May 31, 2006

The Dreaded Phone Tax Hasn’t Been Totally Repealed, and Could Even Come Back in a Bigger Form

Filed under: Economy,Taxes & Government — Tom @ 3:28 pm

According to a Tuesday Wall Street Journal editorial (subscription required), part of the tax still remains, and it could morph into a more comprehensive tax someday:

The IRS will continue to collect the tax on local calls, but Mr. Snow to his credit did express support for the idea of Congress passing legislation to repeal the tax entirely.

That would be the best outcome, and not just because a future administration might opt to begin collecting the tax again and restart the court battles. Another argument for full repeal is that so long as the tax exists, so will the political temptation to expand its scope and turn it into yet another revenue stream for the federal till. A Joint Tax Committee report issued last year suggested extending the excise tax to “all data communication services,” including cable modems, cellular and DSL Internet connections.

These taxes have more lives than Jason in those Friday the 13th movies. Congress should nuke the telephone tax, including the local amount still being collected, and send it to the House of Horrors museum for future lawmakers to ponder (including the dingalings at the EU who are considering taxing e-mails and instant messages) before they create any new form of taxation.

Getting Exercised Over the Backdating of Stock Options

Filed under: Business Moves,Economy,Stock Schlock,Taxes & Government — Tom @ 1:59 pm

Did you know Congress is partially responsible for the scandalous runup in CEO pay?

Yup. By capping the deductibility of officers’ salaries at $1 million, companies who wanted to retain talent had to come up with creative ways of delivering compensation. (BTW, why are CEO salaries any less deductible that those of professional athletes and entertainers?)

This led to a widespread increase in the use of stock options. If a CEO did a great job, he or she could, and thanks to the great markets of the mid-1990s sometimes did, make tens of millions of dollars by exercising them.

Enter the mostly yucky markets, relatively speaking, of the last 6 years. Companies still need to have their CEOs around, yet don’t want to pay any more non-deductible salary than they have to (Shouldn’t the $1 million should at least be indexed to inflation?). Some boards have cut corners by backdating CEO options to dates when the company’s stock price was lower, enabling the CEO to make a profit, or more of a profit, when he or she exercises. This is a move that almost certainly isn’t legal (many criminal probes are in progress) and is a breach of fiduciary duty to shareholders.

But it all goes back to the fact that companies are not able to simply pay out deductible compensation, as The Wall Street Journal noted in a subscription-only editorial last weekend:

Which brings us to Congress, the villain of this tale that the rest of the press corps wants to ignore. Executive greed is an easier story to sell, we suppose. But the same Members of Congress who most deplore big CEO paydays are the same ones who created the incentive for companies to overuse options as compensation.

In 1993, amid another wave of envy over CEO pay, Congress capped the tax deductibility of salaries at $1 million. To no one’s surprise except apparently the Members who passed this law, most CEO salaries have since had a way of staying just below $1 million year after year. But because companies still need to compete for and retain top talent, they have found other forms of compensation — notably stock options.

And one of the problems with options is that they give executives every incentive to capitalize all company profits back into the stock price — thus contributing to their own pay — rather than paying out dividends to shareholders. As SEC Chairman Chris Cox has noted, the 1993 law deserves “pride of place in the museum of unintended consequences.”

In a better world — one in which Congress kept its nose out of wage decisions — corporate directors could pay the salaries they wanted and wouldn’t rely so much on options to motivate executives. This, in turn, would reduce the incentive for companies to stoop to such dubious pay practices as option backdating. But as long-time observers of Washington, we can say with certainty that backdating will cease as a corporate practice long before Congress admits its mistake.

UPDATE: This MarketWatch article in IBD has a lot of noise about how the backdating of options, which mostly occurred between 1996 and 2002, would not have taken place if Sarbanes-Oxley had been in effect. Give me a break – the ability to detect the backdating goes back to 1992, thanks to rules on executive compensation mandated by the Bush 41 SEC. Nice try, no sale. If SarBox increased disclosure in this area, great, but SarBox fans know darn well that the tedious and mostly-worthless mandated extra internal control work brought about by Section 404 is where all the contention is.

US Government Budget Flim-Flam 101, Courtesy of Brain Shavings

Filed under: Economy,Scams,Taxes & Government — Tom @ 11:28 am

When is a cut not a cut?

When someone is claiming that the “cut” is occurring in the federal budget for something. It’s almost always a reduction in the level of projected spending that ends up being an increase of more than the rate of inflation compared to the prior year.

My dictionary says that’s what’s known as an “increase in real spending.”

“”Brain Shavings has more, with graphs and all (HT “” Porkopolis).

“Wow” Economic Numbers Come Out. Let’s See How They’re Reported by Reuters. (Answer: Not Well At All)

Filed under: Economy,MSM Biz/Other Bias,MSM Biz/Other Ignorance — Tom @ 10:14 am

Off the wires from Marketwatch (registration may be required):

May Chicago PMI rises to highest level since October

Business activity expanded in the Chicago region for the 37th consecutive month in May, the National Association of Purchasing Managers-Chicago said Wednesday. The Chicago purchasing managers’ index rose to 61.5% from 57.2% in April, much stronger than the expected decline to 56.2%. It was the highest level since October. Anything over 50% indicates growth. The prices paid index fell to 76.9% from 77.2%. The new orders index rose to 69.6% from 60.8%.

The very last number can be translated as “manufacturers are getting flooded with orders.” Nice problem.


UDPATE: Reuters 10:04 a.m. — “US Midwest business activity grows strongly.” That’s pretty good, but it’s the immediate reax; let’s see if and how they massage as the day goes by.

UPDATE 2: Reuters 10:36 a.m. — Okay, the headline is good, but now the spin is ready (bolds are mine):

Midwest May business activity grows strongly

Business activity in the U.S. Midwest expanded at a faster rate than expected in May, with new orders and hiring bouncing back from weak April levels.

The report defied weakness in some other regions’ data recently and suggested the Chicago regional economy was staying strong well into the second quarter.

The National Association of Purchasing Management-Chicago business barometer rose to 61.5 from 57.2 in April. Economists had forecast the index at 56.0.

A reading above 50 indicates expansion, and the Chicago index has been above that level for more than three years.

Questions to Reuters:

  1. If above 50 indicates expansion, by definition, how can you call any of the April numbers (57.2, 77.2, 60.8) “weak”?
  2. Could you specify other regions with weakness that needed to be “defied” (as if the weakness is fairly pervasive)? Although I was not able to find regional data at the Institute for Supply Management web site (found and discussed in Update 3), I was able to find this overview of the entire economy in April (Yes, I realize that the page referred to says “Also, the information in the regional reports is not used in calculating the results of the national report” [which, by the way, Reuters neglected to note]. I’m showing that the chance that there is meaningful weakness in an individual region is pretty low.):


    Across the board, April could be fairly characterized as an economy that’s on fire. In fact, the “problem,” as indicated in the Inventories numbers, is that things are so good that producers can’t produce things fast enough! The chance that any one region is suffering from a great deal of “weakness” has to be close to zero. It’s up to Reuters, in the face of the above, to show readers that I’m wrong.

So let’s call this characterization of good numbers as weak, and the attempt to refer to conveniently unidentified “weak” regional data what it is, shall we? It’s a fundamentally dishonest attempt to minimize good news by Reuters. Unfortunately it’s par for the course.

UPDATE 3: Reinforcing the conclusion in Update 2, here is the list of April regional reports (HT to Rose Marie Goupil at ISM for helping me find these). Every single one has a composite score over 50, even auto industry-plagued Detroit.


Not every region submits a report every month, but I struggle to see where Reuters can claim “weakness” in other regions that needed to be “defied.”

UPDATE 4: Almost forgot — the obligatory “good news may be bad news” warning at the end of the Reuters report:

“The Chicago PMI report certainly came in much stronger than anticipated and will continue to feed the uncertainty surrounding the June Federal Open Market Committee meeting,” said Kevin Flanagan, fixed income strategist, global wealth management, at Morgan Stanley in New York.

Yup, the big bad Fed might stop the economy all by itself with an interest rate hike or two. Zheesh.

Just another day in Business Media Bias.

UPDATE 5: Reuters 12:55 PM report is still singing from the same hymnal (“Midwest economy powers on”) — “Midwestern U.S. business expansion was faster than expected in May, with new orders and hiring bouncing back from weak April levels, a report showed on Wednesday.”

Cross-posted at

The 25th Carnival of Ohio Politics Is Up!

Filed under: News from Other Sites — Tom @ 10:01 am

It’s here.

Biz Media Bias 101: Reuters on the Treasury Announcement

Filed under: MSM Biz/Other Bias,MSM Biz/Other Ignorance — Tom @ 9:47 am

From Reuters’ announcement of the Hank Paulson selection as Treasury Director:

WASHINGTON (Reuters) – President Bush on Tuesday named Henry “Hank” Paulson as his new Treasury Secretary, enlisting a powerful Wall Street player to lead his economic team as he seeks to lift his sagging poll ratings.

The assumption is that Bush cares about his “sagging poll ratings,” which by the way are actually slightly rebounding. Given his conduct for 5-1/2 years, I doubt that he really cares. If he cares at all, he won’t start worrying about it until Labor Day.

….. Paulson, 60, is a former Nixon administration official and a heavy contributor to Republican candidates. He is poised to take the reins of an economy that grew at its fastest rate in 2-1/2 years during the first quarter but shows signs of slowing.

As if what Paulson was doing IN HIS MID-20s is terribly relevant.

As for the “but shows signs of slowing,” this is rich. If it “slows,” it might be to 4% or so, which is twice the rate of the established EU countries and Japan. “Growing less briskly” would be accurate, if that’s what Reuters was interested in being (but it’s not).


The Treasury shake-up was the latest in a series of staff changes Bush has made to try to shore up his popularity, starting with the move of Bolten, the former budget director, to the job of chief of staff.

Again, presupposes that personnel moves are all about popularity and not about getting a job done. Totally, absurd. Reuters should simply report the news (but it won’t).

Bizzy’s AM Coffee Biz-Econ-Life Links (053106)

Free Links:

  • They needed a poll for this? — “Americans Like Instant Gratification” (and hate to wait in lines). Who knew?
  • Jacques Chirac is getting grief for pardoning Olympic track hero Guy Drut, who had received a 15-month suspended jail sentence for “picking up a EUR 3,000 monthly salary for a non-existent job from 1990 to 1993.” Read the article, and you’ll see that the reason people are upset has little to do with condoning corruption, and more to do with fear that the dreaded “right wing” will seize electoral opportunity from it. Zheesh.
  • Managing, or Massaging, ExpectationsThis Expatica report tells us that the Pope “was expected to draw up to one million people to the inaugural mass in Warsaw, but only an estimated quarter of a million showed up for Friday’s proceedings.” Benedict DID draw 900,000, as noted in this not widely carried AP report, at Krakow on Sunday (FreeRepublic has some great pics; this Catholic News Agency link reports “1,000,000 strong”). But this AP report managed not to mention the Krakow crowd size, and this one focused on the financial opportunism exhibited by some. And I’m supposed to believe that the WORMs (Worn-Out Reactionary Media, known to most as The Mainstream Media) have no anti-religious bias. Uh-huh.
  • “Don’t try to control illegal immigration, or forest fires will burn out of control” — That’s what The New York Times article about private firefighting in the West is trying to tell us. Spare me.
  • Brad Pitt and Angelina Jolie had their baby daughter named Namibia this past weekend. No, BizzyBlog isn’t going Hollywood. I’m just amazed at the nerve of this: “As the world awaited the birth of the child at a luxury villa complex on the coast, Namibian authorities said they had bowed to pressure from Jolie and Pitt and granted them the right to ban foreign journalists from entering the country – a remarkable move for the Government of any sovereign state. But the exceptionally high-profile presence of Pitt and Jolie promises to be a massive boost to tourist income in the desperately poor country, where the average wage is $46 a week.” Wanna bet?

Subscription-only Links:

  • Biz Weak reports in its June 5, 2006 issue that “The 3 million students graduating from U.S. colleges and universities this year carry more than $40 billion in student loans, and interest rates on federal loans are jumping two percentage points in July. That means new grads are going to feel an even bigger pinch than their predecessors ….. They do have a window to secure the lower rates if they consolidate their loans with one lender by June 30.” Take note if you or your grad are affected.
  • Another Biz Weak article on voting machines found that Sequoia Voting Systems Inc., which sells machines in 20 states, is majority-owned by ….. Venezuelans. Nothing automatically nasty in that, except that a Sequoia affiliate provided the machines for the 2004 recall election of Hugo Chávez, which many observers believe was rigged. So we have potential foreign influence to worry about, on top of the already well-documented security problems. 1,050 counties in the US will use these in 2006. I say, “Paper ballots, please.”
  • In its cover story Saturday, Barron’s reported that the market for second homes in some vacations spots isstarting to plunge.” Supposedly, “some welcome a correction.” I’ll bet that group would not include those who bought recently. (June 1 update: Free Real Estate Journal link is here.)

Positivity: Honoring Three Virginia State Troopers

Filed under: Positivity — Tom @ 6:01 am

All for “extraordinary acts of valor above and beyond the call of duty”:


The Pleasure Inn Has “For Service Speak English” Company

Filed under: Economy,Immigration,Taxes & Government — Tom @ 12:39 am

It’s a good thing for this guy that The Ohio Civil Rights Commission (OCRC) can’t cross state lines (HT Michelle Malkin):


How do you say cheesesteak with in Spanish?

Joseph Vento, the owner of Geno’s Steaks, doesn’t know. And he doesn’t care.

Just read the laminated signs, festooned with American eagles, at his South Philadelphia cheesesteak emporium: This is America. When Ordering, Speak English.

This is my kind of guy:

Some try to order a cheesesteak. And it bugs Vento if they can’t ask for American cheese, provolone or the classic – Cheez Whiz – without pointing.

“If you can’t tell me what you want, I can’t serve you,” he said. “It’s up to you. If you can’t read, if you can’t say the word cheese, how can I communicate with you – and why should I have to bend?

“I got a business to run.”

Vento, who lives in Shamong, put up the signs when the immigration debate seized national headlines six months ago.

With Geno’s Steaks tattooed on his arm, Vento is used to publicizing things, especially what’s on his mind. Speak English signs also poster his Hummer. He has driven through South Philadelphia blaring through the SUV’s P.A. system denunciations of neighborhood business owners who hire illegal immigrants.

“I say what everybody’s thinking but is afraid to say,” Vento said.

Unfortunately for Tom Ullum at the Pleasure Inn, the OCRC, described by the R-Rated Whistleblower as the “$11,456,071-per-year Political Correctness Commission, whose 135+ bureaucRATS seem to have nothing better to do than travel around the state so they can persecute people like bar owners in Mason for having a helpful sign in their window…..” can, and has, come into Mason, and is attempting to make him pay a heavy price for posting signs (originally “For Service Speak English,” plus the recently added “For Service You Must Be Legal”) he has every right to post.

Earth to OCRC: If the State of Pennsylvania can leave Geno’s alone, leave the Pleasure Inn alone. NOW.

Previous Posts:

  • May 13, 2006 — Why Won’t the Ohio Civil Rights Commission Get Off Tom Ullum’s Back?
  • Dec. 19, 2005 — Update: Thought Police 1, Bar Owner 0; Bar Owners Showing Solidarity–1
  • Dec. 16 — Thought Police 1, Bar Owner 0
  • Oct. 9 — Questions for the Thought Police at the Ohio Civil Rights Commission and The Cincinnati Enquirer


Republican by Design Trackback Tuesday participant.

May 30, 2006

Paul Hackett Defends (But Is Not Representing) Officers in Haditha Deaths: AP

Filed under: OH-02 US House,Taxes & Government — Tom @ 11:44 pm

June 29: The computer taken from the Veterans Administration has been recovered, and per the FBI, the data was never accessed.

Paul Hackett must have been very busy today, which is why this has turned in to Paul Hackett Night (see previous post on the Veterans Administration ID theft class action filing).

In a very curious development, Hackett has gotten involved in the story of the Haditha deaths:

Officers Not a Target of Iraq Death Probe
Lawyer says officers not target of investigations into Iraq civilian deaths in Haditha

By THOMAS WATKINS, Associated Press Writer

CAMP PENDLETON, Calif. – Three officers relieved of command from a Marine battalion are not targets of investigations into whether their troops killed as many as two dozen Iraqi civilians and tried to cover it up, the attorney for one of the officers said Tuesday.

Capt. James Kimber learned about the deaths only after the 3rd Battalion, 1st Marine Regiment returned from Iraq in March, attorney Paul Hackett said.

Separate investigations seek to determine whether the Nov. 19 killings in the western Iraqi city of Haditha were criminal and whether the Marines involved and their commanding officers tried to hide the truth.

The Pentagon has said little publicly. What is known is that a military convoy hit a roadside bomb, killing one Marine. The Marine Corps had initially attributed 15 civilian deaths to the bombing and a firefight with insurgents, eight of whom the Marines reported had been killed.

Rep. John Murtha, a Pennsylvania Democrat and decorated war veteran who has been briefed by military officials, has said Marines shot and killed unarmed civilians in a taxi at the scene and went into two homes and shot others.

On Tuesday, White House spokesman Tony Snow said President Bush learned of the killings only after a reporter from Time magazine asked questions. Time published an article in March that said the Pentagon was investigating the incident.

The targets of the investigations are about a dozen enlisted Marines, according to Hackett, a Marine reservist and Iraqi war veteran who represents Kimber.

Hackett, who last year narrowly lost a special election for a U.S. House seat in Ohio, said the highest ranking among those under investigation is a staff sergeant who led the four-vehicle convoy that was hit by the bomb.

Kimber, who was nominated for a Bronze Star for valor in Haditha, was relieved of command last month because his subordinates in the battalion’s Lima Company used profanity and criticized the performance of Iraqi security services during an interview with Britain’s Sky News TV, Hackett said.

“My purpose is to separate his name from the alleged war crimes that took place,” Hackett told The Associated Press by telephone. “He’s not under investigation for anything related to what has played out in the press.”

The Pentagon has named two others who were relieved of command: Lt. Col. Jeffrey Chessani, the commander of the 3rd Battalion, 1st Marine Regiment, and Capt. Lucas McConnell, who commanded Kilo Company, which was implicated in the killings.

Hackett does not represent either man but said that neither was present for the shootings and that he believes neither is a target of the investigations.

Well Look Who’s Filing a Class-Action Lawsuit against the VA

June 29: The computer stolen from the Veterans Administration has been recovered, and per the FBI, the data was never accessed.

I’ll have a lot more to say on the Veterans Administration data breach and a number of other alarming developments in the deterioration of financial privacy within a week or so (maybe sooner), but I couldn’t help but call attention to this little tidbit:

Class Action Suit Filed On Behalf Of Veterans

Paul Hackett of Cincinnati and Matthew Page of Walton have filed the suit on behalf of nearly 26 million veterans. The lawsuit requests relief in the form of credit and/or identity theft monitoring, paid for by the VA.

Can’t help but think there might be a little more to this story.

UPDATE: Obviously I’m not a big thinker. Today’s Enquirer (HT “” Chuckoblog) takes the spin from Hackett and tells us that he wants $1,000 in damages for each vet plus credit monitoring.

Do the math, people: 26.5 million vets (noted in the Enqurer article) times $1,000 per vet is $26.5 billion. Hackett’s fantasyland 30% standard contingency-fee cut of that would be a measly $7.95 billion. When he settles for “only” $50 per vet, he’ll get a paltry $400 million (rounded), and be set for life. He can BUY a Senate seat at that point. Hope Voinovich is paying attention. See comment 2 below. Hackett is a complainant, according to the Enquirer article (he was not identified as such in the WKRC article I originally posted from), and therefore by law is not to benefit from any settlement any more than anyone else in the “class” of 26.5 million vets.

Separate Hackett Post: Paul Hackett Defends (But Is Not Representing) Officers in Haditha Deaths: AP

KELO Crunch Time Clearly Begins Tomorrow

June 1 UPDATE: And Then There Were Four

It’s clear from recent headlines that nothing is going to be settled tomorrow in the New London Kelo situation, and, though it won’t be formalized by New London City Council until next week, Kelo Crunch Time will begin. If form holds (“form” meaning that nothing happens until the issue is forced by a deadline or similar time pressure), Crunch Time will last at least 90-plus days before a final resolution occurs.

Did I say “KELO situation” and “KELO Crunch Time”? Yes, because “Kelo” seems to have become a four-letter word that the AP oddly won’t utter:

Deadline approaches but no deal expected in Fort Trumbull dispute
May 30, 2006

NEW LONDON, Conn. –Though facing an eviction deadline Wednesday, the residents whose Fort Trumbull neighborhood has been seized by eminent domain don’t expect anything to happen for nearly a week and expect more legal battles before the case is resolved.

The dispute over the waterfront New London property reached the U.S. Supreme Court last year, when a divided court ruled that the city could take the land for a private development. (Take a look at the pink house at the previous post and tell me what is “waterfront” about it. The Fort Trumbull area as a whole is on the waterfront, but the “disputed property” is most definitely not. — Ed.)

Most of the neighborhood has been razed but a handful of homeowners refuse to leave. They’d be kicked out of their homes if a deal wasn’t reached by Wednesday.

But since the City Council, which would need to approve any action, doesn’t meet until Monday, an attorney for the homeowners says Wednesday’s deadline isn’t set in stone.

“Nothing is going to happen one way or the other tomorrow,” Bullock said.

Neither the excerpt, nor the rest of the article, contains the word “Kelo.” That’s like talking about Norma McCorvey’s unsuccessful attempt to overturn Roe v. Wade without mentioning the case title itself (which of course this article does not fail to do).

Does the AP not want articles about the KELO situation found by search engine users?

I can’t be the only person who thinks that the way the actual situation in New London turns out as a result of the (ahem) KELO decision might reflect on how well thought-out (or not) that KELO decision was in the first place.

As to developments on the ground, assuming Council acts as expected in its meeting next Monday, it looks like a 90-day eviction clock will start ticking shortly thereafter. That clock would run out on roughly Labor Day, well over 13 months after the KELO v. New London case was decided at the Supreme Court.

UPDATE: Reax from Ken at It Comes in Pints“Unbelievable. I’ve been trying to absorb this all day. I still can’t freakin’ believe this utter nonsense.”

UPDATE 2: Other Reax –

  • The No Kool Aid Zone” the New London thieves are going to continue in their plan to steal the homeowners’ property even though they no longer ‘need’ it. This just defines the word ‘infuriating’.”
  • Atlas Blogged notes that states have been notoriously slow in enacting anti-eminent domain legislation with teeth.

UPDATE 3, May 31, 11 p.m.: Following up on the “waterfront” characterization above, here is the “waterfront” location of Suzette Kelo’s house –

Kelo House

Here is a Google Earth view (don’t know how recent, but it looks like the properties in question are all within the rectangle above and to the left of the Kelo house):


Kelo Crunch Time Looms in New London — Part 3: Pre-Crunch Commentary Roundup

Filed under: Economy,MSM Biz/Other Bias,Taxes & Government — Tom @ 2:14 pm

6:15 PM UPDATE: Recent headlines indicate that nothing decisive will occur tomorrow, and that Kelo Crunch Time (expected to last 90-plus days) will begin. Go to this follow-up post for more.

June 1: UPDATE: And Then There Were Four

Note: Tomorrow, May 31, is what I am calling Kelo Crunch Day, the deadline set by the New London City Council and the New London development Corporation (NLDC) for the Kelo holdouts to either accept their “offer” (moving the houses to a different parcel and paying rent for the rest of their lives) or face eviction and the assessment of $946,000 in back rents, taxes, and fees. Go to “Kelo Crunch Time” Part 1 and Part 2 from last week for more immediate background, and explore the previous post links at the bottom of this entry for a deeper look at what has happened to the real people impacted by Kelo v. New London since the Supreme Court’s decision.

New London House 0605

This home in New London, Conn., is one of several at the
center of last year’s Supreme Court ruling.
(AP Photo originally posted at in June of last year)


Rick Green at the Hartford Courant Challenges the Governor to Lead

In his May 26 column, Green said, in essence, that Connecticut Governor Jodi Rell needs to do the right thing, and noted how easily the matter could be resolved:

Is Gov. Rell Really Set To Rumble?

Big Brother wants their homes and all our governor can say to these New London property owners is let’s “redouble” efforts to prevent this.

How about: You kick them out of their homes, New London, I take away the state money for your pretty waterfront condos and boutique hotel.

….. It seems the governor thinks these holdouts just want to shake down New London for more money. Her mediator, Robert Albright, “has to move beyond these discussions of who wants to sell,” said Scott Bullock, lawyer for the Fort Trumbull residents.

“They want the title to their property. They want to hold on to their homes,” said Bullock, senior attorney with the Virginia-based Institute for Justice.

Giving the residents back their homes won’t interfere with the development, Bullock said, because residents with homes in the way are willing to have their buildings moved to a small portion of the property, known as parcel 4A, where no immediate construction is planned.

So what’s at stake isn’t the future of the Fort Trumbull project. But after eight years, this ugly eminent domain fight might teach us something.

It’s whether our top leader is really a leader.

Dissenting New London Councilman Speaks Out

In a May 23 Letter to the Editor, Councilman Charles Frink made a strong argument that what the City and the NLDC’s believe they are entitled to collect from the holdouts if they don’t give in is vastly overstated, and that in any event the holdouts should get what they want (New London Day link requires registration, and requires subscription after 7 days):

Fort Trumbull Tax Issue Might Be Fictitious

….. if my information is correct, the figure of $946,143 for past-due-taxes, use and occupancy fees, and rent from third parties, is, at the very least, grossly exaggerated and may be entirely fictitious.

Since the obligation to pay property taxes rests with the owner(s), and the titles to the properties of the Fort Trumbull residents were taken from them by eminent domain and have not been returned, those residents do not owe a penny of past taxes. As for use and occupancy fees and third-party rents, a pre-trial agreement stipulated that these fees would be waived and rents not claimed during the period of litigation, which ended in June of 2005. A court might hold that these monies are owed since that date, but the amount would be a small fraction of the quoted figure.

The situation could be settled promptly if the council would adopt the compromise proposed by Bill Cornish and me:
• Return the titles to the residents.
• Cluster the remaining houses on parcel 4A.
• Agree that the residents would pay taxes back to last July.
• Agree to no further litigation.

Any other course of action promises further delay and dissension.

It is pretty unique to owe property taxes on property you don’t even have the title to.

The New London Day Weighs In

In an unsigned Sunday editorial (as with the previous item, registration is required, and subscription is required after 7 days) that I believe surprised almost no one, The Day said that the Council and the NLDC should get their way:

Giving back the titles to the affected properties and leaving them all in place is not a reasonable option. It is time to move on.

Mayor Elizabeth Sabilia’s proposal to relocate buildings to the northern part of Parcel 1-A (Note: I believe they mean 4-A — Ed.) and give the people lifetime uses of the dwellings is a sincere and accommodating proposal. It may well have placed additional pressures on all the parties — including the former property owners and the governor’s office — to press with renewed vigor to settle the matter.

The governor, who is running for election, has tried to balance the interests of the former property owners with the need to complete a state project that would provide an enhanced tax base and a new center of economic activity for New London.

Beside the additional compensation and possible home relocations, there also may be other options. Perhaps some property owners could get new housing among some 64 units planned in the area. That is a fitting subject for negotiation.

But time truly is running out. The City Council has set a deadline of May 31, Wednesday, for the parties to reach a settlement. After that, the individuals would be subject to paying back taxes, give-backs on rents they collected since the Supreme Court decision and paying rent for their occupancy of the buildings. The former owners agreed to those stipulations in a court case before the matter was settled by the Supreme Court.

The Day editorial did not address why moving the houses AND giving back the titles, which is the holdouts’ compromise offer, is not acceptable. And The Day must know that none of the holdouts is the least bit interested in “new housing.” I also question the accuracy of The Day’s claim in the final sentence of the excerpt, given that Councilman Frink above stated that “a pre-trial agreement stipulated that these fees would be waived and rents not claimed during the period of litigation, which ended in June of 2005.” E-mail me if you can help to clarify this.

An AP Downplay?

Maybe it’s me, but The Associated Press’s National News Calendar (backup link here) for this week didn’t seem to be interested in calling attention to the situation: “New London, Conn. — Deadline for home sales in the city’s Fort Trumbull section as part of eminent domain proceedings.” Seems like it would have been appropriate to relate this to the Supreme Court Kelo case, don’t you think? If I hadn’t added “Fort Trumbull” to my Google Alerts I would have missed this; a lot of other people probably did. Maybe that’s the point.

My Take

The fact that New London’s City Council and the New London Development Corporation (NLDC) won’t even move the houses and return the titles tells me that this is, to them, about a lot more than the Fort Trumbull project. I believe that it has nothing to do with reason, or fairness, or equity. Instead I believe that it’s all about putting a win in the eminent domain tyrants’ column, and finishing the messy (and in their minds, mandated) job of property confiscation that the Kelo decision enabled. They don’t want to be seen as the group that couldn’t finish the job of eviction even with a landmark Supreme Court decision buttressing their cause.

If this out-of-control pride is all that is keeping Council and the NLDC from a entering into what from here seems to be a perfectly reasonable settlement, shame on them. If it is a legal option, I believe that Governor Rell needs to threaten to pull the state money earmarked for the project, and be willing to back up that threat, even if it holds up continuation of the NLDC’s development plan.

Developers and city fathers everywhere will be watching to see who blinks, and what Governor Rell does. Hopefully, so will the rest of America.

UPDATE: You would think that this item is unrelated, but maybe not — New London High School football coach Jack Cochran has a nasty habit of running up the score against his opponents, and, regardless of the score, will not take out his first team until the opposition puts in its second team. In response, effective this year, the Connecticut Interscholastic Athletic Conference passed a rule (which I strongly disagree with, for what it’s worth, as does the writer at the linked article) that a victory margin of 50 or more points earns the winning coach a suspension for the next game. Given how the City Council, the NLDC, and the local paper are treating the badly outgunned Kelo holdouts, it makes you wonder how many of them played football under Cochran, or share his run-up-the-score philosophy.

UPDATE 2: Just this morning, a Hartford Courant editorial (“Stop Shameful Eviction Plan”) came out firmly for the holdouts:

The New London City Council has ignored reasonable compromise, including the residents’ willingness to move their homes to a neighborhood site that wouldn’t interfere with the city’s plans.

….. (Gov. Rell) should use her power to insist that the development plan be revised to include the remaining homes. The state’s heavy investment in Fort Trumbull, its museum and the river walk give her the clout to insist on changes in the plans forged during the Rowland administration.

She alone can prevent this mistake from compounding.

What an image for Connecticut – to be a national example of how not to treat homeowners.


Selected Previous Property Rights Posts:

The NY Times Gets the New Treasury Pick Wrong, and Reveals Its Paranoia in the Process

The New Times’ prediction for who would be the next Treasury Secretary to replace the departing John Snow totally blew up — They predicted it would be former Commerce Secretary Don Evans.

OK, everybody makes mistakes, but its’ teh premise of this one that’s so remarkable (HTs Don Luskin and TimesWatch via “” Porkopolis):

…That Mr. Evans is even being considered underscores the shift in focus of the search from Wall Street outsiders to Bush insiders. …Administration allies said that senior officials had made overtures to prominent executives on Wall Street, including Henry M. Paulson Jr., the chairman of Goldman Sachs.

…But Mr. Paulson and other executives expressed little interest in taking the post, in part because neither Mr. Snow nor his predecessor, Paul H. O’Neill, had any substantial role in shaping economic policy.

The real power to set priorities, whether it was cutting taxes in 2001 and 2003 or the failed effort to overhaul Social Security in 2005, has always been held by a small circle of advisers in the White House, including Vice President Dick Cheney.

This would seem to indicate that The Times needs to admit that this Cheney-led cabal, this “small circle of advisers” (implication: operating in the dark, beyond the reach of accountability, cooking up sinister plans to ruin us all) doesn’t set economic priorities — otherwise Paulson, according to Times’ own reporting, would not have taken the job. Don’t buy tomorrow’s paper expecting to see that admission.

I Must Have Been Absent the Day “Steely Resolve” Got Redefined

Filed under: Corporate Outrage,Economy — Tom @ 2:05 pm

This is what ousted Hewlett Packard CEO Carly Fiorina thinks is heroism (or is it heroine-ism?), based on this book excerpt noted at Business Week (subscription required; appears on Page 11 of June 5 print edition):

An excerpt of the book handed out at the show offers a glimpse of Fiorina’s steely resolve even as a young executive. At AT&T (T ) early in her career, she writes, a colleague arranged a business lunch at a strip club where women “would dress in completely see-through baby-doll negligees and dance on top of the tables while the patrons ate.” Fiorina insisted on going, and the next day at the office, she writes, “the balance of power had shifted perceptibly. I had shown…that I would not be intimidated, even if I was terrified.”

I’m sure women managers who are still subjected to coercion to attend these “business lunches” are REALLY grateful for your show of “steely resolve,” Carly.