ObamaCare vs. Free Market Solutions

The Heritage Foundation has a new analysis of the US House Democrats' health care bill, showing that over 80 million people would lose their private insurance, and costs for private coverage would go up by as much as $460 per person.  (Click here for full study).  Michael Tanner also raises the loss of private options in "The Three Lies of ObamaCare."

If you are curious who is lobbying for ObamaCare, well, good luck with that; the administration is leery about putting that information out there.  (As an aside, former Obama apostle John Stewart has a funny bit examining Obama's delivery on transparency.)

Of course, simply pointing out the flaws in ObamaCare isn't enough, nor - despite attacks against critics of government run health care - what groups like the Commonwealth Foundation advocate.  Here are our proposals for health care reform. The Cato Institute also  has a nice rundown on the Free Market Approach to Health Care Reform and the Texas Public Policy Foundation has a good FAQ on Obama's Plan vs. a Patient Centered Approach.

The Manufacturer and Business Association has an easy-to-use form for contacting your legislators, and Free Our Health Care Now is a e-petition you can sign.  Some more resources on the health care debate can be found here.

Good Pennsylvania State Budget Questions I Can't Answer

A reader sent us this, which is an excellent question about how many state worker will really have to be laid off:

I have heard a lot of speculation about what the dramatic impact of the spending cuts would be (according to Rendellian budget analysis). One of the items cited is a huge loss of State jobs. I think they cited something like 800 jobs. I would like to understand if anybody has gotten a hard analysis of those jobs that would be lost from the Governor? How many are current active employees? How many are openings that won't be filled? How many are rank and file vs managerial? How many will be lost to attrition in the next fiscal year?

Additionally, I would love to know how many consulting firms are engaged, how many consultants for each firm, expenditures to consultants, what role are these consultants playing, is it mission critical?

This is all routine stuff we look at in the private sector so I figure the information must be available..I just can't seem to find it. THANKS!

While one might think this information is readily available, it is not. I have not seem any supporting evidence for the “800 jobs” (sometimes "2,000") figure, and certainly not how those positions break out. House and Senate Republicans argue that many of those “jobs” are currently vacant positions which still get funding in the state budget, but there is no way to verify.

The Auditor General thinks we can achieve $50 million or so by offering early retirement incentives, and getting about 2,000 workers to retire (and not fill those positions, or hire within) and reducing the state payroll by 3-4%.

As for consultants, I don’t know of a listing statewide. The Treasurer’s new database would have all the contracts by department, but unfortunately it would take a Herculean effort to add them all up.

If anyone has, or has seen, documentation of this, it would be a great help. I will of course be filing an Open Records request to determine the current number of vacant positions, though I think this is information that should be readily available. Again, another example of why transparency is needed in the current budget debate.

Cost and Benefits of State Spending Transparency

The Mercatus Center has a new podcast on state online spending transparency.  Jerry Brito, senior research fellow at the Mercatus Center, discusses the need for spending transparency in states through online databases and searchable open books.   He says that criticism (coming mostly from legislators)is unfounded - these websites are inexpensive and that states that have built these websites have spent an average of $140,000.

The Commonwealth Foundation has advocated the need for spending transparency in Harrisburg on a consistent basis, such as HB 1460 or SB 105. Many states have already seen the need for some sort of an "open book" on government spending.

Kansas is one of the first states to pass substantive transparency legislation and boasts one of the most comprehensive online databases for government expenditures. Other outstanding examples include Oklahoma’s OpenBooks website and Missouri’s Accountability Portal, which also provides the salaries of government employees.

10 Ways to Balance the Budget Without Tax Hikes

Contrary to the Governor's rhetoric, there are a plethora of reforms and spending cuts that can balance the budget without firing our police, evicting our elderly, or dumbing down our kids. Below we offer our ten ways to balance the state budget, this year and the years to come, without raising taxes.

1. Eliminate corporate welfare. The Governor's latest General Fund budget contains over $410 million in corporate welfare.


2. Eliminate, privatize, or implement user fees for "private goods" - such as museums, parks, and the arts. The Governor's budget spends almost $500 million to maintain non-core functions of state government.
   


3. Control self-service government programs expenses like legislative leadership accounts used to fund illegal bonuses. A number of state programs and expenditures work to benefit of government official and the detriment of citizens. Rendell's revised General Fund budget about $200 million on self-benefiting expenses.
   


4. Reform Medicaid by giving individuals more control over their health care spending.


5. Limit the increase in basic and special education funding to 11.7%. This increase would give school districts their highest level of funding in Pennsylvania history. Over the past 25 years, per-pupil spending has increased 364% (inflation of 141%) while achievement has stagnated.


6. Repeal prevailing wage laws for government construction contracts. This unnecessary regulation inflates costs by 10-30% and increased the cost for state and local government by almost $9 billion in 2007.


7. Reform government pensions by moving from a defined benefit to a more predictable defined contribution plan.


8. Reduce advertising budgets for the state lottery ($32 million), tourism ($26 million) and the film tax credit ($576,000, which at $75 million, we should eliminate). Do we really need a groundhog on TV (and facebook) convincing us to gamble, or a psychedelic website to remind us that Feb. 2 is Groundhog Day?
   


9. Increase state spending transparency and accountability. Creating an online spending database, like HB 1460 would create savings, as demonstrated in other states, and will discourage the misuse of tax dollars in programs like WAMs.


10. Privatize state-run businesses, such as the state liquor stores. Competitively contracting out all Liquor Control Board operations could produce a one time influx of $1.7 billion, increase future revenues through corporate and property taxes, and provide better service to consumers.

Over 80 state lawmakers agree with us, saying YES WE CAN balance the budget without raising taxes. Find out what your legislator thinks.

The rest of our suggested spending cuts, totaling $5 billion, are detailed in Government on a Diet: Spending Tips 2009.

Why Are State Budget Negotiations Secret Meetings?

With all the debate surrounding the Budget this summer, a concerned taxpayer has the right to see exactly what his representatives and legislature are doing on the people’s time, or does he? According to the state Sunshine legislation, all official “agency” business, including that of the General Assembly, Governor’s cabinet, or any board, council, authority, or commission of the state must be open to the public. That is, state university boards, school boards, and county commissioners have to make their budget deliberations open to the public.

However, the Rendell administration continues to bypass the Sunshine Act and remain virtually unchecked by not allowing certain people, such as myself, into “open” meetings. Instead of debating the state budget on the House floor or in Committee, they continue to hold closed-door meetings in the Governor’s mansion with only a few legislative leaders.

Why aren’t these meetings public? Well perhaps, what is discussed would embarrass many lawmakers. For instance, one aspect of debate is reportedly whether to cut funding for 20 open positions. “Not cutting” open positions is code for hiring more government employees, which perhaps should be reconsidered given a $3.2 billion deficit.

And given the recent experience with budget negotiators like Vince Fumo and Mike Veon, who were convicted and indicted for using taxpayer dollars for their own gain, respectively, wouldn’t now be a good time for transparency, just to convince voters that not every lawmaker is a crook?

Pennsylvania Lawmakers Still Using Tax Dollars to Buy Votes

Mark Levy of the AP has a hard hitting story of Pennsylvania lawmakers use of WAMs - i.e. "Walking Around Money" made available to us at the discretion of legislative leaders.  Levy finds, not suprisingly, that $110 million in WAMs were doled out in such a way as to benefit the districts of legislative leaders.

But the AP analysis found that tiny Greene County, 56th out of 67 Pennsylvania counties in population and home of last year's House Democratic leader, Bill DeWeese, was slated to receive more than $3 million, or about $82 per person. That made Greene County No. 1 in grant dollars per person and No. 6 in total dollars.

No. 2 in dollars per person was Carbon County - home of House Speaker Keith McCall, who was the Democratic whip last year - with an average of $50 per person in requests. Carbon County, 40th in population, also was expected to receive about $3 million - making it No. 7 in overall dollars.

On the Republican side, House GOP grant requests helped put Jefferson and Delaware counties - respectively the homes of Minority Leader Sam Smith and Mario Civera, the ranking Republican on the Appropriations Committee - in line for more money than most counties with similar populations.

In the Senate, Democrats requested outsized portions for the home counties of last year's ranking Democrat on the Appropriations Committee, Gerald LaValle of Beaver County, and his successor, Jay Costa of Allegheny County. Similar patterns were not as evident in the grants requested by the Senate GOP.

For those unfamiliar with WAMs and the WAM process, Levy provides an excellent summary, for those who can stomach learning how sausage is made:

Pennsylvania's budget does not specify the money that is set aside for legislators' special projects. It also does not link grants to individual legislators, or groups of legislators, who sought the money.

Pennsylvania's legislative grants - known colloquially as "WAMs," for walking-around money - have existed in one form or another for a couple of decades, built around the concept of providing the Legislature with a pot of money to spend as it sees fit.

Once the total amount available for the grants in the budget is hammered out behind closed doors, legislative leaders sift through requests from their caucus members and submit selected ones, along with their own, to the governor's office. Executive branch agencies match the requests to applications filed by the intended recipients for more than a dozen programs that are flush with money for the grants. ...

Former Sen. Vincent Fumo of Philadelphia is awaiting sentencing for his February conviction on 137 corruption counts, including the misuse of money from a nonprofit that he founded and partially financed with the grants. Former Rep. Michael Veon of Beaver County has been charged with committing similar crimes.

It is for these reasons - corruption, the process by which WAMs are doled out, and the waste of taxpayer funding, that we believe WAMs should be eliminated from the state budget. We have attempted to identify line items within the state budget that could be classified as WAMs.

It also adds fuel to the growing movement that Pennsylvania needs greater spending transparency.

State Spending Transparency Hearing

FYI by PLS has a brief summary of a hearing yesterday on proposals to create a state spending transparency for Pennsylvania, with particular attention paid to HB 1460 sponsored by Rep. Jim Christiana (similar legislation passed the Pennsylvania Senate last month). PLS subscribers can view the full summary. Rep. Christiana also has a summary of the hearing:

For everyone else, here is what you missed:

Sandra Fabry of the Center for Fiscal Accountability led things off (her testimony is here), testifying that 25 states have already enacted such legislation, typically for very little costs, and often resulting in dramatic savings. She dismissed claims that such a website would cost several million dollars.

Ed Martin, former chief of staff to Missouri Gov. Matt Blunt testified that they created the Missouri Accountability Portal without additional funding, with current staff preparing the system. He said their site has had 20 million hits, and constituents have found several examples of wasteful spending that resulted in changes in policy. He also commented that they report every dollar spent (vs. a $5,000 threshold in the proposed Pennsylvania legislation). The Missouri site has expanded to now include state employee salaries and tax credit programs, and they are working to help local governments develop similar sites.

Rep. Kasha Kelly from Kansas testified about the creation of KanView, noting as others had that the site was created for far less cost than projected, and has resulted in savings and cuts of some wasteful spending. She added that they also have no threshold for reporting of grants or expenditures, and that is easier to do than setting a minimum. She also noted that while some "big spenders" may have opposed the legislation, when it came to a vote, there was little opposition.

The Commonwealth Foundation spoke to the need to have greater transparency, using the current budget debate as a case in point, as well as refuting argument that this information was already available online. Rep. Kathy Rapp seconded that notion, noting that it was difficult even for lawmakers to get information about what specific line items actually fund. Elizabeth Bryan's testimony is here.

Finally, Terry Mutchler, Executive Director of the Pennsylvania Office of Open Records testified in support of the legislation. She commented that not only was transparency a good move for government, but an online website would dramatically reduce the number of Open Records requests state departments would receive - perhaps by 30% - saving staff time and resources. She suggested that the proposed time frame in the legislation be amended, as it was important to do transparency right, not just soon (Rep. Christiana concurred, noting the timeline would be amended based on how quickly the legislation moves through the process).

Two Cheers for Transparency

Good read on transparency effort in state government by Larry Reed in the latest issue of the Freeman.

PA Senate Passes Spending Transparency

Legislation which we have discussed many times on this blog (see previous posts here and here, and Elizabeth Bryan's commentary here) to create an online database of state spending passed the Pennsylvania Senate yesterday.

It passed largely along party lines, with Larry Farnese being the only Democrat to cross over and support it, which astounds me, especially given that four members who voted against it were co-sponsors. I can't imagine a good reason to oppose letting taxpayers see how their money is spent (unless they are looking to see the threshold above which grants must be made public lowered from $25,000). The legislation which is similar to what has been passed in 14 other states, and at the federal level - the latter being the key legislative achivement of President Obama in the US Senate.

Transparency Needed in Pennsylvania Budget Debate

ABC 27 has a news story and video on proposed legislation that would create an online portal and database of state spending in Pennsylvania.

What is most disappointing are comments by Chuck Ardo, Gov. Rendell's spokesman.  Earlier this month, Ardo stated with regard to this legislation, "It sounds like the right thing to do."  What happened?  Yesterday, here is Ardo's response:

The Governor's Office said that's nothing new.  "Most of what that bill calls for is already available on the Internet," said Governor's Office spokesperson Chuck Ardo. "All government contracts are listed on the Treasurer's website."

 Really?  If a legislator, reporter, or taxpayer wanted to weigh in on the current budget debate, and wanted to find out what a specific line item was funding, could they do so?  I challenge Ardo to try it sometime. 

Take something innocuous like "Economic Advanvcement" in the Department of Community and Economic Development. It received $17 million in state funding last year - Governor Rendell has proposed cutting it in half, and the Senate Budget eliminated the line item.  What does it fund?  I find impossible to tell using the Internet - it isn't listed as a program in the DCED "Investment Tracker".  Are there contracts for these funds?  Doubtful, and even so, who is willing to browse through the 772 pages (7,722 contracts) of DCED contracts on the Treasurer's site.

The Treasurer's contract database site is a worthy effort to promote transparency, but is limited to state contracts, and is not easy to use if you aren't searching for a specific vendor.  For instance, I was able to discover that the Treasurer's contracted with Koryak  Consulting to build the site - original contract for $372,000 and additional features added for $84,850 - but only after browsing through 100 contracts.

Contrast that with Kanview - the spending database for Kansas (which cost a mere $100,000) - where users can go through the budget by agency and then program by program (as well as several other categories) to find out where money is going.  It is this kind of spending transparency we need to help inform the current state budget debate.

Fourteen states already have online spending databases or transparency portals, as does the federal government (through bi-partisan legislation sponsored by then-Sen. Obama and Sen. Coburn).  It is time Pennsylvania and the Rendell administration get on board.

Who Watches the Watchmen?

From Plato’s Republic to…well…The Watchmen (2009), the question of “Who watches the watchmen?” has remained unanswered. This problem continues with the government’s stimulus plan with its lack of oversight in spending and accountability for results.

While it’s impossible to know how the economy would have responded without the government’s recovery plans, this didn’t stop the president’s economic advisers from projecting the unemployment rate through 2014 both with and without the recovery plan.

Source.


Will the government see this as a failure of the recovery plan? No, rather than admit failure, the administration will likely proclaim the economy was in a worse position than originally estimated.

The government may never own up to its policy mistakes in the light of quantitative economic evidence, but greater transparency in spending can still be achieved, as Auditor General Jack Wagner publicly stated that Pennsylvania is not ready to oversee stimulus spending despite the fact that the costs of government spending databases are well below expectations.

HT: Greg Mankiw

Shining Some Light on Pennsylvania Spending

Kevin Ferris has a good piece in the Philadelphia Inquirer on proposals to create online databases of state spending in Pennsylvania, as well as the success of other states in creating spending transparency.  Specifically referenced are legislation introduced in the Senate by Pat Browne and legislation proposed by Rep. Jim Christiana with bi-partisan support. 

Even Gov. Rendell's spokesman, Chuck Ardo, is on board, saying "It sounds like the right thing to do."  We agree:

• Open the Books on Government Spending
• Government Spending Databases are Cheap
• Open government should save taxpayers, not cost them
• Update: State Spending Transparency

For additional resources on state spending transparency check out the Center for Fiscal Accountability and the Show me the Spending Coalition.

Some Perspectives on Obama's 100 Days

Reason Magazine sums up the "change" of the Obama administration: 

On the economy, and specifically on the economic crisis, Obama came to office promising a sharp break from the past. Instead, he has added so much fuel to the fires that George W. Bush ignited—exploding already swollen deficits, using TARP monies (which were statutorily provided for banks) not just for auto companies but minor auto parts manufacturers, and giving the federal government more power to seize private companies than even Henry Paulson dreamed of wielding. Such has been the extent of Obama's me-tooism that he's taken to defending his record by pointing out that, hey, Bush started it!

The latter was actually a rare moment of transparency; Obama's typical M.O. is to proclaim a new era of responsibility while ushering in a new era of irresponsible debt, promise to close the revolving door of lobbyists and government while keeping it open, and vow to post all bills online for five days without doing anything of the sort. He says the bailout is "not about helping banks—it's about helping people," then gives more of the people's money to banks. He says he doesn't want to run General Motors, then fires its CEO, guarantees its warranties, and wags his finger about the company's surplus of brands. He says he's taking a battle-axe to the budget, then offers to shave $100 million off a $3.4 trillion tab. At his gee-whiz, interactive, online town hall meeting, he laughed off the most popular question asked by web viewers—should marijuana be legalized—with a lame joke before embracing the status quo like Jimmy Carter hugging a Third World dictator.

On traditional domestic programs, too, Obama came to office with vague yet high-minded promises to rise above, for example, "the same tired debates over education that have crippled our progress and left schools and parents to fend for themselves." When it came to improving rotten schools, Candidate Obama vowed we would no longer be paralyzed by "Democrat versus Republican; vouchers versus the status quo; more money versus more reform."

Since then, Democrats (versus Republicans) have killed Washington, D.C.'s proven-effective voucher program (versus the status quo), and showered more federal money on schools and teachers (versus more reform). All while having the gall to maintain, as Education Secretary Arne Duncan recently wrote in the Wall Street Journal, that they aim to "close the achievement gap by pursuing what works best for kids, regardless of ideology." 

For those Americans who voted for Obama, a question: Is this the change you had in mind?

For some pure humor, here is Obama's First 100 Days on Facebook.

Financial Bailout Oversight & Transparency - Failure

Story from CNN Money covers testimony from the special inspector overseeing the TARP program, i.e. the financial bailout (HT Brian Ellis):

Barofsky said his top concern was that Treasury continues to ignore his suggestion that TARP bailout recipients detail exactly how they're using their money. He said that two banks, Bank of America and Citigroup, have made efforts toward such disclosure, but "otherwise it hasn't come to pass."

Further, Barofsky said, when Treasury released more bailout money to troubled insurer American International Group this month, neither the company nor the government would say what it would be spent on. ...

The report, which was released on Monday, offered a close inside look at the government's handling of the bailout. It revealed that Barofsky's office had 20 criminal investigations and six audits into whether tax dollars are being pilfered or wasted.

And some still wonder why the million or so Americans who gather in "tea parties" are mad at they way government is spending their money.

Audit: PA Not Ready for Stimulus Oversight

Auditor General Jack Wagner believes Pennsylvania is ill-suited to provide transparency and oversight on the stimulus money coming to the state in a letter he sent to the federal Government Accountability Office.  See stories in the Pittsburgh Tribune-Review and the Patriot News.

Governor Rendell's spokesman expressed outrage as such accusations, touting the state recovery website - which I have to say I'm not impressed with - and the stimulus oversight commission.  Curiously, the Auditor General is not on the stimulus oversight commission, which may be a sore spot, but it is also pretty much his job description to evaluate how taxpayer money is being spent., whereas the people on the oversight commission are largely the spenders, or the recipients, of the money.

On the bright side, the private sector has developed a user-friendly website, which allows users to search for project by state, county, and city at Recovery.org.

Government Spending Databases are Cheap

The Mercatus Center has a new analysis on the cost of state spending databases showing that it typically costs far less to produce online websites tracking government spending than estimates indicate.

As we have pointed out, spending transparency is key to reducing wasteful spending, achieving greater competition and lower costs for government contracts, and achieving greater accountability.

There are proposals to create a database of state spending both in the Pennsylvania House and in the PA Senate.

Gov. Creates Pennsylvania Stimulus Oversight Board

John Micek has the list of appointees (sans the GOP caucus appointments) to Gov. Rendell's Stimulus Oversight Commission.  Unfortunately, the panel includes no representation by taxpayers, with the exception of Gene Barr of the PA Chamber representing the business community - which often undermines its low tax message with a demand for corporate welfare. Everyone on the commission represents the appropriators, or the recipients, of taxpayer funding.  Basically, people who spend other peoples money are being asked to oversee how they spend other peoples money.

I have previously noted I have little confidence in the oversight that would be provided by this commission - I would prefer complete public transparency in how every dollar is spend, i.e. a checkbook registers.

On Specter's Economic Remarks

Roxbury News has posted video of Arlen Specter's remarks yesterday (part II here) at the State Capitol.  Three things really bother me regarding his defense of his vote on the stimulus:

1) "The Stock Market Dropped 800 points when the House failed to pass the bailout."  Are you kidding me?  They are still using this drivel?!?  Yes, the Dow did drop sharply on Sept. 29 - but they rebounded then next day, when the bailout was in doubt, and then dropped after the Senate passed the bailout, and dropped again after and coinciding with the House passage of the bailout.  The Dow continued to drop after the bailout passed, after Obama was elected, and after the stimulus passed.  In fact, the Dow was over 10,500 when the stimulus passed ... wouldn't you like those golden days back again?

2) Our economic problems are "much more serious that is publicly disclosed."  Really, after months of Bush, Paulson, Bernanke, and now Obama telling the public that we are facing another Great Depression, Specter tells us its worse than that/  His evidence - top secret economic data than cannot be revealed.  I've made this argument repeatedly - but if the government has economic data that they are making enormous policy decision on, why are they not sharing it with the public?  Aren't we supposed to be in a new era of government transparency?   I would compare this to the run-up to the Iraq War, but that would be unfair to the level of transparency in intellegence info the public got on Iraq.

3) Paraphrase: Bush's Bailout and Obama's Stimulus are twin brothers - showing both parties are behind this. I agree that both big spending policies are the same. But apparently it never occured to Specter that both parties are overspending, serving special interests rather than taxpayers, trying to appear to "do something" rather than following sound economic principles, and repeating the same failed mistakes of the past.   

Transparency on PA's Stimulus Money

Governor Rendell announced his ideas for "oversight" of the funding Pennsylvania will receive from the federal stimulus (related story here), and unveiled a new website - recovery.pa.gov -  to promote transparency in the simulus spending.

While the website does breakdown how much stimulus money PA will get by category, and profiles some of the tax provisions for citizens - indicating someone read the bill - I'm not overly impressed with the promised level of transparency.

For example:

A key provision of the federal recovery is regular public reporting of project status, spending, and job creation and retention.  These quarterly reports will be made available on this website

As I suggested before, a continually updated checkbook register would offer far better transparency and accountability.  

As for the level of detail under the FAQ for "Where is your money going?", we get answers like this:

Pennsylvania’s young people will benefit from more than $2.5 billion for tuition assistance and improved public education.  ...


The economic recovery plan provides an estimated $4 billion to increase access to quality health care for elderly, disabled and low-income Pennsylvanians, as well as other assistance programs.

That's not transparency, it's marketing slogans.  They might was well write, "We'll spend lots of money, and it will be awesome."

Stimulus money to go to PA Universities

It looks like someone has gotten around to reading the stimulus bill, and realized their is funding for higher education in there.  The Pittsburgh Tribune-Review reports state-related universities (Penn State, University of Pittsburgh, Lincoln University and Temple University) will get $42 million from the federal stimulus money, restoring the 6% state budget cut proposed by the Governor Rendell.

But the universities are not satisfied, "That doesn't represent an increase in our budget," said Penn State president Graham B. Spanier. "It just gets us back to zero."


"If the Legislature could see its way clear to appropriate an increase of some level [then that could result] in a reduction in tuition, but I don't see that as a high-probability event right now," Mr. Spanier said.

State funding makes up a small percentage of these school's overall budgets, some see this as the deeper problem, even though the state has little control over tuition hikes at these schools.

Perhaps their ungrateful attitude is has something to do with being left out as a beneficiary of the governor's proposed video poker tax.  Offering more taxpayer money to institutions without transparency or accountability measures will do nothing to reduce the cost of tuition to students.

Check out our suggested Higher Education Reforms here.