Month: March 2011

FEDERAL LANDS: Should we sell federal lands to pay off the national debt?

By Glen Stonebrink, Guest Writer

History: A historical understanding of so-called federal lands is necessary in order to grasp the true “intent” of their existence and usage. From the Pilgrims of 1620 and the creation of the original colonies, there was no such thing as federal lands because there was no “federalism.” As the people of the colonies became equally and increasingly abused by the King of England, they found it necessary to join their efforts to address their concerns to the King – thus the birth of the Continental Congress, which later was used for their common defense and war against England. It was this newly created Continental Congress that started the road to federalism among the separate and sovereign states. Even though each state gave very little in rights or property, they did give away some degree of their power to federalism.

As the Revolutionary War was nearing its end and prior to the formation of “the United States” as we know it, two basic events were taking place: (1) the western colonies/states were looking to extend their western boundaries into the Ohio Territory in order to accommodate more settlers, which thus would create additional wealth for their individual sovereign states; (2) soldiers from the Revolutionary War soon would be returning to civilian life and were desperately seeking new soils to cultivate, but more importantly their promised wages for their service in the war.

Both of these events were giving rise to a problem. States with no western boundaries were not happy about the expansion of those that did, and the Continental Congress was not able to pay the back wages of the armies. To satisfy both issues the Northwest Ordinances (1784 & 1787) were adopted. The 1787 Ordinance codified how new states were to be formed: on equal footing with the original states in every respect whatsoever, and by selling the western lands the “federal government” could pay its debts. Obviously, there were many land grants and homestead previsions, but clearly these lands were to be “disposed of” – not retained!

It is critical to understand that in the beginning the original states agreed through the Northwest Ordinances that newly formed states were to enter the Union “on equal footing” with the original states in every respect whatsoever, including debts and obligations, and these lands were to be disposed to bonafide purchasers. This is where the debate about federal lands begins.

Intent: Who would have envisioned among the pilgrims, settlers, pioneers or especially the framers of the founding documents that someday there would be an overpowering federal government which would claim ownership over huge amounts (nearly 30%) of this newly formed country? NONE! The thirteen original and sovereign states never would have agreed to a central federal government owning large amounts of the soils within “their boundaries” as a price for statehood within the Union. In fact, before there were nine states (2/3 of 13) in agreement to forming the United States with a binding Constitution, there was an insistence that a Bill of Rights be produced that would limit the power of the federal government to only those things specifically listed within the Constitution, and everything else was to be retained by the individual states or the people.

The intent of ownership of the soils within each state’s boundaries was made extremely clear with the Northwest Ordinances’ Equal Footing Doctrine. The Continental Congress through the Northwest Ordinance, on July 13, 1787, provided that when each of the designated states in the territorial area achieved a population of 60,000 free inhabitants it was to be admitted “on an equal footing with the original States, in all respects whatever.”

To further emphasize the strength of this law that was to determine new statehood, Georgia and Virginia ceded their claim to large areas of western lands, but only on the condition that new states should be formed therefrom and admitted to the Union on an equal footing with the original States. Texas, on December 29, 1845, then an independent nation, “was admitted into the Union on an equal footing with the original States in all respects whatever.” In fact, since the admission of Tennessee in 1796, Congress has included in each State’s act of admission a clause providing that the State enters the Union on equal footing. The Act of Congress that admitted Oregon states ACT OF CONGRESS ADMITTING OREGON INTO UNION [Approved February 14, 1859] Whereas the people of Oregon have framed, ratified, and adopted a constitution of State government which is republican in form, and in conformity with the Constitution of the United States, and have applied for admission into the Union on an equal footing with the other States….

So if the founders of the Constitution did not indicate any intent on retaining large amounts of federal lands, what exactly were their intentions for the uses of federal ownership? The answer lies within the Constitution (Article 1, Section 8; Article IV, 5th Amendment and 9th/10th Amendments) and is supported by The Federalist Papers.

Article 1, Section 8 – Powers of Congress:

  • To establish Post Offices and Post Roads;
  • To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings….

Their intent is quite clear as to the reasons for federal ownership: roads, post offices, needful federal buildings, military facilities and dockyards. Nothing else is listed. There is not a clause that says “…and anything else Congress chooses any time they wish.” There is not a clause that says “…and Congress may choose to be prejudiced against certain states by retaining ownership of large quantities of land.” Or a clause that says “…and Congress does not have to treat new states on equal footing in every respect whatsoever with the original states.”

The key words in the above Constitutional language need close scrutiny in order to understand the full intent. “To exercise exclusive Legislation in all Cases whatsoever…” simply means the federal government would have full legal power to own and control their property within any particular state without any interference or taxation from that state. Does this mean then that since the Constitution grants power to the federal government to levy taxes, the government simply may buy all the land within a state and have full and unchecked power over the entire state? No! The state first must give away its control and power by Cession of particular States, and then the Congress (not just a federal agency) must agree. This means the two United States Senators from the state in question would have a strong voice, as well as the state’s members to the House of Representatives. How would a state agree to grant the federal government exclusive legislation? This is addressed with these words “…by the Consent of the Legislature of the State in which the Same shall be….” Again, the people who are elected to serve in the legislature of the state in question have the final say as to whether or not to grant the federal government these powers over lands within their state. James Madison wrote in Federalist Paper number 43: And as it is to be appropriated to this use with the consent of the State ceding it; as the State will no doubt provide in the compact for the rights and the consent of the citizens inhabiting it; as the inhabitants will find sufficient inducements of interest to become willing parties to the cession; as they will have had their voice in the election of the government which is to exercise authority over them; as a municipal legislature for local purposes, derived from their own suffrages, will of course be allowed them; and as the authority of the legislature of the State, and of the inhabitants of the ceded part of it, to concur in the cession, will be derived from the whole people of the State in their adoption of the Constitution, every imaginable objection seems to be obviated.” Madison makes it clear that the people’s voice through their representation in their legislature and Congress must be heard before powers are to be given away.

Was it the intent for the federal government to purchase lands and obtain exclusive powers on any land for any reason? Of course not, thus the reason for the final wording in Article 1, Section 8, Clause 17: “…for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings.” This limited ownership and specific activities were mentioned by Madison in Federalist Paper 43. If the founders had any thoughts of large holdings of lands within the states, they would have made it clear at this point. They knew full well that the people of the various states would not have agreed to the formation of a new nation had this been the case.

Article IV: This article of the Constitution has two important sections.

  • Section 2, which states, “The citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several states.” Obviously, if more than half of Oregon’s land mass is owned and controlled by the federal government, the citizens of Oregon are not being “…entitled to all Privileges and Immunities of Citizens in the several states,” when other states east of the Rocky Mountains contain a very small percentage of federal ownership.
  • Section 3, paragraph 2, which states: “The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State.” This section is vital because it only addresses “disposal,” not retention, of federally owned properties, which meant the intent was to do just that very thing (dispose of these lands), and this section addresses “no prejudice against any state.” Obviously, there is a huge prejudice against western states concerning federal ownership within their boundaries.

5th Amendment: The 5th Amendment to the Constitution and an important part of the Bill of Rights addresses the importance of private property. In fact, the wording “…nor be deprived of life, liberty, or property…” is similar and connected to the Declaration of Independence’s wording “…with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness.” The Declaration uses the terminology “unalienable rights” and the Constitution uses “…nor be deprived…” within the Bill of Rights. Both documents address “rights of the people.” Furthermore, historical letters point out that Jefferson and others considered using the word “property” in the place of “pursuit of happiness” in the Declaration. They concluded that property and pursuit of happiness were synonymous. However, the creators of the Bill of Rights, including George Mason, James Madison and Thomas Jefferson, did not overlook the opportunity to codify in the Constitution that private property was a right of the people, and knowing that private ownership of the land was indeed the avenue to pursuit of happiness. With huge federal ownership of lands, there is a direct conflict with the intent of both the Declaration of Independence and the 5th Amendment because it denies private ownership.

9th/10th Amendments: There would not have been enough states to agree to the Constitution and the formation of a central government had there not been a Bill of Rights forthcoming, especially including these two amendments to limit the powers of the federal government:

• 9th: The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

• 10th: The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

Had the founders ever had any intentions to have the federal government retain or obtain large areas of land within the individual states beyond that explicitly specified in Article 1, Section 8, here was there opportunity to do so, but they did not. They did just the opposite: The wording is self-explanatory.

To conclude this understanding of the Constitution’s intent, here are the words of James Madison, also known as the Father of the Constitution, in his Federalist Paper number 45:

The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.”


The debate: The question is whether to sell the lands held by the federal government to private ownership or to grant the title to the individual states? There is little doubt that federally held lands have a great amount of value. Whether their value would equal the debt owed is not for this debate, but only if these lands could or should be disposed of by the federal government. To this, the answer is “absolutely.”

A prudent-minded person would have to conclude that the founders never envisioned the federal government owning large amounts of lands within the states, or they simply would have mentioned it in the Constitution. Since they did not, then they did not. There is no mention of designating wilderness areas, national forests,[1] or grasslands, or any so-called “beautiful places” to be locked away forever. All the resources of the states were to be for the benefit of the inhabitants of the states or of the state itself.[2]

Every founding document clearly specifies the intent of land holding of the federal government was to be small, limited and for specific purposes only. All other lands were to be in the ownership of the states or of the individual. Moreover, the intent was for the soils to be for productive uses to create wealth for the states and the nation. That, once again, is where we are today.

Sell these lands to bonafide purchaser,[3] pay off our national debt, allow private ownership to makes these lands productive; and this nation will prosper and have a wonderful future.

[1] Federal laws that created national forestlands, monuments, grasslands, etc. have no standing within the intent of the Constitution or any other founding documents.

[2] In the book entitled History of the Oregon Constitution, the lands within Oregon’s boundaries were not intended for federal ownership, but rather for private ownership and productivity.

[3] Bonafide purchasers of grazing lands would be those producers currently with leases and/or qualified for leases under the Taylor Grazing Act of 1934. Purchase price would be based in connection with current leasing rates and on a 30-year amortization.

Glen Stonebrink was Executive Director of the Oregon Cattlemen’s Association (1998-2005) and previously served as Oregon’s State Executive Director of USDA federal farm programs under the Reagan and George H.W. Bush administrations. He held staff and administrative positions in the U.S. Congress and the Oregon Legislature and has been a rancher, a teacher, and a member of the Oregon National Guard. He lives in Rickreall, Oregon.

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Atlas Shrugged Movie Coming to Portland: Who is John Galt?

[Update 4-29-11: Atlas Shrugged Part 1 continues to play in Portland (Fox Tower and Eastport) and Tigard (Bridgeport) theaters through at least May 5th and is now playing in these additional cities:
Vancouver, Salem, Eugene, Klamath Falls, North Bend, McMinnville and Roseburg. It will open in Bend on May 6th.]

Ayn Rand’s epic novel, Atlas Shrugged, is finally coming to the silver screen.

Whether you’ve read the 1,000-plus page book or not, you won’t want to miss Part 1 of the film, which debuts the weekend of April 15, 16 and 17. Parts II and III will follow. If you read the book, you’ll understand why it opens on Tax Day.

Because the film is an independent production, it won’t open everywhere, but thanks to the persistence of Cascade Policy Institute and Portland fans it has been booked into the Regal Fox Tower theater downtown. It’s a relatively small theater, so if you want tickets I strongly suggest that you pre-order them at now. Or, you can purchase them at the theater box office.

The book was published in 1957, but the film’s producers have wisely set the story in 2016. This way, Americans can see what’s coming if we don’t turn around the collectivist government in Washington, D.C. The plot involves “men of the mind” who are asked by the mysterious John Galt to go on strike and “stop the motor of the world” rather than let the “parasites,” “looters” and “moochers” benefit from the fruits of their labor. In fact, the book opens with the question, “Who is John Galt?”

It’s a great story, and a powerful warning. Don’t miss it.

If you’re on Facebook, please click “Attending” at the Oregon Atlas Shrugged event page so we can build support for the film and help ensure a longer run.

Many Cascade staff and supporters will be attending the film during the three-day opening weekend. We hope you can join us.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Testimony of HJM 22: Regarding Columbia River Bridge Project

Testimony before the House Transportation and Economic Development Committee on March 30, 2011

I have followed the CRC process quite closely for the past decade. Based on this experience, I offer the following comments about HJM 22:

This is a random request for a random project. There is no evidence that the CRC is part of a strategic transportation vision for the Portland region. Unless and until ODOT comes up with a plan to address related congestion problems and the need for new capacity at the I-84/I-5 interchange, I-405, the Marquam Bridge, and the West Hills Tunnels, the CRC will just absorb vast resources while offering few public benefits.

There is no price tag listed and no specific amount requested. It’s difficult to see how anyone in Congress would take this seriously when the only message seems to be, “more, now.”


There needs to be a coherent rationale for the use of tolls and the setting of toll rates. I am not opposed to highway tolls per se; it’s a time-honored method of financing new infrastructure. In fact, I have no doubt that within the next 20 years much of Oregon’s highway system will be converted to an electronic tollway (with variable rates in dense urban centers), and I look forward to those changes.

But unfortunately the most obvious interest in tolling on the CRC has been to use toll revenue as a local match for federal funding, especially for the uneconomic light rail[1] portion. That is the wrong use of toll revenue and will generate a much-deserved rebellion among highway motorists. If the project is really cost-effective, it should be 100% financed by local user fees, and the toll rates should be set to generate adequate cash flow for debt service as well as to vary by time-of-day/direction-of-travel to ensure free-flow driving conditions at all times. I testified before the CRC tolling subcommittee on three different occasions last year making these points, but to this day the proponents of tolling cannot explicitly state a principled rationale for the use of tolls.

The light rail element is a total waste of money. Vancouver transit riders are express bus commuters and will have no interest in a slow train. At a capital cost of $321.27 million mile, this will be the most expensive transit project in the history of Oregon. By comparison, the earlier portion of the MAX Yellow Line (Interstate Avenue) was constructed for about $60 million per/mile. That project was also a mistake; there is no policy reason to magnify the error at 5 times the cost.

Moreover, neither C-TRAN nor TriMet is planning on putting any of their own money into construction of light rail; both agencies expect everyone else to pick up the tab[2]. One can reasonably conclude that if the two transit districts don’t think light rail is worth one dime of their own funds, it is worth even less to the rest of us.

The mega-bridge concept is doomed to fail under any scenario. The CRC project epitomizes the old-guard, “build up, not out” approach beloved by land-use planners. They oppose new bridges because they imagine that more bridges would encourage more driving. But reality is passing the Oregon system by. Between 1998 and 2006, even with no new highways, the percentage of jobs located within 3 miles of downtown decreased from 27% to 23%. The percentage of jobs located more than 10 miles from downtown increased from 24% to 29%. The future of employment and housing is on the periphery of Portland; thus a massive highway structure on Hayden Island will be irrelevant to many motorists and force them to drive out of their way to cross the river.

The more appropriate response would be to build multiple bridges, much smaller in scale, to accommodate the increasingly scattered travel patterns of the next three decades. It’s interesting that Portland has 10 bridge crossings over the Willamette River and only two are highways; the rest are arterials. Yet no one would seriously suggest that Portland rip out the eight smaller bridges in order contain “bridge sprawl”; everyone recognizes that with more bridges, people drive less because they have more direct avenues to travel on.

The City of Pittsburgh, comparable in size to Portland and located along three major rivers, has 29 bridge crossings, and only 5 are connected to Interstate Highways. The rest are small-scale, two- and four-lane bridges handling local traffic.  Since the I-5 Interstate Bridge is not structurally flawed, it seems evident that Oregon should leave the I-5 Bridge in place and look at adding 2-3 smaller bridges upriver and downriver on the Columbia. In particular, there needs to be a way to get Washington-bound traffic originating on the west side of Portland off of HW 26 by creating an alternative route north to HW 30 from Beaverton/Hillsboro, and then over the Columbia. That would reduce congestion problems on HW 26, I-405, the Fremont Bridge, and I-5 north – which the currently proposed CRC will never do.

[1] Consolidated Appropriations Act, 2010, Section 173 (H.R. 3288, December 9, 2009). “Hereafter, for interstate multi-modal projects which are in Interstate highway corridors, the Secretary shall base the rating under section 5309(d) of title 49, United States Code, of the non-New Starts share of the public transportation element of the project on the percentage of non-New Starts funds in the unified finance plan for the multi-modal project: Provided, that the Secretary shall base the accounting of local matching funds on the total amount of all local funds incorporated in the unified finance plan for the multi-modal project for the purposes of funding under chapter 53 of title 49, USC and title 23, USC.”

[2] CRC Finance Plan, September 2010: “The forecast assumes no TriMet funding of CRC capital costs”, p. 3-27.  “No linkage is required between the CRC LRT capital plan and the capital expenses included in the agency-wide systems plan because the capital finance plan for CRC LRT does not include any C-TRAN revenues”, p. 4-22.

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Testimony on House Bill 3538: Regarding Climate Trust’s Offset Programs

Testimony before the House Committee on Energy, Environment and Water on March 29, 2011:

Co-Chair Cannon, Co-Chair Gilliam and members of the Committee, my name is Todd Wynn. I am Vice President and energy policy analyst at Cascade Policy Institute, a non-partisan, non-profit public policy research organization based in Portland. Our mission is to promote policies that enhance individual liberty, personal responsibility and economic opportunity in Oregon.

I am here to testify today against House Bill 3538.


The original purpose of House Bill 3283 is to regulate and reduce CO2 emissions from regulated facilities by implementing carbon offset projects. The Climate Trust, the only “qualified” organization that receives funds according to the bill, has proven ineffective and wasteful.

House Bill 3538 would change the original purpose of the carbon dioxide standard set forth in HB 3283 and set up the possibility for more fraud and abuse with regard to delivering real, verifiable, and additional carbon offsets.

1. The Climate Trust is not transparent

Because The Climate Trust’s existence is a function of state law regulating facilities, it should be subject to the same standards as public agencies for release of public records.

The Climate Trust has refused to answer questions that could be considered “critical” of carbon offsets[1] and has refused to provide access to the recent five-year report.[2]

The Climate Trust’s annual reports have not been accurate updates. They have been overly positive reports addressing self-proclaimed success and not mentioning failure or specifics of projects.

Many documents such as funding and dollar amounts spent on certain projects are unable to be retrieved or accessed.

2. The Climate Trust has failed to reduce carbon dioxide and to adhere to the monetary offset rate according to House Bill 3283

The Climate Trust has never adhered to the monetary offset rate established by the Energy Facility Siting Council (EFSC), and this has led to a major shortfall in offsets that were paid for by regulated facilities.

The Climate Trust has admitted to paying more than the established monetary offset rate in the last five-year report to the EFSC. Out of thirteen projects, the Climate Trust estimates they spend an average of $3.45 per metric ton, which is well above the current 2007 rate of $1.40 per metric ton. Since The Climate Trust pays an amount higher than the established rate, carbon dioxide is not being offset as according to HB 3283.

The table above shows five of The Climate Trust’s projects that have data on offsets delivered and funds spent. This table describes the shortfall of offsets that should have occurred and the value of these offsets to regulated facilities.

The Climate Trust on these five projects alone has an offset shortfall of 649,923 metric tons which, at the offset rate of $1.40 per metric ton, amounts to $909,893 of regulated facility money.

3. The Climate Trust has continuously failed to produce verifiable and additional carbon offsets

Cascade Policy Institute audited 58% of the offset projects in The Climate Trust portfolio. Cascade Policy Institute audited projects that were completed or near completion in order make use of monitoring and verification reports and other data.[3]

A closer look into the portfolio showed there are numerous problems that undermine the quality and effectiveness of The Climate Trust’s projects. Lack of additionality and accountability of funds, inaccurate assumptions, difficulty in verifying and monitoring results, lack of permanence and leakage issues are most of the problems that plague the analyzed offset projects.

Brief overview on failure of projects:


Deschutes Riparian Reforestation– In addition to only completing approximately 18% of its 2008 goal, The Climate Trust needlessly paid a lumber company to plant more trees on an already stocked land thus negating additionality.

Preservation of a Native Northwest Forest– Climate Trust funds that were supposed to be allocated to the Lummi Indian tribe to purchase 1,654 acres of forest were used to fund the tribe’s annual canoe journey and a college scholarship program.

Blue Heron Paper Manufacturer Efficiency Upgrade– Climate Trust funds that were supposed to be the deciding factor in whether Blue Heron could finance an energy efficiency upgrade were not allocated to the company. Blue Heron’s energy and environment department head stated that they would have completed the upgrades at some point in the future in order to stay competitive thus negating additionality.

Portland Building Efficiency Program– Monitoring and verification reports used two different estimates to calculate the offsets that were not additional. These figures were highly significant in determining the actual amount of offsets paid for and claimed by The Climate Trust. This leads to serious questions on the additionality of these offsets.

Traffic Signal Optimization– The City of Portland already committed to optimizing traffic signals over two years before The Climate Trust’s involvement which negates additionality. In addition, the third party that performed the calculations on fuel savings admitted the estimates were inaccurately calculated.

Internet Based Carpool Matching– The Climate Trust only achieved 1.4% of the ten-year goal and allowed the City of Portland to “make up” the offsets through two projects that were neither monitored nor verified.

Innovative Wind Financing– The Climate Trust paid for renewable energy certificates (RECs) which do not represent actual reductions in carbon dioxide. Subsequently, The Climate Trust has written a policy paper proving why RECs are not offsets.

4. Allowing the Climate Trust to offset more than carbon dioxide goes against the original purpose of House Bill 3283 and opens up the opportunity for more waste and abuse.

The original intent of House Bill 3283 was to reduce and offset carbon dioxide emissions from regulated facilities. This did not include all greenhouse gases.

The majority of fraudulent carbon offset projects have stemmed from greenhouse gases other than carbon dioxide. Massive fraud on the international scale has been attributed to the destruction of trifluoromethane (HFC-23) a greenhouse gas byproduct of manufacturing refrigerant gases. The carbon offset credits that sold to reduce HFC-23 are twice as valuable as the refrigerant itself.


A study found that almost three-quarters of Clean Development Mechanism (CDM) registered offset projects were already complete at the time of approval, and thus, didn’t need carbon credits to be built. An estimated 40 percent of CDM projects registered by 2007 represented “unlikely or at least questionable” emission cuts. Between a third and two-thirds of CDM offsets don’t represent actual emission cuts.[4]


HB 3283 was originally passed with the intention of reducing manmade carbon dioxide, not other greenhouse gases.

The Climate Trust has proven itself to be wasteful and non-transparent in its operations.

Allowing The Climate Trust to offset more than carbon dioxide violates the original intent of the law and opens the door for more fraudulent non-additional offsets at the Oregon ratepayer expense.

I urge the members of this committee to vote no on HB 3538.

[1] Email from Mike Burnett, Executive Director of The Climate Trust. November 28, 2008.

[2] Phone call from Amy Phillips, Marketing and Communications Director of The Climate Trust. September 9, 2009.

[3] Money for Nothing: The Illusion of Carbon Offsets. February 2009. Available at

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Selling Public Land Could Help Budget Woes

by Karla Kay Edwards

The federal debt limit of $14.29 trillion dollars is projected to be reached between April 15 and May 16 this year. Many argue that the ceiling must be raised or the U.S. will begin to default on debts owed. Others believe the U.S. must cut costs and begin to live within our means. But the U.S. government is now spending three dollars for every two it brings in, so if Congress succeeds in cutting the proposed $100 billion out of the budget, it might relieve federal borrowing for a single month. (more…)

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Al Gore, Newt Gingrich, and the Unintended Consequences of Ethanol Policy

By Eric Lowe

Successive presidential administrations over the past 50 years have vowed to aggressively pursue energy independence, attempting to decrease the amount of oil imported from the Middle East. The federal government has latched onto corn ethanol as the silver bullet solution to domestic fuel production disparities. Yet again, public policy creates a set of unintended consequences that ought to be fully considered if Oregon and the nation as a whole are going to continue to transfer demand and taxpayer dollars to this fledgling industry.


As it currently stands, regulation requires a certain volume of ethanol to be blended into domestic fuel supplies annually, and a percentage ratio of this ethanol-to-petroleum blend is “permitted” in gasoline refining by the EPA. Additionally, the subsidies, grants and tax loopholes for the ethanol industry are numerous. According to Rice University’s Baker Institute for Public Policy,[1] in 2008, roughly $4 billion in taxpayer dollars were spent to subsidize replacement of about 2 percent of the U.S. gasoline supply. Up to 15% of gasoline now can be replaced with ethanol (E15 blends), and taxpayers subsidize half of all related costs for ethanol.[2]


Starting with the 2005 Energy Policy Act, 12.95 billion gallons of renewable fuel must be used in 2010, increasing to 36 billion gallons per year by 2022.[3] The EPA recently raised the amount of ethanol permitted in the blending of fuel to 15%, effectively mandating that many refiners produce at this level to meet legislative requirements. U.S. ethanol enjoys a roughly half-dollar per gallon import tax, making domestically produced ethanol artificially competitive over cheaper, more energy-dense Brazilian sugarcane ethanol. In addition, domestic producers receive a whopping 45-cent per gallon tax credit, a handout even certain refiners within the industry have said they don’t need.[4]


Many have begun realizing that ethanol policies may be causing more problems than they solve. Studies show that vehicles built in or before 2007 and all non-road engines aren’t designed to operate on the E15 ethanol (15% ethanol) currently being pushed by the EPA. These higher blend fuels increase emissions of particulate air pollution, ground-level ozone (which is harmful to humans) and other toxic air pollutants.[5] These emissions can mitigate or entirely eliminate the public health arguments for ethanol.


Ethanol policies on the state and federal levels also don’t account for cost. According to the U.S. Department of Energy research, E10 has a 3.6% fuel economy loss compared to traditional gasoline, E15 has a 5% loss, and E20 has a 7.7% loss.[6] Furthermore, older vehicles and all non-road engines (ATVs, leaf blowers, tractors, generators, etc.) are put at risk by these policies. These generally do not have oxygen sensors, so with more oxygen-rich fuel they burn “lean,” or hotter than normal, contributing to significant wear and tear and early degradation. For the average family, having these expensive machines break down far faster than they otherwise would is an expense they can hardly afford. This means that the roughly 247 million “legacy” vehicles and 400 million non-vehicle gasoline engines are negatively impacted by these policies.


The mandates, regulations, grants, tariffs and tax credits surrounding the ethanol industry are, unsurprisingly, of a political origin, and not necessarily pertaining to sound environmental or economic policy. Even Al Gore admits as much in a recent public reversal of his support for what he then referred to as “gasohol.”[7]


“One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for President,” he said. This isn’t the first time a presidential candidate has supported something purely to gain favor from a specific constituency.


Al Gore also admits a common problem with government programs, particularly the ethanol industry, when he said, “It’s hard once such a program is put in place to deal with the lobbies that keep it going.”


Interestingly enough, at a recent Renewable Fuels Association conference (in, of course, Iowa), Newt Gingrich called upon the government to mandate all vehicles sold be flex-fuel models.[8] Mr. Gingrich explained that “the big-city attacks” on ethanol subsidies are really attempts to deny prosperity to rural America. Not only were his remarks politically tinged and partisan, they lacked any sound basis.


While it is hard to believe Al Gore is wiser on the topic of government intervention than Newt Gingrich, in the case of corn ethanol, he is. Politicians ought to account for the unintended consequences of public policies that affect every American. It is well overdue to reverse the subsidies, taxes and mandates on the state and national levels that force ethanol upon consumers and artificially prop up the industry for reasons of political favoritism.


[2] Ibid.




[6] Ibid.




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Karla on Caepla Connections in Canada

Check out Karla talking about the dangers of land use reforms on the Caepla Connections radio program out of Canada.

You can listen by using the player to the right.

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Cascade 20th Anniversary Dinner Cruise

Listen to an Audio advertisement from KBNP radio for the event

Come celebrate Cascade’s 20th Anniversary in style on the Portland Spirit in downtown Portland.

Speaker: Stephen Moore – Wall St. Journal and Fox News Contributor
Cost: $75

Boarding: 5:30pm
Set Sail: 6:00pm
Disembark: 8:30pm


There are 3 ways to RSVP:

1. Register online below (there is a small fee for registering online)

2. Email

3. Call Deanne at 503.242.0900

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Cascade Marks Its 20th Anniversary

In 2011 Cascade celebrates its 20th anniversary. Formed shortly after the Berlin Wall came tumbling down, the Institute’s growth since 1991 is a tribute to the principles which form its foundation and to the ideas that arise from them.


Much has changed since then and continues to change in Oregon, America and the world. More people are free from arbitrary government constraints than ever before. Open markets and property rights are now recognized as essential elements of a free and prosperous society. Cascade is part of a growing network of think tanks worldwide finding a growing acceptance of these classical liberal ideas.


We founded Cascade to promote public policy that advances individual liberty, personal responsibility and economic opportunity in Oregon. We were convinced then, and are still convinced today, that these ideas and principles will produce positive consequences for all Oregonians.


The idea for Cascade actually emerged from an initiative campaign that I and a small group organized and placed on Oregon’s 1990 general election ballot. Measure 11 would have provided refundable tax credits to every K-12 student in the state, which they could use to attend any public, private, religious or home school of their choice. No state had ever voted on such a sweeping reform before, and we felt it was time for Oregon to lead the way.


As it became clear that we would not win that election campaign, we began thinking about how we could move our school choice agenda forward in the future. We decided that Oregon needed a free-market think tank to advocate for school choice as well as other limited-government ideas. That’s why, barely two months after Measure 11 lost at the polls, we incorporated Cascade Policy Institute in January 1991.


Cascade began with a one-person staff (me) and a vision of a freer society in Oregon. We began researching, writing and hosting speakers on a number of important public policy topics. We strategically hired additional staff and built a board of directors capable of carrying our vision forward.


Today, Cascade has a team of twelve full-time staff and eight board members. We now concentrate on a number of policy areas including tax and budget, education reform, health care reform, land use, transit, energy and climate change, and rural policy. We also facilitate the Children’s Scholarship Fund-Portland, which has helped hundreds of low-income students attend the tuition-based schools of their choice.


Cascade has become the “go to” organization for legislators and news media around the state looking for a limited government, free-market perspective on legislation and the issues of the day. And, we host Oregon Capitol News which provides timely news and investigative stories about Oregon policy and politics.


Our budget has grown from $57,000 in the first year to one million dollars today. In our first twenty years, supporters of liberty and markets have voluntarily donated  ten million tax-deductible dollars to support the Institute’s work. That’s a generous sum for an organization in a small state, whose primary “products” are ideas. We believe our donors’ funds have been well spent, and we greatly appreciate the faith they have placed in us to promote our ideals for the betterment of all Oregonians.


As we enter our second twenty years working for Oregonians, we will take a few hours in May to stop and celebrate what we’ve accomplished. We hope you can join us for a Willamette River Cruise on the Portland Spirit the evening of May 26, 2011. Details will be available soon. In the meantime, thanks for all your support, financial and otherwise. We couldn’t do it without our supporters and fans.



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Unemployment Benefits Warrant a Second Look

Oregon’s legislature is currently rushing to approve bills that will extend unemployment insurance yet again. But legislators should pause to consider that while it may feel good, the costs may sabotage the effect they seek.


This year, the average payroll tax to support unemployment insurance is $995 for an employee who makes at least $32,300 in Oregon. This is $109 more than it was in 2010. And that doesn’t even include the costs of large federal extensions. Why have these taxes increased so much? Because Oregon’s unemployment is high and our benefits are generous, or at least prolonged. In Oregon, workers can claim benefits for more than two years.


Some will say that $1,000 per worker is a fair price to pay for a popular safety net. Yet, such a hefty price demands that we ask hard questions or at least look for ways to improve unemployment insurance. The current program has repeatedly been shown to increase unemployment. It also indirectly taxes many employees who personally can never benefit from the program if they become unemployed because they, for example, cannot accept full-time work.


Let’s encourage our federal and state legislators to stop rushing through extensions and pause to ask hard questions about unemployment insurance. The cost is too great to continue ignoring its problems.



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