Puget Sound Liberals Weekly Newsletter #197
Enhancing Freedom, Opportunity and Cooperation in
Through informing and networking Liberals and Liberal Organizations.
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Our Website Our Editor To Unsubscribe Table of
Contents * Featured Articles Calendars of Events Communication with Our Members Institutional and Personal Change Toward Living
Simply Opportunities Petitions 2009 Election Endorsements Washington
Democrats Endorsements Commentaries from Our Members Norm Conrad: Causes of Bubbles and Solutions* Dick Burkhart: McGinn Opposes Car Dependence Liberals and Democrats Links to the Beef Congressional Ethics Violations Should Be Punished State and Local Links
to the Beef David Spring: BIAW’s Political Consequences** No Liberal Initiatives to Counter Tim Eyman’s Ones* Featured Advocacy Group: Take Back Your Time Too Few Washington Jobs or Too Many People? Washington Needs Healthy San Francisco Clinics* Nation and World Links to the Beef Many Positive Mid-East Possibilities* We Need an Earn, Conserve and Invest Economy** Our Liberal Spirit Our
Political Priorities ·
Fair Clean
Elections and Open Government ·
Fair Taxes and
Competent Spending ·
Investment for
Productivity ·
Quality
Health, Education, Jobs, Income ·
Environmental
Protection and Energy Independence ·
Security and
Equal Rights ·
Justice and
Peace Everywhere ·
International
Cooperation and Leadership Conservatives oppose all of these Let’s
End Our National Nightmare
Let’s
Restore Our American Dream More on Conservative opposition to our
American Dream Washington State’s 5 Major Needs · Federal Funding for Health and Education · Substituting
a Progressive Income Tax · Replacing
Conservative Legislators Quote of the Week Small is Beautiful. E.F. Schumacher
Calendar of Events
Thursday, October 29 at 5:30 PM at Town Hall Seattle
(1119 Eighth Avenue, Seattle) - 2nd
Annual Puget Sound Sage Vision for Justice Dinner. $70.
Thursday, November 5, 2009, 7:30 PM at Seattle First
Baptist Church (1111 Harvard Avenue, Seattle) - November Election post-mortem discussion, sponsored by the League
of Women Voters of greater Seattle.
Saturday, November 14 at 6 PM at Seattle
Marriott Waterfront Hotel (2100 Alaskan Way, Seattle) - ACLU
Bill of Rights Celebration Dinner.
$65. To
order tickets.
Communication
with Our Members
Institutional and Personal Change toward Living Simply
To enable people to live simply, we need
first to change our mindset and practice from Borrow, Consume and Speculate to
Earn, Conserve and Invest. Instead of
being managed by major companies and their associated labor unions as our Earn,
Consume and Invest economy was following World War II, we need a publically
managed Earn, Consume and Invest economy.
Then we need to personally change from
busily Borrowing, Consuming and Speculating to Living Simply. We need to focus upon what is important to
us: our primary interests, our relationships with others and preserving our
environment. Commentaries on both our
required institutional and personal changes appear below.
Opportunities
Useful
Websites: contacts, maps, community organizing tools, and more.
Petitions
Tell
the Army Corps of Engineers to end streamlined Mountaintop Removal mining
permits.
Thank
Interior Department Secretary Ken Salazar for protecting polar bears.
Tell
Interior Department Secretary Ken Salazar to protect Yellowstone from uranium
mining.
Tell
your senators to vote for the Hate Crimes Prevention Act.
Tell your congress
members to vote to close Guantanamo.
Tell
our Federal Communications Commission to preserve internet neutrality.
Tell
Senate Majority Leader Harry Reid to include a public option in the Senate
Bill.
Commentaries
From Our Members
Norm Conrad: Causes of Bubbles and Solutions
My most recent post talked
about the danger to the economy posed by financial overreach. Among other unhappiness, financial overreach
inevitably causes speculative bubbles.
Speculative bubbles always collapse and frequently destroy economies, sometimes
for centuries. I’d like to talk about
what produced our recent financial bubbles.
Bubbles always develop in the financial, nonproductive sector of an
economy.
·
That was true in
the Roman economy as it was declining and fell apart.
·
It was true for
Spain as its economy collapsed in the 17th century after gold from
the New World ran out.
·
It was true in
the Netherlands in the 17th and 18th century as it
replaced seafaring and manufacturing with tulips and banking.
·
Great Britain
followed the same self-destructive path in the late 19th and early
20th centuries as it became a financial powerhouse but its empire
began to break up.
·
It is true for
the U.S. and much of the “global economy” today.
It
is a lesson as old as history; one that succeeding economic powers, overcome by
the hubris from their past successes and self-interested greed, seem never to
learn.
How do bubbles form? The simultaneous bubbles we have recently
experienced arose from a shift in the balance of economic rewards. That
shift has three direct causes and several indirect ones. The direct causes are the
·
Wage
growth/productivity gap that has been growing steadily since the early 70s
·
Change to a “free
trade” policy begun by the Nixon administration and expanded by every
administration since
·
Reagan’s tax and
economic policies that have been pursued by each successive administration.
Some of the important
indirect causes have been the
·
Perpetual war
economy that arose out of the Cold War and its revitalization by the new
Counter Terrorism-Industrial Complex
·
Abandonment of
the Bretton Woods Accords in 1973
·
Oil shocks of the
70s and the recessions and fear that they produced.
Indirect Causes
The Cold War brought
permanent lobbying to Washington, DC on a scale never before seen in this
country. Defense companies set up shop
in DC to wring contracts out the taxpayer.
Public corruption prior to this was primarily a state and local affair
rather than a national affair. Even the
senate corruption of the Gilded Age was mostly a factor of where specific
trusts operated. As a consequence of the
Military-Congressional-Industrial Complex success, other industries saw the
need and opportunity to enhance their income by “buying” members of Congress to
reduce competition and regulation and to restrict pesky stakeholders with
claims on profits.
When Nixon withdrew from the
Bretton Woods Accords, currency became a huge financial play. Prior to this, currencies were bought and
sold as needed by tourists, by exporters, importers and investors in foreign
expansion. Nixon let the dollar float to
resolve a gold reserve drain brought on by the war in Vietnam and by the
emergence of Japan as a predatory exporter (more on this later). Milton Friedman, his economic advisor,
advocated de-linking the dollar and gold, claiming that this would stabilize
world currencies. (Wasn’t that wildly successful? Only one of Milton’s calamities!) The point here is that currencies quickly
became a financial commodity that redirected banking activities away from the
real economy and into riskier, unproductive speculations.
The oil shocks of the 70s
caused the breakup of the labor-management Cold War consensus that, to deny the
Soviets a potential pool of dissatisfied western recruits and revolutionaries,
kept owners and managers from destroying the middle class and labor and,
ultimately, themselves. The recessions
scared the devil INTO business; as they saw their wealth erode, they grabbed
the levers of economic power they had developed since the 50s and pulled them
to attack those who made demands on profits (spelled u-n-i-o-n-s). As business made ever greater demands for
concessions from unions, everyone suffered because non-union workers now saw
their ability to demand increasing wages and benefits vanish as well.
Direct Causes
1973 was a pivotal year, a
perfect storm of really bad ideas and destructive actions that turned our
economy to mush. Because of management’s
aggressive attack on labor, the parallel
path of productivity and non-managerial incomes stopped tracking each other
beginning in 1973. In previous years
workers realized about 80% of the fruits of all productivity gains. If productivity in company X went up by 10%,
employee paychecks went up by about 8%.
In the years since 1973, management and ownership have grabbed more and
more of all productivity gains for themselves. Today, all of the productivity gains accrue
to management and shareholders. The
point here is that as profits have disproportionately increased, stock prices
have skyrocketed. As stock prices
climbed, a mania, a rush developed to get in on the action.
The next culprit is the change in our trade policy in 1973 from
mild self-defensive to increasingly self-destructive under the misapplied
ideology of free trade. Even during the
50s and 60s when we assumed the role of buyer of last resort for the free world,
our tariffs were mildly self-defensive.
The rest of the world was seriously self-defensive. But as the labor-management consensus broke
down, our business community saw that they could profit even more by using
cheap labor overseas to reduce their labor costs for goods sold domestically and
further enhance their profits. This was
a major shift in microeconomic thinking.
This new “thinking” saw investing abroad as a way of lowering costs and
increasing profits on products sold here rather than as a way of producing
goods only for foreign markets. As a
result, manufacturers began to demand much reduced tariffs on their overseas
goods brought here for sale. This
further eroded domestic wages and exploded profit margins and raised
expectations for further profit increases.
The Japanese and later the Koreans rammed everything they could through
this crater in our industrial non-policy.
The last of these direct
causes was Ronald Reagan, the
president from GE, and his economic policies.
His administration amplified all the preceding events and influences and
gave us a few addled wrinkles of its own.
Tax rates on the wealthy and
the business community were slashed, increasing the cash available to them for
gambling on unproductive paper assets.
This forced the rest of us to make up the revenue shortfall by accepting
higher payroll and higher state and local taxes and lower levels of
service. Because wages stagnated or
shrank, the middle class drew out its entire savings. And when their bank accounts were gone, they
went into debt to sustain the dream. But
with more cash in the pockets of the wealthy searching for new opportunities,
the housing market took off with speculators buying houses simply to resell
them a few months later. The sight of
such profits induced many of the middle class to jump in as well. As their houses increased in value, they
found a way to access their new found equity and jump into the stock
market. Refinances begat stock
purchases; one bubble created another.
Regulations that promoted the
general welfare of all Americans were disregarded. Reagan let it be known that his crew would
not enforce labor standards. Election
campaign rules were decimated, forcing candidates to spend truck-loads of cash
to buy advertising and further delivering our “representatives” into the hands
of the wealthy and their lobbyists. A
compliant Congress then dutifully reduced critical safeguards in the name of
increasing profits and efficiency, resulting in greater income disparities and
exacerbating the new wage-productivity gap.
Reagan’s chief economic advisor and nominee for Fed Chairman, Alan
Greenspan, and his increasingly powerful banking constituency promoted new
“innovations” in the financial sector and convinced Congress to exempt them from
regulation.
And if this were not enough,
Congress, with Pres. Clinton’s signature, repealed the Glass-Siegel Act in 1999
that had kept commercial banking separate from investment banking. It had worked so well over the previous 60
years that it was obviously no longer needed.
Without this separation of investment and commercial banking, the larger
banks went on two binges. The first was
to buy up everything they could find – smaller banks, bigger banks, insurance
companies, brokerage houses. You name
it; they absorbed it. This
consolidation, as in any industry, reduced jobs and workers’ incomes and
increased profits, which increased share prices, which increased expectations,
which inflated the bubble bigger still.
The second binge was Greenspan’s
innovations. With “Dollar Bill” Phil
Gramm’s Commodity Futures Modernization Act of 2000, those “innovations” were
exempt from oversight or regulation, and no one really knew what these
derivatives were or how they worked.
Within this “black hole”, the bankers lost all control and went
wild. They commoditized everything they
could think up: securitized mortgages,
credit default swaps, collateralized debt obligations, more futures contracts
than there were commodities to grow or extract and sell, etc., etc. They put the word out, “Make more paper that
we can push to the unsuspecting! Don’t
worry about old-fashioned ideas like honesty, credit worthiness, or ability to
pay. Just keep them coming!” Like Enron before them, they began
manipulating the markets. Agricultural
commodity prices became weirdly erratic from day to day.
Now, their “big new idea” is
to buy up life insurance policies from seniors or the sick and infirm and to
sell them as mutual fund units or anything else that strikes their fancy. These new investments will pay off nicely as
those folks die and the policies pay the face amount to the new fund. Talk about the risk of hurrying along
Granny’s demise!
As long as we allow paper,
artificial assets to swamp real ones, bubbles will develop. As long as we
accept the theft of workers’ just rewards for improved productivity and
profitability, bubbles must
develop. As long as trade is deformed
and misused as a way to cut labor costs for goods sold here, bubbles have to expand. As long as the objective of public policy is higher
profits without any concern for labor or community, bubbles will ensnare the
unsuspecting and the conniving. Catastrophe
will befall us all.
Solutions
How do we prevent this
universal scourge? The most important
corrective we can undertake is to rebalance economic power. This can take a number of forms, and I
suggest that we put as many as possible of them in place at once.
1.
Break up the big
guys, starting with the banks, in order to bring back competition. Too big to fail is too big, period.
2.
Separate the commercial
banks from insurance companies and all banks from insurance companies and brokerage
houses.
3.
Enhance the
standing of labor in our economy by rewriting the Labor Relations Act and by
passing the Employee Free Choice Act.
4.
Gradually
strengthen tariffs to level the field and send the free trade orthodoxy to the
shredder instead of allowing it to further shred our economy.
5.
Bring back
taxation on the corporation and the wealthy by closing all their cute loopholes
and offshore tax havens and by increasing their tax rates. Remember, during the days of our greatest
economic expansion, the highest personal marginal income tax rate was 91%. Corporate taxes at that same time were over
25% of federal tax revenue instead of less than 8% tocay. (These first five steps are necessary but
insufficient by themselves to solve the problem. The next one is the key to long term
viability.)
6.
Most important
(and the most difficult to achieve), utterly redesign the corporate business
model.
We must recognize, as did
Abraham Lincoln and our Founding Fathers, that labor precedes capital and that
capital is to be employed by labor instead of capital buying labor. Only nonprofit charities and worker-owned and
entirely worker–managed enterprises should be corporations without a limit on
how long they may operate. Ordinary
corporate charters, publically or privately held, must have an expiration date
which cannot be renewed. (I suggest that
the expiration date be 30-40 years after the charter date.
This must happen within a
mixed, competitive, market economy.
There will be plenty of room for new ventures to emerge through the sole
proprietor, the partnership and the time-limited corporate models. Future Bill Gateses will still be able to
develop their products and prosper, but their Microsofts will not live on
forever unless they become this new type of co-operative venture.
When that corporate time
limit expires, the company will have to be sold to either its employees,
creating a worker-owned and –managed co-operative, or to humans operating as
sole proprietor or as partners who may never reincorporate it.
There it is: the disease and the cure. Norm
Conrad
Dick Burkhart: Michael McGinn Opposes Car
Dependence
I’ve seen Michael McGinn in action for the past few
years, working alongside me and others on the Sierra Club Transportation
Committee. I’ve always been impressed by his extraordinary grasp of the key
issues and his ability to communicate and work with people in practical ways to
achieve goals that others dismiss as politically infeasible.
McGinn is a man of good judgment, as he proved when
working with the Sierra Club to defeat the heavily compromised regional roads
and transit ballot measure in 2007, then helping to pass the visionary light
rail expansion last year. He knows that the extreme car dependence of our
society must, and is, giving way to something more balanced, so it is
imperative to put our resources into infrastructure for the future, not the
past.
This is why McGinn has questioned replacing the
Viaduct by a tunnel. Is it really worth 4 billion dollars, including a billion
or more from Seattle voters? And historical experience suggests major cost
overruns. What with tolls and no downtown exit, how many will actually use
it? Do we want to encourage unsustainable car dependence, or discover
that people will adapt quite nicely, as have San Francisco Vancouver BC, when
government says no to new downtown freeways and yes to alternatives? Among the
few ways Seattle could raise additional funds for transportation projects is
the Transportation Benefit District. Should this be used to fund more
alternative service (buses, light rail from West Seattle to Ballard, bike and
pedestrian) or the tunnel? Dick Burkhart
Liberals
and Democrats
Government Watch
Also go to Whitehouse.gov.
Health Care Reform
President
Obama’s ambiguity about a public option and his bargaining with private health
insurers successfully delayed their attacks upon health care reform. Now they
have finally attacked and the attack was a dud. For
more. Our Obama Administration and
House Democrats are now committed to removing
the anti-trust exemption for private insurers. For
more.
A majority
of Americans support a public option, making it easier for Democratic
congress members to do so. For
more.
Financial Reform
http://www.whitehouse.gov/economy/financial-reform/
http://www.bloomberg.com/apps/news?pid=20601070&sid=axePKeIA7Xx8
http://www.bloomberg.com/apps/news?pid=20601070&sid=agLyUl0aqYuk
Regulating Food Safety
Our Obama
Administration is increasing
inspections to ensure food safety. For
more.
Medical Marijuana
Our Justice
Department quits
the prosecution of sellers of medical marijuana.
Greening Government
Government
employees are asked to express
suggestions for greener practices.
Congressional Ethics Violations Should Be Punished
In spite of
some ethics reforms, Democratic congress members are still unwilling to punish
their fellow Democrats who act unethically.
Charles Rangel should be removed as chair of the ways and means
committee. In addition, when a house
member is accused of more than one ethics violation, each one should be
investigated and resolved separately, instead of waiting until all have been
investigated. For
more.
Here’s the Beef
Read
Michael Moore’s action plan
U.S.
Chamber of Commerce claims 3 million members, but only has 300,000.
Republicans
Are Out of Touch with Mainstream America.
Fox news is not fair and
balanced. It is simply a mouthpiece for
Teabag Republicans.
Teabag
Conservatives are sure that they know more than mainstream Americans.
State
and Local
David Spring: BIAW’s Political Consequences
“The goose that lays golden eggs has been
considered a most valuable possession. But even more profitable is the
privilege of taking the golden eggs laid by somebody else's goose.”
Louis
Brandeis wrote the above book to describe how the rich and powerful “controlled
people using the people’s own money.” This is exactly what is happening with
our political system today. It is one thing for corporations to use their own
money to control elections. It is quite another for corporations to use tax
payer money to control elections. The kind of corruption described by Brandeis
led to the Great Depression. Similar corporate corporation, combined with a
lack of government oversight, is leading to a Second Great Depression today.
The fox is not merely guarding the chicken house, the fox now owns the chicken
house. We should therefore not be surprised that when all the chickens
disappear.
There
has been a great deal of media attention given to the BIAW attempts to take
over the Governor’s Office and the State Supreme Court as well as their
involvement with our current Attorney General. Certainly had BIAW succeeded in
controlling either our Governor or our Supreme Court, it would have increased
their chances of keeping their windfall pot of gold.
But
far less attention has been given to the BIAW’s efforts to manipulate our State
legislature.
While
the BIAW has been tipping elections to pro-BIAW candidates since at least 1994,
in local elections as well as House and Senate elections, we will use the 2008
State House of Representatives contested races as an example in part because in
the December 2008 BIAW newsletter, Building Insight, the BIAW boasted that they
were “5 for 5” in tipping closely contested House races in 2008. These 5 races
are shown below:
2008 House 5 Races “Targeted” by BIAW
|
Counties |
LD |
Pos |
Name |
%
to swing |
2008
% |
BIAW
funds |
||
|
Snohomish* |
44 |
2 |
Loomis Liz -D |
.01 |
49.9 |
|
||
|
Snohomish* |
44 |
2 |
Hope Mike
–BIAW R won |
|
50.1 |
$50K |
||
|
Island, * |
10 |
1 |
Knue Tim- D |
.04 |
49.6 |
|
||
|
Island, * |
10 |
1 |
Smith Norma
–BIAW R won |
|
50.4 |
$50K |
||
|
Spokane* |
6 |
1 |
Barlow Don- D |
2.9 |
47.1 |
|
||
|
Spokane* |
6 |
1 |
Parker Kevin
– BIAW R won |
|
52.9 |
$65K |
||
|
Kitsap* |
26 |
1 |
Abel Kim- D |
3.3 |
46.7 |
|
||
|
Kitsap* |
26 |
1 |
Angel Jan
–BIAW R won |
|
53.3 |
$60
K |
||
|
Pierce* |
25 |
1 |
Cerqui Rob-D |
4.1 |
45.9 |
|
||
|
Pierce* |
25 |
1 |
Dammeier
Bruce BIAW R won |
|
54.1 |
$71
K |
||
In
each of these 5 races, the BIAW and affiliated PAC’s spent more than $50,000
promoting the Republican candidate over the pro-education Democratic candidate.
In two of the 5 cases, the Democratic candidate was a former teacher (Tim Knue
and Don Barlow). In 3 of the 5 races, the BIAW knocked out seats formerly held
by pro-education Democratic incumbents (44th, 6th and 26th
LD’s). In the 7 most closely contested 2008 House races not targeted by the
BIAW, Democrats won four.
So
without the intervention of the BIAW, Democrats would have won as many as 8 of
the 12 closest State House races in 2008. Pro-education progressive advocates
would have picked up several more votes in the State House. Instead, Pro-BIAW
Republicans won 8 of the 12 closest House races making our State one of only a
few in the nation in which Democrats lost seats.
Nor
is this problem limited to the 2008 State House race. BIAW candidates also won
in the State Senate in several closely contested swing districts. Nor is the problem merely limited to
Republican legislators. The BIAW has also made significant campaign
contributions to several of the leaders of the Democratic caucus including Ross
Hunter, Fred Jarrett, Judy Clibborn, Larry Springer, Deb Eddy, Pat Sullivan,
and Deb Wallace.
But
the real problem is not just the 2008 election. It was the prior 10 elections
before that.
In
all, the BIAW has tipped more than two dozen legislative races making education
funding reform all but impossible. There is no doubt that the BIAW is blocking
progressive pro-education reforms in Washington State. The May 2009 BIAW
Newsletter “Building Insight stated: "After coming in like a lion, the
2009 Legislature went out like a lamb." The newsletter lists 14
legislative proposals that it opposed. The word "Dead" was attached
to 12 of them.
Erin Shannon, BIAW public relations director was so proud of
BIAW’s ability to buy elections and block progressive bills that she openly
stated: "We are kicking their ass.
How many years have we whipped labor. ..It was a big 'Fuck you!' to all the
liberals out there."
At
least some Democrats have had the courage to stand up to the BIAW. The
Chairperson of the State Democratic party, Dwight Pelz has stated: "There is no
other group in Washington state fighting harder against worker, consumer and
environmental protections than the BIAW."
Brendan
Williams, a leader in the House for protecting homeowners, stated:
Now more than ever, we must speak truth to power and condemn this
organization for the scourge upon politics that it is. And this coming session
we must finally stand up to it in the pursuit of substantive consumer rights.
It's absolutely unpardonable that those Washingtonians struggling in this
economy to pay 30-year mortgages on new single-family homes must also pay for
their homebuilder's negligence. Even conservative states like Louisiana and
Texas provide statutory warranty rights - running up to ten years - for those
purchasing new homes. In opposing such rights this past session, BIAW was so
unworried it was even able to engage in crude "comedy" - bringing
into a House Judiciary hearing the Republican candidate, Jan Angel, targeting
Judiciary Chair (and homeowners' rights supporter) Pat Lantz's seat. Angel was
one of the BIAW candidates to win November 4. Our citizens deserve better.
What does
BIAW get for their Political “Investment”?
BIAW clearly wants and is getting several things
by investing $10 million a year of tax payer money in political campaigns. The
most important thing they are getting is the ability to keep their political
slush fund going. Less than 20% of all Retro subsidies get kick backed into
political campaigns. The rest (many hundreds of millions of tax payer dollars)
goes right into the pockets of the con artists running the scam. Yet despite
the fact that there is no public benefit to this billion dollar give away,
Retro Reform bills have been blocked many times while Retro expansion bills
have been allowed to pass.
A likely reason the BIAW invested so much in the
2008 Governor’s race was so that if a Reform bill did manage to pass out of the
legislature, they would own the Governor who could veto the bill. And a likely
reason they have invested millions getting their own lawyers put on our Supreme
Court was so that if the legislature passed a bill and the governor signed it,
they could get the Supreme Court to declare the retro reform to be
“Unconstitutional.”
A second goal of the BIAW has always been blocking
any kind of growth management or environmental protection measure. They are the
ultimate example of a lack of social responsibility towards or children, our
economy and/or towards future generations.
A third goal has been to block any kind of
financial responsibility for negligent building practices. Most States have
some kind of Home Owners Warranty to protect home buyers against faulty
construction. In our State, thousands of home buyers have lost their life
savings after purchasing a new home with serious structural flaws. The fact that
we do not have a Homeowners Warranty law is evidence of the power of the BIAW.
But the fact that Retro Reform has not yet passed
is greater evidence of the level of power BIAW exerts over our State
legislature. What BIAW wants, BIAW gets.
A fourth goal is blocking tax reform. It is no
coincidence that we have near the lowest school funding in the nation and also
the lowest tax rates for millionaires. Instead, we can thank the BIAW for
representing the interests of millionaires very well.
A final goal is expanding tax breaks for
millionaires and major corporations. As we noted earlier, in 2000, tax breaks
for millionaires totaled $20 billion dollars a year. Currently, in 2009, they
total $50 billion dollars a year. That is a $30 billion per year return on
investment of only $10 million dollars a year.
In other words, for every dollar BIAW invests in our State legislature, they and their
fellow millionaires get back $3,000 just in tax exemptions. It is no wonder
that State legislative races have turned into bidding wars with the BIAW
usually submitting the highest bid.
Laws that
may have been broken
In addition to costing tax payers billions of
dollars, there are at least four laws that may have been broken as part of this
retro scandal. First, it is illegal to use tax payer dollars for campaign
purposes. Second, it is illegal to unfairly shift the cost of retro insurance
programs to non-retro programs. Third, it is illegal to shift the cost of retro
programs to the tax payers. Fourth, it is illegal for L & I to not collect
subsidies which were given out in error. We will next discuss each of these
four issues.
1. USE OF TAX PAYER DOLLARS TO FUND POLITICAL CAMPAIGNS
Here is the law that prohibits the use of tax payer
dollars to finance political campaigns:
RCW
42.17.128 Use of public funds for
political purposes.
Public
funds, whether derived through taxes, fees, penalties, or any other sources,
shall not be used to finance political campaigns for state or school district
office.
[2008 c 29
§ 1; 1993 c 2 § 24 (Initiative Measure No. 134, approved November 3, 1992).]
The
BIAW has claimed that Retro subsidies are not tax payer money. They are merely
refunds or alternate uses of retro premiums. But Workers Compensation (including retro) premiums are tax payer dollars as is made clear by the following
statute:
RCW
51.08.015 "Amount,"
"payment," "premium," "contribution,"
"assessment."
Wherever and whenever in any of the provisions of
this title relating to any payments by an employer or worker the words
"amount" and/or "amounts," "payment" and/or
"payments," "premium"
and/or "premiums," "contribution" and/or
"contributions," and "assessment" and/or
"assessments" appear said
words shall be construed to mean taxes, which are the money payments by
an employer or worker which are required by this title to be made to the state
treasury for the accident fund, the medical aid fund, the supplemental pension
fund, or any other fund created by this title.
It
is especially clear that retro subsidies are public funds when the subsidies
exceed the difference between premiums and claims. Since the entire amount of
the premium was used to pay for claims, what else could the subsidies be
besides public funds?
2. UNFAIRLY SHIFTING THE
WORKERS COMP TAX BURDEN FROM RETRO TO NON-RETRO PROGAMS
WAC 296-17-90402 requires that retro
employers as a group and non-retro employers as a group fund the same portion
of their total claim costs relative to their total premium charges. In other words, each group is required to
have the same final loss ratio.
(Loss ratios are simply total claims divided by total premiums… a loss
ratio greater than one means that claims are greater than premiums). L & I
claims that they insure that the loss ratios are equal by adjusting the
Performance Adjustment Factor (PAF). However, this claim does not appear to be
true because Retro Refunds were issued even when the PAF was greater than
one.
We
have described at least four areas where the tax burden was shifted from retro
to non-retro. These include the double entry computer coding error, the
mis-assignment of occupational disease claims, the 45 month retro adjustment
limitation and the numerous L & I attempts to deceive oversight groups
about the true costs of retro claims (including but not limited to submitting
false data to the Wyman study authors). All of these policies and actions were
likely violations of WAC 296-17-90402.
3. UNFAIRLY SHIFTING THE
TAX BURDEN FROM RETRO PROGRAMS TO THE TAX PAYERS
There are at least two laws requiring that the
Workers Comp program be “self supporting.” This means that funds used to
operate the Workers Comp program must be paid by employers and not be shifted
to the tax payers.
RCW
51.16.100 Classification changes.
It is the intent that the accident fund shall
ultimately become neither more nor less than self-supporting…
RCW
51.16.105… Departmental expenses, financing.
All department expenses relating to industrial
safety and health services of the department pertaining to workers'
compensation shall be paid by the department and financed by premiums…
Given
these two laws, why is the Workers Comp program being allowed to put the tax
payers in debt with long term obligations of more than $40 billion dollars?
Also these two laws make it clear that premiums must be adequate. It is not
permissible to bankrupt the Accident Fund just to give out Retro subsidies.
4. L & I FAILURE TO REQUIRE RETRO GROUPS TO FULLY
RETURN RETRO SUBSIDIES RESULTING FROM L & I FORMULAS INCONSISTENT WITH WAC 296-17-90402
On Friday, September 25, 2009, at a
Retro Proviso Study group meeting, L & I issued a written 15 page “Response
to Oliver Wyman Actuarial Examination of Retrospective Rating Plans. On page
9,in response the Wyman’s conclusion that L & I handling of Occupational
Disease Claims was “actuarially unsound,” in assigning all of the unknown
claims burden to non-retro instead of fairly dividing the burden of such
claims, L & I stated:
“The
agency agrees that this procedure for allocating occupational disease losses is
not equitable and must be revised. A
final decision about the rule language and the effective date will be done on
or after September 29, 2009. Any change will apply prospectively, impacting
retro enrollments for future coverage years. The current method negatively
impacts all non-retro employers by including all non-chargeable occupational
disease claim costs as non-retro losses. Implementing the recommendation will
reverse this, lowering the overall retro refunds.”
(emphasis added)
After agreeing that the current method is in violation of WAC 296-17-90402, it is
contrary to State law for L & I to fail to retrospectively recover retro
subsidies which retro groups should never have received in the first place.
This is the law they are violating:
RCW 51.48.260 Liability of persons unintentionally obtaining
erroneous payments.
Any person,
firm, corporation, partnership, association, agency, institution, or other
legal entity, but not including an industrially injured recipient of health
services, that, without intent to
violate this chapter, obtains payments under Title 51
RCW to which such person or entity is
not entitled, shall be liable for:
(1) Any excess payments received;
and (2)
interest on the amount of excess payments at the rate of one
percent each month for the period from the date upon which payment was made to
the date upon which repayment is made to the state. [1986 c 200 § 3.]
Note the
word SHALL. It is not legal for L & I to fail to recoup the $500 million dollars
in retro subsidies that were given to retro groups due to the computer coding
error and the Occupational Disease Mis-assignment error.
At $30 million per year, even if only
going back 10 years, retro groups need to be required to return the $300
million that was erroneously given to them from the Accident Reserve Fund.
They also need to return the entire $150 for the coding error – plus interest
on the entire $450 million - bringing the grand total to over $500 million that retro groups owe the tax payers.
L
& I proposals to only recover $30 million of the $150 million and not a
penny of the $300 million are a blatant and reckless disregard of the law and a
failure to comply with their financial duty to protect the tax payers’ money.
For L & I to erroneously give away $450 million dollars and then not
require its full return after the errors were discovered is not merely illegal.
It is a serious breach of the public trust.
While there is a need for
additional retro reform laws, there is also a need to enforce existing State
laws.
Unfortunately, the person most responsible for enforcing State Law (our State
Attorney General) has a very close relationship with BIAW. It is likely that
BIAW and affiliated PAC’s are our Attorney General’s largest campaign
contributors.
So
what is really needed is an enforcement system, a watch dog group, not subject
to political influence. Only then can we be assured that the tax payer’s money
will truly be protected. David Spring
It’s
surprising to know that some Democratic legislators are supporting BIAW while
BIAW is attempting to defeat other Democratic legislators. Dave Thomas
No Liberal Initiatives to Counter Tim
Eyman’s Ones
During
the last 12 years, Tim
Eyman has sponsored 15 Conservative Initiatives, most of which attempted to
lower Washington’s tax rates. Of the 9
which qualified for the ballot, 7 were approved by our voters (most of whom are
paying too much tax). The ones that have
been implemented have severely limited the revenue and services of our state
government.
During
this same period, no Liberal Initiatives have been proposed which would produce
adequate state revenue through requiring our high income people to pay fair
taxes, while lowering the amount of tax paid by most people. Instead of being proactive, Liberals simply
react to Tim Eyman’s initiatives by opposing them. Let’s begin spending our money proactively instead of
reactively, so that we can produce a long run improvement in our
voters’ understanding of needed tax reform.
Just as BIAW and other Conservatives have funded Tim Eyman’s activities,
we need some Liberals to fund the activities of a Liberal who creates and
attempts to pass Liberal initiatives.
Featured Advocacy Group
--------------------------------- Take
Back Your Time ------------------------------
Take Back Your Time
is bringing together individuals and organizations in support of the following "Time To Care"
public policy agenda. It believes these
broad policy ideas -- all taken for granted in other countries -- really speak
to the needs for time poverty relief that millions of Americans share. They are
not political bills -- we encourage legislators to take these ideas and design
specific legislation around them -- but they are ideas for action, a
comprehensive program to win more free time for Americans.
·
Guaranteeing paid
leave for all parents for the birth or adoption of a child.
Today, only 40% of Americans are able to take advantage of the 12 weeks of
unpaid leave provided by the Family and Medical Leave Act of 1993.
·
Guaranteeing at
least one week of paid sick leave for all workers.
Many Americans work while sick, lowering productivity and endangering other
workers.
·
Guaranteeing at
least three weeks of paid annual vacation leave for all workers.
Studies show that 28% of all female employees and 37% of women earning less
than $40,000 a year receive no paid vacation at all.
·
Placing a limit
on the amount of compulsory overtime work that an employer can impose,
with our goal being to give employees the right to accept or refuse overtime
work.
·
Making Election
Day a holiday, with the understanding that Americans
need time for civic and political participation.
·
Making it easier
for Americans to choose part-time work. Hourly wage parity and
protection of promotions and pro-rated benefits for part-time workers.
It calls upon elected
officials and candidates of all political parties to support this free time
agenda. Let's bring the United States up
to the standards already in place in all other industrial countries, thereby
creating more jobs and improving our health, families, community and civic life
and environment. For more.
Also read about the
local organization led by John de Graff:
Right2Vacation.org. Our Economic Opportunity
Institute also addresses these issues.
-------------------------------------------------------------------------------------------------------------------
Too Few Washington Jobs or Too Many People?
Washington
State’s unemployment rate is 9.3%. For
more. If 5.3% (347,108) of our
6,549,224 population left Washington, 5.3% (184,650) of our people in the labor
force would leave Washington. This would
decrease our unemployment rate to 4% (146,150 of the 3,556,990 people in our
labor force). By reducing our population
by 5.3%, we would see less competition for housing and transportation and less
impact on our environment, increasing the quality of our life.
We can not consider measures to help our unemployed as
creating a moral hazard which encourages them to stay here. But we can assist them to find employment
elsewhere. Suppose we established a
website featuring job opportunities in places with low unemployment. This would both serve our unemployed and
perhaps encourage them to leave here.
Washington Needs Healthy San Francisco Clinics
Three major strategies are necessary to increase American’s
health:
· Encourage people to adopt more healthy habits:
nutritional diets, exercise and eliminating tobacco, alcohol and other
substance abuse.
· Provide a medical home for everyone, which provides
care which is coordinated by a primary care physician.
· Eliminate for-profit private health care insurers
which are motivated to deny coverage of sick people and their treatment.
Instead
of subsidizing the coverage of low
income people by private health insurers as we now do, Washington should
encourage the people to adopt more healthy habits and should stimulate the
creation of medical clinics which provide coordinated care. We commented
last week about Healthy
San Francisco, which provides such coordinated care clinics. Hawaii
also enables people to obtain coordinated care, resulting in increased
health of its people and lower medical costs.
For no more than we are spending now, we might achieve better results by
adopting some of San Francisco’s and Hawaii’s health care initiatives.
Here’s the Beef
Seattle
should approve levy to raise money for affordable housing.
Adding
compost to a barren pit may support trees that absorb carbon.
Zero
waste strategy is gaining attention.
Federal funds
are creating electric charging stations throughout Puget Sound.
Multnomah
County plans to stimulate locally grown healthy food.
Indian
tribes push state to clean up salmon spawning streams.
Health
and Environmental experts are listing healthy and environmentally safe seafood.
In
spite of high unemployment, shortages of some types of Washington workers are
forecast.
Nation
and World
Many Positive Mid-East Possibilities
·
Iraq
is suffering less violence and non-sectarian political leadership is
increasing, easing the way for the withdrawal of U.S. troops.
·
Through a run-off election or a coalition
government and U.S. pressure, the present Karzai Administration’s corruption
may be reduced, stimulating Afghans to side with the government instead of the
Taliban. For
more. And the U.S. may be able pay
some Taliban supporters to quit their support as we did some Sunnis in Iraq
during the surge. For
more.
·
Responding to Taliban attacks,
Pakistan is attacking tribal areas which have sheltered the Taliban and perhaps
al Qaeda. For
more. For
more.
·
Iran indicates it will allow
inspection of its nuclear facilities and may allow Russia to process its
nuclear products for peaceful uses. For
more.
·
Our U.S. is adopting a flexible
combination of carrots and sticks to encourage Sudan to quit its ethnic
cleansing in Darfur. For
more.
Many of these
developments are partly due to our Obama Administration’s foreign policies,
especially its patience in deciding how to proceed in Afghanistan. The result may be some increase in troops there,
but not nearly as many as have been considered.
At our
Conversation Café this week, we discussed ‘maturity’. As something that distinguishes some adults
from children, maturity involves sensitivity to others and willingness to take
responsibility. According to both
criteria, Barack Obama is very mature.
Yet Conservatives and commercial media pundits have criticized him for
being too soft toward others and for taking too much maturity. They are the ones that exhibit
immaturity. I believe that many of the
positive Mid-East events are at least partly due to President Obama’s mature
approach.
We Need an Earn, Conserve and Invest Economy
We need to return to the Earn, Conserve and Invest mindset and
practice which prevailed for twenty five years following World War II. Beginning in the mid-1970s, we began to
change to our present Borrow, Consume
and Speculate mindset and practice, which have produced lower household
incomes, indebtedness, speculative bubbles and their collapse and environmental
damage. But unlike previously when our earning was the result of private
management by large companies and associated labor unions, we
need to have public management to regulate our practices.
Our public management should
include:
·
A transaction tax on stock market sales
to greatly reduce speculation in stocks.
Margin requirements should also be imposed, sufficient to reduce the
amount of speculative failures. This
might reduce the number of people and transactions to as little as 10% of
present activity.
·
To prohibit
commercial banks from speculating with depositor’s money, pass the Glass-Siegel Act with perhaps a few
changes.
·
Just as we
prohibit insuring the life of someone whose death wouldn’t cause any financial
harm, we should prohibit hedging concerning events which are unrelated to
causing financial harm. For
more. Hedging should be arranged in
regulated exchanges, instead of privately.
They should be homogeneous, standardized and transparent. Proceeds should be subject to the same
capital gains tax as applies generally to companies. These measures would greatly reduce the
number of speculative hedging activities.
·
Our Federal
Reserve should have responsibility for anticipating and preventing systemic
speculative risks. No speculative
company should be large enough to cause systemic risk. Network mapping
should be used as a key tool for understanding who would be affected and how
much by failure of large financial companies.
·
One agency should
regulate all of the various financial markets, companies and products, instead
of the several (Federal Deposit Insurance
Commission (FDIC), Office of Thrift
Supervision (OTS), and Office of the Comptroller of the
Currency (OCC)) which now regulate
different ones, leaving some inadequately regulated and motivating financial
companies to try to be regulated by the agency which does the least
regulation. Choosing one agency is
resisted by congress, due to different committees wanting to preserve the
agencies which they relate to. For
more. For
more. For
more.
·
Consumers should
be protected by a newly formed Consumer Financial Protection Agency (CFPA).
·
Having reduced
speculation, we should strengthen to power of workers to receive earnings which
fairly reflect their production. This
includes maintaining a full employment economy, enabling unionization,
maintaining realistic minimum wages, supplemented with an adequate Earned
Income Tax Credit.
·
We should also
encourage employment through substituting publicly paid health care coverage
for employer paid health care coverage and for shifting our FICA jobs tax to
value added tax (VAT), which would also discourage consumption.
·
Refusing to
consider corporations to have the same legal status and rights as people would
remove their ability to promote excessive consumption. Corporations should be required to
incorporate at local, state, national or international levels corresponding to
their scope of activities. Incorporation
should include requirements common in Europe, in which directors include not
only providers of capital, but also suppliers, workers, and the general public
which are affected by corporate activities.
Corporations should not have rights to privacy from public scrutiny, or
rights of expression, lobbying and making campaign contributions. Severe penalties should apply to corporations
which violate their charters.
·
Money should not
be considered to be speech, such that some interests have much more freedom of
speech than others.
The
above are major measures to be enacted, but many others may be added. As we change to an Earn, Conserve and Invest
mindset and practices we will not have to run the risk of borrowing nor be
preoccupied with obtaining and maintaining large amounts of various stuff. We can attempt to live more simply. Dave Thomas
Here’s the Beef
People
who live near parks are healthier and less depressed.
Small
scooters for easy mobility and parking and less greenhouse gas emissions.
We need to adapt to the
fact that more than half of our labor force are women.
France
is limiting bonuses for employees of companies that receive public subsidies.
Our
Liberal Spirit
Living Simply
Assuming that through public
management, regulations have reduced borrowing, consumption and speculation in
favor of increased earning, conserving and public and private investing, we can
now imagine people living simpler lives, as some people are already doing, at
least temporarily.
The call to live simply is
not new to America.
In
1854, Henry
David Thoreau published Walden about his experiences at Walden Pond.
In
1973, E. F. Schumacher published Small Is
Beautiful. Economics as if People Mattered.
About the same time, about 10 other books criticized the need for a
growing economy, with people working harder to purchase and consume more stuff.
In
1982, Duane Elgin published Voluntary
Simplicity.
In
1992, Vicki Robins and Joe Dominquez published Your Money or Your Life.
In
1996, Richard Carlson published Don’t
Sweat the Small Stuff (and It’s All Small Stuff).
Many books have appeared
which tell us how to live simpler, getting rid of stuff, limiting our agenda,
acting slower, enjoying our immediate surroundings and leaving a smaller
environmental footprint. For examples,
see Elaine St. James’ 1994 book Simplify
your Life: 100 Ways to Slow Down and Enjoy the Things That Really Matter
and Nick Temple (ed.), 2005, 500 Ways to
Change the World
These books recommend less
response to outside demands and advertising, less shopping, less stuff,
especially stuff that requires maintenance, simpler personal and financial management,
less commuting, less superficial interaction with others, more meaningful
interaction with fewer others, more reflection, observe and enjoy your daily
environment and experiences. For
more. Dave Thomas
Recommended Books – See our list of books for liberals
Henry
David Thoreau, 1854, Walden
E.
F. Schumacher, 1973, Small Is Beautiful.
Economics as if People Mattered
Duane
Elgin, 1982, Voluntary Simplicity.
Vicki
Robins and Joe Dominquez, 1992, Your
Money or Your Life.
Richard
Carlson, 1996, Don’t Sweat the Small
Stuff (and It’s All Small Stuff).
Elaine
St. James,1994, Simplify your Life: 100
Ways to Slow Down and Enjoy the Things That Really Matter.
Nick
Temple (ed.), 2005, 500 Ways to Change
the World
For more, see our Liberal Spirit Commentary.