Monday, January 22, 2007

Ed Rendell's fuzzy economics

Pennsylvania Gov. Ed Rendell should send a thank-you card to President George W. Bush. Maybe some flowers or candy.

Thanks to the 2001 and 2003 Bush tax cuts, which have put more money into the hands of middle class Americans and small business owners, Pennsylvania's economy has added 162,000 jobs since January 2003. (That also happens to be when Rendell took office as governor, which is the only thing that counts in Rendell's book.)

Rendell, of course, didn't mention President Bush in his latest "pat-myself-on-the-back" announcement about job growth. As usual, Rendell took all the credit. Reality and Rendell are very far apart these days.

You don't create jobs by raising taxes. You don't create jobs by increasing government regulations or presiding over the largest increase in government spending in Pennsylvania history.

When it comes to economics, Rendell should be made to repeat his first term. (This is the same governor who was given an F for his economic achievements by both the Commonwealth Foundation and the Cato Institute. Independent rankings of business climate by state consistently have Pennsylvania in the bottom rung.

Rendell said Pennsylvania added 10,300 jobs in December, the largest one-month job gain in 2006 and the third straight year the state has added 50,000 or more jobs. (I'm also wondering how many of those new jobs were handed out to Rendell political cronies?)

"To sustain job growth, we must continue the strategic investments we have made in the past four years," Rendell said. "And, we must continue to look for new and innovative ways to bring more businesses and jobs to the state."

Which brings us to Rendell’s latest scheme — universal health care for uninsured Pennsylvanians.

Rendell wants to force state employers to provide health care for workers or pay a tax to the state so the government can subside health coverage for private sector employees.

The government can "help employers help their employees be more productive by giving them the peace-of-mind they need when it comes to paying for visits to the doctor," Rendell said, trying to drum up support for his "Prescription for Pennsylvania."

"When we make quality health care coverage affordable, and accessible to everyone, we will make Pennsylvania the most attractive place to locate and expand a business and create jobs for our hard-working citizens," Rendell said.

Reducing the Pennsylvania's net corporate income tax rate (highest in the country) would help entice new businesses and job to Pennsylvania, but Rendell doesn't know how to cut taxes. He only knows how to raise taxes.

Regulating "for-profit" insurance companies would go a long way to reducing insurance costs for all Pennsylvanians, but the insurance lobbyists don't like that idea and have opposed bills introduced in both the House and Senate to level the playing field in Pennsylvania, which is one of only two states that do not regulate "for-profit" insurance companies.

That means some of the state's biggest insurance companies can raise their rates 35 percent a year.

Rendell's "Prescription for Pennsylvania" is the latest bitter pill Rendell is trying to force down the throats or the state's beleaguered business community.

Matthew Brouilette, president and CEO of the Commonwealth Foundation, got it right in his assessment of Rendell's health insurance scheme: "This is why the governor's 'Prescription for Pennsylvania' will fail: He is prescribing treatment for the symptom rather than the cause. Expanding insurance coverage at taxpayers' expense without first addressing the factors that are driving up healthcare costs will only exacerbate our healthcare problems. Under the governor's scheme, neither the cost of healthcare nor the cost of insurance will ever become reasonably priced for the average Pennsylvanian."

Cutting taxes and slowing runaway spending in Harrisburg is the best way to keep the state's economy healthy.

Rendell's limited playbook of raising taxes, increasing spending and borrowing enormous amounts of money is a recipe for disaster.

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