Horizon, Host: Ted Simons

April 14, 2008


Host: Ted Simons

One on One

  |   Video
  • Bob Grossfeld of The Media Guys and Doug Cole of Arizona Highground debate the issues in the state Legislature.
Guests:
  • Doug Cole - Arizona Highground
  • Bob Grossfield - President, The Media Guys


View Transcript
Ted Simons:
Now for the regular Monday feature focusing on issues of concern with the state legislature and upcoming elections. Two political types go one-on-one, Bob Grossfield, the President of Media Guys, Inc., goes head to head with Doug Cole, Senior Vice President of Government Affairs for High Ground.

Bob Grossfield:
Doug, it appears that marriage is going to be on the ballot again in Arizona. We may not be able to escape it. There will be one that says, yeah, it's anybody you want it to be. And there may be another one that says, no, no, marriage is just one man, one woman, but apparently no limitation on how many times you can do that.

Doug Cole:
Bob, you're right. This issue is turning out to be the perennial issue in modern Arizona politics. Seems like every two years we get a state trust land initiative on the ballot, and now it looks like we're going to get another definition of marriage on the ballot. If you remember, back in 2006 it went down in defeat. There were many prominent people supporting it and a lot of prominent people on the other side. It's a hot topic down at the legislature.

Bob Grossfield:
I think the question is, have they removed the part that just was overreaching, that said, well, not just marriage but anybody, and make it more palatable.

Doug Cole:
The strike everything amendment that went through the house judiciary committee last week to a Senator Ron Gould bill actually did that. The union between a man and a woman is what is recognized in the state of Arizona, and that's it. None of the other partner benefits or anything else is in that ballot.

Bob Grossfield:
Maybe we can get the full cost of the weddings at least made deductible or a tax credit or something.

Doug Cole:
Exactly. What else is interesting, another item working through the legislature is also seeming to be a perennial, always talked about in the legislature. And that is doing away with Arizona's judicial merit selection system.

Bob Grossfield:
Isn't that just a way of saying, instead of doing away with the merit system, it's a way of politicizing the judiciary?

Doug Cole:
For full disclosure to you and the viewers watching, I sit on the Maricopa County Trial Court Commission. And we're the commission here in Maricopa County that makes -- we interview candidates and make our recommendation to the governor. The governor ultimately makes the selection. This system was passed by the voters back in 1972. It's been tweaked by the voters over the years or looked at by many across the country and around the world as having a very, very fine system. Judges are selected on merit.

Bob Grossfield:
What problem are these folks trying to solve?

Doug Cole:
I think what we heard when it was debated in the legislature over the last number of weeks is judges need to be accountable to the people. Bob, I don't want a judge accountable to the people. I want a judge accountable to the constitution and the laws of this state. The people that are accountable to the people are legislators and the governor. The judicial branch needs to be above politics. They need to be interpreting the constitution and interpreting the laws of the state.

Bob Grossfield:
And applying them.

Doug Cole:
They should not be making laws from the bench. And I think if judges are elected here in Maricopa County and Pima County, its going to be such a popular race on sound bites that it's going to push the legislature more towards the bench because of campaign promises.

Bob Grossfield: It's going to make them accountable not to the people and the constitution, but to those that helped get them elected.

Doug Cole:
Exactly.

Bob Grossfield:
A couple of weeks ago I was sitting with Stan Barnes and he was talking about the McCain effect.

Doug Cole:
I have more hair than Stan Barnes.

Bob Grossfield:
To your credit. And the premise was, with McCain at the top of the ticket in Arizona, it's going to be a grand day for republicans in the state. But then I started looking up some other things and it appears as if -- and it's confirmed by the federal elections commission -- that the real McCain effect may be that his campaign is just sopping up all of the available money from republican donors in this state, because according to the F.E.C., when you look at the relative cash on hand and the contributions going to democrats running for congress, versus those republican, it's like suddenly your team is not doing very well.

Doug Cole:
This has been an evolution. We've seen our party struggle year after year, and hopefully we're at the bottom now. Hopefully with McCain's candidacy, we're going to turn the party around. It was republicans who could count on a few phone calls, the money was there. Well, the table's kind of flipped a little bit here. As a republican operative in this state, I think having John McCain at the top of the ticket -- and yeah, we have worked very, very hard to get donors for the campaign here in Arizona, because his opponents look here to try and embarrass him.

Bob Grossfield:
Here it is April, almost may. With a lot of these congressional campaigns, if they're not up and really running hard in the next six to eight weeks --

Doug Cole:
And we're seeing that. C.D.1, Ken Bennett.

Bob Grossfield:
And Kirkpatrick is wiping them all out.

Doug Cole:
And watch out for Howard.

Bob Grossfield:
That's about all the time we've got time for.

Doug Cole:
Great, Bob, good to see you, too.

Bob Grossfield:
Take care.

Payday Loans

  |   Video
  • state Senator Debbie McCune Davis, the chair of the Stop Payday Predators campaign discusses the proposed state initiatives and legislation dealing with payday loans with Stan Barnes, representing Payday Loan Reform.
Guests:
  • Senator Debbie McCune Davis - Chair, Stop Payday Predators
  • Stan Barnes - Arizonans with Financial Reform


View Transcript
Ted Simons:
Good evening, and welcome to "Horizon." I'm Ted Simons. Governor Janet Napolitano will let E.L.L. funding increase become law without her signature. The legislature approved more than 40.5 million dollars to pay for implementing the English language learning programs. The deadline for approval for funding had been set by a federal judge for tomorrow before daily fines would begin.

Ted Simons:
The payday loan industry in Arizona is currently under attack by some who call it predatory lending. Others say payday loans supply a demand for fast cash loans. Voters could see two potential initiatives on the ballot in November, one outlawing the loans and another reforming the industry. Here to talk about the initiatives is Senator Debbie McCune Davis, chair of Stop Payday Predators. And also with us is Stan Barnes with Copper State Consulting Group, speaking for the Arizonans with Financial Reform, the group sponsoring payday loan reform.

Ted Simons:
Thank you so much for joining us.

Stan Barnes:
Good to be here.

Ted Simons:
Debbie, let's start with payday loans. How do they work?

Debbie McCune Davis:
They operate on a two-week cycle at extremely high interest rates. They are offered to people with very few questions asked. Before long, people find out what the industry's interested in is not them paying back the loans, but renewing the loans over and over again. They're operating today at an interest rate, an annual A.P.R. of 458\%. And the problem is that our usury cap in Arizona is 36\%. They have the carve-out in the consumer loan act that applies to them, and it's time to end that. We have a chance to do that in 2010 when the sunset takes effect and the industry loses its ability to operate. They would then have to come back under the 36\% cap.

Ted Simons:
Stan, I want to talk more about what Debbie is saying, as far as the sunset and what she want to see done. As far as how they work, someone just writes a check for a certain amount plus the interest? I'm confused as to how they actually work.

Stan Barnes:
One of their chief benefits is they are so simple. The idea is that the borrower who is -- finds himself in a circumstance, for an example, and needs $100 for whatever reason, writes a check in a typical store for $117.65 and receives $100 cash today. The check is held by the payday loan store until the next paycheck period. And so the customer then can buy his check back and pay it off, or the store can deposit it and it clears on payday and away the customer goes. The reason they thrive, over 700 stores and over 2500 people that work the industry in Arizona, is because they're simple, convenient, and the cheapest alternative to most people in most circumstances in that position. Let me give you an example. If you need $100 to buy baby formula and you're going to buy it, but you don't have any money, your options are pretty limited. If you go to Wal-Mart and bounce a check on your Wells Fargo account, it costs you $54 to do that. The payday loan stores costs you $17.65 to do that. Most people are trying to avoid other more costly alternatives and they like the simplicity and convenience.

Ted Simons:
Don't they thrive as well because 90\% of industry revenues, according to sources here, come from folks who can't pay off the loan?

Stan Barnes:
I don't know what those sources are. But the reforms that we're promoting that will go to the ballot in November, if we are lucky, if we qualify, will reform the system so much that it'll be very much of a pro-consumer product versus the product it is today. Debbie and other opponents of the industry already have a sunset in law, but now we're trying to qualify an initiative that would make it a felony to have a payday loan. Removing choice from consumers like that, I don't understand.

Debbie McCune Davis:
Let me address that, because I think it's important that we think about whether or not we want this industry to reform itself. Bottom line is, they can change anything in their business practice today. They don't need their initiative to do that. The only thing that their initiative does is take the sunset provision out of the law. The bottom line is the industry can make any of those changes today and can make them voluntarily. They take advantage of people because, when they can't pay the loan back, that loan gets rewritten and rewritten to the point where the average customer of a payday lending store takes out eight to nine loans a year. It isn't a matter of that one-time transaction that $100 with a $15 fee. If it were a bounced check, you would be unhappy with your bank. It would feel a little like they were in your checking account taking your fee out, and that's a little offensive. But with these guys, it's like an abusive relationship. Every two weeks you go in, you can't pay it off. They take their fee off the front and write the loan again. Before you know it, you're in the $400 interest range.

Stan Barnes:
What Debbie just said is factually not true. All you have to do is to read the initiative to know that it does a great deal more than remove the sunset. The only sunset I might add on a private sector business in the state of Arizona. It cuts the rate, it ends the rollover situation that Debbie is referring to, in terms of extending the loan. It ends that practice. It sets up a free repayment plan for those customers who cannot meet their obligation. Is preserves choice for customers that want to choose it. What opponents of payday loans can't tolerate is that rational Arizonans are making a decision, that's financially based, in their own interest to borrow from a payday store cheaper than the many alternatives that Debbie is talking about.

Ted Simons:
Can these stores be used responsibly, and don't most folks use the stores responsibly?

Debbie McCune Davis:
We don't think so. The statistics indicate otherwise. The industry tells you these folks are happy doing business with them. What we know, they count those rolled-over loans as satisfied customers, as paid-back loans, when in reality that's not the case. In fact, the reforms that Stan talks about, lowers the cap on interest rates from 458\% to 391, and they call this a substantial increase. I go back to the usury rate of 36\%, and point to the 90 licensed folks operating in the state today under that cap. I tell you that our folks are much better off doing business with legitimate lenders and not with payday lenders.

Ted Simons:
Is there a place for short-term high-interest loans in the marketplace?

Debbie McCune Davis:
I don't think there is, and I'll tell you why. We've looked at what happened in North Carolina, and what's happened in other states. 12 other states have outlawed this industry in the last few years. Washington, D.C., as well, the District of Columbia. The bottom line is in those communities they've looked at what happens, and the lenders that are there doing business under the interest rate cap are the ones that begin to provide the services to these folks. We believe this is really much better for the community.

Stan Barnes:
Ted, a working paper done by the Federal Reserve Bank of New York, a researcher for the Federal Reserve Bank of New York, found that when payday has existed in a state and is removed from the marketplace as a credit option for those who choose it, that families are hurt. Bounced check fees go up, bankruptcies go up. It's not the industry study, it's the Federal Reserve Bank of New York's research study. I believe what Debbie's saying is inaccurate. There is a place for short-term high-interest loans. They're not interest at all, they're fee loans. There is a place in the marketplace. What voters are going to see in November is that very choice, eliminate the entire industry or reform the industry. That's what's coming in November. I think most people will choose the reasonable effort.

Ted Simons:
Why the reform now? Payday loan industry has been under the microscope and the topic of conversation for quite a while. Why now?

Stan Barnes:
Not only is it under attack from opponents who want to end it immediately and make it a felony, because in state law is a sunset provision. That sunset is coming in June of 2010. The legislature so far refuses to make these reforms to let the industry preserve the choice going forward. So the industry feels like the reforms need to be done now in context with keeping this option open to consumers.

Debbie McCune Davis:
It's all about self-interest on the part of the industry. They can't get the sunset provision extended at the legislature, so they're going to go to the voters and try to convince the voters that this industry should write its own regulations and be able to operate in perpetuity in Arizona. The real challenge here for us is to help the public understand that if they do that, we're under the voter protection act. The legislature won't even be able to go in and correct anything that's in this initiative. There's a lot at stake here, and I don't think we like the idea of the fox guarding the henhouse. This is a classic case of that. Let me go one step further and tell you that the study, the Federal Reserve study that Stan cites, looked at more states than just North Carolina, which is the state that did do the analytical work on what happened in their community when payday lenders went away. We know there are legitimate lenders in the community that will step up and provide these kinds of loans to the community.

Stan Barnes:
It won't be the fox guarding the henhouse when the voters of Arizona choose reform or elimination. I smile when Debbie talks about the rollovers and how that's the big problem. We tried that reform at the legislature and opponents including Senator McCune Davis opposed them. The very arguments against the industry used are answered in the initiative with the choice preserved for consumers. Yet those same opponents still oppose. I don't know why. Are the reforms a problem or is it just the fact that it's an initiative that, once it's there, it's there?

Debbie McCune Davis:
The true reform is to take away their authority to do business, and bring it back under the Arizona Consumer Loan Act. The protections for consumers are there, the 36\% cap is there. And that's where we need to end this discussion, is we don't need payday lenders in Arizona. Other states have demonstrated it, the marketplaces are fine without the predatory lenders. I think that's where the Arizona voters will end up.

Stan Barnes:
When your utilities are about to be shut off and it's going to cost you $100, it might cost you $40 to turn it back on, where's the dignity in that? And the cost of that versus going to a local payday store where it's simple and convenient, it makes sense. That's why there are so many of them because they make sense.

Ted Simons:
And we'll stop it right there. Thank you so much both for joining us on "Horizon."

Stan Barnes:
Thanks, Ted.

The End of the World as We Know It

  |   Video
  • Last week University of Arizona Professor Guy McPherson wrote a provocative article in The Arizona Republic predicting the end of the world because of peak oil. McPherson joins us to discuss his theory.
Guests:
  • Guy McPherson - University of Arizona Professor


View Transcript
Ted Simons:
On Sunday, April 6th, an Op-Ed piece appeared in the "Viewpoint" section of the Arizona Republic, entitled "The End of The World as We Know It". It was written by Guy R. McPherson, a professor of natural resources and ecology and evolutionary biology at the University of Arizona. Starting with a concept of peak oil, McPherson did nothing less than predict the end of the world. I spoke with Guy McPherson last week.

Ted Simons:
Peak oil spells the end of civilization. Provocative, you really think so?

Guy McPherson:
Absolutely.

Ted Simons:
Talk to me about it.

Guy McPherson:
Well, our entire way of life in this country is built on ready supplies of inexpensive oil. And we know that oil supplies follow a bell-shaped curve. This was said by M. King Hubbard in 1956, the year he predicted the United States would reach its peak in 1970, and it did. We've passed the world oil peak, that halfway point of the production, about three years ago. And it looks as if we're going to fall off the oil supply cliff later this year, going from 74.3 million barrels a day at peak to 73.3 million per day all of last year on average, to somewhere around 70 or fewer barrels per day this year. It only gets worse from there in terms of the production of oil. And we lose probably on the order of 6\% or so a year. That's a significant problem given that demand is screaming up, and supply is falling down. So the disparity between those suggest that we'll hit $400 oil within the next decade or so, and we won't be refining $400 oil to put into gas tanks or turn it into diesel. Therefore we won't be able to use to it supply food to the grocery store or deliver water through our taps. That's the end of civilization.

Ted Simons:
Okay. But you mentioned production peaked. What about reserves?

Guy McPherson:
Reserves are -- well, there are stated reserves and actual reserves, and there is discovery. Discovery peaked in 1964 in the world. We haven't found significant sources of new oil for a very long time. Stated reserves are questionable because there are political reasons to increase the reserves in OPEC countries, for example. They get a portion of the income based on their stated reserves. So while they've been pumping like crazy for the last 15 years, no reserves have declined in any country. That sounds a little dubious to me. And then there are actual reserves which are very, very difficult to get a handle on. But we know that the model suggests when we peak, in terms of production. And countries are producing flat out at $112 oil now. Countries are producing oil as quickly as they can.

Ted Simons:
And you're right that in 2015 the depression will seem like the good old days. Most experts predict complete collapse followed by reckless anarchy. Does this only look at one result, without maybe some huge innovation, which between now and reckless anarchy, whatever it may be, something might give and develop?

Guy McPherson:
Well, sure. And my hope is that people will behave, right? So the existence of Buddhist monks says that we can power down with the tranquility of Buddhist monks. The country suggests otherwise. If you look at Katrina, which everybody recognized as a temporary inconvenience, look at how people behaved in that situation. It makes me wonder how people behave when the power goes out and the supply is disrupted at the gas tank, when the water's not coming through the taps. I think anarchy is the best we can hope for. It's a form of government, and chaos is probably a more likely outcome. Can we innovate out of this? I don't see any way. Can we organize out of this? I don't see any way. And furthermore, I don't see any leadership.

Ted Simons:
With so little offered, it's really hellish times in the future. I can see where critics are saying this is a series of scare tactics, pushing a political agenda. There isn't even an end to the tunnel. How do you respond?

Guy McPherson:
Well, I have no political agenda. It certainly doesn't serve my so-called career, or my own economic situation to talk about -- to know about what's coming. In many ways I wish I didn't know what was coming.

Ted Simons:
I can see where some would say, I think this guy really wants to see economic and cultural collapse. He's almost -- the way you put things, the end of this and the nature of that, I'm not hearing fear, I'm not hearing alarm, I'm hearing almost a matter of fact. You don't want to see this, do you?

Guy McPherson:
From a personal perspective, it's disastrous for me, just as it is for most living Americans. But let's take a broader view. Let's be concerned for example about other species and cultures or even about our own species. I think if humans exist beyond the end of the next century or two, it will be only because we didn't fry the planet beyond the point of habitability, and if we stop burning fossil fuels relatively cold turkey. The climate change assessment suggests the business as usual projection will get us temperature increases by the end of this century, three degrees. That's dinosaur days, no planetary ice. If we're going to prevent that, it'll be only because we stopped burning fossil fuels. On the one hand, while it will completely destroy my 401(k) and basically my way of life, on the other hand I think the only way for humans to exist beyond another generation or five, is if we stop burning fossil fuels right away.

Ted Simons:
Thank you so much for joining us, Mr. McPherson.

Guy McPherson:
Thank you, I appreciate the opportunity.

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