And The Private Sector Shall Lead Them

Contrary to popular opinion, this is not a positive outcome.

Contrary to popular opinion, this is not a positive outcome.

The Vermont Department of Labor recently published the October 2014 unemployment numbers, showing an unemployment rate of 4.4%, matching September’s adjusted rate of 4.4%.  But let the Commissioner’s Message speak loud and clear so all can understand what’s going on with employment in Vermont:

Vermont employers are reporting increased opportunities throughout the state. During the summer months, there appeared to be some signs that the economic expansion was slowing.  Recent data from Vermont businesses are pointing in a different direction — towards ongoing economic growth in which jobs are being created and filled; and it is the private sector leading the way.

First of all, let’s correct the Commissioner’s thinking here:  There are 200 more unemployed people in October than there was in September.  That doesn’t seem to comport with the idea that businesses are “pointing” in a different direction, if, indeed, businesses are allowed to “point” in directions othen than that the State Board of Business-Pointing approves of in its annual review process.

An increase in the number of unemployed – and seasonally adjusted, by the way – does not reflect a “different” direction.  In fact, if you look at the state’s own numbers on this (which apparently the Commish here is not wont to do), the October 2013 to October 2014 trend in the number of unemployed is going up, not down.  Numbers courtesy of the VT Dept. of Labor:

It's pointing in a direction, all right.

It’s pointing in a direction, all right.

Vermont’s labor force is holding more or less steady at 350.6K, without a lot of variation in 2014.  The ideal situation would be a growing labor force, though, not a “hold steady” – and just to keep things in perspective, Vermont’s peak labor force for the last 38 years was in March 2009, at 361.8K.  It has gone downhill from that peak number ever since.

To compare that highest historical labor force number to 2014, the lowest monthly total in 2014 was 350,150 in August.  This means our labor force 5 years ago was roughly 10,000 people stronger than it is today – yet we’re told we’re heading in a “different direction”.  Well, the direction is different, that’s for sure – it’s different from what Vermonters would like to see.  This can more simply be called The Wrong Direction.

Similar numbers are reflected in the prior year as well:

Looks a lot like this 2014, for some reason.  Golly.

Looks a lot like this 2014, for some reason. Golly.

So, to help the Commissioner out, here’s what Vermonters really want (and yes, I’ll claim to speak for all of them today):

A growing labor force.

Higher number of employed Vermonters.

Lower number of unemployed Vermonters.

That’s what Vermonters are looking for, not claims that Vermont is creating and filling jobs.  Because Vermont isn’t doing that, it’s that simple.  How can you tell?  Let’s try looking at averages for the Labor Force, Employment, and Unemployment for the past 5 years (Oct-Sept timeframes):

The number of unemployed drops, but so does labor force participation - which gives VT it's magically low unemployment numbers.

The number of unemployed drops, but so does labor force participation – which gives VT it’s magically low unemployment numbers.

While the number of unemployed is dropping, it drops in direct correlation to the number of people dropping out of the labor force.  The Employed number remains fairly steady for 5 years, yet the number of people in the labor force is dropping – which means that the jobs outlook is not improving, or you’d see a higher number of employed people, regardless of the labor force participation rate.

What’s also interesting is that while the state claims that the private sector “led the way” (as if this should be a unique event in Vermont’s economic history; shouldn’t that always be the goal?), the state’s seasonally adjusted data shows that gov’t “led the way” at an almost 2-1 margin from September to October.  Total non-farm gain was 900 jobs, with 600 from the government sector, and 300 from the private sector.

Is this what leading from behind looks like?

Is this what leading from behind looks like?

If this is what constitutes good economic news for Vermont, I’d really hate to see what bad news looks like.

Upside Down Humble Cake

Putney’s own Peter Shumlin, still not “officially” governor until a legislature likely votes him in, was recently “humbled” by the close election results.  But apparently not so

Take a bite, guv'nah!

Take a bite, guv’nah!

humbled where he’s actually going to change his tune, according to VT Digger:

“We all know that the two biggest obstacles to prosperity are rising property taxes and rising health care costs that rise faster than our incomes,” Shumlin said. “We need to stem the growth of property taxes and continue to push for affordable quality accessible health care for all Vermonters.”

Shumlin seems to still think it’s OK, though, to grow the state budget at rates that rise faster than Vermonters’ incomes.  We don’t “all know” what the two biggest obstacles are, despite what a humbled Shumlin might say.  Health care costs rise because programs like Medicare and Medicaid do not reimburse at cost, so the shortfall is foisted on the private commercial insurers, that have to raise rates higher than the rate of inflation to cover existing federal “single-payer” shortfalls.  Vermont’s aging demographic worsens this trend, as the percentage of total Vermonters on Medicare and Medicaid go up, the cost-shift is put on a smaller and smaller number of people working who are covered under commercial insurers.

The biggest obstacle is not the fact that property taxes rise – they are rising because the budgets go up, local and state, and the money for education has to from somewhere.  Since we’ve hitched our wagon to the property tax star – and eventually had to change that to react to the reality that property values do not correlate positively with income levels – the would-be Governor is arguing to scrap the state’s property tax system that funds education, whether he realizes this or not.

Worse, Shumlin does not seem to think that the near-smackdown he received on election day wasn’t a vote against his own policies.  From the Rutland Herald:

The governor won’t change what he believes in, according to those close to him, but will look to make stylistic changes and do a better job of explaining to the public why he is pursuing certain policies.

He’s been explaining why he’s pursuing these policies for years now.  Making more noise about them is the solution?  Doubling down on a losing hand does not sound like the choices a rational man makes.

What Shumlin seems to be missing is that Vermont’s economy is failing, slowly, and has been for some time.  There are only two reason the doors stay open for the business that is the State of Vermont:

1.  35% of the state’s budget is federally funded – this is the governor’s recommended budget, by the way:

Aren't wish lists for kids?

Aren’t wish lists for kids?

2.  65% of all personal income taxes collected in Vermont come from households earning $100K+ in income (as of 2012) – a number that goes up every year (tax stats courtesy of the State of Vermont):

Numbers That Only A Bernie Could Love

Numbers That Only A Bernie Could Love

It’s becoming increasingly clear that from a personal income standpoint, the entire state budget is hugely dependent on a tiny number of Vermonters.  They shoulder the increasing burden of being the biggest tax revenue component of the General Fund, the state’s 2nd-largest fund component of the budget, behind the Federal funds and in front of the Education fund.  In fact, of the 312,505 returns filed in 2012, the 100K+ households constituted 12.5% of that number – that’s 12.5% of households coughing up 65% of all net personal income taxes collected.

If more jobs were available – and not the kinds of jobs that the state is forecasting Vermonters can look forward to, like cashier and retail gigs (the biggest “growth” sectors in the state’s own labor forecast) – then you’d have fewer Vermonters struggling with property taxes and health care costs.  Low unemployment numbers does not equal job growth.  Low unemployment does not mean rising incomes, and it certainly doesn’t mean incomes rising faster than the rate of the state’s budget growth.

The state’s tax revenue structure is built upside down.  Vermont is far too reliant on a very small number of households to fund the state budget, and if incomes drop in this small demographic, the state’s budget goes into the tank – which is what seems to be happening right now.

So:  How are we going to pay for single-payer in Vermont, when we can’t pay for our budget now, without it?

Surviving Shumlin’s Budget

Vermont’s tax revenues are unexpectedly drying up, according to Jeb Spaulding, Shumlin’s Secretary of Administration.  From the Vtdigger article:

Good luck, Vermonters!

Good luck, Vermonters!

Financial forecasts predicted more than $115 million would flow into the state’s General Fund during the peak leaf-peeping month. So-called consumption taxes — sales and use, meals and rooms — cleared their targets. But personal income tax receipts fell short by more than $7 million, or 11 percent.

It’s a good idea to think of budgets as a target – you try to hit what you’re aiming at.  In other words, if you’re off a little bit, that might not be a big deal.  But if there’s a major component of your targeted revenues falling short by over 10%, then that’s a miss.  Ask your mortgage company if they’re ok with you “missing” the full payment this month by 10% and see what their reaction is like.

What’s interesting is the revenue component that’s missing its target – personal income tax receipts.  Why?  How can receipts be underperforming when Vermont’s economy – according to Peter Shumlin, anyway – is a juggernaut, featuring low unemployment and boundless opportunity for those who might be involved in an E5-B project or, if you’re extremely lucky, you’re the state’s largest private employer and you’re able to wrangle out a few ducats from the state on your way out the door.

But revenues are off in the form of personal income.  Shumlin’s 2015 budget was based, in large part, on projections of revenue growth from FY2013 data, in July of 2013.  Fy2013 hadn’t yet closed, FY2014 hadn’t started yet, but those FY13 numbers were used in Shumlin’s Fy2015 budget – the budget year we are now facing shortfalls in.

What did Shumlin’s own FY2015 budget recommendations show for YOY growth in the General Fund revenues, through FY2013?  A 1.9% average YOY growth rate (FY2009A through FY14F).

Hey, we've had some tough years here - so let's double our expectations!

Hey, we’ve had some tough years here – so let’s double our expectations!

What did he propose in the FY2015 budget, for an increase in general fund spending?  3.56%, which he describes as “restrained”.

If you ignore prior history, this seems reasonable - which is kind of a big "if".

If you ignore prior history, this seems reasonable – which is kind of a big “if”.

In fact, if you look at the revenue projections from Shumlin’s budget, not just for the General Fund but for other funds, it’s a snapshot of irrational exuberance writ large:

Usually rosy forecasts are actually rose-colored, chief.

Usually rosy forecasts are actually rose-colored, chief.

Even allowing for the recession’s effects on general fund revenue receipts, casually tossing aside the most recent history and projecting rosy growth estimates does not comport with the realities of Vermont’s economy.  Diminishing median household income, middling to awful rankings for business climate, a low unemployment number relying heavily on an extremely low labor force participation rate, and the state’s own workforce projections showing the bulk of job growth at the low end of the salary spectrum, well, that forecast of revenue grow seems to be based much more on wishful thinking than on real, quantifiable data.

The actual performance of the fund, and its YOY increases, coupled with the rescission work that had to be done one month after the FY15 state budget was

A good thing the Fed can print money, or we'd be in big trouble.

A good thing the Fed can print money, or we’d be in big trouble.

passed, seems to indicate that the 2013 forecasts were wildly optimistic.  If you’re trudging back to the statehouse to fix the budget you just spent months finalizing, that means your core assumptions are flawed.  The core assumptions, for the biggest revenue component the state has (excluding federal funds, which make up almost 35% of the budget’s revenues – a fact that should startle anyone who thinks Vermont’s budget is solid), will have to be revisited.

Oh.   And the state’s unfunded liabilities, the fact that the cost for Vermont’s version of single-payer will range into the $2 billion dollar realm, and the state’s (formerly) largest employer had to pay another company $1.5 billion dollars to take its “asset” off its hands does not seem to paint a rosy growth picture ahead, no matter what color the glasses Shumlin’s wearing while he’s crunching the budget numbers.

 

 

 

 

 

Vermont’s FrankenHealth Online: A Belt and Suspenders Approach

Vermont’s single-payer experiment – foisted on the witting and unwitting populace like a massive

It is alive!  Well, not really.  Not if you need it.  Even though we spent $100 million on it.

It is alive! Well, not really. Not if you need it. Even though we spent $100 million on it.

Frankenstein experiment gone horribly and expensively wrong – seems to be flailing badly, just as the gubernatorial election looms right around the corner.  Like most things involved with Vermont Health Connect, the timing couldn’t be much worse, both for the users and for the politicians who have saddled Vermonters with a $100 million dollar “exchange” that doesn’t give them anything they didn’t already have access to.

But hey, it’s the right thing to do, if you’re buying votes looking out for the little guy.  As the Rutland Herald notes:

The state is asking customers not to use the Vermont Health Connect website to make changes to their policies during the upcoming open enrollment period, when it is preparing for a high volume of those requests.

So:  $100 million dollars – roughly 1/3 of the Transportation Fund for 2015 – have been chucked down the money pit and given us a system that will not be available for usage.  “Open enrollment” usually means “Open for enrollment”.

But not in Vermont.  In Vermont, you spend $100 million and you get “closed for enrollment”.  You get phone calls, pencil and paper, and manual labor.  And what does the state have to say to explain why Vermonters are being backhanded, repeatedly, by a failed implementation?  Buy

Where do I sign up for the belt and suspenders subsidy?

Where do I sign up for the belt and suspenders subsidy?

suspenders:

During a briefing Tuesday before the Legislative Committee on Health Reform Oversight, Lawrence Miller, chief of health care reform, told the committee his staff is preparing for as many as 60 percent of health exchange customers to make some sort of change to their policies.

“It’s a belt-and-suspenders approach,” Miller said of preparations as 22,000 households are expected to begin renewing their policies when open enrollment begins Nov. 15.

Miller’s stating the obvious here, which is have a backup plan.  But if the Vermont Health Exchange was never implemented, people could still have still signed up for their health care, either at work, through Medicare (which has been the bulk of “new” enrollees, people who already had access to health care but had not signed up for it), or VHAP (now wrapped under Green Mountain Care).  Which begs the question: Why buy an exchange?

But don’t worry, those tax dollars sure buy a lot of pencils:

The website, however, will not include a page for customers making changes while renewing their policies. Instead, Miller urged customers making changes — either to their policies or to their personal information to determine subsidy eligibility — to do so either on paper or by contacting one of the exchange’s navigators. 

Due to the state’s inherent inability to do much at all, we’re going to spend $100 million to fall back onto pencil and paper, when we didn’t need to, other than to satisfy the political ambitions of a frequently-absent governor.

Health care access was never, and continues not to be, the problem.  Solving the increasing costs of health care was not the problem, either, despite claims of un-bendable cost curves.  The reason that private insurer rates go up so much every year is primarily due to the government’s already-existing single-payer program:  Medicare.  When Medicare doesn’t reimburse at the full cost of care – which it doesn’t – then the costs are picked up by the insurers in the private sector in the form of increased rates.

The cost curve is a feature, not a bug, of single-payer.  Since many doctors refuse Medicare patients, because they like to be able to keep the lights on in their practices, the inevitable conclusion for single-payer is reduced access to health care, as more doctors decide they do not want to participate in a system that doesn’t reimburse them at cost.

Would a mechanic keep his doors open for long if what he was able to be paid by his customers didn’t cover the costs of materials, labor, and overhead?  So why is that same economic premise any different for health care?  Financial reality doesn’t change just because someone is sick; things still have costs.  They cannot be waived away by magical thinking, or by promises by under-qualified and ambitious politicians.

If you really want the insurance rate climb to slow down, increase Medicare reimbursement rates.  That would remove the rate burden off the private insurer, more doctors would participate, and there would be less need for the spending of $100 million dollars on nothing much at all.  This will mean a de facto increase in Medicare withholding, but those costs have to be borne one way or another.  But even now it looks like Medicare won’t be giving Vermont the control and dollars that it anticipated under Act 48.  There’s nothing quite like an undelivered promise about your health

So it's going really well, then?

So it’s going really well, then?

care, right before an election.

Speaking of cost curves, like the Vermont state budget going up 2x/3x the rate of economic growth, there’s another question to be asked: How many Vermonters could have been insured with that $100 million?  Instead of this being forced to ask this question:  How many pencils does $100 million dollars buy?

 

Fed Ends QE While Keeping ‘Considerable Time’ Low-Rate Pledge (Even Greenspan Criticizes QE)

christolicious:

Charts don’t lie. Fed Chairpeople do, though.

Originally posted on Confounded Interest:

Even former Federal Reserve Chairman Alan Greenspan is saying that QE did no good for the economy, but helped assets prices soar (which I have been saying for years).

Oct. 29 (Bloomberg) — The Federal Reserve confirmed it will end an asset-purchase program that has added $1.66 trillion to its balance sheet and maintained a pledge to keep interest rates low for a “considerable time.”

“Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate,” the Federal Open Market Committee said today in a statement in Washington.

“A range of labor market indicators suggests that underutilization of labor resources is gradually diminishing,” the panel said, modifying earlier language that “there remains significant underutilization of labor resources.”

Policy makers said that while inflation in the near term will probably be held down by lower energy prices, it repeated language from its September statement that “the likelihood…

View original 46 more words

The Unprofitable Non-Profit

Burlington College, a few years removed from being on the receiving end of the management by Bernie Sanders’ wife, Jane Sanders, is now selling much of its once and future campus to the private sector, in order to

Everything must go!  Except the former president's compensation package.

Everything must go! Except the former president’s compensation package.

cover its bills (h/t to Seven Days).  As has been discussed in the past, Burlington College’s revenue streams did not seem to match its operating expenses, nor did the acquisition of additional property seem to fall into a category of “advisable”, given that it was already servicing debt  and had clearly demonstrated a serious need for much higher enrollments to simply cover its operating expenses.

But in fact, it’s much worse than that:

Burlington College is planning to sell all but seven acres of the lakefront campus it acquired just a few years ago. Interim president Mike Smith said in an interview Monday that the school needs money from a sale soon in order to survive. 

So, even though the property as originally purchased was valued at nearly $20 million dollars, yet sold for $10 million – and Burlington College went ahead with the purchase anyway, despite its lack of revenue growth and debt overhang – the college is forced to sell the property as fast as it can, since it’s heading underwater.

Perhaps this was the plan all along.  Burlington College would acquire 32 acres at half price, find itself unable to even maintain payments, much less develop the property, and then sell the bulk of the asset to a developer.  This has the happy circumstance of providing prime real estate to the private sector at roughly half the assessed value, in order to “save” Burlington College.

25 acres now goes on “sale” for $7 million, when the whole parcel at 32 acres was valued at almost triple that amount.  Even the lower-assessed value at $16.5 million, it’s  almost twice the per-acre price it will sell for now:

Mommy, when I grow up, can I be a real estate developer?

Mommy, when I grow up, can I be a real estate developer?

Oh, and Bernie Sanders’ wife, Jane Sanders, former Burlington College President, was handsomely rewarded with $150K annual salary for driving this ship so solidly onto the rocks before bailing out – and continued to be paid after she left the organization.  But that’s what life is like for the 1%.  The school’s finances are a ruin; meanwhile, a golden parachute awaits you (from Burlington College’s 2012 Form 990):

Damn, their separation packages are *tasty* at Burlington College.

Damn, their separation packages are *tasty* at Burlington College.

Burlington College, with an enrollment between 200-300 students, and annual revenues as of 2012 in the $5MM range, clearly did not have the revenue stream to support the interest and principal on a loan of that size.  But they went ahead with it anyway, which means they did so for a reason.  Which likely means that any financing deal anticipated the future sale of the asset, in the near short term, in order to prop up the school’s glaring revenue shortfalls.  Taken one step further, this meant that a local developer would probably have an inside track on buying 25 acres of some of the best real estate in Vermont at much less than the assessed price.

Christmas comes early for a few connected Burlingtonians.  If there is a silver lining, it is that Burlington will at least see some property tax revenues out of the developed property, so maybe the bath the city’s been taking on Burlington Telecom will ease up a bit, but as Interim President Mike Smith said, Burlington College’s days are probably numbered:

After what he described as a “deep dive” into the school’s finances during the last several weeks, Smith said he came to the conclusion that absent an immediate infusion of cash, “Burlington College is not a viable ongoing entity.” He determined that it would likely need to undergo a “soft closure,” starting next year.

 

 

 

 

To Have And To Have More

Vermont Governor Peter Shumlin, when not busily touting the successes of his single-payer campaign, recently spoke about how vital the tourism industry is to Vermont, and how the state is committed to boosting tourism in the state.

“Columbus Day holiday weekend is the busiest of the year in Vermont, with visitors heading to hiking trails, inns and lodges, museums, restaurants and other attractions across the entire state,” Gov. Shumlin said. “Given the importance of this industry to Vermont’s economy and job creation, I’m thrilled we’ve had such a strong year, and committed to doing what it takes to ensure visitors across the globe know how much Vermont has to offer.”

Gov. Shumlin noted that the state committed $310,000 to an advertising campaign designed to bring visitors from New York and Boston (see attached photo). More than 2.7 million tourists travel from New York and Massachusetts annually to Vermont, bringing to $370 million the annual spending by visitors. Included in the advertising package is an editorial, print and digital campaign, as well as broad marketing.

Outdoor recreation activity generates $2.5 billion in Vermont retail sales and services (12 percent of gross state product) annually. That sector alone results in $753 million in salaries and wages for 34,000 jobs – and $176 million in state tax revenue.

Well, promoting tourism is a good thing, but should Shumlin be “thrilled” about this:

Tourism Industry salary per job

 

 

 

The bulk of tourism industry jobs are not going to cover the cost of living in Vermont, at least not in the traditional sense of “living”, meaning owning a home, car, etc.  The stat above equates to $11/hour, and I’m fairly confident that the requirements to buy even a 2-bedroom condo anywhere in Vermont won’t be fulfilled by that kind of income.

In fact, if Peter was interested in pitching an industry to work in, he need look no further than the office building he sometimes works in for inspiration.  The government sector of Vermont’s economy has consistently higher earnings than the private sector.  From BLS.gov:

I'm noticing a trend here.

I’m noticing a trend here.

In fact, the annual difference between the salaries in the two sectors would at least cover the cost of a hot tub or a new snowmobile – if you’re on the right side of the two charts:

The bitter fruits of political victory.

The bitter fruits of political victory.

Part of the governor’s job is to cheerlead – so Shumlin’s going to tout “good” news, by hiding or conveniently ignoring the relevant data.  Regardless of the success of the tourism industry, it is an industry dominated by lower-paying jobs, not the kinds of jobs that create massive influxes of highly-educated professionals from out of state, looking to live the rest of their lives in the mountains of Vermont.  As has been recently discussed, Vermont’s labor outlook is dominated by lower-paying jobs with very minimal education requirements, and that’s not the mark of a vibrant and growing economy.  Ideally, the tourism sector should be the slowest-growing in terms of job opportunities, playing catchup to manufacturing, finance, professional services, etc., the sectors that are much higher-paying, stable, with significant career development potential, not because we want fewer jobs, but because we want real job growth in jobs that can support families trying to carve out their existence in the Green Mountains.

Hey, these clothes don't dry themselves, and those electric bills pile up in a hurry, especially since Shumlin helped shut down Vermont Yankee.

Hey, these clothes don’t dry themselves, and those electric bills pile up in a hurry, especially since Shumlin helped shut down Vermont Yankee.

Obscenity Redefined

The Senator with the most obscene haircut in 2014 recently complained, again, about the “incredible and obscene” level of wealth inequality in the US.  Despite the tired nature of this old saw, Bernie himself is a key player and contributor to this obscenity, and

Damn, math is *hard*.

Damn, math is *hard*.

seems to miss, entirely, the fact that if he wasn’t busily spending trillions we don’t have and will never have, the economy might recover, and more jobs would become available.

BURLINGTON, Vt., Oct. 4 – U.S. Sen. Bernie Sanders (I-Vt.) said today that the “incredible and obscene” level of income and wealth inequality in America has become a danger to our economic and political systems – and must be addressed. 

According to a new Forbes magazine tally, the 400 wealthiest Americans are now worth $2.29 trillion. Their combined wealth grew last year by $270 billion – a 13 percent increase.  These billionaires now own more wealth than the bottom half of America – more than 150 million people. 

Sanders’ fix?  Let’s ask Congress to do something!  They really know what they’re doing!

“Congress must summon the courage to take on their big money campaign contributors and pass legislation that asks the wealthy to start paying their fair share of taxes and overturns the disastrous Supreme Court decision on Citizens United.”

Well, that was easy.  Congress need only do two things and wealth inequality is fixed.  As if being unequal in earnings is a bad thing by definition.  If I work two jobs and earn 50% more than my neighbor does who works only one job, are we “unequal”?

But still, this is Sanders, and asking Congress to do something – like pass a budget – might be something they’re not equipped to perform.  They can pass a 2,000 page monstrosity without reading it, but this wealth inequality thing should be a snap.

Here’s the deal on the “fair share”, Senator, and pay attention this time, because you don’t seem to be getting it:  Half the country pays no net income taxes.  Of the half that do pay income taxes, the top half of this group pays 97% of all income taxes collected.  I agree with Sanders (gasp!): that is unfair, to the people paying virtually all the income tax in this country.

That top half is a lot more than the evil 1%.  It includes that vaunted “middle class”, the top end of which can earn over $250,000 per year.  These people are not billionaires, swimming in pools filled with gold coins.  They are professionals: engineers, lawyers, doctors, managers, IT administrators, contractors, and if these people are married, it’s not that rare to find yourself over that $250K threshold.  These are people who work for a living, and the market pays them their “fair share” as determined by supply and demand for their work, not as determined by a Marxist price-setter sitting in a dank sub-basement cave somewhere in DC, where social “justice” is meted out through transfer payments.

If you really want to see an obscenity, how about all the federal spending combined – and we’re setting world records in spending/obscenities in the Congresses that Senator Sanders is a willing participate in – does not effect median household income.  At all.  In fact, if there’s a correlation between federal spending and incomes, it’s a negative correlation.  As federal surpluses increase, household income decreases.

I’m no Marxist theorist, but that seems to be the reverse of the intended effect, no?

Deficits go up and household income decreases?  Golly!

Deficits go up and household income decreases? Golly!

Here are a few other obscenities that Sanders seems to ignore, and are directly leading to the results of virtually zero median household income growth:

1.  As US debt goes up, real median household income goes down.  So Sanders’ solution of more, obscene, and ridiculous federal spending, at record levels of debt, does not fix one damn thing regarding individual income.  If, indeed, that is the federal government’s job, and if it could even do that if 535 knuckleheads thought that it should be so.

Is Bernie going to pay that big loan off for the middle class?  They'll be paying for that via the labor of their children's children's.....children.

Is Bernie going to pay that big loan off for the middle class? They’ll be paying for that via the labor of their children’s children’s…..children.

 

2.  It’s difficult to participate in an economy when the bulk of the job growth is in lower-paying jobs, and the federal gov’t has created safety nets, well, they’re more like safety condos, that make the decision not to work easier than ever before in the history of man.  The Bureau of Labor Statistics shows that in their projections for job growth through 2012, of the top ten categories of jobs with the most growth, only 2 of them require any education beyond high school.

Whatever we're doing, it's not working.

Whatever we’re doing, it’s not working.

3.  Obamacare – which Sanders has supported all along, and has long called for the nationalization of health care, like those other successful countries such as the former Soviet Union and Cuba – will reduce employment by 3%, according to the Mercatus center:

Much of the ACA’s tax effect resembles unemployment insurance: both encourage layoffs and discourage people from returning to work. The ACA’s overall impact on employment, however, will arguably be larger than that of any single piece of legislation since World War II.

  • The ACA’s employment taxes create strong incentives to work less. The health subsidies’ structure will put millions in a position in which working part time (29 hours or fewer, as defined by the ACA) will yield more disposable income than working their normal full-time schedule.
  • The reduction in weekly employment due to these ACA disincentives is estimated to be about 3 percent, or about 4 million fewer full-time-equivalent workers. This is the aggregate result of the law’s employment disincentives, and is nearly double the impact most recently estimated by the Congressional Budget Office.
  • Nearly half of American workers will be affected by at least one of the ACA’s employment taxes—and this does not account for the indirect effect on others as the labor market adjusts.
  • The ACA will push more women than men into part-time work. Because a greater percentage of women work just above 30 hours per week, it is women who will be more likely to drop to part-time work as defined by the ACA.

4.  Oh, and Bernie seems to have no problem getting his nest feathered on the public dime.  Bernie’s annual average growth rate in net worth 2004-2012 was 29%.  The average American’s growth rate for the same period?  -0.94%.  So when Bernie’s telling you he’s working for the little guy, remember that in Berniespeak, little guy means “Bernie Sanders”.

I didn't realize Socialism had such a high rate of return.

I didn’t realize Socialism had such a high rate of return.

 

In short, the Senator himself, through the policies he’s supported, are exacerbating the wealth inequality he so loudly trumpets as the biggest scourge of our time.  It could just be that the biggest problem is not wealth inequality, but wealth transfer, and that the government that Sanders works in is responsible for creating it in the first place.  Instead of demonizing companies that actually employ people, perhaps Bernie should start demonizing the catastrophic spending he’s been responsible for all of his years in the US Congress, and start doing what the rest of us have to do, every day – live within our means.

 

Idling In Net Neutrality

Megan Epler Wood, board member of the Keep BT Local Co-Op, has taken the broad leap of faith required to justify public expense to keep the Internet “neutral”.  In other words, she wants to re-animate the corpse of Burlington Telecom, in the form of yet another mixed-revenue enterprise that will, through the magic of good intentions, not only give everyone access to critical

Yep, let's try this one more time!  What's the worst that could happen?

Yep, let’s try this one more time! What’s the worst that could happen?

free speech platforms like Facebook, but will ensure both access and something very vaguely stated as “neutrality”.

“Neutral” means nothing of the sort.  It means subsidization, it means regulation, it means oversight, it means political capital earned and spent on propagating a “neutrality” that will do nothing but protect the interests of those who are able to get politicians to care about them.  Which is a difficult enough task, since most politicians seem only to care about themselves and re-election.  It’s always refreshing to hear Vermont’s best-known senior, and senior Senator, Patrick Leahy, crafting new “rights” out of the whole cloth of the Bill of Rights, but he’s off to the races:

Over 1 million concerned citizens wrote the FCC to demand equal access to the Internet over a 5 month period ending this July. In Burlington, Senator Patrick Leahy held a public field hearing on July 1 for the U.S. Senate Judiciary Committee to explore the importance of preserving a neutral Internet environment to protect our local businesses, civil society and local services. Senator Leahy stated at this hearing that “open-Internet principles correspond to the U.S. Bill of Rights.” “

Leahy’s claim is helping to serve local re-distributionists, again, since by claiming that Interrnet access is a right, then there must be public funds made available for it.  The Keep VT Local Co-Op is a group that’s looking to acquire the remnants of Burlington Telecom, because they, and only they, can keep an Internet local.  Let me just pause here as the top of my head is lifted off in an explosion of astonishment.  The whole premise of the Internet is that it is not local.  It is global.  Are they planning to cut Ethernet cables at the Chittenden County line?

But let’s let lunacy explain itself here:

Local ownership is a viable means to protect Net Neutrality according to many leading experts. Municipal fiber networks not only foster competition with the ISPs, they create citizen empowerment. According to Christopher Mitchell director of Community Broadband Networks at the Institute for Local Self Reliance municipal fiber networks “ensure open access to the Internet regardless of what tolls the big cable companies charge.”

Neutrality is a cover phrase for nationalizing (or, in BT’s case, localizing) the internet, because, apparently, a profit motive runs against how Leahy, et al, interpret the Bill of Rights.  Since we all know how well government of any size manages projects large and small – because they are mercifully free of the bounds of costs and revenues, as long as tax dollars keep flowing in one form or another – we can just simply rest assured that not only will our Internet become Switzerland, in terms of its undying neutrality, access will be granted by our patriarchy and costs for this blessed benefit will somehow magically evaporate, and people will pay less for it.

I hate to break it to the Co-Op, but that’s been tried.  Right here in Burlington.  And what was the result?  Disaster.  Even with all the breaks possible, including placement of BT’s routers in city buildings to reduce footprint costs, and with a $17 million taking from the taxpayer slush fund, er, “cash pool”, BT crashed like a plane without wings.

Worse, not only does the Co-Op have the wrong idea about how markets work (if they have any idea at all about markets), but they are re-writing BT’s history along the way.

We must not forget that BT’s funding came from a vote of the citizens. We have invested $17 million already, and one of the only viable options to retain local ownership, which is not concentrated in the hands of the private sector, is by supporting a Co-op solution. It is highly unlikely the city can retain ownership according to all reliable sources.

We must also not forget that BT’s funding did NOT come from a vote from the citizens.  It came from the city’s “plan” to have a profitable enterprise in place, not one that had public funding to fall back on.  There was no” investment” of $17 million.  This is such a bald-faced claim that runs contrary to reality I’m wondering if Wood is unaware of the facts of simply misrepresenting them in order to further a cause.  Oh, and the $33 million in an equipment lease/purchase from Citibank was kind of a big deal, too.

The $17 million wasn’t exactly stolen from taxpayers, but it was taken without their knowledge and approval, and thrown at BT behind the scenes to keep the failing enterprise afloat a while longer.  This is not an investment.  It’s a taking, one that was purposefully hidden.  Worse, it’s a taking for something that Burlington did not need.  Internet access was and still is available to all Burlingtonians at the same or better pricing than what BT offered, as has been repeatedly demonstrated.

As it turns out, the only people who believe in  the free lunch are the people who aren’t paying for the food.  So look forward, Vermont, to more publicly-funded debacles that you will pay for in one way or another.  You will be paying for them in your taxes, in additional fees, or when another “investment” is required, and the funds you have already paid to the city in the form of taxes will need to be replenished with yet another taking.

Oh, and it seems that some minor details – like how many subscribers are needed to keep the thing afloat, which was the original selling, and failing point, for BT – is not something the Keep

Math.  It's still hard, even if you're stuck in neutral.

Math. It’s still hard, even if you’re stuck in neutral.

BT Local FAQ seems to consider.  Or it’s omitting that small detail for a reason, because they don’t know.  They don’t know how many customers they will need because the price they will charge per customer will vary until they can cover costs, the same problem BT had, and the same problem every other provider of a service or product in the world has to address, every day.

But hey, it’s neutral, so don’t sweat the details.

 

And one last line of incredulity-generating nonsense from Ms. Wood:

Little did we know that BT would become a vital safety valve in the fight to ensure Free Speech for our people, and there can be nothing more important than preserving our citizens’ access to a level playing field in business and politics.

Little did Burlingtonians know that BT would become a money pit that they were forced to throw their own hard-earned dollars into for the public aggrandizement of self-loving politicians and the unworkable and socialist ideals they love to curl up with.  It’s unclear how a valve analogy applies here, unless it’s more of a spigot that’s attached to the wallets of taxpayers.  There is no restriction on free speech if you don’t have access to a megaphone, either, but that’s the analogy being made.  Your taxpayer-funded free speech megaphones should be arriving in the mail shortly.

Oh, and if anyone wants access to the Internet, go to your local library.  After all, you’re already paying for it.  Better yet, go to City Hall on Church St. and ask to use one of their computers, since your free speech rights are obviously being curtailed, and you’re paying for everything in that building, too.

 

The Shumlin Economy: A 10.8% Increase In Unemployment

Since Peter Shumlin, former governor of Vermont (well, he seems to be a former governor, since he’s not spent so much time governing in the last year), seems to have lost his touch in touting the state’s low unemployment numbers.  Why?  Because they’re lousy, if you crack open the numbers a bit.  Now, as Vermont’s unemployment rate spikes 10.8% higher in August (jumping from 3.7% to 4.1%), you won’t see Peter touting Vermont’s low unemployment numbers, as he has so heartily done in the past.

But the spike in unemployment is just the beginning of the worse news.  The number of unemployed went up (by 1,300), to the highest level of unemployed in 2014.  The labor force participation rate shrank, again, month over month, by 800, which helped the unemployment rate calculation be less bad.  Irony is rarely unseen in labor data, obviously.

The trends have been consistent – the labor force participation rate is much lower than the national average, but it has been fairly steady in 2014 at close to 351,000 (2014 average is 350,844).  But when the number of unemployed goes up, even relatively little, the impact on the rate is large.

In April 2014, the unemployed number was 11,500.  The unemployment rate was 3.28%.  But just 4 months later, there are 14,400 unemployed, with virtually the same number in the labor force participation rate, and the unemployment number jumps to 4.11%.  That’s an almost 33% jump in the unemployment rate in just four months.  And yes, it’s seasonally adjusted data, so the smoothing has already been applied.  If you can call that bump smooth.

Peter Shumlin Says:  Just In Time For The Holidaze!

Peter Shumlin Says: Just In Time For The Holidaze!

Even though Peter’s probably possibly primed to pump a penultimate, um, fist in victory this fall in the gubernatorial election, I would think his electoral opponents would want to bring a lot of flashlights with them during debates.  Why flashlights?  To shine some bright light on the truth of Vermont’s economy.  Peter rushes in as fast as his non-gubernatorial duties allow him to when there’s something that can even be remotely touted as good news.  So let’s help Peter own his legacy here, and point to the stats he loves to tout – but point to them when they lay bare the truth of Vermont’s struggling, if not dying economy.

 

Notice that Peter is rarely found in front of businesses that are laying people off.