Monthly Archives: August 2011

CEO Pay: Do We Really Want To Tax The Rich?

Oh boy. Here’s one of those stories where you can huff and puff and try to blow the house down. But unless you have the wind of Hurricane Irene, nothing is going to change. Let’s stew this early a.m. on CEO pay, corporate taxes and taxing those who are accumulating real wealth because of legal tax breaks and loopholes.

The Institute for Policy Studies, described in the NYT and elsewhere as a “liberal-leaning research group” released a study yesterday showing that the CEOs at many of the big-name USA corporations make more than the companies pay in taxes. And the backstory: this comes at a time when many are arguing that corporate tax rates are too high and only Warren ‘Please Tax Me More’ Buffett is pushing for individuals at the top of the income totem pole to pay more taxes.

Here’s from a NYT article “Where Pay for Chiefs Outstrips U.S. Taxes“:

At least 25 top United States companies paid more to their chief executives in 2010 than they did to the federal government in taxes, according to a study released on Wednesday.

The companies — which include household names like eBay, Boeing, General Electric and Verizon — averaged $1.9 billion each in profits, according to the study by the Institute for Policy Studies, a liberal-leaning research group. But a variety of shelters, loopholes and tax reduction strategies allowed the companies to average more than $400 million each in tax benefits — which can be taken as a refund or used as write-off against earnings in future years.

The chief executives of those companies were paid an average of more than $16 million a year, the study found, a figure substantially higher than the $10.8 million average for all companies in the Standard & Poor’s 500-stock index.

The financial data in the report was taken from the companies’ regulatory filings, which can differ from what is actually filed on a corporate tax return. Even in a year when a company claims an overall tax benefit, it may pay some cash taxes while accumulating credits that can be redeemed in future years. For instance, General Electric reported a federal tax benefit of more than $3 billion in 2010, but company officials said they still expected to pay a small amount of cash taxes.

The authors of the study, which examined the regulatory filings of the 100 companies with the best-paid chief executives, said that their findings suggested that current United States policy was rewarding tax avoidance rather than innovation.

“We have no evidence that C.E.O.’s are fashioning, with their executive leadership, more effective and efficient enterprises,” the study concluded. “On the other hand, ample evidence suggests that C.E.O.’s and their corporations are expending considerably more energy on avoiding taxes than perhaps ever before — at a time when the federal government desperately needs more revenue to maintain basic services for the American people.”

Well, you can argue that the nation has a spending problem not a revenue problem. But I’ll let the members of the new super committee in Congress wrestle with that issue until they punt right before Thanksgiving. Oops. I digress.

Back to CEO pay and corporate taxes.

Politico opines, “Study: CEO pay tops tax bill”:

The report revealed eBay paid CEO John Donahoe $12.4 million — but reported a $131 million refund on its 2010 federal income taxes. And at General Electric, where CEO Jeff Immelt raked in $15.2 million, the company received a $3.3 billion refund and dropped $41.8 million on lobbying and political campaigns. And at Boeing, CEO Jim McNerney takes home $13.8 million, while the company paid $13 million in taxes and spent $20.8 million on lobbying in 2010.

On average, S&P 500 CEOs make $10.8 million.

Note to self: Is that the same Jeff Immelt who is Obama’s Jobs Czar — but who has been mostly of late creating jobs in China?

Another note to self: You can bet that most of the CEO pay comes in ways — stock options, for instance — that escape the tax bite that the rest of us pay on regular earnings. Tax reform, anyone? Sorry. I digress again.

Back to Politico and the story about CEO pay and corporate taxes:

Rep. Elijah Cummings (D-Md.), the ranking member on the Committee on Oversight and Government Reform, immediately called for hearings on CEO pay after reading the study, Reuters reported.

Cummings sent a letter to committee chair Rep. Darrell Issa (R-Calif.) asking “to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today” and “the extent to which our tax code may be encouraging these growing disparities.” He also sought an inquiry into “why CEO pay and corporate profits are skyrocketing while worker pay stagnates and unemployment remains unacceptably high.”

I see a congressional hearing on this in the near future — with CEOs heading to the dock for a symbolic flogging. And perhaps Warren Buffett should be first up to the plate.

It appears his company, Berkshire Hathaway, has been grappling with the IRS for more than a decade over $1 billion or more in taxes.

Huff. Puff. Ain’t nothing coming down.

Why No Urgency About Jobs and Unemployment?

Hurricane Irene sure got the attention of elected officials and sparked some immediate — and beneficial — action: mandatory evacuations, mobilizing emergency crews and so on. Too bad there has not been a similar response to the big problems of creating enough quality jobs and getting people back to work.

After a spring and summer of disappointing — at best — economic news and employment stats, Prez O is now post-holiday at work on a “jobs plan.” But an article in WaPo suggests that the plan is still evolving and specifics are still being considered by the White House policy wonks and other miscreants. Here’s from the WaPo story “Princeton economist tapped to head Council of Economic Advisers“:

The White House scrambled Monday to finalize a new jobs initiative as President Obama nominated the last member of the economic team that will be charged with carrying it out.

In tapping Alan Krueger, a Princeton University professor and noted labor expert, to be chairman of the Council of Economic Advisers, Obama turned to an economist who officials said was well suited to guide the White House through a jobs crisis.

Obama, standing with Krueger in the Rose Garden on Monday, said he intended to reveal the much-anticipated new jobs agenda in a speech next week.

That address, coming at the end of a summer of worsening economic news and sagging poll numbers for the president, is shaping up as a pivotal moment as Obama tries to resuscitate his presidency with less than 15 months before he stands for reelection.

And yet, behind the scenes Obama and top aides had yet to reach agreement on the major tenets of that plan, and it remained unclear whether the president was looking for narrower ideas with a realistic chance of passing the Republican-led House or more sweeping stimulus proposals that would excite his liberal base and draw contrasts with the GOP.

Call me an asshat but, ah, why has it taken so long for the Prez and members of the administration to come up with a specific plan?

Here’s an interesting perspective from Nicholas Kristof, opining in the NYT, “Did We Drop the Ball on Unemployment?

WHEN I’m in New York or Washington, people talk passionately about debt and political battles. But in the living rooms or on the front porches here in Yamhill, Ore., where I grew up, a different specter wakes friends up in the middle of the night.

It’s unemployment.

I’ve spent a chunk of summer vacation visiting old friends here, and I can’t help feeling that national politicians and national journalists alike have dropped the ball on jobs. Some 25 million Americans are unemployed or underemployed — that’s more than 16 percent of the work force — but jobs haven’t been nearly high enough on the national agenda.

When Americans are polled about the issue they care most about, the answer by a two-to-one margin is jobs. The Boston Globe found that during President Obama’s Twitter “town hall” last month, the issue that the public most wanted to ask about was, by far, jobs. Yet during the previous two weeks of White House news briefings, reporters were far more likely to ask about political warfare with Republicans.

And the point:

Unless more people are working, paying taxes and making mortgage payments, it’s difficult to see how we revive the economy or address our long-term debt challenge. While debt is a legitimate long-term problem, the urgent priority should be getting people back to work. America now has more than four unemployed people for each opening. And the longer people are out of work, the less likely it is that they will ever work again.

We may not officially be in a recession, but for many people outside the power alleys of New York and DC it sure feels like it. Try to buy or sell a house lately? If you are out of work, how optimistic are you about finding one? If you believe your job is shaky, how likely is it that you are going to buy anything beyond what is absolutely necessary?

I’m never quite sure that people who live and work inside the bubble of DC understand that. Clearly there are thousands in DC who struggle economically and socially. But equally clearly, for the elite who make and influence policy and those who work for the government or for firms such as the large defense contractors, DC is a world untouched by the realities that face the rest of the country.

Here’s an interesting perspective from Catherine Rampell in the NYT, “Why Washington Really Likes Itself“:

IF it sometimes seems as if Washington exists in a totally different economic universe from the rest of us, rest assured: it does. According to Gallup, the District of Columbia is the most economically optimistic part of the country.

Every day, the polling organization surveys Americans of all income levels about whether they think current economic conditions are good, and whether the economy is getting better. The results of these two questions make up Gallup’s Economic Confidence Index.

The latest index report shows that the District of Columbia is far more confident in the economy than any state, by a long shot. In every state, most residents think the economy is getting worse; in the nation’s capital, fully 60 percent think the economy is getting better.

And yet the District of Columbia also has an unemployment rate above the nation’s — 10.8 percent, compared with 9.1 percent — and persistent ills like crime and poverty.

“If ever there were a place where people not only tend not to face economic facts, but it’s almost their purpose not to face economic facts, it’s Washington,” said P. J. O’Rourke, a contributing editor at The Weekly Standard and a political satirist.

And more:

In turn, these factors have helped prop up the housing market, unlike elsewhere in the country where foreclosure rates seem as high as pessimism.

According to the government’s housing price index, the worth of homes nationwide fell 2 percent last quarter. In Washington, they grew 2 percent. Zillow, a company that tracks real estate data, says three of every thousand homes in Washington are in foreclosure, less than a third the rate for the nation.

There is, of course, a large subset of Washingtonians who are not flush with federal largesse, as indicated by the high jobless rate.

Washington has one of the nation’s highest poverty rates, with 18.4 percent of residents living below the poverty line, a rate exceeded by only three states in 2009, the most recent year for which data are available.

Washington also has the highest income inequality in the country, according to the Census Bureau. For decades there has been a sharp divide between the haves and the have-nots in Washington. Northwest Washington is mostly white and wealthy; the other sections are largely black and poor.

“I do think that the views of politicians, specifically, are warped by their social networks and backgrounds,” said Larry M. Bartels, a political scientist at Vanderbilt University and author of “Unequal Democracy.”

So let’s keep our fingers and toes crossed that as the Prez puts together his jobs plan he considers what is happening Outside the Beltway.

And as I heard a pundit on TV exclaim the other day while I was chasing the treadmill belt early a.m.: “If you want to be a leader, then lead.”



Hurricane Irene: Evacuation and Communication

OK. Let the second-guessing begin. If it were your call, would you have ordered people in the path of Hurricane Irene to evacuate? Would you have closed the beaches — and brought public transportation to a standstill?

I would have. That’s the life lesson from Katrina: better to do something rather than nothing. And when you are talking about evaluating risk, the something that you do might not always be perfect.

Here’s an interesting perspective from the New York Daily News, “Mayor Bloomberg’s ‘sky-is-falling’ act makes him hero of Hurricane Irene“:

Note to pols: Too much is better than not enough.

Or as mom always said, better safe than sorry.

Those words of wisdom are political winners.

Sure, Irene wasn’t quite as advertised. Plenty of New Yorkers grumbled that mandatory evacuations and constant warnings were an extreme overreaction, but history will remember Hurricane Irene as a victory for Mayor Bloomberg.

He was the one who evacuated low-lying parts of the city, who was on TV seemingly at every moment warning, cautioning and coaching New Yorkers on how to deal with what was touted as a killer hurricane.

The foresight and hustle won kudos – some begrudgingly.

In sharp contrast to the bruising Bloomberg took as the city struggled to dig out from the debilitating post-Christmas blizzard, Hizzoner was lavished with praise yesterday from even his toughest critics.

“I’m not a critic today. I’m a fan,” said City Councilwoman Letitia James (D-Brooklyn), who last spring conducted what some called the “Mother of all Hearings” into the city’s disastrous blizzard response.

“I’m sorta disappointed. I emailed some of my colleagues today and said, ‘Damn! I missed my opportunity to have the Mother of All Hearings, Part II.'”

And then we get to the national news media — especially cable TV — which appears to enjoy covering hurricanes more than any other story. Did the media make too much of Irene?  Here’s an interesting take from Sebastian Smith, “Did hurricane of hype engulf New York?“:

NEW YORK — Hurricane Irene may have been a category one storm, but some wondered if hot air from the media and politicians wasn’t what really blew off the scale.

New York is the biggest US city, media capital, financial powerhouse and one of the most photogenic places on Earth — Hollywood’s favorite backdrop for disaster movies.

So, given the chance to report on a rare storm at their doorstep, TV networks headquartered in Manhattan did not disappoint.

Beautifully coiffed and tanned weathermen competed to paint more terrifying scenarios.

Even before Irene was anywhere near New York, one big network aired a colorful report about a possible urban apocalypse, with JFK airport under 20 feet of water, Wall Street submerged, and the subway system “knocked out.”

During the actual storm some TV reporters — and stars like CNN’s Anderson Cooper — took the tone to yet another level.

Dripping wet, wind scraping at their microphones, the reporters stood resolutely in the familiar pose of hurricane journalists — water everywhere and bodies bent to the gale.

Never mind that during one network’s report, ordinary people could be seen calmly walking around while the correspondent seemingly battled to stay upright. Or that sometimes the extent of flooding shown in New York seemed to have been exaggerated through clever camera angles.

Then there was the indomitable reporter who did an entire stand-up while being lathered in a brown, foamy and very smelly substance that sounded suspiciously like sewage overflow.

“Conditions continue to deteriorate in a big way,” he declared, as he started to disappear under the mystery foam in front of a beach. “Doesn’t smell great.”

As Irene faded from hurricane to plain windy day, the wall-to-wall coverage might have seemed overcooked. Maybe not.

Journalists were following what politicians told them and politicians said they were following what the National Hurricane Center and other weather experts told them.

President Barack Obama, fighting for reelection next year, quickly showed he was in charge.

Breaking off a Martha’s Vineyard vacation with conference calls and emergency meetings, Obama at least ensured he didn’t repeat George W. Bush’s mistake in 2005 of seemingly not paying enough attention to the truly deadly Hurricane Katrina.

New Jersey Governor Chris Christie, seen by some as a dark horse contender for Republican presidential candidate, confronted Irene in his own particular media savvy way.

Not only did he order one million people out of their homes, he loudly told everyone to “get the hell off the beach.” They did, fleeing in droves — and Christie’s authority was boosted.

New York Mayor Michael Bloomberg — still stung by criticism that the city failed miserably in a huge snow storm last winter — shut down New York before so much as a rain drop fell.

In an unprecedented order he told 370,000 people in Brooklyn and other outlying neighborhoods they had to evacuate. Then he closed the entire Subway, train and bus system, turning the city into a ghost town.

When Irene shuffled off Sunday, having caused minimal damage in New York, but leaving the transport system facing days of chaos, Bloomberg said he’d been proved right.

“The bottom line is that I would make the same decisions again, without hesitation. We can’t just, when a hurricane is coming, get out of the way and hope for the best,” he said.

Although New York City escaped mostly unscathed, the storm did claim 18 lives and inflict billions of dollars of damage along the US east coast.

Still, even that toll is unlikely to persuade critics that the hype matched reality.

“Cable news was utterly swept away by the notion that Irene would turn out to be Armageddon,” Howard Kurtz of the Daily Beast website said. “National news organizations morphed into local eyewitness-news operations… with dire warnings about what would turn out to be a category one hurricane, the lowest possible ranking.”

For elected officials, better to be safe than sorry.

For news directors, it’s a big, important story. But the sky isn’t always falling.

Just sayin’.

Bikes and Cellphones: Do We Need a Law?

OK. Here’s where the principles of someone who tends to be a libertarian runs smack into a possible government mandate that appears to be based on common sense. Do we really need a law to keep asshats from talking on a cellphone while riding a bicycle?

Here’s the backstory from USA Today, “California bill would ban cellphone use while bicycling“:

LOS ANGELES – Talkative bicyclists beware: A crackdown on cellphone yakking while pedaling is afoot.

California’s Legislature this week sent to Gov. Jerry Brown a bill that stiffens penalities for talking or texting on a cellphone without a hands-free device while behind the wheel of a motor vehicle.

For the first time, the bill would extend the state’s 3-year-old cellphone ban to bicyclists, though with lesser penalties than motorists face.

Bicycle groups aren’t fighting the ban and say something similar is probably in the future for bicyclists in other states.

Andy Clarke, president of the League of American Bicyclists, the cyclists’ lobby in Washington, says talking on cellphones while moving is a bad idea, whether on four wheels or two.

“We can and should be held to the same standard as people driving cars,” Clarke says. “One needs to be paying attention, both hands on the handlebars.”

He says he expects others to follow California’s lead. “It doesn’t cause me any heartache to see that passed,” Clarke says. “My hope is it will be enforced vigorously.”

State Sen. Joe Simitian, a Democrat from Palo Alto, sponsored the bill and the original law that took effect in 2008. He says data from the California Highway Patrol showed a 20% reduction in fatalities and collisions in California in the first year after it took effect and an immediate 40% drop in the number of accidents attributed to drivers distracted by cellphones.

When I run outside these days, generally in the dark of the early a.m., I never carry along an iPod or similar digital distractions. I prefer to know when a garbage truck is gaining on me. And I can’t imagine interrupting this quiet and thinking time to talk to someone or text them on a cellphone. Ditto when I’m riding my bike in the relative serenity of the Cuyahoga Valley National Park.

Obviously, not everyone agrees.  And if they want to block a tree with their forehead while riding a bike and talking on a cellphone that’s their loss — as long as it doesn’t directly involve me and as long as they have adequate medical insurance coverage.

But folks, it’s dangerous and does put others at risk. So couldn’t we just rely on some common sense here — instead of a government mandate? And for those tethered to their cellphones, iPods, iPads and so on —  why not give it a rest and enjoy the ride?

Enjoy the weekend — and best wishes to those on the East Coast who are waiting for the arrival of Irene.

And I’m getting ready now to go ride my bike — without my cellphone.

Steve Jobs: A Lesson in Communication

There are plenty of excellent articles and blog posts today about the career achievements and legacy of Steve Jobs.  Jobs announced last night that he was resigning as Apple’s CEO. What strikes me about the announcement is not the commentaries written about him by others, but by his own resignation letter.

Here’s his resignation letter as printed in the NYT:

To the Apple Board of Directors and the Apple Community:

I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s C.E.O., I would be the first to let you know. Unfortunately, that day has come.

I hereby resign as C.E.O. of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.

As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as C.E.O. of Apple.

I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.

I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.


Clear. Concise. Classy.

Not many CEOs, certainly few if any with the stature and reputation of Steve Jobs, would be content to leave center stage with so little fanfare and without the spotlight focused directly on his/her accomplishments.

There is a lesson in communication and public relations here — and perhaps what Jobs said and how he said it in his letter of resignation provides some insight into why he was so successful in developing, designing and marketing products that really have influenced our economy and the lives of people around the world.

Corporations, Tax Credits and Outsourcing U.S. Jobs

Jeff Immelt, the head sled at GE, is kinda Obama’s Jobs Czar, heading the task force on jobs creation. Snort. OK. These impotent task forces are mostly symbolic — and they might even be somewhat useful if they occupy enough big chunks of the miscreant CEOs time so they don’t muck up their own companies or other parts of the economy.

But you can only stretch the symbolism so far — especially when, like Immelt, your company is outsourcing jobs to China and elsewhere and striking joint-venture deals with advanced technology on the line that might give foreign companies a competitive edge for decades to come.

Here’s from a WaPo article “GE ‘all in’ on aviation deal with China“:

GRAND RAPIDS, Mich. — At a General Electric flight simulator here, the visibility has been set at near zero to mimic thick rain and clouds. But a video console near the pilot shows a vivid picture of nearby mountains precise enough to allow a plane to take off or land despite the conditions.

The system is one of several highly valuable next-generation technologies that GE has developed — and that the company has passed along to China as part of a joint venture with the state-owned Aviation Industry Corporation of China (AVIC).

Access to the world’s second-largest economy is critical for nearly any global company. Yet this often comes at a cost: the transfer of the very technologies that leading business officials — including GE chief executive Jeffrey Immelt, who heads an Obama administration panel on U.S. jobs and competitiveness — cite as essential to the United States’ economic future. The “synthetic vision” system, for example, could be worth millions of dollars to airlines, which could significantly reduce costs from weather-related delays.

GE, like other companies, must weigh which technologies should be brought to joint ventures with China and how to protect them from being stolen or misused. These decisions face virtually any executive trying to develop a presence in the country — from the most sophisticated technology firms, which worry about software piracy, to old-line industrial equipment makers, which have seen knockoffs of their products pop up soon after making deals with Chinese partners.

Under the agreement with AVIC, GE avionics will be on board a new Chinese commercial airliner that is likely to become a rival to aircraft produced by U.S.-based Boeing and Europe’s Airbus. The potential competition with Boeing, coming at a time when the United States is fighting to maintain its own manufacturing base, has stirred some American criticism.

But GE executives say they have had no second thoughts. China’s airplane market is booming, and the deal was too important to pass up, they said, even at the cost of sharing the avionics technology.

“We are all in and we don’t want it back,” said Lorraine Bolsinger, chief executive of GE Aviation Systems. She said new airplanes don’t come along that often, and that the chance to be part of developing a major new aircraft is not to be missed — even if most of the jobs will be in Shanghai or elsewhere in China.

“We don’t sell bananas,” she said in an interview here. “We can’t afford to take a decade off.”

But American business leaders wonder privately whether companies such as GE are at risk of giving up long-term strategic advantages when they agree to technology-transfer deals for shorter-term gain.

OK. We get it. GE “don’t sell bananas.” And multinational corporations, to paraphrase Mitt Romney, are just people trying to make as many bucks as possible regardless of where the bucks come from.

But here’s the rub. If U.S. corporations get — and want more — tax incentives for job creation, shouldn’t they disclose where they are actually creating jobs. Some do. And GE to its credit is one of them. But many do not.

Here’s from WaPo, “Corporations pushing for job-creation tax breaks shield U.S.-vs.-abroad tax breaks“:

Some of the country’s best-known multi­national corporations closely guard a number they don’t want anyone to know: the breakdown between their jobs here and abroad.

So secretive are these companies that they hand the figure over to government statisticians on the condition that officials will release only an aggregate number. The latest data show that multinationals cut 2.9 million jobs in the United States and added 2.4 million overseas between 2000 and 2009.

Some of the same companies that do not report their jobs breakdown, including Apple and Pfizer, are pushing lawmakers to cut their tax bills in the name of job creation in the United States.

But experts say that without details on which companies are contributing to job growth and which are not, policymakers risk flying blind as they try to jump-start the hiring of American workers.

“It’s an important piece of information that the American people should have,” said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology. “Should you listen to the kind of advice these companies have about how to grow the economy when their record and their model indicates they’ve cut jobs? . . . Or should we talk to people who actually do create jobs in the United States?”

As the country faces an unemployment crisis, President Obama, lawmakers and business lobbyists have all touted the country’s biggest companies as critical to creating jobs.

The head of Obama’s jobs council, General Electric chief executive Jeff Immelt, said during a tour of a company plant in Greensboro, S.C., that firms should be ready to answer questions from the public.

“If you want to be an admired company, you better know, you better have accountability, and you better think through where the jobs are,” he said.

GE breaks out its employment numbers in company filings to the Securities and Exchange Commission. In 2010, about 46 percent of GE’s 287,000 employees worked in the United States, compared with 54 percent in 2000.

But many firms, including some whose executives have counseled Obama on the economy, do not put their number of U.S. workers in their annual reports.

IBM chief executive Sam Palmisano has met a number of times with the president, most recently in July at a lunch with other executives to talk about jobs and the economy. IBM stopped giving its U.S. head count in 2009.

“We just made a policy that we would only break out global head count,” said company spokesman Doug Shelton.

Data from before 2009 showed IBM rapidly shifting workers to India. Dave Finegold, dean of the Rutgers School of Management and Labor Relations, estimates that 2009, when the company stopped sharing its U.S. employment figure, also marked the first time the company had more employees in India than the United States. Finegold based his number on reports from the media, third-party groups and former employees who have tried to track the number.

And more:

For chief executives of multinational companies who are used to answering only to their shareholders, the country’s jobs crisis has uncomfortably switched the political spotlight onto their decisions about who they employ and where. It has also thrown into relief the fact that when U.S. multinationals chase profits and hire workers anywhere in the world, they become less tied to any one country, including this one.

Immelt acknowledged last month that the health of a company such as GE is now less connected to the U.S. economy, but he added that companies including GE “got carried away” with outsourcing. “I’m a GE leader first and foremost,” he said. “At the same time . . . I work for an American company.”

Well, big guy. It’s all about jobs. And I expect American taxpayers would like to see jobs stay and be created in the USA. I expect that’s why the Prez made you the Jobs Czar.



Nation Building and the Public School Dropout Crisis

I wonder why the news media pays so much attention to the regime change that the USA is sponsoring in Libya while virtually ignoring the real threat to our nation’s future: the dropout crisis in our public schools and what a lack of education and job opportunity means to a generation of young people.

Maybe it’s time for some nation building in the USA. I can’t take credit for that notion — or saying — but I can’t find now the original source. But as public schools begin to open throughout the country, consider these facts as reported by America’s Promise Alliance:

One in four public school children drop out before they finish high school. That’s 1.3 million students a year – one every 26 seconds, 7,000 every school day.

And as bad as those numbers are, the situation has actually been improving somewhat. Here’s from a November 2010 article in Time, “Dropout Rate Dropping, but Don’t Celebrate Yet“:

High school graduation rates are one of education’s perennial bad-news stories. How bad? In 2008, there were 1,746 “dropout factories,” high schools that graduate fewer than 60% of their students. But according to a new report released on Tuesday, there is finally some good news to talk about. First, the national graduation rate inched up from 72% in 2001 to 75% in 2008. There were 261 fewer dropout factories in 2008 than in 2002. And during that six-year period, 29 states improved their graduation rates, with two of them — Wisconsin and Vermont — reaching almost a 90% rate.

But don’t call in the cast of Glee just yet. According to the report, by Johns Hopkins University, along with two education-oriented groups, America’s Promise Alliance and Civic Enterprises, eight states had graduation rates below 70% in 2008, and 2.2 million students still attend dropout factories. An achievement gap also persists: only 64% of Hispanic students and 62% of African Americans graduated in 2008, while 81% of white students did. (See the top 10 college dropouts.)

These shortfalls carry enormous costs for students as well as for taxpayers. In today’s economy, dropouts have few options, a poor quality of life and almost no economic mobility. In 2009, the average person with a college degree earned about $1,015 a week, while the average high school dropout earned just $454. Meanwhile, the unemployment rate is 5.2% for those with a college degree and 14.6% for dropouts. The Alliance for Excellent Education, an advocacy group based in Washington, D.C., estimates that dropouts each year cost the nation more than $300 billion in lost income.

OK.  The dropout crisis. That’s one side of the issue. How about those who do graduate and move on to college? How well prepared are they? Here’s from an Akron Beacon Journal editorial, “Remediation 101“:

Something is seriously wrong when one third or more of incoming freshmen need to take remedial classes in English or math before they can proceed with their regular college courses. The growing need for remediation (an astounding 62 percent of first-year students at Youngstown State in 2009-10) underscores once more fundamental weaknesses in the state’s educational system.

The percentage of freshmen under age 20 who need remedial classes has risen three percentage points, to 39 percent, in five years. For older students, many of whom take on college work after years out of school years, the figure is a disheartening 46 percent. As reported Sunday by Carol Biliczsky, a Beacon Journal staff writer, for Ohio, the cost of bringing marginal students up to speed in 2007-08 was $189 million. A state pushing to stay competitive by increasing the percentage of college-educated citizens can hardly afford the inefficiency and wastefulness such figures represent.

Without question, much of the blame resides with the uneven quality of secondary education and a curriculum not closely aligned with the material and standard of performance expected in college.

It is expensive, financially and in time spent, when high schools fail to provide the necessary academic preparation, passing on the responsibility to colleges and universities. Taxpayers end up subsidizing not only secondary education but also a do-over in college at much higher cost. Students lacking basic math and language skills often do not graduate, or they take longer than four years to earn a diploma. Either way, they rack up large debts along the way.

The rub in all this, of course, is that employers are demanding a more educated workforce to compete in what in many ways is now a global knowledge-based economy.

Here’s from John Bridgeland, CEO of Civic Enterprises, opining on The Huffington Post, “America’s Job Surplus and the College Completion Crisis“:

How can it be that today, in the midst of the most severe economic downturn since the Great Depression and millions of Americans seeking work, that 53 percent of employers — and 67 percent of small business employers that create most new jobs — find it difficult to find qualified workers? How can a workforce desperate for new jobs appear so helpless amid so many businesses desperate to hire?

The answers to those questions lie at the heart of a new divide that has developed within the American economy. Over the last several decades, a chasm has emerged to divide the skills of the nation’s workforce, as they exist, and the demands of the nation’s job market. Today, America has only 45 million workers who have the training and skills to fill 97 million jobs that require some post-secondary education. U.S. companies have to choose among importing skilled workers, outsourcing jobs, or relocating operations in markets overseas with a rising supply of skilled and affordable workers. At the same time, the nation has more than 100 million candidates for only 61 million low-skill, low-wage positions. If America wants to remain competitive, we will have to expand our supply of high- and middle-skill workers.

Ah, good to see Mad Dog moving toward retirement in Libya. But if we are interested in nation building that really matters to the USA, we should start here with our schools and with a generation of young people who really are being left behind.