7-30-09

 
7-30-09
Badlands Journal
Triumph of dogma over thought...Badlands Journal editorial board...7-29-09
http://www.badlandsjournal.com/2009-07-29/007343
News From…
Congressman Dennis Cardoza
18th Congressional District of California
Congressman Cardoza hails long-awaited House passage of PAYGO budget requirement 
FOR IMMEDIATE RELEASE
July 22, 2009 CONTACT: Mike Jensen
(202) 225-6131
http://www.house.gov/list/press/ca18_cardoza/PRPAYGOHOUSE.html
WASHINGTON, D.C. – With strong support from Congressman Cardoza, the U.S. House of Representatives today passed legislation forcing Congress to reduce federal spending and curtail the national deficit. Specifically, the House passed the Statutory Pay-As-You-Go Act of 2009.
Pay-As-You-Go, or PAYGO, had previously been enacted in Congress during the 1990s and early 2000s. During that time it helped rein in reckless federal spending and restore the first federal budget surplus since 1969. Congressman Cardoza and other fiscally conservative Blue Dog Democrats have fought for years to reinstate the PAYGO law.  
“This is a proud day for all Americans, for the Blue Dogs, and for me personally as this is one of the most significant issues I have fought for since I was elected to Congress,” said Congressman Cardoza. “Returning to the fiscal accountability measures that I and my fellow Blue Dog colleagues have supported is long overdue and it’s high time we start doing the right thing and start paying for what this country buys.”
PAYGO requires that any new spending increases or tax cuts are fully paid for. The United States currently has a deficit of more than $11.6 trillion. Much of the new debt being accumulated is held by foreign countries, such as China.
Although the House of Representatives has legislated with a rule requiring PAYGO, the House today helped ensure it will become law. Congress will be required to offset every new dollar it spends. If at the end of a particular year Congress has not paid for all the legislation it has enacted, cuts are automatically triggered from certain mandatory programs. This has the full support of the Obama Administration and awaits action in the Senate. 
“I could not be more pleased with today’s outcome and am grateful to President Obama and my colleagues for their support,” said Cardoza. “I look forward to prompt Senate action so the President can sign this into law as soon as possible. It is imperative that we take immediate action to address our nation’s spiraling deficit and get back on the road to fiscal responsibility before we pass the nation’s keys — and our debt — onto our children and grandchildren.”
Congressman Cardoza further added, “Especially during these difficult economic times, Americans are tightening their belts and spending only what they have. It is time that Congress ensured it did the same.”
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In February 1933, President Herbert Hoover wrote to President-elect Franklin Roosevelt:
It would steady the country greatly if there could be prompt assurance that there will be no tampering or inflation of the currency; that the budget will be unquestionably balanced even if further taxation is necessary; that the Government credit will be maintained by refusal to exhaust it in the issue of securities.
The rejection of both fiscal (tax and expenditure) and monetary policy amounted precisely to a rejection of all affirmative government economic policy. The economic advisers of the day had both the unanimity and the authority to force the leaders of both parties to disavow all the available steps to check deflation and depression. In its own way this was a marked achievement -- a triumph of dogma over thought. The consequences were profound.
-- The Great Crash 1929, John Kenneth Galbraith, 190.
Settlement of federal suit to improve Stockton sewers...Badlands Journal editorial board...7-29-09
http://www.badlandsjournal.com/2009-07-29/007341
Press Release
California Sportfishing Protection Alliance
3536 Rainier Avenue, Stockton, CA95204
FOR IMMEDIATE RELEASE
Contact Information
Bill Jennings, CSPA Executive Director: 209-464-5067, Cell 209-938-9053, deltakeep@aol.com
Daniel Cooper, Lawyers for Clean Water, Inc.: 415-440-6520x205, daniel@lawyersforcleanwater.com
CSPA, Stockton Settle Sewage Spill Lawsuit
Agreement ensures major reductions in sewage spills 
Stockton, CA – Wednesday, July 29, 2009. Frequent sewage spills in Stockton California will be dramatically reduced through the settlement of a Clean Water Act lawsuit brought by the California Sportfishing Protection Alliance (CSPA) against the City of Stockton. The lawsuit was filed 16 September 2008 in federal District Court and alleged that the City had violated procedural and substantive provisions of the Act by failing to adequately maintain its sanitary sewer system and failing to report the resulting spills as required. CSPA’s research identified over 1,500 overflow/spills, or almost 25 spills per 100 miles of sewer line per year. The agreement contains specific measures requiring the City to reduce spills by approximately 80% within five years.
 “We’re delighted that the City engaged in proactive and meaningful negotiations that have culminated in this landmark settlement agreement,” said CSPA Executive Director Bill Jennings. “Excessive sewage spills are both a public health and environmental hazard and the agreement ensures substantial improvements to Stockton’s sewage infrastructure over the coming years,” he said.  
The settlement agreement is subject to continuing jurisdiction by the court and, among other things, requires the City to:
1. Reduce sewage spills to no more than 5 per 100 miles of sewer line within 5 years.
2. Prepare and implement new standard operating procedures within 90 days,
3. Using CCTV, inspect all gravity sewer lines older than 10 years within 5 years,
4. Undertake corrective actions where problems are found according to an agreed upon schedule,
5. Expand its inspection of food service facilities that contribute fats, oils and grease to the system,
6. Adopt amendments to the Municipal Code to require inspection and remediation of private laterals as a condition of property sales,
7. Establish a program to routinely clean all sewers less than 15 inches in diameter within 5 years and significantly improve the preventive maintenance program.
8. Provide a series of reports to CSPA, included any requested information,
9. Reimburse CSPA $250,000 for costs of bring suit,
10. Provide $15,000 to CSPA legal or technical consultants to oversee compliance, and
11. As mitigation, provide $300,000 to the Rose Foundation for environmental projects benefiting water quality in the Delta.
The agreement also provides for both formal and informal dispute resolution processes. If necessary, CSPA can return to the court to seek enforcement of the agreement. 
“This settlement will move Stockton from very poor to very good system performance. Eliminating the majority of Stockton’s sewage spills is an important step towards toward restoring the health of the San Joaquin River and the Delta,” said Daniel Cooper, attorney for CSPA.
 The Stockton lawsuit is part of CSPA’s continuing campaign to end sewage spills in the Central Valley. Sewage spills and overflows are serious health and environmental hazards. Because local business and industry discharge into the sanitary sewage system, sewage can contain numerous dangerous chemical solvents, heavy metals like lead and mercury and wastes that can impair immune and reproductive systems of fish and wildlife. Pathogens in untreated sewage can cause a multitude of illnesses in humans. Residents may be exposed to these pathogens when swimming, waterskiing, wading, fishing or boating in local waterways, as well as when sewage spills into homes, streets, parks, schools and businesses.
 Daniel Cooper and Drevet Hunt of Lawyers for Clean Water, Inc., and Michael Lozeau and Doug Chermak of Lozeau/Drury LLP are representing CSPA in this matter.
__________________________________________________________
CSPA is a non-profit public benefit conservation and research organization established in 1983 for the purpose of conserving, restoring, and enhancing the state’s water quality and fishery resources and their aquatic ecosystems and riparian habitats. CSPA’s website is: www.calsport.org.
-----------------------------
In the course of a conversation this morning with CSPA director Jennings, we were again reminded of the centrality of Stockton to the whole Delta debate. Stockton is a fresh-water seaport on the largest estuary on the Pacific Coast in North America,, a transportation hub for north-south and east-west trucking, located on the water source for 27 million people living to the west and south of it, a regional financial, supply, legal and political center for what really is the richest farmland in the state, currently possessing one of the highest unemployment and foreclosure rates in the nation. Stockton is also the home port of some of the most knowledgeable and worthwhile critics of the perpetual war of special interests this state calls “water policy,” because every bit of it affects Stockton directly in some way. It is also home of one of the most important forms of locomotion in the 20^th century, the track-laying system used for tractors and tanks.
Below are a few recent news articles that show some of the diversity of interests and concerns that center in Stockton, a city whose importance is routinely forgotten in the state.
Badlands Journal editorial board
7-29-09
Stockton Record
Stockton to pay $4M in sewer spill settlement...Alex Breitler
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090729/A_NEWS/907290313
STOCKTON - The City Council on Tuesday approved a $4 million settlement with environmentalists who claimed that a slew of sewer line spills placed the city in violation of the federal Clean Water Act.
The Stockton-based California Sportfishing Protection Alliance sued the city in September, claiming 1,530 sewer overflows during the previous five years endangered human health and the environment.
Tuesday's settlement requires a gradual decline in the number of spills over the next five years through more vigilant inspections and maintenance, and requires the city to consider new rules requiring private sewer line connections to be inspected prior to the sale of a home...
"We're patching one of the thousand cuts" that are killing the Delta, Jennings said.
Sewer spills are a threat to the estuary because waste-water from a leaking or burst pipe may find its way into storm drains, which empty directly into rivers and streams.
Residents can help by not pouring grease down their drains, Willett said. Grease congeals inside the pipes, forming blockages that can lead to spills.
Under the settlement, the city must hire an additional employee to inspect grease traps at restaurants. It also must conduct closed-circuit television inspections of 1,000 miles of sewer line over the next five years.
The cost also includes $300,000 for environmental mitigation projects elsewhere and $250,000 in fees for the alliance's attorneys and consultants. The alliance itself, Jennings said, does not make money off the numerous lawsuits it has filed but rather is funded through contributions...
Spanos rides green wave with Preserve proposal...Michael Fitzgerald
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090729/A_NEWS0803/907290323/-1/A_NEWS
I think one can say without argument that the AG Spanos Co., though ultra-successful, have not been on the forefront of the green housing revolution.No. This is the developer who ripped out a line of ancient Valley oaks by mistake - oops - which builds big boxes, which pours oceans of asphalt around big boxes, which builds into the Delta, and which, around here, specializes in sprawl so bad it summoned the wrath of the state attorney general.
Yet this week, Spanos Co. announced a bold and admirably progressive $2 billion housing plan with elements greener than Kermit the Frog.
The Preserve immediately had two things going for it...
Guaranty Bank collapsing...Staff and wire reports
Institution bought Stockton Savings Bank in 1997
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090729/A_BIZ/907290305
Guaranty Financial Group Inc. probably can't continue as a going concern, the company said.
Its subsidiary, Guaranty Bank, which has 10 branches in San Joaquin County, is "critically undercapitalized" after recent write-downs related to its mortgage-backed securities portfolio. Guaranty's primary shareholders are unwilling to inject additional capital, the company said.
"In light of these developments, the company believes that it is probable that it will not be able to continue as a going concern," Austin, Texas-based Guaranty said in a filing with the U.S. Securities and Exchange Commission.
Guaranty Bank has agreed to be taken over by federal banking regulators, but a takeover has not yet occurred. Guaranty could end up as the largest U.S. bank failure of the year so far...
Contra Costa Times
Smaller Delta canal could work nearly as well as massive one in the works...Mike Taugher
http://www..contracostatimes.com/localnews/ci_12932308
Studies of an aqueduct as wide as a 100-lane freeway to carry water around the Delta are showing it might not get as much bang for the buck as some advocates might think.
State water officials recently put the rough price tag at $7 billion to $15 billion, which may be tough to swallow in a cash-strapped state. More importantly, studies are showing a 50-mile-long canal through a right-of-way as wide as three football fields — a size critics compare to the Panama Canal — would be dry much more often than full. Although the Schwarzenegger administration is pushing to have key permits and plans done by the end of 2010, it is likely to be at least 15 years before it could be completed.
These details about size, cost and time — which were included in a presentation last week by the Contra Costa Water District — play to critics of the canal plan, but water officials caution that criticism of the plan's cost-effectiveness is premature and no decisions have been made.
Still, studies show a peripheral canal would provide only slightly more water than agencies have pumped out of the Delta in recent years, and then only if the canal is operated in conjunction with existing south Delta pumps. Even that amount of water assumes regulatory approval that is not assured.
Surprisingly, the difference in average water supply from the massive, 15,000 cubic-foot per second canal favored by water agencies and a less controversial version one-third the size is marginal — less than 300,000 acre-feet on average, enough water for roughly 600,000 households or enough to irrigate 100,000 acres of crops.
"A small one does just as good as a big giant one," said Greg Gartrell, Contra Costa Water District assistant general manager.
"A small one you get done a lot faster without the threat" to water quality and the environment.
In addition to arguing for more consideration of a smaller canal, the water district is arguing for immediate action on a set of more modest — but largely ignored — measures that could improve water supplies and fisheries quickly.
Studies by the Bay Delta Conservation Plan, a committee of water agencies, regulators and environmental groups, shows the large canal would be full 4 percent of the time and would hold a trickle of 2,000 cubic feet per second or less 30 percent of the time, according the Contra Costa Water District's presentation to a group of Contra Costa business representatives.
By comparison, the smaller aqueduct could carry 5,000 cubic feet per second through a 25- to 30-foot tunnel.
Major water agencies say it is too early to make judgments about the appropriate size of a canal but added that if the Delta's vulnerable levees collapse after flooding or an earthquake, parts of the state will become entirely dependent on a canal.
"In the long-term, given the changes we will likely be seeing in the Delta, we will need to look at something in the (larger) 15,000 cfs size range," said Laura King Moon, assistant general manager of the State Water Contractors, an organization that includes Zone 7 Water Agency, Santa Clara Valley Water District and the Metropolitan Water District of Southern California.
Other advocates point out that a larger canal would be prudent for the future if environmental conditions improve and restrictions on water deliveries are eased.
King Moon did not rule out a smaller canal but was critical of the Concord-based water district's conclusions.
"They presume to know the right answer. It's not possible to know the right answer right now," King Moon said.
The conservation plan was launched in 2006 to resolve two problems for water agencies from the Bay Area to San Diego: the potential unreliability of water deliveries from south Delta pumps due to fragile levees and the increasingly tough restrictions on water deliveries to protect endangered species.
The plan seeks to build a canal, restore wetlands and enact other measures that committee members hope will be approved by regulators. King Moon said water agencies hope the canal can at least get water agencies back to the supply levels they were receiving before restrictions triggered by the collapse of endangered fish species.
Meanwhile, with the state's budget crisis addressed for now, state lawmakers are expected to turn their attention to California's water crisis so the entire slate of options is likely to be fiercely debated in coming months, particularly if public money is needed for wetlands restoration and pollution cleanup.
The chair of the state senate's Delta stewardship and sustainability committee, Sen. Lois Wolk, D-Davis, said the Contra Costa Water District's numbers should carry a lot of weight.
"It's always good when a water district does this kind of analysis, especially using the BDCP's own numbers," said Wolk, who has been critical of the proposed canal and the governor's water plans. "A conveyance of a kind that is being proposed by the administration will not be cost effective and may not solve the crisis in the Delta," she added.
"The worst thing you could do would be to build a Panama Canal that you couldn't use or might make things even worse."
Los Angeles Times
Home prices may be stabilizing, market tracker shows
The S & P/Case-Shiller index of prices in 20 major cities rose in May over its April level for the first time since 2006. Analysts say it's too early to declare that the free fall in prices is over...Peter Y. Hong
http://www.latimes.com/business/la-fi-home-prices29-2009jul29,0,5601852,print.story
Another sign emerged that the nation's struggling housing market may be nearing its bottom as a widely followed national home-price index posted its first gain in nearly three years.
The S&P/Case-Shiller index of home prices in 20 metropolitan areas was up slightly in May over its April level for the first time since 2006.
Cleveland, Dallas and San Francisco showed the largest gains in May figures released Tuesday, but Los Angeles prices continued to fall. The index was the latest surprise following reports showing monthly gains in new-home sales and housing starts nationwide, and higher median home sales prices in California.
"The data do show for the first time in quite a few years some potential signs of turnaround," said Maureen Maitland, vice president of index services at Standard & Poor's.
But "in terms of a sustained recovery, we're not out of the woods yet," Maitland cautioned. "What we need is for this to continue for quite a few months."...
Banks can profit more by allowing certain types of borrowers to lose their homes, hampering government efforts to rein in foreclosures...Renae Merle. Merle writes for the Washington Post.
http://www.latimes.com/business/la-fi-mortgage29-2009jul29,0,6439981,print.story
Government initiatives to stem the country's mounting foreclosures are hampered because banks and other lenders in many cases have more financial incentive to let borrowers lose their homes than to work out settlements, some economists have concluded.
Policymakers often say it's a good deal for lenders to cut borrowers a break on mortgage payments to keep them in their homes. But, according to researchers and industry experts, foreclosing can be more profitable.
The problem is that modifying mortgages is profitable to banks for only one set of distressed borrowers, while lenders deal with three types. Modification makes economic sense for a bank or other lender only if the borrower can't sustain payments without it, yet will be able to keep up with new, more modest terms.
A second set are those who are likely to fall behind on their payments again even after receiving a modified loan and will probably lose their homes one way or another. Lenders don't want to help these borrowers because waiting to foreclose can be costly.
Finally, there are those delinquent borrowers who can somehow, even at great sacrifice, catch up without a modification. Lenders have little financial incentive to help them.
These financial calculations on the part of lenders pose a challenge for President Obama's ambitious efforts to address the mortgage crisis, which remains at the heart of the country's economic troubles and continues to upend millions of lives. Senior officials at the Treasury Department and the Department of Housing and Urban Development on Tuesday extracted a pledge from 25 mortgage company executives to do more to help borrowers in danger of foreclosure...
CNN Money
Profiting from bank failures
Big banks are scooping up troubled, smaller institutions at a time when growth is hard to come by -- and thanks to favorable FDIC rules, more deals are likely...Colin Barr
http://money.cnn.com/2009/07/29/news/economy/failed.banks.
fortune/index.htm?postversion=2009072911
Since the banking crisis started last year, six regional banks have bought at least two failed banks from the FDIC. The leader has been Zions Bancorp (ZION), a Salt Lake City-based institution that has acquired four banks from the FDIC.
Other buyers of multiple troubled banks include U.S. Bancorp (USB, Fortune 500), the Minneapolis-based bank that last year bought the remains of troubled thrifts Downey Savings and PFF, which failed on the same day. The joint purchase of Downey and PFF wound up being the third largest deal by assets for failed banks last year, after the WaMu and IndyMac sales.
FDIC rules require the agency to resolve bank failures in the manner that's least costly to the deposit insurance fund. The deposit fund is backed by fees paid by banks, but the FDIC has a credit line with the Treasury Department that it could tap in an emergency.
The rash of failures over the past year and a half has come at heavy cost to the fund, which is now 75% below its statutory minimum balance.
The cost to the FDIC fund in the U.S. Bancorp and Zions deals alone was $3.6 billion. The agency also agreed to so-called loss-sharing agreements on some of the transactions, which means the fund could end up shouldering additional costs on troubled assets taken on by the acquirers.
It's this provision -- capping the acquirer's losses at the expense of the fund -- that is most alluring to regional banks and their investors...
7-28-09
Indybay.org
Legislature to Consider Big Water Package After August Recess...Dan Bacher
http://www.indybay.org/newsitems/2009/07/28/18612770.php
A peripheral canal may or may not be included in the water bond package that emerges after the State Legislature convenes on August 17 after its summer recess, according to this article by Steve Evans featured in the recent Friends of the River e-newsletter. It has also been reprinted on the California Progress Report website, http://www.californiaprogressreport.org.
The problem is that the Legislative process regarding the creation water package has completely lacked any transparency, so it has been difficult to get any handle on the exact bill or bills that will emerge.
One particularly troubling proposal being advanced argues for bypassing the Delta by taking water out of the Sacramento River just south of Sacramento. "The peripheral canal would then deliver the water 50 miles downstream to the existing California Aqueduct, where it would be pumped south to the Westland's Irrigation District in the Central Valley and to the municipal water districts in the Los Angeles basin," said David Greenwald, editor of the California Progress Report. "One source places the price tag for this at around $20 billion, not to mention the potential environmental and economic impacts." Read more on http://www.californiaprogressreport.com/2009/07/peripheral_cana_2.html.
I encourage everybody interested in saving the Delta to participate in the Million Boat Float on August 16 and 17. For more information, go to: http://www.indybay.org/newsitems/2009/07/22/18612057.php
Legislature To Consider Big Water Package After August Recess...Steve Evans, Conservation Director, Friends of the River.
A Peripheral Canal may or may not be included in a package of water bills that the Legislature expects to take up after their August recess. The water package will likely address Delta governance and ecosystem restoration, as well as water conservation.
Capitol insiders are not saying whether the bill package will expressly authorize a giant Peripheral Canal to divert massive quantities of fresh Sacramento River water around the beleaguered estuary for export to the southern Central Valley and southern California.
The water package will also likely include some kind of appointed water council or water master to manage water operations in the Delta. In addition, the package will attempt to implement the Governor’s call for a 20% reduction in water use in the state. Whether this will include conservation mandates for agriculture, which uses 80% of California’s developed water, remains to be seen.
It is also unknown whether this initial water package will include funding mechanisms, either in the form of a proposed general obligation bond (essentially borrowing money in the name of the taxpayers) and/or water fees. The cost of a Peripheral Canal could be at least $10 billion and new or enlarged dams needed to supply water to the canal would be billions more. Billions are also needed for ecosystem restoration in the Delta and upstream watersheds.
Whatever the Legislature’s Democratic majority intends to do about water, you can be sure that the Republican caucus will withhold any support unless the package includes authorization and funding for new or enlarged dams. Dams on the Republican’s “must do” list include the enlargement of that Shasta Dam (which would drown the last remaining homeland of the Winnemem Wintu Tribe on the McCloud River), the Sites Reservoir (which would divert water from the Sacramento River), and the Temperance Flat Dam (which would drown the scenic San Joaquin River Gorge).
Even if the water package doesn’t explicitly authorize construction of the controversial Peripheral Canal, it is certainly intended to enable its construction. The canal was rejected by voters in a statewide referendum in 1982. Since then, many native fish species in the Delta have declined towards extinction and water quality in the estuary has suffered from the lack of fresh water flows. Water exports through the Delta have more than tripled over the last 50 years.
Southern California developers and southern Central Valley agribusiness are pushing for a canal as wide and as long as the Panama Canal, that can divert more water than the average flow of the Sacramento River. Some Legislators and even some misguided conservation organizations believe that a canal or some other form of “conveyance” could actually benefit the Delta ecosystem and its endangered fish species. But the government’s track record in operating water projects in compliance with state and federal environmental laws is less than stellar and there is no reason to assume that the canal will be operated differently.
There are serious questions about the assumption that a Peripheral Canal, or some other kind of new conveyance system, will benefit the Delta’s ecosystem, fisheries, water quality, and agriculture. The Public Policy Institute of California determined that there is only a 50% likelihood that the Sacramento River salmon population, which is the mainstay of the commercial salmon fishing industry in California and southern Oregon, will remain viable with a Peripheral Canal. The same report found only a 40% likelihood that the Delta smelt would remain viable with a canal.
A recent science evaluation of the draft Bay-Delta Conservation Plan, which is closely tied to the canal proposal, found that the benefits of Delta habitat restoration may be off-set by the negative impacts of the Peripheral Canal diversion on Sacramento River salmon. The same report indicated that the canal would do little to improve south Delta water quality or the survival of San Joaquin River salmon population.
Friends of the River, and its commercial and sport fishing allies, are working with Delta communities and farmers to ensure protections for the Delta in whatever water package that may emerge from the Legislature. Recently, we helped mobilize Delta farmers and Legislators, anglers, and the concerned public at a rally for the Delta held on the Capitol steps in early July.
Friends of the River is also pushing hard for a top to bottom revamp of water rights in California. One of the underlying problems with the seemingly intractable water issue is the fact that California has granted rights to considerably more water than is normally available in any one year. That sets up a permanent but artificial state of demand outstripping supply.
Redetermining the highest beneficial use for all existing water supplies, coupled with significant efforts to encourage regional self-sufficiency through water conservation, recycling/reclamation, and improved groundwater management, will go a long way towards solving the problem. The fact is that California has a water management problem, not necessarily a water supply problem. Look for alerts concerning this important issue when the Legislature reconvenes or visit http://www.friendsoftheriver.org for the latest information.
Two Gates Project: the Gateway to Extinction?...Dan Bacher
As if plans for the peripheral canal and more dams weren't bad enough, the Metropolitan Water District and and the state and federal governments are aggressively working to complete another environmentally destructive government boondoggle, the "Two Gates Fish Protection Demonstration Project."
http://www.indybay.org/newsitems/2009/07/27/18612658.php
The Metropolitan Water District (MWD) of southern California and other water agencies have concocted a new scheme supposedly designed to “protect” the endangered Delta smelt – the "Two Gates Fish Protection Demonstration Project."
However, critics of the project consider the project to be a thinly disguised plan to export more water from the California Delta that will result in the extinction of imperiled Central Valley Chinook salmon, Delta smelt, longfin smelt, green sturgeon and other fish populations. The project is being fast-tracked at the same time that the Schwarzenegger administration, Senator Dianne Feinstein, corporate agribusiness and their allies in the State Legislature are pushing to construct a giant peripheral canal approximately the same size and length as the Panama Canal.
MWD, in a June 9 board meeting, described the Two-Gates Fish Protection Project as a “key near-term project that, according to modeling analysis, should assist in reducing entrainment of Delta smelt and other sensitive aquatic species at the state and federal Delta pumping facilities without adversely affecting Chinook salmon, steelhead, sturgeon or Longfin smelt.”
The project would be implemented by the U.S. Bureau of Reclamation’s installation of an operable gate structure on Old River and Connection Slough in the central Delta between the cities of Stockton and Antioch. “Hydrodynamic modeling analyses have also indicated that gate operations could improve water quality in the central and south Delta,” MWD contended.
Governor Arnold Schwarzenegger recently said he was committed to fast-tracking the project to provide “relief” to San Joaquin Valley agribusiness while affirming commitment to a “water deal” that includes a peripheral canal and more dams.
“With mandatory water restrictions and crops lying fallow, it is clear that every Californian is suffering from our water shortage - and this project will provide much-needed relief,” claimed Schwarzenegger, during a break between his staged "green energy" photo opportunities and holding press conferences regarding slashing the state budget. “While I remain committed to getting a comprehensive water deal done this year, I will aggressively work with local, state and federal officials toward the speedy approval and completion of the Two Gates project so that California’s bread basket can continue to feed the world.”
In contrast, Bill Jennings, chairman of the California Sportfishing Protection Alliance, after carefully reviewing the draft Biological Assessment and draft Mitigated Negative Declaration for the Two Gates project, is alarmed that this scheme is “another bullet speeding towards the Delta’s heart.”
“The stated purpose is to circumvent the export restrictions in the recent Biological Opinions (BiOp) issued by the U.S. Fish and Wildlife Service (USFWS) and National Marine Fisheries Service (NMFS) by preventing Delta smelt from entering the south Delta where they are susceptible to entrainment in the massive export pumps of the state and federal projects,” said Jennings. “The project was hatched in secrecy, but has now been handed to the U.S. Bureau of Reclamation where it is on a breathtaking fast track to construction this fall.”
Jennings said Two Gates is being "merchandised as a scientific experiment" and admittedly seeks answers to a series of hypotheses that need to be verified. These include: do Delta smelt “surf” the tide, can intermittent operation of the gates affect turbidity, will subtle changes in turbidity cause smelt to avoid certain areas?
“Unfortunately, the reality is that the project is an increased water export scheme masquerading as science," stated Jennings. "Suggestions that conveyance be decoupled from the actual scientific experiment and that any positive effects serve to restore smelt abundance have been rejected. The clear intent of the project is to increase water exports over limits imposed by Judge Wanger's Delta smelt decision and the recent BiOp.”
The Recreational Boaters Association of California is also taking aim at the project over concerns that it will impede navigation on the Delta.
“At issue regarding this project is the long standing policy principle of RBOC to keep the navigable waters of California open and accessible to recreational boating,” stated Dave Breninger, 
RBOC President. “In this instance, this appears to have not been taken fully into consideration by Cal-Fed in designing the 2-Gates Project.”
He emphasized that the group is also very concerned about the speed with which the agencies are implementing the project without concern for proper public input.
“There is a very short time-line on the 2-Gates Project. It is on an extremely fast-track for installation targeted for the gates by this November!,” stated Breninger.
Roger Mammon, board member of Restore the Delta, echoed Breninger's concerns about the Two Gates Project blocking navigable waterways, as well as being part of a plan by agribusiness and southern California to increase water exports out of the Delta.
"This is just the start of Southern California and corporate agriculture telling us we cannot play in our own backyard," said Mammon. "And if we want to, we have to play by their rules. Before you know it, there won't be water for Delta residents, aquatic life in our waters, Delta businesses or Delta farms. As soon as they build their Panama Canal of the Delta, they will just wait for us to dry up and blow away."
CalFed, the joint state/federal organization that has presided over the collapse of Central Valley salmon and Delta fish populations while wasting billions of dollars on unsuccessful “restoration” projects, has scheduled a science panel review for 6 August 2009. Information can be found at: http://www.science.calwater.ca.gov/pdf/reviews/Final_2_Gates_
meeting_notice.pdf
“Given that Delta smelt are clinging to existence by a thread, is it reasonable to embark upon a rush project to alter the hydrology of their designated critical habitat simply to get around water export restrictions imposed by the BiOp?” Jennings asked.
Delta smelt, a 2 to 3 inch long fish only found in the Sacramento-San Joaquin River Delta, is an indicator species that demonstrates the health of the ecosystem. The San Francisco Bay-Delta Estuary is the largest and most significant estuary on the West Coast of the Americas and supports an array of species found up and down the coast, including Chinook salmon, steelhead, green sturgeon, starry flounder, striped bass, American shad, herring, anchovies, California halibut and Dungeness crab.
During the presidential campaign and since taking office, President Barack Obama has repeatedly said that he is committed to “integrity” and “transparency” in the scientific process under his administration.
“The public must be able to trust the science and scientific process informing public policy decisions," said Obama in a memorandum to the heads of executive departments and agencies on March 9, 2009. “Political officials should not suppress or alter scientific or technological findings and conclusions. To the extent permitted by law, there should be transparency in the preparation, identification and use of scientific and technological information in policy making.”
Those are welcome words that many would agree with, especially after 8 years of the persistent manipulation of science to the detriment of fish and the environment under the Bush administration. However, if the Obama administration is truly committed to “integrity” and “transparency” in the scientific process, why is the Bureau of Reclamation working with the California Department of Water Resources and MWD to fast-track the construction of the Two Gates Project without regard to proper public input and the impact of the project on collapsing fish species?
CSPA’s Concerns with the Two Gates Project
Here are some of the concerns of Bill Jennings, executive director of the California Sportfishing Protection Alliance, with the Two Gates Project (http://www.calsport.org/7-27-09.htm):
• Environmental review has been short-circuited. A Finding of No Significant Impact (FONSI) and Mitigated Negative Declaration is proposed instead of a full Environmental Impact Statement/Report - this for a project whose purpose is to keep an endangered species out of a part of its critical habitat.
• Required authorizations (i.e., 404 & 401 permits, streambed authorization agreement, consistency determinations with federal BiOps, etc.) are proceeding with reckless and unprecedented haste.
• The models justifying the project have never been peer-reviewed, are based upon questionable assumptions and exclude significant relevant information.
• There has been no effort to determine whether the hypotheses the experiment seeks to verify could be answered in other ways that don't require major structural components and altered hydrology.
• Evaluations of potential impacts to other species (salmon, steelhead, sturgeon, longfin, splittail, threadfin shad, striped bass, etc.) are cursory, if nonexistent.
• There is no evaluation of potential water quality impacts to non-conservative constituents (i.e., the suite of pesticides, industrial and household chemicals, oxygen demand, selenium, mercury, toxicity and other dissolved constituents) that are identified as plaguing Delta waterways. Indeed, the MWD modeling indicates that residence time and water quality problems in Old River at Tracy could increase. Data collection of constituents will be limited to salt, turbidity and chlorophyll.
• Potential problems that arise, like increased predation, will be addressed on the fly by the seat-of-the-pants.
• Should Delta smelt show a slight increase in abundance (for whatever reason); there will be enormous pressure to quickly ramp up exports without waiting for the scientific experiment to run its course. There can be no confidence that the Water Operations Management Team or the fishery agencies will be able to withstand that pressure.
• The recent NMFS BiOp bluntly prohibited installation of the South Delta Improvement Project (SDIP) operable barriers because of numerous fishery impacts. That project was developed over the span of a decade and subject to an EIR/EIS. If the SDIP operable barriers in Grantline Canal and Old and Middle Rivers were environmentally unacceptable, what can justify the haste to install the Two Gates operable barriers?
In sum: what can be the necessity of short circuiting the normal rigorous environmental review and permitting processes to hastily embark upon yet another hydraulic modification of the estuary when every previous effort has led to disastrous consequences?
CSPA believes that a full EIR/EIS should be conducted and that any increased conveyance should be uncoupled from the scientific experiment. Of course, history suggests that is not likely to happen short of litigation.
Hun vetoes Williamson Act subventions...Badlands Journal editorial board...7-29-09
http://www.badlandsjournal.com/2009-07-29/007342
Gov. Arnold Schwarzenegger used his line-item veto power Tuesday to kill a legislative compromise that would have cut the state's Williamson Act subvention to counties by 20 percent. The Hun axed it all, leaving a token $1,000 in the fund.
Reports are coming in from rural counties across the state:
"Fresno County will lose about $4.8 million in Williamson Act money ...Tulare County will lose about $3.4 million in Williamson Act money, officials said. Madera County Supervisor Frank Bigelow said his county will be out $1.3 million. 'We're either going to have to borrow the money ... or we're going to have to make cuts to police or libraries,' he said." -- Fresno Bee, July 29, 2009 (via CVSEN clipping service)
Tehama County to lose $800,000 -- Corning Observer, July 28, 2009
Eighth District Assemblywoman Mariko Yamada ... said the governor's "reduction in annual Williamson Act subventions to local governments for forgone property tax revenues, in effect, eliminates the Act and continues the assault on agriculture in California. Without this land protection program, California will likely lose more farmland to development -- something we will never be able to regain." -- Woodland Daily Democrat, July 29, 2009.
Glenn County to lose $950,000 in state subventions for land enrolled in the Williamson Act -- Orland Press-Register, July 28, 2009
Shasta, Sisciyou, Tehama and Trinity counties combined will lose $2 million in subventions -- Redding Record-Searchlight, July 29, 2009
Butte County will lose $600,000 in subventions -- Chico Enterprise-Record, July 29, 2009
Fresno County will lose about $4.8 million in Williamson Act money ...Tulare County will lose about $3.4 million in Williamson Act money, officials said. Madera County Supervisor Frank Bigelow said his county will be out $1.3 million. "We're either going to have to borrow the money ... or we're going to have to make cuts to police or libraries," he said. -- Fresno Bee, July 29, 2009
It's unclear from the early reports quite how the counties and their farmers under Williamson Act contract are going to work this out. Just because the state cancels the subvention it pays the counties to backfill county property-tax losses from enrolled farm and ranch land, does this automatically mean that counties will raise property taxes on enrolled agricultural land? The history of state subventions has been that the state has increased them to make preserving farm land more attractive to counties. Yet, the Agricultural Preserve and Williamson Act are county-option programs.
Here in Merced County, which passed its Agricultural Preserve-Williamson Act in 2000, some leaders saying it would provide agricultural mitigation for UC Merced -- a purpose for which the program was never designed nor could effect -- we haven't heard a peep about the Hun's blue-line veto. We are certain, however, that we have somehow erred in our survey of the press on the matter so far and that tomorrow, spokespersons for agriculture and the County will illuminate our ignorance on this subject and tell us it really ain't so, when they get around to dealing with the hottest agricultural news in the state.
We're curious to hear what our leaders think will happen to the price of agricultural land in the Valley, already falling, if counties begin taxing land under Williamson Act contract at its real estate rather than agricultural production value.
Or will these farming counties, where "family" agribusiness has brought so much prosperity to so many, provide the subventions themselves?
Finance, insurance and real estate special interests govern California as is fitting, because the people of the state sold it to them.
Merced Sun-Star
Public Notice
GENERAL PLAN AMENDMENT #06-01, SITE PLAN REVIEW APPLICATION #260, VACATION/ABANDONMENT APPLICATION #06-01, AND NOTICE OF INTENT TO CERTIFY AN ENVIRONMENTAL IMPACT REPORT FOR THE PROPOSED WAL-MART DISTRIBUTION CENTER
http://www.legalnotice.org/pl/mercedsun-star/ShowNotice.aspx
NOTICE OF PUBLIC HEARING FOR GENERAL PLAN AMENDMENT #06-01, SITE PLAN REVIEW APPLICATION #260, VACATION/ABANDONMENT APPLICATION #06-01, AND NOTICE OF INTENT TO CERTIFY AN ENVIRONMENTAL IMPACT REPORT FOR THE PROPOSED WAL-MART DISTRIBUTION CENTER A public hearing will be held by the Merced City Planning Commission on Wednesday, August 19, 2009, at 6:00 p.m.(and continuing to Monday, August 24, 2009 at 6:00 p.m. and Wednesday, August 26, 2009 at 6:00 p.m., if needed), or as soon thereafter as may be heard in the City Council Chambers located at 678 W. 18th Street, Merced, CA, concerning the proposed Wal-Mart Distribution Center, generally located at the northwest corner of Gerard Avenue and Tower Road in Merced, California (hereinafter referred to as the Project ), initiated by Carter & Burgess, Inc., agent for Wal-Mart Stores East, LP, property owner(s). The Project includes consideration of General Plan Amendment #06-01 and Vacation/Abandonment Application #06-01 for a change in the General Plan Circulation Element and the abandonment of the right-of-way for Kibby Road (a designated collector) between Childs and Gerard Avenues; Site Plan Review Application #260, to approve the construction of a regional distribution center (approximately 1.1 million square feet, operating 24 hours per day, and employing approximately 1,200 employees) and associated facilities on approximately 230 acres; and the certification of an environmental impact report regarding the Project. Said property being more particularly described as Parcels 2 and 3 as shown on the map entitled Parcel Map for Lyons Merger Partners, L.P., filed in Parcel Maps in Volume 101, Pages 47 and 49, Merced County Records, also known as Assessors Parcel Numbers (APN) 061-250-090 and 061-290-047. An environmental review checklist has been filed for this Project, and Draft (DEIR) and Final (FEIR) Environmental Impact Reports have been prepared in accordance with the requirements of the California Environmental Quality Act (CEQA). Significant environmental effects are anticipated as a result of the Project, including some significant effects which would be reduced to a level of less than significant after mitigation measures are imposed and others that would remain significant and unavoidable even after mitigation is imposed. These include effects on agricultural resources; air quality; biological resources; cultural resources; geology, minerals, soils, and paleontological resources; hydrology and water quality; noise; population and housing; public health and hazards; traffic and transportation; utilities and public services; and visual resources. Each significant environmental effect is described in detail in the DEIR, which was circulated for a 60-day public review from February 25, 2009 to April 27, 2009. The FEIR contains copies of all the written comments received on the DEIR and the City s responses to those comments as well as any minor modifications to the text of the DEIR. The Draft Environmental Impact Report (DEIR) and reference documents, and the Final Environmental Impact Report (FEIR) may be reviewed at the City Clerk s office and the Planning Division office at 678 West 18th Street, Merced during normal business hours, Monday through Friday, 8:00 a.m. to 5:00 p.m., as well as at the Merced County Library Main Branch at 2100 O Street, during their normal operating hours. All persons interested in obtaining printed copies of the DEIR and Technical Appendices for a reproduction cost of $45 each and/or copies of the FEIR for a reproduction cost of $145 are invited to contact the Merced City Planning Division at the address indicated above. The first copy of the DEIR and Technical Appendices and the FEIR on CD-ROM is available free of charge to any individual or group (there will be a $5 reproduction cost for each additional CD) or the documents may be downloaded from the City s website at www.cityofmerced.org. Please feel free to call the Planning Department at (209) 385-6858 for additional information. All persons in favor of, opposed to, or in any manner interested in this request for a General Plan Amendment, Vacation/Abandonment, and Site Plan Review are invited to attend and be heard at this public hearing. You may also forward written comments on the project to the Director of Development Services, City of Merced, 678 West 18th Street, Merced, CA 95340. If you challenge the decision of the Planning Commission in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City of Merced at, or prior to, the public hearing. Local organizations have volunteered to have translators available at the hearings to provide translations into Spanish and Hmong upon request. Any person who wishes to have these services made available at the hearings must call the Planning Department at (209) 385-6858 no later than Friday, August 14, 2009 to make arrangements, otherwise the City cannot guarantee their availability. These services will allow non-English speakers to hear the public testimony via headsets in Spanish or Hmong, but any person intending to testify before the Planning Commission must bring his/her own translator, as public testimony will only be taken in English. After the Planning Commission makes its decision and recommendation on this matter, the matter will also be considered at a public hearing before the City Council for final decision. A separate notice of that public hearing will also be given. July 27, 2009 KIM ESPINOSA Planning Manager Legal SS July 30, 2009
A third of Merced area high school students have to try exit exam again...DANIELLE GAINES
http://www.mercedsunstar.com/167/v-print/story/976714.html
Almost one-third of the incoming junior class in the Merced Union High School District must retake the California High School Exit Exam before those students can receive a diploma, according to preliminary statistics recently released by the district.
Only 69 percent of sophomores last year passed the exam, which is on par with results two years ago.
The exit exam is a state graduation requirement. It consists of two parts: math, which addresses sixth- and seventh-grade Algebraic standards, and English, which focuses on 10th-grade standards.
Based on the preliminary results, the district anticipates that it will not meet adequate yearly progress standards required by federal No Child Left Behind Act requirements in several student subgroups. That information is expected to be released by the California Department of Education in early September.
Students first take the test in the second half of their sophomore year. If they fail one or both parts of the exam, they must retake the portions failed to be able to graduate.
Students who fail in 10th grade have two chances in 11th grade and up to five opportunities in their senior year.
Since 2007, the school district has seen a 24- to 26-percentage point increase in the number of students passing the exam in subsequent tries.
Still, the percentage of Merced Union High School District students passing the exam before they graduate is on the wane, according to the preliminary results.
Ninety-three percent of regular education students in the class of 2009 passed the exam before last May, compared to 96 percent of their counterparts in the class of 2008.
Members of the class of 2009 had five opportunities to pass the exam, while the class of 2008 had three. The last test for the class of 2009 was in May and is not included in the preliminary results.
In wrangling over the state budget, lawmakers proposed cutting the graduation requirement completely, a notion that was struck down by Gov. Arnold Schwarzenegger. In a compromise, the governor instead suspended the exit exam requirement for the state's special education population.
The number of special education seniors in the Merced Union High School District passing the exam increased for the class of 2009 to 79 percent, well over the 66 percent passing rate of their counterparts in the class of 2008.
Modesto Bee
Guaranty on brink of failing...Bee Staff Reports and News Services
http://www.modbee.com/business/v-print/story/799053.html
Guaranty Financial Group, with about a dozen bank branches in the Northern San Joaquin Valley, is on the verge of financial collapse and awaiting a takeover by regulators.
In its latest regulatory filing, the company said its major shareholders would not put in more money. As a result, it said, Guaranty had become "critically undercapitalized" because of the slashed value of its mortgage-backed securities.
If Guaranty is shut down, it would be the largest bank failure so far this year, exceeding the collapse of Florida's BankUnited Financial.
The Austin, Texas-based company ranks as one of the 50 largest publicly traded financial-services companies by asset size.
Guaranty has roughly $16 billion in assets and more than 150 branches in Texas and California.
It reported losses of at least $444 million in 2008, and estimated it lost $256 million more in the first quarter of this year, with even more expected.
Guaranty reported that its mortgage securities were worth more than $3 billion at the end of 2006, and $2.2 billion at the end of March of this year. But this month, regulators said the securities weren't worth anywhere near that much, and ordered Guaranty to cut their value by $1.5 billion.
That move pushed the bank's finances into a critical condition, and triggered its announcement that a takeover was imminent.
The Federal Deposit Insurance Corp. does not comment on the status of banks that are still open and operating. As of Wednesday, Guaranty branches were open and the bank wasn't on the FDIC's official closure list.
Typically, the FDIC takes over banks after they close on Fridays. This allows regulators to get the bank back into operation on Mondays.
In many cases, the agency has found buyers for the failed banks — which take over the accounts and branches immediately — similar to what happened with Merced-based County Bank, which was acquired by Westamerica Bank.
Depositors are protected by the FDIC's general de- posit insurance rules, under which coverage is now up to $250,000 per depositor (with separate coverage for joint accounts) per insured institution.
The FDIC provides full coverage for noninterest-bearing transaction deposit accounts, including personal and business checking deposit accounts as well as attorney-client trust accounts.
Last year, as the housing crisis deepened, Guaranty also suffered because a high percentage of its own mortgage loans — including pay-option adjustable-rate mortgages — had been made to buyers in California, where the housing crisis is most severe. The company had loan offices in cities such as Riverside and Stockton.
Many of the underlying loans were made by lenders such as Countrywide Financial Corp. and Washington Mutual Bank, which failed last year. And many of those loans were pay-option ARMs, which lets borrowers make minimal monthly payments or pay only the interest.
As the housing crisis grew, home values began to fall and buyers began to default on their mortgages, and those securities dropped in value.
Guaranty had an equal problem with loans to homebuilders. As of Sept. 30, almost 40 percent of its nonperforming builder loans were in California.
Late last year, Guaranty acknowledged in securities filings that its nonperforming assets — problem loans and foreclosed property — had tripled to $520 million from the start of the year.
Guaranty was spun off from Temple-Inland Co. of Austin in late 2007, a move sought by Temple-Inland shareholder and New York billionaire Carl Icahn. A year ago, Guaranty picked up a $600 million additional investment from Icahn and Dallas billionaire Robert Rowling.
But that wasn't enough.
On April 6, the Office of Thrift Supervision ordered Guaranty to raise even more capital, find a buyer or face a takeover. The regulator said Guaranty had engaged in "unsafe and unsound banking practices."
Stockton Record
Cause of bald eagles' deaths remains a mystery
Exam, lab tests reveal few clues to loss in Lode...Dana M. Nichols
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090730/A_NEWS/907300319/-1/A_NEWS14CAMPO CAMPO SECO - The mystery surrounding the death of two young bald eagles last week in a nest near Campo Seco deepened this week as utility and game officials said they had no obvious injuries and initial lab examinations offered few clues.
"There was no obvious signs of them having been shot," said Kyle Orr, a spokesman for the California Department of Fish and Game. "The birds appeared well-fed."
The birds had been observed by Valley Springs-area bird watchers since March and were believed to be within a few days of learning to fly when they were found dead July 23.
Stacey Hebrard, a retired California Department of Forestry fire captain and a bird watcher, even photographed the adult eagles recently bringing a large fish to the nest.
The nest is on East Bay Municipal Utility District land not far from Pardee Reservoir. Chris Swann, ranger supervisor for EBMUD's Mokelumne Watershed, said conditions at the site appeared to be good for the eagle family.
"We found more than a dozen skeletal remains of fish and a few from hares and egrets under the nest, so their selected location between Pardee and Camanche Reservoirs seemed to provide a reliable food supply," Swann wrote in an e-mail.
Swann also said the nest was 220 yards away from the nearest road, which is far enough to buffer the birds from the stress they feel when humans are too close. Swann said biologists generally recommend giving eagles a buffer of about 110 yards around their nests.
In addition, the nest was high in a tree, making it unlikely people would meddle with it. Swann said the state Department of Fish and Game hired a professional tree climber to retrieve the remains of the two young birds.
Those remains were sent to California Animal Health and Food Safety Laboratory at the University of California, Davis. The UC Davis School of Veterinary Medicine runs that laboratory for the state government. Although the lab mostly provides diagnostic tests on livestock and poultry, it occasionally conducts tests on wildlife.
Leslie Woods, a veterinary pathologist who examined the birds, said that because of high summer temperatures, the tissues of one of the birds already had become "soup" by the time a game warden retrieved and froze the carcass.
"The birds came in in very poor post-mortem condition. That is going to hurt a number of tests," Woods said.
For example, the decayed condition of the birds may make it impossible to conduct tests that could show whether pesticides had harmed them. On the other hand, if they were poisoned by lead or other toxic metals, that would still show up, even in decayed tissues.
Woods said it will be several days until she gets the toxicology results.
Woods said one young bird had food in its gizzard but the other did not.
She said she saw no obvious injuries and no obvious signs of some kind of infection. But she also has not yet received prepared tissue slides that might make it possible to find evidence of infections or disease on a microscopic level.
Bald eagles are the United States' national bird and one of the few species to have recovered in population. They have been deemed stable after having once been listed by the federal government as endangered. Regulation of pesticides is believed to be one factor in helping the species recover.
Adult eagles have a wingspan of 6 to 8 feet, and one of the juvenile eagles that died last week was nearing the size of its father. Females are larger than males.
San Francisco Chronicle
Why do you still have a top-loading washing machine?...Dr. Peter Gleick
http://www.sfgate.com/cgi-bin/blogs/gleick/detail?entry_id=44493
My colleagues and I here at the Pacific Institute have been arguing for more than 15 years that California has enormous potential to save water by improving water use efficiency. We always get push-back from cities, farmers, and other water users who routinely plead they've done all they can to save water, despite the blatant evidence to the contrary everywhere we look.
And here is some new evidence:
Water Number: 32. Last month, water demand in Los Angeles reached a 32-year low, according to The LA Department of Water and Power - even with a far higher population and a far larger economy. This is precisely what we've been arguing for years and continue to argue - both in our comprehensive assessment of the potential for urban water conservation and our newest study of the same potential for improving efficiency in the agricultural sector.
But is that all there is? Have we finally captured all of the water we can by improving the efficiency of use and reducing waste?
Hardly. Not even close. Let me give you one example (and I'm sure every single reader has stories of seeing agricultural sprinklers going in the middle of the hottest days, flood irrigation losing vast quantities of water to the atmosphere, lawn sprinklers gone crazy, or other examples of wasteful and inefficient use):
I was in a meeting last week at the Capitol in Sacramento, with a roomful of smart legislative experts and aides interested in water. But I found even they are confused about the potential of reducing demand as an equivalent (and cheaper and faster and cleaner) option to increasing supply. So I asked the gathering who was still using a top-loading washing machine. Stunningly, easily 80% of the people in the room raised their hands. Yet front-loading washing machines use far, far less water, energy, and detergents (and do a better job cleaning your clothes). And we've known this for years - even the federal government has new appliance standards for washing machines and California's had them for even longer. The Pacific Institute has estimated that replacing JUST old, inefficient washing machines can save over 100,000 acre-feet per year in California, and at a far lower cost than any new supply option proposed. I had an x-ray the other day with a new digital machine. The images were transmitted to my doctor in seconds, and no water was used. But there are still plenty of old film machines that use and contaminate lots of water. Washing machines and digital x-ray machines are the tip of the iceberg.
Why aren't we replacing old machines and other inefficient water uses faster? First, ignorance or apathy: people don't know they can save money, energy, and water, and commercial laundromats have no incentive to cut back since they pass their costs on to consumers. Second, faulty economics: people look at these efficient washing machines in the store and all they see is that they are (sometimes, not always) more expensive than the old-style top loaders. What they don't see or understand is that over the life of the machine, the savings more than make up for this initial higher cost, so the efficient one is actually cheaper. A third reason is we don't price water properly to make people care enough to save it. Similar kinds of barriers prevent improvement in agricultural efficiency or commercial and industrial use.
There are solutions to all of these barriers to efficiency improvements (read our reports!). Let's find them and continue to grow our economy (though, hey, maybe not our population?) with less water.
EPA Plans Air Quality Tests at 62 U.S. Schools...Dan Shapley. Reprinted with Permission of Hearst Communications, Inc. Originally Published: 100 Cities: The Best and Worst Air Quality
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2009/07/29/hearstmaggreen431692.DTL&type=printable
Three months after a USA Today report relying on government data found potentially high levels of dangerous air pollution around schools, the Environmental Protection Agency has announced plans to test the air.
The USA Today report in December concluded that the air quality in many U.S. schools is likely to be so bad that children and teachers are at risk of cancer, brain damage, asthma and a host of other illnesses, because schools are situated downwind of major industrial facilities.
The newspaper at the time called the potential risk "widespread, insidious and largely unaddressed."
While USA Today identified 435 schools that ranked worst, the EPA will focus first on testing at 62 schools.
See The Smokestack Effect: Toxic Air and America's Schools for reports, analysis and calculators that allow you to see how risky the air might be at your local school.
(Also consider previous research, which wouldn't be reflected in this data, that show that asthma and allergy rates are up to 50% higher for children who live near major highways, and that one in three U.S. public schools is within about 1,300 feet, or a quarter mile, from a major highway.)
Other air pollution monitoring tools include the EPA's Toxic Release Inventory and annual drinking water quality reports.
And, remember to consider air pollution sources that won't make it into any national government database, but which may be more important to the health of students. Most notably: School buses. Older diesel school buses are a huge source of air pollution that can damage young lungs. Talk to your school board about replacing or upgrading any buses made before 1990, and instituting a No Idling campaign to avoid unnecessary risks in the school parking lot.
100 Cities: The Best and Worst Air Quality...Dan Shapley. Reprinted with Permission of Hearst Communications, Inc. Originally Published: 100 Cities: The Best and Worst Air Quality
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2009/07/29/hearstmaggreen331041.DTL&type=printable
America's air is markedly cleaner than it was nearly 40 years ago, when the Clean Air Act was passed. Toxic chemicals, smog and soot are less pervasive today. But science has also taught us, since then, that lower levels of pollutants do serious harm -- to our lungs, our hearts and circulatory systems and to the development of our children. Science has shown that, despite significant reduction in acid rain, mountain streams are still struggling to recover from decades of abuse, leaving water there toxic to much fish and plant life.
In other words, as the American Lung Association's 10th annual State of the Air puts it: "Air pollution continues to threaten the lives and health of millions of people in the United States despite great progress since the modern Clean Air Act was first passed in 1970. Even as the nation explores the complex challenges of global warming and energy, air pollution remains widespread and dangerous."
The report, released this week, focuses on the two forms of air pollution most dangerous to lungs: Smog (a.k.a. ozone) and soot (a.k.a. fine particulates). Particulate pollution was analyzed in two ways -- short-term and long-term levels.
Ozone forms on hot sunny days when smokestack and tailpipe pollution interacts with heat and sunlight. The result is ozone, a major component of smog. It's the same molecule that, in the upper atmosphere, protects our skin from harmful radiation from the sun; but at ground level it scars lung tissue, causing permanent damage and making it unhealthy to exercise or, for sensitive individuals like the young, the elderly and those with lung disease, even breathe. Particulates can come in the form of familiar dust and soot, but also in the form of chemicals that form as tiny droplets after being spewed out of tailpipes and smokestacks.
More than 175 million Americans -- six in 10 -- live in counties where high ozone levels were detected -- nearly twice as many as were at risk in 2008. That increase is largely due to new government calculations that account for new scientific understanding of risk of exposure at lower levels for shorter durations.
Even as cities have taken steps to reduce pollution sources, global warming is producing more hot sunny days, extending the ozone pollution season (April heat wave, anyone?) and increasing the number of days likely to produce unhealthy levels of ozone pollution.
Of the 25 most-polluted U.S. cities, 16 had worse ozone pollution than one year ago, according to the American Lung Association. Thirteen had worse particulate pollution.
 
The Cleanest Cities in the U.S.

1. Fargo-Wahpeton, ND-MN This is the only city area to appear on the American Lung Association's list of cleanest cities when measured by all three criteria -- ozone, short-term particulates and long-term particulates. The others on this list appeared on two of the three.
2. Billings, MT
3. Bismarck, ND
4. Cheyenne, WY
5. Colorado Springs, CO
6. Farmington, NM
7. Ft. Collins, CO
8. Honolulu, HI
9. Lincoln, NE
10. Midland-Odessa, TX
11. Port St. Lucie, FL
12. Pueblo, CO
13. Redding, CA
14. Salinas, CA
15. San Luis Obispo, CA
16. Santa Fe-Espanola, NM
17. Sioux Falls, ND
18. Tucson, AZ

 
25 Cities with the Worst Air Pollution: Ozone (Smog)

1. Los Angeles/Long Beach/Rierside, Calif.
2. Bakersfield, Calif.
3. Visalia-Porterville, Calif.
4. Fresno/Madera, Calif.
5. Houston/Baytown/Huntsville, Texas
6. Sacramento, Calif./Arden-Arcade/Yuba City, Nevada
7. Dallas/Fort Worth, Texas
8. Charlotte/Gastonia/Salisbury, N.C.
9. Phoenix/Mesa/Scottsdale, Ariz.
10. El Centro, Calif.
11. Hanford/Corcoran, Calif.
12. Las Vegas/Paradise/Pahrump, Nevada
13. San Diego/Carslbad/San Marcos, Calif.
14. Washington, D.C./Baltimore, Md./No. Virginia
15. Cincinnati, Ohio/Middletown, Ky./Wilmington, In.
16. Philadelphia, Pa./ Camden, N.J./ Vineland, De.
17. St. Louis, Mo. / St. Charles / Farmington, Il.
18. New York, N.Y. / Newark, N.J. / Bridgeport, Conn.
19. Knoxville/Sevierville/ La Follette, Tenn.
20. Birmingham/Hoover/Cullman, Ala.
21. Baton Rouge/ Pierre Part, La.
22. Kansas City, Mo./ Overland Park, Ks.
23. Atlanta, Ga. / Sandy Springs / Gainesville, Ala.
24. Merced, Calif.
25. Memphis, Tenn.

 
25 Counties with the Worst Air Pollution: Short-term Particulates
City data unavailable at the moment.
1.       Allegheny, Pa.
2.       Fresno, Calif.
3.       Kern, Calif.
4.       Riverside, Calif.
5.       Jefferson, Ala.
6.       Los Angeles, Calif.
7.       Salt Lake, Utah
8.       Sacramento, Calif.
9.       Cache, Utah
10.   Cook, Ill.
11.   Wayne, Mich.
12.   Marion, Ind.
13.   Tulare, Calif.
14.   Lane, Ore.
15.   San Bernardino, Calif.
16.   Baltimore City, Md.
17.   Kings, Calif.
18.   Orange, Calif.
19.   Union, N.J.
20.   Stanislaus, Calif.
21.   Washington, Pa.
22.   Merced, Calif.
23.   Jefferson, Ky.
24.   Philadelphia, Pa.
25.   Santa Clara, Pa.  
 
25 Cities with the Worst Air Pollution: Long-term Particulates

1. Bakersfield, Calif.
2. Pittsburgh/ New Castle, Pa.
3. Los Angeles/Long Beach/Rierside, Calif.
4. Visalia-Porterville, Calif.
5. Birmingham/Hoover/Cullman, Ala.
6. Fresno/Madera, Calif.
7. Cincinnati, Ohio/Middletown, Ky./Wilmington, In.
8. Detroit/Warren/Flint, Mich.
9. Cleveland/Akron/Elyria, Ohio
10. Charleston, W.V.
11. Huntington/Ashland, W.V./Ky./Ohio
12. Louisville, Ky./Jefferson County/Elizabethtown/Scottsburg, In.
13. Macon/Warner Robins/Fort Valley, Ga.
14. St. Louis, Mo. / St. Charles / Farmington, Il.
15. Weirton, W.V./ Steubenville, Ohio
16. Atlanta, Ga. / Sandy Springs / Gainesville, Ala.
17. Indianapolis/Anderson/Columbus, In.
18. Rome, Ga.
19. Canton/Massillon, Ohio
20. York/Hanover/Gettysburg, Pa.
21. Lancaster, Pa.
22. New York, N.Y. / Newark, N.J. / Bridgeport, Conn.
23. Hagerstown, Md./Martinsburg, W.V.
24. Houston/Baytown/Huntsville, Texas

See how your city's air quality ranks.
But most people are not in those clean counties. One in eight lives in a county where all three pollutants reach unhealthy levels, according to the American Lung Association. Among them, at least 4 million children and 10.9 million adults with asthma are exposed to unhealthy air. At least 20.4 million adults over age 65, and 44 million children under the age of 18 are exposed to unhealthy air. And at least 4.4. million people with chronic bronchitis, and 2.1 million people with emphysema are exposed to unhealthy air.
Air pollution isn't just a risk factor for lung disease, but heart disease and diabetes, too, research shows. At least 24.5 million people with cardiovascular diseases and 5.2 million people with diabetes are exposed to unhealthy air.
What can be done? The American Lung Association recommends these actions:
· Clean up coal-fired power plants.
· Clean up dirty diesel engines currently on and off the road.
· Clean up dirty ocean-going vessels.
· Tighten ozone and particulate exposure standards to reflect current science.
· Require all counties with high air pollution levels to crack down on sources.
· Drive less by combining trips, walking, biking, carpooling and using public transportation to limit your contribution to air pollution -- especially on hot, sunny days.
· Don't burn wood or trash, to avoid releasing particulates in smoke into your neighborhood's air.
· Encourage your school district to retrofit old school buses with modern pollution controls, and to stop idling in school parking lots.
· Conserve energy, because every bit of electricity saved means less pollution from the power plant supplying your electricity.
Los Angeles Times
Congress considers legislation for quicker testing of water pollution
A measure approved by the House would require the EPA to develop a system that would allow the public to be made aware of contamination within hours of sampling...Richard Simon
http://www.latimes.com/news/nationworld/nation/la-na-beach30-2009jul30,0,3116069,print.story
Reporting from Washington — Under legislation making its way through Congress, beachgoers would find out sooner whether they should steer clear of the water.
A measure approved Wednesday on a voice vote by the House would require speedier testing for coastal pollution and fund projects to track down sources of contamination.
In California, the additional spending authorized by the bill would be welcome by cities that have cut back on beach monitoring because of the state's budget troubles, said Mark Gold, president of Heal the Bay, a Santa Monica-based environmental group.
Rep. John Boozman of Arkansas, top Republican on the House subcommittee on water resources and environment, said the measure would "help ensure that the public can get timely warnings of potential health hazards associated with a trip to the beach."
Congressional action came as the Natural Resources Defense Council reported that beach closings and advisories last year declined 10%. But that, the group said, most likely was because of dry conditions and decreased funding for water monitoring.
Beach closings and advisories, often the result of aging sewage and storm water systems, still exceeded 20,000 incidents nationwide last year -- the fourth highest number since 1990, the group reported.
The Clean Coastal Environment and Public Health Act passed Wednesday by the House would require the Environmental Protection Agency to develop a test by 2012 that would allow the public to be alerted to contamination within hours of sampling, reducing the risk of exposure to disease-causing pathogens. A similar bill has cleared a Senate committee.
Currently, tests take 18 hours or longer to produce results.
"You get information on Friday that tells you whether the beach was clean on Thursday," said Nancy Stoner, co-director of the Natural Resources Defense Council's water program.
Once a faster test is developed, Gold said, "you grab a sample at 7 in the morning, and then you can post warning signs on the beach by 11 to let the public know whether or not it's safe to swim."
The House bill would authorize $40 million a year for the program through 2014. The Senate bill would authorize $60 million annually through 2013. Even if a final bill passes, the money would have to be appropriated by Congress.
Lawmakers already have moved on a separate front to increase funding for clean-water projects, including those designed to prevent beach pollution. A House-approved bill would provide $2.3 billion for the Clean Water State Revolving Fund, which helps state and local agencies pay for projects such as upgrading aging sewage-treatment plants and preventing runoff of polluted water. A bill headed to the Senate would provide $2.1 billion. About $689 million was provided this year.
Lawmakers also are considering the Sewage Overflow Community Right-To-Know Act, which would require treatment plants to alert the public to sewer overflows.
Washington Post
Unemployment spreads distress in U.S. home loans...Lynn Adler, Reuters...(Editing by Kenneth Barry)
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/30/AR2009073000078_pf.html
NEW YORK (Reuters) - Cities in the U.S. Sun Belt states of California, Florida, Nevada and Arizona dominated the record foreclosure spree in the first half of the year, but distress in other regions emerged as joblessness spread, RealtyTrac said on Thursday.
Metro areas with populations of at least 200,000 in those four states accounted for 35 of the 50 highest foreclosure rates.
Mortgages have failed the fastest in the areas with the greatest overbuilding, purchases by speculators and reliance on riskier loan products to improve affordability.
But the source of the mortgage trouble has swung from lax lending standards to unemployment.
Some of the areas with the most severe foreclosure activity have started to show improvement as price cuts and first-time buyer tax credits lure purchasers.
With the unemployment rate near a 26-year high and many employers cutting wages, more consumers in areas that were initially spared in the foreclosure explosion are now behind in their home loan payments.
More than 20 percent of areas with above-average foreclosure activity were in Oregon, Idaho, Utah, Arkansas, Illinois and South Carolina in the first half of the year. That shift points to growing unemployment more than to fallout from subprime and adjustable-rate loans, RealtyTrac said in its midyear metropolitan foreclosure market report.
While total foreclosure activity kept rising, "some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, while new markets like Provo, Utah, and Boise, Idaho, have seen large increases," James J. Saccacio, chief executive officer of RealtyTrac, said in a statement.
"As unemployment rates increase in different parts of the country, it's very likely that we'll see similar patterns develop elsewhere," he said.
Home prices through May plunged more than 32 percent from their mid-2006 peak, with losses varying sharply depending on region, according to Standard & Poor's/Case-Shiller indexes.
A rise in foreclosure properties pressure prices of other homes for sale.
"As unemployment rises, we are seeing a change in the financial profile of the people seeking our help," Suzanne Boas, president of Consumer Credit Counseling Service of Greater Atlanta, said this week.
"We are serving an increasing number of people who work in professional services and skilled trades," she said. "These people have maintained solid incomes their entire lives, but are now in financial trouble and are reaching out for counseling to help avoid foreclosure."
In June, 72 percent of homeowners who got foreclosure prevention counseling from the agency, which serves all 50 states, were either unemployed or reported a drop in income.
RealtyTrac this month reported a record 1.9 million foreclosure filings on more than 1.5 million properties in the first six months of this year. The pace picked up after various temporary freezes ended in March.
The company forecasts 4 million filings for the year.
SOME LIGHT AT TUNNEL'S END
Las Vegas, Nevada, had the highest metro foreclosure rate, with 7.45 percent, or one of every 13 households with a loan, getting at least one filing in the first half of the year. Filings include notice of default and auctions.
Cape Coral-Fort Myers area in Florida had the second highest rate and Merced, California was third. Both reported a slight decrease in foreclosure activity from the previous six months but a higher pace than the first half of 2008.
Other metro areas in the top 10 were the California cities of Riverside-San Bernardino-Ontario, Stockton, Modesto, Bakersfield and Vallejo-Fairfield; the Phoenix metro area and Orlando, Florida, metro area.
Foreclosure activity rose in all but Stockton and Modesto from the prior six months and from the first half of 2008.
Stockton had a 4 percent drop in the first half from the prior six months and a nearly 13 percent fall from the first half of 2008.
Other hard-hit areas showed declining foreclosure activity in the first half, including Detroit and Cleveland, RealtyTrac said.
Bloomberg.com
Las Vegas, Fort Myers, Florida Lead U.S. Cities in Foreclosures ...Brian Louis
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZejjD7U1FNw
July 30 (Bloomberg) -- Las Vegas and Cape Coral-Fort Myers, Florida led U.S. metropolitan areas in foreclosures in the first half of the year as unemployment and falling home prices forced home-loan defaults, RealtyTrac Inc. said.
The Las Vegas area had the highest rate of foreclosure filings, with 7.5 percent of households receiving a default or auction notice or being seized by a lender. That rate was six times the national average. The Cape Coral-Fort Myers region, on Florida’s Gulf Coast, was second, with a rate of 7.2 percent.
“Foreclosure activity continued its upward trajectory nationwide and in the majority of metro areas in the first half of the year,” James Saccacio, chief executive officer of RealtyTrac, said in a statement. “While some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, new markets like Provo, Utah, and Boise, Idaho, have seen large increases.”
Home prices in 20 major U.S. metropolitan areas dropped 17.1 percent in May from a year earlier, according to the S&P/Case-Shiller index. Nationwide, home prices have fallen 21 percent since peaking in July of 2006, according to the National Association of Realtors in Chicago. The U.S. unemployment rate rose to 9.5 percent in June, the highest in almost 26 years, the U.S. Labor Department said on July 2.
That brought the total number of lost jobs to about 6.5 million since the recession started in December 2007, the Labor Department said.
1.5 Million Properties
U.S. foreclosure filings rose to a record in the first half as job losses and slumping home prices fueled an increase in defaults, RealtyTrac said in a July 16 report. More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June. That’s a 15 percent increase from the year earlier.
Six of the nation’s top 10 metro areas for foreclosure rates were in California, according to RealtyTrac. Merced was the highest in California and third in the nation with a 6.9 percent rate of foreclosure filings. California’s unemployment rate was 11.6 percent in June, according to the Bureau of Labor Statistics.
The California metro areas of Riverside-San Bernardino- Ontario, Stockton, Modesto, Bakersfield, and Vallego-Fairfield were fourth through eighth on the list that included 203 U.S. metro areas.
The Phoenix region was ninth and Orlando-Kissimmee, Florida, was 10th, according to RealtyTrac. Florida’s unemployment rate was 10.6 percent in June, according to the Bureau of Labor Statistics.
California, Florida
California had 12 areas in the top 25 with the highest rates and Florida had 10, according to Irvine, California-based RealtyTrac, a seller of default data.
The foreclosure data comes as reports on new and existing- home sales raise the prospect that the housing market may be approaching a bottom. The S&P/Case-Shiller home price index rose 0.5 percent in May from the prior month, the first monthly gain since July 2006.
New home sales rose 11 percent in June, the biggest increase in eight years as homebuilders reduced prices, the Commerce Department said on July 27. The median price fell 12 percent to $206,200 from a year earlier.
Sales of existing homes rose for a third consecutive month in June, the National Association of Realtors said July 23.
Home resales climbed 3.6 percent to an annual rate of 4.89 million, stronger than forecast and the highest level since October, according to the National Association of Realtors. Median prices fell 15 percent from a year earlier to $181,800.
CNN Money
Foreclosures: How bad is your city?
Foreclosures are easing in some of the worst hit metro areas, but watch out for the next wave of filings to start crashing in unexpected cities...Les Christie
http://money.cnn.com/2009/07/30/real_estate/worst_hit_foreclosure_
cities/index.htm?postversion=2009073003
NEW YORK (CNNMoney.com) -- Sun Belt cities dominated the list of metro areas with the biggest foreclosure problems during the first six months of 2009.
Cities in just four states -- California, Florida, Arizona and Nevada -- captured 29 of the top 30 places with the highest foreclosure rates, according to a report issued by RealtyTrac on Thursday. Greeley, Colo., was the only outsider, coming in at 29th.
The good news is that some of the worst hit spots, such as the Central Valley cities in California, showed some improvement, according to James Saccacio, chief executive officer of RealtyTrac.
"There are some significant differences beginning to show up in the data," he said. "Some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates."
But we could also be in a lull before the third wave of foreclosures hits, according to Rick Sharga, RealtyTrac's spokesman. The first wave was triggered by the subprime mortgage meltdown. The second wave was caused by layoffs and other economic fallout from the subprime meltdown. "The third wave," said Sharga, "will be the fallout from the option-ARM resets over the next several months."
Where it's getting worse
Many cities with populations larger than one million experienced rapid increases in foreclosure during the past six months. Seattle, for example, wasn't the worst hit city, but it experienced the biggest increase in the rate of filings. While a relatively small 1 in 107 homes received notices, that is a 72% jump compared with the same period a year ago. In second place was Minneapolis, where the filing rate grew by 58.6% to 1 in 90 homes; Phoenix spiked 51.7% to 1 in 22.
But some big cities showed substantial improvement. Filings in Greater New York fell 23.5% (1 in 211), and tumbled 40.7% in Boston (1 in 144) and 31.3% in Houston (1 in 153)
Taking the title of foreclosure capital is Las Vegas, which surpassed Stockton, Calif., for the honors. Stockton, which is 80 miles east of San Francisco, wore the crown for all of 2008.
Vegas, with a whopping 1 in 13 properties receiving a foreclosure filing during the first six months of 2009, is six times worse than the national average of 1 in 84. The number grew 56% since the first half of 2008.
The Cape Coral-Ft. Myers, Fla., area was second with 1 in 14 homes. California posted six cities in the top 10 list, with Merced coming in third at 1 in 15 homes being in trouble.
The Rust Belt, however, may have put the worst of its foreclosure problems behind it. Now even economically devastated Detroit recorded only 1 in 54 properties receiving filings. That's a 16% decline over the first half of 2008.
Cleveland, one of the first cities to get whacked, has also improved and is now ranked only 56th among all U.S. metro areas. The city was once home to the nation's hardest hit neighborhood -- Slavic Village -- but filings are now just 1 for every 73 homes, a 30% decline.
Inversely, Chicago, which had not previously suffered from the foreclosure blight, has pushed up 30% from last year to 39th place among cities. That equates to 1 in every 59 homes having a black mark
The next great bailout: Social Security
Fortune's Allan Sloan takes a look at the troubled retirement program, why it's more important now than ever - and how lawmakers can repair it...Allan Sloan
http://cnnmoney.printthis.clickability.com/pt/cpt?action=cpt&title=The+next+great+bailout%3A+Fixing+social+security+-+Jul.+30%2C+2009&expire=-1&urlID=407673822&fb=Y&url=http%3A%2F%2Fmoney.cnn.com%2F2009%2F07%2F29%2Fnews%2Feconomy%2Ffixing_social_security.fortune%2Findex.htm&partnerID=2200
(Fortune Magazine) -- In Washington these days, the only topics of discussion seem to be how many trillions to throw at health care and the recession, and whom on Wall Street to pillory next. But watch out. Lurking just below the surface is a bailout candidate that may soon emerge like the great white shark in Jaws: Social Security.
Perhaps as early as this year, Social Security, at $680 billion the nation's biggest social program, will be transformed from an operation that's helped finance the rest of the government for 25 years into a cash drain that will need money from the Treasury. In other words, a bailout.
I've been writing about Social Security's problems for more than a decade, arguing that having the government borrow several trillion dollars to bail out Social Security so that it can pay its promised benefits would impose an intolerable burden on our public finances.
However, I've changed my mind about what "intolerable" means. With the government spending untold trillions to bail out incompetent banks, faddish mortgage borrowers, General Motors, Chrysler, AIG (AIG, Fortune 500), GMAC (GJM), and Wall Street, it should damn well bail out Social Security recipients too. But in a smart way.
Unlike the pigs feeding at Uncle Sam's trough, the people who qualify for Social Security old-age benefits -- the ones who'll benefit from the bailout -- have played by the rules and paid Social Security taxes for decades. It would be immoral to tell them, "Sorry, we have to trim your cost-of-living adjustment because we can't afford it," while expecting them to continue footing the bill for bailing out imprudent people and institutions.
Why am I talking about Social Security when health care is sucking up virtually all the oxygen in Our Nation's Capital? Because Social Security is a really big deal, providing a majority of the income for more than half the people 65 and up, and also supporting millions of disabled people and survivors of deceased workers; because the collapse of stock prices and home values makes Social Security retirement benefits far more important even to upscale baby boomers than they were during the stock market and home-price highs of a few years ago; and because the problems aren't that hard to solve if we look at Social Security realistically instead of treating it as a sacred, untouchable program (liberals) or a demonic plot to make people dependent on government (conservatives).
Finally, this is a good time to discuss Social Security because the Obama folks say it's next on the agenda, after health care. No one at the White House, Treasury, or Social Security Administration would discuss specific Social Security proposals, however.
It ought to tell you something that Peter Orszag, director of the White House Office of Management and Budget, is a noted Social Security scholar. He's co-author of an influential 2004 book, Saving Social Security: A Balanced Approach, that advocated substantial tax increases (and a few benefit trims) to preserve the program. Alas, he wouldn't tell me what he plans to propose this time around. "Health care first" was all he'd say.
Meanwhile in Congress, Rep. Steny Hoyer (D-Md.), the House majority leader, says he intends to deal with Social Security as soon as possible. But he also declined to be specific. "I've been more inclined toward a commission" than to introduce legislation, he said.
That makes this a good time -- and maybe our last chance -- to have a rational conversation about Social Security. After proposals start getting leaked and the game-playing and finger-pointing start, it won't be possible.
So I'd like to show you that Social Security has a real and growing cash problem even as its trust fund is getting bigger than ever, explain how the program really works, and -- immodest though it may seem -- propose a few simple solutions to fix it, restore it to its roots, and make its finances less incomprehensible.
Social Security's cash-flow problem
How can Social Security possibly need a bailout when by Washington rules it's "solvent" for another 26 years? To understand the problem, all you have to do is look at me. I'm the distinguished -- okay, old -- guy above and to the right, holding an ancient (but real) Social Security card that Fortune's photo mavens have doctored to display an invalid number (so don't try using it).
I'll turn 66 near the end of next year, making my wife and me eligible for full Social Security benefits. They'll be about $42,000 a year starting on Jan. 1, 2011, and are scheduled to rise as the consumer price index rises.
Social Security, which analyzed my situation at Fortune's request, values those promised (but not legally binding) benefits at a bit more than $600,000. In other words, that's how much Social Security would have to set aside today to pay benefits to my wife and me, assuming that we live out statistically average lives, and that the current benefit formula stays in place.
Even though 600 grand is a lot of money, Social Security is way ahead on my wife and me because the value of our benefits is far less than the Social Security taxes we and our employers will have paid by the end of next year, plus the interest Social Security will have earned on that money in the decades since we started working. Those taxes and interest will have totaled more than $800,000 by Dec. 31, 2010. For example, the $5.18 my employer and I paid in 1961 -- the year I got that card I'm holding -- will have grown to $140 by the end of next year.
I don't have a problem with this $600,000-to-$800,000 disparity, by the way. One of the principles of Social Security is that higher-paid folks like me -- I'll get the maximum old-age benefit because I earned the maximum Social Security-covered wage (currently $106,800 a year) for 35 years -- support the lower paid. That's as it should be, given that the Social Security tax (12.4% of covered wages, split equally between employer and employee) is regressive, far more costly as a percent of income to a $40,000-a-year person than it is to me. According to the Tax Policy Institute, five out of six U.S. workers pay more in Social Security tax (including the employer's portion) than in federal income tax -- something that makes it especially important (and only fair) to preserve the program for lower earners, who get old-age benefits of up to 90% of their covered wages, while I get only 28%.
How can my wife and I pose a problem to Social Security when our benefits are valued at $600,293, while our tax payments ($271,508 through next year) plus interest will total $804,686? Answer: because the obligation is real, but the $800,000-plus asset is illusory, consisting solely of government IOUs to itself.
Now let's step back a bit -- to 1935, actually -- to see how we got into this mess. Franklin Delano Roosevelt set up Social Security to look like an insurance company and a funded-benefit program, even though it's neither (a point, by the way, that Fortune made almost 75 years ago, in our December 1935 issue).
No, it's not a Ponzi scheme as some folks claim. A Ponzi uses money from today's investors to pay yesterday's investors and -- the key element -- lies about it. Social Security, in contrast, doesn't lie about what it is: an intergenerational social-insurance plan, with today's workers supporting their parents (and disabled and survivors) in the hope that their children will support them. It's not a pension fund. It's not an insurance company.
Social Security exists in its own world. In this world taxes are called "contributions," though they're certainly not voluntary. "Trust funds," which in the outside world connote real wealth bestowed on beneficiaries, are nothing but IOUs from one arm of the government (the Treasury) to another (the Social Security Administration). And "solvency," which in the real world means that assets are greater than liabilities, means only that the Social Security trust fund has a positive balance.
Alas, the trust fund is a mere accounting entry, albeit one with a moral and political claim on taxpayers. It's Social Security's cash flows, not its trust fund, that will determine what the system can actually pay. It's really a pay-as-you-go system, its trust fund notwithstanding.
To understand why I say that Social Security will soon need a bailout while most people say everything's fine through 2035, we have to examine the trust fund. It currently holds about $2.5 trillion of Treasury securities and is projected to grow to more than $4 trillion, even as Social Security begins to take in far less cash in taxes than it spends in benefits. For instance, in 2023 it projects a cash deficit of $234 billion. However, the trust fund will grow because it will get $245 billion of Treasury IOUs as interest -- the Treasury pays its interest tab with paper, not cash.
"The trust fund has no financial significance," says David Walker, former head of the General Accountability Office and now president of the Peterson Foundation, which advocates fiscal responsibility. "If you did [bookkeeping like] that in the private sector, you'd go to jail."
Let me show you why the Social Security trust fund isn't social or secure, has no funds, and can't be trusted, by returning to my favorite subject: myself.
The cash that Social Security has collected from my wife and me and our employers isn't sitting at Social Security. It's gone. Some went to pay benefits, some to fund the rest of the government. Since 1983, when it suffered a cash crisis, Social Security has been collecting more in taxes each year than it has paid out in benefits. It has used the excess to buy the Treasury securities that go into the trust fund, reducing the Treasury's need to raise money from investors. What happens if Social Security takes in less cash than it needs to pay benefits? Watch.
Let's say that late next year Social Security realizes that it's short the $3,486 it needs to pay my wife and me our Jan. 1, 2011, benefit. It gets that money by having the Treasury redeem $3,486 of trust fund Treasury securities. The Treasury would get the necessary cash by selling $3,486 of new Treasury securities to investors. That means that $3,486 has been moved from the national debt that the government owes itself, which almost no one cares about, to the national debt it owes investors, which almost everyone -- and certainly the bond market -- takes very seriously.
Think about this for a second. The Treasury has to borrow money to make good on the Social Security trust fund's obligations. Remember that the Treasury and Social Security are both part of the government. This example shows you that the trust fund is of no economic value to the government as a whole (which is what really matters), because the government has to borrow from private investors the money it needs to redeem the securities. It would be the same if the trust fund sold its Treasury securities directly to investors -- the government would be adding to the publicly held national debt to fund Social Security checks. See? The trust fund isn't a savings vehicle -- it's nothing but a bookkeeping entry.
If you look at the "Social Security cash flow" chart, above and to the right, you'll see that Social Security's projected annual cash-flow deficit starts small but grows quickly to 12 digits. It's like having an AIG every year, then two AIGs, then more. It's simply unsupportable.
You won't find anything like our chart in Social Security's annual trustees report -- we used information from a special online version of a table buried on page 196 of this year's 222-page report.
Social Security's "solvency" calculations -- and the insistence by the status quo supporters that there's "no problem" until 2036 because the trust fund will have assets until then -- assume that the Treasury can and will borrow the necessary money to redeem the trust fund's Treasury securities. They also assume that our children, who by then will be running the country, will allow all this money to be diverted from other needs. I sure wouldn't assume that.
This whole problem of Social Security posting huge surpluses for years, using proceeds from a regressive tax to fund the rest of the government, and then needing a Treasury bailout to pay its bills is an unanticipated consequence of the 1983 legislation that supposedly fixed Social Security.
In order to show 75 years of "solvency," as required by law -- a law that should be changed -- Congress, using the bipartisan 1983 Greenspan Commission report as political cover, raised Social Security taxes sharply, cut future benefits, and boosted the retirement age (then 65, currently 66, rising to 67). That was the first such step-up in retirement age, even though life spans have increased greatly since Social Security was founded in 1935, when someone who reached 65 really was old.
The changes transformed Social Security from an explicitly pay-as-you-go program into one that produced huge cash surpluses for years, followed by huge cash deficits. No one in authority seems to have realized that the only way to really save the temporary surpluses was to let the trust fund invest in non-Treasury debt securities, such as high-grade mortgages (yes, such things exist) or corporate bonds. That way, interest and principal repayments from homeowners and corporations would have been covering Social Security's future cash shortfalls, rather than the Treasury's having to borrow money to cover them.
This problem has been metastasizing for 25 years. Now I'll show you why the day of reckoning may finally be here, using numbers to back up my earlier assertion that Social Security could go cash-negative this year.
Just last year Social Security was projecting a cash surplus of $87 billion this year and $88 billion next year. These were to be the peak cash-generating years, followed by a cash-flow decline, followed by cash outlays exceeding inflows starting in 2017.
But in this year's Social Security trustees report, the cash flow projections for 2009 and 2010 have shrunk by almost 80%, to $19 billion and $18 billion, respectively. How did $138 billion of projected cash go missing in just one year? Stephen Goss, Social Security's chief actuary, says the major reason is that the recession has cost millions of jobs, reducing Social Security's tax income below projections.
But $18 billion is still a surplus. Why do I say Social Security could go cash-negative this year? Because unemployment is far worse than Social Security projected. It assumed that unemployment would rise gradually this year and peak at 9% in 2010. Now, of course, the rate is 9.5% and rising -- and we're still in 2009.
I'd love to be able to give you a report on Social Security's cash flow so far this year, which is more than half over. However, it's impossible to get interim numbers. So I don't know where we stand, and we probably won't find out before next spring, when the 2010 trustees report comes out.
Social Security's having negative cash flow this year would be a relatively minor economic event -- what's a few more billion when the government's already borrowing more than $1 trillion? -- but I think it would be a really important psychological, political, and journalistic event.
OMB's Peter Orszag -- remember, he's a Social Security maven -- pooh-poohed my thinking when I met with him. He says I'm wrong to harp on Social Security's near-term cash flow -- a term, by the way, that he won't use. "I think the real question of Social Security is how we bring long-term revenues in line with long-term expenses," he said, "not whether the primary surplus within Social Security turns negative within the next few years." I guess we'll see.
When you look back at numbers from previous years, as I did while reporting this article, you suddenly realize that Social Security's finances have been deteriorating for a long time. As the "2009 cash-flow projections" chart, above and to the right, shows, Social Security's cash flow (and thus its trust fund balances) has fallen well below earlier projections. Seven years ago, the projected 2009 cash flow was $115 billion, which as we've seen had fallen to $87 billion by last year and is now $19 billion. Ten years ago the trust fund was projected to be $3 trillion at the end of this year, rather than the currently projected $2.56 trillion.
In 1983 the system was projected to be "solvent" until the 2050s. This year it's only until 2036.
Social Security's Steve Goss says the major reason is that over the past two decades the wages on which Social Security collects taxes have grown more slowly than projected. He said Social Security projected them to grow at 1.5% above inflation, but they've been growing at only 1.1%. While this reduces future obligations because benefits are based on salaries, for now the below-projected salaries cut sharply into cash-flow projections.
The scariest thing, at least to me, is that even as its financials erode, Social Security is as important as ever -- maybe more so.
Let me elaborate on what I said earlier, about how older people depend heavily on Social Security. It accounts for more than half the income of 52% of married couples over 65, and 72% of that of 65-and-up singles, according to the Social Security Administration. For 20% of such couples and 41% of singles, it's more than 90% of their income.
What's more, this dependence -- which Goss says isn't projected to change -- comes despite 30 years of broadly popular self-directed retirement accounts such as 401(k)s, IRAs, 403(b)s, and such.
Why haven't those reduced dependence on Social Security? Part of the reason is that it takes a lot of money to generate serious retirement income: about $170,000 for a $1,000-a-month lifetime annuity. Inflation protection, if you can find it, is ultra-expensive. Vanguard, which offers a lifetime inflation-adjusted annuity in conjunction with -- shudder! -- an AIG insurance company called American General, quoted me a staggering price for an annuity mimicking my wife's and my Social Security benefit. Would you believe ... $774,895? Yes, that was the number.
Another problem is that the stock market has been stinko, the post-March rally notwithstanding. Stocks are below their level of April 2000, when the great bull market (August 1982 to March 2000) ended. It's hard to make money in stocks when they've been down for nine years. The Employee Benefit Research Institute estimates that the average retirement account balance of people 65 to 74 was about $266,000 in 2007 but had fallen to about $217,000 as of mid-June.
Then there's the problem of lost home equity. According to a study conducted for Fortune by the Center for Economic and Policy Research, people in the lower-income to upper-middle-income ranges have lost a far greater proportion of their net worth as a result of the housing bust than the most wealthy people have.
The bottom line is that many older people who felt reasonably well-fixed for retirement a few years ago now need Social Security more than ever. That makes it even more important to come up with a way to sustain it and to show our children a realistic plan to give them benefits, rather than to rely on the trust fund and the supposed political clout of the geezer and the approaching-geezerhood classes to keep benefits flowing when cash flow goes negative.
Solutions
So how do we fix these problems? Let me divide it into three categories: what to do, what to change, and -- this is crucial -- what not to do.
What to do
Many of the old standbys: raising the "covered wage" limit, but not to outrageous levels; tweaking the benefit formulas so that high-end people like me get a little less bang for the buck; modifying cost-of-living increases for us high-end types; and most important, raising the retirement age to 70, with a special "disability" earlier-retirement provision for manual laborers, who can't be expected to work that long.
What to change
The law requiring 75-year solvency. It's hard to predict what will happen 75 days from now, let alone 75 years from now. But the obsession with 75-year solvency and the status of the trust fund has obscured what's really going on in Social Security.
This requirement forces Social Security's actuaries --who are among the best and smartest public servants I know -- to make all sorts of impossible projections, such as the one we show, above and to the right, about how many beneficiaries we'll have per worker decades from now.
As we've seen, even one faulty projection -- such as overestimating wage growth -- can cause substantial problems. Would you bet your life on the beneficiary-to-worker ratio, given the rising pressures for people to work longer? I sure wouldn't.
The trust fund. Before the Greenspan Commission-related changes in 1983, the trust fund was a checking account. The workings of Social Security post-1983 have turned it into something it was never intended to be: an investment account. Let's gradually draw down the trust fund by having the Treasury redeem $100 billion or so annually (less than the current interest the fund earns) by giving the fund cash rather than Treasury IOUs, gradually increasing the redemptions. That will let the fund buy assets that will be useful when serious cash-flow deficits hit -- things like high-grade mortgage securities and high-grade bonds.
That way we'll be bailing out Social Security a bit at a time, which is realistic, rather than in huge chunks, which isn't. Combine that with the lower costs and higher revenues we've mentioned, and today's kids could see there really is a way they'll get benefits when they attain geezerhood. They'll be looking at what will have become a pay-as-you-go system with a checking-account-size trust fund. That would give any numerate person more confidence in Social Security's future than the current system does.
What not to do
Depend on taxing "the rich." One of the solutions you hear in Washington is restoring "covered wage" levels to the good old Greenspan Commission days, when 90% of wages were subject to Social Security tax, compared with 83% now. Sounds simple and fair, doesn't it? However, that would increase the Social Security wage base to about $170,000 from the current $106,800, according to Andrew Biggs of the American Enterprise Institute -- at 12.4%, a huge new tax to middle-class workers. (And yes, that's middle-class income, not rich-person income, in large parts of the country, including much of the East and West coasts.)
During the presidential campaign, President Obama proposed (and then dropped) a plan to leave the Social Security wage cap where it is but to apply the 12.4% Social Security tax to all wages above $250,000. That -- like the 90%-level-of-income idea -- would be an enormous new tax that would greatly weaken support for Social Security among higher-income people. I'm not saying "rich people," because truly rich people generally have huge amounts of investment income, which isn't subject to Social Security tax.
Don't means-test benefits. It's already being done. We'd be making a terrible mistake to means-test Social Security by saying that people above a certain income level can't get it. That would violate the current social compact that everyone pays Social Security taxes and everyone gets something. It would turn Social Security from an earned benefit into a flat-out welfare program. Remember what happened to welfare when Bill Clinton was in office? Imagine what would happen to a welfare Social Security program the next time we have a conservative administration and a conservative Congress.
Besides, Social Security is already means-tested, indirectly. That's because if you have enough non-Social Security income -- about $23,000 a year in my case -- you pay federal income tax on 85% of your benefit.
Given the three pensions I stand to collect from previous employers, I'm reasonably sure to hit that level. So, for the final time, let's go through the numbers on me. If my wife and I are in the 28% federal tax bracket when we start collecting benefits, we'll be giving almost a quarter of our benefit right back to Social Security (0.28 x 0.85).
It would also mean that the $600,000 benefit I talked about earlier would cost Social Security only about $450,000 -- just 55% or so of the $800,000-plus value of our taxes.
I don't mind that big haircut -- but I'd be furious if the government decided to just confiscate all the money my wife and I put into Social Security over the decades by saying we were "rich" and had no right to any benefits. And I wouldn't be alone.
Given the way health care has bogged down, Social Security may not make it onto the agenda until next year. But it's going to show up sooner or later, probably sooner, because the numbers are so bad that something's going to have to be done. As I hope I've shown you, we're going to have to bail out Social Security or else risk hurting a lot of low-income older people or putting the whole program's future at risk by gouging and alienating upper-income Social Security sympathizers like me.
So let's fix this, already. By the numbers. And by the right numbers, not fantasy ones.
It's official: You own a piece of Citi
Citigroup has converted a big chunk of the government's stake into common stock, meaning that taxpayers now have a 34% stake in the banking giant...David Ellis
http://money.cnn.com/2009/07/30/news/companies/citigroup_stake/
index.htm?postversion=2009073011
NEW YORK (CNNMoney.com) -- You now own a big piece of troubled bank Citigroup.
Although some housekeeping issues remain, Citigroup effectively completed its long-awaited plan to turn preferred shares owned by the government into common stock Thursday. That gives U.S. taxpayers a 34% stake in one of the world's largest financial institutions.
The New York City-based bank said Thursday that it converted a $25 billion preferred share stake the government acquired as part of rescue efforts for the firm taken earlier this year and last fall into common shares.
Facing concerns about its underlying health and ability to endure future losses, Citigroup (C, Fortune 500) agreed to the deal with the Treasury Department in late February.
By converting preferred shares into common stock, regulators hope to boost Citigroup's level of tangible common equity, a widely watched measure of a bank's ability to withstand losses.
Part of the agreement included the option for other preferred share investors to convert their holdings into common shares as well. About $58 billion worth of preferred and trust preferred securities have been exchanged to common stock as result of the exchange offer, according to the company.
Citigroup has earned a reputation as one of the nation's most troubled financial institutions. From the time the credit markets began to unravel in late 2007 up until the end of last year, the company lost more than $28 billion.
The bank's problems subsequently led the government to take a $45 billion stake in Citigroup to help stabilize the bank.
Following the conversion, the government will still own $20 billion in preferred shares on which it is earning an 8% dividend. Although the remaining amount could be converted if Treasury determines more assistance is needed, Citigroup officials have maintained that the company's position is quite secure.
"Following completion of the exchange offers, Citi will be among the best capitalized banks in the world," Citigroup CEO Vikram Pandit said in a statement about the exchange offer in June.
When the government first announced the stock conversion plans, there were fears about just how far the government would become involved in Citi's day-to-day operations, perhaps going so far as nationalize the company.
While regulators have stopped short of running the company, many of the recent changes among senior management and to the bank's board are widely believed to have been a result of government pressure.
And as one of the companies that has received extensive aid from the U.S. government, compensation packages for its highest-paid employees are now subject to scrutiny from the White House.
Still, conditions at the company appear to be less dire as of late thanks to signs that the U.S. economy may have hit bottom. Last quarter, the company reported a second-quarter profit of $4.3 billion, although its results were helped by its sale of its Smith Barney wealth management division to Morgan Stanley (MS, Fortune 500).
 
7-30-09
Meetings
8-3-09 Merced City Council/Redevelopment Agency meeting...7:00 p.m.
http://www.cityofmerced.org/civica/filebank/blobdload.asp?BlobID=7680
 
8-4-09 Merced County Board of Supervisors meeting...10:00 a.m.
http://www.co.merced.ca.us/CurrentEvents.aspx?EID=321
Agenda posted 72 Hours Prior To Meeting
 
8-5-09 Merced City Planning Commission meeting...7:00 p.m.
http://www.cityofmerced.org/depts/cityclerk/boards_n_commissions/
planning_commission/2009_planning_commission/2009_planning_
commission_agendas.asp
Agendas are posted the Monday before a Wednesday Planning Commission Meeting.
 
MCAG meetings
8-6-09 Technical Planning Committee meeting...10:00 a.m.
http://www.mcagov.org/tpc.htm
8-7-09 Citizens Advisory Committee meeting...8:30 a.m.
http://www.mcagov.org/cac.html