Wednesday, July 30, 2014

The year ahead

From page A4 | January 03, 2014 |

Most economists are pointing to 2014 as a pretty good year for the economy. That is likely to translate locally as “could be worse,” but there remains optimism in the air about the local economic outlook. Not that anyone is going on a hiring binge.

Some hopeful signs at the end of 2013 point the way toward 2014. The El Dorado Irrigation District collected $1 million more in hookup fees than it had budgeted. That leads one to be optimistic about new construction picking up the pace in 2014. One caveat here, though, is the self-appointed development scolds who call themselves the Measure Y Committee.

The El Dorado County General Plan is generally a conservative growth plan that should be allowed to do its job. It was approved by a vote of the electorate. With carpool lanes built all the way from Cameron Park to Watt Avenue, we see no reason not to consider new subdivisions in the west end of the county. Freezing the population in place will only mean the cost of everything from fire service, ambulance, water and sewer service is going to become more expensive for existing residents. A growing population means spreading the basic costs of government service among more people, thus lowering the basic cost per person. More people will mean water rate hikes being lower or close to none.

Nationally, the stock market ended the year on an up note and finally the Federal Reserve Board began winding down its bond buying spree. Maybe banks will start paying savers a better interest rate.

Another hopeful sign is that the Social Security Administration has finally got control of its administrative law judges that were handing out Social Security Disability claims like Halloween candy. The SSA is rewriting the job description for  those judges from “complete independence” to”subject to supervision and management.” That followed a 2011 Wall Street Journal report that found, “Dozens of judges awarded benefits in more than 90 percent of their cases, while others were much less likely to find someone unable to work, denying benefits in more than 80 percent of their cases, data showed.”

While the average SS Disability award was 67 percent in 2010, by 2013 it was 56 percent. That’s the power of the press in shining a light on what had become a backdoor welfare program for those whose extended unemployment had run out and didn’t want to move to where the jobs are. Meanwhile we are stuck with the bill. In 2003 SSA paid $71 billion in disability claims to 7.6 million people. In 2012 it paid $137 billion to 10.9 million people.

We’ll really know the recession is behind us when the birth rate ticks back up. Keying on U.S. Census Bureau information, the Washington Post reported Tuesday that the U.S. population grew only 0.7 percent in 2013. The last time the country grew more slowly was the Great Depression from 1932 to 1937.

The real drag on the economy in 2014 and beyond is going to be the unaffordable health care act. With more than 5 million individual policies canceled because they don’t have the bloated and irrelevant benefits and outrageously high deductibles of Obamacare, the country is going to be staring into a health care abyss. With only a tad more than 1 million signing up for expensive Obamacare plans or Medicaid, despite deadline changes and other shifting administrative changes to the law, it is looking like an economic disaster for the health insurance industry, doctors, hospitals and patients. And the economic bloodbath hasn’t hit the employer insurance market yet.

Sorry to end this editorial on a downer. The general economy looks promising as GDP is predicted to grow 2.6 percent in 2014, according to the Kiplinger Report. But the government chokehold on the one-sixth of the economy related to our health care will keep the economy from hitting on all eight cylinders.



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