To accommodate my outrageous request, an agent would need multiple licenses – one in each state – prohibitively expensive and impractical.  As it is, any insurance company doing business in multiple states incurs the expense per state of separate trainers and agencies, unique policies, claims adjusters, financial portfolio managers, attorneys and regulatory relations personnel.  And each state’s insurance commission must be funded ultimately through fees on consumers or taxes on consumers.  Clearly, that level of upheaval is not warranted by my convenience.

I was left wondering what is so geographically frightening about consumer insurance policies?  Why won’t states trust each other with reciprocal rights?  Does Florida think Colorado is not competent to oversee auto insurance? Does South Carolina think Florida is not competent to oversee fire & casualty insurance on an owner occupied dwelling?  Does Colorado feel South Carolina is incompetent on rental insurance policies?  Let’s answer for them – “of course not.”  Coloradans drive in Florida using Colorado insurance and Floridians rent homes in South Carolina.  We don’t need an insurance “endorsement” to cross state lines.  There is no epidemic of out-of-staters being slaughtered by insurers.

Regulatory commissioners are typically political appointments for the usual non-economic reasons.  These state icebergs have appointee salaries as the visible tip, with a massive bureaucracy below the budget surface.  The more “rules” adopted, the more bureaucrats are needed to enforce conformance with the rules.  But then, harsh rules on businesses can burnish the reputation of populists.

Some states enacted quirky laws such as Florida’s “personal injury protection,” a mandatory auto insurance coverage for bodily injury reimbursement that has been milked by rear-end collision scammers.  Some states chose a “no-fault” approach, lest bad drivers suffer a drop in self-esteem.  But the functionality of auto insurance is always the same – if your health or vehicle is damaged, an insurance company pays (minus deductibles) for it to be restored to the extent possible.

If you strip away marketing frills (e.g. declining deductibles, roadside assistance), insurance policies are conceptually the same in each state.  And each state’s insurance commission has about the same job.  They assure that: insurer finances are adequate; policies conform to the law; policyholders and claimant treatments conform to the law; and that insurance employees know their obligations under the law.  These are important roles.  A commission that does it well in one state has 95% of what’s needed to do it in the adjacent states, and they are certainly smart enough to learn the other 5%.  Indeed, state insurance commissions have enough in common that they have a national association –where they share tactics on handling state issues and where they set a joint stance on federal matters.

If a few states were in budget difficulties and could shed the auto-reflex of appointing buddies to commissions, they could save a lot of taxpayer money by merging and then streamlining their insurance commissions.  That begs the question of why must we duplicate virtually identical state medical boards, state bars, state boards of nursing, state bank supervisors…and so on.

Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research

While the US is still recovering slowly from our protracted recession, “The 17 countries that use the euro were in recession in 2012 and will probably contract further this year.”  In contrast, US growth during 2013 is expected to be 2% and our unemployment rate dropped to 7.6% in March 2013.  EU unemployment stood at 11.9% in January 2013, an alarming 57% higher than in the US today.  In some countries it is much worse, for example in Greece and in Spain unemployment stands at 27%.  It might get worse.  Greece announced it must let 15,000 civil servants go over the next 18 months.  The promise to rehire that many soon is likely a hollow promise meant to mollify left-wing activists.

In China, the 2013 Q1 GDP growth of 7.7% is considered a slump.   It was slightly below the 8% expected.  However China’s industrial production was off 2% points or a full 20% below expectation.  That is an omen of decreasing China-bound exports from the EU.  Slow growth in the US is another indicator of dismal growth prospects for the EU.

High national debt levels have led most individual EU nations to adopt fiscal austerity.  Consumers and workers are generally unhappy with this posture and are more tolerant of debt than are their leaders.  Germany is perhaps an exception.  Alternative for Germany, a new political party, has formed to seek exit from the Euro, reduce bailouts to other nations and to moderate Angela Merkel’s policies of austerity.  If successful, this new party is likely to remove support from Merkel’s coalition, and that will likely throw victory to German leftists – who tend to favor sharing German wealth with neighboring countries.

In France, austerity and reforms that would make labor more competitive are not welcomed by President Hollande’s supporters.  The nation lost much of its export-driven vigor over the past few years.

Looming across most of the EU is the long term problem of an aging population with a wide swath of entitlements.  That will be an increasing and heavy economic burden into the future.

Although it is a very small nation, the insolvency of Cyprus has illustrated the EU’s inability to act decisively.  At first Cyprus’ banking crisis looked like a $17B problem of which $10B would be loaned by EU and $6B was to be taken from bank depositors (they lack the equivalent of our FDIC).  But just two weeks later, that plan has come unraveled.  Now Mohamed El Erian reported on CNBC that it looks like a $23B problem where $13B is to be taken from bank depositors.  Cyprus will need a miracle to attract depositors in the future, and any who use its rescue plan as a model should expect bank runs!  Perhaps the bigger indictment of EU financial sorcery is that there is no credible plan for sparking growth that will lift Cyprus out of its massive insolvency and economic malaise.

The UK also is in an economic slump with national debt proportionately like that in the US.  UK voters have not been permitted to weigh in on EU membership.  David Cameron has promised they will be given a chance to vote on it in 2015 – if he is reelected.  That may be an effective vote-getter since the UK populace is not enthusiastic about being regulated from Brussels, and yet the other UK parties favor being tied up with the rest of Europe and thus are unlikely to schedule a EU-membership vote.   Indeed, substantial numbers of citizens in each EU country would prefer to return to self-government.

Spain remains stuck with a no-growth economy, high unemployment, and excessive debt.  Italy is similar with debt at 130% of its GDP and suffers a vexing stalemate over who will govern.

Americans should be grateful that our problems are not quite at Europe’s scale.

Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research

Some of the biggest reductions in the budget come in Medicare, achieved by means-testing premiums and prescription prices.  Drug makers’ complaints of “price fixing” might be credible if they had no history of pricing drugs in foreign markets at levels far below those charged in the U.S.

One really smart idea in the budget is to hike Medicare premiums where the beneficiary’s medigap policy leaves no incentive to think twice before selecting the costliest treatments.  If consumers don’t see prices, they cannot react properly.

The budget is a calamity for some on the left.  Jeff Sachs complains bitterly that discretionary spending will shrink to 4.9% of GDP, down from 7.9% of GDP in 2008.   He accepts that for many Americans the federal government seems “little more than a corrupted trough for special interests.“  That sentiment pushes chronic social and economic problems beyond the federal government’s budgetary reach.  He says “until 2017 at the earliest, there is likely to be no or very meager action to address America’s growing underclass, gaping inequalities, decrepit infrastructure, persistent drought or worsening climate change.  Slow growth, unemployable young people, a vast incarcerated minority population and gaudy excesses at the top will remain the norm.”

Crystia Freeland laments the same problem areas and says without adequate budget President Obama is doing his best, but “it requires transformational leadership and a transformational agenda.  Liberals need their own Margaret Thatcher, and they haven’t found her yet.”  That sounds like desperation.

David Brooks, a moderate seems surprised by the austerity in the President’s budget.  He says that the public holds an uninformed and dim view of discretionary spending, but that additional cuts to entitlements could free some funds for the most pressing social and economic issues.  As Brooks notes, the Hill and White House will practice their public kabuki dance of trading entitlement cuts for more taxes.

Expect few results.

Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research

But along comes Congress considering a tax for fixing the inevitable wind and flood damage to pricey beachfront properties.

The bill, ironically coined the Homeowners and Taxpayers Protection Act of 2013 (H.R. 1101) and introduced by Congressman Sires, siphons away billions of dollars from insurance consumers across the country and uses these dollars to create a new national insurance fund.  Bureaucrats could then choose to give the money in selected states for coastal rebuilding and public education, including reconstructing in regularly stricken catastrophe-prone areas.  H.R. 1101 is a tax designed to preserve the private joy of beach living while getting other consumers to pay the inevitable cost of recovery after storms.  Think of it this way:

• Building in a catastrophe-prone area is dumb.
• Frequently rebuilding in the same place is crazy
• Conning a sucker to pay for your folly – priceless!

Some beach residents and some in the catastrophe recovery business will see the beauty in this attempted con.  In fact, some coastal states have a tradition of looking for ways to spread their catastrophe costs to consumers living as far into dry lands as possible.  For example, Florida has a poor history of aligning actuarial costs with insurance premiums – pushing higher costs to lower-income consumer and those who live inland to makeup the financial shortfalls of state-run insurance programs.  This national plan will do the same only on a national scale.

To predict success or failure of such a national insurance fund, you only have to look at the current National Flood Insurance Program (NFIP).   According to a General Accountability Office report, most NFIP policies are priced below water (so to speak).  Pre-Sandy, the fund collected $3 billion in premiums each year, but owed the U.S. Treasury $18 billion.  So much for taxpayer protection.

In fact, the NFIP program is well-known for its bureaucratic senselessness — repeatedly rebuilding the same damaged properties, again and again.  One home, worth $70,000, filed 34 claims totaling $668,000 over a 32-year stretch.  Maybe these homes should not be rebuilt or maybe they should be rebuilt to withstand storm damage.  Instead, the program is too carefree about paying taxpayer money.

The proposed national fund would be worse, because its funding would come from some consumers that have no coastal exposure and no responsibility for mitigating risk along the beach.

The result encourages development along fragile coastal environments that serve as natural storm barriers.  Furthermore, encouraging development along hurricane exposed coastal areas only serves to raise consumer prices for insurance by putting more property and lives at risk.  Pushing these costs to consumers in other states only exacerbates this problem, by making coastal development insensitive to risk.

In short, this plan will raise consumer insurance prices for all and ultimately put taxpayers on the hook for another bailout.  Where is the taxpayer protection?

If implemented, H.R. 1101 would be another big government program and it would be a losing proposition for both consumers and taxpayers.  It’s a beach house bailout, pure and simple.

Alan Daley and Steve Pociask write for the American Consumer Institute Center for Citizen Research.  For more information, visit www.theamericanconsumer.org.    

This article was published in the Huffington Post on 3/22/2013 and can be downloaded here.

The best ways to limit growth in the debt pile is to find good jobs for American workers and force government to spend carefully – not like politicians buying votes.  Even today, some politicians prescribe as many as 30 years littered with “high speed trains that connect major cities, early childhood education, and high-tech job training” before reaching a balanced budget.

Meaningful jobs are created when investors see three factors aligned: market demand, reasonable cost of capital, and cost-efficient employee skills.  When those conditions are right, they can earn a profit from new investments.  Following 2009’s stock market trough, the private sector has been creating jobs slowly.  It expected increasing demand for some goods and services.  Interest rates have been very low and there are plenty of skilled workers.  Productivity levels have been gently volatile in 2012.

Looking ahead, interest rates will rise when the Federal Reserve reverts to its focus on inflation instead of pinch hitting at elected-Washington’s job of fiscal management.  To offset rising interest rates as an investment incentive, increases in market demand would be needed.  Fortunately there are some large scale private sector market demands that will improve the US economy.  If government can resist the temptation to regulate and tax, the following projects will produce well-paying jobs and a more resilient US:

• Exploit “big data and cloud technology” for efficiencies in product promotion and service delivery;
• Permit rational development, distribution and export of tight oil & gas.  Encourage nuclear, wind, solar, and geothermal power in the national portfolio to gives us energy sufficiency;
• Control cyber-threats of criminals and adversary nations without unreasonable privacy loss;
• Achieve ubiquitous electronic health records, advanced pharmaceutical and genetic treatments to tame the major health challenges in the US, and substantial cost containment; and
• Use distance education and internet-delivered courseware as a highly effective norm for most university-level and high school electives.  Align teacher pay with productivity.

Each project is similar in scale to the 1960’s “man on the Moon” project.  These projects call for government cooperation and in some cases funding, although most need just private sector investment.  None is uniquely the province of one domain or the other.  Each will employ armies of skilled American labor, and will produce plenty of income tax to retire federal debt.

Alan Daley is a retired business man who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research

The European Union (EU) stands in contrast to our recently buoyant US economy.  The US shows a healthy 236,000 jobs created, unemployment down to 7.7%, a 10-year T-bill near 2%, retail sales up by 1.1%, and we expect growth in the 1.5% range despite fiscal cliff injuries.  There are worries, but it’s generally a decent story.  Regretfully, the EU’s economy is expected to contract by 1 to 1.5% in 2013.  Europe’s fortune matters to US consumers because of our exports to the EU and our US investments in the EU.  Those make EU gloom communicable.  A European recession and Washington’s dysfunction are palpable burdens for our economy.

Three years ago, the EU suffered from a handful of overspending countries and economies hurt by housing bubbles; Portugal, Ireland, Italy, Greece and Spain (aka PIIGS).   Great Britain, France, and Germany stood ready to help the PIIGS back onto their feet with few loans and aggressive advice or the evils of budget deficits.

Portugal continues to limp along.  Ireland accepted bitter austerity and is healing.  Greece defaulted on some bonds and took EU funding (largesse mostly from Germany).  Italy enjoyed a few years of welcomed caretaker management, but recently voters chose political and budgetary confusion.  Spain opted for austerity with just enough loans to ward off bankruptcy.   Currently PIIGS unemployment rates are; 16.9%, 14.1%, 11.7%, 26.4% and 26%, respectively.  They are in a poor position to lead any recovery.

Meanwhile, France chose a left-wing leader who hiked personal taxes and made doing business in France less attractive.  Unemployment stands at 10.4% and was heading up but 3 of 5 labor unions agreed to moderate employment regulations that have long dissuaded employers from hiring.  That may staunch growth in unemployment.

Britain has 7.8% unemployment, 10-year government bonds yielding about 2% and a budget deficit remarkably like that in the US.  Britain chose austerity instead of pretending it can spend its way out of deep debt.  Still, Britain’s economic outlook lacks growth.  Germany’s unemployment rate is 5.9%; bond yields stayed at a low 1.5% and the economic outlook is also flat.

It is unclear what spark might help the EU to pull itself out of the economic mire.

Alan Daley is a retired businessman who lives in Florida and who follows public policy from a consumer’s perspective.

The spending cut of $1.2 trillion over 10 years starts with $85 billion, just 2.4% of the $3.553 trillion the Administration plans to spend in 2013. 

At least once, many American consumer families have experienced a 2½% drop in available funds, or worse.  They’ve had the sense to make do through cut-backs in discretionary outlays; such as restaurant meals, high-priced lattes, entertainment, vacations, delayed automobile replacement, nixed haute couture shopping sprees, and foregone car detailing.  They have the sense to preserve spending on good nutrition, regular health care, core education and keeping the mortgage payment current.  They don’t need advice from scaremongers – they have the common sense they were born with.

Evidently, common sense has been sequestered in DC.  But official screeching on the horrors of sequester is in surplus.  Arne Duncan from Department of Education claimed teachers will be pink slipped, but had to walk that canard back.  Homeland Security’s Janet Napolitano warned of travel delays through Homeland Security’s TSA and other cutbacks  — so far so good, but then she blamed others for not warning her about 5,000 illegal immigrant detainees who were released, allegedly as a budget saving tactic. 

The White House warned that sequesters would force choosing between care for poor kids and care for sick kids, and added a tall story about the serious harm that sequestration would do to government janitors.  That story of political convenience was so false that it earned him a 4 Pinocchio award.  Our politicians were clearly on a mission to outdo Chicken Little.  They succeeded.

But not all government workers are birds of a feather.  Given a 2.4% spending authority cut, some departments have made reasonable plans to comply; the FAA and the Dept. of Defense began furloughs and cutting contractor positions, and tours in the White House were halted to save $18,000 per week. 

But what about the hideously expensive travel for White House entourage on those quasi-campaigning junkets?  What about making government agencies becoming more productive? 

Think again.  As the Department of Agriculture warned its staff, “However you manage that reduction, you need to make sure you are not contradicting what we said the impact would be.”  They didn’t want junior staffers thinking up better ways to deliver public services.  After all, real politicians never let a good crisis go to waste.

Alan Daley is a retired businessman who lives in Florida and who follows public policy from a consumer’s perspective.

Wireless infrastructure investors are facing major roadblocks, as a number of counties and municipalities across the country have put up barriers to entry, delayed investment and extracted payments and fees that have no bearing on costs from wireless investors.  For consumers, this could mean higher prices and a poorer quality of service; for the Georgia economy, it means decreased investment and economic output; and for workers, it means fewer jobs.

Despite policies that should encourage innovation and investment, local counties and municipalities are using local zoning rules, application approvals and rights-of-way regulations are impede wireless investment in Georgia.  Some counties are prohibiting wireless companies from adding or making changes to existing wireless antennas; requiring full hearings just to upgrade an existing cell tower; and dictating the scope, size and type of facilities for investment.  Making it harder to invest makes for less investment.

But here is the catch – the delays and threatened prohibitions can be resolved with sizable payments to local governments in the form of application and permitting fees, placing moneys in escrow, and requiring payments to government consultants.  Local governments can also require that facilities be placed only on public land, which conveniently extract additional funds for years to come.  For investors, it means paying up and passing these costs along to their consumers (you) in the form of higher prices, and it means delaying services or letting the quality of services degrade.  For the local government it is a kickback, it is klepo-bureaucracy and its business as usual.

The issue is not a new one.  The Federal Communications Commission recognized the problem in 2009, when it ordered local jurisdictions to decide applications to existing infrastructure within a 90-day “shot clock” and new construction applications within a 150-day shot clock.  However, some local governments have figured out ways to delay an application process, such as arguing over the completeness of an application or requiring payments to consultants who confirm an application’s completeness before starting any shot clock.  In some local areas, a one-year delay or more in the application process is common, which is ironic since it can take only one or two months to erect a cell tower and mount an antenna.  Can you hear me now?

Companies are trying to invest in high-speed wireless services that Georgia consumers want.  These services enable Internet browsing, video services and applications like free navigation, messaging, remote medical monitoring, e-books, telecommuting, shopping and banking.  In Georgia, there are about as many wireless subscribers as there are people living in the state.  Consumers want these services and that requires investment.

It is time for state policymakers to step in, end the kickbacks and refocus on the public’s interest.  From a state policy perspective, these barriers result in real costs to businesses, consumers, workers and the Georgia economy.  With more than one billion dollars of broadband and communications investment in the state each year, that investment generates more than 12,000 jobs and it creates services that consumers want.  Even on a small scale, at about one-half million dollars per tower, that creates the equivalent of 4 full time jobs for an entire year.

President Obama has called for increasing broadband deployment, lawmakers desperately want the economy to stronger, workers want jobs and consumers want new and innovative services.  It is time for state policymakers to step in for the sake of consumers, workers and the economy.  Let’s stop these kleptocrats.

Steve Pociask is president of the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization.  For more information, visit www.theamericanconsumer.org.

On the surface the prospect of a 4.5% yield is welcome news to investors looking for higher yields from a rock-solid source.  For those already holding low-yield bonds, an adjustment from 2.0% to 4.5% may occur too rapidly to sell low yielding, complex instruments such as mortgages without taking a capital gains hit as market values plummet.

If you bought $10,000 in T-Bills at par yielding 1.95%, and the next day the Fed manipulated rates to revert to a 4.5% yield, the newer 10-year T-Bill would pay $2,965 more than the one you hold.  If you tried to sell your T-bill, you would incur a loss near the $2,965 difference in value.  Other income sources will adjust in value along with the change in Fed-influenced rates.  Illiquid instruments may be worth holding to maturity instead of offering them up at fire sale rates so that you can swap into better-yielding instruments.  Of course the Fed would not change yields quite so abruptly and you should check with your financial advisor first.

In a growing, healthy economy, net income for common stock companies will tend to rise making it possible for dividends to increase a small amount.  Higher growth will likely create jobs and/or increase wage rates.  Social security benefits will rise in-sync with the cost-of-living (or the consumer price index).  Pension funds will have a chance to grow their way out of underfunding.  On the other hand, the US taxpayers will face even higher monstrous interest payments on the bloated national debt.

Alan Daley is a retired businessman who lives in Florida and who follows public policy issues from a consumer perspective.