Betsy Chapman:
Bad policy leads
to more poverty

It’s time to take the keys away from those who are driving Maine public policy. Over the last thirty years Maine’s personal income has lagged and poverty has increased.

The latest poverty figures issued by the U.S. Census Bureau for 2002 show Maine has the highest rate of poverty growth in the nation along with Mississippi and Arkansas; poverty grew 1.7% in these states. Maine is the only New England state to show an increase.

Maine policy-makers are moving to the beat of a different drummer and that drummer is leading more and more Mainers into poverty.

Maine has made some progress in reducing poverty, but not as much as we could have. In 1969 13.6% of Mainers were in poverty, in 1999 that rate had dropped to 10.9%; but by 2002 it had risen to 11.9%. In the same period, New Hampshire’s rate plummeted an amazing amount— from 9.1% to just 6.1%.

Poverty Rate in ME,VT, NH and MA, 1969-2002

No one would ever accuse our state and local policy-makers of intentionally passing laws and ordinances to increase poverty. Even those committed to redistributing wealth couldn’t have wanted to hurt the needy and push thousands of more people into poverty.

Regardless of the reason Maine policy-makers pursued misguided policy that produced meager improvement over the past three decades, what matters is: first, that we understand the misguided path we still follow; second, a majority of citizens decide to choose prosperity. Finally, our state and local lawmakers must halt policy headed in the wrong direction and turn toward the more successful policies of our neighbor.

All we have to do is to look to some of the economic growth indices regularly released to glean examples of where our policies vary from our neighbors.

One example is the Maine governor and legislature’s efforts to take over healthcare. Dirigo Health Plan assumes that state of Maine will spend money more efficiently than the citizens will spend their own money. I know of no examples of where this has ever worked, and it has been tried many times.

You need look no further than the failed healthcare facilities under government management. The state of Maine ran the Augusta Mental Health Facility until the court issued a consent decree. The federal government runs the Togus Veterans Hospital and makes the news from time to time as veterans request that our Congressional delegation intervene to ensure that their concerns are addressed. This experience does not bode well for Dirigo.

Another example is the growing burden of health insurance mandates. Maine now has 50 percent more mandates than New Hampshire and almost twice as many as former Governor Dr. Howard Dean’s state of Vermont. While only ten states have more health insurance mandates than Maine, there seems to be no hint of reviewing and repealing any, and indeed there’s talk of adding more mandates.

We are one of only five states that has a guaranteed issue mandate, repealed by New Hampshire several years ago, and Maine is one of the few states that hasn’t set up a high risk pool, as New Hampshire has.

Finally, our tax burden is still rising. The legislature has set in motion an automatic gas tax increase each July and we saw the last legislative session increase many user fees. With the highest tax burden in the country, we can’t afford any increases; they are choking our economy.

A good goal is to reduce Maine’s tax burden from number one in the nation to challenge 12th-ranked Vermont, 13th-ranked Massachusetts, and to bring real prosperity, challenge 49th-ranked New Hampshire.

A long-term commitment to a steady, gradual reduction would work wonders for the Maine economy. It took us 30 years to deteriorate to this point; let’s be firm and patient in following the more prosperous path of our neighbors. By doing so, 30 years from now, we could cut our poverty rate in half.

Something is very wrong with Maine’s growing poverty. In the most prosperous decades of the last century, when neighboring states flourished, Maine’s poverty rate grew at the fastest rate in the nation.

Let’s admit that Maine’s full-blown political experiment with government intervention and high taxes has failed. Poverty is growing and our low-income families are hurt by this bad policy and our neighboring state is an example of the path to more prosperous public policy.

The low-income people of Maine are the canary in the mineshaft. Their growing numbers warn of the dangers of the status quo and should bring us all together in agreement that we can do better.

Betsy Chapman is a Financial Consultant and Board Chair of the Maine Public Policy Institute (www.maineinstitute.com), an independent, non-profit, non-partisan education and research institute devoted to promoting market solutions to the challenges affecting the people of Maine. It focuses on three areas: economic opportunity, education excellence, and health improvement. She resides in Hampden, Maine. Contact her at <BPChapman@adelphia.net>.

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