But do federal loan subsidies make college more affordable? President Ronald Reagan’s Education Secretary Bill Bennett didn’t think so. Back in 1987 he wrote in The New York Times, “If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase. … Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.”

While Bennett’s statement is really just Econ 101 applied to the higher education market, there was not a lot of hard evidence for Bennett’s statement in 1987. There is now. Between 1982 and 2008, the cost of attending college increased 439 percent, more than four times the rate of inflation. Americans now owe more than $1 trillion in student loan debt. Here are the conclusions of some studies that have looked at the relationship between college prices and federal subsidies over the last 30 years:

• The Revenue to Cost Spiral in Higher Education, John William Pope Center for Higher Education Policy: “The net effect of more public support for college access is higher costs and increases in tuition that must be addressed with more subsidies. This means that until costs are under control, we cannot significantly increase the access of lower-income students to college. Additional government funds keep providing revenues that, under the current incentive system, increase costs.”
• For Whom the Pell Tolls: The Response of University Tuition to Federal Grants-in-Aid, Economics of Education Review: “For private universities, though, increases in Pell grants appear to be matched nearly one for one by increases in list (and net) tuition.”
• College Choices: The Economics of Where to Go, When to Go, and How to Pay for It, University of Chicago Press: “Consistent with the Bennett hypothesis, we find substantial evidence that increases in the generosity of the federal Pell Grant program, access to subsidized loans, and state need-based grant aid awards lead to increases in in-state tuition levels.”

Subsidizing student loans does not make college any more affordable for America’s middle-class. All it does do is entice young people into taking out huge loans that make it harder for them to start businesses and families. That is the bottom line.

Obama then went on to propose $52 million in new spending for government monitoring of oil markets. Never mind that regulators at the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Federal Trade Commission all already have resources devoted to making sure oil markets run fairly. The Federal Trade Commission alone has released three reports on oil market manipulation over the last seven years. Here is what they found:

2005: “The vast majority of the FTC’s investigations have revealed market factors to be the primary drivers of both price increases and price spikes.”
2008: The Task Force’s preliminary assessment is that current oil prices and the increase in oil prices between January 2003 and June 2008 are largely due to fundamental supply and demand factors. … [Our] preliminary analysis to date does not support the proposition that speculative activity has systematically driven changes in oil.”
2011: “The report concludes that although a broad range of factors influence the price of gasoline, worldwide crude oil prices continue to be the main driver of what Americans pay at the pump.”

Academics have reached similar conclusions. Craig Pirrong of the University of Houston examined the relationship between changes in the net position of speculators and physical oil prices between January 2006 and July 2008. He found that, even if we assume correlation equals causation, speculative behavior could only account for a 2.56% increase in oil prices during a time in which prices actually increased by more than 123%.

The reality is that oil speculation is good for consumers. Just look at what happens in commodity markets that don’t have futures markets. Back in 1958, Michigan onion farmers convinced then-Rep. Gerald Ford to sponsor a law banning all futures trading in onions. The law still stands. As a result onion prices are among the most volatile in the market.

Between 2006 and 2008 oil prices rose steadily by 100 percent. But during that same time frame onion prices soared 400 percent between October 2006 and April 2007, only to crash by 96 percent in March 2008, followed by a 300 percent increase in 2008. AEI’s Mark Perry has a handy graph comparing oil and price volatility here.

The high cost of gas should be a signal for Obama to open more federal lands for drilling and lower the regulatory burden for building new oil refineries. These policies would increase gasoline supply and lower demand. Unfortunately Obama still hasn’t mastered the concept of supply and demand yet.

[I]t is just plain wrong middle-class Americans pay a higher share of their income in taxes than than some millionaires and billionaires. … I’m not the first President to call for this idea that everybody has got to do their fair share. … Ronald Reagan was calling for then is the same thing that we’re calling for now: a return to basic fairness and responsibility; everybody doing their part. And if it will help convince folks in Congress to make the right choice, we could call it the Reagan Rule instead of the Buffett Rule.

First of all, it is just plain false that “middle-class Americans pay a higher share of their income in taxes” than millionaires and billionaires. According to the Congressional Budget Office, middle-class Americans pay an average 3.3 percent effective tax rate on their income. The top one percent of Americans, which includes those making $350,000 and above, pay an average effective rate of 19 percent.

But maybe Obama misspoke. Maybe he meant to include all federal taxes, including payroll and death taxes, in his calculation. Even then, however, Obama’s statement falls short. Middle-class Americans pay an average effective rate of 14.3 percent on all federal taxes. The rate for the top one percent? 29.5 percent.

The reality is that the United States already has one of the most progressive tax system in the world. The top 20 percent of Americans already pay 68.9 percent of all federal taxes. And while the top one percent of Americans do earn 19.4 percent of all income, they also pay 28.1 percent of all federal taxes and 39.5 percent of all federal income taxes. How is that not their “fair share”?

Yes, some millionaires do game the system. And as Reagan rightly pointed out in his 1985 Address to the Nation on Tax Reform, this does undermine trust in government. But Reagan’s solution to this problem was the exact opposite of Obama’s. “We’re reducing tax rates by simplifying the complex system of special provisions that favor some at the expense of others,” Reagan said.

And that is exactly what Reagan’s tax reform did. It eliminated hundreds of loopholes, cut the number of tax brackets from 15 to two, and slashed the top income tax rate from 50 percent to 28 percent. The Buffett Rule does the reverse. It further complicates the tax code by creating a special new provision which will both further distort economic incentives and raise tax rates. The Buffett Rule does not eliminate a single loophole. Instead, all it does is create a new Alternative Minimum Tax complication that, as The Washington Post’s Ezra Klein notes, doesn’t even guarantee that millionaires will pay the same rate as middle-class tax payers.

More importantly, Reagan pursued tax reform to decrease the power and scope of the federal government. Pitching his plan in Atlanta in 1985 he said:

We want the part of your check that shows Federal withholding to have fewer digits on it. And we want the part that shows your salary to have more digits on it. … Maybe you’ll take some of the money and put it in the bank. Fine. … Maybe you’ll spend it. And that’s fine, too. … But whatever you do with it, you’ll be the one who’s doing the doing. You’ll make the decisions. You’ll have the autonomy. And that’s what freedom is.

Mr. Verrilli, I thought that your main point is that, unlike food or any other market, when you made the choice not to buy insurance, even though you have every intent in the world to self-insure, to save for it, when disaster strikes, you may not have the money. And the tangible result of it is — we were told there was one brief that Maryland Hospital Care bills 7 percent more because of these uncompensated costs, that families pay a thousand dollars more than they would if there were no uncompensated costs. I thought what was unique about this is it’s not my choice whether I want to buy a product to keep me healthy, but the cost that I am forcing on other people if I don’t buy the product sooner rather than later.

The concept Ginsburg is describing (aka “cost shifting”) is indeed the heart of the legal defense for the individual mandate. Problem is, as a factual matter, it is just plain false. Economists John Cogan, Glenn Hubbard, and Daniel Kessler recently explained in The Wall Street Journal:

A study conducted by George Mason University Prof. Jack Hadley and John Holahan, Teresa Coughlin and Dawn Miller of the Urban Institute, and published in the journal Health Affairs in 2008, found that so-called cost shifting raises private health insurance premiums by a negligible amount. The study’s authors conclude: “Private insurance premiums are at most 1.7 percent higher because of the shifting of the costs of the uninsured to private insurance.” For the typical insurance plan, this amounts to approximately $80 per year.

The Health Affairs study is supported by another recent peer- reviewed study that focused exclusively on physicians. That 2007 study, authored by Massachusetts Institute of Technology economists Jonathan Gruber and David Rodriguez and published in the Journal of Health Economics, found no evidence that doctors charged insured patients higher fees to cover the cost of caring for the uninsured.

Where did Congress go wrong? We traced its estimates of the magnitude of the hidden tax of $43 billion per year, or an increase in family premiums by an average of $1,000 per year, to two sources—the aforementioned Health Affairs study, and a non-peer-reviewed study commissioned by FamiliesUSA, a Washington, D.C., group long known for its advocacy of greater government involvement in health care. Yet Congress simply ignored the evidence in the Health Affairs study and failed to recognize the serious flaws in the FamiliesUSA analysis.

So, it turns out the entire intellectual premise for the legal defense of Obamacare comes from a made-up statistic from a liberal health care advocacy group. Furthermore, if Congress wanted to undo the damage from uncompensated care, all they would have to do is require people to buy catastrophic care insurance (or first tax, and then buy it for them).

But Obamacare does not do that. Instead, it forces people to buy “comprehensive” insurance plans filled with things they may not want or need (like free birth control). That is the real cost-shifting going on in Obamacare: from people who otherwise don’t want to buy insurance, to insurance companies who now have a ready-made market for high-cost insurance plans.

Previewing his energy message in Maryland last week, Obama told students at a community college:

America uses more than 20 percent of the world’s oil. If we drilled every square inch of this country — so we went to your house and we went to the National Mall and we put up those rigs everywhere — we’d still have only 2 percent of the world’s known oil reserves. Let’s say we miss something — maybe it’s 3 percent instead of 2. We’re using 20; we have 2.

Part of this statement is technically true. The United States does have “only” 22.3 billion barrels of proven oil reserves, which comes out to less than 2 percent of the world’s total. But the rest of it is also highly misleading. The term “proven oil reserves” greatly understates how much oil the U.S. actually has in the ground. Investors Business Daily recently detailed all the oil this calculation leaves out:

At least 86 billion barrels of oil in the Outer Continental Shelf yet to be discovered, according to the government’s Bureau of Ocean Energy Management.

About 24 billion barrels in shale deposits in the lower 48 states, according to EIA.

Up to 2 billion barrels of oil in shale deposits in Alaska’s North Slope, says the U.S. Geological Survey.

Up to 12 billion barrels in ANWR, according to the USGS.

As much as 19 billion barrels in the Utah tar sands, according to the Bureau of Land Management.

Then, there’s the massive Green River Formation in Wyoming, which according to the USGS contains a stunning 1.4 trillion barrels of oil shale — a type of oil released from sedimentary rock after it’s heated.

A separate Rand Corp. study found that about 800 billion barrels of oil shale in Wyoming and neighboring states is “technically recoverable,” which means it could be extracted using existing technology. That’s more than triple the known reserves in Saudi Arabia.

All told, the U.S. has access to 400 billion barrels of crude that could be recovered using existing drilling technologies, according to a 2006 Energy Department report.

When you include oil shale, the U.S. has 1.4 trillion barrels of technically recoverable oil, according to the Institute for Energy Research, enough to meet all U.S. oil needs for about the next 200 years, without any imports.

Contrary to Obama’s claims, the United States has more than enough oil needed to lower gas prices at the pump. If, as Obama proposes, “we drilled every square inch of this country — so we went to your house and we went to the National Mall and we put up those rigs everywhere,” we’d have far more than “2 percent of the world’s known oil reserves.”

All we need is the political will to allow the private sector to develop these resources.

The first thing to remember about Obama’s auto bailout is that it was not the first time the federal government came to Detroit’s rescue. In 1979, President Jimmy Carter pushed through the first bailout of Chrysler at a bargain basement price of just $1.5 billion. Almost 30 years later, General Motors and Chrysler would need another $85 billion to “save” the industry again.

But unlike the 1979 bailout, which Chrysler did finally pay back, the U.S. Treasury admitted last month that taxpayers will never see at least $24.77 billion of their $85 billion back this time around. And that doesn’t include the $13 billion in tax benefits that General Motors will receive over the next decade. Add those foregone revenues in, and the bottom line bailout cost is closer to $40 billion.

So what did U.S. taxpayers get for their $40 billion? Not much. President Obama claims his intervention saved 1 million jobs, but that claim is completely unverifiable. It assumes that if General Motor and Chrysler had gone through Chapter 11 bankruptcies without government interference, that all of their employees would have been immediately fired. That’s just not true.

Reality would have been much different. Brand names and patents could have been put to use by other carmakers. Factories could have been sold and re-purposed. Other carmakers like Ford, Nissan, and Toyota would have had to hire more workers to meet the shift in automobile demand.

Obama’s preference for taxpayer bailouts, rather than orderly bankruptcies, did lasting damage to the rule of law generally and to the U.S. bankruptcy system in particular. A linchpin of U.S. bankruptcy law is the absolute priority of secured creditors in the bankruptcy process. If creditors aren’t assured they will get their money back first in the event of a bankruptcy, lenders will only assist troubled companies at crippling interest rates.

President Obama violated this rule, forcing Chrysler’s secured creditors to take 29 cents on the dollar. This was simply an unprecedented violation of contract law. And a quick look at who Obama did prioritize in the Chrysler bankruptcy, reveals the true reason for Obama’s intervention.

One would expect that the president who told the Occupy Wall Street movement, “You are the reason I ran for office,” would stick creditors with pennies on the dollar. But what about Chrysler’s workers? Well, if you were a member of the United Auto Workers union you got 100 percent of your pension and health benefits. But if you were a non-union employee you only got about 30 percent of your pension and none of your health benefits.

Obama’s auto bailout “saved” the U.S. auto industry at the expense of taxpayers and the rule of law, but it was a success at rewarding his political allies.

Desperate to not become the target of motorist rage over gas prices, President Obama delivered a speech in Miami Thursday explaining why he isn’t to blame. “Now, we absolutely need safe, responsible oil production here in America.  That’s why under my Administration, America is producing more oil today than at any time in the last eight years,” Obama said.

And that is technically true: American oil production is the highest that it’s been in eight years. But this is happening in spite of Obama and his policies, not because of them.

What Obama did not mention today is that much of the rise in domestic oil production is due to energy development on private and state lands that Obama has no control over. Since 2000, oil production on lands not owned by the federal government is up 11 percent. Meanwhile, development on federal lands can take years. To the extent that oil production has risen on federal lands, and there is dispute over whether it is up at all, it is the result of lease sales made years ago by President Bush. As far as Obama’s actual policy record, it shows that he has done everything he can to thwart oil and gas production:

• Immediately after taking office in 2009, Obama canceled 77 leases for oil and gas drilling in Utah.
• In January 2010, Obama issued new regulations making it more difficult to develop energy resources on federal land.
• After the BP oil spill, Obama needlessly instituted, not one, but two outright drilling bans in the Gulf of Mexico.
• After rescinding his outright offshore drilling ban, Obama then refused to issue any new drilling permits in the Gulf, a policy that the Energy Information Administration estimated would cut domestic offshore oil production by 13% that year.
• In 2010, Obama issued the lowest number of onshore leases since 1984.
• In 2011, Obama held just one offshore lease sale in all of fiscal year 2011. President Bush’s energy plan called for five.
• So far in his presidency, Obama has leased less than half of the offshore acres that President Clinton did.
• Obama is also blocking access to 19 billion barrels of oil in the Pacific and Atlantic coasts and the eastern Gulf of Mexico, another 10 billion barrels estimated in the Chukchi Sea off the Alaskan coast, and another 10 billion barrels of oil in the Arctic National Wildlife Reserve..
• Obama’s budget wants to exclude the oil and gas industry from the Section 199 manufacturers’ tax deduction. All other industries get to keep this tax break.
• Obama’s budget proposes raising royalty rates for onshore oil and natural gas leases. This $27 billion tax hike will be passed directly to consumers at the pump.

Obama’s actual policies, not the rhetoric he deployed in Miami Thursday, closely match the promises he and his cabinet made before they were in office. For example, his Energy Secretary Steven Chu famously told The Wall Street Journal in 2008, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” And when Obama was asked by CNBC’s John Harwood that same year if high gas prices actually “helped” the United States, Obama said, “I think that I would have preferred a gradual adjustment.”

When Obama took office gas was $1.85 a gallon. A little over three years later gas is up to almost $3.60. If anything, today’s gas prices are exactly what Obama wanted to happen.

Obama’s budget does raise taxes. According to his own numbers, Obama hikes taxes by $1.9 trillion over the next ten years. Currently, the federal government consumes 15.8 percent of gross domestic product through taxes. Under Obama’s budget that number will rise to 20.1 percent by 2022.

Moving on to the spending side, however, Obama turns to gimmicks to create the illusion of spending cuts. The biggest of these is almost $850 billion in “savings” from cuts to spending on the wars in Iraq and Afghanistan. Nobody, including the Pentagon, ever requested those funds. Obama’s budget does fix Medicare’s doctor reimbursement shortfall, but only for two years. If Obama had used an honest spending baseline for ten years, as Paul Ryan’s Path to Prosperity does, that would add another $430 billion in spending. Add in some hidden spending on Pell Grants and phantom spending on debt servicing, and Obama’s supposed spending cut turns into a $1.472 trillion spending increase.

The spending hikes are clear when Obama’s budget numbers are compared to the Congressional Budget Office’s annual Budget and Economic Outlook. According to the CBO, federal spending is set to reach a total $44.251 trillion through 2022 under current law. But under Obama’s budget, spending would total $46.959 trillion in spending through 2022. That is a $2.7 trillion spending increase over ten years. For 2012 alone, Obama’s budget increases spending by $195 billion.

Moving to the debt, Obama’s own numbers show that deficits will total $6.7 trillion over 10 years under his budget. That is more than double the $3.1 trillion projected by the CBO. While the CBO estimated that public debt would rise to $15.3 trillion by 2022, under Obama’s budget, it would rise to $19.5 trillion.

It’s also worth noting that the White House uses much more optimistic economic forecasts than the CBO. In 2012 and 2013, the OMB forecasts growth of 2.7 percent and 3 percent of GDP, while the CBO has projected 2.2 percent and 1 percent growth during those years. Weaker economic growth would make Obama’s deficit totals even worse. For example, Obama’s first budget projected that the deficit would be $581 billion this year. Today, the fiscal year 2012 budget is projected at $1.33 trillion.

William Dougan, president of the National Federation of Federal Employees said the report was full of “lies.” Office of Personnel Management Director John Berry claimed it was part of “a misinformation campaign.” National Treasury Employees Union President Colleen Kelley accused Heritage and AEI of fabricating “self-serving, self-created data.” And Economic Policy Institute President Lawrence Mishel said that the idea that federal workers are overpaid is “a conservative myth.”

Fast forward to this Monday when the Congressional Budget Office released a report showing federal employees receive compensation packages that are 16 percent higher than those received by the private sector. Specifically, the CBO found that federal employees receive average salaries that are about 2 percent higher than those for similar private sector employees, and that federal employee benefit packages are 48 percent more generous than private sector levels.

The AEI/Heritage study found a similar breakdown. They pegged the salary premium at 14 percent and the benefit premium at 63 percent. But they also identified a third factor ignored by the CBO: job security. Looking at how few federal workers ever leave their jobs, and how few are ever fired, the Heritage/AEI study found that job security was worth another 17 percent of total pay.

Commenting on the CBO report released Monday, Biggs writes:

CBO’s methods are broadly consistent with the 2011 AEI study, although we found a larger federal pay premium because we sought to capture a broader range of federal compensation—including the implicit value of federal workers’ near-total job security—and because of somewhat different economic assumptions. Nevertheless, the CBO report serves as a valuable contrast to figures generated by the federal Office of Personnel Management claiming that federal employees are underpaid by 26 percent relative to private sector jobs.

Obama does have one narrow fact to hang his hat on. The Obama administration did approve 613 regulations in his first 33 months, which is 30 fewer than Bush approved over the same time frame. But not all regulations are created equally. A new rule dictating how the Federal Election Commission must conduct their meetings inflicts no damage on the economy. The Environmental Protection Agency’s Boiler MACT rule, regulating pollutants from industrial boilers, however, is expected to cost the U.S. economy $3.2 billion a year.

The White House Office of Information and Regulatory Affairs (OIRA) even has a handy way of distinguishing between minor rules that have little to no effect on the economy, and those rules that do cause economic harm. OIRA categorizes all rules with $100 million or more in economic impact as “economically significant” or “major” rules. And if we look at these major rules, Obama’s regulatory record has been far more burdensome than any president’s in history. The Heritage Foundation‘s James Gattuso reports:

Based on reports prepared by regulatory agencies themselves, The Heritage Foundation has calculated that through the end of March 2011, the Obama Administration added close to $40 billion in new costs to the economy, more than twice the Bush rate. Fiscal year 2010 was particularly costly, with $26.5 billion in new costs, higher than any other year on record.

The scariest part is that thanks to the Dodd-Frank financial regulation bill and EPA Administrator Lisa Jackson’s attempt to halt global warming by using the Clean Air Act, the regulatory tsunami emanating from the Obama administration is about to get much worse. Gattuso reports: “According to the spring Unified Agenda, a semiannual compendium by regulators of upcoming rules, 144 major rules are now in the pipeline, compared to 105 at the end of 2008. But even that was high; from 2001 to 2006, the agenda averaged just over 70 rules.”