The Obama Administration’sDepartment of Education has been working for months on an attack that would severely cripple career colleges in the United States, schools that help American students pursue educational options outside of the four-year non-profit universe.

Charging that these career colleges mislead students into believing they’ll obtain employment upon graduation, and that these schools mislead students into taking on debt, the Administration has proposed a “gainful employment” rule that would severely limit students’ financial aid options if they chose for-profit colleges over the Administration’s preferred four-year university route.

According to sources, the “gainful employment” proposal has been fueled by reports from the U.S. Government Accountability Office (GAO) as well as news media that have painted the career university system as predatory. However, many of these reports, including the one from the GAO, were revised after questions were raised about the accuracy of their initial drafts – and many of these reports fail to provide information about similar tactics and return on investment data for four year schools, a mis-step that, this week, Jamie Farrell at Forbes brought to light.

As congressional talks surrounding the negative impact online education has had on graduation rates and specifically loan default rates; what we are not hearing are long term solutions. We are hearing suggestions of Band-Aids.

Do I like the idea of the gainful employment laws? Yes! That said, if we are going to implement them, it should be done across the board and it needs government support to get started. What these lawmakers are failing to recognize is that it took guts, innovation, large investments and a lot of time NOT being profitable for these for profit online education companies to get where they are today…and the model is less than TEN YEARS OLD.

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Last month, I discussed the negative impacts that a nutritional label mandate would have on small producers of alcohol beverages, such as craft brewers. Another side of this issue is the negative impact that prohibiting nutritional labels has caused small and large alcohol beverage producers—as well as health-conscious consumers of adult beverages.

I sat down with the executive Vice President of Diageo, one of the world’s largest producers of adult beverages (its brands include Guinness, Smirnoff, Jose Cuervo, and many others) to discuss how voluntary labeling could help both consumers and producers of alcohol, big and small.

In 2004, the National Consumers League called on the Federal Alcohol Tax and Trade Bureau (TTB) to reform alcohol label requirements so that consumers of adult beverages can make better nutritional decisions (it wasn’t the only group calling for change). At that same time, Diageo began its lengthy battle with the TTB to be able to attach to its products labels that included information on calories, carbohydrates, and alcohol content. The agency rejected Diageo’s request.

Now, seven years later, the TTB has not changed its rules, and consumer groups have asked again that it issue a final rule. However, in 2007 the TTB did issue a notice of proposed rulemaking that would amend its regulations to require a statement of alcohol content on all alcohol beverage products as well as a “serving facts” panel on alcohol beverage labels that would include a disclosure of calories, carbohydrates, fat, and protein. According to TTB spokesman Tom Hogue, the issue is a complicated one and federal officials aren’t likely to issue a final rule anytime soon.

While Diageo and other alcohol beverage manufacturers strongly support the idea of allowing nutritional data to appear on bottles, they currently support doing so on a voluntary basis. “Let the market place decide. If companies don’t think their consumers want labels then don’t have labels, but don’t prevent us from telling our consumers what’s in our products,” said Diageo Executive Vice President Guy Smith.

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Last month, President Barack Obama signed a highly publicized Executive Order demanding a government-wide review of existing laws to remove regulations that stifle job creation and hamper America’s economy. Meanwhile, the Obama administration is considering a new alcohol labeling requirement that would devastate America’s small brewers, hampering their ability to grow and hire new employees—and even to continue operating.

Big producers of alcoholic beverages are supporting a proposal before the federal Tax and Trade Bureau (TTB) that would require manufacturers of alcoholic beverages to list the nutritional content of their products, such as calories, alcohol content, and carbohydrates.

Supporters of the proposal claim that it will help provide consumers with more information to make better choices, but the result will be an increase in production costs could force some brewers of craft beers to close their doors while depriving others of the funds they need to grow their business—and hire more workers. This will mean fewer varieties of beer, more expensive products, and fewer jobs throughout the entire nation, as every state is home to small breweries.

Larger breweries will have little problem absorbing the cost of the new rule. In addition to the economies of scale they enjoy from large-scale production, major brewers only produce a few limited beer lines. Having fewer products limits the cost of providing content analysis and labeling.

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A few weeks ago, President Obama purported to promise an overhaul of the Federal regulatory regime, pledging to look at bloated and outdated piles of red tape in order to make the tough cuts necessary, in his mind, to stimulate economic growth.

Writing in the Wall Street Journal, Obama stated, ““Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary…But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.”

But as Big Government demonstrated just a few short weeks ago, the progressive left did not respond favorably to the President’s call for balance between public welfare and private-sector growth. Progressive special interest groups have outlined, instead, a plan of attack on Obama’s regulatory agencies, demanding an iron-fisted regulatory regime designed to punish some of the nations most prolific industries. A few short examples:

• Just days before Christmas, the FCC voted in “Net Neutrality,” an unprecedented power grab on par or greater than Obamacare. Under this scheme, the FCC essentially gave itself regulatory power over telecommunications companies, a job it was never intended to do.
• Speaking of Obamacare, contained within it’s own regulatory scheme is a terrifying Medicare reform project called IPAB, the Independent Payment Advisory Board. IPAB consists of 15 unelected officials charged with making drastic cuts to Medicare benefits – cuts that don’t require Congressional approval and can only be reversed by a Congressional supermajority.
• On the education front, it seems that the Department of Education has been relying on the advice of noted short-sellers as it and Congress formulates policy on for-profit colleges. New rules like the “gainful employment” rule threaten to punish students for choosing not to attend favored non-profit schools and universities in favor of career-oriented schools.
• Across the country, the National Labor Relations Board has been threatening legal action against state legislation designed to protect workers from “Card Check” legislation at the behest of the Obama Administration.
• Although the Clean Air Act was never intended to regulate carbon emissions, the EPA is threatening to use it to punish energy-producing industries that it doesn’t like, like biomass, a plan that could cost Americans nearly a million jobs. At the same time, the EPA is revoking permits for clean coal operations, and despite promising to restore oil and gas production in the Gulf, the Obama Administration has failed to issue new drilling permits, resulting in a de-facto moratorium on domestic oil production.

The Republicans have just introduced draft legislation that could force the Obama Administration to live up to it’s promises to investigate regulatory overreach and institute real, job-saving reforms.

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President Obama, in his State of the Union address Tuesday night, was right to focus on the challenges the United States faces as domestic companies try to compete with low-cost global competitors. But he was wrong to suggest that the United States can “win the future” by getting Washington more involved in innovation and education.

As the president conceded elsewhere, Washington is, in fact, a big part of the problem—with high corporate tax rates and excessive regulation.

Just a week earlier in a Wall Street Journal article, the president elaborated on this, rhetorically declaring a truce with business and laying out the administration’s strategy for moving “toward a 21st-century regulatory system.”

Mr. Obama said this new system would need to strike a balance between the innovativeness, job-creating capacity and robust growth produced by free markets and the responsibility of government to impose “common-sense rules” to protect the public. He called for a “government-wide review of . . . rules already on the books,” and said that “careful consideration” would be given to the costs and benefits of all pending regulations. But as Yogi Berra once said, “This is like deja vu all over again.”

Presidents Clinton and Reagan both signed executive orders requiring that proposed federal regulations be implemented only if their economic benefits exceeded the costs of complying with them. Reagan even established a branch within the Office of Management and Budget—the Office of Information and Regulatory Affairs (OIRA)—to make sure executive branch agencies complied. The executive orders by and large were ineffective.

In fact, the federal government has been expanding its control of the private economy since the 1890s, on the theory that vulnerable people must be protected from cradle to grave by an omniscient bureaucracy that knows what’s best for them. The growth in regulation typically has been justified by analyses, prepared by the regulatory bureaus themselves, which grossly overstate regulation’s benefits and understate its costs.

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For-profit education is under assault from elitists who hate the idea of free market educational institutions.  It is also under attack from bureaucrats at the U.S. Department of Education who are trying to make it hard for students to arm themselves with the education needed to find a job.  Elitism is alive and well at the Department of Education.

The Department of Education announced this week that they are “on schedule to implement new regulations of the for-profit education sector dealing with gainful employment and 13 other issues to protect students and taxpayers.”  The non-profit sector feels threatened; therefore allies in the Administration are trying to use the power of the federal government to provide non profit schools a competitive edge to slow the growth of for-profit institutions.  For-profit institutions are the trend and they are becoming more popular.

Senator Jim Risch (R-ID) has introduced legislation to prevent the Department of Education from denying federal financial aid to students attending for-profit colleges and vocational certificate programs.  Senator Risch said of his effort:

The ‘gainful employment’ rules could deny hundreds of thousands of students access to the training and skills development they need to secure a job in today’s troubled economy.  Highly-skilled workers are in high demand in certain sectors and propriety schools are uniquely qualified to meet that need.  It is simply irresponsible for the government to throw roadblocks in front of students and institutions at a time when job creation in America should be the administration’s number one priority.

Senator Risch’s legislation, S.3837, the Education for All Act, would forbid the Department of Education from singling out students from proprietary and vocational institutions and treat them differently than other students.  These institutions have proven to be uniquely qualified to help students find jobs in today’s complex economy. (more…)

The Senate votes this week on a small business tax-break bill which also contains controversial provisions to boost community-bank loans to small business. That is, Washington wants to “nudge” small banks into making loans that they’d otherwise avoid. Kind of like what the government did with home mortgage lending, with results some party poopers might characterize as catastrophic, but hey, who’s paying attention to things like that anyway.

One tries in vain to argue that the answer to recovery is not to artificially stimulate anything, or to overrule prices and rates in the marketplace; those are signals about underlying realities to heed and allow to play out. But beyond that, we must cut regulations that paralyze business and job creation. The starting point is to inventory all the regulations that impact a small business as it grows, and set about rolling them back.

Below is the rough inventory I’ve compiled, but I’m sure it’s out of date and some things have changed. And this doesn’t even address industry-specific rules (see endnote), themselves desperately in need of reform. And it certainly doesn’t address yet-to-come from the new financial reform and Obamacare legislation. I welcome any additions and subtractions.

FEDERAL WORKPLACE REGULATION IMPOSED ON GROWING BUSINESSES* (Draft—Wayne Crews)

ONE EMPLOYEE

• Fair Labor Standards Act (overtime and minimum wage [27% min. wage increase since 1990])
• Social Security matching and deposits
• Medicare, FICA
• Military Selective Service Act (90 days leave for reservists; rehire discharged veterans)
• Equal Pay Act (no sex discrimination in wages)
• Immigration Reform Act (eligibility must be documented)
• Federal Unemployment Tax Act (unemployment compensation)
• Employee Retirement Income Security Act (standards for pension and benefit plans)
• Occupational Safety and Health Act
• Polygraph Protection Act

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The President is expected to sign the financial overhaul bill today, yet he might want to pause a moment to consider not signing this bill because of the potentially unconstitutional racial and gender preference provisions buried in the massive bill.

Four members of the U.S. Commission on Civil Rights have signed a letter complaining that Section 324 of the conference report titled the “Dodd-Frank Wall Street Reform and Consumer Protection Act” “includes a section on race and gender that even those who pride themselves on keeping up with national affairs may have failed to notice.” This provision, which can be found on page 172 of the conference report, may lead to unconstitutional racial and gender preferences being forced on financial institutions covered by the new law.

As the Becker-Posner blog argues, this over 2000-page long bill is “complex, disorderly, politically motivated, and not well thought out reaction to the financial crisis that erupted beginning with the panic of the fall of 2008.” One of the critiques leveled by Gary Becker and Richard Posner is that “the bill adds regulations and rules about many activities that had little or nothing to do with the crisis.” It is clear that the lack of racial and gender preferences had nothing to do with the financial meltdown in the fall of 2008. Section 342 is a special interest provision that has no relevance to financial services reform and may lead to this law being deemed unconstitutional by the courts.

The letter from members of the U.S. Commission on Civil Rights was signed by Commissioners Peter Kirsanow, Ashley Taylor, Gail Heriot, and Todd Gaziano. In the letter these experts in civil rights law explain that the legislation “requires that each covered agency establish an ‘Office of Minority and Women Inclusion’ responsible for ‘all matters of the agency relating to diversity in management, employment, and business activities.’” This law will empower federal bureaucrats to issue rules and regulations governing the financial sector of the economy, if those businesses are doing any work for the federal government.

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Congress has suddenly realized something. Animals could be dangerous! Gosh. One wonders what magick faierie dust was sprinkled on these stalwart protectors of the public weal that made them realize that animals are dangerous? Whatever fantastic episode befell Congress they have acted and hence these high mukety-mucks last year introduced an ominous sounding bill called the Nonnative Wildlife Invasion Prevention Act (H.R. 669).

According to the summary this bill is supposed to, “prevent the introduction and establishment of nonnative wildlife species that negatively impact the economy, environment, or other animal species’ or human health, and for other purposes.” But like most federal laws it has an element of overreach to it.

That overreach is a stipulation that would require all dealers in pets to “prove” that their animals are “safe” and “noninvasive” and to present scientific proof to that end. As specified, the act would require, “sufficient scientific and commercial information to allow the Secretary to evaluate whether the proposed nonnative wildlife species is likely to cause economic or environmental harm or harm to other animal species’ or human health.”

In other words, pet sellers would have to engage scientists, economists, medical experts and the like to assemble a report that shows the government that the pet they are selling is safe for humans and the environment. And even at that rate the final decision is in the hands of the government and any capricious decision could be returned even after all that expense is incurred by pet sellers.

As I said, the idea almost sounds reasonable.

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President Barack Obama made news on The Today Show when he talked about kicking some ass over the BP oil spill in the Gulf of Mexico.

If he is interested in punishing those responsible for what is shaping up as one of the worst environmental disasters in U.S. history, he should think about giving himself a boot.

While BP is ultimately responsible for the spill (and for cleaning it up), the federal government is a major player in the problem for at least three reasons:

1. It owns the property on which the oil well is located.

2. It regulates offshore drilling. And

3. In order to protect small players in the drilling industry, it capped economic damages from this sort of spill at just $75 million, a way-too-low cap that encourages risky behavior.

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The Democrats’ health care takeover didn’t stop with ObamaCare and there are some hurtful provisions in the new financial regulation bill Americans should know about if they have any expensive dental procedures coming up.

For millions of American teenagers braces are an embarrassing rite of passage, and for their parents, a tremendous cost. According to bracesinfo.com, the average prices of straightening a teenager’s teeth is about $5,400. In South Carolina, where themedian family income is approximately $45,000, the cost of braces for one child can total more than 10 percent of a parent’s gross income for the year.

Because braces are so expensive, many families pay for them through an installment agreement with their dentist. This is often a fair and affordable option that allows families to avoid charging the expense on their credit card and paying double-digit interest rates.

But the Democrats in Washington are clamping down on health care payment plans with the banking bill. As the bill is currently written, health care providers, or any other business that allows customers to make payments in more than four installments or assesses any kind of late fees, will be treated under the same terms as AIG, Freddie Mac and Goldman Sachs. A new Consumer Financial Protection Agency, housed in the Federal Reserve, will regulate their transactions and could subject them to further regulatory burden.

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President Obama has appointed three new doves to the Federal Reserve Board, thereby taking command of the nation’s central bank. But there’s a split developing inside the Federal Reserve System: The Reserve Bank presidents, appointed by their own district boards of directors, are increasingly likely to wage a battle royale against the central-bank headquarters in Washington and its free-money, ultra-easy policies.

The new Obama appointees include Janet Yellen, president of the San Francisco Fed, Peter Diamond of MIT, and Sarah Bloom Raskin, the top Maryland state banking supervisor who blames Wall Street greed for much of the financial crisis.

Now, Ms. Yellen is a highly credentialed and respected former Clinton economist. But the new Fed vice chair is also a devotee of targeting the unemployment rate as a key monetary-policy gauge. The Keynesian idea here is that too many people working cause inflation. So with a 9.7 percent unemployment rate, she can be expected to back Fed head Ben Bernanke in his quest for continued free money, with the other new doves following suit.

Make no mistake about it. These appointees (along with Daniel Tarullo, an earlier Obama appointee and another dove) make for an easy-money, pro-regulation Fed. As for monetary soundness, price stability, and a reliable King Dollar, these highly credentialed academics won’t pilot us there.

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In a blow to the Federal Communications Commission (FCC) and its Chairman, Julius Genachowski, the U.S. Court of Appeals for the District of Columbia Circuit today ruled against the agency in a case brought by Comcast.  At issue in the court action was the question of whether the FCC currently has sufficient authority to regulate broadband services.  The Court has now determined that it does not.

Already being interpreted as a major slap in the face to the agency, the ruling could have major implications for how Genachowski proceeds in implementing his vision with regard to broadband policy—a vision that critics charge encompasses heavy-handed, excessive and unnecessary government regulation.  As Capitol Confidential has previously reported, Genachowski is a champion of a policy known as “net neutrality,” which is broadly opposed by a coalition of internet service providers (ISPs), communications workers, minority, women’s and artists’ groups, and large numbers of congressional Republicans and Democrats.

The ruling leaves open three options for Genachowski in continuing to push for heightened regulation.  First, the FCC can appeal the decision to the Supreme Court.  Second, the FCC could urge Congress to rewrite legislation.  Third, the FCC could pursue what some observers have dubbed a “sweeping reclassification” of broadband services under an existing set of rules which relate to telephone services.

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