Category Archives: The Vote

Public Policy Principles News, The Vote, Public Policy Radar, Commentary

Sowing The Wind- Part V

This entry is part 5 of 8 in the series Ohio Con Con Call

Public Policy RadarThe following was testimony offered before the Ohio House Judiciary Committee by Robert Owens, an attorney from Delaware, Ohio and a recent independent candidate for Ohio Attorney General.

I want to thank Chairman Blessing and the members of the committee for allowing me to speak today. My name is Robert Owens, I am a lawyer from Delaware, Ohio and I am an active member and leader in a number of Christian conservative organizations that embrace the time tested and proven concepts of limited constitutional government, free enterprise and individual liberty bestowed upon us by our creator.  I urge you to vote no on HJR 8.

Here are some of the possible results of a “run away” article 5 convention as described of by U.S. Supreme Court Chief Justice Warren Burger:

1.      Total civilian disarmament.

2.      Socialization of industry.

3.      Confiscation of private property.

4.      Torture of citizens.

5.      Suppression of the Press and of Religion

If you started this day unaware of the reasons and legal arguments of a Chief Justice of the Supreme Court that talks of a “run away” convention and,

If you started this day unaware that a totally different ratification process than what you might expect is perfectly lawful and consistent with legal precedent, and

If you started this day unaware that if a article 5 convention is called in the next two years, Nancy Pelosi and her team would get to choose how delegates are selected, how they are paid, where the convention would be held and if the convention were to be held in public or in secret. And,

If you started today unaware that Ohio would be the 33rd state in the history of the republic to call for the convention and that 34 is the magic number to forcibly trigger Congress to call the convention. Then caution is urged.

If any or all of these facts were unknown to you, please do not risk giving Congress a blank check without doing all the research.  We are talking about possible political suicide to the conservative movement.  This move must be carefully examined, not hurried through a December session without scrutiny.

One point of irony should not be missed in this process.  If Congress actually followed the Constitution, we would have a balanced budget and there would be no need for this committee to consider this resolution.  What makes anyone think Congress would be limited by new rules if it does not follow the existing ones?

The proposed convention could have devastating effects upon our American tradition of being a free people.  This tradition has made us the most prosperous nation and the most charitable nation in the history of the world.

Robert’s wife Teri also testified. Here are her remarks to the committee.

Chairman Blessing and members of the House Judiciary Committee, thank you for the opportunity to provide opposing testimony on House Joint Resolution No. 8. My name is Teri Owens and I am from Delaware, Ohio.

This is my first time testifying in a legislative committee. I don’t want to waste precious time explaining who I am because my background, ethnicity, race, religion or vocation does not matter to this issue. I speak as a citizen of Ohio, who – no matter what special interest categories I might fit into – stands to be irreparably harmed by the ramifications of calling an Article V convention. The quickness and quietness with which this legislation emerged and is moving is especially troubling because of this.

With due respect to the Sponsor, Representative Huffman, for those who stand in opposition to calling an Article V Constitutional Convention, it is not about fear, but rather wisdom.

The consensus among jurists and Constitutional scholars is that once a Constitutional Convention is called in accordance with article V, state legislatures have no authority in the method of selecting delegates and no authority to limit the scope or outcome of the convention. The only precedent for this in our nation’s history was the first Constitutional Convention, which was called to amend the Articles of Confederation. Indeed this became a runaway convention that emerged not with an amendment, but a brand new form of government and Constitution which only required 9 of the 13 states to ratify in nominating conventions rather than the consent of all state legislatures per the Articles of Confederation.

By its very nature, a Constitutional convention creates a sovereign representative body of the people and no limitation of the state legislatures or congress can restrain the delegates.

Would a Constitutional Convention become another runaway jeopardizing the political protection of the God-given rights of Ohio citizens? Is it wise to take that risk in today’s divided political climate?

Associate Justice Arthur Goldberg summed up the answer this way: “if the question is whether a runaway convention is assured, the answer is no, but if the question is whether it is a real and serious possibility, the answer is yes. In our history we have only one experience with a Constitutional Convention, and while the end result was good, the convention itself was a definite runaway.”

In addition to the dangers of a con-con, the most glaring problem with HJR 8 and its companion bill SJR 9 is that a Constitutional Convention is not even needed to address the problem cited. Applications for a Convention should only be used if a Legislature believes that the present Constitution is structurally flawed and in need of repair. An unbalanced federal budget is not the result of a “Constitutional flaw,” rather it is the result of a Congress which consistently ignores the Constitutional limitations upon its spending of federal funds.

I have emailed to all of you links to a 4 part video series called Beware: Article V which was created by legislators to help you take a closer look at the serious implications of an Article V Constitutional Convention. All four parts can be viewed at principledpolicy.com.

Chairman Blessing and members of the committee, I strongly urge you to vote against sending this bill to a floor vote. This issues comes down to whether you believe the possibility of obtaining a balanced budget amendment is worth the risk that our entire ststem of government could be changed. Chairman Blessing I know that you are a 20 year champion of a Con-Con and I especially urge you to allow your fellow legislators more time to discern the wisdom of this resolution before they are forced to vote on it.

Thank you for the opportunity to speak on this important matter.

Marriage and Family, Public Policy Radar, Commentary, The Vote

YES On State Issue 5

This entry is part 4 of 5 in the series 2008 Election Issues

Voting MachineOne of the two most contentious issues on Ohio’s Fall 2008 ballot is Issue 5. In 1995 Ohio’s legislature foolishly repealed the existing usury laws. In the wake of that action hundreds of so-called “payday” lenders popped up all over the state, usually in or near areas where predominantly lower- to lower middle class workers reside.

Just a few years ago, Ohio passed very tight new bankruptcy laws. The combination of tighter bankruptcy laws and the repeal of usury laws have created an economic atmosphere in which usurers can flourish. And have they ever flourished. The number of payday lenders grew by more than 1500% since 1996 from 107 to 1638 in 2007. Between 2006 and 2007 the number of Ohio’s payday lenders grew by 76 or over 5%1.

Taking advantage of Ohio’s current law which allows a 391% Annual Percentage Rate (APR) ceiling (this is for a two-week loan. A 10 day loan can be as high as 548% APR2 due to the decreased loan duration and subsequent increase in annual repayment periods ; to be fair a loan at the $800 cap is “only” 367% APR3) and an $800 borrowing cap, Ohio’s virtually unregulated payday lenders are reaping huge revenues from their chosen targeted customer base. And just who is that base? Those who can least afford it, naturally. People who have limited or no access to other kinds short-term credit- credit cards, equity in real property, acceptable credit rating (or in the case of young people new to the job market and college students, any credit rating) people in low-income jobs (seasonal employees, etc) or on a “fixed-income (retirees, injured and disabled workers4).” A favored target of payday lenders is families of enlisted military, whose pay rates tend to be dismally low. In many states payday lenders cluster near military bases. Or they used to. The federal government recently (2006) capped loans to soldiers and their immediate families at 36% and most payday lenders have moved on to greener pastures like subsidized housing.5 So much for noble payday industry claims of “just being there to provide a necessary service.” Only if the interest rate is in the triple digits as we will prove later.

What payday industry watchdogs say about the industry-

Morgan Stanley IPO Analysis of Advance America:

The Georgetown study reveals the long-term nature of much payday lending. At a 300 percent APR, the interest on a payday advance would exceed the principal after about four months. In these circumstances, the loan starts to look counterproductive: rather than bridging a gap in income, the payday advance may contribute to real financial distress. Advance America’s disclosures show that repeat borrowing is important. [emphasis added]

FDIC Center for Financial Research:

‘We find that high-frequency borrowers account for a disproportionate share of a payday store’s loan and profits.

Ernst & Young Analysis of Payday Lending Business Model:

The survival of payday loan operators depends on establishing and maintaining a substantial repeat customer base.’

Michael Stegman’s “Payday Lending: A Business Model that Encourages Chronic Borrowing” – Economic Development Quarterly:

The financial success of payday lenders depends on their ability to convert occasional users into chronic borrowers.

What the Payday lenders themselves say-

Stephen Winslow–Former Harrisonburg, Virginia Payday Store Manager:

This industry could not survive if the goal was for the customer to be ‘one and done’. Their survival is based on the ability to create the need to return, and the only way to do that is to take the choice of leaving away. That is what I did.6

My customers were not stupid or ignorant – they were in crisis. I ended any ability they may have had to overcome that crisis by putting the final nail in their financial coffins.7 [emphasis added]

Rebecca Flippo – Former Virginia Payday Store Manager:8

These companies feed on the people living on a paycheck-to-paycheck basis.The customers who do come in and repay the loans take out another loan right then almost every time.They want to create a dependence on their services so the customer is forced to reissue the loan on every payday.

We saw most of our customers every month.

We really played down the APR. We disclosed it, but we played it down.[emphasis added]

What the Bible has to say about deliberate gouging those who can least afford it-

If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him. Ex. 22:25 ESV

Take no interest from him or profit, but fear your God, that your [poor] brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit. Lev. 25:36, 37 ESV

You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. Deu. 23:19 ESV

Whoever multiplies his wealth by interest and profit [That is, profit that comes from charging interest to the poor] gathers it for him who is generous to the poor. Prov. 14:31 ESV

Though the exegesis of this is well beyond the scope of this article (see Gary North and R.J. Rushdoony for an expansion), the Bible doesn’t condemn interest bearing loans for commercial purposes. The Institute For Principled Policy believes in the basic economic premise that market forces should set interest rates for commercial loans under normal circumstances. However, the Bible does strongly condemn the lending of money at interest, especially at rates that are condemned as usury under any circumstances except extreme hyperinflation, to those in society least able to repay the loan for reasons that are obvious. Truly, the book of Proverbs states it most eloquently

The rich rules over the poor, and the borrower is the slave of the lender [emphasis added] Prov. 22:7 ESV

Compare the verse above with the highlighted part of Steven Winslow’s quote above. The payday lenders know they are a lender of last resort (i.e., the bad players are little better than loan sharks) and they are fully aware that most of their customers are unable to repay within the normal 2 week window without creating either a severe financial hardship or taking out another loan at the same usurous interest rate. That is why payday lenders specifically target a specific demographic of borrower. Why would anyone with a credit card or home equity loan capped at no more than 36% APR borrow from a payday lender at 391% APR in an emergency?

Currently there is no mechanism for making 0% bridge loans to needy borrowers. The Progressive movement and its influence on policy making, has resulted in the takeover of church functions like charitable loans, feeding, clothing, housing and educating the needy through the old church tithe agencies by the government, complete with gross over-taxation, nearly completely. Therefore, the biblical concept of equity provides for the private-enterprise establishment of a system to provide loans at reasonable cost and under reasonable repayment conditions for those who have fiscal emergencies but have no other recourse.

Unfortunately, the lenders have completely failed to govern themselves, as illustrated by the earlier quotes and, more importantly, the statistics which show that unscrupulous lenders know a cash cow ripe for milking when they see one.

Here are some interesting numbers9. Statistically, the average Ohio payday loan is $328. The average interest rate is 391% with a two-week interest due payment of $49.33. But as we have noted, the payday industry thrives on and cultivates repeat business. The average payday borrower visits a single location 7.4 times per year. This means that the average borrower pays out $365.01in interest alone on top of his original loan amount of $328 or more than 111% of the original. But that doesn’t end the story. That same borrower doesn’t just visit one payday store front. On average, he visits 1.7 per year. That means that the 7.4 times he visits a single shop has to be multiplied by 1.7 to get his total number of loans taken each year at the average $328. That brings the total to 12.6 loans of $328 each with an interest payout of $49.33 each, bringing the total interest only to $621.51or 189%  total interest paid. This also means that the average payday borrower is indebted to a payday lender for nearly 6 months per year!

But the situation is worse than it looks at first blush. Using data from Michigan , the state closest to Ohio’s demographic and economic numbers, we find that 94% of the entire revenue generated by payday lenders came from borrowers who had 5 or more transactions per year (pretty close to our example above and the equivalent of 75% interest only repayment). Seventy-seven per-cent of their revenue came from borrowers who had 12 or more transactions per year (very close to the example). Eight per-cent of Michigan customers had 30 or more transactions but they accounted for 27% of the revenue of Michigan payday lenders. In other words, a small but significant percentage of borrowers were indebted with one loan for the entire year, and a second loan virtually certainly with at least one other payday lender for at least part of the year and paid 450% or more in total interest. That’s $1476 or more in interest alone for a $328 loan. If that’s not usury then what is?

Here’s the bottom line. Low-income payday borrowers are easily trapped in a cycle of debt by extremely high interest rates and very short pay-off times from which there is virtually no escape.10 It’s designed that way by testimony of former and present industry insiders and industry analysts

The financial success of payday lenders depends on their ability to convert occasional users into chronic borrowers.11

Irrespective of whether the repeat transactions are cast as “renewals,” “extensions,” or “new loans,” the result is a continuous flow of interest-only payments at very short intervals that never reduce the principal.12

– Michael Stegman, “Payday Lending: A Business Model that Encourages Chronic Borrowing,” Economic Development Quarterly

Having put to rest the false industry arguments that it “isn’t really 391% interest” by showing that, indeed it can be 391% interest and more and that the APR is a reasonable description that allows loan comparisons with credit cards, banks and credit unions, we now must deal with the question that seems to have ruffled so many libertarian feathers- the loan registry.

An analysis of HB 545 shows the following information: Under the new law loans are capped at 28% APR and borrowers are permitted only 4 loans per year, only one at a time and only 2 in a given 90 day period (this final requirement is waived for borrowers who complete a state-approved “financial literacy” course to be offered at low cost at local community colleges). The repayment period must be longer than 30 days.

And, to insure that these requirements (and a number of others borrower safeguards including seriously restrictions to the loan shark-style harassment collection methods often used by payday lenders against those whose finances they have had a significant hand in ruining) are adhered to there is a provision for the creation of a loan registry. BUT, and this is important, the registry CANNOT be used by law for any purpose other than tracking the transparency of the loan transactions, CANNOT by law contain any private financial identity information (e.g., the Social Security number of the borrower, bank ID numbers, etc.) and CANNOT by law even be created if there are less than 400 licensed payday lenders. Industry sources have made it clear that 90-95% of lenders will leave the state if the law passes.

Taking the best case scenario given by lenders would leave 10% of the current number of lenders or about 164 proprietors left to pull licenses, well under 400. Therefore, no registry.13 And if there ever is one, it will most likely be under the supervision of a contractor with experience handling sensitive records- just like a bank, credit card company or credit union!

The loan registry is recommended by groups like The Ohio Coalition For Responsible Lending because it keeps the more predatory payday lenders from playing the corporate shell game of moving loans around to corporate subsidiaries and partners to hide them from regulators, hardly an unimaginable scenario for companies who have no qualms about targeting low- and fixed- income borrowers with 391% APR interest rates. The experience of other states proves the necessity of the registry.

Frankly, we’ve left out a lot of information regarding details like interest rate and cost deception and collection methods employed by the payday industry but you can research these yourself, especially by reading Stephen Winslow’s blog site and The Center For Responsible Lending website (see footnotes below).

It is clear that the current payday lender regulation is completely inadequate to control the rampant greed and usury that creates a cycle of debt in the low- and fixed-income community which the industry targets. While the Institute For Principled Policy applauds initiative and vehemently supports the right of businessmen to conduct their chosen business, we cannot sit on our hands and say nothing as social Darwinists actively work to allow the poor to be trapped into penury and wage slavery by unscrupulous lenders. To do so would be a dishonor and curse on our own heads.

The legislation which will be approved by a “YES” vote on the Issue 5 referendum will go a long towards keeping low- and fixed-income families from disintegrating due to debt and bankruptcy and the downward spiral of family despair and destruction that often follows. It will also allow the principled players in the industry who really do want to provide a needed service stay and run an efficient and profitable business to continue to operate. It is not an outright ban, as the industry has claimed. We know this from the several other states which have been forced, as has Ohio, to regulate corporations who have allowed themselves to become no better than the loan sharks the usury laws were passed to stop originally.

VOTE “YES” ON ISSUE 5

_____________________________________________________________________________________________________________________

1 Rothstein, David & Jeffrey D. Dillman, The Continued Growth of Payday Lending, Policy Matters Ohio, The Housing Research & Advocacy Center, Mar., 2008, p. 1

2 Rothstein, p. 3f

3 Rothstein, P. 3, table 1

4 Rothstein, P. 8

5 Rothstein, P. 8

6 King, Uriah & Leslie Parish, Center For Responsible Lending, Springing the Debt Trap: Rate caps are only proven payday lending reform Dec., 2007, P. 12

7 Winslow, Stephen, Payday Lending: A practice whose end has come, Conservative Viewpoint blog entry for May 25, 2007

8 Center For Responsible Lending, Payday Loans Trap Borrowers, video at http://www.responsiblelending.org/issues/payday/inside-the-payday-industry.html

9 Ohio Coalition For Responsible Lending Trapped By Design: Payday Lending By The Numbers, Sept. 19, 2007

10 Rothstein, P. 10, Table 5

11 King, P. 11

12 King, P. 12

13 Gakh, Max, Ohio General Assembly Legislative Service Commission Final Analysis Sub. H.B. 545 127th General Assembly

Public Policy Radar, Gambling, Commentary, The Vote

NO on State Issue 6

This entry is part 5 of 5 in the series 2008 Election Issues

Four times. November 4 will mark four times in the last 18 years that gambling advocates have tried to persuade Ohio citizens to allow them to set up to play in the Buckeye state. Normally, in a ballgame, three strikes is an “out”. Three swings of the electoral bat, and the gamblers have a perfect average: .000. That’s three “NO” votes, by resounding margins, one each in 1990, 1996 and 2006. Now they are swinging again.

This time the bat (or should I say bait?) is a single “resort destination” casino which, if approved, would be located right in the middle of southwestern Ohio farm country: Chester Township in Clinton County. Why there? Easy access to I-71, and within 50 miles of three major population centers (Columbus, Dayton, Cincinnati).

The team this time trying to break out and be the winners of the Gambling World (Ohio) Series is MyOhioNow, a collaboration of a retired podiatrist and a business liquidator from Cleveland, and a professional gambler from Minnesota with a history of taking the money and running. With tens of millions of dollars invested in this initiative, mainly in advertising, from television to drop mailers, they seek to assure the suckers (er, citizens) of Ohio that the odds are stacked in their favor and not the House’s.

Promises of jobs, jobs, jobs and money, money, money have flowed as freely as cheap alcohol to a high roller at the blackjack table. When one reads the material supporting their claims, one reads the words “up to” before each promise of money and jobs…”up to” meaning “we won’t be held to any hard numbers, but we will be using them to fool you into supporting this con job.”

The Institute for Principled Policy has already posted a position paper on the Biblical admonitions against gambling, which can be found here. Focus on the Family has an excellent brochure about the social costs of legalized gambling here.

Additionally, a study conducted by the Buckeye Institute for Public Policy Solutions shows that the license for this casino is worth $1 billion on the open market, but that MyOhioNow will get it for a mere $15 million, all of which is reimbursed to them upon startup by the state. Additionally, there is nothing, either in law or in the proposed amendment to the Ohio Constitution, to keep this license from being immediately sold to another interest (think Eastern Shawnee tribe).

If Ohio voters fall for this bluff, then Ohio will become, for purposes of federal gambling laws, what is known as a Class III state. This is one of the three pieces of the puzzle that the Eastern Shawnee tribe need to open a casino in the state. One other piece is the recognition of a land claim to establish a reservation (and this tribe already has or is in process of having intergovernmental agreements with numerous cities in Ohio, such as Monroe, Botkins, and Lordstown). The last piece is two signatures: one from the Secretary of the Department of the Interior, and one from Ohio’s Governor. All of these have a realistic possibility of being obtained by the tribe in the near future.

A peculiarity about Indian tribal casinos is their immunity from taxation, at the federal, state and local levels. As a sovereign nation, they cannot be taxed by another government. That makes a tribal casino’s tax rate ZERO. Accidentally, according to MyOhioNow, language was written into the amendment proposal of Issue 6 to set the tax rate for their casino at the lesser rate of either 25% or equal to any other casino that would operate in Ohio. Should voters approve Issue 6, and a tribal casino be authorized, long gone will be the promised “estimated” annual payday for all of Ohio’s 88 counties: Zero divided by 88 is still Zero.

Conveniently, Lakes Entertainment, one of the MyOhioNow partners, specializes in managing Indian tribal casinos in other states. This sounds less like a coincidence or an accident and more like a plan being executed by a savvy operator who is looking to fleece a mark who can’t read the cards.

Time to fold MyOhioNow’s hand and vote a resounding, resonating, reverberating “NO” on State Issue 6 on November 4th.

Then, on November 5th, let’s get to working on an initiative to make sure that Ohio voters don’t have to say “NO” again.

Private Property, Commentary, The Vote, Public Policy Radar

YES on State Issue 3

This entry is part 3 of 5 in the series 2008 Election Issues

Voting MachineState Issue 3 on the November 4 ballot in Ohio has been given little attention during this tumultuous election season. No one seems to be focusing on what is possibly one of the most important issues the voters will decide next month.

This proposed amendment to the Ohio constitution would secure private property rights of Ohio citizens in relation to the use of ground water or the use of the waters of lakes or watercourses that flow through or are adjacent to their land.

This seems like a pretty inocuous, potentially superfluous, amendment. Historically, property owner rights to water were held in common law. However, given the bend to judicial activism in all levels of the judicial branch, “common” law isn’t common nor is it an adequate protection of fundamental, nigh unalienable, rights.

Therefore, the voters of Ohio have before them an opportunity to protect one of these rights through the adoption of state Issue 3. This language explicitly spells out the water rights of Ohio citizens, and prevents such rights from being impaired or limited by any other provision of the state constitution. This is an important proviso, as it trumps the “home rule” authority which Ohio’s local governments can exercise.

Language in this amendment would subordinate such property rights in the ground water to “the public welfare”, which indicates that such rights can be abrogated, but not without similar eminent domain action and compensatory payment for the loss of such property rights by the owner as currently exists for the land over which the ground water is located (already secured by Article 1, section 19 of the Ohio Constitution).

The protection of these fundamental rights to the productive use and valuation of a basic resource such as ground water is a proactive step to ensure that as Ohio’s government enters into future compacts or agreements with other Great Lakes states or as part of intergovernmental treaties with neighboring countries over water rights, Ohio property owner rights will be protected in our Constitution.

The Institute for Principled Policy encourages Ohio voters to support their water rights, and vote “YES” on State Issue 3.

Taxation, Public Policy Radar, Commentary, The Vote

NO on State Issue 2

This entry is part 2 of 5 in the series 2008 Election Issues

Voting MachineOhio State Issue 2, which voters will be deciding on November 4, is a proposal to allow the state of Ohio to issue and spend an additional $400,000,000 in bonds for conservation and environmental revitalization purposes. $200,000,000 would be issued for conservation puposes and $200,000,000 for revitalization. The Institute for Principled Policy urges Ohio voters to cast a “NO” vote and reject this expansion of the state’s bonded indebtedness.

In an economic environment that would best be described as “toxic”, especially as it relates to Ohio’s economy, the proposal to push for more debt so the state can use it to buy up farmlands and other private property under the guise of “conservation”, is foolhardy. The state would in effect be taking those properties out of the tax bases of communities and creating a double tax burden. Other landowners will have to assume the burden of the lost tax revenue base as the state gobbles up more land, and the bonds, once matured in 25 years, will have to be repaid with interest.

This represents hoisting an additional tax burden on the next generation, as the bonds for conservation are backed as “general obligations of the state, and the full faith and credit, revenue and taxing power of the state.” This means that these obligations will be paid first out of the public treasury, including interest and debt service, as they mature. Given the economic catastrophe that is Ohio, this is nothing more than a future tax increase on our children.

The “revitalization” package, although not general obligations of the state and thus not a guaranteed tax increase for future years, has it’s own significant drawbacks.

These bonds may be used, as authorized in this constitutional amendment, for the support of privately owned lands, in a number of ways classified as “revitalization.” This aspect of “public-private partnership” is nothing more than central planning and favoritism toward private parties utilizing public taxpayer funds (which will have to be used to pay off the $200,000,000 in bonds that may be issued under this proposal).

There are many promises made by the committee who drafted the argument in favor of Issue 2, the most repeated of which (and in actuality in the language, bolded, italicized, underlined and written in all capital letters) is the claim that passage of this “DOES NOT RAISE TAXES.” Yeah. Right. Sure. What the committee, Rep. Barbara Sears, Senator Mark Wagoner and Senator Sue Morano, neglected to add was the phrase “RIGHT NOW.” The whole truth is that yes, indeed, this is an all-but-guaranteed tax increase on future generations, just not on those who are “living for the moment.”

A long-term vision includes providing economic opportunity and security for our children’s children. State Issue 2 militates against that vision. For this reason, we ask Ohio voters to vote “NO” on State Issue 2.

Public Policy Radar, Commentary, Public Policy Principles News, The Vote

Voter Fraud? Here in Ohio? Naw…

1 Comment

There have been numerous concerns about possible voter fraud here in Ohio.  The following news interview shows what I believe is just the tip of the iceberg and, believe me, the Titanic is going down on this one.  There is a reason we have laws that REQUIRE county Board of Elections offices to verify a voter address BEFORE they are allowed to vote.  This “5 day window of opportunity” that occurred here in Ohio is going to blow up in all our faces.

Secretary of State Brunner, in a second article says,

“Like so many recent controversies, this issue has been raised less than one month before the election — and it was only raised by one political party.”

Well, of course it happened in the past month. That is when this whole fiasco with early registration/voting began. Now, the SOS office is stating that there are possibly 200,000 voter registration forms that may have discrepancies. That is 1/3 of all new voter registration forms received this year.

So, why is Secretary Brunner so “concerned” that she is persistently fighting this issue all the way up to the Ohio Supreme Court?  If she is so concerned about problems this close to the election, would she not just let the process work and verify that ALL the registration forms are valid?  God only knows…

I would not be surprised at all if this presidential election is decided by the United States Supreme Court. Hang on…we are in for the ride of our lives.

Public Policy Radar, Public Policy Principles News, The Vote

NO on State Issue 1

This entry is part 1 of 5 in the series 2008 Election Issues

“This past May, the Ohio General Assembly passed House Joint Resolution 3, which placed Issue 1 on the ballot.  Previously, taxpayers have paid more than $300,000 to advertise information about initiatives that ultimately did not qualify for the ballot.  But, in an effort to build voter confidence in elections, ease elections administration and save valuable taxpayer dollars, Issue 1 seeks to establish clear timelines for filing and reviewing initiative petitions, thereby avoiding the aforementioned problem.”

Or so says Ohio State Senator Larry Mumper. Mumper claims that the purpose of Issue One is to “save taxpayer money” and to “establish clear timelines for reviewing petitions.” The reality is far less flattering to state legislators.

Several citizen initiative petitions and constitutional amendments which have proven to be embarrassing to state legislators have been not just successful, but have passed by wide margins, often despite legislators efforts to sabotage them.

Issue one reduces the amount of time available to petitioners to get approval by 35 days. An examination of the history of these initiatives and referendums reveals that some of the true grass roots efforts would have failed had they not had those 35 days. You can know with a confidence approaching metaphysical certitude that legislators know it. And they are also aware that a number of them were embarrassed by their lack of support for and efforts to defeat the issues which passed by those wide margins. They also want a monopoly on what laws and amendments are passed.

The passage of Issue One would make it much more difficult for local activist groups with limited resources to get issues that the legislature refuses to move on or passes in error on the ballot for an initiative or referendum. It also makes certain that heavily resourced groups, often from out of state (e.g. ACORN) have an advantage in the initiative and referendum arena.

In short, Issue One will seriously weaken an important weapon in the arsenal of truly local citizens groups, while giving heavily resourced outsiders an advantage. It will allow state legislators to ignore the will of the electorate in controversial issues and pass half-way measures without fear of citizens embarrassing them at the ballot box with an initiative or referendum.

Vote “NO” on Issue One

Taxation, Public Policy Radar, Commentary, The Vote

Black Eye On Westerville- The “Tax Fairness” Argument

This entry is part 2 of 3 in the series Black Eye On Westerville

As this is being composed it is the weekend of the Fourth of July. Independence Day is always a good time to both reflect on the history of the Declaration of Independence and compare these past events with those in the present to see if we’ve got it right.

Currently, the most prominent argument being used by Westerville, apparently with some success judging by by the letters to the editors of the local newspapers, is the “tax fairness” argument.

The core of this argument is that the 60% income tax increase isn’t really about enhancing the city’s revenue, but about “being fair.” This is absurd on its face because in the next breath the same city leaders cry crocodile tears about the city’s infrastructure and the need for additional revenue to pay for it. But more about this blatant falsehood in a later post. In detail, the argument sounds like this; many surrounding communities have a 2% income tax and a large portion of Westerville residents work in those surrounding communities and must pay those taxes plus Westerville’s 1.25% additional resident income tax less a credit for taxes paid to other municipalities of 0.95% or, currently, 0.3%. So those Westerville residents are paying municipal income taxes that add up to 2.3% of their income.

The city also does some mathematical sleight-of-hand in claiming that they will, with this 60% increase, “recapture” millions of dollars in revenues that are currently “going to other municipalities.” Of course, they are recapturing nothing. They are actually increasing the overall tax burden and taking the millions of dollars that residents would have formerly had in their pockets to spend on things like books, hardware, housewares, meals out, etc. at local businesses and pouring it into the governmental black hole. The other municipalities would continue to confiscate the same amount of money (if not more) as they did before the increase. It is a well known economic maxim that a private dollar goes around 7 times but a government dollar only goes around twice. More money paid in taxes means less money for buying things. It’s a zero-sum game.

The city claims that to “be fair,” Westerville residents who both live and work in the city and non-resident employees of businesses located in the city must be forced to pay a 2% tax. Under the plan, Westerville residents who work in other cities will be given 100% credit for taxes paid in other municipalities, thus cutting their municipal tax outlay by about 13% from 2.3 to 2%. But, of course, someone has to pay the piper and that means Westerville residents and non-residents who work in Westerville are slapped with the 60% increase. It also means that Westerville residents who work in cities like Columbus would pay nothing for Westerville city services.

If you find yourself asking “how exactly is this fair?” then welcome to the club. There’s nothing “fair” about a tax plan that shifts the burden of taxation to a targeted minority of taxpayers, especially those who have no voice in how it is spent or vote on its imposition. And this is where comparisons to past events become very important to understanding what is wrong with not only the attempt to increase Westerville’s base tax rate but the way the entire municipal tax system is structured.

The Declaration of Independence issued on July 4, 1776 was the culmination of many years of abuse of power by Parliament. All of the complaints the Continental Congress made against Parliament are included in the Declaration of Independence, a document you will find most useful in this discussion, available here. As mentioned in the previous posting, the complaint we will focus on is no. 17, “For imposing taxes on us without our consent,” though other complaints on the list will also come into play.

How is it that only 232 years after the issue of a document that is foundational to the understanding of the concept of liberty (a concept now lost to the “spirit of democracy;” these are not the same by any stretch or deconstruction of the definitions), the operation and the limits of our government, so little of it is known or understood, especially by government servants? One of the fundamental principles of government in the United States of America is the idea that no one without a representative voice in any government should be required to pay taxes to that government. Another fundamental principle of government in the United States is the concept that the majority is prohibited by law from tyrannizing the minority. And yet, these two fundamental principles of liberty are being not only ignored but disparaged by government bodies eager to grow their own power and control and to do so by creating and exploiting class envy to raise revenue and create a class of tax slaves.

Think the “tax slave” accusation is too harsh? Think about the city’s argument for the increase. Most, they say, will actually enjoy a tax reduction and they are correct if they mean most voters. And that’s exactly what they mean. Non-resident non-voters don’t count in the equation. They are a voiceless non-entity to the city. They are perceived by city government as a convenient deep pocket which can be picked at the will of the Westerville voter. The fact that some of these non-voting taxpayers will now be subjected to combined municipal taxes in the 4% range (or more depending on where he lives and what kind of work he does) doesn’t phase them. Why should it? These unfortunates can’t vote the city leaders out. They can only pay and complain to… well, no one. When a man with no voice or power is coerced to surrender the hard earned fruits of his labor to an entity which has the power to impose financial harm or ruin and imprisonment for refusal to pay, he is a slave. That was the point of the Continental Congress way back in the late 18th century. The more things change the more they stay the same.

A man is also a slave if he has a voice in the system but can be forced to surrender the fruits of his labor to subsidize the services that others receive from the entity collecting the payments by a vote of the majority. This kind of system, in effect, gags his voice within the taxing entity. That’s what is happening in Westerville and has been since 1998 with the PROS 2000 tax increase. The city wants the majority of voting taxpayers who work outside the city to vote their own self-interest by promising them an overall tax cut.

In effect, Westerville residents who work outside the city will receive a net tax cut under the city’s new tax plan. All they have to do to accomplish this is shift their personal tax burden onto the backs of their neighbors who are foolish enough to both live and work in Westerville and the completely powerless non-resident taxpayers. Thus, the city increases tax revenue by using the lever of tax-relief and the fulcrum of taxation class envy to shift the burden to a powerless minority taxpayer base. The chains of tax slavery are being forged on the anvil of “tax fairness.”

The city’s argument for a tax shift and increase is shown to be among the grossest and most cynical kinds of propaganda, designed to play on the emotions of self-interest and tax-envy rather than the abstract intellectual concept of liberty. It is clear that true tax fairness can only be achieved by fairly and equally spreading the legitimate costs of city government on the residents of the city and on the businesses which own property here, exempting non-residents from the burden of paying for the services residents enjoy.

Large businesses should pay their fair share of taxes because they are large consumers of city services in the form of water, sewer, garbage collection, streets and sidewalks, etc. What about their voice in government? That’s pretty easy actually, and it’s a matter of personal choice. Any large business, if they want a voice in local government, could require some of its management personnel to live in the city limits. That would be good both for the business and the city. City residents are far less likely to propose hare-brained schemes which will, in the long run, harm their own property values or the city’s environment. Absentee ownership doesn’t have the same incentive. The government of the city of Westerville seems incapable of making this elementary political calculation.

And yet the city of Westerville, as discussed in the first article in this series, clings to the failed paradigm that businesses must be bribed with 50-100% tax abatements in order to remain “progressive” and keep the businesses “in the tax base.” Of course what they really mean that they want to keep the businesses’ employees in the tax base. The city leaders don’t seem to realize that large, often absentee owned and operated businesses that aren’t willing to pay their share of the tax burden don’t really care for the city at all. They care for big quarterly profits which impress stockholders (by the way, nothing wrong with profit when it is gained legitimately. Accepting a pay-off in the form of a tax abatement is not legitimate, especially when it is gained on the backs of your employees). That’s what makes the slap in the face of a 60% tax increase for local owners of small local businesses such a travesty; the small local business owner is the backbone of the community socially and economically. The large absentee business is a disproportionately expensive and subsidized consumer of city services. And yet the city, in the interest of additional revenue for the purpose of growing city government beyond its legitimate bounds, is willing to shift the tax burden to the local businessman.

We will be expanding on the concept of what a legitimate cost of government in the next entry.

Commentary, The Vote

Federalism And The Electoral College

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This entry is part 3 of 5 in the series Federalism, Democracy And Presidential Elections

Voting MachineThe director of the Institute For Principled Policy recently sent me an interesting article from US News And World Report about a sophomore government class being taught at Lloyd Memorial High School in Erlanger KY. It seems the students in the class drafted a bill for the Kentucky State Legislature which would require a change in the way Electoral College votes are awarded from the current winner-take-all system where the winner of the popular vote gets all of the state’s electoral votes, to an apportioned electoral college award, where the electoral vote is awarded according to the winner by congressional district with the winner of the popular vote getting the two votes representing the senatorial votes.

A quick reminder of how the Electoral College votes are distributed is in order. Each state gets a number of electors equal to the number of representatives it is entitled to in Congress plus two representing the Senate representation. The District of Columbia gets one congressional vote plus the two senatorial votes it would have if it were a state. That’s a total of 538 electoral votes with 270 (50% plus one) required for election.

Most states currently award electoral college votes on a winner-take-all basis. Only Nebraska and Maine award electoral votes according to congressional district. Interestingly, the congressional district method was the original intent of the Constitutional Convention and teacher Jon Davis’s students are working to return their state’s presidential election to a condition more closely resembling the original design. As discussed in a previous article, the founders wished to avoid direct democracy as an unstable form of government ultimately leading to anarchy followed inevitably by tyranny. Their intent was to provide a limited representational republican style of government.

But how do we know for sure that the founders wanted to avoid direct national democracy? The answer to that question is implicit in the design of the federal government. First, the federal government had little or no contact with the average citizen, save for the post office. That’s only fitting, since the purpose of the federal government, as designed, was to act as a specific agent of the states. A study of the US Constitution reveals that the federal government is given the authority to act as a limited agency of the states in three specific areas; defense, diplomacy and trade. Unless called into federal service as a state militiaman in time of war, most citizens simply had no need to be in contact with the federal government. Second, the very structure of the federal government, as originally designed, indicates that direct democracy was not part of the framers plan. Of the 2 houses of Congress only the House of Representatives was directly elected. Senators were chosen by state legislatures until the 17th amendment changed the method to a popular election mandate, thus destroying state participation in the federal government. Judges are appointed by the president and approved by the Senate; under the original design of state government representation in the Senate thus ensured that the individual states interests would be protected. And finally, the president was, under the original design, chosen by electors who were themselves chosen at the discretion of the individual states, usually by the state legislature. Thus, of the 3 separate branches of government created by the Constitution, only one-half of one of them was selected by direct election, albeit the most powerful one. In other words only 1/6 of the federal government was democratically elected.

The founders’ vision for the electoral college was for a group of wise men, uncommitted to any party or faction, who would independently vote for whom they believed would be the best possible choice to serve as chief executive. Within 15 years of the first meeting of the electoral college and the unanimous choice of George Washington as the first president the presidential election process was well down the road to domination by the fledgling political parties which arose out of the governmental milieu of Washington’s administration. The bones of contention in that rarified atmosphere were such issues of constitutional interpretation of federal authority, how the economy would be structured and foreign policy, especially regarding the French revolution. The 12th amendment essentially began the process of the institutionalization of special interests, what Madison called “faction” in Federalist No. 10, in the form of party politics. It allowed the running of teams for vice-president and president to ensure “unified government,” a euphemism for one party control. By the election of 1828, only 39 years after Washington’s first non-partisan election, the presidential elections were in the control of political parties at both the state and federal levels. The parties made sure that the federal nature of the presidential election was minimized by changing election laws state by state to adopt what is know as “general ticket” elections, where parties run slates of electors committed to specific teams of candidates for office. In general ticket states all voters statewide vote for the entire slate of committed electors. In states like Maine and Nebraska each congressional district votes for a specific committed elector with the popular vote winner getting the 2 senatorial electors, a far more federal system.

And you might think this author believes the system is broken and in need of repair, as the sophomore government class at Lloyd Memorial High School apparently does. And you’d be right. But it is important to understand that even in its current corrupt condition, the electoral college still works in preserving the federal nature of presidential elections. How? Think about these presidential elections- 2000, 1888, 1876 and 1824. In each of these elections the popular vote winner did not become the president. We’ll ignore the 1876 election since the process was so horribly corrupted both at the state and federal level that it is a complete wash-out in examining the electoral process. In the election of 2000 Albert Gore, Jr. won his support in urban centers by a large margin. George W. Bush won his support in the rural districts, also by a wide margin. The final margin of victory for Bush came down to under 500 votes in Florida. But the real story is that Bush carried several times as many counties as Gore, with fewer popular votes. Bush voters represented, with fewer popular votes, the electorate of a larger portion of the population than did Gore. The counties Bush carried covered more square area of the country by several times, with fewer popular votes. Similarly, in 1888 Grover Cleveland lost the electoral college votes with a higher popular vote margin than Rutherford B. Hayes. Cleveland won in the south by wide margins- 60% or more, but he lost in the north by tiny margins. Southern states at the time were small electoral college totals, so his popular totals looked big, but in fact he got his large overages in regional voting where it made no difference in the electoral college total. In other words, the electoral college did exactly what it was supposed to. It prevented an urban or regional majority from tyrannizing a rural or non-regional minority. It protected the unique properties of federalism in the presidential election process.

So how can presidential elections be restored to the federalist and non-partisan design intent of the founders?  The bill proposed by the sophomore government class is a good start. It would help to reinforce the federal nature of the election if each state awarded electoral college votes on the basis of congressional district. Partisanship could be at least partially removed from elections by running, in each congressional district, at least one non-committed elector. This would be the so-called “none of the above” choice so many have claimed that they want. This proposal could break the stranglehold that the two major parties currently have on presidential politics. If only 10% of the congressional districts chose the non-committed elector, it could throw the presidential choice to the House of Representatives. While some may think this undesirable, it is in fact the original intent of the founders. George Mason, during the debates at the Constitutional Convention said that 19 times out of twenty the choice of president would fall to the legislature under the proposed plan. Most agreed then proceeded to pass the plan. Does anyone believe that Bill Clinton or George W. Bush or a host of other dismal White House residents would have been chosen as the president by the House of Representatives? And what party would spend $100 million on a presidential campaign if there is a good chance of “none of the above” tripping up their groomed and vetted choice for the office? Of course, this is not a perfect solution but it would, probably, tend to increase the caliber of candidate chosen. It would also help remove emotional issues from the front burner in presidential politics and increase discussion of truly pivotal issues.

What do you think? Let us know by commenting or join a discussion on the forum.