New governor’s three challenges

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(Host) Commentator John McClaughry reflects on the challenges that lie ahead for the Douglas administration.

(McClaughry) Vermont’s first new governor in 11 years will come to office facing three serious problems. The first big problem is that Vermont’s economy keeps lagging behind the national economy. This problem can be stated simply:

– High taxes to support high state spending.
– A maddening regulatory jungle, where unaccountable bureaucrats can stop forward motion with little concern for the costs to the applicant and the consequences to the state’s economy.
– An array of mandates on business, and the constant prospect of a legislature poised to add even more.
– And soaring health insurance costs, caused in large part by government meddling in the health care market.

During the recent campaign, all gubernatorial candidates vowed to take bold action to improve Vermont’s economy. Now we’ll see whether the winner can deliver.

The second big problem is educational finance. Under Act 60 the education budget will soar past one billion dollars this year. Absent a sweeping reform, the next governor will be casting about for some cost control mechanism to rein in rapid spending growth. Whatever he hits upon will put state government increasingly in charge of the amount and growth rate of local public school spending. This will lead to one big school system. Vermonters won’t like it.

The third big problem is health care financing. Beginning in 1991, Vermont has been in a pernicious cycle. To rescue Vermont Blue Cross/Blue Shield, Governors Snelling and Dean got the Legislature to impose community rating. That drove out the competing health insurers who, like car and home insurers, based premiums on risk. Premiums went up for young workers. Small businesses dropped coverage. Governor Dean expanded Medicaid to bring down the uninsured rate. He paid for much of the expansion by simply underpaying health care providers. So they had to increase charges to private patients. That increased the premiums, and around it goes again.

But it’s not all bad news. The good news is that there are workable solutions for the economic, education finance, and health care problems. They require, however, something that has not been much in evidence in Montpelier in recent years: a reorientation of public policy toward personal responsibility, market competition, economic opportunity, consumer choice, less government, and more freedom.

The new governor will have the opportunity to make a great reputation for himself in solving these big problems. It will take considerable ingenuity to pull together a program, considerable powers of persuasion to build public support, considerable political skill in pushing it through the legislature, and considerable courage to face the frenzied attacks of various monopolies and special interest groups who don’t want anyone messing with their deals. Success will mean reelection. Failure will mean defeat. That ought to be a real motivator.

This is John McClaughry. Thanks for listening.

John McClaughery is president of the Ethan Allen Institute, a Vermont policy research and education organization.

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