(00:00:03) The Minnesota Horizons turning point to the 90s conference attempted to give lawmakers future-oriented perspectives in policy areas. They will face this legislative session but one moderator may have described the conference better when she called it a Cram Course in the areas of Economics Human Services and the taxation financing system. This was the fourth Minnesota Horizons conference since 1975 and its speakers included yawns, maybe on the need for Human Services, like general assistance and jobs training. Dr. Michael Resnick on public health Trends and Stanley colander from the accounting firm of touche Ross and Company on the impact of the federal budget and the deficit we will hear from those speakers later in this program, but our program will begin with the conference began on Tuesday by trying to put Minnesota's economic situation in perspective discussion on Tuesday centered on the state's so-called dual economy. Dr. Philip raw professor emeritus of Agriculture and applied economics at University of Minnesota address this idea that urban and rural Minnesota faced different and somewhat independent economic futures. (00:01:13) I welcome the opportunity to be here and I'm very grateful for having had the opportunity to participate in the first of these Horizon sessions. I believe in 1975. So I feel a little bit at home also have occasion to think back over the time over the intervening time and reflect on what's happened since this series of seminars for the legislature was introduced. the topic I've been asked to talk on is a reflection of one of the most emphatic developments over that intervening 11-year period and that has to do with disparities in income in rates of growth in well-being. And it's dramatized in the last four years by a decline in the relative status of the rural sector of the state and a considerable buoyancy and stability in the urban sector and especially in the urban sector centered on the Twin City metropolitan area. This has led to a belief in the emergence of a dual economy. One stagnant one buoyant. The boy and sector is generally thought to Center on the Twin Cities or on a corridor running from Rochester up through the Twin Cities to st. Cloud. The stagnant sector is identified with the natural resource using portions of the economy mining in the Northeast forestry in the north and agriculture throughout the rest of the state. I'm going to suggest that this is not wrong, but it's too simple to Be an Effective base for policy. Deer are distressed sectors of the economy in the Twin City area. We have them right here in Saint Paul. There are buoyant sectors in some of the rural areas and they're even agricultural sectors that are in reasonably good condition. Each year, we make a survey in the University based on records kept by Farmers that belong to farm management record-keeping associations. Those data are being worked up right now. We'll have a report you'll expect to report in a few weeks. I have no doubt that when it comes out it's going to show the widest dispersion. We have ever reported in farm incomes. In other words, the low 20 percent of those Farms that keep record are going to have incomes so much lower in relation to the high 20% that we will have new orders of magnitude in analyzing the central Tendencies or the mean or the average. What it means is averages are always misleading averages this year or currently in agriculture. And especially with respect to farm. Income are are going to be dangerously misleading. if you didn't buy expensive Machinery in the 1970s, and if you didn't buy land in the 1970s and there are farmers who didn't you are having the best year of your life this year. We are going to have farmers who will have the highest income they had ever reported in 1986. now not many people could Escape debt not many people could postpone purchases that long but on the other hand, it does throw up a realization that the Dual nature of the economy that people are worried about or concerned with is not properly described as an urban rural dichotomy or a split between the metro and the non metro area. It's occurring within each of the major sectors in most prominently in agriculture. Do we need to ask I think why this major shift in the distribution of income within major agricultural sectors? And I'm going to propose some answers to that question. Which I think deserve the attention of you in the legislature and those of us in the educational establishment. The first I believe the most important is that the nature of work is changing a job ain't what it used to be. We have a growing segment of Agriculture comprised comprised of part-time Farms. In the United States as a whole and in Minnesota in the last since 1969, the most rapidly growing sector in agriculture has been Farms of under 50 acres. The only other sector that expanded were Farms of over 500 Acres. So you've got a growth pole system with growth occurring at either end of the distribution and stagnation and actual hardship in the center. Some people have called this the souffle economy hard crust on the bottom hard crust on top and Squishy in between Now this nature of work is not only associated with part-time farming is associated with part-time jobs in all sectors. We have far more people now than ever before working. What might be considered short shifts. This is one of the legacies. I happen to think a desirable one of the legacies of having more women in the labor force. It has made it possible for many women to enter the labor force and consequently, I expect we will see more Flex time more part-time or employment that is telescoped in time. So you were two three days intensively and take four five off. And in other ways. We're going to have shifts in the composition of the jobs that confound the statisticians. It's going to render the statistics on in come on. Number of people employed on the scale of the job market very suspect so watch it jobs are not the same component are not the same commodity that were being reported 10 and 20 years ago Farms are not the same animal that they were enumerated in the census as recently as two decades ago. Now a third dimension of that not only more part-time far more part-time jobs. We're having mid-career occupational shifts. We're going to have a lot more people changing jobs in their lifestyle in their lifetimes. In other words. We've got a geographic or you might say a horizontal shift in the way. The day is split up into a work day and the concept of what you do during the workday and we've had a lifetime shift over the career years of an individual so you no longer assume that the person going to wind up his productive years doing the same thing. He was doing when he started out a lot more Mobility over time a lot more Mobility over space. That's associated with another basic variable that's shifting under our feet. And that is the nature of the link between the place of work and your place of residence is being broken. It used to be necessary to bring people together to have a labor force to run a factory. It's increasingly unnecessary to have highly congested labor force in order to have a factory based economy. Many of the things that people did in the past because they could do them conveniently in cities can now be done as efficiently and with more grace and greater amenity outside the cities and so we find many of the reasons for the existence of City's crumbling under our feet. We don't need cities as large as we haven't cities in that sense represent a cultural and a technological lag. That's being related to a foster by augmented by an even more basic shift. That's the nature as a change in the nature of the family. Not only our Farms not what they once were but the family ain't what it once was. So we're having family structural changes. With a feedback relationship to the kind of change that are occurring in small businesses in proprietary businesses of all kinds and especially into proprietary businesses in agriculture. Another variable in this rapidly shifting seen is that the nature of production is changing Jim discovered this in his discussion of the nature of imports and exports in the shift from Goods to services. What production involves? Has shifted so dramatically that it's having a major effect is I'm going to explain in just a minute or what we think is valuable and what we think is scarce. The production today doesn't mean the manipulation of a raw material supply is not raw material oriented. The productive activity that's most rewarding in this economy is largely divorced from the supply of raw materials. It shifted instead to a focus on the manipulation of materials. Now that has relevance to the agricultural sector of Minnesota has relevance to the mining sector in Minnesota has relevance to the Timber and the Pulp and Paper sector in Minnesota. We have a natural resource based economy. We had Fortunately, we are among the states are in the Forefront of accommodating a shift from an Economy based on natural resource extraction exploitation to one based on the manipulation and the further enhancement of Natural Resources. Natural resources are necessary, but they're no longer the critical variable. And in that process what is production is changing? Most of us I think have a model of production that is mechanistic. We think in mechanical terms. This is especially prevalent in this generation because we have divorced many of our children from biological processes. Many children do not personally take part in birth and death anymore. It's not a part of their daily experience and the biological growth process is foreign to an individual brought up to believe in instantaneous responses and in mechanical models now, that's unfortunate because our production processes are shifting from ones properly symbolized by the tractor that truck the mechanic and the motor 21 properly symbolized by the chemical reaction by the nuclear explosion. production is Shifting very rapidly we've got Examples of that Galore in agriculture and they are especially significant in terms of their structural consequences for rural areas. And that's going to be the theme of the rest of my comments. These changes in the nature of what is the family? What is the job? What is the nature of production are fundamental to understanding of what's happening to us? I'd like to give some statistics to illustrate the significance of these remarks in agriculture. That crop land acreage harvested in the United States in the 1980s averages out to be just about identical with the crop land acreage harvested in the United States before the first World War. You know those have been virtually no increase in total crop land acreage in that period corn production has gone up something are between four and five fold wheat production has gone up about four fold and we found enough acreage to produce 2 billion bushels of soybeans, which was a crop that was not even recorded in the statistics in 1910 to 14. So we've added a whole new major crop and increased corn and wheat production by multiples of four or five times with no change in the crop land acreage base what more dramatic evidence could eyesight to indicate that the land base is no longer determined of the nature of the production expectation. It's the what you do and add to and manipulate out of the land base that significant Directions very clear, I think. The critical variable today is the skill the technology the information and the organization with which you can manipulate and manage resources, not the physical measure of the quantity of the resource itself. Now that's pretty much background. For pointing out the nature of the expectations the nature of the perceptions that have contributed to the financial crisis. We find ourselves the in at the present time in raw material extractive exploitive and manipulative Industries like Mining and agriculture. People believe in the fixity of the supply of land. They believed in the inevitability of an expansion in foreign markets for food exports. And they had no history in this country personal experience with the evils of inflation. And so we jumped into a land boom in the 1970s that was unlike any other land boom. We had had in our previous history. What we forgot was that other countries are developing their own versions of these technological Revolutions in production, and especially in agriculture. They too are finding ways to divorce themselves from the constraints imposed by a fixed supply of land. They too have their own versions of the Green Revolution and the technological transformation that we would like to think we played a role in pioneering about that is no longer our Monopoly possession and consequently we have what people have been calling recently the glut economy or what the headline of leading article in the Foreign Affairs last year. characterized as a world Awash in Grain In other words in the modern world, there are substitutes for landing. We've been experiencing some very painful lessons of the truth of that observation in Minnesota. I'd like to remind you of some of the statistics from nineteen seventy seventy to eighty one our land values in this state increased 45 fold fourfold nationally and fivefold in Minnesota. You've said since 1981 in current dollars these values in Minnesota as a whole for the state generally have dropped about 60% for the most productive lands in the Southern and southwestern part of the state over two-thirds of the values disappeared from the peak of 1981. If you take out the effects of inflation measured in constant dollars land values Minnesota or back to the levels of the mid-1950s. This decline has been severe in all parts of the state, but it's not been uniform. It's been most severe in the South Central and Southeastern counties. It's an interesting observation why Southeastern counties? And in been least serious in the corridor extending Northwest of the Twin Cities up Beyond and north of st. Cloud up toward Little Falls food. north of there and in the Red River Valley Now they have fallen land prices have collapsed in those areas. But we have to measure relative degrees of collapse. What is forty to fifty percent fall in the valley or in this touristic and amenity value Corridor north of st. Cloud turns out to be a 65 to 70 percent fall in the agricultural counties of the southern part of the state. We wiped out equity and agriculture. In other words on a scale that's unprecedented in our history. We had no institutions to accommodate a wipe out of that magnitude and this is the back explanation for bank failures for small business failures for main streets of many of our small towns consisting of boarded-up storefronts. And I think it's appropriate just take a minute to ask ourselves. Why did this happen? I've got several suggested answers. We believed in a fixed supply of land. I've already stressed that we had a lack of understanding of the dangers of inflation. We had never experienced inflation in this country on a scale that every other leading industrial country in the world had experience in the late 20th century and in the mid 20th century. In other words, we are still using a dollar that has not been converted since the country was formed 200 years ago. No other industrial country is using a currency that has been preserved in circulation without major transformation over a comparable time period and certainly not Japan and Germany and France and Italy and some of the other major countries in actors on the international scene today. So we had no history of the experience of inflation and like a child. It's never put his hand on a hot stove. We behaved carelessly. This special careless in the heedless use of credit. We were exposed to the dangers of the credit card economy without the sobering experience of having had our currency collapse under our feet in our living in the lifetime of people still living and as a result. We embraced the credit card mentality. to enthusiastically Consumer Debt as you all know, is it all time high? The credit card mentality is a characteristic of our culture and it's especially damaging to proprietary businesses. If you're a worker for a big firm then being exhorted to use your credit and your personal credit card charge accounts doesn't necessarily collapse the capital raising capacity of the firm you work for but if you are the proprietor of a family-owned business and you're being exhorted with all the skills that Madison Avenue can command to overextend yourself in personal credit. It does constrain the capital farming in the capital managing capacities of your family owned business. So the credit card economy hits family Enterprises especially heart. This is one reason why the collapse in the 1980s was so severe in the solidly family-owned sector of American agriculture. It has another root that is intriguing and that has to do with the unfortunate juxtaposition of Trends in the financial sector of the economy and Trends in the demographic structure of the population. We just had this experience recently of the sun and the moon coming in Confluence in such a way that they caused exceptionally high tides in Ocean Front Regents something akin to that happened in the 1970s. The baby boom generation reached its peak in terms of young people achieving their majority that is reaching 21 years of age in 1977. This was almost spot-on in the middle of the exuberant boom. We were having in land prices so that just at the time when land prices had already risen substantially and still had a greater distance to go Midway in the boom here was the biggest population of young people reaching age 21 we'd ever had in our history. We will ever have in our lifetimes. We will not again have over four quarter million young people reaching age 21 in one year which we had in 1977. As a result everything that was wrapped up in family tradition and family pride in desire the family to have the son take over the farm. Occurred with a special force just at the time when appreciated land values had expanded the credit base of the family, especially if they had acquired the land in the lower you priced years of the 50s of the 30s of the earlier period or by inheritance and consequently those people whose credit-based had been most generously expanded by Al and boom were most vulnerable to the desire to mortgage that credit base in order to help the young people get started in farming and that's why we have a distressing proper fraction of the people in agriculture day who were in serious economic difficulties comprising some of our oldest most established. most dedicated family type Farms They were the ones that were most vulnerable to the credit card economy into the demographic wave. I'd like to ask now. Whether or not there are still forces in motion in the economy that are likely to extend this trend. I'll I'll try to recall the try to observe the injunction that the London economists recently published in its end of year session, which they said never forecast, especially of the future. So I'm not going to forecast but I'm going to list for you some of the things I think I should consider before deciding whether or not land prices bottomed out whether we've begun an upturn or whether they're still some adjustment remaining to be achieved. I'll just read these quickly because I don't have time to elaborate them but they deserve elaboration one big unknown in this state is what will happen if we fail to reduce the milk Surplus. We've got Machinery in place to try to reduce the milk price to achieve a better balance. It isn't working very well the dairy herd by Aus I happen to think it was a mistake and it isn't working very well. We will probably increase or maintain milk supply in spite of having reduced the dairy herd. Remember we had 24 to 25 million dairy cows as recently as the mid-1950s and were producing a virtually the same amount of milk today with about 10 at point three million dairy cows. We cut the dairy herd to just a little over 40% of its mid-1950s eyes without cutting milk production. So it'd take a lot of dairy herd by out to have an impact on a system that is exhibited that kind of capacity to substitute output increases for number of reductions. So failure to resolve the milk Surplus could lead to some further distress in the dairy sectors and therefore Land values in the area is dependent upon daring by and large the land values in the dairy sectors of the state were not those most severely affected in the collapse of values after 1981 that was principally a phenomenon of the grain producing sectors. So there's some more potential softness in the dairy areas. The deficiency payments this year for wheat and feed grains have been so large. So well-publicized the cost of the farm program is so shocking. I think we can anticipate there's going to be some reaction and it's quite probable that we will not have deficiency payments and farm income supplements from federal government policies in 1988 and 1989 on the magnitude. We had in 1986. So 1986 is going to be a bad year for projecting future support price activities of the federal government. Therefore if you're buying land you would want to take that into consideration. Someday somebody's going to discover Cuba. If we can discover China if Richard Nixon can discover China it's not inconceivable that we might elect a president someday that could discover. And when that happens we're going to have a Readjustment in the sugar program. If it happens that at the same time, we ReDiscover stable government in the Philippines, and we want to restore some of our former import of sugar from the Philippines as a gesture of support for an Administration that we want to help. The president support base for land values in the Red River Valley could be shaky. So that's unknown. I'm not sure what's going to happen but have to take that into to my equation here. We can't go on borrowing from abroad to cover our federal government deficits forever that has to stop and Jim Houck Illustrated the significance of these increases in Imports and decreases in exports which we balance by getting other people to buy our government debt at some point. It's like a chain letter they run out of confidence in your ability to service your debt and somebody Spooks it takes Panic Flight and the house of cards come tumbling down. This is a very real threat the Japanese are patient people, but they hold a distressingly large fraction of our public debt. It was Asian and Japanese has Japanese in Hong Kong Bankers pulling out their money overnight. It brought down Continental, Illinois. It could happen again, so we could have a rise in interest rates in order to hold foreigners. Confident to lead them to continue to buy our evidences of public debt. We couldn't buy we couldn't get them to buy it in any other way will raise the rate of interest and make it attractive to them will make them an offer. They can't refuse so I can't believe that the present level of interest rates, which I expect may go down again in a few months. We'll be a stable level interest rates over a longer period of time which I would want to take into consideration of his are buying a piece of land. So I would have to reckon with the prospect that interest rates may go up which of course would mean land prices would have to yield a higher and higher rate of return in order to be an attractive by Two things that have lagged very seriously in this last decade have been taxes and rents. Rental rates were slow to come down taxes were slow to go up property taxes today are a very severe burden in areas whose land values have collapsed. This is the other side of the coin of the fact that throughout the 1970s property taxes were ridiculously low in relative in relation to land values. We had the lowest level of property taxes per hundred dollars of value in land in the late 1970s that we have had since we began to collect statistics on taxes and on land values, which is about to turn of the century. Now that's dramatically reversed the fall in land values and the lag in the fall of the property tax levies has meant that taxes as a fraction of land values have shot up. There's especially important concentration of them in the south central part of the state an area centered around Rochester, which is part of the reason For that sharp fall in land values in the Southeastern counties. There's another concentration of rather High land values in the Red River Valley. These two concentrations have different routes in the Rochester area. It's largely a reflection of the high level of public services and the willingness to spend money and enact Bond issues that has characterized the area in the Red River Valley. It's largely a reflection of the fact that there isn't anything else in the tax base except agricultural land. And so if you're going to raise money for minimum levels of services, you have to put the burden on agriculture. Well that lagged effective property tax rates still has some distance to go in working its way out the other side of the coin that rental rates which are fixed in advance pretty much like the assessment of property taxes two or three years ahead were slow to fall. So that rental rates came down much more. slowly then lab values and they have a weight of to go yes a distance to fall so If I throw that in the equation, I could find some other reasons why we might not have seen the bottom in the level of land values. Then I observe the fact that he could marry the Credit Agencies had acquired land through repossession had held off held it off the market. That was a very commendable action. They did not don't land on the market in panic fashion Banks insurance companies and above all the Farm Credit system. Now that's shifting. Now if the credit agencies that have acquired a lot of land through foreclosure and repossession suddenly decide to dump it on the market and clean up their balance sheets. We could have a sudden influx on the supply side of the land market that exceeded the demand size capacity to absorb it and that's a possibility because one of these days the Credit Agencies will have to clean up their balance sheets. So that Prospect is still ahead of us and then more generally we could just have a slide into a general depression in the economy as a whole. So I don't know what's going to happen to land values. But I caution you about any exuberant belief that we're going to have a bottoming out and a Resurgence of the inflation on the scale of the 1970s. I have said before I will repeat they will surely bottom out but no bounce. So caution would be indicated in credit activities in tax levy plans and in purchase expectations affecting agricultural land. What can the legislature do about this? I suppose as we some of us discussed last year when I met with you. One of the most important things A legislature can do is not do anything. Because the greatest temptation is to do something when you're not equipped to do it properly or to do it without having thought through the consequences and inaction is extremely damaging to most people have to get reelected periodically. But in action can be a conscious policy and I see I commend it to you. I'd especially commend to you actions that have the unintended effect of hurting low income and rural areas and small scale businesses and their lots of opportunities to take those actions for example, and these are sensitive areas. You will recognize some sacred cows. The minimum wage is in effect a device to protect the level of income of those who have jobs from encroachment by underbidding from those who don't have jobs. And it can serve a useful purpose. It has been a desirable social policy. It can also be abused. It's also a tax on the rural areas to benefit the urban areas because you can harmless never get a minimum wage approved at a level that would be low in the urban areas. And therefore it generally is at a level that is a little on the high side in the parts of the community or parts of the country where living costs are really lower. You can avoid activities that place unrealistic burdens on small scale business, especially proprietary businesses of all kinds but Farms included and we have adopted a lot of policies recently that have paperwork requirements and Reporting requirements and licensing requirements and conforming obligations that in effect amount a to a anti small business policy. It's difficult to avoid that but it's probably one of the most difficult tasks you face. And finally we have the possibility of Shifting the attention of a legislature from its head traditional role, which was to promote good roads to promote business activity in a conventional sense to its new role, which I see as promoting the late 20th century equivalent of good roads, which is better Communications in an electronic sense instead of a mechanical sense to enable small communities rural areas to live up to the potential of the information age and the service economy. You have the opportunity to do that. You also have the opportunity to do a lot of damage in preventing that from occurring the slogan of the 1920s was get the farmer out of the mud and good road policies followed the slogan for the 1990s should be to improve Communications. So that small communities do not suffer the same kind of denial of Communication Service that we see already in process in the loss of Air transport as a result of deregulation of the airlines that could be repeated with more devastating consequences with respect to the communication rules. That would permit small communities to take full advantage of the computer age that I think is the biggest challenge facing you. Thank you very much. (00:40:22) Dr. Philip Rob speaking to lawmakers at the Minnesota Horizons conference earlier this week at the st. Paul Technical vocational Institute. Dr. Rob is professor emeritus of Agriculture and applied economics at the University of Minnesota. And his talk was entitled does the Dual economy really characterize Minnesota later in this program. We will hear about the impact of the federal budget and the deficit from Stanley colander Director of National policy issues and federal budget policy for Touché Ross and Company one of the nation's larger accounting firms, but day two of this conference for lawmakers focused on human services and human needs and it included a discussion of Public Health Trends, which we will get to by. Dr. Michael Resnick who is also with the University of Minnesota it began. However with yawns maybe yawns maybe is perhaps best known as the co-host of the popular weekly public affairs program Almanac, but she is also president of the Spring Hill Center and she's former director of Hennepin County Department of Economic assistance. She also has served as a budget and program analyst for the criminal justice system may be spoke to the conference on those in need Human Services support system. Good morning, everyone. As Esther wattenberg noted. It was 50 years ago today that the Social Security Act was ushered in and that act redefined the role of governments in our lives. The Social Security Act created a precedent and it established a principle. It said that there are certain things that people should not have to fear nor beg for social security has become far far more ambitious than was ever Envision back in 1935. Most people think of Social Security today as an old-age pension program and frankly with 36 million recipients. It is certainly that but it is far far more. It is Medicare. It is Medicaid. It is unemployment compensation workers comp federal employee and Veterans pensions. It is assistance to the Blind and disabled and it is afdc Aid to families with dependent children. Today there are over 180. Federal payment programs transfer payment programs to individuals or service programs to individuals in this country. Almost half of all federal expenditures are social welfare program expenditures and just under half let me underscore that just under half of All American households All American households receive one or more of these benefits. It must be understood that social welfare programs. Do not serve just the poor though. That is often what we wish or choose to believe Social Security Medicare and pensions for the veterans account for more than four and a half times the expenditures that we provide to afdc recipients or that we allocate for Child Nutrition programs. There are 36 million people on Social Security. There are 30 million people in this country receiving Medicare while we have and million afdc recipients And yet when we read of welfare reform We are speaking really only of those 10 million afdc (00:44:20) recipients (00:44:22) in Minnesota as was pointed out. We are spending annually over 2 billion dollars a year in federal state and local taxes to support a human services system. Now the greatest expand ature in that system has been and remains to this day Medicaid and the greatest outlay of the Medicaid dollar which is really the greatest outlay of our welfare tax dollar. Is to support the institutionalization of our elderly in nursing homes. but Our Minnesota Human Services System serves hundreds and thousands of minnesotans. Annually, who are they they are young. They're old. They're all Races. They are all Sexes and again, they are not all poor by state law. If I have a child who is mentally retarded regardless of my individual or family income? The state shall provide me with assistance. Yet again, when we speak of welfare reform. We really speak only of the poor welfare recipients the general assistant recipient the afdc recipient and frankly because it is the latter that is receiving so much attention these days let me concentrate on that population for several moments who are the afdc recipients in the state of Minnesota. This may surprise you despite the fact that Minnesota is reputation as being terribly Scandinavian homogeneous and white all of which is somewhat true. It may surprise you to learn that the statistics was respect to the afdc recipient in Minnesota parallel mightily the statistics with respect to the afdc recipient across this country. Contrary to public opinion. They are not homogeneous. In fact, ladies and gentlemen, the afdc population in the state of Minnesota is far far more diverse than we are collectively in this room today. Over two-thirds of the afdc recipients are children somehow we tend to forget that. They are predominantly white though, we cannot escape the fact that minorities and principally blacks are disproportionately represented on that welfare role and frankly on others as well. Half of them have come to a FTC to a life due to a life crisis divorce largely is the reason it can also be death of the primary family earner. And slightly more than half around 56% will receive afdc for proximately two years or less. The average number of children they bring with them is not even quite to its thinks about 1.7. I'll round that up to to their ages are around six. Over half of our afdc recipients in the state of Minnesota do have a high school diploma several of them have achieved entire college education many of them certainly have worked toward have achieved completion toward a college education. I wish for some reasons that only a few of you will truly understand to underscore the next point the overwhelming majority of all of our welfare recipients are homegrown. Most of the women on afdc have been out of the labor force for several years or they were in a low-paying job which now with the absence of additional Income Support. Perhaps due to a divorce has left them unable to provide adequately for themselves and particularly for their children. Now in Minnesota, the FTC grant for Mom was two kids as $532 that mother and two kids will probably be eligible for food stamps and will also be covered by Medicaid in the event that they need a health care services. 532 dollars in the metropolitan area over half of that Grant will be expended for shelter rent the overwhelming majority of welfare recipients. Do not live in subsidized housing as a matter of fact within the metropolitan area. There's often a two to three-year waiting list to access subsidized housing. The majority of women wish to work or seek the training and education that will allow them to provide for themselves and for their children, however, since 1981 federal law and regulations generally preclude a woman from accepting a job, which would pay more than roughly four dollars and forty cents an hour without jeopardizing not only her entire afdc Grant but some of the attendant necessary benefits such as Child Care Medical Care Transportation assistance. I guess I can note which would be no surprise to you that few jobs. If any which pay four dollars an hour include benefit packages to which all of us in this room. I suspect have long ago become accustomed to particularly when it comes to health care insurance. And yet I'm going to call all of these facts. I've just shared with you positive X positive X if for no other reason than they should debunk, I hope some of the myths and stereotypes we carry with us about a welfare recipient namely that they are long termers. They are lazy. They are shiftless unreliable. They are dependent people clearly for many children and their mothers afdc has been and remains an essential and relatively effective short-term program. And it has worked in terms of at least providing a minimal safety net. But now I must turn to what I call the negative facts. When women in their children do leave a FTC they do not enter our middle-class mainstream. No, as a matter of fact most will remain poor for several years teetering on and off the brink of falling back under welfare. And most will go without minimal Health Care not just for themselves, but also for their children. While it is true that some of the women who leave afdc are able to do so because they found work. 40% will leave as a result of having remarried. Why do I call that? A- I am not opposed to the institution of marriage. But one of the things we have learned as we have both worked with and studied this population is that we are indeed dealing with women who are dependent who have been dependent. In fact many of them arrived on afdc because they were so dependent on the income of another. If we have not successfully trained or educated them. Before they leave afdc for whatever reason. I'm sorry, but the statistics with respect to divorce are such that that is not a particularly reliable Institution. And for many of these women they are but transferring their dependents from a welfare system onto another system who's reliable lat reliability is in fact, even verifiable many of the women who returned returned as a result of a second failed marriage. What about half of all the FTC recipients who spells are longer much longer than two years over 30% of our afdc recipients will be on afdc 4227 years. Another 7 to 10% are going to be on afdc for more than seven years that seven is 10% of our afdc population accounts for over half of all of our afdc expenditures over half. Who are these women most of them came to afdc? As a very young woman indeed many of them came as a minor with a child. They do not have a high school diploma. And frankly their chance of living a life in poverty. If not always on welfare is nearly guaranteed. the welfare system the school system and even the private enterprise system have been unprepared at times woefully ill-equipped and frankly at times even unwilling to assist effectively these recipients And that's dependence on welfare for some is indeed a certainty what's wrong with the current system? Well, the welfare system is mired down in unbelievable bureaucratic regulations. There is neither time and often neither. Is there the authority to really work with recipients in attaining self-sufficiency? The obscene weight and that is one of my favorite words to use to describe it because it's nothing less than obscene. The obscene weight of these rules and regulations is not brought about by bureaucrats who want to save their jobs. No, it's brought about largely by our concern in this society that we have to distinguish between the deserving poor and the undeserving poor. There's another way to translate that. We need to distinguish between those who are truly needy and those who are out to abuse and defraud us. I think it is impossible to distinguish among the truly needy and the truly ER needy and the truly esta needy. And I will tell you that is with respect to Fraud and Abuse particular in the state of Minnesota. And this has been historically true and it will remain true Fraud and Abuse is minimal. But the system the welfare system is designed to maintain people. We are so good at getting those checks out on time and we are so good at canceling a case. If certain forms aren't returned within a specified period of time that most of the people again in this room would never meet you'd never meet the deadlines as a matter of fact, and I'm really not trying to be too facetious. You would be lousy welfare recipients. You would be canceled often. You wouldn't tolerate you would not tolerate what it is. We asked the people to do to stay on welfare. And remember we're dealing with a population that doesn't have the advantages that we have had in terms of Education in terms of support systems. The school systems are ill-prepared to provide sufficient programs which include daycare for teenage moms. We have some exciting ones in this state, but they're few I can think I can count them on one hand. How do we ensure that those teenage moms stay in school? And as a society, we clearly have not yet reached any consensus on the issues of sex education in the distribution of contraceptives. And that is something which frankly we're going to have to try and Achieve or find some other miraculous way to stop producing babies among babies. But perhaps most importantly at all of all in a state such as Minnesota which so Prides itself on the quality of its public education system. Why why do we still allow children at the age of 16 to legally drop out of school? We do. I know the answers Ian be realistic. There are certain children to Public Schools. Simply can no longer cope with I accept that and Ian remember. Minnesota has the highest graduation rate of any state in the Union. And that's true. in Hennepin County among 14,000 afdc recipients 40 percent do not have a high school diploma or GED. That's got to tell us something. For several decades there was a broad consensus in this country, which did favor increase social spending and not just for moral grounds. There was a belief that equality improved our economic efficiency, if we could eliminate poverty that meant we had more purchasing power we could keep factories humming indeed social justice would reduce social conflict in short through income redistribution with some limits. We would have not only adjust and decent social policy. But that meant sensible economics today that consensus is broken down. The economy weakened in the in the 70s tax revenue growth declined yet the cost of social programs Rose significantly. We are now debating at all levels the extent to which government can and should ensure the welfare of its people. What are some of the values underlying this debate and where do they Clash is it any surprise to any of us that basically we Americans distrust welfare. It really shouldn't be public assistance when you think about it threatens. What is being us a core of our Doctrine I guess of capitalism. And that is the incentive to work is born of the desire to have and to have more we subsidize industry agriculture. We subsidize other nations and we do so because we believe it is in our national interest. But we have been less able to view the subsidizing of people is serving our national interest. Let's face it. We do view people welfare as a negative. The Clash of values our security inequality on the one hand and individual liberty Merit and self-determination on the other and The Clash becomes ever greater as people feel less secure about their own future and their ability to provide for their children Particularly as they recognize that they may not succeed as far in as well as the generation did before them. So there we have. What are social obligations? How do we organize to achieve them? What is the proper balance between what government does and what the individual is responsible for? This is being debated right here and Across the Nation with differing perspectives. Now, there are those who will argue that what we need to do to solve this problem is to create a social welfare system that provides adequate benefits to everybody and we'll kind of worried about how to pay for that later on. I think that that may be equated with a little bit too much socialism for even liberal liberals within our society. There are those who are going to argue that government ought to do more for the truly needy and less for those capable of taking care of themselves. Now, unfortunately that thesis is often seen as a choice between the deserving poor and the cheating poor. I want to bring you all the way back to the beginning of my talk because that's not what that issue is all about know if we are going to distinguish between the truly needy and those who we think are more capable of taking care of themselves than ladies and gentlemen, we are talking about a debate between the poor and the middle and upper-income classes. Do we do away with Medicare? Do we not allow Social Security payments to go to everyone? Do we stop subsidizing industry? That's what that issue is all about. There are also those who say that the welfare state is inherently inefficient. It undermines personal initiative and freedoms and our very sense of community. The federal government should scale down its social assistance across the board. Now underlying this perspective is the rationale that government's responsibility should be to ensure a whole array of opportunities, but not attempt to achieve equal outcomes. Unfortunately that notion presumes that everybody still has equal chances to achieve those outcomes that there are no obstacles. That's not been the case in it's still not the case today for minorities in particular but also for women. So what are the solutions? What are the answers? I do not defend our present system of welfare. I think like you. However, I do defend Our obligation to serve one another and to assist one another. There is no single nor simple solution. The current welfare population is terribly diverse. The current welfare system is enormously complex, but more to the point for those of you present here today largely federally controlled and thus your ability as a state legislature to fundamentally change. It is limited. The welfare system to a large extent is a reflection of the health of our economy. And if our economy is not healthy our welfare system shall be. But that doesn't mean we can't make some changes and that doesn't mean that you as a state legislature cannot achieve some very real reforms. If we look at afdc across the board, we can restructure that program into being one that is that is geared towards self-sufficiency. In which we are trying to assist people through specific time limits and individual case management techniques. work jobs sufficient Education and Training that we no longer just maintain All applicants who approached any economic assistance welfare department in this in this state should be provided with information and ready referrals to Services which may turn out to be better Alternatives than being signed up on afdc or even general assistance for that matter. We don't do it now. we should we could make Grant payments retrospectively for those people who are participating in the work and training program so that yes, there's some accountability. We really don't have anything like that now we should We can increase the standard of need in this state without adjusting Grant levels. So that women can look at earning more than four dollars and forty cents an hour and can secure at least part-time work. If not full time work that will allow them to not only gain additional income but gain better work skills that will help them become self-sufficient. We can increase perhaps not to meet all needs the availability of childcare Transportation Support Services. We can maintain Medical Care coverage for persons who are off afdc, but have at least found a job. Is some of this going to cost money, of course. But virtually everything I've outlined now is not going to bankrupt the state. Not even when we're looking at at Revenue projections that may or may not be good. We can require that. They shall complete a high school degree. I don't know why we ought to throw that on the back of the welfare system though. I still would like to come back to why we allow children to legally quit school at 16, but we can require that and we should we can go after more effective techniques with respect to collecting child support, but I do throw in a word of caution here. Please keep in mind that when half of your afdc population came largely is Young and often unwed mothers. That also usually meant that the fathers were very young as well. It's awfully hard to collect child support from a 16 or 17 year old dad who doesn't have a high school diploma who's in no training program and probably is fully unemployed. More expensive things that we can do. Weekend create a case management system Governors welfare task force has called for that. So have a variety of other reports. We can indeed provide more complete Fuller support and counseling services to recipients. Can we afford to do that for every afdc recipient in this state? Absolutely not. Does every afdc recipient needed absolutely, not both the state Governors welfare commission and other reports have said Target your audiences. It not only makes economic sense right now, but frankly not everyone needs to be treated equally under this program and Target the resources so that we're putting as much as we can into those who without our intervention will probably end up on afdc for years the young those recipients who are repeatedly on and off. I will tell you that I don't know how many women I had tell me that Ian if you had just stayed out of my way. I probably would have been awful lot sooner. There are women who come to welfare desperate to get off within weeks and months. They have skills. They need stabilization. That's what afdc is. We could have provided them with somewhat better support services, but they did not need intensive case management. We can better match our training and educational programming that we provide welfare recipients to jobs that are available in the community. And this is where we are going to have to spend money. We need more than $50 a recipient or even $200 of recipient ask Private Industry what they spend to train an employee and see if in welfare. We can just get half that amount dedicated to training and education and I think we're well on our way one of the most exciting resources to use were sitting in right now avt eyes. We have a program going in Hennepin County using them where they have taken a group of our afdc recipients are providing daycare on site have them in training and education programs for which we know jobs are available in the community. They're here. We need to use them. I think they want to be used. I'm talking a lot about women and children and I must mention men. That's not forget men. Did you know that there is no federal welfare program that recognizes that men can be poor. Why is it that Minnesota has a general assistance program one of a handful of states in the country that does? It's because there is no federal program that covers men who are poor. In some ways we do a far worse job of training and educating poor men then we have done even for women. On Christmas Eve. I walked into a church with family members and I saw before me tables. That were literally filled with contributions for food shelves. I was angry. And if you ask anybody who's worked in welfare, they're going to tell you that that's probably how they would feel as well. I thought with Charles Dickens. So went serving the poor by charity. Oh, I'm grateful to churches have been there. That's not a way to run a welfare system. Ladies and gentlemen, we have in the last four years institutionalized Emergency Shelters and emergency food shelves. They are the norm. And they don't work and they're costly. Just because your tax dollar may not be supporting. It don't think you're getting off cheap. You're not. Every time a welfare worker is confronted with an emergency. There are no options that emergency has to be resolved and that is the most costly expenditure. We will make And every time we see a man woman or child walking into a shelter or going to a food shelf we have failed. We have failed that is not the way to solve the problems of the poor. We must stabilize those who will be with us for years. And we have them. Look at the homeless. Many of the homeless are people who 10 years ago were in state hospitals for the mentally ill. They're now out on their own. Have we provided adequate support services for them in the community? No. Are they the ones who are often found in our shelters? Yes. Are they in a constant state of Crisis? Yes, and it costs us millions of dollars. In addition to being a very inhumane way of treating people. I would gladly take those contributions through the churches and Target them to programs and services that would provide far more stability. Far more stability to the lives of the poor. Than any food shelf or shelter can or ever will be able to provide? private sector Well, I heard two legislators introduced a bill yesterday or at least are talking about it to raise the minimum wage going to have to take a look at that as controversial as I know that it is but what about benefit packages benefit packages and what about hiring practices service economy is a growing economy in this state. Hire an awful lot of part-time people in part-time people aren't covered by benefits are those jobs that we can get welfare recipients into not very easily if they're not going to get benefits covered. There are actually some creative things. I think we can do there through both tax policy as well as through pools and other kinds of Arrangements, whereby we can support corporations be they large or small in providing better wages in providing better benefit practices and in looking at their whole hiring practices system. The private sector is needed to achieve welfare reform. Ultimately over the next year. I hope that you will be able to be guided by facts not anecdotes. If you would do me one favor for every story you hear a Fraud and Abuse. Would you call me and I will give you one of great achievement. Please don't make your decisions by anecdotes. I can match anyone one-on-one and it really doesn't get us anywhere. I hope you will be driven by Common Sense. There still exists in the statutes. That we allow someone who is illiterate to become eligible for general assistance all very well and good. Does that person once eligible for GA have to secure literacy have to participate in any kind of educational training program that will assist him or her and becoming literate know is that common sense? Of course, not that can and should be changed. You will also have some hard choices. There is no way of getting around that. What I asked to spite the fact that I agree with Esther wattenberg. But let's stop tinkering with the system. Let's try and make some real fundamental reforms. But what I ask of you if I may be so bold is may we please reform our expectations in terms of the results. We wish to achieve. If you walk into this legislative session hoping that by the end you will have passed a law that will cut our welfare Rolls by 50% You will be terribly disappointed and angry because it won't happen. But if you walk out of this legislative session having passed a law that says in a year five percent more of our afdc recipients will be gainfully employed because we instituted some programs that had they not been there. These women would not have been employed and you got to make sure that's the case 5% You don't know what cause for celebration we will all have because not only are we not doing that now? But every few hundred more individuals, we successfully get off and permanently off welfare will be amazing. So let's reform our expectations. That's not trying to achieve something that is unachievable. But let's start now with the first step and stay with it and a final comment picking up on what the senator said at the very beginning of this talk. We're in kind of a fad stage with welfare reform right now and in a way that's good because people are focusing in on the issue. They're gaining some information that they might not otherwise have had for 50 years. We haven't done a heck of a good job in achieving any real reform. I hope that their 10% of you if nothing else who will stay with us issue for at least 10 years because frankly ladies and gentlemen, it's going to take that long. I thank you all very very much and I wish you a great deal of wisdom and luck. Thank you. Yawns, maybe speaking about the Human Services support system in Minnesota. Maybe is president of Spring Hill Conference Center and she spoke to lawmakers who attended a three-day conference earlier this week at the st. Paul Technical vocational Institute that conference entitled Minnesota Horizons turning point to the 90s. We're presenting highlights of this conference today, which aimed to provide forward looks in several policy areas that lawmakers will face this legislative session and in just a moment. We'll get to a talk by dr. Michael Resnick on public health Trends and Human Services support but first station identification The portion of the Minnesota Horizons conference that dealt with human services and human needs concluded with a look at Public Health Trends and the Human Services support system. Michael Resnick is assistant professor and research coordinator of the Adolescent health program at the University of Minnesota. Well, I'm honored to have the opportunity to speak to a group of people who have the opportunity to influence the course of social policy in this state and to influence the allocation of scarce resources. What I would like to do is to begin with a brief description of the organization and structure of Health and Medical Care Services as they once were a brief history lesson, and I'd like to look at what that system has become. We will then examine the needs of the population within that system Trends and morbidity disease and mortality death across the life cycle. And which issues will Loom particularly large for us in the 1990s. Third we will address the question of cost and payment what are the critical issues in Health and Medical Care financing which are the key groups which will command our attention in the coming decade. And finally we will end with a brief look at approaches to coordinating the organization and delivery of private and public health services in Minnesota. before World War One anyone who is hospitalized had less than a 50-50 chance of benefiting from that encounter the major causes of death in this country and across Europe were linked to a small number of microorganisms this meant that the predominant causes of mortality were contagious disease pneumonia influenza. Tuberculosis whooping cough and of course the scourge epidemic diseases smallpox scarlet fever yellow fever diphtheria cholera. Back in 1900 heart disease accounted for only eight percent of deaths in America Strokes 6% cancer 4% in the brilliant book entitled of rats lice and Men medical historians told us that more than Battlefield strategy or Brilliance the great military conquests of Julius Caesar Napoleon Bonaparte Alexander the Great we're actually a function of epidemics and disease patterns that took place in particular places in particular times more than anything else and the tools of medicine were extremely limited. Let me paint a scenario for all of you. It is the mid-1800s. Good conscientious physician. Where's the long black silk frock characteristic of his day. He moves from Patient to Patient in open Hospital wards. He is treating cholera scarlet fever tuberculosis someone with an infected wound somebody about to give birth and the patients lie side by side waiting for his ministrations. Now as a physician intensely concerned about his patient, he agonizes over the fact that his hospital has a mortality rate a death rate upwards of 80% Now in the mid-1800s it British surgeon named Joseph Lister gets the idea that he and his staff will wear white cotton gowns washed in a particularly stinky stuff called carbolic acid and all the medical instruments will be cleaned in this solution. And while all the other physicians in London Society are laughing at the odor of Joseph lister's Hospital Wards. He sees that the stench of death is diminishing as his patient mortality rate drops by 50 percentage points. So the principle of antisepsis is born For a surgeon around this same time period competency is defined by speed 20 seconds to saw through the thigh bone while the patient bites a wooden stick because there is no anesthesia. In 1845 a Plucky Boston dentist by the name of William G Morton lures his trusty cocker spaniel into the backyard. He uncorks a bottle of ether and initiates one of the first semi clinical experiments in the use of anesthesia later. He tries it on himself. He did wake up. If he if he didn't I couldn't tell you the rest of the story on January 5th 1846 a music teacher presents with a horrific toothache understand that in 1846 to go to the dentist with a toothache meant that the pain of the tooth had to be worse than the pain of having it removed without any kind of anesthesia. Well in that case in that Jawbone ether gets its first direct clinical application and the principle of anesthesia is born antisepsis and anesthesia together with other technological developments. We are propelled into the era of modern Medical Care. And meanwhile advances in sanitation nutrition laboratory services surveillance and Reporting and public education are all increasing the effectiveness of Public Health interventions to the point that public health services and environmental change rather than personal medical care become the major reason for dramatic declines in mortality in the 20th century. As we move into the latter half of the 20th century the system of Health and Medical Care Services becomes nearly unrecognizable from that which came before it the system used to be a small fragmented cottage industry individual hospitals within communities were developed by philanthropic and religious groups Physicians held high status as solo practitioners. They were paid on a fee-for-service basis. And patient-physician interaction and the relationship was at the core of physician behavior and physician decision-making. The phenomenal expansion of Health and Medical Care Services since World War II in the United States with accompanying leaps and cost have transformed that system into a market-driven price-sensitive Enterprise. This piecemeal small-scale cottage industry used to be composed of relatively small unconnected Parts where the components of the Healthcare System be it acute care or long-term care medical supplies health insurance pharmaceutics Homecare did not relate to each other in any systematic kind of way. This has changed. Our system has evolved into an increasingly interconnected network of service organizations horizontally and vertically integrated about one-third of the nation's hospitals have formed multi Hospital Systems a form of horizontal integration where they have advantages in the marketing of their service has some advantage in bulk purchasing and improved access to Capital vertical integration occurs as hospitals move increasingly to attain ownership of health promotion centers Ambulatory Care Centers diagnostic Centers satellite facilities rehab facilities and nursing homes. Health maintenance organizations which used to be relatively small-scale operations struggling with startup funds from the federal government are now joining into large National networks with rapid affiliation occurring between hmos hospitals academic teaching centers physician groups and other facilities. Increasingly in the United States medicine is being conducted under corporate auspices with more and more Physicians working as employees for salary in groups on a contractual basis with corporate organizations in networks with enrolled patients who pay for care or have it paid for them on a capitated basis as gatekeeper physicians in a managed Primary Care model were enrolled patients have first contact with a generalist physician who then decides on access to physician Specialists and other services. We can be proud of the fact that Minnesota is regarded by the rest of the country as a glimpse of the future. An example of the corporatization of medicine in which Physicians have by and large shifted from solo practice and partnership to group practice and employees of multi organizational systems 80 percent of physicians in Minnesota are now affiliated with at least one Health maintenance organization. And as noted by dr. Reese, the editor of the journal Minnesota medicine quote traditional fee-for-service medicine is dead or dying we won't return to it. In the metropolitan area enrollment and health maintenance organizations now includes 45% of the population four times the national average Leonard Schaefer the former president of Group Health described organizational innovation in Minnesota quote just about every model that can be designed is being designed and tested right here in the Twin Cities and quote. in outstate Minnesota, we see a mixture of physician shortage and surplus multiple choice options for some consumers and elements of traditional fee-for-service medicine as it once was the critical questions, which Loom large for all of us in this Brave New World of Medical Care are these Who shall have access to what kinds of services at what level of quality? how to pay for it and which health goals should be our first priority for the population at Large well any system of public and private medical services is judged by its ability to meet the needs of the population as we have seen causes of morbidity disease and mortality death have dramatically changed in this state in the nation. Moving into the 1990s it becomes clear that at all ages. Many threats to health and well-being are rooted in Social and environmental factors rather than biological causes alone. And different issues at different stages of the life cycle command our immediate attention, for example. Rates of infant and neonatal death have generally declined since 1940 in Minnesota. There are exceptions. Those exceptions are related to poverty. Critical to reducing premature death is the timely seeking of prenatal care and good health habits during pregnancy adolescents poor and near poor women and minority women are at higher risk for late prenatal care and low birth weight infants than any other women in our state. In childhood and Adolescence accidents suicide and homicide along with cancer assume increasing importance as causes of death three quarters of all adolescent deaths are due to Violent causes. And the reductions in premature death that we have experienced due to reductions in acute contagious disease have been offset for teenagers by an increase in the rate of violent death. This means that alcohol Automobiles and weapons become significant contributors to these causes of death. This pattern continues through young adulthood. The risk of homicide is substantially increased for minority males. moving into middle age and old age heart disease cancer and stroke the so-called big three become more predominant. At the extreme end of the life cycle Continuum. We are faced with particularly challenging issues as we continue to experience what investigators call the graying of America. Over the course of the last 50 years. The United States has experienced a profound demographic transformation as the proportion of the population 65 and older has more than doubled from a little more than five percent back in 1932 over 11% in 1980 with the trend expected to continue. Reaching more than 18% of the population 65 years and over by the year 2030. Let's take a look at a slide to demonstrate this. The upper line indicates a gradual decline in the proportion of the population aged under 65. We see from the Green Line a gradual increase in the proportion of those 65 years and older and most dramatically in increase among the very old those over the age of in this graph 75 and older the most dramatic increase being those 85 and older. Here's another way to look at this phenomenon. When the first census was taken in the United States back in 1790. The median age of the population was 16 years. That's the age above which half the population stood and the other half fell this median age past 30 years in 1981, and we'll hit 40 years by the year 2030 a real shift in the composition of our population out of all of the sub groups among the elderly the very old those 85 and older are increasing most rapidly and by the turn of the century, it is estimated that caring for the nation's oldest old will cost at least 85 billion dollars in federal benefits. This is an expenditure that is more than for veterans more than for the poor more than for any other single group. the issues which command our attention for this age group Are the provision of appropriate Services which promotes self-sufficiency and independent living to the greatest extent possible? We are talking about the coordination of Health and Social Services and here the social HMO concept holds promise along with various coordinated gatekeeper models of service provision. We are faced with the very difficult ethical question of how much resource should be directed toward any one group when it means that other groups must do without Chronic degenerative disease and high tech high cost Medical Care near the end of life poses. One of the great challenges to decision makers and makes the reaching of some kind of ethical societal consensus even more important by the limits of care and the rights of patients to determine their own destiny at the end of life. One lesson which cross Cuts all stages of the life cycle is the one which became clear to us as a nation by the mid-1970s. There are limits to resources available for health services and the high cost of Medical Care means that prevention becomes an increasingly important issue. Let's look at Trends in expenditure first in the United States, and then it issues of health promotion. Since 1966 the percentage of the gross national product spent on Healthcare has steadily increased with a slight leveling off in 1984. Nonetheless, it is expected that Healthcare spending will continue to rise in dollars and as a percentage of the gross national product up to some 600 billion dollars and over 11 percent of the gross national product by the year 1990. Presently expenditures for healthcare are divided among the various sectors of service. The hospital sector clearly consumes the largest proportion at 41 percent. Physicians dentists and Professional Services 28% nursing homes constitute about 8% of expenditure. They are among the rapidly a most rapidly Rising group for increase drugs eyeglasses appliances almost 9% and public health consumes only about 3% of our expenditures for health care. The United States is the only industrialized nation in the world without a comprehensive national health insurance system in place Congress enacted Medicare and Medicaid in 1966 by seeing to it that expenditures through Public Funding of healthcare never reached 50% of total outlays as we see here there has been a steady growth in the proportion of Health Services paid for by public outlay about 42% in 1983. Clearly private outlays have always comprise the majority category of expenditure for health services, and we anticipate that it will stay that way in the United States. As cost continues to dominate the healthcare agenda in America the prevention of disease and the promotion of Health take the center stage as issues for the 1990s. From a health promotion perspective our critical issues become those of social policy not issues of biological organisms. We are looking at Social policies which influence the level and type of risk faced by our citizens of all ages when we consider the detrimental result of accidents homicide-suicide chemical use and premature pregnancy and parenting we must recognize that laws regulating Alcohol Tobacco drugs use of automobiles enforcement of penalties for drunken driving access to handguns and the availability of quality comprehensive sexuality education for young people and other social policy issues become critical influences on preventing morbidity and mortality for all of our citizens. In this decade and the next public health promotion and prevention of premature morbidity and mortality assumed increasing importance for minnesotans individually with great implications for expenditure on Health Services as well. Back in 1979 Julius Richmond the Surgeon General of the United States issued. His now famous report entitled healthy people. Lifestyle and health habits were targeted as key points for improving the health of the populace tobacco use was identified as the single greatest cause of preventable morbidity and mortality excess alcohol use was highlighted as contributing to accidents and other violent causes of death in addition to personal distress and disease. We were chastised in the words of one government official as a nation that was growing quote fat Toothless and constipated. And a new awareness was growing in this country through the late 70s and into the 1980s about the benefits of exercise prudent diet and reduction of risk behavior The crucial element to promote all of this is public health education. Seven years after the surgeon general's report. We stand on the brink of another urgent push in public health education. This is being urged on by our current Surgeon General. Dr. C Everett. Koop who has warned us that aids represents an epidemic threat to the nation. Dr. Coups proposal is that through education which begins with our youngest children we can strive to create a climate of sufficient awareness and motivation. So as to reduce this threat to the entire population, which is so costly both an individual human terms and in financial terms and I urge you as legislators to consider AIDS education along with quality comprehensive sexuality education, which has been demonstrated through research to delay the onset of sexual activity among youths and to reduce pregnancy rates. Once the decision to become sexually active has been made. It is active public participation and involvement. That is the key element in improving the health of any population in a world of competitive corporate medicine. We as buyers are urged to make prudent purchasing decisions about health services as individuals, if equipped with proper education and motivation for change there is much that can be done to promote Health to prevent disease and improve the quality of living. But and this is a big qualifier. Promotion of the populations health does not and cannot rest on individual effort alone. That is why and it's forward plan for the 1980's the Minnesota Department of Health identified toxic waste disposal and clean up as its number one priority for the decade Public Health. That's so-called invisible Healthcare System becomes most obvious to Citizens when it breaks down. When toxins threaten our water our air our food our land when communicable diseases threaten our population. But above and beyond the issue of toxic waste and contagious disease and environmental hazard in the home the workplace and elsewhere. The public health issue that will confront Minnesota legislators in this decade as you have heard from our speakers is the issue of poverty and it is appropriate to emphasize the destructiveness of poverty as we speak of the healthy futures of minnesotans because poverty is destructive of both the human body and the human spirit. when we connect the issues of poverty and health We see that poor people and those just above the poverty line. The so-called Corridor poor are at higher risk for poorer Health higher risk for chronic illnesses and higher risk for inadequate utilization of Medical Care Resources. The recent impressive report from the Minnesota Department of Health on the health status and health care of Minnesota's minority groups shows that much of their higher risk for premature death disability and disease. Is related to the disproportionate amount of poverty evident among people of color. So as you legislators address complex issues of employment and employment retraining welfare reform and strategies for building self-sufficiency among financially disadvantaged minnesotans. Please keep in mind that remediation of poverty means enhancement of health and Improvement in the ability of individuals and families to stay healthy. This leads to our next question. Where will we find the greatest demands on Public Health and Medical Care financing in the next decade? The populations which require our Attention our those at highest risk for poverty dependency and catastrophic expense. We are talking about children and youth young adult women particularly single heads of household women in late middle age and old age persons who are uninsured some 8 to 10 percent of minnesotans those facing high cost procedures such as organ transplants as well as those with multiple disabilities persons requiring long-term care home care and finally our oldest elderly. Each of these groups highlights critical issues for public health and personal medical services. How do we pay for those services? And how do we resolve the tension of cost versus quality? Let me conclude with this observation. The answers to these complex questions rest in something that Minnesota is uniquely good at and something which dr. green described the building of Partnerships which Bridge different interests and different interest groups. In order to promote the health and well-being of our citizens and continue to develop a system of public and private resources to address the needs of the population. We need to be thinking in terms of forging linkages which connect the various domains of social life education employment Community participation Health and Social Services. This may not require new programs, but it does require improved coordination among the various sectors of Human Service. It requires quality information basis, which permits communities to assess the health status needs and concerns of its citizens at various stages of the life cycle. And finally, it requires a citizenry well-educated in health promotion and disease prevention. You have many resources and pools of expertise available to you. I wish you great wisdom farsightedness and compassion in your endeavors. Thank you. Michael Resnick assistant professor and research coordinator of the Adolescent health program at the University of Minnesota. He spoke on public health Trends and the Human Services support system. If you just tuned in we have presented some highlights of the Minnesota Horizons turning point to the 90s conference that legislators attended earlier this week in st. Paul the conference concluded with a session devoted to Minnesota's tax and financing system for some national perspective lawmakers heard from Stanley e colander on the impact of the federal budget and the deficit colander is Director of National policy issues and federal budget policy for to strawson company. One of the nation's larger accounting firms. He is Editor in Chief and founder of the federal budget report Touché Ross's newsletter on federal budget and the Congressional budget process and he's former president of budget research Group Incorporated a private washington-based. organization (01:47:33) Thanks very much Steve. I the problem with that resume in my biography is it makes me sound like I'm either 50 years old or that I can't hold a job. One of the two. I have been working on the federal budget in one way or another for about 12 years and I have promised myself consistently that at some point. I'm going to give a enjoyable. Uplifting speech on the budget. This is not it I tell you that because particularly when it comes to State and local governments the news from Washington about the budget and about what the budget is going to be is not good and will not be good for quite some time. So just by way of warning you about what's coming up this may not be the easiest thing for you to sit through. No, hopefully not because of the way I speak but because of what the information I have to impart now, you've got to understand that the budget I've done a great deal of traveling the last year mostly because the gramm-rudman but the budget tends to be a Washington Story. I mean I get a lot of questions. Well, why can't they just do something about it? We've got a 1 trillion dollar budget. What's the problem and the real problem with the budget is at its perspective from Washington is very different than it is from almost any place else? What do I mean by the budget being a Washington story? Well suppose just to give an example suppose government astronomers discovered this afternoon that there was a large meteorite heading towards the Earth so big and traveling so fast that the world was going to be destroyed tomorrow. tomorrow afternoon you all would hear about it differently than we would hear about it in Washington and it would mean something to you very different than it meant to us headline and local papers here read would undoubtedly, give play it very very straight be a big banner headline world to be destroyed tomorrow. All right, you would get the idea pretty quickly. We in Washington wouldn't hear about it that way in fact around the country. They wouldn't necessarily hear about it the same way you would for example, if you were in New York you all know the New York Times doesn't run better headlines instead, they'd have just a little box on the front page. That would say world to be destroyed see science section something like that. USA Today. All right. Now that's something from across the country, right? Everyone sees USA Today once in a while would have its typical story complete with three color graphs and charts. They would have five pictures that would say world to be destroyed how we really feel about it. All right, Wall Street Journal. All right business people across the country around the world read The Wall Street Journal. It would have its typical story, which would be big headline world to be destroyed markets to close early. All right, finally in Washington. Those of us who work on the budget and work on virtually everything else would have a very different story from either what you got out here or what anyone else in any other part of the country The Washington Post would have its typical story world to be destroyed Reagan tax cuts blamed. All right. Now, what do you think the policy response would be to that? All right, obviously we go and try to reform the tax system again, but that's what I mean by a Washington Story the perception of what the problem is is very different. But the truth is you can generalize you can actually get very specific. About what the nature of the budget situation is. Let me give you look at a 1 trillion dollar budget the budget that the president proposed this past year is the first one in history where a president proposed that we would spend in excess of a trillion dollars truth. Is this year's budget? We're going to reach a trillion dollars, but he didn't propose it. So it doesn't count it. Just just going to happen. Why can't we make big changes in a one trillion dollar budget? Obviously everybody in this room has control over a personal budget or a professional budget. That is somewhat smaller than 1 trillion dollars. And if you need to come up with a few dollars here in a few dollars there to make some changes you can do it. Why can't we do it with this one trillion dollar federal budget? Well, the first reason is that most of the budget is really beyond control and I don't mean it's like a roller coaster that can't be stopped what I mean is that most of the decisions most of the spending that will occur? This year and every year is really the result of decisions made many years before for example, 14% of the budget that the president proposed is going to be interest on the national debt. The national debt at the end of fiscal year 1987 that is the current fiscal year is expected to be in excess of two point three trillion dollars. The net interest alone is going to be about a hundred and forty billion just the interest on the debt. Now this is money that the government can't simply say we're not going to pay back. It is actually a permanent appropriation doesn't even require a vote by Congress dates back 200 years. The thinking was if someone lens the government money they have to be absolutely sure they're going to get it back regardless of the politics of the other needs of the time. So let's just take that 14% that hundred and forty billion dollars put it aside can't be touched. The only way you can reduce interest payments is if interest rates go down or if the size of the national debt goes down to the size of the national debt is increasing second major categories defense spending about twenty-nine. Twenty-eight twenty-nine percent. of the federal budget 1987 and probably the same in 1988 is going to be spending on the military operations salaries procurement research and development and the entire the entire military budget nuclear weapons Etc 29% and although we've made small changes in military spending over the last couple of years this President and for the most part Congress has shown that the really aren't going to be large wholesale downward changes in the military budget what that means is that essentially another twenty nine percent of the federal budget is off-limits another two hundred ninety billion dollars. Now, there's two categories interest on the debt and the military make up a total of 14 plus 29 or 43 percent of all federal spending. We've just put out of bounds four hundred thirty billion dollars. That wouldn't be too bad. Except is another major category. We have to talk about social security. It's no secret to anybody here. I'm sure that the federal government doesn't even whisper that Social Security should be cut let alone that it should let alone come up with a real proposal in the next year's budget that's expected to be about 22% of all spending or another two hundred twenty billion dollars what we've just that done though therefore with those three categories interest on the debt. Defense Social Security is take 65% of the budget and put it off limits. That leaves about 350 billion dollars for us to play with. All right. Well, we've got a debt a debt deficit, excuse me listed as anywhere between a hundred eight billion and hundred eighty billion dollars for the coming year. So in other words, we might have to cut every penny or half of excuse me about half of that what's remaining half of the 350 billion dollars, its remaining just to deal with the deficit except you can't do that because that 350 billion dollars itself is not completely eligible to be cut of that amount of that 350 billion dollars another 220 billion call. It falls into the category. These are all rough figures, of course and that the 220 billion dollars falls into the category of what we could excuse me call entitlements Medicare Medicaid fact Medicare is 25% of that. Food stamps veterans benefits agricultural price supports. These are the most politically difficult programs to cut and while every year the president and Congress look at these proposals. Look at these programs try to come up with a few dollars here in a few dollars there. The truth is all they're doing is tinkering at the margins. And if there are no changes made the full amount will be spent on these programs as they currently exist. They are permanent until such time as Congress decides to change them. It doesn't even require a vote what that leaves after everything is all counted is only about a hundred and thirty billion dollars to deal with the deficit problem. Hundred thirty billion dollars to deal with the deficit that might exceed a hundred and fifty now that's typical Washington myth. All right, the truth is even that overstates the amount that's really of easily or available to be cut because in that hundred thirty billion dollars or so is all of the basic functions of government the FBI the Internal Revenue Service the lights at the Washington Monument the park rangers in Yosemite almost everything you think of When you think of the someone's laughing I suspect you think we can cut the Internal Revenue Service Congressional salaries presidential salaries, almost everything you think of when you think of the non-military part of the government is in this hundred and thirty billion dollars, and obviously we can't simply do away with all of it. Included also in this hundred and thirty billion dollars is the category that I wanted to get to most. That is everything that with the exception of Medicaid and a couple of other small entitlement programs everything that falls into the category of Aid to State and local governments is in this final category, which means very very simply that when they talk about cutting the deficit when they talk about reducing spending. In order to get the deficit down the parts of the budget that are most vulnerable have been most vulnerable and will continue to be most vulnerable is are the dollars that you are currently getting from, Washington. It should be no surprise to anyone that General Revenue sharing was eliminated last year. It was a natural. It was a four billion dollar program for billion dollars a year. That fell into the category of most vulnerable to be cut. Therefore most likely to be cut therefore. It was cut. In fact, it was the only major program that was eliminated last year. It should also be no surprise to anybody that President Reagan's 1988 budget also proposes major change in programs major changes in programs that state and local governments take advantage of Urban Development action grants Economic Development Administration Legal Services Corporation Medicaid. along with a host of others Almost across the board as you read the Reagan budget, it is essentially says programs that state and local governments currently get to money from will be reduced housing. I mean everything across the board that has nothing to do necessarily with the politics of the Reagan Administration. Now it may very well be true that for political reasons for philosophical reasons. They have also proposed some of these Cuts but the truth is that even if it was a democratic Administration, even if it was another Republican in office, the only place they would have to go to look for significant spending cuts is in this most vulnerable category. In this most vulnerable category, in fact of the eighteen point seven billion dollars in spending cuts that President Reagan has proposed in his budget. Approximately half of those come in Aid to State and local governments. Now everyone's definition to varies a little bit, but about half or about nine billion dollars key question. Is How likely is this situation to continue? Well, the answer is very for a variety of different reasons one the numbers I gave you have not changed that much over the last decade. Defense has gone up a little bit Aid to State and local governments have come down somewhat, but for the most part the uncontrollable nature of the federal budget has stayed the same fact, it's increasing someone in addition. We've got this new thing little over a year ago Congress passed the president sign something known as the balanced budget in emergency deficit control act more popularly known as gramm-rudman-hollings. What it does is set up specific deficit maximums for each of the next few years through 1991 at which point the federal budget is supposed to be balanced up until gramm-rudman Congress and the president never had a specific deficit Target. Not an explicit one that was in the law. They were pretty much free to come up with any mix of spending and revenue policies any deficit that they felt was economically and politically doable. Now, however, if they follow the law and there are some questions about that the deficit must be reduced by a continual amount through 1991 419 just to give you an idea where we are on this for 1986 last fiscal year the deficit deficit Target was about a hundred and seventy two billion dollars. We came in at 221. All right, we missed it pretty substantially 1987 the deficit Target was a hundred and forty four billion dollars. It looks like we're going to come in very close to a hundred and seventy five billion dollars, maybe a hundred and eighty. now we've missed two years in a row there for but the truth is that from 1986 to 1987. We reduce the deficit by about 20 of gives me 40 billion dollars. That is a highly significant change. The deficit is on a downward slope. But it's not according to gramm-rudman-hollings. The problem is really could be this year this year. We have to go from what looks like a deficit of about a hundred and eighty billion dollars to a hundred and eight. That's the gramm-rudman target for fiscal year 1988, which means we could be forced to come up with 60 billion dollars or so 70 billion dollars maybe in spending reductions and and perhaps some Revenue increases as well. In other words. This will put extreme pressure extreme pressure on Congress on the president to come up with dollar savings that will reduce the deficit here again, the place most likely to look Is an aid to State and local governments in general that most vulnerable category? How could this change? What would change Congress what would you what would you what would make it less likely that the programs that you're currently taking advantage of? Would not would not be you so much at risk. Well, the first thing is if the deficit suddenly doesn't matter anymore. And gramm-rudman pretty much guarantees, even if it's ignored, even if it's deadlines are pushed aside and not really paid attention to gramm-rudman pretty much guarantees that at least through 1991 and probably longer. That the deficit will be of interest. and a political issue that doesn't mean that there isn't countervailing pressures. There seems to be a whole nother field in economics these days that basically says the deficit is in. You know, who cares about a deficit anyway, why is it so bad? There are increasing numbers of books and articles written that we shouldn't be worried so much about the deficit. Let's just you know, so we run a two hundred billion dollar deficit what difference does it make and the evidence seems to be well, maybe that's the case. I mean after all we've had these huge deficit since 1981 and inflation is down interest rates are down unemployment is down GNP is growing. Like the problem is always been with the deficit that it's not a short-term situation what the Congressional budget office and others say is look short term. It's probably a positive thing long term. It's very definitely negative question I have for everybody here is when do we get to long-term? When do we arrive there in Washington long term is anything longer than two years and the truth. Is that while members of Congress may not be worried about it today. They are clearly worried about what it might do a year or two later when they're closer to an election. So that even if today the evidence indicates that the deficit is not much of a problem economically speaking Chances Are Congress will continue to respond in a way that ending it makes it make that makes them try to reduce it further only so that they can avoid someone pointing the finger at them and saying you should have done something you should have known something. We're in a terrible mess and it's your fault and this is in spite of every Pole. Taking across the country for years polls have shown that 70% 80% 85% of the American people think the deficit is a terrible problem may be the most important. In fact the exit polls from the 1984 elections showed that more people listed the deficit is the number one domestic problem facing the country than anything else every year at the same time a virtually equal percentage of people say, but don't cut spending and don't increase taxes to deal with him. What all this leads to is that at least through the end of the gramm-rudman era which is 1991 and probably well beyond the deficit will continue to be an issue. Therefore don't count on things changing that much. What else could change the situation? Revenue increases for every dollar of increased Revenue that the federal government gets spending has to be cut that much less in order to reach the deficit targets. The president in his budget is included about twenty three twenty two point seven billion dollars in new revenues. He's not calling it a tax increase because it's not a general tax increase it involves selling assets. Both loans and things like Amtrak and Conrail and those kinds of things. It involves new user fees course, the ultimate user fee would be if you're all charged for defense you want an F-14 to fly over your state. You got to give us an extra couple of dollars something like that. But now we've got user fees proposed for food and meat inspection. And you know, if the nuclear Regulatory Commission increase user fees for the national parks Etc and a variety of other fees and small small type taxes Congress is considering other revenues cigarette tax increase in the federal cigarette tax. They almost did it last year except. I suddenly realized that it was an election in, North Carolina. So therefore the Republicans didn't want their candidate to get blame. The Democrats didn't want their candidate to get blamed. The ultimate result was no cigarette tax. However, there is not another tax. Excuse me, not another election scheduled in North Carolina for four years. So chances are we're going to see one of those another thing they're talking about. Tax on distilled Spirits. We're increasing the tax on distilled Spirits not on beer because that's a working man's tax. But attacks on Chivas Regal something like that, you know champagne perhaps that one they can justify and there's a good deal of talk about that. They are considering other things like oil import fees, but not very seriously, but it looks like there will be some new revenues in the budget and for every additional dollar That we get in revenues the pressure on the spending side of the budget will be relieved. If you remember early in the Reagan term. He said the president said that he would not consider a tax increase of any kind until such time as he was convinced that there was no more spending to be cut. Well, I submit to everybody here that we're getting pretty close. That the calculations I gave you at the very beginning are such that at some point whether it's this president or the next Administration. They are going to find that there isn't any spending left to be cut or not enough left to be cut and therefore Revenue increases will have to happen. This is not necessarily though all good news for all of you because a lot of the revenue changes that the federal government will consider in the coming years will affect state and local governments directly. It'll have to do with duct, you know with interest on bonds that are deductible or not. It may be we having to do with the national sales tax and therefore pre-empting some of your taxing Authority. It may do with a variety of other things that currently effect or two in a positive way state and local governments. All of those are up for grabs. They will have to be and the same kind of calculations that well. I just went through on the spending side. You can probably do on the tax side. If you say no General Inca income tax increases no corporate tax increases then either only a limited number of places to look. What about after the gramm-rudman era? What about after 1991? Well this all he's up. I mean is this just a temporary thing and if we can get through this on a short-term basis at this point, can we expect it? Things will get back to normal. The answer is no because even if by 1991 or 1992 the Federal Government Federal Budget is balanced. It doesn't mean that the national debt will have gone away the national debt at that point will probably be close to or in excess of three trillion dollars. An interest on the debt, which continues to be the fastest growing part of the budget will be a significant part of spending every year. By the way, just as an aside. Remember I mentioned interest on the debt was a hundred and forty billion dollars that is close to what the deficit is estimated to be this year. So if there was no dead If we didn't have any interest payments to pay then we probably wouldn't have a deficit problem. But the problem will be in 1991 or 1992. If the budget is balanced that we will still have these tremendous interest payments and they will still be significant pressure. I believe to deal with that as a problem which means there's still will be no spending. No new spending and they will still be pressure on existing programs. In order to bring the deficit the debt down. in order to reduce interest payments so that eventually they'll be a little bit more a little bit more to you know to give out so the situation very very simply Very simply is that right. Now the government the amount you're getting from. The government is the most I think you can expect at least through the next five years and probably for the next decade. There is simply no money in Washington to start new programs so that any new needs. Any new problems that arise? The gun federal government will have very little discretion. In meeting them or helping you meet them even in a situation like like the drug problem recognized by almost everybody as something serious a lot of Ballyhoo a big anti-drug bill passed Congress just before it recess the administration and its budget is already pulling back the amount of money. That is proposing to spend on and on of the anti-drug situation including last year is part of that program. That was a 225 million dollar Grant to State and local governments. The administration is proposing not to continue that. Which is a good example of everything. I've been saying the amount of money, you're currently getting is going to be cut back regardless of the situation regardless of how serious the problem is now. Let me close with one other thing. How do we get out of gramm-rudman? All right, I mean if gramm-rudman is such a problem if it was for those of you are thinking maybe it was an ill-conceived Law, whatever. How do we reduce the pressure so that we can spend more money if necessary. Well gramm-rudman itself. Has two built-in ways written into the law to take care of certain problems. The first one is if there is a economic downturn defined as one of two things if the Department of Commerce announces that there have been two consecutive quarters of less than 1% growth in the gross national product adjusted for inflation. Or if the Congressional budget office projects that there will be over the next year two consecutive quarters of less than zero percent growth in the gross national product. Then they inform Congress of that. They take a couple of Congress has to take a vote on it. They have to send it to the president. The president has to sign the resolution if all of that happens then gramm-rudman is suspended for the year. And so these deficit maximums don't apply at least at least short term and that would allow a little extra spending. The idea was that they thought it was not appropriate for the government to be cutting back their spending in times of recession. Think about what we just have to ask Congress to do in essence you'd have to ask Congress to vote in favor of a recession. Right. Now those are in the president to sign a bill saying yes, we're going to have a recession. I submit to almost everybody here that that's just not likely to happen unless it's a very very serious situation if it's marginal chances are it's not going to happen the other one while a little bit more extreme doesn't require a specific vote. It would be automatic. That is if there's a formal declaration of war. Right now think about the possibilities here just for a second. Yuri, just to show you how everyone's perspective is a little bit different you remember the evening that there was a military exercise and off the coast of Libya Dan Rather sticking in his telling the reporter to stick the phone out the window so we can hear the bombers going overhead that kind of thing I'm sitting having a glass of wine with a couple of my budget friends up on Capitol Hill what we're watching this whole thing happened it seemed to be time for the evening news on the east coast and the first thing out of all our mouse was god dammit that trying to get out of gramm-rudman absolutely we sat there saying that's got to be the total motivation behind this several glasses of wine later we decided that you know, maybe it would be a good idea for us budget people to find out what it takes to declare war. I mean because obviously this was they trying to get out of Grandmother then we got it. We got to know about this what we discovered calling one of our friends at home that night was that you don't really have to declare war against anybody in particular. All right. You just declare war we're at War. Thank you very much. Gramm-rudman is suspended and not only that. You don't even have to declare war against a country. You could declare war against poverty against drugs against Kansas. Don't any I just picked that out of a hat. I'm not you know, I but that is maybe the easiest way to get out of at least the current deficit situation. As long as we're at War we can split the deficit targets would be eliminated and Congress would not have the same pressure. The president would not have the same pressure to reduce the deficit every year. Other than that. The situation that I just described you as far as the federal government for his dollars from the federal government is concerned will almost certainly continue and I would urge you all to plan for it and to expect very little from the federal government in terms of dollars other than what you're currently getting now. Thank you all very much. (02:16:07) Stanley colander Director of National policy issues and federal budget policy for to schroth and Company calendar spoke on the third and final day of a legislative conference entitled Minnesota Horizons turning point to the 90s, which was held earlier this week at the st. Paul Technical vocational Institute, and that concludes our presentation of highlights from the conference special. Thanks to Bill Palladino. Dave sleep and Jeff Walker for technical assistance. I'm Bill where mmm