How Things Really Work

Recently President Clinton took two steps that affect our trade with Japan. He announced a 100 percent tariff on 13 models of Japanese luxury cars, effectively banning imports of those popular vehicles.

And he vetoed the budget-cutting bill which contained a rider that would undo efforts to restrict some logging in national forests. A major beneficiary of that rider might well have been Japan.

The car tariff, which would go into effect June 28, is an attempt to force the Japanese to open up their market to U.S. vehicles. It is more likely to touch off a trade war, since Japan has already complained to the World Trade Organization and could resort to countersanctions against other U.S. products.

Whether the tax on Japanese luxury cars would increase sales for U.S. autos and create jobs is another question. It is more likely to increase the sale of German luxury cars, Mercedes and BMW’s.

The Japanese have shown little interest in buying U.S. autos, but they have a keen, long-standing interest in U.S. timber. They prefer whole logs so that the jobs from milling and making fiberboard will go to their own citizens. We have been very willing to accommodate them.

Until a few years ago, the Japanese had an exclusive 55-year contract on timber from the Tongass National Forest in Alaska. The Japanese-owned Alaska Pulp Corporation was guaranteed the right to remove up to 100 million board feet a year from our last intact temperate rain forest without competitive bid until the year 2011.

Before the contract was canceled, the Japanese took 2.16 billion board feet of lumber, causing concern about over cutting. Environmental organizations estimated that the forest was being cut at twice the sustainable rate.

At least for a time, the Japanese employed about 400 Alaskans in their pulp mill, but they shut that down in favor of exporting high-grade whole logs.

This sweetheart deal, which originated as an effort to help rebuild Japan after World War II, is not the only tidy subsidy American taxpayers are giving to timber companies, both foreign and American owned.

The Wilderness Society estimated that logging on public land cost us $614 million last year.

The rider attached to the budget bill would have required the Forest Service to cut a certain volume above the current limit. No restrictions would apply to that timber, meaning that the Forest Service efforts to restrict logging in particularly scenic or ecologically sensitive areas like high peaks, would be null and void.

Federal law prohibits exporting whole logs taken from public land. But any increase in the timber harvest from the national forests would offset the domestic demand, allowing timber companies to export more trees cut on private land.

The economics of deforestation are hard to grasp.

In Brazil, New Guinea, Indonesia and most countries with tropical rain forest, it is popular to give the resource away for a tiny fraction of its worth.

The U.S. Forest Service supports logging by selling timber at prices that do not cover the cost of growing it, harvesting it, selling it or building roads to it.

Like many other policies that now contribute to environmental degradation, U.S. forest policy was intended to develop the West. There have been others. In 1972 when the West was a sparsely settled frontier, Congress passed a law under which miners can buy U.S. land for as little as $2.50 an acre and extract valuable minerals without paying royalties. The 1872 Mining Act is still in effect.

Now it means that a Nevada gold deposit estimated to be worth $10 billion can be sold by the federal government to a Canada-based mining company for less than $10,000.

It does not consider the environmental damage that usually accompanies modern mining operations with pits 1,200 feet deep and nearly a mile across. It does not consider the return that justifiably is due the taxpayers who own the resource.

The General Accounting Office estimates that about $1.7 million in hard rock minerals is being taken from federal lands each year. A bill is expected which would create a 2 percent royalty — a modest sum considering that oil produced on federal lands carries about a 12 percent royalty.

Last year, the Clinton administration triggered an uprising in the western states by proposing a modest reform in the grazing lease policy. The present system costs taxpayers about $60 million a year because of the very low prices charged to lease the land.

Much of the acreage has been damaged so much that it has eroded. Grass has been replaced by weeds. The reform would double the cost of the grazing leases over three years, but the good stewards — those who do not overgraze — would get a 30 percent discount.

This is where the staunchly independent men of the West become whining welfare cowboys. If they lose their subsidy from taxpayers, they argue, ranching will die in America. Amazing, isn’t it, that Texas ranchers, who don’t have the benefit of cheap federal land, have been able to stay in business all these years.

The new policy is to go into effect in August, but a bill now being considered in Congress would halt that modest change. It would make grazing the number one purpose of public rangeland.

The Houston Post is dead. Newspapers are special institutions. the death of a newspaper is not like the death of a grocery store or a bank or a movie theater.

However noble grocery stores are, they do not entertain, enrage or challenge people the way newspapers do. They do not have the personality that newspapers do. Grocery stores are not usually staffed with characters as colorful as those who populate newsrooms. But newspapers can fail just like grocery stores. When people don’t shop at the grocery store, the store dies.

Newspapers are outrageously expensive to produce. The business is labor intensive. It takes a lot of people to cover the news, sell the advertising, print and distribute the paper. The presses on which the paper is printed cost scores of millions of dollars and can be used only a few hours a day. The raw material (newsprint) is a commodity just like pork bellies.

At the same time, newspapers are virtually free to their readers. The subscription and single-copy prices bear little relation to the cost of putting the paper on subscribers’ doorsteps.

Ironically, the Post was the victim–not the beneficiary–of a booming economy. When the economy in Houston (and the nation) is depressed, merchants don’t buy much advertising and newspapers don’t buy much newsprint. So newsprint prices are stable. When the economy recovers, retailers buy more advertising, newspapers buy more newsprint, the newsprint producers near their capacity and raise prices.

Newsprint prices went up about 40% in the last year. For a newspaper the size of the Post, newsprint is about 40% of all expenses. (The more circulations a newspaper has the larger the newsprint factor.) And 40% of 40% is 16%. In other words, the Post’s operating costs went up by one-sixth.

The Post was the “second paper” in town. Its circulation was substantially smaller than that of the Chronicle. Therefore, its advertising rates had to be higher than those of the Chronicle on a per reader, or milline, basis. The Post was already a less efficient “buy” for an advertiser and so in no position to raise its rates to cover costs.

If a business is only marginally in the black even on a cash-flow basis, and its costs go up by one-sixth and its revenues don’t, it goes broke. The Houston Chronicle was the only possible purchaser.

So much for the grim arithmetic of prosperity.

When all the numbers are added up, a newspaper is dead. Not just a business, but a voice, a personality, that was a vital part of Houston for more than a century is gone. My family and I were involved with the Post for most of that century. My father went to work there on March 2, 1895, shortly before his 18th birthday. Our association ended in 1983 when we sold to the Toronto Sun.

Please forgive the lump in my throat.

“Affirmative action” seems to be a bad word these days. Its opponents say it’s unfair, that it excludes the qualified in favor of the less qualified, that it is discrimination in reverse.

The complaints center around hirings, promotions, and college admissions based in part on test scores. The decisions are crucial not only to those making the decisions as well those affected by them.

Test scores and previous grades and resumes are valuable tools on which admissions committees and personnel officers must in part rely where there are hundreds or thousands of applicants of whom ten percent can be accepted. But scores and grades are not perfect predictors of performance. They are not, and should not be, the sole bases for decisions.

Some presentable young people get admitted to Yale because of their grades. Some get admitted because their daddies graduated from Yale. Some people get hired because of sterling credentials. Some get hired because their cousin, who is a senior manager, put in a good word for them. Some people get promotions because of exemplary performance, some because they play golf with the boss.

Affirmative action was intended to open the door a crack for those who might not have some of those advantages. If your parents didn’t go to college, you will not be admitted as a legacy. If you are Hispanic, and the firm has no Hispanic employees, it’s unlikely your cousin can put in a good word for you. If you are African-American and your boss plays golf at an all-white country club, you won’t impress him on the golf course.

Employment is like most other endeavors. People tend to hire those with whom they feel comfortable, and they feel most comfortable with people just like themselves.

By most standards, affirmative action hasn’t been a rousing success. The so-called Glass Ceiling Commission set up by then President George Bush found that white males still held up to 97 percent of top level management jobs.

Despite aggressive affirmative action policies by many universities, minority enrollment in higher education has increased only modestly. Between 1976 and 1993, black enrollment went from 9.4 percent of all students to 9.9 percent. Hispanic enrollment increased from 3.5 percent to 6.9 percent and Asian enrollment from 1.8 percent to 5.1 percent.

Bachelors’ degrees earned by minority group members were 10.3 percent of the total in 1976 and 15.6 percent in 1993. In other words, laws and strenuous efforts by universities produced a yearly increase of three tenths of one percent a year.

Affirmative action gets blamed for the problems of angry white men, but it’s hardly the cause. As Peter Drucker wrote in an article called The Age of Social Transformation, “No class in history has ever risen faster than the blue-collar worker. And no class in history has ever fallen faster.”

Between 1950, when blue-collar workers were at their zenith in numbers and earning power, and 1990, high earning industrial workers were displaced by a new breed of high-earning employee–the technologist or the knowledge worker. Technology and economics caused the jobs to change.

It wasn’t caused by affirmative action. In fact, the job shift aggravated what Drucker calls “America’s oldest and least tractable problem: the position of blacks”. The fall of the industrial worker hit African-Americans disproportionately hard.

But job insecurity is a relatively recent phenomenon for many white men. As President Clinton said in Sacramento recently, “They’ve been working for 15 years without a raise and they think they could be fired at any time.”

Their anger is aimed at the wrong target. Affirmative action, where practiced in good faith by government, universities and well-meaning businesses, has had modest success in offering opportunity to minorities. A great many well-qualified women, African, Hispanic, Native and Asian Americans probably owe their positions to affirmative action. We hope they are hiring and promoting more people like themselves. Until there are enough minorities in decision-making positions, the playing field will not be level.

Where there is honest-to-goodness reverse discrimination, there is a remedy in the courts. Department of Labor figures indicate it occurs less often than we think–only 100 of more than 3,000 federal court decisions on discrimination cases involved reverse bias, and most of those cases were found to be without merit.

It seems more likely that affirmative action has become a political weapon, to be used to divide us along racial lines and dismantle what progress we have made toward equal opportunity.

Hooray for the new Congress. They promised to take government off our back, and they’ve put it in our living room.

They promised to free us from regulation, and they’ve concocted one that can deprive some unwitting computer nerds of their liberty.

The amendment attached to an overhaul of federal communications law by the Senate Commerce Committee sets fines up to $100,000 and jail terms of up to two years for anyone who transmits material that is “obscene, lewd, lascivious, filthy or indecent” over the Internet.

Welcome, thought police.

As one columnist, Charles Levendosky of the Casper (Wyoming) Star-Tribune, put it, “It would melt the promise of this electronic Gutenberg.”

Many of us are just now discovering the wonders of cyberspace as presented through the Internet. We’re just learning to pull up reproductions of paintings in the Louvre, reference material from the Library of Congress, bills up for consideration in the Texas Legislature. We are travelers in a fantastic new world of knowledge and information.

This wonderful worldwide network of computers can answer our questions in seconds, whether we want to know about ancient Egyptian hieroglyphics or what happened today in the O.J. Simpson trial.

So naturally our Big Brothers in Congress couldn’t leave us alone.

Under the guise of protecting children from smut, the Senate has adopted one of the most draconian invasions of privacy ever.

It has never been clear to me why the government considers that it owns the airwaves. I have never seen the bill of sale or the certificate of title. Yet, while newspapers and other printed means of communication are protected from regulation by the First Amendment, electronic media have always been subject to arbitrary and capricious acts of Congress.

There was good reason for the federal government allocating frequencies so that broadcasters didn’t interfere with one another. It is quite another thing to decide that broadcasting media must be owned by U.S. citizens, carry public service programming and adhere to the Federal Communications Commission’s idea of fairness.

Now, just when most of these regulations are being repealed, Congress has decided it must control what you send over your personal computer. This is directly equivalent to opening your mail.

No one wants to defend pornography. There is too much of it around, too much of it on the news stands and on television. But we have a defense. We don’t have to buy it or watch it.

We have the same defense on the Internet. We can heed the increasingly frequent warnings and just not download. (I don’t know how to download photographs anyway. I have enough trouble finding Windows on State Government. I don’t know how many 10-year-olds are computer literate enough to surf into the adult video sections.)

But the evil of pornography pales beside the great threat to our privacy and personal freedom that this legislation creates.

In print media, the courts have carefully balanced the issues, setting up stringent tests for defining pornography. The amendment the Senate passed does not define what is “obscene, lewd, lascivious, filthy or indecent”. Do we really want Newt Gingrich defining it? Or Janet Reno? Or the FBI?

There’s a small technical problem. Information flows over the Internet in bits, 1’s and 0’s. Digital packages race over telephone wires. As Levendosky explains it, it’s like “putting a normal letter into a shredder, then sending each strip to the recipient in separate envelopes along with hundreds of other envelopes each containing a strip from different pieces of mail.”

The government can only monitor it at the point of sending or of receiving–by leaning over your computer.

What about some ham-fisted novice who clicks his way into the wrong news group? Does he deserve two years in jail? Shouldn’t we be worried about the rapers and robbers and murderers?

Senator Jim Exon, D-NE., the sponsor of the amendment, says that the information superhighway may one day transcend radio, television and newspapers as an information source.

“Therefore, I think this is the time to put some guidelines or restrictions on it,” he said.

It’s not clear to me, and I hope it won’t be clear to the courts, why speech over electronic media should be subject to more severe restrictions than speech printed on paper.

Exon’s amendment was adopted by voice vote, so it’s not clear who exactly voted for it but we do know that not one courageous member of that committee stood firm against it.

These are the members of the Senate Commerce Committee chaired by Sen. Larry Pressler, R-SD: Sens. Bob Packwood, R-OR; Ted Stevens, R-AK, John McCain, R-AZ, Conrad Burns, R-MT; Slade Gordon, R-WA; Trent Lott, R-MS; Kay Bailey Hutchison, R-TX; Olympia Snow, R-ME; John Ashcroft, R-MO; Ernest Hollings, D-SC; Daniel Inouye, D-HI; Wendell Ford, D-KY; Jim Exon, D-NE; John Rockefeller IV, D-WV; John Breaux, D-LA; Richard Bryan, D-NV, and Byron Dorgan, D-ND.

Whatever television touches it destroys–the President, the Congress and now the courts, author and journalist Richard Reeves remarked recently after a lecture at the Lyndon B. Johnson School of Public Affairs.

He was referring, of course, to the national addiction, the O.J. Simpson trial. Pundits and newspaper editorials deride it as an “offensive sideshow”. University of Texas Law Professor Michael E. Tigar compares it to “a pillow fight in a pizza parlor” People say they’re sick and tired of it, but CNN’s ratings are off the chart.

A recent seminar at the University of Texas School of Law focused on the impact of mass media on litigation. The judicial process has always carried a heavy burden: to discover the truth, protect the rights of the accused and punish the guilty. Does the media’s spotlight make that mission impossible?

Our democracy leaves us with relatively few tools to curb the excesses of the tabloids. In Britain, judges can hold the media in contempt. Not here. An attorney who runs his mouth can be censured by the local bar association. But censure collides frequently with protected rights of free speech.

One of the participants in the seminar was Dominic Gentile, a Las Vegas, Nev., attorney who was disciplined by the Nevada State Bar for a pre-trial press conference. Gentile was defending the owner of a storage company accused of stealing money and drugs stored there in a police sting operation. In his press conference, Gentile noted that police officers were likely suspects in the crime.

“There had been 13 months of pre-trial publicity. This was my first chance to respond,” Gentile said, adding that prosecutors used the media to demoralize the accused.

His press conference won him a private reprimand from the State Bar. He appealed. Tigar argued for him before the U.S. Supreme Court and the court found that the bar canon was unconstitutionally vague.

The Nevada Bar is looking for new language which would forbid pretrial statements that prejudice a jury. The problem, according to Gentile, is that there must be clear and convincing evidence that the statement will prejudice the jury. This evidence comes not from the law, but from market studies and sociological research–very hard to prove.

Judges have some weapons to protect the right to a fair trial. They can change venue–move the trial to another city. They can decide against having cameras in the courtroom. They can put gag orders on attorneys. They can sequester the jury.

But mainly it’s friendly persuasion, said Judge John F. Onion. Most people don’t want to displease the judge.

As presiding judge of the Court of Criminal Appeals for many years and visiting judge in last year’s aborted trial of Sen. Kay Bailey Hutchison, Onion has had plenty of experience with media. His main concern is that preoccupation with media problems can distract judges from the law.

Exasperated with media though they might be, the attorneys and judges were more afraid of heavy-handed restrictions on courtroom coverage.

The bottom line is a fair trial, said William Cofer, a Kansas City, Mo., defense attorney. An open press assures public faith in the judicial process. By and large, he said, it’s better to have controversies in public.

And they confessed that the media had served them and their clients well on occasion. Here are a few of their hints for maximum media manipulation.

Rule 1: Media attention does not do the defendant a whole lot of good.

Remember former Secretary of Labor Ray Donovan on the courthouse steps the day of his acquittal. He said, “Where do I go to get my reputation back.”

Rule 2: Know your objective and stick to it.

William H. Colby of Kansas City, Mo., represented Nancy Cruzan and later Christine Busalacchi in the “right to die” cases. Nancy Cruzan was on life support after a car accident. Her family, believing that it was the correct thing to do and what she would have wanted, wanted to stop medical treatment. They were opposed by the state of Missouri.

“We courted public coverage because we wanted to raise the level of human consciousness about this issue,” Colby said. “I said the same thing over and over….that such a private decision should not be interfered with by the state. Ultimately that became the way we deal with this issue.”

Rule 3: A closed mouth gathers no foot.

Lawyers love to see their names in the paper. The important thing to remember is whether talking to a reporter will help your client. If the answer is no, don’t.

Rule 4: Never lie, never dissemble.

They will find out. They will be furious. Remember Nixon.

It is the age of the knowledge worker. Our high speed electronically connected information age economy demands new skills.

Today’s jobs require more formal education, the ability to acquire and apply theoretical and analytical knowledge and a habit of continuous learning. Producing an automobile requires 40 percent ideas, skills and knowledge and 60 percent energy and material. Producing a computer chip requires 98 percent ideas, skills and knowledge and only 2 percent energy and raw materials.

Knowledge workers are essential to our economy, and higher education is essential to produce knowledge workers. No wonder that cities as diverse as Midland and Laredo consider their universities to be engines of economic development.

In a decade when prisons and school equity have been front burner issues is Texas, higher education has been neglected.

The higher education budget hasn’t been cut, thanks to the insistence of Lieutenant Governor Bullock, Speaker Laney, Senator Montford and Representative Junell. But it has remained flat compared to criminal justice, health and human services and public schools.

Texas ranks 49 among the 50 states in appropriations plus tuition per student–$5,084 per student compared to a national average of $6,019. Higher education spending, 18 percent of the budget 10 years ago, has shrunk to 12 percent.

We Texans have a lot to brag about in our system of higher education, public and private. No state has greater access to a college education. Tuition is low. There are public two-year and four-year universities in every corner of the state. The South Texas/Border Initiative, with $302 million in state funds, will result in new buildings and degree programs to match the expanding economy on the Mexican border.

State universities bring nearly $900 million in federal and private research funds to Texas. There are six Nobel prize winners in the University of Texas system alone.

There are exciting projects underway. The University of Texas System recently created a task force to recommend ways universities could work more effectively with public schools to improve the quality of education.

This task force identified 200 existing projects involving UT universities and public schools. It also proposed five initiatives involving better training for school professionals, better delivery of education programs and outreach activities for students and families.

One proposal would expand the Centers for Professional Development and Technology so more new teachers could benefit from field training in these technology-rich classrooms. Another would create educational leadership institutes to provide training for principals.

Another would expand the very successful outreach effort to minority students in public schools. This project, called the University Connection, is an attempt to increase the number of Hispanics and African Americans who enroll in universities. The program helps junior high and high school students improve their academic and test-taking skills, explore career opportunities and aim for college. Of the 421 University Outreach seniors who graduated in 1993, 311, 74 percent, were accepted at institutions of higher education, a considerably better percentage than the 48 percent of African Americans and 55 percent of Hispanics who typically go to college.

It’s a good project, and it deserves more funding.

The major problem with the budget bill now being considered by the Legislature isn’t the amount allocated for higher education, a modest .4 percent increase. It is the stealth cuts on the table that would subtract $302 million from the higher ed budget proposed for 1996-97. (Some of these cuts affect all state agencies.)

The proposals freeze employees, reduce contributions to insurance and retirement programs and make across the board cuts in special university initiatives. The bottom line would be a four percent cut in university budgets.

State universities educate 89 percent of Texas students who pursue a college degree. The rest are educated in 42 private institutions of higher education. Texas has a good program to help students who attend these universities. The Tuition Equalization Grants (TEG) provide payments averaging $1,416 a year per student.

TEG’s are a good deal for taxpayers. The state pays $4,309 a year to educate a student at a state university and $1,416 to educate that student at a private institution.

The $50 million TEG program now meets only 38 percent of the demand, and schools now must reserve the grants for the neediest students. Comptroller John Sharp recommends a $20 million increase to make financial aid available to more students and increase the size of the grants.

That is a modest proposal which will help private universities to continue their efforts to educate students from lower-income families. TEG recipients come from families with an average income of $23,000 a year. About 43 percent of them are minority.

It looks like a good year for Texas.

The economy is healthy, if not booming. We learned from our mistakes in the 1980’s and pretty much got out of the oil business. Our new economy is diverse–semiconductors, software, biotechnology and aerospace.

The state is growing, not as wildly as during the 1980’s, but still at a rate about twice the national average.

Six of our metropolitan areas, more than any other state, made it into the top 27 fastest growing list for 1990-1994. Dallas lost its place as the nation’s seventh largest city, but Plano is the fifth-fastest-growing big city in the country. Houston is still number four, and San Antonio is number 10.

A good year lies ahead, but the picture 20 years from now may not be bright if we take a longer look down the road. The trends are disturbing, maybe alarming.

Texas population expert Steve H. Murdock, director of the state data center at the Texas A&M University Department of Rural Sociology, has taken such a look. This is what he sees:

• Texas’ rate of growth is slowing. The state grew by 19.4 percent during the 1980’s. The growth rate for the first half of the 1990’s is 8.2 percent.

• The population is aging. We’re still the third youngest state in terms of median age, but Texas is hardly immune from the graying of the baby boomers.

• The minority population is increasing. By 2005, the population will be more than half minority. Texas now has the second largest Hispanic population, the third largest African-American population and the fourth largest Asian population.

• The composition of households is changing. We’re still building three-bedroom houses, but the ideal American family is disappearing. Only about 26 percent of households consist of Mom, Pop and two kids.

What does this mean? Texas as a state will be poorer and less able to meet the demands of the next century if the trend lines are not interrupted.

Texas has never been a wealthy state. In 1989, only California had more people living below the poverty line. We rank first in number of persons over 65 living in poverty.

People who are black, Hispanic, elderly and/or single heads of households are more apt to be below the poverty line. About 31 percent of blacks and 33 percent of Hispanics live in poverty, compared to 14 percent of white persons. About 24 percent of persons over 75, regardless of race, are below the poverty line. Only 10 percent of Texas’ two-parent families fall below the poverty level, compared to 35 percent of families headed by a single female parent.

Follow the trend lines and you will see a state of old Anglos being taken care of by young minorities. The younger minority citizens, Murdock says, will be the caregivers in nursing homes and hospitals, and they will be the taxpayers who support Medicare and Medicaid.

Follow the trend lines and you will see an unskilled, uneducated labor force. A recent study of 250 North Texas manufacturers showed their biggest concern is lack of adequate workforce skills. Follow the trend lines, and you will see an even larger prison population and growing welfare rolls. You will see a much greater gap between the have’s and the have-not’s.

But we Texans haven’t been much at meekly accepting our fate. If we were, Houston wouldn’t be the nation’s second largest seaport and many of us would still be gazing at idle oil rigs. We can change the future.

The best answer we have is education. Short of winning the lottery, it’s still the best way we know to improve median income.

That means making some changes. We in education aren’t yet meeting the challenge of our changing population. We are not doing a very good job of preparing those from low-income, minority and single-parent families for the high-paying jobs.

As a state, we have underinvested in education and we are under producing educated people. Texas ranks 39th in percentage of high school graduates and 33rd in percentage of college graduates.

We in higher education must change the way we do business. We must develop more partnerships with public schools, sharing our know-how. We must increase access and improve retention rates. We must make our product more available to those who must learn or retool while they work. That means distance learning technology as well as more classes convenient to students.

We have no time to waste. As Steve Murdock says, if we are going to fix what needs fixing in Texas, we better do it soon. As our population ages, our median income will decline. Older citizens on fixed incomes are not usually willing to make major investments.

We can do it. We built the Ship Channel. We put a man on a moon.

Are you unhappy with the way your legislators spend money? Now you can write your own state budget with your own computer.

The Texas Budget Simulator (TBS) is new software developed by the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin as part of a project sponsored by the Legislative Budget Board. TBS gives you information about the current (1994-95) two-year state budget and the ability to plug in your own numbers for the 1996-97 budget the Legislature will be considering this session.

You can plug in the revenue estimate contained in the new Biennial Revenue Estimate issued by Comptroller John Sharp or experiment with restructuring taxes. (The Texas Constitution, however, assures that the Legislature will use the Comptroller’s figures.) TBS will keep a running total of the revenues and expenditures you decide upon and show you the difference between the two.

That will help you understand the problems legislators face when they try to keep spending within available revenue. Unlike the federal government, Texas is required by its constitution to balance its budget.

With a keystroke, you can get backup information on each revenue or expenditure item. This also introduces some of the restrictions real budget writers must observe. The constitution and the laws of Texas dedicate the revenues from some taxes to some functions of state government. If you try to cut public school appropriations, for example, below the dedicated amount, TBS will stop you and tell you why it did.

With a keystroke, you can look at certain policy options and their dollar implications. You can then adjust the figures to fit the options you like.

None of these options are necessarily endorsed by the LBJ School or the Legislative Budget Board. Like TBS and a printed report titled “Hard Choices–Setting Priorities for the Texas State Budget”, they are the product of a student policy research project. The project was directed by Tom Keel, a former director of the Legislative Budget Board and myself, with valuable assistance from Mike Wegner of the comptroller’s office and budget board staff.

In short, TBS allows you to play “what if?”:

*State revenues increase $4 billion in the next two years (a good guess)? The net spendable increase would be about $3.2 billion, because about $800 million has been committed by “one-time savings” in the current appropriations act.

*The school year were five days longer? State cost: $151 million.

*Tuition in state universities went up $1 per credit hour. State saving: $18.8 million.

*Aid to Families with Dependent Children were eliminated? State saving: $1.27 billion.

*The state paid for all that current law requires for public schools? Cost: $2 billion.

*Medicaid costs go up? They will. State cost: $2 to $3 billion.

*Teacher retirement payments were reduced to the constitutional floor of 6 percent of salary? Saving: About $325 million.

*The offices of the state comptroller and treasurer were merged? Saving: $8 million.

Some costs will go up whatever happens. Prison costs will go up about $1 billion including $190 million in interest on the bonds to build the new prisons and $600 to $700 million more to operate them.

Interesting facts you can find on the disk and in the report:

*State taxes pay for just half (51 percent) of state government. The other half comes from the federal government (30 percent), dividends and interest (5 percent), and other sources, including the lottery (14 percent).

*Half the state budget (49 percent) is driven by federal mandates and court orders.

*Texas state government spends less money per citizen than any other state.

*Federal mandates increase your local school taxes. Federally required increases in Medicaid siphon money from the state treasury. That money therefore cannot be spent on state aid to public education. In 10 years, the local (property tax) share of the cost of public schools has increased from 48 percent to 55 percent.

*For the first time in fiscal 1994, Texas got more money from the federal government, 30 percent of revenue, than from the sales tax, 28 percent.

TBS comes on a 3.5 inch floppy disk. The information contained on the disk–and more–is available in the printed report, “Hard Choices”. After January 11, you can download TBS from the Legislative Budget Board Bulletin Board, 512-463-7005. The printed report has additional historical data on state revenues and expenses.

TBS is also available from Window on State Government, the comptroller’s bulletin board, which can be reached at 1-800-227-8392 by modem or window.texas.gov by telnet. A wealth of useful information is available on this bulletin board, including population projections to the year 2010 and state economic indicators. A limited number of copies of TBS and “Hard Choices” are available for about $15 from the LBJ School Publications Office, 512-471-4218.

Two LBJ students deserve much of the credit for the software and report. Joe White designed the software and Joe Dyer wrote the report.

An excellent similar program for the federal budget is available from Larry Dzieza, Citizens’ Toolbox, 1411 Westview Place, Olympia, WA 98504. Dzieza’s program is based on a Congressional Budget Office publication titled “Reducing the Deficit: Spending and Revenue Options.”

As Tom Keel says, there’s nothing here that can’t be done with a lead pencil and a Big Chief tablet but it’s a lot easier with a computer.

DHAKA, Bangladesh — When Bangladesh won its independence from Pakistan in 1971 Henry Kissinger called her “the basket case of the world.”

Kissinger said that because Bangladesh is:

• Poor. Per capita Gross National Product is $155. Only one-third of its citizens can read.
• Crowded. If all the people in the world lived in the United States, the U.S. would be as densely populated as Bangladesh. If all the people in Bangladesh lived in Wisconsin, Wisconsin would be as densely populated as Bangladesh.
• Fast growing. The population (now 122,000,000) doubles every 25 years.
• Disaster prone. In 1991 a cyclone (hurricane) killed 150,000 people on April 29. Ten days later there were as many Bangladeshis as before. If all the water that falls on or flows through Bangladesh came at the same time, the country would be 30 feet underwater.

Maybe because of these problems, Muhammad Yunus, a Bangla economist and banker has created a bank to combat poverty that works in Bangladesh and is being transplanted to many Asian and African nations — and to the United States.

The idea is to lend money, without collateral, to the poorest people in the country, mostly women, so that they can earn money and improve their lives. They do so, and they pay back the loan, on time, 98% of the time. Some commercial banks in Bangladesh have payback rates in the thirties.

The Grameen Bank in Bangladesh has found the secret to this kind of banking. The loans are made to groups, usually of five people. The group members guarantee the loan and are therefore careful whom they let into the group. The loans are repaid in weekly installments within a year. No bill collectors will call. The payments are made at weekly meetings, in full view of all.

Peer pressure works. Not only is the loan repaid, the borrower must buy a share of Grameen Bank stock (for 25 U.S. cents) and save a small amount weekly.

Grameen is more than a bank, it is a social movement. Customers must promise to keep their children in school, not drink polluted water, not give dowries when their daughters marry nor take them when their sons marry, plant trees, grow and eat vegetables, dig latrines. Calisthenics are a part of the group meetings.

Grameen customers are encouraged to found nursery schools. The Grameen Bank operates textile mills and agricultural cooperatives, raises bees, finances schools, and other enterprises. In 1986, Grameen took over 108 bankrupt fish farms that had been started by the Bangladesh government and abandoned as failures. Now they are productive and profitable.

Muhammad Yunus got his doctorate in economics from Vanderbilt University and returned to Bangladesh in 1972 with, as he is fond of saying, “all the arrogance of a new Ph.D.”

In 1974, when Yunus was head of the Economics Department at Chittagong University, “a horrible famine (all famines are horrible) struck Bangladesh in 1974. One could not avoid seeing dead bodies of men, women, children who died of starvation — a long painful process of death.” Yunus later said that was when he “became a dropout from economics.”

Well, not exactly. In 1976, Yunus began the first pilot project in Jobra, a village near Chittagong. Today, Grameen Bank has 2,000,000 borrowers, 94 percent of whom are women. It has branches in half of Bangladesh’s 68,000 villages. Two-thirds of the branches are profitable. The average loan is $67. Interest is about 20%.

Bangladesh may receive more aid per citizen from foreign governments and through private contributions to non-government organizations than any other country in the world. Yunus is skeptical of many aid projects. He says that 75% of all the foreign aid received by Bangladesh since its independence in 1971 has gone back to the donor countries as payments to consultants and purchases of commodities and equipment.

“This aid money was spent in building roads, bridges, power plants, research institutions, and buying equipment for large manufacturing enterprises. The expectation was that this investment will benefit a large number of people…

“But, unfortunately, the bottom half of the population…particularly the women…hardly see any benefit coming to them. Often they are actually harmed by the projects,” says Yunus.

Yunus has made a difference, not only in Bangladesh but in the world. Grameen is Bangladesh’s most significant export.

Another election year is ending and with it, another debate about public schools. We’ve heard a lot in recent months about vouchers and charter schools, privatization and local control.

The basic issues are the same ones that have preoccupied Texans since the days of the Republic: Who runs the schools and who pays for them.

The Texans who revolted against Mexico in 1936 listed as one of their grievances the failure to establish a system of public education. But when the Texans won their independence, they proved to be no better educators than the Mexicans. The congress of the Republic merely provided an endowment to each county and left the maintenance and support of the schools up to parents.

To the extent that the Republic did anything at all about education, it provided a voucher system and not a very generous one, since the allotment per student in 1854 was 62 cents per year.

It would be hard to come up with a way of governing schools that Texas hasn’t tried. The state governing body has sometimes been constitutional, sometimes statutory. It has varied in size from three to 24 members. It has been appointed. It has been elected.

Frontier Texans were willing to share the cost of the schoolteacher’s salary. Taxes have been more problematical. Now, in a far more complex society, we must consider not only who pays for public schools but who pays for human services.

The two issues are related in a surprising way. When Congress raises Medicaid costs, it raises your school property taxes. Here’s how it works.

In human services, the federal government (Congress and federal agencies) sets the rules, allows limited state discretion, and pays about half the cost. In public education, the state government (the Legislature and the Texas Education Agency) sets the rules, allows limited local discretion, and pays about half the cost.

When Congress increases Medicaid costs the increased state share comes off the top. The states then have just that much less money to provide for education, prisons, or anything else. But the schools, prisons, and other services still have to be provided. And those services will cost more than they did last year because there will be more students and prisoners than there were last year.

Therefore, legislatures must raise state taxes or cut expenses in areas not affected by federal mandates or court orders and shift more expenses to the school districts. In the current anti-tax climate legislatures by default choose the latter course.

All over the country, property taxes have come under increasing attack. They less and less represent a homeowner’s ability to pay. They are taxes on investment by business and industry.

The State of Texas provides a relatively low level of public services and imposes a relatively low tax burden. Texas ranks 49th among the 50 states in per capita state tax burden, but local school property taxes are another matter. Texas ranks 19th in local property tax burden and those taxes are rapidly increasing.

The most recent property tax revolt has been in Michigan. Last July, the Michigan legislature repealed all local school property taxes. Michigan, like Texas, relied on those taxes for more than half the cost of public schools.

Last December the Michigan legislature put two alternatives before the voters. Last March the voters had to choose between raising the income tax or the sales tax. They overwhelmingly chose to raise the sales tax.

The new plan retains (or reinstates) a much smaller school property tax but shifts about 80% of the burden to state sales and business taxes, and away from property taxes.

Why should Texas not follow the Michigan example? Were Texas to eliminate school property taxes and replace the revenue with state aid, the state would have to impose an income tax of 6 to 7 percent of federal adjusted gross income or a 10 cent increase in the sales tax.

Hardly an appealing political prospect.

The interesting political result, the common denominator in Texas, California, and Michigan, is that when property taxpayers are pitted against the sales and/or the income taxpayers, the property taxpayers win.

The lesson is that Texas’ tax structure won’t change until the property taxpayers get mad.