July 30, 2008
Last week six thousand state legislators and staff gathered to study, share and debate major issues facing statehouses across the country. Taxes, budgets, roads, education and economics were on the menu.
For the first time, I participated in the National Conference of State Legislature’s (NCSL) Annual Summit. The NCSL is the bipartisan organization that serves legislators and staff of all states. It provides research, professional assistance and opportunities to exchange ideas on the most pressing state issues.
The Summit covered critical issues facing State Legislatures such as education, health care, climate change and energy as well as state budget challenges and the current economy.
In 180 policy sessions, participants are involved in intense policy discussions; sharing ideas and innovative ways to solve problems. Additionally, they look at ways to work with the federal government to avoid costly and burdensome unfunded federal mandates.
The Summit allows Democrats and Republicans to set aside partisan rancor and work together to make states strong.
At NCSL everything is bipartisan. Every leadership role rotates between Republicans and Democrats. Committees include Democrats and Republicans working together to craft policy recommendations. And topics relate to problems we all face when we return home.
One issue on everyone’s mind is the economy. Are we in a recession? How long will it last and what has caused it?
David Wyss, Chief Economist from Standard and Poor’s, briefed participants on the coming economic storm. “Yes,” he said. “We are in a recession.” But the good news is Mr. Wyss predicted it will be a mild recession that will hit bottom by next March. The problems we face are complex. And the housing and banking crisis are at bottom of our troubles.
We built too many expensive houses. Home prices are too high and the only way to fix this is for prices to drop. Housing starts are down 50%.
The housing crisis it only part of the problem. Banks have made lending money too cheap. Houses and commercial buildings have been financed at 98% of their value and that value has decreased 18%.
Many people bought second homes or recreational property. In some parts of the country, almost half of the properties in default are not owner occupied. People seem more than willing to walk away from a loan on a second home. We will continue to see a high rate of foreclosures, defaults and bankruptcies. Banks will end up with only about 70% of the value of foreclosed homes.
We learned the price of oil is a bit of wild card in economic forecasts. Part of the problem is speculators getting into the oil market. And not just oil. Speculators are buying and selling agriculture commodities too. This adds more volatility to the market.
Other sessions focused on changes in the workforce as our population ages. Today we have five workers for every retiree. In twenty years, there will be only three workers for every retiree. This creates huge budget problems as the state and federal government spends more in services than it collects in revenue. With the aging population and fewer people earning money to pay for services, legislators were told we must cut programs or raises taxes.
Of course, no one really wants to do either. We do have major problems that must be fixed. A big part of the coming budget problem is health care. We learned in five years Medicare will run out of money.
“The United States has the most expensive medical system with almost the worst results,” Mr Wyss said. We pay too much, we provide too much and we are drowning in costly paperwork. In Europe, prescription drugs cost two thirds what they do in the United States.
“Care in the U.S. is extremely inefficient. We spend way too much at the end of life and way too little on prevention.”
As the Summit came to a close, I realized that having a national organization working in a bipartisan way to help states solve problems is a tremendous resource for us all.