From The American Spectator:
3:38 PM (7 hours ago)New Election for Calif. Prop. 23?from The American Spectator and AmSpecBlog by Paul ChesserThat's the talk, as hundreds of thousands of ballots in Fresno County contained illegal, politically-charged language describing the global warming act-postponing measure. The Sacramento Bee reports:
Ballots printed for the county's roughly 380,000 registered voters say Proposition 23 would suspend laws requiring "major polluters" to report and reduce greenhouse gas emissions. That language was thrown out by a Sacramento superior court judge, who ordered several edits to the original language drafted by the attorney general's office, including changing "major polluters" to "major sources of emissions."
The Proposition 23 campaign has demanded that the county "take immediate steps to reprint the ballots remaining to be sent to vote by mail voters as well as ballots to be distributed on election day."
"Fresno County is a county of significant size in California and in a close election, its vote, now tainted by this serious error, could call into question the state results and possibly give rise to an election contest and require a new statewide election on Proposition 23," attorney Colleen C. McAndrews wrote in a letter to the Fresno elections officials.
Officials say it's too late to do anything about the 140,000 mail-in ballots that have already been distributed, and that they will post signs with the correct language at polling places.
This is not insignificant; environmental extremists have been trying to label carbon dioxide emitters (that would be me and you also, readers) as "polluters" to push their fraudulent global warming scenario since they took up the cause. If you were just faintly familiar with the issue, would you be more likely to vote against the measure if businesses were identified as "polluters" rather than "sources of emissions?"
A major screw-up that could require a new election. Not surprisingly, the opponents of Prop. 23 are pooh-poohing the significance of the error.
Friday, October 29, 2010
Un-Happy Days For Milwaukee Entrepreneurs: Brew City Regulations Make It Hard For Businesses To Achieve The High Life
From The Heritage Foundation:
Regulation & Deregulation
Unhappy Days for Milwaukee Entrepreneurs: Brew City Regulations Make it Hard for Businesses to Achieve the High Life
by Jason Adkins
Institute for Justice
October 28, 2010
Milwaukee, nicknamed the Cream City, is the commercial center of Wisconsin, the Dairy State. But layers of red tape are making it difficult for the cream of Milwaukee’s entrepreneurs to rise to the top. The city government imposes a complex maze of regulations that prevent many businesses from ever getting started. Even failed businesses cannot escape the regulatory grip of city officials. At anytime—but especially in tough economic times—the government must get out of the way so that businesses can succeed.
URL: www.ij.org/images/pdf_folder/city_studies/ij-milwaukee_citystudy.pdf
Regulation & Deregulation
Unhappy Days for Milwaukee Entrepreneurs: Brew City Regulations Make it Hard for Businesses to Achieve the High Life
by Jason Adkins
Institute for Justice
October 28, 2010
Milwaukee, nicknamed the Cream City, is the commercial center of Wisconsin, the Dairy State. But layers of red tape are making it difficult for the cream of Milwaukee’s entrepreneurs to rise to the top. The city government imposes a complex maze of regulations that prevent many businesses from ever getting started. Even failed businesses cannot escape the regulatory grip of city officials. At anytime—but especially in tough economic times—the government must get out of the way so that businesses can succeed.
URL: www.ij.org/images/pdf_folder/city_studies/ij-milwaukee_citystudy.pdf
Regulatory Field: Home Of The Chicago Laws
From The Heritage Foundation:
Regulation & Deregulation
Regulatory Field: Home of Chicago Laws
by Elizabeth Milnikel, Emily Satterthwaite
Institute for Justice
October 27, 2010
Especially in such tough economic times, people may be shocked to discover the lengths to which the city of Chicago and the state of Illinois go to discourage entrepreneurs who seek to create jobs for themselves and others. This report examines government-created barriers in industries that have traditionally provided a better way of life for the economically disenfranchised. Economic liberty—the right to pursue an honest living without arbitrary government interference—must be respected by governments at every level.
URL: http://www.blogger.com/goog_2031357855
Regulation & Deregulation
Regulatory Field: Home of Chicago Laws
by Elizabeth Milnikel, Emily Satterthwaite
Institute for Justice
October 27, 2010
Especially in such tough economic times, people may be shocked to discover the lengths to which the city of Chicago and the state of Illinois go to discourage entrepreneurs who seek to create jobs for themselves and others. This report examines government-created barriers in industries that have traditionally provided a better way of life for the economically disenfranchised. Economic liberty—the right to pursue an honest living without arbitrary government interference—must be respected by governments at every level.
URL: http://www.blogger.com/goog_2031357855
No Work In Newark: City Must Free Entrepreneurs
From The Heritage Foundation:
Regulation & Deregulation
No Work in Newark: City Must Free Entrepreneurs
by Jeff Rowes
Institute for Justice
October 28, 2010
Newark faces enormous challenges in good times, but the need to promote economic liberty is even more urgent in today’s economic climate. The fundamental problem with the culture of Newark is that it is government-oriented, top-down and hostile to most grassroots entrepreneurs who are just trying to make it. Mayor Booker should use his innovative approach in education and fighting crime and corruption to unleash the creativity and prosperity of Newark entrepreneurs. Strip away the bureaucracy, make city government responsive to ordinary entrepreneurs, and allow people to make decisions for themselves.
URL: http://www.blogger.com/goog_129729995
Regulation & Deregulation
No Work in Newark: City Must Free Entrepreneurs
by Jeff Rowes
Institute for Justice
October 28, 2010
Newark faces enormous challenges in good times, but the need to promote economic liberty is even more urgent in today’s economic climate. The fundamental problem with the culture of Newark is that it is government-oriented, top-down and hostile to most grassroots entrepreneurs who are just trying to make it. Mayor Booker should use his innovative approach in education and fighting crime and corruption to unleash the creativity and prosperity of Newark entrepreneurs. Strip away the bureaucracy, make city government responsive to ordinary entrepreneurs, and allow people to make decisions for themselves.
URL: http://www.blogger.com/goog_129729995
Miami's Vice: Over-Regulating Entrepreneurs
From The Heritage Foundation:
Regulation & Deregulation
Miami’s Vice: Overregulating Entrepreneurs
by Paul Sherman
Institute for Justice
October 27, 2010
To the millions of tourists who flock there each year, Miami is a tropical paradise. But, for thousands of entrepreneurs, life in Miami is anything but sunny. Although these are difficult economic times for entrepreneurs everywhere, times are especially tough in the Magic City. One survey of the 50 most populous cities in the United States recently placed Miami dead last in terms of job prospects, with nine people unemployed for every job posting. In times like these, the governments should not be standing in the way of people who just want to earn an honest living. But that is exactly what it is doing with the complex web of regulations, red tape and bureaucracy faced by Miami entrepreneurs.
URL: www.ij.org/images/pdf_folder/city_studies/ij-miami_citystudy.pdf
Regulation & Deregulation
Miami’s Vice: Overregulating Entrepreneurs
by Paul Sherman
Institute for Justice
October 27, 2010
To the millions of tourists who flock there each year, Miami is a tropical paradise. But, for thousands of entrepreneurs, life in Miami is anything but sunny. Although these are difficult economic times for entrepreneurs everywhere, times are especially tough in the Magic City. One survey of the 50 most populous cities in the United States recently placed Miami dead last in terms of job prospects, with nine people unemployed for every job posting. In times like these, the governments should not be standing in the way of people who just want to earn an honest living. But that is exactly what it is doing with the complex web of regulations, red tape and bureaucracy faced by Miami entrepreneurs.
URL: www.ij.org/images/pdf_folder/city_studies/ij-miami_citystudy.pdf
Los Angeles Vs. Small Business: City Of Angels No Heaven For Entrepreneurs
From The Heritage Foundation:
Regulation & Deregulation
L.A. vs. Small Business: City of Angels No Heaven for Entrepreneurs
by Michael Bindas
Institute for Justice
October 27, 2010
Los Angeles has a reputation as a city where big dreams can come true—where you can not only get ahead, but make your fortune, as well. Although that reputation maybe deserved with respect to actors, athletes and celebutantes, it holds little truth for the overwhelming majority of folks who are just trying to earn an honest living and support their families as entrepreneurs. Transforming Los Angeles into a city that truly respects and encourages entrepreneurship will take a lot of reforming—of the laws on the books, the procedures followed by government agencies and the culture of the local bureaucracy.
URL: http://www.blogger.com/goog_892238553
Regulation & Deregulation
L.A. vs. Small Business: City of Angels No Heaven for Entrepreneurs
by Michael Bindas
Institute for Justice
October 27, 2010
Los Angeles has a reputation as a city where big dreams can come true—where you can not only get ahead, but make your fortune, as well. Although that reputation maybe deserved with respect to actors, athletes and celebutantes, it holds little truth for the overwhelming majority of folks who are just trying to earn an honest living and support their families as entrepreneurs. Transforming Los Angeles into a city that truly respects and encourages entrepreneurship will take a lot of reforming—of the laws on the books, the procedures followed by government agencies and the culture of the local bureaucracy.
URL: http://www.blogger.com/goog_892238553
Houston, We Have A Problem: Space City Regulations Prevent Entrepreneurs From Taking Off
From The Heritage Foundation:
Regulation & Deregulation
Houston, We Have a Problem: Space City Regulations Prevent Entrepreneurs From Taking Off
by Wesley Hottot
Institute for Justice
October 27, 2010
Houston has a proud history of fostering entrepreneurship. As the city has taken its place as one of America’s great cities, however, it has adopted some of the worst traditions of American municipal government—erecting barriers to entrepreneurship based on vague notions of “beautification” and protection of existing industries. With a new mayoral administration, Houston now has an opportunity to reaffirm its commitment to being an opportunity city.
URL: www.ij.org/images/pdf_folder/city_studies/ij-houston_citystudy.pdf
Regulation & Deregulation
Houston, We Have a Problem: Space City Regulations Prevent Entrepreneurs From Taking Off
by Wesley Hottot
Institute for Justice
October 27, 2010
Houston has a proud history of fostering entrepreneurship. As the city has taken its place as one of America’s great cities, however, it has adopted some of the worst traditions of American municipal government—erecting barriers to entrepreneurship based on vague notions of “beautification” and protection of existing industries. With a new mayoral administration, Houston now has an opportunity to reaffirm its commitment to being an opportunity city.
URL: www.ij.org/images/pdf_folder/city_studies/ij-houston_citystudy.pdf
Red Tape Rising: The Obama Regime's Torrent Of New Regulations
From The Heritage Foundation:
Red Tape Rising: Obama’s Torrent of New RegulationPublished on October 26, 2010 by James Gattuso , Diane Katz and Stephen Keen Backgrounder #2482 Print PDF
Abstract: The burden of regulation on Americans increased at an alarming rate in fiscal year 2010. Based on data from the Government Accountability Office, an unprecedented 43 major new regulations were imposed by Washington. And based on reports from government regulators themselves, the total cost of these rules topped $26.5 billion, far more than any other year for which records are available. These costs will affect Americans in many ways, raising the price of the cars they buy and the food they eat, while destroying an untold number of jobs. With the enactment of new health care laws, financial regulations, and plans for rulemaking in other areas, the regulatory burden on Americans is set to increase even further in the coming year.
The Hidden Tax
The cost of regulation has often been called a hidden tax. Although the total does not appear anywhere in the federal budget, the multitude of rules, restrictions, and mandates imposes a heavy burden on Americans and the U.S. economy. According to a report recently released by the Small Business Administration, total regulatory costs amount to about $1.75 trillion annually, [1] nearly twice as much as all individual income taxes collected last year.[2]
Not all regulations are unwarranted, of course. Most Americans would agree on the need for protections against terrorism, although the extent of such rules is certainly subject to debate. Moreover, regulations are not necessarily inconsistent with free-market principles. Some, such as anti-fraud measures, protect the rights of consumers. But there is always a cost. And, for the same reasons that federal spending is reported, so, too, should regulatory costs.
Record Increases
This regulatory burden has been increasing for some time. During the presidency of George W. Bush, which many mistakenly consider as a period of deregulation, the regulatory burden increased by more than $70 billion, according to agency regulatory impact reports. In FY 2009, which spanned the Bush and Obama Administrations, rulemaking proceeded at a nearly unprecedented rate, with the addition of 23 major rules imposing $13 billion in new costs.[3]
But the available evidence indicates that regulatory costs increased last year at a far greater pace. According to data from the Government Accountability Office, federal agencies promulgated 43 rules during the fiscal year ending September 30, 2010,[4] that impose significant burdens on the private sector. The total costs for these rules were estimated by the regulators themselves at some $28 billion, the highest level since at least 1981, the earliest date for which figures are available.[5] Fifteen of the 43 major rules issued last during the fiscal year involved financial regulation. Another five stem from the Patient Protection and Affordable Care Act adopted by Congress in early 2010. Ten others come from the Environmental Protection Agency (EPA), including the first mandatory reporting of “greenhouse gas” emissions and $10.8 billion in new automotive fuel economy standards (adopted jointly with the National Highway Traffic Safety Administration (NHTSA)). Overall, counting the fuel standards, the EPA is responsible for the lion’s share of the reported regulatory costs—some $23.2 billion.
Among the most costly of the FY 2010 crop are:
Fuel economy and emission standards[6] for passenger cars, light-duty trucks, and medium-duty passenger vehicles imposed jointly by the EPA and NHTSA. Annual cost: $10.8 billion (for model years 2012 to 2016). For automakers to recover these increased outlays, NHTSA estimates the standards will lead to increases in average new vehicle prices ranging from $457 per vehicle in FY 2012 to $985 per vehicle in FY 2016.[7]
Mandated quotas for renewable fuels. Annual cost: $7.8 billion (for 15 years). Utilizing farmland to grow corn and other crops used in renewable fuels will displace food crops, leading food costs to increase by $10 per person per year—or $40 for a family of four, according to the EPA.[8]
Efficiency standards for residential water heaters, heating equipment, and pool heaters. Annual cost: $1.3 billion. The appliance upgrades necessary to comply with the new standards will raise the price of a typical gas storage water heater by $120.[9]
Limits on “effluent” discharges from construction sites imposed by the EPA. Annual cost: $810.8 million. The cost of the requirements will force the closure of 147 construction firms and the loss of 7,257 jobs, according to the EPA. Homebuyers also will bear some of the costs, with an increase in mortgage costs of about $1,953.
Regulatory Reductions Missing in Action
Measures to reduce regulatory burdens, by contrast, were few and far between in FY 2010. Only five significant rulemakings adopted last year reduced burdens. Of these, cost reductions were quantified for only two, for reported savings of $1.5 billion. This leaves a net increase in the regulatory burden of $26.5 billion.
Moreover, one of the five measures—though technically deregulatory in nature—relates to an unparalleled expansion of EPA powers. Due to its determination last year that greenhouse gases are pollutants, the agency is moving to set emissions limits for such gases. To follow the standards in the Clean Air Act would corral millions of currently unregulated “facilities,” including offices and apartment buildings, shopping malls, restaurants, hotels, hospitals, schools, houses of worship, theaters, and sports arenas into the EPA regulatory regime. In hopes of quieting political outrage over so sweeping a dictate, the EPA’s “Tailoring Rule”[10] set a minimum threshold level for regulation. Therefore, fewer facilities would be subject to permit requirements, making imposition of the emissions limits more feasible. Rather than reduce overall burdens, this action actually facilitated increased burdens.[11]
Actual Costs Likely Higher
The actual cost of regulations adopted in FY 2010 is almost certainly much higher than $26.5 billion. As a first matter, the cost of non-economically significant rules—rules deemed not likely to have an annual impact of $100 million or more—is not calculated (although such rules are believed to constitute only a small portion of total regulatory costs). Moreover, costs were not quantified for 12 of the economically significant rules adopted in FY 2010.
Many of the rules lacking quantified costs involve financial regulation. The Federal Reserve Board, for instance, did not quantify any costs for its new “Truth in Lending”[12] regulations—which impose fee and disclosure requirements for credit card accounts—although the new rules are generally expected to be costly. Similarly, costs were not calculated for new Federal Reserve Board regulations on prepaid electronic gift cards.[13]
It should also be noted that reported costs are likely minimized by allowing agencies to make the initial calculations, thereby casting their proposals in the best light. This could have a substantial impact: Overall, there is evidence that agencies systematically understate regulatory costs. In its 2005 report to Congress, the OMB’s Office of Information and Regulatory Affairs conducted ex ante analyses of regulations to test the accuracy of cost-benefit estimates. The study determined that regulators overestimated benefits 40 percent of the time and underestimated costs 34 percent of the time.[14]
Even a finding that costs exceed benefits does not necessarily stop a new rule from going into effect. For instance, in evaluating new regulations for train-control systems, the Department of Transportation identified costs of $477.4 million, and benefits of a mere $22 million. Nevertheless, due to a statutory mandate, the regulations were adopted.
The EPA is prohibited by law from considering costs in devising regulations under the Clean Air Act and other major environmental statutes. Thus, the agency recently set new, more stringent standards on emissions of nitrogen dioxide without formally considering the economic or technical feasibility of compliance.[15] While the EPA did prepare a cost-benefit analysis—concluding that the costs exceed the benefits—agency officials conceded they had no way of determining the number of localities that would be out of compliance under the new rule.
Lastly, it should be noted that annual compliance costs constitute only part of the economic burden of regulation. New rules also entail start-up costs for new equipment, conversions of industrial processes, and devising data collection and reporting procedures. These “first-year” costs exceed $3.1 billion for the 43 new FY 2010 regulations. For example, new restrictions on “short sales”[16] imposed by the Securities and Exchange Commission will require initial costs of more than $1 billion[17] for modifications to computer systems and surveillance mechanisms, and for information-gathering, management, and recordkeeping systems. Likewise, the EPA estimates one-time implementation costs of nearly $745 million for new limits on emissions from diesel engines used in energy production.[18]
More Rules on the Way
Many, many more regulations are in the pipeline. According to one estimate, financial regulation legislation recently adopted by Congress, known as the Dodd–Frank bill, will require 243 new formal rule-makings by 11 different federal agencies.[19] So wide-ranging are regulators’ new powers, in fact, that the Department of Health and Human Services has failed to meet one-third of the deadlines mandated by the new federal health care law, according to a report by the Congressional Research Service.[20]
Meanwhile, the new Consumer Financial Protection Bureau created under the Dodd–Frank measure will wield vaguely defined powers to regulate financial products and services, including mortgages, credit cards, even student loans. And, the Federal Communications Commission is mulling new regulations to limit how Internet service providers manage their networks. Such “net neutrality” rules, if enacted, would undermine investment incentives, thereby robbing the nation of much-needed broadband upgrades.[21]
Taken together, these initiatives embody a stunningly full regulatory agenda—indicating that this year’s record for regulatory increases will not stand for long.
Conclusion
The regulatory burden increased at an unprecedented rate during FY 2010, as measured by both the number of new major rules as well as their reported costs. Even more are on the way in 2011.
A number of steps have been proposed to stem this growth, ranging from automatic sunsetting of rules[22] to requiring congressional approval of all new major rules.[23]
Mere procedural reforms will not be enough to stem this regulatory tide. Regulatory costs will rise until policymakers appreciate the burdens that regulations are imposing on Americans and the economy, and exercise the political will necessary to limit—and reduce—those burdens
exercise the political will necessary to limit—and reduce—those burdens.
—James L. Gattuso is Senior Research Fellow in Regulatory Policy, Diane Katz is Research Fellow in Regulatory Policy, and Stephen A. Keen is a Research Assistant, in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
Appendix
Major Rulemaking Proceedings that Increased Regulatory Burdens, October 2009–September 2010
October 2009
October 30, 2009, Environmental Protection Agency, “Mandatory Reporting of Greenhouse Gases”: $94.9 million annually; $140.7 million start-up.
November 2009
November 17, 2009, Federal Reserve System, “Electronic Fund Transfers”: $10.9 million annually.
December 2009
December 1, 2009, Environmental Protection Agency, “Effluent Limitations Guidelines and Standards for the Construction and Development Point Source Category”: $810.8 million annually.
December 4, 2009, Securities and Exchange Commission, “Amendments to Rules for Nationally Recognized Statistical Rating Organizations”: $34.9 million annually; $16.2 million start-up.
December 4, 2009, Department of Transportation, Pipeline and Hazardous Materials Safety Administration, “Pipeline Safety: Integrity Management Program for Gas Distribution Pipelines”: $101.1 million annually; $130.1 million start-up.
December 23, 2009, Securities and Exchange Commission, “Proxy Disclosure Enhancements”: $66.5 million annually.
January 2010
January 8, 2010, Department of Energy, “Energy Conservation Program: Energy Conservation Standards for Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and Electric and Gas Kitchen Ranges and Ovens) and for Certain Commercial and Industrial Equipment (Commercial Clothes Washers)”: $23.4 million annually.
January 11, 2010, Securities and Exchange Commission, “Custody of Funds or Securities of Clients by Investment Advisers”: $125.1 million annually; $1.2 million start-up.
January 15, 2010, Federal Reserve System and Federal Trade Commission, “Fair Credit Reporting Risk-Based Pricing Regulations”: $252.1 million annually.
January 15, 2010, Department of Transportation, Federal Railroad Administration, “Positive Train Control Systems”: $477.4 million annually.
January 28, 2010, Department of the Treasury, Office of the Comptroller of the Currency; Federal Reserve System; Federal Deposit Insurance Corporation; Department of the Treasury, Office of Thrift Supervision, “Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance: Regulatory Capital; Impact of Modifications to Generally Accepted Accounting Principles; Consolidation of Asset-Backed Commercial Paper Programs; and Other Related Issues”: cost not quantified.
February 2010
February 9, 2010, Environmental Protection Agency, “Primary National Ambient Air Quality Standards for Nitrogen Dioxide”: cost not quantified.
February 17, 2010, Department of Agriculture, Agricultural Marketing Service, “National Organic Program; Access to Pasture (Livestock)”: cost not quantified.
February 22, 2010, Federal Reserve System, “Truth in Lending”: cost not quantified.
March 2010
March 3, 2010, Environmental Protection Agency, “National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines”: $373.4 million annually; $744.7 million start-up.
March 4, 2010, Securities and Exchange Commission, “Money Market Fund Reform”: $60.2 million annually; $86.9 million start-up.
March 9, 2010, Department of Energy, “Energy Conservation Program: Energy Conservation Standards for Small Electric Motors”: $263.9 million annually.
March 10, 2010, Securities and Exchange Commission, “Amendments to Regulation SHO”: $1.2 billion annually; $1.1 billion start-up.
March 19, 2010, Department of Health and Human Services, Food and Drug Administration, “Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents”: cost not quantified.
March 26, 2010, Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program”: $7.8 billion annually.
April 2010
April 1, 2010, Federal Reserve System, “Electronic Fund Transfers”: cost not quantified.
April 5, 2010, Department of Transportation, Federal Motor Carrier Safety Administration, “Electronic On-Board Recorders for Hours-of-Service Compliance”: $139 million annually.
April 14, 2010, Department of Health and Human Services, Food and Drug Administration, “Use of Ozone-Depleting Substances; Removal of Essential-Use Designation (Flunisolide, etc.)”: $181.9 million annually.
April 16, 2010, Department of Energy: Energy Conservation Program, “Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters”: $1.3 billion annually.
May 2010
May 6, 2010, Environmental Protection Agency, “Lead; Amendment to the Opt-Out and Recordkeeping Provisions in the Renovation, Repair, and Painting Program”: $419.5 million annually; $552 million start-up.
May 7, 2010, Environmental Protection Agency and Department of Transportation, National Highway Traffic Safety Administration, “Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule”: $10.8 billion annually (2012–2016).
May 13, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; Department of Health and Human Services, Office of the Secretary, “Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Dependent Coverage of Children to Age 26 Under the Patient Protection and Affordable Care Act”: $11 million annually.
May 28, 2010, Department of Transportation, Federal Aviation Administration, “Automatic Dependent Surveillance—Broadcast (ADS-B) Out Performance Requirements to Support Air Traffic Control (ATC) Service”: $100 million annually.
June 2010
June 4, 2010, Federal Reserve System, “Electronic Fund Transfers”: cost not quantified.
June 17, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; Department of Health and Human Services, “Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act”: $25.2 million annually; $30.2 million start-up.
June 22, 2010, Environmental Protection Agency, “Primary National Ambient Air Quality Standard for Sulfur Dioxide”: $1.6 billion annually.
June 28, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; and Department of Health and Human Services, “Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections”: $4.8 million annually.
June 29, 2010, Federal Reserve System, “Truth in Lending”: cost not quantified.
July 2010
July 14, 2010, Securities and Exchange Commission, “Political Contributions by Certain Investment Advisers”: $85.1 million annually; $22.6 million start-up.
July 16, 2010, Department of Labor, Employee Benefits Security Administration, “Reasonable Contract or Arrangement Under Section 408(b)(2)—Fee Disclosure”: $57.7 million annually.
July 19, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; and Department of Health and Human Services, “Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act”: cost not quantified.
July 23, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; and Department of Health and Human Services, “Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Internal Claims and Appeals and External Review Processes Under the Patient Protection and Affordable Care Act”: $75.1 million annually.
July 28, 2010, Department of the Treasury, Office of the Comptroller of the Currency, “Registration of Mortgage Loan Originators”: $123.9 million annually; $283.3 million start-up.
August 2010
August 9, 2010, Department of Labor, Occupational Safety and Health Administration, “Cranes and Derricks in Construction”: $151.6 million annually.
August 12, 2010, Securities and Exchange Commission: “Amendments to Form ADV”: $20.5 million annually; $56.4 million start-up.
August 20, 2010, Environmental Protection Agency, “National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines”: $253 million annually.
September 2010
September 9, 2010, Environmental Protection Agency, “National Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry and Standards of Performance for Portland Cement Plants”: $1 billion in 2013.
September 16, 2010, Securities and Exchange Commission, “Facilitating Shareholder Director Nominations”: $8 million annually.
Major Rulemaking Proceedings that Decreased Regulatory Burdens, October 2009–September 2010
October 19, 2009, Securities and Exchange Commission, “Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers”: savings not quantified.
November 2, 2009, Department of Health and Human Services, Centers for Disease Control and Prevention, “Medical Examination of Aliens—Removal of Human Immunodeficiency Virus (HIV) Infection from Definition of Communicable Disease of Public Health Significance”: savings not quantified.
November 13, 2009, Environmental Protection Agency, “Oil Pollution Prevention; Spill Prevention, Control, and Countermeasure (SPCC) Rule—Amendments”: $98.6 million.
March 31, 2010, Department of Justice, Drug Enforcement Administration, “Electronic Prescriptions for Controlled Substances”: $1.4 billion.
June 3, 2010, Environmental Protection Agency, “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule”: savings not quantified.
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[1]Nicole V. Crain and W. Mark Crain, “The Impact of Regulatory Costs on Small Firms,” Small Business Administration Office of Advocacy, September 2010, at http://www.sba.gov/advo/research/rs371.pdf (October 21, 2010).
[2]Council of Economic Advisers, “Economic Report of the President,” February 10, 2010, at http://www.gpoaccess.gov/eop/ (October 21, 2010).
[3]James L. Gattuso and Stephen A. Keen, “Red Tape Rising: Regulation in the Obama Era,” Heritage Foundation Backgrounder No. 2394, April 8, 2010, at http://www.heritage.org/Research/Reports/2010/03/Red-Tape-Rising-Regulation-in-the-Obama-Era.
[4]Based on data from the Government Accountability Office, “Congressional Review Act Reports,” at http://www.gao.gov/legal/congress.html (October 21, 2010). Rules include those classified as “significant/substantive,” and excluding those of a budgetary nature or otherwise not of a regulatory nature. The GAO database covers rules issued from 1997 to the present. For previous Heritage Foundation reports that relied on this database, see James L. Gattuso, “Reining in the Regulators: How Does President Bush Measure Up?” Heritage Foundation Backgrounder No. 1801, September 28, 2004, at http://www.heritage.org/Research/Regulation/bg1801.cfm; Gattuso, “Red Tape Rising: Regulatory Trends in the Bush Years,” Heritage Foundation Backgrounder No. 2116, March 25, 2008, at http://www.heritage.org/research/regulation/bg2116.cfm; and Gattuso and Keen, “Red Tape Rising: Regulation in the Obama Era.”
[5]Based on cost figures provided in Regulatory Impact Analyses prepared by each regulatory agency. Where a range of costs was reported, the mid-point was used in the authors’ calculations. All figures in constant 2009 dollars. Historical data from 1981 through 2007 (shown in chart) obtained directly from OMB staff, and based on Figure 2.1 of OMB, “Report[s] to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local and Tribal Entities” for 2006–2009; 2009 figures from 2010 report Table 1-4. All reports available at http://www.whitehouse.gov/omb/inforeg_regpol_reports_congress (October 22, 2010). OMB data does not include independent agency rules and certain other rules, and is based on the date of OMB approval of the regulation. Heritage calculations for 2010 are based on the date of publication in the Federal Register. All figures in chart are net of deregulatory actions.
[6]This rule represents the first time that “greenhouse gas” emissions performance was applied in a regulatory context for a nationwide program.
[7]“Environmental Protection Agency and Department of Transportation, National Highway Traffic Safety Administration: Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule,” Federal Register, Vol. 75, No. 88 (May 7, 2010), p. 25,324.
[8]“Environmental Protection Agency: Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program,” Federal Register, Vol. 75, No. 58 (March 26, 2010), p. 14,670. In its Regulatory Impact Analysis, the EPA projects several indirect costs, including food increases of $10 per person per year, or $3.6 billion, by 2022. This was not included in the authors’ total. EPA, “Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis,” February 2010, at http://www.epa.gov/otaq/renewablefuels/420r10006.pdf (October 22, 2010).
[9]“Department of Energy: Energy Conservation Program: Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters,” Federal Register, Vol. 75, No. 73 (April 16, 2010), p. 20,112.
[10]“Environmental Protection Agency, Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule,” Federal Register, Vol. 75, No. 106 (June 3, 2010), p. 31,514.
[11]For more information, see Nicolas D. Loris, “The EPA’s Global Warming Regulation Plans,” Heritage Foundation WebMemo No. 2768, January 20, 2010, at http://www.heritage.org/research/reports/2010/01/the-epas-global-warming-regulation-plans.
[12]“Federal Reserve System: Truth in Lending,” Federal Register, Vol. 75, No. 124 (June 29, 2010), p. 37,526.
[13] “Federal Reserve System: Electronic Fund Transfers,” Federal Register, Vol. 75, No. 62 (April 1, 2010), p. 16,580.
[14] Office of Management and Budget, “Validating Regulatory Analysis: 2005 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities,” December 2005.
[15]“Environmental Protection Agency: Primary National Ambient Air Quality Standards for Nitrogen Dioxide,” Federal Register, Vol. 75, No. 26 (February 9, 2010), p. 6,474.
[16]Short-selling involves profiting from the decline of a stock price. An investor “borrows” stock and sells it, with the hope of a price drop. If the price does, in fact, decline, the seller buys back the stock at the lower price and returns the borrowed shares, profiting from the difference in the initial sale price and the decline.
[17]“Securities and Exchange Commission: Amendments to Regulation SHO,” Federal Register, Vol. 75, No. 26 (March 10, 2010), p. 11,232.
[18]“Environmental Protection Agency, National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines,” Federal Register, Vol. 75, No. 161 (August 20, 2010), p. 51,579.
[19]Davis Polk, “Summary of the Dodd–Frank Wall Street Reform and Consumer Protection Act, Enacted into Law on July 21, 2010,” Davis Polk & Wardwell, LLP, July 21, 2010, at http://www.davispolk.com/files/Publication/7084f9fe-6580-413b-b870-b7c025ed2ecf/Presentation/PublicationAttachment/1d4495c7-0be0-4e9a-ba77-f786fb90464a/070910_Financial_Reform_Summary.pdf (October 21, 2010).
[20]Congressional Research Service, “Deadlines for the Secretary of Health and Human Services in the Patient Protection and Affordable Care Act from Enactment to January 1, 2011,” Memorandum, October 1, 2010, at http://coburn.senate.gov/public//index.cfm?a=Files.Serve&File_id=54103bf6-ae3a-47be-916e-72548ba34b5b (October 21, 2010).
[21]James L. Gattuso, “The FCC and Broadband Regulation: What Part of ‘No’ Did You Not Understand?” Heritage Foundation WebMemo No. 2864, April 15, 2010, at http://www.heritage.org/Research/Reports/2010/04/The-FCC-and-Broadband-Regulation-What-Part-of-No-Did-You-Not-Understand.
[22]Gattuso and Keen, “Red Tape Rising: Regulation in the Obama Era.”
[23]Gattuso, “Red Tape Rises Again: Cost of Regulation Reaches $1.75 Trillion,” The Foundry, Heritage Foundation blog, September 22, 2010, at http://blog.heritage.org/2010/09/22/red-tape-rises-again-cost-of-regulation-reaches-1-75-trillion/.
Red Tape Rising: Obama’s Torrent of New RegulationPublished on October 26, 2010 by James Gattuso , Diane Katz and Stephen Keen Backgrounder #2482 Print PDF
Abstract: The burden of regulation on Americans increased at an alarming rate in fiscal year 2010. Based on data from the Government Accountability Office, an unprecedented 43 major new regulations were imposed by Washington. And based on reports from government regulators themselves, the total cost of these rules topped $26.5 billion, far more than any other year for which records are available. These costs will affect Americans in many ways, raising the price of the cars they buy and the food they eat, while destroying an untold number of jobs. With the enactment of new health care laws, financial regulations, and plans for rulemaking in other areas, the regulatory burden on Americans is set to increase even further in the coming year.
The Hidden Tax
The cost of regulation has often been called a hidden tax. Although the total does not appear anywhere in the federal budget, the multitude of rules, restrictions, and mandates imposes a heavy burden on Americans and the U.S. economy. According to a report recently released by the Small Business Administration, total regulatory costs amount to about $1.75 trillion annually, [1] nearly twice as much as all individual income taxes collected last year.[2]
Not all regulations are unwarranted, of course. Most Americans would agree on the need for protections against terrorism, although the extent of such rules is certainly subject to debate. Moreover, regulations are not necessarily inconsistent with free-market principles. Some, such as anti-fraud measures, protect the rights of consumers. But there is always a cost. And, for the same reasons that federal spending is reported, so, too, should regulatory costs.
Record Increases
This regulatory burden has been increasing for some time. During the presidency of George W. Bush, which many mistakenly consider as a period of deregulation, the regulatory burden increased by more than $70 billion, according to agency regulatory impact reports. In FY 2009, which spanned the Bush and Obama Administrations, rulemaking proceeded at a nearly unprecedented rate, with the addition of 23 major rules imposing $13 billion in new costs.[3]
But the available evidence indicates that regulatory costs increased last year at a far greater pace. According to data from the Government Accountability Office, federal agencies promulgated 43 rules during the fiscal year ending September 30, 2010,[4] that impose significant burdens on the private sector. The total costs for these rules were estimated by the regulators themselves at some $28 billion, the highest level since at least 1981, the earliest date for which figures are available.[5] Fifteen of the 43 major rules issued last during the fiscal year involved financial regulation. Another five stem from the Patient Protection and Affordable Care Act adopted by Congress in early 2010. Ten others come from the Environmental Protection Agency (EPA), including the first mandatory reporting of “greenhouse gas” emissions and $10.8 billion in new automotive fuel economy standards (adopted jointly with the National Highway Traffic Safety Administration (NHTSA)). Overall, counting the fuel standards, the EPA is responsible for the lion’s share of the reported regulatory costs—some $23.2 billion.
Among the most costly of the FY 2010 crop are:
Fuel economy and emission standards[6] for passenger cars, light-duty trucks, and medium-duty passenger vehicles imposed jointly by the EPA and NHTSA. Annual cost: $10.8 billion (for model years 2012 to 2016). For automakers to recover these increased outlays, NHTSA estimates the standards will lead to increases in average new vehicle prices ranging from $457 per vehicle in FY 2012 to $985 per vehicle in FY 2016.[7]
Mandated quotas for renewable fuels. Annual cost: $7.8 billion (for 15 years). Utilizing farmland to grow corn and other crops used in renewable fuels will displace food crops, leading food costs to increase by $10 per person per year—or $40 for a family of four, according to the EPA.[8]
Efficiency standards for residential water heaters, heating equipment, and pool heaters. Annual cost: $1.3 billion. The appliance upgrades necessary to comply with the new standards will raise the price of a typical gas storage water heater by $120.[9]
Limits on “effluent” discharges from construction sites imposed by the EPA. Annual cost: $810.8 million. The cost of the requirements will force the closure of 147 construction firms and the loss of 7,257 jobs, according to the EPA. Homebuyers also will bear some of the costs, with an increase in mortgage costs of about $1,953.
Regulatory Reductions Missing in Action
Measures to reduce regulatory burdens, by contrast, were few and far between in FY 2010. Only five significant rulemakings adopted last year reduced burdens. Of these, cost reductions were quantified for only two, for reported savings of $1.5 billion. This leaves a net increase in the regulatory burden of $26.5 billion.
Moreover, one of the five measures—though technically deregulatory in nature—relates to an unparalleled expansion of EPA powers. Due to its determination last year that greenhouse gases are pollutants, the agency is moving to set emissions limits for such gases. To follow the standards in the Clean Air Act would corral millions of currently unregulated “facilities,” including offices and apartment buildings, shopping malls, restaurants, hotels, hospitals, schools, houses of worship, theaters, and sports arenas into the EPA regulatory regime. In hopes of quieting political outrage over so sweeping a dictate, the EPA’s “Tailoring Rule”[10] set a minimum threshold level for regulation. Therefore, fewer facilities would be subject to permit requirements, making imposition of the emissions limits more feasible. Rather than reduce overall burdens, this action actually facilitated increased burdens.[11]
Actual Costs Likely Higher
The actual cost of regulations adopted in FY 2010 is almost certainly much higher than $26.5 billion. As a first matter, the cost of non-economically significant rules—rules deemed not likely to have an annual impact of $100 million or more—is not calculated (although such rules are believed to constitute only a small portion of total regulatory costs). Moreover, costs were not quantified for 12 of the economically significant rules adopted in FY 2010.
Many of the rules lacking quantified costs involve financial regulation. The Federal Reserve Board, for instance, did not quantify any costs for its new “Truth in Lending”[12] regulations—which impose fee and disclosure requirements for credit card accounts—although the new rules are generally expected to be costly. Similarly, costs were not calculated for new Federal Reserve Board regulations on prepaid electronic gift cards.[13]
It should also be noted that reported costs are likely minimized by allowing agencies to make the initial calculations, thereby casting their proposals in the best light. This could have a substantial impact: Overall, there is evidence that agencies systematically understate regulatory costs. In its 2005 report to Congress, the OMB’s Office of Information and Regulatory Affairs conducted ex ante analyses of regulations to test the accuracy of cost-benefit estimates. The study determined that regulators overestimated benefits 40 percent of the time and underestimated costs 34 percent of the time.[14]
Even a finding that costs exceed benefits does not necessarily stop a new rule from going into effect. For instance, in evaluating new regulations for train-control systems, the Department of Transportation identified costs of $477.4 million, and benefits of a mere $22 million. Nevertheless, due to a statutory mandate, the regulations were adopted.
The EPA is prohibited by law from considering costs in devising regulations under the Clean Air Act and other major environmental statutes. Thus, the agency recently set new, more stringent standards on emissions of nitrogen dioxide without formally considering the economic or technical feasibility of compliance.[15] While the EPA did prepare a cost-benefit analysis—concluding that the costs exceed the benefits—agency officials conceded they had no way of determining the number of localities that would be out of compliance under the new rule.
Lastly, it should be noted that annual compliance costs constitute only part of the economic burden of regulation. New rules also entail start-up costs for new equipment, conversions of industrial processes, and devising data collection and reporting procedures. These “first-year” costs exceed $3.1 billion for the 43 new FY 2010 regulations. For example, new restrictions on “short sales”[16] imposed by the Securities and Exchange Commission will require initial costs of more than $1 billion[17] for modifications to computer systems and surveillance mechanisms, and for information-gathering, management, and recordkeeping systems. Likewise, the EPA estimates one-time implementation costs of nearly $745 million for new limits on emissions from diesel engines used in energy production.[18]
More Rules on the Way
Many, many more regulations are in the pipeline. According to one estimate, financial regulation legislation recently adopted by Congress, known as the Dodd–Frank bill, will require 243 new formal rule-makings by 11 different federal agencies.[19] So wide-ranging are regulators’ new powers, in fact, that the Department of Health and Human Services has failed to meet one-third of the deadlines mandated by the new federal health care law, according to a report by the Congressional Research Service.[20]
Meanwhile, the new Consumer Financial Protection Bureau created under the Dodd–Frank measure will wield vaguely defined powers to regulate financial products and services, including mortgages, credit cards, even student loans. And, the Federal Communications Commission is mulling new regulations to limit how Internet service providers manage their networks. Such “net neutrality” rules, if enacted, would undermine investment incentives, thereby robbing the nation of much-needed broadband upgrades.[21]
Taken together, these initiatives embody a stunningly full regulatory agenda—indicating that this year’s record for regulatory increases will not stand for long.
Conclusion
The regulatory burden increased at an unprecedented rate during FY 2010, as measured by both the number of new major rules as well as their reported costs. Even more are on the way in 2011.
A number of steps have been proposed to stem this growth, ranging from automatic sunsetting of rules[22] to requiring congressional approval of all new major rules.[23]
Mere procedural reforms will not be enough to stem this regulatory tide. Regulatory costs will rise until policymakers appreciate the burdens that regulations are imposing on Americans and the economy, and exercise the political will necessary to limit—and reduce—those burdens
exercise the political will necessary to limit—and reduce—those burdens.
—James L. Gattuso is Senior Research Fellow in Regulatory Policy, Diane Katz is Research Fellow in Regulatory Policy, and Stephen A. Keen is a Research Assistant, in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
Appendix
Major Rulemaking Proceedings that Increased Regulatory Burdens, October 2009–September 2010
October 2009
October 30, 2009, Environmental Protection Agency, “Mandatory Reporting of Greenhouse Gases”: $94.9 million annually; $140.7 million start-up.
November 2009
November 17, 2009, Federal Reserve System, “Electronic Fund Transfers”: $10.9 million annually.
December 2009
December 1, 2009, Environmental Protection Agency, “Effluent Limitations Guidelines and Standards for the Construction and Development Point Source Category”: $810.8 million annually.
December 4, 2009, Securities and Exchange Commission, “Amendments to Rules for Nationally Recognized Statistical Rating Organizations”: $34.9 million annually; $16.2 million start-up.
December 4, 2009, Department of Transportation, Pipeline and Hazardous Materials Safety Administration, “Pipeline Safety: Integrity Management Program for Gas Distribution Pipelines”: $101.1 million annually; $130.1 million start-up.
December 23, 2009, Securities and Exchange Commission, “Proxy Disclosure Enhancements”: $66.5 million annually.
January 2010
January 8, 2010, Department of Energy, “Energy Conservation Program: Energy Conservation Standards for Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and Electric and Gas Kitchen Ranges and Ovens) and for Certain Commercial and Industrial Equipment (Commercial Clothes Washers)”: $23.4 million annually.
January 11, 2010, Securities and Exchange Commission, “Custody of Funds or Securities of Clients by Investment Advisers”: $125.1 million annually; $1.2 million start-up.
January 15, 2010, Federal Reserve System and Federal Trade Commission, “Fair Credit Reporting Risk-Based Pricing Regulations”: $252.1 million annually.
January 15, 2010, Department of Transportation, Federal Railroad Administration, “Positive Train Control Systems”: $477.4 million annually.
January 28, 2010, Department of the Treasury, Office of the Comptroller of the Currency; Federal Reserve System; Federal Deposit Insurance Corporation; Department of the Treasury, Office of Thrift Supervision, “Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance: Regulatory Capital; Impact of Modifications to Generally Accepted Accounting Principles; Consolidation of Asset-Backed Commercial Paper Programs; and Other Related Issues”: cost not quantified.
February 2010
February 9, 2010, Environmental Protection Agency, “Primary National Ambient Air Quality Standards for Nitrogen Dioxide”: cost not quantified.
February 17, 2010, Department of Agriculture, Agricultural Marketing Service, “National Organic Program; Access to Pasture (Livestock)”: cost not quantified.
February 22, 2010, Federal Reserve System, “Truth in Lending”: cost not quantified.
March 2010
March 3, 2010, Environmental Protection Agency, “National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines”: $373.4 million annually; $744.7 million start-up.
March 4, 2010, Securities and Exchange Commission, “Money Market Fund Reform”: $60.2 million annually; $86.9 million start-up.
March 9, 2010, Department of Energy, “Energy Conservation Program: Energy Conservation Standards for Small Electric Motors”: $263.9 million annually.
March 10, 2010, Securities and Exchange Commission, “Amendments to Regulation SHO”: $1.2 billion annually; $1.1 billion start-up.
March 19, 2010, Department of Health and Human Services, Food and Drug Administration, “Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents”: cost not quantified.
March 26, 2010, Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program”: $7.8 billion annually.
April 2010
April 1, 2010, Federal Reserve System, “Electronic Fund Transfers”: cost not quantified.
April 5, 2010, Department of Transportation, Federal Motor Carrier Safety Administration, “Electronic On-Board Recorders for Hours-of-Service Compliance”: $139 million annually.
April 14, 2010, Department of Health and Human Services, Food and Drug Administration, “Use of Ozone-Depleting Substances; Removal of Essential-Use Designation (Flunisolide, etc.)”: $181.9 million annually.
April 16, 2010, Department of Energy: Energy Conservation Program, “Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters”: $1.3 billion annually.
May 2010
May 6, 2010, Environmental Protection Agency, “Lead; Amendment to the Opt-Out and Recordkeeping Provisions in the Renovation, Repair, and Painting Program”: $419.5 million annually; $552 million start-up.
May 7, 2010, Environmental Protection Agency and Department of Transportation, National Highway Traffic Safety Administration, “Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule”: $10.8 billion annually (2012–2016).
May 13, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; Department of Health and Human Services, Office of the Secretary, “Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Dependent Coverage of Children to Age 26 Under the Patient Protection and Affordable Care Act”: $11 million annually.
May 28, 2010, Department of Transportation, Federal Aviation Administration, “Automatic Dependent Surveillance—Broadcast (ADS-B) Out Performance Requirements to Support Air Traffic Control (ATC) Service”: $100 million annually.
June 2010
June 4, 2010, Federal Reserve System, “Electronic Fund Transfers”: cost not quantified.
June 17, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; Department of Health and Human Services, “Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act”: $25.2 million annually; $30.2 million start-up.
June 22, 2010, Environmental Protection Agency, “Primary National Ambient Air Quality Standard for Sulfur Dioxide”: $1.6 billion annually.
June 28, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; and Department of Health and Human Services, “Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections”: $4.8 million annually.
June 29, 2010, Federal Reserve System, “Truth in Lending”: cost not quantified.
July 2010
July 14, 2010, Securities and Exchange Commission, “Political Contributions by Certain Investment Advisers”: $85.1 million annually; $22.6 million start-up.
July 16, 2010, Department of Labor, Employee Benefits Security Administration, “Reasonable Contract or Arrangement Under Section 408(b)(2)—Fee Disclosure”: $57.7 million annually.
July 19, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; and Department of Health and Human Services, “Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act”: cost not quantified.
July 23, 2010, Department of the Treasury, Internal Revenue Service; Department of Labor, Employee Benefits Security Administration; and Department of Health and Human Services, “Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Internal Claims and Appeals and External Review Processes Under the Patient Protection and Affordable Care Act”: $75.1 million annually.
July 28, 2010, Department of the Treasury, Office of the Comptroller of the Currency, “Registration of Mortgage Loan Originators”: $123.9 million annually; $283.3 million start-up.
August 2010
August 9, 2010, Department of Labor, Occupational Safety and Health Administration, “Cranes and Derricks in Construction”: $151.6 million annually.
August 12, 2010, Securities and Exchange Commission: “Amendments to Form ADV”: $20.5 million annually; $56.4 million start-up.
August 20, 2010, Environmental Protection Agency, “National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines”: $253 million annually.
September 2010
September 9, 2010, Environmental Protection Agency, “National Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry and Standards of Performance for Portland Cement Plants”: $1 billion in 2013.
September 16, 2010, Securities and Exchange Commission, “Facilitating Shareholder Director Nominations”: $8 million annually.
Major Rulemaking Proceedings that Decreased Regulatory Burdens, October 2009–September 2010
October 19, 2009, Securities and Exchange Commission, “Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers”: savings not quantified.
November 2, 2009, Department of Health and Human Services, Centers for Disease Control and Prevention, “Medical Examination of Aliens—Removal of Human Immunodeficiency Virus (HIV) Infection from Definition of Communicable Disease of Public Health Significance”: savings not quantified.
November 13, 2009, Environmental Protection Agency, “Oil Pollution Prevention; Spill Prevention, Control, and Countermeasure (SPCC) Rule—Amendments”: $98.6 million.
March 31, 2010, Department of Justice, Drug Enforcement Administration, “Electronic Prescriptions for Controlled Substances”: $1.4 billion.
June 3, 2010, Environmental Protection Agency, “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule”: savings not quantified.
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Show references in this report
[1]Nicole V. Crain and W. Mark Crain, “The Impact of Regulatory Costs on Small Firms,” Small Business Administration Office of Advocacy, September 2010, at http://www.sba.gov/advo/research/rs371.pdf (October 21, 2010).
[2]Council of Economic Advisers, “Economic Report of the President,” February 10, 2010, at http://www.gpoaccess.gov/eop/ (October 21, 2010).
[3]James L. Gattuso and Stephen A. Keen, “Red Tape Rising: Regulation in the Obama Era,” Heritage Foundation Backgrounder No. 2394, April 8, 2010, at http://www.heritage.org/Research/Reports/2010/03/Red-Tape-Rising-Regulation-in-the-Obama-Era.
[4]Based on data from the Government Accountability Office, “Congressional Review Act Reports,” at http://www.gao.gov/legal/congress.html (October 21, 2010). Rules include those classified as “significant/substantive,” and excluding those of a budgetary nature or otherwise not of a regulatory nature. The GAO database covers rules issued from 1997 to the present. For previous Heritage Foundation reports that relied on this database, see James L. Gattuso, “Reining in the Regulators: How Does President Bush Measure Up?” Heritage Foundation Backgrounder No. 1801, September 28, 2004, at http://www.heritage.org/Research/Regulation/bg1801.cfm; Gattuso, “Red Tape Rising: Regulatory Trends in the Bush Years,” Heritage Foundation Backgrounder No. 2116, March 25, 2008, at http://www.heritage.org/research/regulation/bg2116.cfm; and Gattuso and Keen, “Red Tape Rising: Regulation in the Obama Era.”
[5]Based on cost figures provided in Regulatory Impact Analyses prepared by each regulatory agency. Where a range of costs was reported, the mid-point was used in the authors’ calculations. All figures in constant 2009 dollars. Historical data from 1981 through 2007 (shown in chart) obtained directly from OMB staff, and based on Figure 2.1 of OMB, “Report[s] to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local and Tribal Entities” for 2006–2009; 2009 figures from 2010 report Table 1-4. All reports available at http://www.whitehouse.gov/omb/inforeg_regpol_reports_congress (October 22, 2010). OMB data does not include independent agency rules and certain other rules, and is based on the date of OMB approval of the regulation. Heritage calculations for 2010 are based on the date of publication in the Federal Register. All figures in chart are net of deregulatory actions.
[6]This rule represents the first time that “greenhouse gas” emissions performance was applied in a regulatory context for a nationwide program.
[7]“Environmental Protection Agency and Department of Transportation, National Highway Traffic Safety Administration: Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule,” Federal Register, Vol. 75, No. 88 (May 7, 2010), p. 25,324.
[8]“Environmental Protection Agency: Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program,” Federal Register, Vol. 75, No. 58 (March 26, 2010), p. 14,670. In its Regulatory Impact Analysis, the EPA projects several indirect costs, including food increases of $10 per person per year, or $3.6 billion, by 2022. This was not included in the authors’ total. EPA, “Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis,” February 2010, at http://www.epa.gov/otaq/renewablefuels/420r10006.pdf (October 22, 2010).
[9]“Department of Energy: Energy Conservation Program: Energy Conservation Standards for Residential Water Heaters, Direct Heating Equipment, and Pool Heaters,” Federal Register, Vol. 75, No. 73 (April 16, 2010), p. 20,112.
[10]“Environmental Protection Agency, Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule,” Federal Register, Vol. 75, No. 106 (June 3, 2010), p. 31,514.
[11]For more information, see Nicolas D. Loris, “The EPA’s Global Warming Regulation Plans,” Heritage Foundation WebMemo No. 2768, January 20, 2010, at http://www.heritage.org/research/reports/2010/01/the-epas-global-warming-regulation-plans.
[12]“Federal Reserve System: Truth in Lending,” Federal Register, Vol. 75, No. 124 (June 29, 2010), p. 37,526.
[13] “Federal Reserve System: Electronic Fund Transfers,” Federal Register, Vol. 75, No. 62 (April 1, 2010), p. 16,580.
[14] Office of Management and Budget, “Validating Regulatory Analysis: 2005 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities,” December 2005.
[15]“Environmental Protection Agency: Primary National Ambient Air Quality Standards for Nitrogen Dioxide,” Federal Register, Vol. 75, No. 26 (February 9, 2010), p. 6,474.
[16]Short-selling involves profiting from the decline of a stock price. An investor “borrows” stock and sells it, with the hope of a price drop. If the price does, in fact, decline, the seller buys back the stock at the lower price and returns the borrowed shares, profiting from the difference in the initial sale price and the decline.
[17]“Securities and Exchange Commission: Amendments to Regulation SHO,” Federal Register, Vol. 75, No. 26 (March 10, 2010), p. 11,232.
[18]“Environmental Protection Agency, National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines,” Federal Register, Vol. 75, No. 161 (August 20, 2010), p. 51,579.
[19]Davis Polk, “Summary of the Dodd–Frank Wall Street Reform and Consumer Protection Act, Enacted into Law on July 21, 2010,” Davis Polk & Wardwell, LLP, July 21, 2010, at http://www.davispolk.com/files/Publication/7084f9fe-6580-413b-b870-b7c025ed2ecf/Presentation/PublicationAttachment/1d4495c7-0be0-4e9a-ba77-f786fb90464a/070910_Financial_Reform_Summary.pdf (October 21, 2010).
[20]Congressional Research Service, “Deadlines for the Secretary of Health and Human Services in the Patient Protection and Affordable Care Act from Enactment to January 1, 2011,” Memorandum, October 1, 2010, at http://coburn.senate.gov/public//index.cfm?a=Files.Serve&File_id=54103bf6-ae3a-47be-916e-72548ba34b5b (October 21, 2010).
[21]James L. Gattuso, “The FCC and Broadband Regulation: What Part of ‘No’ Did You Not Understand?” Heritage Foundation WebMemo No. 2864, April 15, 2010, at http://www.heritage.org/Research/Reports/2010/04/The-FCC-and-Broadband-Regulation-What-Part-of-No-Did-You-Not-Understand.
[22]Gattuso and Keen, “Red Tape Rising: Regulation in the Obama Era.”
[23]Gattuso, “Red Tape Rises Again: Cost of Regulation Reaches $1.75 Trillion,” The Foundry, Heritage Foundation blog, September 22, 2010, at http://blog.heritage.org/2010/09/22/red-tape-rises-again-cost-of-regulation-reaches-1-75-trillion/.
The Sierra Club's War On Coal
From The Capital Research Center and The Heritage Foundation:
Natural Resources, Environment, and Science
The Sierra Club’s War on Coal
by Christopher Horner
Capital Research Center
October 28, 2010
Thanks to the Sierra Club and its allies, during the last three years the U.S. has constructed fewer facilities that expand the capacity of proven energy sources—coal, natural gas, and nuclear power—than we have facilities for unreliable “renewable” energy sources like wind and solar that require coal, gas or nuclear plants to back them up. In the meantime major U.S. competitors like China are busy installing coal, gas, oil and nuclear power plants to produce the energy resources they need.
URL: www.capitalresearch.org/pubs/pdf/v1288276647.pdf
Natural Resources, Environment, and Science
The Sierra Club’s War on Coal
by Christopher Horner
Capital Research Center
October 28, 2010
Thanks to the Sierra Club and its allies, during the last three years the U.S. has constructed fewer facilities that expand the capacity of proven energy sources—coal, natural gas, and nuclear power—than we have facilities for unreliable “renewable” energy sources like wind and solar that require coal, gas or nuclear plants to back them up. In the meantime major U.S. competitors like China are busy installing coal, gas, oil and nuclear power plants to produce the energy resources they need.
URL: www.capitalresearch.org/pubs/pdf/v1288276647.pdf
Colorado's Clean Air, Clean Jobs Act Will Accomplish Neither
From The Competitive Enterprise Institute and The Heritage Foundation:
Natural Resources, Environment, and Science
Colorado’s Clean Air Clean Jobs Act Will Accomplish Neither
by William Yeatman, Amy Oliver Cooke
Competitive Enterprise Institute
October 27, 2010
The Colorado Public Utilities Commission, Xcel Energy, and Governor Bill Ritter colluded to fast track the misnamed Clean Air Clean Jobs Act, which effectively mandates coal-fired power plants to switch to natural gas. The trio essentially duped law makers into hasty passage of this bill. They warned legislators that the federal Environmental Protection Agency would crack down on Colorado coal power with the Clean Air Act. But that was really a bogeyman meant to frighten lawmakers. While it is true that President Barack Obama’s EPA is hostile to coal-generated energy, the governor and the PUC grossly exaggerated the regulatory threat in order to advance their agenda, and Xcel went along with the ruse.
URL: www.cei.org/sites/default/files/William%20Yeatman%20and%20Amy%20Oliver%20Cooke%20-%20Colorado%27s%20Clean%20Air%20Jobs%20Act%20Will%20Accomplish%20Neither%20-%20HB%201365.pdf
Natural Resources, Environment, and Science
Colorado’s Clean Air Clean Jobs Act Will Accomplish Neither
by William Yeatman, Amy Oliver Cooke
Competitive Enterprise Institute
October 27, 2010
The Colorado Public Utilities Commission, Xcel Energy, and Governor Bill Ritter colluded to fast track the misnamed Clean Air Clean Jobs Act, which effectively mandates coal-fired power plants to switch to natural gas. The trio essentially duped law makers into hasty passage of this bill. They warned legislators that the federal Environmental Protection Agency would crack down on Colorado coal power with the Clean Air Act. But that was really a bogeyman meant to frighten lawmakers. While it is true that President Barack Obama’s EPA is hostile to coal-generated energy, the governor and the PUC grossly exaggerated the regulatory threat in order to advance their agenda, and Xcel went along with the ruse.
URL: www.cei.org/sites/default/files/William%20Yeatman%20and%20Amy%20Oliver%20Cooke%20-%20Colorado%27s%20Clean%20Air%20Jobs%20Act%20Will%20Accomplish%20Neither%20-%20HB%201365.pdf
Is Wind The Next Ethanol?
From The Heritage Foundation and the Competitiive Enterprise Institute:
Natural Resources, Environment, and Science
Is Wind the Next Ethanol?
by Ben Lieberman
Competitive Enterprise Institute
October 26, 2010
Much of the Obama administration’s “clean energy economy” and “energy independence” agenda is a virtual repeat of the follies of the 1970s. Back then, failed attempts by Washington to pick winners and losers among alternative energy sources and energy-using technologies led to taxes, regulations, and subsidies that exacerbated the very concerns they were supposed to address. This decades-old lesson may be lost on younger politicians, bureaucrats, and activists who may be unaware that their energy policy ideas are proven failures from the age of disco.
URL: www.cei.org/sites/default/files/Ben%20Lieberman%20-%20Is%20Wind%20the%20Next%20Ethanol_0.pdf
Here is a link to the report: http://www.insideronline.org/summary.cfm?id=13808
Natural Resources, Environment, and Science
Is Wind the Next Ethanol?
by Ben Lieberman
Competitive Enterprise Institute
October 26, 2010
Much of the Obama administration’s “clean energy economy” and “energy independence” agenda is a virtual repeat of the follies of the 1970s. Back then, failed attempts by Washington to pick winners and losers among alternative energy sources and energy-using technologies led to taxes, regulations, and subsidies that exacerbated the very concerns they were supposed to address. This decades-old lesson may be lost on younger politicians, bureaucrats, and activists who may be unaware that their energy policy ideas are proven failures from the age of disco.
URL: www.cei.org/sites/default/files/Ben%20Lieberman%20-%20Is%20Wind%20the%20Next%20Ethanol_0.pdf
Here is a link to the report: http://www.insideronline.org/summary.cfm?id=13808
Mankind Has An Insignificant Impact On The Climate Of Planet Earth
From The Heritage Foundation:
Natural Resources, Environment, and Science
Mankind has an Insignificant Impact on the Climate of Planet Earth
by Jay Lehr
Heartland Institute
October 27, 2010
Policy Study
It is clear that with the deep roots of the global warming scare it is not about to go away. It has the added advantage of not being able to be proven false in our life time. In the mean time the sanest course for us would be to gain what limited perspective we can (remembering the global cooling alarm of a generation ago) and proceed cautiously. We are going through a scare with many causes, and we need to step back from it, take a long second look at the scientific evidence, and not do anything rash.
URL: www.heartland.org/custom/semod_policybot/pdf/28617.pdf
Here is a link to the report: http://www.insideronline.org/summary.cfm?id=13824
Natural Resources, Environment, and Science
Mankind has an Insignificant Impact on the Climate of Planet Earth
by Jay Lehr
Heartland Institute
October 27, 2010
Policy Study
It is clear that with the deep roots of the global warming scare it is not about to go away. It has the added advantage of not being able to be proven false in our life time. In the mean time the sanest course for us would be to gain what limited perspective we can (remembering the global cooling alarm of a generation ago) and proceed cautiously. We are going through a scare with many causes, and we need to step back from it, take a long second look at the scientific evidence, and not do anything rash.
URL: www.heartland.org/custom/semod_policybot/pdf/28617.pdf
Here is a link to the report: http://www.insideronline.org/summary.cfm?id=13824
How The "Scientific Consensus" On Global Warming Affects Ameircan Business
From The Heritage Foundation:
How the “Scientific Consensus” on Global Warming Affects American Business—and ConsumersPublished on October 26, 2010 by Nicolas Loris Backgrounder #2479 Print PDF
Abstract: The only consensus over the threat of climate change that seems to exist these days is that there is no consensus. The much-heralded 2007 United Nations report on greenhouse gas emissions has served as a catalyst for lawmakers to burden traditional energy sources with regulations in favor of so-called clean energy. The private sector has begun to “chase” these policies, shaping business decisions to align with policies preferred by politicians, not the market or the public. Recent revelations of erroneous and misleading data in the report have led many to question the wisdom of government-mandated emissions caps and costly energy-efficiency regulations. Instead of basing policy on a “scientific consensus” that is neither scientific nor agreed-upon, Congress should eliminate subsidies and reduce regulatory red tape—and let all energy technologies succeed or fail on their own merits. Artificially propping up a select few distorts the market and hurts American businesses—which means that the final bearers of the costs are, as usual, the taxpayers.
For years businesses and the general public have been told by mainstream climatologists that the planet is warming due to human activity and that immediate action is necessary to avoid a global catastrophe. The U.S. government relied heavily on a 2007 report by the United Nations’ Intergovernmental Panel on Climate Change (IPCC) to justify the need to reduce emissions of carbon dioxide (CO2) and other greenhouse gases (GHGs) created anthropogenically. Over time, Congress enacted numerous policies to increase clean energy production, such as mandates for renewable fuels, expanded tax credits for renewable energy, and new energy efficiency targets for vehicles and appliances. All of these policies had the goal of reducing America’s carbon footprint. Congress is now seeking to expand and create new policies aimed at further reducing emissions by placing a national cap on carbon emissions and enforcing a federal mandate for renewable energy production. Meanwhile, the Environmental Protection Agency is on its own regulatory path to decrease CO2.
The business landscape consequently changed, and not for the better. Energy producers became vested stakeholders and lobbied for handouts to produce what Congress determined to be cleaner energy from cleaner sources, such as windmills, solar panels, and ethanol. Major oil companies invested in renewable energy technology to capitalize on subsidies and tax breaks while enhancing their image. Most businesses factored the threat of global warming into their daily operations and became cognizant of the threat of higher energy prices caused by government policies.
Despite vigorous dissention among the scientific community concerning the effects of anthropogenic warming, the climatologists who believe the warming to be a serious problem controlled the message for years. Simply put, they convinced the general public that global warming posed an imminent threat and drastic cuts in greenhouse gas emissions were necessary to prevent a catastrophe. Recent flaws discovered in the scientific assessment of climate change have shown that the scientific consensus is not as settled as the public had been led to believe. Leaked e-mails from the University of East Anglia’s Climate Research Unit in the U.K. revealed conspiracy, exaggerated warming data, possibly illegal destruction and manipulation of data, and attempts to freeze out dissenting scientists from publishing their work in reputable journals. Furthermore, gaffes exposed in the IPCC report have only increased skepticism among businesses and the public, and raised serious questions about sacrificing economic activity to reduce CO2 emissions.
Policy should never rest on a shaky set of assumptions, particularly when it can have far-reaching implications for American businesses and everyday Americans, and could therefore fundamentally alter decisions in ways that harm America’s productive system of free enterprise. While the government can pick winners and prop them up with subsidies, every winner comes at the expense of the taxpayer and discourages the innovation necessary to discover new and economically competitive sources of energy. Moreover, business uncertainty created by the government’s wavering on more climate change policy is stunting America’s economic recovery. With such inconclusive scientific evidence, Congress should not implement any new GHG-reduction policies, and it should prohibit the EPA from doing the same.
The Shifting Consensus
The alleged scientific consensus on climate change holds that the planet is warming at a dramatic rate. But not long ago, scientists thought that global cooling was a threat to the planet. As recently as 1975, The New York Times ran an article titled, “A Major Cooling Widely Considered to Be Inevitable.”[1] Some proposals even included covering the polar ice caps with black soot to melt them.[2] Only six years later, climatologists predicted that global warming was inevitable, and the issue gained more traction throughout the 1980s and 1990s. The IPCC published multiple reports, the first in 1990, pronouncing that human activities, predominately fossil fuel use, were warming the planet. A supplementary report followed in 1992, the second report appeared in 1995, and the third in 2001—all presenting “newer and stronger” evidence that the planet’s surface was heating due to human activity.[3]
The message that warming was incontrovertible continually gained momentum and exploded in 2006 when former Vice President Al Gore released his book and documentary film An Inconvenient Truth, claiming that the planet would witness more Hurricane Katrina-like disasters and rising sea levels if humans do not drastically reduce man-made greenhouse gas emissions. The 2007 IPCC report became Al Gore’s magnum opus on climate change and the main source for the “evidence” he relentlessly pitched to Congress. The 2007 report declared that global warming is “unequivocal,” and the frequency and intensity of natural disasters is likely to increase.[4] The report’s “Summary for Policymakers” warned that carbon emissions from fossil fuel production and nitrous oxide, and methane emissions from agricultural production, are significantly contributing to global warming.[5] Government officials in the U.S. and around the world continually use and exaggerate the IPCC report to justify the need for carbon reduction policies, creating a large disparity between hype and reality. For instance, even the IPCC projection of sea level rising over the next century is a modest 7 to 23 inches, with the lower end of that projection occurring over the past two centuries.
Is There a Scientific Consensus? Several recent events, including revelations that forced the IPCC to retract parts of its 2007 report, have called the scientific consensus into question. Although the study puts the probability of Himalayan glaciers melting by 2035 at “very high,” the authors acknowledged that they based this and other claims on speculation.[6] Further, the IPCC’s assessment of reductions in mountain ice in the Andes, Alps, and Africa came from two dubious sources. One was from a magazine that discussed anecdotal evidence from mountain climbers; the other came from a student dissertation.[7] The IPCC also acknowledged overstating crop loss in Africa, depletion of the Amazon rain forest, sea level increases in the Netherlands, and damage from weather catastrophes.[8]
Climate data sets are also raising questions. Hackers leaked thousands of e-mails and other documents from the University of East Anglia’s Climate Research Unit that detailed how these climatologists, many with important roles in promulgating the official U.N. science, refused to share data, plotted to keep dissenting scientists from being published in leading journals, and discarded original data. Some have resigned and others have been investigated for breaching data laws under the Freedom of Information Act.[9] Russian climatologists blamed the scandal-laden Climate Research Unit (CRU) for omitting cooler data points from its data set.[10] In the U.S., computer programmer E. Michael Smith and meteorologist Joseph D’Aleo detailed how the National Climatic Data Center (NCDC) dropped thousands of data points from its climate data set—data points that were in cooler regions around the globe.[11]
A few errors in the three-volume, almost 1,000-page IPCC report may not warrant dismissal of the entire study, but climatologists questioned the IPCC’s findings before these gaffes. University of Virginia professor Fred Singer recently published an 800-page report titled, “Climate Change Reconsidered,” which questions and debunks many of the IPCC conclusions and emphasizes that there is no scientific consensus on climate change.[12] Richard Lindzen, professor of meteorology at the Massachusetts Institute of Technology, notes that the IPCC’s models fail to take into account naturally occurring cycles such as El Niño, the Pacific decadal oscillation, or the Atlantic multidecadal oscillation.[13] Other prominent scientists called political action “irresponsible and immoral” because of the lack of credible evidence.[14] When the IPCC released its report in 2007, 400 climate experts disputed the findings; that number has since grown to more than 700 scientists, including several current and former IPCC scientists.[15]
The profusion of scientific dissent should have been sufficient evidence for policymakers to call the alleged consensus into question, and these recent events should raise even more red flags, especially in light of the economic costs that policies to mitigate greenhouse gases carry.
Government Plans to Reduce Greenhouse Gases
Despite these revelations about scientific research on global warming, the U.S. government has aggressively pursued climate change policies to reduce carbon dioxide emissions. During the past two decades, the federal government has spent more than $79 billion on climate change policies, “including science and technology research, administration, education campaigns, foreign aid, and tax breaks.”[16] Legislation signed into law in 2005 and 2007 included more steps to transition from fossil fuels and improve energy efficiency to reduce CO2 emissions. More recently, the Obama Administration has attempted to tip the balance in favor of renewable energy by advocating a cap-and-trade system, CO2 regulations, renewable electricity mandates, and additional billions of dollars in government spending for government-picked “clean-energy” sources. Key legislative and regulatory steps are:
2005 and 2007 Energy Bills and 2009 Green Stimulus. Over the past five years, the government implemented two key policies to support renewable energy production, and passed a stimulus bill in 2009 with billions allocated to renewable energy projects. The Energy Policy Act (EPACT) of 2005 contained loan guarantees for technologies, such as nuclear energy carbon capture, and sequestration, that would reduce greenhouse gas output by increasing the supply of carbon-free energy, as well as a host of subsidies and policies to increase renewable energy production. The act also included the first requirement that renewable fuels be mixed into the gasoline supply.
The Energy Independence and Security Act (EISA) of 2007 increased the renewable fuel mandate from 7.5 billion gallons in 2012 to 36 billion gallons by 2022,[17] and included more tax credits for wind power, solar energy, and small irrigation power. Congress implemented a number of other energy-efficiency mandates for vehicles, buildings, and appliances to reduce energy consumption and consumers’ carbon footprint. Energy-efficiency mandates were first put in place by the National Energy Conservation and Policy Act of 1978, but EPACT and EISA were the major policy drivers behind efficiency mandates. EISA placed stringent efficiency requirements on incandescent light bulbs in an attempt to phase them out beginning in 2012 and replace them with more energy-efficient bulbs, the most popular being compact fluorescent bulbs (CFLs).
The 2009 American Recovery and Reinvestment Act included funding for renewable energy as well. Also known as the stimulus bill, the $814 billion package allocates nearly $47 billion for renewable energy sources, smart grids, and energy-efficiency programs. Congress granted an additional $20 billion to manufacturers of renewable energy technology in the form of tax credits.
The reason these sources of energy need government help is that they are too uncompetitive to reach the market otherwise. To the extent that there is a valid economic case for wind energy, solar energy, and ethanol fuel, industry will provide them even in the absence of government dictates and subsidies. Moreover, government-mandated energy-efficiency programs may sound good to consumers, but it is rarely good when Washington controls the market, since the forced energy-efficiency standards can result in decreased product performance, features, or reliability, which destroys value for the consumer. Mandatory improvements in efficiency usually raise the purchase price of appliances; sometimes the increase is more than enough to negate the energy savings.
Cap and Trade. One way to make clean energy more competitive is to tax fossil fuels to make them more expensive through a cap-and-trade system. Under cap and trade, emitters of greenhouse gases, primarily carbon dioxide derived from fossil fuel production, would be required to obtain permits (also known as allowances) for each ton of CO2 emitted. The price of the allowances, in essence the tax on energy, is determined by supply and demand. As the carbon cuts become more stringent, the government allocates fewer permits, thus driving up the price for the energy-intensive sectors required to buy them. By taxing fossil-fuel-derived energy with artificial caps on carbon dioxide, clean energy artificially becomes more economically viable. In July 2009, the House of Representatives passed a cap-and-trade bill to reduce greenhouse gases 83 percent below 2005 levels by 2050. Since nearly 85 percent of America’s energy needs come from fossil fuels, capping carbon dioxide amounts to an enormous tax on energy consumption.
EPA Regulations. With Congress unable to deliver a final cap-and-trade bill to the President, the Environmental Protection Agency (EPA) has been working on a backdoor policy to regulate greenhouse gas emissions much like cap and trade. A 2007 Supreme Court case decided that carbon dioxide and five other GHGs are pollutants and can be regulated under the Clean Air Act. The court ordered the EPA administrator to determine whether these GHG emissions were dangerous to human health and the environment and whether the scientific consensus on the effects of GHGs was settled. In April 2009, the EPA issued an endangerment finding, saying that current and future greenhouse gas emissions pose a serious threat to public health and safety. The EPA relied on the 2007 IPCC report as well as data from the NCDC to establish this finding. Thus, questionable science is guiding major changes in economic regulation. Under this approach, almost any activity that emits carbon dioxide and other greenhouse gases could be regulated under the Clean Air Act. Like cap and trade, regulating CO2 emissions under the Clean Air Act would similarly burden the economy with higher energy costs, and would also include higher administrative compliance costs for businesses, higher bureaucratic costs for enforcing the regulations, and higher legal costs from the inevitable litigation.
Business Responds to Government
Recognizing policymakers’ commitment to reducing greenhouse gases, businesses shaped their plans around government policies, despite the fact they are based on poor scientific evidence. Companies worldwide are taking climate change into consideration when making short-term and long-term business decisions. A June 2009 PricewaterhouseCoopers global survey asked 1,124 CEOs how their respective businesses were responding to climate change policies. In a series of yes or no questions, when asked about making changes to the products and services provided due to climate change policies, 46 percent said they were already making changes to day-to-day operations, and 40 percent are already changing how they manage risk.[18]
Businesses are not just changing day-to-day operations and preparing for higher energy costs, but also how they invest for the future. Johnson & Johnson is investing in renewable energy and now uses the most hybrid vehicles of any company in America.[19] Wal-Mart CEO Scott Lee made a pledge that each of his stores would eventually run on 100 percent renewable energy.[20] Coca Cola’s environmental initiative focuses not only on water stewardship and sustainable packaging, but also climate protection.[21] Goldman Sachs invested $1.5 billion in wind, solar, and ethanol projects in 2006.[22]
There is nothing wrong with these business decisions if they are made voluntarily. But if they are made in response to government policies favoring renewable energy over other sources, especially on questionable scientific grounds, it misallocates private resources, crowds out innovation, and wastes taxpayer money. In Spain, solar companies enjoyed lucrative subsidies for years; when the global recession forced the Spanish government to cut back its handouts, the Spanish solar market crashed.[23]
In a free market, the private sector should bear the risk and, therefore, reap the reward or suffer the consequences of an investment decision. If the government dictates these decisions by subsidizing a portion of the project, businesses receive all rewards with minimal risk. With start-up companies and large corporations alike receiving money from the government through stimulus funds or tax credits, firms will divert investments to clean-energy technology away from other—potentially more profitable and value-creating—investments.
As the government moves more actively toward funding renewable technology, investors are waiting to determine who the government winners will be before they spend more of their own money on innovative ideas, expanding their businesses, and hiring more employees. As Darryl Siry, former head of marketing at Tesla Motors, put it, “The existence of an 800-pound gorilla putting massive capital behind select start-ups is sucking the air away from the rest of the venture-capital ecosystem. Being anointed by DOE [U.S. Department of Energy] has become everything for companies looking to move ahead.”[24]
Large corporations also flooded the halls of Congress with thousands of lobbyists to ask for preferential treatment on energy policy. In 2007, 10 of the largest companies in the U.S. formed the United States Climate Action Partnership (USCAP) urging the government to cut GHG emissions. USCAP has since grown to 28 businesses and environmental organizations.[25] Businesses heavily ramped up lobbying efforts in the past decade. More than 1,700 firms and groups sent lobbyists to work in the area of energy in 2009, up from 1,300 the year before, and 900 in 2006.[26]
Businesses rightfully have an interest in protecting their bottom lines. Many of them have calculated that some hodgepodge of green policies is inevitable and that their interests will be best served by trying to influence how Congress creates those policies. The best way to do that will be to position themselves as supporters of the legislation and then to provide helpful suggestions on how to “improve” it. Representatives from the oil, coal, gas, wind, and solar industries, among others, have a stake in the game one way or another—either to stave off harmful legislation or to ensure that legislation is favorable to their business.
This process, known as rent-seeking (because it causes businesses to lobby for rules in their favor at the expense of others), is bad economics and bad for the consumer. Not only is there an opportunity cost to lobbying (business resources spent on lobbying could be spent elsewhere); politics governed by special interests typically worsens conditions for the consumer. Consumers are the ones who bear the costs of these government policies; meanwhile, industry receives a seemingly free windfall. The more that government becomes involved in energy decisions, the more money will be used for special interest politicking. As founding father Ben Franklin said, “When the people find that they can vote themselves money, that will herald the end of the republic.”[27]
Congressional Action Required
Congress has spent years and billions of dollars building policy around an alleged scientific consensus, and is on a path to spend billions more as well as implement policies that would significantly reduce this country’s economic potential. Congress should instead focus on the following measures to prevent more unnecessary economic damage and promote sound energy policy that would create jobs and increase energy supply:
Refrain from Legislating for the Purpose of Reducing GHGs. Congress should not pursue policies, such as cap and trade, a renewable electricity standard, or subsidies for “clean energy” as long as grave scientific disputes remain. Even if a scientific consensus emerges, Congress should still refrain from taking any action unless the economic cost of climate change mitigation justifies any benefits.
Prohibit EPA Regulations. Congress should rein in the EPA’s regulatory authority by amending the Clean Air Act to exclude carbon dioxide and other greenhouse gases from coming under the EPA’s purview.
Focus Energy Policy on Energy, not GHGs. Instead of artificially propping up certain energy sources with subsidies and mandates based on a false scientific consensus, Congress should focus on creating a regulatory and legal framework for all energy policies to succeed or fail on their own merit by removing subsidies and reducing regulatory red tape that prevents the development of all energy sources.
Uncertain Science, Certain Cost
If the scientific consensus behind global warming is crumbling, so, too, should the economically harmful policies that stem from it. When asked about the scientific consensus on climate change, Phil Jones, former climate-research director at the University of East Anglia, said, “I don’t believe the vast majority of climate scientists think this. This is not my view. There is still much that needs to be undertaken to reduce uncertainties, not just for the future, but for the instrumental (and especially the paleoclimatic) past as well.”[28] If the vast majority of climatologists do not believe that the debate on climate change is over, politicians should not be pushing for greenhouse gas reduction policies that not only have significant economic costs, but will also deeply alter the business landscape of the United States.
—Nicolas D. Loris is a Research Associate in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
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[1]R. Warren Anderson and Dan Gainor, “Fire and Ice,” Business & Media Institute, May 17, 2006, at http://www.businessandmedia.org/specialreports/2006/fireandice/FireandIce.pdf (October 13, 2010).
[2]“The Cooling World,” Newsweek, April 28, 1975.
[3]Intergovernmental Panel on Climate Change, “Climate Change 2001: Synthesis Report,” at http://www.ipcc.ch/ipccreports/tar/vol4/english/008.htm (October 13, 2010).
[4]Intergovernmental Panel on Climate Change, “Summary for Policymakers,” 2007, at http://www.ipcc.ch/pdf/assessment-report/ar4/wg1/ar4-wg1-spm.pdf (October 13, 2010).
[5] Ibid. 620 authors and editors produced the full report.
[6]“A Glacier Meltdown,” The Wall Street Journal, January 23, 2010, at http://online.wsj.com/article/SB10001424052748703837004575013393219835692.html (October 13, 2010).
[7]Richard Gray, “UN Climate Change Panel Based Claims on Student Dissertation and Magazine Article,” The Telegraph, January 30, 2010, at http://www.telegraph.co.uk/earth/environment/climatechange/7111525/UN-climate-change-panel-based-claims-on-student-dissertation-and-magazine-article.html (October 13, 2010).
[8]Jeffrey Ball and Keith Johnson, “Climate Group Admits Mistakes,” The Wall Street Journal, February 10, 2010, at http://online.wsj.com/article/SB10001424052748704182004575055703697897576.html (October 13, 2010).
[9]“Climate E-mails Row University ‘Breached Data Laws,’” BBC News, January 28, 2010, at http://news.bbc.co.uk/2/hi/uk_news/8484385.stm (October 13, 2010).
[10]Natalya Pivovarova, “How Warming Is Being Made: The Case of Russia,” Institute of Economic Analysis, December 2009, in Russian, at http://www.iea.ru/article/kioto_order/15.12.2009.pdf (October 13, 2010).
[11]Joseph D’Aleo, “Climategate: Leaked Emails Inspired Data Analyses Show Claimed Warming Greatly Exaggerated and NOAA Not CRU is Ground Zero,” International Climate and Environmental Change Assessment Project, January 15, 2010, at http://icecap.us/images/uploads/NOAAroleinclimategate.pdf (October 13, 2010).
[12]Craig Idso and S. Fred Singer, “Climate Change Reconsidered,” Report of the Nongovernmental International Panel on Climate Change (NIPCC), May 2009, at http://hatch.senate.gov/public/_files/ClimateChangeReconsidered.pdf (October 13, 2010).
[13]Richard S. Lindzen, “The Climate Science Isn’t Settled,” The Wall Street Journal, November 30, 2009,at http://online.wsj.com/article/SB10001424052748703939404574567423917025400.html (October 13, 2010).
[14]Kesten C. Green, J. Scott Armstrong, and Willie Soon, “Climate Change Forecasts Are Useless for Policymaking,” Enter Stage Right, March 9, 2009, at http://www.enterstageright.com/archive/articles/0309/0309climatechangeforecasts.htm (October 13, 2010).
[15]Marc Morano, “UN Blowback: More Than 650 International Scientists Dissent over Man-Made Global Warming Claims,” U.S. Senate Committee on Environment and Public Works, March 16, 2009, at http://epw.senate.gov/public/index.cfm?FuseAction=MinorityBlogs&ContentRecord_id=2158072e-802a-23ad-45f0-274616db87e6 (October 13, 2010).
[16]Joanne Nova, “Climate Money,” Science and Public Policy Institute, July 21, 2009, at http://scienceandpublicpolicy.org/images/stories/papers/originals/climate_money.pdf (October 13, 2010).
[17]This mandate comes on top of other pro-ethanol provisions, most notably a 51 cent per gallon tax credit.
[18]“Capitalizing on a Climate of Change,” PriceWaterhouseCoopers, June 2009, at http://www.pwc.com/en_US/us/transaction-services/publications/assets/capitalizing-climate-change.pdf (October 13, 2010).
[19]“Johnson & Johnson Ranked Third on Newsweek’s Green Rankings List, 2009,” at http://www.jnj.com/connect/caring/environment-protection/recognition/ (October 13, 2010).
[20]Press release, “Remarks as Prepared for Wal-Mart CEO and President Lee Scott at the Wal-Mart U.S. Year Beginning Meeting,” Walmart, January 23, 2008, at http://walmartstores.com/pressroom/news/7896.aspx (October 13, 2010).
[21]The Coca Cola Company, “Environmental Initiatives,” at http://www.thecoca-colacompany.com/citizenship/environment.html (October 13, 2010).
[22]“10 Green Giants: Goldman Sachs,” CNN Money, at http://money.cnn.com/galleries/2007/fortune/0703/gallery.green_giants.fortune/8.html (October 13, 2010).
[23]“Solar Bubble Bursts in Spain amid Subsidy Cuts, Fraud Allegations,” Climate Wire, May 6, 2010, at http://www.eenews.net/cw/2010/05/06 (October 14, 2010).
[24]Neil King, Jr., “Venture Capitol: New VC Force,” The Wall Street Journal, December 15, 2009, at http://online.wsj.com/article/SB126074549073889853.html (October 13, 2010).
[25]United States Climate Action Partnership, at http://www.us-cap.org (October 13, 2010).
[26]OpenSecrets.org, “Lobbying: Energy & Nuclear Power,” at http://www.opensecrets.org/lobby/issuesum.php?year=2009&lname=Energy+%26+Nuclear+Power&id (October 13, 2010).
[27]John Petrie’s Collection of Ben Franklin Quotes, at http://jpetrie.myweb.uga.edu/poor_richard.html (October 13, 2010).
[28]“Q&A: Professor Phil Jones,” BBC News, February 13, 2010, at http://news.bbc.co.uk/2/hi/science/nature/8511670.stm (October 13, 2010).
How the “Scientific Consensus” on Global Warming Affects American Business—and ConsumersPublished on October 26, 2010 by Nicolas Loris Backgrounder #2479 Print PDF
Abstract: The only consensus over the threat of climate change that seems to exist these days is that there is no consensus. The much-heralded 2007 United Nations report on greenhouse gas emissions has served as a catalyst for lawmakers to burden traditional energy sources with regulations in favor of so-called clean energy. The private sector has begun to “chase” these policies, shaping business decisions to align with policies preferred by politicians, not the market or the public. Recent revelations of erroneous and misleading data in the report have led many to question the wisdom of government-mandated emissions caps and costly energy-efficiency regulations. Instead of basing policy on a “scientific consensus” that is neither scientific nor agreed-upon, Congress should eliminate subsidies and reduce regulatory red tape—and let all energy technologies succeed or fail on their own merits. Artificially propping up a select few distorts the market and hurts American businesses—which means that the final bearers of the costs are, as usual, the taxpayers.
For years businesses and the general public have been told by mainstream climatologists that the planet is warming due to human activity and that immediate action is necessary to avoid a global catastrophe. The U.S. government relied heavily on a 2007 report by the United Nations’ Intergovernmental Panel on Climate Change (IPCC) to justify the need to reduce emissions of carbon dioxide (CO2) and other greenhouse gases (GHGs) created anthropogenically. Over time, Congress enacted numerous policies to increase clean energy production, such as mandates for renewable fuels, expanded tax credits for renewable energy, and new energy efficiency targets for vehicles and appliances. All of these policies had the goal of reducing America’s carbon footprint. Congress is now seeking to expand and create new policies aimed at further reducing emissions by placing a national cap on carbon emissions and enforcing a federal mandate for renewable energy production. Meanwhile, the Environmental Protection Agency is on its own regulatory path to decrease CO2.
The business landscape consequently changed, and not for the better. Energy producers became vested stakeholders and lobbied for handouts to produce what Congress determined to be cleaner energy from cleaner sources, such as windmills, solar panels, and ethanol. Major oil companies invested in renewable energy technology to capitalize on subsidies and tax breaks while enhancing their image. Most businesses factored the threat of global warming into their daily operations and became cognizant of the threat of higher energy prices caused by government policies.
Despite vigorous dissention among the scientific community concerning the effects of anthropogenic warming, the climatologists who believe the warming to be a serious problem controlled the message for years. Simply put, they convinced the general public that global warming posed an imminent threat and drastic cuts in greenhouse gas emissions were necessary to prevent a catastrophe. Recent flaws discovered in the scientific assessment of climate change have shown that the scientific consensus is not as settled as the public had been led to believe. Leaked e-mails from the University of East Anglia’s Climate Research Unit in the U.K. revealed conspiracy, exaggerated warming data, possibly illegal destruction and manipulation of data, and attempts to freeze out dissenting scientists from publishing their work in reputable journals. Furthermore, gaffes exposed in the IPCC report have only increased skepticism among businesses and the public, and raised serious questions about sacrificing economic activity to reduce CO2 emissions.
Policy should never rest on a shaky set of assumptions, particularly when it can have far-reaching implications for American businesses and everyday Americans, and could therefore fundamentally alter decisions in ways that harm America’s productive system of free enterprise. While the government can pick winners and prop them up with subsidies, every winner comes at the expense of the taxpayer and discourages the innovation necessary to discover new and economically competitive sources of energy. Moreover, business uncertainty created by the government’s wavering on more climate change policy is stunting America’s economic recovery. With such inconclusive scientific evidence, Congress should not implement any new GHG-reduction policies, and it should prohibit the EPA from doing the same.
The Shifting Consensus
The alleged scientific consensus on climate change holds that the planet is warming at a dramatic rate. But not long ago, scientists thought that global cooling was a threat to the planet. As recently as 1975, The New York Times ran an article titled, “A Major Cooling Widely Considered to Be Inevitable.”[1] Some proposals even included covering the polar ice caps with black soot to melt them.[2] Only six years later, climatologists predicted that global warming was inevitable, and the issue gained more traction throughout the 1980s and 1990s. The IPCC published multiple reports, the first in 1990, pronouncing that human activities, predominately fossil fuel use, were warming the planet. A supplementary report followed in 1992, the second report appeared in 1995, and the third in 2001—all presenting “newer and stronger” evidence that the planet’s surface was heating due to human activity.[3]
The message that warming was incontrovertible continually gained momentum and exploded in 2006 when former Vice President Al Gore released his book and documentary film An Inconvenient Truth, claiming that the planet would witness more Hurricane Katrina-like disasters and rising sea levels if humans do not drastically reduce man-made greenhouse gas emissions. The 2007 IPCC report became Al Gore’s magnum opus on climate change and the main source for the “evidence” he relentlessly pitched to Congress. The 2007 report declared that global warming is “unequivocal,” and the frequency and intensity of natural disasters is likely to increase.[4] The report’s “Summary for Policymakers” warned that carbon emissions from fossil fuel production and nitrous oxide, and methane emissions from agricultural production, are significantly contributing to global warming.[5] Government officials in the U.S. and around the world continually use and exaggerate the IPCC report to justify the need for carbon reduction policies, creating a large disparity between hype and reality. For instance, even the IPCC projection of sea level rising over the next century is a modest 7 to 23 inches, with the lower end of that projection occurring over the past two centuries.
Is There a Scientific Consensus? Several recent events, including revelations that forced the IPCC to retract parts of its 2007 report, have called the scientific consensus into question. Although the study puts the probability of Himalayan glaciers melting by 2035 at “very high,” the authors acknowledged that they based this and other claims on speculation.[6] Further, the IPCC’s assessment of reductions in mountain ice in the Andes, Alps, and Africa came from two dubious sources. One was from a magazine that discussed anecdotal evidence from mountain climbers; the other came from a student dissertation.[7] The IPCC also acknowledged overstating crop loss in Africa, depletion of the Amazon rain forest, sea level increases in the Netherlands, and damage from weather catastrophes.[8]
Climate data sets are also raising questions. Hackers leaked thousands of e-mails and other documents from the University of East Anglia’s Climate Research Unit that detailed how these climatologists, many with important roles in promulgating the official U.N. science, refused to share data, plotted to keep dissenting scientists from being published in leading journals, and discarded original data. Some have resigned and others have been investigated for breaching data laws under the Freedom of Information Act.[9] Russian climatologists blamed the scandal-laden Climate Research Unit (CRU) for omitting cooler data points from its data set.[10] In the U.S., computer programmer E. Michael Smith and meteorologist Joseph D’Aleo detailed how the National Climatic Data Center (NCDC) dropped thousands of data points from its climate data set—data points that were in cooler regions around the globe.[11]
A few errors in the three-volume, almost 1,000-page IPCC report may not warrant dismissal of the entire study, but climatologists questioned the IPCC’s findings before these gaffes. University of Virginia professor Fred Singer recently published an 800-page report titled, “Climate Change Reconsidered,” which questions and debunks many of the IPCC conclusions and emphasizes that there is no scientific consensus on climate change.[12] Richard Lindzen, professor of meteorology at the Massachusetts Institute of Technology, notes that the IPCC’s models fail to take into account naturally occurring cycles such as El Niño, the Pacific decadal oscillation, or the Atlantic multidecadal oscillation.[13] Other prominent scientists called political action “irresponsible and immoral” because of the lack of credible evidence.[14] When the IPCC released its report in 2007, 400 climate experts disputed the findings; that number has since grown to more than 700 scientists, including several current and former IPCC scientists.[15]
The profusion of scientific dissent should have been sufficient evidence for policymakers to call the alleged consensus into question, and these recent events should raise even more red flags, especially in light of the economic costs that policies to mitigate greenhouse gases carry.
Government Plans to Reduce Greenhouse Gases
Despite these revelations about scientific research on global warming, the U.S. government has aggressively pursued climate change policies to reduce carbon dioxide emissions. During the past two decades, the federal government has spent more than $79 billion on climate change policies, “including science and technology research, administration, education campaigns, foreign aid, and tax breaks.”[16] Legislation signed into law in 2005 and 2007 included more steps to transition from fossil fuels and improve energy efficiency to reduce CO2 emissions. More recently, the Obama Administration has attempted to tip the balance in favor of renewable energy by advocating a cap-and-trade system, CO2 regulations, renewable electricity mandates, and additional billions of dollars in government spending for government-picked “clean-energy” sources. Key legislative and regulatory steps are:
2005 and 2007 Energy Bills and 2009 Green Stimulus. Over the past five years, the government implemented two key policies to support renewable energy production, and passed a stimulus bill in 2009 with billions allocated to renewable energy projects. The Energy Policy Act (EPACT) of 2005 contained loan guarantees for technologies, such as nuclear energy carbon capture, and sequestration, that would reduce greenhouse gas output by increasing the supply of carbon-free energy, as well as a host of subsidies and policies to increase renewable energy production. The act also included the first requirement that renewable fuels be mixed into the gasoline supply.
The Energy Independence and Security Act (EISA) of 2007 increased the renewable fuel mandate from 7.5 billion gallons in 2012 to 36 billion gallons by 2022,[17] and included more tax credits for wind power, solar energy, and small irrigation power. Congress implemented a number of other energy-efficiency mandates for vehicles, buildings, and appliances to reduce energy consumption and consumers’ carbon footprint. Energy-efficiency mandates were first put in place by the National Energy Conservation and Policy Act of 1978, but EPACT and EISA were the major policy drivers behind efficiency mandates. EISA placed stringent efficiency requirements on incandescent light bulbs in an attempt to phase them out beginning in 2012 and replace them with more energy-efficient bulbs, the most popular being compact fluorescent bulbs (CFLs).
The 2009 American Recovery and Reinvestment Act included funding for renewable energy as well. Also known as the stimulus bill, the $814 billion package allocates nearly $47 billion for renewable energy sources, smart grids, and energy-efficiency programs. Congress granted an additional $20 billion to manufacturers of renewable energy technology in the form of tax credits.
The reason these sources of energy need government help is that they are too uncompetitive to reach the market otherwise. To the extent that there is a valid economic case for wind energy, solar energy, and ethanol fuel, industry will provide them even in the absence of government dictates and subsidies. Moreover, government-mandated energy-efficiency programs may sound good to consumers, but it is rarely good when Washington controls the market, since the forced energy-efficiency standards can result in decreased product performance, features, or reliability, which destroys value for the consumer. Mandatory improvements in efficiency usually raise the purchase price of appliances; sometimes the increase is more than enough to negate the energy savings.
Cap and Trade. One way to make clean energy more competitive is to tax fossil fuels to make them more expensive through a cap-and-trade system. Under cap and trade, emitters of greenhouse gases, primarily carbon dioxide derived from fossil fuel production, would be required to obtain permits (also known as allowances) for each ton of CO2 emitted. The price of the allowances, in essence the tax on energy, is determined by supply and demand. As the carbon cuts become more stringent, the government allocates fewer permits, thus driving up the price for the energy-intensive sectors required to buy them. By taxing fossil-fuel-derived energy with artificial caps on carbon dioxide, clean energy artificially becomes more economically viable. In July 2009, the House of Representatives passed a cap-and-trade bill to reduce greenhouse gases 83 percent below 2005 levels by 2050. Since nearly 85 percent of America’s energy needs come from fossil fuels, capping carbon dioxide amounts to an enormous tax on energy consumption.
EPA Regulations. With Congress unable to deliver a final cap-and-trade bill to the President, the Environmental Protection Agency (EPA) has been working on a backdoor policy to regulate greenhouse gas emissions much like cap and trade. A 2007 Supreme Court case decided that carbon dioxide and five other GHGs are pollutants and can be regulated under the Clean Air Act. The court ordered the EPA administrator to determine whether these GHG emissions were dangerous to human health and the environment and whether the scientific consensus on the effects of GHGs was settled. In April 2009, the EPA issued an endangerment finding, saying that current and future greenhouse gas emissions pose a serious threat to public health and safety. The EPA relied on the 2007 IPCC report as well as data from the NCDC to establish this finding. Thus, questionable science is guiding major changes in economic regulation. Under this approach, almost any activity that emits carbon dioxide and other greenhouse gases could be regulated under the Clean Air Act. Like cap and trade, regulating CO2 emissions under the Clean Air Act would similarly burden the economy with higher energy costs, and would also include higher administrative compliance costs for businesses, higher bureaucratic costs for enforcing the regulations, and higher legal costs from the inevitable litigation.
Business Responds to Government
Recognizing policymakers’ commitment to reducing greenhouse gases, businesses shaped their plans around government policies, despite the fact they are based on poor scientific evidence. Companies worldwide are taking climate change into consideration when making short-term and long-term business decisions. A June 2009 PricewaterhouseCoopers global survey asked 1,124 CEOs how their respective businesses were responding to climate change policies. In a series of yes or no questions, when asked about making changes to the products and services provided due to climate change policies, 46 percent said they were already making changes to day-to-day operations, and 40 percent are already changing how they manage risk.[18]
Businesses are not just changing day-to-day operations and preparing for higher energy costs, but also how they invest for the future. Johnson & Johnson is investing in renewable energy and now uses the most hybrid vehicles of any company in America.[19] Wal-Mart CEO Scott Lee made a pledge that each of his stores would eventually run on 100 percent renewable energy.[20] Coca Cola’s environmental initiative focuses not only on water stewardship and sustainable packaging, but also climate protection.[21] Goldman Sachs invested $1.5 billion in wind, solar, and ethanol projects in 2006.[22]
There is nothing wrong with these business decisions if they are made voluntarily. But if they are made in response to government policies favoring renewable energy over other sources, especially on questionable scientific grounds, it misallocates private resources, crowds out innovation, and wastes taxpayer money. In Spain, solar companies enjoyed lucrative subsidies for years; when the global recession forced the Spanish government to cut back its handouts, the Spanish solar market crashed.[23]
In a free market, the private sector should bear the risk and, therefore, reap the reward or suffer the consequences of an investment decision. If the government dictates these decisions by subsidizing a portion of the project, businesses receive all rewards with minimal risk. With start-up companies and large corporations alike receiving money from the government through stimulus funds or tax credits, firms will divert investments to clean-energy technology away from other—potentially more profitable and value-creating—investments.
As the government moves more actively toward funding renewable technology, investors are waiting to determine who the government winners will be before they spend more of their own money on innovative ideas, expanding their businesses, and hiring more employees. As Darryl Siry, former head of marketing at Tesla Motors, put it, “The existence of an 800-pound gorilla putting massive capital behind select start-ups is sucking the air away from the rest of the venture-capital ecosystem. Being anointed by DOE [U.S. Department of Energy] has become everything for companies looking to move ahead.”[24]
Large corporations also flooded the halls of Congress with thousands of lobbyists to ask for preferential treatment on energy policy. In 2007, 10 of the largest companies in the U.S. formed the United States Climate Action Partnership (USCAP) urging the government to cut GHG emissions. USCAP has since grown to 28 businesses and environmental organizations.[25] Businesses heavily ramped up lobbying efforts in the past decade. More than 1,700 firms and groups sent lobbyists to work in the area of energy in 2009, up from 1,300 the year before, and 900 in 2006.[26]
Businesses rightfully have an interest in protecting their bottom lines. Many of them have calculated that some hodgepodge of green policies is inevitable and that their interests will be best served by trying to influence how Congress creates those policies. The best way to do that will be to position themselves as supporters of the legislation and then to provide helpful suggestions on how to “improve” it. Representatives from the oil, coal, gas, wind, and solar industries, among others, have a stake in the game one way or another—either to stave off harmful legislation or to ensure that legislation is favorable to their business.
This process, known as rent-seeking (because it causes businesses to lobby for rules in their favor at the expense of others), is bad economics and bad for the consumer. Not only is there an opportunity cost to lobbying (business resources spent on lobbying could be spent elsewhere); politics governed by special interests typically worsens conditions for the consumer. Consumers are the ones who bear the costs of these government policies; meanwhile, industry receives a seemingly free windfall. The more that government becomes involved in energy decisions, the more money will be used for special interest politicking. As founding father Ben Franklin said, “When the people find that they can vote themselves money, that will herald the end of the republic.”[27]
Congressional Action Required
Congress has spent years and billions of dollars building policy around an alleged scientific consensus, and is on a path to spend billions more as well as implement policies that would significantly reduce this country’s economic potential. Congress should instead focus on the following measures to prevent more unnecessary economic damage and promote sound energy policy that would create jobs and increase energy supply:
Refrain from Legislating for the Purpose of Reducing GHGs. Congress should not pursue policies, such as cap and trade, a renewable electricity standard, or subsidies for “clean energy” as long as grave scientific disputes remain. Even if a scientific consensus emerges, Congress should still refrain from taking any action unless the economic cost of climate change mitigation justifies any benefits.
Prohibit EPA Regulations. Congress should rein in the EPA’s regulatory authority by amending the Clean Air Act to exclude carbon dioxide and other greenhouse gases from coming under the EPA’s purview.
Focus Energy Policy on Energy, not GHGs. Instead of artificially propping up certain energy sources with subsidies and mandates based on a false scientific consensus, Congress should focus on creating a regulatory and legal framework for all energy policies to succeed or fail on their own merit by removing subsidies and reducing regulatory red tape that prevents the development of all energy sources.
Uncertain Science, Certain Cost
If the scientific consensus behind global warming is crumbling, so, too, should the economically harmful policies that stem from it. When asked about the scientific consensus on climate change, Phil Jones, former climate-research director at the University of East Anglia, said, “I don’t believe the vast majority of climate scientists think this. This is not my view. There is still much that needs to be undertaken to reduce uncertainties, not just for the future, but for the instrumental (and especially the paleoclimatic) past as well.”[28] If the vast majority of climatologists do not believe that the debate on climate change is over, politicians should not be pushing for greenhouse gas reduction policies that not only have significant economic costs, but will also deeply alter the business landscape of the United States.
—Nicolas D. Loris is a Research Associate in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
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Show references in this report
[1]R. Warren Anderson and Dan Gainor, “Fire and Ice,” Business & Media Institute, May 17, 2006, at http://www.businessandmedia.org/specialreports/2006/fireandice/FireandIce.pdf (October 13, 2010).
[2]“The Cooling World,” Newsweek, April 28, 1975.
[3]Intergovernmental Panel on Climate Change, “Climate Change 2001: Synthesis Report,” at http://www.ipcc.ch/ipccreports/tar/vol4/english/008.htm (October 13, 2010).
[4]Intergovernmental Panel on Climate Change, “Summary for Policymakers,” 2007, at http://www.ipcc.ch/pdf/assessment-report/ar4/wg1/ar4-wg1-spm.pdf (October 13, 2010).
[5] Ibid. 620 authors and editors produced the full report.
[6]“A Glacier Meltdown,” The Wall Street Journal, January 23, 2010, at http://online.wsj.com/article/SB10001424052748703837004575013393219835692.html (October 13, 2010).
[7]Richard Gray, “UN Climate Change Panel Based Claims on Student Dissertation and Magazine Article,” The Telegraph, January 30, 2010, at http://www.telegraph.co.uk/earth/environment/climatechange/7111525/UN-climate-change-panel-based-claims-on-student-dissertation-and-magazine-article.html (October 13, 2010).
[8]Jeffrey Ball and Keith Johnson, “Climate Group Admits Mistakes,” The Wall Street Journal, February 10, 2010, at http://online.wsj.com/article/SB10001424052748704182004575055703697897576.html (October 13, 2010).
[9]“Climate E-mails Row University ‘Breached Data Laws,’” BBC News, January 28, 2010, at http://news.bbc.co.uk/2/hi/uk_news/8484385.stm (October 13, 2010).
[10]Natalya Pivovarova, “How Warming Is Being Made: The Case of Russia,” Institute of Economic Analysis, December 2009, in Russian, at http://www.iea.ru/article/kioto_order/15.12.2009.pdf (October 13, 2010).
[11]Joseph D’Aleo, “Climategate: Leaked Emails Inspired Data Analyses Show Claimed Warming Greatly Exaggerated and NOAA Not CRU is Ground Zero,” International Climate and Environmental Change Assessment Project, January 15, 2010, at http://icecap.us/images/uploads/NOAAroleinclimategate.pdf (October 13, 2010).
[12]Craig Idso and S. Fred Singer, “Climate Change Reconsidered,” Report of the Nongovernmental International Panel on Climate Change (NIPCC), May 2009, at http://hatch.senate.gov/public/_files/ClimateChangeReconsidered.pdf (October 13, 2010).
[13]Richard S. Lindzen, “The Climate Science Isn’t Settled,” The Wall Street Journal, November 30, 2009,at http://online.wsj.com/article/SB10001424052748703939404574567423917025400.html (October 13, 2010).
[14]Kesten C. Green, J. Scott Armstrong, and Willie Soon, “Climate Change Forecasts Are Useless for Policymaking,” Enter Stage Right, March 9, 2009, at http://www.enterstageright.com/archive/articles/0309/0309climatechangeforecasts.htm (October 13, 2010).
[15]Marc Morano, “UN Blowback: More Than 650 International Scientists Dissent over Man-Made Global Warming Claims,” U.S. Senate Committee on Environment and Public Works, March 16, 2009, at http://epw.senate.gov/public/index.cfm?FuseAction=MinorityBlogs&ContentRecord_id=2158072e-802a-23ad-45f0-274616db87e6 (October 13, 2010).
[16]Joanne Nova, “Climate Money,” Science and Public Policy Institute, July 21, 2009, at http://scienceandpublicpolicy.org/images/stories/papers/originals/climate_money.pdf (October 13, 2010).
[17]This mandate comes on top of other pro-ethanol provisions, most notably a 51 cent per gallon tax credit.
[18]“Capitalizing on a Climate of Change,” PriceWaterhouseCoopers, June 2009, at http://www.pwc.com/en_US/us/transaction-services/publications/assets/capitalizing-climate-change.pdf (October 13, 2010).
[19]“Johnson & Johnson Ranked Third on Newsweek’s Green Rankings List, 2009,” at http://www.jnj.com/connect/caring/environment-protection/recognition/ (October 13, 2010).
[20]Press release, “Remarks as Prepared for Wal-Mart CEO and President Lee Scott at the Wal-Mart U.S. Year Beginning Meeting,” Walmart, January 23, 2008, at http://walmartstores.com/pressroom/news/7896.aspx (October 13, 2010).
[21]The Coca Cola Company, “Environmental Initiatives,” at http://www.thecoca-colacompany.com/citizenship/environment.html (October 13, 2010).
[22]“10 Green Giants: Goldman Sachs,” CNN Money, at http://money.cnn.com/galleries/2007/fortune/0703/gallery.green_giants.fortune/8.html (October 13, 2010).
[23]“Solar Bubble Bursts in Spain amid Subsidy Cuts, Fraud Allegations,” Climate Wire, May 6, 2010, at http://www.eenews.net/cw/2010/05/06 (October 14, 2010).
[24]Neil King, Jr., “Venture Capitol: New VC Force,” The Wall Street Journal, December 15, 2009, at http://online.wsj.com/article/SB126074549073889853.html (October 13, 2010).
[25]United States Climate Action Partnership, at http://www.us-cap.org (October 13, 2010).
[26]OpenSecrets.org, “Lobbying: Energy & Nuclear Power,” at http://www.opensecrets.org/lobby/issuesum.php?year=2009&lname=Energy+%26+Nuclear+Power&id (October 13, 2010).
[27]John Petrie’s Collection of Ben Franklin Quotes, at http://jpetrie.myweb.uga.edu/poor_richard.html (October 13, 2010).
[28]“Q&A: Professor Phil Jones,” BBC News, February 13, 2010, at http://news.bbc.co.uk/2/hi/science/nature/8511670.stm (October 13, 2010).
The Costs Of Over-Regulation
from CFIF:
The Costs of Over-Regulation Share
By Ashton Ellis
Thursday, October 28 2010
The top 43 new regulations are estimated to impose an additional $28 billion in costs on the American economy. Of this increase, 10 regulations from the Environmental Protection Agency (EPA) account for $23.2 billion of the overall increase.
There is a difference between protecting people and micromanaging to the point of absurdity. Hot on the heels of a Heritage Foundation report detailing the billions of dollars in lost jobs and profits caused by government over-regulation comes a charge from Europeans: TSA regulations are redundant and ineffective. Will California reverse the trend and suspend its major climate change regulation for the sake of job growth? Here’s what to watch for next Tuesday and beyond.
In the run-up to next Tuesday’s elections, the Heritage Foundation (a conservative think tank) released a report detailing the “hidden tax” impacting American economic growth for the fiscal year ending September 30, 2010. According to the authors of Red Tape Rising: Obama’s Torrent of New Regulation, the top 43 new regulations are estimated to impose an additional $28 billion in costs on the American economy. Of this increase, 10 regulations from the Environmental Protection Agency (EPA) account for $23.2 billion of the overall increase.
What are everyday Americans getting for all this? Thanks to the EPA, they will soon enjoy higher prices for cars, food, appliances and mortgages. Stricter fuel economy and emission standards will require car companies to pass along the compliance costs to consumers in the form of higher sticker prices. Mandated quotas for renewable fuels like ethanol will further repurpose corn growing from food to fuel. Since corn is a major staple in most food, the decrease in supply will increase its cost.
EPA regulations will have a similar upward spike in the cost of home appliances as new rules dictating energy efficiency standards kick-in. And, in another hit on the still fragile housing industry, construction sites are being targeted for “effluent” discharges. The process of eliminating such threats to an environmentalist’s peace of mind includes eliminating more than 7,000 construction jobs, and closing 147 firms. Then there’s the fact that buyers of newly non-compliant homes will experience higher mortgage costs to the tune of $1,953.
But wait; there’s more! As if to cast further doubt on the government’s ability to enact beneficial regulations, European authorities are calling on the Transportation Security Administration (TSA) to scrap its embarrassingly shallow airport procedures. In a recent speech, the chairman of British Airways criticized the TSA’s shoe and laptop screenings as “completely redundant.” Officials from the European Union are pleading with the United States government to rationalize its security policies to reduce the burden on passengers traveling into America. When the bureaucratic apparatus representing a socialist ethos starts questioning a government’s commitment to regulatory sanity, you know we have a problem.
Californians seem to be waking up to this reality. One of the most consequential initiatives on next Tuesday’s ballot is Proposition 23. The measure would suspend implementation of AB 32, Governor Arnold Schwarzenegger’s monument to regulatory excess. Passed in the name of reducing global warming, the law seeks to return emissions to 1990 levels by 2010. That kind of rapid reduction requires costly upgrades and retrofits in order to avoid heavy fines.
Business owners got the message and are fleeing the state in droves. Thus, Prop 23 would sideline AB 32 until California’s unemployment – currently 12.5% – drops to 5.5% or below for four straight quarters. If passed, Prop 23 would be an important first step in reminding the environmental left that emissions targets are luxuries; jobs are necessities.
Ultimately, the costs of over-regulation amount to unreported taxation on Americans’ life, liberty, property and their pursuit of happiness. No one feels safer after partially disrobing in an airport, and no one’s quality of life is improved when economic opportunity is sacrificed on the altar of environmentalism. What’s needed is a comprehensive reordering of the government’s regulatory priorities. That process should start as early as next Tuesday night.
The Costs of Over-Regulation Share
By Ashton Ellis
Thursday, October 28 2010
The top 43 new regulations are estimated to impose an additional $28 billion in costs on the American economy. Of this increase, 10 regulations from the Environmental Protection Agency (EPA) account for $23.2 billion of the overall increase.
There is a difference between protecting people and micromanaging to the point of absurdity. Hot on the heels of a Heritage Foundation report detailing the billions of dollars in lost jobs and profits caused by government over-regulation comes a charge from Europeans: TSA regulations are redundant and ineffective. Will California reverse the trend and suspend its major climate change regulation for the sake of job growth? Here’s what to watch for next Tuesday and beyond.
In the run-up to next Tuesday’s elections, the Heritage Foundation (a conservative think tank) released a report detailing the “hidden tax” impacting American economic growth for the fiscal year ending September 30, 2010. According to the authors of Red Tape Rising: Obama’s Torrent of New Regulation, the top 43 new regulations are estimated to impose an additional $28 billion in costs on the American economy. Of this increase, 10 regulations from the Environmental Protection Agency (EPA) account for $23.2 billion of the overall increase.
What are everyday Americans getting for all this? Thanks to the EPA, they will soon enjoy higher prices for cars, food, appliances and mortgages. Stricter fuel economy and emission standards will require car companies to pass along the compliance costs to consumers in the form of higher sticker prices. Mandated quotas for renewable fuels like ethanol will further repurpose corn growing from food to fuel. Since corn is a major staple in most food, the decrease in supply will increase its cost.
EPA regulations will have a similar upward spike in the cost of home appliances as new rules dictating energy efficiency standards kick-in. And, in another hit on the still fragile housing industry, construction sites are being targeted for “effluent” discharges. The process of eliminating such threats to an environmentalist’s peace of mind includes eliminating more than 7,000 construction jobs, and closing 147 firms. Then there’s the fact that buyers of newly non-compliant homes will experience higher mortgage costs to the tune of $1,953.
But wait; there’s more! As if to cast further doubt on the government’s ability to enact beneficial regulations, European authorities are calling on the Transportation Security Administration (TSA) to scrap its embarrassingly shallow airport procedures. In a recent speech, the chairman of British Airways criticized the TSA’s shoe and laptop screenings as “completely redundant.” Officials from the European Union are pleading with the United States government to rationalize its security policies to reduce the burden on passengers traveling into America. When the bureaucratic apparatus representing a socialist ethos starts questioning a government’s commitment to regulatory sanity, you know we have a problem.
Californians seem to be waking up to this reality. One of the most consequential initiatives on next Tuesday’s ballot is Proposition 23. The measure would suspend implementation of AB 32, Governor Arnold Schwarzenegger’s monument to regulatory excess. Passed in the name of reducing global warming, the law seeks to return emissions to 1990 levels by 2010. That kind of rapid reduction requires costly upgrades and retrofits in order to avoid heavy fines.
Business owners got the message and are fleeing the state in droves. Thus, Prop 23 would sideline AB 32 until California’s unemployment – currently 12.5% – drops to 5.5% or below for four straight quarters. If passed, Prop 23 would be an important first step in reminding the environmental left that emissions targets are luxuries; jobs are necessities.
Ultimately, the costs of over-regulation amount to unreported taxation on Americans’ life, liberty, property and their pursuit of happiness. No one feels safer after partially disrobing in an airport, and no one’s quality of life is improved when economic opportunity is sacrificed on the altar of environmentalism. What’s needed is a comprehensive reordering of the government’s regulatory priorities. That process should start as early as next Tuesday night.
Secret Medicare Database Keeps Fraud From Public
From Corruption Chronicles;
Secret Medicare Database Keeps Fraud From Public
ViewDiscussion.Last Updated: Thu, 10/28/2010 - 11:53am
In a blow to government transparency, a federal database that can expose fraud in the nation’s largest taxpayer-funded medical program is off limits to the public because an influential trade group wants the information to be kept secret.
As a result, the American public is banned from accessing details of how tens of billions of tax dollars are spent on Medicare, the federal insurance program for the elderly and disabled. That’s because the country’s powerful doctors’ trade group, American Medical Association, sued the government more than 30 years ago to keep private how much money physicians get from Medicare.
In 2009 that amounted to $62.5 billion, some of which was billed fraudulently by crooked practitioners, according to an in-depth probe conducted by the nation’s largest newspaper. After a year-long battle with the government agency(Department of Health and Human Services)that keeps the computerized Medicare records, the paper finally accessed the information though it came with restrictions.
Financed by U.S. taxpayers, the extensive database tracks all the money Medicare pays for medical treatment. Reporters were prohibited from naming physicians, even in cases where outright fraud had been committed by the doctor. One example featured a New York family practice doctor who billed Medicare more than $2 million in one year alone for highly questionable procedures.
If the database were fully available to public scrutiny, perhaps waste in the fraud-infested Medicare program could be exposed regularly. After all, federal investigators use the secret database to root out corruption although they aren’t very efficient at doing it.
In the last few months, several huge Medicare fraud schemes have been busted around the country and many had been operating for years without being detected. Most recently an Armenian crime syndicate got charged for billing Medicare more than $100 million for treatments that no doctor ever performed and no patient ever received in bogus clinics throughout the U.S.
Before that 94 people—including doctors—were charged with submitting more than $251 million in false Medicare claims in several states, including Florida, Texas, Michigan and New York. Among them was a veteran Miami physician charged with submitting about $103 million in fraudulent bills.
Secret Medicare Database Keeps Fraud From Public
ViewDiscussion.Last Updated: Thu, 10/28/2010 - 11:53am
In a blow to government transparency, a federal database that can expose fraud in the nation’s largest taxpayer-funded medical program is off limits to the public because an influential trade group wants the information to be kept secret.
As a result, the American public is banned from accessing details of how tens of billions of tax dollars are spent on Medicare, the federal insurance program for the elderly and disabled. That’s because the country’s powerful doctors’ trade group, American Medical Association, sued the government more than 30 years ago to keep private how much money physicians get from Medicare.
In 2009 that amounted to $62.5 billion, some of which was billed fraudulently by crooked practitioners, according to an in-depth probe conducted by the nation’s largest newspaper. After a year-long battle with the government agency(Department of Health and Human Services)that keeps the computerized Medicare records, the paper finally accessed the information though it came with restrictions.
Financed by U.S. taxpayers, the extensive database tracks all the money Medicare pays for medical treatment. Reporters were prohibited from naming physicians, even in cases where outright fraud had been committed by the doctor. One example featured a New York family practice doctor who billed Medicare more than $2 million in one year alone for highly questionable procedures.
If the database were fully available to public scrutiny, perhaps waste in the fraud-infested Medicare program could be exposed regularly. After all, federal investigators use the secret database to root out corruption although they aren’t very efficient at doing it.
In the last few months, several huge Medicare fraud schemes have been busted around the country and many had been operating for years without being detected. Most recently an Armenian crime syndicate got charged for billing Medicare more than $100 million for treatments that no doctor ever performed and no patient ever received in bogus clinics throughout the U.S.
Before that 94 people—including doctors—were charged with submitting more than $251 million in false Medicare claims in several states, including Florida, Texas, Michigan and New York. Among them was a veteran Miami physician charged with submitting about $103 million in fraudulent bills.
Obama Regime Protects Corrupt Friend/Mob Banker Senate Candidate From Un-Favorable FDIC Report
From Corruption Chronicles:
Feds Protect Obama’s Mob Banker Senate Candidate
ViewDiscussion.Last Updated: Mon, 10/25/2010 - 11:17am
It appears that President Obama has pulled strings to help his shady banker friend win a tight U.S. Senate race by delaying an overdue federal report on his mob-connected bank’s failure until after the election.
Federal regulators will conveniently postpone issuing a material loss report on Illinois Senate candidate Alexi Giannoulias’ Chicago bank (Broadway Bank) because releasing it before the election could create "another political headache" for Giannoulias in a “close contest” with his Republican opponent, reports the state’s largest newspaper.
Currently Illinois State Treasurer, Giannoulias helped operate the family bank before it was shut down in April for “unsafe banking practices” that have cost U.S. taxpayers $394.3 million. For years Broadway Bank did business with convicted felons and mobsters by providing them with tens of millions of dollars in “loans” that inevitably fortified their criminal enterprises.
Besides giving Russian mobsters cash, Broadway Bank also gave a jailed Democratic fundraiser and longtime Obama supporter and benefactor (Antoin Rezko) millions of dollars. In fact, Giannoulias’ bank gave Rezko a $23 million “loan” while he was embroiled in a huge federal investigation. Rezko eventually got convicted for bribery, mail fraud and money laundering.
Most recently Giannoulias was embroiled in the bribery scandal masterminded by convicted Illinois Governor Rod Blagojevich. Court testimony in Blagojevich’s corruption trial indicates that Giannoulias, who was subpoenaed to testify, tried to sway the disgraced governor to appoint him to Obama’s old senate seat. The jury eventually convicted Blagojevich for lying to the FBI about tracking campaign contributions.
Giannoulias’ skeletons have not deterred Obama from campaigning hard—and raising big bucks—for his unscrupulous friend and pickup basketball partner. At one recent Chicago fundraiser, the president assured that Giannoulias can be trusted and that he’s committed to public service for “all the right reasons.”
Feds Protect Obama’s Mob Banker Senate Candidate
ViewDiscussion.Last Updated: Mon, 10/25/2010 - 11:17am
It appears that President Obama has pulled strings to help his shady banker friend win a tight U.S. Senate race by delaying an overdue federal report on his mob-connected bank’s failure until after the election.
Federal regulators will conveniently postpone issuing a material loss report on Illinois Senate candidate Alexi Giannoulias’ Chicago bank (Broadway Bank) because releasing it before the election could create "another political headache" for Giannoulias in a “close contest” with his Republican opponent, reports the state’s largest newspaper.
Currently Illinois State Treasurer, Giannoulias helped operate the family bank before it was shut down in April for “unsafe banking practices” that have cost U.S. taxpayers $394.3 million. For years Broadway Bank did business with convicted felons and mobsters by providing them with tens of millions of dollars in “loans” that inevitably fortified their criminal enterprises.
Besides giving Russian mobsters cash, Broadway Bank also gave a jailed Democratic fundraiser and longtime Obama supporter and benefactor (Antoin Rezko) millions of dollars. In fact, Giannoulias’ bank gave Rezko a $23 million “loan” while he was embroiled in a huge federal investigation. Rezko eventually got convicted for bribery, mail fraud and money laundering.
Most recently Giannoulias was embroiled in the bribery scandal masterminded by convicted Illinois Governor Rod Blagojevich. Court testimony in Blagojevich’s corruption trial indicates that Giannoulias, who was subpoenaed to testify, tried to sway the disgraced governor to appoint him to Obama’s old senate seat. The jury eventually convicted Blagojevich for lying to the FBI about tracking campaign contributions.
Giannoulias’ skeletons have not deterred Obama from campaigning hard—and raising big bucks—for his unscrupulous friend and pickup basketball partner. At one recent Chicago fundraiser, the president assured that Giannoulias can be trusted and that he’s committed to public service for “all the right reasons.”
Treasury Department Hires Firms To Help Keep Records Secret
From Corruption Chronicles:
Treasury Dept. Hires Firm To Keep Records Secret
ViewDiscussion.Last Updated: Tue, 10/26/2010 - 12:33pm
While the U.S. government doles out trillions of taxpayer dollars for bank bailouts and economic stimulus, the administration that promised unprecedented transparency has hired a private company to keep information about the exorbitant handouts secret.
The U.S. Treasury Department has enlisted a consulting firm to screen public records requested through the federal law known as the Freedom of Information Act (FOIA), according to a San Francisco newspaper that names the Obama-connected New Jersey business. Analysts who will handle Treasury FOIA requests will have experience in the use of “exemptions to withhold information from release to the public.”
To keep crucial Treasury records secret, the Obama Administration picked a firm (Phacil) that has given tens of thousands of dollars to Democratic candidates and not a dime to Republicans. Earlier this year Phacil won a small-business award that was celebrated in a Rose Garden event with the president.
This marks the latest of many efforts by the administration to keep critical information about its monstrous bailouts and stimulus programs from Americans. For more than a year, the Treasury Department has blown off a news agency’s request to identify $301 billion of Citigroup securities that the government agreed to guarantee. The media group requested the information on the grounds that taxpayers should know how their money is being used.
Since 2008, Judicial Watch has pursued documents regarding the unprecedented explosion in government’s size and reach through its $24 trillion bank rescues, bailouts and fraud-infested economic stimulus plan. Judicial Watch has dozens of FOIA requests and lawsuits pending against the Treasury Department for failing to produce documents in several cases, including the scandalous $200 billion taxpayer bailout of Fannie Mae and Freddie Mac and meetings between top Treasury officials and CEOs of major banks.
Last month Judicial Watch uncovered Treasury Department documents that revealed President Obama’s "Special Master for TARP Executive Compensation" received a $120,830 annual salary to establish executive pay at companies bailed out by the federal government, even though the administration had assured the pay czar wouldn’t be compensated for his work. It’s a perfect example supporting the need to obtain records rather than take the word of government bureaucrats.
Treasury Dept. Hires Firm To Keep Records Secret
ViewDiscussion.Last Updated: Tue, 10/26/2010 - 12:33pm
While the U.S. government doles out trillions of taxpayer dollars for bank bailouts and economic stimulus, the administration that promised unprecedented transparency has hired a private company to keep information about the exorbitant handouts secret.
The U.S. Treasury Department has enlisted a consulting firm to screen public records requested through the federal law known as the Freedom of Information Act (FOIA), according to a San Francisco newspaper that names the Obama-connected New Jersey business. Analysts who will handle Treasury FOIA requests will have experience in the use of “exemptions to withhold information from release to the public.”
To keep crucial Treasury records secret, the Obama Administration picked a firm (Phacil) that has given tens of thousands of dollars to Democratic candidates and not a dime to Republicans. Earlier this year Phacil won a small-business award that was celebrated in a Rose Garden event with the president.
This marks the latest of many efforts by the administration to keep critical information about its monstrous bailouts and stimulus programs from Americans. For more than a year, the Treasury Department has blown off a news agency’s request to identify $301 billion of Citigroup securities that the government agreed to guarantee. The media group requested the information on the grounds that taxpayers should know how their money is being used.
Since 2008, Judicial Watch has pursued documents regarding the unprecedented explosion in government’s size and reach through its $24 trillion bank rescues, bailouts and fraud-infested economic stimulus plan. Judicial Watch has dozens of FOIA requests and lawsuits pending against the Treasury Department for failing to produce documents in several cases, including the scandalous $200 billion taxpayer bailout of Fannie Mae and Freddie Mac and meetings between top Treasury officials and CEOs of major banks.
Last month Judicial Watch uncovered Treasury Department documents that revealed President Obama’s "Special Master for TARP Executive Compensation" received a $120,830 annual salary to establish executive pay at companies bailed out by the federal government, even though the administration had assured the pay czar wouldn’t be compensated for his work. It’s a perfect example supporting the need to obtain records rather than take the word of government bureaucrats.
Thursday, October 28, 2010
Food Nazis: Baltimore Hands Out First Trans Fat Usage Citation
From WBAL TV Channel 11, Baltimore, Maryland and Vision to America:
Baltimore Hands Out First Trans Fat Citation
Trans Fats Banned From Facilities In 2009
POSTED: 7:30 pm EDT October 25, 2010
UPDATED: 11:33 am EDT October 26, 2010
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Comments (89)
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BALTIMORE -- The Baltimore City Health Department issued its first environmental citation for repeat violations of the city's trans fat ban.
The Health Department issued Healthy Choice, a food facility in the 400 block of Lexington Street, a $100 fine on Thursday.
"It was the second time they were found with a high trans fat level in their ingredients," said Health Department agent Juan Gutierrez.
Officials said that during inspections in July and this month, the facility was found to be using a margarine product with trans fat levels in excess of what the law allows.
The law banning food facilities from serving or selling non-prepackaged food items containing 0.5 grams or more of trans fats went into effect in September 2009.
"While we are pleased with the high rates of compliance we've seen since the ban took effect, we will continue to sanction businesses that repeatedly fail to comply."
- Dr. Oxiris Barbot, Commissioner of Health
"They originally had a margarine that was above 3 grams, actually, which is very high compared to the .5 that is allowed. Then when we came back and they had replaced it, they replaced it with one that was 2 grams, so it still was too high," Gutierrez said.
The facility discarded the products in both instances, health officials said.
"I think they're doing it right. They're doing what they have to do," Healthy Choice owner Ki Jeong said.
Jeong said he will abide by the decision but said the new margarine will cost him double what the original type costs.
Trans fats are artificial fats that are known to elevate bad cholesterol and cause heart disease, according to health officials. Studies have indicated that trans fats are responsible for as many as 30,000 premature deaths in the U.S. each year.
The city said it has worked with bakeries to come up with alternatives to using trans fats.
"While we are pleased with the high rates of compliance we've seen since the ban took effect, we will continue to sanction businesses that repeatedly fail to comply," said Commissioner of Health Dr. Oxiris Barbot.
The Health Department said more than 100 Baltimore restaurants have received warnings since the ban went into effect.
Agents said that if restaurants don't make changes after a citation is issue, the establishment could be shut down.
Previous Stories:
•January 22, 2008: Maryland Considers Trans Fat Study
•April 4, 2007: City Urges Restaurants To Go Trans Fat Free
•January 23, 2004: GH: Best Trans-Fat Free Snacks
Baltimore Hands Out First Trans Fat Citation
Trans Fats Banned From Facilities In 2009
POSTED: 7:30 pm EDT October 25, 2010
UPDATED: 11:33 am EDT October 26, 2010
Email Print
Comments (89)
Embed this VideoxEmailFacebookDiggTwitterYahoo BuzzRedditDelicious Link
BALTIMORE -- The Baltimore City Health Department issued its first environmental citation for repeat violations of the city's trans fat ban.
The Health Department issued Healthy Choice, a food facility in the 400 block of Lexington Street, a $100 fine on Thursday.
"It was the second time they were found with a high trans fat level in their ingredients," said Health Department agent Juan Gutierrez.
Officials said that during inspections in July and this month, the facility was found to be using a margarine product with trans fat levels in excess of what the law allows.
The law banning food facilities from serving or selling non-prepackaged food items containing 0.5 grams or more of trans fats went into effect in September 2009.
"While we are pleased with the high rates of compliance we've seen since the ban took effect, we will continue to sanction businesses that repeatedly fail to comply."
- Dr. Oxiris Barbot, Commissioner of Health
"They originally had a margarine that was above 3 grams, actually, which is very high compared to the .5 that is allowed. Then when we came back and they had replaced it, they replaced it with one that was 2 grams, so it still was too high," Gutierrez said.
The facility discarded the products in both instances, health officials said.
"I think they're doing it right. They're doing what they have to do," Healthy Choice owner Ki Jeong said.
Jeong said he will abide by the decision but said the new margarine will cost him double what the original type costs.
Trans fats are artificial fats that are known to elevate bad cholesterol and cause heart disease, according to health officials. Studies have indicated that trans fats are responsible for as many as 30,000 premature deaths in the U.S. each year.
The city said it has worked with bakeries to come up with alternatives to using trans fats.
"While we are pleased with the high rates of compliance we've seen since the ban took effect, we will continue to sanction businesses that repeatedly fail to comply," said Commissioner of Health Dr. Oxiris Barbot.
The Health Department said more than 100 Baltimore restaurants have received warnings since the ban went into effect.
Agents said that if restaurants don't make changes after a citation is issue, the establishment could be shut down.
Previous Stories:
•January 22, 2008: Maryland Considers Trans Fat Study
•April 4, 2007: City Urges Restaurants To Go Trans Fat Free
•January 23, 2004: GH: Best Trans-Fat Free Snacks
Wednesday, October 27, 2010
Red Tape Rising
From The Heritage Foundation and Alliance Defense Fund:
Morning Bell: Red Tape Rising
Posted October 27th, 2010 at 9:13am in Enterprise and Free Markets with 18 comments Print This Post
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. The biggest costs last year all came from the EPA including:
•Fuel economy and emission standards for passenger cars, light-duty trucks, and medium-duty passenger vehicles. Annual cost: $10.8 billion.
•Mandated quotas for renewable fuels. Annual cost: $7.8 billion.
•Efficiency standards for residential water heaters, heating equipment, and pool heaters. Annual cost: $1.3 billion.
•Limits on “effluent” discharges from construction sites imposed by the EPA. Annual cost: $810.8 million.
As high as this $26.5 billion total is, as the above boiler example shows, the actual costs of all these new regulations is almost certainly much higher. First, the cost of non-economically significant rules—rules deemed not likely to have an annual impact of $100 million or more—is not calculated. Second, no costs were given for 12 of the rules that were deemed economically significant. But most importantly, the costs that were given are likely minimized because the regulators are allowed to make up the cost of their own regulations. A 2005 Office of Management and Budget Report to Congress found that regulators underestimated the costs of their rules 34% of the time.
As bad as last year’s rising tide of red tape was it does not hold a candle to the tsunami of regulation the Obama administration is planning to inflict on the U.S. economy during their final two years in office. The 2,319 page financial regulation bill requires 243 new formal rule-makings by 11 different federal agencies. The 2,700 page Obamacare bill contains more than 1,000 instances where Congress instructed HHS Secretary Kathleen Sebelius to regulate the health care industry. And the Federal Communications Commission is considering implementing, for the first time in the history of the internet, “net neutrality” regulations that will undermine investment incentives, thereby robbing the nation of much-needed broadband upgrades.
The left likes to peddle the myth that President George Bush deregulated much of the U.S. economy. But this is just plain false. By every objectively measurable metric, the size and scope of the regulatory state grew significantly under his tenure. But President Obama’s regulatory regime is currently rising at more than twice the rate as President Bush’s did. No wonder our nation’s job creators can’t help us escape near double digit unemployment.
Quick Hits:
•Contrary to White House claims, The New York Times reports that it is Democrats, not Republicans, who have spent the most money on campaigns this year.
•The voting machine technicians in Clark County Nevada, where there have been reports of irregularities, are members of the Service Employees International Union.
•Gov. Edward Rendell (D) signed an order Tuesday effectively banning further natural gas development on Pennsylvania land.
•Fired NPR analyst Juan Williams told the Diane Rehm show yesterday that NPR was biased toward liberals and intolerant of a diversity of opinions and that “people at NPR have to be held accountable for their words and actions.”
•Unions Do Fire Some People After All.
Morning Bell: Red Tape Rising
Posted October 27th, 2010 at 9:13am in Enterprise and Free Markets with 18 comments Print This Post
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. The biggest costs last year all came from the EPA including:
•Fuel economy and emission standards for passenger cars, light-duty trucks, and medium-duty passenger vehicles. Annual cost: $10.8 billion.
•Mandated quotas for renewable fuels. Annual cost: $7.8 billion.
•Efficiency standards for residential water heaters, heating equipment, and pool heaters. Annual cost: $1.3 billion.
•Limits on “effluent” discharges from construction sites imposed by the EPA. Annual cost: $810.8 million.
As high as this $26.5 billion total is, as the above boiler example shows, the actual costs of all these new regulations is almost certainly much higher. First, the cost of non-economically significant rules—rules deemed not likely to have an annual impact of $100 million or more—is not calculated. Second, no costs were given for 12 of the rules that were deemed economically significant. But most importantly, the costs that were given are likely minimized because the regulators are allowed to make up the cost of their own regulations. A 2005 Office of Management and Budget Report to Congress found that regulators underestimated the costs of their rules 34% of the time.
As bad as last year’s rising tide of red tape was it does not hold a candle to the tsunami of regulation the Obama administration is planning to inflict on the U.S. economy during their final two years in office. The 2,319 page financial regulation bill requires 243 new formal rule-makings by 11 different federal agencies. The 2,700 page Obamacare bill contains more than 1,000 instances where Congress instructed HHS Secretary Kathleen Sebelius to regulate the health care industry. And the Federal Communications Commission is considering implementing, for the first time in the history of the internet, “net neutrality” regulations that will undermine investment incentives, thereby robbing the nation of much-needed broadband upgrades.
The left likes to peddle the myth that President George Bush deregulated much of the U.S. economy. But this is just plain false. By every objectively measurable metric, the size and scope of the regulatory state grew significantly under his tenure. But President Obama’s regulatory regime is currently rising at more than twice the rate as President Bush’s did. No wonder our nation’s job creators can’t help us escape near double digit unemployment.
Quick Hits:
•Contrary to White House claims, The New York Times reports that it is Democrats, not Republicans, who have spent the most money on campaigns this year.
•The voting machine technicians in Clark County Nevada, where there have been reports of irregularities, are members of the Service Employees International Union.
•Gov. Edward Rendell (D) signed an order Tuesday effectively banning further natural gas development on Pennsylvania land.
•Fired NPR analyst Juan Williams told the Diane Rehm show yesterday that NPR was biased toward liberals and intolerant of a diversity of opinions and that “people at NPR have to be held accountable for their words and actions.”
•Unions Do Fire Some People After All.
Tuesday, October 26, 2010
IRS Continues To Dodge Congressional Questions On Coming 1099 Rule In The Obamacare Bill
From The Hill and Alliance Defense Fund:
IRS continues to dodge questions on 1099 rule
By Jay Heflin - 10/26/10 03:45 PM ET
Despite repeated requests from House Small Business Committee ranking member Sam Graves (R-Mo.) for how the IRS intends to implement the 1099 reporting rule, IRS Commissioner Douglas Shulman continues to decline to provide him the information.
"I am extremely disappointed by the IRS's ongoing refusal to help employers understand the impact of this hefty requirement," Graves said in prepared remarks. "The questions and confusion surrounding the 1099 reporting rule have stalled small business growth in America."
The new rule was enacted as part of the healthcare reform bill and requires every business to file a 1099 form to the IRS for every purchase above $600. Several organizations, including the IRS watchdog Taxpayer Advocate, have said the rule will overburden businesses.
The IRS' Information Reporting Program Advisory Committee recently deemed the mandate "burdensome" with "no measurable purpose."
"Entrepreneurs are unable to plan for the future, expand their operations or hire new employees for fear that this mandate could force them to dramatically change the way they do business," Graves said. "I respectfully reiterate my request that Commissioner Shulman and the IRS provide our small business owners with some much needed clarity on the scope of this rule."
Graves asked Shulman to provide with him implementation guidelines in a June 23 letter. A similar request was sent three weeks ago.
Despite these requests, neither Shulman nor his aides have responded to the letter, Graves states.
IRS continues to dodge questions on 1099 rule
By Jay Heflin - 10/26/10 03:45 PM ET
Despite repeated requests from House Small Business Committee ranking member Sam Graves (R-Mo.) for how the IRS intends to implement the 1099 reporting rule, IRS Commissioner Douglas Shulman continues to decline to provide him the information.
"I am extremely disappointed by the IRS's ongoing refusal to help employers understand the impact of this hefty requirement," Graves said in prepared remarks. "The questions and confusion surrounding the 1099 reporting rule have stalled small business growth in America."
The new rule was enacted as part of the healthcare reform bill and requires every business to file a 1099 form to the IRS for every purchase above $600. Several organizations, including the IRS watchdog Taxpayer Advocate, have said the rule will overburden businesses.
The IRS' Information Reporting Program Advisory Committee recently deemed the mandate "burdensome" with "no measurable purpose."
"Entrepreneurs are unable to plan for the future, expand their operations or hire new employees for fear that this mandate could force them to dramatically change the way they do business," Graves said. "I respectfully reiterate my request that Commissioner Shulman and the IRS provide our small business owners with some much needed clarity on the scope of this rule."
Graves asked Shulman to provide with him implementation guidelines in a June 23 letter. A similar request was sent three weeks ago.
Despite these requests, neither Shulman nor his aides have responded to the letter, Graves states.
Sunday, October 24, 2010
Behavioral Public Choice Theory
From Let A Thousand Nations Bloom:
Behavioral Public Choice Theory
October 24, 2010
by Mike Gibson
.Matt Ridley points to a paper by Slavisa Tasic, “Are Regulators Rational?” The answer is no–they suffer from cognitive biases as well, such as action bias, motivated reasoning, the focusing illusion, the affect heuristic, and illusions of competence. Whither the “nudge” for bureaucrats? From Tasic’s intro:
The aim of this paper, however, is not to assess the validity of behavioral economics itself, but to show that association of behavioral economics with one kind of policy conclusions has been misplaced. Whatever the other merits or limitations of behavioral economics may be, the issue this paper deals with is only its one-sidedness–its nearly exclusive focus on market participants and its neglect of policymakers who are supposed to remedy the failures of the markets. Rarely have behavioral arguments been used to question the knowledge and rationality of policymakers and regulators, and the reason for this neglect is not in the lack of utilizable psychological research. Cognitive psychology in fact offers many findings that are equally applicable to other participants in policymaking process
Behavioral Public Choice Theory
October 24, 2010
by Mike Gibson
.Matt Ridley points to a paper by Slavisa Tasic, “Are Regulators Rational?” The answer is no–they suffer from cognitive biases as well, such as action bias, motivated reasoning, the focusing illusion, the affect heuristic, and illusions of competence. Whither the “nudge” for bureaucrats? From Tasic’s intro:
The aim of this paper, however, is not to assess the validity of behavioral economics itself, but to show that association of behavioral economics with one kind of policy conclusions has been misplaced. Whatever the other merits or limitations of behavioral economics may be, the issue this paper deals with is only its one-sidedness–its nearly exclusive focus on market participants and its neglect of policymakers who are supposed to remedy the failures of the markets. Rarely have behavioral arguments been used to question the knowledge and rationality of policymakers and regulators, and the reason for this neglect is not in the lack of utilizable psychological research. Cognitive psychology in fact offers many findings that are equally applicable to other participants in policymaking process
Friday, October 22, 2010
Overcriminalized.com's Legislative Update
From Overcriminalized.com:
Table of Contents
New:
H.R. 6298: Protecting Adoption and Promoting Responsible Fatherhood Act of 2010
H.R. 6378: Fighting Fraud and Abuse to Save Taxpayers' Dollars (FAST) Act
H.R. 6391:
Updates:
H.R. 3619: Coast Guard Authorization Act of 2010
--------------------------------------------------------------------------------
H.R. 6298: Protecting Adoption and Promoting Responsible Fatherhood Act of 2010
Sponsor: Richardson (D - CA)
Official Title: A bill to establish national and state putative father registries, to make grants to states to promote permanent families for children and responsible fatherhood, and for other purposes.
Status:
9/29/2010: Introduced in House
9/29/2010: Referred to House Ways and Means Committee
Commentary: This bill would require the Secretary of the Department of Health and Human Services to establish a national putative father registry and provide grants to states to enable them to establish registries at the state level. By accepting a grant, a state would commit to developing a plan that includes setting up a statewide registry and meets specified statutory requirements. Those requirements would include the state's agreement to adopt a criminal law that makes knowingly submitting false information to the state's registry the highest class of misdemeanor under that state's criminal code.
H.R. 6378: Fighting Fraud and Abuse to Save Taxpayers' Dollars (FAST) Act
Sponsor: Roskam (R - IL)
Official Title: A bill to reduce waste, fraud and abuse under Medicare, Medicaid, and CHIP programs, and for other purposes.
Status:
9/29/2010: Introduced in House
9/29/2010: Referred to House Energy and Commerce Committee
9/29/2010: Referred to House Judiciary Committee
9/29/2010: Referred to House Ways and Means Committee
Commentary: This bill is a counterpart to S. 3900. H.R. 6378 would make illicit sales and purchases of Medicare, Medicaid, or CHIP beneficiary identification numbers or billing privileges punishable by up to 10 years in prison, a fine of up to $500,000, or both. If the violator is a corporation, the maximum fine would be increased to $1 million. H.R. 6378's protective mens rea (guilty-mind or criminal-intent) requirement restricts criminal punishment to those who act "knowingly, intentionally, and with the intent to defraud."
H.R. 6391:
Sponsor: Weiner (D - NY)
Official Title: A bill to amend Title 18, United States Code, to prohibit public officials from engaging in undisclosed self-dealing.
Status:
9/29/2010: Introduced in House
9/29/2010: Referred to House Judiciary Committee
Commentary: This bill parallels S. 3854 with a few significant differences. The 23-year-old federal "honest services" fraud statute, 18 U.S.C. § 1346, makes it a federal crime to engage in a "scheme or artifice to defraud another of the intangible right of honest services." The maximum term of incarceration for whatever conduct is deemed to violate this uncommonly broad prohibition has been set at 20 years (30 years if the violation "affects" any financial institution). In June 2010, the Supreme Court held that the language of the "honest services" fraud statute is unconstitutionally vague and limited its reach to acts involving bribery or kickbacks. In that ruling, the Court rejected the government's suggestion that it construe § 1346 to include officials or employees who take actions that incidentally further their own financial interests. Attempting to reverse this holding, H.R. 6391 would punish any public official who is involved in a "scheme or artifice . . . to engage in undisclosed self-dealing" under the provisions of § 1346. By applying exclusively to public officials, the bill has a slightly narrower reach than S. 3854, which applies to officers and directors of publicly-traded corporations and private charities, as well as public officials. Much like the statute that the Supreme Court just struck down, however, the mental state (mens rea or "criminal intent") that the government would have to prove is essentially undefined. Moreover, H.R. 6391 contains an uncommonly broad definitions of "undisclosed self-dealing" which includes, for example, "benefiting or furthering a financial interest" of specified persons or businesses. While nominally narrower in scope than S. 3854, H.R. 6391's formulation remains improperly broad and still subjects violators to a potential prison term of up to 20 years (30 years if the violation "affects" a financial institution).
H.R. 3619: Coast Guard Authorization Act of 2010
Sponsor: Oberstar (D - MN)
Official Title: A bill to authorize appropriations for the Coast Guard for fiscal year 2010, and for other purposes.
Status:
9/22/2009: Introduced
9/22/2009: Referred to House Transportation and Infrastructure Committee
10/16/2009: Referred to House Homeland Security Committee
10/23/2009: House Passage
10/26/2009: Received in Senate
5/7/2010: Senate Passage
10/4/2010: Sent to President
10/15/2010: Signed by the President
Commentary: As enacted, this bill contains provisions banning the manufacture, sale, distribution, and use of organotin, a chemical compound based on tin and hydrocarbon substituents, in the anti-fouling systems of ships. A knowing violation of this prohibition would be punishable by imprisonment for up to 6 years, a fine as authorized by Title 18 of the U.S. Code, or both. The bill also amends 18 U.S.C. §2237(b), which provides for criminal penalties for the failure to heave to or the obstruction of boarding by federal law enforcement officials. As amended, a knowing violation of § 2237(b) that results in death or that involves a kidnapping or commission of aggravated sexual abuse will be punishable by imprisonment for life, a fine as authorized by Title 18 of the U.S. Code, or both. If the violation results in serious bodily injury or involves the knowing transportation of illegal aliens under inhumane conditions, the maximum term of imprisonment will be 15 years. Any other knowing violations will be punishable by imprisonment by up to 5 years, a fine, or both. The provisions of the Cruise Vessel Security and Safety Act and the Alien Smuggling and Terrorism Prevention Act that were included in earlier versions of this bill do not appear in the bill that Congress sent to the President for signature.
Table of Contents
New:
H.R. 6298: Protecting Adoption and Promoting Responsible Fatherhood Act of 2010
H.R. 6378: Fighting Fraud and Abuse to Save Taxpayers' Dollars (FAST) Act
H.R. 6391:
Updates:
H.R. 3619: Coast Guard Authorization Act of 2010
--------------------------------------------------------------------------------
H.R. 6298: Protecting Adoption and Promoting Responsible Fatherhood Act of 2010
Sponsor: Richardson (D - CA)
Official Title: A bill to establish national and state putative father registries, to make grants to states to promote permanent families for children and responsible fatherhood, and for other purposes.
Status:
9/29/2010: Introduced in House
9/29/2010: Referred to House Ways and Means Committee
Commentary: This bill would require the Secretary of the Department of Health and Human Services to establish a national putative father registry and provide grants to states to enable them to establish registries at the state level. By accepting a grant, a state would commit to developing a plan that includes setting up a statewide registry and meets specified statutory requirements. Those requirements would include the state's agreement to adopt a criminal law that makes knowingly submitting false information to the state's registry the highest class of misdemeanor under that state's criminal code.
H.R. 6378: Fighting Fraud and Abuse to Save Taxpayers' Dollars (FAST) Act
Sponsor: Roskam (R - IL)
Official Title: A bill to reduce waste, fraud and abuse under Medicare, Medicaid, and CHIP programs, and for other purposes.
Status:
9/29/2010: Introduced in House
9/29/2010: Referred to House Energy and Commerce Committee
9/29/2010: Referred to House Judiciary Committee
9/29/2010: Referred to House Ways and Means Committee
Commentary: This bill is a counterpart to S. 3900. H.R. 6378 would make illicit sales and purchases of Medicare, Medicaid, or CHIP beneficiary identification numbers or billing privileges punishable by up to 10 years in prison, a fine of up to $500,000, or both. If the violator is a corporation, the maximum fine would be increased to $1 million. H.R. 6378's protective mens rea (guilty-mind or criminal-intent) requirement restricts criminal punishment to those who act "knowingly, intentionally, and with the intent to defraud."
H.R. 6391:
Sponsor: Weiner (D - NY)
Official Title: A bill to amend Title 18, United States Code, to prohibit public officials from engaging in undisclosed self-dealing.
Status:
9/29/2010: Introduced in House
9/29/2010: Referred to House Judiciary Committee
Commentary: This bill parallels S. 3854 with a few significant differences. The 23-year-old federal "honest services" fraud statute, 18 U.S.C. § 1346, makes it a federal crime to engage in a "scheme or artifice to defraud another of the intangible right of honest services." The maximum term of incarceration for whatever conduct is deemed to violate this uncommonly broad prohibition has been set at 20 years (30 years if the violation "affects" any financial institution). In June 2010, the Supreme Court held that the language of the "honest services" fraud statute is unconstitutionally vague and limited its reach to acts involving bribery or kickbacks. In that ruling, the Court rejected the government's suggestion that it construe § 1346 to include officials or employees who take actions that incidentally further their own financial interests. Attempting to reverse this holding, H.R. 6391 would punish any public official who is involved in a "scheme or artifice . . . to engage in undisclosed self-dealing" under the provisions of § 1346. By applying exclusively to public officials, the bill has a slightly narrower reach than S. 3854, which applies to officers and directors of publicly-traded corporations and private charities, as well as public officials. Much like the statute that the Supreme Court just struck down, however, the mental state (mens rea or "criminal intent") that the government would have to prove is essentially undefined. Moreover, H.R. 6391 contains an uncommonly broad definitions of "undisclosed self-dealing" which includes, for example, "benefiting or furthering a financial interest" of specified persons or businesses. While nominally narrower in scope than S. 3854, H.R. 6391's formulation remains improperly broad and still subjects violators to a potential prison term of up to 20 years (30 years if the violation "affects" a financial institution).
H.R. 3619: Coast Guard Authorization Act of 2010
Sponsor: Oberstar (D - MN)
Official Title: A bill to authorize appropriations for the Coast Guard for fiscal year 2010, and for other purposes.
Status:
9/22/2009: Introduced
9/22/2009: Referred to House Transportation and Infrastructure Committee
10/16/2009: Referred to House Homeland Security Committee
10/23/2009: House Passage
10/26/2009: Received in Senate
5/7/2010: Senate Passage
10/4/2010: Sent to President
10/15/2010: Signed by the President
Commentary: As enacted, this bill contains provisions banning the manufacture, sale, distribution, and use of organotin, a chemical compound based on tin and hydrocarbon substituents, in the anti-fouling systems of ships. A knowing violation of this prohibition would be punishable by imprisonment for up to 6 years, a fine as authorized by Title 18 of the U.S. Code, or both. The bill also amends 18 U.S.C. §2237(b), which provides for criminal penalties for the failure to heave to or the obstruction of boarding by federal law enforcement officials. As amended, a knowing violation of § 2237(b) that results in death or that involves a kidnapping or commission of aggravated sexual abuse will be punishable by imprisonment for life, a fine as authorized by Title 18 of the U.S. Code, or both. If the violation results in serious bodily injury or involves the knowing transportation of illegal aliens under inhumane conditions, the maximum term of imprisonment will be 15 years. Any other knowing violations will be punishable by imprisonment by up to 5 years, a fine, or both. The provisions of the Cruise Vessel Security and Safety Act and the Alien Smuggling and Terrorism Prevention Act that were included in earlier versions of this bill do not appear in the bill that Congress sent to the President for signature.
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