My Kingdom for a Razorback Sucker

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On the classic game show, “Let’s Make a Deal,” the host Monte Hall walked down the aisle offering ridiculous amounts of cash for people to produce obscure items from their pockets – $500 for a skeleton key, for example. Cash is a powerful incentive, so people always showed up with pockets full of obscure items.

Interior Department officials should contemplate a similar program today, perhaps not as entertaining but equally effective. We’ll pay $5,000 each for polar bears, and $1,000 to anyone with a Preble’s Meadow jumping mouse. How about $2,000 for a California condor, and even more for a gray wolf. If you want to run a hatchery, we could pay $13,475 each for Colorado River pikeminnow, humpback chub, or razorback sucker.
This modest proposal is just like putting a bounty on certain species (which our government has done before), except this program would pay for healthy live animals, not dead ones. We spend lots of money worrying about roughly 2,000 threatened and endangered species across the country. We have management committees, biology studies, public hearings, documents – tens of thousands of documents – lawsuits, appeals, congressional oversight hearings, websites, blogs, and an entire industry of non-profit organizations raising money, and providing jobs for thousands of activists. Of course, the plants, animals, fish, and birds are completely unaware of all this activity on their behalf. But if there were suddenly lots more of their species, they would certainly notice.
The government has always vehemently opposed the idea of paying people to produce endangered species. That’s not because they don’t care about recovering the species, just that they care a lot more about studies, meetings, and committees. Those produce jobs and budgets; fish do not. But if you wonder how we could pay as much as $13,475 each for the Colorado River endangered fish, consider that we have already done so. We just don’t have the fish to show for it.
Since its inception in 1989, the Colorado River Endangered Fish Recovery Program has raised and spent roughly $380 million. Unlike many endangered species, the government has actually published specific recovery goals (de-listing criteria) for those fish, so success is clearly defined. In addition to habitat, water flow, and legal protection, there are explicit fish population criteria.
We need 11,600 razorback suckers, 8,800 bonytail chubs, 4,200 humpback chubs, and 3,600 pikeminnow. If we had spent that $380 million simply to purchase the fish, we would be celebrating one of the great success stories in the history of conservation. Instead, we spent almost all of it on meetings and documents. Some fish have been restocked, mostly by State programs, so the government is finally reassessing the status of the fish. Congress reauthorized the Program (and the money) through 2023, though, so there is no chance of earlier de-listing.
Maybe buying endangered species sounds too non-governmental, too free-market private-enterprise. But in managing habitat, it is an easier idea to grasp. That’s because the vast majority of critical habitat for most endangered species is on private land. So, we need partnerships with landowners to have much hope of success. To date, they’ve had little incentive for cooperation. An endangered species discovered on someone’s land triggers a federal system that threatens the use of that land, so many owners want nothing to do with such species. “Shoot, shovel, and shut up” is not a joke; it is policy for many landowners. But what if we reverse the incentives?
The American Prairie Reserve, working to create the nation’s largest wildlife preserve in Montana, has utilized many creative ideas to enlist landowner participation. One that has the attention of wildlife managers across the country is the installation of wildlife cameras on private ranches. The project pays ranchers cash for any pictures of various species thus “captured.” Such a simple idea is turning decades of disincentives upside down.
States often pay ranchers for the impact of wildlife on their operations: game damage claims to ranchers whose haystacks are eaten by deer, or predation damage when introduced wolves kill livestock. But those programs are based on later compensation, like punitive damages. Some states also give ranchers a few hunting permits they can sell for guided hunts on their land, but many states still don’t allow even that incentive.
For most landowners, there is no real economic value in the wildlife itself. The camera project is one way of changing that, encouraging the best habitat management by offering direct payments for otherwise threatened species – $1000 for a grizzly bear, for example. As Monte Hall demonstrated, self-interest is a potent motivator, so ranchers are responding as expected: let’s make that deal.

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Signs Virginia Will Keep Tax Reform Windfall

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As of right now all the signs indicate that the Virginia General Assembly and the Northam Administration are going to allow the federal tax reform to generate additional tax revenue for the Commonwealth. Some of what the Congress gave back will flow not to Virginia taxpayers, but to the state treasury.
What are those signs? None of them are totally clear but the circumstantial case is strong.
There are no plans for any special session later in 2018 to amend Virginia’s tax code in response to the federal changes. I have confirmed that with the chairmen of both the House and Senate committees, but of course that could change.
In a recent talk at Christopher Newport University, Senator Frank Wagner, R-Virginia Beach, was gushing to the crowd over all of the extra revenue expected in Virginia – some of which is already baked into the state budget just adopted.
Secretary of Finance Aubrey Layne a couple of months ago, talking to the Senate Finance committee, left me with a strong impression that the administration would be slow to amend Virginia’s tax code and forego any windfall. His next big chance to address the General Assembly in public comes in August when the money committees hold the joint meeting on the closeout of fiscal year 2018.
By then the state may have received the consultant report it has commissioned detailing the state revenue impact of the various federal provisions. A very important sign will be whether that data is widely disseminated or held close as governor’s working papers.
Another sign: The Commonwealth Institute for Fiscal Analysis, possibly reflecting the attitude of key General Assembly Democrats, has come out in favor of full conformity because it believes the net result will be hundreds of millions of dollars in new revenue for the state from higher income taxpayers and from corporations. Unless Virginia changes its tax rates or makes other adjustments that will be correct, except not everybody paying more will be rich.
The strongest indication is the state’s own fiscal stress. The new budget total is about 12.5 percent higher than its 2016 counterpart but the increase in the general fund was only five percent, somewhat anemic for a time of economic growth. Virginia is very dependent – too heavily dependent – on the personal and corporate income taxes to make its base budget. It won’t want to part with income tax dollars.
Virginia was under pressure before expanding Medicaid and the risk that adds that the federal government won’t continue its 90 percent match on the expansion far into the future. Virginia’s reserves remain too low even in the new budget.
Finally, nobody is pushing the alternative, at least not publicly. It’s dead quiet. The average taxpayer won’t feel the impact until early 2019. Nobody is demanding the General Assembly adjust Virginia’s tax rates, standard deductions or filing thresholds to lower taxes on individuals. Nobody is warning that much of the business tax benefits will be wiped away if Virginia moves conformity forward but leaves the corporate tax rate at 6 percent.
The contrast with 1986 is striking. As the GOP director of communications and research and the main liaison with GOP legislators, I helped organize efforts pushing Governor Gerald Baliles to give back any windfall. It was just a year after the transportation taxes had gone up in a special session. Of course, we were the minority in those days and had lots of freedom to stir the pot.
Baliles responded by cutting taxes the way he wanted to, which shifted the tax burden up on higher incomes. But it was a tax cut with some sound policy behind it.
A demand for revenue neutrality is one possible goal to advocate this time around. Another more challenging goal – shared by some legislators – would be to take the opportunity created by this revenue cushion to make some basic changes, tax reforms that would make Virginia more productive and competitive. We are deeply mired in complacency and mediocrity right now while many other states – North Carolina comes to mind – are being aggressive.
Tax Year 2018 is basically half over – two of four quarterly payments have been made and most employees have seen half of their paychecks for the year. The individual amounts being withheld are based on the prior tables. The law already says that if you take the federal standard deduction you must take the state standard deduction, so that windfall happens even if the 2019 General Assembly sits on its hands and leaves conformity fixed at 2017.
An earlier state estimate was that 600,000 individual or combined returns would switch from itemized to standard deduction. That probably means an extra $5,000 to $10,000 in Virginia taxable income for them – meaning higher taxes up to $575. Assume half that and the state looks to collect another $170 million. People who have enjoyed a regular state refund may be in for a surprise when they have to actually write a check next May 1.
It would certainly be an option for Virginia to simply do nothing, but I do expect the General Assembly will make some adjustments in response to the federal changes. That decision could still come at a fall special session or more likely it will be an emergency bill in 2019, passed in time to determine the actual taxes paid for 2018. My prediction: selective conformity, with several exceptions that pad the state’s income and some individual tax rate adjustments to lower taxes on low income workers.
The 2017 federal legislation is very different than the 1986 legislation. The 1986 law was tax simplification and the 2017 bill makes the tax code – especially for business taxpayers – impressively more complex. Having never prepared a corporate return I won’t claim to understand them and I’m very dependent on the Tax Foundation’s reports.
But on behalf of Newport News Shipbuilding I became very familiar with the domestic production activities deduction, Section 199 – and under full conformity that large deduction goes away, increasing taxable income for a large percentage of businesses.
As a small business myself, I’ve dealt with the expensing rules, Section 179, and that is an area where I predict the administration will be tempted to de-conform and be less generous than the new IRS rules.
Will Virginia allow that new 20 percent deduction for certain pass through income? Now that I’ve seen how narrowly that is going to be applied, it is less important – but it is still important to any taxpayer having to add that back into their Virginia taxable income.
The foreign source income rules mystify me, old and new. Do not ask me about GILTI (Global Low-Taxed Intangible Income). Virginia’s current deduction for Subpart F foreign income is tied to a specific IRC section number, and I’m told the new law added or amended several other sections that could become state-taxable now. Virginia may also see a short term bump from all the repatriated foreign profits.
Each and every proposed variation from the new federal system should be examined by the business community and if need be challenged as a tax increase. If Virginia taxes more and more things that the IRS and other states do not tax, it will degrade our competitive position. I hope that is the goal for the folks in this room – a better competitive position for Virginia.
(This column first ran in Bacon’s Rebellion on June 21, 2018).

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Does She Know Where This Leads?

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(Editor’s Note:  Given the events of last weekend in Lexington and the predominance of Administration – any Administration — appointed officials living in Virginia, this column in National Review struck us as particularly timely.  Our nation is heading down the dangerous road of intolerance by all sides.  The time to pull the emergency break is now.)
Democratic congresswoman Maxine Waters, calling for attacks on the Trump administration at a rally in Los Angeles Saturday: “If you see anybody from that Cabinet in a restaurant, in a department store, at a gasoline station, you get out and you create a crowd and you push back on them, and you tell them they’re not welcome anymore, anywhere.”
How exactly does Maxine Waters think this is going to shake out?
Does she think this tactic will be used only by leftist protesters, only against Trump cabinet officials, and that in no circumstance will “pushing back at them” lead to violence against those targeted individuals? Does she think that there is no possible scenario where the security details assigned to protect cabinet officials from harm respond to threatening behavior with force? Does she think that there’s a scenario where the cabinet officials, the president, and his supporters in general decide that because so many leftists are angry, they had better change their minds and their policies?
Does she envision a near-future where Trump and the Right in general avoid policy proposals that offend or anger Leftists, out of a fear of being targeted for “pushback” that will make them unwelcome anywhere?
The only counter-evidence for these scenarios is the entirety of human existence and the complete history of angry mobs. Angry mobs are not discerning or careful. They do not distinguish between their initial target and anyone who happens to be in the wrong place at the wrong time. Charles Murray described how an angry mob at Middlebury College attacked political-science professor Allison Stanger as she attempted to walk him to his car after a disrupted speech event:
I didn’t see it happen, but someone grabbed Allison’s hair just as someone else shoved her from another direction, damaging muscles, tendons, and fascia in her neck. I was stumbling because of the shoving. If it hadn’t been for Allison and Bill keeping hold of me and the security guards pulling people off me, I would have been pushed to the ground. That much is sure. What would have happened after that I don’t know, but I do recall thinking that being on the ground was a really bad idea, and I should try really hard to avoid that. Unlike Allison, I wasn’t actually hurt at all.
Stanger disagrees with Murray politically — but the mob didn’t care; she was next to him and for that she got a concussion.
Angry mobs are not good for deterring a particular unwanted behavior. They are good for instilling fear and giving a lot of people an excuse to let out all of their antisocial or violent impulses with a thin patina of moral righteousness. “I’m not harassing and assaulting another human being, I’m standing up for human rights!” No doubt the man who tried to kill as many GOP congressmen as he could at the baseball field in Alexandria, Va., believed he was standing up for good causes and doing the right thing.
>Harassment of public figures on the right is only going to lead to harassment of public figures on the left. No doubt everyone remembers their own favorite example of a breach of decorum and proper behavior: the guy in the Miami cheesecake factory, Joe Wilson shouting out “you lie!” at an Obama address to Congress, the man who dumped a beer on a lawmaker in a bar, the guy who harangued Ivanka Trump on a flight. The fake blood thrown at the private home of an NRA lobbyist. The guy who threw water at Tomi Lahren in a restaurant in New York. The audience disruptions at Julius Ceasar and Robert De Niro’s A Bronx Tale.
Some no doubt would argue that the president himself threw gasoline on this fire. At a rally in Cedar Rapids, Iowa, in February 2016, Trump said, “If you see somebody getting ready to throw a tomato, knock the crap out of them, would you? Seriously, okay. Just knock the hell — I promise you I will pay for the legal fees, I promise.” And then in Saint Louis a month later, Trump lamented that no one sufficiently hurts protesters at his speeches: “Nobody wants to hurt each other anymore, right? And they’re being politically correct the way they take them out, so it takes a little bit longer. And honestly, protesters, they realize it. They realize that there are no consequences to protesting anymore.”
This is a genie that does not go back into the bottle easily. A lot of people in politics remember the examples of their side being attacked and conclude this is how the entirety of the opposition wants to play the game. The rallying cry on the Right on Twitter these days is “you’re going to hate the new rules” — basically conservatives cheerfully announcing they or their brethren will adopt any tactic used by the Left. Turnabout is fair play; what’s good for the goose is good for the gander. (Lord knows I’ve long lamented the glaring double standard and the need for one bipartisan set of rules for public debate.)
The problem is that this cycle of tit-for-tat leads more and more people conclude that the opposition only understands the language of force and that they cannot be negotiated with, persuaded, or even tolerated in a form of coexistence.
We could steer away from this path, if there was a broad, across-the-spectrum denunciation of comments like the one from Waters, reemphasizing that in the United States, we settle our differences through debate and discourse and the ballot box and in the courtroom — not by stirring up an angry crowd and implying (or maybe more than implying) a threat of physical violence against the political opposition. But that’s too much to ask in this polarized — Balkanized? — environment, isn’t it?
©2018 National Review. Used with permission.

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Health Care Choices Proposal: A New Generation of Health Reform

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The plan, called the Health Care Choices Proposal, takes a federalist approach in moving power and control of the health sector away from Washington, through the states, and ultimately to consumers.
The recommendations were developed by the Health Policy Consensus Group, including state and national health policy experts and members and leaders of grassroots organizations from around the country who are determined to give Americans relief from the high costs and restricted choices that Obamacare has imposed.
“We know health reform is needed, but for too long, conservatives have battled over the right solution—whether to provide tax credits, tax deductions, or some combination to help people afford health coverage,” according to Yuval Levin of the Ethics and Public Policy Center, one of the leaders in the effort.
“After last year’s attempts to pass reform, some are now saying Obamacare will collapse if we do nothing. But that is not the case,” I told the group. “The ACA provides an open-ended call on taxpayer dollars to continue to prop up the law’s programs, even though it is a proven failure in providing the promised ‘universal coverage,’ lowering costs, providing greater choices, and allowing people to keep their plans and their doctors.”
Former Sen. Rick Santorum, Marie Fishpaw of The Heritage Foundation, Dan Holler of Heritage Action, Doug Badger of Galen and Heritage, and Levin all have been leaders in developing the plan. State think tank leaders as well as grassroots activists from around the country also have been integrally involved. (I facilitate the Health Policy Consensus Group through my work at the Galen Institute and was part of the team developing these recommendations.)
Santorum said during the event that his passion to advance patient-centered health reform stems partly from the experience of having a daughter, Isabella, who was born with a genetic disorder called Trisomy 18. “Half of babies born with Trisomy 18 die in the first three months of life and most don’t live beyond one year. But we just celebrated Bella’s 10thbirthday in May. We have been able to get medical care in the United States for the miracle of this beautiful child because of the health care she has been able to receive.”
He said he fights every day to make sure that children like Bella will have the freedom to get the health care they need without government intervening, as tragically happens in countries with government-controlled health care systems that block their access to care, as we recently saw in the cases of Charlie Gard and Alfie Evans.
Unlike Obamacare, the Consensus Group’s Health Care Choices plan devotes resources to help finance care for those with expensive health care needs, including those with pre-existing conditions. The ACA put these patients in the same pools with everyone else without extra subsidies and that drove up premiums to the point that healthy people are being driven out of the market.
About 75 people demonstrated outside the Hoover Institution’s building before the event to protest the Health Care Choices Proposal event. “To those people demonstrating outside,” Santorum said, “you are absolutely wrong in saying that we would not care for people with pre-existing conditions. We do more than Obamacare did for them!”
Gov. Phil Bryant of Mississippi spoke and expressed strong support for policies that would allow states to provide real choices of affordable coverage for their citizens.
“The demonstrators outside have signs that say, ‘Save My Care.’ Well, that is exactly what we are going to do!” he said.
Gov. Bryant said he supports the Health Care Choices approach because “the best government is the government closest to the people. This plan represents a grassroots, commonsense effort that a majority of the American people will gladly welcome.”
Gov. Matt Bevin of Kentucky warned Congress about not taking action. “There is not a single Republican who has run for federal office in the last eight years who didn’t run saying they were going to repeal Obamacare. What we are doing here is asking our Congress to stand up for the very promises they made.”
State Sen. Bruce Reeves of Virginia told the group that putting more people on Obamacare is not the answer. He read an email from a constituent who said his health insurance now costs more than his mortgage. “What am I supposed to do for my family?” the man asked him.
“So now, my constituents have to choose between having a roof over their heads or having protection against huge medical bills? This is unacceptable.” He said the Consensus Group’s plan offers a much better choice.
“I am fired up. We all have to get engaged to turn the tide.”
The Trump administration is doing all it can through its existing regulatory powers to give people relief—including its new rule on Association Health Plans and, soon, reviving Short-Term Limited Duration plans.
And Congress has taken targeted legislative actions, including repealing the individual mandate and delaying onerous taxes. But Congress must do more for real reform to be implemented.
There is interest in the plan in Congress, the White House, and especially the states.
U.S. Sen. Lindsey Graham of South Carolina issued a statement after the launch event supporting for the Health Care Choices Proposal, calling it “a plan created by grassroots groups to lower health care costs and increase choices for people across the United States.”
Graham has been a leader in pushing for health reform changes that will allow states and localities “to create more innovative solutions to health care problems.” He continued:
“As long as Obamacare is the law of the land, we will continue to see premiums skyrocket and choices in health care deteriorate. Millions of Americans are suffering under Obamacare. They demand we provide them with more choices and health care that meets their needs.
“This idea – returning money and control to the states and localities – has been used before with great success when we reformed welfare. It freed states from the grips of a Washington-knows-best bureaucracy and allowed for innovation and cutting-edge reforms.”
Sen. Graham pledged to continue to push for legislation to give people relief from the high costs of Obamacare. “Ultimately, I believe we will have a breakthrough and deliver for the American people,” he said.
The Health Care Choices Proposal would empower states to have much greater flexibility and resources to help their small group and individual markets heal from the assault of Obamacare, reviving competition and giving people choices of coverage they can afford. The actual bill would, of course, contain additional provisions, including grant allocation formulas, transition funding, and enhancements to health savings accounts, but the group believes its recommendations offer a solid platform for future legislation.
More details of the plan are available here. Nearly 100 individuals and groups have signed up to support the plan, and the governors who spoke on Wednesday said they are anxious to talk with their colleagues in other states about the opportunities it offers. Others, including Avik Roy, already have opined.
The Consensus Group summarized its Health Care Choices recommendations, as follows:
“We recommend replacing Obamacare spending with block grants to the states to help the low-income and sick access the care they need from the doctors and coverage they choose, in ways that will strengthen—not undermine—private markets to help millions of others shut out of the market afford coverage.
“The proposal would repeal the individual entitlement to premium and cost-sharing reduction subsidies and Medicaid expansion. Instead, states would receive block grants from the federal government, which they would use to stabilize their markets and provide assistance to those with low incomes and to the sick and needy.
“To assure that people have choices and that the vulnerable are protected, states must make sure that:

  • At least 50% of the block grant goes toward supporting people’s purchase of private health coverage
  • At least 50% goes to provide coverage for low-income people (the two categories will overlap)
  • A portion of the grant goes to offset the costs of high-risk patients to make sure they get the care they need and that they don’t drive up premiums for everyone else in the market
  • Anyone eligible for financial assistance under the block grant, CHIP, or Medicaid can take the value of their premium assistance to purchase the private plan of their choice
  • Life is protected. The grant would be distributed through the Children’s Health Insurance Program which provides protections against taxpayer money being used to fund abortions.

“Obamacare requirements on essential health benefits, single risk pools, minimum loss ratio requirements, and the 3:1 age ratio would not apply in states receiving federal allotments. Nullifying these mandates along with new flexibility to the states would reduce premiums, allow fairer premium variation and, in combination with risk mitigation, assure that the sick get the coverage they need without charging the healthy unfairly high premiums.
“Funds to finance the block grants would be based upon spending, as of a fixed date, on ACA subsidies (both tax credits and CSR payments) and Medicaid expansion.”
(This article first ran in Forbes on June 22, 2018.)

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Hurricanes, Solar Panels and Construction Standards

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The 2017 hurricane season wrought immense destruction to the electricity grid across the West Indies, most visibly in Puerto Rico, the U.S. Virgin Islands and Barbuda. Not only did high winds knock down power lines, they tore away solar panels that otherwise could have provided power after the storm clouds parted. In contrast, finds the Rocky Mountain Institute (RMI), solar facilities in the British Virgin Islands, the Turks & Caicos, and St. Eustatius, survived winds reaching 180 miles per hour.
What was the difference? Installation standards.
RMI sent structural engineering teams to the Caribbean to find out why some solar structures survived nearly unscathed while others disintegrated.
The teams noted similarities between the failed systems, including module clamp failures, undersized racks, undersized and under-torqued bolts, a lack of bolt locking solutions, and a lack of lateral racking support. On the flip side, the systems that survived had the modules through bolted (no clamps), bolts with locking solutions, and lateral racking supports.
Making solar arrays more resilient in the face of natural disaster in the Caribbean would add only 5% in engineering, procurement, and construction, PMI estimates.
The Caribbean is far more exposed to hurricanes than Virginia is, but the questions RMI raises are certainly relevant here as the Commonwealth embarks upon an unprecedented build-up of solar capacity. Virginia could be getting as much as a quarter of its electric power from solar within 20 or 30 years. We want to make sure that power comes back on after a natural disaster.
What construction standards would be required to ensure that solar panels held up to a hurricane? Would the same standards need to apply across the state, or could they be relaxed for solar capacity farther from high-speed winds along the coast? How resilient would Virginia’s electric grid be if a hurricane knocked out 10% or 20% of the state’s solar capacity? Could we import enough power from elsewhere in the PJM Interconnection grid? How much would it cost to protect against a worst-case scenario?
As Virginia moves towards a solar future, I would think that these questions are worth asking.
(This article first ran in Bacon’s Rebellion on June 23, 2018)
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