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InsiderOnline Blog: February 2014

To Do: The Greatest Conservative Show on Earth Begins this Week

• Connect with 10,000 of your conservative friends from all around the country at the Conservative Political Action Conference, which runs March 6 – 8 at the National Harbor.

Celebrate Ronald Reagan and unwind with your old and new friends from the Conservative Political Action Conference. The Young Conservative Coalition’s annual Reaganpalooza will take place March 8 from 8 p.m. to 1 a.m. at the Look Club in Washington, D.C.

Learn who is helping and who is hurting the political Right. The American Enterprise Institute will host a Tea Party v. Establishment debate on March 5 at 5:30 p.m.

Learn about the classical foundations of freedom and how they apply to our culture today. The Acton Institute is now accepting registrations for its annual Acton University. Acton University is four days of courses that integrate economics, philosophy, and Judeo-Christian faith. You can create a customized learning path from over 100 courses taught by a world-class faculty. Acton University runs June 17 – 20 in Grand Rapids, Mich.

Learn about the Great Books by registering for Hillsdale College’s online course, Great Books 101. The 11-week course will cover Homer, the Bible, the Inferno, and much more. The course begins March 3.

Find out who some of the best leaders and thinkers are in the conservative movement. The annual Weyrich Awards will be held March 5. The reception will begin 6 p.m. at the Four Seasons Hotel in Washington, D.C.

• Lift a glass to Margaret Thatcher at the Pacific Research Institute’s annual Baroness Thatcher Dinner. Charles Krauthammer will give the keynote address. The event will begin March 7 at 6 p.m. at the Island Hotel in Newport Beach, Calif.

• Save the date: Join leaders in the conservative movement for The Heritage Foundation’s 2014 Resource Bank Meeting, March 26 to March 28 in New Orleans. Resource Bank is a must-attend conference of today’s top conservative leaders—policy experts, think tank CEO’s, activists, and donors—filled with strategy sessions, networking, coalition building, and policy collaboration.

Posted on 02/28/14 06:09 PM by Alex Adrianson

Playin’ in a Travelin’ Band

Where we’ll be in March:

On March 6 – 8, we’ll be at the Gaylord National Resort and Convention Center at the National Harbor in Maryland for the Conservative Political Action Conference.

On March 14 – 15, we’ll be in Nashua, New Hampshire for the Northeast Republican Leadership Conference.

And, of course, on March 26 – 28, we’ll be in sunny New Orleans for The Heritage Foundation’s Resource Bank 2014.

Please come find us at The Heritage Foundation booth, where we’ll probably be giving something cool away.

Posted on 02/28/14 01:10 PM by Alex Adrianson

Daily Links: Medicaid Grew 31,212 percent in 46 Years

• There was nothing anti-gay about Arizona’s “anti-gay” bill (SB 1062) that Gov. Jan Brewer vetoed, writes Rich Lowry. All it did was clarify that the word “person” in the state’s Religious Freedom Restoration Act—already on the books for 15 years—applies to businesses and that the law’s protections apply to private discrimination lawsuits as well as proceedings involving the government. Also, 18 states and the federal government already have such laws on the books. [Politico, February 26]

• The Department of Justice put the wrong person from the wrong division in charge of leading the investigation of the Internal Revenue Service, says Hans von Spakovsky. Instead of putting a lawyer from the Public Integrity Section of the Criminal Division in charge of the investigation, the Department gave the responsibility to a lawyer from the Civil Rights Division, which is the most politicized division in the Justice Department. What’s more, the lawyer put in charge was Barbara Bosserman, a major Obama campaign donor. [Testimony before the House Oversight Committee, February 26]

• Analysts trying to calculate the social cost of carbon “can get just about any result they desire by fiddling with non-validated climate parameters, made-up damage functions, and below-market discount rates,” say 11 experts from free market groups in comments submitted to the Office of Management and Budget on behalf of the Competitive Enterprise Institute. The experts also say that social cost of carbon analysis “is computer-aided sophistry, its political function being to make renewable energy look like a bargain at any price and fossil energy look unaffordable no matter how cheap.” [Global Warming.org, February 27]

• Conservatives can make good arguments for specific reforms to the health care system, but they need to express a vision, too, says John Goodman. He suggests they emphasize the concepts of choice, fairness, simplicity, and jobs, among others. [John Goodman’s Health Policy Blog, February 24]

• The cost of Medicaid has grown 31,212.5 percent in 46 years, notes a new report from Sen. Tom Coburn (R-Okla.). The cost of Medicare has grown 16,750 percent in 45 years. The cost of the Department of Defense’s health care programs has grown 1,345.9 percent in 32 years. How much will ObamaCare costs grow? [Senator Tom Coburn, February 2014]

• Lots of good briefs have been filed in support of the plaintiffs in Halbig v. Sebelius, the lawsuit that points out how the Internal Revenue Service is just making stuff up—like new entitlements—in implementing ObamaCare. Michael Cannon provides a roundup of those briefs. [Forbes, February 26]

Posted on 02/27/14 08:53 PM by Alex Adrianson

Throwback Thursday: Why ObamaCare Hurts Cancer Patients

The warnings that ObamaCare would especially hurt cancer patients were given last year, but liberals still insist on seeing no evil today. This week, Stephen Blackwood shared his mother’s story with the Wall Street Journal. Mr. Blackwood’s mother had insurance that covered the cancer drug Sandostatin, which was helping to keep her alive and well. But in November, Blue Cross/Blue Shield cancelled the plan because it was not in compliance with the Affordable Care Act regulations. Blackwood describes what happened next:

When finally she found a plan that looked like it would cover her Sandostatin and other cancer treatments, she called the insurer, Humana, to confirm that it would do so. The enrollment agent said that after she met her deductible, all treatments and medications—including those for her cancer—would be covered at 100%. Because, however, the enrollment agents did not—unbelievable though this may seem—have access to the “coverage formularies” for the plans they were selling, they said the only way to find out in detail what was in the plan was to buy the plan. (Does that remind you of anyone?)

With no other options, she bought the plan and was approved on Nov. 22. Because by January the plan was still not showing up on her online Humana account, however, she repeatedly called to confirm that it was active. The agents told her not to worry, she was definitely covered.

Then on Feb. 12, just before going into (yet another) surgery, she was informed by Humana that it would not, in fact, cover her Sandostatin, or other cancer-related medications. The cost of the Sandostatin alone, since Jan. 1, was $14,000, and the company was refusing to pay. [Wall Street Journal, February 23]

Why exactly did Mrs. Blackwood get stuck with a plan that doesn’t cover a drug that is crucial to her health? Liberal opinion writer Michael Hiltzik offers this answer:

The ACA doesn’t dictate which medications are or are not offered by insurers, and the law certainly doesn’t demand that information on formularies be withheld from customers. It sounds as if Mrs. Blackwood was sorely misled by Humana’s customer reps, and it seems likely that its refusal to cover her crucial medication is unjustified. 

That does point to a problem with Obamacare, just not the one Stephen Blackwood and the Wall Street Journal think it does. The problem is that the Affordable Care Act not only left commercial insurers at the center of our healthcare system, but strengthened their grip on coverage. Many of the problems that have cropped up with the ACA are reflections of the private industry’s role, including its lousy customer service. [Los Angeles Times, February 24]

Hiltzik would have us believe that the next expansion of government control will do what the previous one failed to do: Make sure that the health care system provides exactly the right balance of quality service and low cost. But why does anyone believe that government is better than individual consumers at judging tradeoffs between cost and quality? In a market system that has real competition, companies don’t win customers by providing lousy service and a low-quality product. Government regulations suppress the competition that produces the incentives to give customers value.

Right now, only Humana knows why it doesn’t cover Sandostatin. But a search for an explanation for Mrs. Blackwood’s predicament should at least note how ObamaCare gives insurers incentives to narrow their offerings. Fortunately, we have Scott Gottlieb, who explained it in a column from last August:

Obamacare coaxes health plans to reduce spending and healthcare utilization by limiting the choices patients will have of doctors. This is the primary way that health plans are being cheapened enough to meet Obamacare’s strict guidelines on the low value of the coverage that the plans can offer.

Insurers are barred from using the other tools that they’ve traditionally employed to keep the costs of policies in check: cost sharing, underwriting risk, adjusting premiums and benefits. The only thing that health plans are permitted to do under Obamacare is narrow the networks of providers that they contract with. So that’s precisely what they’re doing. By contracting with fewer providers, insurers can cheapen their coverage by clamping down on what doctors prescribe.

This will hit cancer patients especially hard.

If consumers go outside the narrow network of doctors that their plans offer, patients will be saddled with heavy co-insurance that can make these options absurdly expensive. While Obamacare caps a person’s total out of pocket costs, the price of getting care outside your restricted provider network isn’t subject to these limits (except for care delivered in an emergency room). If patients see doctors outside their narrow networks, they’ll have to pay out of pocket for that care. They could be stuck with the entire bill. There are no limits under the law (with the only exception being out-of-network medical care delivered in an emergency room).

Yet cancer patients often need the help of specialized doctors and cancer institutions that won’t make it into many of these cheapened networks. The latest cancer drugs, as well as new (off label) uses for existing medicines, will also be harder to get. Patients may not be able to see the expert doctors most likely to offer these options. New drugs are also slow to make it onto the “treatment pathways” that Obamacare plans are using as a way to narrow the menu of drugs they cover. [Forbes, August 21, 2013]

The people who wrote ObamaCare were focused on figuring out how to control health care spending. That was their priority, and so, in a controlled market, it becomes the priority of the providers; but that is not necessarily the priority of individual consumers. The only way to make sure the priorities of consumers rule is to put consumers in charge not the government.

Posted on 02/27/14 06:48 PM by Alex Adrianson

Thirteen Reasons to Go to Resource Bank This Year

The Heritage Foundation’s Resource Bank 2014 will be held March 26 – 28 in New Orleans. Here are 13 reasons you should register and join us:

13. Louisiana has a school choice program so good the Obama Justice Department just had to try to block it. You’ll learn how Louisiana’s education reforms are working.

12. You just can’t get a good gin fizz outside New Orleans.

11. Sen. Ted Cruz will make his second appearance at Resource Bank, but this will be his first as a United States Senator. Regular Resource Bank goers will recall that then-private citizen/former Texas Solicitor General Cruz spoke at the 2010 Resource Bank in Miami, about nine months before he announced he was running for the United States Senate.

10. New Orleans has the National World War II Museum, and Resource Bank attendees can sign-up to go to the museum for a reduced price.

9. Randy Barnett’s Commerce Clause argument against ObamaCare won at the Supreme Court, but the law was upheld anyway. Undaunted, he’s going to help us figure out the next steps in unwinding the law.

8. America needs energy. Louisiana has energy. Enough said.

7. If there is one thing you need to know about, it’s the Left’s plan to prevent conservatives from participating in the democratic process. A panel of heavy hitters—Cleta Mitchell, John Fund, Tracie Sharp, and Stanley Kurtz—will break it down for you.

6. Washington, D.C., has parasites, but New Orleans has insects—in the Insectarium, the largest museum of insects in North America.

5. You don’t want to miss the next awesome thing Gov. Bobby Jindal says.

4. The average high temperature for New Orleans in late March is 75 degrees.

3. Louisiana’s free market think tank, which is also the think tank with the coolest name, The Pelican Institute, will be there

2. Two words: Po Boys!

1. One word: Jazz!

Posted on 02/26/14 06:37 PM by Alex Adrianson

Freedom Turns the Lights On

Here is the latest nighttime satellite image of the Korean peninsula, taken January 30, 2014, aboard the International Space Station:

North Korea is approximately in the center of the photo, but if it were not for the label, you might not realize there is land there. Business Insider explains the visual contrast by noting that annual per capita power consumption is 10,162 kilowatt hours in South Korea while the figure for North Korea is only 739 kilowatt hours. [Business Insider, February 24]

OK, but why don’t they have lights in North Korea? We suggest the explanation is that economies that are not free produce fewer resources than economies that are free. South Korea ranks 31st in the latest edition of the Index of Economic Freedom. The country’s score of 71.2 (out of 100) puts it in the Mostly Free category. Not bad.

North Korea, on the other hand, is dead last in the rankings with a score of 1.0. North Korea is in the Repressed category, a designation reserved for any country scoring less than 50. Twenty-seven other countries are rated “Repressed” by the Index, but North Korea is really in a league of its own.

If North Korea improved its score by 4,890 percent, it would have the same score as Togo—49.9. That would still leave North Korea in the repressed category. The Index notes: “The North Korean economy has been rated the least free throughout the history of the Index.” [2014 Index of Economic Freedom, The Heritage Foundation and the Wall Street Journal]

Posted on 02/26/14 02:43 PM by Alex Adrianson

Daily Links: The Tax Code Is 10 times the Size of the Bible, but with None of the Good News

• Dave Camp’s tax reform plan will add $3.4 trillion to the economy over the next decade according to estimates by the Joint Committee on Taxation. Rep. Camp writes that his plan reduces the number of tax brackets to two with a top rate of 25 percent, increases the standard deduction, simplifies credits, and eliminates special interest handouts. [Wall Street Journal, February 25]

• Students at Modesto Junior College are now free to hand out copies of the Constitution—or any other materials—without first getting permission from the college, reports the Foundation for Individual Rights in Education. The school has revised its policies that restricted the handing out of printed materials on campus by students in order to settle its lawsuit with Robert Van Tuinen. Van Tuinen had filed the lawsuit after the school had prevented him from handing out copies of the Constitution on September 17—which is Constitution Day. [Foundation for Individual Rights in Education, February 25]

• The Arizona bill that would allow businesses to refuse service for religious reasons does nothing more than “align state law with the federal Religious Freedom Restoration Act” which simply says that “no government action can ‘substantially burden’ religious exercise unless the government uses ‘the least restrictive means’ to further a ‘compelling interest,’” writes Ilya Shapiro, who continues: “Moreover, there’s no mention of sexual orientation (or any other class or category).” [Cato Institute, February 26]

• Keeping Ukraine in the Russian orbit is central to Vladimir Putin’s ambitions to restore Russian power, and the West should expect Putin to back up whatever “red lines” he sets in the crisis, writes Clifford May. [Washington Times, February 25]

• One-hundred and thirteen out of 114 Illinois cities have a severe pension underfunding problem, finds the Illinois Policy Institute. Unfunded public pension liabilities in the state grew to more than $12 billion in 2010 from $1 billion in 2000, despite property taxes skyrocketing around the state. The problem, says the Institute, is that investment returns have not materialized while state officials have legislated ever-increasing benefit levels. [Illinois Policy Institute, February 25]

• The practice of the government colluding with activists in a lawsuit against itself—so-called “sue and settle”—has become much more common under the Obama administration, writes Andrew Grossman, who notes that the tactic is a way of forcing policy changes that could not be achieve by normal political—i.e. democratically accountable—processes. The Meese Memorandum, originally written to address the overuse of consent decrees by the Carter administration, can be a guide today for bringing sunlight to the practice. [The Heritage Foundation, February 25]

Posted on 02/26/14 01:39 PM by Alex Adrianson

The Internal Revenue Service Wants to Use the Tax Code to Regulate Political Speech

Undeterred by the scandal over its targeting of conservative non-profits for special scrutiny, the Internal Revenue Service now wants to make most of the things that 501(c)(4) nonprofits do count as political activity. Those rules would require these organizations to stop what they are doing or reorganize as 527 political groups that are required to disclose the names of donors.

Under the rules proposed by the IRS last November, 501(c)(4)s cannot do non-partisan voter-registration drives or provide issue guides that describe candidates positions. A number of newspapers are published by 501(c)(4) organizations; those news outlets would have to stop publishing articles that mention candidates names. The rules as written would require 501(c)(4)s to review everything on their websites to make sure no candidates names are mentioned within 30 days of a primary election or within 60 days of a general election—even if the content was published before then. Under the IRS’s definition, anybody can be a potential candidate. Other problems abound: The IRS is disregarding the Paperwork Reduction Act, not complying with FOIA, and has deliberately tried to shorten the comment period on its rules. “They simply do not know what they are doing,” said former Federal Election Commission Chairman Bradley Smith.

Smith was one of four panelists who discussed the many problems with the proposed IRS rules at the Heritage Foundation on Friday, February 21:

Don’t forget to submit your comments on the proposed Internal Revenue Service rules on what non-profits can and can’t do and still remain non-profits. Those are the rules, remember, that would require you to scrub your website 60 days before an election to make sure you don’t mention anybody who is a candidate for office. The proposed rules and instructions on how to submit comments on them can be found at federalregister.gov. Comments will be accepted until February 27.

Also, if you would like to submit comments to the IRS anonymously (because, you know …) you can do so at www.NonProfitFreedom.org, a project of the Center for Responsive Politics. For background on the problems with the proposed rules, visit www.CampaignFreedom.org/irs.

Posted on 02/25/14 06:03 PM by Alex Adrianson

Daily Links: Ramis’ Libertarian Film, Venezuela’s Oil-Rich Poverty, CMS Agrees Cancellations Coming

• Accusations that Wisconsin Governor Scott Walker’s 2010 campaign used illegal voter purging tactics are based on an erroneous understanding both of what is illegal and how voter registrations are vetted for inaccuracies. The accusation, however, has been widely repeated by Left-leaning national publications who haven’t bothered to investigate for themselves, reports M.C. Kittle. [Watchdog.org, February 25]

• Making posters for a protest, participating in flash mobs, and capturing video of a “Slut Walk” now count as coursework in some freshman composition course, writes Mary Grabar. And no wonder, when the instructors are reading manuals such as Composition and Sustainability: Teaching for a Threatened Generation, Rhetoric of Respect, and Affirming Students’ Rights to Their Own Language. [Minding the Campus, February 23]

• Mother Jones’s Shane Bauer has noticed that instead of liberals it is conservatives like Marc Levin of the Texas Public Policy Foundation who are leading the drive to reform America’s criminal justice system. [Mother Jones, March/April 2014]

• Between 11 million and 17 million workers covered by small employers will see higher health insurance premiums because of ObamaCare’s insurance regulations says a new report by the Centers for Medicare and Medicaid Services. J.D. Harrison reports that CMS finds 65 percent of small employers will face higher insurance costs. [Washington Post, February 25]

• Harold Ramis, who died on Monday, co-wrote and co-starred in the most libertarian movie of all-time, writes Philip Klein. He’s referring, of course, to Ghostbusters, which shows a small entrepreneur solving a problem (paranormal activity) in spite of meddling government bureaucrats (the Environmental Protection Agency). [Washington Examiner, February 24]

• It’s not a mystery how an oil-rich country like Venezuela can suffer from an economic crisis, writes Don Boudreaux: “Oil and cash are of no use if there is nothing to exchange them for – and without markets there is, indeed, nothing to exchange them for.” [Cafe Hayek, February 25]

Posted on 02/25/14 04:43 PM by Alex Adrianson

President Obama Is Wrong: Many Studies Do Find School Choice Produces Better Results

Leaving aside for a moment the fact that President Obama is wrong about what the studies show, here’s something we can’t figure out: Why do liberals think it’s any kind of argument to say vouchers “don’t make that much of a difference”? If a Chevy dealer told you buying a Ford wouldn’t be much of an improvement over Chevy, would that convince you to buy the Chevy? Would it convince you never to buy a Ford? It wouldn’t be the case that liberals use one kind of standard for judging policies they favor and a different kind of standard for judging policies they dislike, would it?

Posted on 02/24/14 05:06 PM by Alex Adrianson

Daily Links: When Did Austerity Start?

• Despite the fact that neither NBC nor ABC nor CBS reported on the Federal Communications Commission’s plan to have investigators ask broadcast news stations about their news philosophies [Media Research Center, February 20], the plan generated enough negative publicity that the FCC dropped it anyway, which is “exactly what we should expect from a free press,” says Joseph Uscinski. [Washington Post, February 24]  

• President Obama will call for an end to the era of austerity with his 2015 federal budget, reports Zachary Goldfarb. [Washington Post, February 20] Merriam Webster defines austerity as “a situation in which there is not much money and it is spent only on things that are necessary.” [Merriam-Webster.com] The President, however, appears to have a different definition of austerity: The four largest annual federal deficits as a percentage of the economy occurred in the first four years (2009-2012) of the Obama administration, notes Charles Blahous. [Mercatus, February 21]

• Families in the lowest 20 percent of income-earners earn about 3.1 percent of the nation’s income, and will bear 7.3 percent of the new tax burden imposed by ObamaCare, calculates Chris Conover. [Forbes, February 20]

• The collapse of government investments in roads and canals in the nineteenth century prompted many states to include in their constitutions bans on government investment in private companies. Nevada is one of those states, but it is trying to get around that stricture on crony capitalism by creating local governments solely for the purpose of handing out taxpayer money to private companies. The Nevada Policy Research Institute is suing to stop the maneuver, writes NPRI President Andy Matthews. [Las Vegas Review-Journal, February 24]

• “If corporations can’t have religious beliefs, then it follows that they can’t believe in climate change, sustainable investment or any other beliefs embraced by the corporate social responsibility movement,” writes Keith Paul Bishop. [Calcorporatelaw.com, February 10; h/t Instapundit, February 24]

• Non-government organizations have a history of criticizing arms sales from the United States and other democracies while ignoring arms transfers from dictatorships. It’s a history that shows how the Arms Trade Treaty will be implemented, writes Ted Bromund. [The Foundry, February 23]

Posted on 02/24/14 04:51 PM by Alex Adrianson

CBO Says Minimum Wage Does Cost Jobs; Did The Agency Get the Magnitude Right?

According to the Congressional Budget Office, raising the minimum wage would lift a million workers out of poverty, but it would cost half a million low-income workers their jobs. The CBO’s report has been cited as helping to inject some economic logic into debates. Keith Hennessey, for example, writes:

President Obama and his allies have been selling this proposal as a free lunch, a policy that will raise pay for some with no costs for anyone: “Give America a raise.” Proponents of raising the minimum wage now must contend with a reputable nonpartisan analysis that the proposal has costs as well as benefits. Congress must decide whether higher wages for some are worth destroying jobs for others. Every responsible news story will now include a sentence like, “At the same time, the Congressional Budget Office projects the President’s proposal would result in lost jobs for half a million low-skill workers.” [Keith Hennessey, February 19]

And James Pethokoukis notes that the CBO report should strengthen the case for the earned-income tax credit as an alternative to raising the minimum wage:

[O]f the 16.5 million workers who would get a pay raise totaling $31 billion, just a fifth of the increased income would go to families with earnings below the poverty threshold. “Raising the minimum wage probably reduces employment,” the CBO explains. “In the long term, that reduction in the workforce lowers the nation’s output and income a little … .” […]

In its report, the CBO notes that in contrast to a minimum wage hike, “an increase in the [Earned Income Tax Credit] would go almost entirely to lower-income families.” So there you go. More bank for the billions of bucks. [AEIdeas, February 19]

Diana Furchtgott-Roth, however, says CBO significantly underestimated the job losses that will occur:

Employers in CBO’s world would hire 96% of workers formerly making $7.25 an hour, even when their new wage rose to $10.10. Consumers would face higher prices, but they would not adjust spending down in a substantial manner.

CBO concludes that real income in the economy would rise by $2 billion if the minimum wage were raised to $10.10 an hour. The report states that “raising the minimum wage would increase demand for goods and service because, taken together, the second, third, and fourth direct effects would shift income from business owners and consumers (as a whole) to low-wage workers.”

The report continues, “Low-wage workers generally spend a larger share of each dollar they receive than the average business owner or consumer does; thus, when a dollar from business owners or consumers is shifted to low-wage workers, overall spending increases.”

But spending by upper-income consumers helps to employ low-wage workers. The Labor Department’s consumer expenditure data for 2012 show that the highest fifth of income earners was responsible for 52% of spending on personal household services, and 56% of spending on fees and admission to entertainment. These are all local businesses that employ low-wage workers. Reducing the incomes of the top fifth will result in less spending on these categories, and less domestic employment.

In contrast, the lowest fifth of income earners spend a higher than average percent of their income on apparel, footwear, and nondurables, which are more likely to be imported. […]

CBO’s conclusion that approximately 96% of workers will keep their jobs, even with substantial increases in their wages, suggests that these workers have been underpaid. The only way this could be the case is if labor markets in the United States were profoundly out of balance. CBO presents no evidence that this is the case. Indeed, CBO does not address the millions of unemployed Americans who seek work, especially teens and low-skill workers. This is evidence that entry-level wages are too high, not too low. [Market Watch, February 21]

Posted on 02/21/14 05:47 PM by Alex Adrianson

A Sign the ObamaCare Insurance Pool Is Not Getting the Healthy People to Sign Up

The Obama administration is now considering extending the risk-corridor program—a kind of government-operated reinsurance program for health insurers in the ObamaCare exchanges—beyond the three years stipulated in the law. If the administration is willing to put taxpayers on the hook for more insurer losses, it suggests the administration is seeing yet more problems, writes Megan McArdle:

The insurers have clearly been willing to lose money on these policies for a couple of years in order to help the exchanges get established. But with the rollout difficulties and the somewhat underwhelming enrollment numbers, they may be threatening to bolt unless they get some guarantee that they can sell policies people will actually be willing to buy.

A risk-corridor extension would help keep the price of policies down by funneling a backdoor subsidy to the insurers. However, it would not keep the cost down – indeed, it could have the opposite effect. With the administration subsidizing the lion’s share of any losses, the incentives to control costs would be dramatically weakened.

With health-care cost growth already running well above inflation in most years, this could be quite expensive. Basically, the administration would be violating all the promises that were made about deficit reduction and cost control in a desperate bid to keep insurers on the exchanges.

Also, an extension would probably be illegal. [Bloomberg, February 18]

Posted on 02/21/14 05:12 PM by Alex Adrianson

The Current Rules Are Bad, Too

The Internal Revenue Service’s proposed rules on 501(c)4 non-profits sweep so broadly as to compromise First Amendment rights. As much of a threat as those rules are, the IRS proposing them provides an opportunity to make the point that the IRS’s existing rules on 501(c)4 organizations also sweep too broadly because they are not supported by law. David Addington’s letter to Secretary of the Treasury Jacob Lew makes exactly this point, among others:

 When Congress includes a particular restriction on political activities in one paragraph of subsection 501(c) and omits any such restriction in the very next paragraph, Congress is presumed to have indicated the omission. Issuance of a regulation by the IRS imposing a political restriction on 501(c)(4) organizations when Congress has directly spoken to the issue, imposing such a restriction on 501(c)(3) organizations but not 501(c)(4) organizations, is unreasonable. […]

When, as here, Congress has intentionally excluded political restrictions on 501(c)(4) organizations, the Secretary of the Treasury cannot impose them by himself by defining the statutory term “social welfare” to incorporate political restrictions that Congress excluded. […]

The plain meaning of that definition of “social welfare” includes promoting the common good and general welfare of the people for the purpose of bringing about civic betterments and social improvements through advocating, in the electoral process, principles and those who espouse them. [Internal citations omitted.] [The Heritage Foundation, December 19, 2013]

Don't forget to comment on the rules by February 27. (See item # 2 in our “To Do” list this week.)

Posted on 02/21/14 04:38 PM by Alex Adrianson

Not a Good Week for Cronyism

Riot police stormed the camps set up by anti-government protestors in Kyiv this week, leaving at least 100 Ukrainians dead. In Venezuela, President Nicolas Maduro’s crackdown on tens of thousands of protestors around the country has left at least eight dead. In both countries, the people are protesting the lousy economic conditions that have been produced by governments that stymie the economic freedoms of the people in order to help politically connected cronies. Dalibor Rohac and Juan Carlos Hidalgo write:

After years of kleptocratic governance, which derailed the country’s transition toward a market economy, ordinary Ukrainians are desperate for change. In 1990, Ukraine’s GDP per capita was $8,200, which was roughly identical to Poland’s. Today, Poland’s GDP is $18,300 and Ukraine’s has gone down to $6,400. Unlike its post-communist neighbors to the West, Ukraine did not pursue deep institutional reforms and its economy was seized by a narrow group of oligarchs, with close connections to political power and to the Kremlin. The son of the President Viktor Yanukovych, Oleksandr, has become one of the richest men in the country during his father’s time in the office, while incomes of most Ukrainians stagnated.

In Venezuela the economic situation has deteriorated sharply since the death of Hugo Chávez last year. The country has the highest inflation rate in the world (officially 56 percent in 2013, although according to Steve Hanke’s Trouble Currency Project, the implied annual inflation rate is actually 305 percent). After years of nationalizations, expropriations, and currency and price controls—all under the name of “21st Century Socialism”—the private sector has been decimated. Hour-long lines in supermarkets are a daily occurrence and shortages of basic food staples and medicines are widespread. And just like in Ukraine, corruption is rampant as the ruling elite rake in the profits from oil revenues. This has resulted in the rise of a new privileged class called the “Boligarchs.” so-named because they’ve prospered tremendously under the so-called Bolivarian revolution. Moreover, Venezuela is now one of the most dangerous nations in the world, with almost 25,000 murders committed last year. A large segment of the population, mostly middle class, is simply fed up as the country quickly becomes unlivable. [The Cato Institute, February 21]

Posted on 02/21/14 03:56 PM by Alex Adrianson

We Don’t Need Government Providing Broadband

Explains Rosalyn Layton of the American Enterprise Institute:

Posted on 02/21/14 02:04 PM by Alex Adrianson

To Do: Yes, Virginia, There Are Free Market Solutions for Health Care

Explore fresh ideas for health care reform. The Galen Institute will host a Health Solutions Conference. The event will feature members of Congress who have introduced major reform legislation based on the idea of letting markets work in health care. The program’s luncheon will feature a debate between Manhattan Institute fellow Avik Roy and Wonkblog founder Ezra Klein. The conference will begin at 8:30 a.m. on February 27 at the National Press Club Ballroom in Washington, D.C.

Submit your comments on the proposed Internal Revenue Service rules on what non-profits can and can’t do and still remain non-profits. Those are the rules, remember, that would require you to scrub your website 60 days before an election to make sure you don’t mention anybody who is a candidate for office. The proposed rules and instructions on how to submit comments on them can be found at federalregister.gov. Comments will be accepted until February 27.

Also, if you would like to submit comments to the IRS anonymously (because, you know …) you can do so at www.NonProfitFreedom.org, a project of the Center for Responsive Politics. For background on the problems with the proposed rules, visit www.CampaignFreedom.org/irs.

Appreciate James Q. Wilson’s dogged exploration of the most important questions related to human character, the moral sense. The Pepperdine University School of Public Policy will hold a two-day conference examining James Q. Wilson’s contribution to social science and good government. The conference will be held February 28 to March 1 at the Wilburn Auditorium at Pepperdine University.

Analyze President Obama’s proposals for reforming the National Security Administration and its monitoring of Americans’ communications. The Federalist Society will hold a symposium on the topic starting at 10:50 a.m. on February 24. The symposium will be held at the offices of Jones Day LLP in Washington, D.C.

Discover what the television show “House of Cards” teaches us about politics as it really is. The Learn Liberty Academy, a project of the Institute for Humane Studies, is offering an online course on “House Of Cards: Politics Without Romance.” Steve Horwitz, Professor of Economics at St. Lawrence University, will teach the course, which uses the episodes of “House of Cards” to illustrate the principles behind public choice theory. The one-week course begins March 3.

Speak out on the Federal Communications Commission’s monitoring of the news. If the idea of the FCC investigating the “news philosophy” of broadcast television stations has you concerned, then you should sign the American Center for Law and Justice’s “No Government Monitors in the Newsrooms” petition.

Learn about the history of the Federal Reserve, in particular its various failures. The Cato Institute will host a briefing on the Case for a Centennial Monetary Commission “to explore alternatives to the current pure discretionary government fiat money regime.” The briefing will begin at noon on February 28 in room B-318 of the Rayburn House Office Building in Washington, D.C.

Get the Israeli perspective on how the law of armed conflict applies to the challenge of fighting terrorism. The Heritage Foundation will host a talk by Colonel Eli Bar-On, Deputy Military Advocate General of the Israeli Defense Force. Colonel Bar-On’s talk will begin at 11 a.m. on February 26.

Find out which helps the poor more, the minimum wage or the earned income tax credit. The American Enterprise Institute will host a discussion and debate starting at 12:30 p.m. on February 24.

Hear “how individuals and entrepreneurs are finding new ways to get ahead of and around burdensome regulations and restrictions to get on with the business of civilized living.” Jeffrey Tucker, executive editor of Laizzez Faire Books and author of Bourbon for Breakfast, will speak at the Illinois Policy Institute in Chicago on February 26. Tucker’s talk will begin at 6 p.m.

Improve your asking skills. Coley Jackson, Vice President of External Affairs at the Competitive Enterprise Institute, will conduct a workshop on how to make bigger and better asks. The event will begin at 6:30 p.m. on February 27.

• Save the date: The 50th anniversary Conservative Political Action Conference is coming. This year, it will run March 6 to March 8 at the Gaylord National Resort and Hotel.

• Save the date: Join leaders in the conservative movement for The Heritage Foundation’s 2014 Resource Bank Meeting, March 26 to March 28 in New Orleans. Resource Bank is a must-attend conference of today’s top conservative leaders—policy experts, think tank CEO’s, activists, and donors—filled with strategy sessions, networking, coalition building, and policy collaboration.

Posted on 02/21/14 01:51 PM by Alex Adrianson

How ObamaCare’s Mandates Can Make a $10,000 Health Insurance Policy Worth Less than $4,000

Those who get subsidies for the health insurance ObamaCare forces them to buy aren’t necessarily better off than they were without ObamaCare. It could easily be the case, explains David Henderson, that the value of their health insurance plan is worth far less than the subsidized price a person has to pay:

Defenders of Obamacare often claim that the purpose of insurance is to pool risks so that a low-risk purchaser will pay to subsidize a high-risk purchaser. But that’s not true. Insurance works by pooling like risks. That’s why young single men pay more for auto insurance and old men pay more for life insurance.

Similarly, under Obamacare, insurers cannot legally set insurance premiums for young people that are less than a third of what they charge the elderly. This is in spite of the fact that covered expenses for the elderly are typically much more than three times the covered expenses for the young. So, just as in the case of pre-existing conditions, part of the family’s insurance premium covers expenses for a higher-risk group. And the people getting the government subsidy are likely to be disproportionately young because younger people have, on average, lower incomes than older people.

Finally, many people will value some required coverages at or close to zero. A young family in which the husband has had a vasectomy or the wife has had a tubal ligation is at minimal risk for pregnancy. Nevertheless, under Obamacare, they must pay for insurance that covers pregnancy. Also, even people with no children must pay for pediatric dental care. Obamacare requires a number of other coverages, including tests that the insurance company must pay for with zero co-payment by the insured. The insurance company will need to price the policy higher for all these coverages. If our hypothetical family does not place much value on these tests or services, then it is paying something for almost nothing. [Defining Ideas, February 18]

Posted on 02/20/14 05:16 PM by Alex Adrianson

Daily Links: Universal Standards Are Great, Except When They Are Someone Else’s Universal Standards

• The rollout of Common Core State Standards for education has been completely botched because teachers have not been given any input on implementing the standards, says National Education Association President Dennis Van Roekel in a letter to the NEA’s 3 million members. [NEAToday, February 19] Weren’t unions also in favor of ObamaCare before that rollout got botched?

• The Federal Communications Commission, the agency that hands out the licenses that broadcasters need to stay in the broadcasting business, now wants to investigate the “news philosophy” at broadcast news stations. One FCC commissioner says the project could easily turn from collecting information to pressuring reporters, editors, and station owners about what stories to cover. [Washington Times, February 20] “What on earth is the FCC thinking?” says Howard Kurtz. [Fox News, February 20]

• Both the existing and the proposed Internal Revenue Service regulations on 501(c)4 non-profit activities have no basis in federal law, says David Addington in a letter to Secretary of the Treasury Jacob Lew. [The Heritage Foundation, December 19, 2013]

• Nevada is violating a state constitutional provision against corporate welfare by creating pass-through entities that dole out taxpayer dollars, says the Nevada Policy Research Institute, in a new lawsuit lawsuit. [Nevada Policy Research Institute, February 19]

• There are lots of health insurance cancellations still to come, thanks to ObamaCare. Some 20 million employees of small business are likely see their company health plans cancelled at some point this year, calculates David Hogberg. [The American Spectator, September 20]

• While overall employment has not yet returned to its prerecession levels, employment in the oil and gas industries has grown 40 percent, reports Mark Mills. [Manhattan Institute, February 2014]

• More black babies were aborted in New York City in 2012 than were born alive, reports Michael Chapman. [CNSNews.com]

Posted on 02/20/14 04:21 PM by Alex Adrianson

Daily Links: Minimum Wage Costs Jobs, More ObamaCare Trouble, IRS Rules Are for You not Them

• A review of 528 studies on economic policy finds that states that tax less, spend less, regulate less, and protect economic freedom more have more economic growth than states that tax more, spend more, regulate more, and protect economic freedom less, writes John Hood. [Reason, February 17]

• Raising the minimum wage would lift a million workers out of poverty, but it would cost half a million low-income workers their jobs, says the Congressional Budget Office. CBO also finds only one-fifth of the wage gains would go to households in poverty; but raising the Earned Income Tax Credit (which doesn’t cost anybody a job) would provide benefits exclusively to the working poor. [AEIdeas, February 19]

• Eliminating Fannie Mae and Freddie Mac would have negligible effects on mortgage rates and homeownership; but it would reduce the amount of housing debt and the number of risky loans, calculate John Ligon and Norbert Michel. [The Heritage Foundation, February 7]

• False advertising? Tennessee is not really an income tax-free state, writes Lindsay Boyd. [Beacon Center of Tennessee, February 2014]

• Twelve out of 31 Internal Revenue Service executives (39 percent) improperly reported travel expenses as non-taxable, according to the Treasury Inspector General for Tax Administration. [TaxProf Blog, February 18]

• The Obama administration is now considering extending the risk-corridor program—a kind of government-operated reinsurance program for health insurers in the ObamaCare exchanges. That probably means the administration believes the insurance pool going forward is going to be sicker than it had initially projected and that insurers would bolt the exchanges without the risk-corridor program, writes Megan McArdle. Also, the extension is probably illegal. [Bloomberg, February 18]

• The pop band ABBA wore outrageous outfits in the 1970s because Sweden’s tax code gave an exemption for costumes—but only costumes that were so outrageous that they couldn’t be worn anywhere but on stage—says Björn Ulvaeus in his new book. [The Guardian, February 16]

Posted on 02/19/14 01:03 PM by Alex Adrianson

Daily Links: The Acting President, Budget Tricks Widespread, New York Wants to Squeeze Charters

• President Obama has taken a lot of actions that are beyond his statutory or constitutional authority. Elizabeth Slattery and Andrew Kloster have produced a short catalog of those actions. [“An Executive Unbound: The Obama Administration’s Unilateral Actions,” The Heritage Foundation, February 12, 2014]

• About one in five who “signed up for ObamaCare” failed to make their first payment—meaning they’re not really covered by ObamaCare, reports Robert Pear. [New York Times, February 13]

• Twenty-three states are raiding settlement funds, such as the 1998 tobacco settlement, to help balance their budgets. Four states are underfunding their pensions. Four states are selling their assets. The accounting tricks are numerous and widespread. Using data from State Budget Solutions, Luke Rosiak has produced a map showing which states use which accounting tricks to balance their budgets. How many does your state use? [Washington Examiner, February 18]

• Detroit’s public employee pensioners aren’t just innocent bystanders of the city’s bankruptcy; they are complicit in the poor pension governance that contributed to the bankruptcy, writes Andrew Biggs. [The American, February 16]

• Essential government services? Transferring wealth between individuals and funneling money to states make up two-thirds of federal spending, calculates Chris Edwards. [“How to Spend $3.9 Trillion,” Cato Institute, February 2014]

• New York has more charter schools than any city except Los Angeles, and those schools have been found to produce significantly better results than the city’s traditional public schools. But a proposal, backed by Mayor Bill de Blasio (D), to charge rent to charters that are co-located in public schools would put 71 percent of those charters into deficit, finds Stephen Eide. [“Should Charter Schools Pay Rent: Implications for Staffing and Growth,” Manhattan Institute, February 2014]

• Do you have a hidden compartment for hiding your valuables? If so, you may be breaking the law, even if you don’t actually put any valuables in there, reports John K. Ross. [Reason, February 16]

• Constitution … Declaration of Independence … whatever. Federal Judge Arenda Wright Allen mixed them up in his recent decision striking down Virginia’s ban on gay marriage. [ABC, February 14] At least he thought it was important to cite the Constitution.

Posted on 02/18/14 01:01 PM by Alex Adrianson

To Do: Pick a Topic or Two to Examine: Municipal Bankruptcy, Slavery, Poverty, Censorship, and Sex

Figure out what to do about Detroit’s bankruptcy. The American Enterprise Institute will host a panel discussion on the difficult issues of Detroit’s bankruptcy and what the bankruptcy means for the future of municipal finance. The event will begin at 1:45 p.m. on February 18.

Learn about the Douglass-Lincoln Debates. You’ve heard about the Lincoln-Douglas debates between President Abraham Lincoln and Sen. Stephen A. Douglas. Abolitionist Frederick Douglass also engaged President Lincoln in debates through his speaking and writing. Bob Morrison of the Family Research Council will talk about Douglass’s role in moving Lincoln on the issue of slavery. Morrison’s talk will begin at noon on February 9 at the Family Research Council in Washington, D.C.

Hear the story of how Jeffrey Sachs learned that ending poverty is a lot more complicated than he thought. The Hudson Institute will host a talk by Nina Munk on her new book The Idealist: Jeffrey Sachs and the Quest to End Poverty. Munk’s talk will begin at noon on February 20.  

Assess the Internal Revenue Service’s proposed new rules on tax-exempt organizations. The Heritage Foundation will host a panel discussion on the latest developments in the scandal over the Internal Revenue Service’s treatment of nonprofit organizations. The discussion will begin at noon on February 21.

Hear what the women behind Verily magazine think about how women’s magazines talk about sex. The Conservative Women’s Network, a joint project of The Clare Boothe Luce Policy Institute and The Heritage Foundation, will host a talk by Kara Eschbach and Ashley Crouch. Their talk will begin at noon on February 21 at The Heritage Foundation.  

Submit your comments on the proposed Internal Revenue Service rules on what non-profits can and can’t do and still remain non-profits. Those are the rules, remember, that would require you to scrub your website 60 days before an election to make sure you don’t mention anybody who is a candidate for office. The proposed rules and instructions on how to submit comments on them can be found at federalregister.gov. Comments will be accepted until February 27.

• Save the date: Explore fresh ideas for health care reform. The Galen Institute will host a Health Solutions Conference. The event will feature members of Congress who have introduced major reform legislation based on the idea of letting markets work in health care. The program’s luncheon will feature a debate between Manhattan Institute fellow Avik Roy and Wonkblog founder Ezra Klein. The conference will begin at 8:30 a.m. on February 27 at the National Press Club Ballroom in Washington, D.C.

• Save the date: Join leaders in the conservative movement for The Heritage Foundation’s 2014 Resource Bank Meeting, March 26 – 28 in New Orleans. Resource Bank is a must-attend conference of today’s top conservative leaders—policy experts, think tank CEO’s, activists, and donors—filled with strategy sessions, networking, coalition building, and policy collaboration.

Posted on 02/14/14 10:28 PM by Alex Adrianson

Requiring Exceptional Circumstances for Gun Ownership Violates the Second Amendment

The government cannot limit gun ownership to those who show they need a gun because of exceptional circumstances, said the Ninth Circuit U.S. Court of Appeals this week. From Judge Diarmuid O’Scannlain’s opinion striking down San Diego County’s implementation of California’s gun regulations scheme:

Because the Second Amendment “confer[s] an individual right to keep and bear arms,” we must assess whether the California scheme deprives any individual of his constitutional rights. Thus, the question is not whether the California scheme (in light of San Diego County’s policy) allows some people to bear arms outside the home in some places at some times; instead, the question is whether it allows the typical responsible, law-abiding citizen to bear arms in public for the lawful purpose of self-defense. The answer to the latter question is a resounding “no.”

In California, the only way that the typical responsible, law-abiding citizen can carry a weapon in public for the lawful purpose of self-defense is with a concealed-carry permit. And, in San Diego County, that option has been taken off the table. The San Diego County policy specifies that concern for “one’s personal safety alone” does not satisfy the “good cause” requirement for issuance of a permit. Instead, an applicant must demonstrate that he suffers a unique risk of harm: he must show “a set of circumstances that distinguish [him] from the mainstream and cause[] him . . . to be placed in harm’s way.” Given this requirement, the “typical” responsible, law-abiding citizen in San Diego County cannot bear arms in public for self-defense; a typical citizen fearing for his “personal safety”—by definition—cannot “distinguish [himself] from the mainstream.” [Internal citations omitted.] [Peruta v. County of San Diego]

In his opinion, Judge O’Scannlain devoted considerable analysis to the question of what the word “bear” in the Second Amendment means. He concluded that “the right of the people to keep and bear Arms” includes the right to carry a gun outside one’s home. As Walter Olson points out, there is now a split in the district courts on this question. [Cato Institute, February 13]

Posted on 02/14/14 09:22 PM by Alex Adrianson

Were Cancelled Policies Substandard?

Contrary to what many advocates of ObamaCare have claimed, most of the policies that were cancelled because of ObamaCare’s insurance market regulations were not substandard. Alyene Senger provides the details:

Typically, “substandard” refers to plans with limited benefits, which are commonly seen as inadequate because they do not protect against catastrophic costs. These types of plans typically cover routine care, but if there were a major medical event, they might pay only up to a certain amount before leaving the enrollee to pay the rest.

Obamacare gradually phased out these types of plans from 2010 to 2013—completely outlawing them by 2014—by prohibiting both annual and lifetime limits on coverage.

Limited-benefit plans are not nearly as prevalent in the individual market as they are portrayed to be. Of the nearly 16 million enrollees in the individual market in 2012, 725,710 individuals were enrolled in plans classified as limited-benefit plans, and slightly more than a million were in student health plans, which also typically have a limited benefit package. Thus, less than 11 percent of the individual market in 2012 had a plan that could reasonably be considered “substandard.”

Limited-benefit plans are mostly offered by employers in the group market. Indeed, of the temporary waivers received by over 4 million plan enrollees from the Obama Administration for Obamacare’s annual limit caps before they were completely phased out, only 3.7 percent were for individual market plans; the rest were given to enrollees in group market plans. [Internal citations omitted.] [The Heritage Foundation, February 11]

Posted on 02/14/14 08:20 PM by Alex Adrianson

President Obama Really Doesn’t Like ObamaCare

This week, the Obama administration announced a further delay of ObamaCare’s penalties against companies that do not provide health insurance to their employees. That mandate had already been delayed until 2015. Now, companies with between 50 and 99 employees won’t have to worry about the penalties until 2016; and companies with 100 or more employees can avoid fines if they offer health insurance to 70 percent of their employees instead of the 95 percent required by the law.

“Whatever the stated reason for the new delay,” writes Jonathan Adler, “it is illegal.”

The text of the PPACA is quite clear. The text of the Patient Protection and Affordable Care Act provides that the employer mandate provisions “shall apply” after December 31, 2013. The Treasury Department claims that it has broad authority to offer “transition relief” in implementing the law. That may often be true, but not here. The language of the statute is clear, and it is well established that when Congress enacts explicit deadlines into federal statutes, without also providing authority to waive or delay such deadlines, federal agencies are obligated to stay on schedule. So, for instance, federal courts routinely force the Environmental Protection Agency to act when it misses deadlines and environmentalist groups file suit.

Were the express command that the employer mandate take effect in 2014 not enough, other provisions of the PPACA reinforce the requirement. As Michael Cannon points out, the PPACA expressly provides for the amount of the employer penalty to be assessed in 2014, and then provides for the penalties to be adjusted for inflation in subsequent years. Further, the imposition of the employer mandate in 2014 is essential for the proper implementation of other parts of the law. Most importantly, the employer mandate reporting provisions are essential to determining eligibility for tax credits and cost-sharing subsidies in state health insurance exchanges, and the tax credits are to be available beginning January 1, 2014. The tax credits and employer penalties were supposed to take effect together, and no one’s suggested delaying the credits. [Volokh Conspiracy, February 11]

The reason, of course, is that the Obama administration wants to avoid headlines saying that ObamaCare is costing jobs by encouraging companies to get or stay below that 50-employee threshold. It’s not the first time the Obama administration has changed the law on its own to avoid a political problem, as Michael Tanner notes:

Since the law’s enactment in 2010, President Obama has postponed, altered, or done away with at least 16 parts of his signature legislative achievement. These include scheduled cuts to Disproportionate Share Hospitals, the Basic Health Plan option, out-of-pocket caps (in some instances), and small-business-exchange enrollment (Small Business Health Option Programs, or SHOP). He even repealed an entire program, the CLASS Act, although that action was subsequently ratified by Congress. And none of this counts the more than 3,000 waivers granted along the way to individual companies or unions. […]

The health-care law was 2,562 pages and 511,520 words long. We could have saved 511,513 of those if Congress had just written: “The president can do whatever he wants.”

Someday, of course, Democrats may come to regret this precedent. After all, now that we know that laws can be written in disappearing ink, there is nothing, except maybe respect for the constitutional order, to prevent the next Republican president from doing whatever he wants—such as, say, postponing the whole darn mess forever. [National Review Online, February 12]

The Democrats of the future aren’t the Democrats in charge today; and the Democrats in charge today are worried about being in charge in 2016. To that end, the new rules get even weirder. The rules allow a company with over 99 employees to obtain relief from the mandate by firing however many workers it takes to get below the threshold, but only if that company certifies that it reduced its workforce for legitimate business reasons, not to take advantage of the mandate delay. As James Taranto points out, this regulation is not so much a protection for workers as political cover for the administration:

The administration thus acknowledges that its policy creates a perverse incentive and orders employers not to act upon it. But that can’t be enforced. A business will take into account all relevant factors, including the additional costs imposed by ObamaCare, in making decisions about hiring and firing, including whether to terminate employees for poor performance, sell a division, etc. In practice, the new rule is a ban—under threat of criminal liability—on acknowledging the perverse incentive. Call it OmertàCare, a government-imposed conspiracy of silence. [Wall Street Journal, February12]

Posted on 02/14/14 08:01 PM by Alex Adrianson

What’s Next for the Kronies?

A couple of weeks ago, a short video made in the style of a 1980s commercial for action figures with super powers went viral, even though there were no toys for sale—at least they’re not for sale yet. The video wants kids to get excited about the adventures of the Kronies, five superheros who use their super powers to thwart upstart entrepreneurs who want to compete and steal their customers. Their super powers? They’re all connected—politically connected. This piece of guerilla messaging is a product of the group Generation Opportunity. We asked Evan Feinberg, President of Generation Opportunity, a few questions about the project:

InsiderOnline: What are the most interesting responses you’ve gotten about the Kronies? Has anybody said, for example, that the video made him rethink his ideas about the role of government?

Evan Feinberg: My favorite line was from a liberal Huffington Post reporter, Zach Carter, who responded, “This is straight-up right wing propaganda. So why do I like it so much?” He likes the Kronies because it breaks through traditional partisan mental-models. The Kronies go after defense spending, ethanol, and Wall Street banks as readily as they satirize union cronyism.

Our focus is engaging younger Americans to free the future of our country. We’ve been really encouraged to hear feedback from our audience that these videos have been really popular among their friends who are usually politically agnostic or liberal-leaning. We’re breaking down the perception that free-market advocates are in bed with big business. Nothing could be further from the truth. We’re gravely concerned about the collusion of big government and big business.

Finally, we’ve really enjoyed all of the unsolicited user-submissions for new “Kronies” characters. We’re looking forward to investigating whether “Edukator” or “Dr. Blue Shield” can be added to the Kronies lineup.

IO: How do you see work like this fitting into the work that think tanks do to make the case for free markets? Are videos like these a complement to that work, or do you believe think tanks need to communicate differently?

EF: At GenOpp, we’re focused on getting the freedom message out to millions of young Americans. These videos provide us a mechanism to engage our generation with intellectual but fun content. There’s no doubt that policy organizations need to constantly innovate in their tactics if they’re going to communicate effectively with the next generation of Americans.

IO: Are there really going to be Kronies toys?

EF: We hope so! We have so many ideas for how to use these toys to highlight the destructive nature of cronyism between big government and big business. And we’ve got plans for these toys that are educational and pretty funny. Some cronies in DC should be ready!

Posted on 02/14/14 04:03 PM by Alex Adrianson

Ashton Kutcher Notices that Some City Governments Think It’s Still the 1970s

Kelso versus the cartels:

Posted on 02/14/14 02:40 PM by Alex Adrianson

You Might Be a Progressive If …

… you enjoy the television show Downton Abbey. After all, it’s a story about rich people squandering their inheritances, living beyond their means, disdaining those who work, and expecting others to know their place. George Will explains how this show set in post-Edwardian England appeals to Progressive dreams:

This series is a languid appreciation of a class structure supposedly tempered by the paternalism of the privileged. And if progressivism prevails, the United States will be Downton Abbey: Upstairs, the administrators of the regulatory state will, with a feudal sense of noblesse oblige, assume responsibility for the lower orders downstairs, gently protecting them from “substandard” health-insurance policies, school choice, gun ownership, large sodas and other decisions that experts consider naughty or calamitous. […]

“Downton Abbey” viewers should remember the following rhapsodic hymn to capitalism’s unceasing social churning:

“Constant revolutionizing of production, uninterrupted disturbance of all social conditions. … All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air.”

This (from “The Communist Manifesto”) explains why capitalism liberates. And why American conservatives should understand that some people smitten by “Downton Abbey” hope to live upstairs during a future reign of gentry progressivism. [Washington Post, February 12]

Posted on 02/14/14 10:24 AM by Alex Adrianson

Minimum Wage Hike Will Hurt not Help

On Wednesday, President Obama signed an executive order increasing the minimum wage for employees working on federal contracts to $10.10 per hour. At the signing ceremony, the President also urged Congress to raise the federal minimum wage that private employers must pay. [Reuters, February 12]

Increasing the pay of the lowest paid may seem like an easy way to help the poor. There are, however, a couple problems here. First, the President’s executive order might actually be illegal. Andrew Kloster writes:

[T]he Service Contract Act of 1965 requires that any contract for service work with the federal government (for example, security guards or cafeteria workers at federal buildings) include a provision specifying a minimum wage. This minimum wage for a federal contract shall be “determined by the Secretary [of Labor] or the Secretary’s authorized representative, in accordance with prevailing rates in the locality, or, where a collective-bargaining agreement, in accordance with the rates provided for in the agreement, including prospective wage increases provided for in the agreement as a result of arm’s length negotiations” (41 U.S.C. §6703). This minimum wage must at least meet the federal minimum wage, which serves as a floor for such contracts (41 U.S.C. §6704). […]

If $10.10 per hour is the “prevailing” wage in New York for janitorial workers, then federal contracts for janitorial services in New York should set $10.10 as the wage for those services. But if $9.00 per hour is the “prevailing” wage for cafeteria workers in Nebraska, no Executive Order can require federal contracts for those services to pay those workers $10.10. And a contractor denied on that basis would have a viable lawsuit to invalidate that Executive Order. [The Heritage Foundation, January 29]

Second, raising the federal minimum wage doesn’t do much to help the poor, because few of them earn below the minimum wage. But workers who do earn below the minimum wage will be at risk of losing their jobs. Employers will adjust to a higher minimum wage by hiring fewer low-skilled workers and using more high-skilled workers or labor-saving capital. Or they will just make do with fewer workers and reduce their output. The evidence finding such employer responses is considerable. Mark Wilson has reviewed the literature on this question. He notes for example, some of the clear effects of previous minimum wage hikes, including the very first federal minimum wage in 1938:

As an example, with the original 1938 imposition of the minimum wage, the lower-income U.S. territory of Puerto Rico was severely affected. An estimated 120,000 workers in Puerto Rico lost their jobs within the first year of implementation of the new 25-cent minimum wage, and the island’s unemployment rate soared to nearly 50 percent. Similar damaging effects were observed on American Samoa from minimum wage increases imposed between 2007 and 2009. Indeed, the effects were so pronounced on the island’s economy that President Obama signed into law a bill postponing the minimum wage increases scheduled for 2010 and 2011. [Internal citations omitted.] [“The Negative Effects of Minimum Wage Laws,” by Mark Wilson, Cato Institute, June 21, 2012]

Nobody benefits from a job he can’t get. When an employer decides not to hire a worker because the wage he must pay exceeds the value of the worker’s output, the worker is denied an opportunity to gain experience and learn skills that could help him get a higher-paying job in the future. James Sherk points out:

Most American workers started out near the minimum wage: 55 percent began their careers making within a dollar of the minimum wage. However, most minimum-wage workers also experience rapid upward wage mobility. Two-thirds of minimum-wage workers make more than the minimum wage within a year. […] Among those minimum-wage employees who earn a raise, the median worker makes 24 percent more a year later. [The Heritage Foundation, January 21]

Posted on 02/12/14 05:35 PM by Alex Adrianson

Did the Internal Revenue Service Just Invent an Entitlement?

A new report by congressional investigators shows that the Internal Revenue Service was profoundly uncurious about what Congress actually intended in the tax credit portions of ObamaCare. The law authorizes tax credits for people to buy health insurance through an Exchange “established by the State under section 1311.” Yet, when the Internal Revenue Service wrote the rules to implement the law, the agency decided that Congress really intended there to be subsidies both for the state exchanges and the exchanges set up by the federal government in the states that decided not to create their own exchanges.

Since about two-thirds of the states decided not to establish their own exchanges, the IRS decision turns out to be pretty essential to making the whole scheme work. Did the IRS actually look into the question of what Congress intended or did it simply reach the conclusion it needed to reach in order to save the law?

A key finding of the new report, published jointly by the House Ways and Means Committee and the House Oversight and Reform Committee: “[N]one of the seven IRS and Treasury employees interviewed by the Committees were aware of any internal discussion within IRS or Treasury, prior to the issuance of the final rule, that making tax credits conditional on state exchanges might be an incentive put in the law for states to create their own exchanges.” [“Administration Conducted Inadequate Review of Key Issues Prior to Expanding Health Law’s Taxes and Subsidies,” Committee on Oversight and Government Reform and Committee on Ways and Means, U.S. House of Representatives, February 5, 2014]

Surely the agency was aware of the view that Congress intended to restrict the subsidies to state exchanges. After all, as Michael Cannon details at Forbes in his thorough summary of the findings, the IRS official charged with implementing the law’s tax credit provisions testified that she learned about the language now in dispute only a year after the law had been passed from reading an article that made that very case—that Congress intended the restriction as an inducement for the states to create exchanges. Up to that point the language used by the IRS in its draft rules mirrored the language of the law—Exchanges “established by the State.” [Forbes, February 10]

If the IRS did not imagine that such language was limiting, then why did the agency change it in its very own rules?

Posted on 02/10/14 06:59 PM by Alex Adrianson

To Do: Make the Best Arguments for Religious Liberty

Learn how to recast the case for religious liberty. Hadley Arkes will explain how the most compelling case for religious freedom is not merely a plea for tolerance but an argument connecting faith with America’s principles of liberty and the rule of law. Arkes’s talk will begin at noon on February 13 at Hillsdale College’s Kirby Center in Washington, D.C.

Find out how conservatives in Congress are advancing winning conservative ideas. Heritage Action for America will host a day-long Conservative Policy Summit on February 10.

Know what your representative are doing. Michigan voters, make sure you get updated on the most important votes your representatives make. Check out the Mackinac Center for Public Policy’s new VoteSpotter, iPhone app.

Celebrate Canada’s Flag-Day at the Macdonald-Laurier Soiree. The Macdonald-Laurier Institute, one of Canada’s premier free market think tanks, is bringing together parliamentarians, political watchers, public servants, and other Ottawa luminaries to celebrate the great Canadian Prime Ministers in the tradition of Sir John A. Macdonald and Sir Wilfrid Laurier. The Macdonald-Laurier Soiree, the Institute’s signature annual event, will be held on February 12 at 6 p.m. at the Rideau Club in Ottawa.

Assess the state of the American family. The Family Research Council will release its Fourth Index of Family Belonging at noon on February 12. The Index examines the proportion of 17-year-olds who live in an intact married family.

Discover how restrictions on oil and gas exports are getting in the way of our next economic boom. The Cato Institute will host a policy forum on how the export licensing system for natural gas and crude oil is distorting prices, and deterring investment and employment in the oil and gas sectors. The discussion will begin at 11:30 a.m. on February 10.

Submit your comments on the proposed Internal Revenue Service rules on what non-profits can and can’t do and still remain non-profits. Those are the rules, remember, that would require you to scrub your website 60 days before an election to make sure you don’t mention anybody who is a candidate for office. The proposed rules and instructions on how to submit comments on them can be found at federalregister.gov. Comments will be accepted until February 27.

Posted on 02/07/14 10:39 PM by Alex Adrianson

The New Non-Profit Rules Are the Old Non-Profit Rules

A major development this week in the investigation of the Internal Revenue Service’s oversight of non-profit organizations: Patrick Howley reports that the House Ways and Means Committee has obtained an email indicating that the rules that the IRS is now proposing to govern 501(c)4 organizations are not quite as new as they have been made out to be. The email shows that the rules were developed not as a response to the scandal, but during the time that the IRS was investigating conservative nonprofits. The memo further shows that the head of the IRS tax-exempt division, Lois Lerner herself, was involved. Howley reports:

The Treasury Department and Lerner started devising the new rules “off-plan,” meaning that their plans would not be published on the public schedule. They planned the new rules in 2012, while the IRS targeting of conservative groups was in full swing, and not after the scandal broke in order to clarify regulations as the administration has suggested. […]

“Don’t know who in your organizations is keeping tabs on c4s, but since we mentioned potentially addressing them (off -plan) in 2013, I’ve got my radar up and this seemed interesting…,” Treasury official Ruth Madrigal wrote in a June 14, 2012 email to Lerner and others obtained by Ways and Means and provided to The Daily Caller. [Daily Caller, February 5]

Madrigal’s email then provides the text of a post from the Election Law Blog. The post discussed a Fourth Circuit Court of Appeals ruling upholding the Federal Election Commission’s “major purpose” test for determining when a group qualifies as a Political Action Committee subject to disclosure requirements.

It would not be surprising to learn that the FEC and the IRS were taking cues from each other. Recall that before joining the IRS, Lerner was the head of enforcement at the Federal Election Commission, where colleagues remember her as very pro-regulation and in favor of limiting the influence of money in politics. [“Lois Lerner at the FEC,” by Eliana Johnson, National Review Online, May 23, 2013] And last year, the Ways and Means committee unearthed e-mail correspondence showing Lerner may have illegally shared confidential taxpayer information with the FEC. [“Lerner’s FEC Problem,” by Eliana Johnson, National Review Online, August 12, 2013]

As Investor’s Business Daily points out, it now looks like the Internal Revenue Service anticipated as early as 2012 that its standardless inquisition of conservative groups would come under scrutiny, and that the “new” rules it was working on at that time were a way of immunizing itself ex-post facto against the controversy. [Investor’s Business Daily, February 6]

By the way, the proposed rules and instructions on how to submit comments on them can be found at federalregister.gov. Comments will be accepted until February 27.

Posted on 02/07/14 09:35 PM by Alex Adrianson

The American Civil Liberties Union Objects to the New Rules on Nonprofits

It’s not just conservatives who object to the Internal Revenue Service’s proposed rules on what 501(c)4 organizations can and cannot do as tax-exempt organizations. The American Civil Liberties Union this week submitted comments to the IRS that explain in great detail how the rules, if implemented, would outlaw speech about policy issues that is supposed to be constitutionally protected, would further chill lawful speech by replacing one vague standard with another vague standard, and would unconstitutionally prohibit activities that are clearly non-partisan.

By way of illustrating the problem with the Service’s proposed “candidate-related political activity” standard for judging communication by non-profits, the ACLU noted that the rules would require the ACLU to remove from its website the very comments it was submitting to the IRS on its proposed rules:

[W]e note that these comments, when posted to the ACLU’s website and otherwise distributed, would likely qualify as CRPA under the proposed rule during the 60/30-day blackout period, including the rolling blackout period before the 2014 election. The ACLU would have to either remove this document from its website or otherwise determine a way to account for the expense in creating it as CRPA expenditures. [Internal citations omitted.]

The ACLU also argued that the new rules would likely lead to the same kind of standardless inquiries that led to the current scandal:

[V]ague “totality” tests like functional equivalence and the current “facts and circumstances” approach chill too much protected speech. As an abstract matter, a hypothetically reasonable speaker should be able to predict with a reasonable degree of certainty how a hypothetically reasonable listener will interpret an advertisement. History suggests otherwise. This uncertainty is compounded by the tendency of regulators to pile “prophylaxis-upon-prophylaxis” in an attempt to capture anything that could conceivably sway a vulnerable listener. That is, in effect, the rationale behind both the functional equivalence and current facts and circumstances tests. They encourage the government to burn down the house to roast the pig. [Internal citations omitted.]

The ACLU concluded:

In sum, the proposed “bright-line” rule offers a triple whammy for free speech. It suffers from an overabundance of clarity through application to virtually all legitimate issue advocacy during the 60/30-day blackout periods and the presidential rolling blackout. It repeats the sin of the “facts and circumstances” test through its application to all communications “susceptible of no reasonable interpretation” other than express advocacy. And, it paints with too broad a brush in its proposed application to unbiased and non-partisan voter registration activity, GOTV drives, voter education guides and candidate forums. [“Comments on Draft Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities,” The American Civil Liberties Union, February 4]

By the way, the proposed rules and instructions on how to submit comments on them can be found at federalregister.gov. Comments will be accepted until February 27.

Posted on 02/07/14 08:42 PM by Alex Adrianson

Expatriotism Has Reached an All-Time High

More Americans renounced their citizenship in 2013 than in any other year ever, according to figures from the Department of the Treasury:

[Figure from TaxProfBlog, February 6]

People like freedom, and that’s been going away, too. In 2008, the United States had the fifth freest economy in the world. Now it has the 12th freest. [2008 Index of Economic Freedom, The Heritage Foundation and the Wall Street Journal, 2008; and 2014 Index of Economic Freedom, The Heritage Foundation and the Wall Street Journal, 2014] 

Posted on 02/07/14 06:05 PM by Alex Adrianson

Is Treasury Fudging Its Corporate Tax Calculations?

The Department of Treasury has claimed that the United States’ marginal effective tax rate on corporate investment is lower than Canada’s—even though Canada has a lower statutory corporate tax rate. Jack Mintz and Duanjie Chen of the Tax Foundation say Treasury’s calculation is wrong because it excludes effective sales taxes and uses inaccurate property tax rates.

According to the Tax Foundation, the real figures are 35.3 percent for the United States (instead of 29 percent, per Treasury) and 18.6 percent for Canada (instead of 33 percent, per Treasury). By the Tax Foundation’s calculation, the United States has had the highest corporate marginal effective tax rate in the Organisation for Economic Cooperation and Development since 2007, and the second highest in the world since 2009.

The result?

[T]he excessively high corporate income tax rate in the U.S. appears to have led to a smaller corporate sector in relation to the overall economy. Canadian corporate net profit has been well above 10 percent of GDP since 2003 when the corporate tax rate dropped to below 36 percent, and Canadian corporate taxable income also moved steadily to above 10 percent of GDP even during the recent period of financial crisis. […]

In contrast, there were only three years during period of 2000 to 2010 when corporate net profits in the U.S. reached above 10 percent of GDP and there was only one year (2006) when U.S. corporate taxable income reached 10 percent of GDP. [Tax Foundation, February 6]

Posted on 02/07/14 05:15 PM by Alex Adrianson

Epstein’s Version

Richard Epstein makes the case for classical liberalism as distinct from hard-line libertarianism:

It is important to understand the differences in views between the strong libertarian and classical liberal position. Serious hard-line libertarian thinkers include Murray Rothbard and Karl Hess. Rothbard believes nonaggression is the sole requirement of a just social order. For Hess, “libertarianism is the view that each man is the absolute owner of his life, to use and dispose of as he sees fit.” There are large kernels of truth in both propositions. It is quite impossible to see how any social order could be maintained if there were no limitations against the use, or threatened use, of force to enslave or butcher other people, which Hess’s proposition of absolute self-ownership strongly counteracts.

Yet the overarching question is how does a group of people move from the Hobbesian “war of all against all” toward a peaceful society? Hess claims that stable institutions are created by “voluntary association and cooperation.” Again, strong libertarians are on solid ground in defending (most) private contracts against government interference, which is why Lochner v. New York (1905), reviled as it is by most constitutional thinkers, was right in striking down New York’s sixty hours per week maximum labor statute. Yet the hard-line libertarian position badly misfires in assuming that any set of voluntary contracts can solve the far larger problem of social order, which, as Rothbard notes, in practice requires each and every citizen to relinquish the use force against all others. Voluntary cooperation cannot secure unanimous consent, because the one violent holdout could upset the peace and tranquility of all others.

The sad experience of history is that high transaction costs and nonstop opportunism wreck the widespread voluntary effort to create a grand social alliance to limit the use of force. Society needs a coercive mechanism strong enough to keep defectors in line, but fair enough to command the allegiance of individuals, who must share the costs of creating that larger and mutually beneficial social order. The social contract that Locke said brought individuals out of the state of nature was one such device. The want of individual consent was displaced by a consciously designed substantive program to protect both liberty and property in ways that left all members of society better off than they were in the state of nature. Only constrained coercion can overcome the holdout problems needed to implement any principle of nonaggression. [Defining Ideas, February 3]

Epstein goes on to explain how this difference over the hold-out problem leads classical liberals and hard-line libertarians to different conclusions in the areas of taxation, eminent domain, anti-trust regulation, and intellectual property. We’d like to know what our readers think of Epstein’s argument. Please feel free to email your thoughts to us at Insider@Heritage.org.

Epstein’s column, by the way, is called “The Libertarian.” No word yet on whether he plans to rename it “A Libertarian.”

Posted on 02/07/14 04:39 PM by Alex Adrianson

Are Concerns about ObamaCare-Induced Labor Costs Holding Back Employment?

The Federal Reserve’s latest Beige Book has picked up some indications that ObamaCare is indeed holding back hiring. From James Sherk and Jacob Deveney, here are a few excerpts from the Fed’s interviews with bank directors and other key market participants:

• Atlanta Fed: “On balance, many firms expressed continued hesitancy caused by concerns about healthcare reform in terms of their overall hiring plans” (p. VI-3).
• Richmond Fed: “Employers continued to express concern about potential cost increases related to [Obamacare]” (p. V-4).
• Chicago Fed: “Non-wage labor costs also increased, with a number of contacts reporting higher healthcare premiums” (p. VII-3).
• Boston Fed: “Downside risks include the upcoming costs to businesses of compliance with [Obamacare] and the trend toward office downsizing on a space-per-person basis” (p. I-3).
• Philadelphia Fed: “Firms also expected to see the largest increase in health benefits costs compared with other input and labor costs in 2014” (pp. III-1 and III-2).
• Cleveland Fed: “A majority of our contacts cited rising healthcare insurance premiums as a concern” (p. IV-2). [The Foundry, February 3]

Posted on 02/07/14 03:40 PM by Alex Adrianson

Honored for Working for Religious Liberty

The Becket Fund for Religious Liberty has awarded its 2014 Canterbury Medal to Rabbi Lord Jonathan Sacks, Emeritus Chief Rabbi of the United Hebrew Congregations of the Commonwealth:

We had the pleasure of publishing Rabbi Sacks’s remarks at the Foreign Policy Research Institute’s 7th Annual Templeton Lecture on Religion and World Affairs on May 21, 2002. In his speech, Rabbi Sacks proposed that the way to avoid a clash of world civilizations was not to aspire to a universal culture that eliminates differences but to understand that our differences reflect God’s design:

So whether we look at biology or economics, difference is the precondition of the complex ecology in which we live. And by turning to the Bible we arrive at a new paradigm, one that is neither universalism nor tribalism, but a third option, which I call the dignity of difference. This option values our shared humanity as the image of God and creates that shared humanity in terms like the American Declaration of Independence or the UN Universal Declaration of Human Rights. But it also values our differences, just as loving parents love all their children not for what makes them the same but for what makes each of them unique. That is what the Bible means when it calls God a parent.

Sacks concluded:

Those who are confident of their faith are not threatened but enlarged by the different faiths of others. In the midst of our multiple insecurities, we need now the confidence to recognize the irreducible, glorious dignity of difference.  [“The Dignity of Difference—Avoiding the Clash of Civilizations,” The Insider, March 2003]

The Canterbury Medal Dinner will be held on Thursday, May 15, 2014, at the Pierre Hotel in New York City. [Becket Fund, February 6]

Posted on 02/06/14 07:17 PM by Alex Adrianson

ObamaCare Encourages Less Work

ObamaCare’s subsidies make it easier to get health insurance without working; meanwhile the law’s additional taxes reduce workers’ take-home pay, making leisure time seem more attractive. As a result, says the Congressional Budget Office, the nation will work between 1.5 percent and 2 percent fewer hours by 2024 than it would have worked if ObamaCare had not become law. The loss of those hours is equivalent to losing 2.5 million full-time workers.

And, says CBO in its latest report on the budget outlook, low-income workers are more likely to be affected since the subsidies are aimed at helping them. Because the subsidies are phased out as income rises, they create a disincentive to earning more—much like a higher marginal tax rate would. Some workers will drop out of the labor force altogether, says CBO, which projects that the labor force participation rate will fall to 62.5 percent by 2017. (The labor force participation rate for January was 63.0 percent, up slightly from the December figure of 62.8 percent, which was a 35-year low.)

The disincentives to work also include the employer penalty for not providing health insurance, which CBO says will be borne by employees in the form of either lower wages and benefits or fewer job opportunities. CBO explains which workers will see their job opportunities diminish: “[B]usinesses generally cannot reduce workers’ wages below the statutory minimum wage. As a result, some employers will respond to the penalty by hiring fewer people at or just above the minimum wage—an effect that would be similar to the impact of raising the minimum wage for those companies’ employees.” [“The Budget and Economic Outlook: 2014 to 2024,” Congressional Budget Office, February 2014]

The disincentives to work created by ObamaCare’s mix of subsidies and taxes needs to be understood in the context of all the disincentives to work created by the American welfare state. The disincentives were already quite high before ObamaCare. This figure, also based on CBO data, shows the combined effect of federal and state taxes and the effect of means-tested transfer programs.

[figure from “Effective Marginal Tax Rates for Low-Income Workers Are High,” by Salim Furth, The Heritage Foundation, January 8, 2013]

The figure above depicts the effective marginal tax rates of the American welfare state as it existed in 2012. It therefore does not include the increase in effective marginal tax rates created by ObamaCare. ObamaCare adds even more disincentives to the system. Liberals would have you believe that ObamaCare makes things better, since now we can all quite our jobs and go on ObamaCare!

Posted on 02/05/14 05:53 PM by Alex Adrianson

The Inequality Debate Is Missing Something

The folks who worry so much about economic inequality seem to start with the assumption that the really rich don’t deserve their wealth. Thomas Sowell points out that if they were to bother looking into the matter, they would likely discover that most people who amass great wealth do so by convincing a lot of other people to give them their money in exchange for some good or service that makes their lives better. Consider the case of John D. Rockefeller, often identified as one of the robber barons of the 19th century. Sowell writes:

What Rockefeller did first to earn their money was find ways to bring down the cost of producing and distributing kerosene to a fraction of what it had been before his innovations. This profoundly changed the lives of millions of working people.

Before Rockefeller came along in the 19th century, the ancient saying “the night cometh, when no man can work” still applied. There were not yet electric lights, and burning kerosene for hours every night was not something that ordinary working people could afford. For many millions of people, there was little to do after dark except go to bed.

When we ignore the causes of other people’s wealth, we risk ignoring the causes of our own prosperity. Sowell: “From the standpoint of a society as a whole, money is just an artificial device to give us incentives to produce real things—goods and services. Those goods and services are the real ‘wealth of nations,’ as Adam Smith titled his treatise on economics in the 18th century.” [National Review, January 28]

Posted on 02/04/14 06:57 PM by Alex Adrianson

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