Author: Dennis Powell

What To Look For In The Next President

As the 2012 election approaches, America is in a state of malaise. Massive debt, unfettered spending, economic decline and partisan divide have served to undermine the great American narrative that is predicated on optimism and a “can do” attitude.

As I assess the candidates for President, I will be looking for the one who most fully understands why we need to resurrect the compelling narrative for America. The compelling narrative has four basic components:

Aspirational: President John F. Kennedy spoke to our better nature in 1962, when, at Rice University, he laid down the challenge of reaching the moon in a decade, His words still inspire us nearly 50 years later:

We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.

His vision was ambitious, his goal worthy, and his target understandable. This is why his words excited a nation to follow. Similar aspirations drove the pioneers west to settle America, drove our nation to wage world wars, hot and cold, against evil, and drove a president to declare war on poverty.

Visceral: The legacy of President Dwight D. Eisenhower is a national interstate system of highways that crisscross America and connect our economy. In 1955, he spoke of systems that unite us as a people. His words rang true to a shared vision for America:

Together, the united forces of our communication and transportation systems are dynamic elements in the very name we bear—United States. Without them, we would be a mere alliance of many separate parts.

Most of post-World War II America was still dependent on the two-lane national highway system that included Route 66 and Route 30. Americans instinctively followed Eisenhower’s leadership that they saw as advancing their quality of life and jump starting the economy into higher gear. They knew instinctively that this would require a modern, multi-lane, high speed roadway system, so Eisenhower’s narrative was enacted and 50,000 miles on interstate highway were constructed over the next five decades.

Fills a Gap: Martin Luther King, Jr. eloquently framed the civil rights issue in human terms in a 1967 speech:

Being a Negro in America means trying to smile when you want to cry. It means trying to hold on to physical life amid psychological death. It means the pain of watching your children grow up with clouds of inferiority in their mental skies. It means having your legs cut off, and then being condemned for being a cripple.

Americans understood that a moral, political and economic gap existed between black and white America. The compelling narrative of the civil rights movement led to proposals for new policies and programs to narrow the gap and Americans responded.

Pays Dividends: The compelling narrative pays dividends all along the way. The space program produced better computers, materials and science. The interstate system gave rise to the motel industry and suburban development. The push west provided impetus to build the transcontinental railroad. World Wars sent men to war and women into industry. Policies that grew out of the civil rights movement made America a more inclusive nation.

In 2011, we have no compelling narrative. The space program is about to be de-funded, as we have retreated from the moon and settled for a low orbit space station. The interstate system is beginning to crumble as the benefits have been exhausted and no new vision has been created. Public policies designed to close the racial gap are being scrutinized because the problem still exists. In short, the great movements have stopped paying dividends and Americans have lost interest and, more important, lost confidence.

President Obama has tried to create a compelling narrative around renewable energy. This has been undermined by the burst of the ethanol (corn fuel) bubble and the relatively low return on investment from wind and solar power. New alternative sources like shale gas find their energy narrative competing with the aspirations of the environmental cause. As a result, Obama’s vision is not gaining traction as a compelling narrative.

America’s next great leader will not only see the future, but will be able to articulate a clear path to get there. He/she will inspire us to join in the pursuit of the cause. We will know in our guts that the cause is right for America. We will clearly see the need to be filled. And, we will understand the benefits that will be derived from the undertaking.

Debt, deficits, entitlements, taxes and spending are not compelling narratives in and of themselves. They are mere building blocks in our quest to articulate the next great American narrative. What it will be is the great unknown.

Photo by Alfred Hermida: Watching The President.

Dennis M. Powell is founder and president of Massey Powell, a strategic communications and digital strategy development company headquartered in Plymouth Meeting, PA. He can be reached at dpowell@masseypowell.com.

June 24, 2011
The Social Side of the Internet
Is success in social networking measured by the number of “Friends” you have on Facebook, or “Followers” you have on Twitter, or “Connections” you make on LinkedIn?

The jury is still out on how social media and social networking will ultimately play out, but new research shows real benefits are being realized from it.

A Harris Poll conducted December 6-10, 2010 found, “Social media has opened the door, or more accurately, many doors, to increasingly numerous ways for people to interact with others, customize their online experiences and receive positive, enriching benefits from their activity therein. In fact, two in five Americans say that they have received a good suggestion for something to try as a result of their use of social media (40%).”

A generation gap remains, but the mere fact that “Matures” are involved in social media constitutes news. The Harris study reports, “A majority of Echo Boomers (those 18-33) say they have received a positive suggestion for something to try from their activity on social media (59%), compared to 44% of Gen Xers (those 34-45), one third of Baby Boomers (those 46-64) (34%), and just one in five Matures (those 65 and older) (19%).”

Pew Research Center’s Internet & American Life Project found that social media’s benefits to groups are now widely recognized by both Internet users and non-users. The study, The Social Side of the Internet, was released on January 18, 2011 and can be found at PewInternet.org. The general findings state, “The internet is now deeply embedded in group and organizational life in America.

Pew studied groups and found in part:
- 68% of all Americans (internet users and non-users alike) said the internet has had a major impact on the ability of groups to communicate with members. Some 75% of internet users said that.
- 62% of all Americans said the internet has had a major impact on the ability of groups to draw attention to an issue. Some 68% of internet users said that.
- 60% of all Americans said the internet has had a major impact on the ability of groups to connect with other groups. Some 67% of internet users said that.
- 59% of all Americans said the internet has had a major impact on the ability of groups to impact society at large. Some 64% of internet users said that.
- 59% of all Americans said the internet has had a major impact on the ability of groups to organize activities. Some 65% of internet users said that.
- 52% of all Americans said the internet has had a major impact on the ability of groups to raise money. Some 55% of internet users said that.
- 51% of all Americans said the internet has had a major impact on the ability of groups to recruit new members. Some 55% of internet users said that.
Does all this suggest that a shift in communications is now upon us? I believe the answer is an unqualified yes. Many experts predict that by 2014 the whole concept of the “new media” and the “social net” will have lost their novelty status as they become fixtures of American business, communications and life.

Many forward thinking companies are moving aggressively to position themselves for this shift. They are beginning to purpose their content for real-time, anytime, two-way dialogue. They are building communities around their own content. American Express is doing a great job at OpenForum using content to build community and establish thought leadership within the small business community.

Why? The “social net” represents a paradigm shift for an organization. It is not as much about the technology as it is about integrating a new way of assembling and distributing information in more open and accessible way. This shift needs to be incorporated into an organization’s DNA. This takes time and a total commitment from the organization.

When the communications shift happens, those organizations that have staged early will realize tremendous benefits. Those organizations that have not will face a very difficult and time-consuming process of not only integrating new technologies into their organizations, but also assimilating the cultural changes that are needed to make this process successful.

The social internet is not a mercurial event, but rather a game changer that will impact every aspect of our lives – something already evident but likely to become more obvious.

Dennis M. Powell is the founder of Massey Powell which provided content logistics services that help organizations ready their content and leverage it into the social media environment. He invites all New Geography readers to visit http://socialmedianewslink.com to learn more about social media.

Illustration by Matt Hamm
February 4, 2011

Geography of the Election: The Philadelphia Collar Counties – A Splash of Red

The Obama coalition of 2008 has begun to fracture with independents, women and college educated voters bolting to Republicans and the youth vote seemingly uninterested in this election. But perhaps the most critical change took place in suburbia. This was particularly evident last week in southeastern Pennsylvania, especially in the suburban Philadelphia counties.

Historically in Pennsylvania statewide Democratic candidates won big in Philadelphia only to see their margin decimated in the traditionally heavily Republican suburban counties of Bucks, Chester, Delaware and Montgomery, known as the Philadelphia “Collar Counties.” This trend began to shift in the 1990s due in large measure to the GOP stance on abortion and other social issues.

During the 1990s, Democratic candidates were able to claim the mantel of moderation by positioning themselves as fiscally conservative and socially moderate. Affluent, college educated, women, and younger voters from traditionally staunch Republican families joined with established Democratic constituencies including the Jewish community, working class voters from old suburban mill towns, and minority voters to form winning coalitions throughout the collar counties.

During the 2000s, Democrats would be elected to fill Congressional seats in three of the four collar counties. Not surprisingly, no Republican at the top of the ticket would win Pennsylvania over the next 10 years. The main reason was the collar counties were voting more Democratic with each election. The table below shows the percentage of the vote won by the Republican candidate at the top of the ticket from 2000 – 2008:

Top of Ticket	Chester	Bucks	Delaware	Montgomery	Phila.
Bush/Gore 2000	53.4%	46.3%	42.7%	43.8%	18.0%
Fisher/Rendell 2002	41.1%	43.6%	33.1%	31.4%	14.7%
Bush/Kerry 2004	52.0%	48.3%	42.3%	44.0%	19.3%
Santorum/Casey 2006	45.0%	41.5%	38.3%	38.1%	15.9%
McCain/Obama 2008	45.0%	45.1%	38.8%	39.2%	16.3%

In 2010, the trend began to favor Republicans again. The GOP picked up a net five Congressional seats including two in the southeast region. It also propelled State House Republicans to a huge victory moving from 99 seats to a projected 111 – 92 majority. Republican Tom Corbett won the governorship by 10 percentage points with 55 percent of the vote. Conservative Pat Toomey outpaced Joe Sestak for the U. S. Senate by two percentage points.

A look at the trends shows that both statewide Republican candidates ran stronger in the collar counties than did Senator John McCain in 2008 in his bid for President:

2010 Numbers	Chester	Bucks	Delaware	Montco	Phila
Toomey/Sestak	53.4%	53.2%	43.6%	45.9%	16%
Corbett/Ontorato	55.9%	55.4%	47.0%	48.3%	17.1%
McCain 2008	45.0%	45.1%	38.8%	39.2%	16.30%

Tom Corbett ran nearly 10 percentage points ahead of McCain in the collar counties. In fact, Corbett carried these counties by 22,370 votes as he reversed the top of the ticket trend of the past decade. Although this was not enough to offset the 274,373 he lost by in Philadelphia at least he won enough elsewhere, including in the collar countries, to win a fairly impressive victory statewide.

Pat Toomey, a clear conservative, ran well ahead of the vote former Senator, and social conservative, Rick Santorum was able to win four years earlier, but he did not perform as well as Corbett did against McCain. This can be explained in part by the fact that his opponent, Joe Sestak, was an elected Congressman from Delaware County.

2010 Numbers	Chester	Bucks	Delaware	Montco	Phila
Toomey/Sestak	53.4%	53.2%	43.6%	45.9%	16%
Santorum/Casey 2006	45.0%	41.5%	38.3%	38.1%	15.9%

Toomey would lose the collar counties by 27,195 votes. This gave him a much steeper hill to climb in the other 61 counties of Pennsylvania, but at least he was not out of the game as had been McCain, Santorum, and Fisher over the past 10 years.

Will this change in voting pattern continue? It could if Republicans can hold Independent voters by delivering solid results at both the Federal and State levels. Republicans will now control redistricting in Pennsylvania. This should allow them to consolidate the gains made this year in Congress, but does not change the fact that the Philadelphia collar counties will continue to determine the fate of statewide candidates in Pennsylvania into the foreseeable future.

The fight in Washington over the next two years will likely be the traditional “heart vs. head” fight of the past where Democrats push for more social programs and Republicans position on the costs of these programs.

The 2010 election in southeastern Pennsylvania seemed to prove that a bad economy and fears of continuing increases in taxes and debt will add a splash of red to the collar counties “light blue” voters.

Dennis M. Powell is president and CEO of Massey Powell, an issues management consulting company located in Plymouth Meeting, PA.

November 9, 2010

Bifurcated American Politics

Bifurcated means to split or divide something into two parts. It is a term often used to describe trees, but today it can also be applied to our politics in America. It seems that right and left, liberal and conservative, Republican and Democratic have never been more at odds than in our recent history.

Politics has always been blood sport. A quote often attributed to President Harry Truman is, “If you want a friend in Washington, get a dog.” This may have been true about our politics, but our legislative process was much more collegial. Elected leaders worked together, shared power, listened to the other point of view, and knew how and when to compromise. Today, lines in the sand have become chasms, and compromise is viewed as retreat. What happened? .

Robert Bork, by any objective criteria, would be judged to be highly qualified to become Justice of the Supreme Court. He was a renowned legal scholar who had the misfortune of also being a strict constructionist of the constitution. In 1987, he was nominated by then-President Ronald Reagan to fill a vacancy on the court. Within an hour of his nomination, Senator Edward Kennedy stated, “Robert Bork’s America is a land in which women would be forced into back-alley abortions, blacks would sit at segregated lunch counters, rogue police could break down citizens’ doors in midnight raids, schoolchildren could not be taught about evolution, writers and artists could be censored at the whim of the Government…” At that point civility ended. Bork’s nomination was withdrawn and the process has not been the same since. Ted Kennedy defined the fears America harbored about conservatives, and a new word was added to the American lexicon – “borked” – which is defined of a savaging of a candidate because of what they believe.

In 1988, Rush Limbaugh syndicated his talk radio program nationally. He was unabashedly conservative and a ratings sensation. His three hour show usually does not include any guests. To his audience, he is a “lovable little fuzz ball,” but to his enemies he is the personification of mean-spirited Republicanism that is anti-Black, anti-woman, and anti-environment. Limbaugh set the stage for conservatives like Sean Hannity, Glenn Beck and Laura Ingraham to follow and achieve talk radio dominance for the conservative point of view. Limbaugh provides daily talking points to his listeners in the form of arguments against what he deems liberal policies. His “dittoheads” now form a network of followers throughout America who can be quickly mobilized into opposition.

Liberals tried and failed to match Limbaugh by launching “Air America” and other programming, but their programs have all been ratings failures, leaving the right firmly in command of talk radio content. Talk radio has divided America not so much along party lines as along ideological propensity, liberal and conservative.

Trust in our elected leaders has been greatly diminished over the past few decades. Republican trust was shattered when George H.W. Bush broke his “read my lips” promise not to raise taxes. The wound deepened when Newt Gingrich “flamed out” in 1998. Democrats circled the wagons around Bill Clinton during his impeachment. His impeachment was viewed as criminal by Republicans, while his actions were considered minor, personal issues by Democrats. George W. Bush was elected in a disputed ballot election. From that point forward, to Democrats he was “selected not elected.” Our trust in our elected leaders is at an all time low as evidenced at recent town hall meetings on health care and polling data that puts Congressional approval below 30 percent.

The powerful nightly news programs and newspapers at one time were the primary shapers of opinion in America. No longer. New internet based media and content providers simply beat them to the punch on a daily basis. This has caused a divide in how we get news. Fox News is soaring in the ratings with its “fair and balanced” tagline. In response, other mainstream media has moved left. What is troubling is that stories that are broken by Fox, using good journalism, are not even carried in the mainstream media. Two recent examples are reporting on Obama appointee Van Jones, and Fox’s explosive reporting on ACORN. The New York Times missed the Jones story. When he resigned they explained their lack of coverage, writing, “Our Washington bureau was somewhat short-staffed during the height of the pre-Labor Day vacation.” Charles Gibson, anchor at ABC, when asked about the ACORN scandal laughingly stated, “It’s a mystery to me.”

The way our “two media” view tea parties, town hall protesters and the September 12th March on Washington goes far beyond a mere gap in perception or difference of opinion on what constitutes news. It defines the camps in a divided America

October 7, 2009
The Curse of my.barackobama.com

President Obama’s campaign was indeed a revolution, not one of policy, but rather a dramatic change in how candidates communicate with voters. It is a reality that helped make Barack Obama our chief executive, but now threatens his ascendancy as well.

It all started with Obama’s hiring of Chris Hughes, one of the founders of Facebook, as part of his campaign team. Hughes’ job was to develop an online community for the campaign. He was largely dismissed by seasoned political operatives more comfortable with conventional media and campaign tactics.

David Plouffe, Obama’s campaign manager, gave an honest assessment saying, “Technology has always been used as a net to capture people in a campaign or cause, but not to organize. Chris saw what was possible before anyone else. I still can’t quite wrap my mind around it.”

Hughes built for the Obama campaign the ability to create and manage content and conversations with vast numbers of people in mere seconds. With an entry into Facebook, video download, or link to information the Obama campaign could shape the opinions of millions of people across America, answer criticisms, and organize campaign events.

The results of Hughes work was reported on Fastcompany.com: “By the time the campaign was over, volunteers had created more than 2 million profiles on the site, planned 200,000 offline events, formed 35,000 groups, posted 400,000 blogs, and raised $30 million on 70,000 personal fund-raising pages.”

Hughes had given Obama the ability to do things in real time. He showed the inherent weakness of newspapers as they were reporting what seemed like yesterday’s news. He was out in front of network nightly news programming. He made the Obama campaign a source of news that rivaled networks like never before in history. In short, he was shaping opinion at its source.

In some ways this was a departure from the ways campaigns were waged in the past: staging huge armies and fighting battles on defined battlefields. The Obama campaign was more like a guerrilla force whose battlefield was at the time and place of their choosing. It bypassed staging. It ran lean. It organized by word of mouth and “buzz” among a new breed of political “activist” who understood the potential of new technology. Obama provided the opportunity to take the new political technology for a “test drive”.

Fast forward nine months and the same technology that helped Obama win his election is now serving to undermine his policy initiatives. The ability to go viral was not proprietary of MyBO.com.

People showed how to take marketing viral, like Mark Hughes in his book “Buzzmarketing”. Hughes engineered the successful takeover of Half.com using “buzz” generated from renaming a town in Oregon. He made ads specifically for YouTube rather than networks. One ad, for the “duckbill” dust mask, went viral and sales shot through the roof. You can still find the ad on YouTube. Hughes understood how conversations were changing. He knew that sending content to someone online could quickly go viral when inserted into that person’s social networks. This is the foundation of “buzz.”

President Obama won several quick and decisive victories early in his presidency with stimulus, omnibus budget, and “cap and trade” legislation. The President’s goodwill ran high in the early months. His resounding campaign victory using new tactics to reach voters held Members of Congress in awe of both his political and fund raising abilities.

But, the same technology that Obama developed to win an election just nine months ago is now being successfully used to organize grassroots opposition to his policies. What stated as “Tea Parties” across America has developed into a broad based uprising opposing Obama’s health care initiative. The opposition has found its voice and it is spreading its word virally. These communications are quickly outpacing our political leader’s ability to spin issues.

John McCain recently commented that there was a “peaceful revolution taking place.” He went on to amplify this point by saying, “There is a grass-roots uprising the likes of which I have never seen. There’s anger; there’s concern about the future. There’s concern about the generational theft that we’ve committed by running up unconscionable and unsustainable deficits.”

The usual tactics to stem the latest grassroots tide are not working. The more politicians talk down the protesters defining them as “un-American” the more energy it provides. Sarah Palin’s post on her blog that the health care bill contained “death panels” worked virally through networks with resounding speed. The result was the Senate removed the provision (end of life counseling) from its bills rather than risk a protracted fight in cyberspace.

How is this happening? People are organizing around information in real time. Visit Drudge Report, Huffington Post and Politico every day and you can read and see politics happening in every corner of America. With YouTube you can be there at a town hall meeting hosted by Barney Frank on the left or Michelle Bachman on the right. You can take this content and send it into your social networks like Facebook, Linkedin, MySpace or hundreds of other platforms. Ordinary Americans can now instigate discussions, mold and change opinion and do it all under the radar. This is fundamentally changing our politics.

President Obama and Congress both now have to deal with the curse of MyBO.com. Social networking has enabled Americans to organize in new ways. Grassroots and community organizing are no longer the sole domain of the political left. In real time every misstep and piece of misinformation works its way into public dialogue on blogs, YouTube and websites where political thought is collected, dispersed and refined.

The days of politics as usual are over. The Obama team will have to play the game under a set of rules that have not all been written yet. This new era in politics will be much more open and subject to more public scrutiny than at any time in history.

The same communications tactics that won President Obama an election in 2008 may prove to be his greatest challenge in building public consensus for action going forward. In the age of “buzz” our young President will face challenges like none other. His greatest challenge may be in learning how to tame and control the inherently unruly politics of the information age.

Dennis M. Powell is president and CEO of Massey Powell, an issues management consulting company located in Plymouth Meeting, PA.

September 12, 2009
GM, Business, and The Age of Small

At its peak, General Motors employed 350,000 people and operated 150 assembly plants. It defined “big business” for America and the world.

But GM was not always big. It grew through the acquisitions that it made in the early decades of the twentieth century. In those days, the automotive industry was populated by entrepreneurial small businesses led by people like Ransom Olds and Henry Ford. There were more than 200 automobile companies in the United States in 1920. By 1940, only 17 had survived.

As with all businesses, success and failure was measured by a company’s ability to manage and adapt to change. Change in consumer expectations and demographics. Demands for lower prices and more features. Underlying all of this was the need to constantly improve, to challenge core assumptions, and attend to customer needs. The early automobile companies that could not adapt were driven out of business or forced to merge. In the end, we had the “Big Three” in control of all major American automotive brands.

And so it was, but only for a time. Our economy is dynamic. It is always changing. This is why consumer products are always adding “new and improved” to even their most popular and profitable labels, and why companies produce competing products — like laundry detergents and cereals — within their brand. Control of shelf space is vital in retail, and an expanded offering of products maintains a company’s all-important market share.

In a free economy, “Big” has some advantages. It has more resources and reach. “Big” companies can define a market and, to a point, control entry into it. But “Big” also has many disadvantages. It is unwieldy, bureaucratic, inflexible, slow to react and unresponsive to small events. This is why in a dynamic free economy “Big” gives birth to “Small”, which forces innovation and change, and ushers in the next Big Idea.

Apple was started in a garage to challenge the giant IBM. Microsoft was founded by a college dropout who ran with a platform (Windows) that Xerox created and discarded. Hechinger’s was the first big box hardware store. It was overtaken by The Home Depot, which pioneered a better way to service clients with an even bigger box.

America is all about good, better, best. Google is now the dominate internet search engine. A small part of its success has been its ability to become part of the vernacular. How many of us have said, “Let me Google that?” Microsoft is not sitting back and accepting Google’s success as a given. It recently launched “Bing”, with features not available on Google. Is Bing the next newer, better search engine? The market will determine if it is, once consumers take it out for a search or two and decide whether or not they like the results.

The American automobile industry has reached the end of “Big.” GM recently sold its Saturn brand to Roger Penske, a former auto racer turned entrepreneur. Penske will likely bring new energy and focus to a brand that was only a small cog in a giant corporation. I bet that the brand will reemerge stronger in the marketplace. A Chinese company bought Hummer. SAAB is still looking for a new home. The remaining GM brands, including Cadillac and Buick, will be part of a newer and smaller company. This is the natural economic cycle. It is what would have taken place months ago, and saved the American taxpayer billions of dollars had we simply let GM go into an orderly Chapter 11 bankruptcy.

The problem is that our federal government is attempting to control this process in order to achieve a desired result. Yes, looking at saving GM as a short term federal jobs program is a valid argument (albeit a God-awful expensive one). But we should not let these actions, taken in the midst of a crisis, instill the belief that government control of markets is a viable alternative to free markets that respond to consumer demand.

The natural flow of our economy is big to small to big again. We are now entering an ‘Age of Small’ throughout our economy. It is an era in which new ideas will drive innovation, and the nimble will overtake the weak. The only thing that can derail this process is the permanent entry of big government into the mix.

Government is the antithesis of a market economy. It is unwieldy, bureaucratic, inflexible, slow to react, and unresponsive to small events and to its own consumers.

It is Big when we are at the right moment for Small.

Dennis M. Powell is president and CEO of Massey Powell, an issues management consulting company located in Plymouth Meeting, PA.

June 21, 2009
Federal Highway Trust Fund: Problem Solving, Government Style

News Flash: The Federal Highway Trust Fund will go broke in August.

It went broke last year, and Congress needed an emergency transfer of $8 billion to keep it solvent. There was very little concern last year, but this year we find ourselves in a post-modernist political environment where managing a crisis is good politics, although actually all we do is talk about it.

According to Senator Barbara Boxer (D. CA), the fund will need $7 billion this year and another $10 billion next year to remain solvent through September 30, 2010. Even with this crisis verified and time running out, Congress seems reticent to pull the trigger on a solution anytime soon. It’s just too heavy a lift politically.

It should not surprise anyone that the trust fund is broke. The federal tax on gasoline has not been increased since 1994, but this did not stop politicians from spinning the issue. State and federal data show that gas tax collections are way down. In Pennsylvania for example revenues are running about $100 million below budget. There is also the recession, price of gasoline and more fuel efficient cars contributing to the crisis. But one factor often overlooked is that with the passage of the last federal highway bill (SAFETEA-LU) spending simply outstripped revenues, and even without changes in driving habits and the economic downturn the fund was slated to be depleted.

Now for the really tough part: Congress needs to find money, not simply print it. The trust fund has a dedicated source of funding that has lost about half its purchasing power to inflation over the past 15 years. During that period, politicians have avoided raising taxes for roads and bridges like the plague, so now a crisis looms and our political leaders are finding out that it is much easier to spend than adequately fund.

An Associated Press report stated, “A study by the Transportation Research Board of the National Academies estimated that the annual gap between revenues and the investment needed to improve highway and transit systems was about $105 billion in 2007, and will increase to $134 billion in 2017 under current trends.”

The usual bag of tricks used to obfuscate this issue is no longer available. Not one but two “blue ribbon” commissions have already reported that gas taxes need to be increased. In January, The National Commission on Surface Transportation Infrastructure Financing called for a ten cent per gallon increase. A two year study by National Surface Transportation Policy and Revenue Study Commission called for an increase of 40 cents per gallon. Both studies recommended that gas tax be indexed to inflation. The second recommendation had no chance since it would in effect take this issue out of the hands of politicians who would much rather do nothing about an issue than lose control over it.

Meanwhile, Congress has been busy at work expanding mandates for biofuels and increasing CAFÉ standards to more than 35 miles per gallon. These two combined decimate gas tax and make it an almost unworkable solution to this crisis going forward.

Problem solving often requires taking a long term view of things. It demands answering tough questions and a willingness to implement difficult solutions. Elected leaders find it very difficult to take a long term view, because they live in a two-year election cycle. It’s one reason why the founders wanted limited government. They knew the limits of government to make tough choices to solve difficult problems.

The day after the Department of Transportation reported the trust fund is reaching depletion it issued another press release announcing the Vice President Biden and Secretary of Transportation Ray LaHood were “challenging governors to think boldly when designing high-speed rail plans…” The Obama Administration has committed $13 billion to high-speed trains to jump start a “world class passenger rail system” in America.

The release states that “President Obama’s vision for high-speed rail mirrors that of President Eisenhower (who gave us the Interstate Highway System.)” High-speed rail was positioned as a solution to lower dependence on oil, provide for a cleaner environment, and drive economic growth. All may be true, but what about the $17 billion hole in the highway trust fund?

There is a lesson and a caution here about putting matters into the hands of politicians. They know that they won’t get as much credit for fixing something that is broken as they will for giving the people something new.

Maybe this explains why government budgets keep growing and so do the deficits for many of our legacy programs.

Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

June 13, 2009
Lessons from Chrysler and the Nationalized Economy

Economists and accountants could very likely have told us six months ago that Chrysler was doomed as a business and that the likely best course of action would be Chapter 11 bankruptcy and restructuring. Doing this in a timely manner would have saved the taxpayers billions of dollars.

But the politics were not right to permit this to happen at that time. So instead we invested billions of tax dollars to save it, only to find ourselves right back were we started. Except now the clock is striking twelve and it is the right time to reorganize the automaker – politically speaking.

The politics has worked to “force” Daimler, Cerberus, Banks, UAW and the U.S. taxpayer to forgive nearly $17 billion in debt, and to transfer ownership to a consortium that includes Fiat, U.A.W., and the U.S. and Canadian governments. The same fate may soon await General Motors given the current political atmosphere.

Government action is not driven so much by economics or accounting as it is by shifts and changes in public opinion and the political winds on Capitol Hill. Regardless of the problem and the consequences of delay, no issue will be dealt with until opinion has been properly shaped around it. This is inefficient by its nature, but government is not a business and cannot fail, so the consequences are never felt by government.

This means government will often invest in what’s next and ignore what is needed in the present. Why? Because the public likes the new and the novel and grows weary of the old and tried and true. Transportation infrastructure is a great example. It is an accepted fact that our road and bridge infrastructure is failing and will require billions of additional dollars to rebuild and reform into a 21st century, integrated mobility network. Yet there is no political will to address an issue which could seriously undermine our economic competitiveness costing us countless jobs and businesses.

Politicians know that a solution will require new revenues and very likely a new user fee to augment the current gas tax. Raising taxes is not good for the long term political health of our elected “leaders” because the public does not want to pay for things. So rather than solve a pressing need, government proposes borrowing $8 billion to spend on high speed rail projects like the one to connect Disneyland and Las Vegas. This project works politically because it is filled with perceived benefits and no one really has to pay for them – we can pass it all on to the next generation.

As we move toward increasing the politicization of our economy where politicians replace CEOs, government becomes a major shareholder in corporations, and the metrics of elections replace standard accounting practices, we should remember the inherent and unintended consequences.

Businesses succeed or fail based on markets. The government’s attempt to create a false housing market with its affordable housing initiative is arguably one of the major contributing factors to our current recession. They will likely assert their new power in the automobile industry to create “green” cars that may or may not sell. What if consumers choose to buy Japanese, Korean or German label cars made in Mississippi or Alabama, instead of UAW-built cars from Michigan?

Markets work, and yet they are being ignored. The second most profound economic event of the past year (the collapse of the financial markets being the first) was when the price of gasoline moved above $4.00 a gallon in April of 2008. People drove less. Demand for SUVs plummeted. Ridership of public transportation increased dramatically. Many valued components of American way of life changed almost overnight.

What is often missed is the fact that government was powerless to do anything about gas prices. Elected leaders looked for scapegoats in speculators and commanded the heads of the Big Oil companies pay homage at their feet. They attacked profits, demanded more drilling, put their environmental agenda on the back burner. The crisis showed them to be feckless on the horns of a dilemma. When prices retreated swiftly in August 2008 and public opinion cooled on the issue, drilling for new energy disappeared from the radar and everything was “green” again. The problem has not disappeared of course, but only public support for a solution. Is this any way to run an economy?

Businesses concentrate on profit. Elected leaders focus on votes. Bad business decisions are unsustainable in a free market which metes out consequences with failure. Bad political decisions make an elected official unelectable, so it is always better to avoid conflict by putting off the really tough decisions for another day. This is not the way most Americans run their households, but it’s how politicians would run our economy – responding to opinion, not market conditions.

There are some very difficult decisions as we move through this economic downturn. Do we want more and more of the political processes to be incorporated into our economy on a permanent basis? Banks and financial institutions have already seen first hand the consequences of getting into bed with government. Our automobile industry is next in line. Let’s hope it is the end of the line, but it probably won’t be.

Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

May 7, 2009
The Republican Party, Pennsylvania and Arlen Specter

Senator Arlen Specter switched parties. A five term Senator switching parties is certainly news, but it also represents a far greater statement about the challenges facing the Republican Party in Pennsylvania going forward.

Pennsylvania has been a dependable “Blue State” in presidential races since 1988. Currently, Democrats have a 1.2 million voter registration advantage. Less than a decade ago the margin was less than 500,000. What changed over the past decade?

The changes in the political and demographic make-up of the five county Philadelphia region forced Specter’s flip. Specter’s base had been eroding as a result of other popular Democratic politicians seeking statewide and national offices and needing moderate Republicans to switch parties to support them in tough Primary Elections.

It began with now Governor Ed Rendell who faced a fierce Primary Election in 2002 against Bob Casey, Jr. – the son of a former Pennsylvania Governor. The former Philadelphia Mayor needed a strong turnout in the Philadelphia area and he managed to flip more than one hundred thousand Republicans for the primary.

Rendell defeated Casey by 162,648 votes statewide, but his victory total was 305,641 in the five county Philadelphia area where he won 81.3% of the vote and 56.5% of his total vote statewide.

The 2002 primary proved the central role of the Philadelphia region, especially the suburbs. Rendell was able to win even while losing the total vote in the other 62 counties of Pennsylvania. The shift in moderate Republicans in the suburbs to Rendell was the critical factor.

This was again the case in the general election; Rendell would carry this region by 515,000 votes on his way to winning his first term as Governor by 323,827.

The 2002 election marked a turning point in Pennsylvania politics. From that point forward no candidate for statewide office could win without carrying at least one of the four suburban Philadelphia counties. All were becoming increasingly Democratic in voter registration.

In the 2004 Primary, Arlen Specter faced conservative ex-Congressman Pat Toomey. Specter likely underestimated the impact of the change is southeast voting patterns. He was overconfident that his moderate Republican suburban base would carry the day. They did, but more narrowly than most suspected. Specter won the election by 17,146 votes statewide but he carried the southeast by 41,719 votes.

Like Rendell in 2002, Specter lost the rest of the state but won in the five county region by enough of a margin to secure victory statewide. Unlike Rendell, his total in the southeast region only accounted for 31.4% of his statewide total votes as compared to Rendell’s 56.5%.

Also, significant was the fact that he only defeated Toomey, who is far more conservative than former Senator Rick Santorum, by 34,669 votes in the four suburban counties. The moderate base was shifting to the Democrats, leaving the remnants of the GOP more conservative. This was a harbinger of Specter’s diminishing prospects as a Republican.

Specter won the primary with 166,944 votes from the southeast region. Two years earlier in the primary, Mike Fisher, the Republican candidate from Pittsburgh who was running for Governor without opposition, won 161,103 Republican votes in this region. Fisher outpolled Specter’s 2004 vote in 2 of the 5 counties. It was only the last minute support Specter received from President George W. Bush and Senator Rick Santorum that saved Specter from defeat in 2004.

In the General Election, Specter walloped his Democratic opponent Joe Hoeffel, a former southeast Congressman and Montgomery County Commissioner, by nearly 600,000. He would carry all five counties in the southeast by wide margins mainly because he had significant support from Democrats and Independents.

The trend of greater Democratic power – and Specter’s dependence on them – continued to build. In 2006, Bob Casey defeated incumbent Senator Rick Santorum by 17.4 percentage points statewide despite the fact that Santorum would spend $31 million and was the number three in Republican Senate Leadership. Casey would carry all five counties in the southeast region proving that conservative Republicans could no longer win in this critical area in a contested General Election. By 2008, Barack Obama put the icing on the cake. The President racked up huge margins in the southeast repeating what Rendell had done in 2002. The change was now complete.

It is safe to say that Arlen Specter simply could not win a Republican Primary Election in 2010. This said it is also safe to say that he would have likely won the General Election with relative ease regardless of who was the Democratic candidate. This is the dilemma that faced a Republican Party increasingly alienated from Specter, but facing increasingly stiff odds in its former suburban Philadelphia strongholds.

The question now is will the Republican Party stand with conservative Pat Toomey to challenge Democrat Arlen Specter in the General Election? With promised support from President Obama, Vice President Biden and Governor Rendell the likelihood of a primary challenge for Specter is remote in his new party.

Revenge is rarely as sweet as anticipated. It seems unlikely that a conservative Republican can win statewide without support in the Philadelphia suburbs. But data and history show that this is highly unlikely for a conservative Republican. There’s a cost to party purification. Unless the Republicans can find a way to appeal to the wayward suburban voters, it will take a major shift in the political dynamic – perhaps a more decided Democratic move to the left – to put Pennsylvania back in play.

Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

Photo: KyleCassidy

May 1, 2009
How About a Rural Stimulus?

In Pennsylvania, public and private funds mainly are directed into areas where people live and where people vote. As a result urban Pennsylvania has significant advantages over rural communities in securing public funds and private investment.

Although rural Pennsylvania comprises a significant percentage of Pennsylvania’s geography it contains a very low percentage of the overall population and its political clout is dwindling. According to Trends in Rural Pennsylvania March/April 2003 overview of the state’s population, urban counties outnumber the population of rural by a ratio of more than 3 to 1.

Politically rural and small town Pennsylvania once wielded considerable power. The “T” which ran up the center of Pennsylvania and east to west across the northern tier of the state was key to Republican victories statewide. In recent elections, it has been the southeastern region that has dominated politics. It has reached the point where it can be safely stated that no candidate can win statewide in Pennsylvania without carrying at least one of the five southeastern counties.

All this puts rural Pennsylvania at a distinct disadvantage, particularly in terms of basic infrastructure. Rural Pennsylvania has 57,065 miles of highway compared to 62,577 in urban counties. Local governments receive only about 10 percent of state revenues from the Motor License Fund and the rest is funded by local taxes.

In rural Pennsylvania, because miles of roadway responsibility are funded by a smaller tax base per mile, the choice is between higher taxes or ignoring the problem. More and more, residents in small, rural communities are driving on outdated highways and over creaky bridges. In many ways, highway infrastructure is moving backwards in time as bridges close or become weight restricted isolating rural communities.

Mass transit is another issue in the divide. Pennsylvania has 46 fixed transit systems. Twenty-four serve small urban areas and another twenty service rural communities. This said the two systems that serve the cities of Philadelphia and Pittsburgh, SEPTA and PAAT, receive roughly 90 percent of all transit monies in the state.

Transit receives about $900 in annual state subsidies. These funds come from a wide-variety of sources and are distributed under a myriad of conditions most of which the rural systems cannot meet. The result is the budgets of rural systems must rely more on passenger receipts and local subsidies than the much larger systems.

In 2007, as part of an effort to find more funds for roads, bridges and transit, Act 44 was passed. Under this legislation Interstate 80 would be tolled. This superhighway runs through rural Pennsylvania. In blunt terms, the politics played out that rural Pennsylvania was being tolled to fund transit in Philadelphia. The only reason I-80 has not been tolled yet has been because the U.S. Department of Transportation rejected Pennsylvania’s proposal.

There are other dramatic differences between the two Pennsylvanias in terms of basis infrastructure. Census data show that 36 percent of people in rural Pennsylvania get their drinking water from wells or some other sources. There are 5,697 active drinking water systems in rural Pennsylvania of which 70 percent are owned by investors or individuals according to n Trends in Rural Pennsylvania May/June 2004. Most of the sewer and other basic water systems are antiquated. The American Society of Civil Engineers’ that rural Pennsylvania needs $5.26 billion invested over the next 20 years in drinking water infrastructure and more than $6 billion over the same period to update sewage.

Yet when Pennsylvania speaks about the upcoming stimulus, the primary voices are urban, epitomized by Governor Ed Rendell, a former Mayor of Philadelphia and fervent urbanist. We can expect that he will be working hard for more stimulus in the big cities, including for such things as the $800 million expansion of the Pennsylvania Convention Center which is now under way.(link to piece on this) Once again demographics and politics could be working against rural and small town communities where projects are on a much smaller scale, but equally important to the welfare of areas of rural Pennsylvania.

Like many similar places around the country, rural Pennsylvania has many assets that would benefit from new infrastructure. It is an area of tremendous natural beauty and bountiful recreational opportunities. Most of these areas have good school systems and are safe areas to live. They could contribute to the nation’s economic recovery and provide an alternative for many urban residents who want improved quality of life or are thinking about retiring to an area that is less expensive. The problem is we have to get our own state officials, and the Obama administration to start paying attention.

Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

December 14, 2008