This article is part of a Nation series exposing the American Legislative Exchange Council, in collaboration with the Center For Media and Democracy. John Nichols introduces the series.
In the world according to ALEC, competing firms in free markets are the only real source of social efficiency and wealth. Government contributes nothing but security. Outside of this function, it should be demonized, starved or privatized. Any force in civil society, especially labor, that contests the right of business to grab all social surplus for itself, and to treat people like roadkill and the earth like a sewer, should be crushed.
This view of the world dominated the legislative sessions that began in January. GOP leaders, fresh from their blowout victory in November, pushed a consistent message—“We’re broke”; “Public sector workers are to blame”; “If we tax the rich we’ll face economic extinction”—and deployed legislative tools inspired by ALEC to enact their vision. They faced pushback, but they also made great progress—and will be back again soon.
Let’s examine what happened in three critical economic areas:
ALEC has long sought to limit the ability of states to raise or collect taxes or fees. Before this spring, it had already succeeded in getting more than thirty to adopt such limits, often hard-wired into their constitutions or requiring supermajorities to change. Its varied model legislation to this end includes the Capital Gains Tax Elimination Act, Use Tax Elimination Act, Super Majority Act, Taxpayer Protection Act and Automatic Income Tax Rate Adjustment Act. Its model resolutions oppose such things as mandatory unitary combined reporting (the chief way states get corporations to pay any taxes at all) while supporting such things as the federal flat tax and efforts to extend the Bush tax cuts permanently. The Automatic Income Tax Rate Adjustment Act, for example, “provides for a biennial reduction in the state adjusted gross income tax rate on residents, nonresidents, and corporations if year-over-year revenue…exceeds certain amounts,” in effect ensuring no increase in state revenue, even during periods of growth, while keeping tax cuts on the table. The Taxpayer Protection Act “prohibits the revenue department of a state from basing any employee’s compensation, promotion or evaluation on collections or assessments,” otherwise known as doing their job.
This past session, ALEC members, drawing heavily from the list above, introduced 500 bills to “starve the beast.” But their greatest victory was the most obvious one. Faced with shortfalls in state revenues from the economic crisis, states almost universally and overwhelmingly chose cuts to public employment or services over progressive tax increases as a solution.
Privatization is so central to ALEC’s agenda that it has built a fake board game, Publicopoly, on its website, where the curious can find model legislation and other resources on privatizing basically everything, from transportation (Competitive Contracting of the Department of Motor Vehicles Act) to the environment (Environmental Services Public-Private Partnership Act). Critical to ALEC’s agenda are the foundational bills that set up the rationale for privatizing government services: the Public-Private Fair Competition Act creates a committee to review “whether state agencies unfairly compete with the private sector,” and the Competitive Contracting of Public Services Act requires “make or buy” decisions to encourage privatization. The hallmark of ALEC’s model privatization legislation, the Council on Efficient Government Act, creates “a council on efficient government to leverage resources and contract with private sector vendors if those vendors can more effectively and efficiently provide goods and services and reduce the cost of government.” These councils typically include representatives from the private sector, who then decide to let their business colleagues bid for public sector work.