Bacon's Rebellion

Gov. Bob McDonnell has just issued Executive Order #31 creating the Independent Bipartisan Advisory Commission on Redistricting. The commission is tasked with ensuring bipartisan citizen involvement in the redistricting process for General Assembly and congressional seats. Stated the governor:

Here’s a less-than-pleasant quiz.

Overview: I have decided to add an unplanned segment to the Politics and the Chesapeake Bay series. I felt there were sufficient questions following the first article in the series (Pt 1) to warrant an intermediary article to answer those questions. The two big areas of interest involved the uniqueness of the Chesapeake Bay (especially as an estuary) and the forces continuing to change the bay (especially rising sea levels).

What is an estuary? It is a partly enclosed body of water with one or more rivers or streams flowing into it. Some definitions add a requirement for brackish water. The bottom line is that there is no completely accepted definition of an estuary. However, like pornography, you know it when you see it. The Chesapeake Bay is unquestionably an estuary. So are both the San Francisco Bay and the St Lawrence River. Other bodies of water, like the Gulf of Mexico, might meet the technical definition of an estuary but wouldn’t qualify in my book.

Is the Chesapeake Bay unique? In many ways, yes. The Chesapeake Bay is not the largest estuary in the world. That distinction belongs to the Rio de la Plata located between Argentina and Uruguay. However, the Chesapeake is the largest estuary in the United States and is generally considered the third largest estuary in the world. Yet even these “facts” can be disputed. By surface area, the largest estuary is Rio de la Plata. By length it is the St Lawrence River. By miles of shoreline it is the Chesapeake Bay. By any measure, the Chesapeake joins a very few other aquatic marvels (such as Florida’s Everglades) as one of America’s most important natural wonders.

The Changing Chesapeake. Anybody who boats on the middle section of the Chesapeake Bay knows Sharp’s Island Lighthouse (pictured in this post). The lighthouse sits at the intersection of the Choptank River and the main bay. It is instantly recognizable by its 20 degree tilt (caused by ice floes during particularly cold winters). The current Sharp’s Island Lighthouse was not the first. The first lighthouse was built in 1837 on top of a 900 acre island which was home to a thriving agricultural community. Named Sharp’s Island after the Quaker physician who once owned it, the island was a beautiful place in the mid 1800s. So beautiful that a wealthy Baltimore shoe manufacturer built a resort hotel on the island. There was only one problem – the island was rapidly sinking into the Chesapeake Bay. The isle (which measured 900 acres in the 17th century) was down to 94 acres by 1900. The island is under 9 to 12 feet of water today.

The rising tide. The water level in the Chesapeake Bay’ along with the rest of the Mid-Atlantic coast’ is rising at twice the rate of sea levels worldwide. This amounts to 1.3 feet per century at the mouth and 1.0 foot per century in mid-bay. That’s a lot of extra water but far from enough to put a hotel that was dry in 1900 under ten feet of water today. The Chesapeake Bay has been identified as one of four anomalous areas along the U.S. East Coast that appear tectonically active. There is a down-warping of the Earth’s crust called the Salisbury embayment. This embayment could certainly be the root cause of the mini-Atlantis known as Sharp’s Island. However, the entire US Mid-Atlantic coast is experiencing sea level increases well beyond global averages. And the Salisbury embayment cannot be blamed for all of that!

True to form, the Richmond Times-Disgrace spent about half of its front page this morning toasting the elevation of their hometown favorite, Eric Cantor, to his new position as House Majority Leader, following the GOP rout in November elections.

The Washington Times published this column yesterday. I didn’t expect much attention. But before noon, I had enjoyed my 15 minutes of fame — in Canada. After a PostMedia wire reporter wrote a story… about me writing an op-ed… and distributed it nationally, Toronto’s National Post asked to republish the piece, the director of an Ottowa think tank contacted me, and I landed two radio interviews in British Columbia. I mention all this not to brag but because I am bemused by the attention. (Unfortunately, I don’t think any of the activity sold any books.) The Canadians feel very much ignored by us Yanks, and they perk up when anyone, even someone as obscure as me, has something complimentary to say.

So, why do I post this on Bacon’s Rebellion. First, to share with my online friends. And second… uh, well, oh, yeah, because Canada is Virginia’s largest trading partner!

Canada Is Quietly Surpassing the U.S. as the Land of Opportunity

Unless the Winter Olympics are on television or someone is clubbing baby seals, Americans don’t pay much attention to what’s happening in Canada. It’s as if we live in a house with a set of quiet, orderly neighbors on one side and a bachelor pad with drunken parties, girls in the hot tub and occasional gunshot eruptions on the other. To whom would you pay more attention?

I dare say Americans could correctly name the president of Mexico (Filipe Calderon) over the prime minister of Canada (Stephen Harper) by a margin of 5-to-1. That’s too bad. While we have every reason to fear the disorder spilling over from our increasingly lawless neighbor to the south, our well-mannered Canadian neighbors have pulled their act together. We could learn a lot from them.

Look what’s not happening in Canada. There is no real estate crisis. There is no banking crisis. There is no unemployment crisis. There is no sovereign debt crisis. Recent reports suggest that consumers are loading up too much debt, but Canada shares that problem with nearly every other country in the industrialized world.

Among the Group of Seven nations, which also include the United States, France, Japan, Germany, the United Kingdom and Italy, Canada’s economic activity has come the closest to returning to the pre-recession peak. The country has recovered three-quarters of all jobs it lost. The International Monetary Fund estimates that Canada will be the only country among the G-7 have achieved a balanced budget by 2015.

Now, instead of expanding Canada’s welfare state, the conservative government led by Mr. Harper is intent upon building the nation’s global competitiveness. Our friends in the Great White North cut their corporate tax rate to 16.5 percent on Jan. 1 and will see it drop to 15 percent next year. That compares to the current U.S. corporate tax rate of 35 percent. That will give Canada the lowest corporate tax rate among the G-7 nations and an eye-popping advantage for businesses wondering whether to locate on the U.S. or Canadian side of the border.

The last time Canadians really caught Americans’ eyes was when prime ministers such as Jean Chretien and Paul Martin, both leaders of the Liberal Party, were proving uncooperative in the realm of foreign policy. American media played up disagreements over the invasion of Iraq and Canadian participation in the American National Missile Defense Program, which made President George W. Bush look bad and confirmed the narrative that his cowboy foreign policy had alienated old friends around the world. By contrast, when Canadian soldiers became active combatants in Afghanistan, the American media showed little interest.

But that’s nothing new. Except to note how well or how poorly Canada’s national health care system was working, Americans have paid little heed to news coming out of Ottawa. The titanic effort of both Canada’s liberal and conservative parties in the 1990s and 2000s to rein in government spending largely escaped our notice. Nor did it ever occur to anyone to wonder why, with our economies so closely entwined, U.S. housing prices were busting through the roof while Canadian houses remained so sensible.

It turns out that Ottawa’s housing policies and banking regulations tempered the boom in real estate prices. No tax deductions for mortgage interest payments. And get this: Buyers actually had to make down payments on their houses. Because there was no real estate bust, there was no banking crisis. (Indeed, healthy Canadian banks are snapping up U.S. financial assets.) Despite the lack of public policies geared toward stimulating homeownership, Canadian homeownership was 68.4 percent in 2008. That would be a higher number than in the United States , which was 67.4 percent in 2009.

Lesson to Americans: If you want affordable housing, stop promoting policies to make it more “affordable.”

Meanwhile, Canada has many of the same assets that Americans like to brag about, such as an immigrant tradition that invites foreigners to live and work in the country. On a per-capita basis, the rate of legal immigration to Canada is comparable to that to the U.S. Settling in world-class, creative cities like Toronto and Vancouver, foreigners add immeasurably to the nation’s wealth-creating capacity.

Talented Canadians have long regarded the United States as the land of opportunity. It may not be long before Americans see our northern neighbor as the land of the future.

It has finally dawned upon the Washington Post news staff that the new crowd of deficit hawks in Congress may not portend well for the regional economy. Indeed, it won’t. The only thing that could be worse than the rough patch we’ll experience if Republicans make good on promises to slash federal spending by $100 billion would be continuing down the budgetary path to Boomergeddon (when Uncle Sam defaults on his debts and investors refuse to lend anymore), in which case the shortfall could exceed $1 trillion.

Here’s my favorite line in yesterday’s story, “Federal austerity could hit the region’s economy hard“:

Some forecasts suggest that the growth of federal spending and procurement could plunge to 1 percent or below in 2011 from an average of about 8 percent annually during the past several years. That could hurt even if the local economy benefits from improvements this year in the U.S. economy.

Overview – This is the first in a series of articles about politics and the Chesapeake Bay. While I’d love to present the matter in one article, the topic is simply too broad and complex for a single post.

Now that it’s the New Year, what happened to the Sound and the Fury?

Christine Romans interviewed me this morning for CNN American Morning. A one-on-one interview running more than five minutes on a national cable network is a generous allotment of time, but it barely skims the surface of the weighty topics at stake. Still, I can’t complain. The interview provides a nice introduction to the “Boomergeddon” book.

The Bacon bottom line: 2/3 of Boomers are financially unprepared for retirement (our friend Groveton is a relatively rare exception) and will have to work longer than they ever anticipated. We can’t count on government to act responsibly enough to preserve the integrity of Social Security and Medicare, so we’ll have to add to savings to offset the risk of cutbacks to the retirement safety net.

And how do we do that? Strip the costs out of our lifestyles to lower our spending profile, pay down debt, become as self reliant as possible — and don’t count on the government to bail you out. You’ve got about 15 years to work on it. Good luck!

The sleeper story of the season: Gov. Bob McDonnell, staff and senior legislators will be paying calls on rating agencies S&P, Fitch and Moody’s to defend Virginia’s AA rating.

According to Chelyen Davis with the Free-Lance Star, McDonnell says he has no reason to believe that the AAA is in jeopardy, but he’s never met with the rating analysts and he wants to make sure they “have confidence in what we’re doing.” In particular, he wants to explain how Virginia intends to honor its commitments to the Virginia Retirement System.

Good luck, governor. Make sure you have an explanation handy for that Senate Finance Committee report that says Virginia cannot borrow any more money if it wants to maintains its self-imposed debt capacity cap of 5% of revenue.

Gov. Bob McDonnell made a few big promises when he ran for governor. One of those promises, raising more money for transportation, was a bust. Privatizing the state’s ABC stores, collecting royalties from offshore oil drilling and slapping tolls on Interstate highways have crumbled like the asphalt on Interstate 95. But another of his promises, to promote job creation, has panned out pretty well. So far, McDonnell has lived up to his campaign slogan, “Bob’s for Jobs.”

The looming insolvency of many states and municipalities is getting more and more attention. CBS’ 60 Minutes highlighted the problem Sunday, and everyone concerned about Virginia public policy needs to watch this video.

Needless to say, Virginia is in far better shape than Illinois, New Jersey and California, but it would be foolhardy to think that we are immune from their difficulties. The fact is, we don’t have a good handle on the financial strength of all Virginia’s municipalities and all the independent authorities that have issued debt. We don’t know how much publicly backed debt there is, we don’t know what potential liabilities governments are potentially liable for, and we don’t know how well covered the debt is. We don’t know what impact declining property values will have on municipal revenues, what impact consumer deleveraging will have on sales tax revenues or laggardly economic growth will have on income taxes.

Meanwhile, we face massive cutbacks in federal aid when the “stimulus” package expires, continuing increases in Medicaid spending, and more cuts of unknown magnitude when the newly elected Congress gets serious (or semi-serious) about closing the federal budget gap.

The 50 states, metropolitan regions and municipalities are coming to the end of an the expansionary era that has prevailed since World War II. Spending will be painful to cut. Much of it is baked into the dysfunctional human settlement patterns — scattered, disconnected, low-density — that we have built over the past 60 years. More spending is tied to our dysfunctional, privately-owned-but-highly-regulated health care system, and yet more is tied to our dysfunctional, hyper-bureaucratized public educational system. The days of blindly shoveling more money at roads, schools and health care are over. We cannot afford this madness anymore.

Our major public institutions have evolved as far as they can usefully evolve. They have reached a dead end. Collectively, they are nearing collapse. Virginia has been less profligate than other states, so that foundational truth may not yet be self evident to everyone. But the design flaws in our institutions are endemic — Virginia is only a few years behind the rest.

Government As Usual will not work. We cannot solve our problems by trimming a bit here and there, jacking up taxes and fees but spreading the pain so no one notices, implementing private-sector processes in the search of ephemeral efficiencies, borrowing up to our AAA debt limit, diverting the public’s attention with culture-war issues, and hoping that some economic miracle from source unknown will deliver a revenue windfall from the heavens. No, we must fundamentally re-think the way we deliver and pay for every major public services at the state and municipal level.

Just as we need a new compact between government and citizen at the federal level, we need a new compact at the state, regional and local level. Either we devise the new compact through a deliberative democratic process informed by reasoned debate, or it will be imposed upon us in a panicked crisis mode by remorseless creditors.

One of the enduring controversies in Virginia involves the so-called “Gun Show Loophole”. I say so-called because the term “gun show loophole” generates intense debate and considerable emotion.