PERSPECTIVE January 2014
OKLAHOMA COUNCIL OF PUBLIC AFFAIRS
Does Per-Pupil Spending Matter?
In Case You Missed It OCPA distinguished fellow Andrew Spiropoulos says that in 2014 Oklahoma needs “a tax cut that, without gimmicks or triggers, reduces the highest rate to less than 5 percent.” http://tinyurl.com/l7mk9v6
More people believe in Bigfoot than that Obamacare will lower healthcare costs.
A liberal think tank used drag queens to promote Obamacare. http://t.co/DRUgtim6C7
http://tinyurl.com/y9fpee9
New York City’s new mayor says liberalism is sweeping the nation, and that pre-K and early childhood education are key to the project.
E-cigarette bans are harmful to public health. http://t.co/LzO5VoB7AD
http://t.co/gwJsfRtM1z
http://t.co/h5YSLziZtR
OCPA’s pension-reform plan shows how to pay down unfunded liabilities while establishing a modern retirement system.
Do OU and UCO donors realize their presidents are this radical on environmental issues, and this hostile to fossil fuels?
A scholar at the liberal Brookings Institution says a new study is “devastating” for universalpreschool advocates.
Family breakdown drags down economic growth. http://t.co/Uhsx7YnndV
Why are liberal men unhappy?
http://t.co/g8fWF2NjWt
http://t.co/PTIODj2woI
http://t.co/r300lVcUm6
PERSPECTIVE OCPA Staff
OCPA Trustees
Brandon Dutcher .................................................. Editor
Blake Arnold • Oklahoma City
Tom H. McCasland III • Duncan
Daryl Woodard • Tulsa
Robert D. Avery • Pawhuska
David McLaughlin • Enid
Daniel J. Zaloudek • Tulsa
Lee J. Baxter • Lawton
Lew Meibergen • Enid
Steve W. Beebe • Duncan
Ronald L. Mercer • Bethany
OCPA Researchers
G.T. Blankenship • Oklahoma City
Lloyd Noble II • Tulsa
Steven J. Anderson, MBA
John A. Brock • Tulsa
Mike O’Neal • Edmond
Clint Colbert .................................................... Office Manager
David R. Brown, M.D. • Oklahoma City
Bill Price • Oklahoma City
Brandon Dutcher ............................. Senior Vice President
Paul A. Cox • Oklahoma City
Patrick T. Rooney • Oklahoma City
Kelly Ferguson .................... Communications Associate
William Flanagan • Claremore
Melissa Sandefer • Norman
Dacia Harris .............................. Communications Director
Josephine Freede • Oklahoma City
Thomas Schroedter • Tulsa
Ann Felton Gilliland • Oklahoma City
Richard L. Sias • Oklahoma City
John T. Hanes • Oklahoma City
Greg Slavonic • Oklahoma City
Brittoni Bobek ...................................................................... Intern Brian Bush ..................................... Executive Vice President Michael Carnuccio .................................................... President
Rachel Hays .................................... Development Assistant Rebecca Hobbes ................................................................ Intern
Research Fellow
Tina Dzurisin
Research Associate
Vance Fried, J.D. Research Fellow
Jayson Lusk
Samuel Roberts Noble Distinguished Fellow
Matt Mayer, J.D. Research Fellow
Ralph Harvey • Oklahoma City
John F. Snodgrass • Ardmore
J. Scott Moody, M.A.
Cassandra Howard ................................... Executive Liaison
John A. Henry III • Oklahoma City
Charles M. Sublett • Tulsa
Jennie Kleese ............... Development Events Manager
Henry F. Kane • Bartlesville
Robert Sullivan • Tulsa
Andrew C. Spiropoulos, J.D.
Karma Robinson ...... Vice President for Development
Robert Kane • Tulsa
Lew Ward • Enid
Jonathan Small .............................Vice President for Policy
Gene Love • Lawton
William E. Warnock, Jr. • Tulsa
Research Fellow
Milton Friedman Distinguished Fellow
Wendy P. Warcholik, Ph.D. Research Fellow
Perspective is published monthly by the Oklahoma Council of Public Affairs, Inc. , an independent public policy organization. OCPA formulates and promotes public policy research and analysis consistent with the principles of free enterprise and limited government. The views expressed in Perspective are those of the author, and should not be construed as representing any official position of OCPA or its trustees, researchers, or employees.
Does Per-Pupil Spending Matter? By Mike Brake
Advocates of increased funding for public schools love to trot out the Holy Grail of their argument, the claim that per-pupil spending in Oklahoma lags behind levels in other states, and that if we’d just boost how much we spend per student we would cross an invisible line into some sort of educational Utopia. Add $500, or $1,000, or whatever the figure of the moment may be, and Johnny would become a scholar of renown. That was the logic behind the 2010 push for State Question 744, which would have mandated specific levels of education spending keyed to the regional per-pupil spending average. Thankfully, voters saw through that charade (or at least they were frightened off by the massive tax increases SQ744 would have required) and rejected it overwhelmingly. But the per-pupil spending mythmakers are ever busy, dusting off their argument for each legislative session to call for x new school dollars because, well, because if we can just hit that magic number things will be hunkydory in the classroom. A low per-pupil spending figure means less learning, they imply; a higher one will lead to more. Unfortunately, data collected here in Oklahoma and nationwide fail to support that claim. In fact, there is ample evidence that the more you spend on schools, the dumber some kids become. *** Utah is supposed to be ashamed that it has the lowest per-pupil spend-
ing average in the nation, just $6,612, according to the National Center for Education Statistics (NCES). The highest per-pupil spending can be found in the District of Columbia public schools, which is not surprising, since those schools are effectively federalized. NCES says per-pupil spending for D.C. schools was more than triple Utah’s, at $19,698. So given the thesis that more spending equals more learning, D.C. kids ought to be miniature geniuses, while those poor neglected kids in Utah should be mired in ignorance. Let’s look at the ACT college entrance exam, a good end-of-instruction benchmark since it is usually taken early in a student’s senior year of high school. Just 32 percent of D.C. seniors took the ACT in 2012, which means that those who did were the cream of the crop, the most likely to be college bound. Fifty-one percent of the D.C. students who took the test were rated as college-ready in English. Forty-two percent were rated as college-ready in reading. Just 37 percent met collegeentrance levels in math, and 26 percent were seen as college-ready in science. Remember, these scores came from the top third of the D.C. class. And those kids had allegedly benefited from 12 years of the highest per-pupil spending in the land. Out in supposedly underfunded Utah, an astonishing 97 percent of high school seniors took the 2012 ACT test. Statisticians will tell you that when almost everyone in school takes a test, that will inevitably water down the ag-
gregate results, since a lot of kids who have no intention of going to college are included in the final scores. Yet 64 percent of Utah seniors were rated college-ready in English, 54 percent in reading, 40 percent in math, and 29 percent in science. The Utah test-taking sample was triple that of the District of Columbia, Utah spends comparative peanuts to educate them, and those kids out west still out-performed their cousins in D.C. The National Assessment of Educational Progress (NAEP) annually tests millions of kids at several grade levels in core subjects and reports its findings by state. In 2011, fourth graders in Utah and D.C. were tested in reading. NAEP ranks students in four groups— those who are advanced at the tested skill, those who are proficient, those who perform at basic level, and those deemed below basic (essentially, those who fail). Six percent of Utah’s 2011 fourth graders were advanced. Twenty-seven percent were proficient. Thirty-four percent ranked at basic level, and another 34 percent were below basic. Overall the Utah fourth graders achieved a numerical score of 220, which happened to be precisely the national NAEP average for that year. In D.C., the same six percent ranked as advanced readers, while 13 percent were proficient. Another 25 percent rated scores at basic level, but a whopping 56 percent—a majority of DC fourth graders—read at below basic level. The aggregate score was just 201. So Utah is spending $6,612 per student—$132,240 for a class of 20—and
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outperforming the District of Columbia, where the taxpayers are forking over $19,698 per kid, or $393,960 per classroom. Put simply, D.C. spends more than a quarter-million dollars more per classroom yet gets worse results. These inconvenient truths are not confined to the extremes. A 2012 paper by Drs. William E. Bibb and Larry McNeal assessed the impact of perpupil spending on schools in their native Tennessee. “This research,” they concluded, “revealed that per pupil expenditure did not have a significant relationship to ACT scores or to the TCAP (statewide) Writing Assessment scores. An implication is that giving schools more money does not necessarily raise student achievement, but rather how the money is spent can raise student achievement.” In short, mere dollars are not the answer. How and where those dollars are spent matter more. Next came State Budget Solutions, which issued a study based on the 2009 and 2011 school years that concluded “states that spend the most on educa-
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tion as a portion of their total budget didn’t graduate students at a higher rate, nor did their students score better on the ACT than their peers.” *** Even a cursory glance at the Oklahoma Educational Indicators Program reports will show that there is no detectable correlation between per-pupil spending and what students are learning, as measured by a wide range of tests, in different Oklahoma schools. To accurately assess data from Oklahoma schools, it is important to recognize some variables. First, per-pupil spending can vary widely between schools, since local property tax bases and dollars funneled to them in state aid may be quite different. Small rural schools, schools with high levels of minority or even special-education enrollment, and those with other demographic factors may receive considerably more in state aid per student. So it is not uncommon to find two schools in the same county with perpupil spending levels that can differ by
hundreds, or even thousands, of dollars. It is also important to keep in mind the large number of small rural school districts in Oklahoma, the product of historic resistance to any form of consolidation. We are propping up hundreds of small schools—in some cases a dozen or more in a single county—at excessive additional cost. That results in a less than efficient expenditure of school dollars, if only to pay all those small school superintendents. So how are some of our schools doing on the per-pupil spending front as it (allegedly) translates into more learning? Bethany Schools is an average school district in many ways. It has about 1,500 students from a middle-income suburban population. Per-pupil spending there is well below the state average, at $7,017 for 2010. But Bethany kids are doing well. They score at or above the state average in all 26 state-mandated assessments of student learning, from tests given in grades 3, 4, 5, 6, 7, and 8, and at the end of instruction in seven high school subjects. In addition, Bethany’s class of 2010 averaged 21.6 on the ACT, nearly a full point above the state average of 20.8. Bethany’s four-year dropout rate was just three percent, compared to a state average of 11.1 percent. Almost 73 percent of Bethany grads went on to college (the state average was about 57 percent) and five percent fewer Bethany graduates had to take remedial courses as college freshmen than the state average. All in all, Bethany is doing well—at a per-pupil spending level of $7,017, some $800 below the state average, which the advocates of more school spending would be quick to tell us means that education in Bethany is “underfunded.” Now drive east to Heavener Schools in LeFlore County, which has a similar enrollment (1,027 students), more Native Americans, but otherwise is not that different from Bethany. Heavener spends $9,383 per student, more than $2,300 more than Bethany, and a hefty
$1,500 more than the state average. Heavener students score below the state average on 14 of the 26 state mandated assessments, which is not terrible, but less than you’d expect with that increased financial investment if those dollars actually led to more learning. The ACT average for Heavener was 19.0, well below the state average. The four-year dropout rate was 4.7 percent, not bad again, but still worse than Bethany’s. About 44 percent of Heavener grads went on to college, but 54.6 percent of them—more than half—had to take at least one remedial freshman class. The bottom line? Kids in Bethany are coming out of that school district significantly better educated than their peers in Heavener, at less cost. If the per-pupil spending gurus are correct, you’d expect results that are exactly the reverse. You can do these comparisons all day long. Some are startling. Out in the Panhandle at tiny Plainview School (nine total elementary students) we are spending an astounding $48,647 per student, but the kids there are still scoring below state average on every grade tested. Jenks Schools have one of the lowest per-pupil spending levels in the state ($7,352) and one of the highest academic records, with an ACT average of 23.8. Caney Schools in Atoka County spends a hefty $10,956 per kid and recorded an ACT average of just 18.7 and a college attendance rate of barely one in three. Down in Norman they are virtually poverty-stricken, at a mere $7,093 per student—almost Utah territory. Somehow they are acing all 26 state tests, scoring an astronomical 23.3 on the ACT, and sending three-fourths of their graduates to college. So clearly, how much you spend per student has little, if any, impact on educational outcomes. What does? Back in 1966 sociologist James Coleman issued a landmark report on a massive study of public education. He isolated two primary factors that have more to do with student success than
any other—demographics and family background. Not surprisingly, kids from stable two-parent homes where there are books on the shelves, limits on television time, and parental educational levels that foster an expectation of academic success do better than those from poor single-parent households where drugs, violence, sloth, and other factors send a signal that it doesn’t really matter how you do in school, or whether you go at all. And there is nothing school dollars can do to alter those conditions. We could triple Oklahoma’s per-pupil spending average to surpass D.C.’s and those numbers in Norman and Bethany and Heavener and Jenks would barely budge. Of course demographics is not destiny. We all know people from stable backgrounds and supportive communities who dropped out of school, and we all know children of poverty and chaos who overcame those obstacles to do well and succeed. But on average, the family backgrounds and socioeconomic environments most kids come from are much better predictors of school success or failure than how many dollars, out to the last decimal point, we are spending on their education. It’s time to bury the per-pupil spending myth that has driven too many of our educational and appropriations policies for decades. How much we spend on schools, above a sensible basic amount, has almost nothing to do with the results those schools produce. How we spend those dollars—creating a more efficient network of schools where more courses are offered, for example—can have a minimal positive impact, but dollars in are never going to magically turn into geniuses out.
It’s time to bury the myth that more dollars will buy more learning.
Mike Brake is a journalist and writer who has recently authored a centennial history of Putnam City Schools. He served as chief writer for Gov. Frank Keating and for then-Lt. Gov. and Congresswoman Mary Fallin, and has also served as an adjunct instructor at OSU-OKC.
www.ocpathink.org
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49th Is Not OK? Then Try This By Brandon Dutcher
Perhaps you’ve heard the lament from folks in Oklahoma’s public school system that “49th is not OK” when it comes to per-pupil spending. Now for starters let’s note that, according to Daniel Thatcher of the National Conference of State Legislatures, Oklahoma actually ranks 29th when adjusted for comparable wages and pre-kindergarten spending. Jennifer Doverspike—formerly an intelligence officer at the Defense Intelligence Agency with expertise in al-Qaida, now a Tulsa blogger and cofounder of Midtown Tulsa Moms—says “it’s laughable that the same people who lament that ‘49th in school spending is not OK’ aren’t noticing the prekindergarten parasite stretching the education budget even further.” Nevertheless, why does it matter if Oklahoma is 49th or 29th or 9th? The Census Bureau says that the District of Columbia, for example, spends a whopping $29,409 per pupil—yet D.C. has some of the worst schools in America. There’s no necessary relationship between school spending and student performance in this country. “When you look at the statistics,” President Obama has acknowledged, “the fact is that our per-pupil spending has gone
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up during the last couple of decades even as results have gone down.” But, just for the sake of argument, let’s pretend that 49th is not OK. What exactly can the public-school folks do to boost Oklahoma’s ranking? They tried litigation; that didn’t work. They tried a ballot initiative; it was thrashed. Each year they continue to press for more government spending on education, but it never seems to satisfy them. Well, what about tax hikes? Not likely. Indeed, with Oklahoma becoming an income-tax sandwich—Texas has none, and Kansas is phasing its out— it’s more likely that Oklahoma will continue to cut taxes. Early on Gov. Mary Fallin promised “the most significant tax cut in state history”—indeed, she said Oklahoma is charting a course “toward the gradual elimination of the state income tax.” (It hasn’t happened yet, but there’s no question the momentum favors tax cuts, not tax increases.) The raise-per-pupil-spending crowd is running out of options. Given their insatiable appetite for money (Tahlequah Public Schools superintendent Lisa Presley has helpfully informed us that “there has never been enough revenue for public education, and
there never will be”), I would suggest they have no choice but to turn their attention from the numerator to the denominator. School choice—vouchers, tax credits, and Arizona-style Education Savings Accounts—can offload pupils onto the private sector, thereby increasing per-pupil funding in the government’s schools. (And no, educators aren’t allowed to complain that they still have fixed costs when students leave—unless they’re also willing to tell lawmakers they don’t need any new money when enrollment increases.) Or, here’s another proposal. Let’s radically increase per-pupil spending right now, with one small caveat: Oklahoma moves to a system of performancebased funding. Give schools massive per-pupil spending increases—but only for every student who can read. After all, an official at the state Department of Education recently said that up to 98 percent of kids can learn to read when taught properly. Sylvia Brown, a former public school teacher and principal in Tulsa, once told me it’s closer to 100 percent. 49th in per-pupil spending may or may not be OK. But widespread schoolproduced illiteracy is most certainly not OK.
Langston Professor Says School Choice Benefits Students By Brandon Dutcher
Despite spending more money on public education than many other developed countries, America’s studentperformance woes persist—in part because public schools often have no motivation to improve. But the increasing availability of educational options—charter schools, virtual schools, magnet schools, vouchers, homeschooling, and more—represents a positive development for students and for public schools themselves. Indeed, far from undermining public education, school choice provides an environment in which public schools can thrive. That’s the message of a recent article written either by (a) an OCPA researcher, or (b) an education professor at Langston University—a loyal Democrat who believes that “Barack Obama is one of the greatest presidents America has ever seen.” If you guessed (b), you get a gold star. In an excellent piece over at The Huffington Post (“Is ‘School Choice’ an Anti-Public School Sentiment?”), Matthew Lynch, Ed.D., a former schoolteacher who now serves as chairman of the Department of Elementary and Special Education at Langston University, explains that school choice is “a movement that strives to improve education at all schools through the oldfashioned business concept of competition.” Public charter and magnet schools are tuition free, just like public schools, but must make some promises in their contracts in order to stay open. If these schools of choice habitually do not reach their goals, they close. Can the same be said of public schools? The accountability level that these young
additions to the public school arena bring ensures that students achieve more — and if they don’t, those schools do not stick around long. School choice is not simply about non-traditional public schools though. The movement goes much deeper than that and empowers parents to take the reins of their children’s learning paths. Since 2007, the number of K-12 students enrolled in online public schools has risen an astonishing 450 percent. Home schooling is also on the rise as 1.77 million K-12 students are homeschooled — a number that has more than doubled since 1999. Parents are pushing back against simple acceptance of educational opportunities based on geography; they are still choosing traditional public and private schools but only after educating themselves. … There is room for all choices in K-12 schools and students benefit from the options. Dr. Lynch’s article is excellent, and I encourage you to read the whole thing. And lest you think it’s unusual for an African-American in this state to embrace various forms of educational choice, I hasten to remind you of the following. Rev. Donald Tyler of Tulsa supports tax-credit scholarship legislation (of the sort eventually enacted in Oklahoma) that allows children to attend private schools. As he told reporters at
a state-capitol press conference, “I have kids in my church who have graduated who can’t read. You tell me the system is working?” State Sen. Jabar Shumate (D-Tulsa), who was an Obama delegate to the Democratic National Convention, says “the civil rights issue of today is school choice.” Another Obama delegate, state Rep. Anastasia Pitman (D-Oklahoma City), supports Oklahoma’s state-funded scholarship program for special-needs children because she says “it will make our school districts better, it will make our families stronger.” Another Obama delegate, longtime Tulsa Public Schools board member and former state Sen. Judy Eason McIntyre (D-Tulsa), believes in the “right of parents to be able to choose.” Dr. M. L. Jemison, senior pastor of St. John Missionary Baptist Church in Oklahoma City, supports tax-credit scholarships that allow low-income children to attend private schools. Dr. Betty Mason, a former superintendent of the Oklahoma City public schools who later served as superintendent of St. John Christian Heritage Academy, also supports tax-credit scholarships. And now, just in time for National School Choice Week, it is encouraging to see an education professor from Langston University join the ranks of those who see the value of giving parents more choices.
Brandon Dutcher (M.A. in public policy, M.A. in journalism, Regent University) is senior vice president at OCPA. He’s the editor of the book Oklahoma Policy Blueprint, which was praised by Nobel Prize-winning economist Milton Friedman as “thorough, well-informed, and highly sophisticated.” His articles have appeared in Investor’s Business Daily, Forbes.com, WORLD magazine, the Tulsa World, The Oklahoman, and in 200 newspapers throughout Oklahoma and the U.S.
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Financial Transparency Needed in Public Education By Jason Bedrick
Do you know how much it costs to educate a student in Oklahoma? It’s likely more than you think. In Oklahoma the total annual cost per pupil is $8,630 on average, according to the most recent data from the National Center for Education Statistics (2009-10). However, according to the Oklahoma State Department of Education (OSDE), the average per-pupil cost was just $7,760 that year. Why the discrepancy? Despite referring simply to “per pupil expenditures,” the OSDE actually only publishes operating per-pupil expenditures, omitting some big-ticket items like paying off debt for school buildings. A business that acquired a loan from a bank while understating its expenses would be in serious trouble, yet state education departments routinely understate the costs of public schools. It’s no wonder that a recent Harvard study found that the public’s average estimate of the annual cost per publicschool student nationwide was less than half what is actually spent. Here are a few ways that the OSDE could be more transparent with its data: • Report at least 10 years of total per pupil expenditure (PPE) data in accessible reports. Oklahoma is one of the 25 states that does not report total PPE figures. As of last December, the OSDE only published a few years of operating PPE in outdated reports titled “Average Daily Attendance,” which is not where most citizens would look for such data. Now it appears that even those reports are no longer posted on the website. • Report more complete expenditure data. Oklahoma provides data
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PERSPECTIVE • January 2014
on total spending, capital expenditures, and aggregate salaries but is missing data on pensions. Moreover, the reports generally cover only four to eight years and are sometimes a few years out of date. • Report multiple years of average employee salary data. Oklahoma admirably publishes salary and benefit data for every superintendent and principal in the state. However, the OSDE provides only one year of data and does not include statewide averages for comparison. The OSDE provides the salary schedule for teachers but does not provide data on the average salaries or benefits actually paid. Financial transparency is essential for sound decision-making. To fully understand public school spending, citizens require complete and timely data in an easy-to-analyze format. Awareness about public school spending has implications for the public discourse over public education. The aforementioned Harvard study showed that the public’s underestimation of how much public schools cost affects the public’s spending preferences. When the citizens are informed about the true cost of public education, they are significantly less likely to support an increase in spending. Likewise, the widespread misperception that private schools cost more per pupil than public schools likely affects
the public’s support for school choice programs. A greater awareness that school choice programs can save money would likely translate into greater public support for school choice. Indeed, Florida policymakers have wisely sought to demonstrate exactly that. The Florida legislature’s nonpartisan Office of Program Policy Analysis and Government Accountability (OPPAGA) estimated that Florida taxpayers save $1.44 for every dollar of revenue reduced by the state’s scholarship tax credit program, which is similar to Oklahoma’s Equal Opportunity Education Scholarships program. Financial transparency is important in a democracy for its own sake, but school choice advocates should be particularly concerned about ensuring that the public is fully informed regarding the cost of public education. At a time when state and local budgets are severely strained, it is crucial that spending decisions reflect sound and informed judgment.
When citizens are informed of the true cost of public education, they are significantly less likely to support an increase in spending.
Jason Bedrick (master’s degree in public policy, Harvard University) is a policy analyst with the Cato Institute’s Center for Educational Freedom. He is the author of “Cracking the Books: How Well Do State Education Departments Report Public School Spending?”
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OCPA Research Fellow Spotlights Our Nation’s Founding Debate By Matt A. Mayer
The scene is a familiar one. You’ve seen it portrayed in paintings and pictures in history books and on television. It is the summer of 1787. America’s Founding Fathers are gathered in Philadelphia to repair the deficiencies of the Articles of Confederation. Instead of repairing the Articles of Confederation, they draft and propose a new Constitution. Upon adopting the Constitution on September 17, 1787, they submitted it to the 13 states for ratification. Over the next 18 months, a vigorous debate occurred over the proposed Constitution. In September 1789, Congress proposed the Bill of Rights, which were the first ten ratified amendments to the Constitution modeled after the English Bill of Rights contained in the Magna Carta. During the debate over the Constitution, two sets of men took their debate to the newspapers (their version of the airwaves). On one side were the Federalists, with Alexander Hamilton (future Secretary of the Treasury) and James Madison (future President of the United States) leading the charge. On the other side were the Anti-Federalists, including Robert Yates (future Chief Justice of the New York Supreme Court) and Samuel Bryan (future Comptroller General of Pennsylvania). All of these men wrote using pseudonyms (Publius, Brutus, Centinel, and Old Whig), and all were distinguished and learned men. One area of their debate focused on the powers of the new federal government under Section 8 of Article I. Specifically, the two sides portrayed drastically different versions of the federal government under Section 8. The Federalists casually dismissed concerns
that the federal government would overpower the states. In contrast, the Anti-Federalists warned that the federal government could abolish state legislatures with its new powers. A key topic of concern for the AntiFederalists was the “necessary and proper” language in Section 8. Why did this language worry them? Because, along with what became known as Article V’s Supremacy Clause in which federal law trumps state laws, they believed this broad language gave the federal government unfettered power to do whatever it deemed necessary and proper to execute the enumerated powers granted it under the Constitution. Many Americans today view the federal government as the permanent behemoth whose shadow eclipses the sunshine of the states. They’ve never known an America where it wasn’t so encompassing. To help you understand this key founding debate, in my new book, The Founding Debate, I have reviewed the founding documents to find the core arguments on each side. In addition to the Constitution, the book contains the five best arguments presented by the Federalists (Hamilton and Madison), the five best arguments presented
by the Anti-Federalists (Yates, Bryan, and the unknown “Old Whig”), the Bill of Rights, and select quotes from the 10 most relevant U.S. Supreme Court cases decided over the 200 years that interpreted the words debated so robustly by our Founding Fathers. No matter where your ideology rests along the clamshell shape of the political spectrum, it seems fairly clear that the locus of power over our lives resides in Washington, D.C., not in the 50 state capitals. With the dysfunction in Washington, D.C., and mounting failures produced by the federal government’s one-size-fits-all mentality, we must escape the sloth of the centralization status quo. Perhaps the pathway to America’s future prosperity is to look to a principle from the past. Competitive federalism was a central doctrine powerfully espoused by the less-famous Anti-Federalist Founding Fathers. Our Founding Fathers didn’t debate some esoteric issue high in the ivory tower of academia. The fate of our country hung in the balance. With 226 years of history behind us, that debate and its outcome in the future are as relevant and consequential as ever.
Perhaps the pathway to America’s future prosperity is to look to a principle from the past: competitive federalism. OCPA research fellow Matt A. Mayer serves as chief operating officer of The Liberty Foundation of America. Previously, Mayer served as a visiting fellow at The Heritage Foundation, where he wrote extensively on the issue of federalism as it relates to national security. His latest book is The Founding Debate, from which this article is excerpted.
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Hobby Lobby Case Underscores That Liberty Is Tenable Only with Limited Government By Tina Korbe Dzurisin
The United States Supreme Court has agreed to hear a consolidated case against a particularly objectionable dictate of Obamacare—the mandate to employers to provide their employees with health insurance that specifically covers abortifacients. Included in the case is a challenge brought by the David Green family, the owners and operators of Hobby Lobby, a chain of nearly 600 arts and crafts stores with headquarters in Oklahoma City. As Christians who oppose abortion, the Greens claim they cannot in good conscience pay for their employees to have free access to abortion-inducing drugs, as the mandate would essentially force them to do. At stake in the case is whether the First Amendment right to freely exercise religion applies to an individual like David Green not only in his private life as a believer, but also in his public life as the founder and CEO of a successful for-profit company. Critics of the Hobby Lobby challenge have not framed the case in these terms. They suggest the case hinges on whether the First Amendment applies to corporations and then quickly insist that it does not. Does that mean the Department of Health and Human Services mandate does not apply to corporations, either? It is inconsistent to suggest that impersonal corporations can obey regulations, but not exercise rights. Regulations and rights apply only to persons, but they apply whether those persons are acting individually or within a corporation. Given the confusion introduced by the “Are corporations persons?” question, though, the Supreme Court deci-
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sion in this case will have implications not just for religious liberty, but for other First Amendment rights, as well. Oral arguments are expected to begin in March, and the Court will likely rule in late June. The justices will accept the Greens’ stated religious beliefs at face value. In other words, they will not attempt to determine whether the mandate actually violates the Greens’ Christian religion. The Greens have said it does; from a legal standpoint, that is evidence enough. Instead, the burden will be on the lawyers of the Obama administration to articulate a clear and compelling public interest that justifies abridging the Greens’ religious liberty. In previous rounds of the case, the Obama administration argued the mandate is justified in the name of “public health and gender equality.” The idea that abortifacients somehow affirm gender equality is puzzling. To suggest that women need abortifacients to attain parity with men suggests that women lack something— that is, abortifacients—to be equal to men. It’s to suggest women are not inherently equal to men, but must deny what is unique to them—the capacity to conceive and bear a child—to be considered equal.
The argument that abortifacients are essential to public health is even more ironic. This argument is rich not only because abortifacients literally result in the loss of life, which is generally considered the antithesis of a positive health outcome, but also because the administration has already exempted numerous other employers from the mandate. Negative rights, including the right to religious liberty, are tenable only within the proposition of limited government. As government mandates increase, so, too, does the probability that one of those mandates will abridge personal rights. It is not easy to balance the competing desires for liberty and governmentguaranteed goodies like health care, but, if the Supreme Court cares to preserve liberty at all, it will circumscribe government officials with the limiting principles to which they have already agreed—those limiting principles outlined in the U.S. Constitution. Tina Korbe Dzurisin is a research associate at OCPA. Formerly, she was a staff writer at The Heritage Foundation and an associate editor at HotAir.com.
Do Food Stamps Boost the Economy? By Jayson Lusk
Farm bill negotiations have resumed in Washington, D.C., and one of the first items of business is to determine the fate of the Supplemental Nutritional Assistance Program (SNAP), more commonly known as food stamps. In an attempt to cut government spending and reduce the deficit, budgets for all programs are being scrutinized, and the farm bill is no different. If farm bill spending is to be cut, a likely candidate is SNAP. After all, spending on SNAP and related programs accounts for nearly 80 percent of the farm bill. At issue is the size of the cuts to SNAP benefits. The House has proposed to cut about $39 billion from SNAP over the next 10 years (a roughly 5 percent reduction) but the Senate’s bill only cuts about $4 billion (a roughly 0.5 percent reduction). To provide some perspective, the Senate’s bill cuts farm commodity programs by about 40 percent. The relatively small percentage cuts proposed to SNAP have raised the ire of many on the left. Adding to their consternation is the fact that SNAP benefits recently fell about $36 per family of four due to the expiration of the American Reinvestment and Recovery Act (ARRA). While there is good evidence that SNAP reduces hunger and food insecurity among poor households, there are also legitimate concerns about the program fostering government dependency, reducing the incentive to work, and increasing the government deficit. These concerns have even more force when one realizes the spending on SNAP doubled from 2008 to 2012 while enrollment soared to near record levels (nearly 1 in 6 Americans today are on
SNAP). The White House has recently entered into the fray with a new report arguing that, among other things, “SNAP provides a fiscal boost to the economy during economic downturns,” and “every new SNAP dollar generates up to $1.80 in economic activity for the more than 230,000 retail food outlets that take part in the program.” Whatever benefits might be ascribed to SNAP, the claims of economic benefit for the overall economy are misplaced. If SNAP spending can boost a poor economy, shouldn’t the 100 percent increase in SNAP spending over the past five years have boosted us out of the economic malaise? If every new SNAP dollar generates $1.80 in benefits, then let’s spend a billion—heck, why not a trillion?—new dollars on SNAP. Such is the problem with crude Keynesian models: they don’t tell us when to stop. Moreover, if the Keynesian approach is the right one, then shouldn’t we pare back when the economy begins to recover, as it now has? There is a deeper problem with this line of thinking from Obama’s White House: a failure to imagine what happens in absence of their action. They claim that spending an extra dollar on SNAP generates $1.80. Here is my question: where did the original dollar come from? And what
would that dollar have been spent on had it not been spent on SNAP? Is the dollar borrowed driving up the deficit? Is it a new dollar printed from the Fed, increasing the chance of inflation? Is it a tax dollar taken from citizens who would have spent it otherwise? Is it a dollar re-allocated from other government spending priorities? Dollars have alternative uses, and a thorough economic impact study would have to factor out all the other ways in which money would be spent had it not been spent on SNAP. The White House report is clear to point out that the $1.80 activity accrues to “participating” food outlets. What about non-participating food outlets that lose customers? What about taxpayers who must fund the program? To point out the benefits of SNAP spending without also counting the costs is misleading. I don’t think SNAP spending should be zero. As far as government welfare programs go, it is probably one of the more effective (though it also is likely to crowd out some private charity). There is a reasonable debate to be had about the appropriate size of SNAP spending, but throwing in irrelevant and misleading claims about economic impact only makes the conversation more difficult.
Jayson Lusk (Ph.D., Kansas State University) is the Samuel Roberts Noble Distinguished Fellow at OCPA and Regents Professor and Willard Sparks Endowed Chair at Oklahoma State University. His new book is The Food Police: A Well-Fed Manifesto about the Politics of Your Plate (Crown Forum, 2013).
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GDP Undervalues the Impact of the Family By Wendy P. Warcholik
A strict free-market reading of economic growth would support the view that any monetary generating activity is of equal value to society. But is that really the case? For example, if I spend $1,000 on an abortion or $1,000 on a life-saving procedure, are the two activities really of the same value? If $15 million is spent to build a casino or a manufacturing facility, will they both produce the same economic results to the surrounding community? In truth, abortions feed economic inequality since abortions are most prevalent among poor women (with an abortion rate of 53 per 1,000 women, representing 40 percent of all abortions). At the same time, well-heeled doctors and the health system pocket
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the abortion money, oftentimes including government-funded Medicaid dollars (17 states provide state Medicaid dollars for abortion under most circumstances, and most other states allow Medicaid coverage for abortion in the case of rape and incest). The doctors’ and health systems’ revenue increases the Gross Domestic Product (GDP). And what about that $15 million casino? Studies have shown that casinos and other gambling venues are an economic black hole for the communities in which they are located. The revenue generated from mostly local customers is whisked away, never to return. Yet, economic theory says that this economic activity is just as valuable as any
other. According to government economists, revenues from abortions and the $15 million casino would go into our GDP, and America’s income goes up. If we suddenly decided to abort every baby in America, GDP would zoom, but within a few years it would become painfully obvious that a 100 percent abortion rate is also bad economics. As economist Scott Moody and I have previously pointed out in these pages, the number of babies born is in freefall in one-third of all U.S. counties. These counties (including 27 of Oklahoma’s 77) are experiencing demographic winter—i.e., there are more deaths than births. Every state except New Jersey and Utah has at least one
county that is dying. Renowned financial analysts Rob Arnott and Denis Chaves were able to estimate how demographic winter will affect future growth in GDP. They found that over the past 60 years, demographics added about 1 percentage point to America’s GDP growth. So if 3 percent GDP growth is considered normal, the reality is that 2 percent was productivity growth (producing more with less) while 1 percent was demographic growth. With demographic winter, they estimate that the plus 1 percent due to demographics becomes a negative 1 percent (a 2 percentage point swing). The “new normal” for economic growth in America becomes 1 percent to 2
percent productivity growth with a demographic drag of -1 percent. This is indeed bad economic news. The fact that 33 percent of all U.S. counties are dying points to the unpleasant reality that the traditional American family is in decline. Let’s examine another major flaw of GDP: the failure to account for household production. According to Salary.com, the work of a stay-at-home mother is worth $97,530. Following are the components used to calculate the value: housekeeper, cook, daycare center teacher, facilities manager, computer operator, van driver, psychologist, laundry machine operator, and CEO. There are also many job titles that were left out (nurse, event planner, nutritionist, logistics analyst, interior designer, bookkeeper, administrative assistant, plumber, general maintenance worker, and groundskeeper). Let’s not even discuss if the mom homeschools, as then we have teacher, curriculum development professional, guidance counselor, vice principal, and principal to add to her compensation matrix. And, what about dad’s contribution? What if he helps provide a portion of the utilities by splitting wood and takes care of home expenses by acting as the house painter and plumber? If the traditional family is a cornerstone of civil society, then the measurement of U.S. economic growth should encompass family production. Robert W. Patterson, former editor of the public-policy journal The Family in America, observes: The growth that the typical American family wants to see is the kind that gives the economy a human or family purpose. It is the kind of growth that allows a breadwinner to earn a “family wage” sufficiently
high enough to support and provide benefits for a spouse and children. But as currently constituted, measurements of GDP tell us nothing about the presence or absence of such an economy. As currently constituted, the GDP captures a rather limited range of activities, counting only financial transactions in the “public” and “private” sectors of society, regardless of their impact on the family. Moreover, the GDP only adds things up—it never subtracts—meaning that all monetary exchanges in these two sectors of society are treated the same whether or not they actually build a healthy economy or serve the family. What’s considered important or valuable is the fact that money changes hands, not what the exchange represents. He continues: Moreover, parasitic undertakings of the private sector—such as gambling and pornography interests— which corrode the social fabric, are considered “pluses” for the GDP. Many industries have originated with the increasing presence of mom in the workforce. The most obvious is daycare. While GDP may increase as mom goes to work and her kids go to daycare, we aren’t realizing an increase in economic growth. Instead, we see merely a substitution effect of an activity that has always been performed in the home but is now brought into the marketplace and counted in GDP. There are many other activities like this. Clearly, maximizing GDP isn’t the same as maximizing economic wellbeing. The family plays a crucial role in a country’s determinant of economic well-being, and the family is grossly misrepresented in official U.S. economic statistics.
OCPA research fellow Wendy P. Warcholik (Ph.D., George Mason University) formerly served as an economist at the U.S. Department of Commerce’s Bureau of Economic Analysis, and was the chief forecasting economist for the Commonwealth of Virginia’s Department of Medical Assistance Services. She is a co-creator (with J. Scott Moody) of the Tax Foundation’s popular “State Business Tax Climate Index.”
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Work Under Way on OCPA’s ‘Advance Center for Entrepreneurship’ As you can see from the photos and artwork to the right, OCPA’s capital campaign for our Advance Center for Entrepreneurship is bearing fruit! And once constructed, the Center will serve as the hub of the free-market movement for policymakers, students, and civic-minded Oklahomans from across the state. Just a couple of minutes from the state capitol building, the Center will host lawmakers, executive-branch officials, and policy staffers for training sessions on how to apply core principles to knotty public-policy issues. Breakfast meetings and policy receptions will allow lawmakers to interact with OCPA scholars and staff, as well as with experts from around the nation. The Center will also be a valuable resource for students, as OCPA partners with schools and nonprofit organizations to host programs teaching students the principles of liberty and the importance of our free-enterprise system. Afterschool events and summer seminars will train students to take responsibility for their personal finances, and will teach them the value of entrepreneurship in our system of liberty under law. The Center will empower Oklahomans to forward the cause of freedom. National policy summits will encourage dialogue between business leaders and national free-market partners. Bloggers’ briefings, policy symposia, debates, book signings, and more will unite citizens from across the state with national scholars and experts, growing OCPA’s membership while reinforcing first principles. With liberals in Washington, D.C. now in the process of “fundamentally transforming the United States of America,” there has never been a better time to forward the cause of freedom in one of America’s most promising laboratories of democracy—the great state of Oklahoma. We invite you to join us!
14 PERSPECTIVE • January 2014
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QUOTE UNQUOTE “For two years in a row, the state of Kansas has reduced its tax rate below Oklahoma’s, while at the same time zeroing-out income tax on small-business profits and increasing funding for Kansas public schools. This has placed Oklahoma uncomfortably in an income-tax sandwich between our neighbors to the north and south.”
Dave Bond, CEO of OCPA Impact, Inc., saying the recent Oklahoma Supreme Court decision nixing the state’s latest income-tax cut presents an opportunity to reduce the tax even further
“I believe we should immediately provide the tax relief we promised …”
House Speaker T.W. Shannon
“Thinking about the future here and its bleak prospects is not much fun at all, so instead of too much black-minded introspection you have the pills and the dope, the morning beers, the endless scratch-off lotto cards, healing meetings up on the hill, the federally funded ritual of trading cases of foodstamp Pepsi for packs of Kentucky’s Best cigarettes and good old hard currency, tall piles of gas-station nachos, the occasional blast of meth, Narcotics Anonymous meetings, petty crime, the draw, the recreational making and surgical unmaking of teenaged mothers, and death …”
Kevin D. Williamson, reporting from Appalachia for National Review. He says “there are lots of diversions in the Big White Ghetto.”
“I think we have made a commitment and we need to honor that for the people of Oklahoma.”
Senate President Pro Tem Brian Bingman
“Is there anything that better describes the state of American racism than a black billionaire contemplating a black president and seeing a victim of racism?”
National Review, on Oprah Winfrey’s belief that critics of Obama are often motivated by racism