Category Archives: Taxing and spending

What can a government do?

Uninsured in Virginia

The Bristol Herald Courier reported today that Virginia U.S. District Judge Henry Hudson will rule by the end of the year on the constitutionality of the new health care reform law. The suit was brought by Virginia State Attorney General Ken Cuccinelli, using Virginia taxpayer money. It alleges that the HCR provision requiring individuals to purchase health insurance is not a proper exercise of the government’s authority.

In the motor vehicle code in Virginia, there is a provision that corresponds to the HCR requirement to purchase. Virginia requires people who register a vehicle to have insurance or pay an uninsured motorist fee to help pay for damage done by people without insurance. This is the same motivation for the requirement to purchase that is included in HCR, since everyone at some time needs medical care, and forcing the cost of your care on other people while keeping your money in your pocket is just not nice.

If Virginia’s objection to requirement to purchase is upheld, then in order to have health care in the United States, we will have to fund it with tax dollars. The suit recognizes that the federal government has the power to levy taxes. It follows that if health care reform had come to us with a tax-payer funded public option or with single payer, apparently there would have been no objection from Virginia. However, those of us with good notes or sufficient memory of the last couple of years know that Republicans wanted people to purchase insurance from private insurers.

For reference, here from the Virginia Division of Motor Vehicles is information on the Uninsured Motorist Fee. Note that it does not raise revenue for the state to use. It sustains a fund that is paid out to insurers, but the citizen who pays the money has no protection. This fee serves the same purpose as the HCR requirement to purchase, but carries no benefit for citizen who pays:

Uninsured Motor Vehicle Fee — information for citizens:

The Virginia Uninsured Motor Vehicle (UMV) fee allows a motor vehicle owner to register an uninsured motor vehicle. At the time of registration, the motor vehicle owner must certify whether the vehicle is insured or uninsured.

If the vehicle is uninsured, the motor vehicle owner is required to pay to DMV a $500 uninsured motor vehicle fee in addition to normal registration fees. Payment of the $500 fee does not provide the motorist with any insurance coverage. If involved in an accident, the uninsured motorist remains personally liable. This fee is valid for twelve months but may be prorated for a shorter amount of time.

Motor vehicle owners who falsely certify that they have insurance and are found by DMV to be uninsured face stiff penalties. In addition to facing suspension of all driver and registration privileges, compliance includes payment of a $500 statutory fee, a $85 reinstatement fee and filing proof of insurance for three years. During the three-year period, insurance companies cooperate with DMV by providing notification if a policy is canceled. This requirement to maintain proof of insurance enables DMV to ensure that these motor vehicle owners maintain liability insurance on their registered vehicles.

This information is posted on the same website for insurers, and describes how the money is held and dispersed:

Uninsured Motor Vehicle Fee — information for insurers:

Every person registering an uninsured motor vehicle shall pay a fee of $500 at the time of registration. Payment of this fee allows a motor vehicle owner to operate an uninsured motor vehicle. Payment of this fee does not provide the motorist with any insurance coverage. If involved in an accident, the uninsured motorist remains personally liable. The fee is valid for twelve months but may be prorated for the unexpired portion of the registration period.

Uninsured Motorists Fund
As provided for by Motor Vehicle Code 46.2-710, all revenue collected by DMV as a result of registering an uninsured vehicle is paid into the state treasury and held in a special fund known as the Uninsured Motorists Fund. The purpose of the Fund is to reduce the cost of uninsured motorist insurance coverage. Moneys are distributed annually from the Fund among the insurers writing motor vehicle bodily injury and property damage liability insurance on vehicles registered in Virginia. Moneys are distributed in proportion that each insurer’s premium income for the basic uninsured motorists limits coverage bears to the total premium income for basic uninsured motorists coverage written in Virginia during the preceding year.

What a kilowatt-hour costs

At last night’s Town Hall in Bristol, Virginia Governor Bob McDonnell expressed support for off-shore wind energy, and I want to respond to his statement that we cannot afford the move to clean energy because the price per kilowatt-hour is higher for clean energy.

I believe in general that there is common ground between factions in our state and in our nation even at this most contentious time, and the common ground is the common good. I am by commitment holding fast to the idea that people all want to be happy, and nobody wants to see anybody else suffer. For the most part, disagreements arise among us because some people see the world as simple and compartmentalized, and others see the world as incredibly complex and interrelated.

With regard to the clean energy question, the objection of cost per kilowatt-hour appears reasonable if we compartmentalize energy production. We look at a power plant, calculate its costs, and arrive at a selling price that we call the cost per kilowatt-hour. We balance this cost against the effect of carbon emissions, which some of us still question. This distraction keeps us from seeing other immediately quantifiable and visible costs of dirty energy production that are distributed over the ecological and economic community.

If we can see past the simple formula we now use for cost per kilowatt-hour, we can see that a more accurate reflection of the cost of coal and oil energy production would have to include these costs as well:

  • land use lost to pollution from run-off and residue
  • health effects of fly ash that dusts heavy metals and radiation across our landscape and in our children’s schools and play areas
  • loss to sea and maritime industries including food production related to oil spills at sea
  • cleanup from oil spills at sea
  • losses to insurers and investors when coal and oil production damages occur
  • loss of income to families of dead or disabled workers
  • medical care and loss of income associated with black lung and similar rock and coal dust effects to miners
  • costs of oil-related conflicts like the wars in Iraq and in Afghanistan.

I am sure that I have left out something in this formula, but you can see the point. To compartmentalize the calculation of costs we pay for carbon-based energy to the amount that a power plant has to charge for a kilowatt-hour is neither honest nor accurate. We are paying more for dirty energy than we think we are, because in the interest of dirty energy, our economy must absorb all of these costs.

Economists and politicians and greedy people

From the Tea Party to the other extreme, which so far as I know has not been adequately named, the U.S. population seems to agree that finance reform is needed to stop greedy people in powerful financial institutions from creating fraudulent products to line their pockets and designing consumer credit to empty ours. Economists agree, people agree, and on most points even banks agree. Big banks made big money and got bailed out, while some smaller banks closed their doors; so they know there is a problem.

The debate will be an interesting because there is so much agreement. Politicians cannot be seen to have agreed with the wrong people, so we have the stand-off reported in The New York Times today in an article by Wyatt and Herszenhorn titled “Bill on Finance Wins Approval of Senate Panel:”

Republicans said that they had forced Democrats back to the bargaining table to negotiate a bipartisan accord, while Democrats said that Republicans were hastily abandoning their opposition in fear of a public outcry.

Another dimension in this debate is that the people who are actually interested — it is economics, remember — are more educated, better informed, and more critical. In the health care debate, Republicans tagged end-of-life counseling as “death panels,” and they got a lot of street action from what was actually just a lie. In the financial reform debate, Democrats talked about having banks pay into a fund so that if they failed in the future this fund could be used to finance their liquidation. Republicans immediately tagged this fund a “bail-out fund,” and Fox News announced that Democrats were not preventing future bailouts, but were in fact guaranteeing future bailouts. The story worked on the street for an hour or two, then someone noticed that it was a lie. Soon after the lie died, Democrats and Republicans and the public — in what order we are not sure — found out that President Obama didn’t like the fund idea, so that left Republicans agreeing with President Obama. So everyone had to take a look at the likely effects of such a fund, and now practically nobody thinks it is a good idea, including me. I was with the Democrats at first, and I knew the Republicans were lying. But when I looked at the issue more closely, I now find that I agree with President Obama, the Republicans, and the Democrats on this particular aspect of financial reform.

What nobody can really tell is whether the Democrats proposed something and the Republicans drove them back to the bargaining table to start over, or the Democrats thought of something and reconsidered it with input from President Obama, or the Republicans abandoned their opposition because of fear of public outcry. We will never know. But among us there are some who will continue — absent any knowledge, mind you — to care deeply. That is probably because they got into a habit of calling the other side evil, sneaky, mean, lying Nazi-Fascist-Socialist idiots. So by habit they must think of something to put on a sign in no more than six words to show to each other to tell each other how bad everyone else is. But the topic is economics, and practically everyone agrees on just about all of the points. So the sign-carrying population has a lot of tried-and-true insulting adjectives and nouns, but they can’t figure out which ones go with which. So we are likely to have a substantive discussion resulting in a strong piece of legislation, which will be, well, interesting.

Open letter to Virginia legislators

This letter has been sent on e-mail to my Senator, William Wampler,  and my Delegate, Joseph P. Johnson:

Dear (Virginia legislators)

I am writing to encourage you to vote against amendments to the budget bill that cut services in health, support of families and children, and education. I know that these are rough financial times. Rough financial times require us to hold our breath and trust one another, to share our resources so that everyone can come out okay in recovery. This is not the Democrat way or the Republican way. It is not the Christian way. It is not the way of the right or the left. It is in fact the only way to recovery. Nothing else works for hard times.

As a student of history, which I know you are as well, I know that governments are instituted to serve people, to make a good life a possible goal, and to even out the good times and the bad times. Virginia has done well with that, and has maintained a good environment for business and workers. If we cut health, family support, and education now because of hard times, we won’t all come out okay in the recovery. We will in fact all come out worse, because we will downgrade the educational level of our workforce, lower the standard of health for the Commonwealth, and leave families — upon whom society rests — to fend for themselves.

I don’t think people are as mean and greedy as they have been represented in the press, and I don’t think they would be as angry if our leaders, like yourself, would stand up and give them the truth instead of letting them receive their news and views from FOX. Most of us wouldn’t mind a small tax increase if it meant that we could go to bed each night knowing that Virginia’s mothers and children were not hungry or cold or ill and unable to afford medicine. Every Virginian is either a mother or a child of a mother, so every Virginian knows what I am talking about on a very personal level.

I know that you can’t spend money you don’t have, but I also know that people of a democracy or a commonwealth count on government to create and run programs and projects for the benefit of citizens. When a government loses or gives up the ability to raise revenues for essential programs, it can no longer serve its purpose. It changes from being a servant and conservator of the Commonwealth to being an expensive parasite, absorbing resources for its own existence when it can do us no good.

Please vote “no” on additional cuts, and give us a budget that will let us sleep better in the Commonwealth. There will be a great health benefit to that good night’s sleep we get after making sure we have done all we can for the people we serve.