Republicans unveil budget plan

Republicans unveil budget plan
GOP says it kills need for tax hikes; Dems say it’s flawed

By Nick Budnick / The Bulletin
Published: December 23, 2009

SALEM “” State Senate Republicans have issued their latest budget proposal, which they say proves that tax hikes are not necessary to balance the budget. Democrats, however, say the plan is filled with holes and flawed thinking.

The plan, spearheaded by Sen. Chris Telfer, R-Bend, relies on cuts to the salaries and benefits of state employees, as well as reserve funds, reform of the controversial Business Energy Tax Credit and use of funds in agency accounts not normally touched by lawmakers.

Telfer says the plan shows that the two tax hikes, which the state budget is relying on for about $730 million over the next two years, are not necessary. “This budget says, “˜Hey, there are other options that don’t involve business choking tax increases or service cuts,'” she said in a news release.
Supporters of the tax hikes, however, say the Republicans’ budget entails cuts to education and relies on agency funds that may not be available “” as well as reserve funds that shouldn’t be touched until the economy stabilizes.

House Speaker Dave Hunt, D-Gladstone, said, “This alleged plan cuts hundreds of millions from the education budget. It cuts hundreds of thousands of dollars in scholarships for needy college students. It uses funny money schemes, and it leaves Oregon broke.”

Telfer said that Republicans feel confident in their plan but have been hampered by a failure to get the same level of cooperation normally provided to the Democrat-led Joint Ways and Means Committee, which writes budgets.

“For us to play Ways and Means is very difficult with the limited information we’ve been provided,” she said.

The Republican plan relies mainly on the following:

“¢ State employee compensation: $291 million

Republicans say that if both tax measures are defeated, Gov. Ted Kulongoski should go back to the state employees unions and negotiate cuts in pay worth $160 million, effectively rolling back state workers’ salaries to 2008 levels.

Republicans also think state employees should be asked to pay $187 a month for health care, much as they say the average teacher does.

Defenders of the tax hikes, however, say state employees have already agreed to a variety of unpaid furlough days and other cuts in compensation.

Scott Moore, a spokesman for the pro-tax coalition supported by public employee unions, said that the Republican plan appeared to ask for every state employee to give up $2,800 a year, which he contrasted with the proposed tax hikes on corporations and higher-earning Oregonians.

“We can’t ask for a dime more from families that make more than $250,000?” he said.

Telfer, however, said fairness also applies to public employees, who she said have not taken the level of cuts as most private-sector companies and employees already have.

“¢ Reserve funds: $203 million

Republicans say they will use $203 million from rainy day fund accounts that are currently projected to hold $382 million by July 2011.

Under Democrats’ legislatively approved budget, K-12 schools would have received $200 million in reserves.

However, that was only if the economy held up. Democratic lawmakers say an additional hole has appeared in the budget of $230 million or more, due mainly to the worsening economy.

In effect, the Democrats say, the Republicans are using $200 million that would either have gone to schools or been used for other services due to the worsening deficit.

“The money that they are counting on does not actually exist,” said Senate Majority Leader Richard Devlin, D-Tualatin.

Telfer, however, said that there are plenty of other efficiencies to be found in state agencies.

“¢ Agency account balances: $133 million

For months, Telfer and other Republicans have been arguing that there is another place to go to balance the state’s budget: money that state agencies receive other than personal and corporate income tax, dubbed “other funds.”

Depending on how you look at it, there are hundreds of millions, if not billions, available in these accounts.

However, Democrats and state officials say most of the money is already spoken for “” earmarked for road spending or other uses mandated by law.

Republicans have compiled a detailed spreadsheet of specific cuts that they say takes into account agencies’ stated needs for reserves as well as legal restrictions on the accounts.

Telfer called the list “low-hanging fruit.”

Hunt, for his part, questioned the use of $240,000 in funds that would have gone to the Oregon Student Assistance Commission, calling it an example of “gimmickry.”

“¢ Energy tax credit reform: $50 million to $85 million

Telfer says she has received a range of estimates on how much would be saved by reforming the state’s controversial BETC, which subsidizes renewable energy and conservation projects.

The most recent estimate is about $50 million.

That figure is what could be produced by negotiations already under way between lawmakers and lobbyists.

Democrats do not question that the BETC could produce significant savings.

In fact, Sen. Ginny Burdick, D-Portland, recently said the $50 million figure seemed realistic.

Nick Budnick can be reached at 503-566-2839 or at nbudnick@bendbulletin.com.

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  • Some Guy

    Isn’t it time to break the public employee unions here in Oregon? THEY are the ones bankrupting the state!

  • Anonymous

    This is a joke, right? This is the best we have to offer? A half-assed budget proposal led by an unimpressive new state senator who essentially bought her seat? Slash the funding of an already underfunded education system, drain the state’s reserve funds, and aggressively cut state employee salaries all so that Oregon Republicans can appear business-friendly? The only reasonable suggestions in this proposal are BETC reform and the scrutinization of “other funds” accounts. Both no-brainers that most Democrats are probably willing to accept.

    • Anonymous

      Well the Democratic spin machine just kicked into high gear. How is the view from fantasy land as I didn’t see one dollar cut from education. Just because Speaker Hunt says it doesn’t make it true.

      I was always told when they start screaming things that aren’t true you have them on the run. Nice work R’s.

      • Anonymous

        “Well the Democratic spin machine just kicked into high gear. How is the view from fantasy land as I didn’t see one dollar cut from education. Just because Speaker Hunt says it doesn’t make it true.”

        Fair enough, Anonymous. I haven’t had the opportunity as yet to read any official documents with regard to this proposal. I was only commenting on the article as written. The author saw fit to include Dave Hunt’s (D) remark and did not dispute it.

        “I was always told when they start screaming things that aren’t true you have them on the run. Nice work R’s.”

        If it turns out to be untrue, then I will retract that particular criticism. Either way, this proposal remains half-assed (from what I see here) at best.

  • David Appell

    Did you know that GW Bush increased the size of government spending by 100% in real terms, during his time in office?

    • Anonymous

      Did you know Obama is on track to double GWBs spending in one term?

      • David Appell

        It’s easy (and essentially) meaningless to try and extract 8 yr trends from one year’s worth of data.

        You’d have found the same thing in Clinton’s term, after 1 yr. Yet he balanced the budget by the end of his administration. (What Republican has ever done that?) GW Bush then ruined all that.

        Bush has a solid 1-yr record of drastic spending increases, and then left Obama with an absolute mess of an economy. The steps taken to correct the Bush economy should rightfully be charged to Bush.

        • Anonymous

          no, Clinton never “balanced” the budget. Clinton used overly optimistic projections of what future revenues could be to claim that spending increases would be paid for.

    • Dan

      Two wrongs dont make a right.

      Stop trolling and actually address the article.

  • Anonymous

    Disclosure: I am a state worker.

    OK, that is out of the way. I am also a fiscal conservative limited government Republican. I also manage millions of dollars of state money and do my damndest to cut costs, but legislative mandates make my efforts pointless.

    Employee salaries are NOT the problem. The problem is runaway welfare spending. We are expanding welfare benefits and enrolling more people. This costs BILLIONS. A 10% across the board cut on employee pay would be a drop in the bucket. We need to stop signing up every child for “healthy kids.” We need to stop giving TANF benefits and food stamps to people who refuse to work. We need to stop the inflow of illegal aliens who get free medical care to have their anchor babies in our state.

    We could slash welfare programs and balance the budget while cutting taxes and creating jobs for those willing to work. Those unwilling – I have no sympathy for them.

    Now don’t even get me started on K-12!

    There is no reason to cut my pay (which is already far below average for a person with my experience and education in the private sector) if we aren’t going to do something about the real spending problems. And until the GOP is willing to do something about the elephant in the room, the GOP should stop trying to stomp on the mice.

    • David Appell

      > We need to stop signing up every child for “healthy kids.”

      Why — should kids (most of all) not have access to all the health care they need?

      > We need to stop giving TANF benefits and food stamps to people who refuse to work.

      Yes, we should — if your description is accurate. What evidence is there that the people receiving TANF and food stamps are refusing to work, and not victims of the inexorable cycles in a capitalist economy?

      • dan

        you are such an anti-free market hack.

        Move to china or cuba and see how you like the perils of central planning.

        • David Appell

          > Move to china or cuba and see how you like the perils of central planning.

          Perhaps you, as a purported free marketer, should move to a truly open market like Russia or Somalia and see how long you’d last.

          Cuba does have more comprehensive health care then the US.

          And the European countries seem to be doing a better job or providing equal access to necessary services to its citizens — health, education, retirement, etc. while doing a better job of protecting the environment.

          I don’t read stories about European citizens having to line up in fields to get health care under tents, the way I do here in the US.

          • Rupert in Springfield

            >I don’t read stories about European citizens having to line up in fields to get health care under tents, the way I do here in the US.

            Then you probably don’t know a lot about the issue, especially if you are going to bring up the tent nonsense.

            European health care, at least so far as the drugs involved go, is subsidized by the American citizen. Obviously you do not know about that since you have no education in the matter. And that’s just one facet of the issue. You are neither a doctor or an economist.

            So, I am going to apply your own words to you.

            Please, sit down and be quiet. As you said regarding AGW, you have no education in this matter and have done no work on the subject. You are neither a doctor or an economist.

            Your absence of education and work in this area means you have not earned the right to a vote.

            So, follow your own rule – be silent.

            If not, then please understand why you are not taken at all seriously when you demand others be silent on issues which you insist they have no education.

            Thank you.

          • David Appell

            In fact, 5 of the 12 largest pharmaceutical companies are HQ’ed in Europe:
            http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies

            Only 20 of the largest 50 pharm companies are located in the US. 14 of them are located in Europe.
            http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies

            So how is European drug spending subsidized by the US? More details, please.

          • Rupert in Springfield

            >So how is European drug spending subsidized by the US? More details, please.

            The US is the major source for new drug discoveries. New drugs are extremely expensive to develop. Once developed that cost has to be recouped quickly, before the patent runs out. Whatever new drug one may be speaking about if one looks into it, the same drug in the US will cost far more than in countries with national health care. This is where the subsidy comes in.

            National health care systems usually buy drugs in bulk, there is a single buyer, the government. So, what they do is buy the new drug at pennies above cost.

            Obviously that tiny profit margin is not enough to pay for the cost of the drugs development so why in the world would the evil horrible American pharmaceutical company sell for so low a margin?

            Simple – if the company refuses to sell, WTO rules say that companies patent runs out in two years. So, they sell at the discount price rather than lose the patent.

            So where in the world does the money to develop the new drugs come from?

            Simple – the American consumer. WTO rules apply to international trade, not domestic sales. Therefore the company can charge what they want here, so we pay inflated prices so our European friends can pay low.

            Ok, now since I know totalitarians like I know the back of my hand, lets cut this one off at the pass.

            I know what you are thinking. The answer would be no. You cannot mandate to the drug companies that they sell here for what they sell in Europe. If you did so there would be no profit margin at all and thus no incentive to develop new drugs.

          • David Appell

            > The US is the major source for new drug discoveries.

            Your proof of this assertion?

          • David Appell

            > Once developed that cost has to be recouped quickly, before the patent runs out.

            In the US these patents last for, I believe, 20 years. No?

            How much more time do you want?

          • David Appell

            Rupert wrote:
            > the same drug in the US will cost far more than in countries with national health care.
            > This is where the subsidy comes in.

            Completely false.

            The difference comes because European+ countries bargain with the drug companies for bulk discounts, but such bargaining is not allowed for US entities buying such drugs.

            Why is that? Because Congress won’t allow it? Why is that? Because it harms the massive profits of the pharm industry, one of the most profitable industries in existence.

          • David Appell

            > Obviously that tiny profit margin is not enough to pay for the cost of the
            > drugs development so why in the world would the evil horrible American
            > pharmaceutical company sell for so low a margin?

            The pharm companies freely enter into these purchase agreements, because after the drug is developed the cost of producing future pills is, literally, less than pennies.

            So Americans pay for the development, regardless of where the drugs were manufactured, because Congress is in the pocket of big Pharm. Others get the pills for pennies benefit.

      • Steve Plunk

        David,

        You sound like a skeptic. Demanding proof of all things. Maybe we could model welfare benefits on a computer and satisfy your demands.

        The historical record shows spending growing at an alarming and unsustainable rate. If we don’t stop it or slow it down we could reach a “tipping point” and bankrupt our democracy. Maybe some draconian cuts in all social services would do the trick. Let’s risk it based upon those computer models.

        To be more realistic we need to recognize the institution of government is corrupt (as opposed to people who work for it) and needs to have it’s incentives changed. The incentives and feedback mechanisms are broken and creating spending growth the taxpayers no longer tolerate unless those taxes fall on someone else. Someone else like business, the well off, or the next generation.

        Spending control has not worked so now it’s time for controlling the incoming revenue.

        • David Appell

          > The historical record shows spending growing at an alarming and unsustainable rate.

          It’s been showing that for about 4 decades — and suddenly NOW you’re worried about it? Where were you in the Reagan and GW Bush administrations, two self-claimed free marketers who were anything but.

          > Maybe some draconian cuts in all social services would do the trick.

          So would taxing the wealthy at more equitable rates, ie undoing the Bush tax cuts.

          > … creating spending growth the taxpayers no longer tolerate unless those
          > taxes fall on someone else.

          Voters _DO_ tolerate the existing government financial state — they’ve been voting for it for about a half-century now. They know that both R’s and D’s are going to raise the budget, yet they vote for them anyway. Candidates like Ron Paul or HR Perot simply cannot get elected. The American people either (1) apparently like the current situation, or (2) are so stupid that they pick candidates like they pick soap.

          > Spending control has not worked so now it’s time for controlling the incoming revenue.

          It worked during the Clinton admin. It would have worked during the Bush admin, if he hadn’t but taxes for his buddies. Despite all his big-talking, Bush did not do what was required to balance the budget, and increased govt spending massively without being able to know how to pay for it.

    • dan

      It isnt cutting pay it is eliminating the increase in pay.

      In the entire economy, private sector jobs are freezing pay, increasing non paid furloughs and even giving pay cuts. In a recession, the private sector and citizens tighten their belts. Why should government be any different?

      • David Appell

        > In a recession, the private sector and citizens tighten their belts. Why should
        > government be any different?

        Because such cuts just make the situation worse. It has never made any sense to me to cut health care support just because the private sector is ailing. With the latter, MORE people are needing help from the government, not less, especially in the US with our screwed up system of attaching health care to employment.

        The govt is not a business, and should not be thought of one or run as one.

        • Anon

          You are correct. Government is not run like a business. It lacks things like customer service and accountability. If government cared about customer service furlough days would be taken on a rolling basis instead of closing everything down all at once. If government was accountable we wouldn’t tolerate disasters like the failed state data center.

          • David Appell

            > If government cared about customer service furlough days would be
            > taken on a rolling basis instead of closing everything down all at once.

            Maybe. Maybe not. I don’t think govt managers are dolts, nor are the consultants they talk to. I suspect they know far more about the intricacies of their situations than you do, and how their personnel and departments ought to be managed to maximize customer service plus budgetary needs plus human resources needs.

            > If government was accountable we wouldn’t tolerate disasters like the failed state data center.

            Data centers, private and public, fail all the time. Have you noticed the Blackberry outages in the last week? When I worked for AT&T I was on the inside track and heard about data center failures all the time — during that time they suffered one of the biggest network failures of all time (4/15/1998). I just read about an airline network failure about two weeks ago that backed up the whole system.

            These things happen in a technological society. Try to relax a little, and maybe take the time to read a good novel.

          • Bad Man

            Wow! You worked for AT&T. I’m impressed. Did you do retail sales at minimum wage or sweep the floors? Every time I see your posts here you sound more like an uneductaed DOLT that gets all their information from the Daily Kos or MoveOn.

          • David Appell

            Neither. I was first a systems engineer at AT&T Bell Labs, and then a project manager at their Bedminster headquarters, developing and managing fraud control projects for their virtual private network.

          • dan

            and now…..you are an unemployed crappy writer who spends his time trolling on blogs and making ridiculous comments regarding the evil Bush…the evil republicans…and other various nonsense.

          • David Appell

            Sure, Dan. Please feel free to issue whatever insults you need to.

            I hope they make you feel better.

          • Anonymous

            Ooooh he worked at AT&T. Meanwhile the person here who works for the largest spending agency in the the state, the one responsible for multimillion dollar welfare plans and who is telling you where the real problems, are is dismissed…

  • Rupert in Springfield

    I have a feeling that when the vote on the tax increase come, we will hear yet again from the left that Republicans never propose anything in lieu of tax increases.

    We certainly heard that in the fall. Endless yammering about how Republicans never proposed anything so they have no right to complain about measures 66 and 67. I think that began about three weeks after the Republicans proposed a plan without tax increases over the summer.

    Ok, so now we will have two. Last summers and this one. Will that put an end to the assertions of “Well do Republicans have a better idea than 66 and 67? Let’s hear it”

    Nope

    The same crowd will have to be reminded yet again of why that is getting to be a very tired tactic indeed.

    • v person

      There are PR plans, and then there are plans that are reality based. Telling Kulongowski to “go back and negotiate pay cuts” is not a reality based plan. Negotiations are 2-way streets. Thinking you can re-program earmarked funds to other uses, i.e. road funds to schools, is not reality based. Re-spending rainy day funds already spent is not reality based.

      On the BETC funds? Good idea. Already being done.

      • Anon

        Thinking you can re-program earmarked funds to other uses, i.e. road funds to schools, is not reality based.

        Where exactly are the “road funds going to schools.” You really need to stop making things up.

        • v person

          What do you know? You’re not a gay man wading through a slough of hetero discrimination. When will my kind and I be allowed to live openly? That’s the only real question here!

  • Insider

    Rupert, the criticism is not that the R’s don’t have a plan, the criticism is that they have a BAD AND STUPID PLAN.

    The R’s have proposed cutting the 139 State Troopers that the D’s hired during the past two years, cutting the 3,200 Head Start slots that the D’s added during the past two years, cutting K-12 funding for this biennium by $200 million (which is sitting in reserves earmarked for K-12), etc. And now they also want to spend all the budget reserves, even though we have 18 months left in this biennium and the revenue forecasts will likely continue to fall. They have now completely abandoned the fiscal responsibility mantra.

    Yes, the R’s now have a plan. But it is a ridiculous plan.

    YES on 66 and 67.

    • capor

      Bunk. Repubs fought hard in every committee they could get an ear at to show their interest in proposing alternative plans to tax increases. R’s know that slowing spending is hard for everyone, but a necessity now more than ever. I watched and communicated with R’s closely during the session and know they were trying to get information from leadership and committee chairs to reinforce their alternative proposals and were stone walled at every corner of the Capital. Dems in the 2009 Oregon Legislature pulled the same stunt that the Dem controlled Congress is pulling and it will require “un-baking the cake” eventually.
      Voting NO on 66 and 67 will be a first step in forcing the entire legislature to sit down and work it out correctly as we all expect them to do.

    • Anon

      Now this is just getting funny. When you can’t win on the facts, make stuff up. Here is where you are dead wrong.

      1) The Republican plan leaves $100 million in reserve funds and billions in state agency coffers.
      2) The $200 million to schools? Call Dave Hunt on that one. His SB 5520 killed that. Read the bill! The triggers will not be met taxes or no taxes.
      3) Head Start cuts? Now that is just silly. There is nothing about that in the plan. Good try though.

      Any other items you want to make up?

  • Salemite

    It’s curious that the R’s now say they want to cut the BETC by $50 million, when just six months ago they opposed cutting it by even $20 million, saying that would damage the program.

    Hypocrisy, anyone?

    • dan

      Rs oppose the BETC cutback?

      Hmmm i remember the bill passed with bipartisan support. It was gov k who vetoed it.

  • Salemite

    Dan: All the Ds voted for it, but only 3 or 4 Rs. 90% of the Republicans opposed BETC reform (before they now appear to be supporting it…).

  • Oregonian

    The GOP in this state is just effing amateur hour. What the hell happened to the party of Mark Hatfield and other such statesmen?

  • Insider

    Mark Hatfield and other statesman can no longer win a Republican primary in Oregon.

    • Anonymous

      Yes, and the pro-life tax cutting anti-communist defense hawks like Jack and Robert Kennedy could never win a democratic primary.

  • state employee

    If I can afford to have my salary and benefits cut, the people making over $250,000 per year can damn well afford to pay a little more of their surplus in taxes.

    If the state is not willing to have higher taxes, it time for you people to tighten your belts.
    Get used to reduced services.

    This “plan” is going to be a very tough negotiation. You tough guys want to break the state employee unions?

    Bring it on!

    • Anonymous

      this disgruntled state employee (SEIU) wants to break the union. i also want to fire incompetant and lazy state workers, give merit raises to junior but effective state workers, cut social welfare programs and the education budget first, and cut taxes for everyone, not just the rich.

      • state employee

        Take it to your union bosses, pal. I’m not a union member so I can’t help you. Or maybe you can take it to your favorite union-busting politician. Good luck!

    • Anon

      No need for the R’s to break the public employee unions. They are going to do that with a stubborn resolve to increase costs and deliver fewer services. The handling of furlough days is a joke. Rather than take them in a rolling fashion to keep some staff on each day they throw a temper tantrum, shut everything down, take their ball and go home. What a joke!

      This voter is watching…

      • state employee

        No rolling furloughs?

        Must be the tough negotiating your state government did with the unions!

  • Rupert in Springfield

    *David Appell* – It is so ridiculous you tell others to shut up when you think they have no training in a subject, but yet you think its perfectly fine for you to violate your own rule. Lets go through some of yourmisconceptions:

    >> The US is the major source for new drug discoveries.

    >Your proof of this assertion?

    You are unaware the US develops most of the new drugs?

    See Gambardella et. al. “Global Competitiveness in Pharmaceuticals, A European Perspective” for info on the innovation in Europe vis a vie their policies.

    See Grabowski and Wang “The Quantity and Quality of Worldwide Drug Introductions, 1982-2003” Specifically they found that from 1993-2003 The United States dramatically overtook EU countries in all categories except Global NCE’s

    Gee…..hmmm…. wonder if David will figure out what was going on right around that time? Why would the US pull ahead in early to mid 90’s?

    This is really basic stuff. If you are unaware of the US position in this field it is pretty clear you dont have a lot of understanding about it. Please follow your own rule and be silent in the future on this matter. You have not studied the subject, you have no training in it. Follow your own rule and be silent next time.

    >In the US these patents last for, I believe, 20 years. No?

    You’re kidding right?

    You think a patent lasts 20 years after a drug is released on the market? Good Lord,

    I think your lack of knowledge is so profound Id be scared to let you put a band aid on me.

    Rupert wrote:
    >> the same drug in the US will cost far more than in countries with national health care.
    >> This is where the subsidy comes in.

    >Completely false. The difference comes because European+ countries bargain with the drug companies for bulk discounts, but such bargaining is not allowed for US entities buying such drugs

    Wrong

    They are able to bargain those prices at pennies above cost for the reason I stated. Since you do not understand the WTO regulations on this matter you should probably not speak to it. You simply don’t understand what you are talking about.

    >The pharm companies freely enter into these purchase agreements, because after the drug is developed the cost of producing future pills is, literally, less than pennies.

    >So Americans pay for the development, regardless of where the drugs were manufactured, because Congress is in the pocket of big Pharm. Others get the pills for pennies benefit.

    Wrong. The companies enter into these purchase agreements because as I stated, if they do not, they lose their patent after two years under WTO rules.

    You clearly do not have any education in this matter and thus, if we follow yopur own rule, you have not earned a right to have any say in it

    Please, next time follow your own rule and be silent. By your own standards you have not earned the right to speak.

    Thank you

    Free the Sea Monkees

    • Anonymous

      >>In the US these patents last for, I believe, 20 years. No?

      >You’re kidding right?

      >You think a patent lasts 20 years after a drug is released on the market? Good Lord,

      >I think your lack of knowledge is so profound Id be scared to let you put a band aid on me.

      In the U.S., a pharmaceutical patent is valid for 20 years. Drug companies usually apply for patent protection before they actually begin producing the drug, opting instead to secure their rights to a particular compound at the beginning of the testing process. By the time a drug comes to market, there may only be 8-10 years of patent protection remaining, which is significantly less than the 20 offered by the patent. Companies often attempt to extend these patents by making slight reformulations of the original compound or proving its effectiveness at treating a condition other than the one for which it was originally granted a patent. This is referred to as “evergreening”.

    • v person

      I’m curious Rupert. Is it your position that the US taxpayer ought to subsidize European and Canadian consumers of pharmaceuticals by not allowing Medicare and Medicaid to negotiate prices with private companies? That is very generous of us no?

    • David Appell

      The first Gambardella paper is over 9 years old. It’s unfit to be the source of a claim about anything for the present era.

    • David Appell

      Rupert, there is a lot of data that disagrees with your claim. In particular:

      Europe leads global drug discovery: Study
      Published: Monday 31 August 2009
      New data shows that Europe is ahead of the United States in pharmaceutical research productivity, contrary to conventional wisdom, argues Professor Donald W. Light in an article published recently in the journal Health Affairs.
      http://www.euractiv.com/en/health/europe-leads-global-drug-discovery-study/article-184974

      Global Drug Discovery: Europe Is Ahead
      Health Affairs, doi: 10.1377/hlthaff.28.5.w969(Published online August 25, 2009)© 2009 by Project HOPE

      In the end the relevant factors for consumers isn’t what continent produces the most drugs — they couldn’t care less — it’s at what price they can buy the drugs they need. European countries undertake collective bargaining — that’s prohibited in the US, for, for example, Medicare, by Congress.

      Where is your vaunted free market in this case?

      http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.5.w969v1

      Yet a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity. Other large studies show that most new drugs add few if any clinical benefits over previously discovered drugs.

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