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.

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.

Vermonzuela: It’s Either A Cheese Or A State Of Mind

Vermonzuela:  A Progressive cheese that’s so progressive it winds up in your shopping cart without you asking for it, it’s price is

labeled “free”, and it tastes like the ashbin of history?

OK, so it’s not a real cheese.

In what can only be potentially great news for under-employed millennials here in the United States, Venezuela, a country demonstrating just how clever it is by nationalizing industries and implementing massive social welfare programs predicated on revenues flowing from just one commodity, is now taking steps to make its own citizens work in forced-labor camps.

You asked for work, you got it, Millennials!

In a scene that could only make such historical luminaries as Pol Pot, Mao Tse-Tung, and Stalin throw a party:

Fight the power! Er, wait - I am the power!

Fight the power! Er, wait – I am the power!

The government of Venezuela has issued a decree that “effectively amounts to forced labor” in an attempt to fix a spiraling food crisis, according to a new report from Amnesty International.

Nothing fixes a shortage of food like taking people out of their offices and putting them to work in the field, where they will surely create such a massive spike in productivity that prices will inevitably drop, as more food is grown and harvested more rapidly than before, simply by adding more resources to the same level of work.  Even if said resources know absolutely zero about farming, harvesting, transporting, and selling produce of any kind.  And might also be hungry.

This type of thinking has historical precedent.  They’re called “famines”, and the Soviet Union wound up killing millions of people through starvation, based on forced collectivization.  So did Mao in his Great Leap Forward Into Slaughtering Tens Of Millions.

So, for Venezuela to follow this same historical path just sounds like good science.  Unfortunately, this same science is applied in Vermont, on a much smaller scale, with smaller impacts, but the basic premises are the same.  Let’s take a look.

1. Single-payer:  Price controls for Health Care:  As has been called for by some single-payer proponents to make the system “work”, price controls essentially act as a cap on what can be charged for services.  This means that either a) once the number of patients has been seen that gobbles up the budget through the cap limit for the year, no more patients can be seen, or b) you can continue to see patients, but they will only be able to offer reduced services in order to stay under the cap for the year.  You can model this as a per-capita equation, estimating how many people a particular doctor might see based on historicals, but you are completely guessing as to what the real need will be (a big flu season, bad weather causing more accidents than normal, a flood, etc, would throw the budget into chaos).  Odds are good that your variance to that capped budget will exceed the 3.5%-4.0% margin Vermont hospitals generally operate under, annually.

As Hamilton Davis argues:

Getting the costs under control will require unprecedented changes in the health care delivery system itself. In the past, ties between elements of the health care system – doctors and hospitals – were limited. They competed with one another to a significant degree and that is still going on.

In the future, they will have to be integrated, tied together, both clinically and financially. The reimbursement system will have to shift from fee-for-service, which is a powerful incentive for overuse, to some sort of per capita financing, rather than financing per medical episode. And the doctors and hospitals will have to take “risk”; they will have to set a price for caring for a group of patients, and if they exceed it, the overage will come out of their pockets.

Right.  And if the overage is more than what goes into their pockets, the practice shuts down – or at best, it starts rationing care in one form or

Is this where the line starts for free college?

Is this where the line starts for free college?

another.  Or the doctor and staff start receiving salary cuts.  Even though some of Davis’s arguments are logical, they fail, utterly, when compared as easily as he does to other industries.  A car mechanic can turn away anyone he or she doesn’t want to work for; a hospital has to take care of the sick immediately, with the financing done later.  That will mean the hospital will have a mix of payers, and some cover the costs, and some don’t.  A cap on what you can spend per patient creates the incentives to do just what cost controls aren’t supposed to do – reduce the amount of care available.  Davis actually states that the doctors will have to set a price – which you have to do either in the market, or in a government-mandated controls situation.  Why is one OK but the other isn’t?  Why would the inevitable reduction in the amount of care available be seen as a benefit?

Oh, and as for examples of price controls not working?  See how Medicare and Medicaid’s reimbursements have been keeping up with actual costs.  How’s that working out?

2.  Venezuela banned GMOs.  I seem to recall some Progressive efforts on this in Vermont recently, but let’s see how Venezuela’s doing:

The Seed Law seeks to consolidate national food sovereignty, regulate the production of hybrid seed, and rejects the production, distribution and import of GMO seeds, according to GMWatch. The law will also ban transgenic seed research.

The law will establish the National Seed System, a central body that will implement the new law. The group will monitor and sanction any agricultural violations, with a focus on the protection of traditional seeds, teleSUR reported.

The legislation, which comes after years of collective grassroots efforts, was promptly signed by Venezuela’s President Nicolas Maduro.

“Approval of the Seed Law was pending since last year after being proposed through a national dialogue process in 2013,” teleSUR reported. “Public consultations have sought popular input on the law, and campesinos [farmers] and environmental advocates have

Clear evidence that nationalization of industries works just fine, thank you.

Clear evidence that nationalization of industries works just fine, thank you.

long urged for its approval.”

Are these “environmental advocates” starving?  Because it looks like the rest of the country is, so much so that they’re going to force people to work in labor camps to produce more food.

3.  Venezuela Bans Private Gun Ownership in 2012:  Not to be outdone, the Burlington, VT, city council banned guns from private ownership.  Despite such niceties as the 2nd Amendment creating headaches for right-thinking city council members, Burlington, at least is choosing the same path to success and individual freedom as Venezuela.

History has no shortage of despots in one form or another banning the private ownership of guns, which obviously makes it easier to control your less-than-thrilled-with-you citizens.  But it clearly sends a signal to Venezuelans that they’re subjects, not citizens, and the choices are being made for them, to them, instead of the people making their own choices for themselves.

Which is what markets, and ultimately freedom, are about.  The more choices are removed, the less free you are.

Looks like Vermont and Venezuela have a lot more in common than I might have thought.

 

Vermont GDP: Gross Disaster Product

Art Woolf, longtime economics professor at the University of Vermont, recently wrote about Vermont’s GDP being the lowest in the nation – even lower than a state with a smaller population than Vermont:

The best summary statistic we have to describe a state or nation’s economy is gross domestic product, the total dollar value of all goods and services produced within its borders.  Vermont’s GDP — $30.4 billion in 2015 — pales in comparison to the U.S. total of $17,800 billion.  That’s usually referenced as $17.8 trillion, but it’s hard enough for me to conceptualize a billion dollars, much less a trillion, and comparing Vermont’s GDP to the nation is best done using the same units of measure.  We could also say that Vermont’s GDP is $0.0304 trillion, but that’s even harder to conceptualize. At any rate, Vermont’s GDP is the smallest of any state in the nation, below even Wyoming, the only state with fewer people than Vermont.  At the other end of the list, California leads the nation with a GDP of $2.5 trillion.

As we’ve noted before, Vermont has been at the very tail end of economic growth as compared to the other 49 states (or 56 if you’re Obama, who really kills it at math).

But worse, even when comparing a barely anemic growth rate in GDP in Vermont to New Hampshire’s more robust rate, there is much more compelling economic evidence that the state is trending downward.  In a very critical category:  Income.

GDP goes up in both states, but incomes go down in Vermont. Shocking.

GDP goes up in both states, but incomes go down in Vermont. Shocking.

Vermont’s median household income has never been higher than New Hampshire’s, at least going as far back as 2000 (earliest year of the FRED data).  New Hampshire’s population is roughly twice that of Vermont’s, but on the median household income basis, that population factor is accounted for.

Why?  Why are Vermont incomes lower, and even trend negative starting in 2013?  If those trends are negative in 2013, why would Vermont’s sitting governor, Peter Shumlin, declare Vermont to be a “great” place for jobs in 2014?  How “great” can it be if incomes are going down?

Worse, the trend in Vermont is increasing spending and employee hiring in the public sector, while NH has been trimming the number of employees in the public sector.  Vermont’s answer to stagnation is to hire more employees; New Hampshire’s seems to be the opposite.

One of these trends is not like the other.

One of these trends is not like the other.

In fact, between the peak of government employees for both states in the January 2010 timeframe (above), until January 2016, here’s how NH and VT compare:

 

nh vt govt employee split

Incomes do not go up when state spending increases to hire more people.  The dollars spent on state employees come from the private sector, and the higher the private sector is taxed, the slower the economy will grow.  So how does VT and NH compare, in total taxes?  Vermont is ranked 12th in total taxes; New Hampshire is ranked 49th.

This is not a race you want to be first in.

This is not a race you want to be first in.

In other words, if you’re looking for growth prospects, higher incomes, and opportunity for yourself and your family, Vermont might not be the state you’re looking for.

obi meme

What A Difference A Year Makes!

Nothing succeeds like success!  Or, it does if you’re Annie Noonan, the Commissioner of the Vermont Department of Labor, and your job is to cheerlead mediocrity.  Since Vermont has such a low unemployment number, even when bad weather (from the ski industry’s point of view) makes for fewer of those high-paying seasonal service jobs, Annie’s here to tell that there’s a silver lining to the unemployment cloud:

January 26, 2016:  “The lack of snow directly impacted the number of jobs in Vermont in December.  People who had been hired by employers in the leisure and hospitality sector were laid off when the snow didn’t arrive as expected, and ski lifts were idled, hotel rooms weren’t booked, and restaurants weren’t serving the winter-season visitors.  As such, the December employment data had notable employment loss; fortunately, the situation is turning around, and many of those laid off workers are now back to work.  Vermont employers are still hiring, and job training programs and internships are available for many Vermonters.  The Department of Labor encourages anyone looking for work or a career change to visit one of our 12 regional career centers.”

Well.  Vermont employers are still hiring.  Great news!  So what kind of jobs are they hiring for?  Before answering that question, let’s look at Vermont’s 2015 economic performance from an employee point of view.  Meaning someone who’s actively looking for work:

Hey, unemployment's lower! But, um, so are the employed. Oh.

Hey, unemployment’s lower! But, um, so are the employed. Oh.

Hm.  The Total column represents Vermont’s burgeoning labor force.  So there’s roughly 5,000 fewer people actively seeking employment in Vermont in December 2015 than there was in January 2015.

As the unemployment column shows, about 5,000 fewer people were unemployed in December 2015 than there were in January 2015.  So how can the unemployment number drop from 4.6% to 3.1% in 12 months, if those two numbers are the same?

Answer:  Because the overall employment number is almost exactly the same.  330,000 people were employed in January 2015, and 330,000 people were employed in December 2015.  Net new employment is all of 100 people.

That’s it.  That’s the Shumlin administration’s 2015 job creation record.  100 net new jobs.

What industries were able to reap this whirlwind harvest of jobs?  What businesses could absorb this upwelling of employment?  Well, government, mostly, and health care & social assistance.  In other words, taxpayer-supported jobs, not private-sector jobs, the jobs that provide the tax revenues to support the public sector.

Feel the economic...burn?

Feel the economic…burn?

And how is Annie Noonan’s boss, Peter Shumlin, addressing this massive job crisis in the Green Mountain State?  Oh, he’s telling businesses to divest from the coal and gas industries:

MONTPELIER – February 3, 2016 – Gov. Peter Shumlin stood with Vermont business and education leaders today who support his call for Vermont to use divestment as a tool to help combat global warming. The Governor made the call in his State of the State address earlier this year for Vermont to follow California’s lead in divesting state pension funds from coal assets. The Governor also urged that the state go further and divest from ExxonMobil assets.

So, in short, the governor manages to eke out 100 new jobs in 12 months, and then he’s telling businesses how they should run their asset portfolio.  This from the same guy who’s crashing the state’s budget on an annual basis before slinking out of office at the end of 2016.  As others have noted, submitting revenue estimates with 6% growth rates – when the historical trends are half that number – seems like a less

If only the governor's budgets were this accurate.

If only the governor’s budgets were this accurate.

than intelligent way to formulate next-year budgets.

The first consensus revenue forecast Shumlin saw as governor in January 2011 predicted that general fund revenues would grow by close to 6 percent in the following two years. In general, forecasts have fallen since then.

This was catastrophically bad financial planning, and only a fool would assume doubled growth rates based on no reason whatsoever.

Which leaves me one question:  I wonder if Shumlin will have another 100 jobs to take credit for in 11 months, on his way out the door?

Bernie Sanders: Federal Spending Hawk

In a shocking turn of events, Sen. Barry, er, Bernie Sanders (current whereabouts unknown, but might be found in a server storage facility at DNC headquarters, or apologizing spasmodically at the last debate to his Probably Pantsuit Overlord) recently decided that he opposes federal spending!  In the interests of saving digital space, I omitted any additional exclamation marks at the end of the previous sentence.

Bernie has taken this bold stance as a result of the House and Senate passing the omnibus spending bill, just in under the wire to continue funding the federal government, and just a few weeks from the New Year:

The Senate voted overwhelmingly Friday in favor a $1.8 trillion package of spending bills and tax breaks, sending the legislation to President Obama’s desk for his signature.

(As an aside, out in the real world, if you’re finally getting around to authorizing your next year spend two weeks before it starts, you get fired.)

Bernie’s response to this record-setting spend?  Billionaires are evil.  Insert shocked meme here.

I guess I'm shocked he's still peddling this idea.

I guess I’m shocked he’s still peddling this idea.

Millions of Americans are unemployed and working longer hours for lower wages, yet this spending package gives more tax breaks to billionaires, encourages large corporations to ship jobs overseas and makes worse an already corrupt campaign finance system.

First of all, unemployed Americans are not going to become more employed by doing the opposite of what Bernie’s complaining about here – raising taxes will reduce employment, as more money flows to the federal, state, and local governments rather than being invested in businesses, which leads to hiring.  The fact that federal spending has exploded in the last 8 years (with Bernie cheering the way on much of that increase in spending) while employment and incomes have remained stagnant seems to escape the reality of a man who’s literally fed himself off the labor of other people.  Taking money from the productive sector of the economy will in no way create a job.

Government spends more, incomes stay flat. Another economics lesson that Bernie hasn't bothered to wrap his receding hairstyle around.

Government spends more, income drop or stay flat. Another economics lesson that Bernie hasn’t bothered to wrap his receding hairstyle around.  That’s a *doubling* of federal expenditures in 15 years.  Federal spending does not improve incomes.  Period.

Oh, and “shipping jobs overseas”?  Don’t worry about the budget or spending bills, Bernie – our corporate tax rate is enough to do that as it is.  And since Bernie loves to tout European countries as being more progressive than the knuckle-draggers here in the states, maybe he can explain why, say, Sweden has a lower corporate tax rate than the United States?  In fact, why does the US have the highest rate out of all these countries?  Are those countries also shipping jobs overseas?  I guarantee that they’re not shipping them to the US with a higher corporate tax bite.

Can't wait for Bernie's platform to call for European-level corporate tax rates. How long will I have to wait for that to come out of Bernie's mouth?

Can’t wait for Bernie’s platform to call for European-level corporate tax rates. How long will I have to wait for that to come out of Bernie’s mouth?

Oh, and as for corruption in campaign finance – who are some of Bernie’s biggest campaign contributors?  Public-sector employees.  So tax dollars collected from the private sector are paid to those employees, a portion of which is also paid to their union, then the union lobbies Congress – and Bernie Sanders – to increase their rates of pay and benefits.  It’s a circular kickback scheme.

Yes, by all means - let's end campaign contribution corruption, starting with unions.

Yes, by all means – let’s end campaign contribution corruption, starting with unions.

Still, Bernie is by no means finished; he’s still going to take a swing at industries that produce that hated result – jobs:

Scientists tell us that we must act immediately to combat climate change, but this bill will lift the crude oil export ban and encourage the burning of more fossil fuels.

Scientists also tell us that climate change is directly correlated to solar activity, and that the cooling period that’s occurring now (prompting a change from the “global warming” nomenclature to “climate change”) is part of normal solar activity.  Scientists also tell us that smoking tobacco will kill us, yet Congress hasn’t banned tobacco.  Or banned cancer.  What’s Bernie waiting for?

Now, lest we forget the children, Bernie reminds us how evil Republicans are, again, in case anyone’s missed his earlier messaging on this issue:

And 16 million children are living in poverty in this country, but Congress has decided to cut food and nutrition services for our most vulnerable and increase the already bloated defense budget.

Yes, but by the measures used to define “poverty”, Bernie ignores the one trillion or so spent annually in the US on welfare programs, of all kinds.  From the article:

The government’s own data show that the actual living conditions of the more than 45 million people who are deemed “poor” by the Census Bureau differ greatly from popular conceptions of poverty.[18] Consider these facts taken from various government reports:[19]

  • Eighty percent of poor households have air conditioning. By contrast, at the beginning of the War on Poverty, only about 12 percent of the entire U.S. population enjoyed air conditioning.
  • Nearly three-quarters have a car or truck; 31 percent have two or more cars or trucks.[20]
  • Nearly two-thirds have cable or satellite television.
  • Half have a personal computer; one in seven has two or more computers.
  • More than half of poor families with children have a video game system such as an Xbox or PlayStation.
  • Forty-three percent have Internet access.
  • Forty percent have a wide-screen plasma or LCD TV.
  • A quarter have a digital video recorder system such as a TIVO.

Only in Bernie’s America do poor people have 2 cars and a plasma TV, and get to be categorized as “poor”.  Since the War on Poverty began,  $19.8 trillion has been spent on it – triple the total spent on military wars for the entire history of the US.

Since the beginning of the War on Poverty, government has spent $19.8 trillion (in inflation-adjusted 2011 dollars) on means-tested welfare. In comparison, the cost of all military wars in U.S. history from the Revolutionary War through the current war in Afghanistan has been $6.98 trillion (in inflation-adjusted 2011 dollars).[3] The War on Poverty has cost three times as much as all other wars combined.

But Bernie complaints continue:

While there are some important and positive provisions in this bill like the expanded Earned Income Tax Credit and Child Tax Credit, the truth is we cannot afford another spending package that expands the power and wealth of the billionaire class at the expense of everyone else. Congress must pass legislation that make our rigged political and economic systems work once again for the vast majority of Americans not just the 1 percent.

As Bernie fails to note, again and again, is that the 1 percent, the 10 percent, the 50 percent – those are the only people in the country paying taxes.  So if you’re going to create tax incentives or cut rates, it will of course impact the people actually paying the taxes, not the net recipients of those taxes collected.

If the 1% are so powerful, why are they the ones always stuck with paying the bills?

And to keep Bernie somewhere in the vicinity of Honesty, USA, the top 10% of income earners in the US pay 68% of taxes.  The top 50% of taxpayers pay 97% of all income taxes collected.

I guess coughing up 6-7 times your earnings in taxes paid relative to everyone else isn't enough in BernieLand.

I guess coughing up 6-7 times your earnings in taxes paid relative to everyone else isn’t enough in BernieLand.

If there’s something unfair in that tax scheme, it’s that half the country has almost no skin in the game whatsoever in paying taxes – so of

In his defense, though, it's not like it's *his* money.

In his defense, though, it’s not like it’s *his* money.

course they’re going to vote for tax increases on the wealthy, because it nets them more government stuff.

And that, in its entirety, is why Bernie Sanders is a presidential candidate.  His supporters’ votes have been bought and paid for by the 1% he so routinely demonizes.