Connecting the Dots

Why Right-Wing Lawmakers Are Desperate to Stop a Union Vote in Tennessee

Workers assemble Volkswagen Passat sedans at the German automaker's plant in Chattanooga, Tenn. Workers at the plant will decide in a three-day vote Wednesday, Feb. 12, 2014, whether they want to be represented by the United Auto Workers union. (AP Photo/Erik Schelzig, file)
Workers assemble Volkswagen Passat sedans at the German automaker's plant in Chattanooga, Tenn. Workers at the plant will decide in a three-day vote Wednesday, Feb. 12, 2014, whether they want to be represented by the United Auto Workers union. (AP Photo/Erik Schelzig, file)

For years, economist Dean Baker has waged a lonely campaign urging  progressives to stop accusing business-friendly politicians of being “free-market fundamentalists.” In his 2011 book, The End of Loser Liberalism: Making Markets Progressive, he wrote, “The vast majority of the right does not give a damn about free markets; it just wants to redistribute income upward.” Today, you don’t need to look any further than Tennessee for proof that the “free market” rhetoric of business-friendly politicians is in fact thin cover for favoring the investor class over workers and the environment.

In the Volunteer State, Volkswagen determined that it can gain a competitive advantage by establishing a workers’ council — a structure that gives employees a voice in a plant’s management — and remaining neutral in a vote on whether its workers will be represented by the United Auto Workers (UAW). MORE

How Universal Pre-K Could Redistribute Wealth Right Now

This post originally appeared at The Nation.

New York Mayor Bill de Blasio delivers his State of the City address at LaGuardia Community College in the Queens borough of New York, Monday, Feb. 10, 2014, in New York. De Blasio outlined his vision for New York and offered a glimpse into his signature goal of fighting the city's widening income inequality gap. (AP Photo/Mark Lennihan)

New York Mayor Bill de Blasio delivers his State of the City address at LaGuardia Community College in the Queens borough of New York, Monday, Feb. 10, 2014. De Blasio outlined his vision for New York and offered a glimpse into his signature goal of fighting the city's widening income inequality gap. (AP Photo/Mark Lennihan)

Something’s being lost in the battle of the pre-K plans. New York City Mayor Bill de Blasio won his election based in part on his proposal to fund universal pre-kindergarten with a tax on the city’s top 1.4 percent of wage earners. Governor Andrew Cuomo has countered with his own proposal for universal pre-K, which would cost much less and — surprise! — wouldn’t require potential campaign contributors on Wall Street to pay a dollar more in taxes. Meanwhile, President Obama has reiterated his call for publicly funded pre-K accessible to all, and commentators wielding reams of data are debating the merits of the idea.

The benefits of Head Start to poor children diminish after the first grade, skeptics warn. The long-term gains from free pre-K for all children have been oversold, they say. Supporters argue, on the other hand, that it is essential to ensure that the new pre-K slots are high-quality ones — the kind that, according to one study, produce returns of 7 to 10 percent on every $1 in annual government spending, thanks to the lifelong earnings bump enjoyed by their five-year-old graduates.

But everyone seems to agree on this: we have to make sure that down the line, when the children are grown, free public pre-K will have been “worth the money.” MORE

The Obamacare ‘Bailout’ Conservatives Don’t Want to Talk About

Patient Luis Gutierrez, right, talks with Dr. Javier Hiriart at Camillus Health Concern, Wednesday, June 27, 2012, in Miami. (AP Photo/Lynne Sladky)

Patient Luis Gutierrez, right, talks with Dr. Javier Hiriart at Camillus Health Concern, Wednesday, June 27, 2012, in Miami. (AP Photo/Lynne Sladky)

In recent months, conservative opponents of the Affordable Care Act seized on an issue that they were sure was going to be a big winner for their cause: the “Obamacare bailout.” The Weekly Standard’s Jay Cost wrote that “conservative thought leaders have begun to sound the alarm” about a “bailout [that] could feasibly run into the tens of billions of dollars.”

The narrative was built on two relatively obscure provisions of Obamacare: “risk corridors” and “reinsurance.” The short version is that the law contained provisions which would protect insurers from losses in the early years of the ACA if it didn’t function as intended. Think of it as a kind of insurance for insurers — they pay into a pool that would help spread a single company’s big losses across the whole industry. (A detailed explanation of what those terms mean can be found here.)

Jonathan Chait, calling the talking point a “new Death Panel,” argued that it was a cynical attempt to capitalize on the fact that “’bailout’ may be the single most unpopular policy concept in American politics.” But despite conservatives’ high hopes, the narrative died an untimely death last week, when the Congressional Budget Office (CBO) projected that the provisions will actually make the government around $8 billion in profits — it’s a reverse bailout if anything. (This followed the speedy demise of another widely touted claim that the CBO projected Obamacare would cost the economy two million jobs.)

But in a new twist, Republicans in some states that refused to expand Medicaid under the ACA are being forced into their own “government bailout.” Slate’s Dave Weigel explains:

When Democrats predict that the GOP will eventually have to embrace the Affordable Care Act, they usually start with the plight of rural hospitals. In the 25 states that have accepted the Medicaid expansion, these hospitals are taking in reimbursements when they cover the indigent who are newly covered. In the 25 states that haven’t—no reimbursements. Red states (and red-run blue states like Wisconsin) first embraced the Supreme Court decision that made Medicaid expansion optional, and saved them from putting up 10 percent of the cost of a new annual entitlement. But the costs of doing nothing are burning up the plains.

How can a Republican governor fix this problem without accepting the Medicaid expansion? Ray Henry and Christina Cassidy explain: They’ve trying to bail out hospitals within the states. In South Carolina the state has agreed to reimburse 100 percent Medicaid spending at distressed hospitals. In Georgia the Republican charged with this year’s budget is looking at a bailout worth “tens of millions of dollars.” In Mississippi, Gov. Phil Bryant wants $4.4 million for a bailout.

The refusal to expand Medicaid remains a triumph of ideology over good governance. Many of the states refusing the expansion are among those with the highest rates of uninsured citizens. According to the Kaiser Family Foundation, the refusals will leave around five million people who earn too little to qualify for the ACA’s insurance subsidies and fail to qualify for states’ existing Medicaid programs in a “coverage gap.”

Ironically, to the degree these states have to bail out their rural hospitals with state dollars, it’s also the antithesis of fiscal conservatism.

Higher Profits Explain Why There Are More People of Color in Private Prisons

In a frame grab from video obtained by The Associated Press, an inmate attacks fellow inmate Hanni Elabed at the privately-run Idaho Correctional Center just south of Boise, Idaho. Elabed suffered brain damage and persistent short-term memory loss after he was beaten by inmate James Haver while multiple guards watched at the Idaho prison operated by Corrections Corporation of America. (AP Photo)
In a frame grab from video obtained by The Associated Press, an inmate attacks fellow inmate Hanni Elabed at the privately-run Idaho Correctional Center just south of Boise, Idaho. Elabed suffered brain damage and persistent short-term memory loss after he was beaten by inmate James Haver while multiple guards watched at the Idaho prison operated by Corrections Corporation of America. (AP Photo)

It’s well known that people of color are overrepresented in America’s prisons relative to their share of the population. But a recent study finds that they make up an even larger share of the populations of private, for-profit prisons than publicly run institutions.

According to Christopher Petrella, a doctoral candidate at UC Berkeley who conducted the study, this is not an accident — it’s about private firms selecting the least expensive prisoners to manage and leaving costlier populations in the hands of state correction systems.

Why would African American and Latino prisoners be cheaper to incarcerate than whites? Because older prisoners are significantly more expensive than younger ones. “Based on historical sentencing patterns, if you are a prisoner today, and you are over 50 years old, there is a greater likelihood that you are white,” Petrella explained to BillMoyers.com. “If you are under 50 years old — particularly if you’re closer to 30 years old — you’re more likely to be a person of color.” He cited a 2012 report by the ACLU which found that it costs $34,135 per year to house a non-geriatric prisoner, compared with $68,270 for a prisoner age 50 or older. MORE

The Koch Brothers Left a Confidential Document at Their Last Donor Conference

This post first appeared at Mother Jones.

Protesters fill the corner of Bob Hope and Rancho Las Palmas in Rancho Mirage CA as they march against a conservative strategy meeting hosted by the Koch brothers, Sunday, January 30, 2011. Crystal Chatham,The Desert Sun.

Protesters fill the corner of Bob Hope and Rancho Las Palmas in Rancho Mirage, CA, as they march against a conservative strategy meeting hosted by the Koch brothers. (Photo: Crystal Chatham, The Desert Sun)

There’s one main rule at the conservative donor conclaves held twice a year by Charles and David Koch at luxury resorts: What happens there stays there.

The billionaire industrialists and their political operatives strive to ensure the anonymity of the wealthy conservatives who fund their sprawling political operation — which funneled more than $400 million into the 2012 elections — and to keep their plans private. Attendees of these summits are warned that the seminars, where the Kochs and their allies hatch strategies for electing Republicans and advancing conservative initiatives on the state and national levels, are strictly confidential; they are cautioned to keep a close eye on their meeting notes and materials.

But last week, following the Kochs’ first donor gathering of 2014, one attendee left behind a sensitive document at the Renaissance Esmeralda resort outside of Palm Springs, Calif., where the Kochs and their comrades had spent three days focused on winning the 2014 midterm elections and more. The document lists VIP donors — including John Schnatter, the founder of the Papa John’s pizza chain — who were scheduled for one-on-one meetings with representatives of the political, corporate and philanthropic wings of Kochworld. The one-page document, provided to Mother Jones by a hotel guest who discovered it, offers a fascinating glimpse into the Kochs’ political machine and shows how closely intertwined it is with Koch Industries, their $115 billion conglomerate. MORE

It’s Time to Rethink K-12 Public Education for the 21st Century

This post first appeared at DEMOS’ PolicyShop blog.

Gabbie Bradburn, center in orange, Briana Hayden, center right in blue, and Ellena Barber, far right, graph the data they collected during a paper plane experiment.   at Robert E. Lee elementary school in Spotsylvania county, Va.  The students were treated to Constitution Day lesson plans as they arrived to school on Tuesday as teachers helped to reinforce the ideas of our founding fathers through history, science and various other subjects throughout the day.   (AP Photo/The Free Lance-Star, Reza A. Marvashti)
Gabbie Bradburn, Briana Hayden and Ellena Barber draw a graph at an elementary school in Spotsylvania County, Va. (AP Photo/The Free Lance-Star, Reza A. Marvashti)

What’s the biggest change afoot in education today: The rise of online courses? The charter school movement? The Common Core? Or how about this one: The fall of the anachronistic, industrial-era idea that only a K-12 education should be freely provided by government.

The dated K-12 regime is under attack from two directions as the push for universal pre-K gains steam and as calls mount for making college free. A new education norm can be glimpsed on the horizon: P-16, free for all Americans.

Let’s start with the momentum behind pre-K, which seems to be growing by the day, and not just in blue states like New York or the lofty reaches of presidential rhetoric. Oklahoma and Georgia have been leaders on this issue, which often transcends partisanship once you get beyond the Beltway. As The New York Times reported recently:
MORE

CBO Report: Obamacare Will Make Us More Free

Linda Potter, left, receives a shot of H1N1 flu vaccine from a research nurse during the first of several clinical trials of a new vaccine conducted by Emory University, Mon., August 10, 2009, in Atlanta. (AP Photo/John Amis)

Linda Potter, left, receives a shot of H1N1 flu vaccine from a research nurse during the first of several clinical trials of a new vaccine conducted by Emory University, Mon., August 10, 2009, in Atlanta. (AP Photo/John Amis)

On Tuesday, the Congressional Budget Office (CBO) released a new report on Obamacare’s impact on the economy that ignited an enormous amount of controversy.

The firestorm centered on CBO’s projection that the Affordable Care Act would reduce the hours we work by the equivalent of 2.5 million full-time jobs by 2024. Conservatives were elated, claiming that the report supported their belief that Obamacare is a “job killer.” Liberals lamented the media’s shoddy reporting of the CBO projections, arguing that they were mostly good news. CBO projected that the law will reduce the deficit, increase consumer demand and cut unemployment.

Most of the dispute over what the report actually says was informed by partisanship or ideology. But the substance of it came down to a simple sentence: The CBO expects a reduction in hours worked “almost entirely because workers will choose to supply less labor — given the new taxes and other incentives they will face and the financial benefits some will receive.”

In other words, Obamacare won’t reduce the number of jobs in the American economy. Rather, some people will be choose to reduce the hours they work or stop working altogether as a result of the law. Economist Dean Baker, calling this projected effect “a feature not a bug,” notes that this should lead to higher wages as employers will have to compete for fewer workers. MORE

What’s the Right Path Forward on Net Neutrality?

Federal Communications Commission Chairman Tom Wheeler, left, testifies on Capitol Hill in Washington, Thursday, Dec. 12, 2013, before the House Energy and Commerce Committee hearing on cell phones on planes. Wheeler is joined at the witness table with FCC Commissioners from second from left, Mignon Clyburn, Jessica Rosenworcel, Ajit Pai, and Michael O'Rielly. (AP Photo/Susan Walsh)
Federal Communications Commission Chairman Tom Wheeler, left, testifies on Capitol Hill in Washington, Dec. 12, 2013. Behind Wheeler are FCC Commissioners (from second from left) Mignon Clyburn, Jessica Rosenworcel, Ajit Pai and Michael O'Rielly. (AP Photo/Susan Walsh)

The recent DC circuit court decision that killed net neutrality put the Federal Communications Commission — and its newly appointed head, Tom Wheeler — in the position of needing to figure out what they can do to maintain their authority to ensure an open Internet. If they don’t, the Web as we know it could dramatically change. Journalists and advocates point to a future in which Internet service providers (ISPs) could give users faster access to some sites and slower access to others. So if, for example, Hulu paid Comcast to allow viewers a faster connection, and competitors such as Netflix did not, Comcast subscribers might decide Netflix, with its slower streaming services, was not worth their money.

In another scenario — one that could create more serious problems for our democracy than slower video streaming — ISPs could grant users faster access to, say, The Wall Street Journal than to The New York Times. They could choose to block other sites altogether. This situation is exacerbated by the fact that, in many parts of the US, ISPs have monopolies. (The map below highlights in green areas where consumers have at least two options for broadband providers. Clearly, consumers in many areas don’t.)

Map of locations with two or more broadband providers. (broadbandmap.gov)

Map of locations with two or more broadband providers. (broadbandmap.gov)

The FCC and President Obama have both indicated that they don’t wish to see such a dystopian vision become reality. “I have been a strong supporter of net neutrality. The new commissioner of the FCC, Tom Wheeler, whom I appointed, I know is a strong supporter of net neutrality,” the president said in a recent video chat.

There are a number of options for how to move forward.

The Washington Post’s Brian Fung reported that Wheeler is leaning towards taking enforcement actions against ISPs that use their monopoly power to actually make the kind of discriminatory decisions outlined above. “We are not reticent to say, ‘Excuse me, that’s anti-competitive. Excuse me, that’s self-dealing. Excuse me, this is consumer abuse,’” Wheeler said. “I’m not smart enough to know what comes next [in innovation]. But I do think we are capable of saying, ‘That’s not right.’ And there’s no hesitation to do that.”

And there’s another, broader option. The DC circuit court supported the idea of net neutrality in principal, but said that the FCC was enforcing it incorrectly. The commission categorizes ISPs as information services, not communications services, and the FCC has a lot more power over the latter. If ISPs were considered communication services, FCC-imposed rules mandating net neutrality would be legal. So, instead of taking action after broadband monopolies do something the FCC finds problematic — as Wheeler proposes — the FCC could prevent those problems from arising in the first place by reclassifying the Internet as a communications service.

Last week, the nonprofit advocacy group Free Press, in cooperation with 80 other organizations, delivered petitions with more than a million signatures to the FCC, urging reclassification. And yesterday, House and Senate Democrats introduced a bill that would reinstate net neutrality rules as they stood before the DC circuit court decision and keep them in place until the FCC has come up with new rules.

But Republicans have warned that reclassification would create substantial pushback from ISPs and their lobbyists, as well as investors on Wall Street.

In an interview with Bill Moyers last year, Susan Crawford, a law professor and former assistant to the president for science, technology and innovation, said that thinking of ISPs as a communications utility, like a phone company, could have a number of benefits, including making Internet access more democratic.

“They’re in the business right now of finding rich neighborhoods and harvesting, just making more and more money from the same number of people,” she said. “They’re doing really well at that. Comcast is now a $100 billion company. They’re bigger than McDonald’s, they’re bigger than Home Depot. But they’re not providing this deep social need of connection that every other country is taking seriously.”

Watch a clip from the interview:

Family Values? US Has the World’s Least Flexible Workplaces

Tacoma Fire Dept. firefighters Gayle Nikolaisen, left, Lt. Jennifer Gunnell and Karen Leming pose atop their fire engine Sunday, March 3, 2002. (AP Photo/Elaine Thompson)

Tacoma Fire Dept. firefighters Gayle Nikolaisen, left, Lt. Jennifer Gunnell and Karen Leming pose atop their fire engine Sunday, March 3, 2002. (AP Photo/Elaine Thompson)

The phrase “family values” has become a proxy for a suite of policy preferences championed by the religious right. But what would a set of policies that truly reflected the value of American families look like?

A good place to begin in creating such policies would be addressing our uniquely inflexible workplaces. Over the past couple of generations, two-earner households have become more common as women have come to play an increasingly vital role in the American workforce. According to the Bureau of Labor Statistics, between 1971 and 2011, while men’s participation in the workforce fell by 11 percent, women’s increased by more than a third. That’s also true of women with children under the age of 18 – seven out of 10 mothers worked in 2011.

And despite our happy talk about gender equality, women continue to bear the lion’s share of the burden of caring for kids, elderly parents and ill family members. In the Unites States, many juggle these realities without access to paid sick leave, parental leave or the ability to work a flexible schedule.

But there’s an effort underway to push America’s employers to catch up with the realities of the 21st-century family. Last month, two think tanks — the Center for American Progress and the Center for Economic and Policy Research — issued a report, “Job Protection Isn’t Enough: Why America Needs Paid Parental Leave,” which laid out the reasons that effort is so important.

BillMoyers.com spoke with economist Heather Boushey, executive director of the Washington Center for Equitable Growth, a senior fellow at the Center for American Progress and one of the report’s coauthors. Below is a transcript of our discussion that has been lightly edited for clarity. MORE

Can a Left-Right Coalition Bring About Real Prison Reform?

This post originally appeared at Colorlines.

Editor’s note: On Friday, the “Smart Sentencing Act,” which the ACLU calls “the most significant piece of criminal justice reform to make it to the Senate floor in several years,” passed the Senate Judiciary Committee with bipartisan support. You can read the ACLU’s press release here

A black man with hands outside the bars of a prison cell

A black man with hands outside the bars of a prison cell. iStock

There’s not much that Tea Party Republicans and liberal Democrats agree on these days. Surprisingly, one of them happens to be scaling back mass incarceration, the subject of a live-streamed meeting today of the Senate Judiciary Committee. The motives vary among and between key legislative leaders as ideologically disparate as Republican Sens. Mike Lee (UT) and Rand Paul (KY) and Democrats Patrick Leahy (VT) and Dick Durbin (IL). But whether motivated by concern for civil liberties, unsustainable state and federal budgets or a New Testament-inclination for giving second chances, one fact trumps all differences: The US houses by far the largest incarcerated population in the world at 2.2 million people as of year-end 2011. That smudge, as well as unsubtle championing of sentencing reform by attorney general Eric Holder, has galvanized a relatively quiet bipartisan effort over the past five years. Advocates say Congress is taking on mass incarceration one reform at a time. The latest are tucked into the 1,582-page FY2014 omnibus spending bill, and other reforms are coming down the pike. Below, a guide to these new developments. MORE

It May Be Cold Outside, but Planet Earth Is Getting Hotter

This post originally appeared at Mother Jones.

Snow-Covered Rural Highway (Blend Images via AP Images)

This week, the Central, Southern and Eastern US have all experienced yet another bout of frigid cold and snow, one that left motorists in the Atlanta area stranded in their cars overnight. Freezing air from the Arctic has been an all-too-frequent visitor this month, and with this latest arrival we’ve seen record-low daily temperatures for Detroit (minus-9 degrees), Grand Rapids, Mich. (minus-9 degrees) and Lubbock, Texas (7 degrees), among other locations, according to Weather Underground.

There’s no denying that it’s cold out; and once again, that’s prompting anecdotal claims that somehow, global warming is in question. Yet it’s important to bear in mind that just because you’re freezing — or even have seen a new daily record-low temperature in the particular place where you live — that doesn’t mean that what’s happening to you accurately reflects what’s happening to the planet overall, or even to the United States.

In other words, don’t be the white-capped guy in this XKCD comic: MORE

Obama’s SOTU Didn’t Mention the TPP – Is the Trade Consensus Breaking?

President Barack Obama shakes hands with House Speaker John Boehner before he delivers the State of the Union address in the House Chamber at the US Capitol in Washington, DC, Jan. 28, 2014. (Official White House Photo by Pete Souza)

For 30 years, a bipartisan consensus supported one corporate trade agreement after another that helped hollow out America’s middle class. But if this year’s State of the Union address is any indication, that consensus, if not dead, has become gravely ill.

Last night, Obama hardly mentioned trade. He didn’t name the Trans-Pacific Partnership (TPP) or the Transatlantic Trade and Investment Partnership (TTIP) — two mega-trade deals that his administration has pushed in past years.

Obama’s only reference to trade was almost pro forma – it seemed like a throwaway line included only because a president has to say something about trade. Here are the two times “trade” appeared in his speech:

When 98 percent of our exporters are small businesses, new trade partnerships with Europe and the Asia-Pacific will help them create more jobs. We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped “Made in the USA.”

All very vague. Contrast that with his 2013 State of the Union address: MORE

Wall Street’s Frightening New Plan to Become America’s Landlord

This post originally appeared at ThinkProgress.

A foreclosed house sign with sale pending. March 2011. (AP Photo/Don Ryan)
A foreclosed house sign with sale pending. March 2011. (AP Photo/Don Ryan)

Anyone who has ever struggled to get her landlord to fix a broken appliance can imagine how much worse it could have been if she were paying rent to a faceless hedge fund based thousands of miles away. That tenant’s nightmare may be on its way to reality for hundreds of thousands of Americans, as Wall Street firms have snapped up 200,000 family houses with the intention of renting them out.

Banks, hedge funds and private equity firms have been amassing those real estate holdings for a few years now, but their plan for wringing profit out of the rental market is just starting to draw real scrutiny. The New York-based hedge fund Blackstone Group is now the nation’s largest landlord after purchasing over 40,000 foreclosed family homes for the purpose of renting them out.

While firms like Blackstone often farm out the day-to-day management of the rental properties to third-party companies, those intermediaries are often also based in faraway states. Some have a track record of being unresponsive to basic things like broken sewer pipes, as the Huffington Post has reported. The banks and their intermediaries may neglect basic upkeep of these properties. In that worst-case scenario for renters, local and attentive property managers and building supers will get replaced with “Wall Street-based absentee slumlords,” in David Dayen’s phrase. MORE

Bumbling, Blame and Bankruptcy in Wake of West Virginia Chemical Spill

Crews clean up a chemical spill along the Elk River in Charleston, W.Va., which compromised the public water supply of eight counties on Thursday, Jan. 9, 2014. (AP Photo/Tyler Evert)
Crews clean up a chemical spill along the Elk River in Charleston, W.Va., which compromised the public water supply of eight counties on Thursday, Jan. 9, 2014. (AP Photo/Tyler Evert)

Last Friday, as lawsuits piled up over the chemical spill that left hundreds of thousands of West Virginia residents without potable water for days, Freedom Industries, the company responsible for the leak, declared bankruptcy.

The filing set off a battle between several private companies trying to avoid liability for the damages suffered by West Virginians. It also provided new insight into the previously murky ownership of Freedom Industries, and a sense of what the company’s foreclosure strategy may look like.

Who Owns Freedom Industries?

As Bloomberg Businessweek’s Paul Barrett wrote, it “took some detective work” to figure out exactly who owns Freedom Industries. The company, first founded in 1986, merged with several other small operators on December 31, just weeks before the spill.

According to The Wall Street Journal, a company called Chemstream Holdings paid $20 million and is now the sole owner of Freedom Industries. Chemstream Holdings is owned by Pennsylvania coal magnate J. Clifford Forrest, president of Rosebud Mining Corporation.

Barrett notes that separate West Virginia filings also list Forrest as the manager of two of the companies that merged with Freedom last month.

Forrest and Rosebud are heavy political donors. According to Open Secrets, during the 2012 election cycle, Rosebud and its officers donated almost $600,000 to Republican candidates, PACs and outside spending groups.

Among other donations, last year, Forrest personally maxed out his contribution to Rep. Bill Johnson (R-OH), who sits on the House Committee on Energy and Commerce. He also donated to Speaker John Boehner (R-OH), Sen. David Vitter (R-LA), the ranking member of the Senate Committee on Environment and Public Works, and Rep. Shelley Moore Capito, a West Virginia Republican who sits on both the House subcommittee on railroads, pipelines, and hazardous Materials and the subcommittee on  water resources and environment.

What Does the Filing Mean?

Freedom Industries filed under Chapter 11 of the bankruptcy code. That temporarily halts all litigation against the firm as it reorganizes.

John Pottow, an expert in bankruptcy and commercial law at the University of Michigan Law School, tells BillMoyers.com that most claims are “dischargeable” by the bankruptcy court. That means that the company’s creditors, state regulatory agencies and anyone suing for damages would have to get in line for a piece of Freedom’s assets proportional to their claims.

There are “narrow” exceptions, he said. A company can’t get bankruptcy relief for damages resulting from “fraud, or intentional personal injury.” The company can also still be stuck with some kinds of government fines. Criminal investigations aren’t impacted by the bankruptcy.

But the courts will likely treat any fines that regulators may levy on Freedom — and they could add up — like any other debt. Asked whether the company could use the court to shirk responsibility for those sorts of liabilities, Pottow said that there’s “a gatekeeping power in the bankruptcy code, so when a company files a Chapter 11 petition, they can get thrown out of bankruptcy for bad faith.” But, he continued, “there’s a perverse reasoning here: The worse they are, the more likely they are to incur penalties and fines, which makes it more likely that they have a legitimate need to file for bankruptcy.”

According to the Charleston Gazette, Freedom claims to have between $1-$10 million in assets. Aside from those mounting lawsuits, it owes creditors $3.6 million, and Uncle Sam has a lien on the company for $2.4 million in back taxes.

A Fast One?

Here’s where things get interesting. At Bloomberg Businessweek, Paul Barrett notes that “Freedom’s filings also show that entities called VF Funding and Mountaineer Funding are seeking to lend as much as $5 million to keep Freedom Industries operating during its reorganization.” But Mountaineer Funding was only formed last week, and is owned by none other than J. Clifford Forrest.

According to West Virginia University College of Law’s Joshua Fershee, there’s a third company seeking to finance the re-organization: WV Funding. He writes, “WV Funding LLC was organized by the same Wheeling attorney who formed Mountaineer Funding LLC for Forrest. The sole listed member of WV Funding LLC? Mountaineer Funding LLC.”

Liability Battle

In bankruptcy proceedings, creditors who bail out a company in bankruptcy move to the front of the line for their share of its assets.

This is where West Virginia-American Water comes in. The private company that supplies drinking water to the area — and had an intake just a mile and a half downstream from Freedom’s chemical storage tanks — made its own filing on January 19, claiming that it had incurred massive damages, and would likely end up being Freedom’s largest creditor. According to Barrett, the company is alleging that Forrest’s loan to Freedom “is actually a disguised tool to manipulate the bankruptcy process.”

In its filing, West Virginia American Water claims that Freedom’s ownership is trying to use the loan to hold onto “those parts of the business that it deems valuable, abandoning the rest, taking the going concern value from the debtor, and leaving the debtor and its many creditors ‘holding the bag.’”

John Pottow, the University of Michigan scholar, says that there’s precedent for these kinds of maneuvers. “This happened in the car company bankruptcies,” he said. “When ‘old GM’ sold itself to ‘new GM,’ the purchasers wanted to buy the nice cherries from the company, but they said, ‘Oh we don’t want to buy those pieces of land that have leaking gas on them.’ They didn’t want to pick up the claims from people that were hurt.’” Eventually, public outcry led the company to change course, but Pottow says “it was pretty clear that the court couldn’t force them to do so.”

The Wall Street Journal reported that the litigants ultimately agreed to a deal that would allow Forrest’s WV Holdings to loan his troubled company $4 million, but wouldn’t grant it special status as a creditor.

Meanwhile, Freedom Industries’ filing claims that a water main underneath the ruptured chemical tanks may have been responsible for the leak in the first place, which would shift liability for the mess back onto the water company. So everyone is suing everyone, and a big question is how much insurance Freedom carries — according to the water company, it didn’t specify in its filing.

Poor Response Continues

Last week, it became clear that early communication issues between West Virginia-American Water and Freedom may have aggravated the impact of the spill. Both firms have continued to bumble the aftermath.

After being cited for numerous violations at its Elk River depot, Freedom Industries moved the remaining mining chemicals to a second facility in Nitro, West Virginia. Several days later, according to the Associated Press, state environmental inspectors found similar violations at the Nitro site.

West Virginia-American Water, meanwhile, was using water from tanker trucks to service its customers, who then reported that they smelled the same licorice-like odor that had accompanied the spill in the first place. The water company told local officials that the trucks were being filled, “off site, out of Charleston.” But according to the Gazette, the company was actually filling up their trucks near the plant where the original spill occurred.

Second Chemical Discovered

We previously reported that little is known about the potential health affects of Crude MCHM, the chemical discharged into the Elk River. On Wednesday, the Gazette reported that state and federal health officials had been informed by Freedom that a second chemical was also contained in the tank.

According to the Gazette, the “health impacts of the [second] chemical remain unclear, and Freedom Industries has claimed the exact identity of the substance is ‘proprietary.’”

In an email to state officials Tuesday night and a press statement this morning, the U.S. Centers for Disease Control noted that data about the potential health effects of the chemical “PPH” are — like the information on Crude MCHM — “very limited.”

Unlike with food or drugs, the government doesn’t require most chemicals to be tested for harmful effects in humans before they’re put on the market.

Deconstructing PISA: Implications for Education Reform and Fighting Poverty

This post first appeared on The Huffington Post.

PISA rankings for top 10 countries' math scores 2012. Credit: The Economist


PISA rankings for top 10 countries' math scores. The US scored 36th place. Credit: The Economist. Click graphic to see more charts at The Economist website.

Every three years, American policymakers eagerly anticipate the release of scores for the Programme for International Student Assessment (PISA). While any single test, no matter how strong, can explain only a limited amount about our education system, PISA provides some unique insights, testing students’ ability to apply knowledge and skills both in and out of school. It is taken only by 15-year-olds, making it a decent proxy for the “college-and-career readiness” that is the focus of current debates.

The 2013 headline is basically that the United States falls right in the middle of the pack, as it has for several decades. The US Department of Education and its allies used those rankings to argue that US schools are “stagnating” and to advance specific reforms it says will fix them. However, average scores may obscure and confuse more than they inform. Indeed, scores from individual states that have their own PISA rankings offer more policy-relevant insight than overall US rankings. This makes sense — US education looks more like a diverse patchwork than a unified system. Public investments in schools, and in students and their families, vary greatly across states, as do other policies that may boost or depress scores. Luckily, this year, three states received individual PISA rankings — as if they were independent countries. This can help us connect the dots between those disparities and scores. MORE

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