On the Blog
The legislators in Raleigh recently took a step to lower North Carolinian’s tax bill.
At the end of midnight marathon session of the North Carolina House of Representatives, the House passed a compromise budget bill funding the government for the coming fiscal year. One of the provisions of the bill ends North Carolina’s generous 35 percent tax credit solar or other renewable energy projects. One project alone, the Desert Wind Project, if completed would cost North Carolina taxpayers more than $140 million to produce energy for out of state customers. Iberdrola, the Spanish company that owns Desert Wind, gets more subsidies from U.S. taxpayers than any other renewable energy company in the world, yet investors fear it is on the edge of financial collapse while it is simultaneously the subject of several federal investigations. There is no good reason for North Carolinians to throw more good money after bad.
Until the legislature ended this credit, North Carolinians had been forced to pay twice to prop up the state’s renewable energy lobby: once in the form of the tax credit and again for higher electric bills as a result the state’s renewable power mandate.
Unfortunately, having dealt with the first issue, the legislature failed to end a second source of the higher prices state residents and businesses pay for energy. HB 332 was not allowed an up or down vote in the Senate despite passing out of committee. In the debate over HB 322, according to WRAL, Republican State Sen. Bill Cook (Beaufort) said “It sounds like you’ve got one camp that’s real interested in promoting the wind and solar industry and another camp that’s interested in trying to save the rate-payers.” I couldn’t have said it better myself.
Some in the Senate evidently thought it was more important to cater to green special interests desires for unearned profits rather than put North Carolinians needs for affordable, reliable energy first.
HB 332, would have had North Carolina follow Ohio’s lead and freeze the state’s renewable energy mandate at its current level of six percent. Absent the freeze, utilities will be required to increase the amount of renewable energy they provide to 10% in 2018 and 12.5% in 2021. The bill would also reduce the guaranteed market for renewables by requiring utilities pay a standard rate for power from small renewable power generators.
The case for freezing the mandate, or even better, repealing it entirely as West Virginia and Kansas both did earlier this year, comes down to money. Renewable energy, like wind and solar power, costs more in part because it is not not available 100 percent of the time as are conventional fuel sources, thus you have extra costs associated to provide backup energy by traditional power sources when wind and solar drop off line, or as the power they supply fluctuates. Both problems are common.
Higher energy costs hit low-income households the hardest, as they must spend a larger share of their monthly income on utility bills than do higher middle- and upper income households.
What impact has six percent renewable mandate had on North Carolina? A lot! Earlier this year, Utah State University’s Institute of Political Economy estimated North Carolina residential ratepayers paid slightly more than $3,800 for a typical household in North Carolina in 2013 alone because of the renewable mandates. The study further concluded higher energy costs to commercial and industrial ratepayers has discouraged investment, already costing the state 24,000 jobs and $14.4 billion in personal income.
And it’s not just North Carolina as studies consistently show states with renewable power mandates have seen their energy costs rise higher and faster than states lacking such market interventions.
State Rep. Mike Hager (R-Rutherfordton), the sponsor of the bill in the House testified before the Senate Commerce committee the bill was about helping the poor, saying, “What we’re trying to do on that is protect those folks in each of your districts that can least afford to pay more on their power bills.”
Like all legislative mandates and tax credits for specific industries, the renewable tax credits which will now die, and the renewable mandate, which should be killed, distort the market. They are a form of welfare for the well-to-do, giving big bucks to politically connected renewable energy producers who know how to game the system. They, in turn, fund environmental groups and hire lobbyists to ensure the revenue stream continues flowing. Absent tax breaks and mandates wind and solar boondoggles just can’t survive, except for niche applications for the very rich, who don’t need such subsidies.
While HB 332 died in North Carolina’s Senate, in Ohio, the legislative committee established by the law freezing its renewable energy mandate until 2017 recommended maintaining the freeze indefinitely. The committee recognized that, if anything, the justification for freezing the mandate had become even stronger since it went into effect.
A study of the impact of Ohio’s renewable mandate by the same Utah State University think tank that examined the cost renewable energy to the state’s economy and residents found Ohio’s renewable mandate will cost electricity customers up to $1.92 billion between now and 2026.
In a news release announcing the study’s release, Ryan Yonk, one of the study’s authors said, “This study, one of the strongest and most widely examined ever conducted on RPS, shows there is significant evidence to suggest RPS mandates were not helping local economies. Rather, they were causing economic damage to families and businesses.”
The study reports Ohio’s renewable mandate will reduce personal income by $258 million between now and 2026. Ohioans can expect to receive approximately $3,800 less per household than households in states without a renewable mandate. In addition, the RPS could result in a loss of nearly 3,600 jobs.
This uncontroverted evidence led the Energy Mandates Study Committee to its decision to recommend extending the freeze indefinitely.
Oddly, Gov. John Kasich (R), who signed the earlier freeze, has come out against the Committee’s recommendation. Perhaps, Kasich’s presidential ambitions have overcome his concern for Ohio’s ratepayers and businesses – maybe he’s trying to win the vote of moderate Republicans and independents who consider a candidates views on the environment as important when they vote.
The reason most often cited for the success of the nonpolitical candidates is the frustration with Washington; the sense that the system is broken. Voters feel that we have no control and that government has gone wild. Even people who don’t watch the news or closely follow politics are aware of the “overreach.” It seems that, perhaps, the messages the outsiders have been heralding on the trail has caught on.
Washington’s overreach has been rolled back—by courts and commissioners and, even, in response, the government itself. In little more than 30 days, there have been five distinct cases that you may have missed—each, a victory for responsible land use.
First was WOTUS, or the Waters of the U.S. rule—which was scheduled for full implementation on, Friday, August 28. WOTUS attempted to greatly expand the federal government’s authority over water and land and could apply to ditches, streams, wetlands and small isolated bodies of water. Late on Thursday, August 27, U.S. District Judge Ralph Erickson issued a temporary injunction sought by North Dakota and 12 other states. In his decision, Erickson wrote: “Once the rule takes effect, the states will lose their sovereignty over interstate waters that will then be subject to the scope of the Clean Water Act.” Calling the rule “arbitrary and capricious,” he declared that the EPA “violated its congressional grant of authority in its promulgation of the rule.”
Undaunted, the Environmental Protection Agency (EPA) pushed back, stating that the rule only applied to the thirteen states that requested the injunction. For the remaining 37 states, the EPA is enforcing the regulation as planned. At least 10 lawsuits—including 29 states and 14 agricultural and industry organizations—have been filed in federal district court challenging the rule.
Constitutional and environmental law professor, Jonathan H. Adler, addressed WOTUS in the Washington Post, saying: “As a general matter (and as the Supreme Court has recognized) land-use control is generally beyond the scope of federal power. In this case, the district court concluded that the states were likely to succeed on the merits as the EPA had adopted an ‘exceptionally expansive’ view of its own jurisdiction under the CWA.”
Perhaps, as you’ll see, if the WOTUS deadline was a month later, the EPA may not have been so bold in its assertion that it would continue to enforce the rule. But, then again, this is the Obama EPA.
Lesser Prairie Chicken
Once again, a federal agency has been acting “arbitrarily and capriciously.” This time, it is the U.S. Fish and Wildlife Service (FWS). On September 2, U.S. District Judge Robert A. Junell overturned the Obama administration’s 2014 listing of the lesser prairie chicken (LPC) as a threatened species, which gave the bird protection under the Endangered Species Act (ESA) and limited land use in five states.
Citing the “more than 180 oil and gas, pipeline, electric transmission and wind energy companies” that had enrolled in voluntary conservation plans, The Permian Basin Petroleum Association challenged the listing, as soon as it was finalized.
The FWS is required to consider the conservation plans. The court determined that FWS “did not properly consider active conservation efforts for the bird when listing it.” Junell wrote: “The Court finds FWS did conduct an analysis, however this analysis was neither ‘rigorous’ nor valid as FWS failed to consider important questions and material information necessary to make a proper evaluation.”
Addressing the LPC decision, The National Law Review, states: the “ruling raises important questions about the upcoming Service decision whether to list the greater sage-grouse under the ESA. A sage-grouse decision was due on September 30.
Representative Rob Bishop (R-UT), Chairman of the House Natural Resources Committee, sees that the FWS “has been illegally steam rolling states by their own secret rules.” He added: “The Obama administration has been merciless in its quest to list species—even when the science says otherwise.”
Hydraulic Fracturing Rule
On September 30, another federal district court judge smacked down another federal agency—this time the Interior Department’s Bureau of Land Management (BLM), which, in March, issued federal fracking rules designed to spur states to follow suit (most energy-producing states already regulate fracking). BloombergBusiness states: “There are more than 100,000 wells on federal land making up 11 percent of the nation’s natural gas production and five percent of its oil.” The rule, if implemented and adopted by states, as hoped for by the administration, would magnify the impact, “potentially slowing development of oil and natural gas resources”—which is likely the goal. As a result, BloombergBusiness adds, producers “would have faced higher costs at a time when profits already are strangled by low crude prices.”
In his 54-page decision, Wyoming’s U.S. District Judge Scott Skavdahl wrote: “Congress has not authorized or delegated the BLM authority to regulate hydraulic fracturing and, under our constitutional structure, it is only through congressional action that the BLM can acquire this authority.” He issued a preliminary injunction barring implementation of the rules, “finding that those suing had a good chance of winning their case and getting a permanent order barring enforcement.”
Different from the EPA’s arrogant decision to move forward with implementing WOTUS, a BLM spokeswoman, according to the Wall Street Journal, said: “While the matter is being resolved, the BLM will follow the Court’s order and will continue to process applications for permit to drill and inspect wells sites under its pre-existing regulations.”
Kathleen Sgamma, vice president of government and public affairs at Western Energy Alliance, a party to the lawsuit against the government, is overjoyed to finally be “getting relief from the courts regarding the regulatory overreach of the Obama administration.” She added: “We hope the BLM, EPA and other agencies that are rushing to implement even more regulations on the very businesses that create jobs will pause and actually follow the law and regulatory procedure.”
“The case will proceed to a final resolution,” BloombergBusiness reports, “probably early next year.”
Ranchers in and around New Mexico’s Gila Forest have been fighting the federal government’s plan to release “another dozen or so Mexican grey wolves.” Already, in the region, wolves since their introduction in 1998 have killed livestock, and children waiting for the school bus often do so in cages for protection. I’ve written on the sad tale several times.
On September 29, in a 7-0 vote, concerned about the impact to ranchers and elk hunters, the New Mexico Game Commission upheld an earlier decision denying the FWS permits to release Mexican wolves into federal land in southwestern New Mexico.
“Federal policy requires FWS to consult state agencies and comply with their permitting processes when releasing endangered animals from captivity,” Science Magazine reports, “even when releases are made on federal land.”
In June, according the Santa Fe New Mexican, “New Mexico Game and Fish Department Director Alexandra Sandoval rejected a federal permit for the Mexican wolf program because she said the FWS lacked a detailed plan to release up to ten captive wolves in the Gila National Forest, leaving her without enough information on what effects the predators would have on deer and elk populations.”
In response to the decision, Game Commissioner Elizabeth Ryan of Roswell, NM, said she and her colleagues could only overturn the director’s decision on the wolf permit if they found it “arbitrary and capricious.”
This string of recent decisions may have been noticed by the Obama administration. On September 22, after years of debate, and after the LPC listing was overturned, Department of Interior (DOI) Secretary Sally Jewell announced that the sage grouse would not be listed under ESA. The Washington Post reports that “the chicken-like grouse does not meet the required standard because a collaboration of federal agencies, states, ranchers, industry and environmental groups has already begun to restore areas where it breeds.” “According to state fish and game agencies,” Kent Holsinger, a Colorado attorney specializing in lands, wildlife and water law, told me: “sage grouse populations have risen 63 percent over the past two springs.”
An ESA listing would “significantly limit future development.”
The ESA, Brian Seasholes, director of the endangered species program at the Reason Foundation, states: “has a well-deserved reputation for putting severe restrictions on otherwise normal and legal forms of land and resource use, such as farming and energy development.” In an op-ed in The Hill, he adds: “When a species is listed under ESA, landowners can face steep fines, penalties and land use controls that can devalue their property.”
While environmental groups see the decision as a victory for “industry and its supporters,” others, such as Utah Governor Gary Herbert—who estimated Utah would lose more than $40 billion in economic production from oil and gas if the sage grouse were listed—are still not happy.
Rather than listing the sage grouse—which would likely be overturned in court—the DOI’s BLM has released a plan to implement more than 90 land use strategies. Herbert sees that the federal government rejected the successful sage-grouse conservation plan and says the land use plans that govern use of over 60 million acres of federal land “constitute the equivalent of a listing decision outside the normal process.” He calls the plans “a significant overreach by the federal government.” Bishop agrees: “Do not be fooled. The announcement not to list the sage-grouse is a cynical ploy… With the stroke of a pen, the Obama Administration’s oppressive land management plan is the same as a listing.” The land-use restrictions have been decried as “every bit as rigid as could be expected under ESA.”
While “the West’s sage-grouse worries are far from over,” I see that, when combined with the aforementioned stories, the unwarranted decision is still welcome news. Land-use plans will be easier to revise under a new administration than removing an ESA listing. But, more importantly, I view it as a recognition that big government overreach has reached its limits.
The good news about having so many reform-minded outsiders running for president is that they are like a band of crusaders spreading the message of big government overreach far and wide. That message is, apparently, being heard. Voters are, hopefully, ready for responsible land use. The tide is being rolled back.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.
Heartland Daily Podcast – Dr. Merrill Matthews: Hillary Clinton’s Plan Makes Prescription Drugs More Expensive
In today’s edition of the Heartland Daily Podcast, Dr. Merrill Matthews, a resident scholar with the Institute for Policy Innovation, a research-based, public policy think tank in the Dallas area, joins managing editor Kenneth Artz to discuss Hillary Clinton’s plan to make prescription drugs even more expensive.
Hillary Clinton, Democratic presidential candidate, announced in September her plan to introduce price controls on prescription drugs. Immediately the biotechnology and health care sectors tanked, as investors fled those industries, taking billions of dollars of capital with them.
But she wasn’t through. Right after telling us she wants price controls on prescription drugs, she turned to health insurance, doubling-down on Obamacare. Matthews says both these prescriptions are the wrong tonic for curing what’s wrong with the American health care system.
New research has emerged showing the world’s oceans are cooling the planet by emitting vast amounts of volatile organic compounds (VOCs) into the atmosphere. These VOCs are not presently accounted for by climate models and may explain in part or in whole the growing gap between the temperatures predicted by the models and those actually measured by satellites, weather balloons, and surface temperature stations.
The VOC isoprene, which like all VOCs tends to cool the planet, has long been known to be produced by plants and trees on land and plankton in the sea. Now, atmospheric chemists from France and Germany have discovered huge amounts of isoprene are also produced in the “microlayer” at the top of the ocean by sunlight acting directly on floating chemicals – no life being necessary. Global models presently assume total emissions of isoprene from all life-form sources – trees, plants, plankton – of around 1.9 megatons per year. The new research shows “abiotic” processes occurring in the oceans release as much as 3.5 megatons on their own.
A new form of informant is emerging in politically correct California — the “water rat.” The water rat is a person who dials “311” to report that a neighbor is wasting water in Los Angeles, or who files a complaint on the other residents of their street at savewater.ca.gov, the government’s informant tip site. The informants are creating a wave of anxiety in Hollywood, according to a report in The Hollywood Reporter. “I called the DPW (Department of Public Works) and told them there was a hose draining a huge amount of water from someone’s driveway,” the trade paper reported, of comments made by a tipster. “The water waste stopped the next day. I still check every day. It’s been more than a month, and I do feel it was due to me.”
During the month of May 2015, alone, 29,000 Californians informed on their neighbors about suspected water use violations in the drought-stricken state. Use of too much water is considered, today, in LA, an obscene form of demonstration of wealth, and is not socially acceptable for movie stars, movie producers, or executives in related industries.
To reduce their chances of being busted by the water police, wealthy Californians are planting “drought-tolerant” fruit trees, like pomegranates; figs; feijoa; and the pineapple guava. They are also adding gravel gardens, desertscapes, and California native plantings, according to the trade weekly.
The world has changed. Although few yet understand it, the revolution in the production of oil and natural gas from shale has altered the course of global energy, affecting most of the world’s people. This is not a short-term event. Citizens, industries and nations will be impacted for decades to come.
We are witnessing a modern energy miracle. For more than 30 years, U.S. crude oil production fell from 9.6 million barrels per day in 1970 to 5 million barrels per day in 2008. Oil production, an annual $200 billion industry, was in long-term decline. Industry experts proclaimed that we had reached “peak oil” and that world oil output would soon fall. But beginning in 2008, U.S. production soared, again reaching 9.6 million barrels in June of this year, recovering all of a 30-year decline in just seven short years.
For more than a century, geologists searched for pockets of oil and gas between rock layers. But by using the technological advances of hydraulic fracturing, or fracking, and horizontal drilling, geologists learned how to squeeze oil and gas out of the rock itself. Shale is a common rock formation that covers large areas in the U.S. and other nations. In a 2013 study, the Energy Information Administration concluded, “the world shale oil and shale gas resource is vast.” The shale revolution has opened additional centuries of low-cost hydrocarbon resources to modern society.
On the world stage, the most obvious shale shock impact is the precipitous drop in world oil price. The price of a barrel of West Texas crude dropped from $106 in July 2014 to $53 in January of this year. Prices have now fallen to under $45 per barrel, a level not seen since 2009. Our current $2.50 price for a gallon of gasoline is a direct result.
For the first time in four decades, the world market price for petroleum is determined by competition. The Organization of Petroleum Exporting Countries (OPEC) can no longer dictate the price of crude oil by restricting production. Small firms that led the shale revolution, such as Baker Hughes, Cabot Oil & Gas, and Range Resources, now have the ability to quickly ramp or reduce production from shale fields, depending on market price. Big oil firms like ExxonMobil and BP are reacting to the shale shock along with everyone else.
It appears that low oil prices are the new normal. In the shale fields, oil production per drilling rig has increased 500 percent in the last seven years. Energy expert Mark Mills of the Manhattan Institute estimates that the fracker cost will soon drop to $20 per barrel, on par with the low-cost oil fields of Saudi Arabia.
The geopolitical implications of the shale shock are huge. Low oil prices have crippled the economies of oil-baron nations Venezuela and Nigeria. Food and medicine shortages are rampant in Venezuela, and prices are soaring. Oil provides 80 percent of the government revenue of Nigeria, where low prices have forced budget cuts and stimulated civil unrest. In Russia, oil and gas account for over 50 percent of the national budget and 75 percent of export revenue. The Russian ruble has weakened to 71 rubles per dollar, halved in value over the last year.
On the positive side, affordable prices are great for consumers and the world’s poor. Lower oil prices are reflected not only in energy but also in transported food and consumer goods. Low prices are boosting the economies of nations not dependent upon hydrocarbon production.
The anti-fossil fuel environmental movement is in despair. For decades, proponents of the ideology of sustainable development preached that humanity was running out of oil and gas, that consumption of hydrocarbons was destroying the climate and that renewable energy was rapidly becoming a cost-effective alternative. But the shale shock has slain peak oil and promises low-cost oil and gas for centuries to come.
Oil and gas from shale will provide irresistible pressure for global carbon dioxide emissions to increase. Environmental groups are engaged in an all-out effort to stop fracking, but these efforts will ultimately fail. The world’s one billion automobiles today will double to two billion in the next 40 years, buoyed by inexpensive hydrocarbon vehicle fuel.
Electric cars and biofuels are already being impacted. US sales of hybrid and plug-in electric vehicles fell 15 percent in the first half of 2015 compared to last year. Ethanol vehicle fuel, an alternative when gasoline was priced at $4 per gallon, is no longer competitive.
Natural gas from the shale revolution provides a tremendous advantage for our nation. U.S. natural gas prices are one-half those of Europe and one-third those of Japan. Inexpensive gas now powers a growing number of power plants, keeping U.S. electricity prices low. Global chemical producers are relocating to the U.S. to use low-cost ethane feedstock from natural gas.
The shale industry will provide a U.S. competitive advantage for many years. More than two billion well-feet of horizontal shaft have been drilled in the U.S. over the last 20 years, a distance equal to 15 times around Earth. Fracturing is just starting in China, Argentina and the United Kingdom, but such efforts are more than a decade behind.
The shale shock is a tribute to U.S. hydrocarbon geologists and to human ingenuity. Dozens of small companies perfected hydraulic fracturing, launched the shale revolution and changed the world. As the late economist Julian Simon pointed out, the greatest resource of mankind is not material in the ground, but the ingenuity of people operating in a free society.
This year, coinciding with All Hallows’ Eve, U.S. House of Representatives Speaker John Boehner (R-OH) is retiring, ending a quarter-century career in Congress, which was capped by successfully organizing a historic papal speech to both houses of Congress.
With Boehner’s resignation, the Export-Import Bank (Ex-Im) is effectively dead and buried, and lawmakers jockeying to take up his mantle should commit to keeping the zombie crony-capitalist program six feet under.
Boehner was the only member of House leadership supporting the reauthorization of the Export-Import Bank, a government agency created by President Franklin Delano Roosevelt in 1934 “to remove obstacles to the free flow of interstate and foreign commerce which tend to diminish the amount thereof” and “to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry.”
Ex-Im provided a mechanism for using taxpayer money to guarantee loans to domestic businesses unwilling or unable to obtain loans for exporting goods. Congress rightly opted to allow Ex-Im’s charter to expire at the end of June, which it should have done decades earlier. A bipartisan team of Senate leaders had voted to raise Ex-Im from the dead and reauthorize it as a rider in an unrelated spending bill, but House leaders refused to take up the bill, favoring their own spending bill and leaving Ex-Im to expire on June 30.
In April, Boehner warned of dire repercussions if Congress did not reauthorize the Great Depression-era corporate welfare program, telling reporters, “There are thousands of jobs on the line that would disappear pretty quickly if the Ex-Im Bank were to disappear.”
Nearly three months after Ex-Im’s corpse was laid to rest, the spirit of Ex-Im job loss has yet to materialize, like the subject of a failed All Hallows’ Eve séance.
In September, General Electric (GE) executives claimed forcing GE to seek private financing of export loans resulted in 400 jobs being outsourced to France, but that isn’t what happened in the real world.
As reported by the Washington Examiner, GE had planned to move those jobs, which do not currently exist, to France as early as 2014. GE committed, in writing, to exporting those jobs, as a deal sweetener, swaying French regulators to approve a then-pending purchase of Alstom, a French power generation company.
So GE was planning to move U.S. jobs overseas despite receiving a huge amount of Ex-Im encouragement to keep them here. According to research conducted by Mercatus Center Senior Research Fellow Veronique de Rugy, GE was one of Ex-Im’s biggest beneficiaries, receiving a total of $2.6 billion in financial assistance from U.S. taxpayers.
Not only did Ex-Im fail to prevent GE from moving jobs overseas, the program doesn’t create jobs.
According to a 2011 American Action Fund study of Ex-Im’s economic effects, “For the economy as a whole, export financing merely redistributes jobs across the economy, rather than create more overall jobs.”
After Boehner enters retirement, his replacement should continue to treat taxpayers by resisting the urge to breathe life into Ex-Im’s dusty old bones. Ex-Im is a dead idea, and it should be allowed to rest in peace in the graveyard of failed government interventions.
In his 1998 State of the State address, Ohio Governor George Voinovich (R) famously referred to Medicaid spending as the “Pac-Man” of entitlement spending, noting how it ends up “gobbling up ever larger portions” of government funds.
By following through on entitlement reforms started in the 1990s, Congress can defuse a ticking entitlement-spending time bomb and allow states to lead the way on holding costs down and better serving taxpayers.
According to estimates from the Congressional Budget Office (CBO), the national deficit will exceed $1.088 trillion, or roughly $8,369 per U.S. household, by 2025. Much of the growth in the deficit will come from increases in major health care program costs, including Medicaid.
In 2014, $3 of every $20 spent by the federal government was spent on Medicaid. Over the next decade, CBO predicts, Medicaid spending will increase by 87 percent, ballooning from about $952.86 for every man, woman, and child in the United States in 2014 to about $1,635.77 per capita in 2024.
Block grants are a time-tested solution to the problem of skyrocketing Medicaid spending.
In the 1990s, increasing welfare costs kept federal lawmakers up at night, so Congress and President Bill Clinton worked together to transform welfare from a top-down federal program into a more efficient state-administered program.
In 1996, Congress replaced the old and busted Aid to Families with Dependent Children program with Temporary Assistance for Needy Families, allowing states to take charge of their own destinies and conform welfare to their particular circumstances. As states tailored their programs to suit their individual needs, the overall costs of entitlement programs fell and the quality of service increased.
At the time, lawmakers seriously considered including Medicaid block-grants in the reform bill that ultimately became the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). In early 1996, Clinton was open to including Medicaid in the reforms, as recounted by Peter Edelman, an anti-reform advisor to the president.
In a 1997 article for The Atlantic, Edelman, who opposed PRWORA so much that he quit his job after Clinton signed it, wrote, “When the governors came to town for their winter meetings early last year, the President invited them to draft and submit new proposals on welfare and, for that matter, Medicaid.”
Medicaid is fundamentally broken because of how it was designed. New York, a state with about 6.2 percent of the nation’s population, sucked up 12.4 percent of all federal Medicaid money in 2014. As that fact indicates, Medicaid has powerful incentives for high spending by states like New York that can afford it. The more a state spends other people’s money, the more of other people’s money it gets.
Finishing the work Congress and Clinton started with PRWORA would empower states to improve Medicaid with new ideas such as global spending caps, health savings accounts, and program budget rebalancing. Cost overruns would be discouraged, as state lawmakers would face pressure from taxpayers to avoid mismanagement and optimize for efficiency.
It’s urgent for Congress to build on the work it started more than 20 years ago and block-grant the “Pac-Man” Medicaid monster before it gobbles up an even bigger proportion of cash-strapped state budgets.
If you don’t visit Somewhat Reasonable and the Heartlander digital magazine every day, you’re missing out on some of the best news and commentary on liberty and free markets you can find. But worry not, freedom lovers! The Heartland Weekly Email is here for you every Friday with a highlight show. Subscribe to the email today, and read this week’s edition below.LeftExposed.org Profile of the Week: Center for American Progress
LeftExposed.org is a new Heartland Institute project devoted to creating accurate profiles of prominent individuals and organizations on the political Left with a special focus on groups in the global warming (a.k.a “climate change”) debate. Project Manager Emily Zanotti and principal researcher Ron Arnold have written a devastating profile of the Center for American Progress, a political spin-machine for the Democratic Party that pretends to be a think tank. Zanotti and Arnold document the organization’s founding, funding, and latest scandals. READ MORE Roadway Impacts of Industrial Silica Sand Mining
Isaac Orr and Mark Krumenacher, Heartland Policy Study
Hydraulic fracturing – “fracking” – has produced tremendous benefits to American energy consumers. The fracking process requires a special type of sand, called “frac sand,” mined in Wisconsin and a few other states. What impact has the rapid growth of fracking had on communities near frac sand mines? In this new Heartland Institute Policy Study, authors Orr and Krumenacher address “the potential impacts of industrial sand operations on the public roadways and [provide] an overview of successful methods used to minimize those potential drawbacks while maximizing the benefits of industrial sand mining to the community.” READ MORE Buy Your Tickets Now: 31st Anniversary Benefit Dinner Is Next Week!
The Heartland Institute’s 31st Anniversary Benefit Dinner will take place Thursday, October 8 at The Cotillion, 360 South Creekside Drive in Palatine, Illinois. This year’s theme is “The Heartland versus The Ruling Class,” featuring keynote speaker Angelo Codevilla, Ph.D., author of The Ruling Class: How They Corrupted America and What We Can Do About It. Donald J. Devine, Ph.D., will receive this year’s Heartland Liberty Prize. Join us for dinner, drinks, great conversation, and fellowship in liberty! MORE INFO HERE Featured Podcast: Wayne Allyn Root: Liberalism Leads to Lack of Economic Freedom
Wayne Allyn Root, author, entrepreneur, and television and radio personality, joins Heartland Research Fellow H. Sterling Burnett to discuss the problems of big government and how advocates of liberty must be relentless in their efforts to reclaim the country. Root laments the fact government power and influence continue to grow and the United States continues to drop on the Economic Freedom Index. LISTEN HERE 31st Anniversary Sale at the Heartland Store! 31% Off!
The Heartland Institute is celebrating its 31st anniversary on Thursday, October 8. To commemorate this special occasion, get a 31% discount on one item you purchase from the Heartland Store. Visit the store to find t-shirts, posters, and even poker cards featuring images of freedom’s founders and champions plus other great products. Use the code “31years” for big savings! SHOP HERE The U.S. Coal Industry Is Under Regulatory Assault
H. Sterling Burnett, Huntington (WV) Herald-Dispatch
The once-vibrant coal industry is being crippled by increasingly onerous and scientifically unjustified regulations on carbon emissions. As a result of Obama’s anti-coal policies, nearly a third of coal miners in Kentucky have lost their jobs since 2008. New and existing regulations have been made more stringent by Obama and have caused the premature closure of dozens of U.S. coal-fired power plants. READ MORE Without Boehner, Export-Import Bank Is Over
Jesse Hathaway, The American Spectator
The resignation of House Speaker John Boehner may mean the Export-Import Bank (Ex-Im) is effectively dead and buried, a significant victory for free-market advocates. Boehner was the only member of House leadership supporting reauthorization of the Export-Import Bank, a government agency created by President Franklin Delano Roosevelt in 1934. Lawmakers jockeying to take up Boehner’s mantle should commit to keeping the zombie crony-capitalist program six feet under. READ MORE
Obama’s Solar Energy Socialism
Isaac Orr, The Hill
Taxpayers have been bilked for billions of dollars for decades so politicians could funnel money into solar firms like Solyndra, which a new investigation by the Inspector General of the Department of Energy (DOE) confirms engaged in a “pattern of false and misleading assertions” to win a loan guarantee from DOE. Obama’s solar energy socialism will not lead to a utopia of cheap energy but will instead drive up costs for U.S. households and businesses. READ MORE Bonus Podcast: Norbert Michel: The Benefits of Bitcoin
Norbert Michel, research fellow at The Heritage Foundation, joins Heartland Research Fellow Jesse Hathaway to discuss the innovative digital currency Bitcoin. Michel explains how Bitcoin works and why policymakers should get out of the way of this financial revolution instead of trying to ban or regulate it using outdated financial models. READ MORE Families Intervene Against Lawsuits Challenging Nevada ESA Program
Heather Kays, The Heartlander
When Nevada legislators approved the Nevada Education Savings Account Program (NESA) earlier this year, school choice advocates celebrated their biggest victory ever. Naturally, the Evil Empire has struck back, filing two lawsuits alleging the program violates the state constitution’s ban on public funding of religion. The Institute for Justice is defending NESA, representing five Nevada families. READ MORE How Missouri Should Handle Transitional Care Facilities
Matthew Glans, Research & Commentary
Senior citizens have longer recovery rates after surgery, and the market has responded with transitional care facilities (TCF), which offer an alternative many seniors use for post-acute and rehabilitation health care needs. Heartland Senior Policy Analyst Matthew Glans writes aResearch & Commentary urging Missouri lawmakers to give this innovation a chance to succeed by not adding TCFs and other facilities to the state’s certificate of need program. READ MORE Invest in the Future of Freedom! Are you considering 2015 gifts to your favorite charities? We hope The Heartland Institute is on your list. Preserving and expanding individual freedom is the surest way to advance many good and noble objectives, from feeding and clothing the poor to encouraging excellence and great achievement. Making charitable gifts to nonprofit organizations dedicated to individual freedom is the most highly leveraged investment a philanthropist can make. Click here to make a contribution online, or mail your gift to The Heartland Institute, One South Wacker Drive, Suite 2740, Chicago, IL 60606. To request a FREE wills guide or to get more information to plan your future please visit My Gift Legacy http://legacy.heartland.org/ or contact Gwen Carver at 312/377-4000 or by email at firstname.lastname@example.org.
President Barack Obama recently made headlines in Nevada by promoting the “progress” his administration has made in promoting solar power and fighting climate change. Most media outlets conveniently forgot to mention one crucial fact: Without government mandates, subsidies, and sweetheart deals, the sun would quickly set on Obama’s solar empire.
The administration has taken a two-pronged, carrot-and-stick approach to propping up the solar industrial complex. Carrots have been lavished on the solar industry by encouraging states to enact policies such as renewable energy mandates, which require a certain percentage of the electricity generated in the state come from renewable sources, and net-metering policies, which subsidize wealthy rooftop solar owners at the expense of middle- and low-income families.
Taxpayers have been bilked for billions of dollars for decades so politicians could funnel money into solar firms like Solyndra, which a new investigation by the Inspector General of the Department of Energy (DOE) confirms engaged in a “pattern of false and misleading assertions” to win a loan guarantee from DOE. The Inspector General also said DOE failed to do its job in vetting the loan, because of pressure from the White House.
Despite all these carrots, solar produces just 0.4 percent of the electricity generated in the United States, according to the Energy Information Administration, which is why Obama is increasingly turning toward using the stick.
The Environmental Protection Agency (EPA) has wielded those sticks, circumventing congressional authority in order to punish conventional sources of energy such as coal, natural gas, and oil by saddling them with a series of costly, burdensome regulations. Those regulations, such as the Clean Power Plan and new rules regulating methane from hydraulic fracturing sites, drive up the cost of energy while providing no benefit to the environment.
An analysis by the Cato Institute, using EPA’s own climate models, showed the carbon dioxide emissions reductions forced by the Clean Power Plan would offset only 0.02 degrees C of anticipated warming by the year 2100, an amount so small it falls below the margin of error for the model, meaning this plan would cost billions of dollars and drive up energy costs for no measurable benefit. The increase in costs will hit low-income families the hardest, a fact even EPA boss Gina McCarthy has admitted. Maybe that’s what Obama means when he claims he stands up for the middle class.
The Obama administration is subjecting the energy sector to the same harmful ideology that has stagnated the overall economy (except for oil and natural gas development from fracking, ironically). He is attempting to build up the weak—solar and wind—by tearing down the strong. Obama’s plan is to build up inefficient and costly forms of energy by tearing down reliable and affordable energy sources.
Obama’s solar energy socialism will not lead to a utopia of cheap energy but will instead drive up costs for U.S. households and businesses and further tank the nation’s economy along with the forms of energy we depend on to power our hospitals, schools, and refrigerators. All of that will accomplish nothing for the environment.
The solar industry gets the carrots, and the rest of us get the sticks.
Last month, a man by the name of Dr. Jagadish Shukla (along with several other scientists) sent a letter to the President and Attorney General Loretta Lynch, demanding that RICO charges – that is, “racketeering, influenced and corrupt organization” charges – be brought against so-called “climate deniers,” as though those who disagree with the theory that global climate change is inherently man made and undeniably catastrophic, were joined together in a conspiracy that amounts to organized crime.
Dr. Shukla is a meteorologist and professor at George Mason University, but the letter itself was posted on the Institute of Global Environment and Society website (it has since been replaced with a notice that it’s posting was an unfortunate mistake – odd since the URL featuring the “mistake” message, was the one listed on a press release touting the letter itself), bringing up the possibility that Shukla’s actions were either endorsed or commissioned by the IGES, and that Shukla may have benefited financially.
This is a problem; the IGES receives millions in taxpayer dollars each year for its research, and such an offensive measure as calling for a RICO investigation is very clearly partisan politics.
“IGES’s recent decision to remove documents from its website raises concerns that additional information vital to the Committee’s investigation may not be preserved,” Smith wrote in a Thursday letter to Shukla.
Smith asked Shukla to preserve all internal documents and communications that could be relevant to the committee’s investigation, and to ask all current and former employees and contractors to do the same…
Shukla’s letter to Obama and Lynch “raises serious concerns because IGES appears to be almost fully funded by taxpayer money while simultaneously participating in partisan political activity by requesting a RICO investigation of companies and organizations that disagree with the Obama Administration on climate change,” Smith wrote.
Smith’s letter cited prior reporting by the Washington Free Beacon revealing that IGES has received $63 million in government funds since 2001, which comprised 98 percent of its total revenue in that time according to annual tax filings.
This money comes from several sources, including the National Science Foundation (NSE), the National Oceanic and Atmospheric Administration (NOAA), and NASA. It’s supposed to be used for research.
It goes deeper, though, than just a conflict of interest involving a non-profit. Much of that federal money, too, appears to have eventually ended up funding Dr. Shukla’s paycheck.
IGES employs just a few people – Dr. Shukla, his wife and his daughter among them. And according to a report by National Review‘s Ian Tuttle, the Shukla’s seem to do very well, “pocket[ing] $5.6 million in compensation from IGES since 2001” (not counting what their daughter, Sonia earned). And, according to Tuttle, that’s on top of what Dr. Shukla earns as a professor at George Mason, a “double-dipping” scenario that is, to say the least, frowned upon in academia. His partner, another professor at George Mason, appear to also “double dip,” taking funds from George Mason as well as from IGES. According to Climate Watch, the story goes even deeper and involves allegedly shifting grant money, earmarked for IGES to other projects, including an educational charity.
In sending the letter to President Obama demanding transparency among “climate skeptics,” a well-known professor in the global climate movement may have exposed his own questionable handling of finances. Rep. Lamar Alexander has promised to “get to the bottom” of the interrelationship between IGES, Shukla’s work (both public and academic), and how taxpayers might have inadvertently funded some things they didn’t expect to. The results should be very interesting.
Cross-posted from LeftExposed.org.
In The Tank Podcast (ep6): Alcohol Prohibition, Economic Sinkhole States, and Presidential Campaign Blunders
With John Nothdurft out of town, Jim Lakely stands in to host with Donny Kendal for episode #6 of the “In The Tank” podcast. This weekly podcast features (as always) interviews, debates, roundtable discussions, stories, and light-hearted segments on a variety of topics on the latest news. The show is available for download as part of the Heartland Daily Podcast every Friday.
In today’s episode of In The Tank, Donny and Jim debate about the unintended consequences of alcohol prohibition, and discuss proposed minimum wage hikes in Berkeley, California and elsewhere. John Nothdruft also comes on to discuss the financial “State of the States” from Truth in Accounting, and potential Mars contamination. The trio also talk about some of the best presidential campaign and debate blunders.
- These places banned booze. Now they’re dealing with something far worse – Meth
- 2015 Financial State of the States
- $15 minimum wage? Berkeley shoots for $19 an hour
- Water on Mars: Nasa faces contamination dilemma over future investigations
We also talk about the infamous “Rock” political ad by Democratic presidential candidate Mike Gravel, which is embedded below.
This is the abstract from a new report “Putting People First: An Alternative Perspective with an Evaluation of the NCE Cities ‘Trillion Dollar’ Report,” authored by Wendell Cox and published by the Center for Opportunity Urbanism. Download the full report (pdf) here.
A fundamental function of domestic policy is to facilitate better standards of living and minimize poverty. Yet favored urban planning policies, called “urban containment” or “smart growth,” have been shown to drive the price of housing up, significantly reducing discretionary incomes, which necessarily reduces the standard of living and increases poverty.
This makes the alleviation of poverty, the opportunity for better living standards and aspirations for upward mobility secondary to contemporary urban planning prescriptions. Despite this, calls to intensify land use regulations are becoming stronger and more insistent.
A New Climate Economy report (NCE Cities report), by Todd Litman, “Analysis of Public Policies that Unintentionally Encourage and Subsidize Urban Sprawl,” contends that the failure to implement urban containment policy (smart growth) costs more than $1.1 trillion annually in the United States. The urban containment policies favored by the NCE Cities report seek substantially increase urban population densities and transfer urban travel from cars to transit, walking and cycling.
There are serious consequences to such policies, which lead to lower standards of living and greater poverty. This report evaluates the NCE Cities report which places urban containment policy as its most important priority. This Evaluation report offers an alternate vision, focused on improving living standards for all, while seeking to eradicate poverty.
The NCE Cities report relies heavily on social costing and externality analysis of lower density development. While these are useful tools, they are ultimately subjective and should be used with great caution.
This Evaluation identifies a number of issues with respect to the NCE Cities report cost analysis.
1. Nearly 90% of the cost is attributable to personal vehicle use, and is based on a fixed cost per mile differential between the Most Compact (densest) quintile of US urban areas and the four quintiles that are less dense. This Evaluation finds a range of differences in per capita mileage among the quintiles that is far smaller than the NCE Cities report estimates. Adjustment for this and other issues would reduce the NCE Cities report cost estimate by nearly 85 percent, to a maximum that is under $200 billion. Other, unquantified issues are identified that could reduce the reduced estimate even further.
2. The NCE Cities report largely dismisses the housing affordability consequences of urban containment policy. By rationing land, urban containment policy drives up the price of housing and has been associated with an unprecedented loss of housing affordability in a number of metropolitan areas in the United States and elsewhere. Urban containment policy has also been associated with greater housing market volatility. This is a particular concern given the role of the 2000s US housing bubble and bust in precipitating the Great Financial Crisis that resulted in a reduction of international economic output.
3. Urban containment policy has significant negative externalities. A recent economic analysis associates an annual loss of nearly $2 trillion in gross domestic product in the United States with more stringent housing regulation. This estimate would nullify the NCE Cities report cost of dispersion estimate by more than 1.5 times. More significantly, it would dwarf the NCES Report cost estimate as adjusted in this Evaluation.
The purpose of public policy in cities is not to focus a particular urban form, planning philosophy, type of housing, population density, or mode of transport. The purpose is rather to seek better lives for people. The most appropriate form of urban planning policy is that which facilitates better living standards and less poverty. There is increasing evidence that urban containment policy is not only irreconcilable with housing affordability and price stability but also with better standards of living and reduced poverty.
Wendell Cox is Chair, Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), is a Senior Fellow of the Center for Opportunity Urbanism (US), a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California) and principal of Demographia, an international public policy and demographics firm.He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.
In today’s edition of The Heartland Daily Podcast, we listen in as Research Fellow Heather Kays joins the Freedom Foundation’s Freedom Daily Podcast with host Jamie Lund. Kays joins the podcast to discuss education policy and the top five reasons teachers unions must change.
Kays and Lund discuss an article Kays wrote on the issue of teachers unions and how they negatively impact education. Kays says while there was a time and a place teachers unions made sense, now they have more power than is reasonable and are redundant since job protections laws now exist for everyone. Lund and Kays also discuss education policy in Washington state, where teachers unions have a huge amount of power.
The national Republican Party is currently in the midst of a slow-motion train wreck. Their presidential primary has amply demonstrated their Base’s profound disaffection. You can call it anger, you can call it delusion – you can call it a tuna fish sandwich. But when 70+% of your voters don’t like anyone having anything to do with anything you’ve been doing – you absolutely call it a problem.
And when it’s this big, it’s a problem for the Party – not their voters. There’s an old banking joke: If someone owes the bank $10,000 – that someone has a problem. But if someone owes the bank $10 million – the bank has a problem. 70+% is the bank having a problem.
The Party remains somewhere in Egypt – along the banks of Denial. It likes to dismiss these people with incredibly flattering terms like “Crazies.” And elected officials these people actually like with terms of endearment like “Jackass.” Because you always go far when insulting the majority of your voters.
Speaker Rep. John Boehner (R-OH) is turning in his gavel and leaving Congress – apparently because everyone thinks he’s done a phenomenal job. And on his way out the door he is denouncing his voters for having “unrealistic expectations.” He would know – they have them in large part because his Party and their campaign minions set them every election cycle when they’re lying to get votes.
They last October ran thousands of ads promising to defund ObamaCare and President Barack Obama’s unConstitutional fiat amnesty. People then ridiculously expected them to defund ObamaCare and Obama’s amnesty. Talk about “unrealistic expectations.” Immediately after the election, the GOP funded both. And are now saying to their voters what Otter said to Flounder in Animal House: “You f***ed up – you trusted us.”
All of this is part of a larger problem. The GOP appears to be at best utterly indifferent to – at worst complacently complicit with – this President’s all-encompassing, omni-directional unConstitutional overreaches. He and his many, many political bureaucrats are every second of every day dramatically exceeding their legal bounds to exponentially grow government. And the GOP has done just about nothing to stop any of it.
We the People gave the GOP the Congress – and thus the power of the purse. Yet every time a potential political scrap looms anywhere way out on the distant horizon – the GOP Leadership goes into a preemptive cringe. And screeches from their crouch that they pinky-swear-promise they absolutely will not use their power of the purse. One would think that if you from a deep sleep shook awake Senate Majority Leader Sen. Mitch McConnell (R-KY), he would reflexively yell “No shutdown!”
What HAS the GOP done? Well, they sued ObamaCare. Which is at best extra-Constitutional – I don’t recall any of our Founders mentioning calling the trial bar as a remedy to tyranny. But there is a non-shutdown, Constitutional remedy at their disposal – they can impeach bureaucrats.
A government shutdown (which is really only ever like a 13%-of-the-government shutdown) is inarguably high profile – and thus the merest mention thereof causes Republicans to run for a corner in which to collectively cower. A Presidential impeachment is also very visible.
But the American people’s initial response to impeaching a bureaucrat would most likely be “What? Who?” The repeal of these faceless cogs in Obama’s Machine would allow the GOP to not just pretend to oppose this President’s agenda – but ACTUALLY oppose this President’s agenda. In a way that has little prospective political cost – and thus shouldn’t cause their fragile constitutions any discomfort. And it affords them opportunities to message on the concepts and advantages of legal and less government.
Arguably no bureaucrat deserves impeachment more than Environmental Protection Agency (EPA) head Gina McCarthy. Arizona Republican Congressman Rep. Paul Gosar (R-AZ) rightly thinks it’s time.
For far too long, Congress has allowed unelected bureaucrats and executive branch officials to slowly bend and break the laws of this country in order to further their own partisan political agendas. We have reached a breaking point where the American people have no faith in the fundamental checks and balances put in place by our founders to protect our liberties and freedoms.
On numerous occasions, EPA Administrator Gina McCarthy broke the law by lying to Congress in order to force misguided and overreaching regulations, which have no scientific basis, down our throats. Perjury before Congress is perjury to the American people and an affront to the core principles of our Republic and the rule of law…
Lying to Congress is not an unserious thing. This Administration’s first Attorney General, Eric Holder,was found in Contempt of Congress for withholding information therefrom. A problem with a Contempt of Congress charge for the Attorney General is – the Attorney General is the one who is supposed to mete out punishment. When the Executive Branch is supposed to discipline itself,….
Impeachment bypasses this self-dealing. Congress impeaches – the bureaucrat goes. Miss McCarthy repeatedly lied about policies that are incredibly damaging to just about every sector of the private economy. She repeatedly lied so as to protect and advance their anti-capitalism agenda – at the expense of the rule of law and Congressional oversight. She needs to go.
The GOP should remove her – and use the process as an opportunity to detail the very obvious case for why. And when they see the sky doesn’t come crashing down upon them – they should feel liberated to lather, rinse and repeat with all manner of McCarthy’s out-of-control colleagues.
And as an added bonus – their Base will love it. It is the very good policy – that is also very good politics. If the GOP wants to save themselves from a fate worse than Trump – they should get busy doing it.
To try to justify mandating Title II utility regulation of broadband and the blocking of the Comcast-Time Warner acquisition, the Administration and FCC had to gerrymander broadband definitions to reach their political goal that wireless broadband service not be considered an official competitor to wireline broadband service.
Never mind the obvious: that the nearly three quarters of Americans who use a smartphone know that one can functionally do most everything one wants on a mobile smartphone/tablet/laptop that one can do on a wireline connection. Also never mind: tens of millions of Americans who use only wireless broadband for all their Internet needs.
To try to justify preempting State limitations of gigabit muni-broadband build-outs and its cheerleading for Government Owned Networks (GON) to politically and economically devalue commercial broadband competition, the government had to ensure that the wireless industry could not create four more very-high-speed competitors to wireline cable and telco broadband providers.
It did so by unilaterally changing Federal spectrum policy to starve and limit the amount of licensed and unlicensed spectrum available to wireless users long-term, because for smartphone users — spectrum is speed. Limit spectrum, limit speed, to maintain the charade that wireless broadband does not compete with wireline broadband.
Rather than fulfilling President Obama’s pledge to make available another 500 megahertz of spectrum available by 2020 to meet the projected spectrum demand for licensed and unlicensed spectrum, the Administration unilaterally changed U.S. spectrum policy. It effectively has shut down the commercial spectrum pipeline after the spectrum in the upcoming incentive auction is sold. In addition, it is now effectively requiring all future spectrum availability beyond the incentive auction to be permission-dependent-spectrum-sharing with the Federal Government.
CTIA’s spectrum pipeline research concludes that the Nation’s empty spectrum pipeline will leave the U.S. wireless industry ~350 MHz short of the broadband-suitable spectrum they need to just keep up with projected demand.
CTIA’s spectrum pipeline report also says: “Today, the federal government has sole or primary use of between 60-70% of spectrum suitable for wireless broadband.”
This federal spectrum hoarding policy perversely leads to unnecessary spectrum scarcity rather than possible spectrum abundance.
It also has huge negative implications for both the evolution of 4G to 5G wireless and for the future of “permissionless innovation.”
Government Throttling 4G evolution to 5G?
The big difference between 4G and 5G is speed; 5G wireless is expected to offer broadband speeds 30-50 times faster than 4G precisely because it enables the aggregation and bonding of many different bands of spectrum — licensed and unlicensed spectrum – simultaneously via more advanced, next generation, 5G software algorithms.
Since wireless broadband speed is largely physically determined by the aggregate spectrum MHz available to a user, the Federal government’s de facto hoarding of 60-70% of the Nation’s spectrum for federal bureaucracies’ sole or primary use, combined with its refusal to make more licensed or unlicensed spectrum available after the incentive auction, means federal spectrum policy is de facto set to ensure 5G wireless practically cannot reach its gigabit speed potential. It also ensures that 5G wireless broadband cannot reach its full potential for OTT video streaming competition.
Simply, the Administration’s de facto forced spectrum scarcity policy is anti-5G and anti-very-high-speed wireless broadband competition to wireline broadband, because 5G’s much faster speed potential can only be met if the federal government makes available dramatically more licensed and unlicensed spectrum suitable for broadband, and allows licensed and unlicensed spectrum to be aggregated and bonded when not in use – without government permission required.
The Future: Permission-Dependent-Spectrum-Sharing with the Federal Government?
The federal government’s decision to effectively shut-down the spectrum pipeline for more licensed and unlicensed spectrum use threatens the longstanding and hugely successful Federal policy of “permissionless innovation” which is not requiring the government to pre-approve innovations before they can be market-tested or go to market.
That’s because “sharing” spectrum with a federal government bureaucracy that currently has spectrum rights to be the sole or primary user of the spectrum isn’t really “sharing” – it is waiting for the “big dog’s” scraps and hoping the “big dog” doesn’t grow more hungry or territorial about their spectrum bone over time.
Simply, the government-shared spectrum concept implicitly is government-permission-dependent spectrum and a classic “mother-may-I” regulatory model where innovators must seek preapproval to experiment and market test their innovations and wait for the FCC to get around to the matter in their own sweet time. This is not gigabit 5G innovation speeds its innovation at the speed of government.
The Government’s new permission-dependent spectrum policy is in stark contrast to the longstanding, successful, and operative “permissionless-innovation” policy for both unlicensed spectrum and licensed spectrum.
This all has a lot of relevance to the current concerns over how LTE-U and WiFi share unlicensed spectrum.
Google (via its New America Foundation front-proxy), Public Knowledge, FreePress, and Common Cause have proposed in comments to the FCC that licensed spectrum holders should not be trusted to use unlicensed spectrum because they have “both the ability and strong incentives to use LTE-U and LAA to engage in anti-competitive behavior harmful to consumers.”
This is the exact same logic and argument that these interests made that broadband competitors should be considered guilty by the FCC of net neutrality violations until they are proven innocent by the FCC; and that they should be subject to preemptive Title II utility regulation to preserve and a free and open Internet for consumer.
In sum, hopefully the FCC remembers the amazing plethora of phenomenal innovations that have occurred over the last two decades because of an FCC policy of “permissionless innovation” that did not seek to micromanage wireless technology transitions from 1G to 2G to 3G to 4G wireless.
And hopefully the FCC does not adopt FreePress and Public Knowledge’s preemptive-regulation theory that market-based, wireless broadband competition should be presumed to have “both the ability and strong incentives to use LTE-U and LAA to engage in anti-competitive behavior harmful to consumers…” because that could throttle the “permissionless innovation” evolution of 4G to gigabit-speed 5G wireless over the next few years.
Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.
The coal industry is beset by regulatory slings and arrows threatening to cripple this once vibrant industry. These assaults, however well-intentioned some may be, won’t do anything to reduce air pollution or change the world’s climate.
In a 2008 San Francisco Chronicle editorial board interview, presidential candidate Barack Obama remarked, “If somebody wants to build a coal-fired power plant, they can. It’s just that it will bankrupt them. Under my plan electricity rates would necessarily skyrocket.”
That’s one promise he has kept. Since assuming the presidency, Obama has waged a sustained war on coal.
The Obama administration’s misguided focus on reducing greenhouse gas emissions in order to prevent a theorized climate change catastrophe is forcing the closing of coal-fired power plants and the coal mines that supply their fuel. The president’s climate obsession is bad for the economy, threatens electric power reliability and affordability, and will do nothing to prevent climate change, an impossible goal.
The coal mining industry has been contracting in fits and starts for a couple of decades. New mining techniques and technologies, combined with natural gas supplanting coal as a source of fuel for new electric power plants, have caused a loss of jobs in the coal country.
The industry’s gradual decline, however, became a steep fall after Obama became president. According to Energy Information Administration (EIA) data, coal supplied 48 percent of the nation’s electricity in 2007, and 39 percent in 2014.
A report by the American Action Forum (AAF) details the devastating impact Environmental Protection Agency regulations have had on the coal mining industry. As a result of Obama’s anti-coal policies, 30.7 percent of the coal miners in Kentucky have lost their jobs since 2008, and mining in Wyoming suffered a 2.8 percent employment decline.
In the early 2000s, high natural gas prices brought a resurgence in interest in coal-fired power plants. Numerous older plants slated for retirement were refurbished and relicensed, and 151 new coal-fired plants were proposed or began construction between 2000 and 2007. As natural gas prices fell in the wake of the fracking revolution, some of those projects were canceled, but what really caused the industry to hit the brakes was Obama’s war on coal. Of the 151 plants under construction or planned in 2008, only 22 have come online. By contrast, 104 projects were canceled or placed on hold, with the remaining 25 still in the planning stage.
A 2011 National Energy Technology Laboratory report projected zero new coal-fired electric plants would come online after 2018.
New and existing regulations have been made more stringent by Obama and have caused the premature closure of dozens of U.S. coal-fired power plants. EIA reports between 2009 and 2014, 265 coal-fired power units, at dozens of power plants, ceased operations. Those closures took more than 28 gigawatts of electricity offline, enough to power approximately 12.6 million homes.
AAF estimates the closures have cost 39,684 jobs at coal-fired electric power plants, a 28.8 percent reduction in total employment.
Another 60 GW of coal power plant capacity will be retired by 2020 because of existing regulations – enough electricity generating capacity to power about 27 million homes. Other analysts say the toll could be as high as 72 GW because federal agencies have in the past dramatically underestimated the number of power plants closed and electricity taken offline due to regulatory restrictions.
Seventy-two gigawatts is enough to power every home west of the Mississippi River except for households in Texas.
EPA’s proposed Clean Power Plan and ozone regulations would prematurely shutter four times as many coal-fired power plants as have already been taken offline as a result of the Obama administration’s restrictions.
The North American Electric Reliability Corporation, the agency charged with ensuring the reliability of the nation’s electric power system, warns the Clean Power Plan will result in early power plant retirements representing more than 134 GW of generation, which the organization says will threaten the nation’s electric power grid.
How are consumers faring in this war on coal? Despite low natural gas prices and historically low inflation, electric power prices have risen 15 percent since Obama became president. That is a bitter irony: He has consistently claimed he wants to help the poor and middle-income Americans, yet higher energy prices hurt the poor and those on fixed incomes the most.
And all of this pain is for exactly nothing. New clean coal technologies keep these plants from polluting the air with soot, and the closing of coal-fired power plants has no effect at all on Earth’s temperature.
Unfortunately, Obama is not about to let the facts sway him, if history is any guide. It will take a new president and Congress working together to reverse fortunes of the coal industry and electric power consumers.
French President François Holland Predicts There Will Be a Climate Change Agreement this Fall in Paris, But is Uncertain as to the Terms
President François Hollande of France says an agreement at the COP 21 climate change talks this fall is now assured, according to a report in The New York Times. “Everyone is now convinced there will be agreement in Paris. But the question is, what kind of agreement?” Hollande said.
The paper of record reports that there is analysis being published next week that indicates that the proposed agreement “would be the biggest reduction in the history of global climate politics.”
That would be an end to 20 years of “disappointing negotiations,” the paper reported.
“Yet the analysis also shows that the nations are still a far way from meeting their own shared target, set in 2010, of limiting global warming to about 3.6 degrees Fahrenheit. That level of warming, while potentially producing dire effects on agriculture, sea level and the natural world, might at least be tolerable, some experts believe,” the paper reports. “The pledges countries have made are a big step forward, but not sufficient — not even close,” said John D. Sterman, a professor of management at the Massachusetts Institute of Technology, and a climate change consultant.
“Making any serious pledge has been a political challenge in many countries, including the United States, where President Obama has encountered vociferous opposition in Congress. Governments are unlikely to want to reopen those fights in the remaining two months before the Paris talks. Thus, many analysts expect that any final deal struck in Paris will probably not be enough to forestall dangerous levels of global warming,” the paper reports.
In today’s edition of The Heartland Daily Podcast, H. Sterling Burnett, managing editor of Environment & Climate News, speaks with Wayne Allyn Root. Root, referred to as the capitalist evangelist, is an author, entrepreneur, and television and radio personality. Root joins Burnett to discuss the problems of big government and how climate change is being used to expand government control.
Root says it is more important than ever to fight back against moves to expand government power and influence. He laments the fact that the United States is continuing to move down the economic freedom index, now at 16th. To reclaim the country, Root says advocates of liberty must be relentless in our efforts.
Since the economic downturn of 2008, the critics of capitalism have redoubled their efforts to persuade the American people and many others around the world that the system of individual freedom and free enterprise has failed.
These critics have insisted that it is unbridled capitalism, set lose on the world, which is the source of all of our personal and society misfortunes. We hear and read this not only in the popular news media and out of the mouths of the political pundits. We see it also in the election of a radical socialist to the leadership of the British Labor party, and a self-proclaimed “democratic socialist” riding high in the public opinion polls for the Democratic Party’s nomination to the U.S. presidency.
The first observation to make is that many if not most of the social and economic misfortunes that are most frequently talked about are not the product of a “failed” free enterprise. The reason for this is that a consistently practiced free enterprise system no longer exists in the United States.
The Heavy Hand of Regulation
What we live under is a heavily regulated, managed and controlled interventionist-welfare state. The over 80,000 pages of the Federal Register, the volume that specifies and enumerates all the Federal regulations that are imposed on and to which all American businesses are expected to comply, is just one manifestation of the extent to which government has weaved a spider’s web of commands over the business community.
The Small Business Administration has estimated that compliance costs imposed on American enterprise by this mountain of regulations maybe upwards of $2 trillion a year.
At the same time, the tangled web of corrupt government-private sector relationships is also reflected in the size and cost of special interest lobbying activities connected with the Federal government.
According to the non-partisan Center for Responsive Government, in 2014 there were almost 12,000 registered lobbyists working in Washington, D.C. Their job is to influence the writing of legislation that serve special interest groups attempting to obtain sectorial tax breaks, anti-competitive regulations or market restrictions, redistributions of wealth, or taxpayer funded subsidies and protections from the realities of free market competition and trade, or to advance various ideologically motived “causes.”
Spending Big Money to Plunder Others
The Center for Responsive Government, which tracks who lobbies and for what purposes and causes through the targeting of specific holders of or contenders for Federal elected office, including the Presidency and both Houses of the U.S. Congress, estimated that in 2014 lobbyists spent nearly $3.25 billion in the pursuit of privileges for some at the expense of others in society.
Just alone in 2013-2014, over $500 million dollars was spent on lobbying activity by the financial, insurance, and real estate sectors. Ideological and single-issue groups spent more than $352 million. Lawyers and lobbyists spent $151.5 million; health industry companies spent $142 million; and labor unions “invested” $140.6 million on lobbying.
Communications and electronic companies spent $116 million; energy and natural resource sector, $115 million; agribusiness, $77 million; construction companies, $67.7 million; transportation firms, $61 million, and defense companies, $25.4 million.
Based on the Senate Office of Public Records, the Center for Responsive Government calculates that lobbyists spent close to $41 billion on lobbying activities over the last 15 years, since the beginning of the twenty-first century.
These billions of special interest-serving dollars have influenced and affected the spending of trillions of dollars of Federal government expenditures over the same decade and a half. The lobbyists work with and use those who hold high political office so the special interest and ideological groups who employ them can plunder many others in American society; they can be viewed as among the most successful enterprisers in the country.
The Best Politicians Money Can Buy
But the symbiotic relationship between politicians and special interest groups of all types does not begin or end with the formal lobbying for legislative, regulatory and fiscal privileges and favors in the halls of Congress and the White House in Washington, D.C.
It goes on all year round all over the country in the form of campaign and electioneering contributions to get those elected or reelected who can be depended upon to direct the powers of government in ways that interest groups and ideological activists desire and from which they hope to benefit.
Again according to the Center for Responsive Politics, in 2013-2014, individuals and PACS donated over $1.6 billion to 1,671candidates of both major political parties running for office in the Senate and the House of Representatives. Democratic Party candidates received $736 million, while Republican Party candidates received $901.5 million.
While it may seem unseemly to suggest such a thing, these amounts for legislative lobbying and campaign funding, of course, do not include more millions of dollars that grease the palms of those in political power or who want to be in those lofty positions that represent funding that are outside the official channels in the form of “gifts,” travel junkets, off-the-books expense accounts, and out-and-out bribes of one type or another.
The real world of corrupted and corrupting crony capitalism includes more than lobbying expenditures and campaign contributions to have ringside seats in the halls of political plunderland.
The media has been in a frenzy with the revelations that the Volkswagen automobile company manipulated information about emission standards on its diesel vehicles to deceive environmental regulators in both the United States and Europe. This is being portrayed by many in the media as another example and “proof” of the consequences of unbridled capitalism, when left outside of sufficiently tight and demanding government regulation and intense oversight.
Government Partnerships and the Volkswagen Scandal
However, a closer look shows that this is, instead, another example of the result arising from government, business and labor union “partnerships.” In Germany, labor union representatives sit on the executive boards of large companies and corporations that work closely with various levels of the German government to attain political and “social” goals and objectives very different and separate from what a truly free market company does in pursuing peaceful and honest profits in the service of consumer demand on open, competitive markets.
On September 25, 2015, The New York Times quoted a former Volkswagen executive who said:
“There’s no other company where the owners and the unions are working so closely together as Volkswagen. [Volkswagen] guarantees jobs for over half the supervisory board. What management, the government and the unions all want is full employment, and the more jobs, the better. Volkswagen is seen as having a national mission to provide employment to the German people. That’s behind the push to be No. 1 in the world. They’ll look the other way about anything.”
In such a politicized market economy, working for and serving “national” and “social” interests become the guiding principle of business decision-making. Not only does it lead to wasteful and inefficient economic business operations having less or sometimes nothing to do with cost-effective management and allocation of labor and resources to make better, newer and less expensive products, it also corrupts the individuals participating in these activities.
Breaking one or more regulatory standards imposed by government on these enterprises is merely one way of “doing business” to advance other political goals such as “jobs” and “full employment” that are expected as part of the “partnerships” with local and national-level politicians and labor union leaders.
The only thing expected from the business enterprises in these intricate political webs is: Don’t get caught. If you do, then your political partners become like Captain Renault, the prefect of police in the 1942 movie “Casablanca.” When Renault orders the closing of Rick’s Café, the owner asks him on what grounds. Renault declares that he is “shocked, shocked” to discover that there is gambling going on in the café. At which point the roulette coupé appears with a stack of franc banknotes in his hand and says to Renault, “Your winnings, Sir.”
Volkswagen got caught, and will pay handsomely in financial and other penalties that will, no doubt, be imposed by the U.S. and European governments. And all the time, Volkswagen’s political partners, especially in Germany, who fostered and worked with the company to play its part in the “game” of government interventionism that has nothing to do with market-oriented enterprise, will sanctimoniously condemn the greedy and “selfish” conduct of profit-hungry businessmen.
What all these examples and facts about lobbying activities, campaign funding and government-business partnerships highlight is the pervasive extent to which “capitalism” as it now exists in the United States or Europe – or in fact all other parts of the world – has nothing to do with free market, laissez-faire capitalism.
Corrupting Hand of the Interventionist State
The Austrian economist, Ludwig von Mises, described this twisted, corrupted, and politicized capitalism over 80 years ago, in 1932, in an essay on “The Myth of the Failure of Capitalism,” published shortly before the coming of Hitler and the Nazi movement to power:
“In the interventionist state it is no longer of crucial importance for the success of an enterprise that the business should be managed in a way that it satisfies the demands of consumers in the best and least costly manner.
“It is far more important that one has ‘good relationships’ with the political authorities so that the interventions work to the advantage and not the disadvantage of the enterprise. A few marks’ more tariff protection for the products of the enterprise and a few marks’ less tariff for the raw materials used in the manufacturing process can be of far more benefit to the enterprise than the greatest care in managing the business.
“No matter how well an enterprise may be managed, it will fail if it does not know how to protect its interests in the drawing up of the custom rates, in the negotiations before the arbitration boards, and with the cartel authorities. To have ‘connections’ becomes more important that to produce well and cheaply.
“So the leadership positions within the enterprises are no longer achieved by men who understand how to organize companies and to direct production in the way the market situation demands, but by men who are well thought of ‘above’ and ‘below,’ men who understand how to get along well with the press and all the political parties, especially with the radicals, so that they and their company give no offense. It is that class of general directors that negotiate far more often with state functionaries and party leaders than with those from whom they buy or to whom they sell.
“Since it is a question of obtaining political favors for these enterprises, their directors must repay the politicians with favors. In recent years, there have been relatively few large enterprises that have not had to spend very considerable sums for various undertakings in spite of it being clear from the start that they would yield no profit. But in spite of the expected loss it had to be done for political reasons. Let us not even mention contributions for purposes unrelated to business – for campaign funds, public welfare organizations, and the like.
“Forces are becoming more and more generally accepted that aim at making the direction of large banks, industrial concerns, and stock corporations independent of the shareholders . . . The directors of large enterprises nowadays no longer think they need to give consideration to the interests of the shareholders, since they feel themselves thoroughly supported by the state and that they have interventionist public opinion behind them.
“In those countries in which statism has most fully gained control . . . they manage the affairs of their corporations with about as little concern for the firm’s profitability as do the directors of public enterprises. The result is ruin.
“The theory that has been cobbled together says that these enterprises are too big to allow them to be managed simply in terms of their profitability. This is an extraordinarily convenient idea, considering that renouncing profitability in the management of the company leads to the enterprise’s insolvency. It is fortunate for those involved that the same theory then demands state intervention and support for those enterprises that are viewed as being too big to be allowed to go under . . .
“The crisis from which the world is suffering today is the crisis of interventionism and of national and municipal socialism; in short, it is the crisis of anti-capitalist policies.”
How different is today, in its essential qualities, from Mises’ description of the interventionist state and government-business “partnerships” during those years between the two World Wars?
Real Free Markets Mean Privileges for None
If what we have today is what is widely referred to as “crony capitalism,” then how might we define and explain what a truly free market capitalism would be like? Let me suggest that the following seven points capture the essence of a real free economy:
- All means of production (land, resources, capital) are privately owned;
- The use of the means of production is under the control of private owners who may be individuals or corporate entities;
- Consumer demands determine how the means of production will be used;
- Competitive forces of supply and demand determine the prices of consumer goods and the various factors of production including wages of workers;
- The success or failure of individual and corporate enterprises is determined by the profits and losses these enterprises earn in free competition with their rivals in the market place;
- The free market is not confined to domestic transactions, and includes freedom of international trade;
- Government is limited in its activities to the enforcement and protection of life, liberty, and honestly acquired property against, violence and fraud.
In a real free market, there is no place for politicians to offer privileges and favors, because there are none to sell. There is no motive or gain for special interest groups to spend huge sums of money in campaign contributions or lobbying expenses, because political benefits for some at others’ expense cannot be bought.
Wasteful and corrupting “partnerships” between government and business enterprises cannot occur because political authority is restrained from any task other than the securing of each individual’s right to his life, liberty, and peacefully acquired property.
As Ludwig von Mises said, the political and economic crises through which the world suffers is not the crisis or failure of the free market. No, it is the crisis and failure of the interventionist-welfare state, and its anti-free market capitalist ideology.