The Unseen Consequences of Governmental Spending on the Interstate Highway System

Highway to Collapse: Spending on Infrastructure

By Jacob G. Hornberger, The Future of Freedom Foundation
April 1993

Bill Clinton believes that spending on infrastructure will bring jobs and prosperity to America — and, in the process, finally prove, after sixty years of failure, that the welfare-state, managed-economy way of life can be a success after all. But spending on infrastructure is just another highway to collapse. It will only result in higher taxes, more impoverishment, and greater destruction of people's lives.

The Interstate Highway System is the infrastructure that is the pride and glory of national politicians and bureaucrats. They point to the highways and proclaim, "Look at the interstates. We created jobs and prosperity for you."

The Interstate Highway System was the biggest public-works project in history. It outranks even the public works of the pharaohs of ancient Egypt, the Caesars of Rome, and the most powerful totalitarian dictators of the 20th century.

Did it provide jobs? Yes — for those who were among the politically privileged. The beneficiaries of the governmental largess were all of the special interests who built the highways — the engineers, contractors, cement companies, and the like — and, of course, the automobile industry itself.

The American people see only that which the politicians and bureaucrats want them to see: the highways, along with all of the special-interest jobs that came with them. People block out of their minds that the money to build the highways was taken from the citizenry through taxation. And they fail to see the unseen: all the jobs that failed to come into existence because people were not permitted to spend their money the way they wanted.

For example, suppose a person has $10,000 in the bank. He decides to spend the money on home improvements. He hires a contractor who purchases supplies and hires sub-contractors. Jobs are created in the home-improvement industry as a result of the money that he is spending.

But suppose that before he has a chance to spend his money, the government takes it from him and uses it to build a road. The public officials point to the road and say, "Look at the jobs we created by having this road built." Will the person see through the charade? Will he see the home improvements and the related jobs that never came into existence?

But not even the unseen consequences of governmental spending reflect the true horror of the Interstate Highway System: the thousands of people who were financially destroyed by this federal monstrosity.

Let us look at a few examples. Most Americans are familiar with Route 66 — the highway which ran from Chicago to Santa Monica. While Route 66 was itself a governmental project (and one with a notorious history, too), thousands of our fellow Americans had built their lives and fortunes around this road across America. What happened to all of the thousands who tied up their life's savings in the restaurants, motels, and souvenir shops which dotted Route 66? By redirecting traffic away from their places of business, America's governmental officials condemned them to financial destruction.

Michael Wallis' recent book, Route 66: The Mother Road, provides some glimpses of what happened all across America. The personal accounts of Arizona residents Nyal Rockwell and Angel Delgadillo provide good summaries:

"Those old cabins over there were once filled with people. When they put in I-40 the government claimed that I had been taking petrified wood from their park and so they cut me off with a fence and then the new highway sliced through here, and they didn't leave me a gate or an access ramp, so I was marooned." (Rockwell)

"Back in the early years, the town had a big Harvey House and motor courts galore and we accommodated many, many people in this little town. When we got bypassed by the interstate in 1978 business shriveled up some and we struggled.. . . " (Delgadillo)

And this only pierces the surface of the highway horror story. For an in-depth account of how highway officials destroyed the lives of so many of our fellow Americans, read Robert Caro's 1974 book, The Power Brokers: Robert Moses and the Fall of New York. Although little known outside of New York, Moses was one of the most powerful public officials in world history. His power to build highways and parks — and to smash those who got in his way — was virtually unlimited.

Not even the so-called "Long Island barons" could stand against Robert Moses. Using powers of eminent domain, Moses sent his storm-troopers onto the estates of some of the wealthiest people on Long Island and confiscated their land for the construction of highways and parks.

And lest the average American begin cheering too loudly over the wealthy having their land taken against their will, Moses did the same thing to the poor — like those living in East Tremont, New York.

East Tremont was a long-established, Jewish community. Here, as in neighborhoods all across America in the 1950s, there was a sense of community — of friendship — of culture — of tradition. But Moses decided that "progress" demanded that the Cross-Bronx Expressway be built — and that it be built across the homes of the people of East Tremont.

The residents petitioned, pleaded, begged to have their homes and neighborhood spared. They even showed that the highway could just as easily be built a short distance away, with significantly less destruction. But they learned a lesson: when the wealthy cannot stand against raw political power, neither can the poor. The Tremont residents were thrown out of their houses and given some money to find new ones. Their houses and neighborhood were destroyed. The Cross-Bronx Freeway was built.

As Helen Leavitt pointed out in her 1970 book, Superhighways-Superhoax, it was the same in cities all across America. Homes and neighborhoods were threatened with destruction in the name of "highway progress." Citizens petitioned for relief, trying desperately to save what they had developed. But the highway czars scoffed at the "little people" who dared stand in the way of "progress." Homes and neighborhoods were smashed — and the people who lived in them were scattered apart by the eminent-domain machinery.

Why are Americans so attached to their Interstate Highway System? Because, like so many others around the world, they are still clinging to the dual ideas of (1) public ownership of the means of production and (2) central planning over peaceful activities — the core elements of the socialist nightmare. And that is exactly what the Interstate Highway System is: government ownership over land and central planning of transportation. And with the taxes, congestion, and pollution which it brought in its wake, the Interstate Highway System is as big a failure as socialist schemes all over the world.

Unfortunately, Americans are about to receive more of the same. Infrastructure spending is the centerpiece of Clinton's "economic-recovery" plan. Moreover, Clinton's new Transportation Czar, Frederico Peña, is "Mr. Public Works, par excellence." Peña, the former mayor of Denver, is primarily responsible for the construction of Denver's new $3.1 billion government-owned airport — even though Stapleton Airport is satisfying consumer demands perfectly. And even though socialism has failed all over the world, not once has Peña suggested that the new airport be privatized. Even worse, Peña wants to keep the old airport facilities publicly owned and managed-sort of a "little Cuba" in the middle of Denver. (For his devotion to public works, Peña was awarded the life-long dream of every politician and bureaucrat: a public street named after him.

What is the solution to all of this? To do what Americans have been telling the Russians and Eastern Europeans to do: privatize their governmental boondoggles and have faith in the market process. Will this immediately solve the problems that have built up as a result of sixty years of central planning and public ownership? Of course not. But it will take America off of its highway to collapse and return our country onto the road toward freedom and prosperity.

Mr. Hornberger is founder and president of The Future of Freedom Foundation.

Great Outdoors Initiative: A Radical Green Land Grab Program

How Obama Is Locking Up Our Land

By Michelle Malkin
August 14, 2010

Waving goodbye to property rights…

My column today raises bright red flags about a little-noticed, radical green land grab program underway at the White House called the “Great Outdoors Initiative.” Keep in mind my previous coverage of Obama’s War on the West and Interior Secretary Ken Salazar’s job destruction. The War on the West is a war on property rights, a war on the economy, and a war on the American way of life.

***

Have you heard of the “Great Outdoors Initiative”? Chances are, you haven’t. But across the country, White House officials have been meeting quietly with environmental groups to map out government plans for acquiring untold millions of acres of both public and private land. It’s another stealthy power grab through executive order that promises to radically transform the American way of life.

In April, President Obama issued a memorandum outlining his “21st century strategy for America’s great outdoors.” It was addressed to the Interior Secretary, the Agriculture Secretary, the head of the Environmental Protection Agency and the chair of the Council on Environmental Quality. The memo calls on the officials to conduct “listening and learning sessions” with the public to “identify the places that mean the most to Americans, and leverage the support of the Federal Government” to “protect” outdoor spaces. Eighteen of 25 planned sessions have already been held. But there’s much more to the agenda than simply “reconnecting Americans to nature.”

The federal government, as the memo boasted, is the nation’s “largest land manager.” It already owns roughly one of every three acres in the United States. This is apparently not enough. At a “listening session” in New Hampshire last week, government bureaucrats trained their sights on millions of private forest land throughout the New England region. Agriculture Secretary Tom Vilsack crusaded for “the need for additional attention to the Land and Water Conservation Fund — and the need to promptly support full funding of that fund.”

Property owners have every reason to be worried. The Land and Water Conservation Fund (LWCF) is a pet project of green radicals, who want the decades-old government slush fund for buying up private lands to be freed from congressional appropriations oversight. It’s paid for primarily with receipts from the government’s offshore oil and gas leases. Both Senate and House Democrats have included $900 million in full LWCF funding, not subject to congressional approval, in their energy/BP oil spill legislative packages. The Democrats have also included a provision in these packages that would require the federal government to take over energy permitting in state waters, which provoked an outcry from Texas state officials, who sent a letter of protest to Capitol Hill last month:

“In light of federal failures, it is incomprehensible that the United States Congress is entertaining proposals that expand federal authority over oil and gas drilling in state water and lands long regulated by states… Given the track record, putting the federal government in charge of energy production on state land and waters not only breaks years of successful precedent and threatens the 10th Amendment to the United Sates Constitution, but it also undermines common sense and threatens the environmental and economy security of our state’s citizens.”

This power grab, masquerading as a feel-good, all-American recreation program, comes on top of a separate, property-usurping initiative exposed by GOP Rep. Robert Bishop and Sen. Jim DeMint earlier this spring. According to an internal, 21-page Obama administration memo, 17 energy-rich areas in 11 states have been targeted as potential federal “monuments.” The lives of coyotes, deer and prairie dogs would be elevated above states’ needs to generate jobs, tourism business and energy solutions.

Take my home state of Colorado. The Obama administration is considering locking up some 380,000 acres of Bureau of Land Management land and private land in Colorado under the 1906 Antiquities Act. The Vermillion Basin and the Alpine Triangle would be shut off to mining, hunting, grazing, oil and gas development and recreational activities. Alan Foutz, president of the Colorado Farm Bureau, blasted the administration’s meddling:

“Deer and elk populations are thriving, and we in Colorado don’t need help from the federal government in order to manage them effectively.”

Indeed, the feds have enough trouble as it is managing the vast amount of land they already control. As the Washington, D.C.-based Americans for Limited Government group, which defends private property rights, points out:

“The (National Park Service) claims it would need about $9.5 billion just to clear its backlog of the necessary improvements and repairs. At a time when our existing national parks are suffering, it doesn’t make sense for the federal government to grab new lands.”

The bureaucrats behind Obama’s “Great Outdoors Initiative” plan on wrapping up their public comment solicitation by November 15. The initiative’s taxpayer-funded website has been dominated by left-wing environmental activists proposing human population reduction, private property confiscation, and gun bans, hunting bans and vehicle bans in national parks. It’s time for private property owners to send their own loud, clear message to the land-hungry feds:

Take a hike.

Federal Government to Spend $900 Million Per Year to Purchase Private Land Over the Next 30 Years

The CLEAR Act of Another Federal Land Grab

Cassandra Anderson, Infowars.com
July 21, 2010

U.S. Representative Louie Gohmert (R-TX) addressed Congress on July 15th to report the Natural Resources Committee’s passage of HR 3534, the Consolidated Land, Energy and Aquatic Resources Act (CLEAR Act) of 2009. Congressman Gohmert said that the bill was to “deal with the disaster in the Gulf of Mexico” but it contains plans for the federal government to acquire land and was introduced in 2009.

The CLEAR Act is ambiguous so if the bill is passed, federal agencies will determine how it is implemented and how the land will be used.(1)

Congressman Gohmert pointed out that a portion of the CLEAR Act contains a provision for the federal government to spend $900 million a year to purchase private land over the next 30 years, for a grand total of $27 billion dollars over 3 decades. Gohmert noted that the federal government already owns or manages about 30% of the land in America, most of it in the western states. He said that the federal government has failed to maintain the federal and national parks that it already controls and is $3.7 billion behind in basic maintenance costs, according to one report. When land is federalized, it is taken off of the tax payroll.

He went on to say that when the federal government acquires land, it makes promises to generate revenue but then fails to utilize the resources;an example is timber, as logging is prohibited in most federal lands. Mr. Gohmert then showed a graph of how much money the federal government has spent to acquire more land over the last few years:

2008 $100 million

2009 $150 million

2010 $300 million

Gohmert was incredulous that the federal government intends to raise its purchasing allocations to $900 million a year for the next 30 years and questioned “how in the world does that make sense”?

It makes perfect sense when the objectives of the UN’s Agenda 21 are understood, as Agenda 21 is the overarching blueprint for depopulation and total control from the international level all the way down to the individual level, using the environment as the excuse. Most people are unaware that one of Agenda 21 Sustainable Development’s goals is to make 50% of America into ‘Wildlands’ that are off-limits to humans and to herd people into ‘Smart Growth’ cities. Almost all wealth is derived from land and its resources. The more land the federal government owns, the more control they have. Less than 6% of America is considered developed (with roads and buildings) but the federal government is devoted to reducing these developed areas.(2)

The federal government has expanded its expense account to purchase more private land following the burst of the housing and real estate bubble that they created, and at a time when property is cheap. When Bill Clinton was in the White House he authorized a study called the Gap Analysis which identified all privately owned land in America and this is the target for takeover by the federal government and UN Biosphere Reserves, per Dr. Michael Coffman.

The Constitution provides for the federal government to exercise authority over ten square miles in Washington, D.C. and places for needful buildings like forts, arsenals and dock yards. Nowhere does the Constitution give the federal government authority to regulate conservationism, forestry and wildlife.

Watch this short video introduction about the Wildlands Project by Dr. Michael Coffman:

Wayne Hage, author of “Storm Over Rangelands, Private Rights in Federal Lands” meticulously documented how the eastern financiers (bankers, railroad magnates and wealthy cattle ranchers),over 100 years ago,used federal lands in the western states to control resources that include minerals, timber and hydroelectric sites. In modern times, oil may also be included. There is an abundance of natural resources in the western states, but the resources are locked up, through conservation measures to prevent prosperity. And to prevent energy independence.

Congressman Gohmert said that the Obama Administration doesn’t like to lease land for drilling and gave an example of Ken Salazar, Secretary of the Department of Interior, rejecting bids and returning checks to oil companies for drilling in Utah, Wyoming and Colorado, which could have prevented the need for deep water drilling. He also said that uranium mining is off-limits in America and that 90% of uranium used in nuclear energy plants is imported. Gohmert mentioned that Obama is advocating Spain’s ‘green’ energy model for wind and solar development that has proven to be an economic disaster.(3)

The CLEAR Act’s funding for private property purchase by the federal government is just one part of the machinery that is overtaking America’s private land. An example of another federal land grab method was in the news just a few months ago when Senator Jim DeMint exposed Obama’s plan to takeover 10 million acres of land in the west.(4) Because the western states’ federal lands are already heavily regulated and there are existing plans for federalizing more land through ‘conservationism’, it is likely that the federal government intends to purchase private land that is resource rich (especially with oil, gas and water) in the midwestern and eastern states. Dr. Michael Coffman’s thorough analysis, “Taking Liberty”, is a must-see for anyone who owns property, especially the region-by-region section that explains how the federal government plans to take land in each area of the U.S. in order to control the resources and transform the property into Wildlands.(5)

Dr. Michael Coffman’s website is www.epi-us.com.

For more analyses on Agenda 21, visit Cassandra Anderson’s website at www.MorphCity.com.

1. http://lib.store.yahoo.net/lib/realityzone/UFNHR3534LandTrust.html

2. http://lib.store.yahoo.net/lib/realityzone/UFNEPAlanduse5percnt.html

3. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2PHwqAs7BS0

4. http://www.washingtontimes.com/news/2010/mar/02/white-house-land-grab/

5. http://www.takingliberty.us/TLHome.html

Homeland Security Threatens to Seize 4.9 Acres from Vermont Farmer for 'Secure Bording Crossings'

Vermont Dairy Farm Wins David vs. Goliath Battle with U.S. Government

June 3, 2010

AP (MONTPELIER, Vt.) – Score one for David. Goliath decided it just wasn't worth the fight.

The federal government has decided to close a tiny U.S.-Canada border station rather than push ahead with a controversial plan to expand it by seizing a dairy farmer's land, officials announced Thursday.

U.S. Customs and Border Protection had sought to renovate the sleepy Morses Line port of entry in Franklin — which gets about 2 1/2 vehicles an hour — by seizing a 2.2-acre parcel from the Rainville family dairy farm, which adjoins the station.

"This means my father can harvest his crops and go about his business without having to worry what his farm is going to look like a month down the road," said Brian Rainville, 36.

By any measure, the Depression-era border station — a small brick building surrounded by pastures and hayfields — was a better candidate for closure than a big-ticket renovation.

Sitting on a half-acre of land, its agents sometimes get so bored waiting for business that they hit golf balls or shoot skeet out back.

But the U.S. Department of Homeland Security, which got $420 million from the federal bailout to modernize land ports like it, wanted to make it a project.

Customs officials initially wanted to take 10 acres from the dairy farm, then cut it to 4.9 acres, warning the family in a letter that if it didn't agree to sell for $39,500, the land would be seized through eminent domain. Last month, officials reduced that to 2.2 acres.

The plan drew opposition from the Rainvilles, Sen. Patrick Leahy and many along the quiet border.

In a public hearing last month, about 150 people packed into Franklin Town Hall, some carrying signs that read "Eminent Domain Equals Federal Land Grab" and "Save the Rainville Family Farm." Of the 18 people who spoke, none favored the plan. Some called it wasteful, an abuse of eminent domain or worse.

Leahy said Thursday that Homeland Security Chief Janet Napolitano had agreed to close Morses Line instead.

The process will take about a year, to accommodate public comment, consultations with stakeholders and assessments of safety and traffic patterns, he said.

"It makes good sense," said Leahy, D-Vt. "It was too much for too little."

Rainville, who had said the loss of the land could put his family's dairy operation out of business by eliminating one of the feed sources for its dairy cows, said it was clear that upgrading the station wasn't essential to national security.

A civics teacher by profession, he said the decision restores his faith in government.

"I don't see this as a victory for my family as much as I see it as an absolute affirmation of the democratic process," he said.

Vermont Farmer Draws a line at U.S. Bid to Bolster Border

Boston Globe
May 17, 2010

Franklin, Vt. — The red brick house sits unassumingly on a sleepy back road where the lush farmlands of northern Vermont roll quietly into Canada. This is the Morses Line border crossing, a point of entry into the United States where more than three cars an hour constitute heavy traffic.

The bucolic setting of silos and sugar maples has become the focus of a bitter dispute that pits one of America’s most revered traditions — the family-owned farm — against the post-9/11 reality of terror attacks on US soil.

The Department of Homeland Security sees Morses Line as a weak link in the nation’s borders, attractive to terrorists trying to smuggle in lethal materials. The government is planning an estimated $8 million renovation here as part of a nationwide effort to secure border crossings.

It intends to acquire 4.9 acres of border land on a dairy farm owned for three generations by the Rainville family. Last month, the Rainvilles learned that if they refuse to sell the land for $39,500, the government intends to seize it by eminent domain.

The Rainvilles call this an unjustified land-grab by federal bullies.

“They are trying to steamroll us,’’ said Brian Rainville, 36, a high school government and civics teacher whose grandfather bought the farm in 1946 and whose parents and two brothers run it now. “We have a buyer holding a gun to our head saying you have to sell or else.’’

The Rainvilles say the land, where they grow a portion of the feed for 150 head of cattle, is worth far more than the offer, and is critical at a time when the low price of milk has dairy farmers struggling to cover the cost of production.

“It’s like taking a leg off a stool. If you reduce the hay, you reduce the herd; if you reduce the herd, you immediately affect the viability of the farm,’’ Brian Rainville said. “Last year, the farm lost money. Right now, we are hanging on by our fingernails.’’

The family’s many supporters in the area do not dispute that the Morses Line facility, some 50 miles southeast of Montreal, is outdated. But they do not understand why the government needs to spend millions on it.

“The whole thing is a perfect example of waste,’’ said Glen Gurwit of Swanton, a customs inspector for 31 years who frequently worked at Morses Line before retiring in 2004. He said the port is used mostly by locals crossing to visit relatives, play hockey, or shop, and is notable for its “peace, quiet, and isolation.’’

“We used to spend hours watching deer graze,’’ he said.

Homeland Security officials counter that modernizing border facilities should be a national priority. US Customs and Border Protection received $420 million in federal stimulus funds to renovate ports of entry along the Canadian and Mexican borders.

Morses Line, one of 15 ports between Vermont and Quebec, was among the first in the country slated for repair. It was built in 1934. Its only detention facility is a set of handcuffs attached to a wooden bench. It has no place to inspect vehicles, so customs officers have to do it in the middle of the road. It has a road gate that they have to open and close manually. Its roof leaks.

“It is unsafe,’’ said Marco A. Lopez, spokesman for US Customs and Border Protection.

Lopez said the government has been cooperating with the Rainvilles, and responded to their concerns by scaling back an earlier plan to use 10 acres of the farm.

Allison Stanger, director of the Rohatyn Center for International Affairs at Middlebury College, said the government is right to shore up aging, little-used border crossings.

“If there’s a weak link in the chain, that’s precisely what our enemies would target for getting things into the country,’’ she said. “It seems far-fetched to think that something like this could happen in beautiful Vermont. But before it happened, what American would have thought that someone would fly a plane into a building?’’

The Rainvilles suggest that the Morses Line port, where only 14,811 vehicles crossed in 2009, could be shut down altogether. They say the stimulus money would be better spent upgrading the busy Highgate Springs port 11 miles to the west, where Interstate 89 connects with a Canadian route to Montreal. Hundreds of thousands of vehicles cross there each year.

US Senator Patrick Leahy, a Vermont Democrat who supports the family, raised the idea of closing the Morses Line port with Department of Homeland Security Secretary Janet Napolitano last month. Napolitano promised to hold a public hearing Saturday in Franklin, Vt., the town that includes Morses Line.

Lopez said the government has already hired a contractor, but he added that officials will hear out opinions voiced at the meeting.

“All options are on the table,’’ he said. “If the community and the state and whatever disagree with us, we will talk to Canada about closing the border.’’

The Rainvilles say they have nothing against border officials. Two years ago, they closed the farm so that law enforcement agencies could use it to conduct a drill on the response to a nuclear, biological, or chemical attack. But they were rankled by a recent government assessment that described the 4.9 acres as undeveloped and insignificant to their operation.

The plot is a fraction of their 220-acre property, but it constitutes about one-twelfth of their available hay land. It yields 1,000 bales of hay a year; without it, the family would need to buy the hay at $3.25 a bale, and possibly reduce the number of cows, said Craig Rainville, 32.

He calculates that the cost would soon exceed the sum the government is offering, and cripple a farm that has been named to the National Register of Historic Places for its intact 19th-century buildings and pristine landscape and designated a Dairy of Distinction by the Vermont Department of Agriculture.

The family recently put up a “Save This Farm’’ sign at the entrance to the property.

Last week Brian Rainville stood on a field of alfalfa and indicated orange posts erected by government surveyors to delineate the boundaries of the disputed plot.

“They look at it like a vacant lot,’’ he said. “They do not understand how vital that land is to who we are and what we do.’’

Local Governments are Selling Tax Liens on Homes to Investors

Woman’s Home Confiscated Over Small Water Bill

Fred Schulte, Ben Protess and Lagan Sebert, Huffington Post Investigative Fund
May 20, 2010

One raw day in early February, Vicki Valentine stood by helplessly as real estate investors snatched her West Baltimore home over what began with an unpaid city water bill of $362.

As snow threatened to fall, she watched a work crew hired by the new owners punch out the lock on her front door. A sheriff’s deputy was on the scene while Valentine and her teenage son piled whatever they could into a borrowed car.

Running out of time, Valentine scrambled to pack up clothing and mementos. The home had been her family’s for nearly three decades, and her father had paid off the mortgage in 1984.

“It’s hard to say goodbye to this house,” she said. “It’s like someone forcing you out of something that belongs to you. I don’t get it.”

Valentine lost the two-story brick row home after the city sold her debt to investors through a contentious and byzantine legal process called a “tax sale.” This little-known type of foreclosure can enrich investors as growing numbers of property owners struggle to pay their bills.

These foreclosed homeowners are not the families making headlines for taking on mortgages they could ill afford. Families ensnared in the tax sale sometimes are unable to overcome relatively small debts owed to local tax collectors.

Rather than collect the overdue money they are owed, many local governments are selling tax liens. Buyers range from behemoths such as JPMorgan Chase & Co, and some regional banks and law firms, to small-fry investors lured by late-night television commercials promising quick riches. Investors generally bid in an auction for the right to collect delinquent taxes and other municipal debts on property owners, sometimes by paying only a few hundred dollars. When owners can’t pay, investors can pick up property at bargain prices.

It can be a good deal for everyone except the property owner. Selling the debts to investors can help governments efficiently ease budget woes without having the added expenses of debt collection, foreclosing and being a landlord.

Investors, meanwhile, can rake in hefty profits. That’s because they can tack on fees and steep interest rates, which can amount to 18 percent annually in Baltimore.

In Valentine’s case, legal fees and other charges climbed past $3,600 — nearly 10 times her original bill.

Investors purchased an estimated $30 billion of real estate tax debt held by governments across the country in 2009, double the amount a year earlier, according to the Florida-based National Tax Lien Association. Altogether, 29 states and the District of Columbia can sell tax lien debt to investors.

Lien sales in Baltimore have nearly doubled since the housing bubble of 2006. On Monday, the city sold 12,689 liens — a probable record. Properties ranged from boarded-up shells and vacant lots to row homes in gentrified neighborhoods and some commercial buildings.

Government and Big Corporations Are 'One Entity' Controlled by the Financial Elite

Judge Napolitano responds to a case of a repeated attempt to seize farm land to build a bridge.

Should Private Equity Firms of the Elite Be Investing in Residential Real Estate?

By Ken Stier, TIME
January 20, 2010

When new owners took over an apartment building in the New York City borough of Queens, they promptly set about filing eviction notices, suing nearly half of the building's tenants — some of them multiple times — within the first 16 months. That amounted to 965 court proceedings against 2,124 apartments, compared with just 50 court proceedings in the final year of the previous owner. The complaints alleged that the tenants were subletting illegally or had not paid their rent or security deposits, even though the tenants often had records proving otherwise. To the tenants, it seemed as though every possible legal vulnerability was being sought out in an effort to force them out.

This kind of activity — flushing out low-rent tenants and replacing them with wealthier new renters — has been a staple of strong real estate markets for years. What was different over the past few years was how widespread this Dickensian business model had become, largely fueled by Wall Street money seeking high rates of return. Another difference was how much the general investing public — through university endowments and pension funds — became party to such morally dubious schemes. Consider it another footnote to the Gilded Age we just passed through.

This investment trend, which flourished from 2005 until the financial crisis hit in 2008, threatened a cherished pillar of urban policy — affordable housing, which has long been regarded as essential for maintaining vibrant diversity in our cities. The victims are among the huge numbers of Americans (estimated at close to 100 million before the latest housing boom promoting homeownership) who rent their primary residences — poor, working-class and even middle-class folks — who have been overshadowed in the deluge of media coverage of the debacle in single-family housing. (Affordable housing refers to that costing no more than a third of a family's income.)

But as private equity funds seized on the rental market in major cities in recent years, all this was jeopardized by the need to generate fat returns of 15%-20% per annum.

Worse, this business model was based on a dirty secret — expelling as many existing tenants as possible. This is the thuggish reality behind otherwise respectable-sounding prospectuses offered to investors to explain how they could service high debt on mortgage-backed securities.

"The borrower anticipates to recapture approximately 20%-30% of the units [roughly within the first year] and 10% a year thereafter," explained a prospectus for a portfolio of buildings in upper Manhattan being bought by Apollo Real Estate Advisers (now AREA Property Partners), with a primary mortgage from a Credit Suisse subsidiary.

The normal turnover rate in cheap or moderate rent-regulated apartments in New York City is 5.6%, according to data from the New York City Rent Guidelines Board.

"From a public policy standpoint, you can make a strong case that it is not desirable [for Wall Street money to be in this market], and equally strong you can say that housing regulators or authorities in New York and most other cities have been asleep at the wheel for the last five and 10 years — this stuff is going on everywhere," says Guy Cecala, CEO of Inside Mortgage Finance Publications, a stable of industry newsletters, who worries that the very idea of affordable housing is under threat.

But these securitized transactions were considered a legitimate business strategy by investors, who typically focus on the cash flow from these deals, not the fine points on how cash is generated.

"These could have all been brothels or sweatshops underlying them, and nobody would know that either," says Cecala, who notes that "one of the reasons for buying securities ... is supposedly you don't have to worry about any of that; someone else is supposed to have signed off on the legality of the transactions, the business practices, everything."

Those packaging these investments say they regarded them as aboveboard, though their defense is less than robust. Key players included leading banks in tandem with some of the biggest names in real estate and private equity, none of whom would have missed that high tenant turnover was the main motor for profits.

"We truly went into this trying to turn housing that was run very, very poorly by slumlords into affordable working-class housing, and to be portrayed like this is somewhat upsetting, to be quite frank," says Richard Mack, who works at AREA Property Partners, a $9 billion partnership, with his father William, who got his start in 1963 with a 5-acre plot of New Jersey swampland.

The turnover targets were perhaps "more aggressive than people think they should have been," but he says, "Life is too short for us to have done this, with this small a part of our portfolio, if we didn't actually think we were doing the right thing. Whether or not we executed as perfectly as we could — I'm sure that we made mistakes — our true intention here was to make money by doing good."

Tenants pried from their homes would see it differently. In a typical Queens building, hired legal guns were able to achieve 23% turnover in the first year of new owners, or about double that of a typical building in Manhattan, where the culture of tenant rights is stronger, according to a new study by affordable-housing advocates, the Association for Neighborhood and Housing Development.

The study focused on New York City, where Wall Street money made the most inroads — capturing about 100,000 units (out of the city's 2.5 million), or about 10% of the city's rent-regulated apartments before the real estate bubble collapse.

In this process, the report explains, the investor-owners were helped by the fact that many transitional neighborhood tenants were new (and possibly undocumented) immigrants, whose lack of English fluency and legal representation put them at a disadvantage in housing court, where deals are typically hammered out with owners' lawyers before ever reaching the judges. Those actually executing these orders were often conflicted about it.

"Having a large property owner as a client is great for the volume of work, but if you ask me about it morally or ethically, well, I'd rather not say," admits a housing court attorney who asked not to be identified.

Others are inclined to give big investors the benefit of the doubt.

"If people are really stretching the law — doing outright harassment to remove tenants — that's not a good thing, but I don't think that most big institutional investors knowingly will target deals like that or knowingly target deals with partners where they think that might happen," says Andy McCulloch, senior residential analyst with Green Street Advisors, a property research shop.

In the end, though, many new owners have been unable to meet their overly ambitious rent roll increase targets, and many of these investments are in danger of buckling under the high debt servicing costs. Finance industry watch lists are already full of private-equity-financed deals in danger of default. That has local officials scrambling to find "preservation buyers" who are willing to take on these properties with the expectation of a more modest 7%-8% annual return.

"I do think it is a problem ... and that's why we are putting our resources to bear to try to correct the problem before it becomes a bigger problem than we can tackle," says Rafael Cestero, commissioner of New York's Department of Housing Preservation and Development.

"Ownership of rental properties in New York City is a long-term proposition, and if you do it right, you can make a fair profit, but trying to make a short-term investment is where you can get yourself in trouble."

Nowhere was that more true than in the ill-conceived investment to turn the twinned 11,000-unit middle-class housing complex known as Stuyvesant Town and Peter Cooper Village, built originally to accommodate World War II veterans, into luxury housing, for which limits on yearly rent increases are chucked in favor or whatever the market will bear. The prospectus offered by the lead investors, Tishman Speyer and Larry Fink's asset-management fund BlackRock, imagined evicting 50% of rent-regulated tenants in just a few years. But tenants fought back and won in a court decision that also undercut plans for using city tax abatements to further sweeten returns on apartments pushed into luxury decontrol. The upshot, according to a recent Deutsche Bank analysis, is that the property, purchased in late 2006 for $5.4 billion, "would fetch less than $2 billion if sold into the current dislocated market." It added that the most natural buyer was MetLife, the insurer and original owner, in part because it represented "patient capital."

Who's the Boss, the States or the Federal Government?

The Federal Government Exists Because Representatives of the States Created It

By Henry Lamb
March 4, 2010

Is the federal government sovereign, with authority over state governments? Or, are individual state governments sovereign, with authority over the federal government? It's a simple question; it's the answer that's a problem.

The federal government exists because representatives of the states created it. This fact should provide a clue. The federal government was designed by representatives from the states in a document called the Constitution of the United States. The federal government became a reality when the Constitution was ratified by the 9th state, New Hampshire, on June 21, 1788. This infant government, created by the states, began operation March 4, 1789. From that day until this, people have been arguing over whether the federal government or the states possess the supreme authority.

It is quite clear that the people who designed the federal government intended it to be limited in its power. Article 1, Section 8 sets forth 17 enumerated powers of the federal government. The first clause empowers the new government to "lay and collect taxes," to provide for the "defense and general welfare" of the United States. Here's where the argument gets nasty.

One group of people argues that the phrase "general welfare" means whatever Congress wants it to mean with no limitations. Another group of people argues that if this is what the designers intended, why on earth would they have bothered to enumerate the remaining 16 specific powers? It's a reasonable question that the first group prefers to ignore rather than answer.

To be sure that the federal government's authority stayed limited, the primary architect of the Constitution, James Madison, introduced the Bill of Rights in the very first Congress in 1789. These first ten Amendments further clarify the authority and limitations of the federal government. The 10th Amendment in particular, limits the federal government to those powers enumerated in the Constitution and explicitly reserves all other powers to the states and to the people.

Among the powers granted to the federal government is what is known as the "Enclave Clause," which happens to be the 17th enumerated power. This clause provides authority for the federal government to exercise supreme authority over an area "ten miles square" ceded by the states to be the Capitol of the new government, and over any lands purchased from the states with the approval of the state legislature for "…the erection of forts, magazines, arsenals, dock-yards, and other needful buildings."

This is where it really gets sticky. Clearly, the designers intended for the federal government to purchase "with the approval of the legislature" any land to be owned by the federal government within any state. The Constitution empowers the federal government, however, to exercise sovereign authority over its territories, and the authority to add states which are carved out of the territories.

It is reasonable to conclude that when a state is carved out of a territory, it becomes a state subject to the powers and limitations of all the other states within the jurisdiction of the Constitution, and no longer subject to the federal authority suffered by the people when the land area was a territory.

This is pretty much the way it went when Texas was admitted to the Union in 1845. What was called "public land" was shifted to the state of Texas. Today, only 1.9 percent of Texas is owned by the federal government.

In Utah, however, the federal government required, as a condition of statehood, to "disclaim all right to title" of public land, and the feds retained nearly 60 percent of all the land in the state. In Nevada, the feds retained 85 percent of the land.

How can it be legal for the federal government to own land in a state that it did not purchase with the consent of the state legislature? How can it be legal for the federal government to exercise sovereignty over land within a sovereign state? Why were the eleven Western states and Alaska treated differently upon admission to the Union than were the other 26 states that joined the Union – when all states were supposed to be admitted on an "equal footing"?

There is only one logical conclusion: the federal government should not own the land it now claims within any state unless it is purchased with the approval of the state legislature for the purposes set forth in Article 1, Section 8, Clause 17.

There is a growing effort in Western states to force the federal government to honor its Constitutional limitation on land ownership and return to the states that which is rightfully theirs.

Obama to Lock Up Public Lands from Being Used for Timber, Ranching, Mining and Energy Development

Obama Eyes Western Land for National Monuments, Angering Some

By William La Jeunesse, FOXNews.com
February 18, 2010

More than a dozen pristine landscapes, wildlife habitats and scenic rivers in 11 Western states, some larger than Rhode Island and Delaware combined, are under consideration by the Obama administration to become America's newest National Monuments -- a decision the administration can make unilaterally without local input or congressional approval.

According to internal Department of Interior documents leaked to a Utah congressman and obtained exclusively by Fox News, the mostly public lands include Arizona deserts, California mountains, Montana prairies, New Mexico forests, Washington islands and the Great Basins of Nevada and Colorado -- totaling more than 13 million acres.

Sources say President Obama is likely to choose two or three sites from the list, depending on their size, conservation value and the development threat to each one's environment.

"Many nationally significant landscapes are worthy of inclusion in the NLCS (National Landscape Conservation System)," according to the draft report stamped NOT FOR RELEASE. "The areas listed below may be good candidates for National Monument designation and the Antiquities Act."

Presidential use of the Antiquities Act is highly controversial because the White House, with the stroke of a pen, can lock up thousands of square miles of federal lands used for timber, ranching, mining and energy development without local input or congressional approval. The Act is generally interpreted to commemorate or protect a specific historical landmark, not prohibit development or deprive local communities of jobs and tax revenues.

"Any federal action that could lead to limited access should be done in an open and public manner using extraordinary caution," said Rep. Dean Heller, R-Nev., upon seeing the leaked report. "The fact that this administration is already circulating internal memos to bypass Congress and the public process is troubling."

In 1996, President Clinton turned 1.3 million acres of southern Utah into the Grand Staircase-Escalante National Monument without telling the Arizona or Utah congressional delegation. Highly controversial at the time, the designation has withstood numerous legal challenges to the president's authority, and the national monument remains one of Clinton's boldest environmental accomplishments.

While Western politicians are still digesting the report, several properties stand out.

-- Otero Mesa, New Mexico: The area stretches over 1.2 million acres and is home to 1,000 native species. Gov. Bill Richardson has sought protection for Otero Mesa for years, but the Bush administration targeted it for oil and gas development.

-- Heart of the Great Basin, Nevada: Researchers call it a "globally unique assemblage of cultural, wildlife and historic values" that includes thousands of petroglyphs and stone artifacts dating back 12,000 years.

-- Owyhee Desert, Oregon: Called one of the most remote areas of the United States, the Owyhee is home to the largest herd of California bighorn sheep.

-- Bodie Hills, California: Located in the fast growing eastern Sierra Nevada mountains, Bodie contains the Golden State's best preserved ghost town. But the area is also loaded with gold, and several mining permits are pending.

-- The Modoc Plateau, California: Spanning close to 3 million acres in the northwest corner of California, the Modoc Plateau is "laden with biological and archeological treasures." Interior officials call it the second largest unprotected landscape in the state.

The list contains a number of political land mines for the president, according to a former Bush Interior Department appointee familiar with the document who asked to remain anonymous.

"Right now a number of senior officials are going over the report," he told Fox News. "When Clinton did it, most of the West was red states and he didn't have any blowback. Obama has to ask himself, if he chooses a Nevada location, will it hurt (Senator Harry) Reid's re-election. The same is true in almost every (Western) state where Democrats have made serious inroads."

The list was leaked just days after a story appeared in the New York Times outlining the administration's plans to use executive power to advance his agenda in the face of congressional opposition.

"We are reviewing a list of presidential orders and directives to get the job done, across a front of issues," White House Chief of Staff Rahm Emanuel told the newspaper.

Western representatives are planning a full-fledged assault on the report when Congress returns from its break next week.

Congressman Rob Bishop, R-Ut., co-founder of the Western States Coalition and now Chair of the Congressional Western Caucus, has also seen the leaked memo.

"We are taking this seriously. The tar is warming up. The pitchforks are ready. We will do what ever we need to make sure Congress is fully informed and fully aware of this action. This process should be open and transparent and President Obama should go though Congress and do it this the right way, not by presidential fiat," said Bishop.

"Outrage. In a country as dependent on foreign oil as this one, this kind of action on public lands is simply unacceptable."

Interior Department spokesman Craig Leff told Fox News late Wednesday the leaked document "reflects some brainstorming discussions within [the Bureau of Land Management], but no decisions have been made about which areas, if any, might merit more serious review and consideration."