November 21st, 2008 7:51 pm
Hearing now delayed until next week, Willacy County DA files motion to recuse judge

By Emma Perez-Trevino / Brownsville Herald

RAYMONDVILLE - A hearing has been recessed until next week in Willacy County where attorneys are attempting to quash a number of indictments that accuse officials, including Vice President Richard Cheney and former Attorney General Alberto Gonzales, of various charges related to a private jail construction project in Willacy County.

But just as the proceedings got started, they took a number of surprising twists.

First, Willacy County District Attorney Juan Angel Guerra, who only has six weeks left in office, filed a motion to have State District Judge J. Manuel Bañales recused from the case, which clearly stunned attorneys who shot up from their chairs.

Then Bañales, called a recess to the hearing, telling the court he would call the Texas Supreme Court for guidance on whether he should recuse himself from the hearing.

Bañales called a recess to contact the chief justice of the state Supreme Court for suggestions on how to proceed. He has now reset the hearing until 10 a.m. Wednesday.

Special prosecutor Al Padilla, who Bañales appointed to the case, did not agree with Guerra's motion to recuse Bañales. He told the judge, that since he was the special prosecutor, Guerra's motion should be dismissed.

But Guerra argued differently. In an emotional voice, sometimes breaking, he told the judge, "do you really think that my grand jury didn't take this seriously?" Adding, "they (the grand jury) took it very, very, seriously."

Guerra told the judge to void the order that disqualified him (Guerra), noting that the statute is very clear.

During his ten minute address to the court, Guerra said the citizens are wise enough to know what is happening in Willacy County. He also said he would take up Sen. Lucio's challenge and prosecute his case on Dec. 8 and would make Lucio's prosecution a priority.

Earlier this week, Lucio asked that if the indictment against him progresses to trial, he wants the trial to be held this year to avoid allegations of impropriety since a new DA will take office in January. Bañales agreed and set the December date.

Attorney Tony Canales, who represents Cheney, Gonzales and the GEO Corporation, formerly Wackenhut Corrections Corp., told the judge to recess the hearing and to call the supreme court to appoint someone, if need be, for the other cases.

"We have invested too much time," Canales said.

When Banales arrived at the courthouse this morning he was surrounded by Texas Rangers.

On Monday, a grand jury indicted Cheney, Gonzales, State Sen. Eddie Lucio Jr., 103rd District Judge Janet Leal, 197th District Judge Migdalia Lopez, former Willacy County special prosecutors Mervyn Mosbacker Jr. and Gustavo Garza, and Willacy County Clerk Gilbert Lozano.

Willacy County District Attorney Juan Angel Guerra, who only has six weeks left in office, said he will appear in court this morning. On Wednesday, he was not present during court proceedings where attorneys tried to have all the indictments quashed.

Guerra claims he was not informed of the proceedings and was out of town.

This morning his staff was seen carrying boxes of of files into the courtroom. Judge Banales instructed in his order that Guerra bring all related case files to court this morning.

November 21st, 2008 7:17 pm
Prosecutor shouts at judge in Cheney hearing

By Christopher Sherman / Associated Press

RAYMONDVILLE, Texas — A county prosecutor who won indictments against Vice President Dick Cheney, former Attorney General Alberto Gonzales and others pounded his fist and shouted at the judge Friday about special treatment for high-profile defendants as a routine motions hearing descended into chaos.

Willacy County District Attorney Juan Angel Guerra, who is accusing the public officials of culpability in the alleged abuse of prisoners in a federal detention center, asked Presiding Judge Manuel Banales to recuse himself. Guerra has complained about Banales' handling of the case.

Attorneys for the vice president and other defendants leapt to their feet in objection, as Guerra pounded the table and accused Banales of giving the defendants special treatment in allowing motions to quash the indictments to be heard before the defendants were arraigned.

"Now all of a sudden there is urgency," Guerra shouted at Banales. "Eighteen months you kept me indicted through the election."

Charges accusing Guerra of extorting money from a bail bond company and using his office for personal business were dismissed in October, but he had already lost the March Democratic primary.

The defendants in the prisoner abuse case, who were not required to be in court, were all expected to waive arraignment, but the hearing never progressed that far.

"Did you think, judge, my grand jury didn't take this seriously?" Guerra said. "They indicted the vice president."

Banales called a recess to contact the chief justice of the state Supreme Court for suggestions on how to proceed, and ordered Guerra to remain in the courthouse.

"I will not obey that order," Guerra said.

When Banales implied he would take steps to keep Guerra in court, Guerra agreed to stay if the judge asked him respectfully.

Banales adjourned until Wednesday.

Outside the courtroom, defense attorneys suggested Guerra was unstable.

"What came out today was the mental state of the prosecutor was exposed to the court," said Tony Canales, co-counsel representing private prison company The GEO Group. Canales was also communicating the proceedings to attorneys for Cheney and Gonzales, who were not represented in court Friday.

But that talk only incited Guerra, who said he's heard "the (district attorney) is loco" before.

"I know exactly what I'm doing," Guerra said.

Unlike the initial hearing last Wednesday when Guerra was absent and media and attorneys for the indicted appeared in equal numbers, curious residents packed the well-worn pews of the Willacy County Courthouse's only courtroom Friday.

Half of the indictments returned Monday are linked to privately run federal detention centers in the sparsely populated southern Texas county. The other half target judges, special prosecutors and the district clerk who played a role in an earlier investigation of Guerra.

Banales appointed a temporary prosecutor to handle the local officials indicted along with Cheney, Gonzales and state Sen. Eddie Lucio Jr. because Guerra has sparred with them for years and would be a witness in their cases.

Lucio, D-Brownsville, said in a statement Friday afternoon that he was disappointed the judge was not able to hear their motions to quash what he called "baseless charges."

It was Guerra's interest in the contracts to build and run a federal detention center that led to some of his biggest successes — three guilty pleas on bribery charges from former county commissioners in 2005. But he also believes it was the motivation for his own legal battles.

He continued working for more than a year while under indictment on charges of extorting money from a bail bond company and using his office for personal business until Banales dismissed the indictment last month.

Guerra ran the current investigation into alleged prisoner abuse with a siege mentality. He worked it from his home, dubbed it "Operation Goliath" and kept it secret from his staff, he said. He gave all the witnesses biblical pseudonyms — his was "David" — and sometimes gave false reasons for witnesses' appearances so as not to raise suspicion in a courthouse he believed to be filled with political enemies. A clerk and a judge who share the building were among those indicted Monday.

The grand jury also charged Lucio with illegally profiting from his position by accepting consulting fees from private prison companies.

The GEO Group Corp. was indicted on a murder charge for the death of an inmate at a federal prison.

Cheney's indictment alleges that his personal investment in the Vanguard Group, which invests in private prison companies, gives him culpability in alleged prisoner abuse. Guerra distributed a simple flow chart alleging how Cheney profited from the prisons.

Other indictments charge two district judges, two special prosecutors and the Willacy County district clerk with abusing their powers in investigating Guerra's office.

November 21st, 2008 4:40 pm
Assembly Line

Debunking the myth of the $70-per-hour autoworker.

Jonathan Cohn / New Republic

If you've been following the auto industry's crisis, then you've probably read or heard a lot about overpaid American autoworkers--in particular, the fact that the average hourly employee of the Big Three makes $70 per hour.

That's an awful lot of money. Seventy dollars an hour in wages works out to almost $150,000 a year in gross income, if you assume a forty-hour work week. Is it any wonder the Big Three are in trouble? And with auto workers making so much, why should taxpayers--many of whom make far less--finance a plan to bail them out?

Well, here's one reason: The figure is wildly misleading.

Let's start with the fact that it's not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research--who was my primary source for the figures you are about to read--average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income--hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.

More important, and contrary to what you may have heard, the wages aren't that much bigger than what Honda, Toyota, and other foreign manufacturers pay employees in their U.S. factories. While we can't be sure precisely how much those workers make, because the companies don't make the information public, the best estimates suggests the corresponding 2007 figure for these "transplants"--as the foreign-owned factories are known--was somewhere between $20 and $26 per hour, and most likely around $24 or $25. That would put average worker's annual salary at $52,000 a year.

So the "wage gap," per se, has been a lot smaller than you've heard. And this is no accident. If the transplants paid their employees far less than what the Big Three pay their unionized workers, the United Auto Workers would have a much better shot of organizing the transplants' factories. Those factories remain non-unionized and management very much wants to keep it that way.

But then what's the source of that $70 hourly figure? It didn't come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $28 per hour--and you get the $70 figure. Voila.

Except ... notice something weird about this calculation? It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that--probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees--in other words, the cost of benefits for other people. One of the few people to grasp this was Portfolio.com's Felix Salmon. As he noted yesterday, the claim that workers are getting $70 an hour in compensation is just "not true."

Of course, the cost of benefits for those retirees--you may have heard people refer to them as "legacy costs"--do represent an extra cost burden that only the Big Three shoulder. And, yes, it makes it difficult for the Big Three to compete with foreign-owned automakers that don't have to pay the same costs. But don't forget why those costs are so high. While the transplants don't offer the same kind of benefits that the Big Three do, the main reason for their present cost advantage is that they just don't have many retirees.

The first foreign-owned plants didn't start up here until the 1980s; many of the existing ones came well after that. As of a year ago, Toyota's entire U.S. operation had less than 1,000 retirees. Compare that to a company like General Motors, which has been around for more than a century and which supports literally hundreds of thousands of former workers and spouses. As you might expect, many of these have the sorts of advanced medical problems you expect from people to develop in old age. And, it should go without saying, those conditions cost a ton of money to treat.

To be sure, we've known about these demographics for a while. Management and labor in Detroit should have figured out a solution it long ago. But while the Big Three were late in addressing this problem, they did address it eventually.

Notice how, in this article, I've constantly referred to 2007 figures? There's a good reason. In 2007, the Big Three signed a breakthrough contract with the United Auto Workers (UAW) designed, once and for all, to eliminate the compensation gap between domestic and foreign automakers in the U.S.

The agreement sought to do so, first, by creating a private trust for financing future retiree benefits--effectively removing that burden from the companies' books. The auto companies agreed to deposit start-up money in the fund; after that, however, it would be up to the unions to manage the money. And it was widely understood that, given the realities of investment returns and health care economics, over time retiree health benefits would likely become less generous.

In addition, management and labor agreed to change health benefits for all workers, active or retired, so that the coverage looked more like the policies most people have today, complete with co-payments and deductibles. The new UAW agreement also changed the salary structure, by creating a two-tiered wage system. Under this new arrangement, the salary scale for newly hired workers would be lower than the salary scale for existing workers.

One can debate the propriety and wisdom of these steps; two-tiered wage structures, in particular, raise various ethical concerns. But one thing is certain: It was a radical change that promised to make Detroit far more competitive. If carried out as planned, by 2010--the final year of this existing contract--total compensation for the average UAW worker would actually be less than total compensation for the average non-unionized worker at a transplant factory. The only problem is that it will be several years before these gains show up on the bottom line--years the industry probably won't have if it doesn't get financial assistance from the government.

Make no mistake: The argument over a proposed rescue package is complicated, in no small part because over the years both management and labor made some truly awful decisions while postponing the inevitable reckoning with economic reality. And even if the government does provide money, it's a tough call whether restructuring should proceed with or without a formal bankruptcy filing. Either way, yet more downsizing is inevitable.

But the next time you hear somebody say the unions have to make serious salary and benefit concessions, keep in mind that they already have--enough to keep the companies competitive, if only they can survive this crisis.