Free Markets, Free People

Daily Archives: March 27, 2012


SCOTUS and ObamaCare: So how is Justice Kennedy feeling about this? [Update]

One of the jokes that has gone around for some time concerning ObamaCare’s eventual hearing in the Supreme Court is it will likely revolve around what Justice Kennedy had for breakfast.  The obvious point being most SCOTUS observers can pretty much predict how the other 8 Justices might rule, but Kennedy is sort of the wild card and swing vote.

So, as you might imagine, many eyes are on him.

Today was the 2nd day of oral arguments in the case.  This question from Justice Kennedy may give an indication of how he’s leaning in the case:

JUSTICE KENNEDY: “Could you help — help me with this. Assume for the moment — you may disagree.  Assume for the moment that this is unprecedented, this is a step beyond what our cases have allowed, the affirmative duty to act to go into commerce. If that is so, do you not have a heavy burden of justification?   I understand that we must presume laws are constitutional, but, even so, when you are changing the relation of the individual to the government in this, what we can stipulate is, I think, a unique way, do you not have a heavy burden of justification to show authorization under the Constitution?”

My answer to his question is “you bet”.  How did the Solicitor General answer?

GENERAL VERRILLI: So two things about that, Justice Kennedy. First, we think this is regulation of people’s participation in the health care market, and all — all this minimum coverage provision does is say that, instead of requiring insurance at the point of  sale, that Congress has the authority under the commerce power and the necessary proper power to ensure that people have insurance in advance of the point of sale because of the unique nature of this market, because this is a market in which — in which you — although most of the population is in the market most of the time — 83 percent visit a physician every year; 96 percent over a five-year period — so virtually everybody in society is in this market, and you’ve got to pay for the health care you get, the predominant way in which it’s — in which it’s paid for is insurance, and — and the Respondents agree that Congress could
require that you have insurance in order to get health care or forbid health care from being provided.­

Uh, I don’t know about you, but it seems to me that the Solicitor General sidestepped the question and erected a giant strawman.

If you want to read the transcript of today’s oral arguments they’re here and they’re very interesting.  If I had to guess, I’d say the law is in trouble.  I found the arguments for to be fairly weak and I got the indication that most of the Justices (well, at least a majority of the Justices) may have as well.

Bottom line, Kennedy’s question is still laying out there unanswered. 

UPDATE: More Justice Kennedy:

JUSTICE KENNEDY: But the reason, the reason this is concerning, is because it requires the individual to do an affirmative act. In the law of torts our tradition, our law, has been that you don’t have the duty to rescue someone if that person is in danger. The blind man is walking in front of a car and you do not have a duty to stop him absent some relation between you. And there is some severe moral criticisms of that rule, but that’s generally the rule.

And here the government is saying that the Federal Government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases and that changes the relationship of the Federal Government to the individual in the very fundamental way.

Indeed, it does.

~McQ

Twitter: @McQandO


Why the EPA’s new regulation will increase electricity prices significantly

Because, as you know, the laws of supply and demand can’t be repealed, no matter how much some want that to be true.

Today, the EPA will act to make electricity more expensive.

How?

The Environmental Protection Agency will issue the first limits on greenhouse gas emissions from new power plants as early as Tuesday, according to several people briefed on the proposal. The move could end the construction of conventional coal-fired facilities in the United States.

The proposed rule — years in the making and approved by the White House after months of review — will require any new power plant to emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced. The average U.S. natural gas plant, which emits 800 to 850 pounds of CO2 per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.

If you can’t get Congress to pass a “cap and tax” law, then simply go it alone and direct executive agencies to implement regulation which will cap CO2 by making it too expensive to operate if the plant produces CO2 above the arbitrary limit you set.

“After Congress refused to pass carbon caps, the administration insisted there were other ways to skin the cat, and this is another way — by setting a standard deliberately calculated to drive affordable coal out of the electricity market,” Popovich said.

And that’s precisely what Obama’s done here.

Result?

Well it gives lie to the “all-of-the-above energy plan” that Obama has been pushing in stump speeches around the country:

Industry officials and environmentalists said in interviews that the rule, which comes on the heels of tough new requirements that the Obama administration imposed on mercury emissions and cross-state pollution from utilities within the past year, dooms any proposal to build a coal-fired plant that does not have costly carbon controls.

“This standard effectively bans new coal plants,” said Joseph Stanko, who heads government relations at the law firm Hunton and Williams and represents several utility companies. “So I don’t see how that is an ‘all of the above’ energy policy.”

Nor do I.

And it will have a significant effect:

The proposal does not cover existing plants, although utility companies have announced that they plan to shut down more than 300 boilers, representing more than 42 gigawatts of electricity generation — nearly 13 percent of the nation’s coal-fired electricity — rather than upgrade them with pollution-control technology.

Michael Brune, executive director of the Sierra Club, said the new rule “captures the end of an era” during which coal provided most of the nation’s electricity. It currently generates about 40 percent of U.S. electricity.

So the war on coal continues apace despite claims of an inclusive energy policy.

This is a preview of a 2nd Obama term.  As mentioned yesterday, public opinion will be of no consequence in January 2013 if he’s re-elected.  Hence, there’ll be no need to concern himself with it again.  4 years of unilateral action by agencies such as the EPA can certainly be expected:

The EPA rule, called the New Source Performance Standard, will be subject to public comment for at least a month before being finalized, but its backers said they were confident that the White House will usher it into law before Obama’s term ends.

“The Obama administration is committed to moving forward with this,” said Nathan Willcox, federal global warming program director for the advocacy group Environment America. “They’re committed to doing it this, and we’re committed to helping them do it.”

Fair warning.

~McQ

Twitter: @McQandO


Economic Statistics for 27 Mar 12

The following statistics were released today on the state of the US economy:

Retail sales look lackluster according to ICSC-Goldman, whose year-on-year same-store sales increase is only 2.7% for the week. Redbook is more positive, though, with a same-store sales increase of 3.8%.

The S&P Case-Shiller Home price index was unchanged for the month on a seasonally adjusted basis. Unadjusted, however, the index is down -0.8% for the month, and -3.8% from last year.

Consumer Confidence dipped slightly in March, to 70.2 from 70.8 last month.

The Richmond Fed Manufacturing Index fell to 7 in March from 20 last month.

~
Dale Franks
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Why “tax the rich” rarely lives up to expectations

Bruce Bartlett takes a look at Britain’s experience and a study that documents it and concludes the same is probably true for here:

The study concluded that the behavioral effect of raising the top rate was much more powerful than anticipated. Two factors in particular had a large effect on revenues.

There was a timing effect. People moved income that they anticipated receiving forward so it would be taxed before the new higher rate took effect. They also postponed the receipt of income into the future in anticipation of a change in the tax rate after the election of a new government.

Also, because the British top rate had increased above that in all other major countries except Japan, many Britons relocated in reaction. For example, 1,379 people in high-income occupations moved to Switzerland in 2010, a 29 percent increase over the previous year.

The point, of course, is those who fall in the bracket in which the tax is increased are going to do what is necessary to minimize the impact of that tax.

Human nature 101.  Consequently, the revenue projections are almost always high – and wrong.

Additionally, the Democrats like to imply that taxing the rich is a panacea for the spending problems we have.  In the name of “fairness” they imply that if the rich would only pay their “fair share” well everything would be hunky dory.  Of course we know the real problem is spending not revenue.  But regardless, the real effect of the “Buffet Rule” for instance, is negligible:

But a March 20 analysis from Congress’s Joint Committee on Taxation estimates that implementation of the so-called Buffett rule, which would require those making $1 million or more a year to pay an effective federal income tax rate of at least 30 percent, would raise only $46.7 billion over the next 10 years. That’s a drop in the bucket compared with the $41.2 trillion in federal revenues expected to be collected under current law.

Note that last number and remember, this is a government which is claiming that it can’t get by on $41.2 TRILLION over 10 years.

Where again is the problem?

~McQ

Twitter: @McQandO

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