Friday, June 17, 2011

Why Business People Don't Run For Public Office

In the weeks before the election filing deadline, I’d been approached by two different ad hoc groups asking me to help them convince local businesspeople to seek elective office.

They both believed that if successful businesspeople were elected, we’d have a legitimate shot at cleaning up a lot of the ongoing financial turmoil government is experiencing at every level, and either eliminate, or at least slow, the inevitable regulatory and tax increases. They seemingly viewed me as someone who has successfully made that transition from the private sector to government.

In my experience it’s possible to run government like a business if you actually mean to — and know how. However, in my view, there is also a myriad of reasons why successful businesspeople don’t answer the call to public service.

My personal motivation stemmed from anger at a highly dysfunctional City government where phone calls weren’t returned, emails were ignored, and some very simple questions were not responded to for more than two years — unanswered questions that cost myself, my wife, and our business, an inexcusable amount of money. I’ve always believed that if you want something fixed right, fix it yourself — so that’s what I set out to do.

That said, the level of invasion of your personal privacy is perhaps the most chilling aspect of running for — much less being elected to — public office. Your personal and business finances become public. The most personal aspects of your private life become everyone’s business. You can become the victim of vicious rumors — and outright lies — about your personal life and/or financial affairs, intentionally circulated by political opponents.

The political spin machine operated by our local media allows for the routine distribution of massive disinformation — as we witnessed with the NASCAR debate a few years ago. It also encourages ongoing character assassination by small-minded people with personal agendas writing in the local blogs — people who are not required to even sign their names to their vitriolic commentary.

In my view, these are equal to Letters to the Editor, only in a more immediate form. You’re required to submit verifiable identification to get a Letter published. I've yet to receive a non-lame answer from the Kitsap Sun or the Kitsap News Group as to why the blogs are any different.

Being in the news business I can tell you it's because they don't want to publicly admit the answer is that online advertising rates are usually set by the number of page views a given Web site generates. If an article can sufficiently stir up the cadre of regular posters, and the more moronic segment of these folks begin arguing with each other online (sound familiar?), it helps drive ad rates higher. It’s just that simple.

I firmly believe if the local media only allowed these folks to post using real, verifiable names, the level of discourse would become much more civil — and more intelligent folks would become engaged at every level.

While voters have a right to know who they’re voting for, I also believe that invasion of privacy is why businesspeople generally decline to needlessly subject themselves, the future of their businesses, and their families, to the vitriol of anonymous people who steadfastly refuse to allow actual facts to ever influence their opinions. That disservice by the media often leaves us choosing between the lowest common denominator of candidates for public office. And it’s the decisions those sometimes unqualified folks make after being elected that impact our businesses, the state budget, the business and regulatory climate locally and statewide, and of course, taxation.

Over the past three and half years, I’ve worked closely with a large number of elected officials from the federal and state levels on down to small taxing districts. While we do have a lot of dedicated, qualified people serving in public office, we also have quite a number who I seriously doubt could survive in the private sector. I let you speculate upon who they might be.

The bottom line is, unless businesspeople like you are willing to step up, none of the things you hate about government are going to change — but they are likely to get worse.

Tuesday, June 07, 2011

When the Washington Post Calls Obama a Liar, He's Got Troubles...

 President Obama’s phony accounting on the auto industry bailout

“Chrysler has repaid every dime and more of what it owes American taxpayers for their support during my presidency.”  — President Obama, June 4, 2011

By Glenn Kessler
The Washinton Post

With some of the economic indicators looking a bit dicey, President Obama traveled to Ohio last week to tout what the administration considers a good-news story: the rescue of the domestic automobile industry. In fact, he also made it the subject of his weekly radio address.

We take no view on whether the administration’s efforts on behalf of the automobile industry were a good or bad thing; that’s a matter for the editorial pages and eventually the historians. But we are interested in the facts the president cited to make his case.

What we found is one of the most misleading collections of assertions we have seen in a short presidential speech. Virtually every claim by the president regarding the auto industry needs an asterisk, just like the fine print in that too-good-to-be-true car loan.

Let’s look at the claims in the order in which the president said them.

“Chrysler has repaid every dime and more of what it owes American taxpayers for their support during my presidency, and it repaid that money six years ahead of schedule. And this week, we reached a deal to sell our remaining stake. That means soon, Chrysler will be 100 percent in private hands."

Wow, every dime and more sounds like such a bargain. Not only did Chrysler pay back the loan, with interest but the company paid back even more than they owed. Isn’t America great or what?

Not so fast. The president snuck in the weasel words, “during my presidency” in his statement. What does that mean?

According to the White House, Obama is counting only the $8.5 billion loan that he made to Chrysler, not the $4 billion that President George W. Bush extended in his last month in office. However, Obama was not a disinterested observer at the time. According to The Washington Post article on the Bush loan, the incoming president called Bush’s action, "a necessary step to help avoid a collapse of our auto industry that would have had devastating consequences for our economy and our workers.”

Under the administration’s math, the U.S. government will receive $11.2 billion back from Chrysler, far more than the $8.5 billion Obama extended.

Through this sleight-of-hand accounting, the White House can conveniently ignore Bush’s loan, but even the Treasury Department admits that U.S. taxpayers will not recoup about $1.3 billion of the entire $12.5 billion investment when all is said and done.

The White House justifies not counting the Bush money because, it says, that money was completely spent when Obama was making a tough political decision on whether to extend another loan. In other words, a decision to do nothing at the time would have resulted in the immediate loss of the $4 billion that Bush had extended.

This is chicanery. Under the president’s math, Chrysler paid back 100 percent of Obama’s loan and less than 70 percent of Bush’s loan. A more honest presentation would combine the two figures to say U.S. taxpayers got back 90 percent of what they invested. In fact, that is how the Treasury and other administration officials frequently portray it; it is just when Obama speaks that the numbers get so squishy.

The White House justifies saying that Chrysler will be in 100 percent, “in private hands,” because there will no longer be government ownership once Fiat completes its purchase of the U.S. stake. For the record, the United Auto Workers will own 46 percent of the company.

“All three American automakers are now adding shifts and creating jobs at the strongest rate since the 1990s.”

The White House says the data to back this claim concerning the Big Three automakers is not public information. The official Bureau of Labor Statistics data refers to the entire auto industry — including foreign auto manufacturers, auto parts manufacturers, auto parts dealers and auto dealers. If you look at the data, the 113,200 jobs added between June 2009 and May 2011 amounts to about a 5 percent increase from a rather low base.

“GM plans to hire back all of the workers they had to lay off during the recession.”

This is another impressive-sounding, but misleading figure. In the five years since 2006, General Motors announced that it would reduce its workforce by nearly 68,000 hourly and salary workers, creating a much smaller company. Those are the figures that generated the headlines.

Obama is only talking about a sliver of workers — the 9,600 workers who were laid off in the fourth quarter of 2008. About 4,100 were sent home for a few weeks. Another 5,500 were put on indefinite leave, meaning there were no jobs at the time for them. All but 1,000 have returned to work, and the rest should be back at work by year’s end, according to GM spokesman Greg A. Martin.

“In the year before I was President, this industry lost more than 400,000 jobs, and two great American companies, Chrysler and GM, stood on the brink of collapse. Now, we had a few options. We could have done what a lot of folks in Washington thought we should do — nothing.”

This is quite a straw man — that many people wanted to do nothing. It was never so black and white. The debate was over the right course to take in the bankruptcy process.

The Wall Street Journal published Monday an interesting conservative critique of the government’s intervention by David Skeel, a law professor at University of Pennsylvania. Skeel says that the revival of the auto industry, “is a very encouraging development, but to claim that the car companies would have collapsed if the government hadn’t intervened in the way it did, and to suggest that the intervention came at very little cost, is a dangerous misreading of our recent history."

To support the claim that, “a lot of folks wanted to do nothing,” the White House referred us to statements by the House minority leader, John Boehner (R-Ohio), and Sens. Richard Shelby (R-Ala.) and Jon Kyl (R-Ariz.).

We do not read Boehner’s quote that way; in this 2009 comment, he is questioning the administration’s approach while saying, “The success of our automotive industry is critical.” Shelby and Kyl in 2008 were protesting the use of taxpayer funds by Bush to delay a bankruptcy filing; they preferred immediately putting the companies through the bankruptcy process.

It will be up to historians to decide what the best solution would have been for taxpayers and the auto industry. We can understand why the president wants to portray himself as making a lonely and tough decision. But the debate was not either/or, bur rather what was the best policy to bring the automakers back to financial health.

Washington Business Climate Claims Another Victim

International Tennis Tour Operator Relocates to Phoenix
Tennis Ventures, an official tour operator of the Australian Open, recently relocated its corporate headquarters to Phoenix. The international tour operator previously was based in Spokane. Under Governor Jan Brewer, Arizona has earned a reputation for being business-friendly and aggressively recruiting businesses — and the jobs they create.

“Tennis Ventures is the only all-inclusive tour operator in the U.S. sanctioned by the Australian Open,” according to CEO Chadwick Byrd. Tennis Ventures is also the only Grand Slam tour operator that offers organized professional tennis clinics and play nearly every day during their trips. Travelers not only see Grand Slam tournament action, they get tennis instruction from international and US tennis pros. On most programs participants get the chance to rub elbows with past tennis greats.

According to Byrd, the company plans to develop domestic tennis camps in the Valley. “Our camps will bring tennis players from across the northern states and Canada to the warm weather of the Valley during the winter and early spring. These programs will not only bring business to local hotels, restaurants, and shops, but will also utilize local tennis professionals and tennis facilities.” Byrd says the company is working with a Former Wimbledon Champion to headline as Tennis Director for these camps.

Additional information about Tennis Ventures and all of their programs can be found at

Wednesday, June 01, 2011

To Woo Business From Washington, Other States Add Special Touch

(Editor's Note: While our legislature wasted it's special session time debating how to hurt business the most, other states are actively courting the companies our legislators hate — and the jobs they provide. A very telling piece from Jerry Cornfield that appeared in the Everett Herald.)

Just before the Legislature rejected a tax break extension for John Sabey’s high-tech firm, an iPod arrived from Virginia.

By Jerry Cornfield, Herald Writer
OLYMPIA — Add an iPod Touch to the tools other states are using to recruit Washington businesses.

Virginia’s governor used one to reach out and tap high-tech businessman John Sabey last week just as Washington leaders pulled their hand away from the Seattle entrepreneur.

The iPod Touch arrived at Sabey Corp. offices hours before Washington lawmakers, on the final day of the special session, balked at extending a tax break the company sought for expanding its business of building data centers.

“We thought it was very ironic,” said Sabey, president of Sabey Data Center Properties. “On the day we got spiked by the Legislature, the state of Virginia is sending us goodies telling us, basically, they’d like us to do business in their state.”

Carrie Cantrell, Virginia’s deputy secretary of commerce and trade, confirmed the state sent the recruitment package as part of an ongoing campaign to attract data center firms. She wouldn’t say if the timing of this particular delivery was planned or a coincidence.

David Sabey, John’s father and renowned commercial real estate guru, received the package on the outside of which is written, “The governor of Virginia requests five minutes of your time.”

Inside was the iPod Touch preloaded with a video message from Virginia Gov. Bob McDonnell extolling the virtues of operating in his state.

“That’s pretty aggressive,” said state Sen. Steve Hobbs, D-Lake Stevens, a supporter of the tax break and one of several state lawmakers who heard about the package.

Gov. Chris Gregoire on Tuesday veered away from commenting on McDonnell’s tactic, focusing instead on her disappointment the bill didn’t pass.

“I’ve been a proponent of data centers from the beginning,” she said, adding that she knew of other companies in addition to Sabey that were ready to break ground had the tax break been approved.

Data centers are essentially where gobs of servers are used to process, store and transfer information online. With surging volumes of information and online transacting, the demand for these centers is growing and states are actively competing for them.

Last year, Washington’s Legislature passed a bill to lure construction of centers in rural counties. It allowed firms to forgo paying sales tax on the electrical equipment and servers used in the buildings.

Seven projects were undertaken as a result; Sabey’s firm launched work in East Wenatchee and Quincy.

But the law had a limited life span, with the tax break available only until July 1, 2011. This year’s bill sought to keep the tax break going another three years.

As a result, the flurry of activity will be muted and the state will be at a bit of a competitive disadvantage, according to John Sabey.

He said his firm had been exploring opportunities in Virginia well before the package arrived. If they make a deal, he might drop by McDonnell’s office to say hello.

At the same time, he’s hoping Washington lawmakers revive the tax break bill in 2012.

Hobbs and Gregoire hope so too.

“I certainly hope we do something,” Hobbs said.

“If we’re not aggressive enough we could lose out on these high-tech businesses.”

McDonnell is not the first governor to attempt to lure a Washington-based company.

Idaho Gov. Butch Otter sent a “love letter” to Washington businesses in March 2010 extolling his state’s economic climate. Texas Gov. Rick Perry wrote a handful of corporate executives in October as Washington voters considered an income tax measure. Perry’s missive noted Texas had no income tax and no interest in getting one.

Each of those overtures evoked a bring-it-on response from Gregoire, who expressed confidence Washington firms wouldn’t bite. In replying to Otter, she hinted at trying to lure companies from his state but apparently didn’t try anything as brash as a letter.

Earlier this year, she went out of her way to not publicly trash such tactics.

“I’m not going to criticize any of my colleagues,” she said in February at the National Governor’s Association meeting. “Anybody who wants to come to Washington state is welcome. I’m not out trying to steal companies from my colleagues.”

Gregoire, this year’s NGA chairwoman, went on to say each state’s future economic development hinges on them competing globally not “stealing from someplace else” in this country.

Jerry Cornfield: 360-352-8623;