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ISSUE 12.30
Jul. 25, 2013

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12/04 | 11/27 | 11/20 | 11/13

Index

News :
Drawing blood over money
Palmetto Politics :
Dems draw a bead
Commentary :
New study challenges assumptions about poverty
Spotlight :
S.C. Policy Council
My Turn :
Poverty grows, but does anybody care?
Feedback :
Demagoguery is alive and well in S.C.
Scorecard :
And then there's T-Rav
Stegelin :
Standing her ground
Number of the Week :
$3.6 million
Megaphone :
Just plain wrong thing to say
Tally Sheet :
Search S.C. legislative bills
Encyclopedia :
Henry Laurens

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NUMBER OF THE WEEK

$3.6 million

That’s how much the federal government will spend on marketing federal health care reform law in South Carolina, where state government stands largely against it. More.

MEGAPHONE

Just plain wrong thing to say

“I imagined a lot of different people."

-- Gov. Nikki Haley, on who she was thinking of earlier this week after firing a host of powerful weapons, including a machine gun, while wearing heels at a firing range. When asked who, specifically, she replied: “That’s my secret.” More.

TALLY SHEET

Search S.C. legislative bills

With the legislature adjourned until next year, the next time bills will be introduced is in late November or early December with pre-filing for the 2014.  For now, you can look at bills filed in 2013 to determine what's so far in the hopper for 2014:

ENCYCLOPEDIA

Henry Laurens

(Part 2 of 2)

The South Carolina to which [Henry] Laurens returned in 1774 had moved beyond peaceful petition to revolution. Within weeks of his landing, St. Philip's Parish elected him to the First Provincial Congress.


H. Laurens

In June 1775 he became president of the Provincial Congress and the Council of Safety and consequently the state's chief executive during the establishment of the provincial regiments and the transition from royal to independent status. He contributed to South Carolina's first constitution and served as vice president in the first state government formed in March 1776. He remained an active and moderating force in South Carolina's revolutionary movement from 1775 until he left to serve in the Continental Congress in June 1777.

Laurens has been frequently cited by historians as one of the few citizens in the lower South who expressed opposition to slavery in America as early as the 1770s. In an oft-quoted passage from his correspondence, he wrote (after receiving a copy of the Declaration of Independence), "I abhor slavery," despite participating in the slave trade early in his career, owning 298 slaves as late as 1790, and the fact that there is little evidence that he offered freedom to more than a few of his servants. Laurens understood the harm that slavery posed, to both races, and anticipated that it would end in a bloody conflict. His opposition to slavery, however, had little impact on the institution in South Carolina.

Arriving at Philadelphia in July 1777, Laurens quickly established himself as an active and respected member of the Continental Congress. In November 1777 he succeeded John Hancock as president during one of the most trying times in American history. He took the chair at York, Pennsylvania, where Congress met after Philadelphia had fallen to the British the previous September. During his tenure the Continental army spent its winter encampment at Valley Forge and turmoil in Congress and among Continental officers threatened General George Washington's command. Laurens resigned as president in December 1778 but continued to represent South Carolina in Congress until late 1779. In October that year Congress selected him to travel to Holland and secure a loan and an alliance with the Dutch.

Shortly after departing on his Dutch mission, Laurens, his vessel, and most of his papers were taken by a British warship in September 1780. Charged with high treason, he was a prisoner in the Tower of London from October 1780 through December 1781. After obtaining his parole and subsequent freedom, Laurens learned that he had been named to the American commission to negotiate peace with Britain. The fifteen months spent in confinement ruined his health, however, and permitted him to play only a minor role. Along with Benjamin Franklin, John Adams, and John Jay, Laurens signed the preliminary peace treaty in Paris in November 1782. Traveling to England to regain his health, Laurens did not attend the signing of the definitive treaty in Paris in September 1783.

Laurens returned to South Carolina in January 1785 and withdrew from public affairs. Elected as a delegate to both the 1787 Philadelphia constitutional convention and the 1790 South Carolina constitutional convention, he declined to serve in both. The one minor exception occurred in 1788 when he supported the federal Constitution as a delegate to the South Carolina ratification convention. He spent his declining years successfully rebuilding his war-ravaged estate. He died on December 8, 1792, at his Mepkin plantation on the Cooper River. As stipulated in his will, he chose to have his remains cremated before burial. His ashes were interred at Mepkin.

-- Excerpted from the entry by C. James Taylor. To read more about this or 2,000 other entries about South Carolina, check out The South Carolina Encyclopedia by USC Press. (Information used by permission.)

PALMETTO PRIORITIES

Palmetto Priorities Statehouse Report encourages state leaders to develop and implement Palmetto Priorities involving several issues to make the state better a better place. Click the link to learn more about our suggestions for bipartisan policy objectives.

Here is a summary of our Palmetto Priorities:

CORRECTIONS: Reduce the prison population by 25 percent by 2020.

EDUCATION: Cut the state's dropout rate in half by 2020.

ELECTIONS: Increase voter registration to 75 percent by 2015.

ENVIRONMENT: Adopt a state energy policy that requires energy producers to generate 20 percent of energy from renewable sources by 2020.

ETHICS: Overhaul state ethics laws.

HEALTH CARE: Ensure affordable and accessible health care.

JOBS: Develop a Cabinet-level post to add, retain 10,000 small business jobs per year.

POLITICS: Have a vigorous two- or multi-party political system of governance.

ROADS: Strengthen all bridges and upgrade state roads by 2015.

SAFETY: Cut the state's violent crime rate by one-third by 2016.

TAX REFORM: Remove outdated special interest sales tax exemptions as part of an overall reform of the state's tax structure to be completed by 2014.

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News

Drawing blood over money

Treasurer, pension fund managers continue to spar

By Bill Davis, senior editor

JULY 26, 2013 -- What will it take for state Treasurer Curtis Loftis and the state Retirement Investment Commission to stop fighting over the handling of the state’s $27 billion pension fund?

Last week, a report from the state Inspector General’s office found fault and praise for both sides in a fight that has been roiling ever since Loftis took office in January of 2011.

The report said there had been no proof of criminal activity on the part of the commission and called for both sides to put away their swords.

Dovetailing with that sentiment, Loftis was quoted last week in a major pension industry magazine as saying that there “can be no room for hurt feelings or grudges as they are counterproductive to our work.”

Last year, the legislature even attempted to put the fight to bed, in part, with a pension reform bill.

But then this week, Loftis, casting himself as a warrior for the little guy, castigated the commission yet again, saying that no proof of criminal wrongdoing by the commission was a “world of difference” from not doing anything “civilly wrong.”

Apparently, at least one more timeout is needed.

A history of major drops

The management of the state pension fund became a hot-button topic in the recent past after Statehouse Report first reported that the pension fund, which will have close to a half-million recipients in the near future, lost a whopping $2 billion in one day of trading in 2008.

Additionally, this publication reported the next year that the fund had lost $10 billion in value over a year’s time by March 2009, when the total dropped from $29 billion to $19 billion.

Suddenly, there was more scrutiny of the commission and its former Lamborghini-driving investment guru. That same pension guru, now back in the private sector, advocated a strong cash position to enable the fund to snap up good investment products at fire sale prices, and ride them back up as the economy revived.

Then-Gov. Mark Sanford raised a stink at the time about the commission's Budget and Control Board’s decision to increase the fund’s expected rate of return to 8 percent, due to the uncertain financial times that has since been nicknamed the Great Recession. [Correction appended, 7/29]

Now with four more years of continued employee contributions, the fund’s total value now stands at $26.5 billion – close to $2 billion less than where it was five years ago, despite a mild national recovery that has seen Wall Street benefit more than Main Street.

According to the most currently available numbers from the commission, the pension fund earned just short of 11 percent over the past three years.

Possible policy solutions

Loftis took some time this week to lay out three policy changes he’d like to see implemented to improve the state’s pension fund, which pays out benefits not only retired state employees, but also to retired teachers and cops.

First, Loftis called for more free and open information to be passed between the commission and his office.

Second, he called for better benchmarks to be set for incentives for money managers. Loftis has repeatedly claimed that if the state pension fund earned the average of its peers, it would have resulted in close to $450 million more in profits.

And third, he wants the state to restrict state pension fund managers’ opportunities to be flown and fêted by potential investment houses – a practice he alleged occurred before he took office.

Another hornet's nest

Seemingly common sense suggestions on the surface, Loftis “magic wand” solutions stirred up the hornet’s nest again.

Reynolds Williams, the commission chair who has repeatedly clashed publicly with Loftis, said that treasurer should practice what he preaches and offer a full explanation of the settlement and attorneys’ fees in a $25 million settlement he reached with a New York investment bank over alleged mishandling of pension funds.

At issue was the loss of $125 million in investments handled by the bank.

Loftis defended the settlement amount, saying it was a “tough case,” and that the $9 million of the settlement paid to lawyers was appropriate with the size and scope of the case.

Herschel Harper, the commission’s chief investment officer, took issue with Loftis’ call for new benchmarks more in line with peers in the pension field. For Harper, “peer” is a slippery word, since the size of pension fund doesn’t always equate to similar goals, which in turn, drive investment strategy.

Harper said Loftis was really calling to “risk up” the plan for higher returns, and questioned whether that was sound advice from the treasurer, who has a fiduciary responsibility to protect the state and those who will draw benefit checks in retirement.

Wayne Bell, a retired state worker and the former president of the State Retirees Association of South Carolina, said he liked the commission’s strategy, saying that its balanced risk and reward in such a way that he’s sure his monthly check will always be there.

To increase the risk built into the commission’s plan could lead to the unthinkable, in Bell’s view: watching the legislature having to choose between shorting pensioners and asking for a tax increase in South Carolina.

Harper said he has asked for Loftis’ investment plan, but has yet to receive it. Loftis countered, saying it was his job to make sure the system worked to maximize tax and pension dollars “not to figure out which stocks to pick.”

Crystal ball: There appears to still be some bad blood that will be spilled between the two sides before the state's pension fund ceases to be, in Bell’s words, “a political football kicked between the treasurer and the commission.” Loftis, by many accounts, has done little to smooth over ruffled feathers at the commission. And the commission seems just as recalcitrant when it comes to apologies. But a truce has to be met – warring branches of state government proved ineffective under Sanford. Maybe one of the two side will shut up if the fund begins to earn way more (or way less) than it is currently earning.

Bill Davis is editor of Statehouse Report.  He can be reached at:  billdavis@statehousereport.comRecent news stories include:

Legislative Agenda

All's quiet

At publication time today, no major meetings were listed for next week for the House, Senate or committees.

Palmetto Politics

Dems draw a bead

State Democrats are going after Catherine Templeton, and by association, her boss Gov. Nikki Haley.

Democratic operatives are passing around a list of employees that Templeton, the current head of the state Department of Health and Environmental Control, has taken with her from her former agency – the state Department of Labor, Licensing and Regulation – to better paying gigs at DHEC (and doing so after getting kudos for “cleaning house.” )

Obviously, the bungling of a tuberculosis outbreak response in Greenwood County has opened a political window for potshots at Templeton and Haley. In the Senate, a public hearing will be held in early August to look into the response.

Commentary

New study challenges assumptions about poverty

By Andy Brack, editor and publisher

JULY 26, 2013 – For Americans trying to escape poverty, location matters – just like in real estate. And if you live in the Deep South, it's harder to escape than about anywhere else in the country, just as generations of us have known.

Throughout every area of South Carolina, jumping from the bottom quintile of income to the middle class or beyond is tough, according to a new Harvard study making waves in policy circles.

In the Columbia area, for example, a child has a 36.6 percent chance of rising out of the bottom quintile of income and a 4.2 percent chance of leaping from the bottom to the top quintile. Those probabilities are among the lowest in the nation and not much different from the number for Greenville, where kids have a 37.7 percent chance to escape poverty and a 4.9 percent chance to be among the nation's highest earners. Researchers found similar low numbers for Memphis, Charlotte, Atlanta and Raleigh.

“Where you grow up matters,” Harvard economist and researcher Nathaniel Hendren told The New York Times. “There is tremendous variation across the U.S. in the extent to which kids can rise out of poverty.”

The new study is drawing attention for what it found, but also for what it didn't find. Researchers crafted the study by analyzing millions of anonymous earnings records to measure intergenerational mobility, or how children move across income levels compared to their parents.

The research team was interested in whether tax breaks and credits, such as the Earned Income Tax Credit, were correlated to high mobility, or the ability of kids to move out of poverty. They found some correlation between local tax rates and mobility, but a weaker correlation between state EITC policies and mobility.


So they looked for other factors to explain why some areas had high mobility out of poverty and others, like Southern states, had low mobility. They identified four correlations, but emphasized they were not causes:

  • Family structure. “The share of households with kids that are headed by a single mother is a very strong predictor of mobility,” research associate Alex Olssen told Statehouse Report. The study indicated income mobility was higher in areas with more two-parent households.

  • Local middle class. The density that poor families are dispersed among mixed-income neighborhoods appear to be correlated. “Areas in which low income individuals were residentially segregated from middle-income individuals were also particularly likely to have low rates of upward mobility,” according to the study.

  • Better schools. Income mobility is higher when a metro area has better primary and secondary schools. Having an array of colleges and their tuition rates don't appear to be as significant, according to study's results.

  • Civic engagement. The more chances for civic engagement, including with religious and community groups, the better the upward mobility.

While these factors appear to contribute to upward mobility, the study also found geography didn't impact income mobility in children born in richer households. In other words, richer children tended to remain richer, regardless of where they grow up.

From a public policy perspective, the study includes notions that fly in the face of traditional thought. First, it suggests that engineering tax policies to help people in poverty might help, but not as much as anticipated. Keep in mind, however, that Southern states tend to not have full earned income tax credits similar to the federal credit. Other implications:

  • Zoning. Perhaps sticking housing projects in separate areas of a community instead of blending them in (as is done increasingly in Charleston) is not the best public policy.

  • Schools. Instead of giving tax credits, it might be better to spend more tax dollars on creating better schools throughout school districts. Also, lift up all schools instead of pouring resources into specialty schools (charters, magnets and more).

  • Family. Figure out ways to craft public policy so there are fewer single-parent households. More sex education in high school? More free condoms? More abstinence?

  • Involvement. Perhaps more community organizations should get involved in local schools to engage children in their communities at earlier age. More quality after-school programs? More Boy Scouts and Girl Scouts?

Location matters. We need to remember this when crafting public policy.

Andy Brack is publisher of Statehouse ReportYou can reach Brack at: brack@statehousereport.com.

Spotlight

S.C. Policy Council

The public spiritedness of our underwriters allows us to bring Statehouse Report to you at no cost. This issue's underwriter is the South Carolina Policy Council. Since 1986, the Policy Council has brought together civic, community and business leaders from all over our state to discuss innovative policy ideas that advance the principles of limited government and free enterprise. No other think tank in South Carolina can match the Policy Council's success in assembling the top national and state experts on taxes, education, environmental policy, health care and numerous other issues. That ability to bring new ideas to the forefront, lead the policy debate and create a broad base of support for sensible reform is what makes our organization the leader in turning good ideas into good state policy.
My Turn

Poverty grows, but does anybody care?

By Allan Sheahen
Special to Statehouse Report

JULY 26, 2013 -- America is awash with money. Yet poverty continues to grow. Does anybody care?
 
The latest government figures show that 46 million Americans live in poverty, more than in any other time in our nation's history.  That's 15.1 percent of our population.  One in five children live below the poverty line of $22,314 for a family of four, compared to one in twelve in France and one in 38 in Sweden. [Editor's note: South Carolina has the nation's third highest rate of poverty at more than 19 percent, according to Census statistics.]
 
Yet whenever elected officials ask their constituents what issues are most important to them, poverty isn't even on the list.  The economy, jobs, Afghanistan, the environment, health care, and education always show up.  But not poverty.
 
Accordingly, Congress is now debating not whether to cut food stamps for the poorest Americans, but by how much.  The Senate is proposing $4 billion in cuts.  The House wants to cut $20 billion,.  Many Democrats are supporting the Senate version.  Many South Carolinians depend on food stamps, even though the average monthly benefit is only $141.70 in Lexington County, $145.24 in Pickens County, and $155.36 in York County.   South Carolina's successful Head Start program is also in danger of being cut.
 
More than a half-million people are homeless in America.  Food banks and homeless shelters are serving more people now than a year ago.  Unemployment is at 7.6 percent.
 
The problem is that all the private charities in America can't end hunger and poverty.  Ending poverty demands government programs, such as Social Security, unemployment compensation, Medicare, welfare, food stamps, child care and more.
 
The 1996 Welfare Reform Act was sold to us as a way to get people off welfare, and it did.  Welfare rolls in the United States are down more than 50 percent.  But it didn't reduce poverty.  That's because welfare reform dumped many recipients into low-paying jobs -- with no benefits or ability to move up.
 
Does anybody care?
 
Maybe we care, but we don't know what to do about it.  So we shrug, say the poor will always be with us, and forget about it.
 
In 1969, a Presidential Commission recommended we establish a Basic Income Guarantee (BIG) at the poverty level for all Americans.
 
On that Commission, the chairmen of IBM, Westinghouse and Rand, former California Gov. Edmund G. (Pat) Brown and 17 others unanimously agreed with economist Milton Friedman that: "We should replace the ragbag of welfare programs with a single, comprehensive program of income supplements in cash -- a negative income tax.  It would provide an assured minimum to all persons in need, regardless of the reasons for their need."
 
Fast-forward 44 years, and we find that welfare has failed because it has destroyed people's ability to take control of their own lives and make their own decisions.  We assume the poor are incapable of making sound decisions; that they can't be trusted with cash and have to be protected from themselves.  It's as if your employer thought you so irresponsible that he sent part of your paycheck to your landlord, another part to your grocer, another to the bank that provided your car loan, another to your doctor.
 
There are more than 300 income-tested social programs costing more than $400 billion a year.  Much of that money goes for administrative expenses, not to the needy.
 
Charles Murray, whose 1984 book: Losing Ground claimed that welfare was doing more harm than good, has seemingly done a 180 and now agrees with the BIG approach.
 
"America's population is wealthier than any in history," Murray writes in his new book: In Our Hands.  "Every year, the American government redistributes more than a trillion dollars of that wealth to provide for retirements, health care, and the alleviation of poverty.  We still have millions of people without comfortable retirements, without adequate health care, and living in poverty.  Only a government can spend so much money so ineffectually.  The solution is to give the money to the people."
 
Murray calls for giving an annual cash grant of $10,000 -- with no work requirements -- to every adult over age 21.
 
Indeed, the U.S. is a wealthy nation.  Our 2011 Gross Domestic Product was $14.4 trillion.  That's an average of $46,000 for each man, woman and child in the country.  It's an average of $61,000 per adult.  It's more than enough to end poverty.
 
Poverty is wrong.  A Basic Income Guarantee would establish economic security as a universal right.  It gives each of us the assurance that, no matter what happens, we won't go hungry.
 
Allan Sheahen is the author of the new book, Basic Income Guarantee: Your Right to Economic Security. More: http://www.basicincomeguarantee.com/.

Feedback

Demagoguery is alive and well in S.C.

To the editor:

Letters to the editor and talk radio prove the art of the demagogue is alive and well in South Carolina. Therefore let’s define demagoguery and list some practices.

Demagogues clutter the media landscape with irrelevant emotional appeals to short-circuit the listener’s decision-making process. This allows the demagogue to create scapegoats.

The Pharaohs used the Hebrews, the Romans used the Christians, and Adolf Hitler used the Jews. The target of the demagogue must become an “enemy of the people” and responsible for all of problems the nation faces.

The real effort is to create a social movement to put the demagogue in power and removes those who are perceived as “the enemy” by whatever means necessary. The goal may be to take control of government in order to dismantle our democratic republic and replace it with a corporate state.

Groups of corporate power brokers, dedicated to the divine right of capital and the search for more profit internationally, are now creating a corporate state system by putting their propagandists on call day and night, 24 hours a day, seven days a week.

The reason for this is that nations keep passing laws to protect people, the environment and hire inspectors that keep the rich and powerful from making more money.  

The ultimate goal is to create a system that will serve the functions of government without the transparency or accountability.  The Constitution will be set aside and corporate policy will take its place.

The problem is that a corporate revolutionary movement like all social movements requires a continuing supply of enemies or devils to keep it in power.

A demagogue must create a constant state of fear in order to create need to justify their existence and the public’s continuing support which group becomes their target is another matter of concern.

– William C. Heitsman, Darlington, S.C.

Wants more made in America

To the editor:

Your Friday article was excellent! I agree with you totally. Wal-Mart used to advertise "Made in America." Now, just try to  find something "Made in America" there. I spoke to the manager recently and he said that subject had been discussed in the managers meeting. However, they aren't the buyers so there is little they can do.

Also, have you noticed the quality is poorer? I would be glad to pay more to get better quality and keep jobs in America. For years, when we call tech support for computer problems, we usually have to talk to someone speaking broken English in  India.

I remember Senator Fritz Hollings. In fact I was born in 1924 just two years later than he.

Most of our representatives in Washington obviously do not understand basic math, to say the  least and have not had a successful business. Just look at our current president for a classic example.  

 Keep writing your thought-provoking articles and hopefully someone will listen.

– Gladys Ward, Florence, S.C.

Send us your letters. We love hearing from our readers and encourage you to share your opinions.  But you've got to provide us with contact information so we can verify your letters. Letters to the editor are published weekly. We reserve the right to edit for length and clarity.We generally publish all comments about South Carolina politics or policy issues, unless they are libelous or unnecessarily inflammatory. One submission is allowed per month. Submission of a comment grants permission to us to reprint. Comments are limited to 250 words or less.  Please include your name and contact information.  Send your letters to:

Scorecard

And then there's T-Rav

Education. The state’s dropout rate drops for the fourth straight year. More.

Immigration. Portions of the state’s immigration laws continue to be held in legal limbo. More.

T-Rav. On the downside, former state Treasurer Thomas Ravenel was arrested recently in the Hamptons resort area on DUI charges. On the plus side, at least it wasn’t cocaine-related. More.

Roads. Weeks of seemingly unrelenting rains may have damaged state roads to the tune of $1.3 million. More.

Stegelin

Standing her ground


RECENT STEGELIN:  7/19 | 7/12 | 7/5 | 6/28
credits

Statehouse Report

Editor and Publisher: Andy Brack
Senior Editor: Bill Davis
Contributing Photographer: Michael Kaynard

Phone: 843.670.3996

© 2002 - 2018 , Statehouse Report LLC. Statehouse Report is published every Friday by Statehouse Report LLC, PO Box 22261, Charleston, SC 29413.
Excerpts from The South Carolina Encyclopedia are published with permission and copyrighted 2006 by the Humanities Council SC. Excerpts were edited by Walter Edgar and published by the University of South Carolina Press. Statehouse Report has partnered with USC Press to provide readers with this interesting weekly historical excerpt about the state. Republication is not allowed. For additional information about Statehouse Report, including information on underwriting, go to http://www.statehousereport.com/.