Free Markets, Free People

fines

ObamaCare–why you should care and work for its repeal

We’ve talked a lot about the dependency culture and how the left continues to try to grow it.  And perhaps one of the most outrageous examples of that is The Patient Protection and Affordable Care Act (PPACA) law commonly called ObamaCare.

The Heritage Foundation does a great job of outlining 13 reasons why ObamaCare needs to go down the circular drain (and that’s regardless of whether or not the Supreme Court invalidates the individual mandate, although that mandate is among their 13 reasons).

Each of the 13 reasons to repeal the law has its own link that takes you to another page which explains the Heritage Foundation’s argument.

Let’s take one of those reasons and look at it.  How about:

Health Care Subsidies: Obamacare spends more than $400 billion in the first 10 years to subsidize health insurance offered through government-designed exchanges. The design of these subsidies reinforces the current inequities in the tax code and creates new ones that will discourage work and encourage employers to discontinue offering health insurance.

When you go to the link you find out that:

These subsidies are the most expensive component of the overhaul, costing over $460 billion by 2019. Perhaps even more problematic, they will cause significant and harmful disruptions far outside the health care system by discouraging work and further complicating the tax treatment of health insurance. The subsidies reinforce current tax code inequities and create new ones.

Other than the cost, how that all works is hard to wrap your head around.  And to the Heritage Foundation’s credit, they attempt to explain it.  For instance, how does it discourage work?

The subsidies will discourage work by individuals eligible for the subsidy and for other taxpayers who will likely be forced to pay higher taxes in order to finance the subsidies.[14]There is an enormous “cliff effect” at 400 percent of the FPL, where earning additional income results in a total loss of the subsidy. A family of four headed by a 60-year-old would lose more than $15,000 worth of tax credits as household income passes 400 percent of the FPL.[15] The subsidy will also encourage individuals to retire early and to change the way they report income. This subsidy structure also penalizes upward income mobility and marriage.[16]

FPL is the “Federal Poverty Level”.  And 400% of the FPL for a family of four is $89,400 in 2011.  That’s right … if you make $90,000 dollars as the head of a family of 4, you’re eligible for a health care subsidy.  If you go beyond that, as the Heritage Foundation points out, it could cost you more than $15,000 dollars.

But that’s not the only impact.

How will it effect business, specifically small business?  Remember, you have to have over 50 employees before this kicks in.  But if you do have that many, you’ve got some real problems ahead of you (and, perhaps, an incentive to stay or get below 50).  The National Federation of Independent Businesses lays it out for you:

Which Businesses Face Potential Penalties?

Businesses with 50 or more full-time employees or full-time equivalents (FTEs) face potential employer mandate penalties. In this context, a full-time employee is one who works 120 hours per month or more – roughly 30 hours per week. In counting toward 50, each 120 hours per month of part-time labor comprises one FTE.

If an owner has several different businesses, they may or may not be treated as a consolidated group  under the Tax Code. If they are treated as consolidated, then the full-timers and FTEs in the multiple  businesses will be added together and treated as one business in determining whether the employee count is 50 or more.

So, first we redefine full-time employee.  From as long as I can remember, 40 hours a week has been a full time employee.  Anything under that was part-time.  Now we have 30 hour a week employees considered full-time.

Anyone, can you guess what may happen to those who are working part-time hours (30 a week, 120 a month) now when 2014 rolls around and these rules go into effect?  Yes, no more than 29 hours week and 116 hours a month.  So immediately it has an effect on productivity and hours worked and part-time employees hours and pay.

And if a business had plans to expand to 50 workers and beyond, given the complexity and cost concerning health care of doing so, why would it?  Or if it did,  why wouldn’t it drop health insurance and tell employees to join government exchanges?   In the first case there is no incentive for expanding to 50 or beyond and in the second there is every incentive to drop health care insurance if they do.

Because providing insurance could lead to this:

How Much Are The Penalties?

If a business does not provide insurance and if at least one employee receives federal insurance subsidies in the exchange, the business will pay $2,000 per employee (minus the first 30). Example: a business with 50 employees, two of whom are subsidized, would pay $40,000 = $2,000 x (50 – 30). To qualify for subsidies, an employee must meet two criteria, described below.

If a business does provide insurance, and if at least one employee receives insurance subsidies, the business will pay $3,000 per subsidized employee OR $2,000 per employee (minus the first 30) – whichever is less. So a providing business with two subsidized employees would be fined $6,000.   With 14 or more subsidized employees (above the tipping point for the formula), the penalty for a 50-employee firm would be $40,000.

So you’re a small business which has been providing health insurance for your employees and suddenly the government decides it is going to subsidize some of them (even those well paid and making 400% of FPL).  But if they subsidize them, without you or the employee asking them too, you, the employer have to pay a fine?

Why would you continue to provide health insurance?  Especially when this could happen as the law is written today:

For some firms, the employer mandate will result in large fines when circumstances change in their employees’ households. For example, an employee’s spouse losing a job or an employee’s spouse’s elderly relative moving into their house could trigger thousands of dollars in annual employer penalties. Employers will not be entitled to know the details of what triggered their penalties – unless they challenge the employee’s honesty before a government agency. The IRS is trying to fix this
sticky situation.

The absurdities abound.  But the intent is clear. 

The intent of this draconian nonsense is to drive employees to government exchanges.  And we know where it goes from there.

This is only one of 13 reasons why this travesty of a law must be repealed.  It is a disaster, it won’t drive cost down, and, given the penalties it imposes, we, the consumer will be picking up the tab for these penalties in the price of our goods.

This law alone is reason enough to get the current occupant out of the White House and planning an early retirement.  ObamaCare must not stand.

~McQ

Twitter: @McQandO

EPA: When reality meets bureaucratic inertia

What if you passed a law that required the use of alternative fuels from particular sources to be blended with petroleum based fuels to help “break our dependence” on petroleum from “unfriendly countries” (and cut greenhouse gases).  And what if, a few years later, new and abundant sources of domestic oil and gas were found, plus even more from secure allies like Canada?

Wouldn’t it makes sense to reconsider the original legislation in light of the new finds. 

Oh, and one more thing … what if one of the alternative fuels mandated to be mixed with gasoline hadn’t yet materialized commercially?  Would you exempt refiners or fine them?

Common sense says you exempt them.  The EPA has, instead, chosen to fine them.

When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law.

But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.

Somehow that appears to be considered the fault of the refiners.  And the EPA is requiring the fines be levied and paid. 

Any guess as to who will end up paying those fines?

The 2007 law requires three types of bio fuels be mixed:  “car and truck fuel made from cellulose, diesel fuel made from biomass and fuel made from biological materials but with a 50 percent reduction in greenhouse gases” according to the NY Times.

But cellulosic fuel is commercially unavailable.  There simply is none to be had.

Michael J. McAdams, executive director of the Advanced Biofuels Association, said the state of the technology for turning biological material like wood chips or nonfood plants straight into hydrocarbons — instead of relying on conversion by nature over millions of years, which is how crude oil originates — was advancing but was not yet ready for commercial introduction.

Of the technologies that are being tried out, he added, “There are some that are closer to the beaker and some that are closer to the barrel.”

But the requirement – and the fines – remain.

Meanwhile, time has marched on and guess what? 

Mr. Drevna of the refiners association argued that in contrast to 2007, when Congress passed the law, “all of a sudden we’re starting to find tremendous resources of our own, oil and natural gas, here in the United States, because of fracking,” referring to a drilling process that involves injecting chemicals and water into underground rock to release gas and oil.

What is more, the industry expects the 1,700-mile Keystone Pipeline, which would run from oil sands deposits in Canada to the Gulf Coast, to provide more fuel for refineries, he said.

But the EPA is unmoved by that or the fact that cellulosic fuel is unavailable:

But Cathy Milbourn, an E.P.A. spokeswoman, said that her agency still believed that the 8.65-million-gallon quota for cellulosic ethanol for 2012 was “reasonably attainable.” By setting a quota, she added, “we avoid a situation where real cellulosic biofuel production exceeds the mandated volume,” which would weaken demand.

Hmmm … expert: “We’re closer to the beaker than the barrel”.  Bureaucrat: “Even though the product is not commercially available, we still believe the mandate for this year is reasonably attainable.”

Yet there is nothing on the horizon for commercially available cellulosic ethanol in 2012:

One possible early source is the energy company Poet, a large producer of ethanol from corn kernels. The company is doing early work now on a site in Emmetsburg, Iowa, that is supposed to produce up to 25 million gallons a year of fuel alcohol beginning in 2013 from corn cobs.

And Mascoma, a company partly owned by General Motors, announced last month that it would get up to $80 million from the Energy Department to help build a plant in Kinross, Mich., that is supposed to make fuel alcohol from wood waste. Valero Energy, the oil company, and the State of Michigan are also providing funds.

Yet other cellulosic fuel efforts have faltered. A year ago, after it was offered more than $150 million in government grants, Range Fuels closed a commercial factory in Soperton, Ga., where pine chips were to be turned into fuel alcohols, because it ran into technological problems.

Yes that’s right folks, Government Motors is sucking up $80 mil in taxpayer dollars for a startup on a product that experts say isn’t ready for prime time and, as demonstrated by the Georgia plant, still has technical problems which apparently prohibit the commercial production of the desired alternate fuel (after it sucked up $150 mil of tax payer money).

This is ideological agenda driven madness abetted by bureaucratic stupidity.  However, no one has ever claimed bureaucracies deal in reality. They’re fall back for such absurdities is process.   Fining companies for not using a product that isn’t available but mandated simply underlines how decidedly absurd they can be.  The EPA is on a mission.  It has been directed to push that agenda by whatever means necessary.

Meanwhile the changes that should be reflected in the new reality – more abundant domestic and safe oil and gas, are being roundly ignored and their exploitation mostly hindered.  And you, Mr. and Mrs. Taxpayer, are being fined and looted to push this absurd agenda.

~McQ

Twitter: @McQandO