Thursday, September 25, 2008

The Final Failure of Reaganomics

We’ve all seen the headlines: The government takes over troubled mortgage giants Fannie Mae and Freddie Mac, Lehman Brothers files for bankruptcy, Merrill Lynch is acquired by the Bank of America, and the government announces an $85 billion emergency loan to rescue insurance giant American International Group (AIG) as stock prices plummet. And that was just the beginning.


The government is currently debating a $700 billion bailout of distressed banks under a plan that initially proposed to give Treasury Secretary Henry Paulson and the Bush administration unprecedented power. We need to "remove the distressed assets from the financial system," suggests Paulson, who resigned as CEO of Goldman Sachs to become the Treasury secretary in 2006 after amassing a personal net worth of $700 million during his time at the bank.


How did all this happen? The root of the problem can be traced back to the deregulation era that began during the Reagan administration. What George H.W. Bush once called "voodoo economics" fast became the biggest redistribution of wealth since the New Deal. The central article of faith in the "Reagan Revolution" was that money rerouted from the poor to the rich would produce a burst of productivity and economic growth. Give to the corporations and the wealthy, said the "supply side" economists, and they will invest the money in new factories, research and technology, and the country will be restored to greatness.


Did the theory work? Hardly. Rather than putting their money into jobs, research or equipment, the country’s biggest businesses went on the largest merger binge in history, buying up smaller companies in a trend that spelled less competition, less productivity, and more control of the economy in fewer hands. Multi-billion dollar corporate war chests were assembled to finance takeovers of large oil and coal companies, communications giants, and prestigious financial institutions.


After a stock market meltdown in 1987, Wall Street advised the US Treasury not to meddle in financial markets. This paved the way for consolidation around large merchant banks, institutional investors, stock brokerage firms, and large insurance companies. Complex speculative instruments – derivatives, options, futures, and hedge funds – were largely unregulated, becoming vulnerable to manipulation.


Then, in 1999, the Financial Services Modernization Act – also known as the Gramm-Leach-Bliley Act – removed remaining regulatory restraints on Wall Street's powerful banking conglomerates. Repealing the Glass-Steagall Act of 1933, a New Deal reform put in place in response to corruption that had resulted in more than 5,000 bank failures in the years following the 1929 Wall Street crash, commercial banks, brokerage firms, institutional investors and insurance companies were permitted to invest in each others’ enterprises and integrate their financial operations.


In short, the current financial crisis has been building for a long time. But the alarm bells didn’t start ringing until June, 2007, when two hedge funds of the New York investment bank Bear Stearns lurched toward collapse because of their extensive investments in mortgage-backed securities. They were forced to dump assets as the trouble spread to major Wall Street firms such as Merrill Lynch, JPMorgan Chase, Citigroup, and Goldman Sachs, which had loaned the firm money.


Over the summer, German banks with bad investments in the US real-estate market were caught up in the crisis. But the most obvious sign of trouble was the Federal Reserve’s decision on August 9 to pump $24 billion into the US banking system through large purchases of securities, while the European Central Bank made a record cash injection of $130 billion into its markets to shake off credit fears. On the same day, Wall Street suffered its second-worst decline of the year as the Dow Jones dropped by nearly 400 points.


The next day, the Fed pumped another $38 billion in temporary reserves into the financial system, but the government rejected a request for Fannie Mae and Freddie Mac to take on more debt. At the end of the month, President Bush announced a plan to use the Federal Housing Administration, which insures loans for low-income borrowers, to offer government-guaranteed loans to around 80,000 homeowners in default.


On Sept. 18, 2007 the Federal Reserve started cutting interest rates, citing the credit crunch on Wall Street and in the broad economy. The nation's central bank made cuts at seven straight meetings. It also agreed to start loaning money directly to Wall Street firms, rather than only to commercial banks, and to accept troubled mortgage-backed securities as collateral. In October, profits at Citigroup dropped sharply. One large financial institution after another reported heavy losses.


At the start of 2008, the Bank of America acquired Countrywide Financial in a deal that rescued the country's biggest mortgage lender. Another sign of trouble: Bear Stearns CEO James Cayne lost his job. In February, Congress approved a $150-billion spending package to stimulate the sluggish economy. In March, on the verge of collapse and under pressure by the Federal Reserve, Bear Stears was forced to accept a buyout by investment bank JPMorgan Chase at a fire-sale price. The deal was backed by Fed loans – up to $29 billion in financing to cover potential losses. In July, the California mortgage lender IndyMac collapsed and troubles deepened for Fannie Mae and Freddie Mac.


Which brings us to September 6, 2008, when Treasury Secretary Paulson announced the takeover of Fannie and Freddie, putting the government in charge of firms that own or back more than $5 trillion in mortgages. The Treasury Department agreed to provide up to $200 billion in loans to the cash-starved firms, which are crucial sources of mortgage funding for banks and other lenders. It was a bid to reverse a prolonged housing and credit crisis. By the way, this was the same week when the McCain campaign was pushing the “lipstick on a pig” charge and the candidate himself remained certain that the “fundamentals of the economy are strong.”


Both Fannie and Freddie were placed in a government conservatorship, a move that could end up costing billions. The firms own or guarantee about half the home loans in America. The government implicitly had been guaranteeing their creditworthiness, enabling them to borrow at below-market rates. But private shareholders pocketed the profits they made lending cheap money at higher interest rates.


A week later, on Sept, 15, 2008, Lehman Brothers, burdened by $60 billion in soured real-estate holdings, filed for bankruptcy after attempts to rescue the 158-year-old firm failed. Merrill Lynch also agreed to be acquired by the Bank of America, and AIG asked for a bridge loan of billions of dollars from the Federal Reserve. The $50 billion Bank of America deal creates a bank that will rival Citigroup, the biggest US bank in terms of assets. Meanwhile, stocks fell, the Dow Jones sliding 504.48 points – the worst drop since the 9/11 attacks. Stocks also posted big losses in markets across much of the globe. The day has been labeled “Black Monday."


The next day, Sept. 16, 2008, the government agreed to an $85 billion emergency loan to rescue AIG, saying failure of the company could hurt the already delicate financial markets and the economy. That was Tuesday. On Wednesday, the Dow lost about 450 points, giving it a shortfall of more than 800 for the week. Markets around the world were also having a confidence crisis, and Russia shut down its market for a third day following its worst plunge since 1998.


Last Thursday, the Federal Reserve, working with banks in Europe, Canada and Asia, pumped as much as $180 billion into money markets to combat a seizing up of lending. Republicans blasted the Treasury Department and Fed for orchestrating the AIG bailout, and the White House for not informing them of the plan. John McCain said he would fire SEC Chair Chris Cox (which the President can’t actually do), and Barack Obama called it evidence of the failure of deregulation and Bush-McCain policies.


What’s next? Most likely, a $700 billion government bailout, unspecified limitations on executive payouts, a bipartisan board to handle implementation – and, perhaps, changes in regulation of the mortgage market, forcing companies to restructure individual loans rather than foreclose them. It’s not surprising that McCain, who proposed this week that his first debate with Barack Obama be postponed because of congressional negotiations on the proposed bailout, would prefer to grandstand in DC than take questions about his changing positions. A joke in Washington these days is that the crisis seems to be turning former deregulators into socialists – at least as far as business risks are concerns.


Vermont’s junior US Senator, Bernie Sanders, who has never been shy about his socialist leanings, wants to go further. He is proposing a surtax on the very wealthy, stronger oversight of financial institutions, and an end to deregulation policies. He also argues that huge businesses like Bank of America should be broken up so no company in the future could bring the economy down with it. In the meantime, he calls for an immediate economic stimulus package that would put people to work rebuilding infrastructure, and increasing energy efficiency and sustainable energy.


“The people who can best afford to pay and the people who have benefited most from Bush's economic policies are the people who should provide the funds for the bailout,” Sanders says. “It would be immoral to ask the middle class, the people whose standard of living has declined under Bush, to pay for this bail out while the rich, once again, avoid their responsibilities.”


Sanders’ plan includes:


* A five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers to raise more than $300 billion in revenue


* Ensuring that assets purchased from banks are realistically discounted so companies aren’t rewarded for their risky behavior and taxpayers can recover the amount paid for them


* Equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies' stock goes up


* A major economic recovery package which puts people to work at decent wages rebuilding infrastructure and moving the country from fossil fuels to energy efficiency and sustainable energy


* Reinstalling the regulatory firewalls that were torn down in 1999, including re-regulating the energy markets and possibly abolishing various financial instruments that have created an enormous shadow banking system at the heart of the financial services meltdown


Finally, and most radically, Sanders calls for ending the danger posed by companies that are "too big to fail," breaking them up if necessary. “We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions,” he argues.


It’s not likely that most of this plan will be embraced by Congress. But the crisis is certainly forcing the country to take a serious look at Reagan’s old claim that “government is the problem.” Even President Bush, in his remarks to the country on Sept. 24, admitted that “democratic capitalism” – which he still considers “the best system ever devised” – needs serious help. With the economy’s “fundamentals” clearly in jeopardy and the disaster wrought by deregulation and corporate excess finally exposed, government intervention has become the only way out.

Thursday, September 18, 2008

VT Candidate Pledges to Prosecute Bush

Charlotte Dennett, who entered the race for Vermont Attorney General this week, readily admits that it will be an uphill battle. But the Vermont Progressive Party’s candidate does have one thing going for her – an issue with the potential to mobilize voters upset about the Iraq War. At her first press conference, sitting next to renowned prosecutor and author Vincent Bugliosi, she pledged to prosecute George W. Bush for murder if elected and appoint Bugliosi as a special prosecutor to take on the job. (See video clips below)

Bugliosi had come to Vermont specifically to back Dennett’s bid against incumbent Attorney General William Sorrell, who has held the job since 1997. “There is no better state to bring this forward,” Dennett said, pointing to the fact that Vermont has lost more soldiers per capita than any other state during the war and that voters at 36 Town Meetings have called for Bush’s impeachment.

“No man is above the law,” Bugliosi argued, explaining that a state Attorney General can prosecute Bush for conspiracy to commit murder after he leaves office. The key is to establish “overt acts” that prove there was a conspiracy to mislead the country into war, he said. Bugliosi pointed specifically to Bush’s frequent public statements, which were broadcast nationally, and the recruitment of Vermonters to fight in Iraq. “Any Attorney General can do this,” he said.

Dennett, who has been practicing law since 1997, is also an investigative journalist. "When I read Mr. Bugliosi’s meticulously-argued case," she has explained, "it struck a chord with me as a Vermonter and an American citizen.”

Bugliosi has won 105 out of 106 felony jury trials and is best known for prosecuting Charles Manson. Yet his most recent book, The Prosecution of George W. Bush for Murder, has proven highly controversial. Mainstream media outlets have declined to review it or interview him, Bugliosi noted. Asked what explains the reaction, he speculated that the Right Wing in the US has frightened many people into silence. Thus, “the establishment has decided Bush should not be held accountable,” he said.

In recent days, there have been renewed calls to go after the president. For example, Seattle Congressman Jim McDermott has announced that he wants to see Bush impeached, whether or not he’s still in office. He has joined a call from Ohio Congressman Dennis Kucinich to launch impeachment proceedings, and has cited Bugliosi’s book as part of the reason for his decision.

Although pleased that McDermott is calling for impeachment, Bugliosi thinks congressional action doesn't go far enough. "Impeachment alone would be a joke for anyone interested in justice," he says. His recommendation is that a state official – Dennett, for example, if she is elected – should prosecute Bush for murder in the deaths of American soldiers fighting in Iraq.

On the campaign trail, Democratic Vice Presidential candidate Joe Biden recently said that an Obama/Biden Administration would pursue criminal charges against Bush over the treatment of captured terrorists held at the US Naval Base at Guantanamo Bay. “If there has been a basis upon which you can pursue someone for a criminal violation, they will be pursued,” Biden pledged at a Florida campaign stop.

Earlier this year, Barack Obama took a similar position, stating that he would look at whether Bush violated laws. But fearing that such a position could undermine their chances of victory, Biden subsequently softened his position, telling the Philadelphia Daily News that he didn’t want the start of an Obama/Biden term to look like a “witch hunt.”

At this point, Dennett’s chances of victory aren’t strong. Although Vermont Progressives have elected representatives to the state legislature, no candidate has yet come close to winning a statewide race. Anthony Pollina, the Progressive standard bearer who ran for governor in 2000 and received 24.8 percent of the vote in a 2002 race for Lt. Governor, decided this summer to run for governor as an Independent in hopes of broadening his base.

Sorrell, a Democrat, has enjoyed bi-partisan support, and received enough write-in votes in Vermont’s recent primary to appear on the November ballot as both the Democratic and Republican candidate. Nevertheless, a strong turnout for Dennett would send the message that the idea of prosecuting Bush is something to seriously consider.

In 2007, Vermont's State Senate passed a resolution calling on the US Congress to impeach Bush over his handling of the war. But House Speaker Gaye Symington, a Democrat who is currently running for governor against Republican incumbent James Douglas, argued at the time that the move wasn’t appropriate prior to a Congressional investigation. During the House proceedings, about 400 Vermonters from 102 communities showed up at the State House but the resolution was defeated. Vermont's congressional delegation has shown little interest in the idea.

The question raised by Dennett’s promise to pursue prosecution of Bush is whether anger about the war – and how the public and Congress were misled – are enough to create a competitive race against a successful incumbent. Vermonters don’t register by party, and identification as Democrats and Republicans is weaker than in most states. But it remains to be seen if the race can become an unofficial referendum. In essence, a strong turnout for Dennett would mean that Vermont voters want to take the lead in turning a former president into a criminal defendant.

If nothing else, the campaign could produce a great bumper sticker: Prosecute Bush. Elect Dennett.

Video Report on Charlotte Dennett’s Pledge




Bugliosi testifies before House Judiciary Committee

Wednesday, September 17, 2008

Pacifica Meltdown: The Price of Democracy

Rob Robinson, a member of Pacifica Radio’s National Board representing WPFW in Washington, DC, has been working on programming issues for years. In 2006, he finally succeeded in getting a National Programming Policy adopted, although several key elements were sidetracked and few people have read it. In early September, at a meeting of the network’s Programming Committee, he explained again that stations are losing listeners and not meeting on-air pledge goals. The current programming schedules aren’t attracting enough people, he argued, and the audience is aging. “I’m not trying to dictate to management,” he promised, yet he stressed that some accountability is needed.

The Committee’s main business that night was to deal with a series of new proposals Robinson had put forward in his role as chair. But those on the phone were also thinking about a motion referred to them by the Pacifica National Board. Concerned about listenership, the Board was asking the Committee to consider a series of “performance requirements” for managers developed by KPFK director Grace Aaron.

The basic idea is that Program Directors, Station Managers, and the Executive Director should be working to increase listenership by 7 percent each quarter, or else have their failure to do so “kept on file” as part of performance evaluations. Some Board members had problems with the idea. “Magical thinking doesn’t work,” said KPFA Director Bonnie Simmons. “I can’t imagine people working under this system.” Others called it reckless, arbitrary, and punitive.

In the end, the motion was passed, but mainly because it would be referred to the Programming Committee for further consideration. When the Committee met, however, it wasn’t ready to deal with the issue, and Robinson said that his intention wasn’t “to implement a specific growth rate.” Still, one of his proposals was to establish “quantifiable programming goals designed to reach new listeners, convert them and get renewals.”

Another was to develop “objective measures to evaluate programs and schedules.” Revenue isn’t the only way to measure a show’s success, he said, but there should be “incentives” to free up space and develop new programs. Since the 16-member Committee didn’t have a quorum, it was clear from the start that no decisions would be made. But that would have been unlikely anyway, since there was disagreement about most of Robinson’s ideas. George Reiter, a director representing KPFT in Houston, saw the proposal for evaluating programs and schedules as a way to spark change, but Simmons found it troubling and advised asking the staff how they felt. “We shouldn’t throw lofty but impossible things at the stations,” she cautioned. KPFK Board Member Sherna Gluck looked for common ground, suggesting that people needed to be reminded that the current national policy hasn’t been implemented.


Robinson also urged that resources be allocated to reach larger audiences “by helping current shows and developing new programs.” WBAI Board members Lisa Davis and Cathy Davis were uncomfortable with that, noting that cutbacks at their station are being considered and the staff there should determine the needs. Next, Robinson suggested that money be “reallocated” to produce “quality news programs, documentaries, and specials,” noting that most stations don’t carry the network’s “Headline News” service and too often rely on soft-edged “talking head” interviews. Several people objected strongly to his analysis and defended their local news operations. The real problem, several people asserted, is training.


When Robinson proposed “national access to local airwaves,” the chorus of objections was almost unanimous, even when he stressed collaboration and local initiatives. Simmons and Lisa Davis opposed the suggestion that stations “must carry” any program. “Mandating builds in failure,” Simmons argued. The consensus was that the National Programming Coordinator should suggest some local shows for national distribution, but stations shouldn’t be forced to air them.


Another idea was to consolidate and coordinate the network’s news operations. After discussing the uniqueness of local news, as well as Free Speech Radio News and the DC News Bureau, the group agreed that better communication would help but the proposal itself should be dropped.


Finally, Robinson urged more aggressive digital distribution of programs. Cathy Davis agreed but added that it should be handled “station by station,” while Simmons argued that the real issue is “getting people to focus” on the network’s best shows.


In the end, while there seemed to be agreement that improving programming would eventually increase revenue, the Committee remained stymied on how to do it. The overall thrust was that stations and their staffs are best equipped to make any needed changes, and forcing the issue won’t help. Robinson’s assertions that Pacifica currently has no standards, that station schedules haven’t significantly changed for years, and that listeners are rejecting them failed to persuade.


The stalemate over programming reflects a more general problem, the difficulty in making any substantive changes with a management and governance structure that imposes a complex deliberative process, and requires input from literally hundreds of people prior to any action. Complaints about this often bring the response, “Democracy is messy.” But there’s more to it. If a group of people – for example, a local Board faction, or a group of unpaid staff members – or the management at one or two stations objects to something, they can usually block it by demanding consultation, threatening to protest, or simply ignoring the idea. One obvious result is that there has been no new ongoing national programming in a decade, since the launch of Democracy Now! Less obvious, but equally troubling, is the failure to adopt network-wide policies in key areas.


Pacifica has about a dozen national committees dealing with finances, governance, personnel, audits, programming, the internal election process, affiliates, allegations of racism and sexism, and so on. It also has a Coordinating Committee, which is supposed to keep the process moving. But many committees have trouble consistently achieving quorum, resulting in a work backlog, or are divided along various factional lines. The one committee that has been explicitly avoided in the 2002 bylaws is an “executive committee,” which could allow some decisions to be made when other parts of the system break down. Yet, some directors clearly have more influence than others.


On Sept. 7, when 11 members of the National Board convened in hopes of moving forward with a “strategic recovery plan” to deal with Pacifica’s current financial problems, nothing could be done because the other 11 Board members didn’t show up. This approach – preventing a decision through non-participation – is relatively common. It could be argued that such a response represents democracy in action – the withdrawal of consent – but the immediate result is inaction.


The meeting demonstrated the dynamics of the Board split. Those attending included two directors each from KPFK, KPFT and WPFW, three from WBAI (the winners in a highly contested election that led to a lawsuit), one director representing affiliate stations, and one from KPFA. All but two just joined the Board this year. The absent members included the other affiliate director, one from WBAI, plus the remaining three KPFA delegates (including the Board chair), and the remaining six directors from the other three stations, including the chairs of the Coordinating and Finance committees. Three in that group were elected by station staffs, and a majority have served on the Board for two years or more. In other words, the turnout suggests that the Board’s leadership, and most directors representing KPFA and staff, are at odds with a new insurgent group.


The bylaws impose some rules that have been difficult to follow. For example, the National Board is supposed to meet in person four times a year in specific months and a prescribed rotation between station areas. But this requirement has frequently been sidestepped, and the most recent quarterly meeting was postponed, then cancelled. Two attempts to change this meeting requirement have failed, due in part to other strict amendment requirements, and another attempt is currently underway. But another section of the bylaws says that amendments can only be put forward once every 12 months, so if several are proposed they all must be handled at the same time – unless the Board decides otherwise by a two-thirds vote.


At the moment, at least five possible amendments are in the pipeline. In addition to the one allowing the Board to reduce the number of in-person meetings (if two-thirds of the Board deems it necessary due to “emergency conditions”), proposals include allowing amendments at any time during a given year; a new category of “monthly” Board meetings that can be held by telephone, video conferencing or other means; allowing earlier election of Affiliates Directors, so that they can be seated along with others in January; and, possibly, elimination of bylaws language that describes the duties of election supervisors.


The election supervisor amendment is being considered in response to concerns that classifying national and local election supervisors as contractors despite the inclusion of their qualifications and specific job descriptions may violate California employment law. The solution being considered is to strike anything that describes job requirements or duties.


If the Board decides to move forward, any proposed changes – also according to the Bylaws – will have to be posted on the Foundation’s website and announced two times daily on all five sister stations for 60 days before each Local Station Board (LSB), as well as the Pacifica National Board (PNB), votes. All the voting must occur during the same month.


Fortunately, Pacifica isn’t electing new local board members this year. That will happen in 2009 and 2010, using a process that takes up to nine months and can cost $200,000. But each station will vote in January on who should represent it on the PNB, and after that, the National Board will have to reconstitute itself, holding new elections for officers and committee membership. That process can take up to two months, further slowing down the Board’s work.


In the midst of all this, Pacifica will have to fill some key management vacancies – Executive Director and Human Resources Director, and KPFA will continue to struggle with whom to appoint as permanent General Manager in the midst of an emerging local revolt. In addition, the PNB will be looking at a new job description for its Chief Financial Officer.


Last Spring, at the urging of Executive Director Nicole Sawaya, the Board decided that national financial staff should report to her. But Sawaya is leaving, and the Personnel Committee has meanwhile voted not to incorporate that reporting requirement into the new job description, while giving the CFO responsibility for investing Pacifica’s funds and managing its banking relationships. Thus, the situation may return to where it was before.


None of these problems are insurmountable. But the current financial crunch won’t make things easier, and, as if things weren’t tough enough, Hurricane Ike forced KPFT off the air on September 12. According to Sawaya and GM Duane Bradley, the staff is all right and power will soon be restored, but the transmitter site was burglarized. This is the longest period that the Houston station has been off the air since it was bombed about 38 years ago.


When the next ED is chosen, she or he is very likely to have a smaller national staff, and thus less ability to coordinate resources or advance new initiatives. There will be union negotiations at stations, a new Pacifica election season, and lingering complaints and lawsuits to resolve. At WBAI the cash crunch is severe enough that the PNB may be forced to either further tap Pacifica’s line of credit, let the station fail, or consider the unthinkable – sale of a station.


A decade ago, when the rumor that a station might be sold began to circulate, it added fuel to an already smoldering revolt. This time, if the option of selling an “asset” is publicly voiced by those in charge, the response could be different. The confederal structure put in place after the “Save Pacifica” movement makes change difficult, but also stresses that individual stations have a right to chart their own paths. The Local Board and management at KPFA, Pacifica’s flagship station, don’t always see eye to eye, but they do agree that the current crisis could put the station at risk. That makes it unlikely that KPFA’s stability will be further leveraged to save a sister station.


In a Sept. 12 open letter to KPFA supporters, a group of managers underlined the seriousness of the situation as the station prepares to begin a delayed on-air fund drive on Sept. 18. “Given the Pacifica Network's current financial condition,” they write, “if we don't raise the money we need soon, KPFA could have to close its doors.”


Yes, democracy is messy. But cleaning up this mess, with a divided Board and a fragile national structure, may well require sacrifices that put Pacifica’s version to the ultimate test.


To find out more, read Part One and Two of this series:


Part One: Quiet Meltdown on Planet Pacifica

Part Two: Budgeting for Triage


The Pacifica National Board met in Washington, DC, Sept. 19-21.To access archived recordings, go to http://www.kpftx.org/. See agenda below. Sources for these articles include meetings of the Pacifica National Board, National Finance Committee, Coordinating Committee, and Personnel Committee, LSB minutes, and members of the Pacifica community who provided information on condition of anonymity.


PNB meeting, Sept. 19 - 21, 2008: Preliminary Agenda


Friday, Sept. 19

10:00 AM - Executive Session, with legal update

12:00 - Lunch

1:00 PM - Open Session

Welcoming Remarks; roll call, approval of agenda/minutes

Executive Director's state of the network address

Updates: General & Specific

2:00 PM - By-law revisions

3:00 PM - Executive Session; solutions, strategies

4:00 PM - break

5:00 PM - Open Session - Host station presentation

5:45 PM - Public comment

7:00 PM - Reception


Saturday, Sept.20

9:00 AM Sharp – All Day Session: Finances/Budgets

Presentation and approval of 7 budgets; personnel issues; implications for re-organization; National Office staffing issues/ transition


Sunday, Sept.21

8:00 AM - PNB Public Session

Audit Committee report & presentation of new firm; report out on work; ED report

10:30 Public comment

11:30 Committee reports


Tuesday, September 16, 2008

Spooking the Anti-Nuclear Movement

My weekly column for the Vermont Vanguard Press, cheekily titled “Immediate Release,” offered interviews and ongoing stories. In cover features I meanwhile tackled complex topics like privacy and the growing dossier industry, environmental threats, and the struggle within the Vermont court system over the role of Side Judges, a unique system of county judicial power via non-lawyers. For human interest I profiled towns, creating word pictures of people and Vermont ways.


That June, I returned to the anti-nuclear movement. In 1978 the Clamshell Alliance was at a crossroads. A legal rally had been held near the nuclear construction site, a shift away from civil disobedience that allowed over 15,000 people to gather peacefully. But some Clams felt that the spirit and process of the organization was being undermined. They also had evidence that it was under surveillance and possibly infiltrated. At a conference in New Hampshire, suspicion flowed powerfully beneath the surface. My article was called “Clam Watching.”


Many Clamshell members supported "public control of energy" through municipal energy groups. But some saw the goal as simply "Stopping Seabrook" or building momentum for action on related issues like the mysterious death of nuclear safety researcher Karen Silkwood. Others viewed the organization's central mission as internal, things like developing "a nonviolent lifestyle," building networks, "fostering love of the earth," and "local communication." A few urged national lobbying, while still others suggested that the Alliance help build "a world base for socialism."


By the end of the weekend much had been shared, but "consensus" on the big issues was elusive. One area of agreement was public action that November to commemorate the mysterious death of Karen Silkwood. A case against Kerr-McGee was in the Oklahoma courts, where lawyers for the Silkwood family charged that she had been under surveillance and the FBI conspired to suppress evidence of spying. Silkwood lawyer Dan Sheehan claimed that a national spy ring was involved in illegal surveillance of anti-nuke activists like Silkwood, and mentioned links between the FBI, CIA, the federal Law Enforcement Assistance Administration (LEAA) and the quasi-private Law Enforcement Intelligence Unit (LEIU).


The charges weren’t far-fetched. Since 1974, surveillance, harassment, and infiltration of nuclear power opponents had been deemed "necessary" to prevent "terrorist” incidents. To make his point Sheehan subpoenaed Paul Wormeli, Vice President of Operational Systems of Arlington, Virginia, to shed some light on the covert activities. Wormeli was a key figure in the escalation of anti-nuclear surveillance. Until 1977, he had been deputy administrator of LEAA; in 1971 he’d helped create the Interstate Organized Crime Index (IOCI), while acting as coordinator of SEARCH, California's criminal justice technologies group. In 1976, Richard Velde, another LEAA official, had explained in a memo to Deputy Attorney General Harold Tyler Jr. that the future use of IOCI would relate to "terrorist control." It subsequently became the FBI's National Crime Information Center.


Wormeli's knowledge wasn’t restricted to LEAA. When its Boston office was dismantled in October 1977, he, Velde and other LEAA guys established a consulting firm called Operational Systems (OSI). According to its spokesman George Campbell, they subsequently went to work for the Public Service Company of New Hampshire, major backer of the Seabrook plant. Campbell admitted that Wormeli’s group gave PSC "public relations input on how to discredit Clamshell," though he denied that the group's work included “intrusive” surveillance techniques.


Wormeli had even approached New Hampshire Governor Meldrin Thompson to obtain security work from the state, a plan that included electronic surveillance. Despite Thompson’s apparent rejection, OSI soon began to work with the New Hampshire State Police. Clamshell leaders were sure that the State cops, probably with OSI assistance, had launched surveillance before the 1978 legal rally. In fact, the authorities admitted photographing people who attended a crucial meeting of the Coordinating Committee. The Alliance also had a list of phones believed to be tapped.


Some Vanguard Press readers may have been shocked by my story, but the facts came as no surprise to most anti-nuclear activists. The previous year Thompson had publicly called Clamshell’s mass occupation at the Seabrook nuclear site a "cover for terrorism." Afterward, some Clams obtained documents from the State Police indicating that the U.S. Labor Party, which promoted nuclear power in its extremist literature, provided the “information,” including the accusation that Clamshell members were "terrorists." Working through its National Caucus of Labor Committee (NCLC) the Labor Party then shifted its focus to Vermont, at the instigation of an appointee to the Vermont State Nuclear Advisory Panel.


New England wasn't the only target of pro-nuclear intelligence groups. During a Los Angeles City Council hearing on a proposed nuclear facility, the L.A. Police Department had assigned two officers to photograph and videotape witnesses critical of the plan. Similar incidents were being reported in Philadelphia, New Jersey, and Georgia. In at least one case, the use of informers and agents-provocateurs had been confirmed. During the trial of activists arrested during the 1977 Abalone Alliance occupation of the Diablo Canyon plant in California, evidence surfaced that two local police officers had infiltrated the group. They were reportedly the only ones to suggest the use of violence.


During testimony before the Vermont Nuclear Advisory Panel, NCLC spokesman Jon Gilbertson, a pro-nuclear expert who once worked for General Electric, denied that his group was anything but a vocal pro-nuclear lobby. Activists charged that NCLC itself was a "terrorist" organization. Yet the strangest aspect of the NCLC's introduction into Vermont energy politics was the origin of its invitation. Nancy Kaufman, an attorney known for her public interest work on utility cases, had helped make the contact to expose the "anti-technology" bias of nuclear opponents.


A former Liberty Union candidate, Kaufman had once labeled herself a socialist. But she and Bernie Sanders had publicly resigned from the party in 1977. Kaufman said she had changed her mind about nukes; jobs outweighed the possible dangers. Bernie didn’t talk about nukes. He just called the party “sad and tragic” and said it wasn’t working anymore.


While a self-proclaimed socialist was entering the pro-nuclear camp, a conservative Republican was moving in the opposite direction. Sen. John Howland of rural Windsor County had been making strong anti-nuclear statements since the spring. "We are just now beginning to realize that we have been conned for a generation," he said, exposing the many hidden costs of nuclear power. The companies had "overbuilt their capacity," and Construction Work in Progress fees, the way utilities obtained investment capital by passing on costs to customers in advance, should be prohibited, he advised. He was eventually joined by the Democratic Party, which called for a moratorium on nuclear construction. The political spectrum was going through a shuffle. Terms like "liberal," "conservative," and "radical" didn’t have as much meaning when applied to issues like nuclear power.


Activists were digging in their heels and making connections, so direct action and other protest tactics wouldn’t end soon. But neither would watching and infiltrating the young social movement, a dynamic that created a rough double-bind for the activists – working to build trust while staying skeptical, if not suspicious, about unfamiliar supporters or anyone advocating tactics other than nonviolence. Fortunately, the intelligence community had neither the time nor the resources to spy on everyone disillusioned with nuclear power and weapons. Then again, with federal and state money, plus incentives from an industry under attack, it was hard to predict just how far the things might go.


Chapter 15 of Prelude to a Revolution


Next: A Vermont Terrorist Scare Begins

Monday, September 15, 2008

Pacifica Meltdown: Budgeting for Triage

Developing budgets for the Pacifica Radio network is an arduous task that involves more than 150 people – members of five local station boards (LSBs), managers and staff at Pacifica’s sister stations, the Pacifica National Board (PNB), and national staff, including a finance team in Berkeley and other personnel across the country. Each station develops its own proposals, discusses them with the main office, then forwards them to the National Finance Committee, then back for local approval, followed by review and, hopefully, eventual sign off by the PNB. Since funding for national operations is dependent upon local station contributions, it’s hard to determine how much will be available for projects such as the Pacifica Radio Archives, Affiliates Program, national programming, development and technical infrastructure until the five station budgets have been finalized.


The whole process takes at least four months, and sometimes budgets are kicked back even after the annual meeting.


Talking frankly with the National Finance Committee in early August, Executive Director Nicole Sawaya, who had privately submitted her resignation not long before, described Pacifica’s current cash position as “not good at all.” At that point the year-to-date variance between projections and the actual situation was $1.6 million, she said, adding that this was the reason “we’re going into a relationship with the bank.” A line of credit (since obtained) was already in the works, using a $400,000 C.D. held by KPFA in Berkeley as collateral. But an equity loan also will be needed, she added, and that would take longer.


Meanwhile, management was looking for other ways to economize. For example, staff members were being “migrated” from “incredibly generous” health care programs to less expensive HMOs; the option of “reimbursing employees for their purchase of health care” was also being considered. “We’re trying to ferret out every liability and pending expense as we build these budgets,” Sawaya explained, “to mitigate any surprises,” notably potential legal costs.


Board Chair Sherry Gendleman, who is also on the KPFA local board, saw the situation as “enormously distressing,” concerned that the PNB was on the verge of making decisions that could “destabilize” her station by “using it as a cash cow.” Sawaya responded by asking whether Pacifica was “a network or five stations.” In a very real sense, that is precisely the choice facing the organization as it deals with financial and other challenges.


Station Budgets


The National Finance Committee began reviewing individual station budgets in August. Presenting the plan for KPFA, Brian Edwards-Tiekert, a staff member who also sits on the local board, called it a “break even budget” from which travel and most consultant costs had been eliminated. About $125,000 in staff reductions (about two and a half positions) were also being proposed, but “we may not be conservative enough.” The reason, he said, is that “fund drive revenue plateaued a year ago and is going down.”


The Committee felt that the cuts weren’t deep enough, and Edwards-Tiekert agreed that “if revenue doesn’t go up, we’ll face another $300,000 in cuts” in the future. After looking over the situation, the committee recommended trimming an additional $80,000. The network is “putting enormous responsibility on KPFA,” Gendleman noted, referring to the loans.


Before it began to meet in executive session, due in part to the personnel implications, the Finance Committee also began to look at KPFK in Los Angeles and KPFT in Houston. KPFT has the smallest budget (about $1.3 million) and, along with WPFW, the smallest staff. The proposal was to cut the next year’s KPFT station budget by 6 percent, mainly by eliminating two staff positions, and implement an immediate 10 percent cut in management salaries. But the conservative estimates led to questions about why income from on-air fund drives, Pacifica’s main source of revenues, was declining.


Fundraising was level through the 1990s, Edwards-Tiekert offered, followed by a “surge of support after 9/11 and the invasion of Iraq.” But spending went up with income and to maintain that level a fourth on-air fund drive was institutionalized. “We’re now returning to an historical average,” he said.


Turning to KPFK, the Committee considered the Los Angeles station’s plan to make $250,000 in payroll cuts and heard that KPFK also owed money to the national office. Board member Grace Aaron noted that the summer “mini-drive” wasn’t going well, jeopardizing the ability to cover the September payroll. She also pointed to frequent sabotage, including hackers who attack the station’s website. But the underlying problem, she acknowledged, was that the age of the average listener is 54, and core listeners are over 60, calling the overall situation “very troubling.”


Others pointed to the issue of fulfillment rates, the percentage of money actually collected once a fund drive has ended. At times the fulfillment rate at KPFK has been below 80 percent. The station’s new General Manager, Sean Heitkemper, believes he can change that, but some on the Committee were skeptical.


The biggest question mark, and largest financial challenge, is WBAI in New York. That station has been losing about $500,000 a year, according to Committee sources, sometimes leading to short-term bailouts by the national office. Yet, the Committee had still not reviewed its budget by the end of August, with charges flying back and forth about whom to blame. “National is in no way impeding the process,” Sawaya insisted, while WBAI Board member R. Paul Martin expressed concern that “the PNB is rushing into things before the LSB sees it.”

The main dispute, according to members of WBAI’s local board, is the insistence by the national office that the station cut 6.5 staff positions from its next budget. The station currently has a staff of 23 full time equivalents. At a recent meeting of the station’s LSB, General Manager Tony Riddle listed a series of disagreements with the national office and said he was being pressured. His list included the amount budgeted for legal fees, projections for direct mail and website income as well as increases in health care costs, and a plan to cut station rent through “reduction in physical space” (the national office reportedly wants written confirmation from WBAI’s landlord). Out of total budget of $2.4 million, the station pays $277,969 a year for its Wall Street headquarters, plus $350,778 to transmit from the Empire State Building.

According to a September 12 article in The Indypendent, the newspaper of New York’s Independent Media Center, the station and national office are also arguing about exactly how much WBAI owes the national office. “We’re in major negotiations with Pacifica over this,” WBAI LSB chair Mitchel Cohen told the publication. “WBAI has been unfairly billed and we’re asking for a line-by-line accounting.” Whatever the debt may be – somewhere between $300,000 and $450,000 – an obvious problem is the station’s low fulfillment rate, hovering around 70 percent.

The station continues to be mired in a long-term factional struggle. The Sept. 3 LSB meeting, which attracted only 15 members of the public, “was delayed half an hour in order to reach quorum, then quickly descended into hour-long bickering over the agenda, Robert’s Rules of Order (which outlines meeting process) and what constituted an excused absence,” The Indypendent reported. “Finally, after almost two and a half hours of thinly veiled contempt and bickering, the LSB meeting began addressing the most pressing issue — the budget.”

The two budgets yet to be discussed in public are those for WPFW in Washington, DC, and the national operation. Concerning the former, no information is publicly available yet, except Sawaya’s August comments that she has been attempting to get information and sees as a major challenge the need to relocate the station in a year.

The National Dilemma

The options for the national budget, which relies largely on “central services” payments from the stations, range from cutting about $200,000 to $600,000, depending on the severity of staff reductions. If staffing remains the same, the deficit could top $800,000. On the other hand, if most positions are eliminated – a scenario labeled “national office collapse” – the shortfall would still be around $250,000. The main problem, based on the national office’s analysis, is that WBAI and KPFK haven’t forwarded their full central services payments, and none are expected from WBAI next year.

Health and insurance expenses are expected to rise, and a contract with Democracy Now! calls for a 4 percent increase. Pacifica pays DN about $600,000 a year for the distribution of its daily public affairs show, plus Amy Goodman’s help with on-air fundraising. There might also be unanticipated severance payments and legal fees.

Sawaya has stressed that there is no choice but to borrow, and “anyone lending money will demand a balanced budget.” That apparently won’t pose too severe a problem for some stations. For the national office and WBAI, however, the impact could be devastating. For several years, the New York station has been assisted by national. Now both are in jeopardy.

With both Sawaya and the network’s Human Resources Director resigning, the temptation is to downsize. CFO Lonnie Hicks has been on leave over the summer, but is still being paid and may return. The Pacifica Radio Archives has agreed to make staff reductions, but has a proven financial track record and is too valuable to the organization to sacrifice. Not having an HR Director could be dangerous, given the frequency of employee disputes. So could the lack of an Executive Director for any length of time, although finding someone willing to take the job – and acceptable to most Board members – may be difficult. That leaves technical staff, the DC Bureau, the national programming coordinator, Free Speech Radio News, finance staff, and the Affiliates Program.

The Affiliates Program generates fees from member stations, around $200,000 a year, and has only one full-time staff member, Ursula Ruedenberg. Though modestly profitable, questions have been raised about how much it actually costs, and whether too many low power and Internet stations have been allowed to join without paying. On the other hand, it represents a significant form of outreach to the larger independent radio community, and expands the reach of Pacifica programs. Cutting the program could have a significant impact on how Pacifica is perceived.

The DC Bureau was created when the Pacifica National Office moved from the East to West Coast about six years ago. Verna Avery Brown, who had been Deputy Executive Director, was left behind and agreed to take on a new position. Since then, questions have been raised about her main contribution, daily news headlines available to sister stations and affiliates. Most don’t carry them. The one-person Bureau currently costs around $100,000 a year and doesn’t directly produce income.

Free Speech Radio News provides a daily half hour news program to Pacifica and its affiliates. Last Spring, Sawaya and Hicks cut Pacifica’s payments to FSRN by 25 percent, and funding beyond next Spring is unlikely. FSRN is already seeking alternative sources. But its departure would leave Pacifica without a national newscast, and there is no money to produce one in-house, unless existing local news operations take up the slack. When Pacifica last produced its own national daily newscast, it cost around $1 million a year.

If fully staffed, the national finance team includes four people plus Hicks. Sawaya has suggested that financial management could largely be “outsourced.” But she has also said that Pacifica needs more centralized accounting and reporting. Thus, the questions become whether to strengthen national oversight, and how to do that given the desire of stations to control their own budgets. Each station has its own business manager.

The other members of the national staff are Programming Coordinator Nathan Moore, Technical Director Jon Almeleh, and Internet Projects Manager Pete Korakis. If Pacifica were to eliminate any of these positions, its ability to coordinate programming and technical services, including governance, could be seriously undermined. Still, some members of the community question whether a national infrastructure is worth the price.

This brings the discussion back to Sawaya’s key question: Is Pacifica a network or five stations? If a choice must be made, the overarching structure – which places control in the hands of Board members whose primarily loyalty is to their local stations – makes it likely that the answer will, at least for now, be the latter. But if the national organization is dramatically scaled back, the main reason to pay central services fees is gone. And if those fees are seriously reduced to ensure balanced budgets for the stations, it could take years to reconstitute an effective national organization.

In sum, Pacifica has reached the point of unavoidable triage. Some parts will have to be sacrificed to ensure the organization’s survival. What they will be remains unknown, at least until the National Board meets in Washington, DC on Sept. 19-21. But both the future of Pacifica as a functioning network and the viability of WBAI appear to be on the line.

Sources for this article include meetings of the Pacifica National Board, National Finance Committee, LSB minutes, and members of the Pacifica community who provided information on condition of anonymity.

Coming up: Programming, governance, and the Bylaws

Friday, September 12, 2008

Quiet Meltdown on Planet Pacifica

Two years ago it looked as if Pacifica Radio, the original listener-supported network, was on the road to reconciliation and renewed relevance after a decade of internal warfare. New national shows had been launched, the number of affiliates was increasing, a mood of collaboration and mutual respect was taking hold, and, in September 2006, the CFO reported the highest revenues in the organization’s 57-year history. A year later, the financial news was less encouraging, but Pacifica was about to hire a new Executive Director, Nicole Sawaya, returning to Pacifica after nine years with enthusiastic support from the Board and community.


Cut to September 2008. As Pacifica approaches its 60th anniversary, it faces the most serious organizational and financial crisis in years. Sawaya has resigned – for the second time in ten months – effective September 30. Meanwhile, the network is considering budget cuts of more than $900,000, including at least 10 staff positions at stations and possible layoffs from the national staff.


Pacifica is also grappling with the need for multiple bylaw amendments and the high cost of lawsuits. The National Board is split down the middle, the Human Resources Director has left, a line of credit has been secured from Wells Fargo to cover recent expenses, based on a C.D. held by KPFA, and another loan is being sought.


Nevertheless, those waiting for an official announcement, especially concerning personnel changes, would be well-advised not hold their breath. Although critical of the mainstream media, Pacifica’s managers and Board are often late and consistently coy when the subject is their own internal activities. Concerned about the staffing implications and potential for panic, recent meetings of the National Finance Committee have been conducted in executive session. The term “transparency” is used frequently, but, in part due to the crisis, is being selectively applied.


As Sawaya’s predecessor, I’m not that shocked by recent developments. Things certainly weren’t easy or conflict free during my two years in the job. But the rapid pace of the decline does raise at least two questions: How could so much go wrong so fast? And, what do Pacifica’s leaders hope to do about it? The second question may be answered, at least in part, at the in-person meeting of the Pacifica National Board scheduled for next weekend, Sept. 19-21, in Washington, DC. But before digging into the financial, programming, and structural challenges confronting the organization, it may help to recap the last year.


Nicole Sawaya worked as General Manager of KPFA in the later 1990s, until she was abruptly dismissed during the struggle for the network. For years after that many people in the “Save Pacifica” movement eagerly looked forward to her return, certain that she had the radio know-how to give the organization what Pacifica historian Matthew Lasar called a “second chance.” The enthusiasm was so great that she was the only person interviewed face-to-face for the job last September, and quickly won both unanimous Board approval and a multi-year contract.


Complications arose almost immediately. Pacifica was in the midst of a Board election year – they happen two out of every three – and complaints emerged over how the National Election Supervisor and Interim CEO, who was also corporate counsel, handled disputes. Phasing in on a part-time basis, Sawaya meanwhile hit problems in the national office, particularly over control of finances. In early December, after only weeks on the job, she announced her resignation.


As negotiations proceeded to woo her back, Pacifica stations found it harder to keep pace with rising costs, particularly health insurance, legal fees, and governance. On-air fund drives, which bring in over 80 percent of the network’s income, weren’t meeting projected goals, most stations had meager cash reserves, and one – WBAI in New York – was both a half a million behind its target and mired in an internal power struggle that had been building for several years. After the elections, a lawsuit was filed by one faction at WBAI against the network and its representatives.


In early March 2008, Sawaya agreed to return. What changed her mind wasn’t revealed, but the fight over financial control did result in a Board decision to give her the right to directly supervise the national financial staff. Unfortunately, after a three month absence she faced a rapidly worsening picture, predicted by CFO Lonnie Hicks and me more than a year earlier. Like myself, Sawaya was frustrated by an organizational structure that was costly and often blocked change. She openly called the approach “unsustainable.”


One of her first major decisions, made with Hicks’ agreement, was to cut the budget for Free Speech Radio News (FSRN) by 25 percent. What shocked Pacificans wasn’t so much the cutback (about $11,000 per month) on an agreement to produce a half hour daily news show that some questioned, but the fact that it was done without prior discussion. Sawaya explained that the financial crunch required strong and immediate action, and the Board decided to let it stand. Her other big decision, the hiring of a new General Manager at KPFK in Los Angeles, was met with more enthusiasm.


The next surprises came in July, just as budgets for the next fiscal year were being developed. The National Board had voted to convene in person that month, but national office management failed to follow up and the meeting had to be cancelled. Then, without explanation, Hicks disappeared from the national office. The Board made no announcement, but news leaked out that he was on “paid leave to deal with family matters.” Later, there were rumors that an investigation of his activities was being pursued, and also that he might sue. Meanwhile, Sawaya assumed responsibility for budget development, pushing for staff and other budget cuts. Managers at some stations responded, others – most notably at WBAI – didn’t.


Sawaya announced her decision to leave again in early August, but asked those who knew not to say anything for a month. At meetings, she meanwhile tried to convince the Board and National Finance Committee that Pacifica needed to act like a network and “centralize” various functions, especially accounting and reporting. Directors listened, but not much changed.


As the national political conventions approached, she turned her attention to Pacifica’s coverage of those events. It had been a high priority for her from the start. But some were surprised by her decision to attend herself at a time when the main business of the network was resolving its financial crisis. What the public didn’t know was that Sawaya had already announced her decision to leave.


Before she went to Denver, another confrontation further intensified the situation. A volunteer programmer, allegedly “banned” from KPFA, showed up on August 20. The General Manager wasn’t around, but the Business Manager felt that something needed to be done. Calling the National Office next door, she asked for advice from Human Resources Director Dominga Estrada, who advised her to call the police. According to several witnesses, when the cops arrived excessive force was used, and Sawaya herself attempted to block videotaping of the event.


The response was dramatic and deepened the existing divide at the station. Management defended its decision but said it wasn’t responsible for the overreaction of the police. Dozens of volunteers, and some on the staff, saw it as another example of a management team that was out of step with Pacifica’s values and mission. A letter of no confidence in General Manager Lemlem Rijio has since been signed by about 24 people.


In late August, the Human Resources director also decided to leave for a new job elsewhere, effective September 5, and the National Board began to discuss what was being calling a “national office collapse.” Actually, the term referred to one of several options for how to address the overall problems. One alternative was to struggle on as is, a decision apt to leave a large budget deficit. Another was to cut a few national staff positions and the salaries of others. The third and most radical option was to lay off almost everyone, retaining only enough staff to pay the bills and keep the governance structure functioning. This is one of many decisions the national board will face when it meets in person.


It will also have to decide what to do about Pacifica’s leadership vacuum. Some hope to quickly recruit a new Executive Director. But this process usually takes months, and pending recommendations to re-expand the CFO’s authority and apply strict performance standards to all managers (more about that in the next installment) could get in the way.


Another possibility is that Hicks might be asked to step in upon his return, or that Siegel might again be tapped. But Siegel has been criticized for his handling of (and billing for) recent personnel and election-related lawsuits, which have allegedly cost the foundation hundreds of thousands. Hicks has his own critics, and may not even want the job. Another possibility is Ambrose Lane, who served as interim ED before I was hired. Finally, the Board could ask its Chair, Sherry Gendleman, to fill in. But she’s said to be less than enthusiastic about that prospect.


Even if a new chief executive can be found – and the Board overcomes its divisions to agree – there is still the biggest elephant in the room. Pacifica hasn’t figured out how to resolve its current financial crisis, and, even more difficult, restructure its programming and management to reverse a long-term decline in listenership and income.


Part Two: Budgeting for Triage

Part Three: The Price of Democracy

Update: Nicole Sawaya's Resignation


A Pacifica National Board teleconference scheduled for Friday, September 12 was postponed due to Hurricane Ike. To access archived recordings of Board and Committee Meetings, go to http://www.kpftx.org/. Sources for this article include meetings of the Pacifica National Board, National Finance Committee, Coordinating Committee, and Personnel Committee, LSB minutes, and members of the Pacifica community who provided information on condition of anonymity. Updated September 26, 2008.


Next: Finances, Programming, and the Bylaws

Wednesday, September 10, 2008

Alternative Media: The Phoenix & Vanguard

The growth of local and regional newspapers was the leading alternative press development of the 1970s. By the end of the decade there were several statewide weeklies, strong city papers, and smaller weeklies that had outgrown their original campus audiences. They varied widely in style and tone – from the soft features of the Chicago Reader to the rough investigative journalism of the Bay Guardian – but shared a preference for the local slant, occasionally reflecting the global in smaller forms.


No paper exploited the new commercial-friendly formula with more success than the Boston Phoenix, which was reaching over 100,000 readers by the end of the decade with fat, multi-section, ad-packed editions. The paper’s story began back in 1965 with a former MIT student newspaper editor, Joe Hanlon, who had the idea for an art insert to the Harvard Business School’s paper. Within a year it became an independent publication called Boston After Dark. Partners came and went, and by 1969 it was owned by Stephen Mindich, a Boston U grad who had started by selling ads. After Dark built its circulation by giving away papers on campuses and selling them elsewhere.


There was a brief challenge. Vietnam vet Jeffrey Tarter saw the chance to combine arts coverage with local muckraking and started The Cambridge Phoenix, tapping into the area’s deep talent pool. But he couldn’t make it viable and soon sold to two local entrepreneurs. They hired a professional, beefed up the paper editorially and financially, and got vendors to hawk it downtown. It didn’t take long for the Phoenix to outclass its predecessor.


Mindich adjusted, adopting the competition’s design and edgy style, even hiring his own vendors. He also added local news. Both papers prospered, packed with free classifieds and youth culture “guides.” It was a perfect market, half a million young people in the metropolitan area, and they had captured it by keeping the content sharp – but not too radical. The object was to be both hip and mainstream.


Ultimately, Mindich bought the competition and took the name. The Phoenix staff got word in a brief announcement from publisher Richard Missner, a wealthy Harvard Business School grad. They were all fired. No notice, no severance pay, nothing. It was therefore no surprise when former Phoenix staffers started a paper of their own, The Real Paper. Theirs would be a staff-owned business, operated by consensus, giving everyone a vote in major decisions. The experiment lasted nine years, but in the end The Real Paper folded while the Boston Phoenix became Phoenix Media/Communications Group, a New England mini-chain with radio stations and similar papers in Providence and Portland.


By 1977 the Boston Phoenix was already a prime example of how hip design, youth-oriented content and ruthless determination could capture a market. The lesson wasn’t lost on Steve Brown, one of the former Vermont Cynic staffers who’d dreamed of starting their own paper. After finishing school he had worked for Mindich, absorbing the lessons and working out how to apply the Phoenix formula to Burlington and Vermont.


The Eclipse, founded by UVM grad Peter MacAusland earlier in the year, was a long-shot from the start. It had talent – especially ace reporter John “J.D.” Dillon and photographer Ron “RoMac” MacNeil – but not enough money to pay for it and nothing for promotion or decent management. That fall we put out a dozen strong issues, writing the first local investigative features the city had seen in years. We exposed environmental threats and government corruption, watchdogged officials, and gave voice to the emerging progressive agenda. But MacAusland’s limited capital wasn’t enough to sustain it. The paper had been launched on faith, on the passionate belief that it needed to be done and would somehow work out. It probably would have failed anyway. But two things hastened it – Steve Brown’s arrival and an unexplained fire in the production office.


The fire hit hard. The previous year The Frayed Page had moved from its second floor walk up to a newly renovated building nearby. We’d decided to co-locate with Bookstacks, a local independent bookstore. They handled new book sales, we bought and sold used editions, and had special sections on leftwing politics. The Eclipse eventually took over the old location. It felt familiar attending meetings there. Now it was a charred ruin.


Steve’s message was less devastating but just as disorienting. He had enough money to start a viable weekly, with paid staff and a sales strategy based on the Phoenix model. There would be both local news and a strong arts section. He already had some staff picked out but there was room for more, especially in the editorial department.


Why not throw in with The Eclipse? The question was asked, repeatedly. But Steve had a vision and wanted to start fresh. No need for excess baggage, either image or people-wise. He also had a name in mind – The Vanguard.


As it worked out, Steve couldn’t have the exact name he wanted. A handicapped access group already owned it. Instead he went with Vermont Vanguard Press. In the end, most people called it the Vanguard anyway. But he did get several Eclipse staffers – J.D., RoMac and me. In December The Eclipse released its last issue, a full eclipse on its cover. A month later, in the middle of a brutal storm, the first issue of the Vanguard Press hit the street.


A decade later, in a book on Vermont’s progressive revolution, I looked back at it this way: “Editing the Vanguard Press was the job I had been waiting for all of my adult life. From the time I had landed in Vermont, a wide-eyed hippie, in 1968, to that snow-covered day in 1978 when we distributed the first copies, I’d been thinking about the potential of an “alternative” newspaper to change the consciousness of the state.”


Becoming editor took a year, however, and wasn’t achieved easily. Despite my “advanced” age – compared to the rest of the staff – and experience, Steve didn’t know me well or completely trust my intentions. His idea, he explained, was a hip paper that didn’t take sides. There wouldn’t even be an editorial page. Instead, he would showcase various columnists, mixed with some “straight” news. The job offer was Staff Reporter, including a weekly column, news items, and at least one cover feature a month.


Chapter 14 of Prelude to a Revolution. Photo above: In the Vanguard Press office are original staff members, from left, Jeffrey Polman, Arts Editor; John Dillon, Associate Editor (seated); Ron MacNeil, Photo Editor; and Carlo Wolff, first Editor-in-Chief.


Next week: Spooks, Nukes, and Counterterror