Well, So Much For That

Burlington Telecom, the failed/failing/flailing government-sponsored enterprise, an enterprise that Burlington taxpayers unwittingly subsidized when then-Mayor Bob Kiss decided it was OK to dip into the city’s cash pool to keep the cable flowing, has had its settlement talks with its creditor collapse on Monday. From the Freeps:

Golly!

Settlement talks in Citibank’s $33.5 million lawsuit against Burlington and Burlington Telecom have ended unsuccessfully, federal mediator Richard Cassidy said in a report to U.S. District Court in Burlington.

Cassidy said in a “final report” to the court that he had participated in “many telephone conversations” with both sides since the last face-to-face negotiations in late January.

“We have apparently exhausted the possibility of settlement,” Cassidy concluded, “given the present posture of the case and the views of the parties.”

Let’s not all be shocked at once. This issue has been dragging on since 2010, when Burlington terminated the lease agreement when, as if by magic, it discovered that Burlington Telecom could not make promised payments on the leased equipment. Since then, Citibank has been trying to recoup its losses, but it now sounds like that even aided by a federal mediator, the parties can’t come to an agreement. This sounds a lot like:

a. Whatever Burlington is offering to pay is nowhere near the value of the equipment, or the terms are so long that Citi would continue to lose money. I’m assuming that Burlington Telecom is still considered to be a viable enterprise by the City of Burlington, regardless of the math surrounding the debt structure and operating expenses.  Hope has sprung eternal here.

b. Burlington is operating under the impression that BT will continue indefinitely, regardless of the outcome, so they’re not offering terms in good faith. As unrealistic as this sounds, this could very well be the case, considering its past statements about the value of BT.

c. Citibank is unwilling to accept anything but full value of the lease agreement, and/or repayment terms that equate to the full value of the lease agreement. Considering the City essentially broke a contract, and the City violated its Certificate of Public Good under which BT is allowed to operate, I’m not quite sure how Burlington is off the hook for the value of the contract, regardless of how painful that payment structure might be to the citizens of Burlington.

Miro Weinberger, who inherited this rolling disaster when he became Mayor, states something approaching the obvious here:

“We would all like to put (this) behind us,” Weinberger said. “It’s an unfortunate chapter for the city and for Citibank.”

No kidding. But Bob Kiss left you something to clean up that is simply not going to come up easy.

He said the city wants to be sure that any settlement of the case, whether by negotiation or in trial, “is fair to the citizens of Burlington, who have spent far more on BT than they expected.”

There won’t be anything fair in a settlement. The citizens of Burlington were not supposed to spend anything on Burlington Telecom – period. End of story. It was not to be a taxpayer-supported enterprise, until Kiss and Jonathon Leopold decided to spend $17 million of money that wasn’t their own to keep BT’s doors open, and tried to hide the spend from taxpayers.

There should be zero expectation that Burlingtonians spend anything on this boondoggle, but they’re going to end up with the bill

Unbelievable, Number One. Didn’t anyone have a calculator in City Hall?

that someone else left for them anyway.  But for what?  An enterprise that provides a service was already provided, by multiple suppliers, to all Burlingtonians, and had been for years?  BT’s pricing, even before the wheels came off, was not much better or worse than other service providers.  It’s about the same.

So why re-create the wheel, on the backs of taxpayers, when you don’t have to?  Why not City of Burlington Gas Stations?  City of Burlington Shoe Stores? Inevitably, when politicians do things for political reasons, the bottom falls out of the project, onto the heads of taxpayers. A “Progressive” business is always a success, when there’s a deep and wide pool of tax dollars available for siphoning when economic reality slaps the Progressive mind square in the melon.

A Healthy Dollop of Mediocrity

In continuing the ongoing story where Peter Shumlin is presented as being wildly detached from economic reality, I give you the best and worst states for business in 2013.

The Peter Shumlin Experience

Let the betting begin, in terms of where we might find our fine, green, and wildly economically competitive state.  Where’s VT on this chart? 39th out of 57, er, 50 states. We slipped a notch from last year, so now we’re ranked even lower than Mississippi, a state not known as an economic behemoth.  If we’re 39th, how can Peter Shumlin claim that Vermont has “ the strongest job market in the region“, when our closest neighbor in terms of population, natural resources, and land mass, New Hampshire, is ranked 26th?

A few other untasty nuggets from the ranking site:

1. GDP Growth Rate

Vermont GDP Growth % 2010-2011: .5%
National Avg: 1.5%

In other words, our GDP growth rate would have to grow 200% to reach the pathetic national average.  But hey, everything’s fine.

2. State-Local Tax Burden

Vermont Rate: 10.9%
National Average: 9.9%

We’re one full percentage point higher than the average, but 1 out of 10 is 10% – Vermont has a 10% higher tax burden than the national average.  That’s supposed to make us more competitive?

3. State and Local Govt Employees

Forward! To The US Senate When The Time Is Just Right, Hopefully Soon!

From the ranking site, there are 641 State/Local workers for every 10,000 residents. But with the number of federal employees included, Vermont’s “government” sector (according to BLS.gov) is 53,000. There are 306,000 NonFarm Vermonters working, for a total working population of 359,0000. This means that roughly 15 percent of our workforce, a workforce that only consists of about half the population of the state, works for the State, Local, County, or Federal government. Now that might not seem like a big percentage, but the Manufacturing sector alone only employs 32,100 people – or about 65% of what the government sector employs.  We have 20,000 more government workers than we do manufacturing workers.

I’d like to be the first to break the news to the aspiring Senator, er, Governor Shumlin – something is massively, horribly rotten in my Green Mountains. Meaning the state has a pathetic, anemic, rotting economy, and he’s happily presiding over it, smiling and telling us that not only are we OK, we are “Vermont Strong”.  How a rational adult can try to pitch what amount to economic lies to Vermonters, and hope or expect that they’ll buy it, is both the height of hubris, and cynicism.  We can, and should do better.

I have some advice for Peter: If you’re that interested in a job in DC, don’t let the door hit you in the ass on the way out. We’ll have one less government worker who needs tax dollars to pay for his vacations.

Competing Industrially: Or How I Learned to Stop Worrying and Let Peter Welch Fix Everything

Because absolutely no one asked for it:

Improving Homes: Welch Style!

Reps. David B. McKinley, P.E. and Peter Welch (D-VT) have introduced The Energy Savings and Industrial Competitiveness (ESIC) Act (H.R. 1616). The bill will spur the use of energy efficiency technologies in residential, commercial, and industrial buildings, plus encourage job creation.

I’m guessing because business are always interested in ways to pay higher energy costs, they absolutely needed the helping hands of these two fine people in Washington to show them the way, otherwise they would never, ever, think to use “energy efficiency technologies” in their businesses. They would obviously just be implementing non-energy-efficient technologies in their businesses. Like heating their buildings with warm lumps of coal, perhaps. Thank God Peter Welch is able to shed light on newer technologies so the dolts who actually work for a living can be shown how to do their jobs in the right way that people in Washington, DC, think they should be doing their jobs.

“This bipartisan bill is designed to save businesses and taxpayer’s money while making America more energy independent,” said Rep. McKinley. “As an engineer, I’ve designed energy efficient buildings and understand how to conserve energy and save money.”

Oh, so now we’re going to save money because of federal intervention? Like Obamacare was going to reduce health insurance rates?  Energy independence doesn’t come by (for example) mandating the use of a marginally less energy-consuming light bulb that contains mercury and doesn’t last as long as conventional bulbs, as Congress tried to do in 2007.  Energy independence comes from developing the domestic energy sources that the US has in the trillions of gallons, but the current President and Congress won’t allow those same hapless taxpayers to tap into. Then you would see energy being produced domestically, which is apparently not something these two fine representatives are interested in doing.

“Energy efficiency is a practical, non-partisan idea that saves money, puts people to work, creates demand for American-made products, and improves the environment,” said Rep. Welch. “This bill is a common sense idea whose time has come.”

Federal energy efficiency legislation is nothing of the kind. It will raise costs for products to meet federal efficiency guidelines. It will enable the federal gov’t to determine local building codes. It will create a cottage industry

for K-Street employees to ensure the corporations that they work for are lined up at an appropriate and respectful distance from the federal trough, so they can only madly consume tax dollars after Congressman Welch, et al, has blown the “All clear – DIG IN!” whistle.

I would also suggest that a reading of the text of the bill is in order, since it seems to ascribe a federal overview, and approval mechanism, when new energy-efficiency codes are created by the Secretary of Energy.  In other words, a federal appointee will be creating the building codes which the entire country will now be subject to.  How could this possibly go wrong?

I will bow shortly, Overlord Welch! At your command, O Bald One!

Lastly, regarding common sense:  It did not make sense (common or otherwise) to ban a perfectly functioning, cheap, well-known, well-established, and widely available technology for a more expensive, less reliable, less available,and actually more potentially damaging technology, all in the interests of “efficiency”. Banning the incandescent light bulb was the epitome of legislative hubris, borne of a rampant desire to control every aspect of

formerly-free peoples’ lives (for their own good, of course), and a complete misunderstanding of both their responsibility in their Congressional oaths and their duties as representatives of the People. The People, not the Sheeple, in case Peter Welch has missed it.  We do not need to be led (or led by incompetents), we need to be left alone by those who seek an ever-expanding federal wasteland of spending, regulation, and control, all of which is apparently sought out by those kinds of people who either can’t cut it in the real world, or simply desire the power to dictate the lives of others.

Among other items, H.R. 1616 requires the Federal Government to adopt energy saving techniques for computers, saving energy and taxpayer’s money.

I have a much easier way of saving both energy and taxpayer money – cut federal spending in half, shut the power off to half the Department of Education buildings and the Department of Energy buildings, neither of which actually educate anyone or provide energy to anybody, and boom – you have instant energy savings and instant taxpayer savings.

Problem solved!  Next?

When Lies Become The Truth

Governor Peter Shumlin, fresh from seeing an unemployment number he liked without understanding it, or, more likely, purposefully ignored the underlying data, didn’t miss his opportunity to once again lie to Vermonters about how great the Vermont economy is doing. In case you missed it, because you were overloaded with requests from local headhunters looking to place highly-skilled workers in much-demanded, high-paying jobs immediately, Vermont’s economy is like, totally rebounding! Yes, watch out, Charles Barkley – Vermont is the new Round Mound of Economic Rebound!  But let’s let the governor’s own words spill from his wise and sainted lips:

- The news today of another drop in the Vermont’s unemployment rate, to 4.1 percent, is further proof that the state’s economy continues to rebound from the worst recession in our memory.  

You have been warned. Stand clear, citizens!

No, it’s not. In fact, it’s the opposite. Total Nonfarm employment went down from Feb to March – a net loss of 1,800 jobs. Why isn’t Shumlin waving his “hooray!” flag around the state from the confines of a taxpayer-subsidized electric car for this data point? Is he afraid he’ll drive past an unemployed person’s house?

Sadly, the real reason the unemployment rate went down is the same reason Vermont’s rate is typically low in the first place: Vermont has a relatively low participation rate in the workforce. From Vermont’s DOL website:

Civ Labor Force:  351,650
Working:   337,100
Unemployed:   14,550
Unemployment rate:   4.1%

But Vermont’s workforce participation breakdown is:

State Population 626,000

Workforce participation rate (working/population): 53.8%

National Labor Participation Rate (From BLS) 63.3%

Vermont has a much lower labor force than the national average, which means that there are fewer people chasing jobs – and that keeps the unemployment number tamped down, even when the state experiences net job losses, as it did last month. The number of diminishing participants is larger than the number of net jobs lost – numbers which essentially negate each other’s impact.  Amazingly, Shumlin is stating that net job losses are an example of how well Vermont’s economy is doing.  Why doesn’t anyone ask him that question?

Vermont also has a higher proportion of people over 65 than the national average, which means that Vermont will have (and continue to have, considering its low birth rate) a smaller and smaller labor force.  This will mean the unemployment number will continue to follow this same dismal pattern, enabling politicians like Shumlin to follow their own same, dismal pattern.

As everyone but Shumlin knows, a low unemployment rate does not equate to higher wages, a better standard of living, income mobility, or a fresh plate of tacos.  Everyone could be employed at, say, a travel agency for college students, but only make $9.30 an hour.  I guess those kinds of lucrative jobs are creating a surge of transplants from other states, seeking those golden employment opportunities?  Vermont is 36th nationally for median household income, and, oh, a host of distressing data points already covered here.  But please, let Peter continue:

- Vermont now has the third lowest unemployment rate in the country and the strongest job market in the region, reflecting what I’m hearing from business owners as I travel the state.

Again, the stat the governor should be touting, but can’t because it doesn’t exist, is net new job growth. Unemployment, in this instance, is not an indicator of economic health – job growth is.  I’m also guessing that Shumlin is

The Economically Muscle-Bound Govenor Flexes His Guns Of Steel Here. More Or Less.

listening to a very select group of business owners if he thinks Vermont has a strong job market.  That statement is perfectly laughable on its face, especially if you’ve done any job-hunting in the last, oh, say, decade.

- While we know the rate will fluctuate up and down over time, the consistent downward trend in recent months shows that employers are hiring and need skilled workers.

As demonstrated above, this “downward trend” summary Shumlin provides is a flat-out lie. Vermont lost net jobs last month. In fact, the “Government” sector also lost 100 jobs.

- We are working hard to ensure Vermonters are qualified to fill those jobs and are connected with the employers who need workers.      

This is the worst part: Shumlin actually thinks he’s helping. He actually thinks it’s government’s job to match employers with employees. With a track record like Shumlin’s, any more “help” from the government will be the straw that breaks the Vermonter’s back.  The last thing any business needs is help from a governor who seems to be pushing forward with multiple policies that hinder business growth, not encourage it.

Is this really the guy you want helping you?

Shumlin Celebrates Failure

I totally RULE!

Peter Shumlin, never one to miss an opportunity to take credit for something he didn’t do, recently touted Vermont’s low unemployment rate as evidence that the state’s public policies are,    well, working? Is that the right word? Let’s ask the governor himself:

Shumlin, speaking during a news conference at the company’s headquarters near the Burlington International Airport, said the state has been working hard to ensure businesses have enough workers. 

“I think it’s worth celebrating that Vermont right now has the third-lowest unemployment rate in America. That doesn’t happen by coincidence,” Shumlin said.

In February Vermont’s unemployment rate was 4.4 percent, tied for the third-lowest in the country.

As has been previously demonstrated here, there’s a reason why Vermont’s unemployment is so low – and it’s not because Vermont is a hothouse of job growth. Quite the contrary, it’s due to a declining number of people participating in the workforce.  More importantly, a low unemployment rate does not mean there is job growth, median household income growth, nor does it mean that state taxes revenues are growing (because they are declining.) If everyone in the state were employed at Wal-Mart, and unemployment was 0%, would the governor still be trumpeting the wondrous effects of his policies, or would there be a different reaction altogether?  How about if all Vermonters worked in the fracking industry?

Speaking of altogether, let’s start repeating these facts, altogether now:

1. 36th in median household income.

2.  Ranked 44th for business climate.

3.  3rd-highest property tax as percentage of all state/local tax revenue.

4.  1st most costly state for manufacturing.  (We’re number 1!  We’re number 1!)

5.  Gov’t is the highest component of Vermont’s GSP (scroll down to the Economy section).

6.  Vermont was in the lowest quintile for state GSP growth for 2011.

7.  Ranked 34th in per-capita GSP (2010).

8.  From the period of 2001-2011, private nonfarm employment rose in total by 14,000 (342K to 356K – and Vermont’s population is roughly 620K, so half the population does not work).  But the manufacturing sector lost 14,000 jobs, just in that sector.  The health care/social assistance sector gained 12,00o jobs.  These are not the trends that healthy, growing economies show.

Even Godzilla knows he can’t find a good job in VT.

But the VT Dept. of Labor has the more relevant data, data that Shumlin (shockingly!) failed to mention:

The Vermont seasonally adjusted unemployment rate decreased by three-tenths of a percent to 4.4 percent in February. The comparable rate for the United States (7.7 percent) was down two-tenths of a percent from the revised January estimate of 7.9 percent. The seasonally adjusted Vermont data for February show the Vermont civilian labor force decreased by 2,100 from the prior month estimates. The number of employed decreased by 1,000 and the number of unemployed decreased by 1,100. The over-the-month declines in the civilian labor force, the unemployment rate and the number of unemployed were statistically significant.  

So – the civilian labor force decreased by 2,100 from the prior month. The number of employed and unemployed both decreased, by roughly 1,000, which is a wash. So the real reason why the unemployment number decreased was because 2,100 people left the labor force.

Note to Shumlin: That’s not a sign of a growing, vibrant, or even recovering economy.  It’s yet another sign of a dying one.

President North Star

The President, Zaphod Beeblebrox, er, Barack Obama, in his weekly remarks (not his weekly Q&A

Where’d I put my sequester towel?

in front of actual reporters, which can be terribly disconcerting, so the Q&A doesn’t actually occur), highlights the wonders of the economy having added 95,000 new jobs last month.  (Funny, the news reports it as 88,000, but what’s 7,000 jobs amongst friends?)

Now, yesterday, we learned that our businesses created 95,000 new jobs last month.  That’s about 500,000 new jobs this year, and nearly 6.5 million new jobs over the past three years.

That all sounds simply smashing, doesn’t it?  With all this great job news, I wonder why the president needs to worry about anything?  In fact, he also said earlier in his address:

Our top priority as a nation, and my top priority as President, must be doing everything we can to reignite the engine of America’s growth: a rising, thriving middle class.  That’s our North Star.  That must drive every decision we make.

So 95,000 new jobs isn’t a re-ignition of the American growth engine?  I’m confused.  Should I be happy, or sad, Mr. President?  Oh, and since it’s now your fifth year in office, are you just now discovering what your North Star should be?  Was it hidden behind clouds?  Hidden, perhaps, behind the flag pole on the 18th green when you were shooting a casual round of golf with Tiger Woods?

As has long been known, we need at least 350,000 new jobs to be added to get to a 5% unemployment rate, widely considered to be a more normal rate of unemployment.  Note that three

I long to hear the lamentations of de verkers.

years of adding 350,000 jobs per month comes out to 12,600,000 jobs, or about 200% of what Barry’s now sadly touting as some kind of accomplishment.

But President Obama’s comments come after yet another (unexpectedly) bad jobs report, and an unemployment rate that went down, despite adding 88,000 jobs.

Why did the unemployment rate drop?  663,000 people left the workforce, meaning they are no longer counted in the official unemployment number.  A whopping 88,000 jobs were added, but 7 times that number left the workforce.  So the unemployment rate drops, but because these other numbers aren’t talked about that loudly, meaning Jay Carney’s not going to talk about them, the public spin is that the economy is improving.  In fact, the White House will take it one step further:  The sequester is helping to cause unemployment, a sequester described as a “Republican sequester” when it has always been Obama’s sequester, one he specifically asked for during the budget deal of 2011.

From the Breitbart article (highlights are mine):

Kathy Bostjancic, Director of Macroeconomic Analysis for The Conference Board business research group, says the major flaw in Obama’s argument is that the sequester has not kicked in yet.

“What is even more troubling about the most recent slowdown is that it takes place even before the sequester cuts materially hit the economy,” Bostjancic stated in a press release. “This reinforces our view that the estimated 3.5 percent real GDP growth in Q1 is not likely to be sustained. Instead, we see the overall economy, led by the consumer, downshifting significantly in the second quarter, struggling to get close to 1 percent real growth.”

The need to curb Washington’s spending will have an effect on jobs, says Bostjancich, but they will likely be centered around “further contraction in government sector jobs.”

Indeed, the unemployment rate for government workers is less than half (3.6%) the national unemployment rate. Since July, the government has added 618,000 government workers to its payrolls, employing 20,633,000 individuals.

In other words, last year the gov’t hired (roughly) as many workers as the number of people who dropped out of the workforce last month.  Apparently the workers who dropped out couldn’t land one of the sequester-proof gigs the government created in the 2nd half of 2012.  To put this in even better perspective, the USG hired the equivalent of the entire population of the state of Vermont, since July of last year.  Apparently our government is just swimming in cash.  I didn’t know there was such a critical need for more government employees that the USG is hiring a state’s worth of workers to carry the enormous burden of doling out taxes back to the 57 states as long as they continue to do exactly what the federal government tells them to do – or else.

And yet, to send the self-aggrandizing parade off on a sour note:  President North Star is going to

Oh, so THAT’S where it’s been hiding for 4 years!

return 5% of his paycheck!  Isn’t that wonderful of him, to show solidarity with the 20,600,000 federal employees who might also have to take a slight pay hit?

But wait:  Note that Barry’s pay does not cover his rent, his car, his groceries, his vacations, his retirement package – Barry’s actual income pays for none of his expenses.  So for him to take a 5% cut as “solidarity” has about as much direct impact on him financially as it would for the average American to skip an extra taco at dinner.   This might be laughable, if it weren’t also so transparently cynical, and easy to do.

Oh, and let me just add this:  What kind of cut is the President going to take for the troubles of the rest of the country?  How about a percentage reduction in his post-presidential retirement funds that match the monthly unemployment numbers?  Then you’d see a President North Star actually doing something to create jobs, not destroy them, and then laughably claim otherwise.

Inequality Solved!

Recently, a friend of mine sent an email to Senator Bernie Sanders, Socialist From Somewhere Other Than Vermont, regarding the minimum wage and the recent vote on the Fair Minimum Wage Act. Let’s leave alone, momentarily, how a “minimum” can be considered “fair”, since the word minimum seems to indicate the least possible wage. Unless fairness is now defined as paying someone the least that can possibly be given, which might be a well-deserved result for those who put words like “fair” into every piece of legislation written.  As if there’s a universally-accepted definition of what constitutes “fairness” in any situation, of course, but even worse, a legislator thinks that by slapping the word into a document spat out by the bumbling loads in DC that somehow, fairness will magically rise from the American tundra like summoned golems.

But that might be a digression.

Instead, let’s tackle the economically-confused Senator’s words as he’s given them to us, shall we? The text (and our magical journey of economic illiteracy) begins:

Dear Mr. XXXXX (the name is changed here to protect the wage slave, er, the “innocent”):

Can I be a wage slave if I get to learn Kung Fu?

Thank you for contacting me regarding the federal minimum wage. I appreciate the opportunity to respond to you on this important issue.

What’s interesting here is that the word “federal” really means state-based, not the Leviathan that our government has morphed into.  Even though he’s a Senator, I don’t think Bernie’s interested in the rights of states, other than the state’s right to say “yes” to whatever it is that he wants to happen.  The Appreciator continues:

As poverty rates continue to increase and the gap between the very rich and everyone else is growing wider and wider, the time is past due to raise the federal minimum wage, which is now less than it was in 1968, when adjusted for inflation.

Poverty rates continue to increase?  Is that because the metric used by Senator Opportunity is inherently flawed?  Or is it because, depending on which dates you use, you get different outcomes?  From the US Census, using the Official Poverty Rate metric:

The poverty rate in 2010 (15.1 percent) was the highest poverty rate since 1993 but was 7.3 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available.

In other words, the poverty rate (as measured by the flawed OPR), is higher than 1993, or 20 year ago, but is roughly 30% lower than 50 years ago. So whether or not poverty is getting worse or better seems to depend largely upon the metric one chooses to use. 10 bucks is yours if you can guess which metric Sanders uses.

Maybe the OPR rate is higher because the additional federal spending designed to offset poverty is strongly correlated with increases in the poverty rate? Is that because when more free money is made available by federal programs, more people sign up for it?  Is that possible?

Increasing minimum wage rates will ensure this chart continues its glorious climb.

Oh, and what constitutes “the poor” seems to miss the point that if you’re at the bottom of the distribution, you fall under a politician’s convenient category of poor, but you have a place to live, two TV’s, air conditioning, a car, an Xbox, a cell phone, and you are receiving additional assistance (which is not counted as income, the only metric that put you into the poor category in the first place), that increases the total amount of wealth in hand in any given year. In other words, the “poor” in this definition is so broad, and ignores the actual living standards, that the word “poor” itself becomes meaningless – other than as a cudgel to demand an increase in federal spending.

But wait – Sanders is proud of himself:

I am proud to co-sponsor the Fair Minimum Wage Act, which would raise the minimum wage to $10.10 per hour over a three-year period, in equal steps of 95 cents per year. This legislation will also link the minimum wage to the cost of living, providing automatic increases in future years as the cost of living increases. Moreover, the bill would raise the minimum wage for tipped workers to 70 percent of the regular minimum wage.

Increasing the minimum wage increases unemployment. Why? As you increase the cost of labor, the cost of the product or service being sold increases as well, which decreases demand. Increased rates for existing employees means it might become cost-prohibitive to hire the next worker, even if you sorely need more help.  In terms of a larger macro-economic benefit, however, the effect of raising the minimum wage will have a hugely inconsequential effect, since minimum wage earners constitute only 5% of the total workforce.

But what the minimum wage does, at core, is prevent entry into the labor market for those low-skilled workers who want to work at a wage rate lower than the minimum wage, because the government says you cannot pay anybody less than X dollars per hour. This means that a 19 year-old college student, who might be willing to wash dishes at a restaurant for $6/hour for 10 hours a week spread over 2 shifts, for a little extra cash each week, cannot do so – the restaurant cannot legally hire this person to do the work they are willing to do, at that rate of pay. So that person remains unemployed, simply because the state says that regardless of the skill-level requirements for the job, you must pay a person X, even if they are willing to accept less than X.

The most obvious effect of this approach is that it increases the unemployment rate for the low-skilled worker, the very people that the minimum wage law is supposed to be helping.  Every time the minimum wage goes up, some number of low-skilled jobs will disappear, because the government is out there helping.

What is most at odds with economic realities is that Sanders wants to raise the cost of labor during a recession (insert a series of exclamation

I grew this tall to demand $10.10 per hour, bitchez!

marks here), when aggregate demand is already down, and unemployment is the highest it has been in decades (at least partially due to the existing minimum wage laws themselves).  So many people are willing to work for whatever they can get, or even work a 2nd part-time job, yet the laws created to help the American worker make it harder for him or her from getting a job they want, at any wage rate.

Of course, there’s more self-congratulations oozing forth from the taxpayer-supported piehole of no one’s favorite flatlander Senator:

I was also the sponsor of an amendment to the budget resolution recently passed by the Senate, which endorses the goal o f reducing income

inequality in America by increasing the minimum wage.

Shockingly, Sanders’ Supreme Body of Budget Resolving fails to note that his august corps (men) of narcissists had failed to pass an actual budget for almost 4 years, but hey, he sponsored an amendment that will increase unemployment!  Time for Bernie to kick the ol’ taxpayer-funded shoes off and wallow in his own crapulence for, say, a week or two, until it’s time to sponsor another amendment to some resolution or other that makes it even harder for Americans to find a job.

The Shumlin Real Estate Agency: No Rent Is Too Damn High Enough

In a move that’s sure to become a model for future Vermont state budget cost estimators, the State of Vermont has recently moved the Vermont Agency of Natural Resources to the National Life building in Montpelier, due to the flooding of the agency’s former space in Waterbury.  As originally pitched, this move was estimated to cost $2MM, but now that the actual bill has come due, it’s $8.65 million – more than four times the original estimate.  (At least we can be glad it’s not a cost-plus contract.)

Of course, now that the price tag has gotten some notice, there’s some scrambling going on at the higher levels of the administration.  They’re

You’ve got this, right?

trying to bat aside any questions about price (from Vermont Today):

Administration Secretary Jeb Spaulding, whose agency includes the Department of Buildings and General Services, which managed the project, said Monday that he and his aides never told the committee the National Life project would cost $2 million.

But there had to be an estimate of some kind, right?  And it looks like there was, because:

Last year, the Legislature included $1 million for the project and separate allocations for replacing other office space in Waterbury lost by Tropical Storm Irene and for replacing the Vermont State Hospital. The allocation was included in the state’s capital construction budget, which uses money raised through bonding to pay for building projects. 

Whew.  So there was some kind of plan to pay for the new office space, we just won’t know exactly what that was – but we’ll be told we have to pay for it when the costs exceed the $1MM.  Which they already have.  By 8X.

As kind of a bonus, because the state owned the Waterbury complex and only paid upkeep on it, the state now leases office space from National Life (after spending almost $6MM on renovations), to the tune of $3.7MM per year, on a 10-year lease.   Ahem.   $37 million, just to rent the space they also helped fund the improvements on.  One of the improvements?  $3.675 million on modular furniture.  I would think that’s the furniture budget for the entire State of Vermont, not one lone agency.  Did we shop at Ikea?

Given that Vermont commercial office space leases (in Burlington) in the mid-teens per square foot, for $3.7MM per year you could lease

Let me just dump this rent money over here, then.

246,667 feet of space at $15/sqft.  That’s like a 10-story office building, in terms of a footprint, which is, I’m just guessing here, at least 9 Vermont Agencies of Natural Resources equivalents in extra space that we wouldn’t need to pay for.

In other words, it seems like Vermont is overpaying for space in a market that has lots of opportunity for savings, because there doesn’t seem to be a shortage of commercial space for lease in VT.  Instead, our largely untroubled “leadership” chose one of the best-known and premiere office spaces in the state, helped pay for its improvements, and then agreed to a 10-year lease at what seems like multiples of the per-unit pricing it could be paying for commercial office space, anywhere.

When it comes to spending someone else’s money, there’s no tab too large for the Shumlin administration to coyly slide over to the next guy at the table – before excusing himself to hit the bathroom on the way out.

Bernie Betrayed!

Sen. Bernie Sanders, was recently horrified to learn that Dear Leader, President Obama, might be putting Social Security benefits up for potential cuts in order to tackle deficit reduction:   

Wait – Who’s betraying who, here?

President Meets Senators President Obama made a rare visit to Capitol Hill on Tuesday and told Senate Democrats behind closed doors that he was open to cutting Social Security benefits as part of a deficit-reduction deal with congressional Republicans. “He is more inclined to cut benefits, which I strongly disagree with,” Sen. Bernie Sanders told The Wall Street Journal and United Press International after leaving the meeting with the president. “I’m going to fight as hard as I can to make the point that Social Security has not contributed on nickel to the deficit,” Sanders said Wednesday morning on National Public Radio’s “Morning Edition.  (No word as to whether or not Obama talked about cutting NPR’s budget – ed.)

It’s hardly shocking that Bernie has a problem with anyone cutting the checks that help keep him in office.  After all, it’s been decades since he never had a real job.  I quote Venkman: “I’ve worked in the private sector – they expect results“.  But I suppose that Bernie had some of his highly-groomed locks standing on end to hear this sort of talk issue from the mouths of, well, the President who has broken all prior deficit records for 4 years running.

But let’s parse Bernie, shall we?

“I’m going to fight as hard as I can to make the point that Social Security has not contributed on nickel to the deficit,” Sanders said.

I’d like to see that “fight”.  ================>

But instead (sigh), let’s talk about the budget.  In the FY2012 budget, Social Security was 22% of all federal outlays.  Yet Bernie says that Social Security doesn’t contribute one nickel to the deficit?  He’s right there – it’s billions of nickels that Social Security outlays have contributed to the deficit.

Why?  Because current Social Security payments are made through two vehicles, since Social Security has no “lock box” and has, in fact, a stack of IOU’s instead of money in its coffers.  Current Social Security outlays come from current tax receipts, meaning people working, right now, are having their Social Security dollars transferred to current recipients, and all the dollars retired workers contributed to Social Security have already been spent.

If the USG is borrowing roughly 43 cents out of every dollar it spends, some of that borrowing is going out the door in the form of transfer payments, including Social Security, Medicare, Medicaid, Defense, Education – all are part of the total budget pie.

As Andrew Biggs (AEI) outlines below, Social Security does contribute to the annual deficit - to the tune of $165 billion per year:

And on a unified budget basis, when Social Security’s financial position worsens the budget deficit grows. Social Security today contributes about $53 billion to the budget deficit—$165 billion if we include the temporary payroll tax cut designed to stimulate the economy—rising to $100 billion by 2020 and never looking back. It’s as simple as that. Is Social Security the main driver of today’s $1.3 trillion unified budget deficit? Of course not, and no one said it is. But it’s not pennies or dimes either, as the left would have you believe.

Sanders simply wants to wave away any suggestion that Social Security is insolvent, or that there are unfunded liabilities in the tens of trillions of dollars, not just for Social Security, but for Medicare and Medicaid, too.

Unsurprisingly, for the Senator who sees every additional dollar of government spending as a good thing, and also seems to see the pockets of people who work for a living as bottomless pits of revenue, no tax stone shall remained unturned:

In an interview afterward with Reuters, Sanders said it would be better to bring more revenue into the system. “There are ways to address these problems without cutting benefits,” he said.  “Some of us suggested doing what he [Obama] proposed in 2008, which is to lift the cap on taxable income,” Sanders said. Harkin told

What do you mean “If we tax all the wealth away, there will be nothing to spread around?”

Politico that Obama’s response to his and Sanders’ concerns was “basically things are open for negotiation.”

Yes, in Sanders’ world, everything is open for negotiation – as long as it means continuing to increase public spending, public dependency, and public fealty to our charismatic overlords, and that “the rich” pay for it, even if it has been empirically demonstrated that there’s not enough tax revenue in the world to cover our debts and liabilities.

No wonder Bernie feels betrayed.  The president who just won his 2nd term based on the notion that we don’t have a

spending problem is now saying well, we might have a spending problem.  The reality is that we have decades of politicians who quite knowingly have pushed a growing problem off and under the table, which is the pinnacle of irresponsibility, yet Sanders still lectures us that there’s no problem that can’t be solved by higher taxes and even more spending.

Let’s ask Europe how well that’s working out for them.  If their phones are still working.

Another Telecom Too Far

Yet another “community based” telecom is rapidly sinking under the weight of its own diminished expectations.  ECFiber, a non-profit municipal entity (meaning it’s publicly funded, even when including subscriber revenues), is having trouble finding customers that it just knew wanted to pay for

Is the BT on the left, and ECFiber on the right? Kinda hard to tell which one’s which.

its services 5 years ago.  But let’s let ECFiber makes its own case, shall we?  The following are listed under “Community Ownership” on ECFiber’s website:

ECFiber isn’t owned by some out-of-state mega-corporation. We’re a non-profit municipal entity determined to do what the big telecom companies could not do: connect every residence, institution, and business to a high-speed fiber-optic network.

This concept of community ownership has a number of benefits:

1) It keeps you (sic) money in Vermont. When you pay your monthly ECFiber bill, you know that your money is being kept right here in Vermont to create jobs and reinvest in the infrastructure we need to sustain the social and economic fabric of our community.

Funny how the social and economic fabric of our “community” suddenly needs to be sustained, and ECFiber will be the vehicle to do just that.  Yep.  So now I can watch “Dancing With The Stars” and smile contentedly at the shiny box, perhaps with some trace of salivary discharge around the corners of my mouth, secure in the knowledge that me paying some municipal entity for TV and Internet access (both of which are available already) is worlds better than paying someone else (at the same or cheaper rates) for TV and Internet access.  Oh, and as a bonus, my local municipal and property taxes will also help pay for this wonderful service.

Drink It. Drink The Kool.

I can see where ECFiber’s offering is just inherently better.  The difference is stark and clear.

2) ECFiber is committed to using the revenue it receives to expand our network in Vermont, using Vermont labor, and where possible, using Vermont-purchased materials.

What difference does it make where the labor and materials come from?  This is a municipal entity offering a service at a price the market will or will not bear.  There’s a reason why so much of what’s constructed in VT is made from materials and labor outside of VT – because the state’s economic and fiscal policies have made costs so high that businesses move elsewhere, or else their products become too expensive, and therefore less competitive.  If ECFiber’s goal is to use VT materials and labor (where it can, of course, to be determined by ECFiber), then it’s very likely that its cost structure will make it less competitive with other firms.  A quick peek at its price catalog confirms this assumption.
3) Most of the investors in ECFiber are our friends and neighbors. They receive interest at cometitive (sic) rates, most of which stays in Vermont. Going forward, subscriber revenue will be used to repay the investors.

Most of the investors use spellcheck, too.  Capital is fungible, it has no address.  That some Vermonters have chosen to invest in ECFiber does not change one thing about the service being sold, other than the potential costs and the service’s sell price.

4) When network construction is complete, and the investors have been repaid, excess cash generated by subscribers to ECFiber will be returned to the networks’ owners — its 23 member towns.

Which I’m sure will be used to offset each town’s property tax burden.  But the larger question is:  When is the payback period for the investors?  What rate are they getting?  Why wouldn’t “excess” cash be used as an investment fund by ECFiber to build out its own network to other towns?

But the larger problem with what amount to state-run or municipally-run entities is that they are inevitably supported with public dollars.  Taxes help with start-up and expansion costs, either through loans, grants, or federal “investments”, which are just a really nice way of saying “tax re-distribution”.

If Burlington Telecom, an entity that had an enormous density advantage over the area ECFiber wants to serve, still couldn’t build out its own network and garner enough subscribers to cover its costs, even with a $17 million dollar unsecured loan, why would anyone think that ECFiber could do it better?

Well, as it turns out, ECFiber can’t.  Burlington Telecom customers (and Burlington taxpayers), try to pick your jaws up off the floor.  It seems like ECFiber has only been able to connect a few hundred customers, in five years.

Five years ago at Town Meeting, about two dozen towns from Montpelier to White River Junction voted to join ECFiber, a community based organization that promised to deliver high speed fiber optic broadband service to every household.

Today ECFiber has been able to connect just a few hundred customers, and in the five years that have passed, its had to dramatically change its business model.

In March of 2008 on the heels of the town meeting votes, Tim Nulty, ECFiber’s project director, outlined an ambitious timeline for the network to be up and running.

“We hope to turn on the first customers at the end of 2009, and there would be a cable down every road, every street in this area around 2010.” Nulty said.

It hasn’t worked out that way. Today ECFiber has connected roughly 300 of 25,000 potential subscribers in the 23 towns that now make up its service area. It has about 50 miles of active cable out of 1,600 miles of roads in its service area.

Clever readers may remember Tim Nulty, of Burlington Telecom fame, who managed to leave the mess behind him before BT requested, and received, $17 million from Burlington taxpayers without anyone knowing about it, except then-Mayor Bob Kiss, and the city’s chief financial officer, Jonathan Leopold.  Nulty fails to mention his complicity in pitching the original idea, and his driving BT underwater, which required the bailout from Burlington.

No taxpayer subsidies here. Nope. No sir.

In other words, Nulty’s selling, again, the idea of public entities masquerading as telecom providers, providers that inevitably fail to meet the grand promises made in the past, and are inevitably required to rely on public funding to survive in the future.  The results of these failed enterprises has been increased taxes in Burlington, an ongoing lawsuit with Citi Capital, and at least some Vermonters wondering why cities feel they have both an interest in, and an obligation, to provide telecom services that are already being provided by the private sector.