Archive for category HD-6 2010
On the campaign trail, I’ve spoken to any number of public employees and retirees who are worried about PERA, understand the problems, and who recognize the system needs to be changed. Some retirees are even willing to take cuts themselves, although I think asking them to do so would be a breach of faith. Employees and even reitrees are clearly more flexible on this issue than their unions are. To his credit, Mayor Hickenlooper has proposed changes to Denver’s pensions to try to make it more solvent:
For future employees only, the proposal would increase the minimum retirement age from 55 to 60, further decrease the pensions of those who retire early and increase the time required for vesting from five years to seven years….This year, city workers had to contribute an extra 2 percent of their paychecks to offset losses in the pension fund’s investments…The most recent analysis shows the pension plan ended December 2009 with 88.4 percent of its obligations funded, better than many other public pension plans, including the one for state workers.
Now, an 88.4% funded status is excellent, especially given the status of other public pensions. It speaks well of the conservative management of plan assets, although it’s worth noting that Denver may be using the expected return as the discount rate, rather than the level of obligation, which would overstate the plan’s funded status. (Full disclosure: I’m friends with Steve Hutt, who attends my synagogue, and haven’t had a chance to ask him what discount rate the plan uses.)
Nevertheless, defined benefit plans will almost always encounter, over their lifetimes, a rough patch rough enough to make them insolvent without greater contributions. The Mayor’s efforts are better than doing nothing, but will face opposition in the City Council from unions, and don’t address the fundamental problem of making promises the city can’t keep.
This is important, because dealing with PERA will be an important job of the next governor and legislature. According to Business Insider, Colorado’s pension fund is only 12 years away from actual insolvency, 8th-worst in the country. Unless we deal with this, by getting obligations to current and imminent retirees fully funded, and then converting to a defined contribution plan for new and younger state employees, we will end up bankrupting the state. Pension obligations – backed by unions whose greed is not representative of their members – will eat us alive, leaving almost nothing for actual services and functions.
I’m not sure that John Hickenlooper is willing to make that decision, but I am certain that the current legislative majority isn’t. We need to elect one that is.
Contrary to the headline in this week’s Intermountain Jewish News, I support Amendment 63. Here’s the full text of the letter to the editor, which Hillel Goldberg was kind enough to print:
Last week, the Jewish Community Relations Council voted note to take a position on Amendment 63. While that was the correct decision, as voters, we should strongly support Amendment 63, the Right to Health Care Choice initiative.
Amendment 63 does two things: it keeps the state of Colorado from enforcing any state or federal health insurance mandate, and it ensures that Coloradans will always be able to spend their own money on their own health care, unless they voluntarily enter a program that prevents it. These are protections of fundamental rights that we have as human beings.
Member organizations indicated that they knew of beneficiaries of their services who might not be able to obtain insurance, or had undergone serious financial hardship from medical expense. Their conclusion is that the best solution to this problem is Obamacare.
In fact, the law’s benefits will prove illusory. Both organizations explicitly said that the benefits depend on the mandate. Implicit is that Obamacare isn’t insurance, it’s a direct transfer of wealth.
We can easily point to those who benefit; it’s much harder to point to those individuals who will bear the cost – young workers and families who are just starting out, but who will be forced to pay for benefits that they will not receive. It’s a shame they have no advocate on the Council.
Instead of forcing young workers and families to transfer what should be their house, education, or retirement savings to the government, we should make their insurance more affordable by removing unused, expensive mandates that price them out of the market in the first place.
It has been claimed that Obamacare will save $1 trillion. This double-counts $500 billion taken from Medicare, re-spending it, and classifying it as savings. It includes 6 years of benefits for 10 years of revenue, and assumes Congress will cease an annual Medicare adjustment – the “doc fix” – that everyone expects will continue unabated. After 10 years, it will add to our already gargantuan $100 trillion of unfunded liabilities. No one reading (or writing) this piece truly comprehends that number. But we’ll have to pay it.
Instead of strengthening our system, the law’s deleterious effects are already being felt. Insurers are raising rates in anticipation of greater obligations. Insurers are dropping child-only coverage. Low-cost insurance policies for college students are endangered. Employers are shifting costs to those who still have jobs, who will pay with after-tax dollars. It will likely cost small insurance companies and brokers their businesses. The IRS has asked to hire 17,000 new employees to enforce the provisions, a deadweight loss of billions to the economy.
While the effects of the current system on those organization’s members are real, by focusing on those needs as an excuse to oppose Amendment 63, the member organizations assume that the only, or even the best, way to address those needs is the current legislation. Instead, we should encourage innovation and implement incentives for health care consumers to spend their dollars wisely, lowering costs for all.
There is good reason that the JCRC did not take a position. It generally doesn’t take on these sorts of issues, preferring to conserve its voice for issues of distinctive importance to the Jewish community. Supporting Obamacare would have placed the JCRC at odds with the 60% of Americans who want the thing repealed outright. Instead of building bridges, it’s likely to isolate us, dilute our voice, and prevent us from being effective in the future.
Earlier this year, voters in Missouri approved a similar measure by a whopping 71% – 29%. Voters in Arizona and Oklahome will likely also approve similar measures in a few weeks. Democrats in 5 other state legislatures have blocked measures from their states’ ballots this fall, but count on them to be re-introduced this coming year.
Coloradans should seize the chance to protect our own health care choices, and continue the efforts to find sensible fixes to our troubled health care system.
One of the frustrations in any local campaign is the limited opportunity to appear on the same stage as your opponent. Such appearances help to draw clear contrasts between the candidates, and if conducted well, and great opportunities for the voters to understand the choices in front of them.
We had one of those rare chances yesterday at Windsor Gardens Political Day. I’ll post the video of the whole thing later today, but what struck me most was my opponent’s claim that she votes how her constituents would vote on a given issue. In fact, her priorities seem to be far more arcane and abstruse than the concerns I’ve heard people talking about, and had she held more than three town hall meetings in the last two years, Rep. Court might have known that. When I knock on people’s doors, we talk about the budget, the economy, jobs, and education. Rep. Court’s priorities are public financing of campaigns.
It’s also telling that she touted not her infrequent town halls, but her equally infrequent Civics for Citizens lectures. While a more educated electorate is in everyone’s interest, a town hall implies listening, whereas in a lecture, the communication is from the lectern to the audience. Nobody of any political persuasion wants a representative who decides how to vote by putting a finger up to the wind, but still less do they want who who tries to divine what they would do on important issues without the benefit of meeting with them.
It’s one of the reasons I’ve spent so much time knocking on doors this election year, and the reason that I’ll continue to do so even after I’m elected. And it’s the main reason that I’ve committed to bi-weekly town halls during the legislative session. It’s something that many of Lois’s colleagues do, and it’s really the least that we owe the voters who elected us.
The Glendale Cherry Creek Chronicle‘s distribution area pretty much mirrors HD-6, so it’s not entirely surprising that they gave some coverage to the race in their most recent issue. You can see the article here, but why not go out and pick up a copy of the entire paper?
To whet your appetite, here’s the ad we ran in the paper:
Unlike the Jobs plank, which is focused on directly creating jobs, the Economy plank recognizes that in the long run (and even in the short-run), the best way to create jobs is to revitalize the economy as a whole. The private sector creates jobs, so let’s make it easier for markets to operate. Here’s how:
- Incentivize large-scale business investment in manufacturing, aerospace and other high-wage sectors by phasing out the Business Personal Property Tax.
This is, perhaps, the worst tax we have in the state, among the most destructive, and phasing it out – now, when the projected deficit is manageable – will let the economy grow to help fill the gaps in the out years. If the economy doesn’t grow, extracting more money from it for government isn’t going to be possible, anyway.
- Improve the state commitment to biotechnology and biosciences by building on a 2008 package that provided some $26 million assistance for Colorado start-up companies24 and research institutions seeking to commercialize new technology.
Yes, we saw this before, under Jobs. But it’s worth repeating: research doesn’t do any good unless it’s commercialized, and when it is, it helps bring down costs, save lives, and raise our standard of living, as well as provide the sorts of jobs that a well-educated state like Colorado, and a well-educated district like HD-6 can take advantage of.
- Revisit and revise the new oil and gas regulations that have contributed to a steeper decline for the natural gas industry in Colorado than in nearby states.
- Review Colorado’s regulatory environment, and support sensible expansion of Colorado’s coal production.
Not only does this take away direct jobs, it also derails indirect job creation. The legislature slapped a new, 2.9% tax on energy for industrial purposes, something that had never existed in the history of Colorado sales taxes. That tax will take an average of $2000 out of the pockets of employees in a Pueblo steel mill with a profit-sharing plan, according to the Denver Post. We have abundant energy resources here in the state, let’s make the best, environmentally-friendly use of them.
- Prioritize infrastructure investment which coordinates government and free enterprise initiatives to ensure a cutting edge multi-model transportation system — an essential component to a thriving economy.
OK, this is a little wordy. But infrastructure matters. I’m not a big fan of big, shiny, inflexible, expensive, and usually empty, commuter rail systems. But if we want to find a way to make commuter rail work, like it does with the Virginia Rail Express and the MARC trains around DC, let’s at least see if the tracks exist and some company is willing to bring in the rolling stock to give it a try.
There are also two suggestions for limiting health insurance and health care costs, which are creating an increasing burden on the state’s employers and individuals:
- Protect employers and consumers by enhancing Colorado’s protections against junk lawsuits.
- Require plaintiffs in medical malpractice suits to demonstrate a bona fide medical and legal issue before a lawsuit can proceed to the cost-intensive trial phase.
- Expand access to affordable health care choices by lifting restrictions on the purchase of health insurance across state lines
Prove that you have something really wrong, and don’t assume that bureaucrats in Colorado know more than bureaucrats everywhere else about what citizens need or want in insurance. In 2009, HB09-1256, which would have done just that, was killed by the current legislative majority. I’d add one thing more: a moratorium on new health insurance mandates without an analysis of how much they’ll cost consumers, and an analysis of how much existing mandates already add to our insurance bills. My opponent voted to kill such a bill, HB10-1154, in the most recent session, showing a deep lack of understanding about the avaialbility of free lunches.
You can tie down an economy through a thousand little strings, like Gulliver at the hands of the Lilliputians, or you can find a way to free it by starting to cut those strings. I think it’s clear which course is the more productive.
One of my biggest concerns regarding the impending state House elections was that we, as a party, might end up running without much of a platform beyond, “We’re not them.” Now, this year, “We’re not them” probably would be enough to get us the six seats we needed for the majority. But it’s not really much of a governing mandate. Had this happened, we’d have been running the risk of repeating the same mistake we’ve just lived through with the Democrats, who took a “We’re not Bush” vote to be a mandate to remake the country into Sweden, and are now looking at their worst electoral performance in generations.
You’ll note that I’m using the pluperfect subjunctive, which means that this didn’t happen. Today, the House Republicans issued a four-part governance plan, dealing with Fiscal Issues, Jobs, the Economy, and PERA. I’ll be rolling these out over the next couple of days, along with my own commentary on them. Let’s start with the one that’s the most important to Coloradoans – Jobs
Everyone knows the numbers: we’ve lost 160,000 jobs since the beginning of 2008. Our state unemployment rate hit 8% in 2010, double from three years earlier. The only way we’re going to get those jobs back is to create incentives for business, and by growing the private sector. There are no easy fixes here, but Colorado can make use of its world-class research facilities, and it can draw on its tremendously well-educated workforce. There are also long-term strategies, and short-term jump-starts.
- Incentivize large-scale business investment in manufacturing, aerospace and other high-wage sectors by revisiting the Business Personal Property Tax.
It’s important to do this this year, when the deficit is relatively low (“relatively,” in this case, meaning a couple hundred million dollars), to give the jobs time to materialize, so that they’ll be around when the federal money disappears in 2011-2012.
- Constructing and maintaining a cutting edge multi-modal transportation system is essential to a thriving economy. Policymakers must create an infrastructure strategy for the state, seeking lower cost solutions and opportunities for public-private partnerships.
Not such a big fan of “multi-modal,” as it usually means, “expensive, inflexible, under-used rail.” But it could also mean, “flexible, privately-operated buses and cars.” This could mean privately-operated toll roads, which have worked extremely well in other places.
- Improve the state commitment to biotechnology and biosciences by building on a 2008 package that provided some $26 million assistance for Colorado start-up companies8 and research institutions seeking to commercialize new technology.
- Work with Colorado’s universities in technology transfer opportunities, to create new Colorado jobs and companies. Identify reasonable solutions to obstacles which stop cooperation between academic research institutions and free enterprise.
I’d include “nano-tech,” which will change the world, in this list, but that’s a quibble. Productizing this stuff is really the name of the game; it lowers costs, raises our standard of living, creates both fabrication and design jobs, meaning it can employ both skilled workers and PhDs. It creates the potential to raise our exports from the state, which haven’t kept pace with those from other states. In the best-case, it can turn Colorado into another Silicon Valley-type operation, assuming it can find and attract venture capital for these operations.
The co-location of research, industry, and capital is fundamental to truly inventive entrepreneurship, and while it won’t create large-scale employment tomorrow, it’s the kind of thing that will bring back the economy. I’m delighted to see the prospective House leadership embracing it.
Nobody reasonably doubts the need for responsible regulation. It’s for that reason that we need to understand the limits of reasonable regulations, and the risks that come from the temptation to exceed them.
Last week as a bad week for bad regulation. First, this example of entrenched industries using regulators to further their own interests at the expense of their customers:
The National Association of Broadcasters is lobbying Congress to stipulate that FM radio technology be included in future cell phones.
In exchange, the NAB has agreed that member stations would pay about $100 million in so-called performance fees to music labels and artists. Radio stations would be required to pay performance royalties on a tiered schedule with larger commercial stations paying more than smaller and non-profit stations.
FM radio now has to compete not only with AM, but with all manner of streaming media. So of course, they want the government to force their competition to pay the freight to expand FM’s market. The irony is that the regulators writing these rules are just as clueless: my smartphone already includes an app where I can listen to any local FM radio station.
The other lesson is in the risk of politicizing well-established rules. BP was browbeaten, if you recall, into putting $20 billion into escrow for the executive branch to dispose of as it wishes. Some of us argued at the time that there were rules for how to deal with liability, and that the courts were a better, non-political venue for doing so. Even assuming that Kenneth Feinberg were completely incorruptible personally, he would find himself buffeted by political pressures he – or his administration employers – might feel the need to respond to.
The first, most obvious pressure, is to be lenient in disposing of BP’s money. Feinberg has tried to make it clear that he will, in fact, be far more lenient and timely than the courts would be:
Appearing … before about 300 people in Houma, La., Feinberg lectured, cajoled and asserted that once he takes over Monday, the process will be accessible, fast and fair.
“I will be extremely lenient in documentation,” Feinberg said. “I don’t need reams and reams of stuff. I don’t need a tax return. Do you have something you can show me? Well, the ship captain will vouch for me — fine. Well, my priest will — fine.”
But this hasn’t mollified those who want more:
Kenneth Feinberg’s effort to set the terms for handing out BP PLC’s money to Gulf oil spill victims came under fresh attack Monday from state officials and private lawyers who said he planned to be too restrictive in deciding who gets paid.
“Mr. Feinberg seems to be completely tone-deaf to the concerns of people along the Gulf Coast,” said Alabama Attorney General Troy King, who blasted Mr. Feinberg as a “corporate shill” of the oil giant.
The point here isn’t who’s right. I certainly don’t know. The point is that the suspension of normal, well-established processes for recovering economic damages have been suspended in favor of the judgment of a single bureaucrat. Many will pile on and try to pressure the system in their direction, often through the media, which can’t help but erode public confidence in the system.
The temptation to help a client group, or to solve a problem now is dangerous, and often, if not usually, makes thing worse rather than better.
This, from the Wall Street Journal, describes how Virginia managed to close its budget gap:
Here’s something you don’t see often these days: a government running a budget surplus. Governor Robert McDonnell announced last week that Virginia closed fiscal 2010 some $400 million in the black. That’s a radically improved financial picture from a year ago when the state faced a $4.2 billion two-year budget hole.
The usual suspects—the big business lobbies, the Washington Post—thought a major tax increase was needed. So did the previous Governor, Democrat Tim Kaine, who proposed a $2 billion tax hike before he left town, on top of two major Virginia tax increases in the previous eight years.
Mr. McDonnell has proved otherwise. The newly elected Republican put a freeze on hiring and took the knife even to such politically sensitive programs as school aid, police and Medicaid to cut hundreds of millions of dollars. Total state spending has been reset more or less to 2007 levels. If Congress were to do that, the federal deficit could fall by more than $900 billion, or two-thirds.
It’s true that Richmond used too many budget tricks to make the surplus appear larger than it really is. Sales tax payments were accelerated by one month to count in 2010 rather than 2011. Several hundred million dollars were borrowed from the public-employee pension reserve—money the Governor promises to repay by 2013. Most fiscal experts think the real surplus is closer to $87 million. But given the lousy economy, Virginia’s budget achievement is laudable. (Emphasis added)
Virginia does biennial budgeting, so they’ve passed their FY11 and FY12 budgets already. Virginia’s general fund is about $15.5 billion, and its total budget is about $38 billion, so either way, it’s about twice Colorado’s. Virginia was facing a $4.2 billion deficit over two years, so it was also roughly proportional to the $1 billion hole we face in FY11-12.
We could begin with a meaningful hiring freeze ourselves. Despite the Democrats’ claim of a hiring freeze, the Bureau of Labor Statistics tells a different story:
It also makes the urgency of converting PERA from a defined-benefit to a defined-contribution plan even more plain. (For the basics on public pensions, see this primer.)
In the past, I’ve posted on the difficulty of forecasting, how despite the best intentions and best information, the folks at Legislative Council have a hard time seeing revenue crises before they hit. Bloomberg has a fine posting on why this is so:
How do economists fare when it comes to real forecasting, to predicting GDP growth and inflation one year out? About as good as a coin toss, according to Bryan’s research. Less than half the economists did better than the “naive” forecast, which is based on no understanding of the economy and merely assumes next year’s outcome will be the same as this year’s. It’s what you’d expect if the results were purely random….
I want to hear a plausible scenario, based on what we know and what we expect, for how things are going to play out in the U.S. and on the global stage. Getting the number right is a job for an accountant. Putting that number in the context of a larger trend is a job for an economist.
We don’t know when revenue will recover, and we don’t know when the next drop will hit. As a result, we need to be careful not to build in additional structural spending when times are good.
Unfortunately, we’ve already used up all those gimmicks that make the Virginia surplus look larger than it is. For us, it’s going to be even more painful, which means it’s going to call for a seriousness that’s been lacking. It’s going to call for the guts to make difficult cuts, and the courage to defend them before the voters – even in odd-numbered years.
So I’m in synagogue on Saturday morning, and a friend of mine introduces me to someone he’s talking to:
David: Joshua, meet Steve
Steve: Hello, I’m Steve
Joshua: Hi, Joshua Sharf, how do you do?
Steve (slightly incredulously): You’re Josh Sharf?
Joshua (having been Joshua Sharf all his life, and thus finding it unremarkable): Eh, ye-es….
Steve: You’re the guy with all the signs!
This has happened a couple of times, with the blog, or with the radio show, or with the signs. I’m always amazed by it.
This, from this morning’s Wall Street Journal:
The Food and Drug Administration proposed shoring up medical-device approval rules that have been criticized as lax and inconsistent by consumer advocates and the agency itself.
The FDA aims to better define what devices can use an approval pathway known as 510(k), under which companies can get an accelerated decision on whether they can market a new product if they can show it is similar to an already approved device. The proposals, which will be open for public comment, will be closely watched by the device industry because more-stringent rules would raise development costs.
Since in politics, anything you say can and will be used against you, let’s start by saying that medical devices that are supposed to help us shouldn’t kill us, and the FDA plays a useful – although an exclusive – role in making sure that doesn’t happen.
That said, this is bad news for health care and bad news for Colorado. Medical innovation is the single, surest way of bringing down costs. New technologies cost more, sure, but they bring down the relative desireability, and thus the relative price, of existing technologies.
Think about your cell phone. Everything about it, from the signal to the network to the phone itself, is in a relentless drive towards being commoditized. Which means that you can get an iPhone for about 1/2 the real cost of a cell phone ten years ago, and pay only slightly more for the network access. The same factors are at work in every market.
And bad news for Colorado? Well, we’re home to some of the best, most innovative biotech companies around, which up until last year, attracted a lot of venture capital money.
Let’s hope the FDA doesn’t make things worse, and that if they do, that our Congressional delegation has the sense to stand up for innovation, rather than demagogue about “rich” “companies” “profiting” “at our expense.”