Perspective - July 2014 by OCPA

PERSPECTIVE July 2014

OKLAHOMA COUNCIL OF PUBLIC AFFAIRS

Thwarting Health Care Reform Three measures in this yearâ&#x20AC;&#x2122;s legislative session would have helped Oklahoma patients and taxpayers. The forces of the health-care status quo squashed them all.

In Case You Missed It Kansas Gov. Sam Brownback is showing how smarter policies can transform the states and renew the nation. tinyurl.com/kdw62ct

OCPA president Michael Carnuccio says special interest groups (which make millions when Oklahoma overpays for health care) helped government spending reach a new record-high level this year. ocpathink.org/articles/2741

In The Washington Times, an OU professor correctly notes that “with his new series of children’s books, Rush Limbaugh is showing the way.”

A major school district closed its traditional public schools. All of them. wapo.st/1nWMuYg

One of liberalism’s echo Chambers is chiding Oklahoma lawmakers for cutting taxes. bit.ly/1oEWLfF

The latest federal data tell us that only half of Oklahoma’s public education employees are teachers. ocpathink.org/articles/2736

In The Wall Street Journal, past OCPA authors Stephen Moore and Richard Vedder discuss the bluestate path to inequality.

tinyurl.com/l5h8oof

An OCPA fellow says Oklahoma’s legislative majorities lack the energy, desire, and intellectual capacity to fight the education establishment. tinyurl.com/nzr7rvd

In The Wall Street Journal, tax-cutting Kansas Gov. Sam Brownback discusses the “choice between dependence and selfreliance.” on.wsj.com/1khxlN8

Economist Richard Vedder says there are more college graduates than jobs requiring degrees, and that the problem will probably get much worse in the next decade. bv.ms/1poONoe

on.wsj.com/1oXjljO

PERSPECTIVE OCPA Staff

OCPA Trustees

Brandon Dutcher .................................................. Editor

Blake Arnold • Oklahoma City

Tom H. McCasland III • Duncan

Daryl Woodard • Tulsa

Brittoni Bobek ....................................................................... Intern

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

John A. Brock • Tulsa

Mike O’Neal • Edmond

Trent England ...... Vice President for Strategic Initiatives

David R. Brown, M.D. • Oklahoma City

Bill Price • Oklahoma City

Dacia Harris .................................. Communications Director

Paul A. Cox • Oklahoma City

Patrick T. Rooney • Oklahoma City

Rachel Hays ....................................... Development Assistant

William Flanagan • Claremore

Melissa Sandefer • Norman

Rebecca Hobbes ................................................................. Intern

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

Michael Carnuccio ...................................................... President Clint Colbert ...................................................... Office Manager Brandon Dutcher ................................ Senior Vice President

Kelly Hughes ............................ Communications Associate Jennie Kleese .................... Development Events Manager

Steven J. Anderson, MBA 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.

Maysen Mackie ......................................................................Intern

John A. Henry III • Oklahoma City

Charles M. Sublett • Tulsa

Karma Robinson ........... Vice President for Development

Henry F. Kane • Bartlesville

Robert Sullivan • Tulsa

Andrew C. Spiropoulos, J.D.

Jonathan Small ................................Vice President for Policy

Robert Kane • Tulsa

Lew Ward • Enid

Teresa Yoder .................................................... Executive Liaison

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.

Larry Arnn

John Bolton

William F. Buckley

George W. Bush

BRIT HUME

Jeb Bush

Dinesh D’Souza

September 24 • Tulsa

For more information, contact Rachel Hays at 405-602-1667 or rachel@ocpathink.org

Mitch Daniels

Jim DeMint

J. Rufus Fears

Mike Huckabee Laura Ingraham

Artur Davis

Steve Forbes

Tommy Franks

John Fund

Newt Gringrich David Horowitz

Frank Keating

Jeane Kirkpatrick

Charles Krauthammer

Art Laffer

Rich Lowry

Ed Meese

Russell Moore

Stephen Moore

Peggy Noonan

Marvin Olasky

Bill Owens

Sarah Palin

Star Parker

Michael Reagan

Paul Ryan

Joe Sobran

Thomas Stafford

John Stossel

Cal Thomas

Clarence Thomas

Scott Walker

Malcolm Wallop

John Walton

J.C. Watts

Allen West

Walter Williams

Past OCPA speakers are pictured above.

Mourning Our Medicaid Malaise: Lawmakers Reject Free-Market Reforms By Patrick B. McGuigan

Dr. Doug Cox is no Dr. Tom Coburn. And the Oklahoma Hospital Association is no supporter of Medicaid reform. In 2014 Oklahoma hospitals, through their powerful lobbying arm, blocked Medicaid reforms, thanks in large measure to the work of Cox, a medical doctor and a Republican state representative from Grove. Cox is a top advisor to Oklahoma’s Speaker of the House Jeff Hickman, RFairview, and an emergency room physician at Grove’s Integris Hospital. He is among the lawmakers pressing hard for Medicaid expansion, per the Affordable Care Act, in the blended Arkansas model that is bringing significant enrollment increases and cost overruns. In other words, the Arkansas Plan, not a whole lot different than the Obamacare plan— which is to say, straight-up Medicaid expansion. In 2013 it was Sen. Brian Crain, R-Tulsa, who guided maneuvering to thwart wholesome Medicaid reforms. The analysis that follows is not a personal assault on either Crain or Cox, but an assessment of how and why some good things didn’t happen at 23rd and Lincoln these past couple of years. Let’s be clear about why this is important: Government health care spending, driven by Medicaid, is the fastest growing chunk of the Oklahoma state budget. Although I am largely a fan of House Speaker Jeff Hickman, his close alliance with Dr. Cox likely contributed to the death of broad Medicaid reforms in the 2014 legislative session. Medicaid Reform Thwarted The reforms were contained in Senate

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Bill 1495, introduced by Sen. Kim David, R-Porter. She proposed to begin implementation of Medicaid reforms enacted (and operating in cooperation with federal administrators) in Florida, Kansas, and Louisiana, and partially in other states. The culprits in the demise of SB 1495 included administrators at the Oklahoma Health Care Authority, former director Mike Fogarty, the Oklahoma Pharmacists Association, and, yes, the Oklahoma Hospital Association. Hospitals make big bucks from Medicaid, as my old pal Peter Rudy reported a couple of years back on his OK CapitolSource website. Unfortunately, they are comfortable with expansion as envisioned in the Affordable Care Act, and uncomfortable with market reforms on the model of, say, the Surgery Center of Oklahoma. The Oklahoma Pharmacists Association helped impede reforms in these measures that would have allowed multiple options for delivery of prescription drugs to patients, including mail order, the option pharmacists most despise. In this case, you can’t fault “Big Pharma” for the death of reform. In the end, as Sen. David noted, opponents of reform preferred the singlepayer system, with less accountability (however imperfect) than the private insurance that still provides coverage for most taxpayers. They left in place the promise (to providers) of comparatively high reimbursement levels for doctors with the often-illusory promise of quick turnarounds on submitted claims. No private company can allow such an arrangement (again, often illusory in any case) because it does not allow time for

proactive review of utilization and appropriate care, or for documentation that procedures were actually performed. As the clock ticks on rising costs for government-financed health care, lack of forward movement for these varied measures is damn near despair-inducing. However, faithful readers of my Perspective essays for lo, these many years, know I remain a short-term pessimist and a long-term optimist. So, some small consolation comes from the Legislature’s passage of, and the governor’s signature on, House Bill 2906. This measure instructs the Oklahoma Health Care Authority (OHCA) to study “diversion models” for Medicaid patients. The law requires study of cost containment and delivery alternatives. By the end of this year, the OHCA is to present a study to the Legislature that includes, in the words of a House summary, these elements: “an assessment of the propensity of Medicaid recipients to use emergency medical facilities; opportunities to ‘leverage and partner’ with community-based resources to reduce emergency-room utilization; analysis of existing state and national initiatives ‘with the aim of more cost-effective, coordinated care’ for persons who overuse emergency medical facilities; [and] development of recommendations, accompanied by projected expenditures and potential cost savings.” All well and good, I guess. Here’s what we know for sure. As of March, state Medicaid enrollment totaled 830,850. That includes 539,996 children and 290,854 adults. As I reported earlier this year, SoonerCare (i.e., Medicaid) enrollees made 548,136 emergency room visits in Fiscal Year 2013.

The Health Care Authority’s own data showed that cost us $178 million in the last year. There’s gotta be a better way. In fact, there is a better way and the state does not need to spend the next six months reinventing the wheel. Sen. David’s SB 1495 would have created a pilot program—not a “study”—to put counselors in ERs to direct Medicaid recipients to more appropriate and much less expensive general care. Her bill was based on market-oriented models in Florida, Louisiana, and Kansas. Florida has had success in easing costs and improving patient satisfaction among diabetes and high blood pressure patients. David’s bill is the best place to start improving Medicaid outcomes without the “expansion” envisioned in the Affordable Care Act. Her proposal’s demise in the latter days of the legislative session must be scored as one of the most deeply disappointing results of the session. Ironically, the anti-reform matrix actually preferred to see implementation of a provider cut rather than countenance the start of systemic reforms. Other Missed Opportunities Alas, that’s not the only disappointment from the 2014 session. Oklahoma’s Legislature nixed two other health care reforms that would move us toward better (and more personalized) health care for Oklahomans. House Bill 2400 by Rep. Arthur Hulbert, R-Fort Gibson, steadily gained support this spring, and I hoped it would pass. It would have required hospitals accepting Medicaid dollars from the state program to post prices transparently, on the Web. This would have enhanced the ability of both the public and Medicaid recipients to see the price of procedures before they were performed. Alas, after the proposal gained credible momentum it did not get a hearing by the full House— because the Oklahoma Hospital Association was opposed. Another promising reform was contained in House Bill 2828, sponsored by state Rep. Jason Murphey, R-Guthrie. Heaven knows I have been critical of

Gov. Mary Fallin and her team on certain issues. But in this instance the Fallin team—including Secretary of Finance and Revenue Preston Doerflinger—supported Murphey’s proposal to allow Oklahoma’s self-insured plan to incentivize the use of providers who produce positive outcomes at a low, affordable price. Yes, we’re talking about providers such as the Surgery Center of Oklahoma, a multispecialty facility that posts its prices online, which is performing common procedures at one-sixth to one-tenth of the cost at Big Box Hospitals. As I discussed in these pages in April, the model is proving itself shockingly effective. In March, Oklahoma County entered into an agreement with the Surgery Center of Oklahoma—an agreement which is benefiting County employees and taxpayers alike. Jon Wilkerson, director of HR, benefits, and payroll for Oklahoma County Clerk Carolynn Caudill, told me on June 17 that he estimates the cost savings to date for Oklahoma County is $400,000. That kind of money can fill a lot of potholes. Jonathan Small, OCPA’s vice president for policy, reflected on this year’s disappointments in the Oklahoma Legislature. In an interview, he told me, “In Oklahoma, the instances of good reforms being thwarted by crony capitalists in the health care system is growing. What’s bad is that lawmakers often aren’t even aware of the problem. What’s worse is that some lawmakers are actively ‘working on the inside’ and are involved in helping the crony capitalists succeed in hurting patients and taxpayers.” Informed citizens should press their legislators to assure that the study authorized in HB 2906 is prelude to enactment of Sen. David’s SB 1495. And, that’s just for starters.

The anti-reform matrix actually preferred to see implementation of a provider cut rather than countenance the start of systemic reforms.

Patrick McGuigan (M.A. in history, Oklahoma State University) is editor of CapitolBeatOK.com. He is the editor of seven books on legal policy, and the author or co-author of three books, including Ninth Justice: The Fight for Bork. Last year the Washington Post political blog, “The Fix,” designated McGuigan one of the three best political reporters in Oklahoma.

www.ocpathink.org

The Value of the College Premium— and the Marriage Premium By J. Scott Moody and Wendy P. Warcholik

There is a lot of discussion in the mainstream media about the “college wage premium”—the benefit gained by earning a college diploma in terms of one’s long-term earning potential. Going to college provides many benefits to an employer, such as increased skills and a signal of work effort. In economic terms, college reshapes a person’s life by increasing his or her productivity, which higher productivity leads to higher earnings. However, obtaining a college diploma is not the only life-altering event that can reshape a person’s life. Another major event is starting a family, which begins with marriage. After marriage, behavior often changes for the better, especially for men, as a person takes on the added responsibility of caring for a household. While harder to quantify, married people are more productive, as shown by higher earnings. Unfortunately, the “marriage wage premium”—the earnings boost stemming from marriage—is not as widely discussed, or lauded, as the college wage

PERSPECTIVE • July 2014

premium. We recently examined data from the U. S. Bureau of Labor Statistics (BLS) Current Population Survey as published in the October 2012 report, “Highlights of Women’s Earnings in 2012.” The data in the two nearby tables show a significant boost in earnings from marriage. Indeed, for the majority of workers the boost exceeds that of going to college. Table 1 shows the median weekly earnings of all workers in America in 2012. A person with a high school diploma earns $652 per week while a person with at least a bachelor’s degree earns $1,165 per week—a difference of 79 percent. The college premium is also higher for men than it is for women. Table 1 also shows the median weekly earnings of people who have never been married at $609 per week while a married person earns $880 per week—a difference of 44 percent. The marriage premium is also higher for men than it is for women. However, the majority of America’s

employed work on an hourly basis (59 percent). These workers tend to be blue collar and thus middle class. For these workers, the situation is very different, as shown in Table 2. A person with a high school degree earns $13.58 per hour while a person with at least a bachelor’s degree earns $18.18 per hour—a difference of 39 percent. The college premium is also higher for women than it is for men. Table 2 also shows the median hourly earnings of people who have never been married at $10.16 per hour while a married person earns $14.99 per hour—a difference of 48 percent. The marriage premium is also higher for men than it is for women. It is very interesting how the marriage premium, on a percentage basis, is actually higher for the majority of working Americans—yet marriage gets so little attention in the media. There is significant social and human capital formation that occurs within a marriage—interpersonal skills, dependability, reliability, integrity, flexibility, and motivation, to name just a few—that has tremendous economic value in the workplace (see the Energy Industry Competency Model). To further illustrate the economic value of marriage, the data also show the impact on earnings from divorce. For both median weekly earnings and median hourly earnings, a person that has been through a divorce suffers a decline in economic productivity (-12 percent for weekly earnings and -5 percent for hourly earnings). In both cases, the negative impact is highest for men. An important extension of this work would be to further disaggregate the data to better ensure an apples-to-apples comparison. The workers represented actually fall into each of these classifications in different proportions, thus

Table 1 Median Weekly Earnings 2012

Characteristic High School Graduates, no college Bachelor's Degree and Higher Percent Never Married Married, Spouse Present Percent Married, Spouse Present Divorced Percent

Both Sexes $652 $1,165 79% $609 $880 44% $880 $774 -‐12%

Men $735 $1,371 87% $620 $981 58% $981 $858 -‐13%

Women $561 $1,001 78% $594 $751 26% $751 $720 -‐4%

Sources: Bureau of Labor Statistics; Oklahoma Council of Public Affairs

Table 2 Median Hourly Earnings 2012

Characteristic High School Graduates, no college Bachelor's Degree and Higher Never Married Married, Spouse Present Married, Spouse Present Divorced

Both Sexes $13.58 $18.88 39% $10.16 $14.99 48% $14.99 $14.25 -‐5%

Men $15.09 $19.87 32% $10.75 $16.24 51% $16.24 $15.32 -‐6%

Women $11.97 $18.18 52% $9.92 $13.81 39% $13.81 $13.23 -‐4%

Sources: Bureau of Labor Statistics; Oklahoma Council of Public Affairs

biasing the results. (For instance, “never married” individuals likely represent a greater proportion of “high school graduates,” which makes it less clear which factor is driving the lower earnings.) Even so, these data from the BLS study are enlightening. Many people lament the fading of the “American Dream” of living a solid middle-class lifestyle, but fail to connect the decline of the American Dream with dramatic increases in divorce and cohabitation. Both cases result in lower household earnings and erode the middle class. Society simply cannot discard the marriage earnings premium without expecting to pay a steep economic cost.

‘Why Do Economists Urge College, But Not Marriage?’ That’s a question Megan McArdle raises over at The Daily Beast.

“College improves your earning prospects,” she writes. “So does marriage. Education makes you more likely to live longer. So does marriage. Yet while many economists vocally support initiatives to move more people into college, very few of them vocally favor initiatives to get more people married.” To read more, visit http://tinyurl. com/bq9d55z.

OCPA research fellow J. Scott Moody (M.A., George Mason University) has worked as a public policy economist for more than 17 years. Formerly a senior economist at the Tax Foundation and a senior economist at the Heritage Foundation, he has twice testified before the Ways and Means Committee of the U.S. House of Representatives. His work has appeared in Forbes, CNN Money, State Tax Notes, The Oklahoman, and several other publications.

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.”

www.ocpathink.org

Anti-Capitalism in the Twenty-First Century By Mike Brake

The political left is aflutter over Capital in the Twenty-First Century, a book by French economist Thomas Piketty, who argues that the much-maligned wealth gap between the haves and have-nots is largely the result of higher returns from capital investment rather than from ordinary wage earnings. His remedy for the gap, not surprisingly, seems to be more confiscatory taxation of the “rich” with further wealth redistribution via government fiat. This must delight some of our American politicians, including the current occupant of the White House, who have made much in recent months over what they term “income inequality.” Of course, they’ve been busily addressing this supposed crisis. Food stamp enrollment rose 70 percent in the first four years of the Obama administration, record numbers are receiving disability payments, and even before the left took to the streets to protest the supposedly nefarious wealthy “one percent,” the administration was moving to boost the top marginal income tax rate to nearly 40 percent. Piketty plays into this mindset. His contention is that income inequality has grown because the rich (who he believes mostly inherited their money) can reap bigger returns by investing a million bucks in stocks and other instruments than a ditch digger can by investing his sweat in an eight-hour day. Which of course is true. Free economies set the value of investments based on their potential returns and the risks involved. Million-dollar investors are inevitably going to earn (and risk) more than workers, but what Piketty forgets is that the workers also benefit from those investments, if only in the influx of capital that created their jobs in the first place.

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Piketty (and presumably many within the corridors of power who are intensely vexed over income inequality) think this is just awful and needs fixing. The problem with all of this is that it is not just wrong, it is counter to what most Americans know instinctively to be true: that most wealth is earned, honorably so, and that when it is it makes things better for everyone. What makes one rich? What makes one poor? The Thomas Pikettys of this world believe that income status and success in life are primarily things that just sort of happen to you, like catching a cold. To them, most rich people, living large on the excessive returns from their invested (often inherited) wealth, are little more than parasites, while the poor are essentially victims of an unfair slicing of the economic pie. Well now. Is this a realistic way to view the world? First of all, without that much-maligned one (or five or 10) percent at the top of the wealth scale, much of the government so beloved of statists would be unavailable. The top five percent of earners in America today pay almost 60 percent of all federal income taxes. The top 10 percent pay more than 70 percent of those taxes, while the bottom half in income contribute just over two percent of federal tax revenues. Those with wealth are also the foundation of much charitable giving. Few cities would have orchestras, museums, or even homeless shelters without the freely given largesse of the successful and prosperous. And ironically, it is those from the supposedly hard-hearted red states who give the most. Chronicles of Philanthropy magazine annually ranks the most generous states,

Piketty’s Questionable Data According to Heritage Foundation researcher Salim Furth, “Thomas Piketty made some questionable choices in adjusting and presenting the data that underlies his bestselling economics tome.” To read Dr. Furth’s analysis, visit tinyurl.com/kt3xbh2.

based on tax returns and the levels of charitable giving they record. The most recent accounting ranks Utah, Mississippi, Alabama, Tennessee, and South Carolina as the most charitable states. Who gave the least? From 46th to 50th they were Rhode Island, Massachusetts, Vermont, Maine, and New Hampshire, all blue to deep blue states where policymakers are often seen wagging their fingers at the supposedly miserly rich. By the way, the often-maligned Koch brothers, targets of Sen. Harry Reid’s ire for backing free-market causes, donated $600 million in one decade to such causes as cancer research and education. So are the rich, as Piketty claims, mostly silver spoon beneficiaries of lucky genes, born to vast wealth and destined to fatten on their underserved capital? Forbes annually ranks the 400 wealthiest among us. In any given year, well over half of them can be fairly described as self-made, rather than lucky inheritors of wealth. On the most recent list, Bill Gates, who famously started Microsoft in a garage, remains number one. Larry Ellison of Oracle, another bootstraps story, is third. Yes, there are Waltons in the top 10, but they are also famously charitable. And despite the loathing of the left, Walmart continues to employ about two million people. Not a bad way to inject one’s capital into the economy. Further negating the Piketty thesis of a permanent upper class waxing fat and sassy on the backs of the poor are many studies that show we continue to enjoy a remarkable level of social and wealth mobility. Mark Rank and Thomas Hirschl recently published the results of their exhaustive study of wealth in America. They found what most of us know to be true from our own experiences and observations. They found that fully 12 percent of Americans would at one time or another find themselves in the coveted top one percent in income for at least one year. Thirty-nine percent were able to make it into the top five percent for at least a period of time, while 56 percent would hit the top 10 list. Conversely, 54 percent would find

themselves at or below the poverty line at some point, if only through a brief run of lousy luck. Lots of us bounce up and down throughout life. The rich are not a selected few living behind moats. Nor are the doors of business independence closed to the ambitious, as Piketty would suggest. The Global Entrepreneurship Institute studied startup businesses in America in 2011. They found that 10 percent of Americans were involved in some form of independently run businesses. In most cases their capital was not inherited wealth, but simple oldfashioned sweat. Sixty-three percent of business founders had their roots in the middle class, 26 percent in the working class. Five percent classified themselves as poor, and just six percent hailed from wealthy backgrounds. The simple truth is that wealth is most often earned, even in Obama’s America. Being economically comfortable, wealthy, or even poor is most often the result of things you do, not of things that happen by accident. Drugs, booze, crime, and sloth are almost certain to make, and keep, one poor. Work, marriage, and education usually result in the reverse. Work, of course, is central to wealth creation. The American Enterprise Institute found that families in the bottom quintile of income had just 0.45 workers per family, while those in the top quintile averaged 2.04 employed people per household. Education is equally obvious; those with medical, law, engineering, science, or advanced degrees earn multiples of those with high school educations or less. Again, these are things they did to place themselves in a position to outearn others. An extensive Heritage Foundation study of the impact of marriage on income and wealth was even more con-

clusive. “Marriage,” the report said, “remains America’s strongest anti-poverty weapon.” More than 37 percent of children in single-parent homes are classified as poor; just under seven percent of those in two-parent households experience poverty. Worse still, single-parent upbringings are exponentially more likely to steer kids into crime, drugs, dropping out, and other negative behaviors, all recipes for extending the poverty cycle into future generations. So things you do or do not do most often help determine your economic fate. Being rich or poor is not the inevitable, or even likely, result of forces outside your control. The loathed one percent often got there by hard work and smart selfmanagement. The bottom five or 10 or even 20 percent are most often mired there because of behavioral issues, not fate. They may be victims, but to find the victimizer they should look in the mirror, not at others. Unfortunately, the Piketty thesis will likely continue to drive much of what passes for public policy in an administration where it is obviously more important to enroll vast numbers in povertyperpetuating social programs than to encourage work and innovation and the creation of wealth that is honorably earned and just as honorably shared.

BEING RICH, OR POOR, IS MOST OFTEN THE RESULT OF THINGS YOU DO, NOT THINGS THAT HAPPEN TO YOU.

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

Oklahoma Public Schools: Worse than You Think By Greg Forster

Yet another new study shows that Oklahoma public schools are worse than you think. It’s not just schools in big cities that are behind. No matter how good a neighborhood you live in, your schools are almost certainly failing to keep up with the high educational standards being set in other leading nations. This shouldn’t be news; other data have been showing the same for years. But few things are as stubborn as the public’s insistence that it’s always somebody else’s public schools that are awful. The newly released Harvard study hammers this home with a report bearing the provocative title, “Not Just the Problems of Other People’s Children.” The study compares the math scores of students in the 34 highly developed countries that make up the Organization for Economic Cooperation and Development (OECD)—basically North America and Europe plus a few other countries like Japan and Australia. The study breaks out results by U.S. state, so we can see how Oklahoma is doing. The bad news is that the U.S. is doing quite poorly compared to other developed nations. The U.S. ranks 27th out of 34 countries, with only 35 percent of students in the class of 2015 proficient in math. That’s compared to 65 percent in Japan, 59 percent in Korea, and 57 percent in Switzerland—the top three countries. Disadvantaged students don’t explain the difference. For one thing, disadvantaged students in the U.S. overwhelmingly drop out of school; our national graduation rate fluctates from year to year but is always below 80 percent. So the students included in this study are already the more advantaged students. For another thing, among students who do remain in school, the same study finds that the U.S. does a worse job than most developed nations at educating the disadvantaged. Those in the class of 2015 whose parents had lower educational outcomes rank 20th among the 34 OECD

10 PERSPECTIVE • July 2014

nations. So don’t let anyone tell you disadvantaged students are dragging down our scores. That’s the bad news. The worse news is that Oklahoma performs below even most U.S. states. Only 27 percent of the Oklahoma class of 2015 is proficient in math, ranking the state 43rd in the U.S. If Oklahoma were a country, it would rank 31st out of the 34 OECD nations. Its educational neighbors are Hungary (33 percent), Greece (24 percent) and Turkey (23 percent). Among students whose parents had low educational attainment, 10 percent of the Oklahoma class of 2015 were proficient; that’s 42nd in the U.S. and the equivalent of 29th in the OECD. If this were just one study, it would be disturbing enough. But other studies like the Global Report Card (GRC) have been saying the same thing for years. Comparing U.S. school districts to 25 developed countries, the GRC found that Oklahoma City students scored at the 25th percentile in math and the 32nd percentile in reading. That means the average student in Oklahoma City performs more poorly than 75 percent of students in the typical developed nation in math, and below 68 percent of students in reading. Think that’s bad? It gets worse. If you picked up Oklahoma City, airlifted it north and dropped it in Canada, it would be at the 17th percentile in math and the 23rd percentile in reading in that country. Even Oklahoma’s most advantaged and presumably highest performing public school districts are actually close to average on the world stage. For example, consider Edmond (51st percentile in math, 58th in reading) and Norman (53rd in math, 59th in reading). Pick up these swanky school districts and airlift them to Canada, and they get even worse: Edmond would be 43rd in math, 49th in reading; Norman would be 46th in math and 50th in reading. It’s an old problem: we’re all biased in favor of our own neighborhood schools. It’s partly local pride. Like all hu-

man beings, I want to feel good about the community I live in. There’s nothing wrong with that impulse, but a century of government monopoly schooling has taught us to equate “good neighborhood” with “good schools.” When children are assigned to schools by ZIP code rather than by parental choice, the distinction between neighborhood and school is blurred. Local pride creates an irrational bias to think that “our” schools must be good. Even more, it’s because parents would feel guilty admitting they’re sending their kids to schools that aren’t as good as they ought to be. Logically, there’s no reason it should shame parents to say that the government monopoly has trapped them in a broken system. But emotionally, no one wants to be the first to stand up and say, “I’m sending my kid to a school that’s shortchanging her, and it’s long past time the politicians in Oklahoma City did something about that!” It feels irresponsible. This problem is itself one reason it’s horribly perverse to give government a school monopoly. It makes us feel like we can’t admit the system is failing without being failures ourselves. These problems may be exacerbated in Oklahoma because it’s a relatively white and rural state. Our cultural image of “failing schools” seems to have been set in stone way back in the 1980s with movies like “Lean on Me.” It’s only the poor, black, inner-city schools that fail. White schools don’t fail. Suburban and rural schools don’t fail. So Oklahoma schools can’t be falling way behind the world curve, consigning our kids to second-class citizenship in the global economy. That kind of thing only happens to dark people. Education reformers, unfortunately, have spent decades reinforcing this prejudice. We’ve typically used only one measurement of what counts as success in education reform: reducing the “achievement gap” between white, suburban schools and minority, urban schools. The unconscious assumption is

Report Cards for Oklahoma School Districts District

Grade on Oklahoma A-F Report Card

How Average Math Student Would Stack Up If Dropped into Canada

How Average Math Student Would Stack Up If Dropped into Singapore

Ada Altus Amber-Pocasset Ardmore Bartlesville Bethany Bixby Broken Arrow Chickasha Chisholm Choctaw-Nicoma Park Claremore Clinton Deer Creek Duncan Durant Edmond Enid Grove Guthrie Guymon Jenks Lawton McAlester McCord Midwest City-Del City Moore Muskogee Mustang Norman Oklahoma City Okmulgee Owasso Ponca City Putnam City Sand Springs Sapulpa Shawnee Stillwater Tahlequah Tulsa Union (Tulsa) Weatherford Yukon

CC AD+ BA AC+ C A B BC A D+ C+ AD+ B D+ D B+ C C A+ C BDBBF D B CCC+ CD+ B+ CF BB B-

31 48 60 22 44 43 37 41 49 33 27 36 23 66 34 32 43 34 36 33 28 37 31 31 42 23 40 18 35 46 17 22 42 27 31 27 27 37 38 27 20 35 65 43

23 35 45 16 32 32 27 30 36 24 20 26 17 50 25 23 31 25 26 24 21 27 22 23 31 17 29 13 25 34 13 16 30 20 22 20 20 27 28 19 15 26 49 32

How Does Your School District Stack Up Internationally? The Global Report Card (GRC), which Greg Forster discusses in the nearby article, allows parents and taxpayers to see how their local school district stacks up internationally. As GRC authors Jay P. Greene and Josh B. McGee explain, the GRC “enables users to compare academic achievement in math and reading for virtually every public school district in the United States with the average achievement in a set of 25 other countries with developed economies that might be considered our economic peers and sometime competitors.” The math achievement of the average student in the Jenks school district, for example, is at the 45th percentile relative to the international comparison group. In other words, one of Oklahoma’s better districts produces students with math performance below that of the typical student in the average developed country. This despite the fact that “the comparison is to all students in the other countries, some of which have a per-capita gross domestic product that is almost half that of the United States,” Greene and McGee say. Here’s another way to look at it. If you picked up the Jenks school district and dropped it into Canada, the average Jenks student would be at the 37th percentile in math. If you dropped it into Singapore, the average Jenks student would be at the 27th percentile in math. Here’s how some other Oklahoma school districts stack up. To see how your school district performs, visit globalreportcard.org.

–Brandon Dutcher

Sources: 2013 Report Card District Grade List, http://afreportcards.ok.gov; Global Report Card, math achievement for 2009 (latest data available), http://globalreportcard.org

that if a school is white and suburban, it must be succeeding. That kind of school must represent the best that American education is capable of. But why? Because it’s white and suburban? It’s past time we quit turning a blind eye to the failures of our own public

schools just because they’re our own. And it’s long, long past time we quit turning a blind eye to the failures of predominantly white schools just because they’re predominantly white. Oklahoma, your public schools are worse than you think—like those of every other state

in the nation. If you don’t embrace real reforms with a proven track record, like school choice, your children will not achieve the potential that the global economy opens for them.

Greg Forster (Ph.D., Yale University) is a senior fellow with the Friedman Foundation for Educational Choice. His research has appeared in the peer-reviewed publications Teachers College Record and Education Working Paper Archive, and his articles on education policy have appeared in the Washington Post, the Los Angeles Times, the Philadelphia Inquirer, the Chronicle of Higher Education, and numerous other publications.

www.ocpathink.org

Powerful Iron Triangle Resists Educational Choice By Brandon Dutcher

As I pointed out in these pages in February, Oklahomans favor policies which give parents more educational options. However, enacting those policies has proven to be difficult. A simple metaphor can help explain why. In their new book Teachers versus the Public: What Americans Think about Schools and How to Fix Them (Brookings Institution Press, 2014), scholars Paul E. Peterson, Michael Henderson, and Martin R. West write: Triangles are the strongest, most rigid, most solid, of basic geometric forms. … Triangles relentlessly resist change. That’s why the three-legged stool is sturdy, the tricycle stable, and the ancient pyramid an architectural triumph. … When iron is cast as a triangular form, the object is tough, strong, and powerful. For political analysts, the iron triangle is the perfect metaphor for characterizing one of the strongest, most stable, and most pervasive aspects of American politics — the connection among producer interests, elected officials, and actions taken by government agencies. Let’s have a look at the three sides of this triangle, starting with the base. Producer interest groups. “Metaphorically speaking, representatives of producer and occupation-based interest groups … constitute the base of an isosceles triangle,” the authors write. “They serve hard, highly concentrated, powerful interests. Those interests connect and support the triangle’s other two sides.” In Oklahoma, these interest groups include the Oklahoma Education Association, the Oklahoma PTA, the Organization of Rural Oklahoma Schools, the United Suburban Schools Association, affiliates

12 PERSPECTIVE • July 2014

of the American Federation of Teachers (AFL-CIO), and other organizations. Elected officials. “By means of steady communication and financial contributions, representatives of producer groups build close relationships with the senators and representatives who serve on relevant committees in Congress, state legislators who act in the same capacity at the middle tier of government, and local officials who serve on special boards and commissions that affect the well-being of the producer group.” This is certainly the case in Oklahoma, where “for too long Republican legislative leaders have carelessly placed members with close ties to the failed education establishment in important committee posts concerning education funding and management,” as OCPA distinguished fellow Andrew Spiropoulos has noted. Local school boards (and the Oklahoma State School Boards Association) are

also part of this triangle’s left side. Typically they are hostile to parental choice, in large part because they are populated by officials elected at odd times — which is just the way the producer interest groups like it. “The people who vote in a stand-alone, low-turnout election are disproportionately those individuals who have a personal stake in the outcome and are organized to further these selfish interests — special-interest groups,” Spiropoulos explains. “Candidates supported by teacher unions and the rest of the school establishment are likely to prevail when everyone else isn’t paying attention.” Government agencies. “The third side of the triangle is formed by the government agencies that produce goods, regulations, and services of interest to the producer group,” the book’s authors write. Fortunately in Oklahoma, the state department of education currently is not hostile to parental choice, though many local school district administrators (and

Mixed Results for Educational Choice in 2014 In a visit to OCPA in late May, Wisconsin Gov. Scott Walker offered a passionate defense of Wisconsin’s statewide school voucher program. It’s not a matter of public schools versus private schools, Walker said. (His own children went to public schools.) Rather, it’s a matter of ensuring that every family has the opportunity to choose the best school for their son or daughter.` Oklahomans want those opportunities. In December 2013 the Friedman Foundation for Educational Choice commissioned a statewide survey of Oklahoma voters. The survey was conducted by Braun Research, Inc., a company which has been used by such research firms as Gallup and the Pew Research Center. Right now more than 9 in 10 Oklahoma students attend a traditional public school. But the survey found that Oklahomans want more choices. The results are especially pronounced among those voters who are paying the closest attention: parents of school-aged children. One in three parents say they would choose a traditional public school for their children. The rest would choose a private school, a charter school, or homeschooling. Doubtless aware of this underwhelming demand for its product, the government school monopoly fights hard every legislative session to make sure none of the little revenue units head for the exits. In 2014 the results were mixed. Oklahoma’s powerful iron triangle (see nearby article) was able to squash a charter school expansion bill, a parent trigger bill, and a bill which would have provided Education Savings Accounts to allow low-income kids in Oklahoma’s worst-performing schools (basically the bottom 10 percent) to go to a private school. However, the monopoly forces were less successful on other fronts. Oklahoma’s scholarship program for Special Education students — which is already saving lives (go to YouTube and type in “Lindsey Nicole Henry Scholarship Stories”) — was expanded to include students who have been provided services under an Individual Family Service Plan through the SoonerStart program. In addition, Oklahoma’s popular tax-credit scholarship program (63 percent of Oklahoma voters favor it, 28 percent oppose) was expanded. Under the program, Oklahomans can donate to philanthropic organizations which help families pay private-school tuition. The newest such organization, the Opportunity Scholarship Fund, was launched this year. Board members include OCPA president Michael Carnuccio and state Sen. Jabar Shumate (D-Tulsa). With these scholarships, kids get an opportunity to go to a school where the third-grade illiteracy rate is — here’s a concept — zero. And donors get a 50 percent tax credit. A new law increases the tax credit to 75 percent. In his OCPA visit, Gov. Walker made the point that Wisconsin’s voucher program is causing the public schools to improve. No surprise there. As education researcher Greg Forster has noted, “twenty-three empirical studies have examined school choice’s impact on academic outcomes in public schools. Of these, 22 find that choice improves public schools and one finds no visible impact. No empirical study has found that choice harms public schools.” Let’s empower Oklahoma parents with the choices they want and deserve. –Brandon Dutcher the Cooperative Council for Oklahoma School Administration) certainly are. In summary, then, “an iron triangle encloses a space that is virtually impossible to penetrate,” the authors write. As a metaphor, it captures the reality that producer groups excel at discovering channels of communication that access information unavailable to the general public. Iron triangle politics are quiet, operating beneath the radar, almost in secret. To capture special benefits from the public trough, the producer group needs to belly up to the goodies while squeezing others to the side. Producer groups succeed in insu-

lating policy decisions from external pressures because they have the focus and resources to pursue their goals effectively; the attention of the general public, in contrast, is too episodic and scattered to have an impact, except in times of crisis. … Ordinarily, the iron triangle operates quietly — at the public’s expense. Which is why, year after year, Oklaho-

ma’s political leaders increase education spending without implementing widespread parental choice, as Spiropoulos points out. They simply don’t have “the energy, desire, or intellectual capacity to fight the powerful education establishment. It’s just easier to give them what they want.” Even if it’s not what parents want.

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 200 newspapers throughout Oklahoma and the U.S.

www.ocpathink.org

@OCPAThink 1. Wisconsin Gov. Scott Walker chats with OCPA’s Jonathan Small at a May 29 event at OCPA. Gov. Walker told a small group of OCPA supporters that Wisconsin’s statewide voucher system is causing the public schools to improve.

2. On June 11 in Oklahoma City, OCPA participated in a panel discussion hosted by The Charles Koch Institute on “Expanding Opportunity in Oklahoma: Earned Success and the Paths to Prosperity.” OCPA’s Jonathan Small (left) is pictured here with Ryan Kiesel, executive director of the American Civil Liberties Union of Oklahoma. 3. On June 6 at the Harkins Theatre in Bricktown, OCPA hosted a premier screening of Dinesh D’Souza’s new film “America.” The event featured a prescreening VIP reception and book signing at RedPin Restaurant and Bowling Lounge. Attendees were later treated to post-screening questions and commentary with Dinesh D’Souza, writer and co-director of the film, and co-producer Gray Frederickson. “America” opens nationwide on July 2. OCPA trustee Josephine Freede and OCPA president Michael Carnuccio are pictured here at the screening.

4. U.S. Congressman Jim Bridenstine (OK-1) is pictured here with Dinesh D’Souza. 5. Pictured here are “America” co-producer Gray Frederickson, Dinesh D’Souza, and Pam Pollard, state president of the Oklahoma Federation of Republican Women. 6. On May 22 OCPA broke ground on its new Advance Center for Free Enterprise, a 6,500-square-foot multipurpose facility located on the OCPA campus at the northwest corner of 13th and Lincoln. 7. Pictured here at the groundbreaking are (left to right) Oklahoma City Mayor Mick Cornett, Joan and Paul Allen, Jean and Dave McLaughlin, and OCPA chairman Dr. David Brown. 8. OCPA trustee Greg Slavonic is shown here with Gov. Walker. 9. OCPA president Michael Carnuccio chats with OCPA chairman Dr. David Brown at the “America” screening.

14 PERSPECTIVE • July 2014

9 www.ocpathink.org

It’s Time to Phase Out Oklahoma’s Personal Income Tax By Jonathan Small

Oklahoma is moving forward with a plan, Gov. Mary Fallin wrote in 2012, which will “chart a course toward the gradual elimination of the state income tax.” Progress has been slow on that front, but now is no time for policymakers to abandon this worthy goal. Oklahoma Secretary of Commerce Larry Parman is one leader who has called for phasing out the tax. He says the absence of an income tax is one tool that would be extremely beneficial to him and to the state in the fierce competition among states to attract entrepreneurs and job creators of all sizes in all industries. Liberals and tax consumers often predict that personal income tax cuts will only help “the rich” and will lead to sharp declines in government revenue and a decimation of government services. But those predictions have proven to be false. Oklahoma’s Office of Management and Enterprise Services (OMES) is responsible for preparing the state’s Comprehensive Annual Financial Report (CAFR). The FY-2011 and FY-2013 CAFRs reveal that personal income tax cuts in Oklahoma have benefited state government and Oklahoma taxpayers from 2004 to 2011 (the latest available data). Over this period, the number of tax filers with adjusted gross income (AGI) of more than $50,000 has increased by 152,029, or 39 percent. These filers paid 76 percent of total personal income taxes in 2004 but paid 84 percent in 2011. Tax filers with AGI of $25,000 or less paid 6 percent of total personal income taxes in 2004 but paid 3 percent in 2011. Total personal income tax liability for these filers declined 55 percent — from $167 million in 2004 to $75 million in 2011. Even though there were more filers in 2011 than in 2004 with AGI of $25,001 to $50,000, those filers paid $133 million

16 PERSPECTIVE • July 2014

less in personal income tax. Tax cuts didn’t just help taxpayers. State government officials regularly report that Oklahoma total net state tax collections are at all-time highs. Total net state personal income tax collections set a record the last two years and are on pace for a record for FY-2014. State sales tax collections soared over the last decade. Net state sales tax collections were $1.4 billion in FY-2003. In FY-2013, the most recent fiscal year, net state sales tax collections were $2.2 billion, an increase of $871 million. That’s 62 percent in just 10 years. (Inflation over this same period was 27 percent, state population growth was 9 percent, and state personal income growth 39 percent.) Total net state sales tax collections set a record the last two years and are on pace for a record for FY-2014. Moreover, according to the CAFR, Oklahoma’s total state spending set a record high every year for at least the last decade and is on pace for yet another record high. Total available revenues for common education are at all-time highs, according to the Oklahoma State Department of Education, with local revenues surging more than $300 million from FY-2008 to FY-2013. Some continue to deny the reality of a dynamic economy and continue to argue that personal income tax cuts cannot be credited for any amount of growth in other revenue sources. But it is undeniable that their predictions that tax cuts would lead to doom, gloom, and despair have proven false.

Research and human action demonstrate that taxes on productivity are the most damaging. The personal income tax is a direct penalty on work, entrepreneurship, and job creation. Oklahoma has made significant strides over the last decade but cannot afford to be complacent. It’s simply a fact that the states with no personal income tax outperform the nine highest-taxed states, the national average for states, and even Oklahoma. According to the U.S. Census Bureau, from 1992 to 2011 Oklahoma lost nearly $1 billion in AGI as a result of Oklahomans choosing to relocate to other states. It’s no coincidence that over that time period Oklahoma lost $1.3 billion to Texas and $296.9 million to Florida, both no-income-tax states. Oklahoma now is in the “incometax sandwich” that governor Mary Fallin feared. Of the six states surrounding Oklahoma, four penalize work less than Oklahoma does, completely surrounding Oklahoma’s north, south, and west borders. To be sure, more must be done to unleash human potential in Oklahoma. Oklahoma must implement strong K-12 school choice alternatives, expand and embrace the national free market health care movement taking place in Oklahoma, and desperately needs corrections reform. But achieving the goal of phasing out Oklahoma’s personal income tax is the one economic policy change which will expand economic opportunity for the majority of Oklahomans.

Jonathan Small, C.P.A., is the vice president for policy at OCPA. He previously served as a budget analyst for the Oklahoma Office of State Finance, a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department.

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In Review:

Oklahoma’s 2014 Legislative Session By Dave Bond

The Republican supermajorities which are in control at the Oklahoma state capitol produced a mix of policy victories and missed opportunities during the 2014 legislative session, which concluded on May 23. Policy Victories Major reform of Oklahoma’s government employee pension system. Oklahoma’s pension debt is $11 billion and growing. Prior to this legislative session, OCPA provided a roadmap for converting new hires at most state government agencies to a definedcontribution retirement system, similar to the 401(k) structure used in the private sector. With leadership from state Rep. Randy McDaniel and state Sen. Rick Brinkley, the reform was enacted. Taxpayers and public-sector retirees will benefit. Preventing a 600 percent increase in Oklahoma’s tax rate on oil and natural gas drilling. Job creators in Oklahoma’s energy production industry pay a specific penalty, the state’s gross production tax, in addition to the myriad of other state taxes they and their employees and contractors pay. The industry already pays more in taxes to Oklahoma state government than any other industry. But before session, tax consumers began pushing the myth that energy producers were not paying their “fair share” in state taxes and demanded that Oklahoma’s 1 percent gross production tax on horizontal and deep wells be increased to 7 percent. In the final week of session, the Legislature passed a compromise setting the gross production tax on all new wells drilled in Oklahoma—horizontal, deep, conventional, vertical, or otherwise—at one, low rate of 2 percent. Lawmakers also locked in the structure permanently, so energy producers will have more certainty to allocate capital in Oklahoma. Missed Opportunities Failure to keep pace in the interstate tax competition to attract jobs and opportunity. Oklahoma is in an “income tax sandwich” between Kansas and no-income-tax Texas. Kansas has dramatically reduced its income tax below Oklahoma’s 5.25 percent rate, with more reductions scheduled, and eliminated taxes on small business profits. A plan by state Rep. Leslie Osborn, state Rep. Tom Newell, state Sen. David Holt, and state Sen. Nathan Dahm to lower Oklahoma’s rate to 4 percent proved too bold. Instead, the Legislature passed a bill that would lower Oklahoma’s income tax to 5 percent in 2016, if tax collections reach certain levels. While delayed, this tax cut is still significant because it keeps momentum going in the right direction and does not include tax-code manipulations that, in past sessions, threatened to increase payments on middle-income families. No significant expansion of educational choice. State Rep. Jason Nelson proposed allowing certain Oklahoma parents to use Education Savings Accounts (ESAs) to place their children in schools outside the public system. Public schools work for many students, but not for all. Parents tend to know best what their children need, and ESAs would expand options, at a savings to taxpayers. Nelson’s bill failed in committee. No Medicaid reform. Despite Gov. Mary Fallin’s rejection of Obamacare’s costly Medicaid expansion, Oklahoma’s Medicaid program is still enormous. Policymakers in Florida, Louisiana, and elsewhere have utilized innovative methods to take greater control of federal Medicaid dollars and reduce costs. A plan by state Sen. Kim David and state Sen. AJ Griffin to take similar steps in Oklahoma was put on hold. Failure to create a leaner, more efficient state government. Lawmakers passed a $7.12 billion budget that is the largest in state history and contains hundreds of millions of dollars in nonessential spending, including golf courses and rodeos. Dave Bond is CEO of OCPA Impact.

OCPA Impact is the only organization working every day at the Oklahoma Capitol during the legislative session as an advocate for taxpayers on issues of free markets and limited government. To join our action alert network, visit www.ocpaimpact.com. www.ocpathink.org

To Win the Presidency, the Right Must Expand the Electoral Map By Matt A. Mayer

In a recent op-ed, political Svengali Karl Rove correctly noted that history is against the same party winning the presidency three terms in a row. In fact, George H.W. Bush’s win in 1988 is the only example in the last 60 years. Rove used this factoid to make the case against Hillary Clinton winning in 2016. This electoral history, however, is misleading for one very important reason: The Electoral College advantage Democrats now have due to the big blue states. In the six elections since 1988, Republicans have only won twice. Those two victories by George W. Bush barely hit the 270 electoral vote threshold: 271 in 2000 and 286 in 2004. Don’t forget that Al Gore won the popular vote in 2000, losing Florida by a mere 537 votes. In contrast, the four Democratic wins in 1992, 1996, 2008, and 2012 hit 370, 379, 365, and 332 electoral votes. Why such lopsided wins? Rove’s historical guide is significantly weakened by the low margin-of-error strategy to which the Republican candidate must adhere. Specifically, the Republican candidate must nearly run the table on the battleground states in order to squeak into the White House, whereas the Democratic candidate has multiple pathways to victory. Let me break it down by state and electoral votes. The Democrat will almost always win the following states and the District of Columbia: California, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin. Republicans haven’t won New York, Oregon, Washington, or Wisconsin since Ronald Reagan’s 1984 landslide win. They haven’t won California, Illinois, Michigan, New Jersey, or Pennsylvania since 1988. Those states are worth 183 electoral votes. Thus, the Democrat likely enters the 2016 election with a base of 242 electoral votes.

18 PERSPECTIVE • July 2014

The Republican will almost always win Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming. Those states give the Republican a base of 170 electoral votes. This electoral vote allocation leaves the Democrat just 28 electoral votes from The White House, while the Republican needs an additional 100 electoral votes to win. There are only 126 electoral votes left among the 11 battleground states. This assumes Colorado and Virginia really remain toss-up states, which is doubtful. Thus, the Republican must win 79 percent of the remaining electoral votes. To put a starker gloss on the Republican’s tough predicament, a loss in just Florida ends the race. Period. So, while the Democrats are trying to turn reliable red Texas blue, based on long-term demographic trends they see as favorable, Republicans should be doubling-down on efforts in Florida, Indiana, Missouri, North Carolina, and Ohio and seeking breakthroughs in California, Illinois, Michigan, New Jersey, and Pennsylvania. Why those five blue states? Because liberal-progressive policies decimated those states fiscally, thereby giving Republicans a strong opportunity to present voters with clear contrasts. Additionally, left-wing federal and state mandates are crushing farmers, energy producers, and job creators in those states. On a more practical level, if Republicans can make headway in those states, Democrats will have to spend precious resources shoring them up. Every dollar spent in expensive media markets in blue states is a dollar not spent in battleground states or Texas. We will see this November if Illinois voters drop inept Democrat governor Pat Quinn for a more fiscally responsible Republican alternative. Voters in Michigan, New Jersey, and Pennsylvania already

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Population shift favors Republicans, but not by much

–1

E L EC TO RAL VOT E S I N 2 01 2 ( ■) AN D 2 03 2 P ROJ EC T ED ( )

The U.S. population is shifting towards states in the South and Southwest and away from states in the Northeast and Midwest. This means a larger share of the population will reside in states that traditionally lean Republican, which could alter the allocation of electoral votes for presidential elections. In the projection below, Republican states would pick up 8 electoral votes in 2032 while Democratic states would lose 17. That would narrow the gap but still leaves the Democratic Party with a sizeable advantage going into the 2032 presidential election. +5

2012: 242

2032: 225

DOWN 17 electoral votes

2032: 178

UP 8 electoral votes

UP 9 electoral votes +3

2012: 170 30

–4

2032: 135 2012: 126

–2 –3

–2 15

–1

–1 10

–2 +1 +2

–1 –1 +1

–1

+1 –1 –1

Florida North Carolina Ohio Virginia Colorado Indiana Missouri Nevada Iowa New Mexico New Hampshire

Texas Georgia Arizona Tennessee South Carolina Alabama Kentucky Louisiana Oklahoma Utah Arkansas Kansas Mississippi Idaho Nebraska West Virginia Alaska Montana North Dakota South Dakota Wyoming

California New York Illinois Pennsylvania Michigan New Jersey Washington Maryland Massachusetts Minnesota Wisconsin Oregon Connecticut Hawaii Maine Delaware D.C. Rhode Island Vermont

–1

Lean Democratic

Lean Republican

Battleground

Note: States are categorized based on presidential elections from 1984 to 2012. Source: U.S. Census Bureau data.

made that decision, but more needs to be done to turn those states truly purple. History is a reliable guide upon which to make predictions about the future. It depends, however, on the timeframes you use to make those predictions. Democrats may not in fact win a third straight term in 2016, but the electoral history since 1988 gives them a much smoother path than Republicans.

It is time to invest even more in permanent outreach efforts in key states. Unless it wants to continue winning just two of six elections, the Right must expand the electoral map. The sooner, the better. Matt A. Mayer is chief operating officer of the Liberty Foundation and author of Taxpayers Don’t Stand a Chance and The Founding Debate.

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QUOTE UNQUOTE “The fall of the Soviet Union should have spelled the demise of central planning, yet the socialist mentality thrives—albeit in a diluted form—in all governments in the so-called ‘free world.’”

“I like those amendments to the Constitution. They are foundations to democracy. But that’s all they are, foundations. You can’t live on them.”

Thomas Russell, an equal opportunity official at Cameron University, who used the university’s speech code to censor a student’s constitutionally protected speech

“Over the past decades we’ve talked of curtailing government spending so that we can then lower the tax burden. Sometimes Economist Robert P. Murphy, instructor for the Mises Academy course “How the Government we’ve even taken a run at doing that. But there were always Wrecks the Economy” those who told us that taxes couldn’t be cut until spending was reduced. Well, you know, we can lecture our children about “The natural progress of things extravagance until we run out of voice and breath. Or we can is for liberty to yield and cure their extravagance by simply reducing their allowance.” government to gain ground.” President Ronald Reagan Thomas Jefferson

“We are not content to accept the endless growth of relief rolls or welfare rolls. ... Our American answer to poverty is not to make the poor more secure in their poverty but to reach down and to help them lift themselves out of the ruts of poverty and move with the large majority along the high road of hope and prosperity. The days of the dole in our country are numbered.”

President Lyndon Johnson, at the signing ceremony for some of his initial War on Poverty legislation