Other People’s Money
August 25, 2012
On the eve of the Republican Convention in Tampa, I keep thinking back to the movie, “Other People’s Money” which starred Danny DeVito in the role of “Larry the Liquidator.”
Larry was a Vulture Capitalist who was noted for buying up under-valued firms; then breaking them up into component parts; selling off the parts; and making lots of money for himself and his partners.
In this scene from the movie, the essence of the dilemma emerges: http://www.youtube.com/watch?v=p7rvupKipmY
Gregory Peck as the current executive in charge of New England Wire and Cable is immersed in a critical vote at the company’s annual meeting which could allow Larry and his Vulture Capital Firm to take control of the company, which would result in closing down the company and putting hundreds of people out of work. Permanently.
New England Wire and Cable was modeled on the many indigenous American family-owned small manufacturing companies which took root in New England in the 19th century. The inspiration for the theme of Other People’s Money was a real company in Seymour, CT which went through a fatal and permanent intervention by some Venture Capital Pirates around 1990.
Back in the Golden Age of Pirates (approx. 1650s to the 1730s), the pirates were self-declared. They typically didn’t dress up in suits, fly in private aircraft, or ride in chauffeured black cars. Today’s pirates operate openly in daylight; they pay taxes (albeit at greatly reduced rates vs. regular working people); and many own multiple mansions in delightful places around the world.
I imagine a shortened version of Other People’s Money (Part 1) where the name of Larry’s firm was changed to “Brain Capital.”
Then, I envision Part 2 as a take-off which is focused on ‘off-shore blocker’ strategies where the principals of Brain Capital explain their strategies:
http://news.yahoo.com/bain-documents-romney-offshore-investments-used-blockers-avoid-185957445–abc-news-topstories.html
Part 3 of the series could contrast one or more successful U.S. entrepreneur(s) who have invested their own money into a business that manufactures some product and where 50 to 500 people work full-time at decent wages with benefits, against a principal from Brain Capital. Part 3 would contrast the effective tax rate (and amounts paid) by the actual entrepreneur and all of the employees (year after year) vs. the tax rate (and amount paid) by the Vulture Capitalist in the current year. Don’t forget: once the Vulture Capitalist liquidates the company, there will be no further jobs; no further purchases; and no further local property tax, sales tax or income tax collections.
Part 4 of the series could be a lesson on the multiplier effect of all of those employees; the goods and services purchased by the manufacturing company; and so forth, vs. the absolute finality of the liquidation of a struggling but operating business.
To a great degree, the contrast between a real American entrepreneur and a Vulture Capitalist is very similar to the contrast between hard-core, tea-party conservatives and main-stream Democrats (plus what some might call ‘Centrist Republicans’).
The hard-core Right seems to be laser-focused on reversion to a society and economy that mirrors Medieval Europe and Feudalism, where the majority of main-stream residents in the U.S. seem to continue to favor the more egalitarian approach on which the United States was founded and has operated until very recently.
Through some very clever sound bites and an inordinate amount of attention on trivial but emotionally engaging issues, Tea-Party conservatives have polarized our society in an unprecedented way.
Best example of this would be Obama-care — which was inspired by the health care reforms enacted in Massachusetts under the leadership of former Gov. Mitt Romney.
Obama-care is not a perfect solution — primarily due to the amount of compromise that was required to get it passed — but the majority of experts tell us that it is a significant move in a positive direction.
Yet, there are a number of elected officials (and their disciples) — ‘Hard-Core Right’ — who continue to hammer on REPEAL!
What are their reasons, what are their real objections? Here is a synopsis: http://theamericandrivein.com/2010/11/21/why-repeal-obamacare/
As Jon Stewart may have already said — while stamping his feet and whining: “Just because!”
Westchester County & Source of Income Legislation
August 5, 2012
A modest article published in the August 4, 2012 issue of The Journal News provides some continuing details on the apparent impasse between Westchester County Executive Astorino and HUD on the need for “source of income legislation” in relation to the 2009 settlement with the U.S. Department of Housing and Urban Development.
The terms of the settlement require Westchester County to take several steps to break down the effects of housing discrimination, including building 750 units of affordable housing in mostly white communities and marketing those units in areas with largely non-white populations. At the time of the settlement, the County also agreed to “promote” source-of-income legislation. The definition of promote has been and continues to be a “sticky wicket” in the discussions.
Here is a link to the article:
http://www.lohud.com/apps/pbcs.dll/article?AID=2012308040029&nclick_check=1
Opinion
As a taxpayer in Westchester County, I am very puzzled as to how this constant bickering can possibly be productive. I am further concerned that the continuing obfuscation detracts from the ability of our County government to do the work of the people, and further, is wasting precious County resources on legal costs and other unnecessary expenditures.
The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or source of income.
Housing Choice Vouchers (a.k.a. ‘Section 8’) are generally and widely accepted as a legitimate and stable source of income for housing purposes.
The great majority of people I’ve met who are eligible to receive Housing Choice Vouchers are people of good will who just want a decent and safe place to live and raise their children (or, in some cases, grandchildren) and to be able to feel confident their children have the same opportunity for a ‘free and appropriate public school education’ as other children in nearby neighborhoods and/or towns.
Landlords can most effectively screen potential tenants by: (1) employing a standard and uniform application; (2) run a credit report; (3) check references; and (4) verify income sources.
Using a consistent decision-making process for any prospective tenant is considered a “best practice” by a number of sources, including www.Landlord.com
Background & Definitions
The housing choice voucher program (often called “Section 8”) is a national program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. Housing choice vouchers are administered locally by public housing agencies (PHAs). The PHAs receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program. Since housing assistance is provided on behalf of the family or individual, participants are free to find their own housing, including single-family homes, townhouses and apartments. The participant is free to choose any housing that meets the requirements of the program and is not limited to units located in subsidized housing projects. A family that is issued a housing voucher is responsible for finding a suitable housing unit of the family’s choice where the owner agrees to rent under the program. Rental units must meet minimum standards of health and safety, as determined by the PHA. A housing subsidy is paid to the landlord directly by the PHA on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program.
Under certain circumstances, if authorized by the PHA, a family may use its voucher to purchase a modest home.
Source of Income Legislation in this context would cause “Source of Income” to become a protected class under Westchester’s Fair Housing Law, and would include any legal, verifiable income derived from social security, or any form of federal, state or local public assistance or housing assistance, including Housing Choice Vouchers.
Disparate impact is a legal concept used to describe situations where an apparently neutral practice has an unexpected or unjustified adverse impact on members of a protected class. Typically, a plaintiff must prove that the challenged practice or selection device has a substantial adverse impact on a protected group. Generally, this proof is offered through statistical comparisons.
Protected classes in the sale and rental of housing (as defined by the Federal Fair Housing Act) include: (a) race; (b) color; (c) national origin; (d) religion; (e) sex; (f) familial status; or (g) handicap.
Some clear and obvious examples of discrimination illustrated on HUD’s website include:
• Refusal to rent or sell housing;
• Refusal to negotiate for housing;
• Make housing unavailable;
• Deny a dwelling;
• Set different terms, conditions or privileges for sale or rental of a dwelling;
• Provide different housing services or facilities;
• Falsely deny that housing is available for inspection, sale, or rental;
• For profit, persuade owners to sell or rent (blockbusting); or
• Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.
Note: The Fair Housing Act covers most housing. In some circumstances, the Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations and private clubs that limit occupancy to members.
Selected Census Demographics for Westchester County
Westchester County is a county located in the U.S. state of New York. Westchester covers an area of 450 square miles and — according to the 2010 Census — has a population of 949,113 residing in 45 municipalities. A quick review of some demographics captured in the Census reveals:
• Median Household Income: $79,619
• % of Persons living at or below Poverty Level: 8.2%
• % Persons under 18 years: 23.6%
• % Persons over 65 years: 14.8%
• % White, not Hispanic: 56.9%
• % Black or African American: 14.8%
• % Hispanic or Latino Origin: 22.4%
Housing Choice Voucher recipients in Westchester County have a much different profile than residents of the County overall. Based on data submitted to HUD from PHAs in Westchester which administer these vouchers (Form HUD-50058) for the period 4/01/2011 through 7/31/2012 , the voucher recipients are:
• Average Annual Income: $20,236
• % of Persons living at or below Poverty Level: Not Available
• % Persons under 18 years: 27.0%
• % Persons over 62 years: 29.0%
• % White, not Hispanic: 48.0%
• % Black or African American: 50.0%
• % Hispanic or Latino Origin: 34.0%
Conclusion(s)
There seems to be sufficient evidence to warrant a statistical analysis to measure the probability that inaction by Westchester County on Source of Income Legislation has exacerbated disparate treatment of individuals protected under the Fair Housing Act and other protections guaranteed in the laws of our land.
Mitt Romney & the Military
July 13, 2012
There seems to be an increasing interest in Gov. Romney around his expertise and general views on war and the military.
Preface my comments from one who has never served in the Armed Services and one who was adamantly opposed to the War in Vietnam:
As the Vietnam War raged in the 1960s, Mitt Romney received a deferment from the draft as a Mormon “minister of religion” for the duration of his missionary work in France, which lasted two and a half years.
Before and after his missionary deferment, Romney also received nearly three years of deferments for his academic studies. When his deferments ended and he became eligible for military service in 1970, he drew a high number in the annual lottery that determined which young men were drafted. His high number ensured he was not drafted into the military.
If Mitt Romney avoided service because he was against the Vietnam War, fine.
However, he says he wants a Hawkish foreign policy that will involve the lives of many young Americans. How about any of his 5 sons joining up for service? Not so far.
Mr. Romney has expressed appreciation for the country’s “volunteer army” and said “that’s the way we’re going to keep it. He explained his sons had made different career choices in life and had not chosen to serve in the military but he mentioned a niece whose husband he said had just been called up by the National Guard.
As many from my generation have pointed out: Mitt Romney is a Chicken Hawk and is not fit to be President. If elected, Mitt Romney would be a Coward in Chief President and he would cause irreparable damage to our country.
Elected Officials
July 10, 2012
Back in 1776, our founding fathers felt that it was a good idea to have elected officials represent their constituents to do “the work of the people”.
There have been a number of transformational changes which have occurred over the last 236 years in our society, our economy and in technology.
Yet, we have not really stopped for a strategic planning session to see if our Federal (State & Local) governments are structured to meet the demands and needs of our current global society.
Is anyone else thinking that it might be time for some re-engineering in how our public sector is configured to give us optimum results at the most reasonable cost?
Trouble in Paradise?
May 13, 2012
At an aggregate level, the population of Westchester County, New York is reasonably diverse: racially, religiously and economically. Get down to the details, and you will find classically segregated neighborhoods, towns and schools. There have been several attempts to break this socio-economic logjam, most recently a landmark consent decree between the U.S. Department of Housing and Urban Development and Westchester County signed in 2009.
It is now May 2012, and Westchester County is in trouble. The County is in trouble with the U.S. Department of Housing and Urban Development because of some alleged oversights in how the County managed federal CDBG funds. U.S. District Court Judge Denise Cote has ruled that Westchester County Executive Robert Astorino is required to promote ‘source of income legislation’, which would prohibit discrimination against tenants using Section 8, disability income or other government income to pay rent.
Mr. Astorino vetoed the legislation in 2010 and that veto was one of several matters the monitor assigned to the case was asked to rule by U.S. Department of Housing and Urban Development. The monitor sided with HUD but the county appealed that decision.
U.S. District Court Justice Cote said in her most recent ruling, “Under no reasonable understanding of the term can the County Executive be said to have discharged the obligation to promote source-of income legislation when he vetoed the legislation. The veto was an unambiguous breach of the duty to promote…The County Executive’s action constituted the very opposite of what was required under the Settlement, and placed the County in breach.”
County Executive Astorino has vowed to fight the federal government because – despite the written agreement and the court affirmation of his duties under the settlement – he says that he believes he is right.
HUD is withholding federal funding from the County until the County is in compliance with the settlement, an amount that has now reached $12 Million combined for 2011 and 2012, all because of this seemingly foolish ongoing legal stalemate.
Most unfortunate: The withheld money is for affordable housing; new sidewalks; and nonprofits including A-Home ($30,000); Westchester Residential Opportunities ($145,000); and the Housing Action Council ($120,000); each of which is working closely with Westchester County to meet its obligations under the settlement.
It is also money for homelessness prevention; scholarships for disadvantaged youth; summer evening programs for teens; and a medical van for seniors. It adversely affects communities that aren’t even part of the settlement.
The U.S. Department of Housing and Urban Development invests a great deal of time and resources each year to ensure that eligibility for various housing-related subsidies is carefully indexed to local markets.
In Westchester County, HUD defines a 2 person household as “low-income” if their gross annual household income is $58,250 or less. That is almost 400% of the Federal Poverty level.
One of the HUD programs available to low-income residents in Westchester County is the “Housing Choice Voucher Program” (a.k.a ‘Section 8’) which assists low-income households by limiting their contribution to their monthly housing expense to 30% of their gross monthly income. There are 17 Section 8 program offices in Westchester County. Each office is an independent program with its own waiting list for assistance, program guidelines and areas of assistance. The availability of apartments which accept Section 8 assistance for renters is limited due to the lack of non-discriminatory ‘source of income’ requirements for landlords.
Westchester County is also in trouble because it is planning to increase the amount that lower income working parents are required to pay for subsidized child care. Westchester County’s plan to increase this share from 20% to 35% of “above-poverty income” will severely and negatively affect many households which are already struggling with the high costs of housing and transportation. Safe, affordable and quality early learning is a societal mandate if we are to have a productive workforce today, and for the future.
We know from 2010 Census data that 30% of Black (or African American) households were headed by a female householder, no spouse present, three times as high as White alone households (9.9 percent), and the “majority of female family households with no spouse present contained own children of the householder…”
2010 Census data for Westchester County tells us that 36.9% of households headed by a single female with children under 5 years are living at or below the federal poverty level.
For a 2-person household, the 2012 definition of living at 100% of the Federal Poverty level anywhere in the continental U.S. is an annual income of $15,130. (Note the disparity between this definition of poverty, and HUD’s definition of “low-income” at $58,250 or less.)
Some will say that there is no connection or correlation between the housing case and the child care subsidy case.
What I see here are two seemingly unrelated actions which will have disparate negative impact on people of color, particularly single female heads of household.
This sort of behavior by an elected official is not only wrong, it seems to be a clear violation of the purpose and intent of federal and state anti-discrimination laws.
Our Congressional Representatives
February 12, 2012
Our U.S. economy is still shaky. A payroll tax cut was enacted to help increase the spending power of middle-class Americans, and it is due to expire at the end of February.
Class action lawsuits and medical malpractice lawsuits have driven up costs across our health care system, and could potentially be ameliorated through comprehensive tort reform.
There are dozens – probably hundreds – of serious domestic issues that our Congress could be working on.
Instead, they are currently focused on contraception.
Let’s set the record straight: Members of Congress who seek to limit the availability of affordable birth control all enjoy contraception insurance as part of the government managed Federal Employees Health Benefits (FEHB).
This benefit has been in place since 1998, and it “…ensures that federal employees participating in FEHB have insurance coverage of FDA-approved prescription contraceptives and related services.”
Former U.S. Senator Rick Santorum told an audience at the Conservative Political Action Conference (CPAC) on February 10 that ‘insurance plans shouldn’t cover contraception services because birth control “costs a few dollars” and is only a “minor expense” for women.’
Good to know.
In my job – in my life – I am forced to prioritize my time and my efforts. Wouldn’t it be nice if I could spend all my time focused on minor issues that I think are “fun”?
That seems to be what our leaders in Congress are all about these days.
To paraphrase an old fable, “Rome is burning while our Congressional leaders are fiddling.”
We pay each and every member of Congress a base annual salary of $174,000, plus deluxe health care and pension benefits, and perks for things like travel and mail. There are various stipends for leadership roles as committee chairs, majority leader, minority leader, etc.
Most recent estimates of the total annual costs of our federal legislative body – Senate and House of Representatives — are in the $5 Billion range.
Now, some might point out that spending for the House and Senate, which includes salaries, mailings, and committee expenses, represents only .07 percent of total federal spending. The entire legislative branch includes additional expenses for the Government Accountability Office, the Congressional Budget Office, the Library of Congress, and some other functions.
That seems like a really good deal — if we are getting focus on critical issues and real results.
There are some – including voters, political scientists and lawmakers themselves– who have said that the 112th Congress (which convened on January 3, 2011) was our worst ever.
The 2011 session began with a House vote to repeal President Obama’s health-care law and ended with a flip-flop over the 60-day tax-cut extender — with detours in between for the two parties to flirt with shutting down the government, jeopardize the nation’s credit and various assorted legislative mayhem.
As a citizen, a taxpayer and a voter, I don’t much care what political party a person claims as their own.
What I do care about is: When they run for public office and get elected, our representatives put aside their personal agendas and work for the best long-term interests of our country.
Is that too much to ask for?
Class Action Law Suits
February 6, 2012
Class Action Lawsuits really frost my windshield.
In November 2011, Senior U.S. District Judge James King approved a $410 Million settlement against Bank of America in a class action suit which alleged that the bank overcharged debit card users for overdraft fees.
It all sounds good and just – those greedy blood sucking banks! — until you get to the news that the Judge set fees for the class counsel at about $123 Million.
That is 30% of the award.
Maybe the bank was bad, and it really needed to be punished and to refund some excessive fees that were charged to customers.
But, for this law firm to step in and take $123 Million off the top? What in the world did they do to earn $123 Million? And how does this help any consumers who may have been victimized?
I’ve been waiting for the news on who will be litigating against that law firm for Piracy and Pillage! Haven’t heard anything yet, but I’m sure one of the other Class Action Conquistadores will step forward soon?
I recently was the beneficiary personally from a class action suit against an insurance company for some transgression that I don’t think really happened. Pretty sure I didn’t get any monetary benefit, maybe a coupon for a 10% discount on future premiums?
I do recall that the class action law firm received a 7 figure payout — not in coupons, but in real dollars!
Who pays for that? We do.
Over the years, I’ve read about proposals in Congress around “Tort Reform”.
I’ve read that some of the spiraling costs in our health care industry are in large part related to fear of litigation.
The Congressional Budget Office recently found that reforming the medical malpractice insurance system, a.k.a. “med-mal reform” — a.k.a. ‘tort reform’ — could save $54 billion over 10 years.
Other estimates are higher.
David Kendall, a senior fellow with Third Way, an independent ‘think tank’ recently said, “We found that roughly, between $92 to $207 billion dollars per year can be saved from reducing defensive medicine.”
My call: We are missing some real opportunities to reform our legal system and to save huge amounts in our health care system due to a continuing battle between Red and Blue.
Yet, if we look back in history, we would find that the Civil War was decided long ago.
Isn’t it time for each and all of us to find ways to find common ground and work together for the common good?
ObamaCare?
February 1, 2012
Members of Congress have the Cadillac health insurance plan.
Why should we expect them to understand the plight of average Americans?
When things got ugly in France, Marie Antoinette said, “Let them eat cake.”
What people didn’t grasp back then was that Marie wasn’t being mean or sarcastic, she just didn’t know.
She was so disconnected, she had no clue what it was like to be a peasant in France at the end of the 18th Century. In fact, some historians believe that something may have been lost in the translation, and that Marie wasn’t referring to what we today think of as cake, at all.
Even so…
My sense is that most of those sitting in Congress today are so disconnected that they have no clue what it is to be a regular American at the beginning of the 21st Century.
So, we need to give them a break, stop the rhetoric, and come up with a plan to help inform those who have the power that we — the people who are getting jerked around — are just not happy with the fat cats working in the private insurance industry who travel in their private jets and chauffeured black cars while denying us health care; that we are not happy with our Congresspeople and other ‘government workers’ — who now make up around 30% of the workforce — and who have lifetime benefits.
We are not happy because the rest of us — the 70% who work in the private sector — are getting screwed.
Some of us have been working as virtual slaves to a corporation which recently determined that health care coverage for retirees was too much of a burden for them to shoulder.
Or worse, the company declared bankruptcy or closed down, leaving workers and retirees with nothing other than bad memories.
Others of us were counting on some sort of group plan that has now disappeared.
We need access to a group health plan that spreads the risks and the costs across a broad cross section of the population.
If we take this to the extreme, let’s take a peek at K-12 public education, which is typically funded with property taxes, levied on all property owners whether they have children or not, and whether they send their children to public or private schools.
Everyone shares in the cost of public education. Everyone.
Some pay twice: they pay their taxes; then they send their children to private schools. That’s their choice.
With our healthcare system as it stands today, people have no choice. Either you are at the top of the economic pyramid and have the Cadillac plan, or you are uninsured.
Is that a Socialist issue?
Then what about roads? Sewers? Libraries? Public education? How about parks? Sidewalks? Public transportaion?
It seems that the USA may be the last of the economically developed nations to stop and recognize the need for universal health care.
Will this be the very issue that precipitates our demise as a sovereign nation?
Speaker of the House & Keystone XL Pipeline
January 18, 2012
Imagine if Ronald Regan were with us today, and what he might be saying to Speaker Boehner:
“If you seek oil independence, if you seek economic prosperity, if you seek good jobs in the United States: Come here, to this microphone. Mr. Boehner, open your mind! Mr. Boehner, tell us the whole story.”
There is an old saying, ‘…real success comes from good planning, carefully executed’.
The Alaska Pipeline — sometimes known as the “Alyeska Pipeline” – provides an interesting case study.
First proposed in 1968, it took about 6 years of pre-construction activities, including extensive soil surveys; archeological investigations; and significant government oversight and permitting to reach the point where preliminary construction began in 1974.
That pipeline was completed in June 1977, taking just over 3 years.
Despite what seems to have been great planning and very careful execution, there have been a number unfortunate and destructive failures and accidents
From 1977 through 1981, about 27,000 barrels – just over 1 Million gallons – of crude oil leaked from the pipeline at various places due to a variety of failures: accidents; pipe settlement; leaking valves; even sabotage.
http://alyeska-pipe.com/Pipelinefacts/Chronology.html
Running 800 miles across a very complex ecosystem and terrain, the Alaska Pipeline provides a great “cookbook” for what it takes to build a great pipeline that will stand the test of time.
The proposed Keystone XL pipeline, which would run some 1,700 miles from the Canadian border to the Gulf of Mexico, has generated a great deal of controversy, some pro, some against.
Some have claimed that the Keystone 1 pipeline, which began operations in June 2010, had more spills in its first year of operation than any in history – some very minor, some significant, thus creating some reason for reservation about the sponsor and operator itself of Keystone XL.
Others have claimed that the Keystone XL pipeline will be a salvation for the U.S. economy, creating an endless supply of petroleum while also creating thousands of jobs.
There must be some truth on both sides of these arguments, yet it seems we don’t have all of the facts quite yet.
Doesn’t it make sense to give a few more months so that a complete and independent assessment can be completed so that our elected officials and their independent advisors are able to make neutral and informed decisions?
If we leave the decisions to be made in the hands of lobbyists and insiders, will we get an optimum outcome?
Proposed 2012 Westchester County Budget
November 24, 2011
We must applaud our current Westchester County Executive Astorino for staying true to his campaign promise to halt tax increases at the county level in Westchester.
However, we need to remind CE Astorino that reigning in tax collections can be done in several ways.
The proposed 2012 Westchester County budget as released by CE Astorino hacks away at the branches of excess.
Unfortunately, CE Astorino has not driven down to the roots of inefficiency and waste.
The public sector at the County level can deliver major savings without affecting frontline services.
Real and sustainable savings will not come from slashing safety net services, such as:
• legal services for low-income residents;
• eviction prevention services;
• financial education and budget intervention for low-income families; or
• community health centers.
A quick look at the staffing levels and budget allocations to the Office of County Executive and the Board of Legislators leaves me wondering:
What if these 2 divisions were eliminated completely? Or, had their administrative support functions combined?
Then, a further look at the various administrative functions:
• Human Resources;
• Budget;
• Finance;
• Information Technology;
• Acquisition and Contract;
• Law;
• Planning;
• Tax Commission;
• Board of Elections.
This all makes me stop and think:– If this was my company: Would I try to combine all of these functions under one Chief Operations Officer? And look for synergies and cost savings?
walrus51 