NEW ORLEANS, La. - Last week, the U.S. Department of Commerce nullified an $80.6 million grant meant to extend broadband internet access to rural Louisiana.

The Commerce Department rescinded the grant on the grounds that the Louisiana Board of Regents – who originally applied for and received the grant – had an implementation plan that was incomplete and behind schedule.

They also said that the board was unresponsive when repeatedly asked for additional information.

The grant, originally awarded last year through the American Recovery and Reinvestment Act, would have enhanced the state’s high-speed optical network at schools and libraries in 21 rural parishes and four American Indian reservations.

Upon learning of the Commerce Department’s ruling, Sen. Mary Landrieu (D) released a statement claiming that it was “yet another missed opportunity to improve the lives of Louisiana residents, particularly rural Louisianans who are often left out of such initiatives.”

Paul Rainwater, Commissioner of Administration, claims that the plan would undermine private businesses.

Projected Rural Broadband Internet Access from the American Recovery and Reinvestment Act

“From the start, we’ve always said there were implementation and sustainability problems in the grant that had to do with a top-down, government-heavy approach that would compete with and undermine, rather than partner with, the private sector and locals.”

Jim Harper, Director of Information Policy Studies for the Cato Institute, agrees with Rainwater, and says that subsidies and grants always distort market processes.

“Businesses are there to serve the demands of ordinary Louisianans, while grants tend to go to the politically well-connected.”

Jim Purcell, Board of Regents Commissioner of Higher Education, claims that he became aware of some problems with the plan soon after arriving in Louisiana, and attempted to remedy the situation, but “unfortunately, despite gaining demonstrated support from both our public and private partners, our approach was rejected.”

Both Landrieu and Purcell also say they’ll continue working to improve broadband access in the state despite losing the grant.

“If the state of Louisiana is unable to carry out these types of transformative projects across our state, then I will work even harder to partner with interested local officials, nonprofits and businesses to accomplish the same goals,” Landrieu says.

Harper contends that the best way to spread broadband to rural Louisiana is to lower taxes, leaving more money for Louisianans to spend on what they want.

He also suggests the federal government should release control of the electromagnetic spectrum so “more wireless broadband providers can come to the market and offer Louisianans more high quality broadband options at lower prices.”

Robert Ross is a policy analyst with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.

NEW ORLEANS, La. - A recent study contends that the unemployment insurance system is in need of an overhaul, as the current system “[exacerbates] negative job growth”.

According to the Tax Foundation, a non-partisan tax education organization, the financial burden faced by state governments and businesses demonstrates that the system is in need of immediate reform.

The study claims that record high levels of unemployment and record low reserve funds are placing additional pressure on the unemployment insurance system.

Joseph Henchman, Vice President of Legal and State Projects for the Tax Foundation, says that unemployment insurance was meant to be a program that built up surpluses in prosperous times, with the expectation that they would be spent down during economic downturns.

“The problem with most state funds is that they stopped building up reserves during the good times. Before the beginning of the recession in 2008, less than half the states were in a position to disburse more than a year’s worth of the kind of high benefit pay-outs that would be expected in a major economic downturn.”

As a result, 34 states have borrowed over $37 billion to pay for benefits, and many may default on interest payments to the federal government.

From 2008 to 2011, $174 billion was paid in unemployment taxes while $450 billion was paid out in benefits, leaving states with a $276 billion hole.

In 2011 alone, employers and employees are projected to pay $51.8 billion in unemployment taxes, while $131.4 billion is projected to be paid out in benefits for the recently unemployed.

If states fail to make interest payments, the Tax Foundation expects an increase in taxes on businesses.

Lawrence Summers, former economic advisor to President Obama, admits that government assistance programs contribute to long-term unemployment by providing an incentive, and the means, not to work.

“Each unemployed person has a ‘reservation wage’ – the minimum wage he or she insists on getting before accepting a job.”

This is also know as a compensation differential, which occurs when the difference between the benefits unemployed persons are paid by the government through unemployment benefits and the amount they would be paid by an employer is not significant enough for people to look for work.

Cato Institute’s Alan Reynolds found nearly two percent of the current jobless rate is due to extensions of unemployment insurance and other federal policies.

In addition, the Brookings Institute found in March 2010 that extensions in unemployment insurance “correspond to between 0.7 and 1.8 percentage points of the 5.5 percentage point increase in the unemployment rate witnessed in the current recession.”

Dr. Walter Block, economics professor at Loyola University New Orleans, contends that the government is actively subsidizing unemployment, causing the unemployment rate to rise.

“The more you subsidize something, the more of it you get. If the government wanted the unemployment rate to fall, it would find a way to tax unemployment.”

Louisiana has fared well in relation to average unemployment tax rates and average weekly benefits, ranking 48th and 49th respectively.

Recently, the Senate rejected President Obama’s $447 billion job bill, which would have extended unemployment insurance for many.

Data from the National Employment Law Project shows that roughly 6 million are set to lose federal unemployment benefits in 2012, with 1.8 million running out in January.

House Majority Leader Eric Cantor claims that unemployment benefits should not turn into a permanent solution, rather, “We should somehow connect the unemployed and unemployment benefits with work and job opportunity.”

Robert Ross is a researcher and social media strategist with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.

NEW ORLEANS, La. - President Obama has been touring the country in hopes of gaining momentum for his $450 billion plan to create jobs and stimulate the economy.

The bill would set aside $434,400,000 to support 6,300 education and first responder jobs in Louisiana.

However, simple math shows that the plan is shortsighted, as it only provides a temporary boost to public sector employment while further burdening taxpayers.

Dividing $434,400,000 by 6,300 yields $68,952 to cover salary, benefits and other costs associated with providing each job in Louisiana.

Currently, Louisiana has 49,377 public school teachers.

According to the Louisiana Department of Education, the average salary for a public or secondary school teacher was $48,903 for 2009-2010.

Total benefits expenditure for teachers was $421,427,270 for the same time period, or $8,534 per teacher.

Therefore, salary and benefits included, the average Louisiana public school teacher costs $57,437 per year, using up $361,853,100 of the federal money and thus leaving only $72,546,900 for first responders and for teachers in the 2012-2013 fiscal year.

NEW ORLEANS, La. - One in five Louisianans live below the poverty line, the highest level since 1995, according to data released by the U.S. Census Bureau.

NEW ORLEANS, La. - The debate over whether to build a high speed rail line between Baton Rouge and New Orleans is heating up.

Scott Bernstein, president of the Center for Neighborhood Technology, says that a rail line connecting Baton Rouge and New Orleans could be as successful as Amtrak’s most profitable lines.

He claims that routes that run from 80 to 170 miles tend to be the best able to support themselves through fares. Shorter routes, such as Amtrak’s Capital Corridor in Northern California, usually recover 75 percent to 80 percent of their operating costs through fares.

However, the remaining 25 percent to 20 percent of operating costs not covered by fares are paid for by taxpayers.

Proposed Gulf Coast Corridor

Randal O’Toole of the Cato Institute refutes the notion that taxpayers should make up the difference, claiming that any project that cannot cover its operating costs is not viable, and contends that the length of the rail line “has almost nothing to do with” covering operating costs.

He cites data from the New Haven-Springfield corridor, that shows the 62 miles rail line loses 56 cents on every dollar of operating costs, while the Chicago-Milwaukee corridor, which serves 11 million people, loses 40 cents on the dollar, leaving taxpayers to make up the difference.

In addition, O’Toole claims that there is almost no statistical correlation between the percent of operating costs covered by fares and corridor length.

Bernstein, citing a 2009 study, states that the rail line would cost taxpayers $105 million to build, while generating $186.5 million in benefits over 30 years.

However, O’Toole points out that this estimate is understated compared to current high speed rail projects. “$105 million on an 80-mile corridor is not going to produce a high-speed train. True high speed rail (150-mph or more) on an 80 miles route would cost several billion dollars.”

Florida considered spending $3 billion on a 85-mile high speed rail line in 2011, but scrapped the idea as being too costly for taxpayers.

Gov. Bobby Jindal

In 2009, Gov. Bobby Jindal made headlines when he refused $300 million in federal stimulus money intended to kick-start a high speed rail project for Louisiana. Gov. Jindal reasoned that maintenance costs would be too high to justify building the rail system between Baton Rouge and New Orleans.

In addition, Vice President Joe Biden has called for spending $53 billion on passenger trains and high-speed rail projects over the next six years, as part of the administration’s goal of making high-speed rail accessible to 80 percent of Americans within 25 years.

Worldwide, only two high speed rail lines have broken even, both of which are located in densely populated areas of France and Japan where people drive less because gas prices are twice as high as in the U.S., and many foreign intercity highways levy high tolls.

Robert Ross is a researcher and social media strategist with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.

A dispute over the merits and potential defects of health care exchange systems continued to rage last week at the American Legislative Exchange Council’s (ALEC) annual meeting in New Orleans as state officials expressed concern over ObamaCare’s Medicaid mandates.

While it may be politically appealing to resist setting up an exchange system, governors and legislators who adopt this policy stance would actually open the way to greater federal interference, Edmund Haislmaier, the Heritage Foundation’s Senior Research Fellow of Health Policy Studies, explained in a panel discussion.

“We are arguing over strategy and the utility of a hammer,” Haislmaier observed. “There is no special magic to this tool and there is nothing especially threatening either. It depends how you use the exchanges. They can be used as a tool to empower consumers and to move the needle more in the direction of meaningful reform.”

Haislmaier also said free market groups “left an opening for the other side” because they did not move aggressively over the past few years to alter the status quo with policies that would empower patients with more choice and autonomy. If properly configured, exchanges can be used as part of an overall strategy to resist ObamaCare and to shield states from some of its worst effects, he suggested.

“This is going to be an unrelenting fight [against ObamaCare],” he said. “It is going to be house by house, floor by floor, room by room combat. There will be numerous place and lines of attack where we can undermine this law.”

But conservatives who are supportive of exchanges should take note of the opinion from federal Judge Roger Vinson of the Northern District of Florida, Michael Cannon, the Cato Institute’s director of health policy studies, advises.  In response to 26 states that brought the suit, Vinson concluded that Congress exceeded its authority in passing the Patient Protection and Affordable Care Act (PPACA). But he also warned that many of those same plaintiffs are undermining their own case by implementing the law, even while they argue it is unconstitutional.

In his response to the Obama Administration’s “motion to clarify,” Vinson stuck to his original decision but agreed to stay (temporarily set aside) the ruling pending an appeal in part because some states have proceeded with exchanges and other implementation measures, Cannon told audience members.

“States are not required to create exchanges under ObamaCare,” he said. “But if they are implemented voluntarily this will undermine the legal case to repeal the law. The law asks the states to do the heavy lifting of creating these bureaucracies, offers them considerable sums of money, and as a fallback position allows the federal government to create an exchange if a state declines to do so.”

Even if exchanges are started with free-market motives, they will eventually morph into vehicles for ObamaCare, Cannon said. Moreover, he noted, they would have the added effect of giving bipartisan cover to the law.

Cannon also said state officials who have argued against the constitutionality of the new law have a special responsibility to resist implementation because they are essentially violating their oath of office by accepting federal funds and accommodating new bureaucracies.

Rep. Noble Ellington (R-Winnsboro), the national chair of ALEC, said in an interview that he did not have a firm opinion on the exchange system, but that he welcomes the debate.  He also expressed concern about the impact federal mandates and stipulations attached to President Obama’s health care law will have on Louisiana and other states.

“Washington [D.C.] is trying to take control of everything and that’s not healthy for anyone,” he said. “We are already in the middle of a recession as it is, and if ObamaCare does kick in it will mean less jobs, less business activity and less opportunity.”

ALEC has been successful because it has fostered strong relationships between state officials who have been on the receiving end of new directives from the federal government, Ellington continued. There is, for example, widespread concern among his colleagues that rising Medicaid costs will place additional burdens on state budgets that are already strained, he observed.

Under ObamaCare, states are required to extend their Medicaid programs to anyone earning up to 133 percent of the federal poverty level come 2014. This comes out to about $30,000 for a family of four. In addition to the Medicaid expansion, PPACA also creates an individual health insurance mandate, which will further encourage those who were already eligible for benefits prior to the new legislation to now enroll, according to ALEC. The federal subsidies included as part of the new health care law will not cover the entire cost of the Medicaid expansion.

“States will be affected the most by ObamaCare’s budget-busting Medicaid expansion, forced collaboration on federally-dictated health insurance exchanges, the unconstitutional individual mandate, and the federal takeover of state health insurance regulation,”  Christie Herrera, ALEC’s health and human services task force director, said. “That’s why 28 states have stepped forward to challenge this law and reclaim state sovereignty.”

Medicaid currently accounts for about 17 percent of all state-level spending, according to StateHealthFacts.org. Louisiana’s Department of Health and Hospitals has produced a report that shows implementation of ObamaCare will cost Louisiana in excess of $7 billion over a 10-year period. Between now and 2014, Louisiana health officials also expect Medicaid enrollment to grow by more than 50 percent.

Two years ago Gov. Bobby Jindal initiated a plan aimed at reducing Medicaid costs by transitioning over to Coordinated Care Networks (CCNs). The idea is to allow enrollees to choose their own plans and providers, which in turn would alleviate Medicaid spending by increasing competition. Moreover, the networks would emphasize preventive care as a way of heading off alleviating future costs.

The Cato Institute has criticized the plan for increasing eligibility to the entitlement program and for failing to embrace genuine free market reforms.

State lawmakers are opposed on procedural grounds.

They claim Jindal bypassed the legislative branch by inserting the program’s authorization into an amendment in state budget legislation. The House unanimously passed a resolution that would end the program by 2014 unless it gains approval from the state legislature.

Meanwhile, a new study that explores the financial impact of shifting Medicaid recipients into HMOs and other forms of managed care concludes that impact on spending has been marginal at best and that there is very little savings.

Cannon, the Cato analyst, has said that the managed care programs help demonstrate how little control states actually have over Medicaid programs. But by refusing to implement their own exchange system, state lawmakers could be playing into the hands of Obama Administration officials with regard to Medicaid, Haislmaier has argued. Whoever controls the exchange system “becomes the de facto gatekeeper for both the state’s Medicaid program and the new federal subsidy program,” he wrote. Haislmaier favors a “defensive approach” that allows for states to shape exchanges and “maximize” local control of Medicaid programs.

The “State Legislators Guide to Repealing ObamaCare” ALEC released earlier this year includes several recommendations crafted with an eye toward delaying and ultimately blocking the federal legislation.  The Guide includes a description of ALEC’s “Freedom of Choice in Health Care Act, which provides for a “state-level defense against ObamaCare’s excessive federal power.” It also advises state lawmakers to enact a moratorium on ObamaCare rulemaking and to decline federal grant money that come with “federal strings.”

“States should let the federal government spend the time, money, and political capital required for implementation,” Herrera said.  “I don’t think that states will be able to escape federal rules if they decide to get involved.  Barring congressional repeal or a Supreme Court decision, this law will go forward as enacted — so state legislators would be wise to step back and let the federal government take ownership over the consequences.”

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and you can follow him on Twitter.

By refusing to set up a health care insurance exchange system that could be used to advance ObamaCare regulations, Gov. Bobby Jindal has cut a path that other state officials should follow, argue analysts with the Cato Institute. However, other leading figures within Gov. Jindal’s own Republican Party remain divided on this question.

Governors Rick Scott (R-Fla.), Scott Parnell (R-Alaska), Susana Martinez (R-N.M.) and Rick Perry (R-Texas) have all expressed opposition to an exchange system in their states. But Gov. CL “Butch” Otter of Idaho, Rep. Bill Cassidy (R-La.), and other GOP officials, disagree. They view the exchange system as a viable tool for advancing patient-centered, market-friendly health care reforms that can lower costs and expand consumer choice.

Earlier this month, the U.S. Department of Health and Human Services (HHS) released a set of proposed rules that “set minimum standards” for the exchanges. But the suggested guidelines are so incomplete and uncertain that states cannot make an informed decision on whether they should participate, said Bruce Greenstein, Louisiana’s secretary for the Department of Health and Hospitals (DHH). Greenstein supports Gov. Jindal in his decision to remain outside of the exchange system.

“This is very good policy on the part of Gov. Jindal for today, and tomorrow it will be seen by the rest of the market as very forward thinking, and very savvy in terms of the way we move forward and protect the market of health insurance in Louisiana; we need to be able to access high quality insurance products at a good cost,” Greenstein said. “We continue to be very prudent in our approach.”

However, Cassidy, who is a medical doctor and a vocal opponent of the federal health care law, said in an interview that it may be advantageous for states to put their own “imprimatur” on a health care exchange before federal officials advance new regulations.  He cited the Utah system, which is already up and running, as a model for what might work in Louisiana and other states.

“The governor might know something that I don’t,” Cassidy said. “But I think it’s possible to set up a free market exchange system that benefits consumers; that’s the impression I get from our own private insurance agents [in Louisiana] and I think this is a model that can work. There is a robust discussion about exchanges among conservatives going on now. What I see out of Utah has been successful.”

Mike Leavitt, the former Republican governor of Utah, recently told the Republican Governors Association (RGA) that states would only further empower federal officials if they avoid setting up exchanges. Leavitt also served as the federal HHS secretary under President George W. Bush.

Leavitt now serves as an advisor to Massachusetts Gov. Mitt Romney, who is seeking the Republican nomination for president and is widely viewed as the front runner. Cassidy, and other conservatives figures have been critical of the exchange system that was set up under Romney’s watch because, they argue, it closely correlates with ObamaCare.

Gov. Otter in Idaho sees no contradiction between supporting the exchanges and opposing ObamaCare. States are more likely to succumb to federal regulations, if they do not take the lead in setting up exchanges that can be tailored to fit local needs, Otter has said in media interviews.

Edmund Haislmaier, a senior research fellow with the Heritage Foundation, shares this assessment. Although it may be “politically appealing” to resist setting up the exchanges, this decision could open the way for greater federal interference, in his view.

“The best strategy for state lawmakers is to adopt their own reforms—separate from, and independent of, ObamaCare’s exchange design,” Haislmaier wrote in a policy paper. “State policymakers should then consider augmenting their “counter reform” initiatives with defensive measures designed to minimize federal interference, while the ultimate fate of ObamaCare is debated in Congress and litigated in federal courts. Taking such an approach will give state lawmakers a strategy that has both offensive and defensive components.”

The exchange design included as part of the federal legislation, formally titled the Patient Protection and Affordable Care Act (PPACA),  is a “perversion of the core concept” of what is an otherwise a sound approach to health care, Haislmaier has argued. State lawmakers can use exchanges to implement market reforms independent of the federal law, he wrote.

But Michael Cannon, a health care scholar with the Cato Institute, has been sharply critical of this approach. Republican governors who are inclined to set up the exchanges, despite their stated opposition to ObamaCare, should reconsider their position, he has said.

In an opinion piece, he advises Virginia’s Republican Gov. Bob McDonnell, to remain mindful of Thomas Jefferson’s warning that goes back over 200 years: “The natural progress of things is for liberty to yield, and government to gain ground,” Jefferson said.

McDonnell has set up a commission to study whether the federal health law should be implemented, even though he sees it as unconstitutional.

“Creating any sort of exchange is unnecessary, wasteful and counterproductive,” Cannon wrote. “If the Supreme Court overturns ObamaCare, any money Virginia spends creating an exchange would be wasted.”

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org. Follow him on Twitter.

NEW ORLEANS, La. – The American Enterprise Institute, a D.C.-based think tank, recently released a working paper which finds that federal employees receive a salary premium of 14 percent, a benefits premium of 63 percent, and extra job security worth 17 percent of pay. That makes the total federal compensation premium approximately 61 percent.

The study’s authors estimate that if federal employee compensation was reduced to private levels, taxpayers could save $77 billion per year.

A 2009 study by the Bureau of Economic Analysis, a branch of the U.S. Department of Commerce, claims that federal civil servants earned average pay and benefits of $123,049 while state and local government employees earned average pay and benefits of $69,913. The BEA found private workers, by comparison, made $61,051 on average in total compensation, indicated an even greater difference between compensation premium of 101 percent.

According to LouisianaSunshine.org, the average pay for public employees in Louisiana is $44,341, while the average salary for all occupations is $37,980.

The BEA website highlights four factors that contribute to the wage disparity.

First, private sector employee salaries range from minimum wage workers to the highest paid CEOs, while members of the federal government’s civilian workforce are concentrated in professional, administrative, and technical occupations.

Second, there has been a shift towards higher skilled federal employees, while low-skilled and low-paid workers have been outsourced to private companies.

Third, federal government employees receive higher benefits in the form of pensions and health insurance contributions than private employees, with many private employees receiving no benefits.

Lastly, federal compensation estimates include large payments for unfunded liabilities. For example, in 2006 the value of payments for unfunded liabilities were $28.6 billion or 10.7 percent of total federal compensation.

Cato Institutes’s Chris Edwards claims that the BEA’s first criteria misses the point, since “the federal workforce has always been full of lawyers and scientists.”

Additionally, Edwards claims that, “Total wages and benefits paid to executive branch civilians amounted to $230 billion in 2010,” while over the last decade, “compensation of federal employees rose much faster than compensation of private-sector employees.”

On the contrary, John Berry, Director of the U.S. Office of Personnel Management, claims that headlines purporting a gap between public and private employees are comparing “apples to oranges.”

He states that reports from the Cato Institute and other organizations “look only at gross averages,” including service workers and entry level positions. This, he contends, reduces the private sector’s average pay “in comparison to the federal average, which does not include many of the subcategories in its workforce.”

Additionally, Berry purports that the federal workforce has become more specialized.

“Thirty years ago, over 22% of our workforce was in blue collar jobs. Now that percentage has dropped by half while the percentage of IT and Health professionals has doubled.”

Robert Ross is a researcher and social media strategist with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.

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BATON ROUGE, La. – Lafayette may soon have a new public financing method to attract outside investment, but the merits of this initiative remain hotly disputed.

HB 531, which passed unanimously in the House on May 12th, would create the Lafayette Parish Redevelopment Authority. The LPRA would then approve local government allocation of future property, sales, and other taxes to pay for debt-funded development of “blighted” or “distressed” areas.

The Tax Increment Financing method for government expenditure, usually applied to distressed areas, uses future revenue from the TIF district as collateral for debts. These fund current improvements to roads, sewers, and buildings.

Proponents claim that this will nurture business development, and that increased property values and economic activity will bring greater tax revenue to more than pay back the debts accrued.

For example, proponents of TIFs state that if a plot of land valued at $10 million before the development is worth $50 million afterwards, then the $40 million increase in taxable value can be used to pay off the municipal bonds that financed the development.

The company that benefits from the TIF development funding has its taxes prioritized for seven to 35 years, with all tax revenue first going towards paying off the targeted municipal bonds.

In short, the city is trading future tax income for present benefits, in the hope that economic activity will continue to increase in the future.

According to Jeremiah Supple, leader of Lafayette Tea Party, TIF violates the “home rule charter.” The city’s charter requires a vote of the people before raised taxes, but this policy appears to shift the power of determining local taxes to politicians rather than voters.

Supple claims that TIFs can be useful under special circumstances. However, his concern is with the lack of constituent oversight and approval.

“How do you prevent abuse by political insiders at the expense of existing property owners and the community?”

Last month, Cato Institute’s Randal O’Toole released a scathing review of the TIF process. His report claims that developments subsidized by TIF would have happened anyway in the same urban area, though not necessarily the same location.

New developments impose costs on schools, fire departments, and other urban services, but the taxes are siphoned off to pay back the debt. That means other taxpayers must now pay more to cover those costs or accept a lower level of services.

O’Toole claims that states usually give cities enormous discretion in regards to how TIF funds are spent, opening the door for a new breed of crony capitalism where a politician grant subsidies to developers, who in turn donate to his campaign fund.

In response to a public outcry, Lafayette councilmen William Theriot and Jared Bellard have introduced a “no-tax ordinance,” which would make it Council policy to not consider or place upon its agenda any such matter that would increase taxes without a public vote. Thus it would block the TIF proposal.

Robert Ross is a researcher and social media strategist with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.

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NEW ORLEANS, La. – On Monday, President Obama claimed he has no plan to reduce federal education funding, while Senate Republicans have advocated for a $5 billion reduction, as part of their proposed across-the-board $61 billion cut. Instead, Obama called Congressional leaders to revise No Child Left Behind and to expand his new education plan, Race to the Top.

Race to the Top differs from No Child Left Behind in that RTTT redefines a “failing” institution, places a stronger focus on persistently low-performing schools, and avoids placing sanctions on schools that fall short of federal standards.

Both reforms stress the importance of annual tests for every child from grades 3 to 8 and use the results to make federal funding decisions.

This unified emphasis, however, goes against the conclusions of a 2009 Department of Education study (with results below). It attributed disparities between states’ reported test scores to “differences in the stringency of their standards.”

Andrew Coulson, Director of the Cato Institute’s Center for Educational Freedom, believes that rewards for reported improvement incentivize public schools to lower proficiency standards and inflate their test scores.

“[For funding] it doesn’t matter whether those scores reflect real learning or if they’re just the result of lower [proficiency] standards. That’s why [proficiency] standards have been dropped.”

Last month, Mr. Coulson testified before Congress, showing representatives that there had been a decline in student achievement, even as federal spending rose over 350 percent.

Former U.S. Assistant Secretary of Education Diane Ravitch agrees with Coulson. Since federal law lets states decide their own standards, “states have been creative in adjusting the passing mark on their tests to produce the best results.”

For example, the Department of Education report identified Louisiana as having lowered its grade 8 reading standards by a significant margin between 2005 and 2007. And there were no significant increases in the rigor of Louisiana’s standards at either the 4th or 8th grade level for reading or math, even though funding had increased dramatically.

The Department of Education study identified this trend in 15 more states, including Georgia, Illinois, Michigan, New York, Ohio, Oklahoma and Virginia. Some education advocates and researchers dispute this conclusion, though, and remain in favor of Obama’s testing plan.

Leslie Jacobs, founder of New Orleans-based Educate Now!, claims that Louisiana adopted the LEAP test and proficiency standards of BASIC in 1999, years before No Child Left Behind. Since then, we “have not changed our standards nor the rigor of the tests either easier or harder, since we adopted the [BASIC] standards.”

Coulson does agree with standardized testing to gauge student academic progress and inform parents. “The problem is that public schooling creates the wrong incentives regarding testing.”

Robert Ross is a researcher and social media strategist with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.