Commentary’s 2005 Domestic Policy Year in Review

Ten headlines from 2005 to remember-and why

As a very busy year comes to a close, the Reason policy team has selected 10 news headlines from 2005 covering key domestic policy developments affecting individual liberty, free markets, government accountability, and the rule of law. We’ll be closely watching and working on these and other issues in 2006 and beyond. Happy New Year!

Airport Security
“Airport Security’s Grand Illusion”
Pittsburgh Post-Gazette, June 23, 2005

A federal air marshal recently shot and killed a man at Miami’s airport, thrusting the nation’s airport security back onto the front pages. From women accusing federal airport security screeners of groping their breasts to Transportation Security Administration officials wasting half a million dollars on art, silk plants and other decorations to a Government Accountability Office report showing that private screeners do a better job than TSA screeners, it is becoming increasingly difficult for the agency to justify the more than $18 billion in taxpayer money that has been allocated to airport security since the 9/11 terrorist attacks.

What to Watch for in 2006

Some good news: Starting on Dec. 22, the TSA will inch toward the risk-based security approach Reason’s Robert Poole has been calling for since 2001 by relaxing rules on scissors and small tools. The TSA also says it will launch a nationwide registered-traveler program by June 2006, like the one Poole outlined in a January 2002 op-ed for The Wall Street Journal.

Will airports opt out of federal screening? Thus far, many airports considering hiring the higher-performing private screeners have been scared off by liability issues, i.e. the threat of massive lawsuits in the event of another terrorist attack.

With growing calls to screen every bag and piece of cargo placed aboard planes, it will be ever more important for the Department of Homeland Security to allocate resources according to risk in 2006 and beyond.

Reason Resources

» Reason Commentary: Let Airports Take Over Security
» Reason Testimony: Poole Before Congress On Screeners
» Reason Study: A Risk-Based Airport Security Policy
» More Reason Airport Security Resources

Eminent Domain
“Supreme Court: Cities Can Seize Homes for Private Developers”
– Associated Press, June 24, 2005

Few U.S. Supreme Court decisions in history have prompted as much public outrage as Kelo v. City of New London. The 5-4 ruling allows local governments to take non-blighted homes and businesses to make room for new private development projects that officials argue will benefit the public by generating more jobs or tax revenue. The news media, state governments, legal scholars, and homeowners across all political and economic spectrums have reacted with shock.

In a stinging dissent, Justice Sandra Day O’Connor wrote, “The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory. … Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.”

Bills curbing eminent domain abuse are moving through Congress and more than half of all state legislatures. Nevertheless, many local governments throughout the country – from Riveria Beach, FL to Tempe, AZ to New York City – are proceeding with plans to use eminent domain to take private land from residents and sell it to favored private developers. Meanwhile, plaintiff Susette Kelo and her New London neighbors have been able to stay in their homes despite the high court ruling thanks to a temporary moratorium on this type of eminent domain in Connecticut while the legislature considers new curbs on abuse.

What to Watch for in 2006

More than two dozen states have introduced bills limiting eminent domain for economic development purposes. A few, such as Alabama, have formally adopted limits. Most, such as Ohio and Indiana, have established “study committees” (usually with 12 month timeframes) to development recommendations for state legislatures and governors.

The Institute for Justice is currently litigating Norwood v Gamble before the Ohio Supreme Court and is scheduled for oral arguments in January 2006. This will be the first state Supreme Court case addressing eminent domain for economic development purposes since Kelo.

Will Congress, state legislatures, and even local governments enact legislation that puts meaningful substantive limits on the power of eminent domain? (One of the toughest anti-abuse bills in the country recently passed the Pennsylvania Senate.) What municipalities will proceed with sound economic development projects that do not rely on eminent domain abuse, like Seattle has done? Will Susette Kelo and her neighbors remain in their homes?

Reason Resources

» Reason Amicus Brief in Supreme Court Kelo Case (.pdf)
» Restricting Eminent Domain: Model State Statutory Language & Local Ordinance/Charter Provision
» Reason Policy Study: Governments Increasingly Seize Property as First Resort, Not Last (.pdf)
» More Reason Eminent Domain Resources

Pension Crisis
“‘Broken’ Pension System in ‘Crying Need’ of a Fix”
USA Today, November 15, 2005

Late in 2005, many started waking up to the massive pension deficits that are all around us. The defined-benefit pension plans of private companies are underfunded by a mind-numbing $450 billion. And the Pension Benefit Guaranty Corp., which insures the pensions of 44 million U.S. workers, had a $22.8 billion deficit in 2005 alone – thanks in large part to legacy airlines.

Government pension plans are abysmal shape as well:

And the list goes on and on.

What to Watch for in 2006

Will states and cities have the courage to acknowledge that they need to start shifting away from generous, traditional defined-benefit plans and move toward 401(k)-style plans that are good enough for workers at most companies? Will the private companies still using defined-benefit plans follow Verizon, freezing pension plans and moving to 401(k)-plans?

The House just passed a pension reform bill, will it be enough to protect taxpayers from a Savings & Loan-like bailout?

At the heart of the New York City transit strike is a proposed reduction in pension benefits for new workers – part of an effort by management to contain ballooning pension obligations. Will that be resolved in a way that faces economic reality? Or will other public sector unions be emboldened to fight for the status quo, however untenable for the long term?

Reason Resources

» Reason Study: The Gathering Pension Storm: How Government Pension Plans are Breaking the Bank and Strategies for Reform
» Reason Commentary: How to Keep Pension Promises
» More Reason Reform Resources

Toll Roads
“Chicago Closes $1.8 Billion Skyway Deal”
– UPI, January 26, 2005

Toll roads were hotter than Mariah Carey in 2005. USA Today says the idea of selling and leasing roads “caught fire” when Chicago leased (for 99 years) its 8-mile, debt-riddled Skyway for $1.8 billion in January 2005. And The New York Times reports that “nearly two dozen states have passed legislation allowing their transportation systems to operate pay-as-you-go roads, and in many cases, letting the private sector build and run these roads.”

As states across the country try to cope with budget deficits and worsening congestion, they are realizing that private companies are willing to construct, manage and maintain the much-needed roads that the government simply cannot afford to build.

What to Watch for in 2006

Who will sell a road next? Dulles Toll Road, Indiana Toll Road, New Jersey Turnpike, Pocahontas Parkway (VA), Houston’s toll roads, and several highways in Delaware are among the likely candidates to be sold or leased in 2006.

But there is also a sea change under way in how companies are proposing to develop new toll road projects. Instead of aping the state toll agency model of going to the tax-exempt bond market (by creating a local nonprofit corporation to issue the debt), the new approach is to propose a European-type long-term concession, under which the company puts in significant equity investment in exchange for a long-term franchise (long enough to take depreciation on the asset). This enables the private sector to fund a larger total amount, making more projects pencil out without the need for partial state funding. These types of deals should continue winning competitions in states like Georgia, Oregon, Texas, and Virginia—and perhaps Colorado, Florida, Indiana, and North Carolina.

Another big question mark for 2006 is whether California can get its act together and pass Gov. Schwarzenegger’s enabling legislation for tolls and public-private partnerships. If not, watch billions in new investment flow to other states, leaving Californians even more stuck in traffic.

Reason Resources

» Reason Study: Should States Sell Their Toll Roads and Bridges?
» Reason Study: Easing CA’s Transportation Crisis
» Surface Transportation Newsletter
» More Reason Toll and Transportation Resources

Government Reform
“Katrina May Cost as Much as Four Years of War”
– Associated Press, September 10, 2005

“It’s going to cost whatever it’s going to cost, and we’re going to be wise about the money we spend,” President Bush declared as he tried to buy back public support after the feds helped botch Hurricane Katrina rescue and recovery efforts. The $62 billion Congress approved to help rebuild the Gulf Coast apparently didn’t include the levees, as President Bush just committed another $1.5 billion in taxpayer money to make them better than ever. But that’s still not enough money – the House just awarded the region another $29 billion.

What to Watch for in 2006

Investigations into no-bid contracts awarded in the hurricane’s immediate aftermath have already started. Will the feds demand accountability and closely monitor how billions in taxpayer money is money spent?

The full aid package following the devastating Hurricane Andrew was $12.5 billion in 1992. Have President Bush and Congress set a standard and created an entitlement program for future natural disasters?

Reason Resources

» Reason Policy Brief: Rebuilding After Disaster
» Reason Commentary: The Big Easy vs. The Last Frontier
» Reason Commentary: Bush’s Disaster Socialism

Government Spending
In Congress, the GOP Embraces Its Spending Side
Washington Post, August 4, 2005

In September, then-House Majority Leader Tom Delay (R-TX) curiously declared there was nothing, no fat whatsoever, to cut from the federal budget, saying, “Yes, after 11 years of Republican majority we’ve pared it down pretty good—My answer to those that want to offset the spending is sure, bring me the offsets, I’ll be glad to do it. But nobody has been able to come up with any yet.”

The federal deficit was $318.5 billion in 2005 and the deficit for the first two months of the government’s fiscal 2006 is already $130 billion.

When the House passed the $286.5 billion transportation bill by a vote of 412-8, the Washington Post reported, “Lawmakers packed $24 billion in special projects into the transportation bill that finally passed Congress yesterday, including $5.9 million for a Vermont snowmobile trail and $3 million for a documentary about Alaska infrastructure.” There was plenty more where that came from, with over 6,000 “pet projects” pilfering taxpayer dollars in the bill. Funding for Alaska’s infamous $230 billion “Bridge to Nowhere” was eventually rescinded, but in federal government terms that simply means the state was given $452 million that would’ve gone to two bridges but can now be spent on the pork of Alaska’s choice (and yes, the bridge is still a go).

What to Watch for in 2006

More spending.

Reason Resources

» Reason Commentary: Bush the Budget Buster
» More Reason Accountability Resources

California Issues
“Schwarzenegger Is Cut Down to Size on Election Day”
– AP, November 9, 2005

Gov. Arnold Schwarzenegger’s 2005, his “Year of Reform“, didn’t exactly go according to plan. Some of the Terminator’s cornerstones, like the California Performance Review, containing over 2,000 ways to cut government waste, and desperately-needed pension reforms disappeared well before November’s special election. Then the state’s voters rejected all eight initiatives on the statewide ballot, including the four measures Schwarzenegger was championing: a state spending cap, paycheck protection for union members, stricter requirements for teachers seeking tenure, and a change to the way the state’s voting districts are drawn.

What to Watch for in 2006

After hiring, Susan Kennedy, a former Gray Davis aide as his chief of staff, Schwarzenegger is dealing with a bunch of angry Republicans. Will the governor’s 2006 agenda be designed to appeal to independents and moderates, or the GOP’s base?

The idea of a $50 billion, or even $100 billion bond to finance roads and other infrastructure has been floated as a way to jumpstart the state, with Gov. Schwarzenegger saying, “Let’s not Mickey Mouse around here and try to introduce a $5-billion bond to fix transportation. It’s bogus. Or $10 billion. It’s bigger than that.” Will Arnold embrace user-pays projects or feed the state’s spending addiction with more debt?

Reason Resources

» Reason Commentary: Infrastructure – Yes! Mega-debt – No!
» Reason Commentary: Schwarzenegger Needs to Refocus
» Reason Study: Easing CA’s Transportation Crisis
» More Reason California Resources

“Preschool Initiative Nears Ballot”
San Jose Mercury News, November 18, 2005

Movie director Rob Reiner says he won’t run for governor of California this time around, but he has gathered enough signatures to put his $2.5 billion per year universal preschool plan on the state’s June 2006 ballot. The plan would provide taxpayer-subsidized preschool for every 4-year-old in the state, even though over 60 percent of kids attend preschool now, and would also require preschool teachers to have credentials and degrees.

What to Watch for in 2006

Proponents claim preschool will lower crime rates, dropout rates, and cure a host of other problems. Will the debate focus on real-world data, like statistics from Georgia, which has implemented universal preschool but has not seen test scores improve – or Quebec, where taxpayers are now stuck with a daycare plan that costs 33 times the original projections but has not boosted student achievement? Or will it focus on fanciful projections of how much value taxpayers will get in return for their investment?

Gov. Arnold Schwarzenegger, fresh off a series of losses in the special election, is slightly moving away from Republicans, but has yet to announce a position on the “Preschool for All” initiative. Will he endorse it?

Reason Resources

» Reason Commentary: Meathead Is At It Again
» Reason Commentary: Universal Preschool Is Universal Disaster
» Reason Commentary: Don’t Give Them Our Preschoolers
» More Reason Education Resources

“Sandy Springs: Birth of a City: Inaugural Address”
Atlanta Journal-Constitution, December 1, 2005

2005 will be remembered as an important year for privatization, the year an experiment in local government began. For years, residents in Sandy Springs, a suburb of Atlanta, were fed up with dismal public services, a lack of local control, and the skyrocketing cost of being part of Fulton County. So on Dec. 1, after a grueling battle with county officials, Sandy Springs became the first newly incorporated city in Georgia in over 50 years. But what makes this new city of 87,000 truly unique is its decision to contract out virtually every city function, from road maintenance to building inspections to human resources. “We have harnessed the energy of the private sector to organize the major functions of city government instead of assembling our own bureaucracy,” said new Mayor Eva Galambos upon taking office. “We are convinced that the competitive model is what has made America so successful. And we are here to demonstrate that this same competitive model will lead to an efficient and effective local government.”

The founders of Sandy Springs were inspired by the city of Weston, Fla., which incorporated in 1996 after years of poor public service and spiraling costs. Today that city of 65,000 with a $100 million budget has fewer than a half-dozen employees because most of its services were privatized, resulting in better service at significantly lower costs.

What to Watch for in 2006

What portion of Sandy Springs’ services will be contracted out by next December? Will the contracting process be fair and transparent, with adequate provisions and incentives to encourage cost-effective, high-quality performance? Will other communities in Fulton County that are eying incorporation and privatization like what they see and follow Sandy Springs’ lead? Will Sandy Springs become a positive example for local public administrators nationwide?

Reason Resources

» Reason Commentary: The Real Sandy Springs Effect
» Reason Commentary: Sandy Springs Redefines How Government Should Look
» More Reason Privatization Resources

War on Drugs
“Supreme Court Rules Medical Marijuana Users Can be Prosecuted Under Federal Anti-Drug Laws”
CBS Morning News, June 7, 2005

If Congress can regulate [homegrown medical marijuana] under the Commerce Clause [of the U.S. Constitution], then it can regulate virtually anything–and the Federal Government is no longer one of limited and enumerated powers.

So wrote Justice Clarence Thomas in a stinging dissent from the U.S. Supreme Court’s majority opinion in Gonzalez vs Raich in 2005, in which the high court upheld the federal government’s authority to prohibit the medical use of cannabis by people like Angel Raich, who suffers from chronic pain due a brain tumor. The majority concluded that Congress is justified in outlawing the use of homegrown medical marijuana on the grounds that even small amounts of legal pot could make it impossible to police illegal drugs.

In addition to turning sick people into criminals and dramatically expanding federal power over individuals, the Raich ruling departs from the Court’s earlier federalism decisions which viewed states as laboratories for public policy. As Justice Sandra Day O’Connor wrote in her dissent, citing a 1932 precedent, “[o]ne of federalism’s chief virtues, of course, is that it promotes innovation by allowing for the possibility that ‘a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.'”

The people of Raich’s home state of California – and nine other states – have legalized medical marijuana. Are those policies sound and workable? We may never know now that the Supreme Court has given Congress the power to eradicate this experiment for the flimsiest of reasons.

What to Watch for in 2006

On Nov. 23, 2005, attorneys for Angel Raich and her co-defendant returned to the 9th Circuit to re-argue their case on the grounds that federal drug law deprives them of their rights to life and liberty without due process. Will their case get back to the Supreme Court? Will there be more medical marijuana raids, like these ones in San Diego and San Francisco?

Reason Resources

» Reason Commentary: Medical Marijuana Madness
» Reason Commentary: Flush That Commerce, It’s the Feds
» Reason Files Amicus Brief With Supreme Court Supporting Raich, Medical Marijuana
» Reason Files New Amicus Brief As Raich Appeals Medical Marijuana Case to Ninth Circuit