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Breaking EPA’s climate sciences secrecy barriers

Somewhat Reasonable - July 02, 2014, 3:59 PM

FOIA request seeks hidden data and analyses that agency claims back up its climate rulings

Can you imagine telling the IRS you don’t need to complete all their forms or provide records to back up your claim for a tax refund? Or saying your company’s assurances that its medical products are safe and effective should satisfy the FDA? Especially if some of your data don’t actually support your claims – or you “can’t find” key data, research and other records, because your hard drive conveniently crashed? But, you tell them, people you paid to review your information said it’s accurate, so there’s no problem.

Do you suppose the government would accept your assurance that there’s “not a smidgen” of corruption, error or doubt – perhaps because 97% of your close colleagues agree with you? Or that your actions affect only a small amount of tax money, or a small number of customers – so the agencies shouldn’t worry?

If you were the Environmental Protection Agency, White House-operated US Global Change Research Program and their participating agencies (NOAA, NASA, NSF, etc.), you’d get away with all of that.

Using billions of our tax dollars, these government entities fund the research they use, select research that supports their regulatory agenda (while ignoring studies that do not), and handpick the “independent” experts who peer-review the research. As a recent analysis reveals, the agencies also give “significant financial support” to United Nations and other organizations that prepare computer models and other assessments. They then use the results to justify regulations that will cost countless billions of dollars and affect the lives, livelihoods, liberties, living standards, health, welfare and life spans of every American.

EPA utilized this clever maneuver to determine that carbon dioxide and other greenhouse gases “endanger” public health and welfare. It then devised devious reports, including national climate change assessments – and expensive, punitive regulations to control emissions of those gases from vehicles, electrical generating plants and countless other sources.

At the very least, you would expect that this supposedly “scientific” review process – and the data and studies involved in it – should be subject to rigorous, least-discretionary standards designed to ensure their quality, integrity, credibility and reliability, as well as truly independent expert review. Indeed they are.

The Information Quality Act of 2000 and subsequent Office of Management and Budget guidelines require that all federal agencies ensure and maximize “the quality, objectivity, utility and integrity of information disseminated by Federal agencies.” The rules also call for proper peer review of all “influential scientific information” and “highly influential scientific assessments,” particularly if they could be used as the basis for regulatory action. Finally, they direct federal agencies to provide adequate administrative mechanisms enabling affected parties to review agency failures to respond to requests for correction or reconsideration of the scientific information.

EPA and other agencies apparently think these rules are burdensome, inconvenient, and a threat to their independence and regulatory agenda. They routinely ignore the rules, and resist attempts by outside experts to gain access to data and studies. EPA Administrator Gina McCarthy has said she intends to “protect” them from people and organizations she decides “are not qualified to analyze” the materials.

Thus EPA’s Clean Air Scientific Advisory Committee reviews the agency’s CO2 and pollution data, studies and conclusions – for which EPA has paid CASAC’s 15 members $180.8 million since 2000. The American Lung Association has received $24.7 million in EPA grants over the past 15 years and $43 million overall via a total of 591 federal grants, for applauding and promoting government agency decisions. Big Green foundations bankrolled the ALA with an additional $76 million, under 2,806 grants.

These payoffs raise serious questions about EPA, CASAC and ALA integrity and credibility.

Meanwhile, real stakeholders – families and companies that will be severely impacted by the rules, and organizations and experts trying to protect their interests – are systematically denied access to data, studies, scientific assessments and other information. CASAC excludes from its ranks industry and other experts who might question EPA findings. EPA stonewalls and slow-walks FOIA requests and denies requests for correction and reconsideration. One lawyer who’s filed FOIA cases since 1978 says the Obama Administration is bar-none “the worst” in history on transparency. Even members of Congress get nowhere, resulting in testy confrontations with Ms. McCarthy and other EPA officials.

The stakes are high, particularly in view of the Obama EPA’s war on coal mining, coal-fired power plants, businesses and industries that require reliable, affordable electricity – and families, communities and entire states whose jobs, health and welfare will suffer under this anti-fossil fuel agenda. States that mine and use coal will be bludgeoned. Because they pay a larger portion of their incomes on energy and food, elderly, minority and poor families are especially vulnerable and will suffer greatly.

That is why the House of Representatives is moving forward on the Secret Science Reform Act. It is why the Institute for Trade, Standards and Sustainable Development is again filing new FOIA requests with EPA and other agencies that are hiding their junk science, manipulating laws and strangling our economy.

The agencies’ benefit-cost analyses are equally deceptive. EPA claims its latest coal-fueled power plant rules (requiring an impossible 30% reduction in carbon dioxide emissions by 2030) would bring $30 billion in “climate benefits” versus $7.3 billion in costs. Even the left-leaning Brookings Institution has trashed the agency’s analysis – pointing out that the low-balled costs will be paid by American taxpayers, consumers, businesses and workers, whereas the highly conjectural benefits will be accrued globally.

That violates President Clinton’s 1993 Executive Order 12688, which requires that agencies “assess both the costs and benefits” of a proposed regulation, and adopt it “only upon a reasoned determination that the benefits … justify its costs.” EO 12866 specifies that only benefits to US citizens be counted. Once that’s done, the EPA benefits plummet to between $2.1 billion and $6.9 billion. That means its kill-coal rules costAmericans $400 million to $4.8 billion more than the clearly inflated benefits, using EPA’s own numbers.

Moreover, the US Chamber of Commerce calculates that the regulations will actually penalize the United States $51 billion. Energy analyst Roger Bezdek estimates that the benefits of using carbon-based fuels outweigh any hypothesized “social costs of carbon” by orders of magnitude: 50-to-1 (using the inflated SCC of $36/ton of CO2 concocted by EPA and other federal agencies in 2013) – and 500-to-1 (using the equally arbitrary $22/ton estimate that they cooked up in 2010).

Even more intolerable, these punitive EPA rules will have virtually no effect on atmospheric CO2 levels, because China, India, Germany and other countries will continue to burn coal and other fossil fuels. They will likewise have no effect on global temperatures, even accepting the Obama/EPA/IPCC notion that carbon dioxide is now the primary cause of climate change. Even EPA models acknowledge that its rules will prevent an undetectable 0.018 degrees Celsius (0.032 deg F) of total global warming in 100 years!

Fortunately, the Supreme Court recently ruled that EPA does not have the authority to rewrite federal laws to serve its power-grabbing agendas. FOIA requests seeking disclosure of EPA records that could reveal a rigged climate science peer review process – and legal actions under the Information Quality Act seeking correction of resultant data corruption – could compel courts to reconsider their all-too-common practice of deferring to “agency discretion” on scientific and regulatory matters. That clearly scares these federales.

The feds have become accustomed to saying “We don’t need no stinkin’ badges.” The prospect of having to share their data, methodologies and research with experts outside their closed circle of regulators, collaborators and eco-activists almost makes them soil their shorts.

Bright sunlight has always been the best disinfectant for mold, slime and corruption. With America’s economy, international competitiveness, jobs, health and welfare at stake, we need that sunlight now.

Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (www.cfact.org) and author of Eco-Imperialism: Green power – Black death. Lawrence Kogan is CEO of the Institute for Trade, Standards and Sustainable Development (www.ITSSD.org).

Categories: On the Blog

Death by Delay

Somewhat Reasonable - July 02, 2014, 1:30 PM


“The difference between taking a part of my life,
and taking my whole life, is just a matter of degree.” -

There was a time, before the baby-boom generation took over, when we took pride in the achievements of our builders, producers and innovators. There was always great celebration when settler families got a phone, a tractor, a bitumen road or electric power. An oil strike or a gold discovery made headlines, and people welcomed new businesses, new railways and new inventions. Science and engineering were revered and the wealth delivered by these human achievements enabled the builders and their children to live more rewarding lives, with more leisure, more time for culture and crusades, and greater interest in taking more care of their environment.

Then a green snake entered the Garden of Eden.

Many of the genuine conservationists from the original environmental societies were replaced by political extremists who felt lost after the Comrade Societies collapsed and China joined the trading world. These zealots were mainly interested in promoting environmental alarms in order to push a consistent agenda of world control of production, distribution and exchange – a new global utopia run by unelected all-knowing people just like them.

The old Reds became the new Greens.

They used every credible-sounding scare to recruit support – peak resources, acid rain, ozone holes, global cooling, species extinction, food security, Barrier Reef threats, global warming or extreme weather to justify global controls, no-go areas and international taxes to limit all human activities. However the public became disenchanted with their politics of denial, and their opposition to human progress, so they have adopted a new tactic – death by delay.

“We are not opposed to all development, but we want to ensure all environmental concerns are fully investigated before new developments get approval.”

In fact, their goal is to kill projects with costly regulations, investigations and delay. Their technique is to grab control of bureaucratic bodies like the US EPA which, since 2009, has issued 2,827 new regulations totalling 24,915,000 words. A current example of death by delay is the Keystone Oil pipeline proposal which would have taken crude oil from Alberta in Canada to refineries on the US Gulf Coast – far better than sending it by rail tankers. It was first proposed in 2005, and immediately opposed by the anti-industry, anti-carbon zealots who control the EPA and other arms of the US federal government. The proposal was studied to death by US officials and green busybodies for nine long years.

This week the Canadians lost patience and approved an alternative proposal to take a pipeline to the west coast of Canada, allowing more Albertan oil to be exported to Asia. Jobs and resources that would have benefitted Americans will now go to Asia. Naturally the Green delayers will also attempt to throttle this proposal. Over in Europe, shale gas exploration is also being subject to death by delay. In Britain, the pioneering company, Caudrilla, has been waiting for seven long years for approvals to explore. In France, all such exploration is banned.

No wonder India recently accused Greenpeace and other delayers of being “a threat to national economic security”.


Categories: On the Blog

The Inversion of the Presidency

Somewhat Reasonable - July 02, 2014, 12:52 PM

It was long the case that American presidents held less power on domestic issues than did the Congress. The executive branch could only enact the laws of the legislature with a limited ability and proclivity to veto.

The president’s real power lay in setting foreign policy, as he had much more freedom of action in that arena than on the home front wherein the checks and balances of the Constitution were in full force.

That traditional balance has been overridden in the current political system, and the fault for this breakdown of traditional magisteria of influence lies with both the executive and the legislative branches.

In domestic politics, the legislature has ceded, both deliberately and under protest, a great deal of power to the executive. The so-called imperial presidency has been growing in power since the end of World War II, but it has become a monster since Barack Obama took office.

The Obama White House has sought to dominate the American political system, and has attempted to paint opposition forces in Congress as enemies of progress.Yet it has not been a mere rhetorical attack on checks and balances. Indeed, the president’s promise to use his “pen and phone” to enact executive orders so as to bypass Congress wherever possible has become a terrifying reality.

Perhaps what is most shocking about Obama’s stated aim of bypassing the constitutional checks on his power is the fact that much of the mainstream media has endorsed his actions. They seem to forget that the president is not the only elected official in the country and he is not the only person with a mandate to govern. The Congress has an electoral mandate to do as it was elected to do. The president cannot pretend he has a right to run roughshod over Congress and the Constitution.

Also disconcerting is the trend in the Congress itself to permit executive overreach. There was once a time when senators and congressmen viewed their office as taking precedence over party. That is no longer the case (in either party). During the administration of George W. Bush, the Republican-controlled Congress was more than willing to hand sweeping powers to the president. The Democratic Congress after 2009 gave even more powers to Obama. In both cases, Congress has been complicit in the erosion of the essential checks and balances that preserve the United States government and the liberty of all Americans.

The Obama administration is a particularly strange beast. At the same time that the White House has been hoovering up domestic powers from a Congress too divided and weak to fight back, it has also been entirely rudderless on foreign policy. Almost everything Obama has done on the world stage has weakened America. He has snubbed our allies in Israel and South Korea, ceded control of the Internet to even more statist (and sometimes authoritarian) interests, and has led a foreign policy in the Middle East so senseless as to render any observer speechless. What we are witnessing is a fundamental inversion of the proper power and role of the presidency.

Can the situation be saved? That is a matter up to the American public. They can stand by and continue to allow the gradual whittling away of their liberties at home and security abroad, or they can call on their elected leaders and candidates to uphold the Constitution. For the sake of the nation, they had best choose the latter.

Categories: On the Blog

Public Voices Opposition to Internet Sales Taxes

Somewhat Reasonable - July 02, 2014, 12:10 PM

In an effort to address growing budget problems, many states have attempted to draw on the as yet untapped revenue source of online sales taxes. Currently, these efforts have been stymied by legal precedent and a lack of public support. However in the last few years, Congress has attempted to accelerate these efforts with several pieces of legislation that  expand the states’ ability of states to charge sales taxes on out of state retailers regardless of if the retailer has a physical presence in the state. The most prominent of these is the Marketplace Fairness Act (MFA), which was first proposed by Sens. Dick Durbin (D-IL), Mike Enzi (R-WY), and Lamar Alexander (R-TN) in 2011.

This week, the National Taxpayers Union (NTU) and the R Street Institute launched a 20-state tour to announce new poll results that demonstrate the publics near complete lack of support for the MFA and the detrimental the tax plan would be. The first stop was in South Carolina, where R Street Executive Director Andrew Moylan and NTU Executive Vice President Pete Sepp hosted a press conference annoying the results. Voters in South Carolina rejected Internet sales taxes by a significant margin of 51-36.

It should come as no surprise that the majority American public against attempts to impose taxes on internet purchases. Internet sales taxes have long been unpopular with everyday shoppers, for good reason. Imposing such a tax on online and mailer order sales would unfortunately have strong negative effects on the online economy, hinder tax competition amongst the states while raising far less revenue than legislators expect and worst of all open taxpayers up to a slew of new possible taxes.

A Gallup poll conducted in 2013 found that 57 percent of respondents opposed enacting a law that would allow states to collect sales taxes on online purchases, as the Marketplace Fairness Act does. Another 2013 poll commissioned to Mercury by the National Taxpayers Union and R Street Institute found the same results, 57 percent of respondents were opposed to an Internet sales tax scheme like the MFA.

“New Internet sales tax laws are bad policy, but this polling proves that they’re terrible politics as well,” said R Street’s Andrew Moylan in a press statement. “It shows that strong majorities across the country seek an Internet that enriches their lives, not out-of-state revenue agents.”

NTU’s Pete Sepp pointed to a disconnect between Washington and the average taxpayer, “Special interests might convince some in Washington, but in the states, voters are not fooled by any attempts to unleash tax collectors from reckless states like New York and Illinois on their hometown businesses.”

The tour will continue over the upcoming months, with individual results being released for each state. More information on the fight against Internet sales taxes can be found online here: DontTaxtheInter.net.

While proponents of this measure and others have argued that efforts like it are needed to restore a balance between online and bricks-and-mortar retailers, the reality is quite the opposite. The Marketplace Fairness Act would give bricks-and-mortar retailers a distinct advantage over online retailers. Even with today’s technology, it is difficult and expensive for online merchants to accurately charge sales taxes for the products they sell to the 9,600 different taxing bodies in this country. In addition, local retailers benefit from services such as roads; police, fire, accident, and disaster protection; and utilities delivered over money-saving public rights of way. Out-of-state retailers get none of these.

One alternative state legislators could consider is an origin-based sales tax system for Internet sales taxes. It stays within the parameters of the physical presence standard and ensures that out-of-state consumers are not paying taxes for services they will never use. Preserving this standard is essential. Allowing it to be overridden would create a significant expansion of state taxing powers and would undermine tax competition, which helps keep taxes low.

Categories: On the Blog

Got Obamacare tax questions? You might be out of luck — FATCA’s here — Koskinen gets the Times treatment

Out of the Storm News - July 02, 2014, 12:08 PM

From Politico:

NORTH CAROLINA VOTERS NOT FANS OF MFA. WRAL reports, “Most North Carolina voters oppose a federal bill that would allow online retailers to collect out-of-state sales tax, according to a poll released Tuesday by the National Taxpayers Union and the R Street Institute. The poll, based on a telephone survey of 400 North Carolinians likely to vote in the 2014 general election, showed that 70 percent of respondents oppose” the Marketplace Fairness Act. http://bit.ly/V9zJRN

Arthur could strike around the Fourth in Morehead City

Out of the Storm News - July 02, 2014, 11:47 AM

Ahead of the Independence Day holiday weekend, the U.S. East Coast is preparing for Tropical Storm Arthur, the first named storm of the 2014 season.

Formed yesterday off the east coast of Florida, Arthur has strengthened to a strong tropical storm, with sustained winds of more than 60 miles per hour, and is expected to strengthen to a Category 1 hurricane at some point Thursday. Storm watchers say it is showing signs of forming a defined eye wall and could strike the Outer Banks of North Carolina – an area typically thronged with tourists this time of year – the morning of July 4.

While it is unusual to see a storm reach this degree of intensity so early in the season, risk modeler AIR Worldwide does not expect significant wind-related claims, anticipating storm surge to be a more significant factor:

According to AIR, if the storm makes landfall in or bypasses North Carolina as a Category 1 hurricane, wind damage to most homes and businesses is not expected to be significant. There may be isolated instances of nonstructural damage to roof coverings and wall cladding, and windows if debris becomes airborne, as well as damage to trees, utility poles, and signage

Should the storm hit North Carolina particularly hard, it will be interesting to see how the two state-backed insurance pools – the North Carolina Joint Underwriting Association (or “FAIR Plan”) and the North Carolina Insurance Underwriting Association (or “Beach Plan”) – cope with the losses.

Under their current financial structure, the pools have about $4.09 billion of claims-paying ability, which comprises $700 million of retained earnings; $1 billion of assessments on member companies; $945 million of traditional reinsurance and an additional $544.6 million of reinstatement layers; $701.8 million of catastrophe bond coverage; and $270 million of post-event bonding coverage.

The first layer of cat bonds (the Tar Heel Re bonds) if losses exceed $2.025 billion. To date, no cat bonds issued by a public insurance authority in the United States have ever been triggered.

According to the most recent wind-speed probabilities advisory from the National Hurricane Center, most directly in Arthur’s path are North Carolina’s Cape Hatteras and Morehead City, which face odds of a tropical storm strike of 82 percent and 75 percent, respectively, and odds of a hurricane strike of 21 percent and 15 percent, respectively.

Other cities facing tropical storm risk include Wilmington, N.C. (55 percent); Nova Scotia’s Halifax (51 percent), Yarmouth (50 percent) and Eddy Point (43 percent); Nantucket, Mass. (44 percent); and Myrtle Beach, S.C. (40 percent).

There’s little risk of a hurricane strike outside of North Carolina’s Outer Banks, with the highest risks seen in Yarmouth, N.S. (7 percent); Nantucket (6 percent); and Wilmington, N.C. (5 percent).

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

The New Yorker Maps NYC's Shadow Transit System

Stuff We Wish We Wrote - Homepage - July 02, 2014, 10:10 AM
Latest Study Libertarianism and Federalism Ilya Somin Featured Event June 19 Featuring the authors Steve Forbes, Chairman and Editor-in-Chief, Forbes Media; and…

Swedish study: After a heart attack, quitting tobacco better than no tobacco

Out of the Storm News - July 02, 2014, 10:10 AM

A recent study by Gabriel Arefalk and colleagues at the University of Uppsala in Sweden, published in the American Heart Association flagship journal Circulation, was purported by the authors, the AHA  and the media to show that continuing snus use or smoking after a heart attack (myocardial infarction, MI) is twice as harmful as quitting.

These conclusions are questionable.  Using the Arefalk numbers, Carl Phillips and I found that snus users, and perhaps even some smokers, are better off than non-users.

We have submitted a letter to the editor of Circulation, and Carl has the full text of our letter in his CASAA blog post.

The bottom line is that the authors tried to spin the results as suggesting that continuing snus use is dangerous after an MI.  In fact, continuing snus users actually had a lower death rate than people who used neither snus nor cigarettes.

Whatever is happening in this population, it clearly does not support the simplistic “snus is bad” mantra.  There is a glaringly obvious explanation for why people who quit snus (or smoking) after an MI fare better than those who do not:  Those who are healthy (except for the recent MI, of course) and hope to recover are more likely to take steps to minimize their risks.  After being advised to give up snus, many also get physical therapy, exercise and maintain a healthier diet.  Meanwhile, those who are less healthy may not make changes in an attempt to regain long-term health.  The Arefalk analysis may not have adequately controlled for these confounding factors.

Of course, this would only partially explain the better outcomes of quitters compared to continuing users; it does nothing to explain why all of them (except those who continued to smoke) apparently fared better than non-users.  There are possible explanations for this in the form of statistical artifacts or real effects.  The key observation is that these unreported results do not support the authors’ main interpretation that snus use is dangerous after an MI.

With the publication of this article, peer review appears to have been woefully inadequate.   The prime statistical error we discovered is the key number reported in the first paragraph of the article’s results section.  Reviewers of this study failed to detect the glaring error.

Even without correcting that error or calculating the mortality rate for non-users, the (incorrect) number for the population as a whole the authors reported can still be compared to rates for people who used snus or cigarettes at the time of their MI.  This is enough to raise red flags about the analysis and conclusions, since it is still higher than the rate for those who kept using snus, and far higher than the rates for those who stopped using either product.

In 2011, Arefalk was lead author on a study making dubious claims about snus use and heart failure.  I described that effort as “neither legitimate nor persuasive until the authors resolve the fundamental questions about the analysis.”

The current article in Circulation is a classic example of anti-tobacco propaganda.  Credible epidemiologic studies do not report risks in exposed groups without reporting the comparable baseline risk among the unexposed.  The authors, and the journal editors and reviewers who enabled them, omitted this critical information.  Our letter to the editor gives them a chance to correct these deficiencies.

The Republic of Gilead Is Not Nigh

Law Suit - In The News - July 02, 2014, 9:10 AM
Latest Study Libertarianism and Federalism Ilya Somin Featured Event June 19 Featuring the authors Steve Forbes, Chairman and Editor-in-Chief, Forbes Media; and…

A Plea to End Corporate Welfare

Stuff We Wish We Wrote - Homepage - July 02, 2014, 9:10 AM
Latest Study Libertarianism and Federalism Ilya Somin Featured Event June 19 Featuring the authors Steve Forbes, Chairman and Editor-in-Chief, Forbes Media; and…

Supreme Court lets stand several rulings blocking enforcement of HHS mandate - Hot Air

Stuff We Wish We Wrote - Homepage - July 02, 2014, 9:10 AM
The mantra after the announcement of the 5-4 Hobby Lobby decision on Monday, other than the Left’s shrieking over falling skies and theocracies, has been this:…

Major Networks go quiet on VA Scandal

Stuff We Wish We Wrote - Homepage - July 02, 2014, 9:09 AM
Just not a priority anymore to those who decide what gets reported. This past April, a whistleblower at the VA Medical Center in Phoenix revealed to the world…

Netflix And The Net Neutrality Promotional Vehicle

Tech Suite - In The News - July 02, 2014, 9:03 AM
Federal Communications Commission chairman Tom Wheeler says he’s looking into Internet interconnection practices in general, and the disputes between Netflix…

Netflix And The Net Neutrality Promotional Vehicle

Stuff We Wish We Wrote - Homepage - July 02, 2014, 9:03 AM
Federal Communications Commission chairman Tom Wheeler says he’s looking into Internet interconnection practices in general, and the disputes between Netflix…

Poll: Few like sales tax on online purchases

Out of the Storm News - July 01, 2014, 4:26 PM

From WRAL-5:

Most North Carolina voters oppose a federal bill that would allow online retailers to collect out-of-state sales tax, according to a poll released Tuesday by the National Taxpayers Union and the R Street Institute… …”Across the board, there is surprisingly large opposition to changing the law to impose a sort of Internet sales tax collection burden,” said Andrew Moylan, executive director and senior fellow at the R Street Institute.

Poll: South Carolinians reject Internet taxes

Out of the Storm News - July 01, 2014, 4:18 PM

From FitsNews:

The data – released this week by the National Taxpayers Union and R Street Institute – underscores the extent to which the state wants the federal government to adopt a “hands off” approach when it comes to taxing the internet…

…Andrew Moylan, executive director and senior fellow at the R Street Institute, said the data painted an unambiguous picture.

“The voters of South Carolina clearly believe that the Internet should exist to enrich the lives of its citizens, not line the pockets of out-of-state revenue agencies,” Moylan said. “While conservatives strongly oppose such a law, it’s striking that independents and Democrats join them in clearly rejecting new state tax enforcement powers over the Internet.”

Michigan scalping law is 'consumer protection' gone wrong

Out of the Storm News - July 01, 2014, 4:02 PM

So-called “consumer protection” has evolved into a major legislative preoccupation, which would be fine if it was mostly related to protecting citizens from injury – physical or fiscal.

Alas, despite the emotional rhetoric politicians deploy in their floor speeches, much of the legislative output is more targeted at protecting special interests than at keeping the market honest and efficient.

Licensing bills, in particular, are simply impediments to potential competitors.  Many of them are ridiculous – like the 1,200 hours of study and three year’s apprenticeship required by one state to practice hair braiding; mandatory licenses for florists and interior designers; and the laws being passed to protect existing transportation monopolies from the new share economy.

Michigan has a law on the books that prohibits reselling tickets to events for more than face value. What that means is that people who incur charges from services like Ticketmaster charges can’t even recoup their out-of-pocket expenses by reselling the ticket should they be unable to attend the game, concert or other event.

It’s a criminal law, and theoretically one could be imprisoned for three months for a violation.  At a legislative hearing to modernize and decriminalize this behavior at which I testified, a pastor of a suburban Michigan church told how he had been un-theoretically arrested, fined and forced to pay court costs for trying to sell some of the unused tickets his church had bought for a congregation outing outside the event.

Most of the attention on ticket sales reflects consumer interest in sports and popular music concerts.  It is enormously entertaining to watch another run for the Triple Crown, or to see the world’s second highest-paid athlete make an exquisite crossing pass which allows Portugal to tie the United States in last few seconds of a World Cup match. I wasn’t personally affected when the Electric Forest concert this weekend in western Michigan sold out, but I did have friends there and can’t wait to hear about their experiences. A lot of people will pay plenty to have that kind of memory.

About half the states have some kind of prohibition on ticket resales, either a special law to protect NASCAR races, NFL games, events at universities and the like, or, in 11 of those states, a general prohibition.  Of those, all but three states allow commercial resellers to charge a service fee.  (Interestingly, two states – California and Arizona – specifically allow ticket scalping by statute.)

Respected media organizations, public policy institutes and the American Bar Association have all concluded that we have way too many criminal laws.  One recent book relates the story of a 12-year-old girl arrested on the Washington, D.C. subway for eating a single french fry.  As former Sen. Daniel Patrick Moynihan observed, “We started with a few laws, and now we have catalogs of offenses.”

The antiquated Michigan law is a pretty good example of why there is such a strong libertarian streak emerging in the country.  The legal landscape is so littered with criminal laws that nearly every citizen is a violator at least once a day.

Michigan is way out of line with her sister states by slapping criminal sanctions on mostly unsuspecting residents who have tickets to unload; want at least their money back; and may hope to match up with somebody who wants to be there so badly they will happily pay more.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

Reinsurers starting to drop their terrorism exclusions

Out of the Storm News - July 01, 2014, 3:19 PM

As property insurers lock up their July 1 reinsurance renewals, many are finding a bonus surprise above and beyond the soft pricing environment – the terrorism exclusions that have been standard in reinsurance contracts for the past decade are, in many cases, being completely done away with.

Writing in the Financial Times, Alistair Gray notes:

Reinsurers, which backstop conventional insurers, are agreeing to withdraw the terrorism exclusion clauses that they insisted on after the insurance industry lost about $40bn from the al-Qaeda hijackings of 2001.

Gray also quotes Moody’s Senior Credit Officer Kevin Lee noting that, while the “technology for modelling terrorism risk has improved greatly” since 9/11, the current trend “is largely driven by greater bargaining power among reinsurance buyers.”

A flood of institutional capital into the reinsurance sector – particularly to insurance-linked securities and other forms of collateralized reinsurance – has made it increasingly difficult for traditional reinsurers to find attractive prices in the market that long has been their bread and butter, the North American property catastrophe market. June 1 renewals, which are dominated by contracts covering property risks in Florida, saw rates on line fall by between 12.5 percent and 20 percent, and similar declines of up to 20 percent are expected for the July 1 renewals.

While there remain skeptical observers who feel the tide of institutional money could reverse itself, either in the wake of a significant catastrophe or once the market for fixed-income securities once again begins offering more normal returns, general sentiment is moving toward the conviction that the new money is here to stay. As Lara Mowery, global property specialty leader at reinsurance broker Guy Carpenter, put it in a recent Q&A:

There are things out there that will shape the space going forward, but I think the dynamics in terms of this capital coming in and the way that reinsurers and insurers are reacting is a longer-term proposition now. People are becoming more comfortable that this isn’t fleeting capital.

All of which should be taken as support for the approach taken in the U.S. House toward extension of the Terrorism Risk Insurance Program, including raising the trigger level for conventional terrorism to $500 million. Guy Carpenter recently issued a report finding that multiline terrorism reinsurance capacity is about $2.5 billion per program for conventional terrorism and about $1 billion per program for coverages that include nuclear, biological, chemical and radiological risks.

Those trends already supported raising the program’s trigger level from the current $100 million. With a growing number of reinsurers offering to include terror cover as part of an overall reinsurance program, that further strengthens the argument that the private market is ready and willing to take on more risk than it has in the past, and that the government should ensure that it does not crowd out the capacity that is coming on line.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

How The Populist Assault On Cronyism Draws New Battle Lines

Somewhat Reasonable - July 01, 2014, 2:35 PM

Slowly but surely, Washington is waking up to the idea that the current surge in populism is not some flash in the pan, but a real and sustained trend in politics on the right and left. Distrust and frustration with an economic and political system that rewards, defends, and bails out the wealthy, powerful, and well-connected while leaving the middle and working class to get squeezed by stagnant wages and the higher costs of the basic staples of life, has made things which were once considered humdrum politics as usual suddenly controversial.

The most recent hot-button issue to attract populist frustration was highlighted in yesterday’s hearings on Capitol Hill concerning the Export-Import Bank, an institution not many in politics could even name a few months ago. As a test case for how both parties are responding to this issue, the arguments yesterday over ExIm served as an illuminating example of the political shifts taking place in response to the populist frustrations with corporate cronyism.

Republican Financial Services Committee Chairman Jeb Hensarling opened today’s hearing on the Export-Import Bank by excoriating corporate welfare and calling out big businesses by name in something of a populist speech: ‘Who benefits? Overwhelmingly — and indisputably — it’s some of the largest, richest, most politically-connected corporations in the world — like Boeing, General Electric, Bechtel and Caterpillar. … And big Wall Street banks apparently benefit as well. As reported in the press recently, one former JP Morgan and Citigroup banker said of Ex-Im’s credit guarantees, “it’s free money.” So if you’re a politically-connected bank or company that benefits from Ex-Im, no doubt you would like it to continue. After all, it’s a sweetheart deal for you. Taxpayers shoulder the risk and you get the reward.’ …

On the other side of the aisle, Democrats were singing hosannas to corporate America. Rep. Denny Heck, D-Wash., warned darkly that if Ex-Im dies, we might “wake up in 20 years” in a world with no Boeing. Rep. Carolyn Maloney, D-N.Y., pointed to the Chamber-of-Commerce-led lobbying effort to save Ex-Im and declared, “865 businesses and associations can’t be wrong!”

It seems the Democrats are going to ignore calls to reconsider the defense of this corporatist entity, even as investigations into its corruption haveshifted the position of past defenders. Picking winners and losers is just that appealing. But the more interesting battle lines over ExIm are going to be on the right, where there really are people arguing that “Corporate welfare in the defense of liberty is no vice.”  Did you know that the ExIm bank won the Cold War and is critical to the cause of human flourishing?Neither did I.

The populists have a challenge: as a practical matter, there are simply not enough Republicans who agree with and share their views to shift policy priorities on the big issues. So they have to pick fights like ExIm to highlight these problems in ways that are clear-cut. They can rely on members like Jeb Hensarling to speak their language, but they need something more: they need people who recognize where the political winds are blowing, and adapt to these priorities.

There’s an interesting contrast here between Thad Cochran and Kevin McCarthy. Cochran is headed back to Washington after surviving a runoff thanks to a deluge of political activity from Haley Barbour and his family, Mitch McConnell, the NRSC, and the Chamber of Commerce to turn out Democratic voters for their candidate.  As a Senator, Cochran is little more than a puppet operated by traditional corporate and K Street interests - a life-long appropriator with no real ideology, and someone whose Coping With Senility process is going on in the public eye. If Republicans take the Senate, Cochran is in line to take over the Appropriations Committee, and with his re-election, his backers will stand to benefit enormously, where he is expected to bring back the old appropriations culture and “restore some of the spend-along-to-get-along spirit of bipartisan collegiality that drives insurgents on the right absolutely nuts.”

It’s no accident that the Barbour family’s role includes leading the lobbying effort to defend ExIm, and they and their clients stand to benefit enormously from this arrangement. That’s discouraging, but what do you expect – it’s politics as usual.

On the other side of the Hill, however, Kevin McCarthy’s new position on the Export-Import bank is an encouraging sign, particularly given its status as his first big shift post-election as Majority Leader. McCarthy is indicating that he’s happy to be swayed by conservatives when they’re on the same page as the WSJ editorial board, and he’s not going to go out and sacrifice himself over the plate on the first at bat to save some cronyist pocket change. This is another reason why ExIm was a smart play for a populist assault – Republicans don’t actually have to do anything in particular to kill ExIm, they just have to sit on your hands and let it die.

Here, we have a good test case for how Republican leadership will treat fiscal conservatives going forward. If McCarthy’s not even willing to let anti-cronyist policies happen that way, he’ll be a problem. But if McCarthy does keep his word, it could indicate why, on balance, it’s sometimes better for conservatives to have a pragmatic operator like McCarthy as a leader as opposed to the likes of Mitch McConnell (whose approach in the Senate has been to say the right things and vote the right way, but work behind the scenes to make sure K Street always wins and cronyist institutions like ExIm survive).

McCarthy’s not a dumb guy. He knows his position as leader isn’t very secure. With elections again after November, he’s basically an interim coach with a few months to win the permanent job. The chief difference between McCarthy’s and Cantor’s relationship with the conservative members is that McCarthy doesn’t think he’s a leader, either. And he seems to be okay with that: he’s a glad-hander, not an arm-twister. He just wants everybody to have a good time at the party, and if that takes an extra keg of Sierra Nevada, Kevin McCarthy will get those suds for you.

That’s why the new battle lines over cronyism are so interesting in charting the country’s political future. The always-too-simplified lines of establishment and conservative movement are already completely outdated. One of the important lessons for easily discouraged conservatives to remember about politics is that when political winds change, windsocks move too. And when the wind moves the GOP in this populist direction, it appears politicians like McCarthy will move with it, even as politicians like Cochran don’t.

It’s an intriguing possibility which indicates that maybe, just maybe, the Republican Party could reject some of its corporatist pro-business past and get serious about free market policies. We’ll see if McCarthy’s as good as his word on ExIm over the next few months, and particularly in the upcoming lame duck session, where – if candidates like Cochran prevail and the GOP as a whole underperforms in November – K Street will smell sweet, sweet taxpayer-funded blood.

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[Originally published at The Federalist]

Categories: On the Blog

Energy is America’s Economic and Political Trump Card

Somewhat Reasonable - July 01, 2014, 2:01 PM

Despite a slight contraction during the first quarter of this year, the American economy has been expanding slowly but steadily since the end of the “Great Recession.”

And America’s newfound abundance of energy — especially oil and natural gas — has played a key role.

As a result of what’s sometimes called the “shale revolution” — the extraction of oil and gas from shale and other source rocks buried up to 10,000 feet below the surface — domestic oil production has jumped 40 percent since 2010 and is nearly back to its peak in the mid-1980s. What’s more, according to the International Energy Agency, America’s incremental production over the next four years is projected to be greater than the expected increase in total global demand; and by 2018 at the latest, the U.S. will have reclaimed its crown as the planet’s number one oil producer.

Natural gas output has also climbed dramatically, up 33 percent since 2010, pushing us ahead of Russia to become the world’s number one gas producing country.

Five years ago, the oil and gas industry accounted for only 3 percent of America’s economic output. Today, it’s more than 10 percent. Employment in the oil and gas industry is up nearly 30 percent since 2008 while total U.S. employment has just returned to its pre-recession level. In those states that have embraced energy development, output and jobs have grown faster than in most other states while unemployment rates are well below the U.S. average of 6.3 percent.

Because of greater domestic production, oil imports have dropped from 50 percent of consumption to 30 percent in just five years. Lower petroleum imports, combined with higher exports of gasoline, diesel and jet fuel from America’s refineries, have had a positive impact on our trade deficit.

Growing use of natural gas for power generation, industrial boilers and heating has driven down utility costs for millions of households and thousands of businesses while at the same time reducing greenhouse gas emissions to a 20-year low. To sustain this trend, new nuclear plants are being constructed in Georgia and South Carolina using an AP1000 reactor design, a technologically advanced system that will add stability to the power grid while producing no greenhouse gases.

Abundant and relatively inexpensive energy supplies are also helping to revive America’s manufacturing sector and attract foreign investment. As evidence, since 2010 the 15 states with the lowest electricity prices have all posted gains in industrial employment.

Importantly, America’s evolution as an energy colossus offers the promise of greater international political clout if we pursue sensible policies. Federal authorities could expedite the construction of export terminals for liquefied natural gas . By exporting LNG from the U.S. to Europe and Asia we can help break Russia’s hold on those markets.

Similarly, Congress could remove the current prohibition on crude oil exports, an action that would quickly produce 90,000 new jobs according to a recent analysis by the American Petroleum Institute.

A strong foreign policy requires a strong economy, and energy is America’s trump card. We’re number one in natural gas, number one in nuclear power, number one in renewables, number two in coal, and we’ll soon be number one in oil. By playing this card smartly, we can boost economic growth while reclaiming some of our lost global political leverage.

Bernard L. Weinstein is associate director of the Maguire Energy Institute in the Cox School of Business at Southern Methodist University in Dallas and a fellow with the 4 Percent Growth Project of the George W. Bush Institute.


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