JOURNAL EDITORIAL REPORT

Will Obama's overtime mandate hurt American workers?

President flexes executive power once again

 

This is a rush transcript from "Journal Editorial Report," March 15, 2014. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: Welcome to the "Journal Editorial Report." I'm Paul Gigot. A big win in Florida raises Republican hopes for a midterm rout. How can the GOP capitalize on the ObamaCare mess heading into November?

Plus, President Obama flexes his executive power yet again. But will his overtime mandate really help American workers?

And as world leaders struggle to respond to Russia's Ukraine aggression, could unleashing American energy exports be our most potent weapon?

Welcome to the "Journal Editorial Report." I'm Paul Gigot.

A major upset in a special election Florida this week with Republican David Jolly pulling off a surprise win over Democrat Alex Sink in a congressional district President Obama carried twice. The closely watched race was seen by many as an early test of how the ObamaCare debate will play out in states across the country this year.

So what can the GOP learn from Tuesday's win? And can it translate to even bigger gains come November?

Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and editorial board member, Joe Rago.

So, Kim, I think maybe even many Republicans were surprised this year -- this week with that victory. They hadn't been expecting it. How important an issue, how central was ObamaCare to the win?

KIM STRASSEL, WASHINGTON COLUMNIST: It was the issue. The Republican in the race, David Jolly, talked about this day in and day out. Here's the important part, Paul. What he did is he talked a lot about miseries of ObamaCare, reminded voters. That seemed to get a lot of the Republican base to turn out. There was a very good turn out on the conservative side. But he also talked a lot during the race about things that need to be done to fix the immediate problems that ObamaCare was causing. And that seemed to resonate with a lot of the seniors down there and Independent voters, which helped his victory as well.

GIGOT: So Karl Rove was also -- the former White House strategist -- also said this -- claimed this week that ObamaCare wasn't the only issue, and Republicans would make a mistake if that's all they campaigned on. What else did Jolly talk about?

STRASSEL: Well, he also talked about -- this was important. Democrats now have a very predictable list of attack lines that they come out with. And the important thing for David Jolly was he had an answer for nearly every one of them. They did the class warfare thing. They talked about the war on women. They tried to get him on abortion and equal pay. They went after him on senior citizens, claiming he wanted to throw granny off the cliff. He had answers for all of these. And he wasn't afraid to talk about them. As a result, he blunted most of that attack. That was also very important to his victory.

GIGOT: The other big issue, Dan, in this race was that the Democrats had laid out a "mend it, don't end it" strategy for ObamaCare. They're not going to be for repeal. They attacked Republicans for being for repeal. They said we'll fix the parts that don't work. That strategy now looks much more suspect. What do the Democrats do in response now? Where do they turn?

DAN HENNINGER, COLUMNIST AND DEPUTY EDITOR: I'm not sure they return anywhere, Paul. They have --

GIGOT: Do they stick with this?

HENNINGER: Their strategy is "fix it, don't repeal" it.

GIGOT: Right.

HENNINGER: But Alex Sink didn't propose a single fix. Nor has any Democrat anywhere really proposed a serious fix, other than delaying the mandates and so forth, which isn't really a solution. I think most voters understand that something is needed beyond simply taking ObamaCare and kicking it down the road. But the Democrats you see are hostage to Barack Obama and Kathleen Sebelius. They're calling the shots. They're running the show. They're not giving them anything in the way of a real fix. So I think they're yoked to this until the end of November.

GIGOT: Sebelius being the Health and Human Services secretary for Obama.

HENNINGER: Yeah.

GIGOT: Joe, you had a great scoop this week about how the administration, speaking of Kathleen Sebelius, had postponed, delayed for two more years, quietly. Didn't tell anybody about it, put in a bit of footnote, and a bit of rule making. The individual mandate, which was supposed to be central to ObamaCare and making it work, making every individual buy insurance, now this is gutted until, what, 2016?

JOE RAGO, EDITORIAL BOARD MEMBER: That's right. What they did was, last December, they declared that ObamaCare itself was a hardship that qualified you for an exemption from the mandate. They extended that for two more years. And the implication in this rule is that they're relaxing the enforcement of the individual mandate for a much longer time. It's very easy to qualify now for one of these waivers. You can attest that your health plan was canceled, that you find the ObamaCare health plans unaffordable for your budget. So there's just a lot more outs from this. It's a lot more porous than it was supposed to be.

GIGOT: It seems designed to ease the pain through this election, make sure this doesn't pop up in October or September as a big issue I assume.

RAGO: Right. And next year, people are going to find a nasty tax surprise if they're taxed for being uninsured. That's going to be very unpopular. People are not signing up in the numbers for ObamaCare that they were supposed to, so there's going to be a much larger group that would potentially be penalized by the mandate. And they're trying to build in preemptively a political response to that.

GIGOT: Are there anything that's going to happen between now and November on ObamaCare that could flare up again and make this a big issue? I know the administration is trying to smooth that all out, push it past the election. What could pop up and be an issue?

RAGO: A lot of health plans for small businesses and individuals are due to be canceled in October. They've tried -- with this unrelated rule making last week where they hid the other thing.

GIGOT: Right.

RAGO: They tried to say, well, you can get a waiver from the mandates. You can maybe extend those out. I still think we're going to see a lot of disruption in the next benefit season.

GIGOT: OK, Kim, now, so learning lessons from this race and moving forward, how should Republicans plot a strategy that best exploits this huge issue for them, ObamaCare, going forward?

STRASSEL: Well, they do need to talk about the problems. That is key, central. They've got to continue hammering on the issues that are hurting so many Americans.

But I think what we saw out of Florida, too, is what they also have to do, there are discreet aspects of ObamaCare that can be fixed to a degree, that can be mitigated. And there are discrete policy agenda items Republicans could put forward to look as though they are the people who are trying to fix them. So, for instance, high prices. One thing they could be pushing in the House would be to get rid of some of the mandates in the bill.

GIGOT: Right, that are raising costs.

STRASSEL: Right.

(CROSSTALK)

GIGOT: Maternity coverage for 50-year-olds, for example.

STRASSEL: Exactly. Or being able to buy insurance policies across state lines. These are issues that Americans now, because they understand so much more about the health market, how it works, having lived under this terrible experience, are going to understand that there are ways to make it better. And Republicans need to be pushing those forward to look as though they've got a positive agenda as well.

GIGOT: Republicans and strategy aren't often words you hear in the same sentence.

HENNINGER: Yeah.

GIGOT: They don't really get it together in the House and the Senate. Don't you think they need to hear get something together? Push a common line and actually then pass it through the House and force Senate Democrats to respond?

HENNINGER: Yeah. I think they do. Because most voters are out there looking for an idea, a substantive idea, not just rhetoric from these people.

GIGOT: And not just repeal.

HENNINGER: Not just repeal. And I think the other thing they should be pushing is the persistently weak economy, the lack of growth in the job market. Because this is the sort of thing that the Democrats simply, like ObamaCare, have no real answer for.

GIGOT: All right. Thanks, Dan.

When we come back, President Obama flexing his executive powers once again and expanding overtime pay. His latest mandate may poll well but will it really help American workers?

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER, R-OHIO, SPEAKER OF THE HOUSE: If you don't have a job, you don't qualify for overtime.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: I'm going to do what I can on my own to raise wages for more hard-working Americans. Today, I'm going to use my pen to give more Americans the chance to earn the overtime pay that they deserve. Now, overtime is a pretty simple idea. If you have to work more, you should get paid more.

(END VIDEO CLIP)

GIGOT: Undeterred by Congress's refusal to raise the minimum wage, President Obama Thursday directed the Department of Labor to make millions of salaried employees eligible for overtime pay. It's just the latest executive order aimed at boosting the wages of American workers ahead of November's mid-term elections. But will it help the economy long term?

We're back with Dan Henninger and Kim Strassel. And Wall Street Journal editorial board page assistant editor, James Freeman, joins us.

James, so what does this proposal do? How many people will qualify?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Millions, potentially. It's basically saying that the federal government is going to raise the level above which people are no longer eligible for overtime. So it's going from $455 a week to probably close to $1,000.

GIGOT: So more overtime pay -- more pay, higher salaries, sounds great. You and I love it.

FREEMAN: Yeah. Raises for everyone. Hooray.

GIGOT: Raises for everyone, hooray. It's like free drinks at the bar.

(LAUGHTER)

But as Milton Freedman taught us, no free lunch in economics. So how is this likely to play out in the workplace?

FREEMAN: Well, the president says it's a simple idea: You work more you ought to get paid more. There's another simple idea, which is when businesses don't see top-line growth, when they don't have new customers, there's less money to pay people wages.

(LAUGHTER)

GIGOT: Right.

FREEMAN: So it's of a piece with the president' effort to raise the minimum wage. Washington cannot simply command higher wages in the economy. There is a price. There's not a free lunch. If the money is forced into more wages for particular workers, the business has less money. Maybe it has fewer workers.

GIGOT: So inside a firm, how does this work out? I mean, a lot of people work more than 40 hours because they want to impress their colleagues on the bus. They want to say you know what I'm willing to put in the extra time.

HENNINGER: Yeah.

GIGOT: Is it possible here that a lot of companies say, oh, no, no, no, you work 41 hours and suddenly we're on the hook for overtime that we really can't afford.

HENNINGER: Sure.

GIGOT: So you better not work more than 40 hours.

HENNINGER: Well, that's right. Overtime exists. There are people who get overtime.

GIGOT: Sure.

HENNINGER: And most employers watch overtime workers very, very closely. Literally, monitor them. And you cannot get over 40 hours if you're earning overtime, except under the most special circumstances. So absolutely, people who want to put in extra work, if they're getting overtime, the employer is going to say, no way, you go home. That's just the way it's going to work. Business is going to -- they have litigated this. The plaintiffs bar has filed lawsuits to try to get stock brokers, bank loan officers into the category of overtime. The Supreme Court ruled in 2012 that drug representatives do not qualify for overtime. This is just a huge legal morass that the president has opened up.

GIGOT: I figured there was a plaintiff's bar angle here for the lawsuits.

Kim, what are the politics behind this in your view?

STRASSEL: Well, this is all a piece of the Democratic strategy to say, we're in favor of the middle class and to also stoke this class warfare theme. The president saying, look, I'm the only person who can make sure and guarantee you get better wages.

I mean, the nature of how political this was, Paul, was in fact exposed by the way the White House did it. Back in 2003-2004, the Bush administration did their own rewrite of these rules.

GIGOT: Right.

STRASSEL: It was a very rigorous review. It lasted a very long time. It dealt with every aspect of these laws that had been written back in the 1930s. The Obama administration just air-dropped these out of nowhere. Normally, the Department of Labor puts out any big regulations that are coming to give the business industry a heads up. This was nowhere. They had given no indication this was going to happen. But suddenly, the president and his political advisers decided this would be a way to get a little bit of attention and push their theme in an election year.

GIGOT: I assume, James, this is also an attempt to drive Democrats to the polls. I mean, unions in particular are very upset with ObamaCare because it's raising the cost of their health care.

FREEMAN: Right.

GIGOT: And they're asking the White House for relief. They haven't gotten it. This is a way I think to appeal to unions and say, see, we're trying to raise wages by dictate across the economy and that will help you.

FREEMAN: Yeah. Unions love this. Because it gets more to the union idea that workers should be hourly wage earners, kind of in an adversarial relationship with management, fighting over a finite pie of resources. Of course, the great companies, the great enterprises get everyone to think like a team, think like owners, think about the growth of the business. That's why it's going to be really destructive within firms.

GIGOT: The idea is trade more votes before November in return for probably fewer jobs.

FREEMAN: And slower growth. So yeah, it's a political win now for the president --

(CROSSTALK)

FREEMAN: -- and maybe slow growth the last few years of his term I would guess.

GIGOT: All right. When we come back, weeks into the crisis in Ukraine, the handwringing continues over just how to respond to Russia's aggression. Could unleashing U.S. energy exports be America's most potent weapon?

(COMMERCIAL BREAK)

GIGOT: Now over two weeks into the crisis in Ukraine, world leaders are still struggling to respond to Russia's Crimean invasion and the ongoing threats in the region. But as visa bans, asset freezes and other sanctions continue to be debated both here and abroad, some say America's own oil and gas boom may be our most potent weapon.

We're back with Dan Henninger and Kim Strassel. And editorial board member, Mary Anastasia O'Grady, also joins the panel.

So, Dan, the West is struggling to come up with a response here. Can't seem to agree. Why are they having such a hard time?

HENNINGER: Let's put the baseline fact on the table. Putin and the Russians have moved a lot of Russian military assets into Crimea, OK --

GIGOT: Right.

HENNINGER: -- soldiers, ships, tanks. Angela Merkel gave a speech this week. She said the consequences --

(CROSSTALK)

GIGOT: German chancellor.

HENNINGER: German chancellor -- could be catastrophic for Germany. She also said a military option is not available to us. They've taken that off the table. And I think what that means is that the West now struggles with an alternative. And that's such things as sanctions, pulling visas, freezing bank accounts. That implies that the West would have to probably take an economic hit. They do have an economic relationship with Russia. And they're trying to figure out just how far they're willing to go in that direction.

GIGOT: So, Mary, let's talk about the energy option. Because a lot of these frontline states next to Russia are very dependent on Russian natural gas exports. So if -- and we have this boom in production here, oil and natural gas. What difference would it make if we unleashed those on the world?

MARY ANASTASIA O'GRADY, EDITORIAL BOARD MEMBER: Well, I think Dan's right that, in a sense, the West feels powerless. And for sure. We can't get our energy to them anytime soon. But I think that misses the point that we actually have some leverage with Putin if we make it very clear that we are going to get more active in the export business. And we haven't done that. And I think that would both hurt him, because it's going to affect the world price of gas, which he depends on a lot, and it would also, I think over a little bit longer time -- and I'm not talk about a real long term -- it would make the U.S. a more powerful geopolitical force, not just depending on the military but in terms of its ability to provide energy and stimulate energy projects in places like Poland and Croatia, where there are planned L and G ports. But they haven't gotten the capital yet.

GIGOT: L and G being liquefied natural gas.

O'GRADY: Right.

GIGOT: And we don't ban the export of liquefied natural gas. We just require permits from the government --

(LAUGHTER)

-- to be able to build the terminals. That's the tie up right now. They just have been very slow in allowing these terminals to be built.

O'GRADY: Right.

GIGOT: We had an oil executive -- you were there -- tell us, if you approved all the permits right now, then people could decide which were the most economical. Do it right now, would be a great signal to the world. Approve all of them.

O'GRADY: Right. One of the problems is that they first have to get in line at the Department of Energy. And --

(CROSSTALK)

GIGOT: Come on. Experience. The post office for companies.

O'GRADY: If the 20th investor is the better project, but they're working on the fourth, you're just going to have to wait. So the process is really slow. And if they said, OK, we're going to skip the Department of Energy permitting rule and go to a regulatory process and streamline that process, you could do it much more quickly. I don't think politically President Obama's friends want that to happen. And that's why it's not happening, not because you can't do it.

GIGOT: Because they don't like fossil fuels, the --

O'GRADY: Right.

GIGOT: So four countries, Kim, Hungary, Poland, the ambassadors from those countries, Czechoslovakia Republic and the Slovak Republic, wrote John Boehner, the speaker of the House last week, saying, look, we're very dependent, more than 70 percent, for our natural gas from Russia, please do more to unleash yours, that will really help us, send a great signal. And John Boehner's response is, Mr. President, do it, you have the power to do it, you have the authority under -- without Congress doing a thing to do it.

This is funny because the president is willing to do things that the Congress doesn't think he has the power to do. Here's one, Congress says you have the power to do, go ahead, but he won't do it.

STRASSEL: Our allies are begging for this. A side note here, too, Paul, as part of the E.U./U.S. trade pack that's being negotiated, they're asking for unlimited gas exports because they realize how important this is in terms of their position vis-a-vis Putin.

But you're right. It's not getting anywhere in Washington. The president, for instance, he has the ability to just instantly lift what is currently an export embargo on crude oil exports. And presidents in the past have done this. It takes an executive order. We happen to know that this president likes executive orders. But he won't do it.

(LAUGHTER)

GIGOT: That's right.

STRASSEL: We have members of the Senate who, right now, as part of a process for Ukraine, to push these energy exports to, and being blocked by Democrats.

GIGOT: All right. Thank you, Kim. Let's hope he does it.

We have to take one more break. When we come back, "Hits and Misses" of the week.

(COMMERCIAL BREAK)

GIGOT: Time now for "Hits and Misses" of the week.

Mary, you're starting.

O'GRADY: My hit this week is for Irish actor, Liam Neeson -- one of my favorites -- for telling New York City Mayor Bill de Blasio to man up and visit the stables in New York City before he sends the horses to the glue factory, because he's going to outlaw horse and carriages.

(LAUGHTER)

The problem is this is a mayor who put children out of their charter schools, so he's got a lot of manning up to do.

GIGOT: OK.

Joe?

RAGO: Paul, a hit, as it were, to Colorado which, this week, reported $2 million in tax receipts from retail marijuana legalization. That will be about $98 million a year. But the problem with sin taxes is they make the government complicit in the behavior they're designed to discourage. My prediction, if more states legalize, they are going to be doing it for the money.

(LAUGHTER)

GIGOT: OK.

James?

FREEMAN: Paul, this is a miss to Senator Ed Markey of Massachusetts. This is almost like an episode of "House of Cards," but basically the Senator has been carrying water for a hedge fund, which has been betting against a company called Herbal Life --

GIGOT: Right.

FREEMAN: -- a nutritional company. The hedge fund betting on this company's failure claims that this is some kind of pyramid scheme. And so Mr. Markey has taken the hedge fund's brief and is urging federal regulators to investigate for fraud. Just completely amazing that this is now a market tool to get politicians to create allegations.

GIGOT: All right, James, thank you.

That's it for this week's show. Thanks to my panel and to all of you for watching. I'm Paul Gigot. We hope to see you right here next week.

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