Why Government can’t run a business ... The Postal Service vs (gulp) The NY Times

The United States Postal Service has spread the alarms.  It has run through a $12 billion federal loan that has kept itself afloat for the past two years and it is now looking for a bailout.  It cites declining revenues because of the internet, the inordinate cost of its pension program and the inability to control labor costs because of no-layoff provisions in its union contracts. It wants to cut service to 5 days a week, possibly more and it is planning to slow the delivery of first class mail.  It has talked about reductions in force of 120,000, but that is probably more of a scare tactic to pressure Congress into approving emergency funding and granting relief on pension obligations.

 

The plight of the Post Office and how it is handling its fate stands in stark contrast to that of another private sector group – the newspaper industry.  Both are suffering from the effects of internet competition.  Both deliver product daily.  Both are unionized.  Both prefund their pension plans.  And both are declining industries.  Yet, by and large, newspapers and newspaper groups have kept their heads above water, the Post Office has not.  And newspapers have succeeded with far greater rates of revenue declines.

Part of the reason for newspapers resiliency is they have their backs against the wall.   They have to solve their own problems.  Going to the government trough for a bailout is not an option.  It would forever compromise their integrity and believability.

I picked the New York Times as an example, not because it is my favorite paper, it is not.  But it is representative of the newspaper industry.  It has no broadcast subsidiaries and virtually all its revenue is from newspaper circulation, advertising and more recently internet ads and fees.  But the decline in revenue at the Postal Service is nowhere near that of the Times.  In the past 5 years, the loss of revenue at the Times has been triple that of the USPS (almost 27%, as opposed to 8% ).  Even looking at the 2008 – 2010 year comparison (peak revenue for USPS was 2008) the Times revenues losses were more than double the Postal Service (22.9% vs. 10.5%).

Despite this adversity, the Times is profitable (by a smidgen) and the USPS is facing an $8.3 billion loss.  Interestingly, the Times lost money in 2006 and has actually improved its performance.  In the same year USPS was well in the black (by its accounting procedures) and is now threatened with insolvency.

Now, why has the Times shown success and the Postal Service not?  The Times as most other newspapers has taken aggressive action to control costs.  It has reduced force and renegotiated labor contracts.  It has sold its broadcasting operations to bolster its cash position.  It has outsourced its newsstand sales and bought out its employees to do so.  But most of all it has been facing reality.  Contrast that to the USPS which recently negotiated its labor contracts with raises it can’t pay.  It has lobbied Congress for relief and in general has simply ignored the problem.  And it has dug itself into a hole.

The whole mess is an example of the inability of government run enterprises to adapt rapidly to threats.  The meddling of Congress is one reason.  They refused to approve a rate increase last year the Rate Commission requested.  They prefer wasteful Post Offices where they should be either be replaced with private contract operations or simply shut down.  They must get out of the way.  The example of what the NY Times has accomplished should be used as a model for mail delivery.  Nothing should be sacred, be it privatizing major delivery functions, hiring consultants to eliminate inefficiencies, and most of all getting out of the mode of government workplace comfort.  Newspapers are reacting to the threat of extinction and making progress.  The Postal Service looks for largesse, our largesse.

New management with backbone is the only answer.

Why LightSquared is more than cronyism … It’s about safety

The recent revelations by Eli Lake at The Daily Beast that a four-star Air Force general was pressured to alter his testimony to favor Light Squared, revealed a new case of cronyism in the White House.  Now a second individual has now come forward to say he too was urged to parrot OMB suggested text in his testimony - that the OMB wants expedited testing for frequency interference.  He refused to do so out of safety concerns.  From The Daily Beast: 

The four-star Air Force general who oversees Air Force Space Command walked into a highly secured room on Capitol Hill a week ago to give a classified briefing to lawmakers and staff, and dropped a surprise. Pressed by members, Gen. William Shelton said the White House tried to pressure him to change his testimony to make it more favorable to a company tied to a large Democratic donor.

The episode —confirmed by The Daily Beast in interviews with administration officials and the chairman of a congressional oversight committee —is the latest in a string of incidents that have given Republicans sudden fodder for questions about whether the Obama administration is politically interfering in routine government matters that affect donors or fundraisers. Already, the FBI and a House committee are investigating a federal loan guarantee to a now failed solar firm called Solyndra that is tied to a large Obama fundraiser.

Now the Pentagon has been raising concerns about a new wireless project by a satellite broadband company in Virginia called LightSquared, whose majority owner is an investment fund run by Democratic donor Philip Falcone.

LightSquared hopes to become a satellite based phone operation similar to land based cell phone service providers.  It seeks to use additional unused frequencies adjacent to the GPS band that currently provide a buffer to GPS service.  Interference from LightSquared satellites could degrade GPS service both for civilian and military users.  The majority owner of LightSquared is hedge fund manager Phil Falcone who between himself and his wife have been heavy contributors to the Democratic Party (over $60,000 last year).

But this meddling is far more than crony capitalism it’s about threatening the integrity and safety of the GPS system.  GPS has grown from its infancy as navigation system to pilot sailboats or to guide you to Aunt Katie’s house in rural Vermont. With accuracy improvements, it can now position anyone consistently within 3 feet, anywhere in the world.  Because of that accuracy it is now being used by aircraft to conduct precision approaches to weathered in airports without ILS.  Down the road air traffic control will become GPS based, rather than ground radar based, as will collision avoidance systems.  In the future GPS will be used to help drive your car autonomously (hands-off or driverless).  Google is currently testing a fleet of autonomously driven Priuses in the Bay area (using backup drivers) and soon will be testing them in Nevada, driverless.  The DARPA Grand Challenge conducted in the 2004 to 2007 period proved that driverless cars can operate safely even in an urban environment.  And farm tractors will soon be doing the same thing.  It is the very accuracy and dependability of this system that will be applied to yet undreamed of applications. 

The administration and the FCC should refrain from reducing safety margins for this irreplaceable system.  The recent case of the North Koreans jamming a US intelligence plane’s GPS navigation system, forcing it to cut short its mission shows that the system is fragile.  We should be working on hardening it, not putting it in jeopardy with risky, self serving actions.

Bloomberg warns of riots … Is he actually encouraging “US Days of Rage” riots in NYC tomorrow?

Matt Drudge’s red and bold headline screams about Mayor Bloomberg’s prediction of civil insurrection by disaffected youth against the government.  But is Bloomberg actually encouraging, rather than predicting, disruptive behavior on the eve of the US Days of Rage protest led by former SEIU official Stephen Lerner?  Surely the mayor is aware of Lerner’s plan and background. 

The US Days of Rage is scheduled as a “nonviolent” protest outside the JP Morgan Chase headquarters
 tomorrow, Saturday, September 17.  It has been organized by Lerner, a far leftist, to bring down Wall Street and the banks and ultimately collapse the economic system of the US.  Lerner has been an acolyte of Andy Stern who resigned the presidency of the SEIU in March, 2010.  Lerner left the union seven months later.  Neither the Days of Rage nor Lerner’s incendiary speech at Pace University in March (see below) have been reported by the legacy media.  Only The Blaze (Glen Beck) and Fox News have given it coverage.

Lerner’s March 19 speech at Pace University is a call to destroy the capitalist system (audio and text from the Blaze here).  The initial plan was to mob the JP Morgan Chase shareholders meeting in May to demand social justice.  That failed because the meeting in Columbus Ohio was held at a motel surrounded by a moat.  The intended tactics there and presumably Saturday are to encourage mortgagees and student loan recipients to withhold payment to force JP Morgan to renegotiate or eliminate their loans.  Cities would follow with the same tactics, forced by the unions under the threat of a strike, to blackjack JP Morgan to write down municipal debt and free up funds for union employee wages.  From the Blaze:

And so the question would be, what would happen if we organized homeowners in mass to do a mortgage strike. Just say if we get, and, and, if we get half a million people to agree, we’ll all not, we’ll agree we won’t pay our mortgages, it would literally cause a new financial crisis.

There are four things we can do that could really upset Wall Street. One is if city and state and other government entities demanded to renegotiate their debt because they’re paying too much interest. And you might say, well why would the banks ever do it? Because they, the cities and counties could say we won’t do this and this in the future with you if you don’t renegotiate the debt now. Meaning, about a third of bank profits generate from dealing with cities and states. So we could leverage the power we have of government to say we won’t do business with you, JP Morgan Chase, anymore unless you do two things: you reduce the price of our interest, since your interest rate is down; and second, you rewrite the mortgages for everybody in the community so they can stay in their homes. We, we could make them do that.

The second thing is there’s a whole question in New York now about austerity and student’s rates and the question of the debt structure. What would happen if students said we’re not going to pay? It’s a trillion dollars. Think about your …sweeping that debt, a trillion dollars from students debt?

There’s a third thing that we could think about, what about if public employee unions, instead of them being on the defensive, put on the collective bargaining table when they negotiate they said we demand as a condition of negotiation that the government renegotiate, we want, we believe in good financial management. It’s crazy that you’re paying too much interest to your buddy the bankers. It’s a strike issue for us. We will strike unless you force the banks to relieve the debt of the city. I’m not going to go through all the detail except to say there’s extraordinary things we could do and if you add on top of that, if we really thought about moving to the kind of disruption in Madison, but moving that to Wall Street and moving that to other cities around the country where we basically said you stole $17 trillion, you’ve impoverished us and we’re going to make it impossible for, for you to operate.

Lerner continues

The folks that control this country care about one thing: how the stock market does; how the bond market does; and what their bonus is. So I think we weed out a very simple strategy: how do we bring down the stock market, how do we bring down their bonuses, how do we interfere with their ability to, to be rich. And if we don’t do, and that means you have to politically isolate them, economically isolate them and disrupt them. So, it’s not all theory, I’ll do a pitch.

So, a bunch of us around the country are thinking about who would be a really good company to hate? We decided that would be JP Morgan Chase.

Lerner’s use of the term “Days of Rage”, the Weatherman inspired riots in Chicago in1969, does not appear to be a call for a peaceful protest.  Lerner, reportedly has been a guest at the White House on 4 occasions, two of them more than ceremonial functions.  Keeping company with folks like that throws a bad light its current occupants.

Pulling the R lever in NY-9

The most important fact that has Democrats in Washington quaking in their boots, is that thousands of Jewish voters discovered last night they could pull the R lever and not be struck by lightning.

“When you’ve lost the New York Times …”

Sunday’s NY Times opens a subject being whispered in the halls of Democratic power.  Will a second run by a severely weakened President Obama destroy the party as it did for the 12 years following Jimmy Carter’s loss to Ronald Reagan?  Is the war of 2008 now lost?  Blame is put on his lack of resolve for liberal ideas, namely killing the EPA’s new ozone dictates, his lack of aggressiveness and of course the economy. 

In English spoken west of the Hudson, it’s called panic. 

Democrats are expressing growing alarm about President Obama’s re-election prospects and, in interviews, are openly acknowledging anxiety about the White House’s ability to strengthen the president’s standing over the next 14 months.

Elected officials and party leaders at all levels said their worries have intensified as the economy has displayed new signs of weakness. They said the likelihood of a highly competitive 2012 race is increasing as the Republican field, once dismissed by many Democrats as too inexperienced and conservative to pose a serious threat, has started narrowing to two leading candidates, Mitt Romney and Rick Perry, who have executive experience and messages built around job creation.

Democrats have been deluding themselves in the past nine months that the massive losses they took in 2010 were just a fluke.  The race for Weiner’s Brooklyn/Queens seat is proving them wrong.  There, the central issue is Obama himself because of his treatment of Israel. Polls are now trending to the Republican candidate, and even if the Democrat manages to hold it, it would be a humbling win. The district is a 2 to 1 Democratic and heavily Jewish, one that would normally go at least 60/40 in their favor.  Democrats are very vulnerable especially in the Senate next year, where 23 seats they own or control are up for grabs, versus 10 for Republicans. 

While the Times bemoans the threat Obama presents to the party next year, it doesn’t say how to get to there from here.  That is, who tells Obama he should step aside?  Bill Clinton?  No way, with the presumptive candidate his wife.  Jimmy Carter?  Give me a break!  For good or bad, Democrats will have to stick with their man.   

Republicans could create a little mischief if they wanted.  And that would be to convince either Rasmussen or Gallup to do public polling of Democrats to see who would be the best nominee, Hillary or Obama.   And keep doing it each month.

Now that would cause ruckus!

Anthrax lawsuit against the federal government gets a boost from DOJ gross incompetence

There are times when government agencies exhibit sheer idiocy and ineptness.  That happened this summer when Justice filed papers that, if true, undermines the entire FBI case against Fort Detrick scientist Bruce Ivins in order to win a lawsuit brought by the family of Bob Stevens, the first anthrax victim following 9/11.  Bob Stevens was the photo editor of The Sun, a subsidiary of American Media (AMI) located in Boca Raton, Florida.  He died after inhaling spores from a letter mailed to AMI containing powdered anthrax.  The family is suing the government claiming negligence in the way anthrax was handled at Fort Detrick, resulting in Steven’s death.  The case is now proceeding after the FBI closed its investigation last year declaring Ivins the sole culprit.

What DOJ is claiming is the now deceased Dr. Ivins did not have access to the specialized equipment used to dry the cultured spores in order to weaponize it (make into a fine powder), this to absolve the Fort Detrick command that employed Ivins.   Nice trick!  The problem is access to this specialized equipment was the linchpin in the case to prove Ivins was the sole perpetrator.  The government simply can’t have it both ways.  That was the reaction of the Stevens’ family lawyers and congressional critics.  Mercifully the federal judge handling the Stephens case has allowed it to be amended by Justice lawyers, though it totally undermines its case.  What is ironic is the unamended filing is probably accurate, but Justice is hoist in its own petard and doesn’t want anything to throw doubt on the FBI’s case against Ivins.

Bruce Ivins, a scientist at Fort Detrick, became the prime suspect after almost 7 years of massive FBI efforts to nail Dr. Stephen Hatfill, another scientist at the facility.  The FBI threw the kitchen sink at Hatfill, having him fired from his job, lifting his security clearance, blackballing him from other employment, releasing confidential information to the press and exerting relentless pressure on him.  Throughout his investigation, Hatfill was both cooperative (he voluntarily allowed the FBI to search his home and computers) and resilient (he consistently proclaimed his innocence, volunteered for polygraph tests and took his case to the public).   Eventually the FBI tired, and in late June 2008 settled a lawsuit that gave Hatfill a $5.8 million settlement.  In the meantime the FBI had begun pursuing Bruce Ivins with the same vicious treatment.  However Ivins did not have the fortitude of Hatfill to stand up to it.  He was emotionally fragile and ultimately committed suicide in late July, 2008 shortly after being told he would be indicted.  Now the FBI had their man and unlike Hatfill, he couldn’t fight back.  He was dead.

The FBI’s case against Ivins was weak.  It was based solely on circumstantial evidence.  It based its case on the similarity of the anthrax strain he was working with to the strain found in the letters mailed shortly after 9/11, a fact disputed by an independent National Academy of Sciences study.  The FBI claimed drying equipment used to weaponize anthrax was available to him, others said it wasn’t. Ivins was a vaccine specialist seeking methods to immunize populations against anthrax, not weaponize it.  His experience and expertise wasn’t there. But the FBI was desperate to close out the case.  It was an embarrassment.  It had cost over $100 million, the most expensive case in the Bureau’s history.  The lifeless Ivins was convenient fall guy.

In reality it is unlikely either Ivins or Hatfill were involved in the plot.  Far more likely it was the work of Islamist terrorists.  The text of the letters was anti Israel and anti US, consistent with the rhetoric of extreme Islamists.  Except for the letter to Boca Raton, all letters were addressed to the same two power centers that were the targets of the hijacked jets, New York and Washington.  The postmark dates on the letters suggests a preplanned, coordinated effort to extend the terror campaign.  They were mailed precisely one week after 9/11 (first batch to ABC, NBC, CBS, NY Post and AMI/Boca Raton postmarked 9/18) and the second batch precisely 4 weeks after (Senators Daschle and Leahy to Washington postmarked 10/ 9).

The Delray Beach, Boca Raton, Fort Lauderdale area was the final staging area for the hijackers in the two months prior to 9/11.  There was contact between two of the hijackers and the wife an AMI editor (not the anthrax victim Stevens).  She rented an apartment to them.  The targeting of AMI may have been more about bad blood than an ideological target.

Both the Justice Department and FBI have not covered themselves in glory.  They have tried to manufacture facts to fit its preconceived notions.  They have been intellectually dishonest.  They have wasted money when the answer should have been, “we don’t know.”  The FBI has ruined the life of Steven Hatfill and was probably the major factor in the suicide of Bruce Ivins, both individuals likely innocent.  It is still living down the major scandal of its crime lab.  And it lives with the legacy of fingering and harassing an innocent man in the high profile Atlanta Olympics bombing case.  It is a shadow of the organization J. Edgar Hoover founded.  It should hang its head in shame.

Will Obama admit his policies are failing as Lenin once did? Will he declare a New Economic Policy?

After Lenin seized power in the USSR in 1917, he instituted a repressive policy of seizing industry, farms, banks and almost all productive enterprises (without compensation), a policy called “War Communism” (essentially communism as we know it today).  It was an unmitigated disaster.  There were famines, diseases and a general breakdown in production.  Because of these failures, in 1921 he ordered a major change called the New Economic Policy (NEP) which allowed significant private ownership for small business and gave peasants a share of their output. This rapidly improved the economy that had been devastated by WWI and his earlier policies.  I am definitely not a fan of Lenin, but he had the wisdom to realize his original policies were unworkable.

With the miserable failure of President Obama’s jobs program in the past two and a half years, will he have the courage of Lenin to admit his policies are a mistake?  Will he see the wisdom of capitalism and its ability to generate jobs?  Or will he wallow in his ideology and watch the country tank, while blaming his opposition?

I’m not optimistic.