Carolina Journal Weekly Report

January 28, 2002

In this issue

Feature 1 - Golden LEAF Horses Around

Ahead of the Curve

Feature 2 - Terrorism on Local Front

Capital Quotes

Feature 3 - Frist Speaks at Wingate

Coming Up

On the Cutting Edge

Golden LEAF Horses Around

Tobacco settlement funds to pay for equestrian park

The Golden LEAF Foundation, the nonprofit organization given control by the General Assembly of over half of North Carolina’s $4.6 billion tobacco settlement money, is using some horse sense to distribute $200,000 worth of economic development. The foundation’s mission “is to support organizations that promote the social welfare of North Carolina’s citizens…to lessen the economic impact of changes in our tobacco economy.”

Originally seeking $300,000 from Golden LEAF to fund the construction of one of its horse barns, the Carolina Horse Park Foundation in Southern Pines instead settled for the lesser amount to offset this year’s operating expenses. Golden LEAF granted the funds, one of 60 awards totaling $8.9 million, late last year.

When originally established in 1998, the horse park was called “Friends of the Foundation” and its goals were primarily of a conservationist nature, wanting to “preserv[e] environmentally significant land near or adjacent to natural areas in Southern Pines.” During its first year of existence the foundation changed its name to “Sandhills Equestrian Conservancy,” but its first tax return still stated its primary exempt purpose as “preserving environmentally significant land…” Subsequent tax returns for 1999 and 2000 expanded the conservancy’s purpose to include “promoting…equestrian competition.” On Aug. 1, the conservancy’s name was changed to the “Carolina Horse Park Foundation.”

In its initial grant application to Golden LEAF on July 10, the horse park requested “up to $300,000 for one of two barns.” The project objectives were to build permanent stables for horses. The horse park wrote, “It is our vision to establish a premier horse facility that offers a competition venue to those equestrian disciplines needing large acreage on which to compete…” A seeming shift in priorities is reflected in that a potential grant from Golden LEAF would “cause a dramatic increase in tourism to the area.” The park states that its goal is to increase economic activity. Such an initiative would seem to conflict with the park’s original goal to limit developments and preserve “environmentally significant land.”

So far, the park has purchased 250 acres of land, and constructed a seven-eighths mile steeplechase track, as well as cross-country courses, at a cost of about $1 million. Funding has come from private donations, sponsors, bank mortgages, and a line of credit. The park received a government grant in 2000 for $25,000, and at least $3,500 in 2001 from the state tourism office. Its Golden LEAF application says that its “project is well-started and funded to date by private and corporate entities…” It is unknown whether the park is building the barns this year.

Ahead of the Curve

The Wilmington Star devoted an entire article Jan. 24 to the economic analysis of UNC-Wilmington professors Claude Farrell and William Hall, who believe the [Tri-county area of Wilmington, NC] “will experience a 4.5 percent increase to $7.1 billion in economic activity in 2002.” However, the article also mentions the two economists’ prescience last year in forecasting the economy. Star writer Bonnie Eksten reported that “the area had a 3 percent decline in 2001. The two had predicted 6 percent growth for 2001.” The story said Farrell and Hall expected a similar recovery in the national economy for 2002.

Rep. Fern Shubert, R-Union, is having a dill drafted entitled "The Identity Security Act of 2002." It would require that Social Security numbers be verified through a computer database before driver's licenses could be issued. Individuals with visas would get licenses valid for the length of their visas, and penalties for using false information to obtain a license would be strengthened.

The Charlotte Observer reported Jan. 24 that government watchdogs wonder why Mecklenburg County commissioners went to a Pinehurst golf club for their annual retreat, when budget cuts and tax increases have been the course of the day. Similarly, they questioned why the Charlotte City Council needed to stay in an expensive hotel for the same purposes. The story said commissioners argued that the trip hardly dents the budget.

Terrorism on Local Front

Rep. Jones, City officials outline preparedness

How should government react in the aftermath of Sept. 11? That was the topic of the Center for Local Innovation’s luncheon address by U.S. Rep. Walter Jones and the afternoon panel of local mayors and law enforcement officers entitled “Homeland Security: How Local Governments Should Respond to Terrorist Threats.”

Jones kicked off consideration of the topic with an address entitled “Protecting Our National Security: How the Federal-Local Government Relationship Has Changed Since September 11.” Jones said that since 1995 many members of Congress have believed the U.S. needed to rebuild and retool the military. The intelligence community and members of Congress who sit on intelligence committees have been privy to information about the threats posed by various rogue states, one of which happens to be China.

However, since Sept. 11 “the stakes have changed and they are higher than ever before,” Jones said. Local governments will have to work with the federal government (and vise-versa) to strengthen homeland security.

Jones cautioned that “this is going to be a long campaign…but if we don’t fight it now, I fear that our children will one day go to the mall and see armed patrols.” Still, to accomplish the goal of security, “Congress is going to have to reconsider its priorities,” Jones said. The nation “can’t continue to spend and ask the taxpayers for more.” Part of that reconsideration must be in the form of how much the government spends on social programs. Jones said that the federal government spends about 50 cents on the dollar. Therefore the government needs to be more efficient in those areas. “The Constitution,” Jones said, “requires we have a strong military and we have to make that our priority.” Ultimately, Jones said that “as long as we remember that God is the strength and the power [of our nation] then we will remain strong.”

The moderator, UNC-Charlotte Professor David Hartgen, opened the afternoon panel by saying terrorism is here to stay: “Not every event is terrorist-related and not all events are preventable. We may strive for zero and want zero, but it is unlikely we will achieve zero.”

Raleigh Police Chief Jane Perlov said local law enforcement officers must prepare themselves. “When the time to respond has arrived, the time to prepare is gone,” Perlov said. This might seem difficult given that many governmental agencies protect their turf and “terrorism knows no boundaries.” But Perlov said she believed that federal, state, and local agencies can work together to provide for the common defense.

Greensboro Mayor Keith Holliday pointed to New York Mayor Rudy Guiliani to demonstrate how mayors should deal with emergencies: “He let the experts take over. I can no more take charge of an emergency situation than any of us here,” Holliday said.

Charlotte Mayor Pat McCrory gave his account of Sept. 11 by saying Charlotte evacuated downtown buildings after officials heard about the attacks. Four thousand people were stranded at the airport, and the city helped find them a place to stay, McCrory said. Duke Power called within 30 minutes of the attacks to assure the mayor that extra security was present at the two nuclear power plants near Charlotte.

In Guiliani-like fashion, McCrory said that he left most of the logistics up to the experts: “I got out of the way and let the law enforcement officials take care of business.”

Capital Quotes

“Our success rate is unprecedented in terms of government litigation and environmental studies. We've never had an environmental statement completely overturned.”

— FAA spokeswoman Kathleen Bergen, commenting to the Winston-Salem Journal on pending legal action challenging the agency’s environmental impact study of the proposed expansion of Piedmont Triad International Airport. The Alliance for Legal Action, an umbrella group for opponents to the expansion, is appealing the study before the U.S. 4th Circuit Court of Appeals in Richmond. The $500 million expansion includes a new runway and other facilities needed to support Federal Express’ proposed hub.

“I’m more interested in quality than quantity.”

— Ronald E. Ferrell, manager of the Wetlands Restoration Program, explaining to The News & Observer of Raleigh one of the reasons for the program’s lack of apparent progress. Since its inception in 1997, the office has collected $58 million from the N.C. Department of Transportation and developers to replace twofold wetlands lost to development and road building. To date, however, the program has restored only 10 acres of land and less than five miles of stream.

“The baby has been born. Now we’ve got to raise it.”

— Sandy Carmany, Greensboro councilwoman and chairwoman of the Piedmont Authority for Regional Transportation, discussing with the Greensboro News & Record the status of the mass transit agency. The Guilford County Commission has voted to impose a 5 percent tax on car rentals beginning to help fund the authority, which will link existing transit systems in Greensboro, High Point, and Winston-Salem. The tax, however, will need to be reapproved by commissioners after a year, meaning that PART essentially has a year to prove itself.

Frist Speaks at Wingate

Tennessee senator, doctor discusses bioterrorism

Recalling much of his recent trip to Uganda, Sen. Bill Frist, R-Tenn., lectured at Wingate University on Jan. 21 as part of the Jesse Helms Center Foundation’s lecture series.

Frist, the first practicing physician elected to the Senate since 1928, discussed issues relating to bioterrorism, such as how prepared we are as a country to respond to such attacks.

“The reality of bioterrorism is here,” he said.

On his trip, Frist witnessed firsthand the devastation HIV has caused. “There is no cure for this little virus that wasn’t around 30 years ago,” he noted. Drawing a correlation between the AIDS epidemic and possible bioterrorist attacks, Frist reminded the audience that “germs know no boundaries.”

While in Uganda Frist performed a heart-lung transplant on an 18-month-old child. He was assisted by another surgeon — who happened to be the country’s vice president.

Frist made clear during his lecture that he was not in Uganda as a senator, but as a member of Samaritan’s Purse, a nondenominational evangelical Christian organization dedicated to aiding the needy all over the world.

“Biological terrorism personalizes terror in every community in the country,” Frist said, referring specifically to the anthrax panic in October. He said that no matter where people were in the country, they became more aware of the packages and letters they received.

Frist tried to avoid sounding pessimistic in his view of the threat of bioterrorism. He said the involvement of various units of government encouraged him, and he acknowledged the City of Charlotte for providing a comprehensive approach to bioterrorism preparation.

Frist maintained the idea that overcoming challenges is what makes America great. By confronting the issue head-on, he said, we can capture what America is all about. With words of encouragement, he said, “We can meet those challenges.”

Frist graduated from Princeton University in 1974. Later, he went to Harvard Medical School. In 1985 he joined the faculty of Vanderbilt University Medical Center, where he developed the internationally recognized Vanderbilt Transplant Center.

State Rep. Fern Shubert, R-Union, attended the event and was pleased with Frist’s message. “The gentleman himself is very impressive,” she said, adding that the state is taking part in many of the same precautionary measures against bioterrorism as the federal government.

The Jesse Helms Center Foundation’s lecture, a biannual event that in that past has sponsored speakers such as Margaret Thatcher and the Dalai Lama, began with an introduction from Sen. Jesse Helms himself: “There are two types of people: talkers and doers,” Helms said. “Where Mr. Frist and I work, they’re mostly talkers.”

Prior to the lecture, Helms and Frist met with a small group of college students. When asked how he felt about Sen. John Edwards’ potential presidential candidacy, Helms asked, “Who?” The student, thinking the senator had not heard him, repeated his question. Again, Helms said, “Who?”— this time with an obvious smile.

Coming Up

Syndicated columnist and CNN personality Robert Novak will speak at a John Locke Foundation Headliner luncheon at noon Feb. 11 at the Brownstone Hotel in Raleigh.

Novak writes the political column “Inside Report” three times a week and appears in more than 300 newspapers nationwide. He is perhaps most well-known for cohosting the programs “Crossfire,” “Capital Gang,” and “Novak, Hunt & Shields,” on CNN.

“Inside Report” is noted for its rapidly moving dateline and its hard-hitting analysis of national and international developments.

Novak has also coauthored the following books: Lyndon B. Johnson: The Exercise of Power; Nixon in the White House: The Frustration of Power, a comprehensive study of the first 2 1/2 years of the Nixon administration; and The Reagan Revolution, an analysis of Ronald Reagan’s blueprint to transform the U.S. government.

Contact Kory Swanson at (919) 828-3876 or [email protected] for more information, or to register for either event.

On the Cutting Edge

Antarctica Cools

Parts of Antarctica have cooled sharply in recent years, according to a study published online by Nature, a British weekly science journal. The research was led by Peter Doran of the Department of Earth and Environmental Sciences at the University of Illinois at Chicago.

The finding punches holes in the doomsday prediction that the frozen continent faces imminent meltdown from global warming. It also counters fears that a breakup of the continent’s ice cap will result in sea levels rising dramatically around the globe.

Measurements taken by weather stations in the McMurdo Dry Valleys, the largest ice-free area in Antarctica, show that on average this region cooled by 0.125 Fahrenheit a year between 1986 and 2000. Scientists found the cooling was especially strong during the autumn and summer seasons, and they theorize it is due to a complex interplay between ocean currents.

The distorted view that the continent is warming might be traced to the fact that most weather monitoring stations are based in the Antarctic Peninsula, the tongue of land projecting northward from the continent toward South America, an area which is warming dramatically, Doran said. He said the Antarctic findings don’t conflict with other theories of global warming, since he believes the other continents are warming.

Reported in the Washington Times, Jan. 14, 2002.

Airline Loan Guarantees

Of the nation’s 10 largest airlines, only America West has applied for its share of the $10 billion in loan guarantees Congress set aside for the industry last fall as part of a $15 billion bailout package. Following the attacks of Sept. 11 and the subsequent 50-hour grounding of the airlines by the government, airline executives paraded the specter of the industry’s possible bankruptcy unless a bailout was forthcoming.

So why have airlines largely avoided the loan guarantees? From the very beginning, the airline bailout consisted of two separate measures: a cash payout ostensibly to compensate the airlines for the grounding, and a credit line designed to keep hard-hit airlines solvent in the face of reduced ridership. In a compromise between the airlines and the government, loan guarantees were set at $10 billion, as well as a payout of $5 billion in cash, but no tax breaks, which the industry had lobbied for.

Taking the cash would obligate the airlines to almost nothing but the loan guarantees carried a great many strings, which is why the airlines have been turning them down.

Another reason the airlines could pass up the loan guarantees is that most of the majors had substantial lines of private credit — in the case of some companies, more than $1 billion — they could call upon without opening themselves up to government dictates.

Experts say that most carriers were never interested in a traditional bailout. Just about the only reason they had for going along with the highly conditional loan guarantees was their public relations value. The guarantees were a fig leaf for the $5 billion federal giveaway.

Reported in the Washington Post, 1-13-2002.

Money Defined

It is frequently alleged that "tax havens," small, low-tax countries with stricter financial privacy, are money-laundering centers for tax evaders, organized crime and terrorists. According to a study from the Center for Freedom and Prosperity Foundation, however, dirty money is more likely to be laundered in high-tax countries because that is where the illegal activity is most likely to occur.

The U.S. State Department, Central Intelligence Agency, and the International Organization for Economic Cooperation and Developments Financial Action Task Force each independently assess whether countries are money laundering centers and/or have financial systems that make them vulnerable to dirty money. All of the agencies have come to similar conclusions.

According to the CIA, only four out of the 41 OECD-identified tax havens are money-laundering centers, whereas 11 nontax havens are. The State Department estimates that 14 tax havens are a primary concern for money laundering vulnerability, compared to 38 nonhaven jurisdictions.

The OECD Task Force lists eight tax havens as “noncooperative” in antimoney laundering efforts, fewer than the 11 noncooperative nonhavens, and not including the four OECD members that its recent self- assessment gave failing grades.

According to the International Monetary Fund, the biggest money laundering center in the world is the United States, where about $300 billion of an estimated $600 billion globally is laundered each year.

Tax havens attract wealth, but most of the money is institutional investment. Criminals, on the other hand, go where the money is, and launder it quickly. The U.S. Treasury Department estimates that 99.9 percent of the criminal money in the United States is laundered successfully.

Reported by the Center for Freedom and Prosperity Foundation, 1-15-2002.



Material published here may be reprinted provided the
Locke Foundation receives prior notice and appropriate credit is given.


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