United Liberty

Written by Tad DeHaven, a budget analyst at the Cato Institute. Posted with permission from Cato @ Liberty.

When it comes to reporting on the Small Business Administration, it seems to me that most journalists simply assume that if a government agency exists to “help” small businesses then it must be good. So I was pleased to read a weekend piece from two investigative journalists with the Dayton Daily News that challenges the conventional wisdom on the SBA.

As the reporters explain, the SBA’s main job is to back loans issued by private lenders to small businesses that couldn’t get financing on market terms. The result is that taxpayers end up holding the bag when these naturally riskier loans go bad.

And quite a few go bad as this Cato essay on the Small Business Administration explains.

Lenders have little skin in the game so for them it’s heads they win, tails they win. Thus it was shocking – absolutely shocking – that a representative from the SBA and the head of the Ohio Bankers Association provided the reporters with the most favorable quotes.

The entire piece is worth reading, but the authors did a particularly good job of turning the spotlight on the racket that exists between the SBA, lenders, and national franchisors:

Let’s put aside for a minute that ObamaCare is unconstitutional, adds $6.2 trillion in debt, piles on countless new taxes, and has already racked up $31 billion and 71.5 million hours in regulatory compliance costs.  Yes, that’s a lot to put aside.  But for just a moment assume the role of a liberal with an entitlement mentality.  For a law with enormous riches and political capital invested in it, wouldn’t you expect it to at least function on its most basic level consistent with its namesake?  In other words, you would expect for the Affordable Care Act to provide affordable coverage.

The latest of ObamaCare’s fundamental flaws to be euphemistically reported as a “glitch” that needs to be “tweaked” is its failure to provide affordable family coverage for a broad group of employees.  As a result, Kaiser Family Foundation estimates that 3.9 million family dependents may not be able to afford employer-sponsored family coverage or receive subsidized coverage on an ObamaCare exchange.

Understanding the family glitch requires a quick primer on the byzantine regulatory structure governing Obamacare’s subsidies:

Seemingly in response to this letter from Chairmans Darrell Issa (R-CA) and Dave Camp (R-MI) on January 29 to the Treasury and IRS, on February 1, the IRS again finalized the Obamacare subsidy regulations that flagrantly deviate from the statutory authority.  This issue continues to simmer relatively under the radar since I last wrote about it in August. To refresh everyone’s memory, Obamacare’s core redistributionist provisions are its refundable premium tax credits and cost sharing subsidies available for individuals to purchase coverage on state exchanges starting in 2014.  The credits will be available to anyone with annual income under 400% of the federal poverty line who isn’t covered under an employer-sponsored plan.  To put that in perspective, a family of four today earning up to $92,200 per year would be eligible for the credits.

Federal Exchanges Excluded
Here’s the kicker: Obamacare specifically limits these credits and subsidies to individuals who purchase coverage on an exchange established by the state.  Below is the actual, unambiguous provision from PPACA [emphasis added]:

Over the last six years, I’ve been watching Sen. Saxby Chambliss (R-GA) very closely. Back in 2008, Chambliss faced a tough challenge in a three-way, finding himself in a runoff against Jim Martin, a liberal Democrat.

Part of the problem was campaign organization. Insider Advantage quoted an unidentified Republican who said that Chambliss and company had the organization of a “bad state House race,” calling it a “embarrassing campaign.” There was also the perception of Chambliss among Georgia Republicans. Insider Advantage again quoted a unidentified Republican who said, “Saxby’s reputation is that he’s spent six years in Washington playing golf. He’s gone on lots of trips. He hasn’t done the down-and-dirty constituent work.”

“Saxby bragged about it his first four years – how much golf he was getting in. It was a real problem and it irked a lot of people,” said the unnamed Republican source. Many Republicans in the state were less than thrilled with Chambliss, who hadn’t been able to endear himself to the state party the way Sen. Johnny Isakson had.

Another issue that hurt Chambliss was that he had lost the support of many fiscal conservatives in Georgia because of his votes that put taxpayers at risk.

Don’t look now, but the Solyndra scandal is coming back up in the media. The now-defunct, politically-connected green energy company was given a sweetheart $500+ million loan from the Obama Administration back in 2009. By August 2011, Solyndra had filed for bankruptcy, leaving taxpayers on the hook for millions.

Supporters of heavily subsidized green energy projects downplayed cronyism, which runs rampant in the Obama Administration. But new e-mails show that a White House analyst warned that giving taxpayer money Solyndra would be a big mistake (emphasis mine):

As the Obama administration moved last year to bail out Solyndra, the embattled flagship of the president’s initiative to promote alternative energy, a White House budget analyst calculated that millions of taxpayer dollars might be saved by cutting the government’s losses, shuttering the company immediately and selling its assets, according to a congressional investigation.

Even so, senior officials in the White House’s Office of Management and Budget did not discourage the Energy Department from proceeding with its plan to restructure a federal loan to Solyndra — a move that put private investors ahead of taxpayers for repayment if the company closed, the investigation by Republicans on the House Energy and Commerce Committee found.

Tonight, the U.S. House of Representatives voted 237-170 to use taxpayers funds for a downpayment on a recovery program for the failing auto industry. Alabama’s US Senator Richard Shelby is leading the opposition to the bailout. Shelby declares that the total cost of the bailout will easily exceed $100 billion. The late Samuel Francis often quipped that the United States has two political parties: the Evil Party and the Stupid Party. Occasionally, you see a true bi-partisan effort and you can count on that bi-partisanship involving both evil and stupidity.

But not because of the reasons you may believe

Part I - “The False Claims” - Can be found HERE

Labor Market Intervention

Within a month of the peak of the stock market in September 1929, President Hoover began a campaign of coordination between industry and government that is still seen today. He was under the belief that falling wages would exacerbate the coming recession and that they must be held steady in order to preserve purchasing power.