Flying on empty

Aviation in America

May 19th 2005
From The Economist print edition

America's airlines have managed to keep flying with the help of some unusual friends. But for how much longer?

EVERYONE else in aviation makes money while airlines just do the flying. So says Giovanni Bisignani, boss of the International Air Transport Association. His point is that airports, component-makers, aircraft-makers, banks and so on make a nice living, while most airlines chronically fail to turn a steady profit. Nowhere is this more true than in America, roughly half of the world's aviation market.

America's six big traditional carriers have lost a total of $27 billion since 2000, yet they are all still flying. One of the top six, US Airways, is enjoying Chapter 11 bankruptcy protection (which keeps creditors at bay while the business goes on) for the second time in recent years: its latest wheeze is to merge with America West, another troubled airline. United Airlines, the country's second largest airline, has been stuck, battling the unions and creditors, in Chapter 11 for 30 months.

The terrorist attacks of September 11th 2001 coincided, roughly, with the collapse of profits from business travel, which had been at inflated fares during the dotcom bubble. It also coincided with strong growth by low-cost carriers such as Southwest and JetBlue. In the previous industry downturn in 1990, low-cost carriers had only a 7% market share; this time they were approaching one-third of the market, and had wrested pricing power from the traditional carriers on all but a few routes.

So how have America's traditional carriers (the big six with their hub-and-spoke networks and a legacy of unionisation and high labour costs) managed to keep aloft?

A federal hand-out of $2.5 billion in compensation for shutting airspace for four days after September 11th stopped them all going into Chapter 11 then. That might have been a better way to go. The government could have stepped in later to allow only those airlines with credible business plans to fly again.

Lessor of two evils?

Arguably, however, the most significant change in the industry since the early 1990s has been the growing role of aircraft lessors. They are led by General Electric's Commercial Aviation Services (known as GECAS) and International Lease Finance Corporation (ILFC), owned by AIG, the biggest American insurer. The GE business offers a panoply of services to airlines: not only is it the leading maker of jet engines, but also it offers aircraft finance, aircraft leases, servicing and even pilot training. “No organisation envelops airlines quite like GE,” wrote Robert Ashcroft, an analyst at UBS, in a recent research note.

Moreover, GE is the leading lessor within America. Over half of its roughly 1,350 planes are with American carriers. In contrast, ILFC leases nearly 90% of its planes to non-American carriers. At the end of 2004, GE had 150 aircraft, financed to a value of $2.6 billion, with US Airways alone.

This explains why GE has been so supportive since September 11th of stricken airlines. A nightmare for GE would be another carrier flying into Chapter 11, or one of those already there being liquidated, as either would release a flight of planes on to the market, thereby further depressing second-hand values and leasing rates.

Many of GE's leases to American carriers are so-called leveraged leases. These let the owner of an aircraft (ie, GE) defer its tax bills by writing off the cost against tax over seven years. Add in the interest on money borrowed to finance the plane and the effect is to reduce the lessor's tax payments in the early years of the lease.

Companies from beyond the usual bounds of aviation have become involved in this scheme over the years, to defer tax. A firm could, through a special-purpose entity (SPE), stump up, say, only 20% of the cost of an aircraft and yet claim 100% in tax relief—all without putting the relevant debt on to its balance sheet. When an airline goes bust, however, the deferred tax could become payable sooner than expected, and the money in the SPE could be at risk. Firms such as EDS and Walt Disney that, surprisingly, are involved in financing aircraft leases, took write-downs when US Airways and United went into Chapter 11. Whirlpool, a maker of white goods, faced accelerated tax payments. For GE, another airline bankruptcy could be a double whammy: lost or lower lease revenues and large tax payments.

A glance at GE's exposure to American carriers explains its willingness to intervene to help airlines stave off Chapter 11 and liquidation. GE was quick to help United with short-term loans when it entered Chapter 11. It has also led a syndicate that lent up to $630m on a secured basis to Delta. It is to take 24 regional jets back from Independence Air and defer the troubled fledgling carrier's lease or loan payments on other aircraft. It has agreed to contribute $140m to US Airways through loans and deferrals on lease or loan payments, and to take back 25 Boeing and Airbus planes. Counting only US Airways, ATA (a smaller carrier in Chapter 11), Aloha Airlines and United, GE's exposure is $5.4 billion. Given that GE has a further 255 aircraft placed with Continental Airlines, Northwest Airlines and America West, it could soon have to dip its hand into its deep pockets again to fend off the effects of leases going bad as another of these operating airlines goes bust. As Eric Jones of GECAS says: “We're in the business of helping our customers if we can; we do it if it makes sense for us.”

GE does hold some advantages, even as oil at around $50 a barrel threatens to push the rest of the American airline industry over the cliff in the second half of this year. A special provision of Chapter 11 gives aircraft lessors a privileged position over other creditors: they can re-possess aircraft if an airline cannot pay its outstanding lease charges within 60 days.

With air travel and airline profits recovering outside America, GE may be able to ease its troubles by placing some of its now unwanted Boeing 737s and Airbus A320s elsewhere, particularly Asia. In the first quarter of this year, GE re-deployed 18 Boeing planes in China, India and Brazil that ATA returned when it went bust. But this was a small deal. The collapse of one of the big American carriers into Chapter 11 would have far more troubling consequences for lessors.

GE is not alone in seeking to preserve the status quo by keeping airlines on life support, whether in or outside Chapter 11. A $250m loan from Airbus may have sealed the merger of US Airways and America West. Banks with credit cards tied to air miles also have a vested interest, as they do not want their customers to lose their miles. One industry estimate links 40% of Citigroup's credit-card revenues just to American Airlines' frequent-flyer programme. Tellingly, American Express has paid a $500m advance to Delta. Even so, banks are tempted to hold back some payments due to airlines, to cover the credit risk of paid-for flights that never take off. Delta and United face the prospect of tougher terms in August and January respectively, when their credit-card contracts with the banks are up for renewal.

Beyond the support of interested and profitable parts of the aviation food-chain, and the difficulty of revising labour contracts and pension promises, there is another huge obstacle to a general shake-out that would slash capacity. For consolidation to occur in any industry, at a national or global level, there must usually be at least one strong firm able to pick up the pieces. For instance, in airlines in the early 1990s, American Airlines and United picked up the lucrative international routes of distressed PanAm and TWA.

No big airline is currently strong enough to want to pick up the scraps of bust carriers. And the industry's outlook is too bleak to attract outside investors to take on the challenge—even cash-rich private-equity investors are steering clear. The healthy low-cost airlines have no interest in assuming the legacy business model of the hub-and-spoke carriers.

Hence the miserable stalemate in which lessors and banks prop up ailing carriers in or near Chapter 11, while armies of lawyers and consultants earn huge fees working on rescue plans that never succeed. Creative destruction may be essential to healthy capitalism, but in America's air travel business the wrecker's ball has not even started to swing, yet.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.

Caveat vendor

Morgan Stanley

May 19th 2005 NEW YORK
From The Economist print edition

A Florida court wallops one of Wall Street's top investment banks

COULD the headlines get any worse for Morgan Stanley? Already facing an attempt by dissident former managers to unseat its chief executive, on May 16th the investment bank was ordered by a Florida court to pay $604m for defrauding Ronald Perelman, one of America's smartest and richest investors. Mr Perelman contended that Morgan Stanley had misled him in 1998 when he agreed to accept shares in its client, a second-rate appliance manufacturer named Sunbeam, in exchange for his controlling interest in Coleman, a supplier of camping equipment.
And yes, things could get worse. On May 18th, after no more than a brief deliberation, the jury decided to award Mr Perelman another $850m, this time in punitive damages.

Morgan Stanley says that it is planning to appeal and that it was “not permitted to defend itself on the merits.” Quite so. In a pre-trial ruling on March 3rd, the judge, Elizabeth Maass (sitting in the Florida district where Sunbeam had been based), had instructed the jury that the bank had conspired with Sunbeam to defraud Mr Perelman; the only questions were the extent to which he had relied on the misleading information and the size of the resulting loss. That left Morgan Stanley unable to argue that it was not a party to fraud but itself a victim of it: witness its own $300m loss on the deal.

The jury was thus spared one of the sorriest business stories of the past decade. Sunbeam had long been a disaster when it decided in 1996 to bring in the executive hero of the moment, “Chainsaw Al” Dunlap, who had managed profitably to gut and sell Scott Paper, a troubled papermaker, before celebrating his methods in a self-congratulatory book, “Mean Business”. His tenure at Sunbeam resembled a caricature of capitalism. It began with lots of firings and an overstatement of losses. Reserves were built up and then released, augmented by fraudulent sales; that created the illusion of a fast turnaround and boosted the share price before, inevitably, the charade became apparent. In 2002, Mr Dunlap settled charges with the Securities and Exchange Commission by paying a fine and agreeing that he would never again be an officer or director of a public company.

Mr Dunlap's fast work at Scott endeared him to few employees, but made him sought after by bankers. Morgan Stanley was just one of many firms wanting his business. In Mr Perelman, Morgan Stanley found a buyer who seemed well equipped to cope with the Chainsaw Als of this world, having acquired an intimate familiarity with the challenges of managing suspect firms. He still controls Revlon, an ever-struggling cosmetics company, and had a controversial stint atop Marvel Entertainment, a publisher of comic books, that earned him a fortune even as it left the company bankrupt. Earlier in the 1990s, Mr Perelman had benefited hugely from the government-sponsored bail-out of the savings-and-loan industry.

Further, Mr Perelman, like any other billionaire, could afford the finest financial and legal advice that money can buy. And, if that were not enough, Coleman had overlapping distributors with Sunbeam. He was in an excellent position to ignore whatever blather Morgan Stanley had to say in favour of his own investigation into Sunbeam's recovery.

Yet none of this was ever brought before the jury, because of something that turned out to be critical to Morgan Stanley's defence. It had consistently failed to turn over internal e-mails. As the bank had done in other investigations, it blamed the omissions on computer errors and the like. This time, however, in Mr Perelman it faced an adversary who was implacable, well represented and determined to extract more than a token settlement; past opponents, mainly regulators, have been more easily satisfied.

Worse still for the bank, it faced a judge who found its delays and evasive answers to requests intolerable. “Many of these failings were done knowingly, deliberately and in bad faith,” concluded Judge Maass, in her critical pre-trial ruling. “A reasonable juror could conclude that evidence of Morgan Stanley & Co's misconduct demonstrates its consciousness of guilt.”

That ruling, and the thought that lots of embarrassing dotcom-era e-mails might come to light, will warm the heart of many a plaintiff lawyer. And an odd twist to the Sunbeam case is worth a moment's meditation—not for Morgan Stanley specifically, but for the whole financial industry. According to Mr Perelman's allegations, the company's problems came to light only because of the demands of its auditor: Arthur Andersen, an accounting firm once renowned for its probity. How easily can reputations crumble to dust.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.

When 'I Robot' becomes 'We Robot'

from the May 19, 2005 edition - http://www.csmonitor.com/2005/0519/p14s02-stct.html

By Gregory M. Lamb Staff writer of The Christian Science Monitor

It sounds like classic sci-fi: Robots, linked by a common network, roam the land. When one unit discovers something, they all know it instantly. They use artificial intelligence to carry out their mission.

Soon, such marching orders will be real, carried out by robot groups known as "swarms" or "hives." For example:

• Last month, South Korea's Defense Ministry announced that it was planning to spend up to $1.9 billion to deploy robots along its border with North Korea. The robots would be used mainly for surveillance, although some could be armed. The effort might allow South Korea to remove some of its troops from along the 150-mile-long demilitarized zone (DMZ), one of the most heavily guarded borders in the world, a defense ministry representative told the Associated Press.

• iRobot, a Burlington, Mass., company that makes military robots along with its popular domestic robot, the Roomba vacuum cleaner, operates perhaps the largest robot swarm in the world. About 100 experimental units operate as a team and have taught at least one important lesson: Real-life robots need to be reminded to recharge themselves. That's led to just such a feature on the Roomba, which now returns to its charging base when its battery fades.

• The United States Army is developing a Future Combat System (FCS) that includes a close network of troops and ground and aerial unmanned robots. The robots would communicate with one another and coordinate their activities based on the mission assigned to them.

"We're very interested" in hive or "swarm" technology, said Dennis Muilenburg, FCS program manager at Boeing, which is being paid $21 billion by the Army to oversee hundreds of contractors working on the FCS program.

The FCS family of ground and aerial robots now under development would include a 25-pound "flying fan" that could be carried in a soldier's backpack, Mr. Muilenburg explained at a robotics conference in Cambridge, Mass., last week. When launched, it would survey the battlefield by hovering overhead or perching on a rooftop. A combat unit of the near future, he said, might consist of 3,000 soldiers, 900 vehicles, and "hundreds of robots" - some of them armed - all closely networked.

The US military will deploy networked robots "within five years," predicts Helen Greiner, cofounder and chairman of iRobot.

Frontline Robotics, in Ottawa, is working with a South Korean firm, DoDAAM Systems Ltd., in a bid to supply robots for the DMZ defense project. The Canadian company plans to offer a line of security robots that possess a significant level of individual autonomy and "hive" intelligence, says Richard Lepack, president and chief executive officer of Frontline, which merged last week with White Box Robotics in Pittsburgh.

In a test last month, two of the company's robots were able to decide for themselves which should enter a narrow passageway first. That's something that may be easy for people, he says, but has been hard for robots to master.

Frontline makes a robotic vehicle that looks like a small Jeep and others that could be cousins of R2D2, one of the robots in the "Star Wars" movies. A proprietary Robot Control System on each unit employs mathematical formulas, or algorithms, that give it some basic movements such as following the leader, avoiding obstacles, or wandering in an area.

The robots also can work as teams, with each having a leader. The teams talk among themselves, and the leaders talk with one another. If a leader is disabled, another robot automatically takes over.

"What one robot sees is shared among all the other team members in real time," Mr. Lepack says. So what Robot A senses is immediately known to Robots B, C, D, and so on.Birds and bees, part II

Robotmakers find inspiration for their programs in nature: the behavior of bee, ant, and wasp colonies, as well as of flocks of birds and schools of fish. Ants, for example, communicate by leaving pheromone trails that other ants can follow to food. Ants also work as teams to distribute their workload, such as finding the most efficient paths for foraging or deciding who will haul bits of leaves back to the nest, without needing any directions from a leader.

In simulations on a computer at Frontline, teams of up to 200,000 robots were shown to be able to coordinate their activities smoothly.

But computer simulations can only do so much, says Ms. Greiner of iRobot. Software can't account for the unexpected, she says. "Whatever you don't put in [to the simulation] will come back and bite you."'True swarms'

The development of "true swarms," thousands or tens of thousands of mobile robots working together, is many years off and "depends on some things that haven't been invented yet,"
Greiner says, including miniaturization of components and better power sources and sensors.

Military deployment of networked robots will come first, she says. For example, "searching for mines is inherently a parallel task," since you don't want "to put all your eggs in one basket" if a single robot gets blown up. Swarms will be an effective tool for reconnaissance, too. In the foreseeable future, a soldier might take a handful of tiny robots out of his pocket and send them into a building to check it out, she says.

And in an imaginable future, swarms might do much of the routine housework, Greiner says.
They'd understand that the dusting robots should come out before the vacuuming robots, which should do their job before the mopping robots. The lawn-mowing robots would scurry around before the raking robots cleaned up.

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Not all SUVs guzzle gasoline

from the May 23, 2005 edition - http://www.csmonitor.com/2005/0523/p14s01-wmgn.html

By Clayton Collins

As I leave work for the day and head for an SUV parked in an underground garage, a colleague glances up from her desk and, with a sweet smile, says: "I hope you hit a lot of traffic."

But she's not sarcastically demanding gas-pump justice from a solo commuter driving way too much car. Rather, she knows that when I start the slow roll home, my ride will be golf-cart quiet and (mostly) emissions-free.

The vehicle: a 2005 Ford Escape Hybrid, the gas-electric version of the V6 "cute ute" launched in 2001 and first offered in hybrid form last fall. About $3,500 more than its outwardly identical gasoline counterpart, it's the pioneer in a paradoxical-sounding category: the eco-friendly sport-utility vehicle.

With "clean diesel" vehicles a couple of model years in the future, and hydrogen fuel-cell cars even farther down the road, it's encouraging to see automakers working to deliver a smart interim option for consumers seeking fuel efficiency and ultralow emissions in an SUV.

The Escape Hybrid's 2.3-liter four-cylinder engine is paired with a 70-kilowatt motor that produces the equivalent of about 95 horsepower - enough to move the SUV through city traffic all by itself. The gasoline engine engages in milliseconds when the Escape needs more muscle - accelerating quickly, for example. The electric motor assists then, too.

The hybrid could run about 25 miles on electric power alone if driving conditions were right (and if you didn't need to use the air conditioner). Watching the tachometer register zero revolutions per minute as the SUV noiselessly creeps along in 20 m.p.h. city traffic takes time to accept.
Realizing that you haven't ignited an ounce of gasoline in the 10-minute slog toward a tollbooth can be elating.

Staying light-footed on the accelerator keeps the piston engine from jumping on, and it's hard not to become mildly obsessive about staying in full-electric mode. (Just ignore that V-8 driver on your bumper who's urging you to step on it.)

The Escape Hybrid - suggested retail price between $26,000 and $28,600 - gets close to 40 miles per gallon in stop-and-go driving. It comes in front- or four-wheel drive.

Inside, the Escape has a fairly utilitarian feel compared with some of its plusher cousins in the SUV world. But it seems not to compromise on performance. Acceleration is smooth, the switch to gas power barely noticeable, and it hums along nicely at highway speeds.

Like many of today's cars, the Escape uses a continually variable transmission - essentially an infinite range of "gears" - eliminating the little lurches felt during acceleration in older automatic- transmission cars.

Its 300-volt battery pack - worth lifting the carpet for a peek - is neatly stowed beneath the rear cargo deck at no cost to interior room. The Escape's regenerative braking system and gasoline engine keep the battery pack charged. It is never "plugged in" anywhere.

Space is respectable for a small SUV. With the rear seat down, the Monitor's test car easily swallowed up about 500 pounds of audio equipment, including two 85-pound speakers and a components case nearly five feet long.

Before Escape, the only mainstream vehicles propelled by combination electric-motor and combustion-engine powerplants were quirky cars you can still easily spot in traffic - Toyota's Prius and Honda's Insight. Honda has now added a hybrid Civic and Accord. More hybrid cars are coming soon.

Toyota, a lead developer of hybrid technology - some of which was licensed by Ford - recently introduced hybrid versions of its popular Camry sedan and Lexus RX400 car-based SUV. It also plans to launch a hybrid Toyota Highlander in June. A hybrid Mercury Mariner - basically an Escape with a Mercury badge - is also nearing release.

Ford reportedly sold more than 1,700 Escape Hybrids in April, the strongest month in the car's seven-month history. But some consumers might hold back on Escape and its ilk. For one thing, there is the danger of current hybrid technology becoming outdated, hurting resale value.

And some car shoppers have questions about battery life. Most current hybrid batteries appear fully capable of soldiering on for at least eight to 10 years or 100,000 miles, probably more, before degrading.

After that, replacement could run to a few thousand dollars, roughly equal to the one-time tax credit offered to hybrid buyers. (Of course, buyers have already spent at least that amount to cover the sticker-price difference for their hybrid version.) Reclamation trade-in deals should ease consumers' worries about producing waste.

Keeping it clean is what this stealthy little sport-ute is all about.

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Defining 'Extraordinary'

from the May 25, 2005 edition - http://www.csmonitor.com/2005/0525/p08s01-comv.html

In Senate pact on court nominees, words matter.

The Monitor's View

The selection of the next one or two Supreme Court justices - and how that court's decisions turn - may depend on how a handful of senators define "extraordinary."

That word lies at the heart of the last-minute bipartisan agreement reached Monday by 14 senators intended to preserve the tradition of the filibuster as a blocking tool for a Senate minority.

The agreement holds only through this Congress, or until January 2007. Under it, though, three of President Bush's current nominees will not be filibustered by Democrats, thus allowing their approval by a simple majority vote instead of the potential filibuster hurdle of three-fifths. Mr. Bush's other nominees, however, including possibly at least two for the Supreme Court in the next 20 months, could be filibustered "under extraordinary circumstances."

The problem with "extraordinary" is that it's no longer a very extraordinary word, given all the rhetoric and accusations thrown at the courts themselves, as well as many past Supreme Court nominees and many current Bush lower-court nominees. This agreement could easy fall apart if Republican and Democratic moderates believe the other side is stretching the word's meaning.
The senatorial center cannot hold unless the rhetoric over judges recedes and reason prevails in selecting them.

Finding Aretha-style respect

The rising incivility toward many nominees, as well as the whole judiciary itself, has bred a dangerous disrespect for this independent branch of the federal government - one that's still wrapped in the mystique of black-robed individuals who work in secret chambers, interpreting laws based on constitutional principles, and who serve for life.

Take just these examples of the worrisome McCarthy-like rhetoric:

Pat Robertson, founder of the Christian Coalition, recently criticized the federal courts for eroding American values, saying this is "probably more serious than a few bearded terrorists who fly into buildings." Sen. Edward Kennedy, meanwhile, vowed to resist "any Neanderthal" who is nominated by Bush. The Senate minority leader, Harry Reid, practiced personal destruction by innuendo by making vague reference to "a problem" in the confidential FBI file of Judge Henry Saad, a Bush nominee.

Sen. Charles Schumer, meanwhile, accused Priscilla Owen, a Bush nominee and justice on the Texas Supreme Court, of being "more committed to advancing her own extreme beliefs ... than guaranteeing a fair shake." And finally, House Majority Leader Tom DeLay threatened judges who allowed the death of Terri Schiavo that they will "answer for their behavior." (He later apologized.)

What are the effects of such words? One comes from Joan Lefkow, the federal judge from Chicago whose mother and husband were killed in February by a man whose complaint she had dismissed. She warned the Senate this month that "the fostering of disrespect for judges can only encourage those who are on the edge or on the fringe to exact revenge on a judge who displeases them."

Supremes politicize the court

Epic struggles over Supreme Court nominees are not new. But since 1987, with the vicious attack on the character of Reagan nominee Judge Robert Bork, the knives have been out for almost every nominee, and lately for many to the appeals courts.

Such disrespect creeps even into the Supreme Court itself. Justice Antonin Scalia has accused a majority on the court of relying on "personal views," "feelings," and "self-awarded sovereignty" in cases. He indirectly accused one justice of lacking reason. Justice Stephen Breyer once wrote that a majority in the 2000 case that gave Bush the presidency had committed "a wound that may harm not just the Court, but the nation."

This Senate agreement should serve as a necessary check in the trend toward hostile vetting of nominees. Like the 14 senators who found common ground, the Senate can approve only those nominees who don't cater to the left or right.

Politicizing the courts, either by judges themselves or their critics, only erodes the judiciary's role as an equal branch of government that must balance rule of law against the rights of the individual before laws made by elected politicians in the other two branches.

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High court vacancy?

from the May 25, 2005 edition - http://www.csmonitor.com/2005/0525/p03s02-usju.html

By Peter Grier Staff writer of The Christian Science Monitor

WASHINGTON - The last-minute Senate deal on confirming federal judges may be a historic achievement - but its full implications are unlikely to be apparent for months to come.

That's because the next US Supreme Court confirmation battle will be a true test of the compromise's strengths and flaws, and the intentions of its signatories.

Under the deal, neither Republicans nor Democrats would lose the heaviest weapons they might employ in a Supreme Court struggle. They've just been stashed under the table, for now.

"It defuses the situation temporarily but postpones the inevitable, which will be a big and ugly battle over the Supreme Court," says Ross Baker, a professor of political science at Rutgers University in New Brunswick, N.J.

Of course, in the world of Washington politics, kicking a can down the road often counts as a major achievement.

Politics is such a fluid endeavor that the context for partisan disputes over judicial nominations could be completely different the next time it arises. The fact that a bipartisan group of 14 senators struck a key agreement outside the control of their respective party leaderships might augur some change in the way the chamber works. The tone on Capitol Hill might soften somewhat, at the very least.

Furthermore, there are aspects of the deal that both Republicans and Democrats can define as a victory for their side.

Republicans won the right to unfettered up-or-down votes on three contested US circuit-court nominees: William Pryor for the Atlanta-based 11th US Circuit, Janice Rogers Brown for the District of Columbia Circuit, and Priscilla Owen for the New Orleans-based Fifth Circuit.

All these nominations have been blocked for years by Senate Democrats. Their confirmation could change important aspects of the ideological balance on these important courts. Janice Rogers Brown, for instance, a firm believer in limited government, will go to the circuit that handles most federal agency-related appeals.

Mr. Pryor, who has called into question the continued relevance of the Voting Rights Act, would sit on a circuit with jurisdiction over much of the South, the very region where that law was long controversial.

The Democrats, for their part, can say that they did not promise up-or-down votes on two other blocked nominees, William Myers and Henry Saad. And their ability to filibuster future nominees survives - limited, perhaps, but still extant nonetheless.

The key here is in a two-word phrase: "extraordinary circumstances."

The seven Democratic senators who signed on to the bipartisan deal agreed that they would filibuster future judicial nominations only under "extraordinary circumstances."

But what does this mean, exactly? Sen. John McCain (R) of Arizona, a leading broker of the deal, indicated in a broadcast interview Tuesday that the gang of 14 who produced the deal might now become the arbiters of "extraordinary."

Would future nominees similar in ideological bent to Ms. Owen, say, now automatically pass muster? Would a Supreme Court nomination get closer scrutiny? If one or two members of the new gang of 14 object to the course of a nomination, what happens?

Given the health of Chief Justice William Rehnquist, both parties expect a Supreme Court opening soon, perhaps within weeks.

Senate majority leader Bill Frist of Tennessee has stressed that he is not a signatory to this week's agreement - and he has said that the so-called nuclear option, under which he would attempt to implement a ban on judicial filibusters, remains on the table.

Senator Frist has said he "will monitor this agreement closely."

Some Democratic partisans, for their part, have already begun warning that President Bush needs to desist from what they term confrontational behavior, or the deal could unravel.

"As the country awaits a likely vacancy on the Supreme Court, we hope that the president will take to heart the advice he has been given by these senators: 'to consult with members of the Senate ... prior to submitting a judicial nomination,' " said John Podesta, who served as White House chief of staff under President Clinton and now runs the Center for American Progress, a left-leaning think tank in Washington.

Yet the compromise deal might send something of a mixed message in this regard, notes Professor Baker. Some of the most controversial of Mr. Bush's circuit- court nominees were approved, while less controversial ones aren't promised an up-or-down vote.

"This would certainly embolden the president to appoint people who look like Pryor," says Baker.

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How Senate fracas may shape '08

from the May 25, 2005 edition - http://www.csmonitor.com/2005/0525/p03s01-uspo.html

The filibuster fight may help cast midterm elections and give McCain a boost in the next presidential race.

By Linda Feldmann Staff writer of The Christian Science Monitor

WASHINGTON - By the time the 2008 presidential elections roll around, the 2005 nuclear-tinged battle over judicial nominees may be but a distant memory. But for now, that battle - and the 11th-hour compromise that averted the ultimate showdown - holds implications for the nascent presidential race, particularly on the Republican side.

Among those who appear to be actively considering a run, Sen. John McCain (R) of Arizona emerges a winner, analysts say. Senator McCain played a significant role in crafting the compromise announced Monday evening by a bipartisan group of 14 senators. And he is no stranger to the spotlight - or the public. In the 2000 presidential race, he nearly knocked off heir-apparent George W. Bush for the GOP nomination.

The agreement on judges "certainly burnished his credentials as an independent thinker and someone who's a problem-solver," says John Green, a political scientist at the University of Akron.

McCain's biggest drawback is that his shoot-from-the-hip style makes him unpopular with religious conservatives. But he opposes abortion, and could become palatable to that GOP bloc if he appeared the strongest Republican to face the Democratic nominee, analysts say.

Monday's outcome appears less helpful to the political future of Bill Frist, the Republican leader in the Senate and another possible '08 hopeful. The fact that Senator Frist allowed himself to get backed into a corner, then had to cede leadership to his colleagues in the crafting of a compromise, does not speak to his skills as a leader, analysts say.

"Any outcome would have caused problems for him," says Norman Ornstein, a resident scholar at the American Enterprise Institute. If Frist had gotten what he wanted - a change in Senate rules to ban filibusters of judicial nominees - he would have received a temporary boost from the activist religious conservative wing of the Republican Party. For that constituency, placing conservative judges in the federal judiciary is a top political goal, ultimately in the name of overturning the national right to abortion, and Frist has courted that lobby heavily.

But if Frist had succeeded in banning judicial filibusters, the Democrats would have retaliated, leading to a near-paralysis in the functioning of the Senate. Frist's wider public image could have taken a hit. "The Senate would have been such a mess, which would have raised questions about his stewardship," Mr. Ornstein adds.

The seven Republicans and seven Democrats agreed to vote on some of President Bush's judicial nominees, but held open the right to filibuster other nominees under "extraordinary circumstances."

Another Senate Republican who has been gaining traction of late for '08 is George Allen of Virginia. He took a low-key but strong stand against filibusters of judicial nominees, and has burnished his credentials among religious conservatives and generated buzz.

On the Democratic side, implications are less clear. The most prominent '08 possibilities in the Senate - including Hillary Clinton and John Kerry - stayed on the sidelines during the fracas. "One potential upside [for the Democrats] is it may invigorate the liberal interest groups to get a Democratic president," says Professor Green. "Not that they didn't try hard in '04, but they may redouble their efforts."

The filibuster fallout may affect the '06 midterm elections, too. Given that the so-called "nuclear option" - a move to change Senate rules and ban judicial filibusters - remains a live possibility for the future, the Democrats know it is not sufficient just to have a filibuster-proof Congress, that is, one in which the majority has fewer than the 60 votes needed to end debate. Currently, the Republicans hold 55 of the Senate's 100 seats.

"They know they have to reduce the Republican margins," says Green. "I don't know if the Democrats can retake the Senate in 2006, but they certainly could whittle down the Republican majority."

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From Senate strife, a center takes hold

from the May 25, 2005 edition - http://www.csmonitor.com/2005/0525/p01s02-uspo.html

By Gail Russell Chaddock Staff writer of The Christian Science Monitor

WASHINGTON - After a decade of power shifting steadily to party leaders, a new thing is at work in the US Congress: the reemergence of a center that counts.

Its beginnings are as dramatic as they are fragile. At the 11th hour, a bipartisan coalition - many of whom had never worked together - emerged to change the course of Senate history this week, as they challenged their leaders' decisions to move to a bruising procedural battle over the confirmation of judicial nominees.

On its face, their agreement simply averts a change in Senate rules on debate over nominees. But the deal's impact goes beyond the courts.

Although it can hardly be said that a dozen centrist renegades now rule Capitol HIll, this week may have witnessed the birth of a new Senate, in which rank and file members have rising clout. The dynamic could affect everything from President Bush's agenda to the tenor of America's red-blue political divide. At the very least, it gives new impetus to centrist bids to challenge the White House and party leaders on issues ranging from Social Security and fiscal discipline to revision of federal policy on stem-cell research.

"We're willing to negotiate, to cut deals. That's what we did this week in the Senate," says Sarah Chamberlain Resnick, executive director of the Republican Mainstreet Partnership, a centrist group with 68 members in the Senate and House.

It was a rare Senate moment of comity. For days before the deal, senators had lobbed verbal hand grenades across the aisles. The leaders, backed by powerful outside interest groups, said a showdown was inevitable.

Instead, the center held. The deal, announced late Monday, sparked talk of betrayal from groups who had poured millions into a fight that fizzled. What was not expected was a critical mass of senators willing to commit to an ongoing effort to hold the line for moderation in the judge wars - and, some senators hope, in other fights to come.

"This is one of those rare moments in which some legislators are able to put the national interest before ideological petty and partisan interests. It may only last a few hours," says Marshall Wittmann, a former conservative activist and aide to Sen. John McCain, now with the Democratic Leadership Council.Defending a view of the Senate

The compromisers ranged from the most senior member of the chamber, Sen. Robert Byrd (D) of West Virginia, to the most junior, Sen. Mark Pryor (D) of Arkansas, No. 100 in seniority.
What motivated them, they said, was a conviction that the Senate must not lose what is most distinct about it: respect for debate and the rights of minorities. But what made the deal possible was trust, said senators most directly involved.

A test of that trust could come early. The agreement hinges on a commitment that future nominees should only be filibustered "under extraordinary circumstances." Negotiators worked long and hard to define "extraordinary," but in the end settled on the clause that "each signatory must use his or her own discretion and judgment in determining whether such circumstances exist."

Pressed on this point in an interview on ABC's "Good Morning America," Sen. John McCain (R) of Arizona, a leader in negotiating the compromise, said that the 14 senators, not the full Senate, will make the call: "We have 14 of us who are together and I am confident we will act in a way that if the circumstances are extraordinary, everybody will agree to that," he said.

"The White House needs to talk to us more, and they will," added Sen. Lindsey Graham (R) of South Carolina, on the floor of the Senate on Tuesday.

The emergence of a muscular center in a highly partisan environment throws a new element into preparations for 2006 elections, say activists on both sides. The White House and conservative activists wanted the Senate to change its rules, to remove the filibuster from Democrats' arsenal before a battle over a Supreme Court nominee, which could come as early as this summer.

At the same time, retaliation by Democrats would have cast them in the politically perilous role of obstructionists.

"The so-called deal blurs the distinction between Republicans and Democrats," says Grover Norquist, president of Americans for Tax Reform, a conservative antitax group. "It's best to have the Democrats filibustering or slowing things down so that people visibly see that that's the case going into 2006," he adds.

On the other side, many activists aligned with Democrats see the deal as a betrayal. Eleanor Smeal, president of Feminist Majority, worries that about the new limitations on the use of filibusters.

"Will saving women's lives, women's rights, and civil rights be considered such an 'extraordinary' circumstance? If the records of the three anti women's rights, anti civil rights nominees who will receive a vote of confirmation under the deal are to be the standard, then these rights are in grave peril," she said, after meeting informally with Democratic senators Monday.

What moderates have done

But for the 14 senators brokering the deal, attacks from outside groups are only confirmation that they are on ground worth defending. They say they expect anger from such groups, and even constituents, but trust that voters will come to see the value of restoring a vital center in the US Congress.

The record of moderate collaborations in recent congresses is thin, but significant. GOP moderates joined Democrats in forcing reductions in proposed Bush tax cuts in 2001 and 2003. They hope to rally support for more fiscal discipline in the 2006 appropriations cycle. They are also hopeful that a House vote on expanding federal funding for stem-cell research (expected Tuesday) and a parallel effort in the Senate will also be victories for a revived bipartisan center.

"Trust is what has not been happening around here," said Sen. Olympia Snowe (R) of Maine, who led efforts to rein in the Bush tax cuts. She says the many hours of working together on a deal on judges helped reinvigorate the quality of relationships needed to rebuild a working center in Congress.

"You don't often have a chance to sit down and talk to each other and to be focused. The media and those 30 second sound bite ads accentuate the divide. It gets people cemented in what divides them," she said in comments after the deal was announced Monday.

Signatories to the deal on judges included GOP Sens. McCain, Snowe, and Graham, as well as Mike DeWine of Ohio, Lincoln Chafee of Rhode Island, and John Warner of Virginia; and Democratic Sens. Ben Nelson of Nebraska, Robert Byrd of West Virginia, Mary Landrieu of Louisiana, Joseph Lieberman of Connecticut, Ken Salazar of Colorado, Mark Pryor of Arkansas, and Daniel Inouye of Hawaii.

In addition to those who formally signed on to the deal, centrists such as GOP Sen. Arlen Specter of Pennsylvania, chairman of the Senate Judiciary Committee, called on leaders of both parties to release members from the straightjacket of party-line voting, saying this is the only way to defuse the crisis.

However, a challenge to this new alliance could come as early as this week. Although the pact promised up-or-down floor votes on three specific nominees that has long been blocked by the threat of a filibuster by Democrats, Senate majority leader Bill Frist could opt to force a vote on the two nominees not included in the pact: William Myers and Henry Saad.

"This is the paradox of the moment: A crisis has been averted, but the wrath of the right has been ignited to another level," says Mr. Wittmann.

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The American Dream gains a harder edge

from the May 23, 2005 edition - http://www.csmonitor.com/2005/0523/p17s01-cogn.html

By David R. Francis

The American dream, at least on the economic side, is fading. Most people see the United States as a special place where there is plenty of opportunity for someone to work hard, play by the rules, and get ahead - maybe even become wealthy.

Today, though, nearly 1 in 5 American households has zero net worth or actually owes more than it owns. And the odds of a son or daughter rising above their parents in such a financial predicament have shrunk.

"Income mobility has declined in the last 20 years," says Bhashkar Mazumder, an economist at the Federal Reserve Bank of Chicago.

What that means is that the US is becoming less of a meritocracy, where skill and intelligence determine success, and becoming more of a class-bound society, where economic background, including the better education money can provide, matters more. There are still many rags-to-riches stories. But there's stagnation in the underclass.

Most Americans don't believe that to be true, surveys show. But academic studies suggest that income mobility in the US is no better than that in France or Britain. It's actually lower than in Canada and is approaching the rigidity of Brazil.

That marks a change from the past.

From 1950 to 1980, Americans were more and more likely to see their offspring move up - or down - the income ladder. For example: poor parents in the US had good odds of seeing children make great strides in overcoming their parental heritage. And if they lived long enough, they might well find that a grandchild had risen to a median income level.

Today, it could take five or six generations to close the gap between poverty and middle-class status, calculates Mr. Mazumder.

Of course, there are always exceptions. Remarkable children still get rich - or plunge to the bottom - in one generation, depending on education, attitude, diligence, and other factors. The point is that average intergenerational experience seems to be more frozen in place today.

Of course, Mazumder's research looks at income - not wealth, which results from saving and investing income, and from inheritances.

A broader look at the overall financial security of American families isn't encouraging either. It measures ownership (homes, financial assets, and so on) and protections against financial setbacks, such as health insurance to cover large medical bills that cause almost half of individual bankruptcies.

"There are lots of people who have found it difficult to meet their basic needs," says Lillian Woo, an economist in Durham, N.C., with CFED, a national nonprofit research group that conducted the study. "The ratio of indebtedness seems to be growing."

That's not because these Americans have engaged in shopping sprees, though that sometimes happens. It is often because of medical bills or high housing costs. Many households are "hovering on the brink of financial disaster," Ms. Woo maintains. "The cushion is very thin."

For example: 1 in 4 households does not own enough to support itself - even at the poverty line - for three months.

The picture is worse for most minorities and women: 1 in 3 minority households has zero net worth or is in debt (compared with the average of 1 in 5). Black families have, on average, only one-sixteenth the net assets of white families. For every dollar of net worth of a household headed by a man, households headed by a woman have less than 40 cents.

The situation also differs widely between states, according to the CFED study. At the top, the median Massachusetts household has more than three times the net worth of median households in Arizona, Texas, Georgia, West Virginia, and a number of other states.

"This issue of net worth and what people owe is important," says Andrea Levere, president of CFED. Her goal for the organization is to widen the opportunities for Americans to build their net worth and ownership position by winning bipartisan support for government programs at the state and federal level.

In the states, CFED supports legislation requiring banks to provide "lifeline bank accounts" to bring more of the poor into mainstream financial services. Some 30 percent of families don't have bank accounts. It wants more states to give better tax breaks, somewhat like the Earned Income Tax Credit of the federal government, to the poor.

It also urges states to ban predatory lenders, who make high-cost loans that can strip the poor of their assets. At present, 29 states have such legislation.

At the federal level, meanwhile, Sens. Rick Santorum (R) of Pennsylvania and Joseph Lieberman (D) of Connecticut have drafted a bill that would provide tax credits for financial institutions that match the savings of low-income customers put into Individual Development Accounts.

But the cost, $1.2 billion, makes its prospects for passage dim in deficit-ridden Washington.

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Next church-state dispute: 'In God We Trust'

from the May 23, 2005 edition - http://www.csmonitor.com/2005/0523/p02s02-uspo.html

A case challenging a display of the national motto is one of many battles over religious references in public places.

By Warren Richey Staff writer of The Christian Science Monitor

The words appear on every dollar bill and US coin. They are displayed at the entrance to the US Senate and above the Speaker's chair in the House.

But when local officials in North Carolina placed "In God We Trust" on the front of the Davidson County Government Center, they soon found themselves in federal court facing a complaint that they were violating the separation of church and state.

The display was mounted in 18-inch letters that passing motorists could see on nearby Interstate 85. "If you are going to get sued, you may as well get sued for big letters," says Larry Potts, vice chairman of the Davidson County Commission.

The case is one of an array of church-state battles across the country seeking to establish a bedrock answer to a difficult constitutional question: To what extent may the government bring God into the public square?

It is more than crosses, crèches, and menorahs. Last year the US Supreme Court considered whether repeating the words "under God" in the Pledge of Allegiance violates the First Amendment's prohibition of government establishment of religion. And the justices are currently weighing the constitutionality of displaying the Ten Commandments on public property in Texas and Kentucky. Decisions in the Ten Commandments cases could come as early as Monday, or, at the latest, by the end of next month.

Legal scholars are hopeful the Ten Commandments opinions will provide a legal landmark, offering lower courts more precise guidelines to help judges resolve the growing number of church-state disputes.

At the center of the debate is whether the Constitution demands strict separation between church and state or whether it provides leeway to permit government acknowledgment of America's religious heritage. Others go further, saying the First Amendment bars establishment of a government-backed church but says nothing about government efforts to promote religiosity and faith-based morality.

The Davidson County debate over "In God We Trust" started in 2002. That's when Rick Lanier suggested posting the phrase on the side of the government center. At the time, Mr. Lanier was a county commissioner and a member of a local ad hoc group called the US Motto Action Committee, which was offering to pay for the display.

Not everyone on the county commission thought it was a good idea. Critics said it would be viewed as an endorsement of religion. Some said the commission might get sued.
Lanier noted that in 1956 Congress designated "In God We Trust" as the national motto. After nearly 50 years, he said, what judge would dare declare a local display of the national motto unconstitutional? The measure passed 4 to 2.

To Lanier and other supporters, the display was seen as a local response to the 9/11 terror attacks and an answer to a growing number of lawsuits seeking to remove any mention of God and religion from public life. "For the past three to four years we went from a gradual process with legal challenges from groups like the American Civil Liberties Union and American Atheists to a fast-track effort to try to completely secularize our society," Lanier says.

He adds, "If you secularize and take God and our religious heritage out of [our society], then we open the door even wider to moral corruption and tearing down the very fiber that built this country."

Two local lawyers who conduct business in the county building objected to what they saw as the use of public property to present a religious message. "It is the semantic equivalent of putting up a sign that says Davidson County believes in the Christian God," says Michael Lea, a Thomasville, N.C., lawyer who filed suit with Charles Lambeth to have the display removed.

"I am a Christian and have been on the governing board of the local church. It is not that I am anti-Christian," he says. "I just don't think it should be up on a government building."

Faced with the prospect of open-ended litigation costs, the county commission began to reassess its decision. But the US Motto Action Committee responded by gathering 18,000 signatures on a petition supporting the motto. The group also raised $10,000 from local churches and individuals to cover the legal defense.

In May 2004, US District Judge William Osteen upheld the display. "The phrase 'In God We Trust' is not inherently religious, particularly when considered in light of its history as this nation's official motto," he wrote.

Messrs. Lambeth and Lea appealed. On May 13, the Fourth US Circuit Court of Appeals in Richmond, Va., upheld the display. A reasonable observer would know "In God We Trust" is the national motto, not an endorsement of religion by Davidson County, the appeals panel ruled.
George Daly, a Charlotte civil rights lawyer, argued the case challenging the display. He says the Fourth Circuit got it wrong and he plans to file an appeal to the US Supreme Court.

"You look up over the door and it says, 'We trust in God' - we, the government of Davidson County," Mr. Daly says. "That is direct government speech," he says, "and that is endorsement."

Daly adds, "The government, of course, endorses what the government says. I thought I passed the endorsement test hands down, but what the Fourth Circuit says is, 'No, no, no - everyone knows what the national motto is and that it is patriotic.' "

If the Supreme Court strikes down one or both of the Ten Commandments displays in question, that could make Daly's appeal much easier. Still, he faces another obstacle.

"I just detect a great reluctance in the courts to want to allow religion to become the subject of a trial," he says. "But being a lawyer, I want a trial."

In addition to the Fourth Circuit, three other federal appeals circuits - the Fifth, Ninth, and 10th - have upheld the national motto against Establishment Clause challenges. Furthermore, the Sixth Circuit has upheld the constitutionality of Ohio's state motto: "With God, All Things Are Possible."

Davidson County isn't the only place posting the national motto on public property.

The American Family Association (AFA) in Tupelo, Miss., has sponsored a campaign to display 11-by-14-inch "In God We Trust" posters in school classrooms and other public buildings. At least 18 states have passed laws supporting the posters.

"We have hundreds of thousands of posters in 18 states and not a single lawsuit filed. I think that speaks for itself," says Randy Sharp, an AFA spokesman.

"Under a strict separation of church and state, even this type of endorsement of religion would not stand," says Rob Boston of the Washington-based group Americans United for Separation of Church and State. "But the courts have never adopted a standard that strict. They have always carved out an exemption for certain types of civil religion, and this is another example of that."

He adds, "We haven't been involved in a case like this or taken any of them on simply because it is usually an exercise in futility. The courts aren't going to declare something like this unconstitutional."

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Economist.com Cities Guide: Washington, DC Briefing - May 2005

News this month

False alarm

Panic briefly gripped Capitol Hill on May 11th when a single-engine plane flew into restricted airspace over the city. This prompted evacuations of the Capitol building, the White House, the Supreme Court and other important sites. People leaving the buildings were reportedly ordered to run.

The Cessna, which flew within three miles of the White House, was quickly intercepted by a pair of F-16 fighter jets. Within minutes the alert was over and employees reported back to their offices. But for many the experience was a grim flashback to September 11th 2001, when a plane crashed into the Pentagon, killing 189 people, and another was downed while presumably en route to either the White House or the Capitol. The errant Cessna has raised fears of the capital's vulnerability, despite the increased security measures of recent years. The plane was escorted to an airport in Frederick, Maryland, where two men from rural Pennsylvania were taken into custody. George Bush was away from the White House, but Laura Bush and Dick Cheney, the vice president, and Nancy Reagan, who was visiting, were all escorted away.

Together, but filing separate

Same-sex couples who have been married may not file joint tax returns in the District of Columbia, the city’s chief financial officer ruled in early May. The official, Natwar Gandhi, informed a married gay couple that while District law does not specifically bar the recognition of gay marriages, it allows joint filing only when couples can do so under federal law. But the Defence of Marriage Act, in effect since 1996, prohibits federal joint filing.

The case had been controversial, ever since the DC attorney general advised the couple that they could file their returns together. The newly minted chairman of the Senate Appropriations Committee’s District subcommittee, Sam Brownback, a Republican senator from Kansas, is an outspoken opponent of same-sex marriages. He warned that the attorney general’s ruling could endanger they city’s federal funding.

Following the flames

After two years and 46 residential fires, police say they finally caught a serial arsonist at the end of April. Thomas Sweatt, the alleged criminal, helped manage a fast-food restaurant that was near a half-dozen of the fires, and his apartment was close to several of the others. Most of the blazes were in the District, generally in the eastern half, with several in Maryland and a handful in Virginia.

Investigators caught up with Mr Sweatt after finding a pair of Marine dress trousers at one fire; the Naval Criminal Investigative Service subsequently led them to Mr Sweatt, who was suspected but not charged in a series of car fires. DNA on the trousers and at several crime scenes led to Mr Sweatt, who also implicated himself under interrogation (without suggesting a motive). There were initially 11 arson-related charges against him, relating from three fires in the District and two in Maryland, but more charges are expected. The fires started appearing in 2003, killing one elderly lady and wounding more than a dozen others. The arsonist started them with plastic jugs filled with petrol.

No service

To the dismay of commuters, Amtrak suspended the services of its high-speed Acela trains in mid-April. A routine inspection found millimetre-sized cracks in the brakes, forcing company officials to pull all 20 Acela trains from the tracks. At a speed of 150mph (240kph), they had provided high-speed service between Washington and New York 15 times a day, and between New York and Boston 11 times a day. Amtrak authorities say the trains will return to service by summer, though they have not been specific about dates.

Roughly 300 of the trains' 1,400-odd brakes were found to be cracked. Fortunately for Amtrak, which has lost $500m annually for the last decade, the railroad will not have to pay for the repairs as the trains are still under warranty. While a House subcommittee approved a three-year, $6 billion funding proposal for the firm in April, its fate remains uncertain—it is a favourite target for conservative budget cutters in Congress.

Toxic but necessary

A law banning rail shipments of toxic cargo through the District of Columbia was suspended in early May by the US Court of Appeals. The city council had passed the law earlier this year in response to concerns that terrorists could attack such a train to produce a poison cloud. The law was scheduled to take effect on April 20th, but CSX, the firm operating the trains, went to court to repeal the law. It had prompted other communities to consider similar rules, and CSX argued that the ban could cripple rail commerce across the country. The city had argued that DC faced a unique threat as the nation’s capital.

Will Rosslyn rise?

Washington is famous for its skyline, or rather its lack of one. In accordance with the wishes of Pierre L’Enfant, who originally planned the city, it has remained low-slung, dominated by the 555-foot tall Washington Monument and the 188-foot tall Capitol dome. That may change soon, at least across the Potomac. According to the Washington Post, an Arlington County task-force is recommending a significant increase in the height of office buildings in Rosslyn, a Virginia city just across the river.

Rosslyn’s buildings are now capped at 300 feet, but under a proposal for a “signature skyline”, buildings would be allowed to rise to 500 feet. Plans also include a public viewing deck to take advantage of the unmatched views of the neighbouring District. While Arlington officials argue that a spectacular skyline would enliven the area, critics fear that towering buildings would literally overshadow the nation's capital. They also argue that a 500-foot tall building could be a safety hazard, as Rosslyn is just north of Ronald Reagan National Airport. The Federal Aviation Administration has asked that any new building be capped at 390 feet.

Underbelly belly up?

The Whitehurst Freeway, the three-quarter-mile long elevated road that runs over K Street, along the Georgetown waterfront, may be in its death throes. Proponents of tearing down the elevated roadway, which lets drivers bypass Georgetown when going to or from Rosslyn, argue that it creates a grimy underbelly alongside the glitzy waterfront. To accommodate the 42,000 cars crossing the freeway each weekday, they suggest widening K Street.

Critics point out that planners would not only have to create ways to handle the extra traffic, but would also need to connect K Street with Canal Road at the Key Bridge end of Georgetown—and the road is 60 feet above the waterfront. Such a a connection had been bandied about a decade ago, but District officials chose to rebuild the freeway rather than replace it.

Catch if you can

May 2005

Toulouse-Lautrec and Montmartre

Until June 12th 2005

Don't be fooled by the order of the title: this exhibition is far more concerned with the lurid Parisian neighbourhood than this absinthe-swilling painter who lived there. Though Henri de Toulouse-Lautrec's paintings and lithographs advertised his neighbourhood, he was not the only artist to be so inspired. This excellent show features work from plenty others, including Manet, Picasso, Ramón Casas, Van Gogh and Degas. The blend of styles and media here—from lithographs to oil-on-cardboard to watercolours—bring a vibrant district to colourful life.

The National Gallery, on the National Mall, East Building, Mezzanine and Upper Level. Open: Mon-Sat, 10am-5pm; Sun, 11am-6pm. Entry: free. For more information, visit the museum's website.

More from the Washington, DC cultural calendar

Economist.com Cities Guide: Sao Paulo Briefing - May 2005

News this month

Economy news

Bouncing back spectacularly from three years in the doldrums, São Paulo State’s economy grew 7.6% in 2004, faster even than the 6.7% growth managed by India last year. Though short of China’s world-beating 9.5% jump in 2004, Brazil’s southern economic tiger bested the national average of 5.2%, and contributed 591.6 billion reais ($238.7 billion) to the country’s gross domestic product, more than a third of the total. The reason: higher gross salaries and an explosion of exports of manufactured products, which hit $31 billion, up 34.5% over 2003. More jobs were created in 2004 and average incomes started rising mid-year, leading to a state-wide consumer spending spree.

Now for some bad news: warning signs of a slowdown showed up in the year's first four months. High interest rates, which hit 19.5% in April, are dampening consumer demand, and industrial-production growth slowed in March to 1.7%, from February’s 8.8% surge on the same periods last year. In addition, more people are making late credit payments, a 6.5% increase in the first four months, compared to the same period last year, according to the Business Association of São Paulo.

Head of the class

In a move to quell criticism of his government’s handling of the troubled reform-school system, known as Febem or the Foundation for the Well-Being of Minors, Geraldo Alckmin, the governor of São Paulo State, has appointed a new school administrator. Hédio Silva Júnior, a human-rights lawyer, will be the state’s new Secretary of Justice and Citizen’s Defense, a post that includes managing Febem. Despite announcing several new measures, such as facilities to reduce over-crowding, Mr Alckmin, who is seeking his party’s nomination for next year’s presidential elections, has not been able to stop the escalating violence at Febem, nor the damage it is doing to his potential candidacy.

Mr Silva Júnior was involved in a parliamentary inquiry into “irregularities” at Febem, which this year has seen 26 rebellions, numerous breakouts and a mass sacking. Some 1,000 staff were then rehired, some of whom are accused of torturing inmates. At the time, Mr Silva Júnior, vice-president of the Commission on Human Rights of the Brazilian Lawyers Association, said evidence showed that the Febem administration warranted urgent investigation. He now has the power to do just that.

The, er, silver lining

São Paulo’s crime statistics usually make for queasy reading. But reports still try to look on the bright side, despite the alarming totals. Murders, for example, are down 7% in the first four months: 2,127 people were killed this year, down from 2,277 in the same period last year. (By way of comparison, in the 12 months to March 2005, 195 people were murdered in London—also down 7.6% over the previous year.) More encouraging is the 15% drop in murders during car robberies, or latroncinos; the 99 cases reported this year have resulted in 106 deaths. Robberies are down too, from 57,752 for the first three months of 2004 to just 53,343 this year, an 8% decline.

But this won’t relieve the city’s rich, who have suffered from a spate of high-profile break-ins recently. Since January, 13 luxury-apartment buildings have been taken over by organised-crime gangs and stripped of their cars, electronic equipment, jewels and cash, while residents were held at gunpoint in underground garages. Houses in the posh Jardims district have been targeted more recently. All this despite tremendous investment in private security, including high electric fences, bullet-proof gates and regular patrols by private guards.

A money pit

Marta Suplicy, the former mayor of São Paulo, may have lost last year’s election, but she is already campaigning for the Worker’s Party nomination for the 2006 governor elections. Her campaign met its first roadblock on May 9th, when São Paulo State prosecutors charged, in a civil suit, that Mrs Suplicy and six co-workers broke the law in 2003 when they approved city spending without the funds to pay for it. Prosecutors are calling for an eight-year ban on her holding public office and a return of the money. The 2003 city accounts ended with a deficit of 590.6m reais ($238m), a steep sum to come up with, even for the well-heeled ex-mayor.

The legal action comes after months of accusations by the new mayor, José Serra, that budgetary mismanagement left his administration with higher-than-expected debts, a 1.8 billion reais ($727m) deficit at the end of 2004 and little room to carry out his election promises. Mrs Suplicy denied the charges, claiming the city’s accounts were approved by the chamber of deputies and the Municipal Accounting Office. She also argued that the suit has “electoral motives”. There may be some truth in this: the charges come from the state of São Paulo, which is controlled by Mr Serra’s Social Democratic Party.

Foul play

Name-calling is almost de rigueur in the world of football, but racist epithets are something else. Edinaldo Batista Libanio, a popular black forward for São Paulo Football Club known as Grafite, complained to the civil police that he was called a “nigger” by a visiting Argentine defender during a South American cup game. The player, Leandro Desábato, was arrested and spent two nights in jail, and bail of 10,000 reais ($4,036) secured his release. The Argentine press and football authorities lambasted the Brazilians for over-reacting. They also rightly pointed out that white Brazilian players who verbally abuse black players usually get off with warnings.

On April 28th, South America’s football governing body suggested that similar cases should be dealt with by the sporting authorities rather than the police in future. But Grafite has not dropped charges. In June, the Brazil side heads to Argentina for a World Cup qualifier. Despite the potential for provocation, Brazil’s manager, Carlos Alberto Parreira, has said he may name Grafite, who has played for the national team, to his squad.

Importing a bit of Vegas

São Paulo’s most distinctive luxury hotel, the Unique, seems to be changing its image. Better known for hosting São Paulo Fashion Week and posh debutante parties, the hotel held the Latin American Middle-Weight championship on May 2nd, in front of a crowd of 1,200. VIPs paid 1,000 reais ($404) for a package that included a night in the hotel and a ringside seat. The bout was won in a 9th-round knock-out by Peter Venâncio, who beat the reigning champion, Mário “Marinho” Soares, who is perhaps best-known for punching a TV presenter on air last year. The evening included six other match-ups and a four-round women’s contest. The next boxing night is expected to be in August.

Catch if you can

May 2005

Corpos Pintados – Painted Bodies

Until July 3rd 2005

A mixture of ethnographic photography and colourful trompe l’oeil, this mostly playful exhibition is a feast for the eyes. In the late 1980s, Roberto Edwards, a Chilean photographer, asked a group of artists to experiment with painting the human body and photographed the results. The project has since expanded to more than 150 artists, mostly from Latin America, and broadened to include sculpture and video. The ground floor of this show features large photographs of all kinds of painted reinventions of form, such as backs painted to look like faces, and breasts to look like beasts. The more playful ones, such as Hernan Miranda's person painted to look like a wooden doll, are the best.

The top floor is devoted to documentary pictures, ranging from beautiful images of African tribes by Carol Beckwith and Angela Fisher to less interesting shots of naked Chileans in their urban homes. Most disturbing is a series of extremely old naked Japanese men and women by Manabu Yamanaka, who aimed to capture the precious moment between life and death. A 15-minute video on a giant multi-panelled screen flashes many of the images by at MTV-speed.

Oca, Parque do Ibirapuera, Portão 2. Tel: +55 (11) 6846-6000. Open: Tues-Sun 10am-10pm. 15 reais. For more information, see the exhibit's website.

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Economist.com Cities Guide: Zurich Briefing - May 2005

News this month

Once restive, now restful

For years Labour Day in Zurich has seen broken shop windows, burning rubbish bins and other small-scale conflicts between left- and right-wing groups, but this year's holiday was mostly placid. Some 4,000 people marched to protest about a range of labour issues, such as the dismantling of social welfare and stagnating wages. But the day was not completely without violence: later, a dozen left-wing radicals and neo-Nazis threw bottles at each other, but ended their clash before police intervened. Increased police patrolling seemed to deter violence; only six people were arrested, compared with well over 200 in 2004.

Torn around the edges

Zurich's parks have seen a wave of vandalism. After several weekends, gardeners have found trampled flower beds, smashed flower pots, rubbish strewn about, railings bent and buckled and, in some cases, charred plants. Child's play, perhaps, but the vandalism seems to be escalating: fountain figures have been demolished and a baroque sandstone statue called “The Lying” was knocked over. Another stone figure in Seeburgpark was decapitated. Stone masons are carefully restoring both works, and fences are planned so that the gardens can be locked up after dark. But police lack the resources to constantly monitor the city's green spaces.

Table for one

The canton of Zurich seems to be growing lonelier. A study of census figures carried out by the canton's statistics offices found that households with only one person grew from 85,000 to 224,000 between 1970 and 2000. Couples are getting married later in life, and women are waiting longer before having children. The average age for a woman having her first child rose from 27 to 29, while the number of traditional, nuclear-family households fell from 158,000 to 139,000, despite the total number of households having grown 50% in the same period. Single parents and married couples without children are on the rise as well.

The weatherman burns

Zurich is a rather straight-laced town—swans glide on the lake, and the burghers are seemingly always well turned out. But on April 18th, it put on the Sechseläuten, an annual spring festival and one of its oldest and weirdest spectacles. The highlight is the burning of the “Böögg”, a huge straw man loaded with fireworks, meant to symbolise the end of winter. The explosion of its head is a sign of the coming summer. Superstition holds that the faster the effigy burns, the longer and sunnier the summer will be. Alas, this year it took exceptionally long: 17 minutes and 52 seconds. By comparison, two years ago, the Böögg's head burst into pieces in a record time of five minutes and 42 seconds, and was followed by an extraordinarily beautiful summer.

The Böögg stands on a 13-metre-high wood bonfire, which is lit at six o'clock (“Sechseläuten” means “six-o'clock ring”). While the fire gathers, guildsmen on horseback circle it three times. During their ride, the Sechseläuten march is played, and onlookers cheer. Before the burning, 3,500 guildspeople and their guests, along with 1,300 musicians, 1,000 children and 500 horses are paraded through the city centre for crowds numbering in the tens of thousands.

Gate crashing

A common sight in front of the glossy jewellery shops along the Bahnhofstrasse are two-tonne blocks between the street and stores, stolidly protecting against “ram raids”. But thieves are diligently finding other places to crash cars into. Zurich’s Kreis 9 saw another jewellery theft by ram-raiders recently. The burglars took the dearest baubles, at a value of tens of thousands of Swiss Francs. It seems the thick concrete blocks and rough stones—bemoaned for their utilitarian, unattractive design—will become more common.

Catch if you can

May 2005

Sarah Lucas: 50 Works

Until June 15th 2005

For better or worse, ever since her 1992 show called “Penis Nailed to a Board”, Sarah Lucas has been a seminal member of the informal grouping of young British artists that includes Damien Hirst, Tracey Emin and the Chapman brothers—a collective that is often criticised as a bunch of low-concept, self-promoting publicity artists. Her work includes photography, collage and conceptual pieces that inevitably make ironic use of quotidian objects, and refer in inverted quotes to canonised works of art. If you like that sort of thing, you can see 50 Lucas masterpieces at this show, which will move on to Hamburg and Liverpool.

Kunsthalle, Limmatstrasse, 8005 Zürich. Tel: +41 (0)44 272-15-15. Open: Tues-Fri, 12pm-6pm (Thurs to 8pm); Sat-Sun, 11am-5pm. Entry: Sfr8. For more information, visit the museum's website.

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Economist.com Cities Guide: Milan Briefing - May 2005

News this month

Still looking

On May 3rd, Italy's highest criminal court, the Court of Cassation, upheld a lower court's acquittal of three men accused of bombing a bank in Milan's Piazza Fontana in 1969. The attack, which left 17 dead and more than 80 injured, was one of the country's worst incidents of post-war terrorism. It sparked a decade of violence in Italy by fringe groups on the left and right.

The three accused—Carlo Maria Maggi, Delfo Zorzi and Giancarlo Rognoni—had been active in fascist groups in the 1960s, and all got life sentences in 2001, which was then overturned (a decision sustained by this ruling). The bombing, carried out on December 12th 1969, has been shrouded in controversy from the beginning: prosecutors and victims' families have often alleged official involvement and a cover-up. The new ruling required victims' families to help bear court costs, though the Italian government said it would cover them (an offer that was accepted). Aldo Aniasi, Milan's mayor at the time of the bombing, called the ruling “a defeat for the state, an offence to Milan and a double insult to the families”.

Turning it on

Electricité de France (EDF), a state-owned French utility, has announced that it will be teaming up with AEM, a Milan-based company, to take over Edison, Italy's second-largest utility group, which is also based in Milan. The transaction, which analysts expect will be worth as much as €12 billion ($15.4 billion), will probably involve other investors. The deal looks likely to be one of Italy's biggest this year. Gabriele Albertini, Milan's mayor, called it “a great day for Italy, Milan and AEM”.

The city of Milan owns 43.3% of AEM, and EDF has been a shareholder in Edison since 2001. The deal was announced after the Italian government removed a law that had limited EDF's voting rights in Edison at 2%. Had this law remained on the books, EDF would have probably sold its stake in Edison.

Musical chairs

The city's best conductors are saying arrivederci to Milan. A little over a month after Riccardo Muti left La Scala, where he wielded a baton for 19 years, Riccardo Chailly announced he will be leaving Milan's Orchestra Sinfonico di Milano Giuseppe Verdi. From September 1st, he will assume the chief conductorship of Leipzig's Gewandhaus Orchestra, and will become musical director of Leipzig's opera house.

Mr Chailly was expected to remain active in both Milan and Leipzig. Indeed, he said he would have stayed in Italy had the orchestra appointed an artistic director, which he had requested for years. But the orchestra's director-general blamed a lack of funds. Some critics suspected Mr Chailly would replace Mr Muti at La Scala, but the new artistic director there said there are no immediate plans to find a replacement. Mr Chailly will not sever all ties with the Verdi Orchestra: he will remain an honorary conductor, directing two programmes per year.

Art or provocation?

A seemingly innocent sculpture in front of Milan's Triennale, one of the city's top modern-art destinations, has sparked a heated debate. Silla Ferradini's work features a mass of yarn on a fibreglass base, with a single cast-iron wisp twisting up ten metres into the sky. Entitled, “Large woman's curl...I'd eat you up with kisses”, the work is meant to represent an enlarged pubic hair. Tiziana Maiolo, a local politician, thundered, “I reject the vulgarity of those who use the female body to gain publicity.” Other commentators defended the work on freedom of expression grounds. Last year, a similar debate broke out when Maurizio Cattelan installed a sculpture of three boys hanging from a tree in the Piazza XXIV Maggio; a local man was hospitalised after falling from a ladder while trying to remove the figures.

Jackpot!

Ten lucky people became millionaires after one of the lottery tickets they bought together yielded €72m, the biggest payout in Italian history, in a bar on Milan's outskirts. The May 4th jackpot was the first time the correct sequence of numbers had been chosen for the Superenalotto since October. Nicola Zifarelli, the bar-owner's son, chose the winning formula for the buyers, but denied that any member of his family was among the lucky ten. “If that were the case”, he argued persuasively to an Italian news agency, “I certainly wouldn't be here at work this morning!”

Catch if you can

May 2005

World Press Photo Exhibition

Until May 30th 2005

In this annual international contest of press photographers, there is never a shortage of beautiful, poignant, striking images; they accompanied some of the year's most notable news stories. The World Press Photo Foundation's photograph of the year for 2004 is of a woman in India grieving over a loved one who was killed by the South-East Asian tsunami on December 26th. Arko Datta, an Indian photographer with Reuters, captured the heart-rending image. He is just one of 59 photographers from 24 countries honoured here. Over the course of the year, this exhibition will travel the world; it arrives in Milan from New York, and heads for Rome.
Galleria Carla Sozzani, Corso Cono 10. Tel: +39 (0)2 653-531. Open: Mon, 3.30pm-7.30pm; Tues, Fri, Sat-Sun, 10.30am-7.30pm; Weds-Thurs, 10.30am-9pm. Entry: free.

For more information, visit the websites for the exhibition or the gallery.

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Economist.com Cities Guide: New York Briefing - May 2005

News this month

Ground Zero, still zero

More than three years after the World Trade Centre was destroyed, George Pataki, New York's governor, has finally announced what even casual observers of the reconstruction have long known: rebuilding is delayed. One reason for the slow going is a concern expressed by the New York Police Department about the impact of a truck bomb on the proposed 1,776-foot Freedom Tower. Police say the planned tower is too close to the West Side Highway, at 25 feet away, and recommend a distance of at least 75 feet. This means the tower's base will have to be redesigned.

The security concerns, however, are hardly new. The Port Authority, which owns the land, said the completion (scheduled for 2009) could be delayed up to a year while they are addressed. But the date seemed implausible anyway, as there has been little construction since the tower's cornerstone was laid on July 4th last year. Most energy has been spent bickering over such matters as the on-site memorial and whether to build on the former towers' footprints. David Childs and Daniel Libeskind, the Freedom Tower's architects, have promised that the spirit of the original plan will remain, despite the changes. A preliminary design will be released in the next few weeks.

First in the morning

New York will become the first city in the country to make “morning after” contraceptive pills readily available to all women who want them. Michael Bloomberg, New York's Republican mayor, promised the new programme will provide $1m in public funding to promote emergency contraceptive pills at city hospitals. He also promised another $2m for family planning in poor neighbourhoods.

The plan was blasted by anti-abortion conservatives, who complain of Mr Bloomberg's leftist sympathies. (He ran as a Republican merely to avoid a gruelling Democratic primary in 2001.) The mayor countered their complaints by saying that a goal of the programme is a cut in the 90,000 abortions performed in the city each year.

A small boom

Two small makeshift grenades exploded outside a building housing the British Consulate in midtown Manhattan in early May. The explosions, which occurred in the middle of the night, caused some minor damage to the building but no one was injured. They were found in a flower planter outside the building.

The incident came just as the British voted on whether to keep Tony Blair and his Labour Party in power for a third term. But police say the explosions may have been meant for another tenant in the office building, a board-member of Caterpillar, a maker of construction equipment, who has been the subject of a demonstration before. Police are still looking for suspects, after releasing a Dutchman who was loitering around the building after the explosions.

A tumble of Tonys

Monty Python's “Spamalot”, a recreation of the venerable “Monty Python and the Holy Grail”, led this year's Tony nominations, with 14 nods. Of those, five went to its actors, while one was for best musical and another went to Mike Nichols, for best direction. As usual with the Tony nominations, a select few take most if not all: “Dirty Rotten Scoundrels” and “The Light in the Piazza” each earned 11 nominations for best musical. “Doubt”, John Patrick Shanley's Pulitzer Prize-winning play about a Catholic school in the Bronx, led the drama lot with eight nominations.

Edward Albee, the three-time Pulitzer Prize-winning playwright, will receive a special Tony for lifetime achievement. Hugh Jackman, a theatre veteran before he embarked on his film career, will host the award ceremony on June 5th at Radio City Music Hall.

Landslide

A retaining wall skirting one of Manhattan's parkways collapsed on May 12th, allowing a landslide to bury a stretch of roadway. No one was injured, though up to a dozen parked cars were crushed by soil, rumble and even trees that were uprooted and swept across the road. The inundated section, on the Hudson Parkway near 181st Street, caused the highway to be closed and diverted temporarily as crews worked to clear the debris. The 75-foot wall had been scheduled for repair the following week. Before it collapsed, residents said they could see its face bulging.

Catch if you can

May 2005

Shakespeare's “Julius Caesar”

Until June 12th 2005

Expect to pay a bundle for a glimpse of Denzel Washington in this limited run of “Julius Caesar”, a bloody play that rarely lures a wide audience. The Hollywood star acquits himself as Brutus, channelling the moral ambivalence that has served him well on screen. His is a compelling presence, filling the stage with elegant gestures and a rich voice, though some will note that Broadway is still not his métier. Still, the 112 performances are starting to sell out. Daniel Sullivan, a Tony Award-winner, has directed this grisly update (the characters all wear suits and the setting looks Balkan).

Belasco Theatre, 111 West 44th St (between Broadway & Sixth Ave). Tel: +1 (212) 239-6200. Book tickets through Telecharge's website.

See the show's official website.

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To track global warming, watch the water flow

from the May 19, 2005 edition - http://www.csmonitor.com/2005/0519/p16s03-sten.html

By Robert C. Cowen

Say "climate change" and people tend to think global warming. But we also should think about water, specifically, the cycle of precipitation, evaporation, and river flow that is a key climate component. A little decline here, a little boost there, can have direct effects on how we live our lives.

In the Arabian Sea, for example, fishermen now enjoy richer fishing thanks to declining snow cover in Southeast Asia and the Himalayas. The links work this way: Less snow means more summer heating of the land, intensifying air pressure differences between land and sea, which in turn drive the seasonal monsoon winds. Stronger winds stir the Arabian Sea more vigorously, bringing more nutrients into its higher, sunlit levels. Microscopic plants and animals (fish food) flourish. Fisheries burgeon.

Arctic inhabitants aren't so fortunate. An intensified water cycle is increasing moisture in the American and Eurasian northlands. Rivers fed by stronger precipitation are pouring more freshwater into the Arctic Ocean. It caps the upward flow of fish food. This is bad for fisheries.

Changes in the water cycle itself may be subtle and often poorly understood. Yet their effects can sometimes be dramatic. Joaquim Goes at the Bigelow Laboratory for Ocean Sciences in West Boothbay Harbor, Maine, and several colleagues studied satellite images of the western Arabian Sea and found sea-color changes due to seasonal blooms of phytoplankton (microscopic plants). In fact, the blooms have increased more than 350 percent in seven years, the research team reported in Science last month.

These robust phytoplankton blooms can enhance fisheries, Dr. Goes says. But too much phytoplankton can deplete the water's oxygen supply. That can kill fish and encourage bacteria that release nitrous oxide, a gas with 310 times the heat-trapping power of carbon dioxide.

Arctic water-cycle changes also have global implications. Peili Wu, Richard Wood, and Peter Stott at Britain's Hadley Centre for Climate Prediction and Research studied these changes by comparing computer simulations with actual river-flow data. Their conclusion, published in Geophysical Research Letters in January, indicated that we are seeing the beginning of an intensified water cycle. Dr. Wu calls the team's findings "evidence that changes in the global water cycle predicted to follow global warming are already happening."

That cycle is expected to remain in balance. Increased Arctic precipitation is balanced by decreased precipitation in the tropics. There may be large-scale shifts in ocean circulations and movement of water vapor through the atmosphere. That may involve a net movement of water from the Southern to the Northern Hemisphere.

One particular concern is the effect of more freshwater from the Arctic on the North Atlantic. This could alter the large-scale currents, including the Gulf Stream. "It is clear that further and more rapid warming will increase the vulnerability of this [North Atlantic] circulation system, possibly leading to a permanent circulation change in the climate system," warned Thomas Stocker and Christoph Raible of the University of Bern, Switzerland, in a comment on the Hadley study published last month in Nature.

Public concern about water has concentrated on maintaining clean-water supplies for human use. That's too self-centered. The way water moves around our planet has fundamental environmental implications. We never will understand where climate change is headed without taking account of precipitation, evaporation, and river flow.

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