Regulations kill jobs and the economy

There are so many regulations that FedEx could not get off the ground today. Subway Restaurants would not exist because “there are more and more regulations. It’s tough for people to get into business, especially a small business.”

Other companies that started small include Home Depot, Whole Foods, and Wynn casinos. These now giant companies might not exist at all if they had started in today’s regulatory environment.

Together these companies have over 800,000 employees. How much worse would our economy be without those jobs? without the goods and services they produce?

How many of tomorrow’s giant companies are being killed today by excessive regulations? We won’t ever know, but there are estimates that regulations cost us more than $1.5 trillion each year. That is $5,000 for each man, woman, and child.

Billions wasted by government

Of course, the government doesn’t really need con artists to help it waste money. It is perfectly capable of wasting money without help. Here are a few examples.

  • funding a reality TV show in India
  • studying swine manure in China
  • losing $84 million a year subsidizing food service on Amtrak trains
  • improper food stamp payments totaling $2.5 billion
  • fixing a covered bridge that has not been used in 10 years

and a few more:

  • $30 million helping Pakistani mango farmers
  • $120 million in benefits to federal employees who have died
  • $10 million for Pakistani Sesame Street
  • $700,000 to bring TV to Vietnam villages

And here is Sen. Coburn’s worst 100 list.

Billions bilked from the government

Do you remember a few months ago the story of a kindly cop giving a pair of boots to a barefoot homeless guy? Well it turns out the guy was nothing but a scam artist. He had an apartment, at least 30 pairs of shoes, and a pretty good cash income.

The same thing happens on a much larger scale with out government. The Government Accountability Office (GAO) estimates that fraudulent Medicare payments amount to at least $17 billion per annum. Other estimates run as high as $110 billion.

The prescription-drug benefit is “staggeringly complicated and largely incomprehensible to the very population it was intended to help . . .the drug program’s very complexity is a source of fraud.”

In the current jobless “recovery” millions of people file for disability after their unemployment runs out. Many of the claims might be personality disorders or imaginary illnesses but the result is a record 18 million people collecting $170 billion each year.

Fictitious patients, organized crime, sham companies, kickbacks – as long as the paperwork is properly filled out it is all too easy to bilk taxpayer money from the government. The GAO estimates $100 billion per year cost to the taxpayer.

Down in Concord

“Politicians and diapers have one thing in common: they should both be changed regularly… and for the same reason.” — unknown

Last week the House finished all of its bills except for the three big budget bills. Two bills, HB 135 and HB 617, received lengthy debate as expected.

By a narrow margin of 189-184, the House passed HB 135, restricting the right to defend self, family, and community against deadly force. Sullivan County Republicans Grenier, Rollins, and Smith voted to protect your rights; Democrats Cloutier, Gagnon, Gottling, Irwin, Lefebvre, O’Hearn, Schmidt, and Sweeney voted to restrict your rights.

HB 617, increasing the gas tax by 67% – the largest tax increase in state history – was passed on a mostly party-line vote. Both sides agreed that we should spend more money on roads and bridges. Republicans argued that the Highway Fund has more than enough money if we would simply spend it on actual highways rather than diverting one-third of it to agencies that have nothing to do with constructing and maintaining our highways. Every Sullivan County Democrat voted for the tax increase. Republicans Rollins and Smith voted against the tax increase.

The House has finished all but three of its bills. Those three are the big budget bills, HB 1 and HB 2, which deal with the operating budget, and HB 25, which does the capital budget. When I say “big” I mean both literally and figuratively – HB 1 is about 800 pages long. Total appropriations are more than $11 billion, or 10.2% higher than the current budget.

The operating budget is divided into two parts. HB 1 is a giant spreadsheet. (As of this writing it is available only as a PDF file. Later it will be downloadable as an Excel file.) If you suffer from insomnia, trying to read all of those numbers should put you to sleep. By contrast, HB 2 is lots of words. It has changes to the law to allow money to be spent the way HB 1 says.

Current law may say one thing about how money is to be spent, but if the budget writers want to spend it differently, they just add a section to HB 2 to make it legal for them to break the law. A typical example is Sec. 2, which states “Notwithstanding any provision of law to the contrary, … revenue sharing with cities and towns shall be suspended for the biennium”. The word “suspend” appears 23 times in HB 2; “notwithstanding” appears 44 times.

When debating HB 617, the massive gas tax increase, Democrats promised that all the new money would go to roads and bridges. The proposed HB 2 budget bill illustrates how easily the budget writers can break a promise. They just add a short paragraph saying that a section of law is suspended for the biennium.

Interestingly, the proposed budget does not spend any more money on roads and bridges. In fact, it spends LESS. The  department of Transportation (DOT) portion of the Highway Fund is reduced from $222 million in the current budget down to $192 million in the proposed budget. Total DOT spending from all funds is down from $567 million this year to less than $551 million next year. Yes, that’s right. After telling us how important it is to spend more money on roads and bridges, they propose to spend less money in their new budget. Tell me again why taxpayers have to cough up MORE money for the new gas tax, when the Democrats plan to spend LESS money. More and more it appears that they want the new gas tax not to improve our highway infrastructure, but to pay for all sorts of other programs.

There is (at least) one other way the budget writers break past promises. They grab money that was promised to be used for a specific purpose. Within state government there are hundreds of programs that collect fees to pay for particular activities. These moneys are supposedly dedicated to a particular purpose separate from all other general government activities. One prominent example is the Land and Community Heritage Investment Program (LCHIP). A $25 fee on mortgage transactions is intended to fund land and historic conservation. For five years, when money was tight, that money was moved out of the dedicated fund to the general fund to balance the budget.

Two years ago, the budget writers had the decency to transparently specify in the budget that they were taking money from LCHIP for the general fund. This year the budgeteers don’t say what dedicated funds they will raid. They delegate to the governor authority to choose which funds to raid to come up with $22 million to “balance” the budget.

The new budget was passed by the House Finance Committee just two days ago. It has been visible to the public for not much more than one day. As people have more time to scrutinize, no doubt we will learn even more troubling details.

The Finance Committee will hold a public briefing on the two big budget bills. I don’t want to suggest that their budget is a joke but the briefing is on April Fools’ Day.

On April 3rd, the full House will vote on these three budget bills, then during the next two months the Senate will amend – perhaps extensively – the House budget.

Massive new gas tax not needed

The claim by Reps. Carson et al. (letter, March 19) that their votes for an 83% increase in the gas tax were necessary to fix our deteriorating infrastructure is just plain wrong.

Oh, their intentions are good – my town of Sunapee could dearly use more money for roads – but the road to hell is paved with good intentions. The bill they voted for does not do what they say it will.

The fact is that HB 617 won’t repair a single bridge nor pave a single mile of road. It does not spend a dime on roads and bridges. It is a taxing bill, not a spending bill. Their rhetoric simply does not match reality.

Their massive tax increase does not mean there will be an increase in spending on roads and bridges. The budget writers can always find a way to divert money elsewhere. The proposed budget actually diverts $28 million away from the department of Transportation (DOT). When their budget spends LESS money on roads and bridges, why should struggling taxpayers put MORE money into the highway fund?

There is an alternative, a way to send more money to towns and cities, and to spend more money on roads and bridges, without a huge tax increase. The first step is the budget writers should stop diverting money away from DOT. Before taxpayers are forced to spend a dime more on new taxes, make sure the old taxes are spent the right way.

The Highway Fund collects more than $270 million per year via the current gas tax and vehicle registration fees. That would be more than enough money to maintain and improve our highway infrastructure if it were all spent on actual highways. The problem is that a full $80 million per year is siphoned off and spent on things that have nothing to do with building or maintaining roads and bridges.

The proposed budget allocates just 67% of the Highway Fund to the DOT. (Current law says that “no less than 73%” should go to DOT, but budget writers simply change the law when they want money to go somewhere else. That is exactly what they could do with the new gas tax despite promises to the contrary.)

Without raising the gas tax a penny, instead by reallocating and prioritizing spending, the legislature could raise more money for roads and bridges. The legislature should increase the DOT’s allocation of existing highway money to 80%, 90%, or a full 100%.

Currently, $30 million goes in block grants to towns and cities. The legislature could increase that amount to $35 million. That would actually be more money to municipalities than the new gas tax would produce.

Those two changes – dedicating Highway Fund expenditures to actual highways, not diverting to other agencies, and increasing the block grants to localities – those two changes would provide more money for roads and bridges than the new gas tax would. There is simply no need for higher taxes.

But what about all those other agencies currently funded with gas tax money? They are a little more than 1% of the whole budget. Let them find money in the rest of the budget. If roads and highways are high priority, that means that something else must be lower priority. Let them cut lower priority spending.

The new tax lets our legislators avoid making the hard choices as to which items are higher/lower priority. If they won’t cut other spending then the net effect of new taxes is to provide more money for low priority items.

(Printed in InterTown Record, April 2, 2013.)

Obamacare is part of reason for high unemployment

Employers across the country have “cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.” So says the Federal Reserve in its monthly “beige book”.

New taxes on insurance companies, $8 billion next year rising to $14 billion, will cause higher premiums. Several groups that represent small businesses have called for repeal of this tax.

Obamacare paperwork as bad as doing your taxes

It runs 15 pages for a three-person family. And that’s just the first part of the process, to find out if you qualify for financial help. Another report said it was 21 pages and that most people would seek help to fill out the application.

Here is a flowchart for the process. Click for a larger version.


A Speech Every American High School Principal Should Give

If every school principal gave this speech at the beginning of the next school year, America would be a better place.

“First, this school will no longer honor race or ethnicity. I could not care less if your racial makeup is black, brown, red, yellow or white. I could not care less if your origins are African, Latin American, Asian or European, or if your ancestors arrived here on the Mayflower or on slave ships.

“The only identity I care about, the only one this school will recognize, is your individual identity — your character, your scholarship, your humanity. And the only national identity this school will care about is American. This is an American public school, and American public schools were created to make better Americans.”


“Second, I am uninterested in whether English is your native language. My only interest in terms of language is that you leave this school speaking and writing English as fluently as possible. The English language has united America’s citizens for over 200 years, and it will unite us at this school. It is one of the indispensable reasons this country of immigrants has always come to be one country. And if you leave this school without excellent English language skills, I would be remiss in my duty to ensure that you will be prepared to successfully compete in the American job market. We will learn other languages here — it is deplorable that most Americans only speak English — but if you want classes taught in your native language rather than in English, this is not your school.”


“Fifth, we will end all self-esteem programs. In this school, self-esteem will be attained in only one way — the way people attained it until decided otherwise a generation ago — by earning it. One immediate consequence is that there will be one valedictorian, not eight.”

Read the whole thing.

Obamacare IT impossible to implement

“Wow, what can go wrong here? Let me assess this based on my [35] years of experience in this industry.”

  • The federal government is going to build 50 exchanges, using a data hub that doesn’t exist physically
  • Each of the 50 states have different eligibility rules
  • The thousands of pages of bureaucratic rules that will drive requirements haven’t been completed yet
  • the convoluted federal procurement rules for hardware and software have to be adhered to
  • the people hired must meet the Equal Opportunity criteria
  • all GUIs must be handicapped usable
  • Oh, did I mention this will be done by next year?

Democrats want to repeal parts of Obamacare

First, the Democrat-controlled Senate voted 79-20 to repeal the 2.3% medical device tax. Now many members of both the House and the Senate including many Democrats have formally asked the administration to reverse its opposition to Medicare Advantage.

The Obamacare drafters and regulators didn’t like the Medicare Advantage program but it turns out that many, many Seniors like it very much and they are complaining to Congress.

As Obamacare gets closer to its actual implementation, as the tens of thousands of pages of regulations are drafted, as some of the politicians finally learn about the law they voted for without reading, we may see more parts of it repealed.

Obamacare – the (un)Affordable Care Act

$910 million – that is the cost (so far) for California to create its state-run health exchange. Now we have to pay for a whole new layer of government bureaucrats in addition to paying for doctors, hospitals, and medication. Just how will that reduce the total costs of health care?

A private company, Esurance, sells health insurance, homeowner’s and auto insurance nationwide. They built their website with $40 million of private financing. Facebook $14 million, eBay $7 million. The California government somehow manages to spend $910 million.

The economy still stinks

Mort Zuckerman has the numbers and a good line: “What the administration gives us is politics. What the country needs are constructive strategies free of ideology.”

February’s unemployment rate was reported as 7.7%, but that is misleading:

  • the number unemployed for six months or longer went up by 89,000
  • the average duration of unemployment increased by 1.6 weeks
  • the percentage of people in the workforce dropped to its lowest in 30 years

The economy grew by only 1.5% in 2012. The total growth for the last three years is the slowest recovery in 70 years.

Obama’s 2% increase in payroll taxes will take about $110 billion out of worker’s pockets. His health care taxes will take another $30 billion.