There is a heavy freight train rolling downhill and New Mexico’s economic future is tied to the tracks. What am I talking about? Just the biggest, most expensive mandate to hit New Mexico businesses and taxpayers in a long, long time: universal insurance (subscription required).
I previously reported the fact that Mathematica, the firm analyzing three different proposals for New Mexico health care, had said that a single-payer system would be cheaper than the system now in place. Now, according to the Journal article today, it is said that all three proposals would save money compared to today’s system. This, despite the fact that the single-payer and “voucher” systems would require new payroll taxes of between 4 and 8 percent!
I’m not buying it. How many times have well-paid consultants and analysts tried to tell us that down was up and 2 + 2 was 5 in order to sell some new government program? The truth is that government intervention in the market has caused most of the problems we are dealing with in health care today and bigger, more ambitous government programs will only multiply those woes.

Investor’s Business Daily bodyslams the Energy Bill for — among other things — levying $29 billion in new taxes on the oil industry in this editorial.
Also, according to an analysis by the Heritage Foundation, “the bill could increase the price of regular unleaded gasoline from $3.14 per gallon (the early May national average) to $6.40 in 2016 — a 104 percent increase.” The analysis includes a feature that allows you to figure out how high gas prices will go in your state.

In case you missed the Albuquerque Journal this morning, there was an interesting story (subscription required) about Ben Luce, a Santa Fe physicist who recently resigned as director of the New Mexico Coalition for Clean Affordable Energy.
Mr. Luce is quoted as saying, among other things, that “The renewable energy policy was structured by the (Public Service Company of New Mexico) to make the governor look good but to have no real impact.” Obviously, this would not be the first time that such a thing has happened in New Mexico, but this time it is a hard-core environmentalist that is complaining. To my mind, what is good to him is bad for the rest of us.
Thus, it is hard to read his comments. Are the renewable mandates and transmission authority ineffective? It is hard to tell, but we certainly hope these onerous regulations will be watered down and toothless. Only time and economic indicators will tell.

Sorry for the massive server troubles over the past week. I believe we are back and expect no further problems.
Steve Terrell of the Santa Fe New Mexican wrote an interesting piece discussing Governor Richardson’s claims of having increased the number of jobs in New Mexico by 80,000 as Governor. A number of economic policy experts (including myself) are quoted throughout the story to determine how much credit the Governor should receive for new jobs in the state and the economic growth that has taken place here.
The ulitmate point of our studies of New Mexico’s economy is that elected officials exert only a limited amount of control over the short-term health of the economy. External factors like oil and gas revenues can cover up the effects of mistakes elsewhere, just as a recession could make a governor look worse than they really are.
Unfortunately, New Mexico’s long-term economic struggles are the direct result of a lack of economic freedom.

According to a new publication from the Institute for Justice, the non-profit law firm that litigated for property owners in Kelo v. New London, New Mexico’s eminent domain reforms passed during the last legislative session give the state an “A” when it comes to protecting property owners.
We knew the reforms were good and we’re happy that both Governor Richardson and the Legislature were able to find agreement on the issue without caving to special interests. For more information on eminent domain and the relative degree of protection in all 50 states, check out the report card here.

David Brooks of the New York Times has never been my favorite columnist. I’ve never really thought that he “gets it” when it comes to limited government and personal freedom. He also made several factual mistakes (the RailRunner is not “light rail” for example and New Mexico is not a “Red State“) in a recent article on Bill Richardson’s run for the White House.
But I’m not going to dwell on those past errors. I’m writing about a current issue. Brooks wrote a column recently in which he called himself a “Hamiltonian.” While I don’t dispute his claim — he’s certainly no ‘limited government conservative’ — another statement has me shaking my head:

If you are reading this column, you’re keeping company with somebody in group No. 2. We Hamiltonians disagree with the limited government conservatives because, on its own, the market (emphasis added) is failing to supply enough human capital. Despite all the incentives, 30 percent of kids drop out of high school and the college graduation rate has been flat for a generation.
Just when it needs a more skilled work force, the U.S. is getting a less skilled one. This is already taking a bite out of productivity growth, and the problem will get worse.

How exactly is the educational system in this country a “market?” The answer is it is not a market in any way, but a government monopoly with only a few inroads having been made by charter schools, private schools, voucher programs, tax credit programs, and home-schoolers. While these groups all are attempting to break out of the top-down, government education model, they are a distinct minority.
In other words, Brooks doesn’t seem to know what the word “market” really means. If Brooks and other “Hamiltonians” want to create a better-educated work force, perhaps we should create a genuine “market” in education. Until then, calling it a market is absurd.

Many credit Byron Dorgan (D-ND) with killing the much hated Senate immigration bill. In his quite animated speeches opposing the bill, he notes his distaste for the guest worker program, which ostensibly takes jobs away from Americans and depresses American wages.
Our own Jeff Bingaman sponsored an amendment to the bill that lowered the guest worker cap from 400,000 to 200,000, proclaiming that the former number as untested and irresponsible. His claims have no basis in reality. Prior to the bill, the government authorized an ulimited number of H-2A guest worker visas, along with numerous other guest worker visas such as H-1B. But for a moment, let us give Mr. Bingaman the benefit of the doubt. What can we expect by lowering the number of guest worker visas offered each year?
The Southwest benefits tremendously from expansive guest worker programs. Texan farmers expressed their dismay at the likely death of the guest worker program. Their comments expose one of the main guest worker fallacies. Contrary to the naysayers, guest worker programs keep businesses in America, thereby keeping tax revenue here as well. When the guest worker program runs dry, businesses pack up and move south of the border, taking both immigrant AND American jobs with them; almost half of this industry has already been lost to Mexico because of the shortage of workers. There goes the money that Dorgan and Bingaman so desparately crave for entitlement programs.
Perhaps what Bingaman and Dorgan should be saying is that guest worker programs take jobs away from labor unions. As someone who goes to school an hour away from Detroit, I highly recommend this course of action.

A few weeks ago the Minnesota-based Center for the American Experiment published a symposium of views from various think tankers and economists on the topic “Should Medicare be Means Tested?”
Perhaps not surprisingly, I said “quite simply, yes.” After all, it seems unfair from my perspective for middle and lower income Americans to pay for wealthy recipients of a federal entitlement program.
The fact is, despite legitimate differences of opinion among such free market and conservative luminaries as Grover Norquist of Americans for Tax Reform, John Berthoud of the National Taxpayers Union, and Congressman Tim Penny, something needs to be done to reform entitlements and soon.

As my bio indicates, I was born and raised in Cincinnati, Ohio. I am visiting Cincinnati right now and, after having picked up a copy of a newspaper laying around my mom’s house, I began to have flashbacks to Albuquerque circa last fall.
It turns out that HDR, the very same consulting firm that nearly succeeded (and continues to try) to push streetcars on Albuquerque, is trying to do the very same thing in Cincinnati. As this article indicates, both the financing plan and justification would have a lot in common with Albuquerque’s proposed streetcar:

The streetcar system be funded mostly with tax increment financing, or TIF – a financial tool that earmarks future increases in tax revenues arising from an improvement project to finance the project that will create those gains – and state and federal subsidies. He said the TIF proposal makes sense because a streetcar system would spawn economic growth along its path and into neighboring areas.
‘It’s not about growing revenue, it’s about economic development for the city.’

Sounds mighty familiar to me! Far from being a solution that is “tailor made” to Albuquerque, it looks like HDR is simply trying to sucker as many cities as possible into buying an expensive streetcar system. The plans are the same down to their media strategies of focusing all attention on downtown and the few isolated areas that may benefit from the streetcar while the economic burden placed on the rest of the city is ignored. Hopefully neither city is foolish enough to fall for HDR’s slick sales pitch.

Jerry Ortiz Y Pino is one of the New Mexico Legislature’s most left-wing members. When he’s not trying to impeach President Bush he writes a column for Albuquerque’s weekly alternative newspaper The Alibi .
In a recent column, the usually “progressive” Ortiz Y Pino struck a somewhat different tone in arguing against Mayor Chavez’s proposal to cut Albuquerque’s gross receipts tax. As I point out in my follow-up letter to The Alibi Ortiz Y Pino needs to understand that the gross receipts tax is regressive — that is it hurts the poor worse than it hurts those of us with more money.
So, unless Ortiz Y Pino is simply a lover of government and not a real progressive who is concerned with the welfare of the poor (a real possibility when you consider this), he should come down in favor of cutting the GRT. Unfortunately, in this day and age, both parties seem to care more about growing government and acquiring power than actually helping their constituents.

Whole Foods recently struck a deal to purchase rival organic grocery Wild Oats. No big deal, right? It is a very big deal actually if you work for the Federal Trade Commission and you believe that consumers must be protected from a “monopoly” in organic grocery stores.
Leaving aside the debate over whether federal intervention to ensure competition in the organic food grocery sector is really a pressing national interest, I find the argument that the merger of these two companies is somehow “anticompetitive” quite unreasonable. If anything, the fact that Wild Oats has been losing money and yet was still able to find an interested purchaser implies that Whole Foods management sees ample room to grow the organics market and for new players to enter and expand their selections of organics.
In fact, prospects for growth and the obvious optimism expressed by Whole Foods might even spur other grocery chains like Kroger and Safeway to start doing even more in the organics sector…and where does Trader Joe’s fit in to the discussion? Aren’t they a competitor of Whole Foods?
The fact is that the grocery industry is highly competitive and (even after the purchase of Wild Oats) Whole Foods is a relatively small player, not a monopolist.
Hopefully the FTC will get a grip on reality before this gets tied up in court. Seems like another case of a bureaucracy looking for new dragons to slay when it might be better just to put down the sword.

Before I even get into this topic, it is important to clarify that there is no real evidence that spending more money improves educational performance. That said, I noticed a recent story noting that New Mexico now ranks 35th in education spending among the 50 states.
It may seem that we are not spending enough to educate our children although $7,580 per student is a healthy sum, even higher than rates charged by private schools, but like so many numbers, per-student spending is misleading. I submit to you the following ranking of teacher pay. While New Mexico’s teacher pay is 37th highest in the country in nominal terms, when those numbers are adjusted for cost of living, pensions, and experience, New Mexico’s teacher pay ranking actually rises to 20th.
Despite this focus on money and teacher pay, the fact is that results are the most imporant part of the equation. Choice, not money, is the key to improving results. That is why the adoption of a program of educational tax credits is one of the Foundation’s top priorities for 2008.

Thanks to a reader of our blog, James McHenry, for this story from Bloomberg which explains that New Mexico’s State Investment Council, which funds education and government services for children, has $522.5 million tied up in investments so risky that they make “junk bonds” look safe. In fact, because of their risky nature, bankers call these investments “toxic waste.”
These collateralized debt obligations (CDOs) are packages of securities backed by bonds, mortgages and other loans that have been bought by the State Investment Council with hopes of generating returns as high as 20 percent. That is, of course, assuming that the Investment Council doesn’t lose its shirt on the deal.
The fact is that state employee pension funds across the nation are tremendously underfunded and there is a great deal of temptation, like any gambler in Vegas knows, to double down on losses in an effort to make their money back.
This is just another reason that, contrary to the pleas of organized labor, we are much better off investing our own money in our own retirement accounts than we are letting governments or even corporations do the investing for us.

In a recent column, Gene Grant of the Tribune displays an excellent grasp of the reality and difficulty of putting together a municipal wi-fi/broadband system.
With all of the problems experienced by Rio Rancho and Sandoval County in their public wi-fi endeavors, one might think Mayor Marty would think better of getting involved in such a boondoggle, but apparently “Rio Rancho envy” is a reality when it comes to wasting money on arenas and internet systems.

Health care is going to be an extremely hot topic over the next 9 months or so (if not longer) here in New Mexico. A single payer bill is being pushed along with other “reforms.” I wrote an opinion piece in the Albuquerque Journal recently explaining why, although not as complicated as the experts make them out to be, the solutions to our health care mess will not be found in more government programs and regulations, but in peeling back some of the absurd rules and regulations that have perverted the health care marketplace.

The New Mexico Department of Taxation and Revenue opens it’s webpage with a question; who benefits when taxes are collected? It then goes on to proudly proclaim that 47% of your tax dollars go to public schools!
If someone’s benefitting from this program, I’m not seeing who it is. It’s certainly not benefitting the taxpayer. It’s not benefitting students either. As Justin pointed out, we already pay over $7000 per student, a huge increase over the past 30 years. Despite this, the education system still fails to deliver better results. The excess money has only succeeded in maintaining a system that lags behind the the demands for today’s world.
One way to finally begin putting a dent in the massive amount of money we funnel into our moribund education system is through education tax credits. Tax credits have saved other states such as Arizona and Pennsylvania millions of dollars. The Heartland Institute estimated in 2005 that tax credits could save our state $42 million over ten years.
New Mexicans should not be proud that we half our tax money for education. We need to see some change in the amount we fork over for mediocrity. Tax credits can begin this process.

John Stossel is one of my heroes and, especially considering his role as a commentator/reporter within the mainstream media, his strong grasp of economic and political issues from a pro-liberty perspective is astonishing. One of his most recent columns is all about that moment when you are speaking to a store clerk and both of you say “thank you.” This, Stossel points out is the essence of free market capitalism and is the greatest single difference between voluntary exchange and government force.
The essence of the “thank you” is that you are getting something you want, say a cup of coffee, and the company/employee is getting something they want, namely money. Both parties consider themselves to be “winners” in the transaction.
This is rather different from government interactions. How often do you enclose a “thank you” note with your income tax return? Not often I’d imagine. Ultimately, international trade is no different from the interaction between a Starbucks employee and a customer. Rather than getting in the way, the US government should abandon tariffs and subsidies, especially on agricultural products, and allow Americans to trade freely with citizens of other nations…even Cubans.

My six-month old Siberian Husky, Jack (click here for picture), recently had some health problems. Namely, He swallowed a hackeysack, one of those little bean-filled balls that kids kick around. After two trips to the vet and severy tests, the situation was resolved and the hackeysack removed.
But, the situation got me to thinking about health care and the ways in which human health care differs from veterinary care. First and foremost, Jack was “uninsured.” I’m not sure about the number of “uninsured pets,” in this country, but I am pretty sure that it is a national crisis of epic proportions and that some government solution is necessary.
Anyway, because Jack had no insurance, his bills were all paidout of pocket and upon completion of his treatment by me and my fiancee. To say the least, this is not common practice when it comes to human health care. In fact, a friend of mine was treated for a torn anterior cruciate ligament in Albuquerque and, after repeated requests for an itemized bill, the hospital simply refused to provide one.
It would seem obvious to me that if you don’t provide consumers any information about their health care costs and the tradeoffs they create, you will continue to have costs spiral out of control. Perhaps we can take a lesson from the vet…now if I could only get Jack a Health Savings Account!

Right now, New Mexico is looking for $75 million in federal money for the RailRunner commuter train. The Albuquerque Tribune editorialized that the project was worthy of federal support and that Senator Domenici should use all of his political wiles to get the funding.
While it may seem simple to New Mexicans who think governments have an unlimited amount of money to throw around, even the federal government must (or at least should) prioritize. The problem is, as I point out in my subsequent letter to the editor, when government provides a particular service or several services, it becomes far more difficult to prioritize.
Although I don’t think we’ll see full-blown capitalism in transportation anytime soon, I do think that the first step is to return transportation policymaking to the states. That way, at least states will be able to try innovative solutions and compete with each other to find the transportation systems that work and that their citizens and businesses will use and can pay for.
If you want to see what an innovative, free market transportation system might look like, check out the work of Bob Poole and the Reason Foundation.

The Journal’s Business Outlook section had a nice story (subscription required) about a recent talk given here in Albuquerque by Robert L. Bradley Jr. of the Institute for Energy Research. Bradley’s main point (as disucussed in the article) was that our economy, because it is relatively free market and wealthy, can cope with what climate change occurs. Rather than panicking about a degree or two degree increase in global temperatures — whether it is human caused or not — we would be much better off devising ways to make sure our people can cope with the potential problems of global climate change.
Omitted from the Journal article was another important point made by Bradley, that is that ethanol and other so-called “alternative energy sources” are not really viable as replacements for the current suite of fossil fuels. Unfortunately, as Bradley made clear for the specific benefit of the Domenici and Bingaman staffers present, New Mexico’s Senators don’t seem to have gotten this message. In fact, legislation now being pushed by the Senators would again expand the alternative biofuels mandate.
Thanks to the New Mexico Prosperity Project for putting on an excellent event.

Yesterday, the US Census Bureau released its latest report on the public financing of elementary-secondary education. The data itself is also available.
On average, $8,701 of taxpayer money was spent on each student nationwide in 2005. New Mexico ranks at #35 in spending, $7,580 per K-12 student. Compared to its neighbors, New Mexico collects more revenue per student, but only Colorado spends more ($7,730 per student). Interestingly, Arizona and Utah are at the bottom of the list, spending just $6,261 and $5,257 per student. The problems with New Mexico’s public schools are not due to a lack of funding.
Where New Mexico really stands out is in the large imbalance in revenue for its public school system. Only two states (Arkansas and North Dakota) and the District of Columbia receive more federal funding per student, and we rank #10 in state funding. When it comes to local funding, however, New Mexico ranks #48, one of only 4 states where local sources provide less than $2,000 per student. Only 13.4% of public school funding in New Mexico comes from local sources, versus 43.9% average nation-wide.
What is the result of this displacement of local education funding by state and federal money? New Mexico ranks #42 in spending on classroom instruction, including teacher salaries and benefits, while landing much higher at #25 and #26 for spending on school and general administration respectively. Only 56.5% of public education spending in New Mexico goes to actual instruction, compared to 61% in the country as a whole.
When local communities, parents and property-owners, are directly funding their schools, they have a much stronger incentive to see their money spent where it counts. Clearly, this is a weakness in the financing of New Mexico’s public schools.

There has been a great deal of talk recently about health care reform in New Mexico, in part, because Governor Richardson is likely to dub the 2008 legislative session “the year of health care” and use the session to push for some kind of major health care reform.
The major proposals are known as the “Health Security Act” (single payer system), “New Mexico Health Choices” (taxpayer-subsidized vouchers), and the “Health Coverage Plan” (expansion of existing government programs like Medicaid). Specifics of all three are outlined on page 14 of this document.
With momentum building for some kind of reform, it was troubling to read that a firm known as Mathematica, which is studying each proposal, recently found that the single-payer plan would save taxpayers money. This drew a quick response.
I’m not going to judge the credibility of Mathematica before their final report is issued and I understand that the analyst made “heroic assumptions,” but Canada’s problems with single-payeer care are well-known and socialism has a rather poor track record in health care, not to mention the Soviet Union.
Rather than more government, what New Mexico needs is to peel back government involvement in health care. That may take more time than simply imposing a socialist model, but it is the only one that will work.

With all of the talk about increasing income inequality, particularly on the left, but also among politicians like President Bush, one might think that inequality simply follows the old race and geograpy pattern of wealth and poverty.
It turns out that the story doesn’t follow the old pattern and a new pattern is developing based on age. It turns out that far from the stereotype of old people living day-to-day on pensions and Social Security, older Americans are actually the wealthiest Americans (and they are getting richer every day).
Not surprisingly — as Mark Schmidt, my former colleague at the National Taxpayers Union pointed out a few years back — government policymaking plays a huge role here. Social Security, Medicare, and Medicaid are just a few of the most prominent of these massive programs that transfer wealth from young, productive workers to elderly retirees.
I’m not bashing grandma and grandpa here, but I am saying that Congress needs to do something to stem the tide of red ink. Unfortunately, politicians have been frightened for years by the spectre of angry old people rallying to vote them out of office.
The point is that the elderly are doing very well for themselves and policymakers need to reform and place strict eligibility limits on some of these programs (as I point out in this document) before it is too late.

Gas prices are rising and the usual cry has arisen from Congress that something must be done. As Mr. Gessing pointed out, our own Rep. Wilson is sponsoring this very piece of legislation.
What, exactly, can Congress do about such apparent price gouging? One thing they can’t do is lower the price of oil per barrel; OPEC regulates that. Mandating a set profit margin or lower prices can only destroy profits and drive oil companies out of business. That certainly won’t drive prices down.
OPEC only supplies 40% of the world’s oil, yet they possess 75% of the world’s reserves. They show no signs of increasing their production in order to drive down prices. If they refuse to deal with this situation (since Congress can’t mandate them), then another solution must be found. Congress could consider the perennial topic of opening up our own massive untapped oil fields. From ANWR to the massive shale oil supplies in the West, Congress could do much to loosen what the President labels our addiction on foreign oil. In the interim, price gouging legislation is the first step towards eventually higher prices and increased dependence on the whims of OPEC.