Out of the Storm News
Road pricing — the use of fees or tolls applied to road usage — is the most promising tool we have to improve the productivity of America’s aging surface transportation infrastructure. But while transportation experts generally are enthusiastic about road pricing, voters are not.
There are exceptions. Successful toll roads have made believers out of at least some skeptical drivers, and voters in regions with particularly high congestion levels have at times been open to road pricing proposals. But political resistance to road pricing has been a huge obstacle to its spread.
That has to change. The potential benefits of road pricing to reduce congestion and air pollution, to boost economic growth and to improve the quality of infrastructure, are so great that we can ill afford to pass them up. Building support for road pricing requires changing how the public thinks about infrastructure. More broadly, it will require revamping the institutions that govern U.S. infrastructure.
In 2009, the National Surface Transportation Infrastructure Commission estimated the federal government would have to devote $59 billion per year to highway and transportation spending to maintain U.S. infrastructure at current levels, and $78 billion per year (in 2008 dollars) to meet the design standards set by transportation planners.
Drawing on data from the National Cooperative Highway Research Program, economists Matthew Kahn of UCLA and David Levinson of the University of Minnesota estimate maintaining and operating existing roads at current levels of performance will require $145 billion per year (in 2007 dollars), an amount that also takes into account spending at the state level.
The costs of actually upgrading U.S. infrastructure to reduce current congestion levels are expected to be higher still. The 2012 Texas Transportation Institute Urban Mobility Report, published by the Texas Transportation Institute at Texas A&M University, finds total congestion costs for urban areas reached approximately $121 billion in lost productivity in 2011, a reflection of, among other things, 5.5 billion hours in travel delays. Congestion costs peaked in 2005, at $128 billion in lost productivity, an amount that likely will be surpassed as the U.S. economy recovers in the coming years.
Fifty-four years ago, the Advisory Commission on Intergovernmental Relations was established by statute to examine the best or most logical accommodations of federalism. For many years, it held quarterly meetings in the New Executive Office Building in Washington, letting some of the most able, or at least most logical, representatives of federal, state and local governments sort out what level of government was best equipped to accomplish particular governmental functions.
The ACIR had a respected staff and performed studies which informed serious debates about block grants, welfare reform, criminal law and the growing problem of interstate smuggling, which looked to arbitrage differences in state taxation of products like cigarettes. The commission itself was composed of members of the U.S. House and Senate, state legislators, governors, mayors and county commissioners, and a handful of non-governmental members with credentials and reputations in public policy.
The Clinton administration reportedly withdrew support for the ACIR over its handling of unfunded federal mandates, and it folded in the fall of 1996. It is still possible to find its excellent work referenced where appropriate.
We probably need something to take its place, because all levels of government have been positioning themselves to perform all governmental tasks, including a few new ones that have been discovered in the meantime.
Last week, the National Conference of Insurance Legislators met for the third and final time this year. As the name would suggest, this is an organization to which many states pay dues so that the lawmakers who mostly run or at least sit on the legislative committees where insurance issues are debated can compare notes and develop model legislation on topics as varied as reuse of undeployed airbags and best practices for opioid regulation to curb the rising tide of abuse of largely prescription drugs— a major issue in workers compensation in many states.
The meetings are also increasingly battlegrounds for jurisdiction with not just our own federal government, but with the European Union and other multinational associations, over significant differences in how to measure the solvency of these companies; even though it is clear that state-based regulation kept the insurance industry sound while other American financial institutions were weakened and many broken. Added to the mix is the association for state insurance regulators, which, through its firm grasp on certification requirements of insurance companies, has as much power over them as a multi-million dollar central staff and 11,500 state employees around the country can produce.
One of the issues on the near horizon is a new international accounting system that would usher in immediate new tests for soundness, which many of the American institutions mentioned above are viewing with alarm. A new method of matching risk with capital requirements could potentially show many companies as technically insolvent. Which, I assure you, is a lot bigger deal in the private sector than in government.
Against this backdrop of concern about intrusion into a state-based system that has worked reasonably well for over 150 years, the association has written two letters in the last three weeks to congressional leadership, the Federal Insurance Office, the Financial Stability Oversight Council, the Council of State Governments, the National Association of Insurance Commissioners, the National Conference of State Legislatures and the National Governors Association. Both of these letters assert that state-based regulation covering one-third of the insured premium volume in the world has benefited consumers overall and managed all insurance crises. Actually, six states have insurance markets placing them in the top twenty markets on the planet.
According to Alabama state Rep. Greg Wren, the new NCOIL president:
“Since the financial crisis, there has been an increased focus on global financial regulation. Some of these international regulatory efforts could have a significant influence on state-based insurance regulation, which successfully withstood the financial crisis. It is vital that state lawmakers, who determine insurance public policy in the states, play a prominent role in any international insurance regulatory discussion moving forward.”
Wren and the NCOIL leadership are aware that a prevalent academic theory and the overwhelming view from public policy organizations on the right is that the government produced, directed and to some degree cast the housing bubble that caused so much damage to our economy when it burst in 2007. They do not want to see a more nationalized or even internationalized system replacing what the states have always been capable of handling.
If we still had a good vehicle to sort out what level of government should take on what regulatory function, we could save billions in duplication costs, and we would probably have a more rational approach to protecting customers in financial transactions. Now is time for the discussion to get serious, as the states — meeting in Mount Vernon this past weekend to consider constitutional strategies — move toward wresting back their authority from dysfunctional national and supranational attempts to sort out rights and responsibilities for their citizens.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Early Thursday morning, with just hours remaining before the cutoff, a WhiteHouse.gov We the People petition to reform ECPA (Electronic Communications Privacy Act) and update privacy laws to protect online communications and data passed the threshold of 100,000 signatures. We’ll be eagerly awaiting the official White House response.
ECPA, while forward looking for its time, became law in 1986. This was long before many of the services we use today, including email, cloud services, or Facebook even existed. As it stands the IRS, NSA, and hundreds of other government agencies can read your electronic communications and data without a warrant.
If you want learn more, our friends at the Center for Democracy and Technology have put together a great resource page.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
WASHINGTON (Dec. 11, 2013) – The R Street Institute welcomed today’s news that an effort to gut vital flood insurance reforms has failed in the U.S. Senate.
S. 1610, the Homeowners Flood Insurance Affordability Act of 2013, would put off indefinitely reforms to the National Flood Insurance program that Congress passed in the Biggert-Waters Flood Insurance Reform Act of 2012. A floor motion to adopt the measure by unanimous consent failed after Sen. Pat Roberts, R-Kansas, objected on the Senate floor.
Among other changes, Biggert-Waters requires the NFIP, which is currently more than $24 billion in debt to the federal treasury, to phase out longstanding premium subsidies for vacation homes, business properties and properties that have suffered severe repetitive losses. It also asks the Federal Emergency Management Agency to update its flood insurance rate maps and, over a four-year period expected to start in October 2014, to phase-in adjustments to policyholders’ premiums to reflect the true risk the properties face.
Sponsored by Sen. Bob Menendez, D-N.J., S. 1610 would halt any increase in rates due to remapping and any decrease in premium subsidies, while also reinstating subsidies that already have begun to be phased out.
“Sen. Menendez’s bill proposes an absurd and protracted process – four years, at minimum — of studies, recommendations, hypothetical and non-amendable future pieces of legislation, and then, for good measure, an extra six months of ramp-up, before a single property would see their rates adjusted to reflect their real risks,” R Street Senior Fellow R.J. Lehmann said. “The unstated, but quite clear, goal of this convoluted process is simply to gut any reform until the NFIP’s existing statutory authority would be scheduled to expire.”
As efforts to roll back Biggert-Waters reforms continue to be debated in both chambers of Congress — including a new House bill from Rep. Bill Cassidy, R-La., that would push back remapping changes for five months – Lehmann urged that any tweaks to the law be considered through a thoughtful and deliberative process.
“To the extent that there are legitimate concerns about affordability or how the Biggert-Waters reforms are implemented, those are best addressed through targeted, limited and means-tested programs considered through regular legislative order,” Lehmann said.
“Simply kicking the can down the road with delays, whether short-term or long-term, fails to grapple with the reality that the flood program is broke, that the benefits being phased out flow disproportionately to wealthy homeowners and that, against the backdrop of rising sea levels and increasingly costly catastrophes, we simply can no longer afford to encourage people to live in flood-prone areas,” he added.
Good news from Florida on the insurance front: the state-run Citizens Property Insurance Corporation has shrunk their exposure by some 35 percent. This is a win for competitive insurance markets and for the taxpayers of Florida.
Last week in The Hill, I noted that taxpayers continue to bear significant risk from natural disasters:
The calm Atlantic hurricane season was a blessing for taxpayers, because both state and federal governments have taken on a large share of financial liability for hurricanes and other natural disasters. In Florida, the state-run Citizens Property Insurance Corporation has a half-trillion dollars of liabilities on its books. In Louisiana alone, the federally backed National Flood Insurance Program has over $100 billion in exposure.
While there’s still more work to do, it’s great that this amount has been pared back from $510 billion to $330 billion in the last 21 months. That still leaves taxpayers facing liabilities when a major storm next hits Florida, but it’s a great step in the right direction.
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
TALLAHASSEE, Fla. (Dec. 10, 2013) – The R Street Institute welcomed today’s news that Florida’s state-run Citizens Property Insurance Corp. has seen its policy count fall to just over 1 million, a drop of 31 percent since 2011.
According to data presented to the Florida Cabinet – which consists of the governor, chief financial officer, attorney general and agriculture commissioner – over the past 21 months, Citizens’ total exposure has decreased by 35 percent to $330 billion and its probable maximum loss from a 1-in-100 year storm has decreased by 26 percent to $16.15 billion.
“These latest figures are an encouraging sign that the steps taken by the Legislature in recent years to shrink Citizens is working,” R Street Florida Director Christian Cámara said. “Indeed, the successful ‘takeout’ efforts pursued by management at Citizens, as well as its successful shift to using more private reinsurance, also deserve credit.”
As its surplus has grown to $7.66 billion, Citizens has managed to reduce its reliance on the Florida Hurricane Catastrophe Fund to $4.48 billion from $6.91 billion in 2012. It now cedes $1.85 billion to private reinsurance markets, up from just over a half-billion in 2011. Most importantly, the layer that would be funded by post-storm hurricane taxes has also fallen dramatically, to $3.99 billion from $11.61 billion in 2011.
But Cámara also noted that more needs to be done, as Citizens continues to pose a great threat to Florida taxpayers and the state’s ability to recover quickly after a hurricane.
“The Legislature should continue exploring ways to eventually restore Citizens as the state’s true insurer of last resort to reduce or eliminate the likelihood of a taxpayer bailout following a bad hurricane season,” he added.
Regarding your editorial “Coming to the aid of the Gulf of Mexico” (Our Views, Dec. 5), you are absolutely correct that the RESTORE Act presents an exceptional opportunity for Florida and other Gulf Coast states to invest in projects and infrastructure that support the coast’s interconnected ecology and economy.
But this is just an opportunity — not a guarantee. To ensure that the funds are spent effectively and as intended, it is critical that the funds be allocated and spent in a fully transparent manner, with benefit-cost analyses posted online long before decisions are made. Further, funds must be spent effectively on public goods, not on pet projects and lining the pockets of special interests.
The RESTORE Act shows great promise for the Gulf of Mexico. Whether it delivers on that promise will be up to how it is implemented.
Daniel M. Rothschild
The writer is senior fellow at the R Street Institute.
Imagine a purely hypothetical election. An incumbent president who is despised with unmatched wrath by his party base is swept out of office in disgrace after his administration’s pathological capacity for deceit is exposed. The next election sees a populist, seemingly moderate member of the other party from an infrequently won state elected on the promise to speak honestly and forthrightly to Americans. Partisans of the new president celebrate, believing the deep-seated ideological and systemic problems within their coalition have been papered over by a new chance at power, while the other party appears on the verge of being taken over by its most ideological wing.
The year is not 2016, as the reader may expect. It is 1976, when the stink of Watergate rendered Republicans so perpetually toxic for four years that America turned away from the infant Ford administration and elected Jimmy Carter. Ford, damaged by a primary challenge from the seemingly unelectable cowboy Ronald Reagan, is cut off inexorably from his party’s base, and as the 1980 race looms large, Carter looks poised for a landslide against what is probably his most ideologically unfriendly opponent.
The landslide came, but as we all know, it was not Reagan who got buried. Indeed, Reagan’s supposedly ideological, unelectable worldview ended up realigning the country, to the point where the best defense that Christopher Hitchens – at the time, a committed leftist – could offer in 1985 was that 1980 was merely “the election that Watergate postponed.”
Flash forward to now, and let me paint a similar picture of the future: Republicans, having just been drubbed in two successive elections, once when running a lukewarm moderate, and the second time running a nominee who, despite his personal moderation, ran on the most ideological platform his party has ever endorsed, are desperate for good news. Like clockwork (or rather, like Watergate), the good news comes in the form of Obamacare, which in just one short year threatens to derail the entire Obama presidency. The insult of Obamacare, coming on top of a presidential record that makes Nixon’s look positively transparent, re-galvanizes the Republican Party as Obama leaves office in disgrace. Hillary Clinton, like Ford before her, tries to tap into the zeitgeist of her increasingly ideological party, but fails, resulting in the election of unlikely conservative hero Chris Christie.
But Christie’s first term is marred by the aftershocks of Obama’s, and unlike with Obama, the press is not so forgiving. Soon, Christie becomes caricatured as a bully, more interested in rewarding his rich friends than helping the poor. The demographics that elected him at first, having been disgusted with Obamacare, sour on him almost instantly. Still, Republicans comfort themselves, they are in a strong position going into 2020, when Democrats appear poised to nominate their most ideologically extreme candidate in a generation – Elizabeth Warren. Surely the only possible result can be a Christie landslide?
Naturally, some details in this picture may change. It is far from certain that Christie will be the Republican nominee in 2016, for instance, nor is it certain that the Clinton machine has lost all its juice in the event that Hilary is nominated. However, in the event that the Obama administration’s many Nixonesque failings hand Republicans the White House in 2016, the broader trends of history still suggest that their first term should be treated as borrowed time. And while Elizabeth Warren may not be the candidate of 2020, it is nearly unquestionable that the Warren-style left is the Democrats’ only out in a world where moderate liberalism has been so tainted by Obamacare. Faced with Warrenism, Republicans will have to make a choice: Will they drag the country back towards conservatism, or will 2020 become “the election that Obamacare postponed?”
As of now, it appears that Republicans are courting their own Carter-style defeat. No stronger evidence for this exists than the interpretation of the Harvard Institute of Politics’ most recent poll showing millennial voters apparently souring on Obamacare so drastically that Republicans believe their electoral fortunes will soar. Unfortunately, the problem with this reading is that it is selective to the point of ridiculousness – almost as if those adhering to it had walked into a forest fire and remarked on how vibrant and stable the local ecology was based on a single clump of unburnt trees.
This reaction is understandable, despite its naivete. Yes, it is true that President Obama’s approval ratings among young voters have plunged from 52 percent to 41 percent, and at least 56 percent of young people now disapprove of Obamacare, even when it is called by its less toxic name.
Those are the unburnt trees. But drill down deeper into the data, and the smell of smoke and the screams of dying animals intrude on the consciousness. For instance, while approval of Democrats in Congress has fallen by five points from the mediocre 40 percent to a worrisome 35 percent, approval of Republicans in Congress has fallen from a critical 27 percent to a suicide-inducing 19 percent, below President George W. Bush’s final approval rating on leaving office. Unsurprisingly, Republican Party registration lags Democrats by 6 points among voters aged 18-24, and by an unbelievable 16 points among voters aged 25-29.
The heat starts to become unbearable and the smoke starts to clog the eyes when an issue completely untouched upon by the press – student debt – enters the picture. According to the poll results, 42 percent of all millennials suffer from student loan debt, including 40 percent of Republicans. Moreover, 57 percent of millennials (the same as the rate for Republicans) view student debt for young people as a major problem, with only 26 percent disagreeing.
And unlike the average Fox News viewer, those millennials are not likely to blame the government, or themselves, for this issue. Rather, a solid 42 percent place blame on colleges and universities, with only 30 percent blaming the federal government. In contrast, only 11 percent blame students for the debt issue.
And when the “Buffett Rule,” another issue left untouched by the press, is introduced, the Republican Party may as well have been trapped by burning logs. Polling shows 69 percent of young people, including 57 percent of Republicans, favor the so-called “Buffett Rule,” requiring people making over $1 million a year to pay at least 30 percent of their income in taxes.
This is the good news for Republicans? If so, it’s a poison pill. Yes, Obama and his health care law have become more toxic than they were, but disapproval of a single policy and a single politician do not equate to disagreement with the project of liberalism. Especially not when one of liberalism’s totems – taxation of the wealthy – is a project supported even by 57 percent of millennial Republicans, and when one of the main issues young people care about – student debt – is one where Republicans’ only touchstone is often a formless anti-college resentment that treats students cheated by bad schools as entitled, hedonistic, stupid brats.
Can Republicans escape these problems and put out the forest fire? Time will tell. But to give them a spur, here’s a sobering reminder of one fact: There is one Democrat for whom the abatement of student debt and the taxation of the wealthy unify as factors in their mass appeal.
That politician? None other than the ideological, unelectable Elizabeth Warren. And if Republicans go into future elections unprepared to compete with her on the same terms, then a prescient quote comes to mind:
“There you go again.”This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
From the New York Times:
Why? One idea is that Mr. Reagan himself had had skin cancer, and allowed a concern for public health to triumph over ideology. Eli Lehrer, the head of a Washington think tank called the R Street Institute and a longtime Reagan admirer, offered me a simpler theory: that the man truly loved nature. He was never happier than when riding horses and chopping wood. Perhaps the science of the ozone hole just spooked him. We know it spooked Margaret Thatcher, the British prime minister and Reagan ally, who had been a research chemist in her early life.
The Gulf Coast states — Florida, Alabama, Mississippi, Louisiana, and Texas — are all governed by Republican governors and have Republican majorities in both legislative chambers. With the exception of purplish Florida, these are rock-ribbed conservative states. Yet they may be on the verge of significantly growing their state budgets and public sector payrolls.
That’s because each state is looking at a one-time windfall totaling between the hundreds of millions and several billions of dollars in fines from BP and Transocean paid pursuant to the 2010 Deepwater Horizon oil spill. Under the terms of the RESTORE Act, which Congress passed in 2012 with strong bipartisan support, 80 percent of Clean Water Act fines will go into a trust fund for economic and environmental projects along the Gulf Coast. States directly control 65 percent of that fund and indirectly control most of the remainder.
Conservatives helped lead the charge for the RESTORE Act (the House version was sponsored by now-Republican Study Committee Chairman Steve Scalise, R-La.), and it embodies a number of conservative principles including devolution of authority from Washington and an emphasis on economic growth. Perhaps most notably, it didn’t create any new bureaucracies or permanent programs reliant on taxpayer funds.
But just because the legislation represented conservative fiscal policy doesn’t mean the states will execute it that way.
The simple fact is, states don’t have a great track record with windfall money, which, even when tied to specific spending, has a knack for making its way into general revenues. Revenue volatility tends to exacerbate poor decision-making. And”“temporary” spending tends not to be so temporary.
The RESTORE Act funds are just such a one-time windfall, and it’s entirely possible that funded projects could (if incorrectly designed) create ongoing liabilities for taxpayers. In other words, conservatives could inadvertently use this windfall to permanently grow the governments of the Gulf Coast states. As the massive growth of government under the Bush administration showed, conservatives that think it will help them win elections aren’t shy about busting budgets just as much as those on the political left.
Given the near-religious fervor with which many progressives want to raise taxes (especially on higher incomes), it would seem odd if this were not a deliberate strategy on their end. The urge to add new public sector jobs — and (ostensibly) private sector “green jobs” that rely on public subsidies — will be strong, and something conservatives may be willing to give up in political horse trading.
They shouldn’t. Nor should they use the RESTORE Act funds as an excuse to put off politically painful, but necessary, reforms. That way lies failure.
There are certainly things for which the RESTORE Act provides that conservatives can and should support. Louisiana is facing a crisis as its wetlands disappear; this puts citizens, homes, and businesses across the state progressively closer to the ocean. Louisiana’s Coastal Master Plan provides a good template for decision making in the state about RESTORE Act money, and the media and watchdogs should question every RESTORE Act dollar spent outside the Master Plan.
The economy and the ecology of the Gulf Coast are closely linked, so good environmental programs (including flood infrastructure) can have significant economic benefits. Gulf Coast tourism supports over half a million jobs and generates over $45 billion in annual consumer spending. Restored shrimp, oyster, and fish habitats are critical to the commercial and recreational fishing industries. Since the coast’s ecology has been damaged in no small part by generations of failed federal water management policies, undoing the damage is only sensible. Contrary what many believe, the Gulf Coast is far from “fixed”; they are still finding tar from the spill, and fisherman are still hurting.
Politically, good environmental and economic programs make sense as well. Pace the enviros, conservatives don’t want to strip-mine the earth and pave it over. The RESTORE Act is a good chance for conservatives to show their conservationist bona fides — and show why conservative environmental policies that focus on responsible stewardship of the environment and use of natural resources are preferable to left-wing command-and-control policies that see man as a threat to and not a part of the natural world.
All five Gulf states, as well as their political subdivisions charged with implementing the RESTORE Act and spending its funds, need to commit to complete transparency throughout the process. This means, at a minimum, building online databases of all spending, and project benefit cost analyses should be published as well. Journalists have a critical role to play in tracking the spending and making sure it’s on the up-and-up.
And conservatives need to call out bad programs for what they are — even when a Republican is proposing them. Mississippi’s plan to spend $15 million from an earlier settlement related to the oil spill on a minor league baseball stadium for an as-yet non-existent team stinks of cronyism and corporate welfare.
It’s important that policymakers ensure that money is spent in a way that doesn’t create ongoing liabilities for taxpayers, either as a matter of policy or a matter of politics. One of the great conservative selling points of the RESTORE Act is that it created no new bureaucracies or permanent claims on the public fisc. Undermining this principle in execution would be unfortunate.
WASHINGTON (Dec. 9, 2013) – The R Street Institute welcomed today’s news that leading private sector technology firms have formed a coalition seeking reform of government surveillance laws and practices.
Consisting of AOL, Apple, Facebook, Google, LinkedIn, Microsoft, Twitter and Yahoo, the coalition is asking that governments around the world codify sensible limits on compelling service providers to disclose user data, allow companies to publish the number and nature of government demands for such data and for intelligence agencies to operate under a clear legal framework with checks and balances.
In an open letter to President Barack Obama and members of Congress, the coalition asks that the United States “take the lead and make reforms that ensure that government surveillance efforts are clearly restricted by law, proportionate to the risks, transparent and subject to independent oversight.”
“There is growing evidence that runaway government surveillance is impacting U.S. business interests abroad, so seeing this sort of outreach from our domestic technology community is very welcome,” R Street Policy Analyst Zach Graves said.
R Street has been active in pointing to the need to update the Electronic Communication Privacy Act to reflect changes in communications technology over the past quarter-century. An online petition calling on the Obama administration to support ECPA reform has already gathered more than 65,000 signatures.
The Food and Drug Administration (FDA) should highlight e-cigarettes as a way to reduce tobacco harms, says Dr. Joel Nitzkin, a senior fellow in tobacco policy for the R Street Institute.
The trouble is it paid $80,000 to two longtime advocates for letting states levy sales taxes on remote online sellers to do so. (“Hat tip,” or credit, to Andrew Moylan of R Street for finding the contract.)
The death of Nelson Mandela is being mourned across the world, and for good reason. As the first president of post-apartheid South Africa, he served as a symbol of national reconciliation and as a defender of South Africa’s new and fragile liberal constitution. It is also true, however, that the movement he led, the African National Congress, has not lived up to lofty expectations, and that at least some of the responsibility lies with the great man himself.
Before we turn to what has gone wrong with post-apartheid South Africa, it is worth briefly rehearsing what has gone right, thanks in no small part to Mandela. During the apartheid era, South Africa’s Afrikaner-dominated ruling National Party warned that majority rule would bring violent reprisals against the country’s white minority, a Marxist revolution that would mean the end of private property and an alliance with the Soviet bloc that would threaten the free world. None of that ultimately came to pass, for a variety of reasons. As the Soviet threat receded, and as anti-apartheid activists pressured governments in the United States and Western Europe to isolate the South African government, elements within the governing National Party sensed that the days of minority rule were numbered, and that some accommodation with the ANC was the only way to prevent a bloody denouement. And Mandela, to his great credit, proved a willing partner. Having established his moral authority within the liberation movement as a champion of armed insurrection against the apartheid government, he committed himself to a path of non-violence. One shudders to think of what might have happened had Mandela chosen differently. Mandela’s fateful decision to work with his former enemies paved the way for the ANC’s extraordinary political success.
Since 1994, when South Africa held its first authentically democratic and multiracial national elections, the ANC has won every national election by substantial margins, and there is good reason to believe that it will win the election that will be held next spring. Yet after almost two decades of ANC rule, the country suffers from shockingly high levels of poverty, unemployment and violent crime. Hundreds of thousands of educated South Africans — white, black, and Asian — have emigrated in search of opportunity in Britain, Australia, the U.S. and elsewhere. Many middle-income countries that were in the same economic ballpark as South Africa in 1994 in terms of GDP per capita — like Poland, Malaysia, Chile, Mauritius and neighboring Botswana — have raced ahead in the years since. When we compare South Africa to China or South Korea, the contrast is more dismal still.
One of the key reasons for South Africa’s weak performance is that while high-growth countries saw large numbers of workers shift from low-productivity sectors, like subsistence farming, into high-productivity sectors like export-oriented manufacturing, South Africa’s high-productivity sectors have seen little growth. There are many theories as to why this has been the case. Some will attribute this to the rigidity of South Africa’s formal labor market while others will attribute it to a failure on the part of South Africa’s government to pursue a more ambitious industrial policy. Regardless of the answer, what is striking is that despite South Africa’s economic woes, the same political party keeps winning election after election.
Over the five years Mandela served as president, he ceded most of his day-to-day executive authority to Thabo Mbeki, a polarizing figure notorious for his elitism and authoritarianism. Though Mbeki succeeded Mandela as leader of the ANC only in 1997, and as president in 1999, he was the true architect of the new South African state. By choosing Mbeki as his heir apparent, Mandela all but guaranteed that though South Africa had the formal trappings of a modern multiparty democracy, the ANC itself would remain a rigid Leninist organization, which would reflect the flaws and the pathologies of its leaders.
One of the most celebrated aspects of the ANC during the anti-apartheid struggle was its commitment to building a multiracial society, a reflection of the movement’s socialist ideals. Mbeki was far more willing to deploy racialist rhetoric to achieve his political objectives, something he did quite freely after Mandela exited the political stage. Moreover, though ostensibly still committed to socialism, Mbeki devised economic policies that essentially transferred wealth to a new politically-connected black elite. His leftist critics accused him of being a neoliberal technocrat who neglected the needs of South Africa’s poor. Yet he was hardly a champion of economic laissez-faire. Rather, Mbeki favored policies that entrenched and expanded his power. Over time, resentment of Mbeki built to the point where he was replaced by his temperamental and stylistic opposite, the charismatic Zulu populist, Jacob Zuma, South Africa’s current president. And it is under Zuma that the ANC has started to unravel.
Zuma, like Mbeki before him, has a habit of seeking to delegitimate his political opponents. South Africa’s largest opposition party, the Democratic Alliance, is a centrist party that has taken the ANC to task for its corruption and its economic mismanagement, among other things. Yet because it is a party that is closely identified with the country’s white minority, its ANC detractors often accuse its members of racism, or of wanting to reimpose Boer rule. Now, however, the ANC faces a new set of political rivals. Julius Malema, a former leader of the ANC’s youth wing, has established a political movement that aims to, among other things, seize the property of South Africa’s largest white landowners to redistribute it to the country’s black majority. Though it is unlikely that Malema will fare terribly well at the polls, he has managed to outflank the ANC when it comes to overheated rhetoric.
A more formidable challenger to the ANC is Agang South Africa, another centrist opposition party that has much in common with the Democratic Alliance, yet which has the distinct advantage of being led by Mamphela Ramphele, a renowned anti-apartheid activist who can’t be dismissed as a white interloper. And there are growing signs that the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP), both of which are part of a Tripartite Alliance with the ANC, might break off to form a new labor-aligned political party. ANC loyalists find the prospect of a more diverse, more competitive political environment distasteful. But this political fragmentation could mean that South Africa is finally moving past the soft authoritarianism that was first established under Mbeki and, despite his best intentions, Mandela. Given time, it’s at least possible that some other party will be able to take a crack at steering South Africa’s economy in a more promising direction.
Last Saturday, the 2013 Atlantic hurricane season came to a close, not with a bang but with a whimper. While in the Philippines, Typhoon Haiyan was responsible for more than 5,000 deaths and broke records for its size and intensity, in the Atlantic we only saw two hurricanes and 13 named storms.
The calm Atlantic hurricane season was a blessing for taxpayers, because both state and federal governments have taken on a large share of financial liability for hurricanes and other natural disasters. In Florida, the state-run Citizens Property Insurance Corp. has a half-trillion dollars of liabilities on its books. In Louisiana alone, the federally backed National Flood Insurance Program has over $100 billion in exposure.
In other words, if a major hurricane had hit the Gulf region, taxpayers would undoubtedly be ponying up. The question is not “if,” but “who,” and “how much.”
Indeed, even if every taxpayer-backstopped insurance program were to meet its obligations without taking a penny of general revenues, virtually any storm will require billions of taxpayer dollars to pay for infrastructure repair, short-term relief and overtime for first responders.
And while some efforts have been made to move government insurance programs towards a sounder financial footing, progress has been fleeting, and risk borne by taxpayers remains mammoth.
But with the RESTORE Act, a law passed in 2012 with strong bipartisan support, there exists an opportunity to begin reversing this trend.
Formally called the “Resources and Ecosystems Sustainability, Tourist Opportunity and Revived Economics of the Gulf States Act,” the RESTORE Act devotes 80 percent of the civil and administrative fines from the 2010 Deepwater Horizon oil spill to measures supporting environmental and economic restoration across the Gulf Coast.
Among other things, the RESTORE Act provides funding for “flood protection and related infrastructure,” which allows states to build or improve infrastructure that increases resiliency to future disasters. This provides an opportunity for states to invest in infrastructure and storm damage mitigation projects that will reduce risk—and future costs to taxpayers.
There are a number of ways that states can use RESTORE Act funds to develop infrastructure to reduce the costs of future disasters.
First among these is the redevelopment of wetlands and barrier islands that help attenuate storm surges and reduce the power of hurricanes. The Louisiana Coastal Protection and Restoration Authority calculates that continued loss of barrier islands, swamps and marshes along the state’s coast will cause annual flooding damages to increase by tenfold by 2061, from $2.4 billion a year to $23.4 billion annually.
Wetland and barrier island restoration is precisely the kind of investment the RESTORE Act is ideally suited to address. This kind of “green infrastructure” can absorb storm surge and reduce the effects of storms, saving both taxpayers and the private sector considerable money. Moreover, having natural barriers in place strengthens local economies, and also helps protect the natural environment. That’s why these types of projects should be at the front of the line for funding.
Additionally, states can invest in traditional flood protection infrastructure such as levees, floodgates and drainage infrastructure. Contrary to what many people think, the majority of flood works in the United States are the responsibility of state and local governments. Of the almost 15,000 miles of levees in the U.S. Army Corps of Engineers’ National Levee Database, about 85 percent are operated by state and local governments—and the database represents only a fraction of the estimated 100,000 miles of levees across the country. State and local governments must take a larger role in flood protection.
Third, states can use RESTORE Act funding to create incentives for homeowners and commercial building owners to make their properties more resilient to natural disasters. Property owners can strengthen their buildings and reduce the costs of floods and hurricane through many simple improvements such as roof tie-downs, hurricane shutters and elevated electrical systems. Using RESTORE Act funds to encourage such mitigations may be appropriate in some areas along the Gulf Coast.
Given that reality, the RESTORE Act provides an opportunity to strengthen coastal economies and environments and making them more resilient to future disasters, whether natural or manmade.
“The Innovation Act isn’t a panacea for the problem of so-called ‘patent trolls,’ and in some ways doesn’t go as far as we’d like,” R Street Institute policy analyst Zach Graves said in a statement Thursday. “But it offers the most comprehensive package of any proposal thus far, including a set of litigation reforms vital to undermining the patent troll business model. Overall, this is a big win and we will stay vigilant as the measure moves on to a more uncertain future in the Senate.”
The free-market think tank R Street led a conservative coalition on Capitol Hill advocating for the passing of the bill.
“Important changes include implementing “loser pays” (the cost of litigation), improving transparency and research into the actual owners of patents, and tightening up standards regarding potential infringements,” R Street policy analyst Jeremy Kolassa writes.
From the American Conservative:
In the September/October issue of The American Conservative, R Street’s Andrew Moylan laid out the conservative case for a carbon tax. He looked at the manner in which conservatives consistently denied any problems in the health care industry, leaving the ball entirely in the Democratic court and allowing Obamacare to be passed in the first place. Moylan then laid out a plan for getting conservatives out ahead of the curve. By making the tax revenue neutral, he proposed being able to pursue other conservative policy goals, such as a more growth-friendly tax code, in exchange for addressing climate change.
After a decade-long run of bad weather that included Hurricanes Katrina, Sandy, and Ike, and a host of other river valley and storm-surge floods, the 45-year-old National Flood Insurance Program owes taxpayers about $25 billion that no analyst believes it will ever pay back. Meanwhile, by keeping rates far lower than the private market ever would for some flood-prone properties, the program encourages development in ways that endanger lives and harm the environment.
That’s why it’s disturbing that so many in Congress—including some who stand firm against government meddling in other areas of the economy—have embarked on an effort to undo modest reforms that actually move the program in the right direction. Whether Congress can stay the course on flood-insurance reform is a clear test of its willingness to put its fiscal house in order and govern in the public interest.
The reforms in question were enacted last year in the Biggert-Waters Flood Insurance Reform Act, one of the few major pieces of legislation to pass a terribly riven Congress in 2012. At a glance, they seem to offer something for everyone. Environmentalists got better maps of flood zones that reflect rising sea levels, as well as improved protection of nature. Fiscal hawks saw premium subsidies phased out for owners of second homes, business properties and houses the taxpayers had already rebuilt multiple times, as well as a transition to appropriate rates for people who have been remapped into higher-risk areas.
Private property insurers continue to get payments for servicing policies under the NFIP’s “write your own” program. The law also opened the door to privatizing at least part of the NFIP via private reinsurance and catastrophe bonds.
Realtors, local governments and developers, who would have preferred the status quo, at least got assurance that the program would continue into the future and that rates wouldn’t rise sharply for most primary residences. More than 90 percent of the program’s 5.5 million policies would see no major changes in rates.
The only real losers—people who will no longer get subsidies—are literally members of the “1 percent.” There are 130 million housing units in the country, 1.1 million of which receive subsidized flood insurance through NFIP. And of those 1.1 million, nearly 80 percent are found in counties that rank in the wealthiest quintile. And most of them won’t see their premiums rise sharply anyway.
But the reforms’ vast benefits and modest costs may not suffice. A little more than a year after passage, many who once signed off on the reforms have changed their minds. In local briefings around the country, the Federal Emergency Management Agency, which runs the NFIP, set off a panic by offering accounts of rates rocketing up to $20,000 and $30,000 per year. When about 350,000 second-homeowners (by definition, not poor) got much higher bills this past January, opposition to the reforms kicked into high gear. The National Association of Realtors, arguably the most powerful trade association in Washington, joined with developers and local governments to call for vast changes and convened a high-level committee to seek measures that would effectively gut the core provisions of Biggert-Waters.
Congress responded. Rep. Maxine Waters, D-Calif., who coauthored the reform legislation, did a U-turn, and in June the House passed an amendment to a Homeland Security appropriations bill that suspended the core flood insurance provisions for a year. Meanwhile, 23 senators have jumped on to a bill sponsored by Sens. Robert Menendez, D-N.J., and Johnny Isakson, R-Ga., that would delay all rate changes for four years, effectively punting the issue until the NFIP’s next scheduled reauthorization, at which point it’s not inconceivable that the program’s debt to taxpayers could rise as high as $50 billion. While plenty of liberals like Sen. Elizabeth Warren, D-Mass., have joined the bill, so have conservatives like Sen. David Vitter, R-La.
This isn’t to say that the reforms have no flaws or couldn’t use some changes. A handful of people of modest means who are unexpectedly remapped into much higher risk areas may be socked with larger bills they can’t afford to pay and should probably get some temporary relief as long as they occupy their homes. More seriously, a longstanding rate-setting practice of ignoring levees that don’t provide protection against 100-year floods has resulted in some people behind “decertified” or “uncertified” levees being charged much higher rates than they should be. (Developers and others blocked an effort to fix this, because it would have also required more of those behind the levees to purchase coverage.) Other broader changes—even rate freezes for people of modest means who own their own homes—probably should be part of a negotiation.
But not every problem has a government solution. Even the truly high rates—which will likely be in the neighborhood of $10,000 rather than the $30,000 figures FEMA has thrown around—may be more an opportunity than anything else. They can be a catalyst for serious discussions about mitigation or buyouts for those who face the enormous risks that justify extremely high rates. Moreover, as higher rates have rolled out, at least a half-dozen companies around the country have announced plans to go into business in competition with the government’s program. While they won’t charge subsidized rates, many of them may be able to underprice the government on unsubsidized coverage.
On balance, the reforms under Biggert-Waters are incredibly modest: More than half of the properties most at risk won’t see rate increases even if all of the reforms go into force. The private sector’s role in flood insurance for homeowners will grow only slightly. Anyone looking to privatize flood coverage in a serious way will have to make further reforms when Biggert-Waters expires in 2017.
Still, each year that subsidies for development in flood-prone areas continue, more people will move into harm’s way. As the backlash to the reforms demonstrates, once they are there, it is beyond difficult to get them out.
This has very real human costs: Undoing a modest phaseout of flood insurance subsidies almost surely would mean plucking more people off of roofs with helicopters during the next massive flood or seeing more of them perish. And things appear certain to get worse. Ocean levels have been rising for at least 10,000 years, and climate change may accelerate this process in the future.
The real problem, however, isn’t the flood insurance program itself, but rather what it represents. In the context of a $3.5 trillion budget, the NFIP’s $25 billion of unpayable debt isn’t a fiscal calamity. But Congress’ seeming inability to stick with modest reforms—even when they produce far more winners than losers—proves how hard it is for the federal government to do anything that improves the nation’s finances. If members of Congress can’t save flood insurance reform, it’s hard to believe they’ll ever be able to fix far larger fiscal ills.
The president of a conservative think tank is highly critical of the current effort to roll back flood insurance rate increases imposed through a 2012 law, saying the reforms were “modest” and a test of whether federal legislators have the political will “to put its fiscal house in order.”
The comments by Eli Lehrer of the R Street Institute, a think tank based in Washington, will be appearing in the Dec. 16th issue of the Weekly Standard.
He is commenting on legislation now being considered by the Senate that would defer the imposition of actuarial rate hikes imposed by a 2012 law while Congress and the executive branch complete an affordability study…
…Lehrer said in his comments said that, on balance, the reforms “are incredibly modest.”
Lehrer said that more than half of the properties most at risk won’t see rate increases even if all of the reforms go into force. He said, “The private sector’s role in flood insurance for homeowners will grow only slightly,” adding that anyone “looking to privatize flood coverage in a serious way will have to make further reforms” when authorization of the National Flood Insurance Program runs out in in 2017.
Still, Lehrer said, each year that subsidies for development in flood-prone areas continue, more people will move into harm’s way. “As the backlash to the reforms demonstrates, once they are there, it is beyond difficult to get them out,” Lehrer said.
He said that “this has very real human costs” because undoing even a modest phase-out of flood-insurance subsidies “almost surely would mean plucking more people off of roofs with helicopters during the next massive flood or seeing more of them perish.”
And, Lehrer said “things appear certain to get worse. Ocean levels have been rising for at least 10,000 years, and climate change may accelerate this process in the future.”
Moreover, Lehrer said the real problem isn’t the flood-insurance program itself because the NFIP’s $25 billion in unpayable debt “isn’t a fiscal calamity in the context of a $3.5 trillion a year budget.
“But Congress’ seeming inability to stick with modest reforms—even when they produce far more winners than losers—proves how hard it is for the federal government to do anything that improves the nation’s finances,” Lehrer said. “If members of Congress can’t save flood-insurance reform, it’s hard to believe they’ll ever be able to fix far larger fiscal ills,” he said…
…That is not to say that Lehrer doesn’t think that the bill could be modestly changed.
“A handful of people of modest means who are unexpectedly remapped into much higher risk areas may be socked with larger bills they can’t afford to pay and should probably get some temporary relief as long as they occupy their homes,” Lehrer said.
More seriously, he said, a longstanding rate-setting practice of ignoring levees that don’t provide protection against 100-year floods has resulted in some people behind “decertified” or “uncertified” levees being charged much higher rates than they should be. Lehrer noted that developers and others blocked an effort to fix this, because it would have also required more of those behind the levees to purchase coverage.
“Other broader changes—even rate freezes for people of modest means who own their own homes—probably should be part of a negotiation,” he said.
The R Street Institute, a free-market think tank based in Washington, D.C., wants to hire a media relations manager. The media relations manager will be chiefly in charge of growing R Street’s media impressions, particularly in right-of-center outlets. He or she will author press releases, manage and expand our contacts database, serve as a spokesperson and have primary responsibility for getting R Street staff and fellows noticed by print, broadcast and electronic media.
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