Tag Archives: Commanding Heights

Treasury Department threatens private companies for responding to Obamacare incentives

Investors Business Daily reports on how the Treasury Department is threatening private companies who lay off employees because of the costs imposed on them by Obamacare.

Excerpt:

In what may be considered an ObamaCare loyalty oath, the Treasury Department orders employers to attest that any employee layoffs are not due to its imposed costs under penalty of perjury.

The first rule of business is to stay in business, something which is accomplished by doing what government is incapable of doing — controlling costs and making a profit by giving customers a product or service they need or want.

ObamaCare is obviously a product neither business nor the individual wants, so coercion is necessary under penalty of law.

Enforced by the Internal Revenue Service, individuals must enroll in government-approved plans or be fined.

Individuals are not allowed, despite presidential promises, to keep the plans and doctors they like and can afford.

Instead, they must accept plans they don’t like and can’t afford, some getting subsidies extracted from other taxpayers or China. They must grin and bear their reduced health care choices and higher costs.

Even though ObamaCare’s employer mandate has once again been illegally and unconstitutionally extended by the president who would be king, business still faces ObamaCare’s punitive cost increases down the road and its own form of government coercion.

Layoffs are an unfortunate but sometimes necessary means for a business to control costs and stay in business.

On Monday, a Treasury Department unconcerned with the necessities of the free market said that businesses will need to “certify” that they are not shedding full-time workers simply to avoid the mandate and its costs.

Officials said employers will be told to sign a “self-attestation” on their tax forms affirming this, under penalty of perjury.

What happens when a government passes regulations that make it harder for employers to lay off workers if they are forced to? Well, companies stop hiring workers, and expand their operations elsewhere. That’s exactly what has happened in countries like France, where the government makes it nearly impossible to get rid of workers, even when circumstances warrant it. So the net effect of policies that reduce the freedom to hire/fire as needed is to raise unemployment.

Here’s the economist Aparna Mathur of the American Enterprise Institute to explain.

Excerpt:

Labor market regulations often take the form of employment protection rules that govern the hiring and firing of workers. These were originally introduced to enhance workers’ welfare; for instance, by reducing unfair dismissals. The same provisions that protect employees, however, translate into cost for employers, leading an employer to think twice (at least) before hiring a new employee.

Theoretical economic models have shown that, in general, the effect of such laws is to reduce job flows (broadly, the sum of jobs created and jobs destroyed). In my paper, I show that these reduced job flows could have negative effects on investments in education because they reduce the expected returns on a job search; and they lower the value of education as a signaling device.

Under rigid labor market regulations, employers have a stronger disincentive to create new jobs, so there are fewer available jobs on the market. As a result, one’s likelihood of earning a productive wage is reduced. Moreover, firings under a system of strong labor market regulations are less frequent than they would be otherwise, so even workers with jobs expect to face fewer opportunities to search for re-employment. As a result, they will have less use of education as a signaling device to secure their next job.

With flexible labor markets and higher job mobility, these conditions are reversed. Job flows are higher, leading to more vacancies per unemployed worker. This yields a higher expected return on a job search for educated workers since the likelihood of finding a job is higher. Further, workers are either fired or they quit more frequently (i.e., job destruction is higher), leading to a greater use (or need) of education as a signaling device.

Put simply, imagine a developing country with rigid labor markets leading to few vacancies. For a low-income worker, the cost of getting educated may outweigh the prospective benefits since the likelihood of finding a job in this scenario is fairly low. On the other hand, for the same worker, if the likelihood of finding a job goes up when labor market restrictions are removed, the incentive to invest in education may be higher since the returns to investing in this costly activity are higher. Countries such as France, Germany, and Italy, which consistently have strict labor regulations, would do well to heed these results (see figure). It is also true in general that developing countries have stricter labor regulations than the OECD economies.

All these regulations sound so good, but we have to think beyond stage one in order to see the real results of the happy-sounding speeches. These things are understood by economists, but we didn’t elect an economist.

CNN: Obama administration bullying insurance companies to not criticize Obamacare

From the (normally) radically leftist CNN, of all places.

Excerpt:

White House officials have pressured insurance industry executives to keep quiet amid mounting criticism over Obamacare’s rollout, insurance industry sources told CNN.

After insurance officials publicly criticized the implementation, White House staffers contacted insurers to express their displeasure, industry insiders said.

Multiple sources declined to speak publicly about the push back because they fear retribution.

But Bob Laszewski, who heads a consulting firm for big insurance companies, did talk on the record.

“The White House is exerting massive pressure on the industry, including the trade associations, to keep quiet,” he said.

Laszewski, who’s been a vocal critic of Obamacare, said he’s been asked by insurance executives to speak out because they feel defenseless against an administration that is regulating their business — and a big customer.

[…]Insurers, he said, warned the White House that the regulations would lead to discontinued policies.

“One of the things I think is clear here is the Obama administration has no trust in anything the health insurance industry is telling them about how to run a health plan,” Laszewski said.

Newsbusters has the video and transcript from CNN.

Obama administration effectively bans construction of future coal plants

CNBC explains. (H/T Bad Blue)

Excerpt:

The proposal would help reshape where Americans get electricity, away from a coal-dependent past into a future fired by cleaner sources of energy. It’s also a key step in President Barack Obama’s global warming plans, because it would help end what he called “the limitless dumping of carbon pollution” from power plants.

Although the proposed rule won’t immediately affect plants already operating, it eventually would force the government to limit emissions from the existing power plant fleet, which accounts for a third of all U.S. greenhouse gas emissions.

[…]Despite some tweaks, the rule packs the same punch as one announced last year, which was widely criticized by industry and Republicans as effectively banning any new coal projects in the U.S.

That’s because to meet the standard, new coal-fired power plants would need to install expensive technology to capture carbon dioxide and bury it underground. No coal-fired power plant has done that yet, in large part because of the cost.

[…]”EPA has set a dangerous and far-reaching precedent for the broader economy by failing to base environmental standards on reliable technology,” said Hall Quinn, president and CEO of the National Mining Association. The EPA regulation “effectively bans coal from America’s power portfolio,” he said.

The first effect of this decision will be to put a lot of Americans out of work.

The second effect will be to cause electricity costs to skyrocket, exactly as Obama promised.

Excerpt:

Wind and solar energy are dilute, intermittent, and more costly than traditional hydrocarbon energy sources. After atmospheric absorption and system losses, only a single 100-watt bulb can be powered from a square meter of solar cells, and this only at midday on a cloudless day.  Wind towers must be spaced about 140 meters apart to capture energy from the wind.  As a result, solar requires 75 to 100 times the land and wind requires 150 to 250 times the land of traditional power sources.

Solar systems don’t output energy at night or at low angles of incoming sunlight.  Wind systems provide rated output less than 30% of the time and this output varies chaotically. Traditional gas or coal power plants must be running as an active backup to maintain continuity of electricity supply.  Like a car driving in stop-and-go conditions, installation of a wind farm converts the power system into a stop-and-go electrical system.  In measured real world conditions, combined wind and hydrocarbon systems use more fuel, output more sulfur and nitrogen oxides, and emit more carbon dioxide than hydrocarbon-only electrical systems.

Total cost estimates show that wind and solar systems are significantly more costly than hydrocarbon energy sources.  Since wind requires an active backup hydrocarbon facility, wind can only replace some of the variable cost of a coal or gas plant.  Department of Energy 2011 estimates place the variable cost of coal at 3 cents per kW-hr and gas at 5 cents per kW-hr, compared to 9 cents for on-shore wind and 24 cents for offshore wind.  Solar costs are 20 to 30 cents per kW-hr.

We’re getting what we voted for. We’ve had no significant global warming for 15 years, but that won’t stop the Democrats from saddling private industry with regulatory costs – costs that they will pass on to consumers. I would not be surprised if consumers (who after all mostly voted for Obama) blame the energy companies and never identify the root cause of the rising costs.