Free Markets, Free People

regulation


Food police want to regulate foods "for the children"

At RightOnLine, Ann Macelhinny (author of “Not Evil Just Wrong) said that while many believe that the right wants to control what happens “in the bedroom”, it is the left which wants to control everything that goes on in every other room in the house to include the kitchen and garage (what car you should drive and what fuel it should use).

An example of her point comes to us today via this proposed “voluntary” regulation by the Federal Trade Commission, Centers for Disease Control and Prevention, Food and Drug Administration and the U.S. Department of Agriculture.

“The Interagency working group recommends that the food industry, through voluntary self-regulatory efforts, make significant improvements in the nutritional quality of foods marketed to children and adolescents ages 2 to 17 years,” the proposal says.

“By the year 2016, all food products within the categories most heavily marketed directly to children should meet two basic nutrition principles.  Such foods should be formulated to … make a meaningful contribution to a healthful diet and minimize the content of nutrients that could have a negative impact on health and weight.”

The foods most heavily marketed directly to children and adolescents fall into 10 categories: “breakfast cereals, snack foods, candy, dairy products, baked goods, carbonated beverages, fruit juice and non-carbonated beverages, prepared foods and meals, frozen and chilled desserts, and restaurant foods.”

Again, this proposed regulation calls for voluntary compliance, but apparently there’s also a proposed penalty for those foods which aren’t reformulated:

If the food is not reformulated, no more ads or promotions on TV, radio, in print, on websites, as well as other digital advertising such as e-mail and text messaging, packaging, and point-of-purchase displays and other in-store marketing tools; product placement in movies, videos, video games, contests, sweepstakes, character licensing and toy branding; sponsorship of events including sport teams and individual athletes; and, philanthropic activity tied to branding opportunities.

That includes softball teams that are sponsored by food companies and school reading programs sponsored by restaurants.

That’s why the FCC is involved (in case you were wondering).  Additionally, as most of us know:

“When regulators strongly suggest a course of action, it’s treated as a rule, not a suggestion,” said Scott Faber, vice president of federal affairs for the Grocery Manufacturers Association.  “Industry tends to heed these suggestions from our regulators, and this administration has made it clear they are willing to regulate if we don’t implement their proposal.”

That’s just reality.  Of course, the underlying premise is that parents are inept and children rule the household and make all the buying decisions as well as eating what they want when they want too.  Thus government must step in.

Oh – and of course, any reformulation will cost money which will, of course, be passed on to the consumer, if the consumer buys the product at all (vs. going to a substitute or alternative).

Between the EPA, the Department of Interior, and now this bunch, the war on US businesses continues apace.

Choice – the lost concept of freedom.

~McQ

Twitter: @McQandO


In the midst of terrible economic times, let’s raise energy prices dramatically and lay people off …

“Never let the reality of the situation stand in the way of a political agenda”, ought to be the slogan of the Obama reelection campaign.

In the midst of the worst economic downturn the executive branch of the Federal Government (the Obama administration), under the guise of the EPA is ratcheting up standards that will shut down many coal fired plants and their jobs as well as cost billions for utilities to keep other coal plants open.  Result:

Consumers could see their electricity bills jump an estimated 40 to 60 percent in the next few years.

The reason: Pending environmental regulations will make coal-fired generating plants, which produce about half the nation’s electricity, more expensive to operate. Many are expected to be shuttered.

Of course the timing of the increase is predictable:

The increases are expected to begin to appear in 2014, and policymakers already are scrambling to find cheap and reliable alternative power sources. If they are unsuccessful, consumers can expect further increases as ore expensive forms of generation take on a greater share of the electricity load.

Yup, safely reelected (he hopes), Mr. Obama will smile benignly as he watches more of you hard earned money go for what should be cheap and plentiful energy based on incredibly abundant coal.  Instead we’ll be chasing “reliable alternate power sources”.   One would like to believe we’d go to natural gas, but then those abundant finds are also being slow walked through the red tape of the government approval process.

More than 8,000 megawatts of coal-fired generation capacity has been retired in the U.S. since 2005, according to data from industrial software company Ventyx. Generators have announced they plan to retire another 21,000 megawatts in the near future, and some industry consultant studies estimate 60,000 megawatts of power, enough for 60 million homes, will be taken offline by 2017.

This in the midst of projected energy shortages as demand increases while we shut down power generation assets.

Certainly we may want to, at some time in the future, shut down all coal fired plants.  We may collectively wish to see other energy sources used as well.  But that would require a coherent transition plan, viable alternatives, phasing and a little common sense (or essentially being in touch with the reality that one finds around them).

This is  a agenda driven, safely-after-the-election, regulatory fiat that will cost workers their jobs and consumers a higher portion of their earned income in poor economic times.

Another, among a myriad of reasons why the man in the White House needs to be in his own house come 2014.

~McQ

Twitter: @McQandO


Top 10 cities with the most pink slips and the 5 worst states to do business in

What do they have in common?  Well, you tell me (but my guess is onerous taxation, over-regulation and an anti-business climate).  Here are the cities that have lost the most jobs recently according to the Daily Mail?

  1. Los Angeles, California, 17,393 workers
  2. New York, New York, 14,312
  3. Chicago, Illinois, 7,835
  4. San Francisco, California, 5,117
  5. Riverside, California, 4,852
  6. San Diego, California, 4,382
  7. Philadelphia, Pennsylvania, 2,747
  8. Seattle, Washington, 2,601
  9. Sacramento, California, 2,467
  10. Pittsburgh, Pennsylvania, 2,205

OK, you say, LA has a lot more jobs to lose than say, Montgomery AL.   True and understood.  But, there’s more.  Take a look at the states in which you find the job losses.  Now peruse the list of the “best/worst states to do business in”.

Bottom 5?

46 Michigan

47 New Jersey

48 Illinois

49 New York

50 California

All deep blue states.  If you’re wondering, PA comes in at 39th just ahead of OH, WV, HI, CT and MA and behind MS.  Yeah, that’s right, MS.  Everyone’s 50th state in most every other comparison.  WA was 34th.

Contrast that with the top 5 states  – TX, NC, FL, TN and GA.  All red, all right to work states, all southern states.  Draw your own conclusions.  By the way, the ratings of the “best/worst states” came from a group of people who ought to know and be able to make such a determination as it relates to business.  The rankings are the product of surveying 550 CEOs.

And, as they indicate, it isn’t rocket science needed to attract and keep businesses in a state:

Business leaders graded the states on a variety of categories grouped under taxation and regulation, workforce quality and living environment. “Do not overtax business,” offered one CEO. “Make sure your tax scheme does not drive business to another state. Have a regulatory environment and regulators that encourage good business—not one that punishes businesses for minor infractions. Good employment laws help too. Let companies decide what benefits and terms will attract and keep the quality of employee they need. Rules that make it hard, if not impossible, to separate from a non-productive employee make companies fearful to hire or locate in a state.”

That, in my estimation, is the primary difference between Texas and California, and why Texas is booming and California is drowning.

Food for thought.

~McQ

Twitter: @McQandO


Dems double down on government spending in face of stimulus fail

It seems “insanity” has indeed gripped the party of the left.  That is, doing the same thing over and over again and expecting different results:

House Democrats this week have amplified their calls for new spending on infrastructure and other federal projects in the face of May’s discouraging job-creation figures.

Even as Republicans are insisting on "trillions" of dollars in spending cuts, Democrats maintain that a targeted injection of additional federal dollars in the near-term would go a long way toward reversing the hiring slump. Friday’s disappointing job report, they say, only bolsters their case.

I’ll again remind readers that it was the Obama administration and Democrats who said that if we’d give them the almost one trillion dollars in borrowed stimulus money, they’d keep unemployment under 8%.  And, of course, the plan was to spend all that money on “infrastructure and other federal projects”.

Worked real well didn’t it?

Now, with much of every dollar spent still coming from borrowed money, they want to repeat the failure while saddling the economy with even more debt?

It all comes down to what they believe the role of government to be:

"The American people, while concerned about the deficit, place much more emphasis on job creation, and they see a role for the government," Rep. Raul Grijalva (D-Ariz.) told The Hill. "A fast injection of job stimulus on the public side would help tremendously. … It [the job report] helps our argument about investment."  

No.  It wouldn’t “help tremendously”.  If that were the case, the stimulus would have helped “tremendously” and we’d be looking at less than 8% unemployment as promised instead of 9.1%.  But as is obvious to everyone but Democrats, it didn’t help at all.    In fact, considering that 9.1% unemployment rate, it can be argued that things got worse.

That’s because where the government actually could help, it won’t, can’t or isn’t willing to help.   Deregulation, for instance.  Make it easier for businesses to do business and hopefully expand and hire.   They can quit making war on the private sector as well.  The NLRB’s shameless politically motivated attempt to shut down Boeing in South Carolina at the behest of unions.   The seemingly permanent moratorium in the Gulf of Mexico and the slow-walking of the permit process that has crippled domestic oil and gas production and cost thousands of jobs and millions, if not billions, in economic impact.  Cut taxes and leave more in the pockets of both consumers and business.  Cut spending – deeply – and quit borrowing money.

Unfortunately, all that is boring economics and at conflict with the “government is the answer” mindset that is prevalent in Democratic circles:

Rep. Earl Blumenauer (D-Ore.) said that only in Washington is targeted new spending being demonized.

"Once you get outside the Beltway, almost everyone agrees that we should be rebuilding our crumbling infrastructure and investing in clean American energy that reduces our dependence on oil," Blumenauer said.

I have no idea where this guy gets this nonsense, but I live out here and I don’t hear anyone claiming that the solution to our problem lies in “rebuilding our crumbling infrastructure” and “investing in clean American energy”.  Not once have I heard the typical Americans I know ever mention those two options as how government should be responding.

So either Rep. Blumenauer has selective hearing, or he’s making it up on the fly.  Most people I’ve talked too are convinced that government is the problem, not the solution.  That government can contribute to a recovery by getting the heck out of the way, quit throwing road-blocks in front of business, reduce taxes and cut spending and getting its own house in order.

But double down and increase spending on make work and pie-in-the-sky energy projects? 

No, not what I’m hearing.  At all.

~McQ

Twitter: @McQandO


The cost of the regulatory state

One issue that deserves much more attention is the cost of the powers government exercises to regulate.  The Competitive Enterprise Institute has just issued a study that does exactly that – study the cost of the regulatory state and the impact it has on our economic viability.

You shouldn’t be surprised to learn that regulation is up and so is its cost (per the report, the cost of regulatory compliance in this country is about $1.75 trillion):

Among the report’s findings:

  • The Federal Register stands at an all-time record-high 81,405 pages.
  • In 2010, federal agencies issued 3,573 final rules.
  • While agencies issued 3,573 final rules, Congress passed and the president signed into law a comparatively “few” 217 bills. Considerable lawmaking power is delegated to unelected bureaucrats at agencies, an abuse addressed recently in proposals such as the REINS Act.
  • Alarmingly, proposed rules in the Federal Register have surged from 2,044 in 2009 to 2,439 in 2010, a jump of 19.3 percent.
  • Of the 4,225 rules now in the regulatory pipeline, 224 are “economically significant” meaning they wield at least $100 million in economic impact—this is an increase of 22 percent over 2009’s 184 rules.
  • Given 2010’s government spending (outlays) of $3.456 trillion, the regulatory “hidden tax” of $1.75 trillion stands at an unprecedented 50.7 percent of the level of federal spending itself.
  • Regulatory costs exceed all 2008 corporate pretax profits of $1.463 trillion.
  • Regulatory costs dwarf corporate income taxes of $157 billion.
  • Regulatory costs tower over the estimated 2010 individual income taxes of $936 billion by 87 percent—nearly double the level.
  • Regulatory costs of $1.75 trillion absorb 11.9 percent of the U.S. gross domestic product (GDP), estimated at $14.649 trillion in 2010.
  • Combining regulatory costs with federal FY 2010 outlays of $3.456 trillion reveals a federal government whose share of the entire economy now reaches 35.5 percent. 

The report urges reforms to make the regulatory costs more transparent and accountable to the people, including annual “report cards” on regulatory costs and benefits, and congressional votes on significant agency rules before they become binding.

Take a moment to absorb those numbers.  And ponder, for a moment that final percentage.  35.5% of what our economy produces now is related to government spending or compliance to a government regulatory regime.

Here’s a thought – if the government wants to spur economic growth, create jobs and, most likely, increase revenue for government, perhaps a serious – and I mean very serious- look ought to be taken (along with action, please) at the mountain of costly regulations now imposed by said government and a majority of them rolled back.  Over 81,000 pages of regulations, and I’m sure some bureaucrat out there believes everyone of them is necessary.

Sane people know better. Much of it is out of control or heading that way.  For instance:

Runaway regulation under the Clean Air Act.

In regulating greenhouse gas emissions, the Environmental Protection Agency (EPA) is trying to pick and choose which provisions of the Clean Air Act it wants to implement. But that is not how the Clean Air Act was set up. Under the Act, regulation under one section trips regulation under multiple other sections. Even if EPA tries to avoid this outcome,environmental pressure groups have already filed several lawsuits to compel the agency to begin regulating greenhouse gas emissions under other sections. Unless Congress intervenes, every building larger than a single-family dwelling likely will become subject to carbon controls in the near future.

Of course the next logical step after pulling in all structures other than “single-family” homes is to do what?  That’s right, pull in single family homes.

And:

EPA’s administrative cap-and-trade power grab.

The EPA plans to propose greenhouse gas emissions control technology standards for power plants in July2011 under the Clean Air Act. One of the primary options the EPA is reportedly considering is a cap-and-trade program. The fact that even the Democratic-controlled 111th Congress refused to enact a cap-and-trade program appears not to matter to Climate Czar Carol Browner or EPA Administrator Lisa Jackson. The EPA’s authority under the Clean Air Act requires clarification and the agency’s unilateral actions require investigation.

Can’t get it done by Congress (whose job it is, by the way).  Then do it by regulatory fiat.

Plus:

De facto moratorium on American oil and gas production.

Political decisions by Interior Secretary Ken Salazar and his appointees have led to a steep decline in domestic oil and gas production on federal lands and offshore areas. Production is already down and will almost certainly decline further. The extent of these cancellations is not fully apparent because they have been done piecemeal. An investigation is needed to put all the pieces together and thus show the damaged one and being done to America’s domestic oil and gas industry.Congress refused to enact a cap-and-trade program appears not to matter to Climate Czar Carol Browner or EPA Administrator Lisa Jackson. The EPA’s authority under the Clean Air Act requires clarification and the agency’s unilateral actions require investigation.

These are the types of regulatory abuse and over reach that are harming our economy, costing us jobs and making us less competitive.

Not only do we need to get government spending back under control, we badly need to get the regulatory state back under control as both spending and over regulation are eating up increasingly large parts of our GDP.

~McQ


Our energy future should involve a lot of shale gas–if our government will allow it

This map should give you a good feeling as you survey it:

 

shalegas-map

 

All the red you see in the US is a good thing.  This graphically shows the results of a survey conducted by the US Energy Information Administration in which it assessed world shale gas resources.  The legend is a little hard to read so, for those with eyes like mine:

  • Red colored areas represent the location of assessed shale gas basins for which estimates of the ‘risked’ gas-in-place and technically recoverable resources were provided.
  • Yellow colored area represents the location of shale gas basins that were reviewed, but for which estimates were not provided, mainly due to the lack of data necessary to conduct the assessment.
  • White colored countries are those for which at least one shale gas basin was considered for this report.
  • Gray colored countries are those for which no shale gas basins were considered for this report.

And here’s a chart that give you some of the numbers.  Pay particular attention to the numbers in the left hand column:

shalegas

 

The chart doesn’t show all of the 32 countries, but I wanted you to see the amount of shale gas that is technically recoverable and the amount we import (10%).  With the development of these gas fields  we can up our domestic production and consumption (an alternative to oil in many cases) as well as become a net exporter.

Says the report:

The development of shale gas plays has become a “game changer” for the U.S. natural gas market. The proliferation of activity into new shale plays has increased shale gas production in the United States from 0.39 trillion cubic feet in 2000 to 4.87 trillion cubic feet in 2010, or 23 percent of U.S. dry gas production. Shale gas reserves have increased to about 60.6 trillion cubic feet by year-end 2009, when they comprised about 21 percent of overall U.S. natural gas reserves, now at the highest level since 1971.

In fact, this assessment provides good news for much of the world:

To put this shale gas resource estimate in some perspective, world proven reserves of natural gas as of January 1, 2010 are about 6,609 trillion cubic feet, and world technically recoverable gas resources are roughly 16,000 trillion cubic feet, largely excluding shale gas. Thus, adding the identified shale gas resources to other gas resources increases total world technically recoverable gas resources by over 40 percent to 22,600 trillion cubic feet.

Of course the catch is “technically recoverable” – i.e. is it worth bringing to market even if we have the technology to do so?  That depends on a number of things, to include the cost governments place on those attempting to bring it to market, and the hurdles governments may place in their way if they attempt to do so – such as the hydrofracking controversy.

It is estimated that 80% of the new oil and natural gas wells in the US will require hydraulic fracturing (hydrofracking).  What hydraulic fracturing does is create tiny fissures in the rock so the oil and gas can flow through the wellbore to the surface.  Hydrofracking has been used in over 1 million – yes, that’s right – 1 million wells in the last 60 years (here’s an animation of the process if you’re interested).  The fracturing takes place hundreds, if not thousands of feet below the aquifer.

But, as with all things, the process which as been in use for over 60 years and with a million wells is now “controversial” with unsubstantiated claims that hydrofracking in these shale sites will cause contamination of the ground water.

Yet no evidence of that is apparent in the history of the process or an investigation conducted by the EPA in 2004:

U.S. government studies have found no evidence of drinking water contamination from hydraulic fracturing. In 2004, the Environmental Protection Agency (EPA) conducted a study to assess the contamination potential of underground drinking water sources (UDWS) from the injection of hydraulic fracturing fluid into coalbed methane (CBM) wells. EPA found "the injection of hydraulic fracturing fluids into CBM wells poses little or no threat to USDWs and does not justify additional study at this time." EPA also reviewed incidents of drinking water well contamination believed to be associated with hydraulic fracturing operations. It found "no confirmed cases linked to fracturing fluid injection of CBM wells or subsequent underground movement of fracturing fluid."

In 1998, the Ground Water Protection Council (GWPC) and a team of state agency representatives conducted a survey of state oil and natural gas agencies to establish an accurate assessment of the number of active CBM wells associated with hydraulic fracturing. Based on the survey of 25 oil and natural gas producing states, the GWPC concluded, "there was no evidence to support claims that public health is at risk as a result of the hydraulic fracturing of coalbeds used for the production of methane gas."

So, the map points to a bonanza of natural gas that is technically recoverable, would cover our own domestic needs easily (and may see some oil dependent means of transportation and energy production look toward to switching to cleaner burning natural gas) and even have us exporting the product versus importing it.

If … key word … if the hydrofracking Chicken Little’s aren’t allowed to have their way and delay or stop such exploitation.

Look, no one wants ground water contamination – no one.   But a system that has been in use for over 60 years an a million wells with no evidence it has contributed to ground water contamination has enough time and data points to help assure us of process reliability in this case.  Here’s something we can do now to help alleviate our energy deficit and cut dependence on imports.

Will we take advantage of this opportunity?

That remains to be seen.

~McQ


Your global warming, er, climate change update

The Gorebots are not in a happy place today and the latest update on our warming changing climate are posted:

The global temperature has fallen .653°C (from +0.554 in March 2010 to -0.099 in March 2011) in just one year. That’s a magnitude nearly equivalent to the agreed upon global warming signal agreed upon by the IPCC. It is quite a sharp drop.

According to the 2007 Fourth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC), global surface temperature increased by 0.74 ± 0.18 °C (1.33 ± 0.32 °F) during the 20th century

Oh noes.

For those who prefer charts, try this:

uah_march2011

So when they try to limit the EPA’s power to "regulate" Greenhouse gasses today in the Senate via the McConnell/Inhofe amendment, tell your Senator to vote for the amendment.

~McQ


Why EPA’s attempt at regulatory overreach would end up killing the recovery

I think we all know that the recovery, such that it is, is very fragile.  And, of course, the job picture remains very poor.  Any GDP growth numbers we’ve seen over the past few months have been fueled mostly by government deficit spending.

So a government that was concerned about jobs and economic growth in the private sector should be concerned with getting out of the way and ensuring that growth is allowed to go forward unimpeded.  Instead, we see any number of roadblocks, such as the drilling moratorium, banking regulations and the like being imposed that are having the opposite effect.

Another example of that is the EPA’s attempted usurpation of powers only Congress should wield.  It is a classic example of a bureaucracy now attempting to make the law instead of follow it.

The EPA has chosen to interpret the 1970 Clean Air Act as a mandate for it to regulate Green House Gasses (GHG), not only in automobiles, but in stationary sources as well.  In fact, as the EPA has testified, it would effect up to 6.1 million stationary sources.    The Clean Air Act gave the EPA the ability to regulate air pollutants that effect health, such as soot, but not the ability to regulate GHG which are not considered to be pollutants as defined by the Clean Air Act. 

The obvious solution here, if that is a concern of the administration, is to have Congress address the Clean Air Act with an eye on updating it to deal with the perceived pollution problems today.  But there’s a very good chance that such changes wouldn’t be made given the present makeup of Congress.  In fact, even when Democrats had an overwhelming majority these past two years, they were unable to pass a Cap and Trade bill. 

Given that reality, it seems the Obama administration has chosen to bypass Congress and allow the EPA to arbitrarily assume the power to regulate GHG.

The impact of such regulation would be economically devastating.  And, in an era of uncertainty, it would only add to the uncertainty.  James Pethokoukis noted that, “the only thing certain about the EPA [greenhouse gas] ruling is more regulatory uncertainty leading to less economic growth and fewer jobs.”

For instance:

Consider Nucor Steel.  The company planned a $2 billion investment that would have created 2,000 construction and 500 permanent jobs.  But the project was curtailed-by more than 50%-largely because of the EPA’s regulations.  Lion Oil, a refinery based in El Dorado, Ark., faced a similar fate:  The EPA’s cap-and-trade agenda was, according to the company, a "critical factor" that delayed a "several hundred million" dollar refinery expansion, slated to create 2,000 jobs.

Add that to this sort of economic impact on one industry:

The American Forest and Paper Association estimates that, “about two dozen new regulations being considered by the Administration under the Clean Air Act, if all are promulgated, potentially could impose on the order of $17 billion in new capital costs on papermakers and wood products  manufacturers in the next five to eight years alone.”

EPA’s proposed regulation would hit everyone, especially small businesses:

The burden of EPA’s regulations will fall disproportionately on small businesses, according to a new study released by the Office of Advocacy in Obama’s Small Business Administration. The study, titled “The Impact of Regulatory Costs on Small Firms,” small businesses, defined as firms  employing fewer than 20 employees, “bear the largest burden of federal regulations.” Specifically, the report found that “as of 2008, small businesses face an annual regulatory cost of $10,585 per employee, which is 36 percent higher than the regulatory cost facing large firms (defined as firms with 500 or more employees).”

Some of the regulations EPA is attempting to enforce deal with boilers.  “National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial, and Institutional Boilers and Process Heaters.” This proposal is referred to as the “Boiler MACT.”  Boilers are ubiquitous in the commercial market:

The Boiler MACT (maximum achievable control technology) proposal would impose stringent emission limits and monitoring requirements for eleven subcategories of boilers and process heaters. This proposed rule covers industrial boilers used in, among other industries, manufacturing, processing, mining, refining, as well as commercial boilers used in malls, laundries, apartments, restaurants, and hotels/motels.

So obviously imposing new stringent emission limits on boilers is going to effect a broad and deep swath of the economy, correct?  How deep and how broad? 

A recent study by Global Insight estimates that, depending on the policy EPA chooses, the Boiler MACT could put up to 798,250 jobs at risk. The study found that every $1 billion spent on upgrade and compliance costs will put 16,000 jobs at risk and reduce US GDP by as much as $1.2 billion.

Facing that, would you save  your money to upgrade or expand?  Expansion, of course, means more jobs.  Upgrading, however, means less.  And that’s where the EPA would take us.

Then there’s ozone.  The EPA wants to tighten the already stringent standard on ozone.  What the EPA has proposed is to change the standard from 75 ppb to a range of 60-70 ppb.  Here’s a clue as to how preposterous that is – Yellowstone National Park has 67 ppb of ozone as we speak.  So yes, Yellowstone would go from an “attainment” area to a non-attainment area.  That means it gets shut down until it comes into compliance.

That would also be the same for any area.  What does that mean?

Based on 2008 air quality data, a standard of 65 ppb would create 608 new non-attainment areas, while a standard of 70 ppb would create 515 such areas. These areas would be highly concentrated in manufacturing regions and states relying on coal for electricity.

Those counties and cities deemed to be in a non-attainment area would then have to put together a plan as to how to reach attainment (buy offsets from neighboring areas which are in “attainment”) and submit that to EPA.

But here’s the problem.  The new standard would most likely remove from the attainment list many who are now there and move them to the non-attainment list.  Result?  No offsets available to buy:

Consider the case of Ohio. Many areas of the state are still trying to meet the 1997 standard. A further revision now would greatly complicate state efforts to achieve attainment. Bob Hodanbosi, Ohio EPA’s Air Pollution Division Chief, estimates that if the ozone standard is set at 70 ppb, 47 of 49 monitors in Ohio would exceed it; if it were set at 65 ppb, all 49 monitors would exceed it.

In case you’re wondering it takes about 100 ppb of ozone to begin to effect your health.  So there’s really no need to move it from 75ppb.  And, as you can see in the case of Ohio, moving it down 5 points would put most of the state in “non-attainment” and moving it down 10 points would put the entire state in “non-attainment” and require exceedingly costly fixes.

Result?

The costs to Ohio workers and consumers could be severe. For example, in the Cincinnati-Dayton region, assuming an ozone standard of 70 ppb, production would decline by $14.8 billion, killing 91,700 jobs in 2030.  If EPA chooses 65 ppb, the costs in 2030 would nearly double, and 165,000 workers would lose their jobs.

And that’s in one state.

This is the threat posed by the EPA’s attempt at regulating something they have no authority to regulate.  It is being imposed by regulatory fiat.  

There’s a bill in the Senate right now that will prevent the EPA from usurping those powers and imposing those regulations.  It’s the Inhofe-Upton Energy Tax Prevention Act (S. 482).  It is also known as the McConnell amendment.  It is worth supporting.

Not worth supporting are the Rockefeller amendment which only delays the inevitable (and essentially cedes the premise that the EPA can do this) by two years.   No-go.

Neither is the Baucus amendment.  Here’s how Sen. Jim Inhofe (R-OK) describes the smoke and mirrors in that amendment:

The amendment is modeled on the EPA’s "tailoring rule," which temporarily exempts smaller sources-schools, hospitals, farms, restaurants-from the EPA’s cap-and-trade regulations.  That sounds good, but the rule blatantly violates the law, as the EPA changed the emissions thresholds established by Congress.

Hence the Baucus amendment:  It would codify the EPA’s permitting exemptions for stationary sources that emit fewer than 75,000 tons a year of greenhouse gases.  This exemption, which is actually more stringent than the EPA’s, purportedly is designed to help farmers and small businesses.  But as with the Rockefeller bill, it allows the rest of the EPA’s cap-and-trade agenda to move forward.  So businesses and farmers would still face higher costs for diesel and fertilizer, while small businesses would face higher electricity costs. 

The American Farm Bureau is wise to the false charm of the Baucus amendment.  It testified recently that, even with limited permitting exemptions, "Farmers and ranchers would still incur the higher costs of compliance passed down from utilities, refiners, and fertilizer manufacturers that are directly regulated as of January 2, 2011." 

Or said another way, the Baucus amendment also validates the premise that the EPA has the power to regulate GHG and just sneaks it up on us over a longer time period. Both are unacceptable. These amendments are supposed to come up for votes very soon. If you are an activist type and want to weigh in on this with your Senator, I’d recommended you push for passage of the Inhofe-Upton Energy Tax Prevention Act (aka McConnell amendment).

Require those types of decisions be made by elected officials who are accountable to their constituencies, not appointed officials accountable to no one.

~McQ


Judge Kessler: Mandate Constitutional Because of “Free Riders”

There is a new opinion from U.S. District (DC) Judge Kessler ruling that the individual mandate imposed by ObamaCare is constitutional. The primary importance of the ruling is that it is squarely at odds with the Judge Vinson opinion from the District of Florida on one key issue: that deciding not to purchase something is an “activity” that can be regulated under the Commerce Clause. I’m still going through it, and will have more to say, but a few things really leaped out at me.

(1) Kessler places a lot of emphasis on the “free riders” who consume medical services but don’t pay for them. According to the judge, these free rider problems are illuminated by the congressional findings found in the Affordable Care Act (at pp. 39-40):

The findings on this subject could not be clearer: the great majority of the millions of Americans who remain uninsured consume medical services they cannot pay for, often resulting in personal bankruptcy. In fact, the ACA’s findings state that “62% of all personal bankruptcies are caused in part by medical expenses.” ACA § 1501(a)(2)(G), as amended by § 10106. Of even greater significance to the national economy is the fact that these uninsured individuals are, in fact, shifting the uncompensated costs of those services–which totaled $43 billion in 2008–onto other health care market participants, as well as federal and state governments and American taxpayers. See ACA §§ 1501(a)(2)(F), (G),as amended by § 10106; Thomas More Law Ctr., 720 F.Supp.2d at 894.

Because of this cost-shifting effect, the individual decision to forgo health insurance, when considered in the aggregate, leads to substantially higher insurance premiums for those other individuals who do obtain coverage. According to Congress, the uncompensated costs of caring for the uninsured are passed on by health care providers to private insurers, which in turn pass on the cost to purchasers of health insurance. “This cost shifting increases family premiums by on average over $1,000 a year.” ACA §1501(a)(2)(F), as amended by § 10106. Thus, the aggregate effect on interstate commerce of the decisions of individuals to forgo insurance is very substantial.

There are many problems with these “findings” chief among which is an innumeracy problem. According to the first two quoted sentences, we are supposed to infer that 62% of all personal bankruptcies are made up of those “who remain uninsured” and “consume medical services they cannot pay for.” Indeed, according to Kessler’s understanding of the findings, the foregoing population is the “great majority of Americans who remain uninsured.” The only problem is, even if we assume that the 62% statistic is correct (which is a stretch), the number of personal bankruptcies every year does not even reach 2 million. Indeed, 2009 saw personal bankruptcies soar by 32% … to 1.41 million. Sixty-two percent of that is just 874,200, which is far, far fewer people than the “great majority of the millions of Americans who remain uninsured.”

(2) Another glaring issue is that the “cost-shifting” complained of is entirely the fault of the federal government, not “free riders,” thanks to Congress passing EMTALA in 1986, pursuant to which practically every hospital in the nation was forced to accept any and every patient who requested “emergency services.” In short, Congress created the free riders with this legislation.

Now let’s follow the logic here: (a) hospitals refuse to treat patients who can’t afford their medical services, therefore Congress must force hospitals to treat regardless of ability to pay (i.e. costs shifted to hospitals); (b) Patients who can’t afford the medical services, but who hospitals must treat, raise costs of medical services, which are mostly paid by insurers who raise their rates and pass them on to paying patients (i.e costs shifted to service-providers, then insurers, then paying patients); (c) insurance costs are entirely too high because uninsured patients, who can’t afford insurance or medical services, but whom hospitals must treat anyway, which drives up the costs of services and therefore the costs of insurance, and therefore Congress must force everyone to buy insurance (i.e. costs shifted from paying patients to those who can’t afford services or insurance); (d) because some people can’t afford insurance, they must be subsidized in their mandated purchase of insurance by taxpayers (i.e. costs re-shifted back to paying patients).

Putting it all together, according to Kessler’s opinion, Congress must be able to force individuals to purchase insurance because individuals who can’t afford insurance, but still consume health services (thanks to Congress), are causing the health insurance market to become distorted. (Oh, and by the way, those who can afford insurance are going to have to subsidize those who can’t and are therefore responsible for this whole mess in the first place.) Does that make any sense?

(3) The one other thing that really struck me as worrisome is Kessler’s emphasis on the infamous Wickard v. Filburn case (at p. 40):

In this case, the link [between the activity and the market being regulated] is strikingly similar to that described in Wickard: individuals are actively choosing to remain outside of a market for a particular commodity, and, as a result, Congress’s efforts to stabilize prices for that commodity are thwarted. As Wickard demonstrates, the effects of such market-distorting behavior are sufficiently related to interstate commerce to justify Congress’s efforts to stabilize the price of a commodity through its Commerce Clause power.

This is the reasoning underpinning Kessler’s holding (at p. 38) that “[b]oth the decision to purchase health insurance and its flip side–the decision not to purchase health insurance–therefore relate to the consumption of a commodity: a health insurance policy.” In this view, any decision made about an arguably economic subject, even the decision not to participate in a market concerning that economic subject, is subject to regulation by Congress.

Accordingly, should Congress decide to regulate the market for U.S automobiles, your decision to not purchase a vehicle can be regulated and even penalized by federal law. In fact, if Kessler’s view of the Constitution is correct, then Congress could require that you purchase a GM or Chrysler vehicle in order to stabilize the price of that commodity. Or perhaps, because of free rider problems, you can be penalized for choosing not to have children who would grow up, enter the labor force and pay the Social Security and Medicare taxes necessary to support you in your older years. If Kessler is correct, then the only limit on Congressional power is the inability to conjure up a market to be regulated, since any decision (participate/not participate) will have a substantial effect on that market when considered in the aggregate.

I would submit that this cannot be the correct view. The Commerce Clause power has already been distended far beyond what was intended when it written. If the Supreme Court adopts this decision, or something similar, the Congress would effectively have carte blanche to regulate whatever it desires.

In any event, those three things stood out to me. I’ll try to have some more on the opinion itself by tonight.


Reality check: About that “regulatory review”– don’t believe it

With much fanfare, President Obama announced an executive order which directs a regulatory review that ostensibly will remove conflicting, unnecessary and onerous regulations, streamline the reporting process by moving much of it online and further, get rid of regulations that aren’t needed and are impeding business from hiring.

That’s the official line, or should I say, ‘spin’.  However, as Conn Carroll points out over at the Heritage Foundation, some context should be given this airy promise.  And when put in perspective, it again points to an administration on the one hand saying one thing and on the other doing exactly the opposite.

In fiscal year 2010, the first full fiscal year under the Obama Administration, the federal government issued 43 major new regulations. According to the Administration’s own estimates, the total cost of these rules was $28 billion. Only two of the new rules reduced measured regulatory costs, and then by only $1.5 billion. On net, the Obama Administration inflicted $26.5 billion in new regulatory costs on the economy last year, an all-time record. This was on top of the $1.75 trillion in existing regulatory costs already inflicted on the U.S. economy by the federal government.

[…]

The 2,319-page financial regulation bill requires 243 new formal rule-makings by 11 different federal agencies. The 2,700-page Obamacare bill contains more than 1,000 instances where Congress instructed Health and Human Services (HHS) Secretary Kathleen Sebelius to regulate the health care industry. And, in the ultimate example of power-hungry federal regulators providing “solutions” where no problem currently exists, for the first time in the history of the Internet, the federal government will begin to regulate service providers with “net neutrality” regulations.

Message?  Take this Obama promise with a grain of salt.  It’s more posturing than reality.  Don’t believe me?  Well the devil’s in the details isn’t it?

Analysis of the EO Obama signed says nothing real will be happening, and if it does, it won’t be soon.  And then there are the exemptions:

First of all, the President’s executive order doesn’t actually require federal agencies to identify harmful regulations during the next 120 days. It merely requires that they submit a “preliminary plan” for reviewing regulations sometime in the future. This is not an order to reduce a single regulation. It is an order to plan to plan to maybe someday reduce regulations! Second, the order exempts “independent” agencies like the Securities and Exchange Commission, the Federal Communications Commission, and the new Consumer Financial Protection Bureau. Finally, even if an existing rule is found that stifles job creation, it will take years to actually repeal it. Kauffman Foundation Vice President Robert Litan tells The New York Times: “It’s more of a talking point than a policy. Even if you find a rule you don’t like, and they probably will, then they’re going to have to go through rule-making and then it’s going to take a year or two or longer.”

Triangulation has begun in earnest.  The move to the center is on.  This, like many of the administration’s programs, sounds great, but in reality it is all smoke and mirrors.  There is no real plan to identify and kill harmful regulations, there is no plan to reduce them and some of the worst offenders of onerous and intrusive regulation are exempt. 

All in a day’s work for the political propaganda machine that is the White House.  We’re now in “whatever It takes to win in 2012” whether or not it is real or even desirable, it will be promised in some form or another (just words) to make the current occupant of said White House seem more centrist and appealing.

Fool me once, shame on you …

~McQ