Well, well, well. It seems California is not all that interested in the environment after all. As this editorial in the Wall Street Journal notes (June 18, 2013, p. A18), the state is raiding environmental cap-and-trade funds not for improving the environment, but to balance its books. Snip:
California expects to generate $500 million this year from auctioning off permits to emit carbon, and between $2 billion and $14 billion annually by 2015. This rich new vein of revenues was supposed to flow to green programs (e.g., solar subsidies), but Governor Jerry Brown cut a deal with Democrats in the legislature to seize this year’s proceeds to finance more generous welfare and Medicaid benefits. Environmentalists are suddenly stunned to discover that they’re not exempt from Sacramento’s generally accepted accounting principle of raiding internal accounts to backfill the budget.
Will all these environmental taxes and fees the state imposes on business become the latest cash cow for state and local governments to tap for anything but environmental improvement? It seems so. The Wall Street Journal concludes:
In short, California Democrats are proving that the real point of cap and trade is to give politicians another revenue stream for income redistribution while dodging accountability for raising taxes. That’s worth keeping in mind when [politicians] resurrect the scheme for the entire U.S.
The US House of Representatives will be considering the Senate’s version of the 2013 Farm Bill this week. A great deal of the debate over the bill will center on reductions in the food stamp program, which comprises a large portion of the spending in the Farm Bill. The Supplemental Nutrition Assistance Program (SNAP), previously known as the Food Stamp program, has become one of the fastest growing welfare programs provided by the US government. SNAP is administered by the U.S. Department of Agriculture while the benefits are distributed by individual U.S. states.
Nearly 80% of the $955 billion Farm Bill is devoted to SNAP. In an effort to control the rising cost of SNAP payments, both the Senate and House versions of the Farm Bill reduce the funding levels for SNAP. The Senate version cuts $4 billion from the program, which is predicted to cut the expected cost of the program to about $760 billion over the next 10 years while adding provisions to combat the illegal trafficking of food stamps. The House version takes these cuts even further, cutting the SNAP program by around $20.5 billion over 10 years. The White House has warned legislators in the House that if they pass the larger cuts the President may veto the bill.
According to the Congressional Bridget Office, 1 in 7 Americans receive SNAP benefits, at a cost of $134 each month, this equates to a monthly cost of around $6 billion. Over the last five years, SNAP’s costs have doubled. According to the Associated Press, in 2012 alone, SNAP cost $78.4 billion to put 46 million people on food stamps; in 2006, 26 million people received benefits at a cost of $33 billion. Regardless of the cuts Congress decides to make, the fact that SNAP has been growing at a rapid rate cannot be ignored. Similar growth over an extended period may create a situation where the program cannot be sustained.
The key issues with SNAP are centered on eligibility, waste and abuse. In the states using categorical eligibility for the SNAP program, recipients are determined not by the set income and asset limitations of SNAP, but by participation in other cash welfare assistance programs, which can have lesser eligibility standards.
Eligibility for the program expanded considerably since its inception. Currently, SNAP is the fourth largest means-tested program for low income families and individuals. This rapid expansion of eligibility has led to a rapid growth in the number of individuals receiving SNAP benefits. When the food stamp program was first expanded nationally in the 1970s, just 1 in 50 Americans participated.
Another issue which has inflated the number of food stamp recipients is the funding structure used by SNAP. Under the current funding structure, states are given an incentive to increase the number of participants in SNAP, as the money they receive automatically increases as more people enroll.
In a Heritage Foundation paper outlining needed reforms to the food stamp program, Robert Rector and Katherine Bradley recommended several areas where SNAP could be improved, returning the program to its intended role and encourage work and self-sufficiency.
“Future spending needs to be subject to reasonable limits. When the economy recovers, total means-tested spending should be returned to pre-recession levels adjusted for inflation. Food stamp spending should also be returned to pre-recession levels when the recession ends. In addition, when the economy improves, able-bodied, non-elderly adults receiving food stamps should be required to work, prepare for work, or at least look for a job as a condition of receiving aid.”
Efforts to reform SNAP were also considered in amendments to last year’s 2012 Farm Bill proposal. These reforms would have ended the bonuses states receive when they increase their food stamp participation (the CBO estimated this change could save $480 million over 10 years). A second amendment aimed to restore asset tests designed to ensure SNAP recipient meet eligibility requirements (this was estimated to save $11 billion over 10 years). Both amendments failed in the Senate.
Simply cutting spending on SNAP does little to effect the programs glaring issues. Reforms ensuring that recipients are both truly eligible and actively seeking work are needed. Both Congress and state legislators should take a closer look at such reforms before SNAP expenditures spiral out of control.
Heartland Research Director S. T. Karnick was a guest on WJR-AM in Detroit today with host Frank Beckmann to talk about his latest piece from over the weekend in the Daily Caller titled, “The Real Reason the Argument Over the Redskins’ Name Matters.”
From the piece:
In response to charges that the Washington Redskins’ team name is racist, NFL commissioner Roger Goodell sent a letter to members of Congress on Wednesday defending the name as a “unifying force that stands for strength, courage, pride and respect.” Redskins owner Dan Snyder has vowed never to change the team’s name.
This is an important issue, but not for the reason most people assume. It’s important because of its implications for the role of government in our lives.
Listen to Karnick on the radio via the player above.
What was Marco Rubio sent to Washington to do? The concern among Rubio’s team of the rising chorus of “Marco’s gone Washington” shouldn’t surprise them considering his approach to the gamesmanship of typical Senatorial give and take. The problem is a simple one: Rubio was originally sold to the Republican base as not just a good speaker or an inspiring life story, but as a change agent, one of the few politicians who could actually move the country right. His acceptance of the Gang of Eight’s approach to wheeling and dealing their way to a 1,000+ page immigration measure – which invests more faith in government, skews its way toward more corporate interests, and which no one believes will solve the real long-term problems with our immigration system – is as typical Washington as it gets.
Does a change agent really say things like “I think 95, 96 percent of the bill is in perfect shape and ready to go.” And then refuse to say whether you would vote for that same bill if the border security portion remains unchanged? Of course not – unless, like Lindsey Graham, your entire rationale for supporting this legislation (indeed, any immigration legislation at all) is a blatant attempt at political pandering. This is what leads Bill Kristol to saythat “No legislation is better than this legislation.” It’s an acknowledgement that Rubio’s problem isn’t that he’s being a Senator, it’s that he’s breaking faith with the base on what type of Senator he was going to be. He’s altering the Rubio brand in a fundamental way.
Ryan Lizza has more: “The two biggest sticking points were wages for foreign workers (the unions wanted them to be higher) and the objections of the Building and Construction Trades union, which argues that plenty of Americans are looking for this kind of work. Rubio sided with the Chamber against the construction workers. ‘There are American workers who, for lack of a better term, can’t cut it,’ a Rubio aide told me. ‘There shouldn’t be a presumption that every American worker is a star performer. There are people who just can’t get it, can’t do it, don’t want to do it. And so you can’t obviously discuss that publicly.’ In the end, the wage issue was settled to the A.F.L.-C.I.O.’s satisfaction, and the Building and Construction Trades union won a cap on the number of visas for foreign construction workers.”
“In the morning, [Schumer] called Denis McDonough, Obama’s chief of staff, who was starting to have doubts about the Gang, and gave him the news. ‘You guys are kicking ass,’ McDonough said. … Schumer said [of Rubio], “He’s the real deal. He is smart, he is substantive. He knows when to compromise and when to hold. And he’s personable.’ An aide to Menendez said that, if the Gang were a group of high-school students, Rubio would be the cool jock and the captain of the football team, with whom everyone wanted to hang out. Schumer often found himself mediating disputes between Rubio and McCain, who felt that Rubio’s public statements sometimes positioned him positively with conservatives at the expense of the Gang. McCain would call Schumer and fume, “Look what Rubio’s doing!” I assume the frustrations from the Gang are that Rubio’s being insufficiently collegial, or not willing enough to ignore the concerns of the base. But that’s a difficult line to follow.
Rubio’s favorable rating is, of course, still very high with Republicans. And I don’t expect passage of the immigration bill through the Senate to impact him all that much personally until he gets into the fray. Just keep in mind that we have seen Rubio treated largely with kid gloves in the course of his D.C. career: he hasn’t tried to do that much, he’s kept his head down, and picked his battles. This is the first issue where anyone’s bothered to throw a glancing punch his way, and it’s an opportunity to prove he doesn’t have a glass jaw. And it’s brought about a choice Rubio has to make: does he want to be a talented and effective Senator, besties with Schumer and McCain, or does he want to be a change agent who rejects the old Washington ways of thousand page bills, backroom deals and worker quotas in favor of asking the simple question: does this measure solve the real problem? And that’s entirely up to him.
[First Published by RealClearPolitics.com]
On June 10 the U.S. Senate approved its version of the Federal Agriculture Reform and Risk Management Act of 2013, also known as the “Farm Bill.” The House now has a chance to vote on their version of the “Farm Bill.” The bill would fund food stamps, direct payments to farmers, crop insurance, disaster assistance, and various other subsidies. The Congressional Budget Office estimates it will cost $973 billion over the next 10 years.
The largest and most expensive component of the Farm Bill is the Supplemental Nutrition Assistance Program (SNAP), commonly referred to as food stamps. According to Congressional Research Service reports, 80 percent of the Farm Bill money, or $764 billion, will go to SNAP over the next decade. Hunger prevention and farm policy are separate issues, however, and each deserves thoughtful consideration from legislators. Combining them into one enormous 575-page bill decreases chances for meaningful reform.
Another key component of the Farm Bill is the Direct Payments Program. This program gives payments to producers based on past production; farmers collect the payments even when prices are high or their land is uncultivated, provided their average annual farm income does not exceed $750,000. In some cases, however, high-income commercial farms gathered millions of dollars in subsidies without planting a single seed.
Taxpayers also pay 38 percent to 80 percent of crop insurance premiums for more than 100 commodities, and they subsidize insurers for managing the coverage. This allows farmers to take larger risks with their planting and cultivation of crops because they don’t bear the full cost of that risk. In 2011, taxpayers paid 62 percent of the premiums for the crop insurance program, up from 37 percent in 2000. Simply reducing the 62 percent premium subsidy by 10 percentage points to 52 percent in 2011 would have saved $1.2 billion.
Crop insurance also encourages farmers to purchase extra insurance, with the additional cost borne by taxpayers. According to the Congressional Budget Office, crop insurance subsidies are expected to cost taxpayers an average of $8.9 billion a year in 2013–2022. A Government Accountability Office analysis found that if a $40,000 cap on premium subsidies received by farmers had been implemented in 2011, it would have saved taxpayers an estimated $1 billion in that year alone. This type of cap would have affected only 3.9 percent of contributing farmers. Lowering the cap further would achieve even more savings.
Finally, the Disaster Assistance Program invites Congress to declare “emergencies” and release additional funds. This program subsidizes farmers who forgo crop insurance. Current estimates predict the program could grow to cost about $9 billion a year in the coming decade.
Lawmakers should consider the needs of farmers and taxpayers. The most expensive and indefensible subsidies should be eliminated, and lawmakers should take a market-based approach to these programs.
The following documents provide additional information about various provisions of the Farm Bill:
Farm Bill “Reform” Is in the Eye of the Beholder
Sallie James of the Cato Institute explains how the recently proposed Farm Bill is a step backward from some of the reforms to farm programs made in the 1996 and 2002 farm bills.
A Farm Bill Primer: 10 Things You Should Know About the Farm Bill
Daren Bakst and Diane Katz of The Heritage Foundation identify 10 important elements of the Farm Bill, including the many subsidies that should be capped or eliminated altogether.
NTU Urges All Senators to Vote “YES” on the Following Amendments Regarding Crop Insurance Reform
Nan Swift, federal government affairs manager at National Taxpayers Union, writes to encourage senators to vote yes on Farm Bill amendments that would prevent the waste of taxpayer dollars on special-interest carve-outs.
Farm Bill Reboot: Crop Insurance Has Got to Go
The Chicago Tribune editorializes against farm subsidies as creating perverse incentives and unnecessary costs to taxpayers, as well as being bad for the nation’s food production. It calls for an end to this agricultural welfare.
Budget Issues Shaping a Farm Bill in 2013
Agricultural policy specialist Jim Monke discusses difficult choices Congress faces regarding how much support to provide for agriculture and how to allocate it among competing constituencies.
The 2013 Farm Bill: Reducing the Economic and Environmental Costs
Chris Edwards, Scott Faber, Andrew Moylan, and Josh Sewell discuss the impact of the farm programs on taxpayers and the environment and suggest possible reform steps.
20 Completely Unjustified Programs in the House Farm Bill
Diane Katz and Daren Bakst of The Heritage Foundation identify 20 unjustified programs in the 575 pages of the Farm Bill.
Heartland’s Director of Government Relations John Nothdurft and Senior Policy Analyst Matthew Glans talk about the Wireless Tax Fairness Act, which would protect wireless users from further tax hikes.
States and localities have gone after wireless users with high discriminatory taxes that average a staggering 17.1 percent across the nation.
About 90 percent of Americans have a cellphone, so they’re seeing this space increase in size, so they’re trying to tap the revenue … it’s a money-grab by states and localities.”
These taxes threaten to damage innovation in the technology sector, which has been one of the few areas of growth in the economy over the past couple years.
Listen to the player above for the whole story on the Wireless Tax Fairness Act.
[Subscribe to the Heartland Daily Podcast free at this link.]
Let’s proclaim the Good News: Government money is free. No, not just to the beneficiaries of government programs. To society as a whole. Meaning there is no economic cost to government spending whatsoever. The more the government spends, the richer we will all be. Let the Good Times roll.
That is the foundational principle of Keynesian economics, which is heart and soul “Progressivism.” Every Paul Krugman column can just be replaced by the summary paragraph above.
Money doesn’t grow on trees, you say? That outdated notion is where you went wrong. Today’s paper money IS trees.
The liberal left wing that dominates the Democrat Party today so can’t stand cutting just 1% to 2% of federal spending, just from the growth in spending, as provided in the sequester, that they are saying that the sequester spending cuts involve “austerity,” which, they claim, is slowing economic growth, jobs, and the non-existent recovery. This is based on the failed, discredited, outdated economic doctrine of Keynesian economics, which holds that economic recovery and growth is restored by increasing government spending, deficits and debt. This supposedly increases “aggregate demand,” which supposedly stimulates increased production, and hiring, to meet that demand.
You can see exactly this being said in the public debate today. President Obama’s senior economic advisor during his first term, Harvard University Professor of Economics Larry Summers, testified before the Senate Budget Committee on June 5 that during times of sluggish economic growth at least, “Borrowing to support spending, either by the government or the private sector, raises demand and therefore increases output and employment above the level they otherwise would have reached. Unlike in normal times, these gains will not be offset by reduced private spending because there is substantial excess capacity in the economy….”
“Consider the effect of the sequester in 2013. The sequester will impact the last 10 months of calendar year 2013. The CBO estimates that the sequester will, over this 10 month interval, reduce spending by $64 billion [out of total federal spending during this year of close to $3.7 trillion, or nearly 60 times as much]….However, we must also consider the sequester’s effect on GDP growth. The CBO estimates that the sequester will reduce the GDP growth rate in 2013 by 0.6 percentage points. This stifling of growth actually increases the debt/GDP ratio through two effects: First, by reducing the GDP growth rate, the sequester reduces the denominator of the debt/GDP ratio. Second, lower GDP during 2013 means lower tax revenue, which increases the deficit.
So the conclusion that Summers draws is,
“[I]t would not be desirable to undertake further measures to rapidly reduce deficits in the short run. Excessively rapid fiscal consolidation in an economy that is still constrained by lack of demand, and where space for monetary policy action is limited, risks slowing economic expansion at best and halting recovery at worst. Indeed, there is no compelling macroeconomic case for the deficit reduction now being achieved through sequestration, as the adverse impacts of spending cuts on GDP more or less offset their direct impacts in reducing debt.”
Senate Budget Committee Chairwoman Patty Murray reflected this thinking in hearings the previous day, saying,
“When the economy is struggling, government should act to make things better for the middle class and most vulnerable families by investing in jobs and economic growth [meaning increasing federal spending, deficits and debt] that not only boosts demand in the short term, but also helps lay down a strong foundation for long-term and broad-based growth for years to come….Right now, we’re seeing how the indiscriminate and irresponsible cuts from sequestration are hurting the economy….And continuing on the path to austerity right now [meaning making minimal cuts just in the growth of federal spending] would weaken our economy and do serious damage to job creation and growth….In fact, the bipartisan Simpson-Bowles commission highlighted the importance of ‘investing in [meaning increasing federal spending, deficits and debt for] education, infrastructure, and high-value research and development to help our economy grow, keep us globally competitive, and make it easier for businesses to create jobs.’
But all of this is transparently fallacious, and the marked decline in the ability of our nation’s supposed “elites” to reason, or even to communicate clearly, is markedly contributing to the rapid decline of America. The 2009 stimulus in particular included heavy increases in spending for infrastructure, to no good effect for jobs, wages, middle class incomes, or economic growth.
The truth is that Keynesian economics is just plain silly, no matter how many academic eminences embrace it, because increasing government spending, deficits and debt does not increase “aggregate demand.” That is because the money to finance that government spending, deficits and debt must come from somewhere. So if you increase federal spending, deficits and debt by close to a trillion, as the Obama/Democrat so-called 2009 “stimulus” did, and finance that government spending, deficits and debt by borrowing an extra trillion dollars out of the private sector, the net increase in aggregate demand is no more than ZERO at best. [This is why the Wall Street Journal’s Steve Moore has rightly called Keynesian economics “magic fairy dust economics.”] In fact, the whole transaction is probably a net drag on the economy, growth, jobs and wages. (This reasoning still applies even when there is supposed “substantial excess capacity in the economy.”).
That, in fact, is exactly what happened with the 2009 “stimulus,” because as several of my recent columns have documented, the supposed recovery under President Obama from the 2008-2009 recession was the WORST recovery of any previous recovery from any previous recession under any previous President since the Great Depression. It took far too long for the economy to grow back to the previous peak of GDP, we still have not recovered all the jobs lost during the recession, which is taking far longer than for any previous recovery since the Great Depression, poverty has soared during Obama’s entire Presidency, even though the recession actually ended four years ago, middle class incomes have actually declined all that time as well, and economic growth during Obama’s first term was the worst of any President since the Great Depression as well, worse even than during the one term of Jimmy Carter, or during the awful second term of George W. Bush.
This pitiful, disastrous, inexcusable economic record is particularly egregious because the American historical record is the worse the recession the stronger the recovery, as the American economy always rebounded back to it’s previous, long term, world leading, economic growth trendline. As a matter of math, that means faster than normal growth, until we return to the normal, stable, long term growth trendline. Professor Summers did much better during the 1990s serving under President Clinton, when Newt Gingrich was running the economy, and his predecessor at Treasury in Robert Rubin was protecting the dollar. Given his less well supervised, more recent performance under President Obama, Professor Summers should be retired, instead of pretending to tutor the Congress on economics.
But there is an even more fundamental problem with the logic of Keynesian economics, besides the magic fairy dust problem. Demand can never be inadequate in a free market economy. Demand is insatiable in fact. [Verify that with a talk with your teenage daughter, or son]. If the demand for any particular good or service is inadequate for the supply produced, the price will just fall for that good or service, until demand equals supply. Consumers can never consume more than is produced, no matter what policies the government follows to increase “aggregate demand,” and they will never consume less, as the market price system will see to that.
This is because what really drives economic growth, recovery, and prosperity is not “aggregate demand” (a fallacious, fabricated, concept, in fact), but economic production and output. Rich nations, like rich people, are not rich because of their demand for goods and services, but because of their production. Those who produce more, consume more. Demand is not the problem. Production is.
And what drives increased production, economic growth, and prosperity is the economic incentives for such production, growth and prosperity. The more fundamental reason why President Obama’s “recovery” and economic record are so bad is because he has consistently followed anti-growth policies across the board, squelching incentives for increased production.
On taxes, President Obama has now raised top marginal tax rates across the board for virtually every major federal tax. That includes personal income taxes, capital gains taxes, the tax on corporate dividends, and death taxes. The corporate income tax rate under President Obama is now the highest in the world, and the capital gains tax rate, counting state capital gains taxes, is close to the highest in the world. All these tax rate increases slash the incentives for productive activity, and are predatory in particular to capital investment, which is the foundation for increased jobs, wages and incomes in a capitalist economy. Which is why President Obama isn’t getting any.
On regulation, President Obama has been busily increasing regulatory burdens and barriers across the board, which further reduces the incentives and even the opportunities for increased production. See, e.g., the Keystone pipeline, the out of control EPA, picking and choosing which whole industries to assassinate, Obamacare, Dodd-Frank, etc., etc.
On money, the Obama Administration has provided the political cover for, supported, and cheer-led, the wildest Fed monetary policy in U.S. history, debasing the currency, and sharply undercutting confidence in the dollar, which has survived this onslaught only because it is competing with other fiat, paper money currencies which are even less stable. Bad currency murders economic growth, jobs, wages and prosperity, because investors do not want to invest where they are likely to be paid back in a debased currency worth less, and arbitrary monetary policies produce bubble and bust cycles that can bankrupt almost any enterprise. Today’s Fed monetary abuses are fostering new bubbles, and laying the groundwork for an even worse crisis to come.
And on spending, President Obama has pursued the wildest spree of federal spending, deficits and debt, since World War II, when at least we were fighting, and defeating, Nazi Germany and Imperial Japan, which was ultimately very pro-growth. (Investors like to invest where their investments are less likely to be blown up, and they are less likely to be murdered). Before President Obama, no American deficit had ever been anywhere near $1 trillion. Under President Obama, no deficit has ever been less than $1 trillion. And the national debt as a percent of GDP is roaring towards all-time, World War II records.
Contrary to Keynesian economics, that runaway federal spending, deficits and debt just drains resources out of the more productive private sector, only contributing to further decline and stagnation.
There is within this current economy the greatest boom in world history just straining its bonds to break out, and restore the American Dream — traditional, American, world leading, economic growth and prosperity. All we have to do is set it free, by reversing every one of President Obama’s policies.
That means individual and corporate tax reform, cutting rates, and closing, especially special interest, crony capitalist loopholes, such as President Obama’s green energy tax giveaways. Better if such reform is not revenue neutral, but a net tax cut. Such policies would be served particularly well by the proposed tax reforms of House Budget Committee Chairman Paul Ryan, hopefully to be implemented later this year by House Ways and Means Chairman Dave Camp. For individual income taxes, Ryan has proposed a 10% rate for families earning less than $100,000 a year, and a 25% rate for families earning over $100,000. For corporate taxes, Ryan has proposed reducing the world leading 35% federal tax rate to 25%, which is close to the global average. Ryan also proposes to repeal and replace Obamacare, which would end the Obamacare tax increases.
These lower rates would sharply increase incentives for productive activities, particularly the capital investment which is the foundation for growing jobs, wages and incomes. And eliminating the special interest tax loopholes and preferences would terminate the resulting misallocation of resources to less productive activities and enterprises.
It means deregulation, instead of Obama’s costly reregulation. That would be served by repealing and replacing Obamacare as well, and Dodd-Frank and the EPA’s delusional global warming crusade should join it on the ash heap of history as well. Does that mean returning to the same policies that caused the 2008 financial crisis? That was caused by overregulation, starting with President Clinton’s housing policies, adopted to create housing “fairness,” (what was fair about the housing bubble and its inevitable collapse?), and by the same Federal Reserve monetary policy mismanagement that the Obama Administration has been cheerleading.
Probably most important of all is fundamental reform of the Fed, and monetary policy, to enforce a stable dollar. That would involve tying the dollar to stable, real world measures. Such a stable currency would draw capital investment to America from the world over, as investors would know their investment returns would arrive in a currency with the same real world value as when they first made their investment, and there would be no bubble and bust cycles to threaten the very survival of their investments.
And the final component would be to restore control over federal spending, deficits and debt. The best plan for that would again be Paul Ryan’s 2013 budget, which would actually balance the budget within 10 years, and stabilize the national debt as a percent of GDP at manageable levels. Long forgotten has been Reagan’s much vilified at the time 1981 “Reagan budget cuts,” which contrary to brain dead Keynesian economics left more resources in the productive private sector, and so contributed to Reagan’s 25 year, generation long, economic boom. That boom restored traditional American economic growth and prosperity after the disastrous 1970s, while slaying the double digit 1970s inflation, which all the Keynesian gurus of the time had said was impossible in the real world. Impossible for them.
That leaves as the last question only what would be the appropriate punishment for those blind, persistent fools, who continue to teach and promote Keynesian economics. I will leave that question for suggestions from the commenters.
In conclusion, and in honor of Keynesian economics, and President Obama’s economic policies and their results, we can now amend Orwell as follows:
War Is Peace
Freedom Is Slavery
Ignorance Is Strength
Poverty Is Prosperity
[First Published by Forbes]
On June 10, the US Senate voted 66 to 27 to approve the 2013 Farm Bill, an expensive piece of legislation that will guide the agricultural and food policies of the US for the next five years. The Farm Bill, which will cost taxpayers around $955 billion over 10 years makes several changes to current policy expanding some subsidies to agriculture which addressing the rapid growth of the food stamp program known as the Supplemental Nutrition Assistance Program or SNAP. The House of Representatives will consider the Senate’s Farm Bill in the next few weeks.
While the bulk of the near trillion dollar bill is devoted to food stamps, another area that is projected to cost around $89 billion is the nation’s crop insurance program. Farmers buy crop insurance for protection against the financial impact of natural disasters affecting their crops and the loss of revenue caused by declines in agricultural commodity prices. The federal government currently dominates the crop insurance market. It sets most prices, pays more than 60 percent of farmers’ premiums, and decides what the program covers.
The crop insurance program heavily subsidizes the risk of farmers across the county. Currently, the federal government chips around $7 billion per year to help farmers cover the crop insurance premiums. Under the Senate farm bill, the government would expand this subsidy with an additional $5 billion per year to cover the deductibles that farm owners pay before their insurance kicks in. The losses the program would compensate for need not be from floods, droughts, frosts, or other weather-related catastrophes, but would instead largely be driven by market fluctuations in the prices of commodities.
In an interview with National Public Radio, Bruce Babcock, a professor of economics at Iowa State University and a supporter of crop insurance criticized the amount of taxpayer dollars that go into the crop insurance program: for every dollar of insurance premium, on average, farmers pay 38 cents while taxpayers kick in 62 cents.
Several amendments were proposed in the Senate to limit the program but were not passed or even debated on the floor, including an amendment to limit crop insurance subsidies to $50,000 for any one farmer and a proposal to reduce the current cap of government funding for crop insurance companies from $1.3 billion to $900 million per year.
The expansion of the crop insurance program was one of the most highly debated parts of the farm bill. Supporters of federal government crop insurance, including crop insurance agents and agricultural trade groups, have argued that subsidizing crop insurance is an efficient and fair way to protect farmers from disaster and allow them to rebuild—more efficient and fair than private insurance or ad hoc government aid. They contend crop insurance is an important safety net for farmers, who are vulnerable to extreme weather events that can destroy their entire product at once.
Opponents of government crop insurance, however, say the current federal program has become excessively expensive, complex, overreaching, and inefficient. Those supporting reform or cancellation of federal crop insurance contend the defects of the current system have been exacerbated by stakeholders taking advantage of it, exploiting what was once a good program. These critics like the Taxpayers for Common Sense argue that because the cost of crop insurance is tied to the price of near-record high priced commodities, the program is quickly becoming too expensive for taxpayers to bear and the government should reevaluate the risk they are willing to cover. The proposed expansion only exacerbates these problems.
Another criticism voiced during the Senate’s negotiations is the fact that a large portion of the crop insurance subsidies are provided to the largest 4 percent of farm operators. The Senate responded to this disparity by adding a provision that would shrink subsidies for farmers earning more than $750,000 per year.
Experts expect many of the issues raised by critics to reemerge during debate in the House. Scott Faber, vice president of government affairs at the Environmental Working Group argued in an AgriPulse Communications article that only with significant modifications will the Farm Bill make it out of the House of Representatives. “I have faith in the House to write a better bill on the floor.” “It’s hard to imagine this bill, with its Soviet-style price guarantees, would get 218 votes. The path to a farm bill includes many of these reforms.”
Editor and CEO of the Morning Consult, Michael Ramlet joined Heartland Research Fellow, Ben Domenech to talk about recent polling on Obamacare. The discussion analyzed some of the public perceptions surrounding the Affordable Care Act, and what Americans can expect when the overhaul goes into effect next year.[Subscribe to the Heartland Daily Podcast free at this link.]
The video below is a rare debate about the wisdom of a carbon tax on June 13, 2013. James M. Taylor, senior fellow for The Heartland Institute, was a participant, and kicked green tail. (See James’ take on the debate in his latest Forbes piece.) The text below is excerpted From James’ synopsis of the event that he emailed to fellow Heartlanders:
Former Republican Congressman Bob Inglis and R Street senior fellow Andrew Moylan argued in favor of a carbon tax. Heritage Foundation senior fellow David Kreutzer and I argued against it. Although the debate was among “conservatives,” most of the more than 100 people in the audience were liberals from environmental activist groups. I found that rather amusing.
Inglis and Moylan argued for a tax-and-trade system whereby we impose a carbon tax and then eliminate other taxes so that the carbon tax is revenue neutral. My main arguments were:
(1) there is no way government would ever actually eliminate the other taxes;
(2) even if we eliminated other taxes, government would quickly raise them back to previous levels and we would now be stuck with an extra tax;
(3) because the whole point of a carbon tax is to induce less production and use of coal, natural gas, etc., most of the economic harm of the carbon tax (i.e., higher energy prices caused by a switch to wind power, solar power, etc.) would not be in the form of direct tax collection and therefore would not be offset in a tax trade;
(4) carbon dioxide benefits human welfare and the biosphere so there are no net negative externalities to tax;
(5) EPA already harshly punishes carbon dioxide emissions without providing tax offsets, so an additional carbon tax is unnecessary and would result in unjust double punishment;
(6) low-carbon energy sources already receive special subsidies that tilt the playing field in their direction, so a carbon tax is again unnecessary and unjust;
(7) any effort to impose taxes to account for environmental externalities cannot focus solely on carbon dioxide while giving a free pass to wind power birds kills, solar power water depletion, wind and solar power’s massive land development, etc.
The big news of the debate, in my opinion, was that I backed Inglis and Moylan into a corner whereby they agreed they would support a carbon tax-and-trade scheme if – and only if – (1) we repealed all existing EPA regulations regarding carbon dioxide and related issues, (2) we eliminate all subsidies for “green” energy, and (3) we treat all environmental externalities (such as bird and bat deaths as the result of wind turbines) equally and not single out carbon dioxide for special punishment.
Even under such conditions, I pointed out that (2), (3), and (4) above still argue against a carbon tax-and-trade.
Watch the debate for yourself below:
If there is anyplace the gang green can expect to get its way, it would surely be California. The state has the highest renewable energy standards in the country, the legislature is currently dominated by a liberal supermajority, and Governor Jerry Brown’s environmental record runs deep.
When the Energy Information Agency reported that California’s Monterey Shale potentially contains more than 15 billion barrels of oil—a supply three times greater than North Dakota’s Bakken and the Texas Eagle Ford formations, environmental groups ratcheted up their efforts to keep the resource in the ground. The weapon of choice? Demonize the technology that allows the oil and gas to be released from the sedimentary rock: hydraulic fracturing—commonly called “fracking.”
California’s legislature had nearly a dozen different bills designed to impede, restrict, or ban fracking. With lawmakers on their side, environmentalists grew cocky. When the bills made it out of committee, Patrick Sullivan, of the anti-fracking group Center for Biological Diversity claimed: “There’s huge momentum in the legislature to halt this dangerous practice.”
Imagine their shock when the rank and file Democrats revolted and defeated AB1323, 37-24—with 12 Democrats voting with 25 Republicans. Another 18 abstained. According to the Wall Street Journal (WSJ), “It’s a good bet they were ‘no’ votes who didn’t want to publicly cross their leadership.” The WSJ called the vote: “a rare rout for The Sierra Club and other greens.”
It seems that California’s “politicians are beginning to wonder if cultivating greenie obsessions has been worth stopping economic development,” writes Mark Whittington for Yahoo.com. “The environmental lobby … has seen the limit of its power.”
This is especially interesting in light of the columns I’ve been writing lately. Remember Environmentalists Endangered and, more recently, Renewable Energy’s Reversal of Fortune? Then, last week, in my column The Sierra Club Exposed, I referenced a Sierra Club director who claims that Latino voters care more about conservation than energy drilling. Yet, who are the Democrats who split with their party to block the fracking bans that would “throw thousands of Californians out of work?” Those representing poor and minority areas with unemployment rates of 12% or more. Six of the seven black and most of the Latino assembly Democrats refused to vote for the ban, while wealthy, mostly white Democratic coastal districts voted for it. Whittington says the vote is “dividing the state’s all powerful Democratic party, pitting rich against poor, white against minorities and coastal California against central California. … powerful rich elites who have pushed an environmentalist agenda at the expense of the common people.”
Fracking has been used in California for 60 years, and is used in about a third of California’s active wells. Since the start of 2011, 974 California wells have been fracked. Catherine Reheis-Boyd, President of the Western States Petroleum Association, asserts: “California has never recorded a single documented instance of fracking wastewater leaking out and contaminating the surrounding groundwater supply.” Meanwhile, environmentalists, such as Adam Snow of Food and Water Watch claim “there’s no safe way to frack.”
Fracking foes want a complete ban. But, California can’t afford not to frack.
The Global Energy Network & Price School of Public Policy, the University of Southern California, and The Communications Institute recently collaborated on a study called “Powering California: The Monterey Shale & California’s Economic Future.” The study found that Development of oil from the Monterey Shale using hydraulic fracturing and other recovery technologies could result in:
- The creation of 512,000 to 2.8 million new jobs,
- Personal income growth of $40.6 billion to $222.3 billion,
- Additional local and state government revenues from $4.5 billion to $24.6 billion, and
- An increase in state GDP by 2.6% to 14.3% on a per-person basis.
In a state with $167.9 billion in long term liabilities—not counting pensions and retiree health benefits, those numbers can’t be ignored. Fresno Assemblyman Jim Patterson wants to “unleash this magnificent potential for jobs.”
Apparently, Democrats, even with a supermajority, have accepted defeat on a fracking ban and are now moving toward taxes. A driving force in California environmentalism, State Senator Noreen Evans (D-Santa Rosa), author of SB 241—which would impose a tax on harvesting oil and gas—says: “California is poised to allow fracking on a monumental scale in the Monterey Shale, and if we don’t enact an oil severance prior to the time we do that, then we’re allowing … California’s resources to be extracted without taxing it.”
• Oil production tax: 4.6% (.046) of market value of oil.
• Regulatory Tax: 3/16 of a cent ($.001875) per barrel.
• Regulatory Fee: 5/16 of a cent ($.003125) per barrel for report periods prior to September 2001. For report periods September 2001 and later, 5/8 of a cent ($0.00625) per barrel Reduced Oil Production Tax Rates for Certified Exemptions:
• Enhanced Oil Recovery Exemption (EOR) 2.3% (.023) of market value of oil; Two Year Inactive Well Exemptions 0.0% (.000) of market value of oil.
With a potential of more than 15 billion barrels of oil in the Monterey shale, saying no to fracking means saying no to California’s economic salvation.
No wonder Governor Jerry Brown has yet to take a position on fracking. In fact, he sounds like he is willing to abandon his solid green credentials—angering environmentalists who are staging protests outside his office. Like the Sierra Club pushing President Obama to use his executive order pen to designate national monuments and block oil and gas development, California’s greens are demanding that Brown short-circuit the democratic process and ban fracking. The Center for Biological Diversity’s Rose Braz claims: “Fracking pollution threatens our air and water and Gov. Brown’s legacy as an environmental leader.”
The green state is going brown.
In March, Brown said “The fossil fuel deposits in California are incredible, the potential is extraordinary. But between now and development lies a lot of questions that need to be answered.” Last month, he seemed to move even closer to supporting fracking: “This is not about just saying, ideologically, yea or nay. It’s about looking at what could be a fabulous opportunity. . . . And if you remember about oil drilling, oil drilling in Long Beach, which was really pioneered I think when my father was governor, poured I don’t know how many billions into higher education.”
California Senate Republican Leader Bob Huff supports developing the Monterey Shale. “While everyone is giddy about the on-time budget just passed, it does not do anything to pay down the state’s unfunded pension and health care system for state employees. If we had the revenues from Monterey Shale we could pay down that debt and truly build a high class education system to continue what Governor Brown’s father began.”
While Brown doesn’t take the doom-and-gloomers all too seriously, most of the state sees through the fear mongering, too. A recent poll found that 60% of Californians were in favor of properly regulated hydraulic fracturing. Only 30% said they prefer a ban. Generally Democrats opposed fracking while Republicans support it; those on the coast and in the San Francisco Bay area oppose it while support was highest in the central valley and in Southern California counties outside of Los Angeles. Support increased if it could be shown that fracking would reduce energy and gasoline prices. Dan Schnur, director of USC’s Unruh Institute of Politics, states: “It’s clear that a majority of voters is comfortable with the procedure, as long as they believe appropriate regulation is in place.”
Of the flurry of bills aimed at either explicit or de facto moratoria on fracking, one did make it out of the Senate after the author agreed to remove the fracking moratorium provision to get the bill to the Assembly. SB 4 originally called for comprehensive regulations and a fracking moratorium until January 1, 2015—by which time the guidelines would be in place. The bill’s author, Senator Fran Pavley (D-Agoura Hills)—usually an environmentalist ally, describes the bill: “This is not a bill to ban, prohibit or regulate hydraulic fracturing. It’s to provide transparency to the public.”
Investors are now buying up property in the regions surrounding the Monterey Shale, knowing that development will mean economic recovery and a need for new housing and services. The gang green is losing to greenbacks.
Once again, energy could make California great.
[Originally Published by Townhall Finance]
Of course not. That is a simplified representation of the original idea behind the tax exemption for organizations qualified under Section 501(c)(4) of the Internal Revenue Code. The $25 given to your daughter in the example above is not tax deductible to you, and neither are contributions to 501(c)(4) organizations. So contrary to the confusions of the mentally challenged Rep. Jim McDermott (D-WA), neither your daughter’s grocery errand nor 501(c)(4) organizations are subsidized by the taxpayers.
If individuals band together to contribute to a nonprofit corporation to carry out some religious, charitable, educational, or similar purpose, the whole operation is analogous to your daughter’s grocery errand in our oversimplified example. The individuals are giving funds to an organization to carry out some joint purpose. The whole operation does not involve the production of new income that should be taxable to anyone.
Consequently, free people in a free country should not have to ask the government’s permission to set up tax exempt, non-profit corporations like what are called 501(c)(4)s today. They should not have to apply for it, and undergo abusive examination by politicized government bureaucrats carrying out some quasi-authoritarian agenda. They should not have to jump through arbitrary hoops to please government officials, who are restricting their rightful liberty in the process, in order to obtain their organization’s tax exemption. This entire application process grants arbitrary power to the government, which the IRS has now abused.
These 501(c)(4) organizations are not like 501(c)(3)s, which receive contributions that are tax deductible to the contributors. Contributions to 501(c)(4)s are not tax deductible, it should not have to bear repeating to those who are supposed to be cognizant of the issues here. The tax deduction for 501(c)(3) contributions is analogous at least to a government subsidy. Officially recognizing a 501(c)(3) is effectively granting the power to the organization to distribute tax relief.
That is why requiring an application process for 501(c)(3) recognition is legitimate. But even here, the IRS cannot administer the application process in a way that violates constitutional rights. It cannot discriminate for or against applicants based on political affiliation. It cannot discriminate for or against applicants based on whether it agrees with their message, or their cause. It cannot pass judgment on their prayers, or what they pray for. And when I say cannot, I mean that those individual IRS employees who violate constitutional requirements must be fired. And when I say must, I mean if not, then the supervisors of the malefactors must be fired, not promoted. Or if not, then the Secretary of the Treasury. Or if not, then the President of the United States.
And it doesn’t matter if the grassroots of the Democrat party approves of IRS bureaucrats violating the constitutional rights of those they disagree with, as recent polls show. What these polls reveal is that the Democrat party is a cauldron of hatred for their fellow Americans who will not submit to their personal, self-loving, superiority complexes. That is why they are so quick to accuse everyone else of hatred. It is called projection.
Thus, the real problem America is suffering today is not President Obama, nor even the Democrat party. It is Democrats — self-loving, overwhelmingly self-approving, grassroots Democrats, who are bringing about the decline and fall of America. That decline and fall will become more apparent as Obama’s second term proceeds.
They Abused It
But what the IRS scandal shows is that the IRS has already widely abused the application process for both 501(c)(4)s and (c)(3)s. It has discriminated against Tea Party activists based on their political affiliations. It has discriminated against applicants based on their political beliefs and expression. It has even discriminated against applicants based on their religion.
You can ask the National Association of Marriage about that. As Peggy Noonan recounted in last weekend’s Wall Street Journal:
In March, 2012, the [National Organization for Marriage], which argues the case for traditional marriage, found out its confidential tax information had been obtained by the Human Rights Campaign, one of its primary opponents in the marriage debate. The HRC put the leaked information on its website—including the names of NOM donors. The NOM not only has the legal right to keep its donors’ names private, it has to, because when contributors’ names have been revealed in the past they have been harassed, boycotted and threatened. This is a free speech right, one the Supreme Court upheld in 1958 after the state of Alabama tried to compel the NAACP to surrender its membership list.”
Noonan added, “If it was leaked by a worker or workers within the IRS it would be a federal crime, with penalties including up to five years in prison.” Such a penalty is so appropriate for violations of Constitutional rights of U.S. citizens by federal officials. The NOM has, in fact, demonstrated that the information was leaked by a worker or workers within the IRS itself. It just has not demonstrated which ones. But in a continuing pattern and practice of dereliction of duty, the Obama Administration has no interest in pursuing a real investigation to find out who at the IRS broke the law. Just as it has no interest in ever bringing to justice the Benghazi killers who murdered four Americans nine months ago.
Or consider the matter of the organization Pro-Life Revolution. As reported yesterday by Newsmax, an identified IRS agent was caught on tape telling Ania Joseph of the organization, “You cannot, you know, use your religious belief to tell other people you don’t have a belief, so I don’t believe you need the right to do this, start confrontation, protesting, uh, prot, uh, protest.… You don’t apply for tax exemption.”
The agent was similarly later recorded telling Joseph, “You cannot force your religion or force your beliefs on somebody else. You have to know your boundaries. You have to know your limits. You have to respect other people’s beliefs.” Note that Pro-Life Revolution has never mentioned or even suggested anywhere using force to impose its religion or its beliefs on anyone. Nor has it ever engaged in any practice or activity even remotely involving force against anyone.
The organization did finally get its tax exemption application granted, two and a half years after application, when its lawyers at the Alliance Defense Fund pointed out that the standard for tax exemption the IRS was attempting to apply to the organization had already been declared unconstitutional by the U.S. Court of Appeals for the District of Columbia Circuit more than 30 years previously.
So Now They Must Lose It
Forget about the Administration ever prosecuting the IRS agents involved in this abuse. The appropriate response is for Congress to legislate for citizens to obtain 501(c)(4) status just by filing for it, rather than by applying for it. The filing form can call for the filers to certify that their organization is not involved in any income producing commercial enterprise, and is not part of any political campaign. The filers can certify that the organization is funded by voluntary donations and contributions.
And that would be it. Upon filing, not applying, the organization would automatically become a tax exempt 501(c)(4). Of course, the organization would still be subject to audit like anyone else to ensure that it was complying with the law, with the standard penalties and punishments if it did not. But gone would be even the opportunity for the IRS abuses we have seen, at least in regard to 501(c)(4) organizations.
[First Published on The American Spectator]
There is one thing the professoriate in higher education, generally, resist–change. In this narrow consideration, even the most “liberal” of colleges are quite conservative. One thing that higher education as a whole is resisting is the new economic realities facing delivery of education to college students. Case in point is the story in the Chicago Tribune yesterday (June 13, 2013, pp. 1 and 7).
Colleges are under immense pressure to adapt to market conditions, and one of the first casualties in this development is the idea of tenure; an increasing amount of colleges and universities are hiring part-time instructors, and sometimes firing tenured professors to keep their doors open. More and more universities are employing more part-time professors than they have tenured professors. This has raised the hackles of not only tenured professors, whose jobs are more precarious as a result, but their cheerleaders at the American Association of University Professors (AAUP) who want to protect tenure. The supporters of tenure claim that it insures “academic freedom.” While that may be true after one receives tenure, it ignores the fact that a professor has little to no academic freedom before being granted tenure. Most young faculty watch what they say and write so as not to offend their colleagues before attaining the rank of tenure. Where is the academic freedom in that? The fact is that there is only academic freedom for a class of people who happen to be included in what amounts to a union. Those outside the union (or who do not have tenure), conceivably have no security and protection that tenure affords.
That is not to say I do not see a value in tenure as an idea. I have been on both sides of this equation. I have had jobs in a tenure track and jobs where tenure was not offered to anyone at the institution. The former do have freedom to speak and say what they want with little fear of reprisal, and the latter are left to the potential capriciousness of administration. This debate over tenure misses the point in the modern higher ed marketplace–tenure actually constrains, or is a disincentive for, professors from selling their talent. The lack of tenure can be seen as an opportunity for professors to speak freely consistently as all would be on an equal playing field. The decline in tenure does not necessarily mean losing freedom.
What should be more important at the collegiate level is not jobs/tenure, but the diversity of ideas–students, and the republic, are best served by being exposed to what is now called classical liberalism. But that is a discussion for another day and includes a lengthy deliberation over what is liberal education.
Be that as it may, higher education is undergoing much change presently. Whether it is the move toward online education, or the reconsideration of what makes a campus, change is coming, and college will not remain the 19th century icon is has been in the past. As a result of these changes, we may see a retraction in the number of colleges accredited in the future. Higher education needs to adapt to the changing marketplace. Those institutions that don’t, will likely be closing their doors.
Heartland’s Communications Director, Jim Lakely sat down with former Illinois Senator Roger Keats to talk about his new book, Chicago Confidential. The book tells a shocking and compelling story of the rampant corruption that has poisoned Chicago politics.[Subscribe to the Heartland Daily Podcast free at this link.]
There’s a new twist in the story of genetically modified wheat discovered growing rogue by an Oregon farmer. Monsanto, the company which developed the pesticide resistant strain, has now suggested the stalks were intentionally planted.
The discovery of this wheat is a big deal for two reasons. The first has to do with markets. When the wheat was discovered, Japan immediately stopped imports of U.S. Western White wheat, (grown in Oregon), the European Union announced inspections of incoming shipments and wheat futures fell. This leads to the second reason it matters: the politics of genetically modified (GM) food. The markets moved not because of an actual risk to health from the wheat, but because the world doesn’t trust GM products, largely because of a misinformation campaign conducted by activists.
Crops are considered genetically modified if proteins in their DNA were added in a lab instead of through repetitive breeding. Currently, no GM wheat exists for commercial sale. The wheat discovered in Oregon was tested and found to be the same type that Monsanto was developing as part of the approval process for eventual sale. Initially it was theorized that it was left over from those trials. However, the company has since revealed that the seeds are only viable for two years if left in the soil. The last field trial in Oregon was 2001.
Lost in the uproar is the most important fact: This wheat, like all genetically modified crops, is absolutely harmless.
[Read the rest at Rare]
Free men and women are, of course, capable of violence, even murder, but unless it is proven that they are embarking on these, unless the burden of proof is fully met, they must be left free. The job of protecting the citizenry must be carried out without violating their rights. That is the spirit behind constitutional government, especially the American Bill of Rights.
If and when one signs up to work in the security professions, one must adhere to strict standards and do one’s job without violating them. One must cope with the limits and not run rampant unrestrained. (It is a bit like medical research and experimentation–it is all very important but doesn’t justify ignoring the basic rights of patients or subjects!)
That our government officials fail to grasp all this is truly a disaster. When they refuse to act within the limits posed by our individual rights, they are a far greater danger than terrorism! Indeed, they become like terrorists, making use of arbitrary means to reach their goals! Nothing excuses it!
The oath of office of all security professionals includes a commitment to act without doing violence of the rights of the citizenry, including to their right to privacy and due process.
During World War I the Wilson administration called Germans “the Huns” to dehumanize them and undermine any allegiance German immigrants might have for their country of origin. Calling the foes “Japs” in World War II made it easier for the Roosevelt Administration to bomb civilian targets and place American citizens of Japanese origin in internment camps. It is notable that in both cases, these were extremely “progressive” administrations.
So, it may not be that surprising that during the current progressive administration the opposition has been dismissed as “racists” and “tea baggers.” Who cares about protecting the rights of racist tea baggers? They are illegitimate. They are not worth paying attention to. They are not your friends and neighbors; they are people to be shunned. Go ahead and audit them. Don’t allow them to organize or get tax exempt status ― their views are beyond the pale ― voicing racist tea bagger ideas is probably a hate crime anyway. So it goes in these days of total political war.
Still, it is jarring when the same approach bleeds into what should be a fairly innocuous discussion of insurance costs.
The California insurance exchange recently announced what its rates are likely to be once it becomes effective next January. It was big news because California is the state with far and away the greatest number of uninsured people. If ObamaCare can work there, it can probably work anywhere. Some people were excited because the rates seemed lower than they expected. Others were skeptical because the rates are still higher than what people with individual coverage currently pay.
Hardly seems like the stuff to launch a war over.
That is, until one of the excited people decided to rip into one of the skeptical people. The New Republic’s Jonathan Cohn went on a tirade because Forbe‘s Avik Roy saw the glass half empty (article here). Cohn accused Roy of being an “irresponsible writer” who made a “bogus argument” that “distorted the debate.” YIKES!
In particular. Cohn writes −
Roy never acknowledged that, even as young and healthy people would have to face higher premiums, older and sicker people would face lower premiums. He said absolutely nothing — not a single word! — about the federal subsidies available to people with incomes below 400 percent of the poverty line…it’s entirely possible (I’d say likely) that, with the subsidies, the majority of people buying on the exchange next year will pay less than they pay for insurance today.
I’ll respond to that in a bit, but first some guy named Steve Benen raised the stakes on, of all places, Rachel Maddow’s blog. Apparently Mr. Benen considers himself quite a “policy wonk” because he informs us that in the world of policy wonks Avik Roy is thought to be “a pretty serious guy.” (As far as I can tell Benen himself hasn’t done much more than write blogs and appear on MSNBC from time to time. I guess that qualifies for Wonkdom in the Progressive World). In any case, he writes –
While most of us saw the news from the Golden State as excellent news and proof that “ObamaCare” implementation is proceeding apace, Roy published a remarkably dishonest piece arguing the opposite, deliberately omitting relevant details.
So Roy is “dishonest” because he disagrees with “most of us.” But he goes on –
I believe this is yet another data point that highlights the wonk gap. As Republicans become a post-policy party, even their wonks — their sharpest and most knowledgeable minds ― are producing shoddy work that crumbles quickly under mild scrutiny.
He concludes –
I write often about the asymmetry in American politics, and the consequences of a radicalized party in a two-party system. But this wonk gap points to something related but different: it’s not just Republicans who’ve become more extreme and less interested in substance; it’s also conservatives who’ve allowed their intellectual infrastructure to atrophy and collapse.
Credible policy debates are rendered impossible, not because of the chasm between the two sides, but because only one side places a value on facts, evidence, and reason.
So what’s going on here?
Well, first, the level of hysteria suggests that the progressives are not all that confident that their hopes will come true, so they are lashing out at those who point out that the emperor has no clothes. As I’ve written about repeatedly here, everything ObamaCare has tried to do to date has already failed (except for the mandates on insurance companies to cover preventive care and remove dollar limits on coverage). Everything the government itself has been responsible for (the federal risk pools, the subsidies for retiree health programs, the small business tax credit, the “CLASS Act” for LTC coverage, the CO-OPs, etc.) has failed. So, while the exchanges haven’t yet failed (because they are not yet in effect), the prospects are not bright.
In light of that, the Left can’t simply make a civil argument that they are right and the conservatives are wrong. Since they have no victories to point to, they have to resort to the old progressive tactic of dehumanizing and delegitimizing the other side — conservatives aren’t just mistaken, they are irresponsible, stupid, lying, distorters. Not even worth talking to. Pay no attention to what they say.
More importantly, the question of whether people who are currently insured will pay more or pay less misses the essential issue. Any change in rating and underwriting rules will advantage some people and disadvantage others. But the purpose of ObamaCare was not to tinker around the edges of the currently covered, it was to extend coverage to people who are uninsured!
The real issue is whether what California is offering will appeal to people who don’t currently buy insurance. Here we have a problem. As Philip Klein reminds us, “a young American who chooses to go uninsured under the current system pays $0 per month in premiums.” So even with a subsidy the vast majority of young adults will have to pay more, sometimes a whole lot more than they did before. Klein also points out –
The success of ObamaCare hinges completely on the young and healthy. The reason is that the dream of a system in which sicker individuals can obtain coverage at affordable rates is predicated on the idea that the government can corral a lot more young and healthy individuals into the insurance market to offset costs. As long as insurers are raking in profits by collecting premiums from individuals with virtually no medical costs, they can afford to take on more expensive patients.
Lowering premiums for the currently insured older or sicker Californians does absolutely nothing to grow the population with insurance.
Now, I hate to upset Steve Benen by going all wonkish on him, but it might help to review some data from the most recent EBRI report on the uninsured.
First, as mentioned above, California has far and away the greatest number of uninsured of any state — 7.1 million. Texas is next at 6.1 million, then Florida at only 3.6 million.
The uninsured are overwhelmingly young adult men. 31% of those men between the ages of 21 and 24, and 32.1% of those between 25 and 34 are uninsured (compared to only 14.1% of men between 55 and 64). For women it is 26.4% (age 21 to 24), 24.5% (age 25 to 34), and 15% (age 55 to 64).
They are also in very good health. 59.3% of the uninsured report themselves to be in “excellent” (27%) or “very good” (32.3%) health. Another 29.9% report themselves to be in only “good” health. A mere 2.5% say they are in “poor health” and 8.4% are in “fair health.”
Since they are so healthy they can easily get coverage already, and pay a lot less for it than what California’s exchange is charging (Avik Roy goes into great detail on this here). They also don’t feel much need for comprehensive health coverage since they rarely get sick.
The subsidies don’t provide much help, either. Megan McArdle at the Daily Beast did a pretty thorough review of the subsidies, and found –
So I got a sort of a shock today when I started playing with the Kaiser Family Foundation’s subsidy calculator. I had it at the back of my mind that a single young freelance writer living in California, Washington, or New York, and making $32,000 a year, would qualify for insurance at a basically nominal cost. (The profession doesn’t matter so much, but for obvious reasons, this is a type that I’m particularly familiar with.) It turns out that this person will qualify for a subsidy of about $213 a year, based on an expected “Silver Plan” (the medium coverage package) cost of $3,018, or about $235 a month.
$213 a year for a $3,018 policy!? Obviously if you make less you will get a bigger subsidy and if you make more you will get a smaller subsidy, but the argument from ObamaCare enthusiasts is “don’t worry, people will be subsidized!” That isn’t much comfort to people who are paying $0 today and will have to pay $2,805 tomorrow.
Of course to qualify for that subsidy, people will have to fill out a lot of paperwork disclosing every source of income under penalty of perjury. Is $213 a year worth the effort?
Everyone, even conservatives, accept the existence of a penalty. Progressives think people will pay the premium to avoid the penalty, while conservatives think people will pay the penalty to avoid the premium. Neither is true. There is no penalty unless you ask your employer to withhold more money than you are likely to owe. If you have no refund coming to you, there is no penalty.
Bottom line — no matter how big a tantrum the progressives throw, no matter how many names they call their opponents, no matter how badly they distort the facts, the probability of very many young healthy people signing up for coverage in California or anywhere else is extremely low.
Obviously we won’t know for sure until the program actually kicks in, but I wonder what odds I could get in Las Vegas.
There have been tons of articles written about all this, including –
Ezra Klein in the Washington Post.
Trudy Lieberman in the Columbia Journalism Review.
Anna Gorman in the Los Angeles Times.
Josh Barro in Business Insider.
W.W. Houston in The Economist.
Tami Luhby in CNNMoney.
[First Published by the National Center for Policy Analysis]
American Energy Alliance Backs Coalition of 19 Other Organizations for Congress to Vote on Resolution Opposing a Carbon Tax
The Heartland Institute has recently signed a coalition letter led by the American Energy Alliance to “strongly urge a floor vote on the concurrent resolution, H. Con. Res. 24, expressing the sense of Congress that a carbon tax would be detrimental to the United States economy.”
According to AEA, a carbon tax would grow the size of the federal government, slow economic growth, and place a disproportionate economic burden on those with the least capacity to absorb higher energy costs.
From the letter:
The American people and the 133 cosponsors of this concurrent resolution understand that a carbon tax is not about protecting the environment, but rather it is a cynical attempt to raise revenue for Washington’s insatiable appetite for more and more spending. Supporters claim that a carbon tax would not increase taxes since revenues would be offset by reductions elsewhere, but careful analysis shows what the American people instinctively know to be true— new taxes always lead to a higher tax burden for Americans, regardless of promises that are made about “revenue neutrality”
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The predictable smearing of Edward Snowden has begun. He, of course, is the young man who spoke truth to power – and the rest of us – by revealing the massive electronic surveillance the National Security Agency has been doing here in the land of the free and home of the brave.
But before the government goons, lackeys and apologists continue their campaign to discredit Snowden, they might want consider what we could say about many thousands of people who hold government power, including people at the very top of government, starting with President Barack H. Obama, who has admitted smoking dope and snorting cocaine during his youth. This was criminal conduct.
Or the president before him, George W. Bush, whose wife Laura revealed to Oprah Winfrey her husband was a drunk until after a “wild drunken weekend” to celebrate his 40th birthday. “We had the wild drunken weekend and it was no different from any other weekend,” Bush told Oprah. This was boorish and loutish and possibly illegal conduct depending on the circumstances. And it lasted until Bush was 40 years old.
Or the president before him, William J. Clinton, whose tenure in office included canoodling with a White House intern named Monica S. Lewinsky even though he was married to Hillary R. Clinton, and who laughably admitted to smoking dope in his youth but not inhaling. This was immoral, boorish, loutish and illegal conduct.
So go ahead. Tell us about how, when Snowden was a teen, he clownishly dropped his pants to reveal his boxer shorts, and about his pretty pole-dancing girlfriend, and about him dropping out of high school.
How does that stuff stack up against smoking dope, snorting cocaine, decades of drunken binges, and adultery?
And if Snowden really had no business having such power and access to information, what does that say about the government officials who let him have it?
Do you smearers of Snowden really want to play this game?