Freedom Line Blog

Texas Republican Governor Rick Perry is once again visiting Democratic strongholds in an attempt to lure businesses to relocate to the Lone Star State.

Perry is set to meet with business groups in New York and Connecticut, reports National Public Radio. Previously, Perry extolled his state’s low-tax, light-regulation approach in California and Illinois.

But Perry’s initiative is more than just a series of speeches and photo-ops. His moves are coordinated with the work of TexasOne, a coalition of chambers of commerce and corporations funding a $1 million advertising campaign in the targeted states.

YouTube ads like “Texas is Calling” tout the state’s nine consecutive years ranked #1 for business, hosting the world’s largest medical center and welcoming 1,400 new residents a day.

With states like California, Illinois, New York and Connecticut ranking near the bottom in business-friendly taxes and regulations, it’s no wonder Perry sees an opportunity to let wealth creators in those states know there is an alternative.

The Hill reports that the plot is thickening as key members of Congress ask 15 insurance companies to turn over any records related to potentially illegal fundraising to support ObamaCare by Health and Human Services Secretary Kathleen Sebelius.

The request went to industry giants Aetna, Blue Shield of California, Cigna, Coventry Health Care, H&R Block, HCSC Group, Highmark, Humana, Independence Blue Cross, Kaiser Permanente, United Healthcare, WellPoint, America’s Health Insurance Plans, BlueCross BlueShield Association, and CareFirst BlueCross BlueShield.

The controversy first surfaced when the Washington Post confirmed that HHS Secretary Sebelius is personally contacting private members of the health care industry – including insurance providers – to ask that they donate six- to seven-figure sums to Enroll America, a pro-ObamaCare non-profit advocacy group running a national summer and fall ad campaign to promote enrollment in state-based insurance exchanges.

H&R Block, one of the companies contacted by both Sebelius and Congress, has already committed to donating $500,000 to fund Enroll America’s efforts, according to the New York Times.

With its records request, you can bet that Congress wants to know what exactly was said/indicated/promised in the Sebelius-H&R Block conversation, as well as any other communications between top health insurance companies and their chief regulator.

If those requests aren’t honored voluntarily, expect to see subpoenas follow very quickly.

With the first half of President Barack Obama’s regulatory legacy behind us, the folks at Heritage tallied up the cost thus far – 131 new major regulations totaling $70 billion.

Major regulations are those imposing a cost on the economy of at least $100 million or more each year.

In 2012, the two biggest profit-killers were (1) a joint EPA-Dept. of Transportation rule to boost fuel-economy standards that will result in an average new price increase of $1,800.00, and (2) an EPA Utility MACT regulation designed to shut down coal plants by making it cost prohibitive to meet new emissions standards.

On deck are the literally hundreds of regulations spawned by ObamaCare and the Dodd-Frank financial reform law. Since those are still working their way through the bureaucracy, it’s too early to estimate what their financial impact will be. One this is certain, though; they won’t be cheap.

Get a copy of the entire report, Red Tape Rising, here.

This won’t make California Democratic Governor Jerry Brown happy.

On the same day a state court blessed a settlement between Brown’s high-speed rail authority and Central Valley farmers that clears the way to begin construction on a Los Angeles-to-San Francisco bullet train, the federal Surface Transportation Board announced it is claiming jurisdiction over the multi-billion dollar project, according to the San Jose Mercury News.

California officials have filed for an exemption, but that might not be an easy sell since the state has angered environmental activists by seeking exemptions from several state regulations already. I wouldn’t be surprised if the assertion of jurisdiction by STB is the result of some closed door lobbying at the federal level to slow down Brown & Co.’s runaway rail project.

Either way, California taxpayers may get an unexpected ally if STB maintains a presence. Originally approved by voters in 2008 with an advertised price tag of $10 billion, the proposed rail line is now estimated to cost at least $68 billion. If the project is made to comply with the federal versions of state regulations California has exempted itself from, the cost of the program will climb higher still.

Further cost overruns and delays could become California’s version of ObamaCare – an idea with a cost structure too big to work that gives partisans on both sides something to hate.

If conservatives want to make headway in Golden State politics, cheering on the train wreck that is Governor Brown’s high-speed rail boondoggle could be one of the ways to start.

States looking for flexibility under ObamaCare in how to structure and pay for expanding Medicaid can take a hike, according to an analysis by the Heritage Foundation.

States like Arkansas and Indiana have requested waivers from the health reform law’s expansion formula that creates millions of new enrollees at an eventual cost of billions of dollars to states.

The hope was to use existing state-based models like Indiana’s successful health savings account for low-income Hoosiers to increase Medicaid enrollment while retaining cost certainty for state budget writers.

But those hopes were dashed after the federal Department of Health and Human Services released a frequently asked questions (FAQ) sheet that flatly denied any request to deviate from ObamaCare’s one-size-fits-all, open-ended spending commitment for Medicaid.

With this announcement, the Obama administration has definitively articulated its idea of bipartisan reform.  Republican governors who capitulate and get in line are welcomed with open arms.  Those like Indiana’s Mike Pence can take their policy entrepreneurship somewhere else.

Fox News is reporting that the implementation of one of the two state-based, federally-regulated health insurance exchanges is being delayed for an entire year (2015 instead of 2014).

The decision applies to the exchange that will be created to let small businesses shop for affordable insurance policies, not the similar and more well-known exchange for individuals and families looking for insurance.

While it would be easy to blame poor planning and bad execution on the part of the federal government, another explanation seems just as likely.

As originally written, ObamaCare contained a so-called “public option” that would have been offered by the federal government on the exchange as competition with private alternatives.  Conservatives opposed the public option because it threatened to undercut private competitors with an artificially low price since the government, unlike a private business, doesn’t have to make a profit.

After a few years of running private businesses out of the market with artificially low prices, conservatives reasoned, the public option would become the only option as more and more consumers opted for a deal that would be too-good-to-be-true.  When that happened, government could claim the market failed, paving the way for a government-run, single-payer health system.

Of course, the public option was stripped out of the final version of ObamaCare.  But the intent to move America toward government-run health care did not.  Since there’s no requirement under the law for small businesses to provide health insurance, many may now stop bothering if the small business exchange is delayed.  That puts their employees on the individual and family exchange, which as estimates are showing, will cost people much more than originally advertised, even including the government subsidy.

With private insurance unable to deliver a product that covers the heightened floor created in ObamaCare that is also affordable for the people required to buy it thanks to the individual mandate, don’t be surprised if activists and policymakers start clamoring for government to declare a market failure and nationalize the system.

Such a scenario may sound far-fetched, but can anyone seriously say that with the Obama Administration in charge that it’s not at least possible?

In case you haven’t seen it yet, check out the ObamaCare Burden Tracker (pdf), a summary of 157 rules and regulations that will impose an annual paperwork burden of 127,602,371 hours on the American economy.

The ObamaCare Burden Tracker is a joint project of the House Committees on Ways and Means, Education and Workforce, and Energy and Commerce.

Scrolling through one discovers such things as

• The new “340B Drug Pricing Program Forms” (#6) will impose an annual paperwork increase of 14,504 hours
• A new “Medicare Enrollment Application” (#32) will be 70,693 hours
• Navigating the “Process for Obtaining Waivers of the Annual Limits Requirements of PHS Act Section 2711” (#50) will cost 178,183 hours per year
• The process to file a “Letter Requesting Waiver of Medicare/Medicaid Enrollment Application Fee; Submission of Fingerprints; Submission of Medicaid Identifying Information; Medicaid Site Visit and Rescreening” (#71) will add a whopping 1,248,082 hours per year
• Changes to Medicaid eligibility (#77) will mean 21,279,702 new hours
• The form to get credits for Small Employer Health Insurance Premiums (#131) will be 40,189,456 additional hours

There are many, many more.

Though depressing to read, the report is due to a lot of tedious work by hardworking committee staff members.  Because of it, Americans can see just how much economic productivity is being sacrificed in compliance costs.

In this week’s Freedom Minute, CFIF’s Renee Giachino uses data and facts to cool the heated rhetoric of global warming alarmists.

A new GAO report says that Dodd-Frank, the 2010 law that enormously expands the federal government’s regulatory role in the financial markets, is being implemented at a snail’s pace:

Overall, GAO identified 236 provisions of the act that require regulators to issue rulemakings across nine key areas. As of December 2012, regulators had issued final rules for about 48 percent of these provisions; however, in some cases the dates by which affected entities had to comply with the rules had yet to be reached. Of the remaining provisions, regulators had proposed rules for about 29 percent, and rulemakings had not occurred for about 23 percent.

At first blush, limited government conservatives might cheer the slow growth in regulation.  But limited government is only good if it’s for the right reasons; for instance, relying on the current legal (fraud) and market (bankruptcy) framework to police financial bad actors.  Here, however, the delays are due to Dodd-Frank’s perpetuation of flawed regulatory methods.

For example, the report lists obstacles such as regulators with overlapping jurisdictions and inconsistent rules, impossible-to-meet statutory deadlines, and lack of consumer confidence in the regulators’ ability to produce fair and reasonable guidelines.  To cope with these realities, bureaucrats are opting to miss deadlines in favor of more collaborative rules.  But while the benefit may be more buy-in from stakeholders inside and outside the government, the costs are huge to the businessman on the street.

The two biggest casualties are the rule of law and regulatory transparency.  The first is undermined because bureaucrats allowed to ignore statutory mandates are bureaucrats allowed to operate outside the law.  Think a private business could just decide to miss a deadline because compliance is too hard?

Moreover, part of the difficulty complying comes from the lack of transparency.  Businesspeople need certainty in regulations to plan for the future, but that can’t be done when deadlines are waived at the discretion of the regulator.  So instead of being able to act on distasteful yet concrete information, businesses are left wondering how to position themselves as the regulatory elites “collaborate.”

In this type of environment, the safest bet is not to take risks like hiring or expanding.  With government like this, is it any wonder the job market is so lousy?

H/T: The Hill’s RegWatch blog

From Fox News:

By law, each April and October, federal agencies are required to release an accounting of proposed regulations that will have an economically significant impact. That didn’t happen in 2012.

Instead, the Obama administration didn’t release its 2012 regulatory agenda until on the Friday before Christmas.

“The fact that this snuck in after the election, during the holiday season when people were otherwise occupied with their families, is not surprising,” said John Malcolm, senior legal fellow at the Heritage Foundation’s Center for Legal and Judicial Studies.

Since the Dec. 21 release, legal experts and analysts have been pouring through the tens of thousands of pages in order to determine their impact. According to an initial estimate by the American Action Forum, which notes that some entries are missing key fiscal data, the cost of implementing the agenda would top $123 billion. Completing the paperwork could require more than 13 million man-hours.

“It’s massive,” former Deputy Attorney General Tom Dupree said. “There’s no way any human being can sit down and read this whole thing from front to back.”

In a society that prizes both limited government and the rule of law, it’s reasonable to expect regulation to be simple, transparent, and cost-conscious. This new wave of dictates fails on all three counts. And what’s most singularly galling about the whole thing is that there is no one to hold directly accountable. No one who crafted any of these rules ever stood for office or received a single vote.

As ever, when it comes to the administrative state, the delegation of power is the abdication of liberty.

Erick Erickson of Red State on how to visualize the massive cost of regulations emanating from the Obama Administration:

Republicans have an easy story to tell if they would. Every day the Obama Administration issues new regulations on businesses. Some of those regulations are put in place on behalf of one corporate interest against another. Some are put in place because rich players can spread the money around to benefit themselves.

The Georgia Dome covers 8.89 acres, has seven levels, and has 1.6 million square feet of space on all seven levels. It’s roof is 290 feet high. Imagine the Georgia Dome. Now imagine filling up the Georgia Dome with ping pong balls from floor to ceiling. Now imagine one of those ping pong balls — only one — is red.

That one red ping pong ball would represent the parts per million of mercury the Obama Administration wants power companies to remove from coal burning plants. No company can certify the removal because it is so infinitesimal. But because of that regulation, coal power plants are shutting down around the country and energy costs will go up. Those costs will affect American families both in price and in lost jobs.

That is but one of many regulations. There are the healthcare regulations. There are energy regulations. There are all the other regulations. The GOP controls the House of Representatives of the United States. It can tell these stories. It can work to repeal the regulations. It must.

The snippet above is taken from Erikson’s post-mortem of the fiscal cliff deal titled, “A New Agenda.”  The entire piece is well worth a read.

Human Events kindly provides the full text of Senator Marco Rubio’s speech at last night Jack Kemp Foundation ceremony bestowing on him its annual Leadership Award.

While the entire speech is a must-read, a passage on a specific health care reform struck this conservative as especially attractive:

In addition to promoting Flexible Savings Accounts, we should create a health insurance system that focuses on empowering people, not bureaucracy. People should be able to buy a health care plan that fits their needs and budget, from any company in America that is willing to sell it to them. And they should be able to buy it with tax free money, just like their employers buy it for many of them now.

That is, until Obamacare fully kicks in.  Since Obamacare’s regulations on employers only apply to full-time workers, there is a regulatory incentive to minimize the amount of full-time workers one employs.  In order to avoid either the stiff compliance costs or the steep penalties for failing to comply, employers are likely to increase the trend of laying-off workers, scaling back hours, or using contract workers in order to avoid the profit-killing expense of paying for all of Obamacare’s new required benefits.

Because of the entirely predictable response to Obamacare’s mandates, millions of American workers are likely to be caught in an employment trap where they work just enough at two or more jobs not to qualify as full-time employees with benefits.  If Republicans are unable to repeal Obamacare, then fixing the tax code to allow independent workers to buy affordable health plans with pre-tax dollars is one of the next best moves.  Marco Rubio seems poised to lead that charge.

NBC News quotes U.S. Senator-Elect Heidi Heitkamp (D-ND) from a campaign debate on what she would say to President Barack Obama about his energy policy:

“You’re wrong on energy. You’re headed in the wrong direction. You made bad decisions,” she said, according to The Associated Press. “You promised that you would promote clean coal technologies, that you would be a champion of coal, and you haven’t done it.” She also urged the president to replace Energy Secretary Steven Chu and EPA administrator Lisa Jackson.

Certainly, that kind of independence helped Heitkamp eke out a win in a state Mitt Romney won by 20 points.  Now that she’s earned the right to speak her mind in the U.S. Senate, let’s see if she’s willing to make good on her promise.  With the coal industry staring at death by a thousand regulations, the sooner the better.

In my column this week, I note that the Obama Administration refused to meet its legal requirement to publish its upcoming regulatory agenda back in April.  As of today, it failed to do so again in October as required by law. 

We’ve now gone an entire year without the Obama Administration giving Americans – and the businesses that employ them – the information they need to plan for the future.  In response, the job market is frozen and expansion projects are being delayed.  The only reason that makes sense for violating two disclosure requirements is that the White House is waiting until after Election Day to flood the economy with even more regulatory burdens.

If that’s not enough to spur a change, I don’t know what is.

H/T: Daily Caller

Remember this story from Richard Rahn of the Cato Institute the next time you’re looking for an example of how ours is turning into a government of men, not laws:

Use of X-ray body scanners is an example of regulatory deception. If you work in the private sector and spend substantial time around machines or substances that emit radiation, you normally are required to wear tags that measure radiation doses. The Transportation Security Administration (TSA) has exempted itself from that requirement with the argument that the doses of radiation passengers and TSA employees receive from the X-ray body scanners (backscatters) at airports is so low as to cause no more than a trivial amount of extra cancers. They may well be right, but without measuring what employees and passengers actually receive from frequent and sometimes miscalibrated machines, no one knows for sure. Besides, the effect of radiation on the body is cumulative.

The European Union has prohibited backscatters, as have many countries, because of concern about health and safety. TSA has come under great criticism for the use of these machines, particularly when a safer and better technology is available. TSA has not admitted the danger but quietly has been replacing some of the backscatters with millimeter-wave scanners. These machines rely on low-energy radio waves like those in cell phones and thus are believed potentially not to damage a person’s DNA, unlike the backscatters. These new machines are faster because a computer analyzes the image, rather than a guard as with the X-ray machines. They are better at detection and provide greater personal privacy. Still, the question remains, why is TSA phasing out the X-ray machines so slowly and not providing its employees with radiation-detection tags? Private employers probably would be sued over such behavior.

Even though the United Nations’ Arms Trade Treaty negotiations broke down in July, gun control advocates are already promoting a new vehicle to infringe on civilian ownership of firearms.

The new document being discussed at U.N. headquarters is called a “Programme of Action to Combat, and Eradicate the Illicit Trade in Small Arms and Light Weapons in All Its Aspects” (or PoA for short).

As Ted Bromund of the Heritage Foundation reports, so far the PoA isn’t doing much better than the ATT:

The normal approach is to try to walk before you run. At the U.N., though, the response to the PoA’s inability to walk is to recommend running. IANSA wants the PoA to expand to cover ammunition. Parker wants a PoA that would provide a broader framework for the ATT. And McLay believes it should consider further “normative development”—i.e., in future years it should discuss “the issues of civilian possession.” Indeed, on Tuesday at the review conference, IANSA acknowledged that the PoA has served as the basis for “gun control” in many nations and encouraged others to follow along.

IANSA stands for The International Action Network on Small Arms, and as Bromund notes, it is “the leading small-arms-control NGO…”

For some reason, the United States is still involved in negotiations with groups like IANSA.

It’s not often that regulators are so transparent about their ultimate goals.  With the IANSA on record as using the PoA as a basis for gun control, it’s past time for conservatives in Congress to demand that the U.S. pull out of negotiations immediately.  Safeguarding the Second Amendment requires nothing less.

In the words of the Pew Research Center, “No issue relating to business is more politically divisive than the impact of government regulation.”

According to a new Pew survey, 76% of Republicans believe that government regulation of business tends to do more harm than good, but only 41% of Democrats agree.  That’s an enormous 35% difference, but the poll reveals something even more interesting.  Namely, 58% of independents side with Republicans on that question, not Democrats.  Another interesting point from the survey, according to Pew:

Fully 72% of Americans agree that ‘the strength of this country today is based on the success of American business.’ This opinion has endured, largely unchanged, for the past quarter century.”

That’s bad news for Barack “You Didn’t Build That!” Obama and his class warfare campaign theme.

There’s no exercise of government power quite as nauseating when seen up close as a relatively small industry’s attempts to team up with government and either (A) shake down or (B) close down a rival who has built a better mousetrap. In his book “Government’s End: Why Washington Stopped Working” (one of the best political reads of the past few decades, by the way) — a volume dedicated to this trend — Jonathan Rauch describes how Washington D.C. bike messengers, for instance, lobbied heavily against the use of fax machines in the nation’s capital, for no other reason than that they were bad for business (a stand reminiscent of Frederic Bastiat’s famous satirical letter to the French Parliament in which it was claimed that candlemakers were suffering unfair competition from the sun).

This trend is rearing its ugly head again in Washington D.C., where city government is trying to crack down on Uber, one of the great innovations of the smart phone era. Uber is a private car service operating in a handful of major cities that allows you to instantly request a sedan from your smart phone, have it arrive in minutes, and then have all of the billing (including the tip) taken care of straight from your credit card. Uber eliminates all of the inconveniences of the taxi experience (your humble correspondent, for instance, recently waited 45 minutes for a cab in Silicon Valley after being told by dispatchers that it was five minutes away) and usually does so at a cheaper price. And of course, D.C. can’t have that! From the Daily Caller:

Members of the Washington, D.C. City Council haven’t given up on their efforts to bring the efficient and reliable luxury sedan-on-call service, Uber, under the authority of the company’s competitors in the taxicab industry.

Council members previously tried to establish a price floor for the company. More recently, at a July 10 meeting, a number of City Council members voted to bring the sedan service under the authority of the D.C. Taxicab Commission, a regulatory body strongly influenced by the taxi industry.

…

“I was opposed to them not being regulated, period,” councilman and former D.C. Mayor Marion Barry told The Daily Caller. “This was a compromise. I think if it’s not a regulated service, it really has an impact on the D.C. taxi industry.”

Of course it has an impact! That’s generally what happens when someone decides to build a company that can deliver a better product at a lower price.

Let’s hope Uber can resist the legislative strong-arming. At least they have this going for them: there are few inadvertent blessings as sweet as having Marion Barry be your chief antagonist.

We’ve made a bit of a cottage industry here at CFIF of chronicling the downfall of California, a truly great state where metastasizing liberalism threatens to kill its host. Over the weekend, the Daily Caller’s Angelica Malik put the results into sharp relief:

The California Manufacturing and Technology Association found in a recent study that 82 percent of companies surveyed did not consider California when expanding or opening a new facility.

The study also noted that companies looking to expand their operations favored states with proximity to their customers, generous tax incentives, low cost labor, proximity to suppliers and a comprehensible and a favorable tax system.

California ranked last or bottom tier in all of those categories.

This comes on top of the recent news that the Golden State ranked last in CEO magazine’s ratings of state business climates for the eighth straight year.

The upshot: billions in lost revenues, millions in lost citizens, and hundreds of fleeing businesses (with scores more downsizing or dismissing the prospect of heading to California in the first place).

There’s little here in the way of silver linings, except for this: there’s a fair bit of education here for the rest of the nation. If the Lilliputians of liberalism can tie down even mighty California, they can wreak untold havoc anywhere. No one is immune. It’s just a shame that it requires such a significant casualty to convey this point.

If Republicans win control of Congress and the White House in November, expect conservatives to zero in on trying to eliminate the Consumer Financial Protection Bureau.

Created by the Dodd-Frank legislation, CFPB is largely exempted from congressional oversight because it is housed in the unaudited Federal Reserve.  It’s also able to self-fund through fees it sets and assesses on financial institutions.

But though it’s technically an independent agency, CFPB is turning out to be – surprise! – remarkably in synch with the Obama campaign’s anti-capitalist positions.

Piecing together several months-worth of visitor logs, Mary Kissel at the Wall Street Journal presents strong circumstantial evidence of improper coordination between political branch officers and supposedly neutral bureaucratic administrators.

CFPB chief Richard Cordray has been to an Obama cabinet strategy session.  He briefed the press about student loan policy alongside White House Press Secretary Jay Carney and Education Secretary Arne Duncan.  He’s also held calls with the White House Chief of Staff for Policy.  His subordinates are in frequent contact with White House advisors.

Conservative opponents of CFPB’s unprecedented powers and structure like Rep. Patrick McHenry (R-NC) are taking notice.  McHenry sent a letter requesting more details from CFPB officials about its working relationship with the White House.  Though that may seem quaint, remember that Darrell Issa’s investigation of Fast and Furious has largely proceeded by letters of inquiry met with silence, denials, and ultimately admissions.

Kissel puts the process into perspective:

Rep. McHenry’s requests will, in all likelihood, be stonewalled too. But that doesn’t mean that the Congressman’s letter is a waste of time. The 2010 Dodd Frank law gave the consumer bureau an unprecedented—and perhaps even unconstitutional—immunity from traditional checks and balances. If Republicans win a Congressional majority come November and want to eliminate the agency, they have to start demonstrating now to the public why that’s necessary. Letters like Rep. McHenry’s are a good start.

It’s good to know someone is doing the yeoman’s work of reining in a small but important part of the federal bureaucracy.  If McHenry’s letter helps build a case for dismantling CFPB, conservatives will be thanking him for taking steps like this.