MKE airport decline traces right back to Walker

Noticed the Journal-Sentinel article on the lower amount of flights and competition at Mitchell Airport. What we thought was going to be a growing site, between high needs in Milwaukee and the desire for a third airport to serve the north suburbs of Chicago, is now shriveling up, and becoming dominated by one airline.

A total of 7.5 million passengers passed through Mitchell in 2012, compared with 9.5 million in 2011 and nearly 10 million in 2010, when AirTran and Frontier had hubs here and Southwest was operating its first full year at the airport.

Barring, say, Delta deciding to pick a fight with market share leader Southwest here - and no one is saying that is anything more than hypothetical - the commercial air service we have now is probably what we're going to have for the foreseeable future, market watchers say.

Now some of this is due to consolidation in the industry, and Milwaukee was especially affected by the merger of Southwest and AirTran in early 2011, as both airlines were competing against each other in Milwaukee at the time. Since the merger went through, the article says that merged Southwest now has more than half of the flights in Milwaukee, with Delta a solid second, and Frontier all but packing up from town after the airline formerly known as Midwest decided not to keep Milwaukee as a hub last May, cutting an estimated 450 jobs in the process.

Things are a whole lot different at Mitchell than they were in Sept. 2010, when then-County Executive Scott Walker was bragging about overseeing "the fastest-growing airport in America." And it was trademark Walker policies and cronyism that can help explain this boom-and-bust at Mitchell. Remember, it was Walker's County Executive's office that signed off on allowing AirTran to expand its footprint in Milwaukee in the first place, right around the time AirTran announced its sponsorship of Walker's campaign promotion
Harley Ride around Wisconsin. Sure makes you wonder if the same kind of deal was offered to Frontier, and they either turned it down, or they didn't offer enough cash.

We do know this, Walker was sure glad to act like an AirTran shill when out on the road on his bike. And look who's part of the pit crew! None other than convicted criminal Tim ("He Worked for Scotty but Chose to Break the Law on His Own") Russell!

By allowing the airline that sponsored his little campaign stunt, Walker let AirTran have a better chance at expansion and survival, and hurt Frontier's chances at the same time. It also made AirTran a much more inviting prospect for Southwest to buy, with more assets to gain, and the ability to dominate the Milwaukee market. As a result, the J-S story says 3/4 of the passengers at Mitchell Field in December 2012 flew either Southwest or Delta, and while Milwaukee's fares are still competitive, this type of oligopoly here and in the rest of the nation has led to higher fares.

The average domestic round-trip fare at Mitchell in the third quarter of 2012 was $317, according to the most recent government figures available. That compares with a national average of $367. In a ranking of the top 100 airports in the nation, Milwaukee's airfares were 82nd-lowest in the third quarter.  

At the start of 2010, Mitchell's average round-trip fare was $250, according to U.S. Department of Transportation data.     

"Back when we had 12 airlines, competition was great and the airfares were lower," [Airport Director Barry] Bateman said. "What was a $250 round trip fare is now $400 round trip."

And oh yeah, being 44th in the U.S. for job growth and 47th in wage growth isn't exactly going to make people want to dig in their pockets and take trips, either for business or pleasure. In fact, the only thing I could see helping Mitchell's numbers in the near future is that this February, March and April has had such crappy weather that people might be hopping flights out of town just to escape this gloom and cold. It sure won't be our economy doing it. So the decline at Mitchell is yet another example of how Scott Walker's short-term, "do everything for the gain of me and my campaign contributors" mentality has hurt Milwaukee and the state of Wisconsin long-term. There's no question in my mind that Walker signed off on AirTran's expansion as a quid pro quo kickback, and to show that he stood for "pro-growth" policies in preparation for his 2010 governor's run. After he was elected, he couldn't care less what happened to the airport's prospects or the effect on services for Milwaukee-area fliers, because he was off to his next job in Madison, where he could get even bigger contributions and get even bigger kickbacks from corporations.

And now the same pattern is repeating in Wisconsin, with the same failing results, and with Walker already caring more about his next job (running for president and/or being a Sarah Palin-style professional grifter) than performing his current one. We've already seen some of this manifest itself in the mining bill giveaway and the budget provisions funneling taxpayer money to voucher schools, and you can bet it will continue. Because the failure of Walker's management in Milwaukee over Mitchell Field should be Exhibit A on why you need to keep an eye on any deals this guy is trying to push through in his last 21 months in office.

Why Chained CPI is so incredibly stupid- Social Security

Like most people that live outside of the DC Beltway, I also think President Obama's plans to include Chained CPI in federal payments for programs such as Social Security is foolish economically, and politically idiotic. On an economic level Social Security HAS WORKED when it comes to keeping the elderly out of poverty. As the Center on Budget and Policy Priorities estimated in 2010, the numbers of elders in poverty would be 5 times higher if not for Social Security.

Reducing these benefits, even with the "haircut" that Chained CPI would allow for, puts seniors in even more danger, when they're already at great peril when it comes to their financial security. The Washington Post's Harold Meyerson did a great breakdown a month ago explaining how many of the former comforts older people had in retirement have diminished, or gone away entirely.

A 2011 survey by the Society of Actuaries reported that 55 percent of working seniors said they had stayed employed because they wanted to stay active and involved. But the same survey showed that 51 percent were working because they needed the money.

What advocates for reducing Social Security adjustments fail to consider is that corporate America’s shift away from defined-benefit pensions to defined-contribution 401(k) plans — or to no retirement plans at all — has diminished seniors’ non-Social Security income and made the very idea of retirement a far more risky prospect. Today, more than half of U.S. workers have no workplace retirement plan. Of those who do, just 35 percent still have defined-benefit pensions. In 1975, 88 percent of workers with workplace retirement plans had defined-benefit pensions.

The shift from traditional pensions to 401(k)s is one of the main reasons most seniors aren’t able to set aside enough income to guarantee a secure retirement. A 2010 survey by the Federal Reserve found that the median amount saved through 401(k)s by households approaching retirement was $100,000 — not nearly enough to support those households through retirement years, as seniors’ life expectancy increases. And as most Americans’ wages continue to stagnate or decline, their ability to direct more of their income to 401(k)s diminishes even more.

With this in mind, it shows Social Security benefits are needed more than ever for our seniors, and should be the last place to cut if you have any concerns over our deficit. Especially when you consider Boomers and Gen Xers have worked in a time where wages have declined as a percentage of GDP for the last 40 years.



THAT'S one of your main problems with Social Security funding- fewer people working (especially in the last 5 years) and getting less pay for their work, both of which rob Social Security of needed revenues. Add to that the cap on earnings in a time where the income of 1%ers have exploded (you aren't taxed another dime for Social Security after $113,700 in income for 2013, and you pay nothing on capital gains or dividend income), and you can see where there are issues on the revenue side.

So if we're concerned about the long-term viability of Social Security, why aren't we asking about a fairer tax system that would increase the revenues available to pay benefits? And why aren't we concentrating on job and wage growth that would increase Social Security's availability of funds? Instead the DC Bubble (Obama included) is fixated on the deficit.

This is especially stupid when THE DEFICIT ISN'T A MAJOR PROBLEM RIGHT NOW. It's been nearly cut in half from the last Bush budget that ended in September 2009, and we already have had deficit-cutting moves this year with the increase in employees' Social Security taxes back to 6.2%, higher taxes on the rich, and the sequester in March. The Congressional Budget Office has indicated those moves would cut the deficit in half again over the next 2 years, down to $430 billion. And the markets sure don't seem to think we have a debt problem. The U.S. 10-year note is on its lowest interest rates in the 5 years that we've had these large deficit.



If our deficits were a real economic problem, and we truly had a debt crisis, this chart would be reversed, because the U.S. would have to offer higher interest rates to entice investors to buy. This is clearly not happening, and it screams out for added investment to get people back to work over cutting benefits and slowing the economy down.

Lastly from the economic side, SOCIAL SECURITY IS NOT CAUSING OUR DEFICITS. Even in the relatively gloomy pictures given that the Social Security Administration tends to give, they admit that Social Security is still reducing our current deficit, not adding to it, and that if we did absolutely nothing for 20 years, there would be enough money to keep things as they are, because there are literally trillions of dollars available in the Social Security trust fund, and that the fund will keep growing for several years.

In 2011, Social Security’s cost continued to exceed both the program’s tax income and its non-interest income, a trend that the Trustees project to continue throughout the short-range period and beyond. The 2011 deficit of tax income relative to cost was $148 billion and the projected 2012 deficit is $165 billion. The sizes of these deficits are largely due to a temporary reduction in the Social Security payroll tax for 2011 and 2012. (this reduction is now over, and we are again taking in more money to Social Security vs. payouts). The legislation establishing the payroll tax reduction also provided for transfers of revenues from the General Fund of the Treasury to the trust funds to "replicate to the extent possible" revenues that would have occurred in the absence of the payroll tax reduction. Including these general revenue reimbursements, the 2011 deficit of non-interest income relative to cost was $45 billion and the projected 2012 deficit is $53 billion.

The combined Social Security trust funds continue to grow because projected interest earnings ($110 billion in 2012) still substantially exceed the non-interest income deficit. The report indicates that annual OASDI income, including payments of interest to the trust funds from the General Fund, will exceed annual cost every year until 2021, increasing the nominal value of combined OASDI trust fund assets. As noted earlier, however, the trust fund ratio (the ratio of projected assets to costs) will gradually decline despite this nominal balance increase, as it has since 2008.

Beginning in 2021, net redemptions of trust fund assets with General Fund payments will be required until exhaustion of these assets in 2033. After OASDI trust fund exhaustion, continuing tax income would be sufficient to pay 75 percent of scheduled benefits in 2033 and 73 percent in 2086.

OOOOH! We might have to reduce benefits by 25 percent in 20 years if we don't adjust revenues or increase the amount of Americans working. Well, maybe we can do something about that, can't we? How about having an extremely small percentage of the huge corporate profits or capital gains we've been seeing go toward those who worked their ass off for 40 years to earn Social Security? And how about changing our tax system to encourage hiring and wage growth over profit hoarding and gambling on Wall Street? Whaddya say?

And oh yeah, in addition to being dumb, DC bubble-world economics, it's also politically stupid for Obama to ask for Chained CPI. Why in the world would you want to give Republicans any opening to cut the bedrock program that is one of the defining positions of the Democratic Party, and a huge reason why Democrats have been able to position themselves in the minds of some voters as the party that still tries to care for the little guy? Instead, including chained CPI forces Democrats in Congress to choose between backing a Democratic president or staying true to the prinicples of the party and opposing the President (and still possibly being brought down in a "guiilt by association" GOP attack). Especially with the Congressional GOP being about as popular as dog food right now, with a clueless, incoherent economic policy of "never raise tax revenues for anything but never name what you're going to cut," why give these guys any cover?

Sure, I've heard the "11-dimensional chess" theory that this forces Republicans to go further with cuts, or sputter about and look foolish, leaving the Democrats in Congress to be the ones to save the day and keep Social Security from being cut, helping Dems in the future. But the cynicism of that type of thinking is disgusting to begin with, and I'm betting the average citizen doesn't really care about the political game-playing as much as they're worried that they're going to have less to live on in their golden years because of Chained CPI. And since "Democrat Obama" is the guy who proposed cutting Social Security benefits in his budget, that'll be what a lot of them remember, even if it never becomes law because of the efforts of Dems in Congress (which hopefully it never does).

Then again, given this moves and others (including AG Eric Holder admitting that his department finds some banks "too big to jail"), it seems likely that Obama isn't working for the Dems or the Republicans, but instead the 1%-ers. After all, the 1%-ers stand to gain from cutting Social Security, as it leaves the working classes even more destitute and dependent on the largess of the ruling class, allowing the cycle of increasing inequality to continue. Which means we have to oppose this stupid economic policy as loudly and outwardly as we can. Not only to send the message that any gutless Dem that goes along with this crap will have their career ended as a serious player in the party, but also to stem the tide that has screwed the vast majority of Americans for the last 40 years. It has to end now.

Very odd Wisconsin revenue numbers

I was interested in seeing the Census Bureau's release on state tax collections, which indicated that revenues had increased by nearly $800 billion in states during Fiscal Year 2012. This is a rebound from the revenue losses that resulted from the Great Recession, which put major pressure on state budgets throughout the country, including Wisconsin.

I also wanted to see how Wisconsin fared compared to the rest of the nation, and those numbers in the Census Bureau report shocked me. Page 8 of that report shows Wisconsin was the only state in the nation that had drops in both sales and income tax revenues in Fiscal Year 2012 - the first year of Scott Walker's budget.

This is especially odd, because the Walker Administration claimed revenue INCREASES in both of these statistics for FY2012, both in September's Department of Revenue report, and in the state's CAFR that was released in October. These higher revenues are a basis for the Administration's alleged "surplus" that the upcoming budget builds many of its assumptions on, but the numbers from the Census Bureau are a whole lot different than what the Walker DOR is saying...and it wasn't nearly that different in 2011.

Census Bureau vs. Wisconsin DOR, revenue figures 2011-2012
2011 Income taxes- Census $6.43 billion, DOR- $6.70 billion ($270 mil difference)
2012 Income taxes- Census $6.26 billion, DOR- $7.04 billion ($780 mil difference)

2011 Sales taxes- Census $4.11 billion, DOR $4.11 billion (same)
2012 Sales taxes- Census $3.87 billion, DOR $4.29 billion ($420 mil difference)

Now I don't know if the Census Bureau or the DOR is wrong about the numbers, and it does seem that some revenues are categorized differently between the 2 agencies. But the gaps are extremely different in FY2012 vs. FY2011, and that is extremely odd.

There's definitely a story here, because those numbers should not be that different. Stay tuned for the next revenue numbers from the LFB, and with the Journal-Sentinel reporting the Census numbers today, there should be some follow-up on this.

P.S. Now it looks like the Walker Administration is saying that DOA didn't send over the right numbers to the Census Bureau. Could be true, but if so, someone in DOA doesn't have a clue on how to find data. But given who this administration hires, I can't be shocked by that. Maybe that'll be Cullen Werwie's new job.

Lose $6,500, get $9 back. What a deal!

Wisconsin's Legislative Fiscal Bureau sent out their estimations of property taxes under the Governor's budget today. The toplines are bad, but the story buried inside is worse.

First, the LFB estimates that property taxes will increase in Wisconsin for the two years of Governor Walker's budget, as a result of shared revenues and school aids staying low. And this increase will be slightly above what it was last year.

Based on nearly complete reports filed with DOR, gross property tax levies are estimated to total $10,471.3 million on a statewide basis for 2012(13). This represents a 0.8% increase relative to the 2011(12) statewide total of $10,384.8 million. After applying state tax credits, net property tax levies are estimated at $9,436.5 million, an increase of 0.8% over the 2012(13) total of $9,357.7 million. Under provisions in AB 40, as proposed by the Governor, gross property tax levies would increase on a statewide basis by an estimated 1.5% in 2013(14) and 1.4% in 2014(15). Increases in net levies of 1.5% in 2013(14) and 1.6% in 2014(15) are estimated.

On the face of it, it's a pretty tame increase, but it is one, contrary to a lot of the Walker supporters who claim Act 10 and Scotty's tools dropped property taxes statewide.

But that doesn't mean Walker policies didn't drop property taxes. In fact, the LFB report says the average homeowner saved $9 on their property taxes in Wisconsn this year (don't spend it all in one place, folks). However, it's not for the reason you'd want to see your taxes go down.

Median home value, Wisconsin
2011 (12) $157,692
2012 (13) $151,148 ($6,544 DROP)
2013 (14) $152,400 (+1,252)
2014 (15) $154,800 (+2,400)

Gee, you think taking millions of dollars out of the pockets of Wisconsin workers and denigrating public education is going to hurt home values in our communities? Well I am just Jake's lack of surprise right there.

And the tepid price increases for the future are happening while the rest of the country is having prices go up by more than 10%, the fastest jump in values in 7 years. It's a stark reflection of Wisconsin's subpar economy and bottom-10 standings in job and wage growth, and is another example of how policies in the Age of Fitzwalkerstan keep costing Wisconsinites major money.

Oh, but you Baggers did save $9 this year on your (deductible) property-tax bill, while you were losing $6,500 in wealth. Hope THAT was worth it.

MacIver not really getting that seasonal job thing

The fittingly-named MacIver news service (because they can maneuver any stat or piece of information into right-wing propaganda) clearly got the word that Wisconsin's bad jobs numbers are hurting Scott Walker's election prospects. So they decided to send out a pile of crap to the dupes who take them seriously titled "Gov. Scott Walker more than halfway to 250,000 job goal."

Well that's quite a change from what we've been covering here for the last 2 years. And the reason it's different is BECAUSE IT'S A LIE BY OMISSION.

MacIver is using the numbers from the most recent Quarterly Census of Employment and Wages, which says that total jobs in Wisconsin were 2,205,584 in January 2011 (when Walker took office) and was 2,342,956 in September 2012, a difference of 137,372. Of course, there's always more jobs in September than there are in January in Wisconsin, because of weather-related jobs such as construction, landscaping and tourist-related industries. Using the raw numbers without keeping seasonality in complex is the mark of a stupid analyst, or a pathetic liar. It's the same BS that Gov. Walker tried to pull a few months back, and the Journal-Sentinel's Politifact called him a pants-on-fire liar for doing so.

And when you compare those figures with previous years, they don't show success for Scott Walker's policies. They show we often did as well if not better under Jim Doyle when the economy was growing nationwide (as it was from 2003-2007 under Doyle), and the job growth for the 21-month period MacIver is trying to prop Walker up on is a 13.4% DROP FROM THE YEAR BEFORE.

21 month job changes, Wisconsin (QCEW)
Jan 2011-Sept. 2012 +137,372 (+6.23%)
Jan 2010- Sept. 2011 +155,820 (+7.19%)
Jan 2005- Sept. 2006 +139,747 (+6.12%)
Jan 2004- Sept. 2005 +154,895 (+6.88%)
Jan. 2003- Sept. 2004 +128,287 (+5.71%)

So these numbers aren't really anything special, and in fact show a slowing from the previous year. But that doesn't come close with illustrating the amount of fail that's already happened in FitzWalkerstan, with more bad months in the QCEW to come.

If you take a look at Wisconsin's last 10 years or so, you'll see where this cycle of adding and subtracting seasonal jobs happens. Even including the recession year of 2009, when we were losing 150,000 jobs on a year-over-year basis, we added jobs in the Summer.



What's so dishonest about the MacIver story is they take the number that bottoms out at the start of 2011, but doesn't take into account that the number will drop again in the last 3 months of 2012, and is on track to fall again in the first 3 months of 2013. They're not going to be coming back in 6 months saying "Oh my God! We've lost 80,000 jobs in the last 6 months, and we're 200,000 jobs away from Walker meeting his goal!" But saying after the March report "80,000 jobs lost in last 6 months" would be just as true as their "It's Working" propaganda piece that they sent out today...and just as dishonest. Which is why the BLS uses year-over-year numbers when it's measuring the states against each other, and in looking for trends.

And that trend is not in Scott Walker's favor over the last year when it comes to private sector job growth-with barely half the jobs being added in the last report compared to what the state was doing when he took over.



In fact, I'd anticipate the upcoming year-over-year QCEW reports to show a performance as bad as the meager increase of less than 21,000 private sector jobs from Sept. 2011-Sept. 2012 - if not worse. The recently-benchmarked 2012 numbers released done by the BLS and released by the DWD used QCEW data to match up the data with the other surveys used. It showed that October-December 2012 jobs numbers barely nudged up on a seasonally-adjusted basis, while the U.S. as a whole was adding over 200,000 jobs a month in that time period.

Then look at the March 2012 increase in the QCEW, and see that 19,000 more people were working in that month than they were in February, which is the largest March increase in any of the 12 years the QCEW has measured. And it's no surprise why, because March 2012 featured numerous days in the 70s and 80s, accelerating the seasonal hiring that would usually happen in April, as Wisconsinites had green grass and bloomed trees this time last year. By comparison, the last 2 months of 2013 have had temperatures below normal (it hasn't broken 65 once, and we're supposed to get MORE SNOW on Thursday of this week after 2 days of downpours), and there's no outside lawn or landscaping work to be had. So replace the above-normal hiring in March 2012 with what will probably be low hiring in March 2013, and that means another bad 12 months on the list in the QCEW report that'll be out this September.

So don't be tricked by Walker supporters trying to MacIver their way into convincing you that Scotty's going to fulfill his prediction of 250,000 private sector jobs. He's nowhere close to it today, and won't be hitting it anytime in 2014, even with the huge seasonal increases in jobs that we get every Summer in Wisconsin.

March job slowdown- signal or noise?

Friday's job report showed a slowing of the strong growth we'd seen in the last few months, with only 88,000 more jobs created, (95,000 in the private sector). Granted, strong revisions to the previous 2 months left us up nearly 150,000 from where we thought we were last month, so it's really not that bad, but after averaging over 187,000 jobs a month since June, 88,000 jobs isn't even half that.

So why did it happen? Is it related to the budget sequester that took place on March 1 and was kept in place with the late-March budget deal? The numbers would certainly add up, because the CBO paper on the sequester's effects estimated it would lower job creation by about 750,000 in the last 10 months of the year, or 75,000 jobs a month. Add 75,000 to 88,000, and you get to 163,000, which is in line with the job growth since last Summer.

But it's also worthy to remember that many of the furloughs and other sequester-related events have yet to take full effect, so let's take a look inside the March job stats to see if we find anything else. First, let's look at the sectors that gained the most in March.

Biggest job gains, March
Health care- 23,400
Temporary help services- 20,300
Construction- 18,000
Food service/ drinking places- 13,000
Accounting services- 10,700

Nothing out of the ordinary with the first 2- they've been steadily growing at this rate for the last year. Same for bars and restuarants. Construction is worth noting, especially since the big gains were in "specialty trade contractors." This matches up with data that shows the U.S. housing market keeps coming back, with rising home values in most U.S. cities, and a 27.7% year-over-year increase in housing starts reported for February 2013. So that tells me at least that element of the economy didn't slow in March.

Let's go to the other side - which areas lost jobs in March.

Biggest job losers, March
Clothing and clothing stores -15,300
Postal service -11,700
Building + garden supply stores -10,100
Heavy and civil engineer construction -8,800
Truck transportation -6,900

The clothing and garden supply store reductions could certainly be related to the crappy weather much of the country was stuck in for March. Kinda hard to shop for summer clothes and lawn care items when it's 25 and snowing. But it also could portend for slower consumer spending in March, and with the sequester reducing incomes for a large amount of workers, this may be the start of a trend. The Postal Service reductions are probably workers heading to the exits before looming cutbacks hit that area, which is largely the result of GOP-led measures in 2006 that led to pre-funding of all of the Post Office's retirement obligations, helping cause a multi-billion dollar deficit today. Heavy construction is an odd one, but it reflects lower-than-normal March increases instead of layoffs, which also seems to point to bad weather as the reason, reducing the need to hire for road construction.

So maybe the slow March job numbers are a blip reflecting a short-term slowdown in consumer spending which reduced the need to hire for industries who usually have to add staff once the Spring flowers start blooming. We'll see if this turns around in April when it warms up and people start wanting to be outside spending money and being recreational (well, IF it warms up in April. Those of you up North that are dealing with another 3-5 inches of snow may be waiting a while).

I'll deal with the unemployment rate drop to 7.6% another time (it's mostly related to a lower amount of people in the work force, could be an aging Boomer thing). But until I see more evidence that consumer spending is really slowing down or once unemployment claims start picking up consistently (they were up on a seasonally-adjusted basis last week, but had the same numbers as the previous week on a raw number basis), I'll just chalk up these low March figures to bad weather, which puts it in the "noise" category, instead of as a signal of a slower economy.

The bigger concern for me is buried at the bottom of the report, where average weekly wages were up only 2.1% for the last 12 months, barely above inflation. In an economy that's still got 70% of it based on consumer spending, it's going to be hard to have any kind of major expansion as long as people aren't taking home any extra money. That's where you'll need to stay tuned, because that's exactly where these austerity measures are going to be reflected if they really do start slamming the brakes on what was a solidly-growing economy for most of the 1st Quarter of 2013.

Not a surprise- "Competition" leads to cheating in schools

This week is the opening of the MLB season, and I saw my first Brewer game of the season last night (a depressing 3-1 loss where Aramis Ramirez got hurt and the team found a way to lose). It also was "back to school" time in many Wisconsin School Districts after Spring Break. These two events don't seem connected, but as you will see, having high-stakes and big-money associated with performance can lead to corruption of these two things.

The way schools get corrupted through competition came through loud and clear as 35 Atlanta-area educators and school administrators were charged with fraud related to cheating on standardized tests. The ringleader is former Superintendent Bev Hall, who will now have her picture up for reasons other than "school excellence".



Hall was named the U.S.'s Superintendent of the Year for overseeing a "remarkable improvement" in test scores for Atlanta-area public schools, and adhered to the Michelle Rhee-influenced method of paying bonuses to teachers who had students show improvement in test scores and got rid of "underperforming" teachers and principals who didn't have their students do better. Well, it turns out that offering those kinds of incentives and punishments led to other sorts of behaviors that weren't exactly related to excellent teaching or student knowledge.

According to the indictment, Hall placed unreasonable goals on educators and "protected and rewarded those who achieved targets by cheating." It also alleges she fired principals who failed to achieve goals and "ignored suspicious" test score gains throughout the school system....

Investigations into the remarkable improvements on standardized tests were first reported by The Atlanta Journal-Constitution newspaper. A state review determined that some cheating had occurred in more than half the district's elementary and middle schools. About 180 teachers were implicated initially. Cheating is believed to date back to early 2001, when standardized testing scores began to turn around in the 50,000-student school district, according to the indictment.

For at least four years, between 2005 and 2009, test answers were altered, fabricated and falsely certified, the indictment said.

"We've had cheating all up and down the line. It was absolutely amazing," said Michael Bowers, a former Georgia attorney general who investigated the cheating scandal.

Bowers said there were cheating parties, erasures in and out of classrooms, and teachers were told to make changes to tests. "Anything that you can imagine that could involve cheating, it was done."

If this type of behavior sounds familiar, it should, because it reminds you of the "unbelievable" results in Rhee's schools when she was the D.C. Superintendent.



As someone who's taught high school, you don't get answers changed to the right one a whole lot more than they get changed to the wrong one. It's random and largely 50-50 (as you'd expect). It doesn't take a rocket scientist to think that a self-promoter like Rhee would at the very least be OK with teachers going rogue to improve test scores, if not outright ordering it herself.

But Jake, a federal investigation said they couldn't find direct evidence that there was widespread cheating in D.C. under Rhee. True, and Roger Clemens was never officially suspended for steroids either- he just pitched at a higher level in his late- 30s and 40s than he did as a sore-armed guy of 30 in his last years in Boston. And Sammy Sosa never was suspended for roids either, despite having his body and stats completely change in the mid-90s, and then completely "slim down" and fall off the map when steroid testing began after 2002.

Chris Hayes did an excellent job linking the incentives to "enhance performance" and cheat in high-stakes school testing and MLB in his book Twilight of the Elites. Hayes points out that MLB players who roided up often were rewarded with huge contracts, and the MLB attendance grew during the height of the steroid era in the 1990s and 2000s, which encouraged owners to look the other way when it came to PEDs, and pressured other players who weren't juicing, and seeing their performance (and salaries) suffer as a result.

In twenty-first century America we fetishsize the athletic model of ceaseless competition and meriotcratic ascent. Every two-minute biographical package during the Olympics tells the story of some hardworking athlete from the middle of nowhere who woke up early, trained late, and bested her peers to rise to be the best in the world. But what the baseball steroids scandal shows is that it's rather difficult to design a competitive system that heavily rewards performance and doesn't also reward cheating.

In one of the papers that made his reputation for ingenious economic analysis, Freakonomics' Steven Levitt used test score fluctuations in Chicago public schools to conclude that teachers were cheating in at least 4 percent of the classrooms. What prompted the outbreak of deception was an incentive structure put in place by Chicago Public Schools to push the system in a more meriotcratic direction and demand performance from its teachers.

By the way, the Chicago Public Schools' Superintendent that time that Levitt describes? None other than current Secretary of Education Arne Duncan, who has worked with President Obama to set aside billions in "Race to the Top" funding that is based partially on test scores and other performance measures.

Hayes' book also mentions Rhee's sketchy reign in D.C., and has an early rundown of the Atlanta testing scandal that led to all the charges that recently came out. When you see that a "pay-for-performance" system in public schools inevitably leads to corruption and cheating, it seems like if you valued integrity in public schools, you'd run away from this type of system as quickly as possible. But instead, more places want to put this in place as a method to judge, reward, and punish public school teachers and districts. This includes Wisconsin, where Gov. Walker's voucher-expansion plan is directly listed to test scores in certain districts. Is it a shocker that the Rhees and Duncans and the Walkers of the world also discourage strong teachers' unions, so teachers are less likely to call out this abuse? It shouldn't be. (Walker's plan is even worse because it wants public schools to be accountable to test scores, while exempting voucher and charter schools from the same rules. It's a blatant attempt to make public schools look bad and appear to "fail")

This is not to say that using test scores as a method of evaluating how a school is doing is all bad. We deserve to know how our schools measure up, and should use as much information as we can to see where we may be falling short (such as low scores in a particular subject), and possibly use that to change curriculum and emphasis in class. But to base teacher pay and school funding in a Darwinist "Survival of the Fittest" method will inevitably end up with some schools cheating and "teaching to the test", as they did in Atlanta. And while that may make these districts' numbers look good, they don't do much when it comes to long-term growth or necessarily preparing students for their future careers, and may in fact set those students back. Worse, it could encourage a desperate or greedy district to funnel some low-performing students out of the district and leave them permanently behind, like private schools do all the time.

But much like MLB players that juiced in the steroid era, does that matter to people who are looking for short-term adulation and payoffs, even if it leaves a major black mark on their profession? And I'm a lot more forgiving of MLB players that juiced when it was legal (and believe the best players of the steroid era should be in the Hall of Fame, regardless of whether or not they used PEDs). Teachers who knowingly lie on tests are portraying something that is not true, and even though the system encourages this type of deception and cheating, it is still criminally and professionally ILLEGAL, unlike using roids before they were banned in MLB.

The trend of tying school compensation to school performance is a recipe for deception and failure, and will not make us better off in the long term. Even worse, it can penalize teachers and districts who may try to "do the right thing", teaching honestly and trying to meet a student's and class's individual needs, because they will be pushed out over teachers who encourage mindless regurgitation and worse, cheating on tests.