On the Blog
The U.S. territory of Puerto Rico owes more than $70 billion—about $19,729.43 per resident—in debt to creditors and investors. First to note the territory’s fiscal problems were the credit rating agencies, which downgraded the territory’s bond status to “speculative,” the first of three steps along the junk-bond path to loan default.
Over the summer, about a year and a half after insiders warned of the territory’s looming problems, Gov. García Padilla (PPD) announced, “[T]he debt is not payable.”
“My administration is doing everything not to default,” Garcia Padilla said in an interview with The New York Times. “But we have to make the economy grow. If not, we will be in a death spiral.”
Some territory agencies, such as the Puerto Rico Electric Power Authority, are negotiating forbearance agreements with bondholders, but the future of most of the territory’s municipal debt continues to be up in the air.
Without major reforms, the crisis playing out in Puerto Rico will come home to roost in the mainland United States as well, as state governments continue to walk down the same financial path as Puerto Rico and Greece.
One of the root causes of Puerto Rico’s inability to pay its bills is the high cost of doing business in the territory. The litany of mandatory fringe benefits for employees—treated as bonuses elsewhere in the United States—discourages businesses from investing in the territory because the labor costs exceed employee productivity.
Stateside, the cumulative impact of countless business-unfriendly laws in California and New York has caused numerous businesses and the people employed by them to leave those states. Between 2013 and 2014, New York’s net population declined by 153,921, and the number of people leaving California exceeded new arrivals by 32,090. Like Puerto Rico, both California and New York are known for complex tax codes that distort the economy and discourage business investment.
The inevitable result of this incessant business-harassment is fiscal insolvency. Just like Puerto Rico before the fiscal tsunami hit, California carries a jaw-dropping amount of public debt. Adding in the cost of postponed payments to public schools and universities, deferred Medicaid entitlement payments, and other gimmicks, California taxpayers are on the hook for $443 billion in liabilities, or about $11,417.53 per resident.
The situation confronting New York taxpayers is only slightly less bleak than that of a Puerto Rican taxpayer. Each and every New York resident is on the hook for $18,222.78 in public debt. In response to such crushing amounts of public debt, politicians raise taxes even higher, which suppresses economic activity and resultant tax revenues even further, creating the “death spiral” predicted by Padilla.
Tax hikes chase away new business investment and encourage businesses to move. People then move to other states because of the lack of available jobs, and tax revenue falls short of expectations as employment rates and economic activity decline. The bills pile ever-higher as a result. The symptoms of the economic disease crippling Puerto Rico are already present in some states around the nation.
It may be too late for Puerto Rico, the “Island of Enchantment,” but similar high-tax, high-regulation states still have time to avert disaster if they stop treating taxpayers like ATMs and start enacting pro-taxpayer, pro-growth reforms. If they don’t change their ways soon, the result will not be enchantment, but fiscal ruin.
Anti-GMO radicals are harassing scientists who work at state universities — including the University of Illinois at Urbana-Champaign — with an onslaught of speculative Freedom of Information (FOI) requests, according to a report in the 13 August edition of Nature magazine, one of the world’s leading weekly science journals.
Led by the leftist group, US Right to Know, the activists, who oppose the use of genetically modified organisms (GMOs) in food and medicine, are requesting confidential documents that demonstrate the correspondence between academic research activity and industry.
Industry commonly funds research in academia. So does the government. Researchers who are employed at state universities, like Washington State University and the University of Florida, both of which receive state, and federal, funds, are subject to the FOI laws. Radicals at US Right to Know, ironically, are not covered by FOI, and have not disclosed their funding sources.
Radicals asked a total of 40 researchers to hand over documents, though some, like the University of Nebraska, have refused to produce the documents. Others, like Washington State, have agreed to turn over documents, including e-mail, Nature reported.
The liberals are distraught that some scientists have posted remarks on a web site called, GMO Answers, which is produced by the PR firm, Ketchum, in New York City, as the food fear assault mounted by these activists seeks to silence opposition to its un-scientific scare campaign.
Not many normal people support the unhinged leftists and their anti-science campaign. In remarks yesterday at the Heartland Institute’s open house, U.S. Rep. Randy Hultgren (R-Ill.) gave a speech, which, among other things, voiced support for continued federal backing of science and technology at the Fermilab, located in Batavia, Ill., which has conducted research on the ethics of genetic engineering, among other important scientific work.
In today’s edition of The Heartland Daily Podcast, we listen in as Heartland Senior Fellow Peter Ferrara joins the Ayn Rand Institute’s podcast, The Debt Dialogues. Ferrara, author of the new book – Power to the people, is on to discuss the growing entitlement crisis in America and what to do about it.
The Debt Dialogues is a weekly podcast that aims to educate young people about the welfare state and how it will affect their future. Ferrara and host Don Watkins talk about why Social Security and Medicare are not sustainable, the importance of coming up with concrete proposals for reining in entitlements, and Ferrara’s proposals for reforming Social Security and the health care system.
Clint Eastwood’s iconic Dirty Harry Callahan uttered one of the greatest movie lines of all time: “A man’s got to know his limitations.” It would appear no one in Washington, D.C. has ever heard of Harry or his weighty wisdom.
No one in our nation’s capitol seems to think they are limited in any way. Not by any personal shortcomings – it’s like everyone who enters the city limits thinks they magically transmogrify from Clark Kent into Superman. And they certainly find no limits placed upon them by anything as quaint and antiquated as the Constitution.
The Environmental Protection Agency (EPA) is a classic example of very limited men and women behaving boundlessly. To begin, it can be easily argued that the Agency shouldn’t even exist. The federal government’s powers must by the Constitution be expressly enumerated – and nowhere therein does it get anywhere near enumerating what is being done by the EPA.
I have the “1800 Rule” (the year, not the tequila). If a government agency or program was created after 1800 – it most likely shouldn’t exist. Because in 1800 the guys who created the government – were running the government. They knew what they intended it to do – and by 1800 were having it do it. The EPA was founded on December 2, 1970 – just a little past the sell-by date.
For the sake of argument, let’s move past the EPA’s unconstitutional existence – and look at it as just another Executive Branch agency. Which means it is actually a creation and creature of the Legislative Branch – Congress. The EPA can not do anything unless and until Congress first passes a law that says “Hey EPA – do this.”
Think anyone in the EPA recognizes this limitation? It would appear not. They issue power grab after power grab – again and again far exceeding the limits emplaced by Congress and its legislation. In the apparent hope that with such volume – some will slip by the Constitutional backstops. For every court decision stopping one grab – two or three (or four, or…) slam through.
But of course the EPA also rejects limits emplaced by the Judicial Branch. If they don’t like a court ruling – they’ll just make a similar, often bigger power grab all over again. And over again. To wit: The EPA’s serial overreaches beyond the bounds of the Clean Water Act – to again and again reimpose their “Waters of the United States” uber-regulatory-overreach.
The EPA has twice already tried to unilaterally over-expand its authority over the nation’s waterways. Twice the Supreme Court has pushed them back. But we don’t need no stinking limitations – the EPA has issued a third, even huger “Waters of the U.S.” power grab.
Under this sweeping seizure, if after a deluge rainwater temporarily collects in a recessed area on your land – the EPA can deem your entire property a waterway, and thus unusable by you. This is a giant pain in the keister for anyone under any circumstance. If you’re a farmer or a rancher – anyone who makes their living off their land – it’s devastating. So yet again, people who can’t afford to do so are forced to file lawsuits against the EPA.
Meanwhile, how is the EPA doing with the waterways over which they already lord? Not so well. For instance, they just spilled three million gallons of wastewater into Colorado’s Animas River. Turning it a Tang-Gatorade day glow orange – and setting up a lengthy, multi-multi-million-dollar clean up.
It would appear the men and the women of the EPA are sorely limited in what they can do – and thus what they should actually be doing. They should try to get a better handle on things – before trying to handle even more things.
Everything would be a whole lot better – and a whole lot less orange. Dirty Harry understands it – as does everyone outside the self-delusionally-mesmerizing confines of the Beltway.
Guest Column by Wisconsin Attorney General Brad D. Schimel
There is an expectation that when we plug in our smart phone or put laundry in the dryer, electricity will flow to those devices on demand. And we allot a small portion of our monthly expenses to pay the energy bill without much thought. But the EPA’s onerous Clean Power Plan (CPP) will change all of that by forcing Wisconsin utilities to shutter cheap, clean coal-fired energy plants and switch to costly and unreliable energy sources.
With strict oversight by state regulators, the current power grid provides reliable, inexpensive energy to every user as needed. States, including Wisconsin, have spent billions of dollars building a complicated, integrated grid that generates and transmits electricity to those who need it exactly when they need it, at an affordable price. Each state has a unique set of resources and needs, and no one knows the intricacies of each state’s system better than each individual state. The EPA, through the CPP, is reversing this and is taking over regulation of the power grid.
As a result of the EPA’s unlawful power grab, Wisconsin, along with 15 other states, has mounted a legal challenge against the CPP. While there are several parts to the 1560-page regulation, the current legal battle focuses on section 111(d) of the Clean Air Act, the portion of the CPP that applies to existing generators. There are two main arguments against 111(d).
The first is EPA’s inability to regulate outside of the physical location of the plant. For example, in the past the EPA has mandated that certain technology be added to the actual physical plant to reduce emissions. In this case, the EPA is going outside the “fence line” by forcing states to change the entire electric system to reduce emissions, including installing more renewable generation and shifting to natural gas. Most troubling, the EPA did not evaluate how these changes affect the reliability of the electric system, nor did it undertake a full and fair analysis of the cost to consumers. Regardless, the EPA does not have the authority to regulate the entire electric system, and must stick to control measures that can be done at the source of the emissions, i.e., at the generator’s physical location, or inside the “fence line.”
The second argument relates to the tension between regulations on those same plants under section 112 and newly enacted regulations under 111(d). That argument revolves around two different versions of a Clean Air Act amendment that were both inadvertently signed into law – one that encompassed a substantive change meant to prevent particular plants from being overly regulated by different sections of the Clean Air Act, and one that contained a clerical error.
The substantive version prevents additional 111(d) regulation of plants that have already made considerable upgrade investments to comply with regulations mercury and air toxics standards recently passed under section 112. This version clearly prohibits EPA from invoking 111(d) “for any air pollutant…emitted from a source category which is regulated under [Section 112].” 42 U.S.C. § 7411(d)(1). Though Congress’s intent to limit regulation is clear, the EPA argues that it has the discretion to rely on the version containing a clerical error to support their new regulation, which will result in closing plants in which utilities, and consumers, have invested millions of dollars to meet other EPA regulations.
These arguments have been presented in both the Murray Energy and West Virginia cases brought against 111(d) before its finalization, and will be further addressed in the new challenges. The importance of the nuanced arguments that support our position should not be ignored, but it’s equally important to address the big picture problem with the EPA’s unilaterally expanding authority: The EPA is ignoring the foundation of cooperative federalism upon which this country was built.
To say that the CPP is agency overreach is an understatement. The CPP would allow the federal government, through the EPA, to control energy policy in each state. It allows EPA to force a federal plan on states if they choose not ruin their economies with overly-burdensome regulations. It gives EPA the power to mandate what energy type a state must rely on regardless of resources available in that state. In short, the EPA will have full power over our power.
And for what? A very minimal reduction, if any, in global carbon emissions.
The good news is that Wisconsin is joining the state of West Virginia and other states in challenging the EPA’s regulatory overreach, and we have the law on our side.
In today’s edition of The Heartland Daily Podcast, Budget & Tax News managing editor Jesse Hathaway speaks with Rebecca Friedrichs, a California teacher who’s going all the way to the Supreme Court of the United States to fight for her (and other teachers’) protection against compelled speech and involuntary association by labor unions.
Friedrichs explains how the teachers union has failed to protect the best interests of children and educators, but only serves itself and its interests as an organization. Instead of allowing people to choose to join the union and voluntarily pay dues, teachers unions require members to be a part of the unit and pay money they earned as a condition of employment in the school system.
For more information, check out this website: www.cir-usa.org
A federal judge in the Northern District of California last week stopped the U.S. Fish and Wildlife Service (FWS) from moving forward with a thoughtless proposal that would have let the wind industry legally kill bald eagles and golden eagles for the next 30 years. The court ruling is a surprise defeat for President Obama’s Clean Power Plan, which calls for increasing domestic wind-energy capacity threefold.
U.S. District Judge Lucy H. Koh ruled in favor of the plaintiff, the American Bird Conservancy, and against the government’s “eagle take” proposal. Judge Koh, an appointee of President Obama, determined that the government violated the National Environmental Policy Act when the agency’s director decided that the agency could issue permits to wind-energy producers that permitted the wanton slaughter of the eagles for up to 30 years, without so much as an environmental-impact assessment. Eagle kills in particular, are a legal and PR nightmare for the politically correct windmill industry.
A study in Wildlife Society Bulletin found that turbines in the U.S. kill some 573,000 birds and 880,000 bats each year. The study also said there is an “urgent need to improve fatality monitoring methods” at these deadly wind facilities.
In today’s edition of The Heartland Daily Podcast, H. Sterling Burnett, managing editor of Environment & Climate News speaks with William Yeatman. Yeatman is a senior fellow specializing in environmental policy and energy markets at the Competitive Enterprise. Burnett and Yeatman discuss his analysis of Obama’s Clean Power Plan for new and existing power plants, including what Yeatman calls the plan’s dirty secret.
They also discuss the importance of the court in possibly granting a stay of the plan as well as his work on Hillary Clinton’s proposed energy plan. Yeatman also discussed two other Obama regulations, its Mercury and Toxics rule, and the regional Haze regulation, which he calls two of the top three worst environmental rules of all time.
GOP Presidential contenders Sen. Marco Rubio (R-Fla.) and Gov. Scott Walker (R-Wis.) recently introduced health care policy reform proposals that are earning kudos from at least one free market health care analyst.
“Both Walker’s and Rubio’s health care plans are a very good start,” said Dr. David Hogberg, health care policy analyst at the National Center for Public Policy Research, a free market think tank. “On balance, these are excellent plans for moving our health care system in a free market direction.”
What is more, Dr. Hogberg congratulated the candidates for releasing their reform plans early in the campaign season. Perhaps The Donald will follow suit soon? Or Jeb? Or Rand?
“Usually, Republican candidates release their health care plans late in the election cycle, if they release them at all,” he said. “By putting these plans out there more than 14 months before the election, Walker and Rubio show they are willing to make health care a central issue of the campaign.” Both Walker’s and Rubio’s plans contain components that should help the government midwife, so to speak, a free market in health care, the think tank said.
These free market terms include:
* A refundable tax credit to purchase health insurance.
* A provision allowing consumers to purchase insurance across state lines.
* Expanding health savings accounts (HSAs)
“These are all big steps that will empower Americans to become health care consumers,” said Dr. Hogberg. “These will be important drivers in reducing the cost of health care and health insurance.”
Obama Raising $800 Million for Post-Presidential Library, Planning Focus on ‘Criminal Justice Reform’
An ambitious fundraising plan – and agenda – was this week unveiled for the Barack Obama Presidential Library.
A report in The New York Times indicates that Mr. Obama is planning to raise $800 million for the project, and will focus his time, as a former president, on “criminal justice reform.”
The high-tech, digital library and worldwide foundation will be based at the University of Chicago, on the city’s south side. But Obama will have offices there, and at Columbia University, his alma mater, in New York City. Fundraising for the library may reach twice the amount raised by former President George W. Bush.
The Obama family is likely to remain in Washington until their younger daughter Sasha, 14, finishes high school at the prestigious Sidwell Friends school.
Planning an active post-presidency, like Jimmy Carter, whom many compare him to, rather unfavorably one should hasten to add, Obama is expected to continue to be a public presence.
“His focus is on finishing this job completely, thoroughly,” Obama-confidante Valerie Jarrett told The Times.
Now that’s reassuring!
Watch Bruno Behrend debate Chicago Public School Principal Troy LaRaviere on the topic, “Public or private? What should be the future of public education in Chicago?” The debate was held July 25th as part of the famous Bughouse Square Debates.
Behrend’s argument was clear: Large urban districts, the teachers unions, and the public school system itself are willing to protect themselves with lobbying in Springfield and Washington, DC at the expense of children.
LaRaviere started by explaining the difference between scientific data and the use of averages and overall data. He then espoused the alleged virtues of Chicago Public Schools (CPS), quoting statistics from CPS and claiming CPS was outperforming charter schools in Chicago.
Behrend noted the best “vote” a parent could make was not for mayor or alderman, but taking an education savings account and vote with the money following their child to the school of their choice, thus opening up a “vast new array of education opportunities.”
Bruno Behrend is a Heartland Institute senior fellow.
Troy LaRaviere is the principal of Blaine Elementary School in Chicago’s Wrigleyville.
Increasingly over the past decade both federal and state governments have given special subsidies to, provided tax advantages for and mandated the use of solar energy as a solution to environmental concerns and the need for greater domestic energy independence. A damming report from the Taxpayers Protection Alliance details the enormous cost to American’s of the government’s obsessive solar power push. A few of the tidbits are below
- A Government Accountability Office review of federal renewable energy-related initiatives for fiscal year 2010 discovered at least 345 different federal initiatives supporting solar energy. The programs are managed by nearly 20 agencies and support more than 1,500 individual projects.
- Over the past five years, the federal government spent an estimated $150 billion subsidizing solar power and other renewable energy projects.
- Preferable tax treatment given to solar and other alternative electricity initiatives cost Americans nearly $9 billion annually, according to the IRS.
- State and local governments increasingly subsidize solar energy. Personal tax credits related to solar products are available in 20 states, 18 states maintain corporate tax credit and deduction programs, and 14 states and Puerto Rico offer taxpayer-funded grants to support solar electricity.
And what as all this largesse bought? Despite the subsidies and mandates solar will make up only 0.6 percent of total U.S. electricity generation in 2015, according to the Energy Information Administration. Worse still, government efforts to promote solar energy have resulted in waste and fraud and diverted public and private resources from energy resources that hold more promise. For instance, “Government-backed solar boondoggles are rampant and include such devastating examples as the Solyndra loan, which cost taxpayers $535 million and left 1,100 employees without a job, and the Ivanpah Solar Electric Generating System in California, which, despite reaping $1.6 billion in subsidies, produces electricity at a cost three times higher than traditional power and has requested $539 million in additional direct handouts from the federal government.”
The word on renewables is not much better out of Europe. One recent report showed despite generous support that dwarfs the subsidies given to the wind industry in America, Germany’s wind farms are failing to deliver much power. The country has more than 25,000 turbines with a rated capacity of nearly 40,000 megawatts. However, over the course of 2014 they delivered just 14.8 percent of their rated capacity – or less than 6,000 megawatts, the amount of power one could get from just six coal fired or nuclear power stations. And, of course, unlike the power from the coal power or nuclear power plants, the power delivered by the wind turbines was so volatile and unpredictable that it could not be counted upon to provide baseload power.
With numbers like this, it is little wonder why windpower is quickly falling out of favor in Europe. Across the EU green energy subsidy programs have been slashed causing the rate of wind farm installations to plummet. The Financial Times reports new wind installations fell precipitously in much of Europe: by 90 per cent in Denmark; 84 per cent in Spain (Europes largest wind power market) and 75 per cent in Italy. The fact that the decline in new wind farm construction comes as subsidies have been slashed is not a coincident and shows just how “not ready for prime-time” wind power still is despite 40 years of support. Wind still can’t compete on price, and may never be able to compete on reliability with the much abused and criticized electric power staples — coal, natural gas and nuclear.
When the EPA literally popped the cap holding back toxics filled water at the Gold King Mine above Silverton and Durango Colorado, it really screwed up.
Here’s what we know. The Gold King Mine had been closed and plugged since 1923. Behind that plug were several million gallons of tainted water, laced with toxins and heavy metals that existed in the rocks and naturally leached out over time even before mining started in the area, combined with toxic chemicals used in the mining process. Among the potential toxins in the mine were, lead, sulfuric acid, dissolved iron and copper, zinc, beryllium, cadmium and arsenic. Note I said potential toxins. Any of these chemicals or metals alone or combined as they were in the waters contained in the Gold King Mine, could be dangerous, but only if only if a person is exposed to them particular ways, in sufficient amounts.
Even before mining really took off, Cement Creek, the stream first hit with the sludge released by the EPA’s snafu at Gold King, had been declared undrinkable as far back as 1876. Nature was poisoning the water even before humans got involved. Mining exacerbated the problem. Tainted water had been seeping out of abandoned or closed mines near Gold King for decades. The mines that had been the prime reason this region of Colorado was settled in the first place and that had been the lifeblood of the towns in the area for more than 100 years, were also the source of ongoing water problems.
By 2015, Cement Creek contained no fish. Still, the water draining from Cement Creek and other nearby streams into the Animas river was not toxic or dangerous to humans – it took the EPA to literally poison the wells. The Animas river was a popular canoeing, kayaking location, anglers, hikers and hunters used the area, and its resources for food and recreation, farmers used the water for irrigation, adjacent and nearby homeowners used well water for drinking and bathing and cities and the Navajo Nation used the waters from the Animas and connecting streams and rivers for municipal drinking water.
Thanks to the EPA, for now until who knows how long, all this has come to an end.
We also know the EPA had been bucking to declare the entire region a Superfund site for decades. Ever since the last mine in the region closed, Sunnyside, in 1991, the EPA has been trying to force a clean up using the threat of a Superfund designation. Entire towns in the U.S. have had to be abandoned and fenced off once they are declared Superfund sites. Silverton and nearby towns and residents wished to avoid such a fate at all costs. For years, residents of Silverton fought EPA involvement out of fear a Superfund designation would destroy their tourism industry, the only source of income that could replace the vanished mines.
In what seemed a sign of progress, earlier this year, EPA agreed it would not designate the mines a Superfund site, and it would provide $1.5 billion to plug two other area mines, where polluted water was draining. This is where the Gold King problem arose. As the Washington Post reported, “But water has a habit of finding its way downhill, and plugging one mine often means it simply leaks from others, so the agency had to excavate and stabilize the Gold King mine upstream.”
Do we know for sure that water from the mines the EPA plugged was flowing into Gold King? No. Do we know for sure that Gold King’s plug would soon, or indeed ever, collapse absent EPA actions to drain the mine? No.
And here are a few things the EPA didn’t know that engineers think they should have before tackling the problem: How much water was stored behind the plug? What were the water pressures? What toxins at what percentages were in the water?
Rather than doing a little more research and testing at nearby mines containing lower volumes of water, the EPA ham-handedly blundered forward, and by breaking the seal unleashed 3 million gallons of toxic sludge and water into waterways and watersheds that provided sustenance and a living for people in Colorado, New Mexico, Utah and Arizona.
Three million gallons, sounds like a lot, and it is, about 60,000 bath tubs or 4 ½ Olympic sized pools, however, it’s a relatively small volume compared to the water flowing through the affected rivers on a daily basis, and though Lake Powell, the ultimate destination for much of the spill, is only 53 percent full at present due to an extended drought, it still contains 4,247,025,005,449. In short, the toxins that reach Lake Powell’s 4 trillion gallons of water will be so diluted as to not be a concern, and possibly not measurable.
Testing was done immediately after the spill. One of the samples of mercury was nearly 10 times higher than the EPA acceptable levels. Samples of beryllium and cadmium were 33 times higher, and one of the arsenic levels was more than 800 times higher. Having said this, much of the river system is are already back to or near normal conditions. For example, samples tested from nine locations along the San Juan river showing it is back to pre-event conditions.
The problem is, while much of the contaminated sludge will settle into the river bottoms, reducing immediate threats from the toxics, river activities, storms and other events can and will stir it up in the future, leading to episodic spikes in dangerous pollutants.
The EPA compounded its gross negligence by failing to inform city and state officials or residents and recreationists on the river for a full 24 hours after the event. That’s 24 hours farmers were irrigating with tainted water, cities were pumping tainted water for municipal uses, kayakers and anglers were literally standing or floating in the toxic brew. Some mayors of cities were outraged that they first learned of the danger from news stories, not the EPA itself. Colorado and New Mexico’s governor’s declared states of emergency and local officials and those using private wells have turned off the taps in the affected region. Numerous lawsuits are undoubtedly forthcoming, and the EPA has already established mechanisms for compensating individuals and businesses affected by the closure of the affected areas.
As the EPA itself admits, this has created a long term problem, for which it is responsible. And this all could have been avoided, the question is, did the EPA want the spill to occur. Outrageous you say! Consider this, the EPA has long wanted an excuse to declare Colorado’s mining region a Superfund site. Billions of dollars flow to the agency to remediate Superfund sites. In recent years, the EPA’s budget and staffing has been stagnant or in decline.
The EPA has already gone on record stating this spill proves the need to deal with the more than 50,000 abandoned mine in the area. That’s decades of remediation work, work which may never have gotten funding (especially since the problematic waters are a threat to no one while trapped in the mines), absent the EPA’s spill.
Less than a week before the spill a retired engineer predicted it in a letter published in the Silverton Standard and The Miner. He wrote: “Based on my 47 years of experience as a professional geologist, it appears to me that the EPA is setting your town and the area up for a possible Superfund blitzkrieg.” He warned, accurately, EPA would underestimate the water pressure build up and the clean up would fail spectacularly flooding the river with toxic waste. He warned citizens and the cities downstream of the Gold King Mine to attempt to protect their water supplies from the predicted toxic flood and said the EPA would use their failure to pushg to build $100 million to $500 million treatment plant in the area, which he believed was the EPA’s real goal all along.
If a private company had caused this disaster, federal and state officials would already be talking criminal investigations, and civil penalties would be filed claiming in billions in damage. Heads would roll, yet, while the EPA may transfer some of the people supervising the operation, its likely few if any of its employees will fired or forced to resign. Indeed if past cases of government malfeasance are any guide, those most intimately tied to the spill may receive raises or promotions, whether to reward them for surreptitiously gaining the EPA’s underlying goal of garnering millions for future mine clean ups, as suggested by Taylor, or keep them quiet concerning such a plan.
If Congress isn’t careful, it could end up rewarding the EPA’s bad behavior. When it approves, as it likely will, emergency or additional funds to , clean up the Gold King Mine spill, compensate all affected parties, and provide ongoing monitoring of water quality and residents health, rather than granting the EPA additional funds, it should use shift funds from the EPA’s existing budget, cutting or reduce funding for other EPA programs. This would send the message that the EPA will not benefit from either dunderheaded or malicious but self-interested actions it undertakes.
* This is a modified and expanded version of an article the author wrote for The American Spectator.
In today’s edition of The Heartland Daily Podcast, we listen in as Heartland Senior Fellow Peter Ferrara joins The Larry Kudlow Show. Ferrara is the author of the recently released book on entitlement reform titled Power to the People. Ferrara and Kudlow discuss the potentiality and likelihood of a 4% growth rate in America.
Kudlow seeks Ferrara’s opinion on the recent comments by Jason Furman, Chairman of the Council of Economic Advisers, that suggested four percent growth was implausible. Ferrara is more optimistic. What is stunting our growth?, asks Kudlow. Is it secular stagnation as some suggest? or is it just bad policy? Kudlow also asks about Ferrara’s views on the upcoming 2016 presidential election. Ferrara tells who his favorite candidates are what he thinks about Hillary Clinton.
U.S. households are saving hundreds of dollars a year because natural gas prices are low, but that’s about to change. A study by NERA Economic Consulting has found new regulations on power plants mandated by the Environmental Protection Agency’s Clean Power Plan (CPP) will increase natural gas prices to 2007 levels, virtually guaranteeing these savings will soon be wiped out.
A study by the Brookings Institution found natural gas prices have plummeted as horizontal hydraulic fracturing, also known as horizontal “fracking,” has caused U.S. natural gas production to skyrocket to all-time highs, making the United States the world’s top producer of natural gas.
Record-high production caused natural gas prices to fall from $8.03 per million cubic feet (mcf) in 2007 to less than three dollars today. As a result, U.S. natural gas consumers will save $181 to $432 per person, depending on which part of the country they live in. For a family of four living in Ohio, the savings add up to $1,036 of their money they get to keep. People change car insurance providers to save substantially less money than that.
Unfortunately, these savings will soon go up in smoke because of CPP.
The goal of the Obama administration’s new regulations is to reduce carbon dioxide emissions by 30 percent of 2005 levels by 2030. Because wind and solar account for less than 5 percent of U.S. electricity generation, despite receiving decades of subsidies and billions of taxpayer dollars, this goal can be accomplished only by shutting down coal-fired power plants and replacing them with natural gas-fired electricity generation.
This transition has already begun. In April of this year, natural gas accounted for more electricity generation than coal for the first time ever, with natural gas generating 31 percent, compared with 30 percent for coal. Regulating coal out of our energy portfolio will have serious negative consequences because it means abandoning a reliable, abundant, and affordable source of energy. The Obama administration’s ideological war against coal means demand for natural gas for electricity generation will continue to grow, with the goal of the CPP to increase the use of natural gas to account for an average of 70 percent of the electricity generated in each state, causing natural gas prices to climb back up to approximately $7.80 per mcf and essentially incinerating the savings U.S. consumers currently enjoy.
Those who argue the power plant rules are needed to avoid the negative effects of climate change should reconsider their position. EPA’s own climate models show the regulations will reduce the amount of projected warming by a negligible .018 C, an amount below the margin of error in the calculations. In other words, these regulations will cost billions of dollars to implement, will significantly increase the costs of natural gas and electricity, will hurt low-income families the most, and will have no positive impact on the environment whatsoever.
EPA officials argue we need the rules in order to set an example for the rest of the world. That brings to mind something our mothers told us: “If your friends all jumped off a bridge, would you jump off too?” The big carbon dioxide emitters, such as China and India, are listening to Mom and are not going to jump with us. On the contrary, they’re building new coal-powered plants every day.
Low natural gas prices made possible by horizontal fracking are a tremendous boon for families struggling to make ends meet, but even these low prices are barely compensating for the significant, long-term damage being inflicted upon our energy system by the Obama administration’s reckless war against affordable energy. By the time people realize the impact of the Clean Power Plan regulations, it may be too late to reverse the damage.
There is little that happens in society in general and the market economy in particular that most on the political “left” do not think needs more government intervention, regulation, and redistribution to make “better.”
One recent example of this is a lengthy “report” primarily prepared by Nobel Prize-winning economist, Joseph E. Stiglitz, for the Roosevelt Institute. Released in June 2015, Stiglitz and his co-authors present an agenda for, Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity.
The “Progressive’s” Agenda for Bigger Government
Running for 100 pages, it is based on the premise that markets are inherently likely to be unfair when left on their own without pervasive government oversight and regulation; that income inequality must be cured through various fiscal and interventionist policies; that America’s economic system is persistently biased against ethnic and related minority groups; and that sustainable growth and stable financial markets require more intrusive government intervention, including making “full employment” a higher priority for the Federal Reserve in setting monetary policy.
In the grab bag of policy proposals are included federal laws restoring union power to control labor markets and hold businesses hostage to their wage and benefit demands; even heavier environmental regulations on business and industry in the name of saving the planet; higher marginal tax rates on the classified “rich,” and increased capital gains and dividend taxes to pay for all the things the Roosevelt Institute authors think government should be doing more of.
Economic growth is to be fostered through massive government-funded infrastructure programs and expansion of “public transportation” as a tool for creating job access for low-income groups.
Stiglitz and his team also propose to raised the federal minimum wage; impose mandatory paid sick and family leave; subsidize child care for working mothers; increase government spending on all levels of schooling and education, including reducing peoples’ financial responsibility for repaying loans for higher education; “universalizing” government-funded health care even more than it is already; have the government go more directly in to the home mortgage business at subsidized lending rates with below market-based credit worthiness; and expand Social Security access and benefits.
The report really represents a laundry list of every aspect of market activity that those on “the left,” at one time or another, have argued and pushed for as needing corrections or repair through a larger and more intrusive regulatory and paternalistic state.
Even where some actual negative social effects can be shown to have their origin in earlier government interventions and regulations, in Stiglitz’s eyes it is still the market that has failed. Where he correctly observes that the government has used its powers and authority to benefit some at the expense of others, his “solution” is never to end privilege or favor for any and all, but merely to shift how and for what purposes government intervention is used to benefit those groups he likes more or considers more deserving.
It is impossible in a short opinion piece to offer a detailed critique and refutation of Stiglitz’s “diagnoses” of America’s economic ills and his “cures” that, in my view, would lead to an even more government-controlled society and market than already exists – and not for the better.
America is Suffering from Serious Economic Problems
Instead, an as an alternative, I would like to present, however briefly, what might be considered a classical liberal, free market “Rewriting of the Rules for the American Economy.”
America is suffering from a variety of serious institutional and structural problems. It has been most visible in the relatively slow and sluggish recovery from the 2008-2009 economic recession. Most economic recoveries over the last 70 years have witnessed real growth in Gross Domestic Product in the early phase of previous upturns of four to five percent, even over 7.5 percent in 1983. Since 2009, GDP growth has hobbled along between one and 2.5 percent most of the time.
Again, following most post-1945 recessions, recovery of jobs lost in the economy due to an economic downturn was more or less recouped on average within nine months to a year and a half. It is now six years since the 2009 trough and the American economy still has not fully recovered from the loss of jobs from the recession, and to successfully grow employment beyond that level.
The same weakened pattern of improvement in the American economy may be seen in average wage growth, labor force participation in the job market, and the slower rate of start-ups of new businesses and capital investment.
(It should be pointed out, however, that while several indices of real wages over the last several decades have measured limited real wage growth, these indices do not give any clear and relevant calculation of the improvement in the qualities of goods and the availability of new goods the characteristics of which have been radically innovative in our daily lives compared to what could be bought on the market, say, in 1985 or 1990. So that average standards of living across all income groups have dramatically improved, regardless of what a wage index may imply.)
It would be too dramatic to use the word, “malaise,” as President Jimmy Carter did to describe the economy during his presidency, but it is nonetheless the case that the American economy is not as robust and dynamic as it could be and has been in a number of previous post-recession periods
The Primary Source of America’s Problems is Government
From the classical liberal, free market perspective, the source of America’s economic problems stems from the size and scope of government regulation, intervention and redistribution in the economy.
All levels of government absorb at least 40 percent of GDP (up from around 34 percent two decades ago, and a mere seven percent a century ago). Over 80,000 pages of federal regulations handicap business enterprise, with estimated compliance costs of nearly $2 trillion.
In 2012, the Institute for Justice calculated the difficulties for those wishing to practice a small business due to occupational licensing. Especially for low and medium income groups, such occupational regulations makes it time consuming and financially burdensome for the poorer members of the society to improve their material circumstances through self-employment.
The Institute studied over a hundred occupations and found that licensing and mandatory training expenses can easily come to hundreds of dollars, and take up anywhere from several months to over a year for meeting the government stipulated learning courses.
Their investigation concluded that in most cases occupational licensing had little or nothing to do with safety or standards to protect consumers, and far more to do as a method to limit the competition that existing practitioners of these lines of work would have to face.
Business and corporate taxes in the United States are among the highest in the world, including the imposing of double taxation on foreign earnings brought back to the U.S. after they have already been taxed in the country in which the revenues were earned.
The institutional and structural crisis confronting the United States is not a crisis of “capitalism” or the free market. It is the crisis of the interventionist-regulatory-redistributive state.
America, today, may be free and open in comparison to a good number of other countries around the world but in comparison to a truly free America, the United States of the twenty-first century is far from a land of liberty.
Restoring the Spirit and Understanding of Individualism
America must rediscover and reestablish its own founding principles and philosophical ideas. Without this, no lasting institutional or structural change is possible.
This means recapturing the spirit and meaning of individualism and individual rights. That every human being should be considered a free person, allowed to live his or her own life as he or she wishes, guided by their own goals, purposes and ideals that will give their life meaning, value and worth, as they define it.
This means liberating ourselves form the false notion that the individual is owned and subservient to the collective, the tribe or the group into which they were born, and to which a political and ideological elite asserts they are to be sacrificed and obedient; that their life is not their own, but the property of the collective.
As long as this underlying collectivism is not challenged and overcome, real and sustainable freedom cannot be restored. America was founded on the idea of sovereign individuals, who associated with each other for mutual betterment through voluntary trade and consensual association. Government was meant to secure and protect each individual’s right to his life, liberty and honestly acquired property. (“Honestly acquired property” meaning peaceful production and/or voluntary exchange.)
Privileges and favors, subsidies and artificial protections for some at the expense of others must be repealed and abolished. There must be an equality of individual rights before the law, not an inequality of government-imposed “entitlements” and redistributive “rights” that cannot be secured for privileged individuals and groups without taking through taxes or regulations from some to give to others.
The Free Society is a “System of Natural Liberty”
When individual rights are respected and government is limited to the protection of those rights, society experiences what the Scottish moral philosopher and political economist called a “system of natural liberty.”
Each individual is free to apply is knowledge, talents, abilities and skills as he thinks best in the system of division of labor as he undertakes the earning of a living in peaceful, voluntary and competitive cooperation with others.
It is a fortuitous social order, in which each individual is free to live his own life as he thinks best, but which at the same time makes him mutually interdependent with all the others in his society due to the specialization of tasks and occupations.
Thus, to improve his own circumstances he must apply the knowledge, talents, abilities and skills he possesses in ways that benefit those with whom he trades and associates, within and outside of markets, as the means to acquire from them the goods or assistance without which he cannot attain many of his own goals and ends.
From Adam Smith to F. A. Hayek advocates and proponents of the free market economy have pointed out and emphasized that not only does government planning, regulation and control restrict the individual’s freedom to act peacefully as he finds most advantageous. It also inhibits the ability of all in society to best improve their circumstances, because those in government – politicians and bureaucrats – can never possess and effectively use all the knowledge that only exists in a decentralized and dispersed form in the respective minds of all in society, and for the efficient use of which those in government can never have the same self-interested motive as those who possess that knowledge.
Thus, both the achievement of greater human liberty and motivated use of that divided and personally possessed knowledge for the mutual improvement of all requires the radical reduction in the size and scope of government at all levels and for all activities.
Market Opportunities for Capital Formation and a Better Society
A free society, with very limited governmental functions, leaves most of the income and wealth produced in the hands of those who have earned it. This provides the financial wherewithal and the incentives and possibilities for increased savings and investment, and the resulting capital formation.
It is savings wisely invested that results in the profitable manufacture of the new, improved and more capital equipment that increases output per man hour, that raises the (marginal) productivity of labor, and brings about, over time, both higher wages and more, new and better goods and services to buy at competitively lower prices with the incomes earned.
These are old truths that reasonable economists have understood and explained for nearly 250 years, now. To the extent that their insight and advice was even partially followed by governments, subsistence poverty has been reduced or even virtually eliminated in more parts of the planet. Work has become less burdensome, with fewer hours and greater free time and leisure accompanying the higher earnings and rising standards of living.
Furthermore, commercial society makes people more courteous, polite, and deferential to their fellow men, as human relationships have come to rely more on voluntary consent and mutual agreement than force and coerced fear by some against others.
When a potential customer can shop next door rather than in your establishment, self-interest soon makes it a disadvantage to be rude, impolite, or discourteous in one’s market dealings with others. And fraud and deceit, even when technically seeming to be within the law, carries the risk of loss of repeat business and a word-of-mouth bad reputation, which can cost more in the long-run than the seeming gain from a short-run advantage at a customer’s expense.
Combine this with a non-inflationary monetary environment in which individuals can confidently use the market’s chosen medium or media of exchange to facilitate their current transactions and their intertemporal exchanges in financial and related markets, and the institutional setting will be most conducive to business creation, growth and improvement, jobs for an increasing labor force with rising real wages (when accompanied by market-guided investment and capital formation), and improved standards of living for larger and eventually all segments of the society.
Natural Inequality and Egalitarian Desires
However, critics of the market have often pointed out that not all start with the same opportunities in life, and that this presumably gives some unfair advantages at the “starting line” of the race of life.
The fact is, we are not born equal. Some of us have been luckily enough to have chosen parents with the genes that give us the physical attractiveness to maybe be a successful movie star; or the differing height to be either a professional basketball player or a horserace winning jockey.
We are born into different family environments, that may or may not give special attention to the value of an education, or the discipline and responsibility in managing one’s own affairs and pursuing a chosen goal.
And some of us come from financially better off households that enable the purchase and enjoyment of material goods and personal and social opportunities that others may lack.
Since those on “the left” very often oppose the use of GMOs – “genetically modified organisms” – they have not, as yet, espoused the introduction of genetically modified human beings so we may all physically look alike and possess the same intellectual capacities and inclinations to assure a more egalitarian society through the genetic homogenization of humankind. (But one never knows what the future holds in store when it comes to the obsessions of the ideologically driven “social engineer.”)
But in Europe it has been proposed to ban homework and parents’ studying with their children at home, since some parents show greater interest and conscientiousness in trying to assist their child’s learning abilities and advancements. What is the problem? It gives socially unfair advantage to the children in these parent-active homes, compared to those households in which studying is downplayed and parent participation in the child’s learning is less or none at all. Thus, it is considered better to impose the lowest learning common dominator to assure egalitarian ignorance than allow some children to get ahead of others due to the quality of their parent’s support in the home.
So what, then, is left? The redistribution of wealth for educational, as well as many other purposes, of course, to make those who “unfairly” or “unjustly” have more than they “need” through the “luck” or “accident” of the market to pay for others deemed by the redistributors to be more deserving. More will be spent on government schools, including job-secured government teachers, with mandatory attendance to make sure that everyone has the same quality (or lack of quality) teaching as well as the same content of what is learned.
Those who earned more through successfully better serving their fellow men through the free, voluntary and competitive activities of the market are to be penalized for their success as professionals, as entrepreneurs, as managers, and as valued, more highly paid workers in the marketplace of employment.
Educational Choice and Competition for Better Life Chances
Does lack of a good education, all other things held the same, hold a person back from the opportunity of getting ahead in life? No doubt. And there are thousands of young minds who fail to successfully learn even the three “R”s before they drop out or graduate from government schools, and tragically this happens to a disproportional extent in “minority” communities in America.
But the solution to this problem is not more taxpayer money and further centralized “common core” curriculums. It is a radical reform to foster the two “C”s: choice and competition. The educational establishment in America needs, desperately, to be fully privatized, and with this the ending of local and federal taxes collected to fund the current government monopoly schooling system.
Parents, with the resulting lowered taxes, should be given the right and ability to choose where their children are educated, by whom, and with what curriculum and teaching methods. Choice puts decision-making where it belongs in a free society – with the individual, in this case parents.
With choice comes responsibility for the outcome of the decision. Place this responsibility back where it should be, and its exercise will be taken as seriously as when most people decide what job to take, what house or car to buy, and the clothes and shoes to purchase. Since it is their own children’s education and future that is at stake, more parents will end up taking the time and effort to try to wisely decide their offspring’s schooling.
Competition creates the institutional setting and motive for excellence and innovation. This is and can be no less in the arena of education and schooling than in other aspects of life. Competition for consumer dollars drives private enterprises to devise better, new and less costly products to market to all of us as consumers. This would work no less in the educational business, if learning and schooling were made part of economic liberty.
But what about the parents or children who lack the financial wherewithal to finance a decent education in this privatized schooling market? The free society in countries like America has shown itself to be compassionate and benevolent communities of private charity and voluntary philanthropy. Even under the current burdens of taxation, Americans in 2014 generously gave almost $360 billion is charitable giving, more than a third of a trillion dollars.
Reduce taxes, set the market economy free to generate more wealth, output and prosperity, and people will have even greater financial capacities to help those that remain in society who may need that “helping hand.” Besides, a growing economy continues to raise more people out of poverty and modest financial means so the number of people asking for or needing such voluntary assistance would decrease over time.
Artificial Inequalities Versus Equal Rights in the Market Economy
Finally, there are unjust and unfair inequalities in American society. There are people and groups that are prevented from having opportunities and chances to rise to their potential.
But in the eyes of the classical liberal the origin and basis of these inequalities are “artificial,” and not part of the inescapable inequalities of the human condition and the outcomes of freedom. They are due to locking large segments of the population – especially, but not exclusively, in ethnic and racial minority communities – around the country into intergenerational dependency on government welfare and redistributive programs.
It is due to condemning the youth of America, and again especially in the poorest segments of the population, into mismanaged, self-serving, and counter-productive government schools that leave too many young minds far behind in that race of life.
It is caused by regulatory system that locks out the financially poor and poorly educated from starting their own businesses or being hired in local community small businesses because of the often-strangling hand of occupational and enterprise-licensing procedures that prevent people from taking the initiative to improve their own lives.
Minimum wage laws, and union restrictions in “closed-shop” states, as well as tax burdens that hamper job creation and employment opportunities all work to artificially keep those at the lowest end of the income levels from escaping from their circumstances.
Freeing markets under a regime of equal individual rights under an impartial rule and enforcement of the law would do far more to help those that “progressives” claim there are most concerned about in society than the entire array of interventionist and welfare statist programs have done in more than a half a century of coerced redistribution since the heady hopes of LBJ’s Great Society programs.
Adam Smith’s conception of a “system of natural liberty,” under which each individual is free to live his own life as he chooses and peacefully compete and cooperate in the arena of market exchange remains the finest and most powerful vision and agenda for a free and prosperous America and world for all.
In today’s edition of The Heartland Daily Podcast, H. Sterling Burnett, managing editor of Environment & Climate News speaks with Mischa Popoff. Popoff is an author as well as a Heartland policy advisor. Popoff comes on the podcast to discuss organic farming and GMO foods.
Popoff talks about his history as an organic farmer and his time as a government organic food inspector. He explains why he abandoned the organic movement and why organic farmers should embrace GMO foods. According to Popoff, biotech foods can be the ultimate organic food.
The United States and Cuba have apparently buried the hatchet and will open embassies in each other’s capitals after more than 50 years of hostilities, President Barack Obama formally announced during a press conference in the White House’s Rose Garden on July 1, 2015. Although the move has raised legitimate concerns among human rights activists, there may still be a silver lining in this new era of openness with our neighbor: medical tourism.
Cuba has approximately 69,000 doctors, or 6.7 physicians for every 1,000 citizens, according to the World Bank. Since the Castros took power in the 1959 revolution, health care has been a priority for the regime. The communist government pushed to provide universal, free health care for all Cubans, while sending medical personnel around the world to spread communism and bolster foreign relations, especially among leftist governments in South America, such as Bolivia, Nicaragua, and Venezuela.
For sending its health care workers to other countries, the Cuban government receives about $7.6 billion per year, all while it grossly underpays those practicing abroad compared to non-Cuban doctors. Physicians working in Cuba only earn about $30 a month.
Besides the low pay, there are other enormous differences between the medical systems of Cuba and the United States. Stories abound of Cuban medical students and doctors being trained with medical books edited in 1962, and there have been reports of shortages of modern medical equipment, drugs, and diagnostic tools that are taken for granted in developed countries.
Those low salaries and undersupplied facilities pay dividends, however. Every year, thousands of people from other countries, mainly Canada and Western Europe, go to Cuba as medical tourists, often because the treatment is less expensive there or because long waiting periods abound in their native country.
Cheaper Cuban health care will no doubt appeal to many Americans as well. Currently, the most popular destinations for American medical tourists are Canada, the United Kingdom, Israel, Singapore, and Costa Rica, and the most common procedures performed are spinal, weight-loss, cosmetic surgery, and cancer treatments, according to a study by the Medical Tourism Association.
Cuban health care may be less expensive, but there are significant shortcomings and risks involved. Some medicines are hard to find or unavailable, and hospitals commonly lack up-to-date equipment, although doctors say the government has recently invested in modernizing some facilities.
During Obama’s press conference, Cuba made its own announcement in the form of a 700-word declaration posted on Granma, the official organ of the Cuban Communist Party, saying, “To achieve normalization [of diplomatic relations] it will be essential also that the territory illegally occupied by the Guantanamo Naval Base is returned.”
The Guantanamo Bay Naval Base has been the home to the Guantanamo Bay detention camp since 2012. It’s located on 45 square miles of a bay the United States has leased as a coaling and naval station since 1903.
I suggest we try something altogether different: Let’s work with the Cuban government to develop Guantanamo into a medical tourism free-enterprise zone, with Cuban health care providers allowed to treat non-Cubans with minimal government interference and guaranteed oversight by the U.S. government. After 100 years, it can revert to full Cuban control.
Think of the possibilities: Cuba is only 90 miles south of Florida and less than one hour’s flight from Miami International Airport. As our own health care system devolves more into a command-and-control-based social experiment rife with excessive costs, regulations, waste, fraud, and graft, American health care providers could build a health care system from the ground up in Guantanamo, free from the dictates of both Castroism and Obamacare. It would become a mecca for medical tourism.
The situation and timing are perfect. Cuba’s sunny climate and beaches along, with its plentiful, eager, and trained medical personnel would create all sorts of opportunities for innovation when mixed with unfettered capitalism. Exciting medical advancements are sure to follow, and the experiment may even have some positive ripple effects on the rulers of Cuba and those of the United States.
Congressional GOP Leadership Calls Obama’s ‘Clean Energy Plan’ a ‘National Energy Tax’ And an ‘Arrogant Insult to Americans’
The Speaker of the House of Representatives John Boehner (R-OH) is disparaging President Obama’s so-called “clean energy plan” as a national energy tax, and notes that the ludicrous levy will damage the U.S. economy, which is growing at a rate as slow as that last seen after the recovery from the Great Depression.
“While I described the draft plan as nuts, I believe this final plan is an expensive, arrogant insult to Americans who are struggling to make ends meet,” said Speaker Boehner, in a statement released to the media. “For more than a year, Americans have told President Obama and his Administration that they cannot afford his new national energy tax. Instead of listening to families and job creators, the Administration has ignored their concerns and the law and finalized a plan that is even worse than we expected. This rule is being issued in the slowest growing recovery since the Great Depression and it will be another massive burden on our economy.”
There are no benefits to the tax and spend plan, but the costs are “very real” and will inflict pain on Americans. “It will destroy jobs, discourage economic growth and cause energy bills to ‘skyrocket’ – just like the President promised years ago,” said the Speaker. “This will be remembered as another irresponsible policy that makes it even harder for Americans to provide for their families and reach the American dream.”
The House and Senate leadership have said they will seek to stop this national energy tax, and lower energy costs for all Americans.
Anticipating this proposal by presidential decree, on June 24, 2015, the House passed the Ratepayer Protection Act (H.R. 2042) which would ensure that states do not have to comply with the president’s national energy tax until it is proven that it is legal. Earlier, on March 6, 2014, the House passed the Electricity Security and Affordability Act (H.R. 3826) to prevent the administration’s new rules on coal-fired energy producers from taking effect unless the House and Senate approved them by law.
President Obama is planning a clean energy summit next week in Las Vegas, and the Heartland Institute, along with the Libertarian Party of Nevada, a bi-partisan group of Nevada state legislators, and a spokeswoman for Carly Fiorina for President will offer a contrarian summit, where the truth about the White House clean energy plan will be discussed.
The Agency That Contaminated the Animas River is About to Start Regulating Water That May be in Your Backyard
Unless a federal judge issues a preliminary injunction, the definition of the “Waters of the U.S.” will change on August 28—giving the Environmental Protection Agency (EPA) the authority to regulate the water in your backyard (even the water that might be in your backyard due to a heavy rain). Even, according to West Virginia Attorney General Patrick Morrisey: “any area where agencies believe water may flow once every 100 years.”
Thirty-one states, in four districts, have filed motions with the federal courts to block the EPA and the U.S. Army Corps of Engineers (ACOE) from beginning to enforce the new “Waters of the U.S.” (WOTUS) rule—which represents a new interpretation of the Clean Water Act (CWA). The Federal Register calls the new rule “definitional” and states: “The rule will ensure protection for the nation’s public health and aquatic resources, and increase CWA program predictability and consistency by clarifying the scope of ‘waters of the United States’ protected under the Act.”
WOTUS was published in the Federal Register on June 29 and will become effective on August 28.
The interpretation is important. The CWA used to apply to “navigable waters” to now, as Texas Attorney General Ken Paxton recently said: “include almost any piece of land that gets wet and puddles.”
Morrisey calls the rule “regulatory lunacy.” He’s hosted town-hall meetings where he’s heard from citizens concerned that “this rule would infringe on their property rights and force them to pay thousands of dollars to do basic work around their homes, farms and workplaces.” Morrisey adds: “This rule expands a scheme whereby property owners have to ask the EPA for permission to do yardwork.” He claims: “Failure to comply with the new regulations could result in fines of up to $37,500 a day.”
While the word “navigable” hasn’t been removed from CWA—as that would require an act of Congress—the EPA has expanded that definition to include any water that has a “significant nexus” with navigable waters. This is where water in your back yard could be impacted. Regarding the final rule, Paxton explains: it “is so broad and open to interpretation that everything from ditches and dry creek beds, to gullies, to isolated ponds formed after a big rain could be considered a ‘water of the United States.’”
The CWA’s single word, “navigable,” has, for decades, been contentious with those who want to expand government control and limit industrial activity such as oil and gas development, mining, ranching, and farming. Former Representative Jim Oberstar (D-MN) fought hard to have the word navigable removed from the CWA and to expand its control to any waters. Despite repeated bites at the apple, prior Congresses refused to pass his legislation.
EPA, once again, uses rulemaking to do what its proponents couldn’t do through legislation—a hallmark of the Obama administration.
A July 28, 2015 letter signed by officials from 31 states, sent to EPA and ACOE by North Dakota Assistant Attorney General Margaret Olson, requesting a minimum nine month extension of the WOTUS effective date, states: “the new regulation will also have a significant impact on agricultural, homebuilding, oil and gas and mining operations as they try to navigate between established state regulatory programs and the EPA’s and ACOE’s new burdensome and conflicting federal requirements. This uncertainty especially threatens those states that rely on revenues from industrial development to fund a wide variety of state programs for the benefit of their respective citizens.”
On August 11, thirteen states—including oil and gas “heavyweights,” as Natural Gas Intelligence (NGI) calls them, Alaska, Colorado, North Dakota, and New Mexico—became the latest to ask a federal judge to block the controversial rule from taking effect. The states have asked for a hearing on the motion during the week of August 24. NGI states: “The oil and gas industry is opposed to the regulations because they believe it could stifle development.” A statement from the Independent Petroleum Association of America supports this assertion: “The 297-page rulemaking would require a federal permit for any activity that results in a discharge into any body of water covered by the new definition of ‘waters of the United States,’ including small streams and wetlands.”
The Texas Railroad Commission, which overseas oil and gas activity in the state joined the multi-agency multi-state lawsuit because “the rule redefines navigable waters as used in the CWA, allowing the EPA and ACOE to regulate private land anywhere in the United States where water can conceivably flow—even dry creek beds and manmade ditches. The Texas economy is a proud beneficiary of shale drilling, and some of the water used in this process would move under the jurisdiction of the EPA with the implementation of this rule change.”
Luke Popovich, spokesman for the National Mining Association told me: “This rule embodies all that is wrong with EPA’s overall regulatory approach: its costs will far outweigh any benefits, it violates both the spirit and intent of Congress in the Clean Water Act, and it has been sold as a benign attempt to add ‘clarity’ and ‘certainty’ to the marketplace when in fact it only clarifies and makes certain the threat EPA poses to a wide swath of the economy—from mining and farming to home building and construction.”
Jason Bostic, Vice President of the West Virginia Coal Association adds: “It’s no longer about water or discharges. It’s about regulating the landscape.”
The lawsuit filed in the U.S. District Court for the Southern District of Georgia filed on June 28, on behalf of 9 Southeastern states (now 11, including Indiana and North Carolina), received an expedited briefing and oral arguments were heard on August 12. Morrisey’s office told me they are hopeful for a decision by August 28.
North Dakota’s Attorney General Wayne Stenehjem believes the States are entitled to an injunction “because implementation of the Rule will cause immediate and irreparable harm and deprive the States of the opportunity to present the merits of their case prior to this unprecedented jurisdictional over-reach taking effect.”
In addition to the 31 states, on July 2, a coalition of a dozen industry groups—from agriculture to manufacturers to mining—filed a complaint against the EPA and ACOE over the WOTUS rule.
The goal of the litigations is to delay or defeat the regulations before they go into effect.
Morrisey, in a statement, explains: “While the Clean Water Act gave the EPA and Corps authority to regulate ‘navigable waters’—defined as ‘waters of the United States’—Congress made sure that states would retain their constitutional, sovereign responsibility over non-navigable, intrastate lands and waters. The U.S. Supreme Court has twice rejected the agencies’ attempts to expand their authority (in Solid Waste Agency of Northern Cook County v. Army Corps of Engineers and Rapanos v. United States). However, this latest rule written by the two administrative agencies gives them virtually limitless power over these waters.”
Rules like WOTUS, and the recently announced Clean Power Plan, are lauded by environmental groups who are the likely impetus for the regulatory overreach. Senator David Vitters (R-LA), Chairman of the Small Business and Entrepreneurship Committee, sent a letter to EPA Administrator Gina McCarthy regarding “reports that the Agency inappropriately coordinated with outside organizations during the WOTUS rulemaking process.” His statement on the matter offers this reprimand: “For decades, the Department of Justice has recommended that federal agencies do not lobby the general public to build political support for policies promoted by the Executive Branch. In 2014, the EPA embarked on an unprecedented public relations campaign, which may have violated anti-lobbying laws, to promote the WOTUS rule by working closely with outside organizations including the Sierra Club and Organizing for Action, which is closely affiliated with President Obama’s 2012 reelection campaign.”
Apparently, the EPA—which allowed millions of gallons of toxic waste to spill into the Animas River—and its “far-left environmental allies,” believe it can do a better job of protecting waterways, streams and wetlands than the states. A wide majority of states and industry disagree. The coalition hopes the lawsuits—which are expected to be combined into one—will overturn the rule and prove that the EPA has gone beyond it jurisdiction with this expansion of regulatory authority.