While most of the attention during New Mexico’s recently-completed legislative session was on Governor Richardson’s massive, government-managed health care proposal, apparently it wasn’t the only health care reform considered during the session. In fact, Richardson just signed a new law that further regulates health insurance.
One provision in the law will make it more difficult for insurance companies to rescind coverage for people who develop serious medical conditions.
The cap on yearly medical services paid by health insurance policies offering certain minimum coverage also will increase from $50,000 to $100,000 under the new law. The higher limit starts next year.
Currently, an insurer can refuse to pay claims or rescind coverage if there were omissions or misstatements—sometimes even if inadvertent—about a person’s medical condition or medical history in an insurance application.
That standard will change under the new law. Once a policy takes effect, insurers can deny claims or end coverage only if they show that an individual made “willful or fraudulent misstatements” in their application about a pre-existing medical condition.
Another change in the new law is to give people more time to obtain medical insurance after they lost coverage. It increases from 63 days to 95 days the “creditable coverage” period. That’s the time in which a person without coverage receives credit for previously being insured.
While all of these policy matters may sound reasonable to the average citizen, each of these new regulations will further increase the cost of health insurance in New Mexico. Considering that Richardson is simultaneously working to mandate “universal coverage,” it might seem odd that he would sign legislation to make insurance more costly. Unfortunately, it is perfectly consistent because the tendency is towards greater government involvement in all areas of health care.

According to Staci Matlock of The Santa Fe New Mexican (Mora residents split over drilling, Feb. 26, 2008) Mora County commissioners will be holding a meeting on March 7th to discuss taking the radical step of banning all drilling for oil and gas throughout the county. Some residents are concerned about potential harm to endangered species in the area, water contamination, and destruction of the county’s natural beauty. Other residents feel that they have the right to decide what is done on their privately owned land.
Local ranchman Tony Duran has already signed a lease facilitated by KHL Inc. of Albuquerque, and is convinced that drilling would not pose a danger to the water resources in the area. I discussed the mineral leases with Journalist Staci Matlock and she told me that the mineral leases that have been signed in Mora thus far indeed do “include requirements for protecting water,” and in a previous article (Mora County residents torn over mineral leases, Feb. 16, 2008) she noted that, “Mora County… [has] protections for wells and water supplies written into the county’s development code. The code prohibits mining and other activities within a 1,000-foot radius of a well and prohibits activities that would contaminate water supplies.”
In the same article, Knute H. Lee, Jr., proprietor of KHL Inc., says, “New technology and know-how allows companies to drill for hydrocarbons while protecting both the environment and communities.” The company has clearly evaluated the critical issues involved and has worked out a plan to protect the interests of all the inhabitants of Mora County. A few citizens of the county have already signed leases with KHL and it would seem readily apparent that a ban on drilling would be detrimental to this business activity. The county commissioners should pay special attention to property owners who have the most to lose in this process. They should retain their legal authority to lease the minerals on their lands and collect royalties from any gas or oil collected.

The March issue of the Heartland Institute’s excellent publication which follows education and education-related reforms, covered a recent study by Dr. Harry Messenheimer on the failure of New Mexico’s ever-increasing spending on K-12 education. Messenheimer’s study, “The Way to Education Success in New Mexico: Breaking Free from Failed ‘Reforms” find several important facts, including:
“Over the past two decades, New Mexico has dramatically increased resources devoted to education.”
“When adjusted for inflation and population growth, general fund spending has increased by 34 percent over the past 19 years,” the study notes. The average New Mexican is now paying an extra $319 each year for no improvement in the education of our children.”
The entire study is available here.

All of the controversy over the Rail Runner and its negative impact on our transportation budget is just a sideshow to the very real problems and opportunities facing us when it comes to transportation. You read that right…as one of the leading critics of the Rail Runner, I’m telling you that it is not at the heart of our transportation problems. The problem is the government itself and, unless we reduce the government’s role in making infrastructure decisions, the roads in this state are bound to deteriorate and grow more congested over time.
That said, there are systemic solutions available. Pennsylvania, led by Democrat Ed Rendell, is currently working to lease the Pennsylvania Turnpike. Unfortunately, protectionist sentiment has reared its ugly head and is making things politically difficult. While leasing our infrastructure to “foreigners” may make the blood of some protectionists boil, it actually is a way for the US to allow investors to plow money back into American roads and bridges rather than letting it flee the country. Besides, with the government wasting money on transit and other boondoggles, isn’t it time the private sector made transportation profitable again?
For a more in-depth discussion of the need for public-private partnerships and market forces in transportation, check out a new study by Missouri’s free market think tank.
There are solutions to gridlock. While New Mexico has not been as negatively impacted as Pennsylvania and Missouri, the longer we let the government waste our gas tax revenue, the greater the likelihood of tax hikes in the not-too-distant future. We need to move towards market-based solutions and we need to start by passing legislation to enable public-private-partnerships now.

With the Democratic candidates for President campaigning in Texas and Ohio ahead of Tuesday’s primaries, both states have become the focus of attention. As the Wall Street Journal points out, the states have pursued very different economic paths and achieved opposite results.
On one hand, Texas has no state income tax and is a right to work state (no forced unionism). The result has been that Texas has gained 36,000 manufacturing jobs since 2004 and has ranked as the nation’s top exporting state for six years in a row. Its $168 billion of exports in 2007 translate into tens of thousands of jobs.
Ohio, on the other hand is not a Right to Work state and it imposes the third highest corporate income tax in the country (10.5%) and the sixth highest personal income tax (8.87%).
So which state is New Mexico more like? Well, New Mexico is not a Right to Work state and, while our taxes may not be quite as high as Ohio’s, our gross receipts tax places a special burden on businesses that is not found in other states. Unfortunately, until New Mexico reduces its tax and regulatory burdens, it will continue to be more like Ohio than Texas and from an economic perspective, that’s a shame.

While the media are more than happy to talk about global warming and the joys of “renewable” energy sources, I bet you missed this story from last week.
What happened is that the utility’s grid frequency dropped suddenly when wind production fell from more than 1,700 megawatts, before the event, to 300 MW when an emergency had to be declared due to too little power being available. Some major businesses were forced to shut down operations in order to avoid a blackout.
The fact is that wind and solar combine for less than 1 percent of our nation’s energy consumption. While some argue that this is a result of government policies that favor fossil fuels, the reality is that no one wants to — and some like hospitals — can’t go without power when the sun isn’t shining or the wind isn’t blowing. Those who are pushing mandatory renewable requirements are simply making New Mexico’s energy supply less stable and more expensive than it should be.

New Mexico State Senator Dede Feldman (D-ABQ), one of the state’s leaders on the health care issue, had an interesting opinion piece in the Albuquerque Journal on Thursday.
While her arguments don’t necessarily hold together individually, she ultimately decides that “Democrats (who control the Legislature) should trust one another enough to roll up their sleeves…and draw on a basic common value: affordable, quality health-care should be accessible to everyone.” Her arguments are worth analyzing.
1) Mandating that individuals purchase health care is key. While there will be “winners and losers in the short term, costs will ultimately be lowered for everyone.” Unfortunately, the Senator is engaging in some wishful thinking here. Mitt Romney’s reform in Massachusetts relied on an individual mandate that has failed to lower costs. Rather than winners and losers as Feldman hopes, we’ll all lose with an individual mandate;
2) Regarding the concerns of other Democrats and their concerns about the ability of low-income New Mexicans to purchase insurance under an individual mandate, Feldman calls such questions “wonkish” and calls the loss of this mandate “regrettable.” No solutions for this very real problem are offered;
3) Feldman’s last important point is that there is “broad agreement among Democrats, but not Republicans” that health insurance companies should be forced to insure everyone and that 85 percent of insurance companies’ revenues must be allocated to purchasing health care.
She credits the Richardson Administration for “getting the insurance companies to agree, at least partially,” but she doesn’t explain that the only reason the insurance companies are willing to go along with this in the first place is that since we’ll all be forced to buy health insurance, those companies will have a captive market and will be able to charge whatever they wish. Since the insurance companies are “playing nice,” they are assuming that they’ll get favored treatment when it comes time for rate increases which will inevitably be subsidized heavily by taxpayers.
Feldman asks or at least mentions some of the key questions in the health care debate. Unfortunately, she seems to dismiss these concerns in an almost single-minded effort to obtain “universal coverage” for New Mexicans. If she gets her way, we’ll not only be poorer, but we’ll have fewer doctors in the state to treat us. We can’t afford this “reform.”

I recapped the results of Governor Richardson’s efforts to impose a highly bureaucratized — albeit not explicitly socialist — health care proposal on New Mexico in National Review Online. While the story of the 2008 legislative session and the failure, at least to this point, of the Governor’s proposal, is something that many New Mexicans are undoubtedly aware of, Richardson is still hoping to reappear on the national stage as a potential Vice Presidential candidate. The American (and New Mexicans who haven’t been paying attention) people should at least be aware of what he’s been up to recently.

Tucked away in the last Energy Bill passed by Congress and signed by the President was a little-discussed provision that banned incandescent light bulbs by 2014. Now, as it turns out, if the new bulbs break (the curled bulbs are on sale in many stores now) the mercury contained in them will leak out.

In one study from Maine, it was discovered that “immediately after the bulb was broken – and sometimes even after a cleanup was attempted – levels of mercury vapor exceeded federal guidelines for chronic exposure by as much as 100 times.” While there are no guidelines for dealing with such a toxic spill in the home, researchers suggested “If there are young children or pregnant woman in the house, consider cutting out the piece of carpet where the lamp broke as a precaution.”
I love it! if these bulbs were toys made in China, Greenpeace, the Sierra Club, and most of the dopes in Congress that voted for this bill in the first place would have been all over this clamoring for “safe light bulbs” and decrying GE for “unsafe lighting” and “pursuit of profit at the expense of safety.” Of course, since these newfangled toxic bulbs were foisted upon us by Congress and the greens, there’s nary a peep about safety.
Seriously, though, who wants to cut a hole in their carpet every time a light bulb breaks? You better have a lot of furniture to cover those holes.
Hat Tip – The Westerner

Harold Meyerson is the resident left-wing “economist” at the Washington Post. Since the Post’s columnists often run in the Albuquerque Journal, New Mexico readers often have the pleasure — or displeasure — of reading columns from writers including Meyerson, E.J. Dionne, Robert Samuelson, and George Will to name just a few.
Meyerson’s most recent piece which appeared in our papers on Monday of this week discusses the “fact” that the American economy no longer produces anything, rather, Americans simply consume goods produced in other countries. He blames both Wal Mart and our nation’s lack of a labor-driven “industrial policy” for these supposed problems.
The fact is, contrary to Meyerson’s assertions, that industrial production in the United States does continue to grow. Employment in the sector has shrunk over the years, but largely as a result of productivity gains. Can Meyerson really show that it is economically unhealthy for Americans to consume more of their domestic production than other nations? It would seem that our low unemployment and high personal incomes would be good things, not bad.
Of course, with some people, regardless of the problem, the solution must be bigger government. So it is with Meyerson who believes it is time to institute a National Industrial Policy. He seems to think that Obama and Hillary will do this, but I doubt these savvy politicians will fall prey to that siren song. National Industrial Policy didn’t work for the Soviet Union and it won’t work here.
Perhaps the Journal should more carefully screen what it accepts from the Washington Post?

To those who don’t take a great deal of interest in economics, the concept of the Laffer Curve may make their eyes glaze over. That said, the concept is really quite simple and has a huge impact on our daily lives. A group called the Center for Freedom and Prosperity Foundation is working to educate Americans on the Laffer Curve and other important concepts by producing short videos to educate Americans on basic economic concepts.
Laffer’s Curve is essentially a theory of how individuals acting in a free market react to the incentives created by tax policies provides the basic underpinnings of today’s tax system. It provides a partial explanation as to why certain Eastern European nations are adopting flat taxes and becoming economically prosperous almost overnight.
Check out the two short videos on the Laffer curve Part I here and Part II here.

Today, the last issue of the <a href="http://www.abqtrib.com“>Albuquerque Tribune rolls off the presses. While the free market economist side of me says that afternoon newspapers are now a product in search of a market and there are many other news outlets available, the sentimental side of me wishes that somehow the Tribune would have found a buyer and thus been able to continue.
From a purely greedy perspective, the loss of Albuquerque’s second newspaper is the loss of another media outlet that was willing to help spread the Foundation’s message. As I point out in today’s final issue of the paper, the Rio Grande Foundation is able to produce more work than the newspapers are able to run. Another voice lost is another tool taken from our arsenal.
For a number of reasons, some selfish and others altruistic, we will miss the Tribune.

Current Secretary of State Mary Herrera has disclosed information from a federal investigation being conducted by the Elections Assistance Commission accusing the former holder of her office, Rebecca Vigil-Giron, of using $6.4 million of federal money for her own publicity. The federal funds, provided under mandates of the Help America Vote Act of 2002, were supposed to be used to plan and run the 2004 and 2006 federal elections, but according to Trip Jennings of the Albuquerque Journal (Former Official Faulted for Ads, Feb. 19, 2008), Herrera has suggested that Vigil-Giron used the funds for public service announcements “often featuring herself.” Vigil-Giron is now running to represent the Albuquerque district in Congress.
The fact of the matter is neither Secretary of State has a very positive record when it comes to running elections. During the state’s recent democratic caucus, scores of hopeful voters were incorrectly told that they were not registered and were forced to fill out provisional ballots so their registration status could be confirmed before their votes were counted. Mary Herrera’s spokesperson “defended the [voter] database prepared by [Election Systems and Software], one of the nation’s large private election vendors,” even though it was apparent that the list was rife with mistakes.
After the 2004 presidential elections, representatives from all eight political parties united to file a lawsuit against Rebecca Vigil-Giron and the State of New Mexico (Lopategui et al versus the State of New Mexico), alleging that thousands of votes were miscounted by electronic voting machines statewide and hoping to provide measures that would prevent similar failures of democracy in the future. Among stories of voting machine malfunctions, “One poll worker described watching 141 voters come to the precinct, enter the polling booth where a voting machine awaited, stay for a short period, and leave. At the end of the day, there was only one vote counted for president.” While plaintiffs and defendants collected evidence for the lawsuit, Ms. Vigil-Giron motioned to dismiss the case, which was denied by Judge Eugenio Mathis.
It is obviously inappropriate for officials to use public money to boost their name recognition. Even though Ms. Vigil-Giron did appear in the public service announcements, they did their job of educating potential voters on the registration process. On the other hand, Ms. Herrera’s office was responsible for the voter list that butchered the democratic caucus. Public concerns like voter registration lists are one of a handful of public services that should be the responsibility of public officials, not private companies. New Mexicans apparently need to work harder to find competent officials to serve in the Secretary of State’s office.

We at the Rio Grande Foundation have written a good deal about the proposed New Mexico Spaceport. Now, the new director of the Spaceport, Steve Landeene, is making the pitch for “tax hikes for billionaires” to justifiably-skeptical voters in Sierra County.
Landeene argued before the Sierra County Commission that the 1/4-cent gross receipts sales tax hike which will be on the ballot on April 22 is “the key to unleashing world history right here in Sierra County.” He went on to claim that “one study estimated the spaceport would generate $1 billion in economic development and 2,250 jobs within the first five years of operation.”
Of course, the question Landeene didn’t answer is why Sierra County residents should be asked to pay higher taxes — on top of an already-onerous 7.25% gross receipts tax rate — in order to pay for millionaires and others to go into space? If this project is really going to generate $1 billion, shouldn’t the investors be able to afford to build the Spaceport themselves?

Ned Farquhar has become one of my favorite opponents recently. He can always be counted on to represent and write about the latest energy and environmental issues from the green angle. In today’s Albuquerque Journal, he argues that nuclear power is not safe, not cheap, and will inevitably fall into the hands of terrorists. While there is a nugget of truth in each assertion, his claim that we should transition from nuclear (and just about everything else) to solar and wind, is absurd and based on green fantasies that have no bearing on reality.
First, he sets up a straw man, saying “Anyone who proposes nuclear power as a silver bullet, the single answer to our convoluted energy and security issues, is ignoring huge issues.” Of course, all forms of energy have issues and no one that I know of is arguing that nuclear is the “single answer” to our energy “problems.” Of course, what Farquhar doesn’t mention is that the people who have created what problems we have are the very greens he represents.
The resurgence of nuclear is a response to the hue and cry against greenhouse gases and the supposed “crisis” of global warming. The nuclear waste issue, on the other hand, could easily be handled in a free market, but once the federal government took charge, the issue became politicized and prices went up dramatically. Another red herring cited by Farquhar is the supposed danger of uranium falling into the wrong hands. While it is true that the United States tries to strictly limit access to weapons-grade uranium, the type of uranium used in energy-generating reactors is far different.
Ultimately, all of his problems with nuclear power can be boiled down to the simple fact that nukes are not politically correct. Only wind and solar power are beloved by greenies. Of course, even the two percent number cited by Farquhar as the percentage of our energy supply that comes from these politically correct sources is overblown.
The fact is that wind and solar are inconsistent and expensive. Given the high level of subsidies now handed to these industries, they may grow slightly as a percentage of our energy supply, but even a goal of producing 5% of America’s energy usage is a bit far-fetched. The fact is that we need coal, oil, natural gas, and nuclear. No amount of wishing and hoping is going to change that.

The New Mexico state legislature has recently passed House Bill 305, sponsored by Speaker Ben Lujan of Santa Fe, which will impose new mandatory regulations on utility companies throughout the state in an attempt to make them more accountable to environmental concerns.
While encouraging commercial, industrial, and residential growth in New Mexico, our state government will simultaneously force utility companies to adhere to new rules that will drive them to eventually decrease the amount of electricity provided to customers. By 2014, utility companies must be providing 5% less electricity to customers than provided in 2005, and by 2020 providing 10% less.
The law is also known as a Utility Customer Demand Management bill. If customers were actively demanding increased energy efficiency, new technologies and business models would develop in a free market that would meet their demands. Instead, government regulations have been adopted which are likely to stifle the very economic growth that our state needs.
In his blog titled A Lonely Vote for Coal and Against Conservation, Governor Richardson has mentioned that state Senator Tim Jennings of Roswell was the first legislator to vote against the proposed bill.
Although, according to Judy Pasternak of the Los Angeles Times, plans for some new coal-fired power plants have been cancelled or delayed nationwide, they “continue to advance in New Mexico, Mississippi and Indiana.” In the same article she mentions that Rick Sergel, head of North American Electric Reliability Corp., has suggested that the “tight conditions” placed on coal-fired plants may cause the nation to have an electricity shortage within 10 years.
It would seem obvious that, with a power crisis possibly imminent, utility companies should be allowed to ensure ample electricity to their customers. Unfortunately, Governor Richardson and the New Mexico Legislature are all too willing to ignore energy consumers in favor of promises of “efficiency.”

Regular readers of this know that while economists support business and economic growth, there are right ways and wrong ways to go about it. The right way is low, equitable taxes for all while the wrong way is largesse for a few which often results in higher taxes for others. Over the weekend, the New Mexico Film Office released figures stating that the industry generated $1.5 billion for the state. I’m not going to question that number. It would be impossible to state definitively that it is wrong.
On the other hand, I can also state unequivocally that bribing the film industry to come to the state was not the most efficient use of our tax dollars. That point was proven more than 150 years ago (by a Frenchman no less) Frederic Basiat. Speaking to the primary difference between a good economist and a bad one, Bastiat said, “The bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, – at the risk of a small present evil.”
I’m not calling the film industry “evil,” but I do think it is both immoral and bad policy to take money from low and middle income (not to mention wealthy) taxpayers in order to give it to wealthy filmmakers on the possibility that bringing them to the state will generate a few jobs and tax revenue. Across the board cuts in the gross receipts or income tax would have been far more economically efficient (no waste, no special office to distribute the money), not to mention being more just.
I don’t wish the New Mexico film industry any ill will, just that they’d stop taking my money.

Gil Heredia is running for District 7 in Alamogordo. Unlike so many politicians who feel that the only way to improve city services is to raise taxes, Heredia is advocating private sector solutions that are likely to reduce Alamogordo’s tax burden (which is heavier than other Southeast New Mexico cities) while improving service delivery at the same time. He outlined some of his ideas including privatizing municipal golf courses and the city-owned airport — most of which are applicable in cities large and small — in an article in the Alamogordo Daily-News.
Candidates for local office across New Mexico should be encouraged to borrow Heredia’s ideas on limited government. Heredia should be commended for his efforts and innovative approach to governance.

By now, most of you are probably aware that Governor Richardson has called a special session in an attempt to get his health care bill passed. This was no surprise given the Governor’s fixation on health care before the session began, but with little in the way of agreement on the issues, Richardson’s move seems somewhat desperate. After all, even House Speaker Ben Lujan, D-Santa Fe, said of the prospects for a special session, “It won’t be fruitful for the governor to call a special session if there is not mutual agreement.”
This is the rub. The House which Richardson normally counts on for support didn’t even go along with the Governor, but instead gutted the bill. The Senate is even further away from the Governor than that.
Crazy things can happen in a special session, but if legislators seemed skittish about reforming health care in a short, 30-day session, it seems even less likely that they’ll go along with the Governor during a special session that is sure to be unpopular with legislators of both parties, particularly since they’ve already rejected his reforms once. Lashing out at those who don’t go along with his wishes seems to be the Governor’s current mode of operation. Only time will tell whether legislators cow-tow to the Governor.

Anyone who regularly reads this blog knows that we do not engage in personal attacks. We may have policy disagreements, but we don’t generally go after people as individuals. That said, I’m not really sure Governor Richardson has been on an even keel since he return from the campaign trail. First was the statement that doctors were being “greedy” for not going along with his health care plan. While I think this statement is false on its face, it is hard to see the political wisdom of publicly attacking the very health care professionals whose mission it is to make us well. Besides, doctors are people we all deal with personally and, while we may associate their presence with both physical and financial pain, they are certainly viewed more favorably than the nameless and faceless insurance companies.
Of course, attacking doctors was only the start for Richardson. Today he essentially told the Legislature — both houses of which are dominated by his fellow Democrats — “bring it on” (subscription required) when some lawmakers suggested he’s entered his lame duck phase as governor.
As if this belligerent attitude were not enough, the Governor topped his rhetoric off by publicly disagreeing with his Attorney General (also a Democrat) regarding what should be a relatively minor bill deadline and then challenging his Lieutenant Governor over whether she is deserving of security or not.
Something is just not right. While it is to be expected that the Governor would disagree with Republicans and veto their projects from the just-signed budget, he seems to be lashing out at anyone and everyone who crosses him, possibly due to his frustrations on the campaign trail.
While we at the Rio Grande Foundation don’t agree with him very often on policy matters, it would seem that the “wounded bear” routine won’t do much for his efforts to pass his health care agenda and other items. Perhaps he’ll shake it off, but until he does, he isn’t doing himself any favors…and that’s probably a good thing for taxpayers.

As you probably know, the Rio Grande Foundation has been among the most prominent organizations opposed to more government intervention in the health care sector and supporting market-based reforms.
While most New Mexico businesses and business organizations have opposed Governor Richardson’s plans for a massive new government-run health system, the Greater Albuquerque Chamber of Commerce came out in support of the Governor’s plan. Recently, a group of businesses and other organizations including the Rio Grande Foundation sent a letter to the Chamber outlining concerns with the Chamber’s support for even more government intervention in health care and the negative impact such policies would have on small businesses. Mario Burgos blogs about the issue here.

The issue of whether or not to drill in the Galisteo Basin has consumed Santa Fe’s local politics over the next several months. Not surprisingly, given Santa Fe’s politics, this has gone over about as well as well as a third term for President Bush would. Governor Richardson has responded to the outcry by the area’s wealthy, well-connected residents by placing a six month moratorium on drilling in the area.
In an opinion piece that was published in the Santa Fe New Mexican over the weekend, James Taylor, a Santa Fe resident and former oil man who is advising the Foundation on oil and gas issues, wrote that if oil and gas are indeed found in the Galisteo Basin, it would be a good thing for the area and the state. After all, we all use oil and all New Mexicans benefit from the largesse it provides. Besides, oil and gas drilling are fine in Farmington and Roswell, is it only OK to drill in less wealthy areas of the state, are there some in New Mexico who are simply too wealthy to tolerate drilling in their general midst?

Along with Michael Barone, Grover Norquist, and several other prominent conservatives, I recently participated in a symposium on what it means to be an urban conservative that was sponsored by the Minnesota-based Center of the American Experiment. You can read my thoughts and those of the others who took part here.