Amidst the millions of words that will be spent discussing the dire state of the world, it's worth spending a few on something practical that would make every difference in the world, for the world: building Strong Towns.
In the end, all aspects of the catastrophe we face are rooted in the way we occupy the landscape, and nothing has done more to turn that into a wildly resource-intensive and destructive process than putting automobility at the center of our concerns.
As we celebrate -- or mourn, if we are to be honest -- Earth Day, here is more from a lengthy traveling interview with Chuck Marohn, president and founder of Strong Towns, a recovering civil engineer and urban planner, who visited Oregon last October. The Strong Towns message is so important because it answers the question "But what can I, just one ordinary person, do about all this?"
You can get involved locally, insisting on honest accounting for development projects and moving your town in the direction of becoming a Strong Town. For the overwhelming majority of us, there is nothing we could do that would be more effective than that.
The first part of this OregonPEN interview with Chuck Marohn is here.
[Scene – driving through suburban West Salem and looking at two new schools built there.]
Chuck Marohn: I've come to realize that essentially everything we build assumes that the typical user of a system is a middle-class or higher person who can afford the burn rate of having one or two cars, who can afford the lifestyle that almost all of our designers, engineers, and project miners come from, right?
One of the things that we've talked about [is] -- and my experiences in Memphis, Tennessee, where you cannot avoid rubbing up with people, who don't look like you and don't come from the same place as you -- what we really need to do as planners, as engineers is to humble ourselves to, actually, observe people. Observe where people struggle within their environment.
We can spend less time in environments that are comfortable for us. Design rooms are comfortable for us. Public hearings are set up to be comfortable for us. We can present three options, and then listen to all the complaints, and then catalogue them, and demonstrate that we've gone through an acceptable process . . .
OregonPEN: Check the box.
Chuck: Check the box, right. That’s all comfortable for us. What isn't comfortable for us is to actually go out and sit on the street corner in a folding chair for two hours, and watch how people interact with the stuff we’ve built.
If you look at successful businesses -- and I'll go way to the far end and say -- if you look at the make believe land of the theme park, the theme park designers obsess over the interaction of people with their physical layout.
If you go to the Apple iPhone, the genius of Steve Jobs was not being able to put all your music on a little player. There were a lot of people doing similar things. His genius was the interface. Watching how people worked with it and actually designing that.
As engineers, we’re brilliant at throughput for traffic.
But we need to humble ourselves to actually look and say, “How do people actually use this type of environment?” When we do that, this radical disparity between the way the vast majority of people actually live and the way we assume they live becomes so glaring that you cannot ignore it.
I'm not going to pretend in any way that I’ve traveled this journey of great social enlightenment. But I have been forced, by the questions that I've asked, to become a lot more sensitive to the fact that the environments we build are despotic to a large majority of people.
Incidentally, those same people are also who, on a per foot basis, are paying the highest taxes, generating the most viable, sustainable wealth for a community.
In Memphis, I sat down with the Mayor of Memphis. We showed him how their poorest neighborhoods were generating, on a per acre basis, two, three, four times the taxes as their wealthiest neighborhoods.
For an African American mayor in a predominately African American city to see that the poorer neighborhoods -- which were predominantly African American were struggling mightily -- couldn't get sidewalks fixed, couldn't get streets repaired, really, really difficult places -- that they were actually paying the bulk of the freight for the expenses of the community.
OregonPEN: But getting much less services.
Chuck: Not only that, but the cultural disdain. That’s the thing that has weighed on my conscience as an American, as a Catholic, as a human being. This just isn't the right way to go about doing things.
OregonPEN: Getting engineers to even think outside their own race, class, and experience is tough. One of the things is simply that disability is not considered at all. If you cannot drive, you're a prisoner.
Look at this, we just built this high school. We've just took you to the high school. Here is a middle school. [Both very difficult to access except by car, and surrounded by parking lots.]
Chuck: We have an obesity problem in this country. “Here we go kids, we got a chain link fence around your school.”
OregonPEN: We have huge amounts of parking, because we expect the kids would drive. We built the school at the top of the hill to make it easy for bicycling I guess. I don't know.
Chuck: Yeah, well, school funding . . . huge personification of the dysfunction of our whole system. The idea is that it is very efficient for administrators, very efficient for teachers, very efficient for operations of lunches and busing to create a school factory.
We can sell it to the public by adding bling. I mean, we can put a planetarium in it, and we can put a fancy auditorium in, which we couldn't do if we had a bunch of different schools, smaller buildings. But really, those are community facilities that we could build anyway. They don't have to be attached to a school. In some ways, they're almost a detriment when they are in a school because you can't just freely access them. They can't be repurposed and reprogrammed for broader community use.
OregonPEN: Right. If an adult gets on a school grounds these days, they call the cops.
Chuck: Everyone freaks out. We've commoditized schools in the same way we've commoditized the building of communities. Efficiency, when you listen to really smart people talk about the reason that they're doing things, almost always they will bring up the notion of efficiency. I think that efficiency is one of the worst goals that we can aspire to as a nation.
OregonPEN: Doing the wrong...
Chuck: Doing the wrong thing efficiently is really horrible. But we obsess about it in America because of the way our economy is structured, because of the dependence we have on growth and accelerating levels of growth. In everything from paying pensions to making mortgage payments, we require growth.
Efficiency has become the buzzword. When you are obsessed with efficiency, you give up resiliency, redundancy, adaptability. The human body is not efficient. You have two kidneys, you use a small percentage of your brain at any one time.
You have all of these built‑in redundancies in your body. Why? Not because it’s efficient but because it’s resilient. Because that's what it takes to survive over multiple thousands of millions of years and times that are good and times that are bad, and what have you.
In America, we've obsessed over efficiency and we've lost our resiliency. We've lost our adaptability. We’re not able to adapt our thinking. We’re so honed into efficiently delivering more of this [suburban sprawl – Ed.].
"The environments we build are despotic to a large majority of people"
OregonPEN: On the issue of the proposed bridge, part of the situation here is that the bridge is really, if it’s anything, it’s for getting people to the coast quicker, getting people to other places that aren’t the city but with the city paying for it.
I'm wondering if you could talk about how you can have a sustainable city while at the same point dealing with a larger regional area and how those two interface.
We are paying for everything right now on the proposed bridge, and it’s really not going to benefit us. It’s going to benefit people outside of our city if it has any benefit at all. But even with that, how do you balance the needs of our individual cities? Individual cities versus what is perceived as a larger regional need?
Chuck: I think this gets back to the conversation about going along and getting along. We have set up ‑‑ and again, we did this after World War II in order to efficiently deliver this growth machine that was America ‑‑ we said we're going to have an Interstate Highway Act. We are going to connect all these cities. Then, of course, it got perverte --we're going to run highways through the middle of cities too, and we're going to do these other things.
But the basic consensus that we had was that we will have a national tax on gasoline that would go into a very large fund of money that would then get distributed, with standards and strings and ways to operate down through the system.
As Americans, that makes a lot of sense to us, especially when we realize that the local systems have planning, which is the MPO (metropolitan planning organizations). They're supposed to take public input. There's this two‑way kind of interaction that theoretically happens.
Then we realized that we were doing terrible environmental things, so we came up with NEPA [National Environmental Policy Act] and the whole environmental process in the 1970s to try to inject a little bit of sanity there. We kept the same system designed to efficiently deliver this over and over again.
What we lost, while we dot every "I" and cross every "t" and follow a very respectable process, we actually are getting very coarse feedback. We're not getting good feedback from the systems we built.
What you see is that the system today has a huge emphasis on what I would call regional cooperation. This is looked at as altruistic. I'll do something really destructive for me so that you can get what you need.
Real good adaptable systems don't work that way. They're more symbiotic. Again, when we look at own human bodies, we see that we are a collection of different things within us that need us to live but also we need them. We help each other.
Regionalism in the US has become a lot about who is going to be the loser.
OregonPEN: Who’s the sucker at the poker table.
Chuck: Yeah, who's the sucker at the poker table as opposed to, “What is the thing that works for you? What is the thing that works for me, and then where is the overlap between those two?” I have become kind of like the anti‑regional planning person.
Not that I don't think it’s a good idea for us to communicate regionally, and talk, and find areas of collaboration. I would rather that the money, and the origination of projects, and the impetus for how we act just start at a very block-neighborhood level and work up and that our regional cooperation was,
“Where do we find mutual places of interest to work together?” As opposed to, “How do we do regional things that then, hopefully, we can find a way to have it trickle down and make sense for us locally?”
"I think that efficiency is one of the worst goals that we can aspire to as a nation. Doing the wrong thing efficiently is really horrible."
[Scene change – looking at existing Willamette River Bridges in Salem.]
OregonPEN: The other thing about these bridges is they’re not, they haven't been seismically retrofitted. Oregon Department of Transportation says when we have our Big One, that scale, the earthquake, they're going to collapse. Nobody wants to put $100, $200 million into retrofitting these to survive the Big One, but they're happy to put $500 million into a new bridge that would also not be rated for the Big One.
Chuck: Can I try an idea out on you that may just be patently offensive to everybody who has to live in a place like this?
In Memphis, Tennessee, they're looking at, I want to say, it was $5 billion. It was a massive number, for a seismic bridge across the Mississippi. They have three, four bridges. None of them are seismically rated.
I said, “What could we do with five billion dollars?” You're talking like a transformative amount of money. $5 billion sticks to my head. Maybe it was $1 billion. Whatever it was, it was a bizarrely huge number.
My contention was, you're not going to tear down your other bridges, right? You're going to keep your other bridges. What you’re working at, is not like when the Big One happens, there will be people on the bridges that will fall. You’re not worried about that because you're going to keep those bridges, anyway. This new bridge is not about alleviating that.
The new bridge is just about having a route in and out when your big earthquake happens. OK, I'm with you there. Could we go to the US Army Corps of Engineers and say, “What would it take to have a temporary bridge here...”
OregonPEN: A pontoon bridge.
Chuck: A pontoon bridge if we needed it? Then let’s get all those materials and have that on hand, set that over here, and keep it all safe. We’ll practice it once every two or three years. Let’s be really ready. We’ll spend fifty million dollars doing this. We will be ready, right? Then let’s take our $950 million or whatever and actually make life better for people.
OregonPEN: One of your sponsors is Salem Community Vision. I went to a meeting with them. I was saying, “You know, we should start a campaign, a billion better ways to use a billion bucks.”
When you pay off a five hundred million dollars bridge, it becomes a billion by the time it’s paid off. We're talking about throwing a billion at a non‑problem. There's got to be a billion better things you could do with that.
Chuck: We have this park in Minnesota, Jay Cooke Park. It's a great little state park. It's got a rocking bridge that goes over across the river. Suspension bridge. It’s got abutments on both sides. It hangs on its rope and all that. It’s great. It’s really wonderful. It’s kind of iconic.
Well, they had a big flood. It took out the abutments and knocked this bridge down. This is the third time that this has happened. They had a little display up when they were fixing the bridge that went through the history of the bridge.
Here is what it was originally, and then here's a second iteration, and then third iteration is the one that just came down, and now we’re building this one.
The thing is that the new bridge, which was $5 million or some huge amount of money, you could see where the engineers . . . . You had a little bridge that went over and it got knocked over and they were like, “We're not going to let that happen again.” Then it was like, “What? It happened again? We're going to do it even bigger.”
To me, the insanity of it is that we could actually probably have gone out and strung up the original bridge for a couple hundred thousand dollars. Then if it got knocked down next year, who cares? Go through it again. It’s a rope bridge across the river. Who really cares?
We're so obsessive with defeating nature like, “We must not let this happen again,” and “We’re building infrastructure to last.” I’m like, “No, you're not. Your machismo is getting the best of you.”
"Regionalism in the US has become a lot about who is going to be the loser."
OregonPEN: Yeah, this intersection cost ten million dollars. They widened this thing and we're killing pedestrians left and right in Salem.
Chuck: Yeah, you are.
OregonPEN: We really have a problem and so we make everything wider because the cars might miss one now and then, so we need to really widen things.
Chuck: [Pointing at a painted pedestrian crossing] You can see how here, you've acquiesced. The designers have said, “We might have people who walk through here sometimes, so we'll put a little place for them,” but then they put a ramp, a speeding ramp, so that you have to cross through the middle of it.
I used to bristle at the notion that if you're going to design bike infrastructure, you should ride a bike. But now I think that if you're going to design something like this you should have to take your five‑year‑old, four‑year‑old for a walk through it.
Community Bikeways Advocate: I'd like to point out right here, we're actually going over what was a railroad track coming off the Union Street Bridge. Now it's a pedestrian walk that stops there. The city has been working with businesses on this side and asking, “What do you need?”
What the business have said is, “We need access for people to get to us.” The city actually brought in a group of university students to look at the problem and throw out some ideas. They came up with some beautiful designs for getting pedestrians across that bridge to actually then be able to get into the commercial district that’s on that other side.
They came up with some -- they used a word like boulevard. They finally came up with a plan for an underpass, it’s underneath all this so that you don't have to cross that road, and started talking with people, who said “Since we're doing it, why don't we go ahead and add car access?” So now it’s a car, bike and pedestrian access. Then local business said, “Why don't you put an off‑ramp off to the...off bridge so...”
Chuck: Why don't we see if Seattle is done with their boring machine? We'll just bring that . . . .
Bikeways Advocate: Their latest plan created is an underpass, that was originally designed for bikes and walkers, at the cost of four million dollars, but now has a 17‑foot lane for cars to come off the bridge and quickly get into the business district.
The project has, it’s gone from four to five million dollars for a bike‑ped underpass to thirty million dollars for a road underpass and an off‑ramp that would dump cars quicker.
What I see is that it's good intentions, it's good ideas, great conversations that enters into a bureaucracy that is used to moving as many cars as fast as they can. They lose sight of their original goal and therefore will not serve the very people who originally were targeted.
OregonPEN: To your left here is the city hall, which is brutalism architecture. Built in the 1970s.
Chuck: Wow, that's unfortunate.
Chuck: Even the tunnel underneath the roadway, I look at that situation, I'm not going to say a tunnel is a bad idea and it’s cool to get a bunch of students out talking about this. But the fundamental problem with that neighborhood was that you have a place where the buildings, the street, the interface, everything assumed that everybody was travelling by car at 60 miles an hour, and so you’re trying to retrofit into that, an environment that is slightly less despotic for someone outside of a car than what you have. The same thing goes with environment here.
You cannot have a place where you're expecting to have commerce, and people walking around, and spending money, and interaction and 45‑mile‑an‑hour traffic.
[Scene change – driving through South Salem.]
Chuck: This is stroad land. You have people walking along here in the vehicle recovery area, where we put breakaway light posts because we know cars go off the road, but we line them with sidewalks and people.
We have to start talking about how we build auto environments and human environments and not that they are mutually exclusive. You can have human in auto environments but you can't have cars in human environments. You have different design ethics that you bring to them.
You cannot have a place where you're expecting to have commerce, and people walking around, and spending money, and interaction and 45‑mile‑an‑hour traffic. It does not work.
There's two things that I love to do on my Facebook page. The one is to take photos in these kind of things, where it's like, “We're going to create, like the French cafe out on the Strode, and then just sit there, have the close‑up where you're sipping your nice drink and then turn and pan and get the [makes sounds of heavy traffic].”
The other one is, I love when the churches put up the “No parking, except parishioners” signs. The churches tear down the neighborhood, and they have the big parking lot. Then, they put up the “Church parking only.” I always post those and put, “What would Jesus do?” He would tow your ass. Because this is church parking only.
OregonPEN: This stroad, believe it or not, we're not even a third of the way down this Stroad. Yes, we have had such a boom, literally a financial goldmine, of turning really nice farmland into this.
Chuck: This is very sad, and it’s very sad because, like you say... Visually, it’s not great, but I think people who like this stuff would say, “I like to able to go to Pizza Hut. I like to be able to get my Dominoes,” and yeah, this is what the market wants. Taco Bell drive‑through is great. I can run here during lunch.
For me, this makes me sick to my stomach because of the enormous amount of wealth that we have blown in this bonanza of one generation.
You can see some of the places. . . I'm guessing the evolution of this thing is that it was a smaller road at one point, and then got expanded, because you can see the little glimpses of stuff that's been here for longer than two decades, stuff that's been here 30, 40 years, and it's not aged well. But we’ve just skipped past it because that’s what you do. There's no natural renewal mechanism to actually have these places avoid decline and stagnation.
OregonPEN: No one cares about these places.
Chuck: They’re built to be disposable. But in a functioning market, what would happen is that there would be so much value created that, as one of the places went into decline -- so the roof goes bad, the parking lot goes bad, the sidewalk gets old, and the person who owns it did a poor job running their business. They're at the point in their life where they're done. Those things happen. Those are just human things. They happen in Venice, they happen everywhere.
In a functioning environment, there’s actually a cycle where people will come in and buy that, and then improve it up to the next thing. When you have a Taco Bell drive‑through, and it doesn't work or it goes into decline or it's not the thing, when you have a gas station like this, what is the next use for that? It is exactly what is there.
OregonPEN: Tattoo parlors, mostly.
Chuck: Or something really, really low on the economic spectrum. A tattoo parlor, a pawn shop. Then that just has this visual cue like, “Now we've reached the decline phase. Flee.” It is sad . . . America has spent trillions on stuff that is like throwing the wedding party, throwing the big birthday party.
OregonPEN: If growth made wealth then Salem should be wealthy as hell. Boy, look at all this growth we've enjoyed.
Bikeways Advocate: I would argue, as well, that you're saying that the market wants this, I think there’s a large part of the market that doesn't know that there's any other option.
Chuck: The crazy thing is, when other options are presented, they become so vastly expensive that no one else can afford them. I’ll go back to Disney World. An American family will spend $5,000, $6,000 going to Disney World on spring break to live in what, essentially, is high-end mixed‑use housing, and take transit to a walkable downtown.
OregonPEN: A pseudo downtown.
Chuck: The enjoyment of it -- they don't do this to go to Six Flags. They do this to go to Disney World because the difference between Six Flags and Disney World is the ambience of the place, not just the rides that you do.
You have this thing where that’s what we pay premium dollars for. Then we come back home. And we could actually live in that type of environment far cheaper than we could live in this environment, but we prefer this environment. Why?
OregonPEN: We can get it funded. We can get a loan.
Chuck: Yes. It is not because of our consumer preferences, like, “This is what the market wants.” It's that the system we have set up to finance it, to insure it, to zone it, to permit it, to build it. All of that delivers this. Again, we get back to that word efficiency.
If you were Paul Samuelson in the 1930s and 1940s, one of the chief economic advisers to FDR, and you were envisioning a way to avoid going back into the Great Depression, you would have envisioned a system where we would go out and, from the top down, have a big national works project that would create these systems all the way down, so that we could just employ people to continue to build, like Lego pieces, of this cookie cutter, this cookie cutter, and just keep doing, doing, doing it.
That was what we did. The problem is we solved the depression problem, right? We got into it, and we never were able to...
OregonPEN: Turn off the machine. The Sorcerer’s Apprentice.
Chuck: Exactly. We were never able to dial it back, or redirect it, or have it function differently. We’re trapped.
The best economic minds in our country today say things like, “We need a trillion dollar surge in infrastructure spending.” I don't know if they envision, when they say those things, more of this. But if they do, that scares the heck out of me, because this is what is bankrupting our cities.
OregonPEN: This was farm country. Again, it keeps getting wider, and wider, and wider, and higher speed. Now, they want to put … they want to put another power center mall, the big boxes out here.
Chuck: What? [laughs]
OregonPEN: [mimicking developers]: “Downtown isn't fully dead yet. We actually have a Nordstrom, and a Macy's, and a Penney's downtown. We need to kill those. There's a guy who owns this property out here who can make a lot of money if we widen this. He's going to be right in the intersection of I‑5 and Kuebler and there's going to be a power center there. Wouldn't that be great? We can finish off downtown for good and not have to worry about those whiny people who want things downtown.”
Chuck: Here’s the fascinating thing about it. I think we all can step back. Americans in general can step back and acknowledge that we have an economy way too dependent on consumption. It has been bad for families. These are just gluttonous bad habits, and I think we step back, and we realize that, right?
Shopping is the number one recreational activity in America. That's more than walking, more than biking. Shopping is the number one recreational activity. You look at a country where it's like 55 percent, I think, was the status, have a net worth less than $10,000. How is that possible in the richest country in the world?
When we look at it from a city standpoint, and we divorce ourselves from the notion that this approach, that we are dependent on this revenue, is actually bankrupting our own citizens, our own neighbors, we have to step back and realize that, if we build a mall here, people are not consuming more. We're already consuming the maximum.
We’re consuming beyond the maximum. It's not like when we get another clothier, that all of a sudden I increase my wardrobe size by 10 or 15 percent. In America, we're already spending the max on consumer spending. It's not like there is more to squeeze out of that rock.
OregonPEN: Did you read "Fast Food Nation?" It's an interesting book. He talks about how Taco Bell, or Yum! Brands, or whatever behind them, tried to create this thing called Fourthmeal. They were pushing Fourthmeal.
Chuck: Yeah, Fourthmeal. I remember Fourthmeal. The thing is, I kind of like Taco Bell Taco Bell at times. I'm going to acknowledge that. I remember the whole Fourthmeal thing.
OregonPEN: Fourthmeal was insane. They're already saturated. They're having users that are already eating at their places so many times a week, that the only opportunity for growth...
Chuck: Is a Fourthmeal. I had second breakfast. [laughs]
OregonPEN: We need people to eat more. Yeah, we need more retail, more retail space, like we need more rain.
Chuck: Let’s talk about that transaction because it takes it from a place where you actually already have infrastructure built, you already have all the stuff you're committed to maintaining, you already have buildings that are tax‑payers‑paying‑tax space.
It moves it to a place where you have to create all of that from scratch. It's almost like if government were actually a business --- I don't like that analogy, but hang with me for a second --- It would be as if we step back and said we have five divisions. One of them is profitable and four of them are losing money. Our solution is to start a sixth division that competes with the one profitable one.
That is a dumb strategy. That is a really, really, really bad strategy. That is what this continual retail is. The people who advocate for it will say, “Chuck, it'll be a regional draw. So we won't just be cannibalizing ourselves, we'll also be cannibalizing everybody else.” As if the other towns... As if no other city has ever had that idea. Like, “Oh, wow. Why didn't I think of that?” Exactly.
The cities that do really well with retail are not in the mall game. They're not chasing the next big‑box store. They're the ones that actually create ecosystems.
OregonPEN: Places you want to be.
Chuck: Places people want to be, with actual ecosystems of people who live near them interacting. Those places are beautiful. They're high‑demand. People will move there and pay premium dollar. Then they'll pay premium dollar to visit them. They'll pay the park. Imagine that.
It would be as if we step back and said we have five divisions. One of them is profitable and four of them are losing money. Our solution is to start a sixth division that competes with the one profitable one.
Chuck: I love the . . . Is this the State Highway Patrol?
OregonPEN: It's the State Police Headquarters.
Chuck: With your City Hall, and your library and your new police building, it’s important to draw a distinction between public buildings today and public buildings of 100 years ago.
When we would, a hundred years ago, collectively pool our money to build a public building, that was going to serve multiple purposes. It was going to serve the utilitarian purpose of the function it was trying to do. We've got to have a place for police. It will have offices. It will do that.
But it was also going to make a statement about who we were and what we valued. In doing that it was going to, in a sense, radiate like a fire. Like a burning fire it was going to radiate economic success to other places. You go to even small towns, and you'll see that...
OregonPEN: Beautiful post office.
Chuck: Yeah. They'll have the old...You go to their museum and there you'll see, here's the old post office, and the old City Hall, or the old County Seat.
OregonPEN: Carnegie Library.
Chuck: The first ones are small. What they were doing is, they said, "We're just going to get by until we can build the thing." Then you have the big post office, the big County Court House. These tiny little towns with 6,000 people have Roman columns and ornate things with domes on it. They'll be at the end of a street.
You'll say, “Why? Were they that vain?” No. They were really smart. They said, “If we're all going to put in together on this, we’re going to put it in a place of such prominence and use architecture of such timelessness that it is going to make everything else around it valuable.”
Now we say, “Let's do something that works for whatever single purpose we're going to do.” We’ve got a police station out here, so we get on the road quick, and start writing tickets to people and getting in and out quickly.
Bikeways Advocate: This is an industrial park. There's huge warehouses. But in the last maybe 10 years the state has rented -- The state has moved a lot of its state workers away from the downtown core, and out to here in cubicle land. Including my husband, who used to bike five minutes to work and now bike 25 minutes to work. Because per square foot was cheaper.
Chuck: It's more efficient.
Bikeways Advocate: These individuals have nowhere to go out for lunch. If they have doctor’s appointments, they have to get in their car and get back downtown. There is nothing out here besides industry, and so many state workers, who have their cubicles but are disconnected from the urban life that they used to have downtown.
Chuck: It's amazing too that we tolerate that. As tax payers, we turn these decisions over to facilities people whose job is to, essentially, optimize -- get the most amount of building for the cheapest price. As opposed to actual designers or people who are going to look at multiple things, such as why are these huge businesses all over the country locating in core downtowns? It's not because the land is cheaper there. It’s not.
It's because they realize that to get the employees they want, to attract them, they’ve got to be in high‑quality cities, with amenities, interesting things to do.
Bikeways Advocate: And access.
Chuck: People want to be able to get to work by bike, by what...That is what high‑end employees and high‑end cities want.
Nothing says fish and wildlife like a big drainage ditch. At least they have trees in their parking lot median, right? Gosh, give me a break. Yeah. Government is one of the worst defenders of this. It's really crazy.
OregonPEN: The school systems are exempt from all planning participation. They build schools where ever they want. Government is doing the same thing. We're hollowing out. Salem historic downtown was the seat of government. It’s in the constitution that the government has to be in Marion County and that meant Salem. Instead, we're hallowing it out and sending people down here where they have to drive because they can’t get here on the bus.
Chuck: The odd juxtaposition with that is, we’ve told ourselves from a propaganda standpoint that we're going to have cheap gasoline forever now, because we've figured out how to frack North Dakota to bits and extract this oil.
And the funny thing is, is that we can look back at the history of oil and of those types of proclamations, and what you see is that gas prices have steadily done this [points arm upward] on an upward trend. In 2008, we had four‑dollar gasoline in Minnesota. I don't know what it was here but I'm assuming it was around there.
The school district, for example, was in abject panic. They were like, “Oh my gosh! Is this the new normal?”
Four‑dollar gasoline, it's not like you as a family can choose to drive to town one fewer time. The school has to go and pick up all these kids on a bus. They've got a 30‑year bond on this building up the middle of nowhere, they're not moving out anytime soon.
What we do is, it goes without saying, very short‑term thinking with some every narrow metrics, and wind up in a place where we're not very resilient, were not very adaptable. We can’t survive high gas prices.
When you step back and you hear someone like George W. Bush, when he was president say, “We're addicted to oil,” it is a statement of the advocate, right? We can ignore it because we see crazy people out saying things like that.
That’s what we mean by addicted to oil. We must have cheap gas or people can't get to work out at the government building four miles out of town. That is a crazy addiction.
OregonPEN: As if only people well‑off enough to have a car deserve a job. If you are not well‑off enough to have a car, you really shouldn't expect to be employable.
Chuck: Now we have a system where, when gas does get expensive again -- and it cycles, it will at some point, it is a market -- when it gets expensive again, you're going to have to pay more to your employees or else you’re not going to have employees, and those employees work for us.
We have in the short term made no sacrifice. We’ve chosen the building, and we’ve sacrificed our long term resiliency. It is silly.
In a well‑functioning housing market, in a well‑functioning system, in traditional development patterns, you never walked away from a neighborhood.
[Scene changes to 1950s neighborhood]
Chuck: We drove through the brand new auto‑oriented, spread everything out land. Now we are in some of the older neighborhoods. The sad thing about these neighborhoods is that at one point these were the new things.
What they really need now is some love. There is nothing wrong with these homes. They are nice homes. They are a decent size. They could be expanded upon, improved, modernized, but they won’t be because there's no mechanism to do it. There's no financial mechanism to do it. There's no regulatory mechanism to do it. Your urban growth boundary does nothing to revitalize these neighborhoods.
In a well‑functioning housing market, in a well‑functioning system, in traditional development patterns, you never walked away from a neighborhood. Neighborhoods renewed themselves as they went into decline. It’s only post World War II development where we use up a neighborhood and then move on to the next one as if it's slash and burn agriculture.
OregonPEN: They made Americans get rid of the racial zoning, what happens is you zone economically to achieve the same result and we’ve built neighborhoods where everyone is segregated by class. If you're old, or you're poor or you're disabled, you can't stay here.
If you can’t drive, you can't live here. There is no that constant cycle of renewal because we have single use zoning so that we don't allow the accessory dwelling units.
Chuck: You can't move your single family home into a duplex. The only thing you could do is, if the neighborhood gets really bad, you could go down to the city hall and work with the bureaucracy to get a TIF (tax increment financing) project to build a four story apartment near the bus stop.
Everybody in the system would cheer that because now you're getting density and now you're getting – When really what needs to happen is that the neighborhoods need to thicken up over a broad area. You don't need these pockets of intensity. You need broad investments.
The whole insolvency problem of these neighborhoods is what is coming to bear out. That’s the thing that is ultimately pushing us. You don't feel it here as acutely, yet, or as obviously like a place like Detroit or Memphis feels it, but the dynamics are the same. If you think that this looks different than suburban Detroit you're kidding yourself. It's the same thing.
Everybody has as an excuse to explain Detroit. It's the greedy auto companies that ship the jobs away, or greedy unions, or corrupt politicians and what have you.
No, Detroit just got started doing all of this about 20 or 30 years before everybody else. They did it really aggressively, and they arrived at the destination earlier than the rest of us. We're all in the same exact trajectory.
You can see it in your neighborhood where you have things that go into decline and aren't maintained, that's Detroit of 1980s and 1990s. We think it won't happen to us.
OregonPEN: Instead of reinvesting in neighborhoods, we say, “Oh! The solution is a new power center to the south.” It’s more growth, more retail.
Chuck: It's Eight Mile. The salvation of Detroit was always like the next ring. It's like, “The next ring will get it right, and that will trickle down to somehow help these neighborhoods.”
OregonPEN: Anything rather than focus on what you’re calling the fine grain. Fine grain is hard, you have to make the exact same number of decisions and you get a much smaller effect. If I can make the same number of decisions and have a huge project with a huge budget, that makes my status go up.
Chuck: Let me defend the bureaucracy a little bit, too. When I'm working at the fine grain, not only is it difficult and tough, but I'm going to fail a lot. I'm going to try a lot of little things and they’re not all going to work. What happens is that when you're out doing fine‑grain type of work, the public shows up and says, “I'm wasting my tax dollars. Why are you bothering with this little thing? Why are you planting trees? There's huge problems out here.”
The public has almost pushed us to do things that won't fail. What that does is -- it doesn't make us do things that won't fail. It makes us do things that are so big that the failure becomes our failure, not one person or one department's failure.
OregonPEN: Nobody ever got fired for buying IBM, even when it was the wrong thing.
Chuck: If you've build a brand new bridge, what person do you pin that responsibility on? It would be five different agencies, four different commissions. No one will be responsible for it ultimately. Our unwillingness as public to accept a beta version of something -- the way we accept the beta version of that Apple iPhone -- we can't accept the beta version of a new street design with cones and paint to see how it works.
We flip out. We can't accept accessory dwelling because, “Oh my gosh! That could be some chaos in my neighborhood, and those people might move in.” What it does is that it actually forces our systems, our systems of governments, our systems of regulation into a very defensive big mode.
OregonPEN: A defensive crouch that says, “This may not be worth anything. It may not be any good but at least I can't be blamed.”
Chuck: Right, again that's not a failing of bureaucracies. It's human nature. We would all be in a sense the same in that kind of a system.
Would a wounded Trump bring down the whole show rather than lose bigly?
The story goes that, when the aged and failing Franklin doddered out of the Convention in Philadelphia after it finished its work -- of greatly exceeding its charter and proposing a whole new form of government rather than modifications to the existing Articles of Confederation -- a woman asked him what kind of government the Framers had proposed (as if it was common knowledge that the Convention had slipped its bounds). Franklin, so the story goes, supposedly replied "A Republic, madam -- if you can keep it."
As the story of Trump's hidden debts and obligations to foreign interests unfolds, the real worry is that his sociopathic tendencies and narcissism will lead him to ignore the example of Richard Nixon, who resigned when he saw the jig was up rather than put the country through an impeachment almost certain to result in conviction by the Senate. The perfect vehicle for a sensation-seeking sociopath like Trump to "bet the house" would be for him to throw all his weight behind the push -- already fueled by wealthy interests -- for a new Constitutional Convention ("ConCon").
Thus, this issue of OregonPEN considers the ConCon.
First is an analysis by the Center for Budget and Policy Priorities, which has sussed out that the plan of those arguing for a new ConCon is to use a proposed "Balanced Budget Amendment" -- the single stupidest economic idea since the Gold Standard -- as a stalking horse to get a ConCon going, in hopes of being able to stampede the ConCon towards the laundry list of ideas from the fever swamps, such as abolition of citizenship by birth within the United States.
The ConCon notion is gaining steam because, for all its manifest flaws -- lack of any constitutional entitlement to a right to vote first among them -- the present Constitution does retain some vestiges of the character of the Framers, who greatly feared the idea of characters such as Donald Trump. They even cooked up an Electoral College in hopes that it would prevent someone like Trump from being able to win the Presidency . . . oops.
Thus, as the steady drip, drip, drip of revelations about Trump's dealings and doings continue, we can expect to face a most dangerous moment, when a wounded Trump decides he has nothing to lose by putting the whole Country through the equivalency of "reorganization," as the various Trump schemes have been reorganized so often.
States Likely Could Not Control Constitutional Convention on Balanced Budget Amendment or Other Issues
By Michael Leachman and David A. Super 1
In the coming months, a number of states are likely to consider resolutions that call for a convention to propose amendments to the U.S. Constitution to require a balanced federal budget, and possibly to shrink federal authority in other, often unspecified, ways. Proponents of these resolutions claim that 28 of the 34 states required to call a constitutional convention already have passed such resolutions.
State lawmakers considering such resolutions should be skeptical of claims being made by groups promoting the resolutions (such as the American Legislative Exchange Council, or ALEC) that states could control the actions or outcomes of a constitutional convention. A convention likely would be extremely contentious and highly politicized, and its results impossible to predict.
A number of prominent jurists and legal scholars have warned that a constitutional convention could open up the Constitution to radical and harmful changes. For instance, the late Justice Antonin Scalia said in 2014, “I certainly would not want a constitutional convention. Whoa! Who knows what would come out of it?” 2
Similarly, former Chief Justice of the United States Warren Burger wrote in 1988:
[T]here is no way to effectively limit or muzzle the actions of a Constitutional Convention. The Convention could make its own rules and set its own agenda. Congress might try to limit the Convention to one amendment or one issue, but there is no way to assure that the Convention would obey. After a Convention is convened, it will be too late to stop the Convention if we don’t like its agenda. 3
Such serious concerns are justified, for several reasons:
• A convention could write its own rules.
The Constitution provides no guidance whatsoever on the ground rules for a convention. This leaves wide open to political considerations and pressures such fundamental questions as how the delegates would be chosen, how many delegates each state would have, and whether a supermajority vote would be required to approve amendments. To illustrate the importance of these issues, consider that if every state had one vote in the convention and the convention could approve amendments with a simple majority vote, the 26 least populous states — which contain less than 18 percent of the nation’s people — could approve an amendment for ratification.
• A convention could set its own agenda, possibly influenced by powerful interest groups.
The only constitutional convention in U.S. history, in 1787, went far beyond its mandate. Charged with amending the Articles of Confederation to promote trade among the states, the convention instead wrote an entirely new governing document. A convention held today could set its own agenda, too. There is no guarantee that a convention could be limited to a particular set of issues, such as those related to balancing the federal budget.
As a result, powerful, well-funded interest groups would surely seek to influence the process and press for changes to the agenda, seeing a constitutional convention as an opportunity to enact major policy changes. As former Chief Justice Burger wrote, a “Constitutional Convention today would be a free-for-all for special interest groups.” Further, the broad language contained in many of the resolutions that states have passed recently might increase the likelihood of a convention enacting changes that are far more sweeping than many legislators supporting these resolutions envision.
• A convention could choose a new ratification process.
The 1787 convention ignored the ratification process under which it was established and created a new process, lowering the number of states needed to approve the new Constitution and removing Congress from the approval process. The states then ignored the pre-existing ratification procedures and adopted the Constitution under the new ratification procedures that the convention proposed. Given these facts, it would be unwise to assume that ratification of the convention’s proposals would necessarily require the approval of 38 states, as the Constitution currently specifies.
For example, a convention might remove the states from the approval process entirely and propose a national referendum instead. Or it could follow the example of the 1787 convention and lower the required fraction of the states needed to approve its proposals from three-quarters to two-thirds.
• No other body, including the courts, has clear authority over a convention.
The Constitution provides for no authority above that of a constitutional convention, so it is not clear that the courts -- or any other institution -- could intervene if a convention did not limit itself to the language of the state resolutions calling for a convention.
Article V contains no restrictions on the scope of constitutional amendments (other than those denying states equal representation in the Senate), and the courts generally leave such “political questions” to the elected branches. Moreover, delegates to the 1787 convention ignored their state legislatures’ instructions. Thus, the courts likely would not intervene in a dispute between a state and a delegate and, if they did, they likely would not back state efforts to constrain delegates given that delegates to the 1787 convention ignored their state legislatures’ instructions.
The following sections of this report provide background on the current campaign to call a constitutional convention and examine in more detail the reasons why policymakers should be skeptical of any claims that the states could control a constitutional convention. In addition, Box 1 below examines the substantial economic risks that a constitutional balanced budget amendment would pose.
Background: Campaigns for a Constitutional Convention
Article V of the Constitution provides for two methods of enacting constitutional amendments.
Congress may, by a two-thirds vote in each chamber, propose a specific amendment; if at least three-fourths of the states (38 states) ratify it, the Constitution is amended. Alternatively, the states may call on Congress to form a constitutional convention to propose amendments. Congress must act on this call if at least two-thirds of the states (34 states) make the request. The convention would then propose constitutional amendments. Under the Constitution, such amendments would take effect if ratified by at least 38 states.
In part because the only constitutional convention in U.S. history -- the one in 1787 that produced the current Constitution -- went far beyond its mandate, Congress and the states have never called another one. Every amendment to the Constitution since 1787 has resulted from the first process: Congress has proposed specific amendments to the states, which have ratified them by the necessary three-quarters majority (or turned them down).
In the late 1970s and early 1980s, many states adopted resolutions calling for a constitutional convention to require the federal government to balance its budget every year. From the mid-1980s through 2010, no such new resolutions passed, and about half of the states that had adopted these resolutions rescinded them (in part due to fears that a convention, once called, could propose altering the Constitution in ways that the state resolutions did not envision).
Recently, though, additional states have called for such a convention, reflecting the efforts of a number of conservative advocacy organizations such as ALEC, which in 2011 released a handbook for state legislators that includes model state legislation calling for a constitutional
Since 2010, 12 states have adopted such resolutions. According to some proponents of such a convention, a total of 28 states have now adopted resolutions (and not rescinded them). Proponents have targeted another 11 states for action this year and next. 5 (See Figure 1.)
Most of the recent resolutions closely follow ALEC’s model legislation, the key sentence of which reads:
The legislature of the State of hereby applies to Congress, under the provisions of Article V of the Constitution of the United States, for the calling of a convention of the states limited to proposing an amendment to the Constitution of the United States requiring that in the absence of a national emergency the total of all Federal outlays for any fiscal year may not exceed the total of all estimated Federal revenues for that fiscal year.
Most of the resolutions enacted in the last three years add a final clause: “together with any related and appropriate fiscal constraints.” That language opens the door to any constitutional amendments that a convention might decide fit under this broad rubric, including placing a rigid ceiling on federal spending so that all (or virtually all) deficit reduction has to come from cutting federal programs such as Social Security or Medicare, with little or none coming from revenue- raising measures. Such a ceiling would reduce or eliminate any pressure to produce deficit reduction packages that pair spending reductions with increased revenue from closing unproductive special- interest tax loopholes or from combatting tax avoidance by powerful corporations. ALEC’s most recent version of the model legislation specifically includes this additional clause. 6
As ALEC recommends, each recent state-passed resolution also says that it should be aggregated with the balanced budget amendment resolutions that other states have approved (and not subsequently rescinded), even though those other resolutions are not identical and most are over 30 years old. Whether Congress would agree to count all such other state resolutions is unknown. The question is important, because the Constitution grants solely to Congress the power to determine whether the 34-state threshold has been met. The Constitution makes no provision for a presidential veto of a congressional resolution calling a constitutional convention; and such a resolution consequently appears not to require a Presidential signature. In other words, if enough additional states adopt resolutions calling for a constitutional convention and Congress rules that the 34-state threshold has been met, a convention must be held.
Besides the “balanced budget amendment” resolutions, some states have enacted or are considering related resolutions seeking a constitutional convention to impose broader restrictions on federal power. Eight states — Alabama, Alaska, Florida, Georgia, Indiana, Louisiana, Oklahoma, and Tennessee — have all enacted resolutions in recent years that call for a convention to propose amendments to “impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress.” 7
States’ Ability to Control a Convention Is Highly Questionable
ALEC and its allies assert that states can control the operations and agenda of a convention and sharply limit the actions of their delegates. But there is no consensus on this question among constitutional scholars or others who have studied the question carefully; the selective quotations that convention proponents cite from the 1780s do not reflect a consensus among the Framers of the Constitution and do not have the force of law. Even more importantly, no court or other body exists with the authority to enforce any such rules and to override the decisions of a constitutional convention.
A number of prominent constitutional experts have warned of the dangers of calling a new constitutional convention (see Box 2). These concerns are justified, for several reasons:
Once Called, Convention Could Write Its Own Rules
Because a constitutional convention has not been held since 1787, the nation has established no orderly procedures for the formation and operation of one. While the Congress that calls a constitutional convention in response to states’ petitions likely would propose certain ground rules, debate among constitutional scholars is contentious on what those rules might be. As a result, many fundamental questions remain unanswered.
For example, would votes in the convention be allocated among states according to population or would every state have one vote? The original Continental Congress operated on a one-state, one- vote basis, and every state has equal weight under Article V’s ratification procedures. If every state likewise has one vote in a new convention, small states with a minority of the country’s population could control the amendment-writing process. The 26 least populous states contain less than 18 percent of the nation’s people.
Also unclear is whether the convention would need a supermajority (of states or delegates) to propose amendments. Congress may only propose constitutional amendments by a two-thirds vote in each chamber, but Article V is silent on whether a simple majority vote in a constitutional convention would suffice. With the country closely divided on many issues, a simple majority requirement could allow amendments to move forward despite opposition from many or even most voters, especially if all states had equal votes in the convention.
Another critical question is how states would choose their delegations. In today’s highly partisan environment, majorities in state legislatures may be tempted to select delegations that reflect only their views rather than a broader spectrum of opinion within the state.
Finally, even assuming Congress sets ground rules for a convention, the convention itself could disregard those instructions once it convened; after all, there is no enforcement mechanism. Even if Congress purported to make its instructions binding, the courts likely would refuse to enforce Congress’s instructions, both because Article V does not clearly grant Congress the power to make binding instructions and because the courts generally regard such matters as “political questions” that the judicial branch does not wade into.
Convention Could Set Its Own Agenda, Possibly Influenced by Powerful Interest Groups
The only national constitutional convention ever held — the 1787 assembly in Philadelphia that produced the current Constitution — disregarded its original charge, which was to amend the Articles of Confederation to promote trade among the states. Instead it wrote an entirely new governing document, effectively abolishing the Articles of Confederation and superseding them with a new design of government. A convention held today could set its own agenda, too.
Further, the opportunity to bypass Congress and write major policy changes into the Constitution
— where they would be extremely difficult to remove — would likely tempt powerful, well-funded interest groups to influence the process and press for changes beyond those initially envisioned.
After all, there are no federal or state limits on spending to influence delegates to a constitutional convention. No one can predict with confidence what would happen, for example, if Wall Street concerns sought to ban the taxation of capital income or prohibit market regulations designed to prevent another financial crisis, or if energy companies sought to ban a carbon tax or a cap-and- trade system.
In such a highly contentious political environment, delegates could cut deals resulting in amendments covering multiple topics. Although most constitutional amendments have addressed only a single issue, nothing in Article V requires this. The Fifth, Sixth, Eighth, and Fourteenth Amendments all combined provisions on several different subjects.8 Provisions considered radical or damaging, at least in some states, could be attached to highly popular proposals in a single amendment, making their passage more likely.
Further, the broad language of several state resolutions enacted recently may increase the likelihood that a convention would enact sweeping and unforeseen changes. As noted above, most recent resolutions explicitly call for amendments imposing “any related and appropriate fiscal constraints” on the federal government — terms so broad that they could encompass an enormous range of changes in the government’s basic operations.
The resolutions that passed in recent years in Alabama, Alaska, Florida, Georgia, Indiana, Louisiana, Oklahoma, and Tennessee called for amendments to “impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress,” which envisions an even broader range of amendments. Even if Congress called a convention for the purpose of proposing a balanced budget amendment only, the convention once called could use the passage of these broader resolutions as justification to pursue a broader agenda, especially if more states have passed the more expansive resolution by the time a convention is called.
In sum, there is no way to predict what constitutional amendments the delegates to a convention might adopt.
Convention Could Change Ratification Process
The 1787 convention also completely rewrote the Articles of Confederation’s amendment procedures in a way that made it much easier to secure adoption of the convention’s changes. Under the Articles of Confederation, proposed amendments had to be approved by Congress and then ratified by all 13 states to take effect. Rhode Island, which opposed the kinds of changes that the 1787 convention was called to propose, declined to send delegates to the convention, apparently confident that the requirement for unanimous state approval meant it could block any resulting proposals that harmed its interests.
Instead, the other states’ delegates bypassed Rhode Island and created a new ratification process that made the new Constitution effective with the consent of only nine states and cut Congress out of the amendment process entirely. Rhode Island opposed the new Constitution and resisted ratifying for several years. Eventually, however, left only with the choice of seceding or going along, it was forced to succumb. The current three-quarters requirement was imposed only for later constitutional amendments.
This suggests that a new convention could propose to alter Article V of the Constitution, which requires three-quarters of the states to ratify proposed constitutional amendments emerging from a convention. A new convention could, for example, provide that its amendments be considered ratified if approved by two-thirds of the states, or even by a national referendum, citing the precedent of the 1787 convention. If the ratifying states went along, dissenters would have no recourse to enforce Article V’s three-quarters requirement and ultimately would face the same type of choice that Rhode Island did.
No Other Body — Including the Courts — Has Clear Authority Over a Convention
The Constitution provides for no authority above that of a constitutional convention. This makes it unlikely that the courts or any other institution could intervene if a convention failed to limit itself to the language of state resolutions calling for a convention or to the congressional resolution establishing the convention.
Moreover, even if the courts determined that they had the authority to rule, they would be unlikely to intervene if a convention veered away from its original charge. Article V contains only two limited restrictions on the scope of constitutional amendments (one of which expired two centuries ago). Absent guidance from the Constitution’s text, the Supreme Court likely would regard this as a “political question” inappropriate for judicial resolution (consistent with how the Court has treated other highly charged matters on which the Constitution provides no judicially enforceable standard). A court would have great difficulty explaining why a convention should be bound by state resolutions, given that the 1787 convention disregarded both its own stated purpose and the Articles of Confederation’s amendment procedures.
In addition, although some states’ resolutions seek to bar their convention delegates from voting for amendments outside the subject matter of the resolution the state has adopted, the courts likely would not intervene in a dispute between a state and a delegate, viewing it, too, as a “political question.” And if the courts did intervene, they likely would be unsympathetic to states’ efforts to constrain delegates, given that delegates to the 1787 convention ignored their state legislatures’ instructions.
Even if states could recall delegates, it likely would have no practical effect. Unlike a state legislature, a constitutional convention is a one-time body; once it has voted to propose a set of amendments to the Constitution, its work is over and it disbands. Recalling delegates at that point would be irrelevant.
States should be deeply skeptical of claims by ALEC and others that states will control the operations and outcome of a convention called under the Constitution’s Article V. Fundamental questions about how a convention would work remain unresolved. A convention likely would be extremely contentious and politicized, with results impossible to predict.
Further, nothing could prevent a convention from emulating the only previous convention — the one in 1787 — by going beyond its original mandate, proposing unforeseen changes to the Constitution, and even altering the ratification rules. Some states might challenge the actions of their delegates, but with the courts unlikely to intervene, these efforts would likely fail.
States would be prudent to avoid these risks and reject resolutions calling for a constitutional convention. States that have already approved such resolutions would be wise to rescind them.
Box 1: Balanced Budget Amendment Likely to Harm the Economy
Even if a constitutional convention could be limited to proposing a single amendment requiring the federal government to spend no more than it receives in a given year, such an amendment alone would likely do substantial damage.a It would threaten significant economic harm. It also would raise significant problems for the operation of Social Security and certain other key federal functions.
By requiring a balanced budget every year, no matter the state of the economy, such an amendment would risk tipping weak economies into recession and making recessions longer and deeper, causing very large job losses. Rather than allowing the “automatic stabilizers” of lower tax collections and higher unemployment and other benefits to cushion a weak economy, as they now do automatically, it would force policymakers to cut spending, raise taxes, or both when the economy turns down — the exact opposite of what sound economic policy would advise. Such actions would launch a vicious spiral: budget cuts or tax increases in a recession would cause the economy to contract further, triggering still higher deficits and thereby forcing policymakers to institute additional austerity measures, which in turn, would cause still greater economic contraction.
The private economic forecasting firm Macroeconomic Advisors (MA) found in 2011 that “recessions would be deeper and longer” under a constitutional balanced budget amendment. If such an amendment had been ratified in 2011 and were being enforced for fiscal year 2012, “the effect on the economy would be catastrophic,” MA concluded, and would double the unemployment rate.
Most recent proposals to write a balanced budget requirement into the U.S. Constitution would allow Congress to waive the balanced budget stricture if a supermajority of both chambers voted to do so. However, data showing that the economy is in recession do not become available until months after the economy has begun to weaken and recession has set in. It could take many months before sufficient data are available to convince a congressional supermajority to waive the balanced-budget requirement, if they ever would. In the meantime, substantial economic damage — and much larger job losses — would have resulted from the fiscal austerity measures the balanced-budget mandate would have forced.
Requiring that federal spending in any year be offset by revenues collected in that same year would also cause other problems. Social Security would effectively be prevented from drawing down its reserves from previous years to pay benefits in a later year and, instead, could be forced to cut benefits even if it had ample balances in its trust funds, as it does today. The same would be true for Medicare Part A and for military retirement and civil service retirement programs. Nor could the Federal Deposit Insurance Corporation or the Pension Benefit Guaranty Corporation respond quickly to bank or pension fund failures by using its assets to pay deposit or pension insurance, unless it could do so without causing the budget to slip out of balance.
Proponents of a constitutional balanced budget amendment often argue that states and families must balance their budgets each year and the federal government should do the same. Yet this is a false analogy. While states must balance their operating budgets, they can — and regularly do — borrow for capital projects such as roads, schools, and water treatment plants. And families borrow, as well, such as when they take out mortgages to buy homes or loans to send children to college. In contrast, the proposed constitutional amendment would bar the federal government from borrowing to make worthy investments even if they have substantial future pay-offs. And, as with Social Security, the amendment would prohibit using past savings for current purchases; if a family had to live under its strictures, not only would mortgages be prohibited, but so too would buying a house from years of prior savings.
a For more on the risks of a constitutional balanced budget amendment, see Richard Kogan, “Constitutional Balanced Budget Amendment Poses Serious Risks,” Center on Budget and Policy Priorities, updated January 18, 2017, http://www.cbpp.org/cms/index.cfm?fa=view&id=4166.
Box 2: Constitutional Experts Warn That States Cannot Control a Convention
A number of prominent legal experts have warned that states cannot control a constitutional convention or that calling one could open up the Constitution to significant and unpredictable changes. For instance:
“I certainly would not want a constitutional convention. Whoa! Who knows what would come out of it?” a Former Supreme Court Justice Antonin Scalia
“[T]here is no way to effectively limit or muzzle the actions of a Constitutional Convention. The Convention could make its own rules and set its own agenda. Congress might try to limit the Convention to one amendment or one issue, but there is no way to assure that the Convention would obey. After a Convention is convened, it will be too late to stop the Convention if we don’t like its agenda.” b Former Supreme Court Chief Justice Warren Burger
“There is no enforceable mechanism to prevent a convention from reporting out wholesale changes to our Constitution and Bill of Rights.” c Former Supreme Court Justice Arthur Goldberg
“First of all, we have developed orderly procedures over the past couple of centuries for resolving [some of the many] ambiguities [in the Constitution], but no comparable procedures for resolving [questions surrounding a convention]. Second, difficult interpretive questions about the Bill of Rights or the scope of the taxing power or the commerce power tend to arise one at a time, while questions surrounding the convention process would more or less need to be resolved all at once. And third, the stakes in this case in this instance are vastly greater, because what you’re doing is putting the whole Constitution up for grabs.” d Professor Laurence Tribe, Harvard Law School
“[S]tate legislators do not have the right to dictate the terms of constitutional debate. On the contrary, they may be eliminated entirely if Congress decides that state conventions would be more appropriate vehicles for ratification. The states have the last say on amendments, but the Constitution permits them to consider only those proposals that emerge from a national institution free to consider all possible responses to an alleged constitutional deficiency. . . Nobody thinks we are now in the midst of constitutional crisis. Why, then, should we put the work of the first convention in jeopardy?” e Professor Bruce Ackerman, Yale Law School
a Marcia Coyle, “Scalia, Ginsberg Offer Amendments to the Constitution,” Legal Times, April 17, 2014, http://www.nationallawjournal.com/legaltimes/id=1202651605161/Scalia,-Ginsburg-Offer-Amendments-to-the- Constitution?slreturn=20140421101513. In the 1970s, as a professor, Scalia argued that a convention was worth the risks he saw at the time. By 2014, as a Justice, Scalia seemed to have grown much more worried about those risks.
b Letter from Chief Justice Warren Burger to Phyllis Schlafly, June 22, 1988, http://constitution.i2i.org/files/2013/11/Burger-letter2.pdf.
c Arthur Goldberg, “Steer clear of constitutional convention,” Miami Herald, September 14, 1986.
d Remarks as part of the Conference on the Constitutional Convention, Harvard Law School, September 24-25, 2011, Legal Panel, recording available at http://www.conconcon.org/archive.php.
e Bruce Ackerman, “Unconstitutional Convention: State legislatures can’t dictate the terms of constitutional amendment,” The New Republic, March 3, 1979.
1 Michael Leachman is Director of State Fiscal Research at the Center on Budget and Policy Priorities. David Super is Professor of Law at Georgetown University Law Center.
2 Marcia Coyle, “Scalia, Ginsberg Offer Amendments to the Constitution,” Legal Times, April 17, 2014, http://www.nationallawjournal.com/legaltimes/id=1202651605161/Scalia,-Ginsburg-Offer-Amendments-to-the- Constitution?slreturn=20140421101513. 3 Letter from Chief Justice Warren Burger to Phyllis Schlafly, June 22, 1988, http://constitution.i2i.org/files/2013/11/Burger-letter2.pdf.
3 Letter from Chief Justice Warren Burger to Phyllis Schlafly, June 22, 1988, http://constitution.i2i.org/files/2013/11/Burger-letter2.pdf.
4 ALEC’s latest handbook is available here: https://www.alec.org/app/uploads/2016/06/2016-Article- V_FINAL_WEB.pdf.
5 For proponents’ latest description of their goals, see http://bba4usa.org/.
6 See p. 26 of ALEC’s handbook, here: https://www.alec.org/app/uploads/2016/06/2016-Article- V_FINAL_WEB.pdf.
7 A group called Citizens for Self-Governance is promoting this resolution. See the group’s “Convention of States Project” website at http://conventionofstates.com.
8 The Fourteenth Amendment gives U.S. citizenship to those born or naturalized in the United States, protects the privileges and immunities of U.S. citizens, requires states to afford people due process of law, and requires equal protection of law — and all of that is only in its first (of five) sections. Its remaining provisions address numerous controversies active in the post-Civil War era when it was proposed, including changes in electoral rules, eligibility of former confederates for federal office, and the treatment of war-related debts. The Fifth Amendment requires indictments prior to most major federal prosecutions, prohibits double jeopardy, establishes the right against self- incrimination, creates a general right to due process, and prohibits uncompensated government seizures of private property. The Sixth Amendment requires speedy and public trials, specifies the location for criminal trials, gives defendants the right to an impartial jury, establishes a right to counsel in criminal cases, provides for cross-examination of prosecution witnesses, allows defendants to subpoena their own witnesses, and mandates a clear statement of the charges. The Eighth Amendment prohibits cruel and unusual punishment, limits the amount of bail accused defendants may be required to post, and bars “excessive” fines. At various times, some of these rights have proven intensely controversial while others in the same amendment were widely accepted.
Unlike the inept founder of "Trump U," the Kochs have both stamina and focus. Their "Koch University" will turn out shock troops for the Shock Doctrine - and delegates for a ConCon
Koch Kollege for Right-Wing Social Engineers
Breaking news: An amazing new school for political activists is training thousands of people to be community organizers. They’re using Saul Alinsky’s classic manual, Rules for Radicals.
The Grassroots Leadership Academy gives how-to lessons in everything from mounting successful protest actions to recruiting middle-of-the-road voters. But, wait — who’s that hiding behind Saul Alinsky?
Good grief, it’s the Koch brothers!
Yes, this “grassroots” outfit has been set up by the gabillionaires Charles and David Koch to train cadres of right-wing corporatists to spread their ideological laissez-fairydust across the land.
The academy is run through Americans for Prosperity, the Kochs’ political wing, which put up $3 million to get it going. About 10,000 people have gone through training sessions in three dozen states. The brothers’ grandiose scheme is to take over the Republican Party and use it as a tool to rebuild America itself into a Kochlandia, ruled by the superrich.
Even their money, however, can’t overcome one huge barrier: their message.
The academy’s curriculum, for example, is loaded with such corporate nonsense as a course titled “The Moral Case for Fossil Fuels.”
Attendees are indoctrinated with two overarching lessons: First, freewheeling corporate power — unrestrained by labor, environmental, or other public protections — GOOD. Second, Social Security, unemployment benefits, and other social programs — VERY BAD.
Koch Kollege for right-wing social engineers is peddling a status quo agenda of corporate elitism and trickle-down ideology, which the vast majority of Americans are now openly rebelling against. It’s like trying to sell chicken salad made out of chicken manure. There’s not enough sugar in the world to make people swallow that.
Republished with permission of Otherwords.org; OtherWords columnist Jim Hightower is a radio commentator, writer, and public speaker. He’s the editor of the populist newsletter, The Hightower Lowdown.
Constitutional Rights and Public Interest Groups Oppose Calls for an Article V Constitutional Convention
Calling a new constitutional convention under Article V of the U.S. Constitution is a threat to every American’s constitutional rights and civil liberties.
Article V convention proponents and wealthy special interest groups are dangerously close to forcing the calling of a constitutional convention to enact a federal balanced budget amendment (BBA). This would be the first constitutional convention since the original convention in 1787 — all constitutional amendments since then have been passed first by Congress and then approved by three-fourths of the state legislatures. There are no rules and guidelines in the U.S. Constitution on how a convention would work, which creates an opportunity for a runaway convention that could rewrite any constitutional right or protection currently available to American citizens.
Under Article V of the U.S. Constitution, a convention can be called when two-thirds of the states (34) petition for a convention to enact amendments to the constitution. States can also rescind their calls by voting to rescind in the state legislature. Just a few states short of reaching the constitutionally-required 34 states to call a convention, Article V and BBA advocates have recently increased their efforts to call a new convention.
An Article V convention is a dangerous threat to the U.S. Constitution, our democracy, and our civil rights and liberties. There is no language in the U.S. Constitution to limit a convention to one issue and there is reason to fear that a convention once called will be able to consider any amendments to the constitution that the delegates want to consider. There are also no guidelines or rules to govern a convention. Due to the lack of provisions in the Constitution and lack of historical precedent, it is unknown how delegates to a convention would be picked, what rules would be in place, what would happen in the case of legal disputes, what issues would be raised, how the American people would be represented, and how to limit the influence of special interests in a convention.
Because there is no way to limit a convention’s focus, any constitutional issue could be brought up for revision by a convention. This includes civil rights and civil liberties, including freedom of speech, freedom of religion, privacy rights, the guarantee of equal protection under law, the right to vote, immigration issues, and the right to counsel and a jury trial, among others. Basic separation of executive, legislative, and judicial powers would be subject to revision as well. A convention might not preserve the role of the courts in protecting our constitutional rights. Even the supremacy of federal law and the Constitution over state laws could be called into doubt.
A 2016 USA Today editorial (FN1) correctly stated that calling for a constitutional convention is “an invitation to constitutional mayhem” and “could further poison our politics and hobble American leaders at moments of crisis.” Notable legal scholars across the political spectrum agree. One of the nation’s most esteemed constitutional law scholars, Professor Laurence Tribe of Harvard Law School, has said a constitutional convention would put “the whole Constitution up for grabs.” (FN2)
Georgetown University Law professor David Super wrote “a constitutional convention would circumvent one of the proudest democratic advances of the last century in America: one-person, one-vote. Without a precedent, no one really knows how a convention would unfold, but proponents predict that each state would have an equal vote in whatever they got up to.” (FN3)
Former Supreme Court Chief Justice Warren Burger shared similar concerns, writing, “[T]here is no way to effectively limit or muzzle the actions of a constitutional convention. The convention could make its own rules and set its own agenda. Congress might try to limit the convention to one amendment or one issue, but there is no way to assure that the convention would obey.” (FN4)
The late Supreme Court Justice Antonin Scalia also warned of the dangers of a constitutional convention. “I certainly would not want a constitutional convention. Whoa! Who knows what would come out of it?,” Scalia said in 2014. (FN5)
The undersigned organizations strongly urge state legislatures to oppose efforts to pass a resolution to call for a constitutional convention. We also strongly urge state legislatures to rescind any application for an Article V constitutional convention in order to protect all Americans’ constitutional rights and privileges from being put at risk and up for grabs.
African American Health Alliance
African American Ministers In Action
Alliance for Justice
American Federation of Labor and Congress of Industrial Organizations (AFL–CIO)
American Federation of State, County and Municipal Employees (AFSCME)
American-Arab Anti-Discrimination Committee
Americans for Democratic Action (ADA)
Asian and Pacific Islander American Vote
Bend the Arc
Brennan Center for Justice Campaign Legal Center
Center for American Progress
Center for Community Change
Center for Law and Social Policy (CLASP)
Center for Media and Democracy
Center for Medicare Advocacy
Center for Popular Democracy
Center on Budget and Policy Priorities
Children's Defense Fund
Citizens for Responsibility and Ethics in Washington (CREW)
Coalition on Human Needs
Communications Workers of America (CWA)
Community Advocates Public Policy Institute
Democracy 21 Dream Defenders
Economic Policy Institute
Fair Elections Legal Network
Faith in Public Life
Family Values at Work
Food Research & Action Center (FRAC)
Franciscan Action Network
International Association of Fire Fighters
Jobs With Justice
League of Women Voters of the United States
Main Street Alliance
Mi Familia Vota
National Asian Pacific American
Families Against Substance Abuse
National Association of Social Workers
National Council of Asian Pacific Americans (NCAPA)
National Council of Jewish Women
National Council of La Raza Action Fund
National Disability Institute
National Disability Rights Network
National Education Association (NEA)
National Employment Law Project (NELP)
National Fair Housing Alliance
National Korean American Service & Education Consortium (NAKASEC)
National Partnership for Women & Families
National WIC Association
National Women's Law Center
People Demanding Action
People For the American Way
Service Employees International Union (SEIU)
Sisters of Charity of Nazareth Congregational Leadership
Social Security Works
State Innovation Exchange
The Arc of the United States
The Forum for Youth Investment
The Public Interest
The Voting Rights Institute
United Food and Commercial Workers (UFCW)
Voice for Adoption
VoteVets Action Fund
Women Vote Action Fund
State and local organizations:
Fair Housing Center of Northern Alabama
OMNI Center for Peace, Justice & Ecology
AFSCME Retirees Chapter 97
Arizona Advocacy Network Phoenix Day
Southwest Fair Housing Council
California Common Cause
City of Chino Housing Division Courage Campaign
Fair Housing Advocates of Northern California
ACLU of Colorado
America Votes Colorado
Colorado Common Cause
Colorado Ethics Watch
Colorado Fiscal Institute
Colorado Sierra Club
New Era Colorado
League of Women Voters of Colorado
Common Cause Connecticut
Connecticut Fair Housing Center, Inc.
Planned Parenthood of Southern New England
Holy Family Home and Shelter, Inc
Common Cause Delaware
Common Cause Florida Faith in Florida
Florida Consumer Action Network Progress Florida
Common Cause Georgia
Common Cause Hawaii
Better Idaho Idaho AFL-CIO
Common Cause Illinois
Oak Park River Forest Food Pantry Project IRENE
Common Cause Indiana
Fair Housing Center of Central Indiana
AFSCME Iowa Council 61
Congregation of the Humility of Mary
Common Cause Kentucky Kentucky AFL-CIO
Greater New Orleans Fair Housing Action Center
Disability Rights Maine Maine AFL-CIO
ACE-AFSCME Local 2250
AFSCME Council 3
AFSCME Council 67
Baltimore Neighborhoods, Inc.
Benedictine Sisters of Baltimore
Common Cause Maryland
Disability Rights Maryland
Maryland Center on Economic Policy
Public Justice Center
The Xaverian Brothers
Common Cause Michigan
Fair Housing Center of West Michigan
Common Cause Minnesota
League of Women Voters of Minnesota
Minnesota Citizens for Clean Elections
Mississippi Mississippi AFL-CIO
Vision for Children at Risk
Common Cause Nebraska
Nebraskans for Civic Reform
New Hampshire AFL-CIO
CWA Local 1081
New Jersey Association of Mental Health and Addiction Agencies, Inc.
Monarch Housing Associates
Common Cause New Mexico
League of Women Voters of New Mexico
New Mexico Hospital Workers Union (1199NM)
CNY Fair Housing, Inc
Common Cause New York
Disabled in Action of Greater Syracuse Inc.
Long Island Housing Services, Inc.
Schenectady Inner City Ministry
Solidarity Committee of the Capital District
Nevada AFSCME 4041
Common Cause North Carolina
Disability Rights North Carolina
Independent Living Resources (Durham, NC)
North Dakota AFL-CIO
Cleveland Nonviolence Network
Common Cause Ohio
Equality Ohio Ohio Voice
Toledo Fair Housing Center
Toledo Area Jobs with Justice
Oklahoma Oklahoma AFL-CIO
Common Cause Oregon Disability Rights Oregon
Bhutanese Community Association of Pittsburgh
Common Cause Pennsylvania
Community at Holy Family Manor (Pittsburgh, PA)
Just Harvest (Pittsburgh, PA)
Common Cause Rhode Island
South Carolina AFL-CIO
South Dakota AFL-CIO
Tennessee Nashville CARES
Clean Elections Texas
Common Cause Texas
Harlingen Community Development Corporation
Downstreet Housing & Community Development P.S., A Partnership
Virginia Civic Engagement Table
Conscious Talk Radio
Washington Community Action Network
Access to Independence, Inc. (Madison, WI)
AFSCME Council 32
AFSCME Retirees Chapter 32
Citizen Action of Wisconsin
Common Cause Wisconsin
End Domestic Abuse Wisconsin
Grandparents United for Madison Public Schools
League of Women Voters of Wisconsin
Madison-area Urban Ministry
Metropolitan Milwaukee Fair Housing Council
Midstate Independent Living Consultants
One Wisconsin Now
Options for Independent Living Inc.(Green Bay, WI) School
Sisters of Saint Francis (Milwaukee, WI)
Survival Coalition of Disability Organization of Wisconsin
The Arc Wisconsin
The Wisconsin Democracy Campaign
Wisconsin Aging Advocacy Network
Wisconsin Coalition of Independent Living Centers
Wisconsin Community Action Program Association (WISCAP)
Wisconsin Council on Children and Families Wisconsin Democracy Campaign
Wisconsin Faith Voices for Justice Wisconsin Voices
National Association of Social Workers, Wisconsin Chapter
Dominicans of Sinsinawa - Leadership Council
West Virginia Citizen Action Group
Wyoming Wyoming AFL-CIO
FN1 USA Today, “Marco Rubio's very bad idea: Our view,” January 6, 2016, available at http://www.usatoday.com/story/opinion/2016/01/06/marco-rubio- constitutional-convention-balanced-budget-editorials-debates/78328702/
FN2 Michael Leachman & David A. Super, “States Likely Could Not Control Constitutional Convention on Balanced Budget Amendment and Other Issues,” Center for Budget and Policy Priorities, July 6, 2014, available at http://www.cbpp.org/sites/default/files/atoms/files/7-16-14sfp.pdf.
FN3 David Super in The Chicago Tribune, “Don't even think about 'updating' the Constitution,” March 19, 2017, available at
FN4 Letter from Chief Justice Warren Burger to Phyllis Schlafly, June 22, 1988, available at http://constitution.i2i.org/files/2013/11/Burger-letter2.pdf.
FN5 Marcia Coyle, “Scalia, Ginsberg Offer Amendments to the Constitution,” Legal Times, April 17, 2014, available
Chuck Marohn, founder and President of Strong Towns came to Oregon for the first time last October, touring and presenting in Portland, Salem, Newberg, and Independence, and surveying the sites in between.
The following discussion took place during a tour of Salem, where Marohn’s local guides took him through the town, starting in downtown Salem and proceeding to a spot in West Salem, across the Willamette in Polk County, where the local planning authority hopes to build the west side landing for a $500 million dollar freeway bridge they call the “Salem River Crossing.” If it could be funded and constructed, the “Salem River Crossing” would be among the longest, if not the longest, elevated structures in Oregon.
Joining Marohn on the tour were OregonPEN, a safer bicycling advocate, Jim, a leader of a group opposing the Salem River Crossing, and Tom Andersen, a Salem City Council member. Discussion lightly edited for clarity only.
OregonPEN: This bridge would be $500 million, in a city where we have unmanned fire stations because we can't afford to staff them, and we have hundreds of miles of sidewalks that are in terrible disrepair.
Councilmember Andersen: This is exactly [the kind of thing] I was reading last night in your website. I campaigned against [the bridge idea], and I beat the Chamber of Commerce opponent who was all in on it. The three progressives [just elected] are against it too. There's no way to pay for it and it doesn't even address the problem.
It will also involve an expansion of the urban growth boundary, which will ultimately lead to development of prime farmland for homes.
Chuck Marohn, Strong Towns: The perverse thing, often, about those projects is that the money, some of it will come from you, and some of it will come from ODOT, but some of it would also come through the transportation slush fund things.
Right now, at the national level, we're talking about doing a surge in infrastructure spending. Both of our presidential candidates, for what it's worth, have subscribed to that. There really isn't anyone who is against it. The big issue is always how to pay for it.
Let's say that they magically figure that out and come up with the money. Then what happens is that they go looking for shovel-ready projects. The DOTs will have things like this all ready to go. “We have this huge project all ready to go,” – and then you'll be faced with, “Do you turn down $400 million of ...”
OregonPEN: Free money.
Chuck Marohn: Yeah, “free money.” [Because] if you do, it will just go someplace else. Now, it's no longer an issue of do we spend our money to do this, does it make sense; [now it’s] does it make sense to give away, or not accept, free money.
The problem, of course – we see this all over the place – [occurs even] where a state department of transportation, or a regional office, will be very committed to maintaining things. They’ll have a certain budget and they'll have it scheduled out, and they'll say, “We're going to be very prudent about taking care of the stuff we've built.”
Then the free money comes in. You can't say no to it, because the politicians have lined it up. How can you say no to this [through the] political process? That, literally, is where your salary and your budget comes from.
What they'll say is “You just need to take 20 percent – 30 percent, 50 percent, all of –your maintenance budget for this year, to do this matching dollars on this project.”
Not only do you then put off maintenance, but you also add to your inventory of stuff you have to maintain. It’s a double‑edged sword, because we see [this with] DOTs all over. Even the ones that are trying to be very prudent, it’s nearly impossible in a political situation to say no to that [free money].
Andersen: In this particular situation, there really isn't any DOT money, nor is there any federal money. The proposal to pay for it is an increase in gas tax, an increase in property tax, and tolling, both ways, for $1.50 on the new bridge, as well as the bridges we’re going over [right] here.
Chuck Marohn: All local.
Andersen: All local.
OregonPEN: 95 percent of the funding plan, which isn't actually a plan, yet, but is a memo, 95 percent of the funding would be locally generated. DOT said that the federal money and the state money would be about 5 percent, about $50 million, I guess – it’s about 10 percent.
Andersen: 10 percent.
OregonPEN: 10 percent would be about $50 million in state and federal funding. The rest would be us.
Andersen: Tolling this bridge.
Chuck Marohn: Yeah.
I'm not adverse to tolls. Tolls area more refined way to actually [balance] supply and demand than just the gas tax. That being said, you have a situation then where you actually can step back and compare and say, “OK. Is the value and benefit for us here, locally, going to be so great for doing this? Or would that money be better spent on other things?”
As you said, you’ve got diminished firefighting capacity. Are you laying off police officers? Are you keeping your libraries open? Are you maintaining your parks? What we find, very clearly, is that the system of delivery of megaprojects, of these big projects, is [that it is] very convenient for staff, and it’s very convenient for the scale at which [planning bureaucracies] like to operate.
OregonPEN: They know how to do that delivery.
Chuck Marohn: They know how to deliver that, very easily. The problem is that those are – if not negative-returning investments, which they almost always are – they're incredibly low-returning investments.
OregonPEN: The toll alone, the city’s own projection . . . the Metropolitan Planning Organization projection on tolls . . . is that it would devastate demand for the trip so greatly that we keep saying, “Why don't you put the toll on now to solve the problem you claim to want to solve and build [up] some money to do maintenance?”
Andersen: There are two car bridges now across the river. We went over one of them. In order to make anybody want to use the [proposed] bridge in the far north, these two bridges are going to have to be tolled too. Otherwise, nobody will use the bridge.
Chuck Marohn: There’ve been a couple studies. . . . I'm not like, huge, in [accepting] academic studies [uncritically], but this one goes to human behavior. It’s very fascinating, where people will do what, economists would say, would be irrational things to avoid paying tolls.
OregonPEN: [Go miles out] of their way. Yeah, tolls are really hated.
Chuck Marohn: Yeah. They would sacrifice [a lot]. To me, I think you've come up with the exact right answer. If you think that a toll on this bridge is warranted, then let’s go do the toll right now; let’s see what that does to actual demand.
You could do that. You don't need half a billion dollars to do that. You do it very cheaply, see what it does to demand. From a price [or] market mechanism, you can get the result that you want in terms of traffic flow just by manipulating the price.
Quite frankly, if so many people are willing to pay high tolls to get to where you're going, then maybe you do need a third bridge. I doubt that would be the case.
Chuck Marohn: That's a theory you can test out before you go half a billion dollars down the road.
OregonPEN: We're climbing up into West Salem. This was all orchards. Really recently, this was all farmland and orchards. We got sprawled out into Polk County, which is a much smaller county than Marion County. It is an agricultural county. Ag is still the number one or number two [Oregon] industry every year. Marion County is the number one Ag county. Polk is close behind. We are getting a bunch of vineyards out here. There’s really a boom in wine. You saw in Newberg and McMinnville, we are having a boom in wine out here. The developers are just furious that they can’t keep sprawling out to the west. That's what the bridge is about.
Andersen: In order to build the bridge, we have to expand the urban growth boundary. Doing that, they'll open this all up for development. West Salem, even though it's in another county, is still part of the City of Salem. The city spans the river.
Chuck Marohn: The bridge is less about traffic demand than it is about inducing certain amount of growth.
OregonPEN: Traffic is the excuse....
Andersen: This traffic is the excuse for development.
Chuck Marohn: I know that in Oregon, you’re very proud of the urban growth boundaries. It’s one of the things that, in planning circles, you're known for. [laughs]
I'm not going to say that I'm not a fan – I think I get the theory, but—Really, your development is no different than anybody else’s.
Your style and your pattern . . . [pauses] This is Minnesota with topography. It’s the same thing. I saw this in Portland. Once you get out of what is a very spectacular kind of core and get out into things, it’s not only ordinary, it’s almost subpar-ordinary. It’s very blasé.
You're seeing the [exact] same type of financial dynamics, in a place like this, where the developers can . . . . They have a market, they know they can serve; they have buildings they know they can get financed; the banks know that they can sell the stuff into a secondary market.
There’s a lot of cash that can flow these through these from a transaction standpoint. The urban design is horrible. These are not built to last multiple generations; we’re not making big investments – [instead] the city’s taking on enormous liabilities doing this.
Andersen: All big time.
Chuck Marohn: Yeah. You're going to have to come out. . . . In 25 years, every one of these roofs will go bad at the same time. At the same time, this road will fail. The sidewalks will be old and have weeds growing up through them. What will happen is that you will have to come out and spend money that is not generated here to actually fix this stuff.
What the future would be – if we continue in the same pattern as that – the people in this neighborhood that have affluence will see things declining and will leave. The people that will be left are the people that can’t afford to fix the roof, can’t afford to pay the maintenance on the road, and the neighborhood will get stuck in stagnation or decline.
That is – unfortunately – when we build things like this, all at once to a finished state—you wind up with that type of dynamic built in.
OregonPEN: Of course, there's zero transit utility here. It’s impossible to serve this road network with a bus. When the decline hits, there’ll be people who are stranded out here.
Andersen: It's even worse, Chuck Marohn, because we only have bus service till nine p.m., Monday through Friday, and none on [weekends].
[We tried] to have a payroll tax that was infinitesimal. A million‑dollar payroll would pay $2,100 in tax. The business interests, including five city councilors who contributed money, put on a campaign of basically lies, and [we had a] major loss. We now have bus service only Monday through Friday early morning till nine o’clock. That’s it.
Chuck Marohn: Functionally, it won't work for employment. The benefit of transit is that. There are a lot of people who would like to serve places like this with transit and put tons of money into it. [But] you can’t do it effectively, unless you are willing to assume people are going to [take] the last mile or two of their trip by bike. This is not really well‑configured for that either.
Chuck Marohn: Theoretically, there's ways we could do it, but all of them would require a massive commitment to doing something differently, and like you said, I don't see that happening, and I don't know if that would be a really good use of resources anyway.
Andersen: This is where the bridge comes in.
Chuck Marohn: [Looks at houses] Really?
Andersen: Yeah, the west end of the bridge....
Chuck Marohn: These houses would be gone...? [Looks around.] And the bridge would come through here?
Chuck Marohn: [Laughs]
OregonPEN: Massive. It’s a four‑lane bridge …
Jim: It's a five‑lane bridge. It’s three quarters of a mile to the other bank.
Andersen: It's twice the span of the Brooklyn Bridge.
OregonPEN: It would be the longest elevated structure in Oregon, because it goes over this liquefaction zone in the river. It ...
Andersen: [Has to go over the] flood plain.
OregonPEN: It would be this tremendous behemoth, and the people who fought against the transit levy...
Andersen: Are the people who are…
OregonPEN: The ones who are saying we need this bridge, and we would be happy to pay taxes for that, but not a little tiny slice for transit.
Chuck Marohn: Like I said, let's test that theory. You’ve got to split off the two components. If [the bridge] is about creating the platform where you're going to have more of this kind of growth . . . . To me, I think the question then is “Does this kind of growth make any financial sense?”
When you start to run the numbers you see it works for the developer, it works in the short term for the city, it works in a very short term way, but the long term liabilities you create are enormous. As a taxpayer, someone who lives within these jurisdictions, I would not want to see this kind of thing perpetuated.
Andersen: We hold our discussions with the staff, and in my discussions as a councilor, they talk to me. There is no plan to maintain it. They have no idea how they're going to pay for the bridge and pay for its maintenance at all once it’s open.
Jim: They haven't even decided who owns it, if you read those reports. It might be owned by the city, or it might be owned by the state. We haven’t decided yet. We're going to move forward with it even though we don't even know who’s going to own it.
Andersen: Are we right where the bride will come through?
Chuck Marohn: Let me ask this. Just from a bureaucratic standpoint, where is a project like this initiated? I get that people coalesce around it and start to support it and it gains momentum, but where within the bureaucracy does it emerge from?
OregonPEN: I would put that at Region Two of ODOT, which is the state agency. They dangle the money in front of a local MPO, or the Mid‑Willamette Valley Council of Governments, and their transportation subcommittee is called SKATS ‑‑ Salem‑Keizer Area Transportation Study.
Those people, the local mayors, the local councils ‑‑ the transit district is part of that ‑‑ they are the ones who see that dangling money. And they fixate on it like a dog fixates on a bone. They just can’t see anything else.
Andersen: Chuck, for how this particular thing started was there was a perceived need generated for another bridge, or some way to fix what was perceived as a transportation across the river. The advisory taskforce committee was appointed, and looked at all the options.
Of the 22 members of the committee, only 10 voted for this bridge option. Seven voted for no-build. And of the 10 people that voted for this bridge, at least 6 of them were not appointed officials or elected officials. [They] were the administrative staff of the agencies that were going to have something to do when they built the bridge.
I talked about that, and this is the wrong way to make these decisions. The elected or appointed officials [are supposed] to make the policy decisions, but instead, the majority of the people that voted for this were people who earn their living from doing this exact sort of thing.
OregonPEN: The taskforce, a minority or a plurality of the taskforce said we need a bridge, and then that's been the excuse to say, “Well ...”
Chuck Marohn: Let's find a bridge. [Laughs]
OregonPEN: Yeah. Essentially, they went in knowing that the Right Answer was going to be, “We have to build a bridge.” That created a fig leaf for . . . . In theory, it was going to be done by 2009 ‑‑ the planning and the EIS would be done by 2009.
Andersen: None of them are done yet.
OregonPEN: None of it is done yet. One member of the local activists has this [saying]. He used to work for DOT. And he says, “If there was a funding plan, this would be done by now. The fact that you can’t do this suggests that it really is the wrong thing to do.”
Chuck Marohn: Or that the funding streams are so tapped.
At the end of the day, I really feel like we’re at a [weird] moment in this country, and you see this in an insane way at the federal level in our political dialog. We’re actually at a point, at the very local level, where people who are classically identified as right of center, and who classically identified as left of center, have so much in common when it comes to this kind of things.
There’s a whole discussion of government waste and over taxation, and [asking] why are we just continuing to fund programs that are not delivering? Then there's recognition that this type of development is really destructive.
These types of bureaucracies, [the ones] that birth and deliver this, actually need to be defunded and go away. They need to be changed, and changed to work at a very fine grained neighborhood level. That’s going to take not only a coalition of people saying, “No, we will not pay for this,” but simultaneously a group of people saying, “We actually need to see people who are going to obsess over neighborhood-level things in the same [way] that we have historically obsessed over big projects.
OregonPEN: You know, the interesting thing is that change is possible. If you look at school districts, there's a lot of creativity—with the homeschoolers, and there’s a lot of people who are trying alternative methods of delivery of education. That is driving some change.
But how do you do that in the transportation planning world? You can’t do [highway] homeschooling. You can’t withdraw your support from the machine that leads to this “progress.”
Chuck Marohn: That that's an interesting question. Because a lot times . . . . Let’s say that you realize – and in many ways this is self‑evident, but maybe not for everyone.
The greatest investments we can make in our cities today, the highest returning, [the ones where] we spend a dollar and we get two dollars/three dollars of cash back – are fine grained. They are biking, walking‑type of infrastructure, helping people get across the street, helping people get from the house here to the store there. Those fine-grain investments pay off huge, and we’re just not scaled to do them at all. We’re scaled to deliver large things on the theory that the small things will fill in after the fact.
OregonPEN: The trickle‑down theory.
Chuck Marohn: Yeah.
Andersen: It doesn't work any way you look at it in any system.
Chuck Marohn: Exactly. A lot of times, the people who are advocates for the biking/ walking small grain investments, feel compelled to latch onto essentially the table scraps of the big system.
OregonPEN: And [so] they support it.
Chuck Marohn: They’ll go to the Capitol and they’ll say, “OK, we're going to raise taxes and get another $5 billion for transportation.”
Andersen: “One percent for bikes.”
Chuck Marohn: Yeah, and $50 million of that will go for bikes. They’ll say, “We're used to getting $2 million for bikes, now we're going to get $50 million. This is incredible, this is huge, we’re going to do this. Let’s support it.”
There’s a part of me that . . . . I’m sympathetic to that. I grasp what they’re doing.
There’s another part of me that says we need to change our cultural expectations. At the mega‑project level, go down to a maintenance level of funding, and allow local units of government to essentially engage in finer-grained things.
The push back I get is, “Well, they won’t do it.”
OK. I don't know if they would in Year One, or Year Two, or Year Three, but what you would see is that successful places would be doing these things, and a body of knowledge would emerge on “Here are some best practices for cities that want to be really successful.”
Right now we are stunting that intellectual growth by putting all of our intellectual energy into these boondoggle projects.
There's a great video clip you can find on the Internet showing how powerful our mental filters are, and how much they impair our perception, and how much important stuff we can miss while we are focusing on the chaos of the moment. That is one of the reasons OregonPEN is such a big fan of Gail ("Gail the Actuary") Tverberg -- she puts in the work to suss out the signal amidst the noise. It's the signal that counts, that determines what the future will be like, not the static.
In this latest piece, she returns to one of the key issues of our time, the inability of economists to deal with the physical limits to "growth" that are increasingly shaping everyday reality throughout the world. Republished with kind permission of the author.
Why Energy-Economy Models Produce Overly Optimistic Indications
I was asked to give a talk to a committee of actuaries who are concerned about modeling the financial future of programs, such as pension plans, given the energy problems that are often discussed. They (and the consultants that they hire) have been using an approach that puts problems far off into the future. I was trying to explain why the approach that they were using didn’t really make sense.
Below are the slides I used, and a little explanation. A PDF of my presentation can be downloaded at this link: The Mirror Image Problem.
FCAS stands for “Fellow of the Casualty Actuarial Society”; MAAA stands for “Member of the American Academy of Actuaries.” Actuaries tend not to be interested in academic degrees.
I try to explain how a more complex situation can be hidden in plain sight.
It is not obvious that both the needs of energy producers and energy consumers should be considered.
If we look back at what the discussions of the time were, we can see when remarks were that prices were too high for consumers, and when they were too low for producers. See for example my article, Oil Supply Limits and the Continuing Financial Crisis and my post, Beginning of the End? Oil Companies Cut Back on Spending. This latter article shows that companies were already cutting back on spending in 2013, when prices appeared to be high, because even at a $100+ per barrel level, they still were not high enough for producers.
Oil companies tend to extract the cheapest and easiest to extract oil first. Eventually, they find that they need to move on to more expensive to extract fields–even with technology enhancements, costs are rising. There seems to have been a step up in costs starting about the year 2000. The above chart is by Steve Kopits. This EIA data (in Figure 10) also shows a pattern of sharply rising costs about the same time.
The problem, of course, is that wages have not been spiking in the same pattern. As a result, we encounter the problem of prices being either too high for consumers, or too low for producers, as we saw on Slide 4.
The economy is “built up” from many different parts. It includes governments, businesses, and consumers. It also includes people with jobs in the economy, and individuals and businesses making investments in the economy. It gradually changes over time, as new businesses and new laws are added, and as other changes are made. The wages that workers earn influence how much they can spend. The economy keeps re-optimizing, based on the goods and services available at a given time. Thus, slide rules are no longer commonly sold; it is not easy to buy horse-drawn carriages. This is why I show the economy as hollow.
Let’s talk a little about how economic growth occurs in a networked economy.
Clearly, tools and technology can be very helpful in creating economic growth. I am using the term “tools” very broadly, to include any kind of structure or device we build to aid the economy. This would even include roads.
Making tools clearly requires energy. Operating these tools very often requires energy as well, such as energy provided by diesel or electricity. With the use of tools, humans can more efficiently make goods and services. For example, if small parts need to be transported to a business, it is nearly always more efficient to transport them by truck than to deliver the parts by walking and carrying these parts in our hands. Clearly, tools such as trucks also allow us to do things that we could never do otherwise, such as deliver large and heavy parts to users.
Economists often talk about “rising worker productivity,” as if this rising productivity came about because of actions undertaken by the worker–perhaps attempting to work faster. Another possibility would seem to be taking a course on how to work more efficiently. We would expect that most of the time this rising productivity would come about as a result of the use of additional tools, or better tools. Thus, it is really the tools, and the energy that they use, that are acting to leverage worker productivity.
It is not intuitive that adding tools requires debt, unless a person stops to realize that it generally takes quite a bit of resources to make a tool (human labor, plus metal ores and energy products). Using these tools will provide a benefit over quite a long period in the future. A business making these tools has a problem: it must buy the resources to make the tools and pay the workers, before the benefit of the tools actually comes into existence. It is necessary to have debt (or a debt-like financial instrument, such as shares of stock), to bridge this gap.
This same kind of mismatch occurs, even if goods being purchased with debt are not really tools. For example, a home purchased with debt and paid for with a mortgage is not really a tool. The buyer needs to pay interest to a bank or some other intermediary, in order to finance the home over a period of years. Thus, part of the worker’s wages is going to the financial system, rather than to obtain the goods and services he really wants. Financing the home with debt is generally more convenient than paying cash, however. Because of the convenience factor, debt is generally essential for most home purchases. If a new home is being purchased, the builder who builds the home will need to buy lumber and pay workers when the house is built, rather than over the lifetime of the house. Because of this, debt is necessary so that the builder will have the funds to buy lumber and pay the workers.
Analysts coming from engineering and other “hard sciences” often miss this need for debt. Since a person can’t see or touch it, it is easy to think it isn’t needed. Interest payments are important, because they transfer goods and services made by the economy away from workers to other sectors of the economy (such as the financial system, retirees, and pension programs). Thus, they represent a different use for energy products, other than making goods for the use of workers.
Slide 11 shows how an economy produces a growing quantity of goods and services. The three types of inputs I show are
As I noted in Slide 10, it takes debt to be able to have enough funds to pay everyone who makes tools, and in fact, other goods (such as vehicles and homes) that we pay for over the life of the goods. In Figure 12, I show that at least some of those providing inputs to the process receive “Future goods and services, plus interest,” rather than goods that have already been made. In this way, the system distributes more goods and services than would be available through the barter system.
In my notes to Slide 11, I commented that I perhaps should have included a government sector, as a fourth box down the side. That comment is also true here. On Slide 12, we are distributing the benefit of goods and services created, so we probably need to add even more boxes down the side. One of them would be “Payments Under Funded Pension Programs.” Another box would represent payments to individuals who sell appreciated shares of stock and real estate, and hope to buy goods and services with the proceeds of these sales. In the government sector, we would need to be certain that the category is large enough to include goods and services distributed to retiring “Baby Boomers” under Social Security and similar unfunded retirement programs.
People who do modeling can easily lose sight of the fact that we really live in a “calendar year” world. Each year, we can extract only so much oil, coal, gas, and metal ores, and use those resources to make goods and services. These goods and services are generally available for sale the same year. It is easy to add layers and layers of promises of “future goods and services” to the system, without ever checking to see whether the resource base provides enough resources to make promised future distributions of goods and services possible.
Often, it is the owners of resources who are paid in stock or debt. Workers are paid in money (which is a form of debt), but they very often want to spend most of it on goods and services that they can use today.
We can think of debt (and balances in bank accounts) as promises for future energy, and the goods it makes possible. Of course, if that energy isn’t really available, the promise is an empty promise.
There are many kinds of debt, and reciprocal obligations. This is a chart I found recently, giving one person’s view of the amount outstanding today, including a very large amount of derivatives. All of these debts make the assumption that energy will be available in the future so that goods and services can be created to fulfill these various types of promises.
Debt becomes very important in the whole system, because the higher the debt level, the higher that wages can be. Also, with a higher debt level, commodity prices, such as oil prices, can also be higher. Because more debt seems to make almost everyone richer, governments go out of their way to encourage additional debt, and more debt-like instruments. Of course, if interest rates go up, rather than down, interest on this debt becomes a big burden for borrowers. On Slide 12, the higher interest rates transfer a larger share of goods and services away from workers to other sectors of the economy (such as pensions).
Shrinking debt levels are similar to governmental cutbacks for programs. (In fact, governmental cutbacks in programs often result from shrinking debt levels.) Then fewer workers can be hired, and fewer goods and services can be purchased. The economy tends to shrink–similar to what happened during the 2008-2009 recession.
We often hear about “Supply and Demand.” A better name for “demand” might be “amount affordable.”
I mentioned in previous slides that wages and the amount of debt increase are important in determining the amount affordable. Other items that have a bearing are Item (3) the level of the dollar relative to other currencies, and Item (4) the extent to which productivity is rising. If the dollar is high relative to other currencies, the price of oil tends to be low, because those buying goods made with oil in non-US dollar currencies find the goods expensive.
Slide 18 illustrates the very significant impact that changing interest/debt levels can have on oil prices. Although I don’t mark the point on the graph, the peak in oil prices in 2008 came when US debt levels on consumer loans and mortgages started to fall. (See Oil Supply Limits and the Continuing Financial Crisis for details.) The US began Quantitative Easing (QE) in late 2008, with the intent of lowering interest rates and making debt more available. It was not long after it began that oil prices began to rise. Once QE was discontinued in 2014, other currencies fell relative to the US dollar, and the price of oil again fell.
The situation we have now is very much like a Ponzi Scheme. We need to keep adding more debt to keep wages and commodity prices high enough. At the same time, interest rates need to stay very low, to keep payments manageable, and keep the whole system from collapsing.
The balance sheets of insurance companies, banks, and pension plans include much debt. If these institutions are to make good on their promises to those with bank accounts, insurance policies, and pension plans, it is necessary for this debt to be repaid with interest. Back many years ago, debt jubilees were often given to selected debtors. These are out of the question now, because banks, insurance companies, and pension plans depend upon the future payments that this debt represents.
We like to think that improved technology can add more and more benefit. In fact, technology seems to reach diminishing returns, just as almost any other type of investment does. We make the easy changes (smaller cars, for example) first. Later changes tend to be more incremental. Because of this pattern, we can’t count on huge future changes in technology saving us.
Most people do not realize that the laws of physics determine the way that markets work–for example, the prices at which sales take place, and whether or not there are enough suppliers of a given product in the market place. They assume that as we reach limits, markets will always work as they have in the past. This seems unlikely.
Physics is often taught in terms of what actions are expected in an “isolated” or a “closed” system. In fact, the earth receives energy from the sun. The economy also obtains energy from stored fossil fuels and from uranium. Because of these energy flows, the rules of an “open” system are more appropriate. These have only been studied in recent years. Ilya Prigogine received a Nobel Prize in 1977 for his work on dissipative structures.
What is surprising is that dissipative structures are always temporary. They grow for a time, but eventually collapse. We know that plants and animals have finite lifespans; generally new similar plants and animals replace them. It is less obvious that systems such as ecosystems and economies have finite lifetimes.
Figure 23 shows my idea of how the dissipative structure of an ecosystem might be represented. Its inputs include solar energy, water, air, minerals from the soil, and recycled waste products from plants and animals. There are no real waste products from the system, because waste products are recycled. Ecosystems tend to collapse, when very sharp fluctuations occur. For example, forest fires tend to occur when a large amount of waste wood has accumulated and weather conditions are dry. (Perhaps dry wood and leaves, if they do not degrade rapidly enough, might be considered a temporary waste output that can lead to the demise of the ecosystem through fire, when conditions are right.)
Figure 24 shows my idea of how the economy might be represented as a dissipative structure. One critical part is “other energy,” which makes the economy act much like a rocket. Another critical part of the economy is “tools and technology.” Tools and technology allow the various inputs to be used, and the economy to grow. In a way, they are parallel to the biological systems that allow plants and animals to grow in ecosystems.
With human economies, we have multiple problems that can occur:
 Quantity of resources needed for inputs falls short
 Population of humans rises disproportionately to inputs of energy and other resources
 Waste outputs of various types become a problem
Growing debt is one of the waste outputs. Since we voluntarily seek out debt, we think of debt as an input. But if we think about the situation, debt is really an adverse output. Required interest payments tend to pull funds out of the system that could otherwise be used to pay workers. Also, the rising use of debt tends to concentrate the ownership of “tools” among the already wealthy. Debt can grow for a while, but it has limits, because of the adverse impacts it creates for the economy.
Growing wage disparity occurs because of the increased specialization required by ever-rising use of tools and technology. Some people receive the benefit of advanced education and learning to use tools such as computers; others receive much less benefit. As a result, their wages lag behind. Wage disparity is another limit of the system. If a large share of the workers cannot afford to buy the output of the economy, “demand” falls too low, and commodity prices tend to fall.
Distorted prices (shown on Slide 24) have to do with the changes to prices that occur, both because of added debt, and because we are reaching limits. Prices are not the same as they would be in a pure barter economy. Added debt allows prices to be much higher. As we reach limits, prices can fall below the cost of production. Suppliers continue to produce energy products, at least for a time, until the low prices become a real problem.
There are many reasons why an economy, which acts like a rocket, cannot continue forever.
Many readers have heard of “Energy Returned on Energy Invested” (EROEI). This is a favorite metric of many energy researchers. It is calculated by dividing Energy Out of a system by required Energy Inputs. As I show on Slide 25, EROEI looks at one part of one problem that economies encounter. There are many other problems and parts of problems that EROEI doesn’t consider.
Many believe that renewables can replace “Other Energy.” One reason for this belief is the fanciful claims by some researchers. Another reason for this belief is the apparently fairly favorable EROEI calculations that seem to occur when these devices are examined. These calculations are very limited. They don’t examine the many adverse impacts of adding tools and technology, and the rapid rise in debt that would be required.
Trying to run the economy on solar electricity alone (or solar plus wind plus water) is a futile exercise. One reason is that it would require massive changes to allow long-haul trucks and airplanes to operate on electricity.
Also, electricity is a high-cost energy product. Today, our economy operates on a mix of high and low cost energy products, with low cost energy products keeping the average cost down. Trying to run the economy on electricity alone is a bit like trying to run the economy using only PhDs. In theory it could be done, but it would be expensive to have PhDs waiting on tables in restaurants and delivering mail.
Too often, researchers make models without determining the details of how the system would really need to operate and what the cost would be.
There are many different limits for any kind of system. For example, one limit for humans is having enough oxygen. Another limit for humans is having enough water. A third limit is having enough food. Any of these things are limits. The trick is trying to figure out which one is the first limit, in a particular situation.
EROEI based on fossil fuel inputs was developed when it looked like there would be a shortfall of fossil fuels. If, in fact, our problem is not being able to get the price of fossil fuels high enough, this is a different, more complex, problem.
I think of the ratio that is popularly computed as EROEI as “Fossil Fuel EROEI.” Fossil Fuel EROEI is popularly believed to be a limit, but it is not at all clear to me that it is the first limit. It is also not clear that the limit is any particular number (such as EROEI=1, or EROEI=10).
There is a different kind of EROEI that seems to me to be at least as likely, or more likely, to be the first limit that we will reach. That is the return that workers who are selling their labor simply as labor (without advanced education or supervisory responsibility) obtain. If these workers find that their wages drop too low, this will be a limit on the operation of the economy. Low wages will prevent these workers from buying houses and cars. If the wages of the large number of non-elite workers fall too low, commodity prices will tend to fall, and the system will tend to collapse because producers cannot make a profit at such a low price.
Biologists have been studying the return on the labor of animals for many years, because their populations tend to collapse, when animals are forced to expend too much labor in finding food. EROEI based on wages of non-elite workers would seem to be a closer parallel to the animal return on labor than fossil fuel EROEI.
I have laid out a few of the issues I see with EROEI of intermittent renewables on Slide 29. There are other issues as well. For example, because it is a prospective calculation, it is very easy for wishful thinking to lead to optimistic estimates of future energy production and expected lifetimes of the devices.
Energy researchers have defined “net energy” to be any energy in excess of EROEI = 1. There is a common misbelief that if the economy can continue to produce energy products with an EROEI above 1, everything should be fine. In fact, some studies commissioned by actuaries regarding whether the economy is reaching energy limits seem to be based on an assumption that producing energy products with an EROEI > 1 is sufficient to prevent energy problems in the future. This is not a high threshold. Given such an assumption, our problems with energy seem to be far, far in the future. Pensions can continue to be paid as planned.
On Slide 30, Ugo Bardi is saying that this assumption is not correct. It is not true that the system will crash when the net energy of a particular fuel (here oil) becomes negative. We cannot understand the behavior of a complex adaptive system such as the economy in terms of mere energy return considerations. Clearly, I am not the only one looking at the economy in broader terms than an EROEI ratio.
It is hard to see any good fixes. Technology reaches diminishing returns. Neither renewables nor nuclear is really working well now.
The standard forecasts seem to be based on the assumption that the economy can grow forever.
We have many problems that have been missed by recent economic modeling, including models commissioned by actuaries.
Actuaries are involved primarily with insurance companies and pension plans. My concern is that the financial system will be the center of the storm, as we hit limits this time. This will affect actuaries and their work.
Whether or not a new economic system can arise to take the place of our existing system remains to be seen. It certainly is a concern.
The History of Taxes, in One Mega-Rich Family
David Rockefeller has just passed away.
You may have already heard that news. You may have not. America’s major media outlets haven’t treated Rockefeller’s death — at age 101 — as a top-of-the-news story.
How things change. Once upon a time, any breaking news that involved a Rockefeller almost automatically qualified as news not to be missed. And for good reason.
A century ago, David Rockefeller’s granddad, John D. Rockefeller, ranked as America’s richest man. No other fortune in the United States — or the world — came even close in size to his.
Old John D. passed away in 1937 at age 97. Newspapers treated his death as a mega big deal. Front-page headlines everywhere. Editorial pages filled with reflections on his long and lucrative life.
One of those reflections came from America’s most noted 20th-century pundit, columnist Walter Lippmann. The nation, Lippmann observed, would likely never see a fortune as grand as Rockefeller’s ever again. John D. had “lived long enough to see the methods by which such a fortune can be accumulated outlawed by public opinion, forbidden by statute, and prevented by the tax laws.”
In the United States, Lippmann added, “sentiment has turned wholly against the private accumulation of so much wealth.”
John D. Rockefeller raged mightily against that public sentiment over his life’s last decades. He fiercely denounced, for instance, the drive to enact a federal income tax.
“When a man has accumulated a sum of money within the law,” old John D. intoned, “the people no longer have any right to share in the earnings resulting from the accumulation.”
The people felt otherwise. A federal income tax became the law of the land in 1913. That tax would go on to whittle down the fortune John D. later left his six grandchildren.
The most celebrated of those six, longtime New York governor Nelson Rockefeller, would end up feeling intensely embarrassed about his diminished financial status, as one Washington insider discovered in 1974.
That insider, a veteran lobbyist by the name of Tom Korologos, vetted Nelson Rockefeller to be then-President Gerald Ford’s vice president.
“I’ve got something to worry about,” Korologos remembers Nelson grimacing. The former governor, Korologos soon learned, didn’t want to publicly reveal his personal financial picture.
“His concern,” the vetter explained, “was that when it became public, he wasn’t going to be as rich as everybody thought he was.”
What had happened to the fabled Rockefeller family fortune? Taxes.
Beginning in the early 1940s and lasting into the 1960s, the federal tax rate on individual income over $200,000 annually hovered around 90 percent.
And many states also had their own progressive taxes. In New York, the state tax rate on top-bracket income stood at 15.375 percent.
Deep pockets could, of course, deduct their state taxes off their federal taxable income. But those deductions didn’t change the basic bottom line: The extravagantly rich, in mid-20th century America, were losing their capacity to be extravagant.
Nelson Rockefeller passed away in 1979, just before the Reagan Revolution began undoing the progressive tax system that had so shaved his net worth. His younger brother David, a banker, lived on to prosper in the rich-people-friendly political environment the Reagan years ushered in.
Where Nelson watched his wealth shrink, David saw his wealth soar. At his death, Forbes magazine put David’s net worth at $3.3 billion, the world’s 604th largest fortune.
What would John D. Rockefeller think about how his last grandchild’s life turned out? He might be a tad disappointed that his flesh and blood no longer ranked as the richest of the world’s rich. But he’d probably be overjoyed that in America the rich still rule.
At least for now.
Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org. His latest book is The Rich Don’t Always Win. Distributed by and republished with kind permission of OtherWords.org.
The devastating rebuttal demolishing the corporate spin and half-truths by insurance companies
"This time period where we have no cap on injuries, which we heard testimony would drive doctors away from Oregon, would shorten the supply, would devastate the medical industry, we had a 23% increase in 33 out of 36 counties and a 47% increase statewide. "
Sen. Prozanski: Thank you. Questions? Senator Manning first, then Senator Dembrow.
Sen. Manning: Thank you, Mr. Chair. Thank you for your testimony. I think that you bring up some great points in terms of the value for the insurance company. I have a couple of questions. I think that what this bill provides is more, is broader than just the medical industry.
I am hearing testimony that affects victims of sexual abuse. This is outside of the medical issues that you are focused on at this time. I'd look at this Bill in a broader sense. Injuries, say for example, if [someone] had sustained an injury that prevented him from moving forward with his lifestyle and there was a cap of $500,000, look at the value of his life right now. We don't know what those people that have been injured on the job or wherever place may have eventually turned into, what their contributions were.
This is a little bit bigger than just the industry concerning insurance. I know a lot of great physicians out there, doctors. As a matter of fact, I had a surgeon that did a wonderful job on my back. I never thought about any kind of repercussions or coming back to claim. It seems to me that there's a suggestion that, if the cap is raised, then all of a sudden there's going to be a rush to sue doctors or medical providers. I don't believe that's true.
Jim Dorigan: That has been the case and that's what the studies that our actuaries were saying. I actually lived through the 1999, when the Lakin versus Senco Products knocked out the cap in Oregon. What happened to us is that we had a 30% increase in claims against physicians. Automatically, our reserves went up by 60%, because we had reserved retroactively and this has a retroactive clause. We had to reserve retroactively for cases that were now worth more money. Premiums for physicians just about doubled. Three carriers left the state. It's a very real cause of problems for medical providers when there are no caps.
Sen. Manning: Okay, then my question is, what prompted that? Was it medical error or was it medical malfeasance? What caused that all of a sudden that you're treating patients and stuff and then they decide that they're going to file a claim against the medical profession? I don't understand that.
Jim Dorigan: What happened, actually, our statistics on cases that we'd successfully defended did not change. We still had 80% of the cases, plus, in court, we were winning, but more cases were being brought, because there was a bigger target. The plaintiffs’ bar more aggressively sought out and filed cases, because there was a bigger pot of gold at the end of the rainbow. That's what this will create.
Sen. Manning: I think that there are some opportunities here that we need to actually look at the insurance industry and what they're doing in association with this. I'm still finding this hard to believe that all of a sudden .... The doctors and medical providers that I know are very professional. I know a lot of people have great relationships with them.
Like I said, my vision of this, my broader view of this, this is just more. This is not just dealing with the medical industry. This is dealing with on-the-job harassment. It's much broader. I'll be interested in finding out if there might be some language that could be tweaked to be specific. Should it have to go to trial and that the medical provider, in your case, is found not liable, I don't understand why we would have any issues with this.
If it’s the fear that we might have something based off of some data, I don't know. I'm a researcher myself, so I know that you have to be able to replicate any type of study. I'm not sure, and I think there might be some other things, but my view of this bill is much broader than just medical industry. I think that it's worth looking into from my perspective. If there is some specific language that you feel that would be adequate to add to this, then I think that this would be a great opportunity to do so. Thank you, Mr. Chair.
Sen. Prozanski: All right. Senator Dembrow?
Sen. Dembrow: All right, thanks, Mr. Chair. For the actuary, I found the trends that you pointed out very interesting, but I'm wondering, that was based on data that has been collected over a period of time, do we have access to the raw numbers that underlie those studies? Could that be provided to the Committee?
Susan Forray: The publicly-available data that I referred to comes from the National Practitioner Data Bank. That would be, of course, available to anyone.
Sen. Dembrow: Could you steer us towards that?
Susan Forray: Sure, I can definitely direct that towards you. The data that was relied upon specific to Oregon provided by the coverage providers in Oregon, that would of course be proprietary to those providers, but certainly if you have questions on the analysis in particular, I'm happy to talk about that in more detail.
Sen. Dembrow: Okay. With respect to the increase in the claim amounts as the cap was lifted, couldn’t we look at that as what's happened is, for a period of time, those caps were artificially being restrained? Then, when the cap was raised, it went up to its normal level, based on the needs of the people bringing the action.
Jim Dorigan: The reality is the needs of the people bringing the action are limited. Their recovery is limited by the insurance policies available. In the majority of physicians in Oregon, 50% carry a $1 million policy limit. The balance of the 50% carry limits of $2, $3 or $5 million. The reality is that the value of these suits and the amount plead in the suits exceeds available policy limits and assets for the physician.
These high demands in these cases serve more as a motivation or a reason to settle cases. Senator Manning, you mentioned about the insurance companies behind these, the company I work for is owned by our policy holders, so we're a reciprocal, which is similar to a mutual. Two out of the three companies in the state are companies that healthcare providers have set up to make sure that they have access to this critical insurance product. That's my motivation or my bias, is the physicians.
Sen. Dembrow: All right, thanks, Mr. Chair. We heard one of the previous individuals giving testimony that she felt that her pain and suffering that she's undergone since some very traumatic experiences that she had were worth more than $500,000, that she's been experiencing pain and suffering and debilitating effects on her life. Presumably, a jury might agree with her on that, right?
Jim Dorigan: But not impacted, again, by this case, I believe. If that happened, her damages and case were filed when there was no cap on damages. We could actually see what was the result of her case, but-
Sen. Dembrow: Okay, but let's imagine that the Oregonians today-
Jim Dorigan: If it was covered under the Oregon Tort Claims Act, it would be limited by things we're not talking about here.
Sen. Dembrow: Yeah, but let's imagine that that were to happen now. Are you asserting that her pain and suffering isn't worth a million dollars? That she has an experience, that much level of pain, and suffering, and debilitation in her life?
Jim Dorigan: I have difficulty evaluating what her damages are. I would say, from a public policy standpoint, if you look at the costs of unlimited damage across the board and the damage that it can have to access to healthcare, I think it's a public policy issue. It's reasonable to limit damage amounts.
Sen. Dembrow: I think, and just finally, we're coming to understand the broad ramifications of trauma that individuals like that are experiencing. It seems to me that we, as a society, need to recognize that and not be putting artificial barriers in place that make it even harder for people to cope with that trauma. That's just an editorial comment.
Jim Dorigan: We've talked about the victims of drunk drivers. The reality is that their compensation would not be changed, because you look at the insurance limits that are out there. If you look at any of your policies, I'm sure that none of you have liability limits that exceed a million dollars and even lower limits for those less responsible people in the community.
Although the damages may be there, where the real lottery is, is if you're injured by somebody that has the assets or the high enough limits that you can potentially recover.
Sen. Prozanski: All right. I have just a couple questions, but clarification. I just want to make sure. Jim, I just want to go over. At the beginning in your testimony, you talked about 19 states. I think you said "western states"?
Jim Dorigan: Yes.
Sen. Prozanski: Could you just give us, not right this moment, if you could provide to us those 19 states so we can see that? I'm assuming-
Jim Dorigan: As part of my testimony, I put charts that have a chart for both bodily injury and wrongful death by state. You can look at those.
Sen. Prozanski: All right. Do you have it for beyond the 19 states or just the 19?
Jim Dorigan: I do. I could put that together, but we tried to look more at the West Coast.
Sen. Prozanski: I understand that. That's the part I guess I'm kind of scratching my head, because you also then used an example about what happened in Florida. Knowing that's not on the West Coast, I was just interested that all of sudden now we're looking at the East Coast.
Jim Dorigan: The only reason I put Florida in, Senator, is that we are the largest insurer of physicians in Florida. I have the available data when the cap was knocked down. I got that from my counterpart that operates in Florida.
Sen. Prozanski: Okay, but that would be great if we can have all the states. The last thing, I guess, is just kind of a statement. This part of where you said, "A pot of gold at the end of the rainbow," insinuating that ... I guess I'm not sure exactly what you mean, but my take on that is that someone was injured somehow, somewhere, whether it was medical, whether it was non-medical. I guess it seemed like, in the context that I heard you saying it, that this was only coming forward because of the plaintiffs’ bar. Is that where we're at as to your perspective on this?
Jim Dorigan: From my perspective is that when there is a larger chance for recovery and a potential for unlimited damages, there will be more cases. Those cases will be more difficult to resolve because of the potential for unlimited recovery.
Sen. Prozanski: The analysis, then, is the lower the cap is, the less chance that someone's going to be seeking some type of, I don't want to say restitution, relief from injuries that they received, whether it's in the medical area or a non-medical event?
Jim Dorigan: I would say that if we all evaluate cases that are brought against physicians, cases where it's within the standard of care, but the injury is severe, in other words a sick person becomes more sick, I think that there is an added motivation to pursue litigation in that case and with a potential recovery. Whereas, if the recoveries are limited, we may not see that particular case filed.
Sen. Prozanski: Okay. Is it your understanding that, whatever we do with this Bill or any future Bill regarding wrongful death, that the Senate Bill 483 that we did pass is not going to be impacted, that we'll still have that framework to allow for those open, frank discussions to try to reach resolutions without having litigation?
Jim Dorigan: I think we're all actively pursuing the Early Discussion and Resolution. We've invested quite a bit to educate our healthcare providers across the state on how to institute those discussions.
Sen. Prozanski: All right. I'm going to ask counsel if maybe we can put a note for it. I'd like to, at some point, have a review about where we're at, because I don't think we had that scheduled for this session. It seems to me that it'd be appropriate, because I had a lot of hope. I've heard a lot of support, but now I'm wondering if it's actually being utilized. Senator Linthicum?
Sen. Linthicum: Thank you, Mr. Chair. In terms of following-up with the Chair, what he was asking about, you made a statement with regard to eliminating a cap and doubling one cap and eliminating the others would directly impact supply, and with regard to supply, supply in rural areas in particular, as those are hardest hit.
Then, the other item that was somewhat alluded to, and I'm not sure if you mentioned it, was negatively impact supply of physicians in medical services and positively impact a need for litigation, et cetera. Is that a correct assessment? That actually may have come from one of the other respondents. If you'd care to respond?
Kevin Reavis: In terms of supply, yes. In terms of if Oregon is not an attractive place to raise a family and provide care in the community because of the defensive nature based on malpractice premiums, physicians will seek to practice in another state that's more friendly. That's basically the entirety on the supply side and obviously then it directly impacts access.
Jim Dorigan: One of the access issues we saw in 1999 going into the early 2000s is that neurosurgeons discontinued doing pediatric care. We were at one point in the state when there were two neurosurgeons that would do pediatric care and there was a lot of life flights up to OHSU.
Sen. Linthicum: Just a follow-on, for the record, I'd like to note that the Deputy Political Director of Oregon Trial Lawyers Association submitted several items that are in the testimony list. In terms of that demand and supply issue, we see that showing up in who's testifying this morning.
Sen. Prozanski: I understand there was no one else that signed up, so the last individuals I have is Melissa Erlbaum, Kimberly McCullough. I'm going to have those two come up. Then, I have Betsy Earls and Arthur Towers.
Melissa Erlbaum: Okay. My name is Melissa Erlbaum and I am the Executive Director for Clackamas Women's Services. I've submitted written testimony, so in the interest of time, I'll just recap real quickly what we do as an organization and then read the important component of the testimony.
We've been in service for over 30 years serving survivors of domestic violence, sexual assault, elder abuse, and trafficking in Clackamas County throughout the state of Oregon. That is why I am interested in being here in support of this Senate Bill 487.
We know that service requests are growing and the need is great for survivors, especially as we begin to understand the complexity of trauma. We are a proud member of the Restore Justice for Survivors Coalition, because we see firsthand how imperative it is for the women and children that we serve, as well as for those who suffer silently, to know that they have support and their abusers will be held accountable for their actions through the criminal and civil justice systems.
It is empowering for victims to know that a jury of 12 Oregonians just like them will hear the facts of the case and determine an outcome impartially. Sadly, we often see cases where responsible actions by businesses, institutions, organizations could have been taken to prevent the violent acts against our clients. Such responses negatively impact and effectively create additional barriers to the pursuit of safety and justice for these folks.
Consequently, when groups turn a blind eye, refuse to act, or fail to implement policies to protect us, they should be held accountable. The tragic story of Betty demonstrates this. Betty was a 73-year-old, when she was transported by ambulance to a hospital for heart surgery. While in the back of the ambulance, she was sexually assaulted by the EMT who was serving her.
This wasn't the first incident. There had been 35 complaints to the company about this employee. Instead of pulling from services and investigating, the company continued to allow him to be alone with female patients. The assaulter was later sentenced to five years in prison and the company was found negligent for doing nothing to protect the other female patients.
As a result of this case and the five cases of his other victims, the emergency response company made changes to the ambulance design. There is no longer a wall between the driver and the EMT patient area, enabling the driver to have an unobstructed view of the back of the ambulance.
For us, this is a very clear example of positive policy change coming from holding institutions accountable and demanding better and safer systems. As this story and countless others attest, survivors deserve justice. We can no longer afford to sit idly by and allow abuses to take place without accountability. I hope you will join our desire to restore justice by supporting Senate Bill 487. Thank you.
Sen. Prozanski: Thank you. Kimberly?
Kimberly McCullough.: Chair Prozanski, members of the Committee, my name is Kimberly McCullough. I'm here from the ACLU of Oregon. I'm here to provide a slightly different frame for this issue, which is that this is really a basic civil rights and civil liberties issue. The right to a jury trial is something that was crucially important to both our nation and our states' founders, as we find it both in the Federal Constitution and in the Oregon Constitution.
In fact, when Oregon voters fought to have citizen initiatives in the early 1900s, one of those first initiatives was to strengthen the power of juries and that passed overwhelmingly. If an Oregonian has a traumatic life-changing event, they have a constitutional right to hold the negligent party accountable for those actions. When we put one-size-fits-all caps, that really undermines the judicial branch as a pillar of our democracy.
You, as legislators, have a opportunity right now, I think, to really restore the rights of the wrongs in the Court's recent Horton decision, which, essentially, what it did is it said that Oregonians have a right to a jury trial, but not to the decision that the jury makes, which really just makes it procedural and not meaningful.
It really makes little sense that we entrust juries with decisions about criminal justice matters and convict people and imprison them based on what a jury decides and yet we don’t entrust juries with those same types of decisions about the impact of lifelong injuries.
Just to summarize, one-size-fits-all justice, really, it goes against our basic civil rights and liberties. It allows an across the board cap to be placed on the value of someone's life and the dramatic changes that folks go through because of someone else's negligence. For those reasons, we urge your support of this bill.
Sen. Prozanski: Thank you. Any questions? Ladies, thank you very much. Our last two speakers/ presenters will be Betsy Earls and Arthur Towers. I think, for balance, Betsy, I'm going to ask you to go first.
Betsy Earls: Thank you, Mr. Chair, members of the Committee. For the record, Betsy Earls, representing Associated Oregon Industries and Oregon Business Association. As I think we've discussed in this Committee before, AOI and OBA are in the process of merging, so our policy positions are the same for all intents and purposes.
AOI and OBA are appearing before you today in opposition to Senate Bill 487. It's our position that Senate Bill 487 goes too far at a time when cost and access issues continue to increase for healthcare and when stability in the healthcare system is so uncertain.
That's an important point, but I wanted to, as the first speaker tried to do or did do, put a little bit of a different frame on this bill for you from the standpoint of the business community. Oregon has long balanced the needs of plaintiffs for a full and fair recovery in Oregon against the needs of the business community for predictability.
I think you see that attempt at balance in the economic damages awards that are allowed in Oregon, which are unlimited. That includes, as you know, past and future medical costs, lost wages, potential lifetime earnings, any other conceivable lost, almost. Those are all fully recoverable and we think that that's a fair approach to Oregon's liability system.
That's balanced against the needs of the business community for some predictability through limiting or capping non-economic damages, pain and suffering damages. For a while, after Lakin, obviously those were uncapped, and the Horton decision has put a cap on those again. We support that cap and feel that it is a important step to reinforcing the predictability of what organizations or Oregon corporations can expect in terms of Oregon's liability system.
As you've heard before just this morning, a majority of western states do cap their non-economic damages at $500,000 or below, so this state is in good company if we continue to remain at the cap that Horton placed on us. I think the last thing I want to point out to you is, and it's of particular concern to the business community and goes directly to the issue of predictability, is the retroactive nature of this bill.
The bill applies increased damages cap retroactively to causes of action that arose before the effective date of the bill. This is really problematic for the business community, not only in terms of litigation decisions that were made before the Bill passed, if it does pass, but also in terms of settlement decisions and other calculations that are made in the course of going through litigation and those conversations with the plaintiffs. Again, we support the balance that Oregon currently has struck between the needs of plaintiffs and the business community for predictability, while also fully recovering damages. We urge you to oppose Senate Bill 487.
Sen. Prozanski: Thank you. Arthur?
Arthur Towers: Chair Prozanski, members of the Committee, I am extremely proud to be the Political Director for Oregon Trial Lawyers Association. My name's Arthur Towers. I wanted to address a number of the issues that have been raised today. I think I only have two new ones to raise.
First of all, in May of 2000, voters spoke loudly and clearly on this issue. The issue before you today in terms of whether or not there should be caps on compensation for injuries was put to voters. Voters, by about a 70 to 30 margin, it was victorious in every county, said, "No, injuries should not be capped." The people that you've heard from today should not have their compensation capped.
A second thing that was raised had to do with punitive damages that Mr. Dorigan spoke about. It's important to remember about punitive damages that 70% of the punitive damages go to the state in one form or another, but the victim is taxed on the full hundred percent, so the remaining 30% will often go in the form of taxes. When it comes to the punitive damages, the survivor of the negligence often receives $0 out of the punitive damages.
Now, I want to go to unpacking some of the information that was provided. I felt bad for the opponents of this who didn't seem to be able to have the opportunity to advance to coordinate their testimony, so I wanted to pass out some information here.
Mr. Dorigan provided some new information today, or at least new for me, where he said that there's 79 physicians that are currently in litigation and there's an additional, I guess, 79 injury cases, as I understood it, 10 death cases. Those are two to three years worth of cases. If that's been an increase of 30%, because the caps were not in effect, that means that it went from about 60 to 79 on the injury cases and about seven to 10 on the wrongful death cases.
As you understand, what we're talking about with the injury cases is going back to the system that's been in place for the last 17 years. Those cases will be treated just the same as they would be in April of 2016, just before the May 5th Court decision.
In the wrongful death cases, again, if we're talking about these 10 wrongful death cases being $500,000 a piece, if that's what the verdict is going to be, stick with me here for a second, the current cap is $500,000, so 10 outstanding cases, which again the other witness from Milliman testified as two to three years worth, 10 cases would be $5 million, 10 times $500,000.
Now, we talking about 10 cases times one million, which is a astronomical jump from $5 million to $9 million. Given this enormity of the healthcare industry, it makes a huge difference in the lives of those grieving families. Five million to nine million in the healthcare industry? That's a rounding error.
For the last 17 years -- Senate Bill 487 would go back to that system that's been in place from 1999, until 2016 in injury cases. We have the ability to look at what happened to physicians, the supply of physicians that Senator Linthicum was concerned about, over those 17 years.
The information that we put forth is from the Oregon Medical Board, so the state studied this issue and came up with the statistics. You can see on the front page of my testimony that, in 2000, just after the cap went into place, we had 7,848 licensed doctors in Oregon. In 2015, we had 12,447 licensed doctors in Oregon, an increase of 47%, while the population was rising by 18%.
Now, I am sensitive to the issue of availability of doctors in rural Oregon. If you look at that bottom paragraph of the first page, the statistics from the Oregon Medical Board from 2004, forward, which is what we can put our hands on, the number of doctors in 33 of the 36 counties increased by more than 23% over that time period, 2004 to 2015.
This time period where we have no cap on injuries, which we heard testimony would drive doctors away from Oregon, would shorten the supply, would devastate the medical industry, we had a 23% increase in 33 out of 36 counties and a 47% increase statewide. Coos County only had a 16% increase, but Lake County and Sherman County lost. I don't want to minimize that, but there's those two counties.
The one place where we weren't able to directly rebut the numbers was around OB/GYNs in rural Oregon. Again, I don't want to minimize that either, but if you looked at the demographics of Oregon, the Portland metropolitan area has become a magnet for young people, women of child-bearing age, in a way that Sherman County and Lake County and some of these other counties have not been.
That's unfortunate, but again, if you're considering where to set up medical practice, especially for that population, you got to go to where the business is, I would argue. That would make more business sense from the physician's perspective.
The other point that was raised that I wanted to address was around Chair Prozanski's questions regarding the Early Dispute Resolution Program. Remember that that program was put into place when there were no caps on injuries. It should not be severely impacted or impacted at all by going back to the system that was in place when the EDR program was established.
The next point that I'd like to make is that we talked about pots of gold at the end of the rainbow and we talked about winning the lottery. I would submit to you that many of the witnesses that you heard from in support of this bill don't feel like they're at the end of the rainbow. They don't feel like they won the lottery. I found that language disserving.
I also want to talk about the malpractice issue for just a minute. According to a New England Journal of Medicine study in 2016, one-third of all medical malpractice cases are linked to 1% of the physicians. I would submit that there's a better way to solve that problem, that's on page two of the testimony, than limiting the rights of people who survived serious medical errors.
It was testified that all the medical bills are covered by economic damages. I want to set the record straight on that issue as well. The medical bills that are covered in the economic damages are those that can be proven at the time of the jury decision. What that means is that there's a certain percentage.
A large number of paraplegics get bladder infections and you can predict the number of bladder infections over the course of a life, however, the unlucky one or two out of a hundred will get sepsis. We've had people that our members have fought for who've had sepsis, where they ended up in the emergency room at OHSU in intensive care I guess for several months because of the infection caused by the injury. It couldn’t be proven at the time of the trial, but the medical bill was there nonetheless. The non-economic compensation covered some of that cost. I have a hard time explaining that issue, hopefully I did it in a clear fashion.
Ms. Earls, among others, testified about what they term "retroactivity." What they're proposing is that there would be one set of rules for cases that happened before May 5th of 2016, when the Supreme Court issued its ruling, a second set of rules for cases between May 5th and the effective date of the Bill, and then a third set of rules after the effective date of the Bill.
For the number of cases that we're talking about here, it feels like that would be a difficult set of circumstances to have three sets of rules for open cases. I want to close my remarks by bringing this back to the sort of thing that we ought to be thinking about.
This week and the last week, Victor Pierce had a case that he was involved in deciding. Mr. Pierce has spent 22 years working on the assembly line at DaimlerChrysler. His goal was to work there for about 30 years and then retire. He put in 22 years and over the last years of his career there, he started to be subjected to unspeakable acts of harassment on the job. There was racist graffiti, there were racist comments. There were nooses hung in his work place. There were nooses tied to the back of pickup trucks to indicate to Mr. Pierce, as an African-American, that that's what they wanted to do.
Daimler told him at different points, “You're imagining some of this stuff,” or if it wasn’t imagination, they’d catch people and not properly punish them. It turned out there were more than a dozen workers impacted by this. There’s this systematic pattern of racial harassment that is utterly disgusting in 2017 in Oregon, 2017 in America.
Mr. Pierce had the courage to take his case to trial, wasn’t sure if he would be able to get a fair trial as an African-American man, but told his story to the jury. They heard the Daimler side of the story and they heard his side of the story. They rendered a decision that these acts were despicable and that Mr. Pierce was due $750,000 in compensation.
Unless Senate Bill 487 passes, Mr. Pierce is likely to see his compensation reduced by more than 30%. I'm really, really privileged to be part of the 25 or so member coalition to restore justice for survivors, really proud to be fighting for the people that you've heard from today, really proud to be part of that team. I hope that you join me by voting yes on Senate Bill 487. Thank you.
Sen. Prozanski: All right, questions for anyone on the panel? Senator Thatcher first.
Sen. Thatcher: Art, you were talking about economic damages not necessarily being properly reimbursed because you only get what you can prove at the time, I guess based on probabilities of certain things, outcomes. Is there any way to quantify how much? Okay, so a person receives economic damages that are provable, but then later, a bunch of other economic damages essentially occur. I'm just wondering if there's a range of what that difference is between what's received and what is actual?
Arthur Towers: Chair Prozanski, Vice Chair Thatcher, I'm not positive the answer to your question. I bet if I looked at my phone, I'd have 40 texts telling me what the answer is. I think that the point that I would make is that it would go to Ms. Earls' testimony. I think that the business community seeking the predictability would be very upset about having to go back and do over as new ... Oh, I'm sorry. Is that not ...
Sen. Thatcher: I'm not asking for later coming back, I'm just wondering how much, if there's some sort of estimate out there that most people, when they receive economic damages, actually receive 20% less than what actually happened? I just don't know. I don't know if there's any information like that out there.
Arthur Towers: Senator Prozanski, Chair Thatcher, I'm sorry I misunderstood your question. Yeah, I do not know the answer to that, but I will see if I can find out.
Sen. Prozanski: Any other questions? Senator Dembrow.
Sen. Dembrow: Thanks, Mr. Chair. Betsy, you haven't seen the packet that Arthur provided us with, but he offers a set of charts that compare Oregon's average premium rates in a number of disciplines, as opposed to states that don't have caps, such as ours. It suggests that Oregon is not out of line in any way in terms of our premium amounts relative to states that don't have caps or at least caps at our level.
I'm wondering, do you have a sense, just from the business association perspective? Do we have higher than average caps? Is that what is the sense of the industry? I assume that those comparisons were done before the Horton decision. Just wondering. I know you haven't seen this, but if you could just let me know what the sense within the industry is of, is Oregon an outlier in terms of our premium amounts?
Betsy Earls: Maybe we could let you know.
Sen. Prozanski: All right. The only thing I was going to ask, Betsy, in your testimony, you did make the statement, "Senate Bill 487 goes too far." Can you just explain what you mean by that, in the sense that there's an alternative that the business community would like to put on the table, or just status quo is what we should stay with?
Betsy Earls: Mr. Chair, thank you for the question. I really do believe and AOI believes that the balance that the legislature has struck and that the Court recently upheld is an appropriate balance to cover the needs of victims, as well as the business community, and provide a stable business climate looking forward for businesses that are thinking about coming to Oregon. It's one of the things they look at, liability costs and potential liability and the liability system. We would like to be able to continue to put that balance out there as one reasonably attractive piece of the state business climate picture.
Sen. Prozanski: Yeah, okay. I just want to make sure, if you had an alternative, I was going to say maybe we should have a little work group. All right.
Arthur Towers: Chair Prozanski, I don't mean to take up more of the Committee's time, but I will, just to say that the business communities, for the last 17 years, had periods of great growth, periods of decline based on the national economy and a variety of other factors. I would say that the 17 years, which almost coincides with the 17 years I've lived in Oregon, that the economy here has mushroomed. Thank you very much.
Sen. Prozanski: All right. With that, I want to thank everyone that came forward today and gave us their testimony.
Recent Oregon Supreme Court guts jury system, puts corporate profits over people
Sen. Prozanski: Good morning, everyone. We'll go ahead and get started. I'll call to order the Senate Committee on Judiciary. Thanks for everyone that's here. Today, we're going to do a very quick work session for a possible introduction of Committee bill measures and also we will be doing our public hearing on Senate Bill 487. With that, I'm going to go ahead and open up the work session for possible introduction of Committee measures. Senator Linthicum?
Sen. Prozanski: We'll close the work session and we're now going to go ahead and start with our public hearing on Senate Bill 487. First, let's get the summary, and then I'm going to be bringing up Representative Lininger and then I think we are going to the panels after that. Ann, if you'd want to come on up?
Rep. Lininger: Chair Prozanski, members of the Committee, today you have Senate Bill 487 before you. This increases the cap on wrongful death damage awards from 500,000 to a million dollars and it removes the statutory cap on other causes of action. It sets the annual adjustment to the wrongful death cap on changes to the consumer price index, declares emergency, effective on passage.
Sen. Prozanski: All right, thank you. Representative Lininger, thank you for being here.
Rep. Lininger: Thank you, Chair Prozanski, and members of the Committee. I'm Ann Lininger. I'm the State Representative for House District 38, in southwest Portland. I'm proud to be here today in support of Senate Bill 487. This morning, as I was getting up, I was reading the newspaper and I saw an article in The Washington Post about an employer that has hundreds of women employees who have come forward with assertions of sexual assault, sexual harassment, and essentially a culture of sexual predation at the employment place. It's all around the country, this employer.
It really made me think. We have some significant problems of sexual abuse, other kinds of abuse of vulnerable people. For those of us who have experienced sexual assault or sexual harassment, it's a profound harm that has effects that go on long after any physical effects have happened. That's true also for people who have suffered child sexual abuse, elder abuse, catastrophic injury of other types.
This bill, Senate Bill 487, brings forward some important tools to help deal with it. You're going to hear from some other witnesses today who can speak powerfully and on a personal level to the kinds of harms that this bill will help people find justice in response to.
I'm going to tell you first a couple things about the bill and turn it over to other witnesses and other experts. The bill does three things. It restores the ability of a jury to award – in response to abuse, catastrophic injury claims – an amount of non-economic damages that the jury thinks is appropriate.
In a Oregon Supreme Court decision in May of 2016, a decision was made to impose an artificial $500,000 cap on the ability of surviving plaintiffs, injured people, to obtain non-economic damages. The bill would walk that back to the position of law that existed for 17 years prior to that time, that worked well, in which a jury could award an amount of damages that it deemed appropriate for people who had suffered catastrophic injury.
The bill does a second thing. It raises to $1 million the non-economic damages that are available to a family in the event of wrongful death.
These are the surviving family members when someone has wrongfully died at the fault of someone else. Last year, there was a bill that would have raised that level to $1.5 million. I actually opposed that bill, and I'm here today in support of this bill, which has the provision that would raise it to one million.
In the last iteration, we heard a lot of feedback from people who said, "Gosh, if it were only $1 million, that would be an appropriate level that would impose an appropriate amount of pressure on wrongdoers, but $1.5 million is too high." Here we are today, the proponents adjusted their request from $1.5 to $1 million.
In fact, if you paid for inflation the level that it's currently at, a $500,000 cap for non-economic damages in wrongful death, if you had paid that for inflation, the amount today would actually be above one million, modestly. In my view, a $1 million cap at this point is absolutely appropriate and reflects the kind of negotiation and compromise that is the hallmark of the legislative process.
Finally, this bill would establish the same rules going forward for all open cases. With that, I want to reiterate that I think it addresses the profound need to put pressure on wrongdoers to compensate surviving victims of harm and to compensate the families of people who have passed away because of wrongdoers' harm. I think it reflects some good back and forth between proponents and opponents. I look forward to your opportunity to consider and discuss this bill. Thank you.
Sen. Prozanski: Thank you. Any questions for the Representative? Ann, thank you very much for being here. The Chair's prerogative, what I'm going to do is there's a number of people who want to give testimony today. I'm going to call people up in panels. I'm going to break it up, because we have a number of individuals that are in the proponent side.
What I'm going to do is I'll bring up two panels separately, the proponents. Then, the opponents, I want to bring them in so we can have a mix, and then we'll pick up some more that are listed at this point as proponents. With that in mind, let me go ahead and call up the first panel, will be Bob Joondeph, Sherry Stock, and Max Woodbury. If you would please come forward. We need to probably help Max with the chair. Bob, are you going to start off?
Bob Joondeph: I'll start off this morning.
Sen. Prozanski: Okay.
Bob Joondeph: Thank you. Senator Prozanski, members of the Committee, my name is Bob Joondeph. I'm the Executive Director of Disability Rights Oregon. I'm here this morning to speak in favor of Senate Bill 487. Our support comes from our experience. I've worked at Disability Rights Oregon for over 30 years now. During that time, we've served thousands of people who have disabilities. Those disabilities can arise at birth or as the result of disease or injury or natural progressive types of genetic disorders over time.
One of the things that almost invariably occurs when a disability arises within a family is an enormous amount of stress and an enormous amount of a change of life. What we say is that everyone has an opportunity to become a member of the disability community through an injury or a disease or some other occurrence.
When that happens, it not only affects the individual, but it affects their entire family. We have seen countless instances in which families are broken, parents divorce with the added burdens of a child or a spouse become too great for that family to sustain itself. We see countless instances of depression, anxiety that come with the added burdens that might be associated with the disability.
I'm here to say that people with disabilities can lead very productive lives in which they are able to achieve just the same things that we all do, but the challenges of having mobility impairment or having a sensory impairment or a brain injury or a developed mental disability, particularly a severe mental illness, are difficult to handle. They're real. They have a real effect upon people.
When that injury or disability occurs as a result of the wrongdoing of another person, these are true, tangible injuries, profound injuries, that are oftentimes not compensated through direct damages in a legal case. That is why we are here to support Senate Bill 487, to give people the chance, really, to be more successful in their lives and to overcome the difficulties that they encounter. Thank you.
Sen. Prozanski: Thank you. Who'd like to go next?
Sherry Stock: I will. Hi, Senator Prozanski, and members of the Judiciary Committee. My name is Sherry Stock. I am the Executive Director of the Brain Injury Alliance of Oregon. I've been there for 16 years. I'm also the parent of a child that was severely injured by a drunk driver, geez, 50 years ago, so that'll give you my age. He's at about an 18-month-old level. The drunk driver had no insurance, so there was no recourse. What we did is we sued the insurance company for covering him, even though he had, I think it was only $15,000 at the time, that didn't even do a thing for Mark.
I'm here obviously in support of Senate Bill 487 and to talk to you about traumatic brain injury and what the effects can be. Most of the people that I deal with after a brain injury, there are some kids, but most of them are adults that may be in an automobile accident, maybe an assault, maybe a work injury.
When you have a brain injury, that might not affect your intelligence, but it might affect how you interact and work and the abilities that you have. It might look that you're fine, but you might never be able to return to work. One of our survivors is an attorney that was a passenger in a car rollover accident. Actually, they hit a pothole and they went flying. This was a few years ago. She's never been able to return to work. She struggles to keep a home now and keep things going. The max that she got at the time was $30,000 and that's all there was.
There was another man, some of you might know, Max Conrad, but Max was playing football, walked out on the field, sustained a concussion. He stayed home, severe headaches, nausea. There was a football game the next Friday. The coach made him come in, sent him back to play, and told him to, "Suck it up, take it for the team."
He was knocked out again, this time for seven months in a coma. His dad actually does documentaries for HBO, so kind of had the incredible future before him and he's now at about a second grade level. Because there was a $200,000 cap, he's living on actually Oregon Health Plan and welfare.
There's a lot of different things. Brain injury affects more than 1.3 million people, but more than that, over 80% of all returning veterans have a brain injury. Almost 87% of everyone in prison has a brain injury. The homeless is about the same amount, about 87% of homeless are people with a brain injury. It's a very serious issue. It's important, when something happens to someone, that you have the resources there and that they're covered. Once again, we're in support of Senate Bill 487. Thank you.
Sen. Prozanski: Thank you very much. Max?
Max Woodbury: Hi, Chair Prozanski, Committee. My name is Max Woodbury. I'm here to support the bill as well, to restore justice for injured Oregonians. 20 years ago, I was working at a Superfund cleanup site as a fuel geologist. I was working above an underground walkway about a dozen feet above ground and working on a work platform.
I wasn't presented with any sufficient fall protection. There could have been a railing, there could have been some sort of harnessing device, but there wasn't. I fell on August 12th, 1996, straight onto my head. It was only a dozen feet, but fortunately enough for me, I had my hardhat on. The force of my fall straight onto my head went straight to my neck and fractured cervical [vertebrae], the third through the seventh.
I am considered a C6 quadriplegic. A lot of people see me in a manual wheelchair and assume that I'm a paraplegic. That is not the case. I don't have full function of my fingers, my triceps. I don't have function below my shoulders. A lot of people see me in a wheelchair and assume that, "Wow, he can’t walk." While that is the case, that is relatively the easy part of being a quadriplegic.
Every morning, I have to do a morning routine, which can take me up to three to four hours. I can't go to the restroom by myself independently, like everyone else just normally. Because of that work environment and that negligence, I have to deal with this every day.
Another thing that a lot of people don't think about when you think about someone who's a quadriplegic or a paraplegic or paralyzed is reproductive function or sexual function. Those are things that were taken away from me. After 20 years, I've had the fortune to at least find a woman that I love and have kids. I feel lucky for that. There's a lot of paralyzed people that are not so fortunate.
The dream of going out in this beautiful Oregon wilderness and going on a hike with my kids doesn't happen. I can go on a nature walk, but I can't spend more than a few minutes out on a accessible trail. There's a lot of things like that. Just being able to do the diapers of my children is something that I can't help with as a father. I'm here to say that having just a $500,000 cap for just any sort of injury doesn't really encapsulate the experiences of all of us. I'm here to support that and restore justice for injured Oregonians. Thank you.
Sen. Prozanski: Thank you very much for your testimony, Max. Any question for anyone on the panel? Thank you all very much for coming forward, and telling your story, Max. Our next panel's going to include, I believe it's John Anderson, Brenda Tracy, and Klarissa Oh.
John Anderson: I'll start off this morning. Chair Prozanski and members of the Committee, my name is John Anderson. I'm representing sexual abuse victims. I'm here today to urge the support of this Bill that holds organizations that choose to turn a blind eye to sex abuse predators, to sweep it under the rug and move the problem somewhere else, accountable.
When I was a young 14-year-old Boy Scout in Portland, until I was almost 16-years-old, I was sexually abused by my scoutmaster. Once the abuse was found out, I thought everything would be taken care of, but that was far from the truth. Nothing was ever done.
I believed for 40 years that, somehow, it was my fault. Even to this day, I'm still struggling to tell myself that I have done enough to make up for my own perceived fault. It was not my fault at all. I was a child, not the 55-year-old man that sits in front of you, but a 14, 15-year-old child, like your own kids, grandkids, or children you see in middle school. It was the scoutmaster's fault. He was the adult and purposely chose to have sex with a child.
Then, for years, I thought the Boy Scouts would never let something like this happen. They are considered a moral institution, protecting and teaching children. Upon a chance meeting with a friend that I had from the same troop, I found out that he was also abused. I had thought it was just me that had been abused in this troop.
In talking with him, I come to find out that the Boy Scouts had known that this scoutmaster was a pedophile and he had already abused kids in another troop down in California. Once they found out about the abuse in California, they moved him up here to Portland. In the same troop that I was, he abused around 15 or more boys, including, at the time, my 12-year-old brother, who had hid it from everyone, until I came forward, only about eight years ago.
The Boy Scouts, just like the Catholic Church, knew the sex abuse of children was going on. They allowed so many childrens’ lives to be forever changed and turned upside down. They had perversion files on these pedophiles and simply moved them from state to state or club to club. One of these files was only created years after my abuse, when the same scoutmaster tried to start another troop in Portland.
It is only because of cases like mine and those of so many other men who bravely stood up do institutions make change. The fact that sex abuse is morally wrong didn't facilitate any changes in the organizations, not until there were financial consequences or they were forced by the courts did the organizations make needed changes to protect the children. I urge you to restore power to our juries and to hold these institutions accountable. Thank you.
Sen. Prozanski: Thank you. Ladies, who would like to go next?
Klarissa Oh: Chair Prozanski, Vice Chair Thatcher, and members of the Committee, my name is Klarissa Oh. I am one of the founders of Oregon Abuse Survivors In Service, OAASIS. I am currently serving as their education director. I am here today in strong support of SB 487.
I am honored to join the panel of supporters of this bill, especially the courageous, graceful survivors, who are sharing their experiences of abuse and strength. Thank you for shining light on this abuse, which so often flourishes in the shadows. Thank you for listening and considering this important legislation.
OAASIS is building a movement that empowers communities to prevent child sexual abuse and to help survivors live full, healthy, even joyful lives. We are working towards a future where all people experience a loving childhood free of abuse and trauma and all people who have been sexually abused are supported to heal.
SB 487 is important to us, because it insures that people who are sexually abused as children can finally hold the people who abuse them accountable, as well as the negligent institutions that knowingly looked the other way and allowed offenders access to vulnerable children.
We just heard John Anderson's moving testimony. John shared about the abuse he experienced by a Boy Scout troop leader and the negligent, dangerous response from the Boy Scouts. As he said, John's abuser had been a known problem in the San Francisco area, but instead of being held accountable, the Boy Scouts transferred him to Portland, where he abused more than 10 other boys in the mid-1970s.
By turning a blind eye, the scouts allowed this troop leader and other known abusers to continue to work unsupervised with children, allowing offenders to sexually abuse more children. The Boy Scouts did not fix this situation, John's courage and civil cases did.
Through John's civil case and others like this, the real facts and flaws in the reporting system were uncovered. He forced institutional change to put the focus where it should have been all along, on protecting children. As we saw in John's case, oftentimes the only way to get powerful, trusted institutions and corporations to change their ways is to hold them accountable through the civil justice system.
SB 487 will restore the powers of juries to hear the facts of the case and determine case-by-case justice, instead of applying a one-size-fits-all limit on what a jury can determine is fair and just. There is no one-size-fits-all experience of child sexual abuse. The emotional and psychological pain of child sexual abuse don't appear on X-rays like a broken bone, but the impact can be just as fracturing to survivors' long-term health.
The pain of child sexual abuse is real and intensely felt. Victims of child sexual abuse are far more likely to attempt suicide, turn to alcohol, illegal drugs to numb their pain from the abuse. Survivors can live full, healthy, and joyful lives, but have more barriers to overcome than children who are safe from that abuse.
There is also no one-size-fits-all process that survivors go through on their paths towards healing. In the eight years since I've helped found OAASIS, I've walked along countless survivors who were sexually abused as children, helping survivors to live more fully. They can heal, but the healing process extends over a lifetime.
I ask you to stand with me and countless victims of child sexual abuse to ensure they receive justice on a case by case basis. There should never be an arbitrary one-size-fits-all value placed on a survivor's quality of life. Survivors deserve their day in court. Please join me in supporting Senate Bill 487.
Sen. Prozanski: Thank you. Brenda?
Brenda Tracy: Good morning, Chair Prozanski, and members of the Committee. My name is Brenda Tracy. I am honored to be here today with these other survivors in support of Bill 487. I am a survivor of child sexual abuse. I am also the survivor of a gang-rape by four college football players that happened in 1998.
Just over two years ago, I came forward with my story in the Oregonian and since have fought diligently for survivors like myself. As you see, it never gets easier. I always keep thinking I'm going to come here one day, because I've been before you several times, and I keep thinking it's going to get easier. I keep thinking that I'm not going to cry and I'm not going to get overwhelmed with these feelings when I hear other survivors come forward and I share my own story. As you see, one of the non-economic things that happens to us is that it never gets easier.
Since 1998 and my gang-rape, I have suffered. I have dealt with depression, I have dealt with a borderline eating disorder. I have dealt with suicidal ideation. I spent 16 years wanting to die. I don't know if people really understand what it's like to be in a body that has been brutally raped and degraded and defiled by another human being. It is difficult and it is torture to live and exist inside that body.
For 16 years, every day I struggled with wanting to die, being unable to kill myself, because I had two boys, my children. I was a single mother. One of the consequences of that, and I'm embarrassed to admit this, is that I was not the best parent I could have been to my children. I actually resented my children, because they were the reason I had to live. Because of that, I yelled a lot. I was easily frustrated and irritated with them. I was not the mother that I should have been to them.
I have since had to apologize to them. I didn't even tell my oldest son what happened to me until he was 17 and that was only after he had dropped out of school. He had began to do drugs and alcohol and he attempted to commit suicide himself by smashing his car into a telephone pole.
It was only then, when I was faced with his possible death, that I disclosed what had happened to me. That's how much shame I was wrapped in by what had happened to me, that it took my own son possibly dying for me to speak my truth. The idea that we would place a $500,000 price tag on my life, my son's life, and our experience is appalling to me. It hurts to feel that that is the worth of my life, and my experience, and my family's experience, and other survivors' experience.
We deserve our time before a jury to say what we need to say and to let others decide what that damage should mean. I don't want that price tag on me and I don't want any other survivor to have that price tag. I would ask that you do restore justice for survivors.
The other thing I want to address is that I have spent the last two years traveling the country, speaking at different colleges about my experience. I have been to about 23 of them now in about seven months. This price tag will be seen by those universities. Universities are already not dealing with this issue. They are already sweeping these cases under rug.
Every day on my social media timelines, I hear about rape on college campuses. In Texas, one of the most egregious cases we've heard of is a lawsuit that alleges 53 rapes by 31 football players over four years at Baylor University. This is happening all over our country. If we decide that the cap is $500,000, what incentive is there for universities to do better? There is none. They will look at me and they will look at other survivors and they will say, "We can afford that. We can afford that price tag."
Because of our reputation and because of our desire to not be exposed and to not deal with this issue, they will continue to sweep it under the rug. We will be hurting survivors. We will be supporting colleges to continue to do what they've been doing for decades, which is to ignore this issue and allow lives to be ruined.
I can't support that and I know that that will happen. I've seen that. I've talked to so many survivors. I would just ask that you restore justice for survivors. I ask that you would take this very seriously. I thank you for the time that you've allowed for me to share my story, just thank you.
Sen. Prozanski: Thank you, Brenda. Questions for anyone on the panel? Thank you all very much for coming forward and telling your story. We really appreciate hearing from you directly. Thank you.
Sen. Prozanski: I'm going to go ahead and call up a panel, Jim Dorigan, Susan Forray, Kevin, is it Reavis?
Kevin Reavis: Reavis.
Jim Dorigan: I can start out. Chairman Prozanski and members of the State Judiciary Committee, thank you very much for allowing us to testify here today. My name is Jim Dorigan. I'm Senior Vice President and Regional Operating Officer for the Doctors Company, which insures over 2,600 Oregon physicians.
This is a major issue for healthcare providers in that the availability and affordability of insurance provides access to care for patients in the state of Oregon. This bill being proposed doubles the cap on non-economic damages for wrongful death and eliminates non-economic damage cap for bodily injury cases in Oregon.
We heard a lot of very sad and touching stories today from victims and injured parties, but the reality is many of those cases we heard about today would not be impacted under the current law by limiting damages. For example, they talked about damage in the university system on rape cases. The universities are already covered under the Oregon State Tort Claims Act, so they would not be impacted.
A number of these cases involved criminal conduct and involved perpetrators of crimes that would not have assets or insurance coverage to provide these large limits of liability potentially caused by the damages. Also, the economic damages are important. Economic damages in these cases cover all of the healthcare cost, future medical cost, lost wages, the cost to replace any services.
We're talking about trying to make somebody whole through this. The non-economic damages are the pain and suffering and they're very hard to quantify. As you can see with how sympathetic these cases are, especially for healthcare providers, that the non-economic damages have an extreme level of unpredictability and can really drive up the cost of any of these cases.
The other issue that hasn't been addressed is punitive damages, which are designed to punish people for their actions in criminal and in the system. Unlimited punitive damages are also available in these type of cases. We're looking at limiting damages in cases.
I provided testimony, but we look at what our states around the country do. In the West Coast, in the 19 western states, 16 of 19 states have bodily injury limitations of $500,000 or less. On the wrongful death cases, 13 of 19 states have limitations on non-economic damages to $500,000.
Oregon doctors currently pay more for professional liability than California doctors. California, since 1986, has had a $250,000 cap on non-economic damage awards. If we look around our surrounding states, as I said, 16 of 19 states cap damages at $500,000 or less. We're not an outlier, looking at this.
Medical professional liability rates or malpractice insurance rates for rural providers in Oregon are not affordable at this point. The legislature has addressed that. They subsidized premiums for doctors practicing in rural areas. The majority of cases against healthcare providers are driven by bad outcomes, not bad medicine.
Over 80% of these cases that are brought against healthcare providers are closed without an indemnity payment, either in the course of investigation or after a trial. Over 85% of cases against healthcare providers at the trial court level are won by the defendant or the doctor.
Putting in the unlimited damages or non-economic or a million dollars of non-economic damages, it will create costlier litigation for healthcare providers. It will drive up the cost of healthcare and will drive up the cost for insurance. In Florida, after a cap was struck down by the Florida courts, the number of cases against Florida healthcare providers increased by 23%.
Two sessions ago, we worked with the Senate and Senate Bill 483 was passed Early Discussion and Resolution. We have a vehicle to resolve cases without using litigation and we're just starting to see the effects of that. We're hoping that that will continue to benefit injured parties and healthcare providers. The healthcare system is under great financial pressure and even more so with the ACA Act in peril.
Access to healthcare is critical to rural Oregonians and for underserved populations statewide. Another important thing about this Bill, it will be retroactive for all wrongful death and bodily injury cases, therefore, any of the cases pending now have the potential for unlimited damages. We're currently defending 79 physicians in litigation and 10 of those cases are wrongful death cases, so it could have huge economic impact for both us and the healthcare providers involved.
I urge you to vote no on Senate Bill 487 to preserve and promote access to healthcare for all Oregonians. Oregon's caps on non-economic damages ensures that injured patients receive fair compensation, while preserving access to healthcare for reducing costs for doctors, nurses, healthcare providers, and helping them serve the most vulnerable populations. Thank you very much.
Sen. Prozanski: Thank you. Who'd like to go next?
Susan Forray: Good morning, Senator Prozanski, other members of the Committee. I'm Susan Forray. I am a Principal and Consulting Actuary with Milliman. I specialize in medical liability coverage. A part of that practice includes estimating costs associated with legislation such as this.
I was asked by the Oregon Liability Reform Coalition to take a look at the legislation and estimate the costs specific to wrongful death claims. As I submitted with my testimony, we did an analysis based on Oregon medical liability claims data. We were provided with closed claim data by the three largest writers of professional liability coverage in Oregon.
We received, as part of this data, over 15,000 claims for medical liability over a 15-plus year period. Based on this data, our analysis indicated that, if the cap on non-economic damages for wrongful death claims were to be increased from 500,000 to one million, that the average indemnity payment on those wrongful death claims would increase by approximately 20%.
In addition, analysis indicates that there would be, as Mr. Dorigan mentioned, additional claims filed. We estimated the cost associated with those additional claims as an additional 15%. Combining these two, we believe that we would see an increase in cost on wrongful death claims of close to 40%. Now, the other thing I would like to talk about is, as I mentioned, that was based on Oregon claims data going back as far as 15 years.
Okay, you can see here the chart that I'm about to talk about. In 1999, as you know, the courts in Oregon overturned the cap on bodily injury damages. The data that you see here on the screen, this is publicly-available data, it's based on claims submitted to the National Practitioner Data Bank for individual medical providers in Oregon.
You can see that in the years leading up to 1999, when that cap on non-economic damages was in place, the average indemnity payment on the medical liability claim in Oregon was approaching $200,000. In 1999, that cap was overruled by the court, at which point in time the severity increased, what we call the severity, the average indemnity payment increased beginning the following year, approached close to $300,000, so roughly a 60% increase in average indemnity payments.
This is a chart that I have used in other states to make a similar point. It happens to be Oregon in this case, so I think it is certainly very relevant here, but I think it's been illustrated for other states as well who've looked at this issue.
The same data source allows us to look at the number of claims that are filed against individual providers and paid on behalf of those providers. If we normalize for the number of claims, both in Oregon and countrywide, if we normalize back to 1999, again, the year of the cap overturn, which you'll see if you look at the green line, the green line is the countrywide frequency. What we call "frequency" is the number of claims relative to the number of physician providers. You can see that green line began to fall starting around the 2002 time period.
After the cap on damages was overturned in Oregon, we actually saw an increase in the number of claims against providers following the overturn of the cap. Certainly I've seen the same thing in other states, where caps on damages have been either increased or overturned. We see that here. The resulting increase in Oregon was about 30% greater than what we were seeing around the rest of the country at the same time.
Lastly, there were, I would say, about seven states in the 2003 to 2005 time period that implemented non-economic caps on damages. That was a time period where there was a lot of discussion nationwide about this issue. Again, here we've normalized back to 2001, the orange line that you see here is all states other than those seven. You can see there has been a falling number of claims relative to the number of providers since that time.
What's interesting is that, for those seven states that implemented caps on damages, there's a noticeable decrease in the claim frequency a couple of years following the implementation of the cap on damages. Now, the reason it follows by a couple of years is this is based on claims paid, so of course it takes some time for there to be an event and for that event to be reported and eventually resolved two to three years later. That's why we see this two to three-year lag here.
I think it is very noticeable that the implementation of caps on damages hasn't increased on the number of claims that are filed, the associated costs, and of course, the overturn of caps on damages, as we saw looking back in Oregon 18 years, has an impact on the number of claims, as well increasing that number of paid claims.
Lastly, I'd like to refer to some research that's been done by others in the area of access to healthcare. Others have alluded to this issue as well. This is a study from the Journal of the American Medical Association, "The adoption of direct malpractice reform has led to greater growth and the overall supply of physicians."
It's not just opinion or talk, if you will, that there isn't impact on access to healthcare. This has been supported by studies in very reputable publications, again, such as the Journal of the American Medical Association. Evidence clearly indicates an increase in physicians in high-risk specialties after the adoption of non-economic damage caps. Malpractice insurance premiums are a significant deterrent for surgeons. In addition, caps on malpractice damage awards attract surgeons to areas.
The supply of obstetrician/gynecologists decreased by 8% in the three years following premium increases in 1999. As a member of this industry, I can tell you I've heard several stories about patients in rural areas who had to drive, some patients a couple of hours, to get to their obstetrician, because an obstetrician that perhaps formally practiced in that area simply couldn't afford the liability premium combined with the lower income of working in a rural area.
Lastly, caps appear to increase the supply of frontier rural specialist physicians by 10 to 12%. This is very much an issue, in particular for rural areas, access to healthcare in rural areas, as well as access to healthcare among specialist physicians in particular. Thank you.
Sen. Prozanski: All right, thank you. Kevin?
Kevin Reavis: Thank you. Chair Prozanski, members of the Committee, my name is Dr. Kevin Reavis. I'm the incoming President of the Oregon Medical Association. I'm a practicing general surgeon. I focus on the esophagus, stomach, and bariatric related diseases at the Oregon Clinic and I'm a clinical associate professor at OHSU.
Thank you for the opportunity to testify on State Senate Bill 487. We submitted written testimony for the record, for which I'd like to highlight the main points. I'd like to dovetail the previous presentation as well with a physician's perspective on the issue at hand.
First, I want to stress that I want my physicians to understand firsthand the loss of a loved one and what it means to the family of their patient. We're doctors. We're at the bedside with grieving families day or night and we believe the remedy of both economic and non-economic damages should be available to the family.
Senate Bill 487 eliminates existing legislative cap on non-economic damages in injury cases and doubles the cap in wrongful death cases, effectively disregarding the new legal roadmap established in the case of Horton versus OHSU last year. This case reaffirmed the legislature's constitutional role in establishing reasonable safeguards around damage awards in our court system.
The elimination of non-economic caps and doubling the wrongful death cap will disrupt Oregon's currently stable malpractice insurance environment. Doubling the wrongful death cap will increase medical liability costs and, by that, increasing the monetary award for subjective non-monetary losses will result in liability insurance premium increases, we know that.
With little recourse to modify or negotiate these rates, providers are basically forced to accept the rates instead and find other areas of their practice that have to be cut, such as personnel, less services, less clinical operating hours, basically being less available for those in need. This directly affects patient care and their ability to access comprehensive care where they live.
Now, elimination of non-economic damage cap in injury cases will lead to increased healthcare cost, as we just heard. Maintaining a reasonable cap on non-economic damages, while allowing for unlimited economic damages, ensures the healthcare spending is appropriated to patients and not expended on unpredictable jury decisions or in the form of significantly higher liability premiums.
We believe that the legislature should consider the financial challenges to the entire healthcare system in Oregon and use the tools that its been given to safeguard the system from runaway costs. Now, Senate Bill 487, while very well-intended, has several unintended consequences. Both doubling a cap and eliminating a cap will hurt healthcare accesses, as we heard.
When considering moving to our state, healthcare providers seek out states where the physicians practice less defensive medicine and have lower insurance premium costs. Now, Senate Bill 487 jeopardizes Oregon's competitiveness, especially compared to states such as California and others neighboring in the western United States.
As we know, the Rural Medical Liability Reimbursement Program, which ensures that Oregonians have access to the broadest possible range of specialty physicians by incentivizing rural practice, would also be jeopardized through increased costs. History has shown us that medical liability insurance costs have had a detrimental impact on the availability and affordability of healthcare services in rural areas.
Without the subsidies offered by the Rural Medical Liability Reimbursement Program, specialists, often obstetricians, pediatricians, neurologists, as referred to, are often forced to leave rural practice, because the cost of the insurance combined with overhead essentially clips their ability to earn a living.
This means that rural Oregonians who need this high-risk specialty care find themselves without access to critical care and either must forego care, risk their health, or seek services miles away from their home. Thank you, and I'd be glad to respond to questions from the Committee.
(Continued in next issue.)
Next week: The devastating rebuttal to the corporate lobbyist's spin against the jury system
Filing Taxes Could Be Free and Simple. But H&R Block and Intuit Are Still Lobbying Against It.
Jessica Huseman, propublica.org
Here’s how preparing your taxes could work: You sit down, review a prefilled filing from the government. If it’s accurate, you sign it. If it’s not, you fix it or ignore it altogether and prepare your return yourself. It’s your choice. You might not have to pay for an accountant, or fiddle for hours with complex software. It could all be over in minutes.
It’s already like that in parts of Europe. And it would not be particularly difficult to give U.S. taxpayers the same option. After all, the government already gets earnings information from employers.
But as ProPublica has detailed again and again, Intuit — the makers of TurboTax — and H&R Block have lobbied for years to derail any move toward such a system. And they continued in 2016.
Intuit spent more than $2 million lobbying last year, much of it spent on legislation that would permanently bar the government from offering taxpayers prefilled returns. H&R Block spent $3 million, also directing some of their efforts towards the bill. Among the 60 co-sponsors of the bipartisan bill: then congressman and now Health and Human Services Secretary Tom Price.
The bill, called the Free File Act of 2016, looks on the surface to be consumer-friendly. It makes permanent a public-private partnership in which 13 private tax preparation companies — called the “Free File Alliance” —have offered free online tax filings to lower- and middle-income families. The Free File Alliance include both Intuit and H&R Block.
But the legislation would also permanently bar the IRS from offering its own free alternative.
Intuit has repeatedly warned investors about the prospect of government-prepared returns. “We anticipate that governmental encroachment at both the federal and state levels may present a continued competitive threat to our business for the foreseeable future,” Intuit said in its latest corporate filings.
Sen. Elizabeth Warren, D-Mass., offered a bill last year that would have actually allowed the government to start offering prefill tax returns. While Intuit did not lobby against Warren’s bill — presumably because the legislation had little chance of success — tax giant H&R Block did. (H&R Block did not respond to a request for comment.)
Neither Warren’s bill nor the Free File Act made it out of committee.
Very few of those eligible for the industry’s no-charge filing program actually use it, perhaps because the system is confusing and pushes people toward paid products.
While the Free File Alliance says 70 percent of U.S. taxpayers can use the service, less than 2 percent of all individual tax returns were filed through the program in last year, according to a National Taxpayer Advocate’s report to Congress.
“Let’s call the so-called Free File Alliance what it really is — a front for tax prep companies who use it as a gateway to sell expensive products no one would even need if we’d just made it easier for people to pay their taxes,” said Warren in a statement to ProPublica. Warren’s office put out a report on the issue last year that repeatedly cited our coverage.
In an emailed statement the Free File Alliance’s executive director, Tim Hugo, said that the alliance does not automatically push paid products to those that use the Free File program but the taxpayer does “have the option of ‘opting in’ to receive additional information and offers from the tax preparation company they have selected.”
He said that the lack of awareness of the program is “unfortunate,” and placed blame on the IRS. While the tax agency previously had a large budget to advertise the Free File program, “today that budget is $0, making it difficult to reach the general public,” he said.
In response to Warren’s bill, the Free File Alliance warned in press release that allowing the IRS to prep returns would create “a tremendous and potentially harmful conflict of interest for the American people by enshrining the roles of tax preparer, tax collector, tax auditor and tax enforcer in one entity.”
Hugo is also a state legislator in Virginia, which canceled its own cost-free system of tax filing in 2010 and replaced it with a “Free File” bill connecting taxpayers to private companies. Hugo serves on the committee that greenlighted the legislation. Hugo said he saw no conflict of interest here, as the Free File program he represents is federal, not state, and he recused himself from voting in the committee and on the floor.
Joseph Bankman, a law professor in tax law at Stanford Law School said arguments about government overreach are false. Participation is voluntary and actually gives taxpayers the upper hand, forcing the government to “show its hand.”
“Now you know what the government knows,” Bankman said, who added that there are multiple ways taxpayers could benefit. “If there’s a mistake that goes in your favor, maybe you don’t call attention to it.” Also, everyone would receive the returns — including the millions of Americans who are due tax refunds but don’t get them because they don’t file. In 2012 alone, the IRS said more than 1 million Americans did not receive their refunds — amounting to $950 million — because they did not file.
The authors of the federal Free File bill have repeatedly voiced fears of big-government interference.
Intuit, producer of the top-selling tax software, has opposed letting the government do your taxes for free — even though it could save time and headaches for millions of filers. Read the story.
In an opinion piece for The Daily Caller and on his site, Rep. Peter Roskam, R-Ill., said “making the tax collector also the tax preparer creates an inherent conflict of interest while forcing citizens to relinquish control of their taxes to the government.”
Since the 2008 election cycle, Roskam has taken in more than $32,000 in donations from Intuit’s political action committee and Intuit employees. He received a far smaller amount, $2,500, from H&R Block — all for the 2016 election cycle. Roskam’s office did not return a request for comment.
HHS Secretary Price received only modest donations from Intuit, $3,500 since 2008 — $2,500 of which came six days after the Free File Act of 2016 was announced. He received $2,000 total from H&R Block. (Price’s office did not respond to a request for comment.)
The bill’s Democrat co-author, Ron Kind, from Wisconsin, has taken in more than $29,000 from Intuit and its employees since 2008. He received $3,000 from H&R Block.
In a statement, Kind said he is “open to working with anyone” to find ways for “hardworking Wisconsin families” to file their taxes with ease. “At the same time, I want to make sure that Wisconsinites can access programs, like Free File, that they have come to depend on.”
When asked for details on how many Wisconsinites actually rely on the program, given that few of those who qualify for it actually use it, a spokesperson for Kind did not respond.
Republished from ProPublica under Creative Commons license. ProPublica's mission is "to expose abuses of power and betrayals of the public trust by government, business, and other institutions, using the moral force of investigative journalism to spur reform through the sustained spotlighting of wrongdoing."
There is nothing more important to the future of Oregon and its long-term well being than our response to the looming climate disruption and instability.
That instability is caused -- and is still being caused and aggravated today -- by humanity's headlong rush to return billions of tons of carbon-based gases -- involving carbon that had been gradually removed from the atmosphere and sequestered underground over the course of aeons -- back into the atmosphere in just a few generations (essentially all since 1776).
Our carbon pollution is not just a future threat or concern for future Oregonians. By our failure to take a cold eyed view of the threat, we are causing future suffering on a catastrophic scale.
Sadly, even some of the world's best informed experts, like Dr. Naomi Oreskes, cannot bear to face what we have done, and they fly around the country peddling a soothing drug in college campus talks, a drug called "Hopium," in which she simultaneously points out that even though the science is unequivocal (the situation is dire and getting worse), and the political moment is fraught with peril (and outright insanity reigns supreme in Washington), somehow "Solar and Wind" will save us, and that we can all just buy electric cars.
This issue of OregonPEN includes a clear-eyed analysis of that delusion from OregonPEN favorite Gail Tverberg.
But first, OregonPEN brings readers testimony from an official with the Risky Business Project, a DC-based policy outfit that seeks to have reassuring figures present the business case for carbon pricing in the language of money, the one language everyone in DC knows fluently. Her testimony is taken from the hymnal of the First Church of Markets, which is, alas, unproven at best. The success of the sulfur emissions trading scheme that everyone hangs their hat on -- it has been a great success in reducing acid rain downwind of coal-fired power plants, even before the great push to natural gas as the replacement for coal -- hinged entirely on the presence of an immediate substitute (low sulfur coal) that required little or no effort to incorporate into the existing system.
But when the existing system -- 9/10ths of the energy produced to support 7 billion people -- is all based on fossil fuels, for which there is no substitute available at the same scale or even a tenth of the same scale, the going is going to be a lot more rocky.
Still, while there is no realistic hope that carbon pricing will be sufficient to address the problem, that is not to say that carbon pricing is not necessary. Indeed, probably nothing can be done until the price of using fossil fuels incorporates the environmental damage being foisted off on the future.
Testimony to the Joint Oregon Senate and House Environment Committees
March 1, 2017
Kate Gordon, Founding Director, Risky Business Project
Good afternoon, Chair Dembrow, Chair Helm, and Committee members.
Thank you very much for permitting me to testify today.
I am conscious of the fact that I am not a native Oregonian, especially because I truly believe that discussions about the impact of carbon pricing on a state’s economy are profoundly local. However, I have spent the last fifteen years working at the intersection of clean energy and economic development, and the last four years working closely with businesses and investors both in and outside the clean energy arena, including here in Oregon. It is from that business and economic growth perspective that I appear here before you today.
I know that growing a successful business and growing a strong state economy have in common the need to capitalize on opportunities and realistically assess risks. Oregon's new proposed climate legislation for clean energy jobs offers the chance to do both: to better understand and prepare for climate risks, and to take on a leadership role in building a strong, sustainable low carbon economy going forward.
As the founding director and a lead author of the Risky Business Project - a national initiative focused on quantifying the economic risks of climate change - I have worked with multiple companies and governments on how to best evaluate climate risk to their infrastructure and operations, and how to think clearly about the potential to make smarter and more sustainable investments going forward. That initiative is co-chaired by Mike Bloomberg, Hank Paulson, and Tom Steyer, and includes on its "Risk Committee" three former Secretaries of Treasury, two other former cabinet members, a former Senator, and four former CEOs of major multinational corporations. The group crosses political, geographic, and industry lines, and has been deeply engaged in the work to apply conventional business risk accounting to the issue of climate change. Our work looks at the US as a whole but also specific regions, and includes risk modeling down to the state, local, and even county level for key targeted industries including property, energy demand, and commodity agriculture.
I know from our modeling, combined with conversations with Oregon business leaders, that climate change poses clear risks to operations, facilities, supply chains, and markets in this state. These include the physical impacts of climate change-including ocean acidification's impact on the coastal economy, heat and smog reducing labor productivity, and increased risk of wildfires in forested areas, not to mention the much further-reaching impacts of sea level rise and extreme heat on Oregon businesses' supply chains outside the state.
But there is also a risk in inaction in the face of a changing policy and regulatory landscape on climate change. Right now, multiple jurisdictions including China, Canada, the European Union, and a number of U.S. states are actively putting plans in place, or updating existing plans, to price carbon and curb greenhouse gas emissions. Companies that I work with through the Risky
Business Project are paying attention to these policy changes, and starting to evaluate their investments and capital stock decisions accordingly. Investors, too, are beginning to evaluate companies partly based on their resilience in the face of physical climate risk, and their readiness for policies ranging from carbon pricing to renewable energy standards. Today, 71 of 79 industries in the U.S. economy are materially affected by climate risk, according to the Sustainability Accounting Standards Board—and these industries are paying attention.
These companies understand that where there is risk, there is also opportunity—particularly in investments in clean energy technology and smart, resilient infrastructure. When the private sector invests in clean energy and efficiency, deploys low-carbon technologies, and continues to innovate towards a clean energy future, the result is economic growth across industries and regions.
Oregon has already seen the positive impact of low-carbon investment. Building new sources of zero- and low-carbon energy; electrifying vehicles; and investing in making buildings, appliances, and manufacturing more energy efficient has saved Oregonians money and created thousands of jobs within the state. Since the first large wind farm was built, companies have invested more than $9.8 billion in renewable energy in Oregon, creating over 5,300 direct jobs and many thousands of jobs created indirectly.
But as the Risky Business Project Risk Committee noted in our most recent report, while businesses play a key role in reducing climate risk and helping to slow the march of climate change, “[T]he private sector, in turn, will take these actions at the necessary speed and scale only if they can do so on the back of a clear and consistent policy and regulatory framework that provides incentives for innovation and deployment of clean energy systems, and helps business adapt to those climate impacts that are inevitable due to past emissions."
Key to this policy framework is the need for a clear price on carbon to better internalize the true costs of carbon pollution, and to level the playing field for low-carbon technologies. Setting a carbon price encourages companies across sectors and industries to invest in cost-saving efficiency and local, clean power. These actions trim business costs and reduce vulnerability to energy price volatility as well as to larger climate risks, making these companies more competitive in the national and global marketplace.
How each state or jurisdiction decides to design and implement carbon pricing policy is a matter of local discussion and debate. My own personal bias is for a policy that provides for some public investment into areas where the government has traditionally played a supporting role to the market: for instance, into early-stage research and development on the critical low-carbon technologies of the future; into easing the transition to a carbon-regulated world for low-income communities, high-carbon but still important industries; or into training the workforce we will need to fill the high-quality, family-supporting jobs created by clean energy investments.
What I do know is that this is not a decision for another day. Right now, in board rooms and legislative offices across Oregon, decisions are being made about investments and business strategies that will affect not just the severity of climate impacts to the state, but also the overall security of the economy here and around the world. Companies are investing right now in physical infrastructure that will last decades. As the state government, you can take the long view and put a stable carbon price in place that allows these companies to make lower-risk, smarter investments into low-carbon technologies, facilities, and energy sources.
Now is the time to act by putting in place a strong, clear, and consistent climate policy framework that will allow Oregon to avoid some of the most extreme risks from climate change, but also to reap the rewards of leading the way toward more innovative, robust, and sustainable economic growth.
Thank you so much for your time today. I look forward to your questions.
In 2015, renewables made up only 10% of the total world energy production.