A Tribute to Our Veterans

I give thanks to our veterans who served our country this Memorial Day weekend. Protecting our freedoms has never been free, and many of our brave servicemen and women have paid dearly so that we can live free. Mere words can never express the gratitude which we owe them.

Many others - men, women and children - have not served during the Vietnam era, or any of our other wars or conflicts, for that matter. We who have been spared owe a terrific debt of gratitude for those who have.

Special Tribute To:

• My dad, Alfred Olson, who served in World War I in France – “Lafayette, We Remember”
• My wife’s dad, Gerald Ruckle, who served in World War II, in the awful island hopping in the Pacific. He suffered nightmares until the day he died on my birthday in 1971.
• My brother, Jim, who served as a medic during the Vietnam Era, fortunately all stateside
• Our son, Kirk, who served 10 years in the U.S. Navy, as a nuclear electrician
• My high school buddy, David Paavola, who served valiantly in Vietnam and lives to NOT talk about it.
• Our brave young men and women who currently voluntarily serve our country all around the world, preserving our safety and our freedoms. Few will forget the images we saw on 9-11-2001 and the days following, or forget that we still live in an unsafe world, where people are willing to martyr themselves to destroy our way of life.

Thank you!

For the story of my personal journey with regard to serving our country in the Armed Forces, see: A Tribute to Our Veterans

Public Employee Benefits? "That's where the money is."

The Center for Michigan article Special Report: Public worker benefits under scrutiny puts the issue of controlling the cost of public sector employee retirees’ health care costs in perspective. Unfortunately, any effort to deal with this gargantuan cost is labeled as “unfair” and “anti-people”.

“Why the clamor over health benefits for people once they’re no longer in the workforce?

Money. And lots of it.

The cost of pension benefits is astronomical for both the private and public sectors. . . .

Health (including dental and vision) benefits cost the Michigan Public School Employees Retirement System $795 million in fiscal year 2009, a 70 percent increase since the start of the decade.

At that rate, longtime Michigan education leader Tom White isn't far off when he says anticipated retiree health care costs for school employees could total $15 billion in the next 20 years.
And that's just for retirees. That doesn't cover medical expenses for current staffers, let alone pensions.

Total retiree expenses (including health care and pensions) is expected to comprise nearly 20 percent of school districts' payrolls next year, White says.”

This issue is similar to the question Willie Sutton, the famous bank robber was asked, “Why do you rob banks?”, and he replied, “That’s where the money is.”

Public employee wages and benefits make up the vast majority of government expense. Why look here for savings? Well, “That’s where the money is.” Couple that with the fact that public employee benefit costs far exceed the cost of comparable private sector employees.

Legislators serious about balancing the state budget do not look here because they do not like state employees or public school employees. On the contrary, they see them as providing essential public services.

The issue is not whether we like them; the issue is whether the costs have gotten out of control. When Michigan was a rich state, we could afford them. Now that we rank 37th among the states in per capita income, we no longer are a rich state, and we simply can’t afford them any longer.

I am sorry if this offends the public sector unions and their members. Many are my friends, teachers who I have seen work very hard to give their students the same opportunities that lifted me out of poverty. Many dug into their own pockets to provide extra classroom supplies. As individuals, I love the teachers. Collectively, however, through their unions, public employees are trying to protect the past, rather than look to the future our state could have.

Adopting the Michigan Turnaround Plan, or at least most of its provisions, can make Michigan a Top Ten state again. But, we must let go of the past and reposition the state to seize the opportunities the future will bring.

We can do it!

Dismal Forecasts and Possible Light on the Horizon

Sobering information was presented at last Monday's Leadership Summit sponsored by the Business Leaders for Michigan. The presentations may be downloaded from the Business Leaders for Michigan website, on the left margin. Further news from the Summit: The bell is tolling for Michigan Detroit News, Business leaders face Michigan's fiscal reality Detroit News and Budget experts predict economic dire straits Detroit Free Press.

The conclusion from the Summit was that as dismal as some of the forecasts are, there are plenty of ideas that collectively can turn the state around. All that is needed is the political will to make the decisions. (And a few more Republicans elected wouldn’t hurt either!)

A step in the right direction is the passage of Senate Bill 1227 which amends the Michigan Public Schools Employee Retirement System (MPSERS). The Senate Fiscal Agency estimates the plan will save $650 million in the first year and $3.1 billion over 10 years by increasing employee contributions and requiring that new employees are placed in a more cost-effective hybrid defined benefit/defined contribution retirement plan. Newly Passed Retirement Bill a Step in the Right Direction

Friday’s Revenue Estimating Conference brought mixed news:

“. . . [S]chool aid revenue is up $292 million above January estimates. General fund revenue, however, is down nearly $244 million below estimates because income and business tax revenue has come in lower than expected. Senate Fiscal Agency director Gary Olson estimates that will leave a shortfall of about $219 million in the general fund budget for the current fiscal year, which ends Sept. 30.” MI school cuts not expected in 2010-11

“The three fiscal experts also agreed that based on a slightly improving economy, the state will have $128 million more in the general fund and $352 million more in the school aid account for the budget year that starts Oct. 1 than they initially estimated in January.” State revenue fund deficit: $244M: Economists say solutions include borrowing, making cuts or using one-time federal money

The state's economic future is still in jeopardy, but here is a bit of optimism in the midst of gloom. Salute!

My Origins and How They Affect My View of Public Policy Issues

The recent death of my 98 year old mother created a flood of memories of my childhood. With this coinciding with my candidacy for State Representative, it represented a great opportunity to consider how those early impressions affect my thinking on a number of today’s state and national issues.

"What one sees depends on where one stands.” This surely has meaning to an exceptionally short or exceptionally tall person in the physical sense, but also has meaning in one’s outlook in life. That is, our past experiences color how we see the world today. Two people with different backgrounds can see the exact same thing and interpret the occurrence entirely differently.

Because of this, Peter Senge in “The Fifth Discipline” promotes dialogue to explore such differences in backgrounds and perceptions, with the goal to more often arrive at collaborative solutions to problems and issues. He also advises exploring our own perceptions and their origins, and scrutinizing them to see whether they square with reality.

This phenomenon of how external stimuli are filtered by our past experiences to create our current perceptions partly explains our political differences. In the hopes that my views can be better understood and thus make finding common ground more possible, I have given some thought to and hereby share My Origins and How They Affect My View of Public Policy Issues of the Importance of Education, the Welfare State and Poverty, Medical Care as a “Right”, Our “Dependency Culture” and Immigration.

Federal Budget: Spending and Taxing Revisited

A. A Preventable Crisis: Exploring Fiscal Crisis Scenarios for the United States is a sobering report regarding the rising National Debt and potential disastrous scenarios we face unless we tackle the problem soon. From the Committee for a Responsible Federal Budget, April 21, 2010.

B. The Man With the Plan is a long and relatively heavy article, but insightful and worth reading. The article is about Congressman Paul Ryan's "Roadmap for America's Future," a sweeping plan to stave off the nation's looming economic and fiscal collapse by changing the tax code, overhauling the health care system, and reforming the nation's major entitlement programs. Its debt-reducing claims aren't based on mere fantasy -- the Congressional Budget Office has determined that the plan would boost economic growth while making Medicare and Social Security solvent. And it accomplishes these aims without raising taxes or affecting the benefits of current retirees. From The American Spectator, April, 2010.

C. Value Added Tax Update: The VAT is exactly what I have been warning people about with the huge and growing deficits and the enormous national debt. (See National Value Added Tax Considered - Tax Increases Ahead , posted October 2, 2009) This invisible tax (imposed on each stage of production) must be opposed, as once in, can all too easily be increased. The VAT is a prescription that treats the symptom (deficit) rather than the cause (spending) of the disease (national debt).

“As the night follows the day, the value-added tax cometh.

With the passage of Obamacare, creating a vast new middle-class entitlement, a national sales tax of the kind near-universal in Europe is inevitable.” Health bill brings higher taxes, by Charles Krauthammer, from the Detroit News, April 8, 2010.

“Pay attention to the growing chatter about a value added tax. It's how we'll likely pay for our new health care entitlement, and the vehicle that will turn America into a colony of worker bees sweating and slaving to sustain Queen Government. . . .” Welfare state will demand a new VAT tax, from the Detroit News, April 22, 2010.

“. . . the liberals' lunge to maximize government's growth depends on quickly creating a crisis that can be called a threat to the entitlement menu. Then the public can be panicked into accepting the addition of a VAT to the existing menu of taxes.” Social programs have real costs, By George Will, from the Detroit News, April 30, 2010.

Nuclear Power Tidbits

A. Here is an interesting article from the Heritage Foundation about an attack on nuclear power under a hidden "environmental" label.

“The New York Department of Environmental Conservation rejected Indian Point’s request for a water-quality certificate, which the plant needs to keep operating one reactor running after 2013, and the other after 2015. . . . The State denied the certificate largely because Indian Point’s water-intake system, which draws water from the Hudson to cool the reactors, kills about 1 billion aquatic organisms annually — mostly eggs, larvae and plankton.”

Indian Point’s two nuclear reactors provide about a third of Gotham’s power (and nuclear plants overall generate 31 percent of electricity statewide). . . .

“[The regulators] are demanding a system that would require the construction of cooling towers — a process of up to 15 years. Thanks to various regulatory delays (see below), these wouldn’t be online until about 2030. The system would cost more than a billion dollars and take the power plant offline for a year. . . .

Bottom line: The Department of Environmental Conservation is basically imposing hurdles that Indian Point almost certainly can’t clear — which suggests what the real agenda is here. . . .

That is: The decision to deny Indian Point its water-quality certificate is a bid to close the plant down — possibly with an eye on then shuttering other nuclear plants with similar cooling systems across the state or even nationwide.

This isn’t state bureaucrats doing their job — it’s an ideologically-driven move that could cost New York a vital source of clean, affordable energy.” A Sneak Attack on NYC’s Electric Bill The Foundry: Conservative , April 8th, 2010.

B. George Will makes the case for the safety of nuclear power as compared with the coal industry. He also proposes that we recycle nuclear waste as is done safely in France.

“The 29 people killed last week in the West Virginia coal-mine explosion will soon be as forgotten by the nation as are the 362 miners who were killed in a 1907 explosion in that state, the worst mining disaster in American history. The costs of producing the coal that generates approximately half of America's electricity also include the hundreds of other miners who have suffered violent death in that dangerous profession, not to mention those who have suffered debilitating illnesses and premature death from ailments acquired toiling underground.

Which makes particularly pertinent the fact that the number of Americans killed by accidents in 55 years of generating electricity by nuclear power is: 0. That is the same number of Navy submariners and surface sailors injured during six decades of living in very close proximity to reactors. . . .” This Nuclear Option Is Nuclear, by George F. Will, April 9, 2010.

C. Safe disposal of nuclear waste (and Yucca Mountain being the best site) has been scientifically proven since at least 1984 when I served as a management consultant for the High Level Nuclear Waste Management Office in the WA DOE overseeing the US DOE research in selecting the nuclear waste repository. Recycling the waste is a better idea. It is time to get building the plants we will need to meet future electrical energy demand.

“The amount of used nuclear fuel currently in storage in this country is not an enormous amount by volume. It could be stacked on one football field to a height of ten feet, and this used nuclear fuel is being stored safely and securely in engineered water pools and dry casks at nuclear plant sites.

However, it is important to recognize that 95 percent of the nuclear used fuel could be recycled. In fact, countries that recycle their used fuel include France, Great Britain, Russia, Germany, Belgium and Japan. Instead of continuing to store 65,000 tons of used fuel at nuclear plant sites, we should turn the Yucca Mountain site into a national recycling center. Recycling, which is also known as reprocessing, reduces the volume of so-called nuclear waste by 97 percent.” U.S. needs nuclear waste recycling, by Gary Wolfram, from Detroit News editorials, May 5, 2010.

D. This National Center for Policy Analysis article says that “until the government meets its legal obligation to provide storage for spent nuclear fuel and high-level radioactive waste, only a few new nuclear reactors are likely to be built. . . .

With waste building up, Congress passed the 1982 Nuclear Waste Policy Act (amended in 1988) to ensure proper long-term storage. The act required the U.S. Department of Energy to develop and maintain an underground storage facility for nuclear waste.

The Energy Department determined that Yucca Mountain, Nevada, was a satisfactory storage place. However, despite scientific evidence that Yucca Mountain is safe, lawsuits and political wrangling have prevented use of the site as a storage facility.” Nuclear Power Development: Removing Roadblocks, March 29, 2010. See http://www.ncpa.org/pub/ba700 for full report.

Quick Hits Regarding Unions

Here are a few article qoutes and links that I think are instructive:

A. It is time for all Senators and State Representatives to do what is right, instead of being scared of or beholden to the government employee unions. This article chronicles several attempts to control costs that have been derailed by the public sector unions.

“Michigan has the ninth-most heavily unionized state and local government workforces among the states. In a recent article about the rise of public-sector unionism, New York professors Fred Siegel and Dan DiSalvo described how government employee unions are "bankrupting states and municipalities" because they "achieve influence on both sides of the bargaining table by making campaign contributions and organizing get-out-the-vote drives to elect politicians who then control the negotiations over their pay, benefits, and work rules.

In Michigan, one can add preventing the legislature from adopting reasonable public employee pay and pension reforms to that list.” Analysis: Government Employee Political Clout Obstructs Budget Reform, April 13, 2010

B. Here is some insight into what is happening with SEIU, one of the strongest government employee unions in the country and how they are extracting wealth from taxpayers and redistributing it to government workers.

“It is no coincidence that under Stern’s tenure the number of government union members surpassed the number of private sector union members for the first time in our nation’s history. There are two reasons for this: 1) Unions kill private sector jobs, and unionized companies earn profits 15% lower than those of comparable non-union firms. This makes unionized firms less competitive, which is why unionized manufacturing jobs fell 75% between 1977 and 2008, while non-union manufacturing INCREASED 6% over that same time. 2) Government union jobs face no competition. Public sector unionization has exploded in the past decade as leaders like Stern realized politics paid much better than the free market. Under Stern’s leadership, SEIU has become the nation’s second largest government union with over half of its membership drawing a paycheck on the taxpayers dime.” Morning Bell: Andy Stern’s America The Foundry: Conservative Policy News. April 13, 2010

C. More political payback from Obama for the unions' support in the 2008 elections. Elections to approve a new union would only require a majority of those voting, in contrast to prior law which required a majority of workers affected. Rule change aids union workers in airline, rail industries, from The Detroit News, May 11, 2010

D. Responsible contractor" provisions must be rejected, whether they be in federal law, state law or local municipality policies, as they drive up taxpayer costs, the last thing we need now with stretched public budgets. A "responsible contractor" policy allows bidders that provide higher pay and richer benefits for their workers to get an advantage in winning government contracts. In practice, the plan would favor firms whose workers are members of unions. Editorial: Fed contracts should favor best price, not unions, from the Detroit News, March 16, 2010

E. “The government class enjoys higher salaries, richer benefits and far better job security than the citizens they are supposed to be serving. . . . The 'public servants' have become the masters over taxpayers.” Good times still roll for government employees, from the Detroit Free Press .

F. We will not have a sustainable long-term budget plan without addressing public employee wage and benefit issues. The legislature, meanwhile, was not able to get the 2/3 vote needed in the State Senate to rescind the 3% raise for unionized state employees. With no Democrat support in the Senate, the Senate could not send the measure to the Democrat controlled House of Representatives, where it would have been even harder to get the necessary 2/3 vote. If we can’t even block pay raises to public sector union employees, is there hope to get cuts? State pay issue will get worse, from the Detroit News, April 2, 2010

G. “Public Labor Union claims of $700 million in concessions by state employees are a comparison of itself to itself. It pales in comparison to the sacrifices made by private sector taxpayers in Michigan that are being asked to foot the bill for their unrealistic benefit and pay levels. They have been shielded and protected from reality for far too long and it is a luxury that taxpayers in this state can no longer afford.” $700 Million in Concessions By State Workers? Really? Where Did That Number Come From? From the NFIB, March 18, 2010.

H. “State Sen. Nancy Cassis has introduced legislation in Lansing that would allow localities to set up what might be called “right-to-work zones. . . Among nearly all private-sector workers, labor relations are governed by federal law: the National Labor Relations Act. The NLRA is fairly exhaustive, and the courts have consistently interpreted it as “occupying the field” of private-sector labor relations, leaving very little room for states to act. But there’s one big exception carved out of federal labor law: States can regulate union membership and agency fees. This is where state right-to-work laws come into play.

“Right-to-work” prohibits unions and employers from signing contracts that force workers to join or financially support a union, leaving union membership and support to the conscience of individual workers.”

This local approach to Right-to-Work could be the means to bit by bit improve the image of the state as anti-business/anti-jobs, and make the state more competitive. Local Right-to-Work: Yes we can! Well, maybe. If we set it up just right..., October 28, 2009.

I. “Place the blame for the loss of the much-needed [Race to the Top] grants squarely on the Michigan Education Association. It sabotaged the state's application at every step. . . . But real change in Michigan's public schools will only come when parents and others concerned about the future of the state decide they've had enough of the Michigan Education Association's obstructionism. “ MEA's sabotage kept Michigan out of Race to Top finalists, From The Detroit News, March 7, 2010.

Reform of MPSERS Retirement System Necessary – But Only Wisely

Governor Granholm proposed changes to the Michigan Public School Employee Retirement System (MPSERS) in her budget proposal. With the contribution rate public schools and community colleges needing to pay going up to 19.41% for the coming school year, it is obvious that the system is unsustainable. Changes must be made to keep the program actuarially sound, and yet affordable by the education system.

Governor Granholm’s proposal was aimed to create cost savings to help balance the budget, but also contained a sweetener to entice long tenured employees to retire (and allow lower cost new employees to be hired) by raising the multiplier of 1.5% to 1.6%, for a 6.6% increase. The multiplier is multiplied by the number of service years credited to the employee. For example, with 30 years of service, and if the highest 3-year average salary were $60,000, at a multiplier of 1.5, the retirement payments would be 1.5% x 30 x $60,000 = $27,000 per year, while at 1.6% they would be $28,800.

The Senate chose not to include the sweetener in Senate Bill 1227, while adopting the bulk of the Governor’s proposal. Significant savings would result. On the other hand, the Democrat controlled House of Representatives amended the bill to send back to the Senate the bill increasing the sweetener from 1.5% to 1.7% or a 13.3% increase, plus a plethora of additional sweeteners.

The worst change made in the House is changing the lifetime health coverage to a constitutionally protected fringe benefit, which it is not now classified. The Michigan Capitol Confidential estimated the added burden to the State would be a new $25.9 Billion liability for the taxpayers.

When the State is having trouble adopting a balanced budget, does it make sense to be adding to the State’s costs and liabilities? Well, to the Michigan Education Association bankrolled and controlled House Democrats, apparently it does.

I say “NO, IT DOES NOT!”

With the bill thrown into a free conference committee, the Senate Republicans would be better off coming out with no bill than a poor one, just to get something agreed upon. With the state the state is in, we cannot afford to saddle the taxpayers with even more costs and liabilities.

Sources:

• Executive Proposed Reforms for the Michigan Public School Employee Retirement System (MPSERS), February, 17, 2010
• MEA Wounds Governor’s School Pension Reform, May 1, 2010
• Analysis: Senate GOP Fumbles, May Approve $25.9 Billion Taxpayer Liability to Satisfy MEA, May 10, 2010

The Ann Arbor Airport Expansion Is Not Justified Now

On March 20, 2010, I took a position opposing the expansion of the Ann Arbor Airport. My statement to the news media was as follows:

“I oppose the proposed expansion of the Ann Arbor Municipal Airport as described in the “Preferred Alternative” in the recent draft Environmental Assessment. The changes proposed neither greatly increase safety nor sufficiently enhance the operations of the airport to justify spending taxpayers’ money on the proposed changes now.

None of the stated objectives individually (or even collectively) is sufficient to justify the spending of public taxpayer dollars now. If State Road is widened in the future, then a shift of the runway to the SW would be appropriate, which would achieve objectives 2, 3 and 5.

But wait, “Isn’t this money free, that is, federal money from the Airport and Airway Trust Fund, and if we don’t spend it, someone else will?”

97.5% of the estimated $1.3 million cost would come from that fund, and 2.5% from the airport’s operating fund. However, we need to take a principled view of this “free” money. Everyone acting as if federal money is free is exactly what has gotten us into the U.S. Congressional “earmark” game, as everyone tries to “get their share”, to the point that the whole country suffers from budget deficits and an exploding national debt. If a project is not a good expenditure, it should not matter what the source of the funds are, as ultimately we all are paying the cost.

In this case, the shift of the runway 150’ SW may be needed in the future, but not now. The extension of the runway might never be justified. We ought not to spend these funds now.”

The full statement submitted to the Michigan Department of Transportation can be found here.

Several responses to the statement warranted the following Q and A:

Q: The project would be paid from user fees paid into the Airport and Airway Trust Fund. Why are we worried about the cost?

A: The fact that the cost of the project would come from the Airport and Airway Trust Fund actually creates less of an objection than ordinary Congressional earmarks in that the users of the airport contribute into the fund through their aviation fuel tax. Airplane owners can say that they have already paid for the project through their user fees. For me, the bottom line is that if a project does not generate more benefits than its cost, it does not make economic sense to do the project, no matter what the source is. The fact that the money is “free” does not increase the project's benefits nor decrease its cost.

Q: Doesn’t this endanger the survival of the airport?

A: I support the continued operation of the airport. Nowhere in this discussion have I heard that the proposed improvements are needed to ensure the survival of the airport. The proposed improvement would be nice, but not required by any current FAA regulation for continued operation. The Ann Arbor Municipal Airport serves a useful function, especially for student pilots (which I was one back in 1975 flying out of a grass strip near Mason, MI) which you really want to keep away from the busier airports. If you read the full analysis, you will also see that I would support the shift of the runway 150’ to the SW at such time as State Road is widened, but doing so now with no widening of State Road imminent would not be necessary now.

I would also work to receive funds from the Airport and Airway Trust Fund if the airport ever became in danger of closing due to lack of funds for necessary improvements. While little argument can be made that expansion of the airport would create measurable economic benefit, closure would clearly entail significant economic loss which should be avoided.

Q: If Ann Arbor does not get these funds, someone else will, so why not get our share?

A: That is an argument for every project in the United States, and for every earmark. My best response is to suggest you Google “tragedy of the commons”, which in short, means that when each individual pursues his or her own personal best interest in the use of a common resource, the common resource gets overused to the point that all lose. I know, this is a philosophical argument, but we need to start somewhere.

I understand the need for jobs in this area, and having taken 27 courses in economics over the course of my lifetime, I understand the “multiplier effect” of expenditures in an area (although one can argue just what the multiplier is, from 3 to whatever, depending on the “leakage” from the area economy). So, balancing a principles approach vs. a purely “what’s in it for me (or us)” get tough. On this issue, I have chosen the principled approach.

We will not agree on every issue in the future, but what I pledge is to be willing to take positions based on research of the facts and analyses, listen and consider alternate points of view.

Q: You say you are taking a “principled view” on this issue. Would your stance change if the amount of the project were $10 billion to be spent in our area, instead of the much smaller projected cost of $1.3 million for the proposed expansion?

A: This, like many questions that State Representatives face, is not a question subject to an easy “Yes” or “No” answer. Taking a principled view does not mean we should never take federal money. If the hypothetical case would show significant benefits in excess of the costs, then my answer might well be different. A $10 billion investment into our area would obviously result in a substantial positive economic impact for us, and would be extremely hard to not want.

What many people would miss in their thinking about the costs and benefits in this hypothetical (as well as most other well-meaning government programs) is that the taxes necessary to pay for these “free” projects also destroy as many jobs as they create, in very diffused secondary or indirect effects. Most “tax and spend” programs are zero sum games, in that there are winners and losers, with no net positive impact. The reason they are so popular among people (and their elected representatives) is that the winners are easily identified and vocal, while the losers are harder to identify because the costs are indirect, usually more in number, but each hurt only a little bit and therefore not as vocal.

The issues we face as a community today are often complex and not subject to easy answers. We need to have good dialogue on these important issues. “Politics” is, after all, conversations about important topics leading to ultimate decisions that affect virtually every aspect of our lives. (Although many people say it means "poly" (or many) and "ticks" (or many bloodsucking parasites). :)

I appreciate the opportunity to hear supporting and opposing views. Only by considering all points of view can we be sure we make decisions based on all the facts, rather than on uninformed, predisposed opinions.