Lines Grow Long for Free School Meals, Thanks to Economy

Steve Hebert for The New York Times

More than 100 students eat a free dinner daily after classes at Ingels Elementary School in Kansas City, Mo. The Hickman Mills C-1 district feared students would otherwise go to bed hungry.

By SAM DILLON

Published: November 29, 2011

Millions of American schoolchildren are receiving free or low-cost meals for the first time as their parents, many once solidly middle class, have lost jobs or homes during the economic crisis, qualifying their families for the decades-old safety-net program.

The number of students receiving subsidized lunches rose to 21 million last school year from 18 million in 2006-7, a 17 percent increase, according to an analysis by The New York Times of data from the Department of Agriculture, which administers the meals program. Eleven states, including Florida, Nevada, New Jersey and Tennessee, had four-year increases of 25 percent or more, huge shifts in a vast program long characterized by incremental growth.

The Agriculture Department has not yet released data for September and October.

“These are very large increases and a direct reflection of the hardships American families are facing,” said Benjamin Senauer, a University of Minnesota economist who studies the meals program, adding that the surge had happened so quickly “that people like myself who do research are struggling to keep up with it.”

In Sylva, N.C., layoffs at lumber and paper mills have driven hundreds of new students into the free lunch program. In Las Vegas, where the collapse of the construction industry has caused hardship, 15,000 additional students joined the subsidized lunch program this fall. In Rochester, unemployed engineers and technicians have signed up their children after the downsizing of Kodak and other companies forced them from their jobs. Many of these formerly middle-income parents have pleaded with school officials to keep their enrollment a secret.

Students in families with incomes up to 130 percent of the poverty level — or $29,055 for a family of four — are eligible for free school meals. Children in a four-member household with income up to $41,348 qualify for a subsidized lunch priced at 40 cents.

Among the first to call attention to the increases were Department of Education officials who use subsidized lunch rates as a poverty indicator in federal testing. This month, in releasing results of the National Assessment of Educational Progress, they noted that the proportion of the nation’s fourth graders enrolled in the lunch program had climbed to 52 percent from 49 percent in 2009, crossing a symbolic watershed.

In the Rockdale County Schools in Conyers, Ga., east of Atlanta, the percentage of students receiving subsidized lunches increased to 63 percent this year from 46 percent in 2006.

“We’re seeing people who were never eligible before, never had a need,” said Peggy Lawrence, director of school nutrition.

One of those is Sheila Dawson, a Wal-Mart saleswoman whose husband lost his job as the manager of a Waffle House last year, reducing their income by $45,000. “We’re doing whatever we can to save money,” said Ms. Dawson, who has a 15-year-old daughter. “We buy clothes at the thrift store, we see fewer movies and this year my daughter qualifies for reduced-price lunch.”

She added, “I feel like: ‘Hey, we were paying taxes all these years. This is what they were for.’ ”

Although the troubled economy is the main factor in the increases, experts said, some growth at the margins has resulted from a new way of qualifying students for the subsidized meals, known as direct certification. In 2004, Congress required the nation’s 17,000 school districts to match student enrollment lists against records of local food-stamp agencies, directly enrolling those who receive food stamps for the meals program. The number of districts doing so has been rising — as have the number of school-age children in families eligible for food stamps, to 14 million in 2010-11 from 12 million in 2009-10.

“The concern of those of us involved in the direct certification effort is how to help all these districts deal with the exploding caseload of kids eligible for the meals,” said Kevin Conway, a project director at Mathematica Policy Research, a co-author of an October report to Congress on direct certification.

Congress passed the National School Lunch Act in 1946 to support commodity prices after World War II by reducing farm surpluses while providing food to schoolchildren. By 1970, the program was providing 22 million lunches on an average day, about a fifth of them subsidized. Since then, the subsidized portion has grown while paid lunches have declined, but not since 1972 have so many additional children become eligible for free lunches as in fiscal year 2010, 1.3 million. Today it is a $10.8 billion program providing 32 million lunches, 21 million of which are free or at reduced price.

All 50 states have shown increases, according to Agriculture Department data. In Florida, which has 2.6 million public school students, an additional 265,000 students have become eligible for subsidies since 2007, with increases in virtually every district.

“Growth has been across the board,” said Mark Eggers, the Florida Department of Education official who oversees the lunch program.

In Tennessee, the number of students receiving subsidized meals has grown 37 percent since 2007.

“When a factory closes, our school districts see a big increase,” said Sarah White, the state director of school nutrition.

In Las Vegas, with 13.6 percent unemployment, the enrollment of thousands of new students in the subsidized lunch program forced the Clark County district to add an extra shift at the football field-size central kitchen, said Virginia Beck, an assistant director at the school food service.

In Roseville, Minn., an inner-ring St. Paul suburb, the proportion of subsidized lunch students rose to 44 percent this fall from 29 percent in 2006-7, according to Dr. Senauer, the economist. “There’s a lot of hurt in the suburbs,” he said. “It’s the new face of poverty.”

In New York, the Gates Chili school district west of Rochester has lost 700 students since 2007-8, as many families have fled the area after mass layoffs. But over those same four years, the subsidized lunch program has added 125 mouths, many of them belonging to the children of Kodak and Xerox managers and technicians who once assumed they had a lifetime job, said Debbi Beauvais, district supervisor of the meals program.

“Parents signing up children say, ‘I never thought a program like this would apply to me and my kids,’ ” Ms. Beauvais said.

Many large urban school districts have for years been dominated by students poor enough to qualify for subsidized lunches. In Dallas, Newark and Chicago, for instance, about 85 percent of students are eligible, and most schools also offer free breakfasts. Now, some places have added free supper programs, fearing that needy students otherwise will go to bed hungry.

One is the Hickman Mills C-1 district in a threadbare Kansas City, Mo., neighborhood where a Home Depot, a shopping mall and a string of grocery stores have closed.

Ten years ago, 48 percent of its students qualified for subsidized lunches. By 2007, that proportion had increased to 73 percent, said Leah Schmidt, the district’s nutrition director. Last year, when it hit 80 percent, the district started feeding 700 students a third meal, paid for by the state, each afternoon when classes end.

“This is the neediest period I’ve seen in my 20-year career,” Ms. Schmidt said.

Pepper-Spraying Taxpayers

“Diversity” boondoggles are the real scandal.

As protesters festively (oops! I mean “heroically”) rally on college quads across California in the wake of the gratuitous macing of a dozen Occupy Wall Street wannabes at University of California–Davis last Friday, UC Berkeley’s Vice Chancellor for Equity and Inclusion declared that the rising tuition at California’s public universities is giving him “heartburn.” It should, since Vice Chancellor for Equity and Inclusion Gibor Basri and his fellow diversity bureaucrats are a large cause of those skyrocketing college fees, not just in California but nationally.

It is to be expected that students will be immaculately ignorant of the matters they protest, but it takes a special type of gall for a bureaucrat such as Basri to shed crocodile tears over California’s tuition increases, which had been a seeming target of OWS-inspired protest before the brutish UC Davis pepper-spray incident provided a more mediagenic reason to cut classes. OWS-ers are theatrically calling for a general strike of the University of California for this coming Monday.

Basri commands a staff of 17, allegedly all required to make sure that fanatically left-wing UC Berkeley is sufficiently attuned to the values of “diversity” and “inclusion”; his 2009 base pay of $194,000 was nearly four times that of starting assistant professors. Basri was given responsibility for a $4.5 million slice of Berkeley’s vast diversity bureaucracy when he became the school’s first Vice Chancellor for Equity and Inclusion in 2007; since then, the programs under his control have undoubtedly weathered the recession far more comfortably than mere academic endeavors.

UC Berkeley’s diversity apparatus, which spreads far beyond the office of the VC for E and I, is utterly typical. For the last three decades, colleges have added more and more tuition-busting bureaucratic fat; since 2006, full-time administrators have outnumbered faculty nationally. UC Davis, for example, whose modest OWS movement has been happily energized by the conceit that the campus is a police state, offers the usual menu of diversity effluvia under the auspices of an Associate Executive Vice Chancellor for Campus Community Relations. A flow chart of Linnaean complexity would be needed to accurately map all the activities overseen by the AEVC for CCR. They include a Diversity Trainers Institute, staffed by Davis’s Administrator of Diversity Education; the Director of Faculty Relations and Development in Academic Personnel; the Director of the UC Davis Cross-Cultural Center; the Director of the Lesbian, Gay, Bisexual, Transgender Resource Center; an Education Specialist with the UC Davis Sexual Harassment Education Program; an Academic Enrichment Coordinator with the UC Davis Department of Academic Preparation Programs; and the Diversity Program Coordinator and Early Resolution Discrimination Coordinator with the Office of Campus Community Relations. The Diversity Trainers Institute recruits “a cadre of individuals who will serve as diversity trainers/educators,” a function that would seem largely superfluous, given that the Associate Executive Vice Chancellor for Campus Community Relations already offers a Diversity Education Series that grants Understanding Diversity Certificates in “Unpacking Oppression” and Cross-Cultural Competency Certificates in “Understanding Diversity and Social Justice.”

If the OWS campus campers really wanted to understand California’s growing tuition costs, they might also check out the University of California, San Francisco, which created a Vice Chancellor for Diversity and Outreach earlier this year at the height of the state’s budget crisis. Naturally, this new sinecure was redundant with UCSF’s existing Office of Affirmative Action, Equal Opportunity and Diversity, the Diversity Learning Center (where you can learn how to “Become A Diversity Change Agent”), the Center for LGBT Health & Equity, the Office of Sexual Harassment Prevention & Resolution, the Chancellor’s Advisory Committee on Diversity, the Chancellor’s Advisory Committee on Disability Issues, the Chancellor’s Advisory Committee on Gay, Lesbian, Bisexual and Transgender Issues, and the Chancellor’s Advisory Committee on the Status of Women.

The OWS-ers should also look into UC San Diego, which announced the creation of a Vice Chancellor for Equity, Diversity, and Inclusion in May 2011, even as the campus was losing three prestigious cancer researchers to Rice University and was cutting academic programs. Needless to say, UCSD’s Vice Chancellor for Equity, Diversity, and Inclusion replicated an equally fearsome mountain of diversity functions.

Do not think that the exploding diversity bureaucracy is confined to public universities. In 2005, Harvard created a new Senior Vice Provost for Diversity and Faculty Development, responsible for $50 million in diversity funding, and six new diversity deanships. Whereas Harvard’s previous diversity bureaucrats collected mere diversity data about faculty hiring and promotions, the new SVP for D and FD would be collecting “diversity metrics.” Yale already has 14 Title IX coordinators (not enough to stave off a specious Title IX investigation by the Office of Civil Rights in the federal Education Department), but it nevertheless recently put a Deputy Provost in charge of assessing the “campus climate” with respect to gender and overseeing the 14 Title IX coordinators. All these new bureaucrats in campuses across the country — nearly 72,000 non-teaching positions added from 2006 to 2009 — cost $3.6 billion, estimated Harvey Silverglate in Minding the Campus earlier this year.

Just where do the OWS-ish student protesters think that their tuition money is going? In the vast majority of colleges and universities, there are no greedy shareholders sucking their profits from the livelihoods of workers or other “community stakeholders.” Rather, rising tuitions funnel straight into the preposterously unnecessary diversity bureaucracy and the rest of the burgeoning student-services infrastructure, as well as into the salaries of professors who teach one course a semester, the arms race of ever more sybaritic dorms and social centers, and the absolute monarchies of the football and basketball programs. It is particularly amusing to see New York University’s Andrew Ross spearheading a campaign against the student-loan industry; we may safely assume that Ross’s princely salary as Professor of Social and Cultural Analysis (achieved when NYU outbid Princeton for his services) was impervious to what should have been Ross’s reputation-destroying unwitting publication of a hoax parody of cultural-studies gibberish in his journal, Social Text, in 1996.

If students think that they are paying too much for college — and either they or taxpayers most surely are — they should take up the matter with their college president and her retinue of deans, provosts, and vice chancellors, not to mention with the federal government, whose easy loans allow colleges to jack up their tuition even further. The problem lies not with the lenders but with the institutions whose undisciplined appetite for bureaucratic growth and for hiring trendy academic superstars, no matter the speciousness of their scholarship, makes such loans necessary. Berkeley’s Vice Chancellor Basri intones: “We don’t believe that higher education is a private right but a public good.” Federally funded, free college tuition, the goal of Ross and other OWS-ers, would, however, simply remove any last restraints on academic greed, and put the full burden of that greed on taxpayers’ shoulders.

As for the Davis pepper-spray incident, one’s sympathy goes out to those individuals who were subjected to the painful and excessive use of police force. But may one also observe that, however unjustified the pepper-spraying of the protesters (who had refused the lawful order to remove their illegal camping equipment), the coverage of their plight has grown just a little maudlin? A 22-year-old pepper-spray victim told the Los Angeles Times that after hearing someone yell “pepper spray!” he “kissed his girlfriend and closed his eyes. ‘At that point,’ [he said,] ‘I entered a world of pain. I wanted to breathe, but I couldn’t. My face was covered with pepper spray. . . . My hands were covered with pepper spray. I was afraid. I was paralyzed with fear, and that’s the truth.’”

The pepper-spray victims have been recounting their very real pain in media venues across the land. By now we get the point. But the melodrama showered on the Davis casualties is stoically restrained compared with the glamorization of the OWS movement both before and after the Davis fiasco. For once, student protesters spoke with impeccable accuracy when they called a post-pepper-spray encampment at UC Berkeley a “pajama party.” The only sacrifice incurred by students who sleep over in their college quads is having to forego widescreen TV; otherwise, they’re having a ball, not least because they are so certain of their moral superiority.

And here’s another reality check: American college campuses are not police states, pace UC Davis English professor Nathan Brown. (“The fact is,” he wrote in an online letter, “the administration of U.C. campuses systematically uses police brutality to terrorize students and faculty, to crush political dissent on our campuses, and to suppress free speech and peaceful assembly.”) To the contrary, despite the presence of a few abysmally trained clunkers of campus guards, they are zones of maximal freedom (unless of course you challenge certain campus orthodoxies) and of privileged leisure and comfort, into which millions of striving Chinese and Indians are desperately seeking entry.

The Big Lie of the campus diversity industry has been that without constant monitoring by diversity bureaucrats, faculty and other administrators would discriminate against minority and female professors and students. In fact, anyone who has spent a day inside a university knows that the exact opposite is demonstrably the case: Hundreds of thousands of hours and dollars are wasted each year in the futile pursuit of the same inadequate pool of remotely qualified underrepresented minority and female applicants that every other campus in the country is chasing with as much desperate zeal. The hiring process has been thoroughly corrupted. Faculty applicants are brought onto campus who have no chance of being hired, either because the hiring committee incorrectly assumed from their names or résumés that they were the right sort of minority (East Asians don’t count) for a position set aside for just such a minority, or because, although they were the right sort of minority, their qualifications were so low that their only purpose in being interviewed was to fill an outreach quota.

In the wake of Peppergate, it looks like two other Big Lies are quickly forming: the campus as gulag and unscrupulous banks as the source of burdensome student debt. The first new conceit will soon evaporate of its own patent insubstantiality. But the push for wholesale debt forgiveness and even easier taxpayer funding of tuition will have staying power and will simply inflate the campus diversity bureaucracy further.

— Heather Mac Donald is the John M. Olin fellow at the Manhattan Institute and co-author of The Immigration Solution.

editor’s note: This article has been amended since its initial publication.

A Response to Oregon's Governor on Capital Punishment

Tuesday, November 29, 2011

The governor of Oregon, John Kitzhaber, announced last week that he would not allow any more executions in his state during his time in office.

Kitzhaber, a Democrat, gave five reasons for his decision. My response follows each one.

1. "I refuse to be part of this compromised and inequitable system any longer."

This has become one of the most frequently offered reasons for objecting to capital punishment -- that because the system is not equitable, no murderer should be put to death.

This is a reason that is devoid of reason. If a system is not equitable, you don't end the system, you try to end what is not equitable. This is classic left-wing thinking -- destroy what is good if it is imperfect. Documentary-maker Michael Moore was recently on CNN with Anderson Cooper and provided a perfect example of this way of thinking.

Moore: "2011 capitalism is an evil system set up to benefit the few at the expense of the many."

Cooper: "So, what system do you want?"

Moore: "Well, there's no system right now that exists. We're going to create that system."

The utopian streak that is an essential part of the left-wing mind is puerile and destructive: "If it isn't perfect, eliminate it."

2. "I do not believe that those executions (the two that the governor allowed) made us safer."

We all acknowledge that two executions do not make us safer (though they do make it safer for prison guards and for other inmates). Who ever said two executions would make us safer? Overwhelmingly, the reason people give for supporting the death penalty is justice. It is indescribably unjust to allow everyone who deliberately takes a human life to keep his own.

But if you want to talk safety, then yes, we who support the death penalty are certain that, applied with any consistency, it is a deterrent. The late sociologist Ernest van den Haag had an interesting thought experiment. Suppose that murders committed on Mondays, Wednesdays and Fridays carried a death sentence, while those committed on the other days were punishable by a prison sentence. On which days do you suppose more murders would be committed?

The notion that parking tickets deter illegal parking but that death does not deter murder is truly irrational. It shows what happens when people put ideology over common sense.

3. "Certainly I don't believe (the executions of murderers) made us more noble as a society."

Why is it noble to keep all murderers alive? Was Israel less noble for executing Adolf Eichmann, the architect of the Holocaust? When two men enter the home of a family of four; rape the wife and two young daughters; beat all four nearly to death, leaving them in the agony of crushed bones and skulls; and then tie them up and burn the three females to death, why is it "noble" to keep the men who did that alive?

4. Oregon has an "unworkable system that fails to meet basic standards of justice."

Opponents of the death penalty make it virtually impossible to execute murderers. They then lament how long and laborious the effort is to execute a murderer.

5. "... And I simply cannot participate in something I believe morally wrong."

Opponents of the death penalty simply assert the death penalty is immoral. That is their prerogative. But "morally wrong" in this context means nothing more than "I don't like it." Indeed, as reported in the The New York Times, "Asked with whom (Kitzhaber) had consulted, he said, 'Mostly myself.'"

Kitzhaber's moratorium delays the execution of a murderer who had raped and brutally beaten to death a woman named Mary Archer. Needless to say, the family and friends of Mary Archer disagree with the governor's action.

"We are just plain devastated," said the man who had been Mary Archer's husband. "This is such a miscarriage of justice."

Indeed it is. And worse. Societies that allow all murderers to live have lost some of their hunger for justice and certainly lost their hatred of evil. They also cheapen the crime of murder. Punishment is society's way of communicating how serious it views a crime, and there is all the difference in the world between the death penalty and life (not to mention less time) in prison.

When all murderers are allowed to live, the evil exult while the victims weep. Why is that noble?

Confirmed: third party to run in 2012, OWS starts political party

Posted by Red on Nov 28, 2011 in Politics | 40 Comments

With a platform of rape, sexual assault, vandalism, theft and anarchy, who wouldn’t want to vote for an Occupy candidate? Their press release (yes, they have a press release) outlines their wonderfully vague platform:

About Us: What is The Occupation Party?

The Occupation Party represents the 99% of Americans who want reform that brings back honesty and transparency into our governmental and political institutions in short, a return to government that is truly by the people, for the people and that serves the interests of the people first and foremost.

Why Do We Need A Political Party?

Some claim the will of the 99% is adequately represented by the existing political parties. But the evidence says otherwise. Both the Democratic and Republican parties are equally driven by donors dollars (corporate and individual), and are taking actions and supporting policies that benefit corporate and wealthy interests over those of the rest of us. Many of those actions and policies have long-term results that run counter to the best interests of the country as a whole.

That’s why a separate political party is needed to translate the energy and ideas of the Occupy Wall Street movement and the 99% into concrete, actionable solutions to fix our nations problems. Someone needs to act with the needs of the people in mind, not just the privileged elite that funds our elections in order to control our policies.

What Does The Occupation Party Plan to Do?

Our action plan is a work-in-progress, and we encourage members of the public to participate in our forums and discussions about the best responses to the many difficult issues our nation faces.

Currently, our plan includes actions on three fronts:

1) Spread the Word, Tell the Truth
2) Create Consensus, Rebuild Democracy
3) Define Problems, Seek Solutions

See, there’s a small problem with rebuilding democracy – America is a republic. Despite the fact that their current party platform is a ‘work-in-progress,’ rest assured, they will ‘define problems and seek solutions.” And in case you want to get involved in the Occupy party, here’s their website:

The Occupation Party is a new third party that stands in solidarity with the populist message of Occupy Wall Street.

We are planning to occupy the political process and take the people’s message into Congress by electing representatives and senators who are people from the 99%, not the political elite.

But hey, may as well, “Get involved and own your piece of democracy,” right?

(h/t Weazel Zippers)

$7.7 Trillion

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

‘Change Their Votes’

“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open.

The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma -- investors and counterparties would shun firms that used the central bank as lender of last resort -- and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.

$7.77 Trillion

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.

‘Motivate Others’

JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation.

Howard Opinsky, a spokesman for JPMorgan (JPM), declined to comment about Dimon’s statement or the company’s Fed borrowings. Jerry Dubrowski, a spokesman for Bank of America, also declined to comment.

The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.

‘Core Function’

“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.”

The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland.

The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view.

The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak.

Big Six

The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment.

The six -- JPMorgan, Bank of America, Citigroup Inc. (C), Wells Fargo & Co. (WFC), Goldman Sachs Group Inc. (GS) and Morgan Stanley -- accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment- services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.

Bank Supervision

While the emergency response prevented financial collapse, the Fed shouldn’t have allowed conditions to get to that point, says Joshua Rosner, a banking analyst with Graham Fisher & Co. in New York who predicted problems from lax mortgage underwriting as far back as 2001. The Fed, the primary supervisor for large financial companies, should have been more vigilant as the housing bubble formed, and the scale of its lending shows the “supervision of the banks prior to the crisis was far worse than we had imagined,” Rosner says.

Bernanke in an April 2009 speech said that the Fed provided emergency loans only to “sound institutions,” even though its internal assessments described at least one of the biggest borrowers, Citigroup, as “marginal.”

On Jan. 14, 2009, six days before the company’s central bank loans peaked, the New York Fed gave CEO Vikram Pandit a report declaring Citigroup’s financial strength to be “superficial,” bolstered largely by its $45 billion of Treasury funds. The document was released in early 2011 by the Financial Crisis Inquiry Commission, a panel empowered by Congress to probe the causes of the crisis.

‘Need Transparency’

Andrea Priest, a spokeswoman for the New York Fed, declined to comment, as did Jon Diat, a spokesman for Citigroup.

“I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability,” says Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee.

Judd Gregg, a former New Hampshire senator who was a lead Republican negotiator on TARP, and Barney Frank, a Massachusetts Democrat who chaired the House Financial Services Committee, both say they were kept in the dark.

“We didn’t know the specifics,” says Gregg, who’s now an adviser to Goldman Sachs.

“We were aware emergency efforts were going on,” Frank says. “We didn’t know the specifics.”

Disclose Lending

Frank co-sponsored the Dodd-Frank Wall Street Reform and Consumer Protection Act, billed as a fix for financial-industry excesses. Congress debated that legislation in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival.

It would have been “totally appropriate” to disclose the lending data by mid-2009, says David Jones, a former economist at the Federal Reserve Bank of New York who has written four books about the central bank.

“The Fed is the second-most-important appointed body in the U.S., next to the Supreme Court, and we’re dealing with a democracy,” Jones says. “Our representatives in Congress deserve to have this kind of information so they can oversee the Fed.”

The Dodd-Frank law required the Fed to release details of some emergency-lending programs in December 2010. It also mandated disclosure of discount-window borrowers after a two- year lag.

Protecting TARP

TARP and the Fed lending programs went “hand in hand,” says Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie and a former chief economist at the New York Fed. While the TARP money helped insulate the central bank from losses, the Fed’s willingness to supply seemingly unlimited financing to the banks assured they wouldn’t collapse, protecting the Treasury’s TARP investments, he says.

“Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says.

Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.

No Clue

Lawmakers knew none of this.

They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.

Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs.

Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.

Moral Hazard

Kaufman says some banks are so big that their failure could trigger a chain reaction in the financial system. The cost of borrowing for so-called too-big-to-fail banks is lower than that of smaller firms because lenders believe the government won’t let them go under. The perceived safety net creates what economists call moral hazard -- the belief that bankers will take greater risks because they’ll enjoy any profits while shifting losses to taxpayers.

If Congress had been aware of the extent of the Fed rescue, Kaufman says, he would have been able to line up more support for breaking up the biggest banks.

Byron L. Dorgan, a former Democratic senator from North Dakota, says the knowledge might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking.

“Had people known about the hundreds of billions in loans to the biggest financial institutions, they would have demanded Congress take much more courageous actions to stop the practices that caused this near financial collapse,” says Dorgan, who retired in January.

Getting Bigger

Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.

Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data.

For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.”

Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.

‘Wanted to Pretend’

“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.”

Bank of America took over Merrill Lynch & Co. at the urging of then-Treasury Secretary Paulson after buying the biggest U.S. home lender, Countrywide Financial Corp. When the Merrill Lynch purchase was announced on Sept. 15, 2008, Bank of America had $14.4 billion in emergency Fed loans and Merrill Lynch had $8.1 billion. By the end of the month, Bank of America’s loans had reached $25 billion and Merrill Lynch’s had exceeded $60 billion, helping both firms keep the deal on track.

Prevent Collapse

Wells Fargo bought Wachovia Corp., the fourth-largest U.S. bank by deposits before the 2008 acquisition. Because depositors were pulling their money from Wachovia, the Fed channeled $50 billion in secret loans to the Charlotte, North Carolina-based bank through two emergency-financing programs to prevent collapse before Wells Fargo could complete the purchase.

“These programs proved to be very successful at providing financial markets the additional liquidity and confidence they needed at a time of unprecedented uncertainty,” says Ancel Martinez, a spokesman for Wells Fargo.

JPMorgan absorbed the country’s largest savings and loan, Seattle-based Washington Mutual Inc., and investment bank Bear Stearns Cos. The New York Fed, then headed by Timothy F. Geithner, who’s now Treasury secretary, helped JPMorgan complete the Bear Stearns deal by providing $29 billion of financing, which was disclosed at the time. The Fed also supplied Bear Stearns with $30 billion of secret loans to keep the company from failing before the acquisition closed, central bank data show. The loans were made through a program set up to provide emergency funding to brokerage firms.

‘Regulatory Discretion’

“Some might claim that the Fed was picking winners and losers, but what the Fed was doing was exercising its professional regulatory discretion,” says John Dearie, a former speechwriter at the New York Fed who’s now executive vice president for policy at the Financial Services Forum, a Washington-based group consisting of the CEOs of 20 of the world’s biggest financial firms. “The Fed clearly felt it had what it needed within the requirements of the law to continue to lend to Bear and Wachovia.”

The bill introduced by Brown and Kaufman in April 2010 would have mandated shrinking the six largest firms.

“When a few banks have advantages, the little guys get squeezed,” Brown says. “That, to me, is not what capitalism should be.”

Kaufman says he’s passionate about curbing too-big-to-fail banks because he fears another crisis.

‘Can We Survive?’

“The amount of pain that people, through no fault of their own, had to endure -- and the prospect of putting them through it again -- is appalling,” Kaufman says. “The public has no more appetite for bailouts. What would happen tomorrow if one of these big banks got in trouble? Can we survive that?”

Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up -- a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported.

Lobbyists argued the virtues of bigger banks. They’re more stable, better able to serve large companies and more competitive internationally, and breaking them up would cost jobs and cause “long-term damage to the U.S. economy,” according to a Nov. 13, 2009, letter to members of Congress from the FSF.

The group’s website cites Nobel Prize-winning economist Oliver E. Williamson, a professor emeritus at the University of California, Berkeley, for demonstrating the greater efficiency of large companies.

‘Serious Burden’

In an interview, Williamson says that the organization took his research out of context and that efficiency is only one factor in deciding whether to preserve too-big-to-fail banks.

“The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.”

Dearie says his group didn’t mean to imply that Williamson endorsed big banks.

Top officials in President Barack Obama’s administration sided with the FSF in arguing against legislative curbs on the size of banks.

Geithner, Kaufman

On May 4, 2010, Geithner visited Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission.

At the meeting with Kaufman, Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman.

Anthony Coley, a spokesman for Geithner, declined to comment.

‘Punishing Success’

Lobbyists for the big banks made the winning case that forcing them to break up was “punishing success,” Brown says. Now that they can see how much the banks were borrowing from the Fed, senators might think differently, he says.

The Fed supported curbing too-big-to-fail banks, including giving regulators the power to close large financial firms and implementing tougher supervision for big banks, says Fed General Counsel Scott G. Alvarez. The Fed didn’t take a position on whether large banks should be dismantled before they get into trouble.

Dodd-Frank does provide a mechanism for regulators to break up the biggest banks. It established the Financial Stability Oversight Council that could order teetering banks to shut down in an orderly way. The council is headed by Geithner.

“Dodd-Frank does not solve the problem of too big to fail,” says Shelby, the Alabama Republican. “Moral hazard and taxpayer exposure still very much exist.”

Below Market

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says banks “were either in bad shape or taking advantage of the Fed giving them a good deal. The former contradicts their public statements. The latter -- getting loans at below-market rates during a financial crisis -- is quite a gift.”

The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg.

The Fed funds also benefited firms by allowing them to avoid selling assets to pay investors and depositors who pulled their money. So the assets stayed on the banks’ books, earning interest.

Banks report the difference between what they earn on loans and investments and their borrowing expenses. The figure, known as net interest margin, provides a clue to how much profit the firms turned on their Fed loans, the costs of which were included in those expenses. To calculate how much banks stood to make, Bloomberg multiplied their tax-adjusted net interest margins by their average Fed debt during reporting periods in which they took emergency loans.

Added Income

The 190 firms for which data were available would have produced income of $13 billion, assuming all of the bailout funds were invested at the margins reported, the data show.

The six biggest U.S. banks’ share of the estimated subsidy was $4.8 billion, or 23 percent of their combined net income during the time they were borrowing from the Fed. Citigroup would have taken in the most, with $1.8 billion.

“The net interest margin is an effective way of getting at the benefits that these large banks received from the Fed,” says Gerald A. Hanweck, a former Fed economist who’s now a finance professor at George Mason University in Fairfax, Virginia.

While the method isn’t perfect, it’s impossible to state the banks’ exact profits or savings from their Fed loans because the numbers aren’t disclosed and there isn’t enough publicly available data to figure it out.

Opinsky, the JPMorgan spokesman, says he doesn’t think the calculation is fair because “in all likelihood, such funds were likely invested in very short-term investments,” which typically bring lower returns.

Standing Access

Even without tapping the Fed, the banks get a subsidy by having standing access to the central bank’s money, says Viral Acharya, a New York University economics professor who has worked as an academic adviser to the New York Fed.

“Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?”

In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise -- to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).

Occupy Wall Street

The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California.

The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor.

“The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”

In the end, Geithner had his way. The Brown-Kaufman proposal to limit the size of banks was defeated, 60 to 31. Bank supervisors meeting in Switzerland did mandate minimum reserves that institutions will have to hold, with higher levels for the world’s largest banks, including the six biggest in the U.S. Those rules can be changed by individual countries.

They take full effect in 2019.

Meanwhile, Kaufman says, “we’re absolutely, totally, 100 percent not prepared for another financial crisis.”

To contact the reporters on this story: Bob Ivry in New York at bivry@bloomberg.net; Bradley Keoun in New York at bkeoun@bloomberg.net; Phil Kuntz in New York at pkuntz1@bloomberg.net.

To contact the editors responsible for this story: Gary Putka at gputka@bloomberg.net; David Scheer at dscheer@bloomberg.net.

Occupy Movement’s Price Tag Tops $20 Million …Much Higher Than the $13 Million That Was Previously Reported

Earlier this week the liberal media reported that the Occupy protests cost taxpayers over $13,000,000.

But the actual cost is much higher.
Verum Serum updated the total cost estimates on Wednesday.
– Total: $18,450,999

And, here is the latest total of Occupation costs using Verum Serum’s totals plus more recent figures:

• Occupy Asheville – $170,000
• Occupy Atlanta – $652,000
• Occupy Austin – $110,000
• Occupy Boston – $575,000
• Occupy Charlotte – $105,000
• Occupy Chicago – $49,000
• Occupy Cincinnati – $128,000
• Occupy Des Moines – $7,800
• Occupy DC – $870,000
• Occupy Denver – $365,000
• Occupy Eugene – $20,000
• Occupy Fresno – $110,000
• Occupy LA – $120,000 plus estimated $400,000 to repair the lawn
• Occupy Long Beach – $40,000
• Occupy Minnesota – $400,000
• Occupy Nashville – $4,500
• Occupy New York – $7,000,000
• Occupy Oakland – $2,400,000 for police overtime alone
• Occupy Philadelphia – $500,000
• Occupy Phoenix – $200,000
• Occupy Portland – $750,000 3.5 million + $50,000 to repair damaged parks
• Occupy Providence – $9, 000
• Occupy Raleigh – $60, 000
• Occupy Sacramento – $300,000
• Occupy San Diego – $2,400,000
• Occupy San Francisco – $100,000
• Occupy St. Louis – $2,200
• Occupy Seattle – $625,999

– Total: Over $21,273,499

‘Forced Unionization’: SEIU Collects Union Dues From Disabled Kids’ Medicaid Checks

Posted on November 16, 2011 at 5:44pm by Madeleine Morgenstern

Robert and Patricia Haynes take care of their two children, who at the ages of 30 and 34 are more like children in adult bodies. That’s because they both have cerebral palsy, and rely on their parents to feed and change them — and likely will for the rest of their lives.

The Haynes family receives monthly checks from the state of Michigan through Medicaid, allowing the parents to care for their son and daughter themselves instead of institutionalizing them. But because a Michigan law classifies Robert and Patricia as “home health care workers,” they are considered public workers and therefore automatic union members — meaning the SEIU gets a $30 cut of the family’s Medicaid subsidy as union dues.

“We’re not home health care providers — we’re parents taking care of our children,” Melissa Haynes told Detroit Fox affiliate WJBK-TV:

But that’s not how the state of Michigan sees it. According to Michigan Capitol Confidential, it’s an example of “forced unionization” under a plan enacted five years ago.

The Washington Examiner reported:

Michigan Department of Community Health Director Olga Dazzo explained the process in to her members of her staff [sic]. “MQC3 basically runs the program for SEIU and passes the union dues from the state to the union,” she wrote in an email obtained by the Mackinac Center. Initiated in 2006 under then-Gov. Jennifer Granholm, D-Mich., the plan reportedly provides the SEIU with $6 million annually in union dues deducted from those Medicaid subsidies.

Robert, a retired police officer, told WJBK it’s not a matter of being pro-union or anti-union.

“It wasn’t a choice, we were just told this is what’s going to happen,” Patricia Haynes told the station.

They said even though they themselves are doing alright financially, they could certainly use the extra $30 a month to care for their kids — as other families under similar circumstances no doubt could as well.

And despite allegedly belonging to the SEIU, Robert told Michigan Capitol Confidential his family is receiving no actual benefits from the union:

“Nothing,” Haynes said. “We’re not getting anything from them. We’ve tried to contact them, and they don’t even bother to respond. I don’t even know what they could do to help. Considering the dues money we’re sending them, maybe they should come over and babysit our kids so we could have one night out.

“We take care of our kids at home,” Haynes continued. “There aren’t any working condition issues. There are no raises to negotiate. There aren’t any union issues involved. But the money keeps being taken out of our checks anyway.”

According to the Examiner, Granholm’s successor, Gov. Rick Snyder, R-Mich., has “already ended a similar scheme to provide unions with new ‘public employees’ in the area of child care.” A state bill to end the practice for all public sector unions passed the House but has stalled in the Senate.

IRS Tax Data

Number of Returns, Shares of AGI and Total Income Tax, AGI Floor on Percentiles in Current and Constant Dollars, and Average Tax Rates

Classified by: Selected Expanded Descending Cumulative Percentiles of Returns Based on Income Size Using the Definition of AGI for Each Year, Table 3

Tax Years: 2001-2009

White House Pressured Solyndra to Postpone Layoffs Until After 2010 Elections

The Obama administration urged officers of the struggling solar company Solyndra to postpone announcing planned layoffs until after the November 2010 midterm elections, newly released e-mails show. Solyndra, the now-shuttered California company, had been a poster child of President Obama’s initiative to invest in clean energies and received the administration’s first energy loan of $535 million. But a year ago, in October 2010, the solar panel manufacturer was quickly running out of money and had warned the Energy Department it would need emergency cash to avoid having to shut down.

Solyndra’s chief executive warned the Energy Department on Oct. 25, 2010, that he intended to announce worker layoffs Oct. 28. He said he was spurred by numerous calls from reporters and potential investors about rumors the firm was in financial trouble and was planning to lay off workers and close one of its two plants.

But in an Oct. 30, 2010, e-mail, advisers to Solyndra’s primary investor, Argonaut Equity, explain that the Energy Department had strongly urged the company to put off the layoff announcement until Nov. 3. The midterm elections were held Nov. 2, and led to Republicans taking control of the U.S. House of Representatives. “DOE continues to be cooperative and have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet,” a Solyndra investor adviser wrote Oct. 30. “They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd – oddly they didn’t give a reason for that date.”

Yes, very odd, isn't it? Actually, it's so transparently obvious, even Joe Biden could solve this mystery: Team Obama knew their party was already heading for a world of hurt on election day, and wanted to mitigate the damange. Plus, by dropping this ugly news on November 3rd, the entire news media would be suitably distracted by the (important) task of breaking down just how devastating the previous night's GOP tidal wave had been. From the White House's perspective, it was a win/win strategy. They could escape electoral consequences for their own abysmal failure, then try to slip the entire development past the American people. So they applied enormous pressure and dangled a $40 million carrot in front of Solyndra's CEO to "persuade" him to play ball. Lo and behold, he did.

A month later, Solyndra partially defaulted on its loan -- which, it's worth noting, the White House knew from day one was a wildly risky taxpayer-funded gamble -- thus violating its terms. They were duly "punished" for this violation with a generous restructuring of their loan guarantee, which authorized politically-connected private financiers like Obama donor George Kaiser* to recoup the first $75 million if (or, more accurately, when) the company went belly-up. (Which it is precisely what happened in early September of 2011). This entire arrangement may have violated the law, but those concerns were shrugged off. The big question: Regarding the politicized layoff notification delay plot, who knew what, and when?

[Solyndra CEO Brian] Harrison’s e-mail was forwarded to program director, Jonathan Silver, who then alerted White House climate change czar Carol Browner and Vice President Biden’s point person on stimulus, Ron Klain. Browner asked for more information about the announcement, and Chu’s chief of staff explained he had left a voicemail message on her cellphone. On Nov. 3, 2010, Solyndra announced it would lay off 40 workers and 150 contractors and shut down its Fab 1 factory. The department agreed to continue giving Solyndra installments of its federal loan despite the company’s failure to meet key terms of the loan, and in February restructured its loan to give investors a chance to recover $75 million in new money they put into the company before taxpayers would be repaid. Silver resigned from the agency last month.

The White House was probably hoping that Silver would be the symbolic fall guy in this costly misadventure, and that they could cite his ouster as proof that any potential improprieties had been adequately dealt with. I suspect that just isn't going to cut it any more. Based on the Post's report, these political directives clearly came from inside the White House; the question now becomes how high up the totem pole that process climbed. Perhaps this is why the Obama Administration is so keen on depriving House investigators of internal emails and documents on the president's failed green pet. Energy Secretary Steven Chu's scheduled testimony before the House Energy and Commerce oversight subcommittee on Thursday is going to be epic.

* A final reminder about billionaire Obama campaign bundler George Kaiser. When this scandal broke a few months ago, White House visitor logs (you know, the things that the administration is now fighting in court to keep secret) indicated that Kaiser had visited 1600 Pennsylvania Avenue four times immediately before the $535 Billion Solyndra loan was approved over auditors' objections. Kaiser and White House spokesman Jay Carney both adamantly insisted that the green energy loan was not discussed during those meetings. Recently released emails have revealed those assurances to be outright lies:

This isn't the first time actors connected to this scandal have blatantly lied to members of Congress and the public. Just thought everyone should keep that in mind. I'll leave you with a classic video of Captain Hopenchange, the day after his inauguration. As you process this clip, contrast his rhetoric with the information contained in this post. Shameless:

Guy Benson

Guy Benson is Townhall.com's Political Editor. Follow him on Twitter @guypbenson.

Farm-to-table event turns sour when health inspector crashes party

Leila Navidi

Brody Blaber, 15, of Overton, helps to pack baskets during the weekly harvest at Quail Hollow Farm in Overton Wednesday, Nov. 9, 2011.

They don’t make it easy for those of us who believe in vigorous government, the kind that built the Interstate Highway System, put a man on the moon and invented the Internet.

By “they” I mean our public employees, who we want to believe in but who sometimes leave us shaking our heads.

The most recent example: Quail Hollow Farm in Overton had — or tried to have, anyway — a “farm-to-table” dinner last month. This is when a chef takes vegetables and freshly butchered meats and serves them up right there at the farm to fancy food types — “locavores” — who like their food really fresh. Sounds pretty great, right?

Well, someone at the Southern Nevada Health District saw an ad for the event and decided to get on the case.

The health department called farm owners Laura and Monte Bledsoe and said they’d need a special-use permit because it was a “public” event. They complied, or tried to at least.

The night of the event, the guests arrived at the farm, and so did the food inspector. Here were the issues, according to Laura Bledsoe: Some prepared food packages had no labels; some of the meat was not USDA certified; some food was prepared in advance off-site and not up to proper temperature; vegetables were declared unfit; and there were no receipts for food.

(Um, do you not get the whole farm-to-table thing?)

The Bledsoes asked the inspector if they could make the meal a private event, thereby eliminating the health department’s jurisdiction. A church, for instance, can have a pancake breakfast for its congregants, without health department oversight. And for locavores, this meal was to be something like a religious experience.

Nope.

In the end, the health inspector demanded that bleach be poured on the food, including vegetables, to ensure it was not consumed. Bleach really ruins a meal, I gotta tell you.

Of course, the health department and its 50 inspectors do good work in a very challenging environment that includes more than 17,000 permitted food establishments in Clark County. Our own food critic John Curtas said, “I think they do a great job. They have a huge responsibility. If one buffet, one restaurant has an outbreak of food poisoning, and it gets to be national news, think of the impact on our economy.”

Bledsoe said she understands the need for reasonable regulations to protect the public, but added that it seemed the health department was obsessed with shutting down the event. “There seemed to be no solution other than destroy food and destroy everything that had been done,” she said.

I talked about the Quail Hollow incident with Susan LaBay, an environmental health supervisor with the district. She conceded the department hasn’t inspected an event on a farm like this, but said, “We have to apply the law equally.”

She said if there had been an incident of food-borne illness at the event, we’d be asking different questions, like, where were the regulators?

I, for one, wouldn’t be asking that. If some gourmands go out to a farm and someone gets food poisoning, I’m pretty sure I know what the public reaction — including my own — would be: Too bad. You knew what you were getting yourself into. And that’s that.

Strangely enough, LaBay acknowledged that farm-to-table meals will often be safer than a store-bought one, because fewer hands touching the food usually makes for a safer meal. And she said she’s sympathetic to the idea of legislation that would help farmers host these events while still complying with the law. The problem is that the regulations were written for the era of industrial food production and often don’t allow for freshly butchered meat, raw milk and homemade items like pickles.

Until the law is changed, LaBay said, “We don’t have an option.”

Actually, though, they do. Just as prosecutors use discretion to push some cases harder than others, the department could have seen the ad for the uppity food event, pushed it aside and moved on to the next dodgy Chinese, Mexican or burger joint.

California’s high-speed rail system is going nowhere fast

By Editorial, Published: November 13

THINGS JUST WENT from bad to worse for high-speed passenger rail in California. After the Golden State’s voters approved a $9 billion bullet-train bond issue in 2008, officials said they could build an 800-mile system by 2020, for $35.7 billion. The cost projection now, as issued by the state Nov. 1: $98.5 billion, with a completion date of 2033.

Time to pull the plug, right? Not according to Gov. Jerry Brown (D). The new “business plan is solid and lays the foundation for a 21st-century transportation system,” he said. Equally upbeat, Transportation Secretary Ray LaHood offered Mr. Brown his congratulations on “a sound, step-by-step strategy for building a world-class high-speed rail network.”

This is unreal. Apart from the bond issue and $3.6 billion in federal funds already in hand, the cash-strapped state hasn’t credibly identified a source of funds for the system. The new report basically repeats previous assertions that, if California builds, federal and private-sector dollars will come. This is wishful thinking in an era of massive federal deficits, and if the opportunities for the private sector were really so great, where are the companies clamoring to invest?

Actually, the gigantic cost estimate amounts to an indirect confirmation of the doubts voiced in several independent analyses, which have focused on not only the rail plan’s mythical funding but also its high ridership projections — and the attendant risk that California will get stuck with expensive operating subsidies as well as billions in debt service.

Of course, that risk would occur only in the decreasingly probable event that California actually finishes the railroad. A more plausible scenario is that the state manages to construct merely a line between two points in the rural Central Valley before its cash peters out.

Why? The Obama administration has made clear that the state will lose $2.3 billion in federal funds unless it starts construction by October 2012. The money comes from the 2009 American Recovery and Reinvestment Act — the stimulus bill — and that law’s purpose was to get people to work, pronto. The deadline is inflexible.

Alas, there is only one place where the state could finish the necessary environmental impact statements and other bureaucratic requirements before the use-it-or-lose-it date: a thinly populated 130-mile stretch of flatland that starts just north of Fresno and ends just north of Bakersfield.

U.S. and California officials tout this lonely corridor as the “spine” of a system that will connect big cities later on. After all, they argue, the interstate highway system started in Kansas. But that project had a dedicated funding source from the get-go: the federal highway trust fund, supported by fuel taxes.

More realistically, Sacramento’s Legislative Analysis Office calls the Central Valley starting point a “big gamble.” In the all-too-likely event that funding for the rest of the system never materializes, the report adds, “the state will be left with a rail segment unconnected to major urban areas that has little if any chance of generating the ridership to operate without a significant state subsidy.” It would be a train to nowhere, but at least it would go nowhere fast.

As questionable as this project is, we would have less business objecting if the only money at risk was California’s. But the Obama and Brown administrations are talking about devoting the nation’s funds to what looks more and more like a boondoggle. If the president and governor won’t slam on the brakes, then Congress or the California legislature must find a way to prevent the spending. Somebody, please, stop this train.