The Palmetto Insider

The blog of the South Carolina Policy Council

Archive for the ‘Limited Government’ Category

Federal Health Care Legislation: We Really Don’t Know What’s In It

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Everyone already knows the Patient Protection and Affordable Care Act, also known as Obamacare, is more than 2,000 pages long. (2,562 pages and 511,520 words when

both the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are combined, notes Michael Tanner.)

But what isn’t publicized much is that through July 31, 2010, there were already 3,833 new pages of regulations added to the Federal Register directly relating to the new law’s implementation.

That means that a bill that was signed into law on March 30, 2010, generated almost 4,000 pages of new regulations in four months. 1,000 pages a month – and counting.

Here are some examples:

1)      Medicare: Updated rules regarding Medicare payments to hospitals. This 95-page section pertains to the policies and price levels for hospitals seeking reimbursement for Medicare patients. So instead of focusing on providing high quality of care to patients, hospitals must devote significant resources to reading and understanding these new rules.

2)      Hospice care: This rule, among other things, updates payment rates and capitalization requirements for hospice and home health agencies. The rule is 106 pages long.

3)      Electronic medical records (EMR): Most doctors will likely tell you that EMR improves patient care. It cuts down on paperwork, and reduces the likelihood of errors (ever heard of a doctor with good handwriting?). But this rule adopts standards, specifications, and certification criteria for health care facilities to implement EMR in their facilities. In other words, 153 pages of new regulations and rules to facilitate a process that is supposed to reduce compliance costs and paperwork. Huh? On top of that, the rule adds new regulations and requirements for offices that already have EMR. These early adapters now need to obtain government certification in order to receive reimbursements for Medicare/Medicaid. But what if the EMR system they have is already working fine? Why force them to switch? This rule could also stifle market innovation in this area by locking in all health care facilities to the module that the government requires.

No doubt, this is just the start of literally entire libraries of rules that are going to dictate everything from how much health care providers charge to how many x-ray machines are found in each hospital.

And we wonder why lawyers love Obamacare.


Written by Geoff Pallay

November 19, 2010 at 7:47 am

Governor-elect launches website to address budget crisis

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In January, Nikki Haley will be sworn in as the new South Carolina governor. Like nearly every other governor across the nation, she is inheriting a budget crisis.

One of Haley’s first actions was to establish a task force with the goal of addressing budget challenges. (Disclaimer: South Carolina Policy Council president Ashley Landess is one of five appointees to this task force.) The task force will, “assist Haley in identifying the most pressing fiscal challenges facing the state.”

Additionally, Haley’s team launched a website – – that will solicit suggestions from taxpayers about ways to balance the budget. Individuals can submit ideas – anonymously if preferred – the task force can consider in working toward streamlining government.

This evokes images of the movie Dave, where an average Joe becomes president for a short time and in one scene, spends an afternoon with his friend trimming $650 million in fat from the federal budget, in order to save a homeless shelter. As the fake president and his friend (an accountant) look through the budget, the accountant quips:
“I’ve been over and over this stuff. It doesn’t add up. Who does these books? If I ran my office this way, I’d be out of business.”

Sums it up exactly.

Hopefully, the budget task force and website will bring that common sense approach to budgeting next year.

To that end, here are three easy fixes to get the ball rolling:

1) Cut agricultural marketing funding. The General Fund provides $562,000 for Marketing & Promotions to the Department of Agriculture. Yet the Clemson PSA receives $62 million already for these and other purposes. Let alone the fact that government does not need to be marketing farms, there is already substantial funding for these activities. And without profit motives, you get things like Palmettovore.

2) Cut state-funded tourism. Proviso 39.12 of the FY10-2011 budget funnels leftover tax dollars from the Motion Picture Incentive Wage Rebate Fund into tourism marketing. Proviso 39.1 allocates $1.375 million for tourism promotion, including money for private chambers: $105,000 for the Georgetown Chamber of Commerce; $50,000 for the Myrtle Beach Chamber of Commerce; and $20,000 for the Williamsburg Chamber of Commerce. These funds are in addition to $10.05 million for tourism advertising already allocated in the total state budget. Tourism marketers and private chambers should have to pay their own way, instead of forcing other taxpayers to subsidize their marketing and advertising.

3) Close the Statehouse Gift Shop. For some reason, each year legislators protect the Statehouse Gift Shop from budget cuts. This is absurd. Why continue to subsidize a business that keeps losing money? Stop this ongoing bailout for the gift shop and let private sector vendors fill the void. That’s how you create a stable job base. Moreover, anyone ever heard of priorities?

These ideas are just a start. And you can find plenty more on our website – for instance, here and here. But we encourage you to submit your own ideas to

Written by Geoff Pallay

November 18, 2010 at 1:26 pm

Special-Special Interest Legislation

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A good law is one that is fair and applies equally to everyone. The S.C. General Assembly passes very few good laws. As a result, lawmakers are constantly pressed to make exceptions. Business owners want targeted tax exemptions because overall tax rates are too high. Other firms want regulatory relief because compliance costs and regulatory burdens are too onerous. The number of potential exceptions are almost endless – precisely because there are so many bad laws. Here are two of the most egregious examples of special-special interest legislation taken up during the 2010 session.

H 3790 – A Mortgage Lender: This is a perfect example of how a bad law invites special-interest legislation. In 2009, the General Assembly passed legislation regulating the payday lending industry (see 2009 Best/Worst). This law carves out an exemption to the current regulatory system by allowing independent contractors (“qualified loan originators”) to pay a $50 licensing fee, instead of the $750 fee required of other lenders. According to The Nerve, the primary beneficiary of this legislation is Primerica, but Farm Bureau and one other company may have benefitted as well. The governor vetoed this legislation, but his veto was overridden by the General Assembly.

H 3075 – A Nonresidential Hunter: This bill would have granted a lifetime hunting license under very limited conditions – conditions apparently met by the son of one of Senator John Land’s friends. Governor Sanford vetoed the bill, arguing: “Our understanding is that the bizarre combination of the birthplace and property ownership requirements and the unusual application period was drafted, not because it represents a good policy, but because one senator is trying to do a favor for one of his out-of-state friends. We believe this kind of favoritism is an abuse of legislative power, and we simply cannot support this bill.” Responded Land in an interview with The Nerve: “I thought the governor would jump on that (amendment) as a libertarian. Some folks think you ought not have to have a license to hunt on your own land.” We’ll look for Land to introduce legislation doing just that in 2011.

For more examples of strange legislation introduced during 2010, see this Nerve story by Eric Ward.

Written by Jameson Taylor

October 26, 2010 at 8:40 am

More status quo: SC performs poorly in Forbes ranking

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Yesterday, we wrote about South Carolina ranking 41st in terms of state legislative competitiveness.

In what is sadly becoming “another day at the office,” South Carolina finished 34th in a Forbes magazine ranking of the best states for business and careers.

That ranking is an 9-spot plummet from last year’s 25th overall placement.

The rankings use six different metrics to create their rankings: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life.

This year, the lowest ranking category for South Carolina comes from the “Quality of Life” category, where the Palmetto State is 45th.

Meanwhile, our neighbor to the north — North Carolina — ranked 3rd overall.

Last month The Nerve reported that South Carolina paid one magazine thousands of dollars for advertisements — right before they released new rankings that showed South Carolina performed well in business climate.

Personally, I prefer rankings where the bias is not exposed through donations and advertisements.

While rankings should be taken with a grain of salt, one wonders how many times South Carolina performs poorly before the status quo changes.

Written by SC Policy Council

October 15, 2010 at 10:09 am

Want to Cut Legislative Expenses? … Shorten Session

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A new series by The Nerve finds that state legislators – who work three days a week for five months a year – earn about $32,000 annually, once salary, per diem and in-district compensation are accounted for.

To put this figure into perspective, per capita income in South Carolina was $31,799 for 2009.

As today’s story by Rick Brundrett suggests, some lawmakers feel justified in treating per diem reimbursement as part of their salary – meaning they’ll generally claim the maximum $131/day, regardless of whether they actually use it all on mileage and subsistence.

Stated Senator Larry Grooms about his high per diem expenses:

“If I could serve for free, I probably would, but it costs me to serve in the General Assembly. That’s part of the politics – you’re expected to be at a lot of functions. I put more than 40,000 miles a year on my car as a result of my service in the Senate [as chairman of the Transportation Committee], and I get reimbursed a fraction of that.”

According to data provided by The Nerve, Grooms, who represents Berkeley County, has thus far claimed almost $11,000 for mileage and subsistence for 2010.

Similarly, Rep. Joe Neal told The Nerve:

“I have not given it a whole lot of thought, but as I reflect on it, the (legislative) salary here is not what you would call exorbitant. In South Carolina, most of us have families we have to support as well. It is a sacrifice to be here.”

A database created by The Nerve staff shows that Neal, who lives 16 miles outside of Columbia, has thus far collected almost $9,000 for mileage and subsistence for 2010.

The average per diem claimed by legislators was $9,600, which along with a $10,400 salary and a $12,000 in-district expense allowance, adds up to $32,000 in income a year.

I think it should be granted that serving in the General Assembly is somewhat of a burden – a burden that has definite, and sometimes questionable, fringe benefits. The sacrifice entailed by such service is one reason so few South Carolinians can run for office.

Above all, as we point out in our new study on shortening session, very few citizens can afford to take five months a year to serve in the General Assembly. Not even your average teacher, with three summer months off, can do that. Most retirees don’t want to do it either.

But there’s an easy solution to all of this – one that would greatly reduce the burden, for lawmakers and taxpayers alike, of serving in the General Assembly.

Shorten session.

One option, proposed by Senator Mike Rose (SJR 1003), is to switch to a six-month (January to June) biennial, or every-other-year, session.

Another option we recommend is shortening session to 45 days. Currently, the average legislature in the Southeast meets for 47 actual days a year. Why does South Carolina need more (63 days) than that?

If session were capped at 45 days for 2011, the result would look something like this:

  • As required by the constitution, legislators would convene in Columbia on January 11
  • Legislators would have until April 8 to complete their duties
  • Legislators would meet 4 days a week (Tuesday to Friday)
  • As a result, session would end on March 25: one day short of the statutory limit of 45 days

Regardless of the details, the solution is clear: shorten session and reduce costs. Doing so would also reduce the burden of legislative service, making it easier for other South Carolinians to serve as well.

Then again, with incumbency rates the way they are in the S.C. General Assembly, maybe that’s the last thing lawmakers want.

Written by Jameson Taylor

October 7, 2010 at 11:27 am

Posted in Limited Government

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1099: The Trojan Horse within Obamacare

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The new federally mandated healthcare experiment continues to be the gift that keeps on giving – only we wish it would just stop rearing its ugly head in our daily lives.

Last week we reported on the regulatory problems facing Medicaid reimbursement – and the coming $1 billion increase in costs for South Carolina.

Now, comes the 1099 fiasco. Earlier this month, the Senate failed to repeal a provision of Obamacare that adds a major compliance burden to small businesses and independent business owners.

Buried within the federal health care mandate is an unnoticed provision that requires all businesses to report to the Internal Revenue Service any purchase from a vendor for goods and services amounting to $600 or more per year.

What does that mean? Well, if you work from home and purchase a computer for more than $600, prepare to send a 1099 tax form to Apple. Did you buy more than $600 worth of office products this year? Better prepare that 1099 for Staples.

This little gimmick is aimed at raising $2 billion in revenue to help pay for the new health care mandate.

But according to the National Small Business Association, the average business will have to file 85 1099s as a result of this new policy – nearly 9 times the current average of around 10 forms.

There were two amendments proposed in the Senate that would’ve changed the 1099 provision. One was an attempt to raise the threshold from $600 to $5,000 and exempt all businesses with less than 25 employees. That amendment failed, as did a separate amendment to repeal the provision entirely.

Sadly, these amendments seemed to fail because the Senators are trying to make up the $2 billion in revenue needed for the health care bill. So in each amendment, they tried to find the money from elsewhere – and those lobbyists were powerful enough to swing the vote in their favor.

Even President Obama has come out in favor of repealing this 1099 provision. This begs the question – did he even read the bill before he signed it? How come he didn’t know about this 1099 provision before he made it law in such ceremonial fashion back in March?

Remember, as Speaker Nancy Pelosi said, “But we have to pass the bill so that you can find out what is in it.”

Perhaps she was right. After all, you have to open your Christmas present before you can find out what it is. Too bad Obamacare continues to be one giant lump of coal after another.

Written by Geoff Pallay

September 21, 2010 at 8:26 am

Judicial Independence Threatened by Legislative Activism

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In South Carolina, the Senate and the House of Representatives are charged with electing justices to the Supreme Court, the Court of Appeals, the Circuit Court, and the Family Court. The only judicial appointments made by the governor are Masters-in-Equity and Magistrates, and those appointments require the advice and consent of the General Assembly. South Carolina is the only state in the nation that grants this much control over the judicial branch to its Legislature.

All candidates for the bench must be found qualified by the Judicial Merit Selection Commission, which is also controlled by legislators. The Commission may also determine that a judge is no longer qualified to serve when his or her term expires.

The Judicial Merit Selection Commission has 10 members. The Speaker of the House appoints five: three must be members of the General Assembly; two must be members of the general public. (Currently, House Speaker Bobby Harrell’s brother serves on the Commission.)

The chairman of the Senate Judiciary Committee appoints three members; and the President Pro Tempore of the Senate appoints two. Of these appointments, three must be serving members of the General Assembly, and two must be selected from the general public. Senate President Pro Tempore Glenn McConnell actually nominated himself to serve on the Commission.

Judicial Merit Selection Commission Members

  • Senator Glenn F. McConnell 
  • Senator John M. “Jake” Knotts, Jr.    
  • Senator Floyd Nicholson       
  • Representative F.G. Delleney, Jr.
  • Representative Alan D. Clemmons
  • Representative David J. Mack, III
  • Professor Emeritus John P. Freeman
  • Amy Johnson McLester
  • H. Donald Sellers, Esq.
  • John Davis Harrell, Esq.

The American Judicature Society, an organization dedicated to maintaining public trust and confidence in the court system through an independent judiciary, provides a detailed description of the court system in South Carolina. A number of states have adopted a merit review process to select judges, but the American Judicature Society does not include South Carolina’s Judicial Merit Selection Commission among them because it is controlled by legislators.

College of Charleston School of Law professor John L. S. Simpkins likewise expressed concerns about the Legislature’s influence over the judicial branch in his examination of the constitutionality of roll call voting legislation:

“The General Assembly enjoys a broad scope of authority in exercising its constitutional powers. This grant of authority has been characterized by an extreme degree of judicial deference to the legislative branch in the pursuit of legislative prerogatives.”

Much of that influence is concentrated within the Judicial Merit Selection Commission itself. A 2009 report in The State about a decision by the Commission to remove a family court judge raised questions about the Commission’s ability to influence controversial cases:

“If somebody doesn’t stop it, it’s going to repeat itself in the next year and the next year and the next year,” (Clary and Greenwood lawyer C. Rauch) Wise said. “And it’s going to get worse to the point where a judge on any semi-controversial case will think, ‘What will the Legislature think if I rule this way?’”

In March, the state Supreme Court upheld the Commission’s decision to remove the judge from the bench, a decision described by the American Bar Association Journal as “a tragic day for the independence of the judiciary.”

It is precisely for these reasons that those who interpret the laws—the judicial branch—should not be influenced by those who write the laws—the Legislature. An essential part of reforming government in South Carolina must be to end the General Assembly’s control over our courts.

To learn more about how legislative reform in South Carolina, see our new report.

Written by Robert Appel

September 9, 2010 at 3:00 am