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life after measure 30

WSWS weighs in on the history of measure 30

Oregon faces deep cuts in schools, health and safety
By Noah Page
13 February 2004

Schools, health services and public safety agencies in the state of Oregon are bracing for more than half-a-billion dollars in budget cuts as the result of a successful campaign by the right-wing group Citizens for a Sound Economy (CSE) to rip off the band-aid that a bipartisan coalition of elected lawmakers applied to the state's hemorrhaging finances during the 2003 legislative session.

Measure 30 was a referral by CSE of the legislature's approval last summer of a temporary $800 million income tax surcharge and various other fee increases to help overcome a shortfall in the state's $11.5 billion budget.

Following a round of cuts in schools and other programs in the 2001-2003 budget, legislators responded to declining tax revenues resulting from the sluggish economy by approving the tax increases. It featured the $800 million surcharge as its centerpiece and enacted other changes to the tax code designed to boost revenue for public services.

The measure asked voters whether they wanted to approve or reject the legislature's budget-balancing package. By a margin of 59 to 41 percent, they rejected it.

The measure's defeat triggers automatic cuts, including $285 million from K-12 public schools, $7.5 million from universities and $6.8 million from state community colleges; $154 million from health services, including a health insurance program for some 50,000 working-class men and women who cannot afford health insurance; $12.8 million from services for seniors and the disabled; $12 million from family welfare services; $10 million from court-appointed lawyers for the poor; and $13 million from the state court system.

In no way can the vote in Oregon be construed as the product of a "grassroots" effort, as it was portrayed by CSE or by such talk radio hosts as Lars Larson, whose Portland-based, statewide broadcast subjects listeners to a four-hour cacophony of reactionary diatribes against government workers, public schools, taxes and the homeless every weekday afternoon.

As with similar developments elsewhere, such as California governor Arnold Schwarzenegger's move to gut public services in his own state, the vote in Oregon must be regarded in a broader context, one that includes an understanding of capitalism's trajectory during the postwar years and the political and social conditions it produced.

CSE, a Washington, D.C.-based corporate front group founded by David and Charles Koch of Koch Industries, is a product of those conditions. Only by examining the forces that gave rise to it and looking closer—which is to say, in sharp contrast to Oregon's media, looking at all—at the social layers served by CSE, can this "anti-tax" campaign be understood. [See accompanying article]

CSE is a relatively new player in Oregon. The group claims some 12,000 members in the state, which is home to 3.4 million people. Nearly 12 percent live in poverty.

The Oregon CSE chapter moved relatively quickly to fill the void left by another right-wing group, Oregon Taxpayers United (OTU), headed by a failed businessman and Republican, Bill Sizemore.

Sizemore came to power in the early 1990s, riding the wave of an anti-tax measure that effectively shifted a greater share of the property tax burden from corporations to individual homeowners—the very people he purported to represent.

During an unsuccessful gubernatorial campaign in the 1998 Republican primary, the OTU leader's opportunistic character was brought into sharper focus when an investigation by the Oregonian newspaper revealed his failures and ethical lapses as a small business owner. In 2003, two public employee unions sued Sizemore for $2.5 million after earlier convictions for fraud and racketeering against his political organizations—related to an anti-union ballot measure. He continues to fight the lawsuit in appeals.

From the beginning, CSE's campaign in Oregon relied on corporate money, sophisticated political tools brought in from outside the state, secrecy, and distortions.

To collect some 118,000 signatures from the state's "grassroots" to qualify the referendum for the ballot, CSE hired the Sacramento, California-based firm, Arno Political Consultants, whose past clients include several Republican presidential tickets, various right-wing political causes, and Fortune 500 companies—Wal-Mart, Mobil Oil, Occidental Petroleum and Philip Morris among them. The group's web site declares that "we've helped corporations and associations defend their economic interests."

CSE's Oregon director, Russ Walker, and other Measure 30 opponents frequently gushed about how quickly they were able to collect signatures. To be sure, the speed with which Arno's employees and CSE volunteers persuaded people to sign petitions can be attributed, in part, to the economic insecurity that is pervasive in Oregon, no less so among the working class.

Between CSE's cynical exploitation of these fears—blaming the very real deterioration of conditions among the working class and middle class on nothing more than "the government"—and its extensive reliance on foot soldiers drawn from the state's ultra-conservative Republican Party central committees, the Christian right, and the Libertarian and Constitution parties, the speed and efficiency with which it collected the necessary petition signatures hardly comes as a surprise. In fact, it would have been surprising if they hadn't got the measure on the ballot.

CSE's campaign relied on a good measure of stealth politics and distortions. Little is known, for example, about Walker or the group's corporate origins. In the Oct. 19 issue of the Oregonian, a photo caption of Walker notes that "he wants to keep the group's profile low during its campaign to put a referendum on the ballot."

In that regard, CSE was successful. The Oregonian never went further than informing readers occasionally that CSE was based in Washington, D.C. In the four months preceding the election, the phrase "Koch Industries" never appeared anywhere in the newspaper's coverage of Measure 30.

Lies and distortions

CSE's campaign against Measure 30 was built on a foundation of lies and distortions intended to frighten and deceive the public. Although it is not possible here to conduct a thorough review of every claim the group made about this enormously complicated tax package, it is useful to examine a few that were subjected to analysis by the Oregon Center for Public Policy (OCPP), a non-profit research group.

Late in the campaign, CSE published a report on its web site entitled "Oregon's Tax Hike: Unnecessary and a Bad Idea," providing talking points for the state's right-wing mouthpieces. The OCPP responded in a January 14 report written by Chuck Sheketoff.

CSE's claims included:

"Everyone in Oregon will pay for the $1.1 billion tax hike—which comes to $825 per household," and "The government can balance the budget without raising taxes. Eliminating the 5,000 vacant positions in state government would free $322 million in unobligated reserves."

The actual facts, as Sheketoff outlined in his report, which this writer confirmed independently, were that the average Oregonian would have paid about $81 annually in additional taxes. CSE basically divided the three-year revenue package by the number of all Oregon households and then disingenuously suggested that an Oregonian's tax bill under Measure 30 would amount to "$825 per household."

The issue of employee vacancies, meanwhile, was addressed by a veteran Republican member of the Oregon House of Representatives, Speaker Pro Tem Lane Shetterly. In a piece published in the Oregonian, Shetterly wrote: "In fact, the Legislature eliminated more than 1,000 vacant positions during the 2003 session, and the savings are in the budget. There are not thousands more than can be eliminated now."

It hardly comes as a surprise that CSE's campaign relied, in part, on lies and a blatant disregard of objective fact. This fundamentally reactionary attitude found possibly its highest expression in an off-the-cuff remark by the national organization's chairman, former Texas representative Dick Armey, a particularly belligerent and reactionary gasbag. Campaigning in Oregon last fall for Measure 30's defeat, Armey—fresh off the plane from Texas—assured the public that CSE's campaign was not being directed from outside the state. When asked to comment on Oregon's near-legendary budget problems, Armey replied, "I don't need to know that."

Armey was roundly criticized by the state's media for the remark, but in fact, the comment has an element of harsh truth: well-paid lobbyists and right-wing hacks who do corporate America's legwork in the trenches literally don't "need" to know anything about the conditions faced by the working class, by underpaid and overworked teachers, by the unemployed or by people who rely on public health services. Their agenda is to produce conditions that maximize profit—not to worry or even think much about those left behind.

None of this should imply, however, that Measure 30 was the expression of an enlightened and progressive state legislature that set out to tip the state's tax scales in overwhelming favor of the poor and working class. The coalition supporting the measure, including the Democratic governor Ted Kulongoski and the state's trade union bureaucracy, were unable to offer any serious alternative to the right-wing camp's demagogic claims that it was defending the interests of "ordinary taxpayers." Democrats and Republicans alike reject any policies that would force corporations and the wealthy elite to pay for the crisis.

As in other states, corporations in Oregon make extensive use of loopholes to get out of paying taxes. In 2000, for example, 65 percent of the state's corporations paid no income taxes. Instead, more than 23,000 businesses wrote $10 checks, the minimum required on zero liability. A recent report by the Oregon Office of Economic Analysis showed that corporate tax collections for the two-year budget period ending June 30, 2003, dropped to their lowest levels in a decade.

Measure 30, had it passed, would have rectified this inequity only slightly. The minimum corporate income tax would have been raised to a range of $250 to $500 for some companies, and to a range of $250 to $5,000 for others.

Anatomy of a fraudulent "grassroots" campaign: Citizens for a Sound Economy in Oregon
By Noah Page
13 February 2004

The campaign by the right-wing organization Citizens for a Sound Economy (CSE) to overturn a legislatively approved tax increase in Oregon and implement more than half-a-billion in cuts to public services was presented by both CSE and its supporters as a "grassroots" political operation. This claim is worthy of serious examination.

CSE, a Washington, D.C.-based corporate front group founded by David and Charles Koch of Koch Industries, is very much a product of the conditions that afflicted American capitalism in the postwar period. Only by examining the forces that gave rise to it and looking closer—which is to say, in sharp contrast to Oregon's media, looking at all—at the social layers served by CSE, can this "anti-tax" campaign be understood.

In the early 1970s, corporate America faced serious challenges. With the end of the postwar economic boom and the continuing—and increasingly unpopular—war in Vietnam, domestic unrest was on the rise. A serious mass radicalization, with definite anti-capitalist overtones, alarmed privileged elites in both government and corporate circles.

This perceived threat was analyzed at the time by Lewis F. Powell, Jr., a corporate attorney and future Supreme Court justice, in a document that has since been dubbed the "Powell Manifesto." Written at the request of the U.S. Chamber of Commerce leadership, Powell's memo was distributed widely to the chamber's national membership of business executives and trade associations in August 1971.

It began with an observation on how these populist attacks on "the free enterprise system" were seen by the ruling elites:

"[W]hat now concerns us is quite new in the history of America. We are not dealing with sporadic or isolated attacks from a relatively few extremists or even from the minority socialist cadre. Rather, the assault on the enterprise system is broadly based and consistently pursued. It is gaining momentum and converts."

Powell recommended a specific response: "[T]he time has come—indeed, it is long overdue—for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it."

This memo, the contents of which were later reported by investigative journalist Jack Anderson, had a tangible result. In pronouncing the very survival of the free-market system at stake and calling for a well-financed counterattack, Powell's memo precipitated an immediate and vast influx of corporate profits into establishing right-wing "think tanks" and beefing up existing ones.

These groups included the Business Roundtable, founded in 1972 by the CEOs of Alcoa, General Electric, U.S. Steel, and other companies; the Heritage Foundation, founded in 1973 with a quarter-million-dollar gift from the ultra-conservative businessman Adolph Coors; and the Cato Institute, founded in 1977 by petroleum millionaire Charles Koch.

Koch Industries, founded in 1927 by right-wing extremist and John Bircher Fred G. Koch, represents a particularly brutish element within the globe's corporate elite. Much more could be said about it. For the present, it is enough to observe that its ties with the family of George W. Bush and conservative causes are well documented.

Here's a recent example: In September 2000, Koch Industries was indicted on 97 counts of environmental crimes. The company faced $352 million in fines, if convicted. That same year, according to the magazine Mother Jones, David Koch and his wife Julia contributed $487,000 to the Republican Party. In April 2001, the Bush Justice Department accepted a guilty plea in which Koch Petroleum Group agreed to pay a $20 million fine—pocket change for the Koch family.

Koch Industries, based in Wichita, Kansas, owns holdings of oil, natural gas, ranching, securities and finance firms. It is one of the world's wealthiest corporations. In 1984, with an ally in President Ronald Reagan, the Koch brothers launched a political group, Citizens for a Sound Economy, which deliberately had a more activist bent than the Cato Institute.

Paul Beckner, who is the president of CSE, describes this mission on the group's web site: "We are not a 'think-tank,' content to study the issues and publish papers and reports," Beckner writes. "There are many groups doing important work in this area. CSE's mission is to turn those ideas and policies into action."

Two years later, another right-wing group, Americans for Tax Reform (ATR), was launched out of Reagan's White House, intended as an in-house operation to build support for the 1986 tax "reform" bill. ATR eventually became an independent entity and is headed by right-wing strategist Grover Norquist, a repugnant figure who has never been so precise about his own "ideas and policies" as when he told National Public Radio journalist Mara Liasson on May 25, 2001, that: "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub."

The extent to which CSE relies on corporate profits for its nationwide operations is illustrated in a report published in October 2000 by the non-profit consumer watchdog Public Citizen. According to this analysis, the top 10 industry sectors contributing to CSE in 1998 were oil and gas companies, telephone companies, tobacco products, electric companies, sugar manufacturers, food retailers, auto manufacturers, and the pharmaceutical, insurance and finance industries.

That year, CSE benefited from more than $13.8 million from corporate contributors, conservative causes and a few wealthy individuals (e.g., former White House counsel C. Boyden Gray, $242,453). Top individual corporate donors, meanwhile, included: US West Communications ($1.2 million), Philip Morris Companies, Inc. ($1 million), Koch Industries Inc. ($626,500), DaimlerChrysler Corp. ($535,000), and the General Electric Company ($500 million).

The Washington Post examined CSE's stealth influence in an article published January 29, 2000. CSE, the report noted, got more than $1 million from Philip Morris Co. at the same time that the "grassroots" group was opposing cigarette taxes. And while CSE was endorsing deregulation that would permit US West to offer long-distance telephone service, that company contributed $1 million of its own.

CSE's internal documents, the Post reported, "provide a rare look at think tanks' often hidden role as a weapon in the modern corporate political arsenal. The groups provide analyses, TV advertising, polling and academic studies that add an air of authority to corporate arguments—in many cases, while maintaining the corporate donors' anonymity."

The article, written by Post reporter Dan Morgan, went on to quote an observation by Gary Ruskin of the Congressional Accountability Project: "It's part of a rent-a-mouthpiece phenomenon. There are mercenary groups that function as surrogates when industry feels it's not advantageous for it to speak directly."

It is worth pausing to note that this risk was cited as one reason in Powell's memo to the U.S. Chamber of Commerce in 1971 that companies should marshal the financial resources to fund such groups, instead of engaging directly in propaganda work themselves. In Powell's words: "[T]here is [a] quite understandable reluctance on the part of any one corporation to get too far out in front and to make itself too visible a target."

CSE's campaign in Oregon, while relying on some small contributions from individuals, primed its anti-Measure 30 pump significantly with its own corporate-funded coffers in Washington, D.C. Items as small and insignificant as office supplies and even balloons for campaign rallies were paid for by the D.C. office.

CSE's contributors in Oregon were similarly weighted by large donations from local companies and trade associations, including Columbia Helicopters, Inc. ($85,000), Adec, Inc. ($80,100), Seneca Sawmill Co. ($75,100), Jeld-Wen, Inc. ($55,100), Freres Lumber Co. ($27,550) and the Oregon Grocery Association PAC ($7,500).

Oregon is just one front in this national assault being waged by corporate front groups like CSE and Americans for Tax Reform. Assured that Bush and the Republican-controlled Congress will advance its national agenda, these groups are now free to wage war at the local level, one state at a time.

The Wall Street Journal, in its February 5 editions, observed the "encouraging news" from Oregon. Following Measure 30's defeat, Norquist's ATR issued a press released that cited CSE's campaign as "the biggest victory" in the February 3 election.

"With this Congress and President Bush, tax hikes in Washington are dead before the words are even uttered," Norquist was quoted as saying. "And with massive taxpayer victories in Alabama, California and now Oregon, the national consensus against tax increases is firming up even in liberal states."
Money 13.Feb.2004 17:30

Lynn Porter

Good articles, but I think the author gives too much credit, in the defeat of Measure 30, to rightwing money. Money may have put M30 on the ballot, but I didn't see any signs that money defeated it -- no visible TV campaign, etc. We need to look at what else is going on.

State legislators should have known that their budget balancing bill would be referred to the voters and defeated. The defeat of M28 last January should have told them that. Their plan was way too complicated for most voters to understand. I don't think most people understand a progressive tax, or understood that most people would be paying only a few more dollars a month in state taxes. All they knew what that taxes would go up, and they feel like they're paying too much already. You cannot send any kind of complicated measure to the voters. They will not get it, and TV news, for most people the only news they get, will not explain it to them.

Nor did the coalition which tried to pass M30 do a very good job of explaining to people how much M30 would cost them. The flyer I saw said something like "This is a fair tax. Those who make more will pay more." No, that doesn't do it. You have to tell people exactly, as close as you can, what it will cost them. There should have been a simple table on the flyer, telling people what the average tax would be for a given income range. The state Legislative Revenue Office had something like that on their website.

The state legislature will be having a special session in June on tax reform. Before that they will do hearings around the state. We need to be at those hearings and campaign for a fairer tax system that will increase state revenue enough to fund human services and education. (Screw "public safety.") Progressives need to study the state tax system so they understand it well enough to explain it to others. If the legislature can't produce a fairer system, and they probably won't, we should start thinking about an initiative.

At a recent Eugene workshop on the state budget and taxes I found out that 52 cents out of every tax dollar is never collected because of tax credits. We should think about an initiative to abolish all the tax credits that go to business. People will not support any tax increase they have to pay, but I think they would vote to increase business taxes.