With all the debate about the Austin Industry Bailout / Loan / Assistance / Giveaway, I wanted to throw in my two-cents. I believe I have a way that would not only assist the automakers, but in a small way all of us too.

PROPOSAL:

The Federal Government would give every school district (with at least 50 students) and/or every public high school (through its school district) a voucher good for $25,000 towards an AMERICAN MADE truck, van, mini-van, or SUV purchased through a local dealership of its choosing.


Arguement

Basically, the argument is should Detroit automakers be given a loan to assist them through the winter or should they be left to weather the "free market" like other businesses with old and outdated business models. YES, Detroit automakers are a lynchpin in the overall economy of this country. But also; YES, just a few short years ago Detroit automakers were raking in huge profits on the backs of oversized, fuel inefficient vehicles. Automakers at the time said "the market demands big vehicles." So if they played the market then, why shouldn't they play it now?

In the end, like the banks, something needs to be done. My proposal is to help the Detroit automakers through the "free market" and do so in a way that benefits all Americans.


Assumptions:

  • In the end, something will need to be done for the Detroit automakers.

  • One of the root causes of the automaker crisis is the glut of fuel inefficient vehicles on dealer's lots. Basically no sales.

  • A basic truck, van, minivan, SUV can be purchased for $25,000

  • Every American pays for public education in some way shape or form.

  • Every School District owns a fleet of vehicles for transport or maintenance.

  • School Districts are a well defined easily determined number as are the number of public high schools in the United States.

Implementation:

  • The Federal Government would send each School District one voucher worth $25,000 for itself and for each senior high school within its borders. To qualify, a district must have over 50 registered and active students. (This definition is used because some school districts do not have high schools and some districts do not really have any students.)
  • The dealership network would be used to allow for the "free market" to be utilized. A district should be able to choose the best U.S. made vehicle, the best manufacturer, and the best dealership based on market forces (supply, demand, service, etc).

  • Utilizing local dealerships would allow for more relief along the entire supply chain in the auto/truck industry.

Cost and benefits:

  • Assuming 100,000 school districts and/or high schools in the United States and its territories, and $25,000 for each would amount to $2.5 billion in federal tax payer monies.

  • Assuming that amount would be spent at some point by school districts means that the monies would be now available for other school related needs or maybe even the maintaining of a tax rate. Also, it is possible that a district may be able to sell a used vehicle sooner and use that windfall as well.

  • Assuming what automakers say is true "there is a glut of vehicles," this would alleviate this problem. Take stress off the system. Allow for an influx of revenue (rather than a loan). Allow the entire auto/truck network to be positively affected. Allow all Americans, at least peripherally to benefit.


This voucher proposal would directly and immediately benefit all U.S. manufacturers, especially the Detroit based firms. This proposal would do so in a manner utilizing "free market" principles thus appeasing its advocates. Finally this proposal would positively affect all Americans.

(Full disclosure, this idea was submitted for consideration via phone on 11/17-19 to: Reps McCaul; Doggett; Lowey, Senators Cornyn; Kyl; Dodd. Attempted: Reps Pelosi and Sen. Hutchinson).

So the U.S. Congress is taking its sweet time on the "Bailout" bill. Obviously members and staff have not read my last post: "The Economic Reality of Today's Uncertainty."

Yes, they should not give a blank check to Paulson. Yes, deliberation many times creates a better bill (it also amazingly creates opportunities for unneeded add-ons). But imagine what would have happened if two weeks ago Congressional leaders had said...,

"Mr. Paulson, we are the U.S. Congress. We take our sweet time deciding everything let alone a $700 billion request. What we will do is give you $100 billion immediately so you can try out your theory. In the meantime we will debate and deliberate the remaining requested dollars as to how we (the financial branch of our government) deem, based on your request, it best for our constituents and the country."

If Congress had authorized a quick, say, $100 billion immediately, the Treasury could have tested their theory, stabilized the market, immediately been able to see inside the motivations and dealings of these mortgage derivatives, and provided solid information for the deliberation that followed.

Wow, the decisiveness, the understanding of the market situation. A good deal of uncertainty might have been avoided as would have many a 401K. But alas it did not happen that way. While Congress may have forgotten how to work in a bi-partisan manner on important issues, time will tell whether the posturing we have seen this week will prove beneficial to us all.

This article was just about to be posted when the Lehman Brothers and AIG fiascos were announced. After rereading, even with the major troubles on Wall Street, I still believe that uncertainty is the main driver behind today's economic problems.

In 1992, President George H.W. Bush kept insisting the economy of the United States was fundamentally fine and was actually poised for a huge spurt. Well, in hindsight he was right: the 1990s offered quite a nice economic bonanza. But, at that time, the economy was sputtering in places, including some very visible places like Wall Street, legal services, and the arts. When President Bush (41) refused to acknowledge the dynamic behind the economy at the time, he was labeled as out of touch and in the end may have cost himself the election.

Recently, former Senator Phil Gramm basically implied that the U.S. economy is fundamentally fine and that America is made up with a bunch of "whiners" when it comes to economic issues. In some ways (I admit uncomfortably) Senator Gramm is accurate. There are several industries and areas of the economy where life is good. Rail, export-focused industries, certain service arenas, oil workers, and political consultants are all doing quite well, thank you. While the typical American scratches his/her head, tightens the ol' wallet, or cuts back on a family trip, my friends in the oil industry in Midland, Texas, or on an oil rig off the Louisiana coast are doing just fine. Don't think so? Go to Midland or Exxon, or ask NBC about selling 85% of its available SuperBowl advertising being sold five months before the game.

The reality is, just like in 1992, a large and visible part of the economy is hurting. Obviously the auto (i.e., truck) and construction industries are struggling. For others there is an uncertainty - an economic future that is unknown. An economic uncertainty that affects what is so near and dear (our homes, our money, our desire to plan for the future, and our general understanding of things). This economic uncertainty is a real and tangible issue.

I have argued that seeing gas prices climb and drop and climb and climb again and then drop again has left Americans uneasy and unsure. Out of nowhere families have been forced to increase a single budget item (gasoline and home-heating costs) by 25%. Further complicating the matter is the fact many blame speculators for the price jump, which simply confuses the average American. Heck, I'm still not quite sure how the whole pricing thing works--it sure isn't a result of pure supply and demand. If the price is based solely on supply and demand, how the heck did demand jump so far so fast without anyone noticing it?

As we have recently seen, the housing crisis is even more complicated. Anyone with a brain should have seen this coming. Zero-percent down mortgages with three-year ballooning interest rates? Please - there's no recipe for disaster here! Anyone who sold or knowingly took out and understood the dynamics around a creative mortgage or participated in the repackaging of these high-risk loans gets no sympathy and should get no bailout. BUT that does not change the fact that many people were bamboozled into one of these loans (and sorry to say many in the minority community were targeted). Or that a smart friend (who thought he could outflank the system) lost his home. Or how in some communities foreclosed homes have become a blight. What about the couple being transferred for work who cannot buy a new or even sell an old home? It's real. Just ask Lehman Brothers.

When I think about today's economy, for some reason I am always drawn to the "Gas Tax Holiday" presented this spring by Senators Hillary Clinton and John McCain. As an economist, I at first thought this was folly. But upon reflection and analysis, I have come to the conclusion that not only was the idea an inspired one at the time, but it might have set a positive tone. Yes, it is likely we would never have seen anything close to the full savings in our gas prices. However what we would have gained (besides a few bucks) is a knowing that our government was/is looking out for all of us with something we can understand and see. Some uncertainty would have been diminished.

Similar direct across-the-board assistance could be implemented as well. Instead of a low-interest loan to car manufacturers, why not a credit to each municipality or school district that buys a new truck. Instead of a new stimulus check to an anointed few, why not put the construction industry to work and refurbish and rebuild federally owned homes and hospitals or offer to build 51 new state-of-the-art schools? Instead of pointing fingers at who has a new focus on regulation, why not help individual homeowners pay any fees keeping them from restructuring or selling a home they should never have purchased in the first place? While, yes, long-term retraining and technological shifts are required, short-term across-the-board tangible stimuli are needed now.

Academically speaking: the American economy is doing OK. But the average American cutting back on travel, seeing friends lose their homes, watching neighborhoods deteriorate in value, reading headlines about 158-year-old businesses collapsing, freaking out every time a barrel of oil goes up a dime isn't whining--he or she is worried and unsure what the future might hold. Today's economic reality is uncertainty. A focus on anything that would reduce that uncertainty and calm our fears is the prescription for economic recovery.

BFT's Sequal - Economic Reality 2 - Quicker Action by Congress???

Not to pat myself on the back or anything, but I think I can do so when the two choices for Vice President were on my publicized short list of hopefuls.

"Compelling Choices for Vice President" July 21, 2008

OK, some of my short list were not really going out on a limb. But find others who thought publicly that Joe Biden and Sarah Palin would be chosen and we would be in a very small group.

Now you are asking why Palin and Biden.

Governor SARAH PALIN:
As I stated in the above mentioned posting....

"Governor Palin's reputation is quite unique. She is a reformist Republican Governor in a male dominated state. She knows a bit about the environment and energy exploration (pretty much what Alaska is). She adds a youthful vigor, is attractive, and (from what has been read) she can throw on a pair of boots and hang with the guys anywhere; anytime. While Alaska is not large in electoral votes, and there are no immediate coattails, Governor Palin solidifies Senator McCain's environmental and energy stands and offers a youthful and down home contrast."

Back in January when I was volunteering in NH for the McCain campaign I asked a colleague about vice presidential choices. He asked me to go first. I said I think he needed a woman or an unconventional choice. Being from the NYC area I thought of Jody Rell. He said "Nice but I think Sarah Palin from Alaska is better. She would be fantastic"

My curiosity sparked, I did my research and I had to agree Governor Palin was/is a quite intriguing choice. For all the reasons I mentioned above and more. She answers all the questions that have followed Senator McCain and she adds a new spark and a luster to what is already a pretty dynamic campaign. Since that time she has always been on my short list and I think she is the ultimate compliment to Senator John McCain.

Senator Joseph Biden:
As I stated in the above mentioned article:

"We have seen much of Senator Biden on the Sunday morning talk shows and in Senate hearings where he is tough and partisan. We have also seen him speak at neutral locations (like the LBJ Library) where he was much more thought provoking and intuitive. At the LBJ Library his arguments were well thought out and convincing. It is this out of Washington-Biden that makes him so compelling. This Joe Biden would solidify an Obama candidacy."

Honestly, I was never really a fan of Senator Biden's from watching him on the Sunday morning talk shows and such. But when he came to the LBJ Presidential Library in 2006, I got to see a different Joe Biden; the one we all saw at the Democratic Convention. He was challenging and he was thought inspiring. He was just good..
I took away three quotes from his talk...
1 - "[America] is good at projecting power; we are not so good at staying power."
2 - "The American people have never let their country down when faced with adversity... What has been asked of us [during this 'war on terror']?"
3 - "To tell me what you value; show me your budget."

So Senator Barak Obama and Senator John McCain, now that you have evened out your tickets, lets make this a heck of a campaign. Now maybe "A Presidential Election that Could Have Been" might just be. Glad I was able to pick your VP's now if you need help on anything else....

This past April, I had the opportunity to talk one-on-one with former Senator Bill Bradley. I asked Senator Bradley if he remembered a quote from his 2000 presidential campaign where he was reported as saying, "If John McCain and I get nominated by our respectful parties, I could see us riding around the country on a bus and stopping at various locations for a debate on relevant issues. Just drive around and discuss policy and take questions."

He said he remembered that possibility. I asked him if he thought we might actually ever see such an election. Senator Bradley looked at me and said, "If Barack Obama wins [the nomination], I could see him and Senator McCain doing just that."

"Wow, wouldn't that be nice," I said to him

During the week leading up to this past New Hampshire primary, I had the pleasure of leading a group of volunteers for the McCain 2008 campaign in Concord, New Hampshire. Every morning starting at 6:45, our little group occupied two corners of a major intersection in downtown Concord. About thirty minutes later our friends from the Obama campaign occupied the other two corners. It was good fun with excellent camaraderie for what we thought a worthy cause. Both candidates were underdogs and both groups of volunteers genuinely enjoyed our mornings shouting at cars and trying to get truck drivers to blow their horns. The Obama people would chant "Fired up," and the McCain people would yell back, "John McCain."

The citizens of Concord must have thought we were crazy as we stood there waving signs every morning at 6:45 in sub-zero temperatures. Each morning, once our toes went numb, the McCain and Obama volunteers would end up intermingling and discussing the upcoming primary and the presidential race in general. Discussing politics actually became a way to stay warm.

"Wouldn't it be great if both our candidates won the whole thing?" I asked my contemporary from the Obama group.

He observed and I concurred that by far the McCain and Obama volunteers seemed to be the only campaigners actually having fun. "Talk about a clean and fun campaign," he replied.

I said to him, "Maybe McCain and Obama would actually do what Bradley and McCain said they would do in 2000."

"Wow, wouldn't that be nice." He shivered back.

This spring Senator Obama indicated he believed the 2008 presidential campaign would be about two contemporaries from different generations with different ideals just talking about the issues.

This past June, Senator McCain suggested a series of ten Town Hall meetings to do just that. This was quickly followed by an invitation from the Reagan and Johnson Presidential Libraries offering their facilities for Town Hall meetings during July.

Being very familiar with the LBJ Library, I could close my eyes and see one hundred Austinites on the tenth floor of the LBJ Library surrounded by TV cameras and reporters. In walks Governor Perry, followed by James Steinberg (Dean of the LBJ School) and the Director of the Library Dr. Betty Sue Flowers. I could see Lynda (Johnson) Robb introduce Senators McCain and Obama; hand each a microphone; and watch the questions and answers fly.

Well, if only. It is now August. The Olympics are going strong. Both candidates are preparing for their party's convention.

Last week I mentioned my time in New Hampshire to a friend who happens to be an Obama supporter. We kind of talked out loud about the presidential race and the twists and turns it has taken and what the fall will bring. I then described my conversation with Bill Bradley and his belief, back in April, that this election could be different.

"Wow, wouldn't that have been nice," she said.

Well, it still could be... couldn't it?

TJ Costello
Austin Texas

With about one month until the presidential conventions, both major party candidates (Senator John McCain and Senator Barack Obama) have yet to announce their running mates. Both candidates are non-traditional in their own right and Box Free Thinking believes both should look beyond conventional wisdom for his choice as a running mate. Here are BFT's choices....

BFT believes Senator John McCain's choice for vice president needs to be a creative choice. There are a number of big questions about Senator McCain and his vice presidential choice must answer at least one of them. BFT's ideas:

1 - Jody Rell, Governor - Connecticut: Governor Rell offers the ultimate in non-traditional choices. A Republican woman from a northeastern state, Governor Rell is not a limelight grabber and is quite popular in Connecticut. She covers the question of Senator McCain's age as well as the "what if..." question. Governor Rell has taken over the executive offices of Connecticut mid-way through a term after the indictment of the then sitting governor. She managed her state so well that her popularity soared. Also she locks up Connecticut for McCain and brings New York and New Jersey into play. To BFT she is the ideal Vice President for a President McCain.

2- Sarah Palin , Governor - Alaska: Governor Palin's reputation is quite unique. She is a reformist Republican Governor in a male dominated state. She knows a bit about the environment and energy exploration (pretty much what Alaska is). She adds a youthful vigor, is attractive, and (from what has been read) she can throw on a pair of boots and hang with the guys anywhere; anytime. While Alaska is not large in electoral votes, and there are no immediate coattails, Governor Palin solidifies Senator McCain's environmental and energy stands and offers a youthful and down home contrast.

3- Michael Bloomberg, Mayor - New York City: Immediate economic and education credibility. There are no two bigger issues on the election plate (except for maybe Iraq). Mayor Bloomberg's work in New York City post 9/11 and his creative approaches towards education were nothing but mini-miracles. His credibility is unmatched and he brings New York, New Jersey, and Connecticut into play.

4- Colin Powell, former Secretary of State: There is no need to go on too long here. Secretary Powell's reputation is exceptional. He crosses all lines. While he will take heat for Iraq, he also rises above the fray. He says he has no aspirations to run for president on his own. If true, this would give Senator McCain great credibility as a do something now president.


Since Senator Barack Obama is the non-traditional candidate, BFT believes he will be more than likely to look at a moderate established "grey haired" statesman. There are a lot of names floating around and they all have credibility:

1- Sam Nunn, former Senator, Georgia: Senator Nunn is a well respected moderate with a strong military and foreign service background from his days in the U.S. Senate. He is well respected by both parties and might be a big help in creating coalitions for important bills. BFT believes that the choice of Senator Nunn could actually lock up the election for Senator Obama. Nunn's credentials and moderate views would clearly counter anything the Republicans toss into the fray.

2- Bill Richardson, Governor - New Mexico: OK, not a very creative choice, but he has all the international background Senator Obama should seek in a vice president. He also gives Hispanics a candidate to root for and treads into the western states.

2- Joe Biden, Senator - Delaware: We have seen much of Senator Biden on the Sunday morning talk shows and in Senate hearings where he is tough and partisan. We have also seen him speak at neutral locations (like the LBJ Library) where he was much more thought provoking and intuitive. At the LBJ Library his arguments were well thought out and convincing. It is this out of Washington-Biden that makes him so compelling. This Joe Biden would solidify an Obama candidacy.

This interesting and on the money commentary was provided by Brian Kelsey.

The U.S. economy may be shedding jobs at the moment, but don't think for a minute that it's affected demand for skilled workers, especially in production occupations. Do a search for machinist or welder on Monster.com and you'll see what I mean. Counting both new and replacement jobs, there are expected to be nearly 130,000 openings for welders between 2008 and 2018--that's 30 percent of today's entire welding workforce that will need to be replaced in ten years. We'll need almost twice that number of people to fill first-line supervisor and manager positions. In fact, despite all the talk this campaign season about offshoring and pernicious impacts of trade agreements, the U.S. economy is expected to add approximately 688,000 production jobs during the next ten years. Factor in retirements and other replacement needs and that total jumps to 3.8 million. Median wage: $18.23 per hour. There will be some declines, such as in photographic processing and some electronic equipment assemblers. However, overall, total new and replacement job growth in the U.S. economy for production workers is expected to be a robust 33 percent between 2008 and 2018.

Where we do need more attention paid by politicians and others is on the supply side. In 2006, postsecondary education institutions reporting data to the National Center for Education Statistics (NCES) handed out 47,905 degrees, certificates, and other types of awards in programs of study related to production occupations. That's only 70 percent of the workers needed to fill new production jobs, not to even mention replacement jobs. According to NCES data, compiled by EMSI, there were 2,692 completions in machine tool technology education programs in 2006. Compare that to the 10,000 machinist job openings expected annually during 2008-18. Many of these jobs can be filled by high school graduates, but not all of them, especially in a world where manufacturing is getting leaner and more advanced. Postsecondary education is no longer an afterthought for production careers in an innovation-based economy.

Some regions are doing better closing the workforce gap than others. Looking for students ready to enter or re-enter the production workforce? Head to career fairs in Chicago, Los Angeles, and Houston. Schools there are churning out more than 1,000 awards annually in production related fields of study. How about regions with the competitive advantage of high concentrations of production workers? Check out Tupelo, MS, Camden, AR, and Owensboro, KY. What about regions experiencing manufacturing employment declines, where available workers could be transitioned to jobs requiring similar skills in other industries? Consider Rochester, NY, Cleveland, OH, or Milwaukee, WI. We should be hearing more about how national policy can help regions create innovative solutions for dealing with these workforce trends.

The politicians are correct to call this a crisis; they're just not referring to the right one.

Presidential Primaries

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With all the primary discussions lately, many have asked why New Hampshire? Why Iowa? Why should they go first?

These questions and more were on my mind when the opportunity arose to work on a campaign in New Hampshire just before the January 8th primary. After spending two weeks in New Hampshire and talking to thousands of residents, hundreds of campaign volunteers (from most campaigns), as well as dozens of media representatives (well, here I was told to listen only and not to talk) a conclusion was reached that Iowa and New Hampshire have to go first.

1. They are small in size. This is important in the cost factor as well as the greater impact of "retail politics." Candidates were holding 2+ town hall meetings per day, plus other stops across the state. Such a schedule would not be possible in a state like Texas or Montana or even Tennessee. If you look at the New York Times article on the "last scramble" of candidates in New Hampshire, you realize this schedule could not be made with the one on one impact in most states.

2. They are smaller in population. Sure in New York a town hall meeting might attract thousands not hundreds, but the impact, the one-on-one aspect would be lost. 200 people in Laconia, NH during a blizzard, makes an impact on the overall electorate. 200 people in Los Angeles do not. The campaign worked with represented made upwards of 100,000 calls in one week. A large potential impact in New Hampshire, a drop in the bucket in California.

3. Tradition. While traditions do have to start someplace, in New Hampshire the tradition of looking at candidates up and down and all around is taken quite seriously. Many who I talked to were planning to watch the debates, visit a town hall meeting (some driving in bad weather), or wait to see who calls them least or most. The residents welcomed the out of state visitors with open arms (that is until they prove themselves unwelcome).

Lastly, in visiting New Hampshire, there was a real sense of patience on behalf of the residents. Think about it. An independent voter with a record of voting in elections you potentially received upwards of 4 calls per candidate and there were twelve candidates. Plus all the people crowding street corners, taking hotel rooms, and the signs... they were everywhere.

So thank you to Iowa and New Hampshire. They may not represent "America as a whole" but they sure do a great job and a great service to the country.

More on School Vouchers

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In a recent visit to the Texas Public Policy Foundation, BFT met with Jaime Story. Jaime is an Education Policy Analyst at the Foundation and in discussing issues, she mentioned an article she wrote which fits in very nicely here. BFT encourages everyone to read the entire article: Houston students benefit from district's embrace of competition.

Ms. Story wrote:

"While the public school lobby has traditionally opposed any introduction of competition into the education system, the state's largest school district seems to have embraced it."

She goes on to discuss how the Houston ISD has embraced competition. Now one can argue whether any Texas school district can say it is succeeding, but her point about Houston at least trying to be innovative and embracing of a competitive model is a good one.

"What are the results of this movement toward choice? In 2005, HISD had 31 campuses rated unacceptable, and only six rated exemplary. In 2007, the district had 15 of each. For its size, Houston has half as many unacceptable schools as either Fort Worth or Dallas, and fewer even than Austin, a property-rich district. "
"It is no coincidence that HISD, with its significant charter competition, is one of the most innovative urban districts in the country. "

Thanks to Vikki Goodwin of Austin, Texas, for this guest post. Please add your comments and thoughts to this controversial issue below.

Ok, I know, there are better things to do on a Sunday afternoon than go to the State Capital and walk around with a bunch of do-gooders. Or are there? Do you care about the air you breathe? Or the air your kids and grandkids will breathe? This Sunday I will be at the State Capital with the "Stop the Coal Rush" rally and hope you can join me.

You may have seen the ads in Sunday's paper. If not, the same information about why coal plants are bad is on the website Clear Sky Coalition. Please take a minute to look at the information and ask yourself if this is important enough for you to become involved.

Today's newspaper ran a story about the ad mentioned above and where the money came from to place the large ads. It turns out natural gas companies have paid for the ads - since if the coal fired plants are built, they may not be able to get the financing needed for more gas powered plants. The natural gas producers say natural gas is the cleanest burning hydrocarbon, but natural gas is more expensive than coal. Since it's good to hear both sides of an argument, I've included the link to today's article as well. Since that article doesn't really have any facts about the issue, other than who is paying a lot for advertising, I'd also like to give you a link to the Sierra Club which has put together some great data.

Maybe it's because I have a son with asthma, and I know the number of children and adults with this disease is on the rise, I have a greater concern for the condition of the air we breathe. If you too have a concern and believe that it might be worthwhile to pay more for cleaner power, please join me at the rally against the new coal plants. That's how our legislators will know what the people they represent want. That's the way government works. Come out and be heard.

Please forward this on to anyone in your book that might be interested!

Or, on the other hand, you can daydream about what Texas will be like with all that new coal power...