Voice For Liberty

Tag: Regulation

  • ObamaCare employer mandate delayed, start of train wreck?

    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.

  • Westar rate increase contains business welfare

    electric-metersThe rate increase that Westar Energy has applied for contains a large dose of discretionary business welfare spending. Westar, in conjunction with out current economic development machinery, will be allowed to grant discounts on electricity to new businesses. A current program exists, but Westar says it doesn’t offer the flexibility Westar needs.

    Following is an excerpt from testimony Westar submitted to the Kansas Corporation Commission. I’ve added emphasis:

    Q. HOW WILL THE FIRST COMPONENT OF PROMOTE KANSAS WORK?
    A. The economic development portion of the proposal would permit Westar, at its option, to provide economic development assistance in the form of discounted electric service to new customers and existing customers with planned expansions if three conditions are met: (1) the customer adds new jobs to its work force, (2) the customer brings new capital equipment and plant to a new or expanded facility and (3) the economic development effort is supported and backed by a state organization such as the Kansas Department of Commerce or a local economic development organization.

    Q. HOW WILL PROMOTE KANSAS PROVIDE WESTAR WITH FLEXIBILITY TO ADDRESS ECONOMIC DEVELOPMENT NEEDS ON A CASE-BY-CASE BASIS?
    A. If approved, Promote Kansas will allow Westar to adjust the economic incentive — in the form of reduced electric rates — provided to a customer based on the circumstances involved. This is a change from Westar’s existing EDR, which provides for a fixed percentage discount of 25 percent to the customer’s electric bill in the first year. The incentive credit declines by five percent per year over a mandatory five year period. After the fifth year of service, the customer pays the full cost of their electric service. Westar has no flexibility to adjust the amount of the incentive credit level or duration under the current EDA.

    We believe that the fixed percentage under the existing EDA is too rigid. In some situations, the customer may not require the entire 25 percent reduction in its electric bill, or a full five years of reduced electric rates, in order to move forward with an expansion or relocation to Kansas. In these cases, the rigidity of the existing EDA tariff results in either contributing more than needed to attract the new customer or encourage the expansion, or not offering the incentive at all. The current EDA tariff was developed over a quarter century ago, tailored to specific circumstances that no longer exist. It was based on past exigencies, and it is time to revise it to meet today’s priorities and business environment.

    Promote Kansas would contain a variable incentive credit. If Westar decides to provide the incentive credit to a customer, it would range from five percent to 25 percent the first year and would then decline over no more than a five-year period. This will allow Westar flexibility to determine how much incentive is necessary to attract the new customer or the expansion. Westar will be able to actively participate in negotiations with potential new businesses along with other economic development organizations in order to develop the best package of benefits for the customer’s specific situation.

    We need to be concerned with this part of Westar’s application. This language — at its option … based on the circumstances involved … variable incentive credit … this will allow Westar flexibility — gives huge discretion to Westar to decide how much customers will pay for electricity.

    Westar is not a government agency, but as a tightly regulated entity, it’s almost like government. It exercises the type of monopoly power that few outside of government do: It holds a near-monopoly on the delivery of a product that almost everyone wants and needs. With few exceptions, households and business firms can’t negotiate with Westar on their electric rates.

    Therefore, when Westar offers — at its discretion — lower electric rates to some customers, others must necessarily pay more. Testimony to this effect was offered by Westar.

    If we could be certain that the goals of this program would be realized, that would be one thing. But as a quasi-governmental entity, Westar suffers from the same knowledge problem as does government, especially regarding targeted investment programs like that proposed in this new rate structure. These actors believe that they have the ability to select which companies are worthy of public investment, and which are not. Really, it’s even a larger decision, as all other Westar customers have to pay for the investment decisions that will be made.

    This rate plan implements a form of centralized planning by the state that shapes the future direction of the Kansas economy. We have to decide who is in the best position to make these decisions: Regulators and utility company executives, or the diverse market where thousands of business firms freely compete for voluntary investments to be made.

    Arnold Kling has written about the ability of government experts to decide what investments should be made with public funds. There’s a problem with knowledge and power:

    As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.

    When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.

    Despite this knowledge problem, the Kansas Corporation Commission is considering giving Westar the very type of power that ought to be left to markets. For this reason, KCC should reject Westar’s rate increase application until this program, and the program it is intended to replace, are eliminated.

    The full rate application is available at Docket 13-WSEE-629-RTS: Application of Westar Energy and Kansas Gas and Electric Company Charges for Electric Service. A public hearing is scheduled tonight in Wichita; see Westar electricity rate hikes.

  • For our own good: No rain, please

    Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.
    — C.S. Lewis

    There are those who are so sure of the righteousness of their prescriptions for others’ behavior, they will torment themselves when good things happen.

    Normally, we rejoice when it rains during dry conditions, even if it slows down the wheat harvest a bit. But if good fortune for others means it’s less likely your regulatory dream regime will pass — well, which is more important?

    wichita-wanting-weather-sensorsTo a frequent comment writer on the Wichita Eagle online site, the choice is this: His regulatory urge, his conviction that he is absolutely certain he knows what others should do, is more important than our collective sigh of relief: “I have become so committed, to wanting weather sensors to be required on new lawn irrigation systems, that I’m upset when it rains. Because I know it means it’s less likely to get passed by the Council.”

    It’s not enough, apparently, that the city is taking very expensive measures to save very little water. I speak, of course, of rebates for low-flush toilets, which force one person to pay for someone else’s appliance.

    No, for this person, others have to suffer additional expense — and brown lawns — just so he can force his regulatory wishes on the rest of us.

  • USA vs. You: The problem of overcriminalization

    Events in recent months have justifiably caused Americans to ask whether a powerful, activist, and interventionist government and bureaucracy is good to have. Those who have been looking at overcriminalization, however, have known that government and regulatory agencies have been targeting and oppressing Americans for a long time. And it’s getting worse.

    USA vs. You cover

    The new website USAvsYOU.com holds useful information for Americans to know about how law has changed in recent years, compared to how it operated for centuries before. The booklet available for reading is titled USA vs. You: The flood of criminal laws threatening your liberty.

    As an example, here is a troubling trend:

    In many criminal laws, the “guilty mind” requirement has been removed or weakened. This means people can go to prison regardless of whether they intended to break the law or knew their actions were in violation of the law.

    Traditionally, crimes had two components: (l) mens reu (guilty mind), and (2) actus reus (bad act).

    Today, many criminal laws and regulations have insufficient or no mens rea (guilty mind) requirement — meaning, a person need not know that his or her conduct is illegal in order to be guilty of the crime.

    An example story is the following:

    THE CRIME: Rescuing a baby deer

    Jeff Counceller, a police officer, and his wife Jennifer spotted an injured baby deer on their neighbor’s porch. Instead of turning a blind eye to the dying fawn, the Councellers took the deer in and nursed it back to health.

    An Indiana Conservation Officer spotted the fawn (named Dani) in the Councellers’ yard — and promptly charged the couple with unlawful possession of a deer, a misdemeanor offense. Fortunately for her, the day that “Little Orphan Dani” was to be euthanized by the state, the deer escaped into the wild. Due to public outrage, the government dropped the charges.

    The website and booklet is a product of Heritage Foundation and it partners such as the American Civil Liberties Union. Heritage has been covering the issue of overcriminalization here. It describes the problem as this: “Overcriminalization describes the trend to use the criminal law rather than the civil law to solve every problem, to punish every mistake, and to compel compliance with regulatory objectives. Criminal law should be used only if a person intentionally flouts the law or engages in conduct that is morally blameworthy or dangerous.”

    We have problems like this in Wichita, believe it or not. An ordinance passed by the Wichita City Council in 2010 might ensnare anyone visiting city hall, if they happen to have a broad-tip marker in their purse or briefcase:

    Animated marker

    “Possession of Graffiti Implements Prohibited in Public Places. It is unlawful for any person to have in his/her possession any graffiti implement while in, upon or within one hundred (100) feet of any public facility, park, playground, swimming pool, skate park, recreational facility, or other public building owned or operated by the city, county, state, or federal government, or while in, under or within one hundred (100) feet of an underpass, bridge, abutment, storm drain, spillway or similar types of infrastructure unless otherwise authorized.”

    “Graffiti implements” are defined broadly earlier in the ordinance.

    If you’re thinking about a career in taxicab driving, be advised that the city has ordinances punishing you if you’re found to have violated these standards: “Fail to maintain their personal appearance by being neat and clean in dress and person” and “Fail to keep clothing in good repair, free of rips, tears and stains.”

  • REAP: We’ll plan for you, like it or not

    Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
    — H.L. Mencken

    We’ve learned that the government planners will plan for you, whether or not you want it. Despite having voted against participation, two Kansas counties are still included in a regional planning consortium.

    South Central Kansas Prosperity

    The new website thinktomorrowtoday.org promotes and supports the sustainable communities government planning process in South-Central Kansas. The planning effort has been rebranded as “South Central Kansas Prosperity.”

    In the logo, on a map, and in narrative, Butler and Sumner counties are listed as participants. But these newspaper headlines say something else about what the elected officials in these counties thought about joining the plan:

    Sumner County isn’t on board with fed’s sustainable communities planning grant

    Sumner County isn’t on board with fed’s sustainable communities planning grant (Wichita Eagle, July 30, 2012): “One of the counties served by a sustainable communities planning grant recently declined to be a partner in the effort, expressing concerns about federal intrusion in local government.”

    Butler County decides not to support REAP planning grant

    Butler County decides not to support REAP planning grant (El Dorado Times, August 23, 2012): “The issue at the center of the Butler County Commission’s discussion about a sustainable communities planning grant was local control.”

    I can understand why these counties decided to opt out of the planning process and why two Sedgwick County Commissioners voted against participation.

    Cato Institute Senior Fellow Randal O’Toole, in his book The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future, explains the danger and harm of government plans. I remember two passages in particular:

    Somewhere in the United States today, government officials are writing a plan that will profoundly affect other people’s lives, incomes, and property. Though it may be written with the best intentions, the plan will go horribly wrong. The costs will be far higher than anticipated, the benefits will prove far smaller, and various unintended consequences will turn out to be worse than even the plan’s critics predicted.

    And this:

    The worst thing about having a vision is that it confers upon the visionary a moral absolutism: only highly prescriptive regulation can ensure that the vision overcomes an uncaring populace responding to a free market that planners do not really trust. But the more prescriptive the plan, the more likely it is that the plan will be wrong, and such errors will prove extremely costly for the city or region that tries to implement the plan.

    We see the vision of moral absolutism on display: Despite two counties voting against participation, their overseers will, nonetheless, create a plan for them.

    It’s for their own good, after all.

  • Wichita begins rebates and regulation

    Instead of relying on market forces, Wichita imposes a new tax and prepares a new regulatory regime.

    Equus BedsAt today’s meeting of the Wichita City Council, the city decided to spend up to $1 million this year on rebates to encourage people to buy water-efficient appliances. This will save a vanishingly small amount of water at tremendous cost.

    The worst realization from today’s city council meeting is how readily citizens, politicians, and bureaucrats will toss aside economic thinking. The antimarket bias that Bryan Caplan explains in The Myth of the Rational Voter: Why Democracies Choose Bad Policies was in full display — even by the conservative members of the council.

    It’s also clear that some council members want to go down the road of austerity rather than abundance.

    What did we learn today? Many speakers used the terms “conservation” and “judicious.” Conservation is good. Judicious use is good. But each person applies different meanings to these concepts. A great thing about living in a (relatively) free economy is that each person gets to choose to spend their time and money on the things that are important to them, and in the amounts they want. We make these choices many times each day. Sometimes we’re aware of making them, and sometimes we’re not.

    For example: If you’re watching television alone in your home, and you go to the kitchen to get a snack, do you turn off the television for the moment that you’re not watching it? No? Well, isn’t it wasting electricity and contributing to global warming to have a switched-on television that no one is watching, even for just a moment?

    Some people may turn off the television in this scenario. But most people probably decide that the effort required to save a minute’s worth of electricity consumption by a television isn’t worth the effort required.

    (By the way, the type of television programs you watch each evening: Is it worth burning dirty coal (or running precious water through dams, or splitting our finite supply of uranium atoms, or spoiling landscapes and killing birds with wind turbines) just so you can watch Bill O’Reilly or Rachel Maddow rant? Or prison documentaries? Or celebrity gossip? Reruns of shows you’re already seen? And I’ve seen you fall asleep while watching television! What a monumental waste. We should require sleep sensors on all new televisions and rebates to retrofit old sets.)

    But when people leave their homes empty to go to work, almost everyone turns off the television, lights, and other appliances. Many may adjust their thermostats to save energy. People make the choice to do this based on the costs of leaving the lights on all day versus the cost of turning them on and off. No one needs to tell them to do this. The relative prices of things do this.

    (You may be noting that children have to be told to turn off televisions and lights. That’s true. It’s true because they generally aren’t aware of the prices of things, as they don’t pay utility bills. But adults do.)

    In most areas of life, people use the relative prices of things to make decisions about how to allocate their efforts and consume scarce resources. Wichita could be doing that with water, but it isn’t.

    The conservation measures recommended by speakers today all have a cost. Sometimes the cost is money. In some cases the cost is time and convenience. In others the cost is a less attractive city without green lawns and working fountains. In many cases, the cost is shifted to someone else who is unwilling to voluntarily bear the cost, as in the rebate program.

    At least we’ll be able to measure the cost of the rebate program. For most of the other costs, we’re pretending they don’t exist.

    Instead of relying on economics and markets, Wichita is turning to a regulatory regime. Instead of pricing water rationally and letting each person and family decide how much water to use, politicians and bureaucrats will decide for us.

    All city council members and the mayor approved this expansion of regulation and taxation.

    (Yes, it’s true that the rebates will be funded from the water department, but that’s a distinction without meaningful difference.)

    The motion made by Mayor Carl Brewer contained some provisions that are probably good ideas. But it also contained the appliance rebate measure. Someone on the council could have made a substitute motion that omitted the rebates, and there could have been a vote.

    But not a single council member would do this.

    It’s strange that we turn over such important functions as our water supply to politicians and bureaucrats, isn’t it?

  • The future of Obamacare, now he tells us

    This is a sad commentary on the state of politics and governance in the U.S., from the Boston Globe:

    Unencumbered by the political pressures of a reelection campaign, Baucus is in a position to call out both the failure of federal officials to prepare for implementing Obamacare as well as the unintended consequences of its complex regulations.

    A short while ago, before U.S. Senator Max Baucus announced his retirement, U.S. Representative Mike Pompeo of Wichita noticed the incongruity of Baucus complaining about a law he passed, tweeting the following:

    Following are excerpts from a letter Pompeo sent to Baucus, followed by the entire letter.

    My shock wasn’t because I disagreed: You’re right to say this legislation has led to great uncertainty for hard-working Americans, small business owners, and families. No, I was shocked because you wrote this bill. I was saddened because your acknowledgment of the harm caused by PPACA has come so late.

    No one in the country bears more responsibility for the complexity of this law than you. When your supermajority couldn’t pass the bill using normal procedures, you and your Senate colleagues rammed through the final legislation by using parliamentary gimmickry. Then, in the House, Speaker Pelosi cheerfully urged members to pass the legislation “in order to find out what’s in it.” This was not good policy-making, and now we’re seeing the consequences.

    Secretary Sebelius’s implementation of the law is certainly flawed, but the policy process produced a law that could not possibly be implemented successfully. As legislators, it is our responsibility to write bills that clearly explain our meaning and have achievable goals. By your own admission, this law is a disaster.

    You drafted it, you twisted arms to get it passed, and, until now, you have lauded it as a model for all the world. Your attempts to pass the buck to President Obama’s team will not work, nor will they absolve you of responsibility for the harm that you have brought via this law.

    [gview file=”http://pompeo.house.gov/uploadedfiles/130418_-_letter_-_pompeo_to_baucus_on_obamacare.pdf”]

  • The heavy hand of Kansas regulation

    Martini glass, half full, with a single olive

    Regulation run amok in Wichita, from Anne Meyer of KWCH 12 Eyewitness News:

    (Wichita, KS)— “Two for one” drinks or “half price”. Customers may not know the difference between the two on their bill, but those words matter when it comes to Kansas liquor laws. One phrase is legal, the other is not.

    One Wichita bar owner is trying to fight that.

    Shooters on South Hydraulic is known for attracting pool players. Now Owner Paul Weigand is getting attention from the state for violating Kansas’ liquor law.

    “I’m just not ready to pay that fine yet, I want a judge to tell me the difference between two for one and half price,” Weigand said.

    Continue reading and view the video at Words matter when it comes to Kansas liquor law.

  • Kansas House votes for property rights

    state-historic-preservation-environsToday the Kansas House of Representatives passed a bill that will protect property owners from harm simply because their property is near a historic property.

    The bill is HB 2118, as described by its supplemental note:

    HB 2118 would delete provisions related to environs restrictions from historic property reviews.

    Under current law, proposed projects within 500 feet of the boundaries of a historic property located in a city or within 1,000 feet of the boundaries of a historic property located in the unincorporated portion of a county are subject to historic design and appearance restrictions.

    The bill would limit historic reviews conducted under the act to proposed projects that would directly involve, damage, or destroy a property included in the National Register of Historic Places or the State Register of Historic Places.

    The bill passed today by a vote of 99 to 24. Those voting against this bill — those who wish to keep the current restrictions on private property rights — were Alcala, Ballard, Becker, Bridges, Burroughs, Carlin, Crum, Davis, Dillmore, Grant, Henderson, Henry, Hill, Kuether, Lane, Meier, Pauls, Ruiz, Sloop, Tietze, Weigel, Whipple, Wilson, and Winn.