President Obama Will Propose $10 a Barrel Tax on Oil To Pay For $32 Billion Green Transit Slush FundFebruary 5, 2016 5:48 PM
The White House has begun to release details of President Barack Obama’s budget request for Fiscal Year 2017. Most interesting so far is the announcement that the President will propose a new $10 fee on each barrel of oil. With oil selling at roughly $30 a barrel, this would amount to a one-third increase in the cost of oil.
The projected $32 billion a year in new revenue would be used to fund “green” transit: $20 billion for mass transit, including high-speed rail and magnetic levitation; $10 billion for streamlining local and state transit planning, a Climate Smart Fund to give bonuses to States that reduce greenhouse gas emissions from transportation, and three new grant programs for “livable” cities, climate-resilient infrastructure, and regional-wide transit projects; and $2 billion for research into “clean” transportation.
There is no chance that the 114th Congress will enact this new $32 billion tax plus green slush fund, so it’s not clear why the President doesn’t follow his tried and true practice and just impose it by executive order. I doubt that many Democrats in Congress who are running for re-election in 2016 will support it.
February 4, 2016 2:59 PM
Cronyism and boondoggles in an energy bill is nothing new in the U.S. Congress. But this week, senators of both parties are taking the process to new lows in amendments they are offering to the pending S.2012—the Energy Policy Modernization Act.
Not only are these politicos picking winners and losers through subsidies and mandates favoring selected “green” industries and technologies, they are roping in housing and finance agencies into their “environmentally correct” schemes. At best, this would divert the agencies away from their missions at a time of great economic volatility. At worst, it could cause a financial crisis of its own.
First, there is an amendment from Sen Johnny Isakson (R-Ga.), a former real estate agent, which would loosen credit standards for “green” homes backed by taxpayers through the Federal Housing Administration. The FHA, created during Franklin D. Roosevelt’s New Deal in 1934 to help low- and middle-income borrowers obtain housing, now benefits many affluent borrowers as well by insuring from default mortgages up to a limit of about $625,000.
This greatly reduces a bank’s risk from making these loans, but can also create a substantial “moral hazard” because of the taxpayer backing. As I wrote in The Wall Street Journal in 2007, “FHA-insured loans have also been at the center of some of the worst excesses of the housing boom, including mortgage fraud, loans made without income verification, and property ‘flipping’ with inflated appraisal.” The FHA received a $1.7 billion taxpayer bailout in 2013.
February 4, 2016 2:56 PM
U.S. Trade Representative Michael Froman signed the Trans-Pacific Partnership Agreement (TPP) in Auckland, New Zealand, yesterday, together with ministers from 11 other Pacific-rim countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam).
Since the signing took place on the earliest possible date under rules set in Trade Promotion Authority (TPA), it seems clear that the Obama administration wants to move quickly on TPP, knowing that this controversial trade pact could get bogged down in the presidential election cycle.
Now that the agreement is signed, a complex series of dates and rules mandated under TPA takes effect, principally involving the administration and the Senate Finance Committee and the House Ways and Means Committee before Congress can consider the pact.
Finance Committee Chairman Orrin Hatch (R-Utah) in a floor speech yesterday emphasized those steps and noted that the final vote on the trade agreement could be years in the making.
TPP, a deal that represents almost 40 percent of the world’s GDP, is a massive agreement, not only because of its breadth and its length of 599 pages, but also because it deals with a host of issues that aren’t integral to free trade. Including numerous extraneous issues creates much more contentious debate on trade agreements and almost makes trade itself an extraneous issue in trade agreements.
February 4, 2016 11:29 AM
The spread of the mosquito-transmitted Zika virus should be yet another wake-up call for public officials around the world. As a relatively new threat, Zika has captured headlines in a world where many insect-transmitted diseases continue to wreak havoc on public health. Unfortunately, the ability to control all such vector-borne diseases is hindered by more than our limited scientific understanding. Disease control is limited by the lack of political will to use all tools in our arsenal, including politically incorrect pesticides.
Zika has long been known to cause mild infections and rashes, but health officials are now investigating the possibility that it can cause birth defects when mothers are infected during pregnancy. The disease appeared in Brazil last spring and during 2015, the nation experienced a dramatic increase of babies born with neurodevelopmental problems associated with unusually small heads, a defect called microcephaly. Researchers are investigating whether the two phenomenon are connected. They are also investigating the possibility that Zika caused an increase of Guillain–Barré syndrome, an autoimmune disease.
Regardless of what they find, we already know that mosquito borne diseases cause a wide range of health effects that include neurological problems as well as immediately deadly infections. The impact in impoverished nations is devastating with diseases like Malaria and Dengue taking millions of lives every year.
February 4, 2016 9:58 AM
By statute, Congress delegated to the Secretary of Labor “the authority to define and delimit the terms of the [overtime] exemptions.” But that doesn’t mean it is good policy to dramatically modify the exemptions.
On June 30, 2015, the Department of Labor submitted a notice of proposed rulemaking to significantly modify the exemptions in the Fair Labor Standards Act’s overtime rules. Most notably, the proposed rule greatly increases the minimum salary threshold for exempt workers.
Currently, under the FLSA, overtime regulations require time-and-a-half pay for every hour above 40 that an hourly employee works in week. Workers may be exempt from overtime pay if they are salaried employees who perform executive, administrative, professional, and outside sales activities and make more than $23,660. The exemption targeted by the DOL’s proposed rule is the salary exemption threshold. The agency plans on raising the threshold 113 percent from $23,660 to $50,440.
Currently, the DOL is reviewing hundreds of thousands of comments and plans on finalizing the rule in the summer of 2016.
DOL officials claim that the proposed rule is intended to give workers a raise. Yet, a number of unintended consequences will arise if the rule is finalized and has little chance of giving workers a sizeable pay increase.
February 3, 2016 4:14 PM
As has been demonstrated time and again, this administration is opposed to any change in the law that will reduce its powers. We see this once again in the White House’s statement that it will veto H.R. 766 (the Financial Institution Customer Protection Act) introduced by Rep. Blaine Leutkemeyer (R-Mo.) due to be voted on shortly by the House. The bill aims to restrict the powers that were abused during Operation Choke Point.
The administration’s statement is a masterpiece in justifying executive abuse. Here are some highlights.
The bill’s first change to the law would require banking regulators to have material reasons to instruct a financial institution to shut down banking services to a client. The White House says:
Requiring Federal banking agencies to satisfy a written materiality requirement is unnecessary, overly burdensome, and could impede the Federal banking agencies' ability to ensure financial institutions comply with important regulatory obligations, including maintaining effective risk management and controls. [Emphasis added]
In other words, reducing burdensome regulatory powers would be burdensome on the regulators. Making them work to do their job, prove their case, or provide genuine oversight, would be too difficult for them. They have to retain the power to act on what could be a whim or political disfavor.
February 3, 2016 1:15 PM
The House this week is considering H.R. 1675, the Encouraging Employee Ownership Act, sponsored by Rep. Randy Hultgren (R-Ill.). I’ll leave it to my colleague John Berlau to comment on the bill’s impact on employment and financial regulation. But I do want to point out an important regulatory reform it contains for getting rid of old or obsolete rules. The idea is similar to something CEI has been promoting for years: retrospective review. While this particular bill would only affect the Securities Exchange Commission (SEC), the model can easily be applied to other agencies.
Typically, benefit-cost analysis for regulations is done only before they come into effect. Once a rule goes live and we actually have real-world data on it, nothing is done to measure it. This is a problem, especially since complicated rules are prone to unintended consequences. Even the most diligent analyst cannot foresee everything. That’s why regulations should also be subject to cost analysis after coming into effect, not just before.
There are lots of ways to do retrospective review. The way the Encouraging Employee Ownership Act goes about it is to require the SEC to, at least once per decade, look at each of its “significant” regulations (for which there is a special definition) and have the Commissioners vote on whether to keep them, scrap them, or update them. This review doesn’t necessarily involve benefit-cost analysis, just the SEC Commissioners’ judgment. This sort of periodic review is a regulatory best-practice that all agencies should engage in periodically.
February 3, 2016 8:51 AM
West Virginia, which appears poised to become the nation’s 26th right to work state, may soon enact another major labor law reform. The state Senate is set to vote on a bill repealing the state’s prevailing wage laws. The legislation, HB 4005, was voted out of the Senate Government Organization Committee on Monday, February 1, and now moves to the full Senate.
Prevailing wage laws set price floors for contractors working on government-funded projects. This often turns out to be the union wage, which hampers nonunion contractors’ ability to bid for such projects.
Prevailing wage laws—along with project labor agreements, which impose prevailing wage and other requirements that favor union contractors on a per-project basis—disproportionately affect minority contractors, many of whom are not unionized. That impact may be unintended today, but it wasn’t always so. The federal prevailing wage law, the Davis-Bacon Act, was intended to disadvantage African American workers on federal construction projects. Davis-Bacon’s shameful history should make other laws like it similarly suspect.
February 2, 2016 5:10 PM
Operation Choke Point is a major abuse of executive authority. As we have detailed over the last couple of years, Choke Point is an attempt to use federal supervisory powers to intimidate providers of financial services to businesses that are deemed unacceptable by bureaucrats, even though they are perfectly legal (and in some cases constitutionally protected).
After CEI and others, notably Rep. Blaine Leutkemeyer (R-Mo.), raised concerns about the practice, the Federal Deposit Insurance Corporation revised its guidance and stepped back from the Operation.
Although the activities of Operation Choke Point now seem to have been taken over by the secretive Consumer Financial Protection Bureau (CFPB), concern remains that other Federal agencies could use its tactics again. Consequently, Rep. Leutkemeyer has introduced a bill to prevent federal banking agencies from using the tactics involved.
The Financial Institution Consumer Protection Act would do two main things:
February 2, 2016 2:39 PM
Today, the Competitive Enterprise Institute joined seven other free market organizations in a coalition letter expressing our strong support for the SPEAK FREE Act, which would curtail frivolous lawsuits brought to chill protected speech and stifle criticism about matters of public concern. These lawsuits, known as “strategic lawsuits against public participation”—or SLAPPs—are brought by plaintiffs to punish speakers they dislike, even though the speech is protected by the First Amendment. Even though defendants in such cases usually prevail in court, they must still spend lots of time and money defending themselves through the litigation process.
To combat SLAPPs, the SPEAK FREE Act would let defendants move to dismiss lawsuits targeting speech about matters of public concern unless the plaintiff can show the court that the suit is likely to succeed on its merits. The bill, which resembles anti-SLAPP laws that have been enacted by 28 states, would also empower defendants sued in state court to remove SLAPP lawsuits to federal court.
You can read the coalition letter here.