A Home in the Digital World
September 18, 2018
BY JASON PRAMAS @JASONPRAMAS
The events of last week in the Merrimack Valley were unfortunate by any measure. Something bad happened to the natural gas distribution system in parts of Lawrence, North Andover, and Andover that resulted in dozens of homes being damaged or destroyed by explosions and fire, at least 25 people getting injured, and one person (tragically, an 18-year-old) getting killed. The leading theory for the conflagration is that it was triggered by a pressure spike in area gas pipes. But until the National Transportation and Safety Board concludes its investigation—which could take up to two years—we likely won’t know the cause of that spike. According to ThinkProgress, the Mass Department of Public Utilities will be conducting its own investigation, and Attorney General Maura Healey will oversee that effort to ensure transparency.
The company responsible, Columbia Gas of Massachusetts—a division of NiSource Inc. of Indiana—was so slow to respond to the crisis that Gov. Charlie Baker put Eversource Energy in charge of the cleanup effort.
But the magnitude of the disaster is just starting to sink in. About 8,500 homes were affected, and its occupants are being told that it will take months to replace the cast iron gas pipes under city streets and restore service. Pipes so old, and so prone to rusting, leaking, and failure, that the federal Pipeline and Hazardous Materials Safety Administration started pushing gas utilities nationwide to replace them over a decade ago, according to USA Today. Yet despite being allowed to recoup such costs—which run about $1 million a mile—from their customers, utilities like Columbia have been slow to complete the needed work. Meanwhile, the thousands of residents that officials have allowed to return to their homes are forced to stay in apartments and houses that use gas for heating and cooking… with the gas shut off for the foreseeable future. As winter approaches.
This highlights the danger of using methane, an obviously flammable and explosive gas, as a fuel source for homes and businesses. Notwithstanding being in continuous use at millions of sites in the United States for well over 150 years, “natural” gas is not as safe as many people believe. According to the New York Times, “Since 1998, at least 646 serious gas distribution episodes have occurred across the country, causing 221 deaths and leaving nearly a thousand people injured. …” And the reasons for such episodes are not always found.
Perhaps it could not be otherwise, since America has allowed private companies to control the production and distribution of natural gas from the industry’s beginnings. Sure, we call those companies “public utilities” and tell ourselves that federal and state government regulate them. But, like all corporations answering to the siren call of the market, gas companies exist to make profits for their shareholders. To the exclusion of all other considerations—be they health, safety, environmental, or economic. Even though the small local gas companies of the 1800s have long since merged to become large and powerful combines, and even though they are allowed to be monopolies in the areas they control, they continue trying to save money on costs and make as much profit as regulators allow. Often quite a lot, since the phenomenon of “regulatory capture”—where a revolving door sending top staff back and forth between utilities and regulatory agencies generally assures that utilities have fat bottom lines—continues unabated. Including here in the Bay State. Whether utilities provide good service or bad.
Which is why National Grid—another one of the seven companies that have gas monopolies in parts of Massachusetts—is getting away with locking out 1,200 union gas workers who are trying to get a better contract for the difficult and dangerous work they do day in and day out. And why Columbia, which has already been dinged for recent safety issues in the regions of the Commonwealth gas infrastructure under its control, according to the Boston Globe, was allowed to continue business as usual until the Merrimack Valley fires brought international attention to the consequences of its malfeasance. Leading WGBH’s Jim Braude to wonder aloud on the Sept 17 episode of Greater Boston what would have happened if the gas network in Lawrence, North Andover, and Andover had been owned by National Grid. A company currently trying to service its infrastructure with ill-trained scab labor—some of them managers with little or no field experience. The better to bust the labor unions that protect the livelihoods of its workers, and permanently replace them with un-unionized workers that will make its stockholders even bigger profits.
If all these developments were taking place in a period where there were no demonstrable environmental consequences for burning fossil fuels like natural gas, they would be dire enough. But, unfortunately, that is not the case. True, burning methane as an energy source only produces about half as much carbon dioxide as burning coal, according to the Union of Concerned Scientists. However, there are so many methane leaks in the production and distribution of both oil and gas that any relative advantage to the environment that burning it provides is mostly erased, according to a Washington Post article on a key study in the journal Science. Given that methane is a much stronger greenhouse gas than carbon dioxide. So even the 2.3 percent of methane estimated to be leaking away into the atmosphere before it can be burned is enough to ruin its oft-hyped potential as a more “green” fossil fuel source that can be leaned on for decades while carbon neutral energy sources like solar are brought online on an industrial scale. Not because we don’t have the technology to do so faster, but because energy multinationals don’t want clean energy systems deployed until they’ve made all the money they can make by burning carbon.
Worse still, more than half of the natural gas being used in the Greater Boston area is now coming from fracked gas, according to Boston University earth and environment professor Nathan Phillips in a BU Today article. Fracking (more correctly, hydraulic fracturing) is an incredibly destructive and ecologically disastrous method of squeezing oil and natural gas out of vast underground shelves of shale rock by injecting massive amounts of water and any number of often-toxic liquid chemicals into them. Direct environmental impacts include ground, water, air, and noise pollution in those areas unfortunate enough to have lots of shale. And the technique has even been known to trigger earthquakes. Phillips also explains that fracked methane contains many impurities that may be making consumers sick. But the indirect impacts are far more problematic because fracked gas and oil have flooded the planet’s fossil fuel markets with cheap product at exactly the time we need to move away from burning carbon.
In a better world, the Merrimack Valley disaster would be a clarion call to move more decisively toward clean energy alternatives—at least in the affected communities as a useful demonstration project. In advance of doing so swiftly across the country, and in every corner of the globe. But we are not in that world. We’re in a world where energy corporations control the politics of the US and many other countries to their own advantage. And they want to ensure that humanity squeezes every last possible joule of energy out of fossil fuels like natural gas before allowing alternatives to finally become the dominant mode of energy production. Regardless of the fact that doing so will very likely result in a planet that’s unable to sustain advanced human civilization, and perhaps unable to sustain human life at all. If the worst global warming scenarios are allowed to become reality.
That’s why I have repeatedly called—most recently in a column about Eversource, the utility called upon to “fix” the Merrimack Valley crisis—for bringing energy companies to heel on both the environmental and economic fronts by winning the huge political struggles necessary to make them all genuinely public utilities. With a mission to provide cheap, clean, green energy like advanced wind, solar, and hydroelectric (ideally not from environmentally destructive mega-dams) power to America, and phase out all fossil fuel production, distribution, and usage as soon as possible. If we could accomplish that sea change in our energy system, other countries would be likely to follow at speed. And we might actually stand a chance of minimizing the damage from global warming, already on display with increasingly alarming frequency in the form of catastrophic storms like Hurricane Florence and Typhoon Mangkhut.
So if you want to help the Merrimack Valley disaster victims, certainly donate to the best local charities you can find. But also join environmental groups like Mass Sierra Club, Resist the Pipeline, and HEET (Home Energy Efficiency Team) that are working to end the ability of privately owned energy utilities to harm communities like Lawrence in particular and our planet’s ecosphere in general going forward. Furthermore, be sure to make your house, condo, or apartment as energy efficient you can and do whatever you can do to convert your dwelling from reliance on burning fossil fuel to using genuinely clean energy sources. Every little improvement helps. Just remember, we won’t really be able to ensure our survival as a species until the fossil fuel megacorps are stopped. Cold.
Apparent Horizon—winner of the Association of Alternative Newsmedia’s 2018 Best Political Column award—is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
May 1, 2018
BY JASON PRAMAS @JASONPRAMAS
It’s always funny to hear that Charlie Baker is a very popular governor… The most popular governor in the country at the moment, according to polls. Because he doesn’t do anything very differently than his predecessor Deval Patrick did. Or than Mass House speaker Robert DeLeo does. Or than most any state Democratic leader when it comes down to core economic issues—with the exception of the leaders with little actual power.
Baker, Patrick, DeLeo, and all their ilk in both major parties essentially follow the same game plan. They work to lower taxes for those most able to afford them, cut desperately needed social programs to the bone, and give away as much money as possible to giant corporations.
Much of the rest of what they do is posturing for the various constituencies that make up their particular electorates. And that’s the stuff that gets the most media coverage. Which is not to say they’re necessarily insincere about such activity. But they’re elected to represent the wealthy interests that run the Commonwealth, and the work they do for that most important constituency is always their top priority.
So when Patrick and Baker, for example, shovel over $1.5 billion in free public money at the biotech industry or arrange millions in tax breaks and direct state aid for huge companies that don’t need them on an ongoing basis—with DeLeo’s blessing in both administrations—to the extent those acts get coverage, they’re presented as done deals that are “good for the economy.” Then it’s on to the next press spectacle of the day. Events where they can “show leadership” and the like. As when there’s a snowstorm. In Massachusetts, a northern state noted for its frequent snowstorms. And the current governor gets on TV and says “stay indoors during the snowstorm.” That is apparently showing leadership.
Which explains Baker’s high numbers, I think. Simple public relations. Accentuate the positive, eliminate the negative, and all that. With most of the major news outlets gamely playing along. And his numbers are higher than Patrick’s were because he’s a white guy in a super racist state that likes to think it’s super anti-racist.
That’s what results in people that don’t pay attention to politics—including the vast majority of white voters—going, “Oh, Baker’s such a nice man” when pollsters ask their opinion of him. More than they did with Patrick. No doubt Baker is a nice man in person or whatever. Lots of people who do bad things when they have power are personally “nice.” Like, I’m sure when some buddy of his from childhood needs money, he’ll give it to him. Or at least loan it to him. But when all the legions of people he doesn’t know personally need good jobs with benefits, need free higher education, need major improvement to infrastructure like the MBTA—because of entrenched structural inequality—that’s a different story.
A story whose narrative you can hear if you listen to Baker’s remarks to the 2018 Mass Republican Convention in Worcester last weekend.
Stripping away obligatory pleasantries and nods to major supporters, the speech was aimed at the same white middle-class suburbanites who remain the base of the state Republican Party. Baker addressed them directly at one point while enumerating the “successes” of his administration: “We offered early college programs, our Commonwealth Commitment program, which dramatically reduces the cost of a college education. And increases in state scholarships to make the price of college more affordable for moderate- and middle-income families.”
See, he thinks they’re so important he mentioned them twice in a row: “moderate- and middle-income families.” No word about low-income families, though. At all. Not even a nod. Sure, working families are discussed. But in Republican-speak, “working families” isn’t code for “working class” as it often is for Democrats. It means “those who work.” As opposed to “those who do not work.” Like all those “lazy shiftless” folks that used to be called working class in more honest times. And those totally nonindustrious [ha!] immigrants. And the “undeserving” poor in general. Everyone who supposedly lives off the bounty of “our”––the good “moderate- and middle-income” people’s, the “taxpayers’”—labor.
But no mention of his most important constituency, the one he actually works for, either. “Small business” is mentioned a number of times. But not major corporations and the rich people that own them.
Still, they’re there. Lurking behind all of Baker’s remarks. Especially when he said several things that are completely and obviously false to anyone who follows politics reasonably closely. Like taking credit for “dramatically” reducing the cost of a college education. When public higher education is an absolute disaster in Massachusetts. When both the working-class families he seemingly deplores and the middle class he purports to represent—immigrant and nonimmigrant alike—are forced to run up ruinous amounts of debt just to put kids through schools that were once so cheap as to nearly be free. While tuition and fees keep getting raised year after year. Under both Democratic and Republican administrations.
The rich and the corporations are there because public higher ed, like virtually every other beneficial government program, is being starved for operating funds. To fatten that 1 percent’s coffers. Because politicians like Baker make a virtue out of cutting taxes. Slashing budgets. Laying off public workers. Privatizing anything they can get away with. As Baker himself has certainly been doing at the much-beleaguered MBTA. Another public service he addressed in Worcester, saying: “We took on the special interests at the MBTA. Created a Fiscal Management and Control Board. And saved taxpayers hundreds of millions of dollars, and we’re rebuilding its core infrastructure.” While, in the real world, that same public transportation infrastructure continues to fall apart for lack of the needed direct infusion of state funds.
Is everything Baker does bad? No. Is he as dangerous as federal counterparts like President Donald Trump? Or the feral reactionary theocrat Scott Lively that fully 28 percent of Mass Republican delegates just chose to run against Baker in a primary this fall? No. Not yet at least.
But that’s not the point.
The point is that a polity where a Charlie Baker can be incredibly popular is a broken polity. And a news media that enables him is a broken news media. Baker does not represent even the interest of the white middle class that keeps voting him into office, let alone the working class as a whole. A media that was doing its job would make that patently clear. Every hour of every day. Yet it does the opposite. Because it too is controlled by the same rich and powerful interests that control politics and ensure pols like Baker keep getting elected. Whether those pols call themselves Republicans or Democrats.
So to fix politics, we have to fix the media. And I can’t address how that might be done in a single column. But my colleagues and I are trying our damndest to do it in practice at DigBoston and the Boston Institute for Nonprofit Journalism. And the fix starts with journalists who are independent and strive to tell the truth about problems in media and the political system. Every hour of every day. Beyond that, there’s much more to say. So, I’ll plan to talk about specific potential fixes in future columns and editorials.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
BY JASON PRAMAS @JASONPRAMAS
Boston politics—in both its state and local variants—seems to consist largely of backroom deals between government officials and major corporations punctuated by rituals of representative democracy that are increasingly put on just for show. Perhaps it has ever been thus. But that doesn’t mean that Bostonians have to like it.
One would be tempted to call this politics incipient fascism were it not all such a desultory affair—unsullied by any ideology other than a very primitive capitalist greed. And in that way, it is reminiscent of current federal politics. The fact that most of the damage is being done by people calling themselves “Democrats” rather than people calling themselves “Republicans” making almost no discernible difference.
Which is why it becomes tiresome to write about. One disgusting display of government servility to corporate power replaces another week by week, month by month. The storyline is always the same. Only the brand names change.
On the ground—physically close to the halls of actual power in the Financial District, Back Bay, and now the Seaport District, but a million miles away in terms of elite awareness—the situation is dire. People don’t have good jobs. Or affordable housing. Or adequate public schools. Or cheap, safe, frequent, and environmentally friendly public transportation. Or a proper healthcare system. Or pensions. Or sufficient leisure time. Or freedom from several kinds of debt peonage.
But city and state political leadership have no plans to fix these problems. Because they can’t do so without discomfiting the ascendant rich and powerful. So they squirrel around the edges. They juggle budget lines, and change program names, and reorganize departments, and send out obfuscatory press releases, and do whatever they can do to cover up the fact that they aren’t taxing giant companies and their owners nearly as much as they should be. And in failing to collect sufficient tax revenue, they lack the needed funds to fix the worst damage done by those companies.
Yet they never fail to find millions in ready cash for vast conglomerates like General Electric. And now Amazon. A multibillion dollar trust that did not pay a cent in US income taxes last year, according to the Institute on Taxation and Economic Policy—and is expecting a one-time $789 million break from thanks to Pres. Donald Trump’s kinder, more corporate-friendly tax plan.
So, sure, I could write another column this week inveighing against Mayor Marty Walsh’s new scheme to dump $5 million in local tax breaks on Amazon in exchange for bringing another 2,000 jobs to the city. Well, not to the actual city, but to job sites within 25 miles of the city, according to the Boston Globe. And not right away, but by 2025. Maybe. And dumping another $5 million if Amazon brings yet another 2,000 jobs to (Greater) Boston. Not the decent working class jobs that most Bostonians need, of course. Jobs that highly educated people from around the world will come to the area to fill. Exacerbating our housing, transportation, and environmental crises in the process.
And, yes, the proposed $5-10 million is not as much as Walsh arranged to throw at GE—in a deal swiftly running off the rails as that corporate behemoth crashes and burns thanks to the gentle ministrations of its own “activist” investors. But once Gov. Charlie Baker adds state money to the kitty, the new Amazon deal will start to look very similar to the earlier deal. Which he will almost certainly do. Given that he’s so excited for Boston to “win” the far larger “HQ2” boondoggle that he wants to pass a new law that will allow the Commonwealth to shovel truly epic wads of public lucre at the rapacious anti-worker multinational, according to State House News Service.
Yet with such deals becoming so frequent, it really strikes me that writing is never enough to change the politics that allows this kind of backroom deal making by itself—regardless of how boring or exciting it is for me to crank out. After all, providing information to the population at large only goes so far.
Political action is inevitably required. And not just by one journalist. Because stopping the public gravy train for corporations that are also among the biggest donors to state and local politicians’ war chests is going to take truly massive and sustained protest on the part of the people of Boston (and the rest of Massachusetts).
How massive? Well, remember last year’s Women’s March of over 175,000? Or last year’s 40,000-strong march against a few ultra-right weasels? That’s the scale of the street actions that would be required on a regular basis—in tandem with concerted and well-coordinated lobbying efforts—to not only stop particular giveaways to corporations like GE and Amazon, but to outlaw them. And, for good measure, start criminal proceedings against politicians and corporate leaders that collude to loot the public till.
Who will lead such efforts? Hard to say. But at the end of the day, I think it will be new entrants that will step into the political vacuum I’ve outlined, and directly challenge state and local government deals with major corporations. People like most of my regular audience. Working people, many without college degrees, that will finally decide that enough is enough. I think that the existing oppositional forces—ranging from the left wing of the Democratic Party through formations like Our Revolution to grassroots activist coalitions like Poor People’s Campaign to rising socialist organizations like Democratic Socialists of America to some of the more enlightened elements of organized labor—will play a role in the necessary popular movement that will emerge. But I suspect that the main energy will not come from those forces, but from new ones. As has been the case with the Occupy and Black Lives Matter movements in recent years. The trick will be sustaining early momentum long enough to bring some big corporations down to earth. And then moving on to tackling the truly terrifying federal corruption.
Until that happens, it’s going to be one sad government giveaway to huge companies after another in Boston. And I’ll do my best to keep you all up to speed on at least the worst of them. But I look forward to the day that I can help chronicle the victory of a powerful movement for social justice. Rather than merely track democracy’s looming demise.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
December 12, 2017
BY JASON PRAMAS @JASONPRAMAS
Big local corps quiet about huge profits to come from Repub tax scheme… except GE
An interesting WBUR article, “Largest Mass. Companies Are Mostly Silent On GOP Tax Plans,” asked the top 12 corporations in the Commonwealth to comment on the recently passed Republican scheme to transfer vast amounts of money from the working and middle classes to the rich and the corporations they control—euphemistically called “tax reform” in most of the major news media. Unsurprisingly, Bay State business leaders didn’t want to take time away from rubbing their hands together and cackling with glee about all the free money they’re going to get—choosing instead to remain mum for the moment.
But WBUR did get a statement out of General Electric after the Senate vote on the tax plan:
GE commends Congress and the White House for their commitment to comprehensive tax reform. GE supports the Senate tax reform plan because it would upgrade the U.S. to a territorial tax system, bring rates in line with other countries, and allow U.S. businesses and workers to compete fairly around the world, so it’s the quality of our products that determine whether we win global deals, and not tax differences.
No surprise GE would say that, since it will benefit tremendously from the drop in federal corporate tax from 35 percent to only 20 percent. But it will also get to repatriate as much of the lucre it’s been offshoring as it would like at a one-time tax rate of merely 12 percent. And now that the feds are “upgrading” to a “territorial tax system,” the company will make even more money. Why? Because a territorial tax system means that all the profits multinationals sock away in offshore tax havens will be taxed at a rate of zero percent. You read that correctly. Nada. No taxes at all on foreign profits.
Currently, companies like GE stash profits in other countries because, although they have been technically taxed on all profits—foreign and domestic—at the base 35 percent rate (basically a total joke since there are so many corporate tax loopholes that big companies like GE actually end up with a negative tax rate some years, but let’s play along for the purpose of this explanation), they are only required to pay those taxes when they “repatriate” the money back to the US. Which has often been never thanks to a complicated system called “transfer pricing” where corporations book profits in low tax countries, and take deductions in the US and other higher tax countries. And then borrow cheap money on the strength of their foreign bank accounts to make more profits.
The result will be even more offshoring of both money and jobs by megacorps. Because why would a company like GE not move more of both away from the US if foreign profits are tax free—without nearly as much of the tricky accounting that’s currently needed to play the transfer pricing game? Just really bad news for Mass workers. And for boosters of the GE Boston deal. And anyone who thinks big companies like Amazon are going to have much incentive to add lots of jobs anywhere in the US going forward.
BPDA “PLAN: Glover’s Corner” protested in Dorchester
As the neoliberal capture of the government and the public sector continues apace, earnest technocrats at the Boston Planning and Development Agency (BPDA, formerly known as the BRA) still find it necessary to play the communitarian “public meeting” game when trying to sell bad deals that advance corporate interests to the working families who are all too often the targets of such deals.
Communitarianism being the decades-old fad where institutions representing the rich and powerful work hard to make sure that “every constituency has a seat at the table” when they want to do something that will harm those constituencies. But, of course, the power relations remain unchanged. The rich and powerful remain rich and powerful. Everyone else does not. And “the table” isn’t the real table—where bankers, CEOs, and top government leaders meet to make policy decisions happen. Usually behind closed doors. It’s basically a kiddie table where regular people can pretend they have some impact on a process that’s over before it begins.
Which is why it’s nice to see that housing activists with the Dorchester Not For Sale coalition decided to crash a recent BPDA transit-oriented public meeting on its “PLAN: Glover’s Corner”—which is slated, among other things, to add hundreds of units of housing that will be mostly unaffordable to current Dot residents.
According to the Bay State Banner and the Dorchester Reporter, the Dorchester activists are taking a page from JP and Roxbury housing activists with the Keep It 100% for Egleston coalition who protested the larger BPDA PLAN: JP/Rox—which might ultimately involve thousands of units of new housing—until the city relented and mandated that 36 percent of the new units (and 40 percent overall, including units currently permitted for construction) must be affordable.
The definition of “affordable” for the JP/Rox plan area is pegged to percentages of the average median income of the Boston region set by the US Department of Housing and Urban Development (HUD). So, for example, according to an August Spare Change News article, some “affordable” units being rented and sold as part of the 3200 Washington complex are being offered to households making 70 percent of the region’s average median income, and some to households making 100 percent.
But JP and Roxbury advocates have continued to protest PLAN: JP/Rox even after it was made official because its definition of “affordable” remains too high.
Spare Change continues, “For the Boston metropolitan region, the average median income is just over $100,000, and according to the U.S. Census Bureau, the average household income for all of Jamaica Plain is $76,968. However, households within the plan’s range have an average income of just over $50,000.”
According to a March Bay State Banner article, activists three goals for the plan are “to deepen the affordability level on designated affordable housing units so that they are attainable by households making less than $35,000 per year; increase goals for the portion of new housing that’s designated as affordable from 36 percent to 55 percent; and require the conversion of 250 market-rate units into affordable units..”
So while their activism raised the amount of “affordable” housing the BPDA planned to offer in the deal from 30 percent to 36 percent, it’s not going to help many people currently living in or near the affected neighborhoods to stay in the area unless the definition of affordable is changed to reflect economic reality. Given that fact, Mayor Marty Walsh’s much-vaunted progress on getting more affordable housing built on his watch is based largely on smoke and mirrors because much of it remains unaffordable to the people who need it most.
The Dorchester activists, meanwhile, are demanding that the BPDA accept a six-month moratorium on PLAN: Glover’s Corner, use the extra time to provide more data to the community on the plan, and do things like provide childcare at public meetings to allow more locals to attend.
Thus far, the BPDA is blowing off such demands and trying to plow forward without significant changes to its plan. Boston City Councilor Frank Baker, who attended the Glover’s Corner meeting, agreed with the BPDA in a recent Spare Change article, saying “As far as I’m concerned, it’s not a valid request.”
Seems the fight for housing justice is far from over in Dorchester.
Townie (a worm’s eye view of the Mass power structure) is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
November 15, 2017
BY JASON PRAMAS @JASONPRAMAS
What a surprise. General Electric is tanking, and the scheme to bring the multinational’s headquarters to Boston is looking worse by the day. And whom shall the public blame if that once-secret deal cut by Gov. Charlie Baker and Mayor Marty Walsh in January 2016 goes south? Potentially tossing away millions in tax breaks and direct aid to a company that has already done massive damage to the Bay State over the past few decades? Readers of the dozen columns I’ve written criticizing the boondoggle will already know the answer to that question. But for those of you who have made the mistake of believing all the massive amounts of PR bullshit that the Boston Globe and other area press have been tossing around about the affair since that time, here’s a bit of a recap.
Where to begin? So, the governments of Boston and Massachusetts agreed to shovel tens of millions of dollars at GE in “exchange” for “800 jobs” in a new corporate headquarters campus in the Fort Point district of the Hub. Many of which would simply be transferred from the old headquarters, and most of which would be executive level jobs that will not help Boston’s struggling, underemployed working class.
Now there’s a problem. GE’s been losing money all year. According to the New York Times, its stock price had already dropped by 35 percent since January. Then, according to CNBC, the company’s share value dropped another 13 percent this week as of this writing after new CEO John Flannery announced a restructuring initiative—including the one thing investors hate most of all: dividend cuts. Only the second for GE since the Great Depression. So the knives are coming out around the beleaguered behemoth, and it remains to be seen whether some internal reorganization (doubtless costing legions of employees their jobs) and some belt-tightening by its execs will be enough to stop investors from moving to carve the conglomerate up like a Thanksgiving turkey. But let’s not assume the worst just yet.
Funny thing about that belt-tightening, though. According to the Boston Herald, cuts are now in store for GE’s still-small local workforce, and construction of the new Fort Point headquarters building was already pushed back two years from 2019 to 2021 in August. The plan is to make do with the two old Necco buildings already being refurbished on the site at first. The PILOT (payment in lieu of taxes) agreement signed by the Boston Planning and Development Agency (formerly the Boston Redevelopment Authority) and the city of Boston guarantees up to $25 million in tax breaks to GE if it provides the much-ballyhooed 800 full-time jobs. But by what date?
The discussion around GE moving its HQ to Boston has focused on the corporation creating those jobs by 2024. Herein, then, lies the rub about the PILOT deal: The agreement is framed around GE hiring “approximately 800 employees at the Headquarters Building and the Necco Buildings within eight years of the Occupancy Date.” But that occupancy date is explicitly defined as “the date upon which the Company initially occupies the Headquarters Building.” Which has now been pushed back from 2019 to 2021, according to the Boston Business Journal. So 2024 cannot be the year that GE will need to have 800 employees on its new campus. 2027 would have been the earliest it had to meet that target. And now that’s been pushed back to 2029, given the delay with the headquarters building.
Yet it turns out that the PILOT agreement doesn’t actually require 800 jobs to be created. Remember, it starts by stating GE will employ “approximately” 800 people on the Fort Point campus. But further down in the document, in a table explaining the specific tax break the city will actually give the company during each year of the deal, it allows for the creation of as few as 400 jobs in a chart with five tax break tiers between “Job Figure is between 400 and 499” and “Job Figure meets or exceeds 800.” Keeping in mind that the agreement also specifies a “stabilization” period of seven years between 2018 and 2024, during which GE gets $5.5 million in tax breaks no matter what and isn’t required to provide any jobs at all for the first six years. GE is then only required to provide between 400 and 800 jobs from 2024 until the agreement ends in 2037.
What’s super puzzling is that agreement first requires the company to start providing annual job figures “from and after” the aforementioned occupancy date. But the agreement already established that it only really has to start meeting any job targets as far out as eight years from the date it occupies its headquarters building. Making the job target requirement trigger as late as 2029, according to current plans. Despite the tax break table in the PILOT agreement using job targets to calculate tax breaks beginning in 2025 based on the 2024 job count.
The state, for its part, committed a total of about $120 million to the project. Late last year, GE spent $25.6 million to buy 2.5 acres on the Fort Point Channel that includes the land the existing buildings sit on and the land the new headquarters building will (perhaps) one day occupy from Procter & Gamble. MassDevelopment, part of the Commonwealth’s economic development apparatus, took out a $90 million loan from Citizens Bank—an interesting maneuver worth looking into—using $57.4 million to purchase the two old Necco buildings on the site from P&G, and the rest to refurbish the buildings. The remainder of the state’s “investment” is slated to go to fixing up the area around the site.
So, GE is getting basically free rent on the Necco buildings plus free upgrades on abutting public land courtesy of the state. And a big chunk of the taxes it would normally pay over the next 20 years is coming free from the city. Without any real requirement that it actually provide any jobs in Boston for many years, and then only (maybe) 400 jobs by 2029—assuming the headquarters building is built in 2021.
Which is the problem with all such erstwhile “economic development” deals in the Bay State. From their origin as a way to help encourage investment in areas of the state that were down on their luck precisely because GE and companies like it moved their manufacturing operations away from cities like Pittsfield, Lynn, and Fitchburg to places without the decent labor and environmental regulation that was in place by the 1970s, they have become yet another way for rich and powerful corporations to get richer and more powerful. Worst of all, such corporations hold all the cards in the deals. If they don’t get lavished with free public money, they can refuse to move their operations here or can leave if they’re already operating in the area. Once they get the cash they’re looking for, they can basically pull out at any time. Or as is the case with GE, they can “alter” the deal Darth Vader-style, leaving our local “Lando Calrissians” like Baker and Walsh to “pray” the deal is not altered “any further.”
The Boston Business Journal was correct to point out that GE will get $2.1 million in tax breaks on the Fort Point Complex by 2021—the year that the company now claims it’ll be completing its new 12-story headquarters building on the site. But what if it doesn’t build the new structure at all? It’s not clear. Because the PILOT agreement is pegged to job creation starting as far out as eight years after the headquarters building is built, and then allows for the company providing as few as 400 jobs between 2024 and 2037 rather than the 800 everyone’s been assuming. While not actually demanding any job creation until as late as 2029, making it unclear how the tax break will be calculated between 2025 and 2029 should GE drag its feet for the full eight years. The conditions for the company defaulting on the agreement are also pegged to job creation. Not to the construction of the headquarters building. Oh, and by the way, the PILOT deal only covers the headquarters building and the land the company purchased under and just around it (which the agreement calls the “Headquarters Project”). Not the Necco buildings, now owned by the state. Also, there’s no word about what happens if the company has less than 400 workers in Boston at any point from 2024 to 2037. Do these curious contradictions amount to loopholes for GE to bag the whole deal? It certainly looks that way.
The minimum GE will get in tax breaks from the city of Boston over 20 years is $5.5 million by 2024 plus whatever breaks it qualifies for between 2025 and 2037. However, the amount the company actually puts out in annual PILOT payments after 2024 is calculated by a complicated formula based on the taxes that would have been assessed without the PILOT agreement. And the assessed value of the relevant property could change from current projections. So it’s hard to know what the total value of the PILOT deal will ultimately be to GE, other than that it will be a bunch of money… however many jobs it actually creates.
But why exactly are Boston and Massachusetts giving a huge company that’s still profitable any money at all? And what happens if GE bails on the scheme by hook (simply running and fighting its PILOT default in court with its vast legal department) or by crook (not building the headquarters building at Fort Point and possibly getting away with delaying the job creation target trigger until the deal ends in 2037)? And what happens if worse comes to worst for GE, and the company actually does collapse?
These remain my central questions. And I continue to encourage all of you to ask those and related questions to every Boston and Massachusetts politician you can find. And ask the Globe while you’re at it. They’ve got a loooot of ’splaining to do about their cheap boosterism… which they’ve become awfully quiet about of late. Preferring, it seems, to focus on the next giant company that’s demanding public bribes to come to town, Amazon.
A shorter version of this column appears in this week’s DigBoston print edition.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
October 18, 2017
BY JASON PRAMAS @JASONPRAMAS
The rich and powerful interests that control Massachusetts politics and the state economy have their fingers in every conceivable pie. So numerous are their projects that it’s difficult for most news outlets to keep track of them, let alone cover them all. Yet it’s critical for our democracy that they be covered. Which is why I’m launching Townie—a regular news column that will provide short takes on all the elite wheeling and dealing that most people never hear about.
Business Organizations Sue to Down “Millionaire’s Tax” Referendum
In an era when taxes continue to be slashed for wealthy people and corporations as government social programs are starved for funds, one would think that the Fair Share Amendment (a.k.a. “millionaire’s tax”) proposed by the Raise Up Massachusetts coalition of religious, labor, and community organizations would be a no-brainer. The idea is slated to be put in front of Massachusetts voters as a binding referendum question in November 2018. If passed, it would amend the state constitution to add a 4 percent tax on top of the Bay State’s infamously inadequate 5.1 percent flat income tax for all households earning $1 million or more. The money collected will be mandated to fund public schools, transportation, and road maintenance. All sectors that really need the money. And best of all, only 19,500 families would have to pay in 2019 if the tax goes into effect—0.5 percent of all filers.
Well apparently any tax is a bad tax in the eyes of the Commonwealth’s “business community.” No matter how many people it would help, and how painless it would be for the tiny number of 0.5 percenters. So, according to an Associated Industries of Massachusetts (AIM) press release, the leaders of five pro-corporate organizations are trying to torpedo the referendum before it can be voted on by filing a lawsuit against it at the Supreme Judicial Court. The plaintiffs are: Christopher Anderson, president of the Massachusetts High Technology Council, Inc. (MHTC); Christopher Carlozzi, Massachusetts state director of the National Federation of Independent Business (NFIB); Richard Lord, president and chief executive officer of AIM; Eileen McAnneny, president of the Massachusetts Taxpayers Foundation (MTF); and, Daniel O’Connell, president and chief executive officer of the Massachusetts Competitive Partnership (MACP).
They claim that the referendum language is “riddled with constitutional flaws,” with the MTHC’s Anderson remarking that “Amending the Constitution to achieve taxing and spending by popular vote is just a terrible idea, and could undo much of the good work that Massachusetts has done in terms of creating a successful economic climate.” But no matter what kinds of arguments they try to make, it seems like what they’re most afraid of is democracy. Let’s see how far they get with the SJC.
About That Opioid Epidemic…
More proof that the rising number of deaths from opioid abuse has more to do with corporate greed than any personal failings of individuals suckered into addiction by pliant doctors colluding with pharma sales reps. And also that those few drug companies that pay any penalty at all for their role in destroying communities across the state, get little more than a slap on the wrist. According to a press release by the office of Mass Attorney General Maura Healey, “An opioid manufacturer will pay $500,000 to resolve allegations that it engaged in a widespread scheme to unlawfully market its fentanyl spray and paid kickbacks to providers to persuade them to prescribe the product… Insys Therapeutics, Inc. misleadingly marketed Subsys, a narcotic fentanyl product that is sprayed under a patient’s tongue.” The money will be used to “help fund the AG’s prevention, education and treatment efforts.”
Fentanyl is a synthetic opioid that is 30-50 times more powerful than heroin. The company claimed its spray version of the drug was useful for treating “minor” pain in non-cancer patients—despite the fact that the FDC had only approved the drug for use in more severe pain in cancer patients. It then pushed its sales staff to give kickbacks to doctors in the form of “fees paid to speak to other health care providers about the product.”
Boondoggle in Progress?
When a public college gets involved in land deals, it’s definitely worth keeping an eye on. Especially when that college is UMass—a troubled multi-campus institution whose leadership would rather engage in property speculation than fight the legislature for more money for public higher education.
In 2010, the school’s independent development wing, the UMass Building Authority (UMBA), bought the former Bayside Expo Center property after its owners went into foreclosure. According to the Dorchester Reporter, in August, the UMBA issued “a Request for Information (RFI) as it seeks out ideas for the ‘highest and best use’ of the former Bayside Expo Center site on Columbia Point in Dorchester with an eye toward transforming the 20-acre site into a ‘modern-day Harvard Square.’”
Last week, the newspaper reported that 16 developers have responded to the university’s request, including: Accordia Partners; American Campus Communities; Beacon Capital Partners; Bracken Development; Capstone Development Partners LLC & Samuels & Associates; Corcoran Jennison & BTUHWF Building Corp; Core Investment Inc.; Hunt Development Group, LLC & Drew Company Inc.; The HYM Investment Group, LLC; LendLease; Lincoln Property Company; Lupoli Companies; Rhino Capital & Ad Meliora; SKANSKA; University Student Living; and Waterstone Properties Group Inc. The Reporter says the UMass Building Authority “hopes to leverage public-private partnerships toward the massive mixed-use project.” Which usually means big public giveaways to corporations. One way or the other. Stay tuned.
Townie is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.
February 29, 2016
BY JASON PRAMAS @JASONPRAMAS
In May 2012, three former GE executives were imprisoned after being convicted on multiple charges of conspiracy to commit wire fraud and defraud the United States. Dominick Carollo, Steven Goldberg and Peter Grimm had all worked for GE Capital—the financial division that operated as a semi-legal “shadow bank,” and that accounted for about half of its parent corporation’s profits until the global financial collapse it helped precipitate began in 2007. Between 1999 and 2006, the trio conspired to skim millions from municipal bond investment contracts. With the full approval of their bosses.
According to Rolling Stone’s Matt Taibbi, the scam worked as follows for the company that Marty Walsh, Charlie Baker and cheerleaders like the Boston Globe have welcomed to Boston with open arms: Municipal governments commonly partner with big banks to sell bonds to pay for significant capital costs—like building schools. The banks invite investors to buy the municipal bonds and deposit the resulting funds in tax-exempt accounts from which all necessary project expenses can be paid. However, since all the bond money does not get spent at once, municipal governments typically hire brokers to find major financial institutions to invest it for them through a public auction process. In general, it is legally required that brokers get bids from at least three financial institutions—and the one that offers the highest annual rate of return wins the contract to invest the spare cash from a given bond fund.
But for GE Capital—and a host of other major financial institutions—the process was rigged from top to bottom. In the case of GE’s Carollo et al, the defendants conspired with executives at the brokerage CDR and financial institutions like Bank of America, JPMorgan Chase, Wells Fargo, and Morgan Stanley to divvy up investment contracts for municipal bond funds. CDR would drum up business with local politicians around the country—often bribing them with various kinds of campaign donations and gifts. The pols would then reward CDR with contracts to invest unspent funds from municipal bond issues, while CDR would work with the GE Capital—in concert with the other major financial institutions—to illegally decide which corporation would win which auction for such investment contracts in advance. The “winner” of each auction would collude with the other bidding financial services companies on the bid rate to ensure that the “winning” bid was as low as possible. The agreed upon rate was usually lower than a fair market rate by just a few tenths of a percent. But that was enough to make a killing.
For example, if a fair bid in an auction might have been that GE Capital would invest a municipal government’s unused bond funds at a 5.04 percent annual rate of return, CDR would coach the company to only offer 5 percent. The other bidders would purposely offer lower rates, losing in exchange for winning future rigged auctions. GE would then pocket the .04 percent windfall. A municipal bond fund that might have $200,000,000 to invest in its first year would return around $80,000 extra to GE in that fashion. Which doesn’t sound like much. But such bond funds would be invested by GE Capital for years until they were spent down fulfilling their original purpose to build schools and the like. And GE Capital and CDR colluded on huge numbers of such illegal arrangements, pouring vast sums into GE’s coffers. While depriving municipal governments of that same money. GE Capital then kicked back some of its take to CDR as “fees.”
Given the complexity and ubiquity of this practice, no one knows exactly how much was stolen. But since fines paid by large corporations to governments at various levels for such crimes tend to be vanishingly small, it’s possible to get an idea of the scale of the crime. According to the Securities and Exchange Commission (SEC), GE paid a $70 million coordinated settlement in 2011 to the SEC, Department of Justice, Internal Revenue Service, and a coalition of 25 state attorneys general. The SEC alleged that “from August 1999 to October 2004, [GE Capital] illegally generated millions of dollars by fraudulently manipulating at least 328 municipal bond reinvestment transactions in 44 states and Puerto Rico.”
GE committed yet another massive crime against the public interest. And got away with it. In November 2013, Carollo, Goldberg and Grimm were freed on appeal. The reason? The government had taken too long—ten years—to build its case against the former GE executives.
Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.
Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.