Washington Policy Blog

IRS Sees the Light After All?

June 17, 2009 in Blog

A follow-up to last week's blog post on the IRS cracking down on employees who use their employer-provided cell phones to make even incidental personal phone calls: The IRS is now asking Congress to repeal the 20-year old law. According to the Wall Street Journal,

Obama directs agencies to focus on performance

June 16, 2009 in Blog

With the threat from federal budget deficits growing each day, it appears the President is turning to the promise of performance-based budgeting as a solution.

Consider this June 11 memo to agency and department heads issued by President Obama's budget director Peter Orszag:

"Our goal is to build a transparent, high-performance government capable of addressing the challenges of the 21st century. The American people deserve a government that works, where the public interest is prioritized, where the impact of government spending is transparent and held to high, objective standards, and where results and good management matter . . . To be successful, we must focus resources on our highest national priorities, including investments in health reform!
, clean energy, and education. At the same time, we must enforce fiscal discipline, making sure that we invest in what works, do not waste taxpayer dollars on programs that do not work or are duplicative, and improve performance across the board."

One of the ways Orszag hopes to accomplish this is to focus agency attention on high-priority performance goals:

"Identification of agency high-priority performance goals is a first step toward developing the President’s agenda for building a high-performing government. There will be regular reviews of the progress agencies are making to improve performance in priority areas including problems they encountered and plans to address those problems. To prepare for these reviews, each agency is asked to identify a limited a number of high-priority goals and begin to define the strategies and means to achieve them . . . The agency goals identified for this !
purpose should generally have:
  • High direct value to the public or reflect achievement of key agency missions, as opposed to being focused on internal agency management or other administrative priorities.
  • Congressional authorization and appropriations required for successful implementation; though additional legislative changes may also be identified to contribute to success.
  • Coordination, operational, or other implementation challenges including across multiple agencies that once resolved, will likely lead to improved effectiveness or efficiency.
  • Performance outcomes which can be clearly evaluated, and are quantifiable and measureable in a timely fashion.
  • Significant challenges unlikely to be overcome without a concerted focus of agency resources."

Perhaps with an eye towards the spending problem in D.C., the memo goes on to direct agencies to prepare two alternative budget requests based on a freeze in spending and a five percent reduction.

Whether or not the President's proposed budget next year actually reflects this process, the information provided by agencies in response could prove to be invaluable for Congressional budget writers --- should they take the initiative to review it.

As we've previously recommended, Washington state lawmakers should also focus on agency performance when making budget decisions. Providing those who control the purse strings with this type of information allows them to make informed decisions on which purchases will deliver the highest results for taxpayers and those who rely on essential services.

Cost of Kennedy-Dodd Health Care Reform Plan

June 16, 2009 in Blog

The nonpartisan Congressional Budget Office (CBO) released a preliminary estimate of the cost of the major Democratic health care reform bill yesterday. The Kennedy-Dodd Plan would increase the deficit by $1 trillion over the next ten years.

Once the plan was fully up and running, the CBO projects 39 million people would obtain insurance through the government-run health insurance exchange. Unfortunately (but predictably), the CBO estimates at least 10%, or about 15 million individuals, would switch from employer paid coverage to the government plan. In addition, coverage from other private sources would fall by at least 8 million. Hence, the government plan would decrease the number of uninsured by a net of only 16 million. This is truly a small number for the enormous cost.

As if this wasn't bad enough, the CBO estimate does not even include the cost of the proposed Medicaid expansion proposed in the bill.

Washington Unemployment Rate Climbs to 9.4%

June 16, 2009 in Blog

The state's Employment Security Department (ESD) today released the unemployment rate for Washington for the month of May. Unsurprisingly, the rate rose from a seasonally-adjusted rate of 9.0% for April to 9.4% for May. The department reported that Washington's unemployment level increased by 18,200 in May.

The unemployment rate for the nation is now also at 9.4% so this marks the first time since December 2008 that Washington's unemployment rate is either equal to or lower than the national rate. All things being equal, this is not necessarily a bad sign for Washingtonians. Even though the unemployment rate increased this last month by a fairly sizable amount historically speaking, in relation to the job drop-off!
this state has seen in the last three quarters, this amounts to a more shallow drop-off (see graph on the front page of the ESD report linked to above). Signs are that we are entering that "U" shaped recovery that many economists have talked about. Whether significant job recovery accompanies the overall economic recovery remains to be seen.

From the ESD report:

"This choppy monthly pattern of job losses suggests that consumers and businesses are still uncertain about the condition of the economy; and they may be waiting for stronger signs of an economic recovery before they make major purchases or hiring decisions. On a positive note, however, the Consumer Confidence Conference Board's index doubled over the last three months which suggests that consumers are feeling more comfortable about their situation."

Perhaps Washington may pull ahead of the national trend on the way to!
economic recovery, but regardless, our state won't recove!
r those hundred thousand jobs anytime soon. I'm looking forward to Thursday's Economic and Revenue Forecast Council's quarterly forecast report for some more guidance and to see if state economists still expect our state's unemployment rate to bottom out at 10+% in 2010.

Cobra’s weather dominator can solve global warming?

June 16, 2009 in Blog

Dominator In a blast from our childhood, one global warming alarmist appears to be channeling Cobra’s (GI Joe nemesis) effort to manipulate the planet’s weather.

Jamais Cascio, a futurist and Senior Fellow at the Institute for Ethics and Emerging Technologies, is calling for the use of geoengineering, a radical step that he says is necessary to “avoid climate disaster.”

In his Wall Street Journal article, Cascio states:

“If we want to avoid an unprecedented global catastrophe, we may have no other choice but to reduce the impact of global warming, alongside focusing on the factors that are causing it in the first place. That is, while we continue to work aggressively to reduce the amount of carbon released into the atmosphere, we also need to consider lowering the temperature of the Earth itself.”

Sprayship Of the geoengineering options being considered to help reduce the Earth’s temperature, Cascio prefers two methods that look promising.  They are:

“injecting tons of sulfates—essentially solid particles of sulfur dioxide—into the stratosphere, and pumping seawater into the lower atmosphere to create clouds.”

Calls to use of such extreme measures will no doubt face steep political challenges, as Cascio acknowledges.  In fact, many still argue for the reconsideration of global warming science.

Nevertheless, if geoengineering is the wave of the future, then let me be the first to cast my vote for the Weather Dominator

National effort to reduce how much people drive similar to WA's plan

June 16, 2009 in Blog

UntitledBelow is a good post from Bob Poole, a national transportation expert from the Reason Foundation, on a national effort to reduce how much people drive. 

We are experiencing the same effort in WA state. Our analysis shows if the state is able to accomplish the first phase of an 18% reduction by 2020, state fuel tax revenues would fall 10%. Believe it or not, every state legislator was surprised by this analysis and didn’t realize the fiscal ramifications of reducing VMT. Interestin!
gly, some policymakers suggested tolls would replace gas taxes. But as I point out in the study and just like fuel taxes, using a revenue source that relies on driving while simultaneously implementing a policy that reduces driving means the state will be in exactly the same fiscal predicament. 

WPC Study: State's Mandate to Reduce Driver Mobility Threatens Revenue for Transportation Projects


Is the Goal to Reduce Emissions, Fuel Use or Mobility?

Robert Poole
June 15, 2009, 5:05pm

One of the most troubling ideas gaining a head of steam as we approach reauthorization is that a key transportation performance measure should be reducing vehicle miles traveled —either in total or per capita. The logic behind this idea is that using petroleum fuel is bad, and emi!
tting CO2 is bad, so transportation funding and programs shoul!
d deliberately aim to reduce vehicle miles traveled (VMT), in order to advance those other goals.

This idea has been percolating at the Brookings Institution and among any number of environmental groups, and it’s also being heavily promoted by the America 2050 project. But what really caused alarm among transportation people was the release last month by Sens. Jay Rockefeller (D-WV) and Frank Lautenberg (D-NJ) of their Federal Surface Transportation Policy and Planning Act of 2009 (S.1036). The first of its major goals for federal transportation policy is “Reduce national per capita vehicle miles traveled on an annual basis.” It also calls for government-set targets for shifting freight from road to rail.

Putting these idea into legislative language has started to arouse transportation interest groups, as well it should. First out of the box was the American Highway!
Users Alliance, which sent a strong letter of opposition to every member of the Commerce Committt, including Chairman Rockefeller. I’m expecting all sorts of transportation related groups - AAA, ATA, ARTBA, AASHTO, and others - to join in the opposition, once they realize the implications of this proposal.

I’ve written about VMT restrictions at greater length in my May column for Public Works Financing.

Suffice it to say that if the goal is to reduce CO2 or petroleum use, Congress should target those things directly. The idea that reducing Americans’ mobility is a sensible or cost-effective way to reduce greenhouse gases has no empirical support. Indeed, I challenge any proponent of the idea to come up with evidence that it would cost less than the $50/ton of CO2 removed ceiling as a benchmark for “affordable!
” greenhouse gas reduction measures. (My guess is that it would cost !
thousands of dollars per ton.)

Mobility is the purpose of transportation. Its benefits, both for individual well-being and the health of the economy, are enormous.

As we head into reauthorization, our watchword should be: “Reduce CO2, not mobility.”

Safeway Provides a Free Market Solution to Health Care Reform

June 15, 2009 in Blog

Last week, Steven A. Burd, the CEO of Safeway, provided an op-ed piece in The Wall Street Journal that clearly showed a free market solution to the run-away costs of heath care in this country. Safeway is self insured and by recognizing that 70% of health care costs are a result of behavior, the company has provided financial incentives for its employees to adopt healthier life styles.

Since 2005, the company has charged different health insurance premiums based on employees' participation and demonstration of decrease tobacco use, weight loss, blood pressure control, and cholesterol control. 

Health care costs have risen nationally by 38%, whereas Safeway has maintained costs at their 2005 level - essentially a 40% savings.

Green Building: Now With 50% More Global Warming!

June 12, 2009 in Blog

The essence of an eco-fad is something that sounds good, makes people feel like they are making a difference or provides political benefit for politicians, but either does little to help the environment or actually damages it.

Here's another perfect example.

Some new Seattle condominiums are selling their "greenness" by emphasizing the number of trees they save. One web site notes:

  • By using steel and concrete construction, [we] saved approx. 1,609 trees.
  • Cork remains the only tree whose bark can regenerate itself after harvest, leaving the tree unharmed.

This is one of the more humorous claims I've ever seen. Study after study demonstrates that using timber is far more environmentally sustainable than using energy-intensive resources like steel or concrete. A study from the Consortium for Research in Renewable Industrial Materials shows just how much more environmentally friendly timber is.

In their study of the Life Cycle Environmental Performance of Renewable Building Materials in the Context of Residential Construction, they note that a typical house using wood emits about two-thirds the CO2 during its lifecycle when compared to steel. When compared to wood, concrete emits 35 percent more CO2. Similar margins exist in air emissions and water emissions. Steel has five times the water emissions as wood.

What's more, wood is renewable. Concrete and steel don't re-grow. Trees do. While cork trees can continue to live after their bark is stripped (I'd be interested to see a building constructed with cork bark), trees are re-grown. Washington's forest ecosystems actually rely on a certain percentage of clearings and a number of animals, like deer or snowshoe hare, rely on young forests for forage.

It might be understandable that condominium marketing finds ways to spin environmental benefit, even if they end up highlighting "benefits" that are actually detrimental. Environmental activists, however, fall into the same trap.

Two years back I noted that environmental groups should support local timber harvests if they were serious about their commitment to the local timber that is emphasized by "green" building codes. A member of Green Everett responded that he would continue opposing timber harvests because  "Replanted young trees will take centuries to soak up the amount of carbon from the atmosphere that was stored in the original forest." Wrong. As scientists in British Columbia have shown, it takes about 10-15 years for a forest to re-absorb the amount of carbon lost in a harvest, not centuries. Harvesting trees at 45 years or older means that these forests absorb more carbon over their life, especially when compared to steel or concrete. Rather than looking at the science, he invented a statistic to support his reflexively anti-forestry position.

Forests have been at the center of environmental conflicts for so long in Washington that many are drawn into eco-fads that claim to protect trees. Unless we follow the science, however, eco-fads can often end up costing consumers more and harming the environment.

Supreme Court orders Federal Way investigative report released

June 12, 2009 in Blog

So much for the wheels of justice turning slowly. Less than a week after hearing oral arguments, the State Supreme Court today ordered release of the findings of an investigation of Federal Way Municipal Court Judge Michael Morgan. The News Tribune (party in the case) explains the controversy in this editorial:

The fight over an investigation into the Federal Way Municipal Court could have broad implications for the public’s right to know everywhere in Washington.

Judge Michael Morgan is suing his own city and The News Tribune in an effort to keep a potentially embarrassing report under wraps.

The report, written by a Seattle attorney hired by the city, followed an allegation that the municipal court was a hostile workplace. The city was planning to release the document last year to The News Tribune m>, until Morgan intervened.

On Tuesday, he pleaded his case to the state Supreme Court, where it became evident that he is willing to try any legal theory to keep the report out of the public eye.

Morgan argues first that the record belongs to municipal court and therefore is not subject to the Public Records Act that governs executive-branch agencies.

He then goes on to assert that even if the record were subject to the public disclosure law, that the city has several excuses at its disposal for denying public access, among them attorney client privilege and employee privacy.

Judge Morgan is up for re-election in the August 18 primary. As a result The News Tribune asked the Court to expedite its ruling.

Obliging, the Court said today in its order:

"On June 9, 2!
009, this Court . . . heard oral arguments on whether the City!
of Federal Way should be restrained from releasing the Stephson Report --- a report written by Amy Stephson on her investigation into a Federal Way Municipal Court employee's hostile work environment claim --- in response to a public records request from The News Tribune. Because of the nature of this action, the Court has unanimously determined that the report be released immediately, with an opinion addressing this issue and other issues in the case to follow. Now, therefore, IT IS ORDERED that the stay issued by the Court of Appeals on April 15, 2008, preventing the City of Federal Way from releasing the Stephson Report is vacated. This is an interlocutory order which is not subject to a motion for reconsideration."

Pending the full ruling by the Court, this is a great development for open government.

Rarely Heard Phrases: "Let's Follow Oregon's Jobs Policy"

June 12, 2009 in Blog

One of the most common themes from the environmental left these days is that "green" investments will lead us out of the current recession. Already, however, we are seeing that there is no relationship between these jobs and prosperity.

For instance, in January, the Governor claimed that Washington had created 47,000 "green" jobs, far surpassing the goal of 25,000 by 2020. Additionally, she claimed, the state would promote efforts to create another 2,900 such jobs during the next two years.

Have all of these jobs helped Washington's employment? Through April, Washington's unemployment rate of 9 percent was higher than the national average.

Perhaps, however, Washington hasn't done enough to create "green" jobs. What states are doing more?

Well, a recent study points to Oregon. Seattle environmental group Sightline notes on its blog that:

"Folks in Oregon have been trumpeting the good news all day today -- and rightly so; according to the Pew Charitable Trusts Oregon has the largest percentage of its jobs involved in the clean energy economy."

So, what does all of this "good news" mean for Oregon? They have the second highest unemployment rate in the nation at 12 percent. Only Michigan, which has unique problems, is worse. California, whose unemployment rate is 10.9 percent, is also among the green jobs leaders.

Frankly, there is a certain bit of silliness in this study. Idaho is also among the leaders. I don't remember environmental groups pointing to Idaho's policies as exemplary. What the study most likely means is that the definition of "green" jobs is amorphous and meaningless leading to statistics which are unenlightening.

All of this points out that creating "green" jobs doesn't guarantee anything. Indeed, labor leaders from Washington and Oregon comment today in the Seattle Times that there is more to a good job than being "green."

Green jobs are another eco-fad that politicians have latched onto in order to claim political credit even when the impact of the policy is nonexistent or even negative.

IRS: "Let's tax employees for their employer-provided cell phones"

June 12, 2009 in Blog

Once again the Internal Revenue Service is highlighting just how out of touch it can be when it comes to the convergence of technology and tax policy. Today's front page of the Wall Street Journal (subscription required, but you can see the synopsis for free) reports that the IRS is considering tightening regulations that consider employer-provided cell phones as a benefit to employees -- therefore making it a taxable benefit.

BBC: Free Broadband Won't Entice All

June 11, 2009 in Blog

Yesterday the BBC reported that a whopping 43% of adults in Britain who currently do not have Internet access would remain disconnected even if they were given a free PC and broadband connection.

Similarly, the Pew Internet & Life Project reported earlier this year in their own survey that 25% of adults in the U.S. don't use the Internet or email -- and that 1/3 of the adults who are not online would not go online even if the service were free. Also, 9% of all adults are still on a dial-up Internet connection.

Why does this matter? Because both the British and U.S. governments are pushing broadband expansion as "economic stimulus." The BBC article mentions the UK government's desire to get a minimum of 2Mbps connection to every UK home by 2012. T!
he Obama Administration and the FCC has yet to formulate a formal goal for broadband penetration, but the Federal stimulus package (ARRA) contains over $7 billion in funding for broadband expansion.

There is no denying the importance of efficient and affordable broadband connections. But I have concerns when government is taking charge to connect every household. Why? Because a) it is evident not everyone wants it, b) connecting every household in the nation to broadband is extremely expensive and would only happen with great taxpayer subsidization, and c) how will government push technology advancements without choosing winners and losers inside the industry itself?

The United States is a vast nation with millions of people living outside of urban and suburban areas. How does the FCC and the Obama Administration plan on connecting those living in remote!
areas or people who just don't want to take a ride on the!
information superhighway?

Paying for Health Care Reform

June 11, 2009 in Blog

Very little is being said about funding the massive health care reform now debated in Washington, D.C. The largest revenue generator would be eliminating the employer tax deduction for employee benefits. This idea is attributed to Senator McCain during the presidential campaign. President Obama opposed this concept then and only recently has put it back on the table.

What is lost in this discussion, however, is the fact that McCain tied the elimination of the employer tax deduction to a tax credit for individuals and families. In other words, McCain wasn't talking about a revenue source, he was talking about giving individuals more control over their health care dollars and decisions.

Employer tax deductions for employee health benefits has been around since WW II. It seems ludicrous that federal tax policy has been driving our health care policy for the past sixty years. Individuals, not employers or the government, should control their health care dollars.

State Auditor launches new website

June 11, 2009 in Blog

The State Auditor's Office launched a redesigned website today with many new features for citizens to stay informed on government accountability issues. As a frequent user of the past site, I'd like to congratulate the staff that worked on creating this vastly improved citizen resource!

According to the Auditor's press release:

“The redesigned site is another effort by our Office to promote government transparency and accountability,” Sonntag said. “The best way we can be accountable to citizens is to provide the results of our work in an easy-to-read and easy-to-find format.”

The site has new features for citizens, including electronic public records requests and a resource guide to help people find information they need from local, state and federal government agencies.

The site incorporat!
es RSS feeds so citizens can find out instantly when the Office posts reports or news to the site.

Governments and auditing professionals also have a new resource – an interactive best practices knowledge base through which auditors all over the world can share and search the best practices identified through audits.

Check out the Auditor's new and improved website here.

John Dillinger of the 21st Century: Carbon Credits

June 11, 2009 in Blog

News this morning from Australia reports that Australian Federal Police Agents will be required to investigate climate crimes in addition to their regular and more common duties that include, “investigating terrorist threats, drug syndicates, people trafficking, fraud and threats against children."

According to Australia’s Herald Sun:

“Interpol has warned the carbon market will be irresistible to criminal gangs because of the vast amounts of cash to be made. Possible rorts include under-reporting of carbon emissions by firms and bogus carbon offset schemes.”

The concern that a carbon market can be manipulated is not new.In his article, How Incentives to Cheat Undermine Cap-and-Trade, Todd Myers, Director of the Washington Policy Center’s Center for the Environment, wrote:

“Washington and a number of other states are setting up a system that creates an incentive for both the buyer and seller to keep quiet when the buyer doesn’t get what he paid for.

The cap-and-trade system Washington is helping develop as part of a regional effort would require companies that emit greenhouse gases to purchase carbon allocations from the government, or “offsets” offered by others, to bring them into compliance with the law, or pay a fine. The problem is that if the projects that create these offsets don’t protect the environment as promised, both buyer and seller are better off if nobody realizes it. Both have an incentive to collude, keeping the failure of the program a secret.

Such incentives to cheat demonstrate why a regional cap-and-trade system that allows carbon offsets is more likely to have increased enforcement costs, while failing to effectively reduce greenhouse gas emissions.”

Move over John Dillinger, there is a new “Public Enemy Number One!”