Topic: Regulatory Studies

Corrupt Obamacare Waiver Process Is Like a Scene from Atlas Shrugged

In a column about the revolving door between big government and the lobbying world, here’s what the irreplaceable Tim Carney wrote about the waiver process for folks trying to escape the burden of government-run healthcare.

Congress imposes mandates on other entities, but gives bureaucrats the power to waive those mandates. To get such a waiver, you hire the people who used to administer or who helped craft the policies. So who’s the net winner? The politicians and bureaucrats who craft policies and wield power, because this combination of massive government power and wide bureaucratic discretion creates huge demand for revolving-door lobbyists. It’s another reason Obama’s legislative agenda, including bailouts, stimulus, ObamaCare, Dodd-Frank, tobacco regulation, and more, necessarily fosters more corruption and cronyism.

This seemed so familiar that I wondered whether Tim was guilty of plagiarism. But he’s one of the best journalists in DC, so I knew that couldn’t be the case.

Then I realized that there was plagiarism, but the politicians in Washington were the guilty parties. As can be seen in this passage from Atlas Shrugged, the Obama Administration is copying from what Ayn Rand wrote – as dystopian parody – in the 1950s.

Nobody professed to understand the question of the frozen railroad bonds, perhaps, because everybody understood it too well. At first, there had been signs of a panic among the bondholders and of a dangerous indignation among the public. Then, Wesley Mouch had issued another directive, which ruled that people could get their bonds “defrozen” upon a plea of “essential need”: the government would purchase the bonds, if it found proof of the need satisfactory. there were three questions that no one answered or asked: “What constituted proof?” “What constituted need?” “Essential-to whom?” …One was not supposed to speak about the men who, having been refused, sold their bonds for one-third of the value to other men who possessed needs which, miraculously, made thirty-three frozen cents melt into a whole dollar, or about a new profession practiced by bright young boys just out of college, who called themselves “defreezers” and offered their services “to help you draft your application in the proper modern terms.” The boys had friends in Washington.

This isn’t the first time the Obama Administration has inadvertently brought Atlas Shrugged to life. The Administration’s top lawyer already semi-endorsed “going Galt” when he said people could choose to earn less money to avoid certain Obamacare impositions.

So if you want a glimpse at America’s future, I encourage you to read (or re-read) the book. Or at least watch the movie.

The Aid’s the Thing

The following is cross-posted from the National Journal’s Education Experts blog. This week’s topic: Whether new ”gainful employment” regulations for higher education are too little, too much, or just right:

I agree largely with Steve Peha – our policies and mindsets have made “college” synonymous with “job training,” and that has led to huge inefficiencies. But there is an even deeper problem: government aid, both to students and schools.

The most aggressive opponents of for-profit schooling to have posted thus far appear to agree that taxpayer-funded student aid is what for-profit institutions are after. No doubt the critics are, for the most part, right. But there is another side to this equation: The aid also enables students to choose proprietary schools, choices many aid recipients likely would not have made had they been using only their own money, or money they borrowed from people who willing lent it to them. So aid helps enrich proprietary schools, but it also hugely degrades the incentives of students to economize or fully scrutinize the choices before them.

College is a two-way street, and student aid has fueled out-of-control traffic going in both directions

But it gets worse. What has been perpetually ignored by far too many people who’ve been involved in the assault of for-profit institutions is that all sectors of higher education get massive subsidies, and all are performing very poorly.

Public colleges get huge subsidies directly from state and local governments, yet still saddle students – and aid-supplying taxpayers – with big bills. And how do they perform? Only about 55 percent of students at four-year public colleges finish their degrees within six years, while only about 21 percent – one-fifth! – of community college students complete their programs within 150 percent of expected time. And yes, there is a lot that these figures do not capture, but there is no way to look at these outcomes of public schools as anything other than atrocious.

And nonprofit private institutions? They get big tax benefits by virtue of being putatively nonprofit, and often accumulate major wealth as a result. But their six-year grad rates? Only 64 percent.

Once again, the root problem is that massive government subsidies induce students to spend far more – and think about their priorities far less – than they would were they using their own dough, or money someone voluntarily gave them. Moreover, all of our higher ed subsidies enable colleges to raise prices with near impunity, and expend cash on all sorts of things that make them hugely inefficient.

In light of all this, “gainful employment” is clearly no solution to our higher ed troubles. It is, at best, an over-hyped distraction.

We Don’t Need No Art in Kansas

At POLITICO this morning we find a long opinion piece by Matt Stoller, “Public Pays Price for Privatization,” summarized as “The real infrastructure trend in America today is privatizing what is left.” If that weren’t enough to give you the flavor of the piece, the bio line tells us that “Stoller worked on the Dodd-Frank financial reform law and Federal Reserve transparency issues as a staffer for Rep. Alan Grayson (D-Fla.). He is currently a fellow at the Roosevelt Institute.” Say no more – except, there’s more to say.

Stoller notes, among much else, that Kansas Gov. Sam Brownback just turned over arts funding to the private sector, making Kansas the only state without a publicly funded arts agency.” Don’t reel in horror; the cited Los Angeles Times article has already done it for you: “The governor erased state funding for arts programs, leaving the Kansas Arts Commission with no budget, no staff and no offices.” One imagines there will now be no art at all in Kansas.

Not surprisingly, Stoller extols the giant public works of the New Deal and after, which petered out in the 1970s, he says, after which “international competitiveness and environmental costs drove the logic of cost reductions into our political order. Today, we are still living in the Ronald Reagan-Paul Volcker era of low taxes, low regulations, low pay, low spending and high finance.” It seems not to have occurred to Stoller that perhaps the prior absence of “the logic of cost reductions” in our political order might have contributed to why, as he says, “the New Deal coalition melted in the 1970s.”

Art aside – that’s an easy case for defunding – Stoller does go on to criticize much of the “privatization” that’s taken place since – starting with Fannie Mae and Freddie Mac. He’s right there: These “private-public partnerships” are fraught with peril, not least by giving privatization a bad name, something he doesn’t consider. The idea of “public goods” is not meaningless, but the definition has to be strict, as economists know, and the means for privatizing ersatz “public goods” have to be clean. Given the vast public sector before us, we’ve got years of privatization ahead. Let’s hope it’s done right.

Truth Is, All of Higher Ed Is Broken

Over at the New America Foundation’s “Higher Ed Watch” blog, Stephen Burd purports to know “the truth behind Senate Republican’s boycott of the Harkin hearing.” And what is that truth? Republicans are trying to “discredit an investigation that has revealed just how much damage their efforts to deregulate the industry over the past decade have caused both students and taxpayers.”

Really?

Okay, it is possible that Republicans are trying to save themselves some sort of blame or embarrasment – I can’t read their minds – but if so they’ve done a terrible job. Every time Harkin holds one of his hearings the bulk of the media coverage treats it like it has revealed shocking abuse by the entire for-profit sector. And don’t forget the damage done by the now-discredited – at least for those wonks who have followed it – GAO “secret shopper” report that was baised against for-profits enough on its own, but Sen. Harkin abused even beyond what the GAO wrote was reasonable.  So Harkin has defintiely gotten his message across, and he certainly hasn’t hidden past Republican efforts to reduce regulatory burdens on for-profit schools.

The fact remains, however, that the whole Ivory Tower – every floor and staircase – is loaded down with luxurious but crushing waste, and the crumbling foundations are being propped up with huge amounts of taxpayer dough and student debt. Not addessing that, as the boycotting Senators have stated, is what has been blaringly wrong with Harkin’s crusade. (Not that I think either party is likely to do what needs to be done: phasing out federal student aid.)

So absolutely, let’s stop forcing taxpayers to prop up the for-profit part of the tower. But let’s also stop pretending that that part isn’t just one rotten level in a much bigger, buckling edifice.

Are Even Dems Getting Tired of Anti-Profit Crusade?

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Yesterday, Sen. Tom Harkin (D-IA) held his fifth – and perhaps final – Health, Education, Labor, and Pensions committee show-hearing lambasting for-profit colleges. As usual, it was a decidedly one-sided affair, with no profit-defenders apparently invited to testify, and Republican committee members boycotting. Perhaps the only interesting thing that occurred was Sen. Al Franken (D-MN), who has never given any indication he doesn’t support Harkin’s obsessive whale hunt, saying the proceedings could have benefitted from more than one point of view. According to MarketWatch, Franken lamented that “it would have been nice to have someone here to represent the for-profit schools.” Now, he might have only wanted a for-profit rep there to receive the beating, but even that would have been preferable to no rep at all.

Could this indicate that even Senate Democrats are getting tired of Harkin’s tedious grandstanding against for-profit colleges, especially now that the Education Department has issued its “gainful employment” rules? Maybe, and there are lots of Dems in the House who have opposed the attack on for-profit schools for some time. But don’t expect this to be over quite yet: Harkin still gets a lot of negative media coverage for proprietary schools with each hearing, while the scandals surrounding people he’s had testify; the decrepit GAO “secret shopper” report that turned out to be hugely inaccurate; and potentially dirty dealings behind the gainful employment rules seem only to get real ink from Fox News and The Daily Caller. And Harkin keeps indicating that he will introduce legislation – doomed to failure though it may be – to curb for-profits even further.

Of course, what should be the biggest source of outrage in all of this is that while Harkin fixates on for-profit schools, Washington just keeps on enabling all of higher education to luxuriate in ever-pricier, taxpayer-funded opulence. Indeed, as a new Cato report due out next week will show, putatively nonprofit universities are likely making bigger profits on undergraduate students than are for-profit institutions. Of course, they don’t call them “profits” – nonprofits always spend excess funds, thus increasing their “costs” – but that’s probably just plain smart. Be honest about trying to make a buck, and Sen. Harkin has shown just what’s likely to befall you.

Don’t Tread on My Plate

Last week First Lady Michelle Obama and the U.S. Department of Agriculture unveiled “ChooseMyPlate.gov,” an updating of the federal government’s ongoing efforts to lecture us on how to eat. While the idea of nutrition recommendations from Washington, D.C. isn’t itself new, the past couple of years have seen a lurch toward a more coercive approach, especially under the Obama administration, under pressure from a burgeoning “food policy” movement, as I explain in a new Daily Caller op-ed:

All sorts of nannyish and coercive ideas are emerging from that [movement] nowadays: proposals at the FDA to limit salt content in processed foods; mandatory calorie labeling, which poses a significant burden on many smaller food vendors and restaurants; new mandates on food served in local schools; advertising bans; and on a local level efforts to ban things like Happy Meals at McDonald’s. No wonder many parents, local officials and skeptics in Congress are beginning to say: Back off, guv. It’s my plate.

The fact is that the federal government’s dietary advice has changed often through the years—the Washington Post had a great feature on past federal dietary guidelines, under which sweets and even butter held their place as food groups—and that government’s recommendations have regularly proved wrong and even damaging, a point that Steve Malanga elaborates on in this City Journal piece (“Following the government’s nutritional advice can make you fat and sick.”)

Yesterday, C-SPAN’s Washington Journal had me on opposite Maya Rockeymoore of the group Leadership for Healthy Communities to discuss issues that ranged from the school lunch program to whether Washington should serve as an “arbiter” of contending dietary claims, an idea I didn’t much care for. You can watch here.

Government Control of Language and Other Protocols

It might be tempting to laugh at France’s ban on words like “Facebook” and Twitter” in the media. France’s Conseil Supérieur de l’Audiovisuel recently ruled that specific references to these sites (in stories not about them) would violate a 1992 law banning “secret” advertising. The council was created in 1989 to ensure fairness in French audiovisual communications, such as in allocation of television time to political candidates, and to protect children from some types of programming.

Sure, laugh at the French. But not for too long. The United States has similarly busy-bodied regulators, who, for example, have primly regulated such advertising themselves. American regulators carefully oversee non-secret advertising, too. Our government nannies equal the French in usurping parents’ decisions about children’s access to media. And the Federal Communications Commission endlessly plays footsie with speech regulation.

In the United States, banning words seems too blatant an affront to our First Amendment, but the United States has a fairly lively “English only” movement. Somehow, regulating an entire communications protocol doesn’t have the same censorious stink.

So it is that our Federal Communications Commission asserts a right to regulate the delivery of Internet service. The protocols on which the Internet runs are communications protocols, remember. Withdraw private control of them and you’ve got a more thoroughgoing and insidious form of speech control: it may look like speech rights remain with the people, but government controls the medium over which the speech travels.

The government has sought to control protocols in the past and will continue to do so in the future. The “crypto wars,” in which government tried to control secure communications protocols, merely presage struggles of the future. Perhaps the next battle will be over BitCoin, an online currency that is resistant to surveillance and confiscation. In BitCoin, communications and value transfer are melded together. To protect us from the scourge of illegal drugs and the recently manufactured crime of “money laundering,” governments will almost certainly seek to bar us from trading with one another and transferring our wealth securely and privately.

So laugh at France. But don’t laugh too hard. Leave the smugness to them.