National Issues

Congress is on the verge of enacting the largest unfunded mandate in American history. At a time when most states are struggling with rising unemployment, declining tax revenue and the worst national economic climate in 30 years, Congress is demonstrating that it is more out of touch than ever.

The Democratic health "reform" bill in the Senate would require states to expand Medicaid to include all people earning up to 133 percent of the federal poverty level, or $29,327 for a family of four. House Democrats want to require expansion to 150 percent of the poverty level, or $33,075 for a family of four. Even Texas, which has a balanced budget and nearly $9 billion in its rainy-day fund, isn't prepared to absorb this type of blow.

Complaints from majorities of Republican and Democratic governors alike continue to fall on deaf ears. Congress seems intent on forcing a one-size-fits-all mandate on states, some of which actually have solutions to repair their health-care systems that Washington is preventing them from trying.

Texas, for example, has adopted approaches to controlling health-care costs while improving choice, advancing quality of care and expanding coverage. Consider the successful 2003 tort reform. Fewer frivolous lawsuits have attracted record numbers of doctors to the state as medical malpractice insurance premiums dropped by half. Christus Health, a large Catholic nonprofit system with a significant presence in Texas, spent about $100 million on liability defense payments in 2003. Last year, Christus spent $2.3 million on such payments. Much of that savings has gone into expanding health-care services in low-income neighborhoods.

You might think Washington would be curious about plans to provide more low-income Texans with insurance, reduce expensive emergency-room visits for basic care and make it easier to buy into employer-sponsored insurance. Unfortunately, Washington has failed for 18 months to give Texas permission to use Medicaid dollars for these policies.

Historically, the federal government has paid an average of 57 percent of state Medicaid costs. In a transparent attempt to bribe governors and state legislatures into accepting 15 million to 20 million new people nationwide onto Medicaid rolls, Congress is proposing a series of additional subsidies to states to cover 90 percent of the costs of the newly mandated populations. In true Washington form, these handouts would be debt-financed, through the generosity of foreign bankers, to be paid back by future generations of American taxpayers.

Expanding the Medicaid program in Texas alone to include an additional 2 million people would cost $20 billion to $30 billion over the next 10 years. Regardless of how that cost is shared between the federal and state governments down the road, we believe that level of new mandated spending is grossly unacceptable.

Even more stunning than this fiscal irresponsibility is Congress's disregard for the quality of the Medicaid program and the well-being of the people in it. Medicaid is the lowest payer in the health-care system. It reimburses physicians 20 to 30 percent less than even Medicare, which pays costs at a much lower rate than do private insurers. If a doctor or hospital is facing bills, staff salaries and medical malpractice premiums, it is obvious which patients will get preference.

We note with concern that the Government Accountability Office reported in January that Medicaid made an estimated $32.7 billion in improper payments in 2007, equal to a full 10 percent of the program. Sen. John Cornyn (R-Tex.) pointed out that the average improper payment rate for non-health government programs is 3.9 percent. He introduced an amendment in the Senate Finance Committee that would have prevented expansions of Medicaid until the secretary of health and human services could certify that its improper payment rate was equivalent to that of non-health programs, but that amendment failed on a party-line vote. The rate of improper payments needs to be addressed.

The Democratic health-care proposals do nothing to expand choice, lower costs and empower patients. They would add to, without reforming, bulky, overpriced programs that would in turn add to our already crushing burden of national debt. Reckless expansion would ultimately reduce the quality of U.S. medical care.

Such tragedies can be averted if the powers-that-be in Washington set aside their devotion to centrally planned, debt-financed, one-size-fits-all solutions and work cooperatively with those laboratories of innovation known as states. Otherwise, we'll end up with a one-size-hurts-all situation.

Newt Gingrich, founder of the Center for Health Transformation, was speaker of the House of Representatives from 1995 to 1999. Rick Perry is governor of Texas.

“Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California,” Joel Kotkin, executive editor of NewGeography.com and a presidential fellow at Chapman University in Southern California, told the Los Angeles Times this past March. “Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California’s government and the middle class is constantly being renegotiated to the disadvantage of the middle class.”

Similarly, the CEO of a manufacturing company in suburban Los Angeles told a Times reporter that his business suffered less from California’s high taxes than from its ineffectual services. As a result, the company pays “a fortune” to educate its employees, many of whom graduated from California public schools, “on basic things like writing and math skills.” According to a report issued earlier this year by McKinsey & Company, Texas students “are, on average, one to two years of learning ahead of California students of the same age,” though expenditures per public school student are 12 percent higher in California.

State and local government expenditures as a whole were 46.8 percent higher in California than in Texas in 2005–06—$10,070 per person compared with $6,858. And Texas not only spends its citizens’ dollars more effectively; it emphasizes priorities that are more broadly beneficial. In 2005–06, per-capita spending on transportation was 5.9 percent lower in California than in Texas, and highway expenditures in particular were 9.5 percent lower, a discovery both plausible and infuriating to any Los Angeles commuter losing the will to live while sitting in yet another freeway traffic jam. With tax revenues scarce and voters strongly opposed to surrendering more of their income, Texas officials devote a large share of their expenditures to basic services that benefit the most people. In California, by contrast, more and more spending consists of either transfer payments to government dependents (as in welfare, health, housing, and community development programs) or generous payments to government employees and contractors (reflected in administrative costs, pensions, and general expenditures). Both kinds of spending weaken California’s appeal to consumer-voters, the first because redistributive transfer payments are the least publicly beneficial type of public good, and the second because the dues paid to Club California purchase benefits that, increasingly, are enjoyed by the staff instead of the members.

The Texas Medical Association’s political arm, TEXPAC, today announced its endorsement of Gov. Rick Perry’s re-election campaign.

The group selected Perry because of his “unwavering support and defense of Texas’ medical liability reforms and his efforts to protect the sacred patient-physician bond,” said Dr. William Fleming III, president of the association.

In an August column appearing in the San Francisco Examiner, Texas Governor Rick Perry wrote: "Just six years ago, Texas was mired in a health care crisis. Our doctors were leaving the state, or abandoning the profession entirely, because of frivolous lawsuits and the steadily increasing medical malpractice insurance premiums that resulted."

But Texas has since joined 24 other states by enacting reforms that include a reasonable limit on non-economic damages for pain and suffering of up to $750,000 per incident. This essential reform does not limit compensatory awards for calculable lost wages and medical expenses, but it does balance the interests of patients and care providers while helping to ensure access to necessary care.

Now, according to Governor Perry, doctors' insurance rates have declined by an average of 27 percent while the "number of doctors applying to practice medicine in Texas has skyrocketed by 57 percent. In . . . just the first five years after reforms passed, 14,498 doctors either returned to practice in Texas or began practicing here for the first time."

Today's public benefits fail that test, as urban scholar Joel Kotkin of NewGeography.com and Chapman University told the Los Angeles Times in March: "Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California. Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California's government and the middle class is constantly being renegotiated to the disadvantage of the middle class."

These judgments are not based on drive-by sociology. According to a report issued earlier this year by the consulting firm McKinsey & Co., Texas students "are, on average, one to two years of learning ahead of California students of the same age," even though per-pupil expenditures on public school students are 12% higher in California. The details of the Census Bureau data show that Texas not only spends its citizens' dollars more effectively than California but emphasizes priorities that are more broadly beneficial.

Gov. Rick Perry says the state will invest $2.5 million through the Texas Enterprise Fund (TEF) to assist Nationwide Mutual Insurance Co. in expanding its operations in San Antonio.

The governor’s office says the move will help to create 750 high-paying jobs and generate more than $94.8 million in capital investment in Texas.

Nationwide is based in Columbus, Ohio. The company offers a full range of insurance and financial services and has operations across the United States.

It was not immediately clear how many people Nationwide currently employs in San Antonio.

The bulk of the initial job growth will be in the areas of sales and services positions, which will help support existing business and generate new growth for the company.

“Nationwide’s expansion in San Antonio is a testament to the success of the TEF and Texas’ status as the best state in the nation to invest, work and raise a family,” Perry says. “Companies like Nationwide will continue to create jobs in Texas because of our state’s low taxes, regulatory environment and educated and diverse workforce.”

John Raybuck is regional vice president of Nationwide’s Texas operations.

“The Texas Enterprise Fund, combined with the attractive workforce in San Antonio, were key factors in our decision to choose San Antonio for expansion of our operations,” he says.

At Perry’s request, the Texas Legislature created the TEF in 2003 and re-appropriated funding in 2005, 2007 and 2009 in order to help ensure the growth of Texas businesses and create more jobs throughout the state. TEF projects must be approved by the governor, lieutenant governor and Speaker of the House. Supporters say the fund has become one of the state’s most competitive tools to recruit and bolster business.

To date, the TEF has invested more than $383 million in projects generating more than 56,000 new jobs and more than $14 billion in capital investment in the state.

Interview with Texas Gov. Rick Perry
By Lou Dobbs Tonight

DOBBS: Conservative voting power can make the difference at upcoming key elections across the country. Here comes November 3rd. A new Gallup poll shows the number of Americans as describing themselves as conservative outnumber both moderates and liberals in this country. The trend could benefit Texas Governor Rick Perry. He's caught up in a tough primary battle to remain his party's electorate. Governor Perry joins us here now. Good to have you with us. Are you surprised by that poll, the Gallup poll showing conservatives overwhelming both moderates and liberals?

GOV. RICK PERRY (R), TEXAS: No, it doesn't necessarily surprise me. We go back and forth in this country, back and forth, hope and change gets people's attention and then we look at policies and people go, wait a minute, that wasn't the hope --

DOBBS: Need a little more change.

PERRY: The change we were hoping for. It's out there and people are looking for folks to stand up and say, here's what I believe in, here's what I'm going to do, or to have a record to look at.

DOBBS: You say Texans are so fed up with big government that the state may want to succeed. The federal government certainly hasn't become any smaller. What do you think about the necessity of succession?

PERRY: I don't think that's exactly the quote that I made. But let's just say that people are fed up with big government. There is a reason that Republicans are not in power in Washington, D.C. a lot of folks put their hands up and say, listen, elect me and I want to go be a Republican and then they went up and they voted like Democrats. And people kicked them out. People are fed up with government spending our kids' future. These $1 trillion deficits are scaring people. Health care bills that have $1 trillion attachments to them, people are just fed up with that.

DOBBS: You and Kay Bailey Hutchison are tied in a -- statistically tied in a recent Rasmussen poll. What's your plan to win the primary?

PERRY: I just run on my record. When you look at a state that's got 1,000 a people a day moving to it, a place with more than fortune 500 companies, inarguably Texas is the envy of the other 49 states economically. I'll put that record up against anybody.

DOBBS: You have five patrolled ports of entry into the state, as you know. Do you think homeland security Janet Napolitano is doing enough to secure the borders? And we'll limit that just to the state of Texas.

PERRY: And neither did the previous homeland security director.

DOBBS: Michael Chertoff.

PERRY: Neither one are doing enough. We've asked this administration for 1,000 National Guard troops to come, put boots on the ground. We haven't gotten an answer. There's a conflict between the department of defense and homeland security about who's going to pay for it. I don't care who's going to pay for it, just get the troops on the ground. Let's use the technology available. Why not fly predator drones up and down that border region. They're training drones anyway. They're practicing for the real deal. Let's use them, take that data, use it to help on our homeland security.

DOBBS: What's the number one issue for the state of Texas in the next five to ten years? And what are you doing about it?

PERRY: Making sure we keep the economy going. There's nothing more important than any governor does. I like to see states compete against states. So keeping that economic climate very positive in the state of Texas so that people know they can keep more of their money, they can have the type of quality of life, they can have the freedoms that they desire. If states get focused on the tenth amendment, if we continue to make Texas a place where people want to live, obviously, when there's 1,000 a day coming there, there's a reason for it, and it's the economy, stupid.

DOBBS: All right. Well, we're going end to with you calling me stupid. Governor, good to have you with us.

PERRY: Good, Lou.

DOBBS: Governor Rick Perry, good to have you here.

Heading for a city with greater opportunities? It'll cost you. One measure of a region's economic health is the relative price of moving-truck rentals.

It has been said that people vote with their feet. They pick up and go to where the jobs and opportunities are.

The hard part is that it costs more -- a lot more -- to move to where the jobs and opportunities are than to move to where jobs and opportunities are limited. My favorite measure for this doesn't come from the Bureau of Labor Statistics. Nor does it come from any other agency of the federal government.

It comes from U-Haul, the truck and trailer rental company. It has on-the-ground evidence and prices its rentals accordingly. Go to its Web site, and you can learn quickly where people are going. You can also learn where they are leaving.

How will you know this? Simple.

If lots of people are trying to go where you want to go, it will cost a lot more than renting equipment to go to the place everyone is trying to leave. Just as there is a law of supply and demand, there is a law of arrivals and departures. Finding a moving truck will be expensive where departures outnumber arrivals. It will be cheap in places where arrivals outnumber departures.

Suppose, for instance, that you are living in Las Vegas. With a recent unemployment rate of 13.4%, things are tough there. In fact, it's a tough time in what is traditionally a rough time of year for Las Vegas. Skeptics should check a travel Web site like Expedia. When I did, a three-night stay at the four-star Rio was $60 a night, barely more than a roadside motel. You could stay at the five-star Bellagio for $199 a night.

Admittedly, this was a Sunday to Wednesday stay, not a weekend, but it gives you an idea of why the unemployment rate is so high: People aren't traveling, vacationing or gambling as much these days.

So what does it cost to leave Las Vegas?

Try $1,880 if you want to rent a 26-foot U-Haul truck, fill it with your worldly goods, and drive it to San Antonio. (In these comparisons, Nov. 3 was selected as the moving date.) But if you wanted to leave San Antonio (August unemployment rate: 7%) and move to Las Vegas, it would cost you only $437 for the same equipment.

That's quite a difference.

The difference is substantial even for cities that aren't hurting nearly as much. To move from Seattle, with an unemployment rate of 8.8% in August (well below the national average of 9.8%), to San Antonio would cost $1,404, but only $858 to move from San Antonio to Seattle.

The 'Texas premium'
I found similar price differences for other cities. Want to move from Chicago (9.7% unemployment) to Houston (8.4% unemployment)? It will cost you $1,970. But it will cost only $449 to make the trip from Houston to Chicago. Los Angeles (11.8% unemployment) to Houston was $2,051, while Houston to Los Angeles was only $555.

San Francisco (10.7% unemployment) to Dallas (8.3% unemployment) will cost you $1,988. But the opposite will cost only $689. Boston to Dallas was $2,134, while Dallas to Boston was only $634.

Miami (10.8% unemployment) to Austin, Texas (7.2% unemployment), will cost $1,706. But the reverse will cost only $827. Similarly, Phoenix to Austin will cost $1,490, while Austin to Phoenix will cost only $654.

We might call these differences the "Texas premium" because regardless of location -- East Coast, West Coast or somewhere in between -- the migration appears to be to Texas. U-Haul is lowering the price drastically for anyone who is willing to move the equipment back.

To be sure, all the differences aren't as extreme. If you want to move from hip but hurting Nashville (9.8% unemployment) to hip and growing Austin, for instance, it will cost $998 -- but it won't cost much less to move from Austin to Nashville, $826.

In a time when lots of people are feeling powerless, there is a big message here: There is still a lot we can do for ourselves. We can make decisions. We can, and do, move to places where life looks better.

Questions about personal finance and investments may be e-mailed to scott@scottburns.com. Questions of general interest may be answered in future columns. More columns by Scott Burns can be found on MSN Money and at AssetBuilder.com.