{"id":110466,"date":"2015-12-21T13:54:49","date_gmt":"2015-12-21T20:54:49","guid":{"rendered":"http:\/\/nmpolitics.net\/index\/?p=110466"},"modified":"2015-12-21T15:42:23","modified_gmt":"2015-12-21T22:42:23","slug":"all-this-free-money-is-killing-nm","status":"publish","type":"post","link":"https:\/\/nmpolitics.net\/index\/2015\/12\/all-this-free-money-is-killing-nm\/","title":{"rendered":"All this ‘free’ money is killing NM"},"content":{"rendered":"

COMMENTARY:<\/strong> Nothing seems to unite New Mexicans like the desire for \u201cfree\u201d money.<\/p>\n

Over the past few weeks, no fewer than three opinion pieces have run in various media outlets in support of Medicaid expansion. Two of these articles were from Democrat legislators<\/a>.<\/p>\n

\"Paul<\/a>

Courtesy photo<\/p>

Paul Gessing<\/p><\/div>\n

While \u201ccompassion\u201d and alleged health-care improvements \u2013 unsupported by real-world data \u2013 were cited, a central argument involved \u201cfree\u201d money that is flowing into the state from Washington.<\/p>\n

Recently, I had the chance to testify before an interim committee of the N.M.\u00a0Legislature on the economic impact of Medicaid<\/a>. The program for the poor was expanded under the federal health-care law commonly known as \u201cObamaCare.\u201d New Mexico was one of 24 states to expand the program in January 2014.<\/p>\n

Initially, the expanded portion of the Medicaid program is being financed 100 percent by the federal government. Starting in 2017, that will go down to 95 percent, and by 2020 federal support will drop to 90 percent. As 2017 approaches, New Mexico legislators have been quoted as saying that the increased cost of Medicaid is a \u201crunaway train,\u201d and \u201cyou can\u2019t put the brakes on health-care costs.\u201d<\/p>\n

New Mexico\u2019s budgetary outlook is indeed bleak, as total Medicaid expenditures are projected to rise to $5.5 billion, with state taxpayers kicking in nearly $1 billion of that annual total. It has been the fastest-growing item in the budget, and with the state paying an increased share of the program\u2019s expansion costs, that growth rate will rise rapidly in the years ahead. This at a time when New Mexico\u2019s budget is expected to be stagnant as oil and gas prices remain depressed.<\/p>\n

Unfortunately for New Mexico, the \u201cstimulus\u201d effects of having the federal government pay 100 percent of the cost of Medicaid expansion are nowhere to be found. The Rio Grande Foundation examined job growth in the expansion and non-expansion states and found that the 20 states that turned down the \u201cfree\u201d money by not expanding Medicaid saw slightly faster overall job growth than the expansion states.<\/p>\n

An unhealthy reliance<\/h3>\n

How could \u201cfree\u201d money not stimulate New Mexico’s economy? There are many explanations, but one is that welfare programs like Medicaid provide yet another reason for workers to drop out of the work force.<\/p>\n

Another explanation is that much of the money doesn\u2019t actually do anything to improve health care. It may result in additional hiring in the health-care industry, but these are \u201cpaper-pushers\u201d and relatively unproductive bureaucrats. Their productive labor is consumed by a wasteful bureaucracy rather than being put to work in the private-sector economy.<\/p>\n

Again, these are just two potential reasons why Medicaid expansion may not have \u201cstimulated\u201d New Mexico\u2019s economy or the economy of other states that expanded Medicaid with temporarily \u201cfree\u201d money.<\/p>\n

New Mexico has long been reliant on federal dollars. As federal spending is increasingly consumed by entitlements (as opposed to research labs and military bases), we are seeing that this reliance has not been healthy.<\/p>\n

A new Rio Grande Foundation report<\/a> sheds some light on the negative side effects of federal dependency. The report shows that federal dollars increase state and local government spending by 99 cents for every federal dollar. Bloated state government makes it harder for businesses to operate in our state. In other words, those \u201cfree\u201d dollars come with economically-harmful strings attached.<\/p>\n

Do this instead<\/h3>\n

Rather than trying to jump-start New Mexico’s economy by pilfering more money from Washington, New Mexico’s leaders should embrace basic economic reforms. Taxes, occupational licensing, and labor reforms like \u201cright to work\u201d and repeal of the State’s \u201cprevailing wage\u201d law can positively impact the economy right away.<\/p>\n

Longer-term, policymakers must improve the education system (and thus the viability of our workforce) through dramatic expansion of educational choice.<\/p>\n

There’s no such thing as a \u201cfree\u201d lunch, and so-called \u201cfree\u201d money is not the road to prosperity.<\/p>\n

\n
\n

Gessing is the president of New Mexico\u2019s Rio Grande Foundation<\/a>, an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.<\/em><\/p>\n<\/div>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

Rather than trying to jump-start New Mexico’s economy by pilfering more money from Washington, New Mexico’s leaders should embrace basic economic reforms.<\/p>\n","protected":false},"author":790,"featured_media":48942,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1192,16],"tags":[118,117,107],"class_list":["post-110466","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commentary","category-guest-columns","tag-economy","tag-health-care","tag-roundhouse"],"_links":{"self":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/110466","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/users\/790"}],"replies":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/comments?post=110466"}],"version-history":[{"count":0,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/110466\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media\/48942"}],"wp:attachment":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media?parent=110466"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/categories?post=110466"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/tags?post=110466"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}