In my last blog, I commented on a July 11 article by Mary Walsh of the New York Times on the crisis relative to horrifically large pension and retiree medical obligations for government employees.  Coincidentally, as I traveled to and from Europe between July 15 and 20, I had an opportunity to catch up on reading, and I read Roger Lowenstein’s great book While America Aged.

In this book, Lowenstein details the history of three out-of-control pension and retiree medical commitments, the commitment by the Big 3 automakers to their employees and retirees, the commitment to the Transit Workers Union and other municipal unions in New York City, and the commitment to San Diego’s municipal workers.  He draws broader conclusions from these analyses, consistent with Mary Walsh’s.  As Lowenstein puts it on page 1:  “America has a crisis of epidemic proportions.  The fabric of the nation’s pension system is collapsing – at the very moment when the American population is rapidly aging.”

I agree with Lowenstein’s conclusion, and I also agree with some of his key recommendations.  Most importantly, we need to apply private pension and retiree medical accounting to state financial statements.  Today, while governments are expected to size their obligations in total, they are not required to set aside money every year to pay for a portion of the long-term commitments they have made.  They are only required to cover the current year’s obligations in a pay-as-you-go system.  As noted in my last blog, private sector employers had to change to a full accounting of pension benefits on their income statements in 1987, and to a full accounting of retiree medical obligations in 1993.

While I agree with Lowenstein’s recommendation that there be a form of universal health care that combines benefit requirements for the elderly with those of people of all ages, I do not agree that it should be managed under the same system as Medicare or Medicaid.  Throughout his book, he eloquently talks about the many pressures brought to bear on elected officials to do something popular today, such as keeping down current-year expenses, while mortgaging the future. 

Unfortunately, much of what is required for a sensible health care system requires decisions to invest in health today to reap the benefits in future years.  For example, preventive screenings, immunizations, outreach to increase adherence to chronic disease treatment plans, and programs for youth health and fitness are great medium and long-term investments, but almost never is there a current fiscal year payback.  Therefore, any universal health care system that operates on annual budget cycles is likely to be subject to the same pressures as the corporate executives and government officials Lowenstein describes.

Moreover, just as Lowenstein described special interests that interfered with objective decision making in the San Diego and New York situations, health care has great potential for special-interest decision making, as evidenced by the power of medical lobbies to drive for coverage mandates that are highly-specific and often not justified by best-in-class health care.

If we are to have universal health care supported for underserved groups by the government, it is imperative that we construct a system that is not susceptible to annual cost reduction pressures.  Similarly, as Lowenstein recommends, any system needs to have highly-transparent analysis of the longer-term consequences of any major decision, since short-term savings often breed significantly higher long-term costs.

What shocks me most about these issues relative to government employee retirement obligations is how little attention is paid to them in the popular media.  Mary Walsh and Roger Lowenstein deserve credit for the courage of their convictions in dealing with a “dirty little secret” about the massive and often unintended wealth transfer from a large number of taxpayers to a small number of government employees.

I do not blame the employees or their union leaders for demanding rich benefits, because the leaders are expected to be strong advocates for their members, although they need to insure that pension trusts are appropriately funded.  However, I believe that we need to hold elected officials accountable for responsible decision making in the area of legislated or otherwise bargained-for employee benefits.  I also believe that our media do not do a good job educating the public on this issue, because, except for a situation like New York’s (where there was a major transit strike three years ago) or San Diego (where the city basically lost its ability to access the bond markets because of financial insolvency caused by under funded pensions) it is a crisis in slow motion, rather than a single dramatic event.

We must demand more relative to how our tax dollars are spent!!
 

In the July 11 New York Times there was an article on the serious issue of state and local government pension liability, and the debate about the extent to which the Government Accounting Standards Board should require governments to reflect pension and retiree health liabilities on their income statements.

I was pleased to see this issue get coverage because it is one of the biggest issues of our time. We are an aging society, and like every other developed country, we are facing the dual challenge of meeting our commitments to the elderly, while at the same time being able to meet commitments to the rest of our population. Before we can address the dual challenge, we need honesty and transparency as to what the commitments to our elderly populations are going to cost us. (more…)

Having just finished attending the Conference on Research in Regulated Industries sponsored by Rutgers University and led by Dr. Michael Crew, I have been immersed in many presentations relating to many subjects, but one, in particular, caught my attention:

• What universal or public services do we expect of major communication media?

With respect to mail, postal services around the world all have a variety of what are called “universal service obligations.” They are expected to maintain a network that allows every citizen in their country to transact business, to deposit mail into collection boxes or at a conveniently-located post office, and to receive mail at a designated home or business address 5-6 days a week all year. Additionally, their governments expect them to subsidize charitable and educational organizations, to charge affordable and uniform prices for mail originating from individual citizens and to be large employers and anchors for rural communities. In the U.S., the Postal Service also absorbs an enforcement responsibility for obscene, offensive, and fraudulent material that gets sent through the mail. In recent years, Congress has deferred its payments to the Postal Service for the mandates imposed on the Postal Service to subsidize certain categories of mail and certain types of users, such as non-profits. (more…)

On Monday, April 7, I was in New York City, and the subject of Mayor Bloomberg’s congestion pricing became part of several conversations. The depth of the discussion was clearly driven by the outcome of the plan that failed to gain popularity amongst the democrats who ultimately refused to put the bill to a vote on the floor of the state assembly, as highlighted in an article published by the New York Times. I believe that any discussion about infrastructure finance usually is explicitly more complex than publicized with regards to whether or not the public versus the users should be taxed for infrastructure-related capital projects. However, just below the surface of any discussion about raising taxes, fees, tolls, or implementing congestion pricing is a lack of trust about whether the money raised by the government will be spent for infrastructure improvement or absorbed into general revenues. (more…)

Recently, because I concluded the first phase of a two-part assignment as Chairman of a commission created to recommend reform of the Connecticut Department of Transportation, I have been asked to share my observations about government to a number of audiences. I will begin that process in this blog, but, because I have learned so much, I will probably cover this subject over several blogs.

By the way, my comments are not meant to be critical of individual government officials, most of whom I respect greatly. In fact, as you will see, government officials have to overcome huge structural and political obstacles to get anything done, and, given the constraints that have been put in their path, anything they do has to border on the heroic. (more…)

As a person who studied Communications, Political Science, and Law during college and law school, I am acutely aware of the power of language to shape how we think about and act on problems.

The main example that comes to mind is the way we characterize how government positions are filled.

When I was growing up, like most American history students, I read about the 1881 assassination of President James Garfield, who was killed by a “disappointed office seeker.” I learned that this tragedy gave rise to “civil service reform”, which, if I remember the history books, characterized the change as being one which replaced an appointment system based on “patronage” or “spoils” with one based on “merit”. Like most Americans, I came to believe that the civil service system was an unqualified positive development for American government, and the old system was corrupt, to the point of being “un-American.” In fact, on the radio this past week, I also heard a radio commentator refer to “patronage” appointments in a very disparaging way. (more…)

I strongly oppose the so-called single-payer health care model. I have previously articulated my reasons for doing so in this earlier post. One of those reasons is that cost-effective health care is highly-personalized and, by necessity, highly tailored and non-standardized in terms of processes and approaches, but highly-rigorous and standardized in the measurement of results.

Everywhere in the world in which government has operated or regulated health care, including this country, it has tended to create exactly the opposite: a highly-politicized and highly-rigid regulation of processes and approaches, and almost no standardization or regulation of results. The American College of Physicians recently released a relevant position paper “Achieving a High-Performance Health Care System with Universal Access”, which evaluates the condition of the US health care system in comparison to other countries. (more…)

I find it ironic that not only Americans, but citizens of developed countries all around the world, are more alienated and dissatisfied with their political leaders than at any time in the last 50 years, when politicians, in many respects, are more knowledgeable about public preferences and wants than ever before, and attempt to be more responsive than ever. I know many politicians of both parties. The vast majority of them are great people who care deeply about their constituents, but even they feel trapped in a dysfunctional political system. Why?

I would suggest that there are seven contributing causes:

• Because of the massive growth of the size and reach of government at all levels, the stakes of bad or unpopular decisions are higher than ever, so more people feel the effects of what they perceive to be mistakes.

• Small, militant, well-funded single-interest groups have far more impact on elected officials than a broad public that may want completely the opposite of what the single-interest group wants. That is why our tax code has many subsidies and loopholes built into it. The advocates for these subsidies care far more about them than the broad public that would oppose them. As a result, systems like education and health care, heavily controlled or regulated by the government, are riddled with concessions to special interest groups. A recent blog entry in the Ideas Primary blog discusses the influence of special interest groups over judicial elections. (more…)

Although I sometimes think that the focus on global warming risks focusing too much on one environmental issue, reducing carbon emissions, to the exclusion of others with an extremely high urgency, like environmental pollution that contributes to water-borne diseases in third world countries, or toxic chemicals in soils around the world, there are many opportunities to deal with both environmental pollution and global warming issues.

The biggest opportunity to address both in one strategy is the reduction of carbon from vehicle emissions into the air. Better fuel economy, reduced driving, and reduced emissions improve air quality, reduce traffic congestion, reduce asthma from bad air, and reduce the carbon footprint of driving.

That is one of the reasons we have advocated substituting remote commerce for face-to-face commerce relative to citizen interactions with government and other private sector transactional activity that reduces unnecessary vehicle trips. What are some of the “no-brainers” here?

• Why not eliminate all toll plazas and substitute either E-Z-Pass-type solutions or photos that capture a driver’s license plate number and result in a bill being sent to the driver? The highest emissions come from car engines running at low or idling speeds, as opposed to 55-mile-an-hour travel. Why do we keep toll plazas in place? For example, Ireland, which I visited this past week, is on the way to eliminating them. (more…)

One of my passions ever since I was a teenager has been government. As a teenager, I actually wrote an op-ed piece for the Rochester, New York, daily newspapers advocating reduction of the minimum voting age from 21 to 18, which happened years later.

Today, I believe strongly that we are best served as a society to the degree that all of our citizens participate in some way in helping government function better.

The first and most important way to help government function better is to vote. I believe strongly in making voting secure and having complete integrity and trust in the voting process, but, at the same time, we need to make it easier for eligible voters to register and vote. That’s why we have provided secure voting-by-mail solutions through our Relia-Vote system. That’s why I have believed that states should allow “no-excuses” voting by mail as an alternative, very much the way California offers voters the choice of either voting in person or registering to vote by mail. The states that have complete voting-by-mail systems, Washington and Oregon, have higher participation rates, on average, than other states. One could argue whether voting by mail is the cause of that or whether an already engaged citizenry in those states demands voting by mail, but I believe it has to help voter participation to add choices on how voters can exercise their right to vote. (more…)