Washington Policy Blog

Everything Old is New Again for Greens

July 22, 2009 in Blog

Syndicated columnist Froma Harrop has an opinion piece in the Seattle Times today called "The Logic of a Locavore" in which she explains why we should eat local food. Many environmentalists embrace the buy local mantra in the mistaken belief it is better for the environment.

Harrop is, accidentally I think, very honest about the pedigree of this concept. Responding to the critique that eating local is passe, she writes:

Local is so 2008? Yes, and it is also so 1908, 1608 and 508 B.C. Until the last 100 years or so, the "alternative food crowd" encompassed nearly all of humanity.

I'm not sure why this is an argument in favor of eating local. Lots of things are 1608, including lifespans of 30 years, cholera, poverty, spoiled food and the like. Environmental icon Jared Diamond wishes we could go back even further.

A second stimulus? Consider the ramifications first.

July 22, 2009 in Blog

Some policymakers in D.C. and syndicated columnists/economists have already begun talking about the need for a second stimulus package to bolster the $787 billion passed by Congress in February.

But before they move to quickly to spend even more taxpayer dollars on various government projects, a little reading should be in order; namely, this report from Wells Fargo.

In a "Decision-Makers' Guide to Stimulus Part Deux," the authors of the paper first take Vice President Biden to task for saying, "the truth is, we and everyone else misread the economy." The authors point out that, "Everyone did not misread the ec!
onomy. Contrary to political rhetoric, economic analysis outside the beltway clearly anticipated a nine percent plus unemployment rate even with the stimulus package."

One of the major concerns over the last several months as government spending ramps up, is inflation. Again, the authors of the paper address this:

"Unfortunately, a second stimulus could add too much to the growth momentum to be consistent with stability in the long-run inflation interest rates and currency expectations. Inflation/debt concerns, which are already rising, would accelerate quickly and thereby prompt negative interest rate/dollar reactions that would create a boom/bust cycle..."

The stimulus/bailout mentality goes back to the reality that politicians don't always make the most sound economic decisions because they are influenced by the immediate short-term political gains and do not take into account, or minimize, the long-term costs!
. But this type of thinking has immediate economic ramificatio!

Where is the Patient in Health Care Reform?

July 22, 2009 in Blog

During mark up of the House health care reform bill last Friday, a patient-oriented amendment was soundly rejected:

    “(k) Construction - Nothing in this section shall be construed to allow any
federal employee or political appointee to dictate how a medical provider
practices medicine.”   

By rejecting this amendment it is now clear that the unstated intent of the bill is to have government bureaucrats dictate what doctors can or can't do for their patients. This places patients at the mercy of unknow and unseen officials,rather than allowing their own physicians to help them make their health care decisions.

Regardless of what proponents say, pending legislation is unquestionably a government attempt to take over our health care system.

Stimulus funds GMAP

July 22, 2009 in Blog

Today's GMAP (Government Management Accountability and Performance) public meeting was on the state's stimulus efforts. Lots of interesting tidbits were reported including:

  • $4 billion has been allocated to the state - $827 million spent so far.
  • The Governor believes the states are being used as pawns in a political fight in D.C. on whether the stimulus package is working; she complained that some Senators were questioning the value of the stimulus package prior to her testimony yesterday in Congress on green jobs.
  • The Governor reported that her colleagues expressed concern at the national governors meeting about what type of information is to be reported to the feds and the time line for those reports.
  • The bulk of the state’s stimulus jobs are at Hanford. The Governor is concerned that some of those jobs aren’t being filled by Washingtonians; instead the contractors are hiring out of state workers.
  • The Department of Transportation expects to create or retain 5,000 jobs as a result of stimulus funds.
  • The State has obligated the 4th highest amount of transit funding in the country.
  • The transportation construction market may have hit its saturation point as recent bids are coming in at or above engineer estimates in contrast to previous bids coming in below.
  • There is a high correlation with “legislative earmarks” and projects not coming in on time or on budget due to the circumvention of the normal vetting process and review. 

Here are additional details (click on the links):

What’s a “green” job?

July 22, 2009 in Blog

I was reading the Washington Employment Security Department’s report on how many “green” jobs there are in our state (the Department says 47,000), but the definition they use is so vague and open ended that you can’t tell what makes a job “green.”  On page five, however, I did find this nugget:

“Although employers identified many different occupational titles, there were no new or unique job titles identified by employers that were not already reflected in the existing national Standard Occupation Code classification system.  This suggests...that the fundamental work performed by employees in these green jobs has not changed substantially such that employers believe that new occupational titles are necessary.”

In other words, most if not all of the 47,000 jobs listed in the report are existing occupations that the government has decided to label “green,” even though the employees are doing exactly the same work they did before.  Here some examples of what the report calls “green” jobs:

- Millworkers
- Earth drillers (but not for oil and gas)
- Electricians
- Roofers
- Food Batchmakers

So, yesterday I was doing policy research on the state budget, and today I’m reading a government report on environmental policy.  Does that mean that yesterday I did not have a “green” job and today I do?

Today's "green" job is yesterday's job!

July 21, 2009 in Blog

Today, Washington’s Governor, Christine Gregoire, testified before the U.S. Senate Environment and Public Works Committee regarding “green” jobs in a new economy. 

Gov. Gregoire told Senators:

“In 2007, when we adopted a set of climate change goals related to reduced greenhouse gas emissions and reduced fuel use, we also set a goal to triple the number of green jobs we had in the state – to reach 25,000 green jobs by 2020.  Less than two years later, we can point to 47,000 green jobs right now.  Our green jobs are growing much faster than predicted.”

Did Washington State actually create 47,000 “green” jobs in little more than two years?  Washington State Employment Security Department’s (ESD) report, “2008 Washington State Green Economy Jobs,” helps to answer this question.  The report states:

“…there were no new or unique job titles identified by employers that were not already reflected in the existing national Standard Occupation Code (SOC) classification system… the fundamental work performed by employees in these green jobs has not changed substantially such that employers believe that new occupational titles are necessary.”

The acknowledgement that “green” jobs are not necessarily new is a departure from the Governor’s previous comments where she has clearly claimed that the State has “created” 47,000 new “green” jobs.

The Governor’s remarks today also support the findings of the ESD report.  The Governor testified that:

“We learned green jobs are not necessarily some brand new type of job – they are often jobs we all know, only now they include new skills to meet the needs of the new century – for example, the electrician who can wire a smart home.”

Meanwhile, as Washington continues to focus on the creation of “green” jobs, our unemployment rate grows.  Washington’s unemployment rate today exceeds more than nine percent and is similar to other states, like Oregon and California, which have focused on creating a “green” economy. 

While the state is actively pursuing “green” jobs it appears to have taken more of a hand off approach towards traditional jobs.  In fact, when asked by media about Boeing’s potential movement of operations to South Carolina and out of Washington, the Governor stated that issue is between Boeing and the Unions.  But according to the ESD report and Gregoire’s testimony, aren’t many of Boeing’s jobs “green” and worth saving?

Light Rail Amnesia

July 21, 2009 in Blog

With the opening of the region's first light rail line, I'm reminded of what Sound Transit first promised in 1996 when voters initially approved funding.

Voters were promised 21-25 miles of light rail by 2006, which would carry about 107,000 daily riders for a cost of about $1.8 billion.

Today (2009), voters got 14-15 miles of light rail, which will carry about 26,600 daily riders for $2.3 billion.

In reviewing Sound Transit's 1996 plan, I also ran across this claim, which just seems kind of silly today:  

Sound Move is based on extremely conservative cost and ridership assumptions and methodologies reviewed by an independent expert review panel appointed by the governor, the state Legislature and the state Transportation Department.

***A quick thank you to John Niles for maintaining these documents online, which funny enough either don't exist on Sound Transit's website or are not in an easy place to find.

Obama uses free-market language to promote socialized health care

July 16, 2009 in Blog

In pushing yesterday for the sweeping health care plan working its way through Congress, President Obama argued for a government option, saying it “would make health care more affordable by increasing competition, providing more choices and keeping insurance companies honest.”  He sounds like Adam Smith making the well-proven case for freedom in the marketplace – market competition drives down prices and improves quality and choice for consumers. 

No, the President hasn’t suddenly experienced libertarian enlightenment.  The competition he has in mind is the federal government competing against its own citizens.

Government works well when it sets rules that apply equally to all companies, protect consumer rights and provide for public safety.  When government itself enters a market though, in this case as an insurance company, government officials end their role as impartial referees and become market players, with one important difference.  The “competition” President Obama envisions is a national insurance company that can print its own money.

The point is well illustrated by Germany, which allows citizens to buy private insurance or pick a subsidized public option.  Guess what?  Eighty-five percent of Germans take the public option.  Having eliminated most private choices, program managers began rationing care.  According to today’s Seattle Times, “[Germany] tries to control costs by limiting what’s available.”  The practice is standard in socialized systems.  Laboring under intense budget pressures, government managers seek to control costs by limiting people’s access to medical treatments.

If the President wants us to gain from real competition, he should let Americans buy health insurance in any state, just like auto insurance.  Making private insurance companies compete for our business in a national market, not starting a federal super-insurer, is the best way to get health care spending under control.

Obama Administration's Plan to Coerce People out of Their Cars

July 16, 2009 in Blog

Here is an excerpt from the beginning of a new report by Dr. Ronald Utt, a transportation policy expert from Heritage Foundation:

Secretary of Transportation Ray LaHood remarked in May that his livability initiative "is a way to coerce people out of their cars."
When asked if this was government intrusion into people's lives, LaHood
responded that "about everything we do around here is government
intrusion in people's lives," a sentiment that would have certainly
surprised the authors of the United States Constitution, a document
whose major purpose was to restrain government.

Read the full report:Obama Administration's Plan to Coerce People out of Their Cars

Democrats’ Proposed Health Plan Leaves 17 Million Uninsured

July 15, 2009 in Blog

The new health care reform plan unveiled today by Democrats in Congress is not universal care.  The Democrat-proposed plan provides for 17 million people to go without health care coverage.  The plan carries other risks, such as:

  • It raises taxes during a recession.  Higher taxes, even on the so-called rich, means there would be less money available for investment and job creation, delaying the recovery and increasing hardship for people who are out of work.  Business owners would slow or stop hiring, as they wait to see what their new payroll tax will be, and whether they will be forced to pay the proposed 8% “pay-or-pay” penalty each year.
  • The government option would crowd out private coverage.  Many workers would be forced onto the government plan against their will, as employers drop their current coverage in an effort to shift health costs to taxpayers.  Yet the President’s family and those of Members of Congress would not be forced onto the government option plan; as dependents of federal employees they would continue to receive first-class coverage.
  • Eight million people with Health Savings Accounts (100,000 in Washington) might lose their coverage if it doesn’t meet the federal definition of mandated insurance.  Innovative patient-centered medical practices in Washington, such as Dr. Erika Bliss’ Qliance clinic in Seattle, would be forced to close.

Here's a good illustration of how the proposed health care plan would work was released by the Joint Economic Committee.


The House Health Care Bill - The Whole Enchilada

July 15, 2009 in Blog

The three committees controlling health care legislation in the US House released their health reform bill yesterday with the usual fanfare. Basically every bad proposal kicking around Washington, D.C., is included in the 1018 page document. Debate on the House floor is scheduled to begin next week.

The lead-off provision is a government "option", ala Medicare,  to compete with private health insurance. Never mind that Medicare started as a "competitive government option" in 1965, ran insurance for seniors out of business by 1970, and currently has a $67 trillion dollar unfunded liability. 

The House leadership then stuffed an insurance  "connector" into the bill to dictate the kinds of benefits people can select and how much they must pay for them. Massachusetts has had a connector plan in place for the past three years. The state is now running almost a $1 billion deficit for its health care spending. It didn't work for Massachusetts, but then a state, unlike the federal government, can' t print money or run deficits for very long.

A lot can be placed in 1018 pages, but other significant provisions include an individual mandate so everyone in the country must buy health insurance or pay a fine, an employer mandate that requires them to purchase insurance for their employees or pay an 8% payroll tax, a class warfare tax on the rich, and a schedule for decreasing provider reimbursement on Medicare and Medicaid patients.

The overall cost is estimated to be $1.5 trillion over the next ten years. Of course, Medicare was 300% over budget by 1990. So much for confidence in the bureaucratic budget process.

Health Care Reform is Losing Steam

July 14, 2009 in Blog

A new Rasmussen national telephone survey just released shows the country is shifting to opposition of the Administration and Congressional health care reform plans. Those opposed or somewhat opposed now total 49% with 46% in favor or somewhat in favor of the proposed health care reforms currently under debate in Washington, D.C.

Two weeks ago, Rasmussen polling revealed 50% in favor and 46% opposed. This is almost a 10% shift toward opposition.

As more Americans understand the magnitude and the expense of the proposed reforms, the negative impact of government controlled health care is starting to take hold. A prolonged debate gives more people the opportunity to see these reform plans for what they really are - an attempt to move our entire health care delivery system into the control of government bureaucrats.  

Customer Service Lacking in L.A. Bureaucracy. Surprised?

July 13, 2009 in Blog

As Seattle policymakers now say they will postpone consideration of ditching the $25 per employee head tax, a column in Friday's Wall Street Journal should provide a cautionary tale on why it is important for cities and states to endorse policies that encourage entrepreneurial growth.

The column, written by Rick Newcombe, president of Creators Syndicate, is about to move his business and the jobs involved, out of Los Angeles because the city is reneging on its own tax policy. For the last 15 years Creators Syndicate has wrangled with the city over their business tax classification. Mr. Newcombe thought his business, which helps syndicate national columnists, should fall into the "wholesale and retail" classification with a lower tax rate,!
whereas the city thought the firm fit into the "occupations and professions" which would mean a higher tax rate. 

The fight over the tax classification is nothing out of the ordinary. Businesses often appeal their tax classification. Creators Syndicate took their case to court, prevailed, and the city relented and everything seemed fine (this was in 1994).

But the city started running out of money in 2007:

"Suddenly, the city announced that it was going to ignore its own ruling and reclassify us in the higher tax category. Even more incredible is the fact that the new classification was to be imposed retroactively to 2004 with interest and penalties. No explanation was given for the new classification, or for the city's decision to ignore its 1994 ruling. Their official position is that the city is not bound by past rulings -- only taxpayers are."

Los Angeles just said to the taxpaying public, &quot!
;do as we say, not as we do."

A bigger hypocritical statement I could not imagine. 

Cle Elum Solar Plant: Some Things to Remember

July 10, 2009 in Blog

Seattle Times science reporter Sandi Doughton wrote an excellent piece on the potential solar plant in Cle Elum, highlighting some of the opportunity but asking the right questions about potential problems. More information will come out, but there are some elements to watch as this project progresses.

The debate about reducing carbon emissions has centered around two policy directions: technology or lifestyle modification. The focus of most of Washington's climate policy has been on forcing people to change their lifestyle. We've noted repeatedly that these approaches have high cost and low success.

Technology is the approach that is most successful but is also consistent with prosperity. The problem is when politicians try to pick and choose the technologies of the future. They don't pick correctly very often (witness hydrogen or electric cars and biofuels, just to name two recent examples).

There is great initial excitement about the solar project in Cle Elum, but there are some important considerations to ensure that this is truly a successful project and not another taxpayer-subsidized eco-fad.

  • Don't be seduced by the "world's biggest."A few years back, Washington also became home to the nation's largest biodiesel plant (disclaimer: I was hired to organize media coverage announcing that deal to build the plant). That announcement highlighted the jobs that would be created, the environmental friendliness of the project and even featured a US Senator promoting the role of government support in creating the project. Today, that plant is not running at capacity and biofuels are a suspect technology when it comes to reducing CO2 emissions. Seattle just stopped buying soy-based biodiesel due to environmental concerns. What seemed sexy just a few years back is a disappointment today.
  • Taxpayers pay, profits are privatized. This project makes sense primarily due to government subsidies and regulation. The story notes that "Generous tax breaks and a citizen initiative that requires utilities to get some of their power from renewable sources also add to Washington's appeal." Put simply, Washington's laws give tax benefits for construction and require utilities to buy the energy they produce. Profiting in such a scenario is virtually guaranteed. It is hard to criticize entrepreneurs who take advantage of such an offer, but it should be clear that we are paying to build a solar plant for the right to buy high-priced energy.
  • This will likely increase energy costs. As the Times story notes, solar hasn't developed like other technologies "largely because of high costs." The cost of solar photovoltaics is much higher than other forms of energy. For instance, the Kittitas wind project cost $1,920 per installed kilowatt. Solar PV, by way of comparison, costs about $7,000. It will be hard to know what the cost of this project will be until the full financials are released. The project will involve 400,000 solar cells, producing 75MW. The cost is estimated to be "north of $100 million." At $100 million the installed cost would be $1,333 per installed kilowatt, which is much lower cost than other projects, so I'm guessing that it will be well north of $100 million. By way of comparison, the solar panels the city of Seattle wanted to put on Qwest Exhibition Hall cost about $12,500 per installed KW.
  • Creating or losing jobs? While job creation will be the highlighted talking point for this project, there is question about whether it will create good jobs. When looking at other solar PV installations, the article notes that "the biggest is a 60-megawatt plant in Spain." A study earlier this year examining Spain's effort to create a "green" economy found that the effort destroyed 2.2 jobs for every one it created. That's part of the reason Spain enjoys an 18 percent unemployment rate.
  • Logging for a green economy. Ironically, the site of the solar array is a 400-acre area that has been clear cut in the Teanaway. That is the size of about four large clear cuts. While timber harvests re-grow, however, this guarantees the forest will likely never re-grow. Timber harvesting in the Teanaway has been the target of environmental lawsuits trying to stop the very clearings that are now the location of the biggest "green" energy project in the world.

Our creative, free-market economy is the most powerful force ever conceived to promote the technological innovation that has dramatically increased well-being while reducing environmental impact. Political efforts to pick and choose technologies, however, undermine that creativity, substituting eco-fads for true innovation. As this project moves forward, we'll have a better sense in which category it belongs.

Upside down transportation policy

July 10, 2009 in Blog

This, in today's Seattle Times:

As light-rail opponent Emory Bundy and others have noted, the 36-minute
ride from Westlake Center to the airport, via Rainier Valley and
Tukwila, is longer than the 194 bus, scheduled to take 28 minutes using
freeway HOV lanes. Next year the 194 will be dropped, so transit riders
heading to the airport will have to take a train.

Tell me again, why spending dozens of billions of dollars on Light Rail is a good idea?