masthead-highres

Sunday, January 28, 2007

Enron's Green-Fingered Successors

I won't let the week end without a fisking of the Washington Post's silly global warming op-ed Monday by in-house writer Sebastian Mallaby.

Mallaby says: "While the White House was sorting out its message, the rest of Washington was busy. Over at the Reagan building, a conference on carbon trading sold 600 tickets at $595 a pop and turned away 150 executives hungry to study the intricacies of permit allocation."

Response: Hungry to study the green -- or to reap the green? People who understand the global warming debate more than superficially have long known there is a constituency among profit-seekers to impose cap and trade. There is money to be made, even though cap and trade would hurt the economy, and especially harm low-income individuals and families and small businesses operating at the margin. There's a reason Enron pushed so hard for Kyoto and other limits on carbon -- that reason is money. We now speak of Enron's green-fingered successors.

Mallaby says: "Meanwhile, multiple climate bills were floating around Congress, and the House leadership promised to create a special climate committee to force legislation past the auto lobby."

Response: It appears Mr. Mallaby is implying that the House Committee on Energy and Commerce is synonymous with "the auto lobby." Since mere months ago the enviromentalist slur against said committee was that it supposedly was controlled by the oil industry, one looks to see what might have changed. Oh, yes, the new Chairman, Rep. John Dingell, is married to an auto industry lobbyist. I guess Mallaby believes Mrs. Dingell wears the pants in the family. Do you think Mallaby would be willing to say that to Mr. Dingell's face?

That amusing picture aside, Mallaby apparently is unfamilar with Pelosi's proposal. The new global warming committee is to have have no powers to move legislation. Score one for the UAW.

Mallaby says: "Team Bush appears to believe that a cap-and-trade system would burden business, but business leaders are saying they want cap-and-trade enacted."

Response: #1: See profit motive, above. #2: It is dishonest writing to say "business leaders" when it is just a few business leaders. #3: Wasn't Mallaby's propaganda rant against the Dingell family based on Mallaby's belief that the auto industry opposes draconian global warming measures? Mallaby has business leaders cast as both the heroes and the villians of his piece. (Pick a theme, sir!)

Mallaby says: "Chortling climate-deniers, expecting an easy propaganda victory over the man whose energy-tax proposal they killed in 1993, greeted Gore's movie with glee."

Response: Citation, please. I don't recall any glee. I have to think I'm a member of what Mallaby calls the "climate-denier" club, so I think I'd know, although the phrase "climate-denier" is unusually ludicrous, even for the anti-skeptic "all-we-will-ever-know-about-climate-science-we-know-already-but-send-your-research-grant-money-now-please" crowd. Who denies we have a climate? (I ask again: Does the Washington Post edit its "edit"orial pages?)

Mallaby says: "A House Republican hearing ridiculed a graph that features prominently in Gore's movie showing the world's temperature puttering along in a steady state before shooting upward like the handle of a hockey stick."

Response: Two full hearings of House Energy and Commerce Subcommittee on Oversight and Investigations, not a single rump "show trial" hearing featuring only Republicans, as Mallaby implies, heard from expert witnesses who demonstrated significant, fatal weaknesses in the so-called 'hockey stick' graph. In fact, the hockey stick was badly broken -- most notably at the first hearing by the eminent statistician, Dr. Edward Wegman, who has described himself as a Gore voter, and by a Canadian, Steve McIntyre, neither of whom were likely to have been motivated by a zeal to aid the Republican Party. More than the hockey stick broke: In unmasking "peer review" as cronyism, the hearing dealt what appears to be a significant blow to the reputation of the science community generally, at least for folks who get their news from a broader series of sources than does the Washington Post, and who like their science journal writing to be more reliable than, say, a Bob Woodward deathbed report about Bill Casey.

One should be unsurprised to find ignorance about the hockey stick hearings among Post personnel, as the Post declined to cover the hearings as they took place. The Post deems the hockey stick hearings important enough to warrant multiple critical editorial pieces while simultaneously too insignificant to cover as news.

But credit should be given where credit is due. Sebastian Mallaby is correct in noting that Al Gore, like other climate alarmists and associated government-grant receivers, has used the discredited hockey stick graph as a proof of his theories.

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Posted by Amy Ridenour at 12:00 AM

Saturday, January 27, 2007

Like Welfare Queens of Yore

Another big business wants a handout from taxpayers:
The owner of the Washington Wizards has asked the District for $50 million to renovate Verizon Center, and city officials are discussing whether to honor the request and pay for it with a tax increase on tickets, officials said yesterday.

Wizards owner Abe Pollin, who built the $220 million sports arena with his own money in Chinatown nearly a decade ago, wants the extra money to upgrade all or some of its 110 luxury suites and replace its outdated scoreboard, District officials said. Those and other improvements would be designed to attract special events, such as championship basketball and hockey games.

Pollin's company argues that the city should give the arena a financial boost as a reward for its role as a catalyst of the downtown renaissance, city officials said. The 20,674-seat Verizon Center has served as the anchor of the Chinatown area's revival, a transformation into a bustling hub for restaurants and night life...
According to the article, by the Washington Post's Nikita Stewart and Thomas Heath, businessman Abe Pollin wants the taxpayers to give him $50 million dollars so he can upgrade his "outdated" (yet less than ten-year-old) scoreboard and upgrade his 110 skyboxes. Pollin plans to increase the rental price of said skyboxes from $100,000 to $450,000 annually, but the article doesn't indicate -- presumably because it is not true -- that Pollin plans to share any of that $49.5 million in loot with the taxpayers.

Idiotically, the DC government, which shouldn't be buying Mr. Pollin anything more substantial than lunch, is considering the proposal. The Post says one of the scenarios under consideration is increasing the ticket tax at Pollin's arena rom 5.75 percent to ten percent. Does it not occur to anyone that Mr. Pollin could simply increase his ticket prices by the same amount, and leave the taxpayers out of it?

It's bizarre but probably predicable that some private businesses run around with their hands out like welfare queens of yore, but it is bizarre and disturbing that government officials pay them any mind. Hey government: Zip up your purse once in a while, whydon'tja?

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Posted by Amy Ridenour at 9:54 PM

Environmentalism versus Poor (Again)

The current pro-ethanol fad in the United States apparently is a factor in making poor Mexicans cut back on corn tortillas, a dietary staple, says a January 27 Washington Post article by Manuel Roig-Franzia:
Thick, doughy tortillas roll hot off the conveyor belt all day at Aurora Rosales's little shop in this congested city built on a dry lake bed east of Mexico City.

Using cooking techniques that date to the Mayan empire, Rosales has never altered her recipe. Nor did her father, grandfather or great-grandfather.

On good days, the neighbors line up for her tortillas.

But these are not good days, and sometimes hours pass without any customers.

Mexico is in the grip of the worst tortilla crisis in its modern history. Dramatically rising international corn prices, spurred by demand for the grain-based fuel ethanol, have led to expensive tortillas. That, in turn, has led to lower sales for vendors such as Rosales and angry protests by consumers.

The uproar is exposing this country's outsize dependence on tortillas in its diet -- especially among the poor -- and testing the acumen of the new president, Felipe Calderón...

Tortilla prices have tripled or quadrupled in some parts of Mexico since last summer....

"When you talk about Mexico, when you talk about culture and societal roots, when you talk about the economy, you talk about the tortilla," said Lorenzo Mejía, president of a tortilla makers trade group. "Everything revolves around the tortilla."

The ancient Mayans believed they were created by gods who mixed their blood with ground corn. They called themselves "Children of the Corn," a phrase Mexicans still sometimes use to describe themselves.

Poor Mexicans get more than 40 percent of their protein from tortillas, according to Amanda Gálvez, a nutrition expert at the National Autonomous University of Mexico. Modern-day tortilla makers such as Rosales use "an ancient and absolutely wise" Mayan process called "nixtamalizacion," Gálvez said.

The process is straightforward. Large kernels of white corn are mixed with powdered calcium and boiled, then ground into a dough with wheels made of volcanic rock.

The resulting tortillas are more pliable and more durable than those typically found in U.S. stores. Mexicans say tortillas are their "spoons" because they use them to scoop up beans, and can serve also as their "plates" because they're sturdy enough to hold a pile of braised meat and vegetables.

The tortilla-making process, Gálvez said, releases antioxidants and niacin, which allows them to be absorbed by the body, and the membranes on each corn kernel provide important dietary fiber. As a result of eating tortillas, Mexican children have a very low incidence of rickets, a bone disease caused by calcium deficiency that is common in developing countries.

"It is absolutely crucial for our population to keep eating tortillas," Gálvez said.

Gálvez said she believes the price increase is already steering Mexicans toward less nutritious foods. The typical Mexican family of four consumes about one kilo -- 2.2 pounds -- of tortillas each day. In some areas of Mexico, the price per kilo has risen from 63 cents a year ago to between $1.36 and $1.81 earlier this month.

With a minimum wage of $4.60 a day, Mexican families with one wage earner have been faced in recent months with the choice of having to spend as much as a third of their income on tortillas -- or eating less or switching to cheaper alternatives.

Many poor Mexicans, Gálvez said, have been substituting cheap instant noodles, which often sell for as little as 27 cents a cup and are loaded with less nutritious starch and sodium.

"In the short term, the people who can buy food are going to get fatter," she said. "For the poor, the effect is going to be hunger."

There is almost universal consensus in Mexico that higher demand for ethanol is at the root of price increases for corn and tortillas.

Ethanol, which has become more popular as an alternative fuel in the United States and elsewhere because of high oil prices, is generally made with yellow corn. But the price of white corn, which is used to make tortillas, is indexed in Mexico to the international price of yellow corn, said Puente, the Mexico City economist...

Mexico, which counts corn as one of its major agricultural products, now faces a shortage...

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Posted by Amy Ridenour at 9:34 PM

Social Security: A Quick Definition

Willisms describes our current Social Security system:
The government confiscates your money, keeps it for decades, gives you back a terrible return on your money, then taxes you for the privilege.
(Until the system goes bankrupt, that is.)

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Posted by Amy Ridenour at 12:56 AM

Global Cooling Again

If you follow global warming debates, you've heard how environmentalists and their media allies predicted global cooling in the 1970s, only to reverse course in the 1980s.

Well, everything old is new again. Russian scientists are now predicting global cooling, to start about 2055 and last a half century or so.

To be fair, some scientists disagree. These Chinese scientists, for example, say the cooling will start sooner (pdf) -- say, about 20 years from now.

Hat tip: Greenie Watch.

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Posted by Amy Ridenour at 12:37 AM

If You Think the Intergovernmental Panel on Climate Change Presents Objective Science...

read this.

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Posted by Amy Ridenour at 12:23 AM

Wednesday, January 24, 2007

Paul Krugman: Master Spinner

The National Center's health policy analyst, David Hogberg, is impressed by Paul Krugman -- by Krugman's mastery of spin, that is.

Here's David's look at the way Krugman is covering some of President Bush's recent statements on health care reform:
I have to admire Paul Krugman's ability to deceive with spin. He is a master at it. This passage from his last column is a quintessential example:
Mr. Bush is also proposing a tax increase ... on workers who, he thinks, have too much health insurance. The tax code, he said, "unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise, and many Americans cannot afford the coverage they need."

Again, wow. No economic analysis I'm aware of says that when Peter chooses a good health plan, he raises Paul's premiums. [Italics mine].
Yes, it is true that research does not say that choosing a good health plan raises the premiums for others. However, the research does say that the current tax deduction for health insurance leads to over-consumption of health care. Martin Feldstein started this thinking with his 1973 paper, ""The Welfare Loss from Excess Health Insurance," and much subsequent research support it (go here (free registration req.) for a list of other articles).

It follows that if the tax deduction leads to the over-consumption of health care, then it causes the cost of health care to rise. And if the cost of health care rises, so must the cost of health insurance. So, Krugman's statement is technically true, as long as you don't draw the logical conclusion from the relevant research.

Wow. What mastery of spin!
Addendum, 1/26/07: David also asks: Is Krugman aware of the law of supply and demand?

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Posted by Amy Ridenour at 10:57 AM

Tuesday, January 23, 2007

On the State of the Union

We issued a couple of press releases on the President's State of the Union speech tonight.

This one gives thumbs up to the President's health care proposals, while this one gives thumbs down to the President's call for increasing fuel economy standards.

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Posted by Amy Ridenour at 10:46 PM

Far Be It for Me to Disagree with Jim Webb...

...but when he says "the settlement of Jamestown... marked the first step in the long journey that has made us the greatest and most prosperous nation on earth," he's forgetting that the first European settlement in what would become the USA was in Florida.

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Posted by Amy Ridenour at 10:19 PM

How About Disclosing Conflicts of Interest?

I notice that Senator Barbara Boxer's press release, reprinted below, does not include a conflict of interest disclosure by the businesses that signed this agreement, detailing their financial interest in passage of the legislation:
Boxer Hails Landmark Agreement By Industry, Environmental Groups Calling for Immediate Action to Address Global Warming

January 22, 2007

Washington, DC -- Senator Barbara Boxer (D-CA), Chairman of the Senate Committee on Environment and Public Works, commended a coalition of business and environmental organizations for working together to save the planet.

'There are just a few moments in history when all sides come together for the common good. Such a moment has arrived with the agreement by these companies and organizations to work together to call for action to avoid a global warming crisis. The U.S. Climate Action Partnership has challenged Congress to act immediately, and we must answer that call. We have scheduled our first hearing on global warming on January 30, and we will be legislating on this critical issue as soon as possible.'

Senator Boxer made her remarks in response to today's announcement by the U.S. Climate Action Partnership (USCAP), which consists of market leaders Alcoa, BP America, Caterpillar, Duke Energy, DuPont, FPL Group, General Electric, Lehman Brothers, PG&E, and PNM Resources, along with four leading non-governmental organizations - Environmental Defense, Natural Resources Defense Council, Pew Center on Global Climate Change, and World Resources Institute. The partnership today called on the federal government to quickly enact strong national legislation including mandatory reductions in greenhouse gas emissions, and warned against delay in action to control the pollution that causes global warming."

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Posted by Amy Ridenour at 5:24 PM

'The Big Ripoff' Comes To Health Insurance

After seeing the Washington Post's "Universal Health Coverage Attracts New Support; Onetime Foes Become Unlikely Advocates, Citing Rising Costs and Tougher Access" by Christopher Lee in Monday's Washington Post, I asked the National Center for Public Policy Research's health care guru, David Hogberg, to critique the Post's story for publication. He did so.

Says David:
In a very poorly written article in the Washington Post, reporter Christopher Lee seems to find it remarkable that a lot of the health insurance groups that opposed Hillary Clinton-Care back in the early 1990s are now on board with a number of the new efforts at health insurance reform (and I use that last term loosely).

Lee notes:
Many are not willing to wait. Karen Ignagni, president of America's Health Insurance Plans -- the same industry association that once funded the "Harry and Louise" ads -- was among representatives of 16 business, medical and consumer groups that last week called for Congress to spend $45 billion over five years to extend health coverage to most of the nation's uninsured children. After that, the groups said, lawmakers should direct billions more toward covering uninsured adults, mostly through a mixture of tax breaks and expanded federal programs.
What Lee fails to report is that the left-wing group Families USA is the one organizing the 16 groups calling for more spending. Dubbed the Health Coverage Coalition for the Uninsured (HCCU), its members include insurance heavyweights like America's Health Insurance Plans (AHIP), Blue Cross Blue Shield Association, Kaiser Permanente and United Health Group. Apparently Lee is at a loss to explain why these groups are getting on board, so he simply goes on to describe various new health insurance proposals, such as those of Senator Ron Wyden (D-OR) and Governors Arnold Schwarzenegger (R-CA) and Ed Rendell (D-PA).

Perhaps Lee should read Tim Carney's book, The Big Ripoff, where Carney chronicles why big business loves big government. One reason is that big business often gets loads of subsidies from big government, and that would surely be the case with these new health insurance proposals. Wyden's, Schwarzenegger's and Rendell's proposals are much like the Governor Romney's plan that ultimately prevailed in Massachusetts in that they provide subsidies for people to buy health insurance. That, of course, means lots of new business for Blue Cross Blue Shield Association, Kaiser Permanente, United Health Group and other health insurance companies that are members of AHIP. Wyden's, Schwarzenegger's and Rendell's proposals also mirror Romney's in that they have an "individual mandate" -- that is, they force people to buy health insurance. Well, if everyone has to purchase health insurance, that means even more business for big insurance companies.

These health insurance companies opposed Hillary Clinton-Care because it threatened their existence. The reason they embrace more recent proposals is because they are a potential boon for their bottom lines.

It is not surprising that big health insurance would line up so eagerly to suckle from the government teat. Thanks to government policy, they are already one of the most coddled industries in the U.S., leading health insurance companies to be, as a friend of mine puts it, "big, dumb and slow." Government tax policy ensures that insurance companies only have to compete for the business of a few million employers instead of many million more employees. Federal and state laws prevent people from purchasing health insurance out-of-state, thereby further insulating big health insurance companies from competition. Indeed, when Congress tries to let people buy insurance out-of-state, it is big health insurance that opposes it.

There are a lot of innovative ideas that could make health insurance less costly. Professor Regina Herzlinger notes that in Switzerland, which has a very competitive health insurance market, there are policies that give people back some of their money. A consumer signs signs up for a five or ten-year policy, and when he signs up, he has his health measured by the health insurance company. Based on his health status, the company and the consumer decide on certain five-year goals for that consumer's health. If the consumer meets those goals at the end of five or ten years, he gets back a percentage of the money he paid in premiums.

Writing for Consumers for Health Care Choices, Dr. James Pendleton offers another innovative idea. Called "Market Driven Insurance," it entails bringing some competition to catastrophic costs. Under Pendleton's proposal, a person who needs non-emergency catastrophic care, say bypass surgery or cancer treatment, would be given a list of places where he could receive the treatment, the price of treatment at each of those places and the average price of the treatment. If he chose a place that was less than the average price, he would receive a percentage of difference between the price of the treatment and the average price. If he chose a place that cost more than the average price, he would have to pay an additional charge.

No one in the health insurance industry is, to my knowledge, at present pursuing these innovative ideas. Why? Because government policy protects Big insurance from the competition that leads to such innovation. Health insurance companies are, as my friend said, "big, dumb and slow."

Look at the insurance markets -- like auto insurance -- where government policy does not protect carriers from competition. The innovation is relentless. Progressive Insurance lets people use its website to compare prices of many difference auto insurance companies. It also provides a "concierge" service if you are in an accident. AllState Insurance now offers "accident forgiveness" and a deductible that goes lower the longer one has no accident. Lesson: fierce competition leads to innovation.

Unfortunately, neither Wyden's, Schwarzenegger's, Rendell's nor Romney's plans do anything to increase competition. Indeed, they do exactly the opposite by guaranteeing big health insurance companies new streams of revenue. They will only make those companies bigger, dumber and slower.
Something David did not note, but which I believe is significant, is that Hillary Clinton's "Clinton Care" plan from her husband's first term was not primarily defeated by the Harry and Louise ads.

Christopher Lee begins his piece with:
Harry and Louise have had a change of heart.

Thirteen years after television ads from the insurance industry featuring the fictional middle-class couple helped kill the Clinton health care plan and make universal coverage politically radioactive, comprehensive proposals for expanding coverage to millions of uninsured Americans are flowering again inside the Beltway and around the country...
Lee is technically correct when he writes that the ads "helped" defeat Hillary Clinton's version of universal care, but the massive grassroots revolt against Mrs. Clinton's plan was a much bigger "help." I also believe Lee errs in attempting to equate Mrs. Clinton's circa 1993-94 version of "universal coverage" with current "comprehensive proposals for expanding coverage to millions of uninsured Americans" through sleight of hand. The proposals under consideration today are nothing like Mrs. Clinton's late and unlamented plan. Even Senator Ted Kennedy's "Medicare-for-All" plan, which would force every American into Medicare (never mind that Medicare already is insolvent) differs markedly from what Mrs. Clinton tried to impose upon the American people thirteen years ago.

"Universal" health care is radioactive not because actors playing "Harry" and "Louise" sat on a sofa and fretted about Mrs. Clinton's plan, but because single-payer medicine inevitably leads to shortages, suffering and death. To say that "universal" coverage is opposed because of the insurance industry's Harry and Louise ads and not because Americans fear the long lines for cancer treatments and heart procedures their Canadian and British friends endure may make for a nice irony in opening paragraphs, but this meme misses, as David notes, a large portion of the story.

Furthermore, regardless of whatever may be going on in the heads of insurance executives, the genuine Harrys and Louises of this nation are far from having a change of heart about the workability and safety of "universal" Big Government Medicine.

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Posted by Amy Ridenour at 2:36 AM

Monday, January 22, 2007

On Government Health Care: Dead Men Tell No Tales

Our David Hogberg has reviewed a New York Times column on universal health care and -- surprise -- found it wanting.

An excerpt:
[Paul Krugman says],
Some say that we can't afford universal health care, even though every year lack of insurance plunges millions of Americans into severe financial distress and sends thousands to an early grave. But every other advanced country somehow manages to provide all its citizens with essential care. [Italics mine.]
They do? Krugman could try telling that to the 50 Canadians who once lived in southern Ontario and were on a waiting list to receive a cardiac catheterization, but they are now dead. Maybe he could tell it to the 59 other Canadians on that waiting list who suffered a serious heart attack. Or perhaps he could tell that to the families of the nearly 15,000 victims of a French heat wave in August 2003 who died in part due to an overburdened and unprepared health care system. Or perhaps it just depends on Krugman's definition of "essential care."
Dead men tell no tales, eh Mr. Krugman?

Addendum, 1/23/07: Duane Hershberger of The Other Club writes to say:
Actually, Canada is but one example.

Mr. Krugman apparently has overlooked the fine health care provided to Fidel Castro. Fidel has to have received the finest free health care available. Imagine how well this works for the common man in Cuba. Of course, this would not be any big deal except for the refrain we hear from the far left about how good health care is in Cuba.
Good point.

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Posted by Amy Ridenour at 4:55 PM

Sunday, January 21, 2007

2009-2017: Number of Social Security Recipients to Grow Five Times Faster than the Number of Workers

Willisms says: "From 2009-2017, the number of retirees receiving Social Security will grow by 23.9%, the number of workers by only 4.3%. In other words, the number of retirees will grow more than five times faster than the worker population."

Go here for his post, which has eight more facts as worrisome as that one.

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Posted by Amy Ridenour at 10:10 PM

Saturday, January 20, 2007

Fact Checking FactCheck on Medicare Drug Negotiation Proposal

FactCheck.org ran an analysis of the Medicare prescription drug bill (the one that would permit Medicare to negotiate prices with the pharmaceutical industry) the other day that included some criticism of claims made by both parties. I asked the National Center’s Senior Policy Analyst, David Hogberg, if FactCheck knows what it is talking about.

Here’s what David said:
Overall, this FactCheck from Annenberg is quite accurate. It is true that the Medicare bill that would allow the federal government to negotiate drug prices is pretty weak. The reason is that the bill does not permit Medicare to create a "formulary." A formulary is also known as a "preferred-drug list," a list of approved drugs that Medicare would pay for. If a drug is not on the list, then Medicare wouldn't pay for it. A formulary would give Medicare far more negotiating power in that it could threaten to not include a pharmaceutical company's drug on the formulary if the company didn't come down on price.

What the FactCheck doesn't reveal is why the Democrats left a formulary out of the bill. With a formulary, there exists the very real possibility that a drug that is popular among seniors would not end up on the formulary. Going into an election facing a bunch of angry seniors is something that scares the heck out of the Democrats (and, in fairness, probably would do much the same to Republicans). See Rich Lowry for more.

One thing that I think the FactCheck underplays is the ability of the Secretary of Health and Human Services to use the bully pulpit. No drug company is going to want to be singled out by the Secretary as selling a drug that is overpriced. Should the Secretary hold a press conference criticizing the cost of a particular drug, the maker of that drug would have a big incentive to lower the cost. Otherwise, the company might face hearings in Congress or investigations by the Justice Department.

Of course, that would all depend on who was Secretary. Yet it is best never to underestimate the effectiveness of press hungry politicians.
For more on the proposal to let Medicare negotiate drug prices, please see "Letting Medicare "Negotiate" Drug Prices: Myths vs. Reality," by David Hogberg, Ph.D., published by the National Center earlier this month.

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Posted by Amy Ridenour at 10:47 PM

Global Warming Scaredy Cats II

Scared of debate, scared of free speech, the global warming alarmists sure are scaredy cats.

The Wall Street Journal has found another example: Al Gore apparently is afraid to face a genuinely challenging interviewer. The WSJ article begins:
Will Al Gore Melt?

By Flemming Rose and Bjorn Lomborg

January 18, 2007; Page A16

Al Gore is traveling around the world telling us how we must fundamentally change our civilization due to the threat of global warming. Today he is in Denmark to disseminate this message. But if we are to embark on the costliest political project ever, maybe we should make sure it rests on solid ground. It should be based on the best facts, not just the convenient ones. This was the background for the biggest Danish newspaper, Jyllands-Posten, to set up an investigative interview with Mr. Gore. And for this, the paper thought it would be obvious to team up with Bjorn Lomborg, author of "The Skeptical Environmentalist," who has provided one of the clearest counterpoints to Mr. Gore's tune.

The interview had been scheduled for months. Mr. Gore's agent yesterday thought Gore-meets-Lomborg would be great. Yet an hour later, he came back to tell us that Bjorn Lomborg should be excluded from the interview because he's been very critical of Mr. Gore's message about global warming and has questioned Mr. Gore's evenhandedness. According to the agent, Mr. Gore only wanted to have questions about his book and documentary, and only asked by a reporter. These conditions were immediately accepted by Jyllands-Posten. Yet an hour later we received an email from the agent saying that the interview was now cancelled. What happened?

One can only speculate...
I speculate that Al Gore's a scaredy cat.

Addendum, 1/21/07: In response to this post, Daily Kos has posted a series of shots of cats offended at the notion of being compared to Al Gore. Poor cats! For their sake, let's hope the alarmists stop ducking the real issues, so I can stop this "scaredy cat" series.

Addendum, 1/23/07: Here's Warner Todd Huston's take on this, from NewsBusters.

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Posted by Amy Ridenour at 10:32 PM

CSR and Business Profitability Don't Mix, Says Borelli

Prompted by the Wall Street Journal editorial about the departure of John Browne from the helm of BP (the company formerly known as British Petroleum), Senior Fellow Tom Borelli sent a letter to the Wall Street Journal, which they published Friday:
Social Responsibility Isn't CEOs' Business

January 19, 2007; Page B6

Your Jan. 16 editorial "Beyond PR at BP" was correct to call attention to the folly of BP's Beyond Petroleum advertising campaign that distracted management from its core business responsibility: finding, drilling and processing oil in a safe and efficient manner. However, the editorial failed to recognize BP's public relations effort as part of the larger corporate social responsibility (CSR) movement that plagues big business. CEOs are under pressure to expand their companies' responsibilities beyond making money for its shareholders.

BP's CSR detour was a disaster for its shareholders, workers, the environment and Lord Browne himself. BP's CSR experience illustrates that like oil and water, CSR and business profitability don't mix.

Tom Borelli, Ph.D.
Free Enterprise Action Fund
Eastchester, N.Y.
It will be interesting to see if the next CEO of BP also is ashamed of the company's core business.

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Posted by Amy Ridenour at 9:53 PM

The Committee on World Travel and Junkets

I had been planning to post on Rep. John Dingell's response to the creation of a new House committee on global warming, but Pat Cleary did it so well, I'll just recommend his post.

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Posted by Amy Ridenour at 2:47 AM

Wednesday, January 17, 2007

Scaredy Cats

The climate change alarmists sure do fear free speech.

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Posted by Amy Ridenour at 10:26 PM

"American Fascists: The Christian Right and the War on America" Reviewed

Today's Examiner is carrying a review I wrote on former N.Y. Times reporter Chris Hedges' new book, "American Fascists: The Christian Right and the War on America." "American Fascists" was released by Free Press on January 9.

If so inclined, you can read the review here.

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Posted by Amy Ridenour at 4:31 AM

Another AP Global Warming Blooper

The Associated Press ran a story the other day claiming the U.S. once was bound by the Kyoto Treaty.

Apparently, then-VP Al Gore signing the thing was all the AP needed to consider the treaty binding on the USA. Never mind the little business in the Constitution about how treaties must be ratified by the U.S. Senate.

One often gets the impression the Fifth Estate believes there is nothing in the Constitution but the First Amendment, and it doesn't even report that one right.

I previously wrote about the AP's coverage of global warming here and here.

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Posted by Amy Ridenour at 4:22 AM

Tuesday, January 16, 2007

The Source of Global Warming Alarmism

The climate circle is to blame.

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Posted by Amy Ridenour at 2:15 AM

Sunday, January 14, 2007

The Social Security Choice We Face

Rep. Mike Pence has an op-ed in the Wall Street Journal saying three important things about Social Security:
1) The White House must take tax increases off the table.

Says Pence: "Such a tax increase would likely lift or eliminate the cap on the amount of salary and wages subject to the payroll tax, currently at $94,200. Raising payroll taxes would prove devastating to working Americans, small business and the economy as a whole. Worse, it would only serve as a short-term band-aid to Social Security's financial woes.

"According to the Heritage Foundation, eliminating the cap will increase taxes by $484 billion over five years. This 12.4 percentage point marginal tax rate increase would hit middle-income families struggling to make ends meet, pay for college and save for retirement. Much of this increase will be borne by three million small-business owners who pay both the employer and employee portion of the tax hike. These entrepreneurs are on the forefront of job creation, and such a tax would cause millions of layoffs. Overall, the entire economy would slow by 2% to 3%, threatening the standard of living and economic opportunities of every American. In exchange for this massive tax increase, Social Security's financing will be preserved for roughly seven years."

2) Focus on personal savings accounts. Says Pence: "Social Security reform must be properly understood. It is not about achieving solvency; it is about improving the system so that it offers a better deal for younger Americans through personal savings accounts. Focusing on solvency will lead inevitably to tax increases and benefit cuts. Focusing on personal retirement accounts improves the chance of enacting sound public policy that also makes the system solvent."

3) Congress must stop embezzling. Pence says: "Third, the administration should submit a budget that fully protects the Social Security surplus from being used to subsidize government largesse, which Patrick Moynihan once described as 'embezzlement.' Voters have repeatedly said loudly and clearly that they object to raiding the Social Security surplus. It is time for the administration to either offer a budget aligned with those expectations, or propose cutting the payroll tax immediately to end the historic practice of over-collecting for a pay-as-you-go system. Doing both would quickly restore the public's shattered confidence in the way we spend their money."
Pence says if we reformers can't get a good bill through this Congress, we're better off passing nothing now: "Republicans don't have to pass a bad Social Security reform bill. If we lack the votes now to pass legislation that will actually preserve the system and protect our nation's economic expansion, we would be wise to spend the next two years seeking to win the debate and leave a foundation of arguments that will not unravel."

Hat tip: Andrew Roth, writing at Social Security Choice.

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Posted by Amy Ridenour at 12:02 AM

Saturday, January 13, 2007

Wal-Mart Advised to Eliminate Appeasement Efforts

Despite attending -- no joke -- a "light bulb summit," Wal-Mart is in the dark about the nature of its adversaries, says Senior Fellow Tom Borelli.

Tom says Wal-Mart should stop trying to appease its enemies and go on the offensive.

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Posted by Amy Ridenour at 11:35 PM

I Think the Phrase You Are Looking for is "Double Standard"

A Project 21 press release critical of Senator Barbara Boxer for implying that Secretary of State Condoleeze Rice is less qualified to handle Iraq policy because she is childless brought this comment by email from a corrspondent in the Bronx:
"OK, Rice has no children serving in the military because she has no children. But Boxer also mentioned she has neither children nor grandchildren in the military. Therefore, why the hell does she get to serve Foreign Relations?"
P.S. In a story that includes interviews with Secretary Rice and Senator Boxer about the "childlessness as a disqualification?" dustup, the New York Times is covering Project 21's Deneen Borelli's take on the issue.

P.P.S. The Huffington Post (Brad Friedman) is mad that the New York Times quoted Project 21. Says the fact that Project 21 was identified as "African-American" would mislead readers into believing Project 21 is liberal, and thus readers would misperceive its criticism of of Barbara Boxer as a defection from the left.

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Posted by Amy Ridenour at 2:29 AM

Friday, January 12, 2007

Ethics Monitors in Conflict

Interesting. It seems one ethics-monitoring group, the Legal and Policy Center, thinks Rep. Alan Mollohan's recusal from matters relating to the FBI while he remains under FBI investigation is inadequate, while another thinks it is hunky-dory.

Rep. Mollohan was chosen Wednesday to chair the House Appropriations Committee's Subcommittee for Science, State, Justice, Commerce and Related Agencies.

As CNSNews.com reports, the National and Legal Policy Center, which broke the Mollohan scandal, is less than impressed by the recusal:
"To say he's recusing himself is an insult to anyone who understands the appropriations process," [Legal and Policy Center Chairman Ken] Boehm said. "Just the fact that he's not going to micromanage the FBI's budget doesn't mean he can't play havoc with the Justice Department budget.

"When the Justice Department goes to his subcommittee - and they need all sorts of approval out of his subcommittee for other spending things and other things they want - they're going to a man they're investigating," the NLPC chairman said.
But CREW sees it differently, says CNSNews.com:
...Melanie Sloan, executive director of the liberal watchdog organization Citizens for Responsibility and Ethics in Washington (CREW), praised Mollohan "for recognizing that recusal is the appropriate course of action."

"The Democrats have handled Rep. Mollohan's ethics problem in a manner markedly different from the way the Republicans have handled such issues." Sloan said in a statement...

..."Speaker Pelosi, who campaigned on the issue of a cleaner congress, is working hard to live up to this ideal," Sloan added. "The question now is whether Republicans will follow her lead in dealing with their own ethically challenged members."
Boehm counters:
Boehm agreed that "any Republicans on appropriations committees who are under investigation shouldn't have any say-so over the Justice Department budget."

"This has nothing to do with the presumption of innocence," he said. "You also have a duty to the public and the taxpayer to run that appropriations committee in a way that inspires public integrity and not public disgust."

"This is such an obvious conflict of interest that it's amazing Speaker Pelosi allowed it to happen," he said. "If Pelosi wants to do this sort of thing, it would appear to me that her promise of running 'the most ethical Congress ever' has already been broken."

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Posted by Amy Ridenour at 10:23 PM

Minimum Wage Employment Impact Study: How To Cook The Numbers 101

David Hogberg examines a study the left often cites as proof that increasing the federal minimum wage won't harm employment:
House Majority Leader Steny Hoyer, in a speech supporting an increase in the minimum wage, claimed,
According to one recent study small business employment grew more between 1997 and 2003 in states with a higher minimum wage than in those adhering to the federal minimum wage. In other words, in those states that were paying above the $5.15 an hour their economies grew more and they created more jobs than did those states which had frozen their minimum wage at the federal minimum wage.
That "study" (pdf) was conducted by the liberal Fiscal Policy Institute. It is a textbook case in cooking the data. Specifically, the authors find every way to measure employment in a way so as to avoid looking specifically at those industries most affected by an increase in the minimum wage.

First, the authors of the study compare total employment in the ten states and D.C. that had a minimum wage higher than the federal minimum to the other 40 states (see page 8). That means the roughly 2 million minimum wage jobs get mixed in with the other 150 million other jobs in the nation. So that tells us next to nothing.

Next (page 9), they look at retail trade jobs, which, they claim, "tend to pay the lowest wages among all industries in the economy, and thus are more likely to be affected by the minimum wage than other industries." But this leaves out the accommodation and food industries. Indeed, the restaurant industry is one of the industries most affected by a hike in the minimum wage. So, in their attempt to look at industries most affected by a hike in the minimum wage, they conveniently leave out industries most affected by a hike in the minimum wage.

Finally, the authors look at all small businesses, defined as those businesses with 50 or fewer employees (see page 10). Not those small businesses most likely to be affected by a minimum wage, but all small businesses. So if you are a law firm with 40 people, or a think-tank like the National Center for Public Policy Research, you are assumed to be affected by a hike in the minimum wage just as much as if you a running a mom-and-pop diner. Sounds like good research to me!

Regrettably, a hike in the minimum wage now seems very likely. With the likes of Hoyer able to propagandize using garbage posing as serious research, it's little wonder.

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Posted by Amy Ridenour at 1:25 AM

Wednesday, January 10, 2007

On Nancy Pelosi's Smoking Ban

My take on Nancy Pelosi's smoking ban:

Given that the Capitol police recently confiscated a well-wrapped peanut butter and jelly sandwich belonging to my six-year-old son, I am rather amazed smoking was simultaneously allowed in the Capitol.

I am not one for government-imposed smoking bans generally, seeing them as one Nanny State step from an ice-cream ban (which would affect me), but if my son can't have wrapped food in a coat pocket in the Capitol, I see no particular reason why those bozos should be allowed to smoke.
_____

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Posted by Amy Ridenour at 1:39 PM

Barney Frank Intended to Stir Racial Animus, Project 21 Members Say


Some Project 21 members are not at all happy with Rep. Barney Frank.

As CNSNews.com reports it:
A Democrat's allegation that the Bush administration engaged in a calculated policy of ethnic cleansing after Hurricane Katrina to make Louisiana "whiter" has sparked outrage.

Addressing a group of bloggers at the Capitol in Washington, D.C., last week, Rep. Barney Frank (D-Mass.) renewed his criticism of the federal government's response to Hurricane Katrina, particularly the housing crisis that ensued after the hurricane hit.

"At this point, you're not talking about incompetence, you're talking about ethical values," he said.

"In a calculated way, you refuse to do anything for well over a year after the disaster. The policy, I think, is ethnic cleansing by inaction," Frank added...

...Frank said during the speech, "it's not ethnic cleansing in the sense of killing people." But, he went on to say, "What they [Republicans] recognize is they're in this happy position for them where if the federal government does nothing, Louisiana will become whiter and richer."

"By simply not doing anything to alleviate the housing crisis greatly exaggerated by Katrina, they get the hurricane to do the ethnic cleansing and their hands are clean," Frank continued...

...Kevin Martin, an environmental contractor involved in the post-Katrina clean up in Louisiana, told Cybercast News Service on Monday that Frank's comments were "demagoguery and intended for nothing more than creating class envy and racial division."

"How many times has Barney Frank been to the lower ninth ward?" Martin asked, referring to one of the more impoverished areas of New Orleans. "I'm sure I can count on one hand and still have fingers left over. I have photographic evidence that the devastation cut across all economic scales."

Martin, who attended college in Baton Rouge, La., is also a member of the advisory council for Project 21, a conservative black group...

...More attention should be shed on the statements, said Mychal Massie, national chairman for Project 21. The fact that Frank made such comments shows the black community in a demeaning light.

"I find Barney Frank's comments as reprehensible and as insulting as anything he has said or done in his 'debaucherous' career," Massie told Cybercast News Service.

"Mr. Frank's comments were intended for one reason and one reason alone. That is to incite more racial animus, more racial divisions and more racial fatigue directed at the current administration," he added.

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Posted by Amy Ridenour at 12:20 AM

Tuesday, January 09, 2007

Congratulations Are in Order

...to Project 21 Fellow Deneen Moore and National Center Senior Fellow Tom Borelli upon the occasion of their marriage.

May you have many happy years together!

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Posted by Amy Ridenour at 2:17 AM

A Crying Need for Lawsuit Abuse Reform

The Examiner had a very compelling editorial on the need for tort reform Monday. An excerpt:
That there is a crying need for lawsuit abuse reform is beyond question. ...there is substantial evidence of widespread abuse and even fraud at the highest levels of the trial lawyers bar.

The costs to consumers and taxpayers are enormous, as the American Tort Reform Association estimates:
* The cost of the U.S. tort system for 2003 was $246 billion, or $845 per citizen, or $3,380 for a family of four.

* U.S. tort costs increased 35.4 percent from 2000 to 2003.

* The growth of U.S. tort costs have exceeded the nation’s Gross Domestic Product (GDP) by 2 to 3 percentage points in the past 50 years.

* The U.S. tort system is inefficient; it returns less than 50 cents on the dollar and less than 22 cents for actual economic loss to claimants.
Clearly, trial lawyers for too long have grown rich by using forum shopping, friends on the judicial bench and, according to the U.S. Department of Justice, fraudulent expert witnesses to make the mere prospect of litigation so costly that even Fortune 500 firms find it cheaper to settle than to seek their day in court.

The judicial system is thus seriously warped against providing justice for businesses and the consumers they serve...
Read it all here.

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Posted by Amy Ridenour at 1:29 AM

Monday, January 08, 2007

Bush's War in Africa

With his usual impeccable timing, Joe Roche has an op-ed in the Lexington Herald-Leader on U.S. actions to combat al Qaeda in Africa just as the U.S. announces air strikes against al Qaeda in Somalia.

Joe's op-ed says, in part:
...After 9/11, President Bush launched a series of twilight wars to reverse Africa's suffering caused by terrorists. The offensive couldn't be launched outright because of the focus on Afghanistan and Iraq. So it was engineered by special forces and excellent military contractors, and occasionally aided by initiatives threatening more direct U.S. and allied action. The results have been amazing.

Taylor's regime was toppled. Sanko was captured and killed. Gadhafi turned tail in fear that the United States would come after him. Insurgencies abated in Niger, Mali and Senegal.

The ripple effect of these transformations has had a similar dramatic impact on Uganda's suffering and in undermining repressive regimes in other countries. Initially al-Qaida nodes reacted with vengeance in Morocco, Algeria and Tunisia, but that has been increasingly brought under control.

"Thanks to President Bush, whose strong resolve, public condemnation and appropriate action forced our tyrant into exile," Liberian President Ellen Sirleaf, the first woman leader of an African nation, said last spring.

Somalia was the latest major challenge. Jihadists allied with al-Qaida almost established themselves there. Ethiopia took the lead to support the U.N.-appointed government of Somalia and throw out the jihadists, closing a terrorist training camp outside the capital in Jowhar.

Millions of Africans have renewed hope for better lives. Relief and aid agencies are pouring in on the coattails of U.S. victories. Children are escaping the horrors of war...
Read it all here.

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Posted by Amy Ridenour at 9:03 PM

Nanny State

Medpundit found herself on the wrong side of the law recently. Seems she banned smoking in her office long before her home state adopted an indoor smoking ban, but now that her state's adopted her policy, its quibbling about the design of her "no smoking" signs.

It seems that banning smoking and posting "no smoking" signs isn't enough -- one also has to post tremendously ugly signs in one's office telling customers what state office to call if they are patronizing a business and see one of the other customers smoking.

Is it really likely that state employees who receive the calls are going to rush right over to force the offending customer to put out his cigarette?

Addendum: I looked into this a little more and the situation is even dumber than I originally thought. It seems Ohio adopted the rule before it got around to adopting any penalties, so there are no penalties for violating this particular law as yet. Still, if you own a place of business and already have "no smoking" signs posted, you must replace them with signs containing a phone number for turning in violators, so the state can do -- nothing.

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Posted by Amy Ridenour at 12:03 AM

Friday, January 05, 2007

Raising the Minimum Wage Kills Jobs, But Congress Doesn't Appear to Care

As House Democrats pledge to raise the federally-mandated minimum wage by 40 percent, our Ryan Balis asks: "Do Minimum Wage Increases Benefit Workers and the Economy?"

An excerpt:
...the job-killing effect of higher mandatory minimum wages is well documented. As Alex Adrianson of The Heritage Foundation points out: "Raising the minimum wage increases the prices of goods produced by minimum wage workers. Consumers respond by buying less, and employers respond by making less, which means fewer jobs. Employers also respond to relatively more expensive labor by investing in labor-saving technology, which again means fewer jobs."

At the federal level, the National Federation of Independent Business (NFIB), an advocate on behalf of small and independent businesses, estimates a federal increase to $6.65 an hour would result in 217,000 workers losing their jobs. Some 146,000 workers in the restaurant industry lost their jobs following the last federal minimum wage increase Congress enacted in 1996, according to the National Restaurant Association.

At the state level, raising the wage level by $6.75 to $8.25 per hour in Massachusetts would result in an estimated 26,970 lost jobs and $371 million in lost wages across the state if implemented, according to David Tuerck and Paul Bachman of The Beacon Hill Institute at Suffolk University. Low-wage workers, women and workers over the age of 20 would suffer disproportionate employment losses.

Federal minimum wage increases are also harmful to small business. The NFIB explains:
Mandatory wage increases hurt not only small businesses, but their employees as well. Big corporations do not have to absorb the cost because most minimum-wage jobs are offered by small businesses. Government manipulation of the starting wage has failed as [a] tool of social and/or economic justice. It has not been proven to reduce poverty or narrow the income gap and puts a stranglehold on America's top job creators: small businesses.
Moreover, mandatory increases remove the flexibility of business owners to decide how much to pay their own employees. As a result, it may be difficult for small businesses operating at the margins to find ways to cut costs while continuing to offer a competitive service and attractive employee benefits. As Mark Alesse and Matthew Guilbault of the New York chapter of the NFIB write:
A small increase of $1.60 per hour would cost a bake shop with ten clerks and bakers over $30,000 per year, not counting the increases that a higher payroll brings in the costs of workers compensation insurance, unemployment insurance, Social Security taxes, Medicare taxes and even liability insurance in some cases. This is money that most small employers simply do not have. So, what will they do? Lay off workers, increase prices, or both.
In addition to hurting 'mom-and-pop' businesses, the minimum wage also tends to "price out" low-wage workers and those with minimal educational and skill attainment.

For instance, in Santa Fe, California the unemployment effects of mandated wages have been most pronounced among the least-skilled workers. In 2004, the city mandated a minimum wage increase to $9.50 per hour - an additional increase to $10.50 is scheduled to take effect in 2008 - on private city businesses employing more than 25 people. According to University of Kentucky economist Dr. Aaron Yelowitz, the likelihood of unemployment increased 3.3 percent among city workers and 8.3 percent among less educated individuals (those with fewer than 13 years of education). Usual hours of work also fell most sharply among the less educated group - 3.2 hours per week, compared to only 1.0 hours for the general workforce.

Economic research shows that mandatory minimum wage increases offer little help to the working poor. According to analysis of 2003 Current Population Survey (CPS) data by Richard Burkhauser and Joseph Sabia of Cornell University, over 70 percent of workers living in poor families - the "working poor" - earn hourly wages greater than $7.00 an hour.

Ironically, the primary beneficiaries of a minimum wage increase would be those workers already living in higher-income families. As George Mason University economist Walter Williams points out using U.S. Bureau of Labor Statistics data, the overwhelming majority of minimum wage earners do not fit the poverty-stricken demographic that the minimum wage is intended to assist.
...only 5.3 percent of minimum wage earners are from households below the official poverty line; forty percent of minimum wage earners live in households with incomes $60,000 and higher; and, over 82 percent of minimum wage earners do not have dependents."
Instead of forcing employers to pay what the "legislative gods" deem appropriate, James Dorn of the Cato Institute argues that legislatures should focus on establishing positive conditions for economic prosperity. Dorn writes, "If legislators really want to help the poor, the best thing they can do is abolish, not increase, the minimum wage." Dorn concludes, "Policies that increase competition and choice in public education, reduce marginal tax rates on capital and labor, and protect private property rights would be positive steps toward increasing economic freedom, workers' dignity, and prosperity."
It's not clear at all that Congress cares about the job-killing effects of minimum wage increases. The political and public relations benefit of raising them is too tempting for many politicians to resist.

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Posted by Amy Ridenour at 3:18 PM

Thursday, January 04, 2007

Making Health Care More Affordable -- Or Not

Writing in National Review, our David Hogberg takes a look at the chance the incoming Congress will succeed in fulfilling its pledge to "make health care more affordable."

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Posted by Amy Ridenour at 2:28 PM

Tuesday, January 02, 2007

Will Congress Make Health Insurance More Expensive?

The National Center has a new paper out examining the wisdom of a Congressional proposal to let Medicare "negotiate" drug prices.

As our press release describes it:
Congressional Liberals' Plans For Medicare Will Make Private Health Insurance More Expensive

Letting Medicare Negotiate Drug Prices Also Likely to Increase Number of Uninsured


The incoming 110th Congress will make health insurance more expensive if it lets Medicare "negotiate" prescription drugs, says National Center for Public Policy Research Senior Policy Analyst David Hogberg, Ph.D.

"The liberal plan to reform Medicare is designed in a way that givse drug companies greater incentive to raise drug prices. Higher drug prices means higher prices for health insurance. And that means more people will be unable to afford health insurance," Hogberg said.

As Hogberg points out in his new National Policy Analysis paper, "Letting Medicare "Negotiate" Drug Prices: Myths vs. Reality," Congressional liberals and their special interest allies are trying to hoodwink the American public into thinking that by "negotiating" with drug companies, Medicare will actually be bargaining over drug prices. "Nothing could be further from the truth," stated Hogberg. "Medicare doesn't negotiate prices. It sets them."

Medicare is a fee-for-service program that sets the prices it pays to medical providers. If medical providers are unwilling to accept the Medicare price, then Medicare does not reimburse them.

To see how Medicare will deal with drug prices, Hogberg points to the operation of Medicare Part B, which pays for outpatient services. For drugs such as a tetanus shot that have to be administered by a doctor, Medicare only pays the "average" private sector price of the drug.

"That's surely how Medicare will pay for prescription drugs under the Part D prescription drug program should liberals succeed in removing the non-negotiation clause from the Medicare Prescription Drug Act," said Hogberg. "Once that happens, drug companies will have all the incentive to push their prices higher in the private sector, since higher prices in the private sector means a higher 'average price' and, hence, bigger reimbursements from Medicare."

To prove his point, Hogberg points to research conducted by economists Mark Duggan and Fiona M. Scott Morton of the National Bureau of Economic Research. They examined the effect Medicaid, the government health insurance program for the poor, had on the price of prescription drugs. Like Medicare Part B, Medicaid only pays the average private sector price for a drug. Duggan and Morton found that Medicaid's drug reimbursement practices resulted in a seven to 10 percent increase in the average price of a prescription drug.

"With higher drug prices in the private sector," Hogberg says, "insurance companies will have to charge higher premiums to cover the costs of those drugs. Higher health insurance costs mean that it will be harder for employers and individuals to afford health insurance, and a higher number of uninsured will be the result."

"There is really no need for Congress to do this," Hogberg further argues. "The private plans that administer Medicare Part D have done a very good job at keeping costs down. Part D costs are coming in under budget. The changes liberals are proposing pit seniors against those who have insurance in the private sector and in the end only would make health insurance more expensive."

The National Center for Public Policy Research National Policy Analysis paper, "Letting Medicare "Negotiate" Drug Prices: Myths vs. Reality," by David Hogberg, Ph.D., is available online at www.nationalcenter.org/NPA550MedicareDrugPrices.html.

The National Center for Public Policy Research is a non-partisan, non-profit educational foundation established in 1982 and based in Washington, D.C.
For those of you with a cynical turn of mind, allow me to volunteer that although the National Center has received contributions on rare occasions from the pharmaceutical industry over the last 25 years, we have not received one from the pharmaceutical industry in over four years. The last one we received amounted to less than three-tenths of one percent of our budget that year. So, if you disagree with our conclusions in this paper, you'll just have to do so on the merits.

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Posted by Amy Ridenour at 3:07 AM

Copyright The National Center for Public Policy Research