Rules and Regulations Category
Wednesday, June 23rd, 2010
Politicians and pundits often make grand claims about the effectiveness of their own economic policies and ideals. Too often, however, these claims don’t play out in the real world.
Recently, Verizon CEO, Ivan Seidenberg, shared his perspective on the real impact of Washington’s much-touted “growth” policies.
Below is an excerpt from a speech made by Seidenberg at the Business Roundtable:
My colleagues and I have worked closely with policy-makers across the political spectrum on matters from health care to trade and tax policy to energy and climate change. But frankly, we have become somewhat troubled by a growing disconnect between Washington and the business community that is harming our ability to expand the economy and grow private-sector jobs in the U.S. We see a host of laws, regulations and other policies being enacted that impose a government prescription of how individual industries ought to be structured, rather than produce an environment in which the private sector can innovate, invest and create jobs in this modern global economy.
In our judgment, we have reached a point where the negative effects of these policies are simply too significant to ignore.
In the search for short-term revenue fixes, we’re doing long-term damage to growth.
By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses.
Meanwhile, without a sufficiently comprehensive focus on growth and jobs, our unemployment rate continues to hover close to 10 percent. The CBO says debt will rise to 90 percent of G.D.P. in 10 years. And last month’s job report showed the private sector creating only 41,000 jobs, a figure the Economic Policy Institute says is ‘nothing closely resembling the job growth needed to dig us out of our very deep hole.’
So, from our perspective, it’s time to refocus public policy on creating the conditions that will drive private-sector jobs.
Tags: Business Roundtable, economic growth, economic policies, jobs, Obama Administration, regulation, Verizon, Washington
Posted in Blog, Latest News, Rules and Regulations | No Comments »
Friday, March 26th, 2010
This week, the House of Representatives passed H.R. 4899, an emergency spending bill to provide money for summer jobs and disaster relief.
If Congress were serious about getting teens jobs this summer, it would rethink what has undoubtedly been an employment disaster: increasing the minimum wage during a recession.
In 2007, Washington increased the minimum wage. The increase took effect in increments, hiking the wage from $5.15 in 2007 to $7.25 today. This increase raised costs for businesses, especially small businesses. Higher costs on businesses means fewer total workers can be hired. Teenagers were hit the hardest.
Between July 2009 (the month of the last incremental min wage raise) and February 2010, the number of teenagers employed in part-time work fell by 15 percent (equal to 602,000 teenagers). The number of teenagers in full-time work fell more than 6 percent.
In comparison, the number of part-time workers, regardless of age, fell less than 1 percent. The number of full-time workers, regardless of age, declined 1 percent, as well. The unemployment rate for teenagers also rose much faster than the entire population.
Congress should at least explore the causes of teen unemployment before allocating millions more to bolster summer jobs. Not to mention that an alleged $400 million in stimulus funds remain unspent for this program.
Tags: disaster relief, emergency spending bill, H.R. 4899, jobs, minimum wage, stimulus, summer jobs, unemployment
Posted in Blog, Government Overspending, Government Spending, Rules and Regulations | No Comments »
Thursday, March 25th, 2010
The new healthcare bill mandates that all Americans must have health insurance, and the Internal Revenue Service (IRS) is charged with enforcing that mandate.
The IRS will have to hire between 11,800 and 16,500 new employees to manage its new responsibilities, according to analysis by the Minority of the House Ways and Means Committee.
The IRS’s budget is over $12 billion. The Congressional Budget Office (CBO) has estimated that the IRS budget will have to grow by as much as $10 billion to pay for the additional work.
Yet the cost of employing these federal workers is small compared to the cost Americans face in complying with the more than 9,000-page tax code, in terms of lost time and revenue.
In 2009, Americans spent an estimated 3.8 billion hours complying with income tax laws at a cost of $110 billion. Americans also spent nearly $30 billion for help with their taxes – from buying software to paying professional tax accountants. This means that the average American taxpayer spent 26.4 hours and nearly $200 preparing their taxes.
As Bankrupting America has reported, the IRS Commissioner Douglas Shulman himself pays someone else to do his taxes because he finds the tax code too complex.
Just as individuals lose time and resources to the individual tax code, businesses spent nearly $160 billion in 2009 to comply with the tax system.
Yet the tax code continues to grow more complex. Between 2008 and 2009, the average time spent on taxes for an individual taxpayer went up by a full hour. The new health care bill – and its expansion of the IRS – will add to the problem.
Tags: CBO, Congressional Budget Office, health care, health care reform, Internal Revenue Service, IRS, shulman, tax code
Posted in Blog, Rules and Regulations | No Comments »
Wednesday, March 24th, 2010
The American people face a deadline on April 15th. Taxes are due. It’s the law, and if you don’t pay them on time you are penalized. Congress faces an April 15th deadline, as well. Its budget is due. It’s the law, but Congress seems willing to shirk its lawful duty without penalty.
The budget process starts with the President, who must give Congress a comprehensive federal budget by the first Monday in February. Congress is required to create a budget of its own and is free to ignore the President’s suggestions. Here’s how the process is supposed to work:
The House and Senate Budget Committees hear testimony from experts, fellow Members, cabinet members, and others in the executive branch. Other Congressional Committees with jurisdiction over budget matters offer their input, as well. This information allows the Budget Committees to craft a “budget resolution,” which is then considered by the full House and Senate. The adopted budget resolution becomes the blue print for that year’s budget. For example, any legislation that calls for spending beyond what’s called for in the budget resolution cannot be considered under normal rules.
The Congressional Budget Act (CBA) of 1974 specifies that Congress must complete its annual budget resolution by April 15th – the same day Americans must pay taxes. If Congress fails to pass a budget resolution, legislation that affects budgetary matters cannot be considered (unless the rules are waved). After May 15, the House is free to consider appropriations bills without a waiver, even absent a budget resolution.
Here’s what is happening in reality:
The President turned in his budget on February 1st. The House Budget Committee held a hearing on the President’s budget on February 2nd and released a report on the President’s budget on February 4th. Since then, the Budget Committee has held one hearing for each of three departments’ budgets: the Treasury, Education and Defense Departments. That last hearing took place on March 5th, and since that time – even as the April 15th deadline approaches – the House Budget Committee has been almost exclusively focused on health care reform.
The Senate Budget Committee has been moving at a similarly slow pace. Hearings about the President’s budget took place in early February, and since then they’ve just heard from the Department of Defense and Transportation.
When Members are home visiting their Districts, people should ask why their representatives are failing to produce a budget resolution. The public deserves to see how much Congress plans to spend and on what. Members of Congress should have to live within a specified budget – just like American families (who are cutting back, not spending more).
Without a budget, it will be easier for Congress to continue on its reckless path of overspending.
Tags: 2011 budget, budget, Congress, Obama Administration, taxes
Posted in Blog, Government Spending, Rules and Regulations | No Comments »
Tuesday, March 23rd, 2010
Tags: CFPA, Chris Dodd, Consumer Financial Protection Agency, Corporate Welfare, Dana Carvey, financial regulation, Funny or Die, Heidi Montag, Jim Carrey, Main St, Presidential Reunion, Ron Howard, Wall St, Will Ferrell
Posted in Blog, Corporate Welfare, Rules and Regulations | No Comments »
Wednesday, March 17th, 2010
Amid charges that China is “manipulating its currency,” fourteen U.S. Senators have introduced legislation that would penalize China with trade sanctions if they don’t allow their currency’s value to rise relative to the dollar.
The Senators claim China is using its central bank to artificially devalue the yuan (China’s currency) so the country can sell exports more cheaply and generate commerce.
Message to China
We appreciate you selling us goods for cheap and raising our standard of living. However, if you are manipulating you currency, you should do so with caution. A strong currency is a sign of a sound money supply, which is critical to economic growth.
Economic message to the U.S.
Devalued Chinese currency likely has mixed, but net positive, effects on the economy. The Congressional Research Service provides a balanced summary:
If the yuan is undervalued against the dollar (as many analysts believe), there are likely to be both benefits and costs to the U.S. economy.
It would mean that imported Chinese goods are cheaper than they would be if the yuan were market determined. This lowers prices for U.S. consumers and dampens inflationary pressures. It also lowers prices for U.S. firms that use imported inputs (such as parts) in their production, making such firms more competitive. When the U.S. runs a trade deficit with the Chinese, this requires a capital inflow from China to the United States, such as Chinese purchases of U.S. Treasury securities. This, in turn, lowers U.S. interest rates and increases U.S. investment spending.
On the negative side, lower priced goods from China may hurt U.S. industries that compete with those products, reducing their production and employment. In addition, an undervalued yuan makes U.S. exports to China more expensive, thus reducing the level of U.S. exports to China and job opportunities for U.S. workers in those sectors. However, in the long run, trade can affect only the composition of employment, not its overall level. Thus, inducing China to appreciate its currency would likely benefit some U.S. economic sectors, but would harm others.
Political message to the U.S.
Sparking a trade war with China would be a lose-lose for both countries. If the U.S. government took action to prevent the importation of Chinese goods or to raise the price of those imported products, American families, consumers, and industries would suffer. China would also respond by enacting similar policies to punish U.S. exports, which would make U.S. products less competitive and hurt overseas sales.
Tags: artificially devalue, China, Congressional Research Service, currency, trade sanctions, trade war, yuan
Posted in Blog, Rules and Regulations | No Comments »
Tuesday, March 16th, 2010
Unless they ask for a special exemption, taxpayers are required to file their income taxes by April 15. This year, according to a USA Today report, states may not extend the same courtesy to taxpayers.
At least six states may delay paying taxpayers the income tax refunds owed to them.
Alabama, Hawaii, Idaho, Kansas, New York, and North Carolina are among the cash-strapped states considering the delay.
States’ budget problems are not the fault of individual taxpayers. Between 2002 and 2007, politicians increased state spending 50 percent faster than the rate of inflation. The federal government has exacerbated states’ deficits by obligating them to subsidize various spending programs.
The 50 states faced a cumulative $196 billion deficit for fiscal year 2010 and next year’s scenario looks worse.
Whether delayed tax refunds, higher taxes, or four-day school weeks, politicians would rather shift the burden on the public than make the tough choices to root out waste, fraud, and unnecessary spending in their state budgets.
Tags: alabama, budget shortfalls, deficits, hawaii, idaho, income tax refunds, kansas, new york, north carolina, states
Posted in Blog, Rules and Regulations | No Comments »
Monday, March 15th, 2010
With the growing public concern for government spending, Democrats and Republicans are competing to show their commitment to earmark reform.
Earmarks are provisions tacked onto larger legislation to fund politicians’ pet projects. They are often granted from party leaders to legislators in exchange for their vote on a bill, and from legislators to special interests in exchange for their campaign support.
Democrats recently voted to ban earmarks for for-profit entities. Republicans countered with a year-long ban on all earmarks. Neither plan covers what a Washington Post article describes as “undisclosed earmarks,” which include spending on defense contractors competing for funds.
Earmarks should be eliminated not just to for-profits and for one year but to all groups and permanently.
Representative David Obey (D-WI) claims that the Democrats’ plan to ban earmarks to for-profits will reduce total earmarks by 1,000 and “break the link between campaign contributions and earmarks that has sparked intense criticism.”
Taxpayer money shouldn’t be used to fund politically-favored non-profits anymore than it should be used to fun politically-favored businesses.
9,499 earmarks were granted in 2010, so close to 90 percent of earmarks were awarded to organizations other than for-profits. These organizations – including nonprofits and unions – spend millions on lobbyists, pay millions in executive compensation, and gain at the expense of taxpayers just like for-profit recipients of earmarks.
Besides, for-profits benefit from earmarks to non-profits by contracting with the non-profit recipients – a process from which Obey himself is not immune – according to the same Washington Post article mentioned above.
The elimination of earmarks – saving an estimated $16 billion – will not meaningfully address our deficit problem. Yet the move would be a positive step toward fiscal responsibility since earmarks represent pure waste and special interest politics at its worst. Not to mention, Americans are fed up with regularly learning of the ridiculous earmark projects funded with their money.
Be cautiously optimistic. Political promises to eliminate earmarks are common. The only way to end earmarks is for the public to demand their Members of Congress forgo earmarks and hold the rest of their colleagues to the same standard.
Tags: earmark reform, Obey, pork barrel, spending, waste and abuse
Posted in Blog, Rules and Regulations | No Comments »
Monday, March 15th, 2010
President Obama recently renewed his call to double the goods exported by the U.S. in five years. He also reiterated his conviction that free trade – the voluntary exchange of goods and services between nations without government obstruction – plays an important role in fueling economic growth and job creation.
The President has proposed to start liberalizing trade by passing trade agreements with South Korea, Colombia, and Panama. The details of these agreements have already been negotiated. This is a great policy option to help create jobs for the unemployed and encourage economic growth.
Free trade agreements make it easier for American businesses to sell their products and services around the world. 95 percent of consumers of American goods live outside of the U.S. Exports of U.S. goods and services account for 13 percent of our GDP, and generate one-fifth of domestic manufacturing jobs.
The Department of Commerce estimates that every $185,000 of exports creates one job in the United States. Given that the U.S. exports about $1.8 trillion in goods and services each year, realizing the President’s goal of doubling exports during the next five years would create millions of new jobs and increased economic growth.
Opponents of trade liberalization claim that jobs are lost as a result of increased competition with foreign producers. Additional competition can result in some job loss, which can be acute in certain sectors and painful for those involved. Yet those costs are dwarfed by the benefits free trade creates.
Free trade improves our standard of living by giving millions of Americans access to higher quality, lower priced, and more diverse goods. U.S. businesses also benefit from access to lower cost imports, which reduces their input costs, enabling them to produce more, hire more, and compete in the world market.
Some make the case the free trade is the most effective program to fight poverty in the developing world as well.
The ability of federal spending, like the $787 billion stimulus package and the latest $15 billion “jobs bill,” to create real and sustainable jobs is dubious at best. Yet the federal government does have the ability to facilitate free trade, which is an effective job creation policy for the U.S. and our trade partners.
Tags: double exports, free trade, globalization, international trade, protectionism, trade agreements with South Korea, U.S. exports
Posted in Blog, Rules and Regulations | 9 Comments »
Thursday, March 11th, 2010
“Reconciliation” is a buzzword in Washington, as Democratic leadership considers using the procedural measure to pass health care reform.
So what is reconciliation? How often and in what ways has it been used in the past?
Here’s how the Congressional Research Service (CRS) describes the budget reconciliation process:
…an optional procedure that operates as an adjunct to the budget resolution process established… The chief purpose of the reconciliation process is to enhance Congress’s ability to change current law in order to bring revenue, spending, and debt-limit levels into conformity with the policies of the annual budget resolution.
The process was established by the Congressional Budget Act of 1974 and is intended to apply only to spending, revenue and debt limit matters.
Reconciliation enables the Senate to pass a bill with a simple majority – 51 votes – rather than the 60 needed to overcome a filibuster. In the Senate, debate on a reconciliation measure can only last up to 20 hours, and amendments must have to do with the topic at hand.
Discussion has focused on whether Congress has used reconciliation to pass bills not related to the budget. It has, but rarely.
CRS says Congress has used reconciliation to pass legislation 19 times since 1981, including welfare reform and the 2001 and 2003 tax cuts. The New York Times recently highlighted several of these modern uses of reconciliation.
Whether it is necessary or wise to use reconciliation now, the procedure is, as National Public Radio says, “the legislative equivalent of breaking out the heavy artillery in a pitched battle.”
Senate Budget Committee Chairman Kent Conrad (D-ND) has stressed that reconciliation cannot be used for a large bill like health care reform. According to Conrad, reconciliation could only be used to make modest changes to improve affordability and other cost-saving issues within the healthcare bill.
It remains to be seen if that is the intention of Democratic leadership.
Tags: budget, Congressional Research Service, Conrad, health care, reconciliation
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