Colorado Dems flunk basic econ

As Obama pledges to use taxpayer money to hand out cash and prizes in the name of jump-starting the economy, Colorado Democrats seem to be taking notes. But perhaps they should start taking a basic college economics course. Their chosen model just won't work. A quick read through the daily papers and opening day remarks by the state's leading Democrat lawmakers revealed their plans to increase government regulation and taxation, two actions all but guaranteed to worsen the state’s economic prospects.

Here’s just a quick sample of their plans. Democrats want to mandate new business regulations. Rep. Mark Ferrandino, a Denver Democrat, is introducing legislation to force banks to give loan defaulters a “temporary timeout” to renegotiate their loans. Rep. Andy Kerr of Lakewood hopes to force businesses to grant a week of unpaid leave so parents can go to school events.

The trouble with these nice sounding ideas is that they will increase government intrusion into private businesses and increase costs that are in turn be passed on to consumers.

Democrats also want to increase the size of government. Only the state’s projected $604 million budget shortfall restrains their ambitions. According to the Rocky Mountain News, a $13 billion price tag for start-up costs is the only thing stopping some Democrats from moving forward with a socialized medicine scheme.

Even so, Rep. Mary Hodge of Adams County thinks a smaller version is doable. Never mind that government takeover of healthcare is a prescription for long lines, escalating costs, deficit spending, and loss of personal freedom.

To improve education, Rep. Karen Middleton of Aurora suggests that we should increase government bureaucracy by creating an "Office of Dropout Prevention and Student Reengagement." State Rep. Debbie Benefield of Arvada wants the government to guarantee every student has access to a high-quality teacher. I’m guessing parental choice isn’t what she has in mind rather the creation of yet another government teacher training program or teacher salary initiative. On the welfare front, legislation is poised to create an “Economic Opportunity Task Force” (at least it’s not a blue ribbon panel) to develop a “strategic, integrated and comprehensive plan to help lift families out of poverty.”

Bear in mind that every dollar spent on state bureaucracy is one not spent by entrepreneurs to create jobs, charitable organizations to provide real help, or individuals to invest in their own future.

Democrats think they can create jobs, stimulate growth, and generate prosperity through the creation of more government programs, hand-outs, and regulations. Unfortunately, they missed the lessons of the 20th Century, subtle as they were, like the Great Depression, 70's stagflation, and the collapse of centrally planned economies.

“There are severe limits to the good that the government can do for the economy, but there are almost no limits to the harm it can do,” observed Nobel laureate economist Milton Friedman. The direction sought by the majority party this legislative session points to darker days ahead.

Krista Kafer is a Denver-based education consultant, frequent cohost on Backbone Radio, and regular columnist for Face the State.com, from which this is reprinted by permission.

AFP holds line in '09 for Colo. taxpayer

I listened to Gov. Bill Ritter's State of the State speech with anticipation the other day, and we have reason to be concerned. According to the Governor, we need to "invest...despite these tough economic times", and get rid of spending and tax limitations which the Taxpayers Bill of Rights [TABOR] has effectively secured. Ritter wants to extend the spending increases of Referendum C from 2005 and continue seeking changes in TABOR's limitations on taxing and spending. Here’s a quote from his speech:

"As I’ve said before, a budget is a moral document that should reflect our values. . . . There is also an opportunity here – a chance to address TABOR and the constitutional and statutory straitjacket that makes modern, sensible and value-based budgeting an impossibility."

The Governor, though, has left some questions unasked in this statement. Whose values determine what a “sensible” budget is? I know for most Colorado families, a sensible budget is the smallest one possible where they can meet their monthly needs. If their income suddenly decreases or they can't keep up with their credit card payments. Something has to give. They are forced to cut back their spending. Is this the value-based approach to budgeting the Governor finds “sensible”? Or is the “straightjacket” of TABOR, as he implies, keeping him from spending more of our money.

He argues that we have many challenges ahead, but he proposes get rid of TABOR to deal with them. He hopes to remove TABOR's restraints so that he can build a "modern" (read: bloated) government. It seems to be a pattern we are following all over the country: in times of crisis, turn to government for help. Of course, Colorado is faring much better than other states like California which are begging the Congress to bail them out. And TABOR has played a big part in keeping us from going into the tank like they have when huge budgets meet decreasing tax revenues in these tough times.

Americans for Prosperity is going to continue the fight to make this case publicly with your help. When citizens come out in a show of force like they did for us last year, it sends a message to our politicians that we Coloradans will not accept an ever increasing government.

What is a modern budget, Governor Ritter? Does that include ever increasing spending and expanding government services? Or are there some limits to the amount of government we need? Governor Ritter said that when he and other Governors met with Senator Obama in November, the President-elect said, “. . . it would take courage and a strong federal-state partnership to get America back on the path to long-term prosperity.” When has a federal-state government partnership ever made us more prosperous? Does government bring prosperity or do the people and their spirit of ingenuity? These are the questions advocates of government action never seem to ask.

Our left-leaning Congress and State General Assembly will attempt to push the limits expanding government’s role in our economy. Unfortunately, that's what Republicans did when they had the Congress and paid the price at the ballot box. You can be assured that we will oppose any changes to TABOR and any further expansion of government spending beyond the limits imposed by TABOR whether proposed by Republicans or Democrats. But we will need your help to put pressure on our elected representatives to hold the line on spending.

First of all, AFP is hoping for the grassroots army which came out last year to our Hot Air Balloon and Town Hall events to come out again this year to State House rallies and Town Hall events as we force our elected officials to see that Coloradans do not support expanded government.

I am asking for your help if we are going to be successful at stopping the Governor’s and the legislature’s efforts to eliminate TABOR. If TABOR goes down, it would give them the ammunition they need to increase spending and taxes to pay for their pet projects without the “hassle” of obtaining a vote of the people. Please support Americans for Prosperity so we can remain an active, effective force for less government in Colorado.

Last year, Coloradans defeated five measures which would have increased taxes and government spending by nearly $350 million. There is a force of people in Colorado like you who believe in free markets and responsible government.

I look forward to working with you as we continue to hold the line on TABOR and take a strong stand for our rights as citizens of Colorado.

Jim Pfaff is Colorado director for Americans for Prosperity. See www.afphq.org.

Nanny state has you covered

The Lofgren Family Carbon Monoxide Safety Act, now pending before the Colorado House, has emotional power because of the four Lofgrens' recent death in a borrowed house in Aspen. Of course we feel for their loss and wish to prevent similar occurrences in the future. Monoxide killed some friends of mine in their mountain condo years ago, and almost killed my wife's family when she was a child. We have monoxide detectors in our house. But I still say no to this mandatory detector bill for newly built homes or older ones being resold. If you legislate by anecdote, the lawbooks will soon overflow as liberty and personal responsibility are smothered with nannyism. If the bill addressed public accommodations such as hotels, and left private homeowners to make their own safety provisions, I might be receptive. But it does just the opposite, as today's Post reports.

This is the same mentality that had Gov. Bill Ritter saying in his State of the State last week, "We'll be introducing legislation with Representative Merrifield and Senator Carroll requiring that all new single-family homes come with a "solar-ready" option. Today, homebuyers already have choices when it comes to countertops, paint colors and flooring. People should have similar options when it comes to sustainability."

Another example is Sen.-designate Bennet saying "we have an opportunity to reinvent" the auto industry, where "we" means Congress -- as noted by Vince Carroll in the Rocky today.

Be it safety or energy, the liberals will always find an excuse to inject government coercion between freely choosing buyers and sellers. Uncle Sam becomes Mr. Mom and we're all children on the apron strings.

Budget test finds Ritter wanting

Colorado faces a $630 million budget shortfall and stark options now that half the fiscal year is past and so much money is already spent. Balancing a budget during a recession is a difficult, thankless job. But balancing this year's budget didn't need to be this hard if only the leaders at the Capitol had learned from the last recession - or listened to those who experienced it.

Last spring as the economic storm clouds gathered, Gov. Bill Ritter and legislative leaders had opportunities to take precautions.

One worthwhile precaution was proposed by Treasurer Cary Kennedy, my erstwhile political foe, and then-Rep. Bernie Buescher. At a time when revenues under Referendum C were surging, their proposal reasonably sought to double the state's reserve fund by saving, rather than spending, some $250 million.

After all, everyone who experienced the austere budgets of 2001-2003 agreed that the state needed a "rainy day fund."

Unfortunately, that proposal died on the altar of the spending lobby.

Then as lawmakers debated the state budget, headlines warned of a looming recession forecast by Federal Reserve chairman Ben Bernanke. Again, prudence dictated that leaders put the brakes on spending money that might never materialize.

Unfortunately, legislators passed and Gov. Ritter signed a budget that spent every "available" dime, making promises that now cannot be kept.

Even more remarkable than the legislature's habitual failure to save is the day-late-and-dollar-short response of Gov. Ritter and his budget office. Upon signing the full-throttle state budget, Ritter said: "This is a budget we should celebrate. This is a budget that is smart, fiscally responsible and effective."

In September, when the legislature's economists sounded warnings about an economic downturn and a budget deficit, Ritter's Office of State Planning and Budget kept whistling a happy tune.

"One of (the forecasts) is pretty significantly wrong," Ritter told the Denver Post, which noted that Ritter "made it clear" that his forecast wasn't wrong.

Ironically, President Bush apparently changed Ritter's mind a few days later by remarking in a televised speech, "the entire economy is in danger." Ritter responded by putting a partial freeze on hiring and new construction and asking his department heads to "identify other money-saving ideas and strategies."

In November, the governor unveiled his budget for the fiscal year starting next July. He called for growing the budget at only 5 percent and setting aside "an unprecedented $77 million" in a new reserve fund.

Again, this was too little, too late.

His "unprecedented" proposal was just one-fourth the size of the earlier Kennedy-Buescher plan ‹ which received no support from Ritter.

The hypocrisy, as surely even Ritter knows, is that the time to save is when revenues are growing - not when they're already in retreat. That's because when revenues are increasing, saving requires simply setting aside a portion of the increase. But when revenues are declining, every dollar saved must be cut from existing programs.

In December, the legislature's economists sounded a full-throated alarm, projecting a $631 million deficit for 2008-09 and revenue growth at less than 1% for next year. This time, Ritter & Co. issued mixed messages.

Ritter said, "We're experiencing a historic and a global economic crisis." But his budget office forecast a mere $70 million deficit.

Two weeks later, Ritter's budget office asked for a mulligan, telling the Post it had "used outdated information" and now forecast a $230 million deficit - still barely one-third that projected by the legislature's economists.

Ritter's budget data isn't the only thing that's outdated. His fiscal strategies amount to closing the barn door after the horses have already left.

It's not as if Ritter is the first governor to experience these challenges. Just seven years ago in the wake of 9/11 and the tech bubble burst, Colorado lawmakers faced similar challenges.

Unfortunately, it seems the only lesson learned by Ritter is to ask taxpayers for more money to spend - but never to save for the next rainy day.

Don't look now, Governor, but it's raining again.

Mark Hillman served as Senate Majority Leader and State Treasurer. To read more or comment, go to www.MarkHillman.com.

Hospital fees are the wrong answer

The revelation that Colorado Governor Ritter is conspiring with the Colorado Hospital Association to levy fees on hospitals to fulfill his political campaign promise to deal with the uninsured is a massively badidea. It falls short on three points.

First, there is no proof that hospitals have excess profits. Such fees would be internally cost shifted to patients and represent a hidden and covert tax. Medicare and Medicaid reimbursements are fixed and insurance companies negotiate discounts. That means only the sick, self-pay patient, who is already billed 27% more than the average would bear the brunt. It's regressive. We are trying to reduce cost shifting, not increase it.

Second, any extraction of additional monies so as to channel it back to pay for the costs of care of the uninsured is inflationary. Health care hyper-inflation is directly related to the steroidal injections of financial subsidies for various "needy" groups. It has distorted and destroyed any semblance of a marketplace in health care.

Finally, either mandates forcing people to buy health insurance or tax-based subsidies avoids the real need in health care reform. We need to re-institute disciplining forces, be-it competition or regulation, take your pick, to reverse the seemingly never-ending upward trend of health care inflation. In a time of recession we need the health care system to become more productive and efficient. Their costs need to decline, not superficially inflate.

The political establishment and the trade association lobby, continually obfuscate and avoid the real need in health care. There is no magic bullet. It is old fashioned efficiency improvement and quality. Maybe we should be consulting Toyota on health care.