Olympia Business Watch

Florida Passes No Frills Basic Health Coverage Free of Mandates

Florida's legislature just approved a "no frills" health care plan free of the state's 50 mandates which is estimated to cost people $150 a month.  The plan which will be introduced next year provides for primary care and catastrophic coverage for major illnesses. In Washington, similar legislation was tubed for various reasons.

Florida has 21 percent of its population uninsured--some 3.8 million people.  According to Gov. Charlie Crist (R) the reason is health insurance is too expensive.

Crist says government rules are imposed without regard to how much they cost and who will bear the burden.  In practice, Crist believes, the costs are disproportionately carried by lower-and-middle income workers who already have more limited insurance coverage as part of their compensation.  Most small businesses who struggle to provide health insurance coverage for the people they employ experience the very same problem as they deal with annual insurance premium increases.

"When prices rise because of mandates, the less affluent are often forced to make an all-or-nothing choice between Cadillac coverage, which involved just about everything or no insurance at all."

Thirteen states currently offer bare-bones policies.  According to the Wall Street Journal editorial today that while these plans are not a cure-all, they're a movement in the right direction.

Don C. Brunell, President (DonB@awb.org)

More Money Doesn't Correlate Into Better Education

According to the Rio Grande Foundation, academic performance in New Mexico's public schools remains stagnant despite a growing influx of state taxpayer dollars to improve K-12 schools. Foundation studies show that 42 percent of New Mexico's fourth-grade students failed to achieve even a basic level of proficiency in reading and more than half of eighth grade students, 54 percent, did not reach basic proficiency in science.

Over the last 20 years, New Mexico general fund spending, when adjusted for inflation, increased 34 percent and the average New Mexican is now paying an additional $319 for each student in public schools.   Moreover, state spending is supplemented by federal and local tax dollars and all told, per-pupil spending from all sources increased by nearly $2,700 between 1987 and 2005.

New Mexico's legislature is considering implementing a tax credit program similar to what Arizona and Florida implemented. 

Under the Florida program, which was overwhelmingly renewed by the legislature this year, companies can contribute to scholarship funds to provide tuition grants for low-income students to attend private schools. Since 2000, more than 40,000 Florida children from poor families attended private schools under the scholarship program and their test scores have dramatically improved.

In Arizona there is a 10-year-old tuition tax credit program under which individuals receive credits on their personal income tax for making donations to school tuition organizations which enable parents to send their children to private schools of their choice. Approximately 25,000 Arizona students receive scholarships and the tax credit program saved the state $18 million since its inception. 

While the Arizona program is being challenged in court by the American Civil Liberties Union (ACLU) over its constitutionality, the Heartland Institute believes the program will withstand the court challenge. In a similar case, the U.S. Supreme Court declared Cleveland's citywide school voucher program constitutional in 2002.

Iowa, Pennsylvania and Rhode Island  offer similar tax credits and while Washington has no personal or corporate income tax system, lawmakers ought to explore other avenues to encourage people to contributions to foundations so parents can have education choices for their children.  Like New Mexico, Washington lawmakers continue to add more money to our state's public schools which apparently is insufficient to stem a lawsuit by the Washington Education Association (WEA), Washington PTA and 28 school districts claiming the state legislature and governor are not living up to their state constitutional responsibility to adequately fund basic education.  Meanwhile, WEA helped tube a $13.2 million grant from the National Math and Science Institute (NMSI) to improve math and science teaching and student performance on advanced placement tests.

As many states and school districts are learning, just adding more and more money to the public schools doesn't correlate into better student learning.

Don C. Brunell, President (DonB@awb.org) 

The Politics of Climate Change

Last week, George Will used the listing of the polar bear as "threatened" as the basis for a sharp assessment of green politics. His column deservesto be read in its entirety, but here's a taste.

Today's "green left" is the old "red left" revised. Marx, a short-term pessimist but a long-term optimist, prophesied deepening class conflict but thought that history's violent dialectic would culminate in a revolution that would usher in material abundance and such spontaneous cooperation that the state would wither away.

The green left preaches pessimism: Ineluctable scarcities (of energy, food, animal habitat, humans' living space) will require a perpetual regime of comprehensive rationing. The green left understands that the direct route to government control of almost everything is to stigmatize, as a planetary menace, something involved in almost everything -- carbon.

Sound harsh? Consider K.C. Golden's op-ed in today's Seattle Times. He writes in support of the Climate Security Act (aka the Lieberman-Warner bill). The National Association of Manufacturers, with which AWB is associated, has published an analysis of the proposed legislation, concluding:

...if passed into law, [the bill] would have a profound economic impact on U.S. businesses, consumers and governments nationally and in all 50 states. A sampling of the national findings includes:

o Gross Domestic Product (GDP) losses of $151 billion to $210 billion in 2020 and $631 billion to $669 billion per year in 2030
o Employment losses of 1.2 million to 1.8 million jobs in 2020 and 3 million to 4 million jobs in 2030
o Household income losses of $739 to $2,927 per year in 2020 and $4,022 to $6,752 per year in 2030
o Electricity price increases of 28% to 33% by 2020 and 101% to 129% by 2030
o Gasoline price increases (per gallon) of 20% to 69% by 2020 and 77% to 145% by 2030

Golden, of course, doesn't reference those figures, but opines that the bill is, at best, just a good first step:

The vote on the Climate Security Act marks an important whistle-stop on the train to real climate solutions.

He favors

a full-throated roar of solutions, not a soft whimper of palliatives

Sounds ambitious. And how can you argue with logic like this?

The frequency of major floods like this winter's devastation in Southwest Washington has increased by 300 to 700 percent on every continent except Australia since the 1950s. No one of these events can be ascribed to global warming, but the trend is hardly a coincidence.

None of them can be ascribed to climate change, but all of them can be? "Hardly a coincidence" falls short of "settled science," doesn't it?

Oh well. Power Line has a nice post on just how complicated the proposed legislation is, with a link to the U.S. Chamber.

See also Eric Earling's post at Sound Politics on climate change politics in the gubernatorial race here.

More The good folks at Sightline Daily report that Robert Reich has joined the fray, talking about "climate fairness." Golden's piece also made "be fair" one of the three things national climate policy must do well.

As in tax debates, when the discussion turns to what's fair, beware. In the eyes of the beholder and all that.

2008 AWB Session Review and Voting Record

We've just posted the 2008 Legislative Review and Voting Record to our website. AWB members will soon receive them with the May/June issue of Washington Business, which is in the mail now. Take a minute to review how your legislators voted on business issues in 2007 and 2008.

In the Senate, Republican Senators Jim Honeyford and Linda Parlette scored 100 percent in 2008.

Top ranking House members with 2008 scores of 96 percent were Republican Representatives Larry Crouse, Joel Kretz and Lynn Schindler.

Gov. Chris Gregoire received a 2008 score of 29 percent.

More Evidence of Problems in Biofuel Industry

The News Tribune reports delays in planned expansion of the Imperium Renewables, Inc. biodiesel plant in Grays Harbor. The facility, commonly referred to as "the nation's largest" biodiesel plan, opened last year with much fanfare. Since then, the biodiesel world has done a 180. Here's the short take from the TNT.

mperium Renewables Inc. has delayed a $345 million initial public offering, put on hold its plans for four additional plants and trimmed its corporate staff. Its chief executive officer resigned without explanation.

The $78 million plant is still operating, though the price of soybean oil and other vegetable oils has jumped 100 percent to 200 percent in the past year. Hopes to buy much of the feedstock from Eastern Washington farmers haven’t blossomed and, instead, the plant is using mostly canola oil from Canada.

And while biodiesel is supposed to help reduce American’s dependence on foreign oil and cut greenhouse gas emissions, the domestic market has not materialized as expected. Virtually all of Imperium’s product is being shipped to Europe.

AWB president Don Brunell warned of problems back in 2006. Chris McCabe, AWB's governmental affairs director of environmental policy, also addressed the issue after the 2006 Legislature adopted a biodiesel mandate.

... Imperium Renewables will complete a refinery in Grays Harbor County by the end of 2007 that could produce as much as 100 million gallons of biodiesel per year. The plant is a boon to the economically challenged Aberdeen/Hoquiam area, but the plant would rely largely on resources not produced by Washington’s farmers. Instead, it will use Malaysian palm oil and soybean oil produced elsewhere in the United States. This contradicts the very intent of the legislation.

As for reducing our nation’s dependency on foreign oil, biodiesel and ethanol use would still not curb America’s appetite for oil. According to the U.S. Energy Information Association, oil exports are expected to increase 10 percent over the next 20 years as Americans use more oil but produce less in the United States.

As Brunell wrote last February, now even the Greens have soured on biofuels.

Todd Myers of the Washington Policy Center offers a thoughtful perspective in an op-ed in today's TNT. Perverse incentives (mandates and subsidies) have proven counterproductive, he writes, increasing food prices, inefficient agricultural practices, and adding to carbon emissions.

These problems are why many environmental activists who previously supported these programs, have turned against biofuel subsidies and mandates. Even the United Nations, home to the leading voice of concern about climate change, the Intergovernmental Panel on Climate Change, has condemned biofuels. Now it is time for Washington to rethink its approach on biofuels and switch away from this costly and ineffective path.

Unintended consequences or unbridled hubris? Perhaps the problems will engender a little caution as lawmakers consider their next steps in the climate change crusade.

Wall Street Journal Takes Notice of Washington's NMSI Debacle--Our State Takes A Called Strike Three!

How many times do you get an opportunity of a life time to hit a walk off homer to win the deciding game of the World Series?  Kids dream about it over and over, but few players ever have the chance to step into the batters box in this rare situation. 

Picture this, your team is behind by three runs and it is the bottom of the 9th inning in the 7th and deciding game of the Series.  The bases are loaded and there are two outs. The count is three balls, two strikes.  The hometown fans are going crazy and millions around the world are glued to their television sets.  The noise is unbearable and you are happy your third-base coach flashes you the signs rather than trying to yell instructions to you. A grand slam not only wins the game and championship, but paves your way to the Hall of Fame in Cooperstown! You can be the hero of all time--the World Series MVP!

You get the green light to swing away, but you simply watch a home-run pitch come straight across the middle of the plate and YOU are called out on strikes.  You end up the goat and booed because you didn't even take a cut at the pitch.  As much as you'd like to have another chance, the opportunity is gone forever.

Well, that is exactly what happened in Washington State when we watch the $13.2 million National Math and Science Institute (NMSI) vanish in thin air because the Washington Education Association (WEA) tubed a grant which would reward students and teachers for passing advanced placement tests in math and science and would help teachers teach those two subjects. It was a gift to seven states including Washington, but only our state stood there and took a CALLED STRIKE THREE! Even heavily unionized states like Connecticut and Massachusetts took the pitch and blasted a homer and as much as educators and political leaders want another chance at the grant, it is gone!

In Connecticut, Dr. Cam Vautour, a long-time public school superintendent, saw the NMSI grants as a once in a lifetime opportunity. He went to 10 local school districts and got nine of the school administrators and unions to take the grants.  "We kept the state teachers union out of it and simple told the local districts the NMSI grant was NOT negotiable.  It is take it or leave it!"  Nine of 10 local districts took the NMSI grants.  In Washington, we were ZERO FOR SEVEN!   

I've written editorials on the debacle. Many other newspapers have as well.  This morning, The Wall Street Journal  (WSJ) weighed in. WSJ was particularly biting in its criticism of WEA torpedoing the NMSI grant which it reports was started by Washington's own Bill and Melinda Gates.

"They (WEA) were willing to turn away free money for their teacher members rather than abide this kind of merit pay....and while the Washington union is spurning millions of dollars in grant money, it's also suing the state for the alleged inadequate funding of public schools.  Hmmm.  Could it be that union chiefs care more about protecting their monopoly than what students are learning?"

This is a golden missed opportunity and while our state is the goat, it is our children and our future that took a called "STRIKE THREE!"

Don C. Brunell, President (DonB@awb.org)

Analysis of New Jersey Health Insurance Provides Lessons for Washington

Grace-Marie Turner, nationally-recognized health care expert, considers a recent NCPA analysis of New Jersey's health insurance system. At the State Policy blog, Turner writes:

... a healthy 25-year-old male could purchase a policy for $960 a year in Kentucky but would pay about $5,880 in New Jersey.

Instead of community rating and guaranteed issue, New Jersey should allow insurers to charge risk-based premiums, write Herrick and O'Keefe [authors of the NCPA report]. In order to cover residents too poor to afford private coverage, the state could request a block grant for all federal Medicaid funds...

Washington lawmakers have long pushed community rating and guaranteed issue, restricting flexibility and driving up costs. As the NCPA concludes;

Mandated benefits and regulations have driven up the cost of health   insurance in New Jersey.

Here, too.

Wind Energy Overhyped on Campaign Trail?

The wind blows unimpeded across the plains of South Dakota, much as it does in Central and Eastern Washington, where wind power facilities have sprung up to harvest renewable energy. But few expect wind power to provide the bulk of the nation's electricity any time soon. So it was surprising to read this in the Sioux Falls Argus Leader.

The federal government needs to take responsibility for building transmission lines to encourage the development of wind power in South Dakota, Democratic presidential candidate Sen. Barack Obama said during an interview Friday with the Argus Leader.

Obama says wind power could provide up to half the nation's electricity needs, but federal tax incentives must be extended to keep that development in the United States.

Half the nation's electricity needs? Not according to the U.S. Energy Department, as reported in the Austin American-Stateman.

Wind energy provides only a tiny fraction of the nation's electricity today, but with technology advancements, the country could get 20 percent of its power from wind by 2030, the Energy Department reported Monday.

The report comes on the heels of a record-breaking year for the wind energy business — led by producers in Texas — and as the U.S. House prepares to consider extending tax credits for wind and other renewable energy companies.

Energy Department officials and industry representatives acknowledged that wind power has a long way to go before it becomes a major electricity source. Today, only about 1 percent of the nation's energy comes from wind power.

Oh well. It's better than this.

USA Still No. 1 in Global Competitiveness

That's according to the 20th edition of the IMD World Competitiveness Yearbook. Since eclipsing Japan in 1994, the US has enjoyed a long run at the top. But we may be vulnerable. This year, we narrowly escaped displacement by Singapore. More interesting is the analysis of how our current situation resembles and, more important, differs from that of Japan 20 years ago. Professor Stéphane Garelli, Director  and Suzanne Rosselet-McCauley, Deputy Director of IMD's World Competitiveness Center look at the parallels.

Japan’s competitiveness seemed unassailable, with a strong domination in economic dynamism, industrial efficiency and innovation. Then things went very wrong: the stock market went into reverse in 1989, land prices collapsed in 1992, credit cooperatives and regional banks came under attack in 1994, large banks teetered on the edge of bankruptcy in 1997 and a major credit crunch occurred in 1998. Does this ring a bell?

We're in a relatively stronger position.

On the other hand, the differences between the two economic societies are quite large. Apart from a few notable successes (Canon, Toyota, etc.), by the 1990s, much of Japanese industry was in a paralyzed state. The Japanese never practiced “creative destruction.” The US, because of its openness, resilience and entrepreneurship, always seems to find the means to reinvent itself in ways that Japan (and much of Europe) often lacks.

Here's the Business Week report on the study.

Dick's Simply Rules to Success in Business and Life

Last night, the Association of Washington Business (AWB) presented Richard J. Spady and his family with the Bruce Briggs Award for Community Service at its annual spring meeting in Spokane.  The Briggs Award honors one business person or family each year for exceptional commitment to their community.

Since 1954, Dick's Drive-In restaurants have been an icon in Seattle.  Dick Spady is the patriarch of the family.  He is a smart business man and just a good human being.  His philosophy and tradition is embedded in the business, its people and his family. 

Dick prepared four simply business philosophical points which describe his success.

1. The first responsibility is to the business itself.  Business is all about filling human needs.  If one can find a human need--any need--and fill it, one can have a business be it big or small.  That business must thrive--its income must be greater than its expenses.  In other words, it must make a profit.
2. A successful business must treat its employees and suppliers fairly.  At Dick's people working there start at $9.25 per hour and normally go to $9.75 after 90 days.  Employees working at least 24 hours a week receive full medical coverage and are eligible for $15,000 college scholarships after six months.
3. A business is responsible to its immediate community to help in whatever way it can. Dick's generosity is well documented in Seattle especially centered around young people.  Whenever, there is a disaster, Dick's kicks in.  It also encourages its customers through its "Change for Charity."
4. Finally, Dick Spady believes business owners should help build a sustainable community.  Helping churches, educational institutions and business owners and people connect to build a better society.

Dick Spady is an example of what makes our country and its free-market system the envy of the world. He represents the values Bruce Briggs brought to the Olympia area as a kind, generous and prosperous nursery owner.

As you look around Olympia, you see thousands of flowering shrubs which the Briggs family nurtured from clippings in their nursery. Bruce was like my grandfather who raised Colorado blue spruce seedlings and sold them around Butte and today when our family goes back to Montana, we see those majestic old growth spruce in yards, parks and along golf courses.  They are a legacy in their own right.

People like Bruce Briggs, Dick Spady and my grandfather create a legacy and that legacy is what gives Americans hope for the future.  It is based on the ability to create a product or service people need, sell it for a profit, and return those profits to growing the business, its people and our communities.

Congratulations, Dick and the Spady Family.

Don C. Brunell, President (DonB@awb.org)