The case Barlett hasn't made

Bruce Bartlett attempts to justify the bailout ("The case Bush hasn't made") by explaining that the financial sector is different than other sectors, that a collapse in the financial sector reduces the money supply/money available for the rest of the economy, and that such a collapse will lead to another Great Depression. (Note: this piece could be satire, as it is rather absurd, and I wouldn't put it past Bartlett, but if so I missed it).

Bartlett doesn't note than in addition to the Fed restricting the money supply, the Great Depression was caused (or exacerbated) by increasing tariffs, increasing taxes, and by new government spending (i.e. the New Deal). 

Nor does he make the case that the US financial market is on the brink of collapse (indeed many question that assumption); his evidence is that "You can see the fear in Treasury Secretary Henry Paulson's eyes and in those of Federal Reserve Chairman Ben Bernanke." Really?  We are supposed to simply take the word (not even the word, just the look in the eyes) of a man seeking to control over a trillion dollars to help out his former Wall Street colleagues, and another whose policies as Fed chair (along his his predecessors) contributed to the current situation.  As I mentioned before, if Paulson and Bernanke have data not available to the US public, or even to economists who question this plan, why don't they share that data? Even the politburo was more forethcoming.

And Bartlett admittedly does not make the case that the bailout is the best solution - or even a solution at all: 

But now is not the time to come up with something better. There is no time. The program can be revised later, when the emergency is past.

Bartlett apparently dismisses Ronald Reagan's famous line, "The closest thing to imortality on this earth is a federal government program"

In contrast, Arnold Kling makes the point (in fact the entire EconLog blog is a good source for understanding this entire debate):

I really would like to see Ben lay his cards on the table, and not just issue vague threats of doom and destruction. A lot of people, not just from the far left or libertarian fringe, are drawing the analogy between the push for the bailout and the run-up to the Iraq war. Personally, I think that this is being unfair to the Iraq war, which by comparison was debated longer with more information provided to Congress and to the public.

Bailout Bandwagon - The Rendell Plan

As hope for the proposed Turnpike Lease dwindles, Pennsylvania Governor Ed Rendell is asking Congress to add $100 billion in transportation money to the $700 billion bailout deal.

The Democrat said his infrastructure initiative would help recharge the American economy by improving public facilities and creating nearly 5 million good-paying jobs.

The Heritage Foundation strongly disagrees:

Ronald Utt points out, “the vast majority of independent academic and federal government studies on the relationship between infrastructure spending and economic activity have found that the impact is very modest and long in coming.” Highway spending simply transfers jobs from one part of the economy to the other. This plan hardly stimulates the economy.

When will they learn that governments redistribute wealth but private business actually create wealth. For more on why governments should partner with private businesses click here.

Nate Benefield adds:

Members of Congress might want to note that tacking on a laundry list of other proposals to "must-pass" legislation (e.g. the state budget), is Rendell's go to play.  It also explains why the state budget has never passed on time under Rendell's tenure.  That is to say, it's a dumb idea.

Free Market Alternatives to the Bailout

Pat Toomey of the Club for Growth hosted a conference a call to discuss the economics of the proposed bailout. Toomey commented that the financial market does not seem to be near as dire as made out to be. Another “Great Depression” is extremely unlikely (Toomey noted that the 1929 crash was followed up by massive tax increases, massive tariffs, and the fed constricting the money supply. He doesn’t think the government is that stupid today). Toomey pointed to the stock market rising today, even though the bailout was in limbo, and pointed out that many banks (e.g. Wells Fargo) are at all time highs, and noted JP Morgan’s takeover of WaMu’s holdings is evidence that the financial market is not in collapse. He noted that the number of banks failing (or in danger) during the Savings and Loan crisis was several times the number in jeopardy today. He also pointed to evidence that capital is available for main street businesses and there isn’t evidence of a “credit crunch” (Alex Tabarrok makes the same points).

For a quasi-rebuttal, Greg Mankiw notes that he didn't sign the letter with the other economists opposing the plan (though he has leanings against the bailout) partly because he doesn't have all the info, but Bernanke does, and Bernanke is as smart as anyone.

My rejoinder to Mankiw is that we should never put too much trust in anyone to rule over us because they are smarter than us, especially when the advice they are giving involves giving them more discretionary power - that is the thesis behind totalitarianism and central planning. Secondly, if Bernanke and Paulson have data the rest of the country doesn't have, why doesn't the rest of the country have that data? In an era of greater transparency, any data that shows an impending crisis, being used to create one of the largest government programs in decades, should be made publicly available.

Toomey suggested the plan as revised by the House, to act as an insurer of these mortgages (like the FDIC for savings accounts), was a less-bad proposal. As far as good solutions go, Toomey suggested a number, including reforming mark to market accounting rules, repealing parts of Sarbanes-Oxley, and paying interest on reserves. This mirrors some of the proposals of the Republican Study Committee.

Here is a quick summary of free-market reforms that should be adopted, as a replacement for a bailout (or even with a bailout) both for the “crisis” and for long-term economic growth.

1) Repeal Mark to Market Accounting Rules: Essentially the mark to market rule requires banks to count the value of assets based on the latest market price (e.g. sale) of that asset. In this case, when “toxic” mortgages are being sold off at discount, or “fire sale” prices, banks are required to dramatically reduce their value of assets accordingly, whether they intend on selling their mortgages in the near future or not. Since banks are required to keep a certain amount of reserve, the lowering of the book value of assets reduces the capital available. See a better explanation from the Capital Research Center. In contrast City Journal doesn’t think the mark to market rules have much of an impact.

2) Privatize Fannie Mae and Freddie Mac: Free market advocates have long called for the privatization of Fannie Mae and Freddie Mac. The corruption, the political ties, the contributions and lobbying , and – most importantly – the implicit (now explicit) backing of the government which encourage these agencies to push subprime mortgages, creating our financial crisis, is reason enough to away with these government-sponsored enterprises.

3) Cut Capital Gains and Dividend Taxes and Cut Corporate Income Taxes. These are key to encourage investment in our economic engine. Reason’s article on the bailout alternatives discusses why cutting taxes will help stimulate the current economy.

4) Repeal the Community Reinvestment Act. The CRA and other efforts to encourage homeowner led to subprime lending. Read more on that here

5) Repeal Sarbanes Oxley. This series of regulations is enormously costly, and clearly failed to prevent the current crisis. This Out of Control post on free market choices has more on Sarbox.

$12.8B lease opportunity is all but lost

The opportunity to plug a massive transportation funding gap will be lost because of legislative inaction. Although Gov. Rendell plans to try to revive the turnpike lease in 2009, one has to wonder if both the capital and transportation companies will be there to deal with Pennsylvania policymakers again. (We sure would understand why they would take their business elsewhere.)

Here are stories in the Pittsburgh Tribune-Review and Harrisburg Patriot-News on this lost opportunity.

Turnpike Lease Bid expiring - what now?

With the Turnpike lease bid expiring - and indications are there will be no extension of the $12.8 billion bid - both Governor Rendell and some lawmakers have indicated the intent on rebidding a lease deal in early 2009.  To go forward, legislators should:

1. Legislators must take the initiative:
   a.   For such a bid to be taken seriously, legislative action will have to precede the bid process; it cannot be driven solely by the Governor.  Legislators should lay out precisely what the terms will be on aspects of toll limits, retaining current employees, maintenance requirements, bid process, and other aspects.
   b.   Constitutional limitations on the lease money—limiting it solely to transportation infrastructure—should be passed in advance of a lease deal.
2. Repeal Act 44 and stop the Turnpike Commission’s’ borrowing.  As we have mentioned, the Turnpike Commission will continue to borrow to pay their Act 44 requirements.  This new debt obligation will likely force them to raise tolls at a rate faster than the 3% annually they are promising (which follow a 25% increase in January).
3. Require competitive bidding on all bond work and pass Turnpike Commission reforms and/or fold the Commission into PennDOT.  Reforms dealing with hiring practices for Turnpike Commission jobs to eliminate patronage and nepotism, along with requiring competitive bidding on all bond contracts should be passed immediately.  Eliminating the Turnpike Commission and moving Turnpike operations under the fold of PennDOT would be a positive step.
4. Embrace Public-Private Partnerships on new transportation projects.  Bills such as HB 555 (Rep. Geist) and SB 1158 (Sen. Madigan) would allow PennDOT and local governments to engage with the private sector on new projects (new roads, bridges, express lanes, etc.).  These projects will bring the efficiency of the private sector and help fund our transportation infrastructure.  The Turnpike Commission already has the authority to engage is these arrangements, and is taking bids to complete the Mon-Fayette expressway.

Legislators should do their jobs

The Altoona Mirror takes legislative leaders to task for failing to do their jobs:

Senate Republican leaders - President Pro Tem Joe Scarnati and Majority Leader Dominic Pileggi - are among the latest to come down with the ailment of do-nothing-itis.

The Senate's top two said Friday that a proposal to lease the turnpike to a private consortium will not be approved this year. Pileggi was quoted as saying there wasn't support for taking up the matter, ''And we should not rush into such a major policy decision under some sort of artificial deadline.''

Rush? A firm offer of $12.8 billion to lease the turnpike for 75 years has been on the table since May 19 with virtually nothing happening in the Legislature. A dead snail probably could have made more progress than the well-compensated officials who are supposed to be taking care of the people's business.

And in case there's any confusion on the part of legislators: Worrying about how to pay for transportation needs is the people's business.

Things aren't much better in the House. Transportation Committee Chairman Joe Markosek and Majority White Keith McCall have whistled the lease plan dead, and Majority Leader Bill DeWeese suggests waiting until next year and trying again to get permission to toll I-80.

Talk about "leadership inaction."

Since these legislators think waiting on a potential lease deal is no big deal, it's a shame we can't wait to issue their next paychecks until next year. Perhaps then they might consider the matter a little more pressing.

While people may disagree about whether leasing the turnpike is a good idea, it's an idea that deserves thorough debate and a vote - especially when there is an offer on the table and the current transportation funding plan has been nixed by the feds.

Transportation funding options

The Derrick in Clarion provides a good synopsis of Matt Brouillette's presentation on Pennsylvania's transportation funding situation.

What isn't covered in the article was the discussion about the other options on the table for lawmakers to fill the $1B funding gap: 1) Reprioritize current spending; 2) Increase gas taxes by 15 cents or more per gallon (a penny raises ~ $63-65M); and/or 3) Increase vehicle fees -- all of which are unlikely to be done in Harrisburg any time soon.

Competition Encourages Utilities to Help Consumers

Yesterday, Met-ed and Penelec filed their own pre-payment plan with the PUC. The proposal is similar to PPL's recently launched effort to mitigate the expected jump in electricity prices when rate caps expire.

"Each month, customers who sign up for the plan would pre-pay an amount equal to about 9.6 percent of their electric bill. Pre-payments would earn 7.5 percent interest [PPL customers earn 6%] and be used to reduce their electric bills in 2011 and 2012."

See the table below:

Met-Ed and Penelec News Release - Upload a Document to Scribd

Efforts like these show that the competitive market is working. Utilities not only have an incentive to help consumers deal with expensive electricity, but to "outdo" competitors with more attractive mitigation plans. There is no need for the legislature to mandate their own phase-in plans which will require more subsidies in the form of stranded costs.

Talking Free Markets with Karl Rove

I had the chance to hear Karl Rove speak at a conference hosted by Hillsdale College on "Economics and the 2008 Election."  Rove had some interesting things to say:

1) The public is increasingly skeptical of government intervention in the economy (at least compared with 40 years ago).  Government is largely to blame for the current financial crisis - Rove blasted the role Fannie Mae and Freddie Mac played (and their immense lobbying expenditures), the Community Reinvestment Act, and the Federal Reserve for keeping interest rates "too low for too long".  Rove believes the public recognizes the failure of government, even if the media doesn't, and will be skeptical of any government solution.

2) Not surprisingly, Rove was critical of the tax and spend policies of Obama - noting that his tax schemes are aimed primarily at redistribution.  His was also critical of McCain, not so much for his economic policy proposals, but for his failure to talk about them (especially health care), saying "his instincts are right" but not based on an economic philosophy.

3) Rove did not say anything bad about his old boss, but blasted former Republicans in Congress, including those who allegedly choked their mistress, and said that the culture of earmarks - the idea that re-election depends on getting earmarks for you district/state - was the creation of Newt Gingrich and Tom Delay.

4) Responding to a question, Rove said he is no longer a strong supporter of term limits, but does think that the part-time, citizen legislator model (e.g. of Texas) in which legislators have real world experience, is the best way to insure a limited government.  He also thinks we need to end the process of gerrymandering.

The "Disability Epidemic" Among Union Employees

If you don't want to get angry after reading these first couple of paragraphs of this New York Times story, then don't click through here:

To understand what it’s like to work on the railroad — the Long
Island Rail Road — a good place to start is the Sunken Meadow golf course, a
rolling stretch of state-owned land on Long Island Sound.

During the workweek, it is not uncommon to find retired L.I.R.R.
employees, sometimes dozens of them, golfing there. A few even walk the course.
Yet this is not your typical retiree outing.

These golfers are considered disabled. At an age when most people
still work, they get a pension and tens of thousands of dollars in annual
disability payments — a sum roughly equal to the base salary of their old jobs.
Even the golf is free, courtesy of New York State taxpayers.

With incentives like these, occupational disabilities at the L.I.R.R.
have become a full-blown epidemic.

For more on the "epidemic" read on...

Must See TV: "The Call of the Entrepreneur"

The Fox Business Channel is featuring The Call of the Entrepreneur at the following times:

• Saturday, September 27 5:00 - 6:00 PM EST / 2:00 - 3:00 PM PST
• Sunday, September 28 12:00 - 1:00 AM EST / 9:00 - 10:00 PM PST

This is a fantastic celebration of freedom and the entrepreneur -- without which we would not enjoy the prosperity we have today. It is an especially timely broadcast as the media and too many politicians are blaming free-markets for the government's failures in our economy.

Learn more at www.calloftheentrepreneur.org.

"Crisis of subsidization and intervention"

The Washington Post got the perspective of the Cato Institute on the $700B+ federal bailout:

"The biggest emotion we're feeling right now is frustration that the media narrative is that this is a crisis of the free market, a crisis of capitalism, a crisis of under-regulation," Boaz says. "In fact it's a crisis of subsidization and intervention."

Although the story touches on the financial mess, it is really more about how we think tanks respond to issues like the bailout.

It is easy to be pessimistic when it seems everything is going in the wrong direction in Washington (and Harrisburg), but John Samples, director of Cato's center for representative government, noted that

He says he tends toward pessimism on a morning like that, when the ideals seem to be slipping away. But on the bright side, he imagines how much worse things would be if he and his colleagues were not fighting the good fight.

He says: "You have to have a blind kind of faith that you represent what America is all about. It is sort of like a religion. People fail, they don't live up to ideals. But the ideals: You stick with them."

We couldn't agree more at the Commonwealth Foundation, whether we are fighting the Turnpike Commission or the labor unions on school choice, we can only imagine how bad things would be if we weren't here fighting the fight in Harrisburg.

Thanks for all your support!

PA Senate passes "slacker mandate"

The Pennsylvania Senate today passed by a 50-0 vote a "slacker mandate," (SB 1453) requiring insurance companies to cover single, childless children of policy holders (at the policy holder's discretion) up to age 30.

Study after study show that health care mandates drive up the cost of insurance - and this cost is why many go without insurance.  But instead of addressing the cost drivers in health care, proponents of the "slacker mandate" look to more regulation to try and force insurance companies to cover more people - even though slacker mandates fail to do so.

Offshore drilling ban to expire

Democrats to let offshore drilling ban expire; the American Future Fund has the details.
This means that beginning October 1, companies can begin drilling in the areas highlighted here.

Illegal Immigration in Pennsylvania

Yesterday, Rep. Metcalfe held a press conference promoting the National Security Starts at Home reform package. The bills would make it more difficult for illegal immigrants to live and work in Pennsylvania. Metcalfe estimates that illegal aliens cost taxpayers $285 million annually. Much of this cost comes from the free medical and social services they receive.

Faced with the complicated legal immigration process (see this chart from Reason) it’s no wonder immigrants cross the border illegally and then migrate to states with extensive welfare systems including Pennsylvania. If state government officials concentrated on being responsible stewards of taxpayer money, instead of running inefficient charities, we could decrease the number of illegal immigrants flocking to the Commonwealth.

For more on welfare in Pennsylvania click here.

Upwardly Mobile America?

Good article in The American Magazine on income growth and mobility in America.

If you're like me, you can skim the text and just read the charts.

Flunked Trailer

Flunked: The Movie is a documentary looking at the failure of our public schools, and success stories in public education.  Below is the trailer.

We will be hosting a free screening of the movie in Harrisburg on October 7 (along with a luncheon earlier in the day).

Did Dwight Schrute write Paulson's speech before Congress?

Was Treasury Secretary Henry Paulson's speech before Congress plagiarized?  It sounds a lot like this clip from The Office.



Here is Dwight's presentation, with Paulson's edits:

This gives me the authority over every single person in the office the country. All you have to do is say it. Just say it. Say it. Just do it. Don’t think, say it. Do it. 5 .. 4.. 3.. 2. Do it. Give me control, Michael Congress. I promise to return control to you when this crisis is over. Do It! This office country needs a strong hand. Say it.

Financial "crisis" a failure of government

While some pundits and media, such as the Pittsburgh Post-Gazette, point to the proposed bailout as demonstration of the failure of the free market, in fact it is a failure of government.

Part of the failure lies with the government-sponsored enterprises Fannie Mae and Freddie Mac, by attempting to increase home ownership by encouraging subprime loans, as discussed in the Wall Street Journal today. In fact, even the New York Times - hardly the defenders of the free market - cautioned against Fannie and Freddie's actions, given their taxpayer backing, back in 1999 (HT to Carpe Diem), writing:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s.

Government regulation and urban planning is largely to blame for the "housing bubble", which many attribute as the start of the current "crisis."  The Community Reinvestment Act (and its strengthening in the mid-90s), which essentially required lenders to loosen their standards to increase home ownership also fueled the rise in mortgage defaults. 

There is plenty of blame to be laid at the Federal Reserve for holding interest rates too low, government-create credit rating oligopolies, and SEC (the failure occurred among the most heavily regulated firms, not those facing less). Federal mark-to-market accounting rules also intensified the crisis.

What makes support of the bailout so absurd is that it calls for the cause of the problem - government agencies, regulation, and such - to offer more regulation and more management of the financial sector.  Why the media is blaming capitalism is obvious: they maintain the perception that the Bush administration exudes a free-market, limited government ideology (false and false) and that "big business" supports less government intervention in the economy (also false).

The current bailout demonstrates the big business-big government marriage to a T. The bailout gives Secretary Paulson almost unlimited power to help his former Wall Street colleagues.  The Heritage Foundation notes that Chris Dodd - who gets more money from Fannie Mae and Freddie Mac than anyone - will write the legislation (which they compare to Ken Lay writing post-Enron regulations), and help out his friends.

Thankfully, there are many coming to the realization that the bailout is bad economic policy, now including conservative members of Congress and a growing majority of voters.  In contrast, Reason, the Club for Growth, and NTU have all compiled lists of recommendations that would not expand the role of failing government agencies, move us towards a free-market system, and actually help our economy.

Post-Gazette defends mass transit monopolies

The Pittsburgh Post-Gazette has a nonsensical editorial opposing Mike Turzai and Mike Mustio's legislation which would allow competition in mass transit in Pittsburgh. Currently the Port Authority of Allegheny County has not only a de facto monopoly, but a legal one - it is against the law for anyone to offer competing services.

Their opposition to competition on the grounds that "deregulation and the free market bring the U.S. economy to the brink of ruin" is false on more than one count. First, the US economy is not on "the brink of ruin". Second, the failure is not one of the free market in housing - which we have not had - but a failure of government. (Read more on the failure of government regulators, how government mandates and regulations led to the "housing bubble," and how Fannie Mae and Freddie Mac failed because they are government-sponsored entities and face no competition).

They further claim that private firms could not survive in a competitive environment and wouldn't want to compete - which cannot possibly be a legitimate reason to oppose the Turzai/Mustio reform. If no firms compete because it isn't financially viable or they fail, eliminating the legal monopoly would have no effect on PAT or riders.

The Post-Gazette conveniently ignores competition of mass transit in San Diego, Houston, Los Angeles, San Francisco, Dallas, Las Vegas, Minneapolis, Indianapolis, and a full 10% of transit services in the US and far more across the world. Read our Policy Brief on Mass Transit reform for more.

More on the Proposed Bailout

More responses and info about the proposed federal bailout:

• Club for Growth Condemns Federal Bailout
• Reason: Assessing the $700 billion bailout
• NTU: Taxpayers are Sick of Washington's Bailout Fever
• FreedomWorks opposes $700 Billion Bailout
• Cato Podcast: The $700 billion bailout
• Open Market: Bailout Threatens Economy, Shreds Constitution, Rips Off Taxpayers
• Washington Watch: Your cost - $2,000 per person
• Wall Street Journal: A mortgage fable (how government failed)
• Rasmussen Poll: Only 28% support federal bailout

"Leasing Turnpike Jeopardizes Safety"

... so said a commentary distributed by the Susquehanna Valley Center (see below). Either they didn't bother to read the lease agreement or they are intentionally trying to mislead the public with unfounded fears. We wonder which one, particularly since the head of the SVC is a professor at public university who we would hope is teaching students about accuracy and intellectual integrity.

Here's the relevant section from the lease agreement...

Section 3.18 Police, Fire, Emergency and Public Safety Access Rights. Notwithstanding any other provision of this Agreement, at all times during the Term and without notice or compensation to the Concessionaire, any police, fire and emergency services and any other security or emergency personnel, including the armed forces, and any Governmental Authority with jurisdiction over the Turnpike, shall have access to the Turnpike as necessary for emergency management and homeland security purposes, including the prevention of, practice drills for, or response to, a public safety emergency. The Concessionaire shall cooperate with police, fire and emergency services and any other security or emergency personnel, including the armed forces, in respect of such emergency management and homeland security purposes. Further, in connection with the declaration of a state of emergency by the Governor pursuant to the Emergency Management Services Code (35 Pa. C.S.A. § 7101 et seq.), the Commonwealth may designate the Turnpike a toll-free public highway to facilitate evacuations or for any other emergency purpose. The length and scope of any such emergency declaration shall be governed by 35 Pa. C.S.A. § 7301(c); provided that the Commonwealth, notwithstanding anything contained herein or in 35 Pa. C.S.A. § 7301(c), shall use its reasonable efforts to minimize (i) the duration and scope of any such declaration and (ii) the adverse impact that any such declaration may have on the Turnpike Operations.

---

From: susvalley [mailto:susvalley@susvalleypolicy.org]
Sent: Mon 9/22/2008 3:12 PM
To: Matthew Brouillette
Subject: Leasing Turnpike Jeopardizes Safety

SUSQUEHANNA VALLEY CENTER POLICY BRIEF
www.susvalleypolicy.org
www.voiceofpa.net

LEASING TURNPIKE JEOPARDIZES SAFETY

By Carolyn Welsh

When disaster strikes, emergency responders often need to quickly travel great distances to assist the injured, contain the damage and investigate the cause. In many counties throughout Pennsylvania, emergency responders rely on the Pennsylvania Turnpike to connect them with people in need. That is why emergency service providers across the Commonwealth are opposed to any proposal to lease, sell or privatize the Pennsylvania Turnpike to a private contractor.

The turnpike is a Pennsylvania asset that we just cannot lose. The office of sheriff is a full partner in law enforcement in Pennsylvania, responding to all types of emergency situations, including accidents, natural disasters and criminal activities. Our deputies receive extensive law enforcement and first responder training. Sheriffs' offices often rely on the Pennsylvania Turnpike to respond to emergencies, as well as transport prisoners and serve warrants. Each year, 150 million vehicles use the Pennsylvania Turnpike. Emergency service providers respond to life-and-death calls along the 514 miles of the Pennsylvania Turnpike. In return, the turnpike compensates the emergency service providers through agreements between the organizations. Many of these associations rely on this revenue to fully serve the public safety needs of their communities.

State lawmakers need to consider these critical points as they review any proposal to privatize this Pennsylvania asset. First, there is no guarantee that a private operator will honor the commitments with emergency service providers. A private operator would have an incentive to drop the service commitments in an effort to create as much profit as possible for shareholders. As a public safety official, I am concerned about how we effectively respond to emergencies or disasters. In the event of a natural disaster, environmental accident or a terrorist attack, it may be necessary to move large numbers of people from one region of the state to another. The turnpike, as a limited-access highway, can become a one-way evacuation route by closing the ramps and forcing traffic to go east or west, north or south. The rest stops can be turned into emergency areas where food, water and medicines are dispensed.

Again, the turnpike is a Pennsylvania asset we cannot lose. The turnpike is also taking advantage of new technology to make the highway safer. The turnpike is using a cutting-edge video and data system to provide instant information to emergency responders, as well as signboard and radio alerts to drivers. The more information first responders have when they arrive on an emergency scene, the better they can help the injured and protect themselves in dangerous situations.

The turnpike's investment in technology shows its commitment to the public. There is no guarantee that a private company, which must first consider the profits for its shareholders, would make this type of investment in safety technology.

As a publicly owned and publicly managed asset, the Pennsylvania Turnpike has proven its commitment to public safety by investing in technology and reaching agreements with emergency service providers across the state. Emergency responders have no expectation that a private, overseas-based operator would share the same commitment.

We need to keep the Pennsylvania Turnpike a public asset dedicated to public safety. Let's not risk our ability to save and protect lives by handing over this major transportation asset to a private company.

(Chester County Sheriff Carolyn Welsh is the first vice president of the Pennsylvania Sheriffs' Association. She was recently awarded the 2008 Crime Prevention Award presented by the Pennsylvania Commission on Crime and Delinquency.)

Pittsburgh Schools: we can't teach so give them better grades

The Pittsburgh Schools established a new policy that sets 50% as minimum score. (HT Grassroots PA). That is, if you missed all the questions on the test, you would get a 50%.

Only about one-fourth of Pittsburgh fourth- and eighth-grade students are "proficient" in terms of the NAEP standards, and their "real graduation rate" is around 50%, even though, at nearly $18,000 per-pupil, Pittsburgh is among the highest spending districts in the state.

Readers will recall that Pittsburgh dropped the work "public" from its name, because administrators thought that gave the school district a bad name.

As the Allegheny Institute recently pointed out, what Pittsburgh parents need is real school choice to save them from failing schools, not lower academic standards.

Bonus Ban(s) pass House State Government

After numerous complaints about the lack of action on reform bills (including from yours truly) the House State Government committee today voted to send two "bonus ban" bills to the floor of the House - John Eichelberger's SB 986 (which passed the Senate unanimously almost one year ago), and Babette Josephs HB 2375, introduced last Thursday.

Union Against Union

Talk about ironic: the Oregon Education Association is facing a strike, but not from its own members.

The organization that helps the OEA file grievances and negotiate contracts, OEA Professional Staff Organization, is striking due to the threat of lowered benefits and unfair labor practices (HT: TheUnionLabel).

The union has also accused the OEA of using strong arm tactics. Inconceivable.

Check out Pork Parade

Congressman Jeff Flake has a new website to expose Pork from Washington. To contribute to the discussion, you can twitter with the code #pork.

Twitter users can also follow the Commonwealth Foundation here.

Rendell not to blame for sagging PA economy

The lastest state job numbers indicate that Pennsylvania has 100,000 more unemployed persons that one year ago. Yet, Governor Rendell announces that this is due to national trends -his policies of borrow, tax, and spend for "economic development" prevented the economy from being worse.

You will also note that he takes credit for any state growth, even when the rest of the country is growing at a faster rate.

Thoughts on the bailout plan

Heritage Foundation has a Webmemo on the federal plans to bail out the mortgage market, along with a list of recommendations.

You can get the legislation from the New York Times (which doesnt't seem to follow Heritage's suggestions). John Lott points to a couple of key passages:

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by
any court of law or any administrative agency.”

“The Secretary’s authority to purchase mortgage-related assets under this
Act shall be limited to $700,000,000,000 outstanding at any one time.”

Indiana Toll Road private operator eliminates tolls to help in flood

Despite not being required to by the lease agreement, the private operator of the Indiana Toll Road -- an "evil foreign" consortium of Spanish and Australian companies -- suspended the collection of tolls to help with traffic being diverted off of flooded state-operated highways.

Read more at TollRoadsNews.

Gas tax increase coming instead of Turnpike lease?

Pittsburgh Tribune-Review says Rendell is looking at a gas tax increase in light of the refusal of legislative leaders to consider the lease.

"To make up the shortfall, we're looking at a gas tax increase," said
Rendell spokesman Chuck Ardo. "Where else are we going to find the money for the
shortfall in transportation funding?"

While we know there are lots of places to make up some of the shortfall -- such as repealing prevailing wage and using competitive contracting in mass transit -- the gap between needs and potential cost savings is too great. Of course, if the General Assembly and Governor were willing to cut spending elsewhere -- which we've also recommended time and time again -- then we could reprioritize state spending. And what do you think the chances are of all those things happening?

Well, we obviously think higher gas taxes, more bonded debt, and the preservation of the Turnpike Commission are most likely to be the outcome if the lease doesn't go through. And it is why we believe the lease makes the most economic and public policy sense.