Good morning Sen. Ortiz y Pino, Rep. Espinoza, and members of the committee. I am Paul Gessing, president of the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico.

I appreciate this opportunity to provide my organization’s perspective on whether the benefits of Medicaid expansion in New Mexico outweigh the costs and whether a “multiplier effect” exists by which increased federal dollars will generate increased economic growth in our state.

Introduction

Before discussing the economic and multiplier impacts of Medicaid expansion, I feel it is important to discuss the impact of Medicaid on actual health care outcomes. Supporters of free markets and skeptics of the efficacy of government programs are are often accused of being callous or uncaring to the poor, but we actually want government spending to be used in ways that have proven, positive results.

There is no question that Medicaid expansion is a massive expansion of a health care entitlement. According to Congressional Budget Office, between 2014 and 2022, expanding Medicaid will cost American taxpayers at the combined federal and state levels $1 trillion. Before discussing the economic impact on New Mexico, it is important to ask what kind of health care we getting for that money.

For starters, the inspector general of the Department of Health and Human Services found that over half of providers no longer accept Medicaid patients. Of doctors who do accept Medicaid, the provider networks are narrow and nearly one-third face wait times of over a month.

Last year, The Wall Street Journal profiled Farmington family physician Holly Abernethy, who

has turned away all newly eligible Medicaid beneficiaries because she can’t sustain her practice expenses if her proportion of Medicaid patients grows much beyond her current 13%.

For a moderately complex office visit, she is paid about the same as [a] nurse practitioner: about $80 from Medicaid and about $160 on average from commercial insurance.

Says Dr. Abernethy, “I would love to see every Medicaid patient that comes through my door.” “If you give people coverage, they should be able to utilize it.” But making it work would extend her workday, and “I have three small children and I miss them.”

Moving from anecdotal to empirical evidence, it is worth considering Oregon’s experience. In 2008, a total of 29,835 Oregonians were given the opportunity to apply for the state’s Medicaid program out of almost 90,000 people on the waitlist. About 30 percent of those who were selected from the waitlist both chose to apply for Medicaid and met the eligibility criteria. Because it examined a unique, real-world experiment complete with a randomly selected control group, the study of Oregon’s Medicaid expansion is considered the “gold standard” in health-care research.

The study’s results have been published in academic journals, including The New England Journal of Medicine and the The American Economic Review in 2013. Its conclusion was that “Medicaid increased health care utilization, reduced financial strain, and reduced depression, but produced no statistically significant effects on physical health or labor market outcomes.”

The Oregon study is not alone in casting a skeptical light on Medicaid’s health benefits:

• A 2010 study of 1,231 patients with cancer of the throat, published in the medical journal Cancer, found that Medicaid patients and people lacking any health insurance were both 50 percent more likely to die when compared with privately insured patients—even after adjusting for factors that influence cancer outcomes. Medicaid patients were 80 percent more likely than those with private insurance to have tumors that spread to at least one lymph node.

• A 2010 study of 893,658 major surgical operations performed between 2003 to 2007 published in the Annals of Surgery found that being on Medicaid was associated with the longest length of stay, the most total hospital costs, and the highest risk of death. Medicaid patients were almost twice as likely to die in the hospital than those with private insurance. By comparison, uninsured patients were about 25 percent less likely than those with Medicaid to have an “in-hospital death.”

• A 2011 study of 13,573 patients, published in the American Journal of Cardiology, found that people with Medicaid who underwent coronary angioplasty (a procedure to open clogged heart arteries) were 59 percent more likely to have “major adverse cardiac events,” such as strokes and heart attacks, compared with privately insured patients. Medicaid patients were also more than twice as likely to have a major, subsequent heart attack after angioplasty as were patients who didn’t have any health insurance at all.

• A 2011 study of 11,385 patients undergoing lung transplants for pulmonary diseases, published in the Journal of Heart and Lung Transplantation, found that Medicaid patients were 8.1 percent less likely to survive 10 years after the surgery than their privately insured and uninsured counterparts. Medicaid insurance status was a significant, independent predictor of death after three years—even after controlling for other clinical factors that could increase someone’s risk of poor outcomes.

In all of these studies, the researchers controlled for the socioeconomic and cultural factors that can negatively influence the health of poorer patients on Medicaid.

So why do Medicaid patients fare so badly? Payments to providers have been reduced to literally pennies on each dollar of customary charges because of sequential rounds of indiscriminate rate cuts. As a result, doctors often cap how many Medicaid patients they’ll see in their practices. Meanwhile, patients can’t get timely access to routine and specialized medical care.

All that being said about the most important issue, the impact of Medicaid on health outcomes, I am primarily here to discuss the financial impact of Medicaid expansion on New Mexico’s economy and state budget.

In the current fiscal year, New Mexico will spend more than $5.5 billion on Medicaid, with state revenue covering just under $900 million of the total. By 2017, fully a third of the state’s population will be on Medicaid. At a time when revenue is dropping from the decline of the oil-and-gas sector, the program is seriously jeopardizing the state’s ability to balance its budget. By 2020, it is estimated that the state’s bill for covering newly eligible Medicaid recipients will be $163 million.

A Flawed Theory

The “multiplier effect” is the theory that government spending stimulates jobs creation and income growth. Many proponents of Medicaid expansion claim that since it is largely funded with “free” money from Washington, it is an economic-development tool. But, as Harvard economist Robert Barro explained in a September 2009 National Bureau of Economic Research paper, “it is wrong … to think that added government spending is free.” The money Washington is sending to New Mexico for Medicaid must come from either taxes or borrowing.

The national debt is currently $18.6 trillion. At least in the short term, the burden is sure to grow. Unfunded liabilities for Social Security and Medicare are estimated to be in the hundreds of trillions of dollars. This level of debt-creation will not continue. New Mexico, a state uniquely dependent on Washington appropriations, cannot count on an endless spigot of federal cash, for Medicaid or any other program. A reckoning is coming. It is likely to be very ugly for taxpayers in the Land of Enchantment.

The ‘Medicaid Multiplier’ Exposed

On the issue of the multiplier itself, after conducting a survey of the economic literature, Valerie Ramey, an economist at the University of California, San Diego concluded: “For the most part, it appears that a rise in government spending does not stimulate private spending; most estimates suggest that it significantly lowers private spending.” Studies by many others, including economists at the International Monetary fund, concur with Ramey’s finding.

In an effort to better understand the alleged “multiplier effect,” the Rio Grande Foundation recently examined economic performance in the 24 states that expanded Medicaid in January 2014, comparing it with the 20 states that did not. Despite tens of billions of “free” money flowing into expansion states with no state match required until 2017, the percentage of job growth in the two groups was essentially the same, with a slight edge to the non-expanding states:

The absence of a Medicaid “multiplier” is particularly stark in New Mexico. Residents continue to leave our state, the labor participation rate is falling, and unemployment is rising. Our state has yet to recover the number of jobs it had during its employment peak, more than seven years ago. The state’s extensive matrix of welfare programs is surely an incentive to remain on public assistance rather than seek opportunities in the job market.

There are many weaknesses in the claim that Medicaid expansion creates jobs for the workers needed to treat newly eligible beneficiaries. While employment in New Mexico’s health-services industry is rising, it is not at all clear that Medicaid expansion is causing the growth. The sector has been adding jobs for many years, and even increased its employment during the Great Recession.

Even if it were the case that Medicaid expansion creates healthcare jobs, in the assessment of Harvard scholars Katherine Baicker and Amitabh Chandra,

(e)mployment in the health care sector should be neither a policy goal nor a metric of success. The key policy goals should be to achieve better health outcomes and increase overall economic productivity, so that we can all live healthier and wealthier lives. Our ability to ensure access to expensive but beneficial treatment is hampered whenever health care policy is evaluated on the basis of jobs. Treating the health care system like a (wildly inefficient) jobs program conflicts directly with the goal of ensuring that all Americans have access to care at an affordable price.

One penalty of Medicaid expansion that its proponents consistently avoid addressing is the impact it has on those with non-government coverage. Broadening the program imposes “a hidden tax on … people with private insurance. Expanding Medicaid leads hospitals and doctors to shift costs onto patients with private insurance thus making private insurance less affordable and contributing to the vicious cycle of increasing the number of people without insurance.” Prices for insurance premiums are rising—not falling, as Obamacare supporters claimed – and Medicaid expansion is a likely contributor to the cost of private coverage.

In Conclusion

Prior to the enactment of this new health care law, Medicaid provided New Mexico with 70 cents on the dollar with little evidence that it “stimulated” New Mexico’s economy.

Perhaps the worst aspect of Medicaid expansion is that, like so many federal programs, it relied on the promise of “free money” to the states. If any welfare program is worth enacting or expanding, it should be the taxpayers of New Mexico that support paying into a program for the benefit of their friends and neighbors. After all, we all do want better health care outcomes.

A cash-grab based on long-discredited Keynesian “stimulus” theory with little or no health benefits isn’t just unwise, it’s immoral. Think of what else we could do with $1 trillion.

In the short term, New Mexico should work with other states to press the federal government for the flexibility required to fix a badly broken and irresponsibly unsustainable program.

Medicaid desperately needs a sweeping overhaul. Reforms must be consumer-oriented, permitting beneficiaries to obtain private coverage in a competitive marketplace. Time limits similar to those imposed under the creation of the Temporary Assistance to Needy Families program in the 1990s, are also worth consideration.

In the long term, aggressive implementation of proven economic-development strategies will create the prosperity that will enable New Mexicans to obtain private insurance, either through their employers or purchased individually. The way to gauge successful healthcare policy in New Mexico is to track how many people are leaving, not joining, our population of Medicaid enrollees.

Thank you for your time today.

(Albuquerque) – Elected officials of both parties have conspired over several decades to “bring home the bacon” in the form of federal dollars. For example, Senators Domenici and Bingaman served in the United States Senate for decades and were known as effective “porkbarrel” politicians.

New Mexico’s poverty along with its willingness to aggressively pursue federal spending has made the State the 3^rd-greatest recipient of federal dollars relative to what it sends to Washington. A report by Key Policy Data recently found that New Mexico receives $1.69 for every dollar it sends to Washington.

More recently, the Republican Gov. Susana Martinez agreed to expand Medicaid under the federal “ObamaCare” program thanks in part to the generous federal match which is currently 100% of the costs of expansion and will remain at 90% from 2020 on. Prior to Medicaid expansion, Medicaid was often touted as “economic development” due to the fact that the federal government covered 70% of the program’s cost in the state.

Also, the Republican Mayor of Albuquerque has been pushing for a plan to put “bus rapid transit” along Central Avenue. That plan is contingent upon the federal government kicking in $80 million of the plan’s expected $100 million cost.

While federal funds are often seen as “free” and an “economic stimulus” by proponents, a new analysis by Dr. Eric Fruits, an adjunct scholar with the Rio Grande Foundation, each additional dollar of federal intergovernmental transfers to New Mexico is associated with $0.99 in additional taxes, charges, and other state and local own source revenue.

This new research further finds that New Mexico experiences a larger ratchet effect than states as a group. In 2012, New Mexico state and local governments received $5.9 billion in federal intergovernmental transfers and spent $13.1 billion raised from state and local sources. A hypothetical 10 percent increase in federal transfers to New Mexico would amount to about $590 million more federal money to the state.

“ How Federal Spending in New Mexico Grows State Government” is linked here and can be downloaded from the Rio Grande Foundation’s website, www.riograndefoundation.org.

There are many ways to analyze the political leanings of the various states and, while New Mexico is “redder” than at any time in its modern political history, it remains in many ways a “blue” state. Check out the following from the FEC which was posted by Chris Cillizza of the Washington Post.

A few things are noteworthy:

From a geographical perspective, Republicans are dominant with Democrats relegated to the coasts. The exceptions being only Minnesota, Illinois, and New Mexico.

Democrats are relegated to heavily “urbanized” states with the exception of Vermont and New Mexico.

Oregon (33rd) and New Mexico (43rd) are the only poorer-than-average “blue” states as ranked by per-capita personal income.

But, despite their higher personal incomes, 1,000 Americans are moving from blue to red states every day. 

During the 2015 legislative session, the Rio Grande Foundation along with the NM branch of the Drug Policy Alliance, the ACLU, and the Institute for Justice worked successfully to reform New Mexico’s abusive civil asset forfeiture laws. Unfortunately, the City of Albuquerque is ignoring the law. According to the case being brought by the Institute for Justice, “In Albuquerque, police and prosecutors continue to use civil forfeiture and have even announced plans to purchase a new, bigger parking lot to hold all the cars they expect to seize—a parking lot that will be paid for through civil forfeiture.”

We are excited to be able to continue to work with IJ, but wish that Albuquerque’s elected leaders including Mayor Berry and City Council would adhere to the law without threat of a lawsuit.

Having been occupied in preparation for testifying before the Health and Human Services Committee on the economic impact of Medicaid expansion, I hadn’t had a chance to comment on another hare-brained “stimulus” scheme proposed by Nick Estes, formerly of NM Voices for Children (and a former debate opponent).

Estes, writing in the Albuquerque Journal on Sunday argued that the “Federal Reserve should create new money and transfer it to the government’s spending account. The government can then spend the money…without new debt.”

This “something for nothing” mentality has always puzzled me. It is quite similar to the reaction to my testimony from the mostly liberal legislators in Santa Fe who were eager to get their hands on the “free” money coming to New Mexico due to Medicaid expansion.

I’m not sure how the government “printing” money is going to generate real prosperity, nor do I understand how expanding an ill-conceived welfare program is going to “stimulate” the economy even if New Mexico is able to temporarily loot the other 49 states.

This “something for nothing” mentality is closely-related to the entitlement mentality so rampant on college campuses these days. But the entitlement mentality didn’t begin on modern college campuses. These emotional children learned to expect something for nothing from their parents and grandparents at least as far back as the advent of Social Security. That program’s first recipient Ida Mae Fuller paid just $25.75 into the system, but received $22,888.92 in benefits.

You’ll find no better exemplar of the left’s cluelessness on Medicaid than yesterday’s Albuquerque Journal op-ed by State Rep. Deborah Armstrong.

The Albuquerque Democrat asserted that through Medicaid, New Mexico is “fully insuring and providing quality health care for well over one-third of the population.”

Wrong and wrong. Medicaid is not insurance. It is welfare. It is a government program funded by tax dollars, and administered by politicians and bureaucrats. Calling it “insurance” doesn’t make it so. Facts are stubborn things. Whether ones supports or opposes welfare, Medicaid is welfare.

Furthermore, Medicaid does not provide “quality health care.” Compared to the insured, its patients fare worse on a wide range of maladies, from heart disease to cancer, strokes to pneumonia, vascular disease to childhood asthma.

Finally, in the next fiscal year, the state will not “spend $976.9 million to provide Medicaid services.” That’s the funny math of New Mexico budgeting, which counts only revenue generated in the Land of Enchantment toward expenditures. In actuality, Medicaid expenditures will be in the neighborhood of $6 billion.

Tomorrow, Rio Grande Foundation President Paul Gessing will testify in Santa Fe on the economics of Medicaid — the poor-quality care it provides, as well as the fallacy that “the multiplier effect” from expanding the program will aid the state’s economy. Hopefully, Rep. Armstrong will be listening. She has a lot to learn about Medicaid.

As reported in today’s Albuquerque Journal, the New Mexico Supreme Court has ruled that children in private schools should not be allowed to receive textbooks paid for by taxpayers.

Now, we at the Rio Grande Foundation believe that the number of things government should pay for to be quite limited, but it is hard to see how a family’s decision to send their child to a private school should force them to give up any claim to the tax dollars they have forked over to the state to pay for education. It’s not like tax dollars are being used to pay for religious textbooks or something not taught in the traditional schools. Rather, these dollars are benefiting New Mexico children — children of taxpayers — just the same.

The US Supreme Court has already ruled on this issue, approving the use of tax dollars for non-religious materials provided to religious schools in Mitchell v. Helms.

That decision said in part that since the loans were suitable for both religious and public schools, the government was not serving to advance religion.

Accordingly, the government may now provide aid to religious groups as long as such aid advances some legitimate non-religious purpose and is granted in the same manner to non-religious groups.

Not sure what the next steps are but one wonders if this decision shouldn’t be appealed to the Nation’s highest Court. The good news is that our liberal New Mexico Supreme Court has a bit more balance with the addition of its newest justice.

When it came to education, it used to be that New Mexicans could “thank God for states like Louisiana and Nevada. Normally it was Mississippi and Alabama, but there were we were towards, but not always at the bottom of educational performance measures. Well, according to the US Department of Education, we are now at the very bottom in terms of graduation.

But other states that have traditionally struggled with educational outcomes are not standing still. They are providing real choices to parents and students. Earlier this year, Nevada enacted the most ambitious school choice program in the nation called Education Savings Accounts.

Louisiana too has traditionally struggled with educational outcomes, but under Gov. Bobby Jindal, the State created a statewide system of school vouchers. The Obama Administration sued Louisiana to allow the federal government to regulate the program, but yesterday the Fifth Circuit U.S. Court of Appeals ruled against Obama Administration’s position.

It would be great if New Mexico’s Senate Democrats would stand up to their friends in the teachers’ unions and embrace school choice as a response to Gov. Martinez’s testing and common core-driven reforms. I’m not holding my breath.

New Mexico has always been a big recipient of federal tax dollars (at least since the 1940s). A new report from Key Policy Data sheds some additional light on just how much New Mexico receives and which areas of New Mexico are more and less reliant on Washington, DC.

In Fiscal Year (FY) 2013, New Mexico is the third biggest net receiver of federal spending relative to federal taxes paid. Only Kentucky and Mississippi received more.

The report further breaks the situation down on a county-by-county basis:

The top ten New Mexico counties with the highest federal tax and spending ratios include:

Los Alamos County, NM ($6.52)
Mora County, NM ($3.62)
Hidalgo County, NM ($3.53)
Guadalupe County, NM ($3.49)
Sierra County, NM ($2.59)
San Miguel County, NM ($2.52)
Quay County, NM ($2.51)
McKinley County, NM ($2.49)
Otero County, NM ($2.28)
Curry County, NM ($2.26)

The bottom ten New Mexico counties with the lowest federal tax and spend ratios include (only 2 counties receive less in federal spending than they pay in federal taxes):

Sandoval County, NM ($0.61)
Lea County, NM ($0.86)
Valencia County, NM ($1.04)
San Juan County, NM ($1.08)
Eddy County, NM ($1.17)
Lincoln County, NM ($1.19)
Torrance County, NM ($1.30)
Santa Fe County, NM ($1.48)
Chaves County, NM ($1.51)
Dona Ana County, NM ($1.55)

The image below shows visually which counties receive more and less from Washington.

As Albuquerque’s mayor congratulates himself over the latest plan for “downtown revitalization” (price tag: $23.5 million), it’s important to remember that the Duke City has far more urgent concerns than building a retractable-roof arena and an “interactive, family-friendly, modern and sustainable water element.”

* The “city’s crime numbers have been steadily rising over the past four years.”

* The Albuquerque labor market has yet to regain the number of jobs in had more than seven years ago. Unemployment in the metro area is rising.

* The passenger count at the Albuquerque International Sunport has fallen for eight years in a row.

* Developers continue to report that dealing with the city’s red tape is a nightmare. Roy Solomon, of Green Jeans Farmery, recently told the Albuquerque Journal: “I’m not going to do another project in this town ever, ever again.”

Recently, Paul Gessing sat down with Dan Mayfield of the Morning Brew to discuss several issues the Foundation is working on. Specifically, we talked about an event the Foundation put on relating to civil asset forfeiture. And, while that event has come and gone, several of the issues discussed remain relevant and topical in advance of the 2016 legislative session.

Earlier this week, an “experimental rocket being tested by the U.S. Air Force’s Operationally Responsive Space Office, based at Kirtland Air Force Base, blew up just seconds into its debut mission.”

The ORS office has been deeply troubled since its start. Politics, delays and turf battles have been the norm. The failed launch of the “Super Strypi rocket, based on designs developed by Sandia National Laboratories as part of nuclear testing programs dating back to the 1960s,” took place more than two years behind schedule. Since February 2012, the Air Force has wanted to shut ORS down, and transfer its duties to the Space and Missile Systems Center in Los Angeles.

Uh oh — that means job losses in New Mexico. And the Land of Enchantment’s fedpols can’t have that. ORS has been the congressional delegation’s baby since 2007. Pete Domenici and Jeff Bingaman lobbied heavily to bring it to Kirtland, and more recently, Martin Heinrich has walked point on preserving ORS. Earlier this year, he called it “a program that makes perfect sense from both the monetary and military perspective.”

Please. In a battle between an executive-branch department and and reelection-minded politicians, it’s usually wise to go with the bureaucrats. ORS has an unimpressive record, and if the Pentagon wants to make a change, it should have the flexibility to do so.

If you don’t read Forbes frequently, they do some excellent reporting and analysis on health care issues. This recent article “Obamacare Has Increased Non-Group Premiums In Nearly All States” caught my eye, especially since New Mexico was in line to see the 2nd-highest rate of increase among the states in 2014.

As the article noted, these rapid increases defy numerous categorical assurances from President Obama such as:

“We’ll lower premiums by up to $2,500 for a typical family per year…We’ll do it by the end of my first term as president of the United States”

The Institute for Energy Research has released an updated analysis of “the distributional impacts of federal subsidies for wind energy across all U.S. states.” It found that taxpayers from the Northeast, Southeast, and California are getting socked to support wind turbines in the rest of the country.

Not surprisingly, New Mexico is net recipient of wind welfare. The federal “wind tax burden” in the Land of Enchantment over the past decade was $59 million, while producers here got an estimated $352 million in subsidies. That’s a staggering “gain” of $293 million.

Read the full study here. It offers more documentation of the unfairness — and ineffectiveness — of “green” corporate welfare.

Today, the front page of the Albuquerque Journal had an interesting story about the plight of the State’s commuter train, the Rail Runner, and whether it would be feasible to sell it or simply get rid of it.

I’ve looked at the data and the study itself (thanks for passing it along Dan Boyd) and, I have to disagree with some of the study’s conclusions. That said, it is amazing how public opinion has turned against the train which Bill Richardson said would go from El Paso to Denver. Also, the study correctly notes that selling the train is a non-starter. No one would be foolhardy to invest their own money in a money-losing train like this one.

What the study gets wrong is shutting the train down entirely, an option that would save from $28 to $32 million annually over the next few years. Unfortunately, the study “developed in this analysis mimicked the train trips’ schedules and service patterns.” That’s a bad mistake by itself because a vast majority of riders travel between Albuquerque and Santa Fe. Many of the stops in-between (and within the cities themselves) are superfluous and only slow the train.

This report also fails to account for potential private sector solutions. Why couldn’t a private company run shuttle vans between Albuquerque and Santa Fe? I have taken the Rail Runner, but it is not very convenient. If it goes away and nothing replaces it, we can at least use the savings to pay down the capital costs. If there is really a robust market for transportation between Albuquerque and Santa Fe, the state would do best by getting out of the way.

There’s no reason for taxpayers to have to pay the transportation costs for government workers who want to live in Albuquerque and work in Santa Fe.

Mr. Nordlinger spoke in Albuquerque on November 4, 2015 at a luncheon in Albuquerque co-sponsored by the Rio Grande Foundation and National Review Institute. His comments can be watched or listened to below:

Another day, another news story touting Cleveland as a model for Albuquerque.

According to the article linked to above from the ABQ Biz First, Randy Royster of the Albuquerque Community Foundation had some high praise for Cleveland as a model for Albuquerque recently saying,

Our newest effort in this arena of economic and workforce development came about by a trip that was made in August by the Health Sciences Center…The purpose of the trip was to learn about Cleveland’s 10-year effort for creating new companies, new jobs and basically revitalizing the downtown area, which had been basically shuttered a little more than 10 years ago, and not only revitalizing downtown but also its surrounding neighborhoods. And at the core of their process were anchor institutions.

We already know about Cleveland’s bus rapid transit and how Albuquerque’s leaders wish to emulate that model. Now, a consortium of “nonprofit corporations and publicly owned enterprises” is being touted. I just don’t get the Cleveland fetish.

Perhaps it is the fact that I grew up in Cincinnati and have seen Cleveland deteriorate and shrink over the decades, but I know Cleveland is NOT a model Albuquerque should emulate. In 2010, Cleveland native son, game show host, and libertarian, Drew Carey did a whole video series on “saving Cleveland.” That is the kind of thing you do in a struggling city that continues to hemorrhage population.

I fully admit that I don’t know all the details on this proposed medical “consortium,” but spending a bunch of tax money in order to bring in some additional private dollars is not going to do much about Albuquerque’s economic or job creation woes. Same as the bus rapid transit system. Instead, Albuquerque’s leaders would be better served checking out Carey’s video series and applying its lessons to Albuquerque.

However bizarre it sounds to fans of limited government, many Obamacare supporters believed — and continue to assert — that Medicaid expansion is a powerful economic-development tool.

The state-federal welfare program covers over 72 million Americans. Amazingly, more than a third of New Mexico’s population is on Medicaid. Later this month, the Foundation will testify in Santa Fe on the costs and benefits of the governor’s Obamacare-enabled decision to expand the program, and whether the “multiplier effect” from increased Medicaid spending is improving New Mexico’s economy.

We’ve examined the 24 states that expanded Medicaid “on schedule,” in January 2014, and the 20 states that have declined to broaden enrollment. The average job-creation percentage in the two types of states has been almost identical, with a slight edge to the states that did not expand their programs:

We’ll be examining other economic indicators as well, but at this point, it appears that making a defective and unsustainably expensive welfare program even bigger is not much of a “stimulus” in terms of employment.

New Mexico doesn’t have a jobs problem. It has a jobs crisis.

Nationally, unemployment is falling, but in the Land of Enchantment, it’s rising. Only West Virginia has a higher jobless rate.

Even worse, labor participation for prime-age workers in our state has collapsed. The Pew Research Center recently found that between 2007 and 2015, New Mexico’s employment-to-population ratio for 25-to-54-year-olds plunged by the sharpest rate in the nation.

There are many tools state policymakers can use to restore vibrant job growth, but perhaps no reform offers more promise than passage of a right-to-work law. By ending the compulsory payment of dues to union bosses, New Mexico would send a clear signal that it’s open for business.

Says who? Site-selection experts. They consistently report a significant portion of their clients prefer RTW states.

New research confirms the value of RTW in creating jobs. The Rio Grande Foundation examined investment announcements posted on the website of Area Development, “the leading executive magazine covering corporate site selection and relocation,” between January 1st and June 30th of this year.

During the period, companies declared that they would add 92,923 positions in expansions, relocations and greenfield investments. RTW states were slated to receive 79 percent of employment – a sum, not surprisingly, far in excess of the 47 percent of private-sector jobs found in RTW states.

It’s true that “correlation is not causation,” and other factors – e.g., transportation infrastructure, workforce quality, energy costs, taxes – influence site-selection decisions. That’s why our analysis looks at RTW in several unique ways.

At the broadest level, it examines “quality” jobs – middle- and high-compensation positions in manufacturing, IT, logistics, research and development, finance, and engineering. (No positions in fast food, convenience stores, landscaping, and retail sales are included.)

A further refinement is made for projects that involve “border crossings” – i.e., when a business headquartered in a non-RTW makes an investment in a RTW state, and vice versa.

Relocations, in which enterprises move entire facilities from one type of state to another, are assessed as well.

Finally, foreign direct investment (FDI) is scrutinized, in order to determine which type of states draws the most jobs from firms based abroad.

In total, 113 border-crossing investments were announced. Ninety-six – 85 percent – shifted from non-RTW to RTW. Job-creation followed suit.

In each of the six months examined, more positions were to be created in RTW states by non-RTW-based firms than vice versa. Fourteen facilities announced journeys from non-RTW to RTW, while just three planned to go the other way.

RTW states garnered 98 percent of relocation-related jobs.

In total, 132 FDI announcements were listed. Seventy-three percent were made in RTW states, which garnered 83 percent of jobs. Of the 12 nations that announced more than one FDI in the period, ten indicated a preference for RTW states.

It’s notable that high-population, non-RTW states such as California, New York, Illinois, Pennsylvania, New Jersey, Washington, and Massachusetts did not rank among top job-creators. Also interesting were stellar performances by two Rust Belt states: Indiana (which became RTW in 2012) and Michigan (which became RTW in 2013). Of the 10 states to receive the most employment, nine were RTW.

The reality of jobs growing faster in RTW states has been established for decades. But the foundation’s research shows that banning compulsory unionism does not foster a “race to the bottom.” To the contrary, worker freedom is correlated with employment in well-compensated industries.

Furthermore, firms based in non-RTW states appear to favor expansion in and relocation to RTW states. And RTW states substantially outperform their non-RTW competitors in FDI.

It is not a panacea, but a New Mexico right-to-work law would make the Land of Enchantment more attractive to companies looking to find sites for new facilities and/or relocate existing assets. Shifting New Mexico into the RTW camp is a sound, and cost-free, policy investment to address our state’s jobs crisis.

With the 2016 legislative session around the corner, it’s time for the New Mexico Senate to finally vote on right to work.

D. Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

The following appeared in the Santa Fe New Mexican on Sunday, November 1, 2015.

When is $10 million in taxpayer money simply not enough? In the case of the people who already got a sweetheart deal to build Santa Fe Studios, when you can ask for $22 million more.

There is likely no other business in the State of New Mexico that has received as many subsidies as Santa Fe Studios. That hasn’t stopped the Studios have applied for $22 million in industrial revenue bonds to Santa Fe County.

Already, the State has provided $10 million in economic development grants. The County has provided a generous $6.5 million bank loan.

It’s not as if film studios in New Mexico require subsidies. Albuquerque Studios was built without direct taxpayer subsidy. One would think that if Santa Fe Studios’ business was good enough to require expansion, the owners could pay for it themselves like any other business. Unfortunately, once you realize that you can stick you hands into taxpayers’ pockets, the temptation to do so again is hard to resist.

And then there is the lack of transparency. In October of 2013, there was a dustup between another think tank, Think New Mexico, and the Studios over how many films had actually been produced at the Studios. Without a doubt, Think New Mexico was justified in questioning Santa Fe Studios which has given few details on how the tax money they have received has been used.

A November, 2013 story in the New Mexican noted that “Verification of the (Studio’s) job numbers has been less than vigorous. County officials appear to have accepted the hours reported by the studios as fact and have done little to substantiate them.” Santa Fe County needs to increase oversight at a bare minimum before even considering approval of another $22 million.

Of course, the millions of dollars pumped into Santa Fe Studios are only the tip of the iceberg when it comes to New Mexico’s ill-conceived and overly-generous giveaways to Hollywood. The biggest taxpayer rip-off is the $50 million or so each year New Mexico taxpayers throw at the film business in the form of its film rebate program.

Unlike other subsidies offered by the State, the film subsidy is not a reduction or elimination of taxes owed, rather it is a check cut to the film company for between 25 and 30% of taxable spending done in the State. Rather than foregoing otherwise taxable revenue, New Mexico’s film subsidies actually spend revenue collected from other sources.

That is one reason why such subsidies have drawn opposition from across the political spectrum. The liberal Center on Budget and Policy Priorities issued an entire report in 2010 called “Not too much bang for too many bucks.” Another liberal group, Citizens for Tax Justice, wrote in a 2013 blog posting, “Not only do film tax credits cost states more money than they generate, but they also fail to bring stable, long-term jobs to the state.”

Any objective organization, right, left, or center that takes a close look at the economics of film subsidies like those in place in New Mexico finds that they make no economic senses and that they ultimately harm taxpayers and the poor.

Unfortunately, the Legislature seems inclined to keep the gravy train rolling for New Mexico’s film industry at this point. But, Santa Feans can stop throwing their good money after bad by letting the County Commission know that profitable businesses should grow by reinvesting their own money, not by attaining ever-greater taxpayer subsidies.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

It has been a tough few weeks in the Albuquerque area, but for a nation that has only seen modest economic growth since a challenging recession, Congress’s budget deal is extremely troubling for a number of reasons, but mostly because it blows through the budget caps imposed under sequestration. This tool was imposed in March of 2013 when the Obama Administration and Congress could not agree on a budget. Despite a hue and cry over supposed harms to the economy, the sequester had little apparent impact from the date of its imposition in March of 2013 (as seen below).

In part, the trivial impact of the sequester is due to the fact that it simply wasn’t that big of a deal when placed within the context of the US economy:

Of course, liberals see government growth as an inherently good thing, so President Obama has been trying to get rid of the sequester since it was imposed. And, for some reason, outgoing Speaker John Boehner and many Republicans, rather than passing a fiscally-responsible budget and seeing if Obama would veto it, thus shutting down government, decided to wave the white flag in surrender of even modest fiscal restraint and spend more money. New Mexico’s Congressional delegation was split along ideological lines with Lujan-Grisham and Lujan supporting the agreement and Congressman Pearce opposing it. Congressman Pearce deserves a great deal of praise for opposing this terrible agreement. A list of the 79 Republicans who abandoned fiscal constraint to support the deal can be found here.

Unfortunately, the budget deal wasn’t the only damage inflicted upon taxpayers this week. The Export-Import Bank which had been slated for elimination was resurrected. This time New Mexico’s entire House delegation voted to renew the FDR-era corporate welfare machine. The gist of what the Bank does is to subsidize US exports using American tax dollars so foreign businesses (and governments) can purchase US products. Amazingly, New Mexico’s entire Congressional delegation supported renewal despite the Bank’s trivial impact on New Mexico-based businesses (as seen below):

While the left talks a good game about ending “corporate welfare,” the Export-Import bank often subsidizes environmentally-destructive projects in foreign nations like this one in India as reported by the LA Times.

A full roll call of that vote can be found here. The Senate is expected to follow suit by renewing the Bank.

Yesterday the Foundation released “Where the Good Jobs Are: A New Look at Right to Work and Employment Growth.” Our paper found further confirmation that businesses and entrepreneurs prefer to expand in, relocate to, and set up shop in right-to-work states, where employees cannot be compelled to surrender a portion of their pay to unions. Even more, the RTW advantage applies to middle- and high-compensation jobs — i.e., there is no “race to the bottom.”

One of the paper’s most interesting findings is that firms based in non-RTW states are shifting their assets and facilities to RTW states. In total, 92 percent of the jobs to be generated by border-crossing investments went from non-RTW to RTW:

The story was similar for foreign direct investment. Businesses based abroad preferred labor freedom, with 83 percent of their job growth to take place in RTW states:

Is it time for New Mexico, reeling from rising unemployment and a falling labor-participation rate, to go RTW?

(Albuquerque) – A new analysis finds that right-to-work (RTW) states excel at creating quality jobs, and if New Mexico’s policymakers want the state to escape its severe economic woes, repealing compulsory unionism is essential.

“Where the (Good) Jobs Are: A New Look at Right to Work and Employment Growth,” authored by Rio Grande Foundation Research Director Dowd Muska, finds that RTW states far outpace their compulsory-union competitors in creating middle- and high-wage employment.

Muska’s research examined job-creation announcements posted on the website of the publication Area Development between January 1, 2015 and June 30, 2015. Positions were in manufacturing, finance, IT, biotech, research & development, business services, and logistics.

“These are the kinds of jobs that would make New Mexico a more prosperous state,” Muska said. “And they’re the kinds of jobs that politicians’ current economic-development strategies are not producing.”

Of the 92,923 jobs examined in the study, 79.2 percent were slated to be created in RTW states – a sum, not surprisingly, far in excess of the 46.8 percent of private-sector jobs found in RTW states. Both domestic and foreign firms prefer RTW states, and companies that relocate their facilities from one type of state to another overwhelmingly prefer to move to locations where labor freedom is respected.

Right-to-work laws, which were first adopted in the 1940s, free employees from paying compulsory dues to union coffers. Site-selection experts quoted in “Where the (Good) Jobs Are” argue that RTW is a requirement for many businesses looking to site, expand, or relocate their operations. The Rio Grande Foundation’s new research confirms their claim.

“Our organization has long argued that RTW is right for New Mexico,” said Rio Grande Foundation President Paul Gessing. “This new research offers more evidence of a trend that’s been underway for many decades: Right-to-work states outperform compulsory-union states.”

While a RTW bill passed New Mexico’s House of Representatives earlier this year, and Governor Susana Martinez pledged to sign the bill, the legislation did not receive a vote in the state’s Senate. RTW supporters are sure to press for the law in future sessions.

“Where the (Good) Jobs Are” is linked here and can be downloaded from the Rio Grande Foundation’s website, www.riograndefoundation.org.