I am excited to announce a victory for taxpayers and consumers in El Paso, Texas.  Residents rejected by a more than 4-to-1 margin an effort by outside environmental groups to create a climate charter for the city, which would have included using taxpayer money to deprivatize the area’s electric company. As part of Proposition K, advocates wanted to convert El Paso Electric to municipal ownership with a goal of 100 percent clean renewable energy by 2045. The utility, which has served the areas for 120 years, has already developed initiatives for responsible environmental practices, including striving to reduce its carbon footprint with a goal of going 100 percent coal free.  As the El Paso Chamber of Commerce noted, the charter could have cost local taxpayers billions of dollars in lost revenue, and thousands of people could have lost jobs.The vote against the plan is not a vote against responsible environmental practices. Voters already approved Proposition C last year, which will create a city climate action plan. But with the initial study for that not expected to be completed for 12 to 18 months, it was irresponsible to rush Proposition K onto the ballot.

Postal Losses Persist Despite "Reform"

Last year, President Biden signed the Postal Service Reform Act (PSRA) into law and heralded a new era of fiscal accountability for America’s mail carrier. Clearly, the law has failed to get the U.S. Postal Service (USPS) back on firmer footing. That was supposed to “fix” the USPS. With a fiscal year (FY) 2023 second quarter loss of $2.5 billion, it is clear thar the USPS is still broken. According to Postmaster General Louis DeJoy, the service will lose an additional $60 billion to $70 billion by 2030. Taxpayers are paying the price through historic and above-inflation increases in stamp prices. Policymakers must halt the sorry slide in postal finances. PSRA-style bailouts will only result in higher costs and declining service standards for taxpayers and consumers. Abysmal postal finances are nothing new. In the 15 years before PSRA, the service lost $100 billion despite taxpayer subsidies and preferential treatment from the Treasury. Before “postal reform,” pundits and lawmakers claimed that the service was losing money due to a legal requirement that the agency pre-fund retiree healthcare benefits. The truth is that the service had already transitioned away from the pre-funding schedule derided by critics. From 2017 forward, the service only had to amortize (gradually write off the cost) remaining healthcare-related retirement costs for their workers over 40 years, until 2056.  Meanwhile, “controllable” expenses within the agency’s control regularly dwarfed annual payments toward retirement healthcare expenses. Not surprisingly, lawmakers’ attempts to “fix” this problem didn’t solve the agency’s longstanding fiscal issues. The service has already shed $2.1 billion in fiscal year 2023, 75 percent higher than anticipated losses. And losses are up 10 percent compared to last year (read: pre-PSRA).
 
The agency is attempting to stem these losses by once again raising rates. The Postal Service just hiked prices by 5 percent in January and wants to raise prices again in July. According to a recent report in The Nonprofit Times, “base increases are expected to include an additional 5.4 percent for first-class mail and marketing mail (formerly known as standard mail) letters, 7.4 percent or more for marketing mail flats and carrier route flats, and 8.1 percent for periodicals.” This new stamp revenue won’t be nearly enough to fund the agency’s $10 billion program to buy electric vehicles, nor will it sustain the service’s overbuilt network. Meanwhile, retiree healthcare expenses will be shifted onto Medicare’s balance sheet despite that program’s dire financial situation.
 
There are far better ways to bolster the Postal Service than buck-passing and blank checks from Washington. Congress can and should allow the service to invest assets into index funds, which can yield 10 percent annual returns for taxpayers and retirees. As American Enterprise Institute scholar Kevin Kosar notes, federal and state governments have been using index funds to maximize returns for years, but somehow the Postal Service is not permitted to partake. In addition, the service should consider strategic closures of post offices. A 2021 report by its inspector general notes, “Among nearly 13,000 underwater post offices, one-quarter are within three miles of another post office and more than half are within five miles.” America’s mail carrier could shutter thousands of post offices that are losing money while maintaining easy access to nearby post offices. The problem is that postal leadership is significantly paring back operations in large clusters instead of singling out poorly performing offices. There’s plenty more that Congress and America’s mail carrier could do to keep the mail flowing at minimal cost to taxpayers and consumers. But, the PSRA is sending the wrong message to postal leadership that bailouts are a substitute for real reform. It’s time to deliver significant changes to the U.S. postal system.
 
Just Say No to Su
 
Despite triumphant proclamations from some politicians about the “greatest economic recovery in U.S. history,” there is still much uncertainty for American businesses. Even the nation’s biggest companies are not immune to today’s tumultuous economic climate. One of the most recognizable brand names in the world — McDonald’s — is no exception. The company recently announced the shuttering of several field offices and pay cuts for thousands of employees. All of this comes at a time where the Senate is considering Julie Su to be the next secretary of labor. Instantly, America’s business community reacted negatively to the nomination. In particular, companies that use a franchise model or make use of independent contractors spoke up. The International Franchise Association — of which McDonald’s is a member — issued a statement of opposition, citing Ms. Su’s “track record of policies harmful to franchised businesses and her history of advancing new law rather than enforcing existing law as the role was intended” as reasons for their skepticism.
 
This fear is warranted. Prior to her time as deputy secretary of labor, Ms. Su was the head of the California Labor and Workforce Development Agency. In that role, she pushed policies designed to overregulate employers and force them to reclassify independent contractors as employees, effectively creating an unbearable burden that ultimately costs jobs. One of these laws, the Fast Food Accountability Standards Act, holds fast-food parent companies liable for local wage violations  and overtime pay. It also established a council partially run by fast-food employees and government officials to oversee decisions made by fast-food employers. In another instance, Ms. Su championed passage of the disastrous California Assembly Bill 5, now decimating independent journalism and ride hailing in the state by requiring companies to classify workers who would otherwise be contractors as employees instead.
 
Franchise businesses run on a model where a corporate entity leases out its proprietary information to a franchisee to sell their products under their name. For example, McDonald’s would give its recipes, processes and trade secrets to a Midwestern family who wants to open a McDonald’s franchise. They are not full-time employees of the McDonald’s corporation per se, but are able to expand the business and have a reasonable amount of autonomy and flexibility as they run their store. The corporate side can grow without taking on the typically bloated costs associated with expansion. It’s a win-win. If bureaucrats like Ms. Su get their way, however, this flexibility will be a thing of the past. There will be new requirements regarding employee pay and overtime. There will be new regulations regarding who qualifies as an employee and what benefits they are entitled to if they do qualify. The benefits of a corporation choosing a franchise model will cease to exist, bringing the whole nation under a one-size-fits-all regulatory model. This would be disastrous. According to recent estimates, franchise businesses employ 8.4 million people. Last year, a reported 31.9 million more worked at some point as an independent contractor. Ms. Su and her allies in Congress may posit that her preferred policies will adversely affect only super-rich corporations. However, the livelihoods of tens of millions of people hang in the balance.
 
When AB 5 was passed under Ms. Su’s time in California, it became almost impossible for anyone to qualify as a contractor. Everyone was essentially categorized as an employee instead. This raised hiring costs for businesses, costing them opportunities to hire more people. Naturally, this also deprived many of the opportunity to be hired and to make a living on their own terms. With Ms. Su as secretary of labor, progressive activists would have a better chance at trying to make this legal framework the law of the land. This would be a disaster. Congress has already tried and failed to pass such a proposal — the PRO Act — in recent years. There is a reason it has not gotten enough traction to become law. Nominating Ms. Su indicates that the Biden administration intends to enact this agenda by executive fiat, rather than engaging in substantive debate on the issue. The McDonald’s layoffs show that no company is immune to tumultuous economic times. This is especially true for companies with nontraditional business models. For some, that model works wonders. Others opt for a more regular arrangement. It is not incumbent upon unelected bureaucrats to determine which is best. Unfortunately, Julie Su would bring the notion that it is for the government to decide into office with her. That is something the nation just cannot afford.

BLOGS:

Monday: Government Watchdog Group Applauds Rejection of Proposition K in El Paso

Tuesday: TPA Launches Mobile Billboard Opposing Progressive Efforts to Establish an Unnecessary and Unpopular IRS-Run Tax Preparation System   

Wednesday: Watchdog Calls for USPS Reform After $2.5 Billion Net Loss

Thursday: Consumer Watchdog Group Reacts to FDIC Report

Friday: New Florida law strikes wrong balance between privacy, innovation
 

MEDIA:

May 5, 2023:  The Center Square ran TPA’s op-ed, “Congress looks to ease broadband regulations ahead of BEAD funds distribution.”
 
May 7, 2023: Inside Sources ran TPA’s op-ed, “The High Hidden Costs of Medicaid Expansion.”
 
May 8, 2023: WBFF Fox45 (Baltimore, Md.) interviewed me about the digital advertising tax in Maryland.
 
May 8, 2023: The Washington Examiner (Washington, D.C.) ran TPA’s op-ed, “Democrats’ electric vehicle boondoggle will run way over budget.”
 
May 8, 2023:  Real Clear Energy ran TPA’s op-ed, “Devastating Alaska’s Oil & Gas Industry Won’t Help Taxpayers.”
 
May 8, 2023: The Nashua Telegraph (Nashua, N.H.) ran TPA’s op-ed, “The high hidden costs of Medicaid expansion.”
 
May 8, 2023: Dan Savickas joined Real America’s Voice to discuss the debt ceiling and the EARN IT Act.
 
May 9, 2023: Prescott E-News ran (Prescott, AZ) TPA’s op-ed, “The High Hidden Costs of Medicaid Expansion.”
 
May 9, 2023: TPA was quoted in Just the News’ story titled, “Court would halt Biden attempt to invoke 14th amendment to raise debt ceiling, tax group says.”
 
May 9, 2023: Reuters quoted TPA in their story, “Can publicly owned internet close the digital divide in US cities?”
 
May 9, 2023: The Washington Times ran TPA’s op-ed, “Julie Su as labor secretary would wreck flexibility for employers, employees.”
 
May 9, 2023: I was quoted in a story from WBFF Fox45 (Baltimore, Md.) titled, “Emails: Debate over what info to give City Council, public amid $641M ARPA allocation.”
 
May 10, 2023:  Townhall.com ran TPA’s op-ed, “Stadium Subsidies Are the New York Jets of Public Policy.”
 
May 10, 2023: Just the News mentioned TPA in their story, “Biden under pressure as McCarthy, McConnell align on spending reforms tied to debt limit increase.”
 
May 11, 2023:   I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the housing market and quantitative easing.
 
May 11, 2023:  WBFF Fox45 (Baltimore, Md.) interviewed me about Baltimore City officials traveling to Las Vegas.
 
May 11, 2023: The American Spectator ran TPA’s op-ed, “After Axon, the Supreme Court’s Battle to Keep Powers Separated Is Just Beginning.”
 
May 11, 2023: Must Read Alaska ran TPA’s op-ed, “Devastating Alaska’s oil industry won’t help taxpayers.”

 

 Have a great weekend!