In This Issue:
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1. Silver Lining?
2. A Self Inflicted
Wound
3. Forced Compliance
4. Money Down a
Rat Hole
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Budget Deficit May Have a Silver Lining
 “This is not a time for big new programs.”
-Governor Jim Doyle, in his January 23, 2009 State of the State Address.
Governor Doyle uttered those words even as his administration was finalizing plans for a costly new health care program that would force small businesses (defined as between 2 and 50 employees) to offer health care to their workers. The new plan known as BadgerChoice was widely expected to become part of the Doyle budget despite the ever increasing $5.7 billion state budget deficit.
But today free marketers have reason to celebrate as the Governor announced that his Badger Choice program, with an anticipated price tag of $100 million, would be a casualty of the budget deficit.
At first blush, merely requiring small businesses to offer health care, while a job-slaughtering proposition, doesn’t appear to cost the state any money. Proponents of the program say that it will increase the size of the insurance pool, leading to lower rates. But as usual, the devil is in the details.
These health plans would be subjected to “rate band” regulations, which dictate what insurance plans can charge for their services. The proposed Badger Choice program would limit health plans to charging 15% over or under their midpoint, for a 30% rate band. The main “benefit” of these limits is to make health coverage less expensive for a small number of extremely expensive patients, who pay less with the cap in place.
Smart people will immediately note the downside of this scheme – if a few really expensive people are paying artificially low premiums, a large number of inexpensive people will be paying more. In fact, while the rate bands provide a cost ceiling for expensive health care consumers, the restriction on selling premiums at more than 15% below the midpoint serves as a floor. It actually mandates higher health care costs for a large number of people.
The only way the Badger Choice program can be politically viable is to heavily subsidize the program with state funds, to prevent massive layoffs from small businesses that now have to offer health care to their employees. Some estimates have pegged this number at around $100 million – and, as we all know, once a health care program gets the green light, it always grows rapidly. The Badger Care Plus program signed into law by Doyle last session was $25 million over budget within months of going into effect – there’s no reason to believe Badger Choice will be any different.
In fact, Doyle’s best friends might be the Wisconsin Senate Democrats, who insist on pushing a politically unpopular single-payer, government run health care system down the throats of Wisconsin residents. This would be a $15.2 billion tax increase that would attract sick people from around the nation to take part in free health care paid for by Wisconsin taxpayers. Doyle’s Badger Choice almost looks reasonable by comparison but it’s really like asking taxpayers if they’d rather be stabbed or shot.
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The State Budget: A Self-Inflicted Wound
For months, Doyle has been trying to convince the public that the state’s $5.7 billion budget deficit is entirely the fault of the recession. But a new study by the Wisconsin Policy Research Institute reveals how the state’s budgeting practices have driven the state budget off the cliff.
According to the study, Wisconsin politicians have stolen over $2.4 billion from various state accounts in the past seven years (primarily the transportation fund) to plug holes in the general fund budget. The state in turn uses excessive bonding to fill the Governor's insatiable need to keep spending. As a result, the state’s deficit keeps growing and growing and growing.
Since 2004, state general fund spending has increased by 25%. Had spending merely been limited to inflation (our ability to pay), the state would be spending $943 million per year less. In a two year budget, that means the state has caused almost $2 billion of the budget shortfall by spending more than taxpayers can afford.
Other budget strategies have also helped dig this hole. For instance, the state routinely takes general fund programs and shifts them to other accounts to make it look like money is being saved. In fact, the program is still being paid for, only out of a different account. The state has also used increased debt to finance ongoing programs, and has set aside virtually no rainy day fund to help during economic downturns.
When the 2009-11 budget is introduced next month and filled with tax increases, look for elected officials to blame everyone but themselves for the financial mess we’re in. In fact, our lawmakers are the only ones to blame, and we should finally hold them accountable at the ballot box.
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Forced Compliance
Last year, Governor Doyle’s “Global Warming Task Force” issued a report making recommendations on how Wisconsin can do its part to prevent climate change. The report, which most people recognized would kill jobs and hike the cost of energy, was dismissed by many as environmental extremism gone awry.
Yet the state’s Public Service Commission isn’t laughing. In an incredible abuse of power, the regulatory panel is trying to force utilities to lobby the state legislature in favor of this global warming quackery. The move was so blatantly arrogant that even the left wing Citizen Utility Board was taken aback.
From the Milwaukee Journal Sentinel:
A Green Bay utility says state regulators overstepped their bounds and violated its free-speech rights by requiring that the company lobby the Legislature in support of Gov. Jim Doyle's global warming task force.
The bill reflecting the findings of the task force has not yet been drafted. But language in a Public Service Commission decision that set electricity rates for customers of Wisconsin Public Service Corp. tells the utility that it "should" support a proposal adopted by the Global Warming Task Force last year to expand the amount of renewable energy used in the state by 2025.
"This is kind of like a police officer picking up someone for speeding on I-43 and saying, 'If you write a check to the Police Benevolent Association, " said Rep. Phil Montgomery, we'll forget about this whole speeding deal,' (R-Ashwaubenon), the leading voice in the Republican caucus on energy issues.
So you have a state regulatory commission forcing a business to act against its own interests even though the benefits of those actions are highly questionable. When you see your utility rates rise as a result of these strong-arm tactics, you can thank Jim Doyle and his Public Service Commission for their commitment to bogus, job-killing research.
Money Down a Rat Hole
Several months ago, the Milwaukee Journal-Sentinel printed an outstanding multi-part series on what a failure the Neighborhood Schools Initiative has been for the Milwaukee Public School System. Years ago, the state spent over $102 million on new buildings that currently sit vacant, as kids continue to choose to move to schools in better neighborhoods.
Yet the federal stimulus bill, which aims to spend $1 trillion in special interest money to get the economy going again, apparently will send another$88 million to MPS to – you guessed it – build more buildings. Why the feds feel the need to build more buildings for a school district whose population is shrinking, while buildings are already sitting empty, is beyond comprehension.
Maybe they could use the $88 million to buy iPods, Xbox 360’s and plasma TV’s to encourage students to attend the 15 currently empty school buildings that cost taxpayers $102 million.
Look on the bright side: The empty MPS schools are among the only ones that aren’t failing Milwaukee's kids.
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