Clear Lake Republicans

Monday, May 17, 2010

Did the Federal Government Enable the Gulf Oil Spill?

An "angry" President Barack Obama lashed out at those he feels are responsible for the Gulf oil spill Friday, telling reporters in the Rose Garden: "You had executives of BP and Transocean and Halliburton falling over each other to point the finger of blame at somebody else. I will not tolerate any more finger-pointing or irresponsibility." But as CBS News' Chip Reid points out: "Mr. Obama's been president for nearly 16 months. Does he get at least a little piece of the blame?"
Pointing to President Obama's staunch defense of Interior Secretary Ken Salazar, Reid answered his own question: "Not a bit. ... He portrayed his administration as valiantly fighting the good fight against the oil companies from day one. ...So while the president is pointing the finger of blame, he's also working hard to make sure that over time the finger doesn't do a 180."
In the President's mind the federal government apparently can do no wrong. The leading answer to every problem our nation faces is bigger, stronger, and more intrusive government regulations. But a closer look at the facts surrounding the spill shows that it was an already overly oppressive regulatory legal framework, coupled with lax enforcement, that created the mismatched incentives that led to the disaster.

The federal government is the owner of the waters where drilling takes place and bears ultimate responsibility for what happens on its property. Energy companies seeking to develop our natural resources must survive a phalanx of federal regulations before any action can be taken. For starters, any action taken by the federal government, including offshore drilling leases, requires a detailed environmental impact analysis mandated by the National Environmental Policy Act (NEPA).

But NEPA is such a draconian law, and the process can be so slow thanks to litigation, that to get anything done the federal government often grants waivers to the NEPA process. Which is exactly what happened with the Deepwater Horizon oil rig in question.Regulations also require the Interior Department to inspect rigs at regular intervals, and the Deepwater rig was supposedly inspected less than two weeks prior to the accident. The rig's emergency shutoff valve, which reportedly had a dead battery, also passed inspection just 10 days before it failed. In addition to these intrusively written but leniently enforced regulations, the Oil Pollution Act (OPA) of 1990 set a $75 million liability cap beyond direct cleanup costs for any offshore oil spill. The net result of all of all these policies is a situation where nobody is responsible for safety because everybody is.
The answer to the Gulf oil spill is not a new ban on domestic energy production or more intrusive regulations. The best way to make sure future spills do not happen is make energy companies responsible for safety but to then also hold them fully responsible for any accidents. Combining liability with a responsibility for safety maintenance should minimize the likelihood of accidents by directly connecting profit motives to safe operations. It is also high time the entire NEPA process was reformed. NEPA’s pervasive application makes it highly burdensome and difficult to follow, which drives the need for waivers. As waivers become the norm, they become easier to attain even when, perhaps, they should be denied.If the Obama administration insists on micromanaging every aspect of energy production then it should also be prepared to have the finger pointed at itself when things go wrong

Wednesday, April 7, 2010

How the Left Really Plans to Pay for Obamacare

According to the Congressional Budget Office (CBO), over half of President Barack Obama's new $940 billion health care entitlement is paid for by price-fixing Medicare cuts. Never mind that the President's own Centers for Medicare and Medicaid Services says that these cuts would cause "roughly 20 percent" of Medicare providers to go bankrupt in Obamacare's first ten years. The CBO has to believe these cuts will happen because they are required, by law, to believe everything Congress tells them.
The American people are not. So the American people ought to know that instead of cutting doctors' Medicare reimbursement rates by 21% as required by law on April 1, the Centers for Medicare and Medicaid Services froze payments at current levels until Congress could come back after Easter recess and rescind those cuts. Again. As they have done every year but one since the cuts were first enacted in 1997.
This doc fix is big enough that, if it had been included as a cost of Obamacare, it would have sent the President's bill into the red all by itself. But the half trillion dollars in Medicare cuts used to fund the rest of Obamacare are a much bigger problem. Even if we assume they all go as planned, President Obama's budget would borrow 42 cents for each dollar spent in 2010; would run a $1.6 trillion deficit in 2010; and would leave permanent deficits that top $1 trillion as late as 2020. Add on the half trillion dollars in Medicare cuts that, given Congress' track record, the American people would be naive to think will ever happen, and the federal government is looking at a pile of new debt.The left's solution to this problem has been simmering for some time now.

Senate Budget Committee chairman Kent Conrad (D-ND) floated the idea to The Washington Post last May. Speaker Nancy Pelosi (D-CA) told Charlie Rose it was "on the table" in October. And yesterday White House adviser Paul Volcker told the New York Historical Society it should be considered. The "it" here is a Value Added Tax (VAT), which is a fancy way of saying national sales tax.A VAT can be (and has been) structured in many different ways. But the real world results are always the same: higher taxes, more government spending, lower growth, fewer jobs and more special interest power.Higher Taxes: Don't believe for a second that a VAT will help offset other taxes.
International evidence clearly shows that a VAT is likely to increase the aggregate burden of govern­ment. Europeans used to only have a slightly higher tax burden than the United States. But beginning in the late 1960s, European countries began to implement VATs. Since then, the overall tax burden in Europe has climbed rapidly. And once a VAT is in place, the evidence shows that the tax rate rises over time.Higher Government Spending: Not surprisingly, with more revenues, European governments turn around and spend much more than the United States does. According to a study by the U.S. Chamber of Commerce, government spending grew 45 percent faster in VAT nations than in non-VAT countries.Slower Growth: According to the academic literature, there is a strong negative relationship between govern­ment spending and economic performance. In other words, more government spending means less economic growth and fewer jobs.
Economic growth is driven by individuals and entrepreneurs operating in free markets, not by Washington spending and regulations.More Power to Washington: There is one economy that would greatly benefit from a VAT: Washington, DC. No VAT could ever be levied evenly on all goods and services. Due to political considerations, a VAT in addition to current taxes would likely exempt politically sensitive items like food, clothing, health care and housing. Industries would lobby heavily for exemptions from the VAT for the economic benefits described above. This would give Congress an even larger role in picking winners and losers in the marketplace. Success would depend less on ingenuity and hard work and more on the ability to gain political favor.
Our nation faces a financial crisis. But low revenues are not the problem. Spending is. Heritage fellow Brian Riedl explains:
Real federal spending remained steady at $21,000 per household throughout the 1980s and 1990s, before President Bush hiked it to $25,000 per household. Now, President Obama has a proposed a budget that would permanently spend a staggering $32,000 per household annually – and that’s before all the baby boomers retire and add another $10,000 per household in Social Security, Medicare, and Medicare costs to the bottom line.So the problem is not declining revenues, but rather a spending spree unlike any in American history. If Washington insists on spending $32,000 per household, it will have to tax $32,000 per household – an unaffordable and unfair tax burden regardless what kind of tax collects it.
Rather than tax America into permanent economic stagnation, President Obama and Congress must rein in runaway federal spending. Simply bringing real federal spending back to the $21,000 per household average that prevailed in the 1980s and 1990s would balance the budget by 2012 without raising a single tax on anyone. Even returning spending to the pre-recession level of 20 percent of GDP would eliminate two-thirds of the projected 2019 budget deficit without raising taxes

Tuesday, March 30, 2010

Restoring the First Amendment – One Case at a Time

On Friday, the Court of Appeals for the District of Columbia struck another blow towards restoring every American’s First Amendment right to engage in political speech. In SpeechNow.org v. Federal Election Commission, the court applied the Supreme Court’s recent decision in Citizens United to throw out another pernicious portion of the federal campaign finance law also known as McCain-Feingold.

SpeechNow is an unincorporated association of individuals that wanted to run independent ads in the 2008 election that supported candidates for federal office that shared their views on the First Amendment right of free speech and freedom to assemble. However, federal law limited the amount of contributions that could be made to the association because the FEC considered SpeechNow to be a political action committee or PAC. Individuals are limited to giving no more than $5,000 in contributions to a PAC in a given year.

SpeechNow argued that this contribution limit violated the First Amendment rights of its members because it limited their independent political advocacy. Why? Well, the Supreme Court has previously held that the First Amendment allows unlimited independent political expenditures by an individual. Thus, if I want to spend $50,000 of my own money taking out an ad in the Wall Street Journal urging people to vote for Senator Jefferson Smith because he is willing to filibuster pork-barrel, special interest legislation, Congress cannot limit the amount I want to spend on such political speech. There is a disclosure requirement – most people don’t realize that if you spend more than $250 on such independent advocacy, you have to report it to the FEC

However, let’s assume you didn’t have the $50,000 required to purchase a quarter page of the Wall Street Journal. But you could afford to spend $10,000 and you had four friends who were just as impressed with Senator Smith who were also willing to contribute $10,000 each. One would think, given the First Amendment’s protection of free speech and associational rights, that what one person can do in terms of political speech, several people acting together should also be able to do. Prior to this decision, however, you would have been wrong.

Those five friends acting together to buy a political ad that a single individual could legally purchase would be violating federal law and subject to severe civil and criminal penalties. The FEC, applying federal campaign finance law, would characterize those five friends as having formed a PAC. Since PAC’s are limited to no more that $5,000 a year in contributions from an individual, you and your four friends would be considered by the FEC and the Justice Department to have violated federal law by contributing $10,000 each to buy this independent political ad.

The D.C. Court of Appeals quite properly threw out these federal limitations on an association of individuals engaging in political speech and advocacy, although it upheld the disclosure requirements that apply. So SpeechNow will still have to report its independent expenditures to the FEC. In addition to being unconstitutional, making it illegal for individuals acting together to engage in political activity that any one of them could legally undertake as individuals makes no sense. The SpeechNow case is another great decision for everyone who understands that the very core of the First Amendment is the protection of the right to engage in political speech, a principle that too many in Washington who call themselves “reformers” want to override

Wednesday, March 10, 2010

Callegari: Washington Shouldn't Mess with Texas' Water

Texas has a sovereign right, reinforced by more than a century's worth of sound public policy, over the management and control its water resources. Previous generations amended the Texas Constitution to support the conservation and development of our water resources. Over fifty ago, on the heels of an extraordinary drought, legislators created the Texas Water Development Board to ensure the continued availability of water supplies. More recently, policy leaders developed water planning processes to identify and develop the resources needed for growing domestic, agricultural, and environmental needs. Now, all of Texas' water resources, from major rivers to minor aquifers, are governed by state policies. These policies were created by Texans, for Texas, and address our unique environmental conditions while respecting private property rights. We owe this to our sovereign right over this state's water resources, and the obligations of stewardship attendant to that right. Unfortunately, several proposals percolating in Washington to expand federal authority over this nation's waters threaten Texas' right to manage and control its own water resources. The most immediate threat is entitled the Clean Water Restoration Act. The title of this bill is misleading: rather than "restore" the Clean Water Act, the bill does everything to expand it. Currently, only navigable waters of the United States are subject to the Clean Water Act's requirements. This means that if a body of water is big enough to maneuver a ship, a person must obtain a federal clean water permit before discharging water into that navigable body. These permits are not cheap. The US Supreme Court found that the average applicant for an individual permit spends 788 days and over $270,000 processing the necessary paperwork. Failure to have a permit can result in thousands of dollars in fines and even imprisonment. The Act before Congress would place all waters -- not just navigable ones -- under federal Clean Water Act regulation. If approved by federal lawmakers, owners of detention ponds, storm drains, and irrigation canals, to name a few, may need a costly federal permit. More alarmingly, Texas' cities, farmers, and even water districts will be subject to a level of regulatory control that never existed before. The Clean Water Restoration Act could be just the beginning. Another measure that Congress may consider would create a new federal bureaucracy headed by a White House water "czar" responsible for developing a national water resource policy. This draft bill, called the Sustainable Watershed Planning Act, is based on a top-down policy paradigm where federal bureaucrats could dictate water planning criteria and policies to the states. This proposed centralized approach to water planning could unilaterally usurp Texas' control over her own waters while ruining a state planning process that already works. Like a river cresting in a Texas flood, the list of federal proposals continues to grow. At the bequest of out-of-state environmental activists, the US Fish and Wildlife Service has begun its review of nearly two dozen water-related species that are indigenous to Texas -- including eleven freshwater mollusks, four salamanders, eight fish, a snail, an insect, and a crustacean -- for possible inclusion on the federal endangered species list. If approved by federal bureaucrats, these additions could jeopardize the continued availability of water to towns and farms throughout the state. Another proposal being considered at the behest of environmentalists would revise federal principles and guidelines for water resources planning to emphasize ecological goals over economic and human well-being. Further, the White House is considering amending a Carter Administration program relating to floodplain management to limit land uses along our waterways. The measures being considered in Washington would genuinely interfere with Texas' sovereignty. If approved, they would subordinate Texas' water priorities to federal decisions, and shove this state's right to manage its own water resources aside to make way for federal control and bureaucracies. This cannot happen. If Texas is to maintain her sovereignty over her water resources, our Congressional delegation needs to work with legislators from other states and Texas' own water leaders to stop these measures from being enacted. Texas has a strong tradition of stewardship over her waters. Decisions regarding this precious resource are best left to state policy-makers, and not federal bureaucrats or a Congress mired in other issues.

Representative Bill Callegari represents the west Harris County and Katy area in the Texas House of Representatives. He is currently serving his third term as Vice Chairman of the House Natural Resources Committee. Before his election to the House of Representatives in 2000, Representative Callegari worked for over 30 years in the water industry.

Monday, February 22, 2010

Pension Gap of $1 Trillion Is ‘Daunting’ Bill to U.S. States

Pension Gap of $1 Trillion Is ‘Daunting’ Bill to U.S. States
By Darrell Preston and Nanette Byrnes

Feb. 18 (Bloomberg) -- U.S. states must contend with a more than $1 trillion gap between what they have saved and what they have promised to retired workers for pension and health-care benefits, the Pew Center on the States said in a report today.

States have saved $2.35 trillion of the $3.35 trillion owed to workers as of mid-2008, the center said. The Washington-based group expects the deficit to grow because of investment losses states sustained in the second half of 2008, the report said.

Illinois,Connecticut and New Jersey were among the 16 lowest-ranked in terms of funding pension and retiree health care, according to Pew. The gap reflects “states’ own policy choices and lack of discipline” in failing to set aside enough money and expanding benefits without deciding how to pay for it, the report said.

“States don’t manage this liability and the costs continue to go up,” said Susan Urahn, managing director for the Pew Center, in a conference call with reporters yesterday. “States will either have to make cuts in other priorities or raise taxes.”

Local governments’ borrowing costs in the U.S. municipal bond market may rise because companies that grade the debt factor in the liability, said Urahn. Investors seek higher yields when ratings are lower to compensate for the perception of greater risk.

$3 Trillion

The gap that Pew calculated may be one-third that estimated by Orin S. Kramer, chairman of New Jersey’s State Investment Council and manager of Boston Provident Partners, a hedge fund. Kramer projected a $2 trillion unfunded liability for public pension funds and a $1 trillion gap for health-care benefits for retired public employees, according to a January commentary published by Bloomberg.

Under funding of pensions has been cited in rating cuts or negative outlooks for Connecticut, Nevada and New Jersey, said Edith Behr, a senior credit officer with Moody’s Investors Service.

“States have less money to pay for services that are absolutely expected,” Behr said in an interview. “It’s when you get to times like this when you start having to make some of the tough choices, cutting back services, cutting back staff, raising taxes.”

Urahn called the pension gap “perhaps the most daunting” of all the bills that will come due for states and municipalities. The full payment for plans the study looked at was $108 billion last year, compared with spending of $152 billion on higher education. Florida, Idaho, New York and North Carolina entered the recession with fully funded pensions, the report said. Twenty states have saved nothing for future obligations for health care and other benefits.

California’s Obligations

California, the most-populous U.S. state, owes $51.8 billion for future retiree health and dental costs, an increase of $3.6 billion from a year earlier, said state controller John Chiang in a press release Feb. 9. At the same time the state faces a budget deficit of $20 billion over the next 18 months.

The state can’t ignore its promised benefits “even as we try to claw our way out of the recession and provide needed cash to the state’s coffers,” Chiang said in a statement.

Fitch Ratings, which hasn’t seen states cutting back on funding pensions, is monitoring for such steps because of the tendency by states to trim contributions in past recessions, Richard Raphael, an analyst with Fitch, said in an interview.

Illinois sold bonds last month to cover its pension liability.

Friday, January 29, 2010

The Truth About President Obama and Citizens United

I have to admit that if I had been sitting in the House chamber during President Obama’s State of the Union address, I would have had to fight the urge to have a Joe Wilson moment when the President unjustly criticized the Supreme Court, six of whose members were there. Why? Because the two claims President Obama made about the Court’s decision last week in the Citizens United case are categorically and undeniably false.

President Obama claimed that the Supreme Court had “reversed a century of law to open the floodgates – including foreign corporations – to spend without limit in our elections.” Justice Alito seemed to shake his head and mouth the words “not true.” And well he should. The fact is that the Court overturned a federal ban on independent political expenditures by corporations and unions, and in so doing, it rejected the proposition that the government can decide who gets to speak and can ban some from speaking at all.

First of all, the 100-year claim is completely wrong. In 1907, Congress passed the Tillman Act that banned direct contributions by corporations to federal candidates – there was no ban on independent political expenditures in the law. “Contributions” are funds given directly to candidates for their election campaigns; independent expenditures are funds spent by third parties on things like political advertisements without any coordination with the candidate.
The Tillman Act was sponsored by South Carolina Senator Ben “Pitchfork” Tillman, probably the most vicious racist to ever serve in Congress. Tillman was a Democratic segregationist who was chiefly responsible for the imposition of Jim Crow in South Carolina after the end of Reconstruction when he was governor. This federal law, that so-called “progressives” like the President are constantly praising, was intended by Tillman to hurt the Republican Party – the party of abolition and Abraham Lincoln – because many corporations contributed to the Republican Party, not the Democratic Party. These corporations did not like segregation in the South – it cost them money and made it more expensive to sell their goods and services.
Congress did not ban independent political expenditures by corporations and labor unions until 1947. For three decades after the passage of that law, the Supreme Court went out of its way to avoid upholding its constitutionality, and the Court actually struck down a separate ban on independent expenditures as well as a state law prohibiting corporate expenditures on referenda. It was not until 1990 in the Austin case that the Court, in a 5-4 decision, upheld a state ban on independent political expenditures by a nonprofit corporation (a trade association) in a case completely at odds with prior precedent. The actual electioneering communications provision at issue in the Citizens United case was part of the McCain-Feingold amendments to federal campaign finance law in 2002.

So the point is that the law the President claims has been in place for 100 years has been on the books since 1947, and the Supreme Court only issued a very odd decision twenty years ago upholding such a corporate ban in conflict with stare decisis (Quite tellingly, the government refused to defend the 1990 decision on the basis of its actual reasoning when it argued the Citizens United case). As Justice Kennedy said, “[n]o case before Austin had held that Congress could prohibit independent expenditures for political speech based on the speaker’s corporate identity.” While the Supreme Court in Citizens United found that the corporate ban on independent political expenditures is unconstitutional, it did not touch the ban on direct contributions to federal candidates. That is the ban that represents “a century of law” and it remains in force today contrary to the President’s assertion.
The President’s second point about those evil foreign corporations is also totally wrong. 2 U.S.C. § 441e bans all foreign nationals from directly or indirectly contributing to a federal candidate or a political party. It also bans all foreign nationals from making any independent political expenditures – and this ban was not overturned by the Supreme Court. The term “foreign nationals” is defined to include individuals, foreign governments, foreign political parties, and corporations “organized under the laws or having its principal place of business in a foreign country.” It is simply not true that Citizens United freed foreign corporations to make independent expenditures in American elections.

Congress itself put an exemption into the law. If you are not a U.S. citizen but are lawfully admitted for permanent residence in the U.S., this ban does not apply to you. The Federal Election Commission has interpreted this provision with regard to corporations to mean that only U.S. domestic subsidiaries of foreign corporations can establish political action committees, and only if those PAC’s donations and disbursements derive entirely from funds generated by the U.S. operations of the subsidiary and all decisions concerning the donations and disbursements are made by U.S. citizens or permanent residents. I was actually on the FEC as a commissioner when we considered an advisory opinion request from a Canadian company over its U.S. domestic subsidiary, and this was the rule followed by the FEC to implement federal law. Under current law, there are multiple layers of protection to prevent foreign influence on our elections.

This makes perfect sense. Foreign corporations are prohibited from participating in American elections. But their domestic subsidiaries that are American companies, employ American workers, have American officers, and pay American taxes, are able to participate in the American election process to the same extent as other U.S. companies as long as all of the money and all of the decisions are American.
The Citizens United decision did not even consider this ban on foreign nationals. So the President was completely out-of-line when he made the claim that foreign corporations would be able to spend without limit in our elections, a claim that seems to have become a talking point for critics of the Supreme Court’s decision.

The President should know better than to make these false claims. After all, he taught a voting rights class at the University of Chicago that loosely covered campaign finance law, and his new White House counsel is Bob Bauer, probably the leading Democratic campaign finance lawyer in Washington. Bauer even wrote one of the only books that exists explaining the nuts and bolts of federal campaign finance law.

The President owes Justice Alito and the other justices of the Supreme Court an apology for completely mischaracterizing their opinion, an opinion that helped restore the full protections of the First Amendment. It was a decision that upheld some of our most basic principles, principles about the freedom to engage in political speech that are incorporated into the Constitution, a document that the critics of this decision seem all to willing to ignore when its requirements don’t fit their political objectives