Careful what you wish for
Tuesday, Sep 13, 2011 - Posted by Rich Miller
* From the March 23, 2009 edition of the Jacksonville Journal-Courier’s editorial page…
Until we address the core issue of an ever-expanding state government with fewer workers to pay for it, Illinois will continue to deteriorate.
* Same editorial page, July 17, 2009…
The budget does include about $2.1 billion in spending cuts, with the possibility of an additional $1.1 billion in cuts later in the year. But these cuts merely postpone the inevitable day of reckoning.
* December 30, 2010…
Glaringly present by its absence is any real discussion about trimming the pounds of fat wobbling under the arms of state government.
* January 13, 2011…
At the same time, lawmakers do little to address the problem of gluttonous spending that got the state into a $15 billion hole. Rather, they simply “limit” spending — and we know how well that has worked in the past.
* Sept. 8, 2011…
Published reports indicate Quinn also will announce the closing of a handful of state facilities this week.
One of the powerhouse unions in the state — the American Federation of State, County and Municipal Employees, which represents about 30,000 people — has called on lawmakers to increase spending to avoid any cuts.
That would be a step backward after lawmakers already cut $1.5 billion out of what Quinn requested in fiscal year spending.
We’re empathetic with the pain that such closings and layoffs will bring, but cannot overlook the pain inflicted already on the private-sector workforce.
Any real attempt to address Illinois’ budget problems must reflect the realities that have existed in the private sector for years. Any real attempt cannot continue to reckless and carefree spending of money that simply isn’t there.
To do so would be at the expense of the people state government is supposed to serve.
* Not long after that last editorial was published, Gov. Pat Quinn announced the closure of Jacksonville Developmental Center. Here’s the paper’s editorial from September 12, 2011…
Hi, Gov. Quinn, it’s us.
I know we haven’t been on the best of terms lately, what with our occasional swipes against you on this very page.
Hey, at least you aren’t Rod Blagojevich, right?
Um, OK, we’ll get to the point.
You’re killing us.
Illinois generally, Jacksonville specifically.
Your announcement Thursday that unless lawmakers approve more money, you’ll close a prison, a juvenile detention center, three homes for the mentally ill and two centers for the developmentally disabled was a death knell for this region. […]
Gov. Quinn, Jacksonville has been hit hard by economic turmoil. Yes, everyone has, but hundreds upon hundreds of good-paying jobs have vanished from this city in the past two years. Gone with them has been an incredible pool of talent and of people to provide the vibrancy that makes a city a community.
* To be very clear here, I’m on record repeatedly saying that these proposed cuts are mainly theater and that I seriously doubt whether Quinn truly intends to follow through. Also, to be clear, the Journal-Courier has often offered up thoughtful, realistic and spot-on critiques of Illinois’ failure to get a handle on its budget. I mean, really, it’s no secret that our government has been a mess and even a failure. The paper is also far from alone in helping fan the “cut government now” flames. And it’s not the only media outlet which fanned those flames despite having state facilities and lots of state workers in its coverage zone. It just happens to be the only one of those papers which also has an easily accessible archive.
Even so, it’s always dangerous to demand cuts when your own community is a potential target. Just sayin…
* Related…
* JDC petition efforts mobilize
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Elgin hammered by Des Plaines casino
Tuesday, Sep 13, 2011 - Posted by Rich Miller
* There’s a simple reason why Las Vegas casino owners tear down their establishments and/or build new ones on such a regular basis. Gamblers love new casinos. It’s a silly sentiment, since slots are usually far tighter at expensive new casinos in order to pay for all that fancy construction. But gamblers aren’t exactly taking mathematically sound risks when they walk in the door.
Anyway, this story is not surprising on any level…
The new gambling palace in Des Plaines opened as the biggest money-maker among Illinois casinos, but some suburban leaders say the cost to existing establishments argues against further expansion of gambling.
In its first six weeks since opening July 18, Rivers Casino grossed almost $52 million, according to figures released by the Illinois Gaming Board.
But Rivers’ gain apparently came at the expense of existing Chicago-area casinos. The Des Plaines establishment earned almost twice as much as any other Illinois casino in August, and at all but one of the nine existing casinos, revenues for the month were down from the same time last year. […]
Tom Swoik, executive director of the Illinois Casino Gaming Association, said the reductions at other casinos showed the danger of a legislative proposal to open five new casinos, including one in Chicago, plus add slots at racetracks.
* The Gaming Board, in all its wisdom, chose Des Plaines at least partly because it was so close to Chicago, which is off-limits by law right now to a casino. The Board could’ve chosen a site nearer our Wisconsin or Indiana borders to attract out-of-state money, but the Board decided to focus on bringing in Chicago cash, which has now apparently resulted in cannibalizing the Elgin casino, the next closest site…
The [Elgin] Grand Victoria Casino’s revenues for August, down 24 percent compared to August 2010, are also down nearly 20 percent from just last month.
* But how much of that Elgin dropoff is cannibalization and how much should be laid at the feet of the lousy economy and the overall age of the facilities? Take a look at the August-to-August comparison for every Illinois casino…
They’re all down except Rock Island, which is, by the way, still a fairly new casino.
* The point here is that the cannibalization by Des Plaines of Elgin and other casinos is most likely occurring. However, the economy and the “newness” issue are also factoring in here.
And whatever cannibalization we’re seeing is purely the Gaming Board’s fault. They picked Des Plaines.
The General Assembly, on the other hand, has chosen to site new casinos that the Gaming Board chairman has repeatedly claimed will cannibalize existing locations. But that’s the GA’s prerogative, just as it was the chairman’s several years ago when the board chose the Des Plaines site. He should probably drop this line of argument.
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Question of the day
Tuesday, Sep 13, 2011 - Posted by Rich Miller
* Yesterday’s QOTD asked whether readers agreed with Illinois Chamber of Commerce CEO Doug Whitley’s statement…
Whitley said one of the problems facing Illinois is that “Cook County people are out of touch with the pain of the people of downstate Illinois.”
It was no surprise that Downstate readers nearly unanimously agreed (”agrees” are in green)…
What surprised me a little is that a majority of Chicago-area readers agreed as well…
Apparently, most Cook Countians are aware that they’re out of touch. Let’s expand on yesterday’s question…
* The Question: Do you think that one of the problems facing Illinois is that Downstate people are out of touch with the pain of the people of Cook County? Take the poll and then explain your answer in comments, please. Also, please tell us where you call home. Thanks.
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* U.S. Judge Joe Billy McDade recently overturned former Secretary of State official Cecil Turner’s four wire fraud convictions…
Cecil Turner was convicted on four counts of wire fraud in 2006 for covering up a scheme in which three janitors were paid for hours they didn’t actually work.
Turner did not take any illegal money. He was convicted on the legal theory that he denied taxpayers the honest services they deserved.
Since then, however, the U.S. Supreme Court has narrowed the scope of “honest services'’ violations.
* Some background on the case from Turner’s 2008 appeal, which was denied back then…
Led by Dinora, the three night janitors devised a scheme to take massive amounts of unauthorized leave without being detected by their supervisors. […]
The janitors’ scheme could not have succeeded without Turner’s help. Prompted by requests from Dinora, Turner repeatedly intervened when the janitors’ immediate supervisors began to watch the three more closely.
Turner filed motions in 2010 to vacate his convictions, mainly because of the Skilling v. United States ruling.
* More explanation of Judge McDade’s recent ruling…
Under the wire fraud statute, it is illegal to use interstate wires in any scheme to defraud, or for obtaining money or property by means of false pretenses, representations or promises. A scheme to defraud may include a scheme to deprive someone of “honest services”
In the Skilling opinion, the high court narrowed the scope of the right of “honest services” to include only cases involving bribes or kickbacks.
There was no evidence that Turner received any kickbacks or otherwise personally profited from the janitors’ scheme.
McDade said in his opinion that the court couldn’t determine whether or not the jury’s verdict on the wire fraud charges was based on a monetary scheme to defraud or the now-improper ground of honest services fraud.
* There was a monetary angle to the original case, but it was pretty darned minor and tenuous…
Federal prosecutors alleged Turner helped the janitors pocket unearned state pay in exchange for special treatment by city trash collectors in his Springfield neighborhood.
Turner received no financial kickbacks, but aided in the scheme because one of the janitors - Dana Dinora - also worked for Springfield’s public works department. He allegedly arranged quick pickups of junk ranging from water heaters to a dog house for Turner and his neighbors, Chesley said. […]
[Turner’s lawyer] told jurors special trash pickups in Turner’s neighborhood were arranged by another city employee, not Dinora, and are common for people with political connections. Turner is vice chairman of the Sangamon County Democratic Party and his wife a Sangamon County Board member.
* Interestingly enough, the appellate court had earlier used its reasoning from the Robert Sorich conviction to deny Turner’s original 2008 appeal…
The defendants in Sorich had misused their public offices for the private gain of third parties-campaign workers who were given civil-service jobs. This was sufficient, we said, because “the true purpose of the private gain requirement-and one that does not depend on who gets the spoils-is to prevent the conviction of individuals who have breached a fiduciary duty to an employer or the public, but have not done so for illegitimate gain.”… Because the defendants in Sorich had “created an illegitimate, shadow hiring scheme based on patronage and cronyism by filling out sham interview forms, falsely certifying that politics had not entered into their hiring, and covering up their malfeasance,” the “hallmarks” of an honest services fraud were present.
* Turner’s two convictions for lying to the FBI were allowed to stand by Judge McDade, however. Here’s what the appellate court wrote in 2008 about that…
On appeal, Turner contends that his statements to the FBI were not material because the FBI already knew about his involvement in the scheme and therefore could not have been misled by what he said.
We disagree.
A false statement need not actually influence the agents to whom it is made in order to satisfy the materiality requirement for this offense; it need only have the possibility of influencing a reasonable agent under normal circumstances. Turner’s statements to the FBI-denying that he provided supervisory cover for the janitors’ fraudulent scheme-satisfied this standard.
* Meanwhile, in a different part of the state, US Attorney Patrick Fitzgerald was in rare form yesterday…
U.S. Attorney Patrick Fitzgerald said he sometimes wants to smack people “upside the head” who tell him after he’s convicted someone that they knew all along the person was a crook.
“Seriously, speak up,” Fitzgerald said in a talk to the City Club of Chicago Monday.
“The one thing I find frustrating is that people view corruption as a law enforcement problem. If I had a dollar for everyone who has come up to me after we’ve convicted someone and said: ‘yes, we knew he or she was doing that all the time but we wondered when someone was going to get around to doing something about it. And I bite my lip, but I wanted to smack them upside the head.”
The person who needs to do something about corruption, he said: “was you.”
“It is my view that sometimes we say that’s the way it is in Illinois or that’s the way it is in Chicago. If you’re finding yourself saying that, what you’re really saying is: “that’s the way I will allow it to be,” Fitzgerald said.
“You either speak up and do something about it or you’re part of the problem. That’s the only way to look at it.”
Discuss.
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Governing by press release, Part 54,285
Tuesday, Sep 13, 2011 - Posted by Rich Miller
* I have some objections to this Tribune editorial, but it’s generally on the right track…
Gov. Pat Quinn slammed down a rubber stamper with a dramatic thud Monday as he followed through on his pledge to veto the so-called smart grid bill, which would upgrade the electricity distribution system in Illinois.
Now what? Apart from talking tough — and stamping tough — the governor has no real Plan B. […]
The bill needs a stronger answer for the prolonged power outages that hit more than a million customers in northern Illinois this summer — they’re still angry. An aggressive program to replace cable, upgrade circuits and bury the most vulnerable lines should be part of the deal. ComEd might win more support if it revived the idea of a fund to ease the impact of future rate hikes on the elderly and poor.
The storm-related service problems have made ComEd an easy target, and opponents of the bill looked like they had fun bashing it on Monday. But as the governor should know, this legislation is not “a nightmare for the consumers of Illinois,” as he described it. It is not “legalized pickpocketing,” or a bet on “unproven smart technology,” as Attorney General Lisa Madigan declared at the press conference.
The General Assembly passed a largely solid framework. High-tech upgrades to the power grid will save consumers money over time and make Illinois more attractive for business. The governor gave his veto stamper a good workout on Monday. Now it’s time to push for a genuine electricity upgrade.
I don’t think the bill’s framework was “largely solid.” What we saw over the summer is that the basic structure of the current “Dumb Grid” isn’t nearly up to par. The company needs to be pushed into upgrading its entire network from the ground up, not just the technological improvements produced by a “Smart Grid.” Yes, that would cost money. Lots of it. But these far too frequent outages are also costing money as well, and they’re hurting our state’s competitiveness. We have an opportunity here to squeeze this company to be the best in a whole lot of aspects. For instance, their customer service is horrible, and not just for individual consumers…
For the third year in a row, business customers have placed Commonwealth Edison second-to-last in customer satisfaction among its Midwest peers.
According to a J.D. Power and Associates study — based on interviews with representatives of more than 17,000 U.S. businesses that spend between $500 and $50,000 monthly on electricity — ComEd tied for second-to-last place with the state’s other major utility Ameren Illinois. Both received a score of 607 on a 1,000 point scale.
And guess which company tied for last place in the Midwest? If you said “Ameren,” you’d be correct.
* Gov. Pat Quinn has had months to come up with an alternative plan. Instead, he just issued a veto and walked away, promising to come up with something down the road.
That’s absolutely unacceptable. Yesterday was simply one more in a series of high-profile feel-good media pops for a governor who all too often governs by press release. Vetoing the ComEd bill was easy. Proposing real solutions is difficult. So, it’s no surprise which avenue this governor took.
Maybe one day Pat Quinn will grow up and start to actually lead, but I’m not holding my breath.
…Adding… The SJ-R editorial board is still steaming about Tenaska…
If a newspaper editorial page could have a face, ours would be blue from telling the story of Commonwealth Edison’s relentless effort to prevent construction of a clean coal power plant in Taylorville. […]
A group called the STOP Coalition, heavily backed by Exelon, quickly set about sounding the alarm of economic doom if that happened. Using worst-case-scenario predictions, it said the Tenaska deal would lead to massive increases in power rates for nonresidential users, forcing tens of thousands of jobs out of Illinois. ComEd succeeded in stopping Tenaska’s bill in January. Then it asked the Illinois Commerce Commission for its own $396 million rate hike. (Eventually, it was granted $155 million.)
The Tenaska bill limited Tenaska to a 2 percent increase on residential rates spread over 30 years . The bill vetoed by Quinn this week would have meant 9 percent increases on average for ComEd customers.
This episode was a lesson for us. It said ComEd would do anything necessary to protect its bottom line and keep competition away, no matter how much hyperbole and alarmism was necessary.
* Roundup…
* ComEd Customer Service - User Reviews, Ratings and Comments
* Sen. Don Harmon statement on governor’s ComEd veto: “By vetoing this bill, the Governor paves the way for common sense legislation that can allow for electric grid modernization, while providing true safeguards for Illinois’ consumers. I stand with the Governor in his efforts to create jobs, protect the environment and maintain key consumer protections. The lack of adequate protections in these key areas is the reason I voted no on the ‘ComEd bill’ and today support the Governor’s veto. To be effective, any legislation to modernize the electric grid should contain lower profit margins for utility companies, key protections for those who can least afford rate increases, dedicated revenues for storm response measures, environmental safeguards, and clear evidence that ratepayers will realize future savings from smart meters.”
Unless a trailer bill can be passed to address these specific concerns, I urge legislators to support the veto. I look forward to working with the General Assembly to advance these goals.”
* Gov. Quinn vetoes ComEd rate-hike bill, override battle to come: Bob Pierson, business manager of IBEW Local 9 and chairman of the union’s International Executive Council, said he is disappointed and that the IBEW will continue to try to pass the bill in the upcoming veto session. “There are no jobs now,” he told the Sun-Times. “This would have meant at least 1,500 jobs for our members, more jobs for the utility company, more income for the state and given the state an actual, reliable [electrical] system.”
* Quinn vetoes electric rate hike bill: “If they want to try and override the veto, be my guest. Because we’ll, I think, show them as we did 30 years ago that the people of Illinois are mightier than Commonwealth Edison,” said Quinn, who helped form the Citizens Utility Board nearly 30 years ago.
* Quinn vetoes ComEd rate hike: In December 2008, the ICC ordered the state’s two largest utilities — ComEd and Ameren — to participate in a series of workshops with consumer advocates, government officials and other policymakers to discuss issues surrounding smart grid. The idea was to develop a strategic plan to guide deployment of smart grid in Illinois and to recommend policies the commission could adopt. The resulting 356-page report, released in October 2010, was meant to guide utilities as they moved forward with requests for smart-grid technology. But the utilities never came forward with a detailed proposal, said Scott, instead choosing to fight for legislation that would provide a means to pay for the smart grid without clearly defining what consumers would be paying for.
* ‘Smart Grid’ Might Invade Privacy: ComEd released a statement denying that personal data would be collected: “The parties that negotiated the Energy Infrastructure Modernization Act (SB1652) ensured that customer data information protections were embedded in the legislation. The legislation says that electric utilities shall comply with the consumer privacy requirements of the Personal Information Protection Act and it prohibits selling of individual customer-specific data. ”
* Quinn vetoes electricity rate-hike plan: “To be effective, any legislation to modernize the electric grid should contain lower profit margins for utility companies, key protections for those who can least afford rate increases, dedicated revenues for storm response measures, environmental safeguards, and clear evidence that ratepayers will realize future savings from smart meters,” said state Sen. Don Harmon, an Oak Park Democrat.
* Quinn vetoes Ameren rate hike proposal
* Quinn vetoes Ameren $625 million rate hike bill in Illinois
* With Quinn veto, ComEd’s focus on rate hike bill turns to lawmakers
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* You can look at charts and treatises all day long and still not quite get your head around the problem of America’s stark inequities. This incredibly important Wall Street Journal article, however, brought it all home for me…
For generations, Procter & Gamble Co.’s growth strategy was focused on developing household staples for the vast American middle class.
Now, P&G executives say many of its former middle-market shoppers are trading down to lower-priced goods—widening the pools of have and have-not consumers at the expense of the middle.
That’s forced P&G, which estimates it has at least one product in 98% of American households, to fundamentally change the way it develops and sells its goods. For the first time in 38 years, for example, the company launched a new dish soap in the U.S. at a bargain price. […]
Economist Edward Wolff of New York University estimates that the net worth—household assets minus debts—of the middle fifth of American households grew by 2.4% a year between 2001 and 2007 and plunged by 26.2% in the following two years.
P&G isn’t the only company adjusting its business. A wide swath of American companies is convinced that the consumer market is bifurcating into high and low ends and eroding in the middle. They have begun to alter the way they research, develop and market their products.
Food giant H.J. Heinz Co., for example, is developing more products at lower price ranges. Luxury retailer SaksInc. is bolstering its high-end apparel and accessories because its wealthiest customers—not those drawn to entry-level items—are driving the chain’s growth.
Citigroup calls the phenomenon the “Consumer Hourglass Theory” and since 2009 has urged investors to focus on companies best positioned to cater to the highest-income and lowest-income consumers. It created an index of 25 companies, including Estée Lauder Cos. and Saks at the top of the hourglass and Family Dollar Stores Inc. and Kellogg Co. at the bottom. The index posted a 56.5% return for investors from its inception on Dec. 10, 2009, through Sept. 1, 2011. Over the same period, the Dow Jones Industrial Average returned 11%.
“Companies have thought that if you’re in the middle, you’re safe,” says Citigroup analyst Deborah Weinswig. “But that’s not where the consumer is any more—the consumer hourglass is more pronounced now than ever.” […]
To monitor the evolving American consumer market, P&G executives study the Gini index, a widely accepted measure of income inequality that ranges from zero, when everyone earns the same amount, to one, when all income goes to only one person. In 2009, the most recent calculation available, the Gini coefficient totaled 0.468, a 20% rise in income disparity over the past 40 years, according to the U.S. Census Bureau.
“We now have a Gini index similar to the Philippines and Mexico—you’d never have imagined that,” says Phyllis Jackson, P&G’s vice president of consumer market knowledge for North America. “I don’t think we’ve typically thought about America as a country with big income gaps to this extent.”
Procter & Gamble is one of the smartest marketers in the world. If this is how P&G now sees our country, you can bet it’s accurate. We really are in serious trouble here.
Go read the whole thing.
* And here’s another important story that you shouldn’t pass by…
Caterpillar Inc. is struggling to add skilled workers in its manufacturing operations despite high U.S. unemployment levels that have forced President Barack Obama to take extraordinary measures, the company’s chief executive said on Friday.
The dichotomy in the makeup of the workforce is threatening U.S. and Canadian competitiveness, Caterpillar CEO Doug Oberhelman said.
“We cannot find qualified hourly production people, and for that matter many technical, engineering service technicians, and even welders, and it is hurting our manufacturing base in the United States,” he told a business audience at the Spruce Meadows equestrian facility outside Calgary.
“The education system in the United States basically has failed them and we have to retrain every person we hire.”
* Related…
* Social Status and How the Elected Vote
* Capital gains tax rates benefiting wealthy feed growing gap between rich and poor
* Steel company moving HQ to Chicago: An Ohio steelmaker is in line to receive more than $1 million in financial incentives from the city of Chicago to move its headquarters to a downtown office tower… In addition to the 50 jobs that will move from JMC’s Beachwood, Ohio headquarters, the company, which makes steel pipes and tubes, plans to retain 50 corporate jobs already in Chicago that could have moved to Ohio.
* Community college enrollment falling in Illinois
* Battle Lines Being Drawn In Push For Longer School Day
* Illinois teachers union official blasts CPS longer-day tactics
* Mitchell: Rahm Emanuel right to be a bully about a longer school day
* Crop yield estimates cut due to weather conditions
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