Texas Public Policy Foundation 10th Annual Conference

TPPF 10^th Annual Policy Orientation: Recap

The Texas Public Policy Foundation’s 10th Annual Policy Orientation devoted two days (1/11-1/12) to reviewing policy topics that the state representatives will address in the 83^rd legislative session. These topics, however, do not only engage Texas political issues but also grasp topics of national significance (for the complete program list, click here). 

The subsequent posts will highlight key themes and topics discussed throughout the event with YMinoritiesC perspective. A takeaway from the event, as a whole, is that we are living in a critical time where men and women will make decisions that will influence the state of affairs for years to come. This is a time, not for the faint of heart, but the courageous. As Reagan stated, “The future doesn’t belong to the fainthearted; it belongs to the brave.” We are living in an era where it is time for the brave to rise up, take a stand, and leave a prosperous legacy.  Texans, Americans, we are living in exciting times!

On the Horizon: Texas Legislative Focus

The Texas legislatures, staffers, and policy makers attended various panel discussions during the TPPF 10^th Annual Orientation that will influence the 83^rd legislative session. The conference initiation began with Dr. Bill Bennett’s “Morning in America” radio broadcast, interviewing Dr. Arthur Laffer as well as Wisconsin Governor Scott Walker. 

Dr. Laffer advised that the next president should set tax cuts, cut regulations, repeal Obamacare, boost upstart companies, and more. Gov. Walker relayed that his actions reflect the desire to bring “a little Texas’ policy in Wisconsin.”

The Texas Model Debate followed the introductions laying the fiscal framework for the Conference.

The Texas Model Debate: What is a Fair Economic Plan?

Ronald Reagan expressed that “[i]f we don't start now, who will, and when?” An appropriate comment as we look at the worldwide economic crisis. All eyes are on America—the beacon for prosperity and rule of law. Economics, as many recognize, is one of the most important topics currently addressed worldwide. Tax policy, and free market enterprise, will take center stage this fall in the 2012 elections.  

The Texas Model Debate reviewed key questions when looking at the state and nation's financial structure. As the agenda described, "World renowned economist and 'father of supply-side economics,' Dr. Arthur B. Laffer will debate Dr. Jared Bernstein on the merits of Texas-style governance and how to grow the economy." The debate addressed the definitions of supply-side vs. stimulus (Keynesian) economics along with jobs, tax structure, revenues, deficits, and education.

Debate Highlights

Dr. Arthur Laffer--Supply-Side Economics

Supply-Side Economics Definition: “An economic theory which holds that reducing tax rates, especially for businesses and wealthy individuals, stimulates savings and investment for the benefit of everyone. Also called trickle-down economics.”

Dr. Laffer argued against stimulus spending, deeming it as deficit-finance spending (aka Keynesian economics). Government transfers property rather than creating resources. There is no stimulus in the stimulus package as it decreases the recipient’s motivation to succeed and diminishes the amount of work the employer can provide. Dr. Laffer simplified the economic structure, stating that if it is good economics, it will work in a two-person world with the analogy of Farmer A and Farmer B.  

Dr. Laffer’s answer to more jobs is need more supply, create an incentive for workers.

Dr. Jared Bernstein—Stimulus/Keynesian Economics

Keynesian Economics Definition: An economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.

Dr. Bernstein argued that there is not enough demand in the economy to supply resources in society. He proceeded with the perspective that savings are being accumulated without enough demand to use them. When consumption is too low, then stimulus spending ignites economic flow.

In rebuttal, Dr. Laffer expressed the huge cost in complying with the tax codes. One flat rate, he argued would provide a tax system where everyone pays a rate. In essence, different tax rates cause compliance issues.

Perspective: The basis of the tax argument is what is a fair tax policy? As the government spends more, deficits increase and more of the employers' money is allocated to inefficient programs. As a result, people have fewer career options when employers tighten up in response to increased taxes.

Furthermore, one has to remain aware that the tax system manipulates people’s behavior. Therefore, the more control we provide the government to regulate the free market, the more bureaucrats have the authority to govern how we function. As a result, business growth is stifled and the boom in prosperity that could result from free market enterprise is suppressed under strain and debt.

The current tax code is over laden with costs incurred from its burdensome and inefficient requirements. A flat tax proposal would move the system towards a comprehensive reform that would reduce regulations and provide for economic growth.  (See Dr. Arthur Laffer: Compliance with Complex Tax Code Costs Taxpayers $431.1 Billion a Year).

Lastly, one attendee brought up an important concern that by not addressing moral issues, the argument overlooks a key component in influences on financial policies. Individual’s behavior and lifestyles directly influence their decisions. As a whole, our nation is experiencing a moral kaleidoscope where many make choices based on their feelings rather than principles and commitment. Therefore, individuals bring a moral response to the conservation when they voice their concern and elect leaders who will make decisions based on standards.

Panel Discussion: A Path Forward—Enhancing Texas’ Tax Environment

Discussion Topic: Discussing whether changes need to be made in the Texas' tax code.

 

Panelists: Rep. Harvey Hilderbran, Honorable Jim Dunnam, & Joseph Henchman (The Tax Foundation).

 

Mr. Henchman discussed a sound tax policy, relating it to the question of whether the purpose of tax policy is to raise revenue or manipulate how people make decisions? The Tax Foundation comes from the perspective of acquiring revenue rather than using policy to manipulate citizen’s decisions. As a result, the organization focuses on simplicity, neutrality, and transparency. Furthermore, they review how states raise their taxes, rank the competitiveness of the 50 state tax systems, and provide a roadmap for improvement.

 

Interesting factual takeaways include a definition of the following terms:

 

Tax Freedom Day: Estimate of how long Americans have to work into the year to pay their combined federal, state, and local tax burden.

 

Collections: Amount of $$ collected by government. Adjusts for people who purchase services, may include citizens outside of state.

 

Burden: Amount of $$ citizens pay in taxes.

 

Mr. Henchmen pointed out that Texas’ environment looks at keeping and sustaining companies rather than luring in companies for a short-term focus. Long-term minded companies appreciate this approach. As the legislatures look forward, making a change in tax policy is where legislators can have an immediate impact for good or bad.

 

Honorable Jim Dunnam and Rep. Harvey Hilderbran discussed the tax system. Rep. Hilderbran addressed the need for a balance budget amendment. In addition, making the tax system fairer as well as simplifying it will attract the business sector, providing growth now and in the future.

 

Panel Discussion: Making Texas a High Tech Titan

Discussion Topic: Why is Texas doing so well with overall growth but not in the area of technology?

Panelists: Rep. Aaron Pena, Dane Parker (Dell’s VP of Global Facilities), Jeff Clark (Executive Director of TechAmerica Texas)

Mr. Parker illustrated the expansion in the technology industry and the need for skilled workers. He relayed that the total amount of data created will double every eighteen months. Cloud computing and security needs are growing. Companies are looking at the issue with data increase and view it as an opportunity to provide solutions. Yet, the public sector can stifle this growth because it intervenes in an area where it does not know how to function. Mr. Parker argued that healthy economies require jobs and the private sector knows how to create these jobs.

Mr. Parker’s presentation conveyed that the biggest barrier is federal tax reform and corporate tax. The U.S. has the second most expensive corporate tax in the world. Furthermore, when the U.S. companies bring the profit back from overseas labor, they are taxed at a corporate income tax rate; therefore, discouraging bringing back capital into the U.S.

Mr. Clark expressed a consensus with Mr. Parker’s views on growth in the technology industry and the need to allow these businesses to flourish as an economic resource. The problem, he articulated, concerns companies leaving the U.S. due to attraction to a low cost burden, knowing the environmental regulations for an extended period of time (in the U.S., we change the rules constantly), and having access to the markets. In essence, Mr. Clark emphasized that tech companies need more incentives to stay and grow in the U.S. as well as a dependable resource pool of skilled workers.

Mr. Clark’s solutions centered on an effective education where students receive what the parents pay for rather than simply paying more for school. STEM (Science, Technology, Engineering, and Mathematics) is where we need to encourage students to focus.

Keynote: Governor Scott Walker – Talker & Doer

Gov. Walker spoke with a common sense appeal, explaining how manipulating the budget to increase taxes and collective bargaining would hurt rather than help the state economy. He went on to express that “collective bargaining is not a right, it is an expensive entitlement.” The oppositions’ frustrations lay in the fact that they are upset with the inability to require union dues. As a result, government employees have the freedom to determine where they want to allocate their dues.

Gov. Walker’s approach emphasized looking for ways to reduce government oversight, allowing individuals to make decisions. A balanced budget and low tax burden will leave a long-term impact that allows individuals to allocate their money where needed. This provides the government with the opportunity to function on a merit and quality basis. 

Gov. Walker proceeded with explaining the three components to defeating the liberal agenda:

1.     Message – say the truth repetitively and it will prevail.

2.     Manpower – volunteer base.

3.     Money – grassroots movement where the small donors make up a large part of the donor pool.

In his closing remarks, Gov. Walker stated the key principle that our Founding Fathers were ordinary leaders who did extraordinary things. He articulated that there have been men and women of courage who were willing to think more about their children and grandchildren's futures rather than one’s political future.

Panel Discussion: Can Texas Businesses Afford ObamaCare

Discussion Topic:  Obamacare’s impact on business growth.

Panelists: Albert Cortez (TAMACC), Will Newton (NFIB Texas), Anne Dunkelberg (CPP), and Grady Payne (Conner Industries, Inc.)

 

Mr. Cortez included the perspective on how ObamaCare is influencing Hispanic businesses. There are 627,000 Texas Hispanic Businesses with $85 billion sales, employing one million people, with an $11 billion payroll. Mr. Cortez expressed how Obamacare has placed these small businesses, which do not earn a lot of money, in a hesitant state, as they do not know what the laws will do and cannot afford the increase in cost. Mr. Cortez expressed the following areas that Obamacare will impact:

 

·       Employers must disclose benefits, which mean more administrative cost.

·       31,000 companies will pay an incremental tax.

·       16,000 companies will have to grow or reduce their size due to requirements to provide healthcare.

 

Mr. Newton expressed that the individual mandate and 1099 requirement will cost about 120,000 jobs at an $18-30 billion loss by 2021. He argued that when we need jobs, implementing a policy that reduces employment stifles employers’ ability to provide healthcare at an affordable rate.

 

Mr. Payne expressed that the new healthcare requirements do not address costs. It is a cyclical path that will incur administrative costs in an effort to adhere to the requirements in addition to paying for the insurance.

 

Panel Discussion: Adonde Vamos? Texas Hispanics and the Texas Future

Discussion Topic:  How will Hispanics influence the future of politics?

Panelists: Congressman Francisco “Quico” Canseco, Rep. Raul Torres, George Rodriguez (San Antonio Tea Party President)

All three presenters provided an excellent point that as a nation we have focused more on race, creating division, rather than the conservative values that address all Americans concerns. Mr. Rodriguez emphasized that communicating a consistent message based on values, conservatism, a positive moral message, and frank dialogue about immigration, will cause conservative ideals to resonate. Mr. Conseco encouraged that the three pillars upon which we should focus is one language, the rule of law, and the Constitution.

Texas Republican Senatorial Debate

TPPF and Empower Texans sponsored the Republican U.S. Senatorial Debate between Ted Cruz, David Dewhurst, Craig James, Glenn Addison, and Tom Leppert where the five candidates addressed illegal immigration, tax reform, national security, and government spending. With a mixture of message conveying, rallying the base, vying for the conservative mantel, and seeing who could outshine whom, Texans spent the evening entertained by humorous comebacks and promises of fighting for limited government.

Time will vindicate records, policy positions, and substance to see which candidate will provide conservative and principled leadership as a statesman.

Panel Discussion: Can Texas Keep the Lights On

Discussion Topic:  Does Texas’ energy policy meet both supply and demand?

Panelists: Rep. Byron Cook, Trip Doggett (ERCOT), Donna Nelson (Public Utility Commission of Texas), and Andrew Kleit (Professor of Energy and Environmental Economics at Penn State University)

This discussion emphasized the need for efficient energy use in an economic climate that has to attract businesses while keeping the energy costs low for consumers. The tug of war resides between the politicians who want to regulate the industry to maintain supply requirements and businesses that can provide the innovation to reduce costs but also need an environment where revenue provides an incentive.

 

Panel Discussion: Texas School Funding: How much is enough?

Discussion Topic:  This topic addressed public school funding amounts and the quality of the education system.

Panelists: Rep. Rob Eissler, Honorable Scott Brister, and David Thompson (Thomson & Horton LLP)

Mr. Thompson provided the 2012 projections that the Texas public school system will have 5 million students. He argued throughout his presentation from the position that a thriving society resides on educated citizens; therefore, keeping funds from schools limits proper education.

To the contrary, however, Mr. Brister and Mr. Eissler distinguished entitlement versus merit and the need for efficiency to ensure that system provides quality education. As a result, in advocating the free-market concept where school choice thrives, parents have the responsibility to govern their children’s education. Also, the free market system will develop a competitive market that allows the best education to rise to the top.

According to Mr. Eissler, Texas is ranked 49^th in performance. Continuing to funnel money at the problem does not put forth the due diligence to determine productivity and quality in education.

Closing Keynote: Lou Holtz – Visionary Leadership: More than Mere Words

 

Mr. Holtz’s closing remarks helped the audience reflect on their actions in which he awakened them to think about the state of our nation, traditional morals, and what it means to be a leader. He opened with the comments: “We should have a tax system that looks like it is designed with a purpose. Let’s use common sense. Why is our tax code more pages than the Constitution?” His common sense approach focused on family values and morals, where people do the right thing, and avoid falling into the trap of bitterness.

 

Next, Mr. Holtz emphasized that we should use our time wisely, giving all we can in the moment. Leaders arise in moments with a vision and purpose, while showing a genuine care for individuals.

 

In closing, Mr. Holtz challenged the listeners to ask these questions of themselves and others:

 

1.     Can I trust you to do what you say and mean what you say?

2.     Are you committed to excellence?

3.     Do you care about me?

 

He expressed, “We need to go back to the values we believe in.” In essence, “If you didn’t show up, who would miss you and why? People that are missed are those who have an impact.” What an appropriate ending to the Orientation. The legacy we will have depends on the values we espouse, the character we portray, and the people’s lives that we touch.