20060523 KDDC BE editorial MD legislators fail basic economics

Baltimore Examiner editorial: MD legislators fail basic economics

An editorial I wish I had written. It was emailed to me and I do not have a hyperlink to the Web-site… Editorial: Maryland legislators fail basic economics

The Baltimore Examiner Newspaper, The Examiner
May 23, 2006

BALTIMORE - A prevailing majority of representatives of “we the people” in Maryland consistently seem to work at proving themselves dopey when it comes to business.

The 2006 Wal-Mart legislation, that forces a single company to provide health care benefits is a case in point. The vast majority of people in the state and the country without health insurance work for small businesses — not the target of the bill. The law forces companies with 10,000 or more employees in the state (Wal-Mart is the only one) to pay at least 8 percent of their payroll toward health benefits.

Behaving that way means one thing — fewer jobs other than the ones fueled by taxes. Don’t you think large companies will have an incentive to move elsewhere once they near the 10,000 employee mark? Or choose elsewhere if they are planning a move to the East Coast?

And it shows that the legislature was more intent on punishing a single company than finding a way to insure more people in the state. Unfortunately, it’s not an isolated incident.

A review of some of their decisions on our behalf:

In 1999 legislators capped electricity prices at Baltimore Gas & Electric Co. for six years at prices 6.5 percent below 1993 rates, squashing electricity competition (who would compete for below market rates?) and paving the way for the looming 72 percent rate hikes.

Legislators are mulling whether to call a special session to reconsider the rate hike and the planned merger of BGE’s parent company, Constellation Energy, with FPL Group — a clear signal once again that business exists at the pleasure of the legislature.

» In December 2004, Gov. Ehrlich called the General Assembly into a special session to take “immediate action ... to ensure the costs of medical malpractice insurance are curtailed and that access to health care is maintained.”

Liability reform is the American Medical Association’s top legislative priority because “America’s patients are losing access to care because the nation’s out-of-control legal system is forcing physicians in some areas of the country to retire early, relocate or give up performing high-risk medical procedures.”

The General Assembly’s response: Maryland Patients’ Access to Quality Health Care act of 2004. The legislation trimmed about 3 percent off malpractice premiums — at a time when rates are rising in the double digits. It also raised taxes on HMOs, making it more difficult for small businesses, who employ the majority of people in the state, to purchase health care for employees. Since 1999, the number of small employers offering plans has declined by 13 percent. The 2004 legislation is not the only reason that many small business owners don’t offer insurance, of course, but it only made it more difficult.

» In January, the General Assembly passed legislation raising the minimum wage $1 to $6.15 per hour. In rich sections of the state where jobs are in short supply, this legislation will do nothing. In poorer sections it will decrease demand for jobs because for some businesses $1 an hour will make the difference between being able to hire someone or not.

Jim Brady, the Secretary of Business and Economic Development under Gov. Glendening, says he does not think that legislators purposely try to be anti-business. “It’s not a cabal, I just don’t think they think through the ramifications of what they do,” he said.

We wish they would.

Don’t you?

To prevent future Wal-Mart, et al laws, the business community must actively recruit candidates who understand economics and withhold support from those who don’t. We don’t need any more lemmings in the General Assembly taking us over an economic cliff.

Examiner