Could the country’s largest public power utility really become private?

John Haas — Tue, 21 May 2013 21:37:56 +0000

Wednesday, May 22, 2013 - 05:32

Justin Sullivan/Getty Images

President Obama floated the idea of selling the Tennessee Valley Authority in his budget, released last month. He started receiving pushback almost immediately.

Executives with the country’s largest public power utility meet with the Obama Administration this week, after learning their agency might be up for sale.

President Obama floated the idea of selling the Tennessee Valley Authority in his budget, released last month. He started receiving pushback almost immediately.

“I think there’s somebody with a green eyeshade down there at the Office of Management and Budget who just thinks it’s a cool idea to talk about selling the Tennessee Valley Authority,” Sen. Lamar Alexander, a Republican from Tennessee, said in a recent hearing. “We don’t appreciate that approach.”

TVA originated during the Great Depression. It built hydroelectric dams, then coal and nuclear plants. The utility serves seven states and was conceived as a way to develop an impoverished region. It is fully self-supported through electric rates, and it has national security roles as the country’s sole source for tritium, needed in developing nuclear weapons.

There’s no firm plan to sell TVA, only for a “strategic review” that could result in privatization. But the very idea has done some damage, according to the agency.

The value of TVA’s bonds has dropped sharply. There’s doubt that the sale price would even cover TVA’s $25 billion of debt, and traders fear TVA may not be viable as a private company.

Sen. Alexander has been quizzing Energy Department officials anytime they appear before his committees. During a hearing last week, he asked the acting Energy secretary, Daniel Poneman, if he was consulted about the potential TVA sale.

Poneman admitted that he was not, but said, “the one thing that I do know is that any decision rolling forward that would consider what to do with the TVA would, of course, involve consultation with the Department of Energy.”

TVA officials have said the current business model is a good one, but they’re taking the idea of a potential sale seriously. They’ve committed to cooperating with the White House in good faith.

“I mean, I assume they were serious since they put it in the administration’s budget," says TVA senior vice president of policy Joe Hoagland.

TVA is celebrating its 80^th birthday this week. The meetings in Washington may give a clue as to how many birthdays the utility has left.

Marketplace Morning Report for Wednesday, May 22, 2013

Blake Farmer

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Community disaster relief with help from a tech company

klong — Wed, 22 May 2013 11:53:23 +0000

Wednesday, May 22, 2013 - 04:44

Scott Olson/Getty Images

Matt Johnson salvages items from his grandparent's home after a powerful tornado ripped through the neighborhood on May 21, 2013 in Moore, Oklahoma.

Two days after a powerful tornado struck the city of Moore, Oklahoma, the situation on the ground is still dire. According to The Associated Press, the event killed at least 24 people and leveled scores of homes and businesses.

Part of the promise of technology is that it can help protect us from such events through prevention and appropriate response. The San Francisco-based tech company Recovers is working on just that. The firm has sent a group of employees to Moore, where they'll apply skills and experience gathered from other disasters to help in a range of ways, from building donation websites to organizing volunteers online.

Recovers CEO Caitria O'Neill joins Marketplace Tech host Ben Johnson to describe the tech challenges of natural disasters and recovery.

Marketplace Tech for Wednesday, May 22, 2013

Marketplace Morning Report for Wednesday, May 22, 2013

What will it take to make tornado prediction better?

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Ben Johnson

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Meet Daniel Werfel, the new chief of the IRS

smonroe@marketplace.org — Tue, 21 May 2013 20:25:43 +0000

Wednesday, May 22, 2013 - 04:22

Win McNamee/Getty Images

U.S. Sen. Rob Portman (R-OH) questions current and former IRS employees while they testify before the Senate Finance Committee on May 21, 2013 in Washington, DC.

Daniel Werfel starts Wednesday as the new acting administrator of the Internal Revenue Service, succeeding Steven T. Miller, who resigned under pressure last week.

You have to understand one thing about Daniel Werfel, who's known as Danny to friends like Robert Shea.

“I have never seen Danny able to turn down a challenge that was offered to him," Shea says. "Even though that might have been his inclination.”

Shea met Werfel in 2002, when they worked together at the Office of Management and Budget. Werfel’s last job was at the OMB helping manage the budget cuts from sequestration. In 2011, he helped prepare for the possibility of a government shutdown. Yes, he does like a challenge.

Max Stier, president of the Partnership for Public Service, has also worked closely with Werfel. He says Werfel will have to ask some tough questions, such as, “What kind of culture do we need in the IRS to make sure these kinds of things don’t happen again.”

Stier says Werfel will have to restore public trust in the IRS and rein in rogue agents. And he'll have to do it all in the space of a few months. His appointment only lasts through September.

Marketplace Morning Report for Wednesday, May 22, 2013

The problem of the IRS's dwindling credibility

The IRS's embarrassment creates free advertising for conservative groups

Nancy Marshall-Genzer

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Allan Sloan: Why I voted to keep Jamie Dimon as Chairman and CEO

klong — Wed, 22 May 2013 11:26:52 +0000

Wednesday, May 22, 2013 - 04:16

Chip Somodevilla/Getty Images

Allan Sloan, senior editor at large for Fortune magazine, explains why he voted to allow Jamie Dimon to keep his dual role as CEO and Chairman of JPMorgan Chase.

The country's most powerful banker gets to stay on as both CEO and Chairman at JPMorgan Chase. With the shareholder vote now tallied, 68 percent wanted Dimon to keep his dual role, despite the mess involving nearly $7 billion lost in some trades gone wild.

One man who had a horse in that race, albeit a very small horse, is Allan Sloan, senior editor at large for Fortune magazine. He voted to allow Dimon to maintain his dual title.

"This whole idea that you have to separate the chairmanship from the chief executive officer is just nonsense," Sloan says. "All it does is create another power center, another problem, another level of bureaucracy."

To hear more of Allan Sloan's thoughts on JPMorgan and its corporate structure, click on the audio player above.

Marketplace Morning Report for Wednesday, May 22, 2013

Jamie Dimon as chairman and CEO: His own 'yes man'?

Dimon keeps dual role, but JPMorgan shareholder vote a 'wake-up call' to management

Interview with

Allan Sloan

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How Medicare Part D changed the drug industry

Kim Bui — Tue, 21 May 2013 19:02:02 +0000

Wednesday, May 22, 2013 - 03:37

Joe Raedle/Getty Images

The prescription drug plan has created millions of senior customers for the pharmaceutical industry over ten years.

Later today, a U.S. Senate committee is scheduled to hold a hearing on the prescription drug benefit program for seniors known as Medicare Part D.

The program has been around now for 10 years. And it has meant tens of millions of new customers for pharmaceutical companies says Mark Duggan, an economist at the University of Pennsylvania.

“It expanded insurance coverage to many elderly and disabled Medicare recipients, who otherwise wouldn’t have that coverage,” says Duggan. “But on the other hand, the plans that Medicare recipients joined were very effective at negotiating price discounts.”

Duggan says the Part D plans, which are run by insurance companies, have steered patients to generics. He says that’s helped keep down the cost of prescription drugs. Spending increases have slowed from 11 percent a year to less than 4 percent.

Yale economist Fiona Scott Morton says the emphasis on cheaper drugs has pushed companies to be more innovative if they want a big payday.

“It forces firms to think about what can I invent that's not just a me-too drug. But is something that breaks new ground,” she says.

Still, Scott Morton says thanks to Part D, drug makers are selling their products to millions more Americans than they were 10 years ago.

Marketplace Morning Report for Wednesday, May 22, 2013

Dan Gorenstein

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Will adding subway lines save Beijing from traffic and smog?

Rob Schmitz — Wed, 22 May 2013 07:15:35 +0000

Wednesday, May 22, 2013 - 03:10

Guang Niu/Getty Images

Commuters crowd a subway train on July 21, 2008 in Beijing, China.

Beijing has announced it will add 50 miles of subway track by the end of next year, making the city's subway system bigger than New York's. But will the new additions alleviate the city's notorious traffic and pollution?

Just five years ago, the Beijing subway system was 70 miles long. Today it’s nearly four times that. But economics professor Zhao Jian at Beijing’s Jiaotong University says it’s going to take more than hundreds of miles of subway lines to solve Beijing’s traffic problem.

"The key to alleviating traffic and pollution in Beijing is to raise the cost of owning and using cars," says Zhao. "As it stands, parking fees are very low and traffic tickets aren’t that expensive. This needs to change."

A few years ago, a section of highway in Beijing had a traffic jam that lasted ten days. This year, levels of air pollution in Beijing were the worst on record. Zhao says that’s thanks -- in part -- to cheap cars and cheaper license plates.

In Shanghai, on the other hand, a license plate typically costs as much as the car itself. And that’s meant Shanghai, which has a bigger, more affluent population than Beijing, has half as many cars and is often spared Beijing’s persistent toxic haze.

Marketplace Morning Report for Wednesday, May 22, 2013

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Rob Schmitz

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Why companies are getting rid of cubicle walls

John Haas — Tue, 21 May 2013 21:18:45 +0000

Tuesday, May 21, 2013 - 17:12

Michael Lokner / Creative Commons

Businesses are moving away from individual offices and high-walled cubicles to more open environments. Fitting more workers into a smaller space also slashes rent costs.

A growing number of companies are packing their workers into ever smaller workspaces. They're ditching offices and cubicles in favor of a more open office plan. Some companies say they're creating a hipper, more collaborative work environment. But there may be an even more important strategy in play: cost-cutting.

Before they became a dystopian symbol of the American office, cubicles were meant to be ... nice. You know -- a slick and sophisticated place where the average worker and her, um, machines... could have a little privacy. It was all part of a concept that the furniture maker Herman Miller called "the action office."

“She needs a special, easy-to-get-to place to work...she needs space for her machines along with room for herself,” says the announcer in one vintage Herman Miller ad. “She's an action secretary and she needs action office.”

But collaboration is where the action is today. Cubicle walls are coming down so workers can communicate more easily.

That's the case at the Minneapolis office of Cassidy Turley. It's a commercial real estate services firm. The company recently moved into a new space with a more open floor plan. In the old days, most of the staff had private offices. Now, only three do. Everyone else sits or stands at desks -- with no cubicle walls separating them.

Noam Newman is an associate broker there. He says he doesn't mind overhearing his colleagues' phone calls, because he can take pointers on deal-making.

“If I am hearing them, it's probably a positive, because I'm hearing how they interact with clients,” says Newman.

He may not mind the energetic chatter around him, but the office can get pretty loud with people working elbow-to-elbow in some cases.

Still, lots of companies are overhauling their office plans in a similar way. Over the last couple decades, the average worker has gone from having 90 square feet of space to just 75. That's according to the International Facility Management Association.

One of the biggest factors driving the trend is this: less space means lower costs. Dennis Panzer is the managing principal of Cassidy Turley. He says his company chose to go with an open plan for a lot of reasons. But there was a big savings. In the company's old office, which occupied way more square footage, the rent was 50 percent higher.

“If you can save a dollar in cost, there's no additional revenue that needs to be produced, and it can fall right to the bottom line,” Panzer says.

But Susan Cain says, “There is a hidden cost, in productivity and in morale.” Cain is a former Wall Street attorney turned author and speaker. And she's not a big fan of open office plans. She says they make it hard for workers to concentrate.

She's not advocating sticking with the lonely cubicle. Instead, Cain thinks companies should have a healthy mix of collaborative spaces, like cafes, and quiet places, like libraries.

“Make sure you are building in zones of privacy throughout, quiet places where people can go by themselves or with one other colleague to really focus,” she says.

That might be wishful thinking, though, given that some companies are doing extreme office makeovers, and nixing employee workspaces altogether. Dennis Panzer at Cassidy Turley says some accounting firms assume their workers will embed at clients' offices and not need a desk back at the mothership.

Panzer says it's all fair game when you're looking to cut costs.

“The way we say it our office: if you show me one company that's expanding I can show you five that are downsizing,” he says.

If workers aren't thrilled about all the downsizing, there might be some comfort in knowing that at least it's just their cubicles getting whacked, and not them.

Marketplace for Tuesday, May 21, 2013

The future of workspace design

Dealing with the dirty office kitchen: Grime and crime

Do shared work spaces increase the bottom line?

Annie Baxter

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Why companies are getting rid of cubicle walls

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Senator Carl Levin and Tim Cook clash in tax haven hearing

bbodnar — Tue, 21 May 2013 22:07:53 +0000

Tuesday, May 21, 2013 - 17:02

JIM WATSON/AFP/Getty Images

Chairman of the Permanent Subcommittee on Investigations U.S. Senator Carl Levin (R) questions Apple Chief Executive Officer Tim Cook (front) about 'offshore profit shifting and the U.S. tax code' at a hearing on Capitol Hill in Washington, D.C., May 21, 2013.

Apple CEO Tim Cook was in Washington today, testifying before the Senate Permanent Subcommittee on Investigations.

The topic? Taxes. Specifically, how much Apple is paying on the $100 billion or so in cash that's held by its overseas subsidiaries. Cook says Apple isn't doing anything wrong.

"We pay all the taxes we owe -- every single dollar," Cook says. "We not only comply with the laws, but we comply with the spirit of the laws.”

The chairman of the committee, Sen. Carl Levin from Michigan, disagrees. He says Apple has moved money overseas and "as a result of that shift...they don't owe the taxes, but they avoid paying more taxes than they [should] pay."

Levin wants the public to know more about how large companies like Apple, Microsoft and Hewlett Packard avoid paying more in taxes. He says the purpose of the committee was to "shine a light on the tax code and how it functions with real people, real businesses. And what we learned is the real world situation is just totally unacceptable."

He's betting the attention on the tax loopholes will help stir his fellow Congress members to action.

"We've got 30 of our largest corporations in the world that earn $160 billion in profits that pay no taxes. And unless the public is upset about that [and] understands how companies are able to avoid paying taxes, then Congress isn't going to be put under the kind of pressure that Congress needs to be put under, in order to reform this system."

Levin won't seek re-election in 2014. The tax reform he is pushing for? He's not sure if it could happen before he retires.

"There are certain unjustifiable loopholes which should be closed and that revenue ought to go to deficit reduction or protecting our kids or protecting our health or protecting our skies," he says. "There's a lot of things we need to do, that we've cut back on."

Marketplace for Tuesday, May 21, 2013

Tim Cook goes to Washington

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Kai Ryssdal

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Senator Carl Levin and Tim Cook clash in tax haven hearing

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Working in the dark, in the aftermath of Moore's tornado

Chau Tu — Tue, 21 May 2013 21:51:03 +0000

Tuesday, May 21, 2013 - 16:35

Brett Deering/Getty Images

Piles of debris and cars lie around a home destroyed by a tornado May 21, 2013 in Moore, Okla.

The tornado that hit Moore, Okla., was 1.3 miles wide, the National Weather Service said this afternoon. It's officially been classified as EF-5 -- that is, the strongest of possible tornadoes with winds at least 200 miles an hour.

Since the twister left town, hundreds of rescue and emergency crews have descended on the town. For others who live nearby, the best thing they could do is go to work.

"It's better than just me sitting at home watching TV all day," say Lori Oghi, who works at the Locke Supply Company. "But it's really, really, really bad...When I came work this morning -- I could hardly see through the tears, number one. But you drive for a whole mile down the highway, and when you look to the left or the right as far as you can see, it's absolutely flattened. Completely flattened. All those poor people."

Travel was difficult when she came in, she said, due to all of the help surrounding the town.

"The highway is going about five miles an hour, and they've got the military and just helicopters, crews, emergency vehicles -- just everything going on."

At work, there's paper receipts instead of the usual printouts. Conditions could be better, but they're going to work through them.

"There's no power, there's no water," she said. "But we have generators. We've had no customers today but [at] the company, this is what we do."

"I've lived here for seven years and this is the third time since I've lived here that a tornado has come as close as a quarter-mile from me. And it's scary, it's really scary. It's a beautiful, beautiful state. It's the best people. I love it, but those tornadoes are scary. And it looks like a warzone. It's the worst thing I've seen in my life."

Marketplace for Tuesday, May 21, 2013

What will it take to make tornado prediction better?

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Kai Ryssdal

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Working in the dark, in the aftermath of Moore's tornado

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What will it take to make tornado prediction better?

Kim Bui — Tue, 21 May 2013 18:53:37 +0000

Tuesday, May 21, 2013 - 13:37

NASA/NOAA GOES Project via Getty Images

In this handout provided by NOAAfrom it's GOES-13 satellite, a storm system that generated a EF4 tornado is captured at 19:55 UTC on May 20, 2013 over Moore, Okla.

People in the path of the tornado that tore through Moore, Okla., yesterday had about 16 minutes warning to find shelter. A lot of money is going into research to improve that lead time and predict where tornadoes might touch down.

Scientists have been trying to figure out how to forecast tornadoes in the U.S. since the late 1800s.

"You might think by now we would actually understand how tornadoes form and why tornadoes form, but that's still a very open area of research," explains Glen Romine, who studies tornadoes at the federally funded National Center for Atmospheric Research. "We're still actively trying to go out and look at what's going on in those storms that do and don't produce a tornado and figure out what's different about them."

Romine is working with researchers who are flying over the Great Plains this spring to sample the atmosphere where storms might form. Their goal: better forecasts up to a day in advance.

Other researchers are trying to give people more lead-time to get out of a tornado's path. They know where to start -- building thousands more Doppler RADAR stations.

Scientist David McLaughlin, with the Collaborative Adapting Sensing of the Atmosphere (CASA), says existing stations are too far apart, and forecasters can't get information fast enough. "You can't really tell which streets and individual neighborhoods those vortices are going down, unless it happens to be a well-behaved, mile-wide storm that everybody can see."

CASA is developing a new network of shorter-range RADARs that would give more accurate and specific information. "There is this need for higher resolution, better observations close to ground, now the question is who has a couple billion dollars to deploy this across the entire country," McLaughlin says.

A grant from the National Science Foundation paid for testing of the system in Oklahoma. Now the prototype is set up in the Dallas-Fort Worth, where cities are helping to pay for it.

Marketplace for Tuesday, May 21, 2013

Shannon Mullen

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What will it take to make tornado prediction better?

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Top Stories on Marketplace.org

Could the country’s largest public power utility really become private?

Community disaster relief with help from a tech company

Meet Daniel Werfel, the new chief of the IRS

Allan Sloan: Why I voted to keep Jamie Dimon as Chairman and CEO

How Medicare Part D changed the drug industry

Will adding subway lines save Beijing from traffic and smog?

Why companies are getting rid of cubicle walls

Senator Carl Levin and Tim Cook clash in tax haven hearing

Working in the dark, in the aftermath of Moore's tornado

What will it take to make tornado prediction better?