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Tom Baxter

What the Savannah River dredging project and the Medicaid expansion say about our priorities

By Tom Baxter

For a vivid picture of how Georgia’s fiscal priorities get fixed, let’s compare the state’s refusal to join in the Medicaid expansion with its determination to move ahead with the deepening of the Savannah River channel to the Port of Savannah.

The Medicaid expansion issue, aka the ObamaCare issue, is very controversial, with advocacy groups lining up on both sides to turn up the heat in the lead-up to Oct. 1, when the uninsured can begin signing up for health care exchanges, and Jan. 1, when the expanded Medicaid program begins. As much as they disagree on everything else, neither side would argue that the economic consequences aren’t very high for the state. Tim Sweeney of the Georgia Budget and Policy Institute, an advocate for accepting the expansion, has estimated the cost for each month of delay to be between $240 million and $300 million.

The harbor dredging project also involves getting money from Washington, but in this case the lack of controversy is almost unsettling. When every important political leader in the state from Kasim Reed to Paul Broun is on board with something, you know it’s either a no-brainer, or nobody’s using any brains.

Unlike the federal Medicaid dollars he’s shunning, Gov. Nathan Deal wants Washington to pay for most of the (estimated) $662 million to deepen the Savannah shipping channel from 42 to 47 feet so it can accommodate the larger ships being built to take advantage of the widened Panama Canal in 2015. But he’s indicated the project is so important  to the state that it will pay all the costs for the project if necessary.

When you have the president plugging the project on the Tonight Show,  it’s questionable how wise it is to be talking about going it alone on a project of this magnitude. We should, in any case, try to get our arms around how much $662 million really is.

That’s a lot of money, but a drop in the bucket compared to Sweeney’s estimates of the cost of staying out of the Medicaid expansion. It’s in the same ballpark as the Medicaid shortfall was a few years ago when the legislature passed the bed tax. It’s also approaching as much bonded indebtedness as the state might take on in a lean year. So the state could swing such a deal, but with how certain a payback?

The state is already on the hook for $230 million of the total costs, and the $662 million estimate depends on the success of an system to pump oxygen back into the river through a series of 20-foot-tall “bubblers”  which have never been tested on this scale. The bubblers are more than $72 million of the estimated cost, and a big chunk of the rest would go toward purchasing property along the river, much of it owned by large corporations.

The sizeable cost and the haste in spending it is justified, state leaders say, because Savannah can’t afford to get behind its East Coast rivals in the race to accommodate the new “Post Panamax” ships. Yet while there is agreement the supersized ships will cause big changes in the long run, the emerging consensus seems to be these changes will be “evolutionary rather than revolutionary,”  as one analyst puts it in Forbes.

Nor is it clear yet just what these changes will be. Some in the industry foresee the evolution of a feeder system in which smaller ships offload cargo from the Post Panamax ships to gain the maximum efficiencies, and there’s speculation (see the Forbes piece) that a new form of triangular trade, with Asian, North America and South America as its points will emerge. So we may not yet know the best strategy for taking advantage of the new wave of world trade.

When you consider these uncertainties, the heated competition between Savannah and Charleston, the two cities Vice President Joe Biden visited Monday, begins to look less like a rational business competition and more like some kind of SEC-ACC rivalry thing. In the long run the project may be just as important as all the politicians say it is, but the return is nowhere near as immediate or as certain as the cost of refusing the Medicaid expansion, even if that’s a third or a quarter of Sweeney’s estimate. There’s urgency, and then there’s real urgency, and Georgia’s leadership shows very little of the latter.

Tom Baxter

Tom Baxter has written about politics and the South for more than four decades. He was national editor and chief political correspondent at the Atlanta Journal-Constitution, and later edited The Southern Political Report, an online publication, for four years. Tom was the consultant for the 2008 election night coverage sponsored jointly by Current TV, Digg and Twitter, and a 2011 fellow at the Robert J. Dole Institute of Politics at the University of Kansas. He has written about the impact of Georgia’s and Alabama's immigration laws in reports for the Center for American Progress. Tom and his wife, Lili, have three adult children and seven grandchildren.



  1. Anon September 18, 2013 12:08 am

    Appropriate use of tax money’s not what we do here. But our stadium’s blingin’, yo!Report

  2. moliere September 18, 2013 11:31 am

    For the millionth time:
    A) The money used to build the stadium come from hotel/motel taxes and can’t be used for health care or anything else.
    B) The money used to build the stadium – $15 million a year – would be a drop in the bucket for our MediCare needs. $15 million a year isn’t even the annual budget budget for 1 urban public high school.  
    C) Allow the Falcons to move to the suburbs and the downtown Atlanta economy will collapse. The negative economic and social costs of that happening will be much greater than the amount being spent on this stadium. Everyone realizes this, which is why even the generally anti-Fulton/Atlanta Republicans in the Georgia legislature didn’t lift a finger to oppose this deal (when scuttling it would have been rather easy).Report

  3. moliere September 18, 2013 11:56 am

    It is simple, really. 
    1) Money spent on social welfare does not result in economic growth.  It merely takes money away from taxpayers (away from the general fund) for the benefit of the social welfare recipients. 
    2) Money spent on infrastructure leads to economic growth. The economic growth that results creates more tax revenue. Which creates more money to spend on social programs. Increased spending only causes economic growth when a proper balance of infrastructure spending and social spending is achieved (some social spending is necessary in order to keep social problems from being too much of a drag on the economy).
    The problem is that the left began to equate social spending with social justice. They also took on the position that economic growth without addressing social injustice created more social injustice. So the Democrats became the social welfare party instead of a party that generally did a good mix of infrastructure to spur economic growth and social safety net spending. When you add it to the small government/libertarian impulses that have taken over the GOP (who also used to support infrastructure spending beyond defense and payoffs to oil companies and other big donors) no major infrastructure projects ever get done anymore.
    But the reality is that expanding the port and creating a network of railways and highways to move the freight from the port would create a ton of jobs and economic development. And best of all, a good bit of this jobs/development would be outside metro Atlanta, for a change. That would do a whole lot more for indigent health care – indirectly and directly – in this state (especially outside metro Atlanta and its Grady) than simply spending it on MediCare would.
    Sorry, that isn’t misplaced priorities, but instead core Democratic (and liberal/moderate Republican) economic policy for most of the 20th century until the anti-government crowd took over the GOP and the welfare statists overran the Democratic Party. It used to be that the welfare state mentality was only a marginal interest group in the Democratic Party (i.e. the NAACP/Congressional Black Caucus/Children’s Defense Fund crowd) but now it is the mainstream, controlling interest of the Democrats and motivates everything they do. Which explains why during the worst recession since the Great Depression, the Democrats blew their majority and political capital on health care instead of a jobs bill. Meanwhile, had they passed a jobs bill – or merely done a better job with the stimulus package that Pelosi did a rush job on to get it out of the way so she could focus on health care – the Democrats would have turned around the economy, held onto their majority and had more political capital to enact a consensus-driven healthcare reform effort after the 2014 elections. But as it is, the economy is still horrible and the healthcare reform that did pass is opposed by most of America and will likely never be implemented in its current form. And the Democrats have simply moved on from the economy altogether to other “social justice” issues like amnesty for illegal immigrants and gay rights that won’t do a thing to get us out of this terrible economy, and despite his resounding re-election Obama is so weak politically because of that economy that he can’t force the GOP to so much as compromise on an economic plan, let alone get his own plan enacted. And THAT is misplaced priorities for you.Report

  4. War Eagle 77 September 19, 2013 12:32 am

    Let me get this straight.  Handing out Medicaid cards to thousands of people who may otherwise buy health insurance make good economic sense.
    Dredging our largest harbor to handle the Post Panamax ships is bad economics!
    This is typical of a person who no idea how Medicaid works.  I own an Allied Healthcare company and was a Medicaid provider.  Georgia Medicaid is the most ill run program ever imagined.  It is run by people who could care less about the citizens they are charged to take care of.  It is all about statistics.  Medicaid providers are not part of the team.  They are to be loathed by the government.  Providers are left to explain what has happened to the patients Medicaid benefits because the state refused to deal with the rabble.  Most persons working to run Medicaid have no clue how Medicaid works.  You call to get help or ansers, the person on the other end of the phone is clueless.
    Most citizens do not understand how health insurance reimbursement rates are set.  They are set by a federal agency called CMMS.  Center for Medicare & Medicaid.  This agency sets the reimbursement rate for every medical procedure, modality, unit of time.  From dispencing a asprin to open heart surgery.  Georgia Medicaid pays about 80 – 85% of the Medicare reimbursement rate set probably 3 – 5 years ago.  Private health insurance companies pay their “in network” providers about 115% of the prevailing Medicare rate.  Here is the dirty secret they don’w want you to understand.
    Medicaid was designed to help the poor and sickly.  Now it is used to buy votes, get cell phones, free medical care.  The reimbursement rates are lousy and they get smaller each year.  Providers are audited by people who do not know the rules & regulations, are ignorant of how the medical professions work, and are simply sent out to find “MONEY” or “SCALPS”. Medicaid also runs a scam called “AUDIT FOR PROFIT” where a company audits providers and gets a percentage of monies returned to the state.  We finally had to drop out of Medicaid when the reimbursement rate went below what we received in the late ’90s.  
    Also, the costs to run Medicaid has never been accurately projected.  To simply take the federal governments word on the cost to expand Medicaid under Obamacare is a disaster waiting to happen.  The State of Georgia has already handed out way to many Medicaid cards to people who do not need them. Can pay for their own insurance. Or simply bilkING the system. THE FEDERAL GOVERNMENT IS BROKE.  HOW IS IT GOING TO PAY FOR ALL THESE EXPANDED MEDICAID PROGRAMS ACROSS THE COUNRTY?
    We are steadily loosing well paying “FULL” time jobs to jobs people are now calling “29ers”.  Part time, no benefits, no vacation, no nothing.  WHY IS THIS HAPPENING?
    Well as a business owner I have watch the federal government foul up one program after another.  Pass bad law on top of bad law, for years.  Since 2006 it has simply gotten ridiculous.  Stupidity reins in the Whitehouse and Congress.  WE ARE FED UP WITH IT ALL.  A job is the business owners property.  They don’t have to give it to anyone.  Many people think they are “owed” a job.  Well HELLO THAT AIN’T GOING TO HAPPEN!
    We had better get this economy turned around quickly or there won’t be any  “REAL” jobs left to pay for expanded Medicaid or Obamacare.  

  5. ScottNAtlanta September 22, 2013 6:01 pm

    moliere Sorry, but you are wrong.  Federal money spent on social programs absolutely causes growth.  The government pays for the majority of these programs so they inject liquidity directly into the economy.  After all, the money that the government spends doesn’t go into a vacuum.  It pays providers, hospitals, device makers, etc.  They in turn pay their employees who go buy things.
    As for the government going broke…its crap and you should quit repeating it.  Fiat currency nations whose debts are valued it their own currency cannot go broke.  If you understood that, you would understand just how bat shyt crazy this debt ceiling fight is…The Fed has as much money as they need to pay our “bills” (most of which are owed to ourselves).    Everything stated above is fact, and if you can prove otherwise go ahead. 
    These policies of screw the poor are not just morally wrong but are anti growth.  The poor spend a much higher % of their income than other groups.  A dollar out of their pocket is a dollar out of the economy…plain and simple.  Grasp these facts and you might not be so quick to judge.
    As for how the state administers medicaid, I cant speak to that I dont know…but I do know that indigent care in an emergency room is a WHOLE lot more expensive than preventative care…just sayinReport


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