HorsesAss.Org

We’re in “horrifying economic statistic of the day” territory now. From the AP:

Orders to U.S. factories for big-ticket manufactured goods plunged in October by the largest amount in two years as manufacturing was battered by the overall economic weakness.

The Commerce Department reported Wednesday that orders for durable goods dropped by 6.2 percent last month, more than double the 3 percent decline economists expected.

As the economic crisis has unfolded, there’s been a fair amount of discussion about how our economy doesn’t make stuff any more. This isn’t entirely true, of course, but it does reflect concern over manufacturing being moved to low wage countries.

One risk, I think, is that the crisis will further hollow out our remaining industrial capacity to the point where we’re left with not much more than financial services. We’ll be kind of a giant United Kingdom with better food. (I kid, UK folks. You know I love you. And I hear your food is much better these days.)

When the conflict between Georgia and Russia erupted this summer, it was initially presented to us as a fragile beacon of liberty (Georgia) being attacked by a big anti-freedom bully (Russia). Since then, that narrative has been shattered by continued revelations about Georgia’s role in starting the conflict. This conflict, as are many conflicts around the world, was one where the governments on both sides didn’t feel accountable for their actions – or to their own citizens – and no one was willing or able to hold them accountable.

For more evidence of how that’s true in Georgia as much as it is in Russia, the Hungarian Civil Liberties Union released this video on the alarming human rights violations going on in Georgia under the premise of fighting drugs:

Looking for an Alternative – The Drug Policy Situation in Georgia from HCLU 3 on Vimeo.

In a country of 5 million people, police in Georgia are arresting 60,000 people a year for drug crimes. But that’s only the beginning of the problem. Police don’t need any evidence to arrest someone, so when people are arrested, they must take a drug test to prove their innocence. 70% of those arrested last year tested negative. In the video, one official spoke of a man who was repeatedly arrested outside his house and forced to take drug tests as a form of harassment.

You know, it’s so surprising that one of our close allies is as willing as we are to give the police too much power to wage the drug war.

Talking Points Memo is gearing up for the second annual “Golden Duke” awards, named for incarcerated former Congress-critter Randy “Duke” Cunningham.

I was reminded of this because my prize for nominating former state Rep. Richard Curtis in the 2007 category “Best Scandal- Sex and Generalized Carnality” arrived via UPS today. It’s an authentic TPM media t-shirt emblazoned with their logo and the Golden Duke statuette.

Who says blogging doesn’t pay? So be thinking about possible nominees for 2008. I’m thinking AIG executives are a cinch in some category. Hopefully not that same one.

Join us for a pre-holiday evening of politics under the influence at the Seattle chapter of Drinking Liberally. We start at 8:00 pm at the Montlake Ale House, 2307 24th Avenue E. Some of us show up earlier for dinner.

If you’re not in the Seattle area, no worries. check out the Drinking Liberally web site for dates and times of a chapter near you.

In the previous post, Goldy speculates about federal money flowing to the states as part of a broader spending package, and specifically about whether Gov. Chris Gregoire is headed to D.C. to advocate for such spending. The answer surely is: maybe!

At Political Buzz, Joe Turner wonders if we will see a return to revenue sharing, where the feds don’t put strings on things.

When I started covering Pierce County government in 1981, cities and counties were still getting no-strings-attached money from Uncle Sam. According to Wikipedia, revenue sharing existed from 1972 (the last bad recession) until 1987. It lost favor under President Reagan.

But it appears to be making a comeback, and Washington state workers no doubt will rejoice if it does. Basically, the federal government gives cities, counties and states money to pretty much what they please. That means Gov. Chris Gregoire and the Legislature could head off some of those layoffs that probably are in their future.

I watched Obama’s press conference this morning; there are not a lot of details yet. Basically the message seems to be “if it works, great, if it doesn’t work, it’s gone.” Another point seemed to be that spending at the state level is fine, but it has to be part of a national economic game plan.

So I’m expecting Obama’s team to come up with plans to get money out to the states, but not necessarily without strings. I’m just guessing, but increasing block grants might be another way to go. A short term aid package for states to cover existing shortfalls would make sense, however. There’s really no sense in heightening unemployment misery by ignoring what’s happening at the state and local level.

There’s a little bit of a clue about what might happen in this article from Stateline:

Obama didn’t specifically mention states or a dollar-figure in his remarks over the weekend or during his Nov. 24 press conference in which he unveiled his economic team, including New York Federal Reserve President Tim Geithner as treasury secretary. But before he was elected, Obama called for at least $25 billion in nonspecific state relief and another $25 billion to help states build and fix highways, roads, bridges, airports and rail systems.

Honestly, this is why we want smart, qualified people running the government, instead of anti-intellectual stink tank cretins and talk show hosts. It actually does matter, a lot, what happens next. A good plan might get us through the next few years with a lot of economic pain, but with recovery on the horizon. A bad plan, well, you know. It would be very bad.

We’re all free to raise questions and kick things around, as we should in a democracy, but we need as many good ideas we can get right now. There are still a few conservative voices out there warning about over-spending, and at least that’s a legitimate concern to raise if it’s done in a sincere fashion.

The consensus seems to be we simply must have a large stimulus package, though, and we’ll have to sort out how to pay for it both as we go and in the future.

One thing Obama seemed to be getting at this morning was that wasteful pork will really have to be axed this time. No more cheap talk. You can count on the noise machine to wail mightily if anyone starts pointing out the horrendous inefficiencies in the Defense Department, for example, but as Obama said this morning, every part of the federal budget must be examined.

If the Obama team can focus like a laser beam on getting the most “bang for their stimulus buck,” as they say they are doing, it should help. At this point I could care less if the good ideas come from progressives, moderates, conservatives or little green men from Mars.

Word is they were burning the midnight oil last night at the state Office of Financial Management, before Gov. Gregoire headed out early this morning for a meeting in the other Washington.  Don’t know if the two are related, but it wouldn’t surprise me to see the Democratic Governors Association appealing for a bailout package of their own.  Hmm…

UPDATE:
The Pearse Edwards from the Governor’s office tells me Gregoire is in Olympia today, not DC.  Oops, my bad.  And…

“As for an ask of President-elect and the Congress, that would be an economic stimulus package that puts people to work and fixes our aging infrastructure. And that meeting is on Monday with her fellow governors from across the nation.”

… dogs kill people:

A man from the Tillamook-area who was accidentally shot over the weekend when his dog jumped into a boat and set off his gun is recovering.

Matthew Marcum was shot with his 12-gauge shotgun Saturday on the Tillamook Bay. His legs and buttocks were injured in the incident and he was taken to Legacy Emanuel Hospital & Health Center in Portland.

His father, Henry Marcum, says the 23-year-old Marcum was about to tie up an 11-foot open aluminum boat, when his 3-year-old Labrador, Drake, jumped into the boat.

Matthew Marcum says his dog, Drake, is a good dog and he isn’t upset with him.

Huh.  So I guess owning a dog doesn’t keep you safer than owning a gun, that is, if your dog has a gun.

Way to go Muni League!

High expenses and an outmoded service strategy are hindering King County Metro Transit, asserts a report issued today.

The findings are meant to provoke public debate, as County Council members try to pull Metro from a deep budget hole to prevent cuts in future bus rapid-transit service they promised to voters.

More:

The report urged Metro to scrap its policy that extends 40 percent of new service to the Eastside, 40 percent to the south county and 20 percent to Seattle and Shoreline. The policy was meant to assure suburban taxpayers ample service, but Muni League chairman Brad Meacham calls it “pretty outdated.” Buses should be deployed based on where people travel, the report says.

The 40/40/20 split is an absurd political agreement. It doesn’t make any sense. It’s got nothing to do with running Metro in an efficient way and everything to do with exporting transit dollars from the city to the ‘burbs. If folks in Covington or Duvall or Federal Way want an extra slice of the pie, they should tax themselves to get it.

Nope, Seattle Times Publisher Frank Blethen doesn’t do yoga.  How else to explain this editorial?

YOGA studios ought to be subject to the retail sales tax imposed on all physical-fitness services.

[…] Personal services are a growing segment of the economy, growing much faster than other types of retail trade. Yoga businesses have been in a catchall of services that include motivational speakers. It is time to quantify them and put them in the proper tax code.

So… um… if the sales tax were to be extended to yoga studios, how would this not be one of those dreaded tax increase thingies that the Times so resolutely opposes?

Of course, it would be a tax increase, and an absolutely reasonable one.  As even the Times points out, personal services are becoming an ever larger portion of our post-industrial economy, while retail trade proportionally shrinks.  For that matter, business services (accounting, legal, consulting, etc.) are growing much faster than retail as well.

The result is that our sales tax—WA state government’s largest revenue source—is levied on an ever smaller portion of our economy, year over year, creating a long-term structural deficit that simply cannot keep pace with either economic growth or the lockstep growth in demand for public services.

So in a state that insists on remaining one of the few in the nation to resist an income tax, it’s not just yoga studios to which the sales tax needs to be extended, but most other personal and business services as well.  And if the thought of that ties Frank up in knots, I know a yoga instructor who can help.

UPDATE:
As long as Frank’s paper is lobbying to extend the sales tax to other businesses, we might want to consider eliminating the current sales tax exemption on newspapers.  I’m just sayin’…

Itchy and Scratchy are breaking up at the end of the year.

I doubt anyone can know how much it might help, but the desperation apparent in this move should be obvious. From Bloomberg:

The U.S. Treasury and Federal Reserve will unveil as soon as today a lending program to shore up the consumer-finance market, using money from the government’s $700 billion rescue, two people familiar with the effort said.

The Treasury and the Fed will help fund new loans packaged into securities for sale to investors, the people said. Treasury Secretary Henry Paulson, who scheduled a press conference for 10 a.m. New York time, said two weeks ago that he wants to spur lending for automobile purchases and college education while also reducing the cost of credit-card debt.

If we really need something like a half trillion dollar (or more) in stimulus spending per year, as learned economists seem to be suggesting everywhere, taking some of the leftover $700 billion and using it to provide cheap loans sounds pretty much like a Band-Aid. Consumer confidence is completely shattered. Hard to see how it improves auto sales much. Maybe people pay off some credit cards and take some classes.

But, it is something. The Fed can’t lower interest rates to any effect, so what the heck.

A while back, I was showing Will the Birds Eye Views of Detroit to show just how run-down that city has become. Large swaths of the city are empty now, blocks and blocks of empty and abandoned lots. The picture below is just one area where there was once a bustling neighborhood, but is now desolate.

Via Obsidian Wings, I found these two posts from Sweet Juniper about what happened to that school in the picture, which was amazingly in operation until 2007.

While we’re on the subject of education (and Seattle Times editorials), here’s another of the Times’ line items which I found curious:

• $926 million — Cancel the Initiative 728 money, or most of it. Officially this is for class-size reduction in the public schools, but the schools have folded it into everyday operations. Cutting I-728 money was done in 2003, when the budget was in a crisis, and has to be done again. That is the danger of budgeting by initiative.

“That is the danger of budgeting by intiative.” Cutting taxes by initiative, apparently, the Times has no problem with that, but spending money, well that’s a no-no… despite the fact that taxing and spending are both part of the budget process.  But again, that’s not my concern for the moment.

No, I just wanted to point out that a $926 million cut comes to over $900 per K-12 student over the course of the biennium, or roughly $450 per student per year.  For a typical elementary school with about 400 kids, that’s about $180,000 out of the annual budget.  How many teachers will need to be cut?  Do they increase class size for all the kids, or do they eliminate art or music or gym or reading tutors… assuming they have any of these left to cut?

And don’t think local school districts can make up these cuts by raising local levies.  In fact, some districts may have to reduce their local levies in response, as state law limits the amount of money raised from local levies to a fixed percentage of the district’s total state and federal funding.

The Times argues that this money was cut before and “has to be done again,” because raising taxes—any taxes—simply isn’t an option.  No doubt tough choices have to be made to respond to these tough economic times, but raising taxes is an awfully tough choice too, and it just doesn’t make sense to automatically eliminate one half of the budget equation when something as important as our children’s education is at risk.

Yesterday the Seattle Times editorial board argued that the Governor and the Legislature should balance the state budget without raising any taxes.  They don’t explain why we shouldn’t raise any taxes, it’s just kinda a given behind all their editorials, which they apparently don’t feel they have to explain.  But that’s not my concern for the moment.

Instead I want to briefly talk about how we fund higher education in Washington state, spurred on by this line item from the Times’ list of possible cuts:

• $600 million — Cut seats in state universities and community colleges. Cut some tuition waivers. Offset some cuts with increased tuition.

Of course, with unemployment rising, we’re already seeing a spike in demand, particularly at our state’s community colleges, as students of all ages seek the training and retraining necessary to compete for jobs in our rapidly changing economy, so the last thing you want to do during an economic downturn is to cut seats and raise tuition, thus denying unemployed and underemployed workers the opportunity to better their job prospects.  But then, education comprises by far the largest chunk of our state budget, so it’s hard to imagine pulling education cuts entirely off the table.

There is another solution though, that I’ve written about before, that could absorb some of these cuts in the short term, while allowing for an expansion of seats in the future, without costing taxpayers a dime:  dramatically raise tuition near market rates, while broadly expanding our state’s financial aid system.

Essentially, under our current system, every college student in the state is heavily subsidized, whether they need the subsidy or not.  This broad, per student subsidy lowers tuition rates for all, but still leaves college unaffordable for many potential applicants.  But perhaps worse, it strains our college and university system’s resources, leaving it unable to expand the number of seats available to meet existing demand.

But if we were to shift a larger portion of the state subsidy toward financial aid, while allowing tuition rates to rise, those students who can afford to pay the full cost of their education will do so, leaving more state resources to fund the education of those students who cannot.

When we talk about budget cuts, in education or elsewhere, we are talking about rationing.  Right now, with our broad, per student subsidy, we ration access to education.  Under a high tuition/high financial aid model we can maintain and expand access to higher education while rationing the state subsidy.

Hiking tuition is never popular, but then nothing about the upcoming budget is going to be popular.  So why not take advantage of this crisis to put higher education funding on a solid footing for the future?

I felt a little like Rip Van Winkle this morning, watching President-elect Barack Obama’s news conference, as he not only appeared awfully damn presidential, he pretty much sounded like he was already president.

Has anybody ever seen a cabinet take form this quickly, or a presidential administration seize control of the public and policy debate so soon after an election?  I suppose extraordinary times call for extraordinary measures, but the fact the transition team has been able to act this swiftly is encouraging in itself.