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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsHow The Reagan Revolution Collapsed America & the Florida Condo
Thought y'all here on DU would appreciate this.The collapse of the Champlain Towers South condo building in Florida, the deterioration of infrastructure all across America, and our failure to plan for or respond to the threat of climate change all have the same source: greed. And its killing us.
Prior to the 1980s, Americans understood the need to keep a healthy cash-flow going or set aside reserves to cover the future cost of maintaining things. We had a top personal federal income tax bracket on the morbidly rich of around 74% and an almost-50% top corporate income tax bracket for those corporations that were essentially money machines.
As a result, infrastructure dating all the way back to the transcontinental railroad system built during the administration of Abraham Lincoln were well-maintained and reliable. Roads, schools and hospitals were shiny-new and state-of-the-art; even the older buildings constructed during and before FDRs New Deal were well-maintained. And, although we hadnt yet heard of the need to concern ourselves with climate change, our government was able to fund itself to deal with crises.
When Ronald Reagan took office in 1981, for example, the US national debt stood at a mere $908 billion; we funded things with taxes and mostly maintained a necessary national debt so savers and federal and state agencies would have a safe place to park cash in treasuries.
And we understood that investing in America produced great returns on that investment. When World War II ended and our national debt was 119% of GDP (about where it is now), President Dwight Eisenhower borrowed even more money to build the interstate highway system, which produced such an explosion of economic activity that the added tax revenues paid down the national debt to 60% of GDP by the end of his presidency.
Similarly, the GI Bill that gave 7.8 million mostly young men free college and low-interest home loans proved a fabulous investment.
Since college graduates make so much more than people who only have a high-school education, and higher-income people pay higher tax rates, every $1 invested in the educational part of the GI Bill during its life from 1944 to 1956 produced an additional $7 dollars in tax revenue to our government over the lifetime of those now-well-educated veterans.
Condos have a slightly more checkered history, but it parallels the mentality of the greed is good Reagan Revolution. While the idea of condominiums goes back to the 19th century, the first modern condo built in America was Graystone Manor in Utah in 1960.
When a developer builds and then sells condo units, there are two parts to the selling price that buyers take into consideration: the sale price and the HOA (Home-Owners Association) fee. That fee covers maintenance and operation of the condo, from painting and landscaping to replacing carpeting to fixing leaky pipes, and is typically a few hundred dollars a month.
From a buyers point of view, the monthly HOA fee is mentally added to the monthly mortgage payment to determine how much they can afford to borrow to buy the condo. Thus, the lower the HOA fee, the higher the mortgage the buyer can afford and the higher the initial price the developer can charge money that the developer walks away with.
Therefore, for most of the 80 years developers have been selling condos, theyve ignored long-term maintenance costs when calculating HOA fees to keep them low, making the sale of the condos more profitable to the developer. And, for similar reasons, HOA boards are often reluctant to raise monthly fees to build a reserve for future major maintenance projects because it lowers their own resale values.
The problem comes 20, 30 or 40 years down the road when the condo needs a new roof or major repairs and theres nothing in the reserves to pay for it. Which is why the residents of Champlain Towers South were, just in the past few months, hit with an $80,000-per-unit one-time assessment to pay for the structural deterioration the 2018 survey found.
The developer walks away with the initial cash, previous homeowners got a free ride, and people who bought-in during later years get hit with the costs of major repairs, particularly when HOA boards choose to run the condo with no consideration of the future like Republicans have run the country since 1981.
Which is pretty much the same thing that Reaganomics brought us with the entire nation. The billionaires who owned Reagan didnt want to continue paying a 74% top tax rate, so they got him and Congress to drop that top rate all the way down to 25%.
To deal with the loss of revenue, we essentially stopped maintaining the country while Reagan and the first President Bush subsidized the wealthy by more than tripling the national debt to $2.6 trillion in their 12 years.
Which is why today our rail system cant support a fast train, our water systems are polluted and unreliable, our schools and bridges are collapsing, and our electric grid cant handle a winter storm or summer heat in Texas.
Meanwhile, the billionaires of the fossil fuel industry have known for over 50 years that their product would produce a global climate emergency that would cost trillions (indeed, has already cost America trillions).
Instead of planning to shift to green power over time, though, they funded a multi-decade national campaign to lie about global warming so they could keep churning their profits, leaving future generations and us, now to deal with the costs and consequences, including millions of annual deaths worldwide.
Several states have changed their condo rules to either require (Florida has not) or recommend that developers write HOA rules that require a reserve fund for future major repairs, although enforcement is rare and these rules simply dont apply for substantial long-term needs in most states. (Hopefully the Champlain Towers South experience will cause some states to wake up and change these laws and rules.)
Similarly, some states (almost exclusively Blue States) have raised state taxes enough over the years to be able to continue to repair and rebuild their states infrastructure, given that the federal government has largely abdicated that responsibility ever since 1981s Reagan Revolution.
Red states, with their infamously low taxes, have become sacrifice zones when it comes to infrastructure and, ironically, will benefit the most from President Bidens infrastructure proposals.
Looking forward, condo developers should be required to set HOA fees high enough to build long-term reserves, our nation and the world need a carbon tax on the fossil fuel industry, and federal and red-state governments have to raise taxes on wealthy people and corporations back to pre-1981 levels to cover improvements and long-term maintenance.
If we fail to reverse the Reagan Revolution and again plan/build for the future, this 40-year con by wealthy developers, fossil fuel companies, and morbidly rich billionaires whod rather shoot themselves into space than pay their taxes will continue.
And more people will die.
(If you want to drill into links, the original post is at HartmannReport.com)
abqtommy
(14,118 posts)world-wide devastating response to the covid pandemic that has already cost many lives and
continues to do so.
czarjak
(11,269 posts)Mary in S. Carolina
(1,364 posts)If you are buying a condo, the HOA is required to disclose items such as faulty foundation, lawsuits, inspection and the HOA finances. The buyer than weighs this information, along with the price of the condo when making their decision to purchase. Now, I read somewhere that a recent buyer had no idea regarding the condition of the condo's structure and inspections - this is a problem. In my opinion, the buyer has a lawsuit against the party (HOA, seller's agent, seller, buyer's agent) that failed to disclose.
Wounded Bear
(58,648 posts)If a buyer insists on reading everything exhaustively, it would take hours. Perhaps we need to simplify the process somewhat.
rickyhall
(4,889 posts)But states like Arkansas just keep raising sales taxes which the Congressional Repugs also want to do and then hypocritically accuse the poor of not paying taxes. We're paying higher sales taxes than Texas plus income tax, etc. It's ridiculous. Texas and Colorado charge no sales tax of food or drugs, but one of the poorest states in the union does.
UpInArms
(51,282 posts)Faux pas
(14,672 posts)Mysterian
(4,587 posts)Under-regulated, unreined capitalism will always self-destruct.
Wounded Bear
(58,648 posts)Ferrets are Cool
(21,106 posts)and frequently. I expect it to do so.
RKP5637
(67,107 posts)damn about how many will die and/or the misery they cause. It's all about the bottom line in their pockets.
Ferrets are Cool
(21,106 posts)patphil
(6,172 posts)the condo association uses "special assessments" to finance these needed repairs.
Thus a low HOA fee looks very good to prospective buyers.
My wife and I got caught in this trap when we bought a condo. It can mean a heavy hit to your savings, or even require a loan or refinance.
More often than not, the condo board is made up of the few homeowners who offer to serve on the board. In my condo association you can't get anyone to serve since it's an unpaid position and can be very time consuming and stressful. Thus you end up with people who have little to no experience in budgeting and financial matters let alone building problems and maintenance. We use a management company, but that's mostly to collect the dues and pay the bills.
ShazzieB
(16,389 posts)I had no idea condo developers were setting HOA fees artificially low as described here, much less what the long term impacts are. That's reprehensible.
Thanks for sharing this, even though it's depressing as hell!
peppertree
(21,627 posts)It can be hard to understand something, when misunderstanding is essential to your paycheck.
(and of course, misunderstandings happen regardless)
Turbineguy
(37,324 posts)shoot everybody who points this out.
Dreampuff
(778 posts)Ronald Reagan bothers me because of how he messed with the social security system, but that's a whole other story.
He was a good actor, but that's about it. I have also read a few stories where new buyers had no idea there were such problems. I also read a history of the building and in 2019 many of the board members quit because of all the stress between the tenants, someone wanting to fix things and others having no interest in it.
I do want to add though, that Champlain Towers didn't have a low HOA. I believe it was something like $920 per month so they should have had a reserve fund. But I don't live along the coast and it would probably be shocking to know how much the insurance alone was on that building. Not to mention the cost the homeowners had on their own condo. Insurance companies have gone wild here, once again and they have the full blessing of our Republican state government. They are even requiring some of their customers to redo their roofs and shingling even if there is nothing currently wrong with them. Insurance companies here also work differently then in many other states. They are one of the reasons home ownership is actually very expensive. There are people who pay over $1,000 per month on their insurance policy for their house.
hunter
(38,311 posts)... maybe that's the size of the reserve funds the HOA should be required to keep.
zentrum
(9,865 posts)Thanks again Thom.
BigmanPigman
(51,590 posts)Unions, mental health institutions, taxes, drug war, etc. I could go on for a year. I hate that muther with a passion!!!!!
GumboYaYa
(5,942 posts)that cause obesity and diabetes easy to sell. They rode that to crazy profits while sticking all of us with higher healthcare costs over time.
Jon King
(1,910 posts)The tower collapse is not the same as the nations infrastructure. There were 2 towers, identical. In one the resident's argued, the board quit, no one wanted to pay for the maintenance. The engineer told them repairs were important.
The 2nd tower they were obsessed with maintenance. CNN took a crew in and the place looks brand new.
At some point we have to stop blaming outside agencies. Not one other Florida building has ever collapsed. The 40 year certifications have always worked. Florida after Hurricane Andrew has the best building codes on earth.
This was a combination of poor condo board, cheap residents, and once the actual cause comes out, a very bad series of events that likely even the 40 year inspection would not have found enough to actually close the building.
WarGamer
(12,440 posts)WarGamer
(12,440 posts)It was mostly due to being the world's SOLE remaining industrial powerhouse.
We made EVERYTHING for EVERYONE.
In our "wisdom", after WW2 we rebuilt our competitors who... a couple decades later started to "eat our lunch".
MaryMagdaline
(6,854 posts)Mr. Evil
(2,841 posts)It couldn't have been stated any better. This needs to be spread far and wide and made to go as viral as possible. People, especially working class people, need to read this. Also, coinciding with Reagan's presidency was the advent of AM hate radio with Rush Limbaugh as the conservative's new propaganda arm and you have a perfect storm. Since 1981 it's been just one big scheme to enrich a tiny few and huge multi-national corporations while simultaneously taking a giant diarrhea shitstorm on everyone else in the USA and the country itself. I've never hated conservatives more than I do at this very moment! God damn motherfucking traitors and ass-kissing lowlifes!
And a massive thank you to Thom Hartmann for one of the most comprehensive and enlightening reports I've read in quite some time.
mopinko
(70,090 posts)i was working construction in those days.
high interest rates jacked up the housing market. the building trades got hit hard.
many of the brothers headed for the sun belt, and didnt really care if they were in a union there or not.
since they were making less money, they were happy to skip the dues.
anyone who could swing a hammer in the heat could call themselves a carpenter.