Federal Reserve Report Contains Bright Spots

By Steve Rensberry

   (RPC) - 7/28/2010 - The recent Beige Book report by the U.S. Federal Reserve was a mixed bag of economic ups and downs, weak spots and bright spots. The report tabulates data over the past two months from the 12 District banks, among them the Federal Reserve Bank in St. Louis. In general, the catch phrases were: slow growth, sluggishness, flat or weak activity in the construction and housing sectors, and uncertainty.
   "The economic outlook remains unusually uncertain," Federal Reserve Chairman Ben Bernanke said.
   But where there has been weakness in some areas, like housing and construction, there has been grown in other areas and stability in still others. And is it uncertainty or simply "continued caution" on the part of consumers in the face of a decade of rising energy and health care costs, the foreclosure crisis, and turmoil on Wall Street of the likes that hasn't been seen in decades.
   Still, the report on the Fed's Eighth District does have some bright spots, with the economy showing at least some overall improvement and growth, manufacturing and the services sector included.
   Here's the Federal Reserve Board's July 28 summary of activity within its Eighth District:

The Federal Reserve's Eighth District - St. Louis

   Economic conditions in the Eighth District have continued to improve since our previous report. Manufacturing activity increased, on balance, as did activity in the services sector. Auto sales increased over a year ago. Residential real estate market conditions continued to improve across the District's largest metropolitan areas, while commercial and industrial real estate markets remained weak, especially construction.    Overall lending activity at a sample of small and mid-sized banks in the District decreased from early April to late June.

Manufacturing and Other Business Activity
   Manufacturing activity has continued to increase since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants and reduce operations. Firms in the furniture, plastics product, metal pipe, and plastics resin manufacturing industries announced plans to expand operations and hire new employees. Additionally, a major firm in the automobile manufacturing industry announced the opening of a new production facility. In contrast, firms in the motor and generator, furniture, and polystyrene foam product manufacturing industries announced that they will close plants in the District and lay off workers.
   Activity in the District's services sector has also increased since our previous report. A major software publishing firm has announced plans to open a new facility in the District and hire new workers. Additionally, a firm in nursing care services announced plans to relocate their headquarters to the District. In contrast, contacts in education services, air transportation support services, and the casino industry announced plans to decrease operations and lay off workers. Sales of new and used automobiles in recent weeks were reported as higher than a year ago and slightly above expectations.

Real Estate and Construction
   Home sales continued to improve throughout the Eighth District. Compared with the same period in 2009, May 2010 year-to-date home sales were up 3 percent in Memphis, 12 percent in St. Louis, 19 percent in Little Rock, and 30 percent in Louisville. Residential construction also continued to improve throughout the District. May 2010 year-to-date single-family housing permits were up in most District metro areas compared with the same period in 2009. Permits increased 27 percent in Louisville, 31 percent in Little Rock, 36 percent in St. Louis, and 52 percent in Memphis.
   Commercial and industrial real estate market activity remained slow throughout most of the District. Contacts noted that financing requirements for new construction remained stringent and lease rates remained low. A contact in St. Louis reported that commercial leasing was up in some areas, but new commercial construction projects are not expected before mid-2011. Industrial real estate and construction contacts throughout the District continued to report a flat environment. A contact in Louisville reported that demand for industrial real estate continued to be weak. A contact in the Memphis area reported that while industrial leasing has improved somewhat, no new industrial construction is likely before the end of the year.
Banking and Finance
   Total loans outstanding at a sample of small and mid-sized District banks decreased 2.0 percent from early April to late June. Real estate lending, which accounts for 73.6 percent of total loans, decreased 1.9 percent. Commercial and industrial loans, accounting for 16.0 percent of total loans, decreased 2.5 percent. Loans to individuals, accounting for 5.3 percent of total loans, decreased 6.5 percent. All other loans, roughly 5.1 percent of total loans, increased 4.1 percent. During this period, total deposits at these banks decreased 1.2 percent.

Agriculture and Natural Resources
   Generally, development of the District's major crops remained ahead of its 5-year average pace. In mid-July, the overall condition of rice and cotton was rated as slightly better than last year, while the condition of corn, sorghum, and soybeans was rated as slightly worse. Farmers in the District states planned to harvest more acres of corn for grain and rice in 2010 than in 2009 but fewer acres of soybeans and sorghum for grain. The winter wheat harvest was complete or nearly complete in all District states. Based on July estimates, total winter wheat production in the District states was expected to be down 48 percent from last year. Since our previous report, pasture conditions deteriorated in most District states

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Former Financial Execs Charged in Fraud Case

By Steve Rensberry

   (RPC) - 7/27/2010 - If you were among several bidders on a municipal finance contract or bond and were able to have one last look from the broker at all the other bids that had been placed, before placing your own bid, would it give you an advantage? Of course it would, but it may also land you in jail as a clearly prohibited act under U.S. treasury regulations.
   And what if your "wink wink" agreement with said broker went even further, such as agreeing to place an occasional losing bid in exchange for a financial kick-back or two for the broker and some of his friends?
    Such is exactly the case with a 12-count indictment filed on July 27 in U.S. District Court in New York City against three former financial executives, Domonick P. Carollo, Steven E. Goldberg and Peter S. Grimm, involving investment contracts for the proceeds of municipal bonds. Each had once worked in association with General Electric Co.
   The ongoing investigation and subsequent action stems from efforts of the Financial Fraud Enforcement Task Force begun under U.S. President Barack Obama. This particular investigation involved the Antitrust Division's New York Field Office, IRS Criminal Investigation and the Federal Bureau of Investigation, in coordination with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
   "To date, four individuals have pleaded guilty in relation to this investigation. In addition, on Oct. 29, 2009, CDR (Rubin/Chambers, Dunhill Insurance Services Inc.), two of its employees and one former employee were indicted and charged with participating in bid-rigging and fraud conspiracies and related crimes," a new release from the FBI states.
According to a new release issued by the U.S. Federal Bureau of Investigation, all three worked at one time with financial institutions or financial services companies when they participated in various illegal schemes between 1999 and 2006.
   “The individuals charged today allegedly participated in complex fraud schemes and conspiracies to manipulate what was supposed to be a competitive process,” Christine Varney, Assistant Attorney General for the Antitrust Divison of the U.S. Department of Justice, said. “The Antitrust Division has previously indicted several individuals and their employer in this matter. Our investigation is ongoing and we will continue to prosecute those who engage in such illegal and anticompetitive behavior.”
   Court documents charge that Beverly Hills, California-based Rubin/Chambers, Dunhill Insurance Services Inc. (known as CDR Financial Products) was one of the co-conspirators and had given Grimm, Goldberg and Carollo information about competing bids, as well as participated in a kickback scheme.
   “The elaborate schemes outlined in the indictment boil down to efforts by these defendants to subvert the competitive bidding process for investment agreements. In the process, they defrauded public entities—and therefore, the public—and put bondholders at risk,” FBI Acting Assistant Director-in-Charge George Venizelos said in a statement released to the public. “The FBI will continue to work with the Antitrust Division to ensure the integrity of competitive bidding in public finance.”
   A trial is scheduled to start in September, 2011.
   In a Task Force Fair Lending Forum held in Chicago this past April, Illinois Attorney General Lisa Madigan had strong words for lenders who manipulate the process for gain.
   “During the peak of the housing bubble, Chicago’s African American and Latino neighborhoods became ground zero for the worst of the mortgage industry’s toxic loans.” Madigan said. “Unfortunately, many families in these communities continue to struggle today because of the lending industry’s illegal, reckless practices. Today’s forum is critical because it enables us to combine state and federal resources and create partnerships with agencies on the ground that are committed to ending the types of discriminatory lending practices that helped cause the worst economic meltdown of our time.”

Can Diet, Exercise Prevent Alzheimer's Disease?

   (NIH) - 7/26/2010 - Will doing crossword puzzles prevent memory loss as we age? Does exercise delay or prevent Alzheimer’s disease? Will adding fish oil to a diet help keep our brains healthy as we age? The National Institutes of Health recently convened a conference to answer these and other questions. The conclusion? Research so far has offered good leads about preventing Alzheimer’s disease and age-related cognitive decline. Still, more research is needed before we can be sure what’s effective.
   “Scientists are actively investigating a wide range of strategies,” says Dr. Richard J. Hodes, director of NIH’s National Institute on Aging (NIA). “Before we can tell the public that something will prevent Alzheimer’s disease or cognitive decline, we want to make sure that the intervention is tested as rigorously as possible.”
   Alzheimer’s disease usually affects people 60 and older, but people with a rare form of the illness can develop the disease in their 30s or 40s.
   “The biggest risk factor for Alzheimer’s disease is age, and the number of Americans over the age of 65 is expected to double to 70 million by 2050,” Hodes says. “We must find ways to prevent or delay this terrible disease.”
   While aging brains may not store memories or recall information as easily as they once did, many older people function well despite these changes. In fact, experience can help some older people perform certain tasks as well or better than younger ones. Alzheimer’s disease and other dementias are definitely not, as people once thought, a normal part of aging.
   The science of Alzheimer’s disease has come a long way since 1906, when a German neurologist and psychiatrist named Dr. Alois Alzheimer first described the key features of the disease now named after him.
   He noticed abnormal deposits in the brain of a 51-year old woman who had dementia. Researchers now know that Alzheimer’s disease is characterized by brain abnormalities called plaques and tangles. Plaques are clumps of protein in the spaces between the brain’s nerve cells. Tangles are masses of twisted protein threads found inside nerve cells. Scientists know what these plaques and tangles are made of. But they still don’t know what causes them to form, or how to stop the process.
   During the 3-day meeting—called the State-of-the-Science Conference on Preventing Alzheimer’s Disease and Cognitive Decline—an independent panel of 15 medical, science and health care experts heard talks from leading scientists and reviewed the available evidence.
   The panel noted the challenges in diagnosing and treating these complex disorders. It’s hard to measure them in their earliest stages. There are no agreed-upon tests that doctors can use in their offices. Scientists are continuing to investigate methods for early detection.
   A handful of approved medications are available to help treat the symptoms of Alzheimer’s disease. One, donepezil (Aricept), was found to delay the development of Alzheimer’s disease for about a year in people with mild impairment. None of the approved medications, however, appears to affect the underlying causes of the disease.
   The panel reviewed a range of observational studies and a few short-term clinical trials looking at different prevention strategies. For example, these studies have suggested that physical activity, social engagement and intellectual activity all may help prevent Alzheimer’s disease and cognitive decline. Controlling high blood pressure and diabetes may help. So may omega 3 fatty acids, which are found in salmon and other fish.
   Many of these strategies have already been shown to promote healthy aging and reduce the risk for other diseases.
   However, none of the studies to date has given conclusive answers when it comes to preventing Alzheimer’s or cognitive decline. These strategies and many others are under further study. In addition, many drugs are now being tested in clinical trials.
    “We wish we could tell people that taking a pill or doing a puzzle every day would prevent this terrible disease, but current evidence doesn’t support this,” says Dr. Martha L. Daviglus, panel chair and professor of preventive medicine at Northwestern University in Chicago. 
   Still, many of the healthy habits under study, like exercise, usually do no harm and likely benefit overall health. Smoking has been linked to a greater risk for dementia and cognitive decline, so if you smoke, try to quit. 
   Chronic diseases, such as diabetes and depression, may also raise your risk, so be sure to address any long-term health problems.
   Despite all the challenges, Hodes says, there are reasons to be optimistic. “Technology is advancing our ability to identify the gene mutations that may place some people at greater risk for developing Alzheimer’s disease. Scientists are developing new imaging tools to allow us to map the changes taking place in living brains. And we are moving closer to identifying the markers in blood that may signal disease onset, track its progress and test whether or not a medicine is working.”
   Whether you have memory problems or not, you can take an important step: You can volunteer to participate in research. NIA is now funding 6 clinical trials to examine the effects of exercise or other lifestyle changes on people with mild to severe Alzheimer’s disease. Another 14 clinical trials are testing ways to prevent cognitive decline in healthy older adults.
  For more information and to volunteer for an open trial, go to www.nia.nih.gov/Alzheimers/ResearchInformation/ClinicalTrials.
   Published courtesy of NIH News in Health.

Program Aims to Curb Youth Unemployment Rate

   (NewsUSA) - 7/25/2010 - The economic recession has hit America's youth particularly hard. Nearly 4 million of the unemployed are young people 25 and under. Many of them are not teenagers who need a minimum-wage job to earn pocket money to spend on weekends. They're young adults who need a job -- and job skills -- so that they can support themselves and, sometimes, their families.
   More than 5 million young people ages 16-24 are disconnected from employment and education and living in high-poverty communities in this country. Some of them are lucky. Some live in areas that have jobs and education programs that target youth and help them complete their education, learn job skills and find jobs that allow them to advance and earn a livable wage.
   The Campaign for Youth is a coalition of national organizations that support some 400 programs across the United States that have been successful in assisting disadvantaged and disconnected youth on their path to employment. The Campaign is currently working to encourage Congress to increase federal investment in youth through summer and year-round jobs programs and other efforts that will help young people succeed and reverse the impact of the highest youth unemployment rate in 60 years.
   The Campaign has developed a national strategy to reconnect youth to school and work that includes creating a White House Office of Youth Policy to coordinate federal efforts, providing grants to state and local youth development councils and community institutions, and investing in promising programs and innovations that are already successfully serving youth.
   "We appreciate President Obama's efforts to provide jobs for Americans affected by the recession, but we want to ensure that America's youth participate in the recovery," said Linda Harris, co-chair of the Campaign for Youth and Youth Policy Director at CLASP. "Too often, young people, especially males of color, are left behind in economic recoveries. Putting young people to work now and investing in upgrading their skills and education credentials is the best way to prepare them to compete for good jobs with good wages that allow them to support their families when the economy rebounds. This pool of young talent will be needed to fuel our future economy, and we can't afford to let them remain idle or slip through the cracks."
   The full strategy for investment is available online at www.campaignforyouth.org.

Aide to U of I President Defends $195,000 Salary

By Bill McMorris 
Illinois Statehouse News

   (CHICAGO) – 7/22/2010 - Lisa Troyer has not technically started her job as executive assistant to new University of Illinois President Michael Hogan, but the pair have already come under some scrutiny for her $195,000 salary.
    Troyer says the salary is reflective of her responsibilities – both have increased since coming to Illinois from the University of Connecticut where she served as Hogan’s chief of staff.
    “The pay has stepped up with the responsibilities and magnitude…(of) issues that we have to tackle in the next two years in terms of budget and gaining greater efficiencies,” she said.
    Troyer’s salary is nearly $90,000 more than Kathleen Metz, former executive assistant to Hogan’s predecessor B. Joseph White. But Hogan’s duties will not be limited to the office–she is a former sociology professor and might return to the classroom.
    Troyer was at her boss’ side during Thursday’s Board of Trustees meeting at the University of Illinois-Chicago where they were discussing that very issue. The Board approved Troyer’s salary.
   “We don’t stand in very good shape,” Hogan said after the meeting. “Everyone is very worried about (next year).”
   The state’s $13 billion deficit left the university with nearly $300 million in unpaid bills as of June. Hogan is confident Illinois’ largest universities will be able to make good on these bills before the end of the calendar year. He added that unless the state is able to solve its budgetary crisis, the university will be left “vulnerable” in the future.
    The university’s financial straits are partly to blame for the cold reception Hogan received from some lawmakers. The board approved a 9.5 percent tuition increase–one of the lowest in the country, Hogan said–just prior to approving his $620,000 base annual salary in May. His starting salary is a $170,000 increase from that of White’ base salary of $450,000.
   State Sen. Martin Sandoval, D-Chicago, joined labor groups in protesting the decision outside the same Chicago meeting room. He was equally unhappy with news of Troyer’s salary.  
   “This is once again a reflection that President Hogan is just an extension of the past University of Illinois administration with no regard for working families,” he said.
   White resigned last fall amid a scandal that revealed the university had admitted students who did not meet academic standards but had ties to state politicians.
   Hogan, however, defended his long-time confidant.
   “We can’t pay a highly marketable…faculty less than the market rate or they’re all going to leave,” he said.
   Hogan said he and the board are looking for ways to sustain the system’s operations cost without adversely affecting low-income students. He is looking towards using capital investments, borrowing and increased financial aid from the federal government, as well as private donors to alleviate the sting of the recession.
   The university is also working to cut costs and has demonstrated at least one area of improvement. Illinois’ largest school system was able to save on utilities for the first time in years, thanks to some energy-saving measures. The system’s four campuses saved about $30 million in the past two years.
   Hogan, however, disapproved of some savings measures, taking aim at unpaid furloughs for staff.
   “Furlough days have been very destructive for faculty morale — I’d like to get around that,” he said.
   Troyer brought a sunny demeanor and fire-engine red blazer to an otherwise glib meeting. She is serving on an interim basis for now and will transition to her full-time position on Monday. She said she is already throwing herself into the new job–partly because she always thought she would follow her boss through academia.
   Troyer began working for Hogan at the University of Iowa in 2004 as his assistant provost before following him to Connecticut.
   She said she is not surprised by the eyebrows raised by the Champaign News-Gazette’s revelation that she will earn thousands more than Gov. Pat Quinn–who faces budget issues of his own.
   “These are all legitimate concerns and people should hold us accountable for what we’re earning and I expect to be held accountable for my earnings,” she said.
   Neither Troyer nor her boss said they had received negative feedback from the story — yet.
   “I haven’t checked my email,” she said.
   Neither had Hogan.
   Story courtesy of Illinois Statehouse News. Photo courtesy of free-extras.com.

Criminologists Suggest Reasons for Drop in Crime

By Steve Rensberry

   (RPC) - 7/18/2010 - Data released this summer by the U.S. Federal Bureau of Investigation showed a decrease in violent crime last year, which was down by an apparent 5.5 percent. Property crimes also were down, by about 4.9 percent, and arson dropped by 10.4 percent.
   Among the offenses listed as violent crimes are robbery, aggravated assault, rape, forcible rape and murder. Property crimes includes burglary, motor vehicle theft and larceny-theft.
   The report stands in contrast to predictions of the year before and a January, 2009 report by the Police Executive Research Forum in Washington, D.C. That report argued that the economic recession which began in the fall of 2007 was likely to fuel a dramatic rise in crime. It involved a survey of 233 police agencies across the country.
   It may be noteworthy that a majority of the agencies (63 percent) participating in the survey also were looking at budget cuts at the time, and that roughly 44 percent reported an actual increase in certain types of crime, according to a Jan. 27, 2009 story on the report by Ross Colvin of Reuters News Service, "U.S. recession fuels crime rise, police chiefs say."
   Colvin writes: "There has long been debate over the connection between crime and the economy, but criminologists, sociologists and police chiefs interviewed by Reuters in October predicted a rise in crimes as the United States sinks deeper into recession. Crime has increased during every recession since the late 1950s, sociologists said."
   But what do we make of the Uniform Crime Reports for 2008?  Produced through the FBI's Uniform Crime Reporting (UCR) Program, the report states that:
  • An estimated 1,382,012 violent crimes occurred nationwide in 2008, about 1.9 percent lower than the 2007 estimate. The 2008 estimated violent crime total was 1.6 percent above the 2004 level but 3.1 percent below the 1999 level.    
  • There were an estimated 454.5 violent crimes per 100,000 inhabitants in 2008.
  • Aggravated assaults - the highest number of violent crimes reported to law enforcement - accounted for 60.4 percent of violent crimes.
  • Robbery comprised 32.0 percent of violent crimes, forcible rape accounted for 6.4 percent, and murder accounted for 1.2 percent of estimated violent crimes in 2008. 
  • Offenders in the U.S. used firearms in 66.9 percent of murders in 2008, in 43.5
  • percent of robberies, and in 21.4 percent of aggravated assaults. (Firearm data excludes forcible rape offenses).
   The UCR report looks at four major offenses: murder and non-negligent manslaughter, forcible rape, robbery and aggravated assault, and considers crimes to be violent if they involve force or the threat of force.
   Experts reference the sociological and practical complexities, as noted in a story by Christian Science Monitor Correspondent Husna Haq.
   Haq cites three criminologists in analyzing some of the key reasons for the apparent discrepancy, those being American Society of Criminology and University of Missouri Professor of Criminology Richard Rosenfeld, University of Albany Professor of Criminal Justice Shawn Bushway, and co-direct at the research group Justiceworks at the University of New Hampshire in Durham, Ted Kirkpatrick. Among the reasons:
  • Higher rates of incarceration, meaning those who would commit crimes are simply unable to because they are behind bars.
  • More active policing, including the increasing use of such things as video cameras and security systems
  • Social program aimed at steering trouble individuals away from a life of crime
  • Demographic trends toward an older, less crime-prone population
  • Increased unemployment aid and social support from the government.
  • Fewer opportunities for the simple fact that more people are home, and people and businesses presumably have less cash.
But crime hasn't just fallen in the U.S. England and Wales are also seeing a decrease. Guardian reporters Haroon Siddique and Alan Travis point in a July 15 story to a drop of 9 percent in 2009 compared to 2008. See: "Fall in crime allays fears of recession spike."

"The number of murders fell by 6 percent to 615, the lowest since 1997, while gun and knife crime also fell. Crimes recorded by the police fell 8 percent from 4.7 million in 2008-09 to 4.3 million last year," they write.

Nixon Hopes Incentives Will Keep Ford in Missouri

By Steve Rensberry

   (RPC) - 7/15/2010 - Missouri Gov. Jay Nixon put pen to paper today at United Auto Workers Union Local 249 in Kansas City in signing a bill that gives Ford Motor Company approximately $150 million in tax breaks to stay the course at the Claycomo plant near Kansas City. 
   Ford representatives released a statement congratulating Nixon for the step, while reserving final comment on what the company ultimately intends to do.
   The bill was approved Wednesday after a filibuster that lasted nearly 20 hours.
   "We congratulate Governor Nixon and the Missouri State Legislature on the passage of the Missouri Manufacturing Jobs Act," the statement says. "We believe this will be a great benefit to the future of auto manufacturing in the state of Missouri," Ford statement released this week and reported by NBCActionNews. See video of 7/14: Ford incentives sent to Nixon's desk
   The bill was approved by Missouri legislators Wednesday after four weeks of contentious debate and a filibuster that lasted nearly 20 hours.
   The plant began production in the 1950s and employs about 3,900 people. It is a major producer of the F-150 pickup trucks and Escape SUVs.
   Although Nixon had not released a formal statement as of Thursday, a previous news release from the governor's office, following a visit to a plant in Dexter, explains his position.

July 7 News Release From Nixon's Office
   Speaking to workers at the Faurecia plant in Dexter today, Gov. Jay Nixon called on the General Assembly to reach an agreement this week to pass the Missouri Automotive Manufacturing Jobs Act to help save thousands of existing Missouri automotive jobs and attract next-generation automotive jobs to the state.
   Gov. Nixon called the General Assembly into special session on June 24 to pass the Missouri Automotive Manufacturing Jobs Act, after numerous conversations with legislative leaders from both parties.  At the time of the Governor's call, legislative leaders indicated that strong, bipartisan support existed to pass the act quickly, but the bill now remains unnecessarily stalled in the legislative process. Today, Gov. Nixon urged the House and Senate to work together to reach an agreement on passing the jobs act this week.
   "For more than 100 years, automotive production has been a critical component of Missouri's economy," Gov. Nixon said.  "As major manufacturers, including Ford, restructure their production operations, it's critical that Missouri has the sharpest, strongest tools available to compete for next-generation automotive jobs.  The Missouri Automotive Manufacturing Jobs Act would give us those vital tools.  I call on the General Assembly to get their work done and reach an agreement on passing this bill this week."
   Every day the General Assembly meets in special session costs taxpayers approximately $25,000.
   The Missouri Automotive Manufacturing Jobs Act would allow qualified manufacturing facilities or suppliers that bring next-generation production lines to Missouri to retain withholdings taxes typically remitted to the state.  To be eligible for these incentives, manufacturers would be required to make a substantial capital investment in production capacity and put people to work.  Incentives would be triggered only after a company is making that investment and workers are on the job.  Strict requirements would force a company to repay the incentives if that commitment were not upheld.    

   The total amount of incentives available under the act would be capped at $15 million a year.
   Manufacturers would not be eligible for any incentives until they had made a significant capital investment in the state and workers actually were on the job.  The Governor also has called on the General Assembly to pass legislation to offset the costs of the Missouri Automotive Manufacturing Jobs Act by reducing expenditures in other areas.
   Passing the Missouri Automotive Manufacturing Jobs Act has become increasingly important in recent weeks.  Ford Motor Co., which employs 3,700 workers at the Claycomo facility near Kansas City, is finalizing decisions about restructuring operations and locating production lines.  Other states, including Michigan, have come forward with aggressive proposals to compete for those jobs.  This legislation would help Missouri compete to bring next-generation vehicle production to the state.
    The Ford facility at Claycomo also supports a network of suppliers located in every corner of Missouri. The Faurecia plant in Dexter, which employs more than 900 workers, is a major supplier of emission-control equipment for Ford.  Other suppliers are located in such communities as Columbia, Farmington, Hannibal, Nixa, Perryville and Sedalia, producing seats, wheels, steering wheels and other components.  Relocation of jobs from the Ford facility from Kansas City would severely affect these suppliers and put Missourians out of work.
   In total, Missouri's automotive manufacturing industry contributes $4 billion annually to the state's economy, and automotive products represent 18 percent of Missouri's export market, according to a 2009 report by the Missouri Automotive Jobs Task Force.  Automotive industry suppliers, manufacturers and dealers are located in nearly every Missouri county, according to the Center for Automotive Research.

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Observers Anticipate Blagojevich Taking Stand

By Bill McMorris
Illinois Statehouse News

   CHICAGO - 7/14/2010 - The federal government had three months to prove former Illinois Gov. Rod Blagojevich guilty of 24 counts of corruption. Prosecutors seem to think it only took five weeks, but that will be up for the jury to decide.
   The prosecution on Tuesday rested its case, and defense attorneys will start presenting witnesses on Monday. The jury so far has been inundated with wiretaps of the former governor allegedly plotting the sale of a U.S. Senate seat or the strong-arming of a political player; testimony from former insiders, who pointed to Blagojevich as a man-obsessed with fund-raising; and federal agents talking about his lavish lifestyle and $20,000 suits.
   The sheer volume and nature of government evidence has impressed former federal prosecutor Rodger Heaton, who helped convict former Arkansas Gov. Guy Tucker of fraud in 1996. But the outcome of jury trials are never guaranteed, he said.
   “The jury will have to decide, should the words (on tape) be taken at face value? Do you trust the co-conspirators (who testified) or Blagojevich?” Heaton said. “When you have questions like this in a long trial the credibility of the actors in the courtroom–witnesses and lawyers–becomes critical.”
   Blagojevich has declared his innocence to anyone within shouting distance at the courthouse and on reality television. Now it is up to defense attorneys to counter the government’s case with a different take on the governor’s actions. One of the people they will use to make this case is Rod Blagojevich.
   Sam Adam Sr., the storied lawyer from Chicago’s 26th and California streets criminal court, said he will be handling Blagojevich’s questioning personally. He said he has been preparing his client for the stand for six months and is confident he will hold his own under cross examination.
   Heaton, himself a white collar defense attorney at Hinshaw and Culbertson, said the eagerness to get Blagojevich on the stand is surprising.
   “Normally you wait until after the prosecution’s case to say (the defendant) will testify, but they came out and said it in the opening statement,” he said. “It is a high risk maneuver, but they must feel like they have no choice.”
   Blagojevich’s testimony may allow the defense an opportunity to offer its own narrative as to what was going through the governor’s mind when he was talking campaign contributions and the Senate seat. But it will also, however, allow the prosecution the chance to restate its case, constantly reminding jurors of previous tapes and testimony–a “luxury” for any prosecutor, according to Heaton.
   But that isn’t the only aspect of the defense’s case that surprises Heaton. Blagojevich’s attorneys will argue that the former governor was acting under advice of counsel during the alleged conspiracy. The defense will try to prove that had he known what he was doing was illegal, he would have stopped. Blagojevich’s attorneys have already tried to lay the foundation for the argument, asking his former advisers, almost all of whom have law degrees, if they ever attempted to warn the governor about the legality of his course of action. Each answered no.
   Heaton said such a defense is common for tax cases, but rare for white collar criminals.
   “The jury has to decide that Blagojevich did not know what was right and wrong,” he said. “It doesn’t really fit here, influencing actions by your contributions.”
   The defense is hoping to establish these kinds of doubts to the jury. But the argument will mostly play out when the jury is not in the room. It is up to federal Judge James Zagel to instruct jurors to treat many of the prosecution’s witnesses as attorneys giving bad legal advice, rather than co-conspirators in Blagojevich’s schemes. It is a high bar to clear.
   An advice-of-counsel defense must demonstrate that Blagojevich approached his advisers “for the purpose of securing advice on the lawfulness of his possible future conduct” and that he provided them with all necessary facts. The prosecution has argued that Blagojevich sought political advice, rather than legal advice. He was, the argument goes, gauging how much President Barack Obama’s former Senate seat was allegedly worth, rather than seeing if it was legal to allegedly trade it for campaign donations or cabinet posts.
   Heaton is not the only one surprised by the move. Zagel told the defense he has only seen one person with a law degree argue advice-of-counsel during his 23 years on the bench.
   “It didn’t end well for him,” he said.
   Courtroom observers, like David Morrison, are already starting to analyze how things will end for Blagojevich. Morrison, who serves as associate director of the Illinois Campaign for Political Reform, has attended several trial sessions. He is convinced the prosecution has made a strong a case as ever. Morrison said testimony about Blagojevich’s attitude toward his office, his seeming nonchalance about governance and fervor for fund-raising will prove especially damaging.
   He pointed to testimony from former Deputy Gov. Bob Greenlee as key to the prosecution. Greenlee said Blagojevich would hide in the bathroom to avoid talking with state budget director John Filan, but he never missed a meeting when it came to his campaign budget.
   “People who endured the Blagojevich years are learning the details about Rod that explain why things went so wrong,” he said. “He campaigned as a reformer, but he was George Ryan on steroids.”
   George Ryan is Blagojevich’s Republican predecessor in the governor’s office and potentially federal prison. He was convicted of illegally selling government contracts and drivers’ licenses in 2006. Morrison also followed his trial very closely.
   “The case here is stronger because you have the defendant himself on tape, talking about his criminal acts,” he said.
   Defense attorneys will be spending the weekend preparing tapes of their own, which they say will vindicate the governor, as a politically, not financially, motivated leader. Zagel gave the defense until Monday to prepare its case–an extension made necessary by the prosecution’s early finish.
   While taking away an opponent’s expected month of planning does have strategic benefits, Heaton said it was likely unintentional.
   “The estimates lawyers make are at best an educated guess,” he said. “Who knows how long opponents will go on cross examination, how long the judge will let them go on.”
   Zagel kept a tight leash around the defense during cross examination, which is part of the reason the prosecution was able to end early. He did not allow Blagojevich’s defense team, including showman celebrity attorney Sam Adam Jr., much leeway in introducing new tapes or theories about wiretaps and witness testimony. Zagel sustained objections to defense questioning by the dozens at times.
   “Are you done yet?” became a refrain from the judge during cross examination.
   Heaton expects Zagel to enforce the same narrow standards on the prosecution during Blagojevich’s defense.
   “The judge will be careful to control the cross examination,” he said. “I would be surprised if he gave the prosecution wider latitude when he was so firm with the defense.”
   An early rest also reflects the prosecution’s confidence that they proved their case with the witnesses on hand. Trial lawyers normally pad their witness lists at the start of a case, so they can make up for poor testimony. One name that was noticeably missing from the stand: convicted influence peddler Tony Rezko, who was central to the alleged schemes of Blagojevich. Rezko is a witness nobody wants to touch, Heaton said, despite his close association with the administration.
   “He comes with a lot of baggage, so if you can prove your case without him, you do it,” he said.
   Heaton said prosecutors made a strong case without Rezko, but is staying away from predictions for now, save one.
   “I have no doubt it will be interesting when Blagojevich does testify,” he said.
   Ditto Morrison.
   “We’ll be lined up outside at five in the morning to get tickets,” he said.
   He won’t be the only one.
   Story courtesy of Illinois Statehouse News.

Illinois' Financial Problems are Deep and Systemic

By Steve Rensberry

   (RPC) - 7/13/2010 - The Institute of Government and Public Affairs at the University of Illinois published a report in February of this year drawing attention to the underlying causes behind the state's economic woes. Entitled "The Illinois Report 2010," the opening article, "The Regional Economies of Illinois: Will the jobs return? When?" by Geoffrey J.D. Hewings and Rafael Angel Vera states: "Illinois is not a homogeneous economic unit, but is comprised of many regional economies. Understanding these economies individually is vital for understanding Illinois as a whole."
   To that end the pivotal study breaks down the group’s analysis into several categories: the Illinois budget crisis, climate change, waste and recycling, regional economies, governmental reforms, higher education, health care reform, and race and recession.
   The picture it paints isn't a rosy one.
   "Illinois shares a similar economic structure to the nation, yet job growth has lagged the rest of the country across all major sectors since 1990. Understanding why this has happened will require some intensive research into the make-up and functioning of Illinois’ regional economies. Without this understanding, economic development progress could be limited," Hewings and Vera write.
  According to the report and information collected through the Illinois Department of Employment Security, the percentage breakdown of workers in the state is as follows:  Construction, 3.9 percent; manufacturing, 10.2 percent; trade, transportation and utilities, 20.3 percent; information, 1.9 percent; financial activities, 6.5 percent; professional and business services, 13.9 percent; education and health, 14.2 percent; leisure and hospitality, 9.2 percent; government, 15.2 percent; and other services, 4.6 percent. Figures are from October, 2009.
   The 104-page report points to what it says are a number of systemic problems and a divided leadership which has worked to keep any remedy at bay.
   Speaking of the state's multi-billion-dollar deficit, analysts Richard Dye, Nancy Hudspeth, and Daniel McMillen cite in a contributing article entitled "Fiscal Condition Critical: the Budget Crisis in Illinois," several factors aiding and abetting the state's structural deficit problem (which is not isolated to Illinois). These include:
  • A lack of fiscal discipline in balancing the state budget. 
  • A tendency to defer bills or borrow money to pay them.
  • A shift away from the production of goods to services.
  • Outdated sales tax systems.
  • A state corporate taxes base which has gradually eroded.
  • An increase in interstate commerce and competition. 
  • An aging population, leading to more retirees and fewer workers.
   "Dealing with structural deficits requires fundamental reforms of both state revenue systems and spending obligations – with health care costs being the overarching consideration in every budget examination," the author's write.
   In the final analysis, the report reiterates a familiar refrain. The only solution is to make significant cuts and reduce spending.
   "It is inescapable that Illinois faces very, very tough choices. There almost certainly will have to be major cuts in spending programs and major increase in revenue," Dye, Hudspeth and McMillen write.
   But what the report doesn't address is the entire range of ramifications on the consumer end of the equation. If people are taxed more and pay higher fees, if they get less in the way of government benefits and services, will they alter their spending patterns? Will they react socially and emotionally and take it out on everyone and anyone come election day? Most certainly. Will employers race to expand their workforces if they’re slapped with higher taxes and an ever-increasing amount of red tape? Not likely.
   An online summary and a link to download the report can be found here: The Illinois Report 2010.

Questions Surround New Jobless Rate Report

By Steve Rensberry

   (RPC) - 7/9/2010 - A drop in Michigan's unemployment rate to 13.6 percent this past June, as noted in the United States Department of Labor's latest report, was good news for the state in at least one respect.
   It knocked it off the list as the state with the highest seasonally-adjusted unemployment rate in the nation. But while Michigan's rate remains significantly above the national average of 9.7 percent, Nevada now claims the highest at 14 percent. Illinois was at 10.8 percent for the month, better than what it has been and lower than Michigan's, but still a fair amount higher than the national average. Michigan has been hit hard by declines in the auto industry. Illinois has, well, been hit by a burgeoning deficit and overall budgetary strife.
The Labor Bureau's report is available here: Labor Bureau report
   You can expect a follow-up from this writer on precisely "why" Illinois' unemployment rate is so high. Can we blame it all on the state's budgetary woes? Is it all due to politics and corruption? Everyone's got an answer but proof has been in short supply.
   Here are two paragraph's from the Labor Bureau's report which provide some perspective on the issue. In addition to persons who are defined - strictly speaking - as "unemployed," there as many or more who are "marginally attached," "totally discouraged," or simply "overworked, stressed out and underpaid" to the point of being in a state of learned helplessness. How many have given up? How many are "double dipping, " working under the table but claiming they're not?
   According to the Bureau:
    "In June, about 2.6 million persons were marginally attached to the labor force, an increase of 415,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
    "Among the marginally attached, there were 1.2 million discouraged workers in June, up by 414,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.4 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities."
   There is one key difference between Michigan and Nevada which makes any talk of percentages and rates fundamentally risky. Michigan has a population of approximately 10 million and Nevada's is about 2 million. Even though Nevada now has a higher rate, there are still many more people unemployed in Michigan (more than 650,000) than in Nevada (less than 200,000).
   (Photo: Steve Rensberry stands outside the Lansing Police Headquarters building in Lansing, Michigan, recently, and a stone's throw from the Michigan State Capital building. Around the corner was a line of picketers protesting state cuts in education funding.)

Fight Over Incentives, Tax Breaks, Isn't the First

By Steve Rensberry

   (RPC) - 7/5/2010 - One hundred and fifty million dollars. That's the kind of money in the form of tax breaks Missouri Gov. Jay Nixon and some state legislators are talking about as an incentive to get Ford Motor Company to put its factory in Claycomo to good use in rolling out the company’s new line of vehicles.
   As of Monday, July 5, the package remained in committee in the Missouri Senate.
   Union leaders are fearful the 3,700 workers at the plant will be out of work by year's end. Nixon is pushing for plant upgrades they say are necessary to build the newer Ford models. And the very same arguments heard in every other incentive deal proposed anymore can be heard in this debate, along with the customary allegations of committee stacking.
   Can the state afford to be giving out $150 million in tax breaks in the face of a $1 billion shortfall? That's the "billion" dollar question, being asked by critics. Should Ford be the sole recipient of incentives created with the public purse, or would the state be better off expanding such incentives to everyone as it tries to strengthen the economy?
   Republican State Rep. Bryan Pratt from Blue Springs, Mo., who was at one time on that very Senate committee, makes that exact argument. (1)
   For the record, in 2003, the company was offered an incentive package which consisted of more than $25 million in various kinds of aid and tax breaks to keep its plant in Hazelwood, Mo., up and running. It closed in 2006 before receiving only a small portion of those incentives. Chrysler's operations in Fenton drew incentive proposals of an even larger number, more than $85 million in total. Chrysler's last assembly line in Fenton shut down in the summer of 2009. Finally, state legislators gave their stamp of approval to as much as $240 million in tax credits to Bombardier to build airplanes at a plant in Kansas City. It wasn't enough. (2)
   Ford Motor Company is currently the fourth largest automobile manufacturer in the world in terms of production volume. But despite its size, market share in the United States has plummeted from about $25 percent in FY1995 to only about 5.5 percent in FY 2009. More than 40,000 employees have been cut from the company's payroll in the past three years. The company stock value stood at $10.28/share as of Tuesday, down from a high of $14.46 on April 26.
   (1) Tess Koppelman, Fox 4 - Ford Tax Incentive Package Stalled in Missouri Senate
   (2) David A. Lieb, The Kansas City Star - New session, new crisis for Missouri Jobs

Illinois Lawmakers: No Surprises in Quinn Budget

By Benjamin Yount
Illinois Statehouse News

   (Springfield) – 7/1/2010 –  Illinois lawmakers say they have questions or concerns about Gov. Pat Quinn's new budget.  But few members of the General Assembly say that they are surprised.
   Quinn inked the $24.9 billion spending plan Thursday morning.
   The governor talked of cutting over $1 billion in state spending, but offered few specifics.
   State Sen. Tim Bivins, R-Dixon, said he doesn't expect to get those specifics anytime soon because he doesn't believe the cuts are real.
    "It's the old thing of let's get as much carnage to a couple agencies as we can and get the populace to scream at the legislators to raise taxes."
    Bivins said Quinn promised a billion dollars in cuts in the last budget that never happened.  So he doesn't "see the management" in Quinn's handling of the state's finances.
    GOP State Rep. Bill Mitchell, R-Forsyth, agrees.  He said even though the governor walked into a bad situation when he took over in the office, Mitchell said he hasn't seen Quinn do anything to step up to the plate.
    "I think you can predict what a person is gonna do in the future by what they've done in the past."
   But Democratic State Sen. Toi W. Hutchinson said no one can place all of the blame for Illinois' financial mess at the governor's feet.  She said lawmakers in both parties, and leaders stretching back decades, did their part to get the state to this point.
    "There's no way to make this pretty.  There's no way to make this easy.  This is going to hurt across the board, but we need folks who are willing to step-up and take that challenge."
    Hutchinson said Republicans in Springfield are only willing to say "no" and not help.  GOP lawmakers say their ideas to stop spending and slash government programs are ignored.
    Mitchell said the budget should be about paying for Illinois' real needs, not about blaming the other guy for all of the problems.
    "There's plenty of blame to go around.  The bottom line is you can't spend money you don't have."
    State Rep. Frank Mautino, D-Spring Valley, a leading House "budgeteer," doesn't expect any of the state's budget problems to go away anytime soon.
    He expects lawmakers to take a vote on some sort of revenue enhancing measure, whether it is a $3.7 billion pension borrowing plan, a 33-percent income tax increase that Quinn has championed, or both.
    "I think (voting on both proposals) is a possibility because the longer we delay, the worst the bond markets view us, the less willing vendors are to sell to us," he said.
    Illinois' new budget is $1.4 billion smaller than last year's, Hutchinson said, mainly because the state is bringing in at least a billion dollars less in taxes.
    "The governor has the authority to do what he can with what he's got.  And what he has isn't enough to keep the ship floating," she said.
    But Bivins and other GOP lawmakers guess the budget plan laid out this week is part of a Democratic strategy to have lawmakers come back to the Capitol after the election to "fix" the budget.
Hutchinson said that line of thinking, however popular, isn't helping.
    "The fact that we have a trust crisis in government, an integrity crisis in government, that is as big as the fiscal crisis, makes this infinitely more difficult."
   (Article courtesy of Illinois Statehouse News)