Monday, May 18, 2009

Fourth Estate: Take Out the Paper

When the United States began, the press meant newspapers -- the venerable Fourth Estate. Attributed to British politician Edmund Burke (1729 - 1797), that synonym for newspapers has been broadened to include all of the mass media. The press is protected by law from Congress, but it is not protected from business or technology. Despite pundits’ predictions to the contrary, radio failed to kill newspapers and television failed to kill radio. Neither is the Internet killing its media cousins. As newspapers across the country fail or fold, bad business practice in the present bleak economy threatens all of the Fourth Estate, and this in turn threatens the country.

The story of the failing
San Francisco Chronicle is just one example of a major metro-area newspaper having been managed into the dinosaur museum of media. It took the paper’s losing $50 million last year for management to make a remarkable grasp of the obvious. Its last-ditch solution is to slash expenses and purge the payroll. "Our current situation dictates that we accomplish these cost savings quickly," Chronicle Publisher Frank Vega wrote in a memo to the staff. "Business as usual is no longer an option."

The New York-based Hearst Corporation bought the Chronicle in 2000 in a $660 million deal and has been losing money ever since. The paper is the largest daily in northern California with a paid weekday circulation of 340-thousand and a work force of about 1500 people. According to the Wall Street Journal, Hearst said it will seek "critical cost-saving measures," including a steep reduction in the Chronicle's staff. If it can't reach its cost-saving target "within weeks," Hearst said it will seek a new owner for the Chronicle. If it cannot find a buyer, Hearst said it will close the paper. Bankers say there are no likely buyers for the Chronicle.

The list of new exhibits to the dinosaur museum of media includes other inductees such as the Seattle Post Intelligencer and the Miami Herald. After 150 years Denver’s Rocky Mountain News is history. Tribune Company, parent to the Chicago Tribune and Los Angeles Times, has filed for bankruptcy. So has Philadelphia Newspapers which publishes the Philadelphia Inquirer and Philadelphia Daily Journal. In fact, 33 newspapers have filed for bankruptcy protection. The American Society of Newspaper Editors has cancelled its annual convention for 2009.
Mike Hoyt is the Columbia Journalism Review Executive Editor. He says such losses are sad because newspapers are very tied in with their community. “When a city only has one paper,” Hoyt said, "you lose competition, and you lose the edge, and you lose energy. Competition is good. It sharpens the news gathering, and the investigative reporting." Reflecting on Denver and San Francisco, Hoyt said, "The daily newspaper in a major metropolitan market is the voice of a city. It provides a civic forum that everyone can relate to and come together to talk about. And it can take on complicated problems, and be a watchdog for the community . . . You need big institutions to cover big problems and big situations."

In 1787 Thomas Jefferson wrote, “The basis of our governments being the opinion of the people, the very first object should be to keep that right; and were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter.” Jefferson regarded a free press as absolutely essential to investigate and criticize the government. It bit him. The press vilified Jefferson during his presidency. Nor would he be the last.

A hundred-fifty years after Jefferson’s presidency, Harry Truman joined a long line of presidents who worked the press. “Once a week the President of the United States faces the free press and endures a barrage of questions,” wrote Anthony Leviero in the New York Times in 1949. “It is the biggest show in Washington. It is also a great institution, uniquely American. It has become a factor in our checks-and-balances system of government.”

Then there was President Nixon who, after two years of bitter public debate over the Watergate scandals, bowed to pressures from the public and the press to become the first President in American history to resign the presidency. “We saw a president toppled by a couple of reporters, Woodward and Bernstein, who inspired thousands of young people to take up investigative journalism,” wrote the late author and activist Peter McWilliams. “Then, after Woodward and Bernstein were portrayed in the movies by Dustin Hoffman and Robert Redford, tens of thousands applied to journalism schools.”

The peril of our free press is that it costs a lot of money and there is not much of that to support it. “Journalists are the watchdogs, and being able to shine a spotlight on corruption or scandal is vital to our democracy," wrote Mike Hoyt. However, the impact of the recession on newspapers ad-based bottom lines has to do with business and not journalism. It is just that there will be less journalism.

The worst advertising climate in decades killed the print version of the Baltimore Examiner free newspaper on February 15, less than three years after its debut. "This is very disappointing for all of us. Obviously, this is not what we envisioned when we launched the newspaper," ownership’s CEO Ryan McKibben wrote to Examiner staff. The company will now concentrate resources on an Internet venture where it plans to add space, new columnists and Web editors.

Maybe that is an example of good business management. What about the journalism?

“Half-truths, obfuscations and apparent deceit -- these are the wages of a world in which newspapers, their staffs eviscerated, no longer battle at the frontiers of public information,” wrote David Simon in the Washington Post about his experience as a newspaperman in Baltimore. “And in a city where officials routinely plead with citizens to trust the police, where witnesses have for years been vulnerable to retaliatory violence, we now have a once-proud department's officers hiding behind anonymity that is not only arguably illegal under existing public information laws, but hypocritical as well.”

Rather than solutions, there are modifications to the newspaper business failure. The Duluth News Tribune and the St. Paul Pioneer Press, for example, will work with the University of Minnesota's School of Journalism and Mass Communication on a half-million dollar project. The idea of folding newspapers into endowment projects or university systems is being floated. There is my dinosaur media museum. In the end, business is business – enterprise has a market to support it.

Unfortunately, business being business, markets contract and companies cease to be viable. GM is a looming example of a failed corporation and yet some of its brands will continue to be be produced. I suspect journalism likewise will survive the fall of the big corporations as a hybrid form of credentialed web-print production, such as blogging with a hard copy back end. I will not be convinced that blogging is journalism, however, until I see a White House Blog Corps.

Friday, March 6, 2009

First Bad Bank of the United States

Congress and banking have never been good working partners. Alexander Hamilton conceived the First Bank of the United States to handle the colossal government debt created by the Revolutionary War. Congress drafted and George Washington signed the bank’s charter in 1791. Twenty years later Congress voted to abandon both the charter and the bank. Today the government faces another colossal debt that is being created by the US banking system itself because the system is becoming insolvent. Saving the system may well require Congress to nationalize it. They may draft a charter for Barack Obama to sign creating the First Bad Bank of the United States.

Right now the nation's largest banks are carrying half a trillion dollars in bad debt. According to Nobel Prize Winner Paul Krugman, of the New York Times and Princeton University, the idea of temporary bank nationalization has “moved from the fringe to mainstream acceptance.” Krugman championed the cause for nationalization before the Bush Administration began its bungling government-intervention. "The chances of your being able to do this without nationalizing at least a couple of really troubled banks are not too good," Krugman told ABC.

Nor is he alone in that assessment. Economists Matthew Richardson and Nouriel Roubini may not be names that non-economics types recognize but they are of guru status and in agreement with Krugman that nationalization is the only way out of the out of the current financial crisis. The $1.2 trillion subprime mortgage mess is only the beginning of the problem. “Another $7 trillion -- including commercial real estate loans, consumer credit-card debt and high-yield bonds and leveraged loans -- is at risk of losing much of its value,” Richardson and Roubini wrote in the Washington Post.

How big of a hole are the banks in? It is huge, about $400 billion. This includes losses on loans and the drop in market value of the assets they hold but not the federal bailout funds that they got last fall. Nationalization appears to be the only option that would permit solving the bad asset problem on the banks balance sheets and allow lending to resume.

I use the word bad instead of toxic to describe assets with unknown value. Toxic is a buzz word that pertains to poison. Bad means bad and assets are at the core of this nationalizing business.

Here is the way nationalizing the banks would work. The government takes over running the banks. The bank assets are separated into two piles, good and bad. The good assets would again go private for sale to a buyer or to many buyers through stock offering to the public, such as an IPO. The bad assets would be valued, depressed as that might be, then either sold at their new value to investors or held by the government until the value comes back up to be sold at a profit in the future. In either case, first depositors and then debt-holders would share in the proceeds of the sold assets, with a fee going to the government. The idea is that in time the depositors are paid off and the government breaks even.

Bank nationalization means giving the U.S. government the power to control banks. The government could then choose and install new boards of directors and management as well as set corporate strategy. However, without creating a mega-fund to absorb the bad assets and remove them from the banks’ books, nationalization by itself would do nothing to solve the banking problem.

This is where the Bad Bank comes into the picture. The Bad Bank would be the mega-fund to take a trillion or more dollars of troubled loans and securities off the banks’ books so that credit could get moving again. In other words, the banks could loan money again because they would know what their inventory of money really is. Right now, they do not.

“A bad bank, perhaps run by the Federal Deposit Insurance Corp., would be a big step toward patching up the financial system,” Michael Mandel wrote in Business Week. “However, a bad bank would not eliminate the toughest choices that need to be made. In particular, Treasury Secretary Timothy F. Geithner, FDIC head Sheila C. Bair, and other regulators would still have to decide which banks are insolvent and need to be closed, partly nationalized, or completely taken over.”

What about the government running the banks? It would not make much difference, really. The government would not do a bad job at running the banks since clearly no one has done a good job at it. The problem is the borrowing. The federal government already borrows over a trillion dollars a year. Nationalizing our banks would add trillions of dollars more.

It is not that the government is not already in the banking business, either. Last September Uncle Sam stepped in and effectively nationalized two of the largest mortgage buyers in the country. The government placed Fannie May and Freddie Mac into conservatorship. It could because it backed both of those companies, which had federal charters.

It might have been hard to imagine before the election, but even Republicans such as Senator Lindsey Graham (R-SC) concede that nationalization may be necessary. “To me, banking and housing are the root cause of this problem. I'm very much afraid any program to salvage the banks is going to require the government . . . I would not take off [of the table] the idea of nationalizing the banks."

The president opposes it. "This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government," White House press secretary Robert Gibbs said when asked about nationalizing the banks. I am suspicious whenever a White House press secretary says anything because that is how it launches trial balloons.

Lawmakers already semi-nationalized the banking sector after the first rumbles of the credit crisis last fall. The Bush/Paulson treasury forked over $350 billion in government aid to more than 300 institutions in turn for some of those firms’ shares and other securities. Bank nationalization worked in Sweden with its five banks while we have thousands of banks here, but that does not mean nationalization cannot work here. To say “no” to nationalizing US banks because that is not the way we do things in the good old USA does not make much sense. The First Bad Bank of the United States is an idea whose time has come.

Originally published in Blogcritics Magazine, February 10, 2009

Saturday, February 21, 2009

Correcting Congress

I am becoming increasingly annoyed at members of Congress who bandy the word “billion” when they speak about taxpayer money. Look at the poorly named Stimulus Packages under debate. Each item is all about billions, so much so that $17 billion to give one-time $300 payments to Social Security recipients do not seem like that much. With little exception these members, Democrat and Republican, are the same people who let Bush have his war and allowed our economy to fail. The present debate demonstrates that the governing class has long ceased to represent the constituencies that elect it because its job is only to get re-elected. It is not about representation. We need term limits.

The Founders did not intend government to be a career. They intended governing as a volunteer position for a set amount of time and then it was time to go back home. They also debated limiting terms. Washington and Jefferson argued in support of term limits, while Madison and Hamilton opposed them. Not much came of the debate for about a hundred years since members often voluntarily chose to leave Washington and return home. Long-term Congressional incumbency was rare, but times have changed.

There is only one term limit. The 22nd Amendment to the United States Constitution placed a limit of two terms on Presidents in 1951. There are no term limits for Vice Presidents or members of Congress, whether Representatives or Senators. Politicians, lobbyists and special interest groups continue to combat term limits for those offices.

Fifteen state legislatures have
term limits in effect today and most have experienced a complete turnover in their membership. Term limits have prevented more than a thousand experienced legislators from running for reelection. New legislators have to learn their jobs in less than six years, chair important committees in their first term, and even serve as Speaker of the House after just two or three years in office. The leadership, culture and organization inside those legislatures have had to adjust to limited terms in office, not to mention adjustments of outsiders such as governors and lobbyists.

Voter initiatives of the 1990s are responsible for states adopting legislative limits. In an online column, Wall Street Journal columnist Steve Moore wrote that “limits on politicians' time in office were enacted or reaffirmed by enormous margins nearly everywhere they were on the ballot in what might have been the loudest referendum for term limitation by voters ever.” The Republicans hopped on the bandwagon.

Many Republicans seem to have forgotten that part of their 1994 platform included term limits on Congress. For the first time in more than 40 years, they had gained a majority in the House and their platform, called the "Contract with America," included a pledge to impose term limits. They brought a constitutional amendment to the House floor that limited members of the Senate to two six-year terms and members of the House to six two-year terms. Republicans held 230 seats in the House and got a simple majority vote easily. Unfortunately for them, they needed 290 votes for the two-thirds majority required for constitutional amendments.

The U.S. Constitution sets no term limits on congress. The Tenth Amendment to the Constitution assigns to the states and their citizens all powers not reserved to the federal government. This distribution of powers is seen to create a strong constitutional opportunity for congressional term limits. The Seventeenth Amendment restates the first paragraph of Article I, section 3, of the Constitution and provides for the election of senators by replacing the phrase "chosen by the Legislature thereof" with "elected by the people thereof."

States have tried to extend term limits to members of Congress. However, in 1995 the Supreme Court of the United States ruled that states cannot impose qualifications for prospective members of the U.S. Congress stricter than those specified in the Constitution. U.S. Term Limits, Inc. v. Thornton [514 U.S. 779] invalidated the Congressional term limit provisions of 23 states. Congress failed to achieve the required two-thirds majority needed to pass a term limit constitutional amendment and the matter did not come up again.

Calls for government reform come with the territory. Just over a hundred years ago, William Randolph Hearst championed the cause of direct election as he expanded his publishing empire. He hired a veteran reporter named David Graham Phillips to portray Senators as pawns of industrialists and financiers. A series titled "The Treason of the Senate" appeared in several monthly issues of the magazine Cosmopolitan in 1906. Similar calls can be heard today and term limits is one of them.

“Term Limits would also hinder corruption and the effects that lobbyists have upon the government by breaking the established connections between lobbyists and the legislators in power, and by reducing the sway future campaign donations have,” Duncan Quirk wrote recently in the Huffington Post. “Establishing Term Limits would also promote a meritocracy by reducing the number of career politicians and the influence of political families, consequently curbing nepotism and the grooming of future politicians for office.”

Dan Greenberg wrote for the Heritage Foundation, “Term limits would change Congress. They are supported by large majorities of most American demographic groups; they are opposed primarily by incumbent politicians and the special interest groups which depend on them,” “Term limits would ameliorate many of America's most serious political problems by counterbalancing incumbent advantages, ensuring congressional turnover, securing independent congressional judgment, and reducing election-related incentives for wasteful government spending.”

You might ask about the criticism that the committee and legislative processes take many years to master. Such an argument is more about the legislative process than about the legislator. Patrick Basham, a senior fellow in the Center for Representative Government at the Cato Institute, wrote, “The bottom line is that the workings of our legislatures are far more complex than is necessary. Remember that legislatures aren't the only place to gain useful experience. The private-sector experience that many newcomers bring to term-limited legislative committees may prove more valuable for the general welfare.”

With less than a 10% turnover rate, to think that our best interests are being represented in Congress is naive. The data does not support such a conjecture. Though the election made me tire of polls, they make two things pretty clear – we do not approve of what Congress does and we keep electing the same people. The problem is that we have effectively lost control of a true representative government that the Founders intended. Instead we have a political class that represents itself and not the people.

We need new people in government with responsible, well thought ideas for the military and economic wars we face. Establishing term limits for members of Congress can make it happen and that requires a Constitutional Amendment. Amendments happen when a national public movement demands it. It has been done before – Women’s Suffrage (19th Amendment, 1920), Poll Tax Barred (24th Amendment, 1964), and Voting Age set to 19 (26th Amendment, 1971) to name a few. It can happen again. Establishing Congressional term limits is not a red versus blue issue. It is a we the people versus them the governing class issue, and its time has come.
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Originally published in Blogcritics Magazine, February 10, 2009

Tuesday, February 10, 2009

Fairness: the Fake Debate

Someone needs to explain why it is that conservatives continue to insist that liberals want to reinstitute the FCC’s 1949 Fairness Doctrine. While it is true that the old regulation is brought up from time to time, it has no traction in either the House of Senate. The administration is opposed to it. The Supreme Court would rule against it. Still, conservative talk radio continues to chant about the “Hush Rush Bill’ as if were a real threat with real backing. It isn’t, it doesn’t and it’s not going to happen. Nor will the sky fall.

Before you start to write your commentary about Nancy Pelosi, stop for a moment. The speaker of the House has been quoted as saying she supported the Fairness Doctrine by John Gizzi, Political Editor of Human Events, which calls itself the “Headquarters of the Conservative Underground.” He asked a yes-no question and she said yes at a Christian Science Monitor luncheon they both attended. She also said no, she didn’t think it would come to the floor for a vote. It is an issue for which the speaker does not express a majority opinion.

Perhaps someone can also explain how it is it that conservatives (“disposed to preserve existing conditions, institutions, etc., or to restore traditional ones, and to limit change”) use the word liberal as an adjective of derision as in the term liberal media or liberal socialist agenda such as “state aid for the betterment of the working classes.” That socialism is some kind of evil.

How could mainstream media be anything other than liberal (“favorable to or in accord with concepts of maximum individual freedom possible, esp. as guaranteed by law and secured by governmental protection of civil liberties”)? Being liberal minded requires reporting both sides of any issue, which defines fairness in and of itself without any regulation to be fair.

The conservative mantra that their champion Ronald Reagan struck down the Fairness Doctrine is incorrect. His son Michael claims in his blog, Michigan Redneck II, “My dad, President Reagan, killed the ‘Fairness Doctrine.’ As a result, this rule change allowed Rush, Hannity, and me to have radio talk shows — that’s why the new proposal to bring it back is being called the ‘Hush Rush’ bill. Now the liberals are dying to shut us up.”

No, the president did not. The
FCC overturned the regulation. What President Reagan did was to veto a congressional attempt to make the regulation a law. The Supreme Court set the stage for the FCC to dump the regulation in 1984 (FCC v. League of Women Voters, 468 U.S. 364). The regulation came up again in 1993 and failed. Neither Congress nor the Clinton administration supported it.

There is a difference between a regulation and a law. Section 315 of the
Communications Act of 1937 was federal law passed by Congress. It required broadcast stations to offer "equal opportunity" to all legally qualified political candidates for any office if they had allowed any person running in that office to use the station. The Fairness Doctrine was simply FCC policy, a regulation the FCC dumped as unconstitutional in 1987. After Meredith Corp. v. FCC, the Supreme Court declared that the Doctrine was not mandated by Congress and the FCC did not have to continue to enforce it.

For the record, as an independent regulatory agency, the FCC has the power to reimpose the Fairness Doctrine at anytime without action by either the executive or legislative branches. It should not be confused, but often is, with the Equal Time rule. The Fairness Doctrine deals with matters of public importance, not political opinion. The Equal Time rule only deals with political candidates.

Nonetheless a fake debate about the Fairness Doctrine continues. “In 1980 there were fewer than 100 radio talk shows nationwide. Today there are more than 1,400 stations entirely devoted to talk formats. Liberals, not satisfied with their domination of academia, Hollywood and most of the mainstream media, want to kill talk radio, where liberals have been unable to dent conservatives' dominance,” George Will wrote in the Washington Post.

Will’s colleague
Michael Gerson wrote that “three hours of Rush Limbaugh on a radio station would have to be balanced by three hours of his liberal equivalent. This may sound fair and balanced. But it would destroy the profitability of conservative talk radio and lead other outlets to avoid political issues entirely -- actually reducing the public discussion of controversial issues.” They also both wrote that in 1987 President Reagan “eliminated” (Will) or “overturned” (Gerson) the 1949 FCC regulation.

While they are both wrong about Reagan, they do not demonstrate much knowledge about radio. If conservatives dominate talk radio, it is because it’s cheap. Talk radio doesn’t cost a radio station anything except electricity. Typically the air-time is brokered and the talker pays for the time. Rush Limbaugh, Laura Ingraham and Dr. Laura Schlessinger, for example, are not so much radio personalities as they are media companies. Their concern about the Fairness Doctrine is literally lip service.

They do have large audiences and wield influence. Sometimes their influence works against them. One of my former radio colleagues, Gary Nelson of WFOR TV4 Miami, recently wrote, “About the vitriol on talk radio, in doing a piece the day after the election, on Bush losing the Hispanic vote, I interviewed a Colombian-American voter who said he had been a Republican all his life and had never voted for a Democratic presidential candidate. He said the ‘mean-spirited’ attacks on Obama changed him. ‘Rush Limbaugh cost John McCain my vote,’ he said.”

President Barack Obama is expected to appoint longtime friend Julius Genachowski as chairman of the Federal Communications Commission. Mr. Genachowski also has a Harvard background as a legal scholar and was a Supreme Court law clerk. That may lead him to play a stronger role in determining legal strategy on FCC court cases, normally a Justice Department task. When Genachowski does become FCC chairman, his biggest immediate task will be working on the digital TV transition. The Fairness Doctrine does not appear on his docket.

As to the conservative assertion that the White House will sign Fairness Doctrine legislation, that is far from likely. The President opposes it. As he said in his inaugural address, “To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history.”

The broadcast media of 1949 has its own chapter in history, as will the Internet sixty years from now. Today we have right wing and left wing media. Some are even in the middle. There is one thing that Rush and both Lauras have to fear about being silenced: listeners changing stations. As to a new, improved, rebranded Fairness Doctrine, forget about it. It is not going to happen.
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Originally published in Blogcritics Magazine, February 1 2009

Thursday, February 5, 2009

Hypocrites Lose and Other News

There is new information for several stories I have posted here in the Premise Loft and elsewhere. For those keeping score, here are some updates on Proposition 8, banks taking tax money, and the digital television conversion date.

Initially I wrote that the California’s Proposition 8 amounted to legalized bigotry. It received almost 200 comment postings at
Blogcritics Magazine after it appeared on New Year’s Day. On March 5, 2009, the state Supreme Court will hear oral arguments in a series of lawsuits seeking to overturn Proposition 8. After the court's seven justices hear those arguments, they have 90 days in which to issue a ruling.

For me it is difficult to fathom the amount of money supporters and opponents spent on the proposition. During the contest's closing days, elected officials, businesses, churches and individuals poured more than $28 million into the race. In all more than $83 million went to the ballot initiative that abolished same-sex marriage in California.

Of the supporters of Proposition 8, the money attributed to The Church of Jesus Christ of Latter-day Saints now has a dollar amount. According to the church's report, nearly $190,000 went to its role in getting the initiative passed. $97,000 of that money went to the Utah-based Mormon Church staff for their time devoted to the Yes on 8 campaign.

In the follow-up article I wrote that the Proposition’s backers demonstrated their hypocrisy by petitioning the state Supreme Court to overturn a different ballot initiative than theirs. Citing a potential for harassment, supporters wanted the court to grant a preliminary injunction to remove the contributors’ identities removed from the secretary of state's Web site. The court told them No and noted that most of the activity the plaintiffs called harassment, such as threats of boycotts, was actually protected free speech.

I took banking accountability to task in two articles, especially in Broke Banks Mounting. The president has capped executive pay, but there is a lot more to be done. Bank public relations took yet another hit recently after a torrent of criticism that Wells Fargo was misusing $25 billion in federal taxpayer bailout money. Calling it a “recognition event,” Wells Fargo had booked 12 nights at two of the most expensive hotels in Las Vegas— the Wynn Las Vegas and its sister hotel, the Encore Las Vegas. The bank cancelled the junket.

Wells Fargo spokesperson Kevin Waetke defended the cancelled trip. “This year, we have the unique opportunity to bring together our Wells Fargo and new Wachovia mortgage consultants to focus on continuing to do all we can for U.S. homeowners.” Continuing to do all we can to U.S. homeowners would have been more accurate.

$25 billion TARP recipient Morgan Stanley had been planning to send its top employees to Monte Carlo along with a similar event in the Bahamas. They cancelled those trips. Likewise Bank of America, which purchased Wall Street financial house Merrill Lynch and mortgage giant Countrywide, canceled all employee incentive trips.

Finally, there is new information about the digital television conversion date delay, although it might have gotten lost. In No Viewer Left Behind I concluded, “The Obama administration may know who its friends are, but millions of viewers are now left behind.” House Republicans blocked the postponement. Supporters of the postponement could not make the two-thirds majority when it came to a vote. However, under a "closed rule" vote prohibiting new amendments, the House held the full floor vote and passed the Democratic-backed bill to delay the mandatory shutdown until June 12. President Obama urged the delay and is expected to sign the bill.

I appreciate your comments and invite you to join the conversation at Blogcritics, where the Fairness Doctrine is being debated.

Sunday, February 1, 2009

No Viewer Left Behind

I objected when Monday Night Football moved from over-the-air broadcast television to cable/satellite ESPN after 35 years on ABC. Making fans have to pay to see televised football is nothing short of un-American, I argued to no avail. I objected last year when the NFL channel kept exclusive rights to broadcast a Thursday night game only available on satellite, which you cannot receive if you do not have a southern exposure for a dish. The once public airwaves ceased to be public. What next, I thought: the public will have to pay to watch public television? I hate being right.

Congress mandated the conversion from analogue to all-digital television broadcasting presumably because all-digital broadcasting would free up frequencies for public safety communications such as police, fire, and emergency rescue. The government says that DTV technology will allow broadcasters to offer “television with movie-quality picture and CD-quality sound.” In addition, the switch frees up valuable chunks of wireless spectrum for public safety and those airwaves can also be used for commercial wireless services, which are private interest.

When the legislation originally came up, television stations were supposed to broadcast analog and digital signal in parallel until 2017. The Bush administration dropped that stipulation and the FCC auctioned the airwave spectrum. The wireless biopoly of AT&T and Verizon Communications paid a collective $16 billion at the FCC auction. Back in 2005 when the Republican Congress passed the legislation requiring the conversion, they set February 19, 2009, as the conversion deadline.

However, a glitch occurred. According to the Nielsen Company more than 6.5 million homes are still unprepared to receive digital signals. The government said 1.4 million households are on a waiting list for an equipment subsidy that is financed by the FCC auction. The National Telecommunications and Information Administration, an arm of the Commerce Department, said it had hit its $1.34 billion funding limit set by Congress to pay for converter box coupons. In other words, the government subsidy for converter boxes ran out of money.

At that point the Obama administration decided to push for a delay because the government is not doing enough to help Americans prepare for and navigate the transition. The issue seemed to especially affect rural, poor or minority communities. The Senate GOP opposed the delay. Congressional lines in the sand began to appear.

Enter Senator John Rockefeller of West Virginia, the incoming chairman of the Senate Commerce Committee.”Over 2 million Americans are waiting to receive a coupon to help them offset the cost of equipment that will help them manage the transition,” he said. “Millions more don't have the proper information they need." Rockefeller contended that delaying the transition by three months would give the federal government time to fill a backlog of consumer coupon requests and also to give the government and the FCC more time to prepare for the change. This week a unanimous Senate voted to postpone the upcoming transition from analog to digital television broadcasting.

The House had its own proposal but was expected to go along with the move that was proffered by the Obama administration. Enter Representative Henry Waxman of California, Chairman of the House Energy & Commerce. His bill sought to change the DTV Transition and Public Safety Act of 2005 to insert the new date. It would also move the expiration date of any DTV-to-analog coupons that have expired to Sept. 15, 2009.

The Consumers Union weighed in and wrote to Waxman’s Committee, “We are concerned that millions of at-risk consumers, including rural, low-income and elderly citizens across the country could be left with blank television screens.” In addition to consumers having “fewer resources than ever” to buy converter boxes, this is “not the right time to ask consumers to dig deeper into their own pockets to pay for the miscalculation by the federal government."

The House Bill failed by 26 votes and GOP members claimed victory, warning that postponing the transition would confuse consumers. The 258-168 vote did not clear the two-thirds threshold needed for passage. The February conversion stands, at least until the House Bill comes to the floor again. By regular majority vote, Democrats have sufficient votes to pass the legislation and send it to the President.

The National Telecommunications and Information Administration had almost 3 million coupon requests on a waiting list last week and those people will not receive their coupons before February 17. The NTIA is sending out new coupons only as older, unredeemed ones reach a 90-day expiration date and free up more money. To date, more than half of coupons that have reached their 90 day cycle have been redeemed and more than 13 million coupons have expired.

Although a minority, many of our elderly folks for whom rabbit-ear-antenna television is their entertainment may be looking at black screens next month. The AARP’s advice is pragmatic – “get a special converter box that will make your analog set work” or “subscribe to a cable, satellite or other pay service for all the sets in your home, or buy a new TV that will receive digital signals.”

While I can buy into the public safety aspects of using analogue television frequencies for public safety, I cannot buy into making people pay for public airwaves. The same House legislators who defeated a three month delay also decide Public Television and the National Endowment for the Arts funding. The Obama administration may know who its friends are, but millions of viewers are now left behind.
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Originally published in Blogcritics Magazine, January 29, 2009

Thursday, January 29, 2009

Broke Banks Mounting

I would like to write the story that is published beneath the headline “Banks and Credit Card Companies Lead Country to Prosperity.” It should be clear that there are things bankers do not know how to do, such as lead. I am also troubled that bankers do not know what to do with the tax dollars they have received from the Troubled Asset Relief Program (TARP), such as lend. Since I cannot write that story, please accept this one.

If ever there was an industry that needs some positive public relations, it is banking.
Bank failures have become common place. In Georgia, for example, there have been five bank failures in the last five months and the hits just keep on coming. Another fifteen banks are expected to go under this year, more than twice the number that collapsed there during the savings and loan crisis twenty years ago.

Until last year, California had seen only 3 bank failures during the previous decade – in 1999, 2000 and 2003. According to the
FDIC, California suffered 5 bank failures in 2008 alone.

· PFF Bank and Trust, Pomona, California, closed.
· Downey Savings and Loan Association, F.A., Newport Beach, California, closed.
· Security Pacific Bank, Los Angeles, California, closed.
· First Heritage Bank N.A., Newport Beach, California, closed.
· IndyMac Bank, F.S.B., Pasadena, California, closed. (The FDIC was named Conservator.)

Banking is a highly regulated business. Despite news commentaries that bankers got greedy as banks were deregulated and became corrupt, bank
consumers have protection. In the case of IndyMac Bank, the third-largest bank to fail in American history, a run on deposits and rising defaults made Federal regulators seize it.

The mortgage loan portion of the banking business earned derision for being lax and, in some cases, predatory in its lending practices. Federal Reserve Chairman Ben Bernanke says that a sustained economic recovery may require
additional bailouts of financial institutions. However, the business loan portion of banking has become the collateral casualty that threatens the country’s economic recovery.

As a
business management consultant experienced in dealing with bankers on behalf of my clients, it is clear to me that business loan criteria are in flux. Even clients with excellent credit, strong assets and positive history are being denied new loans and are incurring decreased credit lines. New financing does not seem to be happening. Does that mean banks are not lending money to small businesses? They say that they are but that assertion is inconsistent with my clients’ are experiences.

Banks make money by selling the use of money, right? “If the borrower provides the bank with both a belt and a pair of suspenders,” Joe Nocera wrote in the
New York Times, “the loan is being granted.” However, “[i]n addition to not making new loans, the banks are systematically withdrawing commitments and capital from the economy.”

So what about the
Economic Stimulus Package of 2008? It is about tax breaks for businesses that spent money on property and vehicles last year while their credit lines were getting trashed. According to the Packages press release, “This new legislation will not only benefit small businesses in a variety of ways, but it will also provide an economic boost to the entire nation.” Bold words in that generalization do not change the fact that “there are exceptions and additional requirements.” Tax credits for small businesses that create jobs sound fine, but it takes money to make the payroll to pay for the jobs to qualify for the tax credits.

Consider this: it is not that bankers are greedy, they are just not thinking of anything except their bank as directed from the home office. They do not make informed decisions, they just react. That is not
greedy, that is stupid. Additionally, from the previous bailout round of the dying days of the Bush Administration, there is no mechanism to hold the banks accountable for putting bailout money into circulation.

Bank accountability is about to change with the new administration. Specifically, the government might force banks to make loans they would otherwise avoid. It is certain that the Obama administration wants to avoid more stupidity, such as those of the Bush Treasury secretary, Henry Paulson “who sold Congress on an elaborate strategy for shoring up banks and then shifted to an entirely different approach before he even got started.”

A retreat is in order. Banking and bank shareholders have no choice but to go along with a change that will mean making less money by taking less risk.

Meanwhile, forces for the benefit of small business—the largest aggregate employer in the United States -- are seeking the administration’s ear. The
National Development Council wants a $75 billion small business stimulus package and a Cabinet-level position to coordinate federal resources for small businesses. Additionally, the National Small Business Association is seeking congress’s ear, asking for 25 percent of TARP funds to be aimed at small business lending and a mandate that 23 percent of stimulus infrastructure funds be contracted out to small businesses. Both are debatable requests.

Another debatable move is that of
credit card companies like American Express. In November the Federal Reserve granted a request by American Express to become a bank holding company and access to low-cost financing from the Fed. Just like the banks, Amex also cuts back credit lines regardless of business or personal credit worthiness or history. The credit card business is a trillion dollar a year industry, cunning, predatory and greedy.

At the top of the banking food chain are some serious minded criminals who got away with being sharks in the Bush Administration’s pool. While the former president may avoid prison, I hope that those lesser crooks at the top serve time. Nor do I believe that bank shareholders, whom the crooks served, should prosper at taxpayer expense while the banking system undergoes its overhaul.

Small business needs direct financial help to grow our pillaged economy and to create the jobs promised by the new administration. Tax credits alone cannot make job growth happen. The new congress and administration need to hear from us. We will have to make prosperity happen. They will have to help us.

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Originally published in Blogcritics Magazine, January 22, 2009

Thursday, January 22, 2009

New Bigotry II

I had not intended to write a follow up to Proposition 8: The New Bigotry until I read about the latest hypocrisy in the ongoing debate since the ballot initiative passed. Supporters of Proposition 8, so vocal about voter approval to amend the California State Constitution, now want the same Constitution to overturn another voter-approved initiative -- the Political Reform Act of 1974. They seem to believe that they can have it both ways and have asked the court to back them.

Proposition 8 added fourteen words to the Constitution of the State of California: “Only marriage between a man and a woman is valid or recognized in California.” California voters approved it by 52.3% of the November 4 vote. In 2000, California voters approved Proposition 22, which defined “marriage as between a man and a woman,” by 61% of the vote. On May 15 last year, the California State Supreme Court declared that statute unconstitutional and legalized same-sex marriage in California.

The constitutionality of Proposition 8 is before the
California Supreme Court.

The amendments co-author Kenneth Starr represents its supporters in asking the court to uphold the Proposition. By the close of business on January 15, a number of groups filed
amicus curiae, or “friend of the court,” briefs to ad to Starr’s. Among them, the United States Conference of Catholic Bishops, the Family Research Council, and the Union of Orthodox Jewish Congregations filed briefs.

Of its legal filing, San Francisco Archbishop George H. Niederauer wrote that under California Law, “Same sex couples who register as domestic partners will continue to have ‘the same rights, protections and benefits’ as married couples. Proposition 8 simply recognizes that there is a difference between traditional marriage and a same sex partnership.”

One can interpret that as supporting "separate but equal" treatment under the law which is unconstitutional. Nonetheless, Father Neiderauer's opinion is protected speech under the 1st Amendment.

California Attorney General Jerry Brown represents the measure’s opponents in asking the court to overturn the Proposition. Joining the opponents, the
League of Women Voters of California, the California Council of Churches, and the California Labor Federation have now asked the court to invalidate Proposition 8.

Of its amicus brief the California Council of Churches said, “ The brief argues that Proposition 8 poses a severe threat to the guarantee of equal protection for all and was not enacted through the constitutionally required process for such a dramatic change to the California Constitution.”

Google has weighed in. On its official company blog, the Internet search company joined other businesses in signing a brief in support of the lawsuits to overturn Proposition 8. “Denying employees basic rights isn't right, and it isn't good for businesses," Google General Counsel Kent Walker wrote. He added, “California's image has suffered since the divisive election.”

The Washington Post conservative scribe George Will also weighed in. In a
recent column he took to task Jerry Brown’s 111-page argument to invalidate Proposition 8. He wrote, “Passing laws by referenda is an imprudent departure from the core principle of republican government -- representation: The people do not decide issues, they decide who shall decide. But the right of Californians to make laws through the direct democracy of referenda is as firmly established as it is promiscuously exercised.” While I usually disagree with what George writes, I agree it puts the court where it should not be and agree about the promiscuous part.

You may say, “So far, so good. It’s now in the Court’s hands.” You would be correct and, in addition to all those briefs, amicus or otherwise, there is an
additional law suit to consider. That suit alleges that California’s Political Reform Act is unconstitutional. The Political Reform Act was adopted as a statewide initiative (Proposition 9) by an overwhelming vote of the electorate in 1974.

According to the
State of California, “the law's most fundamental purpose [is that] of ensuring that ‘receipts and expenditures in election campaigns should be fully and truthfully disclosed in order that the voters may be fully informed. . . .’” However, supporters of Proposition 8 have filed a lawsuit that seeks to keep the public from seeing the supporters’ campaign finance records, which are required under the post-Watergate law to be posted for 10-years.

Claiming that the reports have led to harassment of donors, they have asked the court to declare the law unconstitutional.

The First Amendment Coalition says that the suit probably will not succeed. According to the Coalition’s executive director, Peter Scheer, "The problem with their argument, of course, is that campaign finance laws, both at the state and federal level, have been litigated endlessly now since Watergate and the argument has, in one form or another, been rejected."

Still, it is amazing what can be done with data today. While the suits are being considered, much has been done with Proposition 8 supporter information. Not only is it a matter of public record, it can be found online on a
map. That is pretty darned amazing.

Incidentally, if you have not seen Jack Black in
Proposition 8 – the Musical, have a look.

As I wrote in my initial piece, it was “the effort to invalidate 18,000 gay marriages that changed my mind on writing about the issue to expose it as the sheer, unadulterated bigotry it is.” Adding hypocrisy makes it New Bigotry II. The courts will rule as early as March.

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Originally published in Blogcritics Magazine on January 17, 2009.

Saturday, January 17, 2009

A Lot of News But Are We Aware?

Think of our
news as a dartboard game and opinion as a dart. As long as your dart hits and sticks in the target, your dart scores, you earn points and you can espouse an opinion. Since the dart board is the size of an empty store building, it’s hard to miss. Without a toss we can start with the news that the store building is empty and have an opinion on its emptiness. But, could we have seen it coming? Shouldn’t we have?

I spent some time as a
television reporter. A shopping mall had burned to the ground and was still smoking when I arrived with another hundred reporters from regional newspapers, radio and television stations. I shot video above the scene from the skids of a sheriff’s helicopter -- a panoramic view that included all those other reporters standing behind the yellow police tape.

The next day, only reporter on the scene, I shot video from inside the shouldering ruins of the mall. Wet and smoky, the eerie scene got personal when my camera caught a man and a woman hunkered down just inside the door of what, just days before, had been their store and their life savings. Except for the arsonist, no one saw that devastation coming.

No one aside saw California based department store chain Mervyn’s closing. At least the employees and customers did not until the company filed for Chapter 11 bankruptcy protection last July. Cerberus Capital Management, the company that owns Target, saw it coming. Target owned Mervyn’s. The problem is that Mervyn’s was not financially big enough to be saved from failing. GM and Chrysler, by comparison, are too big to let fail, at least for now. Cerberus, the financial company not the mythical guardian of Hades’ gates, also owns GMAC and Chrysler.

Hurricanes are huge. We can personally run from one, but property damage is still going to happen. If we cannot run, the risk of not surviving increases. If we cannot see it coming, we do not know to run. A hurricane is a huge depression, the effects of which are only mitigated by our meteorological forecasting technology. Do we really lack economic forecasting technology? Could we not see this recession coming?

We seem to need something to
blame. I blame the news dartboard. It is too big to miss. Unfortunately, it is also personality dependent so we always need someone to blame. We blame the weatherforcaster for the tropical depression instead of blaming an inaccurate forecast.
Since blame is personality dependent, we throw another dart and hope to hit a person. Bulls-eye! Bush! That will work but the target is too big, too easy, too many more column inches to write, and too many writers to fill those inches. How about Madoff, the $50-billion Ponzi scheme guy? The same result as Bush. I am afraid that blame is only interesting.

The news dartboard makes it abundantly clear that a lot of things are not in our best interest, like Ponzi Schemes,
predatory lending and poor public policy. What it does not make clear is that we do not have to stand for it like an animal in the beam of oncoming headlights. We seem to have a tremendous amount of information at our disposal. Oddly, what we do not seem to be is aware.

For example, are we aware that banks and credit card companies have no mandate to make our business and personal financial lives suck? As institutions, they are not bright lights. At best they are rear-view mirrors. From a behavior point of view, they are like lemmings. They actually need us not to follow them over a cliff. We are their customers and following their plummet does not work for us. Maybe blaming banks will.

Back at the news dartboard, the scoring point for bank failures is a triple score. In Georgia, for example, there have been
five bank failures in the last five months and the hits just keep on coming. Another fifteen banks are expected to go under this year, more than twice the number that collapsed there during the savings and loan crisis twenty years ago.

I do not see a scoring headline that says “
Banks and Credit Card Companies Lead Country to Prosperity.” Should we blame them further? On one side I can argue that we cannot blame people for not doing what they do not know how to do – such as lead. On the other side I am troubled when bankers who have received tax dollars from the Troubled Asset Relief Program (TARP) refuse to say where that money is being spent.

“We've lent some of it. We've not lent some of it,” said a spokesperson for JPMorgan Chase, which received $25 billion. “We have not disclosed that to the public. We're declining to." Really!
As a business management consultant with years of experience asking for and getting money for my clients, I can guarantee you that bankers ask two make-it or break-it questions. One is, “What are you going to do with the money?” The second is, “where did you spend the money we gave you?” I can also guarantee you that answering, “We're choosing not to disclose that," would get me and my client shown the door. Bank of New York Mellon got about $3 billion of the TARP and that is what they told the Associated Press.

Fortunately, there is the
Treasury Department. It is monitoring how our taxpayer TARP billions is being spent. How is it doing that monitoring?

"What we've been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we're doing this. So we're building this organization as we're going."

That might sound like a Sarah Palin answer, but it is worse than that. Those are the words of Treasury Secretary
Henry Paulson. Let’s overlook the “lightening speed” bit and focus on Paulson’s central point. If he had said “We are making it up as we go,” he would use fewer words to tell the truth. We would at least be aware that he was a banker.

While we than deserve more in the way of public policy than “making it up as we go,” that is what we have. It is public policy as a dartboard game. Now that we are aware of that, perhaps we had better learn how that game is played.
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Originally published in Blogcritics Magazine on January 14, 2009.

Monday, January 12, 2009

Smoking Government: A Tobacco Tale

Smoking became a significant political issue beginning with a shocking event in 1964 -- First Surgeon General's Report: Smoking and Health. The Johnson Administration’s Surgeon General Dr. Luther L. Terry’s report came to what was then an astounding conclusion: “smoking causes cancer." The implications were staggering since the administration needed the tobacco growing states on its side, not to mention the industry’s money. To say that smoking was not only a multi-billion dollar year industry but a way of life would be understatement.

Joseph Califano, the senior domestic policy aide to
President Johnson, said, "It was a very dramatic and courageous thing to do." Califano also said, "We wanted to get schools integrated, the voters' rights act passed, fair housing passed. And all of those things required us to take on the whole phalanx of Southern states." Therefore, the Johnson Administration did not want to deal with the implications of the report by directly addressing them.

When I turned fourteen in 1964, I looked forward to taking up
smoking as a grown up kind of thing. At the time almost half of all Americans smoked and they did it everywhere – restaurants, theatres, airplanes, offices. Television and movie stars smoked and cigarette advertising was everywhere. Magazines, newspapers, radio, television, billboards, movie theatres all benefited from cigarette ad revenue. Even television cartoons had cigarette sponsors.

In my parents’ time, during the print and radio advertising era, icons like Santa Claus and actors like
Ronald Reagan lit up. Medical doctors endorsed cigarette brands for “patients who smoke.” Millions of dollars went into television commercials which created their own icons, like the Marlboro Man. Even Fred Flintstone and Barney Rubble lit up Winston’s. That is until Congress passed and President Nixon signed the Public Health Cigarette Smoking Act on April 1, 1970. When it went into effect on New Year’s Day 1971, television lost $220 million a year in revenue.

More money is being spent today on tobacco
advertising in anti-smoking campaigns. It is just that those ads may not be working the way they are intended. Many that use disturbing images are designed to scare people so that they don’t smoke. Present research, however, shows that such a strategy either does not work or may backfire.

The special relationship between tobacco and government date from the founding period. One can see it literally set in stone at the 19th century US Capitol building. The sight is called the
Hall of Columns -- 28 Corinthian columns line the corridor. When you look at their capitals, you see a stone work metaphor. In addition to classical acanthus leaves and native thistles, American tobacco plants appear to support the ceiling of government. In reality, tobacco still supports a lot of government at many levels.

Tobacco remains a big source of tax revenue at federal, state, county and city levels. According to the
Tobacco Merchants Association, bills to raise tobacco taxes have been active in 22 state legislatures since last year. The National Conference of State Legislatures reports that the previous year 11 states enacted increases. How much money is that? R. J. Reynolds Tobacco Company estimates that state taxes generate almost $15 billion in revenue, while the federal excise tax of 39 cents a pack raises over $7 billion.

If you are a cigarette smoker traveling to New York, you may want to take a carton of smokes with you. The New York Legislature recently approved an increase in the cigarette tax that makes it highest in the country, almost $3 a pack. That is projected to raise $265 million for the state’s general fund.

Cigarette manufacturers argue that tobacco taxes make
for an unstable revenue source because of declining sales. Supporters of increased cigarette taxes make a claim that increases in tobacco taxes drive down smoking rates, particularly among youths who may find that they cannot afford to start. The tobacco industry says smokers already bear an unfair tax burden and that the tax increases encourage bootlegging.

The economics of cigarettes first became an issue to me when I went to military school in 1965. A pack of cigarettes from a machine on campus cost a quarter. In town a carton cost $1.65, great savings on a $4.00 per week allowance. Price increases made me quit in 1975 when the pack cost half a dollar. I quit again in 1985 when it crossed the dollar mark. When I finally quit last year cigarettes cost about $4.00 a pack in San Francisco.

While the feds and states are raising tobacco taxes, smoking rates are going down. The
American Heart Association says 26 million men and 21 million women in the U.S. are smokers. Meanwhile, cigarette sales declined 18%; nearly 4 billion packs a year by 2007. Unfortunately, the National Cancer Institute says smoking-related illnesses are pushing half-a-million deaths each year in the U.S.

As if smoking is not enough of a danger and its economic and health impacts are not scary enough, there is yet more to fear. Step aside second-hand smoke. Meet the new headline maker --
third-hand smoke. Third-hand smoke is a term being used to describe the invisible but toxic gases and particles that cling to smokers’ hair and clothing, lingering long after second-hand smoke has cleared. Passive smoking makes headlines but it may not be a very good point of argument.

According to Jane Gravelle, an economist with the
Congressional Research Service, “You hear that passive smoking might increase your risk 20 percent, 50 percent, 70 percent, but what you don't know is that lung cancer among nonsmoking individuals is a very, very rare disease. So you can have a big percentage increase, and it's still a very small risk.”

I first read about third-hand smoke the same day I read the latest story about the president-elect’s smoking. His doctor described
Mr. Obama’s smoking history as “intermittent” and said he had quit several times. That is good enough with me. However there are folks who will wonder whether or not his quitting is a good thing, especially in a crisis situation otherwise known as the presidency.

Enter Neal Benowitz of the
University of California, San Francisco, an expert in nicotine addiction. He says that “there is evidence that stopping smoking can cause irritability, slowed reaction time, or difficulty concentrating and solving problems. But that’s typically in heavy smokers — people who’ve smoked 10 or more cigarettes a day.” The good news for the nation is that Mr. Obama’s doctor reports that “he had quit several times.”

What I have found is that it takes a lot of quitting to quit smoking. My advice to the new president is to personalize the act of quitting. Don’t turn your daughters into smokers, either first-, second- or third-hand. The government will be able to find revenue somewhere else. Besides, as American author and non-smoker John Steinbeck said, “I can start any time I want.”

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Originally published in
Blogcritics Magazine on January 6, 2009.