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Limited Government on the Anniversary of September 11
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Press Release

Limited Government on the Anniversary of September 11

As the anniversary of September 11 approaches, conservatives will again be presented with the opportunity to explain how their view of the proper role of government squares with the harrowing realities made evident by the heinous terrorist attack. For those who do not understand conservatism, or wish to mischaracterize it for political gain, September 11 was supposed to be a death knell for the ideology: A harsh, yet unmistakable reminder of the primacy of the state in the life of its citizens.

08/28/2002
Strength in Numbers
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Press Release

Strength in Numbers

America heads into the Labor Day weekend with great uncertainty. A war with Iraq may be on the horizon. The economy could be on the road to recovery, or slipping back into recession. The most recent data shows consumer confidence is dropping, but consumer spending on durable goods surging. The country’s mood is undecided with the people almost evenly split on the question of “is the country headed in the right direction or wrong direction?” A baseball strike looms. And, we don’t even know if Steve Spurrier’s offense will work in the NFL.

08/28/2002
CSE Property Rights Activists to Participate in "Sawgrass Rebellion"
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Press Release

CSE Property Rights Activists to Participate in "Sawgrass Rebellion"

A CSE core principle: "Environmental laws must respect the rights of property owners." For years, this principle has been violated by radical environmental groups. The Sierra Club, the Wilderness Society, the Nature Conservancy and others have relentlessly filed lawsuits, misusing the Endangered Species Act to restrict property use and confiscate private property without compensation..

08/27/2002
Various Groups Say Publishers Willing to Alter Textbooks
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Various Groups Say Publishers Willing to Alter Textbooks

BY Jim Suydam

As the State Board of Education ground through the second of three public hearings on proposed history and social studies texts, it became clear Friday that the dozens of publishers at the hearing were listening. Of the more than 500 points of contention brought forward by one pro-business interest group, nearly 40 percent already had been addressed by publishers, said Chris Patterson, director of education research at the Texas Public Policy Foundation. The group, which paid more than $100,000 for an academic review of the texts, has posted scores of the publisher's changes in response to their criticism on their Web site. Others, from private citizens representing no one but themselves to organizations representing tens of thousands, such as the pro-free market Citizens for a Sound Economy, also reported dealing with publishers willing to alter their books to correct errors and avoid criticism. Although some board members pointed to the changing drafts of history as proof that the state's textbook adoption process improves the quality of the final text, others, such as Mary Helen Berlanga, D-Corpus Christi, worried that the board members' grip on the content of Texas textbooks was slipping. "You are not elected, you are not appointed, you're simply people making recommendations to our board," Berlanga said, warning publishers to not be so quick to make the changes requested by anyone other than the board. Board member Alma Allen, D-Houston, agreed: "I don't want the publishers running out and making changes every time your group comes up here to speak." The publishers have the right to do what they want, board chairwoman Grace Shore, R-Longview, said. The State Board of Education only gets to vote on the final texts. "The publishers are free to meet with anyone they want and make any editorial changes they want," Shore said. Austin lawyer Joe Bill Watkins, who represents the American Association of Publishers, said publishers have always been willing to work with anyone interested in developing textbooks. But the increased interest and organization of groups, such as Citizens for a Sound Economy and the Texas Public Policy Foundation, have required more work by publishers. "To some extent, this is what they are used to dealing with every adoption," Watkins said. "There is just more of it in this adoption, in part because it's social studies and there's just more issues." The board's decision to add an additional public hearing, scheduled for Sept. 11, has also brought out more people wanting to make a comment. In November, the board will vote on more than 150 proposed social studies and history texts, selecting which ones make the list of books from which Texas school districts may buy. Making that list means a lot to publishers. Texas will buy 4,681,500 history and social studies books and will spend about $344.7 million on the books and other materials up for review. By the time a publisher takes a book before the board, about 80 percent of the company's investment has been made. Because Texas is the nation's second-largest textbook consumer, it can dictate what other states get as publisher's target their offerings for Texas.

08/24/2002
Perspectives on the President's Commission to Strengthen Social Security
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Press Release

Perspectives on the President's Commission to Strengthen Social Security

The President's Commission to Strengthen Social Security was appointed in May 2001 to formulate proposals that would protect benefits for today's retirees; enhance Social Security's fiscal sustainability for the long term; and give younger workers the opportunity to invest part of their payroll taxes in personal retirement accounts that they would own, control, and be able to pass on to their children. The commission's three reform proposals, delivered to the president in December, fulfill those obligations.

08/22/2002
Senate Dems, Conservative Groups Clash Over Energy
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Senate Dems, Conservative Groups Clash Over Energy

Senate Democrats and national conservative groups are tugging energy conferees in opposite directions on several so-called green provisions included in the Senate version of energy legislation now before a House-Senate conference. In a letter sent to conference committee members Friday, six conservative groups told lawmakers that the Senate's language on global climate change and a renewable portfolio standard should be "deal breakers." Specifically, the groups targeted provisions to create a national greenhouse gas database, require power plants to generate a portion of their electricity from renewable sources, require the Commerce Department to produce climate change vulnerability assessments and ask the White House to develop a strategy for stabilizing greenhouse gases. Together, the sections would "make U.S. energy supplies less abundant, less affordable and less reliable," according to the groups, which included Citizens for a Sound Economy, National Taxpayers Union, Small Business Survival Committee, Americans for Tax Reform, Consumer Alert and the Competitive Enterprise Institute. The bill should not become a "vehicle for anti-energy policies that penalize consumers, seniors, taxpayers and the economy," they wrote. Also last week, Senate Democrats released a fact sheet that defended those and other environmentally friendly provisions included in their bill. Overall, the bill would "address the long-term need to increase domestic energy supplies while promoting greater energy efficiency through the use of new clean technologies," according to a fact sheet compiled by the Democratic Policy Committee. Specifically, Democrats said their bill combines climate change mitigation with "common sense" strategies to reduce greenhouse gas emissions and reliance on traditional fossil fuels, such as a requirement that utilities generate 10 percent of their power from renewable sources. House and Senate energy conferees will resume discussions of the bill soon after returning to Capitol Hill from the August recess. Conferees will tackle the toughest energy issues beginning in the third week of September. House Energy and Commerce Chairman Tauzin, the chairman of the negotiations, hopes to wrap up work by October. - by Brody Mullins

08/22/2002
Time to Get Serious About the Economy
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Press Release

Time to Get Serious About the Economy

© 2002 Copley News Service, 8/21/2002 The White House put on a much ballyhooed Economic Forum in Waco, Texas, last week, involving 250 hand-picked "experts" and "average Americans" with the stated purpose of discussing "where our economy stands, the impact of policies we put in place and the steps we are taking." How disappointing that not a single supply-side economist was there -- not Art Laffer, David Malpass, Richard Rahn, Larry Kudlow, Bruce Bartlett, Gary Robbins, Steve Entin, David Gitlitz, Dr. Robert Mundell or Dr. Judy Shelton.

08/21/2002
An Owner Divided Against Himself Cannot Stand
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Press Release

An Owner Divided Against Himself Cannot Stand

As corporate governance structures adapt to guard against the type of corporate accounting scandals and high-profile bankruptcy filings witnessed over the past year, CEO compensation will be subject to far greater scrutiny than during the high-flying 90s. Conventional wisdom suggests that stock option grants encouraged executives to realize short-term gains through risky strategies and earnings manipulation at the expense of sustainable growth and the long run interests of shareholders. While the value of such options, which in some cases ranged in the hundreds of millions of dollars, was based on the huge capital gains provided to shareholders, the fact that top executives could realize such ungodly sums for essentially failing at their jobs is compelling evidence that the corporate structure did not adequately align the interests of management and shareholders. The question now facing corporate boards is how best to encourage CEOs to seek long run shareholder value instead of transitory spikes in the company’s stock price. Some suggest that instead of giving executives the option of purchasing a set number of shares at a predetermined price, they should be paid in company shares that could not be sold for a specified period of time. This would allow executives to share in any wealth they helped to accumulate while making them as sensitive to declines in the stock price as their shareholders. CEOs would be more cautious, less concerned about meeting quarterly earnings expectations, and unable to cash out just before their company plunges into bankruptcy. However, as the case of UAL, parent of United Airlines evidences, long-term stock ownership is not the silver bullet many may suspect. In 1994, United Airlines employees agreed to a 16 percent pay cut and reduced benefits in exchange for an illiquid 55 percent stake in the company. The stock was intended to serve as the basis of employees’ retirement and could not be sold until the employee left the company. The first six years of employee ownership was blissful: there were no work stoppages, the stock appreciated by over 200 percent, and employees enjoyed seats on the board and the ability to influence key decisions. This changed in 2000 when the Employee Stock Ownership Plan (ESOP) was up for renewal. To maintain its stake, employees had to agree to purchase the shares of retiring employees, something many did not want to do without increased flexibility. Opportunistic union leaders highlighted the fact that United’s salaries were well below the industry average. In late 1999, United’s Air Line Pilots Association (ALPA) chapter elected bellicose Frederick C. Dubinsky, who promised big wage and benefit increases. At the same time, the International Association of Machinists (IAM), who represent the bulk of United’s non-flight attendant workforce, felt pressure from a rival union, the Aircraft Mechanics Fraternal Association (AMFA), to get wages above the industry average if it was to retain its membership. Yet both of United’s unions were committed to a continuation of the ESOP at 55 percent. Of course, it was impossible for the unions to win huge wage increases and maintain their majority holding in the company without a steep decline in UAL’s stock price. The differential between wages at United and other airlines was the premium paid for ownership the company. By demanding that employees retain majority ownership and be given huge wage increases at the same time, the ALPA and IAM argued that its members should pay less than nothing for the stock. Knowing that such dilution would lead to a stockholder exodus, CEO James Goodwin took a hard line during negotiations. But when ALPA members refused to work overtime, leading to tens of thousands of flight cancellations in the summer of 2000 and lost market share, he was forced to relent. Not only did United’s pilots maintain their ownership stake, they also secured the highest wages in the industry. When Goodwin tried to block a similar package for IAM members, it used the September 11 layoffs as an excuse to oust him. Overall, United wages increased by 25 percent in 2000 and the company’s stock dropped by nearly 50 percent. What’s more, wage increases put downward pressure on the company’s bottom line. The company has lost well over $3 billion since the 2000 negotiations and labor costs now stand at an industry-high 41 percent of operating expenses. UAL’s stock price continues the freefall begun in 2000 as investors now await a bankruptcy filing. Ironically, the government has offered a $1.8 billion loan to save the company, but its majority owners have scoffed at the $750 million in wage concessions the government requires before United can draw on it. Labor unions have often been accused of cultivating an unnecessarily antagonistic relationship between employees and owners, but at United the unions have managed to turn owners against themselves. The idea behind employee ownership – like stock options for executives – was that allowing employees to share in the profits would align their interest to those of shareholders. Instead, unions succeeded in convincing employees that they could have their cake and eat it too. United is a fascinating case study of an innovative corporate governance structure gone terribly wrong. While it does not have the ready-made corporate villains of the Enron and WorldCom scandals, it provides another example of how stock incentives for employees do not necessarily lead to an increase in shareholder value. Corporate boards would be well served to pay as close attention to United’s travails as those of Enron before pioneering the next generation of corporate governance schemes.

08/21/2002
Is There a Doctor Left in the House?
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Press Release

Is There a Doctor Left in the House?

Recently, the trauma center at the University of Nevada Medical Center in Las Vegas closed its doors to the public. The reason? Physicians and surgeons working in the trauma center could no longer afford the costly malpractice insurance premiums arising from the constant threat of lawsuits. With the trauma center closed, critically injured patients would have to be transported to a similar center five hours away. It was only after the surgeons agreed to be re-classified as county employees (which provided a shield against excessive lawsuits) that the trauma center reopened its doors.

08/21/2002
The President Leads
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Press Release

The President Leads

President George W. Bush took another important step last week in defining who he is and what he will fight for. It was the kind of bold move that will be talked about for years after he has left the presidency. He placed principle ahead of politics – which is pretty close to a man bites dog story these days.

08/20/2002

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