FOR IMMEDIATE RELEASE, December 17, 2014


Back in 2011, Governor Peter Shumlin promised, “We will only go ahead [with Green Mountain Care] if we’re th-3convinced together as a state, that the system is better than what we have, that it costs less, it’s going to help create jobs, and we’ve got the cost containment system right. If we can’t do that, we’ll take our marbles and go home.”

Today he kept that promise amidst the realization that single payer healthcare will do none of those things.

The Administration’s tax policy expert Michael Costa’s press conference presentation showed that Green Mountain Care would require $2.6 billion in new taxes, not the $1.9 -$2.2 billion most recently forecast.

A single payer plan that might have been affordable (an 80% actuarial plan) would not have been better than what we have now, but rather “a step backward.”

Far from helping to create jobs, the 11.5% payroll tax needed to pay for the program would have decimated Vermont’s small businesses, and dealt a serious blow to the state’s ERISA employers, who would have had to pay twice (both taxes and premiums) to keep their current plans.

As for cost containment, Costa’s numbers show Green Mountain Care moving into the red just four years into its existence.

In addition, the promised hundreds of millions in cost savings were non-existent, Shumlin’s optimism for getting necessary federal waivers was misplaced, and the complexity of being a small state going it alone was naively underestimated.

The question that remains here is why did it take so long for advocates to realize what has been so obvious since very early on in this process? All of these “realizations” have been pointed out numerous times over the three-and-a-half years by critics of Green Mountain Care, including the Ethan Allen Institute.

EAI president Rob Roper said, “The high costs and practical roadblocks that doomed Green Mountain Care have always been there to see for those willing to look. We are proud to have played a role in educating the public as to the many pitfalls of single payer, and are gratified that the ill-conceived program is dead, at least for now. We are, however, sorry that three plus years and millions of dollars were wasted unnecessarily.”

Reform of our healthcare system is necessary, and now that the government-run solutions have proven a failure, it’s time to look at some realistic free market solutions that will reduce costs, expand coverage, and attract new doctors to the Green Mountain State.

###

Contact: Rob Roper
President, Ethan Allen Institute
802-999-8145, rob@ethanallen.org

 

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posted by Rob Roper

Paul Cillo of the Public Assets Institute posted remarks he made at the Vermont Digger forum on education finance crisis. He opened by saying, “What crisis?” then launched into series of charts, graphs and equations that illustrated, to his thinking, how Vermont’s spending on K-12 education is a model of sustainability that we should all be delighted with.

The numbers are well and good (though arguably cherry picked), but ignores the fact that on the campaign trail every candidate I heard from said that property taxes were the number one concern of their constituents. Imagine going into your doctor’s office complaining of severe chest pains only to have the MD tell you you’re wrong. You’re not in pain at all. Get outta here. You’d hit him over the head with that little rubber mallet they use to test your reflexes! Or at least you’d be tempted to.

Which gets us to the moral crux of this issue (and long time pet political peeve of mine). We so often hear left-wing politicians saying that they’re just “asking” taxpayers who “can afford to pay a little more,” so get out your wallet and pony up. First of all, they’re not asking. They’re taking the money, and using government’s monopoly on “legitimate” violence to do so. Second, who are they to be telling us what we can afford?

My 14-year-old son keeps insisting I can afford a fancy sports car. (If only I’d pay my fair share!) Maybe… if we downsized our house, and stopped putting money into his college fund, and somebody put a gun to my head perhaps we could buy it. But it’s not a good use of resources, and I am not willing to spend money on that. And that’s the key word people like Cillo and too many legislators in Montpelier aren’t interested: willing.

In a system based on political power coming from the consent of the governed, “willing” must accompany “able.” Willing and able. Each individual has different priorities. We are all trying to feed our families, put roofs over our heads and pursue happiness where and when we can.

So, it doesn’t matter, as Cillo points out as his exhibit A, that education spending has held relatively steady between 5% and 6% of Gross State Product. What matters is how that reflects in the bill each of us gets every quarter and how big (and bigger) a bite it takes out of our disposable income. Clearly, the current amount is more than a majority of us is willing and able to pay.

Policy makers who don’t realize that are not listening to the people they represent.

- Rob Roper is president of the Ethan Allen Institute

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by Tom Licata
.
Progressivism – so pervasive in today’s Democratic Party – is the ideology of American suicide and specifically of American Constitutionalism. This is the fourth in a series of writings dissecting and analyzing Progressivism’s ideological beliefs and ideas, to which the just stated conclusion will become self-evident. “Suicide” is an emotive term but here I use its cognitive ‘self-inflicting’ meaning. That is, the demise of American Constitutionalism is coming almost entirely from internal or domestic sources, rather than external or foreign.
.

The frameworks of these writings are largely taken from James Burnham’s 1964 work, “Suicide of the West,” a detailed analysis of liberalism’s history and beliefs, which ends in the conclusion that “Liberalism is the ideology of Western suicide.”

*          *          *

Progressivism predicts that the progress or ‘ideal society’ they envision is justified by the five Progressive beliefs or “symptoms” outlined in earlier writings, summarized here: Human nature (moldable with an almost indefinite potential for human development); Rationalism (where reason and science, not nature and revelation, are man’s essence); Obstacles (where obstacles to progress aren’t derived primarily from man’s nature but from external and correctable societal conditions; Anti-Traditional (where the legacies of the past are predominately the cause of today’s injustices and prejudice); Historical-optimism (Because humans are nearly “perfectible” and rational and most obstacles to progress are external and remediable, the Progressive realization of progress is inevitable). These five beliefs compose the formal structure of the “ideological syndrome” known as Progressivism.

We’ll now look at three means by which the progress or ‘ideal society’ that Progressivism sees as possible will be carried-out in practice.

Maximilien de Robespierre – leader of the Jacobin Club during the French Revolution’s Reign of Terror – instituted a system of free, universal education in order to instill his liberal vision into France. And ever since, this means of controlling education for ideological ends has been a tactic of liberals and today it explains why school-choice is so vehemently opposed, as controlling instruction is essential in instilling Progressive ideology.

“Ignorance” – as one of the two external obstacles to Progressivism’s ‘ideal society’- is overcome by using this means of free, universal and rationally-based education. But it’s not just any “education” that will do; rather, it must be a controlled “Progressive education” where any threatening “non-rational” or “irrational” beliefs are either discarded or reinterpreted. As Mr. Burnham writes, “…the purpose of genuine education as understood by liberalism is, precisely, to liberate the mind from the crippling hold of custom [i.e. a nation’s history or founding principles] and all non-rational belief [i.e. religion].”

“Bad institutions” account for the second of the two external obstacles to Progressivism’s ‘ideal society.’ And the means to overcoming these obstacles are found in social, economic and political reform.

Bertrand Russell, the early 20th century philosopher perfectly captured Progressivism’s sentiments for these kinds of reforms. Russell summarized three obstacles facing man: that from physical nature (e.g. death, pain); that from character or ignorance; and from power. And from these, he wrote: “The main methods of combating these evils are… for physical evils, science; for evils of character [meaning ignorance], education…; for evils of power, the reform of the political and economic organization of society.”

So if Progressivism’s ‘ideal society’ is obstructed by the underlying “evils” of poverty, crime, juvenile delinquency, urban blight, etc.; and if these “evils” are the results – not of man’s fallible nature – but of the external obstacles of man’s ignorance and faulty institutions; then it follows that eradicating these “evils” requires eliminating man’s ignorance through Progressive-controlled education and eliminating faulty institutions through the fundamental transformation of America’s existing social, economic and political order.

And therefore Progressive logic concludes that there’s no rational basis for “blaming” criminals for crimes or teenagers for delinquency, as it’s not “their fault” that society either improperly educated them or provided inadequate institutions.

And lastly what follows is the third means by which Progressivism’s ‘ideal society’ will be made possible: For now the soil is fertilized not for a limited, self-government and rule-by-law retributive criminal justice system; but for an almost unlimited, social service Welfare State and “rule-by-empathy” permissiveness.

If it’s not already self-evident that Progressivism and American Constitutionalism don’t go together and are mutually exclusive, then read the first three of this series (found here: http://ethanallen.org/progressivism-the-decline-of-the-west-part-3/) and the fifth, coming out shortly.

– Tom Licata is a member of the Ethan Allen Institute board of directors

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Posted by Chris Campion

Paying for health care, no matter what the payer vehicle is, is simultaneously a complex and simple idea.  Costs are incurred when care is delivered, and someone has to pay for those incurred costs.  How that payment occurs, however, is the crux of the issue, and has become more of a political football than a rational discussion about costs, revenues, and the delivery of care.

As VPR notes, there are those in the legislature that have had and continue to suggest ways to pay for the uninsured.  In some instances, though, they seem to be putting the horse before the cart.

Gov. Peter Shumlin will unveil his single-payer financing proposal later this month. But a powerful Senate lawmaker says the Legislature might want to spend less time this year talking about how Vermont pays for health insurance, and focus instead on making sure everyone is getting it.

Few people in the Legislature will have more influence over the health care debate in than Sen. Tim Ashe. The Chittenden County Democrat not only chairs the committee that handles tax matters for the Senate, he’s also the Senate President’s most trusted advisor on health care reform matters.

Ashe says he isn’t necessarily opposed to pursuing a publicly financed health care system. But he says the payroll tax on employers that would be needed to fund it will make it a difficult goal to attain, at least in the short term.

Senator Ashe well understands that the payroll tax will not only fail to raise enough money to cover the estimated $2.2 billion required to finance Governor Shumlin’s single-payer plan (and $2.2 billion is the low end of the estimate), it will also have a potentially catastrophic effect on small businesses, as they will not be able to absorb that large of a cost increase.

If you remove the idea of insurance from this requirement, and just think of it as a cost that gets added to a business with  no offsetting revenue, then those businesses that are already operating at the barest margins of profitability will slide into the red.  Businesses that can absorb this cost are largely providing insurance coverage already; those that cannot, will not, and it will either force businesses to cut costs, staff, hours, and/or force Vermonters onto the state exchange.  Which is likely the goal, anyway, to make all Vermonters, regardless of current coverage, to enroll in their state-mandated insurance coverage through the state.

Senator Ashe keeps the idea simple, which is a good place to start:

“I believe people across the political spectrum believe that every person in Vermont should have health insurance,” Ashe says. “So, I believe that at a minimum we should come out of this legislative session with a plan for how we’re going to get everybody health insurance.”

Here’s what I believe – I believe having insurance does not make one healthy.  I believe having insurance does not guarantee access to medical care.  I believe having insurance does not affect what decision a doctor makes in the emergency room and the patient is bleeding out.  I have auto insurance, but that won’t stop me from getting in an accident.

“I believe, I happen to have a radical belief, which is that we can provide insurance to every person in Vermont without raising a penny,” Ashe says.

Assuming you can increase the number of people covered under insurance without increasing the costof said insurance does not make sense.  Would that make sense if the state said we’re going to make all Vermonters who don’t currently drive a car purchase auto insurance?  Wouldn’t they have to pay for the coverage, in some way, or have someone else pay for it through taxes?  You can’t increase the insured pool size and not expect the insurance costs to go up.

But this misses the larger point.  Having access to insurance isn’t the goal; having access to health care is the goal. An insurance card won’t stop an arterial bleed; a hospital, physician, and nursing staff will.  And as Medicare so ably demonstrates, having insurance does not mean you have access to health care.  It’s quite the opposite, as it  turns out.  The fact that the government’s existing version of single-payer (Medicare) is simply a cost-shift to commercial insurance carriers means, as always, that costs cannot be wished away under the guise of the state’s beneficence.

Ashe has two ideas to help fund this universal coverage, first:

Ashe says he would accomplish this task by taking all the money Vermont already spends on health care for the uninsured, and using it to buy insurance for them instead. He says the state would likely need to find additional dollars as well. And for that money, he says he’d look to the largest cost centers in the health care system: hospitals.

First, Vermont long had a system for insuring the uninsured, called the Vermont Health Care Assistance Program (VHAP).  It’s what a hospital would sign a patient up for if they showed up at the hospital with no insurance.  A state allocation, partially funded by taxes levied on hospitals, provided the dollars to this fund to insure those people who sought or needed care at the hospital, but had no existing insurance.  This program was already up and running, and working.  The only net benefit from taking the dollars from this and issuing insurance cards to the uninsured is to, well, make sure the uninsured have insurance cards, and to claim that the state provides universal coverage.  In other words, no net tangible improvements to anything, but the state can claim they’ve insured everybody.  Which was already occurring.

The state also collects a provider tax, which also goes, in part, to cover the uninsured – so the hospitals are already paying for the uninsured out of their revenues.

And the second idea:

Ashe says the state could take a number of approaches to curbing administrative costs at hospitals. But he says he doesn’t think it makes sense for either legislators or members of the Green Mountain Care Board – the five-person panel that regulates hospital budgets – to be micro-managing medical centers.

This is not a new idea, and not new to any organization that’s trying to reduce costs.  That said, assuming that, by whatever vehicle, hospitals will simply find administrative cost savings if mandated to by the state means that the legislature thinks the hospitals are already wasting a lot of money.  Even if the legislature states that they are not qualified to tell hospitals how to cut costs (as Ashe does above), yet somehow, miraculously, the legislature just simply knows that there are administrative savings to be had, it absolves the legislature of the responsibility for any cuts that are made, even if the legislature does not mandate which cuts be made.  It’s a fundamental contradiction:  if you state that you’re not qualified to tell someone how they should cut costs, how can you possibly know that they should be able to cut costs in the places you think should be cut, i.e., administrative costs?

But by then taking “cost savings” from a hospital and applying them to funding for the uninsured, along with providing insurance from the pool of dollars that’s already in place to insure the uninsured, misses the largest and most critical issue as to why insurance rates go up at such a high clip:  The government’s existing version of single-payer does not cover costs, and creates a cost-shift onto commercial payers to cover the difference.

In the 2014 Green Mountain Care Board’s approved 2014 budgets for Vermont hospitals (p. 17), the cost-shift to commercial payers is detailed, and explains why those commercial rates climb so much every year – because the Medicare and Medicaid reimbursement rates do not cover the costs of care (let alone the free care and bad debt piece of the hospital’s lost revenues):

GMCB 2014 Budget Cost Shift Summary

The amount shifted and given away has roughly doubled in 6 years, from 2008 to 2014:

Cost-shifting made easy.

These are hundreds of millions of dollars that are absorbed almost completely in rate increases for commercial insurers.  Those shifted costs of care cannot be found in future administrative reductions.  There’s no rational way to assume that a hospital is sitting on $100 million in administrative reductions, but just hasn’t quite gotten around to it yet.

That said, had the state not spent $100 million on an “exchange” that has done nothing but increase overheads and not deliver one additional second of patient care, well, that’s 25% of the annual cost shift that’s occurring right now.  The same state that’s telling Vermonters that it knows that costs can easily be reduced, while ignoring this fundamental reason for the increase in commercial insurer rates:

Look at those costs go down!

Vermont’s aging demographics are the primary reason why those shifts have become larger over time, and that does not look to change in the near future.  If you have more people receiving care under Medicare, then the shift can only get larger, and cutting back an IT budget line will not make up a fraction of that difference.

The real culprit in the cost-shift is not the patient, the hospital, or the state legislator – it’s the US government’s version of single-payer, which does not cover costs, and happily shifts that responsibility onto the backs of those people currently working and paying for insurance through their employers, or the self-insured.  It’s not only a cost-shift, it’s an income shift – an income re-distribution, one not voted on by elected representatives, but one made possible through decades of bureaucratic sclerosis and an abdication of responsibility by the US Congress, which continually fails to address its own mistakes, and the massive unfunded liabilities it has created.

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by John McClaughry

A week ago Citizens Climate Lobby “group leader” Rick Wackernagel published a piece in the Burlington Free Press trying to sell Vermonters on a carbon tax.

In it he repeated that  “97 percent of active climate scientists agree that global warming is real, serious, and caused mainly by human activity.”

This number originated with a quickie survey of 10,257 earth scientists.. The two University of Illinois researchers excluded the solar and space scientists, cosmologists, physicists, meteorologists and astronomers who might have thought that the sun and planetary movements might have something to do with Earth’s climate.  They reduced the initial list to 3,146 who responded to these two questions:

1. When compared with pre-1800s levels, do you think that mean global temperatures have generally risen, fallen, or remained relatively constant?

2. Do you think human activity is a significant contributing factor in changing mean global temperatures?

Ninety percent of the respondents answered “risen” to the first question, presumably assuming it referred to the pre-1850 Little Ice Age.  Eighty two percent of the respondents answered “yes” to the second question.

Those percentages weren’t impressive enough, so the researchers reduced the sample until only 77 remained.  Seventy five of them said “yes” to both questions, producing the desired “consensus” finding that “97% of “active climate researchers” believe that humans are a significant cause of global warming.”

This manufactured “consensus” is obviously dishonest, and it won’t be the last bit of dishonesty offered up by the carbon tax advocates.

- John McClaughry is president of the Ethan Allen Institute. www.ethanallen.org

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by Rob Roper 

Peter Shumlin’s push for a single payer healthcare system has been a disaster for Democrats, and it looks as if things will only get worse as the plan proceeds into the next biennium. Since details of the funding package were leaked earlier this week, everyone’s disgust with the plan has only amped up.

Former allies of single payer from the Workers’ Center and other left wing groups are angry over the benefits package and what they perceive to be a lack of progressivity in how single payer will be paid for. Companies who self insure under federal ERISA laws – some of the largest and best employers in Vermont — look like they’re gong to face a double-hit if they want to keep their current plans. Small businesses that currently don’t offer insurance are facing possible extinction at the hands of a new 8% payroll tax. Middle class Vermonters are looking at a major tax increase. Almost nobody is going to like this.

In the last election, Democrats who stood by the governor lost eleven seats in the legislature, including the chairman of the House Healthcare Committee, Mike Fisher, despite the fact that Republicans only fielded 80-some candidates for 180 total legislative seats. Two years from now, if the single payer debacle continues apace, things could be much worse for the majority party.

But, they have a way out.

By electing Milne in January Democrats could rid themselves of the anchor around their neck that is Peter Shumlin, kill a program that looks like it’s destined for the graveyard anyway, and shift the blame for its demise or ultimate failure onto a Republican governor who never campaigned strongly against single payer, and even said he would consider it. And, they can do all this anonymously behind a secret ballot! Every Democrat, unless the vote is unanimous, which is not likely, would have plausible deniability with their constituents.

Given that Milne is not organized to run the government (he has not made any meaningful plans to transition into the role of governor or done any serious work to formulate a budget that is due in January) and is a political neophyte, one can surmise that a tremendous amount of power would shift to the legislature. Quite a temptation for the Speaker (who many think is eyeing a run for governor in 2016 anyway, and this would clear an easier path) and the Senate President Pro Tem as well as the committee chairs.

A Milne governorship, if he does not rise to the occasion, could kill Republican momentum.

Perhaps this is why Democrats have not come out in full-throated support for Shumlin in the upcoming legislative vote to elect the Governor in January. And perhaps Milne, who has been misunderestimated consistently in this campaign, knows what he’s doing by staying in the race.

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by Frank Mazur

We must curb the federal government’s abuse of power.  Our constitution is ignored by the President and courts.  O’Care focuses on redistributing wealth and the IRS is used as a weapon for political reprisal against those who dissent.  Our judiciary can’t be relied on to follow the constitution and often legislates rather than interprets the laws.

The Democratic Party is driving an agenda where nearly 50% of our society is entitlement driven.  The Republican Party is too afraid to fight for their principals.  The three branches of government act as one: rather than checking and balancing each other, they are reinforcing each other.

Our elected officials ignore us and cater to lobbyists’ money.  What can we do?  Our founding fathers gave us an option in Article V of the Constitution: “Convention of the States” (COS).

Article V allows state legislators to call a COS in order to limit federal power in the event of their overreach.  Once 34 states request a COS any constitutional changes adopted by 2/3 present would require approval by ¾ of the states.

A COS could address a federal balanced budget amendment, states’ overrides of burdensome regulations as well as impose Congressional and Supreme Court term limits.

The call for this COS is gaining steam with ~25 states expected to file application during 2015.  Constitutional expert Mark Levin indicated without change our “economic system and society will collapse.”  Only state legislatures can provide a check on Washington and restore power where it belongs:  the states.

- Frank Mazur is former chair of the Vermont House Transportation Committee, and a former member of the Ethan Allen Institute board of directors.

 

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by John McClaughry 

The House Speakers’ task force produces three dubious plans to hold the line on property tax rates – but it ignores the one promising solution: parental choice and provider competition.

John McClaughry*          *          *

Governor Shumlin and the legislative leadership have recently discovered that Vermonters are really, really unhappy about ever rising school property taxes. In a commentary published December 3, the governor observed quite correctly “We all know that rising property taxes to fund education have put an unsustainable burden on Vermonters. Despite a steady decline in school enrollment over the last two decades, property tax payers have not seen a decline in their property taxes; they’ve seen the opposite.”

He didn’t think to mention that education property taxes do not just “rise”, like cream to the top of a milk pail. Somebody has to “rise” them, and the signature on the bills that increased the homestead property tax rate from $.89 to $.98 per $100 of fair market value – and will soon increase it to $1.00 – is and will be Peter Shumlin’s.

Recall, it was Sen. Peter Shumlin who in 1997 steered Act 60, the education finance “reform” law, to enactment. At the time, critics argued that the funding mechanism for that Court-driven state takeover of public education would break the essential restraining link between voters and spending. Some of the supporters scoffed at that possibility; others welcomed the state takeover.

Eighteen years later we have come to a situation where not increasing the homestead school property tax rate would be more painful than increasing it another two cents. Not raising the rate, by itself, would cause a $42 million shortfall at a time when the General Fund is facing a deficit of $100+ million. Either that shortfall has to be made up by other taxes – very painful – or the Agency of Education must be given the power to force school districts to reduce their voter-approved budgets. That “solution” has never been attempted in the past 227 years.

House Speaker Shap Smith created a working group to find an exit ramp from this politically dangerous highway. The ten-member bipartisan group has produced three exit ramps.

The first is the “renovation plan”. The core of that plan is state mandates to increase local pupil-teacher and pupil-staff ratios, both of which are the lowest in the nation.

Or, alternatively, make local taxpayers financially liable for the high costs of a low pupil-staff ratio. That would violate the redistributive principle of the Brigham decision underlying Act 60.

The second model is a “variable income tax”. This alternative features uniform state-set property tax rates. District voters who wanted to spend more than the state-provided amount would have to raise the funds through a local income tax surcharge. This also flies in the face of Brigham and Act 60.

Then there’s the “regional block grant” model advocated by Rep. Oliver Olsen. This is based on complete state responsibility for education spending. The state would distribute the tax dollars it raises to “regional entities” (no further information available), through which it would flow to local school districts.

Doubtless unbeknownst to Olsen,  in 1967 New Brunswick had a public school system almost identical to Vermont’s in 1996.Then it started down Olsen’s Highway by enacting its “Equal  Opportunity Program”.

The result (from my commentary of July 1998): “A province-wide education property tax…The installation of local ‘Directors of Education’ accountable to and removable by the Ministry. The statewide teachers’ contract. The conversion of superintendents to state employees. Abolition of local school boards as wasteful overlapping bureaucracies. Reduction of “local control” to input sent to the Ministry from PTA meetings.”

“The only curious part of this story is that it took New Brunswick 30 years to achieve the centralized, unitary school system that is the inevitable result of full state funding of local schools. Barring a political revolution, the same results should be attained much more quickly in Vermont.” We are now 18 years into Act 60, and – if Olsen is successful – it looks like we will reach New Brunswick’s condition sooner than they did.

Fortunately, there is an alternative path for Vermont (from 2006): “Give up the bureaucratic, centrally controlled public school monopoly system, which guarantees steadily rising taxpayer costs regardless of the number of pupils, and regardless of their mediocre achievements.”

“In its place, empower all parents with scholarship money to pay for their children’s education at any of a wide range of competing programs: public schools, independent schools, faith-based schools, charter schools, Internet-based virtual schools, employer- and union-run schools, mentoring programs, career-study programs, whatever arises to meet the demand in the marketplace, many of them at lower cost than the public school system.”

The “parental choice and provider competition” model is gradually becoming the future of 21st Century American education. Why not here?

- John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org).

 

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By John J. Metzler

UNITED NATIONS–The precipitous fall in petroleum prices has brought an unexpected holiday season bonus to oil and gasoline consumers throughout North America.  And it’s not a moment too soon that the high fuel prices of the past few years finally take a dip.  But while cheaper costs, both for private drivers and the wider trucking and transportation industry, happily align with the upcoming holidays, there’s actually a bigger story here.

Over the past few years the USA’s anemic economic growth has been hampered by excessive regulation as well as the yet unforeseen cost consequences of Obamacare.

Despite mega trillion-dollar public spending by the Obama Administration, the U.S. economy is doing only marginally better.  The better news is due not so much to the hand of government but the business cycle, which after the long dark years since the 2008 crash, has apparently turned.

Despite the Obama Administration’s cumbersome economic planning, it’s more likely that the hidden hand of market forces, as foreseen by the great Scottish economist Adam Smith, have driven an expanding American energy supply boom. There’s also a temporary falloff in demand.

Serious American domestic energy production (oil and gas) is turning the USA and Canada into a dynamo, happily far less dependent on the Middle East. This outcome presents a win-win situation.  Average U.S. gasoline prices have dropped from $3.87 in Summer to approximately $ 2.71 today and may fall another 20 cents per gallon by year’s end according to the American Automobile Association (AAA).

But the real story here besides lower prices at the pump is that a sustained fall in petroleum prices will provide a needed and unexpected boost to the American economy as a new source of suddenly disposable income becomes available.  This unexpected rebate of cheaper gasoline and heating fuel can realistically put $40-$50 in everybody’s wallet weekly,  across the board, and at a time of year when people wish and want to spend more.  Some economists predict that the spending bonus will cause an extra 0.4% rise in GDP this year.

This is a good thing for North American consumers.  Equally it is a windfall for poor developing countries who are particularly hostage to OPEC’s high oil prices.  Most countries’ economic growth is linked to global petroleum prices.   Thus for the Third world, this is a short to medium term positive situation.

Yet there are other angles to the story. Economies like Mainland China and much of the European Union experiencing a moderate slowdown, has translated into falling fuel demand.  And as mentioned, increased American domestic production is largely the reason for the price dip.  This too is certainly cyclical.

For oil producers such as Russia whose economy is overwhelmingly dependent on energy exports, the fall in the per barrel oil price can be devastating.  According to the IMF, Moscow needs an oil price of $105 per barrel to balance budgets.  Russia can weather an $80 price, but the current numbers in the $67 range will cause serious cutbacks and likely a recession according to Russian government estimates.

Now view this from a political prism.  Vladimir Putin’s Russia which has been buffeted by moderately effective Western sanctions response to Moscow’s actions in Ukraine, (which has hurt European countries more than we realize), is really over the barrel with a steep and sudden decline in the global oil price.   The Rouble, the national currency, has lost 60% of its value this year.

Though the long-suffering Russian people have an amazing capacity to endure, the fact remains what unforeseen political forces will be unleashed by a crashing energy market?  President Putin stated candidly “The times we are facing are hard and difficult.”

This reality is not unique to Russia.  Equally the oil rich Islamic Republic of Iran bases budgets on $131 per barrel and Venezuela at $118.   Again one does not have to be too creative to hypothesize that such regimes with large populations and near total oil export dependency can be rocked by serious economic and political instability.

The major OPEC Middle East producers such as Saudi Arabia and the Gulf states such as Kuwait, Qatar and the United Arab Emirates while dependent, have small populations and are moderately well insulated from the current crisis by huge foreign reserves.

So there’s finally some positive news as a dangerously tumultuous year nears its end. Still the market forces which bring this dose of good cheer are very likely to change yet again.  In the meantime, there are not many people complaining about cheaper gas prices at the pump.

*******************

John J. Metzler is a United Nations correspondent covering diplomatic and defense issues.  He is the author of Divided Dynamism The Diplomacy of Separated Nations; Germany, Korea, China (2014).

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Posted by Rob Roper

Recently released emails between Jonathan Gruber and top Shumlin administration officials reinforce the suspicion that the MIT professor cannot be an impartial judge of whether or not the financing system for Green Mountain Care is feasible.

Critics of Gruber, such as the Ethan Allen Institute, believed that a statement made by Gruber in captured video in which he admitted participating in misleading the American voters about the Affordable Care Act because, “I would rather have this law than not,” made it difficult to trust any conclusions he might make about GMC.

On December 7, the Times Argus reported on the new emails that have come to light:

In a July 7 email to Michael Costa, Shumlin’s deputy director of health reform and the tax expert spearheading the administration’s financing plan, Gruber expressed unbridled enthusiasm at the opportunity to help the state craft a single-payer health care plan.

“[T]hat was an AWESOME call. Thanks so much for making the time. I am really excited to work with you all — I think we have the chance to really make history here.”

So would Gruber mislead Vermont voters because he’d rather make history than not? With over $2 billion at stake, we have to assume the answer is yes. He is clearly not an impartial arbiter, but an enthusiastic advocate. This disqualifies him for the job he has been hired to do.

- Rob Roper is president of the Ethan Allen Institute

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