Here’s an uplifting gem from the folks at the Cato Institute. They assert President Obama’s stimulus package (and health care plan) could end up leading to major scams to seize money from the federal government — scams in which we’d all be investing. They speculate:

Government fraud has been in the news lately because analysts are expecting major abuses of the Obama administration’s $787 billion stimulus plan. One Deloitte expert argued that "swindlers, con men, and thieves could siphon off as much as $50 billion" of stimulus funds, which are vulnerable because policymakers are under pressure to shovel it out the door quickly.

Even more troubling is the potential for fraud and abuse created by President Obama’s other big spending proposals — particularly his giant health-care plan. Obama wants to inject hundreds of billions more tax dollars into federal health care instead of fundamentally reforming Medicare and Medicaid — broken programs that are already subject to Madoff-sized larceny. That is incredibly unfair to those of us paying the bills.

Take Medicare. The Government Accountability Office reports that the program makes about $17 billion in improper payments each year. And that doesn’t include problems in the new $60-billion-per-year prescription-drug plan, which is a juicy target for criminals. Harvard University’s Malcolm Sparrow, a specialist in health-care fraud, recently testified to Congress that official estimates are "lacking in rigor," are "comfortingly low and quite misleading," and exclude many kinds of fraud and abuse. He thinks that as much as 20 percent of the federal health-care budget is consumed by fraud, which would be $85 billion a year for Medicare.

Medicare makes a staggering 1.2 billion electronic payments each year, making it highly vulnerable to cheating by health-care providers and organized-crime rings. Criminals need only fill out the government forms carefully and the "claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all," according to Sparrow. A perfect example is the recent case of a high-school dropout in Miami who was able to single-handedly bilk Medicare out of $105 million from her laptop by submitting 140,000 separate claims for equipment and services.

So what do you think? Do you expect this to happen or do we all need to stop worrying so much?

The latest unemployment statistics released last week showed another statewide increase in Hoosierland. That news, however, does not mean that pessimism should reign. History shows that job creation is one of the last areas to recover. Thus, unemployment stats are a result, not a cause, of economic normalcy.

Need evidence? Following the recession that ended in November 2001, the unemployment rate reached a peak of 6.3% in June 2003. Similarly, in the July 1990 to March 1991 downturn, national unemployment went from 6.8% at the end of the official recession to 7.8% in June 2002.

Earlier recessions did not show such a long lag time. Reasons for the change include more reliance on the service sector today, less use of temporary layoffs and a large increase in part-time workers. John Challenger, CEO of the outplacement firm that bears his name, explains:

"A lot has changed since these earlier recessions. For one, companies are less likely to use temporary layoffs today. They are also more likely to use part-time employees whose status can move to full-time as the economy improves. Unfortunately, the movement from part-time to full-time does not impact the unemployment rate.

"The earlier recessions occured at a time when our economy was dominated by manufacturing. It was common practice for plants to temporarily shutter operations, only to call back workers when business conditions improved. The service sector, where today’s employment is concentrated, is less likely to make temporary cuts.

"Companies are also turning increasingly to part-time workers during these slowdowns. There are about nine million people currently working part-time for economic reasons. That is the largest number of economy-related part-timers in government records going back to 1955. As the economy improves, employers are likely to move these workers to full-time status. However, the unemployment rate will not reflect the improving conditions since these part-timers are currently counted as employed."

One more factor at play. Today’s technology that increases productivity allows employers to be more selective in their hiring. Many jobs require more technical know-how and skills than in previous generations, lessening the number of people being hired just because they’re a "warm body."

So, while the monthly numbers are important, don’t confuse them with lack of economic progress.

The Silicon Valley and Route 128 have long been identified as the homes of venture capital. For the unitiated, that’s the San Francisco and Boston areas. Throw New York in the mix and the three regions are home to nearly half of all VC firms and a like number of VC-backed companies.

The State Science & Technology Institute reviews some recent research that says what appears to be bad news (it is in some respects) for other parts of the country has some silver linings for investors.

Venture firms exhibit a strong local bias, according to the study. A firm is almost six times more likely to invest in a local firm, controlling for other factors. The authors note, however, that out-of-region investments have a higher success rate than in-region investments. One explanation is that firms have a higher barrier to investing out of their home region and tend to restrict their investments to low-risk and higher-yield opportunities.

Despite the greater likelihood of success in out-of-region investments, firms based in venture capital centers outperform firms in other locales. These regions have a greater number of opportunities, pools of talented employees and benefit from knowledge spillovers. The authors suggest that this concentration may be a rational allocation of resources and make sense for investors.

The researchers advise that anything a region can do to increase the number of successful venture-backed investments in a region can greatly increase the likelihood of future deals. Once a region has experienced a few successes, they are much more likely to become the home of branch offices, which in turn are prone to invest locally. Also, once a firm has invested in an out-of-region area, they are much more likely to invest in that region in the future.

Indiana has certainly seen increased outside investment and realized some success stories. More of each will lead to … more of each.
 

Will President Obama’s goal of signing landmark health care reform legislation by October be realized? Cam Carter, the Indiana Chamber’s federal relations authority, says no. Mike Ripley, health care policy expert, offers that if it closely resembles what is currently being debated in Washington, he hopes not.

Carter and Ripley shared their perspective and answered questions from listeners during today’s Policy Issue Conference Call. If you want all the inside scoop and you’re a Chamber member, you need to listen (next up is K-12 education — charter schools, virtual charters and state scholarship tax credits, among other topics, on August 21). From today’s event, a few tidbits:

• Millions and billions in Washington have given way to trillions. Conservatives are looking to bring "down" the cost of a reform package to the $1 trillion level. Early estimates on just pieces of the package are at $1.6 trillion and up
• Congressional Budget Office Director Douglas Elmendorf popped a few balloons yesterday with his comment: "In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a signficant amount and, on the contrary, the legislation significantly expands the federal responsibility for health care costs." Maybe that will give pause to some
• Massachusetts, the state model of universal coverage with its program instituted by then Gov. Mitt Romney, has not worked out as intended with higher costs and lower reimbursement rates for providers causing friction
• No fewer than five Congressional committees are currently weighing in with near total attention on this issue. Nevertheless, the deadlines of trying to get a bill through committees and floor debate before the August recess appear unreachable
• The public plan option threatens the insurance industry as we know it

A Chamber member may have summed it up best when he questioned whether the proposals being bandied about are going to do anything to solve the problems with the health care system. That, of course, should be the bottom line litmus test of any plan.

The details and the dynamics are changing on an everyday basis. Stay tuned for more.

Whether you supported the stimulus or not, it’s important to know that some small businesses in Indiana may now be eligible to receive funds. Here’s the info:

On Monday, Congressman Baron Hill announced that many Southern Indiana small businesses may be eligible for interest-free loans under a new program created by the American Recovery and Reinvestment Act (ARRA). The “America’s Recovery Capital” (ARC) program, which goes into effect today, allows small firms to take out loans of $35,000 to pay down existing business debts. Borrowers pay no interest on the ARC loans and repayment does not begin for one year.

“Our small businesses are the backbone of our local economy and they deserve our support during this difficult period,” Hill said. “One of the best ways we can help small businesses is to provide access to capital, which is why this new loan program is so important. The ARC program gives small business owners extra breathing room so they can pay operating expenses, make payroll, retain employees, and continue their work as job creators in our economic recovery.”

To qualify for the ARC loans, small firms must demonstrate they are experiencing immediate financial hardship due to the economic downturn, but are otherwise deemed by the Small Business Administration (SBA) to be viable. The loans will be made by commercial lenders and can be used for payments of principal and interest for existing, qualifying small business debts like credit card obligations, mortgages, lines of credit, and balances due to suppliers, vendors, and utilities.

To apply for ARC loans, businesses should visit their local SBA-approved small business lenders. The loans will be available through Sept. 30, 2010, or until appropriated funding runs out. Additional information about the ARC loan program is available at http://www.sba.gov/recovery/arcloanprogram/index.html.

In addition to the ARC loan program, the ARRA contained other measures aimed at helping small firms access credit. For instance, the new law increases the percentage of a loan that the SBA can guarantee, makes SBA-backed loans more affordable and provides tools to unfreeze the small business credit markets, helping small companies access capital at affordable rates.

Hat tip to Inside INdiana Business.

Superintendent of Public Instruction Tony Bennett spoke to the Columbia City Rotary Club Tuesday and emphasized his hope to keep the best teachers in Indiana’s school corporations. The Fort Wayne Journal-Gazette has the story; here it is in full:

Indiana public schools need to be centers for student learning, not employment agencies for adults, Superintendent of Public Instruction Tony Bennett said Tuesday.

Teacher contracts need to be overhauled so that if layoffs occur, it’s the worst-performing teachers who lose their jobs, not the ones with the least seniority, Bennett told members of the Columbia City Rotary Club.

“We have to have the political courage to have any and every discussion that puts children first,” Bennett said. “We’ve built a system that really doesn’t do that. So I think we all have to have the courage to say what are the structures that will afford us the opportunity to make decisions that are best for Indiana children.”

Bennett echoed the sentiments of Indianapolis Public Schools Superintendent Eugene White, who told legislators this session he would be in favor of repealing the law that allows collective bargaining for teachers so he could overhaul his schools with the right people in the right spots.

Bennett offered a four-point system for how Indiana’s schools can become the best in the nation.

He compared these goals with President John F. Kennedy’s goal he outlined Sept. 12, 1962, that the United States win the race to the moon.

“I think we need to go back to Sept. 12, 1962, if we’re going to talk about education,” Bennett said. “The world our kids compete in today is very different than the world in 1962.”

Bennett is challenging Hoosiers to acknowledge that students are in a competition for jobs; change the discussion from how to get more money for education to how to get more education for the money; put student learning before assuring jobs for adults; and develop a system that recruits, trains, rewards and evaluates teachers as professionals.

“We have to take a hard look at how we expend our resources,” Bennett said.

Among the goals for the Indiana Department of Education during Bennett’s first term, he said, is for 90 percent of Hoosier students to pass the ISTEP+ and for 90 percent to graduate high school.

“If this is a fight we’re afraid of fighting, we’re in trouble,” Bennett said.

Hat tip to twitter.com/INEducation.

Brightpoint received some national exposure this morning in light of the Indianapolis/Plainfield company’s 20th anniversary. The Indy Star explains:

Brightpoint’s Chief Executive Robert J. Laikin will ring the NASDAQ opening bell today in New York to celebrate the 20th anniversary of the Indianapolis-based wireless device distributor.

Laikin will ring at 9:30 a.m. at its MarketSite in Times Square.

"It’s a privilege to celebrate Brightpoint’s 20th anniversary and the continued success of the company by ringing the NASDAQ opening bell," said Laikin in a statement last month. "Since the birth of the company in 1989 and our debut as a NASDAQ-listed company in 1994, we’ve grown both in size and capabilities and made the Fortune 500 list in 2009."