Big bad debt 2


By Tom Quiner

Former Governor Branstad ran an ad charging Governor Culver with being a big spender.  Is this charge fair?

Let me quote State Auditor, David Vaudt:

“The Legislature’s Fiscal Year 2011 budget relies on over $700 million of one-time resources which will not be available for Fiscal Year 2012.  In addition, nearly $90 million of General Fund costs are shifted to other funds.  This creates a huge spending gap in the General Fund budget for Fiscal Year 2012 when the one-time monies go away.  This spending gap is often referred to as a “cliff” by experts because of the severity and suddenness of the drop in resources which are expected to be available.”

We’re in a heap of trouble in future budgets.  The Democrats have controlled the Iowa General Assembly since the 2006 elections by large majorities.  Prior to 2006, Iowa was noted for having a pretty evenly divided legislature.  Democrat’s ascent to power has produced huge increases in spending for Iowa.

Governor Branstad is correct.

How to boost America’s economy now Reply


By Tom Quiner

Time to get America's economy back on track!

This Labor Day, 2010, our economy is hurting.  Everything the President and his party has tried has failed.

Unemployment is way up.  Economic growth is stagnant. Net job creation doesn’t exist.  The stock market is going nowhere fast.

The underlying premise of the President is that only government can get the economy back on track.  I would suggest that, if anything, the federal government has made things worse in many (but not all) respects.

Here are some concrete suggestions on how to get America back on track:

1. Renew the Bush tax cuts.  The last thing we need now is a tax increase on America’s most productive Americans. In addition, we need to reduce the uncertainty that is paralyzing economic decision-making.  Renew the tax cuts and get out of the way!

2. Sign the Korea-Free Trade Agreement.  Senator Grassley has been a huge advocate of this agreement.  The Bush administration got the agreement negotiated, the Obama administration essentially has killed it.  And yet the upside to the agreement is enormous.

Did you know Korea is the sixth largest export market for pork?  Japan is number one.  But according to the Iowa Pork Producer’s website, pork exports to Korea could surpass Japan’s once the treaty is fully implemented.  Even more, they project the agreement would give our pork producers an increase of $10 per hog marketed.

3. Allow individuals and families to shop for health insurance products across state lines.  This is one of the few products where interstate commerce is prohibited. Increased competition would generate more choice and lower prices for consumers.

4. Along that line, provide a refundable tax credit – $2,300 for individuals and $5,700 for families – to purchase coverage in any State, and keep it with them if they move or change jobs.  This is a key component of the Republican’s “Roadmap for America’s future” as authored by Wisconsin Congressman, Paul Ryan.

5. Rescind the requirement for Project Labor Agreements (PLAs) on Federal construction projects.  As former Administrator for the General Services Administration, Lurita Doan, said:

[PLAs] “punish non-union, small construction businesses and often prevents them from bidding or performing federal construction work in their communities.”

6. Suspend the Minimum Wage (MW) until the national unemployment rate falls below 7 percent.  As discussed in previous posts, the minimum wage punishes workers with low skills.  It takes a devastating toll on teens, especially black teen aged males. The MW forces employers to pay some workers more than they’re worth, which suppresses employment.  Lack of job opportunity drives some of these young men into gangs.

The minimum wage affects the nation’s economy in other ways.  For example, it has encouraged illegal immigration.  Employers who had jobs that weren’t worth the minimum wage filled those positions with illegals who were willing to work for what the job was really worth.  By suspending the MW, we discourage illegal immigration.

Milton Friedman explains the fallacy of a minimum wage 3


By Tom Quiner

The late Nobel Laureate economist, Milton Friedman, explains why minimum wage legislation is counterproductive. He explains it better than anyone.  The clip above was made when the minimum wage was around $2.50, which dates the interview around 1977.  Unemployment for teens, and especially black teens, has only gotten worse, as I highlighted in my previous post.

The mock-benevolence of “compassionate” legislation 1


By Tom Quiner

The Americans with Disability Act (ADA) was a compassionate piece of legislation, right? It prevented discrimination against individuals with disabilities.

Anyone who opposed that piece of legislation is considered mean-spirited, devoid of a drop of humanity.

How about the extension of jobless benefits from a standard half year to closer to two years (99 months)?  These are tough times, right?  In the name of compassion, let’s subsidize unemployment.

Anyone who opposed that piece of legislation is considered mean-spirited, devoid of a drop of humanity.

And what about the minimum wage?  People should be paid what they need, not what they’re worth, right?

Anyone who opposed the two recent bumps in the minimum wage is considered mean-spirited, devoid of a drop of humanity.

These legislative initiatives are compassionate.  They make us feel good.  But do they work?

The ADA was designed to make it easier for folks with disabilities to find jobs. Researchers at MIT studied it. They found that, in fact, employment for men with disabilities between the ages of 21 and 58 dropped after the passage of the ADA.  They found it dropped for women between the ages of 21 and 39.  Why?  Because the disabled became a protected class. The number of lawsuits increased when they lost a job.  The threat of increased lawsuits is a deterrent to employers, because the cost and aggravation went up to hire the disabled.

The “hire the disabled” programs that were in place before the ADA have gone away.

What about the extension of jobless benefits from 26 to 99 weeks. Beside the cost to taxpayers for subsidizing unemployment, what could be wrong with that?  According to Harvard economist, Robert Barro, it has actually worsened the unemployment rate. I quote him from his piece in the Wall Street Journal:  “My calculations suggest the jobless rate could be as low as 6.8% instead of 9.5%, if jobless benefits hadn’t been extended to 99 weeks.”

Why?  According to Barro, more compassionate benefits distort efficiency, prolonging unemployment due to insufficient job search.  Unemployment was higher in 1982 than now, but it wasn’t as prolonged, because unemployment wasn’t subsidized as long by the taxpayers.

Finally, what about the minimum wage, what could be wrong with that?  Here’s what: it suppresses employment for the least skilled workers in society, teenagers. It especially hurts employment prospects for black teenage males.  A year ago, the minimum wage was increased to $7.25.  Unemployment for these black young men immediately shot up from about 39% to about 50%.

How could it do anything else?  If you require employers to pay people more than what they’re worth, more employers will take a pass.

So, in the name of compassion, we have passed legislation that ultimately hurts the people we’re trying to help.  Feelings trump critical thinking.

So, in the name of feelings, take a few minutes to listen the song above.  It pays tributes to legislation that truly is “nothing more than feelings.”

ObamaCare hurts Health Savings Accounts 4


By Tom Quiner

I am self-employed, the owner of a small business.  In order to control health insurance costs, my wife and I purchased a policy with a high deductible supplemented by a Health Savings Account (HSA).

The high-deductible policy reduced my premiums substantially.

The HSA allows me to save up to $5000 of tax deductible dollars to be used toward medical expenses, including dental, eyeglasses, and over-the-counter medications.

Because I pay many doctor bills directly until my deductible is reached, I have incentive to shop for the best price on prescriptions and some medical tests.  In other words, I am a conscientious consumer of medical products and services.

It makes sense.

Beginning January 1st, ObamaCare will cap my annual contribution at $2500 and will no longer allow me to purchase over-the-counter medications using my HSA (Section 9003).  ObamaCare reduces my benefits and raises my costs.  It creates a perverse incentive to purchase higher priced prescription medications which are deductible.

This is but one way ObamaCare will raise healthcare costs for middle America.