January 2012

The Missouri Home Care Union: A burden for taxpayers, and home care workers alike

by John Eskew on January 21, 2010 · 3 comments

in Labor

In Missouri, the American Federation of State, County, and Municipal Employees (AFSCME) and the Service Employees International Union (SEIU), have formed a coalition known as the Missouri Home Care Union. The two unions are now holding another election to unionize home care workers, after having the results of the first union election overturned. The union is seeking to represent about 13,000 home care workers. Home care workers as government employees?

As CEI Editorial Director Ivan Osorio and his co-authors note in their study of public-sector unions recently published by the Cato Institute, this tactic is not new. Evidence has shown that public-sector unions are an enormous burden to taxpayers. Additionally, well-funded unions create a permanent constituency for Big Government. The Missouri example follows the same pattern as the models established in California, Oregon, and Washington state for unionizing home care workers who look after disabled and elderly residents.

Some unions are now trying to expand the definition of “public” by trying to organize government contractors. Washington state provides a good example of this. There, the trend began in 2001, when voters approved a ballot measure, Initiative 775, to allow independent long-term health care providers to unionize and bargain collectively over hours, compensation, and working conditions. Then in 2007, Washington state authorized collective bargaining for adult home care providers who receive Medicaid and other state aid. Stretching the definition of “public employee” to any home-care provider who may contract with the state can give a public employee union a foothold in the private sector.

The roots of the Missouri unionization campaign started with a proposition on the November 4, 2008, ballot–Proposition B.

The language of the bill was harmless enough, “Shall Missouri law be amended to enable the elderly and Missourians with disabilities to continue living independently in their homes by creating the Missouri Quality Homecare Council to ensure the availability of quality home care services under the Medicaid program by recruiting, training, and stabilizing the home care workforce?”

The exact cost of this proposal to state governmental entities is unknown, but is estimated to exceed $510,560 annually. Additional costs for training are possible. Matching federal funds, if available, could reduce state costs. It is estimated there would be no costs or savings to local governmental entities.

Unions are never mentioned in the ballot initiative. The Associated Press wrote, “The ballot summary shown to voters said nothing about making it easier for in-home care providers to unionize.” The proposition passed overwhelmingly 75.3 percent to 24.7 percent. The SEIU was quite disingenuous and deceptive in getting Proposition B passed, having donated $936,575 for the effort.

After the election, the union organizing campaign went into full swing. Home care providers voted overwhelmingly in July to be represented by the new union, after being promised better wages and more hours by union organizers. Those election results were challenged in court by Integra Healthcare Inc., which alleged various procedural flaws. It also alleged that the Missouri Quality Homecare Council violated the state Sunshine Law by meeting without first posting a public notice and without keeping minutes.

A Missouri judge has barred the July election results from being counted and stated that a new election is necessary. He also ruled that the Missouri Quality Homecare Council had violated the state Sunshine Law. The union twisted the ruling around on its website, stating that the rerun of the election is happening at the union’s request.

The unionization process is fundamentally flawed, as it would place additional requirements on home care workers working under the Medicaid system, and increase overall health care costs. Additionally, it would cost far more than the $510,560 estimated in the proposition. Moreover, state programs already exist to keep patients in their homes. In short, the effort is mostly about expanding the ranks of the SEIU and AFSCME.

Missouri governor Jay Nixon has cut 1,800 state jobs in his first two years in office, and his recent budget recommendations call for $253 million in cuts, $121 million from Medicaid. Thus, even if the rerun of the union election is successful, home care providers will be stuck paying union dues, while getting nothing in return. This is yet another glaring example of tax payers and workers alike getting burned by public-sector unions.

A Good Day for Freedom of Speech

by Ryan Young on January 21, 2010 · 3 comments

in Legal, Personal Liberty, Politics as Usual, Regulation

“If the First Amendment has any force, it prohibits jailing citizens for engaging in political speech.”

-Justice Anthony Kennedy, introducing today’s Citizens United decision.

Precisely. The correct way to rebut unwelcome speech is not to silence it. It is to counter it with more speech. Let the best arguments win. Advocating speech restrictions is a fancy way of saying, “my arguments are too weak to withstand criticism.” Get better arguments, then!

Free speech issues aside, there is a reason why McCain-Feingold is informally known as the Incumbent Protection Act. It stacks the deck against challengers. No wonder so many incumbent politicians from both parties have come out against today’s decision. It’s bad for their job security.

“Big, bad banks” — a “faux-populist” response

by Fran Smith on January 21, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Politics as Usual, Regulation

Uh-oh.  It was speculation yesterday, but reality today - President Obama and the Democrats have the banking industry in their sights with their trigger fingers itching.  It’s their populist response to the “Massachusetts Miracle” election of Republican Scott Brown.  After reviewing the election results and polling numbers, they probably finally realized that “We the People” don’t want a cobbled-together, trillion-dollar health care plan rushed through Congress.  Nor do they want a cap-and-trade bill that will restrict energy use and jack up their energy costs.  Neither do they want more spend-and-tax schemes that leave them holding the bag.

Picture White House advisors plotting:  ”So what else makes People mad that we can use to get popular with the People again?” “Big, Bad Banks! Big, Bad Banks!” is the answer and is likely to be the Democrats’ populist slogan in this mid-term election year.

So President Obama today said that he will be cracking down on big banks and restricting their activities.  And , if they don’t turn over and play dead, he warned:

“If these folks want a fight, it’s a fight I’m ready to have.”

Congressman Scott Garrett (R-NJ) was right on target with his response to President Obama’s announcement.   Garrett attacked what he called Obama’s “faux populism” in jumping quickly – in the wake of the Massachusetts election — to paint the banks as the sole villains in the financial debacle, while ignoring Fannie Mae and Freddie Mac:

Garrett said in his press release:

“What is indisputable is that Fannie Mae and Freddie Mac were central to the mortgage market meltdown, which ignited the economic crisis that has left millions of Americans unemployed and has yet to be resolved. It is laughable that Chairman Frank and the Obama Administration have ignored their parasitic effect on our economy, yet proclaim the desire for reform. Passing strong GSE reform legislation should be at the top of the agenda of the House Financial Services Committee this year, in order to stabilize the mortgage market and alleviate risk to the taxpayer.  Any financial regulatory reform that does not reform Fannie Mae and Freddie Mac is not true reform.”

That’s a point that CEI’s John Berlau has long made.  In a statement today on President Obama’s announcement, Berlau pointed to the likely consequences of the President’s ill-conceived plans, which he termed “Glass-Steagall 2.0″:

What it would do is hurt economic recovery, reduce types of financing available to businesses big and small and give European and Asian financial services firms a huge competitive advantage over their U.S. counterparts.

“In short,” Berlau concluded, “The biggest systemic risk is that of hazardous government subsidies to and regulation on the financial sector.”

Obama’s Glass-Steagall 2.0 could crash financial system

by John Berlau on January 21, 2010

in Bailout Watch, Culture, Deregulate to Stimulate, Economy, International, Mobility, Politics as Usual, Precaution & Risk, Regulation, Trade, Zeitgeist

President Obama’s proposal today to bring back 1930s-like separation of commercial and investment banks, dubbed Glass-Steagall II or Glass-Steagall 2.0,  would do little to prevent the problem of financial institutions being too big to fail. What it would do is hurt economic recovery, reduce types  of financing available to businesses big and small and give European and Asian financial services firms a huge competitive advantage over their U.S. counterparts.

 

The president’s proposed regulation would leave U.S. banks, in the phrasing of American Enterprise Institute scholar and former Treasury Department official Peter Wallison, “too big to fail or succeed.” The proposal puts forth nothing to stop bailouts or modernize bankruptcy laws to make failure less systemic. Instead it reintroduces a Depression-era structure for banking used nowhere else in the world. And it does nothing to stop the size or systemic dangers of the government-created financial giants Fannie Mae and Freddie Mac that were at the center of the mortgage crisis.

 

Repeal of Glass-Steagall, which took place in 1999 with the Gramm-Leach-Bliley law that passed Congress overwhelmingly and signed by President Bill Clinton, had little to do with the mortgage meltdown at the center of our economic woes. Neither Bear Stearns nor Lehman Brothers were affiliated with commercial banks. Goldman Sachs and Morgan Stanley only became bank holding companies after they got into trouble. As for the commercial banks that imploded – such as IndyMac, Wachovia, and Washington Mutual – all went bust “by investing in bad mortgages or mortgage-backed securities, not because of the securities activities of an affiliated securities firm,” Wallison, who is also a member of the Financial Crisis Inquiry Commission, has noted.

 

In fact, the crisis may have been much worse had Glass-Steagall still been in place. As former President Clinton pointed out, Glass-Steagall repeal “has helped stabilize the current situation” by allowing mergers of commercial and investment banks, such as that of Bank of America and Merrill Lynch, to go “much smoother than it would have been” when the law mandated a strict separation.

 

What’s needed is updating of the bankruptcy laws for commercial banks, investment banks and combined operations, so that taxpayers are not holding the bag for any of them. Even before the bailouts, longstanding deposit insurance hazards engendered moral hazard by allowing depositors to chase the highest interest rate without inquiring at all to the safety and soundness of the bank.

 

Government entities and policies that encourage reckless lending, such as Fannie, Freddie, and the Community Reinvestment Act also need to be abolished or phased out.

 

Meanwhile healthy competition and innovation should be encouraged among all types of financial institutions to get credit to the entrepreneurs who will jumpstart our economy. Congress should raise limits on credit unions’ ability to engage in business lending. Community banks should be allowed to raise capital without going through the onerous accounting mandates of Sarbanes-Oxley, especially since they already go through stringent audits from bank examiners. And the Federal Deposit Insurance Corporation should lift the moratorium preventing retailers such as Wal-Mart, Home Depot, and units of Berkshire Hathaway form forming their own limited banking operations.

 

In short, the biggest systemic risk is that of hazardous government subsidies to and regulation on the financial sector.

 

 

 

 

Regulation of the Day 102: The Size of Banks

by Ryan Young on January 21, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Politics as Usual, Regulation, Regulation of the Day

Louis Brandeis was a hero of the Progressive Era. One of the central tenets of his philosophy is that when it comes to business, big equals bad. Even if consumers benefit. Doesn’t matter. Big is bad.

This is not an exaggeration. Business historian Thomas McCraw wrote that “a deep-seated antipathy toward bigness clouded his judgment.”*

Then there is Brandeis on consumers: “servile, self-indulgent, indolent, ignorant.” That’s a direct quote, by the way.** It was his justification for wanting to fix prices in favor of small businesses. Consumers invariably prefer low prices. The problem is that sometimes big businesses offer those low prices. And this upset Brandeis to no end. How dare consumers take price into account! The size of the business is more important!

This is not a rigorous line of thought.

But it’s one the current administration has bought into. The White House is expected to propose today a maximum allowable size for banks. Because big is bad.

This reform is unlikely to have its desired effect. The reason banks behaved so badly during the housing bubble is because the regulatory and political climate gave them an incentive to. It had nothing to with size. The solution, then, is to channel incentives in a better direction. Reward good behavior. Punish bad behavior. Any reform that ignores incentives will fail every time.

On one hand, as long as bankers know that the government will bail out their losses, they’ll take as many crazy risks as they can. Where’s the incentive to be careful if taxpayers will cover the bill when you mess up?

On the other hand, a size cap might actually make banks too risk-averse. Loans are risks taken in the hope of future profit. But too much profit — too much good lending — could potentially make a bank run into size problems with the government. This is not the kind of incentive structure the administration should be shooting for.

Today’s fixation on size is just as misguided as Brandeis’ was. Consumers and banks alike would be better served by letting profits encourage risk, and losses encourage prudence, as Russ Roberts put it. That means no size restrictions. No bailouts either.

*Thomas McCraw, Prophets of Regulation, p.99.
**McCraw, p. 107.

Trust me, I found it on the Internet!

by Michael Fumento on January 21, 2010 · 1 comment

in Odds & Ends

It may be true that everything is on the Internet, but good researchers have to beware. Here’s a nice example. For a piece I’m writing on the plastic hardening chemical BPA I wanted to find out how much is produced annually in this country. Here’s what the top hits produced:

1. Sep 16, 2008 … BPA has been cited as a component of plastic baby bottles. Over 2.2 million tons is produced each year and resides in the majority of people …
www.injuryboard.com/…/study-confirms-human-health—bpa-plastic-link.aspx?… –

2. BPA Linked to Increased Risk of Heart Disease

Jan 13, 2010 … Manufacturers have used BPA for years to make plastics and resins. More than six millions tons of the chemical are produced each year and …
www.consumeraffairs.com/news04/2010/01/bpa_study.html – Cached –

3. Bisphenol-A In Plastic Packaging & Products Is Highly Dangerous

US – Many studies have concluded that exposure to Bisphenol A can be fatal, … There are approximately 2-3 million tonnes of it produced each year for use …
www.blatantnews.com/…/bisphenol_a_in_plastic_packaging_and_products_is_highly_dangerous.html – Cached -

4. Numbers: Plastics, From Manufacturing to Recycling to Long Death …

Oct 21, 2009 … Four million tons of BPA are produced each year. A National Toxicology Program report (PDF) released last fall said there was “some concern” …
discovermagazine.com/…/21-numbers-plastics-manufacturing-recycling-death-landfill – Cached

So when they say it causes heart disease or “is highly dangerous” just how accurate is that?

(I think I’d better pick up the phone and call somebody!)

An Unintentional Legacy

by Drew Tidwell on January 20, 2010

in Healthcare, Politics as Usual

When Sen. Ted Kennedy advocated the 2004 Massachusetts succession law revision, he had no idea what the consequences would ultimately be. In 2004 he said, “I strongly support that law and the principle that the people should elect their senator.” A principled statement, even if the motive behind it wasn’t.

He wanted to prevent a Republican governor from appointing a Republican to the Senate to take John Kerry’s seat were he to prevail in the 2004 presidential election.

In 2009, sensing his impending mortality, he advocated changing the law back to appointment since the current governor is a Democrat. That change never occurred.

Now the end of a filibuster-proof Senate majority might be enough to stop the health care bill in its tracks. The election law tinkering that Kennedy supported – and put Scott Brown in office – might have saved the Democratic party from itself. It will also help to preserve what little economic freedom is left in the health care sector.

Other members of the Kennedy dynasty left their own positive legacies. President John F. Kennedy proposed a tax reform which included income tax cuts, passed by Congress in 1964, after his death. Robert F. Kennedy as Attorney General fought tirelessly against union corruption and the Teamsters.

Now that the health care bill no longer seems likely to pass, the late Ted Kennedy’s election reforms may have unintentionally solidified his own place in history with regards to health care policy.

Populism, jobs and the economy — where do we go from here?

by Fran Smith on January 20, 2010

in Deregulate to Stimulate, Economy, Employment, Energy, Environment, Global Warming, Health and Illness, Stimulus to Nowhere

Scott Brown’s decisive victory in the Massachusetts Senate race has upturned the Democrats’ Progressive agenda.  Brown, “the people’s seat” senator, had a resonant message that tapped into the electorate’s disenchantment with ever-increasing government (with the health care proposals figuring strongly), huge deficit spending, and increased taxes to pay for the trillions of dollars in new government programs. Jobs and the economy were an overarching issue.

It was a populist victory that carried many of the themes of the “Tea Party” movement, which, so far, haven’t been promoted by either party.  If the Republicans don’t latch onto those themes with an agenda of their own, they really are the “dumb Party.”

What’s a cause for concern, however, is how the Democrats are likely to embrace people’s fear and anger by taking up their own populist cudgel to even more vigorously attack capitalism, consumer choice, and any and all Big Business entities.

There indeed is fierce popular anger at bank bailouts and big bonuses – Wall Street has become a synonym for greed and arrogance that caused the financial meltdown, with little recognition that government and quasi-government entities like the Federal Reserve and Fannie and Freddie contributed to the financial problems.

Though some banks deserve much of the public disapprobrium because of their mismanagement and sellout on TARP funds, even those banks that were healthy or fought their own way back to solvency are being asked to pick up the tab for their less-responsible brethren. Expect the Democrats to exact more such retribution from banks — in the name of the people.

In addressing the big issues of jobs and the economy, the Democrats will have a hard time spending more money on stimulus packages that seem to evaporate before any jobs are created. But there will probably be an even bigger push for “green jobs.” Democratic leadership may decide that a massive and economically destructive cap-and-trade bill isn’t feasible in this political climate.  They may look to more “green jobs” and “alternative fuels” boondoggles through taxes and fees on fossil fuel industries as a better way to sell the idea of restrictions on and higher costs for energy use. Yet those subsidized jobs themselves are costly, as the Wall Street Journal noted in mid-December 2009 about the 253,000 of direct jobs created:

The 253,000 direct jobs works out to a cost of about $90,000 a head-just for one year. Clean-energy manufacturing jobs are even more expensive to create, costing about $135,000 per job.

It will be difficult to relate the Democrats’ health care proposals to jobs and the economy when the costs are projected by the Congressional Budget Office at $1 trillion in additional federal spending over the next 10 years. But that figure – while astronomical — doesn’t include the states’ mandates, which will cost $25 billion more over 10 years or the unknown costs of the mandates for individuals and employers to buy insurance. Those costs will be paid for by increased yet hidden taxes – and not just on the so-called rich.

Plus, the closed-door negotiations on the bills have resulted in deals that most people consider unfair and outrageous, for instance, Nebraska is the only state that won’t have to pay future unfunded Medicare and Medicaid mandates; Louisiana gets $300 million for agreeing to support the Senate bill; and union members don’t have to pay “Cadillac-plan” taxes on their generous health care plans. These proposals will actually hold back job creation by causing uncertainty among both small and large businesses and thus reluctance to expand jobs. And taxpayers rightly understand that they will bear the increased costs.

In the wake of Scott Brown’s election, whether the Democrats will continue their shenanigans on their health care proposals isn’t yet clear.  Right now, they’re damned if they do and damned if they don’t.

Recently, CEI’s president Fred Smith wrote an article titled “Change we can really believe in,” which sets out a blueprint to stimulate the economy by liberating it.  Fred must have been prescient when he wrote this on January 4 — before the surge for Scott Brown:

This year holds promise for a new start for America. As 2010 begins, we may be teetering on a cliff, but Americans aren’t lemmings. Support for statist policies is dropping, and taxpayer anger is growing. There is a renewed understanding that the limitations on government of the Constitution are the best protections of our liberties. Their restoration should be the primary hopeful change advanced by all friends of liberty.

Why does everybody think BPA is safe but us?

by Michael Fumento on January 20, 2010

in Health and Illness, Nanny State, Precaution & Risk, Regulation

Regarding the ubiquitous plastic ingredient bisphenol A (BPA), my colleague Angela Logomasini blogged that “The greens are rejoicing today because the Food and Drug Administration has softened its stance on the safety of” the chemical and gave some reasons why it’s folly. But here’s what I find striking.

In 2006 the European Union’s Food Safety Authority conducted a risk assessment focusing on the threat to infants. It ultimately raised the Tolerable Daily Intake by a factor of five, which is to say it found BPA much safer than was first believed. Mind you, this is the same EU that has placed advisory warnings on cell phones and whose residents run in terror at the sight of a grain of genetically modified corn.

Two years later the EU conducted an update and as Trevor Butterworth of STATS has documented, since then there’s been:

• A review by Japan’s National Institute of Advanced Industrial Science and Technology (2007)
• An examination of claims of neurotoxicity by the Norwegian Scientific Committee for Food Safety (2008)
• An evaluation by the French Food Safety Agency (2008)
• A risk assessment by NSF International, a World Health Organization collaborative center (2008)
• A review of new data by the German Federal Institute for Risk Assessment (2008)
• A survey of canned drink products by Health Canada (2009)
• A risk assessment by Food Standards Australia/New Zealand (2009)
• A modeling study of BPA in humans by the German Federal Institute for Risk Assessment (2009).

None of these prompted any warnings or restrictions on BPA use.

There’s only one conclusion to draw from all this folks. Apparently Americans are uniquely vulnerable to the horrors of BPA. But (pssst . . . ) don’t try telling that to a geneticist.

Sorry, no RIP yet for the health care reform legislation

by Michael Fumento on January 20, 2010

in Healthcare

It’s fine to celebrate the Massachusetts victory of Scott Brown. I like how Daily Show host Jon Stewart put it: “The Kennedy legacy goes down to a naked guy who owns a truck.” (He once posed for Cosmopolitan.)

But remember from civics class that the legislation only need 51 votes to pass (technically 50, with Biden as tie-braker) and all Brown’s win does is allow a filibuster with one vote to spare. And as the Washington Post’s Steven Pearlstein writes today:

There is very little in the latest version of the health-care bill that Maine’s two Republican senators haven’t supported in the past or couldn’t support in the future. In succumbing to the intense social and political pressure from their caucus, both Olympia Snowe and Susan Collins flunked the leadership test last year. Massachusetts has now given them a second chance to redeem their reputations and political fortunes in a state that has always valued independence over party loyalty.

So here’s to the naked truckdriver, but we need to continue to get the word out on the need for health care reform but the terrible problems with the legislation that the Democrats are trying to foist upon us.

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