In The Washington Post, Allan Sloan points out that while President Obama wants to cap American citizens’ IRAs at $3 million or substantially less—discouraging saving and investment in the process—Obama’s own-taxpayer-subsidized retirement benefits are worth more than twice as much, a generous $6.6 million. A sweet pension for me, but not for thee, seems to be Obama’s thinking. Discussing the president’s “proposal to limit the value of 401(k)s, pensions and other tax-favored retirement accounts to about $3.4 million” (or much less, as interest rates rise), Sloan notes that Obama want “to limit savers’ tax-favored accounts to only about half the value of what he stands to get from his post-presidential package. Based on numbers from Vanguard Annuity Access, I value his package at more than $6.6 million. . . .And that doesn’t include [his] IRA . . . Or the $18,000 (plus cost of living) a year he will get at age 62 for his service in the Illinois Senate.”
He also notes that “the point at which Obama wants to eliminate the ability of you and your employer to deduct contributions to your retirement account isn’t actually the $3.4 million in his budget proposal—that’s just an estimate. The real number is how much a couple age 62 would have to pay for an annuity that yields $205,000 a year. That $3.4 million—which applies to the combined values of your pension and retirement accounts—is subject to a sharp downward change in the future because annuity issuers charge significantly less for an annuity when interest rates are higher than they do today, with rates at rock-bottom levels.”
Obama has discouraged saving in other ways, such as raising taxes on capital gains and dividends, imposing a new Obamacare tax on investment income, and by giving costly bailouts to irresponsible people who, despite ample incomes, saved so little money that they could not “afford” more than a tiny downpayment, and thus ended up with negative equity on their home later on due to declines in the value of their home, qualifying them for the bailouts that certain favored underwater mortgage borrowers have received.
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Is shareholder activism a good or a bad thing? That depends on what any given resolution seeks to improve the company’s performance, and thereby increase shareholder value. That seems like a simple enough and easily understood measure to determine which shareholder resolutions merit consideration. But resolutions that do not meet that criterion are often introduced at public companies’ shareholder meetings, often by labor union pension funds.
A new study from Navigant Economics, commissioned by the U.S. Chamber of Commerce, analyzes resolutions scored by the AFL-CIO in its “Key Votes Survey” between 2009 and 2012, and finds “no conclusive or pervasive evidence that the shareholder proposals assessed in this study improve firm value or result in an economic benefit to pension plans and plan participants.”
Today, at a Chamber event to announce the study’s release, former Securities and Exchange Commission (SEC) Chairman Harvey Pitt. He noted that shareholder activism can be useful, but not when it seeks to advance social agendas. Moreover, successful shareholder activism should advance the interest of all shareholders.
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They called it a “stunt” early last week when House Financial Services Committee Chairman Jeb Hensarling (R-Texas) refused to allow Consumer Financial Protection Bureau (CFPB) director Richard Cordray to testify due to the constitutional cloud over Cordray’s appointment. But this “stunt” just may have forced the Obama administration’s hand in submitting a brief later in the week urging the Supreme Court to resolve the issue.
In a statement, Hensarling announced that the committee could not “legally accept testimony from Richard Cordray … until he is validly appointed as the bureau’s director.” In the letter that Hensarling sent to Cordray, Hensarling cited the ruling of the U.S. Court of Appeals for the D.C. Circuit in Noel Canning v. National Labor Relations Board that three “recess” appointments to the labor board made the same day and in the same manner as Cordray’s appointment were ruled unconstitutional. “It is clear,” Hensarling wrote, “as a number of legal scholars have concluded, that your appointment was also unconstitutional.”
This is exactly what the Competitive Enterprise Institute, and our co-plaintiffs the 60 Plus Association and the State National Bank of Big Spring (Texas), argue in our lawsuit challenging the constitutionality of the CFPB and other elements of Dodd-Frank, the so-called financial reform law rammed through Congress in 2010. Neither Cordray nor the NLRB officials were valid “recess” appointments, because the Senate was in pro-forma session, gaveling in and out every three days and ready for legislative business should it occur (including changes to payroll tax legislation Congress made during these sessions).
The Obama administration’s action was unprecedented. As noted by the nonpartisan Congressional Research Service and reported by Politico, during the 2007-08 pro forma sessions when the Democrats controlled both houses, President Bush “made no recess appointments between [Democrats’] initial pro forma sessions in November 2007 and the end of his presidency.” As I asked on OpenMarket on January 4, 2012, the day the recess appointments were made, “If any adjournment or break the Senate takes can be defined as ‘recess,’ can the president make appointments when the Senate is in formal session and gavels out for the evening?” Or could a recess even be declared when the Senate adjourns for a bathroom break?!
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California Governor Jerry Brown, along with an entourage of high-profile business and financial leaders from the Golden State, recently traveled to China on a trade tour. The agenda included government and private sector partnerships in electric vehicle production, trash-to-electricity technology, and green energy research and development.
But the tour’s main purpose centered on garnering Chinese financial interest in what Jerry Brown hopes to be his defining legacy: high-speed rail for California. (Embarrassingly for Brown, China indicted its former top rail official on corruption charges during the governor’s junket.) China is currently sitting on $3.4 trillion in foreign exchange reserves. Traditionally, these have been invested in foreign government bonds. But in recent years, China has moved to diversify its holdings away from government bonds—which have been yielding historically low interest rates—and into more lucrative brick and mortar assets. Needless to say, the China’s banks and sovereign wealth funds would be fools to invest in Jerry Brown’s white elephant for several reasons.
First, the project’s estimated costs are ballooning before construction has even begun. Since a statewide ballot initiative in 2008 authorized the creation of a high-speed rail network, projected construction costs for the entire endeavor have ballooned from $34 billion. In a revised business plan published in 2011, the California High-Speed Rail Authority estimates construction will now cost $98 billion to $117 billion, and the estimated completion date of the full first section was pushed back by 13 years. In 2012, the rail authority claimed it found $30 billion in estimated savings, primarily by abandoning the initial full-build plan that would have required completely dedicated and electrified infrastructure and moving toward a “blended” model. Basically, this means the initial system will not be true 21st century high-speed rail, in that it will share tracks with electrified mass transit and trains relying on diesel motive power. The downward cost estimates are also the result of modified inflation projections that assume rates over the course of construction will be lower than previously assumed. These are the estimates before a single track has been laid.
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A page 1 New York Times story today describes how the Obama administration, despite opposition from civil servants, radically expanded a legal settlement that had already become a “magnet for fraud,” paying out vast sums of money over baseless claims of discrimination at the Agriculture Department in the Pigford case. As the Cato Institute’s Walter Olson notes, its story “today breaks vital new details about how career government lawyers opposed Obama appointees’ insistence on reaching a gigantic settlement for claims of bias against female and Hispanic farmers in the operation of federal agriculture programs” over the objections of “career government lawyers.” As the Times reports,
On the heels of the Supreme Court’s ruling [adverse to claimants and favorable toward USDA], interviews and records show, the Obama administration’s political appointees at the Justice and Agriculture Departments engineered a stunning turnabout: they committed $1.33 billion to compensate not just the 91 plaintiffs but thousands of Hispanic and female farmers who had never claimed bias in court.
The deal, several current and former government officials said, was fashioned in White House meetings despite the vehement objections — until now undisclosed — of career lawyers and agency officials who had argued that there was no credible evidence of widespread discrimination. What is more, some protested, the template for the deal — the $50,000 payouts to black farmers — had proved a magnet for fraud.
The ever-growing settlement became “a runaway train, driven by racial politics, pressure from influential members of Congress and law firms that stand to gain more than $130 million in fees.”
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Cato Institute attorney Ilya Shapiro wrote Tuesday about “Thomas Perez, the assistant attorney general for civil rights who personifies . . . this administration’s flouting of the rule of law.” As he notes, Perez “is due this week for a vote in the Senate Health, Education, Labor, and Pensions Committee on his nomination to be Labor Secretary.”
Shapiro provides this “recap of Perez’s nefarious dealings” (drawing on the work of Quin Hillyer, who provides more detail at this link):
- Interference with the Supreme Court case of Magner v. Gallagher, getting the City of St. Paul to dismiss its appeal to prevent what would’ve been a sharp . . . rebuke to the federal government regarding its use of “disparate impact” racial theories in housing policy . . . [CEI discussed Perez's misuse of "disparate impact" law here]
- Refusal to comply with subpoenas from the U.S. Commission on Civil Rights [which CEI discussed here];
- Dismissal of the Justice Department’s already-won prosecution of the Black Panthers for voter intimidation during the 2008 election [which CEI discussed at this link];
- . . . running a department dedicated to the proposition that voting rights and other civil rights law don’t protect white people [CEI discussed an example here];
- Willfully misleading and lying to Congress under oath several times [D.C. District Court Judge Reggie Walton said he made false claims in response to queries about the black panther case];
- Racial abuse of the New York fire department, to the detriment of public safety and qualified minority applicants;
- Hiring for “career” (non-political appointee) slots only attorneys who have demonstrable left-wing credentials—making Alberto Gonzales’s politicized-hiring foibles look like the model of civil service administration [see examples here];
- Trampling on religious liberties to the point the Supreme Court unanimously rejected his arguments in Hosanna-Tabor v. EEOC regarding the “ministerial exception” to employment laws;
- Conducting government business from a personal email account as many as 1,200 times (!) and now refusing to comply with congressional subpoenas to release those emails. [CEI lawyers have repeatedly uncovered such abuses, and the use of false-identity alias email addresses, by Obama administration officials, as you can see here and here].
CEI earlier discussed the Magner case and why the Obama administration’s position in that case could undermine the stability of the financial system and cause future financial meltdowns. (CEI joined in an amicus brief opposing the Obama administration’s position, in the Supreme Court). It also highlighted the Obama administration’s (and Perez’s) massive, ethically dubious payoff to the City of Saint Paul to drop the case. Earlier, CEI discussed the Obama administration’s extreme position in the Supreme Court’s Hosanna-Tabor case and how it would have undermined First Amendment freedoms, religious autonomy and the separation of church and state. CEI also examined the Justice Department’s politicized hiring during the Obama administration.
Earlier, I wrote about how it was a good thing that the Supreme Court blocked foreigners from suing in the U.S. over putative violations of “customary international law” by corporations and other defendants with deep pockets. My conviction has grown stronger, since I learned that the U.N. Committee on the Elimination of Racial Discrimination has ruled that Germany violated international law by not prosecuting a former German legislator for an interview with a cultural journal in which he said negative things about immigration and the alleged dependence on welfare of Turkish immigrants to his country. That ruling illustrates that international-law norms can be inimical to American civil-liberties such as freedom of speech, making it inappropriate for U.S. courts to enforce such foreign norms.
German prosecutors had concluded that the former legislator’s remarks were protected by Germany’s (limited) free-speech guarantees because, while offensive, they were part of a “discussion” of “problems of economic and social nature,” and did not rise to the level of hate speech. (Germany generally bans hate speech; by contrast in the U.S., the Supreme Court voided a hate-speech ordinance in 1992 on First Amendment grounds. A federal appeals court has also ruled that a professor’s racially-charged anti-immigration diatribes were protected speech in the Rodriguez case.) Law professor Eugene Volokh reprints the speech that, “according to the Committee, must lead to a criminal prosecution in countries that have ratified the International Convention on the Elimination of All Forms of Racial Discrimination.” (The U.S. has ratified that convention, but, as Professor Volokh notes, “I am pleased to say that the U.S. has not recognized the competence of the Committee to enforce the Convention, though most European countries have; the U.S. has also ratified subject to a specific reservation in favor of the freedom of speech.”)
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Last year, the Obama Office of Management and Budget’s 2012 Draft Report to Congress on the Benefits and Costs of Federal Regulations surveyed 10 years of regulatory costs and benefits and pegged the cumulative costs of 106 selected major regulations during 2001-2011 at between $43 billion and $67 billion. Meanwhile, the estimated range for benefits spanned from $141 billion to $701 billion.
OMB just released the new 2013 Draft Report to Congress on the Benefits and Costs of Federal Regulations, and the burdens are increasing.
Consider just the past two years:
2012 Report: 12 rules were issued with benefits of between $34.3 billion to $89.5 billion annually, and costs of between $5.0 billion to $10.1 billion
2013 Report: 14 rules were issued with benefits of $53.2 billion to $114.6 billion annually, and costs of between $14.8 billion to $19.5 billion.
Observe the high cost estimates for each year; the Obama administration’s acknowledged new regulatory costs nearly doubled from $10.1 billion in 2012 to $19.5 billion annually in 2013.
This is significant; Recall the 2012 State of the Union Address when Obama wisecracked that he got rid of a regulation that classified spilled milk as an “oil.”
He further boasted:
In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. (paused for applause.) I’ve ordered every federal agency to eliminate rules that don’t make sense. We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.
That meager $10 billion in cost savings over five years, worthy somehow of the State of the Union, yet in reality a tiny sliver of the real regulatory burden of $1.8 trillion annually, was just swamped in one year in the new Report to Congress.
OMB’s cost-benefit breakdowns incorporate only benefits and costs that agencies or OMB have expressed in quantitative and monetary terms, omitting numerous categories and cost levels of rules altogether. There are far more rules, and far more costs, in reality. Costs of rules from independent agencies are entirely absent in this report for example. Cost-benefit analyses are also sensitive to basic assumptions about how regulations translate into benefits.
The federal government doesn’t tell us what we need to know about regulation, but what it’s owning up to points in the wrong direction.
If Americans truly want to ensure no unauthorized immigrants work in the United States, they better get ready to pay top dollar. E-Verify, the electronic national identification system contained in the Gang of Eight’s immigration bill, will cost government, businesses and workers at least $8.5 billion per year, according to my new study on E-Verify released yesterday. That’s $13,000 per unauthorized immigrant denied a job.
E-Verify requires employers to submit Form I-9 information for comparison with information in databases held by the Social Security Administration and the Department of Homeland Security. People who advocate E-Verify as a cheap solution to illegal immigration need to understand this requirement is the most extensive regulation possible—it imposes requirements not just on every single business in America, but every single American citizen. Even small expenses distributed among such a large population will produce major costs.
This study basically accepted all federal data about E-Verify at face value and attempted to estimate its impact on the entire economy using the government’s own assumptions. First, as for government, the Congressional Budget Office estimated a national E-Verify mandate would cost, on average, $1.22 billion annually, not including DHS personnel costs. Add $227 million for the 5,000 new DHS enforcement agents called for in this bill, and the cost jumps to $1.45 billion.
But the big costs come from the impact on employers. Based on the estimates in the DHS’s Regulatory Impact Analysis for its 2008 E-Verify mandate for federal contractors, employers nationwide would spend $4.1 billion setting up, training and implementing the new system. That’s nearly $2.4 billion more than the estimated cost to businesses under the White House draft legislation, which exempted small businesses. Annually, employers will spend $2.55 billion operating system checks, based on DHS assumptions alone. This estimate is close to a 2011 Bloomberg Government report that found a national E-Verify mandate would cost businesses $2.6 billion annually (a number that actually ignored costs to 76 percent of businesses).
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It may not be a popular fact, but a fact it is: the environment is getting cleaner, and it has since about the mid-20th century. The question is, what caused this improvement? How can we keep it going? Over at Topix.com, my colleague Geoffrey McLatchey and I argue that the best answer for both questions is wealth creation:
Economic growth and environmental quality are not opposing values. They go hand-in-hand. Something happens to a country when its per capita GDP reaches about $5,000 (U.S. per capita GDP is about $48,000). At that point, families are certainly not rich. But they don’t have to worry as much about where their next meal will come from. They can afford to begin to take care of other needs, such as building sewage systems and other pollution-reducing infrastructure. Instead of using wood for heating and cooking, people can turn to more efficient fossil fuels, which means less deforestation. Farmers can afford to adopt modern techniques that produce more food with less land, leaving more left over for wildlife.
That’s the good news. The even better news is that greater progress is on the horizon. The number of people living in absolute poverty halved between 1990 and 2010, and the number continues to dwindle. Remarkably, this is happening even as global population increases. As more countries pass the $5,000-per capita benchmark, ecosystems around the world will benefit.
Read the whole thing here. Even if people do concede to the data and admit that the world’s environmental situation isn’t doom-and-gloom, they often give credit to the EPA. A glance at my recent EPA report card will hopefully disabuse people of that notion. Innovation, not regulation, is what will keep the environment healthy. That’s the lesson people should take from Earth Day.
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