Year: 2013

ObamaCare’s Employer Mandate Already Costs Employees

By Sally C. Pipes

Some 60 percent of Americans—nearly 160 million people—get insurance through their jobs. Thanks to ObamaCare, that number is about to nosedive. The president’s signature law is hiking the cost of health insurance for American businesses of all sizes. They’re responding by dumping coverage for workers, spouses, and retirees.

Even though the employer mandate, which requires all firms with 50 or more full-time staffers to provide health coverage or pay a fine, has been delayed by one year, the employer health insurance market is slowly bleeding out.

Recently, 30,000 grocery workers in Washington State threatened to go on strike after several supermarket chains announced plans to drop health benefits for part-time workers. Today, workers who put in as few as 16 hours are eligible for health coverage. But the stores say that they won’t be able to afford coverage for part-timers once the employer mandate kicks in on January 1, 2015.

That’s not surprising. Average annual employer-sponsored individual health insurance premiums are up 5 percent this year compared to 2012—to more than $5,800. The average employer premium for a family of four is north of $16,000.

In September, Home Depot announced plans to drop coverage for roughly 20,000 part-time workers. They’ll have to shop for insurance in ObamaCare’s exchanges—which are barely operational despite officially opening for business October 1. Part-timers at Trader Joe’s will have to do the same. They won’t be alone. A National Business Group on Health survey found that one-fifth of big companies think their currently covered part-time workers could end up in the exchanges next year.

ObamaCare is even taking away the benefits of full-time workers—by encouraging their employers to cut their hours and rechristen them as part-timers. The law defines “full-time” as working 30 or more hours per week. So many firms are carefully watching their employees’ hours to ensure that they don’t cross that threshold. A survey conducted by the nonprofit International Foundation of Employee Benefit Plans found that 15 percent of employers subject to the mandate planned to cut hours to reduce their coverage burden.

Spouses also are learning firsthand how ObamaCare will destabilize their families’ benefits. In August, shipping giant UPS said that it would drop coverage for about 15,000 spouses who have access to benefits at their own jobs. The reason? “Costs associated with the Affordable Care Act,” the company said. According to a Towers Watson survey, 12 percent of employers plan to drop coverage for spouses next year, up from 4 percent this year.

Retirees, too, will increasingly find themselves pushed into ObamaCare’s exchanges. Consulting firm Aon Hewitt found that nearly two-thirds of the companies it surveyed plan to “review their retiree health care strategy in light of health care reform.”

To fight back against ObamaCare-fueled cost increases, many companies are turning to consumer-directed health plans, which typically pair low-premium, high-deductible policies with tax-advantaged Health Savings Accounts (HSAs). These plans empower patients to take control of their care. They can save money tax-free in their HSAs and use the proceeds for copayments and other out-of-pocket costs. The high-deductible policy, meanwhile, protects them in the event of a medical catastrophe. And because patients actually own their health care dollars, they have strong incentives to spend wisely.

That dose of market discipline helps lower overall health costs. About one in five workers was enrolled in an HSA plan this year, according to the Kaiser Family Foundation, up from zero in 2005. HSAs are now the second-most popular employer-provided plan. Aon Hewitt says that they could be the leader within three to five years.

Unfortunately, ObamaCare attempts to squash this consumer-directed approach by capping deductibles and requiring all policies to cover a wide array of expensive benefits. The law’s supporters claim its rules will ensure patients get quality coverage. But as the turmoil in the employer-sponsored insurance market demonstrates, ObamaCare may instead ensure that Americans get no coverage at all.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by The Detroit News.

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The Check Engine Light Is On

By William Newell

Imagine you’re in a car traveling down I-5 at 60 mph. The car has been modified with solar panels to supplement the car’s gas engine. Suddenly, as you’re driving down the highway, the sun disappears behind the clouds. In order to maintain your current speed, one of two things needs to happen: Another “idling” engine needs to kick in, or the main gas engine needs to “rev” up.

This hypothetical situation is similar to how the electrical grid works. The electric grid, just like the car, needs back-up generators and large high-capacity generators to make up for the times when wind and solar power fail. Often it’s natural gas or coal plants which fill the gaps. These power plants either continually operate without producing electricity as “spinning reserve,” or they operate less efficiently because they are “revved” up and down constantly.

Now, you can probably see the major drawback to subsidizing intermittent energy sources. It is because they rarely create enough sustained electricity to maintain grid stability; and power plants must “spin” or “rev” up and down, meaning little emissions savings are actually achieved.

If our government leaders continue to preach about saving the environment and reducing emissions, they may want to look under the hood to see if their plan will really work.

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

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How the Environmental Left Became the New Climate Deniers

By Todd Myers

“The UN’s Intergovernmental Panel on Climate Change raises the level of alarm….Global warming deniers are now on a par with Holocaust deniers…” Ellen Goodman, The Boston Globe, 2007

When the United Nation’s Intergovernmental Panel on Climate Change (IPCC) released its report in 2007, the response of the environmental left was close to hysterical. The IPCC’s international mandate was so clear, the left called its findings the “climate consensus.” People who questioned the IPCC’s authority, some said, had the mentality of Holocaust deniers.

Recently, the IPCC released a new assessment, with improved calculations of global temperature increases and associated impacts. The new predictions are less dire and the IPCC’s old fans have become the new climate deniers, dismissing the new report as “political.”

Rather than follow the science, liberal politicians and environmental activists are denying today what they said was undeniable yesterday.

For example, writing in The Wall Street Journal just before the release of the new report, actress Darryl Hannah, who frequently protests with climate scientist James Hansen, says action is needed “urgently, if we are to avoid a 4-degree Celsius raise.” Her claim, however, was wrong before the new report was released and is more so now.

The latest projection of the IPCC for temperature increase under the most likely scenario is 1.8 degrees Celsius by the year 2100―less than half what Hannah claims. In fact, her claim is beyond the median projection for the most extreme scenario of 3.7 degrees C.

Claims about sea level are similarly inaccurate. The Sightline Institute claimed “the world’s leading climate scientists warn of the sea level rising by three feet by 2100.” On Twitter, Northwest NPR was even more extreme, asking how Seattle “would be affected if sea levels rise 1 foot by 2020.”

Under the most likely emissions scenario, sea levels will increase about 18 inches by 2100. The most extreme scenario projects an upper limit of sea level rise of 32 inches―less than the three feet claimed by Sightline. NPR’s 2020 estimate is wildly exaggerated, more than ten times the IPCC’s estimate.

Finally, Washington Governor Jay Inslee repeatedly mentions ocean acidification as a reason to take action on carbon emissions. Pointing to shellfish mortality in Washington’s waters, he claims, “We know that two of the most challenging threats we face to our environment are climate change and ocean acidification.” The pH of our waters, he notes, has recently acidified at the rate of about 0.1 per year.

Less than one percent of that trend, however, can be attributed to CO2 emissions. The IPCC reports, “The pH of ocean surface water has decreased by 0.1 since the beginning of the industrial era.” The acidification the Governor attributes to carbon emissions annually is actually the amount that occurred over more than 100 years.

Some realize their cataclysmic projections are no longer in line with consensus science. Instead of adjusting their claims, they turned to undermining the IPCC instead.

One New York Times columnist accused the IPCC of “bending over backward to be scientifically conservative,” claiming it was intentionally low-balling projections for political reasons.

Another left-wing environmental activist was even blunter, arguing “the IPCC report is more of a political document than a scientific one.” That is exactly the view of the best-known climate “denier,” Oklahoma Senator James Inhofe, who told an audience prior to the last IPCC report, “This is a political document, not a scientific report.”

The left has abandoned the IPCC, after years of touting the agency’s unshakable standard of excellence. What changed were not the IPCC’s standards but its conclusions. New science has sparked the left’s new denial.

Real solutions to any risks associated with carbon emissions will come only when policies are consistent with the latest science. The new, left-wing science deniers have made it clear they are more interested in trimming the science to suit their pre-determined politics. As a result, they don’t just deny the science, they deny the solutions for a cleaner Earth, too.

Todd Myers is director of the Center for the Environment at Washington Policy Center and a guest contributor at Cascade Policy Institute. He is the author of the book Eco-Fads: How the Rise of Trendy Environmentalism Is Harming the Environment and is designated a Wall Street Journal Expert panelist for energy and the environment.

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TriMet Violates Clean Air Act While “Regulators” Stay Silent

In previous decades the Portland region failed to meet national air quality standards for carbon monoxide pollution and was designated a “non-attainment” area under the federal Clean Air Act. As a result, the region was required to develop and implement strategies to reduce carbon monoxide.

One of the strategies is that TriMet must increase transit service by 1% annually for the period 2006-2017, on the premise that more transit service will reduce auto-related carbon monoxide emissions. TriMet’s compliance must be measured on the basis of a 5-year “rolling average” of actual hours of service. The “baseline year” for compliance is 2004 and includes the opening of the Yellow MAX line, which began operating that year. This strategy was specifically devised by TriMet to grandfather in the Yellow line, thus giving the agency the best chance for compliance.

However, even with this advantage, TriMet has not met the obligation to increase service. In fact, TriMet service has been steadily decreasing. This is a potential problem not only for TriMet, but for other local governments. If the Portland region were to be found out of compliance with the Clean Air Act, the federal government could delay or cancel federal dollars for such projects as Milwaukie light rail and the Columbia River Crossing. For regional politicians, this would be a disaster.

In January, the crisis was taken up by one of the obscure committees run by Metro―the Transportation Policy Advisory Committee (TPAC), comprised mostly of local government bureaucrats. TPAC agreed to recommend that compliance be measured on the basis of cumulative average of service hours for the 10-year period 2007-2017. The new “baseline year” would become 2008.

After TPAC, the plan had to be approved by the Oregon Environmental Quality Commission (EQC), the governing board for the state DEQ. The EQC took testimony in August and rubber-stamped the TPAC recommendation in early December.

Last week the issue moved to JPACT, another obscure Metro committee that approves all regional transportation spending. The free pass for TriMet was quickly approved.

The final stop will be the Metro Council, which will approve the change on December 19.

Sadly, none of the four entities approving the recommendation ever seriously considered enforcing the Clean Air Act. The top priority at every level has been to craft an escape hatch so that business as usual can continue. However, even a cursory look at the evidence would have shown that TriMet had no excuses for non-compliance.

For example, Metro/TriMet/DEQ have all claimed that the “abrupt drop” in TriMet service was “caused by the recent deep recession.” However, as shown in Table 1, the drop in TriMet fixed-route service has not been abrupt; both hours of service and miles of service were lower in 2012 than they were in 2004, so this has been a problem for years.

 

Table 1

Annual Fixed Route Service Trends for TriMet

2004-2012

 

FY 04

FY 06

FY 08

FY 10

FY 12

Change

Veh. revenue hours

1,698,492

1,653,180

1,712,724

1,682,180

1,561,242

-8.1%

Veh. revenue miles

27,548,927

26,830,124

26,448,873

25,781,480

23,625,960

-14.2

Moreover, the recession had little to do with the cuts because TriMet’s operating budget has grown by 62% since 2004 (Table 2).

Table 2

TriMet Financial Resources

2004-2013 (000s)

 

 

2004

2006

2008

2011

2012

2013

% change

 

 

 

 

 

 

 

 

Passenger fares

$ 59,487

$ 68,464

$ 80,818

$ 96,889

$ 102,240

$ 112,500

+89%

Payroll tax revenue

$ 168,378

$ 192,450

$ 215,133

$ 226,456

$ 248,384

$ 259,233

+54%

Total operations revenue

$ 315,130

$ 342,274

$ 404,481

$ 410,388

$ 488,360

$ 508,971

+62%

It’s interesting that the pollutant in question here―carbon monoxide―is a serious one that can permanently injure or kill people, and has been explicitly regulated under the Clean Air Act for over 40 years. Yet, local air quality regulators don’t care about TriMet’s non-compliance. Meanwhile, Metro is squandering a vast amount of public money on its co-called “Climate Smart Communities” plan, aimed at decreasing carbon dioxide―a harmless trace element that has never been explicitly regulated by the Clean Air Act.

In fact, the most notable consequence of increased CO2 levels in lab experiments is the faster growth of plants, which is generally thought to be a good thing. But CO2 has been demonized by environmental activists as a cause of “global warming,” so it must be regulated.

The new compliance plan for TriMet subtly changes the goal posts. By moving from a five-year rolling average to a 10-year average, and shifting the baseline year to 2008, TriMet picks a better year to begin measuring (service levels had already dropped by 2008), and gives itself more future years to “forecast” increased service, even if there is no reason to think such service will materialize. TriMet has publicly stated that the cost of employee fringe benefits must be reduced by 50% in order to restore lost service, and everyone who has watched public employee union negotiations knows that such concessions will never be made.

TriMet is a federal clean air scofflaw, but the local “regulators” are all in on the scam. For a region that prides itself as an environmental leader, this is a disgrace.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Portland’s Renewable Energy Pipe Dream

By William Newell

Since 2001 the City of Portland has aimed to obtain all of its electricity from renewable sources. More than 10 years later, the City has failed to meet its own goals, even after renewing the pledge in 2009 and again in 2012.

To achieve its long-standing goal, the City has sought to purchase renewable energy certificates (RECs), which are said to “offset” emissions from electricity use. Unfortunately, RECs have major problems.

First, RECs are not required to show what emissions were avoided in their “production,” so there are few concrete savings for the City to claim. Second, intermittent energy sources require back-up power to maintain grid reliability. When wind dies down, as it often does, the system must make up the shortfall from natural gas and coal plants. Because some plants must “idle” while others “rev” their electricity production up and down, the plants utilize more fuel to produce less electricity. This ends up mitigating much of the claimed pollution savings.

Many Portlanders dream that the City can perfectly meld an urban forest with the concrete jungle, but behind Portland’s green curtain is an unaccountable government wasting taxpayer dollars on what amount to environmental “indulgences.”

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

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TriMet Finally Admits Rail Problems

Last week I wrote about the problems TriMet is having with its constantly failing rail system. On Wednesday, TriMet General Manager Neil McFarlane announced that the agency is hiring an outside firm to review light rail maintenance needs. The contract will cost a maximum of $245,000.

This is an important acknowledgment by TriMet that the vaunted regional rail system is suffering from chronic breakdowns that will require ever-increasing levels of maintenance.

The ownership problems associated with rail transit are well known within the industry. Indeed, four years ago the head of the Federal Transit Administration (FTA), Peter Rogoff, gave a speech on this topic to a room full of transit executives. Mr. Rogoff reminded people that rail systems have significant long-term costs. FTA had recently concluded that there were more than $78 billion in deferred maintenance costs for public transit agencies in the U.S., and three-fourths of those costs were associated with rail systems.

TriMet management is having to face up to this reality. The supposed “operating advantages” of hauling rail cars disappear when the lifecycle costs of rail system ownership are taken into account. Bus transit doesn’t face these problems. The cost of a bus is only one-tenth the cost of a rail car; it can be sent to many locations rather than a few dozen; and the ubiquitous road system is paid for by millions of motorists, not the transit agency. This keeps the maintenance costs of bus transit to a manageable level.

Unfortunately, TriMet is in a financial free-fall, and absorbing substantial costs for depreciation and maintenance of light rail will worsen the fall for a long time to come.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. 

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Knowledge and Courage: What the West Needs to Take Back Our Public Lands

By Ken Ivory

The federal government continues to control more than 50% of all lands in the western United States. Locked up in these federally controlled lands are more than $150 trillion in mineral values and more recoverable oil―in Utah, Colorado, and Wyoming alone―than in the rest of the world combined. Failed federal forest policies prevent harvesting timber, which would improve forest conditions and wildfire resilience, provide useful consumer products and renewable energy feedstock, and revitalize rural schools and communities. FBI criminal activity alerts now warn that terrorists are encouraging the use of wildfire in fuel-laden federal forests as weapons for jihad.

There is no good reason for the federal government to retain control over these lands and resources in states like Oregon. We in the West have, in good faith, simply tolerated the federal government’s delay in honoring its more than 200-year-old obligation to transfer title to these lands for so long that now most people assume there must be some valid reason the federal government controls our lands and resources.

But there is none. At a recent Continuing Legal Education seminar to several dozen lawyers, a law professor (who is frequently quoted as saying it is “clearly unconstitutional” for states to take action to secure the transfer of title to their public lands) displayed an annual average precipitation map indicating that the federal government retains control of western lands because they are “arid.”

The second reason he gave was that the founders of the western states simply gave up their lands as a sort of ransom for the privilege of statehood, citing half a sentence in the statehood enabling acts: “… forever disclaim all right and title….” The funny thing is, this same half sentence is word-for-word the same in the statehood enabling acts of almost all states east of Colorado, where the federal government did dispose of their public lands.

In fact, for decades, as much as 90% of the lands in Illinois, Missouri, Arkansas, Indiana, Louisiana, Alabama, Mississippi, and Florida were kept under federal control. Then, one man had the knowledge and courage to rally citizens to compel Congress to transfer title to their public lands. His name was Thomas Hart Benton, a Democratic U.S. Senator from Missouri featured in President John F. Kennedy’s best-selling book Profiles in Courage.

The statehood enabling acts promising to transfer title to the public lands are the same for all states west and east of Colorado. It’s been done before―repeatedly and recently. And, returning these lands to state control is the only solution big enough to fund education; better care for our lands and forests; protect access; create jobs; and grow local, state, and national economies and tax base.

If we fail to stand up and take action to secure state and local control of our lands and abundant resources, it will not be because it is illegal, unconstitutional, or impossible. It will only be because we―and the local, state, and national leaders we “hire”―lack the knowledge and the courage to do what has been successfully done before.

Do your local, state, and national leaders know why there is a difference between the way the federal government has handled eastern and western lands? Have you inquired what specifically they are doing to compel Congress to honor the same statehood promise for our children and our future that Congress already kept with Hawaii and all states east of Colorado? Have you asked them what groups or influential individuals they will bring to the effort? Have you asked them what specifically you can do to help?

Now is the time to let our representatives know how transferring federally controlled lands back to the state can vastly benefit Oregon’s economy while preserving and using wisely our wealth of natural resources.

Ken Ivory is president of the American Lands Council and a member of the Utah House of Representatives. He was a guest speaker on this issue for Cascade Policy Institute in November 2013.

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The Public vs. Private Sector Compensation Conundrum

Salem Statesman Journal editor Dick Hughes just published a lengthy column asking whether public or private sector employees are better compensated. He cites studies that reach contradictory conclusions, depending on their assumptions, and then answers his question by stating, “Who knows?”

That answer must be challenged because he somewhat dismisses the apparent fact that “…public employees make a whopping 45 percent more” by saying, “One common finding…is that government has a larger proportion of higher-educated workers.”

While higher education may be a big determinant of government compensation, especially in unionized fields such as public school teaching, it means less in the private sector. In the private sector competence can trump credentials. For example, many tradespeople are compensated well above some of their college-educated counterparts because they can fix your plumbing when the pipes freeze, or correctly wire your house so it doesn’t burn down.

Finally, in your opinion, which highly degreed politicians and public employees are worth what we pay them? The list may change depending on whether you’re Democrat, Republican, or whatever, but you get my point.

When we freely purchase services from private sector employees, they earn roughly what they produce. When politics and union bargaining determine pay levels, public sector employees are often paid more than their private sector counterparts. Case closed.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Meet the New Tax Reform…Same as the Old Tax Reform

Oregon Governor John Kitzhaber, fresh off his early October special legislative session “Grand Bargain” success, says he will now turn his attention to tax reform. He has plenty of company in Oregon’s recent history.

Governor Barbara Roberts, concerned that property tax limitation Measure 5 which passed in 1990 would decimate state finances (it didn’t), embarked on her Conversation with Oregon to find out what the average voter might accept in the way of tax and other reforms. Thwarted by the divided legislature, she later supported legislatively referred Measure 1 in 1993, which proposed a new five percent sales tax to fund education. The referral also offered property and income tax reductions. Voters said thanks, but no thanks, with a resounding 75% No vote. It marked the ninth time in state history that voters had rejected adding any state sales tax on top of property and income taxes.

Most recently, Governor Ted Kulongoski appointed members to the legislatively created Comprehensive Revenue Restructuring Task Force in 2007, but it was clear to me (as a member of the Task Force) that no serious “restructuring” was in the cards.

Ask the average Oregonian what “tax reform” means, and they are likely to say it means “more taxes.” And, so far they’d be correct.

Before Governor Kitzhaber has even hinted at specifics of his upcoming tax reform plan, several state legislators are fleshing out their own version of “more taxes” which includes a five percent sales tax coupled with property and income tax reductions. This time, they have in hand a Legislative Revenue Office analysis that says it will create 55,405 new jobs and raise $488 million a year in net tax revenue.

So again, this latest “tax reform” discussion seems to focus on raising more money for the state, thus leaving less money for its citizens and visitors. The concept of “spending reform” doesn’t seem to be on the table, and why should it if legislators and the Governor truly believe that government spending is more important than our own family budgets?

As I’ve noted previously, “Any sales tax is dead in this state―unless coupled with elimination of another tax. Reducing other tax rates won’t sell a sales tax.” That isn’t just my prediction, it’s the expert opinion of Portland pollster Adam Davis, based on focus groups he did for Governor Kulogoski’s Task Force in 2007 and more recent quantitative analysis that convinced him that Oregonians will not accept a third tax…period.

This latest legislative proposal seems determined to make the same mistake that legislative referral Measure 1 made in 1993, blindly hoping that somehow, some way, Oregonians will believe politicians when they promise to lower other tax rates in return for creating a new third tax. But history shows that voters don’t believe such promises. Unless the property or income tax is entirely wiped off the books (I prefer eliminating the income tax), an Oregon sales tax seems destined to be soundly defeated for the tenth time since statehood in 1859.

Even if by some miracle a third tax were approved by voters, it wouldn’t solve our state’s fiscal problems. The best way to do that is to tackle “spending reform” first, finding ways to reduce the size and scope of government. Otherwise, any “tax reform” simply will mask our fiscal problems for a while by allowing government to continue to grow until once again it prices itself above our ability to pay.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Chronic Failure of Rail Transit

The local transit agency, TriMet, likes to claim that continued expansion of the regional rail system is critical because rail has operational cost savings over buses.

Unfortunately, this assertion overlooks a glaring problem: The rail system breaks down approximately 30% of the time.

I subscribe to a TriMet email system that notifies me every time there are service outages on light rail or the streetcar. During the past 12 months, I received 117 such notices.

The Steel Bridge rail crossing is the source of most problems, and when it goes out, four MAX lines are affected. Thousands of riders are inconvenienced, often for hours. But there are many other reasons for rail malfunctions: cold weather, hot weather, collisions with automobiles, and security problems, to name a few.

In addition, Portland streetcar service was completely shut down in the South Waterfront for three weeks in September, due to construction of the Milwaukie light rail line.

In every case of a rail outage, passengers have to be rescued by buses. The road system is ubiquitous, so buses have many options for traveling from one location to another. When a rail car goes down, everything behind it backs up.

TriMet’s management is obsessed with building more rail, but the backbone of daily service is the ordinary bus.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. 

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Cascade Update Fall 2013

Want to know the latest happenings at Cascade Policy Institute? Click here to see our Fall newsletter!

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It’s Time for Renewable Energy to Stand on Its Own Legs

The Energy Trust of Oregon (ETO) is a non-profit organization that carries out energy efficiency activities on behalf of PGE, Pacific Power, NW Natural Gas, and Cascade Natural Gas. ETO also subsidizes the above-market cost of small, renewable energy projects. For 2014, ETO proposes to spend $178.9 million while taking in revenues of $163 million. Revenues are derived from monthly surcharges on the bills of utility ratepayers. The state legislature authorized the imposition of these surcharges (ranging from 3% to roughly 6%, depending on the utility and the year) in legislation adopted in 1999.

ETO’s budget is available for public review and comment (www.energytrust.org) through the end of November 27, 2013 and will be approved by the ETO board in December. Cascade President John A. Charles, Jr. filed the following comments with with Margie Harris, Executive Director of the Energy Trust of Oregon, on November 27:

Dear Margie,

I have listened to your budget presentation twice and also attended the most recent Renewable Energy Advisory Committee (REAC) meeting. Based on those observations I have one suggestion for the 2014 budget/action plan:

Consider shifting the emphasis for renewable energy subsidies away from intermittent sources. Since 2003, ETO has supported the development of 5,217 renewable energy projects of 20 MW or less. Almost all of these projects―99.6%―have been solar and wind, the two most expensive categories. Yet, because these technologies fail to produce any electricity most of the time, wind and solar projects have only accounted for 40.5% of the power generated by all ETO projects.

Not only has the ETO renewable program had high costs with low power output, most of the alleged social benefits of these sources don’t exist because the random failure of wind and solar means that the system operator for the regional grid has to maintain ever-growing amounts of spinning reserve. These back-up sources have adverse environmental effects that are not accounted for by the recipients of ETO subsidies. In essence, wind/solar project owners internalize the benefits of ETO subsidies while externalizing the costs of grid reliability.

In your 2014 draft budget, you propose to spend $9.9 million on solar projects to get 0.9 aMW of power, at a levelized cost of 10.4 cents/kwh. This is roughly triple the cost of your other renewable projects. I don’t think this is a good deal for ratepayers, and it’s not a good deal for the grid.

The “final frontier” for ETO should be to invest in renewable projects that produce reliable, dispatchable electricity. The regional grid craves stability; wind and solar create volatility. This is a fundamental system conflict, and ETO should strive to be part of the solution by terminating future subsidies for intermittent sources.

At the last REAC meeting, someone on your staff noted that solar projects are proceeding even without the Business Energy Tax Credit (BETC) [repealed by the Oregon legislature in 2012] due to declining solar costs of some 40% over the past 4 years. This should not be surprising if you understand the term “co-dependent.” In technological development as well as human interaction, when we stop rescuing people from their own failures, they tend to become self-reliant a lot faster. I’d suggest that after subsidizing 5,000 solar projects, it’s time for ETO to declare victory and move on, allowing this industry to stand on its own legs.

Sincerely,

John A. Charles, Jr.

Cascade Policy Institute

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Story Behind Thanksgiving That Every Elected Representative Should Know

The quintessential American holiday, Thanksgiving evolved from the Pilgrims’ celebrations to thank God for the harvests that saved Plymouth Colony. What most people didn’t learn in school is that nearly half the Mayflower Pilgrims died of starvation because many refused to work in the fields.

Plymouth Colony originally had a socialist economy. Land and crops were held in common. In the words of Governor William Bradford, “the young men who were most able objected to being forced to spend their time and strength working for other men’s wives and children without any recompense.” Collectivism incentivized colonists needlessly to rely on the efforts of others. Realizing this, Governor Bradford assigned each household its own plot of land. Families could keep what they produced or trade for things they needed. The result was a bountiful harvest in 1623.

Instituting private property and respecting the autonomy of the family unit caused Plymouth to survive. Collectivism and central planning produce scarcity. Private property, free markets, and personal responsibility lead to prosperity and plenty. And a healthy economy, with strong and independent families, enables a community to help those who genuinely need assistance. All are important lessons for America today from William Bradford’s first Thanksgiving.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Portland Streetcar: Time to Reset the Vision

If some Portlanders are confused about why we have a 19th century trolley operating in a 21st century city, they are not alone. City leaders are confused as well.

According to the Streetcar Concept Plan adopted by the Portland City Council in 2009, there are three primary policy goals related to streetcar expansion: (1) help the city achieve its peak oil and sustainability strategies; (2) provide an organizing structure and catalyst for the city’s future growth along streetcar corridors; and (3) integrate streetcar corridors into the city’s existing neighborhoods.

Oddly, providing transit service is not an explicit priority, even though that’s the primary reason people ride. Instead we have a mishmash of peak oil mania―now a quaint artifact due to the shale oil and gas booms, coupled with advanced technology―and vague references to real estate development. Given that this plan was estimated to cost $750 million and the city is broke, perhaps we should rethink the objectives.

First, the fundamental purpose of any transit program is to move people. On this criterion, the trolley is a weak performer. It’s slow, it doesn’t go many places, and each car only has 30 seats. It has high costs and low capacity, when what we need is the exact opposite.

If a secondary purpose of the streetcar is to encourage development, there are much better ways to do so. Subsidizing the streetcar means that most property owners will never benefit, because the system is tiny―seven route-miles after two decades of planning. If the city were simply to streamline the permitting process and lower System Development Charges, we would incentivize far more development in all sectors of the city compared to laying another mile of track.

Advocates claim that streetcar lines are “permanent” and provide stability for nearby development, but thousands of miles of streetcar tracks in the United States were paved over when they became obsolete 80 years ago. More recently, the streetcar tracks in South Waterfront along Moody Avenue have been torn up three separate times since 2011 to accommodate light rail. Nothing is really permanent; and when change is needed, it’s a lot easier moving a bus line than it is ripping up streetcar tracks.

A Better Way

We should insist that the streetcar be treated as a transit expenditure and evaluated on those terms. If we do this, it’s clear that rubber-tired vehicles traveling on the existing road network make much more sense.

Of the bus options I’ve examined, the best one is the Metro Rapid in Los Angeles. This system relies on distinctive, low-floor CNG buses with red stripes providing fast, reliable transit service. It operates in general purpose traffic lanes and achieves relatively high speeds by having stops spaced 0.75 miles apart, on average.

Also, the Metro Rapid buses have the technical capacity to shorten a red light or extend a green light at intersections to improve travel time.

A summary of the key characteristics of this system compared with the Portland Streetcar is shown below:

LA Metro Rapid Bus

Portland Streetcar

Year opened

2000

2001

Annual boardings

72 million

4.1 million

System length

400 miles

7 miles

Capital cost/mile

$0.35 million

$29 million

Peak frequency of service

Every 3-10 minutes

Every 14-19 minutes

Average speed

14-30 MPH

7-12 MPH

The Portland Streetcar is 83 times more expensive to build than the Rapid Bus alternative. Is it 83 times better? No. In fact, it is not superior by a single metric. The Rapid Bus is cheaper, twice as fast, and has much greater coverage throughout the city. It’s an actual transit system, not a Disneyland ride.

We should stop further expansion of the streetcar and shift public resources to low-cost, higher-speed bus transit.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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AP: Cover Oregon Is ObamaCare’s “Biggest Failure”

Seven weeks after launch, Oregon’s online health insurance exchange Cover Oregon still hasn’t enrolled one person, surprising out-of-state onlookers who would have voted Oregon “most likely to succeed.” An Associated Press story puts it this way:

“With all the problems facing the rollout of President Barack Obama’s health care overhaul, nowhere is the situation worse or more surprising than in Oregon, a progressive state that has enthusiastically embraced the federal law but has so far failed to enroll a single person in coverage through the state’s insurance exchange.”

The Oregonian has reported on numerous reasons for the delays, including last-minute federal rulemaking that set back Oregon’s website programming. Even so, Oregon received $245 million in federal money to build its online exchange, only to be processing 18,000 paper applications by hand three weeks into November.

It’s safe to say that dysfunction on this level would not be tolerated anywhere outside government: Imagine if your financial institutions were offline and nonresponsive for two months. The stunning failures of Cover Oregon and the federal website Healthcare.gov illustrate graphically how handing government vast control over important aspects of our personal and family lives results in even more loss of personal freedom than was foreseen when the Affordable Care Act was passed. Incompetence without accountability will have real consequences for those who, through no fault of their own, may find themselves without insurance on January 1.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Cascade in the Capitol: Testimony in Support of the Oregon Department of State Lands’ Proposal for the Elliott State Forest

The Oregon Department of State Lands (DSL) is proposing that the Oregon State Land Board―comprised of the Governor, the Secretary of State, and the Oregon Treasurer―sell off 2,700 acres of the Elliott State Forest. The Elliott is a 93,000-acre state forest located on the southern Oregon coast. Most of the forest is required by state law to be managed to generate revenue for the Common School Fund, an endowment for public schools. Due to environmental litigation, timber harvesting has plummeted on the Elliott, making it impossible to fulfill the mission of providing income for the Common School Fund. Therefore, the DSL is proposing to sell three small tracts in order to generate funds.

Cascade President and CEO John A. Charles, Jr. submitted testimony earlier this week in support of the sale:

“I am writing in support of the proposed sale of three parcels within the Elliott State Forest―the Adams Ridge, Benson Ridge, and East Hakki Ridge Tracts. Sale of these parcels is consistent with the Constitutional and statutory directives to the Land Board that it maximize revenue over the long term from Common School Trust Lands.

“Clearly the annual returns on the Common School Fund over the past 20 years have been far superior to the returns from timber harvesting on the ESF, as noted in the Department’s Real Estate Asset Management Plan. Given that the returns on timber harvesting have been declining and will likely decline even more in the near future due to environmental litigation, public schools that rely on the twice-annual distributions from the CSF would be better served with the sale of timberland from the ESF, with the proceeds placed under the management of the Oregon Investment Council.”

Cascade has long supported the lease or sale of Common School Trust Lands, and welcomes the move by the SLB to sell off small parts of the Elliott State Forest. The Land Board will consider the matter at its upcoming meeting in Salem on December 10.

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Press Release: Cascade Policy Institute Responds to Challenges from the Center for Media and Democracy

November 14, 2013

For immediate release

Contact: John A. Charles, Jr.

(503) 242-0900

 Cascade Policy Institute Responds to Challenges from the Center for Media and Democracy

PORTLAND, ORE. – A self-described “progressive watchdog group” has launched a questionable campaign to discredit limited government, free-market oriented public policy research groups across the country, including Oregon’s own Cascade Policy Institute.

Taking a page out of the late Chicago community organizer Saul Alinsky’s book, Rules for Radicals, the Center for Media and Democracy (CMD) is personally attacking both those who work for and those who help fund these organizations.

Two of the Rules for Radicals state: “Ridicule is man’s most potent weapon” and “Pick the target, freeze it, personalize it, and polarize it.” CMD is following both these rules by posting supposedly inflammatory information and accusations on its derisively named website, www.StinkTanks.org.

Oregonian senior political reporter Jeff Mapes wrote a story yesterday about CMD’s claim that Cascade Policy Institute “…and dozens of like-minded think tanks around the country receive major funding from secretive national donors to push a conservative agenda.”

Cascade’s president, John A. Charles, Jr. responded, saying, “It is ludicrous to think that Cascade is operating in lockstep with other organizations to promote any specific policy agenda. As a free-market think tank, we don’t believe in central planning, either in government or in the non-profit sector.”

Charles continued, “We set our own research agenda, approved by an Oregon-based board of trustees, which promotes individual liberty, economic opportunity, and personal responsibility.”

As to the charge that some of Cascade’s funding comes from a group of “secretive donors,” Charles notes that the IRS allows anonymity for donors to non-profit 501(c)(3) organizations, including charities, schools, churches, think tanks, and others.

“We respect the privacy of our donors, whether they are large national funders or the individual Oregonians that make up the bulk of Cascade’s supporters. Contrary to the mistaken belief of CMD, we don’t promote the agenda of our donors; they voluntarily choose to support our agenda of personal and economic freedom.”

Charles noted in conclusion, “The timing of this attack is almost comical given the disastrous rollout of ObamaCare. Now more than ever, the country needs public policies that respect the dignity of individuals to run their own lives. Cascade will continue to be the leading voice for self-governance in Oregon, and we welcome financial support from donors regardless of where they live.”

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Which Is the Monster? Tax limitations, or the taxes they limit

A City Club of Portland research panel has concluded that property tax limitation Ballot Measures 5, 47, and 50 have created a “Frankentax” monster that is “slowly but surely wreaking havoc upon its creators and their communities in ways they might not yet realize.”

Before we buy such arguments and repeal these taxpayer protections, let’s see what good has come from limiting property taxes:

So-called government revenue “losses” from property tax limitations are also “gains” to taxpayers who pay less than they otherwise would―in some cases enough less to keep from losing their homes.

Before Measure 5 was enacted in 1991, as a percentage of our income, Oregonians had on average the 5th highest property tax burden among all states. In 2010, that burden had dropped to 20th.*  In the first ten years Measure 5 was in effect, Oregonians saved over $5 billion.**

An Oregonian editorial about the City Club report points out: “The monster metaphor is worth pursuing because the perception of monstrosity goes both ways.” “Voters approved Measures 5 and 47/50, creating a ‘Frankentax’ system, because they wanted to protect themselves from a government-friendly system that behaved like The Blob, always consuming and expanding. The system that exists now, for all its faults, is designed to protect taxpayers at the expense of government, not government at the expense of taxpayers.”

Knowing the father of Measure 5, the late Don McIntire, as I did, I’m confident he would relish the opportunity to engage those who want to kill his creation. Far from being a Frankenstein, Don was one of the taxpayer’s best friends.

* “2013 Public Finance: Basic Facts,” Legislative Revenue Office,         http://www.oregonlegislature.gov/lro/Documents/2013BasicFacts.pdf

** “Halfway There: Measure 5 and the Road Ahead, Jamie Voykto, Cascade Policy Institute, December, 2003, https://cascadepolicy.org/pdf/fiscal/I_126.pdf

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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ObamaCare Unraveling―And It Gets Worse in 2014

By Sally C. Pipes

With ObamaCare’s health insurance exchanges unraveling (especially HealthCare.gov, the federally run portal for the 36 states that decided not to set up their own exchanges), it’s safe to say that President Obama’s effort to expand coverage isn’t going well.

It’s about to get worse. Once the calendar flips to 2014, ObamaCare intends to expand Medicaid—the joint federal-state health insurance program for low-income Americans—to an additional 8.7 million people. But Medicaid isn’t working for the 62 million Americans it currently covers.

Taxpayers are struggling to shoulder the program’s $400-billion-plus price tag. Beneficiaries, meanwhile, are finding that doctors won’t accept their coverage. Expanding the program will only exacerbate both problems. Fortunately, some states are experimenting with reforms that inject private-sector discipline into Medicaid, thereby improving access to care and reducing costs. Other states should take note and adopt similar reforms.

At present, states largely determine who qualifies for Medicaid. Next year, ObamaCare will instruct them to cover everyone earning less than 138% of the poverty level. To entice states to follow through, the feds will cover the cost of the expansion for new enrollees for the first three years. States will have to share in the cost thereafter. Nevertheless, over half the states are refusing to follow ObamaCare’s dictates and not taking federal funds, exercising the right the U.S. Supreme Court gave them in June 2012 to do so.

Many states are wary of expanding Medicaid because those already in the program struggle to secure care. Between 2011 and 2012, about a third of primary care physicians weren’t accepting new Medicaid patients. A study from 2011 found that two-thirds of children on Medicaid couldn’t get an appointment with a specialist.

Doctors are reluctant to accept Medicaid because the program pays them so little. The entitlement reimburses physicians a little more than half the amount that private insurers do. In some cases, Medicaid’s reimbursements don’t cover the costs doctors incur seeing beneficiaries.

It’s no surprise, then, that the program fails to improve its beneficiaries’ health. A randomized study of Oregon’s Medicaid program published earlier this year in the New England Journal of Medicine concluded that “Medicaid coverage generated no significant improvements in measured physical health outcomes.”

For a failing program, Medicaid costs a lot. States spend more on Medicaid than anything else in their budgets—and collectively shoulder approximately one-third of the program’s more than $400 billion in annual costs.

ObamaCare’s Medicaid expansion will only add to these costs. A new survey of state Medicaid offices shows that, in 2014, spending on the program will increase by 13% in states that have agreed to broaden eligibility in accordance with the law. It’s no wonder that many state leaders are looking to buck the Medicaid status quo.

In September 2013, Arkansas Gov. Mike Beebe secured a waiver enabling his state to use federal funds set aside for Medicaid to provide private coverage to 218,000 residents. The state’s Department of Health reports that more than 56,000 people have asked to participate in the Arkansas Healthcare Independence Program.

Arkansas officials believe they’ll save $670 million over 10 years, thanks to the waiver. Leaders in Indiana, Ohio, Pennsylvania, Iowa, and Tennessee have expressed interest in creating similar “private options.” Arkansas’s approach empowers individuals to shop for insurance that suits their needs, rather than settling for one-size-fits-all policies.

Privately delivered Medicaid also permits state officials and patients to expand the availability of tax-advantaged health savings accounts (HSAs) to low-income families. These accounts give families the ability to shop around for care—and to save tax-free for the future whatever they don’t spend now. Encouraging such consumer-driven behavior in the health care marketplace will be crucial to reducing overall costs.

North Carolina Gov. Pat McCrory has adopted a different approach, proposing that private managed-care firms administer his state’s Medicaid program. Dubbed “Comprehensive Care Entities,” these companies would be tasked with overseeing patient care in a way that improves health outcomes while keeping costs down. They’d also compete against one another, creating an incentive to improve customer service, economic efficiency, and quality of care.

More state leaders should look for ways to use choice and competition to move past Medicaid’s status quo. If they don’t, they’ll simply perpetuate ObamaCare’s strategy of expanding failed programs and calling it progress.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Investors Business Daily.

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Court Says “No” to Forced Insurance Subsidy

The federal government’s HealthCare.gov website has been nearly useless for a month. Now, millions of Americans are beginning to receive letters informing them of the cancellation of their current health insurance policies―proving the inaccuracy of President Obama’s promise that “if you like your health care plan, you can keep your health care plan.”

But news reports on ObamaCare as the calendar turned to November largely missed another important story. A controversial provision of the Patient Protection and Affordable Care Act (ObamaCare) suffered a judicial setback in the D.C. Circuit Court of Appeals on November 1. Writing on behalf of the court, the judge highlighted an important civil libertarian concept which is also at the heart of many principled objections to the health care law.

In Gilardi v. U.S. Department of Health and Human Services, the D.C. Circuit Court granted the plaintiffs, who own a family business, a preliminary injunction against the imposition of the HHS Mandate requiring inclusion of contraception and abortifacient drugs in employee health insurance plans. The Gilardi family, who are Catholics, contend that the HHS Mandate requiring coverage for contraception, sterilization, and abortion-inducing drugs violates their religious beliefs and that requiring their company to cover employees’ contraception, or else pay a $14 million penalty to the IRS, is unduly burdensome. The court sided 2-1 with the Gilardis. In her ruling, Judge Janice Rogers Brown made a distinction between “noninterference” with a person’s choices and the “compelled subsidization” of those choices by another party.

The Obama Administration has consistently held that the HHS Mandate requiring contraceptive coverage is necessary to protect women’s reproductive and abortion rights. The Administration argues that women’s right to have access to contraception trumps the First Amendment rights of those who object to providing these services on religious or moral grounds. The President has refused to accommodate the conscience objections of policyholders, religious and secular employers, and charitable organizations during ObamaCare rulemaking.*

However, Judge Brown wrote on behalf of the court that “it is clear the government has failed to demonstrate how such a right―whether described as noninterference, privacy, or autonomy―can extend to the compelled subsidization of a woman’s procreative practices.”

The distinction between “noninterference” and “compelled subsidization” is important for reasons broader than conscience objections alone, and it should strike a chord with civil libertarians. The expansion of government programs and entitlements (including medical benefits specifically handpicked by the government) pits the newly created “rights” of some to receive additional products and services, against the rights of other people who may be paying for them in whole or in part (as employers, policyholders, or taxpayers).

Charles Krauthammer recently explained the connection between ObamaCare’s health care entitlements and coercion this way:

“The planners knew all along that if you force insurance buyers to overpay for stuff they don’t need, that money can subsidize other people. Obamacare is the largest transfer of wealth in recent American history. But you can’t say that openly lest you lose elections. So you do it by subterfuge: hidden taxes, penalties, mandates, and coverage requirements that yield a surplus of overpayments. So that your president can promise to cover 30 million uninsured without costing the government a dime. Which from the beginning was the biggest falsehood of them all. And yet the free lunch is the essence of modern liberalism. Free mammograms, free preventative care, free contraceptives for Sandra Fluke. Come and get it.”

Once the government has successfully compelled all Americans to purchase health coverage―even against their will―under ObamaCare’s individual mandate in order to make this wealth transfer possible, it is a short slide into compelling Americans to subsidize other people’s benefits to which they morally object.

To protect Americans’ constitutional rights, and rein in the entitlement culture, the courts need to affirm consistently that not interfering with another person’s choices does not mean forcing others to provide, subsidize, or enable those choices. According to the Becket Fund for Religious Liberty, 77 cases representing 200 plaintiffs have been filed against the HHS Mandate on First Amendment grounds. Regardless of Americans’ disagreements over the ethics of contraception and abortion, the freedom not to be financially complicit in the choices of others to which one morally objects ought to be a value on which many of us can unite. The First Amendment may end up being one of the last legal defenses citizens have against the unfettered expansion of the entitlement state.

 

* The HHS Mandate has an extremely narrow conscience exemption which does not apply to for-profit businesses or to organizations which may be religious by any common-sense standard but are not run by a church.

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Metro’s War on Single-Family Housing Continues

For more than a decade, the regional government, Metro, has been quietly herding people into high-density neighborhoods. For those unaware of this policy, the recently announced plans for 80 acres of development near the light rail station at Sunset Transit Center should be a wake-up call: The developers plan to build 2,175 new housing units, and none of them will be single-family homes. In order to meet Metro-imposed density requirements, the project will be dominated by mid-rise apartment complexes, along with commercial and retail buildings.

Metro anticipates that virtually all future development projects will be similar. In draft documents for a planning exercise called “Climate Smart Communities,” Metro notes that the current number of Portland-area households in mixed-use neighborhoods is 26%. By 2035, that number likely will rise to at least 36%. No options for reducing density are being studied.

Metro’s vision of ubiquitous apartment bunkers means that the region will slowly become a childfree zone, because few parents wish to raise their children in vertical housing. Portland parents, and those who hope to become parents, should ask hard questions about why the Metro Council thinks this is a great leap forward for livability.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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The ObamaCare Exchanges: Nowhere Near As Competent As the Post Office

By Sally C. Pipes

What was the worst product launch in history? New Coke, perhaps? How about Colgate’s Dinner Entrees, the frozen food packages with a label mimicking that company’s brand of toothpaste? The Santa Dreidel? They’re all marketing masterpieces compared to the rollout of ObamaCare’s health insurance exchanges—particularly those accessible through HealthCare.gov, the portal operated by the federal government that “serves” 36 states. Though these online marketplaces officially opened October 1, they’ve thus far proven abject failures in their stated mission of expanding the availability of health insurance.

As of October 19, federal officials claimed that 476,000 people had applied online for health coverage. But there’s a big difference between the number of folks who have begun applications—and the number of people who have actually enrolled. According to insurance industry consultant Robert Laszewski, that enrollment figure could be less than five figures. Through its first week, the federal system, which was supposed to work for millions of Americans, had reportedly enrolled about 5,000 people in the 36 states it covers.
Insurers estimate that just one percent of applications submitted through the federal exchange contain sufficient information to actually enroll a person in a health plan. It’s no wonder that the Obama Administration has been mum about official enrollment figures. Visitors have often found that they can’t even log in. A CNN reporter, for instance, couldn’t do so for a whole week. A New York Times researcher failed to log in over 40 separate attempts covering 12 days.

The disastrous rollout of the federal exchange has caused even champions of ObamaCare to train their fire on the president’s team. Washington Post columnist Ezra Klein has said that the Affordable Care Act’s launch this fall has been not been “troubled” or “glitchy” but a “failure.” Robert Gibbs, President Obama’s former press secretary, wants heads to roll, saying, “I hope they fire some people that were in charge of making sure that this thing was supposed to work.”

The Administration has asked the contractors hired to build the system to perform necessary repairs in hopes of re-launching the exchange November 1. But that’s unrealistic, according to the contractors as well as outside experts. One told the New York Times that as many as five million lines of code may need to be rewritten.

Fourteen states and the District of Columbia have set up their own online exchanges. They’re faring little better than the federal exchange. Take Vermont. In the Green Mountain State, 4,300 residents created state insurance accounts. But only 700 were able to apply for insurance—and just 115 of these folks were able to enroll. In Maryland just 1,121 of the 25,781 people who created accounts were able to finish their online applications and get enrolled. That’s less than 5 percent. And the exchanges in Vermont and Maryland are among the better-working ones.

Nine of the 14 states and Washington, D.C. won’t release enrollment data. Oregon admits that its system isn’t fully operational. Hawaii’s exchange launched October 1 but couldn’t enroll anyone for two weeks. Idaho’s and New Mexico’s systems were so hopeless that the states had to turn operations over to the troubled federal system.

Meanwhile, a wide range of experts say that ObamaCare’s online systems are lacking in cyber-security measures and thus invite identity theft. The site’s designers appear not to have included ordinary protections against automated attempts by rogue hackers to falsely log into the system. So cyber criminals can potentially see a user’s social security number, where he lives, how much he makes, and so forth. According to the founder of the McAfee cyber-security company, the exchanges have “no safeguards” and their lack of protection is “outrageous.”

Then there’s the possibility of fraud. The Department of Health and Human Services will not verify the self-reported incomes of all applicants—just those of a sample. Consequently, the federal government could end up doling out millions in unmerited subsidies.

The cause of this mess is not a lack of money. The federal government has spent $634 million on its system—more than the combined cost to design and build LinkedIn and Spotify. That’s nearly seven times the original projected cost. The Obama Administration should have seen this debacle coming. A principal designer of the system, CGI Federal, was fired by the provincial government of Ontario in Canada in September 2012 for botching the province’s online medical registry. The contractor had missed three years of deadlines.

But CGI may have had an impossible task. According to the New York Times, the firm did not begin writing code for the exchange website until the spring of 2013—because the government had been so slow to issue specifications.

One month in, it’s clear that ObamaCare’s exchanges were not ready for primetime, even though Health and Human Services Secretary Kathleen Sebelius repeatedly assured the American public that the marketplaces would launch—and work—as planned. These online marketplaces must function properly if the law is to expand coverage as it promises—and if Americans are to be able to comply with its requirement that they obtain insurance. With each passing day, both are looking less likely.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.

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If You Like It, Maybe You Can Keep It

By William Newell

“If you like your health care plan, you can keep your health care plan.” These words have come back to haunt President Obama. Contrary to his statement, many Americans enrolled in individual health plans have lost or will lose their current plans due to regulations imposed by the Affordable Care Act. White House spokesperson Jay Carney admitted “it’s true” there are plans that won’t be eligible under the health care law.

According to Forbes, more people have been notified of their plan’s cancellation in three states than have signed up for an online health care exchange account in all 50 states. Many people have seen rates increase, yet are not eligible for the ACA’s insurance rate subsidies. NBC News relayed the saddest part of it all: The Obama Administration likely knew for three years that this would happen and that possibly 80 percent of people in the individual health insurance market could lose their current plans.

This situation highlights the fact that leaders must present the policies they promote in a way that is genuinely reflective of their content. When politicians make outlandish promises and fail to meet them, it undermines public trust and the government’s effectiveness. It just goes to show, when a politician says something that seems too good to be true, it probably is.

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

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Ken Ivory to Speak on Transferring Public Lands

Join Cascade Policy Institute as we welcome Utah’s Ken Ivory to share his insights on how to solve many of the western states’ problems through the transfer of public lands.

Ken Ivory (R-UT, District 47) was elected to the Utah House of Representatives in November of 2010. Ken campaigned as a candidate of the “Dad Party.” Ken and his wife, Becky are the parents of four children. Given the daunting challenges that face the state and the nation, Ken took time from his business, mediation, and estate planning law practice to “secure the blessings of liberty” to his posterity.

Ken Ivory will explain why the Transfer of Public Lands is a solution big enough to fund education; to better care for the lands; to protect access; to create jobs; and to grow local, state, and national economies. If we fail to secure our state’s rights to transfer public lands, it will not be because doing so is illegal, unconstitutional, or impossible. If we fail to enforce this “solemn compact” of statehood, it will be because our leaders lack the knowledge or the courage to do what has already been done before.

As the current president of the American Lands Council, Ken educates legislators and community leaders throughout the country about their jurisdictional rights and duties to manage, protect, and care for the lands within our borders. Ken is the author of Where’s the Line? How States Protect the Constitution.

Hors d’oeuvres, a dessert buffet, and a no-host bar will be provided.

Sponsored By

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Does a Higher Minimum Wage Always Benefit Workers?

By Erin Shannon

The debate over raising the minimum wage is everywhere. Fast food workers around the country have been striking for higher pay, Oregon’s minimum wage is set to increase to $9.10 per hour in January, and Seattle Mayor Mike McGinn is demanding that Whole Foods pay workers there more than the company’s current average wage of $16.15 per hour. But while Oregon’s neighbors to the north already have the highest minimum wage in the country at $9.19, a dramatic minimum wage battle is set to take place in SeaTac, Washington. Voters there will decide in November whether the city will increase the minimum wage for workers in SeaTac’s hospitality and transportation industries to $15 per hour.

Proponents of SeaTac’s Proposition 1 argue a mandated higher minimum wage than the state’s current minimum of $9.19 per hour is necessary to help lift low-wage workers out of poverty. Plenty of research shows that forcing a big increase in the minimum wage would have the opposite effect, hurting small businesses and pricing many low-wage workers out of their jobs.

But the most compelling arguments against a super-high minimum wage come from homegrown Washington businesses with real-world experience.

Take, for instance, some of Seattle’s most popular restaurants. Restaurant owner Tom Douglas voluntarily raised the wages of the employees of his 14 restaurants to $15 an hour last month. Douglas says the wage increase was a personal and business decision that he can afford after years of profitable success with his restaurants.

But Douglas readily points out that if he were forced to pay the equivalent of such high wages when he opened for business in 1989, he would be out of business today: “You know, if I were to try and do what I’m doing now when I first started out 24 years ago, I would be bankrupt. I couldn’t have done it. So I think there is a time and place for this and I think there is a sense that in my mind that, you know, you have to be the business owner that wants to do it. I’m not a big believer in the whole government mandate.”

Seattle fast-food favorite, Dick’s Drive-In, provides another convincing argument. Dick’s has made the choice to reward its 180 fast-food employees with reasonable pay and great benefits. The Seattle Times reported that Dick’s offers workers a starting wage of $10 per hour, as well as merit raises, employer-paid insurance, up to $8,000 for child care or college tuition, a 401(k) retirement program with employer match, paid time for volunteer service, and up to three weeks paid vacation.

Government has not forced Dick’s to provide generous wages and benefits; the company does it because it chose a business philosophy that works for them. Dick’s Drive-In founder Dick Spady ran his business according to two rules: “The No. 1 job of a business is to make a profit. If you don’t, it’s not worth anything. No. 2 thing is to take care of your people. They’re the key to success.”

These two rules continue to drive Dick’s business model. But the company’s vice president and the founder’s son, Jim Spady, recently told The Seattle Times that forcing businesses to pay a high minimum wage, such as the proposed $15 per hour, will hurt small businesses, especially new ones. These businesses rely on less experienced or low-skill workers and do not have the profit margin to withstand a massive forced wage increase.

Spady points out that many minimum- or low-wage companies, like Dick’s, are “transitional employers,” where the vast majority of workers start with no experience, develop valuable work skills, and end up moving on to somewhere else. “The way to improve the wages of the poorest people is to encourage them to upgrade their skills, not to pass a law that requires we pay X dollars an hour….So if you force law-abiding businesses to pay more, they will—or they will automate their processes so they use way less labor….So what these high minimum wage laws do is they help a few people get better wages, but a lot of current people will lose their jobs.”

Forcing employers to pay starting workers $15 per hour may make some people feel good, but it will have consequences. It may force many employers out of business, or reduce the number of jobs and hours available. In the case of Dick’s, it may result in the loss of many of that company’s popular employee benefits. Or it may result in young or inexperienced workers being squeezed out of the market by their more experienced counterparts. These workers don’t earn $15 an hour; they get zero.

The real-world consequences of minimum wage increases may vary, but they will happen. And none of them will help low-wage workers. No matter what happens in SeaTac this November, Oregon lawmakers should keep that in mind.

Erin Shannon is Director of the Center for Small Business at Washington Policy Center in Olympia, Washington. She is a guest contributor at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in the Puget Sound Business Journal.

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October Chaos for Cover Oregon

Three weeks after launch, Oregon’s online health insurance exchange Cover Oregon hasn’t enrolled a single person. $82 million has been spent on a website which has received more than 430,000 visits and 3.7 million page views, and yet still cannot process applications.

According to Shelby Sebens of Northwest Watchdog, Cover Oregon spokesperson Ariane Holm “said she anticipates Cover Oregon’s website will be fully functional by the end of October. She also said residents can download an application and mail it back in or file it electronically. Or they can call Cover Oregon to start the application process.”

The Oregonian has reported on numerous reasons for the delays, including last-minute federal rulemaking that set back Oregon’s website programming. Oregon hasn’t been alone with these problems: HealthCare.gov, the national website for the Affordable Care Act, cost more than $400 million dollars and has been experiencing well-publicized, thorough dysfunction since October 1.

One would think functioning websites wouldn’t be too much to ask for the official ObamaCare rollout, the date of which was the focus of both national and statewide awareness campaigns. October’s online chaos seems to bode ill for the future of Americans’ health care experiences. Hopefully, people will rethink having increased centralized government control over a health care system which comprises nearly one-fifth of the U.S. economy.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Global Quest For Freedom

Featuring

Donald J. Boudreaux, economics professor at George Mason University and former president of the Foundation for Economic Education, returns following accolades for his previous two Freedom Seminars engagements. He is an enthusiastic and knowledgeable speaker with a passion for freedom and optimism for the future. He has lectured in the United States, Canada, Latin America, and Europe. Don is published in The Wall Street Journal, Investor’s Business Daily, Regulation, Reason, The Freeman, The Washington Times, The Journal of Commerce, and the Cato Journal. He is the author of Globalization (Greenwood Press, 2008) and has a widely followed blog with Russ Roberts entitled Cafe Hayek. His PhD in economics is from Auburn University and his law degree is from the University of Virginia.

 

Karol Boudreaux is currently director of investments for the Omidyar Network, a philanthropic firm dedicated to harnessing the power of markets to create opportunity for people (especially in developing countries) to improve their lives. Prior to Omidyar Network, Karol was an Africa land tenure specialist at USAID. Before joining USAID, she conducted academic research that concentrated on property and land tenure systems, natural resource management, and many varieties of entrepreneurship in sub-Saharan Africa. A former instructor at the George Mason University School of Law, Karol was also a senior research fellow at the Mercatus Center at GMU where she managed a research project on enterprise-based solutions to poverty. Karol received a juris doctorate degree from the University of Virginia, where she concentrated on international law. She has a bachelor’s degree from Douglass College at Rutgers University.

Click here to register.

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Why Cities and Counties Should Consider Leaving TriMet

Please join us for Cascade’s monthly Policy Picnic led by Cascade President John Charles on Wednesday, November 20th, at noon.

Portland’s regional transit monopoly, TriMet, has reduced service five times in the past four years and forecasts much deeper cuts beginning 2017. The agency has no long-term financial plan to address its unsustainable operating costs. However, there is an escape route for affected jurisdictions: leaving the transit district. Six communities have left TriMet since 1988, and four have established their own districts. All of them provide better service at lower cost than TriMet. In this session, we will discuss TriMet’s financial condition and examine the experience of the four opt-out transit districts.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to sixteen guests on a first come, first served basis, so sign up early.

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Surveying Government Planners Won’t Help

The State of Oregon is sending a survey to economic and community development “practitioners,” including city managers, county executives, elected officials, and local business owners. It asks what economic development projects the state should take on.

A state spokesman says, “We want stories and experiences and recommendations on how to get better.” Given that “free money” is always welcome, the inevitable huge response surely will be taken as a sign that finally the state can make the proper decisions about how to invest other people’s money, namely the taxpayers’.

Milton Friedman once said: “Nobody spends somebody else’s money as carefully as he spends his own.” When it’s your money, you make the best decisions you can because you not only reap the rewards, but you bear the losses when things don’t work out. However, when government officials spend taxpayer money, they simply don’t have the same incentives. They may have every intention of doing a good job, but whether they do or not they don’t personally earn the profits or suffer the losses. They simply send out another survey and try again some other time.

The best way to improve the economy of our state is to remove government planners from our personal and business lives. Then watch as our own freely made decisions in a self-organizing society and free-market economy do what they always do—cause our economy to flourish, grow, and create the kinds of progress central planners can never achieve.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Drug Cartels, Not Cold Medicine Patients, Are the Enemy in Oregon’s Meth War

It seems that despite the best efforts of Oregon policymakers and law enforcement, methamphetamine (meth) abuse continues to ravage the Beaver State.

Recent media coverage has unveiled a newer, darker side of the Oregon drug scene—Mexican drug cartels trafficking meth into our state. In the past, they were a fringe sideshow; more meth was produced locally. That has changed. They are now the dominant supplier. And the meth problem has become less predictable, more expensive, harder to spot, and generally more violent.

The infiltration of drug cartels is the logical outcome of the state’s steady decline in local meth production. Since 2005, Oregon, along with surrounding Washington and California, began to see a drastic drop in the number of meth labs busted in the state. Compounding that trend, policymakers adopted a strict new law in 2006 that required residents to obtain a prescription in order to purchase cold and allergy medicines containing pseudoephedrine, a precursor to meth production. The impetus for the new restriction was the belief that by restricting the sale of pseudoephedrine, meth would be kept out of the hands of criminals, and meth abuse in our state would be impacted.

The outcome has turned out to be quite the opposite. As local meth production declined, generally for reasons separate from Oregon’s pseudoephedrine prescription law, violent Mexican drug cartels have been able to infiltrate so much of the state that they have become impossible to ignore. As was pointed out recently by The Oregonian in an exposé on the topic, the Mexican meth now flowing into the state has the added benefit of also being cheaper and more potent than any other meth on the market. As a result, meth abuse, and related meth crime, hasn’t decreased in the least. Indeed, the 2013 Oregon High Intensity Drug Trafficking Area’s Threat Assessment and Counter Drug Strategy report surveyed law enforcement across the state who said that meth remains the number-one cause of property crime and violent crime. Meanwhile, the Office of National Drug Control says that Oregon meth seizures have been trending upward since 2008; and the Drug Enforcement Administration (DEA) conservatively estimates that 80% of the country’s meth now comes from over the southern border.

But all of these facts still don’t change the minds of those who are convinced that Oregon’s prescription laws for pseudoephedrine successfully cured the state of its meth problem. Oregon’s experience is referenced often as the model solution. Even a recent federal Government Accountability Office (GAO) study cites Oregon’s success in enacting proactive legislation as the reason for its progress. In reality, however, Oregon’s prescription law is not responsible for the state’s drop in meth labs, and its meth problem is anything but solved.

Last year, Cascade Policy Institute performed a study to determine whether Oregon’s prescription mandate was the reason for the state’s reduction in meth labs. The findings were enlightening. Our study concluded that while Oregon had seen a dramatic drop in meth labs between 2004 and 2010, it was not a result of a prescription mandate. We were able to draw that conclusion by looking at regional trends and timelines. Other western states including California and Washington saw similar declines without the passage of prescription laws. And by breaking the data down by year, we found that the vast majority of Oregon’s decline in meth production took place prior to the passage of any prescription law.

Our research was meticulous, reliable, and verifiable. It has since been confirmed by other researchers, including most recently by Siddharth Chandra of Michigan State University. Dr. Chandra conducted his own study in response to the above-mentioned GAO report, criticizing it for its methodology. Noting that the report fails to account for regional trends, he determines that the GAO falsely attributes a decline in meth labs to Oregon’s strict prescription laws. His conclusions are accurate and consistent with Cascade’s.

The fallacy of the Oregon experience has lived on long enough. It is time for policymakers across the country to understand that Oregon’s prescription law for pseudoephedrine has failed to achieve its goals. Meanwhile, honest Oregonians who simply want to buy effective cold medicine over the counter have been forced to suffer due to tight restrictions on their personal freedoms. If progress is to be made in the fight against methamphetamine abuse, an honest discussion must take place. It is time to admit the failure of prescription laws for pseudoephedrine.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Why Was Moody Avenue Shut Down―Again?

Last week, TriMet proudly announced that the tracks for Milwaukie light rail had successfully been laid in the South Waterfront district to allow light rail to cross SW Moody Avenue next to the new OHSU construction project. When finished, there will be a light rail stop at that location, and the train will then go up and over the new Willamette River bridge.

What TriMet did not say in its press release is that SW Moody had already been torn apart, raised 14 feet, and rebuilt over an 18-month period ending June 2012. The tab for this retrofit was $52 million. The whole point of raising the road was to allow the Milwaukie light rail line to cross it at grade. Thus, the light rail tracks should have been laid when the entire road was being rebuilt during 2011.

The most recent retrofit shut down Moody Avenue for three weeks and required the complete removal of the Portland streetcar tracks for the third time in three years. This was a severe inconvenience to South Waterfront workers and a waste of taxpayer money.

TriMet has yet to publicly say how much this second retrofit cost, nor has the agency explained why it was done 15 months after the first rebuilding. An explanation is in order.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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What Would Jefferson Say to the Little Sisters of the Poor?

In 1804 an Ursuline nun in New Orleans asked Thomas Jefferson to clarify in writing her religious community’s right to retain their property and to continue their ministries without government interference following the Louisiana Purchase. As French Catholic Louisiana was being incorporated into the Anglo-Protestant United States, the nuns were concerned about the status of their institutions under U.S. law. President Jefferson assured her that the government would not interfere with the sisters’ property, ministries, and way of life. In a letter dated May 15, 1804, he wrote:

“I have received, holy sisters, the letter you have written me wherein you express anxiety for the property vested in your institution….The principles of the constitution and government of the United States are a guarantee to you that it will be preserved to you, sacred and inviolate, and that your institution will be permitted to govern itself according to its own voluntary rules, without interference from the civil authority.”

Jefferson confidently promised that the American Constitution would protect the nuns and that the government would leave them alone. So why don’t Catholic sisters today even qualify for a religious exemption from ObamaCare’s insurance mandate that requires contraception and abortion coverage? It may seem unbelievable, but according to the Obama Administration’s definition of “religious employer,” sisters are not included.

Last year the Department of Health and Human Services (HHS) directed almost all employers to include coverage of contraceptives and abortion-inducing drugs in their employee health insurance policies, or else pay a fine of $100 per employee, per day. HHS subsequently published a final rule that requires many health insurers to charge all enrollees to cover the cost of elective abortions.

The “HHS Mandate” has a narrow conscience exemption that applies only to organizations whose purpose is solely to inculcate religious values and which employ and serve primarily members of their own faith. The exemption does not include religiously affiliated or faith-based institutions which serve all people without discrimination (like hospitals, colleges, schools, and social service agencies). And it doesn’t apply to communities of nuns.

Because of this, the Becket Fund for Religious Liberty filed a lawsuit September 24 in federal district court in Denver on behalf of the Little Sisters of the Poor. The Sisters are a nearly 200-year-old religious community dedicated to caring for the elderly poor. They run 30 homes in the U.S. (four in the West) and care for nearly 13,000 people in 31 countries.

“We cannot violate our vows by participating in the government’s program to provide access to abortion-inducing drugs,” said Sister Loraine Marie, a superior of one of the American provinces of the Little Sisters community.

“The Sisters should obviously be exempted as ‘religious employers,’ but the government has refused to expand its definition,” said Becket Fund senior counsel Mark Rienzi. “These women just want to take care of the elderly poor without being forced to violate the faith that animates their work. The money they collect should be used to care for the poor like it always has―and not to pay the IRS.”

According to the Becket Fund, the lawsuit “is the first of its kind both because it is a class-action suit that will represent hundreds of Catholic non-profit ministries with similar beliefs and because it is the first on behalf of benefits providers who cannot comply with the Mandate.”

Jefferson explained to the Ursuline nuns that American law would protect them and their institutions, regardless of the differences among American citizens:

Whatever the diversity of shade may appear in the religious opinions of our fellow citizens, the charitable objects of your institution cannot be indifferent to any; and its furtherance of the wholesome purposes of society, by training up its younger members in the way they should go, cannot fail to ensure it the patronage of the government it is under. Be assured it will meet all the protection which my office can give it.

“I salute you, holy sisters, with friendship and respect.”

Like the Ursuline nuns of Jefferson’s time, the Little Sisters of the Poor seek to secure their right to live out their faith through service to those in need. Catholic sisters do not give up their religious freedom when they establish nursing homes―or any other ministry. We can imagine what Thomas Jefferson might think of American women having to sue the Obama Administration to defend their First Amendment rights. But can we doubt he would be dismayed by how intrusive and coercive the federal government has become since the day he wrote so cordially to a group of French nuns about the safeguards of the American Constitution?

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The State of Freedom in Oregon

By William Newell

Today, Oregon is at a crossroads. Oregonians must choose between our current unsustainable path and becoming a place where freedom and prosperity can grow. Sadly, according to the Mercatus Center’s Freedom in the 50 States report which looks at the last 12 years, freedom in Oregon has decreased since 2001; and a major effort will be needed to restore and enhance it.

The report divides freedom into three main components: fiscal, regulatory, and personal. Oregon ranked 28th in the nation in terms of overall freedom. We rank 23rd in fiscal, 30th in regulatory, and 19th in personal. In all three categories, Oregon has fallen since 2001; and since 2009, Oregon freedom has diminished by the largest amount of any state.

Oregon does worse in several major areas. We rank in the bottom third of states in categories of government spending, government debt burden, health insurance regulations, labor market regulations, occupational freedom, alcohol regulations, gambling limits, and travel restrictions.

Oregon ranked in the top third of states in marijuana, education freedom, asset forfeiture, campaign finance, cable/telecommunications, marriage, and civil liberties categories.

Our leaders need to address our growing fiscal and regulatory problems and restore freedom to everyday Oregonians. Instead of a “grand bargain,” Oregon needs a new vision. 

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

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Cascade in the Capitol: Testimony Regarding Grand Bargain Small Business Tax Cuts

Steve Buckstein presented the following testimony to the Joint Interim Committee on Special Session prior to the September 30th special session. The audio of the hearing is here. Steve’s testimony begins at 1:09:22. He was the first member of the public to testify on Legislative Concept 3, the revenue raising part of the so-called Special Session Grand Bargain. Each person was limited to two minutes of oral testimony:

Testimony Before the Joint Interim Committee
on Special Session in Favor of
Small Business Tax Cuts
by Steve Buckstein

Good morning, Co-chairs Courtney and Kotek and members of the Committee. My name is Steve Buckstein. I’m Senior Policy Analyst and founder of Cascade Policy Institute, which is a non-profit, non-partisan think tank based in Portland. Cascade’s mission is to develop and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity.

While I do not support the revenue raising portions of this legislation, reducing tax rates on small businesses is a very positive step that I urge you to take.
There was an instructive exchange on this topic on June 20th before the Senate Finance and Revenue Committee.* One tax cut opponent noted that he didn’t believe the person who fixes his washing machine was going to buy another truck and get another employee for his small business because of a reduction in his tax rate.

I then told the committee that while this one repair man may not change his economic behavior, a tax cut just might be the deciding factor for some entrepreneur to locate a new washing machine manufacturing plant here, hiring dozens or hundreds of Oregonians.

We need to understand that in this modern world, people and capital are mobile. Investors and businesspeople change their behavior based on the incentives and disincentives they face. Oregon’s high tax rates shine like a big STOP sign at every border, warning high-income people and many businesses that the cost of staying here or coming here may be too high compared to other states.

So, rather than rely on taxing others more to generate revenue, rely on the fact that lowering small business tax rates will make Oregon more business friendly, thus generating jobs and more tax revenue.

I have it on good authority that each of you would like to take credit for creating more jobs in this state. Here’s your chance.

Thank you.

* June 20th Hearing audio. The tax cut opponent’s repair man story begins at 1:25:40. My full testimony begins at 1:45:37 and my repair man story rebuttal starts at 1:47:40.

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Seven Steps to Replace ObamaCare with Something That Works

By Sally C. Pipes

Under the Affordable Care Act, state health insurance exchanges open for business October 1 (although the executive director of Cover Oregon has admitted Oregon’s exchange will experience some delays). While ObamaCare remains a controversial―as well as logistically catastrophic―law, President Obama took a shot at its opponents recently, saying, “There’s not even a pretense now that they’re going to replace it with something better.”

Au contraire. Ideas for “something better” abound—but the president hasn’t shown interest in them. He has instead remained devoted to his eponymous law, which promises higher costs and worse care. At this point, ObamaCare’s critics have to play the long game―and press for delays in the law’s implementation, whether by rolling back certain parts of the law or defunding it through a continuing resolution, until the White House has a new occupant.

Here are seven provisions that should be part of a replacement agenda that would ensure that all Americans have affordable, accessible, quality health care.

First, change the federal tax code so that individuals can purchase insurance with pre-tax dollars, just like businesses can. Most Americans don’t realize the full cost of their health care because they get employer-subsidized insurance. Consequently, they over-consume health care. That drives up costs. To offset the cost of insurance for those who don’t get coverage through work, Congress could institute a refundable tax credit.

Second, it’s long past time to expand the availability of health savings accounts, where patients can save pretax dollars for health services. And, HSAs must be combined with catastrophic coverage. Doing so would encourage Americans to shop smartly for their care, as they’d be spending their own money.

Third, Congress should allow the purchase of insurance across state lines. Insurance policies issued in Rhode Island cost 2.5 times what they do in Alabama. People should be able to purchase a plan that suits their needs. Such a move would increase competition and lower costs.

Fourth, policymakers need to increase funding for high-risk pools. Such pools were functioning well in many states before ObamaCare―providing affordable coverage to those with pre-existing conditions without raising premiums for everyone else.

Fifth, federal electronic health records (EHR) mandates have to go. The average initial cost of an EHR system is $44,000 per physician, with ongoing maintenance estimated at $8,500 annually. Those costs are passed on to patients. Instead, let providers implement EHR systems when it makes financial sense for them to do so on their own.

Sixth, Congress should scrap the essential health benefits mandates that require all policies to cover a battery of health services. Such mandates can raise the cost of insurance anywhere from 10 to 50 percent.

And seventh, state-level medical malpractice reform is long overdue. Each year, more than $100 billion in health care expenditures are driven by doctors’ and hospitals’ worries about medical liability. Common sense tort reform that immunizes providers from frivolous lawsuits would usher in lower costs for patients.

Of course, all these reforms are contingent on repealing ObamaCare. The House of Representatives has certainly tried to move that effort forward, voting 40 times to do so.

Death by a thousand cuts may be more realistic, at least in the short term. In June, the House voted to repeal ObamaCare’s medical device tax, with 37 Democrats joining Republicans to pass the bill.

And in the past three months, 22 House Democrats have signed onto legislation repealing the Independent Payment Advisory Board (IPAB)―ObamaCare’s doomed plan to have 15 unelected bureaucrats dictate Medicare spending with no real congressional oversight or control.

Public opinion and legislative momentum favor ObamaCare’s delay, if not its outright repeal. And contrary to the president’s assertion, there is a plan to replace ObamaCare with something better. Once the president is no longer standing in the way, Congress should implement that plan―and fix American health care for real.

But if lawmakers allow ObamaCare to stand, the next stop will be a single-payer system, where government controls the health care system entirely. Senate Majority Leader Harry Reid has admitted as much. When asked in August if he felt the United States should abandon insurance as a means of accessing the health care system, Reid replied, “Yes, yes. Absolutely yes.” This will put America on the road to serfdom, and there will be no off-ramp.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by The Washington Examiner.

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Right to Work is Right for Oregon

Please join us for Cascade’s monthly Policy Picnic led by Cascade Founder Steve Buckstein on Wednesday, October 16th, at noon.

Since the U.S. Supreme Court Beck decision in 1988, no American must join a union to hold a job. But in 26 states, including Oregon, workers still have to pay union dues. The plaintiff in that historic court case, Harry Beck, is now an Oregonian. He recently told Cascade that “Beck Rights are not enough. No one should be forced to pay dues to a union they choose not to join.” Come join Steve Buckstein to discuss this situation, and what Oregonians can do now to grant workers more employee choice.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to sixteen guests on a first come, first served basis, so sign up early. To RSVP, please fill out the ticket form below.

 

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“Free Speech” at Modesto Junior College Means “Take a Number”

Free speech is not allowed on the sidewalk at Modesto Junior College in California. Students must represent an official organization in order to pass out materials or engage in conversation with other students passing by. Even if what they want to distribute is just the U.S. Constitution.

Robert Van Tuinen proved this last week, when he gave out copies of the Constitution to fellow students in honor of Constitution Day. College employees notified Robert that students have to start an official club to engage in free speech on campus, and they must stand in the “free speech area.” Robert was welcome to engage in free speech there, but unfortunately it was mostly booked until October.

According to a FOX News report, Robert Shibley, senior vice president of the Foundation for Individual Rights in Education, “said the very idea of speech codes on campus ought to be troubling to Americans.” “They are imposed in an attempt to sanitize the public space of anything that might offend somebody,” he said. “The fact is, no school specifically needs a speech code….If people are too loud, harassing people, or blocking traffic, they have the means to address that.”

Hopefully, Robert Van Tuinen will plan ahead, and Modesto students will find him and his stack of Constitutions in the “free speech area” on Constitution Day next year. Maybe he could even arrange a group reading of the Bill of Rights.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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As the Expense of ObamaCare Sets In, Companies Cut Health Benefits

By Sally C. Pipes

Implementation of the Affordable Care Act continues this fall and winter, and employees of shipping giant United Parcel Service recently got an unexpected delivery. The company announced that it would stop offering health coverage to the spouses of 15,000 workers.

UPS’s workers and their families can thank ObamaCare for this special delivery. And UPS isn’t alone. American businesses are discovering that the president’s signature law will raise health costs for them and their employees in short order.

In a memo explaining the decision to employees, UPS stated that increasing medical costs “combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost.”

One day before UPS’s big announcement, the University of Virginia announced that it would cut benefits for spouses who have access to health care through jobs of their own. The rationale was similar. Delta Airlines recently revealed that ObamaCare will increase its direct health costs by $38 million next year. After taking into account the indirect costs of the law, the company is looking at a 2014 health bill that’s $100 million higher.

Increasingly, large employers who aren’t dropping spousal health benefits are requiring their employees to pay monthly surcharges in the neighborhood of $100 per spouse. Many small businesses are dropping family coverage altogether because they expect that ObamaCare’s new tax on insurers will be passed on to them in the form of higher premiums. One Colorado-based business received notice from its insurer that the tax would increase premiums more than 20 percent.

The story is similar in Massachusetts. One new report concludes that over 45,000 small businesses in the Bay State will see premium increases in excess of 30 percent. In all, more than 60 percent of firms in the state will see their premiums go up.

Last month in California, the largest insurer for small businesses, Anthem, declared that it would not participate in the state’s small-business health insurance “marketplace,” Covered California. Only two years ago, Anthem covered one-third of small businesses in California. Anthem’s exit represents one less choice for consumers—and a sign that competition may not be as robust in the exchanges as the Obama Administration promised.

Small businesses are responding to these higher premiums by trimming their labor costs in other ways. That’s not good news for workers. Seventy-four percent of small employers plan to have fewer staff because of ObamaCare, according to a recent U.S. Chamber of Commerce survey. Twenty-seven percent are looking to cut full-time employees’ hours, 24 percent to reduce hiring, and 23 percent to replace full-time with part-time employees.

One in four small companies say that ObamaCare was the single biggest reason not to hire new workers. For almost half, it’s the biggest business challenge they face. These findings are consistent with a recent Gallup Poll showing that 41 percent of small businesses have already stopped hiring because of ObamaCare. Another 19 percent intend to make job cuts because of the law.

All this tumult in the labor market is fueled by more than the increase in premiums engendered by ObamaCare. The law effectively encourages companies to cut full-time jobs. ObamaCare requires employers with 50 or more workers to provide health insurance to all who are on the job for 30 or more hours per week. The law originally called for this “employer mandate” to take effect in 2014, but the Administration decided in July to delay enforcement of the mandate until 2015.

Employers are responding by doing just enough to avoid ObamaCare’s dictates. Administrators at Youngstown State University in Ohio recently told adjunct instructors, “[Y]ou cannot go beyond twenty-nine work hours a week….If you exceed the maximum hours, YSU will not employ you the following year.” A week prior the Community College of Allegheny County in Pittsburgh made a similar announcement.

Hundreds of employees at Wendy’s franchises have seen their hours reduced for the same reason. And part-time employees of Trader Joe’s, which has eight locations in the Portland area, are losing their company-sponsored health insurance. Trader Joe’s has offered health and dental coverage for years, but now part-time workers are being directed to the state health insurance exchanges.

Meanwhile, companies with fewer than 50 employees are thinking twice about expanding—and thus being ensnared by ObamaCare’s requirement that they provide health insurance. The cost of each additional employee could be staggering. A firm with 51 employees that declined to provide health coverage would face $42,000 in new taxes every year—and an additional $2,000 tax for with each new hire. Providing coverage, of course, would be even more expensive.

As private firms large and small grapple with ObamaCare-fueled cost increases, one large employer—the federal government—has been quietly exempting itself from portions of the law. Top congressional staffers like their current benefits under the Federal Employee Health Benefits Plan (FEHBP), wherein the government pays up to 75 percent of the premiums. But the law requires those who work in lawmakers’ personal offices to enter the exchanges. And in many cases, staffers make too much to qualify for health insurance subsidies through the exchanges. So they’d be facing a hefty cut in their compensation.

Fearing a mass exodus of congressional staffers from Capitol Hill, the Obama Administration fudged the law to permit lawmakers’ employees to receive special taxpayer-funded subsidies of $4,900 per person and $10,000 per family. Yet only three months ago, Senate Majority Leader Harry Reid (D-Nev.) claimed that Congress wouldn’t make exceptions for itself.

President Obama no doubt knows that these congressional favors won’t go over well with ordinary Americans. So he’s called on his most popular deputy—former President Bill Clinton—to try to sell the law to the public once again. But unless the former president can lower employer health costs with little more than the power of his words, his sales pitch will likely fall flat.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published byForbes.

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The Trouble with ObamaCare Is…Parking?

By John A. Charles, Jr.

Oregon is scrambling to open its new federally mandated health insurance exchange, dubbed Cover Oregon, on time October 1st.  Since the commodity being marketed is health insurance, one can only imagine the number of things going wrong: price quotes, online application forms, privacy protection, etc.

But when Cover Oregon’s Chief Operating Officer went on a recent multi-state conference call with President Obama to discuss the problems various states were having with their exchanges, she didn’t mention any of those issues. She said the number one problem for her organization was parking.*

When asked by the President to clarify, she said, “We have 150 employees at our Tualatin office, and only 96 parking spaces.” The President had to tell her that even the vast powers of the Oval Office did not extend to solving local parking shortages.

This was a classic Oregon moment. In a conversation about how the state will ration health care―an industry covering roughly one-seventh of the economy―we discover that management can’t even successfully ration parking for their own employees.

ObamaCare is already collapsing under its own weight. Things are likely to get much worse before they get better. 

* The source of this story was testimony by Rocky King, Executive Director of Cover Oregon. He told it on Sept. 16th in testimony to a joint hearing of the interim House and Senate health care committees in Salem. The hearing audio wasn’t posted immediately but it is now online here:
http://www.leg.state.or.us/listn/archive/archive.2013i/HHC-201309161400.ram.

The parking story begins at about 59:35 and ends at about 1:00:35 into the hearing.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Outlawing Private Backyards in the Portland Metro Area

Please join us for Cascade’s monthly Policy Picnic led by Cascade President and CEO John A. Charles, Jr. on Wednesday, September 18th, at noon.

The Metro Council insists we all must live closer together in order to “protect” undeveloped land on the suburban fringe. As a result, virtually all new residential development in the Portland region will have to be built at densities of 7-15 units/acre, with the majority of dwellings being apartments or condos. Has the government outlawed private backyards, and if so, how did this happen? Charles will share research conducted this summer which sheds light on this important topic.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to sixteen guests on a first come, first served basis, so sign up early. To RSVP, please fill out the ticket form below.

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Take That First Job

A week after Labor Day, The Oregonian published a front-page story about Oregonians who rely on public assistance and how state officials want to help them transition into the workforce. What the article doesn’t mention, however, is that in 13 states, including Oregon, being on welfare can pay more than $15 per hour. The level of public assistance currently available to welfare recipients, compared with the wages they might earn for entry-level work, can act as a severe disincentive to taking a first job and breaking the cycle of long-term dependence.

According to a new study by the Cato Institute, welfare currently pays more than a minimum-wage job in 35 states. That’s more than $31,000 per year, tax-free. Instead of helping people to transition into the workforce, ever-expanding government programs―and the tax disincentives of earned income―can trap the poor at the bottom of the economic ladder just as they are trying to begin the climb.

In The Work Versus Welfare Trade-Off: 2013, authors Michael Tanner and Charles Hughes compare welfare benefits available to a “typical welfare family” (which they define as a single mother with two children) with the wages the adult would need to earn to take home an equivalent dollar income. The authors note that reports on welfare commonly focus on the cash-benefit program Temporary Assistance for Needy Families (TANF), giving the impression that welfare benefits provide families with “a bare subsistence level of income.” “In reality,” Tanner and Hughes write, “the federal government currently funds 126 separate programs targeted toward low-income people, 72 of which provide either cash or in-kind benefits to individuals.” This being the case, a more accurate assessment of the value of welfare “is likely to be far higher than simply the level of TANF benefits.”

The conclusion? In many states, a welfare recipient would lose money by accepting full-time work instead of continuing to rely on public assistance. Welfare benefits are tax-free, so they can exceed the take-home pay a typical recipient could expect to earn entering the workforce. According to the Cato study, “[i]n 11 states, welfare pays more than the average pre-tax first year wage for a teacher. In 39 states it pays more than the starting wage for a secretary. And, in the 3 most generous states a person on welfare can take home more money than an entry-level computer programmer.”

With disincentives like this, it’s hard for people with few skills to give up the security of a welfare check for any kind of paid work. For those with tenuous work habits, or who are very young, it may take even more motivation to forgo welfare (and the leisure time they have while not holding a job) in favor of the hard work, inconvenience, and discipline involved with earning that first entry-level wage. But it is precisely by working that people gain the skills and experience needed to progress in a job, get promoted, earn raises, receive further education or training, create professional networks, think in longer timeframes, build assets, and be in a place where new doors of opportunity can open.

Both research and common sense clearly demonstrate that work is crucial to escaping poverty, beginning with a low-wage, entry-level, or even part-time job if necessary. The U.S. Census Bureau reported in 2010 that only 2.6 percent of full-time workers and 15 percent of part-time workers are poor, according to Federal Poverty Level standards. In contrast, 23.9 percent of adults who do not work at all are poor. A widely cited 2009 Brookings Institution study by Ron Haskins and Isabel Sawhill likewise asserted that three key factors in avoiding poverty in adulthood (and becoming middle class) are to finish high school, to work full time, and to marry before having children. Only two percent of people in the U.S. who do all three of those things live in poverty.

Unfortunately for those who want to leave welfare and become wage earners, the short-term financial consequences are not in their favor while they have few skills, limited education, or little work experience. If young people at the point of entry to work, and people who currently rely on public assistance, lose the belief that earning a paycheck is better in the long term than drawing a benefit check, the cost to their futures will be significant. The workforce participation rate for men 16-24 has dropped from 80% in the 1970s to about 58% today. Young men, especially with less education, are increasingly opting out of the workforce, and not just due to a weak economy. An enabling factor is that with all the government entitlements available, work doesn’t seem to pay.

Many welfare recipients do want to work and are trying to find employment. But many others will continue to make what seems to them to be a rational choice to stay on welfare if it pays more. If policymakers want to reduce dependence and reward work, they should strengthen welfare work requirements and resist allowing the cumulative benefits of welfare to continue to outpace earned income. Tax reform allowing low-wage workers to keep more of their own money (such as the recent temporary reduction in the FICA tax) would be a great boost for people leaving welfare for work. Taking a paying job is and always will be the on-ramp to the road to the middle class.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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“Field of Dreams” Is No Strategy for TriMet

September 12 will be the 15th anniversary of the opening of Westside MAX. Unlike most transit projects, Westside light rail was deliberately routed through vacant land with the expectation that it would be a catalyst for “Transit-Oriented Development” (TOD). Planners stated, “The success or failure will be determined in large part by what happens around its 20 stations.”

Fifteen years later, the record is disappointing. There have been thousands of housing units built near light rail, but very little retail or office space. In at least two cases, ground-floor retail near light rail was such a flop that it was later ripped out and converted to residential. Most projects have been under-built for parking, causing problems for both residents and neighbors.

Most importantly, light rail did not magically change travel behavior in Washington County. Extensive field monitoring by Cascade shows that for a quarter-mile or half-mile radius around MAX stations, more than 85% of all trips to and from the area during the morning peak period take place in a motor vehicle. Light rail use rarely exceeds 8% of all trips, and the ratio drops even more on weekends.

The “Field of Dreams” strategy was fun for a movie, but it hasn’t worked for transit planning. TriMet should learn from this experience and pull the plug on any more light rail projects.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Vincent Vernuccio Talks on Worker Freedom

Mackinac Center for Public Policy’s labor expert Vincent Vernuccio came to Portland in September to discuss how Michigan secured the freedom for employees to choose whether or not they want to pay for union representation. Here is his talk before the Executive Club on September 4th:

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Press Release: Angry Protesters Reject Proposals for Employees’ Freedom to Choose

For Immediate Release

Media Contact

Patrick Schmitt, patrick@cascadepolicy.org

503-242-0900

Angry protesters reject proposals for
employees’ freedom to choose

Attendees and Speaker Harassed at Northwest Employee Freedom Event

VANCOUVER, Wa. – Several dozen union protesters marched outside Clark College’s Columbia Tech Center in Vancouver on Thursday evening. The hostile group tried to block attendees from entering the event venue scheduled to hold the first Northwest Employee Freedom One Night Event, jointly sponsored by Cascade Policy Institute of Portland, Oregon and The Freedom Foundation of Olympia, Washington.

After yelling, harassing, and shoving event attendees and organizers, protesters entered the venue and began shouting and using bullhorns to disrupt the event. The keynote speaker, Mackinac Center for Public Policy’s labor expert Vincent Vernuccio, was also spat on by a protester. The Vancouver Police Department was called and escorted protesters out of the event center. The two who refused to leave were arrested for trespassing.

This peaceful gathering of Washingtonians and Oregonians was meant to educate them on the story of how Michigan secured the freedom for all of its public and private sector employees to choose whether or not they want to be represented by a union without financial consequences.

“This kind of behavior is most saddening because it shows a real lack of understanding of what Cascade Policy Institute wants for Oregon,” said Cascade founder Steve Buckstein.

“We do not seek to end unions or union representation. We simply want all Oregonians to have the right to choose whether or not union membership and representation is something they desire for themselves,” he said. “All Oregonians deserve that right, even those who reject our efforts.”

“At the end of the day, this is a fight for freedom and justice. No amount of harassment or intimidation will change that fact,” he ended.

Photos from the event, including images of protesters and arrests, can be found here: http://on.fb.me/1aUbH2C

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Oregon’s Opaque K-12 Finances

By William Newell

Before people make financial decisions, most seek out information in order to make better choices. But according to a recent report by the Cato Institute, when Oregon voters are tasked with making financial decisions about K-12 education, they are hard-pressed to find the information they need, let alone interpret what is available.

The report, entitled Cracking the Books, measures financial transparency in K-12 education throughout the nation. In the study, Oregon performed dismally, earning an “F-” and ranking 44th. New Mexico and South Dakota took the top two spots, receiving the only “A’s” for their transparency efforts. Only seven states scored higher than a “C+”. Our West Coast neighbors Washington and California performed well and were rewarded with a “B” and “B-,” respectively.

Of the four categories used to analyze the state’s education financial information, Oregon scored best in public accessibility, with a score of 10.5 out of 15. Alternatively, Oregon failed to earn even half the points available in the transparency categories for per-pupil expenditures, total expenditure data, and average salary data.

Quality, accessible information for voters is essential to making good policy. If Oregon really wants to stand up for transparency and accountability in government, then the state should learn from our neighbors and start with more transparency in its biggest budget item, K-12 education.

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

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Statement on Employee Freedom for All Oregonians This Labor Day

While the first Labor Day was celebrated as a “workingman’s holiday” 131 years ago, today Americans in all sectors of the economy celebrate the day.

And when we are remembering the effort that has gone into improving the working conditions of Americans, let us also remember that freedom of association is important to all Americans. Unfortunately, workers in over half of the states, including Oregon, do not always possess that freedom in their workplaces.

In 24 states, all workers have the right to work for an employer whether or not they choose to join a union or pay dues for collective bargaining and related union services. Workers in Oregon and 25 other states do not yet have this freedom. But this doesn’t have to be the case.

The Public Employee Choice Act (currently known as IP9) is awaiting court approval to begin gathering signatures that will place it on the November 2014 general election ballot. Oregon voters then will have the opportunity to let public employees choose whether or not they want to be in a union or to pay union dues.

This freedom to keep your own money when you need it for your family or to keep it away from political causes you don’t support is within the reach of Oregon public employees.

Let’s take this holiday to remember that all workers deserve this opportunity to make their own decisions about whom they associate with, and where their hard-earned money goes.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. He will be presenting more on why Oregonians deserve employee freedom at Cascade’s Northwest Employee Freedom One Night Event at Clark College in Vancouver, Washington on September 5th.

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This Labor Day, Celebrate the Rights of All Workers

By Paul R. Farago and Angela Eckhardt

This is a slightly updated version of a Commentary the authors originally published in August 2000.

In 1887 Oregon was the first to make Labor Day an official state holiday. Labor Day was intended to be a celebration of American workers’ achievements and a rallying call for workers’ rights. Today, as we reaffirm our support of workers’ rights, we should rethink what exactly that means.

Unionism was initially designed to be a means for the individual worker to use toward the creation of a better work environment. But now the union leaders and the individual worker have switched places in priority. The political power of labor unions has increased, but not to the benefit of individual workers.

One Oregonian, Harry Beck, knows this firsthand. In the mid-1960s Beck began to question his union, the Communication Workers of America (CWA). What started as a struggle for more local union autonomy developed into a fight over misuse of forced union dues. Beck ultimately prevailed in the 1988 landmark U.S. Supreme Court decision, CWA v. Beck.

Beck describes himself in his youth as “an avid union man.” Returning from duty in the Air Force to his career in telecommunications, Beck “traded [his] M-1 carbine for a picket sign and parades for picket lines.”

Soon, however, Beck confronted the dark underbelly of union politics. With CWA control centered in several major cities, suburban workers like Beck, who lived outside Washington, D.C. at the time, lacked a voice. He and his colleagues tried to get someone elected to their union’s Executive Committee, but as he reports, “the election process was rigged.” Next, they tried to form their own Local, and were denied. Finally, Beck withdrew his union membership.

Although he was no longer a union member and had no voting power, Beck was still required to pay the equivalent of dues in the form of an Agency Fee. He began to notice where his “stolen money” was going―particularly in terms of political spending. “The union’s publications were demanding their union people vote for Hubert Humphrey,” Beck explains. “That was the straw that broke my back.”

In 1976, 20 employees who chose not to be union members challenged CWA’s use of their agency fees for purposes other than collective bargaining, contract administration, or grievance adjustment. The National Right to Work Foundation represented the workers.

The District Court ultimately ruled, and the U.S. Supreme Court concurred, that only 21% of CWA’s spending was on collective bargaining matters. Fully 79% was misspent on union politics. The courts further ruled that workers cannot be forced to support political speech through union dues.

Not surprisingly, the Beck decision has been ignored by labor unions. Today, most workers do not know of their “Beck Rights,” or have difficulty exercising them. Unions continue to rake in billions of dollars in coerced payments each year, and dedicate vast sums to political candidates and causes without first receiving individual workers’ authorization.

We should be grateful for people like Harry Beck who struggled for the rights of individual union workers. There are now 24 “Right to Work” states that have gone a step beyond Beck Rights. In these states workers who choose not to be union members are also freed from the obligation of paying for collective bargaining representation they don’t want. Oregon is not yet such a state, but Oregon voters may have the chance to vote on the Public Employee Choice Act (Initiative Petition 9) in November 2014. The initiative would allow anyone to become or remain a public employee without being required to join a labor union or pay dues or “fair share” fees.

This Labor Day, let’s celebrate all who have made this country a free and prosperous nation, be they wage earners or entrepreneurs. Let’s respect one another enough to give more Americans the opportunity to make our own decisions about representation and political spending. In the spirit of Harry Beck, let’s uphold the rights of the individual worker.

Paul R. Farago is a former board member and Angela Eckhardt is a former program director at Cascade Policy Institute, a Portland-based think tank.

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Welfare Pays More Than Entry-Level Work in Most States

Welfare currently pays more than a minimum-wage job in 35 states, according to a new study by the Cato Institute. In 13 states, including Oregon, being on welfare can pay more than $15 per hour. That’s over $31,000 tax-free dollars a year. This decreases welfare recipients’ incentive to accept entry-level work and increases their chances of long-term dependence.

Studies show a crucial key to escaping poverty is work, beginning with a low-wage, entry-level job if necessary. But in many states, welfare pays more than being a starting secretary or even a first-year teacher (and in three states, an entry-level computer programmer). With incentives like this, it’s hard for people with few skills to give up the security of a welfare check for any kind of paid work. Welfare benefits are tax-free, so they can exceed the take-home pay a typical recipient could expect to earn entering the workforce. This traps welfare recipients at the bottom of the economic ladder.

Many welfare recipients do want to work and are trying to find employment. But many others make the rational choice to stay on welfare if that pays more than the work for which they are qualified. If Congress and state legislators want to reduce dependence and reward work, they should strengthen welfare work requirements and resist allowing the cumulative benefits of welfare to continue outpacing the benefits of earning income.

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

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Surprise! Mandatory Paid Sick Leave Has Real Costs

By Erin Shannon

In March, Portland’s City Council unanimously voted to enact mandatory paid sick leave for Portland businesses. While the law sounds well intentioned, it is poised to hurt the very employees it’s meant to help and may damage the businesses that employ them. A recent survey by the Employment Policies Institute (EPI) reveals that Seattle’s 2012 paid sick leave ordinance is increasing the cost of doing business there. Our law could have similar results in Oregon when it takes effect in January.

The Seattle survey targeted service industry employers, such as restaurant and retail businesses that would be newly providing paid sick leave to employees as a direct result of the new law. More than 56% of these employers said the new mandate would increase their cost of doing business, with over one quarter of those saying the increase would be “big.”

Proponents of paid sick leave argue employers will offset those increased costs through reduced employee turnover. But the EPI survey shows two-thirds of Seattle employers who have started providing paid sick leave do not believe the law will reduce turnover, and one third of Seattle employers think the law will increase unscheduled absences among employees taking advantage of the benefit even though they are not sick.

These employers are likely not off the mark. A survey by the Urban Institute in San Francisco found few employers reported reduced employee turnover as a result of that city’s paid sick leave law. As one business owner noted in that survey, if every employer is required to provide the benefit of paid sick leave, turnover becomes a moot point because that benefit is no longer an incentive for an employee to remain with one employer over another.

Regardless, many employers are not relying on offsetting increased business costs with reduced employee turnover, because they are offsetting those costs in other ways. In Seattle, employers reported that in response to the new paid sick leave mandate they had taken one of the following cost-cutting measures:

  • 15.7% of employers raised prices in response to the paid sick leave law.
  • 18.3% of employers reduced hours and staff.
  • 17.3% increased the cost to employees of current benefits, or eliminated benefits they used to offer.

These survey results are not unusual. Surveys in San Francisco and Connecticut, which both mandate paid sick leave, revealed similar results.  A survey of San Francisco employees by the Institute for Women’s Policy Research found nearly 30% of the lowest-wage employees were laid off or given reduced hours after passage of that city’s paid sick leave mandate. The Urban Institute survey similarly found some San Francisco employers had cut back employee bonuses, vacation time, and part-time help to absorb the new costs. In Connecticut, employers reported that state’s paid sick leave law forced them to raise prices, reduce hours and wages, and sometimes eliminate jobs.

There is no arguing that mandatory paid sick leave increases the cost of doing business. It is a fact. Employers are forced to pay the wages of the worker who has called in sick, while paying another worker to fill in for the sick worker. Alternatively, the employer can opt to let the sick employee’s work go unfinished and sacrifice service, productivity and sales (while still paying the sick worker). Either way, it is a cost to the employer.

Some employers, especially the larger ones, can absorb the increased cost. Others, like restaurants, already allowed employees to trade shifts with sick workers without the law, thereby costing no one. But many employers, especially those running small businesses, operate on a shoestring profit margin. When the costs to run their business go up, they simply cannot afford to absorb them. They have no other choice than to pass those costs on to consumers, or to the very workers paid sick leave is designed to protect.

Erin Shannon is Director of the Center for Small Business at Washington Policy Center in Olympia, Washington. She is a guest contributor at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Hotel Proposal Is Pouring Good Money After Bad

Last week the Metro Council unanimously approved two resolutions in favor of subsidizing a Headquarters Hotel near the Oregon Convention Center in Portland. The original idea behind the Convention Center was that with the right package of amenities, people would come to Portland and spend money eating and shopping when not attending meetings. When the Convention Center didn’t generate the hoped-for revenue, it was expanded. When occupancy rates still dropped, Portland officials started planning a hotel.

Other cities have tried this strategy, and it hasn’t worked. Subsidized convention hotels elsewhere have had disappointing results. Not only have they not increased convention business significantly, but they haven’t made their occupancy projections, either. Now those cities are saddled with money-losing convention centers and money-losing hotels.

In 2007, the Portland Development Commission (PDC) rejected the only hotel proposal that didn’t require government subsidies. The Grand Ronde Indian Tribe offered to build a hotel with private money if they could include a casino. After the PDC turned them down, a tribal spokesman said, “We refuse to raid taxpayer dollars for any project.”

The core functions of government are to protect our lives, liberty, and property, not to provide our entertainment and build convention venues. Instead of throwing more taxpayer money at the Convention Center, Portland officials should consider the advice of management guru Peter Drucker, who warned: “There is nothing so useless as doing efficiently that which should not be done at all.”

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Mayor Hales’s Environmental Vision Lacks Grounding in Reality

Recently, Mayor Charlie Hales gave a speech welcoming out-of-town dignitaries visiting Portland as part of “World Environment Day.” Speaking before an obviously friendly audience, Mayor Hales made a number of claims that show a lack of critical thinking about environmental issues. Four in particular deserve comment.

First, the Mayor said that the city “must urge” the Oregon State Treasurer to divest of all state holdings in fossil fuel. This might be a harmless gesture if the Mayor did that with his own personal portfolio, but forcing public investment managers to sell off holdings for strictly political reasons would be a violation of their fiduciary trust to those whose funds they manage. Arbitrarily selling assets would increase transaction fees and could reduce total returns to beneficiaries by disposing of securities at discounted prices (relative to true market values).

Moreover, divesting fossil fuel assets would have no effect on any measurable environmental problem.

The Mayor also invoked the tired “Peak Oil” argument that companies managing fossil fuel assets must inevitably fail because oil, gas, and coal are finite resources. But that prediction has been wrong for over 100 years and will continue to be wrong for the foreseeable future. Indeed, at least one international energy statistical agency has predicted that the United States likely will be energy-independent by 2020 due to technological innovations in oil and gas exploration that are causing large increases in production.

Mayor Hales further warned that we must act before the “carbon bubble bursts.” While it is true that we currently have a carbon bubble, it’s not the one he is thinking of. It is a government-created buying binge in carbon offsets, renewable energy credits, and green tags. These products, which exist primarily to satisfy regulatory mandates, have no underlying assets backing them and represent one of the largest Ponzi schemes in history. When the fraud is finally exposed, holders of these worthless securities will be forced to write off billions of dollars in losses.

If the Mayor is really concerned about avoiding the subprime carbon market, he should publicly instruct his staff to quit buying renewable energy credits.

Second, Mayor Hales pledged to begin implementation of the resolution passed last year requiring 100% of city electricity from politically correct “renewable sources.” Unfortunately, the Mayor is more than a decade late to this party, and the beer is stale. Back in 2001, the City Council pledged the very same thing, to be implemented by 2010. When that deadline passed, the city had managed to reach only about seven percent of the goal.

Not only is this goal unachievable for the city, it’s not even desirable. Since large-scale hydroelectric projects and nuclear power plants are typically excluded by green power advocates as “renewable” energy sources, the only way to achieve 100% renewable energy purchasing in the short term would be through massive expenditures for utility-scale wind energy. But since wind is guaranteed to fail randomly, it must be backed up at all times by base-load sources such as hydro, natural gas, and coal. If hydro steps in when wind fails, there is no net environmental gain. It’s one renewable substituting for another. If coal and gas are used, there is a net environmental loss, since these sources must be kept running even when not needed.

The Mayor’s vision is akin to forcing a rental car company to buy a large percentage of cars that randomly stop working, and then maintaining a back-up fleet that is kept idling 24 hours a day to rescue the stranded cars on a moment’s notice. Nobody would propose such a policy for an auto fleet; and environmentally conscious politicians should not advocate it for the electricity grid, either. Wind power is an expensive nuisance to the grid and should be discouraged, not mandated.

Third, the Mayor pledged that within 10 years, the bike “will be the preferred mode of transportation for all trips under three miles in Portland.” While politicians love to make outrageous predictions―since no one can disprove them―there is nothing in the recent past that suggests bicycling will come anywhere close to meeting this forecast. Bicycling has achieved a healthy market share for commuter trips into the central city, but over a 24-hour period for the entire city, cycling is minimal. Even in the South Waterfront district, a massively subsidized high-density neighborhood with a vibrant cycling population, 79% of all daily passenger-trips to and from the district are made in motorized vehicles.

Finally, Mayor Hales pledged that over the next 20 years, the Council will identify new revenues that will allow the city to turn every street in Portland into a “Complete Street” with pervious surfaces, street trees, and sidewalks. Given that the condition of Portland streets has been declining for years and been the subject of several scathing reports by the Portland City Auditor, I’d suggest a much more humble goal for the Mayor. He should stop the pork-barreling of massive amounts of tax dollars on streetcars, light rail, and “traffic calming” projects (the primary cause of our current road system embarrassment) and begin allocating most transportation dollars to fixing and maintaining what we have.

One of the great success stories of the last century has been the steady improvement in environmental quality due to market-driven technological change. The best way Portland politicians can help continue this trend is to focus on the fundamentals of making the city a great place for entrepreneurs.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Testimony in Opposition to the Oregon Convention Center Headquarters Hotel deal

On August 15, 2013 the Metro Council unanimously approved two resolutions that move the discussion forward toward subsidizing a Headquarters Hotel near the Oregon Convention Center in Portland.

Metro’s news article about the meeting (which quotes from Steve Buckstein’s testimony below) is here. Read his testimony below:

For the record my name is Steve Buckstein. I’m Senior Policy Analyst and founder of Cascade Policy Institute, a free-market think tank here in Portland.

Originally, the idea behind the Oregon Convention Center was that if we put together the right package of amenities, then everyone would come to Portland and spend lots of money eating and shopping when they weren’t attending meetings.

That same idea occurred to people in other cities, and it sparked an ambitious municipal competition that began back in the 1980s and is still going strong.

First, we built a new convention center to attract the convention business. When the original center didn’t generate the revenue we’d hoped for, we decided to expand it. When occupancy rates dropped after the expansion, we turned our attention to the need for a headquarters hotel. That was the magic ingredient we were missing.

Of course, no one wanted to listen to the critics like Professor Heywood Sanders who came here in 2005 to tell us that other cities had already tried what we wanted to try in 2007, and it didn’t work. Big convention center hotels were built in other cities with disappointing results. Not only didn’t they significantly increase convention business, but they didn’t make their occupancy projections either, and now those cities are saddled with money-losing convention centers and money-losing hotels. The fact that the private sector wouldn’t put up much of its own money for such facilities somehow didn’t matter in other cities.

The question you have to answer now is: Does it matter to us?

We like to tell ourselves that Portland is different, but are you willing to risk your taxpayers’ money on that difference, knowing that the competition for convention business is only getting more intense?

As you may remember, in 2007 The Portland Development Commission (PDC) rejected the only Convention Center hotel proposal that didn’t require government subsidies.

The Grand Ronde Indian Tribe said it could do the project with all private money if it were allowed to include a gambling casino. After they were turned down, a tribe spokesman said, “We refuse to raid taxpayer dollars for any project.” He could have added, “especially for hotels which are not core functions of government.”

Rather than deciding today if you want to double down by subsidizing a headquarters hotel, I suggest you do the politically incorrect thing and consider whether you really want to be in the convention center business at all. If the answer to that question is No, which I believe it should be, then consider selling the Convention Center and cut your losses.

[Metro Council] President Hughes, you have correctly pointed out that if you look for a project that’s been scrubbed of all the risk, you will never do anything.

But I hope you will also consider the advice of management guru Peter Drucker who warned:

“There is nothing so useless as doing efficiently that which should not be done at all.”

The core functions of government are to protect our lives, liberty, and property. Providing our entertainment and convention venues should not be done by government at all.

Ironically, in October the Convention Center will host another Scam Jam event where the state attorney general and others will help Oregonians avoid being ripped off by financial con artists. I wouldn’t be surprised if some day in the future publicly funded convention centers and headquarters hotels are listed along with stock swindles as financial transactions to be avoided at all costs by the public.

Further information

The Unseen Costs of Ribbon Cutting: Losses from Economic Development Programs, William B. Conerly, Ph.D., Cascade Policy Institute, June 1998.

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When a Progressive Magazine Pays Less Than Walmart

The age-old misunderstanding over minimum wage laws may finally be resolving.

The Nation magazine is asking Walmart, to pay its workers at least $12 per hour. Never mind that according to Walmart its average worker already earns more than that.

In any case, Walmart turned the tables on the progressive political publication by exposing the fact that it pays its own interns much less than it demands of greedy capitalists. In an email labeled “people who live in glass houses…,” a Walmart executive points out that The Nation has paid its full-time interns below the federal minimum wage for the last 30 years.

Not taking this revelation lying down, The Nation shot back that starting this fall it was upgrading its intern pay to the federal minimum of $7.25 per hour. Of course, that’s still less than what the magazine itself cites as the average Walmart worker’s wage, but who’s counting?

The economic lesson here is hard to miss when the magazine’s intern program director says, “We are not yet certain how [our new higher wage policy] will work out long term, but for the fall we are anticipating hiring ten interns rather than twelve.”

As Reason magazine — on the other end of the ideological spectrum — noted, “One could forgive Walmart for being tempted to reply with something along the lines of: ‘No s**t.’”

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Northwest Employee Freedom One Night Event

On Thursday, September 5 Cascade Policy Institute will be partnering with the Freedom Foundation to host the Northwest Employee Freedom One Night Event. National labor policy expert Vincent Vernuccio of the Mackinac Center for Public Policy will share the story of how Michigan passed historic labor reform last year, becoming the 24th right-to-work state. Join us with other labor experts to learn more about the local efforts to increase employee freedom in Washington and Oregon.

In Oregon, signatures may soon be solicited to place Initiative Petition 9 (the Public Employee Choice Act) on the November 2014 General Election Ballot. It would allow anyone to become or remain a public employee without being required to join a labor union or pay dues or “fair share” fees.

F. Vincent Vernuccio

Vernuccio is director of labor policy at the Mackinac Center for Public Policy. He is a graduate
of the Ave Maria School of Law in Ann Arbor, Mich. Under President George W. Bush he served as special assistant to the assistant secretary for administration and management in the Department of Labor. Vernuccio has published articles and op-eds in such newspapers and magazines as Investor’s Business Daily, The New York Times, The Washington Times, National Review, Forbes and The American Spectator. He has been cited in several books, and he is a frequent contributor on national television and radio shows, such as “Your World” with Neil Cavuto and Varney and Company. Vernuccio is a sought-after voice on labor panels nationally and in Washington, D.C. A regular guest on Fox News channels, Vernuccio has been described by Stuart Varney as a “top union watchdog.” He has advised senators and congressmen on a multitude of labor-related issues. He testified before the United States House of Representatives Subcommittee on Federal Workforce, Postal Service and Labor Policy. Vernuccio lives in Ann Arbor, Mich.
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New York Times Calls Catholic Schools “A Lifeline for Minorities”

The New York Times recently published a feature story about the closure of inner-city Catholic schools, as the Archdiocese of New York consolidates the school system to shore up its finances (“A Lifeline for Minorities, Catholic Schools Retrench,” June 20). Among the 26 urban schools to close this year is Blessed Sacrament in the Bronx, once attended by Supreme Court Justice Sonia Sotomayor.

“The worst thing is, these kids could lose their faith in the adults around them,” [Justice Sotomayor] said in an interview inside her old fifth-grade classroom. “Children need to feel secure. This makes it worse. These kids are going to carry this trauma with them for the rest of their lives.”

Justice Sotomayor’s emotions are shared by a generation of accomplished Latino and black professionals and public servants who went from humble roots to successful careers thanks to Catholic schools. But they fear that a springboard that has helped numerous poor and working-class minority students achieve rewarding lives is eroding as Catholic schools close their doors in the face of extraordinary financial challenges and demographic shifts….

“The Catholic schools have been a pipeline to opportunity for generations,” said Justice Sotomayor….“It gave people like me the chance to be successful. It provided me…with an incredible environment of security. Not every school provides that.”

It is no secret that a substantial hurdle faced by independent private schools across the country is raising the money to operate without charging tuition that could not possibly be paid by the families they serve. Generous voluntary, private support plays a large role in sustaining faith-based private schools. In many cities a majority of students in some schools do not even belong to the institutions’ faith; they and their parents simply crave the good education they offer. But as the situation in urban New York illustrates, modest tuition plus charitable giving are not enough to keep schools open in neighborhoods that need them most.

New York spends $19,000 in taxpayer money per student in the public school system. If children are failed by public schools that do not successfully educate them (as happens to many kids), parents have no “money back guarantee.” If parents want to choose a private school to make up for the deficiencies of the public system, they must pay out of their own pockets. If parents could control only a few thousand dollars of what the public system already spends on their child, they could afford tuition at most private schools.

Today, the school choice movement recognizes the outstanding job faith-based and other independent private schools do to provide a quality education to children who are routinely failed by public schools, especially in low-income communities. “School choice” legislation empowers parents like those in the Times article to choose whatever school serves their children best through options like education tax credits, educational savings accounts, and public scholarships (vouchers).

These options allow parents to control a small portion of the education dollars that would be spent on their child in public schools. If the goal of public education is to educate the public, it shouldn’t matter where the learning takes place. What matters is that every child learns.

As of 2012, 32 publicly funded school choice programs exist in 16 states and the District of Columbia, serving close to 250,000 children. Oregon does not have such a program yet, but the state has made incremental gains in increasing parental choice within the public system. Oregon has about 115 charter schools (including online options that are especially helpful to rural and special-needs students) and an inter-district transfer law that allows students to enroll in public schools outside their district of residence.

Educating children who are most in need has been a priority of Catholic and other private schools since a New York widow named Elizabeth Ann Seton opened the first free school for girls in the U.S. in Baltimore in 1808. More than six million children attend 34,000 private schools today. If The New York Times can praise Catholic schools for educating “a generation of accomplished Latino and black professionals”―and mourn the closing of those schools―hopefully it will soon take the next logical step. The Times should connect the dots between the dreams of millions of low-income parents like the Sotomayors and practical, constitutional legislation that helps parents choose “the springboard” to success that may be just down the street.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute, Oregon’s free market public policy research organization. CSF-Portland provides privately funded scholarships to low-income Oregon children to attend the private, parochial, and home schools of their parents’ choice.

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Can We Correct Oregon’s High Corrections Costs?

By Brandon Maxwell

Behind Oregon’s cultural mystique lies a troubling truth: Compared with similar-sized states, we have one of the fastest growing prison populations in the nation and spend 7.5 percent more per inmate than the national average. Of the fourteen states with populations between two and five million people, ten of them spend less per inmate than Oregon. Where is the money going?

According to the Legislative Fiscal Office, entry-level correctional officers in Oregon take home 24 percent more annually than surrounding states. Likewise, Oregon is the only state that doesn’t require union correctional workers to contribute to their own health plan premiums. As a result, taxpayers carry the burden.

Union wages and benefits aren’t the only things rising―so is the average age of inmates. $21,000 in outside health care costs can be attributed annually to the average inmate over 46. Oregon taxpayers are not only footing the health care bills for aging union members, but for aging prisoners.

Making Oregon a right-to-work state would open the door to performance-based pay through competition, and medical parole reform would curtail Oregon’s aging inmate population. Both could save taxpayers money while arguably improving efficiency in the correctional system.

Oregon taxpayers have a right to be concerned about high prison costs. But until we confront and remedy the causes behind the costs, Oregon’s financial burden will only continue to rise.

 Brandon Loran Maxwell is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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More Money, Same Problems for Oregon Schools

By William Newell

Oregon’s 2013 legislative session ended with the passage of the largest education budget the state of Oregon has ever seen. At nearly $6.75 billion, the budget has been hailed both as a renewed effort to prioritize education and as a weak attempt to reinvest in a lagging school system. The purported decade of underinvestment looks confirmed by the fact that Oregon’s school system was given a “C” by Education Week and a “D-” by Students First, two respected education research institutions. But is it true Oregon’s government has spent too little and thus neglected its duty to provide a quality education system? The answer might surprise you.

Instead of investing too little, Oregon schools have failed to invest their scarce resources in the right places, namely students and teachers. A major part of the problem lies in the hiring of an ever-increasing number of administrators and non-teaching support staff who are soaking up highly valuable but limited funding. A report released by the Friedman Foundation for Educational Choice shows that Oregon had a 47.3 percent increase in the number of administrators and non-teaching support staff from 1992 to 2009. This astounding growth more than triples that of students and teachers, which only grew by 15.4 percent and 12.7 percent respectively. Oregon schools now employ more administrators and non-teaching support staff than they do teachers.

At the same time, student achievement has stagnated with small increases and even decreases in national reading and mathematics scores. Looking at statistics from the National Assessment of Educational Progress, Oregon fourth-grade students have improved their scores in mathematics by 14 points but have fallen below the national average score at the same time. Eighth graders, once well above the national average in math, have regressed back down to the national average. In reading, fourth graders are below the national average and have only seen a two-point score increase. For eighth graders, their reading scores have fallen by two points and have also regressed to the national average. All in all, Oregon students have not reaped the benefits of additional administrators and support staff.

If the growth of administrators and support staff had risen in line with that of students, Oregon could have saved $302,612,947 per year according to the same Friedman Foundation report. These savings could have meant reducing taxes or employing new teachers and keeping young teachers from being fired due to district cuts. A little math shows that if Oregon spent that $300 million on employing teachers compensated at $80,000 (salary plus benefits), the state could have employed almost 3,782 more teachers than it does now.* Instead, Oregon maintains the third largest class sizes in the entire U.S., according to the National Education Association, with a 20.2 student-to-teacher ratio. Instead of creating a larger, more inefficient education bureaucracy with its new money, Oregon schools should refocus on those who matter most: students and their teachers.

*Teacher compensation was calculated by taking the average Oregon K-12 teacher salary of $57,000 plus 40% for benefits.

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

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“Friedman Legacy Day” Inspires Advocates for Freedom

Everybody can recall that one teacher who made a life-changing impression on them. For some it happened in grade school; for others, college. One individual, however, managed to influence individuals not only in the halls of academe, but in magazines, newspapers, television channels, the U.S. Congress, and even the White House. And still, after his passing, he is changing the world. On July 31, people across the world are celebrating “Friedman Legacy Day” on what would have been Milton Friedman’s 101st birthday. 144 local events have been planned, including 90 in the U.S. and 54 in 25 countries.

Milton Friedman is considered by many to be the most influential economist of the 20th century. His contributions have had a lasting impact on monetary policies, taxing models, government spending, and education reforms. Yet, even with the proven effectiveness of Dr. Friedman’s ideas, public policies have moved away from them in favor of a more centralized decision-making system. The case for individual freedom must be made again―and as strongly as Dr. Friedman did.

“Many people want the government to protect the consumer,” Friedman said. “A much more urgent problem is to protect the consumer from the government….The great tragedy of the drive to centralization, as of the drive to extend the scope of government in general, is that it is mostly led by men of good will who will be the first to rue its consequences.”

Nowhere is this more on display than in the current controversies concerning the IRS and NSA. Or take last year’s historic cheating scandal in Atlanta Public Schools. Government is becoming so big it is forgetting its boundaries and failing to do what it’s meant for: serving and protecting the individual.

That is precisely why Dr. Friedman, along with his wife, Rose, devoted his legacy to education reform, specifically to school choice. The Nobel laureate saw the grave ills a centralized, government-run system was having on our nation’s children, particularly on minority families, and determined that freedom of choice in education was the best alternative. And indeed it is.

States’ experiences, empirical research, and parental satisfaction are proving that a market-based approach to education is far better than a monopolistic structure. By focusing our efforts on education, just as Dr. Friedman did, we can reignite the drive toward individual freedom that has served our country so well.

Milton Friedman said that maintaining a free society “requires a willingness to put up with temporary evils on the basis of the subtle and sophisticated understanding that if you step in to do something about them you not only may make them worse, you will spread your tentacles and get bad results elsewhere.”

That is happening far too often today, as evidenced by our high unemployment rate, surging gas prices, ballooning health care costs, high food-stamp reliance, and unacceptable educational outcomes. And still, the reaction to such ills typically focuses on government doing more.

We remember Milton Friedman for his principled stance against government overreach. And we will continue to keep his voice alive. “Milton 101” is a lesson more Americans need to learn. Its teachings are simple, but its effects are profound. Those who learn them will be today’s Milton Friedmans—advocates for freedom, teachers of liberty.

Cascade Policy Institute is participating in the 2013 “Friedman Legacy Day,” a worldwide day of remembrance for Milton Friedman on what would have been his 101st birthday.

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Choosing a Quick Flight to Safety

By Kevin Sharp

Last week, a private helicopter airlifted an injured Texas woman from Mount St. Helens. In her words, the $1,300 bill was a “no-brainer” compared to the seven hours it would have taken for normal search and rescue crews to transport her down the mountain.

While some criticized her decision, it’s clear she valued her safety more than she valued money in her pocket, which is a perfectly reasonable choice. Instead of relying on government assistance, she took the situation into her own hands.

While it is important to have a public safety net to help people in potentially dangerous situations, there is no reason why people should be denied the ability to hire private assistance when they feel the need; and they certainly shouldn’t be criticized for doing so. She paid more, and she received better and more immediate service as a result. Instead of accepting the one-size-fits-all solution provided by the government, she chose the option that worked best for her.

We need to work on adopting that mentality on a broader scale in relation to government services. If we don’t like the schools, we should be free to pick better ones without penalty. If we are unhappy with the public transportation options, we should be able to hire a better contractor. Freedom of choice is an extremely important liberty; we should be able to exercise it more. 

Kevin Sharp is a research associate at Cascade Policy Institute, Oregon’s free-market think tank.

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Can Government Be Run Like a Business?

We’ve all heard the adage that government should run like a business. The problem is that it really can’t. Briefly, here are some of the reasons why:

  1. By its very nature, government is often a monopoly provider of whatever services it performs. Business, on the other hand, is subject to intense competition in a free marketplace.
  2. Government can afford to deliver sub-par service because it prohibits others from entering its market. This doesn’t mean that government employees want to deliver poor service, just that there is often no penalty when they do so.
  3. Government leaders have less incentive to eliminate waste in their operations because they have a captive revenue stream. Business leaders know that customers can pick up and leave, reducing the firm’s income at any time.
  4. Government’s “customers” have to pay for what the majority wants, while in a marketplace individual customers decide what they will pay for, no matter what others want.

None of these reasons imply that business owners are somehow nobler than government leaders. They simply must be more responsive to individual customers, and they must innovate and control costs in order to survive. Government leaders need only satisfy the majority of their “customers” because the minority, in effect, can’t easily take their business elsewhere.

Even faced with such obstacles, to their credit many government officials still try to operate in a more businesslike manner. A lecture hall full of such public servants spent a Saturday back in 1992 at Portland State University listening to an author of the book Reinventing Government try to help them out. Among other assumptions, the book postulated that government could become more efficient if it simply acted more entrepreneurial and less bureaucratic. This sounded good, until one realized that the authors may be confused about at least one key concept.

Co-author Ted Gaebler first asked his public employee audience to think more like profit-seeking capitalists so as to meet the needs of their constituents. However, later he explained that government might be able to do things more cheaply than the private sector because it doesn’t have to earn a profit.

So which is it? Is profit an indicator that you’re satisfying constituent demand, or is it a burden that raises prices on consumers?

Economists will tell you that in a competitive environment, profit is a signal that you’re meeting your customers’ needs. Profit actually can decrease prices, in part because profitable businesses can invest some of their profit into more efficient means of production.

The profit motive is often a key driving force for entrepreneurs who jump into a business because they see an unmet consumer need. They know that unless they can provide better, cheaper goods and services than their competitors, they won’t attract enough customers to cover costs, let alone earn a profit.

One clear example of the profit motive benefitting consumers is what happened when Wal-Mart launched an aggressive program in 2007 offering 30-day supplies of common generic drugs for just $4. Soon, Fred Meyer, Safeway, Walgreens, and others retailers decided to match that low price rather than risk losing customers to a competitor. Each of these big chains is a for-profit company. Yet, each realized that to make profits in health care, they needed to offer something that would attract and retain customers.

Taking the profit out of that health care segment wouldn’t have done anything to significantly reduce prices and save customers billions of dollars over the last five or six years. Who believes that government-centralized drug purchasing, or price controls, would have dropped monthly prescription prices down to just $4 each?

The “profit motive is bad” fallacy is just that―a fallacy.

While government can’t employ the profit motive directly, it can do so indirectly by contracting out some functions to profit-seeking enterprises. When done correctly, contracting out can allow profit to become a signal of citizen satisfaction in public services and can reduce the cost of those services.

Of course, contracting out public services doesn’t guarantee good service and taxpayer savings. Private firms can make mistakes just as governments do. They sometimes fail to meet customer needs, and sometimes they break the law and cheat their customers. But unlike government, most poorly run firms either go out of business as customers flee or change their ways to retain them. To flee a poorly run government, most of the time we have to pick up our family and move to another city, county, or state.

Finally, even if we agree that business should try to maximize revenue and profits, that should not be government’s primary goal. Rather than maximize revenue, government should maximize individual and economic liberty. In today’s modern world, it can only do that by reducing its size and scope.

For example, our Founding Fathers envisioned a government that would protect our lives, liberty, and property. It was not designed to provide our alcohol (OLCC), jobs (picking winners and losers in the marketplace), and entertainment (Oregon Lottery). Getting Oregon’s state, county, and local governments out of these services does not follow a business model; it follows a liberty model.

We can ask no more of our government leaders than that they protect our rights and otherwise leave us alone to pursue our own interests. That is the American way.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Tip of the Education Iceberg

By William Newell

When you think of a school, you probably imagine classrooms filled with students and teachers, not employee offices. The reality is that highly compensated administrators and non-teaching support staff outnumber Oregon’s K-12 teachers.

The growth of administrative and non-teaching support staff has more than tripled that of students and teachers since 1992. In the last 21 years, the student population has grown by only 15.4 percent and teachers by only 12.7 percent. At the same time, the ranks of administrators and non-teaching support staff have grown by a staggering 47.3 percent.

The growth in staff hasn’t improved student achievement. Oregon fourth and eighth grade National Assessment of Educational Progress test scores in math and reading have regressed to or fallen below the national average. In 2013, Oregon received a “C” from Education Week and a “D-” from StudentsFirst, two respected education research organizations.

Rudy Crew, Oregon’s recently departed chief education officer, abused his spending privileges and did little to improve Oregon schools, ultimately showing the top-heavy system’s main flaws. Sadly, the top education bureaucrat’s $280,000 salary and gold-plated benefits package are just the tip of the education iceberg.

If administrative and support employment had grown in line with students, Oregon could have saved more than $300 million annually or hired almost 3,782 teachers compensated at $80,000 each.* Going forward, schools must refocus their priorities back on the classroom and away from the education bureaucracy.

*Teacher compensation was calculated by taking the average Oregon K-12 teacher salary of $57,000 plus 40% for benefits.

William Newell is a research associate at Cascade Policy Institute, Oregon’s free-market think tank.

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Blame Unions for High Prison Costs

By Brandon Loran Maxwell

What’s not to love about Oregon? It’s green. It’s hip. It’s weird. Yet, behind the cultural mystique of Oregon lies a troubling truth: Compared to similar-sized states, it has one of the fastest growing prison populations in the nation and spends 7.5 percent more per inmate than the national average—$84.81 each day.

To put $84.81 in perspective, Mississippi spends $39.56 a day—merely half of what Oregon spends. In fact, of the nation’s 14 states with populations ranging between two and five million people, ten of them spend less per inmate than Oregon. Only Iowa, Connecticut, and New Mexico spend more. So where is the money going?

Interestingly enough, of the ten states that spend less than Oregon per inmate, nine are right-to-work states. Of the four states that spend equal to or more than Oregon per inmate, three are forced-union states.

According to the Oregon Legislative Fiscal Office, entry-level correctional officers take home 24 percent more annually than surrounding states. The study also found Oregon was the only state that “did not require the employees to contribute to their health plan premiums.”

Currently, more than a dozen national and local prison employee unions operate within the United States, including Service Employees International Union (SEIU), American Federation of Government Employees (AFGE), and the American Federation of State, County and Municipal Employees (AFSCME) which boasts over 1.5 million members, 25,000 in Oregon alone.

Over the years, AFSCME has lobbied dozens of proposals with little to no regard for Oregon taxpayers, including a 25 percent pay raise which would have increased the salaries of prison health specialists to more than $80,000 a year. Likewise, AFSCME has aggressively opposed sentencing reforms aimed at reducing prison costs, and in other states even sued to keep prisons open and thriving.

In 2000, AFSCME’s international executive board condemned the privatization of prisons, saying, “Prison privatization only benefits corporations….” Newsflash: Prisons are already a business. The California Correctional Peace Officers Association spent over $1 million in 2008 to fight Proposition 5, which would have placed non-violent drug offenders in drug treatment programs instead of prisons. Why? Because it was bad for business. Union business.

Over the past decade, Oregon’s prison population has grown by more than 3,000 inmates, bringing the total number of inmates to over 14,000, spanning 14 prisons―including the $120 million Dear Ridge Correctional Institute which, despite 60 percent vacancy, still operates. On the bright side, union members still have their jobs.

Similarly, Multnomah County’s Wapato Jail has operated 100 percent vacant for almost 10 years, costing Oregon taxpayers between $300,000 and $400,000 annually.

In addition to mounting union wages and benefits, the age of the average inmate has dramatically increased over the past 15 years. Older inmates mean higher health care costs. According to a recent study by Americans for Prosperity-Oregon and Cascade Policy Institute, $21,000 in outside health care costs can be attributed annually to the average inmate older than 46. In other words, Oregon taxpayers are not only footing the health care bills for aging union members, but aging inmates as well. Who are the real prisoners?

Oregon taxpayers have a right to be upset over Oregon’s high prison costs. But until they hold the unions at least partly accountable, costs will only continue to rise.

Brandon Loran Maxwell is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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In Defense of Liberty: Unions, Right-to-Work, and Majority Rule

By F. Vincent Vernuccio

“We are a democracy, we operate by majority rule. Therefore, we can force you to give us your money.” Such is the message from unions justifying forced dues and opposing laws that protect worker freedom.

It is liberty, not democracy, that is the highest form of society.

Make no mistake, democracies, direct or representational, are better than any other form of government. However, they are only as good as the extent to which they protect the liberty that individuals enjoy. These liberties exist in spite, rather than because, of government institutions.

Many opponents of right-to-work laws justify their ability to force workers to financially support unions because those workers are within a group whose members at one time voted to force everyone in the group to pay.

This is different from voluntarily joining an organization that requires all members to pay dues for the use of their facilities, such as a golf club or a gym. Joining or being associated with a union is not voluntary or a matter of choice. In most cases it is a condition of employment.

Workers do not take a job at Ford because they want to join the United Auto Workers union. They join the UAW because they took a job at Ford. Michigan became the 24th Right to Work state earlier this year so that such workers can keep their jobs without being forced to pay union dues. Likewise, Oregon public employees who are now forced to pay union “fair share” dues against their will may very well support IP9, an initiative petition that would allow Oregon public employees to totally opt out of paying such dues if they wish. Once the Oregon Supreme Court approves IP9’s ballot title and slightly more than 87,000 valid voter signatures are collected, it will appear on the November 2014 General Election Ballot.

The union defense of “we can do anything we want because we have majority rule and we are a democracy like the government” fails on many fronts.

The first and most glaring inaccurate comparison is that the United States is a direct democracy. With the exception of some very small towns and state and local ballot measures, our government is a republic.

Furthermore, we are not just a republic that elects representatives to make our laws, but rather we are a constitutional republic in which certain rights of the individual are protected against laws made by the “majority.”

Pure majority rule in our country has its necessary limits.

The Founding Fathers correctly worried about tyranny of the majority and created several protections against it. James Madison warned against taking liberty out of a democracy. In The Federalist Papers No. 10 he wrote, “Liberty is to faction what air is to fire, an aliment without which it instantly expires.”

That is where defenders of forced unionism fail. When liberty is taken out of democracy and the majority is given the ability to steal from the minority, that no longer is a good and noble form of government or representation. Thankfully, that is not, for the most part, the case in America.

Even if the majority of a small community in the United States with a town hall style democracy or a state with voter initiatives and referendum voted for a law that banned people from going to church, it would not stand because of the First Amendment to the Bill of Rights in the United States Constitution.

It would not matter if a majority of the voters supported the law, majority rule would not be allowed to infringe on the rights and liberties of the minority protected by our Constitution.

Finally, unions are not government. The First Amendment’s freedom of association itself protects workers’ rights to ban together and join unions.

The special privileges granted unions include acting as the monopoly exclusive representative for workers, compelling an employer to negotiate with them, and other collective bargaining abilities that come from the laws government made such as the National Labor Relations Act, National Railway Act, and various state labor laws among others.

Unions, on the other hand, do not provide for government. If someone breaks one of the government’s laws or threatens to harm its citizens, the government, because it has a judicial system, has the ability to arrest and even to incarcerate that person.

While unions in non-right-to-work states can get a worker fired for not paying them (again a privilege granted to them by government) they do not have the ability to create their own jail and incarcerate that worker.

The reason for these limitations is simple—unions are not government. They cannot have a police force, they cannot have jails, and most of all they were never formed to govern citizens.

As unions try to use the majority rule argument to justify their ability to compel others to pay them, they must be reminded that there are rights more fundamental than giving the many carte blanche authority over the few.

Purveyors of this argument must be reminded: When there is a conflict between liberty and democracy, we must always err on the side of liberty.

F. Vincent Vernuccio is director of labor policy at the Mackinac Center for Public Policy and a guest contributor at Cascade Policy Institute. He is a graduate of the Ave Maria School of Law in Ann Arbor, Michigan. A version of this article originally appeared in Michigan Capitol Confidential.

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Eliminating Choice in Housing

By John Glennon

You should be able to decide what type of home you live in, but your ability to make that decision is severely limited by urban planning. Portland’s Urban Growth Boundary removes the responsibility of supplying housing from market actors who profit from producing what consumers want to buy. Instead, planners decide whether land within the Urban Growth Boundary has been sufficiently used, or whether it can accommodate growth for the next 20 years. Urban planners effectively choose what types of housing residents will have available to them.

According to the city of Portland’s Bureau of Planning and Sustainability, in Portland, “[a]pproximately 20 percent of all new housing will be in single-dwelling residential units.” Most future housing capacity allowed by planners in jurisdictions across the region is dense “mixed-use” developments. New single-family residences which are permitted are crammed together without yards. Beaverton’s comprehensive plan actually bans new low-density residences. Beaverton’s plan says: “To limit the City’s deficit in its regional share of population, expansion of the low density residential areas must be prohibited.”

Not everyone’s wants or needs are met in dense urban centers, but with the plans in place only the wealthiest residents will be able to make different choices. Let’s prevent this future and question whether compact development is always the best option.

 John Glennon is a research associate at Cascade Policy Institute, Oregon’s free-market think tank.

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Lazy Fair 2013

For Lovers of Limited Government

Lazy Fair 2013 !

¤ Refreshments ¤ B.B.Q. ¤ Camaraderie ¤

Barton  Park

19009 SE Barton Park Rd., Boring, OR. 97009

(Barton Park is near Carver – see directions below)

Sunday, July 28th

11:00am – 4:00pm

The annual Conservative Picnic Lalapalooza for the

¤ Executive Club ¤

¤ Cascade Policy Institute ¤

¤ Taxpayer Association of Oregon ¤

¤ Ask Damascus ¤

¤ Clackastanis ¤

“A great setting for brilliant conversation and lots of laughter with fellow lovers of liberty!”

$20.00 adults
$10.00 children under 12
$25.00 adults after July 22nd or at the picnic
(Note: Prompt payment helps us with food and refreshment planning. Thanks!)

CASH RAFFLE PRIZE – A CHANCE TO WIN BIG!

Please remember to bring cash ($1, $5, $10, $20) to purchase tickets!
Tickets will be sold at the door!

Send a check made payable to “Craig Flynn” plus the RSVP form below to:
Tina Pisenti
c/o Cascade Policy Institute
4850 SW Scholls Ferry Road, Suite 103
Portland, OR 97225
————————————————————————————————————

Directions to Barton Park
Barton Park’s physical address: 19009 SE Barton Park Rd., Boring, OR. 97009.
Covered Area #2 next to the parking lot

Barton Park is located just off of Hwy. 224, approximately 9.8 miles east of Clackamas on the Clackamas River.
Take Interstate 205 to Exit 12, Clackamas/Estacada. Turn east-bound onto Hwy. 212/224. Proceed 3.2 miles through Clackamas to the Hwy. 212/224 split (Rock Creek junction). Follow Hwy. 224 to the right, following the signs to Estacada. Proceed 6.4 miles on Hwy. 224 to Bakers Ferry Road and turn right (Barton Grocery on the right-hand side). The park is .2 miles on the left-hand side of the road.

———— Print Page, Detach here and return with payment ———-

Please complete form(include all names of those in your party)
and include your check made payable to  “Craig Flynn 

Lazy Fair reservation for:  __________________________________

And Guest(s) _____________________________________________

_______________________________________________________

________________________________________________________

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For Small Business Owners, The ObamaCare Reality Bites

By Sally C. Pipes

More than 40 percent of small businesses have frozen hiring because of ObamaCare, according to a new poll from Gallup. A fifth have actually cut their workforces as a direct result of the health care reform law.

That’s not exactly the future President Obama forecast in 2009, when he told an audience of small-business owners that his health care reform package was “being written with the interests of Americans like you and your employees in mind.” He boasted that he had “no doubt [the law] would benefit millions of small businesses.”

Instead, small-business owners are learning that ObamaCare will drive the cost of insurance up without providing the choice of policies it promised. The law intended to make purchasing insurance easier for small businesses by creating exchanges, where firms could band together with their peers in one statewide risk pool—and thus leverage their buying power to secure lower premiums and access to a wide variety of plans. The Congressional Budget Office projected that two million people would get insurance through the small-business exchanges.

Insurers would compete for small businesses’ allegiance, driving down prices further. Employers would name a benefits level, and then their employees could choose from among several plan options at that level. Under the status quo, by contrast, they may be stuck with the plan their employer picks for them—if they even get insurance at all.

But the exchanges aren’t unfolding as planned.

For starters, it’s not clear that the exchanges will be ready by the October 1 deadline set by ObamaCare. Creating these government-directed insurance marketplaces in all 50 states plus the District of Columbia has proved far more complicated than bureaucrats anticipated.

Maryland, which was one of the first states to embrace ObamaCare, announced in April that it would delay the launch of its small-business exchange by at least three months. A recent Government Accountability Office report said that all 16 states and the District of Columbia building their own exchanges are behind schedule—missing deadlines on 44 percent of the key activities needed to get them up and running. In Oregon, the state’s largest health insurer and three others are steering clear of the state exchange designed to serve small employers.*

In the mad dash to get the exchanges built, officials are cutting corners. The promised choice of plans has been the first casualty. This June, the federal government announced that every business owner shopping in the 33 federally run exchanges will have to pick one plan for all his full-time employees.

In some states, there may only be one choice for every single small business in the state—as insurers have been reluctant to participate. Just one insurer signed up to provide small-business coverage in Washington’s exchange. Ditto for New Hampshire and North Carolina. In Mississippi, not a single insurance company has signed up for the federally run exchange. That lack of competition will no doubt yield higher premiums. ObamaCare’s many mandates will exacerbate their upward march.

The health care reform law requires all policies to cover preventive care free of charge—along with a host of other “essential” benefits. Policies cannot cap annual or lifetime health care spending, and annual deductibles cannot exceed $2,000 for an individual or $4,000 for a family in the small-group market.

Businesses are starting to see the result of all these mandates and regulations. An analysis of 11 states by the insurer WellPoint projects that small-group premiums will jump an average of 13-23 percent.

In Rhode Island, insurers want to boost small business premiums by 14 percent, on average. Maryland’s biggest insurer, CareFirst BlueCross BlueShield, is pushing for an average small-business rate hike of 15 percent. And a survey by the American Action Forum earlier this year found that major insurers in five big cities were expecting small-business premiums to more than double for small firms with healthier employees. So rather than freeing small businesses from the burden of having to manage their own health benefits, ObamaCare has raised the prices they’ll pay and limited their options.

It’s no wonder that small businesses are cutting benefits, putting off hiring—or even firing workers. A quarter of small firms say they’re considering whether to drop insurance coverage, and 18 percent have reduced their employees’ hours to part-time. Thirty-eight percent say that ObamaCare has caused them to pull “back on their plans to grow their business.” So much for writing the law with the “interests” of small businesses and their employees in mind.

The Obama Administration just announced that they’d delay the implementation of the employer mandate, which would require all businesses with more than 50 full-time employees to offer health insurance. Hopefully, ObamaCare’s small-business exchanges will be the next component of the law to be delayed.

* “Insurers skip Oregon’s small employer insurance exchange—for now,” Business Journal, May 3, 2013 (http://www.bizjournals.com/portland/blog/2013/05/insurers-steer-clear-of-oregons-small.html?page=all).

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.

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Moving Forward from the Columbia River Crossing

By Kevin Sharp

With the recent suspension of the Columbia River Crossing project, people are already asking, “What should replace it?” The answer, at least for right now, is, “Nothing.” While it is frustrating that the government spent $170 million to not build a bridge, the cost of a poorly conceived bridge would be much greater.

Before Portland and Vancouver do anything else, they need to look seriously into the root of the transportation problems facing each city and plan accordingly. They also need to understand that just replacing the I-5 Bridge with a different bridge is not a lasting solution to the traffic problems. A new bridge needs to be a supplement to the existing Columbia River bridges.

To make the project viable, Portland also needs to abandon its inherently political goal of spreading light rail anywhere and everywhere. A simple bridge to ease traffic congestion is all that is necessary; but Portland transportation planners continually insist on expanding the MAX line to Washington―while Washington residents obviously do not want that. Any attempt to send light rail to Vancouver will only waste more time, taxpayer dollars, and resources that could go to more productive and valuable projects. A bridge should connect the cities; it doesn’t need to drive them apart.

Kevin Sharp is a research associate at Cascade Policy Institute, Oregon’s free-market think tank.

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Freedom First

On July 4 we pay homage to the founding of our country. I wonder, however, if we are living up to the vision and courage of our Founding Fathers.

Freedom was the key to their view: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

Of course, security was a concern to our Founding Fathers, as evidenced by their statement in the Declaration of Independence that governments are instituted to protect rights. They knew that rights need to be protected. The Constitution is explicit about the President being commander-in-chief and Congress having the power to declare war, so security was on their minds.

Yet, while our founders were aware of the value of security, their decision to revolt placed freedom above security. What could be more dangerous than revolution against the strongest power in the world? A revolutionary war invariably causes death, not just to the rebels but to innocent civilians as well. The founders made their decision: Freedom must come first.

What could happen to a revolutionary? Those who took up arms against the Crown were at risk of being killed by a royal musket ball. Even those revolutionaries who were too old for combat risked capture and a royal noose. Their security was not at all enhanced by defying the Crown. Yet, defy it they did, imperiling their lives.

What about economic success? Our founders considered economic gain to be a worthy goal. Many of them had entered into business, as merchants or developers. A few were wealthy and most were well to do. What could be more threatening to economic welfare than a war fought at home? Some may claim that war is good for the economy; but it’s never claimed when the war is being fought amid one’s own farms, factories, and stores. The Revolutionary War was not a profit opportunity, but a cost that our founders were willing to pay to secure freedom for themselves and their families and succeeding generations.

One might suppose the founders believed a successful revolution eventually would lead to greater security, but that assumption could not possibly survive a serious cost-benefit analysis. A bloody civil war is invariably devastating to the economy. The direct risk from the Revolutionary War was great, and normal police protections are often lost during times of war. One can imagine a Founding Father thinking that in the long run, freedom would be good for the economy. None were so foolish as to think that a revolutionary war would be good in the short term. The Founding Fathers risked their fortunes and livelihoods in the cause. Today, with our very slow economic recovery, politicians are grasping at any straw that might boost people’s standard of living. Our founders, however, traded their own economic welfare for a higher value.

Today, we wonder how many of our civil liberties we must give up to be safe. We wonder how much freedom of choice we must give up to have “affordable” health care. We seldom wonder what price freedom is worth. Our founders calculated that cost carefully when they pledged, in support of the Declaration, “our lives, our fortunes and our sacred honor.” It is for us living in 2013 to be worthy of the sacrifices our Founding Fathers made back in 1776.

The key to the founders’ decision is found at the end of the Declaration of Independence that we celebrate this week: “And for the support of this declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.”

What would happen today if we were in a similar crisis? Those in political power now would quake at the thought of a single life lost here at home, if that life might have been saved through reduced liberty. Those in political power would say, “It’s the economy, stupid,” if a protection of liberty might have an impact on the economy. As for the third price pledged by our Founding Fathers, “our sacred honor”―it is highly valued in homes across the country, though not so much by many in leadership.

Today, let us rededicate ourselves to the fundamental principle of freedom, a principle more important than safety or wealth. Let us be worthy of our Founding Fathers.

William B. Conerly, Ph.D. is the principal of Conerly Consulting, an economic and financial consulting firm, and chairman of the board of Cascade Policy Institute, Oregon’s free market research center.

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Correction Costs and Fiscal Restraint Don’t Need to Be at Odds

By Brandon Maxwell

The Founding Fathers emphasized the vital need for the rule of law in a free society. Samuel Adams wrote, “There shall be one rule of Justice for the rich and the poor; for the favorite in Court, and the Countryman at the Plough.” In a free society, rule of law means both equality and accountability before the law.

But the Founding Fathers also warned against fiscal negligence. Benjamin Franklin wrote, “The burden of debt is as destructive to freedom as subjugation by conquest.”

Oregon taxpayers would be wise to heed Franklin’s warning. According to the most recent Legislative Fiscal Office Budget Report, Oregon taxpayers are projected to spend more than $1 billion on corrections by the end of 2013. In addition, Oregon has the fifth-fastest prisoner growth rate in the nation, and the second-highest cost per prisoner, when contrasted with similar-sized states.

In a 2013 study, Cascade Policy Institute and Americans for Prosperity-Oregon found Oregon taxpayers could save between $60 and $70 million biannually simply by reducing the daily costs of inmate housing and millions more by reforming union labor costs. Rule of law is a necessary condition for a free and prosperous society, but it needn’t be bought with inefficient uses of taxpayer funds.

Brandon Maxwell is a research associate at Cascade Policy Institute, Oregon’s free-market think tank.

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Statement on the Columbia River Crossing Project

For Immediate Release

Media Contact
John A. Charles, Jr., john@cascadepolicy.org
503-459-3727
Sarah Ross Wolf, sarah@cascadepolicy.org
503-242-0900

Statement on the
Columbia River Crossing Project

PORTLAND, Ore. – In light of the decision by the governors of Washington and Oregon to shut down planning for the Columbia River Crossing (CRC) project, John A. Charles, Jr., President and CEO of Cascade Policy Institute, issued the following statement:

“The CRC was never a solution to any transportation problem, and the Washington State Legislature did the right thing by refusing to appropriate more money for it.

“As the two Northwest governors move forward, they should consider the following points:

  • The Interstate Bridge is not in any danger of imminent collapse and should be used for decades to come.
  • Expansion of rail transit between Vancouver and Portland should be taken off the table. Existing express bus service operated by C-TRAN is already providing excellent transit between the two cities.
  • Any new bridge should have a minimum river clearance of 144 feet, which matches the Glenn Jackson Bridge.
  • The governors should consider building at least two new Columbia River bridges in the region, one to the west of I-5 and one to the east of I-205. The reasons are to create redundancy in the case of an earthquake, and to provide better connectivity between the states. By dispersing traffic across four bridges, most congestion problems will disappear, making all classes of bridge users better off and reducing emissions caused by congestion.

“We have ten bridges across the Willamette River in Portland, and each serves an important purpose. There is no policy reason why we should restrict the number of Columbia River crossings to just two.”

###

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The Opportunity to Protect Our Rights and Our Children

By William Newell

Medical technology has miraculously saved millions of lives. Our constitutionally limited, representative government is just as miraculous. Both are designed to improve the human condition. Sometimes though medicine and government clash. The ongoing debate in Oregon concerning religious exemptions from vaccinations exemplifies this conflict.

Over 90 percent of Oregon parents currently vaccinate their children, but the state legislature still passed Senate Bill 132 which requires proof that parents seeking a religious exemption have been notified of the benefits and risks of vaccines. The legislation targets religious individuals because of their beliefs and burdens those individuals with complying to state desires. The Constitution of Oregon makes clear the state’s duty to protect religious liberty under Article 1, Section 3, which reads: “no law shall in any case whatever control the free exercise, and enjoyment of religeous (sic) opinions, or interfere with the rights of conscience.”

Additionally, placing informed consent stipulations on religious parents serves little purpose because  such information is widely accessible from doctors and government websites. Mandating parents watch a video or see a doctor is not going to change people’s minds. While vaccinating children is worthwhile, this legislation will not be very effective and undermines our precious constitutional rights.

William Newell is a research associate at Cascade Policy Institute, Oregon’s free-market think tank.

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More than thirty percent of Oregon union households want out

Right to Work policies in 24 states allow workers the freedom to join or not join a union. Oregon, however, is one of the 26 states without such employee freedom. Here, if a workplace is organized by a union, workers must either join the union and pay dues, or opt out of membership but still pay what are called “fair share” dues, supposedly to cover the cost of negotiating and upholding their employment contracts.

Why might workers like the opportunity to opt out of union membership? Some believe they can make better use of their own money rather than giving it to a union. Others “vote with their feet” against what they perceive to be poor union service or negotiating results. Still others leave because they oppose their unions’ political positions. They simply don’t want to support any organization that doesn’t share their political beliefs, whatever those might be.

Last year, Cascade Policy Institute conducted ground-breaking research on the economic benefits of allowing Oregon workers to opt out of union membership and “fair share” dues. Our February 2012 report concluded that, upon enactment of a full Right to Work policy, Oregon would have:

  • 50,000 more people working in five years; 110,000 more working in ten years.
  • $2.7 billion more in wage and salary income in five years; $7.0 billion more in ten years.
  • 14 percent more taxpaying families per year moving here from non-right-to-work states.

All these economic benefits would occur without spending one dime of taxpayer money.

So, how many workers might completely opt out of their union if they could? To answer that question, beginning in mid-May 2013 a coalition of non-profit groups across the country conducted a series of union household Google Consumer Surveys, including some 500 valid respondents throughout Oregon. Survey results were released at the beginning of National Employee Freedom Week (June 23-29).

All survey respondents were asked:

If it were possible to opt out of membership in a labor union
without losing your job or any other penalty, would you do it?”

Nationally, 33.4% of respondents answered Yes.

In Oregon, 31.2% of respondents answered Yes.

These results are bolstered by the fact that last year only 70% of workers in bargaining units represented by Oregon’s largest public employee union chose to be union members. According to SEIU’s Local 503 annual report submitted to the federal Department of Labor, the other 30% had opted out of membership but were still required to pay “fair share” dues. If Oregon were a Right to Work state, these workers could opt out entirely. Soon, they may be able to do just that.

A citizens’ initiative known as IP9 is awaiting final ballot title approval from the Oregon Supreme Court before collecting signatures for placement on the November 2014 ballot. It would allow Oregon public employees to opt out of membership and any dues payments to a union they don’t wish to support.

The Right to Work without third-party interference is more than an economic issue; it is a profoundly moral one as well. In America, no one should be compelled to join a union or to pay union dues in order to hold a job. Hopefully, before long Oregon will grant true employee freedom to every public and private worker in the state.

Steve Buckstein is the founder of Cascade Policy Institute, a free-market think tank based in Portland.

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Testimony on Beaverton Economic Development Project Grant

Cascade President and CEO John A. Charles, Jr. testified regarding a proposed economic development grant in Beaverton before the Oregon Transportation Commission.

Testimony of John A. Charles, Jr.

President & CEO

Before the Oregon Transportation Commission

June 19, 2013

My name is John Charles and I am President of Cascade Policy Institute. Cascade is a non-partisan policy research center, working to promote economic opportunity, individual liberty, and personal responsibility.

I have analyzed the staff report for Agenda item C1, along with related documents provided by Metro and the City of Beaverton. I have also visited the .8 mile stretch of HW 8 that is being considered for a retrofit, and walked the area on both sides of the highway. In addition, I have conducted extensive field research since 1996 on the nearby Beaverton Round light rail station.

I urge the Commission to reject the IOF grant request, for the following reasons:

 

This is not an economic development project. The primary objective of project advocates is to lower the design speed on HW 8 from 45 MPH to 30 MPH. There is no evidence that such action would incentivize additional capital investment in the region. Indeed, the sad experience of the nearby Beaverton Round district suggests that just the opposite will occur. Deliberately slowing traffic and encouraging more density in the region will make it less attractive.

The series of photos below are instructive on this point. Notwithstanding the seductive architectural rendering that advertised the future project back in 1996 – in which many pedestrians were envisioned relaxing near light rail and no parking was necessary – the reality proved to be quite different. The project went bankrupt twice. Retailers have struggled. And oddly enough, the site is covered with parking, including surface lots, gated private parking, and the tallest single building in Beaverton – a parking garage.

Unfortunately, local planners have learned nothing from the experience. On two different occasions, Metro appropriated $2 million of public money to Beaverton so that the adjacent Westgate theatre could be purchased and bulldozed. The apparent goal was to build more “transit-oriented development” that would improve the neighborhood. The site is still vacant after nearly a decade.

 

The proposed “tie-ins” of the HW 8 project to a low-stress bike route are a waste of money because sensible cyclists are already riding on nearby parallel streets. One of the selling points of the Beaverton proposal is that “traffic calming” on HW 8 will make it easier for cyclists. But low-stress cycling options already exist, as shown below.

 

Attempting to turn a state highway into a boutique “Downtown Main Street” is a nostalgic trip to the past that has no relevance. Metro has encouraged most local governments to subsidize downtown investments based on a “Main Street” model. Tigard has done this, but not by trying to re-invent nearby HW 99w; the city has simply created a faux-downtown that benefits a few businesses while being largely ignored by most Tigard residents.

 

There is no need for a new traffic light at the Rose Biggi/HW 8 intersection. The proposed Canyon Road retrofit project would add another traffic light at Rose Biggi Drive, even though there are already 5 traffic lights on HW 8 in the .8 miles of project territory. The fact that the Beaverton City Council is moving the entire City Hall staff to the Round is no reason to add another light; there are already two traffic lights serving the Round, on either side of Biggi Drive.

 

Conclusion: Stripping away the political window dressing, the real point of this project is to degrade the state highway system by reducing the design speed from 45 MPH to 30 MPH on HW 8. The OTC should resist this effort. Local planners have been waging a political campaign against auto-mobility for over 25 years, on such routes as HW 43, HW 97, and HW 26. Planners and the cycling/pedestrian/transit advocacy groups will never be satisfied, and will be emboldened to ask for even more if you keep giving away the mobility functions of the state highway system.

 

Click here to see the full testimony with photos.

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Cascade in the Capitol: Tax Reform Testimony Presented to the Senate Finance Committee

Senior Policy Analyst Steve Buckstein testified on Thursday before the Senate Committee on Finance and Revenue about a series of tax reform proposals. Below is his testimony to the panel of legislators.

Testimony before the Senate Committee
on Finance and Revenue
regarding Tax Bill HB 2456
by Steve Buckstein

Good afternoon, Chair Burdick, Vice-Chair George, and members of the Committee. My name is Steve Buckstein. I’m Senior Policy Analyst and founder of Cascade Policy Institute, which is a non-profit, non-partisan think tank based in Portland. Cascade’s mission is to develop and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity.

I’m here to express my support for amending HB 2456 to include a new, lower income tax rate for most small businesses in the state. Small businesses, including start-ups and individual entrepreneurs, are a significant source of job creation. I have it on good authority that all state legislators would like to take credit for creating more jobs in this state. Here’s your chance.

I cannot support other changes in the bill which would jack up tax rates on C corporations and in effect raise taxes on high-income individuals. Such provisions will simply reinforce Oregon’s reputation as business-unfriendly.

In this modern world, people and capital are mobile. Investors and businesspeople change their behavior based on the incentives and disincentives they face. Oregon’s high tax rates shine like a big STOP sign at the border, warning high-income people and most businesses that the cost of coming here may be too high compared to other states.

So, by all means lower tax rates where you can, especially for small businesses. And rather than rely on taxing others more to generate revenue, rely on the fact that making Oregon more business friendly will in itself generate revenue–and jobs.

Thank you.

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Do You Still Trust the Government?

By John Glennon

President Obama said it himself: “If people cannot trust the government to do the job for which it exists…all else is lost.” With the IRS scandal, federal surveillance issues, and corruption cases in Portland City Hall, do you still trust the government?

The Oregonian recently reported that Jack Graham, Portland’s chief administrative officer, tried to “divert nearly $200,000 in water and sewer ratepayer money to the city’s general fund last year.” This and countless other cases where public officials have abused their power show how important it is to have strong constraints on government. Just like everyone else, government officials pursue their own self-interest. The difference between government officials and everyone else is that they control public resources, sometimes have the ability to change laws, and are often unaccountable to market forces.

Government officials do not want to cut their programs or reduce staff, compensation, or services. In the private sector, people also want to protect themselves and their employees. But private employers do not have the luxury of spending public funds, and they must downsize when necessary for their businesses to remain profitable. Government officials should be fiscally accountable just like private businesses, and their decisions should be brought more in line with the interests of the citizens they serve.

John Glennon is a research associate at Cascade Policy Institute, Oregon’s free-market think tank.

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Open Letter to Federal Transit Administration Regarding TriMet

 On June 14th, John Charles sent this letter to the Federal Transit Administration regarding TriMet and C-TRAN proposals for the CRC light rail project.

June 14, 2013

 

Richard F. Krochalis

Regional Administrator, FTA

Jackson Federal Building
915 Second Avenue, Suite 3142
Seattle, WA 98174

            Re: FTA requirements for operating funds on New Starts projects

Dear Mr. Krochalis,

I was in the audience on May 15th when you discussed the CRC light rail proposal with the C-TRAN board. I heard you say repeatedly that the application for a FFGA could not proceed until C-TRAN had a firm commitment of adequate funding to operate the new train line.

However, those statements are at variance with how FTA is handling the same issue for federally funded LRT projects in Portland. As I outlined to you in a detailed letter two years ago, TriMet has been in violation of its FFGA for the Green Line since the day it opened, and FTA has done nothing about it.

Service hours for the Green Line were reduced by 33% before it ever opened in September 2009.[1] Service has continued to decline since then. Weekly revenue hours have dropped from 692.4 in the opening year to 686.3 in the fall of 2012, a loss of 1%.[2]

TriMet is also in violation of its FFGA for the Yellow MAX line. That line opened in 2004 with 605.4 weekly revenue service hours. By the fall of 2012, service had dropped to 568.4 weekly revenue hours, a loss of 6%.[3]

Peak-hour service on the Yellow Line was supposed to operate at headways of 10 minutes in the opening year, improving to 7.5 minutes by 2020[4]. Instead, peak-hour headways are currently 15 minutes.[5]

As I pointed out to you in 2011, TriMet has a dedicated revenue source that was supposed to be used to fulfill the obligations of the respective FFGAs. That source, the regional payroll tax, was enhanced by the state legislature in both 2003 and 2009, allowing TriMet to raise the tax rate. The first tax increase was implemented effective January 2005, and has raised a cumulative total of $122.6 million in new revenue through FY 13.[6]

The combined net operating costs of the Green and Yellow lines in 2011 were $10.2 million.[7] Clearly the new revenues generated by the payroll tax rate increase were adequate to pay for all promised new service on the two new MAX lines, if such service had been a priority for TriMet – which it isn’t.

Not only has TriMet failed to provide promised service on federally-funded light rail lines, the agency’s  total fixed route service has dropped by 14% since 2005 — despite the fact that the agency’s all-funds budget has gone up by 125% over that same period, as displayed below:

TriMet Financial Resources, 2004-2013 (000s) 

 

FY 04/05

FY 08/09

FY 10/11

FY 11/12 (est)

FY 12/13 (budget)

% Change 04/05-12/13

Passenger fares

$  59,487

$  90,016

$  96,889

$  104,032

$117,166

+97%

Payroll tax revenue

$171,227

$209,089

$224,858

$232,832

244,457

+43%

Total operating resources

$308,766

397,240

$399,641

$476,364

$465,056

+51%

Total Resources

$493,722

$888,346

$920,044

$971,613

$1,111,384

+125%

 

Annual Fixed Route Service Trends, 2004-2012 

FY 04

FY 06

FY 08

FY 10

FY 12

Change

Veh. revenue hours

1,698,492

1,653,180

1,712,724

1,682,180

1,561,242

-8.1%

Veh. revenue miles

27,548,927

26,830,124

26,448,873

25,781,480

23,625,960

-14.2

In its most recent long-term financial forecast, TriMet admits that the agency’s current service problems are “not caused by TriMet’s revenue base.” According to the agency, TriMet’s operating revenues per capita “are 70% higher than its peer comparators.”[8]

Nonetheless, TriMet service is in a death spiral.

TriMet General Manager told his board in February that the forecast for TriMet service shows that by 2030, the agency will have a “revenue-expenditure imbalance” of some $200 million. Therefore, TriMet clearly does not expect to meet its light rail service obligations to FTA at any time during the life of the two relevant FFGAs.

In your response to me on June 20, 2011, you noted that many transit agencies experience temporary service declines due to various economic factors. Such conditions were “not typically viewed by FTA as a breach of contract.”  You pointed out that Section 19(a) of the FTA FFGA discusses “default” in terms of “…substantial failure of the Grantee to complete the Project in accordance with the Application” for federal funding.

It is clear that TriMet has failed and will continue to fail to meet its contractual obligations to operate federally-financed light rail lines as promised.

Given these facts, I can only conclude that either you misinformed the C-TRAN board about the importance of local operating revenues, or you will soon be requiring TriMet to begin fulfilling its FFGAs for the Green and Yellow lines. Which of these things is true?

Please advise at your earliest convenience.

Sincerely,

 

John A. Charles, Jr.

President & CEO

 

CC:       C-TRAN Board of Directors

TriMet Board of Directors

Interested parties

 


[1] TriMet, Fall 2010 Financial Forecast, p. 39.

[2] TriMet finance office, personal communication with the author, September 18, 2012.

[3] Ibid

[4] TriMet, Before and After Study, Yellow MAX Line, 2009, p. 2-2.

[5] TriMet website as of June 14, 2013, http://www.trimet.org/schedules/w/t1190_1.htm.

 

[6] TriMet, CRC August 2011 New Starts Submittal, Table 1.

[7] TriMet, FY11 Operating Statistics

[8] TriMet, Long Term Fiscal Sustainability Plan, December 2012, p. 7.

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Startup Businesses Are America’s Best Job Creators

By Benjamin Zycher

“Small business” is the recipient of much official love (as well as heavy regulatory intrusion), but it receives its loudest applause as the supposed source of most employment growth.

Alas, that conventional wisdom is incorrect: The modern scholarly literature finds that it is new (not small) businesses—startups—that contribute disproportionately to job creation.

Job creation obviously is important, but ultimately it is economic growth that is of central concern; it is a growing economy that yields the increased wealth from which we derive higher living standards, upward mobility, and improved health and life expectancy.

And so the job creation driven by startup businesses—while crucial—underscores a larger question: What is the effect of employment by startups on economic growth?

A new Pacific Research Institute paper provides an answer: Based upon a dataset of 49 states for 1977-2010, each job created by startup firms is estimated to increase state gross product by almost $1.2 million in a given year. In short, the creation and survival of startups is crucial for job creation, and that job creation is an important component of economic growth.

These findings combined with the existing scholarly literature on the effect of startup firms on job creation suggest that policymakers should focus on both the ability of startup firms to establish themselves and to succeed, and the ability of startup firms to expand their hiring.

Such policy initiatives as the Kauffman Foundation Startup Act can be predicted to increase the ease with which startup firms can be established; this would strengthen the ability of the startup sector to create employment opportunities.

But it is clear that further policy reform is necessary if U.S. startup firms are to achieve more of their potential in terms of actual hiring and the attendant benefits in terms of aggregate output. Such reforms might include the following:

  • An overhaul of such recent government policies as the Dodd-Frank financial services reform legislation, which has had the effect of increasing the competitive advantages of large banking institutions over smaller banks, the latter of which traditionally have specialized in providing capital for new and small businesses.
  • The Affordable Care Act (“ObamaCare”) clearly has introduced rigidities, constraints, and incentives in the labor market that will lead to higher costs for labor force expansion, a substitution of part-time in place of full-time work, and other perversities. The severe ACA implementation difficulties now emerging provide a good opportunity for Congress to reform the law so as to remove the disincentives for job expansion, even abstracting from the opportunity to avoid the prospective adverse effects of the ACA on the health care sector.
  • Increases in the (real) minimum wage, whether mandated by federal or state legislation, will increase disincentives to hire.
  • Current policies on immigration and work permits for foreigners have introduced serious rigidities into the labor market generally and for smaller businesses, startups, and specific sectors in particular. A reform that expands the pool of available high-skilled workers, allows available laborers into the formal work force, and removes artificial rigidities that hinder hiring would strengthen economic growth.

These and other policy reforms would take advantage of the empirical reality that it is startup firms that are responsible for almost all job creation, and would facilitate that hiring and the increased economic output that would result.

Benjamin Zycher is a senior fellow at the Pacific Research Institute in San Francisco, a visiting scholar at the American Enterprise Institute, and a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research organization. This article originally appeared in Investor’s Business Daily.

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Expanding the Chance to Earn an Honest Living in Oregon

How free are you to engage in the occupation of your choice? In Oregon the answer appears to be—not so much. No one is quite sure how many occupations actually require a license, but The Oregon License Directory currently contains 1,190 entries by 113 agencies. While items like drivers’ licenses and concealed carry handgun permits are included, many are occupational licenses, and those often take significant time and money to obtain. Also, the site warns that not all jurisdictions are even in the directory yet, so “adding these additional licenses may take years.”

Recently, one lobbyist told a legislative committee why he thought the state requires such licensing. He said:

“The only reason that the state of Oregon through the Oregon legislature licenses any individual profession or industry is to
protect the public health, safety and welfare. That’s it.”
*

But that’s not the only reason. All too often, existing practitioners ask government to impose requirements that keep competitors and newcomers out of their markets, effectively denying them the right to earn an honest living. As one academic notes, “Occupational regulation has served to limit consumer choice, raise consumer costs…deprive the poor of adequate services, and restrict job opportunities for minorities—all without demonstrated improvement in quality or safety of the licensed activities.”

Cascade has been instrumental in reducing license requirements in the home moving and natural hair braiding fields.

It’s time to greatly expand the right to earn an honest living in Oregon.

* Jim Markee, lobbyist for the Oregon Association of Cosmetology Colleges, testifying on HB 3409 (which reduced licensing requirements on natural hair braiders) before the Senate General Government, Consumer and Small Business Protection Committee, May 17, 2013. The quote starts at the 37:18 mark in the hearing audio archive.

Oregon Licensed Occupations 2006

 

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Principles of Economics You Did Not Learn in ‘Principles of Economics’

Please join us for Cascade’s monthly Policy Picnic, led by our Chairman of the Board, Dr. Bill Conerly, on Wednesday, June 19th, at noon.

Bill is a former college professor turned corporate economist and consultant. He will lead a discussion on some fundamental economic principles that are seldom discussed in classrooms and textbooks, even by friends of the free market.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to ten guests on a first come, first served basis, so sign up early. To RSVP, email Patrick Schmitt at patrick@cascadepolicy.org or call 503-242-0900.

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Cascade Update Spring 2013

Want to know the latest happenings at Cascade Policy Institute? Click here to see our Spring newsletter!

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Educational Opportunity Is a Centrist Issue

Former White House Press Secretary Mike McCurry gave a speech May 21 to education reform advocates in Washington, D.C., in which he described the school choice movement as a rare example of centrism in our increasingly polarized American politics. McCurry serves as board chair of the Children’s Scholarship Fund, which provides privately funded tuition scholarships to low-income elementary kids.

McCurry, who worked for the late Senator Daniel Patrick Moynihan and President Bill Clinton, believes people of good will can and should come together in favor of educational opportunity for all children. “We’ve got to…make sure we get to that destination in which every child in this country goes to a school that equips them for their future, and every parent has the opportunity to make a choice about how that kid will be educated,” he said.

McCurry said that people who want to change the education system so that parents, rather than bureaucracies, decide where kids go to school should build bridges across the ideological spectrum. He advised school choice advocates to seek new allies and to broaden the coalition for school choice.

After all, the point of school choice programs is to empower parents of every political stripe, racial and ethnic background, and income level to get their child educated, even if they live in the worst public school district in the country. If that’s not a centrist issue, what is?

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

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Recruiting for Big Government: Food Stamps Run Amok

By Elise Hilton

One in five Oregonians participate in the Supplemental Nutrition Assistance Program (SNAP), the federal government’s “food stamp” program. Despite indications that the national economy is showing signs of revival, SNAP usage is at an all-time high:

 

Food-stamp use rose 2.7% in the U.S. in February from a year earlier, with 15% of the U.S. population receiving benefits….One of the federal government’s biggest social welfare programs, which expanded when the economy convulsed, isn’t shrinking back alongside the recovery.

 

Food stamp rolls increased on a year-over-year basis, but were 0.4% lower from the prior month, the U.S. Department of Agriculture reported. Though annual growth continues, the pace has slowed since the depths of the recession. The number of recipients in the food stamp program…reached 47.6 million, or nearly one in seven Americans.

 

It seems to be an easy equation: If joblessness is decreasing and the economy is improving, there should be fewer people receiving government assistance, right? Not so. Why? Part of the reason is that the government is actively recruiting people for SNAP, part is America’s ever-increasing dependence on government to solve our problems; and part is crony capitalism. It’s a heady mix of money, entitlement, and big government.

 

SNAP is symptomatic of America’s current view of the role of government: It is there to take care of our every need. Rather than seeking a way to solve problems of joblessness and hunger, we simply grow the programs once designed to help only in a crisis. Of course, the only way to grow these programs is to increase taxes on those who are working. As Dr. Samuel Gregg points out in his new book Becoming Europe, this creates an atmosphere of conflict, rather than harmony, in society. It means standing behind the food stamp user in line at the grocery store and grumbling about their purchases: In a sense, it is your money they are spending on soda and chips. It also means, according to Gregg, that there is less incentive to be productive on the part of citizens; after all, won’t the government take care of things?

 

The state of Florida, like many others, actively recruits SNAP recipients. According to The Washington Post, Dillie Nerios, a Florida state employee, has a quota of 150 new SNAP recipients monthly:

 

[I]t is Nerios’s job to enroll at least 150 seniors for food stamps each month, a quota she usually exceeds. Alleviate hunger, lessen poverty: These are the primary goals of her work. But the job also has a second and more controversial purpose for cash-strapped Florida, where increasing food-stamp enrollment has become a means of economic growth, bringing almost $6 billion each year into the state. The money helps to sustain communities, grocery stores and food producers. It also adds to rising federal entitlement spending and the U.S. debt.

 

As the name suggests, SNAP is meant to be a “supplemental” program. It has its roots in the Great Depression, when the federal government was faced with a surplus of agricultural goods, and high jobless rates. Food stamps allowed participants to purchase excess items at discount prices. The program vastly expanded in the 1960s, as part of the “Great Society” initiative. No longer were participants limited to purchasing surplus items, and benefits were tied to recipients’ income levels. By 2009, the Obama Administration further eased eligibility requirements, encouraging “states to disregard savings and higher incomes as criteria to disqualify applicants.”

 

The USDA claims that SNAP lifts people out of poverty, but the sheer numbers of those on SNAP belie that. As with many other issues in America, the attitude of many citizens toward hunger has become, “the government will take care of it.” This approach destroys charity on behalf of others and undercuts the dignity of those receiving handouts. Programs such as SNAP go from being “supplemental” to “lifestyle”: People stay on these programs longer and longer, with no incentive to support themselves, or to respond to the generosity of others by striving to contribute in turn to the common good. While most people would tell you that you can’t get something for nothing, SNAP proves them wrong.

 

Finally, SNAP is big business, and not in a good way. According to EatDrinkPolitics, the politics of food stamps and the politics of the food industry are deeply entangled in crony capitalism. For instance, Coca-Cola spent over one million dollars in just one quarter of 2011 lobbying the government regarding use of food stamps. Eighty-three percent of SNAP dollars are spent at supermarkets. In Oklahoma alone, Wal-Mart receives over $500 million in SNAP receipts. Because SNAP benefits are now largely utilized via EBT cards, banks benefit financially as well. It’s not just people becoming dependent on food stamps―it’s business. And business has no desire to see the government cut back on programs from which they are making millions.

 

We cannot suggest that SNAP does no good, or that there is no need for a food safety net in our country. Clearly, though, the astronomical growth of SNAP in the past few years has nothing to do with food safety and everything to do with big government, an entitlement culture, and crony capitalism.

Elise Hilton is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research organization. She is the marketing coordinator for the Acton Institute in Grand Rapids, Michigan.

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"Priceless: Curing the Healthcare Crisis" Book Forum

Please join Cascade Policy Institute for our next book forum featuring John Goodman, Ph.D., President and CEO of the National Center for Policy Analysis and Research Fellow at the Independent Institute in Oakland, California.  Dr. Goodman is recognized as the Father of Health Savings Accounts (HSAs). The event will focus on his latest book,  Priceless: Curing the Healthcare Crisis.

Goodman regularly appears on television and radio news programs on Fox News Channel, CNN, PBS, Fox Business Network, and CNBC, and his articles appear in The Wall Street Journal, Investor’s Business Daily, National Review, Health Affairs, Kaiser Health News, and other national publications. Goodman was also the pivotal lead expert in the grassroots public policy campaign, “Free Our Health Care Now,” an unsurpassed national education effort to communicate patient-centered alternatives to a government-run health care system. The initiative resulted in the largest online petition ever delivered on Capitol Hill.

Price for admission includes assorted appetizers, dessert, coffee, and tea.  no-host bar also will be offered and books will be available for purchase.

To attend, RSVP with admission payment to Patrick Schmitt at 503-242-0900 or patrick@cascadepolicy.org by June 25, 2013.

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Ben Franklin Would Approve

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

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

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

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

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Legacy of Freedom Celebration

Join Cascade Policy Institute in celebrating the 101st  birthday of Dr. Milton Friedman. We’re opening our office doors for this event to gather supporters of Cascade, Dr. Friedman, and Dr. Friedman’s ideas on capitalism and freedom!

Our featured speaker will be former Oregon State Legislator Jeff Kropf. Jeff represented Linn and Marion counties in the Oregon House from 1998 to 2007. He served as state Director of the Oregon Chapter of Americans for Prosperity from 2007-2011, and he now serves as Executive Director of the Oregon Capitol Watch Foundation. A fifth generation Oregon farmer, Jeff and his wife Peggy Sue own a farm north of Sublimity.

Jeff will speak about his life-long commitment to Milton Friedman’s ideals of Capitalism and Freedom.

We’ll be celebrating Friedman’s birthday with cake, snacks, beverages, raffle prizes, videos and more! So be sure to join us in the festivities!

RSVP to Patrick at 503-242-0900 or patrick@cascadepolicy.org.

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A Problem Bigger Than PERS

By Doug DeFilipps

Education writer Betsy Hammond recently reported that, according to a study done by The Oregonian, in the 2013-2014 fiscal year the budget woes of most school districts will not come primarily from PERS, Oregon’s retirement system for its public employees. The teachers unions (among others) no doubt will celebrate this finding, but they should not.

What is important is not that the financial woes of most school districts are not caused only by PERS, but rather fixing what else is at fault. As Hammond writes, major expenditures include additional hiring, employee health care, and employee pay raises. So the problem is bigger than just PERS: Schools are running up debt and spending taxpayer money, not on greater classroom expenses, but on employees.

Oregon is a state that believes in investing in its children and their future, but that is not what is happening here. Money is being spent on the employees of the education system rather than on the education itself. Oregon’s parents and taxpayers should not put up with this; they should demand real change. They should demand that their tax dollars follow students to the schools of their choice and that school districts rein in their administrative and employee expenditures.

Doug DeFilipps is a research associate at Cascade Policy Institute. He is a recent graduate of Santa Clara University.

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Is Being on Medicaid Better Than Having No Insurance at All?

By Roger Stark, MD, FACS

Does having health insurance actually save lives or improve health more than being uninsured? This question has not been answered until very recently.

In 2008, Oregon lawmakers decided they had enough additional public money to add 10,000 people to the state’s Medicaid program. So, Oregon officials held a lottery that ultimately signed up 6,400 new Medicaid enrollees. A further 5,800 people were eligible for the program but were not selected. People in this group had the same health and economic profile as the lottery winners. This created the perfect test case on the effectiveness of Medicaid in providing care. These 5,800 people became the control group in an objective, randomized study.

The two-year results of the health comparison study were published recently in The New England Journal of Medicine. The conclusion is surprising. It turns out that having Medicaid health insurance does not improve health outcomes, nor does it improve mortality statistics, compared with having no insurance coverage at all. The Medicaid group had no improvement in the important objective measurements of blood sugar levels, blood pressure, and cholesterol levels. The study did find that vaguely defined “mental health” did improve. However, this was done via subjective telephone interviews, not objective clinical data. For those few people requiring prolonged medical and hospital treatment, having Medicaid did improve their financial status because their medical bills were covered by federal and Oregon taxpayers.

The existing Medicaid program has 60 million enrollees nationally at a cost of $430 billion per year. Looking forward, the cost is estimated to increase to $900 billion per year by 2019. Medicaid is an extremely inefficient program, and reimbursement for doctors and other providers is about half of what private insurance pays for the same services. Doctors are not able to pay their own overhead with these low payment rates. Consequently, existing Medicaid patients have trouble getting access to health care.

The Washington State Medical Association did a recent survey of primary care providers. Results showed 18 percent had dropped all Medicaid patients, and 24 percent were not taking new Medicaid patients, due to poor payment and the complexities of Medicaid cases compared with privately insured patients. Getting access to health care is a significant problem for people in the existing Medicaid program in Washington. It turns out that having insurance on paper is not the same as actually obtaining health care services.

The Affordable Care Act, or ObamaCare, gives states the option to expand Medicaid to at least 16 million new patients nationally and 280,000 in Washington State. The law says that any adult over the age of 18 who earns less than 138 percent of the federal poverty level will be eligible for Medicaid. The estimated cost of this expansion to taxpayers is at least $450 billion over the first 10 years, beginning in 2014.

The Oregon study confirms that Medicaid does not provide better health care to people than having no health insurance at all. These terrible results not only come with a huge taxpayer cost, but also trap poor individuals in a virtually worthless health insurance plan.

The Washington State Legislature is considering expanding Medicaid in the current state budget negotiations. The federal government is bribing states with federal taxpayer money to expand Medicaid. Many state lawmakers support the expansion because it feels like “free” federal money, and they reason that Medicaid is better than no health insurance at all. The large, randomized Oregon study shows this is not true.

Of course, state taxpayers are also federal taxpayers, so ultimately the people of Washington State will pay for this Medicaid expansion. Medicaid is a pay-as-you-go program. The idea of leaving free federal money on the table makes no sense. If Medicaid doesn’t expand, the burden of taxes should be reduced for everyone.

Medical outcomes for people in the Medicaid program are no better than outcomes for people without health insurance. This fact makes it very difficult to argue that Medicaid is better than no insurance, especially considering the tremendous cost involved. Washington’s state legislators would do better to improve their existing Medicaid program; eliminate waste, fraud, and abuse; improve access; and make the program a real safety-net health insurance plan that provides quality care at a reasonable cost. Oregon’s state legislators should do the same.

Dr. Roger Stark is a health care policy analyst at Washington Policy Center in Seattle, Washington and a retired cardiothoracic surgeon. He has authored numerous in-depth studies on health care policy. Dr. Stark was one of the cofounders of the open-heart surgery program at Overlake Hospital in Bellevue and served on the hospital’s governing board. He is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research center.

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Let Them Eat Cake!

By Doug DeFilipps

Imagine your government laid a tax on the entire population, one in which in the same amount is paid by virtually everyone. And people are not simply taxed the same percentage of income, but the same dollar amount. Now imagine the money raised from this tax is spent on entertainment for the upper classes. You might think this sort of thing only happened in ages past, under rulers like Marie Antoinette; but it is happening today, here in Portland, Oregon. An annual head tax of $35 per resident over the age of 18 is being levied―the only exception granted is for those living under the poverty line.

 

The funds will go first to Portland-area schools, with the goal of hiring one art teacher to every 500 students. The remainder will fund various art endeavors in the city. These endeavors include the Oregon Symphony, as well as other organizations and museums. I am by no means trying to diminish the cultural importance of any of these artistic organizations. I myself thoroughly enjoy visiting museums around the city.

 

However, I also know that many of these are patronized primarily by middle- and upper-class Portlanders―not low-income Portlanders. Nonetheless, lower-wage earners will be forced to pay for these artistic endeavors through the new tax in spite of the fact that they enjoy them far less. Though the tax is only on those making above the poverty line ($23,681 for a family of four), I think it is safe to say that not everyone making above that amount is exactly rich.

 

Equally appalling is that, as mentioned above, people with low incomes will pay the exact same amount as people with high incomes, in spite of the fact that $35 means a great deal more to them. Why should those who have the least sacrifice the most for something that will benefit them the least? Furthermore, the Portland art community is already generously supported voluntarily. If the wealthy are already willing to open their wallets, why should the poorest be forced to open theirs?

 

The City of Portland is imitating Marie Antoinette’s follies. Most of the tax dollars that went to pay her expenses were raised through highly regressive taxation mostly imposed on poor peasants. These included the Gabelle, a tax on salt that fell most heavily on the poor. Those same poor peasants, for the most part, would never see or enjoy what their money had paid for (the Palace at Versailles was open to the public but well out of traveling distance for most). They would never see Marie Antoinette’s lavish jewels or gowns or walk through the lovely gardens outside her Petit Trianon.

 

It is also worth pointing out that this kind of tax is forbidden by the Oregon Constitution. The constitution, which supersedes any laws passed by the city, specifically forbids a head tax. The Arts Tax obviously would fall under the category of a head tax, demanding an equal amount from all adult citizens regardless of means.

 

The Portland Arts Tax is unnecessary and unfair. It taxes those who are least able to pay for something they will rarely, if ever, use. And since many Oregonians already subsidize the artistic institutions the tax will benefit of their own free will, why should everyone else be forced to?

Doug DeFilipps is a research associate at Cascade Policy Institute. He is a recent graduate of Santa Clara University.

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Why Do Transit Officials Lie About Light Rail?

The transit agency for Vancouver (C-TRAN) is reconsidering its support for the Columbia River Crossing Project, which includes light rail to Vancouver. In a staff report prepared for this week’s C-TRAN board meeting, the following claims are made:

  • Light rail offers faster service (17 MPH) than bus rapid transit (14.5 MPH);
  • The extended Yellow MAX line will arrive in Vancouver every 7.5 minutes; and
  • Light rail will carry 6,100 people over the Columbia River during the peak period.

All of these answers are wrong.

C-TRAN express buses running from various points in Vancouver to Portland city center currently average 31-45 MPH (depending on the route) in the morning peak period. In the afternoon peak they average 20-30 MPH traveling northbound.

Current Yellow MAX line service is one train every 15 minutes, all day. There will be no peak-hour service to Vancouver at 7.5-minute intervals, because TriMet has reduced service by 14% in the past five years. The agency is broke.

Finally, the maximum one-way capacity of a two-car light rail train is approximately 274. Multiplying this times eight trains per hour in the peak direction is 2,192 riders, not 6,100.

The fact is, C-TRAN’s express bus service is far superior to the slow MAX, so why spend $930 million on a slow train to Vancouver? That’s the question that should be asked.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Salem Report: Why the Legislature Can’t Face Reality

Please join us for Cascade’s monthly Policy Picnic, led by Cascade President and CEO John A. Charles, Jr., on Wednesday, May 15, at noon.

The legislature continues to spend more than Oregonians can afford. Join John in discussing the psychology of legislative decision-making.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to ten guests on a first come, first served basis, so sign up early. To RSVP, email Patrick Schmitt at patrick@cascadepolicy.org or call 503-242-0900.

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Three Years Later, ObamaCare Remains a Troubled Law

By Roger Stark, MD, FACS

President Obama signed the federal health care bill, The Affordable Care Act (ACA), into law three years ago. Let’s look at what has happened over the past three years.

The law remains extremely unpopular with Americans. Since passage, polls have consistently shown at least 50 percent of voters disapprove of the law. A recent Kaiser Family Foundation poll revealed that only 41 percent of respondents actually understood the law, while 57 percent did not.

The estimated cost of the law has gone up dramatically. Originally, the nonpartisan Congressional Budget Office (CBO) estimated ObamaCare would cost $940 billion over its first 10 years. This was based on a deception written into the law of 10 years of revenue starting in 2010 but only six years of benefits starting in 2014.

The CBO now estimates the cost to be $2 trillion over the 10 years starting in 2012. Revenue comes from a $716 billion cut to Medicare providers and over $1 trillion in new or expanded taxes. None of the significant Medicare cuts have taken place as scheduled, so the cost overrun of ObamaCare has already started. Health insurance companies are warning of 30 to 116 percent increases in premiums, and the government’s own CBO estimates at least 10 to 13 percent increases in rates.

Even President Obama sees the failure of parts of the law. He has signed the repeal of the long-term care provision, or CLASS entitlement. He also signed the repeal of the $1.7 billion Small Business Tax Reporting Requirement, which would have forced businesses to report every vendor transaction over $600 to the IRS. A bipartisan majority in the U.S. Senate recently voted 79 to 20 to repeal the 2.3 percent tax on medical device makers’ revenue (not profits).

The administration has, to date, granted 1,600 waivers to unions and various favored companies allowing them to opt out of ObamaCare. For the rest of us, the government has issued 20,000 pages of new regulations for implementation of the law and will force patients to fill out a 21-page application to receive care under the ACA (that’s the EZ form; the long form is 60 pages).

Medicaid expansion and new government-run insurance brokerages, or exchanges, are fundamental provisions of ObamaCare. Yet, 18 states have opted not to expand Medicaid, and 26 states have no plans to set up a state-run exchange.

The proponents of ObamaCare cling to a number of inconsequential benefits. Young adults from ages 19 to 25 now can be covered on their parents’ health insurance plans. These are the young and healthy, however, and the vast majority don’t need health care and don’t have much impact on health care costs. Also, when they turn 26 their parents’ coverage ends. They then will have to pay more than their fair share for health insurance because of the community rating requirement that forces young, healthier people to pay the same premium as older, sicker individuals.

Proponents also tout the mandated preventive care in the law. Yearly physical examinations and other preventive care are not “free,” and for large numbers of patients have no impact on health outcomes, nor do they save money.

We are also told the law prohibits insurance companies from denying coverage to patients because of pre-existing conditions. Research shows that only 62,000 people in the United States are in this group with no insurance and a pre-existing health problem. Spending $2 trillion to provide coverage to this small group is irresponsible and could be handled by shared-risk pools like the one Washington State already has.

The ACA is a 2,700-page, achingly complex, monstrous law that will soon control one-sixth of our economy. The country continues to dislike ObamaCare and remains puzzled by its mind-numbing complexity.

Everyone agrees health care needs to be reformed. Patients making informed choices in a free market―not top-down government mandates that will only result in higher costs, not better care―will put patients in charge of their health care decisions and their own health care dollars.

Dr. Roger Stark is a health care policy analyst at Washington Policy Center in Seattle, Washington and a retired physician. He has authored numerous in-depth studies on health care policy. Dr. Stark was one of the cofounders of the open-heart surgery program at Overlake Hospital in Bellevue and served on the hospital’s governing board. He is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research center.

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Beaverton Wants More Affordable Housing

By Doug DeFilipps

The Beaverton City Council is considering exempting non-profit organizations that open new affordable housing units from paying the city’s property tax. An associate planner for the city said that “affordable units [are] going to be a major challenge in the future” because “[t]he housing market is tight, and a lot of affordable units in Beaverton are occupied by residents who could pay more but opt for cheaper housing.”

If the goal is affordable housing, then the city should ease the tax and regulatory burden on all development and businesses. That way it would be easier for developers to build new housing, and housing would become more affordable. If a major cause of the lack of affordable housing is “people who could pay more but opt for cheaper housing,” then it makes sense to try to give everyone more, less expensive options.

Developers of affordable housing should not be given special treatment. Why should other developers, not to mention businesses and residents, be taxed more than these affordable housing groups? Why should they be forced to make up the shortfall?

Government entities, including the Beaverton City Council, have an obligation to treat all citizens and businesses fairly and equally, and not to pick favorites.

Doug DeFilipps is a research associate at Cascade Policy Institute. He is a graduate of Santa Clara University.

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Cascade in the Capitol: Testimony Against Local Tobacco Tax Proposal

John A. Charles, Jr. submitted testimony on Monday to the Senate Committee on Finance and Revenue, speaking against a proposal to allow counties to impose local tobacco taxes.


Testimony of John A. Charles, Jr.

President & CEO 

Before the Senate Committee on Finance and Revenue

Regarding HB 2870-A

April 29, 2012 

 

I am writing in opposition to HB 2870-A.

This bill suffers from an inherent contradiction in its twin policy objectives: raising money and reducing tobacco consumption. For one to succeed, the other must fail.

None of the proponents want to admit this. They prefer to claim that the primary goal is “public health.” However,  the bill only requires that a minimum of 40% of the proceeds be spent on tobacco use prevention and cessation programs, which means that 60% of the funds will go for other uses. This clearly shows that public health is not the primary motivation behind the bill, revenue generation is.

If we admit that this is just a money bill, then there is no compelling argument in favor of taxing a product used by only a fifth of the population, in order to create a revenue stream that will likely benefit everyone. The only reason such bills get introduced is because it is politically easy to pick on a minority group engaged in a habit that is publicly scorned.  But we should not tax minorities just because we can.

If local governments genuinely want to spend more money on tobacco cessation programs, they already have access to the MSA settlement funds. Oregon has received over $1 billion in MSA money since 1998, but virtually none of it has gone to directly help smokers. Since that was one of the express purposes of creating the fund, I’d suggest local governments direct their lobbying efforts at state legislators who continue to use revenue from the MSA as an all-purpose slush fund.

Between state and federal tobacco taxes, plus the price hikes needed by the major tobacco companies to make the MSA payments, tobacco users have paid more than their fair share for any so-called “negative social externalities” associated with smoking. Please leave them alone by tabling HB 2870.

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WES at 4: Still a Financial Train Wreck

February marked the four-year anniversary of the Westside Express Service (WES), the 14.7-mile commuter rail line that runs from Wilsonville to Beaverton. While the train’s owner, TriMet, has emphasized the steady growth in ridership over time, the truth is that WES has been a failure. Daily boardings are still far below the opening-day forecast, and taxpayers subsidize each rider by nearly $40 per round trip.

Although WES was 15 years in the making, it was always a project in search of a purpose. At various times the train was promoted as: (1) a congestion relief tool for HWY 217; (2) a catalyst for so-called “Transit-Oriented Development;” or (3) a way of providing “another option” for travelers. None of these arguments holds up to scrutiny.

During legislative hearings in Salem, representatives from Washington County claimed that WES would take 5,000 motor vehicles per day off of nearby highways. But WES is not even capable of doing that because it only runs 8 times (each direction) over a four-hour period in the morning, and 8 more times in the afternoon, with seating capacity limited to 154 or less on each trip. The train does not run at all on weekends.

In contrast, both HWY 217 and I-5 are heavily used throughout the day, every day of the week, by passenger cars, trucks, buses and emergency service vehicles. WES only caters to passengers.

During its best hours of performance, the total number of passengers traveling on WES is less than 0.5% the number of motorists traveling on HWY 217/I-5 at those same hours. Moreover, every time WES crosses Scholls Ferry Road or any of the other busy East-West thoroughfares, it ties up dozens of vehicles for 40 seconds or more. Since the train itself typically only carries 20-50 passengers per trip, this means that WES actually has made Washington County congestion worse than it was before the train opened.

WES also will not be a catalyst for “transit-oriented development,” because the train stations are a nuisance, not an amenity. The noise associated with train arrivals was always underestimated and has proven to be a significant problem for nearby businesses and residents.

As for the hope that WES would provide “another transit option,” there were already two TriMet bus lines providing over 4,000 boardings per day in parallel routes prior to the opening of WES. Commuter rail simply replaced inexpensive bus service with a massively subsidized train.

Several key statistics summarize the problems with the train:

  • WES was originally projected to cost $65 million and open in 2000. It actually cost $161.2 million and opened in 2009.
  • TriMet projected an average daily ridership of 2,400 weekday boardings in the first year; actual weekday ridership was 1,156 in 2009 and has grown to 1,639 in 2013. Since each rider typically boards twice daily, only about 820 people actually use WES regularly.

To truly appreciate the high cost of commuter rail, we need to compare it with other types of service offered by TriMet: light rail and bus. The following are averages for the month of January 2013.

Operating cost per

Vehicle-hour

Operating cost per

Originating ride

Operating cost per

Vehicle-mile

Bus

    102.14

    3.97

    7.94

MAX

     282.13

    2.52

   18.84

WES

$ 1,251.94

$ 20.31

$ 57.30

The operating costs for WES are 12 times higher per hour than bus service, but the public benefits are not 12 times higher. In fact, WES is not even equal to bus service; it is far less flexible, and the equipment is unused most of the time.

TriMet recently predicted that within the next decade, more than half of all bus routes will be eliminated due to operating losses if something doesn’t change. The Board places the blame for this on a labor union contract that saddles the agency with the costliest employee benefits package in the nation. But the union did not force management to build an absurd commuter rail line; that was a choice made by the Board alone, without any consideration of the legacy costs it would impose on future riders.

There will be no happy ending to this story. WES is destined to be a one-hit wonder―an expensive monument to the egos of Westside politicians and TriMet managers. Taxpayers would be better served over the long term if we simply cancelled WES, repaid grant funds to the federal government, and moved the few WES customers back to buses.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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School Choice Results Trend Positive in New Study

School choice programs empower parents to choose the schools their children attend―public or private―by allowing parents to direct a portion of public education funding for their child through tax credits, scholarships, vouchers, and education savings accounts. School choice programs are among the most prominent and successful reforms in education today.

The Friedman Foundation for Educational Choice has released a new report examining 23 empirical studies of school choice programs. The report is authored by scholars at the University of Arkansas, Harvard University, the Federal Reserve Bank, Stanford University, and Cornell University.

According to the study, “[o]pponents frequently claim school choice does not benefit participants, hurts public schools, costs taxpayers, facilitates segregation, and even undermines democracy. However, the empirical evidence consistently shows that choice improves academic outcomes for participants and public schools, saves taxpayer money, moves students into more integrated classrooms, and strengthens the shared civic values and practices essential to American democracy.”

More than 250,000 students attend private schools through 41 school choice programs in 22 states and Washington, D.C. Expanding educational options through widely accessible school choice programs for all children can deliver the kind of dramatic improvement American schools desperately need to meet the diverse needs and aptitudes of all students. Putting parents back in charge is the way to revolutionize education today.

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

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Metro’s Open Space Levy: A Bait and Switch for Taxpayers

Since 1995, Metro has been steadily buying up thousands of acres of undeveloped land with bond money approved by the voters. Most of the large parcels are located far from population centers, often outside the Portland urban growth boundary.

In addition to their being geographically remote, Metro has made little effort to provide public access to these lands. Entrances are frequently gated and locked, signage is poor, and there are few parking lots or restrooms.

Unfortunately, this problem will not be addressed with Metro’s proposed levy (Measure 26-152) that will be on the May 21 ballot. Metro officials have stated that if the operating levy passes, only 5-15% of the money will be used to make natural areas more accessible to the public.

According to the levy proponents, the rest of the estimated $10 million in annual tax funding will go to the following uses:

  • improving water quality in rivers for salmon and other native fish;
  • restoring wildlife habitat;
  • removing weeds;
  • restoring wetlands; and
  • providing nature education programs.

While some of these uses sound good, we are already paying for similar programs through other taxes. For instance, we pay electricity surcharges of $650 million annually to finance the Columbia River Basin Fish and Wildlife Program (administered through the Northwest Power Council). Since 1978 we’ve spent more than $14 billion on regional fish and wildlife habitat improvements. There is no justification for spending an additional $10 million through the Metro levy.

Moreover, Metro’s conception of “habitat restoration” is not very compelling. It includes projects such as clear-cutting politically incorrect tree species (Douglas fir) in order to re-plant with Oregon white oak. There is no scientific reason to replace one tree species with another; it is simply an aesthetic preference of Metro planners.

Given that taxpayers already have provided more than $300 million for Metro to buy up lands, a more respectful approach would be for Metro to make public access the top priority and to pay for it out of Metro’s general fund. Over the past decade the Metro budget has grown steadily, and more than 60 new full-time employees have been hired. Obviously, Metro could pay for parks maintenance without a levy.

We also know that maintenance should not cost $10 million annually, because in 2011, Metro’s net operating cost of managing seven natural areas was only $630,747. Even if Metro had to maintain 25 areas instead of seven (as would be the case under this levy), maintenance costs should be closer to $3 million, not $10 million.

As the national recession continues, Oregon families have had to make difficult choices in order to stay afloat. Many people have lost homes to foreclosure or had their electricity shut off. Metro councilors need to do some belt-tightening of their own. They should pay for operations of natural areas out of existing revenues and make public access to those areas the top priority.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Should Oregon Replace the Income Tax with a Sales Tax?

In 2007 Governor Ted Kulongoski appointed me to represent taxpayers on the legislatively created Comprehensive Revenue Restructuring Task Force. The Task Force reviewed and analyzed revenue and spending streams in the state, but did not recommend comprehensive reforms to the tax system.

At the first Task Force meeting in November 2007, Portland pollster Adam Davis presented his focus group work around tax reform. He told us that public negativity on government and politics was higher than he’d ever seen in his 30-year career.

One key finding stood out, and I believe this is an accurate paraphrase:

“Any sales tax is dead in this state―unless coupled with elimination of another tax. Reducing other tax rates won’t sell a sales tax.”

“Even when it was explained that reduced income and/or property tax rates could be locked into the Constitution, voters responded that ‘They’ll find a way to jack the rates back up.’”

Adam Davis recently told me that his firm later did more quantitative analysis which confirmed his focus group findings that Oregonians will not accept a third tax…period.

With that realization in mind, I proposed to the Task Force, and I propose now, that Oregonians should have a serious discussion about replacing our economically harmful income tax system with a less harmful sales tax system. Research finds states without an income tax have experienced higher economic and job growth than states with high income tax rates like Oregon. Last year, two economists who study this trend said:

“Every year for the past 40, the states without income taxes had faster output growth (measured on a decadal basis) than the states with the highest income taxes….

“Over the past decade, states without an income tax have seen 58% higher population growth than the national average, and more than double the growth of states with the highest income tax rates….

“The transfer of economic power and political influence from high-tax states toward low-tax, right-to-work ones is one of America’s most momentous demographic changes in decades. Liberal utopias are losing the race for capital.”*

While it seems clear that income taxes do harm our economy, sales taxes appear to do less damage, and therefore may be preferable when we cannot find voluntary ways to fund government services.

This month a state senate committee held two public hearings on bills that would impose a five percent retail sales tax while somewhat reducing income and property tax burdens. At the first hearing, Governor John Kitzhaber suggested that sales tax advocates (he among them) should first get a better sense of what voters think is wrong with the current system—and then get a “better handle on spending.”

One state senator suggested that a better handle on spending could be achieved by tying state spending to inflation and population growth, as a 2006 defeated initiative would have done. If it had passed, legislators would be sitting in Salem today with a significant budget surplus, instead of wondering how to wring more tax dollars out of a struggling economy. That may not be the kind of handle on spending the Governor had in mind, but it sure beats having no handle at all.

I testified at the second hearing, proposing that the bills (SJR 36 and SB 824) be amended so that they not only create a state sales tax, but that they prohibit income taxes in the Oregon Constitution (Article IV, section 32). If Oregon voters understand that it would be unconstitutional to tax their incomes, they might render a different verdict on a sales tax than they did when rejecting them nine times at the polls since 1933.

Eliminating the income tax completely is important for economic reasons, but also because, as focus groups and polls have shown, Oregonians simply don’t trust their elected officials to keep rates on other taxes down once a new sales tax is in place. I also believe they understand that states with so-called “three-legged tax stools” have budget problems, too, such as our neighbor to the south, California.

One of the perceived advantages of adding a sales tax to currently existing taxes appears to be that the mix of different taxes seems to reduce instability in the system. A number of people testified that budget stability is important to them, especially for local school budgets which are funded significantly from the state General Fund.

But at the hearings, I was the only person who questioned why the state budget should be more stable than our own business and family budgets. As a former and current member of the Governor’s Council of Economic Advisors wrote in 2007:

“It is not clear why government budgets should be more stable than private budgets. It is already the case, with the kicker and without any rainy day fund, that public employment in the state is 20% more stable than private employment.”**

If legislators are not careful, making state revenue more stable will make their constituents’ after-tax family budgets even less stable, and many of them will not appreciate that.

In conclusion, until we reduce the size and scope of state government, no third source of tax revenue will solve our state’s financial problems. It will simply mask them.

* “Laffer and Moore: A 50-State Tax Lesson for the President,” Arthur Laffer and Stephen Moore, Wall Street Journal, April 20, 2012.

** Excerpt from an email to then-State Senator Ryan Deckert from economist Randall Pozdena, Ph.D., dated March 6, 2007.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Marketplace Fairness Act: Taxation Without Representation?

Congress is poised to raise taxes again, this time by allowing states to impose sales taxes on online sales. Senators Ron Wyden (D-OR), Max Baucus (D-MT), and Kelly Ayotte (R-RH)―all representing states without sales taxes―oppose the Senate’s “Marketplace Fairness Act” as “taxation without representation.” The proposed legislation would burden online businesses with enforcing potentially thousands of state and local taxes across the country at the point of sale.

 

Andrew Moylan, senior fellow with the R Street Institute in Washington, D.C., writes, “This means quizzing purchasers about their location, looking up the appropriate rules and regulations in more than 9,600 taxing jurisdictions across the country, and then collecting and remitting sales tax for that distant authority. No brick-and-mortar shop has to do this for in-store sales, and yet every online retailer would have to do it for remote sales.”

 

In an editorial this week, The Wall Street Journal added: “Small online sellers will therefore have to comply with tax laws created by distant governments in which they have no representation, and in places where they consume no local services.”

 

Senator Dick Durbin (D-IL) claims tax accounting software makes it easier for smaller businesses to comply with the proposed law than opponents allege. Still, forcing retailers to enforce the tax laws of thousands of different localities across the country is a massive change in the way we do business―one that will have far-reaching consequences for small businesses and consumers alike.

 

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

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Earth Day Exposes the Ironies of the Left’s Trendy Environmentalism

By Todd Myers
On April 22, in cities across America, some environmental activists will celebrate Earth Day, claiming only increased government control can protect the environment. Those celebrations will expose a couple ironies.

First, many activists will arrive in a Toyota Prius, which has become the symbol of environmental consciousness. Ironically, however, the Prius is not a triumph of political planning but of the free market. In the 1990s, while California was requiring “zero-emission” vehicles, leaders at Toyota and Honda saw an opportunity to sell cars to people who want to spend less on gasoline, drive a car that emits less carbon dioxide, or both. Thus was born the hybrid vehicle. Even though it did not meet California’s regulation, it sold well, causing Golden State politicians to change the law.

Jumping on the bandwagon, politicians began to give preferences to hybrids. Politicians did not lead, but followed the innovation of the free market. Most Prius drivers, however, don’t know that history; and some will spend Earth Day opposing the free-market policies that created the car they are so proud of.

Many activists on the left will also spend Earth Day complaining that people who see the benefits of the free market don’t care about the environment. A look at the national political map, however, tells a different story.

Across the country, the parts of the nation that most consistently support free-market candidates are those surrounded by stunning natural beauty. The most vocal environmental activists —who are quick to lecture others about caring for nature—tend to live in cities, where nature has been thoroughly controlled, constrained, and paved.

How, we should ask, can environmental activists get away with this? How can they continue to advocate top-down policies that don’t help the environment? How can those who live where nature has been subjugated lecture those who live in it and with it every day?

Environmentalism has become trendy and a way to show you are a good person, rather than actually helping the environment. Environmental activists and politicians choose government-mandated approaches not because they help the environment, but because the policies make them feel good about themselves and make them look good to others. The strategy is as simple as the fourth-grade playground: Build up your own environmental credentials by tearing others down and calling names.

Rather than pointing out these ironies, however, free-market conservatives often fall into the trap of arguing there are no risks to the environment, fitting perfectly into the stereotype imposed on them by the left. Some conservatives fear that by admitting they care about the environment, they must then endorse a range of leftwing policies they oppose.

In fact, a strong concern for the environment is part of believing in personal responsibility and the free market. Conservatives believe people have freedom, but must take responsibility for the impact they cause. If you commit a crime, you don’t get to blame society. A reason conservatives live near nature is that we love to hike, hunt, fish, and marvel at the awe-inspiring natural beauty with which our nation is so blessed.

Finally, the free market is the greatest system for allocating scarce resources and doing more with less, both of which are at the heart of a true environmental ethic. Rather than forcing behavior change, conservatives promote technological solutions that respect the freedom of individuals while reducing environmental impact. Rather than falling for the latest trendy environmental policy, conservatives demand that the government measure success or failure.

Better yet, we promote the creative competition that discovers options that we never imagined. As politicians spend billions on rail and buses that carry few people, the market is creating driverless, fuel-efficient cars that will more efficiently take people exactly where they want to go.

For energy efficiency, clean air, clean water, and smart resource use, the free market combines prosperity and innovation to successfully protect natural resources. April 22 may be a one-day event for some; but for those who embrace the free market and its push to do more with less, every day is Earth Day.

Todd Myers is director of the Center for the Environment at Washington Policy Center and a guest contributor at Cascade Policy Institute. He is the author of the book Eco-Fads: How the Rise of Trendy Environmentalism Is Harming the Environment and is designated a Wall Street Journal Expert panelist for energy and the environment.

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"After the Welfare State" Book Forum

Join Cascade Policy Institute and Atlas Economic Research Foundation as we welcome world-renowned speaker and Vice President for the Atlas Foundation Tom G. Palmer to discuss his new book, After the Welfare State.

 

 

Price for admission includes assorted appetizers, dessert, coffee, tea and a complimentary copy of the book.  A no host bar will also be offered.

To attend, RSVP with admission payment to Patrick Schmitt at 503-242-0900 or patrick@cascadepolicy.org by May 3, 2013.

Tom G. Palmer is the Executive Vice President for International Programs at Atlas Economic Research Foundation. He previously served as Vice President for International Programs at the Cato Institute and Director of the Center for Promotion of Human Rights. He is a Senior Fellow at the Cato Institute and Director of Cato University, the Institute’s educational arm. He is the author of Realizing Freedom: The Theory, History, and Practice of Liberty. He received his BA from St. Johns College, MD, his MA in philosophy from The Catholic University of America, and his doctorate from Oxford University.

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