Year: 2014

Elliott State Forest Management Puts Small Birds over Small Kids

By John A. Charles, Jr.

Last year the S&P 500 Index had a total return on investment of 32%. That should have been good news for Oregon public schools, which receive twice-yearly checks from an endowment known as the Common School Fund (CSF).

One of the largest assets supporting the Fund is the 93,000-acre Elliott State Forest, near Coos Bay. Net timber harvest receipts from the Elliott are transferred to the CSF, where the money is invested in stocks, bonds, and other financial instruments.

Unfortunately, the Elliott did not return 32% last year. It did not even return zero percent. The state actually lost $3 million. That is quite a feat of mismanagement for timberland valued at more than $500 million.

The Elliott is governed by the State Land Board, comprised of Governor John Kitzhaber, Secretary of State Kate Brown, and State Treasurer Ted Wheeler. Under their leadership, timber harvesting has steadily declined on the Elliott, so that roughly 78% of the forest is off-limits. Since overhead is relatively fixed (e.g., fire suppression and road maintenance), if harvest is halted, the forest loses money.

 

The Elliott is part of a broader portfolio of lands known as the Common School Trust Lands. Under the terms of the Oregon Admissions Act, the primary management objective for Trust Lands is to raise money for the Common School Fund. Therefore, the Land Board has a fiduciary duty to maximize timber harvest on the Elliott.

As environmental litigation became more widespread in the 1980s, it became clear that “fiduciary trust” would start taking a back seat to wildlife habitat preservation in state forests. Knowing this, in 1994 outside consultant John Beuter was retained by the Department of Forestry to look at various options for increasing revenue to the School Fund from the ESF. His conclusion: “Selling the Elliott is the only marketing alternative likely to significantly increase net annual income to the CSF.”

The Land Board did consider this option in 1995-96, but rejected it. Instead, the Board wasted more than a decade on a futile attempt at negotiating with the federal government on a so-called “Habitat Conservation Plan” (HCP) for spotted owls and marbled murrelets. But ultimately the Board was left at the altar by federal negotiators, and the HCP was abandoned.

This continual appeasement emboldened environmental activists, who sued to halt virtually all commercial logging on the Elliott. As single-issue advocates, they have never cared about the collateral damage to schools. They only want one thing, and that is a shutdown of commercial timber harvest on the ESF.

There is a better way. Selling or leasing the Elliott would result in much more revenue for schools while still protecting bird habitat, because private landowners are subject to Endangered Species Act regulation just as the state is. However, it’s well known in the industry that private landowners use different compliance techniques that allow reasonable levels of harvest, while also maintaining necessary habitat. Private owners generally don’t waste time trying to negotiate HCPs.

To its credit, the Land Board has recently acknowledged that the status quo is unacceptable and is reviewing bids for three parcels of the ESF that it may sell off this year, totaling some 2,700 acres. Selling this land would help erase the $3 million loss from last year, but the basic problem remains: The state itself is a poor manager of commercial timberland.

A recent study by independent economist Eric Fruits reinforces the conclusion made by John Beuter 20 years ago, namely that Oregon schools would gain additional revenues of $40-50 million per year if the state placed management of the Elliott in private hands. While this is not the only option available, it is clearly the one that would generate the most money for schools. Therefore, it needs to be seriously considered by the Land Board.

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

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Time to Stop Throwing Money down the WES Sinkhole

In its proposed fiscal year 2015 budget, TriMet forecasts the purchase of two additional vehicles for the Wilsonville-to-Beaverton commuter rail line known as WES. The total cost will be $8.5 million in borrowed funds. None of those costs will be paid by WES riders; $600,000 annually in debt service will be paid by taxpayers for the next 20 years, for a total of $12 million.

This is a critical decision point for the TriMet board. Approving the proposed budget will expand the WES vehicle fleet from four to six and irrevocably commit the agency to commuter rail. But the five-year track record of WES suggests that another decision would be more defensible: shutting the train down completely.

There are at least three reasons to consider this option. First, WES is an energy hog. According to a new report by the Federal Railroad Administration, the average energy consumed by all commuter rail systems in America during 2010 was 2,923 British Thermal Units (BTU) per passenger-mile. WES was close to the bottom: It consumed 5,961 BTU per passenger-mile, more than twice the national average (by comparison the top performer was Stockton, CA: 1,907 BTU/passenger-mile).

Not only is WES inefficient compared with its peer group, it is wasteful compared with other modes of travel. The national average for all transit buses was 4,240 BTU per passenger-mile; for all light-duty cars, the average was 3,364.

In a state where most politicians are obsessed with energy conservation, it is difficult to justify expansion of a publicly subsidized line that is so wasteful.

Second, WES is TriMet’s most expensive fixed-route service, with an average per-ride cost of $12. Thus, even if ridership grows, it will not help TriMet, since the agency loses about $10 on every trip.

To see just how expensive WES is, we can compare it to an express bus route in the same corridor opened last year by the transit operator in Wilsonville, South Metro Area Rapid Transit (SMART). The costs of the bus are only 3% of WES: $1.30 per mile versus $43.74 for WES.

Transit Service from Wilsonville Station to Beaverton Transit Center

Operating cost/mile

Operating cost/hour

TriMet Express Rail

$43.74

$949.84

SMART Express Bus

$   1.30

$   83.17

Finally, WES ridership is tiny. WES now has about 940 daily riders who account for 1,880 average weekday “boardings.” This is still far below the forecast of 2,500 that was made for opening-year service (2009).

I’ve ridden WES at least 100 times in order to catch the express bus to Salem that picks up WES transfers in Wilsonville. For the privileged few on the train, it’s a nice trip. There are usually plenty of empty seats, free internet service, and lots of legroom. Plus, I feel like royalty as we shut down traffic temporarily on more than 20 east-west cross streets along the way. While this results in a net increase in regional congestion, it’s fun for the train riders.

But just because I personally enjoy WES, that doesn’t make it a good public investment. The bus alternative would move just as many riders at less cost and with lower fuel consumption.

Back in the 1990s, Westside politicians and rail boosters fell in love with the concept of a commuter train to Wilsonville. As with all such pork-barrel campaigns, the promises vastly exceeded eventual performance. But current TriMet board members can claim plausible deniability; none of them were on the Board back then, so it wasn’t their fault.

Now they have a chance to clean up the mess. It won’t be fun having to admit that mistakes were made; but if the Board is serious about re-setting TriMet on a path of financial sustainability, there will be many such decisions to be made. A long journey begins with the first step.

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

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Are Small Birds More Important than Small Kids?

Last year the S&P 500 Index had a total return on investment of 32%. That should have been good news for Oregon public schools, which receive twice-yearly checks from an endowment known as the Common School Fund.

One of the largest assets of the Fund is the 93,000-acre Elliott State Forest, near Coos Bay. Unfortunately, the Elliott did not return 32% last year. It did not even return zero percent. The state actually lost $3 million. That is quite a feat of mismanagement for timberland with a value of more than $500 million.

The Elliott is governed by the State Land Board, comprised of Gov. John Kitzhaber, Secretary of State Kate Brown, and State Treasurer Ted Wheeler. Under their leadership, more than 84% of the Elliott has been set aside in no-touch zones to accommodate the alleged needs of a small bird known as the marbled murrelet. Refusing to harvest timber means that schools lose out.

There is a better way.  A recent study shows that by simply selling or leasing the Elliott, Oregon schools would gain additional revenues of $40-50 million per year, with larger amounts over time.

Markets work when we allow them to. It’s time to apply market-based principles to the Elliott State Forest.

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

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Energy-Efficiency Myths of Commuter Rail

Advocates of rail transit tend to argue that we need trains because they are more energy-efficient than buses or cars. Unfortunately, that’s only true in some cases.

According to a new report by the Federal Railroad Administration, the average energy consumed by all commuter rail systems in America during 2011 was 2,923 British Thermal Units (BTUs) per passenger-mile. But the commuter line operated by TriMet (WES) was close to the bottom: WES consumed 5,961 BTU per passenger-mile, more than twice the national average.

Not only is WES inefficient compared with its peer group, but it is wasteful compared with other modes of travel. The national average for all transit buses was 4,240 BTU per passenger-mile; for all light-duty cars, the average was 3,364.

Based on these numbers, the environment would be better off if WES were terminated and riders simply got in their cars.

Nonetheless, TriMet management is “all-in” on more commuter rail. In its proposed FY 15 budget, the agency plans to purchase two additional rail vehicles at a total cost of $8.5 million. None of those costs will be paid by the privileged few who ride WES; debt service will be paid by taxpayers for the next 20 years.

It’s a cliché but still true: In government, nothing succeeds like failure.

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

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Four Years of ObamaCare Failures Is Long Enough

By Sally C. Pipes

President Obama marked the fourth anniversary of the passage of ObamaCare this week by promising to spend the next year “working to implement and improve on it.” He has his work cut out for him. Four years on, the Affordable Care Act has failed to deliver what its name formally promised—and is shaping up to be decidedly unaffordable for taxpayers. Consumers ought to hope that ObamaCare doesn’t make it to the age of five—and that lawmakers enshrine market-friendly, patient-centered reforms in its place.

Four years after passage—and six months after they were supposed to be fully operational—ObamaCare’s insurance exchanges are still malfunctioning. Last week, just days before the end of the open-enrollment period, the Philadelphia Inquirer discovered that the federal exchange website, HealthCare.gov, was displaying incorrect information about the subsidies for which shoppers should qualify.

The trillion dollars the Administration has earmarked for subsidies won’t make insurance more affordable if consumers can’t actually claim them. Online insurance marketplace eHealthInsurance estimated last week that ObamaCare had pushed premiums in the individual market up by as much as 59 percent this year, thanks to its myriad and costly new benefit mandates, taxes, and fees. Industry officials now say that rates could double in many areas of the country next year.

With the cost of coverage skyrocketing, it’s no wonder that enrollment has lagged the Obama Administration’s goals. One-fifth of those whom the Administration has counted as “enrolled” don’t appear to have paid their premiums. So they don’t actually have coverage.

Further, despite millions of dollars in advertisements, endless stumping by the president, and promotion by the likes of NBA stars Kobe Bryant and LeBron James, the exchanges have failed to attract anywhere near enough young people. Without sufficient premium income from these young, largely healthy individuals, the marketplaces will not be able to shoulder the costs associated with treating older, less healthy folks. Officials originally estimated that 40 percent of enrollees would need to be between the ages of 18 and 34 for the exchanges to be solvent. Thus far, this coveted demographic has accounted for just 25 percent of enrollment. If the exchanges flop, taxpayers could be forced to bail them out.

Small businesses that had been promised repeatedly by Obama that they’d save money learned in late February that two-thirds of them would see their premiums climb because of the law.

ObamaCare is even failing to expand coverage to the uninsured. A McKinsey study found that only a fraction of those who enrolled in the exchanges had previously been uninsured. The same study found that half of those who did not enroll pointed to “affordability”—or a lack thereof—as their main reason for choosing not to purchase coverage.

With the exchanges foundering and several directors of state exchanges resigning (The Oregonian dubbed Cover Oregon’s leadership changes “a major managerial house-cleaning”), the Administration has taken to rewriting the law to try to avoid open revolt. The over 5 million consumers whose plans were previously canceled because they didn’t meet ObamaCare’s stringent benefit requirements can now keep them through 2017, three years longer than the law originally prescribed. The Administration has also given people whose plans were canceled a “hardship exemption” so that they can dodge the individual mandate through 2016.

Many of those who have chosen to buy ObamaCare-approved coverage have been outraged to find that their policies permit them to visit only a handful of doctors and hospitals. So much for the President’s oft-repeated promise, “If you like your plan, you can keep it.” The Administration has responded by forcing plans to expand their provider lists in 2015. That decision may only hike rates further come next year. And recent media stories have been confirming as much.

By tweaking the law on the fly, the Administration is punting its problems down the road. Industry officials specifically point to the Administration’s various delays and changes as the main culprit for rate hikes. One insurance company representative told The Hill that his firm’s rates would triple on the exchange next year.

It doesn’t have to be this way. We can expand access to coverage for those with preexisting conditions, reduce costs, and lower the uninsured rate without disrupting Americans’ coverage and increasing their premiums. The president chose to cover those with pre-existing conditions in the most expensive way possible—by requiring insurers to offer policies to all comers and forbidding them from charging anyone more than three times what they charged anyone else. So insurers just hiked rates for everyone.

A more cost-effective way to minister to those with pre-existing conditions is by expanding federal funding for state-level high-risk pools. Many such pools were functioning well before ObamaCare, furnishing coverage to those who couldn’t get it on the open market without jacking up premiums for the rest of the population.

Meanwhile, the chief obstacle to covering the uninsured is affordability. Market forces could break that barrier down. Letting consumers buy across state lines, for instance, would increase competition among insurers and encourage state regulators to limit unnecessarily costly benefit mandates. Expanding health savings accounts (HSAs), where people can save money pre-tax for health care services, would give patients control over their health care dollars and encourage them to spend wisely. The explosive growth of HSAs in the employer market is one reason that health costs have been growing more slowly than the historical average in recent years.

Another way to make health insurance more affordable? Allow individuals to purchase coverage with pre-tax dollars, just as businesses can. Such a move would grant consumers the opportunity to choose coverage that suits their needs and budget—not their employer’s. And to ensure that low-income individuals could take advantage, the government could offer a refundable tax credit toward the purchase of health insurance.

As ObamaCare turns four, a clear majority of Americans stands opposed to it. Here’s to hoping that this anniversary is among the law’s last.

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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As ObamaCare Turns Four, How’s It Working out for You?

The Affordable Care Act turned four years old last Sunday. So how’s it working out for you? If you’re one of the millions who lost, or risk losing, the insurance you already had, your answer is probably “not so great.”

If you’re a young person who realizes that ObamaCare wants you to pay much higher insurance premiums to subsidize older and sicker Americans, your answer is probably “not so great” also.

Not even considering the HealthCare.gov website disaster, and the totally dysfunctional Cover Oregon website debacle, it appears there may be more people losing their health insurance coverage than have gained new coverage under this deeply flawed law.

The Congressional Budget Office estimates that the law will cause the equivalent of two million jobs to be lost by 2017.

The 2013 PolitiFact Lie of the Year was President Obama’s oft told fib that “If you like your health care plan you can keep it.”

When the first ObamaCare open enrollment period ends on March 31, its flaws will be hard to gloss over. Rather than carve out even more exemptions to the law, the administration should admit that they got it wrong. Then we can have an honest discussion about how to move toward real insurance reform using market principles that offer true affordable alternatives to the Affordable Care Act, which has proven anything but.

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

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As the Affordable Care Act Turns Four, Cascade’s Predictions Were on the Mark

Sunday, March 23, was the fourth anniversary of the passage of the Patient Protection and Affordable Care Act (“ObamaCare”). Cascade founder and senior policy analyst Steve Buckstein predicted then that ObamaCare would “represent much more a violation of individual liberty than an improvement in American health care.”

Four years later, the law remains mired in controversy, confusion, and dysfunction. The ACA has been challenged from numerous constitutional, philosophical, and moral angles; and the Supreme Court will hear a case this week challenging the ACA on First Amendment grounds.

Buckstein wrote in 2010:

When we founded Cascade Policy Institute in 1991, our mission was, and still is, to promote public policy alternatives that foster individual liberty, personal responsibility and economic opportunity. This bill threatens to set us back in all three areas:

Individual liberty will be violated as the federal government takes away even more of our options regarding what insurance, if any, we choose to purchase and how we purchase it.

Personal responsibility will be decimated as the federal government tells us “don’t worry about taking care of yourself; we’ll do that collectively from now on.”

Economic opportunity will be stifled as the tax burden on individual workers, employers and investors go up, not down. Without meaningful cost controls, health care costs will spiral, leading to higher federal deficits and to even more government involvement in the economy.

When the bill’s supporters tell us that every other industrialized country has national health insurance, our response should be, “America is not every country; America is supposed to be the land of the free.”

We now see that most of these predictions are coming all too true. Not even considering the HealthCare.gov website disaster, and the totally dysfunctional Cover Oregon website debacle, it appears that more people may be losing their health insurance coverage than have gained new coverage under this deeply flawed law. The Congressional Budget Office now estimates the law will cause the equivalent of two million jobs to be lost by 2017. The 2013 PolitiFact Lie of the Year was President Obama’s oft-told fib, “If you like your health care plan you can keep it.” Only a fraction of those who have signed up under ObamaCare exchanges are the “young and healthy” the scheme needs to pay higher premiums to subsidize the “old and sick.” It seems that younger people would vote for Obama, but they won’t follow him off a health care cost spiral cliff.

With the first ObamaCare open enrollment period ending on March 31, its flaws will certainly be hard to gloss over.* Rather than carve out even more exemptions to the law, the administration should admit that they got it wrong. Then we can have an honest discussion about how to move toward real insurance reform using market principles that offer true affordable alternatives to the Affordable Care Act, which has proven anything but.

* The administration is now expected on March 26th to announce an extension of the March 31st open enrollment deadline for certain individuals.

 

 

 

 

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Why I Left the Left: Lessons Learned From a Long, Strange Trip

Cascade Policy Institute President & CEO John A. Charles, Jr. spent 17 years heading the Oregon Environmental Council (1980-1996). He just completed his 17th year with Cascade. Why did he make the change and what has he learned along the way? Join us for an entertaining talk from a “recovering statist” who will share thoughts from his essay in the recently-published book, “Why We Left the Left”. 

5:30 PM
Guest Arrival

5:45 PM
Presentation and Q&A

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

Early-bird pricing: Prior to April 15th, $20.00/person.
After April 15th, registration increases to $25/person.

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In Oregon and Nationally, ObamaCare’s Exchanges Don’t Play Well with the Young

By Sally C. Pipes

Young people appear to have abandoned President Obama less than two years after sending him back to the White House. Only 41 percent of Americans 18 to 29 approve of his job performance, according to a recent poll from Harvard’s Institute of Politics.

Even more—56 percent—disapprove of ObamaCare, his chief domestic policy achievement. Many of these “young invincibles”—folks between the ages of 18 and 34―are expressing their disapproval by refusing to enroll in the law’s health insurance exchanges. If this trend keeps up, the exchanges could collapse.

The Congressional Budget Office (CBO) estimates that 40 percent of enrollees must be young and healthy for the exchanges’ finances to work. Here’s the logic behind that conclusion. Young people, while not quite invincible, are far less likely to get sick—and thus to use their coverage. So many will pay premiums without claiming much in benefits in return. Those premiums are supposed to go toward subsidizing the cost of coverage for older, sicker adults.

It doesn’t look like exchange enrollment will meet the administration’s target. Colorado just reported that a scant 7 percent of its exchange enrollees are between 18 and 24. More than four times as many are between the ages of 55 and 64. Sixteen percent are between 25 and 34.

Despite Cover Oregon’s $21-million, youth-friendly marketing campaign, Oregon is tied with West Virginia for last place in young sign-ups. As of March, Oregon remains the only state with an exchange in which people can’t self-enroll online in one sitting, and the manual application backup process may further discourage young adult enrollment.

Nationwide, as of late February, about 27 percent of the four million people who have signed up for coverage through the marketplaces are young adults. That’s only a slight improvement over January, when 24 percent of enrollees were young.

At the outset, the Obama Administration estimated that 1.6 million of enrollees in February would be young people. Their guess was a bit off—just over 800,000 had signed up by the beginning of the month. According to the New York Times, the Obama Administration hasn’t been able to translate the “get-out-the-vote” prowess it displayed in the 2008 and 2012 presidential elections into the health insurance realm. Only 9 percent of those who have purchased policies are aged 18 to 25. The 26 to 34 band accounts for 16 percent of enrollees.

And the situation isn’t likely to improve. A study from NerdWallet, a personal finance website, predicts that young adults who opt for the financial penalty associated with remaining uninsured, which goes into effect on April 1 and amounts to $95 or 1 percent of income this year, could save more than $1,000 compared to someone who buys insurance. That savings even includes the cost of visits to the doctor’s office. If that hypothetical young person has to visit the emergency room, he still could be better off uninsured—$700 better, according to the study.

The enrollment problem may even go beyond the young invincibles. Twenty to 30 percent of people whom the administration counts as having “purchased” insurance via the exchanges have yet to actually make a payment to cover the premium. So they don’t actually have insurance. These folks could be in for a rude awakening if they don’t find out that they’re uncovered until they’re at the doctor’s office or hospital.

The government’s enrollment numbers even demonstrate that the program is failing to accomplish its core goal of providing coverage for the uninsured. According to McKinsey and Co., only 11 percent of the 2.2 million people enrolled through December were previously uninsured.

Nowhere are the failures of the exchanges more apparent than in the Latino community. Nearly one-third of Latinos are uninsured—almost twice the national average. Latinos also skew younger than other ethnic groups. And they were staunch supporters of President Obama in 2012; the president took Hispanics by a 2.6 to one margin. Yet in California, only 20 percent of enrollees are Latino—even though the group accounts for 46 percent of all folks eligible for premium subsidies in the state.

State and federal officials are paying an awful lot for these subpar enrollment numbers. The cost per enrollee ranges from $1,500 in California to nearly $57,000 in Hawaii. The government has invested $205 million in the president’s birthplace to enroll just 3,614 people. Washington, D.C. has signed up just over 5,000 people on its exchange—despite taking in more than $133 million in federal money. Those 5,000 folks put the District 12 percent of the way toward its enrollment goal.

If enrollment continues to skew older and sicker, insurance companies will have to raise premiums. As that happens, fewer people will sign up. Others will drop their coverage. Both outcomes will drive costs for individuals and taxpayers up even further.

The White House has essentially given up on its initial goals of 40 percent young invincibles in a crowd of seven million enrollees by the end of March. Moving the enrollment goalposts may mute some of the political blowback from the exchanges’ failures. But it won’t change the math that underpins the exchanges. That could spell trouble for patients expecting affordable coverage—and taxpayers who may be called upon to shell out more to give it to them.

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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RECs, Renewable Mandates, and the Oregon Electricity System

Please join us for Cascade’s monthly Policy Picnic led by Cascade Policy Institute research associate William Newell on Wednesday, March 26th, at noon.

RECs are a commodity similar to carbon offsets and other so-called ‘green’ products and they are touted as renewable energy ‘equivalents’ meaning anyone who purchases a REC can claim they used renewable electricity. Despite the strong claims, questions remain about RECs’ effects on the electricity system in Oregon and whether they result in less reliance on fossil fuels.

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.

Sponsored By

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New Education Study Shows: We’re Paying More for Less

Advocates on all sides of the public education spending-versus-results debate cite various statistics to make their respective cases. Some argue that more money leads to better results. Others claim that spending more dollars per student―at least in the ways our public school system has spent them―makes little or no difference in educational outcomes; and it appears the evidence is strongly on their side.

A new Cato Institute study, State Education Trends: Academic Performance and Spending over the Past 40 Years, uses adjusted state SAT score averages to track educational performance trends over the last four decades. The findings are staggering: Academic performance has declined despite large increases in real per-pupil spending.

According to Cato, “The study reveals that the average state has seen a three percent decline in academic performance despite a more than doubling in inflation-adjusted per-pupil spending. More strikingly, every state school system in the country has suffered a collapse in productivity over the last 40 years. Essentially, there has been no correlation between state spending and academic performance.”

In Oregon, public education spending has increased 60% in real terms, yet SAT scores have been flat. The study’s results demonstrate that throwing more money at public education has been ineffective at improving student performance. Rather than spend even more, we should let parents direct education funding to the schools of their choice. Unleashing consumer power gets more bang for the buck throughout the economy; it’s time to put it to work in education as well.

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

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Wanted: Less Judicial Activism, More Judicial Engagement

By Clark M. Neily III

Does America have an “activist” judiciary that constantly involves itself in policy disputes best left to the other branches? Several Supreme Court justices have publicly expressed that view recently, but they are dead wrong.

Indeed, given the breathtaking abuses of power we have seen by other branches lately, the prospect of judges becoming even less vigilant about protecting citizens from overweening government should be deeply troubling.

As I explain in my new book, Terms of Engagement: How Our Courts Should Enforce the Constitution’s Promise of Limited Government, the very institution of limited government has become imperiled by an epidemic of judicial abdication. What America needs is judicial engagement: consistent, conscientious judging in all cases, without bent or bias in favor of government. Unfortunately, we’re not getting it.

Take the Supreme Court’s decision to uphold the greatest expansion of federal power since the New Deal by rewriting the Affordable Care Act (aka “ObamaCare”) to transform the requirement that Americans purchase government-approved health insurance from a mandate enforced by a financial penalty, into an option with an additional tax payment for those who choose not to exercise it.

Never mind that the Affordable Care Act refers to this payment as a “penalty” 18 times; and never mind Chief Justice Roberts’s recognition of the fact that the “[t]he most straightforward reading of the mandate is that it commands individuals to purchase insurance.” According to Roberts’s understanding, the justices’ role was not to strike down or uphold the law based on “the most natural interpretation of the mandate,” but instead to bring their own creativity to bear in rationalizing a constitutional basis for the law if possible.

But that’s not judging; it’s advocacy. Judges are supposed to remain strictly neutral in all cases, including ones challenging the constitutionality of a law. Recall how Roberts compared judges to umpires in his confirmation hearing to be Chief Justice. Umpires, of course, do not bend over backwards to avoid calling outs or strikes against the home team the way Roberts did in changing ObamaCare’s insurance provision from a mandate to an option in order to uphold the law.

For those who take seriously James Madison’s assurance that the powers of the federal government would be “few and defined,” that decision was a travesty. Unfortunately, it was not an anomaly. Instead, it reflects a judicial mindset much in vogue among conservatives (and sophisticated liberals who understand its power to clear the way for even more government) that calls for reflexive deference toward the other branches in most areas of law―from the allocation of power between federal and state governments, to economic and business regulations, to property rights and the use of tax policy to manipulate individual behavior.

Compare the absence of meaningful judicial review in those areas with Justice Ruth Bader Ginsburg’s recent lament in The New York Times that the current Supreme Court is “one of the most activist courts in history,” or Justice Antonin Scalia’s characterization of activist judges as “Mullahs of the West.” Even Justice Anthony Kennedy has jumped on the bandwagon, arguing that “[a]ny society that relies on nine unelected judges to resolve the most serious issues of the day is not a functioning democracy.”

But America is not a democracy. It is a constitutional republic in which majorities are forbidden from pursuing a host of policies, including ones that violate individual rights or enable legislators and bureaucrats to exercise powers they do not lawfully possess. Preventing those things from happening is not judicial activism; it’s judicial engagement. And as recent events involving the IRS, the NSA, the Department of Justice, and countless other misbehaving agencies make plain, we need a lot more of it.

*This article originally appeared on FoxNews.com.

Clark M. Neily III is a senior attorney at the Institute for Justice and director of the Institute’s Center for Judicial Engagement. He is the author of Terms of Engagement: How Our Courts Should Enforce the Constitution’s Promise of Limited Government. Neily will be a guest speaker for Cascade Policy Institute in Portland in March 2014.

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Airbnb, Destructive Innovation, and Liberty

By William Newell

Portland is brainstorming regulations for temporary lodging made possible by websites like Airbnb. Airbnb describes itself as a “community marketplace for people to list, discover, and book unique accommodations around the world.” The proposed rules would make homeowners pay a tax, get a permit, and follow certain limitations. Portland’s slow and conditioned acceptance of home lodging businesses serves as a microcosm of one of America’s most troubling problems: our fatal conceit.

Individual liberty is a founding principle of American government and one of our most sacred rights. We protect our individual liberty in part because the dynamism that liberty affords individuals is necessary for a flourishing society. The only time individual liberty is to be attenuated is when one individual interferes with the rights of another.

Portland’s rules simply encourage a political system that erodes liberty and takes with it America’s diversity, dynamism, and drive. If a widow living on a fixed income wants to rent a room to help make ends meet, why should she be stopped because her home wasn’t “zoned” for lodging? If a young couple rents an extra room to pay off college loans, should they have to pay tourism taxes? Those who advocate for bans or restrictions not aimed at mitigating externalities and protecting individual rights are really questioning the underlying dignity and respect we should each be afforded.

*In his essay on the failures of central planning, The Fatal Conceit, Friedrich Hayek argued that individuals are best suited to know their own circumstances and to act to improve them. Actions based upon the presumption of superior knowledge by governments to impede individual endeavors tend to fail and to create more harm than otherwise would have occurred.

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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Sale of Elliott State Forest Would Mean Millions More Each Year For Schools

A new report released today shows that if the Oregon State Land Board sold or leased the 93,000-acre Elliott State Forest, public school funding would increase by at least $40 million annually.

Roughly 85,000 acres of the Elliott State Forest are managed for the primary purpose of raising funds for public schools. These lands are known as “Common School Trust Lands,” and the Oregon State Land Board is required by law to manage them for the trust beneficiaries: public school students. Net receipts from timber harvest activities on the Elliott are transferred to the Common School Fund (CSF), where assets are invested by the Oregon Investment Council in various financial instruments. Twice each year, public school districts receive cash payments based on the investment returns of CSF assets.

Due to environmental litigation, the State Land Board lost $3 million managing the Elliott State Forest in 2013. As a result, the Land Board has recently decided to sell 2,700 acres of the Elliott. An independent analysis conducted for Cascade Policy Institute by economist Eric Fruits shows that selling or leasing the entire forest would dramatically increase the semi-annual returns to public schools, and would do so in perpetuity.

According to Cascade president John A. Charles, Jr., “The Land Board has a fiduciary duty to manage the state trust lands for the benefit of the public schools. Losing $3 million on a timberland asset worth at least $600 million is likely a breach of that duty. The Land Board is doing the right thing by taking bids to sell parcels of the Elliott, and should continue to pursue a path of selling or leasing larger portions of the forest. There is no plausible scenario of Land Board timber management that would bring superior returns to public schools than simply disposing of these lands and placing the funds under the management of the Oregon Investment Council.”

Click here to read the report.

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Income Inequality: A Problem That Isn’t

The debate over “income inequality” has simmered for some time, but now seems to be upfront as a key dividing line in American politics. President Obama uses the concept to make his case for raising the federal minimum wage. And, the Oregon Department of Employment reports on the so-called growing wage gap between rich and poor in our in state as though that were our primary economic problem.

But many who see income inequality as a major problem tend to have a fuzzy understanding of how our economy works―and who is to blame for our economic problems. They seem to think capitalism is evil. They seem to think “rich people” are evil, and they assume rich people gained their wealth by stealing money from the rest of us.

But that’s wrong. Most rich people got that way because they operate in our free-market system to provide goods or services that the rest of us willingly purchase. They create value for us, and for themselves.

Take, for example, the late Steve Jobs of Apple Computers. Jobs died in 2011 at the age of 56. From starting Apple in his garage back in 1976, he accumulated some $8 billion by creating and selling a number of very innovative products to millions of people. From desktop computers, to iPods, to iPhones, and now iPad tablets, Jobs made many lives easier and more enjoyable, and made many of us more productive. For that, those of us who freely purchased his products rewarded him with great wealth. He didn’t steal money from his customers. No one was forced to buy Apple products.

And yet, many people seem to believe that somehow Jobs and other rich people did just that: stole money from them. They think rich people get rich by making other people poor. What they fail to recognize is that poverty is not created. It’s the default condition of mankind. It’s wealth that has to be created.

People like Steve Jobs, Bill Gates of Microsoft, and Sam Walton of Walmart created fabulous amounts of wealth by meeting the needs of the rest of us. We gladly buy their products because they make us better off, not because there is some government mandate that we do so.

But, President Obama either doesn’t understand that or chooses to ignore it. In 2010 he told us that he thinks at a certain point “you’ve made enough money,” meaning that after that point you should pay more taxes than other people.

However, rich people are, if anything, already paying more than their fair share. In the year the President made that statement, the top one percent of tax returns included 18.87 percent of all adjusted gross income and 37.38 percent of all federal individual income taxes paid. The top 5 percent earned 33.78 percent of income and paid 59.07 percent of taxes. The top 10 percent earned 45.17 percent of income and paid 70.62 percent of taxes. How much more should they pay to make everything “fair?”

Billionaire Warren Buffet says that, because much of his income is in the form of capital gains, he pays a lower tax rate than his secretary. Those who seem to envy the rich are demanding he pay at least as much as his secretary. They want to raise his tax rate up to hers.

But I suggest instead that we might want to lower her rate, and ours, down to Buffet’s. I think most of us would prefer to have our taxes lowered, rather than increase taxes on the few billionaires among us. That would help make most of us better off, rather than making the rich few worse off.

And, even if income inequality were a bad thing, a strong case can be made that government solutions may make the inequality worse. As recently noted by the non-partisan Congressional Budget Office, President Obama’s proposed $10.10 minimum wage, if applied across the economy, likely would reduce total employment by some 500,000 jobs. This is another acknowledgement that raising wages above what relatively unskilled workers are worth to a business is likely to lead to some of those workers either not being hired, or actually losing jobs they already had at the bottom of the economic ladder. Raising the minimum wage simply chops off some of those lower rungs on the ladder.

Whether or not income inequality is fair, finding ways to reduce it by helping low-income earners improve their skills and qualify for more demanding positions would be a good idea. However, reducing it by pounding down the top earners through higher taxes will not help low-income earners; it will actually make them worse off.

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

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Engagement, Activism, or Deference: What’s the Role of the Judiciary?

Supreme Court Justice Louis Brandeis once remarked that “the reason why the public thinks so much of the Justices is that they are almost the only people in Washington who do their own work.” However, according to Clark M. Neily III, judges at all levels still might be doing their own work, but are abdicating their responsibility, as James Madison put it, to serve as an “impenetrable bulwark against every assumption of power in the legislative or executive.”

In his book, Terms of Engagement: How Our Courts Should Enforce the Constitution’s Promise of Limited Government, Neily argues that the judiciary’s knee-jerk deference to the other branches has resulted in an explosion in the size, cost, and intrusiveness of government. In any given year, the Supreme Court strikes down just three of the five thousand laws passed by federal and state governments. Unfortunately, this reflexive restraint toward other branches led to the Affordable Care Act being upheld last year and the approval of eminent domain for economic development purposes in Kelo v. City of New London in 2005.

Clark Neily has spent his career fighting against the unconstitutional expansion of government and for a more properly engaged judiciary. The director of the Institute for Justice’s Center for Judicial Engagement, Neily will speak in Portland on March 18. Visit cascadepolicy.org for details and to RSVP for this special event.

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Is a Doctor Shortage on the Horizon?

The Affordable Care Act (ObamaCare) is projected to add 30 million more nonelderly persons to the insurance rolls nationwide by 2022, and Oregon intends to expand Medicaid enrollment by up to 260,000 people under the ACA. But carrying an insurance card isn’t the same as having timely access to quality health care. We also need enough medical professionals available to see us.

As the Acton Institute’s Jonathan Witt says, “A curious feature of recent U.S. health care reform efforts—easily overlooked amidst the daily media grind of canceled plans, crashing websites and new restrictions—is the irrational belief that we can extend more health care to more Americans while rendering a career as a family physician increasingly unappealing.”

A summary of a recent report by Scott Atlas of the Hoover Institution notes that “there will be an estimated additional 15 million to 24 million primary care visits, which would mean that the United States will need an additional 4,307 to 6,940 primary care doctors by 2019. This number is on top of the estimated additional 44,000 to 46,000 doctors that will be needed over the next decade and a half to meet future primary care demand, even without the ACA.”

In short, America needs more doctors―and soon. But, according to Witt, “a growing number of doctors are convinced that ‘many physicians will retire earlier than planned in the next one to three years’” due to increasing government entanglement in our health care markets. Witt explains:

My brother-in-law Bruce Woodall, a physician who has worked stateside and in the developing world, gave me another way to understand this response. Those who go into family medicine, he said, often have an independent and entrepreneurial streak. They have visions of owning a family practice one day and aren’t attracted to the idea of simply working for the government. But increasingly, that’s what family medicine in the United States amounts to. The result is that an increasing number of physicians who can leave, do.

Government currently discourages doctors from being the healers they trained to be by making it more difficult for them to treat patients, run clinics, and make a living for themselves and their families. Ever-increasing regulations, including those resulting from the ACA, are taking American health care further down that path. Add the decline in Medicare and Medicaid reimbursement rates, and today’s doctors already find themselves unable to take on more of those patients.

Another problem for future doctors is that investing in a medical degree requires new graduates to carry heavy debt loads. That investment needs to pay off in the long run. If prospective medical students don’t think they foresee a sound financial future for their practices in the years ahead, they may not choose health care professions in the numbers we need. With fewer doctors available to see us, more insurance cards in our wallets won’t mean much.

Solutions already exist which can increase access to primary care, including expanding outpatient clinics in retail settings and allowing nurse practitioners and physician assistants to provide more care for which they are medically qualified. Government at all levels should focus on removing red tape and making it easier, not harder, for doctors to operate clinics that serve basic health care needs. Simplification of regulations that hamstring doctors is a crucial part of the answer to our physician shortage. Empowering doctors “with an entrepreneurial streak” to find ways of expanding patients’ access to quality health care would be far better than continuing to expand the government’s control over an already massively regulated system.

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

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Forced Charity Isn’t Charity…It’s Just Force

When Phil and Penny Knight announced last September* that they would offer $500 million to OHSU for cancer research if the public matched their gift, it understandably led to an outpouring of positive comments and support. But then, OHSU wanted state taxpayers to come up with $200 million of the match through a building bond. That resulted in much less positive press and some outright criticism.

Now, OHSU has modified its ask so that a $200 million building bond will be in addition to the $500 million it will try to raise from voluntary donors. That would mean a total of $1.2 billion in cancer research funds stemming from the Knight challenge.

Either way it’s presented, though, asking taxpayers to repay $200 million plus interest to house cancer researchers and clinical trial space is a questionable proposition.

Some proponents are counting on this deal to make Oregon the go-to state for top cancer researchers. But at least 67 other National Cancer Institute designated cancer centers nationwide are already competing for recognition and talent with OSHU. Other states are funding some of these centers already. It would be wonderful if future breakthroughs in cancer research came from Oregon, but this is not within our state government’s control.

Philanthropy is admirable, but forcing taxpayers to help match a private gift is a move in the wrong direction. Forced charity isn’t charity…it’s just force.

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

*Audio recording incorrectly lists date of announcement as last November instead of last September.

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Portland’s 100% Renewable Energy Goal Is Still Fantasy

By William Newell

The 2013 North American World Environment Day opened with a speech from Mayor Charlie Hales on the need for Portland to lead on renewable energy policy as it has on other environmental practices. As part of this renewed leadership effort, the Mayor reiterated a 2012 Portland City Council resolution which called on the City to use only renewable energy in its operations. However, this is not the first time the City has created a goal of 100 percent renewable electricity and sold it as an opportunity to lead―only to fail to get anywhere near the goal.

In reality, the Mayor was touting an objective which has existed since 2001. The goal originated as a part of the Local Action Plan on Global Warming, and it called on the City to “purchase 100 percent of City government electricity load from new renewable resources” by 2010. After the initial 2001 proposal, the City purchased three-year renewable energy credits (RECs) equivalent to about ten percent of the City’s electricity use.

Six years later in 2007, the City again tried to purchase more RECs; but the negotiations failed after the sales company decided to sell its RECs to Washington and California. The City spent more than $100,000 just to negotiate the deal.

2009 marked another important step for Portland’s green dreams with the announcement of the Climate Action Plan, which contained essentially the same goal as those proposed in 2001. This time the City would purchase or produce renewable energy with 15 percent of the energy coming from the City’s own generation by 2012. Yet again, by 2012 the City had failed to meet its goal, obtaining about 14 percent of its electricity from renewable sources and only nine percent from “self-production.” The other five percent came from state renewable portfolio standards, which mandate that utilities obtain five percent of their energy sales from renewable sources. This was a lucky development for the City, but ultimately it does little to help Portland accomplish its goal.

In 2012, the Portland City Council passed another resolution which prompted the City’s various bureaus to purchase enough RECs to “offset” 100 percent of the City’s electricity. This is the resolution on which the Mayor focused in his speech. But now, with no large-scale purchases or projects to meet the target, at the beginning of 2014 the City has yet to accomplish its goal. The City still only gets 14 percent of its electricity from renewable sources. This means the City is more than 85 percent behind meeting the objective. After more than a decade of goal setting and public speeches, the City has failed to achieve its goal. Can Portlanders really expect the City to change its behavior now, after 12 years of speeches and resolutions?

The reality is that Portlanders should not want the City to accomplish its long-overdue goal for a few key reasons. First, the proposed method of meeting the target has been through purchases of renewable energy credits, but this is a waste of city resources as RECs are no guarantee of reduced environmental impact. Second, the City has tried to produce its own energy through various means, but often through solar or wind installations―and these are wasteful and undermine grid stability.

To understand why REC purchases are wasteful, it is important to understand what they are. RECs are a commodity which represents the environmental benefits of one megawatt-hour of renewable electricity. One REC is “produced” when one megawatt-hour of electricity is generated from a source that is categorized as “renewable.” RECs are then sold, and purchasers can claim that they “used” renewable electricity.

But there are many problems with this narrative. When the City buys RECs, the purchase benefits government-favored wind operators while encouraging nothing. RECs do not require that proceeds go to expanding renewable generation capacity, and they are too inexpensive to be a sufficient incentive to expand renewable energy production. Interestingly, RECs are extremely cheap, which sounds good for the City budget, but it actually undermines their ability to spur further renewable energy development. Ultimately, RECs play second fiddle to more substantial renewable incentives like the Wind Production Tax Credit.

The main reason for the City to purchase RECs is that they are supposed to “offset” Portland’s carbon emissions from electricity use. But the credits don’t represent credible offset emissions because there is no requirement for RECs to show how much emissions were really avoided in their production. RECs cannot be tracked from creation to final purchase. Another problem with the “offset” theory is that RECs subsidize intermittent energy sources such as solar and wind. Intermittent energy sources must be backed up by other sources (possibly including fossil fuel plants), which either must be “ramped” up and down or “idled” to make up for cloudy or calm days. Relying on intermittent energy sources can actually result in more carbon emissions from existing fossil fuel plants and backup generators and a less reliable electricity grid.

The story of Portland’s 100 percent renewable energy goal is an unfortunate one. Portland hasn’t delivered on its promise, while touting failed solutions. RECs―the City’s preferred “green” solution―are not transparent, credible, or effective. Portlanders should really be thankful the City hasn’t met its own goal, which would have wasted taxpayer dollars on a questionable program.

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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John Charles discusses the dangers of the Metro regional government

In December 2013, Cascade President and CEO John A. Charles spoke to the Clackamas County Americans for Prosperity group about the dangers of the Metro regional government and their planning decisions.

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Too Little of a Good Thing

By William Newell

The recent Portland School Board decision to expand enrollment at Benson Polytechnic High School exemplifies an odd mindset within the public education system. The board’s decision allows Benson to increase its enrollment from 821 to 850 students, due to public outcry over the limit. Benson was designed to handle 2,000 students, yet the school educates fewer than half that number because of district policy.

When businesses provide customers with quality products and services, they attract even more customers. Expansion is a sign of success, and businesses profit from it. Sadly, the same can’t be said of public education. When a public school succeeds, its enrollment gets capped. Its success is considered a drain on other schools: If a school is in high demand, students will flock there and neglect their “neighborhood” schools. Yet, this is the very point of having a market. Poorly performing businesses fail and successful ones rise, but everyone benefits from success.

When schools fail to meet students’ needs, students should be able to attend schools that do. This is why the Benson situation is absurd. The school board shouldn’t limit quality public education. When Portland parents want more seats in schools like Benson, the board should find ways to give them more of the educational programs and opportunities that they demand―either by expanding that school or creating more such schools in the district.

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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Understanding Oregon’s Hidden Sales Tax on Energy

Please join us for Cascade’s monthly Policy Picnic led by Cascade Policy Institute President and CEO John A. Charles, Jr. on Thursday,February 27th, at noon.

Since 2002 most Oregon electricity customers have been forced to pay a monthly energy tax of at least 3% to support such groups as the Energy Trust of Oregon and the Oregon Housing and Community Services agency. Over the last decade more than one billion has been collected to improve energy efficiency and subsidize renewable power. This presentation will discuss where the money goes and outline ways to reduce or repeal the tax.

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.

Sponsored By

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Cascade in the Capitol: Testimony for the House Education Committee Against SB 1538 which would limit new charter school options

February 19, 2014

Testimony Against SB 1538 Before the Oregon House Education Committee

Chair Gelser and members of the Committee, my name is Steve Buckstein. I’m Senior Policy Analyst and founder of Cascade Policy Institute based in Portland.

I would like you to reject SB 1538.

Interestingly, the Senate has overwhelmingly approved SB 1525, which would make it easier for Oregon college students to take online courses from institutions outside the state. The chair of the Senate Education and Workforce Development Committee noted how fascinating it was that the proposal would break down borders standing in the way of Oregonians having more higher education learning opportunities. That seems non-controversial and clearly a good thing.

Unfortunately, by a much closer margin, the Senate also approved SB 1538, which does the exact opposite of SB 1525. It actually builds up borders that will stand between Oregon’s Kindergarten through 12th grade students and new public charter school options that might offer the very educational opportunities they want and need.

Several years ago I was watching a Portland Public Schools Board Meeting where several charter applicants were making their cases to the board.

One group wanted to start a school with, what I recall, was a particular arts curriculum. They’d jumped through all the hoops required of a charter applicant, but when the board members began commenting, it became clear that the applicant stood no chance of approval.

One board member looked at the applicants, and at the audience, and stated, “We already have one of those.”

She went on to explain that the district already had a school with a similar curriculum focus, and therefore they obviously didn’t need any more. How she knew that there was no more demand among parents and students for such a focus was unclear.

They already had one of those, so that ended the discussion.

This bill would make it even easier for Portland and other districts to write off competent, innovative charter applicants by simply stating that their schools wouldn’t advance one or more educational goals that the board had identified.

We already have one of those” would become… “We don’t need even one of those.”

This bill would stifle innovation, and stifle opportunities for students currently “captured” by their local public schools to find any way out…to find a better fit for their educational needs.

I hope you reject it.

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John Charles Debates Tigard’s Light Rail Ballot Measure

During January’s Tigard Initiative Public Forum, John Charles debated a Tigard City Counselor on the merits of the Tigard ballot measure that would place restraints on the Tigard City Council regarding the Southwest Corridor Plan.

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Is Part-Time Work Obama’s New American Dream?

Last week the Congressional Budget Office reported that the Affordable Care Act will cause Americans to work less. Significant numbers of people will choose to keep their incomes low in order to be eligible for federal health care subsidies or Medicaid. Consequently, the economy will lose the equivalent of two million full-time workers by 2017.

The Wall Street Journal explains:

CBO’s analysis is rooted in ObamaCare’s complex design that includes new subsidies, taxes and mandates. For low-wage, lower-skilled or discouraged workers in particular, ObamaCare offers incentives that can force them to trade jobs for entitlement benefits.

…The law’s insurance subsidies are gradually taken away as income rises….[This reduces] the rewards for work—whether it be overtime, accepting a promotion, or training in the hope of higher future earnings.

But the White House doesn’t think this is negative. Press Secretary Jay Carney said people “will be empowered to make choices about their own lives and livelihoods” and “have the opportunity to pursue their dreams.”

However, penalizing people for increasing their earned income hurts workers in the long run. Having government programs, mandates, and regulations steadily disconnect work from reward replaces the American dream of building a better life for yourself and your family with, as the Wall Street Journal puts it, “the new American dream of not working.” If we keep following this road, not only our economy, but our spirit, will pay.

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

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Cascade in the Capitol – Testimony Against Placing Limitations on New Charter Schools (SB 1538)

February 6, 2014

Testimony Against SB 1538 before the Oregon Senate Education and Workforce Development Committee
By Steve Buckstein

Chair Hass and members of the committee, my name is Steve Buckstein. I’m the Senior Policy Analyst and founder of Cascade Policy Institute, a Portland-based free-market think tank.

I’m here to ask you to reject SB 1538.

Chair Hass, the committee just approved SB 1525, which would make it easier for Oregon college students to take online courses from institutions outside the state of Oregon. You noted how fascinating it was that the proposal would break down borders standing in the way of Oregonians having more higher education learning opportunities. That seems non-controversial, and clearly a good thing.

Unfortunately, if you approve the bill we’re discussing now, SB 1538, you’ll be doing the exact opposite. You’ll be building up borders that will stand between Oregon’s Kindergarten through 12th grade students and new public charter school options that might offer the very educational opportunities they want and need.

A few years ago I was watching a Portland Public Schools board meeting where several charter applicants were making their cases to the board. One group wanted to start a school with, what I recall, was a particular arts focus. They’d jumped through all the hoops required of a charter applicant, but when the board members began commenting it became clear that the applicants stood no chance of approval.

One board member looked at the applicants, and at the audience, and stated, “We already have one of those.” She went on to explain that the district already had a school with a similar curriculum focus, implying that obviously they therefore didn’t need any more such schools. One was enough.

SB 1538, brought to you by the current Portland Public School Board, would make it even easier for Portland and other districts to write off competent, innovative charter applicants by simply stating that their proposed schools wouldn’t advance one or more educational goals that the board had identified.

Back when I was about to graduate from a Portland elementary school, I considered attending Benson Polytechnic High School. It was the one Portland public school with an emphasis on technical education, and it seemed to always have a waiting list to get in. I wondered then why the district never opened another Benson type school to meet the obvious need.

Why was “We already have one of those” the mindset then, and why is it the mindset still?

I now believe it’s because board members and administrators don’t have to be concerned about the needs of most students, because most students and their parents don’t have the means to exercise other options, such as moving near a school that better meets their needs, or paying taxes for the public school system and tuition for a private school at the same time.

If SB 1538 becomes law, this mindset of “We already have one of those” could easily morph into “We don’t need even one of those.”

This bill would stifle innovation, and stifle opportunities for students currently “captured”* by their local public schools to find any way out…to find a better fit for their educational needs.

I hope you reject it.


SB 1538 was approved on a 4 to 1 vote in the Committee and will go to the Senate floor for a vote.

Archived audio of the entire February 6, 2014 hearing is here, beginning with the hearing on SB 1525. Senator Hass’s comment about breaking down borders beginning at 08:19 into that hearing. The hearing on SB 1538 begins at 17:20, with public testimony for and against the bill. My oral testimony begins at 51:04.

* Public school districts often try to maintain or increase the percentage of eligible students living within each school’s particular geographic boundaries. This percentage is openly referred to by district officials as the “capture rate.” Anything that could reduce the capture rate of a given district school, such as creation of a new charter school, is seen by those officials as a potential threat to their capture rate goals.

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Cascade in the Capitol – Testimony Against Additional Tobacco Taxes (HB 4129)

February 11, 2014

Testimony Against HB 4129 in the House Revenue Committee

By Steve Buckstein

Chair Barnhart and members of the committee, my name is Steve Buckstein. I’m the Senior Policy Analyst and founder of Cascade Policy Institute, a Portland-based free-market think tank.

I’m here to ask you to reject HB 4129.

Why the state should not increase so-called sin taxes

• Funding any state program through additional tobacco taxes would add one more advocacy group to those who openly or secretly applaud more smoking in Oregon.

• Oregon’s addiction to tobacco revenues will only grow if we become dependent on those revenues to fund any new programs.

• Taxes on alcohol and tobacco are frequently justified as a means of discouraging “unhealthy” behavior. But this objective quickly gives way to a different one: raising revenue. This creates a “moral hazard” problem: sin taxes cannot simultaneously both discourage consumption and raise more revenue. For one to succeed, the other must fail.

• As cigarette smoking continues to decline, tobacco taxes will fail to fund current, let alone new, programs, punching more holes in future state budgets.

The regressivity of sin taxes

Providing health care services to specific groups of people, in this case smokers, may make some smokers better off; but it will also make other smokers and their families worse off. As you may know:

• Cigarette smoking adults are more likely to be uninsured than non-smoking adults.

• Cigarette smokers are in poorer physical condition than non-smokers.

• Cigarette smokers generally have lower incomes and less formal education than non-smokers.

• Cigarette smokers are more likely to be unemployed or unemployable than non-smokers.

In summary, increasing tobacco taxes is regressive, targeting less educated, lower-income, and sicker Oregonians.

Policy option:

If funding new or increased health care services for smokers is worth doing, it should be done through the General Fund so everyone participates. This avoids the moral hazard problem and is not nearly as regressive as the tax increases proposed in HB 4129.

Thank you.
————-
Audio of the entire hearing is here. The HB 4129 hearing section starts at 1:03:25 into the audio.

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WES at 5: Still a Financial Train Wreck

February 2 marked the five-year anniversary of the Westside Express Service (WES), the 15-mile commuter rail line that runs from Wilsonville to Beaverton. While the train’s owner, TriMet, has emphasized the steady growth in ridership, the truth is that WES has been a failure.

A decade ago TriMet predicted that average weekday ridership for WES in its opening year of service would be 2,500. The reality was less than half of that: 1,150 in 2009.

After five years, ridership is only up to 1,880 weekday boardings.

Moreover, WES is TriMet’s most expensive fixed-route service, with an average per-ride cost of $12. Thus, even if ridership continues to grow, it will not help TriMet, since the agency loses about $10 on every trip.

Meanwhile, the independent transit district in Wilsonville―South Metro Area Rapid Transit (SMART)―began its own express bus line along the same route as WES in 2013, to service customers when WES does not operate. The costs per mile of the bus are only 3% of WES: $1.30 per mile versus $43.74 for WES.

Express Service from Wilsonville Station to Beaverton Transit Center

Operating cost/mile

Operating cost/hour

TriMet Express Rail

$43.74

$949.84

SMART Express Bus

$ 1.30

$ 83.17

When the train is 34 times more expensive than the bus alternative, there’s a logical policy response: Get rid of the train. It’s time for regional policy makers to consider this option.

 

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Oregon Medicaid Study Doesn’t Love Big Brother

By Dr. Jonathan Witt

If a large Oregon study is any indication, the Affordable Care Act may drive up frivolous emergency room visits and do little to improve people’s physical or economic health.

The Oregon Health Insurance Experiment began after Oregon budgeted to add several thousand people to their Medicaid rolls and held a lottery to fill the slots, giving researchers a randomized pool to test the effects of having health insurance. Winners were more likely to report being in good health and were less likely to default on medical bills. But there were also some surprising findings. For the lottery winners, getting free health insurance had no measurable effect on their incomes or on three objective health markers followed in the study: cholesterol, blood pressure, and diabetic blood sugar control.

One can only guess why it had no measurable effect on these health markers; but my physician brother-in-law, Bruce Woodall, a family physician with wide-ranging medical experience on three continents, shared with me some thoughts that suggest one possible reason. As he puts it, much of American medical care has become a sickness management industry, with the lion’s share of the industry’s resources spent treating not the elderly but chronically sick middle-aged patients, most of whom are sick primarily because of lifestyle choices.

In essence, the health care industry becomes the enabler in a lucrative game in which patients put off needed lifestyle reform, opting instead for prescription pills, surgeries, and conversations about “genetic predispositions.” None of this gets at the root problem, and indeed exacerbates the root problem. People face a moral challenge to accept responsibility as stewards of their bodies to live a healthy lifestyle. The system, instead of spurring them on to do the responsible thing, all too often invites them to believe they are not responsible and should entrust their genetically hopeless selves into the hands of the medical/pharmaceutical industrial complex.

If the health care market weren’t subsidized and hyper-regulated, the patient would bear more of the economic costs for living an unhealthy lifestyle, which at least would give the patient a strong economic incentive to do the right thing by his body. But thanks to various nanny state interventions, the patient is shielded from many of the economic costs of inaction. Meanwhile, the health care industry goes right on making money, never mind that it’s ostensibly being paid to heal.

Understand, it isn’t just that the health care industry continues making money off the customer even if he remains chronically ill. It’s that the gravy train keeps on rolling only if he remains chronically ill, and insured.

In fairness to ObamaCare, it does contain provisions allowing employers to charge higher premiums to employees who don’t meet certain wellness benchmarks. But applauding the government for this is a bit like applauding your kidnapper for finally allowing you to go to the restroom when you feel like it.

The government never should have been in the business of preventing or allowing insurers to decide what they could and couldn’t charge for health insurance. The process of competing for customers would have sorted this out, provided government had restricted itself to such core tasks as enforcing contracts, promoting contract transparency, and punishing fraud.

For instance, with healthy competition and choice, an insurer who tried to overcharge a physically fit pack-a-day smoker would likely lose the customer to an insurer whose rate more accurately reflected the actual risks of insuring such a person. Instead, because the whole system is fastidiously managed from the top down, with healthy market competition largely squeezed out of the game, ObamaCare’s provisions to boost economic incentives for healthy living have a fussy, nanny-state quality about them, with red tape and unintended consequences likely to come as thick and fast as the Affordable Care Act itself.

The most recent finding of the Oregon Health Insurance Experiment contradicts another ObamaCare selling point. Among those who won the Medicaid lottery, investigators found “increases in emergency-department visits across a broad range of types of visits, conditions, and subgroups, including increases in visits for conditions that may be most readily treatable in primary care settings.” In other words, the free health insurance encouraged patients to visit the ER instead of the more-affordable doctor’s office.

Washington Post article by Sarah Kliff quotes one researcher on the topic:

“I would view it as part of a broader set of evidence that covering people with health insurance doesn’t save money,” says Jonathan Gruber, a health economist at the Massachusetts Institute of Technology, who has also studied Oregon’s Medicaid expansion but is not affiliated with this study. “That was sometimes a misleading motivator for the Affordable Care Act. The law isn’t designed to save money. It’s designed to improve health, and that’s going to cost money.”

Gruber seems to be offering straight talk here, but look closer. Gruber was one of the architects of ObamaCare and, as Kyle Wingfield noted at the Atlanta Journal-Constitution, Gruber was singing a very different tune in October. “The Affordable Care Act is already working: Intense price competition among health plans in the marketplaces for individuals has lowered premiums below projected levels,” Gruber said then. “As a result of these lower premiums, the federal government will save about $190 billion over the next 10 years, according to our estimates.”

More immediately, even Gruber’s newfound straight talk about ObamaCare veers away from the grim reality uncovered by the Oregon study. Yes, the Affordable Care Act won’t be particularly affordable. But while it may improve people’s sense of being in good health, it may do far less to improve the actual health of America—at least if the clinical health markers of 10,000 lottery winners in Oregon are any indication.

Jonathan Witt, Ph.D. is a research fellow and writer at the Acton Institute. He is the lead writer for the PovertyCure initiative and associate producer and lead scriptwriter for the PovertyCure DVD Series. He has written three documentary scripts, including The Call of the Entrepreneur and The Birth of Freedom; and his academic and opinion essays have been widely published. He is a guest contributor for Cascade Policy Institute.

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School Choice Promotes Opportunities “Centered on the Future”

“I wish that the education system could understand that not every child fits into the same sized box, and everyone needs to do what is right for their family,” says Lisa, a Portland-area mother whose children receive tuition assistance from the Children’s Scholarship Fund-Portland.

When Cascade Policy Institute started this privately funded scholarship program in 1999, we learned “hands-on” that middle- and lower-income parents share the same interest in their children’s education as do parents of greater means, and they are motivated to seek the same kinds of opportunities on their behalf.

Parents know a solid education prepares students for life, and that path begins in grade school. But many children are trapped in neighborhood public schools assigned to them by their street addresses that, for many reasons, may not meet their needs or standards that are important to their families.

“Education reform” debates usually focus on how to get the maximum number of children minimally educated. But real-life parents want to get at least a minimum number of children (their own) maximally educated. These two goals shouldn’t be at odds. In fact, the second can drive the first―if more parents had the opportunity to make meaningful choices about their children’s education.

Fifteen years ago, the national Children’s Scholarship Fund (CSF) offered dollar-for-dollar matching grants to independent local partner programs that would provide partial tuition assistance to low-income grade school children to attend the schools of their choice. Cascade Policy Institute was among the nonprofit organizations which took up this unprecedented challenge, raising $1 million in local funds to start a $2 million local program, the Children’s Scholarship Fund-Portland. Since then, CSF and its partners have invested $568 million in private funding to help more than 139,000 children nationwide.

While they don’t have much discretionary income (the average CSF-Portland family income is $41,000), CSF families always must pay part of their tuition themselves (Portland parents pay $1,777 on average). This ensures that the scholarship remains a “hand up,” rather than a handout. Because they have “skin in the game,” CSF parents are motivated to choose schools carefully and to encourage their children to make the most of their opportunities.

The private schools CSF students attend typically spend one-third to one-half what neighboring public schools spend per student (the average tuition for CSF-Portland students is $3,578 this year), with better results in terms of graduation rates and college attendance. However, the point of the CSF program is not to prove that private schools are better than public schools. Rather, CSF believes that parents are the primary educators of their children and have their interests at heart. When empowered with a modest amount of financial help (the average Portland scholarship award is $1,458), parents will invest their own money, time, effort, and discipline to obtain the kind of education they want for their students.

CSF partner programs respect the decision-making processes of families and support parents in directing their children’s education. This family-centered element is what sets parent-focused school choice efforts apart from other ways of addressing the failures of today’s public education system. No one can design a school system that meets every child’s needs. No statistical data analysis or bureaucratic goal setting can ensure that any particular child makes it to high school graduation, succeeds in college, or excels in a career. No school can be all things to all children―nor should it. But most parents, including low-income ones, are keenly aware of their own students’ needs, aptitudes, strengths, and interests―and what it takes for them to learn.

“The children have grown in spades since attending [their] school,” says Lisa. “They have a school family that is very comforting to them. They feel safe every single day. They know that everything that is being done is centered on their lives and future….In their prior school they were pushed aside, never pushed into academically challenging areas. Here at this school every opportunity is given to them to succeed and become better students and better learners.”

Top-down education reform focuses on what is not working for large numbers of people―but keeps those students in the system while the problems are being “fixed.” School choice focuses on what is working across all kinds of schools―and empowers parents to choose the options that best help their children learn.

Top-down approaches pour more money into a broken system. School choice programs achieve more satisfactory results with more modest amounts of money because the dynamic is shifted in favor of parents. Government-focused education reform analyzes the forest; school choice promotes the best interest of the trees. School choice programs like CSF-Portland prove that good things happen when parents have opportunities to choose excellence for their own children.

Kathryn Hickok is Publications Director at Cascade Policy Institute and Director of the privately funded Children’s Scholarship Fund-Portland, which provides partial tuition scholarships to Oregon elementary students from lower-income families.

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Help Oregon’s Most Vulnerable Students Get School Choice in 2014

This is National School Choice Week. Families across the country are advocating for more educational freedom. It would be wonderful if all Kindergarten through 12th grade students had broad public and private school choices now, but political reality won’t let that happen any time soon. So, what is possible now, especially in Oregon?

In the upcoming February legislative session, Oregonians can give some of our most vulnerable kids real choices with passage of Senate Bill 1576, the Education Equity Emergency Act (E3). Modeled after a successful Arizona program, it will create Empowerment Scholarship Accounts to help kids with special needs, in foster care, or in low-income families.

Scholarship recipients can use ninety percent of their state education funding for approved expenses like private schools, tutoring, education therapy, textbooks, online education programs, and community colleges. Unused funds can be rolled over and eventually help students with college costs. And no district must let more than one half of one percent of its students participate.

Whether or not you have children who may qualify for this program, please urge your state legislators to support it. There’s no additional cost to taxpayers. So, even if we can’t get full school choice for all children now, we can get it for some of the most vulnerable ones, including special needs, foster, and low-income kids. It’s the right thing to do.

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

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Coming This January: The Largest-Ever Rally for School Choice Nationwide

Millions of Americans nationwide will voice their support for educational opportunity during the fourth-annual National School Choice Week, which begins January 26, 2014. The Week will include an unprecedented 5,500 events across all 50 states, with a goal of increasing public awareness of the importance of empowering parents with the freedom to choose the best educational environments for their children.

National School Choice Week events will be independently planned and independently funded by schools, organizations, individuals, and coalitions. Events—which include rallies, roundtable discussions, school fairs, parent information sessions, movie screenings, and more—will focus on a variety of school choice issues important to families in local communities, including open enrollment policies in traditional public schools, public charter and magnet schools, private school choice programs, online learning, and homeschooling.

“During National School Choice Week, millions of Americans will hear the uplifting and transformational stories of students, parents, teachers, and school leaders who are benefiting from a variety of different school choice programs and policies across America,” said Andrew Campanella, president of National School Choice Week. “Our hope is that by letting more people know about the successes of school choice where it exists, more parents will become aware of the educational opportunities available to their families.”

“During the Week, Americans from all backgrounds and ideologies will celebrate school choice where it exists and demand it where it does not,” Campanella said. “National School Choice Week will be the nation’s largest-ever series of education-related events, which is testament to the incredible levels of support that exist for educational opportunity in America.”

Cascade Policy Institute will host a National School Choice Week “Policy Picnic” on Wednesday, January 29, at noon. Cascade founder Steve Buckstein will discuss the Education Savings Account (ESA) bill being considered during Oregon’s 2014 legislative session and what Oregonians can do to promote greater educational opportunity in our state. Oregon’s 2014 Education Equity Emergency Act (“E3”) is modeled on Arizona’s highly successful ESA program. For details and to RSVP for this free event, visit cascadepolicy.org.

Students today have diverse talents, interests, and needs; and they learn in different ways. The landscape of educational options to meet those needs is far more expansive today than it was even a few years ago. Freedom in education is good for all children, not just for children who are “at risk” or “in failing schools.” Parents, not bureaucracies, should decide which learning environment is best for their children and be empowered to choose those schools. National School Choice Week provides a platform for all of us to demand greater educational opportunities for children, especially in areas which do not yet provide meaningful options to families.

For more information about National School Choice Week and to participate in events near you, visit schoolchoiceweek.com.

Kathryn Hickok is Publications Director at Cascade Policy Institute and Director of the privately funded Children’s Scholarship Fund-Portland, which provides partial tuition scholarships to Oregon elementary students from lower-income families.

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Reverse the Trend: Restore Oregon’s Economic Freedom

By William Newell

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

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

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

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

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Testimony to TriMet Board on Resolution 14-01-03

Cascade President John A. Charles, Jr. submitted the following testimony to the TriMet Board on January 21, 2014.

 

To the TriMet Board:

In Resolution 14-01-03, TriMet staff proposes to give away a land parcel valued at $570,000 to a developer on the grounds that the net present value of 30 years of increased transit fares generated by the development is estimated to be $648,732.

The staff has neglected to mention that $648,732 is the gross revenue associated with future boardings. Since TriMet loses money on every trip, the net value of future fares will be a negative number.

For example, the operations cost/boarding for light rail in FY 14 has averaged $1.87. The average originating fare for TriMet fixed route service is $1.47.

Last year all passenger revenue totaled $152,698,000 while operating expenses were $580,289,000, a 26% recovery ratio. So it doesn’t matter what assumptions you use about 30-year discount rates, rental occupancy rates, or rail usage by TOD residents; under all scenarios, TriMet loses substantial amounts of money servicing the proposed project. Therefore there is no “profit” to subsidize the $570,000  giveaway of a public asset.

Moreover, FTA has had a long-standing policy prohibiting such transactions, as noted in the following guidance document:

“Thus, locally preferred Plans for highest and best transit use may be acceptable even if they do not generate the highest possible level of financial return, although the transit system is expected to realize some financial return (i.e., not transfer the property for $1) in a development.”  (Innovative Financing Techniques for America’s Transit Systems, FTA, September 1998, p. 45, http://libraryarchives.metro.net/DPGTL/publications/1998_innovative_financing_techniques_americas_transit_system.pdf).

Elsewhere in the same document, FTA discusses exactly the type of Portland situation contemplated with the SE 17th Street proposal, and declares it impermissible:

“In one property, the highest and best use was considered to be a 9-unit, median income townhouse condominium, with built-in parking for all units. The metropolitan planning organization, Metro, had calculated that social, economic and environmental benefits in that area would be maximized by a rental apartment development, for low-to-moderate income residents, with structured parking for 40 percent of units. Developers maintained that, while the Metro plan could eventually prove economically viable, the current market would not support the higher density plan. The risk of substantial non-payments of rent, and resulting default on project financing, was considered too high. Thus, the value of the land would have to be reduced to reflect this risk. In discussions with Metro, FTA indicated that while the price of the land was to some degree negotiable, FTA would not accept a zero or negative valuation of property to make the project feasible.” 

Other subsidies: In the staff memo, it is also stated that TriMet has agreed to “assistance with permitting fees” for the developer. What, exactly, does this mean? Is TriMet proposing to subsidize the soft costs of development, and if so, why?

Alternative uses: The proposed land giveaway should be rejected and alternative uses considered. TriMet staff recommends against using the parcel as a parking lot, but offers no analysis. In fact, light rail depends on park-and-rides to attract riders and most TriMet parking lots exist to service light rail. If you don’t provide parking at this station, out-of-district riders will simply invade nearby residential neighborhoods, creating a nuisance.

Sincerely,

John A. Charles, Jr.

Cascade Policy Institute

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Book Forum: Clark Neily – Judicial Abdication vs. Judicial Engagement

Join Cascade Policy Institute as we welcome Clark M. Neily III

Judicial Abdication vs. Judicial Engagement
Is the Supreme Court shirking its obligation to uphold the Constitution?

Clark M. Neily III
Senior Attorney, Institute for Justice
Author, “Terms of Engagement: How Our Courts Should Enforce the Constitution’s Promise of Limited Government

5:30 PM
Guest Arrival

5:45 PM
Presentation and Q&A

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

Early-bird pricing: Prior to March 12th, $20.00/person.

After March 12th, registration increases to $25/person.


Supreme Court Justice Louis Brandeis once remarked that “the reason why the public thinks so much of the Justices is that they are almost the only people in Washington who do their own work.” However, according to Clark M. Neily III, judges at all levels might still be doing their own work, but are abdicating their responsibility, as James Madison put it, to serve as an “impenetrable bulwark against every assumption of power in the legislative or executive.”

Neily argues that the judiciary’s knee-jerk deference to the other branches has resulted in an explosion in the size, cost, and intrusiveness of government. In any given year, the Supreme Court strikes down just three of the five thousand laws passed by federal and state governments. Unfortunately, this reflexive restraint toward other branches led to the Affordable Care Act being upheld last year and the approval of eminent domain for economic development purposes in Kelo v. City of New London (2005).

Neily has spent his career fighting against the unconstitutional expansion of government and a more properly engaged judiciary. He is the director of the Institute for Justice’s Center for Judicial Engagement, and he served as co-counsel for the plaintiffs in the watershed Second Amendment case,District of Columbia v. Heller.


Terms of Engagement has received enthusiastic accolades from constitutional scholars and leading luminaries of the limited government movement:

“Clark Neily’s elegant essay slays the idea that ‘judicial restraint’ is always a virtue. It often amounts to judicial abdication. Neily explains that judges must judge to defend the rights that government exists to secure.”
– George F. Will, political commentator

“Through the use of compelling real-world cases and remarkably clear, accessible and accurate explanations of current law, Clark Neily exposes the legal charade by which, in the name of ‘restraint,’ judges have stacked the deck in favor of those who use laws and regulations to line their own pockets. Required reading for all who care about their liberties and the Constitution that is supposed to protect them.”
– Randy Barnett, Professor at Georgetown Law School

“Provocative yet fair-minded, this book is essential reading for anyone who cares about our courts, our Constitution, or our country.”
– Kermit Roosevelt, Professor at the University of Pennsylvania Law School

“Clark Neily weaves constitutional analysis with anecdotes in service of large principle. His basic principle is that a squishy policy of judicial deference disserves his clients, the public at large, and the critical role of judicial oversight in a democracy. He is right on all counts. A great read for lawyers and nonlawyers interested in the real-world consequences of judicial decision making.”
– Richard Epstein, Professor at the New York University School of Law

* * * * *

Cascade Policy Institute is a 501(c)(3) nonprofit organization. Donations are tax deductible and accepted with gratitude.

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Cascade in the Capitol: Testimony in Favor of Education Equity Emergency Act

Testimony in Support of the Education Equity Emergency Bill

Kathryn Hickok

Director, Children’s Scholarship Fund-Portland

Portland, Oregon

January 16, 2014

Chair Hass and members of the committee, my name is Kathryn Hickok, and I am director of the Children’s Scholarship Fund-Portland. For 15 years our program has provided privately funded partial-tuition scholarships to children from lower-income Oregon families. The Children’s Scholarship Fund-Portland has helped nearly 650 Oregon Kindergarten through 12th grade students have access to diverse educational settings that meet their individual needs.

CSF-Portland is a partner program of the national Children’s Scholarship Fund, headquartered in New York. Our mission is to maximize educational opportunity by offering tuition assistance for children from needy families. We provide partial tuition scholarships based solely on income that are usable at any private school chosen by the students’ parents or guardians. To be eligible for a scholarship, families must demonstrate financial need.

Our experience with the educational choices made by the lower-income Oregon families participating in our program demonstrates several key points relevant to this bill:

First, lower-income parents want to take charge of their children’s futures through educational opportunity. Parents in our program value high-quality education as the way out of poverty for their children and make the commitment and sacrifice of paying, on average, more than half of their tuition out of their own pockets.

Second, demand for diverse educational opportunities in Oregon is real. When our program began in 1999, the parents of more than 6,600 children applied for only 550 available scholarships. Our waiting list continues to grow every week. The last thing parents who call me want to do is see their children not succeed in school.

Third, it does not take a lot of money to change a child’s life. Our scholarships average about $1,500 for a full school year, and that amount makes the difference in allowing children to attend schools they love, that motivate them to do their best and foster their individual talents. The average tuition of our elementary students this year is only about $3,600. So, a relatively small amount of money truly can make the deciding difference for families in where they send their children to school.

While they don’t have much discretionary income, CSF families always must pay part of their tuition themselves. Because they have “skin in the game,” CSF parents are motivated to choose schools carefully and to encourage their children to make the most of their opportunities. When empowered with a modest amount of financial help, parents will invest their own money, time, effort, and discipline to obtain the kind of education they want for their students.

A Portland-area mother named Lisa recently told me, “I wish that the education system could understand that not every child fits into the same sized box, and everyone needs to do what is right for their family.” I witness the lengths to which parents like Lisa go to choose the school they think is best for their kids. The Empowerment Scholarship Accounts in this legislation would empower parents like Lisa to make life-changing choices on behalf of their children’s education, just when they need it the most. I encourage you to support the Education Equity Emergency Bill. Thank you very much.

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Five Reasons to Oppose the State Treasurer’s 2014 Opportunity Initiative

By Bob Clark

The 2013 Oregon legislative session approved State Treasurer Ted Wheeler’s Oregon Opportunity Initiative for referral to voters, with a vote scheduled in November 2014. If passed by voters, this measure would have the State of Oregon issue General Obligation bonds, give all borrowed money to a newly created Student Opportunity Fund, and obligate State taxpayers to repay the bonds with interest. The Student Opportunity Fund would be invested primarily in stocks, bonds, and other securities. Theoretically, earnings from these financial investments would be used to provide college scholarships (assistance) to a select number of students who met certain qualifications.

Here are five good reasons to oppose the Opportunity Initiative. Another critique of the Opportunity Initiative is “Mining Fool’s Gold” by Nigel Jaquiss (Willamette Week, September 4, 2013).

1. The State’s General Obligation Bond indebtedness would surge.

The Opportunity Initiative begins by having the State borrow $500 million, with additional borrowing expected thereafter. $500 million represents roughly a ten percent increase in the State’s current total outstanding General Obligation debt. But just as importantly, at its extreme the Initiative could result in a doubling of the State’s General Obligation debt.

2. The interest cost to the State would be relatively expensive.

The State is expected to pay 4.5% in interest costs per year on Opportunity Initiative borrowings, with higher interest costs very possible. Currently, college students with similar qualifications to those likely targeted by the Opportunity Initiative have access to federal government loans bearing an interest rate of less than 4% per year. Furthermore, federal government-sponsored student loans are increasingly becoming deferrable and even partially forgivable. The Opportunity Initiative, therefore, fails to take full advantage of less costly federal government college assistance resources.

3. Investments for the Student Opportunity Fund may underperform.

Opportunity Initiative documentation assumes the Student Opportunity Fund will earn a 7% annual rate of return. The State Treasurer suggests 7% is a conservative assumption. In fact, the Treasurer touts an 8.7% annual rate of return on Public Employee Retirement System (PERS) investments as a proxy. However, this 8.7% rate of return likely overstates long-term investment performance, as it is calculated over a ten-year period in which the stock market had only one down year. The stock market normally posts two to three down years in a ten-year period. Even more daunting are the audited actuarial reports posted on the PERS website, which cover investment returns dating back to the year 2000 and extending through 2012, the last year audited. These PERS reports suggest that for the time period 2000-2012, the actual compound annual rate of return was only about 4.5% per year, a rate no higher than the expected state borrowing cost.

4. College assistance and education are advancing without the Opportunity Initiative.

The Opportunity Initiative is being pitched as a way to (1) make up for the stagnating allocation of State general funds to the Oregon University System and (2) support the “40-40-20” goal. (The 40-40-20 goal seeks to have 40% of adult Oregonians hold a bachelor or advanced degree, 40% hold an associate degree, and the remaining 20% hold a high school diploma.) But this pitch is wrong because (1) it ignores the fuller picture of college financial assistance by government, and (2) the 40-40-20 goal itself is inappropriate. First, total college financial assistance which includes all forms of assistance, not just that from the State legislature, is growing sharply at nearly 15% per year since the year 2000-01 (per Oregon University System Fact Books). Also, complementing this increase in government assistance is the Oregon College Savings Plan which allows families to save toward college tax-free. Second, with regard to 40-40-20, the last page of the full Opportunity Initiative documentation shows fewer than 45% of all occupations in the year 2020 are projected to require an associate or higher level degree, not the 80% implied by the 40-40-20 goal.

5. A non-taxpayer-funded alternative to the Opportunity Initiative called “Pay Forward, Pay Back” is under consideration by the Legislature.

The State Treasurer, Governor Kitzhaber, and invited parties brainstormed and hatched the Opportunity Initiative in 2011. But college students championed a different way forward for college financing called “Pay Forward, Pay Back.” Following suit, the Oregon Legislative session of 2013 passed House Bill 3472, which takes the first step in establishing and authorizing a pilot program for students to attend college “tuition-free” if they sign a binding contract to pay a percentage of their wages/salaries for a stipulated period of time following graduation. In the case of “Pay Forward, Pay Back,” colleges could leverage student contract commitments by issuing revenue bonds, or even by incorporating and selling shares, so as to initiate the financing of free tuition pathways. What’s more, Oregonians at large would not be on the hook via taxation or reduced public services for interest costs, principal repayment, or failed investment returns.

The five reasons above to oppose the Opportunity Initiative should be more than enough for informed voters to vote “No” on this ill-conceived measure in November.

Bob Clark holds a Master of Science degree in economics from Portland State University. He has worked as a Senior Economist for the Public Utility Commission of Oregon and as an economist for the Bonneville Power Administration. Mr. Clark is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research organization.

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As TriMet Sinks, Should Portland Suburbs Go Down With the Ship?

Last week Cascade released a report encouraging cities and counties to consider leaving TriMet due to its financial mismanagement.

TriMet has long admitted that its labor costs are unsustainable. In addition, the agency’s addiction to costly rail construction has cannibalized bus service, which has been cut by 14% in the past five years.

Comparison with other local transit districts paints a stark picture. The cost per mile of operation for the TriMet commuter rail line is $43.74. TriMet’s flagship service, light rail, costs $11.96 per mile. Yet, the small city of Sandy runs its own bus service for $2.57 per mile.

TriMet predicts that additional service cuts will be required by 2017 and every year thereafter to balance the budget, which essentially would shut down the agency by 2025. TriMet’s only strategy has been to seek contract concessions from the bargaining unit representing most workers, but this is unlikely to succeed. The ongoing PERS crisis shows that once management agrees to expensive fringe benefits for unionized workers, it’s almost impossible to reduce them later.

TriMet is in a death spiral of its own making. Local jurisdictions might be hoping for the best, but they should plan for the worst. Leaving TriMet is an option that needs to be on the table.

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 Future of School Choice in Oregon: Education Savings Accounts

Please join us for Cascade’s monthly Policy Picnic led by Cascade Policy Institute Senior Policy Analyst and founder Steve Buckstein on Wednesday, January 29th, at noon.

Steve will discuss the history of school choice in Oregon: successes, challenges, and the future of the movement.

Emphasis will be placed on the Education Equity Emergency Act (E3), which is the first Education Savings Account bill submitted to the Oregon legislature. The bill will have an informational hearing on Thursday afternoon, January 16, before the Senate Education Committee and hopefully will be heard during the formal February legislative session.

Learn the benefits of ESAs, details of the E3 Act, and what you can do to help Oregon students receive their own Empowerment Scholarship Accounts.

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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The Future of School Choice in Oregon: Education Savings Accounts

School choice is widespread in America, including in Oregon—unless you are poor. Affluent families have choice because they can move to different neighborhoods or communities, send their children to private schools, or supplement schooling with tutors, online courses, and enrichment programs. Lower and middle-income families, meanwhile, too often are trapped with one option—a school in need of improvement assigned to them based on their zip code.

Some states such as Arizona, Wisconsin, and Florida have made significant progress toward providing more Kindergarten through 12th grade options for many children. Public charter schools (including online charters) and private school attendance made possible by state funded vouchers or tax credits are increasing families’ opportunities to find the right fit for their children. But these options are constantly under attack by those who represent the status quo: those who want the public school system to stay just the way it is, so it continues to provide virtually guaranteed jobs and benefits for certain teachers and administrators―regardless of the results achieved by the children they are supposed to serve.

Nobel Prize winning economist Milton Friedman first popularized the school choice voucher concept in his 1962 book, Capitalism and Freedom. Now, a new concept is capturing the imaginations of a new generation of parents and policy makers: Education Savings Accounts (ESAs). Going beyond the voucher or tax credit idea for school choice, ESAs introduce market concepts that help parents become active shoppers for educational services, thus improving their quality while reducing costs.

As Matthew Ladner, Ph.D. wrote in a major study for the Friedman Foundation for Educational Choice:

Education savings accounts are the way of the future. Under such accounts—managed by parents with state supervision to ensure accountability—parents can use their children’s education funding to choose among public and private schools, online education programs, certified private tutors, community colleges, and even universities. Education savings accounts bring Milton Friedman’s original school voucher idea into the 21st century.

ESAs differ from state-funded vouchers. Typically, parents can redeem vouchers only at state-approved public and private schools. In contrast, ESAs allow parents to choose among public schools, private schools, private tutors, community colleges, online education programs, and universities. In addition, ESAs allow parents to put unused funds into college savings plans, thus changing the “use it or lose it” mentality in the current public school funding system. ESAs promote user-based subsidies (like the food stamp program) rather than supplier-based subsidies that represent the current public school funding model.

Conceived of by the Goldwater Institute of Arizona nearly a decade ago, education savings accounts were first passed by that state’s Legislature in 2011 for special-needs children. In 2012 the program was expanded to children adopted out of the state foster system, children of active-duty military parents, and children in “D” and “F” failing schools. Last June, Arizona’s Governor signed a bill to expand ESAs to children entering Kindergarten and to increase funding for the accounts.

Nationally, school choice is becoming a more bipartisan issue as many Republicans are being joined by leading Democrats, such as former Clinton White House Press Secretary Mike McCurry. McCurry is now chairman of the national Children’s Scholarship Fund, which provides privately funded tuition scholarships to low-income elementary school kids. He describes the school choice movement as a rare example of centrism in our increasingly polarized American politics.

And, America’s newest U.S. Senator, Democrat Cory Booker of New Jersey, has long been a school choice advocate. Speaking back in 2001 for Cascade Policy Institute, Booker told Black students at Portland’s Self-Enhancement, Inc. how important school choice is for his fellow African Americans.

It is time for Oregon to move further toward school choice for every child, and ESAs offer an attractive way to start the journey. Already, our state has over 120 public charter schools that were made possible by passage of a 1999 bill in the Republican-controlled legislature that was signed into law by a Democratic Governor (John Kitzhaber).

In the upcoming February 2014 Oregon legislative session, Oregonians will have an opportunity to start down the ESA road with passage of the Education Equity Emergency Act (E3).* It will create Empowerment Scholarship Accounts modeled after the highly successful Arizona program. These scholarships will help level the educational playing field for kids with special educational needs, in foster care, or in low-income families. Scholarship recipients can use ninety percent of their state education funding for approved educational expenses like private schools, tutoring, education therapy, textbooks, online education programs, community colleges, universities, or college savings plans.

One E3 Act sponsor notes, “These students have had unique challenges in their lives and require enhanced educational flexibility to ensure successful degree attainment.”**

The Act is designed to impose no financial burden on the state or on the school districts that scholarship students currently attend. Scholarship participation will be capped at 0.5% of students in a school district unless a district chooses to allow additional participation.

Oregon has a history of bold experimentation in other policy areas. Now is the time to experiment with expanding the role of parents choosing and the market delivering better education for Oregon’s children. Education Savings Accounts will empower families to find better educational options, leave the “use it or lose it” funding mechanism behind, and save toward their children’s higher education. Altogether, ESAs will provide winning situations for children, their parents, and Oregon’s future.

* The Education Equity Emergency Act is in draft form as of January 7, 2014. The official bill language should be available before the session begins on February 3.

** From a letter by State Senator Tim Knopp to the Chair of the Senate Education and Workforce Development Committee Mark Hass requesting a hearing on the E3 Act during the January interim legislative hearing days. The hearing is tentatively scheduled for the afternoon of Thursday, January 16.

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

 

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$52 Million Retrofit Makes Traffic Worse in Portland’s South Waterfront

A case study released by Cascade Policy Institute shows the $52 million retrofit of Portland’s Southwest Moody Avenue is already increasing local traffic congestion and will be unable to accommodate future road capacity needs in the future.

SW Moody Avenue was raised 14 feet and the overall right-of-way widened to 75 feet. This was to accommodate double-tracking of the Portland streetcar, pedestrian walkways on either side, and a massive two-way bicycle track. The primary purpose was to allow the Portland-Milwaukie light rail line to pass over Moody Avenue at-grade and stop at the OHSU Collaborative Life Sciences Building.

Before-and-after traffic counts conducted by Cascade Policy Institute on Moody Avenue show the percentage of all trips by automobile has increased since the retrofit was completed, despite the generous right-of-way allocated to non-motorized travelers.

According to Cascade President John A. Charles, Jr., “The South Waterfront has long been a Potemkin Village for Portland planners. It…will soon be served by an aerial tram, streetcar, light rail, elevated pedestrian walkway, a monster cycle track, and a 100-foot wide pedestrian greenway. But the actual evidence shows that the district is highly reliant on auto use, and the reliance is growing. Now it’s too late to provide road capacity for future build-out because so much space was allocated to the streetcar and light rail.”

To read the full report on Portland’s Moody Avenue retrofit, visit cascadepolicy.org.

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

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Report Makes the Case for Cities and Counties to Leave TriMet

A report released Monday by Cascade Policy Institute recommends that cities and counties within TriMet’s service jurisdiction consider leaving the transit district.

The study shows that TriMet’s ongoing financial crisis is not just a temporary problem, but a permanent one caused by a failed business model. The agency has one of the most expensive union contracts in America, and the managerial obsession with rail transit is cannibalizing bus service. These problems go back decades, and it’s now too late to fix them.

Due to these factors, TriMet will face annual service reductions beginning fiscal year 2017. Those cuts will slowly destroy the agency. State law has long allowed jurisdictions to leave TriMet, and six communities already have: Molalla, Wilsonville, Sandy, Canby, Damascus, and Boring. Four of those cities created their own transit districts. Based on these experiences, the Cascade study recommends that more jurisdictions consider opting out and create their own transit districts.

Cascade Policy Institute’s report shows that the four cities operating their own public transit systems have lower labor costs, lower payroll tax rates, no long-term debt, virtually no unfunded liabilities for retirees, and better service than they previously had under TriMet.

Services under TriMet have continually declined since 2005, yet the TriMet payroll tax is at an all-time high of 0.72 percent.

“With major TriMet service cuts projected for FY 17 and every year thereafter, jurisdictions still paying the TriMet payroll tax should begin investigating options for leaving the district,” says the report.

According to Cascade President John A. Charles, Jr., “When TriMet was formed in 1969, the expectation among supporters was that creating a single public monopoly transit provider would create economies of scale. Unfortunately, what we really created were ‘diseconomies of scale.’ TriMet’s business model is now permanently dysfunctional, and the evidence from opt-out cities is that ‘smaller is better.’ Cities such as Sherwood, Tualatin, Lake Oswego, and West Linn should not wait for the inevitable collapse of TriMet; they should actively begin assessing the prospects for creating their own transit agencies, either as stand-alone districts or in partnership with nearby communities.”

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Report Shows $52 Million Street Project Makes Traffic Worse

case study released today by Cascade Policy Institute shows that the $52 million retrofit to Portland’s Southwest Moody Avenue is already increasing local traffic congestion and will be unable to accommodate future road capacity needs for the South Waterfront district in the future.

During 2011-12 SW Moody Avenue was raised 14 feet and the overall right-of-way (ROW) widened to 75 feet. This was done to accommodate double-tracking of the Portland streetcar, pedestrian walkways on either side, a massive two-way bicycle track, storm water treatment planters, and relocated utilities. The primary purpose of the retrofit was to allow the Portland-Milwaukie light rail line to pass over Moody Avenue at-grade and stop at the OHSU Collaborative Life Sciences Building, currently under construction.

The retrofit reduced lane capacity on Moody for motor vehicles by moving the streetcar directly onto the road (it had previously run on adjacent ROW) and adding a double-track, despite the fact that motor vehicles are the dominant mode of travel in the district. Before-and-after traffic counts conducted by Cascade Policy Institute on Moody Avenue show that the percentage of all trips by automobile has increased since the retrofit was completed, despite the generous ROW allocated to non-motorized travelers.

To make matters worse, in September 2013 the entire road was shut down for three weeks and much of the new work torn up so that the light rail tracks could cross at grade just west of the new Willamette River rail bridge. Since accommodating light rail was the primary purpose of raising Moody in the first place, this additional retrofit simply wasted tax dollars and inconvenienced local travelers. Neither the City of Portland nor TriMet has provided a credible public explanation of why this was done.

According to Cascade President John A. Charles, Jr., “The South Waterfront has long been a Potemkin Village for Portland planners. It’s likely the only neighborhood in the world that will soon be served by an aerial tram, streetcar, light rail, elevated pedestrian walkway, a monster cycle track, and a 100-foot wide pedestrian greenway. But the actual evidence shows that the district is highly reliant on auto use, and the reliance is growing. Now it’s too late to provide road capacity for future build-out because so much space was allocated to the streetcar and light rail.”

Click here to read the report.

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Your Government-Mandated New Year’s Resolution

Not content with dictating what kind of health insurance it considers adequate for you, late on New Year’s Eve the federal government announced that it would now decide how you should feel about such mandates.

A Healthcare.Gov spokesperson said: “Detecting hesitation among Americans to comply with government rules telling them how to live their lives, it is henceforth required that everyone make this New Year’s Resolution:

“‘I will be happy about being told how to live my life.’”

The spokesperson added, “We are also concerned that young, healthy Americans don’t understand the need for them to sacrifice, er―I mean, happily contribute―by paying much higher insurance rates to benefit older, sicker, and more-likely-to-vote voters.”

He continued, “It did not escape the NSA’s, er―I mean, your duly elected leader’s―attention that young adults overwhelmingly supported us when we promised, ‘If you like your (fill in the blank), you can keep your (fill in the blank).’ Now that these promises have proven false, we shall replace them with two new promises:

“‘If you like not voting, you can continue not voting.’

“And, ‘If you like voting…sorry, the voting age will be raised to the age where older people get so much of you younger people’s wealth that they will continue to vote for our redistributionist policies.’”

As Cascade Policy Institute’s Satirist-in-Residence, I’m Steve Buckstein wishing you a Happy New Year, knowing that the aforementioned government edict didn’t really happen…yet.

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

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