Where Did President Obama Stay in Cuba?

This week, Barack Obama became the first U.S. President in nearly 90 years to visit the country of Cuba. While security concerns may have prevented him staying in a private home rented through Airbnb, he would have had some 2,700 such homes to choose from in Havana alone.

The amazing thing is that Cuba is a communist country, yet it allows short-term room rental services to operate, while some major American cities such as Atlanta, Denver, and Los Angeles do not.

While the American President likely rode through the streets of Havana in his own armored limousine, he apparently could have ridden in one of those iconic 57 Chevys if the driver had one of the still rare and expensive Cuban email accounts. Such ride-sharing services are also allowed in Havana, while Uber and Lyft are still fighting powerful taxi monopolies in some American cities.

We can have legitimate disagreements about normalizing diplomatic and economic relations with Cuba; but we should applaud the movement toward private home ownership and use, and the entrepreneurial opportunities its communist government now allows.

It will be ironic if Cuba comes into the modern free-market era at the same time that some American politicians try to impose more government restrictions on the very economic freedoms that many Cuban refugees risked their lives to achieve by coming here.

Reverse the Trend: Restore Oregon’s Economic Freedom

By William Newell

Our world is freer today than ever before. More people are free from war, poverty, and crime; and they are also more free to start a business, find a job, and join the middle class. Despite the recent recession, the world’s economy has grown 70 percent over the last 20 years (from $32 trillion to $54 trillion), in large part because of the expansion of markets into developing nations. Fortunately for more and more people, their governments are liberalizing markets and allowing competition, rather than enacting Soviet-style “five-year plans.”

But what about the champion of free enterprise, the United States; how are we doing in terms of economic freedom? Sadly, the former bastion of free markets is regressing in terms of economic freedom relative to other nations. According to the 2104 Index of Economic Freedom, released by the Heritage Foundation and the Wall Street Journal, the U.S. has fallen out of the top ten most economically free nations.

Many problems with the U.S. economy are mirrored at the local level. States have regressed economically, including Oregon, which had one of the largest reductions in economic freedom of any state over the last two years. If the U.S. and Oregon want to continue generating economic success, we need to remember what got us there in the first place: a free economy and a free society.

William Newell is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization. He is a graduate of Willamette University.

Ben Franklin Would Approve

Having come of age during tough financial times, Millennials may turn out to be savers. A new study by Merrill Edge shows that young people 18-34 are saving for retirement earlier than previous generations. While the average Baby Boomer began saving at 35, many members of Gen Y are investing by 22.

Some Millennials are saving aggressively. Among those with $50,000 to $250,000 in assets, their average retirement savings are $55,000. Younger adults also take a skeptical view of Social Security: Less than half say they plan to rely on public programs for retirement, down from 63% just two years ago. Almost all young workers eligible for company 401(k) plans choose to use them.

Millennials have witnessed the end of the dot-com boom, the Great Recession, the housing crisis, major financial scandals, and burgeoning student debt. The positive financial news in a bad decade may be that young people now know the truth about financial planning: They can’t take future security for granted without being proactive about good financial habits today. Young people with the discipline to put money away early can help renew a culture of responsibility and thrift, which America needs for a healthy economy and civic life.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

Creativity and Initiative Drive Our Economy

The first Labor Day was celebrated 130 years ago in September 1882. Labor Day was created by labor unions as “a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.”

What began with organized labor is now a celebration of Americans in all sectors of the economy, whose individual initiative is what drives economic innovation and success. There is no economy without millions of people bringing to the marketplace their particular gifts of human creativity, intelligence, initiative, and effort.

Human work is more than just performing tasks or exchanging services. Persons are more than machines, and the things we create to make our lives easier and our work more efficient exist only because we invented them. We bring unique intelligence and problem-solving capabilities into our interactions with others. Human capital―the knowledge, skills, and experiences of human beings―is the true wealth of a society.

For a healthy economy, we must remember that wealth doesn’t create itself. Government doesn’t create it, either. People create wealth. New jobs, industries, and a strong economy are the fruit of our individual creativity. So on Labor Day, let’s celebrate the freedom we have in America to bring our best to the world.

Taxmageddon Would Wreak Havoc on Oregon Taxpayers

By Sven R. Larson, Ph.D.

By now, I am sure you have heard of Taxmageddon – the $494 billion tax increase set to hit America’s already overburdened taxpayers in January 2013. If you haven’t, check out this informative website provided by the Heritage Foundation. Taxmageddon is a combination of expiring Bush-era tax cuts, expiring payroll tax cuts, and new incoming ObamaCare taxes. Together they will create the largest single-year tax increase in American history and very likely the largest tax increase ever created in the entire world.

Taxmageddon will, of course, wreak havoc on our already fragile economy. The only comparable tax increase is the one Sweden went through in 1995-98, when the government took away three percent of GDP per year, three years in a row. This sent the Swedish economy into a lasting depression, brought standard of living to a standstill for a good decade, and caused the permanent loss of hundreds of thousands of jobs.

If Taxmageddon were to happen here in America, we most certainly would experience something similar, only on a much grander scale. To put some perspective on what this massive tax increase would mean, let us break it down to Oregon size. According to the Heritage Foundation, Oregon taxpayers would face a $5.8 billion tax increase, distributed as follows:

  • Expiring Bush-era tax cuts: $2 billion;
  • Expiring payroll tax cuts: $1.5 billion;
  • New ObamaCare taxes: $2.3 billion.

President Obama has indicated that he might want to see the Bush-era tax cuts extended for most taxpayers, but don’t hold your breath on that until there is a bill with his signature on it. And even if Congress and the President reached a deal on that part of Taxmageddon, the remaining parts are bad enough.

To begin with, the cost of the payroll tax hike alone is big enough to place a looming threat of job losses over the Oregon labor market. It remains to be seen how resilient private employers are in the face of this kind of tax hike and just how many private-sector jobs would be on the line. What is absolutely clear, though, is that Oregon cannot afford to lose any private sector jobs: As we reported recently, there has been no real increase in private employment in Oregon over the past decade.

We need more jobs, not fewer.

On top of that, consider the effect of the new ObamaCare taxes. Designed to hit “wealthy” Americans earning more than $250,000 per year, these taxes are eerily reminiscent of the Alternative Minimum Tax (AMT). When first introduced, the AMT was designed to make sure a very small group of very wealthy people could not reduce their tax burden to zero. Today, the AMT is a middle-class problem.

It is more than likely that the ObamaCare taxes will go the same way. For Oregon’s hard-working taxpayers, the $2.3 billion looming to fund the Affordable Care Act are equal to a 23 percent increase in the taxes that Oregonians pay on their personal income each year. That would be a bad-enough tax increase to hit all taxpayers; but since the tax is supposed to be limited to the top two percent of the Beaver State’s earners, the effect will be much more dramatic.

The two percent of Oregonians who earn more than $250,000 pay 38 percent of all personal income taxes in the state. According to the IRS, in 2011 this amounted to a total tax liability of $3.7 billion. If these income earners were hit with the $2.3 billion in ObamaCare taxes, their total tax liability would increase by 61 percent.

Imagine that: For every $100 you pay in taxes this year, you will pay $161 next year.

Added together, the rise in the payroll tax and the new ObamaCare taxes equal the average earnings of 66,139 taxpayers in Oregon. This does not mean that so many people will lose their jobs in 2013 if the payroll and ObamaCare taxes come down on us. But it does raise the question how many more people will have to file for unemployment when Uncle Sam takes $3.8 billion more out of the Oregon economy.

Sven R. Larson, Ph.D., is Senior Fellow in Economics at the Wyoming Liberty Group and a guest contributor for Cascade Policy Institute. He holds a Ph.D. in social sciences with major in economics and has taught economics at colleges in three countries. His research on health policy, taxes, and government budgeting and entitlement reform has been published by free market think tanks across the country.

 

Oregon Lawmakers: Get Proactive on the Economy

Who wouldn’t want to live in the Pacific Northwest?

According to the 2010 Census, Oregon has enjoyed a relatively large population growth. There were 12 percent more people in the Beaver State in 2010 than in 2000. This is good compared to the national growth rate of 9.7 percent.

Oregon is attractive. But other than a pleasant climate, a breathtaking coastline, and beautiful mountains, what makes Oregon stand out?

From an economic viewpoint the answer is “not much.” Over the past decade Oregon had a few years of strong growth, but that was driven entirely by computer and electronics manufacturing. While production of computer components and other electronic products surged from ten percent of the state’s economy in 2001 to 30 percent in 2010, the rest of the private sector stood still or declined. And even though recent media headlines noted that Oregon saw the second highest economic growth rate in the country at 4.7 percent in 2011, you would have to read down the page to realize that this was a 42 percent decline from our 8.1 percent growth rate the year before.*

It is a bit frightening to see the numbers from the Bureau of Labor Statistics. Comparing the recession year of 2001 to the recession year of 2010, there is absolutely no private-sector job growth. There are as many people working private jobs in Oregon today as there were a decade ago.

Again, it is nice that electronics manufacturing has become big in Oregon, and 16,000 Intel employees should be proud of their jobs. But it is problematic that this particular branch of manufacturing is the only driver of the state’s economy. Jobs in the electronics industry are among the easiest to move, both nationally and globally.

The problem is that the Beaver State lacks consistent growth-promoting policies. Instead of being economic visionaries, the lawmakers in Salem come across as run-of-the-mill ho-hummers.

Oregon’s ranking with the Tax Foundation has not changed much over the past ten years. Taxes are relatively high – currently 17th highest in the nation. Oregon is not in the tax dungeon like New York or California; but on the other hand, there is no concerted effort in Salem to make Oregon attractive relative to its peers in the West.

Oregon’s tax rates continue to make the state uncompetitive compared with others. The high individual income tax is a good example. Since two thirds of the state’s tax revenues come from the individual income tax, state legislators are more interested in a tax code that maximizes revenue than one that promotes growth. As a result, Oregon has a nine-percent state income tax bracket that covers the vast majority of income tax filers. Even California is more lenient toward individual incomes.

And let’s not forget that Washington and Nevada have no state income tax at all.

In terms of business taxes, Oregon ranks about the same as for individual income taxes: better than California and Idaho, but worse than Washington and Nevada. This is yet more evidence that state lawmakers are taking a passive, go-with-the-flow attitude to economic policy.

Government employment is another area where state legislators could be proactive. While there is no steady, long-term growth in private employment in Oregon, government employment is doing well. In 2001, at the bottom of the Millennium recession, there were 181 state and local government employees per 1,000 private-sector employees. In 2010, at the bottom of the Great Recession, that ratio had risen to 191. This means, in plain English, that while the private sector was essentially standing still, job-wise, over the long term, Oregon’s governments kept adding to their payrolls.

Since the summer of 2010 there have been some reductions in local government employment, but available Bureau of Labor Statistics data shows no break in the trend of swelling state payrolls. In other words, the prevailing spending-as-usual attitude continues in Salem.

Instead of complacency, the state legislature needs to take a proactive approach to the economy. Their duty is not first and foremost to maintain government and the status quo, but to facilitate the growth of prosperity and economic freedom in the state. To do this, they could start with something as simple as capping tax-funded payrolls to what the private sector can afford. If there are no new jobs being created in the private sector, then at the very least there should be no expansion in tax-funded payrolls, either.

Another step is a more competitive tax code. Interstate migration data from the Census Bureau shows that while Oregon has gained population over the past decade, Washington is a much stronger magnet. It is fair to assume that Washington’s lack of income tax is a major reason for this.

There is a lot more to do, of course, but these two measures would be a good way to start.

 

*http://www.oregonlive.com/business/index.ssf/2012/06/oregon_economy_growing_at_nati.html

 

Sven Larson is Senior Fellow in Economics at the Wyoming Liberty Group and a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research center. He holds a Ph.D. in social sciences with major in economics and has taught economics at colleges in three countries. His research on health policy, taxes, and government budgeting and entitlement reform has been published by think tanks including Cascade Policy Institute and the Wyoming Liberty Group.

Government Anesthesia

Nobody likes pain, but we need it. This may sound counterintuitive or cruel when you are suffering with an injury or illness, but severe dangers accompany a life without pain. A rare genetic disorder renders some people incapable of feeling pain, heat, or cold. Life for them is full of unexpected dangers, particularly for children, who frequently injure themselves, even biting through their own lips or tongues. More than we appreciate, pain protects us. It teaches us to avoid harmful behaviors and to pursue beneficial ones. Avoiding future pain is an incentive to be hardworking, frugal, kind to our family and neighbors, and even to maintain good health.

While policymakers and politicians may mean well, government programs like ill-conceived entitlements, tax breaks, and mandates wrought with perverse incentives numb the beneficiaries against pain, working against healthy incentives. Consider the most recent economic crises. Why would companies that received massive government bailouts choose to avoid the bad practices that got them into trouble in the first place? What incentive do they have to change if government guarantees a painless outcome?

Pain is an important part of life that should work to correct some of our most harmful behaviors. But if we’re too numb to feel the consequences of our decisions, then like those children, we may find we have seriously damaged our lives, our economy, and our society before we recognize the need to change what we are doing.

Resetting Oregon’s Budget and Recharging Our Economy

Steve Buckstein
Cascade Commentary

Resetting Oregon’s Budget and Recharging Our Economy

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by Steve Buckstein

Oregon voters didn’t go as far as voters nationally this month turning out incumbent politicians, but we did replace a number of big-government state legislators with more fiscally conservative ones.

Reducing government spending is a big issue nationally, and a virtual necessity in Oregon due to our balanced budget requirement. Cascade and Americans for Prosperity-Oregon published our answer to this challenge last month in our report, “Facing Reality: Ideas to Reset Oregon’s Budget and Recharge its Economy.”

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Worried About Climate Change? Promote Free Markets!

Todd Wynn
Cascade Commentary

Worried About Climate Change? Promote Free Markets!

by Todd Wynn

Every day more and more Americans are growing skeptical of the climate change doomsday claims and plans to ration energy through cap-and-trade type proposals. Despite this, many environmentalists still claim that far-reaching government intervention is needed to achieve greater energy efficiency and lower greenhouse gas emissions to reduce the threat of global warming. Although there has been no statistically significant global warming since at least 1995, the same groups often claim economic growth and lack of comprehensive environmental regulations have created a society that wastes energy and pays no regard to greenhouse gas emissions. But what if less energy use and lower greenhouse gas emissions are a byproduct of limited government and economic freedom? What if environmentalists’ goals can be reached by freer markets and prosperity? Recent Cascade Policy Institute research shows that very phenomenon.

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Water Storage Can Provide Many Benefits

 Karla Kay Edwards
QuickPoint!


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Water is the lifeblood of the Oregon economy.  Whether it’s the water that turns the turbines to generate clean and cheap energy, acts as the essential nutrient for agricultural commodities, or provides a multitude of recreational opportunities and environmental essentials— water is needed for every aspect of our lives and economy.  Yet, Oregon continues to pass bills like HB 3369 which allowed one storage project to move forward while creating huge hurdles for any new proposed projects to clear. This can lead to the stifling of opportunities to store water at favorable times and create efficiencies within various water uses.

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