DON’T MESS WITH TEXAS?

by CAJUNJOE

Gov. Rick Perry Celebrates Job Growth

By Joe Bruns — Texas Governor Rick Perry is on the trail again. Unlike his short-lived but memorable presidential campaign, this time he is trolling for business instead of votes.

Gov. Perry is starring in a series of ads running in at least five states, touting the business-friendly environment of Texas, in contrast to whatever state the ad happens to be running in.

Recently, the campaign geared up in Maryland.

So how does Texas stack up as a place to live, to work in and to do business?

There is certainly no doubt that Texas has been a robust job creator. It ranks #1 in job growth over the past five years, adding 451,000 jobs with a 4.43% job growth rate while most of the country is still getting back to its pre-recession level. Even as the national economy recovers, Texas ranks highly, at seventh in projected job growth for 2013. And, in many respects, Texas survived the great recession better than most, suffering fewer jobs lost and experiencing less of a housing bubble.

By most measures, business in Texas is good. But the premise being put forward is that the key to Texas’ success can be found in the policies of low taxes and loose regulation that drive a virtuous circle of business growth and individual prosperity. Does that hold up?

Personal and Business Taxes

Texas is a low-tax state. That’s a fact. According to the Tax Foundation, Texas has the fifth lowest individual tax burden in the country, at 7.9%, compared to the US average of 9.9%. Maryland has a 10.2% individual tax burden. But Texas personal income also lags behind both the national average and Maryland.

Per Capita Income 2012

• Texas         $39,142
• US Average    $41,146
• Maryland     $51,329

In other words, while Texas taxes its citizens less, they also earn less to begin with.

But Personal Income Lags
For a state to be considered ‘business friendly,’ one would think that would mean a low tax burden on businesses.

One way to look at business taxes is as a percentage of GSP, or Gross State Product. It turns out that, collectively, businesses in Texas pay more than the national average rate — 5.2% vs 4.8% as a percent of GSP.  The Maryland tax burden is 4%, while Virginia comes in at only 3.8%. It turns out that while overall taxes in Texas are low, businesses carry 61.5% of the overall tax burden, compared to 45.2% in states nationally. With no personal income tax, Texas must find sources for the tax revenue it does raise.

The Costs of Low Taxes and Loose Regulation

Government may be inefficient, and even wasteful, but there is no denying that state and local taxes provide useful programs, such as education, highway maintenance, public health services, public safety and so on. And regulations may be, by their very nature, burdensome, but they are designed to protect workers as well as the general public, to create a level playing field for business, and to protect common public interests.

One reason Texas suffered less in the housing bubble burst is that it had already tightened mortgage lending as a result of the Savings & Loan scandals. In 1967, the anti-regulation Texas government greatly loosened restrictions on S&L’s. By 1987, though, half of all the S&L losses nationwide were in Texas, and 14 of the 20 worst failures were in the state, a result of frenzied and virtually unregulated lending activities as well as criminal conduct.

As Joseph W. Grant wrote in The Great Texas Banking Crash: An Insider’s View,  “In retrospect, it seems incredible that virtually no one saw the thrift crisis coming. Perhaps in Texas we were too close to the situation to realize what was happening. But, regardless of the reason, in the short period of two to three years following deregulation, the S&L industry engaged in reckless, irresponsible, and, in many cases, fraudulent activities that created a financial disaster of epic proportion.” One price of deregulation, Grant writes, was that of the top 100 Texas S&L’s in 1987, only six survived. 

Another possible by-product of a libertarian attitude toward regulation is public health. Texas consistently ranks near the bottom in measures of health, based on factors such as policy, environment, and lifestyle (Maryland ranks 19^th). And while worker’s compensation claims filed in Texas are near the national average, its workplace fatality rate is substantially higher.

Education is also a frequently used metric in comparing states, and, according to Education Week’s Quality Counts survey, Texas ranks a respectable 14^th in the nation. But for the fifth year in a row, Maryland ranked number 1. In higher education, more than a third of Marylanders attain a Bachelor’s Degree or better, while about a quarter of Texans do.

The comparisons can go on. Texas has a culture of individualism, where neighbors may help each other, but government that imposes its will is abhorred. It is a state that prides itself on low taxes, few regulations and self-reliance, and earns rankings near the top of places to do business. But in those areas where taxes and regulations can make a difference — education, public health, infrastructure and controlling business excesses — it frequently lags behind its more progressive peers.

Gov. Chris Christie and Family

In the end, businesses and individuals need to balance a number of factors, knowing that the best place to set up a business might not be the best place to raise a family. That might just be…The Garden State.

– Joe Bruns (Cajun Joe) is a Trail Mix Contributor

THIS ENTRY WAS POSTED IN TRAIL MIXERS SAY. BOOKMARK THE PERMALINK.

Water Water Everywhere... 

Whisky is for drinking; Water is for fighting over.”
– An old western proverb

By Joe Bruns – No resource is more important to civilization than water. But we seldom give it a second thought. Most of us turn on the faucet and an unlimited supply of clean water flows for drinking, cooking, watering our lawns or flushing our toilet waste. For much of the world, though, access to clean water is a matter of daily concern. Just this past week a major aquifer was discovered in Turkana, a desperately arid region of Kenya. If properly managed, this new find can provide water for the next 70 years and transform a way of life.

If we don’t get the water, we won’t need the water.”

Owens Lake, CA

As with many resources, water is unevenly distributed. Abundant, clean water is not always proximate to economic centers. In the American west battles have been waged both in the field and in the courtroom over access to water resources. In the early twentieth century the California water wars were fought between farmers and developers who wanted, and ultimately did, divert water from central California in order to support the growth of Los Angeles, and turn a handsome profit in the process. These manipulations served as the backdrop to the Roman Polanski movie Chinatown. By 1926, the entire Owens Lake on the eastern slope of the Sierra Nevada, had virtually vanished, siphoned off by the Los Angeles Aqueduct.

Mono Lake

After draining Owens Lake, Los Angeles turned in 1941 to a new source, the 760,000 year old Mono Lake, diverting its tributary streams to irrigate orange groves, golf courses, and quench the thirst of its growing population. By 1962, Mono Lake’s water level dropped by 25 feet, and threatened the collapse of a unique ecosystem. Only through intense effort by environmental activists was the diversion stopped and the ecosystem substantially restored.

Fissure in Arizona resulting from pumping groundwater

Not only surface water is subject to exploitation and overuse. In Houston, the land has subsided by more than nine feet as a result of pumping ground water. In Arizona, fissures have formed in the earth, as deep as 100 feet, and hundreds of feet long from pumping.

The High Plains aquifer, which waters vast agricultural tracts from South Dakota to Texas, some 174,000 square miles, will be 70% depleted in 50 years. This has not gone unnoticed by investors who see profit in scarcity. Texas billionaire T. Boone Pickens is the single largest holder ofwater rights in the US.

Enter Fracking

Fracking is to traditional drilling as twerking is to traditional dancing”

Proponents of horizontal drilling and hydraulic fracturing, fracking, point to America’s abundant supply of relatively clean-burning natural gas. The Energy Information Administration estimates there are some 2552 trillion cubic feet of recoverable gas. Indeed, there is a gas boom underway right now that has brought down energy prices, made us less reliant on coal and imported oil, and reduced some of the most hazardous emissions. With all good things, though, there are tradeoffs. Even the strongest proponents of fracking acknowledge that it takes a lot of water, as much as 7 million gallons to frack a single well. And a large proportion of that water is lost forever, bound up in the shale formations and unrecoverable. Others try to put this in context, such as Carnegie Mellon University environmental professor Jeanne VanBriesen who points out the amount of water required to drill all 2916 of wells permitted in Pennsylvania in the first 11 months of 2010 would equal the amount of drinking water used by just one city, Pittsburgh, during the same period. I’m not certain how Pittsburgh feels about that comparison.

Water not lost immediately in the fracking process is recovered and stored in tanks or lined ponds for eventual treatment. Contrary to some industry proponents, such as Sen.James Inhofe, R-OK, there have been documented contaminations of groundwater and surface spills, while industry scientists insist there has been no significant pollution from fracking. However, given enough fracking at enough sites, environmentalists argue, a disaster is inevitable. The wastewater produced by the fracking process contains not only the toxic chemicals added by the driller, but also material including heavy metals and hydrocarbons washed from the underground layers. They point to some isolated cases of methane filtering into the water table and localized spills contaminating surface water. There is also the unknown impact ofseismic activity related to fracking. Proponents insist, though, that if the overall energy production system is taken into account, fracking is among the best trade-offs available, and far preferable to the life-cycle environmental impact of coal.

Inevitably, though, it is a case of dueling scientists making hair-splitting definitions, citing data, statistics and findings that can seemingly be bent to fit any conclusion. And technology is often safer on the engineer’s drafting table than in the field.

To frack, or not to frack…

The mission of the USDA Forest Service is to sustain the health, diversity and productivity of the Nation’s forests and grasslands to meet the needs of present an future generations.”

George Washington National Forest

Later this month, the U.S. Forest Service, an agency of the U.S. Department of Agriculture, will make a determination as to whether to allow hydraulic fracture drilling in theGeorge Washington National Forest. This 1.1 million acre site, straddling Virginia and West Virginia, comprise, along with the Thomas Jefferson National Forest, the largest tracts of public lands in the eastern United States. In 2011, the Forest Service proposed a 15 year ban on fracking in the forest. Industry flexed its political muscle, including Virginia Governor Bob McDonnell (R) to have the forestmanagement plan reconsidered.

Within the boundaries of the George Washington National Forest are the headwaters and tributaries of the Shenandoah, James and Potomac rivers, which together supply fresh water to almost 4.5 million people. The US Army Corps of Engineers,  manages the Washington Aqueduct and strongly supports continuation of the moratorium on fracking, as do environmental, wilderness and recreation groups, and municipalities dependent on the watershed for their water supply. Business and industry groups, predictably, oppose the ban. Many argue that the technology for safe drilling, recovery and storage of wastewater is quickly developing. To impose a moratorium up front will be an unfair lockout. Rather, they say, manage drilling through the lease process, allowing more leases as the technology and operations of fracking elsewhere prove their safety.

Natural Gas Flare-Off

It is a tug of war between interests. Unlike many previous battles of this sort, environmentalists and others opposed to industrial development and drilling are well-informed and active. More than 600 letterswere submitted to the Forest Service commenting on the management plan. Many were well researched, fact-based arguments favoring the moratorium on fracking. But industry was robustly represented as well, making the case for ‘clean’ energy development and touting the track record of fracking elsewhere in the Marcellus Shale, where some 500 million cubic feet of gas is trapped, waiting to be put to productive use in the American economy.

– Joe Bruns (Cajun Joe) is a Trail Mix Contributor

AUGUST 29, 2013

VIRGINIA REEL

by CAJUNJOE

Cajun Joe

The year following a presidential election is generally considered to be an ‘off-year’ for political junkies. But out-of-cycle gubernatorial races in New Jersey and Virginia can still provide good grist. This year is no exception.

While Chris Christie is considered a shoo-in in the Garden State, it will still be interesting to see how far and on which issues he drifts to the right to position himself for a run at the 2016 GOP presidential nomination.

Virginia, though, offers potential for a real horse-race, pitting two candidates with strong negatives, even within their own parties.

Ken Cuccinelli

Ken Cuccinelli, Virginia’s activist Attorney General, is a poster child for Christian conservatives. A Catholic, ‘the Cooch’ is embraced by evangelicals for his personal ‘not under any circumstance’ position on abortion. As a state senator, Cuccinelli supported so-called ‘personhood’ legislation which would recognize rights for the unborn from the time of conception. He recently clarified his position, saying that as governor he would not interfere with access to contraception, although some regard this as ‘lawyer-speak,’ as the actual definition of ‘contraception’ is a matter of dispute.

Cuccinelli used his position as Attorney General to advance conservative causes. He was among the first state officials to file suit in federal court challenging the constitutionality of Obamacare. He also stepped into the climate change controversy by opening an investigation of former University of Virginia climate scientist Michael Mann, alleging he used fraudulent data to secure state funding for his research. Cuccinelli filed a motion to require the University to turn over to his investigators thousands of emails between Mann and his colleagues. Eventually, the Virginia Supreme Court threw out the case, but not before the state-run university spent some $600,000 in legal fees fighting its own lawyer.

Recently, Cuccinelli raised eyebrows with his attempt to revive Virginia’s sodomy law after a federal appeals court struck it down. Cuccinelli claims that his interest is to use the law to prosecute pedophiles. Others contend there are sufficient other laws protecting minors from sexual abuse, and that his real motivation is more about creating an inhospitable climate for gays and lesbians. Cuccinelli is also a proponent of the so-called ‘Repeal Amendment,’ giving States constitutional authority to override federal law.

Cuccinelli talks on Hardball about the Repeal Amendment 

Cuccinelli stepped on establishment Virginia Republican toes when he ‘cut in line’ ahead of the more moderate Lt. Governor Bill Bolling in the race to succeed current governor Bob McDonnell. Virginia governors are limited to a single consecutive term. For the better part of his four-year term, McDonnell governed as a moderate conservative, even though the GOP had effective control of both legislative houses during much of the time. He was riding a wave of popularity that included frequent mention as a possible vice-presidential candidate in 2012, until a falling out with the Governor’s executive chef led to charges of cronyism that include gifts to McDonnell of a Rolex watch, a ‘loan’ of $120,000 for which there was no documentation, a Bergdorf’s shopping spree for McDonnell’s wife, and extravagant gifts to their children from Jonnie Williams, a political supporter and entrepreneur, whose tobacco-based nutritional supplement business the Governor and his wife were flacking.

As it turns out, Ken Cuccinelli himself accepted ‘gifts’ from the same donor, in the form of use of a vacation home, catered meals and private-jet trips. While the McDonnells have paid Mr. Wiliams back the gifts and loans, Mr. Cuccinelli, the father of seven children, says he is not in a financial position to make restitution and has no intention to do so.

Mr. Cuccinelli’s campaign emphasizes none of his extreme positions, though. Instead, it is focused on the traditional ‘New Dominion’ issues of education, transportation, low taxes and job creation. His stated policies are, for the most part, orthodox conservatism. he is big on school vouchers or tax credits for parents wishing to send their children to private schools. And he favors an amendment to the Virginia Constitution to allow vouchers to be used for sectarian schools. As a state senator, he proposed a resolution to amend the U.S. Constitution to repeal birthright citizenship. He opposed McDonnell’s bi-partisan transportation bill, believing it would lead to new taxes. Like all candidates for governor anywhere, including his opponent, he wants to create a positive business climate and to grow jobs.

Mr. Cuccinelli does, occasionally, have the capacity to surprise. He has become something of a champion in expanding DNA testing to free those wrongly convicted, and in a complete about-face, now supports restoration of voting rights to non-violent felons. And his campaign, at least, makes much of his activism against sexual assault while enrolled at the University of Virginia. He has taken strong positions against sex trafficking. More recently, though, he declined to join 47 other state attorneys general in a letter urging Congress to extend the Violence Against Women Act. Why would someone who has advocated for women oppose the VAWA? Some say it is because of language extending protections to same-sex spouses. Cuccinelli says it is simply his policy to not sign such joint letters.

Enter McAuliffe

Bill Clinton and Terry McAuliffe

If an observer might characterize Ken Cuccinelli as dogmatic, that same observer might call his opponent,Terry McAuliffe, opportunistic.

A New York Times article from 1999 quoted McAuliffe as saying “I’ve met all my business contacts through politics. It’s all interrelated.” A review of McAuliffe’s many complicated business dealings reveals that to be so. His business interests include relationships with Tony Coelho, former Speaker Jim Wright, Richard Gephardt, and, proving that business is non-partisan, Richard V. Allen, a National Security Advisor in the Reagan administration. But McAuliffe is best known as President Bill Clinton’s ‘money man’ and as Chairman of Hillary Clinton’s 2008 presidential campaign.

McAuliffe has been especially adept at turning his political contacts into business partners to fund his ventures — ventures that collapsed as often as they succeeded. Most notorious of these was a series of deals involving Federal City National Bank and American Pioneer Savings Bank, the latter owned by McAuliffe’s father-in-law. In each case, the banks ran afoul of regulators. In the former, the bank was eventually merged into another bank owned by Richard V. Allen. While investors faced substantial losses, McAuliffe himself landed on his feet in a new job with Allen’s bank, leading to charges that he saved himself at the expense of investors, a charge denied by McAuliffe.

The American Pioneer Savings Bank was both more complex and more controversial. Again the bank was in distress, and was seized by the Resolution Trust Corporation, the federal agency set up to deal with the S & L crisis. McAuliffe, who was also an investor, arranged a loan from his contacts at the International Brotherhood of Electrical Workers pension fund to buy seized real estate assets valued at $50 Million from the RTC for $38.7 Million. McAuliffe received a 50% stake in the new partnership by putting up $100 of his own money. The Union trustee who approved the loan was a former colleague of McAuliffe from the Gephardt presidential campaign. Not surprisingly, the venture turned out far better for McAuliffe than for the pension fund, as the Union eventually bought out McAuliffe’s 50% share. However, before McAuliffe sold his stake, he was able to secure an additional $6 million business loan from the pension, using his stake in the original partnership as collateral. That loan eventually defaulted, but by that time the Union pension fund itself already owned the collateral.

The pattern continued. Time and again, McAuliffe would enter into partnership using a little of his money, and a lot of someone else’s. In both success and failure, McAuliffe always seemed to come out ahead.

And this brings us to McAuliffe’s latest business venture, Green Tech Automotive, a holding company he founded in 2009. In 2010 the company acquired a Chinese automotive company, EuAutomotive, manufacturer of MyCar. McAuliffe sought to locate a production plant in Virginia, but ultimately was offered a better financial incentive to build in Mississippi. Originally touted to be a $1 Billion project employing 1500 workers and producing 150,000 cars per year, Green Tech has thus far fallen far short of the mark, with fewer than 100 employees. One wag referred to the project as a ‘Potemkin auto plant,’ a view reinforced by alleged difficulty reporters have obtaining a tour of the plant.

Green Tech has attracted investors by liberal use of the federal governments EB-5 visa program. That program grants green cards to foreigners who are willing to invest substantial sums in U.S. businesses. Both the SEC and the Department of Homeland Security have investigations underway of Green Tech’s use of the program, and, while no wrongdoing on McAuliffe’s part has been alleged, it does raise eyebrows, particularly when the company is owned by a well-connected Washington insider. Regardless, Terry McAuliffe very quietly, some say secretly, resigned his position as CEO of Green Tech in 2012, although his remaining financial interest is unclear.

See more on investigations of Green Tech

Given the history of each of the Virginia candidates, it is no wonder that polls focus as much on negatives as positives. In an August 21 Quinnipiac University poll of likely voters, McAuliffe’s favorable/unfavorable results broke 34/33, while Cuccinelli’s were 35/41. Neither is a great place for a candidate at this stage. And, for Cuccinelli, at least, voters seem to already know him, only 22% of responders said they didn’t know enough about him, while 31% felt that way about McAuliffe. Cuccinelli is underwater on questions of ‘honest and trustworthy,’ and by 14 points is failing the ‘understands problems of people like you’ question.

Quinnipiac Poll of likely Virginia voters

It is still early, though. While McAuliffe leads in the preference poll 48-42, there is time for that to change, particularly as the campaign goes into full-swing negative mode. Tradition has it that the party that wins the White House loses the Virginia Statehouse. Turnout is always an issue in this election. McAuliffe will hope to take advantage of the Obama campaign’s effective ground operation, while Cuccinelli will depend on his strong base among religious conservatives to get out the vote. Cuccinelli ads will certainly emphasize McAuliffe’s negatives, both to define him and to erode voter enthusiasm. McAuliffe and his allies, meanwhile, will attempt to scare women into voting by emphasizing Cuccinelli’s positions on social issues.

See ads from both camps:

– Cajun Joe, who has lived in Virginia for more than 30 years, is a Trail Mix Contributor

New Blog

Having spent years as a manager in broadcasting and journalism, I've generally thought that the world suffers from too much opinion rather than too little.

That said, it is time to wave the flag of surrender and join in. After all, how much worse can my blog be than average? And, who knows, maybe someone will read it, and perhaps my opinion will enrich someone's life, or give them pause, or, more likely, reinforce their own point of view.

So, here it goes. I'll be a little iconoclastic, try to cite facts to support opinions, and will ruthlessly criticize others whom I believe to be intellectually inconsistent, loose with the facts, or just plain wrong.

I also hope to have some fun. I'll share what I enjoy, satirize when the target is fair, and afflict the comfortable, sometimes just for fun. I'll try not to be cruel, or attack the weak and defenseless.

Anyway, here it goes. I hope you join me occasionally, and comment back.