Year: 2011

Control Cometh Before the Fall of Education

The desire to be in charge is as human as pride. It’s easy to see it in others. We scoff at arrogant, controlling dictators. We criticize parents who use guilt to influence their grown-up children. We commiserate about friends who manipulate others to get what they want.

Yet, when it comes to politics, we tend to think our leaders must have some unusually evil intention when they pass laws that conflict with our values. But politicians are just people. The consequences of their human defects, because of their position and power, just reach farther.

People often try to control others because they think they know what’s best. Their intentions feel like love, though they may really be driven by fear or distrust. Similarly, most individuals in power whom I’ve gotten to know genuinely feel that by controlling others they are helping people and making the world better. It’s a proud presumption, as familiar as that feeling of superiority we all experience when passing judgment on others for their choices.

The presumption says: “I can make better choices for you than you can make for yourself.” Whether or not that is true, only the government―not overbearing relatives or unpleasant friends―truly has the power to enforce its choices. And nowhere are issues of government control more contentious―and the consequences far-reaching―than in children’s education.

Education policy affects every child, and all sides of the debate trumpet kids’ interests as the heart behind their cause. And most sides believe it. With parents, the argument tends to orbit around values, that is, whose values should be taught in public schools. This struggle to decide whose values should be taught can be seen in states as different as Texas and California.

Rather than controlling how others’ children should be taught, those decisions should be removed from the political realm and returned where they belong―with the family. Each parent should be able to choose a school that offers the kind of education they want for their kids. That is the beauty of “school choice.”

Arguments for school choice usually focus on how empowering parents through education scholarships or vouchers, tax credits, and digital learning programs create scientifically proven gains in math, science, and reading. But its most virtuous effect is on human dignity.

School choice is the only means by which society can respect parents’ rights to raise their children. Parents have a natural right to raise their kids according to their values and to shelter them from an overwhelming barrage of bureaucratic mandates and politically sanctioned value systems. Likewise, school choice is the only means of reform which gives harbor to teachers and school administrators from that same hurricane of red tape that keeps so many of them from fully channeling their talents and passions to prepare kids for life.

The argument I most consistently hear from opponents of school choice is that many parents are unable to make good decisions for their kids. Thus, the most vulnerable children will suffer. However, this argument has been proven wrong in empirical studies that show regular public schools improve with vouchers that allow kids to attend private schools. Yet, that is not why we should support school choice. We should support school choice because we respect freedom itself. We should support school choice because we respect the rights of parents to do their best for their kids.

Those who fear that school choice will leave vulnerable children more vulnerable shouldn’t in the name of love or compassion empower the state to curtail parents’ ability to choose. Rather than cater to our natural arrogance and wrongly call it “loving our neighbors,” why not instead practice real love? Real love demands freedom to choose to love and to sacrifice. If you see something wrong, go out and change it through human relationships―by loving your neighbors, not by stealing their liberties. Talk to your neighbor’s kids. Volunteer to tutor a friend of your family. Support parents who are struggling. Change the hearts and minds of those close to you with the sweat of your brow, not with the cold impersonal hand of government regulations.

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Turn out the Lights

Now that the Dear Leader of the Democratic People’s Republic of Korea (aka North Korea) has left this earth, it is up to the Great Successor (aka the Dear Leader’s youngest, inexperienced son) to carry on his legacy.

Rumor has it that the Great Successor’s first command was that all lights in the hermit kingdom be extinguished every evening at sunset for the indefinite future in honor of his dead father.

Don’t believe it? Check out the satellite photos that show South Korea ablaze with progress-shining lights while the North is almost totally dark. But, you say, these photos are years old? Yes, and that just confirms how brilliant the boy leader is. He commanded darkness in honor of his father years before this demigod was no more.

One theory is that the North is not really dark at night; it is just that they can only afford 25-watt bulbs, which are too dim to be seen from space. If this is true, the U.S. Congress might take note. Rather than argue over effectively banning incandescent light bulbs here, it might instead simply mandate no bulbs over 25 watts. Same result, and we get to look dark from space, too. How’s that for saving the planet while punishing the one percent who could afford those wasteful 100 watters? The Dear Leader would be proud of us.

In any case, everyone at Cascade Policy Institute wishes you a Happy, hopefully bright New Year.

Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization. He is also, occasionally, its Satirist-in-residence.

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Secret Santas Light a Candle at Christmas

Struggling parents with children’s clothing and toys on layaway are finding that anonymous strangers have paid their balances down to a penny at Kmart and other stores across the country. Retailers have known “Secret Santas” for years, but this Christmas season appears to be different.

According to the Frederick News Post in Maryland, a local manager said, “I’ve been in management here nine years, and we had one or two each year. This year we had 16 or 17 in just the past few days. The need is really there and people are helping out.”

A Maryland Secret Santa said a clerk told her people had been coming in all day. “It was a great feeling to see it wasn’t just me,” she said.

Some parents who were told their balances had been paid cried tears of joy and gratitude.

People who make others’ lives a little better know how the first Santa Claus must have felt. Saint Nicholas was a fourth-century bishop who used his inheritance to anonymously help children and families in need. This reputation led to his being associated with surprise gifts at Christmas.

“With all the bad news we see,” said the Frederick Kmart manager, “it is great to see something good happening.”

At Christmas and every other time of year, let’s each find our own way to light one candle rather than to curse the darkness.

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Night of a Thousand Laughs

Come laugh; it’s for the children!

Join State Representative Matt Wingard and three Northwest comedians for “A Night of a Thousand Laughs,” Saturday, February 4, 2012 at 7 p.m. at the Wilsonville Holiday Inn.

Proceeds from the dinner and comedy show support the Liberi Foundation, dedicated to helping vulnerable children by identifying and supporting charities that directly serve them.

The Liberi Foundation has identified three outstanding metropolitan-area charities that provide opportunities to children in foster care, those with incarcerated parents, and low-income children who wish to attend a private school. Through scholarships, mentoring and love, these charities work to improve the lives of our most disadvantaged children. All the foundations operate at little or no administrative cost.

Cascade’s Children’s Scholarship Fund-Portland is one of the charities to benefit from the comedy evening, so come have a laugh!

Visit the Liberi Foundation online for more information or click on the PayPal link below to purchase tickets.

 

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Taking Work Personally: How Individual Accounts Reward Personal Responsibility

Recently, I had a long conversation with an owner of a bakery near Medford, Oregon. He told me of the problems his company faced due to the disincentives inherent in Oregon’s unemployment insurance system. Two years ago, in the middle of the recession, this entrepreneur offered a job to a man who promptly responded that he would not be able to start work for another month. Why? Because his unemployment benefits did not run out until then.

This example is one of the more troubling stories I’ve heard about the problems created by unemployment insurance. Most are less dramatic. A friend of mine only applied for highly competitive jobs she knew she had little chance of getting. She really preferred to stay on benefits. She was expecting her child to be born soon, and it didn’t make sense to start a new job, particularly since her husband was gainfully employed.

Peer reviewed research shows that people receiving unemployment benefits commonly take longer to find a job. Unemployed workers who receive benefits take more than twice the time to find a job than those who do not. The instances of recipients finding a job increase strikingly just before UI benefits are exhausted (see graph below). That doesn’t mean individuals who use unemployment benefits are dishonest, lazy, or bad. It does mean that incentives and logic play roles in their job searches. A new job is not only work, but it is full of risks and uncertainty. In some cases, a new job may pay less than unemployment benefits.

Unemployment benefits come with certain requirements precisely because of these incentive issues. Workers must actively search for work and accept appropriate full-time employment. However, requirements are frequently ignored or misunderstood. A U.S. Department of Labor report showed overpayments in unemployment benefits across the nation amount to almost $19 billion in waste. Beating the national average of 11%, Oregon overpaid an estimated $392 million over the last three years―about 12.2% of all state unemployment benefits paid during that period, according to the Labor Department. About one third of overpayments involved workers receiving benefits when ineligible because they were not available for work or because they failed their work search requirements.

The Labor Department’s report only examined the improper payments within state programs, which usually last up to 26 weeks. These figures do not include federal unemployment benefit extensions that currently allow many workers to claim up to 99 weeks (almost two years) of benefits.

So what’s the solution?

Chile’s unemployment insurance savings accounts have cut back on the disincentives that slow the job search for many who receive unemployment benefits. Chile’s workers and employers pay a portion of wages into Unemployment Insurance Savings Accounts. Each worker has his or her own account. When a worker becomes unemployed for any reason (even if it is voluntary), he or she may draw 30-50% of the previous wage for up to five months from the personal unemployment account. Workers who are laid off with small account balances receive help from a more traditional unemployment insurance safety net. At the end of their careers, workers may keep any balance in their unemployment accounts for use in retirement.

Chile’s experience demonstrates that these accounts offer an improved safety net that also improves some of the disincentives within the U.S. system. The personal accounts system motivates workers to return to work faster so they can have more money upon retirement. Chile’s system also broadens the pool of eligible recipients, since workers own their personal accounts. That means workers who cannot accept full-time employment (like a working mother or student) and workers who quit their jobs for personal or professional reasons (who are not covered under our system) would have some limited coverage under Chile’s system. This system may not solve all overpayment problems, but it would prevent a significant portion of overpayments, since ultimately workers are first paid from their own accounts.

One recent state-specific study (commissioned by Cascade Policy Institute) by economists Stéphane Pallage and Christian Zimmerman showed that switching to a system similar to Chile’s unemployment accounts system would benefit 97% of Oregonians. Even those who are most likely to be unemployed or most likely to have empty personal accounts would benefit from the switch. According to the economic model used, such a system would decrease the unemployment component of payroll taxes while improving outcomes for nearly everyone.

Oregon’s unemployment insurance system is rife with waste because it promotes longer unemployment and has inordinately high overpayment rates. Unemployment accounts would be a huge step in the right direction, improving incentives and rewarding hard work and personal responsibility while still maintaining the safety net that most Americans have grown accustomed to.

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Save the Mail! – Delivery to Slow as Debt Crisis Looms

I read with a tinge of dismay that the U.S. Postal Service is proposing to slow first-class mail delivery to avert impending bankruptcy. A letter-writer who enjoys reading periodicals I get in the mail, I don’t believe the age of hard copy is ended. Delivery of printed materials likely will continue to be a valued service.

But the Postal Service is a classic case of problems with monopoly service providers. The Postal Service has struggled for years to deal with decreasing mail volume and a growing debt that has reached $14 billion this year.

This―even though no other service provider is allowed to compete with the Postal Service for regular first-class or standard mail delivery. No private entity is permitted to offer faster delivery or mail on Saturdays.

Congress’s power “to establish post offices and post roads” is granted by the Constitution (Article 1, Section 8), but the implementation of that power has gradually expanded. Until the late 1800s, independent local companies and letter carriers were involved in delivering mail. It wasn’t until 1872 that local carriers were banned and the federal Post Office gained a complete monopoly over every aspect of what we now call first-class and standard mail delivery.

In the age of electronic technology, protectionism can’t save a monopoly. Government-run mail delivery needs a viable business model just like private industries. Otherwise, it will continue to lose market share and to suffer from its own inefficiencies and union workforce issues. The lesson to take away is that even the Post Office has to compete to succeed. If it doesn’t innovate, cut costs, cover its costs, and expand its business, it will lose out to alternative electronic options. The losers will be its remaining customers who still want their mail on time.

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To Save the Library, Don’t Leave Good Ideas on the Shelf

Sometime in the next three months, the Multnomah County commissioners will decide whether to place on the May ballot a measure creating a new taxing district for the county library system. If approved, this would become the chief source of tax support for the district, replacing the five-year operating levies that have been the norm since 1990.

However, before commissioners spend too much time debating the measure, they should back up and ask how much money the library system really needs. There are several indications that the costs of operation are too high.

The most troubling sign is the comparison with other medium-sized urban libraries. The Multnomah County system includes 18 branches, and we spent $62 million to operate it in fiscal year 2010-11. Denver has 22 branches and spent only $30.9 million. How does Denver operate more branches at half the cost?

Seattle has 27 branches that the city operates on a $50 million budget, while Minneapolis has 40 branches with a $69 million budget.

Not only are Multnomah County costs high in comparison, they are rising at a rate much faster than inflation. For example, in 1993-94 the annual library operating budget was $19.5 million, which supported 325 full-time equivalent (FTE) positions (roughly $60,000 per FTE). In today’s dollars, that would equate to $92,000 per FTE, all else being equal. Yet in 2010-11 we spent $127,000 per FTE.

There has to be some fiscal restraint even for services we love. But in traditional public sector collective bargaining, restraint is virtually impossible. Management represents a government monopoly, and across the table is a labor cartel (otherwise known as a union). A monopoly negotiating with a cartel is unlikely to result in a low-cost outcome.

The solution is to shop around and take multiple bids. Jackson County, Oregon shut down its library system in 2006 due to financial strain. As soon as officials were in a position to consider reopening, the county took competitive bids for operations. A private firm in Maryland, Library Systems and Services, offered a bid several million dollars lower than the public employee union. That bid was accepted and allowed the county to open the library system again.

LSSI operates library systems in 17 locations around the United States. By specializing, it is able to offer a better user experience at a lower cost.

Library purists may be hesitant to embrace this model, but it’s commonplace in other sectors of the economy. Timberline Lodge, Crater Lake Lodge and the Oregon Garden are all operated by private concessionaires. Central Park in New York and Portland’s Pioneer Courthouse Square are both managed by private non-profits.

As part of its due diligence, Multnomah County’s Board of Commissioners should compare the cost of our library system with the cost of libraries in other similar cities, then seek competitive bids for operation. The bidding process will provide valuable information that can never be gained by mere study. That information is essential for sound management decisions.

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New Oregon Law Okays Pocketing Other People’s Money

Even the most casual football-watcher has to have noticed the eye-catching ads run by a Fortune 100 company featuring small, courteous things done for others. The commercials portray people making split-second decisions to help someone or to fix a problem they didn’t cause. The ads end with: “Every day, millions of people choose to do the right thing,” and the tag line, “Responsibility―what’s your policy?”

The ads’ impact lies in an appeal to the obvious. You know what’s right, and you do it! Most people in America do what’s right every day.

It makes you happy to think about, doesn’t it?

What if people stopped doing the right thing, or it ceased to be socially and/or legally expected that most people do the right thing?

Things like returning what doesn’t belong to you―bills that flew out of someone’s wallet in front of you at a coffee counter, a package left on your porch that belongs three doors up, items for which you mistakenly weren’t charged at the store―or the state of Oregon’s overpayment on an unemployment check.

According to a November 8 article by Richard Read in The Oregonian, an Oregon state law passed in 2011 exempts some people who have received overpayments on their unemployment compensation from having to return the money.

In Oregon, state unemployment payment errors in the last three years alone add up to $392 million in lost unemployment insurance funds. This is $392 million paid to Oregonians who were not qualified to receive it, that could have been available today to pay other, qualified jobless Oregonians.

The unemployment insurance (UI) system is currently designed to pay new claimants as fast as possible, sometimes before having full information about their eligibility. The new overpayment waiver is meant for people who did not intend to claim benefits they were in fact not entitled to, rather than for those who commit fraud. But waiving the expectation that people return money that isn’t theirs (through deductions from their future benefits) undercuts a culture of responsibility and adds―however incrementally―to a culture of doing whatever you can get away with and pocketing the change.

From tracking down the owner of a wallet full of credit cards to teaching a younger person the importance of honesty, choices we make every day create the society we live in. The Oregon Employment Department should be held accountable for the hundreds of millions of dollars it has lost―money entrusted to it by employers and employees who pay for the UI safety net for qualified jobless Oregonians. The legislature should repeal the new UI overpayment law in the 2012 special session and focus on fixing an Employment Department missing almost $400 million in wrongly paid UI funds. Oregon needs both a more responsible Employment Department and citizens who still choose to do the right thing.

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Blended Learning: Making Technology Work for Students

In the Nation’s Digital Learning Report Card, Oregon received great marks for our state’s full-time online programs and access to blended learning in Oregon’s public charter schools. Oregon received low marks in the national Report Card for failing to make online classes available to public school students on a course-by-course basis. Oregon has also failed to incorporate blended (or hybrid) learning on any notable scale.

In a blended learning environment, “[S]tudents can learn in an online or computer-based environment part of the day and in traditional classroom, even one-on-one tutoring, for part of the day – essentially the best of both worlds combined into one education.” There are many exciting examples of how this is working in classes around our nation.

This video shows the incredible opportunity that most of Oregon’s students are missing out on. Hopefully, such opportunities soon will be coming to a classroom near you:

The Fundamentals of Blended Learning from Education Elements on Vimeo.

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The Postman Winked and Chirped

No more next-day first class mail delivery? This is just the latest sign of an American institution that is quickly outliving its usefulness.

People within and outside the U.S. Postal Service saw the changes coming back in the mid-1990s. In 1995, then Postmaster General Marvin Runyon foresaw the future but didn’t get it quite right. He penned a column for Insight Magazine entitled “Postal Future Is in the E-mail” (Sept. 25). Trying to justify the post office’s existence in the year 2010, he simply confirmed how out of touch government bureaucrats can be. His scenario had a future business person “opening his computer” which “winked and chirped,” showing him “how to get his message into the postal system.” It would be delivered quickly to the post office near the recipient, then printed out and delivered by a postman the next day. The next day, rather than the next minute. Mr. Runyon apparently didn’t understand that the computer was invented in part to get our messages out of the slow postal system and onto the fast Internet, all the way from sender to recipient.

After eight paragraphs trying to convince us that his government agency had a future, he inadvertently stated the obvious. The greatest innovation by the year 2010 in his view: “Post office lines will be a thing of the past.” While there are still long lines in 2011, especially during the holiday season, he eventually will be proven right since you can’t have lines forming in front of counters in an agency that has been replaced by competitive, Internet-based alternatives.

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Capitalism Is Not Democracy

Among the colorful images of Occupy marches and camps over the last few months, one stood out this past weekend.

As several hundred Occupiers marched through downtown Portland on the evening of Saturday, December 3, one wore this sign on his back: “Capitalism is not Democracy.”

Besides the fact that capitalism is a moral economic system based on voluntary exchange, while democracy is a political system, the sign brings several relevant thoughts to mind.

Occupiers seem to have a visceral dislike of capitalism, mixing it up with the cronyism that really should be the focus of their attention. It is a powerful government dishing out favors to its friends (cronies) on Wall Street that is at the heart of Occupiers’ complaints. But those favors would be dished out almost regardless of our economic system. Socialism is rife with such favors also.

But democracy isn’t the answer to Occupiers’ prayers for a more just society. They ignore the fact that taking from one group and giving to another based on a majority, or even consensus vote, has its own moral problems.

If they studied American history as diligently as they chanted and marched, they would recall it was founding father Benjamin Franklin who gave us one of the most colorful and thoughtful descriptions of democracy:

“Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.”*

So, no, capitalism is not democracy, and thank goodness it isn’t.

* While this quote is often attributed to Franklin online, no primary sources have been found to confirm it. The author may actually be unknown.

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The Oregon Education Investment Board: Top Down on Steroids

The recent firing of University of Oregon President Richard Lariviere has unleashed strong feelings on both sides. While he was officially fired by the Oregon Board of Higher Education “without cause,” news reports made the real reasons clear: “The board said Lariviere had to go because he refused to be a team player. Against their directions, board members said, he lobbied for UO initiatives in the Legislature, gave pay raises to a third of UO professors and administrators and skipped important board meetings.”*

While the official firing was done by the gubernatorially appointed higher education board, the focus quickly turned to Governor John Kitzhaber himself and his role in the process. Now the focus should turn to how this high-profile incident is really the opening salvo in a much larger conflict of visions.

That struggle began quietly in the last legislative session, when the Governor’s proposal for one overarching Oregon Education Investment Board to “oversee a unified public education system from early childhood through post secondary education” was approved. The twelve members of that board, all appointed by the Governor, were conveniently confirmed by the Oregon Senate on November 18, just days before word came out that the UO President soon would be fired.

Now that the new Education Investment Board is in place, chaired by the Governor no less, questions abound about what, if any, role the governing boards of Oregon’s K-12 public education system and the currently spotlighted Board of Higher Education will have going forward. In the eyes of this Governor, we need to “break down the silos” that surround different levels of education so as to make more rational, efficient decisions about how we allocate public funds for everything from pre-Kindergarten through graduate education in the state.

Whichever side you’re on regarding the Lariviere firing, realize that the new Education Investment Board likely will make such situations worse. The twelve new Board members and the Governor may be the smartest people in the room, but they apparently have no clue about why their top down “solutions” won’t work, while costing taxpayers ever more precious dollars.

Here is some of what I told legislators when testifying against the new Board’s creation in the last legislative session:

I oppose SB 909 because I’m afraid that the legislature is about to fall into the “bigger is better” trap. You can’t unify everything from early childhood through post-secondary education without pushing power and control even farther away from the people who should matter most – parents and students.

You should ask how this new unifying effort squares with the Education Act for the Twenty-First Century, which passed the legislature in 1991. Remember the certificates of initial and advanced mastery? Some of you probably don’t because they never gained any traction; they just cost taxpayers a lot of money.

And how does this new effort square with the Quality Education Model, which the legislature approved in 1999?

Why haven’t such efforts in the K-12 education system achieved their goals? Because, according to the late education policy analyst John Wenders, they “…suck power upward and away from parents and students into top down, centralized and inflexible political arrangements, where unions and other special interests have more political clout. This causes accountability to decline and results in higher per pupil costs and lower educational results.”

Is the answer really to put everything from early childhood through post-secondary education into one centrally planned system? I’m sure the Governor and the people he’ll appoint to the Oregon Education Investment Board are very smart people. But no such group can hope to design a system that meets the needs of every, or even most, Oregon children and their parents.

To better meet those needs, we should be going in the opposite direction. Find ways to push power down from the current systems toward teachers, and parents and students. Whatever funding the legislature appropriates to education, give the parents and students much more say in where, and how, it’s spent. Until you can move in that direction, the least you should do is reject this latest attempt to push the power even further away from the people who the system is supposed to help.

When I gave that testimony in May, the new Board seemed like just another example of a top down management system that would move us in the wrong direction. Now, the Lariviere episode makes it clear that if this Board’s powers are allowed to be fully implemented it will look more like Top Down on Steroids.

Finally, Phil Knight was responding to Lariviere’s firing when he said, “It deeply saddens me that some people in power in our state continue to drive Oregon into a death spiral with their embrace of mediocrity.” In the upcoming February legislative session, lawmakers should consider that centralizing control over all education, even by people who are far from mediocre, can lead us down the same destructive path.

There is still time to reverse this ultimate centralization of education power in our state. Oregon students and taxpayers deserve better than Top Down on Steroids.

* University of Oregon rally pushes for independent board after firing of president Richard Lariviere, Bill Graves, The Oregonian, November 29, 2011.

Deconsolidate Oregon’s School Districts, John T. Wenders, Ph.D., Cascade Policy Institute, March 2005.

Phil Knight on Richard Lariviere firing at UO: ‘an application of Oregon’s Assisted Suicide law’, Bill Graves, The Oregonian, November 23, 2011.

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Education Savings Accounts Multiply Options for Kids

Kids do better when their parents have the freedom to choose the right kind of educational program for them, without regard to whether the program is public or private. Nine out of ten gold standard social science studies showed that vouchers improve student outcome, and 18 out of 19 showed that they positively impact regular public schools. The remaining studies showed no impact.

But vouchers still limit options. Sometimes home school or a combination of public or private school, tutoring, and home school may be the right fit. Additionally, if set too low or too high, vouchers can limit student options or artificially inflate the cost of education.

The solution? Education savings accounts, which are now available to special needs kids in Arizona. Under the new program, if a child with special needs leaves public school, a portion of the state per-pupil funding will go into a personal education savings account. The money can be used for private school tuition, online courses, tutoring, or home school curriculum. Any unspent money can be used for college within four years of high school graduation.

Such a program harnesses the benefits of vouchers, while tapping into the psychological and financial benefits of asset building. Of children who expect to one day graduate from a four-year college, those with savings accounts are six times more likely to attend college by the time they are 23.

It is time that Oregon extend such educational opportunities to our students.

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Health Care’s Newest Epidemic: Red Tape

By Douglas A. Perednia, M.D.

Here’s a riddle: What costs Americans over $12 billion per year, generates more work than the nation’s thirteenth largest employer, drives millions of doctors and patients crazy, and is growing so fast it makes kudzu look stunted? The answer: the over half-billion hours of health care paperwork mandated last year by the Department of Health and Human Services (HHS). Even before ObamaCare the burden of HHS paperwork had been doubling every six years. The sheer complexity of the health care reform law guarantees a massive increase between now and 2020.

Combined with the red tape generated by insurance companies, state governments, and a proliferation of other organizations, this administrative overhead is a major reason why the cost of health care continues to grow at a rate that dwarfs increases in the nation’s gross domestic product. Our marginal health care dollars are generating less health than ever.

These insights come to us courtesy of the Information Collection Budget of the United States, an annual report that documents the amount of time Americans must spend filling out forms at the behest of Washington bureaucrats. By far the biggest paperwork offender is the tax-levying U.S. Treasury, which accounts for 84% of the 8.8 billion hours consumed. But while Treasury paperwork has grown 25% since 1999, the amount mandated by HHS has risen by 331% – far outstripping the growth rate of any other federal agency. Unchecked, HHS will generate more paperwork than all other non-Treasury federal agencies combined by 2015.

Figure 1 shows the amount of private sector paperwork demanded by HHS, compared to the total amount required by all other non-Treasury departments. The recent drop in non-HHS paperwork is purely the result of agencies lowering their estimates of how long their paperwork takes to complete. Nevertheless, last year HHS bucked even this trend with an increase of nearly 50 million hours. Only 15 million of those were attributed to ObamaCare.

Figure 1.

Another way of looking at HHS paperwork is to express it as a proportion of all non-Treasury paperwork Americans must complete in the course of each year. This is shown in the Figure 2.

Figure 2.


The burden of paperwork required by HHS is growing so fast that it now accounts for almost 40% of all non-Treasury paperwork, dwarfing the individual contributions of agencies like the EPA, the SEC, Homeland Security, and the Department of Labor. And it seems willing to demand more information at any price. HHS is now the nation’s foremost offender with respect to the Federal Paperwork Reduction Act, with sixty-five violations in FY 2010. This is nearly 60% of the violations generated by the entire federal government.

Just how much is 542 million hours of paperwork? Imagine 271,000 people employed doing absolutely nothing other than filling out forms at the behest of HHS. If these people were all in a single private company, it would have more employees than Albertsons. At the current rate of increase, over 540,000 full-time employees would be needed by 2015. That would make HHS paperwork the second largest employer in the country, right behind Walmart. The cost to the private sector for supplying the government with all that information? Nearly $26 billion.

Most of the people doing this work are doctors, patients, and armies of administrative personnel hired by hospitals, clinics, nursing homes, and private offices to help handle the load. All of these documents are in addition to those they have to complete for literally thousands of private health insurers, disability insurers, state governments, licensing boards, and accreditation organizations. If you want to know why your insurance premiums are rising at 9% per year, this is a big part of the answer.

Why does HHS need all of this information? Quite simply, federal regulators are now struggling to control nearly every aspect of health care – from the price and distribution of hundreds of thousands of health care-related goods and services, to the benefits to be included in private health insurance policies, to exactly what procedures doctors must follow when dealing with patients who smoke. It is an impossible task. No central authority can possibly gather and process enough information fast enough to reconcile the needs of hundreds of millions of patients, providers, and medical suppliers. Free markets are efficient precisely because such information is passed along automatically, instantly, and for free in the form of prices, inventories, and demand.

HHS’s information budget should warn us that the only way to truly reduce health care costs in the long term is by dumping government controls and returning to something that looks far more like a free market in health care goods and services. The entire system needs to be drastically simplified, and fast.

To borrow a phrase from the President, we can’t wait.


Douglas A. Perednia, M.D. is a physician and senior research associate at the Cascade Policy Institute. He is author of the book Overhauling America’s Healthcare Machine: Stop the Bleeding and Save Trillions, published by Financial Times Press, and writes for the blog The Road to Hellth. Dr. Perednia is a guest writer for Cascade Policy Institute, Oregon’s free market public policy research organization.

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“If You Save One Life, You Save the World”

Among the blessings for which to be thankful this holiday weekend is the charitable legacy of Theodore Forstmann, who died last Sunday at age 71 after a battle with cancer.

Known to the financial world as CEO of IMG and the Senior Founding Partner of Forstmann Little & Co., Ted Forstmann was also well known for his commitments to philanthropic causes, particularly those helping children.

Forstmann’s interest in education led to his involvement in providing scholarships to children of low-income families. In 1998, he and the late John Walton cofounded the Children’s Scholarship Fund. The Children’s Scholarship Fund is the country’s largest charity helping parents send their children to the school of their choice. Forstmann and Walton challenged local donors across the country to join them in funding the initial 40,000 K-12 scholarships worth $200 million.

Forstmann said, “Every child, regardless of their parents’ income, should have access to a quality education – an education that will not only prepare them for successful private lives, but help them to build cohesive communities and a strong democracy. We believe if you give parents a choice, you will give their children a chance.”

He was also known to say, “If you save one life, you save the world.” The Children’s Scholarship Fund has helped almost 123,000 low-income children nationwide, including more than 600 here in Oregon. The Children’s Scholarship Fund-Portland is thankful for Ted Forstmann’s vision and for the generosity that opened a world of achievement to low-income kids with few options.

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Steve Buckstein debates the morality of capitalism

Senior Policy Analyst Steve Buckstein debates an Occupy Portland participant at its downtown camp about the Morality of Capitalism on the Victoria Taft Show, KPAM radio, Friday, October 21, 2011. Steve’s portion begins about 40% into segment.

Steve Buckstein on Victoria Taft Show

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Kathryn Hickok talks with Bill Meyer about charitable giving

Kathryn Hickok talks with radio show host Bill Meyer to discuss impacts of changes in the tax code on charitable giving.

Kathryn Hickok on the Bill Meyer Show

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Taking Another Shot at the Profit Motive

The Occupy movement is encouraging people to take their money out of “big Wall Street banks” and to open accounts in local credit unions. Now, a Portland mayoral candidate is urging the city to do just that with some of its official funds.

Big banks are understandably under fire for their role in the recent economic downturn and for their ability to get bailed out by their friends in Washington, D.C. But the call for moving deposits from banks to credit unions relies in part on an assumption that must be challenged.

One reason mayoral candidate Jefferson Smith gives for advocating that public funds be deposited in credit unions is that “[a]s not-for-profit financial institutions, credit unions don’t pay boards or stockholders, meaning credit unions can offer advantageous interest rates.”

What Smith and the Occupiers apparently don’t understand is that profit is not so much a cost that raises prices as it is a signal that consumer needs are being met. Satisfy more consumers, and a business can earn more profits. And, those profits don’t have to come at the expense of higher prices. In fact, some of our most profitable businesses got that way by lowering prices to attract more customers.

So, if credit unions offer a better deal, then by all means consider them. Just don’t fall for the profit-is-bad justification touted by some candidates and protesters.

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Occupy Portland: Don’t Replace One Set of Thieves With Another

The recent Occupy Wall Street/Occupy Portland movement has focused attention on a number of perceived ills in our society. Fortunately, a new book, written before the movement began but distributed in the middle of it, can shed light on why many of the “occupiers” blame the wrong people for their troubles and risk replacing one set of thieves with another.

The Morality of Capitalism* is a short book of essays written by entrepreneurs, philosophers, and economists. Each brings his own perspective to the subject. The editor, Dr. Tom Palmer, may have anticipated the Occupy movement, because he included in the book’s Introduction a timely discussion of free-market capitalism versus crony capitalism. It’s a discussion that the occupiers would do well to read.

Tom Palmer is on a book tour, which included a forum sponsored by Cascade Policy Institute in Portland on November 3. Just a few blocks from city and federal parks “occupied” by a mix of protesters, homeless, and street youth, he shared his insights on the movement and where it goes wrong.

He thinks the occupiers yearn for a world before modernity. The creative destruction involved in progress and innovation scares them. Here is a summarized example Palmer used that younger audience members may not have related to, because the innovation it involves largely happened before they were born:

Not too many years ago people went to school to become typewriter repairmen. Every town had a typewriter repair shop and you could earn a respectable living repairing them all your life. Then, personal computers were invented and typewriters virtually disappeared, putting the repairmen out of work. What happened to them? They all starved (just kidding). No, they retrained for other, more useful jobs and we all benefitted from the computer revolution. The typewriter repairmen didn’t die — the way things had been done died.

Palmer places blame for the recent economic crisis at the feet of government enterprises, including The Federal Reserve System, mortgage facilitators Fannie Mae and Freddie Mac, and The Bank for International Settlements.

He explains that free-market capitalism involves profit and loss, but cronyism is only about profit. Losses are pushed off onto the taxpayers. Cronies are friends of those with political power. They seek protection from market forces. They urge their political friends to outlaw their competitors and to bail them out with taxpayer funds when their risky schemes go wrong. Those now occupying Wall Street and Portland parks may have identified the cronies, but they mistake them for those who bear the ultimate blame.

One of Palmer’s more colorful descriptions may resonate with the occupiers. He postulated that most nations were established by pirates―stationary pirates who, rather than periodically attacking ships and looting them, now could loot smaller amounts from their subjects all the time.

Another very powerful insight might make the occupiers stop and think about their assumption that the rich got that way by stealing from the rest of us, thus making us poor. Palmer pointed out that poverty has no cause. Wealth has causes. Poverty is the absence of wealth. In the Introduction to The Morality of Capitalism, he states:

In many countries, if someone is rich, there is a very good chance that he (rarely she) holds political power or is a close relative, friend, or supporter—in a word, a “crony”—of those who do hold power, and that that person’s wealth came, not from being a producer of valued goods, but from enjoying the privileges that the state can confer on some at the expense of others.

In a country with a primarily free-market capitalist system, the rich got that way by providing value to others. They created, made, and/or sold goods or services that lots of us value and are willing to pay for. We value those goods or services more than the money we voluntarily give up to acquire them. Both sides of these transactions benefit.

Boiled down, the essential difference between free-market capitalism and every other economic system is that capitalism involves voluntary transactions between willing buyers and willing sellers. It is this voluntary feature that makes capitalism moral.

Occupiers don’t seem to have grasped this important concept. Too many of them seem hell-bent on trying “…to redirect crony capitalism in the protesters’ preferred direction, stealing for them rather than from them.” Theft, whichever direction it goes, is still theft.

*The Morality of Capitalism: What Your Professors Won’t Tell You, edited by Tom G. Palmer. Published by Students For Liberty & Atlas Network
(http://studentsforliberty.org/wp-content/uploads/2011/04/The-Morality-of-Capitalism-PDF.pdf).

Gary Galles, “Protesters’ gripe is with crony capitalism,” October 12, 2011
(www.ocregister.com/articles/capitalism-321676-others-crony.html).

 

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Make the Grade with Online Options

Kids today learn how to use a computer or a video game system before they can even read or write, yet states are not taking advantage of this kind of technology in education, according to the Nation’s Digital Learning Council.

The Council released the first Nation’s Digital Learning Report Card last month, evaluating states on their adoption of healthy policies to help kids get more out of their education through online courses and materials.

Oregon received high marks for our state’s full-time online programs, thanks to online public charter schools. Charter schools are privately run public schools, in which parents can choose to enroll their children regardless of their residential district. Oregon’s online charter schools are growing quickly, but they still serve only about one percent of public school students.

Meanwhile, Oregon received low marks in the national Report Card for failing to make online classes available to public school students on a course-by-course basis. Yet, the need for such options is undeniable.

Consider that 75% of Oregon schools fail to offer students Advanced Placement or IB classes in reading, math, science, and social studies. Contrast that with states like Florida, where thousands of kids attending regular public schools that don’t offer in-house AP courses can access effective online advanced courses, as well as courses designed to help them catch up with their peers.

Oregon’s legislature will soon consider online learning again, since it commissioned a task force to examine governance for online charter schools. But instead of focusing on how to govern our state’s successful online charter schools, legislators should focus on removing the barriers that keep so many children from the valuable online opportunities available to kids in other states and nations.

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Personal Health Accounts Empower Medicaid Recipients

As Michael Sherraden pointed out 20 years ago in his book Assets and the Poor: A New American Welfare Policy, the key to getting ahead is not income but assets. People play better and smarter when they have a stake in the system.

According to research, assets not only provide financial security, but they cause people to lead more stable lives, think in longer time frames, be more involved in community affairs, and have more hope for the future.

While many government programs discourage asset accumulation, causing low-income individuals to miss the psychological and tangible benefits of asset building, some states are trying a new approach. South Carolina is testing personal health accounts in a pilot project for Medicaid recipients. Participants get high-deductible insurance paired with savings accounts for medical expenses that aren’t covered by insurance, all funded by Medicaid. When program recipients increase their income and no longer qualify for Medicaid, they keep the balance in their health accounts.

The program realizes the benefits that higher income individuals (and businesses) have already seen from switching to high deductible insurance paired with health savings accounts: People make smarter decisions about what health care they need or want when they have “skin in the game.” That “skin” is the balance of their health savings account.

Isn’t it time that Oregon think outside the box to incorporate asset building into its safety nets?

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The President’s Tax Proposal Would Cripple Charities

President Obama proposed once again that Congress reduce the federal itemized tax deduction for charitable contributions. He argues that people don’t give to charity to get a tax deduction and increased revenue could pay for other things (in the latest instance, his Jobs Act).

“I’m assuming that that shouldn’t be a determining factor as to whether you’re giving that $100 to the homeless shelter down the street,” the president said in 2009.

A tax deduction is not the motivating factor for most people who give. But lower taxes are an empowering factor. How much you give has a lot to do with how much you can give. Charitable giving is discretionary. If you pay more in taxes, it stands to reason that that money will be made up somewhere else in your budget.

Brian Gallagher, president of United Way Worldwide, notes that Obama’s proposal would reduce charitable giving by $2.9 to $5.6 billion per year, according to one study.

“That equates to eliminating all of the private donations each year to the Red Cross, Goodwill, the YMCA, Habitat for Humanity, the Boys and Girls Clubs, Catholic Charities, and the American Cancer Society combined,” Gallagher said.

State budgets for social services and safety nets are stretched, charities are struggling, and needs are increasing. The Senate was wise to reject using the charitable tax deduction as a chance to raise taxes on Americans who are voluntarily and generously stepping up to meet those needs during a recession.

 

(Disclosure: Cascade Policy Institute is a charitable corporation that benefits from donors being able to deduct their contributions.)

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Report on Stabilizing Multnomah County Library Funding Released

FOR IMMEDIATE RELEASE

October 25, 2011

Contact:

John A. Charles, Jr.
President & CEO
Cascade Policy Institute
Office Phone: 503-242-0900
Cell Phone: 503-459-3727
E-Mail: john@cascadepolicy.org

Cascade Policy Institute Releases Report on Stabilizing Multnomah County Library Funding

Portland, OR – When Jackson County, Oregon faced millions of dollars in budget shortfalls in 2006, the county eliminated funding for public libraries and closed them. Shortly afterward, the county decided to reopen the libraries―accepting competitive bids for operations. The winning bid―by a Maryland-based firm―saved Jackson County several million dollars per year.

Now Multnomah County Library is at a crossroads in the way its future revenue will be generated. The County Commission is considering the formation of a library tax district. This would make the library an independent taxing entity.

However, a library tax district is not the only way to stabilize the budget. Cascade Policy Institute’s new report, Checking Out the Options: Creating stable funding and superior service at the Multnomah County Library, by Christopher Robinson, presents several ideas for funding libraries without raising taxes.

Other options include contracting out library operations as Jackson County did or generating revenue through small user fees rather than generalized taxation. Additionally, Multnomah County could reduce the operations cost to bring the system in line with comparable cities such as Denver and Seattle.

Click here to download the full report.

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About Cascade Policy Institute

Founded in 1991, Cascade Policy Institute is Oregon’s premier policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility and economic opportunity. To that end, the Institute publishes policy studies, provides public speakers, organizes community forums and sponsors educational programs.

For more information or to schedule an interview, contact John A. Charles, Jr. at 503-459-3727 or john@cascadepolicy.org.

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Cascade Update Fall 2011

The fall edition of Cascade Update is here! Read about Oregon’s “Year of School Choice,” “Right to Work” laws, Cascade’s 20th Anniversary, and more. If you didn’t receive it in your mailbox, click here to read the pdf version.

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When Does Theft Turn into Taxation?

The Occupy Wall Street/Occupy Portland crowds are demanding that “rich people” pay their “fair share” of taxes. While it’s arguable that high-income taxpayers are paying well beyond their “fair share” already, perhaps we should take a step back and look at taxation in a different light.

I recently noted that a Portland City Hall staffer lists as his favorite quote a statement made by Atlas Shrugged author Ayn Rand:

“Everyone has the right to make his own decisions, but none has the right to force his decisions on others.”

So, do you have the right to take your neighbor’s car just because you decide that you want to drive it? No, most of us would call that theft.

What if you and three of your friends decide to take your neighbor’s car and drive it? Is that OK?

What if you and those same three friends decide to take your neighbor’s car and give it to a poor person who has no transportation? Does your noble intent make your actions OK?

What if you and three thousand people decide to take the car and give it to that poor person? How about thirty thousand people voting to making that decision?

So, at what point does the immoral act of theft become the moral act of taxation?

The occupiers, and all of us, might want to think about such questions before demanding that anyone give up something they own without their consent.

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PRESS RELEASE: National digital report card finds Oregon needs more online learning opportunities

FOR IMMEDIATE RELEASE

October 13, 2011

Contact:

Christina Martin
Policy Analyst, School Choice Project Director
Cascade Policy Institute
Phone: (503) 242-0900
E-Mail: christina@cascadepolicy.org

National digital report card finds Oregon needs more online learning opportunities

PORTLAND, Ore.- Today, Digital Learning Now! released the first Nation’s Digital Learning Report Card along with the Roadmap for Reform. Cascade Policy Institute joins those calling for policymakers to take bold action to bring education into the 21st century.

“Kids today learn how to use a computer or a video game system before they can even read or write,” said Christina Martin, policy analyst at the Cascade Policy Institute. “But the sad fact is that not even 10 percent of schools take advantage of this kind of technology in education.”

The new report provides a comprehensive guide to help governors, state education chiefs, state lawmakers and policymakers adopt bold reforms to transform education for the digital age.

“Digital learning provides unprecedented opportunity for delivering rigorous and personalized educational material,” said Martin. “With this report, policymakers across the nation will be better able to see how to incorporate this technology into their schools.”

Among the elements of high quality learning, Oregon received higher marks for its strong full-time online programs, primarily thanks to its online charter schools, and a 2011 bill that ended several enrollment restrictions.

However, it received many low marks for lacking opportunities for students to take online classes on a course-by-course basis. Many students across the state still do not have this opportunity.

“Cascade Policy Institute strongly supports increasing educational options for kids. Online learning is one very important option where we have seen great inroads. But there is still more work to be done, particularly to increase access for part-time online programs and blended learning,” said Steve Buckstein, who founded Cascade Policy Institute in 1991 to advocate for more school choice for Oregon’s students.

Released this afternoon at the National Summit on Education Reform 2011, held by the Foundation for Excellence in Education, the Roadmap for Reform provides the nuts-and-bolts policies that states need to transition to a student-centered education that prepares students with the knowledge and skills to succeed in college and careers.  Each state also received a report card that assesses current laws and policies and their alignment to the 10 Elements of High Quality Digital Learning.

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About Cascade Policy Institute

Founded in 1991, Cascade Policy Institute is Oregon’s premier policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility and economic opportunity. To that end, the Institute publishes policy studies, provides public speakers, organizes community forums and sponsors educational programs.

For more information or to schedule an interview, contact Christina Martin at 503-242-0900 or christina@cascadepolicy.org.

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The Battle of the Book Worms: Who Should Pay for “Free” Public Libraries?

By Christopher Robinson, John A. Charles Jr., and Kathryn Hickok

When Jackson County, Oregon faced millions of dollars in budget shortfalls in 2006, the county eliminated funding for public libraries and closed them. Shortly afterward, the county decided to reopen the libraries―accepting competitive bids for operations.

Now Multnomah County Library is at a crossroads in the way its future revenue will be generated. The County Commissioners want to create a Multnomah County Library tax district. This would make the library an independent taxing entity.

A library tax district is not the only way to stabilize the budget. Contracting out library operations like Jackson County could reduce costs while improving services. It is also possible to generate revenue through small user fees rather than generalized taxation.

While many library purists argue that user fees conflict with the concept of “free” public libraries, it is important to remember that the service is not actually free, and property-tax-based levies hit lower-income people the hardest. Some group of people always pays, so the question is which group and on what basis? Small user fees could give library managers strong incentives to provide more services highly valued by patrons, generating more revenue. That would make library patrons and managers better off.

Multnomah County Library is a valuable community asset. Budget constraints do not have to mean reduced services. Competitive bidding and user fees could reduce costs and stabilize funding for the library system without raising taxes on residents.


Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research center. John A. Charles, Jr. is President and Kathryn Hickok is Publications Director at Cascade.

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Oregon’s $392 Million Unemployment Mistake

According to the U.S. Department of Labor, almost $19 billion in state unemployment benefits were paid in error over the last three years. Oregon paid an estimated $392 million in error ― about 12.2% of all state unemployment benefits paid during that period.

The Labor Department’s report only examined the mispayments within state programs, which usually last up to 26 weeks. These figures do not include the federal unemployment benefit extensions that allow many workers to claim up to 99 weeks (almost two years) of unemployment benefits.

While Oregon’s Employment Department recovers some mispayments, quarterly statements show that the majority is not recovered. The current federal-state system provides little incentive to state agencies to reduce administrative costs, fraudulent claims, or other payments in error.

Unemployment insurance is not unique in its problems. Reports abound of fraud, waste, and abuse in most areas of government. Consider the $100 billion lost annually in Medicare and Medicaid fraud, the $600 million paid to deceased federal employees, and the expensive Solyndra scandal. No wonder a recent Gallup poll showed Americans believe that government wastes half of all tax dollars.

Government is a poor substitute for personal accountability. Individuals provide far better accountability to each other and to themselves than government programs can. That’s why markets bring us amazing and affordable products while government brings us mediocre to poor programs and high costs. Until we recognize that and alter government accordingly, we will continue to waste hard-earned money on programs with big costs and little payoff.

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“Real” Accountability for Charter Prep Should Extend to the Whole System

With the recent failure of the Portland-based REAL Prep Charter Academy to open its doors, even after spending $500,000 of federal grant development money, parents and taxpayers are demanding more “accountability” for Oregon’s charter schools. But who should hold these schools accountable?

Consider the case of the Willamette Education Service District (WESD), a public entity which provides services like special education to school districts. Despite “oversight” by the state and a board of governors, clear and compelling reports of misconduct delivered by a reputable ESD leader were ignored for years.

As far back as 2004, a neighboring ESD leader, Bob Nelson, alerted the Oregon Department of Education, the Secretary of State’s Office, state lawmakers, and local education officials to no avail. It took media intervention to make a real difference. A 16-month Statesman Journal investigation revealed mismanagement including awarding “no-bid contracts, questionable property deals and supposedly self-supporting ventures that failed, lost money or drew formal complaints and lawsuits.” These mistakes cost taxpayers millions.

Regarding the WESD scandal, the Statesman Journal concluded, “The problems have been compounded during the past 10 years by lax board and state oversight and quid pro quo arrangements with state officials who were operating within a similar culture of mismanagement — a culture that continues today. And in spite of recent improvements, some problems continue unabated.”

Problems with oversight are not limited to just the Willamette ESD episode. A cursory glance reveals a history of management or ethics problems in many school districts across the state. Even in the absence of shady practices, the fact that we are spending on average more than $11,000 per pupil and getting mediocre to poor results (Education Week ranks Oregon 43rd), should clearly indicate lack of accountability and poor management in the system. Within Portland Public Schools alone, mismanagement problems are not limited to the REAL Prep charter scenario, but extend to chronically failing schools (like Jefferson High, which reportedly moved a principal last year due to mismanaging funds), failed property management (consider Whitaker Junior High for an utter waste of resources), and a dismal on-time graduation rate of 53%.

It is tempting to imagine some dream team of “smart people” who can oversee operations of schools and ensure they operate efficiently to provide the best education possible with the public funding they have. But such dreams are just that: imaginary. In the real world, government oversight rarely ensures efficiency, thrift, or effectiveness.

In contrast, in the business world, financial mismanagement can persist only for a limited time before the operation goes out of business. That is exactly what is happening with REAL Prep. REAL Prep founders are facing the consequences of poor planning: Their dream of ensuring future income working in an industry they loved is gone, with little to show for it other than humiliation.

Wasting 500,000 tax dollars is terrible. But because charter schools face more realistic financial demands (demands from which regular public schools are frequently sheltered), poorly managed schools can’t operate indefinitely. An ineffective, inefficient, or unwanted public charter school either must shape up or close its doors. That is not a tragedy, in the grand scheme. It is an important form of accountability, one from which regular public schools have been sheltered for decades.

Such protection for public schools has not been a boon. Rather, it has enabled the sort of culture which allowed the WESD to waste millions, unimpeded for years. The same shelter keeps chronically underperforming schools from improving, and allows districts to continue sick practices like “passing the trash” (transferring the worst teachers and administrators to other positions or schools rather than firing them).

The key solution for the education system is the same as that for the WESD. Legislators passed a law this year that allows some districts to opt out of ESD services and to keep most of the dollars that otherwise would be given to an ESD. That means districts can hold WESD accountable because now it has to earn their patronage.

Likewise, districts and schools should be held accountable by forcing them to earn student attendance. This can be best accomplished by increasing students’ other educational options through open enrollment in public schools, more charter schools, and K-12 education tax credits and opportunity scholarships that allow more students to attend private schools.

As for REAL Prep, more accountability is the answer to prevent future failures from wasting tax dollars. But the accountability should be parents, not politics.

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Unemployment Accounts: A Better Way to Protect the Unemployed

Cascade is hosting this special invite-only event. If you have not received an invite yet, please contact Christina Martin at christina@cascadepolicy.org to request one. We chose to limit the numbers of attendees for the event in order to foster a better environment for discussion, but we also welcome your enthusiasm to participate and hope to allow as many interested parties, as is practical, to attend.

On October 25, while you enjoy a delicious lunch, international experts on unemployment insurance will give a presentation on unemployment insurance reform.

These economists will explain some of the expensive problems with our current unemployment insurance program and discuss what their research reveals about how we could improve it to help workers keep more of their hard-earned money while actually closing gaping holes in the safety-net.

Their conclusion compliments decades of research that show how personal savings is the key to getting ahead and ending cycles of poverty.

Come hear Stéphane Pallage and Christian Zimmermann propose a way forward for Oregon’s workers and our unemployment insurance system.

This event is INVITE only. So please contact Christina Martin at christina@cascadepolicy.org if you would like to request an invitation.

Three course luncheon included – salad, chicken entrée, dessert, plus beverage.

About the Speakers:

Stéphane Pallage is Professor and Chairman of the Department of Economics at the University of Quebec in Montreal (UQAM). He holds a Ph.D. in Economics from Carnegie Mellon’s Tepper School of Business. He has written extensively on the optimal design of unemployment insurance programs in many peer-reviewed academic journals.

Christian Zimmermann is Assistant Vice President at the Federal Reserve Bank of St. Louis. He holds a Ph.D. in Economics from Carnegie Mellon University. He previously worked at the University of Connecticut and the Bank of Canada. He has published articles in numerous peer-reviewed academic journals.

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Free citizen education forum on Urban transportation and the CRC Light Rail Project

Citizens are warmly invited to hear five national experts share research on the myths and truths behind federally funded transportation infrastructure. This is a joint regional/national event, bringing in speakers around the country from the national think tank, the American Dream Coalition.

Come to this free, half-day conference on transportation solutions, their trade-offs, how to effectively address congestion, costs and funding, efficient use of public funds, bus service systems that actually work and how enforcement has been used to alleviate crime issues often associated with transit.

Come and hear about what other communities are doing to solve urban transportation problems and how these solutions can be applied in our region.


SPEAKER TOPIC
Tiffany Couch, Washington. Forensic Accountant & Financial Investigation, Acuity Group, PLLC Forensic Accounting Update – How has $152M in Federal and State Tax Dollars been spent so far?
Wendell Cox, Illinois. Public Policy Consultant, Principal of Demographia Improving economic growth and the quality of life in the Portland-Vancouver area
Tom Rubin, California. CPA, CMA, CMC, CIA, CGFM, CFM. Consultant for major transit capital projects How Cost-Effective Are Buses and Light Rail?
John Charles, Oregon. President and CEO Cascade Policy Institute Will Transit-Oriented Development Work in Vancouver?
Karen Jaroch, Florida. Licensed Professional Engineer. Co-founder of the Tampa 912 Project How to Organize Ideas into Action
Randal O’Toole, Oregon. Cato Institute Senior Fellow, Founder of American Dream Coalition What Are the Prospects for Federal Funding of the CRC?

 

Please visit http://btgaps2-stevescare.eventbrite.com to register!

Online registration is encouraged, but not mandatory.

 

 

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Rubber-Tire Contempt: TriMet’s $1.5 Billion Plan to Deliver Inferior Transit Service

As a young environmental activist growing up in north Jersey in the 1960s, I took transit buses all over – into Newark, Elizabeth, and New York City. Later, as a college student in Pittsburgh, I took Greyhound across the state many times to get home.

For environmentalists, it was a badge of honor to abandon our 9 MPG autos and travel on a bus with 35-45 other passengers. The oil embargo was very real. We had odd/even license plate days for gas fill-up in 1973, so it seemed like a form of patriotism to be frugal.

Times have certainly changed. Cars have become more efficient, and chronic urban smog has permanently disappeared due to improved auto technology. That’s the good news. But the bad news is that many transit agencies are no longer content to merely provide a service to those unable or unwilling to drive in a private vehicle.

Portland is the poster child for this problem. In fact, TriMet doesn’t really care about transit service per se; the agency is obsessed with expensive trains that are supposed to recreate the way entire neighborhoods function, through “transit-oriented development.”

TriMet is so contemptuous of bus service that the agency is building massively expensive trains that simply replace cheap buses. And the replacement service is actually worse. The Milwaukie light rail line, now being built by TriMet (even though they have very little of the required funding in hand), is breathtaking in its sheer wastefulness. It will cost $205 million per mile for a train that will average 17 MPH. It will make the daily commute for current Milwaukie bus riders worse by forcing them to transfer to rail at Milwaukie. Rail will never offer express service; but there are already at least four bus routes on McLoughlin that offer a menu of local, limited-stop, and express bus routes.

Worse yet, the train will take 68 businesses and 20 residences. More than 60 mature shade trees on SW Lincoln Street near PSU are being cut down this week.

How can one government agency spend $1.5 billion for a mere 7.3 miles of train service, to provide a level of transit that is demonstrably inferior to bus service being replaced?

The answer is that TriMet is institutionally designed to fail. The agency has a monopoly on service and a monopoly on subsidies. Actual customers only account for about 25% of the agency’s operating revenue and none of the capital funds used for construction. So customers don’t really matter. TriMet does what its management wants, simply because it can.

I was down at Lincoln Street for an hour watching the trees getting cut. It was one of the saddest things I’ve ever seen a governmental agency do. The street is already served by the #17 bus. The train is simply unnecessary. Yet, for the 906-foot segment of Lincoln Street that is being wrecked, we will spend $35.2 million.

If you had $35 million to spend to improve three blocks of an urban street, how would you spend it? Not on light rail. Not if it was your own money. Not if you actually cared about the urban environment.

The Obama presidential bus only cost $1.1 million and rides on regular roads. Couldn’t we have just bought a few of those, run them up and down Lincoln Street, and saved the trees? I’m sure they would offer a much nicer ride than generic light rail cars.

The day the Portland City Council put private bus companies out of business in 1968 was a sad day in local history. Private companies could never get away with destroying a street like this or spending $1.5 billion on a pointless boondoggle.

TriMet is hopelessly corrupt. It’s time to admit that the agency is out of control and has utterly lost sight of its mission. Maybe in 2012 the legislature should consider abolishing this rogue agency, and starting fresh with a market-driven transit concept that focuses on actually serving customers with the best transit at the lowest public cost.

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Drop the Envy Card: Wealth Grows From Serving Others

The politics of envy is alive and well. Too many Americans, including President Obama, propose to “tax the rich more,” even though the top one percent of earners already pay 38% of all federal income taxes and most really do pay higher rates than the rest of us. They argue that “obscenely wealthy” people such as Bill Gates and the Walton family somehow violate the American sense of fairness.

According to these misguided people, if only the wealthy paid their “fair share” and gave a bit of their “outrageous fortunes” back, everything would be fine.

Choosing the Walton family and Bill Gates as examples of the “obscenely wealthy,” however, are especially poor choices. Their creations, Walmart and Microsoft respectively, give millions of Americans more convenience, better prices and more productivity than we ever had before. Too many of us assume wealth can only come at the expense of others. In reality, most wealth comes from meeting the needs and wants of others in the marketplace.

Some point to new data that show poverty is growing. But it isn’t growing because some become wealthy. As Robert Sheaffer put it in his book, Resentment Against Achievement, poverty is the default condition of mankind. Nobody creates poverty; it is wealth that must be created. In a free society, wealth is created by helping others. The politics of envy will leave us all worse off. It’s time to grow up, and stop blaming our problems on those who succeed.

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You’re teaching my child what? And it is costing us how much!

Join U-Choose exploring public education. Speakers will present information on the history and degradation of curriculum, sex education, censorship of children in the classroom, and parents’ rights. The impact on youth, adults and the family will be addressed. Solutions provided.

Featured Topics/Speakers:

Progressive” Education: How did we get here? How John Dewey’s vision of progressive education was implemented, resulting in the weak “dumbed down” curriculum of today.

Rob Kremer, Host of Kremer and Abrams KXL Radio 101FM, Founder and President of Oregon Education Coalition, Principal Third Century Solutions

“Dumbing Down” of America’s Youth – Is this real? See examples of the watered down teaching in math, science and English that present day students are receiving in our schools compared to a century ago.

Dr. Chana Cox, Senior Lecturer in Humanities, Lewis and Clark College

Sex “Hyper” Education Indoctrination – Human Sexuality is a far cry from the biology of reproduction. Now by law students in Kindergarten through 12 grades will be taught everything from mutual masturbation to homosexual experimentation. Discover why this is important to government educators.

Suzanne Gallagher, Business Owner, Former Candidate for State Representative, Pro-Family Activist

Political Incorrectness and Censorship – What are your rights? Learn about “viewpoint discrimination” including Anti-Christian, and what you can do to defend your right to direct your child’s education.

Herb Grey, Esq.- Alliance Defense Fund Affiliated Attorney

 

America and our children face a bleak future. Their future depends on acting now!

When: Tuesday, October 18, 6:30pm- 9:00pm

Where: Word and Spirit Church, 6140 NE Stanton Street, Portland 97213, 503-771-0022

Child Care available. RSVP with number and ages to Suzanneuchoose@gmail.com.

$5 donation welcome at door.

 

If you can help with event publicity within Portland areas, please contact

Debra Mervyn 503-819-8800 at debrauchoose@gmail.com

 

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Cascade Book Forum: The Morality of Capitalism by Dr. Tom Palmer

Cascade Policy Institute is hosting Dr. Tom Palmer, senior fellow at CATO Institute, presenting on his book, The Morality of Capitalism: How Free Markets Create Justice and Prosperity.

Click here for a sneak peak at the book and his presentation here in Portland.

Click here for the PDF flyer of the event.

RSVP to Deanne Kastine at deanne@cascadepolicy.org or 503-242-0900.

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Oregon Innovates During “The Year of School Choice”

The Wall Street Journal recently called 2011 “The Year of School Choice.” According to the July editorial:

“No fewer than 13 states have enacted school choice legislation in 2011, and 28 states have legislation pending….Louisiana enhanced its state income tax break for private school tuition; Ohio tripled the number of students eligible for school vouchers; and North Carolina passed a law letting parents of students with special needs claim a tax credit for expenses related to private school tuition and other educational services.”

It should be added that here in Oregon, our legislature passed a bill to allow open enrollment among public school districts. Starting in 2012, parents may enroll their children in another district as long as the receiving district is accepting transfers. This arrangement can promote increased enrollment in schools with empty seats while offering additional opportunities to out-of-district children.

A second bill eased enrollment restrictions for online schools. A third allows public universities and colleges to sponsor charter schools. All three bills have been signed into law by Governor John Kitzhaber.

It’s becoming increasingly evident that allowing families more freedom in educating their kids is the way of the future. In a pioneer state, Oregonians should be proud of the ways we are innovating to give students more diverse choices in education.

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A Health Clinic by Another Name…Will the Oregon Health Plan “Transformation” Work?

By Douglas A. Perednia, M.D.

Here’s a question for you. If you quietly take thousands of Oregonians hostage and then release them with great fanfare, does that make you a kidnapper or a hero? The answer, of course, depends on whether anyone remembers you kidnapped them in the first place. This happens to be exactly the scenario posed by the Oregon Health Plan’s newest innovation, the “Coordinated Care Organization,” or CCO.

CCOs are in the news because they now appear to be the state’s only strategy for saving the Oregon Health Plan (OHP). According to a recent article in The Oregonian, they are “poised to transform” health care. The CCO approach is said to “offer a glimpse of the future for the Oregon Health Plan’s 600,000 low-income and disabled people on Medicaid and Medicare.” As described in the article,

“The state budget assumes the transformed health plan will be up and running next summer—quickly enough to save $249 million in Medicaid costs in the second year of the 2011-13 biennium. If it doesn’t, the state will have to find money to fill the hole or cut Medicaid payments, already down 11 percent this year.”

Before we get too carried away with praising the solution, it’s worth recalling just how we got into this situation, who got us here, and exactly what, if anything, is “new” about CCOs.

It’s no secret that Medicaid in Oregon has been underfunded for decades. As documented by The Lund Report, depending on the contract, “…something like 60% or less of a doctor’s overhead is covered…,” and “an additional 19% cut on top of that is going to create problems with access.” Already, “[r]oughly a quarter of all primary care physicians in Oregon, and about 18% overall, refuse to accept additional Medicaid patients mainly due to low reimbursements….”

One predictable result is that large numbers of OHP patients headed to hospital emergency rooms for care. Indeed, the Oregonian article began by profiling one such patient who is now a CCO patient and advisor to the Governor’s CCO program:

“Wracked by diabetes, hypertension, asthma, spinal disease, allergies, depression and other ills, Amy Anderson felt she was near death when she found the Mid-County Health Center in 2007.

“She had lost her job and health care a year earlier and had been getting most of her health care in hospital emergency rooms. But at Mid-County in Southeast Portland, she was assigned her own team of health care providers that she saw at every visit. They got to know her; she grew comfortable with them.

“‘Any time I called, someone was there,’ says Anderson, 56. ‘I started to believe I was going to get good care.’”

That’s great, but how does the CCO do it? And what is a CCO anyway?

In basic terms, CCO is a medical clinic that has enough people, and a big enough budget, to do what any medical clinic would do if it could afford to do so: take care of its patients. Here is the Oregonian’s description:

“Each Mid-County clinic team has a doctor and family nurse practitioner, each with a clinical medical assistant; a registered nurse; a team clerical assistant; and a third clinical medical assistant to track appointments, preventative measures, prescriptions and other information for team patients.

“The team also has access to psychiatric nurse practitioners and social workers at the clinic. Team members work together in the same room and huddle twice a day….

“When a patient like Anderson shows up, the team knows her health history, her medicines she’s taking and what tests she needs. Sometimes the team will call her in for a test. She can call the team directly and often, if needed, get in to see someone on the same day.”

Doctors normally do most or all of those things for their private patients. So why don’t all doctors do this for their Medicaid patients? The answer, of course, is that they can’t. Medicaid doesn’t pay them enough to cover their basic overhead, let alone retain whole teams of social workers and administrative personnel. If it did, many doctors wouldn’t have stopped seeing Medicaid patients in the first place. Moreover, Medicaid doesn’t pay them for many of these activities (such as coordinating with other providers), at all. Adding insult to injury, Medicaid is notorious for its paperwork, administrative rules and reporting requirements. It’s not our health care providers who have failed these patients; it’s the insurance system that the government itself created.

All of which brings us back to the promised OHP transformation. Since the Oregon Health Plan’s own policies created the problem of underinsured patients who receive all of their care in emergency rooms, why should anyone expect that its new Coordinated Care Organizations will be any more successful?

It all comes down to money. CCOs are nothing particularly innovative or revolutionary. They’re just clinics with more resources than the typical clinic that accepts Medicaid patients. If the additional funding isn’t there, they will be held hostage to the same unsustainable business model that has characterized the OHP in the past.

In that event, Oregonians would do well to recall who got us into this mess in the first place.


Douglas A. Perednia, M.D. is a Portland-area physician and the author of Overhauling America’s Healthcare Machine – Stop the Bleeding and Save Trillions (Financial Times Press, 2011). He blogs at The Road to Hellth (www.roadtohellth.com). He is a guest writer for the Cascade Policy Institute, Oregon’s free market public policy research organization.

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Basic American Rights Series – Property Rights

Americans for Prosperity and the I Spy on Salem Radio Show will be co-hosting the first Basic American Rights Series on Thursday, Sept. 22, from 5:30 to 9:00pm at the Portland Airport Shilo Inn. It will also be broadcast live around the state to: Shilo Inns in Seaside, Springfield, and Klamath Falls; the China Gorge Restaurant in Hood River; and the Salem Public Library.

This first in the series will focus on property rights, which are fundamental to the American Dream, and will draw attention to how our property rights are being eroded—by legislation, regulation, and even through the more extreme elements of environmentalism.

The town-hall style event will feature three very informative property rights experts, who will each address a different problem area and what can be done to prevent the loss of one of our most essential American rights. There will also be Q&A afterward.

Tom DeWeese, a national speaker on property rights and the UN’s Agenda 21, will discuss private property rights, local implementation of Agenda 21, and how cloaking restrictions in “sustainability” impacts our rights.

Karen Budd-Falen, a land-rights attorney from Wyoming, will discuss how the Endangered Species Act has been misused and methods environmental extremists use to fund themselves at taxpayer expense—such as Debt-for-Nature swaps. Finally, Jim Huffman will bring the evening around to Oregon and will speak about our private property rights, why they’re so important, and why our Founding Fathers fought for them.

The cost is $10 to cover expenses. Due to limited seating, guests are encouraged to pre-register by going to americansforprosperity.org/Oregon or ispyonsalem.com. There will be a social hour/mixer from 5:30 to 6:30 and the main event will begin at 6:30. For more information, contact karla@ispyonsalem.com.

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Extending Unemployment Benefits: Good Intentions, Bad Results

Last Thursday, President Obama asked Congress once again to extend unemployment benefits, allowing workers to continue receiving benefits for up to almost two years. His request may be at odds with his newly proposed chairman of his Council of Economic Advisers, Alan Krueger.

During Mr. Krueger’s career as a Princeton economics professor, he wrote about the effects of unemployment insurance on the unemployed. He, along with numerous mainstream economists, wrote that unemployment insurance increases the time that workers remain unemployed. More generous benefits lead to longer periods of unemployment. Thus, a bill aimed at helping the unemployed may actually have the opposite effect.

Many economic analyses have estimated that unemployment insurance has significantly increased the unemployment rate. For example, one recent publication from the Federal Reserve Bank of Chicago, conservatively estimated “[t]he extension of unemployment insurance benefits during the recent economic downturn can account for approximately 1 percentage point of the increase in the unemployment rate.”

Adding another 4% to the estimated 2012 deficit, the President’s requested extension would cost around 45 billion dollars. And what about the human cost? Is it right to delay so many workers’ reemployment? Is it right to artificially inflate unemployment? As with so many government programs, good intentions too often lead to bad results. In this case, those results can be measured in fewer jobs and in less personal dignity.

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Power to the People!

By Nick Sibilla

The Oregon Department of Energy (DOE) has unveiled a bold new plan to create green jobs: investing in human energy. With retrofitted bikes and elliptical machines, people can turn their workouts into renewable energy. Thirty minutes of exercise generate 50 watt hours of human energy, enough to charge a laptop for one whole hour.

Among other sources of green power, Oregon is also a pioneer in human energy. The University of Oregon has spent $22,000 on 20 human energy machines, while in March 2009, Oregon State University had the largest human power plant in the world. Those are some sweaty Beavers.

Inspired by these universities, the DOE will pay all 185,000 unemployed Oregonians to generate human energy. If each jobless Oregonian exercised eight hours a day, five days a week, we could produce 18.5MW[i] of clean power each year. That’s enough electricity to power 2,700 homes! All this is possible, for only $3.3 billion.[ii] Now that’s a bargain.

Since anyone with legs can bike or run, these are the ultimate “green collar” jobs. No skills required. Plus, by investing in human energy, even more jobs will be created: Machines break down—mechanic jobs. Athletes need food and water—concession jobs. Bikers need music to listen to—Steve Jobs!

As you can imagine, all this exercise will be great for our health. In fact, we could eliminate childhood obesity altogether by mandating that kids provide human energy. After all, our children are getting fat and corrupted by violent video games. Our children need to learn a sense of civic duty. What better way to teach them how the government works than by forcing them to do something that goes absolutely nowhere?

More jobs, more clean energy and lower health care costs—it’s a triple win!

Now, I know some free trade capitalists will hate this, but we need to make sure that only Oregonians can have these jobs. We can’t let the unwashed masses from Idaho or Seattle steal our human energy. We need to seal off the border. That’s the only way we can keep our energy local. Plus, think of all the jobs that would be created: construction workers, guards, moat diggers, you name it. Soon, we would have too many jobs—can you say negative unemployment?

But fiscally conservative nattering nabobs of negativity will say it’s insane to pay people to ride bikes to power Oregon. They say clean energy subsidies are completely unnecessary. After a Portland streetcar that costs $50 million per mile and a billion-dollar wind farm, they would have you believe Oregon can’t afford any more gimmicks.

But the DOE’s plan has two sources of funding. The first would be to raise taxes on the rich. Recently, Robert Reich proposed a 70% marginal tax rate. But that’s too low. Instead, that rate should be 100% of revenue. Why? 100% is bigger than 70%. Obviously. Better yet, make the rich give 110%. They can afford it. (And what’s this business calling taxes “marginal?” Too many hard-working, middle-class Americans have to pay taxes. Taxes aren’t marginal: They’re mainstream.)

Second, this plan would sell “human energy certificates” (HEX). Buying HEX would allow people to finance human energy without actually exercising. People who buy HEX receive the benefits of human energy, like sweat, a sexier body and an unflappable sense of moral superiority, all at low, low prices!

We must invest in human energy to save our economy and our planet. After all, people are the ultimate renewable resource.


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s premier free market think tank. When he’s not being über-manly, he dabbles in political satire.

[i]100 watt hours per hour X 40 hour workweek = 4,000 watt hours (4 kWh per week)

4,000 X 50 weeks = 200,0000 watt hours per year (200 kWh per year, per person)

200 kWh X 185,000 unemployed Oregonians in May 2011 = 37,000,000 kWh (37,000 MWh)

37,000MWh = convert to MW (divide by the number of hours biked each year [2,000h (40h X 50 weeks)]

37,000MWh/2,000h = 18.5 MW QED!

[ii]$8.50 X 2,000 man-hours per year = $17,000 annual wage X 185,000 unemployed= $3.145 billion

$1100 per machine X 185,000 unemployed = $203.5 million

Total cost = around $3.35 billion

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TriMet’s War on Urban Livability

The following is an op-ed posted in the Oregonian. Weigh in on the comments by visiting TriMet’s War on Urban Livability.

To watch a video on this topic, visit Green to Gray: Trimet and SW Lincoln Street


Why does TriMet hate Lincoln Street?

Between First and Fourth Avenues in Southwest Portland, Lincoln is a quiet, tree-lined street that has everything urban planners say they love: high density with a mix of land uses, regular TriMet bus service, more than 65 mature shade trees, and a wonderful north-south pedestrian walkway bisecting the street.

Yet, on or before September 15, TriMet will destroy all of this. The trees will be clear-cut, the street shut down, and several businesses lost, including the popular Candlelight Café. The reason: TriMet is taking the right-of-way for the proposed Milwaukie light rail line.

If this goes forward, it will be one of the worst public decisions in Portland’s history. TriMet will wreck an entire neighborhood simply to replace the #17 bus line with a slow train, at a cost of $205 million per mile. There will be no new service, and a beautiful Portland neighborhood will be ruined.

This demonstrates one of the fatal flaws of light rail: The infrastructure needed is out of scale with quiet, pedestrian-oriented urban streets. Once the street is destroyed and redone as a set of rail tracks with ugly overhead wires and a huge station, the beauty of the neighborhood is permanently lost.

Anyone who thinks differently should visit some of the light rail stations on the 25-year-old Blue line. None of the neighborhoods along East Burnside are better off today due to light rail, and several are markedly worse. The recently redesigned Rockwood MAX Station is a particularly hideous example of TriMet’s aesthetic “enhancement.”

Not only is light rail going to obliterate SW Lincoln Street in Portland, it will actually degrade transit service for Clackamas County riders, who are the ostensible beneficiaries of this fiasco. Currently, there are nine bus lines stopping at the Milwaukie Transit Center, and five of them continue to Portland. Once light rail opens, all of these buses will no longer provide service north of Milwaukie. Bus customers will be forced to transfer at Milwaukie.

Riders hate transfers. Making them switch from bus to train will push some of them back into their cars.

Moreover, light rail will increase travel times for transit riders. A peak-hour trip from downtown Milwaukie to PSU on the #99 McLoughlin Express bus currently averages 17.5 minutes and sometimes makes it in 12 minutes. The forecasted time of travel for light rail is roughly 19 minutes for the same distance. Why are we going to spend $1.5 billion to provide a slower commute?

This is an absurd project, but fortunately there is still a reasonable alternative: Build the new Willamette River bridge, but cancel light rail. Portland needs a new bridge anyway, and by allowing cars and trucks on the bridge in place of light rail, the South Waterfront district will finally have an eastern portal.

It’s not too late to return common sense to transit planning. Governor Kitzhaber appoints the seven TriMet board members, and they have failed him. He should simply override their decision, save the trees on SW Lincoln Street, and chart a new course emphasizing improved bus service in Portland.

We know this can be done. Tom McCall once fired the entire TriMet board. Gov. Kitzhaber should do the same.

John A. Charles, Jr. is president and CEO of Cascade Policy Institute, a nonprofit policy research center based in Portland.

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“Freedom’s Home and Defender”

“It is said that adversity introduces us to ourselves,” said President Bush three days after the September 11 terrorist attacks.

“America is a nation full of good fortune, with so much to be grateful for, but we are not spared from suffering. In every generation, the world has produced enemies of human freedom. They have attacked America because we are freedom’s home and defender, and the commitment of our fathers is now the calling of our time.”

Freedom is America’s precious treasure―and never more than a few decisions away from being lost. External acts of war and terrorism can undermine a nation. But as Russian thinker Alexander Solzhenitsyn famously said, “the line separating good and evil passes not through states, nor between classes, nor between political parties either, but right through every human heart, and through all human hearts.”

With economic uncertainty, conflicts abroad, and an emerging political season, it’s heartening to remember that character is the first defense against the loss of freedom. Character is the thing for which each of us bears sole responsibility, while being our own greatest power for good. Character under pressure built America, brought us through tough times, and will keep our country “freedom’s home and defender.”


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland at Cascade Policy Institute, Oregon’s free market public policy research organization.

 

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Green to Gray: TriMet and SW Lincoln Street in Portland, Oregon

Narration text below:

In the 1960’s, SW Lincoln Street, near Portland State University, was part of Portland’s first urban renewal district.

Dilapidated buildings were cleared, new development built, and thousands of shade trees planted.

Today, those trees tower over SW Lincoln Street… but not for long. Sometime on, or before September 15th, TriMet plans to cut down every single tree on the street… to put in light rail.

Most residents of the neighborhood are not happy with the decision.

The street is currently served by TriMet’s #17 bus line. If the goal is more transit, why not just run the #17 more often?

The Rockwood MAXX station was recently refurbished. Does SW Lincoln street really want to trade shade trees for concrete and art like this?

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Unemployment Insurance, Savings Accounts or Both? A Way Forward for Oregon’s Workers

One silver lining of the burst housing bubble has been the increase in the personal savings rate. For many years prior to the recession, analysts furrowed their brows, bemoaning the nation’s poor savings rate, questioning the prudence of Americans. Both personal and business savings increased quickly after the recession hit. When individuals are nervous about the future, they save more; when they feel secure, they spend and invest more.

A logical extension of such reasoning, economists have long found that government safety nets decrease the amount individuals feel they need to save. Precautionary savings is that pool of money or other assets that individuals and businesses accumulate as a buffer against future stresses on income: unemployment, health problems or other unforeseen troubles. Unsurprisingly, unemployment insurance, among other safety nets, causes individuals to accumulate less precautionary savings.

Economists Eric Engen and Jonathan Gruber studied this effect and found that “[unemployment insurance] crowds out up to one-half of private savings for the typical unemployment spell,” decreasing overall asset accumulation.[i] Some may argue that this is not a problem since these workers may need less precautionary savings because of the government safety net. But such a simplistic justification neglects deeper implications.

Assets not only provide financial security, they actually change the way people behave. Asset owners tend to lead more stable lives, think in longer time frames and have more hope for the future.[ii] They are also more likely to be involved in community affairs and to plan for their children’s futures. For example, over a decade of research into the effects of assets indicates that the children of asset owners are more likely to succeed in school and to escape poverty. The effect of asset ownership on education and test scores is more significant than that of income.[iii]

Interestingly, research indicates that this relationship is likely causal, meaning that owning assets likely causes individuals to have greater expectations and those expectations cause them to accumulate more assets.[iv] Extending that logic, government programs like unemployment insurance (UI), which typically cause individuals to save less, probably damage inclinations toward long-term thinking, and consequently individuals’ stability, hope and children’s success. Along that vein, it also damages many individuals’ self-respect and confidence.

Personal savings has larger economic benefits, too. Though during recessions we hear frequently that individuals and businesses are “saving too much,” high savings rates are good in the long term. When people save more money, that creates a “greater supply of loanable funds” which tends to “stimulate capital investments.”[v] Under the current UI system, funds from unemployment taxes are “‘invested’ by the Treasury into the U.S. government debt obligations, which does little – to put it mildly – to help the economy grow.”[vi]

Those who like the perks of unemployment insurance are frequently afraid to experiment with something that they think works fine. Fortunately, Chile has already experimented with an alternative: Unemployment Insurance Savings Accounts. Chile’s system maintains the benefits of traditional UI, while harnessing the power of individual saving.

 

Chile’s workers and employers must pay a portion of wages into Unemployment Insurance Savings Accounts. Each worker has a full property interest in his account and will receive the remaining balance upon retirement. When a worker becomes unemployed for any reason (even if it is voluntary), he may draw 30-50% of the previous wage for up to 5 months. If a worker is laid off, small account balances are supplemented with a social unemployment insurance, funded with a small portion of the payroll tax.

These accounts offer an improved social safety net that preserves the benefits of personal savings. Workers can see their retirement and rainy day savings grow and with it, their expectations. Such expectations lead to long term planning and better lives.

These unemployment savings accounts also offer other benefits. While our unemployment compensation causes a well-documented lengthy increase in the time it takes the average worker to find a job and in the overall unemployment rate, the personal accounts system motivates workers to return to work faster so that they can have more money upon retirement.[vii] Chile’s system also broadens the pool of eligible recipients, since workers own their personal accounts. That means workers who can’t accept full-time employment (like a working mother or student), and workers who must quit their job for personal or professional reasons and are not covered under our system, would have some limited coverage under Chile’s system.

One recent state-specific study (commissioned by Cascade Policy Institute) by economists Stephane Pallage and Christian Zimmerman (now Assistant Vice President at the Federal Reserve Bank of St. Louis) showed that switching to a system similar to Chile’s unemployment accounts system would benefit 97% of Oregonians.[viii] Even those who are most likely to be unemployed or most likely to have empty asset accounts would benefit from the switch, according to the economic model.

Government safety nets give citizens a false sense of security and encourage short-term thinking. Incorporating private accounts into unemployment insurance not only would improve the system for most workers and decrease unemployment, but could transform the way many Americans think about their future.


[i] Eric M. Engen and Jonathan Gruber, “Unemployment Insurance and Precautionary Saving,” National Bureau of Economic Research Working Paper no. 5252 (Sept. 1995).

[ii] Michael Sherraden, Assets and the Poor (1991).

[iii] Zhan & Sherraden, “Assets, expectations, and children’s educational achievement in single-parent households,” 77 Social Service Review 191-211 (2003).

[iv] William Elliott III, Mesmin Destin and Terri Friedline, “Taking Stock of Ten Years of Research on the Relationship between Assets and Children’s Educational Outcomes: Implications for Theory, Policy and Intervention” (2011), available at http://cfed.org/assets/pdfs/CSD_Taking_Stock_of_Ten_Years_of_Research.pdf.

[v] David Honigman and George C. Leef, “It’s Time to Privatize Unemployment Insurance,” 45 The Freeman: Ideas on Liberty, (Sept. 1995).

[vi] Ibid.

[vii] Gonzalo Reyes Hartley, Jan C. van Ours and Milan Vodopivec, Incentive Effects of Unemployment Insurance Savings Accounts: Evidence From Chile, The Institute for the Study of Labor, Discussion Paper No. 4681 (Jan. 2010).

[viii] Stéphane Pallage, Ph.D and Christian Zimmermann, Unemployment Accounts: A Better Way of Protecting the Unemployed (Aug. 2010), available at https://cascadepolicy.org/wp-content/uploads/2010/08/UI_Reform_ Report.pdf.

 

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Ready, Fire, Aim, for Oregon’s Payday Lending Policy

By Christopher Robinson

In 2006 and 2007 the Oregon legislature passed two bills which significantly curtailed the ability of traditional “brick and mortar” payday lenders to operate within the state. Senate Bill 1105 (2006) and House Bill 2203 (2007) capped interest rates greater than 36%, limited origination fees to 10%, established a waiting period between payday loans, and required a minimum 31-day maturity. The goal was to protect Oregon consumers from “predatory” lending practices.

Prior to the legislation, there were 346 licensed payday lenders in Oregon. As of 2008 that number had dropped to 82, according to data from Oregon’s Consumer and Business Services Department. On paper the crackdown looks good: “In terms of achieving what the legislation set out to do, it is a complete success story for consumers,” says Dave Rosenfeld, executive director for Oregon State Public Interest Research Group (OSPIRG). However, the reality goes beyond what is on paper.

History shows that when significant demand exists for a good or service, and people are denied access, they will find other methods to satisfy the need, including circumventing the law altogether. Alcohol and drug prohibitions are two notable examples. There is no question that demand for payday loans is, in fact, significant. In Oregon it was a $334 million business and $40 billion nationally.

The biggest proponent of the payday lending legislation was U.S. Senator Jeff Merkley, during his time in the Oregon legislature. Merkley’s website explains the reasoning behind his support: “Many Americans are being forced to turn to short term payday loans just to deal with day to day expenses…causing financial burdens that are practically impossible for families to escape.” This implies that those who seek most payday loans are families who have fallen on hard times. Academic research shows otherwise.

In October 2008, a researcher at Dartmouth University published a study on the Oregon payday loan rate cap. The purpose was to determine its effect on borrowers and also who those people were. “The results suggest that restricting access to expensive credit harms consumers on average,” the study says. This may come as a shock, but when given the facts it makes sense. All people surveyed for the study were payday loan customers. Less than 50% of respondents were married (with an average of 1.1 dependents), and only 12% were unemployed. 66% said they used the loan to pay for emergency expenses (such as car repairs and medical) as well as bills (such as utilities). 70% said if a payday loan hadn’t been available, they would have had no other option or did not know where they would get the money. Finally, 76% expected their financial situation to improve after receiving the loan. The study shows payday borrowers are primarily employed individuals with unexpected expenses. If they are unable to pay for these expenses, their financial situation will be worse in the long run.

Legislators have jumped the gun in banning traditional payday lending in Oregon. They aren’t protecting vulnerable consumers as much as denying a necessary service. Furthermore, there has not been a major push to provide consumers with a convenient, viable alternative.

Senator Merkley’s office could not be reached for further comment, but it appears legislators used the issue for political gain without doing significant research. Responsible advocates should have, at the very least, devised a new business model to provide quick cash at low interest rates to these high-risk borrowers. So far nothing has materialized, leaving former customers worse off than they were before.

Payday lending may seem negative because of high interest rates, but in any industry there will be a premium for last-minute transactions. If you book an airline ticket the day before a flight, the price usually will be much higher than if the ticket had been purchased six weeks in advance. The same principle applies to lenders, especially when the borrowers have poor credit and there is a relatively high risk of default.

Washington State also enacted payday lending restrictions, but some legislators there are already considering relaxing them. Oregon should consider doing so as well. According to the Portland Business Journal (February 11, 2011), there already has been a rise in complaints against out-of-state online payday lenders conducting fraudulent and illegal business practices. These are the real risk to consumers because the Oregon Attorney General’s office has little control over them. If legislators had looked deeper into the facts before enacting legislation from a politically favorable standpoint, this situation could have been avoided.


Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Is the Road to Economic Growth Paved with Broken Windows?

Columnist Paul Krugman is credited with a line of thinking that should be debunked before it gains traction. Krugman wrote after 9/11 that the terror attacks could “do some economic good” because “all of a sudden, we need some new office buildings.”

Before the real Krugman could weigh in on the recent East Coast earthquake and hurricane, a fake Krugman wrote that “…we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.”

Such statements may seem plausible to those without much knowledge of economics. But the fallacy was exposed as early as 1850 in Frédéric Bastiat’s essay, That Which Is Seen and That Which Is Not Seen.

The argument seems to be that paying money to replace a broken window creates more prosperity than having the original window and spending the money on something else. But, as economist Sandy Ikeda asks, “If destruction is so good for an economy, why wait for a hurricane or a bombing raid? Why not just bomb your own cities?”

We can all “see” the new window. But whatever the money could have gone for instead remains “unseen.” No net economic benefit results from replacing the broken window. In fact, the economy is worse off because we now have just a window, not a window and the money that went to replace it.

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“Ready for College and Life”

In just a couple weeks, students everywhere return to school. Have you ever thought of how important it is where a child goes to school? After their family, the greatest influence on growing children is usually their school.

Private scholarship programs like the Children’s Scholarship Fund-Portland help elementary children from lower-income families choose the school that is right for them.

This summer I attended a luncheon at Central Catholic High School to honor graduating seniors with athletic scholarships to college. I was invited by a young man who began to be sponsored by the Children’s Scholarship Fund-Portland when he was in grade school. One of Central Catholic’s star basketball players, he will attend Portland State and play for the Vikings. He was able to attend private schools because of scholarship assistance from caring Oregonians.

“I have learned that nothing’s going to be handed to you and that you’ll succeed through hard work,” he told me. “[Private school] was challenging, but it has gotten me ready for college and life.”

The Children’s Scholarship Fund-Portland helps lower-income Oregon children get a hand up early in life through a quality elementary education. That simple step puts kids with limited choices on a path to success that can change the rest of their lives. To see how you can help a child reach his or her potential through this program, visit www.cascadepolicy.org/links/children.

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REPORT: The Dirty Secret Behind Clean Jobs

With unemployment on the rise, new jobs are scarce. Creating jobs has become a top priority for politicians. One can hardly watch the news without hearing catch phrases like the “renewable energy economy,” “green jobs” and “leading the world in clean energy technologies.” In short, environmental policies have been rebranded as job creators.

Cascade Policy Institute’s new report, The Dirty Secret Behind Clean Jobs, reveals numerous flaws with this approach. The authors address the misconceptions behind creating “green jobs.” The definition of “green jobs” is vague, green job subsidies are based on flawed economic principles and, lastly, assumptions for job growth are inaccurate or downright false.

The report’s co-author, Nick Sibilla, states, “Our report focuses on Oregon, national and international attempts to create green jobs. Overwhelmingly, we found that green jobs are based on faulty economics and wishful thinking.”

The Dirty Secret Behind Clean Jobs reveals:

  • Numerous definitions of the term “green jobs” exist. In fact, most government agencies interchange the terms “clean” and “green,” adding to the confusion of what really constitutes an environmentally friendly job.
  • Proclamations about green jobs fixing the economy are exaggerated and misleading. Oregon employers predicted the number of green jobs would grow 14 percent between 2008 and 2010, which would have equated to 7,400 new jobs in the state. Meanwhile, statewide employment levels have dropped by 140,000 jobs over the same two-year period.
  • “Clean jobs” turns out to be just another term for big government. According to The Brookings Institution, the industry of “regulation and compliance” (i.e., government employees) was the fourth largest source of clean jobs in the United States. Meanwhile, in Oregon, three of the larger green jobs employers are the U.S. Forest Service, the U.S. Army Corp of Engineers and the U.S. Bureau of Land Management. All of those salaries are ultimately paid by taxpayers.
  • One clear example of green job pork barrel spending is the Shepherds Flat wind farm under construction in Gilliam and Morrow Counties. The project has obtained $1.2 billion in federal, state and local subsidies but will create only 35 permanent jobs. Each job will cost over $34 million to American taxpayers.
  • Green job estimates do not account for job losses in other sectors. Spain, a pioneer in renewable energy before the recession, is a sobering example. A recent Spanish economic analysis revealed that for every green job created, more than two jobs were lost.
  • Many green job advocates claim that green industries are more labor intensive and thus create more jobs than other sectors of the economy. Although inefficiency is not something to be praised, the claims are still downright false. A recent Italian study suggests the green industry is a capital-intensive, not a labor-intensive, industry and that the data show that green investments generate fewer jobs than investments in other sectors of the economy.

Cascade’s vice president and co-author of the report, Todd Wynn, stated, “Despite the continued rhetoric from politicians, our report shows the utter failure of the green job movement. It turns out to be more about corporate welfare and government handouts than actual job creation.”

DOWNLOAD THE DIRTY SECRET BEHIND CLEAN JOBS REPORT

FOR MORE INFORMATION:

Todd Wynn
T: 503.242.0900
F: 503.242.3822

 

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Hand-Up Versus Handout Tackles Homelessness

By Michael Bastasch

Since 1986, Portland and Multnomah County have launched a slew of programs targeting homelessness, culminating in the “10 Year Plan to End Homelessness” in 2004. Portland and Multnomah County have built thousands of housing units and shelter beds and provide many services, but homelessness is still on the rise. Despite evidence that their approaches may be exacerbating the homeless problem, public officials continue to use the same failed methods.

The city’s approach to eradicating homelessness is based on the Housing First strategy which focuses on getting people into housing, then providing them with services as needed. Emblematic of this approach is the recent construction of Bud Clark Commons. The Commons was finally completed and opened in June 2011 and contains 130 studio apartments for permanent residents, a 90-bed men’s transitional shelter and a day center offering a variety of services. The city wanted a place with as many services as possible under one roof to provide convenient services for the homeless without referring them to other facilities, increasing the likelihood they will get help.

Those living in the Commons’ apartments are the most vulnerable of Portland’s homeless population, and many suffer from severe mental illness and substance abuse. Just giving these people housing won’t help them, however, as many need an environment where they must commit to getting long-term help. In the Commons, recovery isn’t mandatory, and drug and alcohol use are permitted in the apartments (though not in the shelter and day center). Addicts trying to recover will live next to those who are still using, making recovery much harder.

 

Recovery is easier when a community of recovering addicts is fostered as a mutual support network; but in the Commons, such a community may not occur. Jeanine Carr, a community health nurse at the Multnomah County Westside Health Center downtown, reportedly said, “It’s not like (the housing authority) is trying to build a community that will work well together.” Stacy Borke, housing and support services director of Transition Projects Inc., said, “The housing authority and the city are taking real leaps of faith,” with regard to fostering a community that works well together.

More concerning than the dynamics of the Commons’ residents, however, is the cost. The building cost $49.6 million dollars and will require federal and local subsidies to operate throughout the year. The permanent housing will cost somewhat less than $1 million annually, and the temporary shelter and day center will cost a little under $2 million annually. But even if all the services and housing capacity of this building were utilized, it still wouldn’t be enough to accommodate all the homeless in Portland. How many more $50-million-dollar buildings can the city afford or spare the land for?

These grandiose public projects may be well intentioned, but they cannot achieve results at a reasonable cost. The city of Portland and Multnomah County have poured tens of millions of dollars (over $31 million on average annually from 2001 to 2003) during the past 25 years into combating homelessness, but their spending is utterly useless when aimed at such projects. Much more efficient ways to combat homelessness require little government involvement.

One way is to allow private charities to take over where government intervention has failed. Private charities are voluntary and able to work with the homeless throughout their lives, requiring those they help to make a commitment to getting sober and back on track. Union Gospel Mission (UGM) in downtown Portland has a LifeChange program that works with homeless individuals suffering from drug and alcohol addiction and creates a recovering addict support network. UGM requires those in the LifeChange program to work in their store and at their mission downtown, giving them valuable career skills. They explicitly reject the Housing First approach and focus on getting people sober and responsible before transitioning them back to normal life.

Another way to combat homelessness is to follow the example set by Dignity Village, a homeless community near the Portland International Airport. The Village is campsite with wood shacks that was designated by the city in 2001. It requires all residents to pay $20 per month and to volunteer time to help the community. No drugs or alcohol are allowed, and the Village is self-governed by a board of directors elected by residents every year. The Village teaches residents to be entrepreneurial since they operate small-scale businesses on their properties. In fact, 50-75% of residents have income from work or benefits. Dignity Village also has a low cost to the city, estimated at $14,990 per year for city services and about $30,000 per year for internal costs (which Village residents pay themselves). It is much less expensive per person per night than transitional housing. Most importantly, the Village demonstrates that the homeless can take care of and provide for themselves when they are given a place to do so and are left unmolested.

The city continues to give handouts and spend millions of taxpayer dollars to achieve scant results. Bud Clark Commons, though generating a lot of attention, is just a repetition of the same failed policies of the past 25 years. More efficient and compassionate ways exist to tackle homelessness, with places like Dignity Village or through private charities. Spending taxpayer money doesn’t automatically yield results. No matter how much nicer homeless shelters get or how many more Portland builds, it doesn’t stop homelessness. Rather, it tends to exacerbate it and keep people dependent.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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You’re teaching my child what? And it is costing us how much!

Join U-Choose exploring public education. Speakers will present information on the history and degradation of curriculum, sex education, censorship of children in the classroom, and parents’ rights. The impact on youth, adults and the family will be addressed. Solutions provided.

Featured Topics/Speakers:

Progressive” Education: How did we get here? How John Dewey’s vision of progressive education was implemented, resulting in the weak “dumbed down” curriculum of today.

Rob Kremer, Host of Kremer and Abrams KXL Radio 101FM, Founder and President of Oregon Education Coalition, Principal Third Century Solutions

“Dumbing Down” of America’s Youth – Is this real? See examples of the watered down teaching in math, science and English that present day students are receiving in our schools compared to a century ago.

Dr. Chana Cox, Senior Lecturer in Humanities, Lewis and Clark College

Sex “Hyper” Education Indoctrination – Human Sexuality is a far cry from the biology of reproduction. Now by law students in Kindergarten through 12 grades will be taught everything from mutual masturbation to homosexual experimentation. Discover why this is important to government educators.

Suzanne Gallagher, Business Owner, Former Candidate for State Representative, Pro-Family Activist

Political Incorrectness and Censorship – What are your rights? Learn about “viewpoint discrimination” including Anti-Christian, and what you can do to defend your right to direct your child’s education.

Herb Grey, Esq.- Alliance Defense Fund Affiliated Attorney

 

America and our children face a bleak future. Their future depends on acting now!

Come share your views and experiences during U-Talk.

When: Tuesday, September 13, 6:30pm- 9:00pm

Where: Stafford Center, 21065 SW Stafford Road, Tualatin, OR 97062

$5 donation welcome at door.

 

 

If you can help with event publicity within Portland areas, please contact

Debra Mervyn 503-819-8800 at debrauchoose@gmail.com

 

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You’re teaching my child what? And it is costing us how much!

Join U-Choose exploring public education. Speakers will present information on the history and degradation of curriculum, sex education, censorship of children in the classroom, and parents’ rights. The impact on youth, adults and the family will be addressed. Solutions provided.

 

Featured Topics/Speakers:

 

§  Progressive” Education: How did we get here? How John Dewey’s vision of progressive education was implemented, resulting in the weak “dumbed down” curriculum of today.

Rob Kremer, Host of Kremer and Abrams KXL Radio 101FM, Founder and President of Oregon Education Coalition, Principal Third Century Solutions

 

§  “Dumbing Down” of America’s Youth – Is this real? See examples of the watered down teaching in math, science and English that present day students are receiving in our schools compared to a century ago.

Dr. Chana Cox, Senior Lecturer in Humanities, Lewis and Clark College

 

§  Sex “Hyper” Education Indoctrination – Human Sexuality is a far cry from the biology of reproduction. Now by law students in Kindergarten through 12 grades will be taught everything from mutual masturbation to homosexual experimentation. Discover why this is important to government educators.

Suzanne Gallagher, Business Owner, Former Candidate for State Representative, Pro-Family Activist

 

§  Political Incorrectness and Censorship – What are your rights? Learn about “viewpoint discrimination” including Anti-Christian, and what you can do to defend your right to direct your child’s education.

Herb Grey, Esq.- Alliance Defense Fund Affiliated Attorney

 

America and our children face a bleak future. Their future depends on acting now!

 

Come share your views and experiences during U-Talk.

 

When: Tuesday, September 13, 6:30pm- 9:00pm

 

Where: Stafford Center, 21065 SW Stafford Road, Tualatin, OR 97062

 

$5 donation welcome at door.

 

If you can help with event publicity within Portland areas, please contact

Debra Mervyn 503-819-8800 at debrauchoose@gmail.com

 

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How many presidential buses does it take to equal the cost of one light rail car?

President Obama is traveling the Midwest on a new bus purchased by the Secret Service. The vehicle is painted all-black with tinted windows and appears to be the size of a standard Greyhound bus. Inside, we can assume that it’s tricked out with the latest in high-tech security gear and telecommunications and designed with a kitchen, shower, bedroom and lounge area.

Given its purpose, the price tag must be enormous.

Actually, it’s not. It was purchased for $1.1 million. A typical light rail car in Portland costs $4 million.

Regular transit riders might want to ponder that. A light rail car has hard seats, no headrests, minimal legroom and no on-board internet access.

The Presidential bus can go on any road in America, while light rail is limited to just a small part of the Portland region.

The proposed Milwaukie light rail project will cost $1.5 billion. If we cancelled the project, we could buy an entire fleet of presidential buses and run them to Milwaukie, with free coffee and donuts for everyone, and we still couldn’t spend as much as TriMet plans to spend on one mile of light rail.

Maybe transit customers would like to try the Presidential bus for a few months before we waste $1.5 billion on a slow train to nowhere.

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Germany’s Energy Mistake of Nuclear Proportions

By Gordon J. Fulks, Ph.D.

“Quem deus vult perdere, dementat prius ― Whom the gods would destroy, they first make insane.”

Germany’s precipitous decision to shut down eight nuclear power plants last March and the remainder by 2022 is curious coming from a German chancellor with a doctorate in physics. Under pressure from Greens who exploit scientific illiteracy and promote fears they find useful, Chancellor Angela Merkel has become a pure politician. Nuclear power evokes many fears in Germany. As in the English-speaking world, irrational perceptions about technical matters from nuclear energy to alternate energy to global warming transcend all reason.

The German political situation started to melt down after the most powerful earthquake and tsunami in modern times struck Japan in March: More than 24,000 people lost their lives, and the Japanese nuclear power installation at Fukushima made ominous headlines for weeks. With reports of radiation leaking from three reactors and large evacuations of the local population, European Energy Commissioner Gunther Oettinger of Germany declared the nuclear incident to be an “apocalypse.” Three reactors out of 11 in the Fukushima area were destroyed, resulting in large economic losses and a long, complex cleanup. But the widespread devastation elsewhere was the real tragedy.

Of the huge death toll, not a single death was attributed to nuclear radiation. Two workers at Fukushima died from drowning and one from a heart attack. Although two other workers received non-life-threatening radiation burns from standing in highly radioactive water, no one died from radiation sickness. The large amount of dangerous iodine-131 initially released has largely decayed away.

Long-term effects attributable to radiation exposure should be minimal, even among those workers who received the largest doses as long as established procedures to limit total exposure were followed. In the far worse Soviet Chernobyl accident in 1986, where the reactor burned and workers were unprotected, 57 died from direct effects and 500 in the local population from telltale thyroid cancer. But the vast majority of the population escaped unharmed.

The rational response to major industrial accidents is to carefully understand what went wrong and make improvements to existing procedures and infrastructure to minimize the chance of a recurrence. Because Germany uses far better reactor designs than the Soviets had and experiences few giant earthquakes and tsunamis like those in Japan, these disasters are not particularly pertinent to them. Moving toward more wind and solar power was the politically expedient decision for Merkel, but it has huge practical and environmental drawbacks. Because windmills and solar arrays produce very erratic electricity, backup from new turbine power plants burning natural gas is necessary. Leaving conventional steam plants running as “spinning reserve” is hugely wasteful.

That raises the inconvenient question: Why not just build advanced and highly efficient gas turbines and forget about expensive alternate energy? Wind and solar installations typically fail in 20 years, just as they have paid back the energy and cost of their construction. In other words, they produce little net energy, making them very inefficient. Their erratic nature also means that they reduce the reliability of the grid.

Germans are likely to get the additional natural gas they will need from their present supplier, Russia. Why? Because Germany also has a phobia about the shale-gas revolution that is sweeping the rest of the world. Germany has meager gas reserves, but friendly neighbors like France and Poland now have huge reserves.

If Germans want to avoid shipping the remainder of their industry to China and shivering in the dark when the sun is not shining and the wind is not blowing, they will have to choose between viable sources of electricity: nuclear, natural gas and coal. The smart move for Merkel would be to get full value out of Germany’s existing nuclear power plants during their design life and then consider environmentally friendly gas turbine replacements.

Although nuclear power has many advantages and new reactor designs coming from places like Oregon State University show great promise, natural gas appears to be the most competitive solution for advanced industrialized societies needing clean, reliable power in coming decades. Is Germany still capable of making rational decisions? Very recent news suggests that they may restart one nuclear reactor to avoid power shortages this winter. They are also talking about using millions of euros from a fund for promoting alternate energy to encourage new coal and natural gas power plants. These are steps back from the abyss.


Gordon J. Fulks holds a doctorate in physics from the University of Chicago, Laboratory for Astrophysics and Space Research. He is an Academic Advisor at Cascade Policy Institute in Portland and lives in Corbett.

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Cascade Requests Congressional House Committee to Delete Funding for Milwaukie Light Rail

Portland, OR – Today Cascade Policy Institute sent a letter to Rep. John Mica, Chairman of the Congressional House Committee on Transportation and Infrastructure, requesting that he delete all $750 million in federal funding being requested by TriMet for the Milwaukie light rail project.

Noting that the recently-signed Budget Control Act of 2011 requires Congress to reduce federal spending by $917 billion over the next 10 years and that Rep. Mica has released a draft six-year transportation spending bill forecasting a 35% cut in federal highway/transit spending, Cascade President John A. Charles, Jr. stated that the price tag of $205 million per mile for Milwaukie light rail was “indefensible” and should be terminated.

Cascade sent a second letter to Gov. John Kitzhaber, informing him of the letter to Rep. Mica and asking that he intervene to terminate the Milwaukie project, but implement a low-cost alternative concept with the following elements:

  • Finish the new bridge over the Willamette River
  • Cancel the light rail portion
  • Connect the streetcar loop
  • Offer more “express” bus service to Milwaukie

Charles stated, “The Milwaukie project offers no new transit service, forces the relocation of 68 businesses and 20 residences, and degrades current bus service to Milwaukie. We can improve service while saving about $1.3 billion, and that plan would free up about $600 million in local dollars for other civic improvement projects.”

For the letter to Rep. Mica click here.
For the letter to Gov. Kitzhaber click here.
For a summary of the low-cost alternative plan for Milwaukie light rail click here.

 

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The Debt Downgrade Blame Game

Politicians and pundits upset that tax increases were not part of the recent debt-ceiling deal in Congress are now blaming the Tea Party for last Friday’s unprecedented downgrading of U.S. sovereign debt by Standard & Poor’s.

Some are even calling Tea Party congressmen and activists “terrorists” for daring to stand up and demand that the American government live within its means. In this case, its means are the taxes that hard-working individuals and companies are able to afford in the face of runaway government spending and debt.

Blaming the Tea Party for pointing out that our national government is well on its way toward a financial cliff is like blaming someone who sees a house on fire for calling 911.

“No new taxes” is a perfectly acceptable political position. It bears no resemblance to any tactics that can remotely be described as terrorism. Letting people keep their own money, the money they’ve legitimately earned, doesn’t inflict violence on anyone else.

Terrorists do just the opposite; they take others’ property and lives for their own political, religious or other causes.

The Tea Party is more like the little boy in Hans Christian Andersen’s tale who stood up and pointed out that the Emperor is not wearing any clothes. Such honesty then, and now, is cause for praise, not name-calling.

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John Charles message to the TriMet Board Members

Below is the message John Charles sent to TriMet board members on August 9, 2011. This comes one day before they vote on Resolution 11-08-58, which is the resolution “Authorizing TriMet to Acquire by Purchase or by the Exercise of the Power of Eminent Domain Certain Real Property Necessary to Construction of the Portland-Milwaukie Light Rail Project”.


Board members:

Before you vote on Resolution 11-08-58, I encourage you to stop by SW Lincoln Street tomorrow morning on your way to the Board meeting, and spend a few minutes enjoying the tranquility of this neighborhood. It has all the mixed uses that Portland planners love – residential, commercial and retail businesses, transit service (bus line #17), and two great pedestrian paths – along with more than 65 stately shade trees that were planted some 50 years ago as part of Portland’s first urban renewal project. Please visit the beauty shop that you will destroy with property condemnation, and talk with some of the clerks inside who are very distressed at what is about to happen.

Then imagine all the beautiful trees getting clear-cut by TriMet contractors on or before September 15. Imagine the entire street being blown up and widened to accommodate a slow, noisy light rail line. Picture a big light rail station in the middle of the block, with all the aesthetic glamour of light rail stations such as those located at East Burnside and 102nd, 122nd, 148th, or 162nd; or perhaps the station at North Interstate and Killingsworth, or the Beaverton Round.

Try and remember that even though Urban Renewal is supposed to be used to clean up “urban blight”, most light rail stations create urban blight. And remember that part of your light rail project is being financed with Urban Renewal dollars.

To truly understand the significance of the Milwaukie project, you need to go out to the neighborhoods and see how construction will actually affect them. It is not enough for you to stay above the fray. Light rail is not an abstraction, or just a series of drawings on a board. Light rail affects real people. You need to be aware of that before you pull the trigger and wreck their street.

The staff report is disingenuous when it states, “The business on site, Ed Wyse Beauty Supply, will not be directly impacted by construction. The building will not be affected and no relocation is required.” Of course it will be affected. It is a land-locked site. Customers cannot get to it from the west, south or east. Once you take their street frontage and have construction materials piled right up their front door, they will slowly twist in the wind and then go out of business. We saw this repeatedly on Morrison and Yamhill on the first MAX line, and again on North Interstate.

Don’t kid yourselves that your project is making some kind of surgical intervention onto Lincoln Street. You will be putting the Candlelight Café and Budget Rent-a-Car out of business directly (near 5th Avenue), and the Ed Wyse Beauty Supply out of business indirectly. You can’t pass the responsibility off.

Before you vote, I hope you will be able to state publicly for the record, in your own words, WHY you are doing this. If some businesses must be ruined and beautiful trees mowed down, what greater good is being sought? I don’t have an answer; I hope you do.

Sincerely,

John Charles

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John Charles responds to attacks made by Metro Councilor Rex Burkholder and Metro Councilor Carlotta Collette

At the July 14, 2011 JPACT meeting, accusations were made about John Charles and the Cascade Policy Institute. The response from John is below.


Metro Councilor Rex Burkholder
Metro Councilor Carlotta Collette

600 NE Grand Avenue
Portland, OR 97232

 

Dear Councilors Burkholder and Collette,

I am responding to the personal attacks that the two of you made at the July 14, 2011 JPACT meeting. Although there were many inappropriate comments made by numerous committee members, in the interest of brevity I will focus my concerns on just a subset of remarks made by the two of you.

 

Councilor Burkholder, you started it with your uninformed opinion about the so-called Drive Less/Save More (DL/SM) campaign, a topic that was not even on the formal agenda. After Randy Tucker’s legislative report, you stated:

 

“My understanding is that it was brought up by John Charles of Cascade Policy Institute.  And the stories I’ve heard is that they’ve received a significant boost in funding from the Koch brothers, a wealthy set of people who are funding climate denial kind of actions and anti-transit and anti-urban redevelopment issues, and so they have significant numbers of staff people who are out there fanning the flames and providing misinformation…”

 

In that entire paragraph there is only one factually correct statement: the issue was brought up by me. However, you seem to have no knowledge of the context, or what I actually said.

 

I brought up the DL/SM program in a legislative Ways and Means Subcommittee hearing on the ODOT budget. Although most of ODOT’s budget is characterized by restricted funds, I pointed out two discretionary programs: the 6-year-old DL/SM program, and the 17-year-old Transportation-Growth Management Grant Program. I suggested that regardless of how much merit they might have once had, in the case of DL/SM, “probably everything that can be said about driving less and saving more has already been said.”

 

I encouraged the subcommittee to euthanize both programs and re-allocate the roughly $8.5 million to other more productive endeavors, such as actually improving our road system.

 

My testimony ignited an avalanche of criticism of the DL/SM program from both sides of the aisle. Almost every legislator on the committee joined in, expressing outrage that we were spending valuable tax dollars on silly marketing campaigns. Eventually the issue became the topic of a front-page story by the Oregonian about the role of former State Senator Paul Phillips in fighting for the program, because so much of the money is funneled to his lobbying firm.  As Mr. Tucker informed you, the program eventually took a cut of roughly $500,000, which is minor by legislative standards.

 

From this brief legislative exchange, Councilor Burkholder now concludes that Cascade Policy Institute is receiving significant funding from the Koch brothers, which is threatening Metro’s transportation vision. There is no truth to this claim. We do not receive one penny from the Koch brothers, nor have we ever in the seven years that I have been CEO.

 

Our only link to the philanthropy of these gentlemen is that we have two college interns this summer who are “Koch Fellows”, courtesy of the Institute for Humane Studies (IHS) in Washington, D.C.  The two of them are paid directly by IHS for an eight-week internship at Cascade, where they research and write on various topics, and in return, we provide them with training and experience. One of them has recently published a paper on Medicaid; the other is researching Renewable Energy Credits.

 

Your statement that I am personally “fanning the flames and providing misinformation” is a serious charge. To remind you, I have worked on transportation policy for over 20 years. I’ve served on numerous public advisory committees, have published hundreds of essays, and testified in front of dozens of governing boards. Please provide me, in specific detail, examples of where I have knowingly given “misinformation” to anyone. If you can’t do that within 10 business days, I’ll be expecting a public apology.

 

And if you are unwilling to provide an apology, then we will soon be having a legal conversation about the meaning of the term “defamation.”

 

Councilor Collette:  after Councilor Burkholder got done with his attack, you piled on by saying, “for those who don’t know the Koch family is a major oil industry family, so we know where at least that portion of the opposition is coming from – a real pro-automobile, oil-industry group.”

 

You perpetuated the falsehood that Cascade receives major funding from an outside source tied to the fossil-fuel industry, which in your mind explains everything about CPI testimony – my testimony – that you disagree with. I will be expecting a public apology from you as well.

 

I suggest that both of you carefully listen to the entire audio recording of the JPACT meeting. After your early comments, the meeting quickly turned into a marathon whining session about mean Republicans in Congress, climate “deniers”, and all the other alleged enemies of the vaunted Metro 2040 plan. You set the tone for, and encouraged, this unprofessional behavior.

 

I will note in closing that we received a letter dated June 14 from Metro Council President Tom Hughes extolling the virtues of bringing a “diversity of voices and experience to Metro.” He then goes on to invite us to participate in the Opt In campaign.

 

It is certainly true that Metro suffers from a lack of diversity, but that problem will not be solved by internet polling or offering small bribes to groups to receive “free surveys” of their memberships. The problem will only be solved when the Metro Council recognizes how severe the group-think mentality has become, and includes contrarian voices in meaningful conversations at the decision-making level.

 

I look forward to receiving your respective apologies, and to your joint commitment to raising the quality of public discourse at Metro by showing respect to the people with whom you disagree.

 

Sincerely,

 

John A. Charles, Jr.

President & CEO

 

 

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Renewable Energy Credits: The Ultimate Greenwash

By Nick Sibilla

News Corporation claims it’s greener than Starbucks.

That’s one of many surprising insights gleaned from the first-ever global Corporate Renewable Energy Index (CREX). According to CREX, published by Bloomberg New Energy Finance and Vestas Wind Systems, News Corporation (the parent company of FOX News and The Wall Street Journal) procures 67% of its electricity from renewable energy (RE). That makes News Corp. the 8th highest corporate consumer of renewable energy. Meanwhile, Starbucks ranks below at 14th, with 58% of its energy purchased from green sources. Despite the current recession, among those surveyed, corporate purchases of RE increased by more than 50% over the past year.

Yet many of the corporations on CREX did not actually buy renewable energy. Instead, they purchased a fabricated commodity, known as renewable energy credits (RECs), or “green tags.” A REC represents the alleged “environmental amenities” associated with certain forms of electrical power production such as wind or solar. For those in the trade, one REC is created every time one megawatt-hour (MWh) of renewable energy is generated. (For comparison, the average American household uses just under one MWh every month.)

In other words, two distinct commodities are associated with renewable energy: the electric output itself and the intangible environmental benefits. RECs represent the latter and are sold separately from the power generated by a “green” facility. But by purchasing RECs, corporations can still claim they are using green power. In fact, according to CREX, RECs accounted for over 70% of all corporate green power purchases in 2010.

However, buying RECs is troubling for two reasons. First, the price of RECs is far too low to induce investment in clean energy. As CREX notes, the average price is a little under $1 per REC. But according to exposés published by Bloomberg News and BusinessWeek, the actual cost of generating one new MWh of green power can range anywhere from $40 to over $90 per MWh. In fact, in a study published by the National Renewable Energy Laboratory, the cost of solar power can reach as high as $680 per MWh.

Second, RECs are often a marketing gimmick for corporations to prove they care about the environment. For example, back in 2008, Nike was the 24th-largest corporate buyer of RECs. But that same year, it emitted 1.6 million tons of carbon, one of its highest years in the past decade. One year later, Nike slashed its RECs purchases by almost 70%. Now Newsweek ranks Nike as the 10th Greenest Company in America, as determined by over 700 different metrics. Yet Nike is conspicuously absent on CREX. Meanwhile, News Corp. plummets from #8 on CREX to 107th on Newsweek’s list. Clearly, going green takes much more effort than buying RECs.

Furthermore, for those concerned about global warming, RECs do not reduce total carbon emissions. According to the EPA:

If you are buying renewable electricity or RECs, you are reducing your indirect emissions…An organization buying green power can claim to be reducing its carbon footprint, but cannot claim to be reducing its total emissions to the atmosphere. (Emphasis added.)

Not using fossil fuels may be admirable. But by providing negligible investment for renewable energy, RECs are little more than a waste of other people’s money. As a fabricated commodity, RECs are the ultimate greenwash.


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Learning from Mistakes in Health Insurance Policy

By Michael Bastasch

The Oregon Health Plan (OHP) was implemented in 1994 as Oregon’s attempt to improve health care for the state’s low-income Medicaid population. The program set out to increase access to health coverage, ensure early preventative treatment and reduce premium increases for the insured. Despite its lofty goals, the program largely failed as financial instability forced it to impose higher costs on its own beneficiaries and to disenroll many participants.

Recently, the National Bureau of Economic Research released a controlled study analyzing the effects of “expanding access to public health insurance on the health care use, financial strain, and health of low-income adults” in Oregon. In 2008, the state expanded Medicaid enrollment by 10,000 under the Oregon Health Plan (OHP) Standard program. The Standard program covers only a limited number of uninsured adults ineligible for traditional Medicaid programs and charges monthly premiums but no copayments. This recent study has been trumpeted by some as a vindication for the national Affordable Care Act (Obamacare), but the results simply echo a return to the same failed approach to health insurance that Oregon has already experienced with the OHP.

The results of the 2008 study were as follows: There was an increase in utilization of health care services among those who received insurance. The probability of having a hospital admission increased 30%, the probability of having an outpatient visit increased 35% and the likelihood of taking any prescription drugs increased 15%. Likewise, there was an increase in reported compliance with recommended preventative care including mammograms and cholesterol monitoring.

As for financial strain, there was a 25% decline in the probability of having unpaid medical bills sent to collection agencies and a 20% decline in having to pay any out-of-pocket medical expenditures.

In terms of the benefits of insurance to physical health, the results show a 13% increase in the likelihood that someone reported feeling “good, very good, or excellent;” and the likelihood of screening positive for depression fell as well.

All of these would seem to indicate that the program was successful, yet a closer examination reveals the fundamental problems with the program. First, the increases in the utilization of health services and the reduced financial strain add significantly to overall costs. In fact, average annual individual expenditures increased by 25% ($778). This isn’t surprising, given that merely a decade after OHP was implemented expenditures per enrollee had increased 58[SB1] %. OHP’s total Medicaid expenditures increased 113% from 1994 to 2008[SB2] , well over the rate of medical inflation for that time period. These huge cost increases put heavy burdens on the system which eventually resulted in large-scale disenrollment of beneficiaries.

Second, the push for preventative care did not decrease emergency room visits or generate cost-savings. Proponents of preventative care argue that expanded public insurance should encourage preventative treatments in order to reduce health care costs as fewer people use hospital emergency rooms for preventable diseases. They believe that emergency room visits are often the most expensive form of health care provision. However, the recent study points out that there was no such decrease in emergency room use, despite the fact that compliance with recommended preventative care increased. In fact, OHP has never caused any measurable change on emergency room usage over its lifetime.

Third, self-reported measurements of health indicated improvements. However, two-thirds of the increase in self-reported health came shortly after enrollment and before enrollees began utilizing any medical services. Also, the increase in self-reported health doesn’t mean enrollees were actually physically healthier. In fact, the report indicated it is most likely that the increase in self-reported health reflects a general sense of improved wellbeing. In other words, people feel better off with insurance even if they are not physically healthier.

 

The recent study provides a clear insight into the effects of expanded public health coverage in Oregon, and the results of the study provide additional evidence to the failure of OHP. However, proponents of Obamacare see the Oregon experiment as vindication for their nationwide endeavor. Comparing Oregon’s results to the national stage is premature, as even this report’s researchers have warned: “[C]onsiderable caution must be exercised in extrapolating from our estimates of the causal impact of insurance eligibility and coverage to other settings.”

Policymakers should use the study as a blueprint for how not to go about reforming health care. The Oregon experience has shown that further centralization of health coverage and layering of subsidies ultimately fails. Instead, it would be prudent to decentralize health coverage to promote competition and consumer choice.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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“The Boondoggle of Boondoggles”

By Nick Sibilla

Oregon is a pioneer in green power. But we’re also a pioneer in wasting other people’s money. Right now, Oregon is home to one of the largest energy boondoggles in the nation: Shepherds Flat wind farm.

Currently under construction in Gilliam and Morrow counties, Shepherds Flat soon will have the largest wind farm in the world. Since wind power is expensive, Shepherds Flat has received over $1.2 billion in federal, state and local subsidies. Apologists say these subsidies will create jobs. But according to The Oregonian, this wind farm will create only 35 permanent jobs. In other words, each job created will cost American taxpayers over $34 million.

Meanwhile, Caithness Energy, the developer of Shepherds Flat, will bear only 10% of the cost. But Caithness will earn a 30% return on investment. In addition, this wind farm will not even power Oregon. All of the subsidized output will go to Southern California Edison, which provides electricity to places like Orange County. This project is nothing more than a triad of corporate welfare, government subsidies and exorbitantly expensive jobs. So is it any wonder residents in Shepherds Flat are calling this project the “boondoggle of boondoggles?”


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Dirty Secret Behind Clean Jobs

By Nick Sibilla

New jobs are scarce. In June, Oregon’s unemployment rate rose to 9.4%. Many environmentalists claim the government should invest in “clean jobs” to address both the unemployment rate and their concerns about climate change. Unfortunately for them, clean jobs have a blackened record.

The Brookings Institution defines a “clean job” as a job that produces a good or service with some sort of environmental benefit attached to it. Brookings recently claimed there are almost three million clean jobs nationwide. Among U.S. states, Oregon had the second-highest proportion of clean jobs.

But many of these clean jobs are heavily subsidized by the government. Of the top ten cities with the highest share of clean jobs, six are state capitals. They include Albany, Harrisburg and Sacramento. While Brookings praises these cities, the report neglects a few inconvenient truths.

For example, Harrisburg, Pennsylvania is the fourth cleanest city in the Brookings report. But Harrisburg is on the verge of municipal bankruptcy. In 2010, the city’s debt burden topped $670 million, or $9,500 per resident. What led to this fiscal insolvency? A $300 million scheme to update its trash incinerator…and save 60 clean jobs.

Clean jobs have a dirty secret: They will not put Americans back to work.


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Which Oregon School District Teaches No Students?

Oregon’s major teachers union, The Oregon Education Association (OEA), is seen by many observers as the big loser coming out of the recent legislative session in Salem. Why? Because it failed to convince enough legislators to stop some modest school choice bills from passing. It also couldn’t stop Governor John Kitzhaber, whom it endorsed and financially supported, from agreeing to sign these bills as part of a larger education reform package.

The highest profile bill in question was House Bill 2301, known as the virtual public charter school bill. The union has been trying to shut down online public charter schools ever since they started making inroads several years ago. This year it had hoped to cripple these schools, which it sees as competition to the brick-and-mortar schools in which its members teach. Instead, the legislature agreed to let these online schools expand from teaching about one percent of the state’s K-12 students now up to at least three percent of students in any and all school districts around the state.

In 2005 the union backed a bill to create a state-run competitor to these innovative online schools. Known as the Oregon Virtual School District, it has since been funded to the tune of more than seven million dollars. Legislators appropriated the funds with the intention that the district would “provide online courses.” But as Nigel Jaquiss reported in his recent Willamette Week exposé, “…after six years and the appropriation of $7.1 million, including another $1.5 million lawmakers just approved for the current biennium, the Oregon Virtual School District has yet to provide a single ‘course.’”*

This revelation calls into question which online schools are real and which may appear to be real, but are not. Schools like Oregon Connections Academy and Oregon Virtual Academy are real schools with hundreds of real teachers educating thousands of real students across the state.

The state-run Oregon Virtual School District, on the other hand, is truly a virtual district in the not real sense of the term. It has no teachers and no students. The only real part is that it has spent millions of real taxpayer dollars. And for what? It has a nice website and offers some helpful content and tools for teachers. But that’s about it. Somewhere along the line, its mission morphed from providing real online courses to hosting some “academic materials vetted by the Education Department and training for teachers.”

The Oregon Department of Education manager who oversees the Virtual District says that it is not an alternative to online charter school offerings. “We are not set up to compete with them from a financial point of view,” he says.* Real online charter schools, paying real teachers to teach real students, receive on average less than 5,700 public dollars a year for each enrolled student.** A simple calculation tells us that the $7 million allocated to the Virtual District so far could have been used to teach at least 1,200 students for one school year, or 200 students over the six years it has received state funding. But, again, so far the district has taught zero real students.

The teachers union keeps calling for more accountability from Oregon’s real online public charter schools, the ones with real teachers educating real students. It seems far past time for state legislators and taxpayers to call for accountability on the part of the Oregon Virtual School District. What have we gotten for $7 million in this “district”? If the answer is “not much,” then we should close it down and refocus our energy and resources on real schools with real students.

Oregon’s online public charter schools are not virtual; they are real schools where real learning occurs. Just because their teachers may not wear the union label shouldn’t give OEA the right to stop them from competing with the brick-and-mortar schools its members occupy.

Parents and students hold real online public charter schools accountable every day as they freely enroll and disenroll. More school choice will give more parents and students that power over brick-and-mortar schools as well. If OEA wants to keep students in classes taught by its members, it should figure out how to do that without holding the kids hostage. All students and their families deserve the right to choose where they get their education. Anything less is a disservice to them and to the taxpayers.

* “Virtual Combat: Oregon’s teachers union hates online charter schools. But its alternative has little to show for millions of taxpayer dollars,” Nigel Jaquiss, Willamette Week, July 20, 2011, www.wweek.com/portland/article-17755-virtual_combat.html.

**  “Unintended Consequences: an analysis of charter school funding in Oregon”, Vanessa Wilkins, Northwest Center for Educational Options, April 21, 2010 http://www.nwceo.org/pdf/NWCEO_Charter_School_Funding_Study_May_2010.pdf.
The average Oregon public charter school received slightly over $5,700 per student in 2008/2009 according to the Oregon Department of Education Financial Database, depending on the district that charters them. Current online charter schools are chartered in districts that pay less than this amount; but if the Oregon Virtual School District were to accept students statewide, it likely would receive closer to the average charter payment per student. Note that the $5,700 average per student charter school funding is approximately half the total public funding of brick-and-mortar public schools in Oregon.

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John Charles responds to Portland Mayor Sam Adams

At the July 14, 2011 JPACT meeting, accusations were made about John Charles and the Cascade Policy Institute.  The response from John is below.


Dear Mayor Adams:

I am writing regarding the public criticism you made of Cascade Policy Institute at the July 14 JPACT meeting. I recently listened to an audio recording of the entire meeting.

You twice referred to an essay of mine about Milwaukie light rail as a “screed.”  You also said, as a follow-up to Councilor Burkholder’s earlier attack on me: “The forces to erode the foundation of objective analysis that we all seek to rely on are real. We’re under attack. Basic, impartial information is under attack. I’d like that group [a JPACT subcommittee to be formed in the future] to figure out how we’re under attack and what we can do to make sure that objective information is out there. I worry that we’ll come out with ideas that will just sort of sink for failing to sit on firm, objective soil. “

As the CEO of a policy research center, I share your interest in empirical evidence and data. Therefore I offer the following specific concerns about the Portland-Milwaukie light rail (PMLR) project, and invite you to respond to them in a factual manner:

  1. The Milwaukie-to-Portland corridor is already well-served by TriMet. There are nine buses stopping at the Milwaukie Transit Center, and five of them specifically travel on McLoughlin Boulevard to Portland city center via the Hawthorne Bridge. Of the five, three are local bus routes (31, 32, and 33), one is an express bus (#99), and one is a hybrid – the #30 originating in Estacada continues on to Portland for six runs in the morning peak, where it becomes known as the 31E or the 31L. Both offer types of express service to Portland city center from Milwaukie.

 

According to the published FEIS for this project, once light rail opens, all of these buses “would no longer provide service north of Milwaukie.”[1] Transit customers boarding buses from points south will be forced to transfer at Milwaukie to a slow train with limited seating capacity. This is a degradation of service for them, not an improvement.

 

The ostensible goal of this project is to provide improved transit. Why are you planning to spend $1.5 billion on a train line that will clearly make thousands of current TriMet customers worse off than they are today?

 

  1. The current scheduled time-of-travel for a trip from downtown Milwaukie to PSU on the #99 McLoughlin Express bus averages 17.5 minutes. An early morning run makes it in only 12 minutes. The forecasted time of travel for light rail – which offers no express service — is roughly 19 minutes for the same distance.[2]

Why are you planning to spend $1.5 billion in tax dollars to offer slower service than we already have for peak-hour transit commuters?

  1. The current scheduled time-of-travel for a trip from downtown Milwaukie to PSU on the #33 McLoughlin Boulevard local bus averages 19.8 minutes, with a range of 18-22 minutes. Both the #33 and the planned light rail line offer all-day local service at roughly the same speed, to the same neighborhoods, except that light rail will have fewer stops so it will serve fewer neighborhoods.

 

Why are you planning to spend $1.5 billion in tax dollars to offer local service that already exists?

 

  1. Average daily traffic on McLoughlin Boulevard is 46,000 vehicles.[3] This is not a particularly high traffic load. In comparison, the ADT on the Sellwood Bridge is approximately 30,000 vehicles, and that is a two lane bridge. McLoughlin Boulevard has four lanes for its entire length, and six lanes in some places.

In the key stretch that could be a potential traffic choke point – the subarea of Powell Blvd. to Tacoma Street, which is mostly two lanes in each direction – all McLoughlin Boulevard intersections except one meet current jurisdictional criteria for acceptable levels of service.[4]

This is precisely the reason why current bus service is a success. The widely-promoted assertion that McLoughlin Boulevard is gridlocked (and thus in need of the exclusive ROW that rail transit would provide) is a myth.

This point was made anecdotally in yesterday’s Sunday Oregonian in a feature story in the Homes and Rentals section, which highlighted a new, 18-unit subdivision of “small footprint” homes in Milwaukie. Developer Nick Stearns says, “I think Milwaukie is kind of a secret because commuting from almost any other city in the area takes much longer to get to and from downtown Portland.  I’ve come down here at 5:00 p.m. right at rush hour and it was 11 minutes from downtown.”

A recent home buyer there, Sam Salstrand, echoes that observation: “I work six days a week, and the commute was just killing me. This place is great because there’s an express bus, and it’s incredible!”

I wonder if Mr. Salstrand is aware that his wonderful express bus will be terminated in 4 years because you and other members of JPACT think he would be better off with a slow train?

  1. According to TriMet’s official “Fact Sheet” for this project, the opening of light rail service will mean 110 bus trips on the downtown transit mall will be removed. This is advertised as a “benefit.”

But to the thousands of transit customers who currently get off in city center, being forced to take a slow train that only goes to the south end of the PSU campus is highly inconvenient. For most of them, the re-routing will likely require a transfer to the Green line or a bus to get further north in city center.

Why are you planning to spend $1.5 billion to force the majority of current Milwaukie-Portland transit customers to get off at a college campus, when most of them are probably not college students?

  1. TriMet estimates in its December 2010 long-range financial forecast that in the opening year of 2015, the Milwaukie line will carry an average of 13,000 weekday “boardings.”[5] Of those, 4,500 will be former bus rides diverted to light rail.[6] Since each rider typically makes two “boardings” per day, the number of actual new transit customers will be around 4,250. So in construction costs alone, this project will cost more than $352,941 per new rider.

Why are you planning to spend $1.5 billion just to recruit 4,250 hoped-for new transit customers, when none of them will pay even one dime in direct user fees for the construction of this project? How is that a sustainable business model for transit?

Concerns about the new bridge

 

The new bridge is being advertised as a “transitway.” Unfortunately, the actual vehicle or passenger throughput of the bridge will be tiny, especially compared with real transitways operating elsewhere.

When the project opens in 2015, the bridge will carry six light rail trains at the peak hour plus bus service for three TriMet buses currently operating on the Ross Island Bridge (lines 9, 17 and 19). Those lines cross the Ross Island 16 times per hour (total) at the morning peak. So the total transit throughput on the new bridge will be 22 vehicles per hour at the peak (roughly equivalent to 28 buses).

The highest-volume transitway in the country is the Lincoln Tunnel Express Bus Lane (XBL) traveling from the New Jersey Turnpike into mid-town Manhattan. During the 3.75 hours the busway operates in the morning weekday peak, it carries roughly 62,000 passengers on 1,700 buses, or 453 buses per hour. So in comparison, the new PMLR bridge will carry only 6.2% of the vehicular throughput that the XBL carries per hour.

Moreover, because the XBL is a busway, not a rail line, it is flexible. Thus, at off-peak hours, it operates as a general purpose lane that can run in either direction, serving all manner of trucks, buses and cars.

It is fine that the new PMLR bridge will have excellent access for pedestrians and cyclists, but the exclusive use of the primary ROW for one light rail line and three buses is a gross misallocation of capital.[7]

Servicing the South Waterfront District

Among other things, the PMLR project is being promoted as a way to provide an eastern portal for the South Waterfront district. While it’s true that South Waterfront desperately needs additional options for people traveling there, currently 79% of all weekday person-trips to/from the district are made by private automobile (see below), not transit.

Trip Counts for the South Waterfront District

Average Weekday, 6:00 a.m. – 10:00 p.m.

All passenger-trips Market share of trips by mode
Auto/truck 17,023 79%
Streetcar 1,832 9%
Bicycle 1,076 5%
Bus 926 4%
Pedestrian 642 3%

 

Note: Research was conducted on various good-weather weekdays during the months of May-January, 2010-2011.

 

We know these are the travel patterns because last year we laboriously counted every trip to and from the district by the hour (including observed vehicle occupancies) to learn how the district actually works. Contrary to assertions made by local planners, the South Waterfront is primarily auto-based, including (and especially) the OHSU Health and Healing Center.

 

Since every downtown bridge is currently over capacity at the peak period, why are we building a new Willamette River bridge that will specifically exclude the dominant mode of travel both in the South Waterfront district and everywhere else?

PMLR as a means of promoting “Transit-Oriented Development”

PMLR is also touted as a so-called “catalyst for transit-oriented development.” If you actually believe the claims being made by planners, please give me examples of current light rail stations that serve as models for what you have in mind. Are there any on the Green Line, which is dominated by empty park-and-rides? Are there any in the 25-year-old Blue Line to Gresham? I assume you are not thinking of Rockwood Station, Ruby Junction, Gresham Station, 122nd street, Gateway, 82nd Avenue, or the Rose Quarter.

My own field research over the past decade shows that rail stations, usually funded in part with urban renewal dollars that are statutorily restricted to improving “blight”, usually create blight. If I’m wrong, please provide empirical examples of what you would consider “rail station success stories” on the east side.

Conclusion and Recommendation

I recognize that you are a passionate believer in the PMLR project. Unfortunately, you have been badly advised by the people who are supposed to know something about transit. Milwaukie light rail is destined to be the most wasteful transit project in Oregon history.

Fortunately, there is still a reasonable alternative: build the new bridge (which is needed anyway), but cancel the light rail project. TriMet is about 10 months away from having a signed FFGA with FTA, and the project may not even be approved by FTA due to events now taking place in Congress related to the budget.

The changing political climate in Washington, D. C. is actually your last lifeline to fiscal sanity. If you take it, you can preserve the existing high-quality bus transit service from Milwaukie to Portland, and spend the $750 million in committed local matching funds on dozens of other more important infrastructure projects, such as the Sellwood Bridge replacement.

It is not too late to make this change. We terminated the Mt. Hood Freeway at the last minute, and we can do it again with this project. All that’s necessary is a commitment to assessing the actual facts.

Sincerely,

John A. Charles, Jr.

President & CEO


[1] Portland-Milwaukie Light Rail Project FEIS, October 2010, p. 2-29

[2] Ibid, p. 2-28; TriMet bus schedules as of July 25, www.trimet.org.

[3] Portland-Milwaukie light rail project, Transportation Impact Results Report, October 2010, p. 4-12.

[4] Ibid, p. 4-12

[5] TriMet, Fall 2010 Financial Forecast, p. 52

[6] Ibid

[7] Note that the Portland streetcar is also expected to run on the bridge, but that will have to happen through a separate project; it is not part of the PMLR project.

 

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John Charles attacked by Metro Councilor Rex Burkholder and Portland Mayor Sam Adams

At the July 14, 2011 JPACT (Joint Policy Advisory Committee on Transportation) meeting Metro Councilor Rex Burkholder and Portland Mayor Sam Adams had some interesting words regarding John Charles and the Cascade Policy Institute. Below is a link to the Cascade specific segments, or you can opt to listen to the whole JPACT meeting.

Listen to the whole JPACT meeting

Listen to the Cascade segments (Councilor Burkholder speaks first, followed by Mayor Adams)

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A free-market guru with ties to Portland

The following op-ed appeared in The Oregonian the day after Milton Friedman passed away in 2006. Below it is the full text, including some words edited out for space.


Full text

A great champion of human liberty passed away on Thursday at the age of 94.  Milton Friedman won the Nobel Prize in economics in 1976, but he likely will be remembered more for his passionate devotion to individual freedom.

Friedman’s connection to Oregon was through his devoted wife Rose, a member of the Director family. He was born in New York City in 1912, the son of poor Eastern European immigrants. She emigrated with her family from Eastern Europe to Portland in 1913. She attended public schools and Reed College before transferring to University of Chicago. Rose and Milton met as graduate students at Chicago and the rest, as they say, is history.

They raised two children together and co-wrote three books on economics and public policy: “Capitalism and Freedom,” “Free to Choose” and “Tyranny of the Status Quo.” Rose also helped produce the 10-part PBS television series, “Free to Choose,” which introduced the power of free-market economic ideas to the general public here and around the world beginning in 1980. They published their memoirs, “Milton and Rose D. Friedman, Two Lucky People” in 1998.

Milton started his career as a young economist in the 1930s working for the New Deal Roosevelt administration in Washington, D.C. He worked in the U.S. Treasury Department during World War II before leaving government for teaching. He later said: “My experience in those years shaped the advice I regularly gave my graduate students in later years: by all means spend a few years in Washington — but only a few.”

Friedman issued that warning because he came to realize that government controls over prices, wages and production were both inefficient and violations of liberty. He described himself as “thoroughly Keynesian” back then but later said, “You know, it’s a mystery as to why people think Roosevelt’s policies pulled us out of the Depression. The problem was that you had unemployed machines and unemployed people. How do you get them together by forming industrial cartels and keeping prices and wages up?

More than perhaps any other modern economist, Friedman’s ideas were credited by Western leaders such Ronald Reagan and Margaret Thatcher, and free-market revolutionaries in formerly communist countries, as a driving force behind their efforts.

Milton Friedman was fond of saying that he was not a conservative. He did not want to conserve much of what our current political culture has to offer. He called himself both radical and libertarian. He was an early and strong advocate for abolishing the military draft, and he saw more harm than good in government’s attempts to outlaw peaceful human behavior such as drug use and prostitution.

Of all the ideas he advocated, none was more important to him than universal school choice, a concept he first wrote about in 1955. He and Rose founded the Milton and Rose D. Friedman Foundation to advocate for both public and private school choice.

I first met Milton and Rose when they attended the Ashland Shakespeare Festival in 1989. Just this past Monday I thought about what Milton would have said in response to a front page Oregonian story about how many citizen initiatives aimed at limiting the power of government had not passed in the recent election. The headline read, “Voters nip libertarian dreams across U.S.” If Milton had seen that, I think he would have responded, “It was the tactics that didn’t succeed in this election. The dreams, which are really American Dreams, live on.”

Milton Friedman, lover of liberty, is gone.  But his dreams, the dreams of countless people here and around the world, live on.

 

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Remembering Milton Friedman: A Legacy of Freedom

This year is being coined a “Season of Growth” for the dramatic gains that have been made in school choice. And, indeed, it has been, with school choice programs being enacted or expanded in more than a dozen states across the country, including Oregon. But as we celebrate those fruits and those who cultivated them, we also must recognize their original “Johnny Appleseed.”

Although Dr. Milton Friedman died almost five years ago, his impact on freedom – and specifically on school choice – continues to be recognized by freedom-loving people both in the United States and around the world.

In celebration of Dr. Friedman and the seeds of freedom he planted decades ago that continue to bear fruit, Cascade Policy Institute, in conjunction with the Foundation for Educational Choice, will host the annual Friedman Legacy for Freedom Day. On Friday, July 29th from 3pm to 7pm, Oregonians are invited to a Birthday Party and Open House at Cascade’s offices, 4850 SW Scholls Ferry Road, Suite 103, Portland. There is no cost to attend, although RSVPs are requested. Milton Friedman would have been 99 years old at the end of this month, and Cascade is happy to host this event to discuss his influence on human freedom in general and school choice in particular.

Today, Americans are gravely concerned about our country. They’re awaiting solutions to the debt crisis, rightfully worrying about inflation, and trying to improve public education’s performance and costs. In response, Dr. Friedman’s writings and ideas could not be more relevant. From Capitalism and Freedom to A Monetary History of the United States to Free to Choose, Dr. Friedman’s work contains many of the answers Americans are seeking today.

Dr. Friedman once said that “[g]overnments never learn. Only people learn.” How true. If our country’s current crises show us anything, it’s that the American people are learners. They know what works and what doesn’t. That is precisely why they’re opposing an increase to the debt ceiling. It’s why businesses aren’t hiring over concerns of new government regulations. And it is exactly why Americans are standing up for school choice – because they’ve learned it works for them and their children.

But with Dr. Friedman gone, his ideas need new spokesmen – individuals who can eloquently and plainly explain the theories and benefits of free markets. On this July 29, Cascade Policy Institute will be searching for and empowering new “Johnny Appleseeds” who can instill in the hearts and minds of their friends, neighbors, and children the values of freedom and the fruits they can bear for us all.

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Portland’s Debt Isn’t Rosy

By Christopher Robinson

The Federal Government isn’t the only one with a spending problem. Local governments are finding themselves under a mountain of debt as well. The City of Portland currently owes more than $6.5 billion in long-term obligations. That comes out to about $11,000 for each of the city’s residents.

Portland is required by law to have a balanced budget, meaning income has to equal expenditures. However, an Oregon Revised Statute permits Portland to issue revenue bonds for “any public purpose.” $3.6 billion of the city’s obligations come from the sale of such bonds. The balanced budget requirement doesn’t mean much when funding can be created so easily, simply by going into debt.

Furthermore, only $60 million of Portland’s bonds receive the highest Aaa rating from Moody’s. If the city continues massive spending without strong assets to back its borrowing, the majority of its bonds risk being downgraded. This would lead to an overall reduction in Portland’s credit rating, which would spell financial catastrophe.

The simple truth is that to remain fiscally responsible, you cannot spend what you do not have. Portland inevitably must raise taxes to pay for its obligations or cut spending. Given the still-troubled state of the economy, tightening belts and cutting spending is the best option.


Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Reason Foundation authors in Portland

Cascade friends Nick Gillespie (Reason.TV) and Matt Welsh (Reason magazine) will discuss the themes and ideas presented in their new book, The Declaration of Independents: How Libertarian Politics Can Fix What’s Wrong With America, at Powell’s Books in Downtown Portland on August 1st beginning at 7:30pm. A book signing will follow the discussion.

 

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EcoFlats: One More Unsustainable Green Icon for Portland

By Christopher Robinson

So-called “sustainable development” is a longtime political interest in the city of Portland. Although the term itself is never defined, the concept implies the use of “green” design and technologies in order to reduce energy consumption, water use, solid waste and automobile travel. The loftiest goal is “net zero,” whereby all electricity and water needs are met from on-site generation and no outside sources are necessary.

One such “sustainable” project is the EcoFlats apartment building located on North Williams Avenue in Portland’s Boise neighborhood. Recently, the development received a good deal of media coverage due to its implementation of green technologies and an “affordable” price tag. EcoFlats has no interior hallways, no air conditioning, a large roof top solar array and the goal of net-zero energy usage. On the surface it would seem an excellent model for future affordable, sustainable development; but an extensive back-story to EcoFlats’ financing and planning reveal otherwise.

First, EcoFlats’ location is no coincidence. Although promoted as a bicycle commuter friendly location (North Williams Avenue is considered a major “bicycle thoroughfare”), it is within the Portland Development Commission’s (PDC) “Interstate Corridor Urban Renewal Area.” This means businesses and developers can receive subsidies from PDC. EcoFlats sits on land previously occupied by a small equipment repair shop, which was considered underutilized space. In order to aid redevelopment, PDC provided the developer with a $740,000 commercial loan representing roughly 23% of the total project cost. Loans approved by PDC are intended to close financial gaps and may have reduced interest rates if applicants meet certain requirements, such as using sustainable technology.

In addition to the incentives from PDC, the developer also applied for Oregon’s business energy tax credit. The program covers up to 50% of costs towards the purchase of certain technologies. These include high-efficiency combined heat and power projects, such as the $200,000 solar array on top of the building.

The estimated costs are misleading. Tenants pay the energy costs for their residence, so the tax credit only benefits the developer. Proponents argue that energy costs will be lower because the building produces its own energy, cancelling out the cost of solar panels. However, the solar panels are subsidized by taxpayer money. All Oregonians, including the tenants, are footing the bill.

Furthermore, the developer of EcoFlats was not required to build any off-street parking for the building, a significant subsidy that allowed for more revenue-generating units. The developer received a parking exemption because North Williams Avenue is considered a “transit street” because it has a TriMet bus route. However, the majority of tenants likely will own an automobile, meaning the surrounding neighborhood will have to bear the burden of increased on-street parking.

Finally, EcoFlats is part of Energy Trust of Oregon’s “Net Zero” pilot program. The Energy Trust is a non-profit organization funded through a three percent, state-mandated surcharge on customers of the state’s largest energy suppliers, including PGE, PacificCorp and NW Natural. The Energy Trust works to promote reduced energy use by providing incentives from the money they collect. Projects enrolled in their “Net Zero” pilot are eligible to receive up to $575,000 in various incentives. The goal is to achieve net-zero energy consumption through careful planning and implementation of new technology. Again, however, the benefits are concentrated in developments such as EcoFlats, while the cost is spread across all who pay the three percent energy surcharge.

In total, EcoFlats has $1,415,000 in potential and realized subsidies, representing roughly 44% of the total project cost. Yet, even with these subsidies, the rents are very high for the local market. Portland Housing Bureau designates the Boise neighborhood as a low-moderate income community. Rent for 600- and 750-square-foot apartments at EcoFlats are $1,000 and $1,500 a month, respectively. This means it does not meet the requirements of low-moderate income families for affordable housing, which should represent less than 30% of gross annual income. Current Boise neighborhood residents are effectively priced out of the development.

There are clear winners and losers here. The 18 residential units and two commercial spaces are filled, which is good for the developer. The City of Portland wins, because they now collect almost double the property taxes on the land. The Energy Trust wins, because they can claim more energy savings, though whether or not the building ever achieves its net-zero energy goal will depend on the usage of the tenants. It will require a conscious effort in order to do so, and actual performance is likely to lag the estimated performance.

Oregon taxpayers and all who pay the Energy Trust surcharge are the big losers. They are required to make up the difference in costs for “sustainable development” but receive none of the touted benefits. EcoFlats is only one in a long list of heavily subsidized projects which have increased in number in recent years. Eventually, people will realize that “sustainability” in Portland is not about helping the environment, but rather about creating an image that only benefits a select few.


Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Unfunded Liabilities: Oregon’s Hidden Debt

By Michael Bastasch

Congress is still debating raising the federal debt ceiling. This would allow the U.S. government to continue to borrow and to add to the already staggering $14.3 trillion in debt. However, the feds aren’t the only ones with debt problems. State and local debt is rising, including $3.1 trillion in unfunded liabilities.

Oregon’s debt is piling up as the state government continues to make future promises it won’t be able to fulfill. A study by the National Center for Policy Analysis found that Oregon’s unfunded pension liabilities totaled $47.5 billion, and its unfunded Other Post-Employment Benefits (OPEB) liabilities (mostly for retiree health insurance) were $765 million, totaling about 30% of Oregon’s GDP in 2008.

The real situation is much worse because the study failed to recognize the vastly unfunded OPEB liabilities of other Oregon government entities. A report by Oregon Capitol News showed that the largest 100 government entities in Oregon had $2.8 billion in unfunded OPEB liabilities. Including unfunded liabilities from all 1,700 government entities no doubt would reveal a much grimmer picture.

Future taxation will be determined by what government spends now and has promised to spend down the road. Taxes must increase if government debt isn’t decreased. All levels of government must reduce the debt burden on citizens to avoid severe fiscal distress and high taxes down the road.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Karla discusses Alberta’s Bill 36 on CAEPLA Connections in Canada – Part 2

Click here for Part 1

On July 2, 2011, Karla continued discussion with CAEPLA CONNECTIONS LANDOWNER TALK RADIO about an Alberta land use law similar to one instituted in Oregon.

From the CAEPLA website…

This week on CAEPLA Connections Landowner Talk Radio, Keith Wilson, Karla Kay Edwards, and Kevin Avram discuss the impact of Bill 36-like legislation in Oregon. Bill 36 is an Alberta law that is going to change Alberta in a way that few people realize. In many instances, it is also going to affect property values in ways that few people have thought about. The Bill is the Stelmach government’s central planning land use law.

For more information, visit http://www.landownerassociation.ca

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Karla discusses Alberta’s Bill 36 on CAEPLA Connections in Canada – Part 1

Click here for part 2

On June 25, 2011, Karla visited with CAEPLA CONNECTIONS LANDOWNER TALK RADIO about an Alberta land use law similar to one instituted in Oregon.

From the CAEPLA website…

When Alberta Cabinet Minister Mel Knight was asked if there was any democratic jurisdiction anywhere, that had implemented the kind of land use laws and central planning embodied in Alberta’s Bill 36, he responded by saying, “Yes, in Oregon.” And Oregon did it 40 years ago! Since then, other than Alberta, no one has copied Oregon’s way of doing things, and with good reason. It’s been a disaster for property rights.

For more information, visit http://www.landownerassociation.ca

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This week on CAEPLA Connections Landowner Talk Radio, Keith Wilson, Karla Kay Edwards, and Kevin Avram discuss the impact of Bill 36-like legislation in Oregon. Bill 36 is an Alberta law that is going to change Alberta in a way that few people realize. In many instances, it is also going to affect property values in ways that few people have thought about. The Bill is the Stelmach government’s central planning land use law.

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Oregon’s Economic Outlook Continues to Slip

Hit hard by the national recession, Oregon lawmakers started the 2011 legislative session with calls to create jobs. By the time the session ended on June 30, little had been done to encourage job growth in the state. And virtually nothing was done to address the major factors that determine the state’s Economic Outlook, as identified by the national organization of fiscally conservative state legislators, American Legislative Exchange Council (ALEC).

Every year since 2008 ALEC has compiled and reported on the 15 policy variables influenced by state legislatures that appear to signal the economic outlook of the states. These variables are:

  • Top Marginal Personal Income Tax Rate
  • Top Marginal Corporate Income Tax Rate
  • Personal Income Tax Progressivity
  • Property Tax Burden
  • Sales Tax Burden
  • Remaining Tax Burden
  • Estate/Inheritance Tax Levied?
  • Recently Legislated Tax Changes
  • Debt Service as a Share of Tax Revenue
  • Public Employees Per 10,000 of Population
  • State Liability System Survey
  • State Minimum Wage
  • Average Workers’ Compensation Costs
  • Right-to-Work State?
  • Number of Tax Expenditure Limits

ALEC published its 2011 report, Rich States, Poor States: ALEC-Laffer State Economic Competitive Index, in late June.

How does Oregon rank?* Oregon now ranks number 30 out of 50 states in its actual economic performance over the last ten years. Even worse, looking forward, Oregon has slipped from number 35 in 2008 to number 43 in 2011. Our economic outlook is now worse than 42 other states, again, based on policy variables that the state legislature could change.

In May, Rich States, Poor States authors Arthur Laffer and Stephen Moore published an article in The Wall Street Journal in which they identified the two policies that “have consistently stood out as the most important in predicting where jobs will be created and incomes will rise. First, states with no income tax generally outperform high income tax states. Second, states that have right-to-work laws grow faster than states with forced unionism.”

How does Oregon rate on those two most important variables? The authors spent almost a full page of this year’s report discussing how damaging Oregon’s 2010 retroactive income tax increases on wealthy individuals and corporations are to the state’s economic outlook. They mentioned Cascade’s analysis of those two measures, 66 and 67, which were approved by voters in January 2010. They noted that “Oregon is tied with Hawaii now with the highest state income tax rate in the nation,” a fact likely to deter entrepreneurs and other high-income individuals from coming to Oregon and to cause some who are here already to leave. Initial results confirm what we feared: These tax measures generated far less revenue than voters were led to believe, and the state had some 8,000 fewer high-income tax-filers in the first year of these measures than the state predicted.

Oregon also ranks poorly on the right-to-work variable. Over time, economic growth in states with strong union protections has significantly lagged growth in states with more worker freedom. Twenty-two states have right-to-work laws which prohibit agreements between labor unions and employers that make membership or payment of union dues or fees a condition of employment, either before or after hiring. Twenty-eight states, including Oregon, require that all employees of unionized employers must become union members or pay dues to the union within a specified period of time or lose their jobs.

So, Oregon fails both important economic outlook tests: We have the highest income tax rate in the nation, and we require workers in unionized companies and government entities to join those unions and/or pay union dues. We also fare badly on other variables, including the fact that we continue to tax estates, and we have the second highest minimum wage in the country.

Again, the 15 policy variables taken into account to determine our economic outlook are all within state lawmakers’ control. Of course, there are national and international policies and conditions that are outside our control. But that is the case for every state. Oregon lawmakers must take responsibility for the factors they can control. Unfortunately, they haven’t, and our economic outlook continues to decline relative to other states.

Talking about creating jobs is great, but actually reducing taxes and protecting workers against forced unionization would go a lot farther in turning Oregon’s economic outlook around. Slipping from 35th to 43rd since 2008 is bad enough; let’s encourage Oregon’s legislators to enact policies that will start turning that economic outlook ranking back up.

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The Ultimate Greenwash

By Nick Sibilla

Fox News is greener than Starbucks.

Surprised? You should be. According to the newly published Corporate Renewable Energy Index, News Corporation, the parent company of Fox News, is actually the 8th highest corporate consumer of green power. Starbucks, on the other hand, is only 14th. How is this possible? Welcome to the topsy-turvy world of renewable energy credits.

These credits—also known as RECs—are created every time one megawatt-hour (MWh) of renewable energy is generated. RECs are sold separately from green power and represent the intangible, environmental benefits of renewable energy. But by purchasing RECs, corporations can still claim they are financing clean energy. In fact, in 2010, over 70% of all corporate RE purchases was through RECs.

Yet RECs are a waste of money for two major reasons. First, the average price of a REC is around $1 per MWh. But according to BusinessWeek, the actual cost of clean energy can range anywhere from $40 to over $90 per MWh!

Second, RECs do nothing to combat climate change. The EPA even admits that buying RECs does not lower greenhouses gas emissions! These credits are the ultimate greenwash.

Investors and environmentalists should be skeptical any time a corporation claims to be going green. In short, RECs are a complete wreck.


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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TriMet’s New Transit Bridge to the Last Century

On June 30 TriMet formally began construction on the new Willamette River Bridge for the Portland-Milwaukie light rail (PMLR) line. The bridge will be part of a 7.3-mile rail spur running from the Portland State University campus to a parking garage just south of Milwaukie on McLoughlin Boulevard. At a construction cost of more than $205 million per mile, this will be the most expensive transit project in Oregon history.

During the ground-breaking ceremony, economically illiterate politicians raved about how this project would “make Portland more competitive” (Portland Mayor Sam Adams), “reduce congestion on McLoughlin Boulevard” (Oregon Transportation Commission Chair Gail Achterman), and “show the rest of the country that this is not just spending, but a bridge to the future” (Congressman Kurt Schrader).

Any competent group of high school sophomores would know how silly these claims are. Building another rail line at a cost of $1.5 billion will make Portland less competitive than it would be otherwise, because the region has to allocate $750 million in “local funds” to match federal grants. All of that money could be spent on other more useful projects (like replacing the unsafe Sellwood Bridge) if light rail wasn’t constantly crowding them out.

Light rail has never reduced traffic congestion in the region and never will because it carries too few people. And contrary to the notion popularized by TriMet, the main corridor for this line – McLoughlin Boulevard – is not very congested, even at peak periods; it easily could be used for express bus service, which would travel at double the speed of light rail.

Finally, rail transit is not the future of cities. Passenger rail travel peaked in the Portland region and most other cities 100 years ago, and it will never come back due to the safety, speed and convenience of private auto travel.

Despite the vast expense, few people will ever benefit from Milwaukie light rail. TriMet estimates that in the opening year of 2015, the line will carry an average of 13,000 weekday “boardings.” Of those, 4,500 will be former bus rides diverted to light rail. Since each rider typically makes two “boardings” per day, the number of actual new transit customers will be around 4,250. So in construction costs alone, we will spend more than $352,941 per new rider.

I suspect that if we could locate these hoped-for riders and ask them how they’d really prefer to spend the taxpayer gift of $353,000, relatively few would choose a slow train to Portland.

The cost-per-mile numbers are staggering when compared with transit projects elsewhere. In 2002 Metro estimated that the same Milwaukie light rail project utilizing the Hawthorne Bridge would cost only $72 million per mile. The North Portland MAX line was built for $60 million per mile.

Express bus service is especially attractive in comparison. The Eugene Bus Rapid Transit line, known locally as the “Emerald Express,” cost $6 million per mile. The Los Angeles Rapid Bus system was implemented for a mere $335,000 per mile.

Because the LA Rapid Bus service is so economical, it has been implemented on 369 miles of routes in less than a decade. The service utilizes existing arterials and provides faster travel times than light rail by limiting passenger stops to no more than one per mile.

TriMet could have implemented a rapid-bus option on McLoughlin Boulevard years ago if good service was actually a priority, but it isn’t. In fact, during the past two years TriMet bus service has been cut by 14%, rail service by 10%, and the most recent new rail line – the Green Line to Clackamas Town Center – is operating 33% below planned-for levels. At certain times of the day, service is now down to one train per hour on the Green Line.

How many average taxpayers would vote to spend $1.5 billion on a slow train? We already know the answer. In both 1996 and 1998, the North/South light rail project to Milwaukie was on the ballot, and it was voted down each time. But those results clearly don’t matter to the seven members of the TriMet board, who are all appointed by the governor. They never have to answer directly to voters.

TriMet is taking a huge gamble with this project. The formal grant application for the $750 million in federal money has not even been submitted to the Federal Transit Agency; and local matching funds promised by Portland, Milwaukie and Clackamas County don’t exist. TriMet is building a transit-only bridge (no cars or trucks will be allowed) on pure speculation that more than a billion dollars will be forthcoming to finish the deal.

That speculation may prove fatal. Earlier this week the Oregon legislature revoked approval for $39 million in bond funding for another “iconic” boondoggle, the so-called Oregon Sustainability Center. Local proponents were shocked that the funding was pulled; they had assumed for years that the necessary tax subsidies for their green fantasy would be approved, and they were wrong.

TriMet could be building a bridge to nowhere. If it dies in mid-construction, it would be a fitting monument to the arrogance of the TriMet board.

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Recent K-12 Education Reforms Let Kids Transfer to a Brighter Future

Public education exists to serve children – period. However, as evidenced by the Oregon Education Association’s (OEA) ongoing actions, some believe public education should serve primarily the adults who work in the system. Thankfully, this legislative session, Oregon’s state leaders concluded otherwise.

After tense negotiations on several education-related bills, Oregon’s legislature passed the most substantial education reforms Oregon has seen in decades, at the governor’s request. The more “controversial” elements of that package will provide students – who find their traditional public schools unsuitable – more educational options from which to choose, including charter and online schools. Such student-focused, choice-based measures were a particular pebble in the OEA’s shoe. Why?

Choice threatens the OEA’s monopolistic hold on public education. That grasp has allowed the OEA (a union) to become Oregon’s most financially powerful special interest group, lobbying for, well, itself. So when something undermines that power – even if that something is beneficial to children – the OEA will stand in the way, as it did this legislative session. Oregon families should be grateful the OEA lost and the governor and legislators led. Now, many children in need of a better education no longer will be held hostage.

For example, last summer, more than 4,700 Oregon kids were on waiting lists for charter schools. Because school districts were not authorizing enough additional charters to keep up with demand, desperate families have been left high and dry. (Currently, only districts and the State Board of Education can sponsor charters.)

Now, if charter school applicants are denied by districts, they can appeal to public colleges for sponsorship, providing a new avenue for charters to grow. Although public colleges will be able to sponsor just one charter each, this should help hundreds of families find the schools for which they are looking.

Many Oregon families also have been waiting for access to virtual, or online, charter schools. Currently, Oregon’s virtual charters are operating under an enrollment cap that has kept many kids from using this innovative option. Online learning is emerging as a cutting-edge way for students to have wider access to courses that otherwise might be unavailable to them.  If Oregonians want to enroll their children in such schools, why not let them?

Thanks to state leaders, kids now will be able to access any virtual charter school without having to obtain their local district’s permission – at least until three percent of that district’s students are attending a virtual school. Although still unnecessarily limited, this improvement will be life changing for families who have been denied entry. It also will make it easier for families who have received permission but have had to wade through the same transfer paperwork year after year.

The third choice measure that will benefit Oregon students essentially carries charter schools’ open-enrollment policy over to traditional public schools. Today, it is difficult, if not impossible, for parents to enroll their children in out-of-district public schools because districts often refuse to let kids transfer. Now, parents will be able to enroll their children in any public school, as long as the receiving school district is accepting transfers.

 

In short, districts no longer will be able to force kids to stay in their local public schools if they’re able to get a public education elsewhere.

The OEA claimed that giving parents such choices creates financial instability for schools (by losing transferees). Other states, which have such policies in place, seem to cope. Why can’t Oregon? Moreover, this begs another question: Does the OEA believe that it and traditional public schools are entitled to students?

If parents choose to leave a school, that suggests something is either wrong with the school or, even if the school is “good,” their children’s needs aren’t being adequately met. In both instances, parents believe they can find a better fit for their kids elsewhere. If the goal of public education is to educate, why deny children access to schools that could do a better job of educating?

Oregon’s lawmakers and governor finally are answering that question. They’ve put partisan politics aside to support reforms for which thousands of Oregon families have been waiting. There still is much work to be done to ensure Oregon’s children – not the OEA – are the true  of beneficiaries public education. But this start will show Oregonians that the sky doesn’t fall when choice is incorporated into public education; it gets brighter.

 

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State Budget vs. Union Benefits

By Christopher Robinson

Mediation continues in Salem between two major labor unions and Governor John Kitzhaber’s team over public employee benefits. The governor is seeking concessions from SEIU and AFSCME regarding the Public Employees Retirement System (PERS) and the state employees’ health insurance plan.

 

PERS members pay 6% of their salary towards retirement. Currently, the state pays for this mandate as part of a previous deal. The state also pays 100% of employees’ health insurance premiums.

 

It’s no secret that Oregon is facing budget shortfalls, including financing for public employee benefits. Attempts at legislative reform have largely failed. State negotiators initially aimed to end the 6% pick-up and to require that employees pay 5% of insurance premiums. They have since dropped the pick-up demand.

 

Union supporters argue state employees have already made concessions by forgoing certain wage increases in favor of hardier retirement benefits. However, this still does not account for free health insurance premiums or the wealth of other benefits union membership provides. SEIU Local 503 members are eligible to receive, among other things, free life insurance and legal compensation. AFSCME members get heating oil and rental car discounts.

 

The worst case scenario of not being able to fund state employee benefits is bankruptcy. Making a few concessions wouldn’t be a bad idea, and Oregon taxpayers likely would agree.

 

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An Open Letter to President Obama

Dear President Obama:

 

Your recognition of the importance of rural America is appreciated, but it appears shallow thus far in your presidency. The announcement of the establishment of the White House Rural Council has lofty goals, but actions speak louder than words. At this point your administration’s actions have done little to relieve the economic woes of rural communities, especially in Oregon.

 

The executive order establishing the Council lists 25 agencies and other federal government entities that will participate under the leadership of the Secretary of Agriculture to “better coordinate Federal programs and maximize the impacts of Federal investment to promote economic prosperity and quality of life….” My question is, whose quality of life and economic prosperity? The only mention of economic opportunity in the order pertains to “…energy development, outdoor recreation, and other conservation related activities.”

 

Here in Oregon, we have lived with this utopian concept of economic development for more than twenty years. If you were to ask folks who actually live in rural communities throughout Oregon, you would be informed overwhelmingly that the results of this new conservation economy are dismal at best. In fact, statistics show that the poverty rate in rural Oregon has increased from 12% in 1979 to 17.2% today.

 

Your administration has touted the billions of dollars that have been spent on pet projects throughout the country like broadband and renewable energy. Why not allow communities to identify projects that will best fit their needs locally? Better yet, in these financially strained times, let’s consider removing bureaucratic roadblocks to prosperity and allow the free market to determine the viability of industries, instead of the federal government investing billions of dollars picking the economic winners and losers.

 

Ethanol is one of the best examples of the federal government picking winners and losers. Corn growers definitely have benefited from ethanol subsidies, but livestock growers have seen the costs of their feedstuffs skyrocket.

 

There are also great examples of how public-private partnerships can be successful without federal government funding and bureaucracy. Just look at Powell, Wyoming, which successfully created a community based broadband network without any of the $7.2 billion being offered by the federal government to subsidize broadband development.

 

A critical and often forgotten factor in stimulating America’s rural economy is removing the burdensome regulations placed on communities and businesses throughout the country. Your administration has introduced a litany of rules that only continue to increase the bureaucratic burden on businesses of all sizes and has offered little to no relief or flexibility to businesses trying to meet often over-reaching regulations.

 

Durkee, Oregon is just one rural community caught in the cross hairs of EPA regulations. The town’s largest employer, Ash Grove Cement (116 employees), is facing possible closure despite investing $20 million in retrofits to control airborne mercury emissions. EPA has proposed new airborne emission standards for mercury that are below the natural background levels and beyond levels which technology can economically address in this area. Without an exception to the proposed rule, the business will have to shut down, eliminating a significant number of full-time family wage jobs. There are numerous other examples of egregious, overly restrictive regulations forced upon rural communities by a multitude of federal agencies which greatly diminish market opportunities for businesses.

 

Last, but most important to Oregon and to the stabilization of our rural economy, 53 percent of our land is owned by the federal government. The federal government has shifted its land management philosophy from sustainable active management of renewable natural resources to a passive management regimen that has cost our communities thousands of full-time living wage jobs and greatly increased the vulnerability of our forests to disease, pest infestations and devastating wildfires. The negative impacts of federal management decisions (or the lack thereof) on our renewable resources have been destructive to both the environment and rural communities.

 

Whether it is the livestock industry struggling to meet the impossible demands of federal grazing leases, or lumber mills trying to source enough timber to make up for the lost volume no longer coming from the federal forests — all of Oregon has been impacted. In fact, 31 out of 36 counties in Oregon receive funds from the federal welfare program for counties known as the Rural Secure Schools Act. These funds are provided to counties in a dismal attempt to offset the economic impact on county government (not individuals or businesses) due to the lack of management and bureaucratic entanglement of federal lands in Oregon. Local governments, business and citizens alike would prefer to be self-sufficient, but that is unlikely to happen unless the federal government liquidates its land holdings or begins to actively manage its natural resource assets.

 

While facing this recession, there is no better time for the federal government to stop frivolously spending money choosing economic winners and losers and to begin looking at how it could remove regulatory burdens that would free citizens and businesses to rethink free market opportunities and invest in their own future.

 

Daniel Kemmis wrote in This Sovereign Land: “…[P]eople who live and work, raise their families and build their communities, on a particular landscape cannot be and will never be persuaded by any amount of purely legal reasoning that people who have no such dependence on or knowledge of those landscapes should have an equal say in their governance.” Rural communities like Burns or Enterprise, Oregon would welcome the opportunity to host a listening session and tour for the White House Rural Council to reveal opportunities which would allow them to control their own destiny and once again flourish.

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The Truth about the Canadian Health Care System

By Frank S. Rosenbloom, M.D.

President Barack Obama and supportive members of Congress were able to get the Patient Protection and Affordable Care Act (ObamaCare) passed, in part by extolling the virtues of the Canadian health care system. In speech after speech, Obama has touted the alleged lower cost, “universal coverage” and better medical care of that system. All of the mentioned supposed benefits are untrue, but the most disconcerting fact is that Mr. Obama has never discussed any deficiencies of the Canadian system.

Other influential people have shared their concerns about the serious deficiencies in the Canadian health care system. Perhaps the most important of these is the man some call the ”father” of the Canadian health care system, Claude Castonguay. Although several provinces had government involvement in health care from 1946, Castonguay was the pioneer of socialized medicine in Quebec, which gave impetus to the establishment of a nationwide socialized medical care law in 1966.

However, in 2008 Castonguay had this to say about the health care system: “If nothing is done, at one point we will reach a crisis point. This is why we say it is urgent to act. There’s no miracle solution, there is no simple solution.” He has urged some privatization in the health care system to increase choice and fees of up to $100 for doctor visits. How could this be? Haven’t we been led to believe that the Canadian health care system is financially stable? In fact, the system is close to collapse.

Let’s review the facts. The Canadian health care system was established in the 1960s, when the government was spending like a drunken sailor trying to promote economic growth. Sound familiar? The assumption was that the economy would grow at a predictable rate and that the system therefore would be affordable. However, Canadians made the same fundamental mistakes governments always make when establishing entitlement programs; that the economy would act predictably and that the program’s costs would grow in a predictable linear fashion. These two assumptions have proven to be incorrect in all cases, as they were in establishing our own Medicare system.

Health care reform has been a serious issue in Canada for over fifteen years, as the financial burdens of socialized medicine have put increasing strain on resources. Canadian media regularly trumpets fears about escalating health care costs. Furthermore, since accurate statistics are kept only on government spending, substantial hidden costs are associated with that system. Some Canadians are even breaking the law by opening private clinics to relieve a system that is imploding. One significant reason the Canadian system has lasted this long is the safety valve provided by the U.S. system, where Canadians can receive timely care at a fair price. Yet, if you believe President Obama, the Canadian health care system moves along like a well oiled machine.

Although Canadians spend less per capita than we do in the U.S., the rate of rise in their health care costs has been at times equal to or greater than ours during the past decade. So, how can we be told that Canadian health care costs are rising at a slower rate than our own? The rate of rise in Canadian health care expenditures can be seen by reviewing the widely available graph below.

 
Canadian Institute for Health Information

The graph shows total expenditures in constant 1997 dollars. A quick review shows Canadian health care costs rose about 240 percent from 1996 to 2009, by which time they actually exceeded $180 billion.

By contrast, the rise in U.S. health care costs can be reviewed below.

 
Centers for Medicare & Medicaid Services, Office of the Actuary. National Health Expenditure Accounts – Projected, Table 1: National Health Expenditures; Aggregate and Per Capita Amounts, Percent Distribution, and Average Annual Percent Growth, by Source of Funds: Calendar Years 2003-2018

We see that in 1996, U.S. health care spending was about $1 trillion. By 2009 it had reached about $2.4 trillion, which is an increase during that period of about 240%. Now, wait a minute! The rate of rise of Canadian health care costs is really no lower than ours? Yes, President Obama, (and Governor Kitzhaber), there is no Santa Claus, and no Shangri-La. The often reported, widely disproportionate cost increases between the Canadian and the U.S. health care systems are a myth.

Statistics can be adjusted to promote a particular ideology, as was seen by the graph above adjusted to constant 1997 dollars and the addition of the “projected” 2018 spending in the U.S. graph. Despite these difficulties, the truth about the Canadian health care system and socialized medicine is available to anyone who diligently studies the matter. Unfortunately, many Americans have relied on liberal politicians for their information, and nothing but higher costs and lower quality medical care will be the inevitable result. If we really want costs to decrease while maintaining quality health care, we need real free market reform before the inevitable complete collapse that will occur nationally under ObamaCare and the disaster that will befall Oregon under Gov. Kitzhaber’s reform proposals.


Frank S. Rosenbloom M.D. is a practicing physician and president of the Docs 4 Patient Care Oregon chapter. He is a guest writer for the Cascade Policy Institute, Oregon’s free market public policy research organization.

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Milton Friedman Birthday Celebration!

Come celebrate the birthday of one of the economic greats of our time!

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John Charles Gives Legislature Issues to Work for Next Session

On 6/2, John Charles was an invited witness before the House Committee on General Government and Consumer Protection. He proposed issues for the committee to work on between now and the start of the 2012 legislative session.

Click here to listen

Testimony starts at 35:43

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John Charles testimony on OPEB Unfunded Liabilities

John Charles was an invited witness before the Senate Government Operations committee on June 8th. It was an informational hearing about the unfunded liabilities of OPEB (other post employment benefits), such as retiree health insurance.

Click here to listen

Testimony starts at 37:32.

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Oregon’s Next Green Folly

By Michael Bastasch

Governor John Kitzhaber’s new “green” energy ploy, the Oregon “Cool Schools” Initiative or House Bill 2960, directs the Oregon Department of Energy to give out zero to low-interest loans and grants to school districts for energy efficiency building improvements, and also create jobs in Oregon. HB 2960 is a bad idea for at least three reasons.

First, Washington State launched a similar initiative in 2005 and found that many “green” schools used up to 52% more energy than predicted, students’ academic performance was actually lower on average than in comparable schools, and most of the money each district received went to meeting non-energy-saving requirements.

Second, Gov. Kitzhaber claims that for $1 million spent 10 to 15 jobs will be created, but he ignores total economic costs. Each job created in this initiative will be temporary and cost between $67,000 and $100,000, meaning tens of millions of taxpayer dollars will be spent to temporarily benefit a small group of people at the expense of everyone else. How will that solve Oregon’s economic problems?

Third, Washington State’s initiative has a 43-year payback time for school energy efficiency upgrades. Since schools rarely go that long without being renovated, Oregonians will never see these upgrades pay for themselves. The Legislature should have considered the economic implications of HB 2960 before it was passed.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Say what you want about John Charles…

… but you can always enjoy his show!

(This excerpt is from a TriMet board meeting on June 11, 2011).

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John Charles to TriMet Board: Understand Obligations Before Signing FTA Grant Agreement

Testimony before the TriMet Board of Directors

Regarding Resolution 11-06-38

Application for a Full Funding Grant Agreement with FTA for the Milwaukie Light Rail Line

June 8, 2011

In your consideration of this Resolution, please focus your attention on the second “Whereas” clause: “Federal assistance will impose certain OBLIGATIONS upon the applicant.”

I suggest you review and UNDERSTAND those obligations BEFORE you approve the resolution. Your predecessors approved a similar resolution for the Green MAX Line, yet TriMet is now operating that line at service levels 33% those originally planned do to financial problems.

How, specifically, will TriMet operate this line successfully when there is not even a plan to fully restore transit service over the next decade? I’ve sent you all a copy of my letter to FTA about the Green Line. No one from TriMet has responded or even acknowledged receipt of the letter.  I’ll take that as an admission that you don’t HAVE a response.

You have a fiduciary obligation to conduct proper due diligence. Have you accounted for the following factors?

  • The $25 million promised from Clackamas County is unlikely to be available when you need it, due to an initiative petition being circulated that would require a public vote on new urban renewal districts. The only option Clackamas County has to generate the $25 million is through Urban Renewal. We know from the recent county defeat of the small, $5 motor vehicle fee for the Sellwood Bridge replacement that Clackamas County voters would likely vote against Urban Renewal by a wide margin.
  • The legislature may begin requiring all units of government to begin making annual required payments into OPEP trust funds, which would be a $60 million hit to TriMet’s general fund.
  • What is TriMet’s “Plan B” if you lose the arbitration dispute with the ATU? The boad’s only public statements have indicated that loss of arbitration would result in more service cuts.  How will you operate the Milwaukie line successfully if you are reducing service for the 5th time in less than 3 years?
  • What happens if someone on the relevant Congressional oversight Committee decides that your Milwaukie FFGA application should be held up until such time that you restore service to the Green Line? You’re going to be building this line for an entire year on SPECULATION that the FFGA will be approved. What if it isn’t? What is your back-up plan?

Conclusion

You promised the legislature in 2003 that you would increase service if they gave you a payroll tax rate increase. They approved the tax rate increase, you took in $60 million in new revenue, and you cut service. You BROKE the promise.

You promised the FTA you would operate the Green Line properly if they gave you federal grant money. You BROKE the promise.

You promised the public last year that you would begin funding OPEB obligations in FY 12 at the rate of $1 million per year. You will BREAK that promise when you adopt the budget later this month, by only putting in $435,000.

This will be a dark day in the financial history of TriMet when you approve this resolution. TriMet’s “business model” is broken, and now you plan to make things much worse. I just want the record to show that you knew all of these risks when you voted YES.

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Thousands of Oregon Kids Waiting – Literally – for Education Package

This week, legislators and lobbyists are working frantically behind the scenes on an education package that could help transform educational opportunities for students across Oregon. The package features reforms that will shape the state’s oversight of education as well as parents’ ability to choose a public school based on a school’s merits rather than its address.

One of the bills at the center of the tension, HB 3645, would allow Oregon’s public colleges to sponsor a charter school. Oregon’s charter schools are public schools that are operated by non-profit organizations. These schools do not charge tuition, cannot be religiously based, and cannot discriminate against students for their background, academic aptitude, or any other reason. Currently, only school districts or the State Board of Education may sponsor charter schools. This bill would allow charter applicants to ask Oregon’s public colleges to sponsor charters. Many states, including New York, Michigan, and Minnesota already have similar laws.

I discovered the urgent need for such a reform last year when I set out to learn how many of Oregon’s children were on waiting lists to get into a public charter school. Out of Oregon’s 108 charter schools, 92 schools finally responded. More than 4,700 kids were on waiting lists for a charter school last summer. Fewer than 20,000 kids (less than 3%) currently attend charter schools, but clearly far more would, if given the opportunity. In fact, a 2008 poll showed that 24% of Oregon parents would choose a charter school if they could.

Parents want options for their kids beyond the local district school. But why haven’t charter schools expanded enough to meet the demand? District politics frequently make it nearly impossible for even excellent applicants to get permission to start or expand a charter school.

Portland Public Schools’ (PPS) history with charter schools is telling. The application process is lengthy and expensive, taking 12 – 18 months and costing thousands of dollars since applicants typically hire experts to help. They not only must submit a detailed operating budget and curriculum, but they must pay to send out surveys and conduct focus groups to determine student demand. The PPS application itself is 50 pages long, and complete applications are hundreds of pages long. The hurdles continue through the process and the record reflects that clearly. PPS only approved three out of 17 charter applications (18 percent) between 2004 and fall of 2010.

Are such sky-high hurdles altruistic attempts to protect students from bad charter schools? Theories about the cause or justification of such district suspicion abound, but ultimately school boards are driven by local politics. Political incentives involve a number of competing interests, many of them selfish and in opposition to students’ interests.

Such competing incentives are sometimes apparent in the denials themselves, which often claim that charter schools will have an “adverse impact” on regular district schools by drawing too many students (and accompanying funding) from regular district schools. These claims neglect the reality that charter schools get about 55 cents for every dollar that a regular public school spends per student, and when a student transfers to a charter school, regular district schools no longer bear the cost of educating that child, allowing more money to be spent per student who remains in district-run schools.

HB 3645 will help charter schools steer past some of the political obstacles and to be judged more on their merits. But first, the bill must endure the political game at the state level. The Oregon Education Association (OEA), a union, has stated that it opposes allowing public colleges to sponsor charter schools because, “[a]t a time that we are closing neighborhood schools it doesn’t make sense to promote the growth of charter schools.”

Likewise, the OEA opposes HB 3681, which would essentially carry charter schools’ open-enrollment policy over to regular public schools, increasing kids’ educational options. It also opposes HB 2301, which would loosen enrollment restrictions that currently restrict many families from being able to choose a virtual charter school.

The OEA apparently believes that regular district schools are entitled to local student enrollment. The OEA fears that giving parents a choice would create financial instability for schools that might lose too many kids to transfers. But if parents are leaving a particular school in droves, doesn’t that suggest that something is wrong with that school? And if something is wrong, why should parents be forced to send their children there? Opponents of school choice argue that those children who are left behind in bad schools would suffer most. Yet, evidence across the nation suggests that these kids, too, benefit as schools are forced to improve their performance to retain students and accompanying funds.

This is not a battle between private education and public education. All of these educational options are public schools! School choice – empowering parents to choose a school that is the right fit for their kids – is making a significant difference for thousands of Oregon families already. Many more could benefit, finding the schools that work best for them, with bills like HB 3645, 3681, and 2301.

Stand for Children, Governor John Kitzhaber (a Democrat), and many House Republicans have fought the OEA and popular myths to support this education package. As Oregon’s voters and legislators consider these school choice bills, they should consider the thousands of Oregon families who are waiting for a better educational opportunity for their kids.

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The Not So “Cool School” Initiative

By Michael Bastasch

The Oregon “Cool Schools” Initiative (House Bill 2960) directs the Oregon Department of Energy to provide zero to low-interest loans and grants to school districts for energy efficiency building improvements. Governor John Kitzhaber, the bill’s main proponent, argues that HB 2960 will create healthier, more energy efficient schools and create jobs. However, given the propensity of government to overestimate the benefits of its programs while completely understating the costs, the economic impacts of HB 2960 most likely will yield the opposite results of what Gov. Kitzhaber claims.

Luckily, Oregon has a case study in Washington State. Washington initiated a similar program in 2005, and the results were underwhelming. A recent report from the Washington Policy Center shows the costs of the program greatly outweighed the benefits. First, many of the new “green” schools actually used up to 52% more energy than predicted, and some were even less efficient than buildings that were decades old.

Second, most of the money that went to each school was spent on meeting the program’s guidelines and not to energy savings. For example, the Spokane School District spent $455,826 bringing Lincoln Heights Elementary up to the “green” requirements. Only $81,000 (18%) was spent on energy efficiency measures, while the rest (82%) was spent on meeting other requirements that didn’t yield any energy savings. In addition, estimates reveal that the payback time on these “green” improvements is about 43 years. Since virtually no school goes that long without making any changes, it is very likely that energy efficiency investments will never pay for themselves.

Third, student scores at these “green” schools were not significantly improved. In fact, student performance was 25% below what was promised by the Office of the Superintendent of Public Instruction in 2005. Moreover, academic performance was lower on average at “green” schools than at comparable schools in the same district, according to the State Board of Education’s Accountability Index. Students in these schools are actually performing worse and at a higher cost to Washington taxpayers.

Washington’s experiment should provide us with a lesson on why “green” projects such as these almost never pan out. Instead, Gov. Kitzhaber and other proponents of HB 2960 tout the popular phrase “job creation.” The question we should be asking is, job creation for whom and for how long? HB 2960 requires that schools receiving initiative funds only hire Oregon-based contractors and that district employees not perform work constituting over 5% of the project’s total cost.

Gov. Kitzhaber and his staff also claim that for every $1 million spent, 10 to 15 jobs will be created. How would spending approximately $67,000 to $100,000 per job add jobs to the economy, especially when these jobs are temporary? What the Governor does not mention is how many jobs will be lost for every “Cool Schools” job that is created. Basically, HB 2960 carves out a nice little temporary benefit for a small group of people at the expense of all Oregon taxpayers. What is ignored are the unseen costs to the overall economy, such as jobs not created had the funds been efficiently spent by individuals, and also the goods that those workers could have produced had resources been employed in different areas.

Washington’s “green” schools debacle should show Oregonian lawmakers that these types of endeavors are often fruitless and result in wasted tax dollars, lost jobs and misallocated resources. Why should Oregonians be forced to “invest” in an initiative where they will never see any returns or any noticeable long-run benefits? They shouldn’t, and legislators should consider the wider economic impacts of HB 2960 before blindly passing it.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Real Health Insurance Reform

The day after the Oregon legislature finished voting to create an Oregon Health Insurance Exchange, as required by the federal Affordable Care Act, a three-judge federal panel in Atlanta heard arguments from 26 states seeking to have the federal law declared unconstitutional. The act, better known as ObamaCare, seeks to impose sweeping changes on this country’s health insurance and health care systems. One key provision would require everyone to either purchase insurance by 2014 or face a fine.

Those 26 states argued that the federal government has no legitimate power to require individuals to purchase any product, in this case health insurance. All three judges who heard the case last Wednesday seemed at least somewhat receptive to that argument. Chief Judge Joel Dubina asked, “If we uphold the individual mandate in this case, are there any limits on Congress’ power left?” Judge Stanley Marcus wanted to know, “…[G]oing back to the first principles, is there anything out there that actually suggests that Congress can compel a private party to buy a private product on the open market if they’re not disposed to do so?”

Oregon is being offered 48 million federal dollars to set up an insurance exchange to help our citizens comply with that federal mandate. Some legislators voted for the bill because they feared that if we don’t set up an exchange on our own terms, the feds will impose a less palatable one on us when the individual mandate takes effect.

 

Whether we ever get that $48 million is open to question. The U.S. House voted not to fund such grants, but that decision may be reversed in current Congressional budget deliberations. Whether we eventually get the cash or not, Oregonians will not be well served by an exchange that only helps us purchase policies that our state insurance regulators approve. Some other states have far fewer mandates on similar policies. Many of us could save hundreds of dollars a month if only we were allowed to shop for policies approved by those states.

Any exchange Oregon sets up should increase, not maintain limits on, Oregonians’ insurance policy choices. Then, whether ObamaCare eventually gets overturned or not, our state could lead the way in helping its citizens make informed choices on a wide range of insurance products. Now that would be real insurance reform.

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Oregon Education Spending Increases―But for What Outcome?

How much do we spend to educate students in Oregon? It depends on what kind of spending you include. On May 31, The Oregonian cited a U.S. Census Bureau report stating that Oregon spent $9,805 on average in 2008-09 school year, 7% below the national average for per pupil education spending. That figure excluded certain spending and is well below the Oregon Department of Education (ODE) and national teachers union (NEA) figures for that same year: $10,029 and $10,129 respectively. Add the year’s debt service expenditures reported by the ODE (which presumably go toward improving kids’ education), and spending per enrolled pupil jumps to around $11,200 per student. This total figure climbs even higher to around $12,600 if you measure per pupil expenditures by actual average attendance rather than the October 1 student enrollment.

The National Education Association (NEA), the nation’s biggest union, ranks Oregon around the national average for spending (less than 2% under the average spending per enrolled pupil, but above average for spending for average daily attendance), despite our lower than average cost of living. Typical for the U.S., Oregon has significantly increased per pupil spending, from around $7,000 in 1981-1982 (after adjusting for inflation to 2010 dollars), to more than$11,000 in the 2009-2010 school year.

Yet, focusing on how much Oregon spends per student begs the question as to how much spending is enough. Nationwide, spending has more than doubled since 1970, but improved outcomes have not followed. While fourth and eighth graders are doing slightly better on the nation’s most stable educational measurement―the National Assessment of Educational Progress (NAEP)―it appears that any early gains are lost by the time they reach the finish line: 17-year-old students have not improved since the U.S. Department of Education first started measuring their math and reading performance with the NAEP in the 1970s.

Likewise, international evidence confirms that spending is a poor predictor of educational outcomes. While the U.S. is among the top for per pupil spending, we place in the middle of the pack of developed nations. Decade after decade, our leaders promise better outcomes with “better oversight” and “increased accountability.” But the accountability they speak of does little to empower teachers or administrators to harness their own unique talents and passions, nor does it empower parents and students to find the educational program that would best help them thrive. Bottom-up, market-oriented reforms already have proven successful in places like Florida, New York City and Milwaukee.

Rather than hyping the same empty promises that require better “oversight” by bureaucrats, many states are now catching on and creating more educational opportunities with public charter schools (choice schools), open enrollment policies, opportunity scholarships and education savings accounts. Groups like Oregon’s Stand For Children now recognize that increased funding is not a silver bullet; rather, smarter spending is necessary. Movies like Waiting for “Superman” and The Cartel highlight true success stories around the nation. Perhaps Oregon, too, will join the new wave of effective education reform.

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BPA Fact Sheet

Despite considerable fears raised by activist groups and the press, the science does not warrant regulations on Bisphenol-A (BPA). Instead, it shows that human exposure is too low to have any measurable impact even for infants and children. As a result, regulatory measures to ban BPA could have unintended, adverse health and safety consequences.

Second, the consumer market is already adjusting to meet the demands of overly concerned Oregonians. Numerous manufacturers produce BPA-free beverage containers and major retailers are asking for alternatives to meet consumer demand. This should make one wonder why legislation is even needed to address BPA worries.

Cascade Policy Institute has put together this concise fact sheet to address the myths and misconceptions associated with BPA.

Click here to download the facts on BPA.

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Karla talks Attack of the 50ft Environmentalist on I Spy on Salem

On the June 4, 2011 episode of I Spy on Salem, Karla joins the show to examine Oregon’s lack of timber harvesting.  You can listen to her appearance on the right.  Below is the information from the show:

Listen to Karla Kay Edwards, Rural Policy and Land Use for Cascade Policy Institute, and Rex Storm, Forest Policy Manager for Associated Oregon Loggers discuss (what we titled our show) The Attack of the 50-foot Environmentalist. Find out what’s really going on with environmental groups, the industry it’s become, and if logging can be revived.

I Spy on Salem is aired from 11:00 to noon on KYKN 1430 in Salem.  If you’re outside of the Salem listening area you can listen live at www.kykn.com.  Busy Saturday, not a problem because after the show is aired we upload it to our webpagewww.ispyonsalem.com so you can listen at your convenience.

 

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$11,540 per student in 2009-2010: Are we getting our money’s worth?

According to the National Education Association, the national teachers union, Oregon spent an average of $10,476 per enrolled student in the 2009-2010 school year. Add in reported debt service spending, and that figure leaps even higher to $11,540 per student.

Are we getting our money’s worth? Nationwide, spending has more than doubled since 1970, but improved outcomes have not followed. While fourth and eighth graders are doing slightly better on the nation’s most stable educational measurement―the National Assessment of Educational Progress (NAEP)―any early gains are lost by the time they reach the finish line: 17-year-old students have not improved since the U.S. Department of Education first started measuring their math and reading performance in the 1970s.

Likewise, international evidence confirms that spending is a poor predictor of educational outcomes. While the U.S. is among the top spenders for education, we place in the middle of the pack of developed nations for performance.

Decade after decade, our leaders promise better outcomes if we just spend more and incorporate “better oversight” and “increased accountability.” It hasn’t worked. It’s time we turn the system on its head and empower teachers and administrators at the ground level to use their talents―and parents and students to find the educational program that will best help them thrive.

 

 

 

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Can the Bureaucratic Knot Be Untangled?

Several well-written articles recently have called for Oregon to once again capitalize on our amazing renewable natural resources. Oregon State Senator David Nelson wrote in an Oregonian editorial, “This state has every natural advantage over its neighboring competitors, and a pioneering and ingenious people who know how to work hard and capitalize on opportunity.” But the likelihood of Oregon ever being able to once again use our natural resources as an economic competitive advantage is dependent on our ability to untangle the bureaucratic and legal knots present at every level of government. This will have to be done before we lose our remaining infrastructure and practical experience necessary to once again make them an economic stalwart in our state. With such a matted mess, how and where do we begin?

The snarl of bureaucratic strings is the result of 50 years of methodical actions by environmentalists to tie up any opportunities to create an economic foundation based on renewable resources. Year after year we have watched as new environmental regulations have been implemented at both the federal and the state levels. These strings have been knitted into a paralyzing process that essentially makes it impossible to craft management decisions affecting our public lands. This inevitably forces critical management decisions to be made by the judicial system which can look only at the individual legal knot that has been challenged, not at the impact to renewable resources as a whole. It is this purposely created bureaucratic knot that is strangling our resources and our rural communities.

With more than 60% of Oregon’s forestland owned by the federal government, the first step to unraveling this knot must be to prevent more land from being acquired by federal government agencies, including so-called “gifts.” If federal agencies wish to exchange or acquire additional lands, they should be required to identify equal acreage within Oregon to be liquidated. Consolidation of federal lands should only be allowed to move forward if the counties involved agree to the land exchange. Gifts of land to the federal government also should be handled in much the same manner. The first step to accomplishing this would be for the Oregon legislature to amend ORS 272.040 and ORS 272.050, so that forestland acquired by the federal government must receive both state and county government approval.

Focus must be placed on what seems to be the never-ending federal planning conundrum. The U.S. Forest Service and the Bureau of Land Management now appear to have more staff dedicated to forest planning than they have active foresters. This cultural shift from active forest management to paper pushing is disheartening when you observe the dismal condition many of our federal forests are in. There was slight optimism within the forest industry and rural communities before the New Federal Planning rule was released in February 2011, but the new rule as proposed simply replaces one top-heavy bureaucratic process with another of equal complexity. A streamlined system must be put into place so that active management can restore forest health and fire resiliency of our federal forests before we reach the point of no return. This cannot be achieved with passive management and a few scattered thinning projects. Robust active forest management plans can create the healthy forest ecosystem we all envision.

Our federal forests cannot afford to be caught in regulatory and bureaucratic purgatory any longer. The legal and political wrangling with forest plans―like the on again, off again Western Oregon Plan Revisions (WOPR)―move us no closer to accomplishing either side’s objectives. Solutions lie within a combination of all the sciences: environmental, political and social. And most importantly, deference must be given to our state and local communities to develop plans that can truly begin to untangle the bureaucratic mess the federal government has made of our federal forests.

In 1929 Herbert Hoover said: “Our western states have long since passed from their swaddling clothes and are today more competent to manage much more of these affairs than is the Federal Government. Moreover, we must seek every opportunity to retard the expansion of Federal bureaucracy and to place our communities in control of their own destinies….The Federal Government is incapable of adequate administration of matters which require so large a matter of local understanding.”

If only the federal government had heeded that message when it was delivered, perhaps our federal forests would be in better shape today. It was good advice then and is good advice now. We must demand the opportunity to control our federal forests locally, before the massive bureaucratic knot can never be untangled.

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Lazy Fair Picnic

The annual Picnic Lalapalooza of the Executive Club, Taxpayer Association of Oregon, and the Cascade Policy Institute.

“The must-be-there picnic for brilliant conversation, companionship and laughter with fellow lovers of liberty!”

$20.00 adults –  $25.00 after August 8th – $10.00 Children under 12

We will be serving BBQ chicken, Beef, smoked pulled pork, baked beans, potato salad,
corn on the cob, coleslaw, pasta salad,  dessert, beer, wine, soft drinks and water

Go to Area 2, the Big a Frame covered area
http://www.co.clackamas.or.us/parks/images/ef02sm.jpg

Send a check, and note on the names of those in your party payable to:
ARTICLE IV, Inc.
P.O. BOX 61, Gresham, OR  97030

RSVP as soon as possible for the best price”


Directions to Eagle Fern Park
Eagle Fern Park is located approximately 3 miles north of Estacada,
Take Interstate 205 to Exit 12 Clackamas/Estacada,
Turn Right onto Hwy. 212/224. Proceed 3.2 miles to the Hwy. 212/224 junction
Turn right onto Hwy. 224, follow signs to Estacada.
Proceed 10.4 miles and Turn Left onto Wildcat Mountain Rd. (sign reads Dover District/Eagle Fern Park.)
Go 2.0 miles to Eagle Fern Park Rd;
Turn Right. The park is located 2.3 miles on the right-hand side of the road.
Go to Area 2- the big A-Frame.

To register, please send in a slip with

1. Your name

2.  The names of everyone you are paying for

3.  Your address and your phone number

4.  A check

Mail all information to:
ARTICLE IV, Inc.
P.O. BOX 61, Gresham OR, 97030

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Comments to the TriMet Board Regarding Proposed TriMet Fare Increase

The following comments were submitted to the TriMet board June 3, 2011.


Members of the TriMet Board:

I am writing to comment on the proposed passenger fare increases. For over 25 years I have consistently supported (or not opposed) TriMet fare increases because of my belief that TriMet services are generally under-priced. I support the user-pays concept in transportation finance and believe that passenger fares should eventually cover 80-90% of operating costs for TriMet.

However, my reaction to the current TriMet proposal is more nuanced, as follows:

1.      No general fare increases should be approved until the board abolishes the “free-rail zone.” The current policy of charging all bus passengers for all trips but giving away large numbers of expensive rail trips is intellectually indefensible. The original rationale for creating “fareless square” has long since become obsolete; let’s acknowledge that and move on.

2.      The long-standing tradition of giving large senior discounts also needs to be re-considered. Charging more for a youth ticket than for a senior ticket is exactly backwards from a demographic standpoint. The average student has minimal net worth and low monthly income, if any. Also, youth riders are likely accruing substantial debt due to the cost of education.  In contrast, seniors are likely to have the highest net worth of their lives, with a 45-year working career behind them. They are likely to own their own homes outright and have little debt.

Thus, a more appropriate policy would be to reduce the price of a standard youth ticket to $1 and raise the price of a senior ticket to at least $1.50, if not $2.00. Another option would be to abolish “honored citizen” fares entirely, while allowing for discounted monthly passes based on means-testing. I suggest that the Board direct the staff to analyze current ridership data to determine what the revenue effects would be of altering the prices for these two categories as suggested here.

3.      The high cost of WES needs to be better reflected in the price of the tickets. Charging a retail rate of $2.35 for a trip that costs, on average, $16-$19, is nonsensical.  I suggest that the minimum single-trip fare for WES be raised to at least $3.  In addition, the train staff should be instructed to actually check fares, which they currently do not. I have used WES at least 100 times and have only been checked for a fare once.

4.      I support the proposed increase in LIFT fares, and I would support continued increases up to the maximum allowed under the ADA. This is a premium service that is obviously under-priced.

5.       Over the past decade passenger fares have been raised at a rate 35%-42% higher than inflation, yet the agency asserts this has not been enough. In addition, the agency has been granted two payroll tax rate increases by the state legislature, one of which has been implemented since 2005. In absolute terms, TriMet’s various sources of revenue – operating and capital grants, passenger fares, and payroll taxes – have grown at rates far in excess of inflation, as noted below.

TriMet Financial Resources, 2004-2012[1]

(millions)

 

FY 04/05 FY 08/09 FY 09/10 FY 10/11 (est) FY 11/12 (budget) % Change 04/05-11/12
Passenger Fares $   59.49 $   90.10 $   93.73 $   97.97 $103.80 74.5%
Payroll tax revenue $171.23 $209.10 $207.10 $217.20 229.10 33.8%
Total operating res. $308.77 397.24 $423.50 $424.20 $443.21 43.6%
Total resources $493.72 $888.35 $809.75 $763.66 $1,004.44 103.44%

 

1.        TriMet budget documents, various years.

Clearly TriMet does not have a revenue problem, it has a spending problem. The agency needs to impose fiscal discipline before asking riders or taxpayers for more money through generalized fare increases.

To summarize, I support the concept of user fees in transportation, and targeted fare increases would be appropriate for seniors, the LIFT program, downtown rail passengers, and WES riders. But TriMet’s approach to fare policy over the past decade has lacked creativity, and there has been virtually no cost containment for either employee compensation or capitol construction. It is time for the TriMet board to address these issues.

Sincerely,

John A. Charles, Jr.
President & CEO
Cascade Policy Institute

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Stop Self-Service Electric Car Charging

A specter is haunting Oregon. One of two states that prohibit self-serve gasoline, Oregon is now caving in to the electric vehicle lobby by allowing owners to plug their cars into commercial charging stations all by themselves. They can even plug into personal charging stations and their own wall plugs at home. All this activity is taking place away from the protective eyes of our friendly, helpful state safety regulators.

 

Don’t these rogue individualist electric car owners know that they’re likely to electrocute themselves? What training do they have to safely charge anything? None. What about the innocent children and inquisitive neighbors who might be leaning against their cars when the power surges and turns their sleek metal machines into death traps? Don’t they know that it rains in Oregon, and rain and electricity don’t mix well at all?

 

NO. Not in Oregon. Oregon is for dreamers, not electric charging schemers. This travesty must not stand.

 

The Electric Vehicle Safety/Plug Jockey Jobs Act has just been introduced in Salem to require all commercial charging stations to be manned (or womaned) by state certified plug jockeys who must earn the state minimum wage.

 

The legislation further requires that if you want to charge your electric car at home, you must make an appointment at least 48 hours in advance with a state certified plug jockey who will arrive at your home within a specified four-hour window to plug in and charge your vehicle. He/she must stay at your home until the car is fully charged (which will average four to eighteen hours). Offering milk and cookies to the plug jockey is encouraged, but shall remain voluntary during a trial period. Once the car is fully charged, your plug jockey will unplug the vehicle and leave your home. You will be billed for his/her time to the nearest minute. To ensure tax compliance, these charging bills cannot be paid in cash to the plug jockey. Payments may be mailed to the State Department of Anachronistic Regulations, or may be deposited in special Plug Jockey Drop Boxes strategically placed throughout the state.

 

Oregonians know that they’ll set themselves on fire if they pump their own gasoline, and they know that low-skilled minimum wage workers will lose their jobs and form roving bands of disgruntled youth if we were ever to repeal our self-service gas ban. They now must recognize similar dangers associated with allowing the elite electric car owners among us to charge their own vehicles. We must stop this madness before it spreads to the general gasoline-car-owning population.

 

Call your state legislator now. Demand that they protect us against ourselves and create some unneeded jobs by voting for the Electric Vehicle Safety/Plug Jockey Jobs Act. Remember, it’s for the children.


In addition to being a founder and Senior Policy Analyst, Steve Buckstein occasionally serves as Cascade Policy Institute’s Satirist-in-residence.

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