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Summing Up the Budget (And RI’s Problem) in One Sentence

The Providence Journal article on the Rhode Island House’s budget vote last night captures in one quotation the problem our state is struggling to overcome:

“I expect the budget to rise every year,” said House Speaker Nicholas Mattiello after the final vote, a few minutes before 10 p.m., in response to Republican complaints about overspending. “To not expect it to rise every year is not realistic.”

First, let’s go along with the premise that the state budget should rise every year.  Does it have to go up 3.9% every year, regardless of the health of the economy or changes in taxpayers’ ability to pay?  That’s the important next question.  From Mattiello’s explanation, it doesn’t seem that there is any limiting principle.  From his comments to WPRI’s Ted Nesi:

“I always look at the specifics,” he said. “The level of spending in this case was appropriate to the needs of our society.” He noted that the cost of social services continues to rise faster than other areas.

But there is no reason a budget this big has to climb every year.  If it’s possible that annual growth of 3.9% is too much, then it’s possible for it to be too high, right now.  Sadly, state leaders exhibit is no underlying philosophy.  There is only a balance of various interest groups’ power.  Raises for state employees.  Increases in welfare-related spending.  More crony deals (as foreshadowed by the increased generosity of tax credits for movie productions).

Taxpayers will only become a consideration when they do one of two things:

  1. Change their voting habits in a way that threatens entrenched politicians.
  2. Leave the state in sufficient numbers that the politicians have no choice but to reduce spending or squeeze those who remain painfully enough that they notice (and resort to #1).
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UPDATED: Latest Stunning Display of Incompetence by Raimondo Involving our Most Vulnerable May Cost Taxpayers Tens of Millions

Both the Providence Journal‘s Kathy Gregg and WPRI’s Ted Nesi are reporting today that the State of Rhode Island, more specifically, the Executive branch’s Office of Health and Human Services (the Rhode Island Executive Branch being currently occupied, we should note, by Gina Raimondo), missed a critical court deadline to appeal a court ruling and thereby may have put state taxpayers on the hook for “$8 million annually for each year starting in 2016-17″. From Ted Nesi’s story about this disturbing and jaw-dropping situation:

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A Canary in Seattle

The city of Seattle is blazing trails in the assault on business and disincentive for job creation, and Seattle Times columnist Jon Talton is correct to warn of a reckoning:

One thing is clear. The tax will not be paid by Jeff Bezos, the world’s richest person, or any other real or imagined toffs running the targeted companies. It will be “paid” by hiring fewer people here, making fewer investments, thus perhaps reducing overall taxes to the city. This is not sticking it to The Man.

One of the fascinating aspects of the jobs tax is how it reveals a tectonic shift in Seattle politics.

The slow-moving but generally pragmatic center-left that governed for years has collapsed.

Some of Talton’s lessons are either (it seems to me) either off base or specific to Seattle.  I’m suspicious, notably, of the blame that he puts on the GOP for becoming a “hard-right party” that exploded its leverage by booting its centrists.  One needn’t change the tilt of one’s head too much to see that as something more like a center-right party that didn’t move far enough to the left to keep progressive activists from attacking its donors and volunteers.

Consider Talton’s complaint that voters don’t have options; that can be a sign that people won’t run, given the charged atmosphere.  In short, this probably isn’t quite the distinct trend that he presents it as:

Meanwhile, a hard-left movement arose with the activist foot soldiers, infrastructure and energy to win municipal elections. It might represent a minority of voters, but given the withering away of the old order, it can win. Voters don’t have alternatives.

This lesson is probably increasingly universal across the country.  An activist infrastructure has been built up with funding from embedded interests (like labor unions), a supremely wealthy progressive elite, and siphoned taxpayer money from the Obama Administration.  At the local level, it targets any politician or grassroots organization that attempts to offer an alternative, and so the alternative doesn’t get a voice.

So… the city gets insane tax-and-spend policies that create obvious incentives against economic activity and for reliance on public subsidies.  A reckoning will come, indeed.

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UHIP Problem Is Less the Technology than the Intention

So Rhode Island’s state government paid about a half-billion dollars for software to manage its various welfare programs, and now it’s having to “upgrade” to put bar codes on paper applications so it can properly track them:

“I have an idea,″ [Rep. Jason Knight, D-Barrington] said. “Put a box in each building and that’s where the scanned applications go…This is not difficult…Put a box in the corner.″

“Understood,″ Hawkins said, but “DHS [takes in] thousands of applications every month.” She said a technology upgrade “in the coming months″ will put a bar code on every document that is received by the department to ensure that every one “gets scanned to the right case and eliminate the errors.”

“We believe the technology system should solve this problem for us,” she said.

With a little work, perhaps Rhode Island can graduate to the latest technology of the 1970s.

Not to repeat what’s been written in this space before, but the problem, here, isn’t the technology so much as what the state is trying to use it for.  Tracking all of the information necessary to determine, on an ongoing basis, the eligibility of everybody in the system for every welfare benefit requires a great deal of information.

It is within the competence of state government to set up agencies to process individual welfare programs.  It is not within its competence to vacuum us all into its data base and get us on the dependency highway.  And we should be relieved that that’s the case.

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Evidence of an “I Got Mine” Mindset

Let’s be clear that this guy should not be considered representative of either law enforcement or welfare recipients:

A Rhode Island deputy sheriff, who was praised as a hero in 2015 for saving the lives of two women, has been arrested for fraudulently collecting more than $12,000 worth of food stamps, according to the Rhode Island State Police.

Edward Cooper Jr., 49, of 78 Commodore St., Providence, obtained the food stamps while collecting a tax-free salary because of a job-related injury, the state police said.

It’s reasonable to suggest, though, that some people tend toward a mindset of taking what they can, or even of entitlement.  It’s also reasonable to wonder whether government occupations and programs are an especial lure for such people.

The “I got mine” mindset isn’t a healthy one for the individual nor a just one for the community, so we should keep an eye out that we’re not creating incentives for it.  Rhode Island clearly has such incentives.

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A Need for Sufficient Reforms to Welfare Programs

Kristina Rasmussen makes an important point in the Washington Examiner:

Despite near-historical low unemployment rates and employers desperate to fill open jobs across the country, welfare enrollment is soaring. And overwhelmingly, the newest enrollees aren’t those the system was intended to serve — the elderly and those with disabilities, among others. Instead, they’re mainly able-bodied adults.

That’s an indication that the programs are no longer truly designed for the goal for which they were originally promoted.  If they ever truly were, they aren’t programs to help disadvantaged people so much as jobs to give to government, making dependent clients of increasingly broad cross-sections of the population.

That’s why I’d suggest that Rasmussen is a bit too optimistic about the chance for reforms to work.  On both the client side and the provider side, too much incentive exists to undermine or route around reforms.  Recall when President Obama took office and undermined work requirements.

Unless we fundamentally change incentives and the culture, reforming welfare will be a constant labor of piling up sandbags against relentless tide.  Things like work requirements are worth doing, because they will help in the effort, but they aren’t sufficient.

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Some Interesting Correlations with High Taxes

Investor’s Business Daily found striking correlations between tax burden, presidential vote, population loss/gain, and government fiscal condition.  In general, high-tax states tended to vote for the Democrat in the last election, tend to be losing domestic population to other states, and tend not to be in great fiscal condition.  As IBD suggests:

One way to look at all this is to conclude that poorly managed states are trying to force taxpayers to cover for their mistakes. But, taxpayers won’t stand for it. Which strongly suggests that high-tax states need to set a new course, toward lower taxes and less spending, if they want to stop their population losses.

Of course, that’s a big “if.”  As long as they can keep the scheme going, population is only incidental… never mind that our governments are supposedly instituted to represent the people who actually live in an area.  That isn’t any longer true in a fundamental sense.

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No Secret Why Rhode Island Has a High Eviction Rate

This article by Christine Dunn in the Providence Journal takes a strange (if predictable) turn:

Providence’s 2016 eviction rate, 3.82 percent, was nearly triple that of Boston in that same year (1.3 percent), according to new data from the Eviction Lab at Princeton University. This group is led by sociologist Matthew Desmond, whose 2016 book, “Evicted: Poverty and Profit in the American City,” won the Pulitzer Prize for nonfiction in 2017. …

Why is Providence’s rate so much higher than Boston’s and New York’s when Desmond says a lack of affordable housing is a problem across the country?

According to Clement, less access to free legal assistance for Rhode Island tenants, and less state support for housing in general, are reasons Providence fares worse than Boston in the rankings.

Umm… perhaps the fact that Massachusetts — particularly the Boston area — has a much healthier economy has something to do with it?  Oddly, the article presents unemployment as an effect, not a cause, of eviction.  That presentation is especially odd because the article doesn’t allege wrongful evictions.  People just don’t have the money.  Why don’t they have the money?  Because there’s limited opportunity, here.

That being the case, giving people free legal help would merely shift the burden to landlords, who will either have to increase rents or get out of the business, thus reducing supply and, ultimately, driving up rents again.  Adding evictions to the long list of programs that Rhode Island attempts to address with public welfare programs would increase taxes and harm the economy, thus leading to reduced ability to afford rent.

Rhode Island has no other solution than facing down its insider, I-know-a-guy system and taking the chains off our economy.  None.  And that reality brings us back to the deepest, most-fundamental problem for renters as for every don’t-know-a-guy resident:  It just makes so much more sense to leave than to try to fix the joint.

Unless Rhode Island’s governing elite and information providers shift to promoting economic freedom as the solution to the various symptoms of our state’s decline, that decline will continue.

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Missing the Real Story of UHIP

As a UHIP skeptic from the very first time it was mentioned as a possibility, I continue to think that everybody is following the wrong storyline.  However, increased scrutiny is starting to bring people around to the right questions… the correct angle.  Consider:

As to why so many things went wrong, [Deloitte manager Deborah] Sills said: “Simply put, the system is very complex … the only eligibility system in the country that integrates more than 10 state and federal health and human services programs and a state based health insurance exchange … As the state’s comprehensive analysis last year made clear, Deloitte and the state needed ‘more time, more people and more training.'”

GoLocalProv has posted the entire 40-page, paper-and-pen application that goes along with the half-billion-dollar computer system, and what’s becoming clearer is that the state simply expected too much from software, hoping to avoid the hard work of reconceptualizing how benefits programs are done.  In this light, the fundamental error of Democrat Governor Gina Raimondo was her failure to understand the nature of the Unified Health Infrastructure Project (UHIP).  It was never really intended to be a cost-savings and efficiency tool, but rather a dependency portal, drawing people into government programs and maximizing the amount of “services” that the state could hire people to provide.

Look at the application.  The complexity comes in because each program requires different information.  That’s not a terrible problem if the applicant knows which one he or she wants, but the entire point of UHIP is to give people things they aren’t applying for, so the application asks for all of the possible information.  Streamlining that would require regulatory and legislative changes, some of it at the federal level.

In order to effectuate those changes, advocates would have to make clearer the underlying objective, and that would run contrary to the plan.  The dependency portal is meant to insinuate itself into reality under the banner of efficiency, which the public would actually support.  Less popular would be a banner proclaiming, “We want to ensure that everybody gets every penny of taxpayer money possible, even without looking for it.”  Even less popular would be, “We want to track everybody’s personal and financial information so that we can adjust their benefits automatically.”

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UHIP Catastrophe: Governor Once Again Blaming Deloitte as “Real” Problem (Also, Chafee)

Yesterday on NBC 10’s Connect to the Capitol, Dan Jaenig asked Governor Gina Raimondo, among other topics, how the state dropped the UHIP ball. The governor started her response by taking a swipe at former Governor Lincoln Chafee, saying he signed a terrible contract with Deloitte. She then continued,

Under my watch, we hit the go button before it was ready. But I will say the real problem here is the company sold us a product that didn’t work.

This is not to defend Deloitte, which apparently has a mixed record with regard to such systems. But let’s be clear. It was you, Governor Raimondo, who gave the catastrophic order, for your own selfish political reasons, to launch an unready system. Accordingly, DO NOT BLAME FORD MOTORS FOR DELIVERING A DEFECTIVE CAR WHEN YOU ORDERED THEM TO REMOVE IT FROM THE ASSEMBLY LINE ONLY HALF WAY DOWN. And similarly for the aspersions you cast at Governor Chafee: the contract, good, bad or indifferent, is completely irrelevant if the manager who takes over the contract inexplicably orders production to be shut down well before the product is finished.

Everyone else – taxpayers and UHIP clients – but you, Madame Governor, is paying the high price for your catastrophic action. Please at least stop casting blame for it in desperate and absurd directions.

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Objection to UHIP on the Surface and Conceptually

The court-appointed “special master” tasked with getting Rhode Island’s Unified Health Infrastructure Project (UHIP) working, Deming Sherman, tells Kate Nagle of GoLocalProv that the system is flawed:

“It (UHIP) was not a bad idea, but bad execution,” said Sherman about UHIP. The good idea of UHIP was to tie five distinct programs together, but the flaws have been that the vendor, Deloitte and the workforce did not work and were not trained, respectively. Just as the UHIP program was being implemented the state laid off key workers. Since then DHS has had a difficult time training and retain workers for the program.

Sherman said the UHIP system has two problems technology and the workforce that operates it.

The surface reaction one has to this is to be incensed that the state government has already spent roughly a half-billion dollars on the system.  Nobody forced state government to undertake a project that it was not competent to oversee.  In fact, the state barely conducted public discussion before jumping in.  Bureaucrats under former Democrat Governor Lincoln Chafee simply went forward as if it was the obvious thing to do.

Similarly, nobody forced Democrat Governor Gina Raimondo to manage her personnel under the assumption that flipping the switch on UHIP would instantly bring a new day.  She took a big, big gamble, attempting to make budgetary room for other things, like her crony capitalist approach to economic development, and the state’s vulnerable populations have suffered for it.

More deeply, though, we should challenge Sherman’s statement that the concept was sound.  The goal of UHIP, which was pushed down from activists at the national level (with the encouragement of Democrat Congressman David Cicilline), is to draw people into dependency on government.  The system has the 40-page application about which Sherman complains in part because the designers want it to collect scads of information about people, which would be constantly updated on the pretense of regularly checking eligibility.

If it weren’t for the human suffering and loss of opportunity that it’s causing, we should actually be happy that UHIP isn’t working, which is a sad statement on the condition of our democracy.  Being saved from insidious ideas by managerial incompetence is not a silver lining that ought to inspire confidence or hope.

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International Gangsters in the Land of the Government Plantation

In 2015, I presented Lawrence, Massachusetts, as a cautionary tale of the government-plantation economic model.  Just as industrialists once attempted to draw in foreign labor to the “company town” because it was less expensive, the local government is turning the city into a “government town,” whose main source of income is transfer payments from outside to pay for government services.

Consequently, this recent Boston Globe article caught my eye:

The federal government’s relentless assault on the feared MS-13 street gang in Greater Boston continued this week, with two members of the violent outfit admitting to their roles in the 2015 slaying of a 16-year-old boy in Lawrence, authorities said.

True, immigrant gangs are nothing new to the United States, and homegrown gangs certainly exist.  Still, tracing the arrival of an international criminal enterprise is a necessary task, and one needn’t indulge too much in speculation to propose that using immigration to bolster the population in need of government services leaves a region vulnerable to this sort of invasion.

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Can We Realize The Destruction Of Families Has Unintended Consequences?

In the Providence Journal this week, Wendy P. Warcholik and J. Scott Moody write, “This growing number of children in Rhode Island without a solid familial foundation should give us all pause. This is not a problem that is going to just go away, and we must find ways to help these children before tragedy strikes, perhaps in your own neighborhood.”

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Medicaid Expansion Not Working Out as States Had “Predicted”

Encouraging Virginians not to expand Medicaid to able-bodied, childless adults, Brooklyn Roberts looks at some results from states that have moved forward with the change:

As an example, let’s look at Oregon, a state that began expanding Medicaid in 2008. Officials there lacked funding for the total number of applicants, so they conducted a random lottery and selected enrollees from a waiting list, thus making Oregon an ideal state for study. What they found was that gaining Medicaid coverage increased health care usage and costs across a wide range of settings, and emergency room visits increased by 40 percent in the newly covered group. Proponents of the expansion argued the initial spike in ER visits was due to pent-up needs and would decrease as time went on.

That has not been the case. Oregon’s growth in Medicaid spending between 2012 and 2016 was 83.1 percent. A follow-up study in the New England Journal of Medicine concluded the value of expansion for recipients was quite low — 20 to 40 cents per dollar of government spending.

So, the expansion increases health-care usage in ways that weren’t predicted by the officials who’ve implemented the expansion, and those officials have proven even more egregiously incorrect when it comes to predicting how many people would sign up.  (We could argue about whether that was a flaw in their methodology or something more like deception; after all, they’ve ushered a lot of people into Medicaid by rerouting them through health benefits exchanges that were supposed to sell plans for actual money.)

In Rhode Island, our government officials signed up for the expansion almost before it was officially offered.  We should force them to reconsider how they do things.

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Tax Cuts and Extra Revenue

We’re still in the period of anecdote, when it comes to assessing the effects of the federal tax cut on the economy, but Investor’s Business Daily suggests that we’re seeing early indications of a tax cut’s ability to generate revenue that takes a bit off its projected cost:

The Congressional Budget Office says that federal revenues in January added up to $362 billion. That’s an increase of $18 billion— or 5.2% — from the year before. As a result, the government ran a surplus of $51 billion that month, which is equal to the previous January. …

Individual income and payroll taxes, it says, rose by $68 billion. “That change largely reflects increases in wages and salaries,” the CBO says. …

What’s more, the fact that employment gains continue to be strong means more people will be earning taxable wage income. It also means fewer people collecting government benefits, which will mean less government spending than would otherwise be the case.

The most shocking thing is that we’re debating the cost of the legislation.  Here, we see more people finding work and getting off of welfare.  Those sorts of positive outcomes are supposed to be what welfare programs are about, and it turns out that economic growth accomplishes them.

So to accurately assess pro-growth policy, one must first adjust the static “cost” to account for increased revenue and then assess the benefits to individuals and our society against the remaining reduction in government revenue.  Naturally, I’m biased, but it seems to me that a fair assessment will show that the U.S. and most of the states (especially high-tax ones, like Rhode Island) have a long, long way to go before cutting taxes is anything less than a no-brainer.

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Fake Claims From The Progressive Land Of Make-Believe

The legislative onslaught from the left has begun. As the poster child of their desire for government-control over the lives of residents and businesses, Rhode Island’s progressive-Democrats announced they will introduce legislation this week to establish an estimated $13.2 billion single-payer health insurance system.

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