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The Policy and Commentary Blog of The Heartland Institute
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Heartland Joins Coalition Opposing Federal Gas Tax Hike

January 28, 2015, 2:53 PM

The Heartland Institute has recently signed a coalition letter led by Americans for Prosperity urging Congress to oppose legislation that would hike the federal gasoline tax.

The plan was introduced by Sens. Bob Corker (R-Tennessee) and Chris Murphy (D-Connecticut), and proposes hiking the tax by 12 cents over two years and indexing it to inflation. USA Today reports Sens. John Thune (R-South Dakota) and Jim Inhofe (R-Oklahoma) have also entertained the idea.

Naturally, such an idea gets floated around every time gas prices take a temporary dip, but the idea only gets worse each time it’s proposed, not better.

The reason is today’s vehicles are more efficient than they’ve ever been, which means a high tax on gasoline prices will disproportionately burden those with lower-incomes, who are more likely to own older, less fuel-efficient vehicles.

Secondly, in an economic environment that’s mostly experienced slow job growth and stagnating wages recently, AFP’s Brent Gardner wisely points out falling gas prices are the “first significant relief many Americans have experienced in years.” And it’d be foolish to think prices will stay low for very long. With crude oil prices in the forty dollar range – production can and likely will be cut. Meanwhile, consumption has been rising, according to the 2014 BP Statistical Review of World Energy. And consumption has been forecast to continue rising, according to the International Energy Agency. The whole history of oil is filled with supply/demand imbalances that have taken place only to correct itself a short while later. Congress should avoid increasing the federal gasoline tax and phase it out altogether instead.

Read more from AFP.

Read the letter here.

Categories: On the Blog

Three More Obama Admin Casualties: Congress, Federalism – and Humility

January 28, 2015, 2:16 PM

It’s been a bad six years for the United States of America. The examples are myriad.

The national debt has nearly doubled – from ten trillion dollars to over eighteen trillion dollars.

The workforce participation rate has decreased precipitously – to a level not seen since the mid-1970s. (The phony “unemployment rate” is irrelevant – and its computation process is in desperate need of Reality-based reform.)

Then there are the regulations – oh so many regulations. Hundreds of thousands of new pages of regulations added. The total regulatory damage done is now $2 trillion per year – and the costs continue to increase as the pages (and PAGES) of regulations do.

These are but horrendous symptoms (and there are oh so many more). The root cause? Our decades-long drift away from a Constitutionally limited federal government has become in the last half decade-plus a rocket ride. The USS Leviathan is hurtling at light speed away from the diminutive pen within which the Founders intended it to be contained.

The American people in November again registered their pronounced disapproval. There haven’t been this many Republicans in the House of Representatives since the early 1930s. The Senate now has fifty-four Republicans – in 2009 there were forty.

The repudiation has filtered all the way down and out. 53% of Americans live in states whereRepublicans control both the legislature and the governorship. Twenty-four states are totally Republican – governor and legislatures (and Nebraska has a Republican governor and its unicameral legislature is non-partisan). Only seven have similar Democrat unanimity.

President Barack Obama has presided over all of this. His policies – and how he unilaterally implements them – have caused this horrendous damage to the economy and his Democrat Party.

The President’s just extruded State of the Union speech clearly demonstrates he doesn’t care. He will continue to do exactly what has caused all the harm – including ramp up further still his unConstituional “executive actions.”

Casualty: Congress.

Just after the election, President Obama demanded the allegedly independent Federal Communications Commission (FCC) – and its Obama-campaign-cash-bundling Chairman Tom Wheeler – pretend to be Congress and rewrite existing law to dramatically increase government’s regulation of the Internet.

The actual Congress was just returned to Washington with an historic less government mandate. The President doesn’t care. The actual Congress is writing actual legislation that gives the Internet regulation zealots like the President what they claim they want. He doesn’t care.

Because the legislation doesn’t do nearly as much private sector damage as the President’s unilateral action will. And the President’s ultimate objective is to repeal the private sector and replace it with government.

The President is just getting warmed up. He recently announced his intention to have even more federal government involvement in local governments’ flailing, failing attempts at providing Internet service.

Government Internet is not a new idea. It is an incredibly, serially failed one.

Municipal Broadband’s Record of Failure

For Taxpayers, (Government) Broadband ‘UTOPIA’ Anything But

UTOPIA has accrued more than $500 million in debt for Utah taxpayers with no path to success in sight.

It’s not even new to the President – he spent $7.2 billion on it in the 2009 Stimulus. How’d that go?

The Utter Failure of Government Stimulus

Yet Another Terrible Internet ‘Stimulus’ Project

These types of uber-failures are precisely why nineteen states have passed laws prohibiting local governments from getting into the Internet business. Laws the President wants to steamroll.

Obama Opposes State Limits on Municipal (Government) Broadband

Casualty: Federalism.

Some of the President’s Congressional Democrat colleagues remember they are in the legislative branch.

Responding to a push from President Obama, three Senate Democrats introduced legislation Thursday to revoke state laws that hinder local governments from getting into the broadband business.

Unfortunately, their grasp of the federal government’s enumerated powers is decidedly lacking – nowhere is it empowered to preempt states’ laws like this. This apparently concerns them not a whit.

Nor the President – who doesn’t even think he needs legislation. Apparently, “executive action” is a magical Get-Out-of-the-Constitution-Free card.

“As a first step, the Administration is filing a letter with the Federal Communications Commission (FCC) urging it to join this effort by addressing barriers inhibiting local communities from responding to the broadband needs of their citizens.”

Which brings us to the third casualty: humility.

No one is perfect. Government made up of imperfect people certainly isn’t. Preeminently because it violates human nature – including the Wallet Rule:

You go out on a Friday night with your wallet. You go out the following Friday night with my wallet.

On which Friday night are you going to have more fun?

Spending other peoples’ money is a lot more fun. And government is always on someone else’s wallet – thus it will never spend money as prudently, wisely or well as the people who actually earned it.

It takes humility to acknowledge government’s inherent limitations. It takes hubris on stilts – and/or ideological blinders – to not acknowledge the myriad failures it has already created. And then demand it create more.

But that’s to what we’ve been subjected these last six years. And the President is pressing forward – blindly ideological, and completely devoid of modesty.

Categories: On the Blog

Crony Socialism: Candy Crush Edition

January 28, 2015, 2:16 PM

Hershey’s – the Candy Man – is a BIG business.  Its May 2014 market cap was $23.26 billion.

And Hershey’s is very generous with government.  Through the second quarter of last year, it had spent $8,332,000 on lobbying and $845,534 on candidates and elected officials.  Tallies no Mom & Pop Candy Shoppe can come close to matching.

Greasing the government to grant you special favors – or impose upon your competitors special impediments – is Crony Socialism.  It isn’t Crony Capitalism – because it has nothing to do with capitalism.

This anti-free market practice is best practiced by big businesses – like Hershey’s.  Small businesses don’t have the wherewithal to bribe politicians – excuse me, contribute – with enough umph.

But campaign contributions aren’t the problem – Huge Government is.  If the government wasn’t so gi-normous – and didn’t wield such a massive checkbook and regulatory hammer – just about all of the Crony Socialist donations would dry up and go away.

Lobbying isn’t the problem either.  Lobbying to keep government off of you is Constitutional redress of grievances.  Lobbying to sic the government on others is anti-Constitutional obnoxiousness.

And having Huge Government in your back pocket allows you to “negotiate” private sector “agreements” you otherwise would never, ever get.  If they know you can unleash the Leviathan – you rarely have to unleash the Leviathan.  Having a Big Brother means almost never actually getting into a fight.

So when we read Big Candy Hershey did this:

After a Deal, British Chocolates Won’t Cross the Pond

We have to wonder how free both sides were to “deal.”  When is an agreement actually an acquiescence?  A capitulation?  After all, Let’s Buy British Imports (LBB) – the other side of this “deal” – ain’t anywhere near Hershey’s King Size.

Jeff Beckman, a representative for Hersheys, said L.B.B. and others were importing products not intended for sale in the United States….

Says who?  Why can’t they be intended for sale here?  Because Hershey’s says so?  In fact, they were sold here – for quite a while.

Having a Big Brother means almost never actually getting into a fight.

 

Another retailer of British goods, who wished to remain anonymous because she feared reprisal from Hersheys, said she imagined she would go out of business soon.

“Cadburys is about half of my business,” she said, while eating leftover Cadburys Christmas chocolate, “and more than that at Christmas. I dont know how well survive.

What problem does Hershey claim exists?

L.B.B. agreed this week to stop importing all Cadburys chocolate made overseas. The company also agreed to halt imports on KitKat bars made in Britain; Toffee Crisps, which, because of their orange packaging, and yellow-lined brown script, too closely resemble Reeses Peanut Butter Cups; Yorkie chocolate bars, which infringe on the York peppermint patty; and…Maltesers….

Jeff Beckman, a representative for Hersheys, said L.B.B. and others were…infringing on its trademark and trade dress licensing. For example, Hersheys has a licensing agreement to manufacture Cadburys chocolate in the United States with similar packaging used overseas, though with a different recipe.

Okay, the Cadbury licensing agreement I get.  If Hershey’s cut a deal to be the U.S. manufacturer – albeit with different recipes – that’s the deal.  Though, again, they are the Candy Titans – and can cut “deals” most others can’t.

And British and U.S. KitKat are nearly identical in content and presentation.  Get that too.

But orange and yellow packaging?  The British bar in said wrapping is the Toffee Crisp – Hershey’s the Reese’s Peanut Butter Cup.  At some point, caveat emptor has to reign.  The fact that the names of the bars – and the ingredients – are totally different should be more than enough.

The British Yorkie isn’t peppermint – Hershey’s York Peppermint Pattie is.  I’d be more concerned with the Old Country’s version if I were the American Kennel Club.

Maltesers are chocolate malt balls – a competitor to Hershey’s Whoppers.  Maltesers have no packaging or name similarities – it’s just Big Bad Hershey’s Whopper competitor.  And thus it too is blocked.

Free markets are great.  Free trade is great.

This is neither – and it is lousy.

Categories: On the Blog

Obama Disses Alaska

January 27, 2015, 3:53 PM

Fifty million Americans who live in the northeast will experience what is predicted to be a historic blizzard from Monday evening through Tuesday. Cities and towns will virtually or literally close down. People will be told to stay indoors for their safety and to facilitate the crews that will labor to clear the roads of snow.

In other words, welcome to Alaska, a place that is plenty cold most of the year and which is no stranger to snow and ice.

Alaska, however, has something that the whole world considers very valuable; oil and natural gas. Lots of it. In 1980 a U.S. Geological Survey estimated that the Coastal Plain could contain up to 17 billion barrels of oil and 34 trillion cubic feet of natural gas.

In 1987, the U.S Department of Interior confirmed the earlier estimate, saying that “in place resources” ranged from 4.8 billion to 29.4 billion barrels of oil. Recoverable oil estimates ranged from 600 million barrels at the low end to 9.2 billion barrels at the high end.

A nation with an $18 trillion debt might be expected to want to take advantage of this source of revenue, but no, not if that debt was driven up by the idiotic policies of President Barack Obama and not if it could be reduced by the same energy industry that has tapped similar oil and natural gas reserves in the lower 48 states by drilling on private, not public lands.

Instead, on Sunday President Obama referred to the Arctic National Wildlife Refuge (ANWR) as “an incredible place—pristine, undisturbed. It supports caribou and polar bears” and other species and, guess what, tapping its vast oil and natural gas reserves would not interfere in any way with those species despite the whopping lie that “it’s very fragile.”

At Obama’s direction, the Interior Department announced it was proposing to preserve as wilderness nearly 13 million acres of land in ANWR’s 19.8 million-acre area. That would include 1.5 million acres of coastal plains that Wall Street Journal reported to be “believed to have rich oil and natural gas reserves.”

Not a whole lot of people choose ANWR as a place to vacation. It is a harsh, though often beautiful, area that only the most experienced visitor might want to spend some time. I would want to make every environmentalist who thinks any drilling would harm the area have to take up residence in its “pristine” wilderness to confirm that idiotic notion.

They would find plenty of caribou, polar bears and other species hanging out amidst the oil and gas rigs, and along the pipe line. The Central Arctic Caribou Herd that migrates through the Prudhoe Bay oil field, just next to ANWR has increased from 5,000 animals in the 1970s to more than 50,000 today. There is no evidence than any of the animal species have experienced any decline.

The Coastal Plain lies between known major discovery areas and the Prudhoe Bay, Lisburne, Endicott, Milne Point and Kuparuk oil fields are currently in production In 1996, the North Slope oil fields produced about 1.5 million barrels of oil per day or approximately 25% of the U.S. domestic production. Alaska is permitted to export its oil because of its high levels of productivity.

So why has Obama’s Department of the Interior decided it wants to shut off energy exploration and extraction in a whopping 13-million acres of what is already designated as a wildlife refuge and along its coastlines on the Beaufort and Chukchi seas? The answer is consistent with Obama’s six years of policies to deny Americans the benefits of the nation’s vast energy reserves, whether it is the coal that has previously provided 50% of our electrical energy—now down by 10%–or access to reserves of oil and natural gas that would make our nation energy independent as well as a major exporter.

The good news is that only Congress has the authority to declare an area as wilderness. It has debated the issue for more than 30 years and in 12 votes in the House and 3 votes in the Senate it has passed legislation supporting development and opposing the wilderness designation.

And guess who is the new chairman of the Senate Energy and Natural Resources Committee? Sen. Lisa Murkowski, an Alaskan Republican. She also heads up the appropriations subcommittee responsible for funding the Interior Department!

This latest Obama ANWR gambit is going to go nowhere. It does, however, offer the Republican Congress an opportunity to demonstrate its pro-energy credentials.

“I cannot understand why this administration is willing to negotiate with Iran, but not Alaska,” said Sen. Murkowski when informed of Obama’s latest attack.

Categories: On the Blog

Heartland Daily Podcast – Jim Steele: An Environmentalist’s Journey to Climate Skepticism

January 27, 2015, 3:24 PM

Research Fellow H. Sterling Burnett interviews Jim Steele, ecologist, director emeritus of the Sierra Nevada field campus of San Francisco State University, in today’s podcast. Steele is the author of Landscapes & Cycles: An Environmentalist’s Journey to Climate Skepticism.

In the podcast, Jim discusses how climate alarmism is undermining legitimate conservation goals by misdiagnosing the cause of environmental problems by diverting resources away from direct solutions to those problems. He also discusses lies that climate alarmists have told concerning moose declines, butterfly and mangrove population expansions, problems with Emperor Penguins and in general how climate alarmism is undermining science as an endeavor in the pursuit of knowledge.

[Subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

The Blizzard That Wasn’t

January 27, 2015, 2:51 PM

The Blizzard of 2015 was largely a dud.

There was no climate change where I live in a suburb of Newark, N.J. if by “climate change” you meant a dramatic blizzard with high winds and several feet of snow. It’s winter and you get the occasional, rare blizzard every few years, but more often you get snowstorms. That’s not “change” by any definition.

Listening to WABC radio follow events with callers from around the Tri-State area calling in with far more accurate reports than the meteorologists was an education in the way those trained in meteorology and the rest of us have been conditioned to believe that something is happening to planet Earth that, quite simply, is not happening.

The meteorologists spent their time trying to figure out the difference between a European computer model and one generated here in the U.S. The former predicted far worse conditions. The latter fell victim, along with the rest of us, to the mindset that the conditions the computers were interpreting did not reflect what was actually happening.

At this early morning hour, it is clear that Long Island, parts of Connecticut, and generally along the coastlines, there has been a heavier snowfall. A few miles inland however it is a far different story. Callers who had been out in the midst of the storm described light, powdery snow and perhaps two to four inches at most.

Why, they asked, did the Governors of New York and New Jersey, along with the Mayor of New York City close down the metropolitan area? They speculated on the millions of lost income for everyone involved in a storm that was not posing a significant traffic or other problems, but who had seen businesses, schools, bus lines, and other public facilities shut down. When a significantly incorrect weather prediction does that, it demonstrates how important it is to correctly interpret the data being provided by the satellites—the best source.

When, earlier in January, NOAA and NASA reported that 2014 had been “the warmest year” it should have raised far more questions and media coverage given the sheer absurdity of such a report. Remember, though, these are two federal government agencies we expect to get it right. They didn’t just get it wrong, skeptical scientists were quick to note how they had deliberately distorted the data on which they based the claim.

That is the heart of the issue surrounding the endless claims of “global warming” or “climate change.”  The planet has not been warming for 19 years at this point because the sun has been in a perfectly natural cycle of low radiation.

Centuries ago, it was noticed that when there are few sunspots, magnetic storms, the Earth got colder. Thus, “climate change” is not an unusual event, but rather a reflection of the well-known cycles of warmth or cold that the planet has passed through for billions of years.

At this writing it is too early in the morning hours to know what the rest of the East Coast looks like, but the indications are that, as one moves westward the “blizzard” has been far less than the one predicted and will likely be downgraded to a standard winter snowstorm.

That’s the good news. The bad news was the over-reaction of meteorologists and politicians. No doubt they wanted to be “safe than sorry” but they inadvertently taught us all a lesson about the way environmental organizations and a government led by a President telling us that “climate change” is the most dangerous challenge facing us have been deliberately lying about the true meteorological record in order to drag us all back to a time in which we burned wood for heat and rode horses for transportation.

The Greens don’t like humans much and that is why they have been lying about “man-made” climate change when the climate has nothing to do with human activities.

Listen to the skeptics, often maliciously called “deniers”, when they tell you the truth about the meteorological science that has been deliberately distorted since the United Nations established the Intergovernmental Panel on Climate Change in 1988. It has been lying to us ever since.

Depending on where you live in the area in which the snow fell and the winds blew, trust your eyes. Trust your commonsense. Be more skeptical because the blizzard that wasn’t is not a lesson you want to forget anytime soon.

Categories: On the Blog

Deception, Agenda and Folly Drive Latest Obama EPA Anti-hydrocarbon Rules. Are Farmers Next?

January 27, 2015, 1:38 PM

First they came for the coal mining and power plant industry, and most people did not speak out because they didn’t rely on coal, accepted Environmental Protection Agency justifications at face value, or thought EPA’s war on coal would benefit them.

In fact, Chesapeake Energy CEO Aubrey McClendon gave the Sierra Club $26 million, and New York City Mayor Michael Bloomberg gave the Club $50 million, to help it wage a Beyond Coal campaign. The Sierra Club later claimed its efforts forced 142 U.S. coal-fired power plants to close, raising electricity rates, threatening grid reliability, and costing thousands of jobs in dozens of states.

Mr. McClendon apparently figured eliminating coal from America’s energy mix would improve his natural gas business. The mayor likes renewable energy and detests fossil fuels, which he blames for climate change that he tried to finger for the damages “Superstorm” Sandy inflicted on his city.

Now the Obama EPA is coming after the natural gas industry. Hopefully many will speak out this time, before more costly rules kill more jobs and damage the health and welfare of more middle class Americans. The war on coal, after all, is really a war on fossil fuels and affordable energy, and an integral component of President Obama’s determination to “fundamentally transform” the United States.

Proposed EPA regulations would compel drilling and fracking companies to reduce methane (natural gas or CH4) emissions by 40-45% by 2025, compared to 2012. Companies would have to install technologies that monitor operations and prevent inadvertent leaks. The rules would apply only to new or modified sites, not existing operations. However, Big Green activist groups are already campaigning to have EPA expand the rule to cover existing gas wells, fracking operations, gas processing facilities and pipelines.

But companies already control their emissions, to avoid polluting the air, and because natural gas is a valuable resource that they would much rather sell than waste. That’s why EPA data show methane emissions falling 17% even as gas production increased by 37% between 1990 and 2014, and why natural gas operations employing hydraulic fracturing reduced their methane emissions by 73% from 2011 to 2013. The rules are costly and unnecessary, and would bring few benefits.

The Obama Administration thus justifies them by claiming they will help prevent “dangerous manmade climate change.” Methane, EPA says, has a warming effect 50 times greater than carbon dioxide. This assertion is wildly inflated, by as much as a factor of 100, Dr. Fred Singer says. Atmospheric water vapor already absorbs nearly all the infrared radiation (heat) that methane could, and the same radiation cannot be absorbed twice. The physics of Earth’s surface infrared emission spectrum are also important.

More importantly, to borrow a favorite Obama phrase, let me make one thing perfectly clear. There is no dangerous manmade climate change, now or on the horizon. There is no evidence that methane or carbon dioxide emissions have replaced the complex, powerful, interconnected natural forces that have driven warming, cooling, climate and weather fluctuations throughout Earth and human history. There is no evidence that recent extreme weather events are more frequent or severe than over the previous 100 years.

Indeed, planetary temperatures have not budged for more than 18 years, and we are amid the longest stretch since at least 1900 (more than nine years) without a Category 3-5 hurricane hitting the United States. If CO2 and CH4 are to be blamed for every temperature change or extreme weather event, then shouldn’t they also be credited for this lack of warming and deadly storms? But climate hype continues.

We are repeatedly told, “Climate change is real, and humans are partly to blame.” The statement is utterly meaningless. Earth’s climate fluctuates frequently, and human activities undoubtedly have some influences, at least on local (especially urban) temperatures. The question is, How much of an effect? Are the temperature and other effects harmful or beneficial, especially when carbon dioxide’s enormous role in improved plant growth is factored in? Would slashing U.S. CO2 and CH4 emissions mean one iota of difference, when China, India and other countries are doing nothing to reduce their emissions?

Nevertheless, the latest NASA press release asserts that 2014 was “the hottest since the modern instrumental record began,” and again blames mankind’s carbon dioxide emissions. This deliberately deceptive, fear-inducing claim was quickly retracted, but not before it got extensive front-page coverage.

Let me make another fact perfectly clear. The alleged global temperature increase was 0.02 degrees C (0.04 degrees F). It is not even measurable by our most sensitive instruments. It is one-fifth the margin of error in these measurements. It ignores satellite data and is based on ground-level instruments that are contaminated by urban heat and cover less than 15% of Earth’s surface. Even NASA admitted it was only 38% confident of being correct – and 62% certain that it was wrong. Analyses by Dr. Tim Ball, Marc Morano, Anthony Watts and other experts provide more details eviscerating this bogus claim.

In the end, though, all these real-world facts are irrelevant. We are dealing with a catechism of climate cataclysm: near-religious zealotry by a scientific-industrial-government-activist alliance that has built a financial, political and regulatory empire. They are not about to renounce any claims of climate catastrophe, no matter how much actual evidence debunks their far-fetched computer model scenarios.

Their EPA-IPCC “science” is actively supported by most of the “mainstream media” and by the World Bank, universities, renewable energy companies and even some churches. They will never willingly surrender the political influence and billions of dollars that CAGW claims bring them. They won’t even admit that wind and solar facilities butcher birds and bats by the millions, scar landscapes, impair human health, cannot exist without coal and natural gas, and are probably our least sustainable energy option. They want gas prices to rise again, so that heavily subsidized renewable energy is competitive once more.

Meanwhile, polls reveal that regular, hard-working, middle-income Americans care most about terrorism, the economy, jobs, healthcare costs, education and job opportunities after graduation; climate change is always dead last on any list. Regular Europeans want to end the “energy poverty” that has killed countless jobs, and each winter kills thousands of elderly people who can no longer afford to eat their homes properly. The world’s poorest citizens want affordable electricity, higher living standards, and an end to the lung infections, severe diarrhea, malaria and other diseases of poverty that kill millions of children and parents year after year – largely because alarmists oppose nuclear, coal and gas-fired power plants.

But federal regulators, climate chaos “ethicists” and “progressives” who loudly profess they care deeply about the poor and middle classes – all ignore these realities. They focus on methane, because they view it as a clever way to inject federal oversight and control into an energy sector that had been largely free of such interference, because the fracking revolution has thus far taken place mostly on state and private lands governed effectively by state and local regulators. (Federal lands are mostly off limits.)

The proposed methane rules would generate more delays, paperwork, costs and job losses, to comply with more federal regulations that will bring no detectable benefits – and much harm, at a time when plunging oil and gas prices are forcing drillers to reduce operations and lay people off.

President Obama devoted 15 lines of his 2015 State of the Union speech to climate fables and propaganda. His goal is steadily greater control over our lives, livelihoods, living standards and liberties, with little or no transparency or accountability for regulators, pseudo-scientists or activists.

It won’t be long before EPA and Big Green come for farmers and ranchers – to curtail “climate-wrecking” methane emissions from cattle, pig and sheep flatulence and dung, and exert greater control over agricultural water, dust and carbon dioxide. By then, there may be no one left to speak out.

Categories: On the Blog

Europe’s Move in the Direction of More Monetary Mischief.”

January 27, 2015, 1:12 PM

The European Central Bank has announced its intention to create out of thin air over one trillion new Euros from March 2015 to September 2016. The rationale, the monetary central planners say, is to prevent price deflation and “stimulate” the European economy into prosperity.

The only problem with their plan is that their concern about “deflation” is a misguided fear, and printing money can never serve as a long-term solution to bring about sustainable economic growth and prosperity.

Europe’s High Unemployment and Economic Stagnation

The European Union (of which the Euro currency zone is a subset) is experiencing staggering levels of unemployment. The EU as a whole has 10 percent of the work force unemployed, and 11.5 percent in the Euro Zone.

But breaking these numbers down to the national levels show just how bad the unemployment levels are in the different member countries. In Greece it is nearly 26 percent of the work force. In Spain, it is 24 percent; Italy and Portugal are both over 13 percent. France has over 10 percent unemployment, with Sweden at 8 percent. Only Germany and Austria have unemployment of 5 percent or less out of the 28-member countries of the European Union.

Youth unemployment (defined as those between 16 and 25 years of age unable to find desired work) is even more catastrophic. For the European Union as a whole it is an average of over 22 percent, and more than 23 percent in the Euro Zone.

In Greece, its almost 60 percent of those under 25; in Spain, it is nearly 55 percent, with Italy at 43 percent, and over 22 percent in both France and Sweden. Only in Norway and Germany is youth unemployment less than 8 percent. Almost all the other EU countries are in the double-digit range.

At the same time, growth in Gross Domestic Product for the European Union as a whole in 2014 was well below one percent. Only in the Czech Republic, Norway, and Poland was it above 2 percent among the EU members.

Consumer prices for the EU averaged 0.4 percent in 2014, with most of the member countries experiencing average consumer price increases between 0.2 and 2 percent for the year. Only in Greece was the average level of prices calculated as having absolutely declined by a minus 1.3 percent. Hardly a measured sign of dramatically suffered price deflation in the EU or the Euro Zone!

Fears of Price Deflation are Misplaced

The monetary central planners who manage the European Central Bank are fearful that the Euro Zone may be plagued by a prolonged period of generally falling prices if they do not act to push measured price inflation towards their desired target of around two percent a year.

(It is worth pointing out that if the Euro Zone monetary central planners were to succeed with their goal and maintain two percent average annual price inflation, this would mean that over a twenty-year period the purchasing power of a Euro would decline by around 50 percent.)

Many commentators inside and outside of the European Union and the Euro Zone have insisted that price deflation needs to be prevented or reversed at all costs. The implicit premise behind their arguments is that deflation equals economic depression or recession, and therefore any such decline in prices in general must not be allowed.

In all these discussions it is often ignored or forgotten that annual falling prices can well be an indication of economic prosperity and rising standards of living. For instance, between 1865 and 1900, prices in general in the United States declined by around 50 percent, with overall standards of living in general estimated to have increased by 100 percent over these 35 years. This period is usually recognized as America’s time of rapid industrialization in the post-Civil War era that set the United States on the path to becoming the world’s economic giant through most of the 20th century.

Falling Prices and Improved Standards of Living

A hallmark of an innovative and competitive free market economy is precisely the never-ending attempt by entrepreneurs and enterprisers to devise ways to make new, better and less expensive goods to sell to the consuming public. The stereotypes in modern times have been pocket calculators, mobile phones, DVD players, and flat-screen TVs.

When pocket calculators first came on the market in the 1980s, they were too big to fit in your shirt pocket, basically performed only the most elementary arithmetic functions, and cost hundreds of dollars. Within a few years they fit in your shirt pocket with space to spare, performed increasingly complex mathematical functions, and became so inexpensive that many companies would give them away as advertising gimmicks.

The companies that made them did not proclaim their distress due to the lower and lower prices at which they sold the devices. Cost efficiencies were developed and introduced in their manufacture so they could be sold for less to consumers to expand demand and capture a larger share of a growing market.

In a dynamic, innovative and growing free market economy there normally would be a tendency for one product after another being improved in its quality and offered at lower prices as productivity gains and decreased costs made them less expensive to market and still make a profit.

Looking over a period of time, a statistical averaging of prices in general in the economy would no doubt show a falling price level, or “price deflation,” as one price after another experienced such a decline. This would be an indication of rising standards of living as the real cost of buying desired goods with our money incomes was decreasing.

Europe’s Problems are Due to Anti-Market Burdens

Relatively stagnant economies with high rates of unemployment like in the European Union and the Euro Zone are not signs of deflationary forces preventing growth and job creation. Indeed, since 2008, the European Central Bank has increased its balance sheet through monetary expansion by well over one trillion Euros, and prices in the Euro Zone, in general, have been rising on average between 0.5 and 2 percent throughout this period. Hardly an indication of “deflationary” forces at work.

The European Union’s problems are not caused by a lack of “aggregate demand” in the form of money spending. Its problems are on the “supply-side.” The EU is notorious for rigid labor markets in which trade unions limit worker flexibility and workplace adaptiveness to global market change.

Above market-determined wages and benefits price many who could be gainfully employed out of a possible job, because government policies and union power price these potential employees out of the market. Plus, the difficulty of firing someone once a worker is hired undermines the incentives of European companies to want to expand their work forces.

Even a number of international organizations, usually culprits in fostering anti-free market policies, have pointed out the need for European governments to introduce workplace reforms to free up labor markets in their countries, along with general reductions in regulations on business than hamper entrepreneurial incentives and prevent greater profit-oriented competitiveness.

Creating a Trillion Euros will only Imbalance Europe More

Creating a trillion more Euros cannot overcome or get around anti-competitive regulations, cost-price mismatches and imbalances due to government interventions and union restrictions, or the burdensomeness of taxes that reduce the willingness and ability of businessmen to undertake the enterprising activities that could lift Europe out of its economic malaise.

Furthermore, to the extent to which the European Central Bank succeeds in injecting this trillion Euros into the European economy it will only set in motion the danger of another future economic downturn. Not only may it feed an unsustainable financial and stock market run-up. The very manner in which the new money is introduced into the European-wide economy will inevitably distort the structure of relative prices and wages; wrongly twist the patterns of resource and labor uses; and induce forms of mal-invested capital.

Thus, the attempt to overcome Europe’s stagnant economy through monetary expansion will be the cause of a misdirection of labor, capital and production that will inescapably require readjustments and rebalances of supplies and demands, and price relationships that will mean people living through another recession at some point in the future.

A Market-Based Agenda for Growth and Jobs

What, then might be a “positive” pro-market agenda for economic recovery and job creation in the European Union, and in the United States, as well, for that matter? Among such policies should be:

  • Significantly reduce marginal personal tax rates and corporate taxes, and eliminate inheritance taxes; this would create greater incentives and the financial means for private investment, capital formation and job creation;
  • Cut government spending across the board by at a minimum of 10 percent more than taxes have been cut so to move the government in the direction of a balanced budget without any tax increases; this would take pressure off financial markets to fund government deficits, and end the growth in accumulated government debt, until finally government budgets would have surpluses to start paying down that debt;
  • Reduce and repeal government regulations over the business sector and financial institutions to allow competitive forces to operate and bring about necessary adjustments and corrections for restoring economic balance;
  • Institute real free trade through elimination and radical reduction of remaining financial and regulatory barriers to the competitive free flow of goods among countries;
  • End central bank monetary expansions and manipulation of interest rates; interest rates need to tell the truth about savings availability and investment profitability for long-run growth that is market-based and sustainable. Monetary expansion merely sends out false signals that distort the normal functioning of the market economy.

A market-based set of policies such as these would serve as the foundation for a sound and sustainable real “stimulus” for the European and American economies. It also would be consistent with the limited government and free enterprise principles at the foundation of a free society.

[This first appeared at Epic Times]
Categories: On the Blog

Public Sector Unions Gain Power, Lose Popularity, says Economist

January 26, 2015, 3:52 PM

While becoming more and more powerful, public sector unions are losing favor with taxpayers, Daniel DiSalvo, author of “Government Against Itself: Public Union Power and Its Consequences,” said during a forum hosted by The Illinois Policy Institute Tuesday in Chicago.

The event’s format was that of a two-way conversational discussion that took place between DiSalvo and Paul Kersey, director of labor policy at the Illinois Policy Institute, about the role of public-sector unions in politics today. Daniel DiSalvo is Assistant Professor of Political Science in the Colin Powell School at The City College of New York-CUNY and a senior fellow at the Manhattan Institute’s Center for State and Local Leadership.

Although Americans have long supported public unions because they associate them with the merits of the working class, recently taxpayers have begun to see reality with polls showing that barely half of Americans approve of unions, while an overwhelming majority approve of Right-to-Work laws.

Emily Rose, Vice President of Development, introduced Paul Kersey and Daniel DiSalvo.  Mr. Kersey directed a series of questions to DiSalvo for his response, all of which were relevant to DiSalvo’s book, “Government Against Itself: Public Union Power and its Consequences.”

The book is about a broken system whose financial consequences have reached the point of being unsustainable. The broken system referenced pertains to unions representing government workers in contrast to those found in the private sphere.

No longer the underdog, public-sector unions since 2009 have totaled more members than the membership in traditional private-sector unions. This imbalance came about when in 1962 President John F. Kennedy signed Executive Order 10988 permitting collective bargaining for federal employees.  Around the same time state and city workers, teachers and firemen were starting to unionize.

Following is an account, with photo, of President John F. Kennedy signing Executive Order 10988:

Fifty years ago, on January 17, 1962, Federal employees first obtained the right to engage in collective bargaining through labor organizations when President John F. Kennedy issued Executive Order 10988, “Employee-Management Cooperation in the Federal Sector.” Executive Order 10988 issued as result of the findings of the Task Force on Employee-Management Relations in the Federal Service, which was created by a memorandum issued to all executive department and agency heads by President Kennedy on June 22, 1961. In this memorandum the President noted that, “The participation of employees in the formation and implementation of employee policy and procedures affecting them contributes to the effective conduct of public business,” and that this participation should be extended to representatives of employees and employee organizations.

Public-sector government employment now accounts to 17% of total U.S. employment.  Those employed are mostly found in state and local governments, with teacher having the most members, about 41% of the total public membership. The cost of public sector union employees (teachers) eats up two-thirds of the government’s (school district’s) operational budget. Public sector workers actually fight for benefits whose provision will hurt the public.

What is the nature of pubic unions versus private unions?

  • In public sector unions, pre-existing job protection exists through civil laws that provide protections from arbitrary firing, transfers, and disciplinary actions that private sector workers usually lack.
  • Government can access new revenue through taxation, while private workers are fully exposed to the business cycle.
  • Public sector unions can vote for the politicians who sit across from them at the bargaining table.  This gives politicians (or their delegates) an incentive to give unions concessions instead of bargaining hard, like private-sector unions do.
  • Public sector unions contribute billions to candidates on every level, almost always to candidates from one party.  At one point or other, these are the very candidates who will be “negotiating” contracts with these public sector unions, a definite conflict of interest.  In some states public unions have become so powerful, that there is no opposition.  They can also exert greater influence on their members that private sector unions, through political lobbying.
  • In the private sector the argument is over how to divvy up the profits: How much to owners, how much to management, how much to labor, and how much spent to improve products? If labor gets too greedy, that drives up the cost of whatever they’re making until customers start buying less. Profits then decrease, raises decrease or stop altogether, and jobs start going away.  Labor either wises up of the company goes down. The public sector can’t go out of business no matter how much union members manage to squeeze out of it. Union members have no incentive to settle for less, and the costs get passed along to the taxpayer.  In many cases management benefits from higher settlements.
  • Workers in the private sector struggle with stagnant wages, disappearing benefits, and rising retirement ages, while unionized public employees retire in their fifties, many with over $100,000 a year in pension and healthcare benefits.

Consequences of union inequality and imbalance

After work health and pension liabilities are a major source of bankruptcy of the governments that negotiated them.  Retirement pension benefits are increasingly crowding out discretionary spending.

As such, public sector unions threaten the integrity of our democratic process by increasing a disparity in the standard of living between public and private sector workers, by decreasing efficiency in state and local services, and by reducing the number of necessary services that government can provide.  Public sector workers actually fight for benefits whose provision will hurt the public. Because public sector unions are rich, taken together they spend hundreds of millions of dollars annually lobbying governments on behalf of their members.

Liberal Democrats face a bigger political downside when public pension become unsustainable, as they represent the party of bigger government or what government can do for you.  What happens when public sector unions produce a government that costs you ever more and does for you ever less?  If the Democrats cannot fix government, voters eventually conclude that they might as well elect Republicans to deal with the mess, as happened in Wisconsin with the success of Governor Walker.

The burden of public sector pensions alone is frightening, especially in states like Illinois, California and New York.  Illinois not only exempts public sector union pensions from adjustment to meet changed economic circumstances, but also increases such pensions by 3% every year.

As long as the employer (the government) owns the pension liabilities of its employees, the hazard of potential bankruptcy will hover over the taxpayers. Given the political coalition that supports the public union status quo, it will be hard to reform public sector unions.

FDR was correct when he said there should be NO unions of tax paid employees (government unions), for the employees would be bargaining with themselves as they are also the tax payers who would pay them:

“The process of collective bargaining, as usually understood, cannot be transplanted into the public service,” Roosevelt wrote in 1937 to the National Federation of Federal Employees. Yes, public workers may demand fair treatment, wrote Roosevelt. But, he wrote, “I want to emphasize my conviction that militant tactics have no place” in the public sector. “A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government.”

When Daniel DiSalvo was asked what Governor Bruce Radner should first tackle, DiSalvo indicated that the Governor should think about pension reform before anything else.  But at the same time, DiSalvo admitted that Illinois and Chicago are still a long way off from adopting any reform measures.

Categories: On the Blog

If You Like Your Medicare, You Can Keep Your Medicare

January 26, 2015, 2:16 PM

Not just Barack Obama, but all politicians promise to protect Medicare—even if they are robbing it to pay for ObamaCare. They don’t promise that you can keep your Medicare doctor, however.

And they don’t address the question of what happens if you don’t like your Medicare.

You can drop Medicare Part B, though there is a penalty for getting back in. But to drop Medicare Part A, you have to give back all the Social Security payments you ever received, as well as forgoing future payments. This was litigated in the case of Hall v. Sebelius, and was revisited in the challenge to ObamaCare brought by the Association of American Physicians and Surgeons (AAPS), AAPS v. Burwell, which the U.S. Supreme Court recently declined to hear.

Why would anybody want to turn down free insurance, you may well wonder—especially when there is no private substitute for it. (President Johnson saw to that, to be sure that “his” program was successful.)

That has to do with your Medicare doctor, and your actual care. Medicare rules are forcing many independent physicians to give up their practice, and either retire early or become employees. Physicians who do remain in practice may not accept Medicare patients, or limit the number they see. If you are a Medicare patient, the entire Medicare regime is in the examining room or hospital room with you, like it or not. You are not allowed to be free for a day. Neither is the doctor. There is a way out (opting out or disenrolling), but that’s an all-or-nothing choice for the doctor.

A Medicare beneficiary can see a non-Medicare doctor as a private patient, but is very unlikely to be able to collect any Medicare reimbursement. A Medicare doctor cannot see Medicare-eligible patients as private patients.

Medicare is also making it increasingly difficult for Medicare patients to get tests, consultations, oxygen or other home-health items, or medications prescribed by a non-Medicare doctor, sometimes even if the patient is willing to pay privately.

Why should this be?

Keep in mind that Medicare is not yours. The money you paid in all your working life is long gone. Your benefits are coming out of the wages of people like Larry, John, and Jesus, who toil at Arnold’s gas station, and all of them are having a hard time these days. Now that payroll tax receipts are less than payouts, benefits are coming out of general tax revenues, which redeem the IOUs in the “Trust Fund.” And the ever-increasing Part B premiums pay only 25 percent of benefits. If you are on Medicare, you are a liability—to your doctor and to society.

Medicare does offer some fine new “benefits”—such as paying for “end-of-life” counseling. And why do you need that?

Death is something that could happen to anyone at any moment. If you have obligations or assets, you need to provide for your survivors. Medicare counseling, however, is not about life insurance, wills, or funeral arrangements—or about making peace with your family or God. It’s about reducing the cost of your care. The most expedient way to do that is to use “end” as a verb.

These days you can no longer assume that a hospital will seek to prolong your life and restore you to the health you enjoyed before you fell ill. It is much easier for the hospital if you give them permission ahead of time not to try. The purpose of the “advance directive” is to decline “life-sustaining treatments”—such as food and water.

Do not assume that doctors and hospitals have to “do everything” just because you said you wanted them to. Increasingly, hospitals demand the legal right to refuse care that is “futile”—by their definition. Medicare’s refusal to pay is a strong motive. Your consent provides immunity. Sedatives, to keep you quiet and peaceful, are cheap.

MIT economist Jonathan Gruber has told us how much the government cares.

 

Categories: On the Blog

Note to GOP: Talking About Raising Taxes is a Bad Idea

January 26, 2015, 1:42 PM

What are the Republicans thinking? Coming right out of the gate, at the start of the new GOP-controlled Congress, they began talking about the crazy idea of increasing the gasoline tax. It has little chance of passing, yet can easily taint the party with a tax-raising reputation.

Just two days after the swearing in of the new Congress, the January 8 Wall Street Journal (WSJ) headline reads: “Senate Republicans: Higher Gas Taxes are on the Table.” It states: “Senate Environment and Public Works Chairman James Inhofe (R., Okla.), who just took the reins of the panel, said he is open to considering raising the gas tax as a way to help pay for the dwindling Highway Trust Fund that keeps up the nation’s roads and other transportation infrastructure.”

Many of Inhofe’s Senate colleagues are clear about gas tax increase’s future. According to the Associated Press (AP), Senator John Cornyn (R-TX) said: “I don’t know of any support for a gas tax increase in Congress.” The WSJ cites Senator John Barasso (R-WY), “who said he doesn’t support an increase and doesn’t think there is a political appetite for doing so on Capitol Hill.”

The House isn’t any more optimistic. According to the AP, Speaker John Boehner (R-OH) doesn’t think there “are enough votes in the House for a gas tax increase.” Rep. Bill Shuster (R-PA), the House Transportation and Infrastructure Committee chairman, said: “I don’t think there’s a will in Congress and the American People don’t want it.”

Even the New York Times touts: “Gasoline-tax increase finds little support.”

However, Inhofe’s apparent willingness to consider an increase in the gas tax, along with Senators Orin Hatch (R-UT) and John Thune (R-SD), has given fodder to those who long for a carbon tax. A San Francisco Chronicle article titled: “Odds of gas-tax hike grow with quiet support of GOP Senators,” opens: “With Washington’s most famous climate-change skeptic expressing interest in raising the federal gasoline tax, Bay area Rep. Jared Huffman sees an opening to grab the brass ring of the environmental movement: a tax on carbon.” Huffman sees that “it’s a good time to make the tax a little more sophisticated so it reflects the carbon content of all fuels.”

The gas tax creates headlines because the Highway Trust Fund (HTF), which finances the interstate highway system, faces insolvency due to spending more than it takes in. Had Congress not come up with a solution to the $16 billion shortfall by August 1, 2014, federal highway projects would have ground to a halt and as many as 700,000 people would have received lay-off notices. An agreed upon “patch” put the crisis off until after the elections. That fix ends in May and the new Congress must now come up with another way to fund America’s roads and bridges. A gas-tax increase is the obvious solution as the concept means those who use the roads most, pay for them—supposedly making it more of a “user fee” than a tax.

The tax is currently 18.4 cents a gallon for gasoline and 24.4 cents for diesel—more than double the oil companies’ profit on that same gallon of gas. (Note: the gas tax is a flat figure, not a percent. With lower prices, people are driving more so revenues should be up.) With gasoline prices at historic lows, many think now is the time to raise the tax, as it will hardly be noticed.

But there are other options that don’t require raising taxes—or instituting a new carbon tax.

The fact that modern cars are more efficient than they were when the gas-tax was first instituted in 1956 at 3 cents a gallon is a major problem with HTF funding. Because drivers now go farther on less fuel, the roadways receive wear and tear without enough taxes collected to cover the use. As more electric cars fill our roads, the problem is exacerbated. Electric cars use the roadways for free while everyone else pays for them. Therefore many have proposed a mileage fee rather than a gas tax—or in addition to it. With a voluntary program passed in 2013, Oregon has been at the forefront of what is called mileage-based user fees (MBUF). The pilot program, which takes advantage of smart technology, has been hailed as a great success.

However, MBUFs should concern everyone concerned about more government involvement in our lives. At the Detroit auto show, BMW sounded an alarm about the “fine line between performance and privacy.” While the Financial Times (FT) report focuses on the pressure carmakers receive from technology companies and advertisers who want data collected by “connected cars,” one doesn’t have to be a conspiracy theorist to imagine the data collection morphing into a big-brother-like intrusion. According to the FT: “About two-thirds of today’s new cars have sensors and communications systems that send and receive data.” At last year’s consumer electronics show, Jim Farley, then Ford’s head of marketing, said: “We know everyone breaks the law. We know exactly when you do it because we have a GPS sensor in your car.” Imagine Environmental Protection Agency officers showing up on your doorstep because you have driven more than the allowed amount. Or, more likely, your gas supply getting cut off because you used up this month’s allotment early.

MBUFs may serve as a good option for electric vehicles, but implementation should not be universal—and therefore do not create the full answer to the HTFs funding woes.

The answer requires an understanding of the problem.

Gas taxes used to be more of a user fee—which made it fairer. “But since the 1990s the Highway Trust Fund has come to fund much more than new roads and bridges and highway maintenance,” claims a WSJ editorial. Heritage Foundation transportation and infrastructure analyst Emily Goff believes the problem is: “Spending priorities are determined more by politicians appeasing special interests than local needs or consumer choices. And the federal regulatory burden delays projects and smothers state and private-sector innovation.” She points out: “Washington diverts more than 25% of that money to subways, streetcars, buses, bicycle and nature paths, and landscaping, at the expense of road and bridge projects.” Users of these HTF projects utilize the infrastructure but don’t contribute to it. Cutting non-highway spending would go a long way to closing the funding gap. As the WSJ puts it: “Simply using the taxes that are supposed to pay for highways to, well, pay for highways makes the HTF 98% solvent for the next decade, no tax increase necessary.”

Another part of the solution, would redirect highway projects to the states. Chris Chocola, president of The Club for Growth, explains: “All 50 states have Departments of Transportation. More than 70% of all transportation spending in this country is already financed and spent at the state and local level. Each state has very specific infrastructure needs, and those needs are most effectively addressed at the local level, where those making the decisions are held most accountable by the taxpayers.”

States can more easily innovate and have already solved some highway issues with toll-concession private-public partnerships (PPP). Douglas Holtz-Eakin, head of the American Action Forum, a conservative advocacy group, and a former director of the Congressional Budget Office, sees creating more PPPs as an alternative to an increase in the gasoline tax.

A Reason Foundation FAQ on Toll Concession PPPs explains them this way: “A toll concession is a DBFOM (design-build-finance-operate-maintain) highway contract in which the principal funding source is tolls charged to users of the highway project. The projected toll revenue stream is used to support long-term revenue bonds, in addition to covering operation and maintenance costs of the project. In a toll concession, the consortium that wins the right to do the project takes on the risks of (a) construction cost overruns, (b) late completion, and (c) inadequate traffic and revenue. Those risks would otherwise be borne by the government (and hence, the taxpayers).”

I’ve outlined just four possible options to fund our roadways without raising the gas tax—which will still exist when gas prices go up and impacts the price of almost everything:

  • MBUFs for electric cars;
  • Limit spending to actual highway projects—not mass transit or nature trails;
  • Redirect some projects to the states; and
  • Toll concession PPPS.

Surely, the great minds in Washington could come up with more ideas.

With several options available to support the nation’s highways, the GOP needs create, innovate, and unify in fixing problems—like the HTF—and show America that they can do it without raising taxes.

(A version of this content was originally published on Breitbart.com.)

Categories: On the Blog

ObamaCare Must Go!

January 26, 2015, 12:14 PM

Can anyone remember how awful the U.S. healthcare free market system was that it needed to be replaced by the Affordable Care Act, otherwise known as ObamaCare? Can’t remember? That’s because it was ranked one of the best of the world and represented 17.9% of the nation’s economy in 2014. That’s down from the 20% it represented in 2009 when ObamaCare was foisted on Americans.

One of the best ways to follow the ObamaCare story is via Health Care News, a monthly newspaper published by The Heartland Institute. The January issue begins with an article by Sean Parnell, the managing editor, reporting that ObamaCare enrollment is overstated by 400,000.

“The U.S. Department of Health and Human Services (HHS) once again lowered its estimate of the number of Americans enrolled in health plans through government exchanges in 2014. The 6.7 million enrollees who remain are far lower than the eight million touted in May at the end of the last open-enrollment period.”

ObamaCare has been a lie from the moment it was introduced for a vote, all 2,700 pages of it, to the present day. Everything President Obama said about it was a lie. As to its present enrollments, they keep dropping because some 900,000 who did sign up did not make the first premium payment or later stopped paying.

Michael Cannon, director of health policy studies as the Cato Institute, said the dropout rate is a troubling trend. “It means that potentially hundreds of thousands of Exchange enrollees are realizing they are better off waiting until they get sick to purchase coverage. If enough people come to that conclusion, the exchanges collapse.”

Elsewhere in this month’s edition, there is an article, “States Struggle to Fund Exchanges”, that reports on the difficulties that “states are experiencing difficulty in paying the ongoing costs of the exchanges, especially small states. “’The feds are asking us to do their jobs for them. We get saddled with the operating costs,’ said Edmund Haislmaier, senior research fellow for health care policy studies at The Heritage Foundation.” Some are imposing a two percent tax on the insurance companies which, of course, gets passed along to the consumer. Even so, the exchanges are not generating enough income to be maintained.

Why would anyone want ObamaCare insurance when its rates keep rising dramatically? In Nebraska the rates have nearly doubled and another article notes that “A 2014 study finds large numbers of doctors are declining to participate in health plans offered through exchanges under the Affordable Care Act, raising questions about whether people buying insurance through exchanges will be able to access health care in a timely manner.” One reason physicians gave was that they would have to hire additional staff “just to manage the insurance verification process.”

Dr. Kris Held, a Texas eye surgeon, said ObamaCare “fails to provide affordable health insurance and fails to provide access to actual medical care to more people, but succeeds in compounding existing health care costs and accessibility problems and creating new ones.”

Health Care News reports what few other news outlets have noted. “In Section 227 of the recently enacted ‘Cromnibus’ spending measure, Congress added critical but little-noticed language that prohibits the use of funds appropriated to the Centers for Medicare and Medicaid Services to pay for insurance company bailouts.” William Todd, an Ohio attorney, further noted that “Congress did not appropriate any separate funding for ‘bailouts.’” Todd predicted that “some insurers are likely to raise premiums to avoid losses, or they will simply stop offering policies on the exchanges altogether.”

The picture of ObamaCare failure emerging from these excerpts is a very true one. Its momentum, in fact, is gaining.

In mid-December, the Wall Street Journal opined that “With the Supreme Court due to rule on a major ObamaCare legal challenge by next summer, thoughts in Washington are turning to the practical and political response. If the Court does strike down insurance subsidies, the question for Republicans running Congress is whether they will try to fix the problems Democrats created, or merely allow ObamaCare damage to grow.”

“King v. Burwell will be heard in March with a ruling likely in June. “Of the 5.4 million consumers on federal exchanges, some 87% drew subsidies in 2014, according to a Rand Corporation analysis.”

The Wall Street Journal recommended that “The immediate Republican goal should be to make insurance cheaper so people need less of a subsidy to obtain insurance. This means deregulating the exchanges, plank by plank. Devolve to states their traditional insurance oversight role, and allow them to enter into cross-border compacts to increase choice and competition. Allow insurers to sell any configuration of benefits to anyone, anywhere, and the private market will gradually heal.”

Or, to put it another way, eliminate ObamaCare entirely and return to the healthcare insurance system that had served Americans well until the White House decided that socialism was superior to capitalism.

The problem with the Affordable Care Act is that the cost of the insurance sold under the Act is not affordable and ObamaCare is actually causing hospitals and clinics to close their doors, thus reducing healthcare services for those who need them.

ObamaCare must go. If the Republicans in Congress did nothing more than repeal ObamaCare, the outcome of the 2016 election would be a predictable win no matter who their candidate will be. If not repeal, some separate actions must be taken such as eliminating the tax on medical instruments.

If the Republican Congress fails to take swift and deliberate action on ObamaCare between now and the 2016 elections, they will have defeated themselves.

Categories: On the Blog

Heartland Daily Podcast – Randal O’Toole: Funding for Highway Construction and Transportation Infrastructure

January 26, 2015, 11:10 AM

Cato Institute Senior Fellow Randal O’Toole joins Budget & Tax News managing editor Jesse Hathaway to talk about his work on changing the way the federal government funds highway construction and transportation infrastructure projects. O’Toole explains how the current funding system, based on discretionary grants, is inefficient and wasteful, and proposes a formula-based system.

Formula-based funding, O’Toole says, would fix many of the problems with the current system, removing political considerations and other inefficiencies from decisions on how infrastructure projects are funded. Also, shifting to a formula-based funding system would reduce cities’ incentive to build larger projects than are actually needed, as the system would be based on actual population and ridership statistics.

[Subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

The Founders Wanted a Laser-Targeted Article V Convention (Part 7 of 8)

January 24, 2015, 11:26 AM

This is part 7 of the 8 part series establishing that the laser-focus of the Compact for America approach to organizing an Article V convention with the specific job advancing and ratifying a pre-drafted, specific federal Balanced Budget Amendment is clearly, unequivocally, and overwhelmingly what the Founders expected from the state-originated amendment process.

Exhibit G – George Washington’s Letter to John Armstrong

1788: “It should be remembered that a constitutional door is open for such amendments as shall be thought necessary by nine States.”

George Washington’s statement to his friend John Armstrong clearly indicates that two-thirds of the states (nine at the time) would specify the desired amendments in their Article V application and target the convention agenda accordingly. That’s because the only element of the process controlled by two-thirds of the states is the application!

If you agree, like and share!

[Originally published at Compact for America]

Categories: On the Blog

Sen. Inhofe Uses Heartland Poster to Debunk Climate Alarmism

January 23, 2015, 5:08 PM

On Wednesday January 21, in his first speech on the floor of the senate as the Chairman of the Senate’s Environment & Public Works Committee, Sen. James Inhofe (R-OK) used a poster supplied by The Heartland Institute to drive home the point that the theory of man-made climate change is highly contested.

The poster, which can be seen here, identifies 58 climate experts who “don’t believe global warming is a crisis.” Among those listed are Dr. Richard Lindzen, Dr. Tim Ball, and Apollo 17 astronaut Harrison Schmitt – all of whom reject the UN IPCC’s conclusions regarding the human impact on our climate.

Inhofe used his time on the floor to poke holes in the arguments of climate alarmists in the Senate, who still believe that “97-98 percent of scientists agree” about the causes of global warming. “It just isn’t true,” Inhofe said.

He uses the poster to illustrate the large amount of dissenting opinion in the face of the generally held “consensus” on man-made climate change. Sen. Inhofe reassures us that there are going to be hearings in the future on the subject and “we’ll be there to be the truth-squad.”

Watch the speech in full above, and visit the archive site of Heartland’s nine International Conferences on Climate Change to see presentations by many of the scientists featured on that poster.

Categories: On the Blog

Heartland Daily Podcast – Lindsay Boyd: Right to Try

January 23, 2015, 11:00 AM

Lindsay Boyd, policy director at the Beacon Center of Tennessee, discusses ‘Right to Try’ legislation that has been introduced in Tennessee and elsewhere, and already passed in five states. Under ‘Right to Try,’ patients with a terminal illness are able, with their doctor, obtain medicines that have passed the FDA’s phase one clinical trials for safety but haven’t yet passed phases two and three, which test the efficacy of new drugs.

Right to Try expands treatment options and would give Americans access to many drugs that have already been approved in Europe and elsewhere. It would expand and speed up the FDA’s current ‘compassionate use’ policy that allows patients access to drugs that have not yet been approved. The process for compassionate typically takes between 9 and 18 months, and requires about 100 hours of a doctors time, making approval for compassionate use an arduous and time-consuming process that many patients just can’t wait on.

[Subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

Wind Energy’s Bluster Peters Out

January 22, 2015, 1:23 PM

Cape Wind, touted as “America’s first offshore wind project,” became one of America’s most high-profile and most controversial wind-energy projects. Fourteen years in the making, estimated at $2.6 billion for 130 turbines, covering 25 square miles in Nantucket Sound off the coast of Massachusetts, the Cape Wind project has yet to install one turbine—let alone produce any electricity. Now, it may be “dead in the water.”

On January 6, the two power companies, National Grid and Northeast Utilities, that had agreed to purchase most of the electricity Cape Wind was to generate, terminated their contracts with the developers due to missed milestones. Under the terms of the contracts, Cape Wind had to secure financing and give notices to proceed to its suppliers to start work by December 31, 2014. Neither happened and both companies filed to cancel power purchase agreements. “The project is in cardiac arrest,” according to Amy Grace, a wind-industry analyst with Bloomberg New Energy Finance.

Cape Wind has faced stiff opposition since it was first proposed in 2001. Senator Edward Kennedy’s efforts, and those of his wealthy friends, to fight Cape Wind have been the most publicized, but Native Americans, fishermen, and local communities have also battled the industrialization of Nantucket Sound. The town of Barnstable has been particularly active in the fight. The Cape Cod Times reports that Charles McLaughlin, Barnstable’s assistant town attorney, said: “The town’s concerns include the possibility that a collision between a boat and the large electric service platform the project requires could spill thousands of gallons of oil into the sound.”

Former Massachusetts Governor Deval Patrick (D) positioned Cape Wind as the centerpiece of his renewable energy goals and invested significant political capital backing the proposal—including tying the NStar power purchase agreement to approval of the NStar and Northeast Utilities merger (given the unfavorable terms of the agreements, the companies may have been looking for any exit ramp). Yet, Ian Bowles, Patrick’s first energy and environment chief who, according to the Boston Globe, “helped shepherd the offshore project,” acknowledgesthat the loss of the power purchase agreements “may have spelled the end for Cape Wind.”

The announcement came two days before Patrick left office. While he claims: “We’ve done everything as a state government to get them over the regulatory lines,” Patrick concedes it is now “up to the market.” According to the Cape Cod Times, the former governor doesn’t know “if the project could survive without the contracts in place.”

Even the Department of Energy (DOE), which seems to indiscriminately throw money at any politically favored green-energy project, was tepid in its support for Cape Wind. DOE’s loan guarantees generally average about 60 percent of the project’s costs, but the $150 million offered to Cape Wind made up a mere 6 percent—and that, only after the project received commitments for about half of its financing. In most cases, the government guarantee comes before the private financing and signals a go-ahead for investors.

Additionally, the political winds have shifted. While Governor Patrick championed Cape Wind, Massachusetts’ new governor, Charlie Baker (R) was staunchly opposed to it—even calling it Patrick’s “personal pet project.” While campaigning, Baker “dropped his opposition to Cape Wind” because he believed it was a “done deal.” Now that the deal may well be undone, Baker says he “will not try to influence the outcome of the legal process surrounding the Cape Wind project.”

Wind energy’s future faces problems beyond Massachusetts.

While Massachusetts’s utility companies filed to cancel power purchase agreements, two Minnesota wind farms, operating as Minwind Companies, filed for bankruptcy because the eleven turbines needed extensive repairs and the 360 farmers and landowners who invested in the projects can’t afford the maintenance. Weather related damaged put them 200-300 percent over budget.

Minwind’s nine separate limited-liability companies allowed investors to take advantage of federal wind-energy credits, USDA grants, and the now-discontinued state assistance program for small wind projects. The Star-Tribune reports: “The owners stand to lose their investment, and the wind farms eventually may have to shut down.”

On the national level, the American Wind Energy Association (AWEA) has continued to lobby for a retroactive extension of the Production Tax Credit (PTC) for wind energy that expired at the end of 2013. Disappointing AWEA, the lame-duck Congress did approve a ninth extension—but just through the end of 2014. AWEA’s CEO Tim Kiernan groused: “Unfortunately, the extension to the end of 2014 will only allow minimal new wind development and it will have expired again by the time the new Congress convenes.” In response to the “bare-minimum extension,” Luke Lewandowsi, Make Consulting research manager, said it “casts doubt on the willingness or ability of Congress to revisit the PTC in 2015.”

Adding insult to industrial wind’s injury, wind turbine installation placed number three in a recent list of 10 dying U.S. industries—in a better spot than only computer and recordable media manufacturing.

All of this news doesn’t bode well for the wind energy business, but for ratepayers and those who believe in the free market and who believe that government shouldn’t pick winners and losers, current wind conditions are a breath of fresh air. Governments, both state and federal, have given wind energy every advantage. Even Warren Buffet admits the tax credits are the only reason to build wind farms. And as Governor Patrick acknowledges: “It’s now up to the market.”

Categories: On the Blog

The Founders Wanted a Laser-Targeted Article V Convention (Part 6 of 8)

January 22, 2015, 11:26 AM

This is part 6 of the 8 part series establishing that the laser-focus of the Compact for America approach to organizing an Article V convention with the specific job advancing and ratifying a pre-drafted, specific federal Balanced Budget Amendment is clearly, unequivocally, and overwhelmingly what the Founders expected from the state-originated amendment process.

Exhibit F-James Madison’s Alternative to Nullification

On February 7, 1799, James Madison wrote both that the states could ask their senators to propose an “explanatory amendment” clarifying that the Alien and Sedition Acts were unconstitutional, and also that two-thirds of the Legislatures of the states “might, by an application to Congress, have obtained a Convention for the same object.”

This is perhaps the clearest statement by the Founder called by some the father of the Constitution that an Article V application properly organizes an Article V convention to propose a specific amendment. In 1799, Madison defended the legislative declarations of Virginia and Kentucky that the Alien and Sedition Acts were void and unconstitutional. He said they were statements of opinion to which states are entitled. But he didn’t stop there. He emphasized how the states should consider following up their declaration with an Article V application to obtain an Article V convention for the object of proposing an “explanatory amendment” that the Alien and Sedition Acts were unconstitutional.

The modern notion that an Article V convention sets its own agenda and drafts any number of amendments independently of the will of the States as expressed in their Article V application is obviously, manifestly and completely alien to Madison’s expressed public understanding of the process.

If you find this evidence compelling, please like and share widely. Also, let’s bring the fight for a Balanced Budget Amendment originated by the states to the belly of the beast!Consider supporting our latest educational campaign-this time focused in Washington, DC.

[Originally published at Compact for America]

Categories: On the Blog

It’s Really, Really Time to Ban Internet Discrimination Forever

January 22, 2015, 10:55 AM

Once again the Permanent Internet Tax Freedom Act has been introduced in the House of Representatives, this time because the last temporary extension, passed in December, will expire on October 1. The bipartisan legislation bans taxes on Internet access permanently and disallows multiple or discriminatory taxes on Internet activities. If allowed to expire, states would begin to collect taxes on Internet access, or apply other discriminatory taxes that may already be in place in the state but which have been held at bay during the moratorium.

According to Scott Mackey, former chief economist for the National Conference of State Legislatures, an average household’s taxes would increase by $50 to $75 each year if states apply their sales or telecommunications taxes to Internet access.  While that doesn’t seem like much, keep in mind that that is about what a low-income family spends in a year on subsidized school lunches. Those who qualify for such programs are exactly those who will be most negatively affected by a lapsed moratorium.

And those taxes are discriminatory. Since taxes are already being paid on the infrastructure that is delivering broadband, adding a new tax is merely a multiple tax, and hence discriminatory.  Fortunately, for 17 years, as the moratorium has continued to be extended, the country has continued a policy of keeping the Internet free of multiple or discriminatory taxes to the benefit of all families.

Today, we also have a clear national mandate to expand broadband use. The addition of discriminatory online taxes would drive down online purchases, and additional access taxes would decrease adoption of broadband. However, permanently wiping out the many exceptions made to the ban over the years would eliminate discriminatory access taxes, which would actually encourage broadband adoption.

One would think that immediate passage of a permanent moratorium would be a foregone conclusion given the consensus that broadband across the nation is a good idea. Those taxes discriminate against certain technologies and business plans and ultimately fall heaviest on those least able to bear the burden.

Congress has a clear choice: Make complete and permanent the ban on Internet access and multiple or discriminatory taxes online, encouraging broadband access and e-commerce, or turn away from that national priority and allow the pro-tax thugs to loot our digital future.

Categories: On the Blog

Heartland Daily Podcast – Chris Casey and Paul Rosenberg: Bitcoin

January 22, 2015, 10:43 AM

Chris Casey, Managing Director at WindRock Wealth Management, sits down with the founder of Cryptohippie and author, Paul Rosenberg to talk about Bitcoin. Casey and Rosenberg answer all the most frequently asked question regarding the virtual currency.

With the increasing popularity of Bitcoin, people are curious about the currency and its potential benefits. However, since its inception, the value of a unit of Bitcoin has varied dramatically. This has caused some to become wary of using the digital currency. Rosenberg addresses those fears and explains that Bitcoin is here to stay for the foreseeable future.

[Subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog