LRB 5 June 2008
The Cattle-Prod Election
David Runciman on the 2008 Presidential Campaign
The American philosopher John Dewey thought that democracy should be like a giant conversation: the nation talking to itself about its hopes and fears and listening to what other people have to say. Unfortunately (or perhaps fortunately) for Dewey, he never got to hear what such a conversation might sound like, because the technology wasn’t available. Dewey was born in 1859, which means the first election of his lifetime was one of the most consequential in American history, the 1860 contest that brought Abraham Lincoln to the White House. It wasn’t much of a conversation though, more an exercise in mutual incomprehension and loathing, with entirely different campaigns being fought in the North and the South (where for the most part Lincoln wasn’t even on the ballot). Dewey died in the summer of 1952, so the last election he was able to follow all the way through was the one four years earlier, when Harry Truman beat Thomas Dewey (no relation) in one of the great upsets in US presidential history. This was the election that is remembered for the photo of a triumphant Truman holding up an edition of the Chicago Daily Tribune announcing that Dewey had beaten him. If that election was a conversation, the American people had clearly been talking behind their hands.
What made American national politics traditionally so difficult to read was its sheer scale, with endless local variations and permutations cutting across the bigger picture. That started to change in the age of television, as candidates came to realise that here was a medium that allowed them to talk to the electorate as a whole. But they didn’t converse with the electorate: instead, in what came to be known as the ‘air war’, they began saturation bombing them with branded messages of universal appeal, leaving it to local organisations to get the vote out. It is only with the arrival of the internet that it has become possible to listen in detail to what a wide range of participants in the democratic process are actually saying. In 2000 and 2004, that mainly meant a more sophisticated version of the air war, as Karl Rove showed how to exploit the new information technology to produce a general message that could be endlessly tailored to fit the hopes of niche interest groups. But in 2008, politics on the internet has truly come alive – this is a campaign that is being talked out on the web.
One consequence, among others, is that it’s been relatively easy to follow the campaign close up without being there. TV interviews, campaign stops, set-piece speeches are all available to be viewed almost as soon as delivered, and though it’s impossible to know what it would be like to bathe in the warm glow of Barack Obama’s rhetoric at first-hand, the endless cut-away shots of swooning audience members make it easy to guess. Above all, there is ready access to the endless swirl of comment – instantly aired, constantly updated, limitlessly available – that surrounds all this talking by the candidates. Anyone who clicks onto the RealClearPolitics website each morning to find out what’s been going on will discover that the torrent of speculation has not let up for a minute, with twenty new articles to replace the ones from the day before, drawn from across the nation’s media, each with its own forthright point of view, each determined to be heard above the crowd. And this is only a small selection on a single website; RealClearPolitics will also link you to various of the blogs on which all the comment is itself commented on, pulled apart, reconstructed, fed back into the machine, where it can be reappropriated by the mainstream commentators further down the line.
What is so striking about all this talk poured out day after day is not simply its volume, but also the quality of much of it, and not only in the mainstream media; although many of the blogs are hideous, rambling screeds, many are not, and a selection of the best will always produce plenty of wit and passion, along with unexpected insights. No election in history can ever have generated so much nicely turned opinion. If nothing else, the existence of the internet has destroyed the claims of the mainstream media in Britain to be able to offer any insight into this election. The BBC, whose coverage of British politics looks increasingly lame, has been hopeless at Obama v. Clinton. It’s not enough any longer for a correspondent to paint some local colour about the weather or the quirks of the voting system before asking a seasoned observer from the New York Times or Washington Post to explain to a British audience what it all means. The seasoned observers no longer have even the appearance of a monopoly on wisdom. They are just shouting to be heard like everyone else.
The British media coverage has also been much too slow. The time difference doesn’t help, but too many newspapers have run stories based on polls that were out of date before they even went to press, forecasting turning points that never happened. The polling in this election has been particularly volatile, and not just in the Democratic campaign. John McCain was dead and buried in the polls last year, and Rudy Giuliani riding high, until it turned out that the opposite was the case. The other place where this campaign has seen wild swings in sentiment, and fortune, is on the internet betting sites, where large amounts of money have changed hands, particularly on Obama v. Clinton. The best British betting website covering politics – politicalbetting.com – has tracked these changes, as Clinton established herself as clear favourite last year, only to be overtaken by Obama in January, reclaim her position after Super Tuesday, lose it again, claw the ground back after Texas, Ohio and Pennsylvania, then see the market move decisively away from her after Indiana. Because real money is involved, a lot of the wishful thinking is stripped out, which is what makes politicalbetting.com such a refreshing place to be. It’s also a good place to pick up tips: the site’s founder, Mike Smithson, recommended Barack Obama for president at 50/1 more than two years ago, though it has to be said he entirely failed to pick up on the value in McCain (available at similar prices until late last year).
Now that the primary season has nearly run its course, a different pattern can be seen. Followed day by day, the race for the Democratic nomination has been the most exciting election in living memory. But viewed in retrospect, it is clear that it has been quite predictable. All the twists and turns have been a function of the somewhat random sequencing of different state primaries, which taken individually have invariably conformed to type, with Obama winning where he was always likely to win (caucus states, among college-educated and black voters, in the cities), and Clinton winning where she was likely to win (big states with secret ballots, among less well-educated whites and Hispanics, in rural areas). Even the initial drama of that week in early January – when Obama’s victory in Iowa had seemed to give him a chance of finishing Clinton off, only to be confounded by her victory in New Hampshire, which defied the expectation of the pundits and had them all speculating about what had swung it (was it her welling up in a diner? was it hastily rekindled memories of Bill? was it hints of hubris from Obama?) – turns out to have been an illusion. Iowa was Obama country (younger, smaller, caucus meetings) and New Hampshire wasn’t (older, bigger, voting machines). The salient fact about this campaign is that demography trumps everything: people have been voting in fixed patterns set by age, race, gender, income and educational level, and the winner in the different contests has been determined by the way these different groups are divided up within and between state boundaries. Anyone who knows how to read the census data (and that includes some of the smart, tech-savvy types around Obama) has had a good idea of how this was going to play from the outset. All the rest is noise.
Yet if the voting patterns have been so predictable, why have the polls been so volatile? One of the amazing things about the business of American politics is that its polling industry is so primitive. Each primary has been preceded by a few wildly varying polls, some picking up big movement for Clinton, some for Obama, each able to feed the narrative of a contest that could swing decisively at any moment. All of these polls come with warnings about their margins of error (usually +/–4 per cent), but often they have been so far outside their own margins as to make the phrase ridiculous. A day before the California primary in February, the Zogby organisation had Obama ahead by 6 per cent – he ended up losing by 9 per cent. In Ohio, the same firm put Obama ahead by 2 per cent just before the actual vote – this time he lost by 10 per cent. The sampling of national opinion is even worse. Before the Indiana primary, two national polls released at the same time claimed to track the fallout from the appearance of Obama’s former pastor Jeremiah Wright on the political stage. One, for the New York Times, had Obama up by 14 per cent, and enabled the Times to run a story saying that the candidate had been undamaged. The other, for USA Today, had Clinton up by 7 per cent, leading the paper to conclude that Obama was paying a heavy price.
The reason for the differences is not hard to find. American polling organisations tend to rely on relatively small samples (certainly judged by British standards) for their results, often somewhere between 500 and 700 likely voters, compared to the more usual 1000-2000-plus for British national polls. The recent New York Times poll that gave Obama a 12 per cent lead was based on interviews with just 283 people. For a country the size of the United States, this is the equivalent to stopping a few people at random in the street, or throwing darts at a board. Given that American political life is generally so cut-throat, you might think there was room for a polling organisation that sought a competitive advantage by using the sort of sample sizes that produce relatively accurate results. Why on earth does anyone pay for this rubbish?
The answer is that in an election like this one, the polls aren’t there to tell the real story; they are there to support the various different stories that the commentators want to tell. The market is not for the hard truth, because the hard truth this time round is that most people are voting with the predictability of prodded animals. What the news organisations and blogs and roving pundits want are polls that suggest the voters are thinking hard about this election, arguing about it, making up their minds, talking it through, because that’s what all the commentators like to think they are doing themselves. This endless raft of educated opinion needs to be kept afloat on some data indicating that it matters what informed people say about politics, because it helps the voters to decide which way to jump. If you keep the polling sample sizes small enough, you can create the impression of a public willing to be moved by what other people are saying. That’s why the comment industry pays for this rubbish.
It turns out that the best guide to what’s been going on during the ceaseless clamour of this election season comes from one of John Dewey’s contemporaries, the émigré Austrian economist and philosopher Joseph Schumpeter, who also died during Truman’s second term, in 1950. In Capitalism, Socialism and Democracy, written in 1942, Schumpeter pointed out that most people do not think much about politics at all: they simply respond to triggers in ways that require the minimum of mental effort. ‘The typical citizen,’ Schumpeter wrote, ‘drops down to a lower level of mental performance as soon as he enters the political field. He argues and analyses in a way which he would readily recognise as infantile within the sphere of his real interests. He becomes a primitive again. His thinking becomes associative and affective.’ The demographic determinism of this election campaign is evidence of the ease with which the main candidates have been able to exploit the instinctive reflexes of various segments of the population, and the difficulty that their opponents have had in overcoming these reflexes with competing arguments.
A great deal of the comment that has erupted during the contest for the Democratic nomination in particular has been fuelled by a deep frustration that this should be so, and a lingering hope that it might be about to change. The Obama camp can see clearly how stupid the Clinton supporters are being, as they cling to their prejudices and crass simplicities, refusing to listen to the elegant alternatives being offered by their candidate. Why can’t these people see how much smarter, better, more promising the black guy is? At the same time, the Clinton diehards can see just how dumb all the Obama supporters are, with their limitless appetite for empty rhetoric and naive protestations of faith in the future, unable to face the hard facts of political life. Why can’t these people see how much tougher, shrewder, more realistic the woman in the pant-suit is? So the commentators rehearse these arguments in endless permutations, trying to impose some kind of intellectual imprint on what is happening. They clutch at straws, in the hope that these might indicate a shift in the way the story is going. Underneath it all, the story remains the same.
At the start of the campaigning season, the hope was widely voiced that the 2008 election offered an opportunity to reflect on what had gone wrong in the United States, and to think seriously about how things might be different. Much of the increasingly regretful comment that is being passed on how things have turned out reflects the fact that this opportunity has not been taken. Each side blames the other, for dwelling on race, or gender, or youth, or age, or hope, or fear, or the future, or the past, and imagines some alternative campaign in which the real issues would be debated in serious and open-ended terms. It has to be said that the wistful tones of the Obama camp have come to predominate in this particular blame game, as befits their preponderance in both the mainstream and the new media, and the ease with which a high-minded tone of regret at the grubby reality of contemporary politics fits into their preferred narrative. But in truth, it is absurd for anyone to claim to offer a plausible alternative to the way this election has been conducted. For all the elegance, intelligence and wit on display in the many tens of thousands of words I have read over the past few months, nothing that’s been said appears to have made any real difference to how most people see the candidates.
Certainly, I know it to be true in my own case. From the start, I have wanted Clinton to win, because I decided she was tougher, shrewder, more realistic than her rival. Obama’s rhetoric has always sounded phoney to me, much too good to be true: so sweetly sincere as to be obviously insincere about the hard grind of daily politics. I also thought she had a considerably better chance of beating McCain in the autumn than he did, whatever the polls might say. What I’ve found is that nothing that has happened since has changed this set of beliefs, and that anything and everything can be accommodated to fit it. As Obama has racked up more votes and delegates, it’s simply evidence of the craziness of the Democratic primary system, so obviously skewed to misrepresent who has the best chance in the general election – no caucuses there! As Obama’s speeches have won countless new admirers, it’s just more evidence of how eager self-selected opinion-formers are to be sweet-talked, not of how ordinary people are likely to vote. As Clinton has shifted her ground and the basis of her campaign, from heir presumptive to picked-on woman to plucky and indefatigable underdog, it’s evidence of just how adaptable and determined she is. A couple of weeks ago, I thought I had reached my limit, as she pushed her bogus gas-tax holiday, accompanied with a side-swipe at economists who said it wouldn’t work (including Paul Krugman, one of the few economists who has been out there making the case for her candidacy). But as I write this, on the morning of the Kentucky and Oregon primaries, even though I know she can’t really win, I still want her to thump Obama in Kentucky and run him close in Oregon, to keep the race alive, and to puncture the awful, gloating presumption of his oh-so-easily pleased supporters. It’s like following a sports team: you know exactly why you want them to win (because of how it will make you feel), long after you’ve stopped thinking about why you chose them in the first place. As the novelist Kurt Andersen (who describes himself as a passionate ‘Obamaphile from the get-go’) has written, ‘My whole life, I’ve never cared about sports, never experienced that intense, emotional, extra-rational rooting interest in any team’s struggle to win the championship. I figure this must be what it feels like to be a hopeful, fretful, stressed-out fan during the Super Bowl or World Series.’
Schumpeter didn’t think that intellectuals understood politics any better than anyone else; instead, he thought they were simply more likely to mistake their own impulsive judgments for reasoned ones. The ‘reduced sense of responsibility’ and ‘the absence of effective volition’, he noted, ‘are if anything more shocking in the case of educated people and of people who are successfully active in non-political walks of life than it is with uneducated people in humble stations. Information is plentiful and readily available. But this does not seem to make any difference.’ Super-smart Obama-lovers who wish that everyone would see things the way they do exemplify this aspect of democratic politics, even as they kid themselves that they are trying to confront it. Though as a Hillary supporter, I would think that, wouldn’t I?
If, as now seems almost certain, it will be McCain v. Obama in the autumn, hopes will be raised again for a real debate about the issues, between two principled candidates. These hopes will then be dashed as the campaign settles back into the associative groove, and spews out electronic reams of associative comment bemoaning that this should be so. There is at least some uncertainty at this stage in knowing which particular associations will be decisive. The key demographic – unaffiliated 40+ white voters in the swing states – may be pulled in two different directions. On the one hand, many of them clearly have an instinctive dislike of Barack Obama, because of his sanctimony, his cool demeanour, or because of the colour of his skin. On the other hand, many of them also appear to have developed (if recent state and congressional results are anything to go by) an instinctive dislike of the Republican Party, because of its complete inability to govern successfully. It will be interesting to see which set of associations gets more firmly entrenched by November, because that is what will decide the election. My guess is that people will divide pretty evenly on this question, as the party machines prod them from both sides, and that the final result will be extremely close. What is certain is that the surrounding noise will not diminish, and there will doubtless be a poll to suit every taste, and an elegant piece of analysis to suit every hope. The democratic conversation will continue, but it’s not the one that Dewey had in mind. People are talking, but no one is really listening. For all the fun and fantasy that can be had following this election on the internet, the overriding impression it gives after a while is of tuning into thousands of people as they sit in their cars and complain about the traffic.
Saturday, July 5, 2008
Sub-Prime Crisis: LA Times
Bitter lessons learned from refinancingWhen their need for cash met the hard sell, many homeowners bit. Now they can't afford to pay the mortgage.
By Maura Reynolds
Los Angeles Times Staff Writer
July 5, 2008
WASHINGTON — Vicki Miller bought her childhood home in Altoona, Pa., from her mother's estate for $32,000, using a nice, traditional mortgage from the local savings and loan.
Seven years later, her debt has more than doubled, her once-significant equity has shrunk to zero and she's behind on her payments. The lender has begun to threaten foreclosure.
"I grew up here. My son grew up here. And I had hoped my grandchildren would grow up here," Miller said woefully.
Miller said she was persuaded to refinance her mortgage twice into sub-prime loans she didn't really understand, along with taking out a second mortgage. As such, she reflects what experts say is the true face of the sub-prime mortgage debacle.
Discussion of the problem often focuses on first-time home buyers who stretched to buy homes they couldn't afford. But experts who've crunched the numbers say 90% of people who took out sub-prime loans from 1998 to 2006 were already homeowners.
Many, like Miller, had conventional, prime loans that were well within their means. What often got them into trouble was that they refinanced their mortgages without really understanding the terms and without realizing that the sales pitches and loan documents were sometimes deliberately opaque to snare the unwary.
The result is thousands of cases like Miller's, in which the damaging outcome is clear but it's very difficult to figure out how it happened or exactly who's to blame.
"I should have just stayed with the loan I had. I realize that now," said Miller, who earns a modest income as an office worker. "I'm not mortgage smart. I've since become mortgage wiser."
Lawmakers debating a mortgage rescue bill have spent a great deal of time trying to make sure that they don't reward careless or greedy mortgage holders. But lawyers working with troubled borrowers say few of them were trying to finance outrageous lifestyles.
Most were like Miller, they say, existing homeowners who found themselves in need of money and responded to aggressive advertising for refinancings.
"There's this myth out there that this was a bunch of people overreaching," said Patrick Cicero, a lawyer with MidPenn Legal Services in Harrisburg, Pa., who represents low-income homeowners who are facing foreclosure.
"But the vast majority of these loans were refinancings," Cicero said. "These were elderly people trying to fix up their homes. These were people lured in by promises of lower monthly payments and the consolidation of their debts who didn't understand they were putting their homes at risk."
When lenders ramped up sub-prime lending in the mid-1990s, it was touted as a way to expand homeownership among people with low incomes or shaky credit histories. And many have pointed to the modest growth of homeownership -- from 64% of households in 1994 to 69% of households by 2005 -- as evidence that sub-prime lending had genuine benefits.
But Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies, notes that most of that expansion in homeownership occurred in the late 1990s, before sub-prime lending exploded.
Elizabeth Renuart, a housing attorney with the National Consumers Law Center in Boston, said many sub-prime lenders and brokers targeted people such as Miller.
They were promised cash, based on the equity in their homes. And the solicitations were rarely clear about the fees and interest rates, advocates for homeowners say.
Moreover, sub-prime loans always charged higher interest rates. That meant bigger commissions for the loan agents and brokers who sold the loans, and provided higher returns to investors who bought securities composed of bundled sub-prime loans.
"It was push marketing," Renuart said. "As the engine revved up from Wall Street to invest in these things, the pressure was on the brokers to make these loans."
Miller, a 52-year-old single mother, is typical of many who ended up with such loans. She was making about $26,000 a year working in the accounts payable office of a local lighting manufacturer. Although the cost of living is lower in Altoona, a town of 47,000 in hardscrabble central Pennsylvania, than it is in major metropolitan areas, the housing boom largely passed Altoona by. Home prices appreciated just 2% to 3% a year for the last decade.
Miller moved into her mother's modest brick-and-siding house in 2001. It had become somewhat run-down in her mother's final years, and Miller quickly piled up debt on repairs. By 2004, she was burdened with about $15,000 in credit card and other debt.
She sought financial help and got phone calls from Ameriquest Mortgage Co. of Orange, the big sub-prime lender that has since collapsed. The sales agent suggested that Miller could pay off her debts by refinancing her mortgage.
In June 2004, her sister was flown to Pittsburgh with a life-threatening brain aneurysm. As a distraught Miller sat in the hospital, she called Ameriquest and said yes to the refinancing.
"My mind wasn't on it," she recalled. "I thought I was getting a good deal, but obviously I wasn't."
Like many others, Miller's goal was not profit but relief from financial pressures.
"People equate sub-prime lending with people getting homes. But I think more of it had to do with access to credit," Harvard's Retsinas said. "This is the way people were trying to make ends meet."
Miller, who discussed her situation in extended interviews and provided a thick bundle of financial records, said she thought her new loan was a fixed-rate mortgage at 7.5% interest. Records show it was an adjustable-rate mortgage with an 8.9% interest rate.
The outstanding principal on her old mortgage had been $32,000. The new mortgage was for $60,000, which covered the cost of the new loan and allowed Miller to take out about $23,000 cash to pay off debts and make home repairs. But her monthly payment nearly doubled to $559.
Months later, a man knocked on Miller's door and said it looked like she needed a new roof. He promised to help her get a loan, and she wound up taking out a second $13,000 mortgage from a different lender to pay for it.
Then in 2006, faced with rising heating bills, Miller decided to spend $5,000 for more energy-efficient windows.
By this time, her mortgage had been sold to Countrywide Financial Corp., and every payment notice suggested that she refinance again.
"Your estimated home equity: $24,818," stated one of many letters and e-mails Countrywide sent her. "You may be able to GET CASH from your home equity. . . ."
Countrywide employees Miller talked to by phone in Californiasent her forms suggesting that by refinancing her home she could take out $5,000 in cash and her payments wouldn't change.
She mulled over the documents for a month, Miller said, and then one day a notary public showed up at her workplace with what he said were her new mortgage papers. Miller was taken by surprise. The documents didn't look quite the same as the ones she'd received in the mail, Miller said, but the visitor assured her that Countrywide would correct any error.
Miller signed the documents. "I'm a Christian. I'm a trusting person. I believed him," she said.
"I called and called and called and never heard from Countrywide again," Miller said. "I was stuck with the mortgage."
Her monthly payments, now more than $700 a month, constitute more than half her take-home pay. This winter, as her heating bills topped $3,000,Miller fell behind on her mortgage. She's now three months in arrears. Countrywide is offering a "loan modification" that would raise her payments to $1,165.
"How can I afford that?" she asked. "I have asked if I can make partial payments and they say no, it's all or nothing."
Yet each mortgage notice she receives from Countrywide still includes this message:
"If you need cash for your financial needs, now may be a good time to apply to refinance and tap into the equity in your home. Call Countrywide today!"
maura.reynolds@latimes.com
http://www.latimes.com/business/la-fi-refi5-2008jul05,0,7891725.story
Monday, May 26, 2008
Tax Myths Debunked
Readers add their 2 cents to California tax and spend debate
George Skelton
Capitol Journal, Los Angeles Times
May 26, 2008
SACRAMENTO — This seems like a nice, quiet day to answer e-mail -- at least some of the civil comments that have been rolling in about state taxes and deficit spending.
Readers have been reacting to columns I've written contending that until Capitol politicians summon the courage to raise taxes to pay for services the public demands, the state will continue to wallow in red ink.
Sure, programs should be prioritized and some pared or even eliminated. But this addiction to borrowing to meet daily expenses keeps digging the state into a deeper hole.
Gov. Arnold Schwarzenegger, the all-time state borrowing champ, recently projected a $15.2-billion deficit for the next fiscal year -- roughly 15% of the general fund -- even after he and lawmakers already narrowed the gap by $8 billion.
Here's a representative sample of printable reader e-mail:
"Balancing the budget for California is very easy. Eliminate all handouts for illegal immigrants. Capture, convict, then deport those here illegally. . . . Saves us oodles of money."
--
Jeff
Jeff, illegal immigrants don't get many government handouts: no welfare, no food stamps, no Medi-Cal healthcare. Federal law does require that they be cared for in medical emergencies, including baby delivery, and be educated in public schools.
They're a drain on the state treasury, but not as huge as many believe.
Besides, there's very little Sacramento can do about illegal immigration. That's the feds' responsibility. State and local governments just get stuck with the bill.
"We have way too many government employees making way too much money. Cut salaries to match the private sector."
--
DW
Let's put it this way, DW: You could eliminate the pay of every state worker under the governor's control -- nearly 200,000 -- and still not erase the deficit. If you also fired every legislator and legislative staffer, you'd still fall short. You'd have to additionally ax all the personnel on state university campuses.
Why is that? Because roughly 75% of the state general fund flows out to local governments and schools. It's one of the unintended consequences of Proposition 13 that dramatically cut the property tax 30 years ago. Schools used to rely on the property tax. Now they rely on Sacramento.
As for matching state pay to private sector compensation: There aren't a lot of CHP officers and prison guards to compare with in the private sector. I doubt we want to emulate private companies and offer salary bonuses to civil servants -- say, for recruiting more welfare recipients. And multimillion-dollar severance packages for fired executives isn't anything government should copy.
"Get rid of commissions that have no use."
--
Jeff
OK, Jeff. Former Gov. Pete Wilson once suggested that and was told facetiously by his finance director: "The state will save thousands and thousands of dollars."
Fact is, non-salaried advisory commissions operate on shoestrings and are politically popular. Regulatory boards are funded by the industries they regulate, are self-sustaining and don't affect the deficit.
From a lot of people, in summary: When "the governator" came to office he had a $78-billion general fund budget. Currently, it's around $102 billion. That's roughly a 30% increase. Where'd the spending go?
People, one place it went was for Schwarzenegger's car tax cut. Yes, that tax cut counts as spending -- about $6 billion annually. It's because revenue from the car tax -- the vehicle license fee -- had gone to local governments, not the state. The governor generously agreed to replace the locals' lost revenue with money from the state general fund. But he never replaced the tax he grandiosely whacked. Big hole. Big mistake.
Another reason spending has climbed is because of aggressive borrowing. In Schwarzenegger's first year as governor, the state paid out $2.5 billion on general fund bonds. Soon that will be up to around $6 billion -- on bonds approved by voters.
Also, prisons have been gobbling up tax dollars because of tough sentencing, court-ordered healthcare reforms and big pre-Schwarzenegger raises for guards.
"The people of California are overtaxed already."
--
Kevin
Actually, Kevin, we're paying only slightly above the national average. Based on Census Bureau data, California ranks 17th in state and local taxes as a percentage of personal income. New York is third, Oregon 16th, Arizona 43rd. We're high in income and sales taxes, low in property taxes.
"Nothing could be simpler than balancing the California budget. Just raise the marginal rate on individual and corporate income taxes. It's the fairest possible way."
--
Michael
Michael, you should run for the Legislature.
"The political thinking in this state lacks any imagination. A sales tax [hike] will just send business out of state. A [new] fuel tax would accomplish our CO2 reduction goals and shift most of the negative impact out of state. We don't produce Hummers and SUVs."
--
Dallas
Right, Dallas, that's just what we want to do: Slap on another gas tax when motorists already are paying $4 per gallon, including around 70 cents in taxes. Pity the politician who tries that.
"I know personally of four families in the last two months who have decided to move to Oregon. They say California is just not a very good place to live anymore."
--
Raul
Raul, then they should head on up the road. That'll leave more room on the freeways for the rest of us and reduce property demand, making homes more affordable. I'll send them a road map.
"I do not live in California, but I am fed up with every politician who says that she/he will not raise taxes. I take this as a direct insult to my intelligence. . . . I have vowed to not vote for anyone who says taxes will not be raised."
--
June, in Illinois
June, you should move out here. A road map is on the way.
Thanks for reading and writing.
george.skelton@latimes.com
http://www.latimes.com/news/local/la-me-cap26-2008may26,0,17046.column
George Skelton
Capitol Journal, Los Angeles Times
May 26, 2008
SACRAMENTO — This seems like a nice, quiet day to answer e-mail -- at least some of the civil comments that have been rolling in about state taxes and deficit spending.
Readers have been reacting to columns I've written contending that until Capitol politicians summon the courage to raise taxes to pay for services the public demands, the state will continue to wallow in red ink.
Sure, programs should be prioritized and some pared or even eliminated. But this addiction to borrowing to meet daily expenses keeps digging the state into a deeper hole.
Gov. Arnold Schwarzenegger, the all-time state borrowing champ, recently projected a $15.2-billion deficit for the next fiscal year -- roughly 15% of the general fund -- even after he and lawmakers already narrowed the gap by $8 billion.
Here's a representative sample of printable reader e-mail:
"Balancing the budget for California is very easy. Eliminate all handouts for illegal immigrants. Capture, convict, then deport those here illegally. . . . Saves us oodles of money."
--
Jeff
Jeff, illegal immigrants don't get many government handouts: no welfare, no food stamps, no Medi-Cal healthcare. Federal law does require that they be cared for in medical emergencies, including baby delivery, and be educated in public schools.
They're a drain on the state treasury, but not as huge as many believe.
Besides, there's very little Sacramento can do about illegal immigration. That's the feds' responsibility. State and local governments just get stuck with the bill.
"We have way too many government employees making way too much money. Cut salaries to match the private sector."
--
DW
Let's put it this way, DW: You could eliminate the pay of every state worker under the governor's control -- nearly 200,000 -- and still not erase the deficit. If you also fired every legislator and legislative staffer, you'd still fall short. You'd have to additionally ax all the personnel on state university campuses.
Why is that? Because roughly 75% of the state general fund flows out to local governments and schools. It's one of the unintended consequences of Proposition 13 that dramatically cut the property tax 30 years ago. Schools used to rely on the property tax. Now they rely on Sacramento.
As for matching state pay to private sector compensation: There aren't a lot of CHP officers and prison guards to compare with in the private sector. I doubt we want to emulate private companies and offer salary bonuses to civil servants -- say, for recruiting more welfare recipients. And multimillion-dollar severance packages for fired executives isn't anything government should copy.
"Get rid of commissions that have no use."
--
Jeff
OK, Jeff. Former Gov. Pete Wilson once suggested that and was told facetiously by his finance director: "The state will save thousands and thousands of dollars."
Fact is, non-salaried advisory commissions operate on shoestrings and are politically popular. Regulatory boards are funded by the industries they regulate, are self-sustaining and don't affect the deficit.
From a lot of people, in summary: When "the governator" came to office he had a $78-billion general fund budget. Currently, it's around $102 billion. That's roughly a 30% increase. Where'd the spending go?
People, one place it went was for Schwarzenegger's car tax cut. Yes, that tax cut counts as spending -- about $6 billion annually. It's because revenue from the car tax -- the vehicle license fee -- had gone to local governments, not the state. The governor generously agreed to replace the locals' lost revenue with money from the state general fund. But he never replaced the tax he grandiosely whacked. Big hole. Big mistake.
Another reason spending has climbed is because of aggressive borrowing. In Schwarzenegger's first year as governor, the state paid out $2.5 billion on general fund bonds. Soon that will be up to around $6 billion -- on bonds approved by voters.
Also, prisons have been gobbling up tax dollars because of tough sentencing, court-ordered healthcare reforms and big pre-Schwarzenegger raises for guards.
"The people of California are overtaxed already."
--
Kevin
Actually, Kevin, we're paying only slightly above the national average. Based on Census Bureau data, California ranks 17th in state and local taxes as a percentage of personal income. New York is third, Oregon 16th, Arizona 43rd. We're high in income and sales taxes, low in property taxes.
"Nothing could be simpler than balancing the California budget. Just raise the marginal rate on individual and corporate income taxes. It's the fairest possible way."
--
Michael
Michael, you should run for the Legislature.
"The political thinking in this state lacks any imagination. A sales tax [hike] will just send business out of state. A [new] fuel tax would accomplish our CO2 reduction goals and shift most of the negative impact out of state. We don't produce Hummers and SUVs."
--
Dallas
Right, Dallas, that's just what we want to do: Slap on another gas tax when motorists already are paying $4 per gallon, including around 70 cents in taxes. Pity the politician who tries that.
"I know personally of four families in the last two months who have decided to move to Oregon. They say California is just not a very good place to live anymore."
--
Raul
Raul, then they should head on up the road. That'll leave more room on the freeways for the rest of us and reduce property demand, making homes more affordable. I'll send them a road map.
"I do not live in California, but I am fed up with every politician who says that she/he will not raise taxes. I take this as a direct insult to my intelligence. . . . I have vowed to not vote for anyone who says taxes will not be raised."
--
June, in Illinois
June, you should move out here. A road map is on the way.
Thanks for reading and writing.
george.skelton@latimes.com
http://www.latimes.com/news/local/la-me-cap26-2008may26,0,17046.column
Sunday, May 18, 2008
The University of Raising Big Money
By JOE NOCERA
October 21, 2006
Correction Appended
Last week, Stanford University unveiled its new capital campaign, called the Stanford Challenge, which aims to raise $4.3 billion by 2011. That stunning amount is a record for a university fund-raising campaign, but not by much. It overtook Columbia, which just a few weeks earlier had announced a $4 billion campaign of its own.
Then there’s Yale University, which has just begun a $3 billion campaign. The University of Virginia is also raising $3 billion. Brown University is trying to raise $1.4 billion; Johns Hopkins, $2 billion; New York University, $2.5 billion; the University of Chicago, $2 billion. Back in 1987, Stanford was the first school to raise $1 billion in a capital campaign.
Today, according to the Chronicle of Higher Education, more than 25 universities are conducting campaigns of $1 billion or more. Indeed, just about the only school conspicuously missing from the list is Harvard. But that is highly unlikely to remain the case; no one in higher education expects Harvard to stand pat while all of its peers are raising gigantic sums of money.
These are, of course, America’s elite educational institutions — brand names in their own right. They are the schools the very best high school students vie to get into — and are bitterly disappointed if they fail to do so. They are also very wealthy institutions, with endowments that in most cases run into the billions. Stanford, for instance, has an endowment of around $15 billion, making it the third largest among universities, behind only Yale and Harvard. (Harvard’s astounding endowment is now nearly $30 billion.) And of course if you’ve ever visited Stanford —with its fantastic medical complex, its professional-quality athletic facilities, and its gorgeous campus — you know that what is most striking is not how much Stanford seems to need, but how much it already has.
All of which made me wonder: does Stanford — and Yale, and Brown and N.Y.U. — really need to raise ever more billions to add to the billions it already has? Or is this an example of fund-raising run amok, a case of the rich getting even richer — just because they can?
“I like to say that if this campaign ends up only being about $4.3 billion, we will have failed,” said Martin W. Shell.
Mr. Shell is the vice president for development at Stanford — i.e. the chief fund-raiser — and he was making the case that the sum of money the university was trying to raise, eye-popping though it is, was far less important than the way the school planned to spend that money.
The list of goals for the Stanford Challenge is undeniably impressive. Stanford plans to spend $500 million on “The Initiative on Human Health” which will focus on research “that speeds the conversion of fundamental discoveries into new approaches for diagnosing and treating human diseases.” It will undertake expensive new initiatives on the environment and K through 12 education. It hopes to use some of the money to “reinvent graduate education.” It has many other purposes as well, all of which tend to revolve around the school’s graduate programs. Like most of America’s great universities, Stanford views itself as an important research institution as well as a teaching institution, and that is reflected in the campaign.
It is hard to criticize any effort to raise money that might help cure disease, and far be it from me to try. “To equip a modern scientific lab is hugely expensive,” said William G. Bowen, the former president of Princeton. “If you are Stanford and have a major commitment in science you are going to have to go out and raise substantial resources.” One thing Stanford officials point out, for instance, is that the university plans to use some of the money to build a laboratory for stem cell research.
One thing that struck me, as I listened to Mr. Shell and others, was the extent to which at least some of these initiatives dovetailed with issues that were already on the minds of potential donors. For two years before the introduction of the capital campaign, Stanford was raising money during what’s called the “silent phase,” talking to donors, gauging the market and getting a sense of what alums and others might be willing to fund.
Although Mr. Shell insisted that Stanford was focusing on areas “where we are already strong,” he also told me that “we had long conversations with our donors” during the silent phase. Stanford had already decided to focus on the environment, but that is also a very popular cause among its alums. And the K to 12 initiative became part of the Stanford Challenge because it was something potential donors kept coming back to as they spoke to university officials..
It also seems clear that a good portion of the money will be aimed at enhancing existing properties. Philip H. Knight, the founder of Nike, has already promised $100 million as the lead gift for a new campus for the business school.
But wait: does Stanford really need a new campus for the business school? Not in the sense that its business school students aren’t managing just fine with the campus they use now. But the truth is — and this is a lot of the underlying rationale for all these capital campaigns — Stanford isn’t just trying to save the world. It is also trying to keep up with Yale and Harvard and the other elite institutions with whom it competes for students and faculty.
“If your competitor has a swimming pool, then you have to build a swimming complex,” said Arthur E. Levine, the former president of Teachers College at Columbia, who now heads the Woodrow Wilson National Fellowship Foundation. And if Yale and Harvard have ever-more attractive business schools, then Stanford has to keep pace. John V. Lombardi, the chancellor of the University of Massachusetts, describes the current mania for capital campaigns this way: “It’s an arms race.”
It’s not just fancy facilities or high-end research, either. To compete with the other elite schools, Stanford wants to attract the best faculty possible — which means luring the stars at other schools, offering them huge raises, laboratory space and research assistance. Capital campaigns and big endowments have accelerated the amount of poaching that goes on and have significantly driven up salaries.
These competitive pressures among the elite universities have led to an odd result — or at least odd when you think how competition normally works. Competition normally causes prices to go down. But as Mr. Levine points out, in the case of the nation’s most prestigious universities, competition actually causes prices and costs to rise because the ever-upward spiral of bigger salaries and better facilities and all the rest of it makes the running of the university that much more expensive.
One thing that surprised me was that so few people in the world of higher education seemed bothered by this. Whenever I asked about the high cost of tuition — and why these campaigns and huge endowments didn’t stop the relentless annual tuition hikes — I was told that tuition only covers about 60 percent of the cost of education, and besides, a great deal of money raised in capital campaigns went to financial aid. (Stanford tuition is currently $32,994, with room and board adding another $10,367.) Those students who are paying full freight — and their parents — have certain expectations about the kind of facilities they will have access to, the professors who will teach them, the computers they will use, and the schools are raising money in order not to disappoint. “They are responding to market demand, in which parents and students select the fanciest, most luxurious, best-equipped schools — and everyone wants their tuition discounted,” Mr. Lombardi said. The money raised in capital campaigns helps the elite institutions market themselves.
There is no question that the rise of the elite American university is one of the great success stories in modern life. In their own way, they are global leaders. The competition among them have made them all better. But it has also drained talent and money — and made life more difficult — for all the hundreds of universities that do not rank, in the public mind, with Harvard and Stanford and Yale. These other universities are the schools that educate the vast bulk of American college students. They can’t conduct $1 billion fund drives. And so, ever so slowly, they are falling behind. That’s not Stanford’s fault, or even Stanford’s problem, but it can’t possibly be good for the country.
One other thing about capital campaigns. Whenever I asked anyone involved in one whether they were trying to trump someone else’s campaign — whether, that is, the amount of money they were trying to raise was itself a form of competition — I was told that nothing could be further from the truth. Robert M. Berdahl, the president of the Association of American Universities, told me flatly: “You don’t have a capital campaign because one of your peers is having one. It is about the university’s need for resources.”
But then, a few days ago, something happened that made me wonder about that claim. Cornell got wind of what I was reporting, and a public relations executive sent me a series of e-mail messages trumpeting its own capital campaign, hoping that I would mention it in this column.
So here goes. The campaign will be announced Thursday in New York, and though the executive wouldn’t tell me its size, she strongly implied that it would be right up there with the big boys.
The Cornell campaign, she wrote me, would establish “a new Ivy lead in the ‘race for the top dollars.’ ” Competition, indeed.
Correction: Oct. 27, 2006
The Talking Business column in Business Day on Saturday, about the fund-raising efforts of large universities, misstated the room and board rates at Stanford University. The combined cost for room and board is $10,367 — not $4,796, which is the cost just for board.
Copyright 2006 The New York Times Company
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October 21, 2006
Correction Appended
Last week, Stanford University unveiled its new capital campaign, called the Stanford Challenge, which aims to raise $4.3 billion by 2011. That stunning amount is a record for a university fund-raising campaign, but not by much. It overtook Columbia, which just a few weeks earlier had announced a $4 billion campaign of its own.
Then there’s Yale University, which has just begun a $3 billion campaign. The University of Virginia is also raising $3 billion. Brown University is trying to raise $1.4 billion; Johns Hopkins, $2 billion; New York University, $2.5 billion; the University of Chicago, $2 billion. Back in 1987, Stanford was the first school to raise $1 billion in a capital campaign.
Today, according to the Chronicle of Higher Education, more than 25 universities are conducting campaigns of $1 billion or more. Indeed, just about the only school conspicuously missing from the list is Harvard. But that is highly unlikely to remain the case; no one in higher education expects Harvard to stand pat while all of its peers are raising gigantic sums of money.
These are, of course, America’s elite educational institutions — brand names in their own right. They are the schools the very best high school students vie to get into — and are bitterly disappointed if they fail to do so. They are also very wealthy institutions, with endowments that in most cases run into the billions. Stanford, for instance, has an endowment of around $15 billion, making it the third largest among universities, behind only Yale and Harvard. (Harvard’s astounding endowment is now nearly $30 billion.) And of course if you’ve ever visited Stanford —with its fantastic medical complex, its professional-quality athletic facilities, and its gorgeous campus — you know that what is most striking is not how much Stanford seems to need, but how much it already has.
All of which made me wonder: does Stanford — and Yale, and Brown and N.Y.U. — really need to raise ever more billions to add to the billions it already has? Or is this an example of fund-raising run amok, a case of the rich getting even richer — just because they can?
“I like to say that if this campaign ends up only being about $4.3 billion, we will have failed,” said Martin W. Shell.
Mr. Shell is the vice president for development at Stanford — i.e. the chief fund-raiser — and he was making the case that the sum of money the university was trying to raise, eye-popping though it is, was far less important than the way the school planned to spend that money.
The list of goals for the Stanford Challenge is undeniably impressive. Stanford plans to spend $500 million on “The Initiative on Human Health” which will focus on research “that speeds the conversion of fundamental discoveries into new approaches for diagnosing and treating human diseases.” It will undertake expensive new initiatives on the environment and K through 12 education. It hopes to use some of the money to “reinvent graduate education.” It has many other purposes as well, all of which tend to revolve around the school’s graduate programs. Like most of America’s great universities, Stanford views itself as an important research institution as well as a teaching institution, and that is reflected in the campaign.
It is hard to criticize any effort to raise money that might help cure disease, and far be it from me to try. “To equip a modern scientific lab is hugely expensive,” said William G. Bowen, the former president of Princeton. “If you are Stanford and have a major commitment in science you are going to have to go out and raise substantial resources.” One thing Stanford officials point out, for instance, is that the university plans to use some of the money to build a laboratory for stem cell research.
One thing that struck me, as I listened to Mr. Shell and others, was the extent to which at least some of these initiatives dovetailed with issues that were already on the minds of potential donors. For two years before the introduction of the capital campaign, Stanford was raising money during what’s called the “silent phase,” talking to donors, gauging the market and getting a sense of what alums and others might be willing to fund.
Although Mr. Shell insisted that Stanford was focusing on areas “where we are already strong,” he also told me that “we had long conversations with our donors” during the silent phase. Stanford had already decided to focus on the environment, but that is also a very popular cause among its alums. And the K to 12 initiative became part of the Stanford Challenge because it was something potential donors kept coming back to as they spoke to university officials..
It also seems clear that a good portion of the money will be aimed at enhancing existing properties. Philip H. Knight, the founder of Nike, has already promised $100 million as the lead gift for a new campus for the business school.
But wait: does Stanford really need a new campus for the business school? Not in the sense that its business school students aren’t managing just fine with the campus they use now. But the truth is — and this is a lot of the underlying rationale for all these capital campaigns — Stanford isn’t just trying to save the world. It is also trying to keep up with Yale and Harvard and the other elite institutions with whom it competes for students and faculty.
“If your competitor has a swimming pool, then you have to build a swimming complex,” said Arthur E. Levine, the former president of Teachers College at Columbia, who now heads the Woodrow Wilson National Fellowship Foundation. And if Yale and Harvard have ever-more attractive business schools, then Stanford has to keep pace. John V. Lombardi, the chancellor of the University of Massachusetts, describes the current mania for capital campaigns this way: “It’s an arms race.”
It’s not just fancy facilities or high-end research, either. To compete with the other elite schools, Stanford wants to attract the best faculty possible — which means luring the stars at other schools, offering them huge raises, laboratory space and research assistance. Capital campaigns and big endowments have accelerated the amount of poaching that goes on and have significantly driven up salaries.
These competitive pressures among the elite universities have led to an odd result — or at least odd when you think how competition normally works. Competition normally causes prices to go down. But as Mr. Levine points out, in the case of the nation’s most prestigious universities, competition actually causes prices and costs to rise because the ever-upward spiral of bigger salaries and better facilities and all the rest of it makes the running of the university that much more expensive.
One thing that surprised me was that so few people in the world of higher education seemed bothered by this. Whenever I asked about the high cost of tuition — and why these campaigns and huge endowments didn’t stop the relentless annual tuition hikes — I was told that tuition only covers about 60 percent of the cost of education, and besides, a great deal of money raised in capital campaigns went to financial aid. (Stanford tuition is currently $32,994, with room and board adding another $10,367.) Those students who are paying full freight — and their parents — have certain expectations about the kind of facilities they will have access to, the professors who will teach them, the computers they will use, and the schools are raising money in order not to disappoint. “They are responding to market demand, in which parents and students select the fanciest, most luxurious, best-equipped schools — and everyone wants their tuition discounted,” Mr. Lombardi said. The money raised in capital campaigns helps the elite institutions market themselves.
There is no question that the rise of the elite American university is one of the great success stories in modern life. In their own way, they are global leaders. The competition among them have made them all better. But it has also drained talent and money — and made life more difficult — for all the hundreds of universities that do not rank, in the public mind, with Harvard and Stanford and Yale. These other universities are the schools that educate the vast bulk of American college students. They can’t conduct $1 billion fund drives. And so, ever so slowly, they are falling behind. That’s not Stanford’s fault, or even Stanford’s problem, but it can’t possibly be good for the country.
One other thing about capital campaigns. Whenever I asked anyone involved in one whether they were trying to trump someone else’s campaign — whether, that is, the amount of money they were trying to raise was itself a form of competition — I was told that nothing could be further from the truth. Robert M. Berdahl, the president of the Association of American Universities, told me flatly: “You don’t have a capital campaign because one of your peers is having one. It is about the university’s need for resources.”
But then, a few days ago, something happened that made me wonder about that claim. Cornell got wind of what I was reporting, and a public relations executive sent me a series of e-mail messages trumpeting its own capital campaign, hoping that I would mention it in this column.
So here goes. The campaign will be announced Thursday in New York, and though the executive wouldn’t tell me its size, she strongly implied that it would be right up there with the big boys.
The Cornell campaign, she wrote me, would establish “a new Ivy lead in the ‘race for the top dollars.’ ” Competition, indeed.
Correction: Oct. 27, 2006
The Talking Business column in Business Day on Saturday, about the fund-raising efforts of large universities, misstated the room and board rates at Stanford University. The combined cost for room and board is $10,367 — not $4,796, which is the cost just for board.
Copyright 2006 The New York Times Company
Privacy Policy Search Corrections RSS First Look Help Contact Us Work for Us Site Map
New phase seen in Mexico's drug war
The recent killing of the country's top drug cop has prompted a crackdown, but the cartels have struck back.
By Héctor Tobar
Los Angeles Times Staff Writer
May 18, 2008
MEXICO CITY — To strike back at narcotics traffickers suspected of ordering the assassination of Mexico's top drug cop, President Felipe Calderon dispatched 2,000 army troops and federal police to the gang's home base, the western state of Sinaloa.
The traffickers struck back themselves with a paramilitary-style ambush of a police station, and taunted the newly arrived troops with mocking signs on the streets.
Analysts say those moves last week show that the killing of Edgar Millan Gomez on May 8 has opened a dangerous new phase in the country's drug war.
Millan Gomez, the 41-year-old acting director of Mexico's federal police, knew he was a target, and he shuttled among three homes in a bid to outwit his nemesis: Arturo Beltran Leyva, the leader of one faction of the so-called Sinaloa cartel.
The police official lost that battle.
In the days since he was gunned down, officials have revealed that Millan Gomez's killers probably knew that he slept in more than one home. They even had the keys to his front door, a stunning illustration of the cartels' power to gather intelligence about government operations.
Officials and analysts argue that the assassination was actually a sign of weakness. Pressured by the government, they say, the Sinaloa cartel is in retreat and disarray, split into factions that have turned on each other. Several mid- and high-ranking members of the gang have been arrested, and army troops already deployed in the region have seized drug shipments, destroyed opium poppy fields and seized more than 100 airplanes believed to be used by traffickers.
Killing Mexico's No. 3 public-safety official was a reckless act committed by cornered criminals, the government says.
"We have damaged their financial and logistical operations," Calderon said Monday. "And this has apparently provoked these criminal acts of desperation in which they seek to recover the protected spaces they've lost."
Millan Gomez, who coordinated joint efforts of the army and federal police, had struck several blows against the Sinaloa cartel. The biggest was the seizure of 23 tons of cocaine in October at the Pacific port of Manzanillo.
But the investigation into Millan Gomez's killing has also revealed the power and reach of the cartel.
In Mexico City, Millan Gomez's bodyguards and several of his aides have been forced to take polygraph examinations. Investigators believe a top official close to Millan Gomez must have betrayed him to cartel hit men.
At least one federal police officer has been arrested in the killing: Jose Antonio Montes Garfias, a 14-year veteran assigned to the regional headquarters of the federal police in Culiacan, the capital of Sinaloa state.
Details also have emerged on the extent to which Mexico's drug organizations rely on former army soldiers and serving policemen.
The Sinaloa cartel is one of the oldest in Mexico. Founded by a few close-knit families and once dominant in Mexico's drug trade, it has been challenged over the last decade by the so-called Gulf cartel, based in the northeastern border state of Tamaulipas. But the Sinaloa traffickers still control Pacific smuggling routes that U.S. officials say have become the most popular for shipment of Colombian cocaine to the United States.
Joaquin "Shorty" Guzman, the fugitive leader of the gang, is fighting for control of the group with his former top henchman, Beltran Leyva, officials say. The animosity between the factions may have led to the killing of Guzman's son, Edgar, on May 8, the day Millan Gomez was slain.
Millan Gomez was directing an operation against Beltran Leyva just hours before he was killed, officials said. His police officers had cornered the drug baron on a highway outside Cuernavaca, south of Mexico City. But they found themselves outgunned by a well-coordinated team of bodyguards, led by several former members of the 43rd Infantry Battalion of the Mexican army.
Two men on each side were killed, authorities said. Nine of Beltran Leyva's bodyguards were arrested.
But Beltran Leyva escaped. That evening, his plan to rid himself of the tenacious Millan Gomez moved toward fruition, authorities said. According to federal police, the cartel leader contracted Millan Gomez's killing to a criminal gang in Mexico City.
Millan Gomez's schedule was a closely guarded secret, known only to a few associates, officials said. But as he headed home accompanied by two bodyguards in an armored sport utility vehicle, four cartel hit men were waiting behind his front door.
The bodyguards dropped off Millan Gomez, who entered his home alone. Seconds later, they heard gunshots.
Though wounded by at least eight shots, Millan Gomez was able to grab one of the attackers, officials said.
"Who sent you?" he demanded. "Who sent you to kill me?" He died at a hospital, the third high-ranking federal police official killed in Mexico City in a week.
His bodyguards were wounded in an exchange of gunfire with the fleeing assailants. One man, a petty criminal with two convictions for auto theft, was arrested. At least three escaped.
Several analysts said Mexico was entering a new phase of the drug war. The government offensive, they said, had caused cash shortages and splits in the cartels.
Newspaper columnist Jorge Fernandez Menendez compared the Mexican traffickers' predicament with that of Colombian drug lord Pablo Escobar and his Medellin cartel during its decline in the late 1980s and early 1990s.
"The weaker Escobar became, the more enemies he made . . . and the less money he had, the more he resorted to violence to take revenge on his enemies and strike fear in them," Fernandez Menendez wrote in the newspaper Excelsior.
On Tuesday, Calderon's "security cabinet," including the Interior and Defense secretaries and attorney general, made a point of traveling to Sinaloa's capital for a meeting. Then, the troops were dispatched.
"If necessary, we'll bring even more troops," Defense Secretary Guillermo Galvan said. "Organized crime is not, and can never be, stronger than Mexico."
Officials quickly moved to close 20 of the 22 currency exchange houses in Culiacan and audit their operations. Such businesses often are used by traffickers to launder profits.
The drug traffickers responded with the guerrilla-style attack against the police station.
On Wednesday, as many as 40 cartel operatives launched an attack on a police station in Guamuchil, a city 60 miles northwest of Culiacan. They came in 10 late-model pickups, and wore jackets bearing the logo of a federal police agency.
As the half a dozen police officers inside scrambled for cover, the attackers sprayed the building with automatic-weapons fire and set off at least two grenades. Two officers were hurt before the attackers fled, leaving behind several hundred spent ammunition casings.
The traffickers have also posted signs on Culiacan street corners that taunt the government efforts.
"Little soldiers of lead, generals of straw," read one sign, painted on a sheet.
"This is the territory of Arturo Beltran."
hector.tobar@latimes.com
http://www.latimes.com/news/nationworld/world/la-fg-mexwar18-2008may18,0,5575316.story
By Héctor Tobar
Los Angeles Times Staff Writer
May 18, 2008
MEXICO CITY — To strike back at narcotics traffickers suspected of ordering the assassination of Mexico's top drug cop, President Felipe Calderon dispatched 2,000 army troops and federal police to the gang's home base, the western state of Sinaloa.
The traffickers struck back themselves with a paramilitary-style ambush of a police station, and taunted the newly arrived troops with mocking signs on the streets.
Analysts say those moves last week show that the killing of Edgar Millan Gomez on May 8 has opened a dangerous new phase in the country's drug war.
Millan Gomez, the 41-year-old acting director of Mexico's federal police, knew he was a target, and he shuttled among three homes in a bid to outwit his nemesis: Arturo Beltran Leyva, the leader of one faction of the so-called Sinaloa cartel.
The police official lost that battle.
In the days since he was gunned down, officials have revealed that Millan Gomez's killers probably knew that he slept in more than one home. They even had the keys to his front door, a stunning illustration of the cartels' power to gather intelligence about government operations.
Officials and analysts argue that the assassination was actually a sign of weakness. Pressured by the government, they say, the Sinaloa cartel is in retreat and disarray, split into factions that have turned on each other. Several mid- and high-ranking members of the gang have been arrested, and army troops already deployed in the region have seized drug shipments, destroyed opium poppy fields and seized more than 100 airplanes believed to be used by traffickers.
Killing Mexico's No. 3 public-safety official was a reckless act committed by cornered criminals, the government says.
"We have damaged their financial and logistical operations," Calderon said Monday. "And this has apparently provoked these criminal acts of desperation in which they seek to recover the protected spaces they've lost."
Millan Gomez, who coordinated joint efforts of the army and federal police, had struck several blows against the Sinaloa cartel. The biggest was the seizure of 23 tons of cocaine in October at the Pacific port of Manzanillo.
But the investigation into Millan Gomez's killing has also revealed the power and reach of the cartel.
In Mexico City, Millan Gomez's bodyguards and several of his aides have been forced to take polygraph examinations. Investigators believe a top official close to Millan Gomez must have betrayed him to cartel hit men.
At least one federal police officer has been arrested in the killing: Jose Antonio Montes Garfias, a 14-year veteran assigned to the regional headquarters of the federal police in Culiacan, the capital of Sinaloa state.
Details also have emerged on the extent to which Mexico's drug organizations rely on former army soldiers and serving policemen.
The Sinaloa cartel is one of the oldest in Mexico. Founded by a few close-knit families and once dominant in Mexico's drug trade, it has been challenged over the last decade by the so-called Gulf cartel, based in the northeastern border state of Tamaulipas. But the Sinaloa traffickers still control Pacific smuggling routes that U.S. officials say have become the most popular for shipment of Colombian cocaine to the United States.
Joaquin "Shorty" Guzman, the fugitive leader of the gang, is fighting for control of the group with his former top henchman, Beltran Leyva, officials say. The animosity between the factions may have led to the killing of Guzman's son, Edgar, on May 8, the day Millan Gomez was slain.
Millan Gomez was directing an operation against Beltran Leyva just hours before he was killed, officials said. His police officers had cornered the drug baron on a highway outside Cuernavaca, south of Mexico City. But they found themselves outgunned by a well-coordinated team of bodyguards, led by several former members of the 43rd Infantry Battalion of the Mexican army.
Two men on each side were killed, authorities said. Nine of Beltran Leyva's bodyguards were arrested.
But Beltran Leyva escaped. That evening, his plan to rid himself of the tenacious Millan Gomez moved toward fruition, authorities said. According to federal police, the cartel leader contracted Millan Gomez's killing to a criminal gang in Mexico City.
Millan Gomez's schedule was a closely guarded secret, known only to a few associates, officials said. But as he headed home accompanied by two bodyguards in an armored sport utility vehicle, four cartel hit men were waiting behind his front door.
The bodyguards dropped off Millan Gomez, who entered his home alone. Seconds later, they heard gunshots.
Though wounded by at least eight shots, Millan Gomez was able to grab one of the attackers, officials said.
"Who sent you?" he demanded. "Who sent you to kill me?" He died at a hospital, the third high-ranking federal police official killed in Mexico City in a week.
His bodyguards were wounded in an exchange of gunfire with the fleeing assailants. One man, a petty criminal with two convictions for auto theft, was arrested. At least three escaped.
Several analysts said Mexico was entering a new phase of the drug war. The government offensive, they said, had caused cash shortages and splits in the cartels.
Newspaper columnist Jorge Fernandez Menendez compared the Mexican traffickers' predicament with that of Colombian drug lord Pablo Escobar and his Medellin cartel during its decline in the late 1980s and early 1990s.
"The weaker Escobar became, the more enemies he made . . . and the less money he had, the more he resorted to violence to take revenge on his enemies and strike fear in them," Fernandez Menendez wrote in the newspaper Excelsior.
On Tuesday, Calderon's "security cabinet," including the Interior and Defense secretaries and attorney general, made a point of traveling to Sinaloa's capital for a meeting. Then, the troops were dispatched.
"If necessary, we'll bring even more troops," Defense Secretary Guillermo Galvan said. "Organized crime is not, and can never be, stronger than Mexico."
Officials quickly moved to close 20 of the 22 currency exchange houses in Culiacan and audit their operations. Such businesses often are used by traffickers to launder profits.
The drug traffickers responded with the guerrilla-style attack against the police station.
On Wednesday, as many as 40 cartel operatives launched an attack on a police station in Guamuchil, a city 60 miles northwest of Culiacan. They came in 10 late-model pickups, and wore jackets bearing the logo of a federal police agency.
As the half a dozen police officers inside scrambled for cover, the attackers sprayed the building with automatic-weapons fire and set off at least two grenades. Two officers were hurt before the attackers fled, leaving behind several hundred spent ammunition casings.
The traffickers have also posted signs on Culiacan street corners that taunt the government efforts.
"Little soldiers of lead, generals of straw," read one sign, painted on a sheet.
"This is the territory of Arturo Beltran."
hector.tobar@latimes.com
http://www.latimes.com/news/nationworld/world/la-fg-mexwar18-2008may18,0,5575316.story
Saturday, April 12, 2008
Underinvestment Kills Firefighter
Fatal blasts are linked to aging infrastructure
By Howard Blume
Los Angeles Times Staff Writer
11:44 PM PDT, March 28, 2008
A blast that killed one firefighter and injured another this week in Westchester was a freak occurrence and indirectly the result of the decaying underground infrastructure, officials said Friday.
Firefighter Brent A. Lovrien, 35, was fatally injured Wednesday when a spark ignited combustible smoke behind an electrical panel door that he was trying to open with a circular saw.
Smoke had migrated into the electrical room from the underground burning of a conduit 200 feet away. When underground pipes fail, it normally causes a power outage, not a dangerous fire, officials said.
Fire officials said Lovrien acted according to policy and had no way of knowing that using the saw could trigger an explosion. Los Angeles Fire Chief Douglas Barry said the policy for handling such situations would be reviewed.
The fatal blast also injured fire Engineer Anthony J. Guzman, 48, who emerged from surgery for multiple fractures in serious but stable condition.
During a 48-hour multi-agency investigation, technicians shut down power to 400 customers in a two-block commercial corridor along Sepulveda Boulevard, near Los Angeles International Airport.
Although officials insisted that another blast was unlikely, the problem at the root of the explosions is hardly uncommon. Threading under the city are 15,000 miles of aging electrical pipe -- much of it about 60 years old or more, said David Nahai, general manager of the city's Department of Water and Power.
The electrical current travels through copper wiring that is wrapped in oil-soaked insulating paper. The entire bundle is encased in lead.
Over decades, that lead casing can develop cracks, causing arcing, said Aram H. Benjamin, the agency's assistant general manager. Workers find the problem, then replace the old pipe with a modern synthetic. About half the underground pipes have been replaced.
In this instance, the arcing ignited the old oiled-soaked paper, which began to burn like a fuse. The fire began just under the corner of Sepulveda and La Tijera boulevards.
The first explosion happened about 2 p.m., blowing the manhole cover outside a Staples store 20 feet, said Battalion Chief John Miller. The second explosion occurred about 16 minutes later -- right above the source of the fire.
Smoke from the fire found its way into a 200-foot conduit that led into the tiny electrical panel room. The room stood behind a two-story office building that houses a credit union and a sandwich shop. By about 2:30 p.m., hazardous-materials specialist Lovrien was on the scene with fellow firefighters from Station 95.
Lovrien saw smoke coming from around the edge of the nearly airtight electrical panel room and, finding the door locked, ran to get the circular saw, said arson investigator Thomas L. Derby.
His composite blade struck the steel lock, throwing off a spark. The ensuing blast threw him back eight feet. He died from blunt-force trauma to the head, probably from the doors blowing off or from the saw, arson investigators said. The La Habra resident was divorced and had no children.
The force threw Guzman about six feet, even though he was standing well behind Lovrien.
"These series of events are very, very unusual," Nahai said.
Present with Nahai, Mayor Antonio Villaraigosa and other officials at a Westchester news conference were comrades of Lovrien, a 13-year veteran whose sunny disposition earned him a matching nickname.
"His nickname is 'Lovey,' and that tells you everything about him," said firefighter Anthony Pacheco, his voice cracking. Just days ago, Lovrien had insisted on working a shift for Pacheco so his colleague could have his birthday off.
howard.blume@latimes.com
http://www.latimes.com/news/local/la-me-explosion29mar29,0,5311983.story
From the Los Angeles Times
By Howard Blume
Los Angeles Times Staff Writer
11:44 PM PDT, March 28, 2008
A blast that killed one firefighter and injured another this week in Westchester was a freak occurrence and indirectly the result of the decaying underground infrastructure, officials said Friday.
Firefighter Brent A. Lovrien, 35, was fatally injured Wednesday when a spark ignited combustible smoke behind an electrical panel door that he was trying to open with a circular saw.
Smoke had migrated into the electrical room from the underground burning of a conduit 200 feet away. When underground pipes fail, it normally causes a power outage, not a dangerous fire, officials said.
Fire officials said Lovrien acted according to policy and had no way of knowing that using the saw could trigger an explosion. Los Angeles Fire Chief Douglas Barry said the policy for handling such situations would be reviewed.
The fatal blast also injured fire Engineer Anthony J. Guzman, 48, who emerged from surgery for multiple fractures in serious but stable condition.
During a 48-hour multi-agency investigation, technicians shut down power to 400 customers in a two-block commercial corridor along Sepulveda Boulevard, near Los Angeles International Airport.
Although officials insisted that another blast was unlikely, the problem at the root of the explosions is hardly uncommon. Threading under the city are 15,000 miles of aging electrical pipe -- much of it about 60 years old or more, said David Nahai, general manager of the city's Department of Water and Power.
The electrical current travels through copper wiring that is wrapped in oil-soaked insulating paper. The entire bundle is encased in lead.
Over decades, that lead casing can develop cracks, causing arcing, said Aram H. Benjamin, the agency's assistant general manager. Workers find the problem, then replace the old pipe with a modern synthetic. About half the underground pipes have been replaced.
In this instance, the arcing ignited the old oiled-soaked paper, which began to burn like a fuse. The fire began just under the corner of Sepulveda and La Tijera boulevards.
The first explosion happened about 2 p.m., blowing the manhole cover outside a Staples store 20 feet, said Battalion Chief John Miller. The second explosion occurred about 16 minutes later -- right above the source of the fire.
Smoke from the fire found its way into a 200-foot conduit that led into the tiny electrical panel room. The room stood behind a two-story office building that houses a credit union and a sandwich shop. By about 2:30 p.m., hazardous-materials specialist Lovrien was on the scene with fellow firefighters from Station 95.
Lovrien saw smoke coming from around the edge of the nearly airtight electrical panel room and, finding the door locked, ran to get the circular saw, said arson investigator Thomas L. Derby.
His composite blade struck the steel lock, throwing off a spark. The ensuing blast threw him back eight feet. He died from blunt-force trauma to the head, probably from the doors blowing off or from the saw, arson investigators said. The La Habra resident was divorced and had no children.
The force threw Guzman about six feet, even though he was standing well behind Lovrien.
"These series of events are very, very unusual," Nahai said.
Present with Nahai, Mayor Antonio Villaraigosa and other officials at a Westchester news conference were comrades of Lovrien, a 13-year veteran whose sunny disposition earned him a matching nickname.
"His nickname is 'Lovey,' and that tells you everything about him," said firefighter Anthony Pacheco, his voice cracking. Just days ago, Lovrien had insisted on working a shift for Pacheco so his colleague could have his birthday off.
howard.blume@latimes.com
http://www.latimes.com/news/local/la-me-explosion29mar29,0,5311983.story
From the Los Angeles Times
Sunday, April 6, 2008
Wal-Mart: Brain-damaged former employee can keep money
Wal-Mart sued Debbie Shank to recoup $470,000 it paid for her medical care
Shank appealed to the U.S. Supreme Court, but the court would not hear the case
On Tuesday, Wal-Mart said it is modifying its health care plan
From Randi Kaye
(CNN) -- A former Wal-Mart employee who suffered severe brain damage in a traffic accident won't have to pay back the company for the cost of her medical care, Wal-Mart told the family Tuesday.
"Occasionally, others help us step back and look at a situation in a different way. This is one of those times," Wal-Mart Executive Vice President Pat Curran said in a letter. "We have all been moved by Ms. Shank's extraordinary situation."
Eight years ago, Debbie Shank was stocking shelves for the retail giant and signed up for Wal-Mart's health and benefits plan.
After a tractor-trailer slammed into her minivan, the 52-year-old mother of three lost much of her short-term memory and was confined to a wheelchair. She now lives in a nursing home.
She also lost her 18-year-old son, Jeremy, who was killed shortly after arriving in Iraq. When Debbie Shank asks family members how her son is doing and they remind her that he's dead, she weeps as if hearing the news for the first time.
Wal-Mart's health care plan lets the retail giant recoup the cost of its expenses if an employee collects damages in a lawsuit. And Wal-Mart set out to do just that after Shank and her husband, Jim, won $1 million after suing the trucking company involved in the wreck. After legal fees, the couple received $417,000.
Wal-Mart sued the Shanks to recoup $470,000 it paid for her medical care. However, a court ruled that the company could only recoup about $275,000 -- the amount that was left in a trust fund for her care.
The Shanks appealed to the U.S. Supreme Court, but the court declined in March to hear the case. CNN told the couple's story last week, prompting thousands of angry blog responses and at least two online petitions to boycott the company.
On Tuesday, Wal-Mart said in a letter to Jim Shank that it is modifying its health care plan to allow "more discretion" in individual cases.Watch Wal-Mart reverse its decision »
"We wanted you to know that Wal-Mart will not seek any reimbursement for the money already spent on Ms. Shank's care, and we will work with you to ensure the remaining amounts in the trust can be used for her ongoing care," Curran said.
"We are sorry for any additional stress this uncertainty has placed on you and your family."
Wal-Mart's reversal came as shock to Shank.
"I thought it was an April Fool's joke," he told CNN.
"I (would) just like to let them know that they did the right thing. I just wish it hadn't taken so long," Shank said. "But I thank them and I hope they come through with all that they said they're going to do.
Find this article at:
http://www.cnn.com/2008/US/law/04/02/walmart.decision/index.html
Shank appealed to the U.S. Supreme Court, but the court would not hear the case
On Tuesday, Wal-Mart said it is modifying its health care plan
From Randi Kaye
(CNN) -- A former Wal-Mart employee who suffered severe brain damage in a traffic accident won't have to pay back the company for the cost of her medical care, Wal-Mart told the family Tuesday.
"Occasionally, others help us step back and look at a situation in a different way. This is one of those times," Wal-Mart Executive Vice President Pat Curran said in a letter. "We have all been moved by Ms. Shank's extraordinary situation."
Eight years ago, Debbie Shank was stocking shelves for the retail giant and signed up for Wal-Mart's health and benefits plan.
After a tractor-trailer slammed into her minivan, the 52-year-old mother of three lost much of her short-term memory and was confined to a wheelchair. She now lives in a nursing home.
She also lost her 18-year-old son, Jeremy, who was killed shortly after arriving in Iraq. When Debbie Shank asks family members how her son is doing and they remind her that he's dead, she weeps as if hearing the news for the first time.
Wal-Mart's health care plan lets the retail giant recoup the cost of its expenses if an employee collects damages in a lawsuit. And Wal-Mart set out to do just that after Shank and her husband, Jim, won $1 million after suing the trucking company involved in the wreck. After legal fees, the couple received $417,000.
Wal-Mart sued the Shanks to recoup $470,000 it paid for her medical care. However, a court ruled that the company could only recoup about $275,000 -- the amount that was left in a trust fund for her care.
The Shanks appealed to the U.S. Supreme Court, but the court declined in March to hear the case. CNN told the couple's story last week, prompting thousands of angry blog responses and at least two online petitions to boycott the company.
On Tuesday, Wal-Mart said in a letter to Jim Shank that it is modifying its health care plan to allow "more discretion" in individual cases.Watch Wal-Mart reverse its decision »
"We wanted you to know that Wal-Mart will not seek any reimbursement for the money already spent on Ms. Shank's care, and we will work with you to ensure the remaining amounts in the trust can be used for her ongoing care," Curran said.
"We are sorry for any additional stress this uncertainty has placed on you and your family."
Wal-Mart's reversal came as shock to Shank.
"I thought it was an April Fool's joke," he told CNN.
"I (would) just like to let them know that they did the right thing. I just wish it hadn't taken so long," Shank said. "But I thank them and I hope they come through with all that they said they're going to do.
Find this article at:
http://www.cnn.com/2008/US/law/04/02/walmart.decision/index.html
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