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Roy Romanow

Terry Alm Drive

In case you missed the amateur hour that was Saskatoon City Council, you missed the passionate debate over whether or not Mayor Donald Atchison should be able to name streets, parks, and bridges.   Here is what Ward 6 Councillor Charlie Clark had to say about it in his email newsletter.

City Council will receive a report with a few minor amendments suggested to the Naming Process.  Recent debates have raised the prospect of a more significant amendment to the process.  I would like the process to be changed so that the actual designation of names to parks and streets is not done solely by the Mayor.  Saskatoon is the only City in Canada that grants this power to the Mayor alone, and I believe it is time to change this. 

For me the issue is not out of concern with any specific names that have been applied in the City.  There are two main reasons. 

First having a single elected official hold naming power opens the process up to political influence, rewarding friends or campaign donors. This is not about Mayor Atchison specifically, but a question of good governance and creating policies that mitigate this potential. 

Secondly – there have been hundreds of names applied in recent years to streets and parks in the City, as we add on new neighbourhoods.  These names form the identity of our neighbourhoods and the City as a whole.  The responsibility for establishing this story for our community should not be the purview of one individual.  Ideally this is the kind of work that would have the input of people with historical knowledge and understanding of our community from several perspectives – to help ensure that as we make our mark on these communities with names that they capture a breadth of the history and identity of the City.  

There is a tremendous opportunity to develop a thoughtful process to ensure that these streets and parks capture the essence of who we are as a community and where we came from.  Right now the process relies on the public or property developers to bring forward names, a Committee made up of politicians and City staff determines whether a name can go on the “Names Master List” and then the Mayor picks the ones he wants to use. 

I think it makes sense to have a committee that has a mixture of elected people and the public on it to be part of the approval and application of names.  I also think that it would be worthwhile to engage our City Archivist and other historians to look at our Names Master List and identify which communities are being missed and a way to ensure that these get represented. 

Yes you read it right, Clark used the term, “tremendous opportunity” to describing a process that involved naming street names.  I don’t know what to say either except that its probable that Clark gets excited over governance things that I do not.

Whether or not you agree or disagree with this is irrelevant.  In my opinion it is a shame that we don’t have streets that honour Henry Dayday, Roy Romanow, Lorne Calvert, and even Grant Devine.  Heck I am all for an entire neighbourhood that uses names of former premiers. (austere houses are on Romanow Avenue while over mortgaged houses are on Devine Lane)

What does surprise me is that if council wanted to move on this, they should have done one thing really well.  They needed to have counted the votes for and against before the council meeting started and they never did that.  If they did do that and someone changed their mind (which it sounds like happened), that is politics but somewhere along the way, you need to know that stuff or you look like idiots.  So after some attacked and defended the mayor and in many ways made it personal, it was time to vote which was a five-five tie so the motion failed, the status quo continues and you look really small minded and petty.  Oh right, you have also just attacked the mayor (or one of the few perks the mayor has) and now you are left with nothing to show for it.  Well except with an even more divided city council.

Of all of the issues facing the city, fighting over who gets to name streets isn’t high on my list of things that need to be done.

The Road to Patriation

The Road to Patriation by Robert Duncan

This feature documentary retraces the century of haggling by successive federal and provincial governments to agree on a formula to bring home the Canadian Constitution from England. This film concentrates on the politicking and lobbying that finally led to its patriation in 1982. Five prime ministers had failed before Prime Minister Pierre Elliott Trudeau took up the challenge in the early 1970s. Principal players in this documentary are federal Minister of Justice Jean Chrétien, Prime Minister Trudeau, 10 provincial premiers and a host of journalists, politicians, lawyers, and diplomats on both sides of the Atlantic.

This was an incredible documentary to watch.  One of the best things I have seen in the last couple of years.

Grant Devine 2.0?

It’s really odd to hear Alison Redford use the same rhetoric in Alberta that Grant Devine did in Saskatchewan during the late 80s.

In a series of interviews following her televised address to the province Thursday night, Redford said that she wanted Albertans to understand that the province should no longer rely on its resource wealth to balance its books, pointing to a $6-billion “bitumen bubble” that will cut the province’s anticipated resource revenue almost by half in 2013-14 fiscal year.

“We can no longer continue to rely on oil and gas for 30 per cent of our revenue,” Redford said Friday. “It’s a fundamental change. It’s the sort of thing a province has to deal with, I think, once in a generation, and this is our opportunity to do it this year.”

The provincial government has received plenty of advice in recent years urging it to wean itself off a practice of using resource royalties to balance its books.

The Premier’s Council for Economic Strategy, a panel of experts established by Premier Ed Stelmach, tabled a report in May 2011 that asked Alberta to divert non-renewable resource revenue instead into a new “shaping the future” fund dedicated to helping diversify the province’s economy.

The council’s chairman, former federal cabinet minister David Emerson, said Friday it sounds like Redford is looking to make that kind of shift.

“She’s looking at establishing a new fiscal regime and that’s essentially what the premier’s economic strategy council was calling for: To stop treating non-renewable resource revenues as a form of operating revenue to be spent on, in effect, buying the groceries and to become more strategic separating natural resource assets,” Emerson said.

“If that’s the case, my congratulations,” he said.

But while Redford said Friday that a “different” budget will be forthcoming, she also said will not be a disruptive document. The government has already sent some signals about what some of those changes might look like, she said, pointing to the government’s plans to borrow to fully twin a 240-kilometre stretch of Highway 63.

“The Highway 63 announcement signalled to people that we’re going to think differently about long-term infrastructure plans,” Redford told The Canadian Press. “We’re going to finance that differently. We’re prepared to go out to capital markets and to really put out stellar fiscal reputation out there and ask people to invest in our province in some of our public infrastructure.”

As of right now, however, Redford said tax reform is not part of that financial restructuring.

Right now it looks like a lot of talk without the deep cuts and probably tax increases needed to bring the budget back in line.  

Mount Royal University political scientist Keith Brownsey said Redford needed to make a case for a fiscal crisis in her televised speech. She did that in a reasoned, effective manner, he said.

Such a statement was needed, he said, because Albertans thought financial problems were something that were a thing of the past because of its resource wealth.

“I think she prepped us for both cuts and tax increases,” Brownsey said. “Now, she may not have said that today, she may have said, ‘No taxes,’ but the current revenue structure in the province is unsustainable. We cannot exist as a modern industrial state living off of revenues from non-renewable natural resources. It’s simply too volatile.”

The truth is that Alberta spends money like no other province in the confederation.  Even during the Klein crisis, they spent more money than everyone else.  People talk of the deep cuts he made but ignore the fact that in Saskatchewan, the NDP made even deeper cuts (and had to raise taxes).  Whatever the solution is that it should be a combination of taxes and spending cuts and it is going to take a bit of time.  

I have no doubt that Redford is serious about making cuts (and who knows, she may even raise taxes) but when the oil prices go up, will they stay the course and remake the economy, especially when the opposition will be calling for restored spending and tax cuts (it’s always going to be like that).  I really hope she sticks with it because the oil and natural gas won’t be there forever.  I know the oil sands are a massive reserve but not all of that is recoverable and there is a point where it gets more too expensive to go after it.

If her hero Peter Lougheed brought in Alberta 2.0, then Alison Redford will need to be the one to bring in Alberta 3.0.  I hope it’s more than Devine era rhetoric.

My vote | 2011

After posting what I believed to be a fair and balanced explanation of who I was voting for last year, I learned that there was no way you could announce and explain how you vote without alienating those on the other side.  Voting always has been and probably always will be (for those of us who actually vote) a personal thing that upsets those that see the world differently.   So a wise person would keep it quiet but I am going to keep up the practice of explaining who I am voting for and why.  As always, the comments are open for a rebuttal or even a good rebuke.

As most of you know, I grew up Progressive Conservative.  My first campaign I helped out on way Hon. Ray Meiklejohn’s 1986 campaign for what was then called Saskatoon Mayfair (old massive riding that was Saskatoon Northwest, Meewasin, and part of Saskatoon Massey Place).  I was twelve.  I later ran in Saskatoon Riversdale in 1995 where I narrowly (by 3000 or so votes) lost to Roy Romanow.  If he wasn’t Premier, beloved in the riding, accomplished, a better politician, well financed and far more popular than I was, I would have taken him.

In 2003 I was planning to throw my vote away and vote Saskatchewan Party (they have never run hard in the riding) when Hon. Eric Cline came to my door late one evening while campaigning.  I was his last house to door knock on and he was ahead of schedule so when I asked him some questions, he got all animated and passionate at the door and we had a good discussion about provincial policy, politics, and even some NDP politics.  It was a good enough discussion that I decided to vote NDP for the first time in my life (although I did have second thoughts while heading into the voting booth)

In 2006 or 2007, I think Linsay Martens emailed or Facebooked about Cam Broten’s campaign and asked me to check out his website and consider supporting him.  I checked out the website and I knew Cam would win but I was busy helping out with Ken Cheveldayoff’s campaign.  I don’t think I met Cam that campaign but while helping to elect a Saskatchewan Party candidate, we did vote for Cam in Saskatoon Massey Place as I thought Cam would be a good MLA and I have always been a firm believer in the need for a strong opposition.

Cam won by around 60% of the vote and I ran into him at the Community Christmas dinner for the Salvation Army and we had a good chat.  I think Cam was the first Saskatchewan politician to embrace Twitter (@cambroten) and we connected online.  Over the last couple of years I have found him easy to work with, tremendously helpful when I needed some help or a question answered and often would refer me to another MLA when I was ranting about something or had a question on Twitter.  To be honest he kind of raised my expectations for how approachable a MLA could and should be.

In the Legislature, he went toe to toe with Hon. Rob Norris and held the government accountable for a debacle over the Carlton Trail college mergers.  He didn’t score any cheap political points during those debates and I felt brought some restraint to a debate that could have gone ridiculously partisan.  While Cam is obviously partisan as a NDP MLA, we can talk about issues we disagree on.  This is a quality that not all elected officials have.

Voting NDP is not first nature for me.  I tried to like rent control and look how that turned out.  I can’t agree with a potash royalty rate review because I hate the idea of a government reneging on it’s word (a NDP government at that) with a royalty rate that was just signed.  I really like the Bright Future’s Fund but that idea was lifted from the Saskatchewan Liberals.  On top of that, I really like the Saskatchewan Party’s SAID program and I think overall, the Wall government deserves another four years.

Re-Elect Cam BrotenDespite the fact that the NDP seem to be struggling in the polls, I am going to vote for Cam Broten.  I still believe MLAs matter and Cam does an excellent job.  An effective government needs and effective opposition and Cam has shown that he can help hold them accountable in the Legislature, the media, and online.  As a resident of the riding, the issues I have, he experiences as well.  In addition to living in the riding, he is a tireless campaigner; talking to neighbours and constituents online, on the doorstep, and through his involvement in community events.  There were many days over the last four years in the freezing cold or blazing heat that his Twitter feed said, “knocking doors in ___________”. 

His first four years were excellent and he deserves another four.  The voters in Planet S magazine agree with me (they named him the best MLA two years in a row).  I have high expectations for my elected officials.  Not many have met them over the years but Cam has exceeded them.

What went wrong for the Saskatchewan NDP?

The view from Calgary (and the Toronto Star)

“The NDP grassroots won’t even go door knocking anymore . . . the party only appeals to the mushy middle,” says Mitch Diamantopoulos, head of the journalism school at the University of Regina, a longtime activist and observer of Saskatchewan politics.

For Diamantopoulos, the problems began in the 1990s when then premier Roy Romanow swung the party to the right. “Saskatchewan shifted away from a cooperative, public enterprise approach and as a result a lot of longtime NDPers lost their enthusiasm for the party.”

At the same time, farmers were giving up on agriculture and moving to Saskatoon or Regina. As the province became urbanized, the NDP lost its traditional rural base.

In many ways, 62-year-old Lingenfelter personifies the confusion about what the party really stands for. He grew up in southwestern Saskatchewan on a large family farm. First elected as an NDP MLA in 1978, Lingenfelter managed to survive the near sweep by the Progressive Conservatives in 1982 and served as opposition house leader.

When the NDP was returned to power, he became a cabinet minister and eventually deputy premier and was seen as a likely successor to Romanow.

But in 2000 Lingenfelter abruptly resigned and accepted a senior position with an oilpatch heavyweight, Calgary-based Nexen Inc.

Not surprisingly, Lingenfelter became something of a trophy head in corporate Calgary — the former NDP cabinet minister who had joined the fold. So much so that in 2002 when a group of Calgary businessmen and politicians organized a fundraiser for the Saskatchewan Party at the Petroleum Club, Lingenfelter attended on behalf of Nexen and when introduced was given a special round of applause.

There are four things that I see going on in this election.  I am not an NDP insider or supporter although I have a good working relationship with many of them.  The first is Brad Wall.  He just hasn’t screwed up that many things.  If the old line is true that governments are so much elected but rather defeat themselves, the Saskatchewan Party haven’t made that many mistakes which makes it really hard to gain any traction against them.  Along with that is that I think the NDP elected Lingenfelter because they thought Wall would be a one term wonder and they would be back in power this election.  The choice of Lingenfelter as leader was an odd one because it was a return to the past, a past that Saskatchewan voters had just soundly rejected in 2007.

Next up is that I don’t think the NDP are any good in raising money.  NDP candidates are sharing campaign offices in ridings they should be competitive in the cities.  During the drive out to Arlington Beach, we drive through Watrous, Nokomis, and then from there we went to Regina through Craven and Lumsden.  We only saw one NDP sign the entire three hour drive.  One sign.  Even if they were not getting any traction with voters, you would have expected to see signs in the ditches and other public spaces.  There were none.  Meanwhile there was a lot of Saskatchewan Party signs (all on public land) but even in traditional NDP ridings in Regina.  What does it mean?  Signs cost money and I don’t see any of that in rural ridings.  I am assuming that the reason that Judy Junor is using office space downtown rather than in our her (hotly contested) riding is money as well.  This isn’t a couple of blocks outside her riding but is across the river from her riding.  C’mon.

You can blame that on the leader but raising money is also backend process that involves cultivating thousands of relationships and then understanding what buttons to push to get them to cough up $20 or $100 when you need it.  The federal Conservatives are masters of this and have been going back to the PC Canada Fund.  Whether it is direct mail or email, the NDP need to find a better way to cultivate, understand, and benefit from those relationships because the Saskatchewan Party can outspend them anytime in the election cycle.

Thirdly, the NDP are terrible users of new media.  Look at the video the Saskatchewan Party has produced versus the media the NDP are putting out.  Look at how Brad Wall is using Twitter vs. how Dwain Lingenfelter uses Twitter.  Why do I care how Link uses Twitter?  Social media allows voters to connect to a leader and if you are just posting links to some photos posted to Facebook and never send an @ reply, you aren’t connecting.  Wall understands that, Link doesn’t.  Not connecting to voters isn’t always fatal (like Stephen Harper) but it normally is (Elwin Hermanson, Michael Ignatieff, Stephane Dion).  Link didn’t connect to anyone online.

Finally, as much as Ryan Bater needs to win his seat in North Battleford, the NDP need him to win even more.  The NDP don’t do well against the unified right in Saskatchewan, they never have.  Brad Wall, Grant Devine, Ross Thatcher… when a third party (whether it be the PCs or the Libs) get 15% of the vote, the NDP win.  When they don’t, the NDP lose.  Their votes doesn’t grow enough to beat back the centre right challenger (for a contemporary example see Frank Quennel who is about to lose to Roger Parent in Saskatoon Meewasin).  It is why I was so surprised that the NDP didn’t want Ryan Bater in the debate.  A collapse in the Liberal vote benefits the Saskatchewan Party and no one else.  If I am the NDP I am hoping and praying that Bater wins, even at the expense of their own seat for the long term prospects of the party.

I don’t believe that the NDP are staying home and off the doorsteps because of what Roy Romanow did, I think there are elections that you win and some that you lose and this is one that the NDP are going to lose.   Wall’s performance is out of their control but if they don’t get the other three things solved, they are facing an uphill battle no matter what happens and no matter who the leader is.

Brian Topp

Last week I got an invitation from Pat Atkinson to meet NDP leadership candidate Brian Topp at Amigo’s Cantina last night.  I have always been fascinated by NDP leadership races, partly because they make absolutely no sense to me and I never know what is going to happen on the convention floor.  (yeah I just admitted that I watch leadership conventions for a hobby)

Brian ToppSince Topp was speaking to a partisan NDP crowd (I was on the only non-New Democrat there) I won’t go into the details but here are some observations.

  • Topp can give a good speech to a small group of people.  I don’t know if he will be electrifying in a convention hall or if he can do it in the House of Commons but I was impressed by his speech last night.  He was humble while articulated why he wants to become both NDP leader and Prime Minister of Canada.
  • I expected him to know his policy but I was impressed by how quickly and clearly he articulated it.  He was sharp in the Q & A.  I didn’t ask him any questions as I am not a card carrying NDP and the questions I would have asked him would have probably upset some people there and would have put him in an awkward position.  It wasn’t the place or time.
  • Topp classily distances himself from Layton and was open in giving permission to look at other leadership candidates.  He pointed out that he was not Jack’s heir apparent and that Jack wanted others to run for leadership as well. 
  • Topp reminded me a lot of both Ed Broadbent and Roy Romanow.  If you are an NDP leadership candidate, this is a good thing.
  • I know it’s early but there wasn’t any campaign material left by him and I find that his website is quite devoid of content and compelling reasons to vote for him.  While I found him last night to have a compelling story and a pretty good vision of the country, his website doesn’t communicate any of that. 
  • I wonder if he ever wakes up and looks at a selection of orange-ish ties and realizes, “I’ll be wearing a tie with orange in it for the rest of my life.”  For me, that would be enough to discourage me from ever running for NDP leader.
  • In light of this post by Wendy, I will point out that it was not a Sunday, I don’t think Topp is a Baptist, and there was not a single inappropriate joke told which means my grandfather could vote for him.
  • Unlike my previous attempts to chill out with a party leader, this one went really well.  Pat Atkinson had a nice crowd out and it was nice to chat with Nettie Wiebe for a couple of minutes.

In the end he has a really, really tough job ahead of him.  He spoke of forming government but even holding on to the seats the NDP have in Quebec is going to be tough without functioning constituency organizations and has less then 1700 members in Quebec.  While the road ahead is tough in Quebec, the NDP has stalled in it’s traditional heartland of the prairies.  Many blame electoral boundaries but the NDP message does not resonate in rural Saskatchewan, Alberta, or Manitoba like it used to.  Topp will have to change that if he hopes on growing the federal party out west.

Will he become Prime Minister?  Too early to tell and a lot can change over the next three years but more than any other NDP candidate on the horizon, I think he gives them their best shot.  It will be interesting to watch.

Cutting our own wrists

Back in 2005 I saw a link to a review of Jared Diamond’s book Collapse on the New Yorker website. Malcolm Gladwell was telling the story of Norse settlers coming to Greenland a millennium ago and I found the story fascinating. Even to the Norse, Greenland was not a place that one would want to inhabit but on the southwest corner there are some Fjords that looked a lot like southern Norway and was a perfect place to settle so they got off the boats and set out to tame the land. For four hundred and fifty years they built two settlements, churches, traded with Europe and possibly even had a section of prime downtown real estate they couldn’t develop. They hunted seal, caribou and raised livestock and pets. Life was good and then one day it was all over. What happened?

Diamond’s book is full of stories of societal collapse. Easter Island, Mayans, and even the genocide in Rwanda but the Norse on is the one that I keep re-reading. Partly because I am part Norwegian but partly because I keep seeing those settlement’s demise being played out again and again today.

What happened in Greenland is what happened in most of the societies that Diamond looks at. The ecosystem was too fragile to support the population. The trees were chopped down for fuel, the soil erodes, the crops fail and society has to leave or ends up dying. He tells essentially the same story over and over again. Greenland wasn’t as green as the Norse thought it was and the same thing happened to them.

What is so odd about this chapter is that within feet of their shore is some of the best fishing grounds in the world. Diamond describes running into a tourist who had caught two Arctic Char with her bare hands so why did they not fish. For years archeologists have looked for the fish bones and no one has ever found them. They found tons of trash fully of garbage and livestock bones. When the pastures couldn’t support the cattle, the Norse ate the cattle, then their young (right down to the hoofs), and even their pets while ignoring a massive food supply right that was within feet of them. You could argue that maybe the Norse didn’t know any better but there was Inuit there but the Norse looked down at the Inuit and their hunting practices that probably would have saved their lives.

What does this have to do with today? Until last week I wasn’t that preoccupied with the U.S. debt ceiling. To be honest I was much more preoccupied with the NFL lockout. It never occurred to me that American politicians would allow the U.S. government to default on its debt. As the rhetoric flew in Washington, I realized it all sounded familiar. This isn’t about economics; this is about the survival of ideologies and political parties. In the same way the Norse wouldn’t fish, intermarry with the Inuit or even copy their ways of life because they were ranchers and because of cultural status, Republicans can’t make a deal because they can’t be seen raising taxes or Democrats can’t been seen cutting Social Security or Medicare. Michele Bachmann can’t compromise because that would alienate the Tea Party. John Boehner can’t compromise because then he looks weak. Obama can’t compromise or he’ll upset his base. They may push the United States into another recession but they won’t have compromised on their values.  It’s a pile of crap and the rest of the world in this case pays for it.

This is what bothers me about ideological arguments, they ignore the cost to people along the way.  Real leaders are not ideologues.  They are pragmatists who are capable of making hard decisions that go against their base.  In Saskatchewan how popular do you think it was for the NDP when they closed rural hospitals or cut the public sector in their efforts to reign in the Saskatchewan deficit?  In Alberta during the same time Ralph Klein instituted user fees on healthcare.  How popular were the Chretien budget cuts and austerity of the 1990s with Liberals.  So much for the short term vision of a just society.  While the Saskatchewan Party says it is a party of free market principles, they dug in (with the support of the NDP) to help save PotashCorp (an American company that for some reason we could not handle being taken over by an Australian company because that would be wrong for some reason).  Leaders decide to go fishing from time to time.  They also know they need to raise taxes to pay for a war in Afghanistan and Iraq, no matter what it does to their presidential aspirations or how much it hurts their base.

So why didn’t the Norse settlements eat Arctic Char (apparently it’s quite tasty, similar to rainbow trout)?  Because they were so concerned with the survival of their northern European culture, a culture of churches, cattle, and trade that they never could see there was an alternative way to act.  Why is the United States about to walk into financial Armageddon because Republican’s don’t raise taxes and Democrats don’t cut entitlements and they are both too stupid to realize that this polarization can’t continue.

As Gladwell points out,

The lesson of "Collapse" is that societies, as often as not, aren’t murdered. They commit suicide: they slit their wrists and then, in the course of many decades, stand by passively and watch themselves bleed to death.

I think I see blood on the floor.

Talking Jack

I have never been a big fan of NDP leader Jack Layton but this week just seemed to sum it all up.  Every time I flipped on the news, there was Jack talking up a storm about Stephen Harper’s secret agenda in changing the name of Indian and Northern Affairs to the more politically correct Aboriginal Affairs.  The other highlight of the week was Jack talking about breaking up Canada with a plurality of one vote.  Everyone from Stephane Dion to Rex Murphy had fun with that one and the weird part of it is, the Supreme Court has already ruled that it needed a clear majority for separation to take place.  As Dion pointed out

In its opinion on the secession of Quebec, the Supreme Court of Canada mentioned the words "clear majority" at least 13 times and also referred to "the strength of a majority." However, the Court does not encourage us to try setting the threshold of this clear majority in advance: "it will be for the political actors to determine what constitutes ‘a clear majority on a clear question’ in the circumstances under which a future referendum vote may be taken."

I kind of liked Michael Ignatieff but shortly after he promised to bring down the government (which he could not do at that time), when he would come on television and in print all of the time, I found myself saying, “just shut up already”.  It wasn’t that I found him particularly offensive, in fact some of what he was saying was correct, it was just that I was tired of politics already.  That is how I feel right now about Jack Layton.  I just want him to shut up already.  The parliament isn’t in session, I don’t hear a lot from Harper politically and I would love to hear a different tone and just less of Jack Layton.  If he doesn’t, I think a lot of more people than myself will grow tired of him.

There were times when Chretien, Romanow, Wall, and Harper were in opposition when you just never heard from them for short periods of time.  Even Lingenfelter does a good job of dropping off he radar from time to time because I think they know that all of us have other things to worry about (Saskatchewan Roughriders, Stanley Cup playoffs, how large to build my deck at the cabin) that don’t need any political intervention.  Hopefully Jack Layton learns this lesson if for nothing else; the benefit of my summer, unless he wants to help me with my deck.

The Shape of Things To Come

60 Minutes had a feature on the budget crisis’ that are happening at the state level.  Stay with me on this one.

"The most alarming thing about the state issue is the level of complacency," Meredith Whitney, one of the most respected financial analysts on Wall Street and one of the most influential women in American business, told correspondent Steve Kroft

Whitney made her reputation by warning that the big banks were in big trouble long before the 2008 collapse. Now, she’s warning about a financial meltdown in state and local governments.

"It has tentacles as wide as anything I’ve seen. I think next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy," she told Kroft.

Asked why people aren’t paying attention, Whitney said, "’Cause they don’t pay attention until they have to."

Whitney says it’s time to start.

California, which faces a $19 billion budget deficit next year, has a credit rating approaching junk status. It now spends more money on public employee pensions than it does on the state university system, which had to increase its tuition by 32 percent.

Arizona is so desperate it sold off the state capitol, Supreme Court building and legislative chambers to a group of investors and now leases the buildings from their new owner. The state also eliminated Medicaid funding for most organ transplants.

Then there’s New Jersey. It has the highest taxes in the country, a $10 billion deficit and a depressed economy when first-year Governor Chris Christie took office. But after looking at the books, he decided to walk away from a long-planned and much-needed project with New York and the federal government to build a rail tunnel into Manhattan. It would have helped the economy and given employment to 6,000 construction workers.

Gov. Christie acknowledged that’s a lot of jobs. "I cancelled it. I mean, listen, the bottom line is I don’t have the money. And you know what? I can’t pay people for those jobs if I don’t have the money to pay them. Where am I getting the money? I don’t have it. I literally don’t have it."
Asked if this is going on all over the country, Christie told Kroft, "Yes. Of course it is. It’s not like you can avoid it forever, ’cause it’s here now. And we all know it’s here. And the federal government doesn’t have the money to paper over it anymore, either, for the states. The day of reckoning has arrived. That’s it. And it’s gonna arrive everywhere. Timing will vary a little bit, depending upon which state you’re in, but it’s comin’."

And nowhere has the reckoning been as bad as it is in Illinois, a state that spends twice much as it collects in taxes and is unable to pay its bills.

"This is the state of affairs in Illinois. Is not pretty," Illinois state Comptroller Dan Hynes told Kroft.

Hynes is the state’s paymaster. He currently has about $5 billion in outstanding bills in his office and not enough money in the state’s coffers to pay them. He says they’re six months behind.

"How many people do you have clamoring for money?" Kroft asked.

"It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state," Hynes said.
Asked how these people are getting by considering they’re not getting paid by the state, Hynes said, "Well, that’s the tragedy. People borrow money. They borrow in order to get by until the state pays them."

"They’re subsidizing the state. They’re giving the state a float," Kroft remarked.

"Exactly," Hynes agreed.

"And who do you owe that money to?" Kroft asked.

"Pretty much anybody who has any interaction with state government, we owe money to," Hynes said.

That would include everyone from the University of Illinois, which is owed $400 million, to small businessmen like Mayur Shah, who owns a pharmacy in Chicago and has been waiting months for $200,000 in Medicaid payments. Then there are the 2,000 not-for-profit organizations that are owed a billion dollars by the state.

Lutheran Social Services of Illinois has been around since 1867 and provides critical services to 70,000 people, mostly the elderly, the disabled, and the mentally ill. The state owed them $9 million just before Thanksgiving, and they nearly had to close up shop.

Asked how long his organization can go on like this, Rev. Denver Bitner, the president of Lutheran Social Services of Illinois, told Kroft, "Well, we wonder that too because we really don’t know."

He says they were forced to tap their entire line of credit and all their cash reserves before the state would finally pay them as a hardship case.
"It has to be that you’ve sold off all your assets, you have borrowed from everybody that you can borrow from, and then, we’ll think about it," Rev. Bitner explained.

And according to Bitner, that’s even though the state owes his organization the money.

"The first words out of my mouth are usually an apology, because they have been you know put in this situation, that is really unacceptable. And you know there is very little I can do or say other than apologize," Comptroller Dan Hynes said.

It’s not just the social safety net that Hynes has to worry about: there have been Illinois legislators that have been evicted from their offices because the state didn’t pay their rent, and stories about state troopers being turned away from gas stations because the owners refused to take their state credit cards.

"The state’s a deadbeat," Kroft remarked.

"Yeah. I mean, the state of Illinois is known as a deadbeat state. This is a reputation that has taken us years to earn and we’ve reached, you know, the heights of, I think, becoming the worst in the country," Hynes said.

In the early 1990s, Saskatchewan was on the verge of bankruptcy because the Grant Devine governments of 1982-1991 would not curb government spending and the deficit for a province under a million people grew to over one billion dollars.  The incoming NDP government of Roy Romanow was more pragmatist than idealistic and spent almost a decade trying to get the province on solid financial footings.  That journey was documented in the book Minding the Public Purse by the Hon. Janice MacKinnon, who was the Finance Minister during the most of the cuts.  Like I said, it was a decade of austerity.  There was funding cuts to healthcare, almost no building on the University of Saskatchewan or University of Regina campuses, a higher number of students in classrooms, longer waiting lists, rural hospitals closing, decaying highways, and it was really a lost decade.  Yes Saskatchewan did grow a bit during this time but with our financial house in disarray, growth was hard.

MacKinnon talks about how close Saskatchewan was to defaulting on it’s loans.  With the precarious state of the Canadian economy (pre-Chretien and Martin), there was some legitimate concerns that this could lead to an IMF bailout and intervention.  Luckily it never came to that but it did mean higher tuitions, higher taxes, more fees, a lot of lost opportunities that we are just now seeing as a province.

What’s scary is that the deficit numbers coming out of the U.S. states are worse and for all intents and purposes, the US economy is soon going to be in as bad or as worse shape as the Canadian economy was in the early 1990s.  I keep looking at the debt crisis that is swamping the EU economies and I can’t help but wonder until how long it is that you see places like Michigan, Illinois, and California needing massive financial bailouts.  Good grief, California has even looked at dissolving as a state and becoming a territory again (I don’t think it was a serious option).

How many lost decade will the United States go through to pay for wars in Afghanistan, Iraq, and the greed of the banks?  It took over a decade to recover from Vietnam and the state and cities economies weren’t in such tough shape.  This could either take decades or it could be the start of the long decline of the United States as a economic power.

The good news is that from Saskatchewan and Alberta’s experience is that as voters, we understood that it had to be done.  Whether it was the right wing Ralph Klein in Alberta or the centre-left Roy Romanow in Saskatchewan, we knew it had to be done and as a whole, we stood by them as they did the heavy lifting and hard cutting.  The  bad news for many states is that Saskatchewan has a natural inclination to support the NDP and Alberta has a natural inclination to vote Progressive Conservative which means that during the tough times, the provinces returned (or in Alberta’s case, they only ever elect Conservatives) what they knew and trusted during rough times.  If you don’t have you could have a series of one term administrations that moved from spend to cut to spend to cut for short term partisan advantage which could derail or destroy the entire process.  Too make spending cuts that are needed, you need a really strong majority which is not a strength of the American system which features a lot more checks and balances.

I can’t see many states turning themselves around.

We need to cut back

Back during the Devine era, I listened to Grant Devine give an impassioned speech about the deficit.  The point was “yes we have a deficit but where do we cut back.  You can’t close hospitals, you can’t have crumbling highways, you can’t cut essential services”.  At the time the speech stuck with me (obviously as I remember it today) but history shows that he was wrong.

Roy Romanow came into power and closed hospitals, cut healthcare services, stopped fixing and cut back on plowing the highways and he cut services we used to think was essential in order to balance the budget.  People talk about the draconian cuts made by Ralph Klein but Romanow’s were deeper.  The unions were angry, the NDP caucus was angry, the rural municipalities were angry, the urban municipalities were angry.  No one liked the cuts.

Today Brad Wall broke a promise to the urban municipalities on revenue sharing agreements and they are understandably upset.  No one likes having money taken away from them.  My response to them is “oh well”, this is only the start.

  1. Whoever is going to fight the federal deficit will have to cut services (and probably raise taxes).  We call the transfer payments and I expect Brad Wall and other provincial premiers to be on the other end of the cutbacks.  Even for those of us who are “have” provinces, federal funding cutbacks will have to be picked up by provincial departments or the programs will end.  Money that used to be earmarked for services and tax reductions will have to be used to pay off the debt and fight the deficit.  In case you don’t know how this works, watch Till Debt Do Us Part.  It’s not going to be fun being the next finance minister, no matter which jurisdiction you are in as you will be facing cutbacks of your own and passing them down to the next level of government.  Let’s hope they don’t have a need for friends as they won’t have many.
  2. In case you haven’t noticed, the $1.56 trillion deficit proposed by Obama isn’t sustainable, look for higher interest rates to convince China to purchase American debt.  Higher interest rates will push many highly leveraged North American’s over the brink into personal bankruptcy.  That’s going to hurt earning on many consumer companies which will in turn cut back on spending and mean less tax dollars flowing around.
  3. If many economists are correct, oil prices will rise (and are rising) as we crawl out of this recession.  As we do that, higher oil prices will push us back down again.  This morning I was listening to an economist call this the “new normal”.  In Saskatchewan we are a commodity based economy which means that we will forever be riding the wave of potash, wheat, natural gas, and oil revenues.

I would hope for a better level of political discourse then what we saw when Romanow’s government made his cuts.  There really is no concept of we are in all of this together, which of course we are.  I know lobbying the government is an important part of the job but in the end let’s accept that this is going to get worse before it gets better.  Of course that isn’t going to happen so brace yourself for political stunts designed at short term gain over long term stability.  Grant Devine’s legacy will probably live again.

Update: Sean Shaw has a look at what this cutback will mean for the city.

Deficits are Devine

Well it’s official, deficit financing on the scale not seen since the Devine era is back in Saskatchewan.  The government of Saskatchewan is going to run a billion dollar deficit this year based on the fall of potash prices.  As told by the Star Phoenix.

The release of the government’s mid-year financial report Thursday shows it now projecting it will take in only $109 million from potash royalties and taxes – $1.8 billion below what it forecast in its spring budget.

The government is now spending more than it is taking in, even with higher-than-expected oil royalties, tax revenues and federal transfers.

That has required a drawdown from the reserve Growth and Financial Security Fund of $564.3 million and a special dividend from Crown Investments Corp. of $460 million from the sale of the government’s share of SaskFerco.

However on a summary basis – which includes all of the operations of government including the Crowns – a deficit projected at $25 million at budget is now pegged at $1.05 billion.

The NDP were all over this today.  I’ll link to Cam Broten’s website who posted the NDP press release and response to the deficit.

I liked how it started.

With the release of the Mid-Year Financial Report, NDP Finance critic Trent Wotherspoon said the Wall government has confirmed that it is responsible for the biggest example of fiscal incompetence in the history of Saskatchewan. He said the combination of grossly inflated potash revenue projections, equity stripping from Crown Corporations, and out-of-control government spending has left the province with a $1 Billion deficit on a summary financial basis and a financial blunder not seen in generations.

“Private forecasters, industry representatives, and the NDP Opposition all cautioned against the fantasyland numbers the Wall government put forward in its budget,” Wotherspoon said. “But cheerleading and popular promises ruled the day with no thought as to whether or not the expert advice it received should have been taken into account.”

Then it gets a bit weird as it moves for attacking “out of control spending” and attacks spending cuts.

Wotherspoon said the Wall government’s fiscal mismanagement isn’t just about numbers on a page; people are being asked to pay for its incompetence through cuts to healthcare, education, rural programs, and their quality in life in general. He noted that among the cuts was $122 million from the construction of long-term care facilities in rural Saskatchewan and $32 million from new school infrastructure.

So on one hand the NDP are criticizing the Sask. Party for running a huge deficit (which they should) while at the other hand trying to get upset or cutting spending to keep government spending under control.

I have friends and I respect people in both parties and here is my advice on to handle the situation.

Saskatchewan Party: You missed your revenue predictions by $1.8 billion dollars.  I would fire whoever made that prediction because I agree with the NDP on this one, when you came out with this budget, you must have known it was going to be a bad year for potash prices.  Even I knew it was going to be a bad year for commodity prices going into a global recession.  To keep this from happening again, I would come up with an independent office of economic forecasters that would give guidance to the government that were outside the Ministry of Finance and therefore outside the influence of the political pressures that lead to really bad budget forecasting.  Don’t go half-way with this.  Give it legitimacy, give it some independence, and fund it properly.  I am not an economist but I know many of them have ideological bents on how the world is going to pan out and that is natural.  Even the best economists are also going to make mistakes.  I can accept that (not $1.8 billion dollar mistakes but some mistakes).   What I want to see as a voter and a taxpayer is a process in budget forcasting that is non-partisan and transparent.  This would go a long way in restoring some confidence in your budget predictions which have been questioned by the media for over a year. If you want us to trust you again, you need to take some steps to ensure you don’t miss your targets again.  Again, as a Saskatchewan voter and taxpayer I want to hear what your plan is to pay back your billion dollar boondoggle sooner rather than later.  It’s a lot of money and you are going to take a beating in the press and in the Legislature but it’s better to deal with it up front and head on and then move on then play political games with it.  Dealing with it this way will hopefully stop the comparisons to the Devine Tories of the 1980s.

Also, potash prices didn’t just fall last week.  I know you a governing party doesn’t want to give negative financial updates every month but it seems prudent during a time of unstable financial times to offer a more transparent accounting of the public purse in regards how we are doing compared to our predictions.

NDP: Maybe they should not use the same press release to attack out of control spending and then attacking spending cuts.  Use two pieces of paper and maybe send out two different press releases.  Despite not liking the wording and structure of their release, the NDP have the high ground here, as they are the ones that slayed the deficit that last time.  If I was the NDP, I would have a reunion luncheon with Roy Romanow, Janice MacKinnon, Eric Cline, and others who had to go through year after year of budget cuts to talk about how hard it was and the consequences of deficit financing in the Devine years had on the 1990s in Saskatchewan.  While you are at it, give out a lot of copies of Minding the Public Purse to remind us again how hard it was to make those cutbacks as a government but also to remind us voters how hard it was to see things we care about in Saskatchewan to be cut.  If I was Trent Wotherspoon, I would also use the term “billion dollar boondoggle” a lot in the days ahead but that is just me.  Boondoggle is such a great word.

For both parties, I would love to see a real debate on their visions for the future.  A future that involves peak oil, a liquidity crisis turning into a long term government debt crisis, a future where our federal government seems destined to burden all of us with long term debt (again), higher interest rates, cut transfer payments, and potentially higher unemployment.   Are we going to grow ourselves out of this mess (doubtful) or make drastic spending cuts?  Will we see a higher PST and income tax rates in our future?  Will the burden be put on businesses or individuals or will someone come up with a new path to take?  Tough times are ahead and it would be refreshing to hear the vision of both major parties in Saskatchewan (and for that matter, I would like to hear the Liberal Party vision as well) about the role of Saskatchewan in a smaller, less affluent world will look like.