Another bonehead idea from Oregon’s newest democrat

Oregon’s newly elected State Treasurer, Ben Westlund, has continued an unbroken string of bonehead ideas with his newest proposal to create a prepaid college tuition program.

You remember Ben Westlund. He is the Republican state senator, turned Independent, turned Democrat from Deschutes County. He’s the same Ben Westlund who, as a Republican Representative, lobbied the House Republican leadership hard to become co-chair of the powerful budget committee. He then sided with the Democrats to thwart attempts by the Republicans to provide a balanced budget without a tax increase.

He’s the same Ben Westlund who, when Sen. Bev Clarno (R-Bend) resigned her seat, appeared before the Deschutes County Republican Committee to lobby for their support for his bid to be appointed to fill Clarno’s seat. In the process, Westlund told members of the committee that he would “represent the Republican Platform better than the other GOP candidates.” Westlund got their support and promptly stabbed them in the back by proposing a $1.2B tax increase with Democrat Sen. Kurt Schraeder.

He’s the same Ben Westlund who joined Portland’s uber liberal Sen. Kate Brown (now Secretary of State Brown) in proposing to ignore the popular vote of Oregonians limiting marriage as being between one man and one woman. They sponsored legislation that gave all of the rights, duties and privileges afforded to married couples carte blanche to homosexual couples. Regardless of what you may think about those propositions, they sure as heck did not reflect the Republican Platform to which Westlund had pledged his fidelity.

But Westlund is agile if nothing else. When he realized that as a Republican nobody liked him and as an Independent nobody cared about him, he became a Democrat and now nobody trusts him. And for good reason. Not only did he sell his former colleagues out in budget negotiations and his constituency in Deschutes County but he misled Oregonians on his tax proposals.

Westlund promoted his sales tax proposal as “tax neutral” when in fact it increased tax revenues by $1.2B. When questioned about this seeming inconsistency, Westlund dismissed it by stating that the additional revenue would come from Oregon’s “underground economy.” For a proposed five percent sales tax to generate an additional $1.2B, one would have to discover an “underground economy” of approximately $24 Billion dollars. But Westlund has never been bothered by facts, or logic, or big spending or increased taxation.

His latest proposal for a “prepaid college tuition program” is vintage Westlund. The fault lies more in what he doesn’t tell Oregonians than in what he does tell them.

First, the Democrats have already demonstrated their incompetence in the administration of the Oregon College Savings Plan (OCSP) — the so-called “conservative investment plan.” Why any Oregonian would trust the state government to manage their funds is beyond me. There appears to have been little “due diligence” in selecting the fund from the standpoint of understanding its investment strategies and even less “diligence” is overseeing its strategies as the market evolved.

Second, typical of Democrats, they have another government solution to resolve the problems created by their last government solution. Never once do these Democrats stop to think that Oregonians could have, and would have, done a better job of managing these savings programs themselves if left to their own devices. In this instance the outcome of individual investors would have reflected their tolerance for risk. For those who were adventurous, they could have invested in equities and would have fared no worse than the OCSP — in all probability they would have fared better because they would not have left their money in the market for as long as Oregon’s Democrat State Treasurer. For those less adventurous, they could have invested in FDIC insured certificates of deposit and while they may have made only a small percentage return on their investment, they would not have lost 30+ percent as did Oregon’s Democrat State Treasurer.

And third, again typical of Democrats, they turned to a solution that has already proved disastrous to Oregon’s state budget — unfunded future liabilities. That is what Westlund is proposing. For each dollar invested, Westlund will guarantee repayment at a rate by which tuition rates increase at Oregon colleges. According to an Oregon University System Issue Brief, the average tuition increase from 2000 to 2009 is approximately $2070 or 55%. During the same period of time, the Standard and Poor’s 500 decreased by 566 points or 38.5%. Under Westlund’s plan, taxpayers would be forced to make up the difference between a 55% guaranteed return and a 38.5% market loss. Therein lies the “bonehead” in Westlund’s idea.

It’s not like we haven’t had experience in these types of programs. Remember the Oregon Public Employees Retirement System (PERS). That program guaranteed an annual return of eight percent or whatever the market produced whichever was greater and that the state would match that amount. The result of that boneheaded idea was a $13.5 Billion unfunded future liability as calculated at the beginning of the 2003 biennium. Through a variety of devices including bonding (in effect shifting) a portion of that future debt and improvement in the stock market most of the unfunded future liability disappeared prior to the most recent collapse of the market. But its back again and while there has not been a public disclosure of that unfunded future liability, it is most probably in the billions of dollars.

Now, Ben Westlund — the man charged with watching the health of Oregon’s finances — has proposed we do it again with this new unfunded future liability. Ah, but what the hell, it’s not his money, it’s only taxpayers’ money. Way to go Ben.

Post to Twitter Post to Facebook Post to LinkedIn Post to Reddit

Posted by at 05:00 | Posted in Measure 37 | 8 Comments |Email This Post Email This Post |Print This Post Print This Post
  • anonymous

    So whose the bigger dope? Benny or those who have continually elected him. It’s a sad state of affairs!

  • Jerry

    I applaud Ben for his efforts in helping make college a reality for all. Everyone needs to go to college – even if they never graduate (like the majority at PSU). It is such a rewarding experience and so much knowledge is to be gained from the great profs.
    It is the American dream come true.
    Thanks, Ben.
    Regardless of how much the tuition is, higher ed in Oregon is still a great, great value.

  • John Fairplay

    Oregonians are about to get all the government they asked for, and more. This certainly won’t be the last brilliant idea Ben Westlund comes up with at our expense. I wonder if 4 or 5 years with double-digit unemployment will teach them anything?

  • Steve Plunk

    So if the prepaid tuition is invested and yields a poor return who makes up the difference? It will be the regular tuition payers. So in order to provide cover for the current mess Westlund and the Dems are now going to put other Oregonians at financial risk. Not a good plan. Not a good government. Where’s the accountability for the mistakes already made?

  • eagle eye

    Good point about the unfunded liability. But —

    “he became a Democrat and now nobody trusts him.”

    Isn’t this the guy who just got elected State Treasurer?

  • Rupert in Springfield

    Keep in mind the next thing to bankrupt Oregon is the renewable energy mandate coming up. And what is that based on? These clowns have now convinced themselves they have the power to control the weather through fuel usage.

    Therefore it is no small wonder that the same bunch could convince themselves that they can create a fund with matching dollars that appear by magic.

    The central core of the problem is that those enamored of government tend to both love power, its why they seek office, and think they have a limitless amount of it. This is precisely how you wind up with people in office who believe they can control the weather and make money appear from thin air.

    Legislative authority leads to self deception of personal power. That’s what we are seeing here.

  • Jeff Caton

    When I ran for State Treasurer 4 yrs ago I proposed offering a 529 mutual fund investment option that would automaticlly reduce risk as one got close to needing funds for college. Unfortunatley not many people were interested in the race and issues at that time. Now of course it’s to late for many Oregon families.

    BTW… Ben needs to also keep an eye on the PERS investment allocations. Hundreds of millions of dallars were invested in mortgage backed securities a few years back under Edwards, the same investments that put banks and investment firms under, and could do the same with PERS!!!

  • Eddie

    Larry Huss is making observations based on the old Measure 55 from 1998… a prepaid tuition program similar in scope but different in mechanics. Read the Westlund/Courtney press release, Mr. Huss.

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)