Tuesday, September 29, 2009

The Window On Your Federal Government Is Still Fogged Up

The federal government's RAT Board unveiled its new website yesterday, featuring an interactive national map showing the location of stimulus funded contracts, grants and loans by geographical location. It's a nice toy if you want to see who the original grantees are in your state or zip code, but it is utterly useless to citizens interested in finding out who is really profiting from expenditure of all the billions the folks in Washington are bragging about "obligating" to date. Why? Without clicking on each of the 36,000 dots on the map, it's impossible to find out which contractors are getting the most money from all sources across the country.

Nationwide construction contractors like AECOM, Bovis Lend Lease, Chicago Bridge & Iron, Morse Diesel, Turner Construction and others could be reaping immense profits from all this stimulus spending at innumerable different locations around America, but without endless hours of clicking, reading, and adding up, it is impossible to tell how much revenue any such nationwide contracting firm is going to get. Of course, correlating those figures with campaign contributions to Senators and Congressmen from the localities where the projects have been awarded would add even more time and effort to the endeavor. So, for all the taxpayer money invested into development of this website, the touted "transparency" of the Obama administration has succeeded in making the truth about government operations just as opaque as under any earlier administration.

Two Disputed Construction Projects Holding Up Homeland Security FY 2010 Appropriations

Disputes between House and Senate versions of the FY 2010 appropriations measure for the Department of Homeland Security remain unresolved as the end of the fiscal year approaches, and are not likely to get solved in the next two days. The Senate version of the funding measure requires Homeland Security to build 700 miles of reinforced double layered fencing along the Mexican border, at an estimated cost to taxpayers of about $4.55 billion, to be completed by December 31, 2010. The House version of the bill does not provide funds for the fence construction.

The second dispute is over a much smaller appropriation of $36.3 million to build a Kansas State University laboratory for biological weapons defense and defense against attacks on American agriculture. The House version of the appropriation measure prohibits funding of the facility until completion of a risk assessment from outside the Homeland Security Department, while the Senate version is satisfied with the Department's internal analysis of project risks.

In an exchange of remarks on the House floor, Congressman Harold Rogers of the House Homeland Security Appropriations Subcommittee blamed Obama administration politics for the delay. "Instead of actually doing our work and fulfilling the security needs of our nation, we are placing a priority on Congress' own budget, putting Homeland Security spending on ice, taking the next few Mondays and Fridays off and basically waiting around until October until we get further direction from on high." House Appropriations Chairman David Obey responded that "We can't bring a conference bill back to this House until we've reached agreement on all of those differences."

Even The Chinese Plan To Rapidly Expand Nuclear Power Generation

While authorities in the United States endlessly debate whether to promote, allow, or prohibit construction of more nuclear power generating reactors here, as climate change legislation wends its painful way through innumerable Congressional committee hearings and mark ups, China, the world's biggest consumer of electric power generated by burniung coal, is accelerating plans to exponentially expand its national nuclear electric generating capacity. Previous Chinese plans called for 440% growth in the proportion of electricity that country generates from nuclear power by 2020, but China's newest plan calls for 770% expansion in nuclear generating capaicty by 2020.

All the while, our Congress continues to debate whether or not to define electric power produced by nuclear reactors as "renewable energy" for the purposes of computing carbon emission credit allowances. Last time I checked, nuclear power doesn't give off a single gram of greenhouse gas emissions. What gives?

Senate Version Of Climate Change Bill Due Out Tomorrow

Senate Envorinmental and Public Works Chairman Barbara Boxer is set to release that committee's version of climate change legislation tomorrow. Boxer's bill is expected to seek to increase the Waxman/Markey goal of 17% greenhouse gas emissions by 2020 to a 20% reduction. Still secret, however, are the industry by industry allocations of initially free emissions credits Boxer and her committee propose. Apparently Boxer wants to bring industry lobbyists to the table and garner maximum support for the Senate version of this legislative measure by passing out free emissions credits to those lobbyists first to the bargaining table.

Industrial Construction Spending Declines Again

According to the North American Industrial Spending Index, construction projects for industry declined again in August, for the ninth consecutive month. The only sector with positive growth is the manufacturing sector, with a $3 billion increase in projects over last year. Leaders in the declining sectors are oil and gas transmission, down 79%; oil refining, down 75%; pulp and paper plants, down 69%; alternative fuels, down 65%; oil and gas terminal construction, down 55%, and chemical processing construction, down 47%. Ouch!

Monday, September 28, 2009

Vanishing Highway Construction Funds

The last long term federal Highway Trust Fund reauthorization included an often overlooked provision designed to promote budget flexibility, requiring states to set aside a small portion of highway funds each year. Ignored by most states when the time came to pay for road construction projects, the chickens are now coming home to roost to the tune of $9 billion, or about a third of the amount added to state road construction budgets in the stimulus legislation. Unless Congress acts by Wednesday, to remedy the situation, state highway departments will lose the $9 billion, and in some states the disappearing cash will lead to construction project cancellations or curtailments of jobs already underway.

Senate Environment and Public Works Chairman Barbara Boxer is working on legislation to restore the $9 billion to the budget, in order to avoid an $800 million loss to the California highway department, $114 million to Colorado's road construction budget, $60 million to Nevada, and similar losses in other states. The jobs which would have to be cut from ongoing projects in Oklahoma alone could be up to 1,300 trades workers, according to Senator James Inhofe. It seems odd that such difficulties in an ongoing federal program which is as big a staple in America's construction industry economy as the federal Highway Trust Fund could be left to the last three days of the fiscal year for Congressional action.

Obama Administration To Commit $35 Billion For Mortgage Lending By Local Housing Agencies

Under the authority of the 2008 Housing and Economic Recovery Act, the Treasury Department, Fannie Mae and Freddie Mac are polishing the details of a new Obama administration program to purchase up to $35 billion in municipal debt to be issued by local government Housing Finance Agencies, which provide lower interest mortgage loans to first time and low income home buyers, usually at rates 0.5% to 1.0% lower than commercial lenders in the private sector. The new program is expected to buy $20 million in newly issues municipal housing bonds, plus another $15 million in variable rate demand obligations issued by the HFAs.

HFAs have financed home purchases for about 2.6 million families. Rising interest rates in the municipal bond market have choked off new lending by many HFAs, and as a result, affordable mortgage loans for low income and first time home buyers have dried up, delaying recovery of the housing construction market. While some in Congress object to the reentry of Fannie Mae and Freddie Mac into this segment of the home purchase financing market, the Obama administration seems to have a laser focus on continuing to promote home ownership among the less fortunate as one way of attacking the nation's economic woes. If your business is involved in housing construction, you should be watching eagerly for this program to be launched.

"Price Collaring" Is The New Lobbying Focus Within Cap And Trade Bills

Apparently the free market for carbon emission credits won't be entirely free, after all. Lobbyists working to influence the final climate change bill to come out of Congress are focused on the "price collar" provisions of the Waxman-Markey house measure, which are expected to be tweaked significantly in the Senate version of the legislation. The House measure establishes a price floor of $28 per allowance in 2012, and a floating price ceiling set at 60% over the three year rolling price average.

Peter Darby, chairman of Pacific Gas & Electric, says utility companies need a better defined cost containment mechanism for carbon emission credits, while Nat Keohane, the Environmental Defense Fund's director of economic policy and analysis, says a narrowly defined price collar in the legislation would undermine the environmental integrity of the legislation. Look for legislators to clamp down the price collar as legislation nears finality, in order to avoid wide utility bill fluctuations which would anger voters as Congressmen and Senators run for reelection.

Thursday, September 24, 2009

Why Hasn't The Stimulus Stimulated The Construction Industry?

The Obama administration and the government agencies it runs have fallen right into the "figures don't lie" trap in efforts to convince the populace that the $787 billion in cash appropriated in the American Recovery and Reinvestment Act is rapidly being infused into the American economy, when in fact the vast majority of the money remains locked in federal Treasury vaults in Washington, D.C. In a report released yesterday, the third in a series of every other month reports on progress of stimulus spending, the Government Accountability Office proudly reports that, of $27.6 billion appropriated for highway infrastructure projects in the stimulus bill, $18.0 billion, or 65.1% of the funds, has been "obligated" to 7,000 paving and bridge projects. Sounds impressive.

Buried deeper in the text of the 156 page GAO report is the number which tells the real story of failure of the stimulus appropriation to do anything at all in a hurry to save or create jobs in the construction industry: more than six months after passage of the legislation appropriating all this cash to fund "shovel ready" projects and put construction tradespeople back to work, only $1.4 billion, or a little less than 5.1% of the money, has actually been spent, flowing into the hands of contractors and subcontractors on whose payrolls the rescued tradespeople are meant to be working. At that rate, it would take ten years for all the appropriated money to begin circulating in the real economy of our industry. The shovels were ready, but the bureaucrats and their check cutting apparatus were not.

Of course, anyone in the construction business familiar with the "bell shaped curve" of cash flows on construction projects knows that it won't take ten years for the money to flow out of federal vaults, but the GAO report itself acknowledges that the projects to which this cash has been allocated will last about three years long on average, and since notices to proceed are just beginning to go out, and the peak cash flows can't be expected for at least half of that three year period, the real impact of the stimulus spending won't be felt by construction businesses until 18 months from now, or two years after the legislation was signed into law.

The other significant fact buried in the body of GAO's September 23, 2009 report on stimulus spending which is most telling for construction businesses bidding on and working on these projects is this: profit margins on this work have been shaved razor thin by contractors competing for the work. GAO reports it has been told by state highway officials that bids for stimulus work are coming in within a range of 12% to 35% below state engineer estimates of the cost of the work. This cutthroat competition could lead to a horrible shakeout of the contracting business community, with failing contracting businesses and material suppliers laying off workers, and performance and payment bond sureties facing burgeoning claims by unpaid workers, trade contractors and suppliers, and having to spend billions to take over and finish the work on contracts which were seriously underbid.

This likely fallout of the stimulus appropriations, one of the oft overlooked unintended consequences of hasty and ill conceived government action, will be compounded when fiscal responsibility initiatives to balance future federal budgets result, as they surely must, in reduced future infrastructure appropriations. The pending battle over long term federal highway trust fund reauthorization is just one example. It remains to be seen whether the stimulus was really a shot in the arm of truly additional funding for the construction industry, or only an acceleration of spending which was going to happen anyway, and will be backed out of federal and state capital budgets in 2010 and future fiscal years.

Your business is lucky if it is already in this tiny construction lifeboat while the industry as a whole continues its Titanic-like plunge to the bottom of the economy. However, it could be a long, long time before any other ship cruises by to rescue the survivors, and food and water will be in short supply.

Speaking Of The Highway Trust Fund ...

Wednesday the House voted 335-85 to suspend the rules, and passed a three month extension of funding for the federal Highway Trust Fund, throwing down the gauntlet in the face of Senate leadership and the Obama administration, which prefer an 18 month extension to avoid debating how for pay for a six year, $500 billion reauthorization which is not supported by motor fuel taxes at present rates.

Mired in health care reform negotiations and climate change cap and trade discussions, the House Ways and Means Committee is unprepared to find new revenue sources for highway and transit projects, and loathe to increase motor fuel taxes during this recession. Nevertheless, Congressman Oberstar, Chairman of the House Transportation and Infrastructure Committee, won this round, and the battle is joined for the hearts and minds of the commuting public and the trucking industry.

Tuesday, September 22, 2009

Health Care Reform: Affordability At Whose Expense?

Senator Olympia Snowe, likely the only Republican vote in favor of any sort of health reform legislation this session, was under careful scrutiny as she made her opening statement this morning at the Senate Finance Committee hearing on the Baucus sponsored America's Healthy Future legislation. She called the Baucus proposal a "solid starting point," but called for more work on affordability of the health care coverage every American family would be forced to purchase under the measure.

Meanwhile, Senate Majority Leader Harry Reid announced he might have to cancel the Columbus Day recess to keep work on health reform moving forward, and that he might be "forced" to use reconciliation procedures, rather than regular order, to move the bill. Now that the debate is clearly focused on who will pay for the "universal" health insurance required under the Obama plan, no one in Congress wants to tell his or her constituents that they will be the ones whose pocketbooks get raided for the additional cash.

Finally, the one fact no politician wants to admit has come to the forefront of the debate: you can't buy more coverage for less money. The government leaders who want to take over the health care system in America are trying to fool all of un into believing that additional taxes on "Cadillac" health insurance plans, like many union health and welfare plans, on pharmaceuticals, and on those who refuse to purchase insurance, aren't really taxes at all, and that this money is somehow going to materialize from a source that doesn't ultimately come out of the pockets of citizens. Hogwash!

Lamar Alexander Pushes Nuclear Plant Construction

Senate Republican Conference Chairman Lamar Alexander, responding to questions after his speech to the Institute for 21st Century Energy of the U. S. Chamber of Commerce, says he is pondering whether to introduce separate legislation, or an amendment to the climate change bill now pending in the Senate Environment and Public Works Committee, to push his proposal for construction of 100 additional nuclear power reactors in the nation by 2030. He noted that unlike solar power and wind power, getting nuclear plants built would not "require huge subsidies." A separate bill from Alexander is the more likely outcome, since he opposes any cap-and trade legislation, unless the committee adopts proposals from some of its members to try advancing the measure by splitting energy efficiency from cap and trade to pass them separately. That move would free Alexander to vote for nuclear power growth while still voting against cap and trade.

Highway Trust Fund Extension Battle Looming

House Transportation and Infrastructure Chairman James Oberstar has picked up the backing of Speaker Nancy Pelosi and Majority Leader Steny Hoyer for his proposed three month extension of federal highway trust fund authority, opposing both Senate leadership and the Obama administration, which want an 18 month extension to take highway construction funding off the table while health care reform and climate change legislation work their way through Congress.

The U. S. Chamber of Commerce, National Association of Manufacturers, American Trucking Association, and American Automobile Association have all written to Congress asking for a six year highway trust fund reauthorization as soon as possible. Their joint letter says, "Delaying significant investment and necessary program reforms until the next Congress will not benefit our nation's economy, safety, or quality of life."

Senate Majority Leader Harry Reid, meanwhile, says, "Our strong hope is that we get an 18 month extension and are open to the best way to get that done." If your long range planning in your business depends on consistent funding of federal highway construction projects, now is the time to get on the phone to your Senators and Congressman and let them know you back Oberstar over Reid.

House To Vote On Spending Stopgap Wednesday

Tuesday the House Rules Committee will consider a 30 day stopgap spending bill so the federal government will have money to continue operating beyond the September 30 end of the fiscal year. The House floor vote is expected Wednesday and the Senate should act on the measure before Wednesday, September 30. This will give Congress another month to finish the appropriations legislation for fiscal year 2010.

The House has passed all 12 appropriations bills, but the Senate has acted on only five of them, and there have been no votes on conference committee reports. Conferees are expected to begin their work on appropriations measures later this week. Furthermore, an extension of three months is expected so both houses can finish work on a three year extension of air traffic control improvement funding, and various House and Senate leaders are still bickering over whether the temporary extension for the six year highway trust fund legislation should be three months or 18 months.

Monday, September 21, 2009

Will Climate Change Legislation Promote Coal And Nuclear Power To Cut Down Foreign Oil Dependence?

Senators Joe Lieberman, Lindsay Graham and Lamar Alexander are pushing for a far larger role for nuclear power generation and new technology coal fired power plant construction as part of the climate change legislation now moving through Congress at a snail's pace. Alexander is promoting a provision which would call for construction of 100 new nuclear power plants by 2030.

Lieberman echoes Alexander's sentiments. "Without a nuclear title that's stronger than in the House climate change legislation, we're not going to be able to get enough votes to pass climate change." Lieberman, who changed party affiliation from Democrat to Independent last year after campaigning for President Obama, was stripped by his party of his seat on the Senate Environment and Public Works Committee, but he is still actively talking to committee members about developing a bill in the Senate.

FCC Meddling In Broadband Construction Could Spell Disaster

FCC Chairman Julius Genachowski spoke recently at a conference on broadband coverage in our country, explaining how the agency expects to comply with the Congressional mandate in the stimulus legislation to report by next February how best to make internet service available to every American. Behind him was a huge monitor displaying real time Twitter "tweets" from the audience members responding to his remarks. One audience member wrote, unnoticed by Genachowski, that "It would have taken the government until 2025 to have created Twitter."

During a hearing before the House Energy and Commerce Committee last week ranking member Congressman Cliff Sterns asked whether deeper FCC involvement in internet expansion is really a good idea. FCC Commissioner Robert McDowell echoed those sentiments during a break in the hearing. "I think we should proceed with caution, McDowell said, "There's a potential for good, but there's also a potential for government micromanagement." Amen.

Federal Energy Saving Performance Contracts Come Under Scrutiny

Taxpayers spent $850,000 for "energy savings" at four federal government buildings in the Energy Department's Oak Ridge, Tennessee research complex during the four years since the buildings were demolished, another $650,000 over six years for energy conservation at a high efficiency laundry facility in Texas which was closed and standing idle, and $11.5 million more than necessary to various local utility companies where government bureaucrats and contracting officials failed to use expensive mechanical and software systems installed to automatically turn down the heat in government office buildings at night, according to findings in a recently released Energy Department inspector general audit report.

the American Recovery and Reinvestment Act appropriated nearly $17 billion to the Energy Department's Office of Energy Efficiency and Renewable Energy, which has issued 16 "Super ESPC" agreements which could cost taxpayers as much as $80 billion over the next 25 years. Under these agreements, contractors continue receiving energy efficiency performance bonuses long after construction is complete, if building performance continues to meet the specified energy standards. The audit report notes that lack of oversight and clear accounting for ESPC contracts makes it hard to figure out whether the concept really saves any money for taxpayers over the long haul.

Thursday, September 17, 2009

Freedom Of Information Pillories Cap And Trade

Two short memos just made public under the federal Freedom of Information Act are being touted by cap and trade opponents as backing their argument that the proposed legislation will severely damage the energy sector of the American economy. A one page internal Treasury Department memo written last March estimates the cost of cap and trade at between $100 billion and $200 billion a year. That sum would amount to an energy use tax of $1,761 per American household annually, according to the second document, a brief prepared by last winter's presidential transition team. A chief opponent of cap and trade, Senator Lamar Alexander of Tennessee, remarked, "The current administration claims to be the most transparent in American history, yet it's been hiding a report showing its cap and trade energy plan would cost up to $200 billion every year." The Obama administration's Treasury Department officials counter that their own memo ignores the present proposal to return emission permit revenue to consumers.

Senator Specter's New Colleagues Rein Him In On Card Check Prediction

Recently converted Democratic Senator Arlen Specter is getting his comeuppance from caucus colleagues in response to his remark earlier this week that the upper chamber has "pounded out a deal" on the Employee Free Choice Act, commonly known as the card check bill. Senate Majority Leader Harry Reid says he is not aware of any deal, Majority Whip Dick Durbin says card check is still a work in progress, and North Carolina Senator Kay Hagan says "From what I understood, the whole card check issue was dead."

Latest word on this issue could have come from famed New York Yankees catcher Yogi Berra. Leas Democratic negotiator for the measure, Senator Tom Harkin of Iowa remarked, "I thought we were close to having an agreement that we could bring out and vote on. Close - nothing's final until you bring it out."

Highway Trust Fund Reauthorization To Be Delayed At Least Three Months

Acknowledging defeat by a crowded legislative calendar, House Transportation and Infrastructure Chairman James Oberstar now seeks a short three month extension of highway funding, rather than the 18 month delay sought by Senate leadership and the Obama administration. The longer delay would put motor fuel tax increases or alternative tax revenue enactments squarely in the lap of Oberstar and his panel colleagues right before the next Congressional elections. Ouch! Oberstar's spokesman acknowledged today that the length of any temporary extension of funding for highway and transit construction will not likely be decided until the waning hours or minutes of this legislative session.

Homeland Security SBInet Construction Critiqued As Wasteful, Ineffective

A just released report by the GAO concludes that spending by the Department of Homeland Security on construction of border fencing, guard posts and surveillance facilities, under stimulus appropriations and under the Department's Secure Borders Initiative, dubbed SBInet, is both wasteful and probably ineffective in keeping illegals from crossing into the country. The report points out border fencing construction so far has cost $2.4 billion, remains incomplete, will likely cost an additional $6.5 billion to maintain for the next 20 years, and cannot be shown to have reduced illegal border crossings.

The cost of building traditional border fencing in the Southwestern desert has increased from $4 million per mile to $6.5 million per mile since 2005, mostly due to increased costs of land acquisition for fence lines, patrol posts and surveillance camera towers. Senator Byron Dorgan of North Dakota has questioned allocation by Homeland Security of $128 million to build upgrades at little used checkpoints along the Canadian border in his state, leading Homeland Security Secretary Janet Napolitano to put a hold on those projects pending a review of how the construction sites were selected under stimulus appropriations. House Border Security Subcommittee Chairman Loretta Sanchez said at a Congressional hearing today that "I am particularly concerned by the SBInet program's ongoing struggle with transparency and the pattern of delaying planned deployments." Speaking about Chicago based Boeing's $1.1 billion, three year contract to build SBInet, Sanchez added, "As a member of Congress who is very concerned about fiscal responsibility, it is hard for me to believe that DHS would award a contract of $1.1 billion over three years and continue to award task orders without viable results."

Even the DHS cash saving efforts under the SBInet program have gone awry. DHS used bulk steel purchases for the border barrier construction in an effort to save funds, but delays in the actual erection of the prepurchased steel have produced increases in steel storage costs which ate up most of the bulk purchase savings. Is there no critical path schedule for this work?

Wednesday, September 16, 2009

Senate May Split Renewable Energy From Cap And Trade

Senate Majority Leader Harry Reid is hinting that Congressional attention to health care reform, and the new urgency respecting financial regulatory reform, could push Senate floor consideration of climate change legislation past New Year's day. Responding to a reporter's question, Reid said, "We do have this health care matter. We now have the president in the last few days saying how important regulatory reform is. So, you know, we are going to have a busy, busy time the rest of this year. And of course, nothing terminates the end of this year. We still have next year to complete things that we have to."

Meanwhile, other Senators are talking about separating the controversial cap and trade provisions of energy policy legislation from the renewable energy mandates, in order to get a renewable energy mandate passed this session. Senator Byron Dorgan, an opponent of cap and trade, says, "It's increasingly difficult to have climate legislation done by the end of the year." Addressing the proposed mandate for 15% of electric power to be produced from renewable sources by 2021, Senate Energy and Natural Resources Committee ranking member Lisa Murowski said, "This might start to look attractive even without the cap and trade piece. That's not being ruled out as a possibility."

Other Senate Committee Chairmen with jurisdiction over climate change legislation, including Barbara Boxer of Environment and Public Works, and John Kerry of Foreign Relations, continue weekly meetings with swing vote Senators on cap and trade strategy.

"Card Check" Legislation Stalls Until January

New Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin says he doesn't have the votes to move this controversial measure to the Senate floor until the Senate seats a replacement for his predecessor, the late Massachusetts Senator Edward Kennedy. "I've got to make sure we have the votes for it," Harkin said of the card check measure. "Right now, we're missing a vote. Kennedy's replacement is not likely to be seated before the first of next year.

Responding to Senator Arlen Specter's remark to the AFL-CIO convention in Pittsburgh that senate negotiators have "pounded out" a revamped version of the Employee Free Choice Act, AFL-CIO President Richard Trumka announced, "There is no final deal in place. We are going to keep fighting for labor law reform that will allow workers to join a union free from intimidation and harassment." Senate negotiators have not actually met face to face to discuss this bill since July.

Tuesday, September 15, 2009

New CAFE Standards, But No Motor Fuel Tax Substitute

In what was initially billed by the White House as "an historic" announcement of new mileage standards for cars and trucks, the Obama administration today released new rules which will accelerate by four years a mileage standard fleet average of 35.5 miles per gallon. The new mileage requirement will now go into effect in 2016 instead of 2020 as the Bush administration had planned. Meanwhile, nobody in Congress on or Pennsylvania Avenue has as yet bothered to explain how all the revenue the "cash for clunkers" program and these new CAFE rules will drain from the federal highway trust fund is going to be replaces in reauthorization legislation due by the end of this month, but which clearly will be deferred for at least six months while Congressional committees puzzle over the question how to raise taxes on the traveling public without appearing to raise taxes on the traveling public.

Energy Reform Newcomers Flexing Their Muscles

Two relative newcomers to the political battles surrounding climate change issues flexed their rhetorical and governmental muscles today, in somewhat opposite directions. California Governor Arnold Schwarzenegger announced he will the renewable energy bill his legislature passed Saturday, in favor of an executive order imposing the same requirement that California achieve 33% of its energy from renewable resources by the year 2020. The California Public Utilities Commission estimates that restriction will increase energy construction costs in the state by $115 billion. And, environmentalists believe the governor plans to water down the requirement in his executive order by including nuclear power and hydroelectric power in the definition of "renewable."

Meanwhile, back in Washington, D.C., newly elected Senate Agriculture Committee Chairman Blanche Lincoln gave her first speech since being elected to the chair to the National Cattleman's Beef Association, and announced that she will oppose federal climate change legislation as passed by the House unless someone can answer the question how the bill will affect consumer prices for food. She claims the House passed measure places disproportionate burdens on Arkansas, and on the rural poor in particular.

McCain Transportation Earmark Redirection Soundly Defeated

President Obama's campaign promise to veto appropriations bills coming to him with earmarks will be tested this month. Today the Senate defeated by a vote of 68-26 an amendment to the FY 2010 Transportation-HUD appropriations measure which would have stricken $1.7 billion in earmarks for construction projects favored by Senators within their individual states, in favor of spending the cash on modernization of the civil air traffic control system in the U.S. Complaining that 1 civilian flight in 4 in this country is delayed, McCain claims that air travel improvements are perpetually underfunded by Congress in favor of individual Senators' pet local projects. Senate Appropriations Transportation-HUD Subcommittee Chairman Patty Murray points out that the earmarks total less than 1% of the appropriation, and are 50% less than last year.

Unemployment Benefit Extension Proposed

At a Senate Finance Committee hearing today Chairman Max Baucus indicated he is in favor of extending unemployment benefits for 400,000 people whose benefits will run out this month, and 1.4 million who will lose theirs by the end of this year. Rhode Island Senator Jack Reed has introduced legislation proposing to extend the benefit period for an additional 13 weeks in all states where unemployment exceeds 8.5%.

ACORN Voted Out

Monday the U. S. Senate voted 83-7 to bar the Association of Community Organizations for Reform Now, known as ACORN, from receiving any further federal grant money, following issuance of several arrest warrants against ACORN employees in Florida accused of falsifying voter registration records, and revelation of a hidden camera video in which ACORN employees gave tax avoidance advice to a prostitute and her pimp.

The Census Bureau had announced on Friday it was severing all ties with ACORN, which has assisted in the past with urban area census work. This fiscal year ACORN has received $1.6 million in HUD grants for housing assistance, and since 1994 the group has received a total of $53 million from the federal government.

The vote came on an amendment to the Senate version of the FY 2010 Transportation HUD appropriations bill. The House version of the bill has no comparable restriction on grants to ACORN, so the ultimate outcome of this issue remains to be resolved in the conference committee.

Monday, September 14, 2009

One More Health Care Reform Delay

Late Monday Senate Finance Chairman Max Baucus announced he will not release his chairman's mark of the Finance Committee health care reform bill until Wednesday, and it will be another week after that before his committee begins marking up the draft. Of all the five House and Senate committee bills, the Baucus mark is expected to be closest to the "plan" described by President Obama in his speech to the joint session of Congress last week, and its release is anticipated by all factions involved in the debate over health care reform.

During the negotiating session Monday, Baucus excused all staff from the room for half an hour so there could be a frank and free exchange among the three Democrat and three Republican negotiators about the 12 to 15 member concerns with the still secret draft of the Finance Committee legislation. After the meeting, Oregon Senator Ron Wyden said "The flash point is all about affordability." Sources say Baucus has reduced the overall ten year cost of his proposal to about $800 billion by making further cuts in the levels of health premium subsidy to those earning up to 300% of poverty wages. Baucus now proposes to limit subsidies for those earning 300% of poverty level income to the extent premiums would be more than 13% of total family income. Other Democrats wanted that number limited to 9% of family income.

Massachusetts Senator John Kerry said the negotiators do not expect any immediate support for Chairman Baucus' mark of the legislation, but that "It's not going to be the bill that we're going to vote on, because we are going to amend, we are going to have a tug of war still."

Some of the most contentious issues which remain, pending release of the Baucus draft bill Wednesday, are Republican demands for specific language banning the expenditure of federal government dollars to pay for abortions, language prohibiting enrollment of illegal immigrants in public or private health insurance in the United States, the question of co-ops versus a government run insurance plan, and finally, the additional burden Medicaid enrollment expansion will put on state governments. One reason for Chairman Baucus' decision to delay release of the bill is the discussion Monday and perhaps Tuesday with various state governors to address their Medicaid funding concerns.

The final Baucus mark is expected to run between 1,500 and 2,000 pages in length. Once it has been released, I will do my best to quickly bring you information on key elements of the Baucus plan compared with the Obama speech and the other four pending bills.

E-Verify Fate Hanging In The Balance

Alejandro Mayorkas, the naturalized Cuban immigrant citizen confirmed by the Senate last month as Director of U. S. Citizenship and Immigration Services in the Department of Homeland Security, said at a news conference today at DHS headquarters that he expects Congress to pass a timely renewal of authority for the DHS E-Verify program: "E-Verify is a tool to ensure a legal workforce. It assists employers in abiding by the law and it also protects the workforce. If E-Verify is not renewed, in my opinion we will need a different vehicle to accomplish those very fundamental objectives."

The E-Verify program will expire at the end of September if there is no Congressional reauthorization. Both houses of Congress have passed differing versions of the FY 10 Homeland Security appropriations bill, with the House reauthorizing the E-Verify program for two years in its measure, while the Senate enacted a permanent authorization of the program. It is not clear whether a conference committee can convene and deliver a report to the floor of both houses before the end of the month, but temporary reauthorization language could be included in the continuing resolution Congress will have to pass before the end of the month in order to keep paychecks flowing to federal government workers.

At the DHS press conference, Director Mayorkas noted DHS is evaluating the use of fingerprints, or other "biometrics," to verify citizenship for employment purposes, and the Department is preparing for a monumental onslaught of inquiries expected when anticipated comprehensive immigration reform legislation gives legal status to millions of currently undocumented workers in the U. S.

In response to a direct question whether it was possible E-Verify could cease to operate in a couple weeks, Director Mayorkas said, "We expect that Congress will provide the necessary authority to continue the program," which is now mandatory for all contractors doing federal government work.

Saturday, September 12, 2009

Nuclear Power Construction Creeps Forward At NRC And In Congress

For the first time in nearly 30 years, the Nuclear Regulatory Commission has issued a permit for limited construction on two new nuclear power reactors in Georgia. NRC has pending before it 17 license applications for construction of a total of 27 reactors. Although America's 104 nuclear power reactors nuclear reactors produce 20% of the nation's electrical power, no permits for new reactor construction have been issued since the 1979 partial core meltdown at Three Mile Island.

Pennsylvania Congressman Joe Pitts has introduced H.R. 3448 to cut through the red tape and speed up the process of reviewing applications for construction permits and operating licenses on new nuclear power generating facilities, but the bill has been referred to the Subcommittee on Energy and Mineral Resources of the House Energy and Commerce Committee and to the subcommittee on National Parks, Forests and Public Lands of the House Natural Resources Committee.

NRC Chairman Greg Jaczko acknowledges that the processing of the pending paperwork has been two slow, but at the same time he opposes Congressional intervention to move things forward. "I would love for us to be able to do our job even more effectively than we do," Jaczko said. "We're constantly looking for ways to do that, but we won't ever compromise safety to do that."

Because of the financial risk from regulatory delays, private investment in new nuclear power plant construction id virtually impossible to obtain. Consequently, the Energy Department has established $18.5 billion in loan guarantees to the nuclear power industry, but that fund will provide for construction of only about three of the 27 reactors for which construction permit applications are pending. Of course, approval of the construction permits could go a long way to freeing up private investment to pay for this construction.

So, paperwork at the NRC is holding up the start of $162 billion in projects which could go a very long way towards jump starting the heavy industrial segment of the construction industry.

Republicans Oppose Mass Transit Construction Earmarks

Republican Senators have filed over 50 proposed amendments to the $122 billion Transportation, Housing and Urban Development FY 2010 appropriations bill, attacking every mass transit earmark attached to the legislation. Many of the projects under attack can hardly be characterized as pork barrel work, including $ 85 million for extension of the Washington, D.C. Metro to Dulles airport, $30 million for the Honolulu High Capacity Transit Corridor project, and $75 million for Houston North Corridor Light Rail Transit project. One amendment would prohibit use of federal funds to pay for signs on construction projects announcing that the work is being paid for with stimulus appropriations. Huh?

I can't say whether this onslaught is the result of Republican hatred for mass transit, or Republican hatred for Democratic Congressmen who sponsor these entirely worthy projects. Either way hundreds of millions of badly needed construction project dollars are being held up by political bickering in Washington when the projects are shovel ready and the hard hats are in desperate need of the work.

Congressional Session To Stretch Past Thanksgiving

House majority leader Steny Hoyer has announced that Congress will remain in session long past the scheduled adjournment at the end of October. He would give no fixed estimate of a realistic adjournment date, but did say the House would take Thanksgiving week off, indicating he expects the current session not to adjourn until some time in December. The calendar is crowded with a continuing resolution, action on all annual appropriations legislation, health care reform, climate change bills, and perhaps immigration law reform as well. E-verify expires September 30, and nothing has been done about reauthorizing it, though federal contractors are now supposed to use it for all their employees.

Maybe the longer session will give the politicians a little breathing room to act on some non-controversial and badly needed legislation to permit government agencies and contractors to plan their projects and budgets some distance into the future, and get our sector of the American economy going again.

Friday, September 11, 2009

Fourteen Dollar Item Tells Construction Economy's Tale

Where did you buy your last hard hat? W. W. Grainger, Inc.? Probably. That fourteen dollar item is as telling a measure of the miserable state of the construction sector economy as anything the Ph.D. economists may take into consideration. Lake Forest, Illinois based Grainger reports its 2009 August sales are down 13% compared to August 2008. Grainger, with annual sales of $6.9 billion last year, is one of the world's largest sellers of such products in the U. S., Canada, Mexico, India, China and Panama. As Grainger goes, so goes the construction economy.

Climate Change Bill Stumbles On Tariffs and Carbon Credit Trading

President Obama's next great policy initiative after health care reform is climate change legislation, commonly known as the "cap and trade" bill. Yesterday, one day after his joint session address on health care reform, the cap and trade bill tripped itself up twice on Capitol Hill over two of the most contentious issues it addresses. To begin with, 26 Democrats sent President Obama a letter insisting that provisions in the House version of the bill authorizing imposition of tariffs on trading partner nations who do not enact equivalent carbon emission controls be strengthened, or these legislators will not support the final measure. Of the 26 letter signatories, 24 voted for the bill in the House earlier this session.

Also yesterday, with most of the nation still focused on fallout from the presidential health care reform address, Commodity Futures Trading Commission Chairman Gary Gensler to Senator Tom Harkin's Agriculture Committee that CFTC will need more staff, greater technological support, and increased interagency cooperating to effectively regulate any public market for trading carbon allowances and offsets, as proposed in the House bill. "We should not put too much faith in the markets alone to deliver results," Chairman Harkin remarked. "Do we want to repeat the adverse impacts of excessive speculation in the crude oil markets last year for carbon?"

Gensler testified that all carbon market futures should be traded only on exchanges, but that businesses and farmers could use over the counter markets to trade carbon derivative products tailored to specific needs. Any such derivatives, he stated, should be regulated according to proposals already included in the Obama administration's financial services market reform proposals under Congressional consideration.

Broadband Construction Grants Oversubscribed, Ineffective

Applications for over $28 billion have been filed in the first wave of grants to build broadband networks in underserved and unserved regions of the country, as provided by stimulus grant and loan programs administered by the Departments of Commerce and Agriculture. The first wave has only $4 billion available, however, meaning there are seven times the requests as there is available cash. Congressmen and Senators are disappointed that very few of the major broadband network operating companies have applied for any of the money, put off by the onerous conditions imposed on users of the funds.

Congressman Rick Boucher, chairman of the Telecommunications and Internet Subcommittee of the House Energy and Commerce Committee, told his panel today that major changes in the grant and loan programs are required to make certain that broadband networks built using taxpayer cash are fast enough to be commercially useful, and built first in areas where no internet service is currently available. Boucher is especially concerned that the current definition of "underserved" excludes any locale within 50 miles of a city of more than 20,000 people. This definition, he contends, excludes isolated communities in almost all the rural east coast.

Unfortunately for the construction industry, tinkering with the program definitions will only delay availability of funding for these projects.

Card Check Stalls Out

Senator Tom Harkin, who replaced Teddy Kennedy as Health, Education, Labor and Pensions Chairman, said yesterday in a candid speech to American Rights at Work that the Employee Free Choice Act is not likely to be called up for a vote on the Senate floor until January at the earliest, after a new Massachusetts Senator has been elected to fill Kennedy's seat in that chamber. Harkin promised to call the bill for a vote as soon as there are enough Senators to vote cloture on the bill.

CEA Reports A Million Stimulus Jobs So Far

In its first required report to Congress on the effect of the American Recovery and Reinvestment Act, the white House Council of Economic Advisors yesterday attributes over one million jobs have been saved or created thus far as a result of stimulus spending. Good news, I suppose, but because the economy has lost 2.5 million jobs since the legislation was signed in February, a lot of people are still hurting.

OMB Director Robert Nabors testified at a Senate Homeland Security and Government Affairs Committee hearing yesterday that a total of $300 billion in stimulus spending and tax relief has been "obligated" so far, meaning that bureaucrats have decided exactly where the cash will go. "Obligated" cash, however is not necessarily circulating in the real economy yet, and no one in government will say what the total of checks actually written thus far has been. Consider it is a whole order of magnitude or two less than the $300 billion obligated.

Chairman Joseph Lieberman told OMB it needs to spend the money faster, but to be particularly careful to protect against fraud and abuse. RAT Board Chairman Earl Devaney has suggested that taxpayers can expect up to 7% of the $787 billion stimulus, or a total of $55 billion, to be lost to waste, fraud and abuse. FTC Chairman Jon Leibowitz testified before Lieberman's committee that FTC and the Justice Department have already brought nearly 400 prosecutions against con artists who have promised victims, for a fee, to get stimulus grants for them. Improvements to the Recovery.gov stimulus tracking web site are due out October 5, according to Devaney, but until we have seen the new version it is difficult to believe the public will experience any real transparency into where all this money is going.

Thursday, September 10, 2009

Old Main Chicago Post Office Sold To Troubled UK Developer

Hopes for a quick and easy redevelopment of the old Chicago Main Post Office building, which has been sitting empty astride the Eisenhower Expressway for many years now, were dashed when second ward Alderman Robert Fioretti outed English real estate developer Bill Davies as the successful anonymous $40 million bidder at the Postal Service auction of the building last month. Davies has a checkered history of troubled and failed developments in the UK, including the purchase of the abandoned Liverpool post office building, which he resold 16 years later without doing a stitch of work on the structure. Flo Clucas, deputy city council leader in Liverpool, describes Davies as "long winded and desperately difficult."

U. S. Postal Service spokesman Mark Reynolds posted the required $4 million deposit, and USPS hopes to close the sale and get the property off its books before the September 30 fiscal year end. The empty building needs extensive repairs, and annual maintenance runs about $2 million per year. Alderman Fioretti acknowledges significant asbestos abatement will be part of any renovation for private use, and predicts redevelopment costs will run between $750 million and $1 billion. Davies, listed by the Times of London as one of England's richest people, probably has the cash and credit power to get the job done, it's just a question whether he has the will to spend all that money here. Contractors, sharpen your pencils!

Highway Trust Fund Legislation May Pass In 2009

Although President Obama wants to put off action on a multi-year reauthorization of the federal highway trust fund until after the mid-term Congressional elections, House Transportation and Infrastructure Chairman James Oberstar and his Highways and Transit Subcommittee Chairman Peter DeFazio both are looking for passage of a reauthorization bill before Congress adjourns for the year this coming October 30. Oberstar's panel has marked up its portion of the six year reauthorization legislation, and is just waiting for House Ways and Means Chairman Charles Rangel to figure out what new taxes will be needed to pay for the highway construction, since motor fuel tax revenues are declining as Americans drive less in cars getting more miles per gallon.

Richard Neal, Chairman of the Select Revenue Measures Subcommittee of Ways and Means, says his panel is continuing work on the revenue portion of the bill. "We could get something done this year," Neal said Tuesday. Along with state governments, thousands of road and bridge building businesses await the passage of this important legislation so they can get back to the business of planning their longer term future projects and bids.

Chicago City Council Backs The Bid

Yesterday the Chicago City Council unanimously passed an ordinance authorizing Mayor Daley to sign the standard International Olympic Committee Host City contract, which commits taxpayers to absorb any deficits should Chicago be awarded the 2016 Summer Olympics. Passage of this ordinance was the last speed bump in Chicago's bid against Tokyo, Madrid and Rio de Janero for the games.

Even the non-partisan and often critical Civic Federation of Chicago issued an analysis right before the city council vote which concludes that the bid by the City of Chicago provides fair and reasonable protections to taxpayers thanks to reasonable budget projections in a professionally prepared plan. This is good news for those construction businesses which will get the chance to bid on billions of dollars of new construction in the city, should Chicago be awarded the 2016 Games when the announcement is made next month.

Tuesday, September 8, 2009

E-Verify Challenges Are Not Over

Despite the ruling by U. S. District Judge Alexander Williams Jr. last week rejecting a last minute bid for injunctive relief against the Department of Homeland Security's rules requiring all companies contracting with the federal government to clear all present and future employees through the federal E-verify system to see if it is legal for them to work in this country, the legal, political and practical challenges to E-verify will continue for a long time. The system is expected to falsely label as illegal workers about 38,000 people who are actually legally employed here, requiring their employers to spend money, time and effort to get admittedly mistaken government information databases corrected. Furthermore, E-verify does nothing at all to detect the illegal alien working here who has presented false identity documents of a citizen to his or her employer.

What's even more complicated, the E-verify program will expire at the end of this month unless both houses of Congress pass the Homeland Security appropriations bill before September 30, and House and Senate versions of the bill will have to be reconciled in conference committee, because the House version extends E-verify for only two years, while the Senate reauthorization is permanent. It seems silly to require compliance with a system which could expire in three weeks.

Even under the rules which go into force today, employers with government contracts have 30 days to sign up for E-Verify, and 90 days after that to actually check the legal status of people on their payrolls. Why would a company begin that process without waiting to see whether the program will survive beyond the end of this month?

House Majority Leader Steny Hoyer announced today that Congress will need a short term continuing resolution to keep the doors of the federal government open for business after September 30, because neither house will complete all of next year's appropriation bills before the end of this fiscal year. Conference committee work on the four appropriation measures already passed through both chambers is slated to start in a week or two, but with the contentious health care reform debate taking up a lot more time than anyone expected at the beginning of the session, there is no guarantee that E-verify will get formally reauthorized before it expires.

Federal Stimulus Dollars Could Make Illinois A Bright Spot In Any Recovery

Illinois is among the top five states receiving federal stimulus cash to create jobs on transportation and clean water construction projects, according to information released recently by the House Transportation and Infrastructure Committee. Only Washington, Oregon, Pennsylvania, and Indiana have created more construction jobs by accelerating the spending of their shares of the total $26.9 billion appropriated by Congress for such projects. Additional stimulus cash slated for clean ups at Department of Energy nuclear sites in the state is also putting more hard hats to work here.

Another uncharacteristically prompt response to stimulus appropriations has been the Illinois participation in a multi-state effort to grab a big slice of the $8 billion federal pie appropriated for spending on development of high speed passenger rail transportation corridors. Illinois officials are lobbying hard for $2 billion of that money to come to our state. A lot of that money could go to tiny Mount Vernon, Illinois, where National Railway Equipment Co. already builds diesel electric locomotives for export, and has begun design work on an aerodynamic slope nosed passenger engine capable of cruising at 110 miles per hour.

National Railway Equipment now builds and sells freight locomotives with 60% better fuel economy, and 85% better noise control, that other models. The company's N-Viromotive technology uses multiple 700 horsepower diesel engines in place of the single mammoth diesels used in more traditional freight locomotives.

Of course, we can't count suburban LaGrange based Electro-Motive Diesel, Inc. out of the competition for high speed passenger rail locomotive technology, either. All this high speed rail development has been going on here for several months, mostly under the radar. I guess the cheering will begin when the cash starts flowing.

Friday, September 4, 2009

E-Verify: Tempest In A Teapot?

The ongoing litigation over Homeland Security rules requiring all contractors on federal government projects to submit existing employees as well as new hires to E-Verify may be just a tempest in a teapot if Congress does not reauthorize the E-Verify program, which is set to expire at the end of this month. Some argue that Homeland Security could continue requiring participation in the E-Verify program by rule, even without Congressional authorization, but since the program was initiated by an act of Congress, the prudent thing to do would be for both houses to pass bills reauthorizing the program. Surely President Obama would sign reauthorization legislation.

The House included E-Verify reauthorization in its 2010 DHS appropriations bill, but the Senate may not act on that package before the end of the month. The Senate, in a separate bill, permanently reauthorized the program, and included a requirement that all federal contractors and subcontractors participate. In order to assure continuation of E-Verify, a conference committee must reconcile these different measures so both houses can pass identical measures before the end of the month and get a bill to the Oval Office. If health care reform and climate change burn up the September agenda in either the House or the Senate, E-Verify may just become a lawyers' nightmare in the Department of Homeland Security.

"Card Check" Under Attack

The Labor Policy Institute, lobbying arm of the National Association of Manufacturers, is launching an advertising and direct mail campaign in Arkansas and Colorado attacking the Employee Free Choice Act, colloquially known as the "card check" bill, because Colorado Democrat Michael Bennett and Arkansas Democrats Mark Pryor and Blanche Lincoln are seen as the key votes which could kill the bill. NAM Executive Vice President Jay Timmons described the reasons behind the campaign: "This bill is one of the greatest threats to manufacturers' economic competitiveness. We want to remind manufacturers and the public that this bill would destroy jobs. The EFCA would send our economy and our nation in the wrong direction."

Apparently the AFL-CIO is a little bit worried about the same sort of problem, since the expected incoming president has been quoted as saying the unions could live with a bill preserving employers' rights to continue insisting on secret ballot elections before collective bargaining becomes at their plants.

Thursday, September 3, 2009

"Card Check" Bill May Need A Name Change

Secretary-Treasurer Richard Trumka of the AFL-CIO, expected to elected president of the lab or organization later this month, and a former president of the United Mine Workers, has his finger in the dike holding together this legislative initiative, but even he can see the dike is cracking. Asked yesterday whether the AFL-CIO could accept a labor law reform measure preserving management's right to insist on a secret ballot vote before a company is unionized, he said the "card check" provision of the pending measure "may or may not be" a key to union support for the final bill. Trumka said the AFL-CIO sees three provisions of the reform bill as "must haves" for organized labor: freedom of union organizers from management harassment; stiffened penalties for management violations, and tighter deadlines for concluding union contract negotiations.

The question now is whether anyone in either house of Congress is listening to him.

Obama Health Care Speeches To Light Congressional Fuse

President Obama will give two important speeches on health care reform next week. The first, on Monday at the AFL-CIO Labor Day picnic in Cincinnati, before the obviously receptive audience, will be a friendly warm up for Wednesday evening's prime time address to a joint session of Congress in the Capitol in Washington, D.C. President Obama will highlight two "must haves" he considers essential in any health reform package: federal regulation of insurance companies prohibiting coverage denials or premium increases due to a person's current health or pre-existing conditions, and federal government subsidies to make health insurance affordable for low income Americans. He will also name as "give-aways" three non-essential and particularly controversial proposals of pending bills, including Medicare payment for end of life counseling, school based health clinics, and a national health care database organized by race, sex, sexual orientation and "gender identity."

Thus far, no one but the presidential speech writers seems to know whether three equally debated provisions of the various bills will be on the "must have" or the "give away" list: a federal option to compete with insurance companies, a mandate requiring employers to provide health coverage, and a mandate for everyone to buy health insurance.

Tune in to your favorite news channel Wednesday night. Until President Obama delivers his message to Congress, we don't really know anything about what the final health care reform measure will look like.

Wednesday, September 2, 2009

Construction Coalition Seeks Injunction Against E-verify Requirements

The U. S. Chamber of Commerce, the Associated Builders and Contractors, and the Society for Human Resource Management today filed court papers seeking an injunction against enforcement of the Homeland Security Department's rule requiring all federal government contractors to check the legal status of both current workers and new hires in order to be eligible to work on federal construction projects, as well as state and local projects paid for with federal money. Last week the court rejected the coalition lawsuit challenging the rule, and now the contractor associations want to prohibit enforcement of the new requirement while they appeal that ruling. Some contractors fear that they will be responsible for violations of the rule by their subcontractors and suppliers under Homeland Security interpretations.

What If Chicago Gets The Olympics?

Chicago proposes to host the 2016 Olympic Games July 22 through August 7, 2016. Today the 2016 IOC Evaluation Commission released its comparative report on the bids by Chicago, Tokyo, Rio de Janero and Madrid to host the 2016 Olympics. According to that report, there is a financial bonanza for the local economy if Chicago is selected as host city.

The Games would bring 16,800 athletes from around the world to the heart of our city, where they would live in a newly built Olympic Village on the site of Michael Reese Hospital in Bronzeville. At that location 90% of the athletes would be living within a 15 minute bus ride of their competition venues. After the games the Village would be owned by the private developer winning the construction bid, and the developer would have to promise 20% of the units as affordable housing for Chicago residents.

The evaluation report characterizes the proposed Games budget as "ambitious but achievable," supported by City of Chicago financial guarantees of $500 million and State of Illinois guarantees of another $250 million. The City of Chicago has already arranged an insurance policy covering its guarantee, so the city taxpayers will be protected from any losses. Olympic events will sell 8.9 million tickets to sports fans from across town and around the world, with more than half the tickets costing under $50, and an average ticket price of $71.

The Games would bring a direct total of $5.36 billion in cash to the Chicago area economy, including $1.8 billion from local sponsors, $1.03 billion for construction of the Olympic Village, $876 million in ticket sales, $675 million from IOC, $355 million from international sponsors, $246 million from donations, $226 million in bus and train fares, and $152 million in sales of Olympic merchandise. For the construction industry, in addition to the $1.03 billion Olympic Village project, on land already owned by the City of Chicago, construction of new Olympic venues would bring another $162.2 million.

One in four odds on getting over five billion dollars seven years from now sounds pretty good to me!

Tuesday, September 1, 2009

Unemployment Benefit Cash Unclaimed By 23 States

Despite the determination of Congress and the Obama administration to quickly pump billions into America's moribund economy, including extended assistance for the millions who have been rendered jobless by the recession, local politics has once again stifled the flow of federal cash into the economies of 23 states where governors and legislatures are refusing to change their unemployment compensation systems so that they qualify to receive the federal cash. A total of $3.1 billion sits in the Treasury vaults in Washington, D.C., when it should be going out to 350,000 needy jobless families who could be using the money to buy food, clothing and back to school purchases for children deprived by parental layoffs.

Dissatisfied that the benefit extension cash is not an unconditional gift to their states, Republicans in 11 states refuse to consider making the legal changes required to qualify for the federal handout. Twelve other states have partially complied with the Congressional requirements, but object to other changes needed to get the cash flowing in their direction. The problem is worst of all in Alabama, Florida, Indiana and Texas, where business taxes will automatically increase when state unemployment benefit funds run out, and local politicians refuse to do what is required to get their share of the Congressional unemployment extension appropriation.

The objections of the states - nearly half of the country - refusing the federal assistance, center around requirements to provide benefits for dependents of the unemployed, benefits for those whose work hours were cut but who were not entirely laid off, benefits for workers in job training programs, or benefits for people who quit work to care for a sick family member or because they fear domestic violence.

The negative results of this local political intransigence is not only denial of extended benefits to people out of work through no fault of their own, but also slowing down economic recovery to the tune of $3.1 billion which would be going directly for consumer purchases rather than into savings accounts, where the people still employed are squirreling away a larger portion of the tax cuts and other stimulus benefits they are receiving as a result of the American Recovery and Reinvestment Act. Seems spending nearly a trillion dollars in a hurry is a much more difficult task than Congress and the Obama administration thought it would be.