In this previous legislative session, Senate Bill 187 was passed to create a health care commission for the purpose of discovering what drives health care expenditures in Colorado. Health Care Policy Center Director Linda Gorman was appointed as the sole health economist. Tune in to discover what the commission’s stated goals are and how Linda expects to contribute.
Archive for the 'Economics' Category
When politicians start talking about “bi-partisan cooperation,” smart citizens get nervous. It usually means another transfer of freedom and taxes to the federal government at the expense of individuals, families, localities, and states.
Case in point: a Denver Post op-ed by two U.S. Senators (or their staffs) on their latest “bipartisan” deal. The Senators are Michael Bennett (D.-Colo.) and Richard Burr (R.-N.C.). The op-ed is pure political blather, a haze of almost incomprehensible feel-good rhetoric. But the upshot is this: The two distinguished solons are very proud of themselves for managing yet another transfer of authority from the states to the federal government.
You can read the op-ed here. As you can see, it is filled with mind-deadening phrases refined by pollsters and focus group research: “we have worked with,” “bipartisan,” “ensure the safety,” “stakeholders,” “pragmatism and hard work,” etc., etc.
As for the law itself, it has the kind of title we have come to expect from Congress in recent years: The Drug Quality and Security Act. (Doesn’t that title make you feel good?) Of course, many of these labels have about as much correspondence to the real world as the “Patient Protection and Affordable Care Act.”
The text of the measure is almost impossible for anyone without legal training to understand. (You can see for yourself here.) Essentially, however, it transfers to the federal government areas of drug compounding and distribution traditionally controlled by the states. It imposes new obligations, licenses, and/or paperwork on manufacturers, repackagers, wholesalers, and your local pharmacy. It takes major steps toward federal control of our state pharmacy boards, and restricts state regulatory choices in the areas it covers.
The bill is also about revenue: It authorizes the federal government to collect various new “fees.” (I put the word in quotation marks because those “fees” are really taxes.)
Like the op-ed, the text of the law is filled with mind-numbing, and sometimes deceptive, language. Consider this provision:
Nothing in this section shall be construed to preempt State requirements related to the distribution of prescription drugs if such requirements are not related to product tracing as described in subsection (a) or wholesale distributor and third-party logistics provider licensure as described in subsection (b) applicable under section 503(e) (as amended by the Drug Supply Chain Security Act) or this subchapter (or regulations issued thereunder).
At first, you might think the bill leaves state regulations in effect. But look closer: The provision really is about where federal law does preempt: “requirements . . . related to product tracing . . .. [and] wholesale distributor and third-party logistics provider licensure.” Another passage makes it clear that much state flexibility is gone:
Beginning on the date of enactment of the Drug Supply Chain Security Act, no State or political subdivision of a State may establish or continue any standards, requirements, or regulations with respect to wholesale prescription drug distributor or third-party logistics provider licensure that are inconsistent with, less stringent than, directly related to, or covered by the standards and requirements applicable under section 503(e).
The measure does not set forth its constitutional justification. In other words, it does not cite any of Congress’s enumerated powers as the basis for the authority it claims. Occasional mentions of “commerce” suggest that it relies on the Constitution’s much-abused grant of power to “regulate Commerce . . . among the several States.” In fact, however, the bill sweeps deeply into in-state commerce and into activities that really are not “commerce” at all.
The op-ed touts the bill’s “strong [meaning "intrusive"], uniform” [meaning "centralized"] standards. But the Constitution limited congressional powers precisely to protect us from too many centralized standards. The federalism created by our Constitution is about local control, responsiveness to local preferences, better government, diversity, and the ability of each state to learn from the experience of others. Moreover, as the Supreme Court has pointed out repeatedly, federalism is also about fracturing power to preserve freedom.
Our Founders and generations of Americans have concluded that human freedom and the other benefits of federalism are worth the occasional inconvenience arising from lack of uniformity. This should be particularly true today, when technology has reduced both the benefits of uniformity and the costs of diversity.
“The Drug Quality and Security Act,” however, appears to have been the product of one of those classic deals among politicians and lobbyists. The two Senators assure us that all the “stakeholders” (i.e., groups with lobbyists) were consulted.
But were you?
The Foundation for Economic Education, also known as FEE, does a ton of great work. We are excited to join them for their event at the Tavern Uptown tomorrow night at the Tavern Uptown, from 6 to 7:30.
Join FEE Alumni Board Member, Stephen Macaskill, and other FEE supporters, friends and alumni for an evening of drinks and hors d’oeuvres to hear how FEE is cultivating the next generation of innovative free-market leaders in all industries and arenas. Free with RSVP.
Colorado’s Amendment 66—the billion dollar tax hike—is a constitutional monstrosity.
Amendment 66 is, technically, not entirely a constitutional amendment. It is an unusual hybrid of constitutional amendment and change in the state tax law. The secretary of state refers to it as Initiative 22, and it is on the ballot this fall.
The constitutional change would lock in a hugely-disproportionate share of state spending for a single program at the expense of every other Colorado service, public or private. The statutory change would impose a big hike in the state income tax.
As explained below, the costs across a wide range of areas—including public health and safety—could be immense.
But before we get to that, just think of how unfair this measure is:
Under its rules, everything else would take a back seat to the demands of the school bureaucracy. Law enforcement would suffer. So would disaster relief, parks, the environment, services for the elderly, health care, our universities, not to mention economic investment and the taxpayers’ own needs.
Why? Because Amendment 66/Initiative 22 says that (with a sinister refinement explained below) the state school bureaucracy “shall, at a minimum, receive forty-three percent of sales, excise, and income tax revenue collected in the general fund.” In other words, it requires that we spend nearly half our state general fund for a single service before funding anything else!
And that 43% is only a floor. Amendment 66 demands even more. Here’s why:
* The 43% is in addition to what we pay in property taxes.
* The statutory part adds a steep income tax hike on top of that and gives all he revenue to the school bureaucracy.
* The 43% is calculated on what the older, lower tax rates would have brought in. But an income tax of, say, 20% yields less than 20% more revenue, because of disincentives and tax avoidance. So the 43% is calculated on the older, richer system, not on the newer, poorer one.
Now consider some of the other consequences:
* Because of the 43% strait jacket, the legislature couldn’t freely reallocate existing revenue to new needs. For example, the Denver Post has reported that due in part to funding limitations for supervision, inmates released on parole often commit new crimes, including murder. Yet Amendment 66 would make re-allocating funds to parole supervisions that much harder, thereby endangering the lives and safety of Colorado citizens.
* That means a primary way of allocating revenue would become more tax increases.
* We would be crippled in adjusting school costs to reflect changes in technology or to promote educational accountability. Even if schools don’t do the job or are using money wastefully, they still get their guaranteed cut. This violates a basic principle of Anglo-American constitutionalism: agencies are responsible to the legislature for what they do with appropriated funds.
* State income taxes would jump for everyone—by over 27% for everyone with a taxable income of more than $75,000, and 8% for everyone else.
* And the cost of living would rise for every family in the state—including and especially the poor. This is because tax increases–even they seem to hit only the “rich”—have a way of seeping through an economy like venom. Almost everyone pays in the form of higher prices, lower incomes, and fewer jobs. A tax hike, like water, runs downhill.
* Higher taxes also weaken the entire economy. Don’t be misled on this score: The studies show that the additional spending mandated by Amendment 66 is likely to harm much more than it helps.
* The state income tax hike could wound Colorado’s economic competitiveness and kill Colorado jobs—a serious concern right now. Remember that we are in economic competition with other states and other countries, and several of our neighbors either don’t have an income tax or are cutting, reducing, or phasing out the income taxes they have.
* Colorado’s current tax may look like a flat rate, but because of the base on which it is calculated it is actually somewhat punitive as to income. Amendment 66 would make it much more so. Tax hikes like that have been shown to be particularly damaging to prosperity.
* Because the 43% guarantee is based on revenue from former, lower tax rates, the Amendment 66 insulates the school bureaucracy from the economic damage imposed by the tax hike.
A good constitution protects individual rights and structures government to serve the interests of all. But Amendment 66 mutilates our state constitution to privilege the greedy few. It transfers more money to the bureaucracy to do things that will hurt the general welfare, including the welfare of our children.
This violates every principle of good constitution-writing.
* * * *
P.S.: Here’s the ultimate irony: For years advocates of this money-grab have attacked Colorado’s Taxpayer Bill of Rights (TABOR), claiming it unduly restricts the legislature. Yet now they want to constrict the legislature far more than TABOR does. Hypocrisy, anyone?
With all the focus on guns, it’s easy to forget about all the other areas the Colorado legislature effects our daily lives – like transportation. Transportation policy has been one of my pet issues for quite sometime. As you may recall, I used to be chairman of the RTD board (see, I’ve got some street cred).
Some important things to note: First, the big light-rail boondoggle moves forward with the recent opening of RTD’s West line. You may have read that it came under budget, but of course that’s not true. It actually costs more than double what they estimated back in 1997. Not to mention it will service less people than originally proposed, making it the perfect combination of a government program: Over budget with less benefits. You can read more about the boondoggle in this Complete Colorado Page 2 editorial, “Light-rail boondoggle moves money instead of people,” from Brian Schwartz and Randal O’Toole.
Speaking of Brian Schwartz… he’s been on fire in relation to transportation these days. Not only did he help write that fantastic editorial for Complete Colorado, he was also quoted in this morning’s Denver Post. In an article describing how the state can now use road money for virtually anything transit related (totally unconstitutional by the way), Brian is quoted as the lone voice in opposition (go figure).
Keep it up Brian, we – and our cars – need you fighting the good fight.
The great economics professor Walter Williams joined me on my show last week. In case you missed it, here is the video.
In case you missed our annual Founders’ Night dinner last Thursday, here is the keynote address given by world famous George Mason economist Walter Williams.
IHS Summer Seminars:
Get more liberty in your life! This summer, the Institute for Humane Studies will offer nine week-long seminars on the foundations and applications of liberty. Learn about principles that transcend politics, discuss world-changing ideas with participants from around the globe, and hear about careers that make a difference. Students and recent graduates are eligible. Deadline is March 31st! Find out more: www.TheIHS.org/summer-seminars.
Scholarship & A Free Society Symposia:
This summer IHS will host two colloquium-style academic conferences – http://www.theihs.org/scholarship-free-society – to support the next wave of influential thinkers contributing to the classical liberal intellectual tradition by bringing graduate students together with current leading scholars in their fields. All applicants are invited to submit a paper proposal for presentation (paper submission optional). Open to graduate students pursuing liberty-advancing research in the humanities. For more information, visit www.TheIHS.org/scholarship-free-society.
You know when the car salesman says, “Yep, that’s the last one we have in inventory and I have a couple coming to look at it in a half hour,” and you just know he’s selling you. Well, he’s a car salesman, and therefore, more trustworthy than me. But here’s the odd thing – I’m not lying this time.
We really only have a few seats left for our Founders’ Night Dinner coming up this Thursday, March 7th. (Yes, it’s that close). And when they’re gone, they’re gone.
It’s gonna be a conservative version of Woodstock, which means we’ll accomplish in a couple of hours what took the inefficient liberals days. And all of us, except Todd Shepherd, will have showered. And on stage – all the greatest acts singing the hits that made them famous: Amy Oliver Cooke, David Kopel, Mike Rosen, Bickel Award Winner Leslie White, D’Evelyn Award Winner Gale Norton, and the headline act: Professor Walter Williams.
Will you be one of those losers who can only lie about being at Woodstock–like me–and fake acid flashbacks years later, or will you be the guy who parties with the band and can honestly barely remember it?
Seriously, there are only 20 seats left. Register online here.
Why on earth does an artist’s rendition of some future utopia merit public policy debate?
Recently, an artist drew a pretty picture of what he imagined high-speed rail could look like in a utopian United States. Why is it utopia you ask? Because only in a utopian world without scarcity could the sparsely populated United States sustain high-speed rail. However, in our current world with scarce resources, high-speed rail can only exist in pretty pictures and in thick red ink on government expense sheets. It is simply not a profitable venture, which is why you see private resources staying far away from rail transit. Nevertheless, big government does not shy away from big losses like the private sector. I can see the slogan now, “No loss is too big to scare us away!”
9News came by the Independence Institute offices the other day to get my thoughts on the whole issue. You can watch the video here, or below in the player.