Topic: Government and Politics

Carpe Diem: Fix the Nevada ESA Funding Issue

In 2015, Nevada lawmakers passed the most ambitious educational choice law in the nation: a nearly universal education savings account (ESA) program. The program was scheduled to launch this year, but it immediately drew two separate lawsuits from opponents of educational choice. Last week, the Supreme Court of Nevada upheld the constitutionality of the ESAs, but ruled that the program was improperly funded. Choice opponents were quick to declare that the ESA program is dead, but as Tim Keller of the Institute for Justice noted, the program is only mostly dead, which means it is slightly alive.

Whether the program is fully revived depends entirely on the lawmakers who won plaudits for enacting it in the first place. On Monday, the legislature will meet in a special session to consider whether to subsidize the construction of a football stadium for the Raiders. Fixing the ESA funding would be a much more productive and beneficial use of their time. Sadly, Governor Brian Sandoval announced this week that ESAs would not be on the agenda:

Passage of Education Savings Accounts (ESAs) set a national precedent for school choice and symbolized a significant step toward education equality for every student. I recognize the magnitude of this sweeping policy measure and consider it a major component of the reform package ushered in during the last legislative session. Protecting this program is a top priority for me. There is simply not enough time to add it to next week’s Special Session with full confidence that a rushed outcome will pass constitutional muster.

Bucking the Protectionist Trend

In September, the UK government gave the green light for the construction of the Hinkley Point power plant through a French-Chinese consortium. The project—which has received wide international attention after being very nearly relegated to the protectionist dustbin—has been agreed to after much hemming and hawing. It has been mired in controversy mainly over security concerns related to foreign ownership, viewed by some as smacking of protectionism.

It is no secret that there has been a worrying trend toward protectionism in the global markets. The appetite for international trade agreements and foreign investment has been consistently listless. In the United States, and globally, some politicians have been banking on this by flaunting protectionist rhetoric in an effort to garner support. But while protectionism may win votes in the short-term, domestic economic growth will lose out in the long-term. Ultimately, politicizing the global economic rut will only make matters worse.

Debating Universal Coverage with Norwegian Minister of Education and Research Torbjørn Isaksen

In this Norwegian documentary, former Conservative Party MP and Norway’s current Minister of Education and Research Torbjørn (“Thor Bear”) Røe Isaksen and I debate which provides a better guarantee of access to health care – government or a market system?

Washingtonians may recognize the locale: Bob & Edith’s Diner in Arlington, Virginia. 

A rough translation/transcript of the documentary is available here.

A Report on Urban Policy from DC’s Front Lines

A law-abiding resident has few options to protect herself, if she is luckless enough to live in the Nation’s Capital. This truth became abundantly clear this weekend, when a neighborhood drunk attempted to break into my apartment way past either of our bedtimes. Once the situation resolved, I became hell-bent on determining how someone in my circumstances should respond in case next time they fared less agreeably.

A cursory web search of DC urban policy was less-than-encouraging: in the Nation’s Capital, urban policy so markedly favors the assailant that the victim’s best tool in the event of an emergency seems to be something like practicing jujitsu moves in the corner while she runs the clock out.

Conventionally speaking, there are two options when you are assaulted; lethal or nonlethal resistance. Guns fall into the former category, but leaving the matter of D.C.’s gun laws aside – as bewildering as they are – the perhaps more asinine urban policies are those surrounding non-lethal deterrents.

Non-lethal deterrents include 1) self defense sprays (mace or pepper spray) and 2) tasers. If you’re a woman, don’t own a gun, and would like to protect yourself, your best option is probably a good self-defense spray, followed by a taser or knife, except that in D.C. all of these options are either sometimes or always illegal.

For self-defense sprays, this is because certain sprays do not meet the requirements the City Council has set forth, requirements like containing approved chemicals from a list, being labeled with “clearly written instructions for use, and dated with [their] anticipated useful life.” (Apparently, in a life-or-death situation you should be thinking about whether you’ve labeled your itty bitty mace keychain’s expiration date properly.)

City council members are also rarefied luddites, insisting that your self defense spray use an aerosol-propelled mechanism, rather than the more effective, recent innovations that use a incendiary charge to direct the spray, like the Kimber Pepperblaster.*

Governors Fiscal Report

Most state governments are in an expansionary phase, as revenues are growing at a steady clip. Some governors are using the growing revenues to expand spending programs, while others are pursuing tax cuts and tax reforms.

That is the backdrop to this year’s 13th biennial fiscal report card on the governors, which Cato released today. It uses statistical data to grade the governors on their taxing and spending records since 2014—governors who have cut taxes and spending the most receive the highest grades, while those who have increased taxes and spending the most receive the lowest grades.

Five governors were awarded an “A”: Paul LePage of Maine, Pat McCrory of North Carolina, Rick Scott of Florida, Doug Ducey of Arizona, and Mike Pence of Indiana.

Ten governors were awarded an “F”: Robert Bentley of Alabama, Peter Shumlin of Vermont, Jerry Brown of California, David Ige of Hawaii, Dan Malloy of Connecticut, Dennis Daugaard of South Dakota, Brian Sandoval of Nevada, Kate Brown of Oregon, Jay Inslee of Washington, and Tom Wolf of Pennsylvania.

The report describes the record of each governor and discusses the outlook for state budgets. Medicaid costs are rising, and federal aid for this huge health program will likely be reduced in coming years. At the same time, many states have high levels of unfunded liabilities in their pension and retiree health plans.

Those factors will create pressure for states to raise taxes. Yet global economic competition demands that states improve their investment climates by cutting tax rates, particularly on businesses, entrepreneurs, and skilled workers.

News reports about the states often focus on policymaker efforts to balance their budgets. Balanced budgets are important, but policymakers should also be running their governments in a lean and frugal manner, reforming tax codes to spur growth, and generally expanding fiscal freedom for state residents.

Cato’s new report helps to sort out the governors who are moving in that direction from those who are not. An oped describing the main results is here.

Where Are All the State Tax Cuts?

If you follow state policy issues, you may think that there has been a lot of tax cutting recently because of high-profile reforms by Mike Pence, Sam Brownback, and a few other governors. I examine those reforms in Cato’s 13th biennial fiscal report card on the governors, released tomorrow.

However, a chart from NASBO shows that recent tax cutting across the 50 states has been limited and mainly offset by tax hiking. The chart shows net state revenue changes from legislated cuts/hikes since 1979. In 2017, for example, the dollar value of hikes is expected to outweigh cuts.

NASBO

That is a disappointing because there is usually a trend toward tax cutting during economic expansions, or at least there was during the 1990s. Recent tax cuts in places such as Florida, Indiana, Maine, New York, North Carolina, and Texas have been offset by hikes in places such as Alabama, Connecticut, Delaware, Nevada, Pennsylvania, and South Dakota.

What makes the current dearth of tax cuts odd is that state legislatures have become more Republican since the 1970s. The Wall Street Journal had a chart yesterday showing that the share of state legislature seats held by the GOP has risen from 40 percent in the 1980s to 55 percent today.  

Republicans are supposed to be the tax-cutting party. That is the core of their “brand.” So why isn’t there more tax-cutting? One reason is that some Republican governors start siding with special interests over taxpayer interests after they have been in office a while. They forget that they are supposed to work for all the citizens, not just the ones lobbying for more government spending. Nevada’s Governor Brian Sandoval seems to be a good example, as I discuss in the report tomorrow.

Another problem is that in some state legislatures that are nominally Republican, some of the members have chosen that label only because it was advantageous for election and reelection. In South Carolina, Governor Mark Sanford and then Nikki Haley long pursued major tax reforms, but to little avail.

A final problem is that the Democratic Party has moved to the left on fiscal issues. Andrew Cuomo of New York is about the only Democratic governor in recent years who has been amenable to substantial tax reductions.

Learn what grades Cuomo, Haley, Sandoval, and the others earn on their recent fiscal performance in tomorrow’s report.

The Answer Is a New Government Program. What’s the Question?

The Sunday Washington Post had a long, hagiographic article about Senator Mark Warner’s critique about how capitalism “isn’t working” for the masses and his heroic attempts to fix it that left me thinking I’m in an alternate reality.

The problem he sees is that the growing tendency of people to change jobs throughout their career has left people unprepared for retirement, and that we need to do more to make sure that workers have some sort of safety net to provide them with health care and income in their golden years.

That this was largely addressed decades ago with the introduction of Social Security and Medicare was completely missing from the article. Social Security is an incredibly progressive retirement program that provides everyone with a work history of at least ten years with a decent-sized benefit that doesn’t go up all that much for wealthier people who contributed much more. And Medicare is the largest government program there is, covering hospitalization costs, basic health costs and drug benefits for tens of millions of senior citizens. The government spends about $1.5 trillion each year on these two programs, and they make up the majority of our federal budget. There’s also plenty of evidence that they prevent seniors from indigence: the poverty rate for seniors is well below that of other age groups. 

The current Administration also added an expensive entitlement that makes it much easier for people under age 65 who do not receive health insurance to obtain it, along with a healthy subsidy. For a family of four in Washington DC there is still a subsidy for an income of $80,000, which is well above the mean household income, and Medicaid completely covers those who don’t make enough money to buy their own health insurance. What more can we possibly do to make health insurance more affordable for the working poor?