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As Obamacare implodes, what’s the GOP alternative?
Posted by hpayne on November 5, 2013
Robert Young, a 29-year old independent filmmaker in Lansing, had his health insurance plan canceled. In Sherman Oaks, Calif., meanwhile, Anthem Blue Cross has canceled 64-year old Yale Goodman’s policy after 20 years, offering him a replacement plan with a $1,129 monthly premium, up from $594.
From young to old, from heartland to coast, millions of Americans are feeling the effects of President Obama’s fraudulent Affordable Care Act that promised lower costs and no loss of coverage.
But in crisis there is opportunity, and Obamacare’s pain has created a Republican opening for a workable alternative that actually addresses the twin problems of high costs and the uninsured. Despite a conservative consensus on free-market health care reform, Republican leadership has so far been content to point out the ACA’s flaws. But if America is to be rescued from Obamacare’s botched, centrally-planned surgery, Republicans must pivot to a positive solution.
Like Young and Goodman, the policies of some 15 million people in the individual health market are threatened (ironic since the ACA remade the entire health system to address an estimated 12-32 million uninsured). But they are just the first wave of ACA casualties. An estimated 129 million Americans will ultimately see their plans canceled or premiums hiked, finds Duke University economist Christopher Conover, due to mandates on employer-provided insurance. But what is also clear is that a return to the pre-Obamacare status quo is unacceptable.
Fortunately, GOP-sponsored plans are shovel ready and straightforward in implementation.
Michigan representatives Dan Benishek, R-Crystal Falls, and Mike Rogers, R-Brighton, are at the forefront of legislative proposals that build on President Bush’s 2007, consumer-based insurance reform. Indeed, Dubya’s plan would likely be the law of the land today had he not been weakened by his own over-reach into Iraq. As it was, his health reform was DOA in Nancy Pelosi’s Democratic House.
The Galen Institute’s Grace Marie-Turner, a health care expert who recently met with GOP leadership on health reform, says the GOP plans share three basic elements:
- Federal dollars to incentivize states to create high-risk pools/exchanges for individuals with pre-existing conditions (Utah already had implemented a state exchange for small business and scholars like Shikah Dalmia at Reason have advocated deregulating Obamacare’s exchanges to include Medicaid and Medicare recipients).
- Extending employer-based tax credits to individuals so that health tax benefits follow the individual, not the job (most uninsured are between jobs).
- Allow states to create interstate insurance pools, broadening the individual and small business marketplace.
These reforms are at the center of the Empowering Patients First Act, co-sponsored by physicians Benishek and Rep. Tom Price, R-Georgia, a comprehensive alternative that Price first introduced in 2009. The bill extends health tax credits to individuals, which would grant consumers the same buying power as businesses.
“Dr. Benishek has consistently argued in support of replacing Obamacare with patient-centered reforms like allowing insurance to be sold over state lines (and) making health insurance portable,” says a spokesman.
Rep. Rogers’ reform, the 2009 American Health Care Solutions Act, includes similar provisions and echoes Bush’s plan in directing federal health dollars to the states to set up high-risk pools covering pre-existing conditions.
Josh Archambault, a health policy expert with the Pioneer Institute in Massachusetts, has embraced similar solutions as Romneycare — Obamacare’s troubled model — has goosed premiums and reduced choice. However, he says that Romneycare was successful in addressing pre-existing conditions. How? By extending employer rules to individual policies prohibiting insurers from asking about pre-existing conditions.
It is not enough for Republicans to watch as the Obamacare Hindenburg explodes. “My goal is always to have a positive alternative if the current system isn’t working,” Rep. Price tells National Review. “And in health care, the current system clearly isn’t working.”
Republicans have the tools. Time to lead.
Barack Bush: The lesson of Iraq and Obamacare
Posted by hpayne on October 30, 2013
Barack Obama’s second term is getting off to a disastrous start not unlike George Bush’s did: Both are promising surges to fix flawed polices. Bush’s troop surge was an attempt to salvage the bad decision to invade Iraq. Obama’s tech surge is an effort to save a wrong-headed Washington takeover of the insurance health market.
Both Iraq and Obamacare should be lessons to future presidents: Enough with the grand, ideological Big Government crusades.
Rather than eradicating the problem — Al Qaida in Afghanistan — Bush tried to remake the Middle East with a nation-building, democracy-spreading invasion of Iraq. Rather than fixing the problem — an uninsured population caused by employer-based health insurance — Obama tried to remake the entire health system. Washington can’t build democracies, and neither can it remake insurance markets.
Tellingly, both ideological adventures were sold with bad intel: Bush promised Iraq had WMD, Obama promised no one would lose their existing insurance plans. Both disasters hit Americans where they live.
As the casualties rolled in, middle-class support for Iraq ebbed away. And as middle-class insurance policies are cancelled and premiums skyrocket, so too will Obamacare support dry up. (The difference? Unlike Obamacare, Dubya at least secured bipartisan support for Iraq before committing the country.)
Note to future chiefs: Stick to government budget reform, tax reform, entitlement reform. Stay out of foreign countries and private markets.
Romneycare foretells Obamacare failures
Posted by hpayne on October 29, 2013
Mitt Romney’s health care reform law in Massachusetts has gone down a path that should concern supporters of Obamacare. (David Goldman / AP)
Weeks after the botched rollout of Obamacare’s exchanges, Democrats are desperately trying to reassure Americans that a not-ready-for-primetime website is unrelated to the benefits customers will experience when they can finally enroll.
“Despite this initial bump in the road, we must remember the Affordable Care Act is more than a website,” wrote Congressman John Dingell, D-Dearborn, in a constituent email over the weekend. “It’s affordable, quality health insurance made available to everyone.”
But that reassurance is no more credible than the fib that website crashes were due to high traffic volumes. Yes, Obamacare is more than a website — it is more premium hikes, more government deficits, more waiting to get care. How do we know?
Because Obamacare is modeled after Massachusetts’ 2006 health care law. Indeed, President Obama will be in Boston Wednesday singing its praises. But for the last seven years, Romneycare has failed in its promise of lower costs, better care access and universal coverage.
Passed by Republican Gov. Mitt Romney and a Democratic legislature, Romneycare pioneered Obamacare’s now familiar individual mandate, government-built health exchanges, and Medicaid expansion. Defensive about his signature gubernatorial achievement being the model for his presidential rival’s unpopular reform, Romney in 2012 said that reform should be state-based and not centrally-planned from Washington, D.C.
Romneycare was actually tailored for the known demographics of its state’s uninsured population, unlike its wide-open federal counterpart. As a result, Romneycare’s smooth rollout was a contrast to Obamacare’s chaos.
But, ominously, the wheels started to come off as Romneycare’s features kicked in. Within two years of its launch, the program’s costs were exploding.
“Coverage for the uninsured in the state exchange was more expensive than estimated,” says Josh Archambault, director of Health Care Policy at Massachusetts’ Pioneer Institute, of 20 percent cost over-runs that necessitated tax hikes. To control costs, he adds, Massachusetts also doubled down on exchange regulation, reducing customers’ choices.
What’s more, Romneycare inflated state health premiums that were already among the nation’s highest. Which is to say, while Romneycare has failed to reduce costs, its residents were already paying for a heavily regulated system. Not so for the rest of America, which is now witnessing sticker shock as Washington imposes Massachusetts-sized costs on everyone. Michigan premiums for an average family will grow 12 percent, according to exchange data compiled by the Heritage Foundation. Indiana’s premiums rise 26 percent; Florida’s 25 percent.
Massachusetts’ health entitlement spending ballooned to 40 percent of its budget (and you thought Michigan’s 25 percent was out of control). But didn’t all this spending lead to universal health coverage in Massachusetts? No. The state already had an unusually low 6 percent of its population uninsured. Romneycare has cut that number in half, mostly with hundreds of millions in government subsides. But coverage is still not universal.
Meanwhile, access to health care has declined.
If Romneycare predicted Obamacare’s high costs, it warns of worse: growing physician shortages as regulations drive caregivers from the market. A 2011 survey “by the Massachusetts Medical Society reveals that fewer than half of the state’s primary care practices are accepting new patients, down from 70 percent in 2007,” reports Anne-Marie Turner, president of the Galen Institute. “The average wait time for a routine checkup with an internist is 48 days. It takes 41 days to see an OB/GYN, up from 34” in one year.
This doctor shortage, driven by poor government reimbursement for health services, also has increased hospital emergency room visits, contradicting Obama’s — and Michigan Gov. Rick Snyder’s — claim that Medicaid expansion will reduce uncompensated care. Just 53 percent of internists and 62 percent of family physicians, for example, will see Massachusetts Medicaid patients.
“Insurance rates have continued to increase with more mandates like fertility coverage,” says Paul Bachman, director of research for Boston’s Beacon Hill Institute. “So now the governor has approved price controls that dictate that health costs can’t increase more than inflation.” That means more doctor shortages.
As Romneycare shows, the future does not fulfill John Dingell’s promise. The Affordable Care Act is unaffordable.
Obamacare’s middle-class sticker shock
Posted by hpayne on October 22, 2013
President Obama defended his health care reform at the White House on Monday, citing three consumers who he says have benefited from the law. But millions of others are losing their insurance policies, or are seeing premiums balloon. (Chip Somodevilla / Getty)
Last week I got news that my health insurance costs are going up. A lot. In 2014 my monthly premium for a family of four will increase 15 percent to $575, my deductible will double to $3,000 and I will lose my drug coverage, adding another $100 a month to my expenses. My story is typical for employees of Gannett, the Detroit News’ parent company, and other businesses across the country.
Obamacare is not just creating havoc in state exchanges, it is roiling the larger private health insurance market. Costs are skyrocketing thanks to the expensive mandates, regulations and taxes buried in the Affordable Car Act.
Call it the Unaffordable Care Act.
Billed by President Barack Obama as a historic reform that would reduce heath insurance costs by $2,500 a year and cover 40 million uninsured, the program is dictating terms to every health insurer while offering employees a grim choice of rising costs with their company plan or seeking refuge in unworkable, expensive government-run state exchanges.
While many small employers have welcomed a delay in the ACA’s employer mandate until 2015, businesses that already provide insurance are facing Obamacare’s new reality. The bad news has come in waves as companies like Home Depot and Trader Joe’s announced they are dropping coverage for part-time employees. Hundreds of thousands of consumers are losing their “mini-med plans” because they don’t meet Washington’s minimum requirements. Now come the premium increases for self-insured businesses that an analysis by Duke University’s Center for Health Policy estimates will cost an average family $800 a year. In Michigan, for example, insurance costs for the Extreme Chrysler dealership in Jackson are going up 70 percent and Michigan Group Benefits insurance says its clients’ average increase is 23 percent.
The $2,100 cost jump in my Gannett plan, administered by United Health, is actually worse than it appears, as my premiums have already swelled by 45 percent since 2011 as insurers anticipated federal regs forcing, for example, coverage of dependents up to 26 years old. Gannett must also swallow a $63 tax for each individual in its group plan and another $2.13 fee per head to “study heath care outcomes.” Similar costs threaten private, union-negotiated health plans, leading Teamsters President Jimmy Hoffa to say Obamacare will “destroy the very health and well being of our members.”
“Health care costs historically have been going up 7 percent a year, so anything above that is probably due to provisions in Obamacare,” concludes Drew Gonshorowski, a policy analyst for the Heritage Foundation’s Center for Analysis, who says the ACA’s over-regulation is upsetting important insurance calculations like “age-brand compression” that balances risk pools.
“Insurance pricing is one of the most complicated, difficult-to-price markets,” he says. “The ACA doesn’t allow insurers to price freely.”
Obamacare promises that its state exchanges offer insurance options, but the government-run system is dysfunctional. Three weeks after its launch, the federally run Michigan Health Care Exchange is still a nightmare. In the first two weeks I couldn’t sign up because the three security questions wouldn’t load. Last week, the security questions were finally there, but then I stalled at the next page. After waiting in a chat room, an Obamacare assistant finally responded: “Unfortunately, (high volume) is causing some glitches for some people trying to create accounts, log in, and complete their application. Keep trying and thanks for your patience.”
But if/when if I do get in, more sticker shock awaits.
An analysis of the feds’ own data by Heritage’s Gonshorowski finds Michigan consumers (as in most states) will experience cost increases across the board. For a family of four, the state exchange will increase costs from $771 to $864 per month. Even for a 27-year old, the youth demographic on which exchanges depend to subsidize older applicants, the exchange increase costs from $117 to $255 per month, a 118 percent hike.
“The essence of the law is working,” said the president at his Monday news conference. “The prices are lower than we expected, the choice is greater than we expected.” Do you believe him or your lying eyes?
THE AFFORDABLE CARE ACT You didn’t build that, Mr. Obama
Posted by hpayne on October 15, 2013
The rollout of Obamacare has been a disaster. You did build that, President Obama. (Charles Dharapak / AP
)
The disastrous rollout of the $634 million Affordable Care Act health exchange this month is the latest in a long line of flawed Obama administration investments. From green energy startups to the health market overhaul, the White House has wasted billions in taxpayer dollars.
Meanwhile, Aon Hewitt’s private health insurance exchange serving thousands of corporate employees has launched without a glitch. How come? Because when it comes to his federally-funded businesses, President Barack Obama didn’t build that.
“Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges,” sneered the president in the 2012, belittling American entrepreneurs. “If you’ve got a business – you didn’t build that.”
But Obama has it backwards. Private enterprise creates markets at enormous financial risk to entrepreneurs and investors. Government infrastructure follows. Henry Ford built the auto industry; the resulting tax revenue built roads. Private investment demands results, or the capital goes elsewhere. By contrast, the president is spending taxpayer money with political, not financial, goals. No business plan. No beta test. No consequences. If the Obamacare exchange is a catastrophe, so what? Taxpayers can’t disinvest.
“Obama would have had his own resources at risk if this were a private company,” says Michigan political consultant Stu Sandler. “But it’s not. The result is hundreds of millions of dollars spent on a website that doesn’t work.”
As the federal health exchange was crashing, a private health exchange serving businesses like Walgreens’ 160,000 employee workforce was going smoothly. Why?
Because the exchange’s creator, health consulting firm Aon Hewitt, has had to meet customer demands or lose business. So before it rolled out its exchange in 2011, Hewitt first beta tested its exchange on its own employees.
Despite over three years of preparation, Obamacare tripped out of the gate (“It’s not even ready for beta testing in my book,” computer programmer Luke Chung told CBS News). Imagine if the White House had subjected its own executive branch employees to it first?
Hewitt then rolled out its innovative exchange for Sears and Darden Restaurants in 2012. The exchange is designed so that businesses give their employees “credits” (subsidies) to shop multiple insurance plans for their health needs. Unlike the clunky, one-size-fits-all federal exchange, Aon Hewitt spokeswoman Maurissa Kanter says her firm administers health benefits to 9 million employees, conducts client sign-ups on a rolling timeline rather than opening to everyone on the same day.
Impressed, Walgreens this year signed up for the Hewitt exchange, along with more than a dozen other companies. Satisfied customers Sears and Darden have also renewed their contracts for 2014.
“We can offer better coverage options through the private exchange for our employees,” says Walgreens spokesman Michael Polzin. Wary of previous government-run health efforts like Medicaid, companies like Walgreens have resisted dumping their employees into the federal exchanges – even as they feel compelled to provide employees health coverage in a competitive labor market.
Obamacare has already broken its promise to allow employees to keep existing coverage. Walgreens employees, meanwhile, have been able to keep their coverage with Blue Cross and United Health, while getting more insurers and more plans. Without government-imposed mandates that make insurance premiums prohibitive for young people, the Aon Hewitt exchange offers high-deductible plans for healthy consumers at just $5 a month.
The president compared the Obamacare meltdown to Apple’s difficulties in rolling out its latest iPhone operating system. But the Apple comparison only magnifies Obamacare’s biggest flaw: It doubles down on employer-provided health care rather than liberating insurance markets by extending the health tax credit to individuals. Giving individuals the power to buy their own health care would decouple health insurance from employment and vastly expand their range of insurance options, just like they have in smartphones.
“Apple can’t allow its stockholders to face this sort of failure,” says Sandler. “It has doubled over to fix the problem to prevent losing customers.” Because Apple built it.
Obama repeats Granholm’s government shutdown
Posted by hpayne on October 7, 2013
Before President Barack Ex-Michigan Gov. Jennifer Granholm’s dismissive relationship with key legislative leaders like House Leader Mike Bishop (right) contributed to repeated government shutdowns. AP photo. )
Obama won re-election with a negative assault on Mitt Romney’s wealth, former Michigan Gov. Jennifer Granholm’s 2006 class warfare campaign earned her a second term over businessman Dick DeVos.
Before Obama launched his second term with a GOP-defying State of the Union speech demanding more spending to stimulate a sluggish economy, Granholm’s 2007 State of the State speech promised the same. And before Obama and the GOP went over the cliff on a government shutdown, Granholm and Republicans took the plunge in 2007.
Michigan has seen this train wreck before. We are reliving Granholm’s failed second term.
The dysfunctional tenures of Obama and Granholm are a lesson in what ails Washington today and what once dogged Michigan: A lack of executive branch leadership. While the pundit class sniffs at the current shutdown as an aberration “brewed by the tea party” (as The Washington Posts’ reliable purveyor of conventional wisdom, E.J. Dionne, puts it), the Michigan shutdown came in 2007 — before the tea party existed — because Democrats and Republicans have fundamentally different visions about the role of government.
Such governing splits are hardly unprecedented and demand executive leadership. In the tense budget standoffs of the early 1980s, former President Ronald Reagan and House Speaker Tip O’Neill built a relationship based on respect. “Horse trading, compromise and negotiation made the government work,” recounts ex-Reagan Chief-of-Staff James Baker in The Wall Street Journal. Bill Clinton too “was willing to negotiate when he had a body controlled by the opposite party.”
But in the Obama and Granholm eras, that leadership has been absent.
Harvard Law School-trained and charismatic — but with little governing experience — Granholm and Obama are political twins who manage by elevating demagoguery over political relationships. As a result, their governing styles breed crisis after crisis.
In the first budget of her second term, Granholm insisted on new taxes to pay for new green “investments” even as Michigan’s economy struggled. Similarly, Obama has insisted on enacting Obamacare despite evidence its mandates are strangling job creation.
Grassroots activists are the backbone of both political parties and in 2007, pink pig-hauling activist Leon Drolet stiffened elephant spines by threatening to recall legislators who supported Granholm’s tax hike. Battle lines were drawn: pro-Big Government House Democrats vs. small government Senate Republicans. Lansing careened toward a shutdown. Ratings services warned the state’s bond rating would be downgraded.
But rather than bridge the divide, Granholm reacted with a page right of Obama’s playbook. “People will die,” she said of Republican offers to cut services rather than raise taxes. No negotiations. Just a relentless game of shutdown chicken.
Granholm “appeared to be disassociated from the process, except to issue occasional press releases criticizing ‘the legislature’ or ‘Senate Republicans’ for failing to adopt her budget recommendations,” wrote the Mackinac Center.
Sound familiar?
For five years, Obama has neglected the hard work of building relationships with Congress. Instead of fighting the country’s fiscal fires, he has given incendiary speeches. And when the GOP foolishly overreached and demanded defunding Obamacare, Obama predictably reacted in kind, putting Washington on course for shutdown.
Where do we go from here? Granholm’s second term foreshadows more of the same. Following the 2007 debacle (Republicans caved to a tax hike yet deficits soared), Granholm would go on to preside over another shutdown in 2009.
Ex-GOP Senate leader Mike Bishop recounts he and Democratic House Speaker Andy Dillon tried futile compromises (a bromance that does not exist between Boehner and Reid). Yet Granholm ignored them, plastering notices in public buildings that read “State offices are CLOSED effective Thursday, Oct. 1, 2009, due to the Michigan Legislature’s failure to act to meet its constitutional responsibility to enact a balanced budget.”
“Boy, that’s the kind of leadership and maturity citizens expect from their state’s CEO,” wrote MIRS political analyst Susan Demas for MLive. “Stay classy, Jenny.”
Having failed to head off a 2013 shutdown, the White House is shutting down WW2 memorials to maximize public pain. Stay classy, Barack.
Obama tilts playing field to One Percent
Posted by hpayne on October 1, 2013
White House favoritism to the rich is evident in the Keystone XL Pipeline. Lobbied by wealthy green contributors, President Obama has halted pipeline construction at the expense of 20,000 mostly-union jobs and employers like Michigan’s Delta Valves. AP photo. (LM Otero)
Barack Obama has won two presidential elections promising that he had the best policies to make the U.S. economy work — not just for the wealthy, but also for the middle class and poor. So how is it that his presidency has seen unprecedented erosion in both American household income and the gap between rich and poor?
Consider the president’s visit with San Francisco billionaire hedge-fund manager and green activist Thomas Steyer this April.
Steyer is a staunch opponent of the Keystone XL Pipeline which, despite its promises of 20,000 jobs, he considers to be threat to global climate change. Thanks in part to swanky fundraisers in Steyer’s estate overlooking the Golden Gate Bridge, One Percent greens have gotten their way at the expense of 99 Percenters from union workers to Michigan valve makers.
When government remakes industries like energy and health care and concentrates more power in Washington, it tilts the playing field to the rich and well-connected who, like Tom Steyer, who can afford to lobby for their special interest. Welcome to the Obameconomy.
The yawning gap between rich and poor is also the result of Treasury/Federal Reserve policies during the 2008 financial panic that stabilized Wall Street and have restored stock prices to record highs. Since the rich tend to hold their wealth in assets, those polices have benefited them. The middle-class and poor, by contrast, gain their wealth from jobs — which have suffered from an activist White House agenda that has favored Washington regulators over job creators.
According to Sentier Research, median real household income is 5 percent lower than when the Great Recession ended in June 2009. The decline has actually been steeper during the Obama recovery than in the Bush recession. Meanwhile, reports the Associated Press, “the gap in employment rates between America’s highest- and lowest-income families has stretched to its widest levels since officials began tracking the data a decade ago.”
“The folks in the middle and at the bottom haven’t seen wage or income growth,” President Obama told ABC this month as if he were an innocent bystander to the U.S. economy.
But his initiatives have been a key driver of income inequality.
A Gallup poll of 600 small companies under $20 million this summer found 41 percent have frozen hiring due to the president’s signature achievement, Obamacare. But Big Hospital and Big Pharma, with their armies of government lobbyists, have thrived with hospitals due to reap $2 billion in Michigan alone from Obamacare’s Medicaid expansion.
In the energy sector, thousands of coal miners have lost their jobs as the Obama administration has waged a War on Carbon. In favoring green alternatives, the administration has showered wealthy pals like Tesla CEO Elon Musk and Fisker Automotive investors with hundreds of millions in taxpayer loans. And for the well-to-do buyers of their Obama-preferred, $100,000 chariots? They get a further $7,500 taxpayer subsidy.
The ripples from hedge-fund billionaire Steyer’s anti-Keystone energy crusade are being felt in Michigan, where unemployment has risen to 9 percent. “Our valves are used extensively in the facilities on both ends of the pipelines,” said Keith Stelter, president of Delta Industrial Valves in Niles, in Congressional testimony this spring. “If the Keystone XL pipeline can be built, I would see my company probably doubling in size over the next 10 years.”
“Too many hard-working Americans are out of work, and the Keystone XL Pipeline will change that dire situation for thousands of them,” testified David Milano of Laborers’ International Union of North America. But White House cronies have stifled development.
Indeed, the unions, minorities, and youth that swept Obama to power that have suffered most from his anti-growth agenda. AP reports that black workers are the most underemployed in the U.S., and unemployment among youth under 25 is 15.6 percent.
Maybe Thomas Steyer could host a fundraiser for them at his San Francisco estate?
Twinkie’s lesson for the Detroit auto bailouts
Posted by hpayne on September 17, 2013
Hostess’s iconic Twinkie emerged from liquidation as a strong, competitive brand. But liquidation of GM and Chrysler’s brands brought fears of larger economic collapse. (Robyn Beck/AFP/Getty Images)
What if General Motors and Chrysler had not received government bailouts? Would the Detroit auto industry have disappeared, or emerged a lean, mean, fighting machine?
Observe the simple Twinkie for insight into what might have been.
With products as iconic as the Jeep and Corvette and a bitter union history to boot, bakery giant Hostess Brands, Inc. last year entered bankruptcy and never came out. Yet today, its Twinkie and Wonder Bread products are back on the shelves and its non-union business model is modernized for the 21st century.
But if Hostess’s liquidation lends ammunition to free-market advocates who argued that Chapter 11 might have produced a more competitive Detroit, leading bankruptcy experts say that Hostess is a sobering lesson in how different auto-making is from other industries — and how painful Detroit’s collapse would have been. Without a government bailout, GM and Chrysler likely would have been liquidated, their brands sold to foreign competitors and the U.S. economy would have suffered a devastating blow.
“Hostess was liquidated. And I believe that, if the federal government had not intervened, that the auto companies would have been liquidated as well,” says investor Wilbur Ross, legendary CEO of WL Ross & Co., who revived once-bankrupt steel behemoths Bethlehem and LTV. “A lot of jobs would have been lost, a lot of suppliers would have gone bankrupt, and the brands that survived would still be unionized.”
Ross says Hostess, founded in 1913, is a demonstration of brand durability even in bankruptcy, but that the food-making process is fundamentally different from building a car.
After entering bankruptcy in January 2012, Hostess was unable to get agreement from its bakery union and went into liquidation nearly a year later, locking its doors on 18,000 employees. But its brands did not die. Wonder Bread was sold to Flower Foods, McKee Foods snapped up Devil Dogs and Yodels, and private equity firm Apollo and investor Metropoulos & Co. bought Twinkies and other Hostess cakes.
This summer, a revamped Hostess Brands, LLC had Twinkies back in stores, its bakeries consolidated from 11 to four, and a non-union workforce streamlined of work rules and pension overhead. Industry analyst Natalie Everett tells CNN that only 25 percent of its jobs will return.
The parallels with GM and Chrysler are irresistible. Old companies. Strong brands. Uncompetitive union work rules. Unsustainable pensions costs. Hidebound management.
“Hostess was making a bad product, then the market changed, and their structure wasn’t sustainable,” says Mark Bloch, a senior partner and veteran labor lawyer with Walter Haverfield in Cleveland.
Did the Detroit companies miss a chance to de-unionize, shedding their biggest competitive disadvantage against more flexible foreign transplants? “Toyota can change what they’re doing on a dime,” without union rules, says Bloch. But he doesn’t believe Hostess‘s labor restructuring applies to GM and Chrysler.
“With Hostess, you’re making a Twinkie,” says Bloch. “You can do that in any bakery. Auto plants are extremely complicated and getting the UAW out would probably be impossible.”
Ross says that, given the financial crisis of 2008, only Washington was able to loan GM and Chrysler debtor-in-possession financing and keep their capital-intensive, long-supply chain manufacturing process going in Chapter 11. He had discussions with Wall Street investors about buying the automakers. “It would have been the biggest private equity takeover in the history of the world,” says Ross. But none of them had the required capital.
Without a bailout, the companies would have liquidated. Brands like Jeep, Ram trucks, and Chevy would have been snapped up by other manufacturers. “Like Hostess, someone would have bought up the Detroit brands,” says veteran auto consultant and Pace University Business Professor John Alan James. Fiat, for example, was eager to get into the U.S. market.
But auto plants aren’t bakeries. The buyer of Jeep, for example, would have needed to get Toledo assembly moving quickly and so would have negotiated a tough contract with the UAW.
“When I took over Bethlehem Steel, we put in a different contract,” says Ross, who cut wages, negotiated 401ks and off-loaded pension obligations to the federal Pension Benefits Guarantee Corporation. “We could have de-unionized, but it just wasn’t practical. What would have happened to our assets?”
Given the unusual circumstances of the financial crisis, these experts agree that auto liquidation is an academic exercise. No president, Republican or Democrat, would have abandoned Detroit in bankruptcy. “The sociological implications would have been too high,” says James, who nevertheless laments President Obama’s politicized “UAW bailout.”
“Only the government” had the funding, says Ross. “And the guy who writes the checks calls the shots.”
Can Krazy Kerry Bentivolio survive his own antics?
Posted by hpayne on September 10, 2013
Congressman Kerry Bentivolio is celebrated by tea party members, but mainstream Republicans question whether Michigan’s 11th District can be better represented. (Jose Juarez / Special to The Detroit News)
From The Detroit News: http://www.detroitnews.com/article/20130910/OPINION01/309100009#ixzz2egy58IbNAt an Aug. 21 town hall meeting in Birmingham, Rep. Kerry Bentivolio, R–Milford, told constituents that he would call a Congressional hearing to investigate the conspiracy theory that the government is secretly spewing toxic “chem-trails” from military planes to change the weather or control the population or something.
“We’ll bring in some Air Force folks right here in our district. We can have an oversight reform committee hearing right here and we’ll investigate,” said Bentivolio in response to an audience question. “I’d like to find out about it too.”
This is the kind of black helicopters-are-coming stuff that earned Bentivolio the nickname “Krazy Kerry” (from fellow Republicans) during the 2012 Congressional campaign. The debunked chem-trails conspiracy — that “contrail” vapor condensation from airplane engines is really something more insidious — has long been the fevered talk of fringe Internet chat rooms.
But despite such embarrassing diversions the first-term Congressman, say political insiders, will be difficult to unseat in 2014 — even with last week’s announcement that businessman and Michigan Republican Party establishment favorite Dave Trott has thrown his hat into the ring. Such is the power of incumbency, and the deep pocketbooks of the GOP’s insurgent Ron Paul/Libertarian wing that backs Bentiviolo.
The accidental Congressional career of Iraq War veteran Kerry Bentivolio once brought hope of a real life “Mr. Smith Goes to Washington” who would speak truth to power. But Bentivolio’s congressional term has been unremarkable after he was the only candidate left on the ballot when shoo–in incumbent Thaddeus McCotter imploded in 2012.
Unremarkable, save for his signature loose cannon antics. His Birmingham town hall was a mess.
The forum made national headlines in The New York Times and Politico as he seemed to encourage President Barack Obama’s impeachment. “If I could write that bill and submit it,” said Bentivolio in response to an audience question. “It would be a dream come true.”
Democrat-leaning media seized on the comment as evidence of an alleged Republican impeachment plot. Bentivolio’s lack of discipline was in evidence throughout the town hall (now helpfully available on YouTube).
Aside from the chem-trails nonsense, Bentivolio embraced the far left movement to label genetically–modified foods (GMOs). “I love that idea,” said the congressman, endorsing the campaign to marginalize a bio-technology revolution that has accelerated food production by making crops drought and disease-resistant.
Indeed, while Bentivolio poses as an anti-Big Government crusader, he drifts to fringe theories on the right and left.
Such wanderings do not serve his 11th District constituents well. When contacted about setting a date for the chem-trail hearing, a Bentivolio spokesman said the hearing has been canceled for lack of evidence. Better that he didn’t go down that blind alley in the first place. But there are a lot of blind alleys in Bentivolio’s uneven career that includes runs as a school teacher, actor and reindeer rancher. His teacher tenure provoked reprimands that would make suspended Michigan State Professor William Penn proud — including bullying students and lapsing into classroom political tirades. He also claims a bit part in a conspiracy film that suggests President George W. Bush plotted 9/11.
Wary of such antics, the Michigan Republican Party establishment first tried to defeat Bentivolio in the 2012 primary with a write-in candidate. This go-round, attorney David Trott’s candidacy has all the earmarks of a second establishment run to bury Bentivolio once and for all.
But Bentivolio has been a loyal GOP soldier, voting the party line. The power of incumbency is deep (as districts like the 11th have been gerrymandered to favor one party), and Bentivolio will have fundraising support from party leaders like House Speaker John Boehner of Ohio.
“Trott will have trouble beating him,” says Michigan political guru Bill Ballenger of Inside Michigan Politics. “Trott will have more money, but the Ron Paul crowd will support Bentivolio. He’s the real deal as far as they are concerned.”
With state party backing, Trott hopes to put an end to the brief, bizarre political career of Kerry Bentivolio. He can only hope that Krazy Kerry does more town halls.
Has Snyder’s Obamacare expansion mortgaged Michigan’s future?
Posted by hpayne on September 3, 2013
Michigan Gov. Rick Snyder has gained the bipartisan support of Michigan’s Legislature for his Medicaid expansion. He is flanked here by Senate Majority Leader Randy Richardville, left, and Lt. Gov. Brian Calley. (Carlos Osorio / AP)
Gov. Rick Snyder’s emergency management of Detroit is focused on rescuing the city from decades of bad management that bet unsustainable entitlements on future tax receipts and state revenue sharing. But with his Medicaid expansion has the governor put Michigan on course for unsustainable entitlement spending?
The Michigan Legislature’s bipartisan approval of Snyder’s expansion of Medicaid coverage to 133 percent of the poverty line last week was a rational decision given Obamacare’s threat to small businesses and the federal government’s promise to cover near-term expenses . The governor’s party grimaced at embracing a cornerstone of Obamacare, but Snyder is a businessman first, conservative second, and he struck a deal with Washington that he thinks will protect Michigan’s immediate fiscal and business interests.
In selling his bargain, however, Snyder missed an opportunity to explain to taxpayers the enormous long-term liabilities they have shouldered. The Medicaid deal is a short-term solution that, like Detroit’s past largesse, puts the state at long-term risk well after Snyder & Co. have left office.
“The federal government isn’t going to protect the states that didn’t expand,” said Michigan Budget Director John Nixon in explaining the gun that Washington has put to states’ heads.
Why would a governor expand a program already devouring the state budget? Begin with the $2,000 penalty businesses must pay per employee that enter Obamacare exchanges — but no penalty if employees qualify for coverage for Medicaid’s expansion.
In addition Washington will cover 100 percent of the billions it will cost Michigan to expand Medicaid to these 470,000 residents (until 2020 when the state picks up 10 percent of the costs). In a business deal Snyder is most proud of, Washington also agreed to cover the $200 million a year Michigan currently spends to provide mental health coverage for Medicaid recipients. Snyder will take that $200 million and place it in a “savings account” to cover the 10 percent portion of Michigan’s future Medicaid commitment.
“Noncompliant states face a double whammy — lose federal money and expose their businesses to additional taxes (the $2,000 penalty),” explains Shikha Dalmia, a senior policy analyst at the Reason Foundation.
Lansing’s made a slick deal for the near future. But what happens if Washington’s purse runs dry? After all, Detroit once counted on state guarantees for revenue sharing. But as Lansing dealt with its own fiscal problems (driven by Medicaid and pension entitlements), promises to Detroit evaporated.
State aid to Detroit peaked at $334 million in 2002, dropping in half by 2012. “There was nothing but a handshake deal on the revenue sharing part,” Mitch Bean, former director of Michigan’s House Fiscal Agency, told USA Today about Michigan’s 1999 promise to Detroit for more revenue sharing. “Detroit has always thought they got mistreated with that, and they probably did.”
Promises, promises. As Washington’s debt crisis deepens, are its promises to Michigan any more sound?
By 2025, projects a 2011 Congressional Budget Office report, every dollar in the federal budget will go toward servicing the national debt and the Medicare, Medicaid and Social Security entitlements. As pressure on Washington for fiscal restraint grows, its promises to states like Michigan will shrink.
Since 1992, Medicaid hospital costs have been 17 times higher than predicted. Since the mid-1980s, Michigan’s Medicaid costs have grown from 5 to 25 percent of its budget. Yes, Snyder has cut a good deal with this White House. But what about the next? Or the next administration?
Snyder might have explained the risks.
Even this White House has suggested a blended share of Medicaid costs, which the Heritage Foundation calculates would explode Michigan’s portion to $2.2 billion a year by 2022 instead of the anticipated $800 million. Goodbye savings account.
But Michiganians are sure to feel the negative effects of Medicaid expansion well before then. That’s because Snyder & Co. have just doomed thousands of citizens to America’s worst health program. A recent Oregon study, echoing similar reports, found that Medicaid patients had no better health outcomes than if they didn’t use Medicaid. Why? Because Medicaid only pays 60 cents on the dollar, meaning few doctors will treat Medicaid patients, meaning patients get crisis care at hospitals (that will now receive billions from Obamacare — no wonder the Big Hospital lobby cheered last week).
Yet Snyder has tried to put a happy face on Medicaid expansion by calling it “Healthy Michigan” that will “will make our state healthier.” There is no evidence to support that claim. Massachusetts, for example, has seen hospital visits increase under Obamacare’s twin, Romneycare.
Obamacare forces governors like Snyder to put immediate political realities ahead of the long-term interest of taxpayers. That’s the kind of short-term thinking that landed Detroit in bankruptcy.
U-M racial preferences vs. MLK’s dream
Posted by hpayne on August 28, 2013
Fifty years after Dr. Martin Luther King Jr. addressed a Lincoln Memorial crowd about his dream that his children not be judged by their color, civil rights groups are trying to overturn Michigan’s ban on racial preferences. Photo by Francis Miller/Time & Life Pictures/Getty Images (Francis Miller)
Fifty years ago, Dr. Martin Luther King Jr. stood on the steps of the Lincoln Memorial and dreamed of a day his children would live “in a nation where they will not be judged by the color of their skin, but by the content of their character.” Today his dream is being realized in states like Michigan and California, where voter initiatives have banned racial discrimination in college admissions.
Now, if only King’s dream can overcome the civil rights establishment.
Ironically, as America celebrates MLK’s vision this week, the ACLU and civil rights groups have filed briefs with the U.S. Supreme Court demanding that Michigan reverse Proposal 2, the state’s ban on racial preferences, and discriminate by the color of a student’s skin. In so doing, King’s successors threaten to set back progress for minorities.
“Dr. King was making a case for race neutrality. He wanted equality of opportunity, not racial preferences,” says Joe Hicks, 71, veteran civil rights activist, former communications director of Southern California’s ACLU and an African-American. He has seen California’s preferences ban deliver increased degrees and jobs for blacks.
Following California’s successful passage of Prop 209 in 1996, Michigan voters adopted the language of the 1964 Civil Rights Act in its constitution in 2006, declaring that universities “shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin.”
But in an Oct. 15 hearing before the Supreme Court, the left hopes to turn back the clock in Michigan and five other states. The civil rights establishment would promote a legal norm where “diversity” trumps equality.
“The University of Michigan considers everything from economic status to parental educational background…in its admissions policies. The only thing they can’t consider is the racial inequality in secondary education,” writes Mark Rosenbaum, an ACLU attorney representing students and faculty in a brief filed Friday with the Supreme Court. “Proposal 2 turns the court’s principles upside down by making race the determinative factor.”
“Rosenbaum’s argument is the definition of insanity,” says civil rights pioneer Jennifer Gratz, who spearheaded Michigan’s affirmative action ban in 2006. “No amount of mental gymnastics could make a sane person believe that eliminating race as a factor makes race the determinative factor.”
“The ACLU’s case is Orwellian,” adds ex-ACLU spokesman Hicks.
The ACLU suit threatens the progress of minorities under California’s Prop 209. Since its passage, the overall population of students in the California system has remained remarkably stable, even as they were reapportioned to colleges for which they were more qualified. As racial quotas were ended, schools like UC-Riverside saw black enrollment increase by 240 percent while UC-Berkeley dropped by half.
“The draconian predictions the left made haven’t happened,” says Hicks who campaigned against Prop 209 in 1996 but has since been won over by its success. “Minorities have gone where their opportunities are better. Their grad rates are up across the board.”
Indeed, Prop 209 has delivered a sharp increase in minority graduation rates, a story I first reported in 2006 with the Reason Foundation’s Shikha Dalmia. At UC-San Diego, for example, graduation rates doubled from 26 percent in 1995 to 52 percent in 2001 — nearly on par with whites and Asians — thus increasing the pool of minorities available to employers.
“(Prop 209) has produced better students all around,” says UCLA scholar Rick Sander, whose 2012 book, “Mismatch,” catalogs California’s success.
Another benefit of Prop 209 has been its positive effect on academic outreach to the poor. One of the dirty secrets of race preferences is that elite colleges like U-M and UC-Berkeley chase a small pool of applicants from upper-income households. Now recruiting without consideration of race, the California system has broadened its outreach programs to all income groups. A study by The Pacific Legal Foundation’s Eryn Hadley found that elite schools have refocused resources on “K-12 students…who are disadvantaged or attend low performing schools.”
Consequently, students on Pell Grants — scholarships awarded to low income students — at Berkeley and UCLA today make up nearly 40 percent of their student bodies. At U-M, by contrast, just 16 percent of students are on Pell grants.
Similar changes would be expected in Michigan’s system where black students graduate from U-M at 16 percent lower rates that whites and Asians (at Michigan State, the gap is 22 percent). Racial preferences have the unintended consequence of discriminating against Asian students while stigmatizing blacks as, in Hicks’ words, “needing a protective umbrella to succeed.”
“Large preferences often place students in environments where they can neither learn nor compete effectively — even though these same students would thrive had they gone to less competitive but still quite good schools,” writes Sander in The Atlantic.
Fifty years later, Dr. King’s legacy is under attack by his own allies. In pursuing diversity over equality, Hicks argues they have put too many black students on “a slippery slope to oblivion.”
Labor’s anti-Snyder campaign makes case for right to work
Posted by hpayne on August 21, 2013
Last week, the AFL-CIO announced that it was targeting the re-election of Michigan Gov. Rick Snyder (and five other Republican governors) because of his support of allegedly anti-worker initiatives, such as right-to-work legislation.
But in its partisan broadside, the Big Labor lobby only proved why right to work — which allows employees in a union shop the choice of whether to pay dues — benefits Michigan workers who are opposed to their paychecks being diverted to partisan electioneering.
“Many AFL-CIO rank and file members in those six states approve of the job being done by those governors, yet their union will use those workers’ dues to engage in an extremely partisan fight not supported by those workers,” says Terry Bowman, a United Autoworkers Union member and founder of Union Conservatives, a non-profit organization opposed to Big Labor’s one-party agenda.
The political record of Big Labor indicates that union leadership is more concerned with Democratic Party politics than with the needs of its rank and file. Now law in 24 states after last winter’s stunning win in union-stronghold Michigan, right to work promises to force labor leadership to refocus on workers’ needs if enough employees choose to refuse union dues.
As evidenced by the re-election campaign of President Barack Obama in 2012, Big Labor has been milking member dues to elect Democrats. Indeed, the GM and Chrysler bailouts — more accurately called the UAW bailouts — were White House-organized bankruptcies designed to preserve the UAW and its massive dues structure, a key Democratic funding source for its political PACs and grassroots organizing (ironically, the UAW’s favorable treatment came at the expense of unionized teachers and firefighters, whose bond-invested pensions were gutted in the automakers’ bankruptcies). The Teamsters union also poured resources into Obama’s re-election to preserve Obamacare — as did the AFL-CIO, which represents Michigan AFSCME workers and trade unions.
But workers might be wondering what their union dues bought them.
As the Democratic Party leadership has lurched left to the coasts, green priorities often trump industrial concerns. The Keystone Pipeline XL, for example, promises some 20,000 jobs — many of them represented by the AFL-CIO’s trade unions — yet the Obama administration has turned a deaf ear to the project.
“America’s Building Trades Unions emphatically support the construction of Keystone,” wrote Sean McGarvey, president of the AFL trades, to Congress this May lamenting the 13 percent unemployment rate among construction workers in the slow Obama recovery. “For many members of our unions, Keystone XL is not just a pipeline; it is, in the most literal sense, a lifeline.”
The United Mineworkers have also suffered thousands of coal industry job losses under the Obama EPA’s War on Carbon, while Obamacare has come back to haunt the Teamsters and AFSCME, threatening jobs as employers move more employees to part time to avoid the budget-busting employer mandate.
Yet these same workers’ dues continue to fund the Democratic agenda.
In 2014, that agenda includes defeating Republican governors who have fought to give these employees the right to withdraw financial support from political activities. “These are all states in which the rights of working people are at stake,” Michigan AFL-CIO spokeswoman Sara Wallenfang told The Detroit News in explaining why her leadership has targeted Snyder for defeat.
“This proves that the AFL-CIO purposely ignores that individual workers actually receive additional rights, freedoms and protections when states grant them the return of their First Amendment right of freedom of association by passing a right-to-work law,” responds union activist Bowman. “Ms. Wallenfang apparently wants to continue the destructive policy of forced unionism that politically discriminates against many of their own members.”
Mackinac Center labor analyst Vincent Vernuccio, a supporter of Michigan right to work, hopes that, as more workers refuse to pay dues, the unions “will be forced to concentrate on their original purpose, which is not to campaign for politicians but to ensure the best conditions for workers.”
By giving workers the right to choose, Snyder has won a victory for worker rights. What if the $12 million in dues money that unions spent last year on super PACs to re-elect an anti-coal and anti-Keystone jobs Democratic president was dedicated instead to better coal mine and oil pipeline safety?
Bankrupt? Detroit leaders still chasing away jobs
Posted by hpayne on August 13, 2013
Detroit lost a growing business this month and Detroit politicians cheered. The blue-collar jobs that Detroit Bulk Storage supports at its Detroit River loading dock will disappear this fall after U.S. Congressmen Gary Peters, D-Bloomfield Township, and John Conyers, D-Detroit, and state House Rep. Rashida Tlaib, D-Detroit, protested the loading of a coal-like energy source, petroleum coke, on barges for export to power plants. The Democratic frontrunner for Michigan’s 2014 Senate seat, Peters is already using his “victory” in a campaign ad to raise money.
But what about Detroit’s business base?
The loss of the pet coke loading business comes as Detroit also mourns the death of dynamic American Axle CEO Richard Dauch, coincidentally a few months after union intransigence had forced the demise of his huge Detroit auto parts plant at a loss of 300 jobs.
As Detroit struggles through bankruptcy, the Detroit Bulk Storage and American Axle stories are grim reminders of how political and union leadership still hinder job creation in Detroit. They are a lesson beyond Detroit’s borders. If Motown is to put Chapter 9 in its rear view mirror — and if America is to jump-start its economy — then its political class must partner with business to grow, not use it as a political punching bag.
Detroit’s riverfront is a tremendous geographic advantage, linking it to Great Lakes region that supports $500 billion in commerce. Products like coke, coal, gravel, and steel are loaded on ships bound for local and international markets. Pet coke production, a byproduct of Canadian oil sands refining at Marathon Oil’s huge refinery in southwest Detroit, promises more Great Lakes business, especially for Detroit’s struggling waterfront.
But the growing Detroit business has run smack into the green, anti-carbon agenda of Democratic politicians.
Environmental concerns are an important part of industrial site location, and with Detroit’s industrial waterfront abutting urban neighborhoods, conflict is inevitable. But rather than bringing all sides to the table to balance business and neighborhood concerns, Peters & Co. exploited pet coke storage for political gain — scaring residents about the product’s environmental impact and ultimately driving the business out of state.
“We don’t know what kind of long-term risks pet coke poses to public health and we don’t know what kind of long-term effects it will have on the Great Lakes,” exclaims Peters in a fundraising email. “That’s why I’m fighting for a study on the long-term effects of this pet coke.” That’s pure demagoguery aimed at impressing rich, green Democratic donors —at the expense of small business. It’s part of a larger Democratic war against Canadian oil sands that has postponed the Keystone XL pipeline and cost the struggling U.S. economy 20,000 potential jobs.
Pet coke — like its cousin coal — is a known, carbon-rich commodity that the EPA has judged non-toxic. Indeed, millions of tons of coal make their way across American waterways on the way to power plants. Detroit Bulk Storage itself also stores coal and has abided by all state and EPA regulations governing pet coke storage. Yet Tlaib rages that Bulk Storage is “illegally dumping” pet coke.
Peters — who once proclaimed himself a proponent of small business — might have explained this to his Detroit constituents. But instead he has convened community “round-table discussions” that excluded Detroit Bulk Storage.
Don’t think other businesses aren’t taking note. Indeed, Bulk Storage has lost its pet coke business. Tired of the hassle, Koch Carbon, which loads the pet coke on its barges for export, is taking the business out of state — likely to Ohio’s Great Lakes ports.
This anti-business environment also shut down American Axle, leaving another gaping hole in Detroit’s post-industrial landscape. Axle’s Detroit complex employed 2,200 just five years ago, but its union leadership refused to adapt its workforce to fast-changing truck markets, struck the plant in 2008, and Dauch turned out the lights in February.
Newspaper headlines today herald the new high-tech jobs that Quicken Loans has brought downtown. But in a city with a low-skilled workforce, blue-collar industrial jobs are still essential to reducing the city’s 16 percent unemployment rate. Doug Rothwell, chief executive of Business Leaders for Michigan, tells the Detroit News that warehousing and low-tech manufacturing are key to the city’s immediate future.
But the evidence of Detroit Bulk Storage and American Axle is that the city’s political and union leaders are intent on chasing those jobs away.
The smearing of Hillsdale’s president
Posted by hpayne on August 6, 2013
Larry Arnn, the president of Hillsdale College, is an outspoken proponent of race-blind admissions. Hillsdale was the first college in the country to ban discrimination in admissions. (Hillsdale College)
A century before Martin Luther King’s dream of a United States where his children would “not be judged by the color of their skin but by the content of their character,” Michigan’s Hillsdale College was the first college to prohibit discrimination in admissions.
An early force for the abolition of slavery and Abe Lincoln’s presidential campaign, more Hillsdale students enlisted to fight the Civil War for the Union than any western school, with 60 dying on the battlefield. So formidable was its equal rights reputation that it was a magnet for black, abolitionist speakers like Frederick Douglass. Under current President Larry Arnn, Hillsdale has continued to be a progressive voice, including its role in advancing access to better education for inner-city black students via charter schools.
Its reputation has attracted talented youth to Michigan like Kayla Cash, an African-American from Rochester, N.Y. “I came to Hillsdale because race is not a factor,” she says. “They see me for my talents as a student.”
So at a public hearing on Common Core state standards and on front pages last week, Democrats and their media stooges tried to smear Hillsdale’s reputation by framing its president as a bigot. I’m not making this up.
“Hillsdale president blasted over race remark,” screamed the Detroit Free Press’s A1 headline, trumpeting Democratic attacks on Arnn for allegedly using a racial slur. “It’s absolutely unbelievable to me that the president of an institution of higher learning would utter such a derogatory statement,” roared Rep. David Knezek, D-Dearborn Heights.
But the hearing transcript reveals that Democrats willfully took Arnn’s comments out of context. Arnn’s use of the term “dark ones” was clearly a description of Michigan education bureaucrats’ crude practice of walking around campus counting Hillsdale students by the color of their skin. The real outrage here is the Michigan Education Department’s (MDE) treatment of one of the state’s most upstanding colleges. Arnn’s contempt is understandable. In a 1999 visit to Hillsdale, the MDE criticized Hillsdale for not having a “diverse” student body because it did not record racial criteria for its students — that is, it did not discriminate to achieve racial admissions quotas.
According to page 10 of the MDE’s own 16-page report, “the team had to respond to this standard based on observation of the students on campus.” That is, MDE bureaucrats took their clipboards and began literally recording which students were light-colored and which were dark-colored.
“That makes me uncomfortable,” says Cash, who is a senior at Hillsdale. “If I had seen that, I would have been offended that they were judging students just by their skin color.”
When Arnn exposed this outrage, an MDE spokeswoman initially claimed the visit never happened. No wonder. Its report of the visit is disturbing evidence of how government has turned civil rights on its head into a quota system.
Arnn’s real sin is that he’s a prominent conservative who has opposed the Democratic education establishment on expanding charter schools and ending racial preferences. So Democrats got out the long knives. These McCarthyite tactics are all too familiar to conservatives who cross the Left’s agenda.
Last year, Michigan Democrats tried to punish ex-Republican Party Chair Ron Weiser for his leading role in making Michigan a right-to-work state. After the successful vote, Weiser — like Arnn — awoke to a front page headline twisting months-old comments he made in Detroit to make him appear insensitive to minorities. The charge was absurd given that Weiser — a minority himself (Jewish) — is a longtime Detroit benefactor and ex-chairman of Washtenaw County’s United Negro College Fund. Oh.
These Democratic smear campaigns hurt Michigan’s image. The manufactured Arnn story was picked up by national media outlets like USA Today, bruising the image of a college that competes across 50 states for top students. In a state that has a long history of racial conflict, Hillsdale has been an ambassador of racial equality.
As president, Arnn has continued the school’s tradition of advancing education for all. This summer, it hosted charter school principals ensuring all Americans have equal access to good schools. Arnn helped draft the 1996 California Civil Rights Initiative, which banned admissions discrimination and has led to an increase in California’s black graduation rates. The college is a participant in inner-city student outreach programs like the Detroit Compact and Camp Enterprise.
“At the highest goal of education, (it does not) make the slightest difference what color someone is. Any other view … reduces the human being to incidental and material characteristics,” writes Arnn in his book “Liberty and Learning.”
That is welcomed diversity in a Michigan college system that has too often discriminated by race. It’s a standard that Michigan’s Left should celebrate, not denigrate.
From The Detroit News: http://www.detroitnews.com/article/20130806/OPINION01/308060008#ixzz2bKMB0WYv
Why Obama let Detroit (city) go bankrupt
Posted by hpayne on July 30, 2013
In June 2009 a team of Jones Day lawyers, including Kevyn Orr, defended Chrysler in federal court against some 100,000 Indiana teacher and police pensioners. They were suing the bankrupt Detroit company claiming its offer of just 29 cents for their secured bonds was illegal. The pensioners’ Chrysler investment was part of their retirement income, yet their lawsuit — filed by Indiana’s treasurer — received little media attention and no sympathy from Washington Democrats or the Obama administration. Bankruptcy Judge Arthur Gonzalez quickly dismissed the suit, saying the public employee pensions were less important than saving Chrysler and the economy from harm.
While public employee unions suffered, however, their auto worker cousins in the Chrysler (and GM bailouts) got preferential treatment, with President Obama’s auto task force giving the UAW significant ownership of the two companies and full funding of their pensions.
Fast forward to 2013 and once again a bankrupt Detroit, this time the municipality, is making headlines as now-Emergency Manager Kevyn Orr is under siege from public employee unions and union-bound politicians demanding Washington intervention. Barack Obama, however, is nowhere to be found. He has, to quote the infamous Mitt Romney column that Obama exploited to win reelection in 2012, “let Detroit go bankrupt.”
Why the aboutface from the White House on Detroit just four years after it saved Motown automakers — and just two years after Obama made saving Detroit a centerpiece of his re-election campaign?
“Because of the UAW union,” says Pat Caddell, veteran Democratic campaign consultant. An important difference, says Caddell and others political experts, is that — unlike the Detroit auto bankruptcies — there is no UAW to save this time.
As in the Chrysler and GM bankruptcies, Detroit public employee pensions are a concern. But they are local political players, say experts, and not enough of a concern to warrant intervention from a Democratic president. The UAW was a different matter in the auto bailouts because automakers are major employers of a special interest crucial to national Democratic Party fundraising and grassroots support. In 2012, for example, the UAW gave $12 million to Democratic super PACs.
The auto rescues deserve their nickname, the UAW Bailout.
“Much was up in the air politically in 2009,” says Caddell, who has worked for numerous presidential campaigns including Jimmy Carter and Joe Biden. “The UAW represented a broader constituency than just Michigan. It was crucial in Ohio and other key political states. There were a lot of subcontractors — a lot of unions — involved.”
Michael Barone, a Detroit native, veteran Washington political analyst and author of the respected Almanac of American Politics, points out that there are important economic and political differences that separate the Detroit auto and city bankruptcies. Today, the U.S. economy is in recovery whereas in 2009 it was so fragile that many economists felt some federal intervention in GM and Chrysler was crucial to prevent a larger depression. Furthermore, Congress had appropriated $700 billion in TARP money to help save crucial institutions — and President Bush has already dipped into TARP for $13 billion in December 2008 to aid the automakers.
But while many politicians, including Romney, advocated federal intervention to help the Detroit automakers through Chapter 11, President Obama’s takeover of the industry was extraordinary. His auto task force ruthlessly dictated terms to secured bondholders (including those teacher and police pensioners), handed over half of Chrysler’s ownership to the UAW, and rewrote the rules of bankruptcy so that the companies and UAW emerged intact.
All this despite the fact that, like a Detroit city bailout today, public opinion polls opposed bailouts and many worried about the precedent set for other corporate bankruptcies.
“The UAW is a greater national presence,” says Barone in explaining why managing the auto bankruptcies was such a key priority. “GM and Chrysler would have more active members (with White House intervention). The public employee unions are important in turnout for local elections, but they are less important to Democratic members of Congress.”
Indeed, in his frequent visits to Detroit, Obama has largely ignored city leaders and focused attention on UAW auto plants.
This angers Democratic consultant Caddell who says Obama’s cold-shoulder (so far) to Detroit’s Chapter 9 betrays a party that takes majority-black cities for granted. “It’s one of the biggest problems I have with my party,” he says. “The feeling is ‘we already have those votes so why worry about them?’ What happens in minority cities is of little interest” to Washington.
Is the EPA committing deadly human tests? Or just bad policy?
Posted by hpayne on July 23, 2013
At the University of Michigan, the Environmental Protection Agency (EPA) has been funding experiments on human beings to determine the effect of particulate pollution on their health. The tests are similar to others around the country that use mobile units to pump in filtered exhaust to labs exposing paid subjects to so-called PM2.5 particulates.
Trouble is, the same EPA that funds the studies claims that any exposure to PM2.5 particulates can be deadly.
“Studies demonstrate an association between premature mortality and fine particulate pollution at the lowest levels measured in the relevant studies, levels that are significantly below” existing Clean Air Act standards, EPA assistant administrator for air and radiation Gina McCarthy testified before Congress. “These studies have not observed a level at which premature mortality effects do not occur.”
If PM2.5 particulates are as dangerous as the EPA says, then how can the same agency simultaneously expose human lab subjects to the compounds? Only by grossly misleading the public on the harmful effects of air pollution.
In truth, as the U-M studies show, PM2.5 exposure is not fatal, yet the EPA — with the help of its environmental and media allies — has been scaring the public on particulates to justify stringent new air regulations even as they are costing jobs and shutting down coal plants.
“Soot particles from industrial flares, diesel exhaust and road grit … can get deep inside the lungs, causing disease and early death,” writes the Houston Chronicle, parroting EPA’s call for costly new standards that the Obama Administration claims will save 46,000 lives a year.
Steve Milloy, a regulatory scholar with the Competitive Enterprise Institute and publisher of JunkScience.com, is calling the EPA’s bluff.
Milloy is suing researchers like U-M’s Robert Brook claiming he is conducting illegal human experiments.
“Dr. Robert D. Brook is intentionally exposing human study subjects to an ultrahazardous and toxic substance in violation of federal regulations concerning the protection of human subjects in scientific research,” wrote Milloy in a complaint filed last week with the state of Michigan’s Health Professions Division. “These actions violate Michigan state civil and criminal law.”
The action follows a $2 million claim filed this year by Matthew Cipparone, one of 41 subjects exposed to exhaust fumes and particulates in a study conducted at the University of North Carolina. Cipparone, paid $12 an hour for his part in the tests, claims that he has experienced illness since the tests.
In an interview, Brook says that the tests he has conducted were board-reviewed and exposed human subjects to unharmful, low levels of particulate matter less than what “tyou would receive from 1 or 2 puffs on a cigarette.” Indeed, control groups can be crucial to scientific knowledge.
But Brook’s argument that there are levels of risk to PM2.5 exposure contradicts EPA claims that there is no safe level of exposure.
Using test results from its university-funded research, EPA is now setting particulate levels so low — from the current 15 micrograms per cubic meter to 12 mcg — that critics say they have no effect on human health even as they costs jobs and billions in industry compliance.
The EPA has justified its new Cross-State Air Pollution Rule and the Mercury and Air Toxics Standards on the basis of risk assessment that PM2.5 can kill within hours of exposure. Yet, its disclaimer to human subjects says merely that “you may experience some minor degree of airway irritation, cough or shortness of breath or wheezing.”
Brook says that — while he has received EPA approval to conduct more testing — he is not going to conduct further experiments, though he says it has nothing to do with Milloy’s complaint. “I’m not going to do (these tests) because I don’t believe in exposing people,” says Brook. “I’ve shown PM2.5 is bad for you.”
Bad for you in the 150 mcg doses that people receive in unregulated Beijing, China — but hardly deadly in the U.S. where the average dose is 10 mcg. Milloy says there are obviously healthy levels of PM2.5, as EPA’s intentional exposure of human subjects proves.
“Despite the ongoing economic challenges facing our country, the Obama-EPA continues to roll out strict environmental standards that cause severe economic strain on state and local communities, millions of lost jobs and skyrocketing energy prices,” Republican Senator James Inhofe, R-Oklahoma, told Reuters.
It’s time that EPA came clean: Is it illegally using humans as lab rats in Tuskegee-like experiments? Or is its crusade against particulates bureaucratic over-reach? The evidence points to the latter.
Cartoon: Royal Baby
Posted by hpayne on July 23, 2013
Take Detroit’s Urban Policy Reality Tour
Posted by hpayne on July 9, 2013
Emergency Manager Kevyn Orr has canceled his planned bus tour for city creditors visiting insolvent Detroit this week, but the idea should not be shelved. Indeed, it should be expanded. A tour of Motown’s mean streets should be a regular feature for policymakers because Detroit is a monument to 45 years of failed liberal urban policy. Beyond the city’s downtown square mile of corporate headquarters and sports stadiums, the tour would reveal Detroit’s apocalyptic, 137 square miles of abandoned buildings, empty lots, and violence-torn neighborhoods.
Call it the Urban Policy Reality Tour. It should be mandatory for every politician in America.
Orr’s arrival has brought the welcome eyes of an unprejudiced outsider. Where many Detroiters are in denial, Orr has expressed shock not just at the city’s finances – but also at the area’s alarming state of neglect.
Detroit is a jarring experience of comprehensive urban blight. In his visits to The Detroit News editorial board, Orr has not hidden his own emotional reaction. I welcome his instinct to explain how the city must cultivate a tax base from its fallow blocks and buildings lest the financial restructuring go for naught. But a creditors-only toiur reinforces the city’s self-image that it is a victim of outsiders. Yes, one can’t discount the loss of auto jobs to automation, but this is what aggressive liberal urban policy was supposed to repair by providing resources and education for families to make the transition to new horizons.
Instead, the liberal dream helped bear the Detroit nightmare.
The policymakers’ tour could go in any direction. North along Hamilton or Cass downtown – once thriving shopping streets now pocked with blight. Or northeast on Gratiot or John R to see decaying warehouses give way to murderous neighborhoods.
But I would insist that the tour guide start the tour – not in Detroit – but on its western border on Warren Avenue in Dearborn. Warren is the commercial heart of Metro Detroit’s 90,000 strong Arab community, heavy with English-challenged immigrants eager for the American dream. The avenue is alive with grocers, restaurants, and appliance stores servicing the neat, safe, working-class neighborhoods behind it. Murders per 100,000 residents: 3.1.
But when Warren Avenue crosses Central Avenue, the western border of Detroit, the landscape dramatically changes. Like someone has flipped a switch, the streets are suddenly abandoned. Storefronts are abandoned, sidewalks choked with grass, neighborhoods pocked with burned-out homes. Murder per 100,000 residents? 54 in 2012.
What has changed? A municipal line.
Detroit leaders like John Conyers insist the difference is racism, but that’s a hard case to make when the minority populations on both sides of the line have felt the heavy slap of intolerance. Indeed, the communities that surround Detroit are an American melting pot of Arab, Jew, Indian and black. Yet Detroit struggles while Metro Detroit prospers.
America has suffocated Detroit with compassion, pouring in billions of dollars beginning with Lyndon Johnson’s Model Cities Program in 1966. Trouble is, the liberal medicine turned to poison. Welfare assistance such as the Aid to Families with Dependent Children ripped apart families from black Detroit to white Appalachia, providing perverse incentives for father and mother to stay unmarried. Today, 80 percent of Detroit children grow up without a father – up from 25 percent in 1960 before Washington’s welfare largesse.
In immigrant-heavy Dearborn family is a fundamental building block for education and work ethic. Across the Detroit border, family has collapsed – a void that breeds every city pathology. Without fathers as role models, young boys drift into the city’s unemployable, 47 percent adult illiterate class. According to academic research, over 50 percent of black men in Detroit are high-school dropouts, 72 percent of them jobless, 60 percent have done prison time. In 1966 the murder rate stood at 13 per 100,000 residents. By 1976 it had climbed to 51 per 100,000 and has hovered there since.
Family wasn’t the only fundamental political leadership neglected. Detroit public schools, despite the highest per pupil expenditure in the state, fail their clients. Resources for basic police and fire service have been starved by payouts to greedy union leadership as 65 percent of the city’s budget will soon go to pension and health benefit costs.
No police, no ambulance service, no safety, no schools, no security. No wonder the middle-class has fled Detroit. That is what Warren Avenue teaches the Urban Policy Reality Tour. Michigan politicians should take it. President Obama should take it.
Policy matters. And without a change in policy, Kevyn Orr’s city restructuring will be futile.
Levin’s IRS fog machine
Posted by hpayne on July 2, 2013
Two Michigan representatives are at center stage in the IRSgate investigation, but only one apparently wants justice done. House Ways and Means Committee Ranking Democrat Sander Levin – co-top cop of the IRS hearings with Committee Chairman Dave Camp, R-Michigan – last week dropped a bombshell that “progressive” (read: liberal) groups has also been targeted by the IRS.
“Claims there was a White House enemies list or evidence of a culture of corruption — there’s zero evidence that there was any political involvement, and indeed the IG said that in his report,” said Levin, waving his letter to IRS Inspector General Russell George asking why he had not revealed that the target list was bipartisan. “This new information shows that the foundation of those investigations is flawed in a fundamental way.” Nothing to see here, folks. Please move on.
Trouble is, Levin’s revelation was untrue.
“The evidence only shows conservatives being systematically targeted by the IRS, not just flagged, but actually targeted. The IG has confirmed that, and the investigation by the Ways and Means and Oversight and Government Reform Committees also confirms that fact,” shot back Camp in his own press release just 24 hours later, publicizing George’s letter that contradicted Levin’s wild claim.
“We found no indication in any of these other materials that ‘Progressives’ was a term used to refer cases for scrutiny for political campaign intervention,” wrote George, reaffirming that only tea party groups were specifically targeted by the IRS. “[O]ur audit found that 100 percent of the tax-exempt applications with Tea Party, Patriots, or 9/12 in their names were processed as potential political cases.”
Why the confusion? Levin’s office had deliberately twisted an IRS spread sheet asking agents to flag numerous organizations, including left-wing groups. But only conservative groups were comprehensively targeted and harassed by the IRS.
“Americans deserve better than to fear whether the IRS will unfairly target them,” added Camp in his rebuke of his Michigan colleague. Camp has been relentless in getting to the bottom of an egregious misuse of a government agency for partisan ends.
It is a single-mindedness that Levin once claimed to share. But his actions speak louder than words.
Along with Maryland Democratic Rep. Elijah Cummings, Levin appears more interested in performing public relations work for the Obama administration than in getting to the facts.
Levin’s diversion came just two weeks after Cummings, who sits on the House Oversight Committee’s parallel investigation of the IRS scandal, cranked up his own fog machine to help the bad guys get away.
Over the objections of Committee Chair Darrell Issa, R-California, Cummings released a full, 205-page transcript of a committee interview with Cincinnati IRS agent John Shafer that, Cummings said, proved – another bombshell! – the committee investigation was a “witch hunt” because no Washington link to tea party targeting could be found. Case closed. Please move on.
Except that Cummings revelation was also a fabrication.
The House committee investigation – and gumshoe work by The Washington Post and The Wall Street Journal – have uncovered substantial evidence that the targeting of conservative groups was orchestrated from Washington , including powerful testimony from Cincinnati field agents Gary Muthert and Elizabeth Hofacre.
Levin and Cummings show a disturbing pattern of Democrat investigators using their positions to complicate fact-finding. Yet their desperation only creates more suspicion. What are they afraid of?
Chairman Camp, meanwhile, continues to pick at the IRS’s culture of corruption. “(Your report) fails to deliver the accountability the American people deserve,” he told IRS principal deputy commissioner Daniel Werfel last week after Werfel failed the basic task of indentifying the D.C. source of the anti-tea party scheme.
Too bad Camp isn’t getting more help from his Michigan co-chair.
Insolvency doesn’t deter Detroit politicians’ War on Business
Posted by hpayne on June 18, 2013
Amidst Detroit’s financial emergency, two multinational companies are expanding in Southwest Detroit, bringing good-paying jobs and desperately-needed city revenue. Marathon Oil’s $2.2 billion expansion of its refinery to process Canadian oil has added 80 jobs and an estimated $230 million to city coffers by 2030. Nearby, Koch Carbon is taking the coal-like byproduct of Marathon’s refining process and selling it right back to Canadian power pants — expanding America’s energy exports and bringing life to Detroit’s abandoned, industrial waterfront.
Yet the two companies have received nothing but venom from Detroit politicians and their activist allies.
This week, Emergency Manager Kevyn Orr announced a restructuring plan to get Motown’s fiscal house in order. But Detroit can’t just cut its way to prosperity. It also must grow. “The city cannot stabilize or pay creditors meaningful recoveries if it continues to shrink,” writes Orr in his restructuring plan.
Yet the experience of Marathon and Koch shows how treacherous Detroit’s business climate remains — even towards established manufacturing and commodities industries. Indeed, this hostility echoes a national problem as Democrats’ War on Carbon threatens growth in America’s struggling economic recovery.
Detroit is at the nexus of a North American oil revolution as Canada has tapped vast reserves from Alberta’s oil sands, reducing U.S. dependence on volatile regions like the Mideast and Venezuela. Much of that oil is processed at Marathon’s huge refinery off I-75. And in 2007 the Ohio-based company decided to expand to meet the demand — at great benefit to Detroit.
The expansion, completed last year, brought 5,000 contractor jobs and increased permanent refinery and subcontractor employment by 155 jobs —many of them well-paid, unionized, $30-an-hour maintenance positions, says Marathon Oil spokeswoman Angelia Graves.
An oil sands byproduct, petroleum coke, has brought more business to the city’s waterfront. An industrial center in the Motor City’s heyday, the Detroit River today is pocked with empty buildings and weed-choked loading platforms. In a neat twist, the coal-like, so-called “pet coke” is being sold back to Canada (among other countries) by energy giant Koch Carbon — where it is burned for electricity in a Nova Scotia power plant, adding millions to America’s trade balance sheet. That export operation has brought another 20 jobs — all paying over $45k a year — to Detroit Bulk Storage which loads the coke on Koch barges.
If you think this has brought smiles to Michigan politicians, think again.
Detroit Congressmen Gary Peters and John Conyers and state Rep. Rashida Tlaib have denounced Marathon and Koch for the mounds of pet coke storage. Congress needs to act against the material to protect “families and natural resources like the Great Lakes from the threat of contamination,” raged Peters from the House floor.
This is pure demagoguery. Pet coke has long been used in electricity and steel production. It is a non-toxic material that poses no threat under American clean air and water laws, says Brad Wurfel, a spokesman for Michigan’s Department of Environmental Quality (DEQ). Indeed, the DEQ says the companies have met every state and federal regulation.
But that’s not good enough for Peters and environmentalists who are waging war on oil, coal, and working-class jobs in pursuit of their green Utopia. This war has cost the livelihoods of thousands of coal miners across Appalachia — as well as up to 20,000 more jobs promised by the oil sands-pumping Keystone Pipeline.
Never mind if Detroit companies have played by the rules, Peters wants to draft even more regulations for them to meet. And he is determined to take this harassment nationwide. “One of my main concerns with the Keystone pipeline is that we will be seeing piles of pet coke in a lot of other places in the U.S.,” Peters told London’s Guardian newspaper.
From Detroit to South Dakota to New Orleans, energy production means exports, growth and jobs. But green politicians seem more alarmed about its alleged impact on polar bears than its promise for America’s working class.