Tag: Heritage Foundation

After Boeing Complaint, NLRB Plans Even More Aggressive Action

Hans von Spakovsky and James Sherk of the Heritage Foundation break disturbing news about the radicalized National Labor Relations Board in a post at NRO’s The Corner blog, “The New NLRB: Boeing Is Just the Beginning”:

An internal NLRB memorandum, dated May 10, shows that the board wants to give unions much greater power over employers and their investment and management decisions.

Under current NLRB rules, companies can make major business decisions (like relocating a plant) without negotiating with their union — as long as those changes are not primarily made to reduce labor costs. For example, a business can unilaterally merge several smaller operations into one larger facility to achieve administrative efficiencies. Companies only have to negotiate working conditions, not their business plans.

The NLRB apparently intends to change that. In the internal memorandum, the board’s associate general counsel, Richard Siegel, asks the NLRB’s regional directors to flag such business-relocation cases. Siegel explains that the Board is considering “whether to propose a new standard” in these situations because the chairman of the NLRB, Wilma Liebman, has expressed her desire to “revisit existing law in this area” by modifying the rule established in a case called Dubuque Packing…. (continue reading…)

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Regulations Create Jobs? Yes, the Jobs of Regulators

James Gattuso of the Heritage Foundation applies Bastiat’s “broken windows” fallacy to the arguments of David Michaels, OSHA Administrator, to shattering effect. From “Jobs, Regulations and Broken Windows“:

[Michaels] cited OSHA’s recently withdrawn proposal to limit workplace noise. The standard was criticized for imposing excessive costs. But Michaels argued the requirements would be a boon to private enterprise. “[B]ecause OSHA has a weak noise standard…,” he explained, “U.S. employers have no incentive to buy modern, quieter machines, which means that U.S. manufacturers don’t build them, and there are few jobs in the United States for engineers who could design them.” Imposing mandates would presumably create those jobs, boosting the economy.

That would be a good thing if true. Think of how easy it would be for regulators to rev up the economy. Just place more burdens on businesses, and see the economy grow as they spend money to comply with them. That, however, is simply not the way the world works. Michaels’ argument is nonsense on stilts.

Frederic Bastiat, the 19th Century French economist, refuted the argument that breaking windows produced net economic benefits. Yes, glaziers did well in the repairs, but the work misallocated capital that could be better spent on more productive investments.

It’s not only regulators who base their arguments on jobs without the context of productivity or greater economic good, Gattuso notes.

[Some] have argued that pending FCC “net neutrality” rules would destroy jobs because the marketplace “losers” would be telephone and cable firms who employ large numbers of people, while the “winners” would be lean Internet content firms such as Google and Amazon.com, who have relatively small workforces. But such arguments completely miss the point. The problem with net neutrality rules has nothing to do with protecting fat telephone and cable payrolls. The problem is that, by interfering with innovation and investment, the recently-adopted rules will stymie growth of the Internet. That will probably mean fewer jobs for the economy as a whole – but certainly it would mean fewer benefits for society.

The goal should not be jobs, but wealth creation.

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EPA’s ‘Analysis’ of Clean Air Act Casts Doubt on Regulatory Review

In President Obama’s Executive Order, “Improving Regulation and Regulatory Review,” he instructed executive branch agencies to begin retrospective analyses of their existing regulations. The goal is to determine whether rules “may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.”

For that process to have any value, agencies must undertake it in good faith and engage in serious self-scrutiny. Unfortunately, bureaucracies are usually more interested in justifying their existence and activities, and the regulatory review is likely to be misused for that purpose.

The Environmental Protection Agency recent “analysis” of the benefits of the Clean Air Act provides a clear case in point. Last week the agency issued a news release, “EPA Report Underscores Clean Air Act’s Successful Public Health Protections/Landmark law saved 160,000 lives in 2010 alone“:

WASHINGTON – A report released today by the U.S. Environmental Protection Agency (EPA) estimates that the benefits of reducing fine particle and ground level ozone pollution under the 1990 Clean Air Act amendments will reach approximately $2 trillion in 2020 while saving 230,000 people from early death in that year alone. The report studied the effects of the Clean Air Act updates on the economy, public health and the environment between 1990 and 2020.

Diane Katz at the Heritage Foundation delves into the flawed assumptions, methodological gimmicks, and general spinning in a Webmemo, “Coming Clean on Regulatory Costs and Benefits“:

The report is astonishing for a variety of reasons—not the least of which is the enormous discrepancy between the Obama Administration’s numbers and those of a similar previous study by the Clinton Administration EPA, which pegged the economic benefits of the act to be $170 billion (or 91 percent less than the Obama EPA’s estimates). This magnitude of difference is explained by the unreliable assumptions underlying the Obama EPA’s wildly inflated claims.

Nevertheless, newspaper headlines across the country—and throughout the blogosphere—trumpeted the new cost–benefit calculation as proving regulation to be unquestionably beneficial. The media’s lack of scrutiny is particularly troublesome because, in this instance, the EPA is evaluating itself. Indeed, for every step beyond the agency’s press release, the questionable methodology and leaps of logic are painfully obvious.

As Katz summarizes: “The benefit estimates in the report range from $250 million to $5.7 trillion—a vast difference that indicates vast uncertainty about the EPA’s claims.” This from an Administration that has pledged itself to “sound science.”

Today’s  Washington Examiner reports that Chairman Fred Upton (R-MI) and leaders of the House Energy and Commerce Committee are holding the EPA to account, working to stop the agency from exceeding its authority and misusing the Clean Air Act to establish a national regime of greenhouse gas regulation. The committee’s Energy and Power Subcommittee holds two hearings this week that offer an opportunity to examine the EPA’s activities, including ginned-up analyses: Tuesday on Climate Science and EPA’s Greenhouse Gas Regulations, and Friday on the EPA’s budget.

For now, the EPA’s report suggests the limits of the Administration’s regulatory review:

  • White House to agencies: Go back and review all your old regulations.
  • Agencies to White House: Wow! They’re so much better than we ever thought!
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Heritage Analysis: Lower Corporate Tax Rate Would Spur Growth

From the Heritage Foundation, “The Economic Impact of a 25 Percent Corporate Income Tax Rate,” a WebMemo on taxes:

One way to spur private sector investment in the U.S. and get it into the hands of entrepreneurs would be to reduce the federal statutory corporate income tax rate, which is currently 35 percent.

The Heritage Foundation’s Center for Data Analysis (CDA) conducted a dynamic simulation of a reduction of the corporate income tax rate to 25 percent, comparing it to a baseline forecast of the economy with the current policy of a 35 percent corporate rate.[1] The results of this simulation show the U.S. economy growing faster than the baseline in the 2011–2020 forecast horizon.

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From Heritage: The Regulations Grow, the Costs Mount

From The Foundry, the Heritage Foundation’s blog, “Red Tape Rising

Next January the Environmental Protection Agency (EPA) is set to issue new regulations on emissions from boilers used in facilities like oil refineries, paper mills, and shopping malls. The EPA claims their new regulations will only cost the economy $9.5 billion by 2013. But the American Chemistry Council says the cost will surpass $20 billion and kill 800,000 jobs. Who is right? We don’t know. But what we do know is that if you total up all of the new regulations already passed by the Obama administration last year, using their own cost estimates, fiscal 2010 saw the largest increase in regulatory burdens placed on the U.S. economy in the nation’s recorded regulatory history.

According to a report released last month by the Small Business Administration, existing total regulatory costs already amount to about $1.75 trillion annually. This “hidden tax” on the economy is nearly twice as large as the sum of all individual income taxes collected last year. Adding to this burden, federal agencies promulgated 43 new rules during the fiscal year ending September 30, 2010. The total cost of these rules, each one individually calculated by the Obama administration itself, was $28 billion. Only two of these new rules reduced regulatory costs, and then by only $1.5 billion. On net, the Obama administration inflicted $26.5 billion in new regulatory costs on the economy last year.

Not surprisingly, the EPA is the most aggressive, most costly regulatory agency.

This “Morning Bell” blog post brings to our attention the new Heritage background paper, “Red Tape Rising: Obama’s Torrent of New Regulation,” documenting the alarming rise of federal regulation in fiscal year 2010.  A chart tells the story:

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Self-Interested Polling, Questionable Results

WashingtonPost.com gave big play Wednesday to a new poll that included questions about the recent U.S. Supreme Court decision in Citizens United v. FEC, which overturned the statutory ban on independent political advocacy by corporations and unions. The limits imposed by the Bipartisan Campaign Finance Reform Act unconstitutionally infringed upon First Amendment rights, the court ruled.

The online story was headlined, “Large majority opposes Supreme Court’s decision on campaign financing“:

Americans of both parties overwhelmingly oppose a Supreme Court ruling that allows corporations and unions to spend as much as they want on political campaigns, and most favor new limits on such spending, according to a new Washington Post-ABC News poll.

Eight in 10 poll respondents say they oppose the high court’s Jan. 21 decision to allow unfettered corporate political spending, with 65 percent “strongly” opposed. Nearly as many backed congressional action to curb the ruling, with 72 percent in favor of reinstating limits.

Unfettered corporate spending? No. Direct corporate campaign contributions to political candidates remain prohibited. The two questions posed in the poll also simplify the ruling to the point of inaccuracy:

35. Changing topics, do you support or oppose the recent ruling by the Supreme Court that says corporations and unions can spend as much money as they want to help political candidates win elections? Do you feel that way strongly or somewhat?

36. Would you support or oppose an effort by Congress to reinstate limits on corporate and union spending on election campaigns? Do you feel that way strongly or somewhat?

First, we doubt many in the public are aware of the Citizens United ruling, so a polling story that emphasizes the “strong bipartisan sentiment” for limits oversells the case. As Jeff Patch of the Center for Competitive Politics wrote in a news release, “Campaign finance is an incredibly complex legal framework, and most Americans have an incentive to remain rationally ignorant about the laws and regulations at issue.” (It’s an excellent release that rebuts the ABC/Post’s polling, also noting the vociferous campaign some political interests have mounted against the decision.)

We’d argue, as well, that polling questions should include reference to the U.S. Constitution or the First Amendment, since speech is at the heart of the issue. You could just as well ask: “Do you support or oppose the recent ruling by the Supreme Court that says the U.S. Constitution protects the right of corporations and labor unions to spend money in support of candidates before an election?” The public’s response would be different. Add in the phrase “free speech rights” and the response would change again.

As is typical of the coverage of this issue, the Post account also omits the self-interest of the newspaper industry in supporting limits on corporations’ speech. The McCain-Feingold campaign finance law specifically exempted the media from its restrictions on political advocacy.  Newspapers can spend money to pay the writers and other staff, supply the equipment, heat the building and distribute the product that includes an editorial before an election that says, “This is a bad idea and you should vote against Candidate X.” Any non-media corporation that did exactly the same thing would have violated the law. McCain-Feingold magnified the power of newspapers and their editorials.

Hans von Spakovsky of the Heritage Foundation has just released a new Legal Memorandum that discusses many of these issues from a legal and Constitutional perspective, “Citizens United and the Restoration of the First Amendment.” The article examines the legislative various proposals in the wake of the Supreme Court’s ruling to invent some new limits against advocacy, and concludes they still run afoul of the First Amendment. Unlike the ABC/Post poll, his arguments are founded in the U.S. Constitution.

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Taxes

From the Heritage Foundation’s budget expert, Brian Riedl, an analysis of President Obama’s FY2011 budget, “Obama’s Budget Seeks $2 Trillion More in Spending and Deficits Than Last Year.” Riedl highlights the unprecedented deficit spending, but in discussing economic growth, the immediate concern should be the tax increases.

President Obama bases nearly all of his (modest) deficit reduction on tax increases. Although no economic theory justifies raising taxes during a recession, he would impose nearly $1 trillion in tax hikes for 3.2 million upper-income families and small businesses. He would eliminate tax breaks for charitable giving and the mortgage interest deduction for millions of Americans.

President Obama has endorsed a cap-and-trade bill that would cost more than $800 billion over the next decade. He has also endorsed substantial tax hikes to finance health care reform. All told, tax increases would exceed $2 trillion, yet they are still not enough to prevent a $1 trillion annual deficit by 2020.

In imposing these new taxes, the Obama Administration would damage the global competitiveness of U.S. manufacturers and other businesses.  A report by the Tax Foundation documents that U.S. competitors are going in the opposition direction, reducing corporate taxes to promote growth, “OECD Nations Continue Cutting Corporate Tax Rates While U.S. Stands Still (Federal Plus Provincial/State Corporate Tax Rates for OECD Countries, 2008-2009).

Less competitive = fewer sales = stagnation = fewer employees. So much for JOBS!

The recent analysis by the Milken Institute, “Jobs for America,” concludes that reducing the U.S. corporate income tax rate to match the OECD average would trigger new growth. By 2019, it could boost real GDP by $375.5 billion (2.2 percent), create an additional 350,000 manufacturing jobs, and increase total employment by 2.13 million.

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Why a Personal Mandate in Health Care Bill is Unconstitutional

Health care bills in both the House and Senate require individuals to purchase health-care coverage if they are not covered through some other program, a “compulsory contract.” In a new Legal Memorandum from the Heritage Foundation, Randy Barnett, Nathaniel Stewart and Todd F. Gaziano explain “Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional”:

The purpose of this compulsory contract, coupled with the arbitrary price ratios and controls, is to require many people to buy artificially high-priced policies to subsidize coverage for others as well as an industry saddled with other government costs and regulations. Congress lawfully could enact a general tax to pay for these subsidies or it could create a tax credit for those who buy health insurance, but that would require Congress to “pay for” or budget for the subsidies in a conventional manner. The sponsors of the current bills are attempting, through the personal mandate, to keep the transfers entirely off budget or–through the gimmick of unconstitutional taxes or penalties they dub “shared responsibility payments”–make these transfers appear to be revenue-enhancing.

This “personal responsibility” provision of the legislation, more accurately known as the “individual mandate” because it commands all individuals to enter into a contractual relationship with a private insurance company, takes congressional power and control to a striking new level. Its defenders have struggled to justify the mandate by analogizing it to existing federal laws and court decisions, but their efforts do not withstand serious scrutiny. An individual mandate to enter into a contract with or buy a particular product from a private party, with tax penalties to enforce it, is unprecedented– not just in scope but in kind–and unconstitutional as a matter of first principles and under any reasonable reading of judicial precedents.

Defenders argue for the mandate by saying, “Well, you have to buy auto insurance to drive,” a false comparison demolished by the authors. The Heritage paper also addresses Commerce Clause and Taxing Clause issues and concludes that the Supreme Court would be unlikely to uphold legislation that included the mandate.

News coverage of the admittedly mind-bogglingly complex, thousand-plus page health care bills has mostly kept away from the personal mandate issue, save for some discussion of the Massachusetts precedent. These important questions of Constitutionality and liberty deserve more attention.

UPDATE (9:35 a.m.): Via The Volokh Conspiracy, a Heritage video of Sen. Orrin Hatch (R-UT), Barnett and Eugene Volokh on the unconstitutionality of the health care mandate. (Hat tip: Glenn Reynolds.)

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Repealing Transparency at the Department of Labor

A new web memo from the Heritage Foundation charts the Department of Labor’s march in reverse on transparency requirements for labor unions. From “Decreasing Union Transparency: A Step Backward for Workers“:

President Obama campaigned on a platform of transparency and opposing special interest lobbyists. However, his DOL has violated both of those principles by revoking the improvements in union financial transparency that Secretary Chao implemented.

Union members deserve to know how their dues are spent. It protects them from corruption and allows them to hold their union accountable for bad decisions, such as the SEIU’s close relationship with the now-disgraced ACORN. Congress should act to protect workers if the President will not.

See also Mark Hemingway at The Washington Exmainer, citing how the reporting requirements gave members of Denver United Food and Commercial Workers Local 7 enough information to inspire them to vote out their longstanding president, Ernie Duran, for nepotism and overspending.

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Health Care Costs, Costliers, Costliests

From The Heritage Foundation, reporting on a new study released by the American Health Insurance Plans conducted by Price Waterhouse Coopers, “‘Reform’ Means You Pay More for Health Care”:

A major new report confirms the worst fears of many: Health care reform will raise the costs for most Americans—by about 18% on average. That is on top of existing inflation of health coverage.

Once the plan is fully phased-in (by 2019), a typical family of four would pay an extra $4,000 each year.

When combined with existing inflation, costs would rise from today’s $12,300 annual average to $25,900. Of that 111% increase, $9,600 is due to existing factors uncorrected by the legislation, and $4,000 due to additional costs created by the legislation.

Reuters, “White House blasts health insurance sector report,” highlights the campaign-style response from the Administration.

“This is a self-serving analysis from the insurance industry, one of the major opponents of health insurance reform,” White House spokesman Reid Cherlin said. “It comes on the eve of a vote that will reduce the industry’s profits. It is hard to take it seriously,” he added.

Even more predictable, “Advocacy groups jumping on AHIP report.”

Isn’t it possible that the AHIP report is generally accurate and worthy of consideration?

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