It's time to rethink mortgage tax breaks

By ERIC WIEFFERING, Star Tribune

The Great Recession demolished one myth about owning a house, that values never go down. Now it's time to jettison the one about tax deductions for mortgage interest payments.

It goes something like this: The American Dream itself depends on being able to deduct the interest you pay on your mortgage. Cutting, capping or dropping it altogether will -- take your pick: depress home values; make it harder for minority families to buy a house; lower the overall ownership rate, and destabilize society at large.

While it may be true that owning a home has tremendous social value, there's little proof that being able to deduct the interest payments on a mortgage is essential to fostering an ownership society. In fact, the plethora of tax incentives may have contributed to the financial mess many homeowners currently find themselves in.

In recent weeks, two bipartisan deficit panels have recommended eliminating mortgage interest deductibility or replacing it with a direct credit as part of a broader plan to reduce spending, raise taxes and lower the federal deficit.

These plans, which both include tax simplification and sharp reductions in income tax rates, are a long way from becoming law, but they have initiated much-needed conversations about a variety of sacrosanct special interests and tax incentives.

The chief argument against mortgage interest deductibility is that it is expensive and inefficient. It will cost the U.S. Treasury about $130 billion -- almost three times the annual budget of the Department of Housing and Urban Development -- in 2012 alone. While we're at it, let's tack on another $31 billion for the deductibility of property taxes, and about $50 billion for the exclusion of capital gains on the sale of residential property.

Most of these financial benefits accrue to people in the highest tax brackets -- the people who don't need a subsidy to buy a house in the first place. A 2008 study in one economics journal concludes that households with incomes exceeding $250,000 receive 10 times the tax savings from interest deductibility as households earning between $40,000 and $75,000.

The incentive also distorts choices, encouraging people who receive the smallest benefit to live in a more expensive home. Who hasn't had a real estate agent whisper in their ear that, "the more house you buy, the bigger your tax break"?

Worse, these tax incentives have not led to higher U.S. homeownership rates, which stood at just under 67 percent this past summer. Canada's homeownership rate is 68 percent despite never having allowed interest deductibility. Great Britain eliminated mortgage interest deductibility in 2000, and the homeownership rate climbed. It's about 68 percent.

Mortgage interest deductibility isn't the only proposal in the recent deficit reduction plans, but few have as many advocates. The housing industry represents about 16 percent of the United States' gross domestic product, and loud opposition to the proposal from Democrats, Republicans and industry interests illustrates why it's often called, along with Social Security, "the other third rail of American politics."

The National Association of Realtors weighed in immediately, with economist Lawrence Yun predicting that eliminating the deduction would reduce home values by an additional 15 percent and destroy family wealth.

"Since the inception of the tax code nearly 100 years ago this has been seen as an appropriate social deduction," said Christopher Galler, chief operating officer for the Minnesota Association of Realtors. "Why change the rules on people now?"

But rules change as society does, usually not with the devastating effects that industry groups often predict. Consumers didn't cut up their credit cards in 1986, for example, when the Tax Reform Act ended tax deductions for interest payments on credit card debt.

That legislation for the first time made a special carve-out for mortgage interest deductions. A year later, Congress enriched the benefit by allowing consumers to deduct interest payments on home equity loans. Presto! Interest payments on that LCD television or Mexican vacation became tax-deductible.
This is not the first time someone has suggested eliminating mortgage interest deductibility. The first failed effort was in 1963. Sen. Ted Kennedy tried in 1980, and a budget advisory panel convened by President George W. Bush in 2005 recommended replacing it with a smaller credit. The panel also recommended eliminating the deduction completely for second homes and home equity loans.
"There's a vast and powerful lobby behind that tax deduction, so I have a hard time seeing how it ever passes," said Alex Stenback, a Twin Cities area mortgage banker and author of a closely read industry blog, Behind the Mortgage.

George Karvel, a professor of real estate at the University of St. Thomas, believes that mortgage interest deductibility does provide a valuable incentive toward homeownership, and he cautions against doing anything drastic now, given the fragile state of the housing sector.

"For many people, being able to deduct their mortgage interest might be the only thing keeping their head above water at the moment," Karvel said.

Still, Karvel likes the idea of eliminating the deduction for interest paid on second home mortgages, and interest payments for newly issued home equity mortgages. And he thinks there might be support for limiting the deduction on primary residences to mortgages of $500,000 or less.

He thinks the odds of something happening this time around might be better than ever because of growing awareness of the financial challenges affecting the country's long-term prosperity.

"What is slowly being recognized by the public and politicians alike," Karvel said, "is that our governments have made promises to deliver future benefits, in Social Security, in Medicare, that they will not be able to deliver on unless we start acting now."

source:http://www.startribune.com/business/109282359.html?elr=KArks7PYDiaK7DUdcOy_nc:DKUiD3aPc:_Yyc:aUbPi87EK_g:D_vqnH_nchO7DU#comments

OPINION: Convention Center is supposedly a huge asset

The Minneapolis Convention Center was featured in a recent article that examined the facility's revenues and expenses in light of initial projections vs. the economic and competitive realities of the convention business over the last several years. Although that's important information, we want to make sure that residents of Minneapolis understand the entire story of what the center means to Minneapolis and the region.

The purpose of any convention center is to attract visitors and enhance the local economy. The Minneapolis center is a success story when it comes to the benefits it provides to the community. Hundreds of thousands of people come to the building each year for conventions, meetings, concerts, fundraisers and more. A percentage of them are local residents who spend money on parking, food and beverages; the rest are visitors who bring outside money into our economy and spend even more on hotels rooms and services, transportation, food, beverages and entertainment.

Even in the weakened 2009 economy, people attending events at the Minneapolis center introduced $212.9 million into the local economy. The building is an economic driver for the city, and the city's investment draws people to experience everything Minneapolis has to offer.

The facility also employs hundreds of people. Many of those workers live in the city and spend the money they make in our community.

When the decision was made to build and later to expand the Minneapolis Convention Center, the city leaders before us had the foresight to understand that the investment in "bricks and mortar" was just one aspect of a cycle of community reinvestment. It's a cycle that continues to yield countless benefits every day.

LYNN CASEY and ROBERT LILLIGREN
Casey is chair of Meet Minneapolis. Lilligren is a member of the organization's board and is also a Minneapolis City Council member.

Farheen Hakeem's Political Courage

Voters in south Minneapolis district have the right to know where their candidates stand on the issues. Only Farheen Hakeem has the audacity to stand up for what she believes in and how she will fight for her constituents. This is taken from her Political Courage Test at VoteSmart.org:

Abortion Issues

Indicate which principles you support (if any) regarding abortion.
	a) Abortions should always be illegal.
X	b) Abortions should always be legal.
	c) Abortions should be legal only within the first trimester of pregnancy.
	d) Abortions should be legal when the pregnancy resulted from incest or rape.
	e) Abortions should be legal when the life of the woman is endangered.
	f) Abortions should be subject to a mandatory waiting period.
	g) Require clinics to give parental notification before performing abortions on minors.
	h) Other or expanded principles

Budget and Tax Issues

State Budget: Indicate what state funding levels (#1-6) you support for the following general categories. Select one level per category, you can use a number more than once.
Slightly Increase	a) Education (Higher)
Greatly Increase	b) Education (K-12)
Maintain Status	c) Emergency preparedness
Greatly Increase	d) Environment
Maintain Status	e) Health care
Slightly Decrease	f) Law enforcement
Maintain Status	g) Transportation and highway infrastructure
Greatly Increase	h) Welfare
Greatly Increase	i) Other or expanded categories
For Health care, I would like to join with other legislators to bring Single Payer Universal Health care to Minnesota.
State Taxes: Indicate what state tax levels (#1-6) you support for the following general categories. Select one level per category, you can use a number more than once.
Greatly Increase	a) Alcohol taxes
Slightly Increase	b) Cigarette taxes
Greatly Increase	c) Corporate taxes
Slightly Increase	d) Gasoline taxes
Maintain Status	e) Income taxes (incomes below $75,000)
Slightly Increase	f) Income taxes (incomes above $75,000)
Greatly Decrease	g) Property taxes
Maintain Status	h) Sales taxes
Slightly Increase	i) Vehicle taxes
	j) Other or expanded categories
Undecided	1) Should state sales taxes be extended to Internet sales?
Yes	2) Should accounts such as a "rainy day" fund be used to balance the state budget?
No	3) Should fee increases be used to balance the state budget?
	4) Other or expanded principles

Campaign Finance and Government Reform Issues

Indicate which principles you support (if any) regarding campaign finance and government reform.
Yes	a) Do you support limiting the number of terms for Minnesota governors?
Yes	b) Do you support limiting the number of terms for Minnesota state senators and representatives?
c) Do you support limiting the following types of contributions to state legislative candidates?
Yes	1) Individual
Yes	2) PAC
Yes	3) Corporate
Yes	4) Political Parties
Yes	d) Do you support requiring full and timely disclosure of campaign finance information?
Yes	e) Do you support imposing spending limits on state-level political campaigns?
No	f) Should Minnesota participate in the federal REAL ID program?
Yes	g) Should Minnesota allow homeowners whose mortgage is in foreclosure a one-year deferment on their primary residence?
h) Other or expanded principles
No Answer

Crime Issues

Indicate which principles you support (if any) regarding crime.
	a) Increase state funds for construction of state prisons and hiring of additional prison staff.
	b) Establish the death penalty in Minnesota.
X	c) Support programs to provide prison inmates with vocational and job-related skills and job-placement assistance when released.
X	d) Implement penalties other than incarceration for certain non-violent offenders.
X	e) Decriminalize the possession of small amounts of marijuana.
	f) Minors accused of a violent crime should be prosecuted as adults.
	g) Support state and local law enforcement officials enforcing federal immigration laws.
X	h) Support hate crime legislation.
	i) Other or expanded principles

Education Issues

Indicate which principles you support (if any) regarding education.
X	a) Support state funding of universal pre-K programs.
	b) Support federal education standards and testing requirements for K-12 students (No Child Left Behind).
X	c) Support state education standards and testing requirements for K-12 students.
	d) Support requiring public schools to administer high school exit exams.
	e) Allow parents to use vouchers to send their children to any public school.
	f) Allow parents to use vouchers to send their children to any private or religious school.
X	g) Provide state funding to increase teacher salaries.
	h) Support using a merit pay system for teachers.
X	i) Provide state funding for tax incentives and financial aid to help make college more affordable.
	j) Support allowing illegal immigrant high school graduates of Minnesota to pay in-state tuition at public universities.
	k) Other or expanded principles
I support J, but I would term it to be "Support allowing undocumented high school graduates of Minnesota to pay in-state tuition at public universities.

Employment Issues

Indicate which principles you support (if any) regarding employment.
X	a) Increase funding for state job-training programs that re-train displaced workers and teach skills needed in today's job market.
	b) Reduce state government regulations on the private sector.
	c) Provide low interest loans and tax credits for starting, expanding, or relocating businesses.
	d) Provide tax credits for businesses that provide child care for children in low-income working families.
X	e) Increase state funds to provide child care for children in low-income working families.
X	f) Increase the state minimum wage.
X	g) Support laws that prevent employers from dismissing employees at will.
	h) Support financial punishments for those who knowingly employ illegal immigrants.
	i) Support increased work requirements for able-bodied welfare recipients.
	j) Increase funding for employment and job training programs for welfare recipients.
	k) Other or expanded principles

Environment and Energy Issues

Indicate which principles you support (if any) regarding the environment and energy.
X	a) Promote increased use of alternative fuel technology.
	b) Support increased production of traditional domestic energy sources (e.g. coal, natural gas, oil, etc).
	c) Support providing financial incentives to farms that produce biofuel crops.
X	d) Use state funds to clean up former industrial and commercial sites that are contaminated, unused, or abandoned.
	e) Support funding for improvements to Minnesota's power generating and transmission facilities.
X	f) Support funding for open space preservation.
X	g) Limit carbon dioxide and other greenhouse gases linked to global warming.
X	h) Enact environmental regulations even if they are stricter than federal law.
	i) Other or expanded principles
I would support increased production of renewable energy sources such as wind and solar. I would also support funding for improvements to Minnesota's power generating and transmission facilities if it was to reduce our carbon footprint on the planet.

Gun Issues

Indicate which principles you support (if any) regarding guns.
Yes	a) Should background checks be required on gun sales between private citizens at gun shows?
No	b) Should citizens be allowed to carry concealed guns?
Yes	c) Should a license be required for gun possession?
Undecided	d) Do you support current levels of enforcement of existing state restrictions on the purchase and possession of guns?
Undecided	e) Do you support current state restrictions on the purchase and possession of guns?
	f) Other or expanded principles

Health Issues

Indicate which principles you support (if any) regarding health.
	a) Ensure that citizens have access to basic health care through managed care, insurance reforms, or state-funded care where necessary.
	b) Guaranteed medical care to all citizens is not a responsibility of state government.
	c) Limit the amount of damages that can be awarded in medical malpractice lawsuits.
	d) Allow patients to sue their HMOs.
	e) Require hospitals and labs to release reports on infections that are a risk to public health, while not compromising patient confidentiality.
	f) Legalize physician assisted suicide in Minnesota.
	g) Support allowing doctors to prescribe marijuana to their patients for medicinal purposes.
	h) Other or expanded principles
I support single payer universal health care.

Social Issues

Indicate which principles you support (if any) regarding social issues.
Yes	a) Should Minnesota recognize civil unions between same-sex couples?
Yes	b) Should same-sex couples be allowed to marry?
Yes	c) Should Minnesota provide state-level spousal rights to same-sex couples?
No	d) Do you support a moment of silence in public schools?
Undecided	e) Do you support voluntary prayer in public schools?
Yes	f) Do you support sexual education programs that include information on abstinence, contraceptives, and HIV/STD prevention methods?
No	g) Do you support abstinence-only sexual education programs?
Yes	h) Should the state government consider race and gender in state government contracting and hiring decisions?
Yes	i) Do you support affirmative action in public college admissions?
Yes	j) Should Minnesota continue affirmative action programs?
Yes	k) Do you support state funding of stem cell research?
Yes	l) Do you support state funding of embryonic stem cell research?
No	m) Do you support allowing pharmacists who conscientiously object to emergency contraception to refuse to dispense it?
n) Other or expanded principles
I am confused to what "e) Do you support voluntary prayer in public schools?" Students should have the right to pray in schools if they choose, but the school administrators should not require students to attend prayer. For example, is a student wished to do Friday Prayers, which happen at lunch time, the school should not stop the student, and meet their needs. Yet, a teacher can not require all of the students in the class to pray along with the student.
Legislative Priorities
Please explain in a total of 100 words or less, your top two or three priorities if elected. If they require additional funding for implementation, please explain how you would obtain this funding.
The big challenge that I see in the Legislature is to balance the 2 billion dollar deficit without cutting programs and services to the poor. As your State Representative, I would advocate that housing, jobs, youth programming, and programs to end poverty are an investment, not an expense. I will fight to secure general funds to sustain programs for education and social services, and work beyond party lines to create solutions to balance the budget, find funding for community programs, and bring landmark legislation to law. [ These taken from VoteSmart.org Farheen's primary opponent has this listed on their site: Mr. Hayden repeatedly refused to provide any responses to citizens on the issues through the 2008 Political Courage Test when asked to do so by national leaders of the political parties, prominent members of the media, Project Vote Smart President Richard Kimball, and Project Vote Smart staff. I consider Mr. Hayden's inaction to be yet another sign of local DFL corruption, ineptitude, and not truly standing for anything but getting elected. - KC ]

Barkley on Bailout: 'Key Questions Remain Unanswered'

Pre-Election Rush to 'Solutions' Reminiscent of 2002 Iraq War Debate

For Immediate Release
Contact: Christopher Truscott
612.423.2582
ctruscott@senatorbarkley.com

SAINT PAUL—Dean Barkley, the Independence Party candidate for U.S. Senate, outlined his concerns about the proposed Wall Street bailout with eight key questions at a press conference Friday morning at the State Capitol:

We should not take at face value that a meltdown of our financial market is imminent. What specific events can be cited that foretell these doomsday prophecies? Specifically, where is credit being withheld and where is there inadequate liquidity in the markets?

What percentage of the financial market is involved in this problem? The banking sector seems to be just fine. Bank America and Wells Fargo are still making loans. Can't the Federal Reserve pick up the slack to provide the capital necessary to replace this source of funds?

Who decided that the sky will fall if a decision is not made by Monday? What was the basis of this prediction? What is happening in the market now that would prove this immediate danger?

Where did the $700 billion figure come from?

Isn't the doom-and-gloom rhetoric coming from the Bush administration creating a self-fulfilling prophecy? Why do we need a rush to judgment on this issue?

What specific reforms in leverage requirements, contingent liability disclosure, and regulatory oversight will be implemented to ensure this situation does not resurface.

How will adding $700 billion more to the national debt affect the exchange rate and the price of oil?

Once this precedent is set, who will be next in line? The auto industry? Airlines? Auto loans? Hedge funds?


"In the rush to find 'solutions,' too many key questions remain unanswered," Barkley said. "I'm not ideologically opposed to a bailout at some point, if necessary, but the way in which the Administration and Congress is handling this is reminiscent of the pre-election Iraq War debate six years ago. The American people deserve better than that this time around."

Earlier this week, Barkley called for responsible business leaders and non-partisan politicians, like former Medtronic CEO Bill George and New York Mayor Michael Bloomberg, to be included in the search for answers to the problems affecting certain sectors of the economy.

On Thursday, he said Congress should delay action on the bailout proposal.

"Everyone is worried about the economy, including me," Barkley said this week. "But the worst thing Congress can do right now is rush through a massive bail-out bill before adjourning in just a few days. More than 100 leading economists agree: Let's take a while to breathe, talk to voters over the next month and get a better handle on how the economic indicators are shaking out before we hand over hundreds of billions of taxpayer dollars to Wall Street titans."
* * * * *

Barkley, 58, served as the director of the Minnesota Office of Strategic and Long Range Planning under Gov. Jesse Ventura. In November 2002, Ventura appointed Barkley to fill the final two months of the late Sen. Paul Wellstone's term.

The former governor said recently that Barkley is "measured minute by minute … the most effective U.S. senator in Minnesota history."

Wall Street Socialists

by Amy Goodman

The financial crisis gripping the U.S. has the largest banks and insurance companies begging for massive government bailouts. The banking, investment, finance and insurance industries, long the foes of taxation, now need money from working-class taxpayers to stay alive. Taxpayers should be in the driver's seat now. Instead, decisions that will cost people for decades are being made behind closed doors, by the wealthy, by the regulators and by those they have failed to regulate.

Tuesday, the Federal Reserve and the U.S. Treasury Department agreed to a massive, $85-billion bailout of AIG, the insurance giant. This follows the abrupt bankruptcy of Lehman Brothers, the 158-year-old investment bank; the distressed sale of Merrill Lynch to Bank of America; the bailout of both Fannie Mae and Freddie Mac; the collapse of retail bank IndyMac; and the federally guaranteed buyout of Bear Stearns by JPMorgan Chase. AIG was deemed "too big to fail," with 103,000 employees and more than $1 trillion in assets. According to regulators, an unruly collapse could cause global financial turmoil. U.S. taxpayers now own close to 80 percent of AIG, so the orderly sale of AIG will allow the taxpayers to recoup their money, the theory goes.

It's not so easy.

The financial crisis will most likely deepen. More banks and giant financial institutions could collapse. Millions of people bought houses with shady subprime mortgages and have already lost or will soon lose their homes. The financiers packaged these mortgages into complex "mortgage-backed securities" and other derivative investment schemes. Investors went hog-wild, buying these derivatives with more and more borrowed money.

Nomi Prins used to run the European analytics group at Bear Stearns and also worked at Lehman Brothers. "AIG was acting not simply as an insurance company," she told me. "It was acting as a speculative investment bank/hedge fund, as was Bear Stearns, as was Lehman Brothers, as is what will become Bank of America/Merrill Lynch. So you have a situation where it's [the U.S. government] ... taking on the risk of items it cannot even begin to understand."

She went on: "It's about taking on too much leverage and borrowing to take on the risk and borrowing again and borrowing again, 25 to 30 times the amount of capital. ... They had to basically back the borrowing that they were doing. ... There was no transparency to the Fed, to the SEC, to the Treasury, to anyone who would have even bothered to look as to how much of a catastrophe was being created, so that when anything fell, whether it was the subprime mortgage or whether it was a credit complex security, it was all below a pile of immense interlocked, incestuous borrowing, and that's what is bringing down the entire banking system."

As these high-rolling gamblers are losing all their banks' money, it comes to the taxpayer to bail them out. A better use of the money, says Michael Hudson, professor of economics at the University of Missouri, Kansas City, and an economic adviser to Rep. Dennis Kucinich, would be to "save these 4 million homeowners from defaulting and being kicked out of their houses. Now they're going to be kicked out of the houses. The houses will be vacant. The cities are going to [lose] property taxes, they're going to have to cut back local expenditures, local infrastructure. The economy is being sacrificed to pay the gamblers."

Prins elaborated: "You're nationalizing the worst portion of the banking system. ... You're taking on risk you won't be able to understand. So it's even more dangerous." I asked Prins, in light of all this nationalization, to comment on the prospect of nationalizing health care into a single-payer system. She responded, "You could actually put some money into something that pre-empts a problem happening and helps people get health care."

The meltdown is a bipartisan affair

Presidential contenders John McCain and Barack Obama each have received millions of dollars from these very companies that are collapsing and are receiving the corporate welfare. President Clinton and his treasury secretary, Robert Rubin (now an Obama economic adviser), presided over the repeal in 1999 of the Glass-Steagall Act, passed after the 1929 start of the Great Depression to curb speculation that caused that calamity. The repeal was pushed through by former Republican Sen. Phil Gramm, one of McCain's former top advisers. Politicians are too dependent on Wall Street to do anything. The people who vote for them, and whose taxes are being handed over to these failed financiers, need to show their outrage and demand that their leaders truly put "country first" and bring about "change."

Denis Moynihan contributed to this column.

© 2008 Amy Goodman

Amy Goodman is the host of "Democracy Now!" a daily international TV/radio news hour airing on more than 700 stations in North America.

Published on Thursday, September 18, 2008 by TruthDig.com

Worn down, Obama is reverting to the mean

By David Brooks

Back in Iowa, Barack Obama promised to be something new -- an unconventional leader who would confront unpleasant truths, embrace novel policies and unify the country. If he had knocked Hillary Clinton out in New Hampshire and entered general-election mode early, this enormously thoughtful man would have become that.

But he did not knock her out, and the aura around Obama has changed. Furiously courting Democratic primary voters and apparently exhausted, Obama has emerged as a more conventional politician and a more orthodox liberal.

He sprinkled his debate performance Wednesday night with the sorts of fibs, evasions and hypocrisies that are the stuff of conventional politics. He claimed falsely that his handwriting wasn't on a questionnaire about gun control. He claimed that he had never attacked Clinton for her exaggerations about the Tuzla airport, though his campaign was all over it. Obama piously condemned the practice of lifting other candidates' words out of context, but he has been doing exactly the same thing to John McCain, especially over his 100-years-in-Iraq comment.

Obama also made a pair of grand and cynical promises that are the sign of someone who is thinking more about campaigning than governing.

He made a sweeping read-my-lips pledge never to raise taxes on anybody making less than $200,000 to $250,000 a year. That will make it impossible to address entitlement reform any time in an Obama presidency. It will also make it much harder to afford the vast array of middle-class tax breaks, health-care reforms and energy policy Manhattan Projects that he promises to deliver.

Then he made an iron vow to get American troops out of Iraq within 16 months. Neither Obama nor anyone else has any clue what conditions will be like when the next president takes office. He could have responsibly said that he aims to bring the troops home, but will make a judgment at the time. Instead, he rigidly locked himself into a policy that will not be fully implemented for another three years.

If Obama is elected, he will either go back on this pledge -- in which case he would destroy his credibility -- or he will risk genocide in the region and a viciously polarizing political war at home.

Then there are the cultural issues. Charles Gibson and George Stephanopoulos are taking a lot of heat for spending so much time asking about Jeremiah Wright and the "bitter" comments. But the fact is that voters want a president who basically shares their values and life experiences. Fairly or not, they look at symbols like Michael Dukakis in a tank, John Kerry's windsurfing or John Edwards' haircut as clues about shared values.

When Obama began this ride, he seemed like a transcendent figure who could understand a wide variety of life experiences. But over the past months, things have happened that make him seem more like my old neighbors in Hyde Park in Chicago.

Some of us love Hyde Park for its diversity and quirkiness, as there are those who love Cambridge and Berkeley. But it is among the more academic and liberal places around. When Obama goes to a church infused with James Cone-style liberation theology, when he makes ill-informed comments about working-class voters, when he bowls a 37 for crying out loud, voters are going to wonder if he's one of them. Obama has to address those doubts, and he has done so poorly up to now.

It was inevitable that the period of "Yes We Can!" deification would come to an end. It was not inevitable that Obama would now look so vulnerable. He'll win the nomination, but in a matchup against John McCain, he is behind in Florida, Missouri and Ohio, and merely tied in must-win states like Michigan, Minnesota, New Jersey and Pennsylvania. A generic Democrat now beats a generic Republican by 13 points, but Obama is trailing his own party. One in five Democrats say they would vote for McCain over Obama.

General-election voters are different from primary voters. Among them, Obama is lagging among seniors and men. Instead of winning over white high school-educated voters who are tired of Bush and conventional politics, he does worse than previous nominees. John Judis and Ruy Teixeira have estimated a Democrat has to win 45 percent of such voters to take the White House. I've asked several of the most skillful Democratic politicians over the past few weeks, and they all think that's going to be hard.

A few months ago, Obama was riding his talents. Clinton has ground him down, and we are now facing an interesting phenomenon. Republicans have long assumed they would lose because of the economy and the sad state of their party. Now, Democrats are deeply worried their nominee will lose in November.

Welcome to 2008. Everybody's miserable.

David Brooks' column is distributed by the New York Times News Service.

source: http://www.startribune.com/opinion/commentary/17927464.html

Gas prices bring out the worst in candidates

By Steve Chapman

In the realm of energy policy, there are a great many bad ideas and a very few good ones. The usual practice of presidential candidates is to 1) sift through all these proposals, 2) separate the wheat from the chaff, and 3) keep the chaff.

This year, the two parties are competing to show who is most eager to discard sound economics and long-term prudence in favor of appeasing aggrieved motorists. Barack Obama and Hillary Clinton are pandering with a proposal to punish oil companies with a windfall profits tax. John McCain has targeted the same group by urging a federal gas tax holiday from Memorial Day to Labor Day.

What motivates them is high pump prices, which are at odds with the popular view of cheap gasoline as a national birthright. One common defect of the candidates' measures, though, is that they would not actually reduce prices.

The Democratic option rests on the unshakable belief that Big Oil is guilty of chronic profiteering at public expense. In fact, from 1987 through 2006, oil and gas companies did worse than other industrial companies on return on investment in all but four years.

When the price of gasoline is high, drivers notice. But when it's low, as it has been for most of the period since 1982, everyone takes it for granted.

No idea can be definitively judged until it has been tried, which makes the Obama-Clinton approach particularly hard to defend. Congress, you see, enacted a windfall profits tax on oil back during the Carter administration. You would think Democrats would not want to remind voters of that president or embrace his errors, but you would be wrong.

By almost any standard, the last windfall profits tax was self-defeating. According to a 2006 study by the Congressional Research Service , it generated less than one-fourth of the revenues that were expected. Worse yet, it reduced domestic oil production by as much as 8 percent.

Obama has yet to provide details of his plan. Under Clinton's version, if a company's profits rose above a specified level, the government would take 50 percent of the "windfall" -- in addition to what it reaps from the existing corporate income tax, which tops out at 35 percent.

The expropriation would deter investment in exploration and drilling by reducing the potential payoff. It would depress the supply of oil over the long run, which would push prices up, not down. Punishing Big Oil would mean hurting ourselves.

McCain avoids this error in favor of a different one. He wants to stop collecting federal gas taxes for three months, which he says "will be an immediate economic stimulus -- taking a few dollars off the price of a tank of gas." It sounds like a simple, sure remedy, and it is simple and sure. It's just not a remedy.

As energy analyst Jerry Taylor of the Cato Institute points out, prices are now at the level required to balance supply and demand. Cut prices by the amount of the gas tax, and consumption will rise, pushing prices back up. So drivers would get no holiday, and the economy would get no stimulus.

About the only effect would be to "transfer money from the federal government to the oil companies," says Taylor. If the oil companies don't deserve a windfall profits tax, neither do they deserve an additional windfall. The gas tax hiatus would also enlarge the federal deficit, since McCain would take general revenues to make up the loss to the highway trust fund -- and at the moment, there aren't any extra revenues waiting to be spent.

Besides proposing useless or damaging ideas, the candidates have also passed up the single best idea for energy policy: a carbon tax that would curb use of fuels that release greenhouse gases, while encouraging development of clean alternatives. Better yet would be a carbon tax whose revenues go to cut payroll taxes for Social Security and Medicare, rewarding work without raising the deficit.

It's a win-win concept with wide support among economists, but almost none among politicians. That's the nature of energy policy in an election year: Any bad idea may be adopted, while the good ones remain orphans.

Steve Chapman's column is distributed by Creators Syndicate.

source: http://www.startribune.com/opinion/commentary/17865649.html

Transportation bill got my vote because ...

By NEIL PETERSON

I supported the transportation bill for several reasons:

• I supported the bill not because I believe in more taxation but because I believe in less.

A gas tax is a user fee, plain and simple, and for 20 years it has not been increased. This additional user fee will cost each of us less than a cup of coffee each month.

But the user fee for gas is just one part of the bill. In the bill is municipal state aid, with $11 million for Bloomington, $4.8 million for Edina and $150 million for Hennepin County. This money will be available for street repair and improvements over the next 10 years.

If these dollars do not come to our county and cities through this allocation, residents in my district will eventually pay for the improvements through increased real-estate taxes. That is the bottom line. The cities and the county will have no other choice but to go to their primary source of funding, our real estate taxes, to get transportation needs met. With this bill, I voted to avoid higher property taxes.

• I supported the bill because we have a slowing economy in our state.

People have suggested that an economic downturn is not the time for a bill like this. I believe it is the time. This bill will support thousands of jobs -- jobs with salary dollars that will stay in Minnesota.

What is the remedy for a slowing economy? Jobs. We need these dollars in Minnesota. Our way of life here and our future depend on a strong economic base. We bemoan the loss of 900 jobs at Macy's downtown, but we are losing many times that number in our construction industry alone. Think of the positive effect of thousands of Minnesota jobs in the next decade. With this bill, I voted for a stronger economy.

• I supported the bill because of the recently released legislative auditor's report.

Legislative Auditor James Nobel used the words "downright grim" when looking at the current status of roads and bridges. In his testimony, he gave me no reason to question the talented men and women who are engineers and planners in the Department of Transportation (MnDOT).

He did give me the reason MnDOT is in such a mess. Follow the money. We are asking MnDOT to do more and more with less and less. It is a shell game with horrific outcomes. Maintenance deferred, construction postponed -- it is all part of the MnDOT mantra.

A MnDOT employee I know well said that it is hard when you can't be proud of the place you work. Without funding. MnDOT's hands are tied. With this bill, I voted as a legislator to accept my part of the transportation problems in this state.

• I supported the bill because as a solo business owner, I know the reality of inflation.

Over the last three years, we have lost two opportunities to adequately fund road maintenance and construction. This is the third time that a transportation bill has been passed and vetoed. Over this same period, according to the auditor's report, the cost of construction has gone up almost 40 percent. It will continue to escalate, and a transportation bill will keep coming back, each time with a higher price tag, not to do more, but to do less. The reality is the old adage "pay now or pay more later." With this bill, I voted against inflationary increases for transportation.

• • •

I supported the bill even though I wasn't crazy about the quarter-cent sales tax for transit. I believe in public transit, and I know it is necessary with more than a million more people coming into the Twin Cities in the next decade. Except for the occasional trip on light rail, I don't use public transit on a daily basis, so I don't think about it as much. However, as a user of the freeways, roads and bridges, I need transit to exist and expand if I want to continue to drive without additional gridlock and wasted time. We need public transit to exist for persons who are aging and no longer drive. We need mass transit for cleaner air. With this bill, I supported transportation and the environment of our future.

I supported the bill and was encouraged to do so by the endorsement of the Minnesota Chamber of Commerce, the Minnesota League of Cities, the Environmental Partnership and the president of the University of Minnesota, plus countless other organizations and, believe it or not, constituents.

I supported the transportation bill in spite of the pain that it personally causes me. It pains me to be at odds with the governor, a man I personally like. It pains me to hit a bump in my relationships with some caucus members. But it pains me even more to consider the consequences of doing nothing again this year.

With this bill I voted to represent what I believe to be in the best interest of my cities, my constituents and, ultimately, my conscience.

Neil Peterson, R-Bloomington, represents District 41B in the Minnesota House.

Source: http://www.startribune.com/opinion/commentary/16001922.html

No excuse for recycling apathy

The lack of effort by students and staff is disheartening and maddening, especially since it is relatively easy.

By Chelsey Perkins

he physical act of tossing a bottle or can into a recycling bin is no more strenuous than that of throwing it into a trash can. Of course, you might need to walk a few extra feet, or make room for the recyclable in your bag until you find the proper place to dispose of it. But these are not difficult tasks, nor are they emotionally stressful or a financial burden.

So I cannot understand for the life of me why so many people not only do not make the negligible amount of extra effort needed to recycle items like cans and bottles that are the easiest to recycle rather than trash them, but act affronted by the mere concept.

Of course, I know there are many people who do make the effort, and I also know that outside of cities with comprehensive recycling programs, it might be difficult and maybe even impossible to recycle certain items. In my own hometown, for example, there is no recycling pick-up at all, and the closest recycling drop-off no longer accepts plastic.

But here on campus, for the most part, a majority of the effort has already been made for us. If you have yet to notice, bins all over the place, compartmentalized nicely and neatly, make it possible to rid yourself of last week's Sudoku, your empty Diet Coke bottle and the rest of that $2 burrito you couldn't bring yourself to finish all in one go. In most classrooms I've been in, three separate bins stand directly next to one another, labeled clearly.

Yet I regularly see people throw recyclables into the trash even though literally a foot away they could recycle them.

A friend told me this weekend that her parents poke fun at her when she asks them to recycle; another friend of mine waited until she found a recycling bin for her newspaper and her brother asked, "So, what, are you like an environmentalist now?"

As our world faces an environmental crisis like we have never seen before, the tasks before us seem daunting and nearly unattainable and it is easy to feel helpless. It's not as though the average person can simply waltz into Exxon Mobil and shut them down or halt clear-cutting in the Brazilian Rain Forest.

Why, then, is one of the tasks possible for an individual to complete on their own, a task that undeniably is crucial to environmental health, so often brazenly disregarded?

Even if you subscribe to the notion that humans are not the cause of global warming or could care less what happens to the planet after you're gone, why not just put that bottle in the freaking recycling bin when it is right there in front of you?

The thing is, although it might seem like a long shot, we can as individuals make a difference for our environment by the products we buy and the sustainable habits we commit to. Collectively, we have unlimited power to make change on the environmental front.

If you feel like that one bottle will not make a difference, multiply that by the 50,000 or more people that are on this campus every day for nine months, and you can see what kind of impact can be made. Whether it's a positive or negative one is up to you and which of the three slots you choose.

Chelsey Perkins welcomes your comments at cperkins AT mndaily.com

source: http://www.mndaily.com/articles/2007/12/04/72164839


[ Minnesota has tens of thousands employed in the recycling industry. One of my battle buddies at basic training in the Minnesota National Guard works at one of the factories.

Each can of aluminum you recycle saves a bit more than half a cup of oil. Recycling is interconnected to the economy, natural resources, Global Warming, Peak Oil, and municipal taxes.

Even if you pay $3 a month to do this in suburbs such as Brooklyn Park, you are still making a profound difference. ]

Overlooked family values

Virtually every religious tradition emphasizes paying your debts and caring for your children. Yet America today is failing to fulfill these very basic moral obligations.

By Oliver "Buzz" Thomas

Throw out the turkey carcass, break out the tinsel and batten down the hatches. Election season is upon us. And, if this election is anything like the past two, religion and values will play starring roles in deciding the outcome.

A key economic issue that is starting to gain traction as a result of the falling dollar involves two of religion's most universal teachings and cuts across ideological and party lines. Whether you're Christian, Muslim, Jewish or Zoroastrian, your tradition has taught you at least this:

* Pay your bills.

* Provide for your children.

I don't know a religion this side of Dante's inferno that would dispute either one.

(Illustration by Web Bryant, USA TODAY)

For Christians, the Bible is explicit about our obligations to our children. "Children are not responsible to provide for their parents but parents for their children," wrote St. Paul to the Corinthian Church. He went on to assert that one who fails to provide for his family "has disowned the faith and is worse than an unbeliever." (I Timothy 5:8.) The obligation to pay our lawful debts runs even deeper, going all the way back to the Ten Commandments. Defaulting on one's debts is at least lying if not stealing.

Yet, Americans appear to be violating both of these great religious teachings at warp speed.

How are we doing it? By continuing to spend more and pay less with our national government. Specifically, we are $9 trillion in debt, with the figure rising at the rate of about half a billion dollars a day. The interest alone on the national debt amounts to more than $230 billion a year, or 8% of the federal budget.

The moral component

Why is this a moral issue? Because these are real dollars that must eventually be paid back. If not by us, by our children and our grandchildren.

Think about that for a moment. Nine trillion dollars is nearly $30,000 for every man, woman and child in the country. That's $120,000 for a family of four. And that's assuming everybody can pay, which they can't. The elderly, the sick and disabled, the young ... these people can't pay. When you boil it all down, the amount our workforce would have to pay if we could freeze the debt at its current level is gargantuan. Still, we keep piling it on.

I understand that debt can be useful during times of recession or national emergency. I remember learning how President Franklin Delano Roosevelt used deficit spending to help propel the country out of the Great Depression. But piling up massive amounts of red ink as a matter of ordinary course portends disastrous results. This was a central message of Ross Perot's 1992 presidential campaign, and one of the reasons we turned our attention to successfully balancing the budget during the '90s.

Here's what's fascinating. I don't have a single friend who would run up his credit card debt by $30,000 and expect his children to pay it off when he died. (Most of my friends live by the biblical adage that "a good man leaves an inheritance to his children's children.") Yet, none of these friends seems concerned that we're saddling our children with the same amount of debt through our elected officials. Because Congress and the president are the ones using our credit cards, we seem not to mind.

I suppose we shouldn't be surprised. Combat veterans will tell you that it's easier to drop a bomb on hundreds of people from 20,000 feet than it is to kill a single person at arm's length. Up close and personal, moral questions are clear and focused, but between Washington and Waycross, things cloud up.

The tax cuts passed by President Bush and the Republican Congress in 2001 only worsened our economic woes. Projected surpluses never materialized in the wake of the 9/11 attacks, but our deeply convicted, if not stubborn, president plowed full-speed ahead with his plan to give the surplus back to the American people. Meanwhile, government spending continued to soar. The wars in Iraq and Afghanistan were like pouring gasoline on the fire. Congress began the dangerous practice of adopting federal budgets without reliable figures for war-related expenditures. Then came Pell grants, Homeland Security, farm subsidies, Social Security cost-of-living adjustments, Medicare, foreign aid and all the rest. All good stuff, but the point is this: Somewhere it has to stop.

As the Hebrew Scriptures put it, men die for lack of discipline. We have only two choices really. Cut spending, or pay more into the system.

'Supply side' fallacy

I realize that Republican politicians beginning with Ronald Reagan in 1981 convinced us that you could balance the budget simply by slashing taxes on the wealthy and holding the line on spending. "Supply-side economics," they called it. The well-off would be able to invest more, thereby expanding our economy and growing additional tax revenues to balance the budget.

It didn't work. In the wake of the Reagan tax cuts, federal budget deficits ballooned to record amounts. The Great Communicator, a pragmatist at heart, responded in the only responsible way. He raised taxes.

Here we are 25 years later in the same fix but, alas, without a Ross Perot. To their credit, Congressional Democrats have adopted a "pay as you go" approach to budgeting, but even they appear unwilling to tackle the harsh reality of our collective debt. They have neither cut spending nor seriously moved to repeal Bush's tax cuts.

Meanwhile, on the campaign trail, Democratic presidential candidates are busily proposing ways to spend money while Republican candidates continue preaching tax cuts. They all appear oblivious to the lessons of the '80s or to the non-partisan Congressional Budget Office's 2005 study showing that such tax cuts routinely fall short of their billing and increase the federal deficit. No wonder George Bush the elder once called it "voodoo economics."

As a minister, I'm going to call it something else: Sin. That's not a word that gets used a lot in our politically correct culture, but spending money that we don't have and leaving the bills for the grandkids isn't going to earn us one of God's gold stars.

As "values voters" parse the politicians, I'd like them to remember this. Paying our debts is a family value.

Oliver "Buzz" Thomas is a minister, lawyer and author of 10 Things Your Minister Wants to Tell You (But Can't Because He Needs the Job).

Source: http://blogs.usatoday.com/oped/2007/11/overlooked-fami.html#more

DC Statehood!

Taxation without Representation!
You may recall this protest propelled by the colonists against the British rule before our country was born. The colonists were tired of being treated as second-class citizens. They stood up and fought for Democracy and autonomy. DC residents are doing just this some 225+ years later!

The folks living in the District of Columbia do not have representation in Congress and Congress controls DC's local budget and laws!! Isn't it time we lift up the torch for Statehood again... we can win it this time with your support.

* Please goto http://www.dcstatehoodgreen.org/statehoodnow to sign a petition in support of DC Statehood.

The petition will demonstrate to City and Congressional leadership that we want full voting rights, 1 House Representative and 2 Senators, and complete budget autonomy from the hands of Congress.

It's time we stand up for our rights as citizens of this nation. We can no longer stand the paradox of trying to create democracies around the world, mostly by violent force, when we don't have it right here in the Nation's capital.

Peace!

Bridge Collapse underscores poor transit and road funding

Dear Blog Reader,

Those of us working with Transit for Livable Communities are thinking about the transportation system all the time. Can everyone in our community get where they need to go? Can the system handle the upcoming population growth in the next decades? Does transportation make our communities healthier, safer, and more prosperous? The 35W bridge collapse is a dark time for transportation in our state, but it has also been a reminder of how heroic things can happen when we face a crisis together. We believe this crisis is an opportunity to bring Minnesotans together for a long-term, balanced solution for our transportation problems.

The bridge collapse has shaken us, as we assume it did all Minnesotans. It has raised many questions about how so much destruction, disruption, and personal loss could be caused by flaws in a system so many of us take for granted. In the last week, we've talked a lot about how to honor the losses caused by the bridge collapse, and to also move forward with our commitment to a safer, more reliable, more effective transportation system. As our state begins to look to the future, there will be decisions about the redesign of the bridge and the possibility of passing a transportation funding bill this fall. These issues naturally raise questions about balance and whether our responses will be focused on the short term or a long term solution.

We believe we can, as a community, learn from this tragedy. At TLC, we also know we need to recommit to the values on which our organization was founded:

• We must invest in our communities, including transportation, to preserve our economic, environmental, and human health and our quality of life;
• We must commit to maintain the transportation investments we make and to provide reliable service and maintenance for transit, roads, and bridges, even during economic downturns;
• We must provide transportation choices throughout our communities, so that everyone can get where they need to go, and no one part of the system becomes overburdened;
• We must recognize our regional connections and plan for the future health of our transportation system, which will look different than it does today;
• We must focus our priorities on people, not just cars, and the personal impacts of the transportation system - our safety, time with our families, the air we breathe.

Transit for Livable Communities was founded to refocus transportation priorities toward people by helping more people participate in transportation and development decisions. We hope you'll continue to work with us to increase transportation choices, bring balance to the system, and increase transit, bike, and pedestrian investments.

We look forward to working together toward this shared future. Let us know if you want to know more about our work or want to get more involved.

Lea Schuster
Executive Director, Transit for Livable Communities

P.S. We join Minneapolis Mayor R.T. Rybak in encouraging people across the metro to bike, walk, or take transit to destinations in or near the city. While alternatives to driving are crucial to keeping our metropolitan region functioning at any time, the bridge collapse reminds us how they can be particularly important in times of crisis.

Metro Transit: www.metrotransit.org

City of Minneapolis: www.ci.minneapolis.mn.us

Downtown Minneapolis Transportation Management Organization: www.mplstmo.org

Dane Smith and Charlie Quimby: The good life, as begotten by good government

In the propaganda of profligacy, tax money is always wasted. But statistics suggest that it generates wealth we can spend on ourselves.

Dane Smith and Charlie Quimby

f we've heard it once, we've heard the antitax zinger a zillion times: "You can spend your money better than the government can spend your money."

The premise, of course, is that government is wasteful and profligate, while you are prudent and frugal.

Now comes a July 14 Star Tribune report with some fun facts from the Bureau of Labor Statistics (BLS). Twin Cities households ranked first among 24 metropolitan areas in household spending on home furnishings and entertainment, third in eating out, third in alcohol consumption, and sixth in personal-care items. One retailer in the article observed that upscale consumers are increasingly demanding not just premium vodka, but "super ultra premium vodka."

Let's just quickly review and compare how state and local governments have been squandering "your" money. Almost all public-sector spending goes for these frivolities: public schools and colleges, health care for the elderly and for poor families with children, roads and mass transit, libraries, environmental protection, parks, police and fire protection, courts and corrections. (Some might argue that government officials and the Legislature do provide entertainment, but this is basically a free sideshow, not a budget line item.)

Earlier this summer, we learned from another federal report that Minnesota had sunk to a modern-era low, 23rd among the states, in state and local government taxes as a percent of income, and to 31st in government expenditures as a percent of income. By these measures, our government is significantly smaller than in the mid-1990s, before some of the largest state income tax cuts in the nation were pushed through in 1999 and 2002. (Advocates of those cuts said they would spur economic growth.)

Next comes a troubling report in the July 18 Star Tribune: "Since 2004, Minnesota's growth in jobs, per-capita personal income and output of goods and services has risen at a lower pace than the national average."

High consumer spending on luxuries, proportionately less government spending and slower-than-average overall economic growth. Could there be a connection?

As pointed out in the July 14 story, our high rankings on nearly every consumer-spending category are explained in large part by the fact that our incomes were third-highest of the 24 metropolitan areas. But the dramatic growth in Minnesota's wealth and income over the past three decades actually occurred when taxes were higher than they are now and when "we" were spending more on "us." And our economy has stagnated since we cut government and taxes, giving "you" more money to spend on "you."

Deep down, Minnesotans know that the good life is not all fine wine and skin-care products. Sure enough, digging into the BLS data, we found that the Twin Cities also rank second in consumer spending on health care and cash donations and sixth in education. Throw in our seventh-place spending on reading, and our priorities as consumers start to align more closely with our public spending.

Let's acknowledge that government can waste money, spend inefficiently and make mistakes, just as individual consumers do. But Minnesota, widely admired as a relatively efficient, clean, good-government state, has spent your money pretty well, too.

A truly healthy state economy depends both on spending by individuals, making considered judgments about their families' needs, and on pooled investment that reflects our common wisdom, values and hopes for the future. Instead of viewing government spending as somehow inferior to or more frivolous than individual, consumer-driven decisions, we should insist that the money be invested as wisely and cost-effectively as possible.

If Minnesota's total investment in the public sector increased by just 1 percentage point as a share of personal income, state and local governments would have $2 billion more per year to improve schools and graduation rates, catch up on a long-neglected transportation system, and restore health care to the thousands who have lost it as a result of a gradual disinvestment in the public sector.

Restoring tax fairness, with income tax rates at the top tier that are closer to the rates high earners paid in the roaring 1990s, would go a long way toward restoring the public investment that Minnesota needs to help maintain its lofty position in the consumer-spending rankings and support broad-based economic growth.

And not to worry, there would be plenty left over for "super ultra premium" vodka, as well as all the other spending that you can do better than the government can.

Dane Smith is president and Charlie Quimby is a communications fellow at Growth & Justice, a nonpartisan economic think tank based in St. Paul.