David M. Walker, former Head of the Governmental Accountability Office, now President and CEO of the Peter G. Peterson Foundation will be at Norwich University next Tuesday the 13th at 7pm. The event is being held, Free of Charge, at Plumley Armory. For reservations, call Jackie Barnett at 802 485 2633 or email jbarnett@norwich.edu.
For an introduction to Mr. Walker, this is his appearance on 60 minutes.
http://www.youtube.com/watch?v…
cross-posted from www.asrblog.com
Credit to the Burlington Freepress for reporting last week that federal stimulus money slated for road projects may not be distributed wisely throughout Vermont. Because distribution is based on economic hardship in a county and not on the condition of its roads, rural Essex county in the Northeast Kingdom will receive more money than Chittenden County, the state’s largest metropolis. According to the road surveyors, Essex does not have one road that is considered to be in bad shape, while 25% of Chittenden County’s roads are considered “unacceptable.” The rationale for this decision is that the stimulus money must be injected into the economy as quickly as possible, which would not be possible if it were concentrated only in the areas with the worst roads, considering you can’t work on 25% of the roads in one county at the same time. Furthermore, because the unemployment rate in Essex is higher than Chittenden and mean incomes are roughly $22,000 and $42,000 respectively, Essex is getting more money.
While I am fundamentally against the concept of federal stimulus money for reasons such as this glaring inefficiency of spending, not to mention inflation, I am forced to accept that it is being done and will provide a suggestion as such. The primary goal is clearly to get the money in the hands of citizens by way of road construction, with a secondary goal of fixing unacceptable roads, but everyone knows that there is always wiggle room when tabulating business expenditures. So to avoid turning “acceptable” roads in Essex into “super acceptable” roads, bring all the Essex workers into Chittenden county. The drive is too long to commute each day, so spend Essex’s money paying their workers, and spend Chittenden’s money on trailors to house these guys, buses to get them to the job sites, caterers to BBQ for them each night, launderers to take their clothes every couple days, cleaners to keep the trailers looking nice, and of course we can’t forget to make big signs that say PAID FOR BY THE AMERICAN RECOVERY AND REINVESTMENT ACT. Chittenden county has cleaners, sign makers, launderers and caterers, all of whom could be employed to ensure the roads are constructed well. The money will be shot into the economy as fast as if we had only paid road workers in both counties and neglected all these other folks, with an end result of fixing the same number of unacceptable roads in Chittenden.
Yesterday was an exciting day for me as I had the opportunity to participate in my first healthfair since moving to Miami to start medical school. Our student organization DOCS (department of community service) puts on 6 major fairs a year in low-income areas, providing free service to thousands; additionally, other student interest groups will be asked to participate in healthfairs organized mostly by churches throughout the year. I went to the Church of the Open Door with the opthamology interest group yesterday to work the eye station, testing visual acuity, peripheral vision and intraocular pressure/cornea thickness for about sixty patients, needless to say, each one of whom was Black.
During my break I walked to the lively sign-in area where there was music playing, food served, information about the different health stations available, and interestingly enough, many booths advertising political agendas with a plethora of material to distribute. “Okay,” I thought, given the times and since people go to gun shows, anti-abortion demonstrations, and other meetings that fall within the political spectrum with information about candidates, I suppose this event is fair game too. What disturbed me however, were the large posters displayed and being handed out, which as a background had a picture of Obama, then the writing was all these facts comparing Black people’s health to White people’s health, and the conclusion was that everyone needed to rally behind Obama’s healthcare plan. More specifically, the information stated facts like: “Black babies are 2 times more likely to die before their first birthday than White Babies,” “Black women are 3 times more likely to die from breast cancer than White women,” “Black men are 1.5 times more likely to die from prostate cancer than White men,” etc. The conclusion, to reiterate, was that these folks need Obama’s plan.
Without a doubt I acknowledge that facts like these are true, though there are probably other societal factors that contribute outside the realm of healthcare. Regardless, I can’t help but wonder how it would be perceived if at an all white community event, let’s say the Burlington farmer’s market, there was an anti-government healthcare table distributing flyers that said: “White babies are half as likely to die as Black babies before their first birthday,” “White women are a third as likely to die from breast cancer as Black women,” conclusion: don’t support Obama’s plan.
Now, I’m no believer in reverse-racism, White people have had a slight head-start over Blacks in our society and these facts, no matter which way you state them, highlight the economic disparities. In fact, though it may be irrational, I’m actually comfortable with the first way those facts are phrased and uneasy with the second, and would work to distinguish myself from anyone who truly subscribed to that thought process. We would certainly agree in our opposition, but mine comes from economic arguments and a feeling that the plan will ultimately hurt those it intends to help, while I would dismiss the person with the other argument as a racist. I would also truly hope that because of these people, a few narrow minds were not convinced that everyone who is opposed to government healthcare is also a racist and targets Black people, because that would not accurately represent me.
To elaborate further on the misguidance of generalized racism, I recommend the following short video.
( – promoted by odum)
Well, it took long enough, but many months after Bernie Sanders introduced the Federal Reserve Sunshine Act and Peter Welch co-sponsored the House version, HR1207, Patrick Leahy has declared that he will be the 26th co-sponsor of the bill. Alan Grayson (D-FL) also announced early this week that there will be a hearing on HR1207 (now at 290 co-sponsors) later this month. Below is Leahy’s letter:
Dear Mr. Hirsch:
Over the past several months, many Vermonters like you have contacted me about S. 604, the Federal Reserve Sunshine Act. In light of the overwhelming interest in this issue, I have decided to become a cosponsor of the bill.
I understand the concerns of some that disclosure of lending information could be a disincentive for banks to borrow from the Federal Reserve because it publicizes their need for an emergency loan. Still, I believe the American people deserve to know the full extent of the government’s lending programs.
In addition, a Federal District Court ruled last month that the Federal Reserve must disclose documents detailing the identities of borrowers and the amounts of loans or the assets put up as collateral under 11 relief programs. I am hopeful that the Federal Reserve will comply with this court order in a timely manner.
Thank you again for contacting me about this bill. Please keep in touch.
Cross-posted from www.asrblog.com
The Green Mountain State is often cited during national conversations about progressive ideas: local food production, CSAs, green technology, recycling programs and energy efficiency are all areas that Vermonters hold in high esteem and for which we receive recognition. Co-op models are also present all over the state in the form of numerous credit unions and food cooperatives, engaging members and returning profits to them rather than shareholders, which is the case with banks and supermarkets. So what about healthcare? We have Bernie Sanders leading the charge on single payer, even requesting that Vermont be the pilot state for such a project, yet it has not gained traction. I believe the reason lies with the old fashioned private vs public sector difference: entities like food co-ops and credit unions are privately run and provide good service to those who choose to invest, opposed to government initiatives which get tied up in beaurocratic BS, spending money they didn’t earn and get no where.
So how are we to address healthcare reform if the public option can’t pass the Senate, medicare will be bancrupt in less than a decade, and people remain uninsured? Democratic Senator Kent Conrad of North Dakota proposed and has been advocating for Medical Co-ops, arguing that there’s the interest for such entities across the country (especially in the North East and North West) and his sources say they would insure 12 million people while driving down price through increased competition. Well, I like the sound of that, locally based co-op models providing free market competition is double whammy Libertarian, though Senator Conrad has not explained exactly how he envisions Washington DC encouraging and nourishing these entities, which leaves me with skepticism about him. The principle is good though and he references the success of small co-op models in his own state, large co-ops like Ocean Spray, and the one successful medical co-op in the country GroupHealth.
GroupHealth was established in Washington state in 1947 and now provides medical care to 580,000 residents of Washington and Idaho. They have their own medical facilities to provide general and specialized care and 2/3 of their members use these facilities exclusively. There are in-network doctors at many other locations and out-of-network coverage is reasonably priced. Research is also conducted at the Group Health Center for Health Studies, having published over 1800 scientific articles since 1983, funded by both private and public grants.
This highly successful co-op is the one example that proves wrong all those who dismiss Conrad’s suggestion as impossible to accomplish, stating that established insurance giants have too much control of the landscape to allow such entities to thrive. There is some truth there, for instance the state of Iowa passed legislation to encourage the development of health co-ops in 1990 and the one that attempted to open died after two years. But GroupHealth exists and the question that blares out in my mind is “why is it not in Vermont?!”
Perhaps it is because many Vermonters love medical doctor Howard Dean who believes in the government solution public option, or because many Vermonters love Bernie Sanders who champions single payer. I believe these are poor leads to follow and that Vermonters need to address their healthcare needs the same way many have addressed their agricultural and banking needs. I’ll repeat, GroupHealth has 580,000 members, which is just shy of the entire population of Vermont; we need to apply the co-op model to our health system, leaving Montpelier out of it as much as possible and certainly DC completely out of it. Howard Dean and Bernie Sanders are too far removed from the state and jaded by big government philosophy, it’s time for Vermonters to take care of Vermonters.
A couple weeks ago GMD user Carbonpenguin published a diary entitled “VT Secession, beyond the Strawmen,” which drew much attention from people who are critical of the Second Vermont Republic for its past association with the League of the South, calling the leaders racist. Last night on ASR Matt and I hosted Thomas Naylor, who responded to these accusations:
http://www.youtube.com/watch?v…
The full episode can be viewed at http://asrblog.com which includes a discussion about the similarities between the former Soviet Empire and the United States, in addition to Dr. Naylor’s perspecitive on National Healthcare.
Dr. Naylor will appear on our television show this Sunday, July 12 at 7pm. The focus of the program will be GM’s bankruptcy, Senator Sanders’ S604, VT’s budget gap and Obama’s healthcare proposals. In our phone conversation yesterday, he told me that he’s particularly interested in presenting a philisophical perspective on healthcare rather than economic; specifically that when a person’s fear of death meets a physician’s/insurer’s/policy maker’s greed, then the sky is the limit on price.
The show can be watched LIVE on channel 15 in Burlington or LIVE online at http://asrblog.com/airtimes-in…
The call-in number is 656-0589
Receently, Senator Jim DeMint(R) of South Carolina attempted to attach Senator Sanders’ full bill S.604 as an ammendment to HR2918, a $3.1 billion bill entitled the Legislative Branch Appropriations Act. The purpose of Bernie’s bill is to audit the Federal Reserve since it has been unauditable since its creation in 1913, yet the Senate Democrats blocked a vote on this amendment, claiming a rule violation that states the Senate cannot legislate on an appropriations bill. Thankfully, Senator DeMint continued to press the issue, pointing out the many other GAO audits that the Democrats had put in the bill, which the Senate President was forced to agree were in violation of the same rule.
The full video can be watched here. Go Bernie!
The myth of Federal Benefits
It is sometimes claimed that, under the current US Federal Government, Vermont is a “beneficiary state,” that is, a state that receives more in benefits from the federal government than it pays in federal taxes. According to data collected by the Tax Foundation, a private Washington organization that analyzes tax policies, Vermont receives $1.08 in federal expenditures for every dollar that Vermonters pay in federal taxes (based on data for the tax year 2005, a typical year before the current economic meltdown).
However, this number is misleading, because the feds inflict on us not only the ostensible yearly taxes, but also a huge hidden deficit. The income taxes and other taxes we pay are not sufficient to cover expenditures, and each year the federal government runs a deficit, increasing the US national debt. This debt is effectively an extra, deferred tax, which we owe and will have to pay in the future, with interest.
Your generous Uncle Sam, in other words, pretends to give you more money than you pay him in taxes. But he is taking you for a sleigh ride. He conveniently forgets to tell you that all this extra cash comes from IOUs on which he has put your signature. He isn’t giving you his money, but merely your own – and, of course, he pockets some of it.
In its calculations, the Tax Foundation took Sam’s scam into account, but not to a full extent. For Vermont, the actual raw number for the ratio of federal expenditures received to federal taxes paid is $4,645 million/$4,085 million, or $1.14 per $1.00. The Tax Foundation revised this downward to $1.08 per $1.00 by making a correction for the cash deficit, which it treated as an extra hidden tax burden. But the feds incur debts not only in cash received vs. cash expended, but also in “internal” transaction, such as misappropriations of funds from the Social Security and Medicare Trusts, which they divert to other purposes. And they incur even larger debts by the accrual of new obligations to pay for future (as yet unfunded) Social Security, Medicare, and drug benefits.
Rethinking the Scam Numbers
Instead of the minimalist deficit correction adopted by the Tax Foundation, it is more equitable to adopt a deficit correction according to the yearly increase of the gross federal debt reported by the US Treasury (see “Historical Debt Outstanding, Annual” www.treasurydirect.gov), which includes debt from internal transactions of the feds but excludes the long-term debt associated with new obligations for payments of future benefits. In 2005, the increase of the gross federal debt was $554 billion.
The Vermont share of this debt was $1,170 million, if shares are allocated per capita. (To put this in perspective, note that this comes to 1,870 for every man, woman and child.) If we regard this deficit as an extra tax burden, the ratio of federal expenditures to total tax burden in Vermont drops to $0.88 per $1.00.
This shows that Vermont is not a beneficiary state. Vermont is paying for its federal benefits through the nose, or, more precisely, Vermont will be paying through the nose once the IOUs that Uncle Sam has signed on our behalf become due, and the Japanese and Chinese who hold these IOUs ask for repayment, plus interest.
But wait, there’s more!
And that is not the whole story. Many of the federal expenditures within Vermont are not made for the benefit of Vermonters, but merely for the benefit of the feds – many of these expenditures are not grants, but financial transactions involving payments for purchases of merchandise or for services rendered.
For instance, a bit more than 4% of the federal expenditures in Vermont are for the operation of the Post Office. Evidently, postal services are a benefit for Vermont. But we pay postage and fees for these services, and the feds’ expenditures are covered by these payments. For a fair accounting, we must either include payments of postage and fees on one side of the balance sheet and the Post Office expenditures of the feds on the other side, or we must remove these items from both sides of the balance sheet. In its analysis, the Tax Foundation did neither. To fix this mistake, let’s subtract all the Post Office expenditures from the Tax Foundation’s balance sheet for Vermont. When these expenditures are subtracted, the benefit of $0.88 per $1.00 is cut to $0.85.
Millions for “Defense”
Similar arguments apply to expenditures for military procurements in Vermont. For example, if the feds pay, say, $100,000 to take possession of a Gatling gun manufactured by General Dynamics in Burlington, then the wealth of Vermont increases by $100,000. But in the balance sheet, we must also include the fair-market value of this gun as a loss to Vermont. If we reckon the fair-market value of the gun as $100,000, then this sale is a wash. Thus, all such procurement payments are not grants, but compensation for merchandise and services rendered, and they should not be counted when comparing what we give to the feds versus what benefits Vermonters get in the “bargain.”
In fact, all defense payments – procurement, military salaries, civilian salaries, and National Guard grants – should be deleted from the balance sheet, because none are actually for the benefit of Vermont. The feds expend defense funds in Vermont not to protect Vermont, but mainly for geopolitical reasons, to protect and expand the commercial and military empire of the United States – and this is of little concern to an independent Vermont Republic. Defense payments (other than pensions and disability payments) are about 11% of federal expenditures in Vermont, and if we delete all this from the balance sheet, we discover that our benefits amount to only $0.75 per $1.00 of taxes raised.
Income tax in a Vermont Republic
For a calculation of the total income tax that Vermonters would have to pay as citizens of an independent Vermont Republic, let’s assume that we retain all programs and grants now being paid for by the feds with the exception of defense and a handful of minor programs of questionable value (e.g. No Child Left Behind grants, Improving Teacher grants, Homeland Security grants.) Let’s also assume that expenditures on all existing Vermont state programs remain the same. The total income tax to be paid in an independent Vermont Republic is then the existing Vermont state income tax, plus a surcharge that pays for the federal programs that we want to retain.
The starting point for the calculation is the total expenditures by the feds in Vermont: $4,645 million. To see how much of this has to be funded by the income tax surcharge, simply subtract the portions that will be deleted in our Vermont Republic, and the portions that are funded by sources other than income taxes. In millions, these subtractions are: $197 (postal service), $496 (defense), $33 (questionable federal programs), $1,894 (Social Security and Medicare, funded by payroll taxes). Besides, the independent Vermont Republic will be collecting the excise taxes, estate taxes, and duties that now accrue to the feds, which effectively subtracts another $280 from the amount that must be raised from income taxes.
Immediate Savings
The residual expenditure to be funded by a Vermont Republic income tax surcharge is then $1,745 million. This is to be compared with the 2005 federal income tax burden of about $2,200 million placed on Vermont. Thus, the citizens and corporations of the Vermont Republic would immediately save about $450 million in income taxes. This amounts to about 16% of the combined 2005 income tax burden (combined federal and state, individual and corporate).
Furthermore, in the long term, we would save the full amount of the deficit burden that the feds, by hook and by crook, place on us. For 2005, the feds’ deficit burden imposed on Vermont amounted to $1,170 million. In contrast, the Vermont Republic would have no deficit; it would cover all expenditures out of the taxes it collects. The combined total savings in tax and deficit burden amount to $1,620 million!
Lessons Learned
Even without independence, this tax analysis teaches a valuable lesson: the feds are giving Vermonters a bad deal.
And, with the ballooning deficits proposed for 2009, this deal is getting worse and worse. With the bailouts and economic stimulus packages included, the projected deficit for 2009 is nearly $2 trillion (or more than $6,000 per capita). The feds are taking far more from us than what they give back, and they are drowning us in a tidal wave of red ink and burdensome debt. Besides, they inflict on us a muckload of irksome rules for spending what is, ultimately, our own money.
Borrowing a page from Benjamin Franklin’s playbook, Ethan Allen would have told the feds to go fly a kite and get struck by lightening.
What’s our response?
This article was authored by Hans Ohanian and published in Vermont Commons: Mudseason 2009. Dr. Ohanian is an adjunct Physics Professor at the University of Vermont and supporter of an independent Vermont Republic.