Out of the Storm News
From the Foundation for Economic Education
The headlines are, by now, depressingly familiar: “more Americans are stuck in part-time work” or “part-time jobs put millions in poverty…
In the latest in what has become a roller coaster of mergers and acquisitions in the health insurance sector this month, No. 2 insurer Anthem Inc. announced this morning it will purchase No. 4 competitor Cigna Corp. in a $54.2 billion deal. If approved, the move would allow Anthem to leapfrog over UnitedHealth Group to become the largest in the nation by number of members served.
The news comes on the heels of two other significant deals earlier this month. First, No. 6 insurer Centene Corp. announced it was buying No. 7 insurer Health Net Inc. in a $6.3 billion deal. Then, No. 3 insurer Aetna Inc. announced a $37 billion deal to buy No. 5 insurer Humana Inc. The combined Aetna-Humana would have been the second-largest group, but with the Anthem-Cigna deal, now likely will remain at No. 3.
With these deals, there would be only three significant general purpose health insurers operating at the national level — Anthem, Aetna and UnitedHealth. The rest of the market is largely composed of state-level mutuals, Medicaid specialists and supplemental plan underwriters. Of course, this assumes that Anthem isn’t still considering being swallowed by UnitedHealth, a much-rumored transaction the past few weeks, which would leave us with only two.
All this consolidation is a predictable, even inevitable result of the medical cost pressures that were exacerbated by Obamacare. The combination of the individual mandate; the guaranteed issue requirement; lifting the cap on annual and lifetime benefits; rules requiring an 80 or 85 percent minimum loss ratio; and a lengthy list of mandatory benefits all boost demand for health care, while the law does nothing to alleviate any of the pressures that constrain supply.
It isn’t that health insurers were hurt by Obamacare, per se. As the ranks of the uninsured shrink, they gain access to many more customers. Indeed, as shown by this chart from SNL Financial on companies’ Q2 performance, most are seeing significant earnings gains for the first time in years:
And it’s true that the first couple years of Obamacare actually were accompanied by relatively low medical inflation: 6.5 percent in 2014 and a projected 6.8 percent this year, far below the double-digit growth you saw in the early part of the century.
But bear in mind that the spread between medical inflation and general consumer inflation — which rose just 0.8 percent last year — remains pretty significant. And there are delayed effects just over the horizon, given massive consolidation by hospital groups, pharmaceutical companies and others on the provider side of the equation.
In response, the first move by health insurers has been to raise rates, something that is obviously easier to do in an environment with fewer competitors. In the longer run, to get ahead of the cost curve, health insurers are consolidating to gain more bargaining power. But you can be sure this arms race won’t end here. There will be more provider network consolidation in the future and, likely, even more health insurer consolidation as well.
I’m skeptical that insurers can win this arms race. Partly, because the health insurance sector already is fairly concentrated; certainly much more so than the provider sectors. But also because, whereas the insurers must contend with government-imposed price controls, the providers don’t have that problem.
In the old days, the left used to debate whether it would be better to have a single-payer system, like Canada, or a single-provider system, like the United Kingdom. We appear to be well on our way to having both.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Unless you live under a rock, it was hard to miss the showdown this past week in New York City between Mayor Bill De Blasio and ridesharing platform Uber.
Uber faced a De Blasio-supported proposal to cap its growth, as the mayor blamed the platform for causing traffic congestion and harming the taxi industry. With the help of a wide range of media including a New York Times ad, a television ad and even a De Blasio-themed ride service, Uber was able to successfully stop De Blasio’s assault.
The company even got some unexpected celebrity support on social media, including tweets from current Broadway star Neil Patrick Harris:
— Neil Patrick Harris (@ActuallyNPH) July 22, 2015
And Frozen star Kristen Bell:
And supermodel Kate Upton:
— Kate Upton (@KateUpton) July 22, 2015
Meanwhile, over on Facebook, actor Ashton Kutcher — apparently taking to heart the philosophy of the man he recently portrayed, Steve Jobs — delivered what appeared to be a full-blown manifesto in favor of innovation and the sharing economy: Even if they were somewhat obviously part of a coordinated public relations push, bearing the #UberMovesNYC hashtag, the celebrity tweets apparently did have an impact:
This obviously wasn’t the first time Uber and other ridesharing services have faced difficulties with state and local lawmakers and regulators in New York. From this week’s showdown, to earlier this summer in the Hamptons, to the state Senate and Assembly failing to advance ridesharing legislation during this year’s legislative session, New York has developed a harsh reputation for its handling of transportation network companies.
Even in the recent past, it would have not been uncommon to see TNCs face battles on so many different local fronts within a state. However, now as almost 65 percent of states have either enacted or pending ridesharing legislation, it is becoming less and less common to see such discrepancies. This leaves us to ask, when will we see changes? And, even more intriguingly, why New York?
Unfortunately, since the state Legislature has adjourned for this year, the answer to the first question won’t come until at least 2016. To answer the second question, one of the main catalysts for such a heightened statewide inclination to regulate and limit TNCs has been private interests.
With New York City possessing roughly 48 percent of the state’s overall population, it makes sense that the taxi industry has been able to play such an influential role in both the city and state as a whole. Combined with the fact that New York is a primarily Democratic state, its exerted levels of control over the likes of Uber have been shocking to no one.
Moving away from the city to a location like the Hamptons, the town of East Hampton required all drivers to maintain a physical business presence in the town. While this decision left many scratching their head, it can be simply broken down into being both a form of excessive regulation that favors incumbent local businesses, as well as a means for the town to keep tax revenues within its borders.
This tale of private interests playing a role in government regulations has been seen countless times before with ridesharing services; nevertheless, in very few of the previous instances have any of these private interests held complete control of bodies to the degree they do the behemoth that is the New York City Taxi Commission.
To the disappointment of many, this is also certainly not the last we’ll hear of Mayor De Blasio attempting to regulate Uber and defend his “beloved campaign contributor,” the taxi industry.
The task of taking on the private interests and regulators of New York state may seem like a daunting one, but if we look at what Uber did this past week in New York City, it stands as an example of how we can combat those who stand against innovation and consumer interests.
Beyond the usual arguments advocates point to when defending the TNCs – including job growth, innovation and convenience – that beneficial these services have been, there is another aspect of Uber’s impact that should speak volumes in New York. During his 2013 campaign for mayor, Bill De Blasio took 52 Uber rides in comparison to just 18 cabs.
It may be a long way to 2016, when New York can finally establish fair and permanent legislation, but if one thing’s for sure, it’s going to take one heck of a fight to get Uber to back out of the Empire State.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Is the U.S. solar energy market in a bubble? Analysis suggesting that the burgeoning industry is overvalued certainly aren’t new, and the list of observers who have deigned to call the purported bubble’s pending pop include e21 in 2014, The Wall Street Journal in 2013, CBS News in 2012, the Freakonomics blog in 2011 and even CNet all the way back in 2008.
In a July 9 piece, the Washington Times‘ Drew Johnson joins this chorus of solar bears, but adds a new twist. Likening the solar industry and related financial instruments to the 2008 housing crisis, Johnson asserts that when the solar asset bubble does pop, it will put taxpayers on the hook for billions in bailouts. There are many potential lessons one can draw from the financial crisis, its causes and the government’s response.
The lesson Johnson seems to have drawn is that securitization – the process by which assets are turned into tradeable financial instruments and sold to investors – can be a dangerous proposition. While it is not without its own unique challenges, the process of securitization can help unleash private capital for investment and more equitably spread risk. Bundling the income streams associated with a given asset (in this case, solar equipment leasing) allows risk to be distributed across a wider pool of investors.
It’s a market innovation about which most conservatives are cautiously optimistic, not reflexively skeptical. And while Johnson is not alone in taking a bearish position on the solar industry’s prospects, other talented industry watchers disagree. Major Wall Street players like Goldman Sachs have invested significant sums in various solar-related securities. Johnson argues those investments are likely to fail if the 30 percent solar investment tax credit expires as scheduled at the end of next year, leaving taxpayers holding the bag for the losses.
But there’s simply no evidence that, even if the solar industry collapsed catastrophically, any sort of 2008-style bailout would be forthcoming. The scale of investment in solar-related securities is small enough that it would barely amount to a ripple in the broader economy. While the fledgling industry has been growing rapidly and estimates of total solar market size vary widely, the U.S. market is likely less than $100 billion.
Housing finance, by contrast, accounts for as much as $21 trillion. Widespread failure of solar-backed securities would be an annoyance to investors, while widespread failure of mortgage-backed securities – particularly when multiplied by thousands of bets bundled as synthetic securities – was the kind of systemic threat the nation faced down in 2008. In economic terms, the comparison isn’t apples and oranges; it’s more like a single apple and Apple Inc. Furthermore, the prospect of the tax credit ending is hardly some closely guarded secret.
Wall Street is well aware that it could disappear, so the risk to income streams from the underlying assets is surely priced into the securities in question. In that way, it’s no different than investing in Boeing when there’s a possibility that the misguided Export-Import Bank from which it benefits might finally end for good. If the investments were to fail, it’s difficult to see Washington responding with much sympathy in any case, given tight budgets and Republican control of the House and Senate. The chances of a solar bailout are approximately equal to the chances of a Bernie Sanders-Donald Trump presidential race: zero.
To be clear, solar power should be asked to compete on its own merits and without the benefit of taxpayer subsidies. The same should be asked of every energy source, a process that will keep legislators busy dismantling our stupefying array of subsidies, tax preferences and accounting gimmicks granted to both traditional and emerging energy options. A truly level playing field is the only way to ensure that markets are free of distortion and taxpayers are free of unnecessary burdens. Regardless of solar’s prospects, however, the safe bet is that taxpayers won’t face any additional exposure associated with securities.
The following op-ed was co-authored by R Street Governance Project Director Kevin Kosar.
The Survey on the Future of Government Service, released last week by Vanderbilt University’s Center for the Study of Democratic Institutions, reveals significant problems with the federal workforce. According to the data, collected from 3,551 federal executives, the civil service is struggling to recruit and retain America’s best and brightest — and agencies are plagued by underperforming employees who are difficult to fire.
We have seen the by-products of this malfunctioning personnel system for years. The Department of Veterans Affairs has lurched from one crisis to another. Government-wide improper payments reached a new height of $124.7 billion in 2014, fueled by mistakes made by the Department of Health and Human Services and the U.S. Treasury. The General Services Administration, for its part, is unable to provide a correct inventory of the number of federal properties, let alone unload the unneeded ones.The true insight of this survey is that these crises are predictable; our current civil-service system is not structured to be highly productive. Politicians have ladened the system with other objectives, such as job security.
Here are four more notable findings from the study.
1. The federal workforce is inadequately skilled and likely to stay that way.
Recruitment is a problem for the public sector — 42 percent of federal executives believe their agency is unable to recruit the best employees. Troublingly, 39 percent of respondents think inadequately skilled federal workers represent a significant obstacle for agency mission fulfillment.
Recruitment is hindered by a lack of opportunity (cited by 54 percent of respondents), “rigid civil service rules” (54 percent), and salary (53 percent). However, only 32 percent of federal executives report lacking a qualified applicant pool. So not all is lost; high performers are still interested in public-sector jobs despite these negatives. But there are barriers (like the cumbersome USAjobs site and baroque agency hiring practices) that keep employers from effectively landing them.
2. Underperforming federal managers and employees are seldom fired.
Even if agencies streamlined recruitment, they still would be stuck with low-performing employees who are nearly impossible to dismiss. Some 64 percent of respondents said subpar managers are rarely (if ever) dismissed, and 70 percent said the same for non-managers. Private companies face far fewer obstacles, with 52 percent of private-sector executives surveyed saying non-managers could be reassigned or dismissed within six months. Only 4 percent of public-sector executives said the same.)
3. Federal executives do not feel that they have been properly trained.
Not only do the executives feel their workforce is inadequate, but many also don’t feel up to the task of managing those employees. Fewer than three-quarters of career executives and just 45 percent of appointees felt they had received “sufficient training and guidance on how to manage” federal employees.
The appointee/career split is stark, but unsurprising. Political appointees often come to their positions with little background in the civil service and its maddeningly complex thicket of statutes and rules.
Though career executives felt more confident in their abilities than appointees, the percentages are still distressingly low. It prompts the question, How are people getting to such high levels without sufficient training?
4. Agencies are poaching leaders from one another.
Some agencies are lucky enough to hire the best and brightest. But once they do, the battle to keep them begins. Of the executives polled, 42 percent of appointees and 39 percent of career executives said they’ve been approached about other positions within the last year. Who was top poacher? Other federal agencies.
This behavior is unsurprising. Since the 1960s, federal spending has quadrupled while federal-employee counts have remained steady. Congress and the federal courts have created a complicated system of hiring and firing that prevent agencies from acquiring and maintaining a skilled workforce.
The new survey reveals a high degree of variability among agencies, demonstrating that the situation is not hopeless. When asked about employee retention, 66 percent of the executives from one agency said they were able to retain top employees, while only 30 percent of executives at another agency reported the same. Some agencies, like the Federal Trade Commission, are doing a particularly good job. In the Best Places to Work Index of 2014, the FTC scored highly, and the survey confirmed the agency’s executives felt it could recruit top performers.
This variability was also found in a recent GAO survey that gauged federal employees’ level of engagement. The agency breakdowns are similar to those in the new study, with the VA and Department of Defense scoring low while the FTC maintains high engagement.
As the Vanderbilt survey points out, we can easily examine which agencies are succeeding to determine best practices to implement at others. We have the data for this type of reform; we just need to use it.
On behalf of the undersigned free-market and taxpayer organizations, we urge you to join Reps. Matt Cartwright, D-Pa., and Leonard Lance, R-N.J., in supporting the Preparedness and Risk Management for Extreme Weather Patterns Assuring Resilience and Effectiveness (PREPARE) Act of 2015. By streamlining the federal government’s processes and coordinating agency response to extreme weather events, the act goes a long way toward ensuring taxpayer dollars aren’t wasted in the wake of a natural disaster.
That the federal government will spend emergency funds on disasters in the future is virtually guaranteed. When disaster strikes, no Congress will be able to resist the call for assistance. Since further spending is inevitable, it is imperative to take the necessary steps to ensure an efficient, streamlined response.
Since 2000, only two years have seen less than 100 disaster declarations. In 2011, there were 242 such declarations, as well as 1,096 deaths linked to natural catastrophes and $23.9 billion in damage. From 1988-2013, the National Weather Service estimates that all hazard damages totaled $461.8 billion, for an annual average of $26.2 billion.
Yet despite these dire statistics, the federal government has yet to adopt many of the recommendations from the 2013 Government Accountability Office High Risk Report, such as the need to centralize strategy for coordinated response, monitor and verify agency effectiveness at responding to disaster, and the need to pass data and recommendations along to state and local governments. We can’t afford to delay any longer. With an average of 680 hazardous weather-related deaths per year, it’s time for the federal government to act and improve preparedness and mitigation, both in federal agencies and across states and localities.
Toward this end, the PREPARE Act:
- Creates an interagency council to set goals and priorities for resilience, preparedness, and risk management at the federal level;
- Assists state, local and tribal governments in managing their preparedness and risk by accessing the interagency council for recommendations and resources;
- Requires the interagency council to craft recommendations for how to respond to the GAO High Risk report; and
- Compels each agency to submit a disaster response plan and merge the plans to create a coordinated federal-level response to severe weather events, ensuring each agency can conduct business effectively during a disaster.
Thirty-three disasters have already been declared for 2015, and more are sure to come. Please join your fellow congressmen and help reduce the fiscal and human costs of these disasters by supporting the PREPARE Act.
R Street Institute
Coalition to Reduce Spending
Taxpayers for Common Sense
Taxpayers Protection Alliance
The Electronic Communication Privacy Act, first passed back in 1986, is badly in need of an update. For instance, current law allows federal civil agencies to obtain any “electronic communication” older than 180 days without a warrant.
As I have written before, H.R. 699, the Email Privacy Act, would begin the updating process by requiring government agents to obtain a warrant before accessing the content of private emails, texts or other digital correspondence.
While many civil libertarians and privacy advocates rightly have focused on efforts to curtail the invasive surveillance of the National Security Agency and the FBI, there are a number of federal civil agencies that could exploit weaknesses in the outdated ECPA to invade your privacy. Below are a few such agencies, and why they might be snooping through your private emails, texts, photos and other digital correspondence.
- Securities and Exchange Commission
The SEC has been a vocal opponent of ECPA reform, defending the ability to snoop through private emails without a warrant, because catching bad guys is way more important than the Bill of Rights. So if you randomly come under questioning for alleged insider trading (as happened to Dallas Mavericks owner Mark Cuban, who beat the rap) now you know the answer to the question “where did they get that info?”
- Internal Revenue Service
The IRS also isn’t too keen to lose its ECPA snooping power. While it hasn’t yet been reported as an issue, it’s conceivable the IRS – which usually wants to fight loopholes — could use this loophole in the law for tax-auditing purposes. Or, say, to “check on” conservative-leaning groups for further “examination” of their nonprofit status.
The SEC and IRS have been the most vocal agencies fighting ECPA reform, but here are a few other federal civil agencies who just might enjoy being able to access your private emails and texts.
- Bureau of Alcohol, Tobacco, Firearms and Explosives
I can only imagine the myriad ways the ATF could exploit ECPA to search through your emails without a warrant. For fun, here are a few:
- To see if you are evading the 50 percent taxes on cigarettes;
- To find out what gun clubs you are a member of;
- To learn that secret moonshine recipe you are cooking up at the still
- Federal Communications Commission
Maybe the FCC wants to make sure your electronic communication is upholding certain decency standards. No cursing!
- Environmental Protection Agency
It has become far too common for the EPA to impede on Americans’ private property rights. It isn’t too far-fetched to think the EPA might try to read your emails to collect information about your upcoming home remodel.
- Department of Education
As educators and policymakers are working to establish privacy protections of student data, it is important the Department of Education maintain students’ privacy and not use the power of ECPA to misuse students’ confidential data.
I’ll admit these last few are a bit over the top, but I hope the point isn’t lost. Federal agencies can use many different avenues to access our private communication. As more of our lives are conducted online, it is essential that our private messages, discussions and ideas be protected from unwarranted, prying eyes.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
A recent Senate deal marked a win for bipartisanship, but at the cost of responsible governance. After a highway bill was finalized Tuesday afternoon, a vote for cloture was held less than an hour later, despite the legislation being longer than the Affordable Care Act.
For Senate Majority Leader Mitch McConnell, R-Ky., the transportation bill is high stakes. Getting a long-term funding bill enacted both takes the issue off the 2016 debate stage and shows the public that Republicans can govern.
McConnell worked across the aisle with Sen. Barbara Boxer, D-Calif., to put together a 1,030-page bill. The esoteric negotiations between staff yielded an agreement both parties seemed open to embracing. McConnell then brought the bill to the Senate floor, asking the body to move forward with debate. A coalition of Democrats and 11 Republicans voted against cloture, signaling to leadership that debating a bill that few senators had time to read was not a good way to govern.
McConnell and Boxer believe this vote was a small roadblock and that the long-term solution–as opposed to the short-term solution proposed by the House–still has a chance. To determine whether the bill will become law, these questions are important to consider:
How long will the bill be effective?
The plan authorizes highway and transit programs for six years, but only provides enough funding for three years. The sponsors cite their ability to find consensus on “pay-fors” as sufficient reason to believe the next Congress will be able to finance the last three years of the highway fund.
Over the past six years, Congress has passed 34 reauthorizations of the highway fund. The results of this patchwork have been uncertainty, unnecessary gridlock and inefficient government. The House passed a bill last week that would follow this trend, providing funding only until Dec. 18. Alternatively, if Congress can pass meaningful legislation in the two weeks before summer recess, it would provide the Department of Transportation the financial security necessary to fix our roads.
Where will the money come from?
Each year, the federal government spends about $50 billion on highways. Under the McConnell-Boxer proposal, that spending would be financed by:
- About $105 billion from the federal gas tax and transportation taxes; this share of funding, however, is decreasing with the fall in the cost of fuel and the growing popularity of hybrid vehicles.
- $16.3 billion would be generated with cuts to the Federal Reserve’s fixed dividend rate. For banks with more than $1 billion in combined assets, the dividend would be cut from 6 percent to 1.5 percent.
- $9 billion would come from the sale of 101 million barrels of oil from the Strategic Petroleum Reserve over 10 years.
- $3.5 billion will come from an extension of Transportation Security Administration fees.
- $4 billion is expected to be created by indexing customs fees to inflation.
- $2.3 billion would come from limiting Social Security benefits paid to fugitives with warrants for their arrest, as a result of a proposed change in the 1935 law.
What provisions do Republicans oppose?
Sen. Richard Shelby, R-Ala., the Banking Committee chairman, opposes the deal because of the restrictions placed on the Federal Reserve. Others, especially in the House, are concerned that the bill authorizes spending for three years without any pay-fors. Tax watchdogs may also argue that indexing customs to inflation is a tax increase, putting pressure on Republicans to reject that funding mechanism.
What provisions do Democrats oppose?
Changes to safety provisions regulating auto, trucking and rail are raising concerns among Democrats, including Sen. Richard Blumenthal, D-Conn, according to the New York Times. The only way these concerns can be realized or remedied is if the senators have time to read the bill. Democrats also rightfully are concerned about the precedent that may be set by taking money out of the Social Security fund to be spent elsewhere, especially as Republicans point (accurately) to 2034 as the date the fund will become depleted.
Despite concerns from both sides of the aisle, it appears a bipartisan coalition does exist to pass the bill on its merits. The question is, why did McConnell try to force a vote so quickly if he knew he had a good deal?
For one, he fears that a long, deliberative process will result in irrelevant amendments being attached to the bill. Second, he recognizes that he must give the House adequate time to discuss the bill before authority to take money from the Highway Trust Fund expires Aug. 1.
Senate Democrats, with some bipartisan support from Republicans, have considered attaching a reauthorization of the Export-Import Bank to the bill. House Majority Leader Kevin McCarthy, R-Calif., and House Ways and Means Committee Chairman Paul Ryan, R-Wis., have warned the Senate to keep Ex-Im reauthorization off the road bill.
Another senator likely will attempt to tie Iran to the highway bill, even though the country is on another continent. Sen. Ted Cruz, R-Texas, a presidential candidate, has said publicly he will offer an amendment to the bill that would prohibit any deal with Iran until the country recognizes Israel and frees three American hostages.
Fellow presidential hopeful, Sen. Rand Paul, R-Ky., wants to offer an amendment that would halt federal funding for Planned Parenthood, in the wake of a pair of recently released videos that have raised questions about how the organization is compensated for fetal tissue.
What process would produce the best outcome?
The Export-Import Bank has nothing to do with the highway bill. Neither does the Iran deal. Nor does Planned Parenthood. Those debates deserve their own space, deliberation and separate bills.
Sen. McConnell should have provided more time for senators to negotiate; it is important that elected officials can knowledgeably debate and offer relevant amendments. But he is not wrong to push a vote sometime this week—even if it requires working through the weekend—because the House and the president must sign off on something by the end of the month.
House leadership did cast doubt on whether the legislation could pass that chamber. If the Senate passes their version of the bill, it would force the chamber to either take up the Senate’s version or go to a conference committee. In a conference committee, the numerous differences between the two laws would have to be worked out.
Congress plays by weird rules that many Americans do not understand. We should question why senators are offering noteworthy but irrelevant amendments to an important highway bill. We should also question representatives who say they are passing another six-month extension so they have time to “carefully consider” the issue, even though they have said the same thing 34 times in the last six years.
The same people who are crying “foul” on the fast cloture vote are likely to slow down the highway bill much more than necessary or desired by the American people. We deserve both bipartisanship and good governance, not one or the other.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Last week, I announced first-ever national estimates, generated from new Centers for Disease Control and Prevention data, of U.S. e-cigarette users in 2014, almost 2 million of whom are former smokers. Here, I provide more information about current e-cigarette use, especially in the context of current smoking.
The first chart shows the percentages of men and women in the United States who smoked in 2013 and 2014, along with e-cigarette use in 2014. Among men, smoking declined from 20.5 percent to 18.8 percent, despite the fact that 4.2 percent were e-cigarette users. Smoking among women also declined, although the drop wasn’t as strong. Overall, 3.4 percent of women currently used e-cigarettes in 2014.
The remaining charts show e-cigarette and smoking rates for men and women ages 18-24, 25-44, 45-64 and 65+ years. Smoking declined among men at all ages, with the largest declines at 18-24 years (-16 percent), 45-64 years (-11 percent) and 65+ years (-9 percent). Among women, declines in smoking were only seen in those 18-24 years (-3 percent) and 45-64 years (-7 percent).
E-cigarette use among men was 5.8 percent at age 18-24 and was lower in each successive age group. The same pattern occurred among women, with 4.4 percent of 18-24 year olds vaping.
While prohibitionists insist that e-cigarettes will “renormalize” smoking and erase decades of progress, CDC data clearly show that smoking continued to decline in 2014 as e-cigarettes surge in popularity.
Model legislation governing insurance for transportation network companies may have headlined the summer meeting of the National Conference of Insurance Legislators, but other topics – from “price optimization” to contractor fraud to Europe’s Solvency II – might prove more fruitful areas of discussion for the state lawmakers’ group down the road.
NCOIL continued the focus it has maintained on transportation network companies since the group’s November meeting in San Francisco. Early attempts to produce a model law were complicated by both intra- and inter-industry disputes between insurers, taxis and TNCs. During this most recent convention, two sessions of the Property and Casualty Committee were held to consider a model based on the national compromise that was struck between TNCs and insurers in late March 2015.
Original indications of consensus were dashed when state Rep. William Botzow, D-Vt., took the floor to articulate a list of concerns, ranging from technical drafting issues to substantive matters concerning the employment status of TNC drivers. Hurried changes were made before the committee convened again the following morning and there was some concern that a difference of opinion this late in the game would again delay the model.
However, when Sunday arrived, the final amended language passed unanimously. In its final form, it was substantially amenable to all parties, with the exception of some concern about the identification of specific rating agencies in the model.
Other topics of debate and discussion there were on tap in Indianapolis included:
A panel of experts briefed legislators on the relative merits and drawbacks of using “price optimization” techniques in insurance rate-setting. A subsequent panel of insurance regulators also weighed in on the topic. As should be expected, no consensus was reached about whether or not price optimization should be permitted. While actuaries expressed optimism about the potential for price optimization to reduce cross-subsidies between policyholders, the consumer advocates and insurance commissioners voiced skepticism about moving away from risk-based pricing.
Indiana Insurance Commissioner Steve Robertson made clear he is no fan of the practice, likening its identification to Supreme Court Justice Potter Stewart’s formulation for identifying pornography: “I may not know how to define it, but I know it when I see it.”
There was some initial discussion of a model bill to regulate “storm-chaser” roofing contractors who have no permanent place of business. Reports have come in from various quarters that unscrupulous contractors, sometimes with no intention or capacity to perform the work, are taking deposits from desperate homeowners with leaking roofs who can’t wait for the insurers to repair them. Since most homeowners never get up on their own roofs, they may sometimes be talked into replacing a sound roof with a shoddy new roof after a big storm.
Witnesses before the Property & Casualty Committee attested that roofing fraud is the fastest-growing fraud in Kentucky, according to the state’s attorney general, and the crime generating the most complaints, according to the state Chamber of Commerce.
National and global regulation
After years of squabbling merely about who speaks for the states on insurance matters – the lawmakers or the regulators – the front for insurers has expanded significantly, thanks to the Dodd-Frank Act and Europe’s Solvency II. The effort to defend state-based insurance regulation from federal incursion has now layered on top of it proposed international regulation, embracing capital standards, market conduct, executive compensation and governance issues.
Global insurers looking at new international requirements and international accounting standards note they have been locked out of meetings of the International Association of Insurance Supervisors. They also report difficulty figuring out with whom to speak and guessing what authority any particular regulator might have when it all shakes out. The reports are almost comical with people being appointed to new advisory bodies, but unable even to comment on what business was considered or concluded in closed door meetings.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Conservatives have spent the past month rejoicing over the U.S. Supreme Court’s ruling that the Environmental Protection Agency failed to appropriately account for industry costs when deciding to propose rules limiting mercury emissions from power plants. And rightly so.
After years of sounding the alarm about the massive economic costs the EPA is imposing, seemingly without concern, conservatives find themselves vindicated. For the first time in a long time, it seems there perhaps is a limit to what previously seemed like completely unchecked power. After all, the concept that costs should be appropriately accounted, and that you cannot simply claim any and all benefits, however tangential, to justify a regulation, is the most basic part of regulatory analysis. It shouldn’t take the Supreme Court to affirm this idea.
The question remains, now that the Supreme Court has ruled that the agency must do better, what will happen in future legal challenges over pending regulations, particularly the Clean Power Plan? And how should conservatives who oppose the rules react?
It’s tempting to draw too much hope from the ruling. It’s simply not yet clear what will happen or whether the rule will be vacated during the reevaluation of costs and benefits. Even if it were, a victory in the mercury case doesn’t guarantee a victory later. If anything, conservatives who want to halt the Clean Power Plan will at best get a brief reprieve while the agency figures out a “smarter” way to structure and justify the rule. The Supreme Court’s ruling doesn’t weaken, and may strengthen, liberals’ resolve to regulate any and all emissions. Moreover, the Clean Air Act’s language compels the agency to regulate dangerous pollutants, and the Supreme Court has found that carbon emissions qualify.
Conservatives should see this as a window of opportunity. The left is dead set on doing something about carbon emissions. The rules of the game are such that, if we stay on the current course, we will get some form of onerous regulation to achieve those emissions reductions. Therefore, the right should be proactive during this period of uncertainty and put forward a permanent, market-based solution, using that as a justification to remove the authority from the EPA.
We at R Street long have advocated for a revenue-neutral carbon tax at the federal level that includes preemption of EPA’s regulatory authority to regulate carbon. In absence of federal action, state-level carbon taxes as a means to comply with the CPP are the next best option. As we all know, and even the American Legislative Exchange Council has affirmed, pricing an externality is a far preferable method of control to regulation. At the federal level, the tax could be used to reduce, or even potentially eliminate, the corporate income tax. At the state level, it could be used to reduce taxes that discourage business development and economic growth.
Rather than using the recent ruling to rest on our laurels, conservatives should view this as a golden opportunity. The nation’s highest court has affirmed that the cost of regulation needs to be considered, and that the benefits may not be as high as the EPA claims. But it doesn’t end the agency’s prerogative to act. Congress must present smarter solutions, and once and for all take ownership over the climate change issue. Otherwise we’re merely waiting and hoping the issue will go away. That seems a too much of a longshot on which to gamble the future of America’s energy economy.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Mere mention of the word “oversight” can make a public administrator queasy. It’s not because bureaucracies inevitably have something tawdry or corrupt to hide. Indeed, government agencies often have much to crow about. Keeping the trains moving every day is an achievement, especially as legislatures layer multiple, often-conflicting duties upon those charged with execution.
Administrators and civil servants frequently feel their efforts are little known or appreciated. Which is not a surprise; few notice when government functions smoothly. But lo, when something goes wrong, a white hot light is cast.
Last month’s House and Senate hearings on the breach of Office of Personnel Management (OPM) data systems were typical. To be clear, OPM erred. It had been warned that a number of its systems were insecure and did not fix the problem. At least 4 million and possibly as many as 22 million current and former federal employees, contractors and other persons had personal information pilfered. I myself was a victim. Still-unknown malefactors have my Social Security number, address, federal work history and more.
The hearings brought some useful information to light about the hacks. The public benefited from getting an explanation as to when the cyber-attacks began and why OPM delayed notifying affected individuals. But the hearings also featured mega political grandstanding and ugliness.
Katherine Archuleta, OPM’s then director, was pummeled by legislators, who tagged her with the word “failure” repeatedly. She did herself no favors by saying nobody at OPM was to blame for the hacks. In doing so, Archuleta followed the well-trodden path of political appointees by shifting the blame to bad actors and, to a lesser extent, to Congress, for failing to better fund the office.
Members of Congress called for her head and got it. Some critics spoke as if Archuleta and OPM had no other responsibilities beyond data security, which they plainly do. OPM is the federal government’s civil service human resources shop. It has 5,500 employees and an annual budget of more than $240 million. OPM directs government-wide hiring, employment policies and employee benefits programs. OPM’s responsibilities are many, and its successes drew very little comment in the hearings. Indeed, the previous Congress’ hearings on OPM focused heavily on “problems” revealed in media exposes.
Politics long has been part of hearings. One need only recall Sen. Joseph McCarthy’s rants for the television cameras against “communist infiltrators” six decades back. That said, too many oversight hearings today are mostly partisan public-relations spectacles. They aim to perpetuate media narratives in hopes of attracting votes, donors or both. Some good emerges, but these hearings inflict long-term damage and immense distrust between public administrators and legislators. The former feel they are being pulled into a game of “gotcha.” The latter think they are being deceived and fed talking points. Neither side is entirely wrong.
Not long ago, congressional committees conducted oversight of agencies on a fairly predictable annual schedule. Hearings focused less on crises and more on routine operational matters. During the succeeding weeks, committee staff would work collaboratively to produce reports filled with findings of facts and proposed remedies. The media may have been bored to tears, but government was the better for it.
Committees and the agencies they oversaw, developed relationships that were based on trust and mutual interest. An agency head could tell committee leaders about a problem and expect to receive help, rather than face reprisal via a story on the front page of the next morning’s newspaper. Committees could get straight answers from agency personnel rather than spin from appointees and spokespersons.
For certain, there were committees and agencies whose relationships were a bit too cozy. Government wrongdoing and waste got swept under the rug and committee members’ parochial interests often were fed by the very agencies they were supposed to oversee. It was not perfect.
Why hearings morphed from dry procedure to carnivals of opportunism is a complex story. The shifting of control of the Congress has been a major factor. Since 1995, control of Congress has gone from Democrats to Republicans to Democrats to Republicans. As Frances E. Lee wrote:
The last three decades have seen the longest period of near parity in party competition for control of national institutions since the Civil War…The permanent campaign and politicians’ continual eye on the next election pervasively discourage efforts to work across party lines.
This is regrettable, but not irremediable. Congressional leadership could encourage committees to schedule regular oversight hearings that generally focus on agency operations. Committees also could adopt rules requiring more polite treatment of witnesses. (Congress has decorum rules for legislators’ talks on the floor.) Agencies, meanwhile, should start each Congress by meeting frequently with committee staff. Political appointees need to step back and allow agency professional staff to develop trust-based relationships with legislative staff.
Oversight should be a collaborative exercise for the public benefit. Agency officials bring expertise developed from their years of toil in the minutiae of policy implementation. Legislators provide fresh eyes and ideas and democratic accountability to public administration. Oversight really can be a win-win exercise.
The headlines are, by now, depressingly familiar: “more Americans are stuck in part-time work” or “part-time jobs put millions in poverty.” Former U.S. Labor Secretary Robert Reich recently took aim at “the rise of independent contractors,” declaring it to be “the most significant legal trend in the American workforce – contributing directly to low pay, irregular hours and job insecurity.”
The Intuit 2020 Report, authored by the software company, projects that in just five years, 40 percent of the U.S. workforce will be independent contractors. That report, in turn, led the website Quartz to declare that “we are quickly becoming a nation of permanent freelancers and temps.”
Even former Secretary of State Hilary Clinton, now the front-runner for the Democratic presidential nomination in 2016, has gotten in on the act. In the first major economic speech of her campaign, she set her sights on services like Uber, Airbnb and Etsy, which she noted allow Americans to make “extra money renting out a small room, designing websites, selling products they design themselves at home, or even driving their own car.” While innovation is to be welcomed, Clinton said, the growth of this new, so-called “gig” economy is “also raising hard questions about workplace protection and what a good job will look like in the future.”
There’s just one problem with this conventional wisdom that stable, full-time jobs are a thing of the past – it doesn’t appear to be true in the slightest.
This briefing offers six charts, compiled largely from the U.S. Bureau of Labor Statistics’ Current Population Survey, which demonstrate amply that the “trends” toward part-time and contract work, much-trumpeted by pundits and politicians, just simply have no grounding in the empirical data.
Part-time work is at historical norm
Last fall, CNN Money reported that while “overall U.S. unemployment has fallen steeply in the past year,” from 7.2 percent in October 2013 to 5.8 percent in October 2014, “too many people can only find part-time positions.” A story about the phenomenon in The Washington Post leads off: “In the new landscape of the American labor market, jobs are easier to come by but hours remain in short supply.” Even the Wall Street Journal, the flagship paper of market bulls, remarked that:
The situation of these so-called involuntary part-time workers—those who would prefer to work more than 34 hours a week—has economists puzzling over whether a higher level of part-time employment might be a permanent legacy of the Great Recession.
While the stories do have a basis in reality – part-time work did spike during the recession, a trend that was slow to reverse – current rates are fully consistent with long-term norms. In any case, the tide has long since ebbed.
Based on an average of the levels reported by BLS over the first six months of 2015, part-time workers – defined as those who work less than 35 hours per week – currently constitute 16.5 percent of the nonagricultural workforce. Not only is that rate a full percentage point lower than it was 20 years ago, but it’s also lower than the 16.8 percent that the workforce has averaged over the last 30 years.
More specifically, the segment of the labor force that most concerns analysts is so-called “involuntary” part-time workers. Students, retirees and the independently wealthy who hold down part-time jobs aren’t much of a concern. But where workers would like to find full-time work, but must settle for part-time due to lack of opportunity, that suggests structural weakness that might actually understate the nation’s unemployment levels.
The BLS’ Current Population Survey asks part-time workers whether they are working part-time for “economic reasons.” And looking at those responses, one finds the current rates of “involuntary part-time” to be very much in-line with long-term averages.
Over the first six months of 2015, about 25.7 percent of part-time workers cited economic reasons for working part time. That’s slightly above the 24.0 percent average for the last 30 years, but it’s lower than it was 30 years ago and it’s down significantly since the Great Recession, when roughly one-third of part-time workers were “involuntary.”
Putting the two data sets together, and viewing them through the narrower window of the recent economic recovery, the proportion of the overall workforce who are involuntarily part-time actually has been steadily shrinking, though it still has a ways to go. While the involuntary part-time rate was as high as 6.5 percent of the workforce from late 2009 through much of 2010, it has remained under 5 percent since the fall of 2014.
The share of contract workers is shrinking
Just as involuntary part-time work does not appear to be a “new normal” to which American workers simply must acclimate themselves, nor is it actually true that there has been a massive shift toward self-employed contract work. Quite the contrary, in fact, as the self-employed have been falling as a percentage of the nonagricultural workforce for decades, reaching a new low of just 5.3 percent in 2015.
A quibble one could raise with this data is that BLS’ definition of a “self-employed” worker does not include those who choose to incorporate their businesses. The data series unquestionably shows that true freelancers — those who get gigs that require them to file Form 1099 with the Internal Revenue Service — are shrinking as a percentage of the overall workforce. But if Uber drivers, Airbnb hosts and others who participate in what has come to be known as “the sharing economy” all tend to organize themselves as small businesses, they would not be captured in this data.
Thankfully, there is, in fact, another data series to which one can turn. The BLS’ Business Employment Dynamics program isn’t as old or as thorough as its Current Population Survey. Data are reported quarterly, rather than monthly; they aren’t seasonally adjusted; and the publicly available data set goes back only to 1993.
But the BED data does happen to track employment by firm size. And it clearly shows there’s been no notable increase over the last 20 years in the percentage of the private workforce who are employed at the smallest tier of firms: those with between one and four employees. Though it’s remained fairly steady, at between 5 and 6 percent of the private workforce, employment at these very small firms dipped as a percentage of the overall total in the 1990s, before recovering somewhat in the early 2000s. It is once again on a downward trend that, if anything, appears to have coincided almost precisely to the moment when the “sharing economy” began to take off.
So if the ranks of the self-employed have been shrinking, and the proportion of workers employed at tiny firms also has been shrinking, then what kinds of firms are absorbing these segments of the workforce? The answer, contrary to all conventional wisdom, is very large firms. The BLS data show that employment at firms with 500 or more employees has been growing steadily for the past 20 years and now represents nearly half the private workforce.
In what must count as the final nail in the coffin of the prevailing “gig economy” narrative, even that most bedrock of assumptions about the modern workforce – that today’s workers are more transient and today’s employers less loyal than either were in the past – appears to be without basis.
Over the past decade, the percent of salaried employees over age 25 who had at least 10 years of tenure with their current employer actually has risen, from 30.6 percent in 2004 to 33.3 percent in 2014. Moreover, workers’ median tenure with their current firms also keeps rising, from 4.9 years in 2004 to 5.2 years in 2010 to 5.5 years in 2014. Employees are, if anything, more stable in how long they stay with their employer than they were a decade ago.
In summary, there is no question that changing technologies and other market shifts have altered the nature of work, and will continue to do so. Legal and regulatory frameworks need to be sufficiently flexible to accommodate such changes. But it remains the case in U.S. labor markets that most people work full-time jobs for big companies, and they generally try to stick with those employers for the long haul. Claims to the contrary by the gig economy’s critics, or its supporters, just aren’t supported by the facts.
Last updated: July 21, 2015.
Alabama: No TNC Laws; Bill Failed (HB509)
Arizona: Enacted Legislation (HB2135)
Arkansas: Enacted Legislation (HB1773)
California: Enacted Legislation (AB2293)
Colorado: Enacted Legislation (SB125)
Connecticut: No TNC Laws; Bill Failed (HB6683)
Delaware: No TNC Laws; Bill Didn’t Advance (HB187), Adjourned to 2016
District of Columbia: Enacted Legislation (B20-0753)
Florida: No TNC Laws; Bills Failed
Georgia: Enacted Legislation (HB190)
Hawaii: No TNC Laws; Bill Introduced (SB1280), Adjourned to 2016
Idaho: Enacted Legislation (HB316)
Illinois: Enacted Legislation (SB2774)
Indiana: Enacted Legislation (HB1278)
Kansas: Enacted Legislation (SB117)
Kentucky: Enacted Legislation (SB153)
Louisiana: Enacted Legislation (SB172)
Maine: Enacted Legislation (LD1379)
Maryland: Enacted Legislation (SB868)
Massachusetts: Pending Legislation (H3351)
Michigan: Pending Legislation (SB188); Package of Bills Passed House
Minnesota: Enacted Legislation (SF1679)
Missouri: No TNC Laws; Bills Failed (SB351)
Montana: Enacted Legislation (SB396)
Nebraska: Enacted Legislation (LB629)
New Hampshire: No TNC Laws
New Jersey: Pending Legislation (AB3765)
North Carolina: Pending Legislation (SB541)
North Dakota: Enacted Legislation (HB1144)
Oklahoma: Enacted Legislation (HB1614)
South Carolina: Enacted Legislation (SB3525)
South Dakota: No TNC Laws
Tennessee: Enacted Legislation (HB0992)
Texas: Enacted Legislation (HB1733)
Utah: Enacted Legislation (HB24)
Vermont: No TNC Laws; Bills Failed (H385)
Virginia: Enacted Legislation (HB1662)
Washington: Enacted Legislation (SB5550)
Wisconsin: Enacted Legislation (AB143)
Wyoming: No TNC Laws
Something has gone wrong with small business in America. For the first time since statistics were kept, the rate of business failure now exceeds the rate of business creation. It isn’t that businesses are failing more often than usual; rather, new business creation has slowed markedly and the rate continues to slow further.
Though this worrying trend has several causes, one major cause is clear: small businesses are having a much harder time borrowing from banks. Thanks in part to the regulatory environment, small businesses lending is not sufficiently profitable to interest major banks. Small Business Administration loan programs can take up some of the slack, but not enough.
At the same time, Main Street investors who might like to provide funding for small businesses face many obstacles. Unless you are an Accredited Investor (basically, a millionaire), the only way you can participate in conventional venture-capital investing is if you are a friend or family member of the business owner. Even if you can somehow invest in a startup, thanks to existing securities regulations, you generally can’t sell your investment for years, if ever. As a result, venture capital is simply not available to or appropriate for the vast majority of investors or the vast majority of small businesses.
The Securities and Exchange Commission has taken some steps to make it easier for small businesses to raise money, but again, not enough. The new Regulation A+, which became effective on June 19, allows companies to more easily issue up to $50 million in securities without going through public registration and a costly initial public offering. Unfortunately, such securities issues still require audited financial statements and many months of scrutiny from SEC or state regulators, a process too cumbersome and expensive for most small businesses to afford.
More promising changes have been going on at the state level, where dozens of states now have simplified rules for “crowdfunding” securities issues of up to $1 million. But volume on state crowdfunding portals is still low and Main Street investors have a hard time investing in state-regulated securities. Most of their investing is done through 401(k) accounts, which require that investments be publicly registered on the federal level through the SEC.
In short, our present financial system is starving small businesses of capital at the same time as it denies opportunities to average investors. At a time of economic sluggishness, such perverse regulatory outcomes cry out for reform.
Fortunately, there is a way to kill two birds with one stone: change federal labor regulations to allow 401(k) participants to invest a small portion of their funds (perhaps up to 10 percent) in state-registered securities in their state, provided the securities have a liquid secondary market and meet other standards of prudence.
Using 401(k) accounts to experiment with new forms of investing adds layers of safety for the individual. A 401(k) only provides investment options that are selected by the plan sponsor, who is required to meet fiduciary standards of prudence. Investment vehicles would have to be developed by money managers and new analytical resources put in place to screen state-level investments. Even if the proposed rule change were made tomorrow, it would be a long time before a single dollar of 401(k) money hit the crowdfunding markets.
Still, the effects of such a rule change would be profound. Spurred by the potential of billions of dollars in new investment, state regulators and crowdfunding platforms would work hard to improve their marketplaces to make them safer for investors, and easier to use for professional management companies. Even before retirement accounts start funding small businesses directly, the improvements in state-level markets would directly benefit small businesses across America, and small investors too.
With our era’s tremendous advances in Internet communication, the biggest obstacles to small business finance are now outdated regulations. With a small regulatory fix, we can make America’s investing world more democratic, and our small businesses much stronger.
“Timing has a lot to do with the outcome of a rain dance.” – Unknown
Cowboy aphorisms have a lot to offer contemporary culture, in spite of their dubious origins. The National Conference of Insurance Legislators, an organization designed and created to assist state lawmakers in confronting novel and challenging developments in the nation’s insurance markets, has been caught performing a rain dance on muddy ground, the storm having long since passed. As rain dances go, it is not a great outcome.
Transportation network companies sparked controversy and confusion among insurers and public policymakers alike when they began to expand their operations meaningfully in 2012. A lack of clarity about the coverage status of passengers, drivers and bystanders led regulators to assert their authority in the absence of legislative guidance. The policy terra firm upon which the public relies began to crack and grow fallow in the absence of attention from elected representatives.
To rectify the drought, as far back as a winter meeting in San Francisco, NCOIL legislators and stakeholders were exposed to the existence and implications of ride-sharing services. At the group’s spring meeting in Charleston, S.C., a specific proposal was introduced. But poor weather conspired with disagreement among insurance industry stakeholders – as well as between the insurance, taxi and ridesharing industries – to forestall adoption of a model. In these months, NCOIL was preparing to rain dance before the storm, but failed to take a first step.
Weeks after the Charleston meeting, the sky opened up. A compromise between the insurance and ridesharing industries provided the material necessary for states to move forward with legislation of their own. The compromise was announced publicly just days before a meeting in Phoenix of the National Association of Insurance Commissioners. At that meeting, the NAIC’s working group on the sharing economy praised the parties for their compromise and, in doing so, offered a tacit endorsement of its content.
Half of the states now have passed TNC legislation, while a handful of others have moved into advanced conversations about their own legislative proposals. As a result, the model TNC legislation unanimously adopted this weekend by NCOIL, based on the national compromise, in essence began the organization’s rain dance well after the rain had passed and meaningful conversation about ridesharing services has evolved to other matters.
NCOIL’s delayed dance was three parts bad luck, and one part structural infirmity. Crummy weather, unfortunate timing and conflict between stakeholders all amount to bad luck. But NCOIL also was structurally ill-equipped to overcome the obstacles that ultimately delayed adoption of a TNC model.
Following NCOIL’s panel discussion on TNCs last November in San Francisco, which came after both Colorado and California already had enacted TNC legislation, the legislators had opportunity to focus attention on a brokered compromise of their own. Instead, a model bearing little resemblance to any of the stakeholders’ favored approaches was put forward. That proposal proved too far from the discussion to be salvageable, given the meeting’s constraints.
Which raises the question, why was the meeting so constrained? When there’s a time-sensitive and high-profile issue – about which NCOIL could bring and orient attention – NCOIL has to be less rigid in its schedule and more accommodating to the needs of its members. Work must be done when it’s needed.
With all the stakeholders together and available in the same place for a period of days, NCOIL could have held multiple sessions of its relevant committees to ensure that what could be achieved was achieved. Allowing a session to end with such a timely issue outstanding, only to have it linger for four months, helps neither NCOIL nor the stakeholders that support it as a forum.
If NCOIL can’t embrace a more flexible approach, one that caters to the need for timely commentary, its influence will lag behind other advisory organizations. It will be a clearinghouse for ideas already well worked-over by other, less electorally accountable bodies.
But if it does embrace that approach, NCOIL may become the first rainmaker in history to actually bring the rain. Or at least, to consistently make it appear that it’s making it rain.
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Even as the U.S. Department of Agriculture was reporting a record 98.2 percent of farmers and ranchers have met new “conservation compliance” guidelines required to qualify for federally subsidized crop insurance, some in Congress are pushing for needless delays that would allow more time to keep destroying the environment on the taxpayers’ dime.
According to the USDA, just 1.8 percent of affected producers failed to meet the June 1 deadline set in the 2014 farm bill to submit an AD-1026 form with the Farm Service Agency. The paperwork simply identifies highly erodible land and wetlands that a farmer has or will convert to agricultural use. Under provisions of the current farm bill, an additional 1.5 million acres of highly erodible land and 1.1 million acres of wetlands will be covered by conservation compliance programs, according to the department.
The USDA certainly can’t be accused of not letting farmers and ranchers know the deadline was coming. Notifications have accompanied every crop insurance contract written in the past year for the nation’s 561,000 policyholders and insurance agents who sell the policies have been ordered to highlight the deadline. The department also mailed out more than 50,000 reminder cards and letters; made more than 25,000 phone calls and held information sessions across the countries for more than 6,000 groups.
But bowing to pressure from fruit and vegetable producers, represented by the Specialty Crop Farm Bill Alliance, the House Appropriations Committee gave unanimous support last week to a $143.9 billion Fiscal Year 2016 Agriculture Appropriations bill that will delay enforcement of conservation compliance for another year.
The Senate Agricultural Appropriations Subcommittee on Tuesday marked up its own version of the legislation, which thankfully did not include the delay. But this leaves a major question to resolve as both measures move to their respective chambers’ floors.
Despite having a name seemingly designed to enrage conservatives – for whom both “conservation” and “compliance” tend to be dirty words – the requirements actually are common-sense measures intended to protect taxpayers as much as they are the environment.
First signed by Ronald Reagan in 1985, conservation compliance offers farmers a basic deal. They can do whatever they want with their own land. But if they want to enjoy subsidies from the taxpayers, who pay 62 percent of farmers’ insurance premiums, they have to take some basic precautions to ensure they conserve soil and don’t drain fragile wetlands. Since the program’s inception, it’s estimated it has saved more than $1 billion and about 2 billion tons of soil.
There are only about 10,000 farmers who aren’t already in compliance and the USDA believes the vast majority are those who have died, retired or submitted forms with mismatched identifications or other paperwork errors. The department has said it will need to contact about 2,500 farmers individually, and many would be granted the opportunity to extend the deadline. The actual number of noncomplying farmers, for whom enforcement of the entire program would be put on hold, could be as low as a couple dozen.
It’s also already the case that who have not participated in USDA programs before June 1 can delay certification for the current reinsurance year and those who have already filed are still allowed to make corrections to their forms. For most farmers, conservation compliance is not new, as it was a requirement of the “direct payments” program created in 1995, but abolished as part of the 2014 farm bill. Producers of commodity crops like grain, oilseed and cotton already have to meet the requirements to be eligible for other programs.
The decision to reattach conservation compliance to crop insurance subsidy eligibility is one of the few good things to come out of the 2014 farm bill. It would be folly for Congress to put off implementation for even one more day. As Ferd Hoefner, policy director of the National Sustainable Agriculture Coalition, told the site Agri-Pulse: “There is no issue or problem that such a delay would be solving.”
With customs bills having passed both chambers of Congress, it’s now up to conferees to decide if the final legislation will include language from the Senate bill to create a new intellectual property enforcement czar.
As my colleague Mike Godwin previously wrote, the Senate version of the bill – S. 1269, the Trade Facilitation and Trade Enforcement Act – features language advanced by Sen. Orrin Hatch, R-Utah, to create a new chief of intellectual-property enforcement within the Office of the U.S. Trade Representative. Section 611 of the bill would amend the Trade Act of 1974 to create the new IP czar, who:
(7) shall be to conduct trade negotiations and to enforce trade agreements relating to United States intellectual property and to take appropriate actions to address acts, policies, and practices of foreign governments that have a significant adverse impact on the value of United States innovation. The Chief Innovation and Intellectual Property Negotiator shall be a vigorous advocate on behalf of United States innovation and intellectual property interests. The Chief Innovation and Intellectual Property Negotiator shall perform such other functions as the United States Trade Representative may direct.
The title “Chief Innovation and Intellectual Property Negotiator” is itself a fundamentally conflicted idea. Promoting maximalist intellectual-property enforcement often will actually hinder innovation in a whole host of ways. In addition to this new position being a generally bad idea, the White House already has an intellectual property enforcement coordinator, who commonly is called the “IP czar.”
What’s more, the Congressional Budget Office estimates in its report on the Senate bill that creating the new position will cost taxpayers at least $10 million over the next four years. Since the USTR already looks out for U.S. intellectual property interests in negotiating trade deals, and the U.S. Commerce Department’s International Trade Administration ensures that our trading partners uphold the terms of those deals, it’s hard to see why this would be a good way to spend taxpayer money. Unless you’re Sen. Hatch, and want to create another White House position that, once confirmed, will be basically unaccountable to you.
Thankfully, this provision was left out of the House version of the bill, H.R. 644. As the two chambers’ bills move to conference this week, conferees should spike the IP czar language. Conservatives, after all, shouldn’t be in the business of needlessly expanding government bureaucracy.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Last week, the Tallahassee City Commission showed that even a broken clock is right twice a day. I have oftentimes taken issue with its decisions over the years —especially the vote to increase my property taxes yet again. But I feel compelled to give credit where credit is due.
As local governments around the state take protectionist, anti-market steps under the guise of “public safety” to undermine competition and drive out ride-sharing companies such as Uber and Lyft, Tallahassee commissioners actually did the right thing.
The commission enacted sensible regulations — focused on public safety rather than market interference — which will allow ride-sharing and taxi companies to safely coexist. This is not only a win for consumers, but more importantly, it preserves an alternative many have used to avoid getting behind the wheel after a night of drinking.
Unfortunately, other local governments around the state have elected to enact onerous regulations intended to drive out competition rather than to foster it. The Legislature should therefore still revisit this issue during next year’s session so that all Floridians may access the competitive transportation options that we enjoy in Tallahassee.