Tuesday, April 15, 2014

Should Virginia taxpayers subsidize the film industry?

Regal Cinemas: 'Welcome Virginia Film Festival'
How should Virginia's relate to the film industry?

The Commonwealth has become a popular location for shooting prestige motion pictures. Steven Spielberg's Lincoln used Richmond as a stand-in for 1860s Washington, and Spielberg used the Shenandoah Valley as a stand-in for Massachusetts in his 2005 War of the Worlds remake. Other movies shot on location here include Gods and Generals, Sommersby, Killing Kennedy, Evan Almighty, Giant, Toy Soldiers, and Swedish Auto (those last four made in the Charlottesville area).

Not simply a location for making films, Virginia often is an early venue for seeing other big movies.

For example, one of the Oscars' Best Picture nominees for 2013, Alexander Payne's Nebraska, had pre-release screenings both at the Virginia Film Festival in Charlottesville, where co-star Will Forte and producer Ron Yerxa discussed the film, but also at the new Middleburg Film Festival, where Yerxa appeared with lead actor (and Oscar nominee) Bruce Dern. The 2013 Virginia Film Festival also screened Philomena, another Best Picture nominee this year. In 2011, eventual Best Picture winner The Artist was a closing night feature at the Virginia Film Festival. Oscar-winning live-action short subject West Bank Story also had an early screening at the 2005 festival in Charlottesville.

It's clear that Virginia has strong ties to the film making industry. But should Virginia taxpayers have to pay for them?

Although Virginia has, for some time, offered substantial tax benefits to movie companies that come here to make films, a bill introduced in this year's General Assembly -- and passed by both chambers -- would expand tax credits to the millionaires who would probably do business here anyway.

According to the summary of HB 460, patroned by Terry Kilgore (R-Gate City) and copatroned by Chris Peace (R-Mechanicsville, the bill
Changes the motion picture production income tax credit by (i) increasing the percentage of qualifying expenses eligible to be claimed from 15 percent to 20 percent, and from 20 percent to 25 percent for productions in an economically distressed areas, (ii) increasing the total biennium cap for all such credits from $5 million to $25 million, and (iii) having the credit expire on December 31, 2023. The bill also requires the Department to publish information regarding the credit regardless if it does not prevent the identification of the taxpayer claiming the credit. The bill is effective for taxable years beginning on or after January 1, 2014.
Does this make good sense as policy? Economists say no.

Even uber-liberal Robert Reich, the Clinton administration's Labor Secretary, agrees that states that subsidize the film industry are making a mistake.

According to Variety, Reich
called the bonanza of states offering production tax credits a “race to the bottom,” as competition sees governments sweetening the pot to try to lure movies and TV shows within their borders.

“These tax credits and tax incentives are a zero sum game,” he said in an interview last week. “They don’t create a single new job. They just move jobs around, and they rob the states of the money they need for education and infrastructure.”
Closer to home, the Mercatus Center at George Mason University headlined an article by one of its scholars, Antony Davies, "The Film Tax Credit Farce." Davies, an economist at Duquesne University, wrote:
According to the nonpartisan Tax Foundation, every independent study of film tax credits has found that the credits are money-losers for the states. Arizona's Department of Commerce calculated that Arizona made back 28 cents in tax revenue for every $1 it “invested” in film tax credits. Connecticut's Department of Economic Development estimated that the state earned 7 cents in tax revenue for every $1 it lost. State agencies in Massachusetts, Michigan, New Mexico and even Pennsylvania's Legislative Budget and Finance Committee found that state coffers received less than 30 cents for every dollar they paid out in film tax credits.

If film production is such a great cash cow, why aren't venture capitalists lining up for a piece of the action? The problem is that the film industry wants special treatment. It wants someone else to shoulder the risk of investment while it keeps the profit for itself. No investor would agree to such a deal, and that is why the film industry has turned to our state government.

Filmmakers know the state can force taxpayers to invest in something taxpayers would never choose on their own.
Some politicians are getting the message that tax credits for the film industry do not bring states the benefits touted by their proponents. Variety quotes another GMU source, economist Eileen Norcross:
Other arguments against incentives hold that they don’t help the states that offer them. In March, the Massachusetts revenue commission issued a scathing report on the state’s tax credit program, which stated that two-thirds of the total $175 million awarded in 2011 went to out-of-state spending. “The critique is that while they appear to bring in short-term temporary activity to a state or community, a lot of those benefits flow to the production companies,” says Eileen Norcross, a senior research fellow at George Mason U. “The people who are hired locally tend to be (in) more low-wage service industry jobs. It provides a temporary economic blip on the radar, and then it’s sort of fleeting.”
In a commentary piece for U.S. News and World Report, Norcross explained the case against film industry subsidies. States, she said, are
finding that it is barely worth the lost revenue. A recent report by the Massachusetts Department of Revenue found that of the $44 million in tax credits awarded in 2011, two-thirds of the $175 million in spending generated due to economic activity went to out-of-state workers, and 47 percent of the wages generated, or $53 million, went to those earning over $1 million.

On net, Massachusetts' film credit program is costing the state more than it delivers. After subtracting payments to out-of-state residents and the budget reductions required to fund the credits, only $39 million in state economic activity resulted. The findings have prompted Governor Deval Patrick to cap the state's program to $40 million in annual credits.

North Carolina's Legislative Services Office analysis shows their film credit program realizes even less impressive returns. In 2011, the state awarded $30.3 million in film credits – reimbursing productions that spent over $250,000 up to 25 percent for qualifying expenses. Yet, the program could only claim about 55 to 70 new jobs. Based on their model, the report claims that if instead North Carolina's business taxes had been reduced across the board by $30.3 million, between 340 and 450 jobs and $14 million in personal income would have materialized.
Why, against all this evidence, are states -- including Virginia -- continuing to transfer tax dollars from poor- and middle-class residents to rich out-of-state film producers?

There's a widely held belief that putting the state's locales on film encourages more tourism. That's dubious. Consider the examples above: Tom Cruise fought Martians in the hills near Lexington, Virginia, in War of the Worlds. But Virginia was never mentioned in the film. Virginia played Massachusetts. Daniel Day-Lewis was Abraham Lincoln while Richmond was Washington, D.C.

Of course, even 50 years after it was made, The Sound of Music still brings tourists to Salzburg, Austria, and its environs, and The Lord of the Rings trilogy became the basis to attract tourists to New Zealand. Those are outlying exceptions, however, with cult followings that films like Evan Almighty and Swedish Auto can't match.

In addition, politicians hopefully believe connections with film producers, directors, and actors bring with them "movie magic," as though having Sally Field or Dakota Fanning in town will result in fairy dust falling on Richmond or Lexington. Even governors and senators are dazzled by celebrity, not to mention delegates and city council members.

As Variety's David Cohen pointed out on public radio's Here & Now,
place after place has discovered these things are rife with corruption and they don't deliver the returns that they expect. But there's always another politician or another city that's willing to be seduced by Hollywood glamour.
It turns out that HB 460 passed both chambers of the General Assembly and was signed into law by Governor Terry McAuliffe on April 6, with an effective date of July 1, 2014.

Too bad the governor failed to listen to his friend Bill Clinton's old friend Robert Reich.  He has helped  Virginia join the "race to the bottom."

Adapted from an earlier post on Bearing Drift.

Monday, April 14, 2014

Will Medicaid expansion actually make poor people healthier?

Members of the General Assembly who oppose Governor Terry McAuliffe's proposals to expand Medicaid in Virginia under the terms of the Affordable Care Act (ACA, also called "Obamacare") may find some intellectual ammunition to bolster their case in a study published on March 24 by the Mercatus Center at George Mason University.

The Economics of Medicaid: Assessing the Costs and Consequences, edited by Jason J. Fichtner, contains a lot of wonkish economic analysis, such as Nina Owcharenko's chapter on "the state side of the budget equation," which shows the astronomical growth in Medicaid spending and enrollment over the past two decades (see the graph to the upper left), but the most significant findings may be in the book's last chapter, by Robert F. Graboyes and titled "Medicaid and Health."

Graboyes relies on previous studies in several states and on reports from the Government Accountability Office and other federal agencies to demonstrate that people who rely on Medicaid for health insurance not only have worse health comes than those who have other types of insurance, but worse than people with no insurance at all.

What's more, rather than taking patients out of emergency rooms and putting them in doctors' offices for routine health care, expansion of Medicaid coverage tends to increase emergency room visits by Medicaid recipients.

I'll let Graboyes -- a senior research fellow who was formerly an economist with Chase Manhattan Bank and the Federal Reserve Bank of Richmond, as well as a faculty member at the University of Richmond -- tell it in his own words (end notes omitted).

Pages 175-76:
A Mercatus publication I authored in 2013 stated the following: “An ideal health care system will provide better health to more peo­ple at lower cost on a continuous basis.” By this standard, Medicaid is an abject failure. For lower-income Americans, Medicaid yields poor coverage, poor care, and poor medical outcomes. While prom­ising coverage far beyond the program’s original scope, it fails to enroll millions of people who are among its intended population and who are eligible for enrollment. The data suggest that Medicaid does surprisingly little to improve its recipients’ health and in some ways may even harm them indirectly. It is a pennywise-and-pound-foolish program that, paradoxically, sends costs soaring by underpaying pro­viders. And the coverage, care, and cost elements show little or no improvement over time.

Pages 181-82:

In 2010, the University of Virginia conducted a large-scale study that suggested that an individual without insurance has better health outcomes than an individual on Medicaid.47 Even after adjusting for risk factors, Medicaid patients had higher in-hospital mortality, longer hospital stays, and higher costs—compared with the uninsured, those on Medicare, and those on private insurance plans.48 A University of Pennsylvania study examined data on patients receiving surgery for colorectal cancer; Medicaid patients had higher mortality and surgical complications than uninsured patients.49 A 2011 Johns Hopkins study found that “Medicare and Medicaid patients have worse survival after [lung transplantation] compared with private insurance/self-paying patients.”

Perhaps the most damning of all the recent studies is the Oregon Experiment. This was a rare example of a large-scale, fully ran­domized experiment in health care. In 2008, Oregon expanded its Medicaid program. Approximately 90,000 people applied for 30,000 newly available slots, and the state used a lottery to choose who got in and who did not. Afterward, the state tracked the health of 6,387 adults who were chosen and 5,842 who were not. From a standpoint of physical health, the results were devastating: “This randomized, controlled study showed that Medicaid coverage generated no sig­nificant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.” Supporters of Medicaid point to positives that follow the word “but” in the preceding sentence.

Page 177:


Rapid expansion of Medicaid, as envisioned under the ACA, also has the potential to touch off a cycle of expansion, financial over­load, and mass cancellations of coverage. The best example of such a process is the TennCare disaster that began in 1994 in Tennessee. The state sought to convert Medicaid to managed care, assuming this would lead to enough savings (from efficiency gains) to cover children and the uninsured. In less than a decade, however, enroll­ ment swelled far beyond what had been predicted, and the savings proved elusive. The expansion threatened the state government with bankruptcy and, by 2006, the program was forced to cancel cover­age for approximately 200,000 Tennesseans. A high-profile study of Oregon’s Medicaid expansion provides powerful new evidence that expansion increases rather than decreases the use of emergency services; putting it another way, one of the principal arguments in favor of expansion now appears illusory [emphasis added].

The whole book, which is also available in a Kindle edition, is chock-a-block with nuggets like these. Even legislators who don't read bills before they vote on them should read this book.

Cross-posted from Bearing Drift (April 12, 2014).

Sunday, April 13, 2014

2014 Jefferson Muzzle awards have been announced

Violators of freedom of expression are the "winners" of the 2014 Jefferson Muzzle Awards from the Thomas Jefferson Center for the Protection of Free Expression in Charlottesville. Now in their 23rd year, the Muzzles are announced to coincide with Mr. Jefferson's birthday (April 13).

Josh Wheeler
The ten recipients this year include three educational institutions, three state government agencies, and four federal government agencies. They were announced by the Center's executive director, Josh Wheeler, via a press release on Thursday, April 10.

The awards include implicit criticism of the White House press office for limiting access to the news media to even trivial events and of the Department of Justice for "secretly seiz[ing] dozens of phone records of the Associated Press and falsely label[ing] Fox News reporter James Rosen a criminal 'co-conspirator' in order to obtain a search warrant for the reporter’s phone records and emails."

The National Security Agency (NSA) and Department of Homeland Security are joint recipients of a Muzzle
For causing an online retailer to remove from its website a Minnesota man’s products satirizing various government entities on T-shirts, bumper stickers, and other items. Zazzle.com pulled the items from its marketplace after receiving cease and desist letters from the NSA and Homeland Security. Among the items removed were products featuring a variation of the NSA seal along with the statement “The NSA: The only part of government that actually listens.”
The North Carolina General Assembly police are cited for arresting a reporter who was covering a protest at the state capitol, while the Tennessee General Assembly gets dinged for criminalizing undercover reporting at agricultural facilities.

The Kansas Board of Regents receives a 2014 Muzzle award because
Following controversial statements by a member of the University of Kansas faculty on his personal Twitter account, the Kansas Board of Regents (the governing board of the state’s public universities) adopted a social media policy that allows for the firing of a faculty member for using social media in such a way that “impairs…harmony among co-workers,” or that the university’s chief executive officer deems “contrary to the best interest of the university.”
A Florida high school principal gets an award for cutting off the microphone of a graduation speaker who was stumbling over his words and then denying the student an opportunity to accept his diploma with the rest of the class. His reason? He thought the stumbling was an attempt to go "off script" on the approved text of the speech.

The principal of Pemberton High School in New Jersey wins a Muzzle for censoring two articles in the student newspaper, and then forbidding the same newspaper from publishing an article about censorship.

My favorite 2014 Muzzle concerns a case that received a lot of publicity last September. At Modesto Junior College in California, a student was refused permission to distribute copies of the U.S. Constitution on Constitution Day. Here's the Thomas Jefferson Center's citation:
Campus police confronted Robert van Tuinen outside the student center as he handed out free copies of the Constitution to his fellow students on September 17—Constitution Day. Officers informed van Tuinen that school policy only permitted literature to be distributed within a tiny designated spot on campus, and only then if scheduled several days in advance.
If you missed the widely-distributed video of this incident, here it is:
To hear Thomas Jefferson Center director Josh Wheeler talk about how the Muzzle Award winners are determined, check out this interview on The Score.

Cross-posted from Bearing Drift (April 9, 2014).


Saturday, March 29, 2014

HAH! Celebrate Human Achievement Tonight

On March 29th, from 8:30 to 9:30 p.m. in their local time zones, millions of soul-sapped, misanthropic pessimists will be sitting in the dark marking "Earth Hour."

For the rest of us, that same time period will be celebrated as "Human Achievement Hour," offering an opportunity to turn on the lights, watch television, listen to the radio, or surf the Internet and ponder the wonders of ingenuity and the capacity of man to rise above brute poverty into a scintillating world of his own making that includes art, poetry, music, and machines.

The Competitive Enterprise Institute describes Human Achievement Hour like this:
Human Achievement Hour (HAH) is a celebration of individual freedom and appreciation of the achievements and innovations that people have used to improve their lives throughout history. To celebrate Human Achievement Hour, participants need only to spend the hour from 8:30 pm to 9:30 pm on March 29 enjoying the benefits of capitalism and human innovation: Gather with friends in the warmth of a heated home, watch television, take a hot shower, drink a beer, call a loved one on the phone, or listen to music.

On Saturday, March 29, 2014, from 8:30 pm to 9:30 pm, some people will shut off their lights and spend an hour in darkness as a symbolic vote against global climate change. Observers of Earth Hour want world leaders to “do something” about pollution and energy use. What this means is that they want politicians to use legal mandates and punitive taxes to prevent individuals from freely using resources, hindering our ability to create the solutions and technologies of the future. Instead, the Competitive Enterprise Institute asks you to spend that hour with your lights *on* in celebration of Human Achievement Hour.

HAH is an annual event meant to recognize and celebrate the fact that this is the greatest time to be alive, and that the reason we have come is that people have been free to use their minds and the resources in their environment to experiment, create, and innovate. Participants in HAH recognize the necessity to protect the individual persons from government coercion, so that we may continue innovating and improving our lives and the world around us.
A short video demonstrates some of the amazing things people have done with their hands and their imaginations:
Be sure to leave a comment below, telling everyone how you like to celebrate human achievement. Or more: What human achievement do you most appreciate? What human achievement do you anticipate will make our lives better over the next five or ten years?








Friday, March 21, 2014

My 1991 Interview with Geraldine Ferraro

Hank Stuever's review in Friday's Washington Post of a new Showtime documentary about 1984 Democratic vice-presidential nominee Geraldine Ferraro reminded me that I once interviewed her.

Rick Sincere interviews Geraldine Ferraro, 1991
The occasion was a Human Rights Campaign Fund (now Human Rights Campaign) fundraising dinner in late 1991. I was a correpondent for Gay Fairfax, a local TV magazine show in Northern Virginia that also appeared on various public-access cable channels around the country. The interview, which was cut away from excerpts of Ferraro's speech that night, was broadcast months later, on February 10, 1992.

At the time, Ferraro was embarking on a campaign to unseat then-Senator Alfonse D'Amato in New York. D'Amato was a Republican who had first been elected in the Reagan landslide of 1980.

As John Peter Olinger later noted about Ferraro's appearance at the HRCF banquet in an undated paper for the Rainbow History Project, "It was striking to watch as the crowd at the Human Rights Campaign dinner in 1992 [sic] cheered wildly as Geraldine Ferraro said she was running against Senator D’Amato and to realize that just six years later that same organization endorsed Senator D’Amato’s re-election."

As it turns out, the former congresswoman did not even win the Democratic primary to face D'Amato in November. She lost that election to New York attorney general Robert Abrams in a crowded field that also included pre-MSNBC Al Sharpton, New York City comptroller Elizabeth Holtzman, and U.S. Representative Robert Mrazek.

My interview was rather short (although, if you watch closely, you can see that some of it must have ended up on the cutting-room floor).  Note the references to Dick Cheney, who was then Secretary of Defense for President George H.W. Bush, and the military gay ban, which a little over two years later would become Bill Clinton's "Don't Ask, Don't Tell" policy, with repeal two decades in the future.

Ferraro also refers to "the gay rights act," which I interpret to mean ENDA, the Employment Non-Discrimination Act, another bill that has been in Congress for decades without being passed into law.

The first question I posed mentioned a book Ferraro was working on.  She notes that she had deferred finishing it while running for the Senate, but a search on Amazon.com reveals that no book by Ferraro on that topic -- tensions between the First and Sixth Amendments to the Constitution --  was ever published.

Here is a complete transcript, including introductions by Gay Fairfax anchors Beth Goodman and Dave Hughes.
Beth Goodman: Gay Fairfax correspondent Rick Sincere recently got an exclusive interview from Geraldine Ferraro at the 1991 Human Rights Campaign Fund banquet.

Dave Hughes: Miss Ferraro ran for the United States Senate in New York State. Rick asked her about her views on gay and lesbian issues.

Rick Sincere: Welcome to Gay Fairfax.

Geraldine Ferraro: Thank you.

Sincere: And welcome to the Human Rights Campaign Fund annual dinner.

One of the questions I'd like to ask you is about the book you're working on about the conflict between the First Amendment and privacy rights. Could you comment on how that relates to the question of outing and ...

Ferraro: It doesn't. It doesn't. What it is is it's a book on the tension between the first and sixth amendments. The sixth amendment is the right to a fair trial. I'm a former prosecutor and so out of my experiences over the last number of years, I've sat down and really tried to analyze how much of an impact a good deal of publicity has on a person's right to have a fair trial. But to be very honest, I'm not really writing the book anymore. I've put it aside; I'm now running for the United States Senate. That preoccupies all of my time so the book will be put on the back burner for another day. Perhaps after I'm in the Senate a couple of terms.

Sincere: Right. Give it another twelve years or so, you can get back to it. Tell us about your relationship to the gay and lesbian rights movement. You've been a long term, long-time supporter of gay rights and here you are the Human Rights Campaign Fund dinner. What do you think is top on the agenda for the gay and lesbian community?

Ferraro: Well, I think the issue of funding for AIDS research into to move along i think that's probably most immediate problem, I mean there are obviously others, the immigration laws, the gay rights act which is in the Senate and in the House, I'd like to see that moved.

But again, I think, evidently funding and finding a cure for a disease that is just destroying this nation.

Sincere: What do you think about the problem of the military's discrimination against gay men and lesbians? Do you think there's hope for movement in that direction?

Ferraro:
I sure hope so. I think Secretary Cheney has a very good opportunity to make some significant rules on the issue now especially in light of the report that just came out that indicates that gays and lesbians have no impact on security, no problem with security. Take a look at what happened during Desert Storm, the number of people who served and served valiantly who are gays and lesbians.

I know Dick Cheney. He was in my class in the Congress. I think he is an honorable man, and I would hope that he would be also a man of conscience and would take a very close look at what's happening in the military.

We're facing some very, very tough times and we need the talents of all of our people. We shouldn't discriminate because of race or gender or sexual orientation or anything else, or religion. So I look forward to being able to talk a little bit tonight about the issue, and I look forward to being able to come down in the Senate and doing something about it.

You can watch Ferraro's speech, my interview, and a musical performance by an a capella group, The Flirtations, here on Gay Fairfax:

Ferraro passed away in 2011 at the age of 75. The new Showtime movie about her is called Geraldine Ferraro: Paving the Way. It is directed by her daughter, Donna Zaccaro.