Ripon Forum - February 2017 by The Ripon Society

TODD YOUNG ON THE MESSAGE OF HIS WINNING CAMPAIGN: “Hoosiers want someone who is going to fight for them.”

February 2017 Volume 51, No. 1

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The New Watchword in Washington How President Trump & Congress can provide the American people with a better return on their tax dollars With essays by T. Boone Pickens, Tom Cole, Frederick Hess, Tevi Troy & Emil Frankel www.riponsociety.org

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“Ideas that matter, since 1965.“ Volume 51, Number 1 Cover Story (cont’d)

Debate 4 5

Continuing the Shift on Cuba By Tom Emmer Continuing Unilateral Concessions Towards Cuba is not in the U.S. Interest By Ana Quintana

Politics & Perspective 8

How Republican Governors are Turning New England Red By Gary Sasse With Republicans controlling four out of six executive mansions in New England, a look at how to expand GOP gains region-wide.

Even the OECD Admits Big Government Undermines Prosperity By Daniel J. Mitchell Two economists for the Paris-based organization recently wrote a remarkable paper about the impact of government spending on GDP.

Cover Story 14

Value: The New Watchword in Washington By Lou Zickar The test for the President and Congress over the next few years will not be their allegiance to anti-government mantras. It will be their ability to put taxpayer dollars to good use.

How to Make America Great Again with Domestic Energy Resources By T. Boone Pickens The legendary businessman offers his advice on how the new President can secure our nation’s energy future, and outlines the plan he has authored to do just that. Publisher The Ripon Society

Editor Lou Zickar

President Jim Conzelman

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Making Social Security Last For All By Tom Cole Protecting Social Security will not only preserve this important program for future generations, but will send a message to taxpayers that their money is being well spent.

Stretching the School Dollar By Frederick M. Hess The U.S. spends close to $700 billion a year on K-12 schooling, yet our results are middle-of-the pack and our colleges are beset by price inflation and unhelpful degrees.

Getting a Better Return on Our Health Dollars By Tevi Troy The average American pays over $9,000 for health care each year, and yet the life expectancy of the average American ranks 42nd in the world.

Rebuilding America’s Infrastructure: There’s a will, but is there a way? By Emil H. Frankel As Congress and the new President look to rebuild America’s aging infrastructure, a look at how they can overcome some of the obstacles that have stood in their way.

Sections 3

In this Edition

News & Events -- coverage of the release of The Ripon Society’s 2nd Annual Survey of the American Electorate.

Ripon Profile - U.S. Senator Todd Young

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RIPON FORUM February 2017

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THE RIPON SOCIETY HONORARY CONGRESSIONAL ADVISORY BOARD U.S. Senators: Shelley Moore Capito - Senate Co-Chair Cory Gardner - Senate Co-Chair Roy Blunt Richard Burr Bill Cassidy, M.D. Susan M. Collins Steve Daines Joni Ernst Deb Fischer Orrin G. Hatch John Hoeven Jerry Moran Pat Roberts Mike Rounds Thom Tillis Roger Wicker Todd Young U.S. Representatives: Pat Tiberi - House Co-Chair Susan Brooks - House Co-Chair Martha Roby - Vice Chair, South Erik Paulsen - Vice Chair, Midwest Bill Shuster - Vice Chair, Northeast Greg Walden - Vice Chair, West Mark Amodei Andy Barr Mike Bishop Diane Black Marsha Blackburn Vern Buchanan Larry Bucshon, M.D. Michael C. Burgess, M.D. Ken Calvert Jason Chaffetz Tom Cole Barbara Comstock Ryan Costello Carlos Curbelo Rodney Davis Jeff Denham Charlie Dent Sean Duffy Tom Emmer Bill Flores Rodney Frelinghuysen Kay Granger Sam Graves Joe Heck French Hill Bill Huizenga Randy Hultgren Darrell Issa Evan Jenkins Lynn Jenkins Dave Joyce John Katko Mike Kelly Adam Kinzinger Leonard Lance Darin LaHood Billy Long Frank Lucas Tom Marino Kevin McCarthy Michael McCaul Cathy McMorris Rodgers Patrick Meehan John Moolenaar Tim Murphy Kristi Noem Bruce Poliquin John Ratcliffe Tom Reed Jim Renacci Tom Rice Tom Rooney Peter Roskam Steve Scalise John Shimkus Lamar Smith Steve Stivers Glenn Thompson Mac Thornberry Mike Turner Fred Upton Jackie Walorski Mimi Walters Brad Wenstrup Steve Womack

In this Edition

Five days after the inauguration, seven protesters climbed a crane in downtown Washington and hung a banner across the top. From a political standpoint, the protest was a flop. The protesters were arrested at the end of the day, and the cause that they were promoting was quickly forgotten. From a visual standpoint, though, the protest was a resounding success. For when viewing the crane from the Ellipse along Constitution Avenue, the banner appeared to be hanging directly over the White House. The banner read, “Resist,” The image soon went viral, and became a fitting symbol of the Trump Administration’s protest-filled early days. And yet, when one thinks about the volatile first month of the Trump presidency, one could easily imagine another banner from our recent political past hanging above the White House – a banner that read, “Mission Accomplished.” Indeed, to the extent that one of the President’s stated goals coming into office was to disrupt Washington and upend the old way of doing things, then the first four weeks of his term can be called a resounding success. But just as George W. Bush’s mission was far from accomplished when he strode triumphantly across that aircraft carrier in 2003, so too is Donald Trump’s mission far from being accomplished as he tweets up a storm today. For in addition to being elected to upend Washington, he was also elected to make Washington work. Chaos is easy. Governance is hard. And in that regard, America’s new President has a long way to go. The goal of this edition of The Ripon Forum is to look at ways that the President and Congress can provide the American people with better value for their tax dollars. Poll after poll shows that Americans have lost faith in their government. Yet these same polls also reveal that Americans would like to have a government that works. We look at areas where this can be accomplished with essays from leaders representing the world of business, politics, and academia. The leaders include: T. Boone Pickens, writing about energy; Tom Cole, writing about Social Security; Rick Hess, writing about education; Tevi Troy, writing about health care; and, Emil Frankel, writing about transportation and infrastructure. This latest edition also includes an article about The Ripon Society’s 2nd Annual Survey of the American electorate. The survey asked the public for their opinions on issues ranging from health care to taxes to trade. In keeping with the theme of this edition, it also gets their take on Washington and the role of government in our lives. The results are very informative. Also informative in this latest edition is an op-ed by Dan Mitchell of the CATO Institute looking at the size of government and its impact on a nation’s GDP. Gary Sasse of the Hassenfeld Institute for Public Leadership at Bryant University looks at the growing number of GOP Governors in New England and whether that could be the start of a trend that turns this blue region of the country red. In our latest debate, Minnesota Congressman Tom Emmer squares off against Ana Quinana of the Heritage Foundation in a discussion about Cuba and why relations with the Communist country to our south should – or should not be – restored. And in our latest Ripon Profile, newly elected Senator Todd Young discusses why his message resonated with voters and some of the challenges facing the Hoosier state this year. As with all editions of the Forum, we appreciate your readership and welcome any thoughts or ideas that you may have. Lou Zickar Editor of The Ripon Forum louzickar@riponsociety.org RIPON FORUM February 2017

Debate

“U.S. RELATIONS WITH CUBA: A CLEAN SLATE OR DEMOCRACY FIRST?”

Continuing the Shift on Cuba by T O M E M M E R As President Donald Trump took office, Republicans its agricultural purchases to European countries like in Congress were swept up in the reality of the France and Germany, in addition to Brazil, Argentina, and opportunity that lies ahead. Conservatives finally have an Canada which offer more favorable credit and financing administration which affords them the ability to unwind terms for agricultural products. years of unilateral policymaking that has constrained As a representative from one of the largest agriculture economic growth, weakened our national security, and producing states in the country, it is imperative that increased federal intrusion into our everyday lives. For Minnesotan agriculture producers and growers have the many, myself included, a policy “about-face” on so opportunity to compete for access in this marketplace just many fronts cannot come soon 90 miles off our Florida coast. enough. That is why legislation like When it comes to furthering Representative Crawford’s Cuba economic and diplomatic ties Agriculture Exports Act, which with Cuba however, such a enables financing for the sale policy reversal may be the last of agricultural commodities to thing a Trump Administration Cuba, is so important. Improving should undertake. access to Cuba’s $2 billion The actions President agricultural import market will Obama took on December 17, bolster an industry that supports 2014 to begin normalizing millions of American jobs and relations with Cuba, as families. unilateral as they were, opened The economic opportunities up a line of communication made possible through continued that was otherwise dormant for U.S. engagement with Cuba, more than half a century. While however, expand well beyond engagement with Cuba may not agriculture. While the travel result in unprecedented levels of and tourism industry is a widely economic growth or immediate acknowledged beneficiary of The economic opportunities peace and prosperity in the improved relations with Cuba, made possible through region, there are numerous other industries are poised to benefits that could be realized benefit as well. continued U.S. engagement if we continue to shift away Consider the following with Cuba expand well from the Cold War mentality of statistics – from 2008-2015: isolation. the number of mobile phone beyond agriculture. With a population of just subscriptions in Cuba has under 11.2 million, the Cuban increased to 3 million; the number economy is heavily reliant on imports to sustain itself. of Wi-Fi hotspots on the island increased from zero to 65 by In 2014, Cuba imported $9.3 billion in goods, including the end of 2015 and continues to grow; and the percentage nearly 80 percent of its food. Unfortunately, rather than of the island’s workforce in the Cuban non-agricultural ensuring Cuban families and restaurants source their private sector (which consists largely of self-employed produce and food products from American farmers, the entrepreneurs known as cuentapropistas) has grown from United States - which used to be one of Cuba’s main 17 to 29 percent. Service providers have also experienced sources of agricultural goods – has actually seen its growth, including Airbnb, a popular U.S.-based travel and share of the agriculture export market steadily decline accommodation company which began operating in Cuba in in recent years due to embargo-related restrictions. April 2015 and now has over 4,000 listings. Instead, the Cuban government has increasingly shifted (cont’d on p. 6) 4

RIPON FORUM February 2017

“U.S. RELATIONS WITH CUBA: A CLEAN SLATE OR DEMOCRACY FIRST?”

Continuing Unilateral Concessions Towards Cuba is not in the U.S. Interest by A N A Q U I N TA N A President Obama spent the last two years of his for good headlines, it makes for terrible policy. Despite administration attempting to convince the American the promises of change, the Cuban government has people that a new course for Cuba policy was in not loosened its grip on power. In 2016, nearly 10,000 order. In spite of the Cuban government’s continued politically motivated arrests occurred. Nearly 500 crackdowns against peaceful dissidents and hostility alone occurred during the 72 hours that Obama and his against the United States interests, he argued that family spent on the island. A few of those arrested even it was time for America -- not Cuba -- to change its had appointments to meet with the American President. behavior. That is exactly what President Obama did. Religious persecution also increased tenfold from 2014 Via executive orders and without to 2015, going from 220 cases significant congressional support, to 2,300 particular violations his administration embarked on a occurring. In the meantime, the new policy aimed at legitimizing concessions for Havana kept the Castro regime. churning out of Washington over From lobbying Congress to the past two years. lift the embargo to increasing A well-funded lobbying commercial opportunities for campaign of corporate interests the Castro regime, the Obama has supported these efforts. Administration’s Cuba policy The agriculture lobby has been overwhelmingly benefited the particularly keen on seeing the Cuban government at the expense embargo lifted so they can secure of the Cuban people. Arguably, financing for their exports. What it was designed that way from they fail to mention is Cuba’s the beginning. Indeed, President long history of failing to repay Obama’s announcement on its debts. Despite being close December 17, 2014, made no Cold War allies, Russia was mention of tens of thousands forced to waive over $35 billion Ana Quintana of dissidents imprisoned, the of Cuba’s debt. Mexico waived political opponents murdered, or almost $500 million, and Cuba America got nothing in the catastrophic repression of the still owes the Paris Club $15 return for its decision to past half century. billion. This does not include the Diplomacy is dependent close to $8 billion Americans are normalize relations with on the right words, and the owed as part of the 5,913 claims Cuba, and the human immediate results of Obama’s certified by the Department words were the clear impression rights situation on the of Justice. Since the Trade of his capitulation. While Sanctions Reform and Export island has not improved. Cuba received the diplomatic Enhancement Act was approved recognition, the promise to be in 2000, American businesses removed from the State Sponsor of Terrorism list, the have been able to sell agricultural products to Cuba promise for increased commercial opportunities, and as long as they are paid for with cash. Any reasonable the return of their three convicted spies, the U.S. was person can see the logic behind requiring cash upfront left empty-handed. from a country that is unwilling to pay its debts. Proponents of the Obama Cuba policy point to the When looking at the future of our Cuba policy, increasing numbers of American visitors and his three- timing is everything, Cuban leadership is physically day trip to the island as markers of success. While fragile. Nearly three months after the death of Fidel tourists sipping mojitos and staged photo ops may make (cont’d on p. 6) RIPON FORUM February 2017

(Emmer, cont’d from p. 4) like Venezuela and China have sought to maintain These trends reaffirm the Cuban people’s desire their influence on the island and unfortunately, these to “get connected” and join the global economy. They nations do not always share our values or have our also represent opportunities for the United States. best interests in mind. In a time where the threat Lifting the embargo will enable businesses, services, of attack can come from another nation or a lone actor, we need to ensure and content to enter the we maintain a strong and Cuban marketplace, creating Lifting the embargo is not just secure relationship with our American jobs and allowing neighbors in the region. American brands, culture, about the economic benefits – it Correcting our and even democracy to will also strengthen our national course with Cuba will be take root. That is why I challenging, but our nation and regional security. have introduced the Cuba cannot afford to revert back Trade Act of 2017, to lift Tom Emmer to a policy of isolation. This the embargo and make these does not mean we should opportunities a reality. By giving American businesses the ability to trade freely discard the claims of the many who have lost their with Cuba, we are empowering two of our nation’s freedoms, their property, or even their loved ones under strongest ambassadors for change; the American the brutal Castro regime. However, by engaging with Cuba we can create new jobs, improve our security, people and the American private sector. But, lifting the embargo is not just about the and generate new opportunities for both countries as RF economic benefits – it will also strengthen our national we work to right the wrongs of the past. and regional security. History has demonstrated that there are other nations eager to fill the United Tom Emmer represents the 6 th District of Minnesota in States’ role while the embargo is in place. Countries the U.S. House of Representatives.

fruit in this regard are regulations that allowed U.S. (Quintana, cont’d from p. 5) Castro, questions are increasing about the future of companies to override the law and go into business Cuba after 85-year old Raul Castro steps down in early with the Cuban government. He should rescind the 2018. A power struggle is occurring within the incoming regulations allowing for licensing deals, financing, and leadership, and it is unknown as to who will take over. banking transactions with state and military entities. President Donald Trump’s position on Cuba is There are specific criteria governing the nature of our quite clear. In November, he said “If Cuba is unwilling relationship with Cuba, and we must comply with those statutory requirements. to make a better deal for The executive orders the Cuban people, the and directives issued by Cuban/American people The Cuban government has not former President Obama and the U.S. as a whole, improved its behavior towards the are inconsistent with I will terminate the deal.” United States either. U.S. law. His Secretary of State, Rex America got nothing Tillerson, also promised to Ana Quintana in return for its decision “press Cuba to meet its to normalize relations pledge to become more with Cuba, and the human rights situation on the island democratic and consider placing conditions on trade has not improved. The Cuban government has not or travel policies to motivate the release of political improved its behavior towards the United States either. prisoners.” Needless to say, the leverage is fully on the side We must pursue a Cuba policy that enables and fosters of the Trump Administration. It must capitalize on a democratic transition and ends the rule of the Castro the momentum and the Cuban government’s need regime. There are few things more “America First” than RF for continued relations with the U.S. Cuba’s sole fixing what Obama broke in Cuba. benefactor, Venezuela, can barely afford to feed its people, let alone continue pumping oil money onto Specializing in Latin American issues, Ana Quintana the island. President Trump should start by reverting is a policy analyst in The Heritage Foundation’s regulations that overstretched the law. Low-hanging Allison Center for Foreign Policy. 6

RIPON FORUM February 2017

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Politics & Perspective

How Republican Governors are Turning New England Red by GARY SASSE

New England is often described as a solidly Democrat Indeed, the economic dogmas of the New Deal have been region. When one looks at the numbers, it is easy to see why. insufficient in addressing the economic concerns of working Only one of New England’s 33 congressional seats is held families, recent graduates, and small businesses in New England by a Republican, and Democrats control eight of the 12 state today. From the rise of technology to the impact of globalization legislative chambers. And yet as a result of last November’s to the decline of manufacturing, the region has found itself general election, Republicans now serve as governors in four of lagging behind the rest of the country in its ability to compete. A report released last month by the six New England states -- Maine, the non-partisan New England Massachusetts, New Hampshire and Economic Partnership reflected Vermont. this, finding that the region’s overall While nobody can predict the growth is expected to drop below the future, all signs suggest that the 2018 national average, and the region’s gubernatorial races in both Connecticut employment growth is expected and Rhode Island are eminently to be below national employment winnable. The ascendency of New growth through 2018. England’s Republican governors has In light of these failures, it not gone unnoticed. A recent article in is not enough for Republicans to the Washington Post was headlined, merely point out how Democratic “Governors lead a Republican policies have come up short. renaissance in New England”. The Instead, voters must be convinced question facing Republicans in the that GOP initiatives can work and region is whether GOP victories at make a real difference in their lives. the gubernatorial level can usher in a Massachusetts Governor Charlie new political order at other levels of Baker summed the situation up government, as well. this way in an interview with the Political success will require Washington Post: “Our job is to many things. Rather than talking Gary Sasse focus on what matters most to about the economy in broad terms, people. Is my neighborhood safe? for example, GOP governors must be The question facing Do I have a good job? Are the ready to focus on specifics that place schools I send my kids to going to state government on the side of both Republicans in the region prepare them for the future.” working families and small business. is whether GOP victories Maine GOP Chairman Rather than being critical of social at the gubernatorial level Richard Bennett agreed, saying that, programs, Republican governors must lead and promote those that foster can usher in a new political “Republican governors are successful candidates when they roll up their work, opportunity and self-sufficiency. order at other levels of sleeves and propose practical ways to Rather than imposing state mandates, fix things and not focus on ideology.” Republican governors must deliver government, as well. services based on the principles of Put another way, Republicans win choice and devolving responsibilities when they are viewed as “can do” to communities. Finally, New England’s GOP governors problem solvers who are addressing the needs of the people, rather must contrast their “fix it” solutions for failing schools, unsafe than the needs of elites, cronies and special interests. streets, economic stagnation, over-taxation, costly regulation To achieve this moving forward, GOP governors and and cronyism to the Democrat’s identity politics and liberal gubernatorial candidates should adhere to the following overreach. fundamental best practices: If there was ever a time to make these changes, it is now. (cont’d on p. 10) 8

RIPON FORUM February 2017

Party Power in New England

at the State & Federal Level over the Past 20 Years STATE

OFFICE

1997

2007

2017

Connecticut

State Senate State House Governor US House US Senate STATE TOTAL

R 17 54 1 2 0 74

D 19 97 0 4 2 122

R 12 45 1 1 0 59

D 24 106 0 4 2 136

R 18 72 0 0 0 89

D 18 79 1 5 2 105

Maine

State Senate State House Governor* US House US Senate STATE TOTAL

15 69 0 0 2 86

19 81 0 2 0 102

17 60 0 2 2 81

18 89 1 0 0 108

18 73 1 1 1 94

17 75 0 1 1 94

Massachusetts

State Senate State House Governor US House US Senate STATE TOTAL

6 25 1 0 0 32

34 134 0 10 2 180

5 19 0 0 0 24

34 140 1 9 2 186

6 35 1 0 0 42

34 125 0 9 2 170

New Hampshire

State Senate State House Governor US House US Senate STATE TOTAL

15 255 0 2 2 274

9 143 1 0 0 153

10 161 0 2 2 175

14 239 1 0 0 254

14 225 1 0 0 240

10 175 0 2 2 189

Rhode Island

State Senate State House Governor US House US Senate STATE TOTAL

9 16 1 0 1 27

41 84 0 2 1 128

5 15 1 2 0 23

33 60 0 0 2 95

5 9 0 0 0 14

33 63 1 2 2 101

Vermont

State Senate State House Governor US House US Senate STATE TOTAL

13 57 0 0 1 71

17 89 1 1 1 109

7 49 1 0 0 57

23 93 0 1 2 119

7 52 1 0 0 60

23 91 0 1 2 117

NEW ENGLAND

TOTAL

554

794

419

898

539

776

This Ripon Forum analysis was prepared using NCSL StateVote2016 & StateVote2006 tablulations, as well as data from the Census Bureauâ&#x20AC;&#x2122;s 1997 Statistical Abstract of the United States. *Angus King served as Governor of Maine as an Independent from 1995-2003.

RIPON FORUM February 2017

First, set a few key priorities and try not to be all things to all people. The National Governors Association advises “that success in the governorship depends first and foremost on focus.” The focal point must be a strategy to make the most productive use of people, capital and natural resources. States compete to have the most productive environment to keep and grow jobs. Second, gain control of the center. A governor’s effectiveness depends on the cooperation and goodwill of others. As Governor Baker said in that same interview, “If you’re going to get into a debate or an argument, be soft on the people and hard on the issue.” To accomplish things, it is essential to establish a good working relationship with the legislature. Conflicts are inevitable in partisan politics. How a governor manages these conflicts and controls the center can determine if his or her agenda is enacted. Third, make effective use of the bully pulpit to mold opinion needed to garner public support for making tough decisions. What a governor can do, that no other state leader can do as well, is to tell the people where the state is, where it needs to be, and when it gets there. One of the most important powers a governor has in that regard is the power of communications. Effective and direct communication is critical, and broad popular support is essential to make the fundamental structural reforms that special interests and their legislative allies have long opposed.

Fourth, understand that good policy and good politics are linked. To achieve sustainable political success, New England GOP governors have an important role to play in party building. Voters will support Republican ideas if the party recruits excellent candidates, gets the message out and has the organization and resources to win the battle of ideas. In a 2006 essay in The Ripon Forum, then-Mississippi Governor Haley Barbour wrote that voters do not get involved with political parties and elections because of the delight of knocking on doors and raising money. They engage and support candidates who will propose and implement programs to help their families prosper consistent with their values. It is problematic to predict the outcome of elections. However, if New England’s Republican governors can make a lasting difference in the economic and social well-being of their citizens, then we may in fact witness a revival of a strong twoparty system in New England. And perhaps someday soon, blue New England will turn red. RF Gary Sasse is the Founding Director of the Hassenfeld Institute for Public Leadership at Bryant University. He peviously served as Director of the Rhode Island Department of Administration and Department of Revenue, and as Executive Director for the Rhode Island Public Expenditure Council.

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Even the OECD Admits Big Government Undermines Prosperity by D A N I E L J . M I T C H E L L level of countries in the bottom half of the sample, the The Organization for Economic Cooperation and government size will gradually converge to this level Development is not normally an organization associated (36 percent of GDP).” with policies of limited government. While members But since there are no small-government jurisdictions of the international bureaucracy include governments that belong to the OECD, that automatically restricts from North America and the Pacific Rim, the OECD is the potential results. By definition, we can only see dominated by European welfare states. the potential economic benefits of Perhaps reflecting the mindset reducing the burden of government of those European governments, the spending to 36 percent of GDP. Paris-based organization is often a That’s useful information, of course, cheerleader for statist policies, and but it would be very illuminating is widely seen as an advocate of if the study also calculated the Keynesian spending schemes and additional prosperity that could be higher tax burdens. generated if governments consumed But there are some professional about 20 percent of economic economists who work for the output, as is the case in Hong Kong institution, and they occasionally and Singapore. generate good statistics and analysis. But even with methodological For instance, a new working paper limitations, the study generates by Jean-Marc Fournier and Åsa some powerful numbers. There Johansson, two economists at the would be much more prosperity OECD, contains some remarkable if the big-government nations in findings about the negative impact the OECD reduced the burden of of government spending on national spending to 36 percent of economic prosperity. output. The methodology in the paper, “This reform is phased in entitled “The Effect of the Size Daniel J. Mitchell over 10 years,” the paper states. and the Mix of Public Spending “Such a reduction in the size of the on Growth and Inequality,” is not The OECD’s government could increase longideal. For all intents and purposes, term GDP by about 10 percent, with the economists compare economic economists have much larger effects in some countries performance of the OECD’s bigcrunched numbers with currently large or ineffective government nations with the growth and determined that governments.” numbers from the OECD’s not-quiteThese results are remarkable, as-big-government nations. reducing the burden if not stupendous. We have major “Governments in the OECD of government policy fights in the United States spend on average about 40 percent about reforms that might boost of GDP on the provision of public spending can boost economic output by a couple of goods, services and transfers,” the GDP by an average of percentage points. Yet the OECD’s economists write. “The sheer size 10 percent. economists have crunched numbers of the public sector has prompted a and determined that reducing the large amount of research on the link burden of government spending can boost GDP by an between the size of government and economic growth. average of 10 percent. …This paper investigates empirically the effect of the And for some nations, the potential for added size and the composition of public spending on longoutput is far larger. The study suggests potential GDP term growth. …the simulation assumes that in countries gains of more than 30 percent for Greece and Italy. where the size of government is above the average RIPON FORUM February 2017

Smaller government could produce gains of more than spending programs. Pensions and subsidies seem to 20 percent for Slovenia, France, and Hungary. And a cause the most economic harm. leaner public sector could generate 10 percent more “Reducing the share of pension spending in output for Belgium, the Czech Republic, Portugal, and primary spending yields sizeable growth gains with Poland. no significant adverse effect on disposable income The chart below is from the study that shows the inequality,” the authors state. “Cutting public subsidies potential growth effects for various OECD countries boosts growth, as public subsidies…can distort the (keeping in mind that the paper’s methodology means allocation of resources and undermine competition.” that it is impossible for there to be growth effects for Another interesting finding in the working paper is nations such as the United that it notes that bad fiscal policy States). can be somewhat mitigated by It’s also worth noting that The moral of the story is having market-oriented policies the study concludes that poor that smaller government is in other areas, which is a point people would benefit from I always make when writing good and free markets are smaller government. This also is about Scandinavian nations. an important finding, since the “Countries with a high level good. OECD presumably included an of public spending may also be inequality variable in hopes of characterized by features that weakening the argument for a lower burden of spending. partly offset the adverse growth effect of government “…a reduction of the size of government has a size … in Sweden the mix of growth-friendly structural positive, but moderate, effect on the income of the poor,” policies…may have offset the adverse growth effect of the authors of the paper write. “The average disposable a large government sector.” income also rises. However, the rich gain relatively In other words, the moral of the story is that smaller more. Finally, in countries where the government is less government is good and free markets are good. Mix the effective (such as Italy) the growth effect dominates and two together, and you have best of all worlds. RF a moderate reduction of the size of government would have a large growth effect, so that it would lift all boats.” Daniel J. Mitchell is a senior fellow at the Cato Institute The working paper also looks at the composition who specializes in fiscal policy, particularly tax reform, of government spending. In other words, just as not international tax competition, and the economic burden all taxes are equally damaging, the same is true for of government spending.

Potential GDP Gains from Reducing the Size of Government

RIPON FORUM February 2017

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RIPON FORUM February 2017

Cover Story

VALUE

The New Watchword in Washington by LOU ZICKAR If there’s been one mantra for Republicans over the past 30 years, it can be found in the famous passage from Ronald Reagan’s First Inaugural Address when he stated that, “Government is not the solution to our problem; government is the problem.” After hearing Donald Trump’s Inaugural Address, many Republicans expressed concern that our new President has forgotten this mantra. After all, from rebuilding our infrastructure to negotiating the prices that drug companies charge, Trump is calling for government to 14

play a more active role in solving the problems that people face. In response, some in the GOP say they are ready to stand up for the principles on which the party was built. “There are some of us who will be pushing to get back to the roots of the party,” Senator Jeff Flake said in an interview with the New York Times. “Limited government, economic freedom, individual responsibility, free trade. Those are things that the party has stood on for a long time.”

RIPON FORUM February 2017

Senator Flake is one of the leading voices for common performance reviews to ensure they are providing Americans sense conservatism in America, and he is right -- the GOP was with value for their tax dollars,” 94 percent of Americans – and built on the principle that federal power should be limited. But it 95 percent of Trump voters – said that they should. It is worth is also worth remembering that when Donald Trump calls for a noting that the Ripon survey asked voters about many proposals government that is more effective, he is not repudiating Ronald – from reforming taxes to repealing Obamacare. By far, though, Reagan. He is echoing him. Specifically, he is echoing another the idea of subjecting government programs to performance passage from Reagan’s First Inaugural Address that is all too reviews was the most popular proposal of all. often forgotten today. “It’s not my intention to do away with Other proposals geared around limiting federal power and government,” the Great Communicator stated. “It is rather to making the bureaucracy more accountable also proved popular. make it work.” For example, when asked if federal regulations should have a Making government work. The concept itself has become sunset date “where they either end or Congress decides to renew laughable in recent years. From Hurricane Katrina in 2005 to the them,” 79 percent of Americans – and 88 percent of Trump Great Recession of 2008 to the VA scandal of 2014 to the rise of voters – said that they should. Along similar lines, when asked ISIS today, the federal government has repeatedly been unable if they believed that “federal workers should be rewarded if they to ward off threats and deal with problems effectively after they are doing a good job” and more easily fired “if they are doing a arise. As a result, poll after poll shows that trust in government is bad job,” 85 percent of Americans – and 89 percent of Trump at or near an all-time low. Despite this mistrust, these same polls voters -- said that they believed that they should. also reveal that people want government to work. To conclude with an analogy, taxpayers are no different And yet when Americans look at Washington, they see than any other kind of consumer in that they want to two political parties that have become ideologically blinded know they’re getting their money’s worth. That’s why in this regard. The perception consumers shop at Target, is that Democrats just want because they know, as the When asked if “Federal to throw money at a problem company promises, that they government programs should be and make government bigger, can “Expect More, Pay Less.” while Republicans just want When it comes to the federal subjected to regular performance to cut your taxes and think government, taxpayers believe reviews to ensure they are government makes everything that just the opposite is true. To worse. The simple reality is that make matters worse, taxpayers providing Americans with value Americans want value for their also believe that Republicans for their tax dollars,” 94 percent tax dollars. If they are going to and Democrats in Washington of Americans – and 95 percent of be asked to send their money to don’t care. They are like two Washington, they want to know sales clerks who are so busy Trump voters – said that they are getting something in fighting in the aisle that they they should. return. ignore what’s on the shelf. This desire cuts across all Donald Trump was elected income groups. The man who makes minimum wage and puts to change all that -- to rise above the partisan bickering and do $10 into his tank on his way to work wants to know that the 18.4 what works. The challenge for our new President is to not let cents per gallon he is paying in federal gas taxes are being well his ego and other obsessions get in the way. For just as any spent. When he drives home at night over a bridge that is falling consumer would walk out of the store if they saw two clerks apart, he knows that they are not. Similarly, a woman who earns fighting in the aisle, they will do the same if they see that the a comfortable salary and pays over $300,000 in Social Security store manager has let power go to his head. taxes over the course of her career wants to know the program About a month after the election, Gerald Seib of the Wall will be there when she retires. When she reads that Social Street Journal wrote that Donald Trump is America’s first postSecurity is going broke, she wonders if that will be the case. ideological President. Others have made similar observations, The public’s desire to have a government that works is and they are right. The Americans who voted for Trump did also reflected in a recent poll the Ripon Society conducted of not elect him because they thought he would conform to some the American electorate. This survey, which was conducted the political orthodoxy. They elected him because they thought he second week in January by veteran GOP strategist Ed Goeas, could make government work. found that 66 percent of voters think the federal government is Value is the new watchword in Washington. Which is why not doing enough to solve problems. “Don’t take this to mean the ultimate test for the President and Congress will not be their that people want more government or bigger government,” allegiance to an old Republican mantra. It will be their ability Goeas stated. “They want effective government.” to convince Americans that their tax dollars are finally The survey provides some insight into how Congress being put to good use. RF and the new President can achieve that goal. When asked if “Federal government programs should be subjected to regular Lou Zickar is Editor of The Ripon Forum. RIPON FORUM February 2017

Value: The New Watchword in Washington

How to Make America Great Again with Domestic Energy Resources

by T. B O O N E P I C K E N S It has been 32 years since I appeared in the pages of domestic energy industry has lost nearly a quarter of a this magazine. A lot has changed since that time. But one million American jobs since its recent peak, and OPEC thing that hasn’t changed is the need to make sure we have continues working to maintain control of the market. a government that works. I was asked about this subject in America is in the midst of an energy renaissance, and President Trump will have the opportunity to set the nation that 1985 interview. “Can you really run a government like a business?” on a course toward self-sufficiency -- our situation is good. the Forum’s editor asked me at the time. “Sure you can,” I Instead of predictions about the future, I offer my advice on how to make it great. replied. “It’s a business to start with. I suggest President Trump Taxpayers are like stockholders, and pursue an energy plan with two both are entitled to a full day’s work parts. The first part is to not screw for a full day’s pay. For a dollar up what we have going for us. The spent, taxpayers ought to receive a second part is to not settle for what dollar back in value.” we’ve done so far. To be more Value. Now there’s a word specific: you don’t hear mentioned much in the corridors of power in our DON’T SCREW UP… nation’s capital. And yet providing 1. Clarity in who makes Americans with a return on the energy decisions. Currently, hard-earned tax dollars they send to decisions about energy are spread Washington – providing them with out among the President, the value for their federal investment – Department of Energy, the State should be one of the top priorities for Department, the Environmental our elected leaders. Protection Agency, the Department That’s one of the reasons I T. Boone Pickens of Commerce and the U.S. authored The Pickens Plan. At Congress, to name just a few. 88-years old, I know that I have more 2. Promote hydraulic history behind me than I do ahead. America is in the midst fracturing and horizontal But I also know that I want to make it drilling. There are about 30 oil my mission to help break our nation’s of an energy renaissance, and natural gas producing states historic and dangerous dependence and President Trump will in America. In each of them, on OPEC oil that threatens our fracking has led to an increase in economy, our environment and our have the opportunity to production to nearly 9.5 national security. set the nation on a course American million barrels of oil a day, and Since the plan was launched toward self-sufficiency. has increased known recoverable in July of 2008, we’ve seen an natural gas reserves enough to incredible increase in domestic oil make the U.S. the world’s leader and natural gas production. The incredible ingenuity and innovation of private industry has – more than Qatar, more than Russia, more than Saudi led to a continued decline not just in the price of natural gas, Arabia. 3. Work with industry, not against it. Federal and and American crude oil, but of wind and solar electricity as well. These stunning gains have been achieved despite state agencies should have a policy of working with the oil and gas industry to improve any safety or environmental continued foot-dragging in Washington. We are still a long way from securing our nation’s issues rather than unilaterally imposing new regulations energy future and are not without risk of failing. The without understanding the full effects, or punishing the 16

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Value: The New Watchword in Washington industry with new taxes to pay for programs that have for natural gas vehicles by government fleets will drive nothing to do with energy production. down the cost of manufacturing and increase the rate of 4. Meet our own energy needs before worrying innovation for government and consumers alike. about other countries. Don’t export oil or natural gas. The 3. Build the electrical grid of the future. Electric best way we can help Europe escape the yoke of dependence vehicles aren’t going to replace oil and the internal on Russian natural gas, and help Mexico maximize its oil combustion engine overnight. But renewable energy resources, is by exporting our technology and expertise. sources have a lot of potential, and we need a power grid capable of connecting those vehicles and everything else DON’T SETTLE… to the next generation of electricity generation; a grid OPEC is on the run, but they’re playing the long designed to protect America against cyber or physical game. They’ve shown they are willing to risk everything attacks and to promote efficiencies in home, commercial to control as much of the world’s oil supply as they can. and industrial usage. We still rely on foreign nations for more than six million 4. Continue to research and develop new sources barrels of oil a day. As long as we remain so dependent, of energy. Wind and solar prices are going to continue we’re playing OPEC’s game. We need to not just match, to drop, and the middle of America is the “Saudi Arabia but beat OPEC in looking at of Wind.” States like the long-term. How do we Iowa have embraced wind do that? energy and offshore wind 1. Work with our turbines are fast becoming allies Mexico and Canada to commercially viable. establish a North American 5. Remember: Energy Alliance to create an Energy is not a free energy powerhouse that will market. Market forces never have to bow to the are constantly being demands of OPEC again. manipulated by central The President’s decision governments around the to move forward with the world that control about 70 Keystone XL pipeline is a percent of all oil production. good decision in that regard. America’s military protects Keystone will allow us to Middle Eastern oil, costing safely and economically American taxpayers tens of transport Canadian oil to billions of dollars a year to Fracking has led to an increase refineries in the U.S. rather ensure Europe, India, and in American production to nearly than forcing the Canadians China have secure access to ship that oil to China. to oil supplies. The true 9.5 million barrels of oil a day, and 2 . M o d e r n i z e cost of imported oil is not has increased known recoverable government fleets. Federal, reflected at the pump. state, county and local fleets Governments pick natural gas reserves enough to make should be looking for ways energy winners and losers the U.S. the world’s leader – more to save taxpayer money, all the time whether it’s than Qatar, more than Russia, strengthen our economy, serving as the world’s oil and reduce pollution by police or providing natural more than Saudi Arabia. leading the way in the gas to Central and Eastern changeover from gasoline Europe or subsidizing and diesel powered vehicles to cars and light trucks that ethanol in the United States. It is time that we pick a run on competing fuels that are cheaper and cleaner. The winner, too: The United States of America. transportation fuels marketplace shouldn’t be monopolistic. Doing so will set America on the path to true energy Decisions about government fleets should be decided by independence. In the process, it will also provide competitive bidding with full life cycle costs factored in Americans with a better return on the tax dollars they send when considering competing technologies. If they did, to Washington, DC. RF taxpayer-supported fleets would catch up to the utility, express delivery, and other private sector companies with T. Boone Pickens is the Founder, Chairman and CEO at vehicles that go “home to the barn” every night for central BP Capital and TBP Investments Management, and the natural gas refueling. In addition to the obvious benefit architect of the Pickens Plan, a campaign to get the U.S. of lowering costs to taxpayers, the additional demand off of OPEC oil and on the U.S.’s natural resources. RIPON FORUM February 2017

Value: The New Watchword in Washington

Making Social Security Last For All by TOM COLE At a time when trust in government is at or near that unless action is taken soon, the Social Security Trust an all-time low, it is critical that Congress and the Fund will be exhausted by 2034. Since Social Security President do everything we can to ensure that American is self-financed through income tax revenues and tax dollars are being well-spent. interest, it has had a consistent source of funding that Take Social Security. Whether you are making has allowed benefits to keep pace with inflation. In fact, minimum wage or earning for years, it has collected more a comfortable salary, 6.2 revenue than was necessary to percent of your paycheck pay benefits, and allowed for goes to fund this program. If creation of a Trust Fund that you own your own business, contains the surplus. the amount is actually double However, demographic that because employers are changes since 2010 have seen legally required to match their Social Security expenditures employees’ contribution. rapidly expanding, and the Unfortunately, this Trust Fund will soon start to program – which is one of the be depleted. Most Americans most popular and successful understand what that means in American history – is in their own households. If currently in critical danger. your bills continue to increase Since its creation in 1935, while your income decreases, Social Security has been a and you start spending your reliable resource for retirees, savings rather than reducing and while the program was your bills, pretty soon you initially created to keep senior will have no savings, too little citizens out of poverty, Social income, and you will not be Without significant reforms, Security now represents more able to pay your bills. Without than 50 percent of income for significant reforms, there there will come a time when the typical retiree. come a time when Social Social Security will be unable will However, with the Security will be unable to pay impending retirement of to pay its beneficiaries. its beneficiaries. the largest generation in There are a variety of American history – the baby ways to fix Social Security, boomers – the amount of money being paid into Social and it will be far less painful to fix it now rather than Security will be rapidly overtaken by the amount being if we continue to put it off. One option would be to paid out. In order to protect and preserve this important raise the income level cap from $113,700 to $215,000. social program – and restore public confidence that That alone would reduce the Social Security shortfall their tax dollars are being well spent -- it is imperative by nearly a third, and eliminating the cap altogether that reforms are undertaken with all due haste. If we would reduce it by two thirds. Another option would act now, no current retiree or near retiree will have be to reduce Social Security benefits from the top 25% to make any sacrifices, and the program will be there of earners. Wealthier retirees have many other sources for our children and grandchildren. If we continue to of income to supply their retirement. We should also procrastinate, neither of these will be true. consider gradually raising the retirement age. When In 2014, the Social Security Trustees’ Report stated Social Security was first initiated in 1935, the average 18

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Value: The New Watchword in Washington life expectancy for a man was 61 years old. Today, a 65 year old man can expect to live 18 more years. While policy options for saving Social Security are fairly simple and straight forward, the politics are anything but. In the past, elected officials and candidates for office were warned that Social Security was the “third rail” of politics. Touch it and you will die. Consequently, policy makers in both parties shirked their responsibility to rescue this invaluable program. Fortunately that is beginning to change. Today, leaders in both parties are acknowledging the obvious the real third rail is inaction and denial of the obvious. If nothing is done and Social Security fails, it will be those politicians who sought to make political points rather than constructively addressing the issue who will find themselves tossed from office. That is why in the last Congress I teamed up with my Democratic colleague from Maryland, Congressman John Delaney, to create a reasonable first step to finding a bipartisan solution. Our bipartisan, bicameral legislation would guarantee the long-term solvency of Social Security. Modeled on the 1983 Social Security Commission, this bill would create a commission that has the power to automatically produce an up or down vote

in Congress. Named the ‘Commission on Long Term Social Security Solvency,’ it would be comprised of 13 members appointed by House and Senate leaders of both parties, as well as the President. Within one year of their first meeting, the Commission must provide recommendations on how to save the program. These recommendations need to have a nine vote threshold in order to be presented to Congress, guaranteeing bipartisan consensus. Any recommendation from the Commission would be subject to an expedited up or down vote. American families make common sense, yet difficult, decisions every day. They understand that those decisions may not be popular, and may involve sacrifice. But they respect one another for stepping up and doing what needs to be done. It’s time for our elected officials to lead on this issue with candor, compassion and courage. Doing so will not only help protect and preserve Social Security for future generations of Americans, but will also send a message to Americans that their hard earned tax dollars are being well spent. RF Tom Cole represents the 4th District of Oklahoma in the U.S. House of Representatives.

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RIPON FORUM February 2017

Value: The New Watchword in Washington

Stretching the School Dollar Seven ideas to give taxpayers a better return on their education investment by F R E D E R I C K M . H E S S In his Inaugural Address, President Trump bemoaned, looking at costs as well as results. The 2015 Every Student “An education system flush with cash but which leaves our Succeeds Act promoted this kind of transparency in K-12, young and beautiful students deprived of all knowledge.” reducing federal micromanagement while asking for The prose may have been purple, but Trump’s more basic information on spending. In higher education, overwrought language should not obscure an important Obama-era reporting efforts got entangled in clumsy truth – we spend a lot on education in the United States, schemes to shutter for-profit colleges. Washington’s and it’s not clear we’re getting role should be simple: equipping our money’s worth. parents, voters, and taxpayers The United States spends across the land with comparable, close to $700 billion a year on reliable data on spending, K-12 schooling, or about $12,000 costs, and simple measures of per student. Per pupil, we spend performance. Making use of as much on K-12 education as existing law, the Department of any nation in the world. Places Education should set expectations like Newark and New York City for clean, consistent accounting spend more than $20,000 a year by educational entities that per pupil. When it comes to receive federal funds, then slowly college, Washington and state back away. governments spend $160 billion Embrace regulatory annually. Yet our K-12 results are reform. The major federal laws middle-of-the-pack, at best, and governing K-12 and higher our colleges are beset by runaway education have been with us for price inflation and a surfeit of half a century. Over time, wellunhelpful degrees. meaning regulations have fueled Frederick M. Hess Now, most education a staggering proliferation of spending is not provided by paper-driven compliance. Rules The United States spends Uncle Sam. In K-12, Washington meant to ensure that federal funds covers about 10 percent of the close to $700 billion a “supplement not supplant” local tab, with the rest picked up by spending have led to fear-based year on K-12 schooling ... state and local government. In budgeting, with superintendents Yet our K-12 results are higher education, the lion’s share afraid to move dollars out of of costs are covered by states and ineffective programs. “Timemiddle-of-the-pack, families. The bottom line: Uncle and-effort” reporting requires at best. Sam is a minority shareholder whole bureaucracies dedicated when it comes to education, and to tracking inputs. Federal rules reforms should be designed accordingly. governing distance education grow more anachronistic Given that, what might a bang-for-the-buck federal by the year. The Secretary of Education should work with reform agenda look like? Here are seven ideas: practitioners and state and local officials to determine Promote transparency. It should be easier for parents, how best to streamline requirements while retaining taxpayers, and policymakers to know if they’re getting essential protections. their money’s worth from schools and colleges. After all, Support basic research. Big productivity gains are it’s not enough to know test scores and graduation rates. usually the product of breakthroughs in research and Gauging performance in any enterprise is a matter of technology. In education, the sad truth is that, for all our 20

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Value: The New Watchword in Washington spending and for all the breathless new initiatives and then drop out saddled with debt. For many, a better, hyped new technology, there’s little commitment to basic cheaper, and more rewarding option may be occupational research and development. We devote just $600 million certificates that prepare students for valued trades. Such a year to the federal Institute of Education Sciences, less training has big benefits in terms of employment and than one percent of federal education spending. Compare earnings. Washington can do much more to support and that to medicine, where treatments are developed and highlight these alternatives. For instance, researcher marketed by pharmaceutical firms – but where the Andrew Kelly has found that the Department of Labor’s pipeline of life-altering drugs is primed by $31 billion a successful registered apprenticeship program receives year in National Institutes of Health funding. Doubling about one-thirtieth the funding of “ineffective college or tripling our investment in researching brain science, access programs.” Policymakers should invest more cognition, and new technologies can equip educators and heavily in job training, allowing students and taxpayers to entrepreneurs to better develop interventions and tools reduce wasteful spending and reap higher returns. that deliver exponentially more powerful teaching and Open doors for new, cost-effective college providers. learning. American higher education is configured to address the Enable states and communities to provide access challenges of the mid-20th century, when books, expertise, to high-quality, lower-cost K-12 options. Today, in the and content were in limited supply. Back then, the big nation’s capital, the DC challenge was providing Public Schools spend students with access to the upwards of $20,000 per institutions that provided student. Meanwhile, some these. Today, content is local private schools readily available. Online eagerly accept students delivery, new models, and funded only by a $7,500 just-in-time training make school voucher. The federal it possible to reimagine evaluation of the program the postsecondary cost found that participating curve. The challenge is students performed as well to deliver instruction in academically as their peers cheaper, more useful, and were much more likely and more convenient to pursue postsecondary ways. Yet regulations governing accreditation education. Nationally, and loan eligibility the most reliable research keep cost-effective new suggests that charter It should be easier for parents, ventures from emerging. schools generally perform taxpayers, and policymakers Congress should explore as well as or better measures such as a new than traditional district to know if they’re getting their accreditation agency for schools, while spending money’s worth from schools innovative programs or about 80 cents on the and colleges. devolving accreditation dollar. Congress and the to state government. Department of Education It’s easy for should relax restrictions on federal funds so that states can more readily use them applause-seeking politicians to demonstrate their to support choice programs that allow students to choose commitment to opportunity by calling for exciting new educational programs or big new outlays. But in high-quality, lower-cost options. Give colleges “skin in the game.” Increases in college a nation that already spends a great deal, and where aid get repeatedly gobbled up by rising college costs. high-profile federal education programs have flopped Federal student loan programs give colleges little incentive more often than they’ve flourished, there’s a more to control prices or worry about whether graduates are promising course. And it starts by ensuring that both repaying their loans. Congress should give colleges a taxpayers and students are well-served by our schools RF stake in the success of their students by changing federal and colleges. law so that the institutions have to repay a portion of any defaulted dollars. This would give colleges a share of the Frederick M. Hess is director of education policy studies at the American Enterprise Institute and author risk that students and taxpayers now bear on their own. Support apprenticeship programs and job training. of the new book Letters to a Young Education Reformer Millions of youth enroll in college, take on loans, and (Harvard Education Press). RIPON FORUM February 2017

Value: The New Watchword in Washington

Getting a Better Return on Our Health Dollars by TEVI TROY The U.S. spends more on health care than any other First, we need to address the problem of waste in our developed country – 50 percent more per capita than the health care system. Medicare waste is estimated to be next highest OECD country. The average American pays around $60 billion per year. The Obama administration over $9,000 for health care each year – more than twice claimed to go after “waste, fraud, and abuse” as part of the average of other developed nations – and yet the life the Affordable Care Act, but in reality clamped down on expectancy of the average American ranks 42nd in the world. Medicare Advantage, a popular program that gives choice For all of our health spending, to seniors. What we really need is a the average American can expect more aggressive anti-fraud effort by a shorter lifespan than the average the new Trump Administration that Frenchman, Swiss, or Swede. uses tools like biometric screening Over 17.5 percent of our GDP goes of recipients and secret shoppers to to health care, up from only about root out rampant fraud. 5 percent of GDP devoted to health Second, the replacement of in 1960. We are clearly spending Obamacare with a more consumera great deal on health care and friendly system will go a long way not getting the results we should, towards reducing costs and bringing particularly given the enormous down overall health care spending. size of our investment. The Obamacare approach was In addition to the lack of to increase costs for all, make sufficient return on our health care insurance mandatory, and provide spending, there is also the fact that costly subsidies for a select few. A we are spending at an unsustainable better way is to try to reduce costs rate. Consider the following: In across the system, and thereby 2025, Medicaid costs are expected incentivize individuals to purchase to surpass $1 trillion per year, and coverage on their own. Elements the worker to retiree ratio will dip of such a plan include: expanding Tevi Troy below 3:1. In 2029, all of the baby access to consumer-directed health boomers will have reached the arrangements like health savings The average American standard retirement age of 65. And accounts; allowing the purchase in 2030, the Medicare Hospital pays over $9,000 for health of tax-preferred health insurance Insurance trust fund is scheduled through mechanisms other than care each year – more than to be depleted. Clearly, fixing our just through one’s employer; tort health care spending situation is reform to cut back on excessive twice the average of other not just an issue of getting better lawsuits and defensive medicine; developed nations – and results, but also essential for our enabling the purchase of insurance yet the life expectancy economic security. across state lines; and, replacing With the recent election of Obamacare’s exchange subsidies of the average American a Republican president, along with a refundable tax credit or some nd ranks 42 in the world. with a GOP House and Senate, other tax benefit to help lowerRepublicans have a chance to income Americans afford health change this trajectory. Doing so will not only help generate insurance. A Congressional Budget Office analysis of a much-needed better health outcomes, but could also stave plan along these lines found that it would have the effect of off a looming fiscal crisis based on our enormous and reducing the average cost of health care premiums. unsustainable health care spending. Addressing this problem Third, we should maintain the employer-based system will take a multi-pronged strategic approach. and be wary of the recent trend of moving away from 22

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Value: The New Watchword in Washington more sustainable. President Trump has said he does not employer-sponsored care and toward more governmentwant to change Medicare, so it’s unlikely to be an early provided insurance. Employers cover 177 million people. administration priority. But we cannot push off the problem In doing so, they take pressure off the government-based forever. Speaker Paul Ryan has put forward a serious parts of the system. Employers have proven themselves proposal for Medicare reform based on the premium support to be very good at getting people covered, in contrast to concept. This plan, which has bipartisan origins, does government-sponsored programs, which struggle in that not appear to be on the front regard. Furthermore, the cost burner right now. But it could per covered life is greater Over 17.5 percent of our GDP start a needed conversation for people in governmenton Medicare reform later on, sponsored coverage than goes to health care, up from perhaps after the midterm those in employer-sponsored only about 5 percent of GDP election. care. Obviously, government None of these steps will programs tend to cover higher devoted to health in 1960. be easy. If they were, someone cost populations. But to the would have done them already. extent that we can limit the But if we as a society want to start getting more out of our movement of individuals away from employer-sponsored health care dollars, this four-part plan is the place to start. care and towards government-sponsored care, it will save Otherwise, we will continue to get poor returns on our taxpayers money. Keeping employers in the health care health care investment, and face a serious chance of a longgame is vital to this effort, which means that public policy term health care-driven fiscal calamity. RF should both maintain the current tax preferred treatment for employer-sponsored care, as well as the ERISA preemption Tevi Troy is the CEO of the American Health Policy Institute that allows employers to provide multi-state plans without and a former Deputy Secretary of Health and Human running afoul of a crazy quilt of different state regulations. Services. His latest book is “Shall We Wake the President? The fourth plank is more long-term, but no less Two Centuries of Disaster Management from the Oval important. We need to think about significant reforms to Office.” our costly Medicare system to make it more efficient and

RIPON FORUM February 2017

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Value: The New Watchword in Washington

Rebuilding America’s Infrastructure: There’s a will, but is there a way?

by EMIL H. FRANKEL A trillion dollars. That’s how much Donald Trump has said that he Postal Roads clauses, for a continuing and significant wants to spend to rebuild America’s aging infrastructure. federal role in this area. However, the federal role and purpose in In making this a national priority, the new President is standing on the side of every American driver who has transportation needs to be more carefully defined and ever filled up his or her tank and wondered how his or perhaps narrowed to meet 21st Century national goals. Such a redefinition of the her tax dollars were being federal role and national spent. purpose is a starting point Indeed, there is in assuring taxpayers broad consensus – both in that there will be greater Washington and around returns and significant the country -- that the benefits from a continuing nation’s infrastructure is federal role in this regard. deteriorating, and that our We also need greater transportation facilities clarity on the respective and systems in both rural roles of the private and and urban areas are either public sectors in making inadequate or severely this enormous investment congested. in the rebuilding and Unfortunately, that is expansion of the nation’s where the consensus has transportation system stopped. There has been and other elements of little agreement either about our infrastructure. In its the level of government that most recent report card, should be responsible for Emil H. Frankel the American Society of making such a significant Civil Engineers (ASCE) investment or -- ultimately There is broad consensus – both identified a gap of over $2 and more importantly – trillion to bring America’s how our country is going to in Washington and around infrastructure into a state pay for it. the country – that the nation’s of good repair. The RossIn Congress, infrastructure is deteriorating. Navarro proposal, one of there remains a strong the several infrastructure contingent of conservative proposals of the Trump Republicans, particularly in the House of Representatives, who believe that campaign, suggested that much of this investment could federal transportation programs should be delegated or come from private sources, stimulated by tax credits and “devolved” to the states. However, GOP leaders on this other forms of tax and financial incentives that would issue -- such as U.S. Sen. Jim Inhofe (OK), the former leverage private investment in public infrastructure. Certainly, there is a role for private investment in Chair of the Senate Environmental and Public Works Committee (EPW), and U.S. Rep. Bill Shuster (PA), the rebuilding America’s infrastructure through publiccurrent Chair of the House Committee on Transportation private partnerships and federal guarantees and other and Infrastructure -- argue strongly that there is clear credit enhancements for private loans. However, Constitutional authority, in the Interstate Commerce and almost certainly, private investments and financing will RIPON FORUM February 2017

Value: The New Watchword in Washington be reserved for only the largest and most complicated and benefits. Our first order of business, then, should projects (which will benefit, perhaps even more, from be a reform of the planning and capital programming private sector operational, budget, and technical skills) processes and institutions that make the decisions at the and where revenue streams (such as highway or bridge state and regional levels. It is rare that the existing tolls or dedicated sales taxes) can be identified to service agencies develop comprehensive strategic investment and repay private debt and to provide competitive programs or undertake benefit-cost analyses of returns to invested equity. Such projects are likely, at competing projects or prioritize investments based on best, to comprise 10 to 20 percent of the funding needed. hard financial and economic analyses. Moreover, it should be understood that in the case of It is not for the federal government to make decisions projects largely dependent on private investment and about which are the most important infrastructure financing, the public funding burden has merely been projects within states and regions. Priority setting shifted from federal taxpayers, not to the private sector, should be a state and local prerogative. However, if but to state and local taxpayers in the form of new user federal funds or tax credits are to be utilized in such fees and taxes. projects – as they almost In other words, in any certainly will have to be large transportation and if we are to carry out an infrastructure program infrastructure investment focused on bringing program of the size existing facilities to a and reach that has been state of good repair, the discussed – then there is heaviest burdens will a clear national interest have to be borne by in making sure that a public funds. And almost rational and analyticallycertainly, federal grants to driven investment states and local authorities decision-making process will have to bear a exists. significant portion of the As we enter a period funding requirements. of significant public Despite the spending on the nation’s We must accept that we will not widespread call for a infrastructure, our massive infrastructure guiding principle should be able to do everything, so we investment program, it be that our investments must be able to identify and seems unlikely that a must be “wise” – that target public investments on full $1 trillion federal is, directed to those program will be enacted, projects and programs those projects that will bring the because of disagreement that will bring not just greatest economic returns about the funding short-term construction sources and Congress’ and construction-related and benefits. determination that, if jobs, but long-term much of this investment is benefits in the form of going to come from new spending, sources and budget a more productive economy, greater access to jobs “pay-fors” must be identified. This will be a daunting and markets, and an improved quality of life for the challenge. American people. RF But America can, and should, make significant inroads in the huge infrastructure funding gap that Emil H. Frankel serves a senior fellow at the Eno ASCE has identified. However, we must accept that Center for Transportation. He previously served as we will not be able to do everything, so we must be Assistant Secretary for Transportation Policy at the U.S. able to identify and target public investments on those Department of Transportation, and as Commissioner of projects that will bring the greatest economic returns Transportation for the State of Connecticut.

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Ripon Society Releases Results of its 2nd Annual Survey of the American Electorate

Poll points to reducing health care costs as top economic priority, and finds that holding government accountable is key

WASHINGTON, DC – This month, The Ripon Society released the results of its 2nd Annual Survey of the American Electorate. This year’s survey explored voter sentiment in a number of key areas, including: Economic Priorities – the survey found that voters identified reducing the cost of health care (23%) and creating jobs (17%) as the two most important economic issues facing America. Health Care Reform – 47% approve of Obamacare in the survey, while 50% disapprove of it. The poll also found broad support for key provisions of the law, except for the universal coverage requirement, to which 65% said they are opposed. In terms of timing, 59% of voters would not think the President had broken his promise to end Obamacare if repeal and replace took two years. Tax Policy – the poll found that 81% of voters favor changing tax policy so that sales of made in America products are taxed less than products made overseas. On the question of lowering the corporate tax rate from 35% to 20%, 45% of voters support it, while 50% are opposed. Trade – 56% support renegotiating or ending trade deals even if goods cost more, 68% support taking action against 28

currency manipulators like China, and 72% support an import tax on goods from production that has been moved off-shore. Government Accountability – 79% agree that federal regulations should have a sunset provision, while 94% agree that federal government programs should be subjected to regular performance reviews (which is the highest response of any proposal tested in the survey.)

federal government in extremely low regard. However, he added, that does not necessarily mean that Americans don’t want government to work. “When asked, ‘Is government part of the problem or part of the solution?’ Goeas stated, “65% today say it’s part of the problem. A year ago, 68% said it was part of the problem. We also saw something that was new in the data last year from what we’ve seen over the years. We asked, ‘Is the federal government doing enough, too much, or about right amount?’ What we saw last year is what we saw again in the survey today. 66% of the American public said that government is not doing enough. Now, they think government’s the problem. But they also say government is not doing enough. “Don’t take this to mean that people The survey was conducted want more government or bigger the second week of January, and government. They want effective follows-up on a nationwide poll that government. That is very deeply the 55 year-old centrist Republican held with those voters. They’re public policy organization not going to change overnight just conducted in December 2015. The because Trump says he’s going to survey was conducted for The Ripon make America great again. But it Society by veteran GOP strategist is an opportunity to play to those Ed Goeas. Goeas previewed the voters and bring them in.” findings at a luncheon meeting of Goeas also talked about The Ripon Society on February 6. repealing Obamacare, and the In his presentation, Goeas touched challenges facing both Congress and on the fact that the poll revealed the President in that regard. that Americans continue to hold the “As much as we talk about RIPON FORUM February 2017

the need to repeal and replace of positive is the requirement that all rate of 10%,” he reported, “it was a Obamacare,” the strategist observed, Americans either purchase health plurality support, but not a majority “we need to understand that voters insurance or pay a substantial fine support. 47% support it, but 39% are no longer there. To them, the to the federal government. 65% said are opposed. Strongly support to problem is not Obamacare. The they did not favor that. So basically strongly oppose was 21% to 20%, problem is the cost of health care. they want all those things, but the so the intensity was down on both We need to understand that sides. But one of the things I everything we do on health see in this measurement is that care has to answer the question there are a lot of undecided Everything we do on health of, ‘What is this going to do to voters. They don’t quite know care has to answer the queslower costs?” Because if we what all this means. And if, in don’t do that, we’re going to fact, as it has been rumored, tion of, ‘What is this going to be sitting here four years down you tie a proposal like this do to lower costs?” the road with voters saying, with something like paying for Ed Goeas ‘You changed things, but infrastructure, these numbers health care costs got worse.’ are going to change very, very Because to them, it only goes quickly.” two directions -- it either gets better, one thing that may help prop it up Goeas opened his presentation -- which was always the mistake by talking about last year’s election or it gets worse.” “Everything that we tested -- of Obamacare -- they don’t want and why the unpopularity of both whether it was affordability, pre- anything to do with.” presidential candidates made it such existing conditions, or children Goeas also discussed tax reform a unique political year. being insured by their parents up and some of the proposals voters “Never before in politics have until 26 -- all of those proposals got were asked about in that regard. we had two nominees that had over very high responses. If you look at “With regard to allowing a 50% unfavorable rating,” he said. the approval rating of Obamacare, U.S. companies to move profits “We had absolutely no idea what it’s virtually a 50/50 split. The one earned and taxed overseas into the the impact of that was going to be. thing that kind of jumped out as not United States at a corporate tax Those numbers never changed. Both

What economic issue would you most like the next President to focus on?

*not asked in December 2015 survey

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candidates started off with a 55% who were unfavorable towards him was the 25 point improvement. Even unfavorable rating and never dropped last year. It’s like having a doctor though he’s still upside down by a below that point, except for a couple of and you hate his bedside manner, couple of points in his unfavorables, points in a couple of surveys along the but you’re hopeful that he’s going there is still that improvement. It is way. The only thing that changed was to save your life. That is where a those Republicans coming home and that the intensity of those negatives certain group of Republican voters saying, ‘I may not like his bedside increased for both candidates. In are today.” manner, but he may save my life.’” the case of Trump, The Ripon the intensity of Society is a public “66% of the American public said that his positives also policy organization government is not doing enough ... Don’t increased with the that was founded voters -- something in 1962 and takes take this to mean that people want more that Hillary did not its name from the government or bigger government. They see.” town where the “There were Republican Party want effective government.” only 2% of voters was born in 1854 – Ed Goeas who liked both Ripon, Wisconsin. candidates. That remained constant “After he was elected, his name One of the main goals of The Ripon all the way through the campaign. awareness improved by a net 25 Society is to promote the ideas and There were 18% who disliked both points overnight. He was at a 60% principles that have made America candidates. The difference was on unfavorable rating on Election Day. great and contributed to the GOP’s Election Day they voted 49%-29% He’s now down in the mid 40’s. He success. These ideas include keeping for Donald Trump. That is what put was at low 30’s in terms of favorables, our nation secure, keeping taxes low him over the top. At the end of the he’s now up into the 40’s. All the talk and having a federal government day, that group of voters decided, going into the Inauguration about his that is smaller, smarter and more ‘I may not like him personally, but having the lowest favorability rating accountable to the people. I don’t like her at all.’ And one of of anyone in modern history -- first, if For complete results of The the things I joke about with some Hillary Clinton had been elected, she Ripon Society’s 2nd Annual Survey Republicans who still don’t like would have been suffering from the of American Electorate, please visit Trump are those Republican voters same problem; and, number two, there www.riponsociety.org RF

Do you agree or disagree with the following statement?

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Do you favor or oppose the following proposals to reform Americaâ&#x20AC;&#x2122;s tax system?

If it takes more than two years to repeal & replace Obamacare, would you think that President Trump broke his promise?

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Name: Todd Young Occupation: Proudly representing Hoosiers and the state of Indiana in the United States Senate Previous jobs held: I have worked as a management consultant, attorney, Marine Corps officer and, my first job, as a janitor at my family’s small business. What was the message of your campaign & why did it resonate with voters? Hoosiers want someone who is going to fight for them. In recent years, too many people have gone to Washington D.C. and forgotten about the people they represent and the challenges that folks at home are experiencing. I work every day to make sure that Hoosiers know they have someone in this position who will work for them and fight for the interests and needs that are unique to our state. That was the message of my campaign, and that will continue to be my mission. How does having a 6-year term affect your perspective and the goals you set for yourself in office? My perspective is now statewide, as opposed to just district-wide. There are unique needs and interests in other parts of the state, not just Southcentral and Southern Indiana – which I used to represent – that I’m coming to learn about so that I may better represent all Hoosiers. To that end, a six-year term affords me a longer work-horizon that does not exist in a two-year term in the House. I am looking forward to the opportunity to having more time to understand a need and work on long-term policy prescriptions that actually address that need. Are there any specific challenges or problems facing the people of Indiana that you plan to address? We need to make sure that every Hoosier – every American – feels like they can rise with the tide of a growing economy. One way to do that is to make sure that people have the opportunity to acquire new skills through higher education or a trade program. I also want to be a part of the solution on infrastructure. Indiana is the “Crossroads of America”. Our logistics economy is important as a standalone, but Indiana is the second largest manufacturing economy in the country and we’re also a major agriculture producer; we need to be able to bring those goods, food and fiber to the market. In order to do that, we need to repair our infrastructure and invest in 21st century infrastructure where possible. I have a personal mission to help the neediest among us. Before serving in Congress, I worked with an organization that helps homeless veterans, I offered pro bono legal services to couples looking to adopt, and in the House of Representatives, I worked on solutions for the opioid epidemic that is, unfortunately, plaguing too many Hoosiers and families across America. These are some of the seemingly intractable issues we grapple with as a country, and, despite our best intentions, never seem to make enough of an impact. America marks another President’s Day this month. If you could sit down with one President in history, who would it be and why? Abraham Lincoln. He saw that government really could be a force for good. In addition to significant legislative achievements such as, the Morrill Land-Grant, Colleges Act – which allowed for Purdue University – and bringing the Trans-Continental Railroad to life, for him, politics was tied to fundamental principles, eternal truths, and inarguable facts. It was perhaps most stark during his presidency that politics is not just about winning, it’s really about advancing fundamental, timeless principles like, “all men are created equal,” and he was willing to fight harder than anyone for that.

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