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January 2005 Issue
Feature 1

ADVANCED DEGREES

Feature 2

The Attack on Credit Unions UPDATE

Editorial

Editorial

Wisconsin Favorites

Wisconsin Favorites
Spacecraft & Airplanes & Bikes, Oh My!

ARCHIVES

 

 

 

 

 

Advanced Degrees
Got an opinion on global warming? Science backs it up.

   Rely on daily media reports, and you’ll probably think any question of whether or why the Earth is warming was disposed of long ago. But tens of thousands of scientists have about as many questions concerning both the mechanism and the reality of destructive planetary warming as postulated by the United Nations’ International Panel on Climate Change (IPCC) and the many who embrace its view.

   To get the benefit of differing views, the Wisconsin Electric Cooperative Association invited two distinguished University of Wisconsin scientists to the 2004 joint annual meeting of the Wisconsin Federation of Cooperatives and Minnesota Association of Cooperatives at Eau Claire.

   Dr. John Magnuson is a professor emeritus in zoology. He’s specialized in researching how temperature variation affects aquatic organisms, and his ideas on global warming have made him a quoted source for National Geographic magazine. Dr. Ed Hopkins is Wisconsin’s assistant state climatologist. He’s authored a book called Wisconsin Weather and Climate and has more than two decades’ experience teaching meteorology at the Universities of Wisconsin and Northern Illinois.

   In mid-November, a large and fully engaged annual meeting crowd heard the two debate this proposition: “Resolved, to avoid a ruinous increase in global temperatures and resulting adverse climate events, human-induced carbon dioxide emissions must be significantly curtailed.”

Climate’s Changing; We Can Prove It

   John Magnuson has no doubt that the climate is warming, that this spells trouble, and that people are causing it by doing things that increase atmospheric carbon dioxide. Among the consequences, he says, will be just about every imaginable climate- and weather-related event: dryer, warmer summers and more drought, but also more frequent heavy rainfall. Wisconsin can expect to have winters like Iowa and summers like Arkansas by 2090, he says.

   Ed Hopkins doesn’t doubt that average temperatures have risen over the past 140 years, but he is less certain than his counterpart about how long this will continue and how damaging it might be. Claims that recent temperatures are the warmest ever and that CO2 is the culprit, he considers “hogwash.”

   Magnuson supports his view by showing the annual-meeting audience a selection of graphs and charts illustrating the greenhouse effect—the variable heat-trapping property of Earth’s atmosphere—and several things that are beyond dispute.

   Among these are surface-station temperature records showing a sharp rise that spans the 20th century, and the recorded duration of winter ice cover on Madison’s Lake Mendota going back 150 years.

   “Ice is what I do research on,” Magnuson explains, saying it’s “a most sensitive indicator of change and so it’s sort of an early warning.” He hears a loud, clear warning from Lake Mendota, noting that its typical 1850s ice cover of four months has dwindled by as much as a month and a half.

   Magnuson says on lakes all over Wisconsin, “breakup is occurring earlier and freeze is occurring later,” citing Chequamegon Bay, Shell Lake, and southern Wisconsin lakes where longer historical records are available. He says the same is happening in Minnesota, New York, Ontario, Finland, and Russia.

   “Just recently the Arctic Council released its Arctic report,” he says, “And what they report is the average amount of ice in the Arctic has declined 8 percent in the past 30 years.” This represents an area “larger than the states of Texas and Arizona combined.”

   “Impacts have already occurred and will get worse,” Magnuson says.

   Hopkins responds, “I feel like a court-appointed lawyer for the defense.” Changes are occurring, he says, “but the climate has always been changing and I just want to caution that there is doubt, at least in my mind, that we can attribute everything in this complex climate system that we have, all to carbon dioxide.”

   He presents his own charts and graphs, showing several periods in history that were warmer than the present. Human-induced CO2 emissions couldn’t have been responsible.

Nothing New in the World

   Hopkins contends our understanding of climate change is hobbled by “certain common fallacies,” the first being that “the current atmospheric warming is unprecedented and unique.”

   The idea that today’s temperatures are uniquely warm and growing relentlessly warmer has been fed—indeed was arguably spawned—by a 1999 IPCC historical temperature graph known as “the hockey stick” because its shape resembles one. A long, straight line representing steady average temperatures over the past thousand years suddenly shoots up at about a 70-degree angle, implying unprecedented 20th century warming that accelerates during the 1990s.

   Hopkins never mentions the hockey stick, nor the fact that its 20th century temperature spike amounts to less than one degree, Celsius, above what it depicts as the thousand-year norm. He does bring up lots of established temperature history the hockey stick seems to overlook. “In at least the last few years it has been fairly warm,” he says. “But if you go back about a thousand years to a fairly good warming time they call the Mediaeval Warm Period,” you’ll find warmer temperatures than today’s, he says. “That’s when the Vikings were here in North America and then they faded out because of the cooling” between about 1500 and the mid-19th century, known as the “Little Ice Age.”

   There’s no shortage of climatologists who say today’s rising temperatures only signify an ongoing recovery from the Little Ice Age. But Hopkins adds that things were still warmer about 6,000 years ago and even warmer than that before the Wisconsin glaciation period that ended about 10,000 years ago—with the retreat of ice sheets miles thick that reached all the way to southern Wisconsin.

   About 160,000 years ago, he says, before that big chill, temperatures were 2 to 3 degrees Celsius (3.6–5.4 degrees Fahrenheit) higher than now. “We are not at the warmest time,” Hopkins says. “Be very careful when people say this is the warmest.”

   In fact, he says, the highest temperatures recorded in Madison since the 1860s occurred almost 70 years ago. Blistering summers, especially that of 1936, prompted large migrations as people fled the “Dust Bowl” of the central United States for points west. His counterpart has warned that global warming will bring “more” days over 97 degrees, but Hopkins notes dryly that high temperatures in Madison during the summer of 2004 never once reached 90.

   He also denies carbon dioxide is the most important greenhouse gas. “To my way of thinking it’s water vapor. It does a much better job of absorbing heat,” Hopkins says, offering the example of a cloudy winter night versus a clear one.

   Magnuson promptly acknowledges that computerized models used to generate IPCC climate scenarios are not good at accounting for the role played by clouds—water vapor. He says the models will get better.

What to Do?

   Even if you believe global warming is utter nonsense, it’s not unreasonable to ask whether some things done in response to it might independently make sense. After all, with governments worldwide blaming human economic activity (chiefly that of Americans, who Hopkins points out are only the 12th largest per-capita emitters of CO2, well behind, for instance, Bahrain) for the anticipated destruction of the planet, it’s a pretty good bet we’ll be doing something.

   Magnuson lists major sources of greenhouse gas emissions: combustion by energy utilities, about 30 percent; fuels burned for transportation, 20–30 percent; residential energy use, about 8 percent. Those are the big targets, but anyone who needs global warming as a reason to practice energy efficiency hasn’t paid the bills or filled the gas tank lately.

   Magnuson rejects the idea that the hundreds of billions of dollars in direct expenditures and other economic impacts associated with curbing greenhouse emissions ought to be held off until we’re more certain what’s really happening.

   “If you wait until uncertainty is gone, you will not make any decisions on this issue,” he says. “Thirty years from now, fundamental uncertainties in our understanding of the climate system and how we interact with it will continue.” Later, he adds, “The greater the uncertainty, the higher the economic benefits are to beginning to abate greenhouse gases,” and, “To pass on the cost of this to future generations without taking a bite out of ourselves, I think, verges on the immoral.”

   Whether morality might also be served by helping, in our poorly understood way, to delay freezing of the planet is a question not raised—but Hopkins comes close. “When you look at certain records, the changes in how the Earth’s orientation with respect to the sun changes,” he says, “we could start going back to an ice age. Now human activity will push that time back a few centuries, possibly.” But human activity, he hastens to point out, involves more than emitting CO2.

   Hopkins endorses his counterpart’s views on stewardship of the land. “We should use it wisely,” he says. “My only argument is that when people, scientists, and the media get out there and say it’s the warmest ever and carbon dioxide is the only thing that’s affecting our climate, I say, ‘hogwash.’

   “My opinion,” Hopkins adds, “is that you should take a look and of course act responsibly, but also that you should at least go through and try to ferret out what is nonsense and what is fact.”—Dave Hoopman

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Tax Attack On Credit Unions: Update
Bankers threaten to eliminate credit unions—who’s next?

   In October 2003, we reported on the banking industry’s attacks on credit unions in other states. The bankers’ own tax woes may have deterred them temporarily from introducing legislation to tax credit unions here, but they have re-emerged on the national scene, fighting hard to eliminate credit unions.  OCTOBER 2003 ISSUE CLICK HERE

What’s at Stake?

   Congress first granted credit unions’ corporate tax exemption in 1937 because credit unions operate without capital stock and are organized and operated for mutual purposes without profit. The exemption continues today because credit unions still return earnings to members—not to shareholders. If new taxes were enacted on credit unions, they’d be hard-pressed to function normally. Credit unions can’t raise capital the way banks can, and they rely solely on earnings to maintain or add services. Increased costs would trickle down and members would see higher costs for services. Bottom line: A tax on credit unions is a tax on consumers.

   For other co-ops there are also grave implications. To the extent banks erode in legislators’ minds the difference between cooperatives and other businesses, all cooperatives become “fair game” for regulations, taxes, restrictions, and requirements applied to other forms of business that do not operate with the same limitations as cooperatives.

Attacks Escalate

   The American Bankers Association (ABA) declared in 2004 (as it did in 2003) that taxing credit unions is its number-one priority. It conducted focus groups with consumers and state legislators to hone anti-credit union messages, and it assembled a Credit Union Coordinating Committee involving the major banking trade organizations.

   Next came the launch of “Operation Credit Unions.” The ABA sent anti-credit union “tool kits” to every FDIC-insured bank with instructions to urge state and federal lawmakers to tax credit unions. Banks nationwide visited lawmakers, participated in letter-writing campaigns, and developed anti-credit union advertising and publicity pieces.

   Some leaders may have been listening. FDIC Chairman Don Powell called for the end of credit unions’ federal tax exemption and House Ways and Means Committee Chairman Bill Thomas (R–CA) expressed interest in exploring whether credit unions’ tax status is still justified.

Questionable Tactics

   Later, one banking trade group offered a $1,000 bounty for “photographic evidence” of credit unions “overstepping their mission.”

   This summer, credit unions began receiving mysterious letters from a handful of individuals—most of whom were not eligible for membership—claiming to want to join credit unions. It may have been a “test” of credit unions’ adherence to their membership eligibility restrictions.

   At least one bank in Waukesha erected a sign saying, “We pay taxes—credit unions don’t!” (For the record, credit unions pay millions in payroll, property, personal property, and state sales taxes).

   Ironically, newspapers reported that 80 percent of the state’s banks were skirting taxes by flowing income through subsidiaries in states with no corporate income tax. By transferring income-producing assets to these subsidiaries, many of the state’s largest banks were no longer paying any state income tax. Also, a bill passed in October qualifies more banks for Subchapter-S status under the tax code, further reducing their corporate tax load.

Threat Continues in 2005 and Beyond

   More moves to urge congressional re-evaluation of the credit unions’ tax status are likely. Political insiders believe 2005 may be prime time in which to impose new taxes. The federal budget deficit has reached record levels, and any tax increases lawmakers enact as a response will have a long horizon before the next election cycle in which to be “forgotten.” There are also 20 new lawmakers in the Wisconsin Legislature and nearly 50 in Congress whom the bankers will undoubtedly seek to influence.

   The battle is underway, but we haven’t seen it all yet. The ABA has suggested its members be ready for a costly, multi-year attack. Credit unions will need the support of other cooperatives in order to prevail.—Brett Thompson, president & CEO, and Chris Olson, director of communications, Wisconsin Credit Union League

(Sidebar)

What Banks Don’t Want You To Know

Banks play loose with the facts in order to attack credit unions. Here are a few things they don’t want you to know:

• Banks double-talk on business tax strategy. Many businesses shoulder a heavy tax burden in Wisconsin. Yet while banks complain about their tax load, some of the state’s most profitable banks paid no state corporate income tax in recent years by using of out-of-state subsidiaries.

• Credit unions—regardless of size—are fundamentally different from banks. Credit unions are not-for-profit cooperatives, meaning they return earnings to the people who use their services in the form of competitive pricing. Banks, on the other hand, return earnings to investors. So to claim that credit unions are “better off” by virtue of their corporate tax exemption is misleading; it ignores where earnings are going (the basis for the exemption). If credit unions truly had an advantage, banks would clamor to convert to credit union charters. But none have.

• Wisconsin banks are enjoying record profitability. In 2003, net earnings of Wisconsin banks remained at the near-record level of $277 million. In terms of asset growth, Wisconsin banks grew in 2003 by $17.2 billion—30 percent more than Wisconsin credit unions have grown since they began operating in the state in the 1930s. What’s more, 43 new commercial banks have been chartered in Wisconsin over the past 15 years, another indicator of banks’ success. Nationally, banking institutions’ assets grew by $641 billion in 2003 alone—more than the entire credit union industry grew since its inception ($629 billion) one hundred years ago.

• Banks’ inaction is fueling credit unions’ business lending. An SBA study shows that as banks have grown larger, they’ve made fewer loans to small businesses—a gap credit unions are filling. Just as banks have added services to meet customer needs (securities, real estate, etc.), credit unions have recognized business loans as an emerging need of members. Still, Wisconsin credit unions hold less than 2 percent of market share for business loans; banks and S&Ls hold the rest. Nationally, credit unions hold just one half of one percent of that market.

• Big banks, not credit unions, are a threat to community banks. The largest bank in the state holds more in assets than all of Wisconsin’s 300 credit unions combined. And as big banks grow, they’re doing so at smaller banks’ expense. Over the past decade, the state’s smaller banks lost 21 percentage points of their market share (moving from 50 to 29 percent), while the state’s largest 25 banks picked up almost the same amount (moving from 43 percent to 60 percent). Credit unions added less than four percentage points, and as of 2003, held less than 11 percent of the market.

• Banks mischaracterize field of membership. Wisconsin law allows credit unions to serve residents of and those employed in contiguous communities, rural districts, or multi-county regions. Nowhere does it state these geographic areas must be small, as banks would have it.


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Editorial
by Perry Baird

Timely, Timeless Tax Talk

   For many, the approach of each new year brings thought of renewal and resolutions. And for every adult soul, you can add a third “R” to that list of year-end ruminations: revenue, as in taxes.

   Like a new calendar from your insurance agent, the property tax bills seem to arrive right on schedule, adding to holiday cheer in their own special way. And, although the April 15 income tax deadline is months off, certain tax payments and deductible expenses get dealt with before (and often immediately prior to) year’s end.

   Tapping into this seasonal awareness, the Wisconsin Department of Revenue (DOR) figured the time was right to broadcast some important information related to tax filing, and the agency asked us to help get the word out. We’re happy to oblige.

Online, Offline

   For those who are Internet users, we’ve posted a number of DOR documents on the Wisconsin Electric Cooperative Association web site, www.weca.coop. These include an encouragement to file electronically, to use free tax-preparation services offered by the IRS or AARP, to apply for Wisconsin Earned Income Tax Credit, and to claim Homestead Credit. There is also a list showing a variety of state services that assist individuals and families with health care, employment, transportation, energy assistance, safety, business development, and other matters.

   As the posting on our web site indicates, much of this information can in turn be accessed off the www.wisconsin.gov and www.dor.state.wi.us web sites.

   If you’re not Internet-savvy, you can obtain the facts by telephoning: for electronic-filing service, 608/264-6886; for free tax preparation, 800/829-1040 or 888/227-7669; for Earned Income Tax Credit, 608/266-2772; and for Homestead Credit, 608/266-8641.

Speaking of Taxes...

   A timely offering in this month’s magazine is the feature on page 14 updating the relentless attack by banks on credit unions. As our cooperative friends note, banking organizations are once again pushing to have Congress remove the credit unions’ 68-year-old tax exemption, and the assault has dredged up some of the same anti-cooperative attitudes that have dogged electric co-ops for much of their history.

   Mostly, the main thrust involves some form of the assertion, “Co-ops don’t pay taxes.” It’s a comment narrowly focused on the type of corporate tax paid by businesses that generate profits. Credit unions and electric co-ops operate as nonprofits—returning their margins to member-consumers in some fashion—and that is the source of co-ops’ exemption from that specific tax.

   All we can do is debunk the no-tax notion one more time, and the feature story does a good job of that on behalf of cooperative financial institutions.

   For Wisconsin’s electric co-ops, it’s worthwhile to cite the following tax payments (2003 figures) made annually: $8.8 million in payroll taxes, $9.6 million in gross-receipts license-fee taxes (in lieu of utility property tax), $9.4 million in sales taxes remitted to the state. These payments undoubtedly swelled during 2004.

   If cooperatives enjoy a tax status that makes them so favorably competitive, you’d think legions of envious, for-profit businesses would be clamoring to reorganize as cooperatives.

 

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Volunteers from the Monnroe County Aviator Committee bring in portions of the full-sized Pietenpol Air Camper airplane, which is now reassembled and is hanging in the Deke Slayton Museum. (Photos, Bobi Cripe)

Spacecraft and airplanes and bikes, oh my!

   If you’re interested in the amazing progress of transportation during the past two centuries, Sparta has a museum for you! Called the Deke Slayton Memorial Space & Bike Museum, this fascinating facility’s exhibits present a progression of transportation from the first bicycles, to the Wright Brothers Bicycle Shop and their Wright Flyers, to aviation in Monroe County, and into outer space with Deke Slayton and the other Wisconsin astronauts.

   The museum, situated near the heart of Sparta, occupies the second floor of the Monroe County Museum Complex. Though the upstairs museum is not handicapped accessible at the present time, programming for the disabled is available downstairs in the Monroe County Historical Museum (which is also worth seeing).

   Upstairs at the Deke Slayton Museum, visitors will find three permanent major exhibits. The first is “A New Freedom: The Bicycle Revolution in America.” This exhibit traces the evolution of the bicycle through the earliest European models through those designed by the Wright brothers to modern-day racing bikes.

   “Where Eagles Soar: Monroe County Aviation History” traces aviators of the area through aircraft, models, and photographs. A 1:5-scale model of the original Wright Flyer shares air space above the exhibits with the newest addition—a real, full-sized Pietenpol Air Camper airplane donated by Don Campbell of Chicago. This plane has been a favorite homebuilt airplane of many Monroe County aviators. In November, volunteers from the Monroe County Aviator Committee labored to hoist pieces of the aircraft up to the museum, reassemble them, and hang the craft from the museum’s ceiling.

   The third major exhibit honors Monroe County native Donald “Deke” Slayton in “Shooting for the Stars: The Life & Adventures of Deke Slayton.” Slayton served in the Army Air Corps during World War II and was a U.S. Air Force test pilot during the 1950s. In 1959, he was chosen as one of America’s first group of astronauts—the Mercury 7. Among the many artifacts are one of Slayton’s original space suits and NASA items from the 1975 Apollo-Soyuz Test Project—the first manned international space project, in which Slayton and two other American astronauts joined two Soviet cosmonauts. This portion of the exhibit looks at the political, social, and scientific aspects of this milestone of the Cold War era.

   In addition to these three permanent exhibits, the museum also presents a variety of temporary exhibits, special events, a children’s area with interactive projects, and a gift shop—Linda Hilton

The Deke Slayton Memorial Space & Bike Museum is housed on the second floor of the Monroe County Museum Complex, 200 West Main Street, Sparta. Winter hours are Monday–Friday, 10–4. Saturday hours may be arranged by appointment. For further information or for summer hours, call 608/269-0033 or 888/200-5302, or visit www.DekeSlayton.com. The museum is closed on holidays.

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©2008 Wisconsin Energy Cooperative News