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A Citizen’s Guide to Fixing The Federal Government

The majority of Americans have lost faith in and distrust the federal government. Currently, just 19% of Americans say they can trust the government always or most of the time, among the lowest levels in the past half-century.

What can citizens do to fix the federal government?

fixing federal government guide book coverJohn H. Ramsey has published “A Citizen’s Common Sense Guide For Fixing The Federal Government.” Ramsey presents the problems but more importantly offers common sense solutions to fix what is broken in Washington, D.C. Ramsey lists the most important problems facing the American people as:

  • 70,000 pages of tax code
  • Rampant Deficit Spending
  • 175,000 pages of regulations, many which are not authorized by law
  • Mismanaged Social Security and Medicare Funds
  • Improper Accounting that masks America’s true liabilities

Ramsey offers the following solutions implemented by “We The People”:

  • Tax Only to fund Government with no social engineering
  • Deficit Spending only in national emergencies
  • Tie regulations to law with fair Administrative Courts
  • Repay Social Security and Medicare. Manage as trust funds.
  • Use generally accepted accounting for government

Ramsey proposes a Constitutional Amendment to reign in the federal government.

Most Americans will agree with Ramsey’s analysis and his solutions for fixing the federal government. Some may not agree with his solutions. Creating a new amendment to the Constitution is fraught with dangers. Ramsey’s Constitutional amendment verbiage would be subject to the whims of Congress, those who are the root cause of the problem.

To the naysayers Ramsey responds:

I think there is enough impetus that a Constitutional Convention is probably going to happen. Our task therefore is to influence the outcome. Clearly, Congress may meddle but they cannot stop it.

My goal is to help to adopt an Omnibus Amendment to The U.S. Constitution requiring that our Federal Government:

Tax only to fund Government, with no social engineering. This could be accomplished either with a flat tax based on income or a Fair Tax on consumption. The key is to eliminate 73,000 pages of exceptions, deductions, and attempted social influences that have nothing to do with funding the government.

Deficit spend only in national emergencies; pay down existing debt. You didn’t comment on this but it is crucial that we enact an amendment that stops runaway deficit spending.

Tie regulations tightly to law with fair and impartial Administrative Courts. This provision would tie regulations more closely to the underlying laws which authorize them and would enable the courts to throw out regulations that exceed the specific authorization in law. Furthermore, currently Administrative Courts are the only recourse for citizens wishing to challenge particular regulations, but such Administrative Courts are staffed entirely by government employees who almost always rule in favor of the government. They are not independent and impartial which my Constitutional Amendment would require.

Repay money misappropriated from Social Security and Medicare and manage them independently as trust funds. Repayment of amounts “borrowed” from these funds would reduce the federal deficit by about $2.8 trillion, almost 15% of the total.

Use generally accepted accounting for the federal government. This requirement is simple but not easy, but it is essential because we simply do not know the extent of federal liabilities because they are accounted for improperly and inconsistently, and so much of the exposure is “off the balance sheet”.

There are other efforts being proposed to fix the broken federal government from eliminating the Sixteenth Amendment as proposed under the Fair Tax (H.R.25), to an Article V Convention and a Constitutional convention to impose term limits on the U.S. Congress recently approved by the Florida legislature.

All of these efforts are dramatic bottom up efforts and each has as its goal to fix an increasingly out of control federal government (legislative, administrative and judicial).

The American people have had enough of top down solutions, they hunger for a bottom up approach.

In that light, Mr. Ramsey’s is one of those solutions worthy of a closer look.

RELATED ARTICLE: Pitfalls to Abbott’s Call for Convention of States

3 Ways to Destroy American Prosperity

If you absolutely had to draw up a set of policy proposals to dislodge the United States from its position as the most prosperous country in the world, how would you do it?

Your first step would be to pinpoint which factors have produced levels of prosperity unseen in human history and which exist here in the United States. Step two would be to convince impressionable citizens that their eyes and ears are deceiving them, and that the policies that have produced our unprecedented prosperity are failures. Your third step would be to get those same impressionable people to become advocates for legislation which will ensure that the deterioration of the United States occurs slowly, so the contrast between a less prosperous today and a more prosperous yesterday is less noticeable; the regression of prosperity becomes accepted as the norm. Your fourth step is to laser-focus all blame for this regression on your ideological opponents.

Understandably this is an extremely touchy subject, so in this piece I’m going to avoid speculation about the motives of any particular individual or individuals, as I feel conjecture may obscure the seriousness of our subject matter.

With that caveat, here are a set of policy proposals which will ensure the destruction of prosperity.

POLICY OF DESTRUCTION PROPOSAL #1

The first policy priority would be to separate Americans from their money and to convince them that bureaucrats and elected officials can spend their money—for them—better than they can spend it on themselves.

After all, you cannot have both vibrant economic and political liberty and expect to implement your anti-prosperity platform at the same time. Separating people from their own hard-earned money is not easy and requires some slick marketing. Here’s how to do it: Find a charismatic speaker, with no qualms about bending the truth, and ensure he or she depersonalizes and demonizes hard-working taxpayers.

Very few Americans, when asked about specific people (i.e. their neighbors, family members, or friends) want to confiscate their money for their own personal use, but when the charismatic speaker engages in a full blown class-warfare campaign and avoids specifics, using terms such as “the rich,” “pay your fair-share,” and “big business,” it becomes easier to convince others that they are entitled to the earnings of fellow citizens. What many of these people fail to understand, when they buy into the big lie about income confiscation and redistribution, is that their own prosperity is next.

POLICY OF DESTRUCTION PROPOSAL #2

The second policy priority would be to separate Americans from control of their health and medical care.

You cannot destroy American prosperity while allowing people to freely choose when and where they seek medical care, whether acute or chronic. There are only two ways to organize a healthcare distribution system. Healthcare can either be rationed by those in power or priced through free-markets; there is no other way. Medicine, a hospital bed, and a doctor or nurse’s time are resources that can only be allocated by rationing or pricing. In dismantling the pricing signals of healthcare by inserting the government as a third-party payer of healthcare services, and disconnecting the patient from his or her own healthcare provider, you can convince the public that the inevitable exploding health care costs are the fault of greedy boogeymen. This will allow the government to come in and save the day, even after having caused the problem in the first place.

Once this step is achieved, grab your charismatic leader again, and encourage him to demonize “profits” in healthcare—despite the fact that he or she doesn’t work for free—and you’re on the road to government rationing of healthcare and the destruction of your health and prosperity.

Policy of Destruction Proposal #3

The third and final step is to expand the government bureaucracy and ensure it has maximum discretion in the implementation of regulations.

You cannot destroy American prosperity with a Constitution and laws that limit government power and maximize individual freedom. The way around this dilemma is to expand and empower the government bureaucracy and write a series of regulations that mimic laws by giving the bureaucrats power to interpret what the regulations say.

Go get your charismatic leader again and ask him or her to give a series of apocalyptic speeches about our future and man’s role in the inevitable destruction of the planet, and while giving the speeches, be sure to demonize any opposition as “deniers.” This will pave the road to establishing an unchecked government bureaucracy with the power to take your private property, your business, and your bank account. It will most certainly destroy the path to prosperity.

Ask yourself: Who are these charismatic leaders?

EDITORS NOTE: This column originally appeared in the Conservative Review. The featured image is by Robert F. Bukaty | AP Photo.

EPA tramples a cattle rancher, hammers a steel manufacturer and zaps a power plant

Above the Fold, the U.S. Chamber’s new digital platform, published a three-part series looking at EPA’s regulations and how it affects the day-to-day operations of American businesses.

Whether it’s EPA’s water rule, tougher ozone standards, or carbon regulations, real businesses explain in their own words how they will be hurt by EPA’s overbearing regulations.

Please read these pieces and share them on social media.


A Cattle Rancher, Trampled by EPA’s Regulatory Stampede by J.D. Harrison

jack field

Jack Field, cattle rancher.

Jack Field’s world has long revolved around cattle. His parents were cattle ranchers, and Field and his wife bought some of their herd several years ago and have kept the family business going. Today, they run a herd of about 120 cows in Yakima County, Washington.

“We have too many to be a hobby and not quite enough to make a living,” Field joked in an interview. “We’re a small operation, but we’re trying to grow it into a something bigger.”

That will soon be much more challenging due to overregulation from (the other) Washington.

The Fields’ livelihood and those dreams depend on their cattle, so they depend on having land on which those cattle can graze. In the past, they have always leased nearby pastures from local landowners. However, due to a new rule that expands the definition of federally protected water and gives federal regulators unprecedented authority over local land use, Field isn’t sure he’ll be able to return to those fields in the years ahead.

Under the rule, which was finalized earlier this year by the Environmental Protection Agency, the agency can claim jurisdiction over any “waters” that are deemed to be adjacent to streams, wetlands and creeks, essentially stripping away broad regulatory power from states  and local jurisdictions. In the process, the EPA has opened landowners and ranchers up to a host of new permitting requirements, as well as potentially devastating fines and lawsuits.

“For the price of a postage stamp, someone who disagrees with eating red meat could now throw me into court, where I will have to spend time and money proving that I am not violating the Clean Water Act,” Field told the House Small Business Committee at a hearing last year. “I don’t think this is what anyone had in mind when Congress passed the Clean Water Act.”

With the added liability, it’s not surprising that landowners who have leased Field their property in the past have expressed concerns about his operations moving forward.

“It may very well end up that landlords decide that my cattle grazing activity now has too high a risk profile under this new rule, and they may no longer want to rent the land to me,” Field said in an interview. “If that’s the case, and I can’t find somewhere to run my cattle, I’ll have to get rid of them – that’s just the way it works. I’m not sure what we would do then.”

He later added: “It turns off landowners, farmers and livestock producers, because it just feels like a massive power grab. Frankly, it should scare everybody to death.”

It’s not merely scary, he said. It’s also counterproductive.

“Having this top-down directive coming from 3,000 miles away saying we in Washington, D.C., know what’s better for you in Washington state, or in Arizona or North Dakota or Idaho, that doesn’t sit well with folks, and as a result, it’s extremely ineffective, because the stakeholders didn’t have a say,” Fields added. “Does the EPA secretary really know what’s going on in my watershed here in Yakima, Washington? I doubt the secretary has ever even been here.”

His industry isn’t alone, either.

“The WOTUS rule will choke and stymie a wide range of small businesses, not just livestock and agriculture,” he said, noting that construction companies, timber producers and a host of other sectors have come out against the rule. “It’s basically any small business that relies on the land that could be impacted by this, and that’s why you’re seeing so many people in so many industries stand up with a unified voice and oppose the rule.”

Not surprisingly, the Small Business Administration’s Office of Advocacy, which stands up for the interests of small businesses in the nation’s capital, has urged regulators to redo the rule, which federal estimates show will cost firms millions of dollars in permitting and mitigation costs.

The U.S. Chamber of Commerce has called on the EPA to throw it out, too. William Kovacs, the Chamber’s senior vice president for Environment, Technology and Regulatory Affairs, testified before the House Science Committee, saying that “the rule will have a chilling effect on project development and force property owners to hire consultants, specialists, and lawyers.”

Ultimately, he said, it will have “significantly adverse impacts on the country’s economy, the ability to create jobs in the U.S., and the ability of states to implement these new standards.”

So far, the EPA has ignored those warnings.

But then, that’s not all that surprising, either.

The WOTUS expansion is part of a broader regulatory overreach by the EPA in recent years, as environmental rulemakers in the nation’s capital continue to strip away powers once reserved for states and reach deeper into the day-to-day operations of private businesses around the country. In addition to WOTUS, EPA has recently proposed and finalized new rules that, for example, impose onerous new ozone standards and choke power suppliers with red tape.

The EPA’s increasingly long-armed approach to regulation not only threatens business owners like Field, it undermines otherwise effective environmental protection solutions that many states have crafted and adopted with the help of the private sector.

In Washington state, for instance, the Department of Ecology has over the past couple years moved away from what Field described as a once “litigious, heavy handed regulatory approach, not unlike what we’re seeing from the EPA.” Under the department’s new director, Maia Bellon, who took office in 2013, the state’s environmental regulators formed what became known as the agriculture and water quality advisory committee – comprised of business owners, trade groups, farmers, government officials, environmental groups and academics – to examine critical threats to water quality and other environmental issues and try to craft solutions.

“Trust me, at the beginning of the process, nobody was excited about sitting down to talk through water quality issues,” Field said of his peers in the livestock industry who showed up to the first meetings. “On the other hand, it was something that needed to be done, and at the end of the day, we knew we were getting a say and would have ownership in the outcome.”

And that’s exactly what happened. Over the course of about a year, as Field described it, the public and private sector “came together, identified the existing and potential problems, put our heads together, and came up with workable solutions.” Last month, with the help of researchers at Washington State University, the committee issued a guidance document for landowners and agricultural business owners to help them understand the risks to water quality, the protective measures that were needed, and how the industry arrived at those recommendations.

“Now, I can go out and talk with other livestock owners, explain the problems and how we came up with this plan, and they can easily understand what’s at stake and what’s needed,” Field said. “In my opinion, that’s the kind of collaborative solution we need to work toward, rather than the EPA’s heavy-handed ‘here’s our solution to all your problems’ directives.”

Instead, it appears the directives from the other Washington are going to keep on coming, drowning Field’s and many other small businesses in unnecessary and unproductive red tape.

“They need to take the rule, wad it up and throw it in the garbage, then let’s go back and do this correctly,” Field said of WOTUS. “Let’s have local discussions and listening sessions, identify the problems, have an educated discussion and come up with solutions in each state.”

Because those are the solutions that work.

“I’m not opposed to clean water; I want to drink the same water you do,” Field said. “I just think the best way to ensure that we have clean water is from a locally led effort, where we all have a say and we all have buy in from the beginning.”


A Steel Manufacturer, Hammered by New Ozone Rules by J.D. Harrison

Drew Greenblatt

Drew Greenblatt

Drew Greenblatt’s small manufacturing company, Marlin Steel, has already experienced exponential growth under his watch. Greenblatt, who purchased the company nearly 20 years ago with 18 employees and $800,000 in annual revenue, has nearly doubled the workforce and led the firm to $5.5 million in sales last year. He’s not ready to slow down, either.

Over the past couple years, Greenblatt has been planning to significantly expand his facility in Baltimore, Maryland. The plans, which are nearly finalized, would expand Marlin Steel’s current manufacturing space by 53 percent and allow Greenblatt to hire at least 15 more workers.

“These are middle-class, good-paying jobs,” said Greenblatt, whose firm sells wire containers and other industrial products to automotive, aerospace and pharmaceutical factories. “They’re the type of jobs that pull people out of poverty, that can lift people into the middle class, that can pay for their kids to college. These are the type of jobs that our community needs.”

However, his expansion and hiring plans may soon grind to a halt because of onerous new regulations coming down the pipe from Washington.

Holding Greenblatt back is the Environmental Protection Agency’s proposal to further tighten ozone standards across the country, lowering the acceptable threshold of surface-level ozone in the atmosphere from 75 parts per billion (an already strict limit set in 2008) to between 65 and 70 parts per billion. While that may sound like a minor tweak, it would result in more than 300 U.S. counties falling into the “nonattainment” category, with another 200 counties at risk of not meeting (as in, hovering dangerously close to) the new ozone standard.

In those areas, many of the manufacturing and industrial firms that Marlin Steel counts as customers will see their regulatory compliance costs skyrocket as communities are forced to lower pollution levels even further than they already have (ozone levels have already dropped by a third since 1980). Every dollar spent complying with the new rules is one less dollar those manufacturers have to invest back into their firms and purchase new machinery.

Only when those manufacturers are expanding and investing in new machines do they need more steel containers (like the ones Greenblatt sells) to move goods from machine to machine within their factories. Thus, only when they’re expanding does Marlin Steel have customers.

Several longtime clients have already told Greenblatt that the EPA’s new ozone rules will put a freeze on any expansion or investment plans they had in the works.

“My clients are going to clamp down, and my phone is going to stop ringing” Greenblatt said. “When they hit pause, we have to hit pause, too, and as a result, we’re simply not going to be able to expand and hire as much as we had planned.”

That would be hard pill to swallow anywhere, but it’s “an especially devastating blow” for an employer in a city like Baltimore, Greenblatt explained. He noted that the nation watched this summer as riots erupted across the city due in part to a dearth of economic opportunity and a sense that the poor don’t have access to jobs that can lift them into the middle class.

“We’re here trying to create jobs and strengthen our communities, and Washington keeps making it harder and harder,” Greenblatt said. “It’s just another round of smackdown, and it’s a shame, because cities like ours really need these jobs.”

Marlin Steel isn’t alone. In Maryland, which has struggled to rebound from the economic downturn as it is, the new ozone rules are expected to exact a $37 billion toll on the economy and threaten 43,000 jobs, according to a study by the National Association of Manufacturers. Nationwide, the rule is expected to reduce U.S. GDP by an estimated $140 billion per year and could result in more than a million fewer jobs every year through 2040.

Many of those jobs will likely be stripped from small businesses.

“In the end, all sectors of the economy would be negatively affected by the EPA’s new, stringent NAAQS ozone regulations,” Karen Kerrigan, president of the Small Business and Entrepreneurship Council, wrote in an analysis of the proposed ozone rules. “That means, of course, that small businesses will be hit hardest, as is the case with nearly all regulations.”

While no sector will be spared, two industries will be hit particularly hard, she explained.

“It’s worth highlighting that energy, which has been a rare bright spot in an otherwise dismal economy over the past eight years, and manufacturing, which is in the midst of a revitalization, would both suffer significantly under the new EPA regulations,” Kerrigan wrote. She later noted that “those sectors are very much about small business.” In fact, small businesses account for about 75 percent of manufacturers and 90 percent of trucking firms, Kerrigan added, as well as 90 percent of oil and gas extraction firms and 80 percent of oil and gas drilling companies.

SBE Council Center for Regulatory Solutions Senior Fellow Kevin Nyland, the former deputy administrator at the White House’s Office of Information and Regulatory Affairs, has gone on record calling the new ozone rules possibly “the most expensive in U.S. history.”

Of course, EPA officials say the rules are necessary to help clean up our atmosphere. However, experts believe the rule will have minimal – if any – positive impact on air quality or health. In a letter to the agency this summer, nearly two dozen doctors-turned-lawmakers wrote that the department’s analysis of the ozone rule’s potential health benefits was flawed and that they believe “the proposal’s harm outweighs its claimed benefits.”

Back in Maryland, Greenblatt worries the rule may actually cause environmental damage.

“These rules are going to squeeze more American manufacturers out, pushing even more production overseas to places like China and India, where factories are allowed to and do in fact pump much more pollution into the atmosphere,” he said, noting that U.S. factories are already held to incredibly strict environmental standards compared to most nations.

“If we want a clean atmosphere, we should be doing everything we can to force those countries to clean up their act while at the same time tearing down barriers for American manufacturers,” he said. “Instead, all we’re doing is putting up more barriers.”

That’s frustrating from both an economic and environmental perspective, Greenblatt said.

“I breathe the air, I swim in the Chesapeake,” he said. “I want clean water and clear air, too.”

Marlin Steel’s environmental record shows he’s not just blowing smoke. In addition to implementing a myriad of energy-saving technologies at his factory, Greenblatt and his firm use 100 percent recycled steel from a plant in Indiana that churns out its raw materials by melting down, for example, old dishwashers and cars. Marlin Steel also recycles all of its scrap metal.

Most U.S. manufacturers that Greenblatt works with are taking similar steps.

“Our planet faces real environmental challenges, but the problem doesn’t lie with American factories,” Greenblatt said. “We should start focusing on where the problems actually exist, in places like India and China, rather than continuing to hammer American manufacturers who have been doing the right thing, who are already trying to help clean up our environment.”

If we don’t, he said, “rules like these will keep hurting our economy and our environment.”


A Power Plant, Zapped by the Agency’s Overreach by J.D. Harrison

Ameren-logoJohn Cooper, a former mechanic in the Marine Corps, has spent the past fifteen years working for Ameren, an energy utility company in the Midwest. He started out as a laborer at the firm’s Meramec power plant in 2000, and in the years since has worked his way up to shift supervisor at that same facility in St. Louis. He now supervises the operation of all plant systems.

Soon, there won’t be any systems — or employees — left to supervise.

Last year, Ameren announced plans to close the Meramec site, the smallest of the company’s remaining coal-powered plants, by 2022. While the company has cited a number of factors that played into the decision, executives acknowledged that the Environmental Protection Agency’s new, much more strict carbon emission limits for power plants — which had been proposed one month before Ameren’s announcement — made it “clearer” the facility would have to close. In fact, the site may be shuttered even sooner depending on how the rules are implemented.

Cooper took notice.

“I have a real concern about the speed at which the changes being implemented by the Clean Power Plan will affect my work location and my life,” Cooper wrote in a comment submitted to the EPA after the agency first proposed the standards last year. “I understand environmental change is coming and I wholeheartedly accept that it is our generation’s responsibility to turn the corner on our lasting effects on the environment. However, you also need to understand that not only is our environment at stake but also the livelihoods of thousands of utility workers and the tax revenues these facilities provide.”

His lone request to the EPA? “For myself and my family, I only ask that you be patient and understanding of our plight and please try to work with my company and the many others like us to help make this transition as painless possible,” Cooper wrote.

Instead, the agency has done precisely the opposite. Officials moved with reckless abandon to implement the new emissions standards, recently issuing a final rule without even taking into account sufficient input from the small business community, as is required by federal law.

“EPA has not provided … information on the potential impacts of this rule and has not provided Small Entity Representatives with the necessary information upon which to discuss alternatives and provide recommendations to EPA, as required by the Regulatory Flexibility Act,” Claudia R. Rogers, acting chief counsel for the Small Business Administration’s Office of Advocacy, wrote in a letter to EPA Administrator Gina McCarthy in May. Without that necessary information, Rogers pointed out, small business representatives are “unlikely to succeed at identifying reasonable regulatory alternatives for small businesses.”

Nineteen members of Congress later followed up with the agency to demand a response to Rogers’ concerns. One month later, still without an answer, several senators wrote yet another letter to McCarthy, saying: “We strongly urge the agency to work cooperatively with the Small Business Administration’s Office of Advocacy and the small entity representatives. The integrity of this process – and the confidence that small entities have in it – requires no less.”

Like Cooper, they were ignored. The EPA, without ever answering for the steps it skipped in the rulemaking process, issued its final Clean Power Plan carbon emission rules in early August.

It’s not the first time in recent months the agency has been caught skirting its rulemaking responsibilities. In June, the Supreme Court halted the implementation of a similar rule limiting mercury emissions after discovering that the EPA failed to conduct a thorough economic cost-benefit analysis (also required by law) before starting to implement the rule.

Nor is this the only occurrence of the federal agency extending its reach into rulemaking that has historically been left up to states. Criticism has been pouring in over the agency’s recent expansion of the definition of federal waters and its newly proposed ozone standards.

In short, the agency has started asserting unprecedented power over the private sector while turning a blind eye to both the federal rulemaking process and its directives from Congress.

The result is rules like the Clean Power Plan’s carbon emission standards, which did not take into account input from the business community and which will consequently put a drain on the American economy. In the case of Ameren, the firm recently released a study suggesting that compliance with the new rules — in particular, the rule’s incremental emission reduction checkpoints over the next 15 years — would cost consumers around $4 billion.

Others have issued similar warnings. One recent study found that the Clean Power Plan would cost U.S. consumers and businesses a staggering $41 billion per year. So far, more than a dozen states’ attorney generals have already taken legal action pushing back against the regulations.

Back at Ameren, Cooper isn’t the only one with a job in jeopardy. The Meramec plant currently employs about 200 people, and the company is still considering its available transfer options.

“That is a scary thing to hear when you have dedicated 15 years of your sweat, blood and tears faithfully providing safe and reliable power to our energy grid here in Missouri,” Cooper said of closing announcement last year. “I cannot tell you how many times I have given up time with friends, holidays with my family and hours of sleep to help ensure my facilities success.”

He added, “I write to you with a real concern for myself and my colleague’s futures.”

If only the EPA would listen.

J.D. Harrison

harrisonphoto_0

J.D. Harrison is the senior editor for digital content at the U.S. Chamber of Commerce, where he writes extensively about health care, immigration, infrastructure, regulations and a host of other issues that influence the decisions of executives, employers and entrepreneurs. Follow J.D. @jd_harrison and jharrison@uschamber.com.

Will President Obama’s Regulations Move U.S. Industries Offshore?

The following analysis is by the Institute for Energy Research:

When energy prices in the United States were high, the nation saw an exodus of companies moving offshore to obtain lower operating costs. Those industries have been slowly moving back, as hydraulic fracturing has dramatically lowered the cost of natural gas in the United States and allowed natural gas generation to compete with coal in the electricity sector. Unfortunately, President Obama’s regulations are going to make energy much more expensive in the United States, as his so-called “Clean Power Plan” and his methane rule get implemented.

The so-called Clean Power Plan is expected to decrease carbon dioxide emissions in the generating sector by 32 percent from 2005 levels by 2030. To do this, massive amounts of coal-fired generating capacity will be shuttered and wind and solar power will be built in their stead—technologies that cost 2 to 4 times more than the coal capacity that is being shuttered. According to the Energy Information Administration (EIA), residential electricity prices are expected to be 16 percent higher in real prices than today due to the proposed regulation and others imposed on the generating sector by EIA.

The methane rule will force oil and natural gas producers to reduce their methane emissions by 40 to 45 percent from 2012 levels by 2025.[i] This is a daunting task, considering the oil and gas industry has already reduced methane emissions from natural gas production by 38 percent between 2005 and 2013—despite increasing gas production by 35 percent over that time period.

These regulations and others promulgated by President Obama’s EPA will increase the cost of energy to Americans. President Obama is finalizing these regulations so that he can tell the world how he intends to reduce U.S. greenhouse gas emissions at the United National Climate Conference in Paris in December. However, the reductions that the United States makes will be insignificant to any realized temperature change and an equivalent amount of emissions will be released by China in a matter of days—for essentially no net gain globally.

Manufacturing Industry Exodus

In 2005, when natural gas prices were almost 50 percent higher than they are today, there was a general exodus of companies leaving the United States and moving their manufacturing operations to Asia to reduce costs. However, since then, hydraulic fracturing has enabled the extraction of natural gas from shale formations, lowering the price of natural gas and increasing its production substantially. An accounting firm, PricewaterhouseCoopers, believes that these lower U.S. energy prices could result in one million more manufacturing jobs as firms build new factories here. Companies such as Dow Chemical and Vallourec, a French steel-tubes firm, have announced new investments in America to take advantage of low gas prices and to supply extraction equipment.[ii]

Examples of firms bringing back manufacturing operations to the United States range from tiny firms to large firms, such as General Electric, which moved manufacturing of washing machines, refrigerators and heaters from China to a factory in Kentucky, which at one time had been expected to close. Another firm, Caterpillar, is opening a new factory in Texas to make excavators, but it still plans to expand its research and development activities in China.

A survey of American manufacturing companies by the Boston Consulting Group in April 2012 indicated that 37 percent of companies with annual sales above $1 billion said they were planning or actively considering shifting production facilities from China to America. Forty-eight percent of the very biggest firms with sales above $10 billion indicated that they would bring production facilities to America. The Massachusetts Institute of Technology looked at 108 American manufacturing firms with multinational operations and found that 14 percent of them had firm plans to bring some manufacturing back to America and one-third were actively considering such a move. Another study by the Hackett Group, a Florida-based firm that advises companies on offshoring and outsourcing, received similar results.

It may be ironic, but Chinese companies are now looking to manufacture in the United States. Keer, a textile company headquartered outside of Shanghai, China, is building yarn manufacturing lines in the Carolinas, bringing more than 500 jobs, due to low costs for energy, land, and cotton. The Carolinas at one time had been huge textile centers. Springs Mills in Lancaster once employed close to 20,000 people before the last textile factory closed in South Carolina in 2007. Lancaster County lost 11,000 textile jobs from 1995 to 2007. The greater Charlotte-Gastonia-Rock Hill region lost about 26,000 jobs at textile mills in the past 20 years.[iii]

But low energy prices and American ingenuity have brought manufacturing back to this country. However, all this is likely to change as President Obama’s regulations go into effect, making electricity and natural gas prices escalate, forcing companies to accept higher domestic operating costs or move offshore.

In the longer term, advanced manufacturing techniques will likely alter the economics of production, making it far less labor-intensive. Robots, for example, are already making a difference lowering the share of labor in total costs. Cheaper, more user-friendly and more dexterous robots are currently spreading into factories around the world, but these machines need energy to fuel them. And if President Obama implements regulations to raise energy costs, manufacturers will need to seek lower energy prices elsewhere, which will decrease the number of jobs in this country.

EPA’s Clean Power Plan

Early in August, EPA announced its final rule for the so-called Clean Power Plan, which reduces 32 percent of carbon dioxide emissions from the generating sector by 2030 from 2005 levels. This and other rules affecting the generating sector that have been finalized will shutter 90 gigawatts of coal-fired capacity and other fossil fuel technologies, and direct the construction of wind and solar units instead, despite the fact that it is cheaper to keep existing generating plants operating rather than building new plants. As a result, EIA expects residential electricity prices to be 16 percent higher in 2030 than they are today.

The use of low cost natural gas in the generation sector, displacing coal generation, has already reduced carbon dioxide emissions in the sector by 15 percent from 2005 levels. But, that is not a sufficient reduction for EPA. EPA wants the United States to reduce its carbon dioxide emissions from the electric generating sector by 773 million metric tons, and according to the International Energy Agency, while at the same time, China is expected to increase its carbon dioxide emissions by over 12,000 million metric tons.[iv] The U.S. reduction is expected to only reduce temperatures by 0.019 degrees Centigrade in 2100—a miniscule amount.[v]

Methane Rule

Also in August, the EPA finalized its methane rule, requiring oil and gas companies to reduce methane emissions by 40 to 45 percent from 2012 levels by 2025, despite the fact that the industry has already significantly reduced methane emissions while substantially increasing production.

According to EPA data, methane emissions from natural gas development have fallen steadily since 2005. (See red line in chart below.). The blue bars in the chart indicate natural gas production, which is rising steadily – even as less and less methane is being emitted from that production. The chart shows that net methane emissions from natural gas production fell 38 percent from 2005 to 2013 – even as natural gas production increased dramatically. Further, methane from hydraulically fractured natural gas wells fell 79 percent from 2005 to 2013.

Methane

Source: BreakingEnergy.com.

EPA’s Ozone Rule

EPA has finalized the so-called “Clean Power Plan” and the methane rule, but other regulations are still in the works. The proposed ozone rule, for example, is expected to be the most costly regulation costing the economy $1.7 trillion in lost GDP through 2040.   [vi]

The National Ambient Air Quality Standard (NAAQS) for ground-level ozone is an outdoor air regulation established by EPA under the Clean Air Act. Ozone is a naturally occurring gas composed of oxygen molecules. Ground-level ozone occurs both naturally and results from chemical reactions between nitrogen oxides and volatile organic compounds, which are emitted from industrial facilities, power plants, vehicle exhaust, and chemical solvents.

In March 2008, the EPA lowered the 8-hour primary NAAQS for ozone to its current level of 75 parts per billion. In November 2014, the EPA proposed lowering the ozone standard to a range between 65 to 70 parts per billion. By court order, EPA must finalize the standard by October 1, 2015.

These new ozone regulations proposed by EPA will cause hundreds of counties across the country to be in violation of air laws. Out of compliance on ozone means less development, fewer jobs and the potential for significant and long-term damage to the economy. What’s worse, the new proposed ozone rules are being considered while the previous ozone regulations from 2008 have not been entirely implemented. States, counties and communities across the country are working to meet the current requirements, and a new stricter standard would result in more communities out of compliance.

According to a February 2015 economic study by the National Association of Manufacturers, a 65 parts per billion standard could reduce GDP by $140 billion, result in 1.4 million fewer jobs, and cost the average U.S. household $830 in lost consumption – each year from 2017 to 2040.[vii]

Conclusion

President Obama is making energy prices escalate due to stringent environmental regulations being promulgated by the EPA. Due to the timing of these regulations, most of the price increases will not be seen by the public until his second term is up. Nonetheless, the headway the United States made to bring manufacturing back to America is being threatened. The result will be a loss of jobs that we cannot afford.


[i] Atlantic, The EPA’s New Methane Rules for the Oil and Gas Industry, August 18, 2015, http://www.theatlantic.com/business/archive/2015/08/epa-methane-emissions-oil-gas-industry/401651/

[ii] The Economist, Coming home, January 19, 2013,http://www.economist.com/news/special-report/21569570-growing-number-american-companies-are-moving-their-manufacturing-back-united

[iii] Charlotte Observer, Textile manufacturing returns to Carolinas—by way of China, August 8, 2014,http://www.charlotteobserver.com/news/business/article9148256.html

[iv] Institute for Energy Research, http://instituteforenergyresearch.org/analysis/u-s-climate-deal-with-china-is-no-deal-at-all/

[v] Cato, http://www.cato.org/blog/spin-cycle-epas-clean-power-plan?utm_medium=twitter&utm_source=twitterfeed

[vi] Chamber of Commerce, Ozone National Ambient Air Quality Standards, June 29, 2015, https://www.uschamber.com/issue-brief/ozone-national-ambient-air-quality-standards

[vii] National Association of Manufacturers, Costliest Regulation in History Coming Soon, http://www.nam.org/Issues/Ozone-Regulations/

EDITORS NOTE: The featured image is courtesy of Shutterstock.

We Need a Magna Carta for the Regulatory State

It’s been 800 years since England’s King John signed the Magna Carta and acknowledged that a sovereign’s authority was limited.

Allan Meltzer and Kenneth Scott, both of the Hoover Institution, explain how this document planted the seed of the Rule of Law:

Although general agreement on the precise definition of the “rule of law” is lacking, most agree that it includes the principles that people should be secure in their person and property and that the state’s authority over others remains grounded in legitimate institutions so that no government can impose its will on another unchecked.

Rule of law is often summarized as equal treatment under the law.

By far the most important contribution of the Magna Carta to the rule of law was that King John accepted that his authority was limited, not absolute, and that the limitation was open to negotiation. From this beginning, the rule of law gradually replaced unrestricted sovereign authority.

Separation of powers, divided government, constitutionally enumerated powers. These concepts of limited government sprouted from the 13th Century agreement between barons and king.

From the Magna Carta’s seed to the tree of limited government, we’ve been blessed with economic gain:

The rule of law is found in all countries whose populations enjoy a high standard of living. No country that did not endorse the rule of law has ever developed a high standard of living. Freedom under the law and successful economic development occur together. In our current period, a country like China cannot expect to achieve full development without adopting the rule of law.

By adopting the rule of law, countries reduce uncertainty, which is the foundation of homegrown innovation. The rule of law, and the freedoms that it brings, explain why the United States innovates in the arts, technology and other areas.

However, while “the opportunity to extend the principles that started with the Magna Carta never ends,” Meltzer and Scott warn, “neither does the challenge to freedom.”

Take, for instance, the ever-encroaching Federal Regulatory State.

“The administrative process has become about how unelected officials make laws,” William Kovacs, the U.S. Chamber’s Senior Vice President for Environment, Technology & Regulatory Affairs, told the Senate Judiciary Committee. The Rule of the Regulators has trumped the Rule of Law:

Congress has enacted many broad and vague laws that delegated significant policy making authority to agencies, which have used that authority to fill in many of the legislative gaps. This “gap filling” authority is supported by the courts as they grant deference to agency decisions rather than being a strong check on agency power.

[ … ]

Agencies fill in so many “gaps” they make more law than Congress, all the while ignoring the impacts analyses that Congress requires. Meanwhile, the courts avoid dealing with the complexity by granting tremendous deference to agency decisions. And Congress has focused so intently on the problems with specific rules that it has ignored for almost seventy years one of the most important aspects of our complex society–that while regulators make many laws, all legislative power is still vested in Congress and Congress needs to better ensure that agencies carry out its intent.

For example, after taking three regulatory actions over a six-month period, one agency–EPA–will have extended its reach farther than ever before:

By the end of the year, all these regulations will have been imposed on an economy still trying to generate sustained economic growth and higher incomes for all Americans.

The regulators must be better regulated. We need a Magna Carta for the Regulatory State.

We need reforms to the regulatory process that restore accountability, offers transparency, provides meaningful public participation, and guarantees a safe but swift permitting process.

Americans need a regulatory system that works for them, not one that stifles their opportunities for a better life.

Meet Sean Hackbarth @seanhackbarth Follow @uschamber

EDITORS NOTE: The featured image is of a copy of the Magna Carta. Photo credit: Ed T. Licensed under a Creative Commons Attribution-ShareAlike 2.0 Generic license.

Obama administration in 2010 scraped CDC airline regulations considered critical to protecting Americans from infectious diseases like Ebola

With a growing concern about the Ebola pandemic we now learn that in 2010 the Obama administration scrapped expanded airline regulations that would have allowed people with various diseases, including Ebola, to be detained and quarantined immediately at U.S. airports. The new regulations would have required airlines report ill passengers to the Center for Disease Control (CDC).

The American Civil Liberties Union (ACLU) and Air Transport Association (ATA) were against adding the ability of officials quarantining passengers for up to three days if suspected of having infectious diseases such as: pandemic flu, infectious tuberculosis, plague, cholera, SARS, smallpox, yellow fever, diphtheria or viral hemorrhagic fevers such as Ebola.

In 2007, after an Atlanta man with drug-resistant tuberculosis drew international attention to the potential risks posed by infected air travelers, CDC Director Julie Gerberding testified before Congress that the proposed regulations would improve the agency’s ability to identify exposed passengers quickly.

Lt Cmdr Rendi Bacon

Lt. Cmdr. Rendi Murphree Bacon, a quarantine public health officer with the U.S. Centers for Disease Control, poses inside the isolation room at Chicago’s O’Hare International Airport. Photo by Charles Rex Arbogast, AP.

USA Today’s Alison Young in 2010 reported:

The Obama administration has quietly scrapped plans to enact sweeping new federal quarantine regulations that the Centers for Disease Control and Prevention touted four years ago as critical to protecting Americans from dangerous diseases spread by travelers.

The regulations, proposed in 2005 during the Bush administration amid fears of avian flu, would have given the federal government additional powers to detain sick airline passengers and those exposed to certain diseases. They also would have expanded requirements for airlines to report ill passengers to the CDC and mandated that airlines collect and maintain contact information for fliers in case they later needed to be traced as part of an investigation into an outbreak.

Airline and civil liberties groups, which had opposed the rules, praised their withdrawal.

The Air Transport Association had decried them as imposing “unprecedented” regulations on airlines at costs they couldn’t afford. “We think that the CDC was right to withdraw the proposed rule,” association spokeswoman Elizabeth Merida said Thursday.

The American Civil Liberties Union had objected to potential passenger privacy rights violations and the proposal’s “provisional quarantine” rule. That rule would have allowed the CDC to detain people involuntarily for three business days if the agency believed they had certain diseases: pandemic flu, infectious tuberculosis, plague, cholera, SARS, smallpox, yellow fever, diphtheria or viral hemorrhagic fevers such as Ebola.

[Emphasis added]

Read more.

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