The Agenda

Have you heard someone say that Reagan's tax cuts increased revenue? Do you realize that this is complete idiocy, but wanted more backup? This report is for you. Here's what the Economic Recovery Tax Act of 1981 cost our government in billions (current dollars) in each year after its passage: year1234 Loss (billions)-38.3-91.6-139.0-176.7

And just to be clear, this is the product of the US Treasury Department in 2003, revised in 2006.

This week I decided to spend some time researching just why Landmark Medical Center in Woonsocket is in trouble. For those who don't live in Woonsocket, or haven't been paying attention, Landmark is broke. Its CEO has left, and the enterprise is in the hands of a court-appointed "special master" who is trying to keep it afloat while a savior can be recruited.

I quickly learned the troubles extend well beyond Landmark, to the other community hospitals. These troubles are well documented, and were the subject of an extended report a year ago by a blue-ribbon "Community Hospital Task Force", which included staff from the departments of Health and Human Services, the Lt. Governor's staff, various hospitals, the Health Insurance Commissioner and more.

Fairly well masked by the technical language, here's one thing I learned from it: insurers pay hospitals very different rates for exactly the same services. Getting an appendix removed at Rhode Island Hospital costs your insurance company a much different amount than getting it removed at Landmark.

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But look what happened. Four energetic members of the SIT at Exeter/West Greenwich High School have become quite concerned about the proposed graduation requirements, and have formed a statewide SIT coalition to air those concerns and communicate them to the Board of Regents more effectively. They've already had one meeting, attended by dozens of people from SITs from all over the state. They're having another on Tuesday August 26, from 5-7pm at the Exeter-West Greenwich High School, 930 Nooseneck Hill Road (Rt 3) in West Greenwich. If you're part of a SIT, you're invited. If you're not, you're invited, too, though maybe you should consider joining one.

If, like me, you have a high school student in the house, you probably know about the new requirements for high school graduation. Adopted in 2003, the first class to satisfy them (mostly) has just graduated.

The requirements are interesting. There is a requirement for a certain amount of course work, and also a requirement for a "project" that involves a great deal of individualized attention and instruction. Students are expected to think of something good to do, to do it in some depth, and to report on it with a paper or presentation. At my daughter's school, she tells me that one boy, a drummer, composed a piece of music for nine xylophones and another converted an old car to use biodiesel. Others arranged internships with a variety of local businesses. The idea is to acquaint the students with pursuing something deeply, while also allowing them to follow their own interests.

But those aren't the only parts of our graduation requirements. Seniors are also required to have taken the NECAP tests, a standardized test administered in the fall of junior year. This is kind of a curious requirement, since the test was designed to be an assessment tool for an entire school, not an individual student.

The problem with the NECAP tests is a suspicion among people on the Board of Regents that lots of students don't take it seriously enough. So it was added to the new graduation requirements, though at a low enough level that flunking the test won't deny anyone a diploma by itself. It's an odd reason to add this as a graduation requirement, but it's an odd world, isn't it?

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A 1955 Time magazine article tells the story of what happened to the DC trolleys after the 1935 Public Utilities Holding Company act of Congress forced electric companies to divest themselves of the trolley lines they had operated as loss leaders. Essentially, investors bought the company in order to loot it of its cash holdings, not to run it at a profit, because it didn't make a profit.

A wikipedia article describes how the Pacific Electric Railway was always pretty much a loss leader for Henry Huntington's suburban real estate development interests.

As the nation continues to reel from the ongoing financial crisis, the boom and bust that we're suffering, it's worth stopping to ask how it is that we got to this place.

Everyone knows that foreclosures are driving the economic crisis, but does everyone know that people falling behind in their payments isn't the big story? According to HUD statistics, in 1986, about 5.5% of all mortgages were in arrears, and about one in 21 of those went into foreclosure. In the first quarter of this year, 6.35% of all mortgages were behind in their payments, but foreclosure proceedings had begun on one in six of those. In the subprime markets, the delinquency rates are much higher (22% for variable rate mortgages), but the foreclosure rates are higher still (almost one in three). As late as 2002, the delinquency rates for this kind of mortgage were almost 15%, but only about one-sixth of the delinquent loans began foreclosures.

In other words, these are tough economic times, but at the ground level, we're not so far from other economic slowdowns. What's different now is that foreclosure is a far more likely outcome of falling behind in your mortgage payments than it has been at any time since HUD started tracking these numbers in 1986.

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Well, golly, when you put it like that, it sounds pretty good. Easy, too. I mean why didn't anyone think of that before? But why stop there, let's just eliminate all taxes and make the schools better, too. Or maybe offer us all free commuting helicopters? Better yet, free ice cream and cookies at every meal!

Now, in fairness, Bill is a perfectly nice gentleman, and his opponent, incumbent Sen. James Sheehan, though an energetic and effective legislator, is not widely regarded as a fiscal prodigy. But really, candidates shouldn't even think they can run with this kind of empty and self-contradictory platform.

Though my exalted peers at publications further up the journalistic food chain balk at taking it on, it is role of the press to call politicians on stuff like this, and here I am, published in newspapers and online. So this is my challenge to you. In mid-October, I'm going to award prizes for the most absurd campaign literature I run across (2008, Rhode Island general election), and I'm inviting your nominations.

Don't submit any just for bad photos or slogans, please. I'm interested in flyers or letters that promise the unattainable or the contradictory. So when some candidate tries to hand you their flyer, take it, and look it over. If you get a candidate letter in the mail, read it, and if you learn about a candidate's web site, go there and check it out. If you think you've found something that can beat my example here, send it in for judging by a panel of impartial judges I'll appoint. (You can send nominations for judgeships, too. After all, vying for judgeships is traditional in politics.) Send your nominations to me electronically, or c/o The Times Newsroom, 23 Exchange Street, Pawtucket, RI 02860. Enter by October 15 or so. May the best candidate win!

For one thing, several reports have pointed out that the Department of Human Services is where the bulk of the overspending seems to have occurred. You might think, "Aha! It's because we still spend too much on social services." But in fact, the overspending appears to be that the DHS administration had promised $19 million in general revenue operational savings that they were unable to achieve. That is, someone high on the chain of command appears to have decided they could peel off that much spending while not affecting service, and it didn't happen. In reality, looking only at state tax dollars, every single division of DHS was under their original budget, except for Medicaid, which was over by $641,000, or less than 0.1%.

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The primary is behind us and the election looms. This November, you'll see a Rhode Island tradition on the ballot: the Transportation bond. Every two years, since at least the DiPrete administration, Rhode Islanders are asked to approve another huge round of bonds for roads. Ho hum, isn't that how people build roads?

Well no. Virtually no other states fund their roads this way. Sure lots of states borrow for a specific highway here or a bridge there. But we borrow for no specific project, an astonishingly wasteful practice.

At this point, DOT borrows about $40 million a year, no matter what. We use that money to match federal dollars that are awarded on the proviso that the state come up with a 10% or 20% match to the funds. We spend the sum on whatever projects are at the top of the list.

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Oh, wait. I meant "MBTA". Darn. Why can't we keep up with Massachusetts on transit?

RIPTA got itself a new board chair last week. John Rupp, Governor Carcieri's newest appointment to the board, succeeded Robert Batting, who resigned after being outvoted in an effort to ease the agency's managing director out the door.

These are obviously troubled times at the transit agency, and, as usual, money is at the bottom of it all. The agency is having a bunch of problems all at the same time, which makes it seem like one big fiasco. These are the important parts of the story:

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Over the past 25 years, as our nation has disassembled its manufacturing base and shipped those jobs elsewhere, we've heard over and over again about how that's ok, because those kind of "old economy" jobs were the thing of the past and the "new economy" would provide lots of jobs in finance, service, software, design, and management. We were all supposed to become "knowledge workers", according to Peter Drucker. In the new economy assets are "minds rather than machines," said George Gilder. The new economy was to be clean, smooth and prosperous.

Admittedly, we haven't heard much about all this lately. Gilder's newsletter and web site empire collapsed after the technology stock crash in 2000-2001. Some of the other cheerleaders have gone to ground, while others have said they were right all along -- about different predictions. But the truth is that the events of the past year, and especially the past week, have made everyone a little skittish about imagining an economic future that depends on finance. (Except securities lawyers, who are going to have a little boom of their own over the next few years as the sub-prime mess gets untangled.)

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As evidence for this view, it appears that the RNC prepared — in advance of Monday's vote — attack ads to be run against Democrats who voted for the plan.

As a philosophical point, there are two competing views of what politics is. Or at least there are two with which I am familiar. One view has it that politics is the process by which we rule our polity. This conception of politics is all about finding solutions to the problems we face. Another conception of politics is that it is war. In this conception, all the entities involved in politics are engaged in an all-out struggle for primacy and power. Which do you think serves our nation better?

Sarah Palin: Not on your life. If it was good enough for the founding fathers, its good enough for me and I'll fight in defense of our Pledge of Allegiance.

The pledge of allegiance was written in 1892 by Francis Bellamy, a minister, and didn't include the words "under God". It was re-drafted a couple of times in the early 20th century, but it wasn't until an act of Congress in 1954 that the words were inserted into the Pledge.

Is it too much to ask that the prospective leaders of our country not be ignorant of its history?

After pointing out such state budget trivia as the fact that poor people and immigrants can hardly be the cause of our fiscal woes, I am often asked, "Well, where does the money go?"

Like any interesting question, this has a complicated answer, but it has an answer. I don't have my finger on all the parts of it, but I see some of it, and a big part is something very few people pay attention to, perhaps on purpose.

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Some big shoes are waiting to drop these weeks. It's still far from clear how the state's labor crisis is going to be resolved. Last week the Governor's office presented their application to the federal government to make Medicaid into a block grant, and there were hearings on that earlier this week. Meanwhile, I read that URI is planning to cut $5.7 million from its budget and not replace any of its faculty or staff who retire this year.

We'll hear much more about these in coming weeks, but I thought it would be good this week to step back and look at the bigger picture: Are you better off today than you were before you heard of Don Carcieri? How about William Murphy, the Speaker of the House? Is your life better since he became Speaker in 2002?

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