Blackout a "Metaphor" for Inadequate Government Regulation --8/18/2003

1. Blackout a "Metaphor" for Inadequate Government Regulation
A few journalists on Friday and over the weekend raised "deregulation" as the culprit in last week's big blackout, though transmission systems were never deregulated. On Sunday's Meet the Press, Time magazine's Joe Klein pined for more government as he saw the outage as a "metaphor" for how "we haven't taken government nearly as seriously as we should, the detail work of government. And it's coming to bite us." NBC's Lisa Myers argued: "Deregulation has meant the interests of individual power operators don't always track what's best for the overall system." On Today, Lester Holt asked: "Is deregulation part of the problem?"

2. Schieffer Suggests Companies, Not Customers, Pay for Grid Fixes
CBS's Bob Schieffer must have flunked Econ 101, or never taken such a course. When, on Sunday's Face the Nation, Secretary of Energy Spencer Abraham suggested electricity company customers will need to pay for upgrades to the grid system, an incredulous Schieffer pleaded, "Wait, wait, wait. Let's back up. So you're saying the customers are going to have to pay for this!?" Schieffer recommended another entity pay for it: "Aren't the companies going to have to bear some of this cost?"

3. ABC's GMA Obsesses Over Possibility Terrorism Behind Blackout
Speculation about terrorism really being behind the big blackout was not uncommon on Friday, but the anchors and reporters on ABC's Good Morning America brought it up more often than others and seemed obsessed by the possibility, raising it over and over again throughout the show's two hours.

4. Stewing Over Too Low CA Taxes, Applauding Buffett for Saying So
California state government spending has skyrocketed at twice the level of the benchmark for inflation plus population growth, but commenting on the suggestion from Warren Buffett that Proposition 13 should be overridden so that property taxes can be raised more, on Meet the Press Time's Joe Klein declared that Buffett's "comments on Proposition 13 were a fleeting moment of responsibility in this incredibly stupid race." Over on ABC's This Week, Fareed Zakaria, Editor of Newsweek International, also applauded Buffett as "right about California's property taxes. They are incredibly low..." And last Thursday morning on NBC's Today, Katie Couric fretted about how the California "government has very little ability to raise taxes to pay for all these programs" which were mandated by propositions over the years.

5. CNN's Jack Cafferty Sued for Leaving the Scene of an Accident
The AP reported on Friday that "a bicyclist has filed a $10 million lawsuit against CNN anchor Jack Cafferty for leaving the scene of an accident."

Correction: The August 15 CyberAlert stated: "Because of the blackout, TV shows produced in Manhattan, including NBC's Late Night with Conan O'Brien, couldn't tape a fresh show in the late afternoon and the networks had to go to repeats." While that was true of some shows, including Comedy Central's Daily Show which was unable to produce its scheduled fresh program with Senator Hillary Clinton as the guest, in fact, O'Brien managed to produce a fresh show in his 6th floor Rockefeller Plaza studio, though without an audience.

Blackout a "Metaphor" for Inadequate Government Regulation

A few journalists on Friday and over the weekend raised "deregulation" as the culprit in last week's big blackout, though transmission systems were never deregulated. On Sunday's Meet the Press, Time magazine's Joe Klein pined for more and bigger government as he saw the outage as a "metaphor" for how "we haven't taken government nearly as seriously as we should, the detail work of government. And it's coming to bite us in a lot of different ways." Yet government spending, both state and federal, increases every year.

Klein's argument in full, made during a roundtable moderatedby Brian Williams which also included Bob Novak and Doris Kearns Goodwin: "I think that what we've had is a 25, 30-year period of unprecedented affluence in this country, and during that time we haven't taken government nearly as seriously as we should, the detail work of government. And it's coming to bite us in a lot of different ways. And, you know, you want to use electricity as a metaphor, so be it."

On Friday's NBC Nightly News, reporter Lisa Myers maintained, "Another problem: Deregulation has meant the interests of individual power operators don't always track what's best for the overall system and rules meant to prevent outages are now voluntary."

Earlier, during the 7am half hour on Friday's Today, Myers similarly contended: "Critics of deregulation also argue that privately owned power operators make decisions based on what is best for their company, not necessarily what's best for the overall electrical grid system."

MRC analyst Geoffrey Dickens caught this question from Todayco-host Lester Holt near the end of Friday's Today. During the 9:30am half hour, Holt asked Larry Makovich of Cambridge Energy Research Associates: "Is deregulation part of the problem? Is it not a case where you have companies that used to cooperate who now find themselves competing?"

Makovich, via satellite from the Boston area, agreed: "That's right. We've been trying to reorganize the power business, to deregulate it now for about ten years. The institutions that run these power systems have been forming up and are still not well organized. The rules are still in flux..."

ABC's Ned Potter may have stumbled into reality, as he asserted on Friday's World News Tonight: "Some analysts say the problem has been a well meant but botched effort at deregulation. Laws passed in the 1990s created incentives for companies to build more power plants, but not to build the wires and transformers to send that power where it's needed."

Indeed, as the Cato Institute's Director of Natural Resource Studies Jerry Taylor and Regulation magazine Editor Peter VanDoren explained in a press release on Friday: "Deregulation has been fingered as a culprit, but thetransmission and distribution system has NOT been deregulated -- in fact, regulation of this sector has INCREASED throughout the 1990s. What deregulation occurred in the 1990s occurred exclusively in the generation and retail sales sector of the business, not in the transmission and distribution end of the business."

For the press release, with links to other Cato reports on energy regulation: http://www.cato.org/new/08-03/08-15-03r.html

On several occasions on Fox News Sunday, moderator Tony Snow pointed out how the regulation of transmission prices leaves little room for profit and thus little incentive to invest in upgrading those facilities.

Schieffer Suggests Companies, Not Customers, Pay for Grid Fixes

CBS's Bob Schieffer must have flunked Econ 101, or never taken such a course. When, on Sunday's Face the Nation, Secretary of Energy Spencer Abraham suggested electricity company customers will need to pay for upgrades to the grid system, an incredulous Schieffer pleaded, "Wait, wait, wait. Let's back up. So you're saying the customers are going to have to pay for this?" Schieffer recommended another entity pay for it: "Aren't the companies going to have to bear some of this cost?"

As if companies, even regulated electrical utility monopolies, are somehow independent money machines which don't pass on costs to their customers.

Maybe Schieffer was just stunned by the idea that the federal government would not impose a program to use taxpayer money to pay for any such upgrade project.

The exchange on the August 17 Face the Nation:

Schieffer: "I've seen some estimates that it may cost up to $50 billion to fix this. Who's going to pay that?"
Abraham: "Well, I think the type of money you're talking about relates to the need for modernization on the transmission grid. Ratepayers, obviously, will pay the bill because they're the ones who benefit. And that's where most of the responsibility ultimately will be assigned."
Schieffer: "Wait, wait, wait. Let's back up. Ratepayers -- that means people who pay in their electric bills. So you're saying the customers are going to have to pay for this?"
Abraham: "The rate structure is designed to not only be able to underwrite the generation of electricity, but its delivery. And obviously that's a long-term cost. It's not going to all be borne in one year or a short period of time. But that's the kind of long-term investment that will be needed to keep the transmission system in a situation where we have the ability to both avoid blackouts on the one hand and deliver power to people at an affordable level. I mean, the fact is that Americans and people throughout the world demand more electricity, want it affordable, but they got to -- we got to get it there. It doesn't come out of the wall. It comes out of a long transmission distribution chain."
Schieffer: "Excuse me for asking, but, I mean, aren't the companies going to have to bear some of this cost?"
Abraham tried to explain Econ 101: "Well, of course, they will, and get, obviously, we know that rate structures are set in a fashion that allows for some sort of reasonable return on investment. And that means that the users are going to play a role in paying for it."

ABC's GMA Obsesses Over Possibility Terrorism Behind Blackout

Speculation about terrorism really being behind the big blackout was not uncommon on Friday, but the anchors and reporters on ABC's Good Morning America brought it up more often than others and seemed obsessed by the possibility, raising it over and over again throughout the show's two hours.

MRC analyst Jessica Anderson took down examples from August 15 of GMA co-hosts Charles Gibson and Diane Sawyer, along with news reader Robin Roberts and investigative reporter Brian Ross, asking guests to defend the claim the blackout was not caused by some form of terrorism:

-- Gibson, during the 7am half hour, to Michael Gent, President of the North American Electric Reliability Council: "The critical thing, though, is everyone wants to know, first thought in everybody's mind was, is this terrorism? If we don't know where it started or how it started, how can we say it's not terrorism?"
And: "Well, we may know that nobody came in with guns and seized a power plant, but couldn't it have been, for instance, some worker who may have sabotaged the system, or could it be something in the software, which would suggest cyber terrorism?"

-- Sawyer to Ross: "We heard Mr. Gent say that it would have taken a long, long time, if indeed this was some very sophisticated kind of terrorism. Any indication that they were at work a long, long time."
Ross: "Well, Diane and Charlie, so far the FBI officials who are involved in the investigation say nothing, including cyber terrorism, can be ruled out, although agents have not found any obvious signs of intrusion. Even so, what happened yesterday follows the precise scenario that law enforcement and industry officials had feared could happen just three weeks ago....There are no obvious signs, but a skillful attack would not necessarily leave any obvious signs...."
Gibson: "I don't want to raise any undo alarms here, and I don't want to say or point too strongly to the fact that it was terrorism. I'm just wondering was the government, therefore Brian, too fast in ruling out terrorism. As I said to Mr. Gent, we know that somebody didn't fly a plane into a power station and we know somebody didn't take it over with guns or whatever, but could there have been some more sophisticated [sic]? Did they rule it out too fast?"
Ross: "Well, in fact, they haven't ruled it out. The officials making the public pronouncements may have, but the agents involved in the case don't rule it out at all...."

-- Roberts to New York Governor George Pataki: "How can you say this is not cyber terrorism?"
Pataki: "Well, I can't say at this point what the cause was..."

-- During a 7:30am half hour session with Richard Clarke, former Terrorism Czar:
Sawyer: "First of all, let's just put the question to you: Do you see any signs at all that this could be cyber terrorism, and can you rule it out?..."
Gibson: "Yeah, and I don't want to get too hung up on this point and frighten people, but what has concerned me is that public officials were so quick to say that this was not terrorism, and as you said, anybody who says they know what precipitated this doesn't know, and therefore, is it wrong for public officials to be saying 'it was not terrorism, we know that'?"

-- During the 8am half hour, Gibson to Bill Richardson, the Governor of New Mexico, though it's hard to see how he's doing that job given his constant TV presence, who was Secretary of Energy for President Clinton:
"Why are you so sure that it was just overload? Public officials, the President included, were very quick to say no, it's not terrorism, and as I said earlier in the first half hour of the show, we know it was not an attack on a power station, but might it have been sabotage or might it have been cyber terrorism? Do we really know?"

If it turns out that terrorism really was behind the blackout, the GMA team will look prescient. Otherwise, they just seem unusually obsessed with thinking the worst.

Stewing Over Too Low CA Taxes, Applauding Buffett for Saying So

The problem in California, some national media stars have argued in recent days, is that taxes are not high enough, a bit of sloppy analysis which ignores how California state government spending in recent years has skyrocketed by twice as much as the benchmark for inflation plus population growth.

Commenting on the suggestion from Warren Buffett, now an adviser to nominal Republican gubernatorial candidate Arnold Schwarzenegger, that Proposition 13 should be overridden so that property taxes in California can be raised more, on Sunday's Meet the Press Time magazine's Joe Klein declared that Buffett's "comments on Proposition 13 were a fleeting moment of responsibility in this incredibly stupid race."

Over on ABC's This Week, Fareed Zakaria, Editor of Newsweek International, insisted during the roundtable, with Michel Martin and George Will, that Buffett "is right about California's property taxes. They are incredibly low compared to the national average and with a $38 billion deficit to say that no, there will be no tax increases, is whistling in the dark."

And last Thursday morning on NBC's Today, Katie Couric fretted about how the California "government has very little ability to raise taxes to pay for all these programs" which were mandated by propositions over the years.

Fuller renditions of the remarks by Klein and Couric:

-- On the August 17 Meet the Press, fill-in host Brian Williams asked the roundtable, of Bob Novak, Joe Klein and Doris Kearns Goodwin, about the California recall campaign.
Klein relayed what he sees: "Insanity. We're seeing utter insanity. What we're seeing in California is an excess of democracy and a dearth of citizenship. Proposition 13, it all began with that. We've had 20 years of people in California paying attention to these ridiculous propositions which promised low taxes, more money on schools and a bunch of other things so that now much of governance in California is out of the hands of the politicians. Warren Buffett's comments on Proposition 13 were a fleeting moment of responsibility in this incredibly stupid race."

-- Last Thursday morning, August 14, MRC analyst Geoffrey Dicks noticed this question from Couric to former Clinton Chief- of-Staff Leon Panetta who appeared with former Clinton adviser David Gergen: "Leon, in closing, California is a tough state to govern because of all these initiatives that help, sort of everybody and their brother. And yet the government has very little ability to raise taxes to pay for all these programs. The Washington Post wrote an article recently and basically said, 'The system brings to mind the words of another strongman, not Arnold Schwarzenegger, but Mr. T, and that's, 'Pity the fool!' No matter who is in office. Aren't they limited? Aren't their hands somewhat tied to deal with this whole financial crisis?"

A Reality Check: As the Cato Institute's Chris Edwards, Stephen Moore and Phil Kerpen documented earlier this year in their report, "States Face Fiscal Crunch after 1990s Spending Surge," California's government has collected plenty of tax money and its "budget gap was caused by a remarkable run-up in state spending in the late 1990s under Gov. Gray Davis. Spending doubled between FY94 and FY01 from $39 billion to $78 billion. California's general fund expenditures jumped 15 percent in FY2000 and then another 17 percent in FY01. Thus, in just two years spending increased by one-third."

The Cato trio added: "Although general fund spending jumped almost $12 billion in FY01, FY02 spending was reduced only by just over $1 billion. As in other states, newspaper headlines in California make fiscal restraint sound draconian. A recent Los Angeles Times story declared 'Wrenching Changes Likely with Budget Cuts,' but the 'wrenching' changes listed included such items as the first university fee increase since 1994, small increases in admission charges for state parks, deferral of some transportation projects, and a modest tightening in eligibility for the state's low-income health program. Those are hardly wrenching changes in sprawling state government."

An accompanying table laid out how California state government spending skyrocketed by 108 percent between 1990 and 2001 while the benchmark for inflation plus population growth increased by a comparatively modest 57 percent.

For the Cato report: http://www.cato.org/pubs/briefs/bp80.pdf.

CNN's Jack Cafferty Sued for Leaving the Scene of an Accident

The AP reported on Friday that "a bicyclist has filed a $10 million lawsuit against CNN anchor Jack Cafferty for leaving the scene of an accident."

The unbylined AP dispatch elaborated about the case against the co-anchor of CNN's American Morning: "The lawsuit, filed Thursday in state Supreme Court in Manhattan, alleges Cafferty was 'reckless and grossly negligent' when he knocked Billy Maldonado off his bike with his Cadillac and drove away on May 14."

The AP story added: "Earlier this month, the anchor was ordered to pay a $250 fine and perform 70 hours of community service after pleading guilty to leaving the scene of an accident. A traffic officer and about five pedestrians ran after Cafferty's car to stop him after the accident, but Cafferty drove through at least two red lights and around other vehicles without stopping, dragging the bike beneath his car, according to a police complaint."

Cafferty, the AP story noted, "later told police that he'd seen a man on a bike who may have been a messenger weaving in and out of traffic as he drove south on Ninth Avenue. He told police that when he looked in his mirror, he saw the man getting up off the ground but was unaware he had hit the bicyclist."

The short AP article is online.

# Filling in all this week as the liberal co-host on CNN's Crossfire: Left-wing activist/actress Janeane Garofalo. Crossfire airs at 4:30pm EDT.

-- Brent Baker