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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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The Government Plantation Dragging Down California

Trying to understand why wealthy California would have the highest Supplemental Poverty Measure, which includes cost of living, Kerry Jackson describes what I’ve been calling the “government plantation“:

Self-interest in the social-services community may be at fault. As economist William A. Niskanen explained back in 1971, public agencies seek to maximize their budgets, through which they acquire increased power, status, comfort and security. To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its “customer” base. With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy. Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.

The change, since 1971, is that this tendency of social welfare bureaucracies has metastasized to the entire government.  The leverage isn’t just one agency as opposed to others, but government itself, as a sector in society.  Whether elected or appointed, government officials’ incentive is to create new services to provide and to increase the number of people receiving them.  This expands their base of support while ratcheting up the amount of money they can extract from others.

The well-advertised benefits available attract people interested in collecting them, even as the increased costs and restrictions on private-sector life drive away the people whose work is supposed to grow the economy that pays for it all.  California started from an enviable position, which put in place some massive wealth centers, but even so, a growing tumor will eventually kill even the healthiest animal.

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Linking Poverty and Licensing in a Comprehensive Philosophy

An editorial in the Orange County Register makes the important connection between poverty, welfare, and occupational licensing:

Following the critical passage of tax reform, congressional Republicans and President Trump might now turn their attention to reforming at least some of the nation’s vast, too often ineffective social safety net. …

Ultimately, of course, the best way to combat poverty is to ensure America’s economy continues to grow and jobs remain accessible to as many Americans as possible. Tax reform and Trump’s halt on excessive new regulations are important steps toward that. But the White House and Congress shouldn’t be content with that. Other areas are ripe for improvement as well, like occupational licensing reform to remove artificial barriers to work.

For a while, it seems, the political right lost sight of the need for competing visions.  People’s political views tend to result from some sort of balance between freedom and security (not only for themselves, but as organizing principles for the benefit of others).  It isn’t sufficient, therefore, to combat the statist vision of tasking government with everybody’s well-being and simply (simplistically) making it so with simply cutting taxes and taking all limits off of the wealthy.

Of course, very few people really hold that second view, but the actual philosophy that it caricatures has to be better articulated.  Part of removing limits, for one, means removing them from the poor and working class, as well, which should place a market-driven pressure on the wealthy that is greater than the supposed pressure that government manages.  (I’m always mystified that the same people who warn that the rich control government think they can use government to limit the rich.)

Similarly, the case has to be made that the outcomes that the pro-license advocates claim to be protecting us against aren’t really a danger or don’t justify the heavy hand pushing down on individuals’ opportunity and our economic health.

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The Necessary Schemes of the Government Plantation

Red Jahncke describes one part of the government plantation funding strategy:

… 42 states tax hospitals. Why? One answer is the perverse incentives built into the Medicaid law. When a state returns tax money to hospitals through Medicaid “supplemental payments,” it qualifies for matching funds from Washington. Connecticut hospitals will pay $900 million in taxes, but the state will offset that with $600 million in supplemental Medicaid payments—matched with $450 million of federal funds, meaning Hartford comes out ahead in the whole scheme by $750 million. Nice work if you can get it.

As Jahncke closes his essay by suggesting, if government wants to do this, it should be straightforward about it. The problem is that, increasingly, the business model of government is to seek people to whom to provide benefits or services and then find ways to make taxpayers at all levels of government pay for it.  If the wealth transfer were more obvious, then the people paying the bill would more quickly decline to do so, especially for those portions funded across state lines by the federal government.

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Rhode Island In 47th Place On The Jobs & Opportunity Index

Happy New Year! In 2018, Rhode Islanders want to achieve their hopes and dreams of better life for their families. In order for the Ocean State to prosper, we need an economic climate that rewards hard work, encourages small-business growth, and creates quality jobs. In this regard, the traditionally cited monthly unemployment rate is often used by state lawmakers as a benchmark to evaluate the results of their policy initiatives. However, this rate represents only a very narrow look at the employment health of a state and can often paint an incomplete, or even inaccurate, snapshot of the broader economic picture.

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The Missing How with Food Stamp Backlog Clearance

One crucial thing is missing from an AP article on the judicially appointed special master’s elimination of Rhode Island’s UHIP-driven backlog of people waiting for food stamps:

The attorney appointed by a federal judge to deal with failures in Rhode Island’s food stamp system says the state has eliminated a backlog of thousands of applications. The state has been grappling with problems since it introduced a new computer system last year.

Deming Sherman also said in a report filed in U.S. District Court in Providence last week that the state is almost current on processing new applications.

If we take this self-reporting at face value, the key question is:  How did he do that so quickly?  It is critical that Rhode Islanders know why an appointed Mr. Fix-It was able to accomplish in weeks what the professionals in state government could do in months (going on years).  Something really must be going wrong if the state’s endemic problems are so easily fixed by somebody slightly outside of the system.

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