Freedom Line Blog

In our Liberty Update this week, we highlight the new 2014 Index of Economic Freedom, which itself highlights the critical importance of property rights and free trade in generating prosperity.  The facts, and that correlation, are simply beyond dispute.

On that note, current Trans Pacific Partnership (TPP) free-trade agreement negotiations provide a critical opportunity to upgrade intellectual property (IP) protections that have gradually become outdated since the landmark North American Free Trade Agreement (NAFTA) was signed two decades ago.  That was the expert conclusion of Mark T. Elliot, Executive Vice President of the U.S. Chamber of Commerce’s Global Intellectual Property Center, in testimony this week before the House of Representatives at a hearing entitled “NAFTA at Twenty:  Accomplishments, Challenges, and the Way Forward.”

At the time of signing, NAFTA intended to create the best levels of IP protection and enforcement…  It was a testament to how important IP was viewed by Mexico, Canada, and the United States.  However, as this was signed twenty years ago, this level of IP protection is now a very low bar in 2014.  In 2012, the Chamber released an International IP Index, a comprehensive review of the intellectual property environment in 11 key markets based on existing international standards and best practices.  The United States, the United Kingdom, and Australia all perform well in the Index…  Mexico and Canada, however, rank closer to the likes of Russia, Malaysia, and China.

In Mexico, however, we continue to see progress… and the business community has been working productively with the Mexican government.  In contrast, Canada’s relative low score is a result of wide-ranging IP problems including:  enforcement, weak on membership and poor ratification of international treaties, and significant problems with patent and copyright laws.  Canada is the largest trading partner for the United States… [making] it all the more bewildering to the business community at how substandard Canada’s IP system is.”

When NAFTA was signed, it was an idea ahead of its time.  And as former Clinton Administration Chief of Staff Thomas “Mack” McLarty noted a recent Wall Street Journal commentary, the results have been spectacular:

U.S. trade with Mexico and Canada has tripled to more than $1 trillion a year, supporting millions of American jobs.  The U.S. exported more last year to Mexico than to Brazil, Russia, India and China combined; and more to Canada, with 35 million people, than to the European Union, with 500 million…  NAFTA also opened the door for free trade agreements across Latin America, a catalyst for economic and political reforms.  Mexico was transformed from one of the most closed economies in the world to one of the most open, and it subsequently threw off decades of one-party rule.   Today, U.S. products make up 40% of the contents of goods imported here from Mexico (compared with 4% in goods imported from China).  An integrated market boosts exports and imports, and helps keep good jobs at home.”

Today, we face a perfect opportunity to improve upon NAFTA’s good thing.   As Mr. Elliot testified:

2014 will present many opportunities for the United States, Canada, and Mexico to further improve their IP environments…  In particular, all three countries are participants in the Trans Pacific Partnership (TPP) Agreement negotiations.  The TPP is being negotiated between 12 different countries, and it is essential that it include robust standards for IP protection, using the Korea-U.S. free trade agreement as a model and providing 12 years of regulatory data protection for biologic products.  We encourage the U.S., Canadian, Mexican, and all TPP negotiators to uphold their positions and protect IP from the efforts to weaken existing laws and norms.  The TPP provides the U.S., Canada, and Mexico the opportunity to stand shoulder-to-shoulder in support of strong IP protections, innovation, and access to the creations and inventions of the 21st century.  A TPP agreement that includes a high-standard IP chapter is good for jobs and good for international trade.  The TPP will also allow Canada to raise its IP standards, promote innovation, and bolster its growing economy.  2014 should be the year when the North American neighbors work together to improve each other’s IP environments and the IP environments of countries around the world.”

Free trade and strong IP rights are critical components of economic freedom, which the latest Index of Economic Freedom shows is causally related to a nation’s prosperity.  America, Canada, Mexico and the other negotiating nations face an important opportunity in 2014 to improve upon both, which will boost our prosperity at a time when we desperately need it.

Farm subsidies are wrong on principle. It’s fundamentally unjust to take money from taxpayers and funnel it to other citizens just because of the industry in which they work. If farmers need that money to stay afloat, that’s a sign that their business model isn’t working and that they either need to adjust or leave the practice entirely. If they are self-sufficient, then they don’t need the money in the first place.

Even if you accept the case for farm support in the abstract, however, you have to be mortified at how it plays out in practice. As Susan Ferrechio notes in the Washington Examiner:

To illustrate just how far the subsidy program has strayed from its original purpose, [watchdog group] Open the Books calculated payments going to three major cities with few, if any, modern ties to farming: Washington, D.C., New York City and Chicago. Taxpayers sent $30 million to those residents over the past four years to compensate them for converting farmland to conservation areas and for growing soybeans, cotton, corn, rice and other crops.

The big-city farm subsidies show that savvy landowners are legally maximizing a return on their real estate investments at the expense of taxpayers, [Open the Books founder Adam] Andrzejewski said. They buy land, hire a farm manager and collect a check from the federal government, he said.

This would be a good time to remember Nancy Pelosi’s complaint during last fall’s budget negotiations: “The cupboard is bare. There’s [sic] no more cuts to make.” Perhaps the cupboard deserves another look.

James Taranto draws attention to an adverse selection problem revealed by the newest federal Obamacare enrollment numbers: More women than men are signing up for health insurance.

The gap between women and men enrollees is troublesome for President Obama’s signature law because women, on average, consume more health services than men. That higher rate of spending drives up the cost of future premiums for everyone.

Of course, women are a larger percentage of the population than men, so as long as the ratio on the federal exchange mirrors the ratio in the population, all should be well.

Except that current enrollment numbers – 54% women to 46% men – don’t mirror the population (where adult women outnumber adult men by a slight 50.3%).

It gets worse. “A 54% to 46% enrollment difference means that only 85.2 males are enrolled in Obamacare for every 100 females,” writes Taranto. Put simply, “Obamacare is missing more than 13 men for every 100 women who’ve signed up.”

Obamacare needs more men in its exchange pool just like it needs more young and healthy people – to pay for others with higher rates of health spending (i.e. women and older people, respectively). That the federal exchange is failing to attract people to pay more for coverage they don’t need is proof that everyday Americans aren’t the sheep central planners envision.

Thank goodness.

Get ready for more presidential overreach.

Today, Barack Obama convened his first Cabinet meeting of the year. Unwilling to negotiate with Republicans in Congress, the President threatened to bypass the legislative process in order to impose his preferred policies through executive orders.

“I’ve got a pen and I’ve got a phone,” CBS’ DC affiliate quotes the President telling Cabinet members. “And I can use that pen to sign executive orders and administrative actions that move the ball forward in helping to make sure our kids are getting the best education possible, making sure that our businesses are getting the kind of support and help they need to grow and advance, to make sure that people are getting the skills that they need to get those jobs that our businesses are creating.”

Quick, grab the pen and unplug the phone!

What Obama is promising is to intervene in every stage of an American worker’s lifecycle, without any input from the 535 people elected to represent their diverse interests in Congress. Instead, he will rely on the accumulated wisdom of the bureaucratic and trade association elites to impose change in a centralized, top-down fashion.

It’s as if after five years of running annual trillion dollar deficits, destabilizing the health insurance market, destroying the coal industry and presiding over the largest increase in food stamp use in history the President thinks he needs to increase his influence over the nation’s economy.

It would be better if instead of rushing to issue a flurry of short-lived orders President Obama instead took the remainder of his lame duck tenure for what it is: An opportunity to see the big picture and exercise some humility.

Republicans are interested in talking about poverty reduction. Obama – whose upcoming State of the Union speech is rumored to include a section on income inequality – should meet them half way. Have a real conversation. In private and in public. Elevate thoughtful opponents like Paul Ryan so that the American people see two powerful intellects engaging a serious issue in a respectful way. In short, dabble in statesmanship.

Obama’s executive orders will expire the moment he leaves office. They will also incite partisan opposition, and rightly so since each will represent an end-run around the lawmaking process.

Mr. President, you can do a lot better than your so-called “pen-and-phone” strategy. America deserves it.

Two years ago President Barack Obama decided to appoint three new members to the National Labor Relations Board, even though none of them could clear the U.S. Senate.

Blocked from getting what he wanted, President Obama installed the nominees anyway, arguing that the Senate was on recess; a move allowed under the U.S. Constitution’s Recess Appointments Clause.

There was just one little problem. The Senate had not recessed.

Republicans in the chamber anticipated Obama’s move and negotiated an agreement with majority Democrats to keep the Senate open every three days during the Christmas and New Year’s break in order to conduct business. Thus, as far as the Senate’s own records are concerned, the body never went on recess. By refusing to give its consent, the chamber, in effect, told Obama to nominate three new people.

He declined.

The fight now is before the Supreme Court, which today heard oral arguments from the Obama administration and counsel representing 45 members of the Senate Republican caucus, among others.

While there are a host of arcane and at times interesting constitutional questions to consider this particular case boils down to whether the Court thinks the President or the Senate has the final say as to when the Senate is in session.

The answer should seem obvious, but don’t underestimate the Court’s ability to choose wrongly.

Victory for President Obama in this suit would be a body blow to the Constitution. The Senate’s ‘advise and consent’ role is designed to ensure that only those qualified for high governmental service actually serve in such posts. Yes, the confirmation process is political, but that’s the name of the game when one is a political appointee. Sometimes you lose.

Once again, we have an instance where President Obama, unwilling to compromise, is trying to impose his will by fiat, constitutional processes be damned.

The Court’s ruling is expected in late June. For the good of the republic, it should find a way to rein in an out-of-control executive.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Karl Rove draws some much needed attention to the specific provision in Obamacare that increases the price young and healthy people pay for health insurance.

The “Adjusted Community Rating” in the law contains a ban on charging anyone a premium more than three times someone else’s. This new 3:1 ratio, called an “age rating band,” effectively prohibits insurers from pricing their product according to the age, health and lifestyle of the individual consumer (since to liberal ears that would be impermissible discrimination).

But by requiring insurers to treat everyone as if actuarial factors didn’t matter, Obamacare forces insurance companies to extract higher premiums from young and healthy people to pay for the care of older and sicker folks.

That’s why young people are paying more for health insurance under the misnamed “Affordable Care Act.”

As a policy matter, Obamacare insurance plans act as a wealth transfer from younger to older Americans.

Not that you’ll hear anyone in the Obama administration point that out. In fact, as Rove observes, they’re saying just the opposite.

Despite logic and evidence to the contrary, the National Press Secretary for the Department of Health and Human Services said last week that Obamacare “is making health insurance more affordable for young adults.”

Except that it isn’t. And unlike much of what the Obama administration says about Obamacare, that’s no lie.

Slowly returning from the holiday deep freeze, the political media has spent most of this week fixated on the scandal out of New Jersey, where the Port Authority closed two of the three lanes leading to the George Washington Bridge back in September, causing serious traffic jams for days.

That story turned into a firestorm after it started to become clear earlier this week that allies of New Jersey Governor Chris Christie had engineered the traffic jams as political punishment for the Democratic mayor of Fort Lee, New Jersey (where the bottleneck occurred), who had failed to endorse Christie’s reelection. A few thoughts:

— What makes the made-to-order traffic jam so singularly offensive is its thoughtless victimization of ordinary citizens who had nothing to do with the political infighting. Politicians are always going to engage in this sort of petty one-upmanship. Treating the voters as little more than collateral damage in the process, however, is the height of irresponsibility and makes a mockery of the notion of “public service.”

— Even putting the propriety of the act aside, this whole affair wasn’t even a particularly shrewd exercise in brass knuckle politics. Christie was a Republican governor with a commanding lead in a Democratic state. Failing to get the endorsement of the Mayor of Fort Lee was hardly going to make or break his campaign. And, of course, any reasonable cost-benefit analysis would have factored in the potential damage to the governor of this story coming out (Imagine if Christie had been dealing with the fallout from this story just before the November election instead of just after the new year).

— Like a lot of conservatives, I’m wary of Christie on a handful of issues. That said, his “talk until there aren’t any more questions” press conference yesterday was a superb exercise in crisis management. He took responsibility, fired the people involved, apologized, and demonstrated the kind of accountability that we rarely see in the midst of scandal. He also vehemently denied that he had anything to do with the shutdown, which is probably true—his assertions were so forceful yesterday that his political career would likely be over if it was revealed that he was lying.

— The media (and, to some extent, the general public) need to be a little bit more realistic about executive accountability. As the head of New Jersey’s executive branch, Christie is, of course, ultimately responsible for what goes on underneath him. That’s not quite the same thing as being culpable, however.

In an era of big, complex government, it’s impossible for a chief executive to know every detail of what’s going on beneath him (though it’s important to maximize the flow of information). People are going to make mistakes, sometimes accidentally, sometimes—as in this case—through crass calculation. Governors or presidents shouldn’t be faulted for these things happening unless they’ve directly enabled it. Where they should be held accountable is in bringing this people to heel. By that measure, Christie has done his job very well this week.

This week’s edition of the Liberty Update, CFIF’s weekly e-newsletter, is out. Below is a summary of its contents:

Senik:  Conservatives, Moderates and a Dose of Political Prudence
Lee:  Federal Court Overturns Yet Another Chicago Gun Law
Release:  Broad Coalition Urges Congress to Stop IRS Proposal That Would Effectively Muzzle 501(c)4 Groups

Podcast:  How Liberal Special Interests are Bankrupting Our States
Jester’s Courtroom:  Your Day in Court – Without Knowing About It

Editorial Cartoons:  Latest Cartoons of Michael Ramirez
Quiz:  Question of the Week
Notable Quotes:  Quotes of the Week

If you are not already signed up to receive CFIF’s Liberty Update by e-mail, sign up here.

Nearly half a decade has passed since the last recession ended in June 2009.  Unfortunately, this morning’s monthly jobs report from the Labor Department sent another alarming signal that the worst recovery in recorded U.S. history continues.  That is directly attributable to the destructive economic policies of the Obama Administration, and changes must be made, lest we stall into an entirely new recession.

According to the Labor Department, the economy added a shockingly low 74,000 jobs in December.  That is the lowest total in three years, and it fell 126,000 jobs short of the consensus expectation of 200,000 or more (which was economists’ highest predicted number in several months).  Nobody foresaw that tiny job creation number.  Even more alarming, the labor participation rate (meaning the percentage of all Americans actually choosing to participate in the workforce) fell again to 62.8%, the lowest number since 1978.  That is significant because that was before women had more fully entered the workforce.

The Obama Administration and its apologists may attempt to cite the decline in the overall unemployment rate to 6.7%, but that is not the result of an improving economy or labor market, but rather because some 374,000 additional Americans simply dropped out of the workforce and stopped searching for jobs.  Moreover, the Administration assured us back in January 2009 that the rate would be down to its pre-recession level of 5% by now under its wasteful trillion-dollar “stimulus.”

This sharp slowdown is simply the latest evidence that we haven’t “turned the corner” as Obama has been telling us since as far back as 2010.  Rather, we’re going in circles.  Until we return to the policies of lower taxes, less regulation and smaller government that create jobs and economic growth, that will continue.  The numbers prove that beyond any rational doubt at this point.  The answer isn’t more unemployment checks, but putting America back to work.

In an interview with CFIF, James Lacy, attorney and author, discusses his book “Taxifornia: Liberals’ Laboratory to Bankrupt America” and why tax-and-spend liberals are to blame for rotting state economies.

Listen to the interview here.

Vermont is ready to start the first state-run single-payer system in the United States. There’s just one hitch: It needs federal taxpayers to foot the bill.

A state law passed in 2011 intends to create a state-run entity that “would largely sideline the insurance industry, and instead set up a government-managed system to collect all health care fees and pay out all health care costs,” reports Fox News.

But apparently, a program whose supporters estimate will save Vermont citizens a total of $1.9 billion from 2017-19 isn’t financially viable unless taxpayers living in the other 49 states chip in.

“In order for Green Mountain Care to fully launch in 2017, the health care exchange would have to get approval from the federal government to use federal money to fund the state program,” says the report.

It’s not clear from the article whether the federal money needed comes from Obamacare insurance subsidies or Medicaid (probably the former), but either way people living outside Vermont must fund a program that won’t benefit them, so that Green Mountain residents can live in a liberal utopia.

Simply put, if a majority of Vermont voters want to have a state-run single-payer system, they should raise their own taxes to the level necessary to pay for it.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Yesterday, Noam Scheiber of the New Republic defended Obamacare’s failings as a Machiavellian way for liberals to generate public support for even more government control of health care, eventually leading to the creation of a federally-run single-payer system.

“…the law created potentially millions of hard-working Americans who will have some health insurance; just maddeningly insufficient health insurance,” writes Scheiber. “What are the chances politicians stand up and take notice when these Americans complain?”

Fear not fellow liberals, says Scheiber, Obamacare’s disastrous rollout isn’t all bad news. “When you look at the big picture, the underlying political logic is clearly toward more generous, more comprehensive insurance, the natural upshot of cataloguing the law’s shortcomings isn’t to give them less insurance… It’s to give them more.”

In other words, Obamacare can be seen as a two-step process toward a federally-controlled national health system. First, individuals and employees are severed from their current insurance plans. Then, when they see how insufficient are the subsidies in paying for the government’s mandated coverage options, people will demand more money. The end result is having the feds pick up the entire bill as governments do in countries with socialized medicine.

A messy way to get what liberals want? Yes. But it’s worth the cost to pundits like Scheiber if in the end the liberal dream of nationalized health care becomes a reality.

I’ll add an Amen to what our friend Quin Hillyer preaches at National Review Online today.

Quin writes convincingly about the opportunity Republicans have to take control of Congress by uniting behind the Obamacare alternative proposed by the House Republican Study Committee (RSC).

The short, snappy piece is worth reading in its entirety, but here I want to draw attention to two points I’m glad Quin made. First, there must be an agreement among the DC GOP leadership to adopt the RSC’s framework for reform. Doing so would commit the party to a conservative version of reform that, as Quin demonstrates, will be an easy sell during the campaign season.

Second, that this strategic decision must be joined to an equally unified agreement to abandon any version of comprehensive immigration reform this year. Just as Obamacare is an internally divisive issue among Democrats, so too is immigration reform among Republicans. In a year where Obamacare is already the dominant issue, there is no reason for Republicans to voluntarily drive a wedge between their members on immigration by reviving an issue that’s currently dead. Instead, GOP leaders should try to divide and conquer the Democrats with votes on Obamacare alternatives they can’t afford to oppose.

Conservatives at the RSC have put forward a viable plan. It’s up to GOP leaders to decide whether they want to spend 2014 defeating Democrats, or fighting their own members.

A new study by a top flight team of academic researchers destroys the Obama administration’s premise for expanding Medicaid coverage.

The report, authored by researchers at MIT, Harvard and Columbia, focuses on an Oregon experiment to expand Medicaid that predates Obamacare by about five years. The findings show that giving Medicaid to an uninsured person increases the recipient’s visits to the emergency room up to 40 percent. This “runs counter to government assumptions that the newly insured would choose lower-cost options for care, such as doctors’ offices,” says Businessweek.

Avik Roy speculates that one of the reasons for why Medicaid enrollment increases unnecessary ER visits is that many doctors are refusing to accept new Medicaid patients because the federal government pays less than private insurance for the same service. Difficulty in obtaining primary care results in using the ER as the provider of first resort.

If the Oregon study is an accurate predictor of Medicaid patient behavior under Obamacare – and there is every reason to believe it is – then federal spending is about to soar.

With Obamacare’s Medicaid expansion already enrolling 3.9 million new people, the higher costs associated with emergency room visits could balloon actual spending far above the Obama administration’s current projections.

To make matters worse, previous research from Oregon shows that moving from no insurance to Medicaid does not improve health outcomes. Instead, it shifts the cost of care from the beneficiary to the taxpayer (and the provider who either eats the diminished compensation or passes it on to other patients).

So, to recap, Obamacare’s Medicaid expansion looks very likely to increase costs while having zero impact on the health of the beneficiaries.

Let this be a confirmation that the decision by governors who chose not to expand Medicaid under Obamacare was the sensible, scientifically proven way to go.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

House Republicans are getting ready to ring in the New Year by focusing on Obamacare’s security risks.

As I’ve written previously, personal information entered into an account on Healthcare.gov – the federal Obamacare insurance exchange – may not be protected from identity thieves.

Amazingly, “Under current policy, an agency within the Department of Health and Human Services is tasked with deciding whether there is a risk of harm and whether individuals need to be notified whenever a security breach occurs,” says Fox News. “Republican lawmakers argue that the notification should not be optional.

A memo authored by House Majority Leader Eric Cantor (R-VA) calls for the chamber to vote on bills that would require HHS and its affiliates to notify the public if a security breach occurs.

Democrats are crying foul, but their opposition is self-serving. The only reason not to support the change to mandatory notice is to preserve the false sense of security that no notice means that all is safe.

President Obama once promised that his is “the most transparent administration in history.” The least he could do is apply that promise to the law that bears his name.

According to management experts, there are three pretty obvious reasons why the Obama administration was ill-prepared to make Heathcare.gov work.

“The heart of the issue, many of these people say, is that Obama and his inner circle had scant executive experience prior to arriving in the West Wing, and dim appreciation of the myriad ways the federal bureaucracy can frustrate an ambitious president,” reports Politico. “And above all, they had little apparent interest in the kind of organizational and motivational concepts that typically are the preoccupation of the most celebrated modern managers.”

In other words, no one in an Obamacare leadership position had relevant experience in this area. Worse, the President himself doesn’t appear to think this glaring deficiency matters.

It’s hard to fathom how a program so central to Obama’s legacy could be quarterbacked so poorly for so long, but here we are. The President thought that simply passing Obamacare would be enough to cement his status as one of the nation’s all-time greats. But if Republicans unite around an alternative and win back Congress this year, he’ll be lucky to leave office with anything resembling a workable program.