There is a reason that WTMJ’s Charlie Sykes is one of Wisconsin’s most popular radio talk show hosts.  A successful talk show host gathers the information and presents it in a way that is both entertaining and informative to the listener. In A Nation of Moochers:  America’s Addiction To Getting Something For Nothing, Sykes brings his radio host’s skill to writing an indictment of the present state of American culture.

This is not a cheerful book. Dorothy does not click her heels together three times to return to Kansas, nor will wishful thinking suddenly return us to the days of Calvin Coolidge. The assessment of our culture is bleak.

It is the culture, not just our economic situation. While the book is a dismal narrative of statistics detailing the economic impact, the net result of the great expansion of the modern welfare state under both Republicans and Democrats has been to create a culture of dependency, a nation of moochers.

Who are the moochers? As Richard Nixon would have said, we are all moochers now. Moocherism is bipartisan, even nonpartisan, and reaches into every socioeconomic strata.

From Hollywood movie moguls demanding subsidies to pay for movie star contracts to homeowners demanding bailouts for mortgages they could never afford. From free breakfast programs in schools from affluent neighborhoods to Archer Daniels Midland seeking ethanol subsidies. From state employees expecting taxpayers to pay for lavish retirement and health benefits, to middle class college students applying for food stamps. As Walt Kelly’s Pogo said, “We have met the enemy, and he is us.” Our lust for Other People’s Money is only limited by our relative “suckage.”

Competition shifts from the marketplace to lobbying the government for financial boons. My favorite example from Sykes’ book was the decision by Disney to pursue $200 million in government subsidies to promote tourism. If there is any corporation in America that seems to thrive under capitalism, it would be Disney. Yet as we saw recently, the President of the United States made the pilgrimage to Disneyworld to promote tourism.

Ironically, it was President Obama who single-handedly damaged tourism in Las Vegas when he called for corporations to stop holding conventions there. The trouble with crony capitalism is that you never know when you’ll cease to be the favored crony.

Sykes walks us through the bailout of AIG to show how turning corporations into moochers, deeming them “too big to fail,” is ultimately corrupting to the political process. On all sides of the negotiations concerning the failure were representatives and former representatives of politically connected Goldman Sachs. Conflicts of interests were swirling in the room, and AIG’s bailout broke new ground by placing the full risk on the taxpayers. Goldman Sachs took away $13 billion.

The justification for the bailouts was a yawning financial abyss that impended if the government did not take immediate action to stabilize the markets. It’s an appeal that even reaches conservatives. However, had conservatives in Washington known of the cost culturally, would they have reluctantly agreed to the bailouts? Had they been able to envision the bankruptcy lawyers advertising, “the big banks got their bailouts, now get yours,” would the possible financial breakdown been more endurable? We may never know, but the nation is paying the cultural costs of those bailouts now.

But what is a corporation, or a state, or even an individual, supposed to do? If the federal government is collecting from all of us with one hand, borrowing money with the other, and “making it rain” with a third, should we be surprised when everyone starts buying buckets to collect? Should we be shocked when the ethos of our age changes from, “Ask not what your country can do for you,” to, “Where’s mine?”

From there we are set on the road to ruin, despotism, and even “serfdom” in Hayek’s phrase.

It isn’t hard to predict the course we are headed. The financial ruins of Greece are just ahead. We can point to other historical economic calamities as our future, such as Latin America in the 1970s. Further back in time, and we can see the political corrosion of dependency, as when Julius Caesar bought the masses to ensure his popularity. He was ultimately stopped, but by then it was too late for the Republic.

It’s impossible to read A Nation of Moochers without seeing the context of our times. Indeed, Sykes does not shy from engaging current controversies. The battles with Wisconsin’s government employee unions are featured prominently in, “The Moocher Empire Strikes Back.” Sykes puts Wisconsin’s struggle into perspective by reminding us that other states do not allow public employees to collectively bargain at all. Sykes quotes columnist Jeff Jacoby, “democracy, fundamental rights, and freedom were doing just fine in all of them.”

Sykes asks early in the book if the nation is at a tipping point. Can we bring the country back from one of patronage to one of entrepreneurship? Is it too late to stop the mooching? After a dip in the dystopian pond of Ayn Rand (mercifully brief), Sykes says the challenge is to “step away from the trough.”

”…the revolution against Moocherism requires redefining our expectations of what others owe to us and what we owe to ourselves. Put bluntly, we need to restore some of the stigma to mooching,” he writes.

The unanswered question is whether Sykes’ prescription is a little like the doctor telling the patient dying of lung cancer to give up smoking. We may learn this year if the tipping point has already passed us by.

Share

[Madison, Wisc...] As Governor Scott Walker puts the final touches on a budget he’s set to introduce in two weeks, his Administration has released new figures that indicate the state is facing a deficit of $136.7 million for the current fiscal year.

Agency overspending in medical assistance, the Public Defender’s Office, and in the Department of Corrections is the chief reason for the current shortfall. Making matters worse, moving forward into the next biennial budget, agency requests will outpace expected tax revenue by $3.6 billion.

The Walker Administration is expected to release a budget repair bill this week to address this year’s shortfall.

“Repairing the current budget will send a clear message to employers that the state is serious about getting its fiscal house in order, which is key to growing jobs, reviving our economy, and making sure the world’s job creators know Wisconsin is open for business,” said Cullen Werwie, Governor Walker’s spokesman.

The Walker Administration warns that if the state does not fix the deficit now, it will not have the necessary funds to provide important services.

“Without taking action to reduce the deficit in the current fiscal year, thousands of Wisconsin children and families could lose their health care coverage through BadgerCare, and there would need to be even more aggressive spending cuts in the future,” said Werwie.

The MacIver Institute, the free market think tank located in Madison, Wisconsin has conducted its own analysis on the state’s finances and says the situation is even worse that state officials admit.

MacIver analysts included $1.5 billion Wisconsin owes the federal government for unemployment reserve loans and they also calculated the current year’s deficit to be $145.4 million.

MacIver News Service is a project of the MacIver Institute, however the budget analysis was done independent of MNS reporters.

See the graphic below for more details.

Share

[Madison, Wisc...] The non-partisan Legislative Audit Bureau will conduct a comprehensive audit of the state’s Medicaid programs, after a Joint Senate/Assembly committee gave authorization via a unanimous, bipartisan vote.

“It’s time to take a close look at Medicaid, because the cost of the program is growing at an unreasonable rate,” said Joint Audit Committee Co-chair Senator Robert Cowles (R-Green Bay) “The state is facing tremendous budget difficulties, and we need to find out if this money is being spent in the most efficient manner.”

Deputy Health Services Secretary Kitty Rhoades, a former GOP state lawmaker herself, said that Republican Governor Scott Walker and his administration welcomed the scrutiny of the program and had already begun to assemble materials for the LAB auditors.

Wisconsin’s Medical Assistance program, also known as Medicaid, funds health care services for eligible low-income, elderly, blind, and disabled individuals. The program includes BadgerCare, and blind, elderly and disabled medicaid. Since it was created in February 2008, enrollment in BadgerCare has nearly tripled to more than one million people.

“It is critical that we get a handle on this program, given how expensive it is,” said Cowles fellow Co-chair, Representative Samantha Kerkman (R-Randall). “With costs for the program increasing by eight percent each year, there needs to be a thorough review in order to identify cost savings and efficiencies.”

Although legislative Republicans, who were in the minority in both houses of the legislature last session, had been stymied in previous attempts to audit spending on BadgerCare, the unchecked growth of MA expenditures has received bi-partisan criticism.

“The previous administration pursued dramatic Medicaid enrollment expansion seemingly without regard to rising costs or long term stability,” said Democratic State Senator Kathleen Vinehout of Alma, in committee testimony Tuesday. “Only in the past year were basic cost saving measures considered.”

With this audit, legislators argue, the programs will finally receive much needed scrutiny.

“Wisconsin is facing difficult economic times right now, and the last thing we need is a runaway spending program that has too little oversight,” Cowles said.

Click here for information regarding the scope of the audit.

MacIver News

Share

|

MacIver News Service | October 18, 2010 6:13 pm

[Madison, Wisc...] Wisconsin’s desperate fiscal condition is worse than previously estimated, according to an official analysis released late Monday.

Bob Lang, Director of the non-partisan Legislative Fiscal Bureau, broke down the numbers in a  2009-10 Annual Fiscal Report memo he sent to the co-Chairs of the Joint Finance Committee.

The State’s General Fund balance  closed the fiscal year $265 million below estimates.

According to the memo:

The report indicates that the gross, closing general fund balance for 2009-10 is $71 million. This is $265 million below the $336 million amount estimated at the conclusion of the 2009-10 legislative session. The $265 million variance is due to reduced departmental revenues (non-tax receipts deposited in the general fund) of $43 million and increased net expenditures of $222 million.

Net appropriations exceeded budgeted amounts by $222 million. This is primarily due to the fact the medical assistance (MA) program spent $207 million more than budgeted in 2009-10. To fund a shortfall in the MA program in 2009-10, the administration transferred amounts from the biennial appropriation for MA from 2010-11 to 2009-10.

Wisconsin’s Medical Assistance program, also known as Medicaid, funds health care services for eligible low-income, elderly, blind, and disabled individuals. The program includes BadgerCare Plus, long-term care and blind, elderly and disabled medicaid.

According to Lang’s memo:

[I]t is currently estimated that the GPR appropriation for that program will be insufficient by approximately $148 million for the 2009-11 biennium. To address this shortfall, the Department of Health Services (DHS) intends to seek approval to apply an estimated surplus in the SeniorCare program appropriation of $20 million to MA. DHS also intends to seek approval to delay certain MA capitation payments that would otherwise be paid to managed care organizations in May, 2011, to the 2011-12 fiscal year, thereby reducing the 2009-11 shortfall by an additional $44 million GPR. With respect to the remaining projected GPR deficit of $84 million, the Department is exploring a number of alternatives including seeking additional federal matching funds.

[Madison, Wisc...]  More than one in eight, or 13 percent, of all Wisconsin residents are on food stamps.

With nearly 750,000 receiving FoodShare benefits, Wisconsin has seen a 24 percent increase in the number of food stamp recipients in the last year.

“The explosion in the growth of FoodShare recipients demonstrates again how so many families in Wisconsin are struggling in this economy,” said State Senator Alberta Darling (R-River Hills).

Nearly three quarters of a million Wisconsin residents participated in the FoodShare program in July, an increase of 144,760 from the same month last year an a 12,158 jump from June.

Darling said the startling revelation that one in eight Wisconsinites receive food stamps should shock elected officials into action.

“Instead of moving forward with creative solutions to assist private sector job growth, the state’s political leadership only exacerbated the crisis with job-killing policies.,” said Darling. “Wisconsin lawmakers need to judge every proposal by its impact on businesses and their ability to create job opportunities for working families.”

Source: United States Department of Agriculture: Link

Nationally, the number of Americans receiving food stamps rose to a record 41.8 million in July.

In Wisconsin you are eligible to participate in the FoodShare program if: our family income is at or below the monthly program limit; you are a Wisconsin resident; and, you are a United States citizen or qualifying immigrant

Source: Wisconsin Department of Health Services: Link

As MacIver News reported earlier, the same week in June that Wisconsin Lawmakers expressed concern over fraud in the state’s FoodShare Program, the U.S. Department of Agriculture announced the state’s program was one of the most accurate in the country and would be rewarded with an extra $3 million.

Back in June, The MacIver Institute warned taxpayers that a second stimulus package was making its way through Congress.  At the time, the media was reporting that the package had “failed to gain the necessary support” to pass the Senate.

We suggested taxpayers might still want to hold on tightly to their wallets.

Wednesday, The Wall Street Journal is reported that the Senate voted to end debate on the bill to “provide $26 billion in emergency aid to state and local governments to expand Medicaid and avoid teacher layoffs.”

The bill provides approximately $16 billion in funding to states to help cover their rising costs due to an expansion of the Medicaid program and $10 billion to school districts to avoid the layoffs of teachers this fall.   Democrats believe the bill will save 140,000 teacher jobs.

The Son of a Stimulus package will supposedly be paid for with an $11 billion dollar tax increase on corporations, the repeal of the “advanced earned-income tax credit” and $12 billion dollars in cuts to food stamp benefits.  The food stamp benefit cuts are not scheduled to go in to effect until 2014.

This new spending bill passed despite estimates from the National Debt Commission that “the nation’s federal debt next year is expected to exceed $14 trillion — about $47,000 for every U.S. resident.”

We would do our “I told you so” dance if our exploding debt wasn’t such a serious threat to the future of our country.

Read our original prediction here.  Click here for the latest Washington update from The Hill.

Share

The bill, SB484, was originally on Tuesday’s calendar, but when Senator Kathleen Vinehout (D-Alma) and some of her fellow Democratic Senators began to ready amendments to the legislation,  the Senate Majority Leader Russ Decker (D-Schofield) maneuvered the bill back to the Senate Organization Committee.

During the early afternoon debate Thursday, Republican Senator Ted Kanavas (R-Brookfield) was blunt in his assessment about what is wrong with the plan.

He argued the Wisconsin Commissioner of Insurance would never allow a company in the private sector to market a plan like BadgerCare Basic, which Kanavas said will not have enough reserves to cover the risk the State is assuming, “There are simply not enough funds to support the kind of claims you are going to see.”

An effort was made to once again send the bill back to the Senate Org Committee, this time put forward by Republican Leader Scott Fitzgerald (R-Juneau).

Before the vote, Senator John Erpenbach (D-Waunakee) warned his fellow Democrats, ” If you vote to send this back to committee, you vote to kill this.”

After a lengthy debate of more than 90 minutes, Senator Fitzgerald’s motion  failed 15-18, with all the Democrats voting no.  Debate then began on a series of amendments.

A Vinehout amendment (SA3) to require an audit of the program passed with a bipartisan vote of 23-10 (with Democrats Carpenter, Jauch, Kreitlow, Plale, Robson, Sullivan and Taylor joining Vinehout and all the Republicans in support).

Before the final vote, Senate Fitzgerald made one last stand, arguing the plan would prove to be an expensive burden on Wisconsin taxpayers.

“This is the public option that we are voting on, just so we are clear,”said Fitzgerald. “This is Obamacare light.”

Senator Erpenbach defended his bill.

“This isn’t going to cost the state any money,”  said Erpenbach. He argued it was not universal coverage and that eligible individuals could choose whether or not to enroll.

“Here is a choice, this is a choice they have, if they choose to do so,” he said. “Obamacare? No, not even close.”

Shortly after 3pm, the bill passed 17-16 with Vinehout the lone Democrat joining the Republicans in voting no.

The bill now awaits action in the State Assembly.

Under SB484, BadgerCare Plus Basic would accept customers with pre-existing conditions, would cost enrollees $130 per month and supporters argue it is designed to pay for itself without additional tax dollars. The plan covers low income, childless adults, the same population served by BadgerCare Plus Core. The Core Plan was only expected to serve about 40 thousand people during a two-year period, but that number was reached in only a few months.

The state had to cut off enrollment in October, leaving more than five thousand people on an initial waiting list. A list that quickly surged to more than 23,000.   The proposed Basic plan offers leaner benefits, higher co-pays and deductibles, but opponents say the proposal is undercapitalized and ultimately will result in either the State picking up cost overruns, or ending the program due to lack of funds.

Share

The Senate health care reform plan is full of lots of goodies for those who were nice to Senator Reid in finding him the 60 votes necessary for the vote in the dark of early Monday morning that would limit debate. Unfortunately for many states, the Senate health care reform bill will increase Medicaid costs as the program expands nationally to cover those under 133% of the federal poverty line.

If you are wondering why Senator Ben Nelson of Nebraska gave in to his Democratic colleagues to become the 60th vote necessary to limit debate on the health care bill, Nebraska will receive 100% funding from the federal government to cover the expansion of Medicaid in that state.

In Wisconsin, we could have used that kind of relief for our versions of Medicaid, Badger Care Plus (including the Core Plan). It is unlikely that Wisconsin’s burden from Medicaid will go up under the new federal health care plan. Not because either Senator Feingold or Senator Kohl was able to cut a deal, but because Wisconsin already spends so much on state run health care. To make matters worse, Wisconsin’s Medicaid programs are $1 billion behind.

If we were to join the rest of the country in providing health insurance for those that are at 133% of the federal poverty line, we would actually be reducing the rolls of Medicaid recipients in Wisconsin. Only 17.2% of Wisconsinites would qualify for Medicaid coverage under the current federal health care plan.

That sounds like a lot, but with the expansion of government coverage in Wisconsin since 1998, nearly one in five Wisconsin residents is receiving Medical Assistance, and enrollment in the state’s Medicaid programs has jumped 174%, according to the Wisconsin Taxpayers Alliance. In 1998, less than one in thirteen residents received medical assistance.

Wisconsin’s Badger Care Plus generally covers residents at 150% of the poverty line, although there are exceptions that even go up to 300% of the federal poverty line. The Core Plan covers childless adults up to 200% of the poverty line if they do not qualify for any other federal assistance, again substantially higher than what other states will be covering.

In an effort to contain costs on the state’s Medicaid programs, the state budget planned on $600 million in cost savings in the current budget biennium. However, $195.4 million are from one-time savings that will have to be covered in the next biennium. We’re putting off to tomorrow what we should be paying today, only making what we have to pay tomorrow even bigger.

The current budget also relies upon temporary increased federal matching, $317 million, as a result of the federal stimulus bill. There is a bill in congress to extend the increased matching through June 2011, but then the stimulus funding would need to be replaced for the 2011-2013 biennial budget.

Now Wisconsin is experiencing higher-than-expected enrollment in our Medicaid programs because of the economy, and we’re experiencing an additional shortfall of $450 million. Enrollment in Badger Care Plus has leveled off for now, but it is still higher than planned.

So the news the Core Plan can no longer afford to add new enrollees, and that Wisconsin now has a waiting list looking for state medical assistance, should come as no surprise. As of November 14th, there were 7,434 people waiting on the Core Plan wait list.

We don’t need one of senators to blackmail the senate for more money, although it would help in the short run, we need to start promising less.

Unless Wisconsin gets control of its Medicaid costs soon, it will be the monster that eats the state budget.

By James Wigderson
Special Guest Perspective for the MacIver Institute

Share