Governor Deval Patrick’s Transportation Speech

Governor Deval Patrick announced his transportation package, and although I gave it a separate post dealing with the gas tax proposal it entails far more than that. He makes a powerful case for reform here, and without question the system is badly broken and in need of both reform and revenue. And for those who think that reforms are not important I submit that the politics of this issue require reform, regardless of the sacred cows that will be outraged. Without reform the political question here becomes unsolvable. Since both Governor Patrick and Senate Chair Steve Baddour rely heavily on the Transportation Finance Committee proposals I have once again attached them here. We have gotten some response on the gas tax proposal, but is there anything to say about the reforms. (23 and out over at the MBTA is gone.)?

tfc_findings

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President Obama’s Weekly Address

President Obama gives his weekly “radio” address, talking about the stimulus package, as well as his plan to stem the rising foreclosure tide. He mentions the fiscal summit he is convening, and talks about submitting a budget next week that is “fiscally responsible”. I will try to do a post on the fiscal summit. I can’t help but take up that subject in light of the new found enthusiasm by our Republican posters for balanced budgets.

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The Gas Tax It Is

Governor Deval Patrick will today announce that he will file legislation that will raise the state’s gasoline tax by 19 cents, bringing it from 23.5 cents to 42.5 cents per gallon. While less than the Governor’s trial balloon number of 29 cents it appears to be large enough to create a political problem with the legislature. The Governor also will unveil some prospective reforms, looking to the Transportation Finance Committee Report as a guidepost for those reforms.

The proposal, which would raise about $500 million a year, would help the MBTA stave off a threatened combination of drastic fare increases and service cuts, strengthen regional bus and rail systems, and wean the state from a constant stream of borrowing to pay for basic road and bridge operations, the officials said.

The proposal would also reorganize the state’s transportation system, putting all the bureaucracies that run roads, buses, trains, and airports under the governor’s control in an attempt to reduce overlap and inefficiency.

Patrick would also adopt numerous structural changes proposed by an influential state panel, including cuts in future MBTA fringe benefits that have been especially costly. The Turnpike Authority, a continual target of public anger, would disappear.

Patrick will also advocate that tolls remain, but not be hiked. But the Turnpike Authority, running out of time, is moving towards a toll increase now.

But even as Patrick supports freezing tolls on the turnpike, the authority’s board may be forced to vote on an increase Tuesday. The board has been putting off a vote, but members have said they need to approve some type of increase this month to avoid what could be a costly downgrade by credit rating agencies.

A two-step toll-increase plan, discussed at last month’s board meeting, is on the agenda that was delivered to board members yesterday.

The plan would impose a 25 cent increase at the Allston-Brighton and Weston booths, bringing the cash toll to $1.50, and a $2 increase at the Ted Williams and Sumner tunnels, bringing it to $5.50

The Governor, despite making a speech unveiling this proposal today, will still not file legislation until next week. The delays in formulating a strategy have been politically costly and will necessitate expedited action by the Legislature if toll increases are to be averted. Asking the Legislature to expedite action on a large gas tax increase is not likely to be successful.

Patrick first promised in 2007 to deliver a transportation overhaul that would consolidate the various transportation bureaucracies in an attempt to save money and run them more efficiently.

That plan never materialized.

Last fall, with the threat looming of $7 tunnel tolls, he promised to eliminate the Turnpike Authority and shift many of its functions to the agency that runs the seaport and Logan International Airport.

That plan has been abandoned because fixing the system “requires a more aggressive step,” an administration official said. “We’re not fooling around on the edges.”

As the transportation debate has continued, the problems have grown worse. The MBTA is now projecting a deficit next year of more than $150 million.

The agency has canceled contracts to buy new commuter train equipment and was told recently that the federal government would not fund a key expansion project until finances improve.

The Senate has already filed their reform package, which also relies on the recommendations of the Transportation Finance Commission. Reaction from Joe Wagoner, House Chair of Transportation, was guarded.

Representative Joseph F. Wagner, a Chicopee Democrat who cochairs the Joint Committee on Transportation, said late yesterday that he had yet to read a specific plan and was skeptical of anything pulled together so soon before an unpopular toll vote.

“This has been talked about since the fall of 2007,” Wagner said. “I think it should have been put together well ahead of now.”

No response in the Globe story from Senate leadership.

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The Obama Housing Plan

President Barack Obama has presented a plan to try to stem the foreclosure problem afflicting our housing market. Obama’s plan looks to bring $75 billion to the table in this effort, with a potential $200 billion in additional financial support for the secondary mortgage market. The New York Times broke it down this way:

The plan has three components. The first would help homeowners who are still current on their payments, but who are paying high interest rates and cannot refinance because they do not have enough equity in their homes, a problem afflicting growing numbers of people as housing values tumble.

A second component would assist about four million people who are at risk of losing their homes. It would provide incentives to lenders who alter the terms of loans to make them affordable for the troubled borrowers. A third component would try to increase the credit available for mortgages in general by giving $200 billion of additional financial backing to Fannie Mae and Freddie Mac.

Beyond luring lenders with government money, the plan also calls on Congress to give bankruptcy judges the power to change the terms of mortgages and reduce the monthly payments.

Obama appears to need Congressional approval only for the portion of the proposal that would allow bankruptcy judges to alter the terms of mortgages to reduce monthly payments. This provision has been bitterly opposed by the banking industry.

http://www.msnbc.msn.com/id/22425001/vp/29259996#29259996.msnbcLinks {font-size:11px; font-family:Arial, Helvetica, sans-serif; color: #999; margin-top: 5px; background: transparent; text-align: center; width: 425px;} .msnbcLinks a {text-decoration:none !important; border-bottom: 1px dotted #999 !important; font-weight:normal !important; height: 13px;} .msnbcLinks a:link, .msnbcLinks a:visited {color: #5799db !important;} .msnbcLinks a:hover, .msnbcLinks a:active {color:#CC0000 !important;}

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Does Cheney Have Bush Hate Syndrome?

News reports apparently leaked out of the camp of Vice President Dick Cheney have the former VP quite miffed that George W. Bush refused to grant a pardon to his former Chief of Staff Scooter Libby. From the New York Times:

The dispute underscored the raw feelings of Mr. Cheney and other supporters of Mr. Libby, who believed that he was mistreated by prosecutors and ill served by a president who, in their view, failed to return Mr. Libby’s loyalty and sacrifice.

And it points up the distance said to have grown between the two men as their worldviews, once largely in sync, seemed increasingly to diverge in their second term as Mr. Bush took a less hawkish stance.

For Mr. Cheney, the failure to win a pardon was a stinging loss that led him to offer a rare public rebuke of Mr. Bush’s judgment, saying of Mr. Libby in an interview with The Weekly Standard last month that “I strongly believe that he deserved a presidential pardon,” and that “I disagree with President Bush’s decision.”

We had Cheney pal Alan Simpson explaining the hurt Cheney felt at not getting the President to grant this pardon.

Mr. Simpson said Mr. Bush’s refusal to grant the pardon had left Mr. Cheney “hurt and deeply disappointed.”

The lobbying effort by Mr. Cheney, first detailed Tuesday by The Daily News, was arduous, and at times tense and even emotional, several people briefed on the discussions said.

Mr. Bush’s refusal to give way has created a deep divide between the Bush and Cheney camps. But Mr. Simpson and others said it would not be in keeping with Mr. Cheney’s character to allow the dispute to cause lasting enmity with the president with whom he served so closely in an extraordinarily difficult time in history.

“Dick Cheney is not a guy who is bitter,” Mr. Simpson said. “He doesn’t seethe, he doesn’t brood.”

Cheney doesn’t brood? I thought he was born brooding.

I guess George W. Bush showed Dick who the boss was, at least for the last two weeks of his Administration. And whether we agree or disagree with the decision on Libby don’t we all need to take a step back here, and say attaboy Mr President. Good job in standing up to Dick!

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Looks Like Sebelius at HHS

It appears that Kansas Governor Kathleen Sebelius will be chosen to be the Secretary of HHS, replacing Tom Daschle as the President’s nominee. The leak about the selection is of course subject to additional vetting by the Presidents staff. I am sure that the Governor’s record of tax compliance will be subjected to heightened scrutiny by the Obama team. Sebelius was an early and strong supporter of President Obama, and was considered as a potential VP candidate. Governor Sebelius has eight years as State Insurance Commissioner, as well as six years as Governor. She has a strong record of bipartisan cooperation.

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Methuen City Council Approves High School Finance Plan

The Methuen City Council last night agreed to support the financing package I recommended for Methuen High School, getting us started on the road to modernizing our high school. Methuen is one of three High Schools in Massachusetts that was chosen for funding by the MSBA once the state moratorium was lifted. Methuen is approved through schematic design/feasibility, which will provide a roadmap for full construction. City Council also approved the contract for KBA/Trident as the Owners Project Manager, as well as the contract between the City of Methuen and the MSBA for funding. The loan order totalled $2 million dollars, which is the high estimate of what schematic design/feasibility will cost. The MSBA will reimburse Methuen for 61.26% of the costs associated with this phase of the project. Additionally we are looking at what the federal stimulus package means for Methuen in terms of school construction. The original House Bill had $1.3 million for Methuen for school construction. We are hopeful that some federal stimulus money will help to offset the design cost associated with this project. My thanks to the Methuen City Council for their support of this project.

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G.M. and Chrysler Ask for More Help

Both G.M. and Chrysler tonight filed plans required of them by the federal government pursuant to the loans they took back in December. In terms of the financial requests being made G.M. is seeking an additional $16.6 billion in federal loans, on top of the $13.4 billion they took in December/January. Chrysler is looking for an additional $5 billion on top of the $4 billion already received. Without the additional federal loan infusions both say that bankruptcy is likely, and if the federal government were to provide debtor in possession financing for bankruptcy G.M. estimates that that cost could be in the range of $100 billion dollars. Those are some ugly numbers. The G.M. restructuring plan, while far from complete, offered some tough specifics. From the Wall Street Journal:

GM said it now plans to phase out its Hummer brand this year and Saturn in 2011 if no alternatives arise. Earlier, it said it was trying to sell Hummer and was re-evaluating the future of Saturn. The company also is scaling back Pontiac and trying to sell Saab, its Swedish brand. GM also said it will shut five more factories on top of the closures it had already planned. In addition, it plans to eliminate thousands of dealerships and slash 47,000 jobs this year around the world.

And the Big Three reached some agreement with the UAW over labor cost reductions.

In one sign of progress, GM, Chrysler and Ford Motor Co. reached tentative agreements Tuesday with the United Auto Workers union on a range of labor cost reductions. Among them are changes in work rules and cuts in so-called substitute pay, which supplements laid-off workers’ unemployment benefits, a person familiar with the matter said.

Basic wage levels of auto workers, which are seen as generally equivalent to workers at foreign-owned auto plants in the U.S., remain unchanged, this person said.

But the Big Three have not been able to close the deal on the issue of financing the VEBA’s that will pick up retiree health care costs in the future. That is a major problem that needs to be solved if there is any chance of additional federal loan money.

Additionally the G.M. bondholders have not reached agreement with the company to swap their debt for equity, and appear to be holding out for both better terms as well as forcing G.M. to further cut their labor costs. The interests of the bondholders and of labor are very divergent, and that divergence could also plunge G.M. into bankruptcy. There can be no deal on cost reductions without the assent of the bondholders to make the debt for equity swap.

The Obama Administration issued a statement essentially calling this a good start, but saying that all stakeholders must be prepared for additional sacrifice.

A spokesman for President Barack Obama, Robert Gibbs, said in a statement that the administration appreciates the effort by the auto makers. But he added that “more will be required from everyone involved — creditors, suppliers, dealers, labor and auto executives themselves — to ensure the viability of these companies.”

The Obama Administration sure has its hands full. I have posted the G.M. Restructuring Plan in full below.

gmrestructuringplan

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Lincoln Our Greatest President?

Abraham Lincoln, in a recent survey of 65 historians, was voted as our greatest president. James Buchanan was voted the worst. On this Presidents day what are your thoughts. If not Lincoln then who do you think stands above the rest? Some tidbits from the MSNBC story:

Compared to C-SPAN’s only other ranking of presidents, in 2000, former President Bill Clinton jumped six spots from No. 21 to 15. Other recent presidents moved positions as well: Ronald Reagan advanced from No. 11 to 10, George H.W. Bush rose from No. 20 to 18 and Jimmy Carter fell from No. 22 to 25.

George W. Bush?

Former President George W. Bush, who left office last month, was ranked 36th out of the 42 men who had been chief executive by the end of 2008, according to a survey conducted by the cable channel C-SPAN.

Bush scored lowest in international relations, where he was ranked 41st, and in economic management, where he was ranked 40th. His highest ranking, 24th, was in the category of pursuing equal justice for all. He was ranked 25th in crisis leadership and vision and agenda setting.

Interesting stuff for you history buffs out there. What say you?

http://www.msnbc.msn.com/id/22425001/vp/29137427#29137427.msnbcLinks {font-size:11px; font-family:Arial, Helvetica, sans-serif; color: #999; margin-top: 5px; background: transparent; text-align: center; width: 425px;} .msnbcLinks a {text-decoration:none !important; border-bottom: 1px dotted #999 !important; font-weight:normal !important; height: 13px;} .msnbcLinks a:link, .msnbcLinks a:visited {color: #5799db !important;} .msnbcLinks a:hover, .msnbcLinks a:active {color:#CC0000 !important;}

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Thievery in the Mortgage Business

A “Sixty Minutes” piece on World Bank, which is very telling as to how we have gotten into this mess. Funny thing is that I do not hear anyone in this piece talking about the Community Reinvestment Act. What I do hear is a lot of talk about greed leading bankers to make loans and do refinances for unqualified borrowers, and breaking the doors down to do so. Why??? Not because of CRA, but because, as I have said repeatedly, there was money involved in writing mortgages. There was money involved in securitizing these instruments and writing more bad loans. And Republicans were in charge while the banking system was corrupted and bankrupted. Watch this piece and then tell me that greed and outright fraud and theft are not the real root cause of the banking debacle now swallowing our entire economy. The owners of the bank in this piece, sold to Wachovia, can now enjoy the fruits of that sale while the entire banking system collapses because of what they and others like them did. Then people wonder why Americans are cynical about financial bailouts of banks.

http://www.cbs.com/thunder/swf/rcpHolderCbs-prod.swf

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