A4 Thursday, December 20, 2012
OPINION
Utilities squeeze extra dollars in obscure add-ons A new technical whizbang called E-911 was being introduced by the phone company. It was baloney, the senator told me. E-911 was going to be a new way for emergency responders to know exactly where a phone call was coming from. When a call came to a 911 call center, a message would pop up automatically showing the phone number, which could then be linked to an address. This was 1991 or so. The phone company, US West in those days, was asking the state for approval to add 50 cents to everyone’s phone bill to cover the cost. The senator told me the technology had been developed anyway, and the 50 cents was pure profit to the phone company. The increase was approved. Caller -ID was introduced shortly afterward, making the same technology available to everyone (for a much heftier price than 50 cents), demon-
EDITORIAL
MERILEE
DANNEMANN TRIPLE SPACED
strating that the senator was probably right. The technology was there. But E-911 succeeded in squeezing more money out of you and me. The phone company’s lobbyists were the nicest guys in Santa Fe. They were pleasant, friendly, cheer ful, the sort of guys you would hate to disappoint by voting against their bill. They even had a traveling liquor supply. When somebody hosted a party for legislators during the interim, away from Santa Fe, the phone company’s junior guy would show up with a carton containing a generous selection
of liquor. The next day he would pick up the leftovers for the next party. A few years later he was a Cabinet secretary. (During legislative sessions, in that period, a vice president of PNM was the cold cuts guy, regularly delivering a grocery bag full of sandwich makings to the House majority leader’s private office refrigerator.) The principle behind the regulation of public utilities is that when government protects a private business from competition by granting it monopoly status, that business is accountable to consumers, through their government, for the quality of its service and for reasonable cost. I have long suspected that public utilities, regulated monopolies, and companies that are almost monopolies — big companies with lots of captive customers — are increasingly taking advantage of those cus-
Roswell Daily Record
tomers by squeezing extra dollars out of them, often in the form of numerous small add-on fees that customers don’t understand and can’t fight. Look at your phone bill and see if you understand what every item is for. There is an argument that they are no longer monopolies because of competition from cell phone companies, satellite TV and so on; but I have been suspicious of that. Someone has figured it out. In a new book, “The Fine Print,” investigative reporter David Cay Johnston explains in detail how some of them do it, including how lawmakers and regulators are either bamboozled by the complexity of the issues or coopted by being hired later by the companies they regulated. I am a big fan of Johnston’s previous books, which should be required reading for legislators and regulators. In New Mexico, the structure
for utility regulation is set by legislation, and then regulatory decisions are made by the Public Regulation Commission. In 2013, because of the constitutional amendment we passed, the Legislature is supposed to enact laws establishing qualifications for PRC candidates. We need future commissioners to have the analytical skills to understand the issues in utility regulation and the backbone to resist the blandishments of the utility lobbyists, no matter how nice they are. Perhaps the new law could include some conflictof-interest prevention, such as a requirement that commissioners and their immediate families are barred from working for or consulting for any regulated utility, or any company affiliated with a regulated utility, for a minimum of 10 years. Contact Merilee Dannemann at www.triplespacedagain.com. © New Mexico News Services 2012
Small business slammed
Tax policy — or the lack thereof — has consequences. Americans are seeing that uncertainty about the federal fiscal cliff is sparking investors to make moves to profit now, instead of getting hit with potentially much higher taxes in 2013. “Tax-related selling may be behind the weaker trend in the shares of market leader Apple,” whose stock is down 20 percent in this quarter, Reuters reported. “Of this year’s top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.” “It’s very simple,” Dan Mitchell told us; he’s a senior fellow at the libertarian Cato Institute. “The capital gains tax could go from 15 percent to 23.8 percent. The dividends tax could go from 15 percent to 43.8 percent. And that’s not to mention ordinary income tax rates,” which could go from 35 percent to 39.6 percent for the top rate. “If you have any discretion with your money, you will try to protect it.” Mitchell also pointed to how Costco Wholesale Corp. and the Washington Post Company are issuing dividends this year to avoid higher taxes next year. Ironically, both companies were big supporters of the reelection of President Barack Obama, who is pushing for the higher federal tax rates. Mitchell added that what we’re really seeing is a “timing issue.” By itself, that doesn’t mean much. Companies and investors shift money around all the time. But the deeper meaning is that “taxes matter. The real problem is what these tax increases mean for long-term growth and competitiveness.” Obama and other tax-increase advocates — such as California Gov. Jerry Brown — insist tax hikes are needed so the rich “pay their fair share.” But Mitchell said that’s not what really happens. The truly wealthy, he said, have money in stocks and bonds, which gives them “flexibility,” making it easier to shift funds to avoid taxes. Instead, he said, the tax increases “are a big problem for the small business and the entrepreneur. They don’t have the liquidity of the really rich. If you own a muffler shop, or a couple of Applebee’s or an accounting firm, your income is your cash flow. Your liquidity is used to hire workers. Obama is pushing class warfare, but that really hits small business. The really rich shrug this off like a horse swatting a fly.” Many small businesses file taxes as S corporations, which means they’re taxed at individual rates. So the higher tax rates aimed at the “rich” also will hit companies that are hoping to use profits for expansion and jobs creation. According to a 2010 report by the Small Business Administration’s Office of Advocacy, from 60 to 80 percent of new jobs are created by small businesses. The national unemployment rate has dropped gradually throughout 2012, to 7.7 percent in November from 8.3 percent in January. But that trend could change if small businesses are slammed by higher taxes in 2013. As the country is about to barrel over the fiscal cliff in a hot-rod Lincoln, those seeking tax increases should realize that small business is locked in the trunk. Guest Editorial The Orange County Register DEAR DOCTOR K: My young granddaughter has juvenile rheumatoid arthritis. I worry about the effects of the powerful medications she has to take. DEAR READER: Modern medicine has created real miracles. We have been smart enough to create treatments that relieve suffering and prevent premature death beyond what was previously possible. But we are not yet smart enough to create tests and treatments that are free of side effects. The treatment of arthritis, in adults and in children like your granddaughter, is an example. Powerfully effective treatments are available today that were not available in the past. Your granddaughter’s suffering has a better chance of being relieved than ever before.
It’s the spending, stupid! Listening to progressive media pundits, I’d think the most evil man in the universe is Grover Norquist, head of Americans for Tax Reform. His crime? He heads a movement that asks political candidates to pledge not to raise taxes. I think Grover accomplished a lot. But I wish he’d convinced politicians to pledge not to increase spending. President Obama says raising taxes to cut the deficit is a “balanced” approach. Balanced ... But what’s “balanced” about raising taxes after vast
Doonesbury
ASK DR. K UNITED MEDIA SYNDICATE
But you’re also right to worry: Medications used to treat juvenile rheumatoid arthritis can cause serious problems. That’s why treating children with this condition is a delicate balance. It’s true the treatment can cause immediate side effects and there can be long-term risks. However, doctors want to do everything they can to promptly relieve their young patients’ suffering and to protect
JOHN
STOSSEL SYNDICATED COLUMNIST
increases in spending? Trillions for war, Medicare, “stimulus” and solar panels. Tax receipts rose — after tax-rate cuts — from $1.9 billion in 2003 to $2.3 billion in 2008, the year the recession started. That increase couldn’t keep
them against long-term bone damage. With juvenile rheumatoid arthritis, the lining of the joint becomes inflamed and enlarged, limiting movement and causing pain and tenderness. Enzymes released by the inflamed membranes erode the bone and cartilage. This joint and bone damage can cause problems in a growing child; bones may develop abnormally in shape or size. Medications help to control inflammation to stop further joint damage. They also control pain and inflammation. Nonsteroidal anti-inflammatory drugs (NSAIDs) are usually the first medications used to relieve joint inflammation. But NSAIDs can cause ulcers. COX-2 inhibitors may be safer for the
up with the spending. The deficit doubled — actually, more than doubled — as politicians increased spending to nearly $4 trillion! Our debt, at more than $16 trillion, now exceeds our gross domestic product. Ludicrous, irresponsible spending is why we’re in trouble. As columnist Ron Hart points out, Bill Clinton’s balanced budget spent $1.7 trillion. “Adjusted for inflation,” he writes, “our federal government would (have) a $200 billion surplus. But instead of increasing government spend-
stomach. In more severe cases, doctors may use corticosteroids, which are fast-acting, anti-inflammatory agents. But they can cause weakened bones, increased susceptibility to infections and stunted growth. They usually are prescribed for only a short time. Drugs known as DMARDs often provide relief if other medications have failed. The most widely used is methotrexate. These drugs can cause liver damage or other complications. Doctors carefully monitor children taking DMARDs. Over the past 30 years, medical scientists have made major advances in understanding the chemical signals that cause inflammation, called cytokines. In See DR. K, Page A5
ing in line with normal inflation, under Bush and Obama we are spending $3.8 trillion today. Democrats, who believe we have a ‘revenue’ problem instead of a ‘spending’ problem, must also think they have a bartender problem, not a drinking problem.” The media obsess about tax rates, but spending is more important. As Milton Friedman taught us, spending is a far more accurate gauge of the government burden. If government spends a dollar, that
See STOSSEL, Page A5
25 YEARS AGO
Dec. 20, 1987 Air man L yndel Thorp has graduated from the U.S. Air Force jet engine mechanic course at Chanute Air Force Base. Thorp, a 1980 graduate of Carlsbad High School, is the son of Bobby G. Thorp of Ruidoso and the grandson of Julia L. Neatherlin of Carlsbad. During the course, students were shown how to repair and maintain jet engines with emphasis in ground safety practices when using ground support equipment.