The Great Debate

Washington’s next steps on Syria

The United States has officially recognized the National Coalition for Syrian Revolutionary and Opposition Forces as the legitimate representative of the Syrian people. It has also designated al Qaeda in Iraq-affiliated Jabhat al-Nusra, which often leads the fighting effort in Syria, as a terrorist organization, thus making it illegal for anyone to buy it even a cup of tea. This double-barreled political action, after months of hesitation, is intended to convey the message that Washington supports the relative moderates of the Syrian opposition wholeheartedly but wants to exclude from its ranks Sunni extremists.

The trouble is both moves come late in the game. At this point, U.S. influence may not be sufficient to accomplish the objectives.

A lot depends on the Syrians themselves. Most Syrians do not want to see sectarian slaughter following the current civil war. The question is whether they will be willing and able to restrain the Sunni extremists in their midst. It will take courage and commitment for today’s revolutionaries to speak up and protect Alawites, Christians, Druze and Shia who are suspected of supporting the Assad regime. Mass atrocity in the aftermath of political upheaval is more the rule than the exception. There is little sign that the international community will be able to mount a serious protection effort.

Jabhat al-Nusra would not hold the leading position it does today except for its relative effectiveness both on the battlefield and in providing services to liberated areas. The moderate Syrian opposition needs to get better at both if it is to compete effectively for mass support. It is trying. It has welcomed the Kurdish National Council into the Coalition and formed a new, more unified military command that excludes Jabhat al-Nusra. There was a meeting this week in Istanbul of the Civil Administration Councils from liberated areas in Syria. They need funds. A lot depends on their ability to provide food and shelter, pick up the garbage, open the schools, restore law and order. And it all has to be done in a fair and transparent way that avoids rumors of corruption and nepotism.

Much also depends on what Washington does to follow through. Once it recognizes as legitimate a government other than the one presided over by Bashar al-Assad, Washington can respond to that government’s requests for assistance. Humanitarian assistance is a no-brainer, but it will take patience and fortitude to get at least some of it delivered through the Coalition’s still primitive governing mechanisms. Political help is also desperately needed: the civil administration councils as well as the Coalition itself will need to construct a governing apparatus that is seen as both legitimate and competent, no easy task while bombs are falling around you.

The regulatory cliff awaits

As President Barack Obama’s first term ends and second begins, it is an opportune time to reflect on the cost and sheer volume of new red tape his administration has created; analyze its impact on small businesses, and prepare for what’s next.

The Obama administration has pursued an active regulatory agenda. The overall regulatory burden is now $1.8 trillion annually, according to the Competitive Enterprise Institute, and this year alone new rules have added $215.4 billion in compliance costs. Small businesses are understandably concerned that the second Obama term will only add to this already heavy regulatory burden.

There has already been a wave of “economically significant” regulations ‑ those with an annual impact of $100 million or more ‑ that outpaced both the Clinton and Bush administrations. That pace slowed leading into the 2012 elections, but a second wave has been building.

The U.S. cannot afford to tax energy producers more

Gasoline prices are at all-time highs. As a result, energy policy concerns echo in boardrooms and family rooms across the U.S. At a recent House Energy Committee hearing on “The American Energy Initiative,” Harold Hamm, the top energy adviser of Republican presidential candidate Mitt Romney, warned that President Obama’s proposed repeal of the energy tax provisions for oil and natural gas producers (including a manufacturing tax deduction that all U.S. manufacturers receive) would decrease drilling activity by 40 percent. Can the U.S. afford that?

President Obama wants to end the right of major U.S.-based oil companies to deduct tax payments they make to foreign governments for their overseas operations. He also wants to end tax credits that are allowed to every oil and gas company. Romney wants to protect American competitiveness by keeping the tax benefits intact for oil companies. Let’s look deeper at the energy industry and the taxes energy companies pay.

According to the American Petroleum Institute, the oil and natural gas industry pays more than $30 billion on average to the federal government in taxes, rents and royalties every year. The industry is taxed at an effective rate of 60 percent – higher than any other domestic industry.

An unsung victory in healthcare

In 2008, 17 percent of office-based physicians and just 9 percent of hospitals had basic electronic health records (EHRs) and fewer than 10 percent used electronic prescriptions. This doesn’t mean most physicians were Luddites; rather, there were powerful disincentives to their adoption of health IT.

For example: Installing electronic health records required retraining physicians and staff, exacting months of significantly reduced productivity. Technology from different vendors typically did not communicate with each other, so the free flow of information — referral letters, hospital discharge summaries, lab results, X-rays and all the rest — that would make the investment worthwhile was not there. Then there was the network effect: Until a lot of doctors and hospitals were using electronic health records and a lot of vital information was available electronically — even if the various proprietary systems did communicate — it wasn’t worth it. And finally physicians feared that an expensive new EHR system would soon be obsolete, requiring another big capital investment.

On Feb. 17, 2009, President Obama signed the Recovery Act, which contained a number of healthcare provisions, including the Health Information Technology for Economic and Clinical Health Act (HITECH), which nullified these disincentives. HITECH did this by providing physicians payments of up to $44,000 from Medicare and $65,000 from Medicaid — and hospitals getting millions of dollars, with amounts varying based on how many Medicare and Medicaid patients they cared for — to help defray the cost of EHR adoption. Obviously, this is not free money. Physicians and hospitals receive the incentive payments if their EHRs are certified as capable of supporting “meaningful use.” This, in practical terms, means they can be used for e-prescribing, securely exchanging patients’ health information and electronically submitting data on the quality of care. The law also includes a penalty for physicians and hospitals that do not implement EHRs: Their Medicare payments will be reduced beginning in 2015. It also empowers the government to set technology standards regarding interoperability and the secure exchange of health information.

How Ed DeMarco finally cried fraud

By Maureen Tkacik
The opinions expressed are her own.

Read part two of this series: Everyone’s housing market profits were fictitious.

It took three years, but Fannie/Freddie Conservator Ed DeMarco is starting to channel his inner Irving Picard by acknowledging that among root causes of the financial crisis is fraud, and lots of it.

Trying to parse the madness of Fannie Mae and Freddie Mac over the past few years has given me a new appreciation for Bernie Madoff. Bernie might not have left much for his victims, but at least they finally got a straight answer about what he’d been doing with their money all those years, and a sensible legal framework for recovering and winding down all that might be left.