Notable News from the Last Two Weeks
by Jay Shenk
The State Corruption Olympics……we have a winner!
The judges have spoken, and it looks like New York State has built an insurmountable lead, swamping perennial contenders like New Jersey and Illinois. Even the nearly superhuman effort of former Illinois Governor Rod Blagojevich, who was caught on tape trying to sell President Obama’s former Senate Seat and may soon follow three other former Illinois governors to jail, couldn’t push the “Prairie” state past the “Empire” state. It wasn’t even close.
No New York list of gold medalists in the Corruption Olympics would be complete without crusading State Attorney General and then Governor Elliot Spitzer, who leaped to fame fighting corruption and moral turpitude, while also secretly leaping into bed with high priced prostitutes. He resigned as Governor in disgrace, and his Lieutenant Governor, David Paterson took over as Governor. Paterson has now dropped his reelection bid and is being called upon to resign for a litany of offenses including corruption, obstruction of justice, and perjury. Paterson’s troubles have to share the limelight with the Dean of the NY Congressional Delegation, Charles Rangel, who is the head of the House Ways and Means Committee, which writes our nation’s tax laws—he has just resigned his position as chairman, and by rights should be indicted, for failing to report substantial rental income from his vacation home in the Caribbean (he forgot about it??), for accepting corporate sponsored trips to that same area (perhaps his home was rented), and for having multiple rent controlled apartments for which he was ineligible based on both income and place of residence.
Not even earning a Bronze with this level of competition, freshman Representative Eric Massa, a “family man”, has just resigned amid charges he sexually harassed a male aide. Massa, a Democrat, is claiming he was forced out of office for voting against health care reform, and he recently referred to Rahm Emanuel, President Obama’s Chief of Staff, as the “Son of the Devil’s Spawn” on a recent radio show. People are questioning his sanity after some of the recent interviews he has given.
Over the past four years, the NY State Senate Majority leader was convicted of corruption, a New York City Council Member has just pleaded not guilty to billing the government $177 for a bagel and coffee (along with 12 additional charges), an Assemblyman was sent to prison for stealing from the Little League, a State Senator has been expelled from office for assaulting his girlfriend, another Assemblyman was caught on tape taking bribes, and an Assemblywoman was convicted of throwing scalding coffee in the face of one of her staffers.
It’s a tough act to follow. Even Massachusetts, which has seen 3 consecutive House Speakers resign for corruption, and had a finalist for “funniest home videos” when Dianne Wilkerson, D-Boston was caught on camera stuffing cash in her bra, can’t compete with New York. And, these are only the people who have been caught.
Every Single Teacher Fired at Central Falls High School in Rhode Island….
This high school was certainly doing a poor job—in 2008 a mere 3 % of 11th graders tested proficient in math, and although it was a big percentage improvement it was nothing to brag about, as only 7 % tested proficient the following year, in 2009. Due to these statistics, plus a few others statistics that are better only in comparison to those already cited, The Commissioner of the Rhode Island Department of Elementary and Secondary Education then gave the Superintendent four choices of how to fix the school, or which two were considered—the first choice was called the ‘transformation model’, and basically required that the teachers put in a fair amount of extra time teaching, tutoring and eating lunch with the students, two weeks of training in the summers, agree to more rigorous standards, and attend after school meetings to plan how to handle the situation.
There was no extra pay “carrot” involved for the teachers, but there was certainly a stick—the second model was the ‘turnaround model’, which was a nice way of saying that everyone gets fired if the teachers don’t agree to the conditions of the ‘transformation model’. The teachers’ union didn’t agree, and sure enough, all the teachers plus most administration were fired, effective the end of the year. Only half are eligible to be rehired at that school, although they could be hired elsewhere. President Obama and his Secretary of Education Arne Duncan have come out solidly in support of the firings, which is not what I (or the teachers’ union) would have expected.
Now what’s strange about all this is that just the teachers took the fall on this one, and although the fact that only 7% of their students are proficient in math is certainly deplorable, it’s not necessarily the teachers’ fault, and it’s definitely not completely their fault. For starters, it’s a safe bet this school isn’t in an area that resembles Sudbury or Lincoln here in Massachusetts. It’s probably extremely poor, with many ESL (English as a second language) students, and perhaps from cultures that don’t value education—it’s tough to teach in those circumstances, and it’s tough to really pin the blame on anyone:
The students? They could work harder, but they probably have a whole lot stacked against them from the day they are born.
The parents? Sure, they should make their kids study, but you can’t fire the parents, and some of them are no doubt trying their best while others are MIA.
The teachers? Sure, they probably should have put in the extra time, but would it actually help?
The Administration that fired the teachers? Who knows? Perhaps this will help, but it’s an intractable problem.
Some problems can’t be blamed on just one thing, and are so difficult that the solution might have to take place over a long period of time, even multiple generations.
The Democrats are still trying to pass their health care bill, and the Republicans aren’t helping……
This is a very odd situation and I don’t think anyone knows what will happen. President Obama is pressing ahead with something very similar to the original health bill, with the major problem being that there were two health bills, one from the House and one from the Senate, and as the Democrats no longer have a ‘supermajority’ since Scott Brown was elected, they now can only pass the bill through “reconciliation”, or as they are now calling it so it sounds less gimmicky, a “straight up or down vote”. Regardless of what it’s called, it’s proving very tough to line up the votes, because using the reconciliation method, they can’t do it the logical way and go to a House and Senate conference and just work out the differences, and then send the bill back to both houses to pass the agreed upon bill.
Now, the House has to approve the Senate bill (which they don’t like for a number of reasons), and then have some sort of promise worked out that the Senate will agree to all the changes necessary to get the votes from the House of Representatives. It may sound complicated, but it is actually much more complicated than it sounds. The House and Senate bills are quite far apart, the bill is very unpopular with the public, and the public wants the government to be doing something else, like fixing the economy and creating jobs.
What’s strange to me is that there is so much riding politically on this issue so early in the Obama Presidency, and the outcome is very much an unknown. President Obama has painted himself into a corner, so that he desperately needs a win or his entire first year looks at best like a waste of time. But, if the bill does pass, the public, rightly or wrongly, does not like this health care bill, and there really is not time for them to change their minds before the fall elections, were they so inclined, meaning that in all probability the Democrats will get hammered. The betting right now seems to be that the bill will pass because it has to pass for President Obama’s sake—he’s all in on this one.
Toyota’s problems just keep getting worse…..
On Monday a man driving a Prius on Interstate 8 near San Diego called 911 because his car had sped up to over 90 mph and he couldn’t stop it. A highway patrolman was able to help him stop the car, by having him brake and use the emergency brake to slow down to about 50, at which point driver was finally able to shut down the car and get out.
This incident, which ended up splashed all over the Internet, happened just hours after Toyota had completed a presentation explaining how it was impossible that the Prius’s electronics could cause the problems of sudden acceleration that so many people have been reporting. In fact, most of the recalls to date have focused on fixing the floor mats they claimed were getting stuck on the gas pedal, causing the problem. Toyotas are especially vulnerable to this problem because their cars do not have programmed overrides (Brakes override gas pedal) like many high-end European and some Japanese cars, and the brakes aren’t simply stronger than the acceleration, as is the case on many US cars.
This is an interesting case in part because the driver claims he looked down thinking he could free the gas pedal from the mat, and the mat was not in the way. It also wasn’t in the way when the car was stopped, nor was the pedal stuck at full throttle.
About twenty years ago Audi had similar problems reported about their 5000 series cars, but most of those cases turned out to be driver error compounded by some Audi design problems—the brake pedal was too small, and it turned out drivers were pushing the gas and not the brake. However, in this case it doesn’t seem that happened, as the driver claimed he could smell the brakes overheating.
Toyota and the government are both inspecting the car, so hopefully this one will solve the mystery. It seems like in this particular case there are just two possibilities—the driver is either making the story up, or Toyota has an even bigger problem that they thought, and they already think it’s huge—the recall is expected to cost over $6BN.
Hard as it is to believe, Wall Street has managed yet again to profit off a government stimulus program
Under President Obama’s stimulus plan a new type of municipal bonds were rolled out to help struggling cities build or repair infrastructure such as bridges, roads, and schools. A side benefit would be job creation. These new bonds were called “Build America Bonds”, and were attractive to municipalities because although they paid a higher interest rate than conventional municipal debt, the Federal Government picked up 35% of the interest payments. Goldman Sachs is the biggest seller of these bonds, with sales of $9.8Bn, followed closely by JP Morgan/Chase, Citigroup, Barclay’s, and Bank of America. Goldman also charges a higher underwriting fee for these bonds, getting $8.20 for every $1000 sold, compared to the typical amount of $5-$6 per $1000 for municipal bonds. So our friends at Goldman Sachs have made about $80,000,000 selling these bonds so far. By the way, I love the cartoon that goes with this article.