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?

A Tale of Two States

Vermonters, let’s face facts:  New Hampshire is an upside-down Vermont.  Or, maybe more accurately, Vermont is the upside-down state,

I like this map. It's old-timey!

I like this map. It’s old-timey!

and New Hampshire has been right-side up all along, but Vermont’s politicians never seem to have noticed.  As it turns out, there’s some data to back this New England economic inversion up.

First, let’s take a look at the two states side-by-side, in terms of Median Household Income and the Unemployment Rate.  While both Vermont and New Hampshire enjoy (“enjoy” being a relative word here) a low unemployment rate, there’s just a slight difference of note regarding incomes:

Vermont strong! Um, except for incomes.

Vermont strong! Um, except for incomes.

 

Now let’s take a look at New Hampshire:

Hmmm. How is this state not like the other?

Hmmm. How is this state not like the other?

So, if an enterprising young individual was looking to choose a state to live in, and had NH and Vermont to choose from, which state do you think would be more appealing?  A $15,000 difference in median household income might be a deciding factor, no?  Does Peter Shumlin tout New Hampshire’s low unemployment rate and higher incomes than Vermonters, since he’s always talking up Vermont’s low unemployment number?

Speaking of incomes, you can only spend what you take home.  If given a choice, would you want to live in a state with a higher aggregate tax bite, or a lower one?

state local tax burden vermont

Consistent top 10, baby! And *above* the national average!

And how is New Hampshire so different?  Take a look at a the ranking column:

When it's better to be in the bottom 10 than the top 10.

When it’s better to be in the bottom 10 than the top 10.

Now let’s talk the size of the labor force.  One state has an increasing labor force, while one sad, desolate state’s labor force is consistently decreasing.  10 bucks to the first person who can guess which state is suffering from labor force shrinkage.  Go on, guess.  I double-dog dare you.  I perhaps might even triple-dog dare you.

First, let’s look at Vermont:

Hey, those are great trendlines.

Hey, those are great trendlines.

 

New Hampshire:

Decreasing unemployment rate and an increasing labor force. This is not Vermont.

Decreasing unemployment rate and an increasing labor force. This is not Vermont.

 

In short, New Hampshire has higher incomes, lower tax rates,

And choosy college grads, too.

And choosy college grads, too.

a similar unemployment rate, an increasing labor force, and an ongoing uptrend in

incomes versus Vermont’s stagnating income.

If given a choice, which state would you choose?

 

Health Care Coverage So Nice, Shumlin Wants You To Pay For It Twice

(Just barely) Governor Peter Shumlin recently let Vermonters know that he’s aware of how health care costs are shifted from participants in commercial plans to those participants in the current version of single-payer:  Medicaid.  In other words, the private sector subsidizes a single-payer program because single-payer can’t cover its own costs.  Just casually walking past

Health care costs got you down?

Health care costs got you down?

this stark irony seems to not be impossible for a governor who promised single-payer for all because of the urgent need for all Vermonters to have insurance.  A need that seemed to evaporate just after the governor edged out, by a few thousand votes, his competitor in the last election, as the governor subsequently scrapped plans for single-payer implementation that he already knew the state could not possibly afford.

Shumlin’s plans were scrapped only after a few hundred million were flushed down the tubes on a malfunctioning website, of course.  Note that the hundreds of millions that were wasted on a website could have gone to actually funding Medicaid, instead of paying a contractor to build a site that allowed people to sign up for a plan they were already eligible for.  The governor’s new plan blows all of that away, however:  He now wants to fix Medicaid, all the way from a small office in Montpelier, and then the cost-shift is reduced, and voila!  Problem solved.

But once again, those nagging realities – things like cost, and the fact that the states, in general, have become puppets on the strings of federal dollars – come back around to remind us all (except Shumlin) that you can’t have something for nothing.

Shumlin’s new plan is to hike the payroll tax (a tax hike!  Shocking.) by .7%, to generate an expected $90MM in revenue.  The $90MM is matched by the federal government, which is the way it entices states to manage their own Medicare programs, while simultaneously being completely on the hook for them since the matching funds are the only thing keeping the states’ system alive.

Under the plan, we will ask businesses to pay a one seventh of one percent payroll tax (0.7%), which will raise $90 million a year. For the majority of Vermont businesses, this will equal less than $1,000 per year. And since state Medicaid investments are matched by the federal government, we’ll draw down an additional $100 million in federal money to help our efforts.

Shumlin's hat is on backorder.

Shumlin’s hat is on backorder.

Now, keep in mind that the federal Medicaid dollars come from somewhere, right?  I’m going to guess “taxes” here, on a lark – so taxpayers are already paying for the matching Medicare dollars that the state collects.  And so are future generations, since the federal government’s unfunded Medicaid liabilities are in the tens of trillions.

This is the “free money” argument that seems to hold so much water in Montpelier – that if it’s federal dollars, it’s “free”, and we should do whatever we can to maximize those dollars.

But Vermonters are paying the taxes to the federal government and Peter’s government, and getting hit by them on both ends.  By increasing a payroll tax, you’ve just added another cost to businesses in Vermont, decreasing profitability, which imperils jobs – all to collect matching funds to offset a cost shift that’s due to underfunded and catastrophically managed federal and state programs.

In other words, commercial rate payers (employees who buy commercial insurance through their employers) pick up all the failures of the federal and state government, and now they’re going to get kicked again.  They’re going to wind up paying more for Vermont products because the costs will be shifted to people buying the products from Vermont companies.  Prices for Vermont goods will go up, making them less competitive.  It is an anti-business solution to an already well-known government failure.

But wait -there’s always more good news:

Of that $190 million, we will dedicate a significant portion of it to shore up Medicaid payments and immediately drive down private insurance rates, resulting in a 5 percent reduction in private insurance costs to individuals and businesses. We’ll invest the rest of the funds in strengthening the overall health care system to ensure better outcomes at a lower cost, meaning businesses providing insurance will benefit financially from lower health care costs.

If the cost-shift is the problem, why aren’t all dollars going to Medicaid?  Aren’t there Vermonters in need of Medicare dollars?  What does the rest of that “investment” look like?  How would money not spent in Medicaid “strengthen” the health care system?  How would that improve outcomes and reduce costs?

It looks to me that this is more window-dressing on a chronic failing of the federal single-payer system, that the states are far too tangled up in now to say “no” to.  So we go, hat in hand to the federal government, showing that we’ve done our due diligence in controlling health care costs by raising the cost of employment so we can claim we’ve “fixed” a cost shift created by the same people now claiming we need to fix the health care system.

As a result, Peter’s closing arguments are less than…convincing:

I know businesses are skeptical of new revenue and worried that this will not return value. 

What businesses?  You mean like the state’s formerly largest business that had to cut a $1.5 billion check to take an asset off its hands?  You mean businesses that rank Vermont near dead-last in business climate surveys?  Those businesses?

I know they are worried that Montpelier will try to use this revenue source for other purposes down the road.

Well, only because the state moves dollars around between the general fund and the education fund like water flows through a tap.  The Governor’s budget shows a $300 million transfer from the General Fund to the Education Fund (p. 23 of the governor’s budget summary).  So you can see where maybe the state’s businesses have some sort of historic basis for skepticism here.

General Fund, Education Fund - whatever.

General Fund, Education Fund – whatever.

But here is why I think this makes sense. Right now, businesses pay the vast majority of private health care costs and are the ones being overcharged. If we act, businesses will be the ones that will get the greatest relief if we lower private insurance costs by shoring up Medicaid.

But this just means they’re paying it twice.  Shumlin asks Vermonters to pay more to one system to offset their costs in another.

Simply put, we’ll ask businesses to pay in a payroll tax money they would have spent in higher insurance premiums had we not acted to shore up Medicaid.

So how is this a net benefit?  At best, you raise costs on businesses to offset one insurer (Medicaid) from another (commercial).  To put it in layman’s terms, this does not move the needle – it’s simply a transfer of dollars that would have already been spent on insurance, in one form or another.  It’s just raising one tax (payroll) to offset an already-existing cost, in commercial insurance rates.

It seems like the governor’s plan is to raise taxes, one way or another, to pay for a version of single-payer.  This version of it, though, will just look a little bit more like what we have today, which is a blended coverage, and will lack the stigma of the label of single-payer.

So, no single-payer, but you're going to raise taxes anyway?

So, no single-payer, but you’re going to raise taxes anyway?

What it won’t lack, however, will be the tab, which is ultimately foisted upon the Vermonters Shumlin keeps telling us he represents.  Given the massive budget failures that have occurred and are ongoing, and that Shumlin’s plan will also raise the cost of doing business in Vermont which won’t make it easier for Vermonters to live their lives here, how, exactly, did he manage to squeak past the finish line last November?

An Agenda for Progress….ivism

Peter Shumlin, not-so-recently humbled in an election that he barely won against a (very) late-comer Republican with no dollars in his campaign warchest, outlined just prior to his State of the State address his new “Agenda for Progress“. Essentially this Agenda, acting as a primer for his speech, outlines his future priorities, reflecting his new humble approach to governing.

But it seems that everything in his Agenda is more of the same – exactly the same as he’s been “delivering” for the past two terms.  As an example, he talks up jobs, making a fairly bizarre correlation between the birth of the ski industry in Vermont and renewable energy:

Who shut down Vermont Yankee?  This guy!

Who shut down Vermont Yankee? This guy!

That starts with jobs. In the 1930s, Vermonters with a vision cut the first ski trails, forging an industry that today accounts for over 30,000 jobs and over a billion dollars in annual economic activity. I believe that today we are at a similar point with renewable energy innovation in our state. Through innovation, expertise, collaboration, and strong, supportive public policy and regulation, we can power Vermont forward and give our state the tools needed to become the nation’s energy innovation leader.

In case the governor missed it, he’s managed to jack electrical rates up for that same ski industry that is so heavily reliant on cheap and consistent energy supplies by actively working to shut down Vermont Yankee. You don’t create jobs by increasing the costs of an industry, or any industry.  That destroys jobs. Creating a more expensive and less reliable energy source – a critical piece of infrastructure – dis-incentivizes new businesses from siting in Vermont, and discourages the expansion of existing businesses, because a primary cost driver is going to increase so much that already-thin margins shift to red.

The gubernatorial fantasy continues, however, since he’s claiming that we have a foundation of some kind to build upon:

“We have the foundation to achieve this success. The clean energy sector has created over 15,000 good-paying jobs for Vermonters and, at a time when other neighboring states have seen energy prices spike, our largest utility Green Mountain Power was able to lower rates by 2.46 percent.”

Well. The “clean energy” sector is hugely driven by subsidies, which means, in case the governor lacks this understanding, that either tax dollars or tax breaks are given to these corporations in order to achieve a political outcome, not an economic one. “Clean” energy (an oxymoron only a politician can love) isn’t clean, nor is it cheap, nor free from disasters non-financial.

Fire, like energy, is also sustainable with enough fuel and oxygen.

Fire, like energy, is also sustainable with enough fuel and oxygen.

Secondly, the energy that is “clean” can also be described as expensive, sporadic, and foreign-owned – since Gaz Metro drives so much of the utility bus now for Vermonters. This means that rates will have the unhappy effect of being less regulated by state entities and more regulated by terms of a contract – a contract with huge advantages to Gaz Metro because we had fewer local and regional options for energy supply with Vermont Yankee gone, a shutdown Vermont Yankee that Shumlin now proudly boasts as one of his “accomplishments”.

Peter also lays claim a 2.46% rate reduction, as if this magically occurred when the cheapest energy source in the state was shut down. That lower rate is temporary, and he knows it, because he designed it that way to coincide with his election schedule: That 2.46% represents the extortion, er, payout that Vermont Yankee was forced to cough up as part of their closing deal.  That reduced rate will kick right back up to its historical levels – and beyond! – in 2017. It is a temporary rate decrease, funded by Entergy, an entity whose revenues were paid by electrical consumers.  In other words, the rate decrease is in part funded by dollars we already paid in our prior electrical bills.  This decrease in rates seems as temporary as Peter’s recent claims to have been humbled at the ballot booth.

Ah, but Peter has more, doesn’t he?  He is an endless font of unsustainable speaking:

I am proposing to build on this progress with a new Energy Innovation Program that will spur community-based renewable energy development, create more than a 1,000 new jobs, put money in Vermonters’ pockets with a net savings of hundreds of millions of dollars on energy bills, and cut greenhouse gas emissions.  

Darth Shumlin?

Darth Shumlin?

Anytime the governor states that he’s going to create a new program invovling energy in the state, it really means that he’s going to increase taxes  or fees, and then subsidize otherwise non-viable corporations to build and install more expensive, unreliable, and inconsistent energy sources – all on your dime. He creates these things not out of thin air, but out of the thinning wallets of Vermonters.

He’s actually claiming that energy prices will go down as our reliance upon much more expensive solar and wind, and out-of-state spot market purchases for energy will increase dramatically. The only money being put into pockets is the tax dollars being redistributed to corporate cronies and lobbyists for the “sustainable” energy industries – which means dollars will not wind up in the average Vermonter’s pocket.  Peter also manages to avoid stating how many hundreds of millions Vermonters did not have to spend by buying on the spot market, instead of from Vermont Yankee.

Peter wraps up his looming Agenda thusly:

We owe it to Vermonters to bring spiraling health care costs under control, to begin to address the pressure of property tax increases, to continue the work on job growth, and on education and training from pre-K through college and beyond. We should continue bolstering our mental health system, investing in our downtowns, and turning the tide of opiate addiction to keep families healthier and communities safer.

Health care costs “spiral” because the existing versions of single-payer, Medicare and Medicaid, do not reimburse at cost. Peter talks a lot lately about addressing the “cost shift” but neglects to note that the federal gov’t controls the strings regarding Medicare/Medicaid reimbursements, he does not – so while he’ll loudly applaud federal dollars that are garnered to prop up a collapsing budget, he’ll simultaneously complain that the federal government’s version of single-payer is an abject failure. Reducing mandated hospital margins won’t cut dimes from an organization that’s serving an increasing population of Medicare enrollees – even while the governor makes claims that the number of uninsured have decreased in Vermont, simply due to their enrolling for Medicare coverage that they were already qualified for well before Vermont’s single-payer came into being last year.

I firmly believe that our best days are ahead of us and that Vermont continues to be the best place in America to live, work and raise a family. Over the next two years, I will work hard every day to ensure that is a reality for every single Vermonter.

The governor seems to be the only one believes this these days, since Vermont’s demographic death spiral, its consistent ranking as being one of the worst states to do business in, and the fact that Vermonters are having fewer children in the state that Shumlin claims to be the “best place” to raise a family in, well, it

Is there a federal scooper subsidy available?

Is there a federal scooper subsidy available?

indicates to anyone with eyes and ears that Peter does not live in the same Vermont that the rest of us live in.

Maybe if Peter spent less time out of Vermont, and more time living in it, he’d understand the realities of living in Vermont as Vermonters do, not as a wanna-be Health and Human Services Secretary in a Clinton administration might casually ignore the mess we’re living in – a mess he’s worked very hard to help create.

Peter’s Paralysis

Winners.  They do whatever it takes to win.  If that fails, then they go back and try to change the rules so they can win again.  Putney’s semi-favorite son, Governor Peter Shumlin, recently suggested that Vermont change its Constitution so big guys like Peter who can’t seem to convince Vermonters as to how fantastic a job they’ve done as governor can get a pass when it comes to, well, getting elected:

Hey, those tax revenues are looking great!

Hey, those tax revenues are looking great!

The Vermont Constitution should be changed according to Governor Peter Shumlin, D-Vermont.

He made the comment after the tight race for governor that will be decided by lawmakers. Shumlin suggests that any statewide candidate who wins a plurality over 40 percent is deemed elected. The current law is 50 percent. And since Shumlin did not get there on election night, lawmakers will decide the winner on Thursday. Shumlin also questions whether Republican Scott Milne is prepared to govern if he wins the legislative vote.

Hey, don’t let a little thing like people voting get in the way of you staying governor, Peter.  As massively ego-centric a desire this is, what’s truly stunning is that it comes just weeks after this same Peter, the guy who says he cares so much about Vermonters that he spent 141 days out of Vermont from January 2013 through September 2014, said that last fall’s election results left him “humbled”.

So quotes from just a few months ago like this one, from the guy who in 2012 won 57.8 percent of the vote

“We have faced our share of setbacks in the past couple of years, and I know people are disappointed in how I have handled some issues,” Shumlin said. “I recognize I have work to do to regain the confidence of many Vermonters in the coming weeks and months. I will work with my team as well as legislators from all political parties to assess our coming legislative agenda to ensure that we are representing the will of Vermont voters.”

– is now using this convincing language (below) to tell us all how critical it is that he get back to the fine work of dismantling the state’s economy, er, passing a budget:

“I mean I gotta tell you, how hard we’re working here to try to get a sensible budget, we put together a team before we got here, but we would be scrambling to put a team together, Government would literally be paralyzed while this candidate tried to suddenly pull it all together in a really short time,” said Shumlin.  

Is this the team that "scrambled" to put the last budget together?

Is this the team that “scrambled” to put the original budget together?

Then let’s take a look at the last budget Shumlin put together, since he thinks it’s critical that he does this again, because, y’know, he’s got a “team” and all.  The same budget that, based on the Governor’s own proposed budget assumptions, forced the legislature back into session one month after the budget was passed to make budget cuts, cuts forced by declining tax revenues that stubbornly refused to adhere to the governor’s forecast.  That budget was built on the consensus budget, one using forecasted revenue growth percentages that can only be described as “optimistic”.  Another way of describing them might be “catastrophically stupid”, and the result has been yet another call to cut the budget.  The same budget that Peter so proudly touted last year, and now Peter says his experience in putting a budget together is the reason to vote for him over Milne?

Since Shumlin’s going to tout his simply fantastic record – a record that earned him just a bare percentage point or two more votes than his competition, compared to a couple of years ago when he was winning by 10-20 basis points – let’s look at the latest unemployment numbers (prepare to put on your shocked face).

While the unemployment rate dropped a tenth of a percent from October to November 2014, and the number of unemployed is down, there are still 100 more people unemployed in November 2014 than there were in November 2013.  Shumlin’s economic miracle, perhaps, or perhaps his current budget is on fire because he has no idea what he’s doing:

Mediocrity unchained.

Mediocrity unchained.

Vermont’s legislature will now be forced to vote for Vermont’s next governor because the sitting governor, the incumbent, couldn’t muster enough votes, after getting his signature legislation passed and put into place, to beat a Republican candidate who came in very late in the race, had just a fraction of Shumlin’s campaign spending to rely on, and had little name recognition.

Shumlin fears that government would be “paralyzed” if Milne were elected.  What Shumlin fails to understand, and never will understand, is that a government that does less – especially as Shumlin’s destructive record attests – might be the best thing to happen to Vermonters in the last 4 years.  Funny how Shumlin never seemed to be paralyzed when it came to raising money for his campaign, and traveling all around the country seeking out-of-state donations.

I guess being “personally humbled” means something different to Shumlin than it does to the rest of us.  As Calvin Coolidge once said, “No man ever listened himself out of a job.”  If Shumlin heard a message loud and clear last November, as he told us he did, then why is he almost out of a job?

And The Private Sector Shall Lead Them

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

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

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

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

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

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

It's pointing in a direction, all right.

It’s pointing in a direction, all right.

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

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

Similar numbers are reflected in the prior year as well:

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

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

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

A growing labor force.

Higher number of employed Vermonters.

Lower number of unemployed Vermonters.

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

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

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

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

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

Is this what leading from behind looks like?

Is this what leading from behind looks like?

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

Surviving Shumlin’s Budget

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

Good luck, Vermonters!

Good luck, Vermonters!

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

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

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

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

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

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

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

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

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

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

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

Usually rosy forecasts are actually rose-colored, chief.

Usually rosy forecasts are actually rose-colored, chief.

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

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

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

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

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

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

 

 

 

 

 

Vermont’s FrankenHealth Online: A Belt and Suspenders Approach

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

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

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

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

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

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

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

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

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

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

suspenders:

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

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

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

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

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

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

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

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

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

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

So it's going really well, then?

So it’s going really well, then?

care, right before an election.

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

 

The Shumlin Economy: A 10.8% Increase In Unemployment

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

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

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

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

Peter Shumlin Says:  Just In Time For The Holidaze!

Peter Shumlin Says: Just In Time For The Holidaze!

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

 

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