Sunday, July 27, 2008

Wisconsin's prison costs crowd out higher education

Wisconsin policy makers have made increasing the number of four-year college graduates a strategic objective. Yet, the state's aggressive policy of incarceration is crowding out investments in higher education, undermining its ability to accomplish this goal.

Between 1987 and 2007, Wisconsin actually cut its support for higher education by 6%. Only 6 states reduced their investment in higher ed by more. During the same period, Wisconsin increased corrections spending by 251%, 8th highest nation, despite a declining crime rate.

Wisconsin's incarceration rates are higher than the neighboring states of Minnesota, Illinois and Iowa and the state's African American incarceration rate is the nation's highest.

A recent study released by the Pew Center on the States reports that the U.S. prison population has tripled over the past 20 years. The United States now holds the distinction of imprisoning more of its own citizens, both in total number and share of the adult population, than any country in the world.

In 2007, the United States had a record-breaking one out of every 100 adults in prison. Policy changes in sentencing and parole revocation, rather than increases in crime, have largely driven the increase in incarceration rates.

States, like Wisconsin, shoulder the vast majority of the costs associated with these policies. While states struggle with gaping budget shortfalls (see the recent report by the Center on Budget and Policy Priorities), incarceration rates and costs continue to escalate, consuming growing portions of state general funds and forcing cuts in high education and other programs.

As Wisconsin's higher education funding has declined, the University of Wisconsin System and the Wisconsin Technical College System (WTCS) have been forced to raise tuition, shifting the cost of post-secondary education to students and their families.

The WTCS's adult basic education tuition increased 54.6% over the last ten years; collegiate transfer tuition by 57.3%. Two-year UW colleges have increased their tuition by a whopping 82.6 and UW Madison by 83.8%. Rapidly rising tuition costs have made it even more difficult for lower income residents to pursue post secondary education.

Recent studies conducted by the University of Wisconsin System concluded that students from lower income families were increasingly under-represented in the state’s public baccalaureate education institutions. Between 1992 and 2002, the percentage of freshmen reporting family incomes in the lowest quintle (less than $30,000) fell by nearly one-fourth, from 14.5% to 11.0%. At the same time, the percentage of freshmen reporting family incomes in the state’s top quintile (greater than $87,000) rose by nearly one-fifth.

The WTCS/UW Committee on Baccalaureate Expansion concluded: "...Wisconsin students from lower income families have less access to a college education than in the U.S. as a whole."

Unless Wisconsin addresses its escalating incarceration costs, it will not be able to meet its objective of increasing the number of four-year graduates or train the next generation of technical and skilled workers.

McCain was wrong about the war in Iraq!

Republican operatives have been desperately trying to undermine the public's support for Barack Obama by insisting he was wrong about the "surge."

This desperate approach could only work if the public is afflicted with historic amnesia since as
Frank Rich notes the presumptive Republican nominee John McCain has been wrong about the entire war and occupation!:

It was laughable to watch journalists stamp their feet last week to try to push Mr. Obama into saying he was “wrong” about the surge. More than five years and 4,100 American fatalities later, they’re still not demanding that Mr. McCain admit he was wrong when he assured us that our adventure in Iraq would be fast, produce little American “bloodletting” and “be paid for by the Iraqis.”

Rich also notes that Germany's enthusiastic reception of Obama had less to do with what he said than that his candidacy represents a clear break with the Bush's failed unilateralism in foreign policy.

"We have one president at a time,” Mr. Obama is careful to say. True, but the sitting president, a lame duck despised by voters and shunned by his own party’s candidates, now has all the gravitas of Mr. Cellophane in “Chicago.” The opening for a successor arrived prematurely, and the vacuum had been waiting to be filled. What was most striking about the Obama speech in Berlin was not anything he said so much as the alternative reality it fostered: many American children have never before seen huge crowds turn out abroad to wave American flags instead of burn them.

The entire column is linked.

Saturday, July 26, 2008

Foreclosures will hurt 1/3 of Wisconsin's homeowners!

The Pew Center on the States reports:

Wisconsin's anticipated foreclosures are expected to negatively affect more than one third of the state’s homeowners and their property values.

Their analysis of Wisconsin is linked.

Thursday, July 24, 2008

Republican oil man challenges McCain's call for off shore drilling

Presumptive Republican presidential nominee John McCain is betting his proposal to reduce gas prices by ending the ban on off shore drilling for oil will reap big political dividends.

McCain has begun running an advertisement on drilling (including in Milwaukee), is discussing drilling at campaign appearances and was planning a trip to an oil drilling rig in the Gulf of Mexico on Thursday until weather conditions postponed that visit.

His proposal has been rejected by the presumptive Democratic presidential nominee Barack Obama who argues that we can't drill our way to lower prices; that the solution to rising crude oil prices is developing alternative forms of energy.

Obama's position has received support from a surprising source-none other than billionaire oilman and long time Republican operative T. Boone Pickens..

Timothy Egan writes about these strange bedfellow developments in today's New York Times:

T. Boone Pickens says, in a $58 million campaign,...that we can’t drill our way to lower gas prices. By implication, anybody who tells you otherwise — including the fellow Texan he helped put in the White House — is a fraud...

Totally misleading” is the way Pickens describes Republican attempts to convince the public that if we just opened up all these forbidden areas to oil drilling then gas prices would fall. He’s not against new drilling, but he is honest enough to say it wouldn’t do anything...

Pickens was a geologist before he found a deep pool of money, so when he says “the geology just isn’t there” to reduce oil imports through new drilling in offshore areas, he has some cred...

Meanwhile, looking bravely to the past, Bush and McCain are trying to convince us that more oil drilling will save us from $5-a-gallon gas. History says otherwise. The number of oil and gas permits on federal land doubled in the last five years, with no effect on price or supply. And Bush’s own Energy Information Administration says increased drilling wouldn’t move the market in the short term.

McCain knows this, despite the brazen lie in his Obama gas ad. He now says drilling offshore would have “a psychological impact.” Just like that “mental recession” his former chief economic adviser Phil Gramm spoke of. These guys need to get off the couch.

The entire article is linked.

Wednesday, July 23, 2008

Fed reports economy continues to stagnate

The Federal Reserve beige book for June and July, a snapshot of the economy, reports that Americans are cutting back on everything from cars to food to brand-name products, in another sign that the economy is slowing.

The report raises concerns that as money from the federal stimulus checks dries up, the recession could become even more severe.

The Fed highlighted fears that economic growth will continue to stagnate as Americans cut back in the face of a weak job market and higher gasoline prices. Consumer spending accounts for more than two-thirds of the nation’s total growth.

The Chicago District (7th) which includes Milwaukee reported that:

Economic activity...was sluggish in June. Consumer spending was mixed and labor market conditions weakened some...Residential construction declined further and nonresidential construction showed signs of slowing. Manufacturing activity weakened slightly. Consumer lending declined, while business lending was stable. Cost pressures from rising material and energy prices remained high, while wage pressures continued to be low. Flooding and cool weather further set back crop conditions in June, although they improved toward the end of the month and in early July.

The full report is linked here.

Monday, July 21, 2008

Buzz Bissinger's college world series vacation

Buzz Bissinger, the author of "Friday Night Lights," writes about his recent trip to the college World Series in pursuit of the pure sports experience. Not only did Mr. Bessinger learn that historic Rosenblatt Stadium will fall victim to the wrecking ball, but he got arrested.... for bringing a camera to the game no less!

This account about "progress" and the NCAA is just too good to be true.

Friday, July 18, 2008

U.S. healthcare: poor quality, high costs!

A new study reports that the U.S health system is the most expensive in the world, yet its quality among the industrialized world's worst.

The report, the second national scorecard from this influential health policy research group, shows that the United States spends more than twice as much on each person for health care as most other industrialized countries. But it has fallen to last place among those countries in preventing deaths through use of timely and effective medical care, according to the report by the Commonwealth Fund, a nonprofit research group in New York.

The report highlights how inefficient the U.S. system of private medical insurance is documenting that administrative costs are much higher at about 7.5 percent, than in other countries.

Bringing those administrative costs down to the level of 5 percent or so as in Germany and Switzerland, where private insurers still play a significant role, would save an estimated $50 billion a year in the United States.

Read more here.

Thursday, July 17, 2008

Summerfest attendance falls-C.C. Sabathia meets the substitution effect

Last week the Milwaukee Journal Sentinel reported that attendance was up at Miller Park, but down at Summerfest.

MJS reporter Don Walker wrote that more than 400,000 fans, a record, visited Miller Park during the Brewers' ten-day homestand, noting the team was "well on track to hit 3 million in attendance, a franchise record."

The poor economy and high gasoline prices, he wrote, didn't seem to be hurting sales.

On the very same day, another MJS reporter, Tom Held, blamed the poor economy for much of the decline in Summerfest's attendance: "The hosts of Milwaukee’s Summerfest learned this year how tough it can be to throw an outdoor party in rainy weather and a slumping economy."

Attendance at the 11-day music festival on the lakefront slumped to 831,024, the smallest crowd since 1993. Revenue from ticket, food and beverage sales also feel by roughly 4% below the previous year.

So according to the MJS, rising gasoline and foods prices and the weak economy didn't hurt attendance and hurt attendance. Hmmmmmmmmmmm!

History tells us that rising joblessness, inflation and declining real wages reduce discretionary income and expenditures. Since entertainment is a discretionary expenditure, it is among the first causalities of a slumping economy.

But if the weak economy was causing entertainment expenditures to decline, it should have effected the consumption of similar products like Summerfest and Brewers baseball similarly.

Perhaps there is a different, more coherent explanation for this contradictory experience. Call it C.C. Sabathia meets the "substitution effect."

Most economists agree that professional sports don't increase a community's aggregate entertainment spending; it simply redistributes it from one form of entertainment to another.

Brewers' fans have relatively inflexible and limited entertainment budgets. The money they spend on a attending a game is a substitute for other entertainment such as the movies or Summerfest. So when the Brewers are hot, fielding a competitive team, and management is making aggressive moves to improve the team by trading for Cy Young winner C.C. Sabathia, consumers in the Milwaukee area will spend more on baseball and less on other forms of entertainment like Summerfest.

This analysis received an unexpected endorsement recently from none other than the Seattle, or should I say, Oklahoma City Supersonics.

That's right, the Supersonics who are leaving Seattle for the greener pastures of Oklahoma City argued in U.S. District Court that the team's departure would not hurt the city's economy because there is no net economic gain from professional sports.

"The financial issue is simple, and the city's analysts agree, there will be no net economic loss if the Sonics leave Seattle. Entertainment dollars not spent on the Sonics will be spent on Seattle's many other sports and entertainment options. Seattleites will not reduce their entertainment budget simply because the Sonics leave," the Sonics said in the court brief.

This is, of course, exactly the opposite of what the Sonics had claimed when asking for taxpayer help to build a new arena. And it conflicts with what boosters in Oklahoma City are saying in their attempt to pass a $100 million tax package to spruce up its six-year-old Ford Center and build a practice facility for the team.

But it concurs with what economists, other than those paid by major league franchises, have been arguing for years. And it certainly explains why Summerfest's attendance plummeted while the Brewer's attendance soared.

Tuesday, July 15, 2008

Taxes play no role in MillerCoors decision to locate HQ in high cost Chicago

MillerCoors LLC has picked downtown Chicago, despite its higher costs and high corporate tax rates, as the location for its new corporate headquarters.

Metropolitan Milwaukee, already reeling from the loss of 1200 family supporting jobs at Delphi and Midwest's plans to eliminate another 1200 positions, will lose between 150 and 175 jobs as a result of this decision.

In explaining the decision, MillerCoors President Tom Long explained that Chicago was a more attractive location than either Milwaukee or Denver for the marketing talent that MillerCoors needs to be successful. He also sighted the importance of O'Hare International Airport, the world's second busiest airport which offers global air connections. Long said taxes were not a factor in MillerCoors decision!

The WMC and other free market extremists like Scott Walker who have reduced economic development strategy to a one note song of cutting taxes should take note. Access to skilled employees and a world class transportation infrastructure trumped lower cost real estate and taxes. Competitive advantage requires investing in the labor force and in the parks, amenities and communications and transportation systems that make an urban area attractive and functional.

As former Republican Secretary of Commerce and Alcoa CEO, Paul O'Neil told Congress when asked about the role tax cuts play in attracting investment:". ‘As a businessman I never made an investment decision based on the tax code. If you give money away I will take it, but good business people don’t do things because of inducements.”

Monday, July 14, 2008

Straight talk on Iraq from Barack Obama

One of the main reasons that underdog, Barack Obama won the Democratic presidential primary was because he consistently opposed the war in Iraq.

Last week Republicans and their allies, like Senator Joe Lieberman, began to attack Obama, suggesting he had changed his position when he said that he would listen to the generals in Iraq about how to organize a U.S. withdrawal.

Would they have preferred that he not listen to the generals on the ground about how to sucessfully withdraw our troops?

Obama has been consistent on this issue-opposing the misguided war, arguing that it has diverted resources from the real fight against terrorism, overstretched our military, increased sympathy for terrorism throughout the middle east; squandered resources needed for domestic needs, and made us less safe.

In a clear editorial today Obama writes:

...on my first day in office, I would give the military a new mission: ending this war.

As I’ve said many times, we must be as careful getting out of Iraq as we were careless getting in. We can safely redeploy our combat brigades at a pace that would remove them in 16 months. That would be the summer of 2010 — two years from now, and more than seven years after the war began...

Ending the war is essential to meeting our broader strategic goals, starting in Afghanistan and Pakistan, where the Taliban is resurgent and Al Qaeda has a safe haven. Iraq is not the central front in the war on terrorism, and it never has been. As Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, recently pointed out, we won’t have sufficient resources to finish the job in Afghanistan until we reduce our commitment to Iraq.

In this campaign, there are honest differences over Iraq, and we should discuss them with the thoroughness they deserve. Unlike Senator McCain, I would make it absolutely clear that we seek no presence in Iraq similar to our permanent bases in South Korea, and would redeploy our troops out of Iraq and focus on the broader security challenges that we face. But for far too long, those responsible for the greatest strategic blunder in the recent history of American foreign policy have ignored useful debate in favor of making false charges about flip-flops and surrender.

It’s not going to work this time. It’s time to end this war.

Despite what McCain may believe, the Iraq war which has claimed over 4000 American lives and left over 30,000 of our troops wounded, is not a figment of our imagination. And opposing this war is not whining!

No flip flop! No whining! Just straight talk from Barack Obama

Read the entire piece.

Friday, July 11, 2008

McCain advisor: Americans are whiners who suffer from a psychological recesion!

Yesterday, life long Milwaukee resident and safety assistant with Milwaukee Public Schools, Travis Griffin, sized up the dismal state of the economy when he told the Milwaukee Journal Sentinel: "It's the blue-collar kind of thing...You need two or three jobs to make things work for yourself...But you just do it"

On the same day that Griffin was stoically commenting on how hard it has become to make ends meet, Phil Gramm, Republican presidential nominee John McCain's campaign co-chair and top economic advisor, denied the nation's growing economic problems, declaring that Americans suffered from a psychological recession, not a real one and that Americans like Griffin had become a nation of whiners.

Take a look at this video!

John McCain, who has acknowledged that he knows very little about economics, tried to dissociate himself from Gramm's tone deaf comments. But as this video shows McCain has argued repeatedly that the nation's economic problems are mainly psychological.

Democratic presidential nominee Barack Obama's response was that the nation's economic problems are real, not psychological. People who are losing their jobs, their healthcare and their homes, folks like Griffin, are struggling to fill their gas tanks, keep the lights on, pay their mortgage and piece together an income. They don't need therapy, they need help.

Who do you think has it right-John McCain and Phil Gramm or Travis Griffin and Barack Obama?

Wednesday, July 9, 2008

For sale signs popping up like dandelions in Oak Creek

Steve Jagler, executive editor of Small Business Times, reports that:

"...'for sale' signs are popping up like dandelions in front of condominiums throughout Oak Creek, as (Midwest) pilots and flight attendants prepare to lose their jobs or take pay cuts that would prevent them from staying in their homes."

The Midwest Airlines pilots who agreed to "deep concessions" to keep the Oak Creek-based company afloat in 2003 do not plan to even vote on company demands that would slash their pay by up to 65 percent.

Jay Schnedorf, a captain and chairman of the Midwest unit of the Air Line Pilots Association (ALPA), told Jagler: "'There will be no vote on their proposal. It's unacceptable on its face. We are planning a counter-proposal to present back to the company … We've told them (company officials) their demands are unacceptable.'"

Jagler's article details the human costs of Midwest management's demands for concessions.

Thursday, July 3, 2008

Will Midwest CEO return his $10 million windfall?

Last week Midwest Airgroup Inc. announced that it would seek pay cuts of 45% to 65% from its pilots, 34% to 56% from flight attendants and 10% and 5% for maintenance technicians and professional staff. Hundreds will be laid off.

A few days later, Midwest CEO Timothy Hoeksema declared that he would cut his own pay by 40%. Other senior vice presidents' pay would be cut by 25%.

Hoeksema's decision to reduce executive pay is designed to communicate that Midwest's management will share in the sacrifices required to keep the struggling airline company from going bankrupt.

If Midwest's top brass, who make at least ten times more (in total compensation) than their pilots and other employees, really want to share the pain, why aren't they taking bigger percentage pay cuts than their employees?

And why doesn't Hoeksema voluntarily return the $10.3 million windfall he received when Midwest was purchased less than a year ago? And demand that the senior vice presidents who received between $991,000 and $1.6 million do the same?

The $15 million in stock options that Hoeksema and the senior vice presidents cashed out when Midwest was sold to a private equity firm, TPG Capital LP, would buy an awful lot of jet fuel even at today's sky high (pardon the pun) prices.

The failure of Hoeksema and his lieutenants to match the pay cuts demanded from their employees, much less return their other worldly bonuses, makes it clear that their willingness to sacrifice is little more than a public relations ploy.

Despite management's posturing, its cookies for the executives and crumbs for Midwest's employees.