Brooke Rollins: The Texas Public Policy Foundation Fights for State Sovereignty

THE TEXAS PUBLIC POLICY FOUNDATION is a major shaper of public policy in a state that has become increasingly important in providing an alternative to the high-taxing, high-spending models of California and New York. To that end, Texas has also become increasingly resistant to the conforming influence of funds flowing from federal coffers. Brooke Rollins has been CEO and President of the Texas Public Policy Foundation for the past seven years. We talked with her about how the Foundation has been able to gain influence in Texas policymaking, and why state sovereignty is worth defending.

The Insider: How did you come to be working for a state-based free market think tank?

Brooke Rollins: I had always been very interested in public policy. I grew up in a very small Texas town with a population of a thousand. I was raised by a single mom with a small business. She was a florist in town, and she was very active in educating herself and then educating me and my two sisters on what was going on in the big world even though we lived in a very small town. I went to Texas A&M and got interested in public policy and ended up in law school.

I went off to work for a big law firm for a couple of years, but I wasn’t really loving what I was doing. I had always had this drive to make the world a better place—as clichéd as that sounds—and I felt there must be a better place for me. I left the legal world and went to work for Rick Perry, who is still our governor. That was about 10 years ago. I eventually became his Policy Director. I loved working for Governor Perry. I believe he is one of the best governors in the country and certainly one of the best for Texas in my lifetime.

But I wasn’t crazy about the politics. I lived through a re-election campaign and got to see the political side firsthand. We won that race fairly big, but I was really more interested in moving into public policy. When I was in the governor’s office I was a little bit amazed at how little information was coming to us. Obviously we were inclined towards free markets and limited government, but we just weren’t receiving any information on those ideas. The tendency of government is to grow and grow and grow. While we were inclined to go the other way, there is just so much minutia in day-to-day government that I just didn’t have enough information on a lot of issues and I didn’t even know about the Texas Public Policy Foundation.

Ultimately when I found out about the Texas Public Policy Foundation, they were looking for a new CEO. Wendy Gramm was Chairman of the Board and I had a great talk with the governor at the time and we both agreed that a great next step would be for me to go to this fledgling little think tank based in San Antonio with a handful of employees and really try to build it into something great and that’s how I ended up where I did seven years ago.

TI: Does the problem you just mentioned—of not having the information you need—arise because most of the information flowing to the government comes from parties who just want the government to give them money?

BR: That is exactly right. I remember, about eight or 10 years ago, Texas was facing a homeowner’s insurance crisis. Mold had become a big deal and lots of trial lawyers had gotten involved and people’s insurance rates where skyrocketing, and even though we work in a conservative state with very conservative leadership, the tendency was to regulate more. The attitude was: “We need to regulate those companies. We need to show them who is boss and tell them they can’t charge that kind of money!” I instinctively knew that wasn’t the right answer, but there was nothing out there that showed me. I remember doing my own research late at night and finding that some states like New Jersey had gone down the regulatory path while others like South Carolina had gone exactly the opposite direction and de-regulated everything. And, of course, the best outcome for the consumer, the citizen, was the state with less regulation, and so that experience became very instructive for me.

TI: Like a number of other state-based think tanks, the Texas Public Policy Foundation started out rather small, right?

BR: That’s right. When I joined up we had been around for about 12 or 13 years. So it wasn’t brand new but it had certainly struggled a little bit with funding and employees and providing a consistent message and being part of the debate. What I brought to the organization was that I had been inside a governor’s office and I knew how legislative sessions worked and I knew how laws where passed. So I had a really good feel for how to influence the system and how to make the system work for our ideals—work for a freer and more prosperous Texas.

We moved to Austin and set up shop about a block from the capitol. My goal from the beginning—part of my first five-year plan—was to hire not just people who were really great writers and really great researchers—which we had always done—but also writers who could articulate what our message was and who could take it to the capitol every single day and meet with the policymakers. And so we were going to do more than just write the big papers.

TI: Today you’ve got gubernatorial candidates citing your papers as support for their positions. What advice would you give other groups that are trying to increase their credibility as a source of ideas and information for policymakers?

BR: I think the first thing we have to realize in this line of work is that producing really good papers is not enough. You have to give the product legs. It helps to bring people on board who are well respected. We now have a former Texas House Appropriations chairman as the full-time director of our Center for Fiscal Policy—Talmadge Heflin. This man wrote state budgets. When Texas had its $10 billion shortfall in 2003, he was Chairman of House Appropriations, and he is the one who wrote the budget that didn’t raise taxes; he cut spending. For us to hire him full-time to continue his work after he left the legislature has been extraordinary. Even through all these years of surpluses in Texas we have never increased spending more than population growth plus inflation. We have left a lot of money on the table.

Our executive director is also a former legislator. The director of our Center of Energy Policy ran the Texas EPA for six years. Getting the right people involved who can make things happen is how you change the world.

TI: So when you say “give the product legs,” what do you mean by that?

BR: Putting out a beautifully written document that is 50 pages long on how to shrink Medicaid in your state is not good enough. Maybe a handful of people will read it. You have to go the next step, which means working with the media, meeting with editorial boards, meeting with legislators, and testifying in front of committees. That is how we have been able to produce change in Texas.

TI: Texas is a big and diverse state. Do you do any special outreach to promote free market ideas to different kinds of audiences?

BR: We do. We work with several Spanish-language media outlets, and our goal is to expand that project over the next couple of years. The polls will tell you that the Spanish-speaking population in Texas leans much more conservatively than you would expect based on voting. If you ask them, they believe in less government and they don’t want a government handout. We have to do a better job of reaching out and articulating our ideas to the whole population, not just to a certain segment of the population. That is something we have been slowly wading into and that we are looking to greatly expand in the next few years.

TI: On a number of issues Texas has become a leader in reasserting the state end of the federalism equation. What do Texans have to gain from doing things their way instead of doing what the feds want?

BR: There is no question that the federal government in every respect has expanded its power and has encroached on what are normally state prerogatives. That’s true not just under the current administration but under the former administration as well. The health care bill is just the latest example of federal intrusion into state issues.

We see an opportunity for Texas policies to have national impact. Texas said no to Race to the Top funding, which is an effort by the federal government to tell us what our education standards should be. That is not their business; that is our business. Texas also turned down nearly half a billion dollars in unemployment funds from the stimulus bill. I do not know if there were any other states that turned down funding of an amount that significant. Texas’s unemployment compensation fund is still solvent. The program is working well, and employers are not going to be burdened with an additional $80 million in tax increases, which would have happened had we accepted that money.

We have isolated our electricity grid from the rest of the country to avoid federal regulation of our markets, and that has provided better prices, more supply, and better consumer choice.

TI: In one area, though, it seems like Texas is similar to a lot of other states: A good chunk of the state’s budget comes from the federal government. I think the figure is around 40 percent. Is that something about which Texans should be concerned?

BR: Yes, that is something we continue to work on and is really one of our top priorities. For many years, we have been saying: “Texas does not have to take federal funds; there is a better way.” That message really fell on deaf ears because people saw that money as “free money.” We’re working to change that debate so that people understand that it is not “free money,” that it hamstrings our government and our taxpayers.

Last year, Texas said “no thanks” to the unemployment funds and to some other things coming down from Washington. That really opened the discussion. People are finally beginning to realize what depending on federal funds really means and what a huge driver of our own spending those funds have been.

TI: Is dependence on federal funds really a problem that states can fix on their own? The way federal grants are typically structured, states get more money for spending more money. Don’t those incentives need to be changed?

BR: No question they do. For example we will face an $11 billion shortfall in the next biennium essentially because of Medicaid and the Children’s Health Insurance Program. For several years, we have been working with our governor’s office to try to get a block grant for the state instead of using all the federal formulas so we can essentially figure out for ourselves how best to distribute that money and to do it in a more efficient way so we do not have to spend as much. It is possible.

TI: The hot topic of the day, of course, is health care. How do you see Obamacare affecting Texas?

BR: I’m sure most people have read that AT&T, which is a Texas company, just took a billion dollar charge. That is not pocket change. It is a prime example out of the gate of what government taking over a sixth of the economy will do. Same with Caterpillar. Caterpillar is based out of San Antonio, and it has announced a big hit. I think we are going to continue to see that. The health care bill is going to take money out of the private sector where it would have created jobs and helped to lift our economy.

TI: Beyond repealing Obamacare, what specific reforms does the Texas Public Policy Foundation advocate in health care?

BR: Obviously the problem is that we do not have a free market system in the health care industry and so you have costs that are out of control because the consumer isn’t shopping. We all understand that. So how do you fix it? You allow for interstate purchasing. You provide tax credits for individuals. You expand health savings accounts (HSAs), which lower the cost of health care 10 percent to 12 percent in the first year and cut health care inflation in half in subsequent years. Our little group with 25 employees has had HSAs for a number of years now and they work. Block granting Medicaid is another possibility we have already talked about. Introducing sliding scales into Medicaid so that it isn’t just a 100-percent-pay system would also make consumers more a part of everyday health care decisions. Just having those very minor changes in the way we are practicing health care today will have a tremendous impact.

TI: What is your number one issue going forward?

BR: Our number one issue is really sort of an umbrella issue, and that is the Tenth Amendment. We have already spoken a lot about that, but it covers, among other things, health care and energy. Texas is in the crosshairs of energy policy because we are such an energy-driven state. So whether it is health care, energy, tort reform, education, or criminal justice, we need to consider what is the proper role of the state and what is the proper role of the federal government in all these issues. We want to help Texas provide an example for the rest of the country on how to achieve prosperity, and that means less government and less regulation. So the Tenth Amendment is our priority for this year.