Liars, Thieves, and shovel-ready Jobs

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    PolitiFact ARTICLE, 9-27-11

    The Truth-O-Meter says:

    On Thursday, August 25th, 2011, in a television interview ... on the morning show "Fox & Friends, Gov. John Kasich ... mentioned the referendum battle over Senate Bill 5, the law passed earlier this year that restricts the collective bargaining power of Ohio's public unions.

    (If Issue 2 passes on the November ballot, the law takes effect. If voters reject the issue, SB 5 is repealed.)

    "We have asked public employees to pay 10 percent of the costs of their guaranteed pension and 15 percent of the cost of their health care," Kasich said. ... "The leadership of those public employees unions don't want to pay anything."

    PolitiFact Ohio knew that SB 5, among its many provisions, requires public employees to pay at least 15 percent of their health-insurance premiums, and that it prohibits local governments from picking up any portion of an employee's share of his pension contributions.

    But we thought it'd be good to check into the governor's assertion that "the leadership of those public employees unions don't want to pay anything" toward health care or pensions. Not any? Not anything?

    We called Kasich's office for explanation. Spokesman Rob Nichols quickly provided background on the state's collective bargaining agreements ...

    First, some background. Many public workers contribute 10 percent of their salary toward their pension while the employer contributes 14 percent. Some unions, however, have negotiated deals where the employer pays a portion of the employee contribution, a practice known as a "pension pickup."

    If an employer agreed to pay 2 percent of the worker share, for example, it would pay 16 percent of the worker's salary and the worker would pay 8 percent. That practice is prohibited by SB 5 ...

    For workers for Franklin County, of which Columbus is the county seat. Almost 90 percent of Franklin County workers pay their own entire pension share, the Dispatch found. Columbus schools pick up the superintendent's pension contribution, but not those of teachers and staff members.

    According to figures from the Ohio Legislative Service Commission, about 2,500 local government employers -- less than half of the roughly 5,600 units of government -- pay part or all of their employees' contributions into the retirement system, and organized workers are covered by 3,290 collective bargaining contracts ...

    State government pays only what is required and does not provide pension pickup ...

    One of PolitiFact Ohio's basic tenets is that words matter. If Kasich had qualified his statement, he would have been on firmer ground. It is true that some public workers in Ohio receive a full or partial pension pickup ...

    But saying that "the leadership of those public employees unions don't want to pay anything," ... creates the impression that that union leaders dealing with nearly 3,300 collective bargaining contracts have broadly rejected the idea of paying anything toward the employee's pension contribution.

    Because the governor's statement does contain some element of truth, but ignores critical facts that would give a different impression, we rate it Mostly False.

    Top -- Home

    PolitiFact ARTICLE, 8-2-11

    The Truth-O-Meter Says:

    Dennis Kucinich on Friday, July 15th, 2011 in a speech in the House of Representatives ... says Social Security didn't cause the debt crisis ...

    Kucinich said on the House floor July 15, 2011, that Social Security was being falsely thrown into the debate, and that reducing benefits or raising the retirement age would only "give government more money for tax cuts, spending or repaying the debt."

    "Social Security didn't cause the debt crisis. Social Security had nothing to do with the debt crisis," he said.

    PolitiFact Ohio asked Kucinich's office how he backed up his statement.

    They referred us to "Social Security: The Trust Fund," a recent report from the nonpartisan Congressional Research Service ...

    Let's take deep breath and walk through it.

    Social Security is a government program funded primarily by dedicated payroll taxes. It's called a pay-as-you-go system because current revenues are used to pay current costs.

    For most of the past 30 years, because of reforms designed by the Greenspan Commission in 1982 to protect Social Security's solvency, collected revenues have exceeded benefit payments to retirees, survivors and the disabled.

    Those surplus funds were credited to the Social Security trust fund. By the end of 2010, the trust fund totaled $2.6 trillion.

    Last year, Social Security began to run a cash flow deficit. Costs exceeded tax revenues, for reasons that included the recession and its high unemployment. Social Security dipped into the trust fund to make up the difference.

    Social Security's trustees projected that the fund would fully cover benefits through 2035, the Congressional Research Service notes, and that it would cover about 77 percent of benefits after that until 2085. Taking action like increasing the payroll tax or lifting the level of income subject to the tax above its current limit of $106,800 would keep the fund fully solvent for the entire 75 years ...

    Social Security is required by law to put its entire surplus into interest-bearing government bonds -- Treasury securities backed by the U.S. government.

    They are IOUs -- assets to Social Security but liabilities to the rest of government. They're one part of government promising to pay back another.

    Once invested, the trust fund money is mingled with money from other sources of revenue in the U.S. Treasury general fund, and it is used for other government purposes that include spending, repaying debts or cutting taxes. For years, the infusion of Social Security's surplus revenue held down the federal deficit -- and, some say, encouraged spending.

    When Social Security operates with a negative cash flow -- that is, when benefits exceed revenues -- it draws on interest from the trust fund securities.

    To pay that interest and honor its IOUs to the trust fund, when the rest of the federal budget is operating at a deficit, the government has to borrow money.

    That contributes to the deficit -- even though Social Security is legally drawing on the surplus that was collected from its dedicated tax ...

    Kucinich was accurate in saying that Social Security didn't cause the debt crisis. If anything, Social Security delayed it by subsidizing other spending and reducing the need to borrow money elsewhere. On the books, the Social Security trust fund has credits approaching $2.6 trillion.

    Social Security's negative cash flow has begun to contribute a relatively small amount to the federal deficit, however, because Treasury has to borrow to cover the trust fund money that has been spent elsewhere. That is a recent development, and that information provides clarification.

    On the Truth-O-Meter, we rate Kucinich's claim Mostly True.


    Commentator 1 wrote:

    The liars and thieves are having a field day with Social Security. First they steal the Social Security savings of millions of Americans to give the Bush tax breaks to millionaires and billionaires, fight wars in Iraq and Afghanistan, and bail out banks and crooked financial organizations. Then they lie by saying that Social Security is not paying its own way.

    The fact is that Social Security has been fully paid up by American workers to meet its obligations through 2035. Of course, the thieves now have to find the money to redeem the treasury notes that were issued to Social Security when the contributions of the workers were taken. The thieves and liars shout that this contributes to the annual federal budget deficit. They should not have ripped off the money in the first place.

    Should Social Security benefits be cut because the thieves do not want to pay back what they took? Apparently, Archie Bunker voted for the thieves in 2010 because he hates Obama. As has been noted by others, the bigger the lie, the more it succeeds.


    Commentator 2 wrote on 12-31-08:

    In an effort to paralyze the U. S. federal government, just three presidents, Reagan and the Bushes, have incurred most of our current [2008] $11 trillion national debt -- this was not accident or stupidity; it was deliberate policy.

    Paying interest on this debt as it continues to grow should be repugnant to all of us -- what a waste of our tax dollars. So, here is a proposal in the tradition of President Abraham Lincoln:

    Immediately pay off the entire U. S. debt with electronic (and printed when necessary) U. S. Treasury bills, "electronic greenbacks." These treasury notes will pay no interest; and will be "stored" in the U. S. Treasury until the debt-holders give the U. S. Treasury their account numbers for "electronic greenback" direct deposit. All interest payments on notes issued by the Federal Reserve will be banned by law and immediately cease.

    The new greenbacks will be legal tender in the U. S. and must be accepted abroad by U. S. agencies, contractors, and banks chartered in the U. S. no matter where they are operating.


    [The stakes for the kleptocracy are higher than ever -- the Kazakh oil of central Asia, and the chance to make Afghanistan another Congo. For more on the U. S. invasion of Afghanistan and the Unocal pipeline, see]

    A revealing commentary on the current "Banana Wars' (Oil Wars) was written by U.S. Marine Corps Major General Smedley Butler, who saw action in Honduras in 1903, served in Nicaragua enforcing American policy from 1909 to 1912, was awarded the Medal of Honor for his role in Veracruz in 1914, and a second Medal of Honor for bravery while "crush(ing) the Caco resistance" in Haiti in 1915. In 1935, Butler wrote in his famous book "War Is a Racket":

    "I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism.

    I helped make Mexico and especially Tampico safe for American oil interests in 1914.

    I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in.

    I helped in the raping of half a dozen Central American republics for the benefit of Wall Street.

    I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912.

    I brought light to the Dominican Republic for the American sugar interests in 1916.

    I helped make Honduras right for the American fruit companies in 1903.

    In China in 1927 I helped see to it that Standard Oil went on its way unmolested.

    Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents."


    LETTER to The Sun-Sentinel, 3-10-11:

    ``During last fall's frenzied election process, American citizens were exposed to the cries of Tea Party members who wanted their country back from big government.

    I too want my country back ... from the Supreme Court of the United States ...

    The conservative majority, under the leadership of Chief Justice John Roberts, in the Citizens United case, ruled to allow corporations ... to [secretly] donate unlimited amounts ...

    The big spenders did not wish to be identified. Republicans in the Senate successfully filibustered the Disclose Act which would have required lavish contributors to [publicly] identify themselves.

    Common Cause has alerted us ... Justice Clarence Thomas, although required, failed to reveal his wife's income of over $680,000 from the Heritage Foundation ...

    Has the integrity of the Court been challenged when the billionaire Koch brothers, Tea Party supporters, issue invitations to Justices Scalia and Thomas to attend their confidential meetings?

    May I have my country back?''

    Celine E. Riedel, Avon Lake


    LETTER to The Sun-Sentinel, 4-11-11:

    Kasich takes from middle class to help out Ohio's wealthy

    William Shakespeare, in 'As You Like It,' compared the world to a stage where all the men and women are merely players.

    One of the prominent players is our very own governor, John Kasich, who has set his stage in Ohio. He struts the boards posing as Robin Hood, while reversing Robin Hood's role: stealing from the middle class and giving to the wealthy. He zealously promotes his budget proposals aimed at privatization wherever possible and the elimination of unions' right to collectively bargain.

    Kasich facilitated his union-busting career while working as managing director of the Columbus banking division of Lehman Brothers. When Lehman Brothers collapsed in September 2008, thanks to the manipulations of Kasich, the state pension fund lost an investment of $480 million.

    It is possible that Kasich's next appearance on stage may be as a presidential candidate in the 2012 election. He can count on the billionaire Koch Brothers to have his back financially.

    If Kasich succeeds in becoming the chosen Republican candidate in the election, Americans will have to decide if they wish to appear on the world's stage as a democracy or a corporation.

    Celine E. Riedel, Avon Lake

    ------------------- LETTER to The Plain Dealer, 3-8-11:

    Kasich's and Lehman Brothers' hard sell of bad securities worsened Ohio pension funds' woes

    It's bad enough that our governor would try to balance the state budget by taking collective bargaining rights from public unions (Senate Bill 5) or via the newly proposed curtailing of overtime compensation for private workers (House Bill 61), but consider that the former Lehman Brothers executive helped to cause this same budget shortfall through the public pension's loss of $457 million.

    A recent public records request shows that Gov. John Kasich was pivotal in pitching toxic assets to OPERS, STRS and the OP&F pension funds, and made direct contact with the state pension fund managers, despite statements made to the contrary.

    The documents indicate that not only was Kasich pitching to the state funds, but that his colleagues at Lehman Brothers, whom Kasich had introduced to OPERS, STRS and OP&F, were trying to sell the pension funds these worthless securities as late as Aug. 25, 2008 -- only 21 days before the collapse of Lehman.

    The governor clearly has some explaining to do ...

    It's clear now that the public workers and all of the middle class were the mark in an elaborate con that ... strains the finances of our state.

    Miles R. Heilman Lorain


    LETTER to The Sun-Sentinel, 4-2-11:

    Under Governor Kasich's reign, corporations winning, middle class losing

    After three short months of Gov. Kasich's reign, a clear picture emerges. It is not a pretty picture. It is a picture of winners and losers.

    The big winners are Kasich's billionaire friends and multi-national corporations. He privatized jobs creation and formed JobsOhio. He plans on selling or leasing the lottery, prisons and the turnpike. Corporations will be getting our tax money instead of Ohioans.

    Kasich would rather send our taxes to out-of-state corporations than help keep Ohioans employed in good-paying jobs. He is helping corporations feed at the state trough of money. He does not seem to care that this money will be going out of Ohio.

    The big losers are the middle class, the poor and handicapped. He is cutting help for the mentally handicapped. He is trying to dismantle the Office of Consumer Counsel, which helps consumers with problems concerning big business. He is trying to ram through Senate Bill 5 [SB5], which would hurt many Ohio workers.

    He derailed the 3C Corridor project, which would have given us a choice for travel, with looming high gas prices. Leasing or selling state entities would subject employees to job loss or substantial pay and benefit cuts. He is denying federal funds for transit projects, which are 'pass-thru' funds. He is cutting aid to cities and schools, pushing them to the brink. Cities and schools will have to seek local tax increases ...

    In Kasich's perfect Ohio, we will be a minimum-wage, right-to-work state where corporations can pillage and plunder the state at will. This is not the Ohio we the people want, nor need!

    Geza John Vamos, Cleveland


    NEWS ARTICLE from The Associated Press, 8-21-11, By The Associated Press

    [So called "tax-cutter" Republicans want to raise taxes on workers]

    WASHINGTON -- News flash: Congressional Republicans want to raise your taxes.

    Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, [2012] right?

    Apparently not.

    Many of the same Republicans who fought hammer-and-tongs to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned.

    By their own definition, that amounts to a tax increase.

    The tax break extension they oppose is sought by President Barack Obama ... This policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a social security tax on practically every dime they earn ...

    At issue is a tax that the vast majority of workers pay, ... Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

    As part of a bipartisan spending deal last December [2010], Congress approved Obama's request to reduce the workers' share to 4.2 percent for one year; employers' rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1 [2012].

    [Is it possible that, since 2010, Republican political strategy has been centered on minimizing Democrat election money and maximizing Republican election money? Republican governors in Wisconsin and Ohio are attacking unions to prevent them from donating to Democrats. On the national level, Republicans are protecting their own billionaire donors.]

    Top -- Home

    GUEST COLUMN from the Plain Dealer, 10-1-11,

    By Richard A. DeColibus

    [Repeal Senate Bill 5 by voting NO on Issue 2]

    Camelot, in this case, is not the singing, cheerful Broadway play about handsome knights and beautiful ladies living in a mostly imaginary England around 1100 A.D.

    Real life, back then, was not so swell, especially if you were a peasant or serf. You belonged to the lord (you were his personal property) and lived on his manor, working to produce food and such other goods and services as the lord required.

    It was called feudalism. Not a bad life if you were the lord; not so much fun if you were the serf. Since the lord did all your thinking for you, your only terms and conditions of employment were to obey the lord at all times.

    We have, in Senate Bill 5, an attempt to return to those thrilling days of yesteryear. Personally, I never thought feudalism was a particularly attractive lifestyle, but the Republicans who run Ohio seem to have found a new source of entertainment: reducing public employees to serfdom.

    SB 5 ... [is] mostly just arrogant and bad. To wit:

    * Public employers (aka "lords") have no obligation whatsoever to talk to public-employee unions (or their members) about their wages, hours, terms and conditions of employment, or sick leave (or any other kind of leave).

    The lords just decide how things will be, and that's that. How that, in any way, is different from feudalism escapes me. Teachers, firefighters, police officers, serfs; they're all the same.

    * As a former teachers-union president, one of the best things we had in the contract was language limiting class size. Not that you couldn't have oversized classes, but the board had to pay the teacher a penalty if the class got beyond a certain level.

    Our thinking was they'd do everything possible to avoid giving teachers an extra buck, and we were right. Classes were nicely balanced most of the time. The idea that the teacher-serfs should have any say in class size is now forbidden by SB 5. Good for lords, but not so good for kids.

    * SB 5 mandates "performance-based evaluations." Great, except who defines performance? SB 5 also mandates part of the evaluation must be based on student performance. And, as we all know, all students in Ohio come from identical families, with identical parents, have equal talents and abilities, and live in equally safe and attractive neighborhoods. So this is completely fair and unbiased.

    * The law eliminates step raises, which is fine by me since, I guess, it means first-year teachers will shoot to the top of the salary schedule because they can't get there by steps. Actually, I don't think that was the lords' thinking at all, but I have no clue what murky logic lurks behind this apparently random event. Whatever it is, I suspect it's not good for the serfs.

    * Eliminating pay scales is another pearl of wisdom emanating out of SB 5. In the olden days, high-school teachers got paid more than elementary teachers (high-school teaching was a more important job!), and men teachers were paid more than women teachers (men had families to support!).

    We in the union movement were rather proud we eliminated that thinking and, we thought, made it fair and equal for everyone with pay scales that treated everyone equally ... Shame on us for such muddled thinking that everyone should be treated the same.

    * The crown level of SB 5, however, is the elimination of seniority rights when layoffs must happen. The second-year gym teacher who happens to be a nephew of the principal stays, the 25-year veteran math teacher with a wife, three kids and a problematic mortgage goes. Now, I ask you: What could be fairer and better for education than that?

    The real motive behind SB 5, as I see it, had nothing whatsoever to do with fiscal integrity or intelligent public policy. The impelling goal of SB 5 is the destruction of public-sector unions that seldom endorse Republicans, since most Republicans never met a management right they didn't like.

    In simple terms, it's a law meant to facilitate the re-election of Republicans in the state of Ohio.

    Should SB 5 remain in effect, the law of unintended consequences will inevitably kick in, and our best, most intelligent and most competent firefighters, teachers, police officers and other public-sector workers will abandon public service in this state. This is 2011 A.D.; people don't do serf anymore.

    Richard A. DeColibus is a former president of the Cleveland Teachers Union.


    NEWS ARTICLE from The Plain Dealer, 10-11-11, By Henry J. Gomez, The Plain Dealer

    SB 5 ad war heats up as grandmother complains about her inclusion in supporters' commercial

    We Are Ohio, the union-backed group campaigning against Issue 2, took aim Tuesday [10-11-11] at [Issue 2] supporters for airing ... [an "expropriated"] commercial ...

    Opponents of Senate Bill 5 said Monday that several television stations have pulled a [Building A Better Ohio] ... campaigns spot after a Cincinnati-area great-grandmother featured in the ad said she never agreed to be in ... [the Building A Better Ohio ad]

    Marlene Quinn originally appeared in a 30-second commercial from We Are Ohio, the labor-backed group against changes to Ohio's collective-barganing law for public unions.

    In the spot, Quinn credits firefighters for saving the life of her great-granddaughter and urges a vote against Issue 2, the November ballot [11-8-11] referendum on SB 5.

    The measure, Quinn says, "makes it illegal to negotiate for enough firefighters to do their job. ... I don't want the politicians in Columbus making decisions for the firefighters, the police, teachers, nurses or any organization that's helping people."

    This week, Quinn also appeared in an ad placed by Building A Better Ohio, which is campaigning to keep the law. That spot includes footage from the We Are Ohio spot in which Quinn says "If not for the firefighters, we wouldn't have our Zoey today." ...

    If you hadn't seen We Are Ohio's original spot, you might think Quinn was in favor of upholding SB 5. An attorney for the campaign sent cease-and-desist letters Tuesday [10-11-11] to television stations that serve Ohio markets, calling the Building A Better Ohio ad "false, misleading and deceptive."

    The lawyer, Donald McTigue of Columbus, included a letter from Quinn, who said the pro-SB 5 campaign had no permission to use her likeness.

    "I demand that all television stations or other forms of media immediately stop airing this misleading advertisement by Building A Better Ohio," Quinn wrote. "I also request that Ohio media outlets refrain from accepting any future advertisements in which my likeness is used to advocate [or] support ... Issue 2 or Senate Bill 5."

    In a statement late Monday, We Are Ohio said at least eight stations had agreed to pull the ad -- three in Columbus and others from West Virginia that reach Ohio viewers ...

    Top -- Home

    NEWS SRTICLE from the Associated Press, 10-6-11,

    By the Associated Press business staff

    A job is becoming a dim memory for many unemployed

    WASHINGTON -- For more Americans, being out of work has become a semi-permanent condition.

    Nearly one-third of the unemployed -- nearly 4.5 million people -- have had no job for a year or more. That's a record high. Many are older workers who have found it especially hard to find jobs.

    And economists say their prospects won't brighten much even after the economy starts to improve and hiring picks up. Even if they can find a job, it will likely pay far less than their old ones did ...

    Federal Reserve Chairman Ben Bernanke last week called long-term unemployment a "national crisis" and said it should be one of Congress' top priorities.

    When people are out of work for a year or more, their skills often decline. Their professional networks shrink. Companies hesitate to hire them. The problem feeds on itself.

    "It's a serious threat," said Mark Zandi, chief economist at Moody's Analytics. "A growing proportion of the labor force is becoming disenfranchised."

    Long-term unemployment sets this recession and weak recovery apart from any other period since the Great Depression. Though the economy has endured "jobless recoveries" before, in no previous recovery has such a high proportion of the unemployed been out of work this long.

    Labor Department figures show that for roughly the past year and a half, one in three of the unemployed have been without a job for at least a year. That's more than double the previous peak after the 1981-82 recession ...

    Long-term unemployment threatens the economy in key ways:

    -- It lowers skill levels, making it harder to match the unemployed with available jobs. Harry Holzer, a Georgetown University economist, said that once hiring picks up, employers will likely complain that they can't find people with the skills they need. Companies are already having trouble filling advanced manufacturing jobs, Holzer said, because many laid-off factory workers lack up-to-date skills.

    -- More people rely on government benefits. Unemployment benefits were extended during the recession to a record 99 weeks in states with the highest unemployment rates. The number of people receiving food stamps topped 45 million in May. That's another record high. Older workers unable to find jobs may draw their Social Security benefits earlier. Many also have health problems and end up on government disability programs.

    -- The long-term unemployed who do find jobs again will likely do so at lower pay. Studies have found that the long-term unemployed earn on average 20 percent less when they finally find work. And the earnings gap can persist for as long as 15 or 20 years.

    During the recession, the proportion of unemployed out of work for more than a year rose, as it typically does during a downturn. Yet even as the economy has modestly recovered, the figure has worsened.

    Several factors help explain why. With the economy still struggling just to grow, unemployment has stayed chronically high. The rate has been 9 percent or higher in every month but two since the recession ended in June 2009. That's the longest such stretch since World War II.

    Another factor is the aging of the work force. The huge generation of 78 million baby boomers is nearing retirement. Though older workers are less likely to lose their jobs, when they do, they typically struggle more to find work again.

    "People in their 50s and older who get laid off have a much harder time finding a job than someone in their 20s," said David Wyss, former chief economist at Standard & Poor's and a visiting fellow at Brown University ...

    President Barack Obama last month proposed steps to try to aid the long-term unemployed. His proposals include a tax break for companies that hire them and a ban on discriminating against them in hiring. But some economists think more drastic action is needed.

    Brian Bethune, an economist at Amherst College, favors permanently reducing the Social Security tax, a portion of which employers must pay for each of their workers. The tax can make hiring expensive. Bethune would replace it with a sales tax ...

    [Since deregulation and "trickle down" don't work, it's time to try something else.]


    And here is how some "comedians" view the unemployment problem:

    [TRANSCRIPT of a Republican presidential debate, 9-23-11]

    BRET BAIER, ANCHOR: Welcome to the Orange County Convention Center in Orlando, Florida, the site of our Republican presidential debate. It is being sponsored by Fox News and Google in conjunction with the Florida Republican Party ...

    Now let's meet the candidates.

    Texas Governor Rick Perry.

    BAIER: Former Massachusetts Governor Mitt Romney.

    BAIER: Congressman Ron Paul.

    BAIER: Congresswoman Michele Bachmann.

    BAIER: Former Speaker of the House Newt Gingrich.

    BAIER: Businessman Herman Cain.

    BAIER: Former Senator Rick Santorum.

    BAIER: Former Utah Governor Jon Huntsman.

    BAIER: And former New Mexico Governor Gary Johnson.


    BAIER: Governor Johnson:

    JOHNSON: My next-door neighbor's two dogs have created more shovel-ready jobs than this current administration.


    (APPLAUSE) ...


    Commentator 3 wrote:

    Robots will never earn any income. They are slaves. You can't tax income from slaves that never earn income.

    It will have to be the corporations ... that will have to be taxed with an "employment tax". Unfortunately, and particularly within the United States, you can be sure American corporations will resist paying "employment taxes". Super conservative political organizations like the Tea Party organization will have nothing to do with it.

    Nevertheless, governments will have to go after corporations that have systematically thrown out employees in favor of "employing" robots that don't need to be paid and don't need expensive health insurance. Governments will need to institute some kind of a reasonably fair "employment tax" system that these corporations must pay ...

    By not paying any kind of "employment taxes" these corporations will essentially sign our country's economic death warrant. They will end up eating their own young and all of us along with them. Too many unemployed will continue to remain unemployed, unable buy any of the very products and services that these corporations now produce through robotics and artificial intelligence. They will end up signing their own corporate death sentences.

    Hopefully, smarter heads than those running conservative organizations like the Tea Party movement will eventually prevail. Hopefully enough will see the light at the end of the tunnel. So far, however, nobody seems to be willing to look at these issues ...

    This employment/taxation issue is discussed in the book by Martin Ford, "Lights in the Tunnel"


    Commentator 4 wrote:

    Commentator 3 says "Robots will never earn any income."

    Are you sure a robot could never be designed and programmed to earn an income?

    In addition to rights and contract law, the capacity to earn an income in a free market economy is supposedly what ensures consumers get what they want ...

    [After all, aren't corporations people?]

    I see no reason why in principle the process of innovation and free enterprise might not someday be accomplished by swarms of competing/cooperating robot entrepeneurs ...


    Commentator 5 wrote:

    I do feel compelled to briefly discuss the "political" mater ... because I'm an American, and I'm deeply concerned about the direction my country has been headed lately. It's not pretty.

    IMO, it is appalling how many Republican candidates vying for the President of the United States in 2012 have either dismissed or completely condemned these grass-roots demonstrations ["Occupy Wall Street", etc].

    They have side-stepped the fact that the formation of the movement is pretty much how their own super-conservative Tea Party movement began from individuals unhappy about the way things have been handled ...

    This movement, of course, reminds me of my own participation in the Wisconsin demonstrations last winter against super conservative Governor Walker ... Walker is now facing the possibility of being recalled. Petitions to have him recalled will begin in earnest in November [2011]. Possible re-elections may proceed around April and May of next year ...

    Meanwhile, in regards to the 99% movement, I heard Republican candidate, Herman Cain, describe the movement as comprised of a bunch of disgruntled people blaming rich people for having jobs (and wealth) while they themselves don't. Herman's solution? ... Go out and work for the wealth you covet from the rich.

    I guess from Herman's POV many of the 9% who are currently unemployed must be lazy, or something stupid like that. He's clueless, and yet there are enough people in this country who apparently buy into his profound ignorance of the situation.

    Meanwhile, Michele Bachmann stated that she thought she saw a lot of union organizers in the midst of 99% crowds. Therefore, I guess that from her POV it makes the crowds nothing more than puppets doing the bidding of these nasty Union organizers. And, here too, there are enough people in this country who apparently buy into her POV as well.

    I am concerned about what will happen in 2012. I hope for the best, but to be honest I currently feel pessimistic ...

    Commentator 6 wrote:

    Even sadder for Greece - their nickel deposits could cure their bankrupt economy (See

    Commentator 7 wrote:

    The Greek economy would not be cured, because mining is a capital intensive production and thus it does not much help the sick market economy of Greece. There should be some better means to deposit the wealth produced by nickel mining into pockets of Greek consumers. But usually people are violently opposed to a drastic means such as basic income.

    In Alaska they are paying the wealth produced by oil as a basic income for each citizen.

    This method should be utilised also in all other economic sectors because less and less wealth is returned to consumers via incomes of workers, because work is done by robots and Chinese low paid labour force (I.e. part time slaves). This is problematic for market economy, because it means that consumers have less purchasing power to direct production to satisfy demand. Therefore less iPads are produced.

    Ps. I read last week Martin Ford's book "The Lights in the Tunnel" with my brand new iPad2. I will recommend the book (just $7 in Kindle Store) and also tablet computers are nice.

    Commentator 8 wrote:

    Yes. Mineral wealth is a curse. Places like Saudi Arabia and Texas end up with dysfunctional economies because of it.

    When you talk about iPads, the people assembling them are more like full-time slaves, Or what we used to call wage-slaves. See:

    Someone named Daisey visited the manufacturing plant, Foxconn Inc.

    Despite dire risk (an AP photographer caught taking pictures outside Foxconn had recently been detained and beaten for two days before being released to his embassy), Daisey managed to interview dozens of these workers.

    He interviewed girls as young as 12 who worked crushing hours; he interviewed a man whose hand had been twisted into a claw from overuse; he interviewed a woman who had been blacklisted merely for requesting overtime pay."

    Commentator 9 wrote:

    Understanding the underlying economics of how many consumer products (like the iPad) are manufactured is going to be a difficult and soul-searching process for most Americans. This probably goes for the entire developed world as well.

    As is becoming obvious to most of us that care to dig a little into the matter, the dirty little secret behind why many consumer products are "cheap" is because they were assembled by hoards individuals who are being paid wages that are a fraction of what it would cost to assemble if they were assembled within our own affluent borders.

    For a very long time economists and policy makers have felt obligated to grapple with the following conundrum:

    ONE: Should developed countries continue to assemble consumer products outside of their borders in less developed economies, in places where labor is a fraction of what it would cost if assembled domestically in order to make the products cheaper, so that in theory more of "us" in the developed world can afford to buy them? Or

    TWO: do the developed countries endeavor to rehire assembly workers within their own borders at significantly higher wagers, which in turn boosts the price of the product, which in theory means less of "us" in the developed countries can afford to buy them?

    It always seemed to be a trade off.

    But then, as books like "Lights in The Tunnel" by Martin Ford are making clear, the above age-old conundrum may soon no longer apply anymore. Advances in automation, robotics, and Artificial Intelligence (AI) may sooner than we realize render it uneconomical to hire workers in even the cheapest underdeveloped countries - because it's cheaper to "hire" a robot to do it.

    How each country's currency will continue to get evenly and fairly distributed throughout their borders (in order to keep consumer-based economies running), where more and more jobs are slowing being taken over by robots and AI systems, is going to be a major task future governments are going to have to confront head on. Refusing to grapple with it will do us all in.

    Note: I just read Martin Ford's book "Lights in the Tunnel" on my brand new iPAD2.


    Commentator 10 wrote:

    The late Louis Kelso recognized this problem many years ago. In addition to his widely known Employee Stock Ownerhship Plan, utilized by about 11,000 companies, he advocated a Second Income Plan.

    The latest incarnation is a Capital Homestead Act. See SECOND INCOMES FOR ALL, at

    The book "Binary Economics" provides a comprehensive analysis for anyone interested.


    Commentator 11 wrote:

    Nice new videos about how advanced automation is already here.

    Google's car is trying avoid pedestrians and deer in the streets of California and elsewhere. There are lots of new material and details how these automated miracles are doing just fine without human intervention.

    The Evolution of Self-Driving Vehicles

    How Google's Self-Driving Car Works

    Google's Self-Driving Golf Carts

    More on How Google's Self-Driving Car Works


    PBS DEBATE Transcript, 10-11-11


    Senate Republicans moved Tuesday to block President Obama's $447 billion jobs bill. Judy Woodruff leads a debate over the proposal, which includes a combination of tax cuts and infrastructure spending, with Sen. Carl Levin, D-Mich., and Sen. Johnny Isakson, R-Ga.

    JEFFREY BROWN: President Obama's $447 billion jobs bill faced a key test vote in the U.S. Senate this evening. Republicans moved to block the proposal, which includes a combination of tax cuts and infrastructure spending.

    In Pittsburgh today [10-11-11], the President urged lawmakers to pass the bill, while in Washington, Senate Republican leader Mitch McConnell said the plan was just more failed stimulus.

    PRESIDENT BARACK OBAMA: This is a moment of truth for the U.S. Senate. In front of them is a bill, a jobs bill, that independent economists have said would grow this economy and put people back to work ...

    [These are] people whose job it is ... to analyze and evaluate what kind of impact certain policies would have. They have said this could grow the economy significantly and put significant numbers of Americans back to work ...

    JEFFREY BROWN: For more on the President's jobs plan in Congress, Judy Woodruff talked to two senators a short time ago.

    JUDY WOODRUFF: Joining me are Democratic Sen. Carl Levin of Michigan and Republican Sen. Johnny Isakson of Georgia.

    Senators, it's good to have you with us. Thank you.

    SEN. CARL LEVIN, D-Mich., Armed Services Committee chairman: Thank you.

    SEN. JOHNNY ISAKSON, R-Ga.: Good to be with you, Judy.

    JUDY WOODRUFF: Let me just try to break this up into a few questions hopefully to get to the heart of this ...

    JUDY WOODRUFF: And what do you think should be done in the short term that's different from what the president suggests?

    SEN. JOHNNY ISAKSON: ... The first thing I would do is have a time-out on regulation ...

    JUDY WOODRUFF: And, Sen. Levin, are these things that could work?

    SEN. CARL LEVIN: Well, when you talk to the small business people, and according to the National Federation of Independent Business, who have taken a poll of small business people, the problem isn't regulation. The problem isn't taxes.

    The problem is a lack of customers ...

    And you need to have a stimulus. I think the last stimulus package obviously didn't do what we wanted it to do, but without that stimulus package, according to most economists, you would have had a depression, instead of a recession. And I think most economists who have been surveyed by Bloomberg this time say the president's packaget ... will do some good.

    And according to the Moody's economist Mark Zandi, there will be a 2 percent increase in gross domestic product with the President's package and about 1.9 million additional jobs.

    So it's not regulation, it's not going after EPA ... It's getting people working again.

    And that requires a couple things: support for small business and again to do some direct infrastructure work ...

    JUDY WOODRUFF: And, Sen. Isakson, why is that formula wrong?

    SEN. JOHNNY ISAKSON: Well, I appreciate Carl talking about small business ... That surtax is going to raise the taxes on ... small businesses in the United States of America, which will be a retardant to jobs coming back, not a help ...

    SEN. CARL LEVIN: As a matter of fact, one-third of 1 percent of small businesses make a million dollars a year. That's not the issue here ...

    Millionaires ... have done incredibly well. The only group that has done well in terms of income in the last ... decade or so, is the upper 1 percent.

    Their share of the income has gone up from 10 percent of our national income to almost 25 percent of our national income. [Only] the wealthiest 1 percent have done so well.

    The middle class have done very, very poorly. They have taken a hit. So there's no point in protecting millionaires by claiming that these are small business people. A tiny percentage of small business people are millionaires, [who] make a million dollars a year.

    It's the folks that have done so well making millions that are not small businesses -- executives whose pay has skyrocketed, there needs to be ... some tax fairness applied ...

    JUDY WOODRUFF: Sen. Isakson, what about this other argument one hears from economists across the spectrum that ... this is the exact time when the government doesn't need to be cutting spending and contracting, that, if nothing else, what the country needs is government to spend some more to get more money in circulation?

    SEN. JOHNNY ISAKSON: ... What we need to do is empower small business and empower capital investment in this country and return confidence to the consumers of America.

    JUDY WOODRUFF: So, you just don't buy the argument that [stimulus] is the ... thing to do when the country's economy is scooting along the bottom?

    SEN. JOHNNY ISAKSON: ... We're at the breaking point of too much leverage as a country. I don't want to bankrupt our country because we borrowed too much money and weren't accountable. I want to try and inspire the private sector to reinvest in our country and reinvest in their businesses.

    JUDY WOODRUFF: Sen. Levin, if the President's job bill doesn't pass in its entirety, ... are there pieces that at this point you think Republicans and Democrats could agree on?

    SEN. CARL LEVIN: Well, I think Republicans and Democrats over the past few years have voted for this bill in various -- various pieces of this bill already. And that's why some Republicans really ought to vote for this bill, because there's so much in this that many Republicans have previously supported.

    There's a lot of capital that's sitting on the sidelines. We don't need more tax cuts to continue to go to upper-income people. We shouldn't be protecting millionaires from the restoration of that 3 percent higher tax rate that they were paying prior to the Bush tax cuts.

    JUDY WOODRUFF: But is there something in here...

    SEN. CARL LEVIN: While we're cutting teachers, while we're not building the kind of roads that we have to do -- this jobs bill directly will hire back teachers and cops and firefighters. It will build roads and bridges. And that is what we need in the short term.

    JUDY WOODRUFF: And -- but let me turn to you, Sen. Isakson. Are there pieces of this legislation that you think the two sides could come together and agree on in the short term?

    SEN. JOHNNY ISAKSON: Yes, ma'am, there are. And if we get off of political messaging and get down to the work we're supposed to be doing, we could probably do that ...

    JUDY WOODRUFF: What...

    SEN. JOHNNY ISAKSON: Roads and bridges, infrastructure construction makes a difference ...

    JUDY WOODRUFF: So, just in a word, extending the payroll tax cut?

    SEN. JOHNNY ISAKSON: That's one of those things you can sit down and talk about ...

    SEN. CARL LEVIN: But what we haven't heard from Republicans is what their alternative is. All we hear is less regulation, less taxes for upper-income folks ...

    JUDY WOODRUFF: All right.

    SEN. CARL LEVIN: The problem is lack of customers. And ... the middle class needs to be supported in this country, not the wealthiest among us.

    JUDY WOODRUFF: We're going to leave it there ...

    Top -- Home

    [9 - 9 - 9, the mark of the Beast?]

    Angry Bear Blog, October 18, 2011

    by Linda Beale

    Herman Cain, funded by Koch Bros, Says "Let the Little Guys Pay Taxes" (not the super-rich)

    The New York Times' "Room for Debate" ran a 'mini-op-ed' segment on Herman Cain's 9-9-9 tax plan, called "What's So Bad About a Flat Tax?" New York Times (Oct. 14, 2011) ...

    Yours Truly was one of those invited to participate ... I wrote, in A Plan for the Uber-Rich, that "there's a lot wrong with flat taxes" (a term used to cover both the flat rate income tax and the flat-rate national sales tax ideas).

    Either type of flat tax is regressive, in that it places a high tax burden on the most vulnerable at the lower income scales, for the simple reason that most lower income people use ALL of their income to pay for food, clothing, shelter and other consumption ...

    There are additional significant flaws in those tax schemes, like unrealistic economic assumptions, difficult transition paths, rosy revenue scenarios, misleading propaganda about rates and the probability that a national sales tax that cuts deeply into lower income finances will repress consumption that fuels small businesses.

    Cain's plan is even worse, since it:

    exempts capital income from taxation

    eliminates the estate tax

    imposes a flat rate on wage income with no deductions ...

    shifts the burden from rich to poor since the rich will only pay on their compensation income and some small additional portion due to consumption taxes, while the poor will pay on all of their income and [on] all of their income again in [sales tax, including tax on food and medicine] ... [and] some type of value-added tax ...

    Added since the original positing is Dan Mitchell--conservative spokesperson for the Cato institute, who lauds the flat tax in "The Beauty of the Flat Tax" as "desirable" for its "simplicity, fairness, and transparency."

    Actually, the national sales tax version of the 'flat tax' supported by Mitchell is anything but simple ...

    In fact, most objective analyses of a national sales tax have suggested that the rate (as a tax to price ratio) would be at least 40% and possibly 50% or even higher, meaning that something purchased foa $100 sales price would have an added national sales tax (not taking into account local and state sales taxes) of betwen $40 and $50 or more ...

    The national sales tax is highly regressive, compared to our somewhat progressive system today. And with the elimination of the income tax and the estate tax, the role that the tax system plays in pushing against gross inequalities will be eliminated ...

    Mitchell praises the "repeal of most forms of double taxation" in Cain's 9-9-9 plan. What he is calling "double taxation" is the fact that people currently pay some tax (though too low) on income earned by capital as well as income earned by labor. Cain repeals all taxes on income earned by capital ...

    But the tax on capital is NOT "more than one bite of the apple" as Mitchell asserts. If you invest $20 and that $20 earns $5 in interest, then the $5 in interest is new money that should be subject to tax, just as $5 earned in payment for labor is new money.

    The idea that any tax on income from capital is a double tax is just "free market" doubletalk [otherwise called LIES] to justify the elimination of taxes on the wealthy ...

    Mitchell then asserts that getting rid of deductions and "other distortions in the tax code" will mean that "people will make decisions on the basis of good economics rather than clever tax planning."

    Wrong on two counts:

    First, most businesspeople still do not make most decisions based on tax planning. They want to make money in their business, and if a plan will make money, they will do that plan (even if it also means paying some taxes.

    Second, some deductions are merely common sense--for example, not allowing businesses a deduction for wages will encourage layoffs in favor of capital investments/ robotics [SEE ABOVE], which will accelerate job reduction in the US, NOT create jobs.

    Today's Associated Press revelations about Cain's longtime ties to controversial Koch brothers' group key to his surging presidential bid, AP (October 16, 2011) show a harmonious fit between Cain's 9-9-9 plan, Cain's various comments scorning the non rich and his links to wealthy plutocratic anti-populists like David and Charles Koch, billionaires who "bankroll right-leaning causes through their group Americans for Prosperity [AFP]."

    (The Koch-funded group would be more aptly named America Run for the Super-Rich, since it lobbies for the Right's agenda for New Deal [Social Security] elimination and targeting of earned benefits of ordinary Americans through a campaign for zero taxation on capital, deregulation, militarization, and privatization .)

    Americans for Prosperity tapped Cain as the public face of its "Prosperity Expansion Project," and he traveled the country in 2005 and 2006 speaking to activists who were starting state-based Americans for Prosperity chapters from Wisconsin to Virginia.

    Through his Americans for Prosperity work he met Mark Block, a longtime Wisconsin Republican operative hired to lead that state's Americans for Prosperity chapter in 2005.

    The article notes the many people in Cain's organization now or earlier with links to Americans for Prosperity, including Rich Lowrie, the accountant/investment manager who serves Cain as chief economic adviser.

    And the Koch brothers have a quite clear record of wanting to abolish Social Security, ... minimum wage laws, and similar programs intended to redress the economic imbalance that has grown in our economy since the advent of winner-take-all economics in the Reagan era.


    Herman Cain's Koch Connections

    By Ted Mann, The Atlantic Wire

    October 17, 2011

    The Associated Press [AP] delved into Herman Cain's history with Charles and David Koch, the billionaire brothers who for years have helped to bankroll conservative political organizations and rallies, stiffening the spine of the movement that would become the Tea Party. Turns out they go back a long way.

    Cain, who has been steadily rising in Republican primary polls, worked with Americans for Prosperity, the political committee founded by the Koch brothers to advocate lower taxes and spending cuts. Cain traveled the country as the group's chief spokesman in 2005 and 2006, the AP says, working alongside Mark Block, the Republican operative who is now Cain's campaign manager.

    And a friend from the Americans for Prosperity days, Rich Lowrie, inspired Cain's "9-9-9" plan for tax reform: a 9 percent corporate tax rate, a 9 percent national sales tax, and a 9 percent flat income tax rate.

    Cain's close ties to the Koch brothers seem unlikely to hurt him with Republican primary voters. Those voters certainly have not been eager to turn on the Kochs ...

    Should Cain make it to a general election, there is one attack about Koch connections that is surely in every opposition research dossier:

    Having friends who do business (albeit through layers in incorporation) with Iran doesn't seem like it'll play well with any section of the electorate.


    Bloomberg Markets Magazine

    By Asjylyn Loder and David Evans - Mon Oct 03, 2011

    Koch Brothers Flout Law Getting Richer With Secret Iran Sales

    The most visible part of Koch Industries is its consumer brands, including Lycra fiber and Stainmaster carpet. Georgia- Pacific LLC, which Koch owns, makes Dixie cups, Brawny paper towels and Quilted Northern bath tissue.

    Charles, 75, and David, 71, each worth about $20 billion, are prominent financial backers of groups that believe that excessive regulation is sapping the competitiveness of American business. They inherited their anti-government leanings from their father.

    Abolishing Social Security

    Fred [Koch] was an early adviser to the founder of the anti- communist John Birch Society, which fought against the civil rights movement and the United Nations. Charles and David have supported the Tea Party, a loosely organized group that aims to shrink the size of government and cut federal spending.

    These are long-standing tenets for the Kochs. In 1980, David Koch ran for vice president on the Libertarian ticket, pledging to abolish Social Security, the Federal Reserve System, welfare, minimum wage laws and federal agencies -- including the Department of Energy, the Federal Bureau of Investigation and the Central Intelligence Agency.

    What many people don't know is how the Kochs' anti- regulation political ideology has influenced the way they conduct business.

    A Bloomberg Markets investigation has found that Koch Industries -- in addition to being involved in improper payments to win business in Africa, India and the Middle East -- has sold millions of dollars of petrochemical equipment to Iran, a country the U.S. identifies as a sponsor of global terrorism.

    The 'Koch Method'

    Internal company documents show that the company made those sales through foreign subsidiaries, thwarting a U.S. trade ban.

    Koch Industries units have also rigged prices with competitors, lied to regulators and repeatedly run afoul of environmental regulations, resulting in five criminal convictions since 1999 in the U.S. and Canada.

    From 1999 through 2003, Koch Industries was assessed more than $400 million in fines, penalties and judgments [but the actual damages may hve been in the hundreds of billions]

    In December 1999, a civil jury found that Koch Industries had taken oil it didn't pay for from federal land by mismeasuring the amount of crude it was extracting. Koch paid a $25 million settlement to the U.S. [Do the thieves have any shame?]

    Phil Dubose, a Koch employee who testified against the company said he and his colleagues were shown by their managers how to steal and cheat -- using techniques they called the Koch Method.

    Refused to Falsify

    In 1999, a Texas jury imposed a $296 million verdict on a Koch pipeline unit -- the largest compensatory damages judgment in a wrongful death case against a corporation in U.S. history. The jury found that the company's negligence had led to a butane pipeline rupture that fueled an explosion that killed two teenagers.

    Former Koch employees in the U.S. and Europe have testified or told investigators that they've witnessed wrongdoing by the company or have been asked by Koch managers to take what they saw as improper actions.

    Sally Barnes-Soliz, who's now an investigator for the State Department of Labor and Industries in Washington, says that when she worked for Koch, her bosses and a company lawyer at the Koch refinery in Corpus Christi, Texas, asked her to falsify data for a report to the state on uncontrolled emissions of benzene, a known cause of cancer. Barnes-Soliz, who testified to a federal grand jury, says she refused to alter the numbers.

    "They didn't know what to do with me," she says. "They were really kind of baffled that I had ethics."

    Koch's refinery unit pleaded guilty in 2001 to a federal felony charge of lying to regulators and paid $20 million in fines and penalties.

    Corporate Cultures

    "How much lawless behavior are we going to tolerate from any one company?" asks David Uhlmann, who oversaw the prosecution of the Koch refinery division when he was chief of the environmental crimes unit at the U.S. Department of Justice. "Corporate cultures reflect the priorities of the corporation and its senior officials." ...

    Melissa Cohlmia, Koch's director of corporate communications, wrote "We are proud to be a major American employer and manufacturing company with about 50,000 U.S. employees ... Given the regulatory complexity of our business, we will, like any business, have issues that arise ...

    Regarding sales to Iran, she wrote, "During the relevant time frame covered in your article, U.S. law allowed foreign subsidiaries of U.S. multinational companies to engage in trade involving countries subject to U.S. trade sanctions, including Iran, under certain conditions." ...

    Lobbying Washington

    The Koch brothers have vaulted into the American political spotlight in recent years. Koch Industries has spent more than $50 million to lobby in Washington since 2006, according to the Center for Responsive Politics, a nonpartisan group that tracks political donations.

    The company opposed derivatives regulation and greenhouse gas limits.

    The brothers have backed a foundation that has trained thousands of Tea Party activists. The Tea Party, a popular movement whose name stands for Taxed Enough Already, has grown into a potent force in national politics. Sixty representatives of Congress, out of a total of 435, identify themselves as Tea Party members.

    Virtually every Republican candidate for president -- including Texas Governor Rick Perry and Minnesota Congresswoman Michele Bachmann -- has solicited the group's support.

    Integrity and Compliance

    Koch Industries' political action committee, KochPAC, donated $50,000 to Texans for Rick Perry last year [2010] for his gubernatorial campaign, according to the Texas Ethics Commission. It has also donated to support Bachmann's congressional campaigns, Federal Election Commission records¬ show ...

    The illicit payments uncovered by Ludmila Egorova-Farines raised the specter of a new blow to the company's effort to improve its reputation following criminal convictions and civil penalties.

    [Koch Chemical Technology Group, a Koch Industries subsidiary run by David Koch, hired Egorova-Farines in April 2008 for the newly created position of compliance and ethics manager for Europe and Asia.]

    Avoiding Scandal

    The company wanted to avoid a bribery scandal similar to that of Siemens AG (SIE), says Ged Horner, a managing director at Koch-Glitsch in the U.K. from 2002 until he retired in 2010 ...

    In November 2006, the U.S. Department of Justice and German prosecutors opened an investigation into bribery by Munich-based Siemens, Europe's largest engineering company. Siemens and three of its subsidiaries pleaded guilty in December 2008 to charges of violating the U.S. Foreign Corrupt Practices Act from 1998 to 2007.

    Siemens paid $1.6 billion in penalties, admitting it had paid bribes to companies in Argentina, Bangladesh, Iraq and Venezuela.

    "Koch decided that if it could happen to Siemens, it could happen to them," Horner says.

    French Investigation

    Koch Chemical Technology Group, a Koch Industries subsidiary run by David Koch, hired Egorova-Farines in April 2008 for the newly created position of compliance and ethics manager for Europe and Asia.

    The division, which makes distillation, pollution control and water filtration equipment, recruited her from accounting firm PricewaterhouseCoopers LLP, where she was a consultant for four years on integrating corporate cultures after mergers. As soon as she joined Koch, the company flew her to Wichita to attend an internal compliance conference, she says ...

    The company then asked her to investigate Koch-Glitsch in France ... The specifics of illicit payments for contracts by Koch- Glitsch can be found in two French labor court cases. The complaints were brought separately by Egorova-Farines and Leon Mausen, business director of Koch-Glitsch France from 1998 to 2008.

    Illicit Payments

    Koch-Glitsch fired Mausen on Dec. 8, 2008, sending him a termination letter that described illicit payments from 2002 to 2008 in Algeria, Egypt, India, Morocco, Nigeria and Saudi Arabia. In the Middle East, Koch-Glitsch paid what the termination letter describes as an exceptionally high commission of 23 percent to one of its sales agents.

    "A portion of that money was intended to pay a customer's employee in order to secure the contract," Koch wrote.

    The customer was an unnamed Egyptian company that was partially owned by the state. Koch-Glitsch made similar payments to win other contracts with public and private companies in Egypt and Saudi Arabia, Koch wrote in its letter to Mausen.

    Koch-Glitsch gave envelopes stuffed with cash to a Moroccan company, Koch wrote in its letter. Koch-Glitsch also made an improper payment to secure a contract with a Moroccan government organization, Koch wrote. The company made similar payments to an unnamed Nigerian government agency to win contracts, Koch wrote.

    Koch Blamed Employee

    Koch-Glitsch inflated its bid price to a private company in India in 2008, the letter said. A Koch employee explained the reason in an e-mail copied to Mausen and dated Feb. 6, 2008: "Add an extra 2 percent for a third person whose name I would rather give you only on the phone at this time."

    A Koch-Glitsch agent increased the commission paid to an Algerian agent in 2007 and 2008 to cover what Koch described as an unlawful payment to secure a deal with an unnamed French company ...

    In its Dec. 8, 2008, termination letter to Mausen, Koch blamed him for the illegal payments. In July 2009, Mausen sued Koch for severance and performance pay in the Arles Labor Court in southern France.

    On Sept. 27, 2010, the court said Mausen hadn't acted on his own.

    "It was not Mr. Mausen alone who was giving authorizations," the court wrote.

    Company policy required approval from other Koch-Glitsch managers, including Christoph Ender, the president of Koch- Glitsch for Europe and Asia, the court said.

    'Without Doing Due Diligence'

    "Ender, manager of Koch-Glitsch France, as well as the controllers and auditors who were assisting him, allowed such business practices developed with Mr. Mausen to continue without doing due diligence in their reviews concerning the payment of commissions and the final beneficiaries of said commissions," the labor court wrote.

    An appeals court in Aix-en-Provence issued a second ruling on June 14, 2011, saying the company couldn't justify terminating Mausen for the payment scheme because his managers had been aware of the practices for more than 60 days before he was fired. The court ordered Koch-Glitsch to pay Mausen 150,808 euros ($206,170) ...

    The payments to win contracts documented by Koch investigators may violate U.S. law, says Sara Sun Beale, a professor at Duke Law School in Durham, North Carolina. She says Koch's termination letter to Mausen gives clear guidance to federal prosecutors.

    'Smoking Gun'

    "It sounds like a smoking gun," says Beale, who co-authored "Federal Criminal Law and Its Enforcement" (Thompson West, 2010). "It really should get the Justice Department's attention. When you have a smoking gun, you launch an investigation."

    Such a probe would fall under the Foreign Corrupt Practices Act, a 1977 law that makes it illegal for companies and their subsidiaries to pay bribes to government officials and employees of state-owned companies.

    Justice Department spokeswoman Laura Sweeney says the agency won't confirm or deny the existence of any investigation.

    [Sales to Iran]

    While Koch-Glitsch was conducting its internal probe of illicit payments for contracts, the U.S. government was investigating Koch's European unit on another front: sales to Iran.

    On Aug. 14, 2008, investigators from the U.S. Department of Homeland Security met with George Bentu, who had worked as a sales engineer from 2001 to 2007 for Koch-Glitsch in Germany, Bentu says. In a four-hour interview at the U.S. consulate in Frankfurt, the officials asked about documents showing details of the company's trades with Iran, he says ...

    Internal company records show that Koch Industries used its foreign subsidiary to sidestep a U.S. trade ban barring American companies from selling materials to Iran. Koch-Glitsch offices in Germany and Italy continued selling to Iran until as recently as 2007, the records show.

    The company's products helped build a methanol plant for Zagros Petrochemical Co., a unit of Iran's state-owned National Iranian Petrochemical Co., the documents show. The facility, in the coastal city of Bandar Assaluyeh, is now the largest methanol plant in the world, according to IHS Inc., an Englewood, Colorado-based provider of chemicals, energy and economic data.

    Engineer Challenged Sales

    "Every single chance they had to do business with Iran, ... they did," Bentu, 46, says.

    Bentu, a German engineer who earned his master's degree in chemical engineering from Montana State University in Bozeman in 1990, joined Koch-Glitsch in 2001. His duties included drawing up bids for potential buyers of the company's distillation equipment, which is used in making fuels, fertilizers, detergents and other products.

    Bentu says he had been working at Koch-Glitsch in Viernheim, about 80 kilometers (50 miles) south of Frankfurt, for two months when he first saw an order destined for Iran. Concerned that the transaction might run afoul of U.S. law, Bentu asked his manager about it, he says. Bentu says his boss told him not to worry, that the company's U.S. lawyers made sure the deals with Iran were legal.

    U.S. companies have been banned from trading with Iran since 1995, when President Bill Clinton declared it a threat to national security. Iran supports Iraqi militants and Taliban fighters as well as terrorist groups, including Hamas and Hezbollah, according to the U.S. State Department.

    Getting Around Ban

    Koch Industries took elaborate steps to ensure that its U.S.-based employees weren't involved in the sales to Iran, internal documents show.

    Koch Industries may not have violated the law if no U.S. people or company divisions facilitated trades with Iran, says Avi Jorisch, a Treasury Department policy adviser from 2005 to 2008. That's impossible to determine without a complete investigation, Jorisch says.

    Internal Koch-Glitsch correspondence shows that the company coordinated with Koch Industries lawyers in the U.S. to make sure that American employees didn't work on sales to Iran. Elena Rigon, now Koch-Glitsch compliance manager for Europe, based in Italy, in December 2000 addressed a memo outlining compliance guidelines to company managers in her region.

    'Axis of Evil'

    In another e-mail, Rigon said all offices had to go through a checklist for each estimate quoted for materials headed to¬ Iran.

    "Your staff shall send this form to me since I have to send it to the lawyers in the USA as part of the compliance program," Rigon wrote in the e-mail. "If somebody happens to find out that any U.S. persons are involved in this project or U.S. material is delivered to Iran you CANNOT quote."

    Rigon declined to comment ...

    In his annual State of the Union address on Jan. 29, 2002, in the wake of the 9/11 attacks in New York and Washington, President George W. Bush said that Iran was part of what he called the "Axis of Evil."

    A year later, in his Jan. 28, 2003, address to Congress, Bush said, "In Iran, we continue to see a government that represses its people, pursues weapons of mass destruction and supports terror."

    Soliciting Iranian Orders

    The following day, Koch-Glitsch was sent a purchase order to supply petrochemical equipment for the Zagros plant, which was being designed and built by two engineering firms, Pidec in Iran and Lurgi in Germany, according to company documents.

    On May 31, 2004, Koch-Glitsch secured another contract for 1.2 million Euros, to help expand the Zagros facility. The plant helped Iran turn its vast natural gas reserves into methanol, which is used for making plastics, paints and chemicals.

    The Italian office of Koch-Glitsch sought work on other projects in Iran -- the expansion of the Abadan refinery, the country's largest, and the development of South Pars, part of the world's largest natural gas field, the documents show.

    Koch-Glitsch told employees in 2006 that the company was winding down business in Iran, Bentu says. At that point, he says, his bosses still asked him to work on Iran bids. He says he told them he was no longer willing to sign off on such work, leading to arguments between Bentu and his managers.

    'Totally Betrayed'

    Bentu says he felt dismayed because Koch Industries clearly tells all of its employees around the world that integrity is the company's No. 1 value.

    "You feel totally betrayed," Bentu says. "Everything Koch stood for was a lie."

    Bentu, who was earning about 49,000 euros a year, says the company forced him out in April 2007 and paid him 25,000 euros severance.

    In 2009, Bentu was interviewed as part of a probe by the Bundeskartellamt, the German antitrust agency. It was looking into whether Koch-Glitsch had collaborated with a rival, Montz GmbH, a smaller petrochemical equipment maker in nearby Hilden, to rig bids they made to supply products to companies.

    In November 2010, Koch-Glitsch and Montz each paid 250,000 euros as part of a settlement with the regulator for sharing information from December 2002 to August 2008 ... Koch- Glitsch closed its office in Viernheim in 2009, Bentu says. Several former employees went to work for Montz.

    Guenther Frey, general manager for Montz, declined to comment ...

    Benzene Emissions

    The price-fixing convictions came after years of investigations, environmental lawsuits and fines that had plagued Koch's oil pipeline and refining divisions.

    In April 1996, Koch environmental technician Sally Barnes- Soliz walked into the offices of Texas regulators in Corpus Christi and told them the company had lied about spewing benzene into the air.

    Koch Refining Co. had recruited Barnes-Soliz in 1991 to work in the safety department at the company's Corpus Christi refinery. Barnes-Soliz, then 30, had earned a bachelor's degree in science and environmental health and a Master of Science in industrial hygiene at Colorado State University in Fort Collins.

    "I loved that job," she says, describing how she helped protect plant workers and neighborhood residents from the many hazards at the refinery. "It's important to me that people are safe and their job is not the reason they die."

    Federal rules in 1995 required the plant, one of two refineries Koch owns in Corpus Christi, to reduce benzene emissions to less than 6 metric tons a year. Benzene, a chemical compound refined from crude oil, was found to cause leukemia in 1928 by two Italian doctors who detected the cancer in a worker exposed to benzene for five years.

    False Report

    Four federal agencies -- the National Institutes of Health, the Food and Drug Administration, the Environmental Protection Agency and the Occupational Safety and Health Administration -- say that benzene is a cause of cancer.

    On Jan. 6, 1995, Koch's refining unit informed the Texas Natural Resource Conservation Commission, or TNRCC, that it had installed a new anti-pollution device called a Thermatrix that used flameless heat to burn off the benzene. The machine lacked sufficient capacity for the job, Barnes-Soliz says, and refinery workers disconnected it within days.

    "The refinery was just hemorrhaging benzene into the atmosphere," she says.

    Three months after disconnecting the machine, Koch filed a quarterly report with Texas regulators, while concealing that it had violated the emission rules.

    On Aug. 17, 1995, Koch Industries attorney Vincent Mietlicki wrote a memo to another company lawyer, Thomas Meek, saying the refinery had given the state incorrect information about its uncontrolled benzene emissions.

    "I think it goes without saying that there is a need to correct our first quarterly report which is misleading and inaccurate," he wrote.

    That December, a refinery manager asked Barnes-Soliz to tally the plant's annual benzene emissions for a report to state regulators, Barnes-Soliz says. She found 91 metric tons of uncontrolled benzene emissions, more than 15 times higher than what the rules allowed.

    "I redid the calculation a lot of times," Barnes-Soliz says.

    Those levels of emissions could increase the cancer risk to refinery employees and the public, she says. Barnes-Soliz reported the results in a document dated Jan. 4, 1996, to Mietlicki, the same lawyer who had written the memo calling out the inaccuracies in the quarterly report Koch filed with the state. She says Mietlicki and other Koch executives pressured her to lower the figures in her report.

    Falsified Document

    "There were a lot of meetings to try and get me to change the number," she says. "It was hard, but I held firm to my¬ convictions."

    Barnes-Soliz's bosses went around her. On April 8, 1996, Koch reported to Texas regulators that its Corpus Christi plant had uncontrolled emissions of 0.61 metric tons for 1995, or 1/149th the quantity she had found.

    "When I saw they had actually falsified that document, I had no recourse but to notify the authorities," Barnes-Soliz says.

    On April 18, 1996, on her lunch break, she drove to the state's TNRCC office and reported that Koch had lied about its benzene emissions. By the time Barnes-Soliz walked in, environmental regulators were already investigating Koch in Corpus Christi.

    Oil Slick

    The EPA had sued Koch Industries a year earlier for a series of pipeline leaks in several states, including one that left a 12-mile-long oil slick on Nueces and Corpus Christi bays in October 1994. Her statement triggered another probe by state regulators and the FBI.

    During the next three years, investigators compiled evidence that included hundreds of internal memos about benzene emissions. In 1999, Koch's lawyers tried to stop prosecutors from using the documents in court.

    Koch argued that records of the company's internal investigation regarding benzene rules were protected by attorney-client privilege. U.S. District Judge Janis Graham Jack in Corpus Christi rejected that claim, ruling that the privilege doesn't apply when used to help commit a crime or fraud. She singled out Mietlicki.

    'Front Man'

    "The government has submitted evidence which indicates that Koch was intentionally using Mietlicki and his investigation and expertise in reference not to prior wrongdoing, but to future wrongdoing," the judge wrote. "The February memo strongly suggests that Koch was using Mietlicki (and his investigation and expertise) as a 'front man' to impede the TNRCC from ascertaining the extent of its noncompliance."

    The February memo was sealed by the court.

    A federal grand jury issued a 97-count indictment against Koch Petroleum Group, Mietlicki and three refinery managers on Sept. 28, 2000. Koch Petroleum Group pleaded guilty to a felony charge of lying to the government about its benzene emissions in April 2001.

    Judge Jack fined Koch Petroleum $10 million and ordered that it pay another $10 million to fund environmental projects in south Texas. Koch earned $176 million in profit from the Corpus Christi plant in 1995, prosecutors told the court. The company said in a hearing that it would have cost $7 million to comply with the benzene emission regulation.

    Koch Petroleum changed its name to Flint Hills Resources in 2002.

    In the agreement to plead guilty, prosecutors dropped the charges against the four individuals ...

    Koch spokeswoman Cohlmia says the company reported its compliance issues to the state before a whistle-blower did so ...

    Uhlmann, the federal prosecutor who led the probe, says Koch's after-the-fact response is a public relations whitewash.

    "The Koch case was a classic case of environmental crime, significant violations of law occurring alongside widespread efforts to conceal those violations, which Koch has admitted," Uhlmann says ...

    After the company found out that Barnes-Soliz had tipped off state regulators, Koch stripped her of her responsibilities and moved her to an empty office with no tasks and no e-mail access, she says.

    "They were pressuring me to quit," she says.

    She left the company in July 1996. Barnes-Soliz sued Koch in January 1997, saying the company harassed and mistreated her after she became a whistle-blower. Koch settled the lawsuit in July 1999 for an undisclosed amount.

    The Corpus Christi case was one of a series of challenges Koch Industries faced in the 1990s over environmental issues. In 1997, a company now owned by ConocoPhillips sued Koch for toxic waste dumping at a refinery in Duncan, Oklahoma.

    'Replete With Evidence'

    In March 1998, U.S. District Court Judge Vicki Miles- LaGrange in Oklahoma City ordered Koch to pay for 15 percent of the cleanup costs for dumping at the site between 1946 and 1953. That decision was upheld by the U.S. Court of Appeals for the 10th Circuit in May 2000.

    "The record is replete with evidence Koch used unlined ditches, pits and ponds to dispose of hazardous waste at the site," the appeals court ruled, finding that Koch had tainted groundwater. "The pollution of any Oklahoma waters, including groundwater, has been prohibited by state statute since the early 1900s -- well before Koch's waste disposal activity at the refinery."

    By March 2007, Koch Industries had paid just $440,899 and still owed $2.97¬ million for its share of the cleanup, Conoco told the court.

    "Koch simply refuses to pay its share as ordered by this court," Conoco said.

    Companies Settled

    The two companies settled in February 2009. Terms weren't disclosed ...

    A Koch unit in Rosemount, Minnesota, pleaded guilty in 1999 to two federal misdemeanors of violating the Clean Water Act and paid $8 million in fines and penalties. The company used fire hydrants to pump more than a million gallons of wastewater contaminated with ammonia onto the ground.

    Koch also increased its dumping of wastewater on weekends when it didn't monitor discharges, circumventing the reporting requirement of its permit, the EPA said. Koch also admitted that it negligently released between 200,000 gallons (757 kiloliters) and 600,000 gallons of aviation fuel into a nearby wetland ...

    Koch Industries also spent much of the 1990s defending itself against what a U.S. Senate subcommittee called a widespread scheme to steal oil on Indian land.

    Twin Brother

    The Senate held hearings in May 1989 after Bill Koch, David Koch's twin brother, told a U.S. Senate special committee on investigations that Koch Industries was stealing oil on American Indian reservations, cheating the federal government of royalties.

    Bill Koch had a long-standing feud with his brothers after his failed attempt to take over the company in the early 1980s. He sold his shares in June 1983 and later lost a lawsuit claiming he'd been shortchanged.

    The Senate committee sent investigators to Oklahoma to secretly observe oil companies ... The investigators caught Koch Oil's employees falsifying records so that the company would get more crude than it paid for, shortchanging Indian families, Elroy said.

    Koch's records showed that the company took 1.95 million barrels of oil it didn't pay for from 1986 to 1988, according to data compiled by the Senate.

    "The theft is widespread and pervasive, and these people are being horribly victimized," Elroy testified.

    Elroy told the committee that Charles Koch gave a deposition that said that no one could make exact measurements.

    "There was a lot of uncertainty and tremendous variations," Elroy quoted Koch as saying. The full deposition is sealed, which is committee policy.

    The committee concluded in a November 1989 report that Koch Oil had engaged in a widespread, sophisticated scheme to steal millions of barrels of oil. The Senate referred the case to the Justice Department, which convened a grand jury that never indicted the company ...

    The Civil Trial

    Bill Koch brought a lawsuit on behalf of U.S. taxpayers, claiming that Koch Industries' scheme defrauded the government of royalties. The case came to trial in 1999. Former company employees testified that Koch Industries trained them to steal.

    Phil Dubose, who worked for Koch Industries from 1968 to 1994, told the jury how the scheme worked.

    "The Koch Method is to cheat the producer out of crude oil," he said.

    He testified that he was able to steal 2,000 barrels a month from one customer.

    "You used every available tool to mismeasure the crude oil in Koch's favor," says Dubose, who is now retired.

    Charles Koch testified in the trial, saying the company had the highest standards ...

    24,587 False Claims

    Two days before Christmas 1999, the jury delivered the verdict: Koch Industries had made 24,587 false claims in buying oil, underpaying the U.S. government for royalties on Native American land from 1985 to 1989. Koch paid the U.S. $25 million to settle the case in 2001.

    The Koch brothers, meanwhile, reached an agreement, with undisclosed terms, dropping all litigation against each other.

    While the Koch brothers battled over oil, Koch Industries clashed with regulators over its failure to properly maintain its pipelines. In 1995, the EPA sued the company, saying poor maintenance resulted in corrosion that contributed to hundreds of spills.

    The following year, before the EPA case was resolved, a leak in a Koch butane pipeline led to an explosion that killed two teenagers.

    Burned Alive

    On Aug. 24, 1996, Danielle Smalley and her high school friend and neighbor Jason Stone, both 17, smelled gas outside Smalley's mobile home in rural Lively, Texas, 50 miles southeast of Dallas. The house had no telephone, so they decided to drive the Smalley family's pickup truck to a neighbor's home to call 911.

    They never made it.

    The truck stalled after the couple drove into a fog-like cloud, says Danielle's father, Danny Smalley, who watched them drive away. It was butane vapor, leaking from a corroded steel pipeline. Seconds later, as Danielle restarted the truck, the gas ignited into a fireball, burning Danielle and Jason to death.

    Smalley's father sued Koch Industries in 1997 in the Kaufman County, Texas, district court for the wrongful death of his daughter.

    [Is this the vaunted Texas "business-friendly" environment?] ...

    Koch Pipeline Co., the unit that managed the Texas pipeline, knew the line had corroded and didn't fix it, an investigation by the National Transportation Safety Board concluded in November 1998.

    The 570-mile-long pipeline carrying liquid butane from Medford, Oklahoma, to Mont Belvieu, Texas had corroded so badly that one expert, Edward Ziegler, likened it to Swiss cheese. The company didn't give 40 of the 45 families near the explosion site -- including the Smalley and Stone families -- any information about what to do in case of an emergency, the NTSB wrote.

    Danny Smalley hired Ziegler, a third-generation oilman and certified safety professional, as an expert witness. Ziegler had previously been retained by Koch Industries as an expert witness in an unrelated case. Ziegler told the jury that he'd never seen a company disregard safety to this extent in his more than 25- year career.

    'A Total Failure'

    "This is an example of a total failure of a company to follow the regulations, keep their pipeline safe and operate it as the regulations require," Ziegler, who now operates his own pipelines, testified ...

    The state jury awarded Danny Smalley $296 million in its Oct. 21, 1999, verdict. The jury found that Koch Industries acted with malice because it had been aware of the extreme risks of using the faulty pipeline.

    Smalley later settled for an undisclosed amount. Stone's family also settled. Danny Smalley used settlement money to start the Danielle Dawn Smalley Foundation for pipeline safety education. Large pipeline operators such as ExxonMobil Corp., British Petroleum, and Kinder Morgan Inc. -- and not Koch -- accept free services from the foundation, Smalley says.

    'Never Forget'

    "You see two children burned to death in front of you, you never forget that," he says. "I want to stop other parents from ever having to see that." ...

    Three months after the Smalley verdict, Koch settled the five-year-old EPA case for pipeline leaks, along with a second EPA case brought in 1997. The company paid $35 million to resolve those cases, which covered more than 300 oil spills in six states. [The actual damages may hve been in the hundreds of billions]

    For six decades around the world, Koch Industries has blazed a path to riches -- in part, by making illicit payments to win contracts, trading with a terrorist state, fixing prices, neglecting safety, and ignoring environmental regulations ...

    Commentator 12 wrote:

    So is 9 - 9 - 9 the mark of the Beast? Who knows. But my guess it's just a Koch attempt at comedy. Remember Sargeant Schultz from Hogan's Heros? "Nein - Nein - Nein". Sounds like a mantra for those with tea bags for brains.

    Top -- Home

    NEWS ARTICLE from The Chronicle-Telegram, 10-21-11, By Evan Goodenow

    [Cashing Out the Ohio Turnpike (For what? to give Kasich more money to squander on his cronies?)]

    NOACA says NO, NO [to privatization of the Ohio turnpike]

    A Feb. 25 [2011] analysis by the Northeast Ohio Areawide Coordinating Agency [NOACA] panned Gov. John Kasich's proposed Ohio Turnpike privatization. Among the findings:

    The Turnpike is self-sustaining from toll revenue.

    One-time money for infrastructure ... [from] privatization ... [is a bad idea].

    Any money saved by laying off turnpike workers or cutting their salaries would only mean more profit for the group leasing the Turnpike rather than benefit for taxpayers.

    Desire for profit could lead to less maintenance.

    The privatization of the Chicago Sky Way and Indiana Toll Road sharply increased tolls.

    Higher tolls on the turnpike have traditionally led to more congestion and accidents on nearby routes by drivers seeking to avoid the Turnpike due to avoid the increases.

    Contact Evan Goodenow at


    NEWS ARTICLE from The Plain Dealer, 5-14-11, By Tom Breckenridge

    Northeast Ohio transportation planners come out against leasing the Ohio Turnpike

    Northeast Ohio Areawide Coordinating Agency [NOACA] board members oppose Gov. John Kasich's idea of leasing the Ohio Turnpike.

    CLEVELAND, Ohio -- Most elected leaders in big cities and counties here have a message for Gov. John Kasich -- don't sell or lease the Ohio Turnpike.

    [NOACA] ... voted Friday to oppose Kasich's idea of ... leasing the 241-mile toll road.

    Putting the turnpike in the hands of a private operator would lead to higher tolls and less upkeep, while diverting toll-dodging traffic to alternative routes, making those roads less safe and more costly to maintain, board members of the Northeast Ohio Areawide Coordinating Agency believe ...

    "It's ... our goal to raise legitimate concerns," said Medina County Commissioner Stephen Hambley, a Republican and chairman of the NOACA board, whose members include mayors, county commissioner and engineers from Cuyahoga, Lorain, Medina, Lake and Geauga counties ...

    The NOACA resolution said proceeds from a turnpike deal "would resolve only a fraction of the state's budget deficit ... yet would forego a significant and reliable revenue source for multiple generations." ...

    Tolls have risen steadily under Indiana's lease deal, NOACA board members noted.

    Several NOACA board members said the turnpike is known as a well-run operation.

    It receives no federal funding and state support is limited to gas taxes collected at turnpike gas stations, the NOACA resolution said. Turnpike maintenance and operation is fully funded by tolls, and the road yields a consistent profit.

    Research done by NOACA and its counterpart agency in Akron, covering Summit and nearby counties, have found no compelling, long-term benefits and "possible significant detriments" to a turnpike lease, the resolution said ...

    If a sale or lease of the turnpike is eventually approved, NOACA believes the proceeds should be focused on northern Ohio, whose residents use the turnpike and paid for much of it, NOACA officials said.

    And money should be set aside for parallel routes that will see more wear and tear from drivers avoiding higher turnpike tolls, NOACA officials said.

    To reach this Plain Dealer reporter:


    NEWS ARTICLE from The Plain Dealer, 8-24-11, By Regina Garcia Cano

    U.S. Rep. Tim Ryan critical of Ohio Gov. John Kasich's plan to privatize turnpike

    VALLEY VIEW, Ohio -- U.S. Rep. Tim Ryan criticized the potential privatization of the Ohio Turnpike at a meeting Tuesday primarily attended by union leaders.

    "This is an anti-development proposal; it's going to hurt residents and businesses that want to come to Ohio," the Niles Democrat said of Gov. John Kasich's plan to lease the 241-mile toll road to private investors ...

    Former Ohio Turnpike executive directors Gary Suhadolnik and George Distel attended Tuesday's event and echoed the congressman's view ...

    Distel ... argued that the fate of the Ohio Turnpike in private hands could be the same as that of Indiana's. That toll road was privatized in 2006 and has since been heavily criticized for higher tolls and poor maintenance ...

    To reach this Plain Dealer reporter:

    Commentator 13 wrote:

    The people of Ohio agreed to keep the Turnpike as a toll road when the bonds were paid off so that it would be maintained in top shape. So now if Kasich wants to sell it, let the people of Ohio decide. Put it on the ballot with the other screwball ideas of this Governor.

    Commentator 14 wrote:

    Buy a perpetual money machine for a fraction of what its worth? Why wouldn't Kasich's friends wanna buy it and screw over the people of Ohio?

    Commentator 15 wrote:

    Here we go again. Governor John "Wild Eyes" Kasich needs a special consultant to determine the value of the turnpike; looks like one of his "good buddies" needs to make a few million dollars at the tax payers expense; and who says that the country is in a recession--not "Wild Eyes" or his minions.

    Commentator 16 wrote:

    The Turnpike does not cost the state a dime to run, in fact it makes money. The question you should be asking is where is all the gas tax money going? After hearing about the Indiana toll road, this shouldn't even be considered. Quit fighting wars we have no business being in, put that money back into our own country's problems.


    NEWS ARTICLE from The Press, 10-27-11, By John Edwards

    NORTH RIDGEVILLE -- To discuss the governor's idea of privatizing the Ohio Turnpike, State Rep. Matt Lundy, whose 57th House district includes Avon, Avon Lake, Sheffield Village, North Ridgeville and Elyria, hosted a town hall-style meeting Oct. 20 [2011] at the Sheffield Village Municipal Complex.

    Joining him, and at least 50 other people, were 56th district Rep. Dan Ramos (whose constituents reside in Sheffield Lake, Lorain and western Lorain County, south to Oberlin) and retired 57th district state Rep. John Bender. Gov. John Kasich has publicly stated his intent to lease the Ohio Turnpike for 50 years to one of five corporations for a one-time payment of $3 billion.

    'I thought some of my Republican colleagues, especially those in districts north of I-70, might vote against it to save the turnpike, and that some south of I-70 would vote against it to save the prisons,' Lundy, a Democrat, said. 'But none did. They voted the party line. So, since the legislature isn't allowed to say yes or no, the only way we can stop this is by a referendum like Issue 2, to repeal Senate Bill 5.' ...

    A turnpike lease like the one used in Indiana includes non-compete clauses. All five parties vying to be Kasich's choice are from outside Ohio or are foreign corporations. Those corporate bidders include Citibank, Morgan-Stanley and an Australian-Spanish consortium headed by Macquarie Infrastructure Group.

    Lundy said the contract language rules out legislative input on turnpike privatization and the disposition of prisons, and those details were 'buried in the biennial budget,' a document that passed along party lines in the House and Senate ...

    Lundy cited a letter from former turnpike director Gary Suhadolnik, a Republican, who called Kasich's lease plan a 'Robin Hood concept to get turnpike users to subsidize infrastructure elsewhere.' ...


    Commentator 17 wrote:

    One of the proposals Gov. John Kasich has to help balance the budget is to lease the Ohio Turnpike. But that would not save Ohio taxpayers money. Wages and maintenance expenses are paid from tolls.

    Money generated from a lease is a short-term fix that would have long-term consequences. Leasing the turnpike for an up-front payment of millions of dollars to "attract jobs" to Ohio is irresponsible. Why give control of a valuable state asset to a private company or a foreign investor so that it can make money?

    For a private company to maintain profits, it will cut back on maintenance and service and raise tolls. Once it can no longer profit, it will dump a neglected, worn roadway back to the state to maintain on a beleaguered transportation budget. The turnpike must be maintained for public, not private, benefit.

    The Ohio budget needs to be balanced, but don't give up an important part of the state's infrastructure to do so. Let's not go down that road.

    Commentator 18 wrote:

    In order for a company to earn a reasonable return on it's investment (something that ALL investment speculators expect) they will have to do all that you say: raise tolls (probably at least 3% each year with additional raises for inflation), cut services (maybe do one pass with the snow plow when the road becomes too bad), cut all police and emergency service (except if a pile up blocks both lanes) and generally let pot holes stay where they are at.

    By the way, the cost of the State Patrol on the Turnpike is now paid for exclusively from toll revenue, but with a private company running the road, that cost (which includes everything from the buttons on their uniforms to the wiper blades on their windshields) will be placed on the taxpayers.

    This will further erode northern Ohio's economy because interstate trucking firms will move their East-West traffic to I-70 as much as possible which will boost business around Columbus, Dayton, and Indianapolis, (increasing the amount of taxes needed to repair that road) at the expense of Youngstown, Cleveland and Toledo. The truck traffic will also take to secondary U, S, highways like 2 and 20.

    The only reason I can think of for the Governor to push this "lease" is to get quick cash to help him pay 17% salary increases for his "special" advisors and staff. What will he want to sell next, Lake Erie? I am afraid that this governor is living in his own little world and does not give a second thought to what is good for the rest of us.

    Commentator 19 wrote:

    To lease the Ohio Turnpike to a private entity would be the same as leasing the many National Parks and Forests and other public-owned assets. With the result being higher costs for the consumers. This must be weighed against the sudden 'shot-in-the-arm', but, short-term result that it would provide our State budget. SEE ABOVE


    Commentator 20 wrote:

    We just returned from a trip during which we drove long sections of the Indiana Turnpike. We noticed that, in contrast to the Ohio Turnpike, there was no work on the road itself and that the service areas were old and were not being upgraded.

    It would seem that the citizens of Ohio would be ill served if our turnpike were privatized. The Ohio Turnpike's program of continuous improvement results in a much better customer experience.

    Commentator 21 wrote:

    Three things are certain if the Ohio turnpike is sold or leased:

    1) The cost to users will increase in order to make it profitable for the corporation.

    2) The quality of the road and rest areas will deteriorate from what they are now.

    3) Once sold or leased, they are gone forever from the public realm and influences.

    Commentator 22 wrote:

    Just another way to steal the common wealth of the people and put it in private hands.

    Don't forget: Kasich pursued his union-busting career while working as managing director of the Columbus, Ohio, banking division of Lehman Brothers. When Lehman Brothers collapsed in September 2008, the state pension funds lost $480 million.

    How much will cashing out the turnpike really cost Ohio?

    For related information, see

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