Washington Policy Blog

ObamaCare: Government can kick you off your health care plan

December 2, 2009 in Blog

In a stunning YouTube video, Henry Waxman, Chairman of the
House Energy and Commerce Committee, explains how under ObamaCare the
government would have the power to “suspend” the enrollment of any American in
any health care plan, that is, kick you off your plan.  With the help of an aide, he begins reading
from the 2,074-page bill;

“The remedies described in the paragraph with respect to a
qualified health benefit plan, they [federal officials] can levy civil money
penalties, or can suspend the enrollment of individuals under such a plan after
the date the commissioner notifies the entity of the determination under
paragraph 1 that the plan does not qualify.” 

If federal officials determine your health plan does not qualify, you will be disenrolled.  In government-speak “remedies” means punishment, and
“suspend” means cancel.  Watch it here.

Who is really in charge of the USDOT?

December 2, 2009 in Blog

Yesterday, I posted this blog entry: LaHood to Congress: Debate a gas tax increase

It was based on a story from the Ft Worth Star-Telegram on comments DOT Secretary LaHood made in Texas on Monday. Here is what LaHood actually said:

To index the federal fuel tax [to inflation], that's something Congress is going to
have to decide. As we get into the reauthorization bill, the debate
will be how we fund all the things we want to do. You can raise a lot
of money with tolling. Another means of funding can be the
infrastructural bank. You can sell bonds and set aside money for big
projects, multi-billion-dollar projects. Another way is [charging motorists for] vehicle miles traveled. The idea of indexing the taxes that are collected at the gas pump is something I believe Congress will debate. When the gas tax was raised in 1992 or 1993, in
the Clinton administration, there was a big debate whether it should be
indexed. At that time, they thought there'd be a sufficient amount of
money collected. Now we know that isn't the case. That is one way to
keep up with the decline in driving, and more fuel-efficient cars.

This morning, I received an email from the USDOT saying the Ft. Worth Star-Telegram ran a correction: 

Transportation Secretary Ray LaHood said Congress should debate a range of options on funding transportation needs, including indexing the federal gas tax. He did not endorse any option. Information about his remarks was incorrect Tuesday in an article about the North Texas Transportation Summit.

You can decide for yourself whether the story is accurate based on what LaHood actually said. Its more interesting to me on what it means when the USDOT sends me an email about one of my blog posts and a correction from a story in a Texas Newspaper. It suggests LaHood's office is very sensitive about their position on the federal gas tax and probably more importantly, their relationship with the White House. Perhaps because L!
aHood has been taken behind the wood shed before for suggesting in February that the US should adopt a VMT tax:

If you want to know what a presidential slap across the face feels like, just ask Transportation Secretary Ray LaHood.

LaHood had told an Associated Press reporter that the transportation department was
thinking of changing the way that gas taxes are calculated from a per-gallon measure to a per-miles-driven measure.

Is that the policy of the White House, a reporter asked Press Secretary Robert Gibbs?

"I can weigh in on it and say that it is not and will not be the
policy of the Obama administration," Gibbs said, an unusually sharp
answer.

The reporter continued, prompting an exchange that made clear that LaHood has received new marching orders from the White House.

Congressman Oberstar (D-Minnesota, Chairman of the House Committee on
Transportation and Infrastructure)

has proposed the House version of the federal transportation budget as a starting point and some think that short of implementing a tax on how much people drive, the proposed level of spending can only be funded through a significant increase in the federal gas tax rate, which is a proposal the Obama administration continues to oppose. This funding debate is one of the reasons the federal transportation budget has been delayed until sometime next year.

Washington loses out on Race to the Top funding; Governor's decision means schools will not receive share of $4.35 billion program

December 1, 2009 in Blog

Governor Gregoire announced last week that she would not seek the $250 million that would likely be Washington’s share in federal Race to the Top funds.  President Obama designed the program so states can use what they learn in the first round of applications to succeed in getting grants in the second roun!
d.  The Governor’s announcement means Washington will lose this opportunity, while other states will get a head start.

Washington  lags significantly behind other states in enacting important education reforms. Here are a few  examples of Washington’s outdated education policy:

- A ban on charter schools

- A ban on merit pay for teachers

- A ban on hiring any qualified profressional as a teacher

- Tight restrictions on how principals can run their own schools

- Lower academic standards in math and science

- The majority of public school employees are not teachers

- Centralized curriculum that stifles teachers’ creativity in class

- Union seniority, not classroom performance, determines teacher assignments.

While school funding is at an all-time high, Washington spends more than $10,200 per year on each student, only 59 cents of every education dollar reaches the classroom.  Superintendent Randy Dorn has recently proposed to weaken learning standards, even as one-third of Washington public school students fail to graduate. 

Research shows that leaders of the state’s powerful teachers union remain the primary obstacle to reform.  In January legislative leaders will consider ways of changing the state’s education regulations to make Washington eligible to receive the added assistance being offered by President Obama, but immovable union opposition is the main underlying reason  Washington will not receive Race to the Top funds.

 

LaHood to Congress: Debate a gas tax increase

December 1, 2009 in Blog
Secretary LaHood today commented that Congress is going to have to
debate an increase in the federal gas tax as it seeks to end the
political impasse over the next multi-year surface transportation bill,
reports the Fort Worth Telegram and Streetsblog Capitol Hill.

LaHood
stopped far short of reversing the White House's stated opposition to
raising the federal gas tax...but he seemed to suggest that Congress
should at least debate indexing the federal fuel tax to inflation,
while also considering tolling, creating an infrastrucure bank, and
charging for vehicle miles traveled.

"Beat the Crap Out of Him" is Scientific Jargon

November 25, 2009 in Blog

The keynote speaker at our annual environmental luncheon is featured prominently in the current scandal involving the e-mails hacked from the University of East Anglia's Climate Research Unit (CRU). The e-mails, from some of the most outspoken global warming alarmists, show how deeply politics has influenced the "science" they produced for the UN's Intergovernmental Panel on Climate Change.

Pat Michaels, a Past President of the American Association of State Climatologists, is mentioned in one of the e-mails in a rather unscientific tone. Michaels raised alarm bells that scientific data used by Phil Jones of the CRU had been destroyed rather than shared as is required by the scientific process. Despite that destruction, the EPA used Jones' conclusions as part of their justification for decision to regulate CO2 as a pollutant under the Clean Air Act.

One of Jones' colleagues offered his sympathy to Jones that he had to deal with the unreasonable demand that his science be transparent:

From: Ben Santer

To: P.Jones

Subject: Re: CEI formal petition to derail EPA GHG endangerment finding with charge that destruction of CRU raw data undermines integrity of global temperature record

Date: Fri, 09 Oct 2009 11:07:56 -0700

 

I’m really sorry that you have to go through all this stuff, Phil. Next time I see Pat Michaels at a scientific meeting, I’ll be tempted to beat the crap out of him. Very tempted.

You can listen to Michaels discuss these revelations on the Laura Ingraham show here.

The e-mails also discuss efforts to prevent science that contradicts their own from being published and efforts to punish journals that did publish alternative science.

The great philosopher of science Thomas Kuhn wrote fifty years ago that "One of the strongest, if still unwritten, rules of scientific life is the prohibition of appeals to heads of state or to the populace at large in matters scientific." The reason for this rule was to prevent politics from corrupting science. Despite loud claims that the IPCC and global warming alarmists are simply "following the science," these e-mails demonstrate that they were eager to use politics to fill in the gaps of their own science and silence others

Governor releases budget video

November 25, 2009 in Blog

Governor Gregoire will be releasing her recommendations to close the state's projected $2.6 billion budget deficit the week of December 7. Giving some insight into her thought process, the Governor and the Director of the state's budget office (Victor Moore) have teamed up to create a short video about the budget situation. Here is a link to that video (Hat tip Niki Reading of TVW).

While no new ground was broken in the video, it is disappointing that two words were never mentioned: Government Reform.

This is in contrast to the Governor's message last session that government must change the!
way it operates versus trying to find new revenues to continue the status quo. Here is what the Governor said in her state of the state address this past January:

“.
. . one thing we have to do together is reform state government to
bring it into the 21st century, and soon. At very basic levels,
businesses are struggling to reform, to change the way they do business
because they simply must to survive. And our business leaders tell me
that American companies, large and small, will emerge from this
recession forever changed.

We have to do the same. And that’s government reform.

This is our chance to reform state government to make it a more nimble and relevant partner in a new state economy.

Ladies and gentlemen, we need to reboot!

Over
the decades, state government has evolved — layer upon layer upon
layer. But too much of what served the people well in 1940 or 1960 or
1990 does not serve the people well in the 21st century. We need to
make sure we have a government for the 21st century so our workers and
businesses can compete with anyone in the world."

While the failure to mention the need for reforms in the budget video may have been unintentional, the solution to the state's structural budget problem has not changed. We need "to reform state government to make it a more nimble and relevant partner in a new state economy."

Young companies are the engines of job creation

November 25, 2009 in Blog

For your Thanksgiving weekend reading list: "Where Will the Jobs Come From?" a new paper from the Kauffman Foundation.

Two of the questions I get asked most is, "I often hear that small businesses create most of the jobs. Is this true and if so, why aren't policymakers doing more to help small businesses?"

The first question is pretty easy to answer. Yes, small businesses do tend to create most of the new jobs, particularly during economic recessions. But one of the points from the Kauffman foundation paper is that we (the media, policymakers, think tanks) sometimes may be too focused on small businesses and not focused enough on new businesses. 

Since 1980, nearly all net new jobs created were in firms less than 5 years old. In fact, the businesses most likely to create new jobs are those aged 1-5 and then the older, established and large businesses!
. In fact, an interesting chart on page 8 of the report shows that over the last 30 years, "excluding the jobs from new firms, the U.S. net employment growth rate is negative on average." Take away the jobs created by startups and the country will most likely have negative growth in jobs. That is pretty substantial.

However, this news is tempered by the fact that roughly 1/3 of startups close by their second year and only 1/2 of firms make it to year 5. We see this echoed in Washington state where we are third best in the nation for business startups, but second-worst in business terminations. That means we have a high business churn rate.

However, that is not all bad as the Kauffman Foundation paper points out,

"When we talk about young firms, then, we're talking about an ever-changing assortment of dynamic firms -- entering and exiting; c!
reating and destroying jobs. Such messiness is not cause for d!
ismay or alarm; it is the provenance of net job creation. If we want to chart a rapid employment recovery, we need to foster such messy dynamism."

This echoes Schumpeter's theory of creative destruction. So then, what does it mean for jobs in our state during this recession? After all, our unemployment rate is a stubborn 9.3%, even while the nation's continues to rise at a fast clip; it's up to 10.2% now. And, as you may recall, unemployment numbers are a lagging economic indicator -- meaning that rate will only begin to decline after the economic recovery is well underway (which is still a ways off).

The authors of the Kauffman paper have this to say,

"The slow recovery of employment may also work to spur even higher rates of firm formation: instead of waiting around for new jobs, people may take their future into their own hands.!
"

So what can policymakers do in the short term to help these new, and therefore mostly small, businesses -- therefore answering the second part of the question I get asked most? The authors make two suggestions. One, government can help unfreeze the credit markets, because those are the lifeblood of many businesses. But a much bolder approach, they advocate, would be "to grant a payroll tax holiday for new and young companies, thus fostering job creation."

Certainly, granting a tax or licensing fee holiday for new companies has some difficulties, particularly since both Washington state and Washington, D.C. are stuck with huge budget deficits (mostly of their own doing) but such bold action would back up policymakers' talk of jobs, jobs, jobs.

520 bridge: officials could build 30 of the existing structures for the same amount they want to spend on its replacement

November 25, 2009 in Blog

A state panel has finally selected a preferred option on replacing the floating 520 bridge.

The panel voted 10 to 2 in favor of replacing the existing bridge from
Interstate 5 to Medina with a new six-lane bridge, which would include
one HOV lane in each direction. It would feature a new Montlake
interchange, similar to the current interchange, with a new bascule
bridge across the cut. It also would add some improvement to transit
connections, as well as a reversible HOV lane connecting to Interstate
5.

The cost will be about $4.6 billion but it will not increase general-purpose lane capacity.

According to this 2008 article in Wired Magazine, the first bridge cost $21 million in 1963, or about $154 million in 2008 dollars. This means officials could build 30 of the existing structures for the same amount they want to spend on its replacement.

Harvard economists: Cut taxes to increase growth

November 24, 2009 in Blog

While elected officials at the state and federal level debate the need for tax increases and "fiscal stimulus spending," a recent economic study suggests instead taxes and spending should be cut to spur economic growth and reduce deficits.

Here is the abstract from an October 2009 study by Harvard economists Alberto Alesina and Silvia Ardagna (Large changes in fiscal policy: taxes versus spending):

"We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments those based upon spending cuts and no tax increases are more likely to!
reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis."

The study concludes (in-part):

"As we argued in the introduction it is unlikely that these deficits and debt will disappear simply because growth will resume at very rapid pace very soon. Primary suppresses would be needed since interest rates cannot go other than up from the close to zero actual levels. The analysis of the present paper suggests that primary spending needs to be kept under tight control otherwise increasing taxes running after ever increasing spending will not work."

Speaking of economists and the current budget debate in Olympia, earlier this year more than 30 economists warne!
d state officials

that raising taxes "during a recessionary period is contrary to
responsible economic policy and instead will thwart the state’s
economic recovery."

Metro avoids service cuts, but ridership is falling

November 23, 2009 in Blog

In this Seattle Times article, Mike Lindblom touches on some of the things King County Metro is doing to fund its 2010 budget and prevent service cuts.

Yet, according to the American Public Transportation Association (APTA), Metro bus ridership is down 3.52%.

In other industries, the bottom line forces managers to keep supply commiserate with demand. But in the public sector, there ultimately is no bottom line, so performance and accountability succumb to political agendas. Lindblom even highlights this concept in his article:

This summer, County Executive Kurt Triplett proposed an
across-the-board service cut to all 225 routes. That proved unpopular
with several County Council members, who would have faced heat from
riders in their districts.

In transportation policy, performance should drive spending decisions.

Incidentally, vanpool ridership continues to grow (8.12%), despite the recession.

Transportation choices

November 23, 2009 in Blog

Gabriel Roth, A noted transportation economist and Research Fellow at the Independent Institute, has a great tale about the government's efforts to reduce how much people drive:

On November 17 I attended a National Journal meeting addressed by Polly Trottenberg, Assistant Secretary for Transportation Policy. She told us how important it was to reduce VMT (vehicle miles of travel). After the meeting, as she was entering a chauffeured government car, I asked her why she did not take a bus. She said something about being in a hurry.
 
Can it possibly be that reducing VMT is not a thing for important people?

You might recall that our state implemented VMT reduction targets a couple years back. The first phase calls for an 18 percent reduction by 2020.

Daily light rail ridership

November 20, 2009 in Blog

Over at the Public Interest Transportation Forum, John Niles has been tracking daily light rail ridership.
Here is his chart showing daily ridership between July and October: 

Niles ridership

As Niles highlights, notice ridership has been falling since it peaked in October. Niles estimates average ridership in October was 16,129 trips per day.

But remember, trips are not riders. Trips can count the same rider multiple times in a single day. Also remember that Sound Transit estimates!
two-thirds of its light rail riders come from the existing bus system. So taking these factors into account, at its peak, light rail is only carrying about 2,688 new transit riders per day.

Executive branch needs unified voice on education priorities

November 20, 2009 in Blog

With Washington already behind the eight ball in the quest for the federal "race to the top funds," the last thing we need is for the state's executive branch to be sending conflicting signals about our commitment to accountability. Unfortunately that is exactly what is happening.

Yesterday State Superintendent of Public Instruction Randy Dorn announced his plan to delay the state's math and science graduation requirements. According to his press release:

Citing major concerns with the passing rates on the high school math and science exams, State Superintendent Randy Dorn has proposed significant changes to th!
e math and science graduation requirements. Dorn unveiled his proposal today at the annual conference of the Washington State School Directors Association.

Dorn said students and schools will need more time with new math and science learning standards that are now being implemented around the state. The new standards won’t be assessed until 2011 for math and 2012 for science. That doesn’t provide ample opportunity for the class of 2013, current ninth graders and the first class required to pass four state exams, to learn the standards, or teachers and schools to align curriculum and materials to them, he added.

“It doesn’t take a mathematician to see that we have a big problem in our state. Less than 50 percent of our 10th graders are passing the math and science exams,” said Dorn, who noted 10th graders’ passing rate on the reading and writing exams is more than 80 percent. “We need to be fair to our students and give them time to learn!
the new standards. It’s simply a matter of doing what’s r!
ight.”

This retreat from the state's graduation standards drew a strong rebuke from Governor Gregoire as noted by The Everett Herald:

"I oppose the proposal. As our state and global economies become more technically driven, we need to ensure that our students leave high school highly-trained in math and science so they can qualify for Washington state jobs or entry into training and higher education programs of their choosing.

“Our students are capable of mastering our state's standards in math and science. They have shown us their capacity to meet our expectations in the past. Schools I visited recently give me every indication that when students know the work is important they dig in and make the most of it.

“We can't lower our standards in math, nor can w!
e communicate that science is not important. We must prepare our students for their future. There is every reason to focus attention on the math and science learning needs of our students so they can succeed after high school. The Superintendent is concerned about the graduation rate. I am concerned about the bigger picture - preparing kids for life. I think parents share that concern.”

Education policy is complicated enough without having two members of the executive branch pursuing conflicting strategies and sending mixed signals to the Legislature and citizens. This latest development is just another example of why the Office of Superintendent of Public Instruction (OSPI) should not be an independently elected office but instead should be an appointed office under the Governor's control via her cabinet. This would follow the model used !
for (in-part):

  • Secretary of Social and Health Services
  • Director of Ecology
  • Director of Labor and Industries
  • Director of Agriculture
  • Director of Financial Management
  • Secretary of Transportation
  • Director of Licensing
  • Director of General Administration
  • Director of Commerce
  • Director of Veterans Affairs
  • Director of Revenue
  • Secretary of Corrections
  • Secretary of Health
  • Director of Financial Institutions
  • Chief of the State Patrol

This type of change would address the diffused accountability under the current system. If problems arise with public education voters would know that the solution lies with the Governor. If the Governor fails to use her appointment powers to improve the management and policies of OSPI, voters could take that failure into account at election time.

Budget deficit grows to $2.6 billion

November 19, 2009 in Blog

Washington's budget outlook took another hit today with forecasted revenue dropping $760 million since the September revenue forecast. The result of this is a projected $2.6 billion deficit in the 2009-11 budget adopted earlier this year. 

According to the press release issued by the state's economist, Dr. Arun Raha:

"While growth has returned to the national and state economies, consumer confidence and more critically, consumer spending remain weak. As a result, we are experiencing a revenue-less recovery."

Responding to the news the Governor said in a press release:

"I will produce a budget balance!
d to this revenue projection because I am required to by law. We all know a budget reflects the values of our state. All options must be on the table to produce a budget that works."

The Governor, however, has ruled out calling a special session of the Legislature. 

Tax increases are not the answer and should be removed from the table as an
option to help remove any distractions from making the necessary budget
reductions.

Illustrating this point, earlier this year more than 30 economists warned state officials that raising taxes "during a recessionary period is contrary to responsible economic policy and instead will thwart the state’s economic recovery."

Several state newspapers have also called on state officials to avoid tax increases:

Though lawmakers and the Governor will be tempted to address the state's $2.6 billion budget deficit with one-time fixes, doing so is a recipe for future budget pain and the potential for the state's credit rating to be downgraded. According to Moody's October 9 report on Washington's credit outlook, the following could result in a reduction to the state's credit rating:

  • Protracted structural budget imbalance.
  • Increased reliance on one-time budget solutions.
  • Failure to adopt plan to cover expenditures once federal fiscal stimulus monies are no longer available.

Instead state officials should make fundamental changes by "re-booting" state government as called for by the Governor in her state of the state address last January:

 “. . . one thing we have to do together is reform state government to bring it into the 21st century, and soon. At very basic levels, businesses are struggling to reform, to change the way they do business because they simply must to survive. And our business leaders tell me that American companies, large and small, will emerge from this recession forever changed.

We have to do the same. And that’s government reform.

This is our chance to reform state government to make it a more nimble and relevant partner in a new state economy.

Ladies and gentlemen, we need to reboot!

Over the decades, state government has evolved — layer upon layer upon layer. But too much of what served the peo!
ple well in 1940 or 1960 or 1990 does not serve the people well in the 21st century. We need to make sure we have a government for the 21st century so our workers and businesses can compete with anyone in the world."

 

More bad news for parents and students

November 19, 2009 in Blog

Today's Seattle Times contains two sobering reports about education. 

 One article reports that Superintendent of Public Instruction Randy Dorn is taking steps to further loosen academic requirements.  He proposes to further delay the requirement that students pass the state math and science tests in order to earn a high school diploma.  He would delay the math requirement from 2013 to 2015 and the science requirement to 2017. Reducing standards is the logical response of a school system run by officials focused on embarrassing high school graduation rates: fully one-third of high schools students drop out.  Increasing the math and science knowledge of individual students must play second fiddle to increasing graduation rates. 

A second article reports that the Seattle School District has returned to a neighborhood assignment plan for schools.  Parent choice has now been eliminated, reversing the open enrollment policy instituted by Superintendent John Stanford in the late 1990's.  Until now, this open enrollment policy allowed thousands of parents to make the choice they felt was best for their student, with the result that many schools in the north end of the city became overenrolled and many in the south end became underenrolled. 

The proper response of the district to this evidence of broad disaffection with certain schools should have been to close these schools, or replace their underperforming staff.

Instead, underperforming schools will remain open and fully enrolled, and all will be neat and tidy from the point of view of administrators in the district.  But this bodes ill for students and families.  Parents will be unable to remove their students from underperforming neighborhood schools.  The district responds to these concerns by claiming that all schools in all neighborhoods will be excellent, some day in the future.  But how can excellence in all schools be achieved now, when a critical factor in driving improvements, the power of parent choice, has been eliminated?

What a sad state of affairs for parents and students in Washington state and in Seattle.