Democrats Propose Harmful Corporate Tax Increases

This week, Democrats are pushing a bill that would increase taxes on the profits of American companies with foreign subsidiaries. President Obama states that:

For years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries. I want to change that.

Supporters claim that the corporate tax hike will protect American jobs by supposedly encouraging businesses to stay in the United States. However, Obama’s counterproductive plan will likely drive more businesses out of the US while taking even more money out of the American economy. Microsoft CEO Steve Ballmer has already declared that “if the President’s plan is enacted, Microsoft would move facilities and jobs out of the U.S.”

The United States already has one of the highest corporate tax rates in the world. As shown in the Project America chart below, Japan is the only developed nation with a higher corporate tax:

America is one of the few countries in the world that taxes global profits of domestic companies. Under current tax law, US companies must pay some corporate taxes in both the United States and their host country. After paying the corporate tax of their host country, US companies must pay the difference between the US corporate tax rate and the foreign rate once they bring profits back to the US.

President Obama’s plan would end the deferral of foreign income by forcing companies to immediately pay US corporate taxes on any profits earned.According to the Wall Street Journal:

We’re all for increasing jobs in the U.S., but the President’s plan reveals how out of touch Democrats are with the real world of tax competition. The U.S. already has one of the most punitive corporate tax regimes in the world and this tax increase would make that competitive disadvantage much worse, accelerating the very outsourcing of jobs that Mr. Obama says he wants to reverse.

The Obama administration should focus on the reason why businesses are moving operations overseas in the first place. If the goal is to increase businesses inside the United States, the best way is to encourage companies to stay is to decrease the exorbitant corporate tax rate. Even Obama’s economic advisor Paul Volcker found in a recent report that:

The growing gap between the U.S. corporate tax rate and the corporate tax rates of most other countries generates incentives for U.S. corporations to shift their income and operations to foreign locations with lower corporate tax rates to avoid U.S. rates.

As long as the US corporate tax rate is 80 percent higher than the OECD average, there is a great incentive for companies to move to a country with a lower tax burden. At a certain point, it becomes sensible for businesses to be more cost efficient by escaping the punitive US corporate tax.

Despite the high US corporate tax rate, the revenue Washington collects is lower than most relative to the size of the economy. As the chart below shows, the United States raises less revenue from corporate taxes than most countries with lower tax rates.

For instance, foreign companies have massively invested in Ireland which has a low corporate tax of 12.5 percent. As a result, Ireland collects more corporate tax revenue as percentage of GDP than the United States whose corporate tax is 180 percent higher.

As a U.S Treasury report reveals, employees and consumers are the ones who bear the cost of corporate taxes. A Heritage Foundation study finds that the high US corporate tax rate severely hurts employment. According to their study, the full repeal of corporate taxes would likely generate 2 million jobs and $280 billion more in real gross domestic product.

Lowering the corporate taxes would encourage multi-national companies to flow into America. Instead, the proposed plan to increase the corporate tax would further destroy jobs while hurting America’s global competitiveness. In order to boost job growth and global competitiveness, Congress must strive to lower the corporate tax rate to a more sensible level.

Tax Hikes on the Rich Won’t Work

Originally posted at FreedomWorks.org.

House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) have made it clear that they will strive to raise taxes on all families making over $250,000 annually on January 1st. According to Nancy Pelosi, “I see no justification for giving a tax break…for the wealthiest people in America…the tax cuts at the high end have increased the deficit enormously.”

To the contrary, the key culprit behind rising federal deficits is runaway government spending that has plagued Washington. The current federal $1.4 trillion budget deficit was not created because government taxed too little. As a result of the Bush-era tax cuts which lowered tax rates for all Americans, total tax revenue increased by 40 percent within four years. Between 2002 and 2004, tax payments by individuals who made more than $200,000 increased by 19.4 percent—more than double those taxpayers in lower brackets.

In the current tax debate, we cannot ignore human action and motivation. President Obama claims that raising tax rates for wealthy Americans will increase tax revenue by $700 billion. Obama’s prediction is improbable since the rich tend to be highly responsive to changes in their tax burdens.

While the vast majority of Americans make less than $250,000 annually, raising taxes on the wealthy will have disastrous effects on the entire economy. Ultimately, hiking taxes for the rich will likely worsen the deficit while destroying countless jobs. As history has repeatedly proven, higher tax rates produces lower tax revenue.

Simply, soak-the-rich policies have never worked in anyone’s favor. For instance, Maryland Governor Martin O’Malley raised income tax levels on wealthy households to 6.25 percent from 4.75 percent in 2008. Lawmakers in Annapolis wrongly predicted that this millionaire tax would generate $106 million. According to the Wall Street Journal,

Well, the state comptroller’s office now has final tax return data for 2008, the first year that the higher tax rates applied. The number of millionaire tax returns fell sharply to 5,529 from 7,898 in 2007, a 30% tumble. The taxes paid by rich filers fell by 22%, and instead of their payments increasing by $106 million, they fell by some $257 million.

Certainly,  Maryland’s millionaire tax back fired. It is estimated that Maryland lost $1 billion because one-third of wealthy residents moved or filed their taxes in other states with lower tax burdens. Since Maryland’s millionaire tax was implemented, Maryland’s deficit has increased from $1.7 billion to $2 billion.

Similarly, New York enacted a “millionaire tax” that raised tax rates on all residents making more than $200,000 a year. However, since New York implemented their so-called millionaire tax its state revenue has declined by 9 percent. According to New York Governor David Paterson,

We increased the income tax for millionaires last year. We projected that we would get $4 billion and we actually got well short of it. Tax the rich, tax the rich. We’ve done that. We’ve probably lost jobs and driven people out of the state.

Raising federal taxes on the rich will also have similar unintended consequences—successful US companies will be more inclined to move to a country with a lower tax burden. The rich are better able to change the location, compensation or timing of their income in response to changing government tax policies. Wealthy Americans can generally afford to hire expensive lawyers or accountants to avoid paying numerous taxes. While the capital gains tax is expected to rise by 33 percent, billionaire Bill Gates and Warren Buffett hold most of their wealth in the form of nontaxed and unrealized capital gains. In various ways, the rich are the most responsive to shifting tax rates.

Under the Obama administration’s plan, the federal top two income tax brackets will rise to 36 and 39.6 percent. As President Obama once said, “I do think at a certain point you’ve made enough money.” If the federal government confiscates nearly 40 cents out of every dollar made, businesses are discouraged from expanding their operation and would be entrepreneurs are deterred from starting new enterprises.

Instead, Congress must lower taxes for all Americans across the board to lower the deficit and boost job creation.  President Kennedy favored “an across-the-board, top-to-bottom cut in personal in corporate income taxes.”  In the eight years that Kennedy’s tax cuts were in effect, tax revenue actually doubled. Hiking taxes on the rich is simply a lose-lose situation by stifling economic growth while increasing the budget deficit.

REINS Act: No Major Regulations without Congressional Approval

Originally posted at FreedomWorks.org.

Our Founding Fathers clearly understood that concentrated power is a threat to individual liberty. As a result, they created a system of checks and balances to ensure that no single branch of government has absolute power. John Adams stated that “it is by balancing each of these powers against the other two that the efforts in human nature toward tyranny can alone be checked and restrained, and any degree of freedom preserved in the Constitution.”

In article 1, section 7 of the Constitution, the process of creating a new law is outline, putting authority with the legislation. Today, the omnipotent executive branch has disregarded these limits by enacting thousands of new regulations without proper approval from Congress.

It is hard to justify that unelected bureaucrats should have the power to enact costly regulations that have such an enormous impact on the economy. In 2009, the American people were forced to comply with 3,006 new rules and regulations issued by the executive branch. Every year, about 85 of these federal rules are considered “major rules” since they impose at least $100 million in annual compliance costs. In total, government regulations cost Americans over $1 trillion every year. As the Heritage Foundation graph below shows, the size of the Code of Federal Regulations that lists all federal regulations has grown to 163,333 pages.

Yesterday, Senator DeMint (R-SC) introduced S.3826 Regulations from the Executive in Need of Scrutiny Act (REINS Act) that requires Congressional approval for all “major rules” proposed by the executive branch. In the House, Rep. Davis (R-KY) has introduced a virtually identical bill H.R. 3765, the REINS Act. According to Senator DeMint,

We must put a stop to the reckless and costly anti-free market regulations that are destroying jobs. When the Obama Administration hasn’t been able to ram their anti-job polices through Congress, they’ve empowered unelected, unaccountable bureaucrats to force them through using regulations.

The REINS Act is quickly gaining traction. In fact, in the newly released Pledge to America from the House Republicans it states that they will “require congresssional approval of any new regulation that has an annual cost to our economy of $100 million or more.”

A recent CNN poll revealed that the majority of Americans believe that the federal government has become too powerful that it imposes a direct threat to the liberties of ordinary citizens. It is imperative to limit the excesses of executive power by giving elected officials a voice in all major regulations imposed on the American people.

Most of these federal government regulations do more harm than good. With unemployment at 9.6 percent, businesses and individuals should not be subjected to costly and potentially job-killing rules without approval from the people’s representatives. The REINS Act would help restore checks and balances to our system to prevent one branch of government from infringing on the rights of the people without recourse.

Los Angeles Government Creates Only 55 Jobs with $111 Million “Stimulus”

Originally posted at FreedomWorks.org.

The late Noble Prize winning economist Milton Friedman once stated:

When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it…And when a man spends someone else’s money on someone else, he doesn’t care how much he spends or what he spends it on. And that’s government for you.

Milton Friedman’s words ring true for the $814 billion government “stimulus” passed in February 2009. The city of Los Angeles is a prime example of government recklessly spending these “stimulus” funds. According to City Controller of Los Angeles Wendy Greuel:

LADOT [Los Angeles Department of Public Works] has been awarded $40.8 million and created or retained 9 jobs, though they are expected to create 26 jobs overall. Overall, the Departments have received $111 million in federal stimulus funds out of the $594 million the City has been awarded so far and created or retained 54.46 jobs.

In other words, it has cost taxpayers a whopping $2 million to create or “save” a single job.  Wendy Greuel who is disappointed in the jobs numbers claims that “the City needs to do a better job expediting the process and creating jobs.” Even if the Los Angeles government unlikely meets their goal of creating 264 jobs, the price tag would still be over $400,000 per job.

Politicians cannot “give” us anything without first taking from someone else. Every dime of the $814 “stimulus” was either taking away from taxpayers or borrowed out of the economy. As Milton Friedman noted, individuals tend to spend their money wiser than government does. Therefore, the real key to economic growth is through the private sector.

 So why not allow taxpayers to keep more of their money to stimulate the economy by wisely purchasing goods and services that they desire? Even though Los Angeles’ government spent $111 million creating jobs, this had barely any positive effect on unemployment. In fact, Los Angeles’ unemployment rate has increased by over 2 percentage points to 12 percent since the “stimulus” was enacted. We are unable to visibly see the abundance of jobs that were likely not created due to “stimulus” spending. Imagine how many jobs could potentially be created if taxpayers had their hard earned $111 million in their pockets instead. To be sure, the private sector would likely create significantly more than 55 jobs as a result.

Today, President Obama stated that “we’ve got the most dynamic free-market economy in the world. And that has to be preserved.” At the same time, Obama is pushing for yet another massive $50 billion government “stimulus” package that will likely be mismanaged. In order to truly preserve our free-market economy, we cannot allow another “stimulus” boondoggle to pass. The best solution to boost job growth is to get government out of the way to allow free people to voluntary exchange goods and services without harmful government interference.

ObamaCare Predicted to Increase Health Care Spending By 39 Percent in 2014

Originally posted at FreedomWorks.org.

Over a month ago, Senator Max Baucus (D-MT) claimed that the American people’s unfavorable opinion of ObamaCare would likely change over time:

Mark my words, several years from now, you’re going to look back and say, ‘Well, that wasn’t so bad after all.

Wasn’t so bad after all? In the next several years, studies have confirmed that Americans will face far higher insurance premium costs. By the year 2019, it is estimated that U.S health spending will rise from about $2.5 trillion to $4.6 trillion. The Centers for Medicare and Medicaid services project that overall national health spending will increase by 6.3 percent each year over the next decade. In other words, health care costs will consume one out of every five dollars spent in the United States. According to the Wall Street Journal:

U.S. health spending is projected to rise 9.2% in 2014, up from the 6.6% projected before the law took effect…The creation of new high-risk insurance pools, a requirement that children can stay on their parents’ insurance plans until age 26 and other early provisions will increase U.S. health expenditures by $10.2 billion through 2013, the report says.

This year, the number of uninsured Americans rose at a record rate to 50.7 million. The USA Today reports that:

Driving much of the increase, however, was the rising cost of medical care; a Kaiser Family Foundation report shows workers now pay 47% more than they did in 2005 for family health coverage, while employers pay 20% more.

In the next few weeks, health insurance premiums are expected to rise by 1 to 9 percent due to the costly provisions in ObamaCare. Last week, President Obama stated that:

As a consequence of us getting 30 million additional people health care, at the margins that’s going to increase our costs — we knew that.

Of course, these costly consequences were not exactly included in his rallying speeches prior to the passage of ObamaCare. Instead, the American people were told that “health care reform” needed to be passed immediately to “tackle needless waste and spiraling costs.”

The Obama administration is trying to change public opinion on the rising health care costs. Health and Human Services Secretary Kathleen Sebelius wrote a threatening letter to insurance companies stating that they were not allowed to blame premium hikes on ObamaCare. She claims that “there will be zero tolerance for this type of misinformation and unjustified rate increases.” It seems that Insurance companies only option is to keep silence about the reason for their rate hikes or be cut off entirely from government payments.

Polls show that the majority of Americans want ObamaCare to be repealed as soon as possible. Kathleen Sebelius claims that she has “a lot of reeducation to do” in order to change that fact. However, perhaps Sebelius herself needs to be educated on why informed Americans oppose this counterproductive law. Sebelius should listen to her Health and Human Services predecessor Michael Leavitt who states:

What Congress passed this spring is the illusion of Medicare reform. It does not ease cost pressures but papers over them with unsustainable price controls. It will end in disappointment.

So far, all of President Obama’s health care promises are unraveling. In 2009, FreedomWorks predicted that “your insurance premiums will go up” if the ObamaCare law is passed. Unfortunately, we have begun to see the unintended consequences of a bill that many lawmakers probably did not bother to read.  As ObamaCare supporter Senator Baucus (D-MT) said “I don’t think you want me to waste my time to read every page of the health care bill.” In order to rein in spiraling health care costs, we must work towards repealing ObamaCare and replacing it with patient centered free markets solutions that will lower insurance premiums for all Americans.

America Needs to Take One Lesson from Cuba: Cut the Bureaucracy

Currently in Cuba, more than 85 percent of their 5.5 million workers are government bureaucrats. Even Fidel Castro recently acknowledged that this rate was unsustainable by stating that “the Cuban model doesn’t even works for us anymore.” Therefore, Cuba will cut 500,000 government jobs in the next six months to help fix its nearly bankrupt economy. According to Cuba’s official labor union, “Our state cannot and should not continue maintaining companies, productive entities and services with inflated payrolls and losses that damage our economy and result counterproductive, create bad habits and distort workers’ conduct.”

It’s unfortunate that the Obama administration has not learned this vital lesson. In the United States, one in every six jobs—22.5 million—is a government job. Since the start of the recession, public sector employment has increased by 590,000 while the private sector has lost 7.9 million jobs. It’s hard to believe that Cuba is correcting its mistakes while the United States is escalating its financial problems by adding even more bureaucrats. As Cato Institute Dan Mitchell states “Obama wants more people in the wagon and fewer people pulling the wagon.” If the current trends continue, the wagon—the representation of the economy—will be impossible to move forward. As the Heritage Foundation chart below shows, the gap between government and private sector jobs has rapidly grown:

Furthermore, taxpayers in the private sector cannot afford to pay federal bureaucrats their bloated salaries. With benefits included, the average federal government employee is paid $123,049 while the average private sector receives $61,051 annually. After adjusting for inflation, federal employee wages increased 36.9 percent while private sector wages rose only 8.8 percent since 2000.

Some claim that government bureaucrats deserve to be paid twice the salaries of private sector workers since they have attained more education. According to Paul Krugman, it’s an “apples and oranges comparison.” However, the Heritage Foundation has conducted a new study that carefully accounts for education and skills differences between government and private sector employees. The results:

While federal employees do earn more partially because they are more skilled than the average private sector worker, controlling for skills does not eliminate the federal pay premium. Depending on the methodology employed, the average federal employee receives as much as 22 percent more in wages than an equally skilled private sector worker. Including both wages and benefits, overpaying federal workers costs taxpayers approximately $40–50 billion per year.

America needs to take one lesson from Cuba. America must also take strives to cut needless government bureaucrats and their padded paychecks.  The rapid expansion of government employees jeopardizes America’s future economic growth. We must stop these harmful trends before it’s too late.

Poverty Rate Increased at New Record in 2009

Originally posted at FreedomWorks.org

New 2009 Census data is set to reveal that 1 out of every 7 Americans live below the poverty line. It is estimated that 45 million people—or about 15 percent of the population—were poor last year. The 1.8 percentage-point increase in 2009 is the highest single-year increase since the government starting calculating poverty data.

Since the recession began in 2007, an increased number of Americans are dependent on government anti-poverty programs that have expanded its eligibility and benefits. However, the evidence is overwhelmingly clear that these anti-poverty programs have not reduced poverty. As Ronald Reagan said in his 1988 state of the union address:

My friends, some years ago, the Federal Government declared a war on poverty, and poverty won.

Since President Johnson’s War on Poverty program began in 1964, the federal government has spent about $10 trillion to “eliminate” poverty through government programs. Unfortunately, poverty levels have stagnated since the ineffective program began. The belief that we could simply eliminate poverty through government bureaucracies redistributing massive amounts of taxpayer dollars to the poor is foolish. As the chart from Cato Institute scholar Dan Mitchell shows, the poverty rate was falling until the War on Poverty began:

The facts suggest that it’s time to reconsider our tactics for reducing poverty in America. In order to truly help the poor, we cannot continue repeating the same failed programs hoping that they will eventually produce better results.

In the book Re-Privatising Welfare: after the Lost Century, Dr. Dennis O’Keeffe asks “would a free market mean more or less education, health-care and support for the needy?” He concludes that private charities have always had a better track record of helping the needy. Simply, the private sector will always outperform any service provided by the government. In a Cato Institute study, scholar Michael Tanner states “private charities are able to individualize their approach to the circumstances of poor people in ways that governments can never do.” Before government programs crowded out private charities, people voluntarily contributed massive amounts of money to the poor.

The welfare state is endlessly troubling since it fosters dependency and encourages poverty by paying people not to work. Furthermore, it reduces people’s incentives to voluntary help the poor. As Representative Ron Paul (R-TX) states in The Revolution: a Manifesto, “we have bought into the soul killing logic of the welfare state: somebody else is doing it for me.” The fewer federal government anti-poverty programs, the more people are inclined to  generously donate to charities and volunteer at organizations such as food banks. Unfortunately, by filling out tax forms some people feel that they have already fulfilled their duty towards their fellow men. Ron Paul states: “Do our responsibilities as human beings really extend no further than this?”

Americans are already the most financial generous people in the world. In 2009, Americans voluntary gave an estimated $307.65 billion to private charities. Imagine how much higher that amount would be if the government did not force taxpayers to contribute to inefficient and compulsory government “charities.” Absent of government bureaucracies, communities used to be the ones who cared for the needs of their people. Michael Tanner asks a thought provoking question: “If you had $10,000 available that you wanted to use to help the poor, would you give it to the government to help fund welfare or would you donate it to the private charity of your choice?” It seems that most everyone would choose the freedom to donate to a private charity based on their personal concerns.

It is worrisome that the poverty rate has increased at a record level last year. The federal government may expand its anti-poverty programs to meet increased demand. Like we’ve seen in the past, the expanded government programs will likely not help poor people escape poverty. If the goal was to truly help poor people, the federal government would step back and instead allow taxpayers to donate more of their hard-earned money to efficient private charities.

White House Economist Adviser: “Recovery Summer” Wasn’t Actually About Jobs

Originally posted at FreedomWorks.org.

Remember back in June when the Obama administration promised the American people a “Recovery Summer?” Vice President Joe Biden assured us that “some time in the next couple of months we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.” To the contrary, the economy has lost 283,000 net jobs this summer.  As we’ve come to expect, the Obama administration economic forecasts were dead wrong.

Unfortunately, the Obama administration refuses to admit that the “stimulus” has repeatedly proven to fail by its own measures. Recently, a reporter asked Obama whether or not he regretted calling it a “Recovery Summer.” Unsurprisingly, Obama failed to face economic reality by stating: “I don’t regret the notion that we are moving forward because of the steps that we’ve taken.” How exactly are we moving forward? Between June and August, the unemployment rate has increased .1 percent to 9.6 percent.

All signs point to the fact that the “stimulus” has made the economy worse than it otherwise would be. Last week, Austin Goolsbee took over as the Chair of the Council of Economic Advisers after Christina Romer left her position. Goolsbee who now has the impossible task of defending the flawed “stimulus”, claims that we simply misunderstood the term “Recovery Summer.” According to Goolsbee, the “Summer Recovery” was supposedly a reference to the “stimulus” but not job growth. He states:

The vice president was talking about the Summer of Recovery in reference to the recovery act — that you would see the creation of a series of infrastructure and other projects ramping up over the summer, and you did see that.

Wasn’t investing more money into these infrastructure projects suppose to lead to a “Recovery Summer?” Thus far, $275 billion of the massive $814 billion “stimulus” has been spent in grants, contracts and loans. The projects created are easy to visibly see due to propaganda “stimulus” road signs that cost taxpayers up to $10,000 each. However, in a chart by Mercatus Center Senior Research Fellow Vernonique de Rugy, increased “stimulus” spending has certainly not boosted job growth:

According to Vernonique de Rugy:

With a few exceptions, the data show little correlation between the level of unemployment and stimulus spending. In fact, the opposite is true. The federal government has given far fewer stimulus dollars to states with high unemployment than it has to states with low unemployment.

This evidence is more reason to believe that Obama’s proposed $50 billion “stimulus” plan to create infrastructure projects will not create net new jobs. Instead, it will destroy jobs by taking away money from the productive private sector to fund mostly wasteful pet projects. The key to truly stimulating the economy is to create jobs by allowing taxpayers to keep more of their hard earned money to save, donate or spend on goods and services that they personally desire. Until Congress stops these “stimulus” plans that actually increase unemployment, we may be facing the “autumn of wreckage.”

Proposed Energy Taxes Will Cost Over 150,000 Jobs

Originally posted at FreedomWorks.org.

Back from Congressional recess, Senate Majority Leader Harry Reid (D-Nev.) has made it clear that he wishes to raise taxes on energy providers. He has encouraged Senator Nelson (D-FL) to file an amendment SA 4595 to the Small Business Jobs and Credit Act that would repeal the Section 199 tax deduction for energy producing companies.

Politicians who support Senator Nelson’s amendment may believe that they are standing up to “Big Oil.” Instead, these tax hikes would harm countless energy consumers and workers in the industry. The proposed energy tax hikes would inevitably be passed onto consumers in the form of higher energy prices. Louisiana State University economist Dr. Joseph Mason found that these tax increases on oil and gas companies would cost over 154,000 Americans to lose their jobs. The proposal would likely reduce economic output by at least $341 billion. According to Dr. Joseph Mason,

With at least 150,000 U.S. jobs at stake — in fields ranging from healthcare to real estate — it’s clear that the cost of repealing Section 199 and dual capacity far outweigh the potential benefit of increased government revenues that may be derived from the proposal.

The Obama administration predicts that these energy tax hikes will bring in $17 billion in tax revenue. However, these costly tax hikes will likely bring in far less revenue. As seen throughout history, tax hikes ultimately discourage production which typically leads to less-than-expected tax revenue. Economists have a rule: if you tax something, you get less of it. If these tax hikes pass, Americans will have less energy options to choose from.

Senator Nelson believes that these energy tax hikes will offset the cost of his other proposal to scale back businesses’ reporting requirements. Hidden somewhere in the 2,400 pages of the new ObamaCare law, businesses are now required to submit an IRS form 1099 for all goods and services purchased over $600. Senator Nelson who realizes that this regulation would hurt small businesses, has proposed a measure to scale back reporting requirements to exempt small businesses with less than 25 people and raise the payment threshold to $5,000. While scaling back these business reporting requirements is a step in the right direction, the provision should not be “paid for” by repealing the Section 199 tax rules for energy companies.

Unfortunately, increased energy costs will hurt the poor the most. With unemployment around 10 percent, many Americans are already struggling to afford enough gas to drive to the grocery store. Sadly, a new Census report is expected to reveal that the poverty rate increased 14 percent in 2009—the highest single-year increase since the government starting calculating poverty data. With the cold winter a few months away, this is no time to raise energy costs for struggling families. Senator Nelson’s SB 4595 is likely to be voted on this week, contact your representatives and tell them to vote “no” on this energy tax hike that will increase energy costs and job losses!

ObamaCare Causes Insurance Premium Hikes

Originally posted at FreedomWorks.org.

Back in March, Congress narrowly passed the 2,400 page ObamaCare law that was suppose to help “lower costs in the health care system.” Beforehand, countless economists warned of the costly unintended consequences that may occur. 130 economists signed a letter to the White House stating that “the health care bill will increase spending on health care and will increase the cost of health coverage.” Unfortunately, President Obama ignored their wise advice by signing the health care overhaul bill into law.

Almost six months later, we have already begun to see these harmful unintended consequences take effect. According to the Wall Street Journal, ObamaCare will force health insurers to raise their premiums in coming weeks:

Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the [ObamaCare] law, according to filings with state regulators. These and other insurers say Congress’s landmark refashioning of U.S. health coverage is causing them to pass on more costs to consumers than Democrats predicted… Many carriers also are seeking additional rate increases that they say they need to cover rising medical costs. As a result, some consumers could face total premium increases of more than 20%.

Of course, there’s no such thing as a free lunch. For every extra benefit that Congress mandated that health insurers provide there is an extra cost. One provision of ObamaCare is that children—or adults—must be allowed to stay on their parent’s insurance up to the age of 26. Since this government mandate is likely to cost health insurers a significant amount of money, they have no choice but to pass this extra cost onto consumers.

Like virtually every government intervention in the market, ObamaCare will accomplish the exact opposite of what the law was intended to do. The National Center for Policy Analysis found that state governments forcing insurance companies to provide certain mandated benefits drove up the cost of insurance as much as 30 percent. Additionally, the law is likely to cost far more than the Obama administration’s projection of $950 billion. A new independent study finds that ObamaCare may cost taxpayers as much as $2.7 trillion during its first ten years of full implementation.

Here is a chart from the Wall Street Journal showing some of the health insurance companies that will likely be rising their rates due to ObamaCare:

In order to prevent the coming health insurance premium hikes, we must work towards repealing the bureaucratic nightmare of ObamaCare. In the House, there is a discharge petition sponsored by Rep. Steven King (R-Iowa) that would repeal the entirely of ObamaCare. Thus far, the petition has 170 of the 218 signatures required to force a vote on the motion regardless of the speaker’s objections. However, 6 Republicans and 31 Democrats who voted against ObamaCare have yet to sign the petition—the Republicans include Mark Kirk of Illinois, Joseph Cao and Charles Boustany of Louisiana, David Reichert of Washington, and Shelley Moore Capito of West Virginia (Rep. Castle of Delaware says he intends to sign the petition once he turns from Congressional recess.) Please contact your representatives and tell them to sign a petition to repeal ObamaCare (H.R. 4972) to prevent the cost of healthcare from rising due to needless government intervention.