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.
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.
Sorry, guys. It looks like the Apollo 11 moon landing is canceled.
Sure, it is neat that humanity in 1969 left Earth to set foot on an astronomical body not its own, marking man’s greatest achievement to date, but did you know the Apollo 11 space program was also overwhelmingly white and male?
This is a real complaint being raised on the 50th anniversary of the moon landing by real people in real newsrooms.
The first of such arguments come from the Washington Post, which published a tweet on July 16, that read: “The culture that put men on the moon was intense, fun, family-unfriendly, and mostly white and male.”
The report itself, authored by style writer Karen Heller, reads, “As NASA worked relentlessly to fulfill John F. Kennedy’s goal of landing a man on the moon by decade’s end, it turned to the nation’s engineers. Many of them were fresh out of school, running the gamut from mechanical to electrical engineers, because that’s mostly what was taught in universities, and almost exclusively to white men.”
“In archival Apollo 11 photos and footage, it’s a ‘Where’s Waldo?’ exercise to spot a woman or person of color,” the report adds.
The article is a fairly interesting long-read about life for the men and women who worked at Cape Canaveral in the late 1960s. The problem is: The most fascinating details are buried almost immediately under the identify politics hyped in the story’s opening as well as in its accompanying tweet.
Then there is the New York Times, which on July 17 published an op-ed written by author Mary Robinette Kowal, headlined “To Make It to the Moon, Women Have to Escape Earth’s Gender Bias.”
“The Apollo program was designed by men, for men. But NASA can learn from its failures as it aims to send women to the moon and beyond,” the subhead reads.
“If we do not acknowledge the gender bias of the early space program, it becomes difficult to move past it,” the article reads, concluding with these lines, “As we look back at the Apollo mission … it is important to examine the gender biases of the early space program for lessons learned. If we want to land the first woman on the moon, let’s make sure she has tools designed with her in mind. Eliminating the legacy of gender bias is just one small step.”
None of this compares to what the New York Times published next.
“America may have put the first man on the moon, but the Soviet Union sent the first woman, the first Asian man, and the first black man into orbit — all years before the U.S. would follow suit,” read a July 18 tweet published by the New York Times (reminder: The United States won the space race).
The accompanying article, titled “How the Soviets Won the Space Race for Equality,” is every bit as ridiculous as it sounds, especially the kicker, which reads, “Cosmonaut diversity was key for the Soviet message to the rest of the globe: Under socialism, a person of even the humblest origins could make it all the way up.”
This is pro-Soviet Union agitprop.
The real question here is this: For whom are these article being written? It is worth noting that both the Washington Post and the New York Times have also published several articles celebrating the 50th anniversary of the moon landing. But what is the purpose of these “actually, the moon landing was bad” counterpoints?
What audience does this serve? Does such an audience even exist or are these articles merely a cynical manipulation of the hate-click economy?
By Fox News•
Sen. Bernie Sanders, I-Vt., on Tuesday compared the push to combat climate change to the response to the attack on Pearl Harbor as he unveiled legislation that would declare a “climate emergency” and demand a massive-scale mobilization to tackle it.
“In some ways…I’m reminded today in terms of the crisis that we face in climate change about where the United States was in 1941 when it was attacked at Pearl Harbor, and what happened at that point, having to fight a war on two fronts in the East and in Europe, the United States came together and within three years it had created the type of armaments program that was necessary to, in fact, win the war,” he said in a conference call with reporters.
He went on to argue that fighting climate change was do-able, but it needed greater political will in Washington D.C. — particularly from President Trump, whom he called ignorant on the issue.
“So I don’t think the issue here isn’t that we can’t address this problem, i think we can, I think we know exactly what has to be done, and that is massive investment in sustainable energy, massive investments in energy efficiency, transform our transportation system, we know what has to be done, but the problem is the lack of political will,” he said.
He made his remarks as he, along with Reps. Alexandria Ocasio-Cortez, D-N.Y., and Earl Blumenauer, D-Ore., was set to introduce a non-binding resolution in Congress to declare a “climate emergency” that calls for a “massive-scale mobilization to halt, reverse, and address its consequences and causes.”
Ocasio-Cortez said that the U.S. has fewer than 12 years to act to combat the crisis, and echoed Sanders’ sentiment that it was a question of political will, rather than how to act.
“We know that the scientific consensus is here, the solutions are right in front of us but…this is not just a scientific crisis, not just an environmental crisis, a climate crisis but this is a political crisis of inaction, and it’s going to take political will, political courage in order for us to treat us this issue with the urgency that the next generation needs in order for us to preserve our way of life and preserve our planet as much as we possibly can,” she said.
The resolution calls for a wide-scale mobilization to combat the emergency and restore the climate “for future generations.”
“The global warming caused by human activities,” claims the draft resolution, according to the Mother Jones magazine, “has resulted in a climate emergency that … demands a national, social, industrial, and economic mobilization of the resources and labor of the United States at a massive-scale.”
Ocasio-Cortez and Blumenauer, meanwhile, also wrote to fellow members of Congress urging them to declare climate change an emergency in a bid to “swiftly mobilize federal resources in response.”
The resolution, according to the outlet, details how climate change impacts public health and the national security of the U.S., though it doesn’t make any exact recommendations for how to address the so-called emergency.
The latest declaration comes after Ocasio-Cortez’s signature Green New Deal, a sweeping Democratic proposal for dealing with climate change, failed a test vote in the U.S. Senate in March, with 42 Democrats and Sanders voting “present.”
Both the New York Democrat and her colleagues decried Senate Majority Leader Mitch McConnell’s move to bring the Green New Deal up for a vote, saying the Republicans purposely rushed the vote while McConnell said he only wanted Democrats to go on record to support the sweeping proposal that he himself called “a radical, top-down, socialist makeover of the entire U.S. economy.”
The Green New Deal calls for the U.S. to shift away from fossil fuels such as oil and coal and replace them with renewable sources such as wind and solar power. It calls for virtual elimination by 2030 of greenhouse gas emissions responsible for global warming. Republicans have railed against the proposal, saying it would devastate the economy and trigger massive tax increases.
Last week Wall Street focused on what the Trump-Xi summit would mean for the China trade war, the global economy and the Dow Jones. But the high-stakes meeting turned out to be a warm-up act. President Donald Trump’s real diplomatic flourish came as he crossed into the DMZ to shake hands with North Korea’s Kim Jong-un.
Investors are still trying to discern whether China trade talks will bear fruit after Trump’s big concession to Chinese President Xi Jinping. In addition to holding off on further tariffs, Trump said he would ease a ban on American technology sales to Chinese telecom equipment giant Huawei. Beijing appeared to give up little or nothing, and shows no sign of caving to Trump’s demands.
That raises the risk of another sudden collapse of China trade talks and a further escalation of tariffs. If that happens, both the U.S. economy and Dow Jones look vulnerable, even as the Dow hit record highs Wednesday.
But it may make sense to look at the China trade war through the prism of Trump’s push for a North Korea breakthrough. It’s a good bet that Trump-Kim DMZ meeting wouldn’t have happened if he hadn’t gotten China trade talks back on track.
Now Trump is pushing for a White House visit and reportedly wants North Korea to agree to substantially freeze nuclear weapons capabilities. As long as Trump sees Beijing as a “strategic partner” reining in North Korea’s nuclear ambitions, further escalation of the China trade war seems unlikely.
The relationship between North Korea and China is complex. But China has significant economic ties with North Korea, has often taken Pyongyang’s side against harsh international sanctions and has been seen as able to influence its behavior. International relations experts also say that Beijing has long used its role in mediating North Korea’s threat as a buffer against criticism by the West.
Trump has previously discussed China’s North Korea ties as a consideration in the U.S.-China trade dispute. While that hasn’t averted a major trade conflict, this past weekend isn’t the only time North Korea nuclear issue and China trade war have seemed to follow a parallel path.
Last December, Trump and Xi agreed to their first trade cease-fire. Then came Trump’s February summit with the North Korean leader in Hanoi. Trump walked away from that meeting, putting talks on ice. In May, China trade talks also broke down as Trump lost patience with Beijing for backtracking on commitments. On May 5, Trump threatened to escalate tariffs. Four days later, North Korea fired off short-range missiles in an implicit challenge to the U.S.
The odds of a China trade deal look pretty low, given the depth of the differences separating the two sides. The U.S. insists that China write new laws resolving complaints over theft of intellectual property, forced technology transfers, currency manipulation, access to Chinese markets and state subsidies. Even then, the U.S. wants Trump tariffs to remain in force, with some falling away as Beijing clears these benchmarks. China has refused all of these demands as humiliating and a violation of its sovereignty.
Trump may be losing hope for a huge China trade deal, but he seems to think a North Korean nuclear deal could be in reach. Trump may even see a certain logic in letting a North Korea deal come first. If Beijing really is a “strategic partner,” as Trump said in a Saturday press conference, Chinese leaders will encourage North Korea to complete a nuclear deal with him. If that happened, Trump might be more trusting of China to abide by any trade agreement, rather than keeping tariffs in place until Beijing proves it will keep its word.
"This is the flip side (of) tax the rich, tax the rich, tax the rich. The rich leave, and now what do you do?" said New York Governor Andrew M. Cuomo on Feb. 4
After the Trump tax cut went into effect one year ago, we predicted that the Trump tax reform would supercharge the national economy but could cause big financial problems for the highest-tax states: New Jersey, Illinois, Connecticut, and New York.
The capping of the state and local tax deduction at $10,000 raised the highest effective state tax rates by about 66% (for example, in New York City, the rate on millionaires rose from about 8% to 13.3%). In New Jersey, the highest rate has risen from 7.5% to 12.75%.
Now, we have Andrew Cuomo conceding that the trend of rich people moving out of New York has caused the loss of $2.3 billion of tax revenue in Albany’s coffers. Cuomo called this tax change “diabolical.” We think it was a matter of tax fairness. No longer do residents of low-tax states have to pay higher federal taxes to support the blob of excessive state/local spending and pensions in the blue states.
As we predicted, the wealthy are fleeing these states. The new United Van Lines data were just released that are a good proxy for where Americans are moving to and from. Guess what four states had the highest percentage of leavers in 2018: 1) New Jersey, 2) Illinois, 3) Connecticut and 4) New York. Even high-tax California had more Americans pack up and leave than enter.
Ironically, liberals like Cuomo who argued for years that businesses don’t make location decisions based on taxes in their states are now forced to admit that the cap on the state and local tax deduction (which primarily affects the richest 1%) is depleting their state coffers. The rich change their residence by moving for at least 183 days of the year to low taxers such as Arizona, Florida, Tennessee, Texas and Utah.
We advised Cuomo and other blue state governors to immediately cut their tax rates if they wanted to remain even semi-competitive with low-tax states. They are doing the opposite. Connecticut, Illinois and New Jersey have led the nation in tax increases on the rich over the last three years, while “progressives” have cheered them on.
Last year, legislators in Trenton went on a taxing spree, raising the income tax on those making more than $5 million a year to 10.75% — now the third-highest in the country — and then enacting a health care individual mandate tax on workers, a corporate rate increase and an option for localities to impose a payroll tax on businesses. And they are still short of cash. Idiotically, these tax hikes were passed after the state and local tax deduction cap was enacted, thus pouring gasoline on their fiscal fires.
How has this worked out for them?
In addition to New York’s fiscal woes, the deficit in Illinois is pegged at $2.8 billion (with a $7.8 billion backlog of unpaid bills), and Connecticut faces a two-year $4 billion shortfall despite three tax increases in five years.
New Jersey has a $500 million deficit this year (even after the biggest tax hike in the state’s history) and Moody’s predicts that gap will widen to $3 billion over the next five years. This is all happening at a time when most states have healthy and unexpected surplus revenues due to the Trump economic boom and the historic decline in unemployment.
A Pew study published late last year on which states are bleeding the most red ink ranked New Jersey worst, Illinois second worst and Connecticut seventh worst. New York was also in the bottom 10.
Let us state this loud and clear in the hopes that lawmakers in state capitals across the country are paying attention: The three states that have raised their taxes the most now have the worst fiscal outlook.
Worst of all, things don’t look like they are going to get better in any of these states.
Last fall, Connecticut, Illinois and New Jersey voters elected mega-rich Democratic Govs. Ned Lamont, J.B. Pritzker and Phil Murphy, who have promised to sock it to the rich — the ones who haven’t yet left. In Illinois, Pritzker would eliminate the state’s constitutionally protected flat tax so that he can raise the income tax on the rich by as much as 50%. After raising income taxes three times in the last five years, Connecticut’s legislature now wants to raise the sales tax rate. No one in any of these progressive states even dares utter the words tax cut. In just one decade, New York lost 1.3 million net residents; Illinois 717,000, New Jersey 516,000 and Connecticut 176,000. California has lost 929,000.
There is also a useful warning for the soak-the-rich crowd of progressives in Washington. If a rise in the state tax rate from 8% to 13% because of the state and local tax deduction cap can have this big and immediate negative impact, think of the economic carnage from doubling of the federal tax rate from 37% to 70% as some want to do. The wealthy would relocate their wealth and income in low-tax havens like Hong Kong, the Cayman Islands and Ireland. That would do wonders for the middle class living in those countries.
We are sticking with our warnings from last year. If the four states of the Apocalypse — Connecticut, Illinois, New Jersey and New York — do not reverse their taxing ways and choose to keep making things worse, these once very rich and prosperous states will see thousands more rich taxpayers leave. The politicians in these states just don’t seem to understand math. A soak-the-rich tax rate of 8%, 10% or even 13% on income of zero yields zero income when the wealthy leave the state. Cuomo was right: The bleak outlook for the four states of apocalypse is “as serious as a heart attack.”
A game where only one side plays by the rules is rigged. We have now locked ourselves in an embrace with a corrupt regime, and it has not been to our benefit economically or morally.
The United States and China have traded since the early days of our republic, but only recently has the scale of that trade become a political issue. More than any other point, Donald Trump’s rhetoric against outsourcing to China gave him the blue-collar Midwestern votes that made up his margin of victory in 2016. His election was a break with the generation-long bipartisan consensus that more and freer trade is better, whether the trading partner is a liberal democracy that respects the rule of law or a communist dictatorship where unfree people labor in unsafe conditions for government-suppressed wages.
Even to call trade with China “free” is a misnomer. Besides the minor tariffs still in place, there is also an uneven use of non-tariff trade barriers. Chinese goods enter our markets cheaply and freely because we agree to follow our agreements, our laws, and the rules of the World Trade Organization (WTO). Our goods, on the other hand, are subject to arbitrary restrictions by the communist government, while Chinese companies and government routinely infringe our intellectual property rights. The high hopes of free trade have been replaced with humiliation and decline.
Free trade with unfree nations smells like a conspiracy: the rich get richer by paying peanuts for production, while blue-collar workers lose their jobs and are bought off with cheap goods and more welfare. The truth is not criminal, just criminally stupid.
In classic American broad-mindedness, when our system won the Cold War, we bent over backward to befriend our former enemies. Free trade would lead to a prosperous, freer China, the thinking went. We thought that lowering our guard would turn a foe into an ally. Instead, the American worker just got sucker-punched.
One of the best examples of the perils of this uneven trade is the dispute over rare earth elements. Rare earths—a group of 17 different elements—are plentiful, but difficult to mine and environmentally hazardous to process. In recent years, rare earths have become more important, as many are used in modern electronics and military and high-tech applications.
At present, about 80 percent of the world’s production of rare earths comes from China. That undoubtedly suits China just fine, and the western companies that have outsourced industrial production there don’t have a problem with it, either. After all, if your iPhone comes from China, why shouldn’t its components?
But China’s dominance of the field has other effects. While the United States once led the world in rare earth production, we now import the vast majority of these minerals from China. The loss in mining jobs is bad enough, but the extreme concentration in the field means that China essentially controls the world’s access to a vital industrial and military resource.
Free-market conservatives confronted with a situation like this one usually laud the efficiency gained by trade and competition. They are not completely wrong: it is more efficient to have third-world workers in an unfree country mining hazardous materials. Mining is a dirty, dangerous job: why not let someone in a country with terrible environmental laws and lax workplace safety rules do it?
If rare earths were only used for toys and video games, that might be a financially acceptable albeit morally dubious answer. The military applications, though, make this a much bigger problem. Once China achieved a near-monopoly on rare earths, their position was ripe for abuse.
And, wouldn’t you know it, they abused it. Between 2009 and 2012, China drastically reduced its export of rare earths and two other important metals, tungsten and molybdenum. In a free economy, that would encourage production in sources outside of China, where the artificial scarcity Beijing imposed would make it worthwhile to produce at higher prices.
In 2012, U.S.-based Molycorp, attracted to the higher prices that resulted from the Chinese government’s efforts to boost profits by restricting REE [i.e., rare earth elements] exports, made plans to ramp up domestic REE production, investing nearly $800 million in state-of-the-art mining operations in California. At the moment when the project was poised to succeed, China flooded the market with REEs just long enough to knock Molycorp out of the market. After its Chapter 11 bankruptcy reorganization, Beijing is allowing Molycorp to continue operations in China. But once again, the U.S. has no domestic REE production.
This anti-competitive behavior in a domestic company would earn an investigation by the Federal Trade Commission (FTC). In the international economy, the American government’s options were more limited. The Obama administration, joined by Japan and the European Union, filed a complaint against China in the Dispute Settlement Body of the World Trade Organization (WTO).
America won its case, but the Molycorp mine in California was still bankrupt. In 2017, the rare-earth mining assets were sold to a consortium of buyers that includes Shenghe Resources Holding Company, a Chinese firm with ties to the PRC’s government, according to mining executives quoted in IndustryWeek. The Chinese government broke the rules of the WTO and still came out on top.
The rare earths industry is one of the more egregious instances of a non-market economy manipulating the markets, but it is far from the only one. The problem began when the free nations of the world agreed to admit China into the WTO in the first place. The WTO grew out of the General Agreement on Tariffs and Trade, a post-World War II attempt to rationalize trade and reduce barriers to it. As far as it concerned trade between developed nations recognizing the rule of law, it was a great success.
China joined the WTO in 2001. The organization’s press release from that day is full of hopes for expansion of “its rules-based system” that, in retrospect, look naive. “As a result of the negotiations,” the press release reads, “China has agreed to undertake a series of important commitments to open and liberalize its regime in order to better integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTO rules.”
The specific promises are even less believable 18 years later:
China will provide non-discriminatory treatment to all WTO Members…many of the restrictions that foreign companies have at present in China will be eliminated or considerably eased after a 3-year phase-out period. In other areas, like the protection of intellectual property rights, China will implement the TRIPS (Trade-related Aspects of Intellectual Property Rights) Agreement in full from the date of accession.
Many of these changes have been made in Chinese law, but in a communist country, the law matters less than the will of those enforcing it. Intellectual property rights of foreign nations are routinely ignored, and counterfeits from China are sold around the world with the tacit acceptance of their government.
China also ignores environmental and occupational safety laws while banning independent trade unions from organizing. In a country that respects the rule of law, these things have been judged to make the marketplace more humane. They also make it more expensive to do business, but most people accept that tradeoff. China routinely ignores what laws it does have and squashes any independent source of power like trade unions or industry groups that might challenge the state to change.
China’s accession to the WTO came with the expectation that China would be a “market economy” before very long. These actions show that it has not, and has no intention of ever doing so. Even so, we continue to trade with China on unfavorable terms, a reflection of the consensus among bipartisan elites that free trade benefits everyone, with little or no tradeoffs. The rare earths dispute shows how untrue that is.
Conservatives have recently been transfixed by a dispute between Sohrab Ahmari and David French over whether the liberal democratic system will allow social conservatism to co-exist with the values of the secular left when the secular left increasingly refuses to play by liberal democracy’s rules. A similar argument needs to be had about free market competition with non-market economies that are just as lawless in their pursuit of victory. Conservatives have long fought for greater market efficiencies, but we must now ask ourselves if that goal is worth the price.
Free traders have been very pleased to divide the debate between two sides: those who want to trade with the world, and those who want to keep out all foreign goods. It is a false dichotomy between absolutes. In between, there are many who would be happy with trade, provided it were among free nations. In a system where all involved can be trusted to obey the rules, and where violations can be punished with more than a slap on the wrist, trade can improve all nations’ prosperity.
But a game where only one side plays by the rules is—and there is no other way to say this—rigged. Competition among equal parties is fair and free. If a factory in one state loses out to another, so long as no government’s thumb is on the scale, the result is just. Everyone follows the rules. May the best company, and the best workers, win.
Compare that to competition with an unfree country’s manufacturers. Is a factory in China polluting in violation of their laws? We have no way of knowing. Even if we did, there is little we can do about it when their court system serves only the will of the Chinese Communist Party.
Are their factories working cheaper because they are unsafe? Likely, but again there is no justice system that will remedy it. There are no independent unions to fight for work rules that protect people’s health, nor for increased wages like those in the developed world. China pretends to be a worker’s paradise, but in reality, it is a billion-member factory town.
This month in The Atlantic, Reihan Salam argued normalizing trade with China was a mistake from the beginning. Salam dates the problem to a year before China’s WTO accession, when Congress extended “permanent normal trade relations” (PNTR) to China, rather than annually renewing most-favored-nation status. The results were stark:
The annual battles over whether or not China merited MFN status naturally brought human rights issues to the fore, and gave voice to champions of the Tibetans and other marginalized, and sometimes brutalized, minorities. The deepening of economic ties that followed PNTR had the opposite effect—rather than draw attention to all the reasons the U.S. might want to be wary of further entanglement with China, it greatly enriched those who profited from that entanglement.
We have now locked ourselves in an embrace with a corrupt regime, and it has not been to our benefit economically or morally. The rare earths trade has been one of the worst examples of how Red China has used our openness against us, but it is far from the only one. Now, bound to a hostile nation that grows in power every day, we have outsourced so much of our economic machinery to them that business leaders are heard to say that reshoring manufacturing is “impossible.”
It is not impossible, but it requires hard work. Congress—yes, Congress—must reassess the ease with which unfree nations are granted access to American markets. The entire international trade structure of the WTO has become an unequal treaty, with the United States and the rest of the developed world on the losing end.
China is familiar with the concept. Its trade with the Western world was once starkly unfair in the other direction. More powerful nations, including the United States, forced China to sign unequal treaties beginning in the 1840s. What came next was a “century of humiliation,” followed by the isolation caused by the communists’ victory in their revolution in 1949.
Our politicians may be ignorant of history, but China’s are not. American surrender on trade could cause our own century of humiliation. To avoid it, our leaders must, at last, ask the question workers across the country have asked for 20 years: has unrestricted, one-sided, free trade with China really benefited the average American community? Has ceding control of strategic resources to the enemy made us safer as a nation? After two decades of humiliation, the answer is clear.
International trade is a critical growth engine for the nation’s economic strength and prosperity. Today, we’re at several crossroads with many of our largest trading partners to ensure the U.S. is not unfairly disadvantaged in the global marketplace. As the Administration confronts these issues — including at a highly anticipated meeting between President Trump and China’s President Xi at the G-20 Summit this weekend – it’s vital for Congress to avoid shortsighted new policies that would undercut the very kinds of market access the U.S. is seeking to secure in these negotiations.
Unfortunately, that’s exactly what a proposal included in a bill to reauthorize the U.S. Export-Import Bank (Ex-Im) would do. Passing limits on the Ex-Im Bank that would limit American exports to China is what President Xi is lobbying for and exactly what Americans have been fighting against. Why Members of Congress would side with Chinese interests is hard to explain!
Ex-Im Bank, which provides financing and insurance to U.S. manufacturers and their foreign buyers that are paid for at market rates, is a critical tool that levels the playing field for American businesses while making a profit for the U.S. taxpayer. Other nations often give direct subsidies and government provided financing. We don’t do that. But with the Ex-Im Bank we try to give our businesses that export goods and services the ability to offer reasonable financing to their buyers if there are not other options.
While the Bank’s periodic authorization has historically been a bipartisan matter, it’s faced recent contention in Congress from conservatives who argue the federal government should not be involved in U.S. export sales. However, as I have argued before, in a world where our competitors in China, Russia, Brazil, France and most of Europe and South Africa continue to utilize their own versions of Ex-Im Bank and provide direct subsidies to reap the economic benefits of increased exports — for Americans to hamper our own Ex-Im Bank, only hurts U.S. companies and benefits of our competitors.
Unilateral disarmament won’t make the world safer from war. Likewise, unilateral trade disarmament won’t make the US more competitive or prosperous. In fact, all it will do is surrender business opportunities and jobs to our foreign competitors.
Unfortunately, a new provision tucked into a reauthorization bill that the House Financial Services Committee is scheduled to consider this week would restrict Ex-Im financing for transactions involving any Chinese state-owned entity with more than 25 percent Chinese ownership. This may sound tough against China, but it actually precisely aligned with China’s trade policies which exclude America from their markets. Simply stated, this provision would not only cut off the ability of American companies to export to China, but also to other countries and buyers where the Chinese are also engaged in the transactions.
America’s workers do not favor this proposed policy because it means exporting their jobs to our competitors. I can also guarantee you that China’s totalitarian government is hoping this proposals passes. They would love for us to take ourselves out of international competition. And China won’t be the only nation rooting for this misguided policy. Every competitor we have in the international marketplace will benefit from our unilateral economic disarmament.
Not only is this provision completely counterproductive to the President’s goal of reducing the U.S. trade deficit with China, it undermines the national economic benefits that come from growing U.S. exports all around the globe. Worse yet, this provision would single out the United States as the only country in the world imposing huge limits on doing business with state-owned and state-controlled enterprises through export credit agencies. This does nothing to advance American security or jobs. But it gives foreign competitors a huge upper hand over American companies — with the American economy and the American worker paying the price.
The undertaking of a long-term reauthorization bill is an admirable endeavor, especially in a way that attempts to avoid the brinksmanship of past reauthorizations that have threatened the Bank’s very existence and undercut certainty for American workers trying to compete overseas. For these reasons, it’s hard to imagine any member of Congress could stand behind a provision that would forfeit U.S. exports — and the manufacturing jobs that come with those exports — to our competitors around the world.
This is exactly the type of economic unilateral disarmament that American workers hope to avoid in this year’s timely reauthorization bill, and is the opposite of what the President is fighting for with our major trading partners around the world.
By Fox News•
Americans hate to wait. We scout out the shortest grocery line. We choose the fastest delivery option. We chafe at slow-moving internet speeds. And we don’t like to wait for health care when we or our loved ones urgently need it. But if America gets saddled with a radical new health care system called “Medicare-for-All,” a lot of waiting for health care will be in your family’s future.
When Americans got tired of waiting around in clogged emergency rooms for last-minute care, the marketplace responded. Urgent care facilities started sprouting up, offering care for non-life-threatening illnesses and injuries. Hospitals, sensing a threat to their business, now buy billboards advertising current wait times in their ERs.
But in countries where the marketplace has been supplanted by government-run health care systems like Medicare-for-All, people have no choice but to wait for desperately needed health care on the government’s timetable. Not for minutes or hours, but weeks and months.
According to a comprehensive study by the nonpartisan Fraser Institute, patients in Canada wait an average of nine weeks to see a specialist, and an additional 11 weeks on top of that to receive treatment. Even when every day counts, such as treatment of cancer, patients have to wait a month before getting radiation therapy.
Advanced-stage heart disease can trigger a heart attack or stroke at any time, but in Canada, you’ll wait about two and a half months for coronary bypass surgery unless you are already in an emergency situation. If your life is not at imminent risk, you will wait even longer for care. If you need to be treated by an OB-GYN in Canada, expect to wait 21 weeks. If you’re suffering from acute knee or back pain, you’d better stock up on ibuprofen: you could wait six months to three-quarters of a year for orthopedic surgery.
In Britain, where the government’s role in health care is even more pervasive, wait times are much worse. A 2019 study by the Royal College of Ophthalmologists found that tens of thousands of elderly patients are left struggling with near blindness due to a government cost-cutting drive that relies on them dying before they qualify for cataract surgery. According to another study by the Royal College of Surgeons, nearly a quarter of a million Britons were waiting more than six months—some even longer than nine months—to be scheduled for surgery and other medically necessary treatment.
Why do government-run health care systems—including so-called single-payer schemes like Medicare-for-All—result in long waits for needed care? Because unlike the private sector, government has zero incentive to customize care to individual needs. It achieves efficiencies primarily by doling out one-size-fits-all health care to everyone, regardless of unique circumstances.
Government is also poor at adjusting to medical innovations, new technologies and changes in epidemiology. For example, Canada has struggled to handle the rise in asthma incidence rates. The Canadian Lung Association found that the average wait time for asthma testing is four weeks, with one in four asthma sufferers waiting longer than three months to be tested. In the U.S., private insurance usually covers most of the cost of expensive MRIs to evaluate medical conditions. But in Canada, where MRIs are “free,” wait times have steadily increased, reaching 364 days in British Columbia. Not surprisingly, some Canadians have taken to paying out-of-pocket for an MRI.
Medicare-for-All and its various derivatives all have one ultimate goal: to push the private sector out of health care and replace it with more government. This means that government will be deciding what health care Americans can get and when—not doctors, not hospitals, and certainly not patients. When politicians absurdly promise to make health care “free,” what they actually mean is that government will pick up the tab and bill us later, while deciding what it will pay for and how much to pay. Those decisions obviously and inevitably will impact choice, quality and availability.
This week, on June 26-27, twenty Democratic presidential contenders will face off against one another on the debate stage. Nearly all of them publicly support Medicare-for-All or some variation. Each one should be asked: why should Americans be forced to wait longer (and ultimately pay more) for lower-quality, government-controlled health care?
One year ago this month, opponents of the FCC’s decision to loosen Title II regulations told us the Internet as we know it would end. It didn’t.
June 11, 2018, was to be a date that would live in infamy, when the Federal Communications Commission (FCC) repealed the Obama-era net-neutrality rules. It was a decision met with widespread criticism throughout the country. Fire, brimstone, throttled Internet speeds, the silencing of minority voices, attacks on the LGBTQ community, and the end of the internet as we know it were all imminent, according to liberals. We would be getting the Internet “one word at a time.”
One year after the “day the Internet died,” let’s conduct a post-mortem on the post-mortem.
Starting with Bernie Sanders (I., Vt.), who declared that repealing net neutrality would be “the end of the internet as we know it.” He added that it would be “a disastrous decision, it will impact every American. It will give huge advantages to big corporations over small businesses, to big media companies over smaller media outlets.” Has any of this come to pass?
Meanwhile, Senate minority leader Chuck Schumer predicted that the Restoring Internet Freedom Order, as the administration called it, would make it impossible to stream content on your phone, and would cause shows to lag on Netflix. Ask Netflix whether its business has taken a hit: The Sandra Bullock thriller Bird Box obliterated its records this past December.
That self-appointed bastion of truth in journalism, CNN, echoed Senator Sanders’s opinion in a headline, opining that with the repeal of net neutrality, it was the “end of the Internet as we know it.”
Senator Ed Markey (D., Mass.) said that repealing net neutrality would “create a digital oligarchy that serves the wealthy few.” Senator Tom Udall (D., N.M.) said that “ISPs would create internet toll lanes” and would stifle innovation and competition. Senator Richard Blumenthal, who has exaggerated once or twice in his life, said that students, innovators, consumers, and entrepreneurs would all suffer because of the repeal. The Twitter account for the Senate Democrats sent a vertically aligned tweet, separated by paragraph breaks, in a hyperbolic attempt to show how burdensome an Internet without net neutrality would become.
The culture industry got in on the act. Hollywood stalwarts such as Cher, Avengers actor Mark Ruffalo, and Alyssa Milano sought to convince the masses that the net-neutrality rules were necessary for Americans to enjoy a throttle-free, open Internet. The tone was apocalyptic.
The ACLU piled on, saying that the quality of Internet connection and the content available on the Internet were “at risk of falling victim to the profit-seeking whims of powerful telecommunication giants.” Inserting class warfare into the fervor, they declared that the FCC could “favor the content providers who have the money to pay for better access.” Anything but net neutrality, we were told, would result in “authoritarian” rule of the World Wide Web.
Yet we’ve seen the opposite of the Internet Armageddon these sages predicted. Internet speeds actually increased by 40 percent in the United States last year. The data show that there has been a record number of broadband deployment in U.S. homes. Investment continued to grow in 2018, as the country, says the U.S. Telecom association, an opponent of Title II regulations, “expanded on the momentum shift we saw in 2017 when the FCC initially signaled its intention to restore a forward-looking regulatory framework for broadband.”
As the United States progress toward 5G, utility-style Internet regulations impede the development of new technology. The stubborn fact is that Americans have access to faster Internet than ever before. A year after the Restoring Internet Freedom Order went into effect, there have not been any attempts to limit access of content providers. ISPs have not changed the way they charge customers, and the doomsday scenario has not come to pass of an Internet where content is provided only on an à la carte basis.
Opponents of net neutrality could have made their case without channeling a dark, ominous, apocalyptic future. For example, some have argued that net-neutrality repeal would permit ISPs greater authority to promote their own services, limiting consumer choice. However, concerns such as these were all too rarely expressed in political rhetoric. Equating the repeal of net neutrality to an attack on the LGBTQ community, an attempt to silence marginalized people, or cutting off access to reproductive rights was an outlandish attempt to mobilize the Left’s political base. A year’s time has revealed as much.
By Star Beacon•
To you and me, the meaning of the word “temporary” is generally clear. But not when the folks in Washington use the word.
Consider the “temporary” telephone tax Congress imposed to help fund the Spanish-American War. If you check your history books, you’ll see that the war lasted from April to August of 1893. The tax, on the other hand, survived into the second Bush Administration.
Another “temporary” law, one intended to speed the commercialization, expansion, and consumer adoption of new technology is set to expire at the end of 2019. The Satellite Television Extension and Localism Act Reauthorization (STELAR) should be allowed to fade away, but political pressure being applied by the parties who benefit from it most may unhelpfully keep it alive.
No only have growth in the satellite television industry and advancements in technology made the continuation of STELAR unnecessary, it may never have been needed in the first. It was enacted just about 30 years ago to provide a significantly discounted compulsory copyright license to give satellite companies the right to import out-of-market network television signals into a local market. The alternative, forcing their retransmission to local broadcast stations over the air, was financial prohibitively and technologically challenging.
These rules were supposed to give satellite television a boost in their push to compete with the cable giants. It worked. Today, DirectTV is worth $235 billion, Dish is worth $17 billion, and both networks offer just about every programming option available.
Letting the STELAR Act expire wouldn’t be the end of the world. No one would have missed the final episode of “The Big Bang Theory” or the “Game of Thrones” finale.
What would go away are:
• The discounted compulsory copyright license for satellite retransmission of distant (or imported) broadcast signals to “unserved households.”
• A corresponding exemption from retransmission consent requirements for the carriage of these out-of-market network signals by satellite TV providers.
• The requirement broadcast TV stations and satellite and cable TV companies both negotiate carriage of local broadcast signals in good faith.
According to the broadcasters, the number of satellite television subscribers who’d be impacted if the law expires as intended is now down to just about half a million. And there’s every reason to believe consumers in those markets could find other ways to pick up network signals, either by taking them down over the air or as the beneficiaries of private arrangements between providers and broadcasters.
This corporate to corporate stuff shouldn’t have any impact on what almost every viewer in America can watch. In fact, without STELAR, it might give individual communities a lift since the incentive for satellite carries to offer network affiliates from outside the coverage area instead of local news goes away. The playing field, as it were, becomes level.
Mature, multibillion-dollar satellite companies don’t need crony capitalist legislation protecting their interests, especially when those interests include denying consumers local news, weather, sports, and emergency information. It’s time to let it go.
Under our current law, federal charges can be brought for arson when a person willfully and maliciously sets fire to a building, structure or vessel. Federal bank robbery charges must include evidence that a person, by force or intimidation, takes or attempts to take something of value belonging to a bank, credit union, or any savings and loan association. And if a new bipartisan bill from two senators were to be enacted, a prima facie case for “unfair or deceptive” conduct would require the government to show that a person…filed for a patent.
Yes, we’ve somehow reached the point where inventing something is only OK if you don’t plan to protect that invention with a patent. Maybe the next step will be to outlaw invention altogether, but I suppose we can be thankful we’re not there yet. For now, Senators John Cornyn (R-TX) and Richard Blumenthal (D-CT) have proposed a new law where if you have discovered a way to help some sick patients and then invest capital in new research that may have the effect of helping additional sick patients, you are presumed liable under the antitrust laws if that new investment leads to a patentable invention.
To ground us in reality — sometimes you have a medicine that helps a group of people get better. In those cases, it should not only be legal, it should be encouraged to pursue additional research to see if that medicine can be improved further, or help people fight other diseases.
After making such an investment, can you hope to argue your way out against the government antitrust enforcers? Good luck with that, since you are starting with presumed guilt. But perhaps it would be wiser, before you undertake resource-intensive research, to check in with the newly installed innovation czars at the Federal Trade Commission. In this way, the FTC will decide who lives and who dies. It’s a reincarnation of the Obamacare death panels, only with FTC bureaucrats instead of bureaucrats appointed by the Department of Health and Human Services.
Companies would also be well advised to study what disease areas are most likely to elicit the sympathy or personal interest of FTC commissioners or their immediate family members and tailor their R&D budgets accordingly. If your research turns out to be insufficient to meet the FTC standards for a substantial benefit, you may not only have wasted your money, you may have committed an antitrust violation.
But what about the Constitution? Well you see, our nation’s founding fathers clearly were unaware of the all-knowing powers of the Federal Trade Commission when they specified a right to one’s own inventions (your Intellectual Property) as the only individual right described in the text of the Constitution. And the icing on this big-government cake is that the FTC can bring this new charge in their kangaroo court of FTC administrative litigation, where the FTC acts as prosecutor, judge and jury.
This bill claims to be about prescription affordability (it is titled the Affordable Prescriptions for Patients Act, or APP Act), but nothing in it makes prescriptions more affordable. The most likely direct effect on pricing will be the cost of parking near the FTC, while diminishing the property rights of American innovators. Antitrust lawyers will certainly derive some benefit, but that could increase their hourly rates if demand for their services goes up. So maybe the APP acronym is really for the Antitrust Practitioners Paradise created by this legislation.
Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez want to cap consumer interest ratesin an effort to curb “sky high” credit card charges and other forms of predatory lending.
While that sounds nice in principle, in practice their plan would hurt some of the people it’s intended to help by killing off an industry that’s vital to struggling households: short-term, small-dollar lending.
The history of small-dollar loans and their regulation – which I explore in a recently published book – shows why Sanders and Ocasio-Cortez should rethink their proposal or risk emboldening the type of lending they hope to stamp out. In part this is because their plan relies on an oversimplified history of the rules that limit usury, or how much interest lenders can charge.
Laws against usury are an ancient idea. Religious texts such as the Bible and Quran prohibited all forms of usury, while the Romans barred charging compound interest.
And when the early American colonists began settling up and down the Eastern Seaboard, they brought with them England’s usury law. By the 1970s all but three states still had general usury laws on the book. Annual rate caps ranged from as little as 4% in North Dakota to as high as 30% in Rhode Island.
These caps became less effective in 1978 when the U.S. Supreme Court ruled that state laws don’t apply to loans from out-of-state banks. This allowed credit card-issuing banks to avoid more stringent usury laws by locating in states with higher caps or none at all. Some states, such as South Dakota and Delaware, repealed their laws after the ruling to attract banks.
So while usury laws still generally restricted rates on some types of loans, the sky became the limit for bank-issued credit cards, with some charging subprime rates as high as 79.9% per year.
Sanders and Ocasio-Cortez would like to return to the world as it existed before what they call that “disastrous” Supreme Court ruling. Their Loan Shark Prevention Act would impose a 15% annual interest rate cap on all consumer loans while allowing states to set even lower rates.
But their understanding of history isn’t quite right. That’s because starting in the early 20th century, states began making exceptions to their usury laws to allow for small loans.
In the early 20th century, state usury laws applied to almost all types of loans. As a result, small-dollar lending was effectively outlawed nearly everywhere because lenders could not operate profitably at the legal rates of charge.
Usury laws fixed maximum charges as a percentage of the amount borrowed on an annual basis, which yielded a tiny dollar fee for small, short-term loans. For example, in a state with a 6% cap, a lender offering a US$200 three-month loan would be able to charge only $3 in total interest – the monthly rate would be just 0.5%. At such low rates, small-sum lenders could not cover the costs of running their business.
But working-class households still needed access to credit so strict usury laws didn’t diminish the demand for these loans. Rate caps simply discouraged legitimate enterprises from entering the marketplace. That left borrowers to deal with loan sharks willing to break the law.
The philanthropic Russell Sage Foundation, which studied the problem in the 1910s, urged states to exempt licensed small-sum lenders from their general usury laws. The foundation drafted a model law, which became known as the Uniform Small Loan Law, that allowed these lenders to charge up to 3% per month, or 36% on an annualized basis, on cash loans of a few hundred dollars.
Today, all 50 states continue to allow small-sum lenders to charge more than 15% per year.