Monday, February 8, 2016

We can't tax ourselves into prosperity!

Weekly Opinion Editorial
SIMPLE ECONOMICS
by Steve Fair

     In 1960, the Democrat platform had a plank under the Fiscal Responsibility heading that said,  We believe, moreover, that except in periods of recession or national emergency, these needs can be met with a balanced budget, with no increase in present tax rates, and with some surplus for the gradual reduction of our national debt.   A lot has changed in 56 years.  The 2012 Democrat platform says Ds support, “making sure everyone pays their fair share of taxes.”  That means taxing more, especially those at the higher income levels.  Fact is, everyone will have to in order to pay for all the free stuff Sanders and Clinton are promising young people.  Here is a short economics lesson:
     First, there is no such thing as free.  It doesn’t exist.  It is impossible to get something for nothing.  Someone is paying the bill.  My economics professor in college said the only thing that was free was sunlight and air, everything else costs.  When Bernie Sanders promises free college tuition, he really means that hardworking Americans will foot the bill.  Somebody has to pay, even it isn’t you.  Professors don’t work for free.  The buildings cost money. It is categorially un-American to eat lunch and stick someone else with the bill, but that is exactly what Sanders and Clinton are proposing. 
     Second, businesses don’t pay taxes.  When politicians tell you they are going to tax business don’t believe it.  Businesses don’t absorb taxes; they can’t and stay in business.  They pass tax increases on to their customers in the form of price increases.  Consumers pay more for food, gasoline, drugs, and services because the business has to charge them to pay the taxes and to stay in business.
     Third, taxing productivity will reduce future productivity.  If the incentive to get ahead is taken away, then the most productive members of society will simply stop producing.  Why work hard to get ahead if the government is going to get the money.  Look no further than Europe where productivity has reached record lows.  In a socialist economy, everyone is equal- they are all poor- with few exceptions. 
     Fourth, the US national debt seriously weakens our nation.  When President Obama leaves office in a year, the national debt will be over $20 trillion dollars.  That is nearly double what it was eight years ago.  He can’t bear all the blame- Congress was involved too, but the reality is the country is broke and we keep spending.  Future generations of Americans will be paying for the reckless irresponsible spending of their forefathers.  In a self-governing system of government, the people can’t blame the elected officials.  They have to take responsibility and recognize they are the problem. 
     Congress should immediately pass a balanced budget amendment and cut spending to the bone.  Desperate times require desperate measures.  Nothing should be spared.  Entitlement spending should be first and by the way Social Security should never be called entitlement spending.  The money I have paid into Social Security has been stolen by the feds and spent on other things.  Madoff is in prison for doing the same thing.  Social Security is a glorified Ponzi scheme.
      The final statement in the 1960 Democrat Fiscal Responsibility heading read, “But man does not live by bread alone. A new Democratic Administration, like its predecessors, will once again look beyond material goals to the spiritual meaning of American society. “ Truer words were never spoken- man doesn’t live by bread alone- but government is never going to be the solution to our problems, economically or spiritually.  Until citizens of this great country rise up in mass and demand government live within their means and support serious cuts to governmental programs and services, we will continue down the road to economic destruction, but we will have free college tuition.
 

Monday, February 1, 2016

Are there any GENIUSES in Oklahoma?

Weekly Opinion Editorial
HARD TIMES REVEAL 
REAL LEADERSHIP!
by Steve Fair

     On Monday, the Oklahoma State legislature convened.  They will consider 921 filed bills on the House side and 704 on the Senate side.  In addition, there were a total of 73 Joint Resolutions filed between the two chambers.  The number of bills is down substantially on the House side- down by 25%, but slightly up in the Senate compared to last year.  This session will be a challenging one for legislators.  Tax revenue is down, due to the declining price of oil.  They face not only the prospect of cutting next year’s budget(a projected $1 billion dollar decline from last year), but trimming the current fiscal year budgets to match the projected shortfall.  But with every challenge comes an opportunity.  For years, legislators have campaigned about streamlining government and trimming waste.  There is no time like the present to put their money where their mouth is.  Governor Mary Fallin told The Oklahoman editorial board last week: “It's a time for us to be bold, to do things that we talk about doing, we need to do, but we just haven't done as a state.” Here are a few things that could/should include:
     First, every Oklahoma tax payer dollar should be justified by those spending it.  Instead of state agencies simply taking their current budget and adding/subtracting from that number, they should start at zero and justify why they are getting money.  It is called zero based budgeting(ZBB).  ZBB is a repeatable process that many companies use to review every dollar in a budget and build a culture of cost management.  In a recent survey of 138 CEOs of public traded companies, 21% were using ZBB in their companies.  The food industry has embraced ZBB with zeal.  Perhaps because food processors traditionally have to deal with lower profit margins than other industries.  ZBB forces everyone in an organization to watch costs.  Major food companies currently using ZBB include Nestle, Kellogg, and Con Agra. “ZBB provides people the opportunity to challenge how we have done things and drive activity out that isn’t benefiting the consumer,” Kellogg CEO John Bryant says.  In tough times, just appropriating money to an agency because it has always gotten the money isn’t good enough. 
      Second, there must be a commitment to finding waste in Oklahoma government.  There can’t be any sacred cows.  As late Labor Commissioner Mark Costello said, “The sacred cows belong next to the mashed potatoes.”  Every expenditure must be scrutinized.  No agency or appropriation can be left out.  That includes common and higher education, corrections, and transportation.  So how do we find the waste in government?  The Oklahoma constitution sets forth the duties of the elected office of the State Auditor & Inspector.  The State Auditor and Inspector is supposed to have access to all books, accounts, reports, vouchers and other records of information in any department, institution or agency.  When the legislature cuts the State Auditor’s budget more than other agencies, they are not serious about finding waste in government.  Proposals to expand the reach of the State Auditor’s office to include auditing tax credits has failed in the legislature.  Until the legislature commits to funding and empowering the office of State Auditor, their talk of finding waste in state government is sounding brass and tinkling cymbal.  How can you cut waste if you don’t fund the state’s watchdog agency?  It’s political double talk and is an example of cowardly leadership.
     Third, consolidation of services must be on the table.  That means consolidation of agencies, education administration and governmental functions.  No legislator or elected official likes to use the word consolidation.  That likely involves jobs being eliminated, or a school consolidation, but Oklahoma’s education model is from the 1950s with too many buildings and infrastructure.  Few businesses are operating in the same way they did 60 years ago, yet government hasn’t streamlined and changed their operating model.  The primary reason is that lawmakers lack the political will to take on the bureaucrats.
     Abigail Adams said, “These are the hard times in which a genius would wish to live. Great necessities call forth great leaders.”  The 2016 legislative session will soon reveal if Oklahoma has great leadership.
 

Monday, January 25, 2016

Include Recall in discussion on term limits!

Weekly Opinion Editorial
TERM LIMITS & RECALL
by Steve Fair

     Oklahoma State Senator Mike Schulz, (R-Altus), says he will file a Joint Resolution in the upcoming legislative session that would allow most statewide elected officials to serve up to 12 years in office if approved by Oklahoma voters.  Schulz says his proposal would not apply to the governor or the corporation commissioners.  Currently corporation commissioners can serve two terms of six years or a total of 12 years.  The changes would impact the offices of lieutenant governor, state auditor, attorney general, labor commissioner, insurance commissioner, school superintendent and treasurer.  Currently those office holders are limited to two terms or eight years.  Statewide term limits are the result of the passage of SQ #747, authored by then State Senator Randy Brogdon, (R-Owasso).  It was approved in 2010 by 70% of Oklahoma voters. 
     “Term limits are good public policy, and my proposal would ensure they stay in place, but for most statewide offices a longer term is going to allow for more efficient and effective administration,” said Schulz. “Twelve year term limits have worked for members of the Legislature, and they will be just as effective for statewide offices. A great deal of expertise and knowledge are required to effectively administer these offices, and sensibly extending these terms to up to 12 years is a reform that can produce a better state government.”
     A Joint Resolution need only be passed by both chambers to be sent to the vote of the people.  It does not require the governor’s signature.  Should term limits for statewide be revisited after just six years?  Yes, Schulz’s proposal certainly bears looking into for the following reasons:
     First, giving statewide 12 years would make Oklahoma term limits consistent.  Currently legislators can serve 12 years- corporation commissioners (also statewide officials) 12 years, but the other statewides only 8 years.  Oklahomans overwhelmingly support term limits- as they should- but term limits should be reasonable and result in better government.  Limiting a statewide official, who is doing a good job, to just two terms results in constant turnover that could lead to bureaucrats gaining control of the agency and bad government.   
     Second, statewide officials are administrators, not lawmakers.  What difference does that make?  In a legislative body, seniority matters, longevity matters.  Power and influence are directly related to how long a legislator has been in office.  That is why in Oklahoma some legislators served 30-40-50 years.  That is not necessarily the case with an administrator.  A good Attorney General or Treasurer can be evaluated on their body of work as the head of the agency.  If they do a bad job, they should be booted out.  If they do a good job, give them another term- up to 12 years.  That is the beauty of Schulz’s proposal; it doesn’t eliminate term limits- it just increases the number of terms an administrator can serve.
     Third, it might slow down or eliminate the ‘musical chairs’ game.  It is highly likely some of the current statewides, who are termed out, will run for another of the statewide offices.  That might not be the case if they had another term.  Under current law, a person can run for each of the ten statewide offices and serve two terms in each.  There is no cumulative term limit rule (which perhaps should be considered).  If the goal of term limits is to eliminate career politicians, it hasn’t worked.  The career pol just runs for another office where term limits don’t apply to their situation. 
     Fourth, recall should be part of the discussion.  The enactment of term limits in Oklahoma has revealed a significant gap.  If a termed-out elected official knows they are not going to face the voters again, they can stray off the reservation.  Last year, some lame duck legislators bragged they didn’t have to listen to people anymore about the National Popular Vote issue because they were termed-out.  If recall were an option, that wouldn’t be the case.  Term limits should always include a recall mechanism. 
     As a longtime advocate for term limits for all offices, I believe Schulz is onto something.  His proposal to simply give statewides an extra term and cap them at 12, not 8 years would likely result in better state government.  That is something every Oklahoman should want.  Just add Recall to the proposal.
 

Monday, January 18, 2016

SALES TAX WOULD BE HIGHEST IN THE COUNTRY!

Weekly Opinion Editorial
SALES TAX IS A BAD IDEA!
by Steve Fair

     In November, Oklahoma voters could vote on a proposal to impose a statewide one cent sales tax for common education.  Proponents, including OU President David Boren, say the tax would generate over $600 million annually that could be used to increase teacher pay and improve education in the Sooner state.  Oklahoma Council of Public Affairs, a conservative think tank, challenged the legality of the initiative petition saying it violated the ‘single subject’ provision in the state constitution.   After the 6-3 decision was handed down on Tuesday clearing the way for signature collection, Amber England, with Stand for Children Oklahoma said, “We are delighted that the State Supreme Court ruled in favor of sending the initiative petition forward. Oklahomans deserve the opportunity to solve the state’s education funding crisis by voting to pass this plan. We will begin immediately with the signature collection process and already have the staff and resources in place to get this measure on the ballot.”   President Boren said, “The court decision today is a great victory for the schoolchildren and the people of Oklahoma.”  OCPA said they plan to work in the coming months to prevent passage of the proposal.
     Stand for Children Oklahoma has to collect 123,000 signatures in the next 90 days to get Initiative Petition #403 on the November 2016 ballot.  There are 42,000 plus public school teachers in Oklahoma who each would get a $5,000 annual bump in salary should it pass, so that shouldn’t be a big hurdle. There are several reasons why this proposal is a bad idea.
     First, Oklahomans already pay enough sales tax.  According to taxfoundation.org, Oklahoma ranks #5 in the country in combined sales taxes (local &state) at an 8.66% rate.  If this proposal were approved, Oklahoma would have the highest sales tax rate in the nation at 9.66%.  Increasing the sales tax rate would hurt Oklahoma retailers near the state borders.  Consumers would drive across state lines to buy groceries, drugs and big ticket items in order to save 1%, hurting businesses and costing jobs in the state.  Consumers have a choice where they spend their money and in a tight economy, they will drive to save a buck.  They don’t have to just pay the toll like some politicos mistakenly believe- they will find a backroad.
     Second, there is no guarantee earmarking the one cent to education will improve education.  Oklahoma has thrown more and more money at education through the years and yet education test scores haven’t improved.  The answer to improving education is always more taxes or some scheme; remember pari-mutuel betting for horse racing?  How about liquor by the drink? The statewide lottery?   The campaigns to get those issues passed all were couched with the same tagline: ‘Do it for the Children.’  All or a portion of the monies from every one were going to solve the funding issues for education, but they never did.   According to statebudgetsolutions.org report, there is no direct correlation between increased funding and improved performance in public education, but that doesn’t stop them from asking for more money. 
     Third, this same sales tax scheme didn’t work in Arkansas.  In 1983, then Arkansas Governor Bill Clinton pushed for educational change, calling for teacher competency testing, some school consolidation and a one cent increase in state sales tax to be earmarked for education.  The General Assembly approved it, but according to Greg Kaza, an economist with Arkansas Policy Foundation, not much has changed in Arkansas since it passed.  Education test scores have remained about the same.  There hasn’t been the huge influx of jobs that were promised during the promotion of the tax.  In fact, the sales tax hurt grocery retailers so much that Clinton and the legislature removed most of the sales tax burden on food and drugs. The point person for increasing the sales tax was Hillary Clinton.   Jonathan Leaf with the Weekly Standard said Hillary was the key to the passage of the failed idea; “Hillary’s role was central. She helped develop the plan and her personal intervention and testimony before the assembly committee that held the bill up is what pushed it through.  She campaigned in each of the state’s 75 counties to drum up support for the bill. Later Hillary’s intense personal lobbying would guide the bill through the legislature’s main session, where it passed by one vote.”
     Oklahoma can ill afford to increase our sales tax rate to the highest in the country.  Education needs to start thinking outside the box and come up with some ideas to improve their performance that don’t involve increasing our taxes.