The Thicket at State Legislatures

The Two Sides of the U.S. Economy

By Ed Smith

What do you want first, the good news or the bad news about the U.S. economy?

Beth Ann Bovino, Standard and Poor’s chief  U.S. economist, offered plenty of both Wednesday morning at NCSL’s Legislative Summit in Atlanta.

Initially, she sketched out some of the grim economic news with which we’ve become all too familiar: persistently high unemployment, sequestration, policy gridlock in Congress, growing government debt and an aging population.

“If current debt and policy remains, government debt will be 415 percent of GDP by 2050,” Bovino said.

Want more bad news? American households lost 39 per of their family assets during the recession.

 “We lost 20 years of net worth in just two years. That loss made people stop spending,” Bovino said. “The middle class was hit the hardest. They lost more than 40 percent of their wealth because most of their assets were in real estate.”

But, she added, there’s good news, too. Europe’s problems are not as bad as was feared, China’s ills may not be escalating, there seems to be a growing consensus in Congress not to face off over the debt crisis, and cheap natural gas is spurring manufacturing.

“After four years of mending our financial houses,” she said, “housing is strong, the job market has improved and manufacturing is coming back because of all the natural gas production.”

And, she added, channeling Mark Twain: “News of the Fed's tightening is greatly exaggerated.”

Bovino also said to take a housing bubble off your list of economic concerns. “Bubbles are an issue but not yet,” noting prices are still 25 percent lower than 2006.

The energy area may be the most surprising development for anyone not following the sector in the past few years. The United States, Bovino pointed out, will pass Saudi Arabia in five years as the world’s largest producer of energy.

She said S&P now believes the threat of a new recession, recently 1-in-4, is now1-in-10.

The big surprise for most economists, she added, is how resilient the U.S. economy has turned out to be.

“We think the positives outweigh the risks.”

 And that’s good news.

Ed Smith is the director of digital communications for NCSL.

E-Voting: It May Be a While

By Ed Smith

When it comes to voting, there’s not an app for that and there’s not likely to be one anytime soon.

A group of lawmakers and elections officials debated the pros and cons of voting electronically Tuesday during a session on e-voting at NCSL’s Legislative Summit in Atlanta. While some on the panel were more bullish on electronic voting than others, everyone agreed “baby steps” were likely to dominate the process in the near future.

Senator Whitney Westerfield of Kentucky said his state has approved a first step in electronic voting – distributing ballots electronically – but expected it will be a while before the state would take the next step of allowing election officials to receive ballots electronically.

"We almost have no choice but to take these baby steps,” he said, but added that much of the concern about electronic voting stems from a lack of “knowledge of and comfort with the technology.”

Douglas Kellner, co-chair of the New York State Board of Elections, saw it quite differently.  He noted that proponents of electronic voting frequently point out that if banks can handle electronic transactions, election official should be able to do the same.

“There’s a reason why we can bank online but can't vote online,” Kellner said. “It’s mainly because in banking it's not secret and you can verify and audit the trail of the money.”

Kellner said he favored voting electronically or by fax only in rare circumstances, such as members of the military on the front lines and far from postal services.

“It is critical for confidence in the election process that one be able to verify the election process. There needs to be a trail where you can verify the voting process and that trail does not yet exist when voting by email or fax."

A third panelist, Delegate Jon Cardin of Maryland, said states would continue to study the issue with an eye toward allowing “every person who is eligible to register and vote efficiently and effectively and in a transparent way.”

There are reasons, however, to be concerned since the National Institute of Standards and Technology, the Department of Defense, Department of Homeland Security and the U.S. Election Assistance Administration all have expressed concerns about the security of the current technology.

One member of the audience, however, pointed out that maybe the officials were being too ethnocentric in surveying the electronic voting landscape. Jonathan Brill of SOE Software said electronic voting takes place in 18 developed countries without serious problems.

Ed Smith is the director of digital communications for NCSL.

Follow the Money, but How Far?

By Julie Lays

Disclosure laws that require identification of campaign contributors were the focus of a Tuesday session at NCSL’s Legislative Summit in Atlanta. And in true NCSL fashion, the panel represented a broad spectrum of interests: an academic, one “pro” advocate, one “con” advocate, and a practitioner who has to actually carry out the laws.

Limits on political contributions got a jolt in 2010 when the U.S. Supreme Court ruled 5-4 that restricting independent political spending by corporations, associations or labor unions violated the First Amendment right to free speech. The case, Citizens United v. Federal Election Commission, opened the floodgates to campaign contributions by political action groups, and left policymakers and citizens alike asking, “Is this what the justices had in mind?”

“Yes,” argued Brad Smith from the Center for Competitive Politics. He took issue with the common perception that the ruling was wrong and that legislators should look for other ways to limit the influence of money on political campaigns. Since the ruling, about half the states have strengthened their disclosure laws, according to NCSL’s expert, Karen Shanton.

Smith advised lawmakers, with regards to disclosure laws, to weigh the benefits against the costs. And he wasn’t talking only about financial costs. He described some incidents of harassment of contributors (boycotting businesses, picketing in front of homes) by those who easily found personal information because of disclosure laws. If states decide to require more transparency, they should consider carefully who must report, and how far back in the money chain to go, he said.

Doug Kellner from the New York Board of Elections agreed that disclosure laws involve real costs to governments—in technology, enforcement and public education. He cited figures from New York that it costs around $100 per registered PAC a year. In New York, about 13,000 political action committees are registered.

Pete Quist with FollowTheMoney.org described his group as “pro transparency, not pro limits.” The organization tracks campaign expenditures in all 50 states and grades states on the strength of their disclosure laws. He suggested states should not only track who gives the money, but also who gets it, and who gets a “pass” from having to report.

America's Retirement Crisis: Longer Lives, Lower Savings, Financial Illiteracy

By Mary Winter

The head of one of America’s leading financial services companies kicked off his keynote address to state legislators Tuesday with two eye-opening statistics: More than half of American working couples have saved less than $25,000 for old age, and more than a quarter have saved less than $1,000.

 

Roger Ferguson, CEO of TIAA-CREF detailed America's retirement crisis during a general session of NCSL's Legislative Summit.

For the first time in recent history, current workers are likely to be worse off than their parents were in retirement because of “the huge deficit in savings in our country,” said Roger Ferguson, CEO of TIAA-CREF, which manages retirement investments for four million people in 15,000 institutions in 50 states.

 In his talk, “America’s Retirement Crisis,” Ferguson told the 39th annual National Conference of State Legislatures' Legislative Summit that besides a lack of savings, three other factors are driving the crisis: an aging population, a shift from traditional pensions to the private sector, and unfunded liabilities in the public sector.

“Across all sectors, future retirees worry – with good reason – that they will be unable to count on Social Security, Medicare and Medicaid to the same degree that previous generations of retirees have,” said Ferguson.

Today’s lower lower birth rate, combined with longer life expectancies (an average of 81 years for women and 76 for men), means there are fewer young working people supporting retirees – “a recipe for big fiscal challenges everywhere.”

The ratio of workers paying taxes per Social Security beneficiary is projected to be 2.9 this year, down from 3.4 per beneficiary in 2000 – and 16.5 per beneficiary in 1950, he said.

“It’s clear the nation must take action sooner rather than later,” Ferguson said.

That action should include: 1) making sure Social Security remains healthy and viable for people with low earnings; 2) convincing middle-income earners to plan and save for retirement; and 3) convincing Americans to work more years and to delay retirement.

Finally, Ferguson said, the nation must concentrate on increasing financial literacy. A recent TIAA-CREF survey showed, for example, that nearly half of Americans don’t have a basic understanding of IRAs, one of the most important types of retirement savings instruments, he said.

In the past, employers largely managed their workers’ retirement funds, but today, it’s up to individuals themselves.

“Planning for retirement is a powerful predictor of wealth accumulation,” Ferguson said. “People who plan for retirement have more than double the wealth of people who do not plan.”

Americans with little financial knowledge tend to borrow more, have more problems with debt, buy fewer stocks and save less, he said. The problem is magnified among the poor, women and minorities. Women, for example, earn 77-81 cents for every dollar men earn, and they’re often out of the workforce 10 years or more to care for children or elderly parents.

 “TIAA-CREF believes that one of the most pressing issues of the day is lifetime income - specifically, the need to make sure that our aging population can fund retirements that may stretch for 20, 30 or even 40 years.”

According to the Government Accountability Office, annuities – which guarantee the buyer some monthly income for as long as he or she lives – are good savings vehicles, Ferguson said. But he added that only 6 percent of workers in defined contribution plans bought an annuity upon retirement. Additionally, Ferguson says, many people are taking their Social Security benefits before they reach full retirement age, which means they’re leaving money on the table.

“Given the new realities around funding retirement, our nation desperately needs to rethink its retirement system to meet 21^st century needs.”

NCSL Honors Legislators Who Served the Nation in World War II and Serve it Today as Lawmakers

By Mark Wolf

Four of the six World War II veterans who serve in the nation's state legislatures were awarded the NCSL Civic Medal of Honor during Monday's opening General Session of the Legislative Summit.

 

From left: Representative John Yates of Georgia, Senators Fred Risser of Wisconsin, John Pinto of New Mexico and Charles Colgan of Virginia during Monday's opening session.

Representatives John Yates of Georgia, and Senators Charles Colgan of Virginia, Fred Risser of Wisconsin and John Pinto of New Mexico drew a long standing ovation from the opening session crowd in the Thomas Murphy Ballroom of the Georgia World Congress Center in Atlanta.

 

Idaho Representative Frank Henderson and New York Senator William Larkin are the other World War II veterans serving in state legislatures.

Read their stories in the current issue of State Legislatures magazine.

 

 

U.S. Veterans Often Face Dire Financial Pitfalls

By Mark Wolf

Military veterans and active duty personnel face a plethora of financial roadblocks ranging from loan scammers to housing issues.

During a panel on Creating Financial Pathways for Military Veterans at NCSL's Legislative Summit, lawmakers were told of the extent of the challenges and some potential solutions.

Holly Patraeus, assistant director of the Consumer Financial Protection Bureau, said employment issues for deployed military members were often overlooked. If they are unemployed when they are deployed, the are unemployed when they return, she said.

"We know some of them chase deployments to keep the military pay coming in or they register for school for the GI Bill stipend," she said. "Both of those are short-term solutions."

Declining home values can be devastating to military families, said Petraeus.

"It puts them in a real bind if they get orders to move, the house is underwater and they can't sell it for enough to pay off the mortgage or can't rent it for enough to cover the payment. In 37 years of military service, we moved 24 times and never lived in the same house more than two years," said Patraeus.

Patraeus said veterans are also prey for unscrupulous lenders, especially those who are based out-of-state or out of the country where they are harder to prosecute if they are engaging in predatory practices.

"Put in the search term "military loans" and you get about 58 million responses, may of them extremely expensive or complete ripoffs where they are asked to send money upfront to qualify for loans or to help veterans get approved for VA benefits," she said.

Todd Hill, director of government affairs for the Financial Services (FSR), which represents the nation's largest integrated financial services company, outlined Project Patriotism, a Homes-For-Veterans program which plans to rehabbing distressed properties and either giving or selling them at reduced market value to qualified veterans.

Several of the financial institutions within in the FSR already have veterans' housing program. Project Patriotism aims to establish a a framework to bring the efforts under one umbrella. Hill said that an estimated 500 properties had been donated and that the number could grow into the thousands over the coming years through partnerships with miltary third-party groups and non-profits.

As outlined, a lender identifies a non-profit which selects a candidate,  a property is located and rehabbed, the candidate is prepared for home ownership through financial education and the property is transferred.

The process is neither quick nor easy, Hill stressed. It can take 2-4 years to move the property from a bank to a non-profit and then to the candidate. Rehabbing and refurbishing can take several months and costs from $15,000 to $45,000.

"There are only so many properties available out there," he said. "The challenge is to increase the inventory pool and sustain it for two to five years."

 

Sandra Day O'Connor Tells NCSL Legislative Summit Money Poses Biggest Risk to Fair Courts

By Mary Winter

ATLANTA – The first woman to serve on the U.S. Supreme Court told legislators from across the nation Monday she is promoting two causes: getting money and politics out of judicial elections and getting civics education back into schools.

Sandra Day O’Connor, who served 24 years on the High Court before retiring in 2006, was keynote speaker on the second day of the National Conference of State Legislatures’ 2013 Legislative Summit here. Some 5,000 attendees are at the World Congress Center for the five-day conference.

The best judges, O’Connor said, follow the rule of law, not what they think the law should be. “And they constantly disappoint at least half the people who come to court,” she said.  But good judges are willing to disappoint people all the time, she said, because it’s a requirement of being impartial and refusing to bow to political pressures.

But in 22 states, she said, contested elections are used to choose state supreme court judges, which means candidates must raise campaign funds. From 2000-2009, some $207 million went into judicial campaigns in the United States, O’Connor said. And in 2010, $4.5 million was spent on judicial retention elections in just four states.

“Money presents the greatest risk to fair courts. Money creates the impression, rightly or wrongly, that judges are accountable to money and politics, not the law,” she said.

The best alternative to elections, she said, is merit selection of judges. O’Connor said that when she served as an Arizona state Senator in the early 1970s, the legislature adopted a merit selection system, approved by voters, that set up a commission to pick judges. It has its own flaws, O’Connor said, but “it’s still better than the alternative.”

NCSL President Terie Norelli introduced the trailblazing justice as the author of five books and winner of the Presidential Medal of Freedom in 2009.

O’Connor, appointed to the court by President Ronald Reagan in 1981, was considered a conservative moderate who was often was the swing vote on the panel. In 1971, she famously voted to uphold the controversial Roe v. Wade decision on abortion rights. Her vote also broke the tie on Bush v. Gore in 2000, which upheld the original certification of Florida’s electoral vote and gave Bush the presidency.

On Monday, O’Connor criticized the current state of civic awareness in America, citing a recent study that showed two-thirds of the public knows the name of at least one judge on the TV show, “American Idol,” but only 15 percent can name the chief justice of the U.S. Supreme Court.

It’s among the reasons “why we must bring meaningful civic education back to schools.” Toward that end, she said she has spent a great deal of her time promoting icivics.org, a free website for children and young adults that’s heavy on games about how government works. O’Connor said it’s being used in 50,000 classrooms in all states.

Children need to learn the rights and responsibilities of citizenship, she said, “so we know who we are as a people and how we have impact on issues we care about.”

Legislative Summit Tackles an Array of Lawmakers' Pressing Issues

ATLANTA —The span of issues facing the nation’s state lawmakers will take center stage all week during NCSL’s annual Legislative Summit, which begins Monday at the Georgia World Congress Center.

Before the Summit’s official opening, a pre-conference Health Summit beginning Sunday will focus on the thorny issues around navigating the Affordable Care Act.  Kathleen Sebelius, secretary of the U.S. Dept. of Health and Human Services, will address the Summit at 11:15 a.m. Monday.

Retired Supreme Court Justice Sandra Day O’Connor opens the Summit’s first General  Session, “Our Constitutional Legacy,” at 1:30 p.m.  Justice O’Connor, the first woman to serve on the court, spent 25 years on the bench, much of it as the swing vote, before retiring in 2005.

The Summit, which runs through Aug. 15 and is expected to draw about 5,000 attendees, will also include an energy policy pre-conference, general sessions on America’s retirement crisis, economic recovery and politics (featuring CNN senior political analyst and former presidential advisor David Gergen) as well as sessions devoted to helping military veterans find jobs, transportation issues, campaign finance disclosure, a listening session with the Presidential Commission on Election Administration, a review of the impacts on states of recent Supreme Court decisions, immigration, online gambling, social media and drones.

Although online registration is closed, attendees may register in person at the World Congress Center.

 

Electoral Losses by President's Party Include State Legislatures

An interesting article in Sabato's Crystal Ball on how the president's party, from Truman through Obama, consistently loses seats in Congress and statehouses speculates about what state politics would look like today if Sen. John McCain had won the 2008 presidential election.

Again, let’s just imagine what would’ve happened if we hold all else equal in 2008, except that McCain wins instead of Obama. Not only do Democrats probably retain their state legislative power (they held total control of 27 states after 2008), but they also would probably have retained influence over redistricting in at least some of these aforementioned states. Again, Obama’s 2008 victory — and his subsequent rebuke in the 2010 midterm — has had long-term repercussions for Democrats. For example, it is possible that the 2010 election essentially ceded control of the U.S. House to the Republicans up through the year 2022, when the next redistricting takes effect — determined in good part by the outcome of the 2020 contests.

The article includes lots of historical political detail and justification for this hypothetical and a nice shout-out for NCSL's Tim Storey, who provided the state legislative data and some of the analysis.

Delegate Jameson Testifies on Nuclear Waste Storage and Disposal before U.S. Senate Committee

By Melanie Condon

Delegate Sally Young Jameson of Maryland testifying before the U.S. Senate Energy and Natural Resources Committee.

On July 30, Delegate Sally Young Jameson of Maryland testified on behalf of NCSL before the U.S. Senate Energy and Natural Resources Committee to discuss the recently introduced Nuclear Waste Administration Act of 2013 (NWAA), S. 1240. Delegate Jameson, whose Maryland district borders the Calvert Cliffs Nuclear Power Plant, has long been involved with issues of nuclear waste disposal and storage, and has twice provided testimony to the Blue Ribbon Commission on America’s Nuclear Future.

Delegate Jameson’s testimony applauded the bi-partisan work of Senators Wyden, Murkowski, Feinstein and Alexander to move comprehensive policy on the permanent disposal of spent nuclear fuel forward. In her testimony, Delegate Jameson noted the consent-based approach with state and local governments throughout the disposal siting processes.

Although the process has generally been positive, Jameson pointed out how important it is for state legislatures to be involved. Specifically, Delegate Jameson suggested adding the phrase “presiding officer of each legislative chamber” to the bill’s current language of “Governor or duly authorized official of the state.”

Also testifying before the Committee was newly confirmed U.S. Secretary of Energy Ernest Moniz. Secretary Moniz noted that, in his opinion, one of the most important pieces of the NWAA is the consent-based approach of working with state, local and tribal governments throughout the waste disposal life-cycle, saying that the legislation wouldn’t be workable without state consent.

The NCSL Natural Resources and Infrastructure Committee will be holding a session, moderated by Delegate Jameson, on the future of the NWAA and nuclear waste storage at the upcoming Legislative Summit in Atlanta on August 13.

Melanie Condon is a policy associate for the Agriculture, Energy, Environment and Transportation Committee in NCSL’s Washington, D.C. office.