It’s the End of the World (as Glenn Beck Knows It)

But I feel fine.

DarkestIt’s been both fun and somewhat horrifying reading headlines and social media posts the last few days. Here’s a sampling:

“Five lawyers overruled 2.7 million Michigan voters,” says Michigan State Rep. Gary Glenn.

“This irrational, unconstitutional rejection of the expressed will of the people in over 30 states will prove to be one of the court’s most disastrous decisions,” says former Arkansas Gov. and presidential wannabe Mike Huckabee.

“The country as we know it is done,” says TV and radio host Glenn Beck.

“Now the destruction of the family begins,” says Michigan GOP committeeman David Agema.

“So sad we seem to keep going down the drain faster and faster, But God is not mocked!” says a comment on a friend’s Facebook page.

“June 26, 2015: the day the twin towers of truth and righteousness were blown up by moral jihadists,” a tweet from American Family Radio personality Bryan Fischer.

“This is indeed a rogue act by the SCOTUS which effectively ends Western Civilization as we know it,” a Facebook post by Michigan activist and reputed pastor Stacy Swimp.

And my favorite, from both the Breitbart Facebook page and from Texas Sen. Ted Cruz: “Darkest week in America’s history.”

Let’s let that one sink a little. The “darkest week in America’s history.”

I’m relieved that we made it through the “darkest week in America’s history” without the 7,000 deaths of the first week of July, 1863. Or the 2,500 deaths of the first Sunday of December, 1941. Or the 2,900 from the second week of September, 2001. Not to mention the 8,000 deaths of Galveston in September of 1900, the millions in poverty after October, 1929 or the 3,000 dead and 225,000 homeless of San Francisco in April,1906.

Now, we’re hearing from the same bloviators who complain about the excessive self-absorption of the so-called “Me Generation.” They are now apoplectic: A ruling on a badly worded provision of a two-year-old, poorly written healthcare law, and the ability of four percent of the American population to have their relationships legally recognized, overshadows dozens of wars, recessions and depressions, national disasters … even the Harding and Nixon administrations.

GRIP

Now, the “overruled the voters” complaint is an odd and disingenuous expression of intellectual inconsistency. It is, of course, SCOTUS’ job to “overrule” voters when voters – and their elected representatives – pass laws that do not meet the standards of the constitution. They overruled the voters in Brown v. Board of Education and Loving v. Virginia. Of course, those cases would probably cause the same wailing and gnashing of teeth among the same people today. But these very same people were beside themselves with joy when the Court overruled the voters in Bush v. Gore and in Citizens United v. FEC.

But the other overly dramatic complaints? They would be silly, if they weren’t such an insult to the people who have suffered or died because of one of the aforementioned dark weeks, or many others, in America’s history.

Less hubris would allow them to remember that every week, the families of 47,000 Americans each face their darkest week, as they lose a father, mother, grandparent, sibling or child.

For the record, my positions on these two decisions is pretty much 180 degrees from those of Chief Justice Roberts. I am 100-percent behind the decision on marriage. And I believe the Affordable Care Act is a deeply flawed law that, while addressing a few of the symptoms of a huge disease, will ultimately only make the disease worse.

But now that we’ve had a couple of days to take a breath, I think all the conservatives who have called this “the darkest week” in our history, “the beginning of the end of our republic” and all other manner of drama-queen hyperbole, need to consider something.

A few paragraphs ago, I ticked off five “dark weeks” in which a total of 66,000 people lost their lives and many times that many lost their homes. America is still here.

In fact, this republic is one tough old bird.

It survived an invasion, less than 40 years after its founding, by what was then the world’s greatest superpower. It survived a war with its southern neighbor, two world wars, Korea, Vietnam and dozens of other incursions – not to mention a civil war that literally ripped the nation apart. It survived – and won – a 40-year stare-down with the Soviets.

It survived three major economic crashes – one accompanied by the nation’s most devastating drought– and dozens of smaller ones.

It survived the assassinations of four of its leaders and attempts on several others. It survived hurricanes, tornadoes, floods, earthquakes, volcanic eruptions and explosions.

Ted Cruz, Bryan Fischer, Rush Limbaugh, Bobby Jindal and other so-called patriots have declared that this republic will crumble. Because the GOP still hasn’t been able to put together a real healthcare cost-containment solution. And because all Americans can now legally marry the ones they love.

America has proven that it’s stronger than that. And true patriots believe it.

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Political Advertising: It’s ‘Different,’ All Right

Going to participate in American democracy? Wear your boots.

The first time I was asked to lend my advertising experience to a political campaign, most of my suggestions were quickly shot down.

“Political advertising,” I was told, “isn’t like ‘regular’ advertising.”

Boy, is that true. And another election cycle, about to close, underscores the ugly differences.

First, there’s the fact that, unlike “regular” advertising, in which claims must substantiated and deception is illegal, there are no standards for honesty in political advertising.

None.

So Mark Schauer, Democratic candidate for Michigan governor, can claim that the Rick Snyder administration cut $1 billion from education. Which is completely untrue.

So the Michigan Democratic Party can run an ad quoting Michigan Senate candidate Ken Horn totally out of context and completely – and intentionally deceptively — changing the meaning of the quote. The Michigan Republican Party can run an ad picturing Horn’s opponent, Stacy Erwin Oakes, with expensive luxury items, implying — deceptively intentionally — that she is misspending taxpayer funds.

Yet during this same election cycle, the Federal Trade Commission has gone after dozens of companies for making advertising claims that were misleading, false or deceptive, including:

  • A claim that an online educational program would improve students’ test scores
  • Claims that a Gerber baby food line can help prevent infants from developing allergies
  • AT&T’s reference to “unlimited” data service in some of its network plans
  • A warning shot across the bows of more than 60 national advertisers that they faced fines if they did not correct inadequate disclosures in their advertising.

Double Standard

Courts have repeatedly ruled that commercial advertising is free speech under the protection of the first amendment. So why is there regulatory oversight over one form of free speech, but not over another? Why is commercial “free speech” less “free” than political “free speech?”

One could make a constitutional, founders-intent-based argument: Political speech must be protected from government interference. Which, I think, is vulnerable to an equally compelling counter-argument: Doesn’t the selection of our leaders merit the same standards of truth in advertising as our choice of a cell phone plan?

The truth, I suspect, has more to do with who makes the rules. Political advertising is exempt from regulation for the same reason that political calls are exempt from the “Do Not Call” registry: politicians write the laws.

That we have one standard of “truth” for commercial free speech, and another – or, rather no standard — for political free speech is the height of hypocrisy. Worse, it is a disservice to voters, and to our republic.

Of course, there’s another big difference between political advertising and “regular” advertising – or, what I think we should call “real” advertising.

‘Real Advertising’

Real advertising is designed to build markets. Advertising practices that do not are quickly abandoned. Political advertising, on the other hand, is the only type of advertising that’s allowed to actually shrink the market.

Let’s look at it this way. We’ve all seen advertising from Coke and Pepsi, or McDonald’s and Burger King, fierce competitors in industries in which a single point of market share is worth billions of dollars.

There’s a reason that Coke’s advertising messages are not “Pepsi tastes terrible,” why Pepsi’s spots are not “Coke rots your guts out.” There’s a reason why Burger King doesn’t call McDonald’s hamburger a dried-out wad of cardboard, and why McDonald’s doesn’t out BK’s “flame broiling” as a quick flash after the burger’s already fried.

That’s because both sides know what happens once that kind of battle escalates. People get turned off to both McDonald’s and Burger King — and go to neither. Yes, one or the other may gain a point or two of market share, but it’s of a shrinking market.

While commercial advertising occasionally ventures into bashing the competition, those ill-advised forays generally don’t last long. Nobody wins when you turn off potential customers.

The people who head up the firms that handle most of this country’s political advertising, however, may have gotten that memo, but their hubris made them ignore it. Political advertising strategists are fiercely competitive but, in general, poor business strategists. Either they fail to understand the difference between primary and secondary marketing, or they cynically ignore it.

Primary marketing is delivering the prospect to the first decision: I’m going to buy a car, I’m going to buy a burger, I’m going to vote for a candidate.

Secondary marketing is delivering the prospect to the actual buying decision: I’m going to buy a Ford, I’m going to buy a Whopper, I’m going to vote for Snyder.

The Shrinking Market

When the entire advertising landscape consists of messages that say, “all the car choices are dangerous,” “all the burger choices will make you sick,” and “all the candidates are crooks,” what happens? The market shrinks.

So why has U.S. voter turnout continued an overall downward trajectory since … well, 1872? Why, in 1960, did 75% of Americans feel confident in the capabilities of government while today, only 40% do?

I saw a wonderful anecdotal support for this just this week. A candidate’s campaign ran a Facebook post linking to its latest ad — an ad touting all the ways the opponent was attacking the middle class.

One of the comments following the post said, “That’s why I’m not voting for any of them.” What’s even more ironic is that advertising designed to make people angry — as most negative ads do — has been demonstrated to be the least effective way to make people change their minds.

So you’re not only making the market smaller, you’re not even moving the needle on your share of it. Those of us in the “regular” advertising world are not allowed to consider that “effective” advertising.

There is a considerable body of research on the topic and it is, naturally, conflicting. I suspect that’s because much of it is done on behalf of political consultants to prove that their methods are effective. (It’s a running joke in “real” advertising that salespeople from any form of media will have charts and graphs to demonstrate why their TV, radio, online or skywriting plan will produce the highest ROI.)

Those of us who practice advertising every day — “real” advertising, that is — know that you can’t get into a mudslinging war without getting dirty yourself. And when the public looks at two “products” covered with mud, they shake their heads, move on and look for products sold somewhere there are adults in the room.

Negative political advertising, and deceptive political advertising, do, in fact work. If your goal is to turn people away from the polls, erode their confidence in our leaders and increase their cynicism about our institutions of government.

So the question for our political advertising experts would be: Is that what’s best for America?

Can we fix municipal finance in Michigan? If so, how?

TLDR

Last weekend, I got involved in a discussion* on the Facebook page of former State Rep., State Senate candidate, friend and all-around good guy Ken Horn.  The discussion was about the upcoming vote on the replacement scheme for Michigan’s personal property tax. I am opposed to the proposed legislation, for a number of reasons; I seem to be a rather lonely voice. As part of the discussion, Ken had posed a very valid question:

What would I suggest as an alternative means to provide stable financing for Michigan’s municipal governments?

Here are a few ideas.

1. Increase flexiblity. And accountability.

If I could wave a magic wand, I would say it should be a totally free market-based system: allow municipalities total freedom generate the revenue they need; then take a closer look at how it’s being spent.

Under the system we have now, it’s the opposite. The state controls how – and, to a degree, how much – a local government can collect. State law dictates a maximum property tax rate, maximum income tax rates (one for residents, another for non-residents) and no local sales tax – something that 35 out of 50 states allow.

Yet until recent years there has been surprisingly little oversight of HOW it’s spent. There are accounting guidelines and audits are reviewed – but these are looking primarily at record-keeping practices, not on whether or not you spent your dollars wisely.

Gov. Snyder’s “municipal dashboard,” put in place when he turned revenue sharing into the Economic Vitality Incentive Program, is actually a huge step in the right direction. The state reviews a number of metrics to gauge how effectively a local government is spending its money.

The biggest problem with it is its approach: it was turned into a qualifier for money that, by 50 years’ worth of statutory intent, belonged to local governments. Instead of telling your kids: “If you clean your room and get good grades, you’ll get a special treat,” Gov. Snyder is telling his kids, “if you clean your room and get good grades, you get to eat dinner.”

So that would be my first choice: dump (or radically alter) the property tax system, and let local governments levy the revenue they need in the way that will work best for them. Some reasonable limits can – and perhaps should – be established. But develop a way to monitor the spending more closely. This would mean establishing a way to determine a need for financial intervention from the state at the first smell of smoke – instead of after the house is fully on fire.

Why do I want to dump the property tax system? There’s more on that here, but there are two major problems with it. It’s subject, as we’ve seen, to extreme instability (and the layers of tax-control legislation such as Headlee and Prop A that we’ve placed on it makes that instability even more dangerous). Worse, it creates a disincentive to do what municipalities most want property owners to do: maintain and improve their properties.

By the way, this also applies to the way we fund schools. Most people are surprised to find out that, among the other things they did when they passed Proposal A was to completely take away virtually any control their local school districts have to raise funds … and granted it all to the formula-keepers in Lansing.

2. If you can’t scrap it, fix it.

If we needed to keep some form of property-tax law in place, it needs to be completely overhauled, in order to ease the sting of its two greatest flaws: its instability and its disincentivizing nature.

We’ve fiddled with one side of the stability equation for decades – starting with Howard Jarvis’ property tax revolt in California. Its repercussions gave us the Headlee Amendment. It basically provided a limit to which your taxable value could increase.  We doubled down on that with Proposal A in 1994, which, in addition to changing the way schools were funded, added new wrinkles to property value increases.

This helped keep taxes more stable for the property owner. But these tweaks were made with the assumption that property value would never decrease.

Hello, fall 2008. Property values fell by as much as 40 to 50 percent in many municipalities. So did property tax revenue, with an interesting twist: while property market values can recover quickly (and have, in many places), their taxable values are tied to inflation or five percent, whichever is less. So those taxable values – and the revenue they generate – can only go up by three to five percent a year.

The disincentive?  Improve your property – an addition, a swimming pool, even a new bathroom – and your taxable value jumps.

The best way to minimize both of these problems is to get away from a “current value” approach and use an actuarial tool: a 10- or 20-year rolling average or moving mean of property value. This means that if you add a guest room that increases your home’s value by 25 percent, you won’t see a the 25-percent increase in your next tax bill, but spread out over 10 or 20 years. By the same token, another implosion in the real estate market offers a similar buffer to municipal government.

3. If your basket sucks, get rid of it. Or have a backup or three.

Most of local governments’ eggs are in one pretty leaky basket right now. Either replace it with a few new ones, or at the very least, add a few sound ones to the mix.

A. Allow Local Sales Taxes

Allowing municipalities to enact their own sales taxes would allow the state to roll back the Michigan sales tax by at least one or two percent. It would also eliminates the pass-through bureaucracy required by the current revenue sharing – not to mention preventing the state legislature from looking at it, as it has for the past 12 years, as Lansing’s piggy bank.

Again, 35 states allow local units to establish their own sales taxes. Most of them are economically outperforming Michigan. Well, right now, according to the American Legislative Exchange Council, all of them – since Michigan is at no. 50 on its ranking of 2014 economic performance. Of ALEC’s top 10 economic performers, Montana is the only state that doesn’t allow local sales taxes. Oklahoma (no. 9 on the ALEC rankings) has the highest local rates, averaging 4.16 percent, along with a 4.5-percent state rate. Texas, ALEC’s top economic performer, has an average 1.89 percent local rate on top of the state’s 6.25 percent.

I’m certainly not saying that the cause of these states’ success is their local units’ ability to levy sales tax. But I am saying that having that ability doesn’t seem to be hurting them.

B. Expand Local Income Tax

Take the hobble off local income taxes, currently capped at 1.5 percent for residents and ¾ of one percent for non-residents who work in the municipality.

Michigan currently has 22 municipal governments who levy local income tax. State statute limits how much that can be, as noted earlier. Eighteen of them tax at 1.0 percent for residents and 0.5 percent for non-residents. Saginaw and Grand Rapids each levy 1.5 and 0.75 percent, respectively, for residents and non-residents, while Detroit (again!) and Highland Park have special rates set by legislative exception (2.5 and 1.25 percent for Detroit, 2.0 and 1.0 percent for Highland Park).

At the other end of the spectrum, 2,492 of Pennsylvania’s 2,562 municipalities and 469 of Pennsylvania’s 500 school districts impose a local income tax or local services tax. In large cities, that rate usually works out to anywhere from one percent (what Bethlehem, Harrisburg and York charge both residents and non-residents, with residents paying an additional flat $35) to Philly’s 3.9 percent. This all in addition to Pennsylvania’s 3.07-percent state income tax.

Two hundred ninety-seven Iowa school districts charge an income tax surcharge ranging from one to 20 percent of state income tax owed (under a bracketed state income tax system with a top rate of 8.98 percent). In Kansas, 535 counties, cities and townships have local income taxes ranging from 0.75 percent to 2.25 percent (bracketed state income tax with a maximum rate of 4.9 percent). In Ohio, 774 municipalities and school districts levy between 2.0 and 2.75 percent (bracketed state income tax with a maximum rate of 7.185 percent). In Indiana, 91 counties levy anywhere from 0.1 to 3.13 percent (with a 3.4 percent state income tax).

In most of the states that have local income taxes, residents and non-residents pay the same rate.

Lincoln Park is a warning.

However we do it, it’s not going to be easy. But what we have been doing since 1893 isn’t serving us well. Particularly in the last 30 or 40 years – as state legislatures have offered new ways for municipalities to raise revenue, then either put new restrictions on those ways, or simply reneged on them.

Unless we effect some kind of systemic change, more Michigan cities will fail. This week we saw an emergency financial manager appointed to Lincoln Park. While it lags slightly behind the state median household income, home value and educational achievement, it’s certainly a far cry from the profiles of Detroit, Flint, Lansing, Benton Harbor and other distressed cities. Lincoln Park is a message Lansing must heed.

*”Discussion” is putting it kindly. Eventually I got into full rant mode.

Untie Poverty from ‘Community Development’ Funds

National Initiative 2

Block Grant ReqirementsOne of the most powerful tools the federal government offers cities is the Community Development Block Grant program, administered by the Department of Housing and Urban Development.

Unfortunately, it is not being used to anything remotely close to its true potential.

Each year, block grants pump billions of dollars into  American municipalities. About three-quarters of that money is used for two main areas: public infrastructure and housing.

Saginaw is what’s known as an “entitlement community” – the largest city in its metropolitan statistical area. According to HUD, block grant funds for such communities are “to develop viable communities by providing decent housing, a suitable living environment, and opportunities to expand economic opportunities, principally for low- and moderate-income persons” [my emphasis].

One of its big goals is to increase the quantity and quality of “affordable housing.” That “principally for low- and moderate-income persons” translates into a requirement that “70 percent of CDBG funds must be used for activities that benefit [them].”

As a result, HUD forces cities to throw good money after bad.

In Saginaw, somewhere near 20 percent of our housing stock is vacant and abandoned; another 20 to 30 percent is rental property in decline. Like many cities, we have suffered from the concurrent blows of exurban flight and job loss through plant closures – in our case, the evaporation of several thousand General Motors jobs.

Exurban sprawl is fed by many things – subdivision laws, the hefty subsidy of the federal home mortgage income tax deduction, the needs of the home-building and real-estate development industries and the fears of the middle class, among many other factors. Either way, it has created a huge surplus of housing in America, especially in inner cities such as Saginaw. This has left no shortage of “affordable housing” in our cities.

What it has left is a shortage of people who are not low-income individuals.

This means that one aspect of HUD’s mission –  “to create strong, sustainable, inclusive communities” is directly at odds with of the requirement that “70 percent of CDBG funds must be used for activities that benefit low- and moderate-income persons.”

We must, at some point, come to the realization that trying to prevent and eliminate blight by focusing spending on low- and moderate-income people is a little like trying to plug a hole in a boat by flooding the leaky compartment with water.

Rehab funds that can be used by moderate-income homeowners are little-known and underused. New construction programs add to the oversupply, and cause further decline of all the City’s property values. And you don’t want to get urban homeowners started talking about Section 8 vouchers.

To put it very plainly, the problem in cities isnot a shortage of affordable housing for low-income residents. (The quality of that housing is often a legitimate issue.) What cities need are incentives for residents of moderate and upper incomes to invest in those cities.

Because they aren’t now, and those cities are doomed without them.

My suggestion would be for HUD to put more emphasis on “urban development” and less on “housing,” by creating new programs that build safe middle-class neighborhoods.

The recent Neighborhood Stabilization Program was a start. But, at least in Saginaw, that meant rehabbing a few dozen homes to a required 5-star energy rating. Might we not have been much farther ahead rehabbing 1,000 homes to 3-star energy efficiency?

If we want the CDBG fund to live up to its potential and make more serious inroads in turning our cities around, we should drop the 70-percent requirement on CDBG funds – and make more federal money available for programs that benefit entire neighborhoods, rich and poor – such as community policing and infrastructure improvements.

Too Far Gone to be Saved?

I had an interesting juxtaposition tonight.

As I listened tonight to the sound of bricks, plaster and concrete from North Intermediate School being loaded into dump trucks, I was reading an article in Preservation magazine, published by the National Trust for Historic Preservation. And it got me thinking.

What we heard from the owner of North, of course, was that, upon inspection, the building was too far gone to be saved.

Over the years, we’ve heard that a lot in Saginaw. The Feige’s building was too far gone to be saved. The old LaSalle Lounge is too far gone to be saved. Most of our downtown was too far gone to be saved. Even several of the buildings that have been or are being saved.

So let’s take a look at a picture.

BookCadillac2

All the copper has been looted. The leaky ceiling has left the plaster completely destroyed. It’s infested with vermin.

Clearly, as any lay person can see, this building is too far gone to be saved. About two years ago, I took a tour, with City Council members and members of Saginaw’s Downtown Development Authority board, through buildings on the 200 block of East Genesee. This is the kind of thing we saw. Some city officials and several members of the DDA board said “these buildings are too far gone to be saved.”

Now, let’s take a look at the room pictured above … as it looks today.

BookCadillac3

This was, and is, the Venetian Ballroom in the Book Cadillac Hotel in Detroit.

Now, let’s take a look at a another building, an industrial structure. Been vacant for many years. It, too, had all the scrappable metal removed, had been badly damaged by water infiltration, wildlife and vandals.

BaltimoreDesign1

To Saginaw, definitely too far gone to be saved, right?

This building is in Baltimore, and the complete derelict state it was in made it an appropriate setting for occasional scenes of the HBO drama series The Wire. Today, though, it’s a featured story in Preservation:

BaltimoreDesign2

Let’s think about this. In Baltimore, they took a seriously compromised industrial building and, being creative with the financing, turned it into a school.

In Saginaw, we can’t take a school building that’s in far better condition and turn it into anything except a pile of rubble.

Why?

Because we’ve always done it this way. We got on the urban renewal, if-it’s-old-get-rid-of-it bandwagon in the ’50s. But unlike nearly every other city that has successfully launched a rebirth, we’ve stayed on that bandwagon.

Despite evidence before our very own eyes that it’s foolish. The Temple Theatre (which came perilously close to being razed), the Bancroft/Eddy buildings, the Strouse-Hopkins apartments, most of the bars in Old Saginaw City, Jake’s, the Cathedral District … if you look at some of the most important projects in Saginaw, “old” buildings are at the center of them.

Maybe we’ll learn someday. Hopefully, we’ll still have a few historic buildings left when we do.

But in the meantime, when you hear people around here say, “it’s too far gone to be saved,” understand that they’re probably not talking about the building.  They’re talking about their attitude.

Photos of the Book Cadillac from The Morning News and the Book Cadillac Westin. Baltimore School of Design photos from Preservation.