BuckeyeBlog

It’s not even a certainty to be built yet, but already politicians are jockeying to turn the proposed passenger rail network into even more of a pork barrel project than it already is. Officials in Butler County (and other Ohio counties) are trying to make sure any passenger train includes stops in their jurisdiction. These officials make grand promises that such stops will produce jobs, economic development, tax revenue, and cotton candy for everyone in the area (OK, so no one has promised the cotton candy … yet).

These promises are often based on nothing more than wishful thinking and overly-optimistic economic development “studies” that predict exactly what policymakers want, not what is actually likely to happen. A great example of this is found in Cincinnati’s Riverfront Transit Center, where, at its “May 2003 dedication, local, state and federal officials proudly predicted it soon would handle up to 500 buses and 20,000 people per hour during sporting or other riverfront events. The day was coming, they added, when passenger trains tied into the center also would zip along the riverfront.” Did any of that happen? Nope: “One day last week, however, the midday volume at the center was zero buses – the same as it is most hours of most days. Anyone waiting for a train would have a long wait, considering that there are no tracks yet.”

It’s a pretty safe bet than any passenger rail stop in Butler County or any other Ohio county will be more akin to the Riverfront Transit Center than the bustling economic center predicted by county officials.

As Randal O’Toole’s report shows, passenger rail is a boondoggle in and of itself. Once you get local politicians trying to steer pork to their jurisdictions, it will cost taxpayers even more.

Looks like Governor Strickland is supporting Medicaid cuts and re-thinking his Medicaid expansion because the state isn’t receiving enough tax revenue.  Two years ago, when policymakers in the General Assembly almost unanimously (there was only one dissenting vote) expanded Medicaid at the request of the governor, I wrote this:

Expanding Medicaid can lead to large increases in Medicaid spending when states can least afford it –during recessions. Ohio saw this earlier this decade when Medicaid spending increased dramatically during the recent recession. Spending grew at 11 percent annually during 2001 and 2004, squeezing other budget priorities at a time when the state was seeing reduced revenue. Expanding Medicaid now will only repeat this cycle during the next recession.

Oh, so now Governor Strickland gets it, huh? I guess I was just two years too early.

I’m not a prophet, folks, I’m just someone who actually remembers the events of 2001 through 2004. State policymakers who are grappling with the state’s current deficit chose to ignore the lessons of the recession earlier this decade and expanded spending in a variety of areas, not just Medicaid. Now they are reaping the consequences of their bad decisions. I’ll wager (based on past experience) that soon Ohio’s taxpayers will be reaping the consequences of these bad decisions when these same policymakers raise taxes.

The bankruptcy of an Allen County ethanol plant illustrates a variety of problems with government intervention in the market. The only reason ethanol is being used as fuel is because the farm lobby (which benefits from having another market for corn) and the environmental lobby (whose hatred of fossil fuels blinds them to scientific facts) teamed up to convince federal and state governments to promote ethanol usage. Of course, this push for ethanol ignores the fact that it is bad for car engines, environmentally destructive, and may have raised the cost of food, thus contributing to food riots around the world.

These facts were ignored by policymakers because they like to appease farmers and appear environmentally-friendly. So there was a push at the state level (in Ohio and many other states) to use taxpayer money to invest in ethanol plants. Now those plants are going bankrupt. The one that went bankrupt in Allen County cost taxpayers $1 million.

When you have governmentally-directed “economic development” strategies, this thing is inevitable. Sure, in a free market situation there are plenty of products that fail. But there is no way that a product like ethanol, which has so many flaws, would still be produced unless the government was offering such absurdly high incentives for its production and mandating its usage. And when private business ventures fail, it is businessmen and investors who lose money, not taxpayers.

The ethanol boondoggle should be a sobering lesson for all those who want the government to promote “green technology.”

A mandate that insurance companies must cover services for autistic children was part of the budget passed by the Ohio House. What do autistic services have to do with the state budget? I’m not sure and it seems the Sen. John Carey isn’t sure, either. He wants to remove the mandate so that it can get a more thorough review. That sounds reasonable — the mandate will raise the cost of insurance and shouldn’t be snuck through as part of the state’s budget.

Sen. Carey and other legislators may also want to consider the fact that there is a lack of evidence that many services for autistic children actually produce results:

Medications, new styles of teaching, classical psychological conditioning, physical manipulation, vitamins, diets, special eyeglasses—many kinds of treatments have been proposed and tried, but few have been tested in a rigorous way. Fewer still—some behavioral conditioning methods, a few anti-psychotic medications—have demonstrated some degree of efficacy. Some autistic patients exhibit very difficult patterns of behavior, ranging from simple stubbornness to compulsiveness to screaming to destructiveness to explosive violence. The behavioral changes produced by the few effective treatments make life in social settings (including the home) possible, but we have no idea whether they have any effect on the underlying cause (or causes) of autism or whether they even make severely affected patients feel better. The people who work with autistic clients often come to depend on their own sensitivity and empathy to judge whether a treatment has had a positive or negative impact.

So the House passed legislation that everyone agrees will raise health insurance rates (and likely lead to some people dropping insurance coverage) to pay for services that likely won’t do much good.  That’s pretty poor public policy if you ask me.

First, the good news: Although it’s not ideal that legislators have advanced a bill to impose a foreclosure mortorium, they did remove the egregious (and unconstitutional) “cramdown” provision that would allow judges to modify home loan contracts. As the Buckeye Institute’s Maurice Thompson said in his testimony about this bill: “House Bill 3, as currently written, would clearly raise interest rates for prospective homeowners, thus harming more Ohioans than it would help, and enhancing the likelihood of increased delinquencies.” The removal of the “cramdown” provision lessens the harm to Ohioans but does not eliminate it.

Now, the bad: Get ready for your taxes to go up. As the Toledo Blade reports, “Gov. Ted Strickland yesterday said he won’t take the possibility of a tax increase off the table as he negotiates with legislative leaders over how to deal with the state’s budget woes.” It does go on to say that the governor doesn’t think such a hike is a good idea. At least he’s paying lip service to keeping taxes in line, but the amount of spending he supports makes it a virtual necessity, unfortunately. As I pointed out a couple months ago:

When there were rumbles in the air of an impending recession in 2007, the governor and legislators could have done the prudent thing: limit spending growth, refrain from creating new programs, and planned for the future. Instead, with only one dissenting vote, the Republican General Assembly sent a big-spending budget to the Democratic governor that, among other things, created a new middle class entitlement to government health care.

Now taxes will need to be raised to pay for this fiscal recklessness. In the past the governor has denied the need to do this and, in an attempt to avoid making the hard decisions, got the federal government to pony up billions of “stimlus” dollars to cover the state deficit. Now it appears he can no longer avoid the issue. Too bad it’s the taxpayers who will, literally, be paying for the bad decisions in Columbus.

While other industries that suck from the teat of Ohio government are experiencing hard times obtaining funding, nursing homes are having their usual success in getting more of your tax money shoveled their way. Already profiting handsomely from Ohio’s Medicaid system, if House Speaker Budish has his way nursing homes will be profiting even more from their political connections. The nursing home situation in Ohio is a good example of why government-run health care won’t be the cost-effective, patient-friendly nirvana that some liberals envision.

Health care analysts generally agree that it is less expensive for taxpayers and better for many Medicaid recipients if long-term care is provided mainly in homes or community settings (the cost of home or community care is one-third of the cost of nursing home care in Ohio). However, as you may imagine, nursing home operators have a different view. It doesn’t matter to them if their services are expensive or if people don’t want to use them. If there were a free market in long-term care, business owners could not disregard consumers in this way and thrive. But when politicians are running the show, it’s pretty easy to convince them to spend your tax money for expensive care that people don’t want.

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The commissioners in Warren County are saying “no, thanks” to some of the federal stimulus money because it’s “bad, filthy money”:

Warren County commissioners say they don’t want more than $2 million in federal stimulus funds offered to the county to pay for transit and “green” projects. 

The county refused to take $373,000 set aside by the Ohio Department of Transportation to purchase three shuttle vans for the county transit program and a computer-based program to schedule rides requested by residents.

“This is bad, filthy money, folks,” Commissioner Mike Kilburn said March 17, when the commissioners voted unanimously not to accept transit dollars. “This is money we don’t have.”

These commissioners are exactly right. They want to see if the money can be used to help defray the huge national debt being run up to pay for this “stimulus.”

While some may attack them for not accepting this “free” money, these commissioners understand the problems with higher government spending. If more politicians were like them we’d have far less wasteful and irresponsible spending than we do today.

There is a mini-furor over what appears to be a cozy relationship between the mayor of Parma (who happens to be the state Democratic Party treasurer), the chairman of the state Democratic Party, and the chairman’s wife (a lobbyist for the city of Parma). Some are wondering if there isn’t something improper with a state Democratic Party official using taxpayer dollars to employ the wife of another state Democratic Party official.

While this certainly has the appearance of impropriety, to me it’s not the real scandal. What the Dispatch should be focusing on is touched on in its story:

Hiring the lobbyists has been a good investment for the city, [Mayor Dean] DePiero said.

“They were able to help us with some capital bill stuff and some of the (federal) stimulus stuff.”

What Parma is doing (and what many other government entities do) is use the city residents’ tax money to hire a lobbyist whose job is to get other politicians to send taxpayer money to that city. In essence, it’s using your money to convince politicians to take even more of your money.

Taxpayer-financed lobbying is a major reason why government spending is so high. Local organizations and businesses that receive tax dollars hire lobbyists to get more of these dollars. Local governments hire lobbyists to get more state and federal tax dollars. States hire lobbyists to get more federal dollars. Politicians at all levels are hearing from these lobbyists that they need to tax more and spend more. The interests of taxpayers are not being represented by these taxpayer-funded lobbyists; instead, the it is the interests of tax-consumers that is being rewarded.

That is a much bigger scandal than any conflict of interest these three people may have.

The Findlay Courier has a good editorial cautioning the governor to be careful how he spends the federal “stimulus” money:

It seems unlikely that Ohio will pull out of the recession in only two years, so at this point, relying on economic growth to boost state revenues is unrealistic. Thus it makes sense for the state to be extremely careful in how any one-time money is used. Rationally, one-time money should be used for one-time projects, and in our current circumstances, projects that create jobs should be top priority. It also seems justifiable to use some one-time money to extend benefits for the unemployed.

What it should not be used for is projects that involve heavy long-term fiscal commitments, such as welfare and health care expansion, or the governor’s education reform plan. House Democrats are already crafting plans to limit proposed funding increases to schools and phase in the governor’s reforms over 10 years instead of eight. That’s at least a start.

Both political parties say they oppose both tax hikes and cuts in services. But something has to be done to avert catastrophe in the future as well as now.

There is one problem with their analysis — the unemployment funds from the federal government come with a mandate that the state expand benefits in such a way that once federal money runs out, the state will either be forced to pay more into the unemployment insurance system than they do now or cut benefits. This is exactly the sort of funding the state should reject as it sets up long-term problems.

The general theme of the piece is right on, though. This federal money is a one-time deal (more than likely). If it is used to fund programs that, once the money runs out, will be difficult to scale back, then that is a bad thing. If our leaders are short-sighted and merely look at all the goodies they can buy with this “free” money without considering the long-term consequences, then they are poor leaders.

This federal money isn’t free; it comes with a heavy price tag. It’s just that the cost of this money will come due in the future. Here’s hoping that there’s some long-term thinking going on in the governor’s office and the General Assembly.

A few weeks ago, I wrote a Buckeye Institute Viewpoint on Ohio Attorney General Richard Cordray’s decision to dismiss the state’s public nuisance lawsuit against paint manufacturers. Former Ohio AG Marc Dann brought the lawsuit in 2007 seeking to force the paint manufacturers to pay for the costs of cleaning up thousands of buildings that had been neglected for decades. The state claimed that the paint manufacturers were responsible for creating a public nuisance by manufacturing and selling lead-based paint more than 40 years ago.

Cordray’s decision to dismiss the state’s case sends the right message. While the attorney general’s office is committed to protecting consumers, it will not misuse legal doctrines and waste taxpayer dollars on lawsuits the state is unlikely to win. Moreover, in the current economic climate, Ohio’s businesses need to know they will not be hauled into court and have to spend millions of dollars defending against government-sponsored litigation involving legal products they produced several decades ago.”

The Federalist Society just published a special issue of the State Court Docket Watch dedicated to lead paint litigation.  Included in the publication is new article I wrote discussing the Ohio lead paint litigation and placing it in the context of a disturbing trend of government-sponsored public nuisance litigation against manufacturers. It is unclear whether Cordray’s decision to dismiss the lead paint lawsuit is a clean break with this trend or just a reflection of the reality that the state’s case was unlikely to succeed. Regardless, Cordray’s decision to dismiss Ohio’s lead paint case is a hopeful sign for those who are concerned about overzealous use of government-sponsored litigation.