Handicapping the D.C. Developments

The business experts at Kiplinger recently offered the following odds on the major issues facing Congress:

  • Health care overhaul: 3 to 2 (seems a little optimistic, but they note that President Obama will likely accept less than what is currently on the table to win a deal before the end of the year)
  • Energy cap and trade: 1 to 6 (Kiplinger: a bigger push in 2010)
  • Financial regulations: 3 to 2
  • Stimulus Part 11: 3 to 2 (I’m surprised by this one, but Kiplinger believes states will push for it in the face of a "jobless recovery")
  • Surface transportation: 0 (reauthorization put off until 2010)

Agree or disagree?

Remote Areas to See Broadband Uptick

Stateline.org recently examined state and federal initiatives to bring broadband service to America’s rural areas:

Maine gives out about $1 million about every 10 months to help its residents get high-speed Internet connections. In July, it approved nine projects costing the state almost $800,000 to get 5,000 families hooked up.

States across the country have pursued similar efforts toward creating statewide broadband policies and better access for their residents. But their scale pales in comparison to the $7.2 billion in stimulus money the federal government has committed over the next two years to improve high-speed Internet connections around the country.

Every state is supposed to get a share, and every governor will get a chance to weigh in on how the funds are spent. In this wash of new money, state officials are scurrying to identify the states’ greatest needs, coaching providers applying for stimulus money and developing overarching plans for how to roll out expanded service.

Most of the stimulus money will go toward building out high-speed connections to people in hard-to-reach places. Larry Landis, an Indiana Utility Commissioner active in national broadband efforts, says states have an “obligation to address those who are currently unserved” by broadband.

“What we need is a broadband consensus which nurtures state initiatives to build out to serve the least, the last and the lost,” he said.

The “least,” he says, are the working poor who haven’t been able to afford broadband. The “last” are those “currently on the fringes of the infrastructure to deliver on the promise of broadband.” The “lost” are consumers who could buy broadband but don’t.

Currently, 63 percent of adults have broadband at home, compared to just 7 percent who use dial-up connections, according to the Pew Internet & American Life Project, which, like Stateline.org, is funded by The Pew Charitable Trusts. Half of the U.S. adults who don’t have broadband at home say they don’t see the need for it, the study said. One in five respondents said they didn’t get a high-speed connection because it was too costly.

Also, take a look at how a Noblesville company is working to help Alabama with its broadband efforts in the May/June BizVoice.

Is LaGrange County Getting Short-Changed in the Stimulus Plan?

The lead story on the Huffington Post Thursday morning (although authored by ProPublica) was a critical analysis of where stimulus funds are going. According to the article, some counties — including at least one in Indiana — might be getting the short end of the stick based on need.

Since the economic stimulus bill passed nearly six months ago, the Obama administration has repeatedly pledged that the money would reach middle America, seeping into the communities hardest hit by the recession.

But analysis of the most comprehensive list of stimulus spending to date found no relationship between where the money is going and unemployment and poverty.

Stimulus spending is literally all over the map, according to ProPublica’s analysis, which examined nearly all the contracts, grants and loans the government has reported awarding. Some battered counties are hauling in large amounts, while others that are just as hard hit have received little.

Take Trigg County, Ky., where unemployment was 15.8 percent in June after the auto industry crisis rippled among suppliers. The stimulus has chipped in $1 million toward a biofuels facility and $30 million for a road project. According to the data, the county has been awarded $2,419 per resident.

But LaGrange County, Ind., hasn’t fared so well. Despite having the identical unemployment rate, it has received only $33 a person. The community is still trying to recover after recreational vehicle plants shuttered last fall. Yet the stimulus has provided little more than the education and rural housing money that every county is scheduled to receive.

LaGrange County, of course, is just east of Elkhart, home of Wednesday’s announcement from President Obama about grants coming to the state. To find out what each state is receiving, click here.

Obama Speaks in Wakarusa

President Obama is speaking in Wakarusa today, contending Indiana’s factories will be coming alive once again and touting a national investment in electric cars, among other items. The Indy Star reports on the President’s assertions:

WAKARUSA, Ind. — President Barack Obama today announced a $2.4 billion grant program to spur both a more fuel-efficient future and jobs, including here in hard-hit Elkhart County.

“If we want to reduce our dependence on oil, put Americans back to work and reassert our manufacturing sector as one of the greatest in the world, we must produce the advanced, efficient vehicles of the future,” Obama told an invitation-only crowd at a Monaco RV plant here.

This plant had sat empty until this summer, when Monaco was bought by Navistar International.

The grants Obama announced — and which must be matched by $2.4 billion in private investment — will go to 48 projects in 25 states, including Indiana. Seven of the projects have been awarded to Indiana firms, White House officials said.

The $2.4 billion in American Recovery and Reinvestment Act funds — being announced by Obama in Wakarusa and by Vice President Joe Biden in Detroit — includes:

>> $1.5 billion in grants to U.S.-based manufacturers to produce batteries and their components and to expand battery recycling capability in the United States.

>> $500 million in grants to U.S.-based manufacturers to produce electric drive components for vehicles, including electric motors, power electronics, and other drive train components.

>> $400 million in grants to purchase thousands of plug-in hybrid and all-electric vehicles – including cars, delivery vehicles and trucks — for test demonstrations in several dozen locations. Those grants also will provide education and workforce training to support the transition to advanced electric transportation systems.

A couple hundred people lined the road leading into the plant, most of them supporting Obama and calling for health care reforms but a significant number there to voice their displeasure not only with what they see as a government take-over of health care but also the president’s handling of the economy.

Cato Scholars: Stimulus Could Lead to Scams to Make Madoff Blush

Here’s an uplifting gem from the folks at the Cato Institute. They assert President Obama’s stimulus package (and health care plan) could end up leading to major scams to seize money from the federal government — scams in which we’d all be investing. They speculate:

Government fraud has been in the news lately because analysts are expecting major abuses of the Obama administration’s $787 billion stimulus plan. One Deloitte expert argued that "swindlers, con men, and thieves could siphon off as much as $50 billion" of stimulus funds, which are vulnerable because policymakers are under pressure to shovel it out the door quickly.

Even more troubling is the potential for fraud and abuse created by President Obama’s other big spending proposals — particularly his giant health-care plan. Obama wants to inject hundreds of billions more tax dollars into federal health care instead of fundamentally reforming Medicare and Medicaid — broken programs that are already subject to Madoff-sized larceny. That is incredibly unfair to those of us paying the bills.

Take Medicare. The Government Accountability Office reports that the program makes about $17 billion in improper payments each year. And that doesn’t include problems in the new $60-billion-per-year prescription-drug plan, which is a juicy target for criminals. Harvard University’s Malcolm Sparrow, a specialist in health-care fraud, recently testified to Congress that official estimates are "lacking in rigor," are "comfortingly low and quite misleading," and exclude many kinds of fraud and abuse. He thinks that as much as 20 percent of the federal health-care budget is consumed by fraud, which would be $85 billion a year for Medicare.

Medicare makes a staggering 1.2 billion electronic payments each year, making it highly vulnerable to cheating by health-care providers and organized-crime rings. Criminals need only fill out the government forms carefully and the "claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all," according to Sparrow. A perfect example is the recent case of a high-school dropout in Miami who was able to single-handedly bilk Medicare out of $105 million from her laptop by submitting 140,000 separate claims for equipment and services.

So what do you think? Do you expect this to happen or do we all need to stop worrying so much?

Stimulus Funds Available for Indiana Small Businesses

Whether you supported the stimulus or not, it’s important to know that some small businesses in Indiana may now be eligible to receive funds. Here’s the info:

On Monday, Congressman Baron Hill announced that many Southern Indiana small businesses may be eligible for interest-free loans under a new program created by the American Recovery and Reinvestment Act (ARRA). The “America’s Recovery Capital” (ARC) program, which goes into effect today, allows small firms to take out loans of $35,000 to pay down existing business debts. Borrowers pay no interest on the ARC loans and repayment does not begin for one year.

“Our small businesses are the backbone of our local economy and they deserve our support during this difficult period,” Hill said. “One of the best ways we can help small businesses is to provide access to capital, which is why this new loan program is so important. The ARC program gives small business owners extra breathing room so they can pay operating expenses, make payroll, retain employees, and continue their work as job creators in our economic recovery.”

To qualify for the ARC loans, small firms must demonstrate they are experiencing immediate financial hardship due to the economic downturn, but are otherwise deemed by the Small Business Administration (SBA) to be viable. The loans will be made by commercial lenders and can be used for payments of principal and interest for existing, qualifying small business debts like credit card obligations, mortgages, lines of credit, and balances due to suppliers, vendors, and utilities.

To apply for ARC loans, businesses should visit their local SBA-approved small business lenders. The loans will be available through Sept. 30, 2010, or until appropriated funding runs out. Additional information about the ARC loan program is available at https://www.sba.gov/recovery/arcloanprogram/index.html.

In addition to the ARC loan program, the ARRA contained other measures aimed at helping small firms access credit. For instance, the new law increases the percentage of a loan that the SBA can guarantee, makes SBA-backed loans more affordable and provides tools to unfreeze the small business credit markets, helping small companies access capital at affordable rates.

Hat tip to Inside INdiana Business.

Paying for the Road(s) to Success

Stimulus. Cap and trade. Health care reform. All have been/are vying for attention — and dollars — in Washington. But what about transportation funding? You know, paying for the highways, bridges and infrastructure that help keep our country moving.

The Indiana Chamber’s Cam Carter was one of more than 100 association and business leaders to converge on Washington yesterday to deliver the "Transportation is Your Business" message to lawmakers. The SAFETEA-LU (you have to love those Washington acronyms) authorizing legislation expires on September 30. Delays on a new funding plan are normal, but the U.S. Chamber (organizer of this event) and the business community don’t want those in the nation’s capital to overlook these vital resources.

Among the major challenges is the fact that the traditional funding source for transportation projects, the federal gasoline tax, is generally regarded as nowhere near adequate to meet future needs. More public-private partnerships (see Major Moves here in Indiana) are touted as one of the solutions, but protectionist attitudes have put a damper on these projects. Washington, states, locals and more must begin to realize and accept that additional foreign investment is a good thing.

Transportation investment helps drive the economy (creating jobs in construction, engineering and more) and cost-effective and efficient services are essential for companies and their employees. If we can’t move products and people, we’re basically out of business.

A recent report noted that President Obama and some congressional leaders favor an 18-month extension of the current law before tackling a new agreement. If that time was spent developing new and innovative strategies to meet current and future needs, MAYBE it would be a good idea. Deadlines in Washington, however, like at the state level, often mean the work doesn’t get done until that drop dead time approaches (or passes). Carter reports from Washington that the 18-month extension is likely to become a reality.

Transportation investment is a big issue. Companies, large and small, and their employees can’t really afford for it to be put on the back burner.

You can join Carter, Chamber President Kevin Brinegar and Indiana business leaders on September 23-24 for the annual D.C. Fly-in. On a more immediate front, Carter and Chamber health care expert Mike Ripley will discuss the fast track efforts on health care reform during Friday’s Policy Issue Conference Call for members.

Spending the Stimulus: $46 Billion Down, $741 Billion to Go

How much of the stimulus money had been injected into the economy through the first 4½ months of the year? As of mid-May, about 6% of the money — $45.6 billion – had been paid out. Much of that went to Medicaid costs, unemployment benefits and the $250 checks to Social Security recipients. Highway projects had received $11 million. The Transportation Department had committed an equivalent amount, but the money has not gone out yet.

In all, some $88 billion had been committed to various types of projects and programs. The administration points out that it is a two-year program, but many state officials and others remain anxious. The administration has committed to spending 70% of the money, or $550.9 billion, within the first two years.

Vice President Joe Biden said in an interview recently, "I think that what you’re going to see happen here is the velocity of this will increase not just arithmetically, but geometrically here. At least, we’ve got to make that happen."

Parties Miles Away on Budget

The budget discussion yesterday in the House Ways and Means Committee proved just how far apart the House Democrats and Republicans are in their views of how the state’s fiscal picture should play out.

Republicans voiced concerns that the numerous (25 passed) amendments to the House Democrats’ proposal collectively spend another $100 million on top of an initial $500 million (beyond projected revenues) in the one-year spending plan – severely draining the state’s $1 billion surplus.  They also suggested that the spending levels established, particularly the way the stimulus money is used, will put the state in such dismal shape that taxpayers will be hit hard down the road.

The House Democrats, on the other hand, feel the amended bill simply reflects a different set of priorities than that of their Republican counterparts.  They say much of the state’s reserve will remain intact and that, given our economic climate, it is prudent to hold off on the fiscal year 2011 budget until next session, after revenue revisions are made at the December forecast.

The two parties remain at such odds that the chance of the session going into July was (gasp!) openly suggested.

Of course, it’s only the beginning of a game we’ve seen before with the Senate stripping what the House passes and inserting its own priorities. Thus, we seem to be inevitably headed down the all too familiar path – one that failed two months ago – to conference committee negotiations. 

Before the full House meets today on the budget at approximately 4 p.m., the Ways and Means Committee will hear two other measures, SS 1002 (on the Capital Improvement Board) and SS 1003 (involving public assistance).

Chamber Shares Updates on Federal Issues

Federal issues — and the price tags attached to many of the efforts and proposals — were featured in today’s Policy Issue Conference Call for Chamber members. Cameron Carter, who leads the Chamber’s federal lobbying efforts, discussed a variety of topics.

Add up the numbers — $1.2 trillion in stimulus, $750 billion in TARP (Troubled Asset Relief Program), $410 billion in additional 2009 budget appropriations and proposed 2010 budgets from the House, Senate and White House of approximately $3.5 trillion — and as Carter said, "We’re looking at debt levels not seen since the end of World War II." The expected $1.75 trillion deficit in a single year is projected to double the existing debt in five years and triple it within 10 years.

Some of the other discussion points:

  • Employee Free Choice Act: Senate is now several votes short of what it needs for cloture. The issue is not going away, however, with a potential return to the agenda in June or July.
  • Environmental carbon tax, and cap and trade provisions that would "increase the cost of all goods we consume." While the goal of protecting the environment is laudable, the creation of a market for carbon emissions will produce a price tag beyond comprehension. Carter says to expect some type of legislation yet this year.
  • Health care: Another top President Obama priority, Carter calls it a "stealth" procedure thus far, putting elements of health care reform into the stimulus package and budget resolutions. While a health care bill itself with the goal of providing insurance for all is on the way, the strategy thus far in this area and others of "policymaking within budget resolutions" is concerning. The reason it’s being done: it takes 51 votes in the Senate to pass budget matters, compared to the 60 needed for cloture on other issues to allow debate to move forward.
  • Immigration reform: In the past week, Obama cited this as another top priority to an already crowded plate for Congress. That may lead, Carter offers, to something else falling by the wayside.

Carter also discussed the more high profile roles for Indiana Sen. Evan Bayh (one of the leaders of a Moderate Dems Working Group) and Rep. Mike Pence (chairman of the House Republican Conference). He closed with a simple "no" when asked if he had any desire to be working on these issues in Washington — where he served on the staff of Sen. Richard Lugar in the late 1980s and early 1990s.

That’s OK. He and others working to protect the business interests of Indiana companies and their employees will have their hands full right here in the Hoosier state.