FirstEnergy Scores One For Free Market Capitalism

Did you hear about last month’s appeal by FirstEnergy Solutions to the United States Department of Energy? It may have been one of the most unusual requests that was ever directed to a Cabinet-level Department of the United States government.

FirstEnergy, a struggling coal and nuclear energy producer of electricity, asked the Energy Department to declare a national emergency and order its customers to pay it above-market prices for its power. In theory, the federal government possesses the authority to do so under the Great Depression era Federal Power Act, derived from an earlier law that was first enacted in 1920.

Why did FirstEnergy need this support? Its coal and nuclear generated electrical power plants have been struggling to compete against less expensive and cleaner energy facilities. So FirstEnergy appealed for direct price intervention by the federal government, asserting that the insolvency of nuclear and coal plants would constitute a national energy emergency.

Department of Energy Secretary Rick Perry declined to grant the request. And how did FirstEnergy respond?

Instead of intensifying its political lobbying activities in hopes of a direct government intervention, the struggling company reached an agreement with the creditors of its nuclear and coal division. Although the firm is not yet on stable footing, it appears to be negotiating a path through its period of financial distress.

So let’s score one for free market capitalism. Although it must have been tempting for the Presidential administration of the United States to respond to the appeal of a struggling coal energy producer, it opted instead for a non-interventionist market based response.

That’s not to say, of course, that all of the parties acted in a perfectly consistent manner. FirstEnergy did issue the original appeal for a highly questionable government declaration of a national emergency. And it did take Secretary Perry more than one week to express skepticism about the request.

Eventually, though, the private corporation and the government entity both embraced a free market strategy. Their decisions represented an unremarkable, conventional conclusion to a remarkable, unconventional appeal.

A Republican Obama Care?

They’ve done it! Paul Ryan, the Speaker of the House of Representatives, has been promising to produce the Republican’s alternative to the Affordable Care Act (ACA) for years. Finally, late last month, he unveiled what he called the Patients’ Choice Act (PCA).

And guess what? It appears to be very similar to the ACA! For instance, two of the most prominent concerns raised by opponents of the health care law involve price controls and the mandate to purchase insurance. So how does the PCA resemble the ACA in regards to these two concerns? And how does it differ?

First, let’s address price controls. The ACA stipulates that the premiums charged to older enrollees cannot be more than three times the costs that are charged to younger enrollees. The purpose of this three-to-one ratio is to place a cap on the premium costs paid by older enrollees, even if it results in higher premiums for younger ones.

Republican lawmakers have long criticized this provision as a government price control on a private service, i.e. a regulation that imposes terms that would better be established by the competitive market. So how does Paul Ryan’s plan affect this price control?

Believe it or not, the PCA simply tweaks the ratio by raising it from three-to-one to five-to-one. Despite this tweak, Ryan’s plan allows the price control to remain in our health care system.

Second, let’s address the ACA’s mandate to purchase insurance, which is possibly the term of the current law that is most reviled by Republican politicians. According to the ACA, the mandate employs the tax code to impose a financial cost on individuals who do not sign up for a health plan. At first glance, the Ryan plan appears to eliminate this burden.

But the PCA introduces an alternative burden that does not exist within the ACA. At the moment, health plans are not permitted to deny care to consumers if they are suffering from pre-existing medical conditions at the time they shop for coverage. Such denials would effectively refuse coverage to individuals who need it the most.

Under Ryan’s plan, however, such denials of care would only be forbidden if individuals maintain continuous coverage. In other words, although consumers without health insurance couldn’t be penalized by the tax code under the PCA, they could be denied coverage if they ever experience a need for medical care — and thus for medical insurance — in the future.

Is the threat of losing access to all medical care in the future equivalent to the burden of a tax penalty in the present? That question is a debatable one; reasonable opinions can differ about it. What is not debatable, though, is that the threat of losing access represents a type of mandate to purchase health insurance, even if it exists in a different form than a tax penalty mandate.

In other words, the PCA contains a significant price control. And it contains a mandate to purchase and maintain a health insurance policy. Conceptually speaking, isn’t it simply a Republican version of Obama Care?

The Fallacy Of Labels

And now it’s Secretary Clinton’s turn to be tagged with a label by Donald Trump! After applying sobriquets to Low Energy Jeb Bush, Little Marco Rubio, and Lying Ted Cruz, The Donald is now alternating between Incompetent Hillary and Crooked Hillary.

By doing so, the leading Republican Presidential candidate is drawing attention to the validity of such labels. Are they ever truly accurate? Or are they simply misrepresentations of the beliefs and positions of our political leaders?

While pondering these questions, it may be helpful to consider the American President who may have accomplished more than any other to usher in the modern era of limited government. He presided over the deregulation of the airline industry, the abolishment of usury and other interest rate regulations, and the phase-out of price controls over domestic oil supplies in the United States.

Indeed, he may well have been the most free market oriented leader of the five American presidents who held office during the 1960s and 1970s. Was he Republican President Gerald Ford? Or Richard Nixon?

Believe it or not, this Presidential promoter of capitalism was Jimmy Carter. He signed the Airline Deregulation Act of 1978 into law. He also signed the Depository Institutions Deregulation and Monetary Control Act of 1980. And he signed the National Energy Act of 1978, followed by the Energy Security Act of 1980.

These laws, considered in tandem, collectively implemented the massive deregulation of the American transportation, financial services, and energy industries. That’s why a conservative libertarian web site and a liberal progressive web site agree that the left wing label that is often affixed to President Carter requires “rethinking.”

Ironically, the two Republicans who served in the Oval Office immediately prior to Carter may have been the most economically liberal Presidents in modern times. How so? Gerald Ford, for instance, ultimately decided to participate in the fiscal bail-out of New York City after he initially rejected the Big Apple’s plea for federal aid. And Richard Nixon temporarily ordered “a freeze on all prices and wages throughout the United States” in order to tame inflation.

Apparently, like the liberal label on President Carter, the conservative labels on Presidents Ford and Nixon are extremely misleading monikers. Ironically, many contemporary pundits have declared that Donald Trump’s self-characterization as a conservative is actually fallacious as well.

So what should we do with these political labels? Perhaps we should simply pay no attention to them. Instead, perhaps we should strive to understand each politician’s policies and positions before we draw conclusions about their philosophical leanings.