April 15, 2013 – RI Future

April 15, 2013April 16, 2013

For MetLife and Rhode Island, size matters

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Downtown Providence from the Providence River. (Photo by Bob Plain)

In the brouhaha about MetLife leaving, I did see and hear people try to blame this on the too-high RI taxes. Of course; it’s always about the taxes, isn’t it? I would like to make one point about that.

For 2012, MetLife reported $1.4 Bn of operating earnings. In comparison, the $80-90 Mn of tax relief that the will receive would just register as a rounding error in any single year. But those tax savings will be spread out over a number of years. As such, they don’t even constitute a rounding error.

Any company, of any size, that makes long-term decisions based on a few years worth of tax savings is not a company that will be around long enough to realize those savings. Only a company in dire straits would make so drastic a move for so little return. Because let’s face it, the up-front investment that is required will more than eat up those tax savings. In such cases, breaking even is a good result in the real world.

No: the savings will come from other areas: lower rent vs what is being paid in the Northeast, in greater Chicago, in the SF Bay area; it will come from lower wages paid to younger workers who do not incur the disability and medical expenses an older workforce will incur; it will come from pension benefits that do not continue to accrue to said older workers, and that will not be paid at all to younger ones. That’s where the money is.

No, RI’s problem is not the tax structure. It’s the size that matters.

The sad fact of the matter is that RI does not have its own economy. RI is a pale reflection of what is happening in Boston. Nor is this a recent development: it was already true in the early 1980s. Look back at the numbers; that was the period when Dukakis was creating (or taking credit for) the “Massachusetts Miracle.” The 128 Loop was America’s Technology Highway, where high tech lived before being superseded by Silicon Valley. Massachusetts recovered sooner than most of the country from the recession of the late 1970s; RI was a couple of years behind.

Then, in the mid-eighties came the phenomenon of Woonsocket turning into a bedroom community for Boston. Same with Nashua NH. Around then the ProJo carried a story of people taking classes to lose their RI accent because they felt that companies in Boston believed that people with an RI accent were less intelligent.

So, no, this is not a new phenomenon. What I have cited is anecdotal; but the numbers in the BLS and Census, etc. will support these contentions.

Also according to the US Census, in 2000, 79% of the population of the US lived in urban areas. In states like Nevada, it’s upwards of 90%. More, 45% of the population of the US now lives in the top 20 urban areas. In the meantime, the Census Bureau also says that one-third of all counties in the country are being drained of population. What does this mean?

It means that the urban concentration that began at the end of the 19th century is continuing. More and more people are living in and around cities while other areas languish. Telecommunication, and telecommuting were supposed to make cities obsolete; the opposite is happening. Telecommuting was all the fad in the late 90s and into the new millennium; now, companies are eliminating it.

It means that, in order to compete, size is a huge factor. Charlotte NC is now the #2 financial center in the country, after NYC. It has surpassed Chicago, with its Mercantile Exchange. It is the #2 center largely because the #1 bank, Bank of America, has its HQ there, and Wells Fargo has its East Coast operations HQ there. The Charlotte Combined Statistical Area has 2.4 million people. This is not rural America anymore.

With a million people, Rhode Island cannot compete with such a center, any more that it can compete with Boston. The advantages of a large educated, concentrated workforce with good infrastructure and a compact geographical footprint are too great to overcome. This is why NYC not only continues to exist, but to thrive, in the face of all the reasons conservatives say it shouldn’t: high taxes, big government, and whatever else they complain about. Half of the wealthiest zip codes in the country are in NY and NJ, both of which are high-tax states.

RI is not losing jobs to lower tax states; RI is losing jobs because the vast majority of jobs are in these concentrated urban areas. If jobs aren’t there already, they’re relocating there. I heard a story on NPR that a growing company in Kansas could not find workers. That’s because no one is willing to relocate to a small town that depends on a single employer; what happens when that employer decides to off-shore the jobs? People are stuck in a small town without prospects. In a larger metro area, there are other jobs, or at least a greater possibility of other jobs.

Size matters. The country is not de-urbanizing. Exactly the opposite.

Addendum: The point is, MetLife made its decision to relocate to NC for its own reasons. Only then did it approach the NC government and see how much it could extort from the state’s taxpayers. In other words, MetLife got money from the state to do exactly what it would have done without the tax breaks. In fact, there have stories to this effect in the North Carolina media, complaints that the state of NC got played for chumps by a large company.

And, btw, NC in general, and Charlotte in particular, have unemployment rates that are only a couple of tenths of a percent lower than what RI and Providence has. It’s not exactly boom-town down there, either.

So, yes, NC is getting the jobs. But they would have gotten the jobs without the subsidies. So no, it’s not about the tax rates, no matter how often or how loudly conservatives will say it is.

April 15, 2013

Jack Reed takes it to the banks and their regulators

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There’s been a surprising dearth of coverage in the local press of Jack Reed’s exemplary work last week, as he stuck it to the Office of the Comptroller of the Currency (OCC) alongside Sherrod Brown and Elizabeth Warren. Here’s a .

Here’s the rub, from Dave Dayen at Salon:

The vast majority of borrowers – 3.4 million – will receive $1,000 or less. To pick a category at random, 234,000 borrowers had a loan modification approved, were kicked out of their homes anyway, and will receive for their trouble – for having their home effectively stolen – a whopping $300 (for comparison’s sake, the third-party consultants got $10,000 per review).

HuffPo notes Reed’s role here:

Under questioning from Sen. Jack Reed, a Rhode Island Democrat, regulators came the closest to acknowledging that the reviews, which resulted more than $2 billion in payments by the banks to consultants, were poorly conceived and supervised.

exity of the task,” said Daniel Stipano, a top lawyer at the OCC. He cited the number of financial institutions, consultants and homeowners involved and the difficulty in negotiating state law as among the challenges that reviewers and regulators had to negotiate.

Dave explains how this hearing and the OCC mortgage fraud settlement relate to the broader housing collapse. Dave’s thrilled to see that the foreclosure fraud issue is FINALLY getting some play with the national press — with the tag-team effort by Reed, Warren, and Brown appearing — and even leading — on many national network news casts this week.

I have spent the better part of four years trying, with little success, to raise awareness aboutforeclosure fraud, the largest consumer fraud in the history of the United States. In fact, there’s a whole little band of us writers and activists and foreclosure fighters. We have provided multitudes of evidence about fake documents, forged documents, illegal foreclosures, foreclosures on military members while they served overseas, foreclosures on homes with no mortgages, breaking and entering into the wrong homes, suicides by foreclosure victims, and above all the complete lack of accountability for these crimes and abuses.

But instead of giving voice to thousands upon thousands of victims of illegal foreclosures, instead of documenting the banks’ criminal practices, maybe what we all should have done is simply let the Office of Comptroller of the Currency – part of the Treasury Department — and the Federal Reserve construct their own settlement with the banks. Then, when it utterly unraveled — as it has over the past couple of months — the unimaginable fraud heaped upon homeowners would get more attention than ever before, particularly from a frustrated and angry Congress led by Sen. Elizabeth Warren.

The OCC’s pathetic response to the housing crisis, its attempt to cover up its own corruption/ineptitude, and Warren’s star power make this the perfect moment to bear down on these issues. Reed deserves praise for helping to lead the charge — let’s hope he keeps plowing forward.

April 15, 2013April 15, 2013

How the right pushes for exemptions to equality

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Marriage equality advocates took lot of hope from April 8th’s front page ProJo article in which Senate President M. Teresa Paiva Weed anticipated “a full Senate vote on whether to legalize same-sex marriage by the end of April.” Good news indeed, but one needs to continue reading for the unpleasant bit.

Paiva Weed is concerned that the bill’s religious exemptions may be inadequate, and would like to see more comprehensive exemptions. But if marriage equality is the goal, and so-called conscience clauses allow same-sex couples to be discriminated against by wedding photographers, bakeries, flower shops and rental halls, then in what sense will gay marriage be equal?

A sense can be formed of Paiva Weed’s thoughts on this issue. The ProJo reports that Paiva Weed feels that one of the “better explanations” she’s read regarding exemptions was an op-ed piece by Robin Fretwell Wilson, a Washington & Lee University law professor. Fretwell Wilson criticized the Rhode Island House bill for providing only “fake protections,” arguing that “religious liberty and same-sex marriage share an inseparable fate.”

Reading Fretwell Wilson’s piece one might come to the conclusion that the marriage equality legislation under consideration does nothing to protect organized religion. Fretwell Wilson completely ignores the fact that Rhode Island has a robust set of laws already on the books that provide some of the strongest religious liberty and conscience protections in the United States.

Janson Woo, and attorney with GLAD, Gay and Lesbian Advocates and Defenders, in his testimony before the Senate, explained that “Senate Bill 38 and current Rhode Island Law provide broader exemptions for religious organizations than any other state in this country that allows gay couples to marry.” How is this possible? “Current Rhode Island law already has a complete exemption for religious organizations in our sexual orientation and discrimination law.”

Woo continued, “That is an incredibly broad exemption. It is one of the broadest in our country, and even if that were not ample or broad enough for the protection of religious organizations and the protection of religious liberty, Rhode Island also has the Religious Freedom and Restoration Act, or RFRA, which provides additional protections and greater protections than the Federal Constitution [for religious freedoms].”

So why would Fretwell Wilson, who certainly seems to know a thing or two about the law, mis-characterize both the Senate bill and Rhode Island’s long standing commitment to conscience and religious freedom? Perhaps it is because she is part of the “mainstream academic presence” aligned with “Becket Fund for Religious Liberty, a public interest law firm based in Washington, D.C., and the United States Conference of Catholic Bishops (USCCB).”

A March, 2013 report entitled “Redefining Religious Liberty: The Covert Campaign Against Civil Rights” by Jay Michaelson for the Political Research Associates describes “A highly active, well-funded network of conservative Roman Catholic intellectuals and evangelicals” that “are waging a vigorous challenge to LGBTQ and reproductive rights by charging that both threaten their right-wing definition of “religious liberty.”

The report is comprehensive, well-sourced, and names names. It specifically identifies Robin Fretwell Wilson as being part of a “regular consortium” of scholars who “make highly conservative political arguments, send letters to state legislators, and take direct roles in the drafting of legislation. These academics may well believe that religious liberty is threatened, but their work has been enlisted by a mass movement of seeking to end access to reproductive health care and restrict the civil rights of sexual and gender minorities.” (emphasis mine)

Paiva Weed may also truly believe that she is advocating for religious liberty when she buys into the arguments of the religious right, but she is mistaken. These new calls for “religious liberty” are really calls for the right to discriminate based on gender identity and sexual preference.

In yesterday’s ProJo Bernard Healey, chief lobbyist for the Providence Catholic Diocese, regurgitated these fallacious arguments in an attempt to twist the meaning of religious liberty into its exact opposite.

Schools, health-care facilities and a hospital that are operated by the diocese and “employ thousands of people” would be subject to new rules, some of which violate the diocese’s long-held beliefs, he said. [Healey] pointed to a case in New York, which approved same-sex marriage in 2011, in which a lesbian employee of a Catholic hospital is suing for family benefits.

“If you look in the civil code of Rhode Island, how many times is marriage listed,” Healey said. “It’s not just in the marriage section, it’s in business law, it’s in rental law, it’s in employment law, it’s everywhere. … If that bill that passed in the House is put into law, we would be subject to all types of harassments, lawsuits, litigations.”

Healey makes the extraordinary claim that denying lesbian employees of Catholic hospitals family health benefits is “a long held religious belief.” Healey further claims that his right to discriminate against certain families is being threatened by the marriage equality law. Healey wants the right to open a business, and then discriminate against those his religion deems unworthy of his goods and services. In Healey’s case, this means that LGBTQ citizens need not apply, but other religions might have other ideas, and if their religion demanded different forms of discrimination, the exemptions to the law Healey demands should apply to them as well.

Judge Leon Bazile, in ruling on the Loving v. Virginia case, wrote, “Almighty God created the races white, black, yellow, malay and red, and he placed them on different continents… The fact that He separated the races shows that He did not intend for the races to mix.” Surely this is a “long held religious belief” and under Healey’s logic should be protected by law. Why should we favor Healey’s desire to discriminate over Bazile’s?

Are not both views equally obscene?

As Michaelson explains:

…there should be no mistake: the Right’s “religious liberty” campaign is a key front in the broader culture war designed to fight the same social battles on new-sounding terms, and is part of a movement with old roots in Christian Dominionism (a form of theocracy) and ties to conservative Catholics who launched the antichoice movement. Its deliberate inversion of victim-oppressor dynamic has led to limits on women’s and LGBTQ people’s real freedoms in the name of defending chimerical ones. Proponents may sincerely believe that they are defending religious freedom, but the campaign’s endgame is a “Christian nation” defined in exclusively conservative terms.

And it is thus far inadequately opposed.

April 15, 2013April 15, 2013

David Cicilline and the anti-poverty agenda

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I seem to remember a time when people actually cared about poverty, when poverty was something that society actually wanted to alleviate, when poverty was the social ill and not poor people. That unfortunately was a long time ago.

Almost 15% of Rhode Islanders live in poverty, close to 155,000 of our mothers and fathers, our sisters and brothers, our daughters and sons. According to the 2013 RI Kids Count Factbook, “[t]here are 39,900 poor children in Rhode Island, 17.9% of all children.” One out of ten RI seniors lives in poverty. In a civilized society that is supposed to take care of the less fortunate among us, this should be totally unacceptable. In today’s America, this is just another day in paradise…

There is a lot of discussion about the “middle class,” and about how to “strengthen” it. But there is generally little discussion about poverty, its causes, consequences, and solutions (yes… solutions). When there is discussion about the plight of the poor, it is generally to blame them, either indirectly or directly, for their circumstances. This is not only offensive to the many, many folks who live their lives every day struggling to make ends meet, it completely ignores the economic realities facing the country and the social bases that perpetuate inequality and inter-generational poverty.

A Google News search for “poverty” yields 149,000 results. The same search for “deficit” brings back over 1.2 million results. I’m not sure why this is the case, but I feel the lack of discussion about poverty in the public realm perpetuates the problem, making poverty less visible and therefore “ignorable.” The closest thing to a full public debate on poverty in recent years was John Edward’s campaign theme of “Two Americas” leading up to the 2004 and 2008 presidential elections. And while that was particularly striking to me given the state of electoral politics, it was no Lyndon Johnson’s “War on Poverty” ad.

To this point, I am glad that Dem Whip Steny Hoyer recently announced the Task Force on Poverty and Opportunity, if for no other reason than to bring additional attention to a persistent and growing problem. Equally, I am glad that Rep. David Cicilline has been appointed to it as he is one of the most vocal in Congress about poverty and has been working on his plan for two years to further boost American manufacturing.

These manufacturing jobs would be in sharp contrast to the low-wage work, particularly part-time work, that has been the norm during America’s economic malaise that many people call a “recovery.” When almost 60% of the total number of jobs created after the recession officially ended is low wage occupations, should we even call it a recovery? Moreover, the recession’s effects on employment highlight the need for non-employment based programs to reduce poverty. Focusing only on programs to enhance the income of those who are working, while important, does nothing to help those who are unemployed. And the longer folks lack a job, the harder it is for them to find another.

Empirical research shows that the loss of a good job during a severe downturn—the job-loss pattern of this downturn—leads to a 20 percent earnings loss lasting 15 to 20 years. Earnings losses are more severe for long-term unemployed workers who run a greater risk of dropping out of the labor force and falling into poverty.

It’s important to understand that the policies and programs focused on reducing poverty actually work…, you know, when they’re allowed to work. There are things that can (and should) be done to alleviate poverty in this country, especially in times like these. When the economy was destroyed by those who have everything but wanted more, forcing misery and destitution on millions of Americans through no fault of their own, the most important thing to do is help ensure people can improve their lives.

I hope this task force will help find more creative solutions to reducing poverty, showing the same sense of seriousness and urgency that prompted Lyndon Johnson to push the Economic Opportunity Act of 1964 through Congress. They could start by raising the minimum wage, increasing the EITC benefit, prosecuting wage theft, making it easier to join a union, and truly helping the unemployed with job training, entrepreneurship assistance, long-term unemployment benefits, stimulus spending, and even subsidized work. Maybe then we’ll see another significant decline in poverty as was seen throughout the 1960s.