The Mask Drops: Sanders Unchained

Brooklyn’s own Bernie Sanders (Vermont Senator but really a flatlander with 3 houses, which really, really makes him a flatlander)

Not pictured here: The new chains Bernie wants to put on all of us.

has let slip the dogs of….single-payer?  Not that this is any surprise, but Bernie has stated that he will be introducing a single-payer bill, which he describes as “Medicare for All”.

What an enormous favor Bernie’s doing for Americans!  Why didn’t anyone think of this before?  A truly brilliant analysis and solution provided by a US Senator who didn’t receive his first paycheck until he was 40 years old!

What sort of delights will US citizens receive when Bernie puts us all on Medicare?  Let’s take a look:

Medicare Part A will go bankrupt in 13 years.

Medicare’s Hospital Insurance (HI) or “Part A” Trust Fund ran a cash flow deficit of $8.1 billion in 2014. Expenditures from the Part A trust fund exceeded annual income every year between 2008 and 2014. The Medicare Trustees estimate that the Part A trust fund will generate surpluses between 2015 and 2023 due to recently enacted legislation and an assumed continuation of the economic recovery. Specifically, the Medicare Part A trust fund income is expected to exceed expenditures by about $2 billion in 2015. This surplus continues for the next 8 years – through 2023. Deficits are projected to return in 2024 and will continue until the Part A trust fund is officially bankrupt in 2030, at which time the Medicare program will no longer be able to pay full benefits for seniors.

Medicare Part B will consume a quarter of all federal income taxes by 2089:

The Supplementary Medical Insurance (SMI) or “Part B” trust fund pays for physician care, outpatient services, and prescription drugs. According to Medicare’s actuaries, SMI spending is growing at a rapid rate. The Trustees report evaluates the long term implications of escalating SMI cost growth by comparing it to total Federal income taxes (personal and corporate) during the same fiscal year. The Trustees now predict that, if future federal taxes maintain their historical average level (relative to the national economy), then SMI general revenue financing in 2089 will represent 26 percent of total Federal income taxes.

The Independent Payment Advisory Board – an unelected board that sets target levels for spending on Medicare – will set “savings

Bernie brainstorming.

targets” annually, which means cuts to reimbursements to hospitals and providers.

The health care law created a 15-member Independent Payment Advisory Board (IPAB) charged with making recommendations to cut Medicare spending if and when the program’s spending exceeds specified economic growth targets. Since 2013, the CMS Chief Actuary has been required to calculate both the projected and target growth rates. If the Chief Actuary determines that the projected Medicare per capita growth rate exceeds the per capita target growth rate in a given implementation year, then the Chief Actuary must set a savings target for that year. For determination year 2013 through 2015, target growth rates have not been exceeded.

The Trustees now predict that Medicare’s per capita growth rate will exceed the per capita target growth rate in 2017 – five years earlier than projected in last year’s report. Legislation (S. 141, the “Protecting Seniors Access to Medicare Act”) has been introduced in the Senate that would repeal this unelected, unaccountable IPAB board. The House of Representatives approved a companion measure, H.R. 1190, on June 23, 2015.

Unfunded obligations in the tens of trillions of dollars:

Medicare Part A is financed by a 2.9 percent payroll tax that is split between employers and employees. The health care law (starting in 2013) mandated an additional 0.9 percent payroll tax on wages over $200,000 for single filers and $250,000 for married filers. There is no upper limit on earnings subject to the tax. Income deposited into the Part A trust fund is credited using interest-bearing government securities. Expenditures for medical services and administrative costs are recorded against the fund. Securities represent obligations the government has issued to itself. The Medicare Trustees estimate the Medicare Part A total unfunded obligation over 75 years is $3.2 trillion. Using the Centers for Medicare and Medicaid Services (CMS) Actuary’s alternative projection, which looks at Medicare’s financial footing using more realistic assumptions, the Part A unfunded obligation over 75 years climbs to $7.9 trillion.

Unlike the Medicare Part A trust fund which has a dedicated revenue stream (the HI payroll tax), Medicare Part B and Medicare Part D (prescription drug benefit) are funded by beneficiary premiums and general revenue. As a result, the Medicare Trustees estimate that the amount of taxes collected over the next 75 years that will be spent to pay for Medicare Part B and Part D services equals $24.8 trillion.

Assuming current law remains unchanged, the Trustees project Medicare’s 75 year total spending in excess of dedicated revenues is $27.9 trillion. Again, using the CMS Actuary’s more realistic alternative scenario, that figure soars to $36.8 trillion.

All of this is just the start for “Medicare for All”.  Because Medicare reimburses providers below the cost of providing that service, and there would be no more private insurance to push the costs onto (via increased rates in the private market), the inevitable result of underpaying for services is a reduction in services provided – or, as users of Great Britain’s NHS are enjoying right now – the rationing of health care.

Since Sanders currently enjoys a tasty exemption from the Obamacare mandate, through a subsidy provided to Congress and their staffs, I would also expect the Senator, once full ensconced in the warm, loving embrace of Medicare For All to ditch his subsidy and wallow in the results of his legislation, like the people he’s planning to foist it upon.

But the larger question remains:  If Sanders thinks Medicare For All is the solution to the nation’s health care problems, what, out of

Bernie looks great in a hat here.

the above, makes him think he’s doing anything other than setting us on a path that a) reduces access to care, and b) increases the rate at which the federal budget implodes?

And this is his best idea of a fix?  Then I’d hate to see the ideas he discarded as being unworkable.  His latest is another example of what happens when politicians are put in charge of our lives, and their only accountability to the impacts they make on us is whether or not they can sell 50% of the voting populace on the idea that they’re giving them something they need, for free, paid for by someone else.

 

 

 

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The Fallacies of the New Economy

As Vermont’s economy continues down its relentless path toward the ashbin of history, at least, um, several Vermonters are advocating for a “new” economy.  What’s the under-pinning of this new economy?  Innovation?  A removal of existing regulatory overheads so high that the state won’t finish building a road it started three decades ago?  A restructuring of its tax burden to entice businesses to move to or invest in the state, to grow an economy that ranks 2nd worst in the country?  A job climate that doesn’t scare college graduates into leaving the state at one of the highest rates in the country?

Nope.  Instead of those things, a group of concerned Vermonters calling themselves “Vermonters for a New Economy” have decided that the primary answer to the problems above is a bank.

Yep.  A bank.  But not just any bank.  A state bank.  Meaning a bank that is funded, and backed, to one degree or another by public funds (the funding issue is just another one of those thorny details that no one really needs to think about, just yet).  Which means, of course, that any risk or liability falls directly upon the shoulders and wallets of those who pay taxes.

And what is their mission statement?  Their raison d’etre?  Here it is:

Vermonters for a New Economy is a coalition of organizations, businesses, and individuals working to create a new economy for Vermont. You can work with us to design and enjoy the new ways we are owning and operating businesses, banking, exchanging goods and services, financing projects, and earning income.  This work enables us to pursue regenerative economic activities that strengthen our food systems, build renewable energy, reuse and recycle byproducts, and foster creativity, culture, and healthy lifestyles.

I must have missed Banking 101, but I’m pretty sure the bank didn’t ask me about my healthy lifestyle choices when I applied for a mortgage.  They wanted some details around income, liabilities, etc., because they’re crazy like that.  But no mention of how their capital would foster my creativity.  Which is mildly disappointing.  It’s also fantastic that they’re allowing Vermonters to work with these New Economists as to how Vermonters earn their own incomes.

That’s generous of them.

But let’s let the New Economy Vermonters provide more of their own detail, in terms of why they think we need a state bank:

Our Planet —  a VT state bank can provide the game-changing, long-term, low-interest financing that will power a transition to a just and sustainable future

Students — to access low interest education loans.

Homeowners — to get mortgages and home loans from the bank.

Entrepreneurs — who need credit lines, loans, and other forms of finance to help their businesses succeed.

Municipalities – the bank can offer competitive interest on public deposits and lower cost financing for public works.

Taxpayers — who will benefit from both the profits the bank makes and the services the bank offers

Well, that’s quite a bit to digest, so let’s take it one at a time:

1.  Our Planet —  a VT state bank can provide the game-changing, long-term, low-interest financing that will power a transition to a just and sustainable future.
The planet.  So the planet needs a Bank?  How did the planet exist, then, before humans evolved?  Did Gaia patiently wait for first humans to evolve, then banking, in order to provide a high enough state of enlightenment before asking for funding?  Gaia’s patience here with us is considerable.
2.  Students — to access low interest education loans.
You mean like those low interest student loans current and former students enjoyed, courtesy of one of the biggest central banks in the world?  Loans that are at higher rates that mortgage rates, but worse, are also subsidized rates?
The last large effort to nationalize the student loan program fell afoul of the same issues around health care, and that plan has now been shelved.
So the federal government can’t do it, with virtually limitless resources, but Vermont can, now, because of one bank?
In fact, VSAC has said it’s “agnostic” on the idea of a state bank.  So why list student loans as a justification, when the one institution that has historically provided student loans doesn’t see the need?

When the CEO of VSAC says they don’t need additional access to capital, maybe you should remove that selling point from your website.

3.  Homeowners — to get mortgages and home loans from the bank.
You can already get loans from banks, easily – they’ll happily lend you money for a house, or equity loans.  It’s how they make money.  For FHA loans, you only need 3.5% down.  Rates for fixed 30-year FHA loans are well under 4%.  Do Vermonters not know how to apply for a loan, and the state bank will save them from their own ignorance?
And why the incentive to increase – via public funds – the number of mortgage lenders, increasing competition, when, in many cases, the same people who tout this state bank (like Bernie Sanders) want to decrease competition in other markets, like health care?  Why is it a good thing to increase competition in one place, but not the other?
4.  Entrepreneurs — who need credit lines, loans, and other forms of finance to help their businesses succeed.
They can get this already from existing banks and investors.  What would a state bank provide that does not already exist?  Other than offering riskier loans that will be backed by taxpayers?  There’s a federal Small Business Administration that offers many channels for funding.  What would this bank offer that’s not already available?
5.  Municipalities – the bank can offer competitive interest on public deposits and lower cost financing for public works.
Municipalities already have access to funding through banks and bonds.  Like the Vermont Municipal Bond Bank, which has been in place since 1970.  If municipalities already have access to low-interest funding source, why do they need another one?
6.  Taxpayers — who will benefit from both the profits the bank makes and the services the bank offers.
You mean like the benefits current federal taxpayers enjoy, like $20 trillion in debt?  The profit the bank makes is the interest on the loan, which, for the federal government, increases as a percentage of total spending, and if the rates increase, even a little bit, will start to crowd out all other discretionary spending.
Which is really the heart of the matter.  The supporters of the state bank are looking for a way to finance spending now that someone else will have to pay for later.  It’s like giving a college student a credit card with no limit.  Sooner or later that bill will come due, and the people who want to create and support that state bank will then be asking taxpayers to bail it out, just like some other large financial institutions, like Freddie and Fannie.  Which have become, more or less, nationalized.
But the worst of the justifications for the proposed bank’s existence are in its own supporting documents, which make a few claims of fact that aren’t supported by reality.  A few examples (page 6):

Assumptions made reality by simply writing them down.

Sub-prime mortgages are what Fannie and Freddie specialized in, and still continue to be the largest generators of these types of loans in the industry.  Taxpayers had to bail out their poor business practices and the fact that they were understating their sub-prime exposure; there is nothing in the call for a state bank that would prevent this from recurring.
Secondly, citing Vermont’s low unemployment rate as evidence of economic stability means they either a) willfully ignore the reality of Vermont’s declining workforce participation rate, or b) don’t understand what they’re talking about.  If they’re using this conclusion (below) as one of the underpinnings of the justification for the need for a state bank, they’re making a significant error:
 That Vermont’s housing prices didn’t tumble doesn’t mean anything about “integrity” of anything, and neither does unemployment.  As has been repeatedly shown, Vermont’s unemployment is low primarily because the workforce is shrinking, not because of new jobs created.  As the report’s earlier statements argue, correlation does not equal causation.

Well, it does when we argue that the state’s economy is in great shape based on unemployment data. Then it’s ok to make that correlation argument.

If anything, the state’s demographics and the general leveling off of already-high housing prices won’t require a state bank to support increased demand for mortgages.   In fact, the reason housing prices are (relatively) level is because demand isn’t increasing.  There are simply fewer Vermonters looking to buy homes:
Vermont’s economy, and its housing market, are clearly not divorced from national trends. But our housing market seems to be under performing the national housing market, which is worrisome. Over the last two years, Vermont’s housing market, at least measured by prices, has gone nowhere. Nationally, prices are up 7 percent over the same period—not great, but at least it’s a positive number.

One of the reasons for our weak housing market is our underlying demographics. First-time home buyers tend to be in their 30s and early 40s. That’s precisely the demographic that’s shrinking in Vermont. And if there are fewer first-time home buyers, people trying to sell their houses and trade up to more expensive homes can’t find buyers. That clogs up both sides of the home-buying and home-selling market, limiting both sales and price appreciation.

The New Economy site also encourages readers to read the study that justifies the new state bank.  Hilariously, the study recommends that the state not implement a state bank.  That the capital needs are already met.  That the current options available for financing are just fine.  From page 3:

So…we *don’t* need a state bank, then?  Oopsy!

Then what is the purpose of the New Economy site?  To ignore the realities of Vermont’s business climate, Vermonters’ incomes, the demographic changes, and historical policy overhangs that make the state a lousy place to do business?  Another bank won’t fix that.  Another bank can’t fix that.
Only Vermonters can fix Vermont, by dismantling the policies and governmental apparatus that have put them in the place they are today.  If that’s part of the New Vermont Economy, then maybe things will start to change.

Squeals On Wheels

Recently, a small part of the Trump administration’s budget proposal generated a series of high-pitched squeals across the United States.  Said squeals which could mostly be found in such squeal-oriented places like Facebook, Twitter, and college campuses, where squeals propagate like hippies at a free lunch buffet, and where economic reality enjoys a permanent holiday.

And the root cause for the squealing?  A complete misunderstanding of the federal budget and how some non-profits are funded .  But the squeals of anguish were not rallies to the cause of federalism.  No.  Instead, they were cries of outrage that Trump was cutting the Meals on Wheels program.  A program that relies, so heavily, on government grants.

 

Oh, wait.  It doesn’t.  It’s 3% of their budget (page 18).

And…..it’s 3 percent.

As Reason has noted, the issue is much less about the individual programs that receive grants.  What Meals on Wheels does is a fantastic example of what local effort, and local control, can do to positively impact lives, and help people who need just a little bit of help, a meal, and even a wellness check, when no one is doing that for them.  It’s the vehicle that spends billions per year on administering and doling out dollars that is the source of the issue, and ultimately some level of corruption – the Community Development Block Grant Program.

What’s the result of lading a trough filled with pork in front of politicians eager to buy votes?  The quick appearance of dollar-guzzling politicians, seeing an opportunity to buy something (votes) with someone else’s money (yours and generations of unborn saddled with federal debt):

You don’t need to look far in the past to see this sort of corruption taking place. In June, the Department of Housing and Urban Development (HUD) sent a scathing letter to the Mayor of Honolulu Hawaii, calling on the city to return nearly $8 million in CDBG funds that it gave to Opportunities and Resources Inc. (ORI), a nonprofit redevelopment organization in central Oahu. The Aloha Gardens Wellness Center and Camp Pineapple 808 both were projects developed by ORI with federally issued CDBG money meant to serve elderly and disabled persons, but since completion, the projects haven’t exactly been used for their advertised purpose.

The HUD report claims ORI had been marketing the centers to the public as venues for weddings, parties, banquets, fundraisers, corporate retreats, conferences and family reunions. The city also lent ORI nearly $1.2 million in CDBG funds between 1989 and 1995, which it decided to forgive back in 2010. HUD found that this decision was made by city employees who were running for elected office while receiving campaign donations from ORI representatives.  The report states:

“ORI has maintained significant support over many years by the direct involvement of high ranking City and State officials…The direct involvement of the officials’ appears to have placed pressure on staff resulting in the City ignoring regulatory violations in favor of completing the project and satisfying ORI’s requests.”

In other words, the funding becomes the driving policy directive, not the service that the funding might itself provide.  The funding model subverts the local control because the dollars are critical to a political outcome, less so in addressing a local need.

Local control, and local accountability for dollars spent, should be the watchwords.  But because the federal government throws billions around, annually, in thousands of programs, it would be extremely difficult to say no to those funds if you’re sitting in a small municipal office, wondering how you’re going to affect some local change.  Which then creates the puppet strings that federal agencies, and ultimately politicians, use to buy votes, and influence voters.  Once the city or state becomes hooked on the federal dollars, they can no longer say no to them – and are adversely affected when funding for those programs becomes a political football.

The accretion of these programs, in the federal budget, is what has given rise to the outsized spending and record deficits seen during the last 8 years.  This growth isn’t directly attributable to one administration, but the Obama administration stomped down hard on entitlement spending, then tried to laughably claim that it reduced deficits – record deficits the administration itself had set in the years preceding its final year.

The result was a doubling of national debt in 8 years, a doubling of the debt that took over 200 years to first accumulate.  We have had 4 years of trillion-dollar deficits.  The first year the government started spending over a trillion dollars per year was 1987.  30 years later, we have deficits bigger than the total annual spend in 1987.  Today we’re borrowing more to fund an annual deficit than our total spend was 30 years ago.

I’m noticing a trend here.

 

Hey, what’s a trillion in borrowing, amongst friends?

The historical record doesn’t show any sign of slowing down in spending, which means a further erosion of local control, leave alone any kind of spending efficacy metric that would allow for decision-making regarding the growth or reduction of spending on a program.  Once a program is established, whether or not it’s doing something good or bad (if you can even quantify those outcomes), it will never, ever go away.  It’s too late now.

And any call to reduce spending is met with the squeals.  The self-agonized cries of those who believe, fervently, that it’s up to the federal government to fix local problems, address local needs, through taxation.  Which is, in a way, a tithe of the conscience – that one is off the hook to get off the couch on a Sunday to help someone else, because the government is doing it for them, through their income taxes.

Or, more to the point, through the taxes of those filthy, evil rich people.  The same people who pay 97% of all income taxes collected.  Which will never, ever be enough to pay for the programs that help politicians get elected, to grow the spending of government again next year.  When politicians have a credit card with a $1.5 trillion dollar limit on it, what’s their incentive to not spend more than we have?  For them, the downside to spending less is not getting re-elected.

Until those political incentives change, you’ll continue to see the growth in federal outlays, and a continuing reduction in incomes relative to that spending growth, as the weight of spending and borrowing drags the economy into a perpetually smaller cycle of growth.  It’s already happening.

Trump’s budget, while flawed (like every budget before his), is actually looking to address an issue around federalism, which is:  Why do you need a federal government to sink its controlling claws into a local effort to help those in need?  Why not just cut the check to your local charity of choice and avoid the federal middleman?

Why give more control to someone else over your own choices?  Hopefully the answer to that isn’t “Because then I don’t have to think about it”.

 

 

 

 

 

 

Barrynomics: Keynes Unchained

What a difference 8 years can make – if you’re interested in holding public debt.  The Obama administration leaves office just inches away from a $20 trillion dollar debt, when in 2009 that administration inherited $10 trillion in debt.  It took the US a couple hundred years to get to $10 trillion; Obama created almost that much debt in 8 years.

debt-2

Trillion-dollar deficits became the norm from 2009-2012, as “stimulus” spending was touted as the fix to everything that ails the economy.  A question never asked in those conversations might be “If federal spending fixes recessions, and federal spending goes up every year, without fail, why do we ever have recessions?”

Because the answer would be “I don’t know”, and historically there’s no correlation between increased federal spending and increases in GDP – even with federal spending as a component of GDP.  As shown below, federal expenditures continue to increase, debt increases, and GDP bounces all over the place, but in a downward direction.

Finally! Evidence that federal spending fixes everything.

Finally! Evidence that federal spending fixes everything.

In fact, in 2014 it was predicted that the shorter-term positive impacts would inevitably give over to negative growth impacts:

“In contrast to its positive near-term macroeconomic effects, ARRA will reduce output slightly in the long run, CBO estimates — by between zero and 0.2 percent after 2016,” the analysts said in their new report.

They said the cause is all of the borrowing for the $830 billion program, which dramatically boosted the federal debt.

“To the extent that people hold their wealth in government securities rather than in a form that can be used to finance private investment, the increased debt tends to reduce the stock of productive private capital. In the long run, each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital,” the CBO estimated.

As icing on the Obama administration’s economic cake, GDP in the 4th quarter of 2016 came in at a whopping 1.9%.  For 2016, the annual rate came in at 1.6%, down from 2.6% the year before, which seems to correlate to the CBO estimates above.  So instead of going out with a bang, Barrynomics goes out with an agonized whimper.

What is interesting, though, is that there’s a correlation between incomes and deficits – but in an unexpected direction.  As deficits get bigger (meaning gov’t spends more than it takes in), incomes decrease, at precisely the time when deficit spending is supposed to improve negative income trends through stimulus spending.

So stimulus spending has a negative effect on incomes? That's not the America Joe "Recovery Summer 2009" Biden described to me. He told me I'd be able to buy a Camaro soon!

So stimulus spending has a negative effect on incomes? That’s not the America Joe “Recovery Summer 2009” Biden described to me. He told me I’d be able to buy a Camaro soon!

The smaller the deficits, the larger the incomes.  The bigger the deficits, the smaller the incomes.  Even if federal spending during recessions is designed to offset income reductions through job losses, etc, it apparently does not have that effect.  At all.

Which runs entirely counter to the basic ideas espoused by Keynes, and that federal spending (including significant deficit spending) could dampen recessionary effects in the short run, and in the longer run help grow the economy.

biden-camaro

Want to go for a ride, big fella?

But there’s no real way to account for the disparate impacts of that spending, which has to grind through the political mill and get disbursed through the bureaucracy via changes to funding, grants, etc, which then has to be actually spent by the receiving agencies.  That spending can’t ramp up to full speed on a dime, and if it’s a larger multi-year project, any benefits of that spending (through new hires and their subsequent income increases, impacting aggregate demand) would be delayed, at best, for an unknowable period of time.

Finally, because the civilian labor force participation rate is at historical lows (below), and seems to correlate to the drop in GDP, it seems that any incentives one has to drop out of the labor force – increases in unemployment benefits, expanded entitlement spending, etc – might have as its final result an unanticipated reduction in economic growth.

A reduction that would apparently come as a surprise to both Keynes and Obama.

 

gdp-and-civ-labor-force

 

Lectures By Leaky Leahy

Vermont’s perennially-serving Senator, Patrick Leahy, recently managed to unload a press release on a Russian “hacking” event at Burlington Electric Department.

So leaks are bad, then? Someone tell the Senator!

So leaks are bad, then? Someone tell the Senator!

State-sponsored Russian hacking is a serious threat, and the attempts to penetrate the electric grid through a Vermont utility are the latest example. My staff and I were briefed by Vermont State Police Colonel Matthew Birmingham this evening. This is beyond hackers having electronic joy rides – this is now about trying to access utilities to potentially manipulate the grid and shut it down in the middle of winter. That is a direct threat to Vermont and we do not take it lightly.

computer-hacker

Watch out. I’m extra hacky.

Alarming  I’m sure all Americans can sleep better tonight knowing a man who first came to the Senate in 1975 is all up to speed with the latest in all that computer stuff the kids know so much about these days.  I can also see where someone at BED using a utility’s laptop at home, off the network at the utility, surfing questionable websites, might pick up some malware or two that the utility’s IT department will pick up during recurring scans.  Which seems to be exactly what happened:

The Department of Homeland Security alerted utilities on Thursday night about a malware code used in Grizzly Steppe, the Burlington Electric Department said.

“We acted quickly to scan all computers in our system for the malware signature. We detected the malware in a single Burlington Electric Department laptop not connected to our organization’s grid systems,” it said.

The matched malware code on the laptop may have resulted from a relatively benign episode, such as visiting a questionable website, a source familiar with the matter said, suggesting Russian hackers may not have been directly involved.

It’s not a direct attack against the electric infrastructure.  It’s a chowderhead taking a company laptop home, outside of the utility’s firewall, and since the malware is out in the wild, can wind up on any laptop, anywhere, if someone clicks on the wrong site.  Had it wound up on a laptop from a guy working at the Twinkie factory, would our supply of cream-filled deliciousness be just as threatened by Russia?

No.  It’s Leahy posing as being somebody useful – to the Democrat party, which is looking to find a source of their own malaise in an external actor, instead of asking themselves how their candidate, in Hillary Clinton, could possibly have lost, without first asking themselves hard truths about their own decisions and behaviors.

Speaking of a lack of self-reflection, Captain Irony (or as others like to call him, Senator Leahy) has a decades-long history around questionable behavior with sensitive information, which actually put the country and lives at risk, and may have caused a death or two along the way.  But hey, when you’re busy doing cameos in Batman movies and lecturing the public about Russian malware, maybe you’ve got some free time on your hands.

So let’s take a peek at one or two of Senator Leahy’s own forays into questionable dealings with sensitive information.  Hm.  Looks like there’s a rather distinguished history in this Senatorial practice called “leaking”:

As you may recall, Leahy was stripped of his Senate Intelligence Committee vice-chair during the mid 80’s for making good on threats to sabotage classified strategies he didn’t personally care for. During Ronald Reagan’s own war on terror, the Vermont Democrat was aptly nicknamed “Leaky Leahy” for proving time and again that he would do absolutely anything to discredit the Republican President — including revealing the most vital of national security secrets.

In 1985, he was charged with disclosing a top-secret communications intercept which had led to the capture of the murderous Achille Lauro hijacking terrorists. That leak likely cost an Egyptian counterterrorist agent his life shortly thereafter. Then, in 1986, Leahy threatened to leak secret information about a covert operation to topple Libyan dictator Moammar Gadhafi. When the details of the operation later appeared in the Washington Post, the mission was immediately aborted.

So disclosing information that gets people killed is OK, and so is leaking congressional reports to reporters, and so is pumping up the volume over a malware-infected device in order to score political points and distract from the horrorshow that was the Clinton defeat in the election.  All of those things are fine by Leahy, in service to the Party.

And his own party’s presidential candidate, Hillary Clinton, used an unsecured private hillary-russianserver to keep the US government’s restrictions on the handling of sensitive data out of her considerations, and out of FOIA requests – and Leahy endorsed her for office (8 years after he un-endorsed her for office, but hey, fish gotta swim and Leahy gotta Leahy).

Apparently when it’s his party that’s in question, concerns about sensitivity and security fly out the window, to the point where Leahy would have voted for Hillary as a superdelegate even if she didn’t win the state’s vote.  That’s a man of the people, right there – as long as they do whatever he wants them to do.  Then he’s their man!

Now, just a couple of days later – well, it’s not a hack.   But that fact certainly won’t merit a retraction by Leaky Leahy.  Does this still constitute a direct threat to Vermont that Leahy does not take lightly?  Or does this constitute yet another political embarrassment by Vermont’s (largely) sitting senator that he’ll happily ignore until the next time he can exploit false information for political gain?

The 10-year Winter Of Vermont’s Employment Discontent

Vermont is currently enjoying one of the lowest rates of unemployment in the country.  Enjoying.  Yes, like most things in Vermont,

An economy so strong you can't stop it, you can only hope to contain it.

An economy so strong you can’t stop it, you can only hope to contain it.

“enjoying” comes with a bit of a caveat.  If by enjoying you mean “having a low unemployment rate with one of the weakest state economies in the country”, then yes, there is much to be enjoyed.

Yet even in the state’s own monthly statement on the labor market (November 2016), there seems to be some signs of reality slipping in.  Those signs only appear after the preamble, of course, because low unemployment is automatically great news for Vermonters:

The Vermont Department of Labor announced today that the seasonally-adjusted statewide unemployment rate for November was 3.2 percent. This reflects a decrease of one-tenth of one percentage point from the revised October rate (3.3 percent). The national rate in November was 4.6 percent. As of the prior month’s initial data, the Burlington-South Burlington Metropolitan NECTA was tied for the sixth lowest unemployment rate in the country for all metropolitan areas at 2.2 percent (not-seasonally-adjusted). Overall, Vermont’s unemployment rate was also tied for sixth lowest in the country for the same time period.

That must mean thousands of people are moving to Vermont to enjoy its robust economy and vast repositories of high-paying jobs just waiting to be filled by eager workers, right?  Right?

No.  The number is just a reflection of the declining size of Vermont’s labor force, not the number of unemployed.  In fact, the state’s lowest unemployment rate for the year was 3.1%, back in May 2016.

While the unemployment rate barely changed between May and November, the labor force shrunk by 1,200 people, and the total number of employed shrunk by 1,300 people, which results in a total unemployed number that’s barely changed.  Yet there are 1,300 fewer people employed between the state’s lowest unemployment rate month (May 2016) and last month (November 2016).

2016-labor

Telling Vermonters in a press release that Vermont’s unemployment rate is tied for sixth-lowest in the country is so meaningless (absent any context), it’s almost deceptive.  But the November press release goes on:

“The Vermont economy is more stable than the month-to-month data might suggest, as increases and declines are “ironed out” at the

Welcome to Vermont!

Welcome to Vermont!

conclusion of the year. What we can see is a slower rate of job gains this year than in recent years. Yet, with Vermont’s low unemployment rate, it’s still a tight labor market with recruitment and retention challenges for our employers; and a limited availability of workers can adversely impact economic expansion and growth.

Yes, it’s always going to be a tight labor market when the labor force is shrinking annually, and has been since its 40-year peak in April, 2009, at 361,200 Vermonters in the labor force.  In November, 2016, that number is 344,750.  That’s 16,000 fewer workers in the labor force in 7 years.  Vermont is featuring an annual worker reduction of more than 2,000 workers per year.

A couple of numbers from the state’s historical labor data that never seem to make it into the state’s semi-rosy press releases:

  • The average monthly number of workers in the labor force for 2016 is 345,000.  In 2006, this average is just shy of 357,000.  A reduction of 12,000 workers in the labor force.
  • The average monthly number of people employed in the labor force for 2016 is 334,000.  In 2006, this average is just shy of 344,000.  A reduction of 10,000 employed workers.

In fact, taking a look at a few of the lowest employment months in 2016, and comparing them to the historical high numbers in 3 cateogories – Labor Force, Employment, and Unemployment – and then compare them to the 2009 numbers, a certain trend becomes clear:

  • Vermont’s number of employed is relatively the same for the past 10 years.
  • Vermont’s labor force is shrinking dramatically, at a rate higher than the decline of unemployed – which creates a decreasing unemployment rate.  This decreasing unemployment rate masks the fact that there is little to no job growth in the state for the last 10 years.

The historical context is…painful.

But the state’s conclusion as to how to address this issue, the fix, is a howler that has to be read at least twice to understand the depth of the disconnect:

Vermont needs to effectively utilize every state and federal job-training dollar to get people into jobs, and we need to address issues that will help Vermont be more successful: promoting gender equity, workplace civility, bringing under-represented populations into the workforce, creating job training programs that guarantee employment at the conclusion, and resolving the “benefit cliff” so that anyone who wants to work can do so without suffering adverse economic impacts.

Oh, so that’s all it takes!  Gender equity will create high-paying manufacturing, technical, and financial jobs for all inequitably-gendered Vermonters to enjoy!  I’d gasp with pride but I’m too busy gasping in astonishment.

Let’s look at that State of Vermont sanctioned checklist to fix the economy a bit more closely:

  • Gender equity (I’m assuming this reflects how much you have invested in the value of your house based on gender?)
  • Workplace civility (remember, you have to have a job first before the workplace’s civility can be measured by the Vermont State Civility Department)
  • Bringing under-represented populations into the workforce (like actual Vermonters, I’m guessing here?)
  • Create job training programs (because decades of job training programs have resulted in the numbers above, so let’s double-down on that approach).
  • Resolve the benefit cliff (this from the state that tried to institute single-payer, a system that has failed in Vermont as well as nationally, and has created people taking more part-time jobs because Obamacare’s incentives are upside-down).

Here’s what’s not mentioned in the press release, so I offer these up as suggestions to the State of Vermont, if they’re not too busy creating gender civility or the like:

  • Lower taxes – on income and property.
  • Reduced regulation by a state that’s paying for advertising on the horrors of contractor workers being, y’know, employed.  As a
    I hear there's an opening at WalMart. I'm on it.

    I hear there’s an opening at WalMart. I’m all over it.

    contractor.  By agreeing to a contract.  For work.

  • By creating a business-friendly business environment.  When you’re ranked 46th out of 57 states, well, there’s some room to grow.
  • Stop electing governors who promise something for free but winds up costing $200 million to “cover” only a small fraction of Vermonters who were uninsured, but qualified for insurance of some kind regardless of Peter Shumlin’s flailing attempts at implementing single-payer, and, well, you’d get more businesses interested in investing and expanding in Vermont when they know their costs won’t swing on the whims of state politicians interested in national offices.  Like in DC.  (Ahem).
  • Stop electing governors who usurp the authority of the state’s Public Service Board (which is supposed to represent the peoples’ interest, not the governor’s) and shutter the cheapest and most reliable electricity in the state’s history – Vermont Yankee.
  • Stop electing governors who tout new ‘clean-energy’ jobs as part of the state’s job-growth numbers, while happily ignoring the fact that federal subsidies – funded by taxpayers – pay for the bulk of those new ‘jobs’.

That said, the first step for any corrective action is up to Vermonters, who, at least in the last election cycle, seemed to have grasped what works, and what does not work.  It’s time for the State of Vermont to catch up to its citizens.

 

 

 

 

 

 

 

Recovering From Obama’s Decade of Recovery

The improbable Trump presidential win has led to the most obvious of questions, which is – what can Trump do for the economy?

To answer that, let’s take a look at what’s left of the economy after 8 years of Barry’s version of “economics”, which seemed to largely consist of increased federal spending (to new record levels), massive increases in the regulatory state, and condemnation of those who pay over half the income taxes the federal gov’t seems to so happily gobble up.

It turns out that federal spending and the growth of the federal government does not increase GDP, even when federal outlays are a component of the GDP metric.  The spike in spending in 2008 (these are YOY percentage changes) and again in 2010 reinforce that conclusion – even if you assumed a causal relationship between spending in 2008 and the return from negative GDP in 2008/2009/2010, that conclusion becomes demonstrably false after 2010’s spending, which almost matches 2008, and GDP for that year is flat and decreases afterwards.

gdp-and-fed-spending

 

There’s virtually zero correlation to federal spending and economic growth, especially in this “recovery” as it pertains to job growth.  As an example, let’s look at YOY job growth by job category, October 2015 to October 2016 (from our friends at BLS.gov):

You can almost *taste* the deliciousness of job growth here. Almost.

You can almost *taste* the deliciousness of job growth here. Almost.

Health care and social assistance are largely funded by tax dollars – Medicare and Medicaid are an enormous component all health care spending, so the jobs “created” in health care, are, in part, funded by taxes.  Pensions, in the category below, includes Social Security, disability insurance, workers compensation, etc.  Health care in the category below, includes Medicaid, Medicare, and everything in between.  Over half the 2016 federal budget – $3.854 trillion – is consumed in these two categories.

 

2016-spending-snap

So while federal spending in the largest job-creating categories means that, well, we’re borrowing 40% or so of every dollar spent to create jobs in areas that are already funded by tax dollars, means we’re chasing a negative feedback loop if we think federal spending can simply fund an infinite amount of jobs, and/or increase incomes.

In fact, if you take a look at federal expenditures and median household incomes, there’s almost an inverse impact on incomes – federal spending goes up and median household incomes stay the same, or actually decrease.  When spending goes down, in 2013-2014, incomes actually go up.  Which should tell you all you need to know about using federal spending to increase incomes.

Not really a strong argument for Keynesian economics, that.

Not really a strong argument for Keynesian economics, that.

So, despite 8 years of the 2009 Recovery Summer, what were Obama’s results after assuring us that we needed to spend trillions we didn’t have, else the economy would crash?  A fairly wrecked economy that’s stumbled forward for 8 years – 8 years! – with incomes staying fairly flat, and frequently dipping into negative growth rates.

As Fortune points out in a recent article, it can be argued that for the first time in modern history, there has been no economy recovery.  At least according a Gallup study (linked from the Fortune article), titled “An Analysis of Long-Term US Productivity Decline“:

Rothwell (the study’s author – ed.) goes on to argue that regulatory and tax reform is the main culprit for America’s economic woes, and that the healthcare, housing, and education industries have been particularly harmed by the government. He points to statistics showing that despite rapidly rising costs in all three of these industries, the quality of the products and services offered has stagnated.

Growth in government spending just exacerbates the negative trends.  As an example, new firms per capita are half of what they were in 1981 – and new firms, and new jobs, are the engines that drive future business growth.  From page 73 of the study:

ENTREPRENEURIAL ACTIVITY HAS DECLINED

The escalating cost of healthcare may also have implications for the creation of new firms or startups. There is always an element of risk in creating a new business, but the rising costs of healthcare magnify that risk. In previous decades, an employed worker could quit his or her job and pay for healthcare expenses out-of-pocket if necessary. Now, out-of-pocket expenses for the non-insured are extremely high, so an employed worker who quits to start a business likely gives up a valuable healthcare plan and may have to impose those costs on his or her own fledgling business at a time when revenue is dangerously low. Provisions in the Affordable Care Act were designed to make it easier for the self-employed to purchase health insurance, but even in 2014, 23% of self-employed workers between the ages of 18 and 64 lacked health insurance, compared with 13% of wage and salary workers. For those who are self-employed and have insurance, only about half get it through their businesses.93 Whatever the reasons, people are much less likely to either be self employed or start firms with at least one employee. The number of new firms with at least one worker per capita has fallen by about half since the late 1970s. Although the downward trend has been going on for decades, it accelerated over the Great Recession and has not inched back up.

new-firms

If the United States is to recover from Obama’s Recovery Decade ™, a good place to start would be the dismantling of federal spending onditch a permanent basis, and a re-set in Congress in terms of what it can and should be doing to foster economic growth.  Instead of a decade of piling on regulations and costs in a recession, maybe it could start lifting those weights off of businesses’ backs, and see what happens.

Because whatever Obama’s been trying for 8 years is a perfect recipe for keeping the economy, and the people who do all the work in it, permanently in the ditch.

 

 

 

Leviathan Shrugged

pacific-rim-kaiju-otachi-more

Hmmm – I wonder what a boat filled with taxpayers tastes like?

As Americans set course on a journey that would net them two presidential candidates who are the least liked in what appears to be all of history, one or two or thirty things come to mind, regarding the general irrelevance of which party wins the presidency.  Let’s start at the top.

It does not matter who the next president is:  Federal spending will continue to grow faster than the pace of inflation, or population growth, GDP growth (even with federal spending as one of its components), or the growth of my 401k.  Just taking the last 25 years or so, what is reliably and consistently growing, so much so that if it were an investment option, people would be buying it like cakes that are really hot?

Spending.  Spending is king.

fed-spend-and-gdp

“But wait!” gasps the Keynesian.  “Federal spending is needed during recessions to jump-start the economy, and reduce unemployment”.

Sure – but those dollars spent come from somewhere, in the form of taxes and borrowing, and when that happens, those dollars aren’t available for capital spending, investment, savings, etc, all of which actually creates jobs in the private sector.  It doesn’t have the net effect of taking dollars from the private sector to spend them via the public sector, which gains nothing, other than votes for office and an increase in the debt and deficit.

Unemployment increases and decreases independent of expenditures - not because of them.

Unemployment increases and decreases independent of expenditures – not because of them.

The reality is that the unemployment rate is more closely tied to the dwindling labor force participation rate than it is to federal spending – which runs counter to the standard Democrat response to any kind of recession, consisting of mostly “let’s spend even more money than usual under the guise of helping”.

spend-unemp-and-lbr-force

Participation rate goes down at roughly the same pace as unemployment, independent of increases in federal spending.

In fact, if you go back to 2000, the labor force starts dropping dramatically when, exactly?  Let me check – ah, that’s right, as soon as Barack Obama assumed the presidency.  That drop in participation accounts for nearly all the unemployment reductions since the recession started.

Recovery 2009 never looked so good! Thanks Biden!

Recovery 2009 never looked so good! Thanks Biden!

But it does, of course, get worse.  If you look at unfilled job vacancies, going back to 2001 – we still have (slightly) fewer unfilled vacancies as of 2015 as we did in 2001 or so.  Yet federal spending doubled during that time.  If you use vacancies – jobs available – as a barometer of growth, we’ve doubled federal spending for no net gain in available jobs.

unfilled-gigs-and-spend

All of which is just another reason why the person occupying the White House can speak to different policies, preferences, and budget priorities, but every year, spending goes up.  The deficits, once deemed unpatriotic due to their size by Obama, yet doubled under his presidency, and the subsequent debt, are just choices being pushed onto future generations.

Or, better stated – a reduction of choices, for them.  Because they will be footing the bill for what we spend now, and they didn’t even get a chance to vote on the lesser of two evils, whoever you might end up choosing to vote for on Election Day.  The less they have to spend, the less free they are, to make their own choices.  We are choosing for them.

In other words, Leviathan, in the form of the federal government, doesn’t care who wins.  Leviathan will continue to feed off the labor of the citizens (those still working, anyway), and the borrowed future earnings of those not even born yet.  The only way to kill this beast is to starve it, and no modern president, or presidential candidate, seems interested in taking that one sane step forward.

 

 

Vermont’s Six-Year Plan

Recently, Vermont’s unemployment rate ticked up a notch, a tenth of a percent, which seems to generate the standard spasmodic response programmed into the Department

Quite the opposite, actually.

Quite the opposite, actually.

of Labor’s webpage:

The Vermont Department of Labor announced today that the seasonally-adjusted statewide unemployment rate for August was 3.3 percent. This represents an increase of one-tenth of one percentage point from the revised July rate (3.2 percent). The national rate in August was 4.9 percent. As of the prior month’s initial data, the Burlington-South Burlington Metropolitan NECTA was tied for the seventh lowest unemployment rate in the country for all metropolitan areas at 2.9 percent (not-seasonally-adjusted). Overall, Vermont’s unemployment rate was fifth lowest in the country for the same time period.

The bolded section is the good news the state’s trying to slather over the dismal economic record of Peter Shumlin, and the Progressive bloc in general.  Because even though Vermont’s unemployment rate is low, that doesn’t mean Vermont’s economy is doing well.  Unemployment could be at zero, if every employable Vermonter was working for $10/hour selling lift tickets to tourists, but that’s not the Vermont we’re looking for, is it?

Unfortunately, that’s the Vermont you’re getting.  Even the state’s own out-year employment projections, short-term, says that out of the top 15 job types the state sees demand for, only 3 of them would require a Bachelor’s degree as a condition of employment.

That's encouraging.

That’s encouraging.

So why would the Department of Labor continue with its rosy monthly unemployment summaries, making comparisons to national and other KPIs to show that Vermont has a lower rate of unemployment than other places?  Why would it go out of its way not to provide a historical Vermont context for the overall employment picture?

It’s a simple answer, really.  If the DoL did show the data and speak to it openly, it would look bad for the current and prior administrations.  It might, finally, force the state to change its Progressive agenda to something that oh, I don’t know, create a job other than a cashier at an EB5-funded ski resort.

The real reason unemployment is low revolves around one thing only – a shrinking job force.  This is the Labor Force and Unemployment picture from 2010 (the start of Shumlin’s tenure as Vermont’s Governor and Single-Payer Implementer.  Oh, wait, my bad on that last part.  Never mind).

2010

These are the same months in 2016:

2016

If you look at the averages, the labor force in 2010 was larger by 14,000 people.  Yet the average number of employed Vermonters in 2010 was 337,000; in 2016 it was 333,000, a difference of 4,000 Vermonters.  The unemployed number has been cut in half, by about 10,000.

So although the number of unemployed has shrunk by 10,000 or so, we now have:

  1.  A smaller workforce.
  2.  Even fewer people employed.
  3.  A lower unemployment rate!  The economy must be booming!

These numbers alone show a significant negative trend that no amount of mediocre

Hey, at least it's not economics.

Hey, at least it’s not economics.

word-smithing by the Department of Labor can paper over.  That the state doesn’t advertise these numbers is because it demonstrates a massive failure of public policy, that the policies espoused by Shumlin, Shap Smith, et al, have been and continue to be the harbingers of the slow economic death experienced by Vermonters, every day.

For the dwindling number of Vermonters still living there, that is.  There is a choice.  What’s hard to accept is that for Vermonters to thrive, to live in their own homes, and raise their families, maybe the state they grew up in is no longer home.

 

 

The Ministry of Truth-Telling

Finally, at least one agency of the largest employer of the state – the state of Vermont – is telling the truth:  If you want to live in Vermont,

They misspelled "Progressive Party of Vermont" here.

They misspelled “Progressive Party of Vermont” here.

expect a lower standard of living than your parents enjoyed.  If you could use the word “enjoyed” in a state that boasts one of the highest aggregate tax rates and one of the highest costs of living and doing business in the country, and routinely ranks near the bottom of all national surveys on business climate.

The Department of Public “Service”, that same wonderful entity that helped bring about the shuttering of Vermont Yankee, which had the happy result of increasing electrical costs and dependency upon non-locally-generated power, now suggests, strongly, that Vermonters start moving into caves:

Giving up some rural landscapes for solar arrays, sharing cars and driving less, and generally using less cheap oil and gas are all in order if the state has any hope of achieving 90 percent renewable energy usage by 2050.

This was the message of the DPS at a public forum held at the Vermont College of Fine Arts on Tuesday morning. Included in the crowd of about 100 were some state legislators and energy professionals.

The forum allowed the public to provide input on the standards the DPS must create per Act 174 of 2016 for ensuring consistency of regional and municipal plans with state energy policy.

In other words, like with schools, you can create your own policy, as long as it conforms to what the state is going to tell you to do anyway.

To do this, the state’s finest in planning professionals (the same state that brought you Single-Payer Healthcare Planning Professionals Who Think Voters Are Stupid) are suggesting the following steps to get to the 90% renewables by 2050 target:

Not pictured: Shumlin

Not pictured: Shumlin

Director of the Planning and Energy Resources Division of the DPS Asa Hopkins led much of the initial presentation. He said that eventually communities should create maps that overlay what he categorized as primary and secondary constraints for alternative energy development.

Oooh!  Maps!  To where the buried energy treasure lies?  Oh, no, wait.  Not the fun kind of maps.  He means anything (more or less) found outside:

Some examples of primary constraints include vernal pools, river corridors, FEMA floodways, rare and irreplaceable natural areas, transportation infrastructure, federal wilderness areas and wetlands. Some secondary constraints include agricultural soils, conserved lands, deer wintering areas, hydric soils and habitat blocks.

So, in other words, you’re required to make renewables part of regional energy planning but you can only do so within the state’s proscribed box o’ places to site said energy sources, like solar, else the sky falls in and bad things will happen.  In the form of penalties.

Hopkins suggested a shift from oil and gas to renewables would mean, from an economic perspective, a shift away from operating costs (primarily fuel) into capital costs (infrastructure). He suggested the overall aggregate of energy costs should stay relatively the same, give or take about 5 percent.

Funny, that’s as much as the electric rates for Vermont Yankee went up (5%) when the Vermont legislature decided that it could decide whether or not Vermont Yankee could continue to operate, because as every Vermonter knows, all legislators are highly experienced energy professionals with decades of knowledge to back up their decision-making:

Vermont’s three largest utilities use about one million more MW/H of “system power” now than in 2011 (before the March 2012 expiration of Vermont’s utilities’ contract with Vermont Yankee which provided about one-third of the state’s power). System power is the term for electricity bought from the New England transmission grid, and is comprised mostly of fossil fuel power (especially natural gas), as well as some nuclear, hydro and renewable power. Green Mountain Power, Burlington Electric Dept., and Vermont Electric Coop use 1.8 million megawatt hours of “system power.” In 2011 the same three utilities used 847,000 Mw/h of system power, according to the “Utility Facts” study released in February, 2013 by the Vermont Department of Public Service.

Over the 12 months from December 2011 to December 2012, Vermont’s electricity prices rose 5.1 percent, according to the EIA. During the same time period, rates in New York and every other New England state (except Rhode Island) decreased.

In the same way that Vermonters are being told that they will a) adhere to the state’s incalculably stupid energy policy (which is really just a

The latest in Vermont's new hi-tech homesteads!

The latest in Vermont’s new hi-tech homesteads!  No power required!

vehicle for politicians to use to get elected), they’re also told that b) it really will only cost 5% more.

Just like when Vermonters were told their health care insurance costs wouldn’t go up much (in fact, they were told it would go down), it would be easier to enroll, and they would have more choices.  In that regard, it’s not so much as accepting the lie itself that the state is telling you, it’s that you get to choose which lie you want to believe in.  That’s classical market thinking, Progressive-style.

Not mentioned by the state’s Progressive Peoples’ Brigade are the hard and unyielding economic realities of cost:  When the cost of something goes up, less of it is demanded, and that rule goes for power, too.  Except for local businesses, which are small and depend upon the general economic vitality of Vermont to keep food on the table – and a booming travel industry – bigger businesses can and will move, to places that aren’t apparently out to shutter them.  While politicians like Peter “Thanks, I’ll Quit While I’m Barely Ahead” Shumlin tout the state as a “great” place for jobs, the hard smack of reality is that the bulk of job growth is in service jobs, which are not well-known for their high rates of pay.

Electricity is a cost in every economic activity, but especially manufacturing.  The price and reliability of electricity are critical factors in the manufacturing business model.  Even the Shumlin administration, which had previously worked to not cut IBM a break, finally decided that the rates were an issue in 2014 – well after IBM had already voiced its concerns.

Chris Recchia, commissioner of the Department of Public Service, said the rate freeze was particularly important this year for IBM.

“It is no secret that they are struggling,” Recchia said. “And a rate freeze for them was going be very helpful for additional planning in the coming years.” Though the freeze doesn’t prevent IBM from leaving the state, he said, “I think they would describe it as every little bit helps.”

No kidding.  You think so, Chris?

IBM said in testimony to the Public Service Board that electricity rates in New York are much lower than they are in Vermont. And New York has “made an aggressive push” to attract high-tech businesses like GlobalFoundries, the tech company rumored to be considering the purchase of IBM’s Essex plant.

“Competitors in other geographic areas are paying electric rates significantly lower than IBM Vermont’s rates,” said Nathan Fiske, an IBM site energy manager, in prefiled PSB testimony on May 30. “Our competitive disadvantage, as a result of the higher electric costs paid by IBM Vermont, is very substantial.”

Which is one of many many reasons why Fab 2000 is now sited in New York, not Williston, Vermont, providing jobs to New Yorkers instead of Vermonters (not including the Vermonters who moved there to find a new job in the new fab, part of Vermont’s economic exodus).

But now, finally, the state has come clean:  It wants a diminished future for Vermonters, mandated from a central planning agency.  How this

Not pictured: Chowderheads frantically dialing the power company when the rolling blackouts start. In January.

Not pictured: Chowderheads frantically dialing the power company when the rolling blackouts start. In January.

translates out to Vermonters in the real world, though, might not quite align so nicely with the Vermont Progressive Utopia:

A recurring theme in one of the discussion groups was “One-size-fits-all is a difficult standard to work with,” as Judith Jackson of Irasburg put it.

State Rep. Joseph Troiano, D-Stannard, reiterated as much. He said Stannard has of a population of only about 150 people, with no paved roads and certainly no public transportation. Residents are spread out and they go to work in different directions, so any notion of ride-sharing is pretty much off the table.

Vermont is in the bottom half of states for population density.  Add in the fact that for half the calendar year there’s the real possibility of snow and ice factoring into transportation decisions, and you’re not really likely to see someone from Buel’s Gore biking to work in South Burlington, and, well, this “plan” starts to seem irrationally optimistic.

Moving a weak and demographically shaky economy to one that has less predictability in access to electricity, with uncertainty in rates, does not equal a massive influx of speculative capital, in search of Vermont’s next big economic success story.  The Ministry of Truth, in the form of the DPS, is doing a painful disservice, again, to the people of Vermont, that it purports to represent.

In fact, what DPS says in its mission statement, and what it’s telling the public, are two different things:

We work to advance all Vermonters’ quality of life, economy and security through implementation of our statewide energy and telecommunications goals, using sound statewide energy and telecommunications planning, strong public advocacy of the public good, and through strong consumer protection advocacy for individuals.

So which is it?  A reduction in the standard of living to adhere to the bureaucracy’s latest 5-year plan, or working to advance all Vermonters’ quality of life?

Because it can’t be both.