The Great Depression of the 1930s was by far the greatest economic calamity in U.S. history. In 1931, the year before Franklin Roosevelt was elected president, unemployment in the United States had soared to an unprecedented 16.3 percent. In human terms that meant that over eight million Americans who wanted jobs could not find them. In 1939, after almost two full terms of Roosevelt and his New Deal, unemployment had not dropped, but had risen to 17.2 percent. Almost nine and one-half million Americans were unemployed.
On May 6, 1939, Henry Morgenthau, Roosevelt’s treasury secretary, confirmed the total failure of the New Deal to stop the Great Depression: “We are spending more than we have ever spent before and it does not work. . . . I say after eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!” (For more information, see “What Caused the Great Depression?“)
In FDR’s Folly, Jim Powell ably and clearly explains why New Deal spending failed to lift the American economy out of its morass. In a nutshell, Powell argues that the spending was doomed from the start to fail. Tax rates were hiked, which scooped capital out of investment and dumped it into dozens of hastily conceived government programs. Those programs quickly became politicized and produced unintended consequences, which plunged the American economy deeper into depression.
More specifically, Powell observes, the National Recovery Administration, which was Roosevelt’s centerpiece, fixed prices, stifled competition, and sometimes made American exports uncompetitive. Also, his banking reforms made many banks more vulnerable to failure by forbidding them to expand and diversify their portfolios. Social Security taxes and minimum-wage laws often triggered unemployment; in fact, they pushed many cash-strapped businesses into bankruptcy or near bankruptcy. The Agricultural Adjustment Act, which paid farmers not to produce, raised food prices and kicked thousands of tenant farmers off the land and into unemployment lines in the cities. In some of those cities, the unemployed received almost no federal aid, but in other cities — those with influential Democratic bosses — tax dollars flowed in like water.
Powell notes that the process of capturing tax dollars from some groups and doling them out to others quickly politicized federal aid. He quotes one analyst who discovered that “WPA employment reached peaks in the fall of election years. In states like Florida and Kentucky — where the New Deal’s big fight was in the primary elections — the rise of WPA employment was hurried along in order to synchronize with the primaries.” The Democratic Party’s ability to win elections became strongly connected with Roosevelt’s talent for turning on the spigot of federal dollars at the right time (before elections) and in the right places (key states and congressional districts).
Powell’s book is well researched and well organized. His chapter titles are a delight. He synthesizes a mass of secondary sources (and some primary sources) in making a strong and persuasive case that the New Deal was a failure and that the Roosevelt presidency, at least in its first two terms — was a disaster. Powell covers all the major New Deal programs; he draws on the research of historians both “liberal” and conservative; and he is nuanced — this is no hatchet job — in that he concedes that some of Roosevelt’s policies, such as tariff revision, were more economically sound than, say, his industrial and agricultural policies.
FDR’s Folly takes its place on the shelf alongside Gary Dean Best’s Pride, Prejudice, and Politics and his more recent Retreat from Liberalism as liberating revisionist works that challenge the long-standing adulation of Roosevelt given by almost all historians. In the most recent Schlesinger Presidential Poll (1997), the historians and “experts” chosen by Arthur Schlesinger, Jr., collectively ranked Roosevelt as the greatest president in American history, even though every other American president had lower unemployment rates than Roosevelt did for his first eight years in the White House. As late as 1999, David Kennedy won the Pulitzer Prize for a book (Freedom from Fear) that largely praised the New Deal as a legislative program and Roosevelt as its author.
With the dawning of the 21st century, we may be witnessing the final departure of Roosevelt’s loyal academic propagandists and those targeted recipients of his federal largess. In such a climate, Jim Powell has given us, with FDR’s Folly, a refreshing, must-read account of the New Deal.
The 2010s have been hard on the U.S. patent system. It has been attacked from multiple directions: by big tech, which waged a lobbying campaign to weaken it; by China, which uses IP theft to siphon up to $600 billion out of America annually; and by Washington, D.C., where court decisions and legislation have thrown patent law into turmoil.
The good news is, some are fighting back. President Trump is battling to keep IP protections at the center of trade discussions with China, and the Senate Judiciary IP Subcommittee, led by Senator Thom Tillis (R-NC), held historic hearings just this month to re-stabilize the foundation that patents provide to the U.S. innovation economy.
These efforts are centered on restoring predictability. Today, inventors are uncertain of whether or not their intellectual property rights will be protected. This erodes their incentive to invest time and treasure into creating property in the first place.
Consider the recent words of retired Judge Paul Michel, who spent 22 years on the Federal Circuit and almost a decade working with patent cases. He said of the modern status quo, “I cannot predict in a given case whether [patent] eligibility will be found or not found. If I can’t do it, how can bankers, venture capitalists, and business executives?”
Predictability took its biggest hit in 2011, when Congress enacted the America Invents Act. Among its most damaging provisions was the creation of the Patent Trial and Appeal Board (PTAB), an unrestrained tribunal through which anyone can petition to have a patent declared invalid.
And petition they have. By 2016, PTAB had heard challenges to nearly 100,000 patents. A review by IPWatchdog.com found that only 4 percent of cases ended with all challenged patents being upheld.
PTAB’s overreach is particularly egregious because it is extrajudicial. Patent infringers use it to rob innovators not just of their inventions, but of their constitutional right to due process.
Just ask Josh Malone, the inventor of popular water balloon toy Bunch O’ Balloons, who had his invention ripped off by a large toy maker. When faced with his allegations of infringement, the toymaker went straight to PTAB to have his patents invalidated. It took Josh several years and millions in legal fees to finally get his patents re-validated and lost profits awarded by a jury.
Inventor Roman Chistyakov, and his now defunct company Zond, weren’t as fortunate when faced with similar abuse by infringers. Zond’s patented plasma etching technology used in razorblades and semiconductors was gang-tackled by corporate giants Intel, Toshiba, Fujitsu, GlobalFoundries, and Gillette who filed 125 individual IPR petitions costing Chistyakov and his company millions of dollars. Before the IPR proceedings, Zond owned 371 unique patent claims and employed over 20 people. By the end of the IPR proceedings, all of Zond’s patents and employees were gone.
Or consider the ongoing saga of a small company called EagleView, founded in 2008 by a roofing salesman and his software engineer brother. Their idea was to produce 3-D models from aerial images of roofs, enabling insurance and construction companies to better estimate the cost of repairs. As the company grew, established players promptly swooped in to copy the idea. EagleView alleges that Verisk Analytics, which has a market cap of over $24 billion, began stealing key technologies after its attempt to acquire EagleView fell through. EagleView filed for patent infringement, but Verisk attempted to use PTAB as a get out of jail free card by filing petitions to invalidate the more than 150 patents in question.
No matter what, patent law should always rest on the presumption of validity for patent holders and protect their right to due process in the courts. It’s the only way to ensure that the system is predictable for inventors and small companies up against corporate goliaths. None of these patent holders should have had to fight so long and hard for the basic right to have its day in court—a right that should be as central to the patent system as to any other corner of American life.
Increasingly, this is a matter of public interest. So much of modern society relies on patented innovations—from the medicines we take to the cars we drive to the computing technologies that permeate our lives.
America birthed many of these technologies by being the world’s number one protector of intellectual property. To preserve that status, we must fend off the modern siege of the U.S. patent system. We should meet the battle in our courts, our Congress, our trade deals, or anywhere else it presents itself. Innovation itself hangs in the balance.
As the Frontiers of Freedom’s Letter of March 1, 2018, proved, Hungarian Prime Minister Viktor Orban, his family, and his closest collaborators have been engaged since he assumed his office in institutionalized, conspiratorial, deliberate, and large scale theft, embezzlement, fraud, and malicious corruption against the Hungarian state, and its citizens.
The Institute that has dedicated itself to the universal promotion of human rights and the fight against corruption, hereby submits a Supplement to its original letter, calling the Secretaries’ attention the newest case of flagrant corruption committed by the same and additional officials against the Hungarian state and its citizens.
The case in point is the corruption perpetrated by the managers and employees of Microsoft Corporation’s Hungarian subsidiary that was investigated by the FBI and the Department of Justice, which resulted in a fine of $25.3 million against the Redmond, California based corporation. Microsoft Corporation admitted guilt under the Foreign Corrupt Practices Act of 1977.
The full documentation is available at the Department of Justice. The Department demonstrated on two specific cases the well-thought out conspiracy to defraud Microsoft and the American taxpayers. In its summary, the final report states that the conspiracy reached all the way up to the Prime Minister Viktor Orban’s office.
For this reason, it is incumbent upon the United States of America, as the leading power of the world to take appropriate action to combat the malignant spread of official Hungarian corruption and to prevent further damage to the security of NATO and the European Union. At stake are the fundamental principles of the rule of law and the basic value systems that the United States of America and its allies all over the world have cherished, have fought for, and have been determined to uphold.
The most important individuals are the same that the Institute’s original letter already listed.
Dr. Miklos K. Radvanyi, Senior Executive Vice President
Frontiers of Freedom released this statement on importation of drugs:
“Safe” importation is an oxymoron. It may sound good, but it’s very risky. The reality is that many drugs labeled as “Canadian” and thus assumed to be safe, are usually counterfeit or tainted medications that come from third world countries.
For years, healthcare policy analysts and health safety experts have produced a cacophony of powerful objections to importation based on worries about safety and pricing. Even many government reports make it clear that drug importation is a risky business and that there are better ways to keep costs in check. The health, legal and economic dangers posed by drug importation makes it dangerous public policy.
Additionally, drug “importation” would actually import Canada’s price-controlled, government- run healthcare system and kill off the incentives to develop new medicines. If we hope to find the next generation of cures and treatments to many of the terrible diseases that have plagued mankind for millennia, then we need to encourage innovation, investment and research — not stifle it.
Simply stated, the new @HHSGov proposal may have a certain rhetorical appeal, but when the shiny stylistic glitter is wiped away, it becomes clear that the proposal is dangerous and potentially deadly for American patients. Plus it will hamstring future innovation and development of new medications. None of that is a good idea, and none of that will help American’s stay healthy or end up reducing healthcare costs.
Solar panels and wind turbines are making electricity significantly more expensive, a major new study by a team of economists from the University of Chicago finds.
Renewable Portfolio Standards (RPS) “significantly increase average retail electricity prices, with prices increasing by 11% (1.3 cents per kWh) seven years after the policy’s passage into law and 17% (2 cents per kWh) twelve years afterward,” the economists write.
The study, which has yet to go through peer-review, was done by Michael Greenstone, Richard McDowell, and Ishan Nath. It compared states with and without an RPS. It did so using what the economists say is “the most comprehensive state-level dataset ever compiled” which covered 1990 to 2015.
The cost to consumers has been staggeringly high: “All in all, seven years after passage, consumers in the 29 states had paid $125.2 billion more for electricity than they would have in the absence of the policy,” they write.
Solar and wind require that natural gas plants, hydro-electric dams, batteries or some other form of reliable power be ready at a moment’s notice to start churning out electricity when the wind stops blowing and the sun stops shining, I noted.
And unreliability requires solar- and/or wind-heavy places like Germany, California, and Denmark to pay neighboring nations or states to take their solar and wind energy when they are producing too much of it.
My reporting was criticized — sort of — by those who claimed I hadn’t separated correlation from causation, but the new study by a top-notch team of economists, including an advisor to Barack Obama, proves I was right.
Previous studies were misleading, the economists note, because they didn’t “incorporate three key costs,” which are the unreliability of renewables, the large amounts of land they require, and the displacement of cheaper “baseload” energy sources like nuclear plants.
The higher cost of electricity reflects “the costs that renewables impose on the generation system,” the economists note, “including those associated with their intermittency, higher transmission costs, and any stranded asset costs assigned to ratepayers.”
But are renewables cost-effective climate policy? They are not. The economists write that “the cost per metric ton of CO2 abated exceeds $130 in all specifications and ranges up to $460, making it at least several times larger than conventional estimates of the social cost of carbon.”
The economists note that the Obama Administration’s core estimate of the social cost of carbon was $50 per ton in 2019 dollars, while the price of carbon is just $5 in the US northeast’s Regional Greenhouse Gas Initiative (RGGI), and $15 in California’s cap-and-trade system.
Make no bones about it, the southwest border is facing a crisis like nothing the region has ever seen before. The human wave pouring over the border continues unabated, and it will only continue to do so. None of the traditional tools used to combat illegal immigration will work. A wall won’t work. Placing more sensors won’t work. Even hiring more agents to patrol the border won’t work.
They come from places as far away as India and Nepal. They speak ancient Mayan languages found only in remote central American villages. They claim to be Christians persecuted by the Chinese government. Their stories are so familiar that the officers and agents interviewing them could write the stories without bothering to interview the individuals telling the stories. They are all well coached, and know exactly what to say.
Asylum. That is the magic word, the golden ticket. The story is simply the means to the end, and the stories are familiar because those telling the story have been told exactly what to say in order to get an interview with an asylum officer.
These would be immigrants don’t bother to attempt to try to get away. All they need is a toe hold on American soil. Once they cross, they simply sit and wait for the Border Patrol to pick them up. If there is a Border Patrol Agent in the area they will save the agent the effort and walk to him or her to give themselves up. Why risk their lives when all they have to say is one little word?
The word is so small, but it has an oversized effect on our border security agencies. Border Patrol stations are bogged down with people who never bothered attempting to escape. Agents spend time working with interpreters attempting to interview individuals even though the agents already know exactly what the individual will claim. The only thing different is the names of people and places, the rest of the story is identical to the last story they heard. While agents are processing the asylum seekers, the real bad guys, the gang bangers, rapists, murderers, and potentially the terrorists are able to slip by either undetected or detected but unacted on because there are not any agents available to do anything about it.
President Trump is doing what he can to combat this flow of humanity, but there really is nothing that he can do. There is only one way to stop this wave of humanity, and only one entity can stop it.
Under current law anyone who has been in the United States for up to a year can apply for asylum regardless of how they entered the country. It is amazing that it has taken as long as it has for people to take advantage of this gaping loophole in our immigration law. The only way to fix it is for Congress to change the law. The fix is very simple.
Anyone who is able to present themselves to a port of entry for inspection and enters the United States by way other than the port of entry shall be ineligible for asylum.
There. Simple. If you are able to enter through a port of entry and you choose not to, you lose your shot at asylum and are shipped home. If you are coming from a Caribbean island country, you get a pass because you end up wherever the boat drops you off. For everyone else, you have to go to a port of entry if you want to petition for asylum.
Such a simple word, such a simple solution. Unfortunately, Congress has proven over and over that they do not work with simple solutions. So our asylum officers are backlogged for years, our Border Patrol Agents are busy processing people who simply give up, and the people who we really want to keep out of our country have a free pass to slip by overwhelmed Border Patrol Agents.
We the People.
That’s right, we the people have the right to demand that Congress act. Unless we do so, this problem will persist. It is up to you, the patriot, the concerned citizen, to contact your member of Congress and your Senators and demand that the laws be changed to reflect the current crises.
It won’t happen unless you take action.
The Wall Street Journal is the latest media outlet to report on what’s driving the border crisis. For most Guatemalans, it’s economic opportunity, not the reported violence and bloodshed.
A report this week in the Wall Street Journal chronicles the border crisis at one of its sources, a city in Guatemala that’s emptying out as families leave for the United States, and leaves little doubt that what’s motivating most of them to leave isn’t violence or persecution, but economic opportunity.
The focus of the story is the mountainous city of Joyabaj, “population 100,000 and falling.” The United States has deported 627 people to Joyabaj in the first six months of this year, more than any other municipality in the country except Guatemala City, population 2.5 million, which saw 643 deportees from the United States over the same period. According to one school official, about 2,000 out of 16,400 first- through ninth-graders in Joyabaj’s public schools have gone north over the past 18 months.
Indeed, Guatemalans now make up the largest nationality of those arrested along the southwest border, with 235,638 Guatemalans apprehended so far this year. Of these, the vast majority are family units or unaccompanied minors. As of June, more than 167,100 family units from Guatemala had been arrested, more than the previous three years combined.
What’s driving the exodus? Grinding poverty at home, the chance to get ahead in America, and a robust smuggling industry. On this last, the Journal report is eye-opening. Radio stations in Joyabaj advertise the services of smugglers with ads that ask, “Tired of so much poverty? Tired of so much humiliation?”
Business is good. One smuggler barrels along roads in a bright yellow Hummer. He doubles as a priest in the Maya religion and is paid handsomely to perform ceremonies to insure a safe journey.
Many Guatemalans use homes and plots of farmland as collateral for high-interest loans to pay smugglers.
A popular YouTube influencer has sophisticated equipment to create videos with such titles as ‘The American Dream,’ and ‘I left for the US looking for a better life.’ Together, they have notched almost three million views. Some of the inspirational videos are, in fact, advertisements for one of the area’s most successful human smugglers.
The Journal isn’t alone in its Guatemala reporting. News organizations that have actually bothered to send people to the country have reported at length on the economic benefits of migration, how Guatemalans who sent a family member to the United States live in large, comfortable houses while those who have not live in shacks with dirt floors.
In April, the New Yorker ran an article titled, “The Dream Homes of Guatemalan Migrants,” about American-style casas de remesa, or remittance houses, “which have become ubiquitous in the country’s western highlands as a way for immigrants to invest their earnings while living abroad.”
All of this reflects what Guatemalans say about why they’re leaving. A 2016 survey by the International Organization for Migration found that more than 90 percent emigrated to the United States for economic reasons. According to the report, “56.8 percent of Guatemalans migrate in search of better employment, 32.9 percent to improve their income, 1.2 percent to buy a home, and 0.1 percent to open businesses.” Only 0.3 percent say they migrate because of violence, and 0.2 percent cite gang problems.
Meanwhile, the entire political class in Washington DC is seemingly content to pretend that none of this is happening. Rather than confront the reality that the vast majority of those crossing the border are economic migrants, media elites tend to repeat, mantra-like, that migrants are fleeing violence and crime.
Few of them ever mentioned that although the Northern Triangle remains a relatively violent place, homicide rates in Guatemala, Honduras, and El Salvador have plummeted in recent years. In Honduras, the murder rate has dropped by more than half since 2012; In El Salvador, the rate has fallen for three years in a row; and in Guatemala it has decreased by half since 2009.
Others emphasize poverty in these countries, which is understandable because poverty is rampant in this part of the world. Less emphasized is the fact that the economies of Guatemala and Honduras have grown about 3.5 percent on average in recent years (El Salvador’s GDP growth has been a bit more sluggish, at about 3 percent).
So if violence is decreasing and the economy is growing, why are so many people leaving Guatemala? The answer varies depending on the region of the country, but the common theme is that people are leaving because they are poor and have far better prospects in the United States. Subsistence farmers in the western highlands are facing crop failures due to climate change, so they pack up and leave.
In cities like Joyabaj, cheap cell phones keep people in touch with relatives in the United States, and success stories spread quickly, inspiring others to follow. As one man told the Journal, “If you work in the U.S., you get paid $12 an hour for eight hours, that’s $96 a day. Here you make 40 quetzales [$5.30] a day when there is work. Not enough to live.”
What we’re witnessing is a mass exodus from Central America driven above all by poverty but made possible by a broken asylum and immigration system in the United States. The scale of this exodus is hard to convey. About 17 million people live in Guatemala. Since October of last year, 235,638 Guatemalans have been apprehended by U.S. Border Patrol. That means over the past nine months nearly 1.4 percent of the entire population of Guatemala has been apprehended and processed by U.S. authorities.
It’s time for policymakers and establishment elites to get serious about what’s happening and quit pretending that the vast majority of those now arriving at the southwest border are anything but economic migrants doing what any of us would do in their shoes: exploit a broken U.S. asylum system to forge a better life for ourselves and our children.
Polling shows Medicare for All unpopular when it means eliminating private insurance
Sen. Elizabeth Warren (D., Mass.) discussed her health care plan Friday, outlining a vision where everyone eventually “transitions” to a government health care plan.
“Your Medicare for All proposal would eliminate private insurance, correct? Is that right?” Des Moines Register opinion editor Kathie Obradovich asked Warren at a presidential candidate forum.
Warren, who raised her hand at last month’s Democratic debate to indicate she would abolish Americans’ private health insurance plans, briefly hesitated before answering.
“What it does is it transitions people to more complete insurance coverage, more complete health care coverage, at a lower cost, which I think is what we all want,” she said. “Everyone gets covered, but we do it at the lowest possible cost.”
“Would that also include Medicare Advantage and Medicare Part D, which have private providers within the Medicare umbrella?” Obradovich asked.
“So, the basic structure of the plan is to get everyone covered,” Warren said.
She said a “significant feature” of Medicare for All is that it would pay for “long-term care.”
“The problem we’ve got right now in the United States is that the insurance companies are sucking value out of our health care system,” she said. “Look at the basic business model. It’s charge the maximum amount you can in premiums, and pay out the least that you can in health care coverage.”
Warren supports Sen. Bernie Sanders’s (I., Vt.) single-payer Medicare for All, which Sanders said last week would cost up to $40 trillion over the next decade. Other Democrats running for president have said there should be a role for private insurance, supplemental care, or a public option to buy into a government-run program.
Polling has shown support dwindles for Medicare for All when respondents are told it would eliminate their private health plans. A poll in February found only 13 percent of Americans wanted a true single-payer system that abolished private insurance.
The US House of Representatives is getting closer to voting on the Butch Lewis Act, which failed to pass last year. While a number of provisions in the current version of the legislation make it an unworthy solution, the truth is the problem it attempts to address is real and the legislation even with its flaws does create the opportunity to amend and improve it so that a serious financial crisis can be avoided. Conservatives should consider this an opportunity.
Many multi-employer pension and defined pension plans are now on the brink of failure. They carry over $600 billion of unfunded liabilities and are dangerously close to failing. Millions of retired Americans in states like Pennsylvania, Wisconsin, Michigan, Minnesota, Ohio, Nevada, Florida, Colorado, Maine and New Hampshire could lose their retirement. If that happens, they will be thrust onto the welfare rolls and the fruits of their life’s work will be lost.
Even those who don’t have such pensions, are at risk. The 2008 housing bubble that triggered a huge economic slowdown, impacted everyone — not merely those whose mortgage was foreclosed upon. And we spent the next five plus years in economic turmoil and that was used as an excuse to grow the government. So we paid twice — first with the economic downturn and lost jobs and second, when government spending and debt grew dramatically and government’s penchant to over regulate drastically expanded.
President Trump could ensure his reelection in 2020 and conservatives in the House could insure a return to the majority as well — if they can fashion a sustainable, conservative fix to the pending multiemployer pension plan crisis.
In 2016, Trump won a number of states narrowly — states like Pennsylvania, Wisconsin, and Michigan. In those states and many others — Ohio, Colorado, Nevada, Minnesota, Maine, New Hampshire and Florida — there are millions of citizens who are participants in multi-employer pension plans. Each of these potential voters has family and friends which only multiplies their electoral influence. By stepping in and averting this potential economic pitfall, Trump would win millions of blue collar voters in key states. Likewise, GOP congressmen who had a difficult year in 2018, could find themselves swimming with the current and regain the majority if they can take the opportunity to use the Butch Lewis Act as a starting point to address the multiemployer pension plan crisis in a conservative and sustainable way. Even Senate Republicans could see their majority grow if they move helpful legislation.
In Pennsylvania, there are more than 493,000 participants in multi-employer pension plans. In Michigan, there are more than 440,000 multi-employer pension participants. In Wisconsin, there are almost 150,000. Ohio has almost half a million. Florida has more than 340,000. Colorado has almost 200,000. In Maine, more than 50,000. In Nevada almost 135,000. In Minnesota, more than 278,000.
In each case, those numbers could either expand upon Trump’s 2016 victory, or flip a state that he narrowly lost in 2016, to make it part of his expanded victory in 2020. And once you account for family friends and relatives, those numbers only increase the potential for an impressive reelection victory.
For GOP members of Congress, this provides a powerful way to win the support of working class voters and pave the way to reclaiming the majority in the House and help the Senate preserve and grow its majority.
It may be tempting to leave this problem to fester and then let some future President and Congress deal with it when this pending crisis becomes a full blown, current crisis. But that’s dangerous and risky. The far Left has repeatedly signaled that they won’t let a “crisis go to waste.” They will use any crisis as an excuse to grow government, bust the budget and further smother economic opportunity with burdensome regulations. So solving this now is actually the conservative thing to do. It protects taxpayers and it can keep government growth in check.
A workable and permanent solution will include a number of important principles. First, the affected pension plans must be reformed by requiring them to meet more rigorous and realistic actuarial standards. Second, the reform must engage all the stakeholders to share in the costs, including at least temporarily, the retirees — rather than passing off the costs to taxpayers. Third, modest loan guarantees must be authorized to help pension plans that make the required reforms. This will allow them to get through their short term cash crunch and get back on a firm actuarial footing when the loans would be fully repaid. Fourth, the Pension Benefit Guarantee Corporation (PBGC) must be reformed to make it function as a real insurer where risks and cost balance out. If nothing is done, the PBGC will be bankrupt within 6 years — leaving taxpayers to make good on its promises which will cost hundreds of billions.
If President Trump and GOP conservatives become the champion of a wise pension plan solution like this, they can easily win re-election in 2020, regain the House majority, and expand their Senate majority. That is why the Butch Lewis Act with all its problems, presents conservatives with a real opportunity to fashion a solid conservative solution that benefits all Americans.
By Red State•
It’s bad enough when politicians rob from future generations by piling on debt to the nation’s ruinous finances. Now the Administration and Senate Republicans are considering paying for Nancy Pelosi’s exorbitant spending demands by decimating medical innovation.
But don’t worry, kids: sure it’ll kill future life-saving medicines from ever coming to market, but when you’re done paying for this Pelosi-scale largess, I’m not sure you’ll be able to afford anything nice, anyway.
The deal reportedly under discussion in the Senate would be to meet almost all of Pelosi’s spending demands — did I mention that Republicans control the Senate and President Trump is our chief executive? — and “paying” for it in part by installing crudely designed price controls on the drug industry.
This bright idea is the brain child of Sen. Ron Wyden (D-OR), the chairman, er, ranking member, of the Senate Finance Committee. (Sorry – it’s easy to get confused about who is running things over there).
The headline at Politico tells you everything you need to know: “Senate Republicans pray Trump will take budget deal.”
Imagine how that’s going to go:
“So you’re meeting Pelosi’s spending levels?”
“Yes, sir, Mr. President.”
“And raising the debt ceiling?”
“How the hell are you going to pay for it?”
“Price controls, sir.”
It’s a complete disgrace, and I expect Trump will not take kindly to an outcome where he gets taken for a ride by Nancy Pelosi.
The price controls under discussion are a “Squad”-caliber idea, the “Squad” being the quartet of Socialist Democrats led by Alexandria Ocasio-Cortez who spent last week attacking Pelosi as a racist for not being left-wing enough (you can’t make this up!).
I describe it that way because the proposal is the same combination of Che Guevera-t-shirt-wearing ideological zealotry and breathtaking economic illiteracy responsible for such gems as AOC’s comically melodramatic pronouncement that “the world is going to end in 12 years” because of global warming.
Price controls are already the economic equivalent of a child demanding a pony: they demand an outcome without any regard or awareness of the reality of making it so. We want lower prices, so we’ll order them lower! Except, the cost of production remained just the same, or even increased once the people putting nation-state-level amounts of capital on the line just noticed the infantile children bickering in Congress are about to make a big mess.
The cost of producing one new drug is typically $2.5 billion. Private companies have to pay that up front, without knowing if the effort will succeed or fail, or in this case whether Wyden and Pelosi will decide they need some of that moolah to pay for women’s studies departments, free abortions and sex changes, and only Heaven knows what other insanities they can dream up.
But, you know, some children at least know something about ponies. Some demand a Shetland, for example. The Wyden child doesn’t even know what a pony is, he’s just throwing a tantrum. That’s my best attempt at explaining how stupidly designed these particular price controls are.
First, the proposal punishes price increases of individual drugs compared to inflation. Not only does this ignore any particular circumstances (sudden spike in supply cost for a particular compound, for example), it creates a giant incentive to pad price increases across the entire product line, untethering the price of any individual drug from actual production costs.
Second, the vehicle for delivering these price controls is the Medicare Part D, otherwise known as the one part of the entire federal health care system that shows any sanity and cost-effectiveness — thanks to its use of market principles.
Part D is the only large government program in the history of humanity to come in 40% under budget, which is practically on par with feeding the crowd of 5000 from a basket when you think of the endless list of failed health care “reforms” that cost an eye-watering amount above their price tag.
Why did Part D work? Because it managed to install some semblance of a market, which consumer choice, and real competition, in the form of the plans that compete for patients. Exactly the opposite of the price controls we may be on the verge of adopting to “pay for” Pelosi’s world domination tour — sorry, the obscene spending she demanded and the Senate Republicans appear all too happy to accept.
It’s shameful. Something deep inside the chests of Senate Republicans should cause them to reject a bad Pelosi proposal — simply as a matter of self-respect! But if you believe that most politicians have anything more than trace amounts of self-respect, boy have I got some wonderful price controls to sell you!
Perhaps it’s time for Bernie Sanders to put his money where his mouth is and pay his staffers a “living wage”—and the overtime they should be entitled to.
For all is rhetoric, it may turn out that socialist Sen. Bernie Sanders is just another hypocritical politician who takes money from big corporations, invests in Wall Street and, reportedly, pays his workers “poverty wages” (and NO overtime)—despite the fact that they’re unionized.
Back in March, to show his “pro-union” bonafides, Bernie Sanders made headlines when he encouraged his staffers to unionize with the United Food & Commercial Workers, turning his campaign into the first-ever unionized presidential campaign.
However, as often happens when activists who campaign to dictate standards upon others actually have to live under those standards, things do not always go as planned.
On Thursday, the same day that the House of Representatives passed a bill to raise the federal minimum wage to $15 an hour—which Sanders has long advocated for—the Washington Post ran an article that shed some light on a wage dispute that is currently going on within his campaign.
Apparently, Sanders’ campaign workers are lashing out at campaign management regarding the low wages that they are receiving.
“I am struggling financially to do my job, and in my state, we’ve already had 4 people quit in the past 4 weeks because of financial struggles,” one field organizer reportedly wrote on a message board to Sanders’ campaign manager Faiz Shakir.
Another employee wrote his co-workers “shouldn’t have to get payday loans to sustain themselves.”
Then, there was this interesting statement:
The draft letter estimated that field organizers were working 60 hours per week at minimum, dropping their average hourly pay to less than $13. [Emphasis added.]
As field organizers are paid an annual salary of $36,000 under their new union contract, things would be fine—if they are only working 40 hours per week.
However, it appears they are not.
If they are truly working 60 hours per week (or 3,000 hours per year), on a salary of $36,000, they are only making $12 per hour, instead of the $17.30 they should be making on a standard 40-hour week, 2,080-hours per work year.
Obviously, $12 per hour is far less than the $15 Bernie Sanders claims to support.
However, it’s worse than that.
Based on the article, it also appears that Sanders is not paying overtime.
Under the Fair Labor Standards Act (FLSA) of 1938, employees who are not exempted from the law are entitled to time and one half pay for every hour worked after 40 hours in a given workweek.[Some states (and, more importantly, some union contracts) actually mandate time and one half after eight hours.]
If the Sanders campaign workers are not exempt from the FLSA and are entitled to overtime, they should be making nearly $26 per hour for every hour worked over 40.
Following the 2016 election, the DNC was sued by former field organizers who alleged that the “the state party defendants conspired with one another and with Defendant DNC to unlawfully designate Plaintiffs, and those similarly situated, as exempt employees under the FLSA and applicable state wage statutes, thereby denying Plaintiffs full and appropriate compensation.”
Unfortunately for the DNC’s field organizers, the suit was dismissed in 2018.
In dismissing the overtime suit, according to this summary, “the Court relied on an often-overlooked defense to the Fair Labor Standard Act (“FLSA”) – namely, that the FLSA only covers employees engaged in interstate commerce as opposed to employees engaged in purely local activities. [Emphasis added.]”
That case involved multiple state parties (as well as the DNC)–and not a singular candidate.
In the case of Bernie Sanders, however, a court could determine his campaign to be a singular employer…and, if so, it is definitelyoperating across state lines (interstate commerce).
It is also possible that the new union contract may aid a court in establishing that employees are not exempted from the FLSA. However, neither the campaign, nor the UFCW has released the contract to the public.
Perhaps it’s time for Bernie Sanders to, quite literally, put his money where his mouth is.
It is typical for pundits to criticize the Jones Act claiming that it harms American consumers or benefits others — some even outlandishly claim it benefits Russian President Vladimir Putin. These hypercritical pundits all seem to either overlook or completely ignore a number of critically important facts. In a fact free world, one can come to any conclusion — even silly ones. But when facts and sound reasoning matter, the conclusions must stand up to scrutiny.
The Merchant Marine Act of 1920 (also known as the Jones Act) was passed in the aftermath of World War I to ensure that America had a viable merchant marine that could provide support to our navy and military in times of war or national emergency. It was also intended to ensure that we had a viable ship-building and ship repairing capability — again to support our military. In a world where many foreign nations heavily subsidize their shipping industries as well as their ship building and repairing industries, we must not allow ourselves to become dependent upon other nations to maintain our naval strength.
Contrary to the view that the Jones Act is favored by despots like Vladimir Putin, the act has significant national security benefits for the U.S. Consider the Vice Chairman of the Joint Chiefs of Staff Gen. Paul Selva, who said, “I am an ardent Supporter of the Jones Act. It supports a viable ship building industry, cuts costs and produces 2,500 qualified mariners. Why would I tamper with that?” Likewise, Former Coast Guard Commandant Adm. Paul Zunkunft has said, “You take the Jones Act away, the first thing to go is these shipyards and then the mariners… If we don’t have a U.S. fleet or U.S. shipyard to constitute that fleet how do we prevail?” The military understands that the Jones Act is critically important to our national security.
History teaches an important lesson. In 1812, Napoleon left France with an army of about 700,000 soldiers. Napoleon’s army easily pushed through western Russia and made it all the way to Moscow. But as Napoleon’s supply lines became attenuated, his army lacked the ability to feed and supply itself. Napoleon, despite having the world’s greatest army, was defeated because he couldn’t supply his troops. When he returned to France six months later, his army had only 27,000 soldiers who could defend France and the balance of power in Europe was radically altered for a century.
The lesson we must learn from this is obvious — we may have the best technology and the best trained military on the planet, but if we cannot properly supply them, we too could meet with disaster. The Jones Act is an important part of our military’s ability to supply itself.
In a world in which China and Russia are expanding their naval capabilities, the need for the Jones Act is all the greater. Putin would like a weaker America, not a strong America – with a functioning domestic shipping industry to support our nation’s military strength.
The Jones Act also has a significant impact on homeland security. It limits foreign flagged ships and foreign crewed ships from sailing around America’s inland waterways. Dr. Joan Mileski, head of the Maritime Administration Department at Texas A&M, said, “If we totally lifted the Jones Act, any foreign-flagged ship — with an entirely unknown crew — could go anywhere on our waterways, including up the Mississippi River.” Obviously, this would make our defenses very porous.
Since 9/11/2001, our homeland security approach has been to place most of our security resources and assets at our coasts and at the ports that have the most traffic. But few assets and resources are used along the more than 25,000 miles of navigable inland waterways in the United States. There we rely upon the Jones Act to provide security. American flagged and American crewed ships are trained and keep a watchful eye for signs of terrorism and are thus an important part of our nation’s homeland security layered defense.
Our southern border is 1,989 miles long. The U.S. has more than 25,000 miles of navigable waters. Without the Jones Act, we’ve just made both sides of every river a possible entry point. Michael Herbert, Chief of the Customs & Border Protection’s Jones Act Division of Enforcement has said: “We use the Jones Act as a virtual wall. Without the Jones Act in place, our inland waterways would be inundated with foreign flagged vessels.”
The truth is the Jones Act is more important today than even when it was first passed. Today, it not only provides America with trained and skilled mariners and a viable ship building and ship repairing capability to support our military and Navy, but it also protects us from terrorists and other nefarious international bad actors.
Imagine if Chinese government owned ships could operate freely up and down the Mississippi River and remain there throughout the year. They would use that access to spy and intercept even civilian communications.
Adam Smith, the father of free market economics, in his seminal work — The Wealth of Nations — strongly supported and defended the British Navigation Act, which was a cabotage law much like America’s Merchant Marine Act. His rationale included, “The defense of Great Britain, for example, depends very much on the number of its sailors and shipping.”
The Jones Act protects America. This is a verifiable fact. Any alleged costs are amorphous and difficult to verify or prove. But what is not difficult to prove is that America’s security is benefited and protected by the Jones Act. The world is a dangerous place, filled with adversaries that will be all too happy if the Jones Act is weakened. It is time tested and proven.