I think the best thing we can do in Washington at this time is really just to calm down and quit changing sweeping -- making sweeping changes.
I sat down with a business this week -- I'll give you an example -- and they're looking at the health care bill, and they're trying to decide, should they keep people under 30 hours? Smaller businesses are saying, should we stay under 25?
So I think that much of what we've done over this last year has actually been counterproductive. And, again, the best thing we can do is just calm down, to really let people's balance sheets sort of get back where they need to be. That will stimulate demand over time.
This quote from this front page diary, was the basis of a discussion attacking this Republican's position.
I think the gist of what Sen. Corker said, that President Obama and the Democratic Congress have made sweeping changes, is spot on. I think some time for the country to digest what's been done could help a lot right now.
More below the fold.
There are blogs on the internet stating "how much President Obama has accomplished", here, on Dailykos, there have been diaries here,here,here, etc. and even big shots like Rachel Maddow have chimed in about what President Obama's accomplished.
He's accomplished a lot. The major pieces of his domestic agenda, which passed over the past year and a half are Health Care Reform and Financial Regulation.
The downside to doing so much is many of the laws aren't fully in effect and no one has a 100% guarantee of how those laws will be implemented. You can note the fact the Justice Department is going to enforce the full implementation of the "Motor Voter" law 17 years after its passage.
Businesses are reacting in their own way to the uncertainty of how these laws will be implemented by sitting on record amounts of cash. Without increased business investment in the economy, the unemployment rate will not be reduced. This Financial Times article summarizes the objections and issues businesses have right now:
The complaints against Mr Obama can be divided into three. First, he is loading too many regulations on to a weather-beaten private sector. Of these, the vast, complex health and capital markets bills top the list. Partly because of frenetic lobbying by the Chamber and others, the cap-and-trade climate change bill that passed the House of Representatives last year looks unlikely to pass the Senate.
Business leaders say the health and Wall Street reforms have created huge uncertainty since they will generate hundreds of federal rules, which will affect how companies operate. They cite this uncertainty as the explanation for why there is a record $1,800bn in cash sitting uninvested in US corporate treasuries.
As Keith Van Scotter, owner of Lincoln Paper and Tissue, a small Maine-based business, says: "Till we figure out what is happening with this humungous government bureaucracy it is difficult to get too optimistic and say: ‘I want to expand.’"
http://www.ft.com/...
The FT article is pretty objective and worth reading in full. I think at some point, the uncertainty of how the new rules will impact the market need to work their way through the government regulatory agencies and the courts.
Laws that radically alter the domestic landscape are rarely met with an open embrace or left alone to be implemented. The extent of how the Civil Rights Act of 1964 will be implemented continually gets adjusted based on the rulings of the Supreme Court. The same goes with Supreme Court rulings, which precipitate laws to comply with those rulings. The ruling to end segregation in public schools, Brown v. the Board of Education, which was decided in 1954, still spawns lawsuits and decisions by the Supreme Court on what constitutes racial discrimination in assigning what schools a child in a school district has to attend.
It shouldn't be any surprise there were lawsuits challenging Health Care reform, which is the most sweeping piece of domestic legislation since the 1960's, almost immediately.
The health care legislation, probably like most laws, has left a lot of questions about its implementation. For example, how exactly are medical-loss ratios determined:
The healthcare reform law requires that, starting in 2011, insurance companies' medical loss ratios -- the ratio of an insurance company's spending on healthcare for policyholders to its revenues -- must be 85% or higher in large-group markets and 80% or higher in individual and small-group markets.
The Department of Health and Human Services asked the NAIC to propose specifics for the medical loss ratio, and that definition was due by June 1. The NAIC missed that deadline and explained to HHS Secretary Kathleen Sebelius that it needed more time to figure out a formula that wouldn't harm the insurance market.
Although the Patient Protection and Affordable Care Act (PPACA) stated that federal taxes would be excluded from the formula used to calculate the medical loss ratio, the NAIC, the insurance industry, members of Congress, and others, are locked in a debate about what, exactly, constitutes a "federal tax."
Ultimately, HHS will have the final say.
One NAIC committee has already recommended that all federal taxes be removed from medical loss ratio calculations except for investment income taxes. Under that scenario, insurance companies stand to benefit because the more federal taxes that are excluded from the denominator, the less money insurance companies would be required to devote directly to patient care.
For instance, for a $10,000 policy, the insurer would need to devote 80%, or $8,000 to benefit payments. That money couldn't be spent on anything not relating to medical care for the patient, such as advertising or insurance executive salaries.
But if the plan spends an additional $1,000 on taxes, and that money is not excluded from the medical loss ratio calculation, then the insurer must devote 80% of $11,000, or $8,800 to patient care, Jim Capretta, a fellow at the Ethics and Public Policy Center, and former associate director at the Office of Management and Budget explained on a Monday call sponsored by the Galen Institute, a free-market think tank.
Six members of Congress wrote to the NAIC last Friday to argue that "federal taxes" should be better defined. Translation: federal taxes should be included in the calculation so insurers have to pay more for patient care.
"As the NAIC works to craft proposed definitions, we are writing to clarify legislative intent as it pertains to the exclusion of Federal taxes from revenue calculations," wrote the members of Congress, who are all chairmen of committees involved in passing the healthcare reform bill. The letter was signed by Sens. Max Baucus (D-Mont), Christopher Dodd (D-Conn.), and Tom Harkin (D-Iowa), and Reps. Sander Levin (D-Mich.), Henry Waxman (D-Calif.), and George Miller (D-Calif.)
They argued that "federal taxes and fees" that were meant to be excluded in the law refers only to taxes levied on insurance companies by the reform law, including an annual fee imposed on each health insurance plan and a tax on high-benefit, so-called "Cadillac" plans.
Federal income taxes and payroll taxes should not be excluded, the lawmakers said.
In response to the letter from the lawmakers, the health insurance lobby America's Health Insurance Plans (AHIP) sent a letter to NAIC, urging the group to draft language that "clearly describes the broad array of taxes and fees -– both federal and state – excluded from the MLR calculation in the denominator."
http://www.medpagetoday.com/...
This portion of the law goes into effect next year, but right now there's no definitive guidance on how it will be interpreted.
Another example, from this July 21, 2010 article, the Dodd-Frank Fin Reg bill sets a legal liability ratings agencies' will have, when they rate bonds. The actual extent of this liability has not been determined. This has reduced the ability of companies to issue bonds and loans:
The nation's three dominant credit-ratings providers have made an urgent new request of their clients: Please don't use our credit ratings.
The odd plea is emerging as the first consequence of the financial overhaul that is to be signed into law by President Obama on Wednesday. And it already is creating havoc in the bond markets, parts of which are shutting down in response to the request.
Standard & Poor's, Moody's Investors Service and Fitch Ratings are all refusing to allow their ratings to be used in documentation for new bond sales, each said in statements in recent days. Each says it fears being exposed to new legal liability created by the landmark Dodd-Frank financial reform law.
The new law will make ratings firms liable for the quality of their ratings decisions, effective immediately. The companies say that, until they get a better understanding of their legal exposure, they are refusing to let bond issuers use their ratings.
That is important because some bonds, notably those that are made up of consumer loans, are required by law to include ratings in their official documentation. That means new bond sales in the $1.4 trillion market for mortgages, autos, student loans and credit cards could effectively shut down.
There have been no new asset-backed bonds put on sale this week, in stark contrast to last week, when $3 billion of issues were sold. Market participants say the new law is partly behind the slowdown.
http://online.wsj.com/...
So Sen. Corker is sort of right. I don't think the laws that were passed will be detrimental in the long run, but right now one of the best things President Obama can do is reassure business that no major, sweeping, new regulations are coming down the pike.
Businesses are seething that the rules to the game have been changed. They spent over a billion dollars to influence the laws in 2009 and don't look to be slowing down this year.
I don't think we should do nothing. I think there's plenty of scope for the government to increase investments in renewable energy and mass transit (a second stimulus?), for example, which will help alleviate our dependence on fossil fuels and foster an environment for private investments in those industries, without creating whole new sets of regulations.
I think over all, we've reached a point where we need this Administration to step back and allow the laws, which have been passed to be implemented. Let those effected by these sweeping laws digest what's been fed to them. It'd be one of the best ways to spur businesses to invest in the economy, which is absolutely needed, if we want to bring unemployment down.