Mike Stenhouse, CEO for the RI Center for Freedom and Prosperity will serve as a panelist at a public employee pension symposium in New York City this Friday.

“Advancing Liberty, Creating Change” is a City Symposium in New York City May 18, 2012 co-sponsored by the Mercatus Center and the Institute for Humane Studies.

 The symposium is a great opportunity to gather with other friends of liberty and discuss powerful ideas for overcoming today’s daunting challenges to freedom and prosperity.

The keynote speaker will be Scott Rasmussen, founder and president of Rasmussen Reports. He is a political analyst, author, speaker and, since 1994, an independent public opinion pollster.

For more information on the symposium, go to: http://nycsymposium.org/

The state of Rhode Island has earned yet another poor grade in a national study of an important business category, illustrating how the state makes it more difficult and costly for low-income earners to embark on new careers. The study, released last week by the Institute for Justice (1) , measures regulatory burdens in the form of licensing requirements and fees for “low-income” occupations.

According to the study, Rhode Island licenses 49 of the 102 “low-income” occupations, which ranks the Ocean State with the 13th most burdensome regulatory system in the nation in this category and the 2nd highest burden in New England.

“This burden is especially harmful to many people who would prefer to start new careers and earn paychecks instead of receiving welfare checks,” said Mike Stenhouse, CEO for the Rhode Island Center for Freedom and Prosperity. “In most cases, landing a job should simply entail proving to the employer that you’re talented and honest. In too many instances, Rhode Island applicants also have to also prove themselves worthy to the state, by conforming to its arbitrary standards. Who’s really in charge of our lives?” inquired Stenhouse.

An “occupational license” is government permission to work in a particular field. To earn the license, the aspiring worker must clear various hurdles: earn a certain degree or type of education, complete specialized training, pass an exam, attain a certain grade level, pay fees, and more.

In the 1950s, only one in 20 U.S. workers needed the government’s permission to pursue his or her chosen occupation. Today, that figure stands at almost one in three.

In Rhode Island, under the guise of public safety, the state government took $732,298 from taxpayers in FY 2011 to fund the Department of Business Regulation’s Commercial Licensing and Racing and Athletics program (2) . The program oversees the licensing and regulation of myriad professions and trades, slapping fees and regulations on thousands of Rhode Island employers and workers. In many cases, the Commercial Licensing program governs the requirements necessary for employment in a profession, inhibiting some Rhode Islanders from pursuing the careers of their choice.

The Commercial Licensing program regulates real estate agents and appraisers, auto body shops, salvage yards, glass installation, upholsterers, auctioneers, liquor wholesalers, breweries, wineries, sewer-line cleaners, mobile-home dealers, trailer park operators, and health club workers as well as other businesses and professions.

Supporters of the Commercial Licensing program may claim that the organization has a role in keeping customers safe. In truth, the program creates a disincentive for competent workers to begin new careers or for employers to hire them, while forcing companies to raise prices for consumers across the state.

On average, prospective workers and employers in Rhode Island pay $164 in fees, lose about 211 days — about seven months — to education and experience, and take one exam. A handful of Rhode Island occupations require excessive training requirements compared with other states. For example:

• Rhode Island has the most burdensome laws for HVAC contractors, requiring over five years of experience. The average across licensed states is less than two-and-a-half years.
• Rhode Island is one of only eight states to require that truck drivers and city/transit bus drivers possess driver’s licenses for a year or more prior to licensure. It is also one of 20 states with a similar requirement for school bus drivers, and Rhode Island’s is among the longest, at three years. Other states require only tests, fees, a minimum age and in some states a short course or training session for these occupations.

Some of Rhode Island’s requirements also appear overly burdensome compared to other occupations that the state licenses. For example, it takes only 37 days of training to become an emergency medical technician, but nearly twice that time to earn a manicurist license. Barbers, cosmetologists, skin-care specialists and massage therapists must undergo even more training.

Rhode Island could expand employment prospects for many job-seekers by reducing or removing overly burdensome or needless barriers to low- and moderate-income jobs. Per the Competitiveness Report Card release for Rhode Island earlier this year by the RI Center for Freedom & Prosperity, the Ocean State already grades an “F” for overall Business Climate, with five Fs and one C- in related subcategories. The D- grade in this subcategory would further deepen the problem.

The following table shows the study’s analysis for Rhode Island.

The study also reveals the arbitrary and irrational nature of licensure across the nation:

• Most of the 102 occupations are practiced somewhere without government permission and apparently without widespread harm: Only 15 are licensed in 40 states or more, and on average, the 102 occupations are licensed in just 22 states — fewer than half. This includes a number of occupations with no self-evident rationale for licensure, such as interior designer, shampooer, florist, home entertainment installer, and funeral attendant.
• Licensure burdens often vary considerably across states, calling into question the need for severe burdens. For instance, while 10 states require four months or more of training for manicurists, Alaska demands only about three days and Iowa about nine days.
• The difficulty of entering an occupation often does not line up with the public health or safety risk it poses. For example, 66 occupations have greater average licensure burdens than emergency medical technicians. The average cosmetologist spends 372 days in training; the average EMT only 33. Such inconsistencies give good reason to doubt that many licensing schemes are necessary. These inconsistencies may reflect not the relative public health and safety risks of occupations, but instead the lobbying prowess of practitioners in securing laws to shut out competition. State policymakers should review current and proposed licensure schemes to determine whether they truly serve the public or instead fence out competition. As millions of Americans struggle to find productive work, one of the quickest ways legislators could help would be to reduce or remove needless licensure burdens.

End Notes:

(1) “License to Work”, Institute for Justice , 2012, http://www.ij.org/images/pdf_folder/economic_liberty/occupational_licensing/licensetowork.pdf

(2) State of Rhode Island and Providence Plantations. “Budget Fiscal Year 2012.” p. 67

The Institute for Justice is a nonprofit, public interest law firm that litigates to secure economic liberty, school choice, private property rights, freedom of speech and other vital individual liberties and to restore constitutional limits on the power of government. Founded in 1991, IJ is the nation’s only libertarian public interest law firm, pursuing cutting edge litigation in the courts of law and in the court of public opinion on behalf of individuals whose most basic rights are denied by the government. The Institute’s strategic research program produces social science and policy research to inform public policy debates on issues central to IJ’s mission.

The full-time position will be tasked with developing and publishing investigative and human interest news stories having to do with public policy and should have a demonstrable related background.

 “We are pleased to be able to expand our journalism operation to include a dedicated journalist who will track down stories that may be of interest to Rhode Islanders”, said Mike Stenhouse, CEO, for the RI Center for Freedom.

The Ocean State Current, which can be viewed at www.OceanStateCurrent.com, is presently managed by Justin Katz, Managing Editor, who had previously founded AnchorRising.com. Interested journalists are asked to send their resume and an introductory letter to Mr. Katz at jkatz@oceanstatecurrent.com.

Imagine the Red Sox as a last place team having already lost many of its superstars to free-agency. Now imagine that the Red Sox decide to levy a tax on its superstar players like David Ortiz (Big Papi). After all, it’s not fair that Ortiz should get all those at-bats where he can hit home runs, RBIs, and otherwise produce results for the team. No, instead, Big Papi should give 9.9% of his at-bats to players on the bench, who don’t get to play as much. That would only be fair, right?

But consider if it would help or hurt the Red Sox if one of their top producers didn’t get as many at-bats, and instead, those at-bats went to a lower producing teammate? How would Red Sox Nation feel about that?

Then imagine it’s the end of the year, and Ortiz is a free-agent. Is he more likely to re-sign with the Red Sox, who will tax his at-bats by almost 10%, or might he decide to sign with the Yankees who will not tax him at all? Would the Red Sox, with their ”at-bats tax”, be able to attract other free-agents to replace him? Again, how would this help the Red Sox?

The same questions can be asked about our state’s “rich”: How is it good for Rhode Island if we limit the capacity of our top producers to invest in our economy? How is it good for us if we make it less attractive for our top businesses and individuals to remain in or move to our state?

Just like the Red Sox, Rhode Island should embrace and encourage our best performers, not give them reason to reduce productivity …  or even leave outright.

In sports, teams actually give bonuses to incentivize performance. In Rhode Island, those who defend the status quo want to to do the opposite. Imagine yourself as a “fan” of Rhode Island … how would you choose to treat our own Big Papis?

Quick Links: See the OPEN LETTER below, Automated Online Contact Form , Locally-Administered Municipal Pension Plans Evaluations, About the National Pension Task Force

April 19, 2012. Providence, RI – An “open letter” to Rhode Island municipal officials was released today by the national Task Force organized by the Rhode Island Center for Freedom and Prosperity to provide research and analysis on Rhode Island’s underfunded municipal retirement systems. The open letter is in response to the evaluations of locally administered pension plans recently submitted by each city and town.

The letter requests that City officials utilize the same realistic assumptions used in the private sector, when evaluating the true scope of their pension and OPEB liabilities and assets.

“It is obvious that our city’s are using un-realistic methods to determine the true scope of the problem”, said Mike Stenhouse, CEO for the RI Center for Freedom & Prosperity. “We urge every Rhode Islander to contact their city officials and demand that accurate accounting figures be put forward. How can a problem be solved if we don’t accurately quantify the problem?”

“We all remember the public outrage when Enron and other corporations were exposed for conducting fraudulent accounting practices … and rightly so. But why should we be any less concerned about accounting malpractice when it comes to our public pensions”, asked Rich Danker, member of the task force and project director for economics at American Principles Project, which is hosting the online form to contact municipal officials.

Citizens are asked to contact in their city and town officials in one of two ways:

1) Copy and paste the open letter below into a personalized email or letter to your own selected officials

2) Contact multiiple officials in multiple municipalities with a version of the same letter by utilizing an automated online contact form

OPEN LETTER

Dear Mayor / City Official,

“Truth in Numbers” was a key theme for the historic pension reforms that were implemented last fall in Rhode Island, and, as a concerned citizen, I am requesting that the same level of transparency be implemented when it comes to dealing with the pension and other post employment benefit (OPEB) problems facing our city. All public officials and citizens need to be made aware of the full extent of the liability as well as the true condition of our public finances in order to be able to make informed decisions about proposed solutions.

We all remember the public outrage when Enron and other corporations were exposed for conducting fraudulent accounting practices … and rightly so. But why should we be any less concerned about accounting malpractice when it comes to our public pensions?

We are all in this together. How our city handles this significant problem will impact each and every resident: from retirees, to municipal employees, to property and vehicle owners, to business owners, to students and to all those who receive city services.

In order to instill honesty in public finances the city should publish the data associated with its retirement system that is comparable to what is demanded of the private sector. This means:

1) The city’s pension liabilities must be valued according to a discount rate that matches the true market value of the debt. Even if this means conducting a second valuation of the liability based on this more realistic rate assumption.

2) An open accounting of the city’s OPEB liabilities

3) The city’s pension assets must be valued on a true market basis

4) The projected total benefit contributions expected to be borne by taxpayers for the next ten years must be based on these more realistic figures

We know the horror stories of how public pension debt may have been dramatically undervalued by state and municipal governments, by as much as a factor of three-to-one. The assets that are meant to support this debt are also not always reported according to market values. Therefore, taxpayers are in the dark about what they owe in terms of pension payouts to government workers and retirees. This impedes an honest discussion about spending and taxes that needs to take place for cities like ours to achieve good fiscal health.

We are asking you to enhance your relationship with your constituents and fulfill your fiduciary responsibility to us, the taxpayers, by promptly disclosing the true scope of the pension data requested above. We deserve nothing short of full “truth in numbers” when dealing with this critical matter of public finance.

Thank you for your service to our community,

Accuracy

Massachusetts STAMP

In May of 2009, the Beacon Hill Institute used its STAMP model to estimate that the proposed increase in the Massachusetts sales tax from 5.0% to 6.25% would increase sales tax revenue by $1.038 billion annually. The sales tax increase was implemented on August 1, 2009. The state collected $950 million in additional revenue in the first 12 months that the measure was in place. However, during the prior 12 months sales tax revenue was down $220 million from the previous year due to the recession. BHI used a logarithmic trend to estimate that sales tax revenue would have been down by an additional $140 million in the year to July 31, 2010. Thus we estimate that the sales tax increase actually generated $1.09 billion in that period. Thus the STAMP model projection was off by only 5.5% from the actual revenue change.

New York STAMP

STAMP has a strong reputation for accuracy. A quote from a March 14, 2003 article in The New York Sun illustrates the predictive accuracy of STAMP. In discussing the Manhattan Institute’s analysis of a property tax increase, the article states:

A fiscal policy analyst at the Manhattan Institute, E.J. McMahon, estimated that it would cost the city 62,000 jobs. He made his estimate based on the State Tax Analysis Modeling Program, which models interaction between economic and tax variables using historical data. It seems that the mayor’s own Office of Management and Budget may have reached similar conclusions to Mr. McMahon’s: Between the mayor’s November financial plan and the January adjustment – i.e. before and after the property tax increase – the administration has revised downward its estimate of the number of jobs in New York City in 2003 by 63,000.

Thus, as predicted by STAMP, the tax increase did cost the city approximately 62,000 jobs.

Effectiveness

Since 1991, BHI has constructed STAMP® models for 25 states and three local areas, including New York City. Over the past decade, researchers armed with STAMP® models have successfully fought back tax increases and advocated tax cuts. Here is a partial list of those efforts:

• Massachusetts, 2000. Voters rejected a graduated income tax.
• New Hampshire, 2001. The legislature rejected a proposal to introduce a sales tax.
• Florida, 2002. The legislature rejected an expansion of the sales tax.
• Alabama, 2003. Voters turned down a tax increase.
• Texas, 2005. The legislature rejected a payroll tax.
• Iowa, 2006. The legislature passed a bill to exclude the income tax for elderly taxpayers.
• Michigan, 2007. The legislature vote for and then repeal an expansion of the sales tax.
• Oregon, 2009. The legislature rejected a cap-and-trade regime for greenhouse gases.
• Washington, 2010. Voters reject the imposition of a state income tax.

Background: CGE MODELS

A computable general equilibrium (CGE) tax model is a computerized method of accounting for the economic effects of tax policy changes. A CGE model is specified in terms of supply and demand for each economic variable included in the model, where the quantity supplied or demanded of each variable depends on the price of each variable. Tax policy changes are shown to affect economic activity through their effects on the prices of outputs and of the factors of production (principally, labor and capital) that enter into those outputs.

A CGE model is in “equilibrium,” in the sense that supply is assumed to equal demand for the individual markets in the model. For this to be true, prices are allowed to adjust within the model (i.e., they are “endogenous”). For instance, if the demand for labor rises, while the supply remains unchanged, then the wage rate must rise to bring the labor market into equilibrium. A CGE model quantifies this effect.

Finally, a CGE model is numerically specified (“computable”), which is to say it incorporates parameters that are believed to be descriptive of the actual relationships between quantities and prices. It produces estimates of changes in quantities (such as employment, the capital stock, gross state product and personal consumption expenditures) that result from changes in prices (such as the price of labor or the cost of capital) that result from changes in tax policy (such as the substitution of an income tax for a sales tax).

Because it consists of a large number of interrelated equations STAMP requires the development and application of a sophisticated computer program for the solution of its equations.

CGE Model Construction

Data will be compiled on economic indicators, including data from published sources, and data generated or estimated where published data are not immediately available. Among the variables incorporated in STAMP, for which the model requires data, will be:

• household disposable incomes • private consumption expenditures
• household saving • various consumer price indexes
• labor supply • migration
• population • number of working and nonworking households
• trade with other states and countries • net capital inflow
• investment • capital stock
• gross investment by sector of destination • tax collections
• government income • government purchases of goods and services
• government savings • state personal income
• real gross state product.

Data will be stored in three computer files: a social accounting matrix, a capital coefficients matrix and a miscellaneous data file that has information including employment, tax incidence and transfer payments. The social accounting matrix will map the main economic and fiscal flows in the economy. The capital coefficient matrix will account for investments by industry.

Each run of the model will provide values for:

• gross domestic product by state (formerly gross state product) by expenditure component: consumption, gross investment, government purchases and net exports to the Rest of the World,
• aggregate state consumption, saving and net taxes,
• aggregate state income by type (wages and capital income),
• tax revenues and government expenditures by type,
• employment for the approximately 25 state industrial sectors,
• the private capital stock, by state sector (including government)
• gross investment by sector,
• net investment, by sector,
• wages and capital income by sector of origin and
• intersectoral flows of final and intermediate goods.

Parameters

STAMP will show how changes in local, state and federal tax law affect the above-enumerated economic variables. Tax-law changes will include changes in tax rates, changes in the tax base or changes in the amount of revenue collected from the tax. Among the changes that the model will be or can be equipped to analyze are:

• changes in existing state taxes (including taxes on sales and use, personal and corporate income, residential property and commercial property, and unemployment insurance taxes) and changes in federal taxes (including taxes on personal and corporate income);
• introduction of new taxes; and
• changes in various fees, excise taxes and other revenue sources.

Deliverables

BHI will provide the following:

• A report detailing the methodology of STAMP. The report will also include sections providing background information on the tax policy issues and detailed results from one simulation of state tax policy changes.

• A desktop software simulation program. BHI will provide an online program that can be used to conduct additional policy simulations. In preparing the report and simulation program, BHI will aim to provide a tool that permits it to provide analyses of and to make recommendations pertaining to a broad range of proposed tax and budget policy changes. It will further aim to assure that the underlying model and the results obtained satisfy the highest standards of rigor.

STAMP may be used to perform analyses of and to make recommendations pertaining to state tax and budget policy. The underlying databases and programs will remain the property of The Beacon Hill Institute. BHI retains the right to license the model to other users.

Best Effort Basis

In undertaking the project, BHI shall make every effort to obtain the data needed for completion of both phases. BHI cannot, however, guarantee the outcomes of the data collection and resulting model.

Project Team

The project team will consist of BHI staff, resident economists and graduate students:

• Project Director: Dr. David Tuerck, (Ph.D., University of Virginia) chairs the Economics Department at Suffolk University and is the Executive Director of The Beacon Hill Institute for Public Policy. He has published widely on economic policy issues and brings over three decades of experience as a working economist. An authority on public policy issues including state tax policy and analysis, welfare reform and the economics of regulation, he has made more than 100 television and radio appearances and has testified before the U.S. Senate Committee on Labor and Human Resources, Subcommittee on Children and Families, as well as various committees of the Massachusetts Legislature. He is past president of the North American Economics and Finance Association and a Heritage Foundation Policy Expert in economics.

• Project Manager: Paul Bachman, (M.S.I.E., Suffolk University) is the Director of Research at BHI. He manages the institute’s research projects, including the STAMP model and conducts research for other projects at the BHI. Mr. Bachman has authored research papers on state and national tax policy, state labor policy and annually produces the institute’s state revenue forecasts for Massachusetts and presents them to the Joint Legislative Committee for Ways and Means.

• Senior Economist, Jonathan Haughton is a project manager for the Beacon Hill Institute’s State Tax Analysis Modeling Program. He is an associate professor of economics at Suffolk University. A specialist in the areas of economic development, international trade and taxation, he has lectured, taught and conducted research in almost 20 countries. He received his BA (Mod.) in Economics from Trinity College, Dublin and his PhD in Economics from Harvard University.

• Research Economist: Michael Head (M.S.E.P., Suffolk University) is a Research Economist at BHI. Mr. Head has participated in several BHI studies including our recent study on the federal Davis Bacon Act.

• Other BHI staff consisting of Economists and Research Fellows in residence at BHI

About The Beacon Hill Institute:

The Beacon Hill Institute (BHI) is an independent, nonpartisan economic research organization located in the Department of Economics at Suffolk University in Boston, Massachusetts. Articles and references to BHI’s work have appeared in leading publications, including the Boston Globe, Wall Street Journal, Los Angeles Times Magazine, U.S. News & World Report, State Tax Notes and the Cato Journal. For the last seven years, BHI has been a leader in the development of econometric models for the analysis of state tax policy changes.

The Beacon Hill Institute has developed and built STAMP (State Tax Assessment Analysis Modeling Program) models for 25 states and LAMP (Local Area Assessment Modeling Program) models for 3 cities, including New York City.

The Institute has created a State and City Competitiveness Model and Index. The institute has conducted a comparative analysis of the competitiveness of the US States and 50 largest metropolitan statistical areas (MSAs) and published the results in the form of an annual ranking for the past three years. BHI produces reports for states and cities included in our ranking analyzing the strengths and weaknesses that contribute to its current competitive profile and the steps that need to be taken to improve the competitive posture.

The Institute has provided state revenue forecasts for the Massachusetts and presented them to the Massachusetts Joint Legislative Committee for Ways and Means for the fiscal years.

In addition to the scenario presented above, there are six major reasons why the NPV initiative should be of major concern for citizens and policymakers:

 1)     The Electoral College is a critical part of our constitutional checks and balances

 2)     The NPV proposal would remove any connection between a state’s voters and its electoral vote

 3)     The NPV compact would cause chaos if a state attempts to withdraw

 4)     Differing election standards make the NPV plan impractical and confusing

 5)     The National Popular Vote plan would not achieve its main goal

 6)     The National Popular Vote plan may be unconstitutional

The Electoral College is a critical part of our constitutional checks and balances

 The NPV plan would jettison a nearly 220-year-old system for electing our nation’s President. In doing so, it would reject one of the many carefully-crafted checks on majority rule designed by the Founding Fathers to safeguard minority rights. The Electoral College ensures that in order to be elected President, a candidate must appeal to not only a majority or even  plurality of voters, but also to voters from a geographical cross-section of the country. This system requires that candidates for the highest office in the land are not able to simply rely on highly energized, sympathetic, and homogenous voters concentrated in only a few densely-populated parts of the country.

 Instead, candidates must be able to appeal to multiple constituencies, building broad coalitions based on policies that address the needs and interests of Americans across the country. The plan would eliminate the need for candidates to build these coalitions in support of their candidacies, allowing them instead to focus on issues that appeal to and motivate their partisan base. The requirement that candidates appeal to voters across the country and not just in a handful of populous areas is an important check on the power of a narrowly-focused majority to trample the rights of the minority. The NPV scheme would eliminate this important check.

 The NPV proposal would remove any connection between a state’s voters and its electoral vote

 Another important deficiency with the plan is that is severs the intrinsic link between a state’s citizens and a state’s electoral votes. Instead of each state’s electoral votes being determined based on the interests of its citizens, a state’s electoral votes are allocated based on criteria having little, if anything, to do with the interests and preferences of its own citizens.

 Advocates of the NPV plan claim that states have not always relied on citizens’ votes to allocate their electoral votes. For example, early in American history several states gave the power to appoint electors directly to the state legislature. However, even then, the electors were appointed by official that were accountable to the state’s voters, and presumably were required to heed the interests and preferences of their citizens. The NPV compact breaks this vital connection, allowing for a state’s electoral votes to be awarded based on criteria wholly unrelated to the interests and preferences of the state’s citizens.

 For example, if the state legislature can award electoral votes based on election results outside of its jurisdiction, could the legislature also simply delegate the power to appoint electors to a special commission? Could they establish a system of choosing electors that sought to “correct” or “balance out” perceived inequities in the demographics of who votes and who does not? Could they substitute for the recorded totals of nationwide votes an estimate based on how the vote would have turned out if only other states had run “fair” elections?

 By cutting the link between a state’s voters and a state’s electoral votes, the NPV plan would open a Pandora’s Box of possibilities for alternate methods of awarding electoral votes.

 The NPV compact would cause chaos if a state attempts to withdraw

 Abandoning the Electoral College as it presently operated would also create significant opportunities for political gamesmanship as states may seek to obtain partisan advantage for one party or another by entering or leaving the compact (or threatening to do so), if it seems advantageous at any given moment.

 For example, a state legislature may conclude late in the election cycle that a candidate overwhelmingly favored by its voters is unlikely to win a majority or plurality nationwide, but might win the Presidency if the state were to revert to the traditional Electoral College. As state legislators are only accountable to their own voters, and not any sort of national majority, they may conclude it is in their best interest to abandon the NPV plan.

 The temptation to withdraw from the compact under such a scenario would be irresistible to some. One need only recall the partisan maneuvering regarding a Massachusetts U.S. Senate seat in 2004, when a legislature controlled by Democrats stripped a Republican governor of the power to appoint a replacement in the event that John Kerry won the presidency, and again in 2009 when the Democratic legislature restored the power to appoint a replacement to a Democratic governor when it appeared doing so would provide the U.S. Senate with a timely 60th vote for health care reform.

 Because the authority to determine how a state’s electors are appointed is given exclusively to the state legislature, it may well be that a state cannot delegate that power to a body not under its jurisdiction, i.e. the other 49 states. It is thus uncertain whether a state could legally withdraw from the compact even though NPV supporters claim that states cannot. Nevertheless, simply the attempt to do so would spur nationwide outrage and chaos, leading to court battles reminiscent of Bush v. Gore in the 2000 election.

 Differing election standards make the NPV plan impractical and confusing

Concerns over ballot fraud, controversial election management practices, and different recount processes would also create the potential for chaos and conflict. Under the present system, a specific instance of ballot fraud can only impact the state in which it occurs. Thus, only in a handful of states, where the vote is likely to be very close, can election fraud affect the outcome. While still undesirable, the damage is contained to a single state.

 However, under this plan, a fraudulently-cast ballot in any state doesn’t simply affect how that one state awards its electoral votes; it affects how a majority of electoral votes are cast. Thus, a fraudulently-cast ballot in Texas or New York, or rather thousands or even tens of thousands of fraudulently-cast ballots in these or other states, would help to determine how 270 Electoral College votes will be cast; not simply the electoral votes of the state in which the fraud occurred.

Similarly, each state has different sets of election laws, determining who may vote and what process they must follow. Practices such as expunging felons from voter rolls, same-day voter registration, voter identification, and countless other procedures differ from state to state, creating significant problems because not all voters will be treated the same way nationally.

 ConsiderUtahandWyoming, states which have dramatically different policies on voting by felons.Utahbars currently incarcerated felons from voting, but that ban is lifted once they are released.Wyoming, however, permanently bars felons from voting even after release.

 Under the Electoral College system, both states select their electors based on the election rules and standards they have chosen – in Utah, to include citizens with felony convictions in their past and in Wyoming to prohibit such citizens from participating.

But under the NPV plan, both states risk having their electoral votes allocated through processes that they have otherwise rejected:Utahmight see their electoral votes determined without the votes of citizens they believe should be allowed to vote, whileWyomingmight see their electoral votes cast based on the votes of released felons, in contrast to their laws.

 This example and countless others demonstrate how each state has determined, through 50 separate political processes responsive to each states’ citizens, who can and cannot vote and under what circumstances. The NPV compact would instead force states to allocate their electors based on an election process that is contrary to the wishes of that state’s residents.

It’s also important to note that the prospect of a recount would create confusion and outrage in the case of a close election. States have different standards and requirements for triggering recounts and it is not at all clear whether recounts would be held in all 50 states in the event of a close national vote, or only in those states in which the vote was close. If only “close” states go through a recount, voters in other states are not treated equally, and if the recount is nationwide, the nation will endure a crisis equivalent to fifty Florida 2000 recounts.

What if no state recount was automatically triggered because of close statewide vote, but the national vote was exceptionally close?

In addition, standards for recounts vary from state to state, and what is counted as a vote in one state may be disqualified in another. This sparked considerable controversy inFloridaduring the 2000 recount, when standards varied by county. The NPV plan would magnify the confusion and controversy over how to determine valid and invalid votes in a nationwide recount.

The National Popular Vote plan would not achieve its main goal

Finally, the belief of NPV advocates that abandoning the Electoral College will ensure candidates reach out to and address the concerns of more voters is simply not accurate.

 All elections require candidates to make strategic decisions about which voters to reach out to, in what manner, and how often. Because resources are scarce, especially candidates’ time, a presidential campaign under the NPV system would simply require candidates to allocate their scarce resources differently, perhaps choosing to ignore different voters than they do now but inevitably choosing to devote few if any resources to broad swaths of the public.

 In fact, the NPV plan is likely to increase candidates’ time spent on addressing the needs and issues of “base” voters while decreasing outreach to undecided and independent voters. Rather than appealing to a broad cross-section of voters in different states around the country, it would be in a candidate’s self-interest to appeal primarily to well-organized constituencies with large and motivated national memberships.

Candidates are also likely to spend more time in urban and suburban areas, where potential votes are far more plentiful. Whereas, under the current system, doing a Presidential campaign event in smaller, rural communities might make sense in order to garner enough votes to win a specific state’s electoral votes, under the NPV system, there is little reason for candidates to venture outside of densely-populated areas.

 NPV May Be Unconstitutional[ii]

Supporters of the NPV claim that because the Constitution gives state legislatures the power to determine how electors are chosen, the NPV is constitutional and requires no approval by Congress. Such claims, however, are specious. The NPV is unconstitutional because it would give a group of states with a majority of electoral votes “the power to overturn the explicit decision of the Framers against direct election. Since that power does not conform to the constitutional means of changing the original decisions of the framers, NPV could not be a legitimate innovation.”[iii]

 The Constitution’s Compact Clause provides that “No State shall, without the Consent of Congress…enter into any Agreement or Compact with another State.”[iv] The Founders created the Compact Clause because they feared that compacting states would threaten the supremacy of the federal government in matters of foreign affairs and relations among the states.[v] If states could make agreements among themselves, they could damage the nation’s federalist structure. Populist states, for example, cannot agree to have theirU.S. Senators vote to seat only one Senator from a less populous state.

The very purpose of this clause was to prevent a handful of states from combining to overturn an essential part of the constitutional design. The plain text makes it clear that all such state compacts must be approved by Congress.

By circumventing the checks and balances of Congress, the NPV would risk setting a precedent that states can validate non–congressionally approved compacts as a substitute for a constitutional amendment.

 Further Reading:

 A Critique of the National Popular Vote Plan for Electing the President, John Samples, Cato Institute, October 2008, available at: http://www.cato.org/pubs/pas/pa-622.pdf.

 Enlightened Democracy: the Case for the Electoral College, Tara Ross, Colonial Press, September 2005.

 The Importance of the Electoral College, Dr. George Grant, Vision Forum Ministries, August 2004.

 Securing Democracy: Why We Have an Electoral College, Professor Gary L. Gregg, Intercollegiate Studies Institute, January 2008.

The presentation was well-received by the 25 or so Board members on hand. Following Stenhouse’s presentation and a brief Q & A session, the two organizations agreed to seek to work more closely together on issues of common interest.

The Board presentation was requested following Stenhouse’s popular speech at the Anti-Meals Tax Rally held in March., which was organized by the RI Hospitality Association. See the entire speech, photos, and a post-event interview on the Dan Yorke show … by clicking here.

Special thanks to Executive Director, Dale Venturini, and Chairman, Ken Cusson, for inviting our Center to make its presentation.

Rhode Island has become ground zero for the public-employee pension crisis owing to the size of the unfunded pension liabilities the state and its cities face along with the sad story of the Central Falls bankruptcy.

But, unlike other states stuck in similar situations, the Ocean State has been proactive in making solid reforms to reduce this debt load. This month, Governor Chafee introduced a municipal pension reform plan that will enable localities to make cuts similar to what the state made with its reform late last year.

The centerpiece of the governor’s proposal is legislation to let the state’s independent pension plans suspend annual cost-of-living adjustments (COLAs). Eileen Norcross, senior research fellow with the Mercatus Center at George Mason University, and a member of the Rhode Island Center for Freedom and Prosperity’s national pension task force, finds that a 1 percent reduction in the COLA reduces the overall pension plan liability by 10 percent.

The magnitude of this cost savings is clear in the data on the task force’s transparency website, RIOpenGov.org? , which shows the difference in a 3 percent COLA and no COLA on projected future pension payouts to the top-earning retirees to be around $1.5 million. Cranston, for one, would cut its total projected future pension costs associated with its 421 public police and fire retirees from $579 million to $410 million with this change.

To qualify for the COLA suspension — which the state already enacted with its own reform legislation — local pension plans must be in a “critical status” of a funded level below 60 percent. As the governor’s plan notes, the most recent average reported funded level for the plans is just 40 percent.

But this reporting doesn’t tell the whole story of local pension debt. When these liabilities are calculated using private-sector valuation rather than assumed investment returns, the picture gets even worse.

Norcross and her Mercatus Center colleague Benjamin VanMetre in November 2011 calculated the average funded level to be 29 percent using Treasury bond yields. The unfunded liabilities belonging to the 36 Rhode Island cities with their own pension plans was therefore $6 billion rather than the reported $2.4 billion.

Utilizing private-sector valuation, every locality in Rhode Island would be funded below 60 percent, according to this same Mercatus report. We question, then, why there should even be a “critical status” test in the legislation.

This truth about local pension debt means that many of these municipalities will ultimately need to do more than suspend COLAs. They will need to consider adjusting benefit formulas, capping pension payments, or offering buyouts to pare down this debt. The alternative is to let the burden remain on taxpayers, either in the form of higher taxes, cuts in public services, or both. Those are particularly bad options in Rhode Island, where emigration to other states and towns is just a short trip away.

Governor Chafee should be commended for acting decisively on the public-pension crisis and introducing a plan to give the municipalities a head start on reform. It is now up to the legislature to quickly pass this into law. But the hard work will remain for those cities and towns deemed to be in “critical status.”

They should now calculate and disclosure their pension debt using market valuation so their citizens know full extent of the unfunded liabilities. Then they should come up with reform plans that use every legal option available to spare those citizens from having to prop up uncontrollable pension plans. Rhode Island will benefit when the state’s enablement of the COLA suspension is combined with the opportunity for its fiscally-distressed cities and town to design their own reform plans.

When adding the often-overlooked burden of other post employment benefits (OPEB), the public retirement crisis — decades in the making as benefits outstripped contributions through government overpromising — is the state and local finance issue of our time. It threatens foundations crucial to making government work, such as truthfulness about finances and fairness in allocating public services and benefits. When they get the state’s go-ahead to start reducing their pension obligations, Rhode Island’s cities and towns will have no excuse not to take it on.

Mike Stenhouse is CEO of the conservative Rhode Island Center for Freedom and Prosperity. Rich Danker is director of economics at American Principles in Action, a conservative Washington policy organization. Bot individuals are part of the RI Center for Freedom’s national task force on Pension Reform in the Ocean State.

Click here for image of the actual ProJo OpEd page …

See the full Policy Brief here …

Listen to the Mike Stenhouse Radio Interview w/ Dan Yorke 

Watch Mike Stenhouse’s speech here on YouTube …  

See the entire anti-meals tax speaking program here … 

 MEDIA COVERAGE:

RhodyBeat: http://rhodybeat.com/stories/Protesters-didnt-cry-over-spilled-tea,69209

PROJO: http://digital.olivesoftware.com/Olive/ODE/ProJo/LandingPage/LandingPage.aspx?href=VFBKLzIwMTIvMDMvMjI.&pageno=MTQ.&entity=QXIwMTQwMg..&view=ZW50aXR5

Woonsocket Call: http://www.woonsocketcall.com/node/4887