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In two days, many of us will be celebrating the Birth of a Child. We will attend church, hear or read the familiar story, sing the familiar hymns, and then go home to open presents and enjoy a holiday dinner.

The story is so familiar that even children can recite it.

The events described in that story changed the course of human civilization. Every detail in that story helps us to understand the enormity of the change. But over the centuries the meaning of those details has been lost.

So in preparation for the celebration, let us take a moment and examine a few of those details.

We know He was born in a stable. Did we know that a stable was the only place that was actually accessible to everyone, from shepherds to kings?

In the case of the kings, it didn’t matter. Kings could go anywhere.

But in the case of the shepherds, it was critical. In first century Israel, shepherds were considered unclean because they slept with their sheep. They were not allowed to enter a dwelling.

So if the Child had been born in the famous overly-crowded inn, the shepherds would not have been allowed to visit Him. It was only in a stable that the One Who came to save us all could actually be worshipped by all. The stable was a symbol of the fact that there was no soul too “low” for His love.

On the other hand, the entry to the stables was deliberately small. No one could enter without ducking down, or bowing. Here the situation was reversed. The shepherds were quite used to bowing – they bowed to everyone.

For kings, however, the situation was quite different. Everyone bowed to them. But the kings could only enter that stable if they bowed their heads – a posture that represents humility. So the same stable that welcomed all also required that that all who desired to enter be willing to bow – because the real King was inside.

The stable was not an accident. It was a setting. And like all good settings, it helped to explain the message the Child came to share.

We also know that He was laid in a manger. Did we stop to think about the fact that the first place the One Who described Himself as the “Bread of Life” laid His head was in the very place where the master put food for his creatures?
The manger was also not an accident.

The message of that setting is as real today as it was two millennia ago. Every single one of us is offered a welcome by the Child, no matter who we are or what we have done. To receive that welcome every single one of us will have to be willing to approach and bow in recognition of His lordship over our lives and hearts. And if we accept the welcome He offers and become His, He promises to feed our souls now and forever.

So this Christmas, let’s recognize the stable as more than a decoration. Let’s recognize it as the setting for our celebration – a setting that changed the world.

In an effort to win public support for a bailout of Detroit’s Big Three auto companies, economists for the Economic Policy Institute (EPI) are predicting dire consequences for Pennsylvania and other states if GM, Ford, and Chrysler collapse. Indeed, the grim picture painted by these analysts could come to pass. I agree that if the Big Three shut down one consequence will be widespread economic calamity affecting many innocent people. Yet, the reams of data assembled by these analysts don’t tell the whole story.

The 11th-hour timing of these reports is intriguing. I recall the panicky way Congress rushed to pass the $700 billion financial bailout. Though such haste was unfortunate and problematic, it was unavoidable because the Wall Street implosion occurred with suddenness and rapidity.

By contrast, the Big Three’s pending bankruptcies have been foreseen for years. The car companies have had ample time to get their houses in order, but neglected to do so. The only reason a political solution is now being sought is that the Big Three have shunned a market-based solution, such as reducing the compensation packages of white- and blue-collar employees. Having refused to make the necessary economic adjustments, the Big Three now have the audacity to tell Congress that if they don’t receive a bailout, it will be Washington’s fault they go bankrupt and hundreds of thousands of Americans lose their jobs! The Big Three’s tactic reeks almost of extortion, as they play a high-stakes game of “chicken” with Congress.

The studies that purport to demonstrate a need for a federal bailout apply a static analysis. The world, of course, is dynamic, not static. Yes, if the Big Three’s factories shut down, the ripple effect will result in lost income and jobs for layers of satellite businesses. But why assume that nothing will change? Why not let markets work?

The pricing mechanism can perform wonders, particularly by bringing supply and demand into balance. Consider, for example, the market for houses. If prices are too high, houses don’t sell. Prices fall until housing units do sell. Similarly, the Big Three can afford to keep employing their workers if the price of their labor compensation is right. And if the Big Three adamantly refuse to participate in the marketplace, another option is to auction off their operations so that entrepreneurs, or even existing car companies, can use their assets to build cars profitably in the Big Three’s plants, using many of the Big Three’s suppliers, under a viable business plan.

Indeed, the great flaw of EPI advocating a bailout is other solutions are ignored. It is not accurate to argue that only Washington can save the jobs that depend on the Big Three. The power to preserve those jobs lies within the Big Three themselves. If they would simply price their labor to the marketplace instead of insisting on a subsidy, they could save their own jobs as well as the jobs of the many Americans in the Big Three’s network of satellite companies.

In rejecting market-based solutions and arguing for a handout, the EPI analysts seek to strengthen their case with bold assertions, such as claiming that “it is in the national interest to invest in a bridge loan now.” They even ventured to term such a loan an “investment” that Uncle Sam would likely recover.

“In the national interest”? No. It is in the interest of the Big Three, the businesses that depend on the Big Three, and perhaps in the interest of political careers in Washington to bail out the mendicants from Detroit. It is not in the interest of the majority of white-collar Americans who make less than the Big Three executives, nor is it in the interest of the majority of blue-collar Americans who make less than the $70-plus per hour labor payments that the Big Three bestow upon their UAW employees. It is hardly social justice to take the money of workers earning Chevy wages and give it to workers earning Cadillac wages. Nor is it fair to tax the domestic employees of Toyota, Mercedes, Nissan, etc., to subsidize their competitors.

Additionally, to term a bailout a “bridge loan” is semantically manipulative. A “bridge” to what, a financially sound future for the Big Three? This is what they imply, but then they fail to make a convincing case. Nowhere is there a discussion of what costs will be reduced so that the Big Three will return to profitability and competitiveness. Without such reforms, to suggest that Uncle Sam might earn interest on a bailout loan to the Big Three, as the EPI articles do, is asking us to take a leap of faith.

There is another fundamental economic truth that is absent from the pro-bailout analyses. Economically, it is not in the national interest to prop up unprofitable businesses, for such inefficient money-losing operations are actually making society poorer by consuming more value than they produce. In fact, the larger an unprofitable business is, the more urgent it is that the business ceases wasting scarce inputs so that those factors of production can be redeployed to profitable use.

Propping up colossal, unprofitable enterprises was a hallmark of the Soviet system, and while leftists in this country praised the “enlightened” government policy of propping up inefficient businesses and protecting jobs, the economic reality of such “enlightened” policies was that they systematically destroyed wealth. By outlawing the profit-and-loss system, the Soviets impeded economic progress, guaranteed economic stagnation, and turned the promised “workers’ paradise” into a grim world of poverty. By contrast, a healthy market-based economy doesn’t fear the loss of unprofitable businesses, but welcomes them because they will be replaced by profitable enterprises.

The prospect of massive economic dislocations is daunting. Many Americans would lose their jobs if the status quo remains unchanged. It is a dismal prospect, but it is not inevitable. Let us hope this Christmas season that management and labor at the Big Three, like Ebenezer Scrooge, have a last-minute epiphany so they can save themselves. The Big Three have the power to save themselves without a taxpayer-funded bailout.

Dr. Mark Hendrickson is a contributing scholar to the Commonwealth Foundation (www.CommonwealthFoundation.org) and a fellow for economic policy at The Center for Vision & Values at Grove City College.

Pennsylvania is facing a deep shortfall in revenue which, through October, stands at $565 million. Putting this in perspective, the shortfall in 2002-03—which led to increases in the state personal income and cigarette taxes, as well as a new tax on cellular phone and long distance calls—was $497 million after 12 months. The current deficit blew by that figure a mere four months into the fiscal year. More…

In 1993, I officially launched my campaign for President of the United States. Granted, I was only 17 years old, hadn’t graduated high school yet, and wasn’t a member of the Kennedy family. Nonetheless, I developed a plan —go to college, study political science, do something for 20 years, then become the youngest POTUS in history.

Truth is, I had been inspired (or rather uninspired) by the presidential election of 1992. Watching George H.W. Bush, Bill Clinton, and Ross Perot pander, obfuscate, deceive, and flip-flop, I was greatly disappointed in the quality of the candidates. I reached the conclusion—as I assume did many others—that I was more intelligent, more honest, and more principled than those seeking the highest office in the land.

But although it was the ‘92 election that first drew me in, it was not electoral politics and campaigning that I was truly passionate about. It was political ideas.

Shortly thereafter, I penned my first letter to the editor, in support of NAFTA (I don’t remember the economic arguments I used at the time, though I’m sure I thought they were brilliant), but it was years later that I realized my dream of being President was only a tool to accomplish what truly motivated me—persuading others.

Becoming President was based on the belief that I had great ideas grounded in history, economics, political philosophy, and I wanted to share them. My political goal in life—and with the Commonwealth Foundation—is to convince the world of the merits of those ideas.

In interviewing for my current position, I was asked to name my political heroes—I assume to gauge my philosophical leanings. But I had to respond that I didn’t have any “political heroes,” because I’ve been disappointed by most politicians. Perhaps that is because I’ve put too much stock in them in the past, and they never live up to the hype. The reality is that politicians are human, and human are flawed. To borrow from my favorite movie of all time, Braveheart, “All men betray, all lose heart.” Or, as James Madison writes, “If men were angels, no government would be necessary.”

Focusing solely on winning elections is a waste of energy. Too often we expect to elect heroes to office; men and women who, unlike the rest of us, will put aside their own self-interest and act for the public good. I have friends who believe if we would just elect a few good people to office, everything would change. I’ve met others who spent most of their time fighting for “the lesser of two evils,” and some who hope we elect a great villain in order to bring about a great hero. But I have come to realize that we cannot depend on great men to reform a corrupt system or to scale back a government that has grown far beyond its purpose.

Ee should not put too much faith in any politician to transform our political culture. Whether it’s Obama’s message of hope and change, McCain’s image as a maverick, the mythical inerrancy of Reagan, FDR, Lincoln, or Jefferson, or even the Benefield for President campaign, the reality will always disappoint. Politics forces the greatest statesmen to make promises they can’t keep, compromise on their principles, and do things to win elections that they wouldn’t otherwise. You can’t put flawed men into a flawed system and expect anything but flawed results.

But it is not the fault of politicians. If you want to know who is to blame, look in the mirror. We have enabled this culture of celebrity to take over our system of government. We donate far more to politicians than to political causes or advocates. The media covers politics like a horse race without engaging in the debate over ideas—and we soak it up. We closely follow polls and the personal lives of candidates, but ignore the fundamental debates about good public policy.

Without an active, vibrant, and well-informed citizenry, we will never build that City on a Hill. It is the power of ideas, not heroic political leaders, to which we must turn.

Ideas change the world. There will never be slavery again in this country. Women will never again be denied the right to vote. No American will ever be prohibited from attending the church of their choosing. In other countries, these rights are frequently abridged. Why not here? Because these ideas have taken root in the public consciousness.

Yet we are still waging a war over the truth of our ideas. The virtues of limited government, economic freedom, and personal responsibility are frequently challenged. We must continue to champion the power of school choice, the wisdom of public-private partnerships in transportation, the benefits of lower taxes, the merits of a part-time legislature, and the means to diminish the corrupting power of big government.

Do I still want to become President? Perhaps. But only if I can be elected while staying true to my principles. If I do that, I will already have accomplished my goal.

Winning the war of ideas - not an election - is the true objective for which I fight, and to which those who believe in the principles of a free and just society should join.

Nathan Benefield is Director of Policy Research with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.

“What did you do when you had the power?”

Those words define the legacy of my former boss, the late Gov. Bob Casey. It was a question he would often ask me and other members of his cabinet during his eight years as the commonwealth’s CEO. He asked the question to keep us sharp, to make sure we were always acting in the best interest of Pennsylvanians during the brief time we had to serve.

It’s a question I’d now like to ask legislators who failed to seize on an historic opportunity to immediately address our state’s transportation infrastructure crisis. And, believe me, it is a crisis. Faced with a $1.7 billion transportation funding shortfall, Gov. Ed Rendell came up with a creative solution: leasing the Pennsylvania Turnpike to a private investor group for an upfront payment of $12.8 billion, and a total package worth nearly $22 billion.

Many of the commonwealth’s legislators, like House Appropriations Chairman Dwight Evans, courageously applauded the governor’s bold strategy and worked hard to find support for it among their colleagues.

Unfortunately, others offered false solutions—like the doomed bid to toll I-80—to mask their desperate ploy to preserve a bastion of bureaucratic corruption and patronage, the Pennsylvania Turnpike Commission.

While I can respect those who had an honest disagreement with the principle of leasing the turnpike, it at least deserved an open and honest debate on its merits.

The failure of the Legislature to act on this extraordinary opportunity—the largest private investment of its kind—has led the bidders, a consortium led by Abertis and Citigroup, to withdraw their offer because some in House and Senate leadership told them the Legislature was off limits for any discussion, debate or vote on this issue.

In a cash-strapped world, how long could we expect the group to leave billions of dollars on the table, when other states and municipalities might welcome an investment of this magnitude far more readily than Pennsylvania? Only last week the governor of New York announced his intention to explore public-private partnerships for such important public assets as the Tappan Zee Bridge.

The fiscal consequences for Pennsylvania will be severe to be sure. Recent press reports, including a front-page story in the Philadelphia Inquirer—”Rendell, Corzine order cuts in trying times”—have chronicled the crunch facing the commonwealth. “Rendell has ordered a number of austerity measures to keep Pennsylvania’s budget balanced … the Commonwealth’s September revenues were $163.8 million less—6.5 percent—than expected,” the subheading stated.

With the state and the country facing an uncertain economic future, a private investment of billions of dollars to improve infrastructure would have created thousands of jobs and improved Pennsylvania’s productive capacity. And the glaring truth is the infrastructure crisis cannot wait: It is an issue of safety on the commonwealth’s roadways.

We cannot expect funding from Washington; the municipal credit markets have evaporated, forcing some states to stall highway projects midstream.

Who then will pay for the needed repairs and projects? I’m sure you won’t be surprised to learn it will be you — the Pennsylvania taxpayer.

And so what are we left with? The Turnpike Commission has raided the coffers and avoided any business realities in the last two years, doing anything they could to save themselves.

Their cost of debt is skyrocketing far more than the 4 percent they had budgeted for and the traffic is down more than 4 percent in the Philadelphia region.

It’s time the legislature demands a full audit of the books at the turnpike.

I hope the constituents of those legislators who lacked the courage to embrace an investment opportunity we might never see again will ask the same question of those who purport to represent their interests: “What did you do when you had the power?”

Howard Yerusalim was secretary of the Pennsylvania Department of Transportation under Gov. Robert P. Casey. He was also a member of the Pennsylvania Turnpike Commission and is currently vice president for Infrastructure at MMFX Technologies Corp. For more on the Turnpike Lease, visit CommonwealthFoundation.org and TurnpikeFacts.com. The Commonwealth Foundation is an independent, nonprofit public policy research and educational institute based in Harrisburg.

Washington’s response to the current financial trouble has affirmed Groucho Marx’s definition of “Politics”: “The art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”

To be sure, we are in a financial mess. Too many banks lent money to credit-risky consumers they shouldn’t have lent money to, and too many consumers borrowed more money than they could afford to borrow. But the remedies being pursued by our politicians will miss the mark once again.

Why? The very people who created our current problems think they can now solve it by doing more of the same. Indeed, politicians who have consistently used the heavy hand of government in our economy are claiming that more government intervention and manipulation of the market is the solution. They essentially want us to believe that throwing more gasoline on a fire will put out the flames.

Our national leaders refuse to acknowledge that our current financial woes are a direct result of the federal government’s encouragement and financial backing of poor lending practices. Through a variety of political decisions by both Democrats and Republicans - including loose monetary policy, the Community Revitalization Act which forced banks to loan to credit risks, and using Fannie Mae and Freddie Mac to promote subprime loans - the fundamental cause of the current crisis has been government itself.

It is equally important to recognize that our market economy is not to blame for this mess. Many politicians, like House Speaker Pelosi, have erroneously focused their criticism on capitalism, claiming that the problem is the result of “no regulation, no supervision, no discipline.” Although such rhetoric may sell on the campaign trail, it denies the fact that the current trouble is occurring in one of the most heavily regulated and supervised sectors of the financial industry. Indeed, Fannie Mae and Freddie Mac couldn’t have been any more of a government regulated and supervised entity, yet it still collapsed.

Instead of allowing the banks who made bad decisions to fail and consumers who borrowed more than they could afford to take personal responsibility, politicians will further distort the economy with the recently passed plan. It will be the fiscally prudent banks and credit-worthy consumers who will ultimately pay the price for this federal government intervention.

There is no pain-free solution. The choice isn’t about whether or not we will experience some financial tragedies, but if we believe the same government actors who significantly contributed to the problems we face today have now come up with the solution. Chances are they haven’t. Politicians have a horrible track record of being effective economic planners.

Yet fear of another Great Depression drove them to “do something.” But we must recognize that such comparisons have been greatly exaggerated. Many of the key economic indicators do not suggest we are headed toward such economic ruin. As Allan Reynolds of the Cato Institute points out, “we have had little more than a dozen bank failures this year compared with more than 5,000 in the 1930s, and nearly 3,000 in the 1980s.” Even more important is that the failure of those banks occurred after government “did something” - namely increased taxes, increased tariffs, and created the Reconstruction Finance Corporation.

The only appropriate analogy to the events before and after the October 1930 collapse is that President Bush, like President Hoover, is heavily intervening in the economy. Bush, like Hoover, is criticized as having been a hands-off, market-oriented, do-nothing president. But the historical record has shown that both presidents have been strong government interventionists rather than free-market advocates.

What, then, should government have done?

The solution is to embrace free-market solutions and allow the market to ferret out the bad actors and the bad debt in the marketplace. There are a number of proposals that would do this, including altering current accounting regulations such as “mark-to-market,” lowering taxes on investments in order to infuse more private capital into the economy, and privatizing Fannie Mae and Freddie Mac so that politicians and their friends in quasi-government entities don’t do this to us again. These are a few policy changes where government can “do something” without doing damage.

Unfortunately, panicked politicians ran away from these solutions, proving once again that Groucho Marx was right by incorrectly diagnosing the problem and applying the wrong remedies.

Matthew J. Brouillette is president and CEO of the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, non-profit public policy research and educational institute based in Harrisburg, PA.

The Bowyer Bailout Alternative
By Jerry Bowyer

I just got off the phone with Ed Lazear (Chairman of the President’s Council of Economic Advisors), and he made a good case for the severity of the crisis, esp. negative interest rate on t bills. It got bad last week. The sun turned to sackcloth, moon ran blood red, burning hailstone, etc….crazy stuff. Something had to be done.

The problem is that they are just beginning to understand what a few of us (including Larry Kudlow and Steve Forbes) have seen all along:

Over-regulation brought us to this crisis, not under-regulation. If we get the diagnosis wrong, then the prescription will be wrong too.

Think of the analogy of a ‘bail out’: someone knocks a hole in a boat and the water rushes in. The crew bails water out of the boat to keep it from sinking. If things are really bad, another boat comes and helps. This analogy points to the real problem: the hole! If you patch the hole early, no bailing is needed. If you patch it very late, the whole ship needs to go into dry dock. But the bailing out only makes sense in the context of patching the original problem. The worst thing to do would be to allow the ship to sink to make some kind of populist political point. No, revise that:

The worst thing to do would be to take the left’s view and say “too much water in the boat, let’s knock more holes into it so the water can get out.”

That’s what more regs would mean. Place salary ceilings on “every company that benefits in any way whatsoever from the bailout” as Barney Frank said today on CNBC, and you’ll get a talent exodus. Give judges the power to obviate existing mortgage contracts with investors around the world - the dollar will plunge. Every one of those proposals is another hole in the boat.

The best thing to do is to patch the holes. Here they are:

Some are talking about putting a hold on the mark to market regulations. That’s a start but not enough. Don’t suspend mark to market, abolish it. It’s part of the whole Sarbox, Spitzer, FAS 157 wave of punitive regulation after Enron. It makes no sense to impose and universalize temporary downturns, especially during panics.

Abolish the Bank Holding Company Act. It’s a remnant of the 1920s before branch banking. Its only current effect is to keep private equity from buying majority stakes in troubled banks. Goldman’s decision yesterday just illustrates the problem. They had to change structure in order to buy up other banks. This is nuts. Get rid of this dinosaur and private equity will start the capital infusions.

Abolish the Community Reinvestment Act. Forcing banks to make minority loans is the original sin out of which came the Subprime mortgage industry. Let banks decide where to loan; that’s their job. Leave identity politics out of our credit system.

Do all of the above and I’m not at all sure that any bailout would still be needed. Before we subsidize these institutions, let’s stop the things we are already doing to collapse them. Back to Hippocrates: First of all, do no harm.

____________________________

Mr. Bowyer is chief economist of BenchMark Financial Network and a CNBC contributor. This article originally appeared on CNBC.com at

http://www.cnbc.com/id/26857458

Tolling I-80 and the Presidential Election

Nathan Benefield and Ryan Shafik

The theme of change has dominated the presidential election. Both Barack Obama and John McCain (and their vice presidential picks) tout themselves as agents of change, ready to reform Washington and take on special interests. But if these candidates want to demonstrate their commitment to reform, they should voice their opposition to the proposed tolling of I-80 across Pennsylvania.

The plan to toll I-80 represents bi-partisan exploitation of a corrupt system at its worst. In 2007, the Pennsylvania Turnpike Commission (PTC) used its political ties and lobbying machinations to enact a plan dramatically expanding their authority—allowing them to toll I-80, as well as increase Turnpike tolls without limit and incur billions of dollars in debt. Following an intense public relations effort—in which the PTC spent millions in toll dollars for lobbying expenditures and radio, TV, and newspaper ads across the state to promote its plan.

This plan, Act 44 of 2007, passed with no committee hearings, no public discussions with lawmakers, and no opportunity for the public to weigh in on what became Act 44. There were no studies conducted on the impact of tolling I-80, though a 2005 PennDOT study that recommended against tolling I-80 was ignored. Only the Pennsylvania Turnpike Commission and their legislative patrons—were at the backroom table making the deal.

The Turnpike Commission’s long history of patronage and corruption is well documented, most recently in state Senator Vincent Fumo’s federal indictment (detailing numerous instances of illegal activities tied to the Commission) and Turnpike CEO Joe Brimmeier’s acknowledged penchant for hiring family members. Recent revisions to the PTC’s plans to toll I-80 have dramatically increased the amount of debt to be paid off by tollpayers. Pennsylvania taxpayers and tollpayers will now be paying this debt for decades. Under no circumstances should the PTC be given any additional dominion over Pennsylvania’s transportation infrastructure.

Happily, there is still a chance to kill this plan. As I-80 is a federal highway, funded with federal dollars, approval from U.S. Department of Transportation is required. While the Federal Highway Administration is reviewing the latest revision of the proposal, the Pennsylvania Congressional delegation (less Senators Casey and Specter) have offered their advice—with bipartisan opposition from those representing the I-80 corridor, and support coming only from Democratic Congressmen representing the southern part of the state. Why haven’t our presidential candidates taken a stand?

Opposition by the next President of the United States could put the final nail in the coffin of this horrific plan. Not only is opposing I-80 tolling the right thing to do but it could be a political winner as well.

Aside from being terrible public policy, I-80 tolling is among the most important issues for citizens and business in the northern tier of Penn’s Woods. While the economy is a dominant issue for most voters, for residents whose economy depends on a toll-free I-80, this is an issue of economic survival. Public opinion polls show that over 80 percent of those people living near I-80 view tolling as a top issue when they vote on state and federal candidates in November. A recent Quinnipiac University poll shows an overwhelming majority of Pennsylvanians statewide oppose the tolling of Interstate 80.

Pennsylvania remains an important swing state, with John McCain currently trailing Barack Obama by 4 to 6 points in most polls. Recent polls also show McCain besting Obama by 10-12 points along the I-80 corridor—an area Bush carried by over 20 points. By weighing in on the most important local issue—but one determined by federal policy—either candidate could galvanize the electorate in that area and lock up Pennsylvania’s 21 electoral votes.

The tolling of I-80 is an issue that the both candidates should campaign strongly and visibly against. The plan for I-80 tolling has the hallmarks of what Senator McCain has been fighting against and the “change you can believe in” Senator Obama supports: a shady last minute deal that leaves taxpayers holding the bag, unsecured debt to keep the bi-partisan patronage machine alive, and blatant abuse of federal regulations of highways.

Rejecting the proposed tolling of I-80 is by its very nature good-government reform. Will our presidential candidates stand up to the special interests, or continue to endorse business-as-usual policymaking?

# # #

Nathan Benefield is Director of Policy Research with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute and Ryan Shafik is the Communications Director for the Lincoln Institute of Public Opinion Research (www.LincolnInstitute.org), a non-partisan, non-profit public opinion research institute.

Northeast Pennsylvania Activists Create New
Conservative Grassroots Organization

Clarks Summit, PA - A new grassroots organization aimed at furthering conservative activism started in the Scranton/Wilkes-Barre-area and is looking for like-minded members. The group, Coalition for a Conservative Majority - Northeast Pennsylvania, is the local chapter of the national organization founded by former House Majority Leader Tom DeLay and Chaired by former Ohio Secretary of State Ken Blackwell.

As the first order of business, the CCM chapter has requested meetings with their area members of Congress, whether they’re conservative, liberal, or anything in between. Chapter President Tanya Callaway Crews said earlier today the group will focus on monitoring federal and state policy to ensure conservative thought is represented. “It’s time conservatives take a page out of the liberals’ playbook and start holding our politicians accountable for the actions here and in Washington,” Crews said. “CCM will be the primary organization that will hold their feet to the fire.”

The National Chairman of CCM, former Ohio Secretary of State Ken Blackwell, said the Northeast Pennsylvania group is one of 8 targeted media markets with a burgeoning CCM chapter. “Across the country we are seeing candidates who run as Barry Goldwater, then govern more like Walter Mondale. CCM is here to keep their voting records in line with true conservative ideology.”

During their recent monthly meeting, the organization elected a board and developed an organizational plan. The aim of the group, said Crews, is to unite the different factions of conservatives - security, social, and fiscal - into one organization that can work on a variety of fronts. “We don’t care if you’re here to fight illegal immigration or higher taxes - if you call yourself a conservative and you want to in the fight, you’re welcome to join CCM.”

CCM NEPA meets on a monthly basis and events are only open to registered members. For more information about CCM and how to become a member of the grassroots organization, please visit www.ccmajority.org.

Reducing the Size of the General Assembly

Matthew J. Brouillette

Testimony before the House State Government Committee. Thank you, Chairwoman Josephs, and members of the House State Government Committee for the opportunity to testify today on the issue of reducing the size of the Pennsylvania legislature.

My name is Matthew Brouillette and I am a president and CEO the Commonwealth Foundation, a public policy education and research organization based in Harrisburg.

At 253 Members, Pennsylvania has the 2nd largest state legislature in the nation, trailing only New Hampshire which with 424 members boasts the 3rd largest legislative body in the world (rivaled only by the U.S. House of Representatives and the British Parliament. But as you all know, New Hampshire is the epitome of a citizen-run legislature, where members receive only $100 per year for their part-time and limited legislative service.

In addition to being one of only four truly full-time legislature in the nation, Pennsylvania is among the most highly “professionalized,” according to the National Conference of State Legislatures. This takes into account legislative pay, number of days in session, and staff per legislator.

In terms of compensation, Pennsylvania legislators are the 4th highest paid in nation at over $76,000 in base pay per year (trailing Michigan at $79,650, New York at $79,500, and California at $116,000 in 2008). In terms of support staff, the Pennsylvania General Assembly has the 2nd highest number of legislative staff (after New York, as of 2003) with over 11.6 staff members per legislator (an increase of 106% since 1978).

Given these facts, it is no surprise that Pennsylvania’s General Assembly is the most expensive operating legislature in the nation (even spending more than California’s $260 million and New York’s $220 million). In the current 2008-09 fiscal year, $332 million was appropriated for the operations of the House, Senate, and legislative support services. This is up from $88 million in 1984-85—an increase of 84% after adjusting for inflation.

Obviously these nation-leading numbers do not reflect well on the Commonwealth of Pennsylvania, so it is no surprise that there are proposals to reduce the size of the General Assembly. Over two years ago, we testified on this very issue before a Senate Committee (RE: Sen. John Pippy’s SB 890 which would reduce the General Assembly by 40% from 203 House members to 123, and from 50 Senators to 30) and produced a policy brief, which I have included with my testimony.

Our analysis and critique then still applies now. Allow me to highlight a few of the salient points.

Our conclusion is that reducing the size of the Pennsylvania General Assembly could impact three areas of state government operations: First, it could lead to a reduction in the cost of the legislature. Second, it could provide greater accountability and transparency in legislative processes. And finally, it could bring about different public policy outcomes.

We emphasize could because reducing the size of the legislature on its own—as a stand-alone reform—will not likely improve either state government’s efficiency in spending taxpayers’ money or state government’s policymaking effectiveness. In and of itself, this structural change would only have a minimal effect on the costs and benefits to citizens.

I will, however, briefly address each of these three potential areas of impact.

First, many proponents suggest that a smaller legislature will cost taxpayers less money. But barring other reforms, these savings will be minimal. The operating cost of the General Assembly, though large, represents only a fraction of the Commonwealth’s $60 billion operating budget. Additionally, reducing the number of legislators would not automatically result in an equivalent reduction in either direct or indirect costs to taxpayers.

Indeed, even if a 25% reduction in the number of legislators resulted in a 25% reduction in the legislative budget, the savings would amount to approximately $7 per Pennsylvanian. Of course, this is not totally insignificant, but far greater savings can be achieved through other, more substantive cost-cutting policy changes and reforms.

The second area of possible impact is in legislative accountability and transparency. We believe that a smaller legislature could be a component of a broader set of reforms. Reducing the size of the legislature (and making larger legislative districts) could result in greater accountability and transparency by leading to the adoption and implementation of more substantive reform measures. A smaller legislature may also increase the chances of making the legislative process more open, transparent, and independent of special interests. But none of these outcomes are guaranteed by any means.

There are potential downsides, including a reduction in the attention an elected official can pay to a larger number of constituents, and the possibility of further concentrating power in the hands of a few legislative leaders. For these reasons, we emphasize that reducing the size of the legislature can only lead to increased accountability and transparency if it is complemented with other critical reforms.

Finally, the potential impact of reducing the size of the General Assembly on policy outcomes is unclear. A number of academic studies comparing state legislative size to policy measures reach different conclusions. Some find that states with smaller legislatures spend less per-capita than states with larger legislatures; while other studies conclude that larger constituent size results in more spending (thus shrinking the legislature would lead to more state spending). There is no clear evidence linking legislative size with other measures of state policy, such as economic freedom or tax burden—two important measures of a state’s potential for lasting prosperity.

Several studies, however, have found that state spending, tax burden, and economic freedom vary much more closely with legislative “professionalization” than size. The number of staff per lawmaker, the pay of lawmakers, and the time in session have a strong correlation with the level of spending, taxes, and regulations enacted by state government.

States with highly professionalized legislatures spend more per-capita, have a higher tax burden, and have a higher, more burdensome level of regulation than do states with part-time, citizen-led legislatures. Thus, reforms that move Pennsylvania away from a full-time, professional legislature will have a much greater impact on improving policy outcomes than just reducing the number of members.

I have qualified the Commonwealth Foundation’s support of reducing the size of legislature to needing additional, more substantive reforms. Two of the most important measures we’ve identified include Limited Terms and Limited Sessions:

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Limited Terms. Pennsylvania currently limits the number of terms the governor can serve. Similar limits should be placed on members of the General Assembly to restore the ideals of public service and a truly representative body of the citizenry.
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Limited Sessions. Pennsylvania is among only a handful of “full-time” state legislatures with an unlimited number of session days. Limiting the number of session days, coupled with limited terms, would also return Pennsylvania to a citizen-led legislature.

In summary, our analysis suggests that a reduction in the size of the Pennsylvania General Assembly could improve the lawmaking process, but only if it includes other, more comprehensive reforms.

Thank you again for the opportunity to testify, and I would be happy to answer any questions from the committee.

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Matthew J. Brouillette is president and CEO of the Commonwealth Foundation (www.CommonwealthFoundation.org), a public policy research and educational institute located in Harrisburg.

The 2006 Policy Brief, Potential Effects of Reducing the Size of the Pennsylvania General Assembly, is available at www.CommonwealthFoundation.org.