Tag Archives: regulation

A Measure of Responsibility

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The House plans to take steps to curb the power of federal agencies and impose more checks on them in response to recent scandals emanating from the Internal Revenue Service.

Here are the bills the House plans to introduce before the August recess next month—and hopefully pass and send up to the Senate for passage in September after the recess.  The several bills would

  • bar [the IRS] from implementing and enforcing Obamacare
  • make it legal for citizens to make recordings of any conversation they have with a federal enforcement official
  • necessitate[] the approval of the leadership of the agency for conferences held by government officials
  • [give] Congress…final approval of any regulations that would seriously impact the economy
  • mandate the creation of a customer service system at agencies
  • let agencies place “senior career officials on investigative leave, with or without pay, when they are under investigation for serious abuses.”

Will the Democrats in the Senate support this, or will they block the bills, favoring, instead, continued (Democrat) Executive Branch abuses?  Will the House actually pass this legislation, or is this just a Republican version of Obamatalk?

We’ll see in a bit.

Macroprudential Tools for Economic Flow Control

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Central banks, including the Fed, are trying to narrowly target their manipulation of national economies by using new tools to manipulate economic incentives in particular sectors.

The point of the new tools is to protect the entire financial system and economy, so economists refer to them as macroprudential.  That distinguishes them from microprudential, which describes traditional oversight to assure safety and soundness of individual banks.

However,

The whole idea makes some economists uneasy.
…
The techniques have ignited a debate among central bankers, bank regulators and academics over whether they can do what proponents promise.

Some see “macroprudential” as a euphemism for the largely discredited practice of governments deciding where capital should flow.

They should be uneasy; that’s exactly the effect, whether it’s intentional or not.  Too expensive to put money into this industry, investors and businesses say.  We’ll put our money in that industry, instead.

And create a bubble there instead of here.  Or we’ll put our money into that country instead of this one, they say.

And the net result is to drive inflation in that country instead of this one.  Or, more likely and more insidiously, strengthen an existing tendency toward a bubble or toward inflation, possibly pushing that tendency past a threshold.

But the US government, at least, more broadly than the Fed had already been engaged in macroprudential tools for economic flow control: the Community Reinvestment Act, which was used to pressure banks into making more home loans to poorer credit rated borrowers than the banks thought prudent; tax policy for social engineering, which among other things gives preferential treatment to loans for this purpose but not for that purpose; and so on.  This has gotten even more so since the Panic of 2008: stimulus spending, special loans for particular industries, selective law enforcement where this impacts the economy, etc.

We already know, from all that empirically derived evidence, that targeting this or that sector of the economy not only does not work positively, it exacerbates the economy’s corrections (recessions) when those do (inevitably) occur.

The Fed had at one time a mandate to control price level (inflation) while pushing toward full employment.  It needs to stick to its knitting.  Sure, those are broad-brush goals, but our economy is too complex for any force other than the invisible hand of a free market to control.

Obamacare Fail. Again.

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President Barack Obama has admitted that another critical aspect of his Obamacare is a dismal failure.  This time he’s

delaying a requirement that verifies the income levels of those seeking taxpayer subsidies until after the 2014 midterm elections.

Instead, the new insurance marketplaces operated by states and the District of Columbia will take the consumer’s word that they qualify for the subsidies[.]

And

Timothy Jost, a law professor at Washington and Lee University in Lexington, VA, and a consumer advocate, said it’s not unprecedented for the government to use the honor system, and compared it to reporting cash tips to the Internal Revenue Service.

It’s also like the 21%-25% of Earned Income Tax Credits that go to people who aren’t eligible (according to Treasury’s Inspector General) because their eligibility is self-verified, too.

Or rather than an admission of failure, is this just another administration excuse for lax pay outs of monies that aren’t deserved, even under the law?  As the Wall Street Journal puts it,

[A]nyone can receive subsidies tied to income without judging the income they declare against the income data the Internal Revenue Service collects.

Of course, a third alternative also includes none of this as abject failure.  These cynical (say I) delays simply are for building the dependency of Americans on government largesse, trapping us into voting for the Progressive party.

Regulation and Free Speech

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A mandate of the Dodd-Frank financial law, [a] Securities and Exchange Commission rule requires companies that use certain minerals linked to violence in the Democratic Republic of Congo and surrounding region to file a report with the SEC saying what steps they took to verify the minerals weren’t taxed or controlled by rebel groups.

Never mind that those steps involve proprietary information.  Or that the government-mandated message would tar the companies, inaccurately, with a bigotry brush.

The National Association of Manufacturers and the US Chamber of Commerce, representing a broad group of businesses, in a hearing in federal district court in Washington said the regulation is unconstitutional because it forces companies to make disclosures linking their products to human-rights violations.

Paul Keisler, a lawyer representing the NAM and the Chamber, argued the rule is just a Scarlett Letter requirement and represents, further, government-mandated speech, not free speech.  Even so,

SEC Assistant General Counsel Tracey Hardin…argued the rule wasn’t different from advertising restrictions requiring fast-food restaurants to post the calories contained in their menu items or cigarette labels containing warnings about the dangers of smoking.

This, though, is just a cynical conflation of two widely disparate situations.  The one impacts directly the health (or not) of the user.  The other has no impact on the user, nor does it on the purported victims, since the minerals of interest here have a ready world-wide market, demonstrated by the high prices those minerals command.

Wait—there’s Citizens United.  But, no, Mr Corporation, that doesn’t count.  Just sit down and say the words Government gives you to say.

Now’s the Chance

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President Barack Obama has admitted what Senator Max Baucus said a month ago: that his Obamacare is a train wreck coming down the tracks.  Obama has delayed until 2015—i.e., until after the midterm elections—the implementation of the employer mandate.  With this mandate, large employers would have been required to provide health “insurance” for all of their full-time-equivalent employees or face a fine of $2,000 per employee.  (Note that the existence of that fine puts a floor under the per-employee cost of insurance of some $2,000 per covered employee.)

No one was ready for employer mandate part of the train wreck.  Not the employers, although they have been variously cutting back on employees, employee hours, and/or hiring in order to hold their numbers to a bearable cost.  Not the IRS, which quite apart from the criminal aspects of its operation is wholly unprepared—employees or software—to manage its tracking and enforcement task.  Not HHS, which hasn’t even been able to write draft rules good enough for comment, much less for publication.

This represents a golden opportunity for the Republican Party.  They were handed a gift by the Supreme Court in the summer of 2012 when that body upheld the constitutionality of Obamacare.  Had it been struck, the Republicans would have been caught flat-footed with no viable alternative, and the Democrats would have had a field day beating them about the head and shoulders for being whiners without a solution.

Now’s the chance for the Republicans to recover from that unpreparedness.  In addition to voting to repeal Obamacare one more time, the House has from now through late summer 2014 to pass an actual alternative to Obamacare.  Such an alternative might be three bills: one to take down barriers and allow health insurance to be sold interstate, with no mandates for minimum coverage.  Let the doctors, patients, and market decide what policies (and there will be a lot of them) should be available, and a policy available for sale in New York ought to be saleable in California, also; only the market should make that determination, not any Know Better Government.  Moreover, these policies should be saleable for risk-based premiums, not community premiums.  One group of Americans should not be forced to subsidize another.

Another bill could be a sort of Truth in Advertising bill.  The House should pass a standard, plain English language policy format that mandates that each item to be covered or excluded is to be described in these terms, so that a potential insuree (and his doctor if desired) can compare policies from different insurers and be able to understand the tradeoffs he’s getting when he selects one policy over another.  All without having to talk to an insurance agent for the explanation (or even to view the policy at all), unless the insuree wants to.  This bill might also give the health insurance industry two years (say) to come up with their own standard language, or the House-passed format will go into effect.

A third bill could involve the health provision industry.  This one might center on the publication of performance statistics by hospitals and doctors: admission lengths vs readmission rates vs regional averages, surgery types vs success rates vs regional averages, treatment types vs re-treatment rates vs regional averages, and the like.

Senate Republicans should take up the matter, too, and either work to force a Senate (roll call) vote on their version or work to force a Senate (roll call) vote on the House version when it comes up.  Of course either version will fail in the Senate, and we can anticipate Obama veto threats, too.  But the Republicans will have the Democrats, in the runup to the 2014 midterms, on the record, ideally by name on the failed votes, as opposing serious, material health care reform.  Those Democrats can be called to account for their demonstrated preference for a train wreck that their constituencies—we Americans—have broadly and volubly disliked since before Obamacare was enacted.  We’ll also know who the RINOs were that contributed to blocking these reform bills; they can be dealt with in the primaries.