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Skyhigh Airlines

Do you remember this gem of a commercial from the 1980s?

It was one of an entertaining series produced by Alaska Airlines, parodying the gap between promises of  superior customer service and actual delivery.

Good news for United – they will not have to pay a dime for advertising for a while. There’s plenty of free video available and, unlike the poor chap in the Alaska commercial who at least had a seat, passenger David Dao couldn’t keep his.

But he did receive priority deboarding.

As a frequent flyer, I have endured my share of shoddy service but, quite often, it has been more than balanced with exemplary acts of kindness by airline personnel, both on and off the plane, from the cockpit to the reservation agents and the skycaps.

I am sure the vast majority of United’s rank and file personnel were appalled by this incident, but they have to zip it up lest they face the wrath of CEO Oscar Muñoz and get dragged down the proverbial aisle of retribution.

The airline industry is as complex as it gets, but that fact is often used as tool to bamboozle the public and obfuscate poor management practices.  United and other airlines have been flying for more than half a century and have accumulated a wealth of knowledge about scheduling, matching passenger loads with routes and assigning crews to flights.

When customer service goes awry, airlines’ management just shrug it off as de rigueur of the environment.

If industry CEOs learned from experience and applied fixes, the process of bumping would not be as widespread as it is today.

Airlines bumped 40,000 passengers, not including 434,000 who voluntarily relinquished their seats. Statistics for 2015 show about 895 million passengers were carried on domestic routes. So the number of inconvenienced passengers is a mere fraction of the total.

That’s good, but it is a lottery you do not want to win, especially if you are on a tight schedule.  What’s more, bumping creates delays for all passengers and causes some to miss connections.

The root cause, overbooking, is necessary because of passenger cancellations, according to the industry. Airlines risk losing revenue if they cannot fill seats left vacant by no-shows. But what they fail to admit is the windfall they make off of baggage fees, amounting to $3.8 billion for domestic carriers in 2015.  One study cited by Fortune Magazine estimated close to $11 billion for a la carte fees overall.

The disparity between the two seems inexplicable, but it is a staggering amount no matter what.

Do you think some of this money could be used to offset lost revenue from late cancellations, thereby reducing the need for overbooking? How about some for better comfort?

The public might be more forgiving of mismanagement if they had something in return thrown their way,,,and not just a bag of peanuts.

We are likely to face pay lavatories and other abuse , as depicted in other vintage Alaska commercials, before the airlines show some respect to the people who allow them to exist – the passengers.

 

 

The first thought that popped into my mind when Governor Brown proposed his gas tax hike was former mayor Villaraigosa’s infamous trash collection fee increase.

You may recall, the fee was hyped as a means to hire 1,000 new LAPD officers.

Less than half that number were hired; the rest of the funds went to overhead,

As I told NPR’s Patt Morrison and the LA Weekly in interviews back in 2008, controls and reporting are insufficient  to assure the proper allocation of taxes and fees.

This is especially true with state tax revenues, which are allocated to various funds, including those at the local level.  At every layer, allocations are made for multiple purposes. Such is the case with gasoline taxes. They are also used to fund mass transit and other transportation projects unrelated to automobiles. Gasoline excise tax revenue is also used to pay the debt service on highway bonds (Brown’s proposal is an excise tax), effectively relieving the general fund of the obligation.

This all makes for quite a trail to follow. Few individuals have the time or wherewithal to do so.

Determining how much of gas taxes actually improve roads is almost a fool’s errand. Politicians know this and use it to their advantage.  Lack of accountability gives them all the cover they need to divert funds.

This much is known: Brown’s plan would increase taxes by $52 billion; $7.5 billion would go to public transportation and another $1 billion for bike lanes and walkways, not exactly what you would call road and bridge improvements.

It also includes a constitutional amendment requiring spending to be limited to transportation projects.  And Villaraigosa’s trash fee was supposed to cover hiring officers.

You can be assured that new definitions of transportation will abound if the proposal is passed. If it fails – and it could – don’t be surprised if it is resurrected.

Here’s an idea: instead of the tax increase, let’s just pass a constitutional amendment requiring all existing gas tax revenue be spent on roads and bridges.  We might then see a major decrease in the maintenance backlog.

The Numbers Game

Deportations of illegal immigrants has been in the news quite a bit since Donald Trump took office.

Possession of stolen Social Security numbers by the those detained or deported have played a role in some of the cases. A recent, well-publicized, deportation involved Guadalupe Garcia de Rayos. She was arrested in Arizona and returned to Mexico for a 2009 felony conviction stemming from a stolen SSA number she used.  Her case was reviewed by ICE seven times after the conviction. A removal order was issued in 2013.

One source reported the actual owner of the number was a young man in Tucson.  While I cannot confirm that, even if Garcia de Rayos had created one from randomly selected digits there would have been at least a 50% chance of it belonging to a citizen, living or deceased. As of 2014, approximately 450 million numbers had been issued out of one-billion  possible  numeric combinations.

The remaining 50% will be issued over the next several decades. The current rate is 5.5 million per year (there are blocks of numbers which are unavailable). Eventually, all illicitly used random numbers will, in effect, be stolen.

That begs the question: if you are aware that an action you have taken has a 50% chance of amounting to theft, are you guilty of a felony? There is no easy answer, but it at least can be considered some form of fraud or misrepresentation. It would be enough for me to lose my CPA license (or worse) if I filed a tax return for a client who I knew was using a W2 with an unauthorized SSA number.

SSA numbers are stolen for two purposes: financial gain, as in taking out a fraudulent loan in the name of the person to whom it is legally assigned, or for purposes of obtaining employment.  The former can create significant harm to a person’s credit and reputation; the latter can create other problems, such as impeding a background check or delaying the payment of a federal entitlement. The most vulnerable victims in either case are children. Until they are old enough to enter the job market or apply for certain federal benefits, they will not be aware of the theft.

Thefts for financial gains will always be a problem.  Nothing short of persistent, proactive measures by the government and other institutions who possess SSA numbers will make a dent in this form of criminal activity. Even then, sophisticated hacking will occasionally breach any firewall. It is ultimately up to individuals to prevent or limit damage by practicing relentless vigilance.  Take any seemingly legitimate communication you receive from a financial institution  with a grain of salt. Carefully scrutinize all requests for information appearing to originate from a government body.

Preventing the use of SSA numbers for employment purposes is difficult to stop, too, maybe even more so because theft can be accomplished using low tech resources. Illegal immigrants normally use their own names for the stolen numbers. Creating authentic-looking documents is fairly easy.  However, they will not accrue benefits if the number is fictitious or has already been assigned.  The Social Security Administration screens employer W2 filings for mismatches or no evidence of issuance. Employee contributions will be held in the Earnings Suspense File.

In 2010, it was estimated that these suspense dollars provided around $12 billion to the Social Security and Medicare trust funds.  While that is a windfall, it is a pittance compared to the funding needs of the two programs.  The contributions are likely more than offset by the uncompensated services provided by emergency rooms across the nation to those who are not authorized to be here.  That’s according to the American College of Emergency Physicians. 

I would not rule out future benefit claims against previously unmatched contributions by those who may one day attain legal status, or through a class action. If that occurs, the windfall effect could be greatly diminished. The United States could be facing a growing contingent liability that could bite a large chunk from the Retirement and Medicare trust funds when we least expect it, and when less prepared to deal with the fallout. The Suspense File has accumulated $1.2 Trillion through 2012 from 333 Million unmatched W2s.  Claims against a fraction of that could easily exceed $100 Billion.

Except through a small pilot program, neither the IRS nor SSA will notify you if your Social Security number pops up as a mismatch.  It is important for you to compare your earnings against those shown on your annual Social Security Statement. Do not depend on the SSA to catch all fraudulent W2s and assign them to the Suspense File.

The most sensible line of defense against illicit use of SSA numbers for employment purposes would be to increase the use of the E-Verify system.  There must be penalties for employers who do not perform reasonable due diligence in screening hires.

There are concerns about  mandatory use and the cost of the system to businesses. My suggestion would be to use it as an audit tool – not everyone would be required to use it.  Employers submitting too many W2s with mismatched SSA numbers would have to as long as the problem persists…..and suffer consequences for their carelessness if it did not cease.  In time, it may be practical to require widespread use as efficiency is improved through experience.

Ultimately, we need to come to grips with the primary cause of employment-purposed SSA number theft.  There are some jobs Americans will not do at current levels of compensation, in some cases kept artificially low by the availability of cheap labor. Rooting out unauthorized SSA number use could open up some labor segments to American citizens. Then there are those jobs most citizens will shun at almost any rate of pay.  Do not expect to find more than a few Americans picking crops or working in a poultry processing plant. That was not the case in days gone by, but that train left the station many decades ago, and it is not returning.

There should be regulated guest worker programs, subject to the protection of labor laws, for certain industries and jobs when needs are proven. Employees will not get rich, but could earn a path to citizenship and all the opportunities that has to offer.  Costs of certain products would rise, but the use of unauthorized SSA numbers could significantly diminish.

If  the integrity of the SSA database is compromised by a steady inflow of bogus information, the ramifications will be painful to the economy and greatly diminish trust in the institutions responsible for our financial and physical well being. That pain will be far worse than what would be felt by taking steps to deal with the problem now.

 

 

 

 

I yearn for the days when I covered the CD2 special election back in 2009, one that pitted three insiders against seven average citizens.  I attended almost every forum (there were at least a dozen) and provided the most comprehensive coverage of any outlet.

The seven grassroots candidates were instrumental in forcing a runoff; unfortunately, the top two finishers were insiders.  At least the two had to dig deep in their pockets in what was one of the most expensive council races in the city’s history.

In recent years, I have traveled extensively for business reasons.  I miss attending the forums; I miss writing about them even more.

Measure S is the headliner of this year’s ballot; the citywide races offer little drama, although it would be worthwhile for voters to consider an alternative to Eric Garcetti, whose promises of DWP reform and fiscal responsibility have fallen well short of what is needed to support sustainable services.

Measure S pits democracy against plutocracy.  Either we have a city where the residents have a say in the shape and structure of development, or planning is left in the hands of wealthy developers and their proxies in City Hall – a plutocracy only Vladimir Putin could embrace. Their funding of the opposition to S amounts to the financial equivalent of hacking the election.

If you want planning that facilitates community-wide needs and desires, vote Yes on S. We must stop straining our already over-burdened infrastructure any further, curtail the growing traffic on our streets and prevent mini-Manhattans from dominating the landscape. We want growth to be the result of smart planning – within our capacity to manage and control its effects.

The one council race I have watched from afar is  CD7’s.

With 20 candidates vying for an open seat, voters – at least the few who bother to cast a ballot – are certain to find someone to their liking.  I am at least somewhat personally acquainted with, or have followed the postings in social media of a few: Terrence Gomes, Bonnie Corwin, David Barron and Krystee Clark.  I can say, with confidence, they are true activists whose motives are not political, but rooted in the best interests of their community. I am sure there are others as well.

On the other end of the spectrum is Karo Torrossian.  He is Councilman Krekorian’s  land use deputy who, if elected,  will be certain to do the bidding of developers at the expense of residents.  He has done a poor job of advocating for the residents in my part of the Valley.

You have important choices in other races as well, but these two are the most competitive and offer the best chances for a positive change in how the city operates.

 

The Government Accounting Standards Board (GASB) is pretty clear about how it wants state or local governments to report Net Pension Liability. As stipulated by its Statement 68,  on the face of the financial statements, not buried in the morass of footnotes.

But the City of Los Angeles did not read the memo.

A quick survey of the Comprehensive  Annual Financial Reports (CAFR) of a few major cities – New York, Seattle and San Francisco – show compliance.

There are probably a few, besides Los Angeles, who have failed to do so, but weak oversight by GASB is a prescription for sloppiness.

There is no shortage of other professional or authoritative materials on the subject, for example, articles published by the AICPA, such as this government brief.

This is also the second year in a row where the liability was not reported on the face of the financial statements. … and the pronouncement has only been in effect for two years! Although the required footnote disclosures were included, footnotes amplify the contents of the standard accounting reports; they are not a substitute.

Before I go any further, why is this even important?

Analysts, accountants and numbers geeks will know to dive into the footnotes, so who cares if it is not staring at the users on the face of the balance sheet, or statement of net position, as it is also called?

As GASB and others have clearly stated, it is about transparency.

As residents, we are the most important recipients of the city’s financial statements.  We live here and bear the consequences of our elected officials’ decision-making; the financial effects of which are imparted in the CAFR. Even though only a fraction of the residents bother cracking open the CAFR, and those that do rarely get into the footnotes, there is an obligation to provide complete disclosure.  Anything less is implicitly misleading and a disservice.

I would not be as irritated or concerned if this had not occurred before, but suspect political pressure is behind not reporting the NPL as evidently as it should. And that rankles me more…as it should you!

Most of our officials depend on the support of the public unions to fund their campaigns. In return, they receive generous retirement benefits that come at a high cost to the residents of the city.  Shining the light on the $7 billion net liability that has been incurred to support these plans is not in their best interests. It’s much safer to bury it in a line with other long-term liabilities. Doing so does not invite questions.

The NPL is over 50% of the total long-term liability in the governmental activities segment.  It cries out for the specific recognition GASB 68 mandates.

To make matters worse, the footnotes downplay its significance by stating it is not, by itself, evidence of economic or financial difficulties.

Tell that to the city of Richmond, CA, which faces the prospects of bankruptcy.  Its residents are already feeling the impact of diminished services, the result of diverting more of the budget to pay for pensions. Add San Bernardino, Stockton and Vallejo to the list, too.  Others will follow.

In Los Angeles, we cannot afford to increase the police budget to deal with the rising crime rate.

So while our officials avoid the subject, we will pay more for less service.  That’s the city’s plan to deal with the problem.

The City Controller is in a position to educate the public about the dangers of ignoring this bleak prospect. Ron Galperin has the wherewithal and the standing to heighten awareness, but if he is not willing to at least give it the basic recognition it warrants on the face of the balance sheet, where it is more visible, then it is unlikely to get any attention at City Hall.

Galperin has not shied away from auditing waste and abuse, however unpopular that has been among some powerful forces. He is still the most effective City Controller we’ve had, but he must lead the charge to fight the pension cancer, which is consuming our city from the inside.

The NPL is the tip of an iceberg.  Pretending it is not there will only run the city into the rest of it.

Commander-in-Tweet

By the time this article is published,  either the most awaited or unawaited presidency, depending on your point of view, will have begun.

Trump’s loyal supporters believe he will initiate sweeping, long-overdue changes; his most ardent detractors fear he will take us down the road to fascism.

For certain, we are in for a wild ride, but I do not believe President Trump (can’t believe I am typing those two words together) will be able to wave a magic wand and have his way across the board. This is a guy who did not have a majority of his own party behind him.  His victory was more about the other candidate’s problems.

A Washington Post/ABC poll showed his favorability rating on the eve of taking office as 40%.  That does not signal a honeymoon; an impending divorce is more like it, a nasty one at that.

Without a broad consensus behind him, Congress will not rubber-stamp much of Trump’s agenda, assuming he really has one other than poorly defined tweeting points.

So one should not expect broad support for any of his plans beyond the selection of a new Supreme Court judge. That’s a big one, but the High Court has always ebbed and flowed between conservative and liberal influence.  It’s been that way for a few decades. There’s always a wild card, too, like Justice Kennedy. Let’s not forget that Chief Justice Roberts saved Obamacare. You just never know.

I anticipate we will have a balanced court, unless one of the liberal judges retires during Trump’s term. It is unlikely any of them will retire during a first term.  It would take a Scalia-type departure for another vacancy on the left side of the bench.

What about a wall across our southern border?

I think you might see some segments constructed in strategic locations, but funding will be a problem for any lengthy stretch.  It will be more show than substance. The repercussions will give Republican lawmakers pause.

But there will be some extensive changes to immigration policy, some of which will be embraced. Take for example tightened restrictions on H-1B visas.  Even there, Trump will learn that this abused program can only be throttled back so far, because our schools are not turning out enough STEM talent to meet the demands of science and industry.

A beefed-up Border Patrol is one practical objective many will support.  The members of the USBP save lives and interdict dangerous criminals. Unlike a wall, they offer a flexible response for dealing with illegal immigration. Walls cannot make arrests or render assistance to those challenging the hostile terrain which exists over a vast swath of the border.

Government environmental regulations will be reduced, but to what degree depends on popular support. A majority of our citizens do care deeply about the environment.  People depend on it for recreation, comfort, health and a safe food and water supply. If they feel the environment is significantly threatened, they will push back in noticeable numbers, enough to turn up the political heat in Congress.

A reduction in corporate taxes is almost a certainty.  However, it will be a balancing act between what it will take to bring offshore earnings back home and avoiding the appearance of catering to Wall Street. And no politician wants the Wall Street label to stick. This could be the biggest battle Congress faces, one in which Trump will have the least influence for fear of alienating blue collar workers, the very constituency that helped push him over the top in the election.

The greatest uncertainty involves international relations.  A president has wide leeway in deploying or redeploying troops. Some would argue he has the power to terminate a treaty without the consent of Congress. The Constitution is not specific on this subject.

Most certainly, Trump could effectively undermine NATO by pulling resources from it, turning the alliance into a mere shell.

How about a trade agreement such as NAFTA?

NAFTA is a congressional-executive agreement, not a real treaty. There are no rules as to who can terminate one, so it would appear Trump could pull out over the objections of Congress.

In the end, for Trump’s policies to prevail, he needs broad support from both Congress and the public.

You do not earn broad support with provocative remarks in social media.  Think of the number of people who are unfriended on Facebook because of their relentless partisan posts and memes.

The Tweeter-in-Chief will have more to lose than gain in his use of the internet. People just might unvote him.

Prop 47 crime wave

I had a firsthand look of the chaos bestowed on the population by the passage of Prop 47. As almost all of you know, the measure raised the threshold of a felony and led to the early release of many career criminals.

A neighbor’s house was ransacked and robbed last night.  The family was on an errand for a period of less than two hours, not a long time by most measures, but far more than enough time for criminals to do their deed.

I talked with the LAPD officers who were investigating.  When I mentioned there has been a steady increase of property crimes in the community since the passage of Prop 47, the officer piped right up, “We are seeing an influx of thieves from other states. They know the odds of going to jail are slim.”

There have been steady reports posted to Nextdoor about burglaries in Valley Village.  As president of the homeowners’ association, I am acutely aware of this growing problem, which effects many communities in Los Angeles.  I have lived here since 1986 and have never before seen such a spike in crimes.

Many of the crimes are brazen – carried out in broad daylight.  Thieves have walked all the way up driveways to break into cars, not simply satisfied to target those parked on the street. That takes some cajones…and desperation, a combination that is dangerously explosive and could indicate a propensity for violence by the perpetrators.

It is bad enough that thousands of professional burglars have flooded the streets after early release; we have also become a magnet for out-of-state talent, as the LAPD officer related.

The people of California voted for Prop 47. It was supported by the top elected officials in the state.  It even had the support of New Gingrich!

It is time for the state’s voters to reverse this truly misguided policy.  It will require a new ballot measure, and, in the short run, legislation mitigating the impact of 47.

It is also time to build new prisons.  Instead of selling bonds to construct an extraordinarily expensive  high-speed train, let’s invest in state-of-the-art prisons which have the facilities for addressing and correcting the causes of recidivism. There will always be those who do not respond to intervention – they will ultimately require a lifetime of incarceration, so the capacity must be in place to deal with them as well.

Opponents to this would claim we cannot incarcerate ourselves out of a growing, statewide crime wave.  The converse for that argument is more grounded in reality – we cannot reduce crime by rapidly increasing the supply of criminals, as Prop 47 has done.