Week In Review

A Weekly Column by Bill Onasch
October 19, 2008

Drop Fees, Not Bombs
That was a slogan of Canadian students in cross-Canada protests against their government’s war in Afghanistan. The boss parties never dared join Bush’s coalition of the willing in Iraq but Canada, along with the rest of NATO, has paid a heavy price in blood and treasure supporting Washington’s other war/occupation. My old friend Barry Weisleder in Toronto writes that despite what he calls “post-federal election fatigue,”

“Up to a thousand people demonstrated in Toronto on Saturday, October 18 to demand an end to the imperialist wars of occupation in Afghanistan and Iraq. The event began with a rally of hundreds in front of the Ontario Legislature, gained participants during a long walk in bright sunshine through downtown streets, and concluded with another rally held opposite the U.S. Consulate on University Avenue. Similar protests took place in over twenty locations across the Canadian state.”

Despite all the fatigue, post-election parliament doesn’t look much different than the last one. The Tories will still have to try to rule as a minority government. In spite of the CAW’s desertion of the NDP in favor of “strategic voting,” mainly supporting the boss Liberal party, Canada’s labor party made slight gains and polled over eighteen percent of the vote in the five party race. The Greens, who undoubtedly cut in to the NDP totals as well, won six percent–but not a single seat under Canada’s “first past the post” system.

Foreclosing Mobility
The low key headline in the Los Angeles Times was not all that unusual-
-MTA may have to cut commuter service. Transit agencies across the country are being squeezed as declining dedicated tax revenues drain subsidies needed to keep steel and rubber wheels rolling. But the story’s subhead indicated a problem not so widely known,

“It may not be able to keep trains and buses running if it has to quickly pay investors in AIG-related lease-back deals.”

Now I’ve known for some time about scams in the freight railroad industry that resulted in little plates attached to locomotives and rolling stock claiming ownership by some bank. The Times piece explains,

“Lease-back deals are a common way to raise money in the corporate world. A manufacturer, for example, could sell its factory to investors and then lease it back. The manufacturer gets a large chunk of cash and the investors get a steady stream of lease payments as well as a tax break for their depreciating property.”

What I didn’t know is that this practice was widely adopted by major quasi-public transit agencies as well. Between the late 1980s and 2003, the Los Angeles MTA sold its rail equipment, more than 1,000 buses, a parking garage and maintenance facilities to investors that, in separate deals, included Wells Fargo, Comerica and Phillip Morris.

As is typical, these owner/leaseholders insisted that these transactions be insured, guaranteeing they would get their flow of money.

It turns out that insurer was AIG. AIG had so much faith in customers such as transit agencies that they decided they didn’t have to keep reserves to cover any losses. Instead they invested this money elsewhere–and lost big time. All U.S. citizens are now part owners of partially nationalized AIG.

With the collapse of AIG, the investor-owners are demanding the MTA come up with new insurance, likely costing hundreds of millions of dollars, pronto. This comes just after the agency lost 133 million in state funding and in the face of declining sales tax revenues.

So far, the MTA have found no acceptable alternative insurer at any price. Default and penalty clauses could ultimately push their liability to investors to 1.8 billion dollars. Terry Matsumoto, MTA’s CFO says, “There is no practical way we could ever pay that back.” That’s why, even with rapidly growing ridership–now standing at 1.5 million each weekday–massive service cuts loom.

This mess wasn’t just some southern California quirk. Similar arrangements are known to threaten similar problems with the Muni and BART in the Bay Area, the Chicago Transit Authority, and even the Metro in our nation’s capital. All in all, at least thirty of the country’s top transit agencies have some kind of lease back deals according to the transit boss trade group. A recent attempt by the New York MTA to sell bonds fell flat as well.

Greatly expanded mass transit needs to be a national priority. Nowhere is transit more important than Los Angeles. Its smog and traffic congestion problems are, of course, legendary. Hundreds of thousands of working poor depend on MTA buses for all of their transportation. The present level of LA bus service was won only through court orders, resulting from suits and mass actions by mainly Black and Brown bus riders, that relied on civil rights laws for their legal arguments. And even more affluent residents of the area have come to recognize the benefits of the growing subway, light rail, and commuter rail options of recent years.

The collapse of major transit systems would greatly exacerbate both the economic and global warming crises. Labor should join community and environmental forces to demand emergency action to save what we have, and to begin planning for what we really need.

In Brief

¶ Mountain top removal is a highly profitable, and highly environmentally destructive, coal mining method widespread in West Virginia and Kentucky. For 25 years mine operators have been prohibited by law from dumping rubble and slurry within 100 feet of streams. It has never been effectively enforced. By the responsible department’s own admission, at least 1,600 miles of streams in Appalachia have been wiped out by illegal “valley fills” since the mid-1980s. The Interior Department, in one of its final lame duck acts, addresses this hypocrisy–by eliminating the dumping restriction.

¶ The Rich Support McCain--the Super-Rich Support Obama. The provocative title of this blog entry by Robert Frank in the Wall Street Journal is backed up by polls and campaign contribution numbers. The mere rich–1-10 million net worth–are fixated on taxes. The super-rich, who pay little if any taxes, are more concerned about questions such as war, and healthcare, and see Obama as more reliable in those areas.

¶ You’ve got to admire their attention to detail. The world’s biggest employer finally worked out a business plan that eliminated eight workers covered by the only union contract with Wal-Mart in North America. The car shop adjoining the store in Gatineau, Quebec will no longer offer the tire and lube service performed by UFCW members.

¶ In 1960 the USA ranked 12th in the world in infant mortality. Even then we trailed most industrialized countries that already had well established universal healthcare systems emphasizing preventive care. Since then, we have been overtaken by numerous “developing” countries as well and the latest ranking puts us number 29, with 6.86 infant deaths per 1,000 live births. Twenty-two countries have infant mortality rates below 5 per 1,000 births, and Sweden, Norway, Finland, Japan, Hong Kong and Singapore are below 3.2.

¶ Conventional wisdom tells us Americans are hostile to government intervention. A Times/Bloomberg poll found seventy percent blame the absence of more regulation for the economic crisis. Sixty-one percent support government assistance to individuals facing foreclosure.

¶ Back in June, more than four hundred antiwar activists, gathered at a National Assembly in Cleveland, urged the whole presently divided antiwar movement to unite in a call for mass actions, on both coasts. next spring to protest the ongoing occupations in Iraq and Afghanistan. Clearly, this olive branch has not been accepted by all. Today, I received a message from the UFPJ National Steering Committee preempting everyone–including their own national conference scheduled for December in Chicago–by calling a “national mobilization” in Washington on March 19, in their name only. The character and demands of this take it or leave it mobilization are still vague.

¶ While the presidential candidates have had relatively little to say about immigration issues the lame duck administration has vigorously pursued workplace raids. Apparently there are no budget restrictions in this area. Iowa’s leading daily paper reported this week, “Officials of U.S. Immigration and Customs Enforcement, known as ICE, said in response to a freedom of information request by The Des Moines Register that their expenditures [for the May raid in Postville, Iowa] totaled $5,211,092 as of Aug. 21.” This Thursday in Kansas City there will be a Dialogue on Immigration, sponsored by the Cross Border Network and others, featuring Jane Guskin. Guskin is author of the book, The Politics of Immigration, Questions and Answers. For details about this event click here.

That’s all for this week.

Demand Guaranteed Healthcare on a SinglePayer model for everyone in America, for life.

KC Labor Home

Daily Labor News Digest

 Past Weeks In Review

Sign Up For E-Mail List

Site Meter