Day: July 6, 2012

Policy Judgment on Health Care Law “Is Reserved to the People”

By Jason Mercier

The Affordable Care Act is constitutional in part and unconstitutional in part.”

With these words, the Chief Justice of the U.S. Supreme Court John Roberts, in a 5-4 decision, removed the policy fate of the federal health care law from the hands of judges and placed it squarely in the lap of voters this fall to decide what happens next.

Depending on your perspective, Roberts’ decision was either an example of judicial restraint or, as the four Supreme Court Justices who dissented wrote, “carries verbal wizardry too far, deep into the forbidden land of the sophists.”

Either way, the Chief Justice repeatedly made it clear that the Court was not passing judgment on the “wisdom or fairness” of the federal health care law or if it “embodies sound policies.”

Roberts explained, “Members of this Court are vested with the authority to interpret the law; we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation’s elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.”

Perhaps it should be no surprise that a vast law that has deeply divided the country and barely passed Congress on a party-line vote would be decided by just one vote in a 5-4 opinion by the Supreme Court.

It is also somewhat fitting that the law about which then-Speaker of the House Nancy Pelosi said Congress “[has] to pass the bill so you can find out what’s in it, away from the fog of controversy” would contain a tax on Americans who don’t buy a product the government wants them to, which no one knew was in the bill until the Supreme Court ruled on it.

This, despite the promises made by President Obama proclaiming to the public that he “absolutely reject that notion” that the proposed health insurance mandate was a tax. Despite these public statements, the President did, in fact, argue to the Court that the mandate was a tax (after first telling the Court it wasn’t on the first day of arguments). This two-faced defense of the law proved to be its saving grace, as otherwise the Court would have tossed the individual mandate and the law as a violation of the Commerce Clause.

After winning the legal debate by arguing the health insurance mandate was instead a tax, the President is back to telling the American people it isn’t a tax but a penalty. The White House proclaimed after the Court’s 5-4 ruling, “It’s a penalty, because you have a choice. You don’t have a choice to pay your taxes, right?”

The one choice we do have is to decide what happens next.

Some would have the Court’s decision be the last word on the policies of the federal health care law. While it is in the legal sense, to paraphrase Winston Churchill, the Court’s decision is not the end. It is not even the beginning of the end; but it is, perhaps, the end of the beginning of the policy debate.

Placing the ultimate decision on the fate of the federal health care law back in the hands of voters, Chief Justice Roberts wrote, “The Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people.”

This November, we the people will have the opportunity either to affirm the policies of the federal health care law or to pursue a different direction.

Jason Mercier is director of the Center for Government Reform at Washington Policy Center in Olympia and a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research center. Washington Policy Center’s 10th Annual Health Care Conference on July 10 will focus on the next steps for state policymakers on implementation of the Affordable Care Act.

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Oregon BLM Counties Must Craft Their Own Sustainable Funding

By Randal O’Toole

Many Oregon counties, particularly in Southwestern Oregon, are in deep financial trouble. Coos, Curry, Douglas, Jackson, Josephine, Klamath, Lake, and Lane counties historically received 15 to 33 percent of their revenues from the federal government as payments in lieu of property taxes for the national forest and Bureau of Land Management (BLM) lands in those counties.

Those payments came out of timber sale revenues; but as concerns over the spotted owl and other environmental issues led to a decline in timber sales after 1990, the payments also fell. To ease the transition to more sustainable revenue sources, Congress provided “temporary” funding out of general funds.

Each time temporary funding was set to expire, though, counties complained about a financial crisis; and Congress extended the funding. The latest extension was added to a transportation bill that Congress passed on June 29. But this bill extends the funding only one more year, so county treasuries may be emptied next year. Curry County has threatened to simply shut down, and the Oregon state auditor recently reported that all of these counties have a high risk of financial distress.

The truth is that taxpayers in these counties (of which I am one) have been getting a free ride for decades. While federal lands impose little cost on counties, the payments out of timber receipts have been many times greater than the federal government would have paid if it had paid ordinary property taxes.

Counties throughout the country that have national forests in them receive 25 percent of timber sale receipts. In most cases, this was more than property taxes before sales declined. But the greatest difference was in Oregon, whose valuable old-growth timber produced 40 percent of national forest revenues in the 1970s and 1980s.

Congress allowed the states to divide these “25-percent funds” between schools and county road departments. Most states gave half to each, but Oregon gave 75 percent to roads and 25 percent to schools. This meant that Oregon county road departments were literally rolling in cash in the 1970s and 1980s, but it also meant that the decline in timber sales hit them the hardest.

To make matters worse, the BLM paid a whopping 50 percent of the revenues from most of its western Oregon timber sales to counties. This compares with just 10 percent of timber receipts paid by the BLM to counties elsewhere. While the national forest funds were split between roads and schools, all BLM funds went straight into county general funds.

The result is that these counties have some of the lowest property tax rates in the state. While the average Oregon property owner pays more than $2.80 per thousand dollars in assessed value to the county, property owners in Curry and Josephine counties pay only 60 cents, and rates are also much lower than average in Coos, Douglas, and Jackson counties.

Raising property taxes to somewhere around the statewide average would solve the problems in all of these counties except Lake and Lane. But Oregon law prevents counties from raising taxes without voter approval, and county commissioners suspect that few voters will be willing to double or quadruple their county tax burden.

Representative Peter DeFazio has proposed to divide western Oregon BLM lands into two chunks. One portion, containing mostly old-growth timber, would be set aside for conservation. The other portion, mainly second-growth timber, would be managed as a source of revenues for the counties.

While some environmental groups oppose this plan, I don’t see anything wrong with managing cutover land for timber. But I have to wonder why Southwest Oregon counties should continue to live off of federal taxpayers, who otherwise would get any receipts from Forest Service and BLM sales.

County leaders say these BLM lands (which Congress originally granted to a railroad, then took back when the railroad failed to live up to the terms of the grant) would have been private had they not been taken back by Congress. Perhaps so, but the amounts the counties are asking federal taxpayers to pay—either through an extension of timber payments or via DeFazio’s bill—greatly exceed the amount that private forestland owners pay in property and harvest taxes.

Most of these counties spend the largest share of their funds on public safety, including the sheriff, courts, and jail. Other funds go for health and human services. But most also spend a significant amount of money on what might be called luxuries, including recreation, cultural resources, and community development programs (which mainly means land-use planning).

County leaders need to accept reality and make some hard decisions about their budgets. Recreation, culture, and most public works programs should be funded out of user fees rather than taxes. If users aren’t willing to pay for them, then they aren’t really needed. Counties could also stop funding land-use planning and let the state pay for those programs if it feels they are needed.

To the extent that these cuts aren’t enough to maintain public safety and human service programs, county leaders will have to make it plain to voters that they will have a choice between somewhat higher property taxes or accepting major cuts to these programs. There is no justification for forcing federal taxpayers elsewhere to subsidize county taxpayers in Oregon.

Randal O’Toole is a senior fellow with the Cato Institute and author of American Nightmare: How Government Undermines the Dream of Homeownership. He is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research center.

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