Anyone who purchases a 2011 model electric car should write 100 million thank notes to the U.S. taxpayers who helped pay for it. The federal government’s mandates and lavish subsidies for electric cars would be daft in the best of times. In this grim economic period, the policy is wasteful and counter-productive, like so much else in the 2009 federal stimulus bill.
The 2011 model year electric cars, like the Chevy Volt and the Nissan Leaf, will soon make their debut. General Motors (GM) admits that it will lose money on these vehicles even at prices from $35,000 to $50,000. GM recently announced that the Chevy Volt will have a list price of $41,000. The Volt, however, will help General Motors meet the new Corporate Average Fuel Economy (CAFE) standard. The allegedly zero-emission and petroleum-free electric cars will “allow” automakers to keep selling profitable models with comparatively lower fuel efficiency.
When a Suburban’s and a Volt’s fuel efficiency are averaged across a single vehicle class, Chevrolet can, on paper, attain the new 35 miles per gallon CAFE standard, while looking for profit on less fuel-efficient models which consumers either can afford or prefer regardless of gas mileage. For GM, an automaker rescued from bankruptcy with $50 billion of federal money, this is a pitiful business model. GM, however, did not elect to make money-losing electric vehicles. The federal government demanded the automaker do so in exchange for the bailout money. To ease GM’s pain, the Department of Energy provided a $240 million development grant.
Federal dollars keep flowing for electric cars. The stimulus also provides a $7,500 federal rebate for new electric cars. Several states will offer an additional rebate of $5,000. It gets even better. The home re-charging stations also come with rebates for 50 percent of their estimated $2,000 purchase price. Thus, taxpayers are being forced to give $14,500 to the likely affluent individuals who buy the electric cars.
Your stimulus money is also at work to deploy public recharging stations for electric cars. Not yet chastened by sending I.O.U.s instead of paychecks to state employees, California plans to spend $200 million annually to subsidize the development of 5,000 recharging stations by 2012.
Stimulus money also subsidized construction of factories to produce advanced batteries for the electric vehicles. Compact Power Inc. in Michigan, the ninth of these stimulus-funded factories, opened in July thanks to a $151 million federal grant. Why worry about demand? Industry experts estimate that the current U.S. manufacturing capacity for these advanced batteries is three times greater than projected global demand in 2014. With supply destined to outstrip demand in the near future, expect an outcry for a bailout of this stimulus-created industry. The ethanol industry took just three years to complete the cycle from mandate to subsidy to bailout.
To date, at least 50 different entities have received grants totaling $2.4 billion from stimulus funds tagged for an “electric drive vehicle battery and component manufacturing initiative.” Advocates claim this federal initiative will create jobs, accelerate technology, reduce imports of foreign oil, and improve the environment.
It is unlikely that consumers will buy these cars in large numbers any time soon. The nascent electric car industry would not exist without government coercion and massive spending. Any jobs created in this “green” industry are at great expense to the taxpayer, and thus a drag on the productive economy. The country is in far too much debt – and in far too precarious an economic situation – to afford such speculative, wasteful, and damaging subsidies.
Last Thursday was Americans for Tax Reform’s 2010 Cost of Government Day (COGD) – the day when “the average American has earned enough gross income to pay off his or her share of the spending and regulatory burdens imposed by government at the federal, state, and local levels.” This year’s COGD fell a full 231 days into the calendar year.
Compared to COGDs in the past, this year’s date marks a milestone of sorts in that taxpayers have never before had to work so far into the year to pay for their share of government. In fact, only one other time in the history of calculating COGDs has the date fallen so far into the year, and that was last year – August 11, 2009. Prior to that date, COGDs typically fell in June and July.
Though this year’s COGD estimate isn’t entirely surprising given the recent trillions spent on TARP, ARRA, ObamaCare, the $26 billion state bailout, etc., it should sound the alarm that the rate of growth in federal, state, and local government spending is accelerating far faster than in the past, making it increasingly difficult for the economy to recover and jobs to return.
We heard great things about the state’s energy efficiency program. However, there was very little focus on the costs to consumers. Since 2002, Texas consumers have paid $591.1 million to support the state’s energy efficiency program, and the program’s estimated cost for 2010 is $114.8 million. A recent increase to the program by the Public Utility Commission of Texas will probably double these costs. And legislative proposals could increase the annual cost to over $500 million. All of this would be okay, of course, if the state’s energy efficiency program saved consumers money through reduced consumption of electricity. However, there is simply no way to properly determine the efficiency of the state’s energy efficiency program. But an educated guess is that it costs more than it saves.
This same flaw also plagues the state’s subsidies of renewable energy through the renewable portfolio standard, CREZ lines, and tax breaks. Several people testifying today were asking the legislature to give them subsidies for technologies like solar, biomass, and geothermal. But Sen. Chris Harris captured the problem with these subsidies when he asked, “How can I justify going to my constituents and tell them that I voted to give you money?” Sen. Mike Jackson also pointed out that solar projects are much like wind projects in that we give them credits for economic development but after the installation there are very few jobs left. Renewable energy generation simply costs more than generation from conventional sources.
The results of these two green programs stand in stark contrast to the history of energy use. Market-based energy efficiency has for centuries made electricity less expensive to use so that we could use more of it. This makes sense because there is almost a one on one correlation between the increased wealth and health of society and the increased use of energy.
In the last four weeks Texas has set four new records of peak electricity demand, i.e., we’ve used more electricity recently than ever before. But rather than fret about this and create more government programs, we should receive this as good news that clearly shows that the market can handle the increased demand for electricity in the state. It also shows that what Texans want is more, less expensive electricity, not less, more expensive electricity.
If Texas wants to reduce energy costs and save money for Texas consumers, it needs to go back to the drawing board and make significant changes to the energy efficiency program and eliminate the Renewable Portfolio Standard.
For the second time in a week, Texans have set a new record for electricity use. According to ERCOT, power use for the hour ending at 5 p.m. yesterday was 63,830 megawatts. This tops the peak record of 63,594 MW set just last week.
Looks like Texas’ competitive electricity market is performing exactly as promised—delivering plenty of electricity to Texans when they need it at prices they can afford.
A recent National Sheriffs Association report states that one is three times more likely to find a mentally ill person in jail or prison than in a hospital. In Texas, the odds are even more pronounced: 7.8 to 1. A Texas county official is quoted: “[T]he combined cost of incarcerating and treating the mentally ill is $87 million annually” and “[t]he jails have become the psychiatric hospitals of the United States.”
During the 1950s, popular sentiment and litigation mounted against mandatory institutionalization in state-sponsored psychiatric hospitals, and those institutions were closed. However, the states never created a replacement, and so the mentally ill have been funneled into jails and prisons for lack of a better place to send them. The emphasis on incarcerating the mentally ill presents several problems:
a) Recidivism is high. In L.A. County Jail, 90% of mentally ill inmates are repeat offenders.
b) Mentally ill inmates are more expensive. In Texas, the average prisoner costs about $22,000 per year. Mentally ill prisoners cost between $30,000 and $50,000. They also cost more because they stay longer, partly because their illness often worsens behind bars.
c) Mentally ill inmates are more prone to commit suicide. Half of all prison suicides are by seriously mentally ill inmates. In California, about 77% of all attempted suicides involve the mentally ill.
d) Mentally ill inmates are sometimes abused as they confound correctional staff. One correctional officer justified punching a mentally ill inmate: “[y]ou need to instill fear in these inmates or they won’t listen to you.... Especially crazy inmates.”
Most recommended solutions in the report would require more funds. However, in tough budgetary times, measures that divert suitable mentally ill offenders from lockups to treatment, including home-based care, can actually produce net savings. Outsourcing to private mental health providers that are more efficient and cost effective is another promising strategy. Clearly, public safety and offender accountability must remain paramount, but relying almost exclusively on prisons to solve this perpetuates a revolving door that is costly for victims and taxpayers. Instead, we must break the cycle of illness and crime.
- A.J. Smullen
Intern, Center for Effective Justice
So much for one cap-and-trade scheme. The acid rain cap-and-trade program is frequently praised as an effective market-oriented regulatory mechanism to reduce sulfur dioxide (SOx) from power plant emissions and as a model for carbon cap-and-trade. On July 6, EPA finalized new rules that tighten limits on SOx and virtually eliminate trading. The market for allowances to emit one ton of SOx collapsed from a high of $1,600 per ton in 1995 to $3 per ton in early July. Millions of allowances held by utilities and investors are now worthless.
In the early years, EPA’s SOx cap-and-trade program worked well. Since 1995, the program led to a 50 percent reduction in these emissions. EPA initially allocated a set number of baseline allowances to electric power companies. These utilities then had to “pay” for each ton of SOx emitted with one allowance. By switching to low-sulfur coal, increasing plant efficiencies, and investing in pollution control technology, electric generators reduced emissions. With reduced SOx emissions, the utility then sold allowances or reduced the number of purchased allowances needed each year. The emission reductions and market for trading SOx credits grew until late 2005 when litigation undermined the certainty of EPA’s rules. In 2008, the DC Circuit Court finally vacated portions of the rule and ordered a revision.
The EPA’s new Clean Air Transport Rule devalues SOx emission credits accumulated or purchased under the previous rules, and substantially limits, if not precludes, trading of emission allowances. The final cap in the previous rule was 8.65 million tons of SOx per year. The new rule shrinks the annual SOx limit to 4.1 million tons.
Beware of EPA-created markets. Genuine markets are dynamic. Supply, demand, and price respond to the ever changing dynamics of free exchange. In contrast, markets created and controlled by government are volatile, fragile, and subject to fraud. When the government creates an artificial market for trading emission allowances, i.e. government permission slips, one new EPA edict can nullify the market and vaporize the value of emission credits.
When most people think about the benefits of financial transparency—the timely, meaningful, and reliable disclosure of government budget and spending information—they tend to think of the intangibles: educating the public, knowledgably engaging their elected officials, and so on. But a growing body of evidence is beginning to show that transparency has a much more concrete benefit: saving money.
As a result of the Texas Comptroller’s efforts to post detailed spending information online as well as conducting a top-to-bottom review of her agency’s expenses, the Comptroller’s transparency efforts have “saved taxpayers a projected $10 million” over the last few years. A pretty good return on investment considering the initial cost for Texas’ spending website, Where the Money Goes, was only $310,000.
Transparency’s money-saving ability extends beyond just that example though—state and local governments have also been able to see big savings from TexasSmartBuy, an online ordering system that leverages the state’s purchasing power to boost competitiveness among vendors and cut costs. In the short time that TexasSmartBuy has been up and running, Texas’ state and local governments, as well as the taxpayers who support them, have seen “over $50 million in annually reoccurring savings.”
And there are numerous other “success stories” are out there detailing how governments in Texas are benefitting financially from their transparency efforts, be it by reducing open records requests, saving on printing, or other ways. So the next time you think about how transparency may benefit you, just think about all the money you could be saving.
Recently, I toured the Bill Logue Juvenile Probation Center in Waco and the McLennan County Juvenile Correctional Facility in nearby Mart.
At the probation facility, McLennan County officials highlighted measures intended to reduce recidivism and increase the effectiveness of various rehabilitative methods. Although boot camp programs have been considered generally ineffective at deterring recidivism by juvenile offenders, the McLennan County C.O.R.P.S. program has been modified to contain a roughly 40% military emphasis and 60% therapeutic emphasis, which county officials say has increased the program’s effectiveness. In addition, officials spoke about Quickscreen brain scanning, which used brain imaging to identify signs of behavioral or learning disabilities in juveniles, enabling treatment strategies to be better tailored to the youth.
At the Texas Youth’s Commission’s McLennan County Juvenile Correctional Facility, a new feature is the “grievance” system. Drop boxes are placed in hallways throughout the facilities for youths to place forms detailing any complaints regarding other youths, TYC administration, or even if they just want to say that lunch wasn’t served hot enough.
This system seems to provide a method for youths to report misconduct like that which led to the TYC crisis in 2007. However, when asked, the youths distrusted the grievance system. Youths reported that, even though the grievance form promises a response within 24 hours, a response often takes up to two weeks. Additionally, a youth cannot remain anonymous, which may discourage complaints due to fear of retaliation if an administrator is the subject of his grievance.
Youth also reported that they had only received about four days of in-class education during May. Officials stated that this was mostly due to staffing shortages, including the recent death of one of the GED coordinating educational personnel. As youths entering TYC are on average several grades behind, they clearly need more than a half week of school per month.
My visits suggest reasons to be hopeful about the future of Texas juvenile justice while also indicating that there is still much room for further progress.
- A.J. Smullen
Intern, Center for Effective Justice
The nation’s out-of-control spending problems persist, despite President Obama’s earlier assurances that the federal government would strive to live within its means.
According to a mid-year review by the Office of Management and Budget (OMB), this year’s projected deficit will top $1.47 trillion and is projected at $1.42 trillion next year. Starting in 2013, the nation’s deficit projections are slightly rosier, ranging in the hundreds of billions rather than in the trillions, but their cumulative effect will be to push the amount of debt held by the public to nearly $19 trillion, or 77.4 percent of GDP, by 2020.
Fiscal irresponsibility of this magnitude and duration is not without risk. In a newly released brief, titled Federal Debt and the Risk of a Fiscal Crisis, the Congressional Budget Office (CBO) warns that if present conditions are allowed to continue, the U.S. could face “several negative economic consequences,” including potentially higher interest rates, lower economic output, and an increased probability of a “sudden fiscal crisis.” Though it is impossible to know just when a fiscal crisis of this sort might arise or how long it may last, it would almost certainly have a lasting impact on everyone’s finances.
Risking this kind of fiscal crisis because of persistent deficits and a gargantuan national debt is reckless, to say the least. If we are to avoid future calamity, meaningful budget reforms are needed now.
In the private sector, falling demand and cheap competition lead a business to conclude that it must find efficiencies, right-size, and adjust to survive. In the public sector, the same circumstances commonly lead officials to conclude just the opposite: raise prices.
Case in point: the U.S. Postal Service. Earlier this month, it announced plans to increase the price of a first-class stamp to 46 cents and raise the price of a postcard to 30 cents starting in January 2011. The proposed rate increases come as the agency faces a projected $7 billion shortfall for the next fiscal year.
Whether or not raising prices in a recessionary climate amid plummeting demand and in the Age of the Internet is a well-reasoned idea is yet to be seen—though I would strongly suggest it is not—but what can be said for certain is that the Post Office is in need of long-term solutions, like privatization, to help the agency solve its ongoing fiscal crises.
For some, the call to privatize the nation’s mail delivery service is unthinkable—after all, who would trust the “greedy” private sector with such an important task. But for others, the move to privatize the Post Office is commonsensical, as it has already proven a success in other countries, like Great Britain, where officials are “considering a 100 per cent privatization.” Profit, in this case at least, seems to be the right motivator for delivering the mail and offering a better product.
When the average consumer considers making a major new purchase like a home or automobile, most do their homework before they actually commit themselves. Too much time and money is at stake to do otherwise.
Like consumers, higher education students also tend to do a bit of “comparison shopping,” evaluating professors and classes as they create their schedule for the semester. However, unlike consumers, students only have a very limited amount of information available to them before making their “purchases.” That is, until recently.
A new state law, HB 2504, goes into effect beginning this fall that requires Texas’ public colleges and universities to post faculty and course information online aimed at helping students make more informed decisions. The newly available information includes course syllabi, student evaluations, and professors’ curricula vitae, as well as departmental budgets.
While most consider giving students access to more information about their higher education choices a good thing, some university officials have begun to express their dismay, citing cost concerns and issues with manpower—a familiar tune, it seems, whenever new transparency initiatives are launched.
No matter how much hullabaloo is raised by officials though, the fact of the matter is that the average Texas undergraduate invests upwards of $80,000 in pursuit of a four-year degree and they have every reason to know what they are putting their money towards. Plain and simple.
With a projected budget shortfall of several billion dollars looming over next session, some have begun calling for the creation of a new state personal income tax as a way to help solve the state’s budget mess and aid economic recovery. But as the Foundation has argued in the past, a personal income tax would do more harm than good.
First, creating a new revenue stream would shift the focus away from the state’s real budget problem: government spending. With state government spending having increased by 81 percent since 2000 – compared to just a 43 percent growth in population plus inflation – it is hard to argue that the state lacks revenue.
Next, and perhaps most importantly, much of Texas’ past economic success has been based on the state’s commitment to a low-tax, business-friendly environment that attracts employers, creates jobs, and encourages investment. A state income tax puts that success in jeopardy.
As noted in the Foundation’s previous research, economic growth in the nine states without an income tax has greatly exceeded economic growth in the nine states with the highest marginal income tax rates over a 10 year period.
Finally, the creation of a broad-based personal income tax lets policymakers off the hook and shifts the burden to workers and their families. At a time when most Texans are making cuts to their family budgets, policymakers should be leading by example and making the same kind of tough decisions.
The Financial Times recently reported that the small southern California city of Maywood, population 28,137, is handling its budget woes in a rather unusual way: by firing all of its employees and contracting out essential services, including its police force.
Maywood, a city chronically troubled with its police department\'s insurance program, was finally driven to the edge when its insurance rates and pension obligations increased, while its property and sales tax revenues declined. In response, the city has pulled out all the stops in an effort to find cost-savings and identify unnecessary expenses in everything from school buildings to fire departments.
From the looks of things, it appears city officials are taking to heart an oft-repeated slogan in national politics: \"Treat government more like a business.\"
The city\'s distress shows that a government need not provide all those services itself – and in fact, it shouldn\'t. Every organization has a \"comparative advantage\" – a service it is best suited to providing. When local government acts as the direct provider of public goods, it foregoes the comparative advantages of private firms. If a local government instead simply acts as a bargaining agent on behalf of citizens, it can capitalize on the comparative advantages of the private organizations to provide services to citizens more efficiently.
Local governments can go further, of course, and use opportunities like this to make long-needed reforms of labor and pension rules. At the very least, they should recognize that Maywood\'s reaction to its fiscal distress is a viable strategy to improve municipal services while reducing costs.
- Andrew Glidden
Intern, Armstrong Center for Energy and the Environment
Building on last year’s Heller decision, the Supreme Court voted 5-4 on June 28 in the McDonald v. Chicagocase to incorporate the 2nd Amendment’s protection of gun ownership onto the states via the 14th Amendment. During the Reconstruction Era, relying on the controversial Slaughter-House case, the Cruikshanks, Presser v. Illinois, and Miller v. Texas decisions had expressly stated that the 2nd Amendment did not apply to the various states even though it was binding on the federal government.
The Reconstruction Era Court did not believe that the 2nd Amendment right to bear arms was a privilege or immunity of citizenship as contemplated by the first clause of the 14th Amendment. A plurality of the present Court – Alito, joined by Roberts, Scalia and Kennedy, and with Scalia writing an additional concurrence – navigated around the Reconstruction Era opinions by declaring that the right to bear arms extended onto the states via the Due Process Clause of the 14th Amendment.
The decision to extend using the Due Process Clause is merely a plurality, rather than a majority, because Thomas voted to directly overturn the Slaughter-House-Cruikshanks line and extend the 2nd Amendment via the Privileges and Immunities provision. What this means for us is that, while the Court’s decision to incorporate is binding against the states, there is technically no settled authority on the precise scope of gun regulations that will still pass muster.
Nevertheless, those of us who consider the 2nd Amendment to stand for a defense of individual liberty and self-determination are now more secure in our right to self-defense that was so important to our nation’s founders.
- A.J. Smullen
Intern, Center for Effective Justice
“When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, … a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.”
When we see these opening words of the Declaration of Independence, it can be easy to skim over them in the rush to get to the really exciting part about equality, unalienable rights, and life, liberty, and the pursuit of happiness.
Yet, if we do this, we miss something important.
These opening lines talk about “one people … declar[ing] the causes which impel them to the separation.” But if you look at who signed the declaration, it wasn’t an anonymous group, but 56 individual men who actually declared these causes and thus put their lives on the line.
Signing the Declaration wasn’t like signing a simple ballot petition in our country today. It was instead declaring to England—the greatest military power in the world at the time—intentions that would be treated as treason should the fight for independence fail.
These men put their honor, fortunes, and lives on the line for the good of their country.
Today, 234 years after the Declaration was signed, where does this leave us?
Free, for one thing. The sacrifices they made so long ago are still bearing fruit in the lives of all Americans today. For this we should be ever grateful.
However, all is not as it should be. The United States is now ranked only “mostly free” in the 2010 Index of Economic Freedom from the Heritage Foundation and The Wall Street Journal. Seven countries, including Canada, now rank as Free ahead of us. Our health care system is on the verge of a complete federal takeover—and collapse. And excessive spending and regulation seem to be driving our economy towards years of economic malaise.
We are seeing these impacts first hand in Texas. The mandates of ObamaCare may force many changes to our system unimaginable only six months ago, not to mention billions of dollars of new spending. These costs, along with the impact of federal stimulus spending and the recession, have us facing a budget shortfall next biennium of as much as $18 billion.
We all have a lot of work to do.
We’ve wasted no time in getting started at the Foundation. Two of the leading architects of Texas’ successful 2003 effort to close a $10 billion budget gap without increased taxes—former state representatives Talmadge Heflin and Arlene Wohlgemuth—are now heading up our unprecedented budget project. Over the next few months, our entire policy team will put their regular research work on hold in order to scour the budget of every single state agency looking for ways to save taxpayers money.
We also recently launched our Center for Tenth Amendment Studies led by former Texas Solicitor General Ted Cruz and former Texas Supreme Court Justice Scott Brister. They are looking for ways where Texas can just say “No” to the federal government—its money and the strings that come attached to it.
We are fortunate to live in a country where pledging our lives to liberty doesn’t involve the level of sacrifice it once did here—and still does in too many countries around the globe. That is all the more reason we should all redouble our efforts in the name of liberty.
Thank you for joining us in the fight for freedom.
State Farm, the state’s largest homeowners insurance company, recently raised its rates; as a result, some policyholders began to shop around for less expensive alternatives. This appears to come as a surprise to advocates of increased regulation of homeowners insurance. It shouldn’t.
Consumers are able to help themselves in a competitive marketplace. In today’s competitive insurance market, where the voluntary nature of markets forces attention to the needs and desires of consumers, consumer-protection laws generally just get in their way.
As Bill Peacock points out in his recent study on consumers, competition, and homeowners insurance, consumer-protection measures generally seek to replace consumer preferences with those of the regulators and other intervening parties. This does not mean there is no place for government intervention, but it does mean intervention should be carefully targeted toward unethical, rather than competitive, behavior.
When it comes to wind energy, Texas would be wise to keep an eye on China.
China, the world’s second-largest consumer of energy, is turning to renewable sources – primarily wind. According to Bloomberg New Energy Finance, China invested $34.5 billion in low-carbon technologies in 2009, compared with $18.6 billion in the US. In 2009, China invested $110 billion – 2.2% of its gross domestic product – in power construction projects, increasing wind projects by 44%.
What has China received in exchange for its spending on wind power? Overcapacity. Over the last nine years, China’s government has launched several subsidy programs designed to support domestic manufacturers. These subsidies have flooded the market with more turbines than needed to meet demand.
According to Asia Times Online, many internal experts have pointed to potential waste in China’s large-scale wind power development. China will require extensive upgrades to its power grid to support these large-scale wind farms. These were costs not anticipated, nor accounted for, in the original investment plans.
These problems are the same that Texas will experience. As explained in our sunset report on the Public Utility Commission of Texas, the below market price of wind – due to state and federal subsidies – floods the system with more wind than it would otherwise have, increasing the challenge of maintaining system reliability and the costs of ancillary services. Not only could this have a detrimental impact on system reliability at peak loads, it could also threaten the success of Texas’ energy-only market.
Texas should look to China as an example of the failure of wind power and reach a similar conclusion –namely that “investment in large-scale wind development has created large-scale waste, and the sustainability of such projects is brought into question.”
Teacher quality is an important factor in student success in the classroom in both public and higher education. The proposal to use student evaluations as part of an effort to reform Texas higher education recognizes this fact and seeks to reward the best educators. In the past couple of days, criticism from outside the state hasappeared – criticism which ignores several key parts of the proposal.
• The program is voluntary. Faculty members are not required to participate. The plan rewards those teachers based upon evaluations and the number of students taught. This encourages faculty to teach as many students as possible.
• Existing evaluation forms submitted at the end of the year are used to rate the teachers. These evaluations are typically conducted before final grades are awarded. Multiple studies have shown that students’ ratings are not biased by their likely grades, thus limiting teachers’ incentives to award higher grades in an effort to secure a higher evaluation and thus, a bonus. Additionally, all faculty members are encouraged to agree to limit high grades and grade inflation when first joining the program.
• Studies show that student evaluations are effective measures of teacher performance, especially when the goals and expectations for a course are clearly laid out.
• These bonuses would be available to all teachers, not just tenured professors. As we showed in a 2009 article, 70% of courses taught in public universities are taught by non-tenure-track faculty, including graduate teaching assistants. The average tenured professor teaches fewer than three courses per year. Non-tenured faculty normally earn far less than tenured faculty, often as little as $10 per hour. Those teachers who do the most and best work of educating our youth should be rewarded for such.
The criticisms of student evaluations also ignore the fact that these are only one part of a much larger reform plan that encourages students, parents, and taxpayers to become more involved in improving higher education at public universities.
The Foundation has no problem with sound academic research; after all, we are researchers ourselves. But as important as academic research is, it is secondary to the primary goal of educating students. These are public universities funded by public tax dollars established to educate our citizens.
So while there may be value to “highly qualified scholars working on problems that may have no practical payoff except the unquantifiable payoff of advancing our understanding of something in philosophy or nature that has long been a mystery,” the public should rightly expect accountability from these institutions for the tax dollars being spent. And unlike the students who the critics say “may not realize [the value of a course] for decades, the public is pretty savvy at understanding immediately the value it is getting in return for its money.
Washington D.C.’s addiction to spending may be worse than you think.
This year alone, the federal government will spend more than $30,500 per household, according to a new report from the Heritage Foundation. This figure, up $5,000 per household from just a few years ago, is expected to grow to more than $35,600 per household by the year 2020.
As outrageous as this growth of government spending is, it is even more obscene considering what our tax dollars are being spent on. Here is just a short catalogue of the wasteful spending items identified in the report:
- Washington spends $25 billion annually maintaining unused or vacant federal properties;
- The federal government made at least $98 billion in improper payments in 2009;
- Because of overstaffing, the U.S. Postal Service selects 1,125 employees per day to sit in empty rooms. They are not allowed to work, read, play cards, watch television, or do anything. This costs $50 million annually;
- Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job;
- The federal government owns more than 50,000 vacant homes; and
- The National Institutes of Health spends $1.3 million per month to rent a lab that it cannot use.
Congress passed a 2,700-page bill on health care reform. How can Congress possibly know all of the details in this bill? Much less, how can U.S. Health & Human Services Secretary Kathleen Sebelius—to whom an unprecedented level of deciding power is allocated in this bill—possibly know and understand the laws set forth in the bill that is quickly catching on as “ObamaCare”?
In reading just a 35-page section of ObamaCare that outlines the establishment of state health care exchanges, the Secretary of Health and Human Services – an appointed official, mind you – was listed 110 times as the recipient of certain powers that originally would have belonged to Congress. The authority granted to Secretary Sebelius borders on violating the non-delegation doctrine, the principle that Congress cannot delegate legislative powers to anyone else. Considering the significance of this law – the violation of federalism and interference into the daily lives of all Americans – ObamaCare does not provide anything resembling sufficient guidance for the Secretary.
Out of the 110 times this small section delegates power to Secretary Sebelius, there are five that are particularly striking. Secretary Sebelius has been given authority to (1) certify health plans, (2) determine whether a state will have its required exchange fully operational by January 2014 lest the federal government take over the operation, (3) investigate the affairs of an exchange and require yet more reports, (4) establish geographically adjusted premium rates from Washington, and (5) set provider reimbursement rates.
The federal government is usurping what is intended to be the states’ responsibilities, only to hand it to an unelected official.
- Caitlin Buck
Intern, Center for Health Care Policy
The late Austrian economist Joseph Schumpeter popularized the term “creative destruction” to define the process by which a free market abandons less efficient means of production for more favorable ones, thereby creating greater value for society on a whole. Oftentimes, this means the destruction of businesses through competition. But fair competition comes from other businesses, not government regulations.
The fear that Obama Care would stifle business as opposed to encourage it has now become reality. On June 2, Virginia-based nHealth announced its decision to cease operations, citing “uncertainties in the regulatory climate coupled with new demands imposed by national health care reforms.” Few people doubt that private enterprise is more efficient than government bureaucracy. However, the government, through legislative or administrative means, can establish an environment where no amount of innovation can succeed, a feat diametrically opposed to the free market.
nHealth described the new minimum loss ratios – the amount of money paid out to claims in relation to the amount kept for overhead and profit – as being particularly detrimental to their business. By restricting flexibility on these loss ratios, the federal government has directly legislated how much profit an insurance company can make.
Since the Code of Hammurabi, the earliest known codified rule of law dating back to 1790 B.C., governments have in some way regulated business, but rarely before in American history has our federal government taken such a direct and destructive role in business. Rest assured nHealth will not be the last casualty in the Obama Administration’s takeover of the health care industry.
Former U.S. House Speaker Newt Gingrich, now affiliated with the American Enterprise Institute, is taking a few pages out of an important new book, “The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future.” Gingrich, who has been excerpting the book by AEI President and social scientist Arthur Brooks in his recent speeches, says the thesis of the tome is that “the new culture war in America is not over guns, gay marriage or abortion, but instead between a socialist redistributionist minority (the 30% coalition) and a massive free-enterprise, work-ethic, opportunity-oriented majority (the 70% majority.)”
Among the key themes of the book is: “Free enterprise is not simply an economic alternative. Free enterprise is about who we are as a people and who we want to be. It embodies our power as individuals and our independence from government. In short, enterprise is an act of self-expression – a declaration of what we truly value – and a social issue for Americans.”
This insight helps explain the paradox of both Austin and Hollywood. How many times if you heard folks on the liberal end of the spectrum say they love Austin but couldn’t live anywhere else in Texas? In the latest issue of Austin Monthly, former Mayor Gus Garcia said the thing he likes most about Austin is “the spirit of liberalism that prevails.”
Do you think these folks recognize one of the reasons Austin has become a magnet for musicians, artists, and other creative individuals is that there is no state income tax and that the cost of living here is half to a third of New York or San Francisco? What is a more powerful form of self-expression than selling your own songs and art and, hopefully, getting to keep the vast majority of what you earn? While some people attribute Texas’ prosperity simply to oil, it is the relative economic freedom in our state policies compared with other states that also helps explain why Austin is rated America’s best city for small business.
While many conservatives have had legitimate bones to pick with Hollywood over the years, conservative author David Horowitz – who founded an organization for conservatives in Hollywood – has argued that the capitalist lifestyle depicted in movies and music also played a role in the desire of Russians and Eastern Europeans living under communism to become more like America. Interestingly, both Bibles and Beatles records were smuggled into communist regimes.
Perhaps the reason economic freedom is a tough sell is you can never prove the great inventions, businesses, and creative advances that would have happened had there been fewer taxes and regulations. But we do know that the free market system does more than just create wealth; it unlocks human potential.
A recent study in Spain showed that for every “green job” created by the Spanish government through subsidies, 2.2 jobs were destroyed elsewhere in the economy. The reason, as explained in the study, is because the re-allocation of resources to “green jobs” was centrally directed rather than rationally, as in a market economy.
These results are not unique to Spain. In Italy, the losses were worse. Each “green job” created cost 4.6 jobs across the entire economy. It is this Spanish/European-style green jobs agenda that is being pushed so heavily in the United States, both at the federal level and right here in Texas.
These findings mirror those found by our study on the impact of climate change legislation and economic growth, which showed a direct correlation between energy use and gross domestic product. Any policy that increases energy prices effectively decreases growth.
One does not have to be an economist to figure out that if each “green job” costs more jobs than it creates, then “going green” is not the answer to pull out of the recession. Although Texas has fared better than most states in terms of unemployed workers, pushing green jobs here will weaken—not strengthen—the job market.
Old Dominion University in Virginia is seeking to use its eminent domain authority to seize land. Why? It wants to build a shopping mall. How can it do this? The University is declaring the area “blighted.” Under Virginia law, if an area is blighted, regardless of whether that particular unit of land is blighted, eminent domain can be used to take the entire area of land.
So what is this terrible blight next door to the university? The land being taken belongs to a defense contractor that has been repairing the Navy’s communication systems at that location for 50 years. The company has been in business for 75 years. I doubt this is the kind of taking that was intended when the Virginia legislature enacted its eminent domain statutes.
Texans used to be subject to this same kind of taking. However, with the passage of a constitutional amendment last year, a blight designation can still be used to take a property, but it has to be done one property at a time; which makes it harder than it was in the past to take property in this way. Texas’ eminent domain laws still require more work, but at least we are moving in the right direction.
The U.S. Environmental Protection Agency’s (EPA) Endangerment Finding that carbon dioxide (CO2) is a pollutant harmful to human health is a prime candidate for a rarely used authority in the U.S. Senate to overturn a regulatory decision. A shrewd plan to use this authority is under way. Alaska Sen. Lisa Murkowski, ranking member of the Energy and Natural Resources Committee, has scheduled a vote on a resolution of disapproval under the Congressional Review Act.
A resolution under this law is privileged, meaning that the Senate must vote on it. Passage needs only a simple majority of 51 senators. Before concluding this will never happen with the current makeup of the Senate, remember that 10 Democratic Senators recently wrote a letter to EPA Administrator Lisa Jackson requesting that she suspend implementation of the Endangerment Finding. An unavoidable vote to veto EPA’s finding will provide a record of votes on a key issue in this November’s elections.
The Endangerment Finding, broadly criticized by both parties, has been used by the Obama Administration as a political tool from the start. EPA coincidentally adopted the finding on the first day of the international conference in Copenhagen to finalize a binding international treaty on carbon caps. A final Endangerment Finding enabled President Obama to claim, at this meeting, that the U.S. had full legal authority to force reduction of CO2 even without new legislation.
By officially declaring that CO2 and other greenhouse gases (GHG) are harmful pollutants, EPA triggered the command and control authority to regulate under the existing Clean Air Act. Proponents and opponents of GHG reduction agree that the act is wholly unsuited to regulate a compound as ubiquitous as CO2. The cap and trade bills set a regulatory threshold at 25,000 tons of annual CO2 emissions, but the act sets this threshold at 250 tons. At this low level, churches, hotels, schools, and large homes would be subject to complex and costly EPA mandates.
Last February, the state of Texas legally challenged EPA’s Endangerment Finding in the D.C. Circuit Court. Sixteen other states have followed suit. This litigation challenges EPA’s reliance on flawed global warming science now discredited by the Climategate disclosures of data manipulation, error, subversion of basic peer review, and violation of Freedom of Information laws.
Sen. Murkowski’s resolution raises another fundamental question appropriate for elected representatives to answer. Should unelected agency staff make decisions as monumental as EPA’s Endangerment Finding? Has EPA usurped the prerogative of the U.S. Congress, acting a lawmaker instead of an implementer of those laws enacted by Congress?
The legal authority created by EPA’s Endangerment Finding is used as a cudgel to force passage of new cap and trade legislation, misleadingly pitched as a more market-friendly regulatory mechanism. That strategy is not working. Polls show increasing majorities of voters oppose carbon mandates. The same polls show voters want a genuine energy bill – to facilitate plentiful, affordable and reliable energy—not more taxpayer subsidized green gimmicks.
Sen. Murkowski’s resolution to disapprove (nullify) EPA’s Endangerment Finding is scheduled for the week of June 7. Sen. Lindsay Graham, a cap-and-trade supporter who has also co-sponsored Murkowski’s resolution, told the New York Times late last week he believes the resolution will pass.
Dallas TV station WFAA recently discovered that Super Bowls aren’t quite as super as they might seem.
The Super Bowl’s $611 million economic impact on North Texas – as claimed in a study commissioned by the North Texas Super Bowl XLV Host Committee – doesn’t seem to hold up very well under examination. It appears that the spending by fans used to attain the $611 million impact are simply assumptions, as actual fan spending at previous Super Bowls or related events was not examined.
For instance, the same firm that produced this study did a similar study projecting the economic impact of the NBA All Star game in Arlington. It estimated that NBA All-Star fans would spend more than $13 million on rental cars in North Texas over the five days of the event. However, WFAA discovered that airport figures show just $17 million in rentals for the entire month of February. The story contains multiple examples like this shedding doubt on the projections.
This shouldn’t surprise anyone. Government claims of the benefits of “economic development” are always overstated.
A recent Foundation paper, Economic Development: Texas Style, shows that the best approach to growing the economy is through low taxes and less government spending – not through enterprise funds, Super Bowls, and programs that pay employers money for hiring workers. It is much better to leave money in the hands of the people and employers and let them use it rather than to funnel it through the government. Not only does government have to take its cut as the money passes through, but it redirects the money from more productive to less productive uses.
While most of us enjoy watching the Super Bowl, that enjoyment may be tarnished a bit as we think of the $31 million or more that our state government is going to spend on hosting it.
There are 66 cities/metro areas in the United States with a population of at least 450,000. Five are in Texas – all of which rank in the top seven nationally. Austin, Houston, and San Antonio take the top three spots, while Dallas comes in fifth, and Ft. Worth seventh. Texas dominates the landscape.
The results are quite similar when the smaller cities/metro areas are included. Of the 397 U.S. cities ranked, 24 of the 26 Texas cities place in the top half, with 21 in the top quartile. The only two in the bottom half are Victoria and Wichita Falls.
Surely Texas must be doing something right to achieve these results. I’d like to think that our ranking near the bottom of most spending and tax categories—thus allowing folks to keep their money and create new jobs with it—has something to do with it. Our oil, natural gas, and coal resources certainly help. And though we can’t credit free market policies as the reason we have energy resources where others don’t, it must also be noted that Texas isn’t the only state with fossil fuel resources. And unlike several of those other states—California and Florida come to mind—Texas is pursuing free market policies that allow those resources to be extracted.
Michael Shires, the author of the rankings, writes that while energy is certainly helping Texas, our response to past crises is the key to our current success. He cites the restrictions we have “limiting home equity lines” as one example. While this is hardly a free-market measure, it did insulate Texas from the damage the out-of-control U.S. government-created mortgage lending crisis inflicted on so many other states. I believe our moderation in resolving the 2003 budget crisis through spending restraint rather than new taxes is even a bigger factor in our current economic health.
Shires says that moderation is the best response to the current crises, pointing out that the “current pace of government spending is unsustainable.” Additionally, “governments at all levels need to reduce their cost structures.” And we need to avoid measures such as “California’s aggressive climate legislation, for example, and the mixed signals it is sending businesses across the state’s 28 MSAs.”
We conservatives sometimes don’t like the word moderate, but in this case I believe Shires is right on. Some moderation in taxes, spending, and regulation is exactly what Texas needs to see it through the budget crunch the Texas Legislature will face in 2011. For instance, the top three areas in Texas for growth are College Station-Bryan, Killeen-Temple-Fort Hood, Austin-Round Rock-San Marcos. While I am glad these cities are doing well, and there is no doubt that being in Texas with our small-government climate has helped them, these rankings would lead me to believe that another thing we are doing well is spending a lot of money on universities and the military. We can’t do anything about military spending in Texas, but we ought to take a closer look at higher education spending come January to see if there is a little room for moderation there to help us balance the budget.
There is obviously a lot going on at the federal level right now worthy of attention, but don’t forget what is happening in Texas. We have proven that we can keep things humming along pretty well here despite what goes on in Washington. Stay tuned to www.texaspolicy.com to keep on top of what’s going on here in Austin at the Pink Dome.
Last month, the Center for Economic Freedom hosted a primer on the technology industry and its impact on jobs and growth in Texas – and Austin in particular.
In this “Quick Take” feature from the TPPF YouTube channel, Braden Cox, policy counsel with the Association for Competitive Technology, discussed how Texas has succeeded in fostering innovation. Cox explained that, among other things, having a system of limited regulation while ensuring consumer protections has created an environment that attracts new entrants in the high-technology sectors. The results speak for themselves. Texas is leading the way in job growth, innovation, and competition.
The battle for control of your Internet is far from over.
The federal government’s layout of the national broadband plan has become the fallback mechanism for proponents of net neutrality. Although the recent appeals court decision in Comcast v. FCC struck a blow against government regulation of the Internet, the opinion did not entirely kill the possibility.
The D.C. Circuit Court of Appeals unanimously ruled that the FCC did not have either direct or ancillary jurisdiction to regulate broadband. This decision was, however, narrowly tailored to specifically exclude broadband from the FCC’s jurisdiction as it is currently classified; thus leaving the door open for the FCC to simply re-classify broadband as a telecommunications service. By doing so, the FCC would then have regulatory jurisdiction, since the FCC has jurisdiction over telecommunications. In effect, re-classification would nullify the judicial decision.
Re-classification to allow FCC regulation is only a small part of the national broadband plan for your Internet service. Recommendation 4.20 (page 58 of the 294-page plan) is for an Internet tax. The proposal for the tax states “the federal government should investigate establishing a national framework for digital goods and services taxation.” Proponents argue that an Internet tax would reduce uncertainty and “remove one barrier to online entrepreneurship and investment.”
This rationale presupposes that there are barriers to entrepreneurship and investment. But as I pointed out in my comments to the FCC, more than 96% of U.S. zip codes are served by two or more broadband providers. Those companies have invested huge sums in the Internet infrastructure, including $70 billion last year alone.
Clearly, the current competitive marketplace has already unleashed private investment, innovation, low prices, and a myriad of competitive options. Disrupting the competitive climate will only bring uncertainty and confusion.
So why do this? The stated goal behind the recommendation is to allow federal, state, and local governments to unleash private investment, innovation, lower prices, and give better options for consumers. There is no indication in the recommendation, however, on how these goals will be accomplished by instituting a new tax.
Regardless, the national broadband plan initiative is still being pushed at the federal level. The battle over line management will continue for the foreseeable future.
The Dallas Police Department’s mission statement is “to reduce crime and provide a safe city,”, but innumerable local ordinances often overcriminalize the city’s own residents. Recently, Dallas resident Sandra McFeeley was arrested and charged with a felony for pruning overgrown foliage in the community park.
Undoubtedly, McFeeley violated local ordinances of the Dallas City Code, as the law states: “It shall be unlawful for any person to cut, injure, mutilate or destroy any shrub, plant or tree in the city, in or upon property not belonging to such person, without the permission of the owner of the property.” McFeeley faces a possible $10,000 fine and up to two years in jail.
Overcriminalization is nothing new to government officials on a local, state, and national level. According to Time to Rethink What’s a Crime: So Called Crimes are Here, There, and Everywhere, Texas lawmakers have made more than 1,700 criminal offenses that reside outside the traditional crimes written into the Penal Code or local ordinances such as these.
Let’s hope she receives community service rather than a jail sentence. Then she can use her “green thumb” to lend a helping hand to her community once again.
- Brittany Wagner
Intern, Center for Effective Justice
Last Friday, the chief actuary of the Centers for Medicare & Medicaid Services, an office in the U.S. Department of Health & Human Services, sent out a detailed memo analyzing President Obama’s newly passed health care law and the results were not encouraging.
Among other things, the report suggests the new law will lead to higher costs, increased spending, disastrous coverage issues, and still leave 23 million uninsured by 2019. Here are details from the report:
• Higher consumer costs: Billions in new fees and taxes on manufacturers and importers “would generally be passed through to health consumers in the form of higher drug and device prices and higher insurance premiums.”
• Increased government spending: For fiscal years 2010 through 2019, “federal expenditures would increase by a net total of $251 billion” as a result of the new law.
• Medicare cuts unlikely: Cuts to Medicare “could become unsustainable even within the next 10 years, and over time the reductions in the scope of employer-sponsored health insurance could also become an issue.”
• Coverage but trouble getting care: Increased demand for health services “could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low reimbursement health coverage.”
• Tens of millions still uninsured: In 2019, the report estimates 23 million people will be uninsured, 5 million of which will be illegals. The remaining 18 million will simply choose to pay the fine rather than get coverage.
Jobs. Jobs. Jobs. That is the four letter word on the mind of every lawmaker worth his salt. But while most officials agree that more should be done to help spur job creation, not everyone agrees on the best way to do it.
For some, the best approach for creating jobs is by keeping taxes low and controlling the growth of government to stimulate private sector growth. For others, the best job creation strategy is through increased government spending and public sector-driven demand.
To find out which approach has yielded the best results so far, Reason.tv put together a short video, "More Taxes or More Jobs? California Shows We Can’t Have Both," documenting the Golden State’s recent attempts to create jobs.
Last week, White House economic advisor Paul Volcker said that a Value Added Tax (VAT) “was not as toxic an idea” as it had been in the past and that “if at the end of the day we need to raise taxes, we should raise taxes.”
Controversial as Volcker’s comments were, they have generated a great deal of interest in the new tax scheme, with Doug Elmendorf, Director of the Congressional Budget Office, saying that his agency has fielded “a lot of questions” about the VAT from members of Congress.
As the idea begins to pick up momentum—as it almost certainly will given the government’s inability to control spending—it is important that American taxpayers understand what a VAT is and how it operates. For this, we turn to Dr. Dan Mitchell of the Cato Institute:
Some Austin residents who have made improvements to their properties just got a jolting message from their city government: pay up or become criminals.
According to the Austin American-Statesman, the City of Austin recently unleashed a torrent of code compliance letters threatening 76 homeowners in the working class Fairview neighborhood in South Austin with criminal prosecution for alleged violations of the voluminous City Code. A follow-up piece reports that residents, along with former state Senator Gonzalo Barrientos, are asking the mayor for relief.
Dozens of unsuspecting homeowners were warned of criminal prosecution if they do not come into compliance, including possible fines of $2,000 a day and disconnection of their utilities, which must be provided through the City-owned monopoly. If misdemeanor fines aren’t paid, arrest warrants can be issued.
Just what kind of mischief have these prospective political prisoners been up to? Dale Flatt, a 24-year city firefighter on medical leave, and his wife received a violation alleging that the City didn't have a permit on file for a garage conversion at their home. This update was made before Mr. Flatt’s deceased mother-in-law purchased the house in 1968. Nonetheless, the Flatts paid $123 for a building permit to come into compliance only to get another notice last month that their carport was too close to the street.
Another area resident, Margaret Raupe, got a violation notice concerning the conversion of her garage into a living room, which was done some 23 years ago before she bought the home. Now, the City is requiring that they obtain a permit (cost: up to $700) or face criminal prosecution.
Whatever happened to the statute of limitations? If no one was bothered for two decades by whatever improvement was made to the property, why is the City taking these homeowners to the woodshed today? And to make matters worse, the City office that these residents must deal with is only open three hours a day.
This assault on the property rights of area homeowners evidently stemmed from one anonymous complaint. Because the code enforcement process is complaint-driven, one person who may harbor a personal disagreement with a neighbor can literally hold an entire neighborhood hostage to the endless and almost indecipherable alphabet soup of city regulations.
Does this represent a lack of respect for private property rights, the growth of criminal law beyond its traditional scope, a stimulus package for lawyers, an abandonment of common sense – or all of the above?
A majority of Americans believe they pay more than their fair share of taxes to federal, state, and local governments, according to the latest Rasmussen Reports poll.
Of those surveyed, 66 percent of voters nationwide said they considered themselves overtaxed, while only 25 percent said they were not.
Interestingly, the poll found that “lower income voters (were) more likely than others to believe the nation is overtaxed,” which comes as a bit of a surprise considering last week’s revelation that only half of Americans pay any federal income taxes at all.
When asked what the appropriate level of taxation should be, three-fourths of respondents said that “the average American should pay no more than 20 percent of their income in taxes” – markedly lower than what most Americans believe they pay in taxes now, 30 percent or more.
This weekend’s finding that Americans are unhappy with the nation’s rising tax burden dovetails with the results from earlier polls that show that “two-thirds of voters prefer a government with fewer services and lower taxes” and “46 percent of voters nationwide favor an across-the-board tax cut for all Americans.”
With such a strong outcry for lowering the tax burden at every level of government, I guess the only question now is whether our political leaders are listening.
Over the last year, teacher unions have been on the defensive. Folks from all points along the philosophical spectrum are saying that teacher unions and the policies they back are a big reason for our nation’s high dropout rate and lack of academic progress.
Typically, teacher unions fight for job protections and higher pay and benefits for their members. But does preventing ineffective teachers from being fired or paying every teacher with the same number of years under their belt the same salary regardless of performance help or hurt kids? The court of public opinion is moving away from teacher tenure and rigid teacher salary schedules and towards empowering principals to make personnel decisions and pay top teachers more money with performance pay.
Watch this fun debate between education reformers and top teacher union officials. Intelligence Squared recently hosted this live debate in New York City and had audience members vote before and after the debate on the motion, “Do Not Blame the Teachers Unions for Our Failing Schools.” If you don’t think teacher unions are to blame, then you voted for the motion. If you think teacher unions are to blame, then you voted against the motion. Interestingly, many of those who began the debate as “undecideds” voted at the conclusion that teacher unions were worthy of blame.
California is notorious for its fiscal mismanagement, but even by the state’s own standards, the latest mishap to hit the Golden State is a doozy.
According to a new report from the Stanford Institute for Economic Policy Research (SIEPR), the state’s three major public pension funds—CalPERS, CalSTRS, and the UC Retirement System—face future unfunded liabilities of more than $500 billion.
The bulk of this shortfall exists because, as researchers believe, state officials have understated the size of future pension obligations by relying on rosy growth projections. Under a more realistic set of assumptions, the three pension funds face a likely combined shortfall of $425 billion. Add to that an estimated $110 billion in lost portfolio value, and California’s pension fund debt is almost “eight times greater than officially reported.”
CalPERS issued a response to the SIEPR study, which calls the report’s methodology into question and claims it uses “outdated data.” But even if SIEPR’s doomsday projections are only half-right, California taxpayers can expect to be walloped in the future in order to make-up for the huge pension shortfall.
For those of us on the outside looking in, California’s fiscal blunders serve as a powerful reminder of the consequences of governments gone wild.
As more parents learn about the benefits of charter schools, many are trying to get their child into one even if it means taking their chances with a random lottery. These parents are willing to do whatever it takes to get their child the best education possible.
Charter schools are free public schools. Since charter schools are open-enrollment and may not have a seat for every student that applies, the schools hold a lottery to determine admission for the following school year.
Last week, we witnessed firsthand a lottery at a college preparatory charter school in South Austin, the Harmony School of Excellence. The school had 79 applicants for 48 spots in its two kindergarten classes for 2010-11. In grades one through eight, more than 400 students had applied for a total of nine vacancies. The names of the applicants were written on cards and drawn from a basket in the presence of many of the parents of school children who have applied for openings at Harmony. Children whose names were not selected in the lottery will go on the waiting list for that campus.
Two Austin TV stations covered the lotteries, interviewing the principal and parents.
KXAN 36 (NBC)
KVUE 24 (ABC)
Charter school lotteries are happening all over the state this spring as tens of thousands of students are on a waiting list in Texas to attend a charter school. After surveying charter schools around the state, the Foundation released an updated charter school waiting list number and found that the Texas charter school waiting list had more than doubled from nearly 17,000 for the 2007-08 school year to more than 40,000 students for the 2008-09 school year.
Each child on the waiting list has their own story and deserves to attend the school that best meets their needs. Hopefully, Texas lawmakers will eliminate the cap on charter schools and allow for more open-enrollment charter schools to open in Texas to meet the high student and parental demand.
Remember the summer of 2008 when gasoline prices breached $4 per gallon? A public uproar to “Drill Here, Drill Now” demanded congressional repeal of the 30-plus-year ban on most offshore oil development. Multiple polls showed 85 percent of Americans enthusiastically supported repeal of the legislated ban. The United States was the only country in the world denying access to its offshore oil resources. President George W. Bush repealed a longstanding executive order blocking off-shore production. And finally the unthinkable happened – Congress allowed the ban to expire. The administration immediately opened the doors for lease application to drill here, now.
Eighteen months later, in early 2010, the offshore ban might as well still be in place. Regardless of the Obama administration’s frequent protestations about energy independence, oil resources everywhere – offshore, in Alaska, and onshore – are made increasingly inaccessible. Home grown energy seems to include only ethanol, wind and solar.
Not long after he assumed his office, Interior Secretary Ken Salazar stopped the offshore leasing process by calling for six additional months of public comment. The only offshore activity leased was a wind power installation. In early March, Secretary Salazar told Congress that offshore leases for oil would not begin for two years! The Secretary also denied a request by the Virginia General Assembly for limited offshore drilling. And then the U.S. Department of Interior (DOI) failed to meet court-ordered deadlines for processing new oil leases off the Alaskan coast.
Stall ’em if you must but simply stop ’em if you can: try the lower 48. DOI cancelled oil and gas leases on 77 parcels of federal land in Utah and eight more in Wyoming.
Go for broke: Stop ’em permanently. DOI recently leaked a memo detailing plans to “lock up” 14 million acres of energy-rich Western lands. The document identifies 14 different parcels that the president could close for energy development by designation as “national monuments” under the 1906 Antiquities Act. President Bill Clinton used this authority 22 times to create 19 new national monuments covering almost six million acres. Among those presidential designations, the Grand Escalante Staircase in Utah eliminated access to the largest deposit of low-sulfur coal in the lower 48 and nullified oil and gas leases on 65,000 acres.
Increasing mandates and subsidies for renewable energy will not measurably increase our domestic energy supply. Energy independence per se is an unrealistic and economically ill-advised policy goal. Reducing U.S. dependence on energy sources, however, from unstable or hostile foreign governments (e.g. Venezuela) is a worthy and realistic goal. The federal government need only get out of the way of private enterprise. Allowing the market to develop still abundant U.S. energy resources is the only means of decreasing energy dependence.
SolarBridge recently received a $1.5 million grant from the Texas Emerging Technology Fund to develop technology for residential and small commercial solar installations. Meanwhile, the Texas Public Utility Commission is considering a plan that would provide subsidies to solar generators of electricity. And these are on top of the hundreds or millions of dollars of solar subsidies available from the federal government. In fact, solar is already the most subsidized energy source at around $24 per megawatt-hour.
Now comes a ruling from the office of US Customs and Border Protection that imported solar panels from China containing a basic electronic device for safety and energy efficiency will be treated as electric generators, and thus subject to a duty of 2.5 percent.
So, on the one hand, we are subsidizing solar equipment to make it cheaper. On the other, we are taxing it to make it more expensive. What gives?
A big part of this is probably good ‘ol American protectionism. We like solar panels… provided they are made here by American workers.
But whatever the causes, the one thing these conflicting government actions have in common is that they cost money. The subsidies for solar make electricity more expensive and increases taxes, as do the tariffs on solar panels. And the money is used to shore up a company, “create” jobs, or boost some local economy. Everybody gets something, except consumers and taxpayers.
One of the recent twists in the D.C. health reform saga is a revelation that certain federal employees – including top administration officials and senior congressional staff—are exempt from the new health care system.
According to Politico, rank-and-file federal employees will be kicked out of their existing health care plan – the Federal Employee Health Benefits Plan – and forced to participate in the new government-run health care exchanges. But “professional committee staff, joint committee staff, some shared staff, as well as potentially those staff employed by leadership offices” appear to be exempt from the bill’s mandate since they aren’t listed alongside other federal employees on page 158 of the bill.
What’s worse, the loophole appears to have been created intentionally.
Last year, Sen. Charles Grassley tried to address the issue by changing the bill’s language in committee to mandate that top administration officials participate in the exchanges. But when the Senate bill came to the floor, the language had been removed and subsequent efforts to amend the bill on the floor were rebuffed.
From the start, the government’s health care reform plan has been characterized as expensive and intrusive, but this latest wrinkle proves it to be overly paternalistic as well. The very notion that we would have officials writing bills that they themselves are not subject to goes against a government for the people, by the people.
Health care isn’t the only sector of our nation’s economy that is well on its way to a government takeover. In addition to the health care overhaul, the ill-titled Student Aid and Fiscal Responsibility Act (SAFRA) has been attached the health care reconciliation bill that has passed in the House and is pending in the Senate. That bill is expected to pass the Senate any day.
Fortunately, SAFRA isn’t as bad as it once was, but that isn’t saying much. Now the bill is essentially a broad reorganization of the student loan program. It eliminates private lenders from federal aid programs, in addition to providing $36 billion in additional funding for Pell Grants.
So, similar to how the passage of health care reform without the “public option” was still a near government takeover of health care, SAFRA in its current form is one gigantic step towards a government takeover of the student loan sector of the United States economy.
Cato Institute scholar Neal McCluskey sums up the latest version of SAFRA by saying that “while a great deal of the spending has been stripped out, reconciliation would still tighten the federal government’s already iron grip on college financing. It would also plow billions more into Pell grants despite decades of evidence that schools just eat such increases by raising prices.”
Don’t be fooled into thinking the only higher education reform options are either a nationalization of the student loan market or even more subsidies to private student loan lenders (crony-capitalism). If the government left the higher education market, there would be no need for either.
During Sunday night’s contentious health care debate, Congressman Paul Ryan gave one of the finer speeches of the evening, reminding us of the Founders’ intentions for a limited government and the dangers of subverting that ideal. An excerpt:
America is not just a nationality – it’s not just a mass of land from Hawaii to Maine, from Wisconsin to Florida. America is an idea. It’s the most pro-human idea ever designed by mankind.
Our founders got it right, when they wrote in the Declaration of Independence that our rights come from nature and nature's God – not from government.
Should we now subscribe to an ideology where government creates rights, is solely responsible for delivering these artificial rights, and then systematically rations these rights?
Do we believe that the goal of government is to promote equal opportunity for all Americans to make the most of their lives – or do we now believe that government’s role is to equalize the results of people’s lives?
The philosophy advanced on the floor by the Majority today is so paternalistic, and so arrogant. It’s condescending. And it tramples upon the principles that have made America so exceptional.
My friends, we are fast approaching a tipping point where more Americans depend on the federal government than on themselves for their livelihoods – a point where we, the American people, trade in our commitment and our concern for our individual liberties in exchange for government benefits and dependencies.
“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” - Tenth Amendment to the United States Constitution
Late Sunday night, the United States House of Representatives passed a massive health care reform bill that Americans strongly opposed and rallied against. Passed by a slim majority and with bipartisan opposition, the bill represented everything the public despises about Washington—backroom deals, parliamentary chicanery, arrogant power grabs, and fiscal recklessness.
The president and congressional leaders have said they know better than the American public—dismissing public opposition in the name of socializing our health care system, betting that the public will support their efforts once the bill has passed. But they are wrong and will quickly see that they have stirred an anger that will only grow, as people recognize their freedoms are slipping away.
America and Texas need not wait for another wake-up call. Our federal government has sought to nationalize major parts of our country’s automotive industry, financial system, health care sector, and even the “jobs” machinery. These are things you typically hear out of despotic regimes, not countries who found a path to prosperity by empowering citizens over their government instead of the other way around.
Those in the Congress and the Obama Administration wish to take away the ability for states to be the laboratories of democracy, preferring instead for a command-and-control bureaucracy where Texas is indistinct from California or New York.
Our federal government is broken and working against us. It is our job at the Texas Public Policy Foundation to defend Texas’ liberty. Sunday night’s health care vote is not the beginning of the end. Rather, it is the end of the beginning. The health care debate has engaged Americans on a much more fundamental question: what is the proper balance of power between the federal government, the states...and the people?
During the next several months, the Texas Public Policy Foundation will begin to educate policymakers and the general public about the constitutional intrusion of federal government beyond what the Founding Fathers intended, the negative consequences of this expansion for the states and the people, and viable solutions for the states to avoid the costly and abusive interference by the federal government.
As one example, the health care reform will push 16 million Americans into Medicaid, a dysfunctional federal insurance program for the poor and disabled that barely has the ability to serve the 60 million people already using it. And who will eventually pay for this mandatory expansion of care? The states.
As our executive director Arlene Wohlgemuth said in a press statement earlier today, “The runaway costs in Medicaid are at the core of Texas’ current budget problems, and this new federal law will increase Texas’ Medicaid caseload by 50 percent, putting one-fourth of Texas’ population into this government program. The federal government has no right to co-opt state budgets in the manner that it is with Medicaid.”
Unfortunately, health care is only one of hundreds of examples of how the federal government burdens the states with demands that are difficult—if not impossible—to meet, and enmeshes itself in decisions that should be yours and mine to make as free people.
But as much as we’d like to wave a magic wand and return things to as our Founding Fathers intended, that’s not how things work in the real world. We understand that the first step of fixing a problem is to understand exactly how big of a mess you’re in. (“Really gosh darned big” doesn’t cut it.)
That is why the Texas Public Policy Foundation will apply our expertise and develop the independent research that will help Texans realize the extent of the federal government’s overreach and provide practical solutions to help restore a proper balance and allows Texans to govern Texas—and to govern themselves. We hope you will help us toward this end.
Thank you for standing with me to defend our Constitution and freedom. Texas’ economy is the envy of those across the nation. Our talented team will work tirelessly to ensure that Texas continues to be the beacon of freedom and prosperity for the rest of the country and the world.
My final prognostication is that the U. S. Supreme Court will rule the mandate unconstitutional on a 5 to 4 vote, arguing that the Commerce Clause and 16th Amendment can't be used to support such a unique radical departure. Whoever loses at first in the federal District court will appeal the decision to the Appellate court, the loser then appealing it to the Supreme Court, which will grant cert to hear the case (takes only four votes to grant cert).
So even if the fat lady seemed to start singing on Sunday with a Democrat victory, she still has not commenced her final aria.
One other matter enters into this: For a case to be heard by the District court, that case must be "ripe" and have "standing" – that is, there must be "harm" or "imminent harm" to an individual. Democrats might argue here that since the mandate doesn't kick in until 2014, the case will not be ripe or have standing until then. But since the harm is locked in at the time of passage of Obamacare, I believe the courts will recognize this, ruling both ripeness and standing upon passage.
Now if the individual mandate is found unconstitutional, Obamacare will likely collapse from its own weight: the risk pool of funds will not be there to finance an additional 32 million health insurance policies. And there might not be even enough funds to finance coverage of pre-existing conditions, unless insurance companies raise rates into the stratosphere.
So if Obamacare fails, Matthew Arnold's observation about the poet Shelley is applicable: Obama is "a beautiful and ineffectual angel beating in the void his luminous wings in vain."
- Dr. Ronald Trowbridge, TPPF Visiting Research Fellow, served as chief of staff to the late U.S. Supreme Court Chief Justice Warren Burger and to the Commission on the Bicentennial of the U.S. Constitution.
As the weekend approaches and President Obama and the congressional leadership prepare to force through their federal takeover of our health care system – over the strong objections of the American people – some perspective is in order.
This morning’s Congressional Budget Office score on the “reconciliation amendment” is nothing more than a smoke screen to distract the public. The core issue remains the ugly details of the U.S. Senate health care bill the House will try to “deem to have passed” this Sunday without its members ever voting on the actual legislation.
Passage of the Senate bill would increase Texans’ health insurance premiums by 61 percent over the next five years. Passage of the Senate bill would increase Texas’ Medicaid population by 50 percent and Texas’ budget deficit by several billion dollars. Passage of the Senate bill could expose Texas medical providers to more than 20 new types of medical malpractice lawsuits and pre-empt the tort reforms approved by Texas voters. All of this means that Texans’ health care costs would go up, while our access to quality health care would go down.
The CBO admitted that the $940 billion cost estimate it released this morning was merely an educated guess, as “the agency has not thoroughly examined the reconciliation proposal to verify its consistency with the previous draft. This estimate is therefore preliminary, pending a review of the language of the reconciliation proposal, as well as further review and refinement of the budgetary projections.”
However, the CBO estimate continues to double-count $463 billion in Medicare cuts that are unlikely to occur in the first place, as well as $53 billion in Social Security payroll taxes that are already committed to paying for future benefits. Once these and other smoke-and-mirrors tricks are removed from the analysis, the Senate’s health care legislation would increase the deficit nearly $600 billion in the first decade and by more than $1.6 trillion in its second decade.
Beyond that, the latest reconciliation draft postpones a more onerous tax on so-called “Cadillac” health plans until the end of the decade. Given that this tax is one of the unions’ most hated provisions and that the changes will hit a broad swath of the middle class, it is almost certainly to be repealed before it can take effect, which further guts the deficit reduction promises after 2018.
Sunday’s House vote would only assure that the Senate bill would go to the White House for President Obama’s signature. Any “reconciliation” provisions sent back to the Senate can be struck on parliamentary grounds, and the Senate leadership has little incentive to pass a reconciliation bill once its health care legislation has already been signed into law. That increases the likelihood that Nebraska’s Cornhusker Kickback, Florida’s Gator Aid, the Louisiana Purchase, and all of the other sweetheart deals in the Senate bill will become federal law.
Perhaps the same philosophy of “more government spending will help the economy” that we saw with the stimulus bill has affected the thinking in Washington with regard to the health care bill. Is spending trillions of tax dollars, enacting costly mandates, and federalizing health care decisions really the way to improve health care in America?
And while border security is not one of the Foundation’s research areas, I would be remiss if I didn’t point out that it is a core function of government, if not the central reason for government’s existence. That our federal leaders are devoting so much time, energy, political capital, and – how shall I put it – procedural creativity on an issue outside their constitutional authority while ignoring the mayhem that is bleeding across our southern border into Texas is an outrage.
At the close of the Constitutional Convention in 1787, Ben Franklin was asked what kind of government our Founding Fathers had produced. His response: “A republic…if you can keep it.” Win or lose this weekend, the Texas Public Policy Foundation will remain committed to our Founders’ principles – including individual liberty, limited government, and the rule of law. We ask you to help us keep it.
Be it the epicenter of a cultural movement or a political controversy, New York often seems to grab public attention. Last week was no exception to the norm. Concerns about consumers’ unhealthy high sodium diet prompted state Assemblyman Felix Ortiz to propose a bill banning the use of salt in restaurant food preparation – without regard for salt’s role in food flavor or, as the article’s author put it, the “bill’s ramifications for the restaurant industry.”
Not surprisingly, the culinary world and the public do not seem to appreciate Assemblyman Ortiz’ worries about their health. Thousands of agitated people twittered and posted Facebook comments on Facebook urging a halt to New York’s legislative experiments with their food.
Government policy undoubtedly plays an important role in protecting society, but no one is in need of protection here. While Assemblyman Ortiz argues that this bill will give consumers “the option to exercise healthier diets and healthier lifestyles” by having a personal control over their salt intake, he has obviously forgotten that customers are able to make their own choice by easily switching restaurants if they are not satisfied with the quality of served food. Ultimately, the bill will not just regulate preparation of food in restaurants, but also the choices available to restaurant customers.
Banning a millennia old culinary ingredient such as salt will spoil the cuisine of both internationally inspired restaurants and home-style eateries, leaving New Yorkers with a bad taste in their mouths in more ways than one.
- Desislava Yordanova
Intern, Center for Economic Freedom
The Associated Press is reporting that, despite directives from President Obama, the federal government has become less transparent, not more.
The new AP audit cites a “review of annual Freedom of Information Act (FOIA) reports filed by 17 major agencies,” which found the government used legal exemptions to withhold information from the public at a much greater rate in FY 2009 versus FY 2008.
Agencies cited the FOIA’s nine exemptions “at least 466,872 times in budget year 2009, compared with 312,683 times the previous year.”
• A severe backlog in FOIA requests, with some requests dating back 18 years;
• Only 13 of 90 agencies in the audit had documented concrete changes to the improve their FOIA practices;
• Just four federal agencies, including the Justice Department, showed both an increase in information released and a decrease in information withheld.
Clearly, as these two reports show, more work that needs to be done – especially at the federal level – before the public’s right to know is secure.
Peter Berkowitz, a senior fellow at Stanford University’s Hoover Institute, recently had a piece in the Wall Street Journal entitled “Climategate Was an Academic Disaster Waiting to Happen.” In his piece, he explains why ordeals such as the recent Climategate scandal should not be surprising to anyone due to today’s unfortunate state of affairs at our nation’s public universities.
The piece sheds light on an issue often overlooked or understated, and that is the impact university affairs have on everyday political and business issues. Research published by university intellectuals, though mostly incredibly specialized, sometimes has far reaching effects. Climategate is a perfect example.
Berkowitz lays out the problem quite succinctly when he states that “…our universities, which above all should be cultivating intellectual virtue, are in their day-to-day operations fostering the opposite. Fashionable ideas, the convenience of professors, and the bureaucratic structures of academic life combine to encourage students and faculty alike to defend arguments for which they lack vital information. They pretend to knowledge they don't possess and invoke the authority of rank and status instead of reasoned debate.”
Unfortunately, this dishonest trend shows no sign of slowing down. Until a strong coalition of brave university intellectuals are willing to risk their careers for the sake of true intellectual honesty, expect more scandals like Climategate.
Testifying before the House Appropriations Committee earlier this week, Legislative Budget Board (LBB) director John O’Brien told committee members that the state’s next budget will likely be awash in red ink.
On the low side, O’Brien told lawmakers to expect at least an $11 billion shortfall for the 2012-13 budget. But that figure could go as high as $15 billion if the economy and tax revenues performed below expectations. The shortfall’s main culprits: falling revenues, an ongoing structural deficit, and recurring expenses resulting from the stimulus act.
Making matters worse, Health and Human Services Commissioner Tom Suehs recently informed lawmakers that rising health care costs would add an additional $1.7 billion in cost to the current budget. The increased costs, in large part, stem from higher-than-expected enrollment growth in the state’s Medicaid program.
With the state’s budget outlook presenting a challenge, some are already beating the drums for higher taxes in order to close the shortfall. But just because Texas faces a multi-billion shortfall doesn’t mean higher taxes are a must. The 2003 legislative session is a perfect example of this.
Faced with a $10 billion budget shortfall—similar to the one we face today—Texas lawmakers held the line on spending and passed a balanced budget, without raising taxes.
Duplicating that 2003 effort won’t be easy, but considering the alternative—higher taxes, slower economic growth, and less money in your pocket—it is definitely the better approach.
As the time to write the 2012-13 state budget approaches, viewing the task as an opportunity, once again puts Texas in the position of leading the nation in strong fiscal policy.
One common theme in education that exists in much of the world is the belief by government bureaucrats that they know better than parents. Many academics and development experts tend to believe that because parents are poor they cannot make good decisions regarding their child’s education.
James Tooley, author of “The Beautiful Tree,” finds some very specific examples in Third World countries of parents acting as consumers of education. Parents visited schools, talked with teachers and administrators, compared notes with other parents, and checked up on what students were learning by questioning them or asking them how often their teacher checks their homework. These informal tactics allowed parents to actively compare children in the government public schools to those in the private schools in their neighborhood.
During his travels, Tooley would frequently ask parents why they chose one type of schooling over the other. Here are some of the responses:
• One parent said, “government school children are always smartly dressed in good uniforms but when you ask them some questions, you realize that they know nothing.”
• Another parent explained their reason for choosing a private school for their child by saying, “the children do not learn [in public schools]; all they do is play.”
Private schools are accountable to parents. If parents decide to withdraw their children and their fees, then the private school could go out of business. Owners of private schools understand this market principle and seek to keep their parents happy. Yet government experts don’t appear to trust the judgment of poor parents to decide the best school for their child and don’t understand how a private school can be accountable to parents.
Tooley believes in the education marketplace and finishes his book by saying “the market in education is powerful. It builds on something that no central planner can possibly embrace, the strength of millions of decisions by individual families, the millions of bits of information grasped by the Searchers who relentlessly create and innovate, modify and develop what the people want.”
James Tooley, in his book “The Beautiful Tree,” explores public and private schools in Third World countries and finds that the private schools deliver a superior education with less funding. Why are private schools better?
One government principal in Ghana says that parents choose private schools because public schools cannot fire bad teachers. She says private schools proprietors “are very tough. If teachers don’t show up and teach, the parents react. Private schools need to make a profit, with the profit they pay their teachers, and so they need as many students as they can get. So they are tough with their teachers and supervise them carefully. I can’t do that with my teachers. I can’t sack them…. It is very rare for a teacher to be sacked [in a government school].”
Another reason that private schools are better is incentives. Private school owners have to stay on their toes and constantly monitor the performance of their teachers. Leaders of private schools are constantly walking around their school, making sure teachers are teaching, and following up on parent complaints to ensure that students are learning. One private school proprietor in India decided to install a closed-circuit television system to monitor classrooms because he knew that if teachers were accountable to him, he could be accountable to parents.
Government schools don’t have this incentive. Tooley explains, “the chief problem in the government schools is that the principals and inspectors have no incentives to do any of these things. Principals will draw the same salary and same benefits if they sit in their offices reading the newspaper all day — or even if they don’t show up at all — as they would if they meticulously walked the corridors checking on their teachers.”
As I wrote on Tuesday, James Tooley, author of “The Beautiful Tree,” visited public, recognized private schools, and unrecognized private schools in the slums of India, China, and Africa to compare the quality between these different school environments.
Tooley and other researchers visited the schools unannounced and took copious notes on the size of classes, whether the teacher was actually teaching, and the condition of the building and facilities.
All in all, private schools came out on top on almost every measure. Private school classes were smaller, teachers at private schools were more committed to teaching (as determined by more time on task), private schools were more likely to provide the curriculum parents wanted (such as teaching English), and the condition of the building and facilities were of equal quality. The only input where public government schools ranked higher was on the provision of playgrounds.
Tooley found that class size was a key factor in parents choosing private schools. Parents view classes in government public schools as “simply too big.” The data supports this belief with public school class sizes being either twice or three times as large as private schools.
Tooley was also able to gather information on the level of teacher training, teacher salaries, and student learning. He found that government schools were more likely to have better trained and educated teachers and better paid teachers (in some cases seven times more than teachers at private schools). Yet more training and higher pay doesn’t necessarily lead to higher teacher performance in the classroom, better student results, or a better school.
He explains, “When critics dismiss private schools for not having extensively trained teachers, the key reason they do is because they assume the teachers will be less effective. We’ve already seen that these untrained teachers are far more likely to show up and teach then their more heavily trained counterparts in government schools. Does their lack of training make any difference to student achievement – a key indicator of their effectiveness? It turns out it does not. Private schools again turn out to be superior to government schools.”
Students in private schools also scored higher on standardized tests in key subjects than students in government schools even when controlling for background differences.
Private schools serving poor children in the slums actually receive no government funding and no international aid and yet are of a higher quality because market forces are at work and they are accountable to parents.
While the state’s prison population continues to fall, some counties are still disproportionately filling state lockups.
Consider that Lubbock County (population: 264,418) has 2,478 of its residents in prisons and state jails, while Hidalgo County (population: 726,604) accounts for 2,986 inmates. Thus, taxpayers in Hidalgo County are subsidizing other counties like Lubbock that incarcerate nearly three times as many of their residents per capita.
Gross disparities exist in revocations to prison from probation. For example, in Hunt County, according to state data, last year 95 percent of their adult probation department’s revocations were for rules violations rather than a new offense. That far exceeds the statewide average of 49 percent. From 2004-05 to 2008-09, probation revocations from Hunt County grew 24.9 percent, going from 244 to 309 even as its number of probationers declined. The county only has about 600 felony probationers, but it revokes them for rules violations at a much higher rate than most other counties.
Hunt County is not alone. Many other counties, particularly rural counties in East Texas, have revocation rates for rules violations far above the state average. In contrast, Hidalgo County is the lowest in the state – only 31.8 percent of their probation revocations were for rules violations. Most other counties in the Valley are also below the state average.
Imbalanced scales of justice weigh heavily on Texas taxpayers and lock in disparities, as the same person who would be sentenced or revoked to prison in one county receives probation or remains on probation in another county.
Decisions on revoking probationers must always put public safety first. However, lawmakers should require all probation departments and judges to use a progressive sanctions and incentives model. Instead of doing nothing when a probationer violates the rules and then revoking them for many years after enough violations pile up, graduated responses such as a curfew – and even a few nights in county jail if necessary – are used to promote compliance. Conversely, incentives such as less frequent reporting are used to recognize exemplary performance. Victims also benefit when probationers succeed, as probationers pay more than $45 million per year in restitution while inmates pay about half a million in restitution, fees, and court costs combined.
All counties must be held accountable for implementing best practices that result in more offenders successfully completing probation and reserve prison space for those who pose a danger to public safety.
Many philanthropists, foreign governments, and international aid organizations sincerely want to help the poor and are looking for the best way to educate the poorest children around the world.
This is a lofty goal. What is the best way to provide all children, even those in the most poor and remote areas on earth, access to a quality education? Many academics and development experts believe the answer lies in free public schooling for all. But does a free public education benefit every child or are private schools also part of the answer? Which type of school provides a better education? Do private schools even exist in the slums?
James Tooley set out to answer these questions by traveling around the world in search of private schools that serve the poor. He visited the slums in Nigeria, Ghana, Kenya, India and China to conduct research on public and private schools and shares his findings in his book, “The Beautiful Tree.”
As he visited with government officials in these countries to get a list of public and private schools, he commonly found that those in government did not believe that private schools existed in the poor areas and if they did they had to be of a very low quality. Tooley shares interesting stories as he explores the slums and searches for schools that the government doesn’t believe exist. He encounters many obstacles, but is able to find schools with the help of local townspeople, students, and parents.
Tooley found that there are basically three types of schools in the Third World:
1) Government public schools;
2) Recognized private schools; and
3) Unrecognized or unregistered private schools.
Government schools are public schools and are free and open to any student. They are typically funded by the country’s government, foreign aid, philanthropists, and international aid organizations.
Private schools are funded by fees paid by parents. Private schools make sure their fees are affordable to poor families and typically charge a monthly fee of about 5 to 10 percent of what the breadwinner earns a month. In addition, private schools serve a percentage of orphans and students who can’t afford their fees by allowing up to 20 percent of students to attend for free or at a reduced rate.
Private schools are either recognized or unrecognized by the government and may be for-profit or non-profit. Unrecognized schools are not regulated by the government and may not even be listed on their registry of schools. Tooley does not think much of government recognition, saying that it “conveys no information about school quality, it only indicates the school’s ability to afford bribes.”
Over the last year, the American people have said repeatedly and emphatically that they object to the federal government taking control of their health care. President Obama’s “new” health care proposal is nothing more than a rebranding of the same big-government ideas that the Congress has already passed and the public has already repudiated.
Instead of moving away from government control of health care, President Obama’s plan includes even more regulation. Creating yet another agency, a new Health Insurance Rate Authority, would provide “oversight” of rates. In recent years, the Texas Legislature has moved away from allowing government agencies to set consumer prices. Artificial price controls have never proven effective for very long, and there is no reason to believe that would change now.
Texas has shown that capping non-economic damages is essential to reducing frivolous medical malpractice lawsuits and increasing access to health care. The absence of damage caps in President Obama’s plan demonstrates a lack of seriousness on the issue of tort reform.
President Obama’s plan includes no free market ideas and no elements that promote competition among health insurers and health care providers. The token items that the President claims to have included from his critics were already in the Senate’s bill.
In fact, nothing in the substance of President Obama’s plan gives individuals more control over their health insurance. The only part of his plan that mentions more choices for consumers is the headline on the White House website. That does not count for legislative change.
Google is at it again. According to a recent Los Angeles Times article, the technology giant is planning on building a high-speed broadband service. Google claims that the network will be 100 times faster than what is available today, and reach as many as 500,000 people. Many municipalities have already created “Bring Google Fiber” groups on Facebook, seeking to attract Google to their respective cities.
Interestingly, Google is choosing to put its experimental network in territory tightly controlled by other service providers, citing the strong competition as the key to ensuring success. Google has stated that offering this experimental network could prod cable and phone companies to offer cheaper, speedier access on a broader scale.
The increase in competition is good for ensuring innovation as well. The National Cable and Telecommunications Association said that the cable industry planned to spend billions of dollars on top of the $161 billion it had already invested over 13 years in a national broadband infrastructure, and industry watchers are hoping that Google’s entry into the marketplace will spur competition and innovation. Google’s new fiber network could cost anywhere from $60 million to $1.6 billion.
A new Cato Institute study examines the arguments for national standards. Some individuals and organizations support national standards claiming that countries that outperform the United States on international assessments all have national standards. Let's examine the facts of countries that do better and worse than the U.S. on two different international tests.
• On the international 8th grade TIMMS test, eight countries that outperformed the U.S. have national standards, but so did 33 of the 39 countries that scored lower than the U.S. – including 11 of the 12 lowest performers.
• On the international PISA exam, 11 nations that outperformed the U.S. have national standards, three have regional standards, and five have no centralized standards. Of the nine countries that did worse on the PISA, four have national standards, one has regional standards, and four have no standards.
Clearly, national standards do not equal excellence.
Nations that perform well on international tests with national standards tend to be homogeneous. For a country as diverse as the U.S. making everyone happy with the content on religion or history will be extremely difficult. Just think about the recent battles in Texas over evolution and social studies.
Another thing to note is that some countries with national standards are actually decreasing the scope of their standards.
• Japan reduced the content of their national standards by 30 percent in 2002.
• Singapore reduced its national curriculum by a third in 1999 and added critical thinking in 2001.
• Korea is sending its teachers here to learn how to teach creativity and critical thinking.
What about the quality of the proposed national standards in the U.S.? A study released today by the Pioneer Institute and the Pacific Research Institute shows that Massachusetts and California have higher standards than the prosposed national standards. Another analysis done by higher education and public school educators comparing Texas' English and math college readiness standards to the proposed national standards finds that Texas' standards are more comprehensive than the national standards.
All of this confirms Texas' decision to not join the national standards bandwagon because it just doesn't make sense.
As state government agencies are pressed to cut their budgets, we are glad to hear that some public schools are also examining and rethinking items in their budgets.
The Houston Independent School District and YES Prep charter school are both considering putting an end to the practice of paying teachers more for an advanced degree, according to the Houston Chronicle. HISD estimates it will cost taxpayers $7.8 million this year to pay teachers an additional stipend for a master’s or doctorate degree.
A common misperception about teacher quality is that more training and education equals a better teacher. This is not necessarily the case. Just because a teacher has a Ph.D. in physics does not mean they know how to teach. A one-size-fits-all compensation method such as stipends for advanced degrees risks paying some teachers more who aren’t worth it and not adequately rewarding others who are. School leaders should make the decision on how much to pay each teacher individually based on their performance and effectiveness.
Research clearly finds that possession of an advanced degree has absolutely no correlation to higher teacher effectiveness or student achievement. Our recent paper on teacher quality explains this misconception.
The Center on Reinventing Public Education recently put out a report on teachers with master’s degrees that had some surprising facts.
• 90% of teacher’s master degrees are in education programs (not the subject area they teach).
• Master’s degrees in education had the highest growth rate of all master’s degrees between 1997 and 2007.
• 27% of teachers in Texas have a master’s degree and, as a result, receive an extra $1,423 per year on average. This amounts to more than $124.5 million a year spent on outdated method of compensation that does not translate into better teacher quality or higher student achievement.
As school districts are looking for ways to cut their budget and improve teacher quality, we recommend they cut out stipends for advanced degrees – there is nothing in state or federal education regulations prohibiting them making this cut.
The Texas Tribune re-launched its public employee payroll database last week, citing a need for more dynamic search capabilities. The original application, which the Texas Tribune found to be the most popular feature on its site, only allowed a visitor to search by name or agency. Today, users have a full range of search tools, allowing for a more in-depth analysis.
Through the Texas Freedom of Information Act, the Texas Tribune collected some 340,000 public employee records, accounting for $15 billion in payroll at the state’s largest agencies, universities, cities, school districts, and mass transit operators. Just by toggling through the “Job Title” search function, I found that the 169 “School Crossing Guards” across the state make, on average, $9,683 per year, while the highest paid crossing guards in the state receive $15,080. School Crossing Guard Supervisors make approximately $24,000 on average, while the highest paid Supervisor takes home $47,844. According to the data, “School Crossing Guards” and their supervisors are only on the payroll under that title in seven Texas jurisdictions.
Why do only seven jurisdictions in Texas have salaried crossing guards? $15,080 works out to almost $20 per hour for a guard working two 2-hour shifts per day during a nine-month school year – is that, in fact, a crossing guards schedule?
Obviously, the database can’t answer those questions, but having the data available and making the government transparent allows for us to discover questions we would have never thought to ask. We can then take those questions to PTA meetings, or our school superintendents, or our school board members to find answers.
Kudos to the Texas Tribune for making a great product even better.
One of the panels at this year’s Policy Orientation focused on Western civilization courses and the quality of education received at our state’s public universities.
In this “Quick Take” filmed after the panel, Dr. Richard Brake with the Intercollegiate Studies Institute discussed how Texas does at teaching its students western civilization, as well as if we need to improve and how.
Dr. Brake explained, “ISI has been involved with a multi-year effort to assess how much students know when they go into college about American history and government and how much they know when they come out.” The results of the study showed that students aren’t learning much while in college.
Take ISI’s Civic Literacy Quiz for yourself and see whether you also need a refresher.
At our 8th Annual Policy Orientation for the Texas Legislature, we hosted a movie screening of the education documentary ”The Cartel”. This incredible film has won numerous awards at multiple film festivals. The film’s director Bob Bowdon takes a minute to explain his film in this short video from our “Quick Takes” series.
“The Cartel” has been named an official selection of the Washington, DC Independent Film Festival and will screen at noon on Saturday, March 13. In addition, The Cartel will be shown in movie theaters in 12 cities across the country this spring – one of them being Houston – and the theatrical release will likely be in late April or early May. Stay tuned for more details on dates.
Like many of President Obama’s policy goals, his goals for higher education sound fantastic. However, his plan to “expand access” to higher education is fundamentally flawed. It provides a massive increase in student aid – $156 billion in fiscal year 2011, up from $98 billion in 2008. The budget also will make it easier for borrowers to repay their loans, lowering income-based repayments and cutting the length of their repayments. Again, that sounds great. So what’s the problem?
Neal McCluskey from the Cato Institute summed it up best when he said: “There is perhaps no bigger vehicle politicians use to buy middle class votes than higher education and student aid – giving money away to people who want to go to college. And, there is simply no justification for this because the reason people go to college is so they can earn more money over their lifetime. So, when the president talks about ‘forgiving student debt,’ essentially what he’s saying is taxpayers should have to pay the burden for someone else to make a whole lot more money over their lifetime. It’s simply unfair.”
McCluskey continued, “And then there’s another problem connected to all this student aid, and that’s that it drives up tuition costs. The president talks about tuition inflation, well student aid is what drives tuition inflation because students can buy more, they demand more, which means universities can charge more because they can get the money.”
So not only is the President’s proposal unfair, it actually makes the problem of tuition inflation much worse. The way to solve tuition inflation is not by doing more of the same. Increasing access to grants and loans has become a crutch for bad higher education policy, and until lawmakers ease up on regulations and let the market flourish in higher education, things will only get worse.
The University of Texas at Austin recently announced it would be shutting down its well-known and much loved Cactus Café due to budget woes. The university will also be ending its decades-long program of informal classes that allow area residents to learn various subjects and skills for a nominal fee. Together, ending these programs will save UT-Austin $122,000, barely a drop out of its multi-billion dollar bucket.
The issue here isn’t cutting Cactus Café or the informal classes; it’s that UT-Austin chose to cut those programs rather than areas of the budget that would save substantially more money. For this reason, the cut seems suspect. UT-Austin has so many other areas in their budget to cut, and the fact that they chose something students and lawmakers would be upset about raises some red flags for me. Here’s why.
The state leadership’s letter asking state agencies to cut 5% from their budgets specifically states that: “Your plan should represent prudent, efficient reductions that minimize the impact on direct services. For purposes of this review, we expect you to analyze the necessity of all administrative expenses and purchases. Reducing direct services should be your last option, but should be identified, if necessary, in order to meet the 5 percent target.”
If that’s the case, then why is the Cactus Café the first cut that’s been announced?
To be clear, I’m not defending the Cactus Café. It’s just that when spending cuts are proposed, bureaucracies tend to offer up the ones that inflict the most pain on the public first (e.g., closing the Washington Monument on weekends) as a means to protect their turf. That’s certainly what this smells like.
The public should implore UT-Austin to cut the real fat in its budget. This paper lists several ways universities in Texas, particularly UT-Austin, could reform their operations to save substantial sums of money.
The entire process has been on wrong track from the very beginning. Once leaders in Congress saw that the American people generally disapproved of their proposals, rather than taking a step back, they tried to ram through reform using power moves and backroom deals. The entire issue has become so snarled that Congress couldn’t get out of the mess they created for themselves.
Fortunately, President Obama gave Congress an out this week when he proclaimed the new focus of his administration would be job growth. But during the same speech he reiterated his commitment to health care reform.
"As temperatures cool, I want everyone to take another look at the plan we've proposed," Mr. Obama said in his address. "But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know. Here's what I ask of Congress, though: Do not walk away from reform. Not now. Not when we are so close."
Well, Mr. President, there is a better approach. If Congress is serious about getting a health care bill passed this year, it should abandon its one-government-fits-all designs and instead take its first serious look at the patient-centered health care solutions the Texas Public Policy Foundation has championed all along.
According to the Cato Institute, federal subsidy programs topped the 2,000 mark for the first time last week. Almost half of those have been created in the last 20 years: the number of federal subsidy programs soared 21 percent during the 1990s and 40 percent during the 2000s.
As Chris Edwards, Cato’s director of tax policy, rather depressingly puts it, “There is a federal subsidy program for every year that has passed since Emperor Augustus held sway in Rome. We’ve gone from bread and circuses to food stamps, the National Endowment for the Arts, and 1,999 other hand-out programs from the imperial city on the Potomac.”
Of course, Washington isn’t alone in the subsidy game. Texas does pretty well too. In addition to the standard economic development programs, Texas is tops in the nation when it comes to renewable energy subsidies. By 2020, Texas consumers could be paying as much $1.3 billion a year to support wind energy—that is in addition to the $300 million or so the Feds are contributing to Texas wind producers. The solar folks are also lining up—the cost of proposed solar subsidies last session ran as high as $220 million. And they’ll all be back in 2011.
It would be nice in this one instance if we could topple Texas from its number one ranking.
Social media has revolutionized countless aspects of our lives and made communicating while at work, rest, or play a cinch. Yet, even as transformational as social media has been over the last several years, our state’s public information laws reflect very little of the world we live in.
Government employees of all ages are tweeting, blogging, friending, and chatting their day through the workweek—but much of this information is inaccessible to the public, violating the spirit of Texas’ Open Records Act.
To help tackle this issue, Dr. Wanda Cash, a guest columnist in the Texas Tribune and a journalism professor at the University of Texas, offers some interesting reform measures for lawmakers to consider this interim.
• Update existing law to include “new definitions that encompass wireless-transmission devices and social media;”
• Consider all e-mail traffic emanating from government servers to be public record—regardless of who owns the electronic device;
• Standardize the length of time all state agencies must keep public data; and
• Apply the same standards that government agencies face under the Open Records Act to privatized government functions.
While the details of Dr. Cash’s open government reforms may need to be fleshed out a bit further to determine their full impact, they certainly give lawmakers something to think about this interim as they go about formulating policy ideas for next session.
With as quickly as Facebook, Twitter, and YouTube are changing our world, it is important that our state’s public information laws don’t lag too far behind.
The report calls on the U.S. Department of Education to create an Office of Consumer Protection in Higher Education that would pressure colleges to produce significantly better data on how well they serve students, develop a system for making that data available for students to use in choosing a college, and direct students unhappy with their college’s educational practices to federal, state, or accrediting officials who can help them resolve their complaints.
A new bureaucracy isn’t needed to accomplish these goals – and may actually make things worse – so I disagree with their proposed means to achieve improved higher education accountability. But despite this disagreement, it seems both sides of the philosophical spectrum agree that the lack of accountability in higher education is a problem in need of addressing. It is also incredibly promising that the Center for American Progress referred to students as university “customers.”
The author of the paper states that “In most sectors of our economy, customer focus is paramount, as it should be in education, too. Customer focus could yield a more student-centric system through the development and dissemination of user-friendly 'truth-in-education' information that helps students make 'best-fit' choices regarding which education provider to select based on customer preferences such as: academic quality, price, convenience, learning style, beginning education level and the anticipated return on their investment in education."
The first step is always admitting there is a problem. Now our elected officials, regardless of party affiliation, should come together to reach a solution. Improving university accountability will empower students, improve educational quality, and allow taxpayers to better track the results their tax dollars yield.
Texas property crime victims often pay twice – once for the crime and once for the time as taxpayers. Only half of all court-ordered victim restitution in Texas is collected, although the national average is even lower.
Utilizing alternatives to incarceration when the offender does not pose a danger to the public can increase restitution. Consider that in 2008, Texas probationers paid an average of $109 in victim restitution, totaling $46.75 million. This is more than 34 times the restitution paid by each prison inmate. Probationers also performed 9.7 million community service hours, which would be worth $70.3 million based on the federal minimum wage of $7.25 per hour.
Additionally, felony probationers must pay $600 per year in fees plus court costs. Texas has some of the highest fees in the nation, which fund 40 percent of probation department budgets. This burdens indigent probationers – many of whom also owe child support – and creates a fiscal incentive to revoke a greater share of non-paying probationers to prison.
In 2008, Texas prison inmates paid a mere $501,000 in total victim restitution, fines, fees, and court costs, an average of only $3.21 per inmate. Parolees did better, paying $1.2 million solely in victim restitution, an average of $15.18 per parolee.
Most Texas parolees are employed – indeed the employment rate of Texas parolees exceeds Detroit’s overall employment rate. However, parolees are typically in the limited tier of lowest-wage jobs open to ex-inmates, who average less than an 8th grade achievement level. They often struggle to cover basic housing and nutritional needs. Also, the average inmate who leaves prison owing child support is more than $16,000 in arrears. These children are secondary victims of crime and overreliance on incarceration.
Incarceration is necessary for offenders who pose an ongoing danger to public safety, but two-thirds of offenders entering Texas prisons are non-violent and many county jails are overflowing with non-violent inmates. Incarceration protects the public in many cases, but also severs employment, family, and any religious ties, reducing the likelihood that the victim will receive restitution. The criminal justice system must be brought into fiscal balance with victims treated as consumers.
Allied Van Lines recently released its 42nd Annual Magnet States Report, which tracks where people are relocating within the United States. Texas remained the top destination for people moving between states. Texas’ net relocation gain was almost 2,000 in 2009, higher than the 1,900 gained in 2008. According to Allied, the movers are singles and families from various backgrounds. Not surprisingly, Allied also did a lot of corporate relocations for some very large companies based in Texas.
A large reason for Texas’ appeal is its favorable tax climate. Texas has no income tax, and holds a competitive advantage over most states due to its minimal tax burden on dividends, capital gains, and corporate income. As Bill Hammond, president of the Texas Association of Business stated, “Texas remains the best place in America to live, work, and raise a family.”
For those wondering why states like Pennsylvania, which was the third highest in net relocation losses, continue to lose so many people, the answer lies in their policies. Last year, Pennsylvania spent more on economic development programs than any other state in the nation. Their “economic development” spending was upwards of $754 million. As a direct result of this flurry of government spending, 2,591 people left on Allied Van Lines alone. This result is not surprising.
As pointed out in “Competitive States: Economic Growth Prospects for the 21st Century,” poor economic policies lead to poor economic outcomes. In order to spend money, the government must first take it from the private sector, either through taxes or borrowing. Often, the contribution of the government expenditures to the economy is less than the value of the money to the economy prior to its removal from the private sector. When comparing economic growth in the 10 states with the lowest total state and local taxes per $1,000 of personal income against the 10 states with the highest total state and local taxes per $1,000 of personal income, overall economic growth has been significantly higher in the low-tax states.
When faced with high taxes and job loss, it is no wonder people are moving out of states with large “economic development” packages and into states where they can spend their own money how they choose. If the tax climate in Texas remains the same, we should be on top for a long time to come.
Can a low-performing school actually be turned around? A new article in Education Next suggests that instead of trying to fix failing schools, policymakers should close them and allow them to start over.
The author gives several compelling examples of how the best of intentions have not led to better schools. In California, the state targeted the lowest-performing schools for intervention. Three years later, only 11% of those schools made exemplary progress (109 of 968 schools). Ohio recently restructured 52 failing schools and few have met academic goals.
Several studies found similar results. The Center on Education Policy found that less than 15% of schools being restructured in California, Maryland, and Ohio made federal academic goals set by No Child Left Behind (adequate yearly progress). A 2005 report by the Education Commission of the States says that school takeovers “have yet to produce dramatic consistent increases in student performance.”
Thus, there are no best practices on how to improve a persistently failing schools. In fact, the successful charter school network KIPP attempted to turnaround schools and abandoned the effort after only two years.
If the evidence does not point to success, why do school leaders and policymakers continue to push for restructuring a school versus just shutting it down and starting anew? Politics.
It is very hard politically for a school superintendent or a politician to tell their constituents that a school in their community is so bad it is beyond fixing. They take a risk of angering their constituents who may have emotional ties to the school. So, in most cases, it is easier to come up with a list of action items to improve the school versus allowing the school to face the consequences of its mediocre performance and get shut down.
Often ignored in this debate is the best interest of students. Is it in the best interest of the student and their future if they are stuck attending a low-performing schools for several years? Wouldn’t they be better served if they could attend a high-quality school down the street?
Let’s look at the facts and invest our time and resources in what works instead of continuing to do the same thing over and over and expecting different results.
In the midst of the worst economic climate since the Great Depression, Washington D.C. officials are hitting area shoppers with a brand new tax on shopping bags.
The new 5-cent tax, approved unanimously by the D.C. City Council last June, applies to every disposable paper and plastic bag a customer carries out of businesses that sell food or alcohol. An estimate from the Progressive Bag Affiliates of the American Chemistry Council puts the cost to Washingtonians at $5 million this year.
Instituting a costly new retail tax, particularly in today’s economy, has the potential to reduce business activity and harm struggling consumers, but supporters insist the cost is worth reducing pollution. History has shown that that is not necessarily the case though.
In 2007, the city of San Francisco banned plastic bags altogether in an attempt to reduce the amount of plastic bag pollution in the city. However, when the city conducted a litter audit, it was “revealed that plastic bag litter remained the same: 0.6% of litter composition.”
While we Texans may be tempted to sit back and watch with bemusement, it wasn’t long ago that we were under similar threat.
During last year’s legislative session, House Bill 1361 would have imposed a tax of “7 cents on each disposable plastic bag provided by a retailer to a customer to carry out purchased items,” but the bill never made it out of committee. You can bet that supporters of HB 1361 are watching the D.C. bag tax experiment closely, hoping that it doesn’t fail like in San Francisco and gives them cover to try again next session.
Whose beach is it anyway? We’re about to find out.
Hurricane Rita’s destruction of West Galveston Island moved the vegetation line inland and, with it, the beach.
In 2007, some beachfront property owners, including Carol Severance, were told by the General Land Office that their land was seaward of the new vegetation line and now part of the “public” beach.
At issue is whether the vegetation line’s movement gives the state of Texas a “rolling” easement over the private land that requires property owners to give the public access to their property and perhaps even move their beach houses off of the land.
The legal question is whether there is any such thing as a “rolling” easement, i.e., since the state did not have an easement over the land prior to Hurricane Rita, how can it have one afterward?
In other words, when two pieces of adjacent land now suddenly “overlap,” who gets to use the overlapped portions—property owners or beachgoers? In this case, the answer lies in the courts’ interpretation of the Texas Open Beaches Act (OBA).
Carol Severance has fought her way to the Fifth Circuit Court of Appeals in defense of blocking public access to her land. The Fifth Circuit has asked the Supreme Court of Texas for guidance in helping them understand the application of the OBA. Hinging on the Texas Supreme Court’s response is a large amount of private property and potentially numerous displaced homeowners.
The plain language of the OBA makes clear that it does not create a land interest that was not already in place through an easement created under traditional common law rules. Here, the state has not shown that it had an easement over Carol Severance’s land prior to Hurricane Rita. Since there was no property interest in the land prior to the “overlap,” the OBA should not be used to create one now.
Whose beach is it? We can only hope the Texas Supreme Court and the Fifth Circuit Court of Appeals find the right answer.
This Thursday at 6:15 pm, the Texas Public Policy Foundation and Austin CEO Foundation are hosting a screening of the education documentary “The Cartel,” followed by a Q&A session with Director Bob Bowdon. This incredible film examines the national education crisis and New Jersey schools through personal stories of student, parents, and teachers, and suggests ways to improve education. Check out the trailer and see for yourself.
The Cartel has won numerous awards at various film festivals including:
• Official Selection at the New Jersey State Film Festival & Philadelphia Independent Film Festival;
• Best Feature Documentary & Audience Choice Award at the Jersey Shore Film Festival;
• Best Full-Length Documentary & Official Selection at the Downbeach Film Festival;
• Silver Screen Award at the Nevada Film Festival; and
• Audience Award at the Hoboken International Film Festival.
Please contact me for more details on the screening or if you are interested in attending.
While many Americans are struggling just to make ends meet in today’s sluggish economy, a damning new report shows that government workers are prospering.
According to USA Today, the ratio of federal employees making $100,000 or more increased from 14 percent to 19 percent in the first 18 months of the current recession.
One agency with a particularly high concentration of six-figure bureaucrats was the Department of Transportation. “When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.”
The dramatic salary increases means that the average federal worker now earns an annual salary of $71,206 versus an average annual salary of $40,331 in the private sector.
State and local government employees also saw their pay raised over the last year-and-a-half, though, to be fair, the percent increase (3.9 percent) was on par with that of a private sector employee. Still, the average state and local government employee now earns $54,000 a year, or about $14,000 more than their private sector counterparts.
The growth in public sector wages and compensation is troubling, particularly given the current recession. By taking more and more from those who produce (in the form of higher taxes and increased borrowing) and awarding it (in the form of higher wages and increased benefits) to those in non-productive positions, we are removing the incentive to be productive and slowing our own economic recovery.
During the current economic downturn, some 35 state correctional facilities have been shuttered, though no adult facilities have yet been shut down in Texas where two-thirds of incoming inmates were convicted of a non-violent offense. However, as the state’s crime rate and prison population declines, this issue may arise.
Plans to close lockups often stir opposition in rural areas where the facility is one of the largest employers, though the cities of Dallas and Sugar Land have each sought to redevelop the valuable land on which prisons in their communities sit. Local communities and some of their lawmakers fought the closure of Texas Youth Commission facilities, two more of which will be shuttered in the current biennium.
Prisons have been misused as a bipartisan economic development tool. For example, former Democrat New York Governor Mario Cuomo went on a prison building spree and delivered a prison each to many Republican senators in upstate New York in exchange for support on other measures. Moreover, Cuomo used public housing authority bonds with a higher interest rate than general revenue bonds, a bill that New York taxpayers are still picking up today. This year, the state finally repealed the Rockefeller-era drug laws that fueled this building binge with long prison terms in low-level drug possession cases.
All job losses are regrettable. However, if other agencies are cut instead, jobs will also be lost. Raising taxes may well cost even more jobs as money is drained from the private sector. Furthermore, it’s not the government’s role to create jobs.
However, what’s worse is the harrowing impact of the prison work environment on employees. The prison guard suicide rate is far higher than the general population, and at least anecdotal evidence suggests rates of family violence, depression, alcoholism, and heart attacks are much higher as well. In 2005, 761 Texas prison guards were arrested. Sadly, a prison guard’s life expectancy is only 59, compared to the overall lifespan of 77. Texas guards’ salaries start at $26,000, and many won’t live to collect their retirement, which goes to their survivor.
Given that there are 2,000 prison guard vacancies and still more lower-paying county jail guard vacancies, prison closures in Texas would not necessarily result in job losses, depending on the number of units shuttered. In the larger picture, retraining prison guards in other areas such as probation is preferable to prisons as a jobs program.
Barely a month after the Texas Department of Insurance rejected the Texas Windstorm Insurance Association’s (TWIA) request to increase rates by 10 percent, TWIA’s board announced that it will consider raising rates 5 percent across the board for policy holders. While even the 10 percent rate increase was inadequate, maybe this increase will be enough to move us toward solving current coastal insurance problems and getting private insurers back into the market.
The creation of TWIA has pushed private insurers out of the market, while increasing the amount of exposure for the state. TWIA’s total exposure has increased from $13.2 billion in 2001 to $64.2 billion this year. The cumulative impacts of Hurricane Dolly and Hurricane Ike wiped out TWIA’s finances and the recent legislative fixes are not likely to help – there is concern now that TWIA will not be able to sell the first tier of catastrophe bonds. Texans are still trying to put Galveston back together. Another storm would be catastrophic at this point in time.
Misguided concerns for consumers have led to the current homeowners’ and windstorm insurance regulations that have mishandled pricing, increased risk, and kept private companies from investing capital in Texas. A large, diverse group of policy holders is what spreads the risks and minimizes costs, keeping prices competitive and low. Yet these regulations keep pushing us in the other direction. As Bill Peacock points out in his recent op-ed, “Windstorm Insurance Ruling Shows Legislative Reforms Have Failed,” there is a right way and a wrong way to go about helping consumers.
If TWIA returns to its original intent to serve as the market of last resort – instead of today’s first and best option – private companies will want to return to the Texas coastal market. With the private companies’ return, coastal residents will see competitive, lower prices, and enough money in the market to cover homeowners in the case of another major storm.
- Ryan Brannan
TexasPolicy.com
Texas Public Policy Foundation 900 Congress Ave., Ste. 400 Austin, TX 78701 Phone 512.472.2700 Fax 512.472.2728
