AnnotatedOpinions.com

U.S. steel makers are cheering an International Trade Commission vote Wednesday to impose new duties on imports from China. U.S. consumers will want to hold their applause.  

The case was filed in April by domestic steel manufacturers and the United Steelworkers union, which argued that they had been injured by imports of subsidized steel from China. The ruling allows the Commerce Department to impose countervailing duties ranging from 10% to 16% on future imports from China of “oil country tubular goods,” which are the pipes used in the oil and gas industry. . . [AO: Ok. China illegally subsidizes its steel industry. This hurts American Steel Companies by keeping prices artificially low. U.S. steel manufacturers and the United Steelworkers union bring a case against China before the International Trade Commission and win.   

Should we be happy that U.S. workers are fighting for their jobs against subsidized Chinese production? Not according to the Wall Street Journal.]  

China will no doubt respond to this latest protectionism with more tariffs of its own against U.S. products or investment, further increasing the cost of this protectionism. . . [AO: See, this is about
protectionism. This is not about China cheating and getting caught. This is not about the U.S. being given the option to rectify an injustice perpetrated against American workers by China. No. To hear the Wall Street Journal tell it, this is about the U.S. being protectionist.  

Know what? The U.S. is being protectionist. The U.S. is protecting its citizens—hardworking Americans who have seen their industry decimated by, among other things, cheating on the part of other countries—from, yes, cheating. There is nothing wrong with protecting American families here.]

Maj. Gen. Anthony A. Cucolo 3d issued a general order in November that prohibited soldiers under his command from becoming pregnant or impregnating another soldier. . .  

“I consider the male soldier as responsible for taking a soldier out of the fight,” said Cucolo. But critics still accused him of being insensitive to women, perhaps even pushing some toward abortion. . . [AO: May I suggest a difference between male and female soldiers? Female soldiers under Maj. Gen. Anthony A. Cucolo’s command can never eliminate the potential for “making a soldier pregnant” when they engage in sexual intercourse whereas the male soldiers can ensure this by fraternizing with non-soldiers. See the difference? It’s an order that effectively bars female soldiers from engaging in sexual intercourse but allows male soldiers to do so.]  

Gen. Raymond Odierno, commanding general in Iraq, has since issued a superseding general order that does not list pregnancy as a punishable offense. . .  

The general’s ham-handed effort to attack fraternization in a war zone has become grist for comedians. But the seriousness of the topic goes beyond pregnancy to the rapes and other sexual assaults that also have become more prevalent with today’s male and female soldiers working and living in closer proximity. [AO: Right. because, according to the Inquirer, the way to put an end to rapes and sexual assaults is to bar people from becoming pregnant. Good luck with that.]  

Still, the number of [rape and sexual assault] cases going to courts-martial did increase last year to 38 percent of the 832 investigated cases that were brought before commanders. That compares with 30 percent of 600 investigated cases in fiscal 2007. The difference between the number of allegations and court cases shows that the military has the same difficulty as civilian authorities with sexual assault charges, especially when it’s a case of “he said, she said.” [AO:
Perhaps if civilians were bared from becoming pregnant that would address the problem of rape and sexual assault in the civilian population. Ok, maybe not. But the Philadelphia Inquirer’s logic would suggest as much. Might I suggest then that there is a problem with the editorial board’s logic?]

The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it’s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care. . .  

Proponents say the tax will raise nearly $150 billion over 10 years, but there’s a catch. It’s not expected to raise this money directly. The dirty little secret behind this onerous tax is that no one expects very many people to pay it. The idea is that rather than fork over 40 percent in taxes on the amount by which policies exceed the threshold, employers (and individuals who purchase health insurance on their own) will have little choice but to ratchet down the quality of their health plans. . .  

If even the plan’s proponents do not expect policyholders to pay the tax, how will it raise $150 billion in a decade? Great question. . .  

According to the Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself. The rest of the $150 billion, more than 82 percent of it, will come from the income taxes paid by
workers who have been given pay raises by employers who will have voluntarily handed over the money they saved by offering their employees less valuable health insurance plans.  

Can you believe it?  

“In the real world, companies cut costs and they pocket the money . . .”  

[AO: The writer, Bob Herbert, argues that there is a problem with the tax on Cadillac health plans included in the Senate health insurance bill. According to Herbert, the anticipated $150 billion in revenue that is expected will be generated by the tax is unlikely to materialize because businesses will cut health insurance spending in response to the tax and pocket the difference rather than pass it on to employees as pay raises. Let’s see what three hypothetical companies might do.  

Say Company A, Company B and Company C each spends $1 million on employee health insurance and all their plans are so-called Cadillac plans. These round numbers will keep the math simple. Assume further that the tax included in the Senate bill will cost each company 40 percent of the value of all their Cadillac plans ($400,000 for these companies).   

Company A, acting according to Herbert’s scenario, would lower the value of its Cadillac plans to a level at which coverage is no longer taxed. Say Company A lowers the value of the plan to $500,000. It will then pocket the remaining $500,000 without giving its employees a raise.  

However, a company that is simply interested in responding to the new tax can act in one of two other ways, only one of which is described by Herbert. Company B, acting according to the scenario anticipated by proponents of the bill and described by Herbert, would also lower the value of the plan to $500,000. But instead of pocketing the remaining $500,000 in savings, Company B passes that savings to employees in the form of pay raises. That would leave companies in the same position that they were in before the tax. Herbert suggests managers will pocket the $500,000, using health insurance reform as a reason to do so. But if this is what managers want to do, why do they need health insurance reform to lower their spending on health insurance for their employees?  

As alluded to above, a company interested in maintaining its budget for employee health insurance has another alternative. The company can reduce insurance coverage by the tax amount. Let’s say this is what Company C does. That is, instead of lowering the value of its plan to $500,000, it lowers the value to $700,000 so that the cost of the plan remains approximately $1 million when the next tax is included.  

In light of the choice Company B and Company C make, again, why would a Company A ratchet down the value of its plan and pocket the difference? The only explanation is that Company A is looking for ways to cut health insurance costs and is using health insurance reform as an excuse. After all, as illustrated by Company B and Company C, if a company is only interested in avoiding paying more for health insurance, it has options. Yet, if a company wants to cut employee health insurance, why wait and try to pin it on Congress? Employers have been raising health insurance premiums and lowering coverage for years. ]

This might seem an odd moment to argue that the Senate is fundamentally broken and repairs should top our list of priorities. After all, the Senate passed a $900 billion health-care bill Thursday morning. . .  

To understand why the modern legislative process is so bad, why every Senator seems able to demand a king’s ransom in return for his or her vote and no bill ever seems to be truly bipartisan, you need to understand one basic fact: The government can function if the minority party has either the incentive to make the majority fail or the power to make the majority fail. It cannot function if it has both. . .  

Potential solutions abound. Harkin would eliminate the filibuster while still protecting the minority’s right to debate. Under his proposal, bills would initially require 60 votes to pass. Three days later, that threshold would fall to 57. Three days after that, 54. And three days after that, 51. Merkley has some other ideas. One is to attract Republicans to the project by phasing the filibuster out six or eight years in the future, when we can’t predict which party will initially benefit. . .  

[AO: Senator Harkin’s solution is compelling. According to the writer, Ezra Klein, government cannot function when the minority party has the incentive and power to make the majority party fail. Harkin’s solution addresses this concern by gradually reducing the minority party’s power over time.   

However, the solution does more than simply reduce the minority’s power over time. As envisioned, the solution creates a situation in which the majority could engage in a series of steps with the goal that, nine days later, it can vote its desired bill by 51 votes, whatever the outcome of those intervening steps. As such, the nine-day delay in unlikely to encourage concessions between the majority and minority and may even discourage negotiation if the minority party comes to believe that the majority intends to pass the legislation nine days later whatever the outcome of negotiations. In other words, Harkin’s suggestion will add significant leverage to the majority party’s negotiating position. Indeed, the outcome may be similar to having no nine day delay at all.  

An alternative is to simply lower the cloture requirement to, say, 55 votes or couple that lower vote requirement with Harkin’s solution so that after six or nine days 55 votes, not 51, are required to initiate cloture. One advantage of this approach is that it keeps the major benefit of the filibuster, requiring a significant majority of senators, not a simple majority, to concur on contentious legislation. This approach also leaves the minority party with enough power to negotiate with the majority party without enabling the minority to prevent the government from functioning.   

The 60 vote requirement for cloture is an exceedingly high bar, the health-care bill’s passage notwithstanding. A 55 vote requirement for cloture will reduce the instances in which the minority party can bring legislation to a halt without completely eliminating the minority party’s leverage. It is a high bur, but not an exceedingly high one. It is a reasonable bar for contentious legislation. ]

For much of the last eight years, the majority Republicans pushed through tax break after tax break that mostly benefited the wealthy. Now in the majority, Democratic lawmakers have failed to stop yet another tax benefit for the richest of the rich from taking effect in 2010. . .  

In 2010, the one-year repeal of the estate tax is coupled with a new tax that will hit smaller estates. That tax could affect up to an estimated 70,000 estates next year, compared with the current estate tax law, which applies to about 5,500 estates annually. If that sounds wacky, it is. It would also be harmful to many small family businesses, precisely the group that estate-tax cutters say they want to help. . .  

The Senate has failed to act. Republicans refused to consider the House bill or even a two-month delay to allow time for debate. Democrats correctly refused to consider a proposal to increase the exemption to $10 million for couples and $5 million for individuals, an unconscionable giveaway to the wealthy at a time when ordinary Americans are suffering. Compared with keeping the 2009 law, it would cost $250 billion more over 10 years. . .   

[AO: The estate tax is a tax imposed on the transfer of gifts upon death of an individual. Under Bush-era legislation, the estate tax was reduced, so that it applies to 5,500 estates annually, rather than 70,000 estates. However, included in that legislation was an agreement that suspended the estate tax for one year (2010) but resumes it at the pre-legislation level. If congress fails to act, this Bush-era legislation will run its course.  

The House has voted to continue the 2009 estate tax (which affects about 5,500 estates) permanently. In the Senate, Republicans refuse to act unless the exemption is raised from $7 million for couples ($3.5 million for individuals) to $10 million for couples ($5 million for individuals).   

The New York Times observes that allowing the current estate tax law to run its course, suspension in 2010 followed by resumption at a lower exemption rate in 2011, will be harmful to the other 64,500 estates that would otherwise remain unaffected if the 2009 estate tax is continued indefinitely. In other words, the estate tax exemption would be too low. 

On the other hand, the New York Times observes that demands by Republican Senators to increase the estate tax exemption would be “an unconscionable giveaway to the wealthy.” So, lower the exemption and the estate tax “hurts” too many people but increase it and it applies to (hurts?) too few. It’s nice to see that the Times has found legislation in which congress has set the exemption dial just right.  

Of course, there are arguments for both Republican and Democratic proposals. There are good reasons to continue the 2009 exemption (at $7 million for couple), allow the estate tax to be suspended in 2010 and resumed at a lower exemption in 2010 and, yes, even to increase the exemption as Republicans suggest (to $10 million for couple). This doesn’t mean that $10 million is the correct exemption, nor does it mean that $5 million is. Instead, whenever congress sets a fixed exemption amount that is not indexed, such exemption is worthy of subsequent revisits by Congress to ensure that the exemption remains appropriate. In that vein, the Senate should consider all options on the table that relate to the exemption amount, Democratic, republican or otherwise.]

On Tuesday, Iranian President Mahmoud Ahmadinejad did not just reject President Barack Obama’s latest feckless floating nuclear deadline. He spat on it, declaring that Iran “will continue resisting” until the U.S. has gotten rid of its 8,000 nuclear warheads. . .  

We lost a year. But it was not just any year. It was a year of spectacularly squandered opportunity. In Iran, it was a year of revolution, beginning with a contested election . . .  

Obama responded. . . With offer after offer, gesture after gesture — to not Iran, but the “Islamic Republic of Iran,” as Obama ever so respectfully called these clerical fascists — the U.S. conferred legitimacy on a regime desperate to regain it.  

Why is this so important? Because revolutions succeed at that singular moment, that imperceptible historical inflection, when the people, and particularly those in power, realize that the regime has lost the mandate of heaven. With this weakening dictatorship desperate for affirmation, why is the U.S. repeatedly offering just such affirmation?  

[AO: The writer, Charles Krauthammer, makes a seemingly strong argument. While the Iranian people protested against their rulers, America made multiple attempts to engage the Iranian regime in nuclear talks. According to Krauthammer these offers for talks give the Iranian regime an air of legitimacy it desperately needed.  

But there is more to the Iranian situation. Specifically, the protests against the Iranian regime was preceded by condemnation by the opposition of any nuclear concessions to the United States. That is, the opposition demanded that the regime not give up on the country’s nuclear ambition. Those demands, which brought together the several oppotion leaders and the speaker of the Iranian Parliament, forced the Iranian regime into the position it is now in: rejecting all offers by President Obama for nuclear discussions.   

So in a way, the Obama administration’s repeated offers for negations initially created the “opportunity” and maintains it, though other events such as the elections and the death of the dissident Grand Ayatollah Hossein Ali Montazeri are playing important roles in the ongoing “opportunity.”  

This, more complete understanding of the situation in Iran makes clear that Krauthammer characterization of the situation there as a “squandered opportunity” is, shall we say, inaccurate and incomplete. ]

·       ‘Twas the night before Christmas, and all through the land

·       Not many Americans were celebrating, not even a former Democratic party chairman;

·       The Senate had earlier in the day voted for healthcare,

·       ‘Though no Republican Senator could be found who cared.

·       Yet some people somewhere around this great country,

·       Breathed a sign of relief knowing healthcare assistance was
on the way . . .

Happy Holidays To All Our Readers!

AnnotatedOpinions.com

[AO: We have previously addressed this new airline rule that requires airlines to allow passengers to deplane if a flight sits on the tarmac for three hours, assuming it’s safe to deplane. However, I will address it again because this opinion raises a number of new issues.]  

. . . Since 1988, the number of people boarding domestic and international flights in the United States has climbed by 63 percent. . .  

The increase has not happened because flying is so much more fun than it used to be. It’s occurred because flying is so much cheaper. . .  

The average fare today is $301. If ticket prices had merely kept up with inflation over the last decade, it would be $427. . .  

The decline in prices, adjusted for inflation, has come at the expense of the airlines, which have gotten used to providing their services at well below cost. They have lost money in six of the last eight years, piling up net losses of nearly $60 billion and making bankruptcy a more common occurrence than snowfall at O’Hare. . .

[AO: Here, the writer, Steve Chapman, supports his argument against the new rule that requires airlines to allow passengers to deplane if a flight sits on the tarmac for three hours, assuming it’s safe to deplane, by arguing that, essentially, passengers should not expect this much because airlines have been loosing money over the last decade due to passengers paying less than inflation adjusted prices from a decade ago.  

What? There are a number of assumptions here. The first assumption is that passengers (the airlines’ customers) can compel airlines to charge less than the cost of tickets. That the equivalent of customers compelling gas stations to charge less than the cost of gas or shoppers compelling grocery stores to charge less than their cost. It’s just not possible or at least not that simple. If a private business is selling a product below cost, there must be more going on than customers demanding lower prices. In short, there must be a benefit to the private corporation.   

In the airline industry, this benefit is probably their very survival. In other words, there is such great competition for customers that airlines are willing to lower prices to survive. It is not that customers are demanding below cost flights, after all customers will prefer to fly for free, it is that airlines are competing against each other and deciding that it is in their interest to lower prices below costs in order to survive. But having made this decision, who should be responsible for the consequences?  

Also, consider that not airlines have been unprofitable over the last decade. What is it that the profitable airlines, airlines that generally charge less for tickets than the unprofitable ones, do that make them profitable? Perhaps the unprofitable airlines should do the same?  

Another assumption Chapman makes is that when airlines increase volume by 63 percent, price must remain the same. This is not a necessary fact of nature. Indeed, anyone who has listened to their share of car commercials has probably heard an automobile dealer say something to the effect that they can sell for less because they sell more quantity then competitors.]  

The DOT rule flows from two presumptions common in Washington: 1) that private businesses have insufficient motivation to satisfy their patrons, and 2) that government regulators are capable of making better operational decisions than the people whose livelihoods are at stake. . .

[AO: Chapman’s argument flows from two common and often incorrect presumptions: 1) that private businesses always have sufficient motivation to satisfy their patrons, and 2) that all government regulations involve taking operational decisions away from private industry.  

First, Chapman assumes that airlines have sufficient motivation because . . . well, I don’t know. Yet, his statistics suggest that, from the perspective of airlines, they should have little incentive to address this problem especially if the solution is likely to be more than the costs, which, again, are small from their perspective.   

See, Chapman explains that the problem is “extremely rare.” Only 1,500 of the 9.3 million flights each year are affected. That’s an infinitesimally small number of flights (less than 0.02%). So, how much should an airline be willing to spend to fix a problem that affects less than 0.02% of its customers? Probably nothing. Why? That’s because any “harm” an airline experiences from this problem is likely to be negligible. On the other hand, the harm to each passenger who only flies a few times a year is significant. So, we have a problem that is significant to the passenger (worth more than 0.02% of whatever) but insignificant to the airline (worth
less than 0.02% of sales). Chances are that in this case private business will have little to no motivation to fix this problem even though customers want the problem fixed.  

Second, the new rule does not take operational decisions away from “people whose livelihoods are at stake.” What the rule does is dramatically increase the cost of these delays. This increase makes this issue a non-negligible cost to airlines, meaning airlines now have an incentive to do something about it. But just because airlines now have a motivation to address the issue doesn’t mean that the government is telling airlines with to do. That is, just because government regulators think they can influence airline executives’ motivations doesn’t mean that they also think they “are capable of making better operational decisions than the people whose livelihoods are at stake.”  

The airlines will make the operational decisions. All the government is doing is motivating an unmotivated airline industry.]

The international community has failed so far to undercut the warlords, and its chances of doing so will steadily reduce as the Afghan government grows in self-confidence. . .  

So we should not be surprised at the increasingly overt dominance of warlords. Western governments should engage them, but with a high degree of transparency, consistency, and conditionality. A first step is to determine which ones show potential for long-term reform, and which ones are incorrigible. . .  

For those who show no inclination to reform themselves, there should be consequences. Ideally Karzai himself would see to this, but if he does not, donors can withdraw funding from the provinces they govern or the ministries they run. . .  

[AO: There are a number of concerns regarding the writer’s, Gerard Russell, recommendations. One concern is that although America has had limited success in Afghanistan in terms of improving conditions there, working with and funding Afghan warlords could have unintended consequences. Remember, our aid to Afghanistan in the form of assistance in defeating the Soviets led in part to conditions there now. This is the lesson of unintended consequences that America must consider before deciding to work with Afghan warlords.   

Supporting warlords directly has the potential to ossify the current culture of strong-man-rule, preventing or prolonging the day that the Afghan people can move beyond warlordism. Moreover, just having warlords will mean that certain problems, for example warlord related crimes and fighting, will continue as long as they exist.  

There is also the problem of identifying the warlords to work with. On the one hand, Russell advocates a transparent relationship between America and the warlords. But as warlords, America’s counterpart in that arrangement will no doubt be scheming and engaging in activities that it will not divulge to the US. In other words, American will deal transparently with warlords base on information it has on them while the warlords continue their actions and attempt to drive those actions further underground maximize their total benefit.  

That is, because warlords benefit by being, well, warlords, and because warlords can benefit by being friends or seen as friends of the US, the circumstance will incentivize the creation and perpetuation of warlords who can both seem to be on the right track, for US assistance purposes, and at the same time move as much of their warlord activities underground as possible. In short, following the writer’s suggestion could encourage development of a system that encourages survival of warlords who can do what we want while efficiently and effectively hiding their illegal actions.   

This is probably not what the US administration wants.]

. . . We haven’t given up hope for a worldwide climate accord. Such a deal is important, and someday it should be achievable. But  Washington needs to get its own house in order before it can play a leadership role in global climate talks, or expect them to bear fruit. Right now, we’re less concerned about the lack of action in Copenhagen than about the lack of action on a climate bill by the U.S. Senate. . . the U.S. bears an overwhelming burden of responsibility for the problem, and the world will follow only if it first sets a good example.  

[AO: I have previously cautioned against unilateral action on climate change. Some of the arguments I made there are applicable here. The simple problem is that the US cannot stop climate change without other countries and there is no way of guaranteeing action by other countries in response to our “leadership” on climate change. This problem is exacerbated by the consideration that our actions on climate change could put us at a significant disadvantage vis-à-vis countries that don’t act. I am looking at you, China.  

As a result, summits like Copenhagen provides a platform for action that could, at least potentially, insure that our actions will be followed with action by other countries.  

I am not advocating for no immediate action in Washington. Quite the contrary. I am advocating that Congress takes sensible and reasonable steps with an eye toward not putting America at a significant disadvantage. I am also suggesting that, contrary to the editorial, international summits, like Copenhagen, may be useful and
necessary sooner rather than later.]