Spill Commission Should Lift Moratorium Which Has Cost Gulf Residents 12,000 Jobs and $2.1 Billion
With the spill off the Gulf largely contained, the Administration has launched a commission to investigate the root cause of the tragedy. Now that the heated emotions surrounding the spill are beginning to subside, the presidential commission has an enormous opportunity to objectively access the failures that led up to the spill—and just as importantly—to chart a sustainable, cheap, and safe course for America’s energy production.
Given the Administration’s antagonistic track record with America’s oil and natural gas producers, many Republican Members looked at the commission with weary eyes.
Addressing Interior Secretary Ken Salazar, Senator Barrasso (R-Wyo) highlighted many of these concerns:
“The president said he wanted an objective look. Well the commission’s background and expertise doesn’t really include an oil or a drilling expert, so people in the Gulf, people across the country are wondering about the administration’s goals. Is it really about making offshore energy exploration safer, or is it shutting down our offshore and American oil and gas.”
Unfortunately, the Obama Administration’s actions, thus far, can only lead to Senator Barrasso’s conclusion: the commission is about shutting down offshore production, not making it safer.
After imposing a moratorium on deep water production—despite the impeccable track record of nearly every energy explorer, except BP—the administration went even further and imposed a de facto moratorium on shallower waters. By revoking or halting the permitting process for shallow water production (including exploration in Alaska’s waters), the Administration successfully impeded all offshore oil and natural gas production. But at what cost?
A study by Joseph R. Mason of Louisiana State University found that the current 6 month moratorium will cost 12,000 American jobs and $2.1 billion lost economic activity:
The moratorium only exacerbates the woes those in the Gulf face. The commission would be wise to alleviate the government-induced economic problems and allow for continued, safe production.
Unions plan on spending big this election cycle
The AFL-CIO and the Service Employees International Union (SEIU) recently announced that they will spend a combined $88 million during this year’s election cycle. The American Federation of State, County and Municipal Employees (AFSCME) plans to spend about $50 million.
Organized labor’s enormous war chests are largely derived from member dues—money that is deducted from workers’ paychecks and sent directly to the “representing” union. While some states have enacted paycheck protection laws that allow a worker to decide whether or not his dues are used for political purposes, a majority of states give workers no choice in how their dues are spent.
The following figures illustrate labor’s donations during this year’s election cycle:
Nine out of the top ten PACs that contributed to Democratic candidates are run by labor unions
|Labor Union Political Action Committee||Amount Contributed|
|Intl Brotherhood of Electrical Workers||$2,323,373|
|Operating Engineers Union||$1,879,300|
|American Fedn of St/Cnty/Munic Employees||$1,749,000|
|Machinists/Aerospace Workers Union||$1,527,500|
|American Federation of Teachers||$1,482,250|
|International Assn of Fire Fighters||$1,355,500|
Four out of the top five organizations giving money to all 527s are labor unions
|Service Employees International Union||$10,764,321|
|United Food & Commercial Workers Union||$3,562,014|
|American Fedn of St/Cnty/Munic Employees||$2,382,873|
|Operating Engineers Union||$2,196,245|
Government Workers' Pensions are Underfunded by $3 Trillion
With state and local spending overruns having prompted officials to take a second look at current spending levels and future obligations, what has become apparent is that the current Ponzi-style, defined benefit pension system employed by many states poses the greatest threat to state austerity.
Looking to avoid politically difficult but necessary pension reform, states have been borrowing money, issuing bonds, estimating unreasonable returns, and cooking the books to hide their pension liabilities. Applying private-sector accounting practices to state pension funds reveals an enormous discrepancy between state’s publicized and actual liabilities.
Total underfunding of public employee pensions
- State and local government pension underfunding is $3.04 trillion
- Public school teachers’ pension underfunding totals about $933 billion
- California’s government pensions are underfunded by $535 billion—that’s six times its annual state budget; $35,000 for every household in the California; and more than the gross domestic product of Saudi Arabia, Sweden, Switzerland or Poland.
- State and local pension plans have only a 16 percent probability of being able to cover accrued benefit liabilities with current assets.
Government workers receive generous pensions, driving up costs
A key factor in the underfunding of government employee pensions is the inflated benefits promised to individual workers. On average, government workers with defined benefit plans are owed $2.85 in retirement benefits per hour worked compared to a private sector worker with a defined benefit pension plan who receives $0.41 in pension benefits per hour worked.
Reform is difficult and easily demonized
The biggest opponents to pension reform are the current recipients of generous pension benefits, many of which are union members. Over 35 percent of government workers are represented by a union compared to 7 percent of private sector workers. Furthermore, pension benefits are guaranteed by law or state constitution giving current government unions and workers little incentive to renegotiate their contracts.
States should shift to defined-contribution retirement plans
The current public pension structure is unsustainable and unfair. Switching to defined contribution pension plans—as a majority of the private sector businesses and a number of states have already done—would preserve worker’s retirements and alleviate the government’s burden on taxpayers.
ATR and a Broad Coalition of 27 Organizations Urge Congress to Oppose Oil and Gas Tax Hikes
Today, Americans for Tax Reform and a coalition of 27 national and state organizations sent a letter to Congress urging them to oppose all tax hikes on the oil and gas industry. Currently, some elected officials are looking to repeal the tax exemptions that oil and gas companies, along with all domestic manufacturers, are entitled to. “Oil companies are subject to many of the same tax laws as other domestic manufacturers, even though much of their operations occur overseas and incur foreign tax liabilities. In fact, the effective tax rate for oil and natural gas companies in 2009 was 48 percent compared to 28 percent for the rest of Standard and Poor’s industries, explaining why oil and gas companies paid a total of $13.3 billion in taxes last year.”
In this economic climate, Congress should be doing all it can to encourage investment and help create jobs in the U.S. “Employed by every domestic manufacturer and producer in the United States, the domestic jobs manufacturing deduction (section 199 of the I.R.C.) is a tax break given to American companies to encourage growth and investment in the U.S. A repeal of this provision for oil companies discourages multinational entities from creating jobs here, as opposed to abroad.”
ATR Will Keyvote Against H.R. 3534 (CLEAR Act) in Our Annual Congressional Scorecard
Americans for Tax Reform (ATR) urges you to oppose H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2010 (CLEAR Act), as it further taxes America’s oil and gas producers, removes the liability cap for offshore operators, implements onerous, arbitrary regulations, and creates over $30 billion in mandatory spending for the Land and Water Conservation Fund and the Historic Preservation Fund.
Oil and Natural Gas Tax
While legislation reacting to the oil spill off the Gulf of Mexico is entirely appropriate, the CLEAR Act is an unconcealed attempt to punish oil and gas producers. Imposing a tax of $2 per barrel of oil and 20 cents per million BTU of natural gas, the CLEAR Act will raise energy prices for American families, impel layoffs, and threaten America’s production of oil and natural gas—resources which power our economy. The CLEAR Act elicits memories from 1993 when the White House urged Members to vote for a BTU tax only to have President Clinton distance himself from his proposal.
Removal of the Liability Cap
Further undermining America’s energy security, the CLEAR Act’s removal of a liability cap will drastically increase insurance premiums on Gulf oil and gas production, threatening the very existence of deepwater operations. Insurance premiums would rise so fast that small and medium refiners would be priced out of nearly all Gulf production. This proposal is a clear sop to trial lawyers as it allows them to sue companies for exaggerated amounts.
Reforms are certainly needed to ensure that a spill of this magnitude never happens again, but new regulations must be targeted and precise. Unfortunately, the CLEAR Act’s regulations are not as investigators are yet to determine the exact cause of the oil spill. Instead of simply issuing more regulations, Congress should wait until the spill has been studied and enact thorough, preventative regulations.
Additionally, the $30 billion of mandatory spending for the Land and Water Conservation Fund and the Historic Preservation Fund is indicative of Congress’ spending problem. With government expenditures reaching a record 23 percent of GDP every year over the next decade, Congress should look to cut spending, not compound our mushrooming deficit.
For these and other reasons, ATR will be keyvoting against H.R 3534 (CLEAR Act) in our annual Congressional scorecard.
Organized Labor is the Antitesis of Worker Freedom
The following was published on DailyCaller on July 22, 2010
Public sector unions have a crucial interest in the expansion of government, spending, and by extension, interest in laws that inhibit the free movement of workers and capital. Organized labor has become the antithesis of worker freedom, throwing millions of dollars against candidates and ballot measures that foster choice and competition. More subliminally, public sector unions’ constant advocacy for bigger government crowds out the private sector and erodes states’ free market principles.
The Alliance for Worker Freedom (AWF) has released the Index of Worker Freedom: a National Report Card, a state-by-state comparative study that measures worker freedom through an analysis of policy implications as well as quantitative state data.
One of the key findings from this year’s Index was the negative correlation between a state’s union density and its level of worker freedom. States in the top quintile of worker freedom had levels of union density 41 percent lower than the national average and 55 percent lower than states in the bottom quintile.
This finding tells only part of the story. The composition of the labor movement has changed with more than 50 percent of all union members working for the government, many of them on the state level. This change in union demographics is an important lens by which to view state labor policy, especially in heavily unionized states. Only after a thorough understanding of public sector union’s influence and the policies for which they advocate does the Index’s negative correlation between a state’s union density and its level of worker freedom begin to make sense.
The largest public-sector unions are the National Education Association, the American Federation of Teachers, the American Federation of State, County, and Municipal Employees, and the Service Employees International Union. All together, these organizations have more than 7 million members and collect over $2 billion a year in member dues and fees.
With this enormous war chest, public-sector unions spent $165 million on campaigns and ballot measures in December of 2007 and 2008 drowning out pro-worker initiatives—like paycheck protection—and advocating for increased spending. This fact helps explain why of the fourteen states where over 50 percent of the public sector is unionized, only one ranked in the top 50 percent of this year’s Index. To make things worse, the policies that these public sector juggernauts push do more than help the public sector union: they actively harm local businesses and make the state less economically competitive.
Unions’ vested interest in opposing pro-worker laws manifests itself in one statistic: States that do not have collective bargaining laws have an average union membership rate of just 17 percent compared to the public sector unionization national average of 39 percent. While one’s right to association is at the core of individual freedom, unions benefit from policy that prohibits this choice, and small business owners, the true creators of jobs, get the short end of the stick.
While an understanding of these affronts on worker freedom initiatives is vital, they only tell part of the story. Public sector unions’ unfailing advocacy for more government spending, more programs, and higher taxes crowds out private sector opportunities. Showing a good return on political investment by unions, a study by Chris Edwards reveals that unionized public sector workers enjoy a 31-percent advantage in wages and a 68-percent advantage in benefits over non-unionized public sector workers. While this shows that unions have been successful, as unionized public sector employees get better and better contracts that far outpace private sector competition, the American taxpayer foots the bill, and the economies of the states that play host to these anticompetitive policies suffer.
Christopher Prandoni is the Executive Director of the Alliance for Worker Freedom, an affiliate of Americans for Tax Reform.
AWF Releases Quantitative State-by-State Report Card Examining Key Labor Issues
The Alliance for Worker Freedom (AWF) today released the Index of Worker Freedom: a National Report Card, a one-of-a-kind state-by-state comparative study that measures worker freedom through an analysis of policy implications as well as quantitative state data.
The Index found that workers and employers are fleeing states with low levels of worker freedom--generally heavily unionized states-- in favor of states with high levels of worker freedom. States ranked in the top quintile of worker freedom saw their population grow 50 percent faster than the national average and 150 percent faster than states in the bottom quintile between the 2008-2009 period.
“The positive correlation found between state population growth and worker freedom is proof that Americans are rejecting organized labor’s growth inhibiting policies; people are being drawn to states that foster choice and entrepreneurship,” said Christopher Prandoni, Executive Director of the Alliance for Worker Freedom.
Evaluated on a scale using fifteen key indicators, the Index’s average score was a C grade while the median score was a D. Thirteen states failed while Utah was the only state to earn an A, scoring a perfect fifteen.
“The Index of Worker Freedom is great tool for citizens, policy makers, and scholars interested in examining and comparing state labor policy,”Prandoni added. “Compiling data and statistics from a variety of different sources, the Index provides a comprehensive but easily understandable ‘snapshot’ of worker freedom in any given state.”
Premiums Higher in Federal Sector Compared to Private Sector
This article appeared on Forbes.com on July 22, 2010
With government spending impelling huge deficits, budget hawks are looking for ways to reduce the government's burden on taxpayers. One avenue to reduce government expenditures is to bring federal employee compensation in line with those in the private sector. A recent study by the Heritage Foundation's James Sherk shows that workers in comparable fields and occupations are paid disproportionately more when employed by the federal government.
- Federal employees' hourly wages are 22% more than workers in the private sector.
- Aligning federal workers' compensation with market rates would save taxpayers $47 billion a year.
- When combining wages and total benefits, federal employees earn 30% to 40% more than private-sector workers.
- Full-time federal employees can take 13 paid sick days a year along with all 10 days of national holidays.
- The average federal civilian employee earns on average $32,115 a year in non-cash compensation compared to a private sector employee who earns three times less, $9,882 annually.
Federal employees receive 22% more in employer payments toward their health care than their private sector counterparts.
Choosing Worker Freedom Over Unions
This story was published in the Washington Times on July 21st, 2010
States looking to increase their population, gross state product, revenue and prosperity should look to implement legislation that leaves their labor market free and flexible. The states that have been the most successful at luring new workers and businesses have been states with low levels of union density; union success is predicated on policy that hamstrings state economies and businesses.
In an effort to illuminate states' labor policies and the merits of federalism, the Alliance for Worker Freedom has released its second biennial report, the Index of Worker Freedom: A National Report Card. The index is a state-by-state comparative study that measures worker freedom through an analysis of policy implications as well as quantitative state data. The goal of the index is to provide readers with a 30,000-foot view of every state's labor climate.
One of the key findings from this year's index was the negative correlation between a state's union density and its level of worker freedom. States in the top quintile of worker freedom had levels of union density 41 percent lower than the national average and 55 percent lower than states in the bottom quintile.
Unsurprisingly, workers and employers are fleeing states with low levels of worker freedom - generally heavily unionized states - in favor of states with high levels of worker freedom. States ranked in the top quintile of worker freedom saw their populations grow 51 percent faster than the national average and 149 percent faster than states in the bottom quintile in the 2008-09 period. These two metrics - population growth and union density - are key indicators of a state's level of worker freedom.
The makeup of America's labor movement has changed, with more than 50 percent of all union members now working for the government at some level. With an increased incentive for bigger government, public unions' ability to influence sympathetic state legislatures has only been magnified by this demographic shift.
Paralleling the index's findings, Gallup found for the first time in more than 80 years that a majority of Americans now think "unions mostly hurt the economy." The inherent collectivist nature of unions, in which workers' preferences are secondary to union goals, and the means by which unions attain those ends, are increasingly frustrating Americans.
Unions' main weapon of coercion - the collective-bargaining agreement - enables a union to negotiate a worker's contract for him, negating his preferences regarding his wage, vacation time or retirement plan. In states that do not have right-to-work statutes, unions can mandate membership as a condition of employment. Once hired, workers are forced to contribute a percentage of their income to the union in the form of monthly dues. In a majority of states, unions are free to spend workers' dues on political candidates their members may oppose. Organized labor's defined-benefit pension plans punish workers who leave a union; they receive only a portion of what they contributed to the retirement account.
With the American people renouncing labor's oppressive practices, unions see the writing on the wall. Looking to trump state policy, the labor movement and its Democratic allies are attempting to enact federal legislation and leave every state looking like California or Rhode Island. Removing competition among states, as big labor intends to do, leaves workers little incentive to relocate, effectively reducing each states' worker freedom to the least common denominator.
These ominous words are no exaggeration. In the next few days, the Senate will vote on the House-passed version of the war supplemental appropriations bill, legislation that inexplicably includes language that forces states to bargain collectively with public-safety employees - police officers, firefighters and emergency personnel. In 2007, the House passed the union-coveted Employee Free Choice Act, which would coerce millions of workers into unions by effectively removing secret-ballot elections and would allow for a partial government arbitrator to decide union-employer disputes.
Earlier this year, President Obama issued Executive Order 13502, requiring all federal construction projects that cost more than $25 million to hire union shops. The executive order leaves the door open for state projects receiving federal funds to be subject to the same union-only mandates.
These policies handed down from Washington are the manifestation of big labor's plan to trample on states' rights and institute catchall legislation. The index looks to preserve the 10th Amendment by highlighting the benefits of a federalist system, a pro-worker system that necessitates competition and choice.
Christopher Prandoni is the executive director of the Alliance for Worker Freedom.
Politicians Serious About Deficit Should Tie Government Worker's Compensation to Market Wages
In order to pay for current incongruous spending levels, government spending is now 23% of GDP, Democrats have attempted to levy the American people with a slew of new taxes. More prominently, House Democrats, aided by a handful of Republicans, managed to pass HR 2454, commonly referred to as cap-and-tax, legislation that would have raised a family of four’s energy costs by $22,800 from 2012 to 2035 had the bill not stalled in the Senate.
Desperate for revenue, Democrats have implemented a number of obscure taxes. The healthcare “reform” bill which passed earlier this year and has been called by many on the Left the greatest legislative achievement in decades, taxes people who tan, veterans who purchase prostatic limbs, and families with special needs children, just to name a few.
Unimaginatively, Democrats have looked to tax their way out of the current $13 trillion spending-induced deficit. There is a better way, though--cut spending. ATR President Grover Norquist outlined a strategy to cut government spending when he testified before Congress last week.
A brief excerpt :
1. Resurrect the “Byrd Committee.” One good idea for spending restraint is to restore a committee that once existed (known in the post-War years as the “Byrd Committee”). First proposed in 1941, the committee was a bipartisan, joint committee with subpoena powers that focused only on making rescissions in federal spending. Its proposals enacted over $38 billion (in 2010 dollars) in savings. The fatal flaw in many other “fiscal commissions” is this lack of narrow focus – only when tax hikes are taken off the table are meaningful spending cuts made. Any recommendations from a committee modeled on the Byrd Committee should be privileged and require an up-or-down vote on the floor.
2. Give the public five days to read bills before a floor vote. Congress should enact a five-day waiting period before passing any new or amended legislation. This “cooling-off” time might have prevented $350 billion in President Bush’s TARP, $350 billion in President Obama’s TARP, over $500 billion in the so-called “stimulus” bill, $183 billion more in discretionary spending in FY 2010, and $794 billion in healthcare “reform.”
3. Put every federal transaction and contract online in real time. Every federal transaction, contract, and grant should be available online in real time. A spending transparency portal is an important tool that can be used to cut waste, locate inefficiencies and empower the people whose money is being spent, the taxpayers, as fiscal watchdogs. This was debuted successfully by Governor Rick Perry of Texas. Missouri, Kansas, and Oklahoma also have good transparency initiatives.
While many of these proposals are politically difficult, our elected leaders should grab low hanging fruit, federal worker compensation. The Wall Street Journal ran an article today titled Government Pay Bonus: Private employees toil 13½ months to earn what federal workers do in 12.
Instead of further taxing Americans, federal workers should be compensated with market wages and retirement packages. WSJ writes:
Even using all the standard controls—including race and gender, full- or part-time work, firm size, marital status, region, residence in a city or suburb, and more—the federal wage premium does not disappear. It stubbornly hovers around 12%...total compensation for federal workers may easily exceed $14,000 per year more than an otherwise similar private employee.
Since Americans are the ones paying these inflated salaries, federal worker compensation should be directly tied to market standards, not the whims of politicians. Bringing federal workers compensation inline with the private sector is an easy and sensible way to cut government spending. Politicians serious about the deficit should seize this opportunity to reduce government spending.