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  • Feds Apply Double Standards against Private Employers

    September 4, 2014 3:13 PM

    Government contractors could face a financial death sentence over labor law, civil-rights law, or wage-and-hour law violations under a recent Obama executive order I discussed earlier, EO #13673. By contrast, Federal agencies like the Consumer Financial Protection Bureau often face little penalty for violating the law. 


    Minority employees at the CFPB allege pervasive discrimination there, reports the Washington Times. The discrimination itself is unproven, but it seems clear that minority employees have been subjected to retaliation for speaking out about what they perceive as discrimination. Such retaliation is typically illegal even when the employee’s complaint of discrimination turns out to be mistaken.


    The CFPB responded to allegations of discrimination in pay by essentially raising employee salaries in general, at taxpayer expense (the agency funds itself out of money it takes from the Federal Reserve): minority “employees say the pay increases are just restitution, but because almost everyone got bonuses and promotions, it just raised the playing field instead of equalizing it.” The net result was to reward the agency for its own wrongdoing.


    Federal agencies explicitly receive preferential treatment compared to private companies in federal labor and employment laws. Federal agencies are completely exempt from punitive damages under federal employment and civil-rights laws. And a deadline for suing that is 300 days against a private employer may be only 30 days against a federal agency.


  • Ex-Im Update

    September 3, 2014 5:23 PM

    Congress comes back from its annual August recess next week. One of the top items on its agenda is deciding the Export-Import Bank’s fate. Ex-Im subsidizes financing for U.S. exporters and their foreign customers. As I outlined here, Ex-Im subsidizes certain businesses at others’ expense. It is a pro-business policy, when what the economy needs are pro-market policies. Ex-Im will also be forced to shut its doors unless Congress reauthorizes its charter by the end of September, making for a golden reform opportunity for corporate welfare opponents.


    The merits of the issue are clear enough, but politics is getting in the way. A bill to reauthorizes Ex-Im’s charter would likely pass the Senate, but would have trouble getting through the House. This would ordinarily mean that Ex-Im opponents would succeed in shuttering the agency, since Ex-Im’s expiration is automatic without reauthorization. That means Ex-Im supporters will probably pursue other means, such as tucking Ex-Im’s reauthorization into a must-pass appropriations bill. Ex-Im opponents would have no choice but to swallow that poison pill, or risk another politically costly government shutdown.

  • Strengthening Executive Branch Review of Federal Regulations

    September 3, 2014 9:37 AM

    This week marks the due date of public comments on the 2014 edition of the Draft Report to Congress on the Benefits and Costs of Federal Regulation


    Unable to resist the urge, we filed comments: The Federal Office of No: Enhancing the Executive Branch Role in Challenging Federal Regulation.


    Despite this Office of Management and Budget report’s being the federal government’s only picture of itself with respect to regulatory benefits and costs, just seven rules in the document featured both benefit and cost analysis.


    Yes, seven rules, in an era in which dozens of departments and agencies issue over 3,500 rules and regulations every year.


    Independent agencies like those implementing the Dodd-Frank financial law (Consumer Financial Protection Bureau, Commodity Futures Trading Commission, Securities and Exchange Commission) get a pass.


    Agency guidance documents, memoranda, bulletins and notices also get no review, and were never even subject to the Administrative Procedure Act process that governs ordinary regulation.


    There are plenty avenues for making government bigger. So it makes one wonder, what if the president used the “pen and phone” to shrink government rather than grow it?


  • CEI’s Battered Business Bureau: The Week in Regulation

    September 3, 2014 7:12 AM

    In a week like any other, federal agencies issued regulations for everything from dairy farmers’ profit margins to Canadian apple exports.


  • Judge: NLRB Acting as "Litigation Arm" of SEIU

    August 28, 2014 11:00 AM

    A federal judge in Pittsburgh has reprimanded the National Labor Relations Board for its heavy-handed and questionable treatment of University of Pittsburgh Medical Center (UPMC) in a labor dispute between the healthcare giant and the SEIU.


    A UPMC hospital is undergoing a two-part trial over SEIU’s allegations that the company committed unfair labor practices. The first case involves the charge that UPMC management conducted interrogations and surveillance of organizing activity and made implied threats of discipline and arrest. NLRB judges have not yet issued a ruling for that case. The second case involves SEIU’s claim that UPMC is one entity, and therefore vulnerable to unionization, which the UPMC denies because it claims that each hospital is its own entity.


    U.S. District Judge Arthur J. Schwab weighed in and said,


    The Court does not see how these requests have any legitimate relationship or relevance to the underlying alleged unfair labor practices; instead, the requests seek highly confidential and proprietary information (except for a few public documents); the requests have no proportionality to the underlying charges; and, the requests seek information that a union would not be entitled to receive as part of a normal organization effort.


    Judge Schwab also said,


    Indeed, the scope and nature of the requests, coupled with the NLRB’s efforts to obtain said documents for, and on behalf of the SEIU, arguably moves the NLRB from its investigatory function and enforcer of federal labor law, to serving as the litigation arm of the union, and a co-participant in the ongoing organization effort of the union…


    In the end Judge Schwab unfortunately decided to let the NLRB get away with the excessive barrage of subpoenas.


    If the NLRB is indeed stepping out of its investigatory function and acting as air support for the SEIU’s organizing effort of UPMC, it would not be the first time the federal bureaucracy has played favorites under President Obama’s watch.


  • Taxpayers to Subsidize “Ministry of Truthiness”

    August 27, 2014 10:18 AM

    The Washington Free Beacon reports:


    The federal government is spending nearly $1 million to create an online database that will track “misinformation” and hate speech on Twitter. The National Science Foundation is financing the creation of a web service that will monitor “suspicious memes” and what it considers “false and misleading ideas,” with a major focus on political activity online. The “Truthy” database, created by researchers at Indiana University, is designed to “detect political smears, astroturfing, misinformation, and other social pollution.” The university has received $919,917 so far for the project. . . .


    “Truthy,” which gets its name from Stephen Colbert, will catalog how information is spread on Twitter, including political campaigns.


    This seems like a waste of taxpayer money on many levels, and it is conceivable that government officials who are interesting in harassing their critics could make use of this information to violate their free-speech rights (the way the IRS violated the First Amendment by targeting Tea Party and other groups for costly and burdensome investigations, and demanding lots of irrelevant information from those groups that had nothing to do with whether they actually were eligible for 501(c)(4) status).


    It’s not the government’s role to rule to declare ideas “false or misleading.” Under the First Amendment, there’s “no such thing as a false idea,” according to the Supreme Court’s decision in Gertz v. Robert Welch, Inc. (1974).


  • Obama “Fair Pay and Safe Workplaces” Executive Order Will Punish Firms in Pro-Worker States

    August 25, 2014 11:01 AM

    Earlier, we discussed President Obama’s recent Executive Order 13,673, which “will allow trial lawyers to extort larger settlements from companies, and enable bureaucratic agencies to extract costly settlements over conduct that may have been perfectly legal.”


    But it turns out that President Obama’s executive order (which allows the Labor Department to cut off firms’ government contracts over state or federal employment law verdicts or fines against them) has another, more ironic effect: It penalizes companies based in states like California that vigorously enforce labor and civil-rights laws, leading to employers in those states racking up more fines and verdicts against than similarly-behaving employers in other states. That’s the conclusion of Warren Meyer, the head of a campground-operation company based in Arizona, who recently closed his operations in neighboring California to avoid lawsuits.


    He says that “government contractors would be insane to operate in California,” given its “regulatory and judicial culture that assumes businesses are guilty until proven innocent. If state labor violations or suits lead to loss of business at the national level, why the hell would a contractor ever want to have employees in California?”


    Whether a large company is sued for discrimination or labor law violations often has more to do with its location than whether it violated the law. A recent study shows that “California has the most frequent incidences of [employment-practices] charges in the country, with a 42 percent higher chance of being sued by an employee for establishments . . . over the national average. Other states and jurisdictions where employers are at a high risk of employee suits include the District of Columbia (32% above the national average) [and] Illinois (26%).” It’s because of their location, not because California employers are more racist or anti-union than employers in other states (indeed, California employers spend more time and money on compliance mechanisms than employers elsewhere).


    The president probably thought his order would incentivize compliance with federal labor norms (it allows contracts to be cut off for violations of federal labor laws and roughly “equivalent” state laws). But in effect it punishes employers in states that vigorously enforce civil-rights and labor norms through state laws that ban the same thing as federal law, but through much harsher penalties. (For example, federal law bans sex discrimination in hiring, but caps emotional distress and punitive damages for even the largest employers at $300,000 under Title VII of the Civil Rights Act. But California’s Fair Employment and Housing Act allows unlimited compensatory and punitive damages for the same exact discrimination, leading to multi-million dollar damage awards in some seemingly ordinary discrimination cases.)


    The variation between California and other states in how often workers sue reflects the fact that some parts of the country are much more generous to workers who sue their employer than other parts of the country. How many lawsuits an employer faces is a function of how much workers and their lawyers expect to recover if they win a lawsuit.


  • CEI’s Battered Business Bureau: The Week in Regulation

    August 25, 2014 8:07 AM

    The Federal Register burst past the 50,000-page mark with Friday’s 878-page effort, which also contained 21 final regulations and four “significant” documents.


  • Cops to Destroy Rare Wine Collection in Pennsylvania

    August 22, 2014 2:12 PM

    In the fifth century BCE, famous Greek tragedian Euripides supposedly said, “where this no wine there is no love.” This certainly holds true in present day Pennsylvania, which has one of the nation’s strictest alcohol regulatory regimes. And according to Tom Wark, executive director for the American Wine Consumer Coalition, Pennsylvania is “the worst state to live in if you're a wine lover." In Philadelphia, one man surely isn’t feeling the brotherly love after police raided his home and seized 2,426 bottles of rare wine—with an estimated value of more than $125,000—that the police reportedly plan to “destroy.”

  • Eric Holder Avenges Investor Fraud by Taking from Defrauded Investors

    August 22, 2014 1:54 PM

    “Bank of America failed to make accurate and complete disclosure to investors and its illegal conduct kept investors in the dark,” declared a government official in a Department of Justice press release announcing yesterday’s record settlement in which Bank of America agreed to fork over $16.65 billion to settle charges it and companies it had purchased had deceived investors.


    Back in Washington from Ferguson, Mo., Attorney General Eric Holder announced at a press conference: “As part of this settlement, Bank of America has acknowledged that, in the years leading up to the financial crisis that devastated our economy in 2008, it, Merrill Lynch, and Countrywide sold billions of dollars of RMBS [residential mortgage-backed securities] backed by toxic loans whose quality, and level of risk, they knowingly misrepresented to investors.”


    Yet how much from this settlement goes to the investor victims? Nada! In fact, the settlement takes billions from the very investors who were defrauded.


    More than $9 billion from this settlement goes to the federal and various state government coffers. And, as Holder proclaimed at the press conference: “Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”


    But whatever Bank of America’s misdeeds – and there were many by the company and those it purchased (Countrywide and Merrill Lynch) – it is certainly not “appropriate” to take from the investors the government itself says were victims to give to homeowners that the government never alleges were defrauded.


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