CEI’s Battered Business Bureau: The Week In Regulation

by Ryan Young on December 24, 2012 · 0 comments

in Regulation

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This week in the world of regulation:

  • Last week, 68 new final rules were published, down from 69 the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 28 minutes — 24 hours a day, 7 days a week.
  • All in all, 3,623 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2012 will be 3,728 new rules.
  • Last week, 1,265 new pages were added to the 2012 Federal Register, for a total of 75,450 pages.
  • At its current pace, the 2012 Federal Register will run 76,677 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. The 46 such rules published so far in 2012 have compliance costs of at least $24 billion. Two of the rules do not have cost estimates, and two other rules have cost estimates that do not give a total annual cost. We assume that rules lacking this basic transparency measure cost the bare minimum of $100 million per year. The true cost is almost certainly higher.
  • No economically significant rules were published last week.
  • So far, 339 final rules that meet the broader definition of “significant” have been published in 2012.
  • So far this year, 682 final rules affect small business; 94 of them are significant rules.

Highlights from final rules published last week:

  • If you own a citrus grove, you can buy crop insurance from the federal government. A new rule updates some of the program’s provisions.
  • It may be December, but that isn’t stopping the National Oceanic and Atmospheric Administration from issuing a new rule for fishing for summer flounder.
  • Sometimes the federal government will switch from one contractor to another for a given service. When it does, its policy is to “require service contractors and their subcontractors under successor contracts to offer employees of the predecessor contractor and its subcontractors a right of first refusal of employment for positions for which they are qualified.” If the government’s reason for making a switch is performance-related, then this rule may well make doing so pointless.
  • Americans are now allowed to import sand pears from China.
  • If you were thinking of importing pig semen from Estonia, Hungary, Slovakia, or Slovenia, read this regulation first.

For more data, go to TenThousandCommandments.com.

GM Stock Sale Doesn’t End Damage Of Government Motors

by John Berlau on December 21, 2012 · 0 comments

in Bailout Watch, Economy

Below is my statement released today on the government’s planned 15-month sale of its remaining General Motors stock:

On Wednesday, the government announced a plan to sell its remaining stake in General Motors at an estimated loss to taxpayers of $12 billion. If the losses on General Motors Acceptance Corporation (GMAC) are included, the total probably rises to nearly $20 billion.

It is good news the government is winding down its misguided involvement in Government Motors. It has announced an 15-month plan to divest its stock. It also is good news the auto industry is expanding – though most of the growth has been enjoyed by foreign automakers who have built plants in right-to-work Southern states and had nothing to do with the bailout.

But there is nothing new or remarkable about businesses showing signs of improvement thanks to massive infusions of public dollars. We will never know how many small businesses may have survived, expanded or moved into more profitable lines of business had the government pursued a more pro-growth alternative to this massive government bailout. We hear a lot about jobs allegedly “saved or created” by this bailout. But in reality, we will never know how much farther along the road to recovery we might be if we had foregone this “investment” and lowered tax rates so entrepreneurs could invest, grow and hire.

What we do know is it is long past time for the Obama administration to stop meddling in this or any other industry. We know its meddling – such as the Corporate Average Fuel Economy Standards – will harm GM’s top-selling Buicks, Cadillacs, and trucks and lighter vehicles and more vehicle deaths. We know that after the bailout, GM added less than 10,000  net new jobs, and that the bailout perhaps indirectly destroyed as many as 100,000 mostly blue-collar jobs through the administration’s insistence on rapid closures of auto dealerships. We do know the administration’s policies in Michigan favored the United Auto Workers over bondholders, stockholders – including the American people – employees and others.

And we do know, once and for all, this is not the path to economic recovery.

For more on the auto bailout’s costs to taxpayers, investors, shuttered auto dealers, and non-union workers, readers can view these articles by me and this by my CEI colleagues Matt Patterson and Crissy Brown.

France’s Anti-Business Orthodoxy

by Matthew Melchiorre on December 21, 2012 · 1 comment

in Culture, Economy, Features, International

In France, running a productive business is not important. Simply creating jobs — not wealth or innovation — is the sole purpose of enterprise. At least, that’s the government’s mindset in economically stagnant France. And there’s a danger that this mental disease is spreading to America.

Last month, the French government threatened to nationalize the country’s largest steelworks plant run by ArcelorMittal, after the multinational had idled its blast furnaces due to a 29-percent drop in demand over the past five years. The Socialist government gave ArcelorMittal an ultimatum: restart the furnaces and put French metalworkers back to work, or sell the plant to a buyer willing to fire up production (a tall proposition in the current economic climate). If the firm would chose neither of these options, the government would take the plant by force and resume production itself.

ArcelorMittal and the French government reached a deal earlier this month, in which the furnaces would remain idle, but there would be no layoffs and the firm would sink 180 million euros of new investment into the unprofitable plant.

Unions were outraged and accused Socialist President Francois Hollande of “betrayal.” He broke with the French orthodoxy of business’s inherent obligation to provide jobs regardless of cost.

Today, the European branch of ArcelorMittal absorbed a write-down in its value totaling a whopping $4.3 billion. The steelmaker has been trying to get out of Europe and move to higher-demand regions like North America, but the strong arm of the French government is holding it back.

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Fear The Regulatory Cliff, Not The Fiscal Cliff

by Hans Bader on December 20, 2012 · 0 comments

in Economy, Legal, Regulation

Economist Bruce Bartlett notes that by cutting the federal budget deficit, the much-feared fiscal cliff will actually increase the size of the economy in the long run, even though it will reduce “short-run” economic growth: “It’s too bad that misplaced fears about the fiscal cliff have taken off the table the option of simply letting all the automatic tax increases and spending cuts go into effect. While this would indeed reduce short-run growth, the Congressional Budget Office says the reduction in projected deficits would actually raise growth in the medium- and long-term (see pages 24-25 of the report).” The fiscal cliff is the combination of large tax increases and automatic spending cuts that will take effect next year unless they are canceled by Congress and the president. These measures will cut the deficit roughly in half.

Canceling these deficit reductions would be bad, leading to increased national debt service costs in the future, which will crowd out private investment. While canceling them would “prevent disruptions to the economy in the very near term, it would lead to higher debt over the long term,” thus reducing the size of the economy, notes the GAO.

The tax increases contained in the fiscal cliff will be painful (they are large enough that they have been called “Taxmageddon”), and will reduce economic growth slightly over the long run, especially any increases in investment taxes on the middle class (although most of the tax increases will help shrink the deficit).

But the automatic budget cuts contained in the fiscal cliff are essential and economically valuable. Those budget cuts will grow the economy in the long run, in addition to reducing the staggering size of America’s national debt, and their negative impact on economic growth in the short run is exaggerated. The budget cuts are so valuable that they should not be canceled even as part of a deal to eliminate the tax increases. “The whole notion that federal cuts is going to push us into recession is nonsense,” Cato Institute budget policy expert Tad Dehaven says. “All that money that the federal government spends was taken or borrowed out of the economy to begin with.”  Spending cuts have helped the economy in the past – such as when America experienced an “economic boom” after our government slashed spending in 1946, and when Canada’s economy boomed after it slashed government spending in the 1990s. To get the deficit under control, we need to cut skyrocketing welfare spending, eliminate agricultural subsidies, trim unnecessarily high Pentagon spending, and reduce wasteful education spending. America can reduce military spending significantly without sacrificing national security. The Cato Institute has identified billions in readily achievable savings at the Pentagon.

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Free Speech, The Disfavored Stepchild Of The Law

by Hans Bader on December 20, 2012 · 0 comments

in Legal, Personal Liberty

In a recent column, George Will discussed how college students have been disciplined for racial or discriminatory “harassment” for constitutionally protected expression, such as reading a history book about ugly past racial events, or discussing unpleasant truths about racial or religious matters:

In 2007, Keith John Sampson, a middle-aged student working his way through Indiana University-Purdue University Indianapolis as a janitor, was declared guilty of racial harassment. Without granting Sampson a hearing, the university administration — acting as prosecutor, judge and jury — convicted him of “openly reading (a) book related to a historically and racially abhorrent subject.” . . .

The book, “Notre Dame vs. the Klan,” celebrated the 1924 defeat of the Ku Klux Klan in a fight with Notre Dame students. But some of Sampson’s co-workers disliked the book’s cover, which featured a black-and-white photograph of a Klan rally. Someone was offended, therefore someone else must be guilty of harassment. . .

At Tufts, a conservative newspaper committed “harassment” by printing accurate quotations from the Quran and a verified fact about the status of women in Saudi Arabia. . . .

In 2007, Donald Hindley, a politics professor at Brandeis, was found guilty of harassment because when teaching Latin American politics he explained the origin of the word “wetbacks,” which refers to immigrants crossing the Rio Grande. Without a hearing, the university provost sent Hindley a letter stating that the university “will not tolerate inappropriate, racial and discriminatory conduct.” The assistant provost was assigned to monitor Hindley’s classes “to ensure that you do not engage in further violations of the nondiscrimination and harassment policy.” Hindley was required to attend “anti-discrimination training.”

Why does this sort of nonsense persist? One reason is that college administrators don’t fear First Amendment lawsuits very much. If a state university violates the First Amendment, often it pays nothing for the violation. The Eleventh Amendment protects a state university from having to pay any monetary damages for such a violation. (The Supreme Court has said that Congress can waive Eleventh Amendment immunities to protect civil rights, but Congress has only done so for discrimination cases, not First Amendment cases.)

State university officials — as opposed to the university itself — can be individually sued for First Amendment violations under 42 U.S.C. 1983, but they are protected by the defense of qualified immunity from having to pay any monetary damages at all, unless the court finds that they not only violated the First Amendment, but did so in a very clear way that was obviously unconstitutional under an appeals court’s own past rulings, or past rulings by the Supreme Court — any legal ambiguity, and they are protected against damages. (See, e.g., Reichle v. Howards, 132 S.Ct. 2088, 2094 (2012) (the right “violated must be established, not as a general proposition, but in a particularized sense”); Harrell v. Southern Oregon University, 474 Fed. Appx. 665 (9th Cir. July 20, 2012) (circuit court of appeals granted qualified immunity because “the appropriate speech standard for college and graduate students’ speech remains an open question in this circuit“; First Amendment violation must be “sufficiently clear that every reasonable official would have understood” that it was illegal) (emphasis added).)

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The Great California Government Union Swindle

by Ivan Osorio on December 20, 2012 · 0 comments

in Economy, Employment, Labor, Politics as Usual

Are government employees overpaid? A six-part Bloomberg report answers that question with a resounding “Yes.” It also singles out one state as the biggest spender by far: California. This isn’t a case of a handful of isolated incidents. The team of Bloomberg reporters found a pattern of fiscal irresponsibility characterized by:

  • Lack of control in overtime pay and unused vacation time payouts;
  • Lack of coordination among state agencies which in one instance launched a costly salary bidding war for qualified personnel; and
  • Compensation for pension fund managers that bears little relation to performance.

Government employee unions supported many of the policy changes that have led to the Golden State’s current mess. During his first tenure (1975-1983), Governor Jerry Brown gave state employee unions the right to collectively bargain, greatly increasing their ability to gain more generous compensation — which makes a Brown spokesman’s assertion that, “Governor Brown is busy fixing the many problems that he inherited from past administrations” oddly ironic. (Interestingly, local government employees had been granted collective bargaining privileges by Brown’s Republican predecessor, Ronald Reagan.)

However, it would take the next Democratic governor to really put the state in hock to the government unions. In Gray Davis, the unions found a compliant ally willing to break the bank for them. It led to a public backlash against Davis, who in 2003 became the first U.S. governor in 82 years to be recalled by voters. But the damage had been done. In the first part of the series, Bloomberg’s Mark Niquette, Michael B. Marois, and Rodney Yap note:

One of the first goals of state employee unions when Davis took over in 1999 after 16 years of Republican governors was to unwind curbs on pensions put in place by Governor Pete Wilson in 1991. Workers also wanted broad wage increases.

Unions persuaded the California Public Employees’ Retirement System to sponsor legislation called Senate Bill 400, which sweetened state and local pensions and gave retroactive increases for tens of thousands of retirees. Highway-patrol officers were granted the right to retire after 30 years of service with 90 percent of their top salaries, a benefit that was copied by police agencies across the state.

California’s annual payment toward pension obligations ballooned to $3.7 billion in the current fiscal year from $300 million when the bill was enacted. Some cities that adopted the highway-patrol pension plan later cited those costs for contributing to their bankruptcy filings.

But that was just the beginning.

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CEI Podcast For December 19, 2012: The EPA Regulatory Report Card

by Ryan Young on December 19, 2012 · 0 comments

in Environment, Podcast, Regulation

Have a listen here.

Fellow in Regulatory Studies Ryan Young talks about the need for more transparency in the world of regulation, as well as CEI’s new EPA Regulatory Report Card. The report card, which collects data about the amount and cost of EPA regulation from numerous sources into one publicly accessible document, is something he argues that all agencies should be doing on their own each year.

Stuck in Time: Italy’s Politics

by Matthew Melchiorre on December 19, 2012 · 1 comment

in Economy, Employment, International, Regulation

Things have a way of repeating themselves. This is especially true in Italy, where politics have been stuck in a time loop for the past 40 years.

For Italians, recent drama surrounding the imminent collapse of their government is merely part of the political routine.

Earlier this month, former Prime Minister and convicted tax felon Silvio Berlusconi pulled his party’s support from the coalition supporting Italy’s technocrat government. He claimed that Italy was on the “brink of the abyss” and was “in need” of his return to politics.

Never mind his abrupt resignation from government last November, forced by financial turmoil stemming from his refusal to countenance necessary reform. The technocrat government has been governing since.

Well, he’s changed since then, right? Wrong.

Berlusconi still believes printing money is a substitute for reform. He told Rai Uno in an interview today Italy should leave the Euro to print its own currency if the European Central Bank continues its resistance to lowering interest rates, which already are at historic lows.

Instead of reforming Italy’s rigid labor markets and broken legal system (which most likely will allow Berlusconi to appeal his tax fraud conviction until the statute of limitations makes the entire case moot), he views the printing press as the means to restore Italian competitiveness.

This is the cowards’ way out. Berlusconi, and Italian politicians in general, simply do not have the courage to stand up to Italy’s entrenched special interests that have benefitted from economically ruinous legislation for decades. More cheap credit puts off this inevitable confrontation for a little while, but Italy will have to face it eventually — and at a higher cost because of all the procrastination.

This is the problem with Italian politics. The cycle of political grandstanding followed by inaction on reform has been repeating itself since the 1970s.

In the EU Observer, I explain how Italy’s never-ending political time loop has led to its economic stagnation. The bottom line:

Until Italian leaders gain the courage to take on the special interests that have gorged at the public trough for decades, the best thing they can do is stay as far away from government as possible.

Read the whole article here.

Appeals Court Overturns Dismissal Of Challenge To Obamacare Contraception Mandate By Religious Colleges

by Hans Bader on December 19, 2012 · 0 comments

in Healthcare, Legal, Personal Liberty

According to law professor Jonathan Adler, the U.S. Court of Appeals for the D.C. Circuit effectively overturned a district court’s dismissal of a challenge to the so-called “contraception mandate,” a regulation issued by the Department of Health and Human Services that employer-provided health care plans include coverage for all FDA-approved forms of contraception without cost-sharing.

Various religious employers have objected to this requirement citing the First Amendment’s free-exercise clause and, more persuasively, the Religious Freedom Restoration Act (RFRA). The district court had dismissed the case because the Obama administration claimed it would change the mandate for religious schools and hospitals before it took effect, making the lawsuit unripe. As Adler notes, the appeals court turned that self-serving administration claim into a binding commitment:

“In its brief order, the D.C. Circuit explained that the district court was wrong to dismiss the suit against the mandate for lack of standing as ‘the colleges clearly had standing when these suits were filed.’  The ripeness question ‘is more difficult,’ the court explained, because HHS has promised to address religious employers’ claims in a new rulemaking. Taking HHS at its word, the D.C. Circuit concluded the lawsuits should be held in abeyance, pending further action by HHS.

At oral argument, the government . . . represented to the court that it would never enforce [the contraceptive mandate] in its current form against the appellants or those similarly situated as regards contraceptive services. . . There will, the government said, be a different rule for entities like the appellants, . .  and we take that as a binding commitment. The government further represented that it would publish a Notice of Proposed Rulemaking for the new rule in the first quarter of 2013 and would issue a new Final Rule before August 2013.

We take the government at its word and will hold it to it. . .

As a consequence of this ruling HHS will have little choice but to issue a rule relieving many religious employers of the obligation to provide coverage for contraception. The interesting question will be how this is to be accomplished under existing statutory authority. Moreover, the Administration’s proposed fix — allowing religious employers to exclude contraception coverage but requiring insurers to provide separate contraception coverage to employees at no charge — would do nothing to alleviate the burden on those religious employers that self-insure (which many do because, among other reasons, it provides a way to escape state-level contraception mandates).

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Expert On Gun Regulation Says “Assault Weapons” Bans Are Useless

by Hans Bader on December 19, 2012 · 0 comments

in Legal, Politics as Usual, Zeitgeist

President Obama is backing a revival of the federal assault weapons ban that expired in 2004. UCLA law professor Eugene Volokh, perhaps the leading legal scholar on the Second Amendment, argues that bans on assault weapons are useless — as pointless as trying to stop drunk driving by “banning whiskey.” This is because “assault weapons” is just a label applied by gun-control legislation to certain semi-automatic guns that are not unusually deadly, so banning those particular guns just leaves other equally deadly semi-automatics on the market.

Semi-automatic guns, including “assault weapons,” are not machine guns. They do not fire more than one bullet each time the trigger is pulled, unlike a machine gun. The sale of machine guns and fully automatic weapons has long been banned. By contrast, much of America’s guns are “semi-automatic.” Indeed, so many guns in this country are semi-automatic — the way most cars run on gasoline — that The Washington Examiner’s Tim Carney says that “semiauto is the norm. As Al Tompkins at [the] Poynter [Institute] puts it: ‘The use of the phrase semi-automatic when talking about guns is like using the phrase ‘gasoline cars.’” As Carney notes, New York Times reporters who write about gun violence do not even understand what a semi-automatic gun is, erroneously assuming it has something to do with whether a bullet from the gun can pierce a bullet-resistant “vest” (it doesn’t) when in fact the word “semi-automatic” merely describes the gun’s “loading mechanism.”

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