Tag Archives: obama

Mandates, Cost Curves and Obamacare

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by Bikna Huang

In March 2012, the United States Supreme Court heard oral arguments about the Affordable Care Act, popularly known as “Obamacare.”  The argument centered on the individual mandate provision, which (once implemented in 2014) would require every person to be covered by some sort of health insurance. The question for the Supreme Court to decide is whether Congress has the power to require millions of uninsured Americans to get health insurance.

According to many proponents of the law, including the Obama administration, Congress has the power to require the individual mandate under the Commerce Clause because the uninsured will still use health services which would have an impact on commerce. Opponents, however, argue that the individual mandate falls under the “general police powers,” which is only for states.

The government has argued that the individual mandate will reduce costs and lower premiums, which had been increasing at rates outpacing inflation for several years, because health insurance companies usually raise premium prices to cover unpaid expenses. However, many have argued that the individual mandate will increase premiums and the cost of health insurance. Jonathan Gruber, MIT economists, predicts that Obamacare would reduce costs for the young and the old and increase for adults in between.

Paul Clement, arguing in opposition to the individual mandate, stated that the individual mandate will cause insurance premiums to “skyrocket.”  The argument proceeds that the proof is there, we have already seen increases in health insurance premiums since passage of the Affordable Care.  However, as we noted, the individual mandate is still two years away, as it will not become effective until the law is fully implemented in 2014.  Confronted with that fact, opponents argue that health insurance will increase even more then, which is at odds with a central goal of Obamacare, providing affordable health insurance.  Of course, if the Obama Administration is correct and the Affordable Care Act’s requirement for health insurance brings in a younger healthier pool who currently forgoes insurance because they are younger and healthier and thus have less need for medical care, then premiums will decrease.  It will be interesting to see whether the individual mandate stands, and which side is correct about the cost, if it does.  We at TheFactFile.com will be watching.

Bikna Huang is an intern with TheFactFile.com who studies at CalPoly in San Luis Obispo, California.

It’s Not Obama’s Fault That Crude Oil Prices Have Increased

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by Peter Van Doren and Jerry Taylor

Editors Note:   TheFactFile.com was in the midst of researching for a possible post on U.S. Oil Production when we came across the following piece by  Peter Van Doren and Jerry Taylor that captures the facts and the arguments perfectly.  Rather than re-inventing the wheel, we asked for permission to repost the following and the authors graciously agreed.  The original appeared in U.S. News and World Report (available here) and was also posted by the Cato Institute (available here).

Peter Van Doren and Jerry Taylor are senior fellows at the Cato Institute.

Added to cato.org on March 2, 2012

This article appeared in U.S. News & World Report on March 2, 2012.

Is President Obama responsible for spiraling price of gasoline? Republicans say yes, but the facts say no.

Why have gasoline prices increased since the start of the year? The simplest explanation is that the price of crude oil has increased. Specifically, the spot price for Brent (North Sea) crude has increased $16 a barrel since January. Given that there are 42 gallons to a barrel, that works out to a 38 cent increase in the price of a gallon of oil. Spot prices for gasoline trade in New York have increased about 41 cents per gallon over the same time frame. So there you go.

Why is the price of North Sea oil relevant to the price of gasoline in the United States? Well, we import gasoline refined in Europe from North Sea crude. Even though these imports constitute less than 10 percent of U.S. gasoline consumption, they are necessary to satisfy domestic demand and their price sets the market price for all gasoline regardless of whether other cheaper crude sources are used to refine most of our gasoline.

Why is the price of North Sea crude rising? One possibility is that supply is down. North Sea (British) production has been decreasing for some time. During the first quarter of 2007, it was 1.7 million barrels a day, or mbd. By the end of 2011, it was down to 1.1 mbd. Norwegian crude oil production has likewise decreased from 2.7 mbd in the first quarter of 2007 to 2.1 mbd at the end of 2011. And global demand is bidding up the price of crude oil from the North Sea and elsewhere.

Ironically, during the same time period, U.S. crude oil production has marched upward for the first time since 1971. Since the start of 2007, U.S. production has increased by 2.1 mbd. Sure, more domestic oil creates the possibility of fewer refined imports tied to the price of Brent crude, but given that the price of Brent sets the price for crude generally, the result would be more profit for domestic crude producers rather than significantly lower gasoline prices for Americans (not that there’s anything wrong with that).

So despite the popular perception of President Obama as anti-oil, domestic oil production is increasing for the first time since the Johnson administration. Alas, little of this has to do with the president. Prices increased from $22 in 2002 to just under $100 a barrel average in 2008 and supply has responded. President Obama is no more responsible for production increases than other presidents were responsible for production declines. Unfortunately, presidents get blamed for world market changes that occur during their time in office… but generally, they do not cause them.

Peter Van Doren and Jerry Taylor are senior fellows at the Cato Institute.

(See some related TheFactFile.com charts here)

February 2012 Unemployment 8.3%

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This morning, the Bureau of Labor Statistics released its report on the U.S. employment situation for February 2012, confirming the positive signs shown in ADP’s payroll figures released earlier this week.  As the chart below shows, while the unemployment rate stalled at 8.3% in February; 0.5% higher than January 2009 when President Obama was sworn in, but at the same as rate as his first full month in the presidency (February 2009) the economy added a significant number of jobs. (The chart is color coded red for months that President Bush was in office, and blue for President Obama).

In February, total nonfarm payroll increased by 227,000 jobs. Job growth was widespread throughout the entire private sector, with large increases in professional and business services (+82,000 jobs), health care and social assistance (+61,000 jobs), and manufacturing (+31,000 jobs). Government employment, however, continues to stagnate: in the past 12 months, the sector has lost 22,000 jobs.  Additionally, the change in total nonfarm payroll employment for December was revised from +203,000 to +223,000, and the change for January was revised from +243,000 to +284,000.
On the less positive front, the number of long-term unemployed (e.g., those who are unemployed for 27 weeks or longer) remained high in February at 5.4 million, accounting for 42.6% of the unemployed. However, that was down from 5.5 million in January.

In short, as with the recent upwardly revised numbers on GDP growth for the 4th quarter of 2010, the economy continues to trend in the right direction, nevertheless, it would appear that higher growth and more jobs are still needed to reverse the massive decline brought on by the Great Recession.

We would like to hear from you.  How does the employment situation look in your hometown?

 

Immigration: Deportations on a slow but steady climb – Part 1

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Current Events 2012

On the issue of immigration, President Obama can’t seem to do anything right. On the left, immigration reform advocates have been disappointed by the lack of reforms—whether comprehensive reform of the entire immigration system (one of Obama’s 2008 campaign promises) or less far-reaching reforms such as the DREAM Act—and by the record number of deportations, including many for minor offenses, that have occurred as a result of the administration’s Secure Communities program.  From the right, the 2012 GOP candidates all claim that Obama has been soft on illegal immigration, and call for a tightening of U.S. border security and an increase in the number of deportations.

While we aren’t going to delve into the debate on what constitutes the right approach to fixing our (clearly broken) immigration system, the irreconcilable positions that Obama is simultaneously too tough and too weak on immigration did make us wonder what the facts are on this issue. Specifically, we wanted to see how Obama compares to past presidents in the number of deportations, as well as the percentage of these that were due to criminal offenses (which we’ll discuss tomorrow in Part 2).

The following chart uses data from the Department of Homeland Security’s 2010 Yearbook of Immigration Statistics to show the number of deportations from 1892 to 2010:



Note: Removals are the compulsory and confirmed movement of an inadmissible or deportable alien out of the United States based on an order of removal. An alien who is removed has administrative or criminal consequences placed on subsequent reentry owing to the fact of the removal.

 

As this chart shows, there has been a massive increase in the number of deportations across this period, especially at the tail end (starting around 1997). To get a better sense of this change, the next chart looks only at the data from 1992-2010:

Perhaps surprisingly, the first jump in deportations occurred under a Democratic president (Bill Clinton) from 1996 to 1997, increasing from 69,680 to 114,432, respectively. Also surprising is that the number of deportations actually decreased in the year following 9/11: from 189,026 in 2001 to 165,168 in 2002. That said, since 2002, the number of deportations has been steadily increasing, with just a slight decrease in 2010.

In short, while it is true that deportations have hit record levels under Obama (a fact that goes against recent claims by 2012 GOP candidates), it would be shortsighted to ignore the fact that they were already on an upward trend before he came to office.

Tomorrow we’ll continue our analysis by looking at the the types of people who are being deported. Specifically, has the President succeeded in his focus on finding and deporting the most serious criminals?

 

One Year Later: Grading Obama’s 2011 State of the Union Address

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Tonight marks President Obama’s third—and possibly final—State of the Union (SOTU) address, but before focusing on his ambitions for 2012, we wanted to look back at his pledges from last year’s address. As many of you remember, last year’s SOTU came not only at the start of divided government following the Democrats “shellacking” in the 2010 elections, but also just over 2 weeks following the shooting of Gabrielle Giffords in Tucson, Arizona. In this context, Obama called for unity and cooperation among the two parties: “We will move forward together, or not at all – for the challenges we face are bigger than party, and bigger than politics.”

We all know how well that went. But what about the other pledges from last year’s speech? To rate Obama’s success in accomplishing his 2011 goals, we first went back to the speech to parse out his concrete policy proposals. Broadly speaking, his speech focused on 8 primary themes: (1) investment for the future (including research, technology, education, and physical infrastructure); (2) the U.S. tax code; (3) government regulations; (4) the federal deficit; (5) the organization and transparency of the federal government; (6) immigration policy; and (7) foreign policy. Out of these themes, we pulled out the most significant (and specific) policy proposals:

 

Policy Proposal: Increase investment in biomedical research, information technology, and clean energy technology.

Result: Success. The President’s FY2012 budget requested targeted increases in spending on research at the National Science Foundation (NSF), National Institutes of Health (NIH), and the Department of Energy (DOE). Ultimately, Congress approved a 2.5% increase for the NSF (appropriating $7.03 billion for FY2012), with research and related activities increasing by 2.8%. For the DOE, the enacted budget brought a 2.5% increase for energy innovation investment-related Offices and programs. Finally, while funding for NIH as a whole remained flat, funding for the National Institute of Biomedical Imaging and Bioengineering (an Institute within NIH) increased by 8.0 percent.

 

Policy Proposal: Eliminate subsidies given to oil companies in order to free up money for investment in clean energy.

Result: Failure. Despite the attention these subsidies have been received in Congress and in the media, Big Oil continues to receive approximately $3.6 to $4.5 billion a year in tax breaks and other advantages.

 

Policy Proposal: Begin talks on comprehensive immigration reform.

Result: Failure. Despite speeches from the President that “[w]hat we really need to do is to keep up the fight to pass genuine, comprehensive reform,” Congress has shown no interest in taking up the issue.  And it is extremely unlikely that any headway will be made during an election year.

 

Policy Proposal: Replace No Child Left Behind with “Race to the Top”.

Result: Failure. Despite attempts at comprehensive education reform, Congress has been unable to agree on how to rewrite No Child Left Behind (NCLB). However, with the law’s toughest sanctions for underperforming schools right around the corner, the Administration is expected to allow states to opt out of No Child Left Behind in the coming months.

 

Policy Proposal:  Make the tuition tax credit permanent.

Result: Failure. The American Opportunity Tax Credit was not made permanent, and is still expected to expire in December 2012.

 

Policy Proposal: Simplify the tax code by getting rid of the loopholes and use the money to lower the corporate tax rate.

Result: Failure. Simplification of the tax code received a significant amount of attention in talks on reducing the fiscal deficit—it’s one of the only possible ways to increase revenue that Republicans seem amenable to—, but to date neither the tax code nor the corporate tax rate has been changed.

 

Policy Proposal: Review government regulations in order to find rules that put an unnecessary burden on businesses.

Result: Success. In addition to Executive Order 13563 on Improving Regulation and Regulatory Review, the President called for a government-wide review of existing regulations. The draft plans were released to the public for discussion, and the final plans were published here.

 

Policy proposal: Develop a proposal to merge, consolidate, and reorganize the federal government.

Result: Work in progress. After inaction for all of 2011, President Obama requested (on January 13, 2012) the authority to reorganize government.

 

Policy Proposal: Increase government transparency by introducing a website where Americans can see how and where tax dollars are being spent.

Result: Success. A new online tool called “Your Federal Taxpayer Receipt” has been in place since April 15, 2011.

 

Policy Proposal: Pass the free trade agreement with South Korea.

Result: Success. The agreement was approved by both the House and Senate in October 2011.

 

Policy proposal: Bring troops home from Afghanistan in July.

Result: Work in progress. In June 2011, the President announced the withdrawal of 10,000 troops from Afghanistan by the end of 2011, and a total of 33,000 troops by the end of 2012.

 

In short, while President Obama achieved a number of his policy goals, the most significant ones (i.e., tax reform and comprehensive immigration reform) went unfulfilled. And given that 2012 is an election year, it is highly unlikely that more progress will be made this year than last.