The MC: The Mackinac Center Blog

F. Vincent Vernuccio cited in Teacher Freedom Article

Michigan Teacher says MEA did not provide information on August Opt Out

Watchdog.org tells the story of Rob Wiersema, a Michigan teacher who says the Michigan Education Association did not give him the proper information he needed to opt out of the union.

The MEA has admitted it doesn't explain how teachers can leave. The Mackinac Center's Director of Labor Policy F. Vincent Vernuccio says he is helping to provide teachers with information so that they can make an informed choice in August with the website AugustOptOut.org.

Opponents of right-to-work predicted many negative economic results before Michigan became the country's 24th right-to-work state.

But, as a recent Capitol Confidential article points out, incomes have risen in the first full year since the worker freedom law went into effect. The article was picked up by Fox News, the American Thinker, and Hotair.com

Mackinac Center's effectiveness cited on Fox News and Watchdog.org

Progressives say Mackinac Center is "powerful" and "well-respected"

Opponents of freedom-based solutions paid the Mackinac Center several compliments during a work session at Netroots Nation 2014. The gathering is described as a "giant family reunion for the left."

Both Fox News and Watchdog.org wrote about how the Mackinac Center gains the respect of policy-makers and the public with powerful ideas. Read the Watchdog article here and the Fox News article here.

While the Legislature is on a summer break the Roll Call Report is reviewing key votes of the 2013-2014 session.

Senate Bill 542, Permit more generous government employee health benefits: Passed 38 to 0 in the Senate on October 8, 2013.

To increase from $11,000 to $12,250 the “hard cap” on the amount that a local government or school district can spend for an "individual-plus-spouse" employee health care policy under a 2011 law limiting the cost of such benefits.

Who Voted "Yes" and Who Voted "No"

Senate Bill 272, Authorize corporate and developer “port facility” subsidies: Passed 37 to 1 in the Senate on June 13, 2013

To expand the mission of the Michigan Strategic Fund to include providing undefined subsidies for corporations, developers and other entities involved in port facilities. The House has not taken up the proposal, which was introduced by Sen. Mike Kowall in this and the previous Legislature.

Who Voted "Yes" and Who Voted "No"

Senate Bill 114, Revise commercial rental assessment occupancy formula: Passed 37 to 1 in the Senate on June 13, 2013.

To eliminate the use of occupancy rates in determining the taxable value of commercial rental property. This essentially reverses a 2002 Supreme Court ruling, that the 1994 Proposal A property tax assessment limitations restricted increases for higher occupancy but not decreases for lower occupancy.

Who Voted "Yes" and Who Voted "No"

Senate Bill 283, Repeal annual union PAC contribution “re-up” requirement: Passed 36 to 1 in the Senate on May 22, 2013.

To repeal a requirement that union members or employees of a corporation who wish to have contributions to a union or corporate PAC automatically deducted from their paycheck must affirmatively give consent on an annual basis by means of signing a permission form. The bill would repeal the annual “re-up” requirement. The House has not taken up this measure.

Who Voted "Yes" and Who Voted "No"

Senate Bill 397, Expand a corporate/developer subsidy regime: Passed 33 to 4 in the Senate on September 26, 2013.

To authorize creation of a sixth “Next Michigan Development Corporation,” which is a government agency that gives tax breaks and subsidies to particular corporations or developers selected by political appointees on the entity's board for projects meeting extremely broad "multi-modal commerce" criteria (basically, any form of goods-related commerce). The new entity would be in the Upper Peninsula.

Who Voted "Yes" and Who Voted "No"

Senate Bill 307, Let 278 cities impose additional public safety property tax: Passed 37 to 0 in the Senate on October 16, 2013

To allow cities with less than 70,000 residents impose "special assessment" property taxes to pay for police and fire services. These taxes would be imposed over and above regular property taxes, and require voter approval. According to the Senate Fiscal Agency, this could allow 278 cities to impose these additional taxes. The House has not taken up this proposal.

Who Voted "Yes" and Who Voted "No"

Senate Bill 652, Make state Appeals Court venue for suits against the state: Passed 26 to 11 in the Senate on October 30, 2013.

To establish that the venue for all legal claims against state agencies, commissions, boards, etc. (the state “court of claims”), will no longer be the Ingham County circuit court, and instead will be the state Court of Appeals (which consists of 24 judges elected in four regional elections).

Who Voted "Yes" and Who Voted "No"

Senate Bill 636, Facilitate "land line" transition to cell phones: Passed 32 to 3 in the Senate on December 5, 2013

To streamline regulations on “landline” telephone service providers so as to facilitate transitioning customers to a wireless (cell phone or VOIP) system, and allow phone companies to discontinue landline service after 2016. The bill authorizes appeal procedures for individual customers for whom the replacement service does not work well.

Who Voted "Yes" and Who Voted "No"

Senate Bill 509, Authorize new state Senate office building: Passed 22 to 14 in the Senate on December 4, 2013

To authorize the sale of the Farnum Senate office building in Lansing and construction of a new building for Senators’ offices. The House has not taken up this bill, but Senate Majority Leader Randy Richardville recently revealed that the Secretary of the Senate has issued a Request for Proposals from developers and contractors.

Who Voted "Yes" and Who Voted "No"

Senate Bill 542, Permit more generous government employee health benefits: Passed 108 to 1 in the House on December 11, 2013

The House vote on the bill described above. This was signed into law This was signed by Gov. Rick Snyder on December 22, 2013.

Who Voted "Yes" and Who Voted "No"

Senate Bill 114, Revise commercial rental assessment occupancy formula: Passed 98 to 12 in the House on May 27, 2014

The House vote on the bill described above. This was signed into law on June 12, 2014.

Who Voted "Yes" and Who Voted "No"

Senate Bill 397, Expand a corporate/developer subsidy regime: Passed 87 to 22 in the House on December 11, 2013

The House vote on the bill described above. This was signed into law on December 21, 2013.

Who Voted "Yes" and Who Voted "No"

Senate Bill 652, Make state Appeals Court venue for suits against the state: Passed 57 to 52 in the House on November 6, 2013

The House vote on the bill described above. This was signed into law on November 12, 2013.

Who Voted "Yes" and Who Voted "No"

Senate Bill 636, Facilitate "land line" transition to cell phones: Passed 71 to 39 in the House on March 11, 2014

The House vote on the bill describe above. This was signed into law on March 25, 2014.

Who Voted "Yes" and Who Voted "No"

SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.

Why are RTW States Gaining Population?

Better income potential

Population growth, RTW vs. non-RTW states

If you listen to opponents of right-to-work laws, the claims are dire. But if laws allowing workers the choice of whether to pay money to a union lead to such alleged problems, why are so many people moving from forced unionism states to right-to-work states?

My colleague Michael Van Beek takes a look at a new study by Richard Vedder, an Ohio University professor and member of the Mackinac Center Board of Scholars, and researcher Jonathon Robe. Long story short, they show significant gains in income and jobs for right-to-work states.

But they also include the following statistic: “[T]he proportion of the American population living in a right-to-work environment has steadily grown, jumping from about 29 percent in 1970 to 46 percent by 2013.”

Probably the most important economic measure is population growth. In the policy literature, it is often difficult to tease out how much of an effect a single policy has on a state’s economy, but people deciding to uproot their lives and move somewhere helps encapsulate the bulk of what many people desire.

In that measure, right-to-work states are dominating.

Hohman on Personal Property Tax in Detroit News

Prop 1 better than other Great Lake states' reforms

James Hohman, assistant director of fiscal policy, and Scott Drenkard, an economist with the Tax Foundation, write in today’s Detroit News about Proposal 1, which is estimated to save taxpayers about $500 million. You can read Hohman’s full assessment of the ballot measure here.

New Evidence: Right-to-Work Laws Work

Center scholar co-authors CEI study

A 2013 Mackinac Center study found positive economic effects for states with right-to-work laws. RTW states enjoy increased real personal income growth, population growth and employment growth. New evidence supports this finding.

The evidence comes from a Competitive Enterprise Institute study. Authors Richard Vedder (a member of the Center’s Board of Scholars) and Jonathon Robe control for a variety of factors that impact state economic growth. They then compare the performance of RTW states and non-RTW states from 1977 to 2012. A chief finding is “that the overall effect of a RTW law is to increase economic growth rates by 11.5 percentage points.”

Vedder and Robe also analyzed RTW laws' impact on per-capita income. They estimate how much non-RTW states lost in potential income from 1977 to 2012. The median was $3,278 per capita, or about $13,000 annually for a family of four.

This analysis places Michigan as one of the states missing out on the most from not having a RTW law. Michigan suffered the 6th largest state income loss ($34.2 billion) and was 10th in per capita income loss ($3,460).

The study highlights some additional statistics that suggest RTW laws have a positive impact on economic growth. For instance, real personal income in RTW states grew by 165 percent from 1977 to 2012, but only by 99 percent in states without such laws. Measured by per-capita income, states with RTW laws grew by 65 percent, whereas non-RTW states grew by only 50 percent.

Generalizing about the millions of interactions and factors that impact a state’s economy is tricky, and one should always use caution. But a growing amount of evidence suggests that states with RTW laws, by lowering the actual, perceived or future cost of doing business, attract more capital, firms and workers. Eventually these factors add up and contribute to a growing state economy, just as general economic theory would predict.

More Confusion Over 'Affordable Care Act'

Court rules IRS illegally implemented tax credits

In a significant decision issued Tuesday, the United States Court of Appeals for the District of Columbia ruled that the IRS’s implementation of a significant portion of the Affordable Care Act (ACA) was illegal. The case is called Halbig v Burwell, No. 14-5018. The DC Court’s opinion was very much in line with the interpretation of the ACA urged by Michigan Attorney General Bill Schuette, who submitted a supporting brief on behalf of the state of Michigan in cooperation with the states of Kansas and Nebraska.

What the DC Court said was that the clear and unambiguous language of the ACA states that certain tax credits are available only to people who receive their health insurance through a “health exchange” created by one of the 50 states. These tax credits serve as a taxpayer-funded subsidy to those who buy insurance through the exchange. Additionally, the existence of these tax credits affects the penalties that the IRS uses to enforce the insurance mandate for both individuals and businesses. For individuals, the tax credit makes it more likely that a person who does not buy a qualified insurance plan will face a financial penalty. For businesses, the penalty kicks in whenever a business that employs more than 50 people has an employee who receives this tax credit. If the tax credit is not available, then there can be no penalty for the employer.

The states made a choice whether or not to create these exchanges, and Michigan’s legislators voted not to create an exchange but rather let the federal government create one for them. As Attorney General Schuette argued, this was a conscious choice because it excused Michigan businesses and some Michigan individuals from incurring the ACA’s insurance mandate penalties. As the attorneys general stated in their brief:

“[Michigan and the other states] seek to protect their decision to opt out of the benefits and burdens associated with establishing state-run marketplaces for selling qualified health insurance plans under the [ACA]. The Act expressly gives States this option. In States that opt out, federally funded premium assistance tax credits are not available to individuals who purchase insurance through the required fallback federal marketplaces. In turn, large employers (including States and their political subdivisions) are not subject to the employer mandate. But the Internal Revenue Service (“IRS”) has undermined the States’ policy choice by extending federal premium assistance subsidies to them anyway. As a result, the regulations expose otherwise-exempt individuals to the individual mandate and trigger the employer mandate in States—including [Michigan]—that properly chose to avoid these additional regulatory burdens.”

The DC Court said that under the plain wording of the statute, the federally created exchange did not qualify its participants to receive tax credits, and that many of the penalties found in the law do not apply to Michigan and the other states that did not create exchanges. The court said that for them to interpret the statute as the IRS and President Obama want them to do would be rewriting the legislation — which is not the job of the courts.

Does that mean that the subsidy tax credits are not available in Michigan, or that Michigan’s business and residents do not need to worry about the insurance mandate penalties? The answer isn’t clear yet.

In striking down the IRS’s interpretation, the DC Court of Appeals sent the matter back to the lower district court to issue an order in accordance with the appellate court ruling. Whether the IRS’s policy of offering credits to states that did not create exchanges will continue at least temporarily, or whether it will be immediately ended, will be determined by the lower court, unless the matter is first heard by the entire DC Court of Appeals. The makeup of the DC Court of Appeals was recently altered drastically by the addition of three of President Obama’s appointees, after the Senate took the extraordinary step of ending the possible use of the filibuster against appellate court appointees. 

To further cloud the outlook, another federal circuit, on the same day, ruled that the same IRS interpretation was acceptable because the ACA, as written, was ambiguous. The Fourth Circuit, which covers the Carolinas, Virginia, West Virginia and Maryland, held that the IRS has the ability to clarify matters that Congress left ambiguous.

The entire matter may require a decision by the Supreme Court. However, we may find out before then whether or not the current IRS interpretation of extending the tax credits to states like Michigan will continue or has been ended. This depends on what happens in the DC Circuit either at the district court level, or at a sitting of the entire DC Circuit Court of Appeals.

Obamacare's Survival up to State Legislators

Figures for Halbig's Michigan impact

The U.S. Court of Appeals for the D.C. Circuit has just ruled that the federal health care law does not authorize insurance subsidies provided through health care “exchanges” that were set up by the federal government. Only exchanges set up by the states can qualify for these taxpayer subsidies.

D.C. Circuit appeal rulings are especially significant because, unlike appeals courts for other districts, they can affect the entire nation, not just one region. Given a contradictory ruling from the Fourth Circuit Appeals Court (which directly affects four states in the Southeast), the issue is likely to be taken up by the Supreme Court sooner rather than later  

If this decision prevails (and to the extent the rule of law is actually enforced on the current administration's actions), the ruling might force the suspension of exchange subsidies in 36 states — including Michigan — whose legislatures declined to create a state-run exchange. That will all play out in the fullness of time, but here’s what the ruling means right now for Michigan:

Much of this state’s political class — including many of the politicians who voted for the Obamacare Medicaid expansion — will loudly demand that the Michigan Legislature immediately create a state exchange. The chorus will be led by the law’s cheerleaders in the mainstream media, and the state insurance industry (including the giant Blue Cross Blue Shield).

This case poses an existential threat to the law euphemistically known as “the Affordable Care Act.” If the current decision is upheld, the ACA’s survival will be in the hands of legislators in Michigan and 35 other states. In plain English, Obamacare will likely collapse if its subsidies are not available in more than half the states, or even a significant number of those states. One study shows that, thanks to rate hikes driven mainly by the law's coverage mandates, the cost of insurance for those who currently get subsidies would increase 76 percent on average nationwide, and 74 to 78 percent in Michigan.

Legislators who vote to keep the law on life support by creating a state exchange will find it very difficult to claim that they also “oppose Obamacare.” (In 2011 the Michigan Senate voted to create a state exchange, but the House never took up the bill; see Mackinac Center coverage here.)

In addition, under this ruling if Michigan creates an exchange it will expose many more businesses and residents here to penalties for noncompliance with the “individual mandate” and employer mandate. The Cato Institute’s Michael Cannon has written extensively about this case, and also provided much of intellectual ammunition upon which Halbig is based. He has run the numbers on the ruling’s impact in the 36 federal exchange states.* Here are the figures for Michigan:

  • Number of Michigan residents who would be freed by Halbig from the law’s individual mandate if Halbig is affirmed: 288,130
  • Number of Michigan businesses with more than 50 employees that would be freed by Halbig from the employer mandate: 10,574
  • Number of Michigan employees in those firms: 2,527,857

The following is speculation, but one outcome if the ruling stands - and the Michigan Legislature does not help maneuver around it — would be opportunities for individuals who would like to work full time but can only find part time jobs thanks to the employer mandate’s application to full time jobs (but not ones that provide fewer than 30 hours per week).

On that, the “household survey” component of the monthly employment report for June showed a nationwide decline of 523,000 full time jobs, and an increase of 799,000 part time jobs. (The component of the report that surveys employers showed a net gain of 288,000 payroll jobs.) These figures are subject to revisions that are often quite large, but they are still suggestive of magnitude of the employer mandate’s harmful effects.

*Sources:

Individual mandate exemptions: Explanation and methodology in “50 Vetoes: How States Can Stop the Obama Health Care Law,” Cato Institute, March 2013.

Employer mandate exemptions: U.S. Census data cited by Michael Cannon in “Halbig v. Burwell Would Free More Than 57 Million Americans From The ACA's Individual & Employer Mandates,” Forbes, July 21, 2014.

Exploring the Political Climate of Climate Change

"Average" and "normal" are not synonymous

Using polling to discover not only what percentage of voters believe in man-made climate change but also how much they know about related scientific facts could prove worthwhile. Survey questions might include asking voters if they believe greenhouse gases exist and, if so, whether they think that — if possible — all greenhouse gases should be eliminated.

One wonders whether most voters realize that without greenhouse gases in the atmosphere life on Earth would not be possible. Even man-made climate change advocates don’t dispute this fact. They admit that water vapor is by far the most plentiful greenhouse gas; while conspicuously refusing to represent water vapor on their charts.

The results of such polling could be fascinating. For instance, what if polling revealed that a marked difference in the level of scientific understanding exists between those who believe in man-made climate change and those who don’t? 

Or, perhaps the polling might show that voters in general have so little understanding of the science involved that their opinions tend to be based on factors outside the realm of science.

Man-made climate change dogma has been built on a mix of misinformation, mistruths, the threat of withholding research funding from scientists who publicly proclaim their skepticism, refusal to peer review and publish the studies of nonbelieving scientists, the labeling of nonbelieving scientists who have the guts to speak their minds as not being “reputable,” and most important of all — political and other self-serving advantages of perpetuating the myth.

During some recent internet surfing, this columnist watched a governmental hearing in Washington state that displayed another tactic of those who promote man-made climate change dogma. It is the use of trick statements.

The hearing featured a scientist who argued that man-made climate change was a hoax. An apparently sincere lawmaker read a statement to the scientist and asked him to respond. The statement was basically that: “Soon, no living person on Earth will have experienced — at any moment of their lives — a normal climate.”

Possibly believing the statement didn’t deserve a response, the scientist ignored it. This was unfortunate and represented a missed opportunity for a teachable moment. The scientist should have answered the question and done so in detail.

The point is that the statement was laced with double-layered deceit. First, the proper term should not be “normal,” it should be “average.” Substituting the word “normal” for “average” can be either a commonplace mistake or willful manipulation. The classic example is that for decades the “average” family in the United States had 2.5 children; but obviously the number of families that actually had two and a half kids was zero. Average and normal are not synonymous.

Therefore an accurate answer to the question would have had to be: “Yes, that’s true, but strictly speaking no animal or plant that ever existed on the face of this planet has experienced a “normal” climate, because there has never been such a thing as a “normal” climate.

OK, so for the term “normal climate” let’s substitute the term “average climate.” That will make the statement relevant.

If the time period used for comparison was limited to the past 600 years, which was dominated by roughly 500 years of a relatively colder climate — referred to as the “Little Ice Age” (a bad name because it wasn’t exactly an ice age) — then the answer would be that the people presently on Earth have lived during a warmer than average climate.

But if the time period used for comparison was the past 3,000 years, the people presently on Earth have lived during a cooler than average climate. If the time period used for comparison was the past 9,000 years — dating back to the retreat of the glaciers, the people presently on Earth have still lived during a cooler than average climate.

If the time period used for comparison covers the past 2.6 million years (our current era), the people presently on Earth have lived during a much warmer than average climate, because most of those 2.6 million years consisted of a series of glacial ages, during which time where we are sitting right now was usually under a mile of ice. If the time period used for comparison covered the past 115 million years, the people presently on Earth have lived during a drastically cooler than average climate, because about 110 million of those years took place in a different era during which there was no permanent ice cap on Earth, not even in Antarctica.

Meanwhile, climate predictions of scientists across the world who use the solar activity (sun spot) theory are proving more reliable than those of the man-made climate change crowd. But, possibly because little political advantage can be gained by admitting climate change is beyond man’s control, most of these scientists honor the “scientific method” and call their theory “just a theory” rather than proclaiming it an undeniable fact.

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(Editor’s note: Jack Spencer is Capitol Affairs Specialist for Michigan Capitol Confidential. He is a veteran Lansing-based journalist. His columns do not necessarily represent the views of the Mackinac Center for Public Policy or Michigan Capitol Confidential.)