Daniel J. Weiss and Valeri Vasquez in a CAP cross-post.
Political instability in the Middle East over the past month has driven parallel unrest in world oil prices. The drive for political freedom in the Middle East has rightfully captured the world’s attention but it has also roiled oil markets. Governments across the globe are worried that sustained unrest will escalate oil prices past $ 100 per barrel on their way to $ 120 or more, choking the struggling economic recovery in the United States, Europe, and elsewhere. One entity, however, is almost certain to benefit from this volatility: Big Oil companies.
On Friday, January 28, oil closed at $ 89 a barrel—$ 4 or 5 percent higher than the previous day. This leap reflected concerns that the Egyptian revolution would interfere with Persian Gulf oil transportation and deliveries. Prices returned to $ 85 a barrel when President Hosni Mubarak resigned on February 11, reflecting some stability.
While Egypt generates relatively little oil, Libya is an important producer, yielding 1.8 million barrels daily, or 2.1 percent of worldwide production. It is a vital oil supplier of sweet, light crude to Europe. Although the United States imports https://southcapitolstreet.com/files/css/rket._so_it_affected_the_u.s._gasoline_prices_when_the_more_violent_unrest_in_libya_boosted__a_href__jpco7cwnmypikmioz4atpc.css”http://www.livecharts.co.uk/futures_commodities/oil_prices_historical.php”>oil prices to $ 98 per barrel—a $ 12 or 14 percent leap—in a week. as foreign oil workers flee and unrest continues, a libyan supply disruption—and further price hikes—could follow. simmering unrest in bahrain, which produces 48,000 barrels per day, could increase prices further.
The lingering effects of the recent global recession amplify the impact of rising oil prices, since higher fuel prices affect the bottom line for families and businesses. In the past year, families have experienced a 13 percent and 17 percent increase in gasoline and fuel heating oil prices, respectively. Meanwhile, family incomes have stagnated.
High Frequency Economics notes that, “Higher crude oil prices affect the economies of oil-importihttps://southcapitolstreet.com/files/tag/price/ng_nations_like_a_tax_increase___8230.css; transferring purchasing power from consumers of energy to producers.” This could exacerbate economic problems in struggling nations such as Portugal, Ireland, Greece, and Spain.
The New York Times warned that in the United States:
A sustained $ 10 increase in oil prices would shave about two-tenths of a percentage point off economic growth, according to Dean Maki, chief United States economist at Barclays Capital. [He] estimates [the] increase would offset nearly a quarter of the $ 120 billion payroll tax cut that Congress had intended to stimulate the economy this year.
The Times also notes that higher oil prices would lead to lower consumer spending. This could smother the nascent economic recovery. Higher oil prices could also hike food prices.
A cutback in consumer spending reverberates through the economy by crimping businesses, making it less likely that employers will commit to the additional hiring needed to lower the 9 percent unemployment rate.
The rise in oil prices could also create a vicious cycle, as higher energy costs propel already rising food prices, which in turn can lead to more political unrest and more global uncertainty.
Americans sent nearly $ 1 billion a day overseas to pay for oil in 2010. These purchases make up nearly half of our trade deficit. And every dollar that leaves the country to buy a barrel of oil leaves the domestic economy never to return as investment to create jobs or growth.
While higher oil prices are bad news for the economy and families, oil price increases over the past decade have helped grow profits for the big five oil companies: BP, Chevron, ConocoPhillips, ExxonMobil, and Shell. It’s not a coincidence that these five oil companies set profit records in 2008, the same year that oil reached its all-time high of $ 147 per barrel. When oil prices crashed in 2009, so did profits. There is an exception. Even though prices rose last year, the costs of BP’s Deepwater Horizon disaster spilled red ink over its otherwise healthy balance sheet, lowering the big five companies’ total profits by $ 17 billion. Rising oil prices may be bad news for families but they are generally excellent news for Big Oil.
Turmoil in the Middle East does not impact the intrinsic value of crude oil. It has no effect on extraction technologies or labor intensiveness of oil production or refinement. These costs are relatively fixed. So as prices are driven higher by fears of future supply disruptions or shortages, the oil the companies have is worth more, and profits rise too. This tandem price-profit rise is characteristic of the oil industry, as the chart above demonstrates.
Given the large profits for Big Oil, retaining tax loopholes for these companies while cutting vital federal investments makes no fiscal sense. The unnecessary loopholes provide nearly $ 4 billion annually to the oil industry, funds that President Obama now proposes to invest in clean energy programs.
For instance, oil companies can exploit the tax break designed to keep domestic manufacturers on shore. Former CAP Senior Policy Analyst Sima Gandhi described the absurdity of extending this special tax break to Big Oil and gas companies since they cannot move an onshore or offshore oil field to another nation.
Companies that manufacture, produce, or extract oil and gas or any primary derivative receive a manufacturing subsidy provided that the product was made in the United States. But since removing this subsidy does not affect the production of oil [in the United States], the subsidy does not significantly affect business decisions.
Big Oil companies could also benefit from as much as $ 53 billion in unpaid royalties from their production of oil from federal waters—oil owned by American taxpayers. Rep. Ed Markey (D-MA), ranking Democrat on the House Natural Resources Committee, attempted to halt this huge taxpayer rip-off by offering an amendment to the House Republicans’ fiscal year 2011 budget.
The amendment to the Republicans’ spending bill would have fixed a flaw put in place by a Republican-controlled Congress in 1995 and seek to recover funds from faulty drilling leases in the Gulf of Mexico that allow oil companies to drill without paying any royalties. The Government Accountability Office (GAO) has estimated that taxpayers could lose up to an additional $ 53 billion over the next 25 years as a result of royalty-free drilling when oil prices are high. The Interior Department also informed Rep. Markey that American taxpayers will lose $ 1.5 billion just this year from this free drilling.
Unfortunately, his amendment lost on a vote of 174-251. Only 11 Republican House members (5 percent of the caucus) voted to end this costly practice while 25 Democrats (13 percent of the caucus) voted to maintain these handouts.
Instability in nations with oil reserves threatens the production, transportation, and deliveries of oil. Since oil prices are set on the world market, such events affect the world oil price. Therefore, it matters very little that the United States imports minimal amounts of crude from Libya and Algeria and none at all from Iran. Unrest in these nations will raise prices and slacken our economic recovery. Meanwhile, higher prices will mean pain at the pump for families and higher profits for Big Oil companies.
Long-term measures are essential to dramatically reduce our dependence on oil. But some immediate steps would help reduce the pain at the pump. Given that Big Oil will likely profit from Americans’ misery at the pump, we should first end the tax loopholes and royalty relief granted to Big Oil companies to recoup some of these lost tax dollars. To minimize price shocks, President Obama should sell 30 million barrels of oil from our full emergency reserves and invest the $ 3 billion from sales into public transit such as buses and subways. These steps would cut federal spending, reduce prices, and reduce demand while Big Oil companies continue to make big profits.
– Daniel J. Weiss is a Senior Fellow and Director of Climate Strategy at the Center for American Progress. Valeri Vasquez is the Special Assistant for Energy Policy at the Center. And thanks to Adam Hersh, Economist at the Center.
Hamp II –
It’s what we’ve predicted; Obama will let the banksters off the hook for some minor commtments to “help” some mortgage holders, in a manner and style of the banksters’ choosing, it appears.
Does this include a rewrite to mortgage law to make MERS legally fine and dandy? Will states have any say in this?
Seeing Sarah Palin’s recent witticism:
It’s no wonder Michelle Obama is telling everybody you need to breast feed your babies … the price of milk is so high!
I was reminded of Dan Quayle’s quip during the 1988 campaign:
The governor of Massachusetts, he lost his top naval adviser last week. His rubber ducky drowned in the bathtub.
And this got me wondering: how often do legitimate political figures-not talk show hosts, but actual politicians-communicate via schoolyard-style taunts?
I’m not talking here about dry wit of the Bob Dole or Morris Udall variety, or political gamesmanship such as Ronald Reagan’s “make my day,” or flat-out partisanship like Alan Grayson’s “the Republicans want you to die quickly” or James Watt’s line about “liberals and Americans.” It’s gotta be an actual joke.
There must be some other examples of Palin/Quayle style humor, but I’m not sure where to look.
I keep thinking of Veronica Geng’s hilarious story which includes the line:
In 1950, when Shaw died, his last words were “Don’t tell L.B.J. I don’t want to give him the satisfaction.”
P.S. In case you’re wondering, here’s the price of milk:
The price has declined since 2008 with a slight rebound during the past year. The monthly data stop in Dec 2010 but maybe there’s a big spike during Jan-Feb 2011. I did find this document saying that nonfat dry milk has increased in price by 8% in the past month, so maybe there’s something going on. Although of course this is pretty much irrelevant to choices of how you feed your baby.
P.P.S. The Daily News reports that Palin “made the crack during an appearance at a Long Island country club.” Country club Republicans, indeed.
Back in the American Wild West, federal and state governments often put a price on the heads of infamous outlaws like Billy the Kid, Jesse James, Sam Bass, Belle Star and Butch Cassidy and the Sundance Kid.
Today, our government is not so selective. It's seeking to put a price on the head of every American. Not because they've robbed a train, but for a different reason that could lead to a very bad end.
Various government agencies have come up with formulas for determining how much we are worth. The Environmental Protection Agency (EPA) has set the value of a human life at $ 9.1 million. It reached this determination while proposing tighter restrictions on air pollution. During the Bush administration, EPA calculated our value at $ 6.8 million. Was the difference in price caused by inflation? The EPA didn't say.
The Food and Drug Administration (FDA) arrived at its own figure for the value of an American life. It says each life is worth $ 7.9 million. That, too, is an increase from the $ 5 million value FDA had assigned each human American life in 2008. The agency calculated our value while proposing new and tougher warning labels on cigarettes that include pictures of cancer victims.
The Transportation Department — yes, Transportation — put our worth at $ 6 million while seeking to justify recent decisions to impose regulations the Bush administration had rejected as too costly, such as stronger roofs on cars.
It's nice to know that our government values its citizens beyond what it can extract in taxes. But given the Obama administration's likely pursuit of health care rationing (Dr. Donald Berwick, a wealth redistributionist who heads the Centers for Medicare and Medicaid Services, is a proponent of rationed care) it is easy to forecast where this could lead should human life be regarded as having only that value placed upon it by government, or an agent of the state.
The beauty of our form of government is that it begins, not with government, but with us: "We the People." In our Declaration of Independence from Britain, there is a clause that sets us apart from virtually all other nations. Instead of receiving our basic rights, such as the right to life, from a king or despot — as was the case in older cultures and too many modern ones — America's Founders saw basic rights emanating from "our Creator" and thus, outside the reach of government and bureaucratic tampering.
Where could a formula for a governmental valuation of human life lead? If government gets to determine our worth, it could lead to government determining when in its judgment we are worthless. It could lead to government deciding that when we are costing the state more than we are paying in taxes, we might be seen as a bottle, package or can, whose "sell by" date has expired. And that would mean the government could regard us as disposable and allow — or force us — to "expire."
Too extreme? "It couldn't happen here," you say? All great horrors begin at the extremes and work their way into the mainstream because of moral weakness or exhaustion, or self-regard, or the rejection of (or ambivalence about) certain fundamental truths. Such neglectfulness paves the way for the great inhumanities, which today are studied in schools. They wonder, "how it could have happened" and "why didn't anyone see this coming?"
How and why, indeed? Consider yourself warned.
(Direct all MAIL for Cal Thomas to: Tribune Media Services, 2225 Kenmore Ave., Suite 114, Buffalo, N.Y. 14207. Readers may also e-mail Cal Thomas at [email protected]
Dana Goldstein attempts to defend “last in, first out” layoff policies for public school teachers:
In education, reasonable people have been disagreeing, for decades and decades, about how to define and measure good teaching. LIFO has become standard practice because in the absence of such agreement, it has one great advantage: LIFO can be applied completely objectively.
Life is full of situations that demand you to make decisions under conditions of uncertainty. In almost all cases, the right thing to do is to try your best not to simply give up. Note that since teacher compensation costs increase as a function of experience, LIFO is actually worse than the equally objective practice of firing teachers at random. LIFO maximizes layoffs relative to financial targets. Doing layoffs by lottery would allow districts to fire fewer teachers.
But of course doing layoffs by lottery would be a pretty silly way to run an organization. Adopting any criteria, no matter how imperfect or contestable, that had any correlation to performance whatsoever would be an improvement over random firing. Measuring job performance is hard in any field, and it’s hard in teaching. But is it so hard that we really couldn’t do better than firing people at random? Note that if it really is completely impossible to obtain actionable information about teacher quality, then suddenly the case for forcing teachers to swallow dramatic pay cuts looks pretty strong. I don’t buy it. I think hiring good teachers is important, and part of that is thinking that it’s possible to obtain information about which teachers are the good ones. But if you seriously think we can’t, then we should at least shift to random firing.
Back in July I wrote about uber-hedge fund manager Jeremy Grantham, a self-described “die hard contrarian,” telling it like it is in his blunt 2Q 2010 letter (see “Grantham: Everything You Need to Know About Global Warming in 5 Minutes“).
He wrote back then, “Global warming will be the most important investment issue for the foreseeable future.” He went through the basics of climate science and then wrote:
Do we believe the whole elite of science is in a conspiracy? At some point in the development of a scientiﬁc truth, contrarians risk becoming ﬂat earthers.
He noted that “the obfuscators of global warming actually use the same “experts” as the tobacco industry did” and wondered, “Have they no grandchildren?”
Grantham has earned his contrarian cred the legit way. He is Chairman of the Board of Grantham Mayo Van Otterloo (GMO), which has “more than US $ 107 billion in assets under management as of December 2009. Grantham is regarded as a highly knowledgeable investor in various stock, bond, and commodity markets, and is particularly noted for his prediction of various bubbles.”
In his January 2011 newsletter, “Pavlov’s Bulls,” he has a discussion of climate and commodity prices (emphasis in original):
Commodities, Weather, and Markets
Climate and weather are hard to separate. My recommendation is to ignore everything that is not off the charts and in the book of new records. The hottest days ever recorded were all over the place last year, with 2010 equaling 2005 as the warmest year globally on record. Russian heat and Pakistani fl oods, both records, were clearly related in the eyes of climatologists. Perhaps most remarkable, though, is what has been happening in Australia: after seven years of fierce drought, an area the size of Germany and France is several feet under water. This is so out of the range of experience that it has been described as “a flood of biblical proportions.” More to the investment point: Russian heat affects wheat prices and Australian floods interfere with both mining and crops. Weather-induced disappointment in crop yield seems to be becoming commonplace. This pattern of weather extremes is exactly what is predicted by the scientific establishment. Snow on Capitol Hill, although cannon fodder for some truly dopey and ill-informed Congressmen, is also perfectly compatible. Weather instability will always be the most immediately obvious side effect of global warming.
For more on this, see my series “food insecurity” (and Russian President Medvedev: “What is happening now in our central regions is evidence of this global climate change, because we have never in our history faced such weather conditions in the past” and Terrific ABC News story: “Raging Waters In Australia and Brazil Product of Global Warming”).
Grantham, who launched the Grantham Institutes for Climate Change and the Grantham Research Institute on Climate Change and the Environment, seems to be one of the few big investors who really gets climate change. What is especially interesting about this new newsletter is his discussion of resource limitations:
Resource Limitation Note
For my money, resource problems exacerbated by weather instability will be our biggest and most complicated investment problem for years to come. How should we prepare for it? First, we should all transfer more of our intellectual resources to the problem. Yes, we have already recommended forestry, agricultural land, and “stuff in the ground.” It would be nice to back this up with more detail. To this end, we are starting to look more closely at commodity cycles, both historically and currently. We will report back from time to time.
By the way, the good news is that our long-term bubble study, started in 1998, has become a monster. Formerly a study of the handfuls of famous, accepted investment bubbles, we are now well into a statistically rigorous review of primary, secondary, and possibly even tertiary bubbles, and now count a stunning 320 completed bubbles. For now, we do not intend to make our complete review generally available, but we will review some interesting “average” bubble behavior in a few months.
So, we do know some useful stuff about commodities. The complicating point is that in the recent few years, commodities seem to be making a paradigm shift. If this is so, it will be the most important paradigm shift to date. The bad news is that paradigm shifts cannot, by definition, be described well using history. It is all about judgment. Now there’s a real problem.
In short, we are entering those infamously uncharted waters, thanks to global warming, peak oil and food insecurity, among other things. To make that point explicitly, Grantham ends:
Things that Really Matter in 2011 and Beyond (in one person’s view) for Investments and Real Life
- Resources running out, putting strong but intermittent pressure on commodity prices
- Global warming causing destabilized weather patterns, adding to agricultural price pressures
- Declining American educational standards relative to competitors
- Extraordinary income disparities and a lack of progress of American hourly wages
- Everything else.
Grantham gets it. Too bad his fellow contrarians (and much of the media) don’t.
- S. Korean President: “There is an increasing likelihood of a food crisis globally due to climate change.”
- Washington Post, Lester Brown explain how extreme weather, climate change drive record food prices
- The Economist: “The high cost of food is one reason that protesters took to the streets in Tunisia and Egypt”; Nobelist Krugman: “It sure looks like climate change is a major culprit” in the extreme weather that has run up food price
- As floods and extreme weather devastate the world, CBS News explains the link to global warming.
Rep. Tom Price of Georgia delivers today’s Weekly GOP Address. Price talks about spending cuts, including the Republican plan to slash $ 100 billion in spending.
***Cross-posted at News Real Blog***
He joked about it this week on his radio show:
Glenn has been warning about rising food prices, and he plans to prepare by eating as many McGriddles as possible.
“Corn, sugar, wheat, beef, pork, and coffee, the prices are already soaring. Cotton prices are near their highest level in more than a decade. Clothing prices are going to go up they say 10 to 30% in the next few weeks,” he said.
Vegetable prices are rising as well, and Glenn said that due to the costs he may not have to embark on his new vegan/stick/soy/really disgusting food diet.
The World Bank delivered a stark warning of the impact of the rising cost of food Tuesday, saying an estimated 44 million people had been pushed into poverty since last summer by soaring commodity prices.
The group’s president, Robert Zoellick, says global food prices have hit “dangerous levels” that could contribute to political instability, push millions of people into poverty and raise the cost of groceries.
Nothing but scare tactics from the left’s favorite “buggin’” punching bag? You might be able to convince yourself of that so you can sleep at night.
Just don’t open your eyes at the grocery store, read any signs, or talk to any produce stock clerks.
I had to run to my local Walmart last night, a common occurrence when you’re a mother of teenage-ish boys. It seems no matter how carefully you list everything when you do your “big shopping,” you either always forget something or some “gotta have it tonight!” moment appears out of nowhere, usually after 7 pm.
So there I was, strolling through produce, about to grab some nectarines that I thought were .68 cents per pound when my casual comment on how cheap they were elicited the thoughtful caution from the clerk that they were actually .68 cents each.
“Each???” Naturally, I was incredulous. I love nectarines, and couldn’t believe my luck at finding them so early in the year.
“That’s nothing,” she said, and waved me over to the Roma tomatoes, the smaller, oval-shaped red beauties that I love for salads and my favorite Italian dishes and a staple for all who love spaghetti. “See these Romas?”
“See how they’re $ 1.64 per pound? Well, two weeks ago I left work on a Friday and they were .84 cents per pound. When I came to work Monday morning, they were $ 1.64.”
I literally felt my eyes bug out of my head. I’d always wondered if that ever happened outside of cartoons, Glenn Beck, or Marty Feldman.
Once my baby greens were safely back in their sockets and I could breathe again, I asked her if anyone had said anything about the 100% increase in price over a two day period.
“Nope. I’ve commented on it to several people, but until now, none of them seemed to have grasped the seriousness of it.”
“It’s going to get much, much worse,” I said, then felt my gut tighten. Why did I say that?
“You feel it too?” she practically whispered.
We chatted a moment about Egypt and the fun of Islammunist dominoes we got to watch every day, how she had cut back on coffee due to the price increases in the past few months, skyrocketing gas prices, which always affect commodities, and the ominous Iranian cloud headed for the Suez Canal and Syria. For those few minutes of fresh fruit bonding, we held a secret that everyone around us seemed determined to ignore—that this 100% increase in a two day period was more than just your usual economic glitch.
And then it was time to check out and get home.
I spent most of today pondering on this, until right around 4 pm when my youngest asked if we had any ginger ale for his upset stomach.
Yep, you guessed it. At least it wasn’t 7pm.
So as I headed back toward the soda aisle I had to pass the produce section. I just happened to glance up and there it was, in a newly-arranged center aisle display: Roma Tomatoes…$ 2.34 per pound. It was an increase of .70 cents per pound. That’s about a 43% increase in price.
And this time, it hadn’t been two days. It hadn’t even been a full 24 hours yet.
Old Bug Eyes re-appeared, and the same clerk from the night before recognized my awesome fringe jacket and my shocked-by-tomatoes-face immediately. She gave me “that look” and a weak smile.
“Well, you said just last night that it was going to get much worse. I just didn’t think it would happen in less than a day.”
I guess we are no longer down to days, but to hours, spaghetti sauce is no longer the cheapest meal you can make, and Armageddon is going to look very, very ugly.
If Glenn Beck is crazy for daring to say “out loud” what is clearly happening, then buggin’ is the new normal. We’re all crazy now.
Keep the faith, bros, in all things courage, and no substitute for VICTORY.
This pretty much sums up the relationship between American citizens and their arrogant rulers in the “post-racial” age of Obamunism:
Tuesday’s Dallas County Commissioner’s Court meeting erupted into an argument between Commissioner John Wiley Price and a citizen, ending with Price repeatedly telling several citizens to “go to hell.”
The exchange started during the public speaking portion of the meeting, which happens after the commissioners have gone through their weekly agenda.
Price’s ignorance of court rules resulted in the nasty exchange with constituents. When the meeting was adjourned,
As Price stood to leave, he looked at Turner and the five other citizens who addressed the court. Price said to them, “All of you are white. Go to hell!”
Price repeated “go to hell” three more times. An unknown member of the audience said, “You should be ashamed!”
“I’m not ashamed!” Price answered. “I’m not ashamed! Go to hell!”
For the icing on the cake, Price defended himself by denouncing the citizens as racists.
In the past, Price has revealed that the terms “black hole,” “devil’s food cake,” “angel’s food cake,” and “black sheep” are racist.
The joke isn’t funny anymore. It’s time to revoke everybody’s race card.
On a tip from J.
A reminder that a certain level of arbitrariness invariably creeps into any cost-benefit calculus comes from Binyamin Applebaum’s article on how Obama-era regulatory agencies tend to value life more than did its Bush-era predecessors (also a reminder that partisan control of the White House matters in a lot of below-the-radar ways). The interesting thing is that the US government as a whole doesn’t have a consistent line on this:
The Environmental Protection Agency set the value of a life at $ 9.1 million last year in proposing tighter restrictions on air pollution. The agency used numbers as low as $ 6.8 million during the George W. Bush administration. The Food and Drug Administration declared that life was worth $ 7.9 million last year, up from $ 5 million in 2008, in proposing warning labels on cigarette packages featuring images of cancer victims. The Transportation Department has used values of around $ 6 million to justify several recent decisions to impose regulations that the Bush administration had rejected as too expensive, like requiring stronger roofs on cars.
The gap between the EPA and the DOT is downright gigantic. It amounts to running a buy two get one free sale on human life in transportation-related mishaps. Meanwhile, I would say the case that we’re overemphasizing terrorism as a problem is basically sealed by the fact that “A report last year financed by the Department of Homeland Security suggested that the value of preventing deaths from terrorism might be 100 percent higher than other deaths.” We should not let 1,000 people die in car accidents or of pollution-related illness in order to prevent a terrorism from killing ten people somewhere. Violent murder is awful, and we should try to stop it, but having your husband die in a construction mishap or your wife be killed a drunk driver is also awful.
Meanwhile note that while there certainly are misguided regulations in this country, it’s not like what the business community wants is to rescind a couple dumb rules and streamline things. They’re very upset about the higher valuation of human life, because their goal is to maximize profit by any means necessary up to and including getting people killed.
|Rep. Tom Price (R-GA)|
Rep. Tom Price (R-GA) has submitted an appropriations amendment to completely defund the National Labor Relations Board. Last year, using a recess appointment, named radical union lawyer Craig Becker to the NLRB.
Becker has advocated using regulatory agencies to institute union card check-which eliminates the right of workers to a secret ballot election when asked if they want to join a union.
Democracy often moves slowly, but the separation of powers that the Founding Fathers had in mind when the Constitution was written is balancing the ship.
As the union-controlled National Labor Relations Board continues its job-killing push to unionize America’s workplace—including deciding whether to break-up and unionize company employees by classification—Republican Congressman Tom Price (GA) has introduced an amendment to completely defund the NLRB through the end of FY 2011.
[via Labor Relations Today]
The House continues its consideration of H.R. 1, the Full-Year Continuing Appropriations Act for FY2011. This bill, if passed, will make appropriations for the continuing operation of the various federal government agencies through September 30, 2011. As reported by The Hill several hundred additional amendments have recently been introduced, which are taking up considerable time in the debate.
Among the amendments introduced is C.R. 578, introduced by Rep. Tom Price (R-GA), to defund the National Labor Relations Board, as follows:
At the end of the bill (before the short title), insert the following:
Sec. __. None of the funds made available by this Act may be used to pay the salaries and expenses of personnel to carry out and implement the National Labor Relations Act (29 U.S.C. 151 et seq.)
Given the current anti-business and anti-worker tenor of the NLRB, its declining caseload, as well as the blatant shilling the current NLRB is doing at the behest of union bosses, a defunding of this union-corrupted agency would be a welcome step to making it easier for America’s job creators to create jobs.
“I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes.” Thomas Paine, December 23, 1776
The price for Prince Albert
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Over the past few months, over a half-dozen Republicans have stepped out to publicly support a potential shutdown. Some GOP veterans are calling to shut down the federal government, including Reps. Louie Gohmert (R-TX) and Steve King (R-IA). But it’s the freshmen in Congress, including Sen. Mike Lee (R-UT) and Reps. Alan Nunnelee (R-MS), Tim Walberg (R-MI), Lynn Westmoreland (R-GA), and Steve Womack (R-AR), who are chomping at the bit for a government closure.
Now, with Congress gearing up for a major budget showdown that could result in a shutdown if a funding agreement is not reached by March 4, the GOP is struggling to settle on its strategy. Many Tea Party congressmen and other conservative ideologues won’t be satisfied with anything less than draconian spending cuts. Rep. Gohmert summed up their position: “If it takes a shutdown of government to stop the runaway spending, we owe that to our children and our grandchildren.” However, cooler heads on the right remember the 1995 shutdown and recognize a government closure will cause great harm to the nation.
The congressman whose job it is to corral these divergent views in the Republican caucus is House Majority Leader Eric Cantor (R-VA). When pressed, an “exasperated” Cantor finally sided with Republican realists, telling Fox News yesterday that “we ought to get [a government shutdown] off the table.”
However, Cantor’s proclamation hasn’t persuaded his entire caucus. During last weekend’s Conservative Political Action Conference, ThinkProgress spoke with House Republican Policy Committee Chairman Tom Price (R-GA), the number five in GOP congressional leadership. We asked Price about whether the GOP would be willing to shut down the federal government over the budget fight, particularly defunding health care reform. Despite Cantor’s insistence that a shutdown was “off the table,” Price told us that “everything ought to be on the table”:
KEYES: And if [defunding health care reform] comes to a head, do you think shutdown should be off the table?
PRICE: Everything ought to be on the table. But I don’t think the president is going to go there. I don’t think he wants to shut down the government based on this law.
Linda Bilmes, a professor at Harvard’s John F. Kennedy School of Government who led a seminar for dozens of freshmen members of Congress, argued that freshmen GOPers are eager to shut down the government in order to prove their conservative mettle. Indeed, they are already flexing their muscles against the GOP leadership in a number of areas, including the size of proposed budget cuts and defeating an extension of the PATRIOT Act.
Now, as the budget fight draws closer to a head, Republican infighting is likely to continue, even among the GOP leadership.
By Michael F. Cannon
A colleague forwarded me a letter his friend received from their local hospital. The friend needs surgery. His health insurance has a very high deductible, so he figured he would do some comparison shopping. He asked the local hospital to quote him a price. Here’s how the hospital responded:
[This] hospital typically charges between $ 2,360.45 and $ 22,290.74 for this procedure or service. This is an estimate only…
Our goal is to provide you with the most informed and accurate estimate of the cost of your treatment. If circumstances result in a final bill that exceeds this estimate by more than 20%, we will work together with you to resolve the balance.
For surgical services, the price quote does not include any physicians’ charges. The surgeon and/or anesthesiologist will bill you separately for his or her time.
That price range varies nine fold, or 11 fold if you count the additional 20 percent. Translated from Hospitalese into English, the letter essentially said:
Our hospital faces so little competitive pressure, we’re just going to blow you off.
If you do have your surgery here, don’t even think about complaining about the bill unless it exceeds $ 27,000.
Or even then.
The hospital noted — correctly — that “people react in their own individual way to surgery.” Those individuated reactions could easily lead to an 11-fold cost variation for the same procedure. That information is useful to a hospital. It is not useful to a patient who is trying to find the lowest-cost hospital.
One would expect hospitals (or ambulatory surgery centers) to find some way to cope with the uncertainty about costs and provide useful price information to patients. For example, hospitals could offer the same flat price for each procedure; the flat price would cover the higher costs of patients who experience complications. Or they could quote higher prices to patients who have risk factors associated with complications. While they’re at it, they could also include the physicians’ charges. In a competitive market, hospitals that didn’t do these things would lose customers to hospitals that do.
The problem is that most hospitals do not operate in a competitive market. Many states pass regulations that block entry by new hospitals. Government interventions from Medicare to the tax exclusion for employer-sponsored health insurance block the creation of health systems that face greater incentives to offer a single “package” price and to reduce the uncertainty associated with surgical complications. Those same interventions also encourage excessive health insurance, which reduces the share of patients who pay out of pocket for surgeries in this price range. That reduces the demand for useful price information.
Price transparency is not a problem for government, private insurance companies, or employers. They control the money, so they get all the price information they demand. If we want to give patients useful price information, we need to let patients control the money.