Justifying Government Programs

US Senator Jay Rockefeller hosted a state roundtable on child hunger which concluded that students face hunger during their summer break. In fact, the Children’s Defense Fund says that there are 206,190 children receiving free or reduced lunches during the school year, but only 16,807 participate in the summer food service program. That means, they leave it to us to conclude, 189,383 don’t get enough to eat. Well, this reminds me of a classic equipment justification problem. Huh?


Buying equipment in business (or spending money for anything for that matter) cannot be justified IF we consider only one thing (program) at a time. For instance, if I invest $6,000 into a widget maker and it returns the investment in three years ($2k per year) and then continues to provide me with $2k of benefit in out-years; why wouldn’t I do it?

Here’s why. Because if I take the same $6,000 and invest into a different thingy, it will return my investment in one year ($6k per year) and continue to provide $6k a year benefits after that. Now that I have at least two options, I can prioritize. After all, economics is based completely on the scarcity of resources and choices we make. Otherwise, we’d just buy whatever and there would be no hungry children.

Our reality is we can have a new car or have a new house; which do we want? Senator Rockefeller, on the other hand, stays only on one side of the playground. Consider that in addition to pointing out we need to spend money on feeding children, he recently:

Opposed closing rural post offices such as Left Hand, WV 25251 (Roane County) and Alloy, WV 25002 (Fayette County). Left Hand is six miles or a 9 minute drive away from the Newton post office while Alloy has three other post offices within four miles (Smithers, Boomer and Charlton Heights). From Alloy to Boomer is 1.2 miles or a 2 minute drive according to Google Maps. Is this more important than feeding children in West Virginia this summer? Also see USPS should close 150 WV Post Offices.

Supports subsidized air travel - According to George Hohmann, Charleston Daily Mail, May 10, 2012, “… Sen. Jay Rockefeller, D-W.Va., is an ardent supporter of scheduled passenger air service in West Virginia that is subsidized by the federal Department of Transportation ….” In a May 8 article entitled Taxpayers subsidizing Beckley-to-DC trips, he wrote, “Passengers will pay $103.43 to fly one way from Beckley to Washington, D.C., starting Aug. 1, while Uncle Sam pays $425.20 to subsidize the trip … Although the service will cost about $2.6 million over the two-year period, passenger ticket sales will generate only an estimated $611,168 ….”

All these projects are legitimate concerns to at least some West Virginians. Yes, it hurts if airlines stop servicing our local airport. And, yes, it hurts if my local rural post office is closed. And, yes, it’s a dang shame that some children may not get enough to eat during the summer. But it appears to me that Senator Rockefeller is detached from the fiscal reality that the federal government is spending $1.40 for every $1 it takes in. We have to make some hard choices. We can’t be for everything.

Instead, Senator Rockefeller should take a leadership position and declare what he will drop in exchange for feeding the children. How about dropping the Beckley-to-DC subsidized air service and use that cash for feeding the children? Only then will he be taking an adult approach to solving social issues.

Next thing you’ll tell me is someone wants us to pay for a progressive radio program as a counterpoint to Rush Limbaugh.

Progressive Public Radio Program Proposed to Counter Rush Limbaugh

Phil Kabler, writing in the Charleston Gazette, reports, “EBA [WV Educational Broadcasting Authority] member (and legislative lobbyist) Mark Polen believes WVPB’s long-term survival depends on innovation and providing programming that isn’t duplicated … One proposal he’s floating is for a statewide news/talk show on public radio. He’s proposes airing it at noon weekdays, as a Buy Cialis progressive Buy Cialis Generic Cialis Cialis Online counterpoint Cialis to Rush LimbaughClick here to read it for yourself. Ya just can’t make this up. Does anyone think we really need to spend government funds on this instead of feeding children this summer?

Speaking of Justifying Purchases: House Investigating Routers?

Republicans in the U.S. House of Representatives asked the inspector general to investigate West Virginia’s use of $24 million in federal stimulus funds to purchase oversized Internet routers. Finally, maybe this is getting some traction. John Raese added his voice yesterday but I’m still baffled why more Republicans haven’t pounced on this.

Worse yet, Gale Given, the state’s new chief technology officer, said “the purchase might have been reasonable if based on future needs.” Well,  since the purchase was similar to building a 1.5 million book library at each elementary school in the state on the oft chance the elementary school would grow up to a university …

Our Century Aluminum Power Bill

My buddy, Mater, was sure fired up this week. He didn’t even make it all the way to the porch before he was complaining about Century Aluminum’s proposed electric deal with Appalachian Power. In case you’ve been under a rock, the aluminum company wants to pay Appalachian for electricity under a sliding scale attached to the price of aluminum. If aluminum prices go up, they will pay more; if aluminum prices go down (they are depressed now), they will pay less. The over and under payments will be “banked,” or actually passed along to other customers that is. Theoretically this is supposed to even out over time, but Mater, along with most West Virginians who don’t live in Jackson County ain’t buying it.

I was explaining the mechanics of the proposal to him including the prior Public Service Commission ruling which allowed a similar, but different, rate to stand when he looked over and said, “Tell me this, if Appalachian Power thinks it’s such a good idea, then why don’t they invest in it instead of passing the costs along to the ratepayers?” Huh.

Now there’s an idea.

Seriously, vertical integration in the supply chain has been around even before Henry Ford and General Motors bought iron ore, coking coal and shipping resources to fuel their auto empires. Fact is, Delta Airlines is set to close this month on a landmark deal to buy a Pennsylvania oil refinery from Phillips 66. Read more on Delta’s deal. What jet fuel is to an airline, electricity is to aluminum making. Delta buys an oil refinery and Appalachian Power (really the parent American Electric Power) could take stock in Century Aluminum instead of passing along the costs to other customers. Now that’s the American way.

Note: I really think it was a legality that forced Appalachian Power to bring this proposal the Public Service Commission in the first place. It was similar enough to a previous PSC decision that Appalachian didn’t forward it, well, they could be sued, ya da. So, don’t think that the power company thinks this is a good deal. They seem to me to be saying, “Here’s an idea … not a good idea, but an idea nonetheless.”

Final Note

Saturday was cleaning the ole home place day … and in doing so, I got the opportunity to visit the fine folks at Mountain Mission in Charleston while making a donation of “stuff.” Got to tell you that it was a pleasure dealing with them … they take your “stuff” and work with it even if it’s not in resale condition as some require … good job. I’m impressed …

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As always, I invite your comments, criticisms and concerns. You may reach me by responding to this email or by calling my cell phone at (304) 541-3714. Finally, one thing that I will definitely promise is my opinions won’t be rehashes of anyone’s talking points. My goal is to express an independent view that will help all of us in West Virginia move forward.

Tom

Where ya live? In East Sissonville ….
Tom Crouser
235 Dutch Road
Charleston, WV 25302
http://www.single-delegate.com
Cell (304) 541-3714
email: tom@crouser.com