Policy Feature Issue: November Jobs Report
Last week, the Bureau of Labor Statistics (BLS) released its October monthly jobs report. Nonfarm payroll employment increased by 203,000 in November, and the unemployment rate decreased to 7.0 percent. However, Labor Force Participation remains at historic highs as an increasing number of Americans continue to leave the workforce. As has been the case throughout 2013, the economic recovery continues to lag behind past recoveries, with millions of Americans still out of work, and millions more who have fallen out of the workforce entirely.
Facts You Need to Know:
- The unemployment rate decreased in November from 7.3 percent to 7.0 percent. The number of unemployed persons decreased by 365,000 in November. Though the unemployment rate stands at 7.0 percent this month, this metric is largely misleading. The U-6 unemployment rate, a measure of labor underutilization that takes into account persons marginally attached to the labor force as well as persons employed part time for economic reasons (as a percentage of the civilian labor force plus all persons marginally attached to the labor force), is 13.2 percent.
- Long-term unemployment (those unemployed for more than 27 weeks) remained unchanged at 4.06 million in the month of November.
- The Labor Force Participation Rate (LFPR), which identifies the number of people who are active participants in the labor force (relative to the total population), increased to 63.0 percent in November from 62.8 percent in October. In October, the LFPR dropped to its lowest level since March 1978.
- The Employment-Population Ratio, a metric that establishes the raw employment rate, increased from 58.3 percent to 58.6 percent in November. The employment population ratio is 2.0 percent lower than it was when President Obama took office.
Why Does a “Pro-Growth” Agenda Matter?
- Labor force participation increased by 0.2 percent in the month of November. Despite this increase, labor force participation has not recovered to pre-Obama Administration levels, when the LFPR stood at 65.8 percent.
- Moreover, the number of working age Americans who are not participating in the labor force stood at 91.27 million people in October, an increase of 2.42 million since November, 2012. While the number of Americans participating in the workforce increased from October, the overall sluggish rate of economic growth and job creation has discouraged millions of Americans from entering the labor force.
- Finally, an employment population ratio of 58.6 percent reflects the reluctance of Americans to reenter the workforce, believing that they are better off without a job. A higher employment-population ratio, facilitated by a pro-growth agenda, strengthens GDP per capita, leading to improvements in consumer spending, and greater growth.
- Americans deserve better than a weak recovery that is struggling to create jobs and grow the economy.
 According to the BLS, “Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.” See: http://www.bls.gov/news.release/empsit.t15.htm
 BLS, Historical Tables, Labor Force Participation Rate
If the president won't scrap this law, shouldn't he delay it for all Americans before it can do further harm? Families who work hard and play by the rules deserve some basic choices, fairness and relief. That's why the House passed legislation to delay the individual mandate for all Americans and let you keep the plan you like; and it's why House Republicans will continue to give the law the scrutiny it deserves.
Policy Feature Issue: Obamacare and Youth – Why Millennials are Right to Be Concerned
As the President attempts to restore his credibility among Americans, particularly America’s youth, he should be aware that the environment has changed significantly since he last spoke to them. A recent poll of millennials, released by Harvard’s Institute of Politics, found that today “only 41 percent of millennials approve of the President’s performance, down 11 points since Harvard’s last survey in April.”
And, with respect to Obamacare, young Americans are even more suspicious. More than half of the poll’s responders believe that healthcare costs will increase under Obamacare, with 44 percent indicating that they believe the quality of care will decline. Moreover, almost two-thirds of the respondents say do not plan to enroll in Obamacare, which if accurate would be extremely problematic for the future viability of the federal exchanges.
Millennials are right to be concerned.
1. The President promised that if Americans liked their insurance they could keep it. Yet, despite these promises and assurances, the Administration knew that Americans in the private market would lose their current health care plan. Now those predictions are playing out. Millions of Americans are losing their plans. In Florida, more than 300,000 cancellation letters have been distributed. In California, one million residents have received cancellation notices. In New Jersey, 800,000 cancellations were sent according to the Star Ledger. And, in West Virginia, already 8,800 cancellation letters were sent. Employers are also beginning to feel the effects. Small businesses from Phoenix to Philadelphia are hearing from their insurance carriers that the current small employer plans don’t meet Obamacare’s requirements and are being cancelled.
Notwithstanding the cancellations in the individual market, the President promised that Obamacare would help young Americans remain insured through dependent coverage up to age 26. However, some employers have responded to Obamacare’s regulatory scheme by dropping dependent coverage, leaving young people without insurance. Moreover, young adults whose parents are among the unemployed will also not have access to coverage, forcing them to purchase more expensive plans.
2. Since 2009, the President has promised Americans that they can keep their existing doctor. Yet, insurers participating in the exchanges are limiting the number of doctors and hospitals covered under their insurance plans. Low reimbursements are also forcing doctors to reject insurers’ contracts. As a result, more and more doctors are either not included or are refusing to participate in the network of providers included on an exchange. For example, according to a recent survey conducted by the Washington Examiner, seven out of ten doctors in California are not included in the California exchange. In Virginia, it is “estimated that participating doctor networks …are shrinking by 70 percent in the exchange plans.” And, for the millions of Americans who have received cancellation notices, they will not only have to find new plans but new doctors as well.
3. The President promised that premiums would go down. Yet, Obamacare will disproportionately increase premiums for young adults. Due to age-rating restrictions, some reports estimate that premiums for young males with single coverage could increase by 180 percent if they are ineligible for premium assistance. When new requirements on age ratings and required benefits are taken into account, new entrants in the individual market could see a premium increase of as much as 413 percent, and an average 96 percent nationally. 80 percent of young people living above the poverty line will see an increase in their healthcare costs.
4. The President has failed to address how young Americans are going to pay for these higher costs. When adjusted for a declining labor force participation rate, the effective unemployment rate among young people is 16.1 percent (nearly 1.7 million unemployed young adults). Obamacare only exacerbates the unacceptable employment situation for our nation’s young people. The New York Times reported earlier this fall that the U.S. lagged behind the U.K., France, Japan, Germany, and Canada in the percentage of young people not working. 22.6 million young adults (32 percent) 18 to 34 lived at home with their parents in 2012, up from 18 million (27 percent) a decade ago.
The financial burden of Obamacare on young adults will negatively affect already shrinking disposable incomes nationally. Real Per Capita disposable incomes for young people have increased by only 2.3% since June 2009, compared to an 11.3% recovery average. Obamacare will further strain the amount of disposable income available to young people, which will reduce consumerism and limit economic growth and job creation.
 See Sea Change: Poll shows young people skeptical of Obamacare, amid Obama outreach, December 4, 2013.
 See Washington Examiner, Survey finds doctors rebelling against Obamacare, famous Hospitals declining to join, November 27, 2013.
 Source: Data derived from Join Economic Committee Staff Calculations
Chairman Bob Goodlatte (R-VA)
House Judiciary Committee
On Wednesday, the House Judiciary Committee held a hearing on the President's Constitutional Duty to Faithfully Execute the Laws. In this week's Committee Spotlight, Chairman Bob Goodlatte (R-VA) provides a recap of the hearing and key clips of witness testimony.
Click Here to Watch the Full Video
Please also see below the Read Out from the Hearing:
Judiciary Committee Hearing on the President’s Duty to Faithfully Execute the Laws
On Tuesday, December 3, the House Judiciary Committee held a hearing on “The President’s Constitutional Duty to Faithfully Execute the Laws.” The hearing examined a pattern we’ve witnessed throughout President Obama’s tenure: when the President disagrees with laws, he circumvents them. Now with Obamacare, President Obama is rewriting his own law, even though the law doesn’t provide him the authority to do so.
The Constitution is clear: it is Congress’s duty to write our laws and, once they are enacted, it is the President’s responsibility to enforce them. Article II, Section 3 of the Constitution declares that the President “shall take care that the laws be faithfully executed.” However, President Obama has failed on several occasions to enforce Acts of Congress that he disagrees with for policy reasons. The President has also stretched his regulatory authority to enact policies refused by Congress.
Most notably, the President has—without statutory authorization—waived, suspended, and amended several major provisions of his health care law. These unlawful modifications to Obamacare include: delaying for one year Obamacare’s employer mandate; instructing States that they are free to ignore the law’s clear language regarding which existing health care plans may be grandfathered; and promulgating an IRS rule that allows for the distribution of billions of dollars in Obamacare subsidies that Congress never authorized.
The House has acted to validate retroactively some of the President’s illegal Obamacare modifications. However, rather than mbrace these legislative fixes, the President’s response has been to threaten to veto the House passed measures.
Witnesses at the hearing had very strong reactions to the unilateral actions the President has taken. They were extremely concerned with the vast expansion in executive power the Obama Administration is pushing and the implications it poses to the separation of powers and individual liberty. Some of the key statements from witnesses at the hearing include:
- Professor Jonathan Turley (who testified that he voted for President Obama): “The danger is quite severe. The problem with what the President is doing is that he’s not simply posing a danger to the constitutional system. He’s becoming the very danger the Constitution was designed to avoid. That is the concentration of power in a single branch.”
- Michael Cannon, Cato Institute: “If the people come to believe that the government is no longer constrained by the laws, then they will conclude that neither are they. That is a very dangerous sort of thing for the President to do, to wantonly ignore the laws and to try to impose obligations on people that the legislature did not approve.”
- Professor Jonathan Turley: “I really have great trepidation over where we are heading because we’re creating a new system. . . . Within that system we have the rise of an uber presidency. There could be no greater danger for individual liberty and I really think the Framers would be horrified by that shift.”
- Professor Nicholas Rosenkranz: “The President has a personal obligation to ‘take Care that the Laws be faithfully executed. . . .’ The President cannot suspend laws altogether. He cannot favor unenacted bills over duly enacted laws. And he cannot discriminate on the basis of politics in his execution of the laws. The President has crossed all three of these lines.”
Finally, the point is not whether Americans agree with President Obama’s individual policy decisions. It is that the President may not – consistent with the command that he faithfully execute the laws – unilaterally amend, waive, or suspend the law. Oversight of the Executive Branch is not a partisan issue. Instead, Republicans and Democrats should come together, regardless of the President’s party, to ensure that executive power is kept in check.
Policy Feature Issue: Read Outs from the Committees on Energy and Commerce and Small Business Oversight Hearings
Readout from Energy and Commerce Health Subcommittee Hearing on Medicare Advantage: What Beneficiaries Should Expect under the President’s Health Care Plan
Feature Witnesses: Douglas Holtz-Eakin, President, American Action Forum; Bob Margolis, CEO, HealthCare Partners; Jon Kaplan, Senior Partner, Boston Consulting Group; and Marsha Gold, Senior Fellow, Mathematica Policy Research
The president sold his health care law on a number of important promises including, “If you like your doctor, you can keep your doctor. If you like your health care plan, you can keep your health care plan.”
The committee’s hearing confirmed that for Medicare Advantage beneficiaries, like so many other Americans, this is simply not true. Former CBO Director Doug Holtz-Eakin explained that it couldn’t be: “The regulations and the funding are at odds with the promise. The promise can’t be held true.”
Obamacare raided Medicare by $716 billion, including $300 billion from Medicare Advantage. The cuts to the MA program will begin to be realized next year, at which point the seniors and those with disabilities who rely on the MA program will be negatively impacted.
Holtz-Eakin testified, “The Medicare Advantage cuts are already having a negative impact on enrollment and seniors’ plan choice. Those most hurt by the cuts are low-income seniors in rural areas without other options for supplemental Medicare coverage. Additional scheduled cuts in the future will broaden the damage to Medicare Advantage.”
As Chairman Upton said, Obamacare has already “wreaked havoc” on the health care plans of Americans across the country. Beginning next year, the cuts the law is making to the MA program will directly hurt some of America’s most vulnerable.
This is just one more broken promise being realized.
Jon Kaplan, an expert health care consultant, explained that, “Medicare Advantage plans are an example of a successful public-private partnership.” The MA program should serve as an example for the Medicare program overall as a means to improve the quality of care and choices for beneficiaries. Instead the health care law has raided the program in order to pay for the flawed new entitlement.
Obamacare has ended Medicare “as we know it.” We now know it is leaving our nation’s most vulnerable more uncertain about what their health care will be in the coming weeks, months, and years.
Read Out from Small Business Committee Hearing on Health Care Law’s Application of the Internal Revenue Code’s Business Aggregation Rules to Determine Which Employees Are Attributed to a Business for the Employer Mandate
Witnesses: certified public accountants, small business owners, and an insurance executive
The health care law’s application of the complex business aggregation rules, which were developed as part of the ERISA laws in the 1970s, is another example of provisions in the law that are confusing and unworkable for small businesses
The rules can couple businesses in completely different industries in different states, not directly owned by the same person, with no relationship to each other, so the businesses together will be subject to the employer mandate
Small businesses with less than 50 full-time equivalent employees independently wouldn't be required to provide health insurance, but the aggregation rules will group them together, subject them to the employer mandate, and increase the cost of doing business for each of them
Even some Certified Public Accountants do not have the specialized expertise needed to decipher the rules
The rules are a complicated test for taxpayers, and will lead to inefficient and unwarranted economic behavior
To avoid the application of the rules, some small business owners with capital may avoid investing in other businesses, so small companies will be deprived of the benefit of scarce capital
Business owners are refraining from hiring so they are not close to the 50-worker employer mandate threshold
One restaurant owner witness said the health care law is draining resources form the companies that would otherwise be used to grow the businesses
The law is causing premiums to rise. One small business owner witness said her current plan is being cancelled, and her new plan has 40-44% higher premiums and reduced benefits
Young people are not enrolling in coverage, even with low premiums, because they would rather have the money.
Policy Feature Issue: Patent Trolling and Its Many Victims
The patent system is a vital part of our national identity, stimulating American ingenuity and enhancing our global competitiveness. Innovation is so entrenched in U.S. history that the Framers included safeguards for inventors in the Constitution. Traditionally, patent holders have asserted their patents against those who produce infringing technologies. But in recent years, abusive patent litigation—“patent trolling”—has ballooned, as companies have emerged solely to buy questionable and vaguely-defined patents and assert them against thousands of companies in hopes of extracting licensing fees.
How is a Patent Granted?
The U.S. Patent and Trademark Office (PTO) “is the federal agency for granting U.S. patents and registering trademarks. In doing this, the [PTO] fulfills the mandate of Article I, Section 8, Clause 8, of the Constitution that the legislative branch ‘promote the progress of science and the useful arts by securing for limited times to inventors the exclusive right to their respective discoveries.’”
To acquire a patent, an inventor submits an application to PTO, where a team of patent examiners reviews the application to determine whether it meets the statutory requirements.] This process is known as “prosecution.” A patent application generally includes two parts: the specification and the claims. “The specification is a written description of the invention that, among other things, sufficiently discloses the invention and the manner and process of making and using it” The claims “define the scope of the invention for which protection is granted and must be definite.”
Once issued, a patent provides an inventor “the right to exclude others from making, using, selling, or importing claimed inventions for a limited period of time, generally 20 years,” and allows inventors to enforce this right by filing infringement suits, “regardless of whether it was copied or developed independently.” On average, the process of issuing a patent takes 30 months.
What is Patent Trolling?
Patent assertion entities (PAEs) generally do not produce technology, but instead buy patents and assert them against manufacturers and end users. PAEs can protect small inventors by buying their patents and asserting them against larger companies that infringe on their technology. However, PAEs are increasingly engaging in patent trolling, targeting not only large manufacturers, but also small businesses such as hotels, restaurants, and grocery stores. “[Patent trolls] assert broad patent claims against an unusually large set of potential defendants; these assertions are often not based on any evidence of infringement by an individual defendant, but are instead an attempt to find companies that will seek to settle the PAE’s claims rather than risk a trial.” Demand letters sent by PAEs “can be so vague that they do not reference the patents at issue or what products the operating company sells that may be infringing these patents.” Yet, because patent litigation is so complex and costly, businesses often choose to pay licensing fees to patent trolls—even if the claims are baseless—rather than going to court. President Obama said of these entities, “They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.”
Who is Targeted?
- “…Whataburger has faced legal threats for using Ethernet networking equipment and for putting calorie information on its Web site. And . . . Whataburger scuttled plans to offer Wi-Fi access to its customers after learning that a troll had started suing companies that offered Wi-Fi services.”
- “Supermarkets are also up in arms. . . . ‘I would say every single supermarket chain has been targeted by patent trolls. . . . The biggest chains are being targeted by many trolls in any given year. . . . there’s a troll that claims to own the concept of entering your zip code to find the nearest store. Other trolls claim concepts related to clickable online menus and QR codes.’”
- In 2011, one company “started suing chain hotels and even local coffee shops, saying they infringed 17 patents that cover the use of Wi-Fi. [The company] sued hundreds of businesses and has reportedly sent out more than 8,000 letters demanding license fees, generally ranging from $2,300 to $5,000. Instead of going after companies that make routers like Cisco, [the company] targeted small businesses that simply use Wi-Fi, an increasingly common pattern.”
- Another entity “claims anyone who scans documents to be e-mailed infringes its patents for the technology. It’s sent thousands of letters nationwide to companies and non-profit organizations demanding as much as $1,200 per employee to avoid patent-infringement lawsuits.”
- And another “has sued for license fees from podcasters through a patent originally filed in 1996, long before podcasts were conceived.”
Facts You Need to Know:
- The number of patent suits filed by PAEs has tripled in the last two years. In 2012, “62% of all patent suits . . . were brought by PAEs.”
- In addition to the increased number of suits, “a disproportionate share of [PAEs] sued a relatively large number of defendants” per suit.
- The number of defendants sued by PAEs is estimated to have tripled from 2007-2011, while the number of defendants sued by operating companies did not significantly change.
- The increase in PAE activity extends beyond lawsuits filed, also including “an increasingly large number of suits threatened. . . . Conservative estimates place the number of threats in the last year alone at a minimum of 60,000 and more likely at over 100,000”
- Based on one estimate, “PAE activity cost defendants and licensees $29 billion in 2011”—a 400% increase since 2005.
- Beyond direct costs, “Case study evidence suggests that there are significant indirect costs of [PAE] patent assertions. . . . These include diversion of management or engineering resources, delays in new product introductions and improvements, loss or delay of revenue, and credit constraints.”
- When their cases are decided on the merits of their claims, PAEs lose 92% of the time.
- Small and medium businesses represented 90% of the defendants sued by PAEs in 2011.
- “Patent litigation is very expensive; the average suit in which $1 million to $25 million is at stake costs $1.6 million through discovery and $2.8 million through trial.” Thus for many, settling a claim—despite its legitimacy—is more cost-effective than going to trial.
- PAEs increasingly assert patents without ever filing lawsuits, but “the extent of this practice is unclear” due to the lack of reliable data, as PAEs regularly require those who settle to sign non-disclosure agreements. A number of company representatives said “that for every patent infringement lawsuit filed against them, they might receive many times more letters notifying them of potential infringement and offering licenses.”
- The confidential nature of out-of-court settlements allows patent trolls to extract licensing fees both from the manufacturer of a technology and from companies that purchase and use the technology.
 The U.S. Patent and Trademark Office: Who We Are.
 Id. In analyzing a proposed patent’s novelty and nonobviousness, examiners review “prior art,” which generally includes “other patents, publications, and publicly disclosed but unpatented inventions that pre-date the patent application’s filing date.” Id.
 Id. at 8. “The specification must be written in full, clear, concise, and exact terms so as to enable any person skilled in the art to make and use the invention.” Id.
 Patent Assertion and U.S. Innovation at 2.
 Id. at Executive Summary.
 GAO report at 18. “Even with bringing about a fifth of all patent infringement lawsuits from 2007 to 2011, PMEs sued close to one-third of the overall defendants, accounting for about half of the overall increase in defendants.” Id.
 Patent Assertion and U.S. Innovation at 6.
Policy Feature Issue: If You Like Your Health Care Plan You Can Keep It – Not so in the Individual Market. Not so with Employer Sponsored Plans. And, Not for Seniors Enrolled in Medicare Advantage
What is Medicare Advantage?
Medicare Part C, also known as Medicare Advantage (MA), provides private plan options to Medicare-eligible beneficiaries. Approximately 14.8 million individuals, 28 percent of all Medicare beneficiaries, are enrolled in Medicare Advantage plans, which include health maintenance organizations, preferred provider organizations, private-fee-for-service plans, and special needs plans. In the MA program, payments are made to private plans on behalf of beneficiaries from both the Health Insurance Trust Fund (HI) and the Supplemental Medical Insurance (SMI) fund. In 2012, approximately $136 billion from both the HI and SMI funds was directed toward MA plans. Enrollment in MA plans has grown over the years from 1.3 million in 1985 to 14.8 million in 2013. Studies have identified the MA program as more effective than the traditional fee for service, particularly among those individuals with chronic conditions and those individuals who reside in rural areas.
What is the Issue?
Obamacare makes more than $300 billion in reductions to the MA program. Of that, more than $156 billion are direct cuts. An additional $152 billion in reductions to the traditional fee-for-service program will also indirectly impact MA plans. Finally, the health insurance tax is estimated to cost each MA beneficiary approximately $3,590 over ten years. While “the majority of cuts have not yet occurred, [beginning] in 2014 and 2015, 53 percent of the cuts will go into effect, which has the potential to impact beneficiaries.” In fact, few of the scheduled reductions occurred prior to 2014 as a result of an $8.3 billion demonstration project authorized by the Centers for Medicare & Medicaid. According to the House Committee on Energy and Commerce, GAO questioned the legality of this project in 2012.
What Does this Mean?
Currently 14 million seniors and disabled Americans benefit from the MA program. However, the planned Obamacare cuts to the MA program, will “force insurers to scale back …benefits…or to withdraw their plans entirely from some markets.” In fact, “MA enrollees will lose $3,714 worth of extra services by 2017… and 7.4 million beneficiaries who would have enrolled in MA in 2017 will be forced into less preferable options by the MA cuts. That’s a full 50 percent reduction in expected MA enrollment.”
In fact, in 2014 many seniors are expected to lose their existing MA plan. According to the Energy and Commerce Committee, a report issued by the Kaiser Family Foundation reveals that more than 526,000 beneficiaries will be forced to switch to another MA plan or return to traditional fee-for-service. Specifically, more than 105,000 of those “enrolled in a MA plan in 2013 will not be able to enroll in a Medicare Advantage in 2014.”
What You Need to Know About Obamacare and the MA program
- Obamacare cuts more than $308 billion in the MA program.
- Seven million seniors and disabled Americans can expect to lose their existing MA coverage by 2017.
- Obamacare imposes a $3,590 tax burden on every MA enrollee over ten years.
 See CRS Medicare Financing: September 19, 2013, p24.
 See CRS Medicare Financing: September 19, 2013, p24.
 See What You Need to Know, Medicare Advantage: Providing High Quality, Cost Efficient Care for Medicare Beneficiaries.
 See AHIP, Medicare Advantage: ACA Cuts More than $200 billion from Program.
With 11.3 million people still out of work, it's easy to see that Americans are still struggling to make ends meet in this tough economy. It's not fair that President Obama and his Democratic allies want to add more worries to their plate this holiday season, like higher health care costs and loss of coverage due to Obamacare.
In this week's address, Rep. Michael Burgess, M.D. describes how from cancelation letters to increased premiums, it is becoming clear that the reality of the president's health care law doesn't match what he promised. With this only the beginning of the law's implementation, it is time to start over with true patient-centered reform. The House will continue to ask tough questions about this trainwreck as well as hold the President accountable for his broken promises.
Policy Feature Issue: Hydraulic Fracturing – Benefits & Barriers
America’s recent domestic oil and shale gas revolution is largely attributable to innovations in horizontal drilling and hydraulic fracturing. These technological advances have unlocked vast domestic oil and gas reserves that were historically inaccessible. The impact of these technologies can’t be overstated: they have transformed the U.S. from a nation dependent on natural gas imports into the largest producer in the world; and have put American energy independence within reach. In fact, last week the U.S. Energy Information Administration announced that domestic oil production had surpassed imports for the first time since 1995, by 170,000 barrels.
Hydraulic fracturing technology has existed for decades and has been appropriately regulated by the states, as they are uniquely positioned to understand their distinct geology and water resources. Yet, the Obama Administration has proposed a one-size-fits-all regulatory scheme on hydraulic fracturing that would excessively burden energy production and hamper job creation.
Facts You Need to Know:
- Hydraulic fracturing (HF) is used on 90% of wells drilled on public land in the U.S.
- States have regulated HF for more than 60 years.
- Developments in horizontal drilling and [HF] have enabled vast expansions of domestic natural gas production: “In 2000, shale gas provided 1% of our nation’s gas supplies; today it is 25%. Half of the natural gas consumed today is produce[d] from wells drilled within the last 3.5 years.”
- “Development of oil and natural gas shale resources supported more than 2.1 million jobs in 2012.”
- If HF were eliminated, U.S. natural gas production would fall by 45% and oil production would fall by 17% within five years.
- Advances in HF have dramatically reduced prices for domestic natural gas: “Prior to the shale breakthrough . . . prices exceeded $15 per million btu . . . . Today proven reserves are the highest since 1971, and prices have fallen close to $4 per million btu.”
- According to the International Energy Agency (IEA), natural gas prices in the U.S. are “about one-third of import prices to Europe and one-fifth of those to Japan.”
- According to recent projections, the U.S. is on course to become the world’s largest oil producer by 2015, surpassing Saudi Arabia.
- In October of 2013, the U.S. produced 7.74 million barrels of oil, 170,000 barrels more than it imported. This represented the first time the U.S. has produced more oil than it imported in nearly twenty years.
- The International Energy Agency (IEA) expects the U.S. to achieve almost complete energy independence by 2035.
- In May of 2013, the Department of the Interior proposed new federal regulations for HF on public lands.
- The Obama Administration’s pursuit of a burdensome and duplicative regulatory agenda threatens to significantly drive up the cost of HF. While the Administration estimates that the proposed regulations will cost only $11,000 per well and have little impact on economic development, a recent analysis estimates the proposed regulations, if finalized, will cost $345 million annually—or $96,913 per well.
- This will disproportionately impact small, independent producers, which rely largely on federal land for production.
- According to the Chair of the Alaska Oil and Gas Conservation Commission, “The last thing the United States needs right now is duplicative regulation of an already stringently regulated process, unless, of course, we need increased federal spending and bureaucracy; delays in providing jobs, revenue, and affordable domestic energy; confusion among operators and regulators; and one-size-fits-all regulations that are ignorant to regional differences…”
- Despite critics’ assertions that HF is dangerous to groundwater, Obama Administration officials have—on a number of occasions—admitted that there is no “proven case where the fracking process itself has affected water.”
- From 2007-2012, oil and natural gas production on non-federal lands increased, while production on federal lands fells. Natural gas production on non-federal lands increased by 5.8 trillion cubic feet, or 40%, while production on federal lands declined by 1.3 trillion cubic feet, or 23%. Additionally, oil production on non-federal lands increased by 1.2 million barrels per day, or 35%, while production on federal lands declined by 68,500 barrels per day, or 4%.
 House Committee Report 113-261 at 3.
 House Committee Report 113-261 at 3.
Americans continue to be hurt by the rising costs, loss of access, and policy cancellations brought about by Obamacare. The President's so-called "administrative fix" proposed last week is just a regulatory gimmick, and won't solve the problem. The American people need real solutions.
Policy Feature Issue: CBO Budget Summary for Fiscal Year 2013
Earlier this month, CBO issued its budget review for fiscal year 2013, which ran October 1, 2012 through September 30, 2013. With total outlays for the fiscal year reaching $3.45 trillion and total revenues of $2.8 trillion, the annual deficit was $680 billion, or $409 billion less than 2012. This is the first time since 2008 the federal deficit fell below $1 trillion. Over the last five years, the President has borrowed $5.7 trillion, “more than the entire gross federal debt as recently as the year 2000. Debt held by the public as a share of GDP has nearly doubled in those five years to 76 percent from 40 percent in 2008.”
What Were CBO’s Key Findings?
- Revenues increased in fiscal year 2013, for the fourth year in a row, reaching $2.8 trillion, or 16.7 percent of GDP. This is thirteen percent more than revenues generated in 2012 and eight percent above revenue’s peak in 2007.
- Net spending was $84 billion less in 2013 than in 2012, lower than outlays in any year since 2008. Spending in fiscal year 2013 was 20.8 percent of GDP, less than 24.4 percent and 22 percent of GDP in 2009 and 2012 respectively, but still above the 40-year average of 20.4 percent.
- Combined spending for the three largest entitlement programs increased to 9 percent of GDP in 2013. Social security outlays increased by $40 billion; outlays for Medicare increased by $11 billion; and outlays for Medicaid increased by $15 billion.
What does it Mean?
- For the first time since the Korean War, total federal spending fell two years in a row. Outlays fell from $3.6 trillion in 2011 to $3.54 trillion in 2012 to $3.45 trillion in 2013.
- While progress was made in 2013, an anemic recovery continues to hamper economic growth. As the chart below reveals, the current recovery lags significantly behind previous recoveries – leaving a growth gap of more than $1.3 trillion.
Policy Feature Issue: Health Care in America – Issues with Cancellations and Coverage
The private insurance market has long been a pillar of our nation’s health care system. According to a recent U.S. Census report issued earlier this fall, nearly 64 percent of Americans, 198 million, were covered by private insurance in 2012. 170 million of those individuals were covered by employer-based coverage, with the rest of Americans purchasing health insurance coverage through the individual market. In fact, one out of ten health insurance policies is sold on the individual market. However, over the last several weeks, millions of Americans in the individual markets have witnessed the termination of their health care plans.
Despite promises and assurances by the President over the last three years that Americans could keep their health care plan if they liked it, the Administration knew in 2010 that up to 93 million Americans in the private market could lose their current health care plan. In fact, knowing of the need to drive individuals into the exchanges to make them financially feasible, the Administration specifically narrowed the interpretation of a grandfathered plan and acknowledged “that half of all employer health plans would lose grandfathered status by 2013 and the proportion of individual health plans losing grandfathered status would exceed the 40 to 67 percent range in a given year.”
Why Is This Issue Important?
Now those predictions are playing out. Millions of Americans are losing their plans. In Florida, more than 300,000 cancellation letters have been distributed. In California, one million residents have received cancellation notices. In New Jersey, 800,000 cancellations were sent according to the Star Ledger. And, in West Virginia, 8,800 cancellation letters have already been sent. Employers are also beginning to feel the effects. Small businesses from Phoenix to Philadelphia are hearing from their insurance carriers that their current small employer plans don’t meet Obamacare’s requirements and are being cancelled.
Contrast this number with the inability of Americans to enroll in new private plans online. On Wednesday, the Administration announced that the federal exchange enrolled 26,794 Americans during the first month of open enrollment. An additional 79,391 individuals were enrolled through the 14 state exchanges. The Administration had previously estimated that 500,000 people would enroll through the federal exchange. Moreover, the Administration knows that it needs seven million Americans in the exchange to make it financially feasible.
Americans are rightfully upset. The President promised on multiple occasions that the only individuals who would be impacted by Obamacare were those who were uninsured. Now, the President has upended a system with which most Americans were content.
Three years after the president promised Americans they could keep their healthcare plans, millions of plans (and counting) have been cancelled. Will he follow through on his promise and fix this wrong?
Policy Feature Issue: Medicaid – What the Administration Is Not Telling You
Medicaid has historically been a federal/state partnership to ensure that the most vulnerable populations in America have access to healthcare. For nearly a half century, low-income pregnant women, children, elderly, and disabled populations have had access to a range of mandatory services, including in and out patient hospital services, services provided by physicians and laboratories, nursing home, and home health care. In fact, since 2009, Medicaid has covered more Americans than Medicare. In FY 2013 alone, 72 million Americans will be enrolled in Medicaid at some point. While the cost of the program is shared between states and the federal government, federal contributions have historically averaged about 57 percent of total program’s costs. In 2012, federal spending reached $251 billion in FY 2012.
What the Administration is Not Telling You:
Beginning 2014, Obamacare will make this safety net less about helping vulnerable Americans and more about crowding tens of millions of individuals onto an already struggling program. Why else would the federal government bribe states by paying 100 percent of the expanded program’s costs through 2017 and then 90 percent after 2020.  Already, 440,000 individuals have enrolled in the program over the last six weeks. This number doesn’t even take into account the thirty six states using the federal exchange. Problems with the HealthCare.gov website have also impacted Medicaid, leaving states uncertain as to the true number of new enrollees. CBO projects that the Medicaid program will draw as many as 91 million Americans, including 34 million adults, by 2023. CBO estimates that federal spending for the expanded program will reach $510 billion by 2023.
Why Does This Issue Matter?
Some may ask why this matters. First, federal and state budget resources are scarce. The federal deficit in FY 2013 fell below one trillion dollars for the first time since 2008. In contrast, Medicaid spending in FY 2103 continued to increase by $15 billion or six percent. States continue to address shortfalls. As states have dealt with budget issues, Medicaid provider rates and benefits have been among the first aspects of the program to be cut. Medicaid physician reimbursement rates are already below those of Medicare. In most states, one out of every three doctors will not accept new Medicaid patients.
Putting tens of millions of additional individuals on Medicaid will make an already struggling health care program even worse. Moreover, states are now forced to pay for the increased costs associated with those previously eligible residents who never bothered to enroll but for the individual mandate, further crowding out funding for other state priorities.
As many have said, particularly over the last three years, having health care coverage does not necessarily guarantee quality health care. Moreover, spending more does not necessarily guarantee a sustainable program. Medicaid is the perfect example.