Economy

Losing the tax argument

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EDITORIAL The lead topic on the local cable TV show City Desk News Hour Feb. 21 was the state budget, and a panel of local reporters were talking about the mix of tax increases and service cuts the Legislature finally passed. After a bit of back and forth, Scott Shafer, host of KQED’s California Report, piped up. "Everyone knows it’s a bad idea to raise taxes in a recession," he said.

Shafer, who was a press secretary to former Mayor Art Agnos, is hardly a conservative commentator. In fact, at the risk of damaging his credentials as an unbiased reporter, we might even call him a liberal. And to judge from the response of most of the panel, nothing he said was particularly controversial. Sure, raising taxes in a recession is bad; so is cancer, and violent crime. Next question.

But that’s not just a limited viewpoint — it’s factually inaccurate. Raising taxes during a recession can be an excellent economic idea, if it’s done right. Because the one thing almost every credible economist outside of the far-right intellectual swampland agrees on these days is that cutting government spending during a recession is a terrible idea — and if the only way to keep the public sector jobs, the social services, and the welfare payments going is to raise taxes, then raising taxes on those who can afford to pay is not only good politics, it’s good policy.

And it’s infuriating that this point seems to have dropped out of the mainstream of debate. That’s a major failure of the Democratic leadership, in California and nationwide.

Historians can argue forever about the direct impact the New Deal had on ending the Great Depression. But it’s pretty clear that what Nobel Prize winning economist Paul Krugman calls the great jobs program of World War II turned the American economy around. And during World War II, tax rates, particularly on the wealthiest individuals and corporations, were exceptionally high. The top marginal income tax rate exceeded 80 percent. Corporations that made more than a modest return paid a high excess-profits tax. The high income tax rates on the richest Americans remained through the postwar boom era, a time when inequality declined and overall wealth grew.

That money went into the public sector, not just for the war but for retooling and rebuilding U.S. industry. High taxes on the rich paid for the interstate highway system, the University of California system, the California Water Project, the birth of the Internet. It took almost half a century for the Republicans and no-taxers to wreck the economic gains of that high-tax era.

And yet, despite all the consistent, clear evidence, we still hear the news media, the commentators, and even liberal Democrats saying that tax cuts are good for the economy and tax hikes are bad.

What we’ve got here is failure to communicate.

One of the most important goals of the next year or two, under the Obama administration, is to change the national debate over public and private priorities. That won’t be easy. President Obama has started off in the right direction, although the Republicans forced him to include several hundred billion in wasteful tax cuts in his stimulus bill. The tax hikes in the state budget plan are almost entirely regressive (sales taxes and a flat increase in the income tax.)

Here in California, and here in San Francisco, elected officials who claim to represent the Democratic Party’s future need to stop mouthing the old Republican line. None of the Democratic candidates for governor, including Mayor Gavin Newsom, have been our front about the need for more government spending, even if it means higher taxes on the wealthy (say, a business tax that hits harder on the biggest and less so on the small). In fact, Newsom has taken the opposite line, writing in a Feb. 13 San Francisco Chronicle op-ed piece that "we have to reduce spending." The San Francisco supervisors are at least talking about new revenue sources, but polls show that will be a hard sell.

Why do the polls show that? Because people like Newsom — and to some extent, the supervisors — aren’t using their bully pulpits to change the tone of the discussion, to make the case for economic sanity, to challenge the demented wisdom that’s brought us to this nightmare.

That has to change, now, or there will be no way out. *

‘The end of the goddamn family dog’

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Former Bottom of the Hill and DNA Lounge doorperson Greg Slugocki wakes up every morning at 4 a.m. to feed and care for 75 rescued dogs at Milo Sanctuary, one of the largest dog and cat rescue sanctuaries in the country. It’s one-third the size of Golden Gate Park and tucked in the mountains of Mendocino County, north of Ukiah.

Slugocki has worked like a dog since he was hired last November, part of a crew of two who cover 283 acres of mountainous terrain. But it’s something else that has recently made his head spin.

"The rate of animals we’ve had to take because of foreclosures is astronomical," Slugocki said. "I’ve taken more dogs in the last three months than in the last two years."

Milo Sanctuary holds adoptions in Berkeley, Oakland, and San Rafael, and he communicates daily with Bay Area shelters and rescues, which also have reported unprecedented increases in animals reluctantly turned over by their desperate owners.

Slugocki may be in the backwoods of Mendocino County, but he’s not alone in this dilemma. Shelters all over the country are reporting rising numbers of dogs, cats, horses, and all kinds of family pets made homeless by the home foreclosure crisis.

In January, San Francisco Animal Care and Control — the municipal shelter and adoption department obligated to take all animals — documented, for the first time, an unprecedented increase in owner-surrendered animals. The report found that since August 2008, there’s been steady monthly increase in such animals, amounting to a 13 percent average rise since last year. Last month saw the highest number of owner-surrendered animals, with an increase of 35 percent.

Though there may not be a clear, quantifiable way of determining whether those owner-surrendered animals are in fact casualties of the foreclosure crisis, animal rescue folks say there is overwhelming anecdotal evidence that this is the case. "Our rescue partners are stretched," SFACC director Rebecca Katz told the Guardian. "We’re stretched."

Indeed, almost every kennel contains a dog with a tag reading "owner- surrender." Animal Care and Control runs a "no kill" shelter — which means animals are euthanized only if they are too sick to be treated or too aggressive to qualify for adoption — has had to spill some of its new arrivals over into its adoption kennels rather than give all the new arrivals a chance for the owners to reclaim them.

"I’ve been dealing with this shelter for 15 years," said Paley Boucher, founder of volunteer-run Rocket Dog rescue, which saves almost 200 dogs from lethal injection each year. "It used to stand out when you saw a dog that was owner-surrendered. But now almost all of them are." Linda Pope with Nike Animal Rescue Foundation says dogs adopted and returned due to foreclosures is an entirely new phenomenon to the center.

Cat Brown, deputy director of the San Francisco SPCA, reported a rise in owner-surrendered animals. "We feel it’s directly related to the economy," she added. "It’s about people losing their jobs and thinking about what they can give up."

Gary Tiscornia, executive director of Monterey County’s SPCA, says there have been a high number of foreclosure animals and a lack of communication between the shelters and the banks, real estate agents, property inspectors, and other entities that find abandoned animals in vacated homes.

Tiscornia said that Realtors in California have found animals in all kinds of conditions in vacated homes, including rottweillers abandoned with a few bags of food and a tub of water, and a dog left for dead in an empty house. It hasn’t always been the case that such incidents were reported to animal shelters.

The disconnect between corporate entities and shelters has been exacerbated by California laws requiring that inspected property, including animals, be left untouched. A new law that went into effect last month addresses the problem. Assembly Bill 2949 requires anyone who encounters an abandoned animal in a property that has been vacated through lease termination or foreclosure to immediately contact a local animal control agency.

The American Society for the Prevention of Cruelty to Animals (ASPCA) issued a statement on foreclosure animals Jan. 29, offering the following advice to those facing foreclosure or eviction: Check with friends, family and neighbors to see if someone can provide temporary foster care for your pet until you get back on your feet. Make sure pets are allowed — and get permission in writing — if you are moving into a rental property. Contact your local shelter, humane society, or rescue group in advance of moving, and provide your animal’s records to help it get placed in an appropriate home.

To love and lose a home is a hard thing, but to love and lose a home and a furry family member is worse, especially when people don’t know where their pet will end up. "People don’t know what to do," said Boucher, citing an example of a Bay Area woman who kept her dog in the backyard of her foreclosed home long after she had moved, and another of a family that asked the subsequent owners of their foreclosed home to care for their dog.

"We’re perceived as a no-kill city, but that’s just not true," said Boucher, who rescues pit pulls, the most frequently euthanized of all dogs. Like many rescue agents, Boucher disagrees with the standards set by the temperament tests that determine whether a dog is suitable for adoption, arguing that many perfect dogs would not pass the test.

Slugocki also takes issue with temperament tests. "Let’s say I’m a dog that hasn’t eaten for weeks and I get picked up and taken to a shelter and they put down a bowl of food as part of the temperament test. Take it away and see what I’ll do."

"This is a huge disaster, a quiet emergency," Boucher said. "I hope people can open their minds to fostering an animal."

Despite the spike in economy-related homeless animals, Katz says SFACC is still under control, at least for the time being. "We have not seen an increase in euthanasia and we hope not to." About 84 percent of animals that end up at the SF shelter are saved, compared to the depressing national average of 30 percent.

"We do everything we can to save animals’ lives. We reach out to every rescue we know of," Katz said.

But with shelters, rescues, and sanctuaries swamped with a growing wave of owner-surrendered pets, caring for the displaced animals is bound to get tougher, particularly if foreclosure crisis gets worse, as many economists predict. And with budget cuts in the offing in the city, SFACC staff fear cutbacks could drive up euthanasia rates.

Slugocki says his sanctuary has something other shelters don’t: space. He has 283 redwood-adorned majestic acres of it, and he’s willing to take every dog, no matter how many have failed the temperament tests that would guarantee a swift lethal injection at the pound.

"I can take dogs that don’t stand a chance. I can take them crippled, heart worm positive, deaf, blind, you name it," Slugocki said. Half of the 75 dogs at Milo are unadoptable and will live peacefully among the redwoods for the rest of their days. He says he can take up to 1,000 dogs but he’s missing one thing: sufficient staff to build enough dog pens and feed and care for a small city of dogs every day.

"I desperately need volunteers," Slugocki said. "I know there is a crowd of people, that 30 to 60 tattooed, pierced, old rock ‘n’rollers, new Buddhists, lifelong punks who are older and maybe have kids now." For now he’s taking as many dogs as he has pens for and is working 14-hour days to help save the discarded critters of the economic crisis.

"It’s the end of the goddamn family dog," Slugocki lamented. "Nobody who has a dog and has lost a home will ever think about having a dog again."

To contact Greg Slugocki, call (707) 459-0930 or email milo.sanctuary@yahoo.com.

The Chron — for sale? Shut down?

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By Tim Redmond

Well, that’s the news, anyway. Frank Vega, the publisher, sent a memo out to employees today that lays out some grim options (thanks, SFIST for breaking the story and running the memo):

Memo from Frank Vega, Chairman & Publisher
February 24, 2009

Dear Fellow Employees:

The rapidly declining economy, coupled with severely declining advertising revenues, is forcing nearly every newspaper company to re-think how it conducts business while continuing to serve its respective communities.

Despite all of our best efforts as an organization, The Chronicle continues to show staggering losses each week. Recent staff and expense reductions have not stemmed these losses, which are only worsening in the present economy. In response to our financial picture and the bleak economic forecast for the foreseeable future, our management team has begun a series of cost-saving initiatives designed to alleviate those losses.

First and foremost of these cost savings will be a significant reduction in force across all areas of our operation affecting both represented and non-represented employees. We will shortly begin discussions with union leadership on proposals. Our current situation dictates that we accomplish these cost savings quickly. Business as usual is no longer an option.

If we are unable to accomplish these reductions in the immediate future, Hearst Corporation, which owns The Chronicle, has informed us that it will offer the newspaper for sale or close it altogether. We know these are painful times for everyone and we face difficult choices. We share in the sincere hope that we will reach agreement with all parties involved on the concessions needed to continue to operate and provide the Bay Area with a quality newspaper.

I will update you throughout this process. Thank you for your support and good work, particularly in economic times that are difficult for all of us.

Now, I agree with the SFIST folks — this could be a shot across the bow to the unions, a message that they better accept deep job and pay cuts or lose everything. Vega is known for being a tough negotiator who wore a gun to work during the Detroit News-Detroit Press Press strike in 1995. And even he’s had a hard time getting costs under control at the Chron, which is still losing roughly $1 million a week. I doubt that Hearst would actually shutter the only major daily paper in San Francisco. Particularly since Vega has negotiated a contract with a Canadian company to print the paper on fancy new presses — and it would be expensive as hell to get out of that.

On the other hand, the green-eyeshade guys in New York aren’t going to tolerate these losses much longer. And if the Chron goes on the block, you have to wonder: Who’s going to buy it?

Compostmodern

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GREEN CITY The easier a compost bucket is to use, the more people will use it. But Compostmodern ’09 isn’t about compost at all — it’s about design. This annual event is a collaboration between the American Institute for Graphic Artists (AIGA) and the Academy of Art University that examines the intersection of design and environmental sustainability.

This weekend’s conference, held at various locations around San Francisco, features talks and slide shows by local designers, art installations, workshops, and demonstration projects proving that brown is the new green.

"I’m interested in helping people get a good grounding in what designing for sustainability means. The reality is that this industry is still so new," Nathan Shedroff wrote on the Compostmodern blog (compostmodern.wordpress.com). Shedroff chairs the Design Strategy MBA program at California College of the Arts, and will discuss sustainability frameworks at the conference.

Local graphic designer Amy Franceschini (futurefarmers.com) presented some of her work at Compostmodern in 2006. Inspired by all things green, she posed a question that only a designer would ask: if earth-bound plants lean toward light naturally, might design liberate plants to move about freely? There were mixed results to her experiment, but the question alone gets at the spirit of the conference: bridging the gap between the possible and the possibly possible by challenging designers to be environmentalists.

Autodesk brings sustainable design into the world of software by incorporating powerful new analytical tools into 3-D modeling programs used in architectural and other design. "Full-on energy analysis used to be really challenging and expensive," said program manager Dawn Danby, a featured speaker at Compostmodern this year. "We’re making software that empowers designers to make a case for sustainability, to make better decisions, decisions that have huge impacts on things like water or energy use. We need to make design a solution, not just a bonus when times are good."

Michael Gelobter, another of this year’s Compostmodern presenters, told the Guardian that the Bay Area’s unique combination of companies, researchers, and activists all living together is what makes it the epicenter of the clean-tech revolution. Even though he’s a climate strategist, Gelobter is optimistic about the future: "We have to own this change, and in the process solve a lot of other problems like wars and financial waste.

"A lot of our relationship with climate change and fossil fuels has to do with the built environment, the designed environment — our cities, buildings, schools. and the way we design our day-to-day interactions with products," Gelobter continued. "All of those include assumptions about energy use, where we get the energy, and the form that energy comes in. And designers are really the front line in redrawing that. They’re the cutting edge of how we make the world different, so they have to be informed about policy and economics, but also [about] people’s day-to-day lives, their lived experience of how change might happen. They have to be able to design to those kind of criteria."

That’s why Gelobter founded Climate Cooler, shifting his work from policy to shopping and "changing the choices consumers have so that they can take action." He insists that cleaning up the economy is good business. "You stop smoking crack, and you suddenly have all this money to spend on things that are a whole lot healthier. That’s true with fossil fuel use and the other things that cause global warming as well."

Gelobter’s latest project will equip Intuit’s popular QuickBooks accounting software with a carbon-calculator. It’s a partial redesign to help small businesses know the impact of their purchasing patterns on global warming, and to "start using that information to make better choices, to save money, save energy, and reduce their [carbon] footprint."

Taking on Herculean problems is not for everyone. But Compostmodern seeks to engage top designers with the task of making the seemingly impossible a little more likely. It’s a goal that is essential to achieving sustainability on a grand scale and using this economic meltdown as an opportunity to redesign our world.

COMPOSTMODERN ’09

Herbst Theatre, SF

Feb. 21

8:30 a.m.–5:00 p.m.

www.compostmodern.org

Money talks

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The economy’s a mess, and the housing crisis, financial meltdown, and skyrocketing unemployment rates have left a lot of San Franciscans short of cash. But the flow of big downtown money into political campaigns hasn’t slowed a bit.

In fact, a tally of all 2008 monetary and in-kind political contributions logged in the SF Ethics Commission Campaign Finance Database shows that even in the face of the worst financial crisis since the Great Depression, money spent on local political campaigns in the city swelled to a whopping $20.6 million. That grand total, which does not include loans or so-called "soft money" like independent expenditures, is higher than that of any previous year recorded in the Ethics database, which tracks campaign spending back to 1998.

A review of the entire database paints of picture of how influence money flows in San Francisco: Six of the top 10 donors over the past 10 years are big businesses and downtown organizations that promote the same conservative political agenda. The campaign cash often wound up in the same few political pots — a handful of supervisorial campaigns and some coordinated political action committees.

And despite spending ungodly sums of money, downtown lost more races than it won.

More than half the total money spent in 2008 came from one source: Pacific Gas and Electric Co., which plunked down $10.2 million last fall for the No on Proposition H campaign against the San Francisco Clean Energy Act. That November ballot measure, which lost under PG&E’s barrage, would have paved the way for public power, initiating a process to make the city the primary provider of electric power in San Francisco with a goal of 50 percent clean-energy generation by 2017.

The powerful utility wasn’t only the biggest spender last year — it claims the No. 1 slot on a list of all campaign contributions spanning from 1998 to 2008, which the Guardian compiled using Ethics data. PG&E dropped a juicy $14.7 million into local political campaigns over that period, beating out runner-up Clint Reilly by more than $10 million.

Below are brief introductions to the 10 biggest spenders, 1998-2008.

They’ve got the power. The colossal sums PG&E has forked over to influence ballot measures over the years puts the utility in a category all its own. SF isn’t the only municipality where the company has poured millions into defeating a public power proposal. In 2006, when Yolo County put measures on the ballot to expand the Sacramento Municipal Utility District (SMUD), which would have edged PG&E out of the service area, the utility spent $11.3 million to try and keep it from happening.

Pay to the order of Clint Reilly. Reilly, the former political consultant, now runs a successful real estate company. While his name routinely comes up on the roster of campaign contributors, he owes his status as No. 2 to his 1999 campaign for SF mayor, into which he poured some $3.5 million of his own money. "Most of the money we give is for Democratic candidates or progressive politicians, or neighborhood-oriented issues," said Reilly, who also served as president of the board of Catholic Charities.

Committee on really high-paying jobs? Third in line is the Committee on Jobs, a political action committee that aims to influence local legislation affecting business interests. The PAC is bankrolled in part by the Charles Schwab Corporation, Gap, Inc., and Gap founder Don Fisher — all of whom surface on their own in our Top 30 list. With a grand total just shy of $3 million, the committee coughed up about $100,000 in campaign-related spending in 2008. Much of that funding went to similar political entities, including the SF Coalition for Responsible Growth, the SF Chamber of Commerce 21st Century Committee, and the SF Taxpayers Union PAC (see "Downtown’s Slate," 10/15/2008). This past November, the COJ also backed the Community Justice Court Coalition, formed to pass Proposition L, which would have guaranteed first-year funding for Mayor Gavin Newsom’s small-crimes court in the Tenderloin. Prop. L failed by 57 percent.

Bluegrass billionaire. San Francisco investment banker and billionaire Warren Hellman has dropped nearly $1.2 million over the years into local political campaigns, our results show. Dubbed "the Warren Buffet of the West Coast" by Business Week for his sharp financial prowess, Hellman co-founded Hellman and Friedman, an investment firm, in 1984. Hellman is known for putting on Hardly Strictly Bluegrass, an annual SF music festival. While he tends to contribute to downtown business entities such as the Committee on Jobs and the Golden Gate Restaurant Association, in 2008 he devoted $100,000 to supporting a June ballot measure, Proposition A, that increased teacher salaries and classroom support by instating a parcel tax to amp up funding for public schools.

Fisher king. Don Fisher, founder and former CEO of Gap, Inc., is another one of SF’s resident billionaires. While Gap, Inc. turns up in 17th place in our results, Fisher himself has poured more than $1.1 million into entities such as the Committee on Jobs, SFSOS, the San Franciscans for Sensible Government Political Action Committee, and other conservative business groups. Fisher’s total includes money from the "DDF Y2K family trust," a Fisher family fund that shows up in Ethics records in 2000. In that year, $100,000 from that trust went to support the Committee on Jobs’ candidate advocacy fund, and another $40,000 went to a pro-development group called San Franciscans for Responsible Planning.

Not a very affordable campaign, either. Sixth up is Lennar Homes, the developer behind the massive home-building project at Hunters Point Shipyard, which the Guardian has covered extensively. The vast majority of its $1 million reported spending was directed to No on Prop. F, a campaign sponsored by Lennar to defeat a June ballot measure that would have created a 50 percent affordable-housing requirement for the Candlestick Point and Hunters Point Shipyard development project. The measure failed, with 63 percent voting it down.

Chuck’s bucks. Charles Schwab Corp., which set up shop in San Francisco in the mid-1970s, is an investment banking firm that reports having $1.1 trillion in total client assets. The corporation ranks seventh in our Top 30 list, with some $973,000 in donations. In 27th place is Charles R. Schwab himself, the company’s founder and chairman of the board (and the guy they’re referring to in those "Talk to Chuck" billboards posted all over SF). If Schwab’s individual and corporate donations were combined, the total would be enough to bump Warren Hellman out of fourth place. Schwab’s dollars are infused into the Committee on Jobs, the San Francisco Association of Realtors, the Golden Gate Restaurant Association, SF SOS, and other downtown-business interest organizations. "We’re a major company here in the Bay Area and a major employer," company spokesperson Greg Gable told the Guardian. "We’re interested in political matters across the board — it’s not limited to any one party." But it’s limited to one pro-downtown point of view.

The brass. The San Francisco Police Officer’s Association is another major player, spending some $913,000 since 1998 on political campaigns. The organization backed candidates Carmen Chu, Myrna Lim, Joseph Alioto, Denise McCarthy, and Sue Lee for supervisors in 2008, contributions show. All but Chu lost.

At your service. SEIU Local 1021 and SEIU 790 crop up frequently in Ethics data, with a grand total of about $860,000 in spending over the years. SEIU representatives recently turned out en masse at a Board of Supervisors meeting to urge the supervisors to support a June 2 special election to raise taxes in order to boost city revenues and save critical services from the hefty budget cuts that are coming down the pipe.

Friends in high places. No real surprises here: the Friends and Foundation of the San Francisco Public Library contributed its money to, well, ballot measures that would have affected the library. In 2000, for example, the F and F plunked $265 thousand into an effort called the "Committee to Save Branch Libraries — Yes on Prop. A."

Top 30 San Francisco campaign donors, 1998-2008

1. Pacific Gas & Electric $14,831,486
2. Clint Reilly $4,138,089
3. Committee on Jobs $2,970,857
4. Warren F. Hellman $1,191,970
5. Don Fisher (incl. Don & Doris Fisher Y2K trust) $1,164,286
6. Lennar Homes $1,002,861
7. Charles Schwab Corporation $973,176
8. S.F. Police Officers Association $913,834
9. SEIU Local 1021 & SEIU Local 790 $860,979
10. Friends & Foundation of the S.F. Public Library $858,082
11. California Academy of Sciences $818,154
12. Residential Builders Association of S.F. $753,857
13. Steven Castleman $665,254
14. S.F. Association of Realtors $647,299
15. S.F. Chamber of Commerce $614,824
16. SEIU United Health Care Workers West & Local 250 $585,937
17. Gap, Inc. $573,959
18. California Issues PAC $556,238
19. Corporation of the Fine Arts Museums $541,474
20. Wells Fargo $464,899
21. Building Owners & Managers Association of S.F. $464,027
22. Bank of America $429,316
23. Golden Gate Restaurant Association $422,685
24. SF SOS $407,491
25. AT&T Inc. and affiliates $404,704
26. Clear Channel $391,783
27. Charles R. Schwab (individual) $362,250
28. Yellow Cab Cooperative $344,907
29. S.F. Apartment Association $280,376
30. San Franciscans for Sensible Government PAC $279,009

SF’s economist agrees that Newsom is wrong

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By Steven T. Jones
When I criticized Mayor Gavin Newsom’s latest budget plan as bad economics that will do more harm than good to San Francisco, Newsom spokesperson Nate Ballard said I (and the sources I relied on, from Moody’s to congressional Democrats to President Obama) didn’t know what I was talking about.
“OK, so you think he’s wrong. The City’s chief economist Ted Egan thinks he’s right. So does the Mayor’s chief economic advisor, Michael Cohen. I think the Mayor is probably going to go with Ted and Mike!” Ballard wrote (later referring me to this article, as if it proved his point).
Maybe Ballard or Newsom should have actually talked to Egan, who didn’t review Newsom’s plan and doesn’t agree with its premise. Egan told me, “We were in no way saying you should cut taxes to stimulate the economy, particularly if it means reducing government spending.”

Mayor Newsom doesn’t understand economics

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By Steven T. Jones

It’s maddening to read Mayor Gavin Newsom’s latest prescription for local economic recovery, which parrots the position and talking points that we’ve been hearing for weeks from congressional Republicans. And that fiscally conservative position is just factually wrong.
That was made clear recently in a widely circulated report from Moody’s that shows a dollar of tax cuts provides just over a dollar in economic activity, while a dollar of government spending provides about $1.60 in economic activity. And the most economic activity, about $1.73 for each dollar spent, comes from food stamps (which are similar to welfare assistance to the poorest citizens, which Newsom slashed with his Care not Cash program).
Yet Newsom boldly and stupidly declares in today’s Chronicle op-ed about economic stimulus that, “We need less spending.” Guess what? Spending is stimulus. Newsom even cynically refers to President Barack Obama as if he agrees, even though Obama recently scoffed at the very argument Newsom is trying to make.
Mr. Mayor, all the city jobs that you want to cut are jobs, good paying jobs with good benefits that cause people to spend money in San Francisco. Cuts those jobs and you hurt the economy, and you hurt is far more than you will help it by cutting the taxes of local businesses. It’s just dumb. Or if it’s not dumb, it’s at least very ideologically conservative, this discredited, faith-based belief in trickle-down economics.

Attention: New Mexican revolution scheduled

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MEXICO CITY — Never before has the contrast between the World Economic Forum (WEF), the annual clambake of the capitalist class in Davos Switzerland, and the World Social Forum (WSF), created a decade ago to beat back the corporate globalization of the Planet Earth, been quite so stark.

While the moribund masters of the universe met on their ice mountain in the midst of the most chilling world-wide depression in a century, largely triggered by the overweening greed of those in attendance, tens of thousands samba’ed in the tropical heat of the Amazon city of Belem to celebrate the demise of capitalism. Among those on hand at the WSF dance party were presidents Chavez of the Bolivarian Republic of Venezuela, Bolivia’s Evo Morales, Ecuador’s Rafael Correa, Paraguay’s Fernando Lugo, and Brazil’s Lula da Silva. Lula, who is usually a devoted Davos-goer, eschewed this year’s funerary event to avoid the stench that inevitably results from rubbing shoulders with mummies.

“The God of the Market has been broken,” the one-time Sao Paolo metalworker proclaimed to tens of thousands in Belem. Writing in the Mexican daily La Jornada, Luis Hernandez Navarro pointed out that it was precisely the social forces represented by the WSF that propelled Latin America’s social democratic presidents into power.

Indeed, the only two Latin heads of state to attend the caviar and champagne-laced charade in Davos were Colombia’s widely-disparaged Alvaro Uribe and Mexico’s questionably-elected president Felipe Calderon, both of them Washington’s darlings. Not even freshman U.S. president Obama, who recently lambasted the machinations of the same breed of bankers who gather each year on the ice mountain as “shameful,” showed up in Switzerland, an event that his predecessor in power George Bush never missed.

Felipe Calderon’s trip to Davos got off on an inauspicious foot. On the very day he flew out to the WEF, Bank of Mexico president Guillermo Ortiz confirmed that his country was in full-blown recession. For months, Calderon and his obscenely obese Secretary of Finance Augustin Carstens have characterized Mexico’s economic health as only suffering from “a little cough” (“catarrito.”) According to Bank of Mexico prognostications, the Aztec Nation will suffer negative growth in 2009 (-0.8% to -1.8%.)

The news hit Felipe like an ice ball from hell.

Seeking to put a happy face on his country’s dismal future, Calderon championed Mexico’s 1.5% 2008 growth rate but fooled few – Mexico’s anemic performance last year put it in 24th place out of 24 Latin American economies in the International Monetary Fund’s rankings, even behind Haiti, the basket case of the Americas. The IMF is predicting 1.1% growth for Latin America in 2009 and, like Ortiz, calculates that Mexico will fall into negative numbers.

The Mexican president’s delusional optimism in the face of so bleak an outlook played to incredulous audiences at Davos. Calderon also sought to blunt the recent blockbuster report of the U.S. Joint Chiefs of Staff that Mexico is a potentially “failed” state by handing out trinkets like baseball caps bearing the ambiguous legend “It’s All In The Trust.” The giveaway (“magic spikes” to keep the mummies from slipping on Davos’s icy streets were also distributed) came during a session at which Calderon flogged Mexico’s chances of weathering the current economic turmoil – the Mexican president’s talk was slugged “Riders On The Storm,” a title plagiarized from the Doors’ 1971 apocalyptical anthem about a cowboy spree killer. Lead singer Jim Morrison was reportedly heard thrashing about wildly in his Paris grave.

As a bonus attraction, Calderon teamed with former Mexican president Ernesto Zedillo, now head of Yale University’s Institute for Globalization Studies, in an act conducted entirely in broken English that verged on tragicomedy. Zedillo, who coined the term “globalphobics” in reference to WSF types at the 1996 Davos get-down, revealed that the bank bail-out he sponsored during Mexico’s mid-1990s meltdown and dubbed FOBAPROA, has drained 20% of his country’s gross domestic product (PIB), bragging that the 400 trillion peso outlay was triple that of what the Bush-Obama bail-out has cost U.S. taxpayers.

As might be anticipated, the Calderon-Zedillo act did not play well on the homefront. While the Mexican presidents cavorted with the living dead in Davos, a half million of their compatriots were marching through the streets of Mexico City to protest the economic wreckage the neo-liberal ethos has wrought here. On January 25th, former left presidential candidate Andres Manuel Lopez Obrador, from whom Calderon stole the 2006 election, and his Movement to Defend Mexico’s Oil & The Popular Economy assembled upwards of 200,000 in the great central Zocalo plaza. Five days later, farmers and trade unionists matched that outpouring to denounce the damage done by the current crisis.

Among the crisis indicators: 6% inflation, the highest in ten years, and 340,000 jobs lost on Calderon’s watch. (Calderon campaigned as “the president of employment.”)

Just what Mexico’s unemployment numbers are is deeply obfuscated. Government bean-counters at the National Statistical and Geographic Institute (INEGI) claim it is no more than 4% – but under INEGI parameters, anyone who worked for more than an hour in the informal economy during the previous week is considered employed.

Utilizing such criteria, the emblematic apple sellers of the 1930’s Great Depression would not be determined to be jobless.

On the other side of the ledger, Enrique Galvan, who authors La Jornada’s “Money” column, calculates that 70% of the nation’s 45 million-strong workforce does not have a steady job. A maquiladora industry that assembles consumer goods for the ravished U.S. market and which generated a million jobs in the best of times has gone kaplooy and the Big Seven automakers (including Toyota, Nissan, Honda, and Volkswagen) have shut down their plants for the duration of the downturn.

Meanwhile, workers’ pensions, privatized under Zedillo, have gone up in smoke, with those paying in losing up to 30% of their retirement funds in the past six months. To compound the devastation, the peso has sunk to record lows, having been devalued by 32% since last August 4th when it weighed in at 9.87 against the dollar. At this writing, 14.78 pesos will buy you one dollar Americano and the exchange rate is climbing toward 15.

Nonetheless. Mexico’s banks, rescued by Zedillo’s 15-cypher bailout and subsequently sold to transnational financial conglomerates, registered a 38% profit increase in 2008.

The current blasted economic landscape here bears striking similarities to another period of devastating downturn a hundred years ago. The 1907-08 depression was trip-wired when commodity prices collapsed and money dried up, casting tens of thousands of Mexican workers into the streets and accentuating the monstrous divide between rich and poor. To counter working class rage, dictator Porfirio Diaz cranked up repression, massacring hundreds of striking textile workers in Rio Blanco Veracruz and miners in Cananea Sonora. Synchronistically, workers at Cananea, the eighth largest copper pit in the world, have been on strike for the past 18 months in spite of Calderon’s efforts to break the walkout.

Despite the shattered economy and his deep-rooted unpopularity after 34 years in power, Diaz decided to run for re-election in 1910, stealing the vote that June and jailing opposition leader Francisco Madero, a role model for Lopez Obrador. To celebrate his “victory,” Porfirio Diaz threw a huge party to mark Mexico’s first 100 years of independence from Spain, expending the nation’s entire social budget on useless monuments, many of them lined up along Mexico City’s Champs D’Elysie, the Paseo de la Reforma.

The pageantry culminated on Independence Day, September 16th with the installation of a gilded Angel of Independence on that glittering boulevard. Two months later, the Mexican revolution, led by Madero, exploded, and Diaz was forced to flee the country.

Just before Felipe Calderon took off to tete-a-tete with the dead in Davos, amidst patriotic bombast and flowery fireworks, the Mexican president announced the construction of the Arc of the Bicentennial to be inaugurated September 16th 2010, commemorating both the 200th year of Mexican independence and the 100-year anniversary of the beginning of the Mexican revolution. Following the Porfirian model, the Arc of the Bi-Centennial, whose cost was unannounced, will be built at the foot of the Paseo de la Reforma.

Mexico’s political metabolism seems to break out in insurgencies every 100 years on the 10th year of the century. In 1810, the country priest Miguel Hidalgo launched the struggle for independence from the Crown. In 1910, Francisco Madero ignited the fuse of the epoch Mexican revolution.

At this writing, there are less than 330 days until 2010.

Editor’s Notes

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› tredmond@sfbg.com

It was kind of weird to be standing in front of the White House last week and not protesting anything. I’d been there so many times before, but always with a sign or a shout or at the very least a sneer: the White House wasn’t a symbol of hope as much as it was a monument to everything that infuriated me about the United States of America. The Reagan years, the Bush years, the Clinton years, the Bush years … I used to say, and it wasn’t that long ago, that I didn’t think the United States could ever elect a president I could actually believe in.

And late Saturday night, I was sitting in a hotel bar with a bunch of cynical editors and publishers from a bunch of cynical alternative newspapers — and everyone was talking about walking over to the White House. We knew the Obamas weren’t even there (they’d gone to Camp David for the weekend). And there wasn’t much to see, particularly late at night. But it felt like the street in front of the White House was just a cool place to be.

Pretty amazing.

Barack Obama has a remarkable amount of good will built up. He has a honeymoon period like no president has had in my lifetime. The left is generally patient, the center seems enthralled, and the right is a lot more muted in its criticism than we were when, say, Ronald Reagan took office on a wave of popularity. And his political capital is already getting tested.

It was astonishing listening to some of the debate over the stimulus plan. I’m not thrilled with the way the thing is coming down — it’s too small, it’s too focused on the private sector, there’s too much in tax cuts and not enough in spending. But the way the Republicans have been talking about the bill, particularly in the Senate, is mind-boggling.

John McCain (didn’t he just lose an election or something?) was blubbering away about "pork." Senator Jon Kyl of Arizona insisted that the bill "wastes a ton of money." Sen. Susan Collins of Maine introduced (and remarkably enough, got passed) an amendment reading: "None of the amounts appropriated or otherwise made available by this Act may be used for any casino or other gambling establishment, aquarium, zoo, golf course, swimming pool, stadium, community park, museum, theater, art center, and highway beautification project." As if parks, theaters, and art centers are the same as casinos. (Remember, the Works Progress Administration, one of the most successful parts of the New Deal, built theaters and parks — and put artists to work, something missing from this bill).

Look: the only way the federal government can pull us out of this tailspin is with huge amounts of spending. You can’t spend $800 billion without wasting something, somewhere; some dollars will wind up getting stolen or diverted or used for the wrong thing, and some of what’s in the bill will be foolish.

But the notion that the people who created this mess, who used tax cuts and lax regulations to wreck the economy, should be criticizing government spending is more than a little nuts. You have to wonder: Why does anybody listen to these people any more? And why is Obama even trying to work with them?

Obama’s first prime-time press conference was a little shaky (although it’s hard to blame a guy who’s got the future of the world’s largest economy in his hands for not having a clear position on the A-Rod steroid scandal right now). The stress on Obama is already showing.

But he still has the political capital, and he ought to be playing a little more public hardball.

Why we’re broke

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By Tim Redmond

State Sen. Mark Leno explained to me a few days ago that, despite the GOP’s claim that California has “a spending problem,” when you actually look at how state spending has increased over the past 20 years, you get a very different picture. Actually, after accounting for inflation and population growth, state spending would have been relatively flat — save for the insane prison expansion and the governor’s car-tax cut.

There’s an interesting analysis of all this at Calitics, which looks at the Monterey Herald’s story on Where the Money Went. Bottom line: The state’s problem — as I keep saying — is that Californians want all kinds of services — good education, parks, roads, transportation systems and yes, sadly, prisons — but nobody wants to pay for them. It’s expensive to run the world’s eighth-largest economy, a state with more people than most countries and a wide range of social problems. And there is plenty of money floating around — even in this economy, California is a very wealthy state.

But as long as we aren’t willing to raise taxes on the wealthy and look at issues like Prop. 13, these budget problems aren’t going to go away.

A-Rod and other types of stimulus

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20909arod.jpg

By Tim Redmond

Can you believe that in the middle of a press conference on the meltdown of the world’s largest economy some joker from the Washington Post asked President Obama about A-Rod?

Overall, a decent press conference, but the prez looked a little shaky at times. You can see the stress of trying to save us from another Great Depression with the bipartisan Republicans refusing to help.

Thank God for Paul Krugman!

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What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care, and undermines schools, but offers a $l5,000 bonus to affluent people to flip their houses?

By Bruce B. Brugmann

Jim HIgjhtower, the Texas columnist, once wrote that “there is nothing in the center of the road except yellow lines and dead armadillos.”

Paul Krugman, the Princeton Nobel prize winner, put it a little more diplomatically in his Monday column in the New York Times, “The Destructive Center.”

He led off his discussion of the Obama stimulus plan with this lead:

“What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, and undermines schools, but offers a $15,000 bonus to affluent people who flip their houses?

“A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished.”

“Even if the original Obama plan–around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts–had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years.

“Yet the centrists did their best to make the plan weaker and worse.”

Krugman rightly criticized Obama for offering a plan that was “too small and too heavily reliant on tax cuts” because he “wanted the plan to have bipartisan support and believed that it would.” Krugman rightly criticiazed Obama for not doing something “cruciall important: speak forcefully about how government spending can help support the economy. Instead he let conservatives define the debate…” And so Obama “was reduced to bargaining for the votes of those centrists.”

Krugman asked the critical question: “So has Mr. Obama learned from this experience? Early indications aren’t good.

“For rather than acknowledge the failure of his political strategy and the damage to his economic strategy, the president tried to put a postpartisan happy face on the whole thing. ‘Democrats and Republicans came together in the Senate and responded appropriately to the urgency this moment demands,’ he decalared on Saturday and ‘the scale and scope of this plan is right.'”

Krugman’s summing up, “No, they didn’t, and no, it isn’t.”

Thank God for Paul Krugman. B3

Click here to read Op-ed columnist Paul Krugman’s Monday, February 9th article in the New York Times, The Destructive Center.

Click here to read a CNN report on “What got cut from the stimulus bill.”

Shop Local contest winner

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By Molly Freedenberg

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It’s finally time! We’re announcing the winner to our Shop Local contest, in which we challenged readers to send us stories about how they spent at least $100 at locally-owned and operated businesses during the 2008 holiday season. We received so many fantastic entries, we extended the deadline way beyond Christmas day. But lucky for you, we’re publishing some of our favorites just in time for Valentine’s Day. When getting gifts for that special someone, don’t forget to send the local economy a bit of love too!

(And by the way, for those inspired to continue the shop local initiative throughout the year, please keep in mind that the plan is not only to buy things near your home, but from businesses that are based in San Francisco. The Starbucks or Target on the corner may be nearby, but they ain’t local. Now, commence your shopping.)

First up, our contest winner etristan, who will receive $500 in gift certificates to local businesses. We like this entry because the writer took shopping local to a fantastically micro level, keeping cash not only within San Francisco but within the writer’s own neighborhood. Plus, we like all the specific ideas for creative gifts.

Free Press Action Fund

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Here is a timely action alert from the Free Press media reform organization. It is fighting “in the media and on Capitol Hill to make sure that the internet doesn’t get slashed from the stimulus plan.”

The internet is a tremendous engine for growth across every sector of the economy

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John McCain (known for never having gone online) has joined blowhards Rush Limbaugh and Lou Dobbs in clamoring to strip President Barack Obama’s economic recovery bill of funds to expand Internet access.

Claiming the Internet has nothing to do with jump-starting the economy, they’ve taken to the Senate floor and the airwaves in a relentless assault against efforts to give Americans the tools they need to get working again.

Boxer socks it to the Republican blockers!

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‘Where are my Republican friends when George Bush took the debt from $5 trillion to $l0 trillion over eight years? I didn’t hear a word.’

By Bruce B. Brugmann

I watched on CNN Saturday (2/7/09) as Sen. Barbara Boxer (D-California) spoke for about 20 minutes on the stimulus package. She was eloquent, she made the right points, and she whacked the Repubilcans’ “new found respect for fiscal responsibility.”

Working her arms as if she was actually throwing some punches, she said, “This election was about change, not the same-old same-old trickle down tax cuts that don’t work…They want it all tax cuts or mostly tax cuts. We tried it. It didn’t work. It’s gotten us where we are today. Huge debt, huge deficits, slow growth, no growth.”

Here are the major excerpts from her excellent remarks from a press release put out by her Washington office. Hurray for Barbara Boxer.

Senate Floor Statement of Senator Boxer

Boxer Speaks on Economic Recovery and Reinvestment Act

Saturday, February 7, 2009

Washington, DC – Today, U.S. Senator Barbara Boxer (D-CA) spoke on the Senate floor on the Economic Recovery and Reinvestment Act.

Boxer discussed the need for quick, deliberate action to help get our economy back on track.

Excerpts from her floor speech follow:

“Where were my Republican friends… when George Bush took the debt from $5 trillion to $10 trillion over eight years, doubled it, put it on the backs of every man, woman and child — $17,000 debt, every man, woman, and child. I never heard a word. They spent it on Iraq. They spent it on tax cuts for the richest people, those who didn’t need it. And they didn’t care about the debt.”

“I want to help the middle class and the working poor, the backbone of America because without that backbone, we have nothing.”

*****

“I want to thank those Republicans who worked with us Democrats on coming up with a solution… You stepped forward, you listened to President Obama. You stepped forward for positive change, you stepped forward to help America.”

******

“If we do nothing, if we don’t embrace this bipartisan package – and I know this isn’t perfect – but if we do nothing, that is in my view a hostile act. A hostile act, not a passive act, because to do nothing endorses the status quo.”

*****

“In my home state, I have a list here of layoffs… Target laid off 382 people in Sunnyvale. Harman Becker Automotive, 325 people in Northridge. Ghirardelli Chocolate laid off 107 of people in San Francisco. Circle Foods, 112 people in San Diego. It goes on and on and on.”

*****

“I do appreciate my Republican colleagues’ newfound respect for fiscal responsibility, but we have to admit that they never cared about it the last eight years.”

“I don’t like this. I voted for balancing the budget under Bill Clinton, and I believe we will get back to a balanced budget again. But we’ve got to take care of a crisis. We have to stem the bleeding. Every economist tells us that.”

*****

“I’m working with my colleagues on both sides of the aisle. We have a chance now to get out of this recession. Will this package do it alone? It will not. ”

*****

“Come and talk to us. Come and work with us. This election was about change, not the same old, same old trickle-down tax cuts that don’t work. Yes, there’s 42 percent tax cuts in this bill. That’s not enough for my friends on the other side. They want it all tax cuts or mostly tax cuts. We tried it. It didn’t work. It’s gotten us where we are today. Huge debt, huge deficits, slow growth, no growth.”

*****

“We are headed to a better day, and this Senate debate is very important.”

Jess Brownell: Keynes & Friedman fight it out

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“John Maynard Keynes, he’s our man. He knows more dead than Alan Greenspan”

By Jess Brownell

In the January 28 edition of the New York Times there was a full-page advertisement paid for by the Cato Institute and signed by 203 economists (if I counted correctly; I’m not an economist myself) objecting to the following statement by President Obama: “There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy.”

The brief text above all those signatures advises the world that the signers do not in fact agree and deeply resent being lumped with those who do. No jumpstarting needed, in their opinion. Indeed, the so-called recession/depression seems to bother them very little. Less government and lower taxes will easily solve that problem, and psoriasis better look out, too.

Save the Rainy Day Fund

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The scope of the economic challenges facing the country is overwhelming. We all hope that the new stimulus package proposed by the Obama administration, coupled with the $700 billion bailout of the financial sector, will revive our economy. In California, the state is confronting an unprecedented $42 billion deficit; State Controller John Chiang has made clear that this could mean suspending tax refunds, welfare checks, student grants, and other payments owed to Californians unless a solution is found.
In San Francisco, with an estimated $560 million deficit for the upcoming fiscal year, the city is facing what may be the worst financial crisis in its history.

While the federal government can authorize deficit spending, essentially by printing more money, to address the crisis, the California Constitution and the San Francisco Charter both require the adoption of balanced budgets. Deficit spending is not an option to solve our local budget and economic problems.

Fortunately, in 2003, San Francisco voters adopted Proposition G establishing the Rainy Day Reserve Fund. After the lessons learned from the dot-com bust, Prop. G established an economic stabilization fund for San Francisco. The Rainy Day Fund employs a simple formula to save money for when it’s most needed: in any year when the city collects more than 5 percent more in tax revenue than it collected in the previous year, the city reserves half the extraordinary revenue growth for a "rainy day." The city can withdraw up to 50 percent of the funds from the Rainy Day Fund when an economic downturn yields less tax revenue to the city than the preceding year. The fund currently has $98 million in savings.

Last year, for example, the mayor and Board of Supervisors allocated $19 million from the Rainy Day Fund to the San Francisco Unified School District, which helped avoid 535 teacher layoffs in the face of Gov. Schwarzenegger’s education cuts. This year, it is likely that the mayor and the board will be able to withdraw some $45 million to offset the serious deficit.

These budget policies have helped preserve the city’s excellent credit rating, paving the way for low-cost debt issuance for critical projects like the rebuild of San Francisco General Hospital. However, it is important to understand that the city’s fiscal woes are a combination of cyclical and structural problems.

San Francisco’s structural imbalance between revenues collected and the cost of vital health, public safety, recreation, and social services needs to be addressed through revenue enhancements and comprehensive tax reform, not by spending the entire Rainy Day Fund as a quick fix. According to most forecasts, the recession is likely to continue through at least early next year, and San Francisco is likely to continue to experience fiscal problems.

Currently, there are discussions in City Hall about going back to the voters to revise the Rainy Day Fund to allow the fund to be fully depleted in a single year. I believe that would be a mistake. The Rainy Day Fund is an essential piece of the city’s overall financial strategy, and I strongly urge my former colleagues on the Board of Supervisors and the mayor to preserve the integrity of the fund. If used as originally intended, the fund will help maintain vital programs and help alleviate the impact of budgets cuts to our most vulnerable populations over the long-term as we work to right the ship in the face of this perfect economic storm. *

Assemblymember Tom Ammiano was a member of the San Francisco Board of Supervisors for 14 years and was the author of Proposition G, which created the city’s Rainy Day Fund.

‘Dance party

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PARK CITY REPORT A degree of relative tranquility settled on Sundance this year, as budget cutbacks among media outlets and distributors meant the customary frenzy was dialed down a notch or three. Of course most screenings were packed, but fewer people than usual got turned away; lodgings remained available during the festival, whereas normally they’d be booked months in advance. Still, what was onscreen remained as usual — a more or less even mix of good, bad, and indifferent. (Most likely in 2010 we’ll start to see a shrunken economy affect indie film production.)

The Bay Area was strangely underrepresented this year, particularly in the documentary realm where it often has a major presence. Instead, there were two dramatic features, each highly specific in local setting. Bratt Pack family project La Mission, directed by Peter Bratt, stars Benjamin Bratt as Che, an ex-con Muni driver and middle-aged lowrider whose macho veneer doesn’t get in the way of his love for a college-bound son (Jeremy Ray Valdez). When he discovers junior is gay, dad freaks out; the Castro District may be just a few blocks from their Mission District walkup, but it’s a world away from Che’s comprehension. This cable-ready exercise’s plot turns and social-issue pleadings can be predicted after 10 minutes. Yet it’s also got genuine warmth, easygoing humor, Benjamin B.’s charisma, and a fond grasp of the ‘hood.

Frazer Bradshaw’s starker Everything Strange and New focuses on young North Oakland couple Wayne (Jerry McDaniel) and Renee (sometime Guardian contributor Beth Lisick), neither of whom quite understand how they got to be saddled with a mortgage, two kids, her frazzled nerves, and his deadened ones. Meanwhile, Wayne’s work and drinking buddies (Luis Saguar, Rico Chacon Jr.) have domestic problems of their own. This is the kind of movie people walk out on at Sundance — too slow, uncommercial, etc. — but it’s a quietly original vision with nary a false emotional note.

Elsewhere, local luminary Robin Williams finally found an indie that suited his more restrained seriocomic abilities in The World’s Greatest Dad, an imperfect but clever black comedy about literary fraud and morbid personality cults from (no kidding) Bobcat Goldthwait.

I also particularly liked doc Prom Night in Mississippi, about a burg that finally held its first integrated high school prom last year; Israeli dysfunctional-slum-family drama Zion and His Brothers; amazingly detail-perfect recreation/spoof of 1970s blaxploitation flicks Black Lightning; and (at nearby Slamdance) Smile ‘Til It Hurts: The Up With People Story, about the Me Decade’s most alarmingly perky touring act. Imagine those song numbers in the satirical Brady Bunch movies performed by a couple hundred squeaky-clean young adults, sans irony. It’s enough to make a smiley face go postal.

Mom and pop lose their voice

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› rebeccab@sfbg.com

Bank of America and Pacific Gas and Electric Co. are quite the opposite of mom-and-pop operations, yet two of the seven members appointed to San Francisco’s Small Business Commission hail from these corporations, much to the chagrin of true small business leaders.

In a heated e-mail fired off to an assortment of City Hall staffers Jan. 13, Small Business Commissioner Michael O’Connor criticized the Mayor’s Office for diluting the commission — which was set up to go to bat for the little guy — with big business appointees.

Meanwhile, funding for the Small Business Assistance Center was almost eliminated last month by the Board of Supervisors. And a report that was supposed to streamline the unwieldy permitting process for small businesses, which the administration was required to complete under the 2007 measure Proposition I, never materialized.

At a time when small businesses are struggling in the face of a dour economic landscape, strong advocacy on their behalf is needed now more than ever. But even as former Small Business Commissioner David Chiu ascends to the presidency of the Board of Supervisors, small business leaders are decrying their lack of support in City Hall.

The Small Business Commission is a seven-member body composed of three members appointed by the Board of Supervisors and four appointed by Mayor Gavin Newsom. Set up to serve as an advocate for the small business community, the commission was also chartered to oversee the Office of Small Business, a branch of the city’s Office of Economic and Workforce Development.

Last May, the office opened its Small Business Assistance Center, created to lend startups a helping hand with navigating the bureaucratic maze of permits, fees, licenses, and other hoops to be jumped through to legitimately set up shop in the city.

Regina Dick-Endrezzi, acting director of the Office of Small Business and one of four people staffing the center, says there’s a real need for the service. She said that about 99 percent of all San Francisco businesses fall into the category of "small," which she defines as having fewer than 100 employees, making it one of the most important sectors of the city’s economy.

Since the center opened, more than 1,300 small business clients have received assistance there, according to Dick-Endrezzi. Many lack the resources and capital that larger enterprises might have at their disposal, so SBAC case managers act as counselors for people who are trying to get a new business off the ground.

Entrepreneurs have sought help with things like obtaining a permit to open a vegan taco truck, acquiring a license to start a cleaning business, or filing for tax credits for an organic baby food business, to name a few examples. "This is something we really need," Dick-Endrezzi told the Guardian, "and this is something politics shouldn’t get in the way of."

Nonetheless, the center and the commission haven’t been spared from controversy. In December, the Board of Supervisors considered slashing SBAC funding. The $800,000 annual budget was ultimately granted, but it weathered midyear budget cuts of around 10 percent.

Now a new issue of contention has emerged: O’Connor has sounded the alarm that the SBC is becoming weakened by mayoral appointees who represent the large corporate interests that are often quite different from those of small businesses.

The conflict went public at the Jan. 12 SBC meeting when it came time to elect a new vice president. Richard Ventura, who heads a consulting firm and serves as executive director of the downtown-based Hispanic Chamber of Commerce, had just won commissioners’ approval to serve as president. Before a second round of votes were cast, O’Connor — who served as president for two years but declined to try for the post again — voiced his fervent opinion that "an actual small business owner" should be chosen for the other leadership slot.

"I think we need the balance of a small business owner in either the presidency or the vice-presidency position," said O’Connor, who owns the Independent music venue in the Western Addition. "If we have a president and a vice president that both come from downtown, and if three out of the four mayoral appointees on this commission are from downtown, I will be incredibly embarrassed to be on this commission. And I’m sorry, this is nothing personal — I like everybody on this commission — but small business is in a fight for its life, in this building and in City Hall."

Despite his plea, Commissioner Irene Yee Riley — a retired Bank of America executive — was elected. Although not a small business owner, Yee Riley told commissioners that she was qualified to serve as vice president thanks to her "many years of experience working with small business owners as a banker."

"I’m retired, and I have time, so I want to use this opportunity to give back to the community," she added.

Yee Riley won after receiving one vote more than Commissioner Janet Clyde, a bartender and general managing partner of Vesuvio Cafe in North Beach. "I live in the Mission District in a solid working-class neighborhood that is rapidly changing," Clyde told the other commission members during her pitch. "I know the challenges of small businesses operating far from the power and economic center of San Francisco, and I intend to work to recommend their interests … even in this difficult budgetary time."

The following morning, a dismayed O’Connor vented his frustration in an e-mail to mayoral staffers, typing "Small Business Commission … or … Big Business Commission" into the subject line. Installing commissioners with ties to large corporations rather than direct small business experience constitutes "a neutralization of the only real voice small businesses have in San Francisco," he charged.

The most recent mayoral appointee to the SBC was Darlene Chiu (no relation to David Chiu), a spokesperson for PG&E who formerly served as deputy director of communications for the Mayor’s Office. When the Guardian queried the Mayor’s Office last March on what qualifications a PG&E spokesperson brought to the Small Business Commission, Press Secretary Nathan Ballard responded with this statement: "Darlene has first hand knowledge of the challenges facing small businesses in San Francisco. She grew up working in her family’s … retail businesses in Chinatown, managing nine to l5 employees. She will also bring her knowledge of city government and communications to the commission, which will be important to the successful operations and promotion of the assistance center." (See "Newsom to small business: drop dead!" March 18, 2008 Bruce Blog.)

But since her appointment last March, public records show that Chiu has missed four of the monthly meetings. Excessive absenteeism at city commission meetings briefly emerged as an issue in September 2006, prompting Newsom to introduce a new standard with a working goal of 100 percent attendance for commissioners.

Meanwhile, not everyone agrees with O’Connor’s assertion that "San Francisco’s Office of Economic Development seems to believe small business is just an annoying little rock in its shoe."

"The Office of Economic Development is incredibly committed to keeping this commission strong," counters Jennifer Matz, managing deputy director of the Office of Economic and Workforce Development, who played a role in starting the Small Business Assistance Center. "Michael is very disappointed about what happened, but I don’t think it reflects a lack of commitment to small business on the part of the city or the Mayor’s Office."

Matz said the challenge to the SBAC came from the Board of Supervisors — not the Mayor’s Office — when they considered revoking the center’s funding. She also contends that the Small Business Commission’s voting record doesn’t demonstrate a downtown vs. small business split.

From January 2008 to this January, commissioners voted unanimously 34 out of 38 times, the record shows. But it’s on the divisive issues where small and big businesses differ that can have the most impact.

Sup. Chiu served on the Small Business Commission before being elected to the Board of Supervisors. He said commission members usually saw eye-to-eye on most items that came before the commission regardless of whether they were board or mayoral appointees. But for him, the frustration was that "it didn’t feel that either the mayor or the Board of Supervisors were focused on small business."

In his new capacity as board president, he said measures that aid small businesses will be moving up on the list of priorities. For example, he has asked for a hearing on why the report on streamlining small business regulations, which Prop. I required the Office of Small Business to complete by 2007, was never done.

Although doubts about the commitment to small business seemed to be cast on all sides, everyone we spoke with seemed to agree on one point: in these stormy economic times, San Francisco’s small businesses need all the help they can get.

Two reports released in December by the U.S. Bureau of Labor Statistics and Automatic Data Processing (ADP) provide some insight into the challenges facing small businesses nationally. BLS reported that 524,000 jobs were lost during December, bringing the 2008 total to 2.6 million lost jobs — the highest since 1993.

The ADP report showed that 281,000 jobs had been shed from companies with fewer than 50 employees. This signifies a drastic increase in job losses from this sector: between October and November, small businesses cut just 79,000 employees, according to ADP, and between September and October, they let go of 25,000 employees.

"That was the first time since 2002 that small businesses had net job losses," says Scott Hauge, president of Small Business California. What’s frightening, he says, is that the small business sector traditionally acts as an economic stabilizer.

During the battles it the mid-1980s over accelerating downtown office building construction, the Guardian commissioned a study from noted MIT economist David Birch that found that small business accounted for most net job creation in San Francisco, and that catering to corporate demands downtown actually cost the city jobs.

Yet now, with the small business community sometimes serving as a political football tossed between downtown and City Hall, the city’s economic base is in trouble and hoping for help from political leaders who are now contemputf8g deep budget cuts.

————

Here’s a list of all the small business commissioners:

Commissioner Darlene Chiu
Occupation: Communications, PG&E
Appointed by: mayor

Commissioner Janet Clyde
Occupation: General managing partner / bartender, Vesuvio Cafe
Appointed by: Board of Supervisors

Commissioner Kathleen Dooley
Occupation: Florist / owner, Columbine Design
Appointed by: Board of Supervisors

Commissioner Gus Murad
Occupation: Owner, Medjool (restaurant) and Elements (hotel)
Appointed by: mayor

Commissioner Michael O’Connor
Occupation: Co-owner, The Independent (music venue)
Appointed by: Board of Supervisors

Commissioner Irene Yee Riley
Occupation: Retired senior vice president and market executive, Bank of America
Appointed by: mayor

Commissioner Richard Ventura
Occumpation: Executive director, San Francisco Hispanic Chamber of Commerce
Appointed by: mayor

————-

Previous Guardian coverage:

>>Volume 20.02 (PDF) An exclusive Bay Guardian study in 1985 challenges the convention wisdom that downtown development creates jobs. Instead, our study by an MIT economist shows that small business have created virtually all the new jobs in San Francisco since l980.

>>Volume 21.02 (PDF) Our updated study in l986 shows that as highrises have gone up, downtown San Francisco has lost jobs. In fact, all the net new jobs in the city have come from new and small businesses in light industrial areas and the neighborhoods

>>October 1, 2003 (PDF) The Guardian’s small business agenda for San Francisco

Editor’s Notes

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› tredmond@sfbg.com

Just about every progressive economist agrees that the federal bailout bill should include money to help state and local government. I agree. Forcing government to lay off public sector workers and cut services is the worst thing you can do in a recession.

But in a strange way, some sick, contrary part of me almost hopes the Obama administration doesn’t bail out California. Federal money would let us off easy. It would let us do what just about everyone in Sacramento desperately wants to do right now: figure out a way to get out of this mess for another year. Then we can all hope things will get better again.

But they won’t, is the thing. As the San Francisco Chronicle reported Jan. 25, the weak economy is leading to a lot of home sales, and a lot of those sales are at prices below the level of the property’s current tax assessment. So property tax revenue will be dropping this year – but they’ll stay low next year, and the year after, and the year after that. Because under Proposition 13, property taxes can’t go up by more than 2 percent a year. So even as the economy recovers and property values rise, those houses and commercial properties sold at bargain basement levels today will continue to enjoy nice tax cuts for the foreseeable future.

Meanwhile, the state already owes billions from previous one-time borrowing to cover previous one-time budget solutions. And since most of the money comes from taxes that are highly unstable and move with the economy (sales taxes, for example), the budget hole is going to get worse before it gets better.

This is no way to run the world’s eighth-largest economy.

And I keep thinking: could this finally be our chance to do something about it? Might things get so bad this year that people start asking about actual radical change?

And when I talk about radical change, I’m not talking about a tax here or there. I’m talking about somebody in the Legislature standing up and saying, if we were going to create from scratch a system to fund the state of California, what would it look like? And I can tell you, it would look nothing like the Winchester Mystery House of tax laws that we have today.

I won’t be the one called on to draft the blueprint for a new California revenue system, which is probably a good thing. But I can make a few observations and offer a few proposals that almost everyone with any sense agrees ought to be on the table.

First, California may be broke right now, but many of its residents are not. Generally speaking, the fairest types of taxes are income taxes, and the state doesn’t charge the people with very high earnings anywhere near enough. And since the rich don’t tend to suffer as much as the rest of us in recessions, that’s a fairly stable resource.

We don’t do enough to capture our share of the money companies make off California’s resources, either. This is an oil-producing state, yet we have no tax on oil at the wellhead; even Louisiana has that. And we don’t do nearly enough to charge consumers for the damage they do to the environment (the car tax being the most obvious example).

But beyond that, we tax goods and manufacturing, which is no longer the base of our economy, and let services go free. Some services are necessary and should be exempt (medical care, for example). But are the people who pay for, say, personal trainers or cosmetic surgery by and large better off financially than the rest of us? I suspect they are. Should they be taxed on what is by almost any standard a luxury service?

The point is, we need to stop looking at this as a one-time problem. This year’s deficit is the canary in the financial coal mine. Maybe instead of a ballot measure on one tax plan, we should have an election to reconsider Prop. 13, the tax code, and the entire way we finance the state. The system is about to collapse. Maybe we should start again, and get it right this time.

Bar Hop: Kick-ass sazeracs at 83 Proof

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By Marke B.

83proofint09.jpg
The view from 83 Proof

I highly recommend you fly by the snazzy 83 Proof downtown for some classic cocktails soon — yes, even in these recession-minded times. Hunky Beau and I popped in to check it out last Saturday, and it was quite fab and reasonable.

Both the economy and the inauguration hangover seemed to be taking their toll: 83 Proof is pretty big, with an upstairs lounge area and plenty of airy space around the downstairs table and massive bar stocked with an amazing amount of liquor I’d never seen before. There were maybe 10 others cozied up — and this was just before primetime on a Saturday! But we all got to talking and ordering, and it was an evening well-spent.

I went for the Proof’s storied basil gimlet (which the friendly, craft-minded bartender mixed with a little ginger Cello for spark) after diving into a cucumber gimlet. What can I say? I’m a total girl drink drunk.

Hunky Beau, however, likes the harder, classier stuff. The gimlets were a tad too sweet for his macho, macho buds. He started out with a Manhattan on the rocks and then moved smothly on to a sazerac, one of the oldest cocktails (it’s debated whether it was indeed the very first) — and this proved the highlight of the night.

sazerac09.jpg
A typical sazerac, although ours was on the rocks and much heftier – and our lemon twist twistier.

The truth about Community Choice Aggregation

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By Amanda Witherell and Tim Redmond

It would be easy to just ignore last week’s SF Weekly story on
San Francisco’s energy policy.

The piece was exactly what we’ve come to expect from the Weekly – a direct attack on progressive San Francisco. It used all the buzzwords – “risky,” “radical,” “scheme.” It selectively chose facts and presented them without context.

But stuff like this sticks around, and people read it, so somebody has to set the record straight.

The running theme of the piece, by Peter Jamison, is that Community Choice Aggregation, an energy plan that would allow the city to be the wholesale buyer and provider of power to residents, comes with a high risk. In an effort to get greener power, the article charges, the city may wind up raising electric rates – “which could have a crippling impact on the city’s poorest residents.”

Of course, PG&E is going to raise electricity rates every year for the foreseeable future, and high PG&E rates are already having a crippling impact on poor people, small businesses and the local economy. But that’s not addressed in the story.

The truth is, CCA is only “risky” if you (a) assume that PG&E, which has been in and out of bankruptcy and continues to seek rate hikes, will somehow be a risk-free source of energy in the future and (b) assume that there’s no risk whatsoever to continuing to rely almost entirely on nuclear power and fossil fuels for our energy needs.

Housing is economic stimulus

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By Paul Boden


EDITORIAL Change is certainly in the air these days. A president who understands that the phrase "economic recovery" is more then just a buzzword for tax cuts and bailouts for corporations and wealthy people represents perhaps the biggest, and some would argue the most important change — and it offers an opportunity for struggling communities.

President-elect Barack Obama has promised to create the largest public works construction project since the creation of the federal highway system in the 1950s. He has talked about funding work on everything from schools to sewer systems, from green jobs to ensuring that every American has access to a college education. All this is incredibly good news for the country as a whole.

My concern is that homelessness has received very little mention, although more than 3 million people experience homelessness every year. Family homelessness, in particular, is on the rise, with 16 cities (out of 25 surveyed in a recent report) reporting an increase in the number of families forced out of their homes. And yet there seems no clear plan for using economic recovery programs to restore the draconian cuts in federal affordable housing funding. Since 1983, those programs have been reduced by $54 billion a year. And there’s no plan to show how addressing homelessness can and should be part of the economic revitalization of local communities.

Many of us watched in despair as our issues were ignored during the campaign debates and in the party platforms. Homelessness is the No. 1 issue locally, yet it was all but ignored nationally.

But the country has now elected a president who understands what it means to respect the work of true community organizations and allow for local voices to be at the table when decisions are made that have an impact on our lives.

Local Community Development Corporations (CDCs) and Housing Development Corporations (HDCs) already exist in many communities. The credible ones will work in partnership with community members and organizations to combine a federal reinvestment in affordable housing with economic stimulus activities that benefit everyone — street-level space for creating new local businesses, job training connected to positions created in the development and management of the new business and housing units, the use of (and training in) smart green technology in all development.

Tax dollars invested in affordable housing stay in the local economy. Many of the jobs created remain long after the construction phase is completed.

Economic recovery plans are being made now, as federal departments are hiring staff and priorities are being set. Congress, despite the lessons learned from the banking bailout, is in a rush to release funds without much detail. We need direct petitioning from local communities. We need calls demanding that a share of economic recovery funding be given directly to local organizations to develop desperately needed housing and community spaces, using accountable local hiring requirements and safe green building practices.

It’s on all of us locally to come together and make the call.

Paul Boden is director of the Western Regional Advocacy Project, a coalition of West Coast social justice-based homeless organizations.

Editor’s Notes

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› Tredmond@sfbg.com

Barack Obama is going to have to be a different kind of president, and I don’t mean just policy or the fact that he’s by far the coolest guy to hold that office in my lifetime. I mean he’s going to have to change the tone of how Americans look at our country. He’s going to have to do something that George Bush (and Bill Clinton before him) never did. He’s going to have to get rid of the selfish baby boomer ethos. He’s going to have to talk about sacrifice.

The economy can’t be fixed with deficit spending alone, and the equally massive environmental issues can’t be fixed with just hybrid cars and wind turbines. All those things are important. Without massive federal spending, probably well beyond what Obama is talking about today, the nation will continue to lose millions of jobs, the recession will become a deep depression, and life around here will really suck. And without new technologies, climate change will continue to get worse and energy will become far more expensive and far less reliable.

But in the end, it’s going to take more.

I was listening to the Democratic response to the governor’s State of the State speech Jan. 15 and the KQED radio host asked Darrell Steinberg, the state Senate president pro tem, the basic question of our time: why do Californians want all these wonderful services — education, parks, roads, trains, etc. — but don’t want to pay for them? Steinberg ducked beautifully, but the question still hangs out there. And it’s not just California.

Let us not forget: the United States is still a very wealthy country, and the Bush years made some of its residents exceptionally rich. I just added up the net worth of the top 20 people on the latest Forbes 400 list, and it came to $433 billion. That’s 20 people. The net profits of the top 10 companies on the Fortune 500 list for 2008 totaled more than $100 billion. That’s 10 companies.

Bush never asked any of those people or corporations to help pay for his war. Instead he told them everything would be easy, and gave them juicy tax cuts.

Obama has to set a different tone. He needs to say, loudly and clearly, that those who have the most (far more than they need) in very tough times should be willing to share.

A one-time, 10 percent wealth tax on the ultra-rich would probably raise half a trillion dollars. A short-term excess profits tax (similar to what the nation enacted during World War II) would provide another huge chunk. And it would send a signal to the rest of the country: this isn’t going to be easy. We all have to help out, starting with those at the top.

It also means that, on every level, we all have to get more engaged, more involved in the community. We have to become a nation of givers, not just takers. Public service has to be more important than private profit.

That’s a tough order for a generation raised on selfishness and greed. But it’s the only way out — and the guy we put in office on a banner of change has to lead the way.

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