Tag Archives: Barack Obama

Kansas state government

Lessons from Kansas tax reform

Leave a comment

What can the rest of the nation learn from our experience in Kansas? Come to think of it, why haven’t we learned much?

Economists from American Legislative Exchange Council have looked at Kansas and derived some lessons from our state’s struggle with tax reform. The document is titled Lessons from Kansas: A Behind the Scenes Look at America’s Most Discussed Tax Reform Effort. A few remarks and quotations:

It may be difficult for us in Kansas to see how the rest of the country views our state. But it’s all about the struggle between those who want more government, and those who want more private sector activity: “… it is clear to most observers of state policy at this point Kansas was, and continues to be, a flashpoint in debates about state tax policy. That flashpoint has served as something of a proxy war between big government advocates and those who would prefer to shrink the size and scope of state government.”

While taxes were cut, the state failed to make the other needed reform: “Spending reductions necessary to implement the plan were eschewed in favor of other tax increases, making any honest judgement of the original plan’s success or failure impossible.”

On the 2012 plan, was it all for business pass-throughs, or for everyone? “Enacted an estimated $4.5 billion in tax relief over five years, about 80 percent of which was for individuals and 20 percent for business pass-through income.”

We have to remember the failure of the legislative process in 2012 and the next year: “It is important to note at this point that the revenue increasing offsets included in the 2013 tax plan were nowhere near as comprehensive as the revenue raising offsets in Governor Brownback’s original 2012 tax reform proposal. It was this discrepancy in revenue raising offsets and the failure to rein in state spending that would ultimately lead to revenue problems for Kansas down the road.”

Credit downgrades are a sign of a mismatch between revenues and expenses. Those who want more spending say the downgrades are caused by a lack of revenue, but we could have cured the mismatch by reforming spending, too: “Contrary to this popularly reported narrative, Moody’s cited much more than just recent tax cuts as the rationale for a downgrade, specifically failure to reduce spending to offset tax cuts, pension liabilities and state debt.

The purpose of tax cuts? Let us keep more resources in the productive private sector: “It is certainly true that in the years following the tax reductions, Kansas did experience lower revenue collections, even lower than what had been projected. But, part of the goal of the Kansas tax reform was to reduce the amount of money taken in by state government and enhance the resources available to the private sector. Importantly, however, was the resistance to any meaningful spending reductions. Even as the 2012 tax reductions were projected to let Kansans keep $4.5 billion more of their own money, the state increased spending in 2012 by $432 million.”

Would more taxes help the Kansas economy? “In a late 2012 literature review on this topic, William McBride, former Chief Economist for the Tax Foundation, found that of 26 peer-reviewed academic studies since 1983, only three fail to find a negative effect on economic growth from taxes.”

The 2015 legislative session: “A block of legislators held out for reductions in the cost of government rather than tax increases but they were unable to get a majority. … The final plan that passed both houses and was signed by Governor Brownback included two main tax increases. The state raised the cigarette tax by 50 cents per pack and increased the sales tax rate from 6.15 percent to 6.5 percent. The two tax increase proposals added up to $384 million in new state revenue and were bolstered by $50 million in spending cuts, although there was still a net increase in spending.”

Our legislature failed the people of Kansas: “The first lesson to glean from the Kansas experience is that politics affects policy. The final reforms that passed in 2012 were not the reforms that anybody wanted. Specific tax reform ideas are easily diluted and changed, and without the political will to fix imperfect reforms, unintended consequences can be difficult to avoid.”

Then, politicians should be so boastful. Don’t overpromise. (Ask Barack Obama about that. He said if we don’t pass the ARRA stimulus bill, the unemployment rate would rise above a certain level. Well, the stimulus passed, the unemployment rate went above that level, and it was several years before it fell below. In other words, unemployment was worse with the stimulus than Obama said it would be without the stimulus.) “The second important lesson that can be learned from the Kansas experience is economic growth resulting from bold tax reductions takes time. Governor Brownback’s previous comments about the Kansas tax reforms being ‘a shot of adrenaline’ to the state’s economy continued to hound him throughout the ups and downs of revenue and economic reports. Setting expectations too high or too early can make pushing forward with future reforms nearly impossible, while setting unrealistic expectations can lead to the unwinding of sound economic reforms.”

Finally: “Even though the tax reductions improved economic growth, the lack of commensurate spending reductions led to trouble for the state’s budget. Budget shortfalls and tough negotiations about possible tax increases mean uncertainty for businesses and families, which can hamper some of the positive economic effects of decreasing taxes.”

Economics

Obama’s stimulus, in retrospect

Leave a comment

A positive effect of the 2009 Obama stimulus appeared only long after its forecasted date.

Many people remember that President Barack Obama warned that the unemployment rate would rise to a high level without a stimulus program. In January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus.1 That plan passed.

Stimulus projections from the Obama Administration. Click for larger.
That paper included a table projecting what employment levels the country would experience with, and without the stimulus. For the fourth quarter of 2010, the authors estimated payroll employment would be 133,876,000 without the stimulus, and 137,550,000 with the stimulus. That’s a gain of 3,673,000 jobs due to the stimulus, estimated the authors.

What was the actual experience in jobs? First, for a look at the projections regarding the unemployment rate, see Holding politicians to their boasts and promises. The promoters of the stimulus also projected employment levels, that is, the number of jobs.

To examine the effect on jobs, I gathered data from the Bureau of Labor Statistics and compared the results to projections. I used seasonally adjusted data, which is only slightly different from the non-adjusted data.2

Actual employment with lines showing forecasts of employment with and without stimulus. Click for larger.
Employment exceeded the forecasted level with the stimulus in January 2014, when seasonally adjusted employment reached 137,574,000. (Employment exceeded the forecasted level for the economy without the stimulus in May 2012, when seasonally adjusted employment reached 133,951,000.)

What was projected (or promised) for the fourth quarter of 2010 wasn’t achieved until January 2014. That’s three years late.

The lesson, I believe, is that the power of government to affect the economy in a positive way is weak and limited, especially when using the Keynesian tools of attempting to manage aggregate demand.3 It’s even more true at a state level, as the tools state governments can use are weaker than the federal government’s.

—
Notes

  1. Romer, Christine, and Bernstein, Jared. The Job Impact of the American Recovery and Reinvestment plan. https://www.economy.com/mark-zandi/documents/The_Job_Impact_of_the_American_Recovery_and_Reinvestment_Plan.pdf. ↩
  2. The BLS data series are:
    CES0000000001, series title All employees, thousands, total nonfarm, seasonally adjusted
    CEU0000000001, series title All employees, thousands, total nonfarm, not seasonally adjusted ↩
  3. For criticims of Keynesian economics from free market perspectives, see
    Mitchell, Daniel J. Keynes Was Wrong on Stimulus, but the Keynesians Are Wrong on Just about Everything. https://www.cato.org/blog/keynes-was-wrong-stimulus-keynesians-are-wrong-just-about-everything.
    Gerald P. O’Driscoll Jr. Keynes vs. Hayek: The Great Debate Continues. https://www.cato.org/publications/commentary/keynes-vs-hayek-great-debate-continues.
    Richard B. McKenzie. John Maynard Keynes, R.I.P. https://fee.org/articles/john-maynard-keynes-rip/.
    Hans-Hermann Hoppe. The Misesian Case against Keynes. https://mises.org/library/misesian-case-against-keynes. ↩
Politics

Holding politicians to their boasts and promises

Leave a comment

There are useful lessons we can learn from the criticism of Kansas Governor Sam Brownback, including how easy it is to ignore inconvenient lessons of history.

Tax cuts in Kansas were promised by Governor Brownback to be a “shot in the arm” for the Kansas economy. Opponents of the governor and tax cuts take great delight in reporting the generally anemic growth of the Kansas economy since then. Month after month, the tax cuts are condemned by Kansas newspaper editorial writers and the governor’s detractors.

I don’t think it’s a particularly strong form of argument to defend someone by showing how someone else is equally as bad — or worse. Similarly, criticizing someone for their fixation on A while they ignore the equally bad B: We need to know why they ignore B. Have they forgotten B? Do they not have time to write about B? Or do they ignore B because the fact of B is inconvenient to their ideology or their criticism of A? But I see that not everyone shares these ideals, and even so, perhaps we can learn something.

Many people remember that President Barack Obama warned that the unemployment rate would rise to a high level without a stimulus program. I can’t find that he mentioned a specific number that the unemployment rate would rise above. But in January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus.1 That plan passed.

The Romer paper included a graph of projected unemployment rates. The nearby chart from e21 took the Romer chart and added
actual unemployment rates. (The accompanying article is Revisiting unemployment projections. That chart and article were created in 2011. I’ve updated the chart to show the actual unemployment rate since then, as black dots. The data shows that the actual unemployment rate was above the Obama administration projections — with or without the stimulus plan — for the entire period of projections.

The purpose of this is not to defend Brownback by showing how Obama is even worse. (Disclosure: Although I am a Republican, I didn’t vote for Brownback for governor.) Instead, we ought to take away two lessons: First, let’s learn to place an appropriately low value on the promises and boasts made by politicians.

Then, let’s recognize the weak power government has to manage the economy for positive effect. Indeed, the lesson of the Obama stimulus is that it made the unemployment rate worse than if there had been no stimulus — at least according to the administration projections.

And, there is one more lesson to learn about our state’s newspaper reporters and editorial writers, but I think you’ve discovered that already.

Unemployment with and without stimulus through 2014-01

—
Notes

  1. Romer, Christine, and Bernstein, Jared. The Job Impact of the American Recovery and Reinvestment plan. https://www.economy.com/mark-zandi/documents/The_Job_Impact_of_the_American_Recovery_and_Reinvestment_Plan.pdf. ↩
Liberty

The unprecedented campaign against free speech

1 Comment

The political left’s campaign to silence opponents and reorder society in accordance with their personal beliefs is in many ways the single greatest threat to America’s experiment in self-governance, writes Mark Holden.

The unprecedented campaign against free speech

By Mark Holden. Originally published in The Hill.

The liberal Supreme Court Justice Oliver Wendell Holmes once warned of the biggest danger facing free speech: “If you have no doubt of your premises or your power, and want a certain result with all your heart, you naturally express your wishes in law, and sweep away all opposition.”

Yet many lawmakers today are mistaking his wise warning as an invitation to restrict the First Amendment. At nearly every level of government, freedom of speech is under unprecedented attack. Many on the political left now seek to silence their opponents and reorder society in accordance with their personal beliefs. This is in many ways the single greatest threat to America’s experiment in self-governance.

This coordinated campaign has been underway for years. Its creation can be traced to the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission, when the court refused to accept the Obama administration’s argument that it could ban books, mailers, advertisements or anything else that contained a political message during an election campaign. This simple ruling ensured that Americans retained the fundamental right to use free speech to praise or criticize a candidate running for office.

However, that is the very core of free speech itself. If Americans — individually or acting together through nonprofits, businesses or labor unions — cannot voice their views on public policy and elected officials, then the democratic process as we know it is dead. The result is a system that makes those already in power even more powerful; incumbents need not fear having those pesky voters learn about their statements, views and voting records.

In fact, liberal politicians and activists swiftly made opposition to Citizens United a defining part of their platform from the moment the Supreme Court issued its decision. By 2014, no fewer than 54 U.S. Senators — all Democrats or Democratic allies such as current presidential candidate Sen. Bernie Sanders (Vt.) — supported a constitutional amendment essentially rewriting the First Amendment so that the federal government could regulate and criminalize free speech. Congressional Democrats are once again preparing to make a push to roll back the court’s decision and stifle free speech.

Not to be outdone, leading Democratic presidential candidate Hillary Clinton has declared that she would only appoint judges who promise to overturn Citizens United and permit the censorship of political speech.

At the same time, lawmakers and their allies have found other ways to stifle their opponents’ speech. Americans learned in 2013 that the IRS had systematically singled out conservative nonprofits in the build-up to the 2012 election. The agency harassed many applicants and kneecapped others by refusing to grant them tax-exempt status, restricting their members and supporters from exercising their rights to free speech and free association.

Sadly, this abuse of power still occurs. The federal courts recently learned that multiple nonprofits still haven’t received IRS approval.

Even more attacks on free speech are happening at the state level. For example, New York and California are both demanding that some nonprofits hand over lists of donors to the state. Although the government invariably promises to not release this legally confidential information, California has “accidentally” posted at least 1,400 supporter lists online.

This fact, and ongoing harassment by California Attorney General Kamala Harris, led a federal judge to permanently stop her from obtaining the donor list of one organization, the Americans for Prosperity Foundation. (Full disclosure: I am a director of the related Americans for Prosperity.) However, the IRS has done something similar, conveniently disclosing confidential taxpayer information for several of the Obama administration’s political opponents.

And then there are the demands that government investigate organizations that hold unpopular or controversial views. Over a dozen state attorneys general (all of them Democrats), recently announced that they will go after companies such as Exxon Mobil that disagree with their views on climate change. The prosecutors’ goal is to intimidate these groups to change their position or else face criminal prosecution.

Federal lawmakers are in on the action, too. The Department of Justice has asked the FBI to begin similar investigations of major energy companies. Sen. Sheldon Whitehouse (D-R.I.) has even called for organizations that disagree with him to be prosecuted under the federal law banning racketeering — a law originally meant to target mobsters and drug kingpins.

This coordinated campaign is antithetical to the First Amendment’s guarantee of free speech. In our system of self-government, when someone finds other people’s ideas and opinions disagreeable or even reprehensible, the solution is more speech, not less. Yet instead of persuading others to see their point of view, many in today’s society would rather use government’s power to bully their opponents into silence instead.

Thankfully, Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Paul Ryan (R-Wis.) have tried to combat this assault on free speech. They have championed a number of reforms to protect the First Amendment and prevent elected officials and the administrative state from stifling Americans’ right to free speech.

Their leadership should be praised, but much more needs to be done. This fundamental right won’t truly be protected until Americans of all political persuasions heed Justice Holmes’s wise words.

Holden is senior vice president and general counsel of Koch Industries, Inc. and a director of Americans for Prosperity. (The chairman of the Americans for Prosperity Foundation, David Koch, is also executive vice president and director of Koch Industries.)

Economics

Brownback and Obama stimulus plans

Leave a comment

There are useful lessons we can learn from the criticism of Kansas Governor Sam Brownback, including how easy it is to ignore inconvenient lessons of history.

It’s been three years since the tax cuts in Kansas took effect; tax cuts said by Governor Brownback to be a “shot in the arm” for the Kansas economy. Opponents of the governor and the tax cuts take great delight in reporting the generally anemic growth of the Kansas economy since then. Month after month, the tax cuts are condemned by Kansas newspaper editorial writers and the governor’s detractors.

I don’t think it’s a particularly strong form of argument to defend someone by showing how someone else is equally as bad — or worse. Similarly, criticizing someone for their fixation on A while they ignore the equally bad B: We need to know why they ignore B. Have they forgotten B? Do they not have time to write about B? Or do they ignore B because the fact of B is inconvenient to their ideology or their criticism of A? But I see that not everyone shares these ideals, and even so, perhaps we can learn something.

Many people remember that President Barack Obama promised that the unemployment rate would not top eight percent if the stimulus was passed. In January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus. That plan passed.

The Romer paper included a graph of projected unemployment rates. The nearby chart from e21 took the Romer chart and added
actual unemployment rates. (The accompanying article is Revisiting unemployment projections. That chart and article were created in 2011. I’ve updated the chart to show the actual unemployment rate since then, as black dots. The data shows that the actual unemployment rate was above the Obama administration projections — with or without the stimulus plan — for the entire period of projections.

The purpose of this is not to defend Brownback by showing how Obama is even worse. (Disclosure: Although I am a Republican, I didn’t vote for Brownback for governor.) Instead, we ought to take away two lessons: First, let’s learn to place an appropriately low value on the promises and boasts made by politicians. Then, let’s recognize the weak power government has to manage the economy for positive effect. Indeed, the lesson of the Obama stimulus is that it made the unemployment rate worse than if there had been no stimulus — at least according to the administration projections.

And, there is one more lesson to learn about our state’s newspaper reporters and editorial writers, but I think you’ve discovered that already.

Unemployment with and without stimulus through 2014-01

WichitaLibertyTV

WichitaLiberty.TV: Congressman Mike Pompeo

Video Leave a comment

In this episode of WichitaLiberty.TV: Congressman Mike Pompeo talks about the Middle East, politics in Washington, and domestic issues. View below, or click here to view in high definition at YouTube. Episode 101, broadcast November 29, 2015.

Shownotes

Free markets

Does Kansas have its own Solyndra?

2 Comments

Does Kansas have its own version of Solyndra, the politically-connected firm that failed and cost taxpayers some $535 million? We don’t know. But the Abengoa cellulosic ethanol plant near Hugoton received a $132.4 million loan guarantee under the same program that benefited Solyndra.

In January I requested documents regarding the Abengoa loan guarantee and risk assessment from the United States Department of Energy. I had several conversations and emails with a records clerk. We came to agreement as to what I would receive, or at least what I am requesting to receive. But I’ve received nothing so far. I don’t know if the document will be made available to me at no charge, or will I have to pay thousands of dollars. The Department of Energy is working on my request, they say. But after nine months: nothing. Following, from October 2011, more information about this plant.

At this moment, we can’t say that Kansas has its own version of Solyndra, the subsidized and politically-connected solar energy firm that recently shut down its operations and declared bankruptcy. But as far as absorbing the important lessons from Solyndra, we may have another chance to learn them in Kansas.

Solyndra is a failure in several ways. Much money was lost. It may be that corrupt or criminal activity was involved; we don’t know that yet. It appears that Solyndra will be a useful political scandal for Republicans to exploit, especially in the upcoming election campaign against the president. We can be sure that Republicans will keep us informed on this.

But the largest and most important lesson from Solyndra is one that many politicians — Democrats and Republicans both — don’t want to recognize: Government intervention in the economy is wrong for the health of the country.

The problem is that when government intervenes in the economy, it almost always gets it wrong. It’s not that Obama and other politicians aren’t smart. It’s the problems inherent in government interventionism: There will be both routine and spectacular examples of waste, as people — politicians and bureaucrats, especially — are not spending their own money. Decisions will be made to benefit the well-connected and for political, not market-based reasons. Cronyism and corruption flourish, as many will find it easier to compete in the marketplace for politicians rather than in the free market where fickle consumers rule with their fleeting tastes and preferences.

But politicians and bureaucrats love to intervene. For bureaucrats, intervention — government programs, that is — provides jobs, and well-paid jobs, too. Since much government intervention in the economy is in the form of subsidies, it allows politicians to dispense other peoples’ money and take credit for having “created” jobs or having built a bridge, probably to be named for them later on.

Other government intervention is in the form of creating unneeded regulations or tax loopholes that favor politicians’ friends or harm their competition.

All of this means that economic activity is directed according to political, not economic, considerations. It’s wasteful. It’s harmful. It diminishes market-based investment, that is, investment made according to what people really want and need. It reduces the freedom, liberty, and prosperity of everyone.

Back to Kansas: Last week the Department of Energy announced the award of a $132.4 million loan guarantee to Abengoa Bioenergy Biomass of Kansas, LLC. This is the same federal agency and the same loan guarantee program involved in the Solyndra matter. The difference is that it’s an even newer so-called green energy technology involved: cellulosic ethanol production.

The plant in Kansas is to be at Hugoton, in southwest Kansas. The press release from DOE promotes the number of jobs that will be created.

Cellulosic ethanol is produced from plant material that is usually considered waste, such as corn stalks or wheat straw. That’s different from the usual input to ethanol production in America, which is corn that would otherwise be used as animal or human food. Because of this, cellulosic ethanol is thought of by many as the “silver bullet” that will dramatically improve the path of America’s energy future. That may be the case, or it may not be. Because of the reasons listed above, government is particularly unsuited to make that decision and to participate in the scientific and entrepreneurial experimentation that will produce the answer.

At one time President George W. Bush praised the potential of this fuel. A Reuters analysis from July opens with: “The great promise of a car fuel made from cheap, clean-burning prairie grass or wood chips — and not from expensive corn that feeds the world — is more mirage than reality. Despite years of research, testing and some hype, the next-generation ethanol industry is far from the commercial success envisioned by President George W. Bush in 2006, when he pledged so-called cellulosic biofuels would be ‘practical and competitive’ by 2012.”

That hints at the problem: despite much effort, scientists haven’t been able to demonstrate cellulosic ethanol production on a commercially-successful scale. According to the Wall Street Journal, as of this summer, no commercial cellulosic ethanol has been produced.

The loan guarantee is not the only form of government subsidy and boost ethanol producers received. There is a tax credit for each gallon produced and a tariff that protects producers from cheaper imported ethanol.

Despite these very large measures of government intervention, cellulosic ethanol backers blame the government for lack of progress in the industry, citing the government’s failure to mandate production levels and provide assurances that the industry would receive subsidies. And the loan guarantees are not made fast enough, they add to the list of complaints. An analysis by ClimateWire that appeared in the New York Times in January had industry boosters blaming the federal Department of Energy for its slow pace in issuing loan guarantees.

We won’t know the success or failure of the Abengoa plant in Kansas for some time, and now we taxpayers are placed in the position of hoping that it succeeds. But it has the pedigree of a government plan to correct a perceived market failure, and that’s a danger sign.

Both Kansas Senators Pat Roberts and Jerry Moran have spoken approvingly of this plant despite the government intervention involved; Moran in a statement after the announcement, and Roberts in previous years as plans were being made. U.S. Representative Tim Huelskamp, who represents the district where the plant is located, has not commented on this plant, and offered no comment for this story.

United States government

Release the secret Iran deals

2 Comments

For those of us who are elected officials, few votes will be more consequential than whether to approve or disapprove the nuclear agreement President Obama has reached with Iran. Yet the president expects Congress to cast this vote without the administration’s fully disclosing the contents of the deal to the American people, write Representative Mike Pompeo and Senator Tom Cotton.

Release the Secret Iran Deals

By Tom Cotton and Mike Pompeo
As printed in the Wall Street Journal

U.S. Representative Mike Pompeo of Kansas
U.S. Representative Mike Pompeo of Kansas
For those of us who are elected officials, few votes will be more consequential than whether to approve or disapprove the nuclear agreement President Obama has reached with Iran. Yet the president expects Congress to cast this vote without the administration’s fully disclosing the contents of the deal to the American people. This is unacceptable and plainly violates the Iran Nuclear Agreement Review Act — a law the president signed only weeks ago.

During a recent trip to Vienna to meet with the International Atomic Energy Agency, the organization charged with verifying Iran’s compliance, we learned that certain elements of this deal are — and will remain — secret. According to the IAEA, those involved with the negotiations, including the Obama administration, agreed to allow Iran to forge the secret side deals with the IAEA on two issues.

The first governs the IAEA’s inspection of the Parchin military complex, the facility long suspected as the site of Iran’s long-range ballistic-missile and nuclear-weapons development. The second addresses what — if anything — Iran will be required to disclose about the past military dimensions of its nuclear program.

Yet the Iran Nuclear Agreement Review Act specifically says that Congress must receive all nuclear agreement documents, including any related to agreements “entered into or made between Iran and any other parties.” It expressly includes “side agreements.” This requirement is not strictly limited to agreements to which the U.S. is a signatory. This law passed in May, well before the nuclear negotiations ended. The Obama administration should have held firm in negotiations to obtain what was necessary for Congress to review the agreement. Iran, not the U.S., should have conceded on this point.

Weaponization lies at the heart of our dispute with Iran and is central to determining whether this deal is acceptable. Inspections of Parchin are necessary to ensure that Iran is adhering to its end of the agreement. Without knowing this baseline, inspectors cannot properly evaluate Iran’s compliance. It’s like beginning a diet without knowing your starting weight. That the administration would accept side agreements on these critical issues — and ask the U.S. Congress to do the same — is irresponsible.

The response from the administration to questions about the side deals has brought little reassurance. At first the administration refrained from acknowledging their existence. Unable to sustain that position, National Security Adviser Susan Rice said on July 22 during a White House press briefing that the administration “knows” the “content” of the arrangements and would brief Congress on it.

Yet the same day Secretary of State John Kerry, in a closed-door briefing with members of Congress, said he had not read the side deals. And on July 29 when pressed in a Senate hearing, Mr. Kerry admitted that a member of his negotiating team “may” have read the arrangements but he was not sure.

That person, Undersecretary of State and lead negotiator Wendy Sherman, on July 30 said in an interview on MSNBC, “I saw the pieces of paper but wasn’t allowed to keep them. All of the members of the P5+1 did in Vienna, and so did some of my experts who certainly understand this even better than I do.”

A game of nuclear telephone and hearsay is simply not good enough, not for a decision as grave as this one. The Iran Nuclear Agreement Review Act says Congress must have full access to all nuclear — agreement documents — not unverifiable accounts from Ms. Sherman or others of what may or may not be in the secret side deals. How else can Congress, in good conscience, vote on the overall deal?

On July 30 we sent a letter to the Obama administration asking for a “complete and thorough assessment of the separate arrangements” and the names of anyone who has reviewed them. Iran’s ayatollahs have access to the side agreements. The American people’s representatives in the U.S. Congress should too.

When he announced his nuclear deal with Iran on July 14, President Obama said, “This deal is not built on trust, it is built on verification.” Those words are hollow unless Congress receives the full text of all documents related to the nuclear agreement.

Mr. Cotton, a Republican from Arkansas, is a member of the Senate Select Committee on Intelligence. Mr. Pompeo, a Republican from Kansas, is a member of the House Permanent Select Committee on Intelligence.

United States government

Pompeo: Disclose complete Iran nuclear deal

1 Comment

U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district and Arkansas Senator Tom Cotton recently traveled to Vienna to meet with officials of the International Atomic Energy Agency (IAEA). They have revealed the existence of two side deals between Iran and IDEA that are important and relevant to the deal negotiated by Secretary of State John Kerry and promoted by President Barack Obama. According to a Pompeo spokesperson, the existence of these side deals was not a secret, having been mentioned in an IDEA press release from July 14. But the content of the agreements is secret, and their significance unknown.

Following, two press releases from July 21 and 22 from Pompeo’s office.

July 21, 2015

Pompeo, Cotton Urge Disclosure of Complete Iran Nuclear Deal

IAEA tells the lawmakers that two inspections arrangements regarding Iran’s past military work will remain secret

WASHINGTON, D.C. — Congressman Mike Pompeo (KS-04) and Senator Tom Cotton (R-Arkansas) on Friday had a meeting in Vienna with the International Atomic Energy Agency (IAEA), during which the agency conveyed to the lawmakers that two side deals made between the Islamic Republic of Iran and the IAEA as part of the Joint Comprehensive Plan of Action (JCPOA) will remain secret and will not be shared with other nations, with Congress, or with the public. One agreement covers the inspection of the Parchin military complex, and the second details how the IAEA and Iran will resolve outstanding issues on possible military dimensions of Iran’s nuclear program.

According to the IAEA, the Iran agreement negotiators, including the Obama administration, agreed that the IAEA and Iran would forge separate arrangements to govern the inspection of the Parchin military complex — one of the most secretive military facilities in Iran — and how Iran would satisfy the IAEA’s outstanding questions regarding past weaponization work. Both arrangements will not be vetted by any organization other than Iran and the IAEA, and will not be released even to the nations that negotiated the JCPOA. This means that the secret arrangements have not been released for public scrutiny and have not been submitted to Congress as part of its legislatively mandated review of the Iran deal.

IAEA Director General Yukiya Amano and Vice President of the Islamic Republic of Iran Ali Akhbar Salehi signing a roadmap for the clarification of past and present issues regarding Iran’s nuclear program in Vienna.
IAEA Director General Yukiya Amano and Vice President of the Islamic Republic of Iran Ali Akhbar Salehi signing a roadmap for the clarification of past and present issues regarding Iran’s nuclear program in Vienna.
Parchin is a critical linchpin in the Iranian nuclear program that has long-been suspected of both long-range ballistic missile and nuclear weapons development. In 2011, the IAEA suspected that the facility was used to conduct high-explosive experiments as part of an effort to build nuclear weapons.

Even under the woefully inadequate Iran Nuclear Agreement Review Act, the Obama administration is required to provide the U.S. Congress with all nuclear agreement documents, including all “annexes, appendices, codicils, side agreements, implementing materials, documents, and guidance, technical or other understandings and any related agreements, whether entered into or implemented prior to the agreement or to be entered into or implemented in the future.”

Pompeo said: “This agreement is the worst of backroom deals. In addition to allowing Iran to keep its nuclear program, missile program, American hostages, and terrorist network, the Obama administration has failed to make public separate side deals that have been struck for the ‘inspection’ of one of the most important nuclear sites—the Parchin military complex. Not only does this violate the Iran Nuclear Agreement Review Act, it is asking Congress to agree to a deal that it cannot review.

“The failure to disclose the content of these side agreements begs the question, ‘What is the Obama administration hiding?’ Even members of Congress who are sympathetic to this deal cannot and must not accept a deal we aren’t even aware of. I urge my colleagues on both sides of the aisle to stand up and demand to see the complete deal.”

Cotton said: “In failing to secure the disclosure of these secret side deals, the Obama administration is asking Congress and the American people to trust, but not verify. What we cannot do is trust the terror-sponsoring, anti-American, outlaw regime that governs Iran and that has been deceiving the world on its nuclear weapons work for years. Congress’s evaluation of this deal must be based on hard facts and full information. That we are only now discovering that parts of this dangerous agreement are being kept secret begs the question of what other elements may also be secret and entirely free from public scrutiny.”

July 22, 2015

Pompeo, Cotton, Boehner and McConnell Request President Obama Disclose Secret Side Agreements to Iran Nuclear Deal

Washington, D.C. — Congressman Mike Pompeo (R-KS) and Senator Tom Cotton (R-AR) today joined House Speaker John Boehner and Senate Majority Leader Mitch McConnell in sending a letter to President Obama requesting two side agreements between the IAEA and Iran be provided to Congress.

The letter reads, in part:

The purpose of the Iran Nuclear Agreement review Act is to ensure Congress has a fully informed understanding of the JCPOA.  Failure to produce these two side agreements leaves Congress blind on critical information regarding Iran’s potential path to being a nuclear power and will have detrimental consequences for the ability of members to assess the JCPOA.  We request you transmit these two side agreements to Congress immediately so we may perform our duty to assess the many important questions related to the JCPOA. 

The Iran Nuclear Agreement Review Act was passed before the end of negotiations and the Obama Administration was well aware of its responsibility to submit all related agreements and documents to Congress.  It is therefore incumbent on the Administration to secure those side agreements and submit them to Congress for review.

The letter comes after a recent meeting between Congressman Mike Pompeo and Senator Tom Cotton and the International Atomic Energy Agency (IAEA) in Vienna, during which the agency conveyed that two side deals made between the Islamic Republic of Iran and the IAEA as part of the Joint Comprehensive Plan of Action (JCPOA) will remain secret and will not be shared with other nations, with Congress, or with the public. The first agreement covers the inspection of the Parchin military complex, and the second details how the IAEA and Iran will resolve outstanding issues on possible military dimensions of Iran’s nuclear program.

The full text of the letter can be found here.

United States government

Cato Institute scholars respond to the 2015 state of the union address

Leave a comment

Cato Institute scholars Alex Nowrasteh, Aaron Ross Powell, Neal McCluskey, Mark Calabria, Bill Watson, Chris Edwards, Gene Healy, Chris Preble, Julian Sanchez, Pat Michaels and Trevor Burrus respond to President Obama’s 2015 State of the Union Address. View below, or click here to view in high definition at YouTube.

Video produced by Caleb O. Brown, Austin Bragg and Tess Terrible.

Economics

For Rep. Tiahrt, Cash for Clunkers was a good spending program

Leave a comment

When the Obama Administration needed additional funds for the Cash for Clunkers program, Todd Tiahrt was agreeable to funding this wasteful program.

As summarized by the Congressional Research Service: “Makes emergency supplemental appropriations of $2 billion for FY2009 and FY2010 to the National Highway Traffic Safety Administration (NHTSA) of the Department of Transportation (DOT) for the Consumer Assistance to Recycle and Save Program (Cash for Clunkers Program).”

This bill passed the House of Representatives by a vote of 316 to 109. Among House Republicans, the vote was 78 to 95 in favor of passage. Todd Tiahrt was one of the minority of Republicans that voted for Cash for Clunkers.

(When this bill was voted on in the Senate, then-Senator and present Kansas Governor Sam Brownback voted in favor, and Pat Roberts voted against.)

"Cash for Clunkers - Death Row" by 293.xx.xxx.xx - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.
“Cash for Clunkers – Death Row” by 293.xx.xxx.xx – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.
You may remember the Cash for Clunkers program from 2009. An initiative of President Barack Obama, it paid subsidies to those who traded in their “clunker” for a new fuel-efficient car. The clunkers were destroyed and recycled. This is an example of a program that seems like a benefit for everyone. Take old fuel-wasting cars off the road and replace them with new cars. Save the environment and stimulate the economy, all at the same time. Some writers advocate programs like this as a way to reduce inequality of incomes.

But the Cash for Clunkers program has been widely and roundly criticized. Did it work as advertised? It all depends on the meaning of the word “work,” I suppose. To evaluate the program, we need to look at the marginal activity that was induced by the program. When we do, we find that the cost of moving the additional cars is astonishingly high.

An Edmunds.com article calculated the cost per car for the clunkers program in a different way than the government, and found this:

Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as the Car Allowance Rebate System (CARS), but Edmunds.com analysts indicate that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway. Analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle sold. The average transaction price in August was $26,915 minus an average cash rebate of $1,667.

This is just the latest evidence that the clunkers program didn’t really increase the well-being of our country. Writing at the Foundation for Economic Education, Bruce Yandle doubts the glowing assessment of effectiveness of the program:

The doubt arises for at least three reasons. First, the program was supported politically primarily for its much touted environmental benefits. Carbon emissions would be reduced. But the reduction costs are at least ten times higher than alternate ways of removing carbon. Second, there is Bastiat’s parable of the broken window to consider. And third, there is a serious matter of eroding social norms for conserving wealth. A crushed clunker with a frozen engine is lost capital. … The cost per ton of carbon reduced could reach $500 under a set of normal values for critical variables. The cost estimate was $237 per ton under best case conditions. The much celebrated Waxman-Markey cap-and-trade carbon-emission control legislation estimates the cost of reducing a ton of carbon to be $28 when done across U.S. industries. Yes, we are getting carbon-emission reductions by way of clunker reduction, but we are paying a pretty penny for it. … Before touting the total benefits of clunkers, we must take account of the destroyed vehicles and engines that represented part of the wealth of the nation. As Tony Liller, vice president for Goodwill, put it: “They’re crushing these cars, and they’re perfectly good. These are cars the poor need to buy.”

It’s very difficult for the government to intervene in the economy and produce a net positive result. Even if it could, the harmful effects of taking one person’s money and giving it to another so they can get a discount on a new car far outweigh the small economic benefit that might be realized.

Wichita city government

Wichita businesses dying faster than they’re being born

Leave a comment

What do you get when you combine Sam Brownback, Carl Brewer, and Barack Obama?

Post by Voice For Liberty.
Economics

American economy is more competitive and carbon-efficient, says economist

Leave a comment
Stephen Moore. Credit: Willis Bretz/Heritage Foundation
Stephen Moore. Credit: Willis Bretz/Heritage Foundation

The oil and gas boom in America boosts our competitiveness in the world economy while at the same time reducing carbon emissions, says economist Stephen Moore.

Moore recently left the Wall Street Journal to accept a position at Heritage Foundation as chief economist. He presented to an audience at a conference titled “The Tax & Regulatory Impact on Industry, Jobs & The Economy, and Consumers” produced by the Franklin Center for Government and Public Integrity.

A large portion of his presentation was on energy and its important role in the economy, and how radical environmentalists — the “green” movement — are harming our economy and people. An irony, he said, is that while President Barack Obama is in the “hip pocket” of radical environmentalists, he is presiding over the greatest oil and gas boom in American history. This boom is proceeding in spite of government, not because of it.

Moore emphasized the importance of energy costs to low-income people. Rising energy costs are like taxes on them, he said, while the wealthy can more easily absorb higher energy costs. “To be green is to be against capitalism, against progress, against poor people, against jobs.”

The boom in oil and gas production in America, made possible by horizontal drilling and fracking, is ahead of the rest of the world. While European countries have in the past embraced green energy technologies, these policies have failed, and the countries are retreating from them. Now, European countries want to use American drilling technologies, he said.

The lower electricity prices in America are a competitive advantage over Europe and China. German auto manufacturers are shutting plants in Europe and moving them to the United States, he said.

Of radical environmentalist groups. Moore said: “They don’t even care about global warming. If they really cared about global warming, they would be cheerleading fracking. Because fracking is making natural gas the new fuel for America. And guess what? Natural gas emits less carbon. It’s a great antidote to global warming.”

(According to the U.S. Energy information Administration, when generating electricity, coal emits from 2.08 to 2.18 pounds of carbon dioxide per kilowatt-hour electricity generated. Natural gas emits 1.22 pounds, or about 43 percent less carbon dioxide.)

Moore went on to tell the attendees that it is the United States that has reduced its carbon emissions the greatest amount in the last five years. He said this is remarkable in light of the fact that the U.S. didn’t sign the Kyoto Treaty, the U.S. didn’t implement cap-and-trade, and didn’t implement a carbon tax. “You would think these environmental groups would be applauding natural gas. Now these environmentalist groups have a new campaign called ‘beyond natural gas,'” he said.

Moore explained that at first, environmentalists said they could accept natural gas as a “bridge fuel” to solar power and wind. They were in favor of natural gas, he said, up until the time it became cheap and plentiful. Now, they are against gas. “My point is, the left and environmentalists are against any energy source that works.”

Over the past six years the U.S. has spent $100 billion promoting wind and solar power, but these two sources together account for just 2.2 percent of electricity generation. Even if the country were to quadruple the portion of electricity generated by these two renewable sources over the next 10 to 20 years, the nation would still need to get 90 percent of its electricity from other sources. Moore was doubtful that the country could quadruple the output from wind and solar.

Trends in carbon emissions

To further investigate the topics Moore raised, I gathered data from Global Carbon Atlas and prepared interactive visualizations using Tableau Public. You may access and use the visualizations by clicking here. Following are static excerpts from the visualizations. Click on each image for a larger version.

Click image for larger version.
Click image for larger version.

Looking at the amount of total carbon emissions, we see two important facts. First, after rising slowly, carbon emissions by the United States have declined in recent years. Second, carbon emissions by China are soaring. China surpassed the U.S. around 2005, and the gap between the two countries is increasing.

Click image for larger version.
Click image for larger version.

Note also that carbon emissions in India are rising. Emissions in most advanced economies are steady or falling. These trends are emphasized in the chart that shows carbon emissions for each country indexed from a common starting point. Emissions from China and India are rapidly rising, while emissions from countries with advanced economies have risen slowly or have declined.

Click image for larger version.
Click image for larger version.

A chart that shows the carbon emissions efficiency of countries, that is, the carbon emitted per unit of GDP, shows that in general, countries are becoming more efficient. Advanced economies such as the U.S., Japan, and Germany have an advantage in this metric. These countries emit about one-fourth as much carbon per unit GDP as does China.

Click image for larger version.
Click image for larger version.

The chart of carbon emissions per person in each country show that the United States leads in this measure. In 2011, the U.S. emitted about 17 tons of carbon dioxide per person. China was at 6.6, and India at 1.7. But, the trend in the U.S. is downward, that is, less carbon emitted per person. In China and India, the trend is up, and rising rapidly in China.

Politics

Kansas jobs: Who do we believe?

Leave a comment

bownback-davis-logo-02Earlier this week we saw that candidates for Kansas governor have released statements on recent job figures in Kansas. The news releases from Sam Brownback and Paul Davis appear to contain conflicting views of Kansas employment.

But we saw that the Bureau of Labor Statistics has two monthly surveys that measure employment levels and trends. There’s the Current Population Survey (CPS), also known as the household survey, and there is also the Current Employment Statistics (CES) survey, also known as the payroll or establishment survey. BLS explains: “These estimates differ because the surveys have distinct definitions of employment and distinct survey and estimation methods.”

cps-ces-jobs-compared-2013-12Both the Davis and Brownback campaign appear to cite the data correctly. So which is the better measure to use? Which gives the best indication of the performance of the Kansas economy in creating jobs?

Here’s something to consider. On the national level, a widely-watched number each month is the count of new jobs created. This number, which is universally considered to be important, comes from the CES survey. That’s the number that shows quite a bit of job growth in Kansas. But in order to belittle the Brownback effort, the Davis campaign cites the other data series.

So let’s be fair. The next time Davis and Democrats praise good job creation figures at the national level as evidence of the goodness of Barack Obama, let’s ask them to give the same credit to Sam Brownback.

Podcasts

WichitaLiberty Podcast, episode 1

1 Comment

Voice for Liberty logo with microphone 150In this first episode of WichitaLiberty Podcasts: A Kansas City Star editorial makes a case for higher school spending in Kansas, but is based on a premise that doesn’t exist in fact. There’s a new episode of WichitaLiberty.TV. Eureka! Tea partiers know science. The John J. Ingalls Spirit of Freedom Award. Cronyism and other problems in Wichita. Is the City of Wichita concerned that its contracts contain language that seems to be violated even before the contract is signed? Obama’s debt speech, not really a speech. Episode 1, October 20, 2013.

[powerpress]

Shownotes

Kansas schools do not have rigorous standards, despite newspaper editorials. A Kansas City Star editorial makes a case for higher school spending in Kansas, but is based on a premise that doesn’t exist in fact.
WichitaLiberty.TV October 20, 2013
Eureka! Tea partiers know science
John J. Ingalls Spirit of Freedom Award
Cronyism and other problems in Wichita
Wichita contracts, their meaning (or not). Is the City of Wichita concerned that its contracts contain language that seems to be violated even before the contract is signed?
Obama’s debt speech, not really a speech

United States government

Obama’s debt speech, not really a speech

1 Comment

united-states-senate-seal

In 2006, then-Senator Barack Obama was critical of raising the debt ceiling in order to allow the U.S. to borrow additional funds, a contentious issue that we are facing again. I present his full remarks here, and they are often excerpted thusly:

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

So where can we go to view the future president’s speech on this topic?

The answer is: Nowhere.

Senator Obama never spoke these words on the floor of the United States Senate. Instead, he just mailed it in, submitting his text to be inserted in the Congressional Record.

But you’d never know that by reading the Congressional Record alone. If you’d like to follow along, here’s a link to page of the Congressional Record where Obama’s remarks appear. Note where Senator McConnell says “Congratulations, Senator Sarbanes.”

In the printed Congressional Record, the next item is Obama starting his “speech” with “Mr. President, I rise today to talk about America’s debt problem.”

But in the video from the C-SPAN video library (see below), Obama doesn’t appear. That’s because he never spoke these words on the Senate floor.

The Senate’s explanation of the Congressional Record states: “The Congressional Record is a substantially verbatim account of the remarks made by senators and representatives while they are on the floor of the Senate and the House of Representatives.”

While members may insert written material in the record — that’s what Obama did — it would be nice if there was a way to distinguish between actual floor proceedings and written material submitted for inclusion.

By the way, Snopes gets this wrong. It explains: “In 2006, then a freshman senator from Illinois, Barack Obama made the remarks attributed to him above during discussion in the U.S. Senate prior to the call for votes on raising the debt limit. … The shortened quote now attributed to him is a verbatim capture of the opening and closing paragraphs of his remarks of 16 March 2006.”

Snopes bills itself as “The definitive Internet reference source for urban legends, folklore, myths, rumors, and misinformation.”

The Washington Post Fact Checker thought it was a speech too, in its article Annotating Obama’s 2006 speech against boosting the debt limit.

Health care

ObamaCare chart updated

Leave a comment

obamacare-chart

Republicans of the Joint Economic Committee of the U.S. Congress have released an update of a chart to help us navigate ObamaCare. (Click on it for a larger version.) From the July 2010 press release accompanying the original chart: “Four months after U.S. House Speaker Nancy Pelosi famously declared ‘We have to pass the bill so you can find out what’s in it,’ a congressional panel has released the first chart illustrating the 2,801 page health care law President Obama signed into law in March. Developed by the Joint Economic Committee minority, led by U.S Senator Sam Brownback of Kansas and Rep. Kevin Brady of Texas, the detailed organization chart displays a bewildering array of new government agencies, regulations and mandates.”

Read all about it at Health Care Chart — Updated Chart Shows Obamacare’s Bewildering Complexity.

Health care

ObamaCare employer mandate delayed, start of train wreck?

Leave a comment

aspirin-bottleScheduled to take effect on January 1, the employer mandate portion of the Affordable Care Act (ObamaCare) has been delayed for one year.

Curiously, this announcement was made on an obscure Treasury Department blog, along with articles titled “Meeting, and Exceeding, Our Small Business Procurement Goals in FY 2012” and “In Case You Missed It: Top Executives Say U.S. Is #1 for Foreign Direct Investment.”

The employer mandate requires those who employ more than 50 full time-equivalent employees to provide insurance or pay a penalty. Cato Institute’s Michael D. Tanner notes the general problem, and a specific problem based on the decision to delay the employer mandate:

In postponing the implementation of the Affordable Care Act’s employer mandate until after the 2014 mid-term elections, the Obama administration has tacitly admitted what critics of the law have long contended: that Obamacare is unworkable and would be a significant burden for American business and the economy at large. Stay tuned for further dominoes falling.

Actually, the Administration’s decision to postpone the employer mandate may make a bad situation worse. Because the individual mandate remains in place, workers may now face a situation where they must purchase their own insurance or pay a penalty because their employers don’t provide coverage. In effect, the administration’s decision shifts the cost from employers to workers. This hardly seems fair, and may force the administration to rethink the individual mandate as well. (And So the Obamacare Train Wreck Begins … )

Will the implementation of other parts of ObamaCare be delayed? I think it seems likely. But: Section 1513 AVC states, regarding the employer mandate: “The amendments made by this section shall apply to months beginning after December 31, 2013.” So does the administration have the legal authority to make changes like this?

uninsured-estimates-2013-05

Also: For all the wrenching debate and changes, there will still be many uninsured people. Here’s a chart based on the Congressional Budget Office May 2013 estimate of the effects of the Affordable Care Act on health insurance coverage.

This is just the start of discovery of pathologies built into ObamaCare. Here’s Avik Roy explaining an incentive contained within the employer mandate:

The strong penalty vs. the weak penalty

The employer mandate actually consists of two different penalties, based on two different categories of employer behavior. These originate from Section 4980H of the Affordable Care Act. Subsection (a) requires steep penalties for employers who offer no coverage at all. Subection (b) requires modest penalties for employers who offer “minimum essential coverage under an eligible employer-sponsored plan.” This difference — between the strong penalty in 4980H(a) and the weak penalty in 4980H(b) — is crucial to understanding how things will play out in the future.

Under the strong penalty, in which an employer “fails to offer to its full-time employees…the opportunity to enroll in minimum essential coverage,” and “at least one full-time employee” enrolls in an exchange, the employer has to pay a fine of $2,000 times the total number of full-time-equivalent employees at the firm, minus 30. (The employer mandate only applies to firms with 50 or more full-time-equivalent workers.) So if you employ 50 workers, that’s a fine of 20 * $2,000 = $40,000. And the fine isn’t tax-deductible, adding to the pain.

Under the weak penalty, in which an employer does offer “the opportunity to enroll in minimum essential coverage,” but that coverage doesn’t meet Obamacare’s requirements for affordability or actuarial value, and at least one worker enrolls on an exchange instead, the fine is $3,000 times the number of workers who enroll on the exchanges. So, if you employ 50 workers, and three of them get coverage on the exchange instead, the fine is a much lower 3 * $3,000, or $9,000. (Technically, in subsection (b), employers pay the lesser of the weak penalty or the strong penalty, but this in most cases should be the weak penalty.)

So: Employers avoid the strong penalty and gain eligibility for the weak penalty by offering “minimum essential coverage.”

Roy goes on to explain that “minimum essential coverage” means coverage my any insurance plan that can legally be sod in a state, including plans that provide limited coverage or services. Roy writes that companies may offer these bare-bones plans to their employees and escape the penalties.

This behavior, which federal officials have confirmed is allowed, evidently wasn’t considered by officials, writes Roy: “Nonetheless, Obamacare’s designers expressed surprise that employers would do such a thing. ‘Our expectation was that employers would offer high quality insurance,’ said Robert Kocher, a former Obama health care adviser. It wouldn’t be the first time that the law’s authors didn’t recognize how economic incentives actually work.”

Economic incentives are what makes the world work. They’re based on human behavior, and that isn’t easily changed, even to suit Barack Obama’s desires.