One of the ten planks of Karl Marx’s Communist Manifesto is “Centralization of credit in the hands of the State.”  Apparently of like mind is North Carolina state Senator Ellie Kinnaird (D-Orange), primary sponsor of Senate Bill 150, Study State-Owned Banks.

Basically, the “state-owned bank” would take taxpayer dollars, then loan these funds to select businesses (including privately owned banks). You don’t think there’d be any political preferences to who receives these loans, do you? And what interest rates would the state-owned bank charge — would they reflect the riskiness of the loans and the market’s rate of time preference?

Moreover, the bill states that “excess earnings” of the bank could be “used to supplement General Fund purposes.” But what if the bank loses money? By definition a state-owned bank would primarily be lending to investments deemed unworthy by private lending institutions, meaning the state-owned bank’s loan portfolio would be especially high-risk. Is there any doubt North Carolina taxpayers would be forced to bail it out? Have we learned nothing about the dangers of the system of socialized risk from Fannie Mae and Freddie Mac?

Worse still is this: Kinnaird’s bill represents another shift of power from individuals to the political class. By establishing a state-owned bank, decisions over creditworthy business investments would be centralized to a purely political organization, rather than left in the hands of private citizens. In a free society, however, the use of scarce resources and means of production is dictated by consumers – based according to their purchasing decisions. Capital goods, land, labor and other resources are directed toward satisfying the most urgent needs of consumers.

Under a state-owned bank, unaccountable political appointees will determine which investments are funded, and in turn determine the use of the means of production. Scarce resources are used not in response to the needs of the masses, but rather according to the whims of the political class. More power is taken from the many and concentrated in the hands of the few.

Because it takes a page out of the Karl Marx playbook, and would further erode freedom by politicizing more of our economy, SB 150 is this week’s Bad Bill of the Week.

The post SB 150: Paging Karl Marx appeared first on Civitas Institute.

HB 722, “Capital Punishment/Severe Disabilities,” would mandate that a killer who suffered from a “severe mental disability” when the crime was committed would not be sentenced to death. Sponsored by Reps. Paul Stam (R-Wake), Chuck McGrady (R-Henderson), Sarah Stevens (R-Surry), and Jonathan Jordan (R-Ashe), the law addresses “post conviction procedures for a person with a severe mental disability.” But the details of the bill suggest that the families of murder victims would almost surely be put through yet another trial if the accused was found guilty and sentenced to death, yet could appeal on the grounds he had a severe mental disability.

Stam said the issue of executing the mentally disabled is “nothing new,” quoting 18th century legal scholar William Blackstone: “A madman shall be punished by his madness alone.”

“You don’t deter crime by punishing those that everybody knows can’t be deterred – the people who are clearly mentally disabled or deficient,” Stam said in committee. “That’s what this bill is about. It’s not – not, not, not – about weakening the death penalty on capital crimes.”

If HB 722 is not about weakening the death penalty, then why are so many DAs against the bill?

North Carolina Conference of District Attorneys Director Peg Dorer spoke on the issue.”DAs oppose this bill,” she said. “The issue of mental disability should be weighed by the jury, not by the judge. It only takes one juror to make that decision, and the death penalty is not found.”

Here’s the law’s definition of severe mental instability: “any mental disability or defect that significantly impairs a person’s capacity to do any of the following: (i) appreciate the nature, consequences, or wrongfulness of the person’s conduct in the criminal offense; (ii) exercise rational judgment in relation to the criminal offense; or (iii) conform the person’s conduct to the requirements of the law in connection with the criminal offense.”

No murderer is conforming to the laws of society, so wouldn’t one be able to say that anyone who commits a murder is not mentally stable? And how many murderers could be said to be “exercising rational judgment” when they take an innocent victim’s life?

No murderer fully appreciates the wrongfulness of his acts. And if a lawyer says the accused would do it again, then would a killer be immune to the death penalty?

Dorer said the change would encourage “judge shopping” and would cost more money, as opposed to saving it, as proponents claim. She predicted that all the current inmates on the state’s death row would seek relief under the measure, forcing the state to re-litigate those cases.

That concern was echoed by Rep. Debra Conrad, R-Forsyth, who said her local DA “compared the bill to the Racial Justice Act,” predicting that “it will the end death penalty as a punishment in North Carolina.”

Almost all NC death-row convicts have appealed under the Racial Justice Act, regardless of the race of the killers or their victims. It’s easy to see that under HB 722, almost any convicted murderer would claim a mental deficiency, if only to delay the day of reckoning.

I spoke to Stam the other day and he was not confident the bill would make crossover and get to the Senate, meaning that the bill would die.

HB 722 sounds like lawmakers simply don’t have the guts to push for full repeal of the death penalty. Why else punish the families, courts, and DAs with all this nonsense? That is why HB 722 is this week’s Bad Bill of the Week.

The post HB 722: Racial Justice Act, Part 2? appeared first on Civitas Institute.

Government doling out taxpayer dollars to politically-connected businesses is bad enough, but this week’s Bad Bill of the Week takes that concept to even lower depths.

HB 797, Business Facilities Development, sponsored by Reps. Charles Jeter (R-Mecklenburg), Paul “Skip” Stam (R-Wake), and Tom Murry (R-Wake), would extend government-subsidized loans to groups of unelected and unaccountable bureaucrats. Specifically, the bill makes changes to the Site Infrastructure Development Fund (SIDF).

The SIDF is administered through the state’s Department of Commerce, and was “created for the purpose of stimulating economic activity and creating new jobs in the State.” According to current law, “to be eligible for SIDF assistance, a business must invest at least $100,000,000 of private funds in site development for a project that will provide jobs for at least 100 new employees.”

Basically, the Department of Commerce loans a business money, and the business is “forgiven” a portion of the loan (in other words, handed free taxpayer dollars) depending upon certain performance requirements, e.g., number of workers hired by the recipient company. The loans are typically designated for use to purchase or improve land, and under current law the loans can go either to the business directly or to local government units, state agencies or nonprofit corporations.

Under HB 797, these SIDF loans would only be eligible to go to local government units. And here is the kicker: The bill would include economic development commissions under the definition of “local government units.”

In short, under this legislation a regional economic development commission could receive a subsidized loan, use the money to acquire land, and then lease the land to a private business promising to hire workers.

So this bill would approve taxpayer dollars be given to unelected “economic development commission” bureaucrats for those bureaucrats to buy land and become landlords.

Moreover, HB 797 removes the requirement that SIDF loans be used for investment projects exceeding $100 million, but rather allows for arbitrary “performance criteria that protects the State’s investments” as part of any loan agreement.

Because it further expands the reach of taxpayer-funded corporate welfare to unelected bureaucrats, instead of working to free the economy from political power, HB 797 is this Week’s Bad Bill of the Week.

The post HB 797, Business Facilities Development: Making a Bad Idea Worse appeared first on Civitas Institute.

Gamblers on a losing streak often resort to desperately making riskier bets to try to make up for their previous losses – a move that rarely pays off and which usually leaves them even poorer.

Senate Bill 558, Treasurer’s Investments, appears to mimic the risky behavior of the desperate gambler. Sponsored by Sen. Ralph Hise (R-McDowell) and strongly supported by State Treasurer Janet Cowell, this bill would allow the Treasurer to engage in more risky investments with the state’s $78 billion pension fund. The bill was just approved by the Senate Committee on Pensions and Retirement and Aging.

The legislation would, according to one news account, “allow Cowell to increase the state’s portion of pension fund investments in real estate and alternatives — including hedge funds, commodities, asset-back securities and other credit-related investments, and venture capital and private equity — to 40 percent. Combined, those categories can total 36 percent currently.”

According to a Pension & Investments magazine article, Cowell is seeking the added “flexibility” to make up lost ground by the fund’s poor performance in recent years in order to reach the fund’s long-term assumed annual rate of return of 7.25 percent. “We can’t hedge out 10 years of slow growth,” Cowell said.

Indeed, the state pension faces $2.8 billion in unfunded liabilities, and poor returns over the last several years dropped the fund from a funding ratio of 106.5 percent (the fund had more than enough money to cover projected future obligations) to 95.4 percent. In just five years, the fund went from having $3 billion in surplus assets to an unfunded liability of $2.8 billion.

The state’s pension fund is financed by a combination of state employee contributions and taxpayer dollars. The more underfunded the pension fund is, the more taxpayers are on the hook to pay the benefits promised to state government retirees. Taxpayer support for the pension obligations has grown to roughly $800 million this year.

This dilemma underscores a larger point: North Carolina’s pension system needs to be reformed. Rather than consolidating so much power in the hands of the State Treasurer and exposing taxpayers to billions of dollars worth of risk, state government workers should be shifted to a defined-contribution (or 401k-style) retirement system in which each worker controls his or her own retirement fund, and taxpayers are no longer exposed to any risk.

Because it resembles a risky move by a desperate gambler, exposes taxpayers to greater risk, and further empowers a politician rather than empowering individual state employees, SB 558 is this week’s Bad Bill of the Week.

The post SB 558: Exposing Taxpayers to More Risk appeared first on Civitas Institute.

House Resolution 836, Support Restoration of Glass-Steagall Act, is a fact-free proclamation seeking to perpetuate a harmful myth surrounding the financial collapse of 2008. Sponsored by Reps. Jeff Collins (R-Nash), Mitchell Setzer (R-Catawba), Robert Brawley (R-Iredell), and Rodney Moore (D-Mecklenburg), the Resolution would have the General Assembly urge “the United States Congress to enact legislation that would reinstate the separation of commercial and investment banking functions that were in effect under the Glass-Steagall Act.”

The premise behind this resolution is the ill-informed myth that “the Glass-Steagall Act was repealed in 1999, partially contributing to the greatest speculative bubble and worldwide recession since the Great Depression of 1933.” Neither one of these statements is remotely true.

For sake of background, the Glass-Steagall Act refers to the Banking Act of 1933 which, among other things, attempted to keep separate the functions of commercial banks and investment banks.

The so-called “repeal” of Glass-Steagall took place in 1999 when President Clinton signed the Gramm-Leach-Bliley Act (GLBA).

But it is untrue that GLBA actually “repealed” the Glass-Steagall Act. As financial policy expert for the American Enterprise Institute and former general counsel to the U.S. Treasury Department Peter Wallison points out:

Glass-Steagall was never repealed. It is still applicable to insured banks and forbids them from underwriting or dealing in securities. What was repealed in 1999 were the sections of Glass-Steagall that prohibited insured banks from being affiliated with firms—commonly called investment banks—that engaged in underwriting and dealing in securities. (emphasis added)

So Glass-Steagall was never repealed, it merely was amended to remove two of its sections.

Moreover, the removal of those sections did not even “partially contribute” to the financial crisis and the recession that followed. As President Clinton said in 2008, “I don’t see that signing that bill had anything to do with the current crisis.” Wallison similarly concludes, “(I)f Glass-Steagall had never been amended in 1999, the financial crisis of 2008 would have happened exactly as it did. Those who spend their time blaming Glass-Steagall’s repeal for the financial crisis need to think again.”

Still, there are those that insist that removal of two sections of Glass-Steagall somehow is to blame for overly risky behavior by banks, causing the financial collapse due to the intermingling of commercial and investment banking activities. If this narrative were true, it would follow that those institutions that failed would be those that combined commercial and investment banking activities.

Reality, however, shows otherwise. As noted in the Washington Post:

Facts such as that Bear Stearns, Lehman Brothers and Merrill Lynch — three institutions at the heart of the crisis — were pure investment banks that had never crossed the old line into commercial banking. The same goes for Goldman Sachs, another favorite villain of the left.

The infamous AIG? An insurance firm. New Century Financial? A real estate investment trust. No Glass-Steagall there.

Two of the biggest banks that went under, Wachovia and Washington Mutual, got into trouble the old-fashioned way – largely by making risky loans to homeowners. Bank of America nearly met the same fate, not because it had bought an investment bank but because it had bought Countrywide Financial, a vanilla-variety mortgage lender.

Meanwhile, J.P. Morgan and Wells Fargo — two large banks with big investment banking arms — resisted taking government capital and arguably could have weathered the crisis without it.

And as best-selling economist Tom Woods points out: “The (repeal of) Glass-Steagall-did-it crowd is the same crowd that likes to claim Canada avoided the worst of the U.S. crisis because it was so much better regulated. But they can’t have it both ways — Canada did not have a Glass-Steagall law!”

HR 836 is an ill-informed attempt to revive a false narrative – namely that it was “de-regulation” of the banking system that caused the financial crisis. The premises behind the resolution are false and easily refutable with a minimum amount of research. For these reasons, HR 836 is this week’s Bad Bill of the Week.

The post HR 836: Perpetuating a Major Myth from the Financial Crisis appeared first on Civitas Institute.

This week’s Bad Bill of the Week is HB 737. Titled “Protect and Support the Unemployed” and sponsored by Representatives Deborah Ross (D-Wake), Susi Hamilton (D-New Hanover/Brunswick), Pricey Harrison (D- Guilford) and Edward Hanes (D- Forsyth), HB 737 is not all its lofty title suggests that it is.

Aiming to put people back to work, the bill does two things: provides employers a tax credit for hiring anyone that has been unemployed for a period longer than 12 months and forbids employers from discriminating against persons based on their status as unemployed.

No one will argue that the General Assembly needs to be proactive to fix North Carolina’s economy and create an environment that fosters economic growth and puts people back to work. However, providing tax credits to employers that hire the long-term unemployed is not the answer to North Carolina’s high unemployment rate. While it hypothetically encourages employers to hire those that have been unemployed for longer than 12 months, it unintentionally creates an environment that leaves the more recently unemployed in a vulnerable situation. If employers are financially incentivized to hire those that have been unemployed for more than 12 months, why would they hire another equally, or possibly better-skilled unemployed candidate that has been out of work for only 6 months? They wouldn’t.

More government meddling into the labor market and further distortion of the decisions of employers are not ways to foster genuine economic recovery.

In reality, HB 737 ignores the real problems that plague the economy – that there are more workers than jobs available. The only real way to help people find jobs is to grow the economy- not by bribing employers to hire whoever has been unemployed the longest.

HB 737 also opens employers up to lawsuits if they discriminate against someone based on their status as unemployed. The glaring issue here is that it’s impossible to prove why an employer does or doesn’t choose to hire someone. How could anyone possibly know the reason they were passed over was because they were currently unemployed? What will inevitably happen is employers will be subjected to frivolous lawsuits from rejected applicants.

This brings us to the inevitable unintended consequence: If employers are afraid of being sued, they’re just going to avoid interviewing unemployed candidates altogether. If the General Assembly wants more unemployed North Carolinians to get hired, the last thing they should do is add yet another way for North Carolina job creators to get sued.

North Carolina should get serious about putting people back to work. However, if “help” comes in the form of HB 737, North Carolinians are far better off without it. Full of counterproductive provisions and unintended consequences, HB 737 is this week’s Bad Bill of the Week.

The post HB 737: Shun and Neglect the Unemployed appeared first on Civitas Institute.

This week’s Bad Bill of the Week is HB 603. Sponsored by Representatives Deborah Ross (D-Wake), Deb McManus (D-Chatham), Valerie Foushee (D-Orange), and Paul Tine (D-Beaufort), the The Equal Pay Act is a mess. The bill aims to  guarantee fair compensation by requiring employers to pay all employees “the same wages in the same establishment for the same quality and quantity of the same classification of work.” No one will argue that this should always be the case in any effectively managed operation. However, the government mandating it offers yet another arbitrary, inconsistent piece of red tape for small business owners to deal with when trying to hire North Carolinians.

The bill is inherently full of holes. While it attempts to equalize pay, it offers so many exceptions that it essentially renders the bill meaningless. It goes on to state that, while unequal pay is an absolute no-no, employers can make exceptions based on “seniority, a difference in length of service, ability, skill, difference in duties or services performed, whether regularly or occasionally, difference in the shift or time of day worked, hours of work, or restrictions or prohibitions on lifting or moving objects in excess of specified weight, or other reasonable differentiation, factor or factors other than sex, when exercised in good faith. ” So in essence this bill would apply only to workers hired on the same day who share identical skills, work ethic, ability, knowledge, daily tasks and schedules. That basically rules out, well, everybody.

Even if the bill wasn’t full of inefficient regulatory red tape for business, would the Equal Pay Act be good policy for North Carolina or the people it’s trying to protect? No.  It would make North Carolina business owners hesitant to hire new employees. Though the bill aims to achieve equal pay for women,  it ultimately makes it more difficult for businesses to hire them because it opens employers up to retribution. If businesses are concerned that women could easily sue for better pay based on gender, it would make it more likely that employers avoided that risk altogether by passing over female applicants. Furthermore, it would make it difficult for employers to grant raises without wondering how it will affect compliance with the Equal Pay Act. At the end of the day, it simply makes it much more difficult for business owners to put more people to work in a time when North Carolinians are desperately in need of jobs.

While The Equal Pay Act may be well intentioned, reality doesn’t match up. In cases such as this, the legislature should look past its nice sounding title and realize that North Carolina workers need more than strictly rhetorical assurances of “fairness.”  Naïve, full of holes and unintended consequences, HB 603 is this week’s Bad Bill of the Week.

The post HB 603: The Discourage Employers From Hiring Women Act appeared first on Civitas Institute.

Facing a multi-billion dollar budget deficit in 2011, the state legislature reduced and eliminated a variety of programs in order to balance the budget. One program the legislature ended future funding for was the North Carolina Teaching Fellows program. The Teaching Fellows program awarded renewable scholarships of up to $6,500 annually to 500 high school students who were interested in becoming teachers and who promised to work in North Carolina public schools for at least four years after graduation.

Recently state Reps. Deb McManus (D-Chatham)  and Joe Sam Queen (D-Haywood) introduced legislation (HB 447, Restore Teaching Fellows Program) to provide $3.25 million to restore the North Carolina Teaching Fellows program for this year and subsequent years.

Understandably, eliminating the Teaching Fellows program produced an outcry of support from teachers, alumni and other supporters of the program. Still there were valid reasons why the state stopped funding it.

The Teaching Fellows program was created in 1986 as part of a 10-point teacher recruitment plan. At the time North Carolina population and student enrollment was increasing at record rates and more teachers were needed. Those conditions don’t exist today. With all the cutbacks and demographic changes, North Carolina actually has 231 fewer teachers than in 2009-10.

While there is no denying there are areas of growth, we can’t forget that almost half of North Carolina’s counties are expected to lose population in the coming years. There are areas where teachers are in demand, but the problem is a maldistribution of teachers, not a shortage.

How are localized shortages addressed? North Carolina is contracting with Teach for America to serve parts of North Carolina. So far the experiment has worked well for both sides. Alternative certification programs can also help to meet the need. Both of these options can help to meet the need for teachers at far less cost than Teaching Fellows.

And speaking of cost, it’s important to note the bill requests $3.5 million for tuition and scholarships. However, that is only for one class of teachers. In subsequent years, second-  third- and fourth-year classes would also be added. Hence, the $3.5 million figure is really $14 million to keep the program running.  Add to that another $810,000 annually – the amount think tank Public School Forum of NC was being paid to administer the program – and you’re looking at a very different bill.

In 2009, the News & Observer ran a story about the difficulty Teaching Fellows were having finding jobs. According to the state’s Department of Public Instruction, less than half of all graduates  of UNC education schools had a job in education a year after graduating. Yes, it’s true the job market is slightly better than in 2009, but that’s not saying much. Teachers with math and science background have better options, but an informal check in 2011 revealed only a smattering of Teaching Fellows had such a background. It’s unlikely the figure has changed much since then.

Program supporters say Teaching Fellows shouldn’t be eliminated because the program is working. They forget that North Carolina is not where it was in 1986, nor is the demand for teachers.

An abundance of research attests to the important link between quality teaching and student achievement. North Carolina needs quality teachers more than it needs more teachers. While the Teaching Fellows program has certainly produced some good teachers, our needs today are different.

Because it ignores the ability to improve teacher quality through other less expensive options, (professional development, alternative certification, raising academic standards, etc.), and conceals the true long-term costs, restarting the Teaching Fellows program is a bad idea for North Carolina, and makes HB 447 this week’s Bad Bill of the Week.

The post HB 447, Restore Teaching Fellows Program appeared first on Civitas Institute.

This week’s Bad Bill of the Week is SB 362, Study Energy Efficiency Standards. Sponsored by Sen. Eleanor Kinnaird (D-Orange), this bill would create a study of an ineffective “tiered” billing format for electricity, impossible goals for electricity-use reduction, and an ambiguous “pollution tax.”

Tiered electricity rates mean that the more electricity you use, the higher per kilowatt-hour rate you pay. It would also charge higher rates during peak energy use times. Such a mechanism is popular in other states such as California, but according to the Los Angeles Times, “A growing body of research suggests that not only does tiered pricing fail to meet these goals, it is counterproductive: It neither encourages conservation nor helps low-income people pay for power.”

SB 362 also states that such tiered pricing would create a decrease of total electricity consumption in the state by a whopping 60 percent below 2010 levels – and in just 10 years. In a state with a growing population, that seems especially unrealistic. Imagine attempting to curb your electricity use by 60 percent – do you really leave that many lights on?

Moreover, the bill also raises the potential for “a pollution tax on certain appliances” – those deemed as not meeting “energy star” status. There are also proposed taxpayer handouts for “energy efficiency activities,” whatever those may be defined to be. Clearly, these last provisions are designed as a boondoggle for politically-correct appliance makers, at taxpayers’ expense.

SB 362 is an attempt to further micromanage our daily lives and empower politicians with more control over everyday comforts of living we enjoy. Such an intrusion into our lives and use of private property is unacceptable, and that is why SB 362 is this week’s Bad Bill of the Week.

The post SB 362, Study Energy Efficiency Standards: A Bill Only Al Gore Could Love appeared first on Civitas Institute.

Currently, North Carolina law (NCGS 163-227.2) sets out a 17 day period for all 100 counties to conduct one-stop voting in the Boards of Elections offices. The period begins “not earlier than the third Thursday before the election” and ends on the Saturday before the election. The last Saturday is the only weekend day required to be used in the one-stop early voting period.  It is the County Board’s responsibility to develop a one-stop plan during this window and it is the County Commissions responsibility to fund the plan. The plan must be passed unanimously by the County BOE and if not, one or more of the members may petition the State Board of Elections to adopt a plan.

With just a little research (using the Civitas Vote Tracker) we conclude that this bill is just another unnecessary, unfunded mandate. Unnecessary, because common-sense tells us that there are only a few very large counties that are probably operating at or above 20 hours on weekends already to facilitate their voters, especially in a Presidential Election. And, common-sense would also tell us that many counties in most elections could vote all their one-stop voters in just one 20 hour period. Take a look at the chart below.

Because the legislature should leave the decisions as to where and how often one-stop voting should occur in North Carolina’s counties to the local BOE’s who are charged with administering the elections and to the County Commissioners who are required to appropriate reasonable and adequate funds for the elections, HB 188 is this week’s Bad Bill of Week.

The post One Size a Bad Fit for One Stop appeared first on Civitas Institute.