January 31, 2008: An Update from the Institute
From the Rail: Blago Saves the Planet
By Greg Blankenship, President
As we at the Institute made the rounds in Springfield last week, meeting with various leaders to discuss anticipated agendas and the governor's speech, we also picked up on some pretty hot rumors. My favorite has been the one where Rod Blagojevich saves the planet.
For a couple of years, my colleagues around the country have been asking about when the Institute plans to take on environmental issues. My answer: we haven't done so yet--because our state's political class has yet to figure out how to make a buck off it. As soon as they do, I'm sure we'll all be knee-deep in their kind of green issues (and I mean dollars).
As we found last week, from a number of people, that day may be approaching fast.
For more than a year, the governor's Climate Change Advisory Group has been meeting to discuss ways in which Illinois can fight global warming. (Ironic given that it's about 7 degrees Fahrenheit as write this). Yep, that's right, the state government that couldn't pass last year's budget is now on top of saving the planet. One idea currently kicking around is a cap and trade system--exclusive to Illinois--that would be used to limit carbon emissions in the state.
A cap and trade system is a pretty simple scheme. A fixed number of credits are issued to companies who then buy and sell the credits as need be. The theory is that companies who aren't big polluters can sell the emission credits to the big polluters who will pay to pollute. Big polluters will have the option of lowering emissions or purchasing the credits. This has been tried in a number of European countries and it hasn't worked, of course. No matter.
In fact, Illinois may develop its own unique brand of managing the program. The rumor mill is telling us that companies will have to buy the credits from the state. In other words, surprise, surprise, it will be another tax. Estimates are around $1 billion, which will be used to fund . . . to fund . . . guess what? You got it, the governor's universal health care plan!
Our Governor Blagojevich is sure full of surprises. He's going to save the planet and provide universal health care coverage at the same time! Never mind that his health care plan is modeled after one of the most dysfunctional and expensive programs in the country: New York. And, as I said earlier, cap and trade isn't working where its been tried.
And, actually, now that I think of it, the governor isn't full of surprises. This is classic Blago. Failed programs . . . higher taxes . . . bring 'em on!
Dirty, Sexy Stimulus
By John Tillman, Chairman and CEO
Ever heard of the television show called Dirty, Sexy Money? I've never watched it, but the name has certainly caught my eye. (You can be the judge of whether or not that's a good thing.)
This reminds me of the so-called "stimulus package" recently proposed by President Bush, passed in the House and now being tinkered with by the Senate. Why, this has all the makings of a television hit! Well, maybe not. The dirty little secret of this money, of course, is that the stimulus will have little stimulating effect. And that's just not that sexy.
So why did the powers that be pass this "stimulus" in record fashion in a friendly, bipartisan manner? Because both parties in Congress only move quickly and cooperate when they share something in common: fear. You see, they are scared to death that if they don't do something--anything--that the voters will blame them and toss them out come this November.
Now that, by the way, would be stimulating!
I recently heard Art Laffer explain the multiple reasons why cutting marginal tax rates is highly stimulating. This is especially true for higher earners, which is something you won't often hear in the press. A tax cut, it turns out, would provide a true stimulus to the economy. This stimulus package just won't do it.
Two immediate steps to stimulate the economy are making Bush's tax cuts permanent and lowering the corporate income tax rate.
But Congress won't do that because there is nothing to fear if they don't do it.
And you know what? That's just not sexy. It's truly obscene.
Con Jobs and Charter Blockage
Last week, the Illinois Policy Institute released a new study on the CON system--a system that quietly disrupts quality health care, year after year. You can read more here.
Why aren't there more charter schools in Illinois? Find out more (and find out why there are 10,000 children on waiting lists as we speak) here.
Onward and upward...we'll be in touch soon!