Olympia Business Watch

Statewide Candidate Video Series: Dino Rossi

As part of our Elections '08 Web Site, we are proud to bring the latest entry in our statewide candidate video series: gubernatorial candidate Dino Rossi.

In this series, we will ask candidates for statewide office three questions related to the position and how their approach to each question might impact Washington's economy and business climate. You can read the questions, watch the videos and then evaluate how the candidates responded. Here are the questions we posed to the candidates for governor:

1. A combination of market forces and public policies have driven prices up in recent years, eroding what had historically been a competitive advantage for energy-intensive industries in our state, including our major manufacturers. Climate change proposals aimed at curbing greenhouse gases will likely further increase energy costs, particularly as Initiative 937 does not count our clean, abundant hydro power as renewable for the purpose of meeting the initiative's limits. Additionally, limits on vehicle miles traveled will be particularly burdensome for commuting employees and employers with significant travel commitments.
   
   How will you work to achieve established climate change objectives without jeopardizing the competitive position of Washington industry?
   
   
   
2. Spurred in part by the Boeing 787 competition, the 2003 Legislature recognized that high unemployment insurance costs threatened many businesses here. A bipartisan coalition of lawmakers came together to pass comprehensive unemployment insurance (UI) reform that addressed the issues of tax equity, misconduct and voluntary quits. The federal government subsequently ruled that the system does not conform to federal guidelines. Further, the state Supreme Court recently nullified the voluntary quits language.
   
   How will you, as governor, work with business to reinstate these essential reforms in a way that brings us into federal conformance without increasing UI costs for employers?
   
   
   
3. A strong housing market coupled with peak construction spending fueled extraordinary state revenue growth over the past four years, during which time state spending rose significantly. Now, revenue growth has slowed and the nonpartisan Senate Ways and Means Committee projects that maintenance-level spending commitments will exceed available revenues by some $2.7 billion. Although the numbers will vary, it’s very likely that the next governor will face serious budget challenges.
   
   How will you, as governor, address the shortfall? Specifically, do you believe the budget can be balanced without tax increases?

Stay tuned to hear from other candidates for statewide office in the weeks ahead.

Cost of Energy Driving Inflation to 17-Year High

The lead story in National Association of Manufacturers (NAM) Economy Daily is about inflation reaching a 17-year high.  The government says consumer prices rose 0.8% in July, twice what economists expected and that brings the inflation rate to 5.6% for the last 12 months which is a 17-year high.

What's driving inflation?  The cost of energy is up more than 29% from last year and food prices at up 6% overall.

The Wall Street Journal believes slower inflation may already be on the way because of a combination of factors: 

• recent drop in oil prices and other commodities;
• strengthening of the U.S. dollar which lowers the price of imports; and,
• continued weakness in the U.S. economy, which suggests the Federal Reserve policy makers are unlikely to raise interest rates.

While there maybe signs of relief on the horizon, elected officials need to be careful about increasing taxes, putting more government mandates on employers and people, and must push forward to provide more domestic energy at the lowest possible rates.

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

America's Federal Debt is Bigger Than Life Itself---It is Beyond Imagination, Except it is REAL!

Shortly after the 2004 election, President Bush summoned the nation and Congress to address the Social Security crisis.  The indisputable numbers show what has become our nation's retirement system is headed for a major train wreck.  It is speeding on a course toward bankruptcy.  Rather than addressing the issue, Congress dodged the problem by going after the President's proposal to allow young people to begin to take part of their Social Security taxes and invest them in their own personal 401(k) programs. 

Unfortunately, the reforms died on the vine and nobody would talk about the problem----that is except  Rep. Paul Ryan (R-Wisconsin) who happened to be the ranking Republican on the House Budget Committee. Ryan says the federal government is headed for bankruptcy if it continues on its present course.

To back up this claim, Ryan cited an estimate by the non-partisan Government Accountability Office that says the government faces a $53-trillion shortfall to cover the costs of promised benefits in its entitlement programs.

“They say we are $53 trillion short of fulfilling the promises the government is making to the American people, in today’s dollars,” said Ryan.

Tje former Comptroller General of the United States, David Walker, has been saying much the same thing, making it his main priority since leaving office. 

Walker is traveling across the country speaking to whatever audience will listen to him.  On April 15, he spoke to the Washington Policy Center telling them America not only has a large deficit, but the real problems are off balance sheet obligations.  For example, the U.S. has over $44 TRILLION (that is 44 plus 12 zeros) in unfunded obligations to Medicare and Social Security alone---that's our country's retirement, safety net and health care system for retired citizens.  Add that to the current liabilities and it soon bloats to $53 TRILLION--and that was of Sept. 30, 2007.  And, if predictions are correct, our debt is now in the range of $55 to $56 TRILLION.

Walker figures $53 TRILLION will cost the average American household $455,000.  Since the average family income is $50,000, that is an implicit mortgage of over nine times their yearly income with no house to show as equity.  It is one heck of a credit card bill that our children, grandchildren, great grandchildren.......will have to pay!  What a legacy to leave the next generation, many of whom are simply struggling to pay off thousands in college loans.

Just how much is ONE TRILLION?   In ordinary time, one would have to look at the clock for 31,546 years for ONE TRILLION seconds to pass. Considering the last Ice Age was 11,000 years ago, the clock-watcher would see the formation of much of the Columbia River drainage considering the glacial dams broke and reformed Lake Missoula over a 55-year period between 13,000 and 15,000 years ago. For Biblical scholars, John Ussher pegs Creation at 4004 B.C.

Try multiplying these numbers by 55!  It is beyond imagination, but the federal obligations are REAL and should not be ignored.  Somehow, we all feel as though our "Good Old Uncle Sam" will make things right or we'll simply print enough money to get out of the jam.  Think again! 

And as long as they are at it, those who sought to muzzle the President by criticizing his proposal, ought to think about just how the heck they are going to address this problem.  The answer is not "Let Our Grandchildren Worry About It!"

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

Did a UFO Hit SFO?

Earlier this year, a Pasadena court of appeals cleared the way for San Francisco to mandate private sector employers with at least 20 employees to spend a minimum amount on health coverage for each worker or contribute to a city fund to help cover the uninsured.   It is a costly mandate and large employers are to pay at least $1.76 per hour for each worker's health care coverage.  A worker only need who 10 hours each week to qualify for coverage.

On Tuesday, San Francisco's Board of Supervisors mandated that employers with 20 or more people will be required to offer commuter benefits for which employers foot the bill.   

What is going on in SFO? Has a UFO hit City Hall?  Apparently, the costs of all of these new programs is alien to the city leaders.  Their attitude seems to be "Whatever Government Can't Afford, Mandate the Private Sector to Provide!"  Don't worry about the costs, people will blame business for high prices. Now I know why everything is so expensive in "San Fran-frisk-co."

The new ordinance gives employers three options:

• Set up a program under IRS Code 132(f) in which employees can make a pretax contribution to pay for mass transit.  The maximum monthly contribution set by the IRS for 2008 is $115 for a transit pass.
• Pay for employee's transportation expenses such as buying transit passes, for example.
• Set up a van-pooling program for employees.

The mayor has 10 days to decide whether to sign or veto the measure.  If he signs it, as expected, it will take effect around the first of the year.

While all of these ideas may sound good, why not let the employer and the people in the workplace work out transportation issues?  In a day of $4 gasoline and with skyrocketing parking costs in large cities, aren't employers wanting to keep good, dependable workers going to work out these problems?

Employers need flexibility and incentives, not rigidity and added costs.  If that isn't enough to convince you these mandates are wrong, think about the new bureaucracy at city hall and the army of new city transit auditors needed just to enforce this new mandate. 

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

Massachusetts Businesses Joining Health Care Coalition to Deal With Costs of Connector

Washington lawmakers need to take a real close look at what is happening in Massachusetts on health care.  With the cost over runs for the "Connector",  Massachusetts businesses are joining a national coalition to slow premium growth and ease the financial burden on employers. In Maine, citizens fed up with the cost overruns from the state's Dirigo Care gathered enough signatures to repeal the new taxes to prop up the state system. 

There is a warning for Washington from this new coalition. Employers were overwhelmed in Massachusetts by Romney Care--the nickname for the new state-run "Connector" program. While health care experts praise the new coalition, some feel it may be too late to change course, claims John R. Graham, director of health care at the Pacific Research Insitute. The government foot-hold is implanted. Devon Herrick, a senior fellow at the National Center for Policy Analysis, agreed, saying Massachusetts's current government-based plan is "destined to fail, because it has no cost control whatsoever."

Spending more on health care isn't the answer either. "Many U.S. residents wrongly equate higher spending with better care," said Charles Baker, CEO of Harvard Pilgrim Health Care, Massachusetts's second-largest health insurer. "The notion that the more you spend the better you are in health care is a giant urban myth."

"The answer is allowing consumers to choose a consumer-driven plan that meets their needs is better than forcing people into expensive plans with low cost-sharing, which the Commonwealth Connector Board favors, said Herrick, referring to the organization responsible for overseeing Massachusetts's government-based health insurance program.

Consumers and markets are responsible for meaningful and lasting change, not mandates and bigger government programs.

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

Will Seattle's Bag Fee Sack WA Jobs?

In the debate over paper or plastic grocery bags, have we forgotten about jobs?

(Specifically, jobs in Washington state?)

In today's News Tribune, columnist Peter Callaghan beautifully illustrates the complicated politics of what seems like a very simple question:

Some outside the center of the universe known as Seattle have likely chalked it up to those wacky lefties. But I wonder if the folks on Elliot Bay realize that in adopting a 20-cent fee on paper and plastic bags they are taking an economic shot at rural Washington, where lots of people get paid for growing trees and making paper.

The benefit of those jobs ripples through the economies in the Olympic Peninsula, in southwest Washington and parts of Eastern Washington. But those jobs are in decline, and many who live there feel under assault, not just from economic changes but from political ones.

The new ban in Seattle will take effect in January. Shoppers at grocery, drug and convenience stores will pay 20 cents for each "disposable" bag, whether it's paper or plastic.

AWB Files Legal Brief in Brown v. Owen Lawsuit

This afternoon, AWB filed an amicus curiae ("friend of the court") brief in Brown v. Owen, the lawsuit by Senator Majority Leader Lisa Brown challenging the constitutionality of the provision of Initiative 601 that requires a supermajority vote of both houses of the Legislature to raise taxes.  From the brief's intro:

AWB makes this short amicus submission to add an additional dimension to respondent’s separation of powers argument, contending that the petition raises essentially a political question that the court, as a matter of prudence and restraint, should decline to reach. Should the court reach the merits and grant the writ, it would in essence absolve a coordinate and co-equal branch of government from the difficult political and policy choices it must confront under RCW 43.135.035(1) by invalidating the statute under the same constitutional principle – majority rule – that the Legislature may itself use at any time (and has used in the past) to avoid the statute’s procedural requirements. The court should refrain from granting a single member of a single political caucus of a single chamber of the Legislature the extraordinary relief of striking down an enhanced procedural requirement the full Legislature has chosen for itself when the full Legislature could, by its own authority and through its own processes, loose the binds of that requirement at any time. 

The rest can be read here.  The Supreme Court takes up the case on September 9th.

(Cross-posted at WashACE.com)

               

Gregoire, Rossi to Debate at AWB Policy Summit

What do the gubernatorial candidates have to say about business and the economy in Washington state?

We'll find out on Thursday, Sept. 25 when Gov. Chris Gregoire and former Sen. Dino Rossi come face-to-face for a debate at the 19th Annual AWB Policy Summit at Semiahmoo. Both Gregoire and Rossi have confirmed their appearance at the event for a one-hour exchange of ideas before AWB members, the press and TVW. Seattle Times' Chief Political Reporter David Postman has agreed to moderate the exchange. Candidates will respond to questions collected from AWB members at the event and from AWB's regional meetings scheduled to take place around the state next month. (You can read more about those member-only events here.)

In addition to the governor's race, AWB will also feature debates earlier that same day between Doug Sutherland and Peter Goldmark (Lands Commissioner); Rob McKenna and John Ladenburg (Attorney General); and Terry Bergeson and Randy Dorn (OSPI).

AWB members are encouraged to make reservations now for what should be an excellent primer on the 2008 statewide election races. You can also check out more information on the statewide and legislative races (including a list of AWB-endorsed legislative candidates) on AWB's new elections Web site.

By George, McGovern is Right Again

George McGovern was never a darling of the conservatives.  He was a liberal anti-war activist in the Vietnam Era who lost the Presidential race in a landslide to Richard Nixon in 1972.

A number of years ago, McGovern, a long-time South Dakota member of Congress, departed from his traditional Democrat base and supported legal reforms.  After retiring for the U.S. Senate, McGovern bought a small country inn in New England and got whacked by a number of "slip and fall" frivolous lawsuits.  He even came to Seattle to address Association of Washington Business (AWB) about the need to change the legal system to halt abuses and compensate those who are truly injured.

Now, McGovern is leaving his traditional base again and says eliminating the secret ballot election in the workplace when unions want to organize a shop is a bad idea.  The so-called "Employee Free Choice Act" replaces the secret ballot with an open card check system where union organizers can circulate cards among workers, ask them to sign the cards allowing unions to organize, and watch over them while they decide whether or not to sign the organizing cards.   McGovern penned an opinion piece in today's Wall Street Journal. 

McGovern is correct and here are a couple of pertinent points he makes:

• "I am sad to say it (Employee Free Choice Act) runs counter to ideals that were once at the core of the labor movement.  Instead of providing a voice for the unheard, EFCA risks silencing those who speak."
• "Under EFCA, workers could lose the freedom to express their will in private, the right to make a decision without anyone peering over their shoulder, free from fear of reprisal."

Right now, union leaders can't get by President Bush, who would veto EFCA, and can't muster the 60 votes in the U.S. Senate to stop a filibuster.  In 2008, the elections for union leaders are as much about getting 60 Democrats elected in the U.S. Senate to invoke cloture and block a filibuster of the EFCA as they are getting Barack Obama elected President. 

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

WashACE Redbook Spreading Across America

When the Association of Washington Business partnered with the Washington Roundtable and Washington Research Council to form the Washington Alliance for a Competitive Economy (Wash ACE) in 1999, one of our first projects was the RED BOOK. 

The purpose of the RED BOOK is to provide a common set of measurements to look at the 50 states to see how they rank in competitiveness in a number of different ways such as population, taxes, tax burden, energy, UI, Workers Comp, education, infrastructure and some 50 different measurements.  It is updated each year and unveiled at our Annual Policy Summit (Sept. 24-26) at the Resort at Semiahmoo.

Since its inception, the RED BOOK has been adopted by the National Association of Manufacturers (NAM) and many states such as South Carolina, Nebraska and North Dakota.  Most recently, Oklahoma's state chamber adopted the book and started publishing its version.

The key benefit of the RED BOOK is it provides a set of common measurements in the debate over policy can occur.  The book was the brainchild of current Wash ACE coordinator, Richard S. Davis, and the research is done by the Washington Research Council.   Look for the 2009 edition in late September.

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