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Updated: 19 min 12 sec ago

R Street says House terror insurance bill is short on reform

December 09, 2014, 3:58 PM

WASHINGTON (Dec. 9, 2014) – The R Street Institute expressed disappointment at newly introduced U.S. House legislation that would extend the federal Terrorism Risk Insurance Program for six years with few changes to its underlying structure.

The legislation, which is expected to be taken up by the full House this week, would raise the level at which the $100 billion federal terrorism insurance backstop is triggered from current $100 million to $200 million, phased in over the course of the extension. Legislation approved by the House Financial Services Committee this summer could have raised the trigger for conventional terrorism attacks to $500 million.

In November 2013 testimony to Congress, R Street Institute Associate Fellow Ernst Csiszar, a former president of the National Association of Insurance Commissioners, said data from the market for industry loss warranties suggests the private market could absorb raising the trigger level to as high as $20 billion.

Created in 2002, TRIP would expire Dec. 31 if not extended by Congress.

“Given the burgeoning private market for terrorism insurance, this extension should have been an opportunity for real reforms that take risk off the backs of taxpayers,” R Street Senior Fellow R.J. Lehmann said.  “We supported extending the program in a way that would continue to phase out the government’s role, rather an abrupt expiration that could have had unpredictable effects, particularly on workers’ compensation market. The reforms included in this bill do not go nearly far enough.”

In addition to a significantly higher trigger level, Lehmann argued that Congress should have heeded the call for deeper and broader reforms to the program, including phasing out coverage altogether for commercial liability insurance and charging insurers a premium for the reinsurance the government provides.

“In each of its two prior reauthorizations, Congress moved to shrink the terror insurance program and the market has responded by offering more private coverage at reasonable prices,” Lehmann said. “Leading into this expiration, we already were seeing reinsurers offering even more capacity, in some cases dropping exclusions for terrorism coverage altogether. It is a disappointment that lawmakers wouldn’t take advantage of those trends by moving more forcefully to reform TRIP and better protect taxpayers.”

More folly from the NY Times on snus

December 09, 2014, 12:44 PM

The New York Times has added more fuel to the anti-tobacco harm reduction fire with a Dec. 4 editorial rehashing the somewhat slanted reporting that appeared in the paper’s news pages on Nov. 30. In two stories that day, the Times explored issues surrounding Swedish Match’s FDA application to change the warnings on its snus products. As I noted, “the Times and their quoted experts did a major disservice to their audience; they failed to report the simple truth, that mouth cancer risk for Swedish snus is next to nil.”

The original warning labels that Congress ordered for tobacco product packages in 1986 were factually wrong and fatally misleading to smokers, chewers and dippers. Congress didn’t make the warnings more accurate when it ordered the FDA to regulate tobacco in 2009. It just made them cover more of the package – an action it didn’t take with cigarettes.

The Times editorial acknowledged that snus is “is less harmful than smoking tobacco,” but it painted Swedish Match’s application as a marketing ploy. That ignores the critical need to terminate government’s lie about products’ health risks.

The editors echoed tobacco prohibitionists in denying that snus played a role in the Swedish experience. Said the Times, “reduced smoking rates and lower rates of tobacco-related diseases such as lung and oral cancer” in Sweden since the 1970s “is debatable,” attributing the successes to “various bans, restrictions and public health campaigns.” The editors failed to consider that the reductions are exclusively seen in men – who use snus and have the lowest lung cancer rate in Europe – not in women, who rank fifth in Europe for lung cancer.

The Times acknowledged that their reporters had “cited independent experts who found that snus is not nearly as lethal as cigarettes,” but it added the qualifier “[snus] is not risk-free either, especially for users who also smoke.” It is patently obvious that smoking is risky for anyone, including snus users. It should also be obvious that a smokeless tobacco can labeled “this product is not a safe alternative to cigarettes” encourages smokers to stick with their habit.

The Times editors revisit the discredited gateway theory (“the danger is that snus might lead some nonsmokers and former smokers to…progress on to cigarette smoking”), but they ignore substantial evidence that this has not happened in Sweden or in the United States.

Summing up, the Times observes: “abstention would be the safest approach.” That might work in Neverland, but in the United States, abstention was impossible for the 8 million smokers who died in the 20 years since I first described our government’s warnings as bogus. That is no one’s definition of safe.

EPA’s uncertain FIP power drives competing lobbying on state ESPS plans

December 08, 2014, 3:13 PM

From InsideEPA:

Also, the free-market R Street Institute says in a Nov. 24 paper that the ESPS will fail due to state resistance.

Concerns about EPA’s overreach “have resulted in a number of state legislatures adopting laws that would actually forbid pursuing compliance methods ‘outside the fence,’” the institute says. “Next year, that list of states will likely grow, as state officials become more aware of the threat posed by EPA. . . . Many of these states will fall short of EPA compliance. Other states may simply refuse to provide plans to the agency.”

Dismantling government shutdown politics may improve GOP’s advantage responding to Obama’s immigration actions

December 08, 2014, 9:46 AM

In politics, seeing the bigger picture is more of a challenge than understanding the specifics of the moment. Funding the federal government past Dec. 11 in the middle of a clash over Obama’s immigration actions is no exception.

Because of congressional failure to adhere to the normal budget process, federal legislators have maintained government operations through large spending bills, also known as continuing resolutions. The most recent spending bill will expire this month. Congress must decide what areas of government it wishes to fund and for how long.

President Obama’s actions on immigration have significantly complicated those political considerations. Several Republican lawmakers — such as Texas Sen. Ted Cruz, Rep. Steve King of Iowa and Minnesota Rep. Michele Bachmann — have called on House Speaker John Boehner to include language in the upcoming funding legislation that would prevent federal spending on the president’s intended immigration plans. Such language would likely be removed in the Senate and potentially lead to another government shutdown if the House and Senate were unable to reach a subsequent agreement.

To avoid a shutdown, Boehner and current Senate Majority Leader Harry Reid are reportedly mulling over a compromise measure that would finance most of the government through the end of the fiscal year, while funding the Department of Homeland Security for only a few months. That deal would avoid a shutdown and give Republicans the ability to push back on President Obama’s immigration plan when they have control of the Senate. Reid suggested that such a proposal would be “a big accomplishment.”

In response to Reid’s comments, Jay Saxon, a lawyer in Birmingham and personal friend, succinctly posed a question that many Americans should be asking: “Since when is it a ‘big accomplishment’ to agree not to shut down the government?”

The answer is obvious and simultaneously disappointing. Congress, even a divided one, is constitutionally charged with the responsibility of funding the operations of government. Doing so should be an expectation, not a reason for applause.

Yet America finds many of its political leaders debating whether they should shut down the whole government over an inability to compromise on one policy area.

If Congress, charged by the Constitution with actually making laws, wants the president’s signature on an immigration reform measure, compromise will be required. If the president would truly like to receive a bill from Congress that he would sign, he needs to work with them. Those realities are not failures of leadership or evidence of political weakness; they are critical aspects of the Constitution’s required system for enacting law.

Sadly, political “leadership” at the federal level has devolved into the ability to win a high stakes game of chicken by successfully ensuring that the political opposition takes the blame for the damaging collision. By rolling the funding of the entire government into essentially one vote, important and legitimate policy disputes like immigration have been steamrolled by a winner-take-all approach.

The president picked the lame duck session after being handed a national political defeat to act unilaterally on immigration. He could have just as easily initiated his plan at any time during his term in office. President Obama knew his actions would be controversial, he knew Republicans and Democrats would not pass any immigration reforms in the lame duck and he likely suspected that Republicans might be baited into a repeat of 2013′s 16-day shutdown.

Many conservative Republican politicians may have concerns that their party’s leadership may be unwilling to undertake a battle over executive immigration action after funding most of the government. As a consequence, legislators like Cruz, King and Bachmann are willing to take on the president at every possible occasion, including next week.

If Republicans do plan to challenge the president in the next Congress and are able to strike a deal to split Homeland Security support from the remainder of federal funding, the president’s veto in 2015 would only have the ability to hold up funding for a relatively small portion of the government. By breaking the winner-takes-all approach to federal finance, Republicans have more political leverage and less exposure to being blamed for impacting unrelated federal programs.

While a few months delay in confronting the president’s immigration actions might be hard for conservatives to stomach, it could radically change their tactical advantage giving them a better chance at success.

How dangerous is Swedish snus? Don’t ask the New York Times

December 08, 2014, 9:31 AM

The New York Times has published a reasonably accurate portrayal of the Swedish snus experience that I have chronicled for more than a decade. Reporters Matt Richtel and David Jolly examined Swedish Match’s FDA application to remove the federally mandated “mouth cancer” and “not-safe-alternative” warnings from snus products.  I have discussed this landmark filing previously here.

In a companion piece, the paper tried to answer two important questions about snus and mouth cancer: “How accurate is the current warning? How dangerous is Swedish snus?”

Despite a wealth of available information, the Times unfortunately failed to nail the answers, even after acknowledging that ‘Many studies have been done on the question (sic)…” but fretting that “…but as in many fields that involve complex questions and human subjects, the research is imperfect.”

How is the research imperfect? “For instance, some research concluding virtually no oral cancer risk from snus was funded by Swedish Match itself.” The Times fell back on the old canard – the funder influenced the finding, despite total disclosure and high-quality peer review. The paper failed to note that numerous studies, regardless of funding, show “virtually no oral cancer risk” for Swedish snus and American chew and dip.

The Times asked Kristin L. Sainani, a Stanford epidemiologist not involved in tobacco research, to examine the science. She was remarkably indecisive:

‘The weight of the evidence suggests a small increase’ in the risk of oral cancer with snus. In Sweden, users of Swedish snus see virtually no increase in the rates of lip and oral cancer.

In the end, she made the correct call: virtually no increase.

Dr. Sainani attempted to provide an anti-snus slant using double negatives: she said that “it is inconsistent with the evidence” to suggest that there is “absolutely no harm to an individual” from snus.  In essence, she repeated the no-win argument that snus can’t be proven absolutely safe. That’s an irrational standard that many common foods couldn’t meet.

Dr. Sainani was asked by the Times to resolve the mouth cancer question, yet she is quoted on an entirely different matter: “In fact, she said, Swedish snus users face a doubling of risk of pancreatic cancer.” It appears that Dr. Sainani exclusively used a 2008 review by Boffetta et al., which has been exposed as relying on cherry-picked data.

Is a snus pancreas cancer risk real? No. Five years ago, I detailed how Boffetta fabricated the risk in 2008, and, in 2011, Boffetta acknowledged that his earlier finding was wrong. Sainani would have discovered this if she had compared the faulty Boffetta analysis with the most authoritative and comprehensive meta-analysis by Peter Lee and Jan Hamling, which found no pancreas cancer risk, in addition to no mouth cancer risk.

The Times article ended with Dr. Deborah Winn, deputy director of the division of cancer control at the National Cancer Institute. Readers of this blog know that Dr. Winn launched the smokeless tobacco mouth cancer scare in 1981. While she is the NCI’s top authority on smokeless tobacco and cancer, she demonstrated an appalling disregard of facts in a 2010 congressional hearing. In the Times article, her obfuscation continued:

[Winn] considered Swedish snus to be ‘a form of smokeless tobacco,’ which, in general, she said, is generally ‘linked to mouth cancer…Swedish snus in the past has given you cancer, and at the current low levels, I don’t know,’ she said. ‘There could be some risk there.’

The one data point Winn provided to the Times is false. “She said studies done in the 1990s showed that users of Swedish snus in the 1970s faced a twofold increase in the risk of oral cancer.” There were two studies of Swedish snus and mouth cancer published in 1998.  They concluded:

  1. [Snus] was not found to be a risk factor for oral cancer in our study.”
  2. No increased risk [for head and neck cancer, including oral cancer] was found for the use of Swedish [snus].

The Times and their quoted experts did a major disservice to their audience; they failed to report the simple truth, that mouth cancer risk for Swedish snus is next to nil.

A Public Forum Leading on Climate

December 07, 2014, 7:00 AM
R Street senior fellow Ian Adams will be a featured speaker at an upcoming panel discussion of climate policy.

Fighting Poverty: Solutions from the Center-Right

December 06, 2014, 4:45 AM
R Street senior fellow Lori Sanders will be a featured speaker at a panel on poverty policy.

Cheers! A day worth celebrating

December 05, 2014, 4:13 PM

Even in the middle of a busy holiday season I find it is worth taking time to commemorate the end of Prohibition. Eighty-one years ago today the 18th Amendment was repealed and Americans could breathe–and drink–easy again.

For 13 years Americans were subject to the nanny-state experiment called Prohibition, during which the production, sale, and distribution of alcoholic beverages was illegal in the United States. But instead of a dry Utopia filled with rainbows and ponies, a violent black market emerged, jeopardizing the livelihood of many bystanders. This “Noble Experiment” had disastrous results with a host of unintended economic and social consequences.

Since the end of Prohibition, American entrepreneurs have embraced the economic opportunity a legal alcohol industry creates. But in many states hints of the Prohibition Era continue to exist. A recent Mercatus Center study examined how the three-tier distribution system, tedious labeling requirements, unfair franchise laws, and exasperating permitting processes “bottle up the market.” These laws benefit established brewers, distillers, and wine makers, creating an environment that makes it extremely difficult for new businesses to emerge.

There are a number of other burgeoning industries that endure cumbersome mandates controlling the distribution of goods and services. R Street recently published a report evaluating how a number of cities are imposing overbearing regulations on transportation network companies (TNCs) such as Uber and Lyft; companies that have improved services and reduced their own costs, thereby upending the status quo for local taxation structures.

Similarly, Tesla has changed the car sales model by working directly with consumers and cutting out the car dealership who act as a middleman. This new approach has angered many established interests who have pushed states such as TexasNew Jersey, and Michigan to block this revolutionary approach, protecting the middleman and thus limiting consumer choice.

So on this day let’s raise a toast to celebrate the end of the Prohibition experiment and look forward to a day when policy makers embrace the benefit of consumer choice across all industries.

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

New portal will help alleviate Texas’ unfunded storm liability

December 05, 2014, 11:29 AM

Gulf coast states have long struggled to deal with the increased risk of property damage in hurricane-prone coastal areas. In Texas, we have increasingly relied on TWIA (the Texas Windstorm Insurance Agency), a state-run entity which writes wind and hail policies in designated coastal counties.

TWIA is supposed to be an insurance provider of last resort, but its artificially low premiums have caused TWIA to grow far beyond this goal. And along with that expansion has come increased risk. TWIA’s total potential liability is around $77 billion, but it only has around $200 million cash on hand, with another couple hundred million in a catastrophe fund.

Now, after years of radical expansion, TWIA has begun to take steps to reduce its exposure and increase its ability to weather the next big storm. Most recently, the state-run agency has created a new online portal, which will make it easier for private insurers to write policies for current TWIA policyholders.

The site will contain basic information about current TWIA policyholders, like name, address, building characteristics, and the amount insured. Private carriers can then review the information and, if they wish, contact the agent of record to make an offer of coverage. Private carriers have to register and sign a non-disclosure agreement to gain access to the portal, and individual policyholders can opt-out of having their information provided.

Similar portals have been implemented in Florida and Louisiana, and have had some success in depopulating those states’ TWIA-equivalents. The current TWIA portal, however, is more modest than the Florida and Louisiana approaches in a way that will probably limit its overall impact. In Florida, for example, individuals are required to take a private policy if it is less than 15 percent more than the cost of their current policy.

In Texas, by contrast, acceptance of the new policy is completely voluntary. Given TWIA’s artificially low rates, it’s unlikely that many private carriers will be willing to match or beat TWIA’s rates. A TWIA report from last year recommended a more robust portal on the Florida or Louisiana models, but noted that this would require legislative action. Still, the new portal is a step in the right direction, and TWIA should be applauded for thinking creatively about how to improve its financial footing.


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Federal snow storm aid, self-government and CRS reports

December 05, 2014, 7:00 AM

The Federation of American Scientists recently posted a copy of a report titled, “Major Disaster Declarations for Snow Assistance and Severe Winter Storms: An Overview.” The document was produced by the Congressional Research Service, an agency where I worked for a decade. The report is fascinating on a few counts.

First, it likely will come as news to much of America that the U.S. government provides funds to localities clobbered by blizzards. The Federal Emergency Management Agency administers aid for both “snow assistance” and for “severe winter storms.” What’s the difference? The report explains:

“According to FEMA, a snowstorm is an event in which a state has record or near-record snowfall in one or more counties that overwhelms the capability of state and local government to respond to the event. Severe winter storms, on the other hand, are events that occur during the winter season that include one or more of the following conditions: snow, ice, high winds, blizzard conditions, and other winter conditions that cause substantial physical damage or property loss.”

The CRS report finds that $2.7 billion in federal aid was provided over the past five years, most of it going to help cover the cost of debris removal, infrastructure repair, and, yes, snow removal. This is not a new policy unleashed by an activist Obama Administration—in fact, it is carried out consequent to the Stafford Act (42 U.S.C. 5122), a four-decade old statute. As another CRS report notes, a century ago, the feds had no role in disaster response and recovery. It was purely a local matter. But, bit by bit, the responsibility for disaster response and recovery has shifted from states and localities to the feds.

This snow aid report also is noteworthy because it illustrates a basic truth that is not widely accepted: governance is incredibly complicated. Too often, one hears it said that anyone with good horse sense can stride in Congress and begin governing well. In truth, governance, particularly in the 21st century, is fantastically complex. The federal government is a multi-trillion dollar conglomerate, undertaking an incredible number of activities. To be an effective legislator or congressional staffer who can make smart policy, one needs an immense amount of schooling in the nuts-and-bolts of government works. And as this report illustrates, that is a major role of the Congressional Research Service. This report walks the reader through the basics, explaining what the policy is, what it costs, and how it is administered.

Which leads to a final observation. Nowhere else on the Internet can one find this information in one document. This report became available to the public only because FAS, a private organization, has friends on the Hill. FAS, commendably, publicly shares whatever CRS reports it can get, which is a real benefit. Currently, CRS is not allowed to share its reports with the public, and Congress itself does not post them on Congress.gov. Congress should share these reports with the public. The public would benefit from free access to these nonpartisan, objective documents. CRS reports help Members of Congress better do their jobs, and they can help the public better understand the government that is to serve them.


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Don’t let Congress undermine surveillance reform

December 04, 2014, 4:30 PM

Eighteen months after the Snowden revelations, Congress has failed to enact surveillance reform. With the improved USA FREEDOM Act not reaching cloture in the Senate and the Amash amendment falling short in the House, many Americans were grasping onto the Massie-Lofgren appropriations amendment passed in June as the last opportunity to see real Congressional action. Unfortunately, a recent effort by House leadership will undo that vestige of reform.

Section 702 of the FISA Amendments Act authorizes the NSA to collect emails, chats, and browsing history without a warrant if that information is collected while the agency is targeting communications where one of the parties is believed to be overseas. This incidental search is colloquially referred to as “backdoor searches” and is seen by many as a serious breach of privacy.

In an effort to end this government overreach, a bipartisan coalition led by Rep. Thomas Massie (R-KY) and Rep. Zoe Lofgren (D-CA) ushered through the House of Representatives an amendment to the Defense Appropriations bill that would block funding to the NSA for these so-called “backdoor” warrantless searches. This amendment passed with overwhelming bipartisan support: 293 ayes, 123 noes, and 1 present.

However in the latest deal to fund the government, known around the Hill as the “CRomnibus,” House leaders have stripped out the Massie-Lofgren amendment. This action is extremely disappointing to many Americans who were hoping to see Congressional commitment to surveillance reform.

R Street has joined with 30 other privacy and tech advocacy groups voicing their displeasure with this political maneuver. Signing a coalition letter urging the House to restore the privacy of Americans by retaining the Massie-Lofgren amendment. See the full letter.

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Coalition urges Congress to revive Massie-Lofgren surveillance amendment

December 04, 2014, 4:25 PM

The Honorable John Boehner Speaker of the House
U.S. House of Representatives Washington, DC 20515

The Honorable Nancy Pelosi House Minority Leader
U.S. House of Representatives Washington, DC 20515

December 4, 2014

Dear Speaker Boehner and Democratic Leader Pelosi:

Last night, the undersigned groups learned of a decision by the House leadership to remove a critical surveillance reform amendment from the House-passed Fiscal Year 2015 Defense Department appropriations. The amendment would curtail some of the most egregious surveillance abuses by the National Security Agency (NSA).

That amendment, sponsored by Rep. Tom Massie and Rep. Zoe Lofgren, passed overwhelmingly with 293 votes on June 19. It remains the only NSA reform measure to pass either chamber since the revelations of NSA’s surveillance abuses became public in June 2013. Failing to include this amendment in the forthcoming FY15 omnibus will send a clear message to Americans that Congress does not care if the NSA searches their stored communications or if the government pressures American technology companies to build vulnerabilities into their products that assist in NSA surveillance.

These actions come at a tremendous cost to American privacy and American jobs. We urge you to put the rights and the economic security of Americans first and retain this amendment in any final omnibus spending bill sent to the Senate.

For questions, contact Becky Bond at bbond@credomobile.com or Evan Greer at evan@fightforthefuture.org.



CREDO Mobile

Fight for the Future

Restore the Fourth


Sunlight Foundation

Progressive Change Campaign Committee

Democracy for America

Campaign for Liberty

R Street Institute

Center for Constitutional Rights

Bill of Rights Defense Committee

Constitutional Alliance


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Win Without War

Defending Dissent Foundation

Citizens for Responsibility and Ethics in

Washington (CREW)

Code Pink

Appeal for Justice


Government Accountability Project

Electronic Frontier Foundation

Libertarian Party

Demand Progress

Daily Kos

PEN American Center

Liberty Coalition

The Constitution Project

Free Press Action Fund



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Utah takes a rare insurance misstep

December 03, 2014, 12:52 PM

An administrative agency has again found itself at odds with free-market innovation. In this case, Utah’s Department of Insurance has demanded that a popular new web based human resources platform named Zenefits (which we use here at R Street) cease operation in the state unless it accedes to the Department’s demands.

Zenefits operates an online human resources platform and doesn’t charge its customers anything. It makes money by serving as an insurance broker for these same customers. Under Utah’s ruling, Zenefits can only continue to operate in the state if it starts charging more for its services. The Department, helpfully, has even given Zenefits a list of prices it should begin imposing on customers who currently don’t directly pay the company a dime.

What makes this scenario bizarre is that Utah is, more often than not, a paragon of reasonability when it comes to insurance regulation. In fact, according to R Street’syearly insurance regulatory report card, Utah ranks among the nation’s best jurisdictions to buy and sell insurance.

The problem is political, structural and interpretive.

A group of Utah insurance brokers, apparently unable to modernize their business models, managed to get the ear of the Commissioner and request that he act to build a palisade around them to prevent competition.  It worked and now the citizens of Utah are about to be denied the benefits of modernization and a tool that a lot of businesses find useful.

Structurally, statutes that were promulgated many decades ago and meant to address one set of concerns are susceptible to being applied with anti-competitive results. The evolving state of business was totally unknowable when the statute was adopted.

In the case of Zenefits, the particular statute in question is known as an “Anti-Rebating Statute.” Forty-eight states and the District of Columbia have an Anti-Rebating Statute, many of which are based upon a model promulgated by the National Association of Insurance Commissioners.

As originally conceived, the purpose of a statute to prevent rebating was to preclude insurers from offering services outside of the terms of an insurance policy because of a fear that an insurer might pose an insolvency risk by incentivizing their product beyond the scope of state regulated rating structures. In other words, regulators did not wish to see insurers return crucial policyholder protection dollars (surplus) to their insured in the form of off-the-books benefits. Furthermore, there’s some fear that brokers might use the statutes to offer various kinds of questionable kickbacks.

If applied in the spirit of its enactment, Anti-Rebating Statutes could potentially be in the best tradition of what state-based insurance regulation is intended to accomplish: thriving and reliably solvent marketplaces.

If there ever was a good reason for Anti-Rebating Statutes, however, that day has probably passed. There are plenty of ways to monitor insurer solvency without outright banning a practice that benefits consumers. Common practices like policy dividends from mutual insurers and accident avoidance checks provide post-premium discounts already and haven’t resulted in anyone’s solvency being endangered. There are plenty of ways to modify producer conduct without straightforwardly banning something that consumers really want to have.

Interpretively, the Utah Department is reading its Anti-Rebating Statute in such a manner that Zenefits’ willingness to offer an online HR portal for free is prohibited. As Zenefits and other companies with a similar business model expand nationally, Utah finds itself in a minority, protectionist position and ultimately it will be left behind.

As market-oriented as Utah is in so many matters it is surprising to see that rather than introducing legislation in the 2015 session to modernize (okay, repeal) the “anti-rebating” laws to promote regulated competition, we see the Department clinging to outmoded legislation that now benefits the few at the expense of the many.

The fix would not be difficult if the will existed.  It’s not too late, and the Department still has some time before the introduction of the legislative session to work with the industry to accommodate a new “disruptive technology.”


Alabama’s state budget, math, politics, and other mysteries

December 02, 2014, 5:27 PM

Alabama finds itself in a budget crisis…again. The fundamentals of Alabama’s budget woes are nothing new. Alabama has two major state budgets, the Education Trust Fund and the General Fund. The Education Trust Fund receives the lion’s share of “growth” revenues such as corporate and individual income taxes and most of the state’s use tax. The General Fund’s largest sources of revenues are the insurance company premium tax, interest on the Alabama Trust Fund and state deposits, and a tax on oil and gas lease and production. As a rule, the General Fund is often in worse shape than the Education Trust Fund because of the General Fund’s limited revenue sources and obligation to fund Medicaid, prisons, and the rest of Alabama’s state government.

Expected outlays for the General Fund are about $250 million more than anticipated revenues in the upcoming fiscal year. Unfortunately, there are only a few ways to deal with it.

The math is rather inflexible and politically inconvenient: Either increase revenues or decrease spending. One option is to increase revenues due to economic growth. The hope is that the state keeps taxes the same but applies those tax rates to a larger tax base which creates more money for the state. It may come as a shock to some, but state politicians have little positive control over economic growth. Business Insider recently ranked Alabama as one of the slowest growing economies in the nation. Growth is one possible option, but it is a wild card at best.

The math is rather inflexible and politically inconvenient: Either increase revenues or decrease spending.

Another alternative is to increase revenue by taxing more activities or increasing tax rates. Legalizing and taxing gambling in Alabama has been discussed as has limiting the deduction for federal income tax payments that Alabamians currently enjoy.

The third option is to focus on spending reductions. The first place to start is a top-to-bottom review of every agency, commission and board to eliminate unnecessary programs and activities. Does Alabama really need to regulate interior designers? Prison reforms that focus on incarcerating the most violent offenders while offering sentencing alternatives to nonviolent offenders could also help Alabama avoid significant future expenditures. Another way to reduce spending in the short-term would involve essentially refinancing the payments owed to the Alabama Trust Fund.

Now consider the politics of each option. Economic growth is the favored solution by a long shot but also the most risky. If the economic expansion does not happen, Alabama might find some one-time money from a settlement or litigation with BP due to the oil spill, but politicians will likely be forced to scramble in an effort to find alternatives.

The second option of new taxes or tax increases is a political non-starter. Governor Bentley has won his last election, and has four years to promote whatever policies he pleases without any real political repercussions. If he proposes removing the federal tax deduction, clearly increasing income taxes in the state, he may not find too many legislators willing to follow. Frankly, that will likely be the case for any tax increase proposal. Even taxing gambling has political consequences for the legislators who would be required to pass the measure.

The third option is possible, but it will require serious efforts by legislators to dive deep beyond budgetary line items and find out whether Alabama’s state programs and offices are both essential and efficient. Arguably the most promising and needed area of reform is within Alabama’s state criminal sentencing and prisons. Unfortunately the only real way to address prison reform and avoid significant new spending is to prioritize who spends time behind bars. For a state where virtually every politician prides being tough on crime, that may be too tall an order. Furthermore, any move to refinance repayments to the Alabama Trust Fund could be seen as putting off fiscal reform to a later date.

The big mystery is not the reality of Alabama’s recurring fiscal crises, but which option Alabama’s political leaders choose to solve the current one.

(Cameron Smith writes a regular column for Alabama Media Group. He is the National Director of the Liberty Foundation of America and is a Senior Fellow with the R Street Institute in Washington, DC. He may be reached at cameron@smithstrategies.org or on Twitter @DCameronSmith.) 

Save the date: multidisciplinary hackathons on congressional data

December 02, 2014, 5:25 PM

Boston Kickoff Weekend Co-Hosted by Harvard University’s Ash Center and The OpenGov Foundation; Finals on Capitol Hill Spring 2015

The weekend of January 30, 2015, The OpenGov Foundation and Harvard’s Kennedy School of Government will host a multi-disciplinary hackathon to design what the future of the US Congress should look like.

The event will bring together political scientists, designers, technologists, lawyers, organizational psychologists, and lawmakers to look for multi-layered, thoughtful ways for citizens to get involved in their government, and for elected officials to better communicate with citizens and understand their needs, more efficiently craft legislation, and more effectively address the complex issues of the 21st Century.

Projects presented at the end of the hackathon will be evaluated by a panel of judges. After a second hackathon hosted by The OpenGov Foundation on Capitol Hill in Washington, D.C. in spring 2015, the winning teams will have an opportunity to present their projects to lawmakers and other high-level officials inside Congress.

The event is co-sponsored by The Sunlight Foundation, Congressional Management Foundation, Microsoft New England, CODE2040, and Generation Citizen.

You can register here.

Friday, January 30, 2015
4:10pm: Introductory Panel followed by happy hour

Saturday, January 31 and Sunday, February 1, 2015
8:30am- 5 p.m.: Hackathon


Harvard Kennedy School of Government
79 JFK St., Cambridge, MA

View/submit project proposals:

Click here for more information.


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December 02, 2014, 11:01 AM

Westfields Marriott

December 02, 2014, 11:01 AM

College football: An effort to win at the cost of progress

December 01, 2014, 4:43 PM

Every fall, on campuses across the nation, fans journey to watch collegiate athletes take the field to play America’s most popular amateur sport, football. The appeal of college football lies not only in the intensity of its fans, but in the on-field product itself. The reason is simple. Even though college athletes lead lives that other students would find unrecognizable, they are, in the final calculation, amateurs. Random mistakes that are unthinkable for, or at least less common among, professionals routinely lead to upsets and outcomes that confound even the closest followers of the sport.

A college football program’s success seemingly is predicated on the ability of the coaching staff to overcome the randomness of its sport. They attempt to do so through personnel decisions and strategic innovation.

Programs compete intensely to attract the best high school personnel available. Schools host prospects for lavish recruiting visits and generally do everything within their power, and often within NCAA rules, to make the visiting student feel special. Some programs trade on their tradition of excellence (Notre Dame); some programs can tell of recent successes (Alabama); and still others offer something entirely different, sartorial superiority (Oregon). Yet, talent is only a portion of the formula necessary to foster a winning program.

Successful recruiting is not enough to build a winner because, more than in other sports, the involvement of a football coaching staff is determinative of the in-game success of a team. For this reason, a great deal of attention is paid to a team’s strategy and play-calling. Teams that innovate can succeed in spite of talent deficits.

The evolution of football strategy has moved, seriatim, from days in which blocking patterns exclusively set-up running plays, to the development of forward passing options, and now to a point where play calling occurs from the sideline and requires no pre-play huddle on the field.

That last development is a revolution that has the conservative, old-guard making a goal-line stand. The “no huddle offense” has raised the cadence of the game dramatically. Some programs, in fact entire football conferences, perhaps out of a sense of tradition, have failed to adapt.

For instance, with some exceptions, the Big Ten Conference, well-known for a grinding, slow, and deliberate playing style, has failed to effectively embrace new offensive strategies. Unsurprisingly, in 2013, the Big Ten posted the worst out-of-conference winning percentage of the five major conferences. A repeat of that ignominy is a real possibility. Perhaps it’s tradition that keeps many Big Ten teams mired in futility. It’s not so much that innovation has been considered and rejected… it’s as if it never arrived.

More curious is the case of one of the nation’s top programs, the University of Alabama, that is coached by one of the nation’s most successful coaches, Nick Saban. In 2012, a year that the Crimson Tide would win a national championship, Coach Saban made a point of decrying the use of “no huddle” offense.

I think that the way people are going no-huddle right now, that at some point in time, we should look at how fast we allow the game to go in terms of player safety.

Later that season, Alabama would lose to Texas A&M, a team well known for its use of a speedy no-huddle offense.

Outside of its humane, laudable and situational concern over player safety (and isn’t football an affront to human safety simply by the acts required to play it? Micro-aggressions be damned, smash-mouth subtleties rule in football!) why in the world would a successful program take such a public stand against innovation that has made the game much more exciting and entertaining? Would only an embittered cynic suggest that, perhaps, the program fears more nimble competition and would rather defeat it through regulation than on the field?

Nope. From a conservation of a dominant organization’s resources standpoint, to reduce competition’s chances of overtaking the dominant organization, this retrograde strategy makes excellent sense. Even outside of the walls of athletic academia, one does not have to look far to find real-world examples of protectionism. The dimensions of such protectionism change from the massive, in international trade disputes, to the local in situations where taxicab stakeholders fight to stifle ride-share innovations, and hotel owners fight to kill accommodation-sharing innovations.

Hopefully, for the sake of innovation, Saban’s campaign to enshrine go-slow football will fail.  Should Alabama fail to win the national crown this year, he might find himself available to assist his anachronistic soulmates as they selfishly but understandably try to buck progress. One can imagine the very-well-qualified-to-do-so Mr. Sabin speaking out to limit private sector innovation with noble sounding expressions of concern about car rider and house guest safety. In the meantime, the public pays more and is limited to services it no longer wants, by such efforts.


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R Street is seeking a Director of Innovation Policy

December 01, 2014, 3:53 PM

The R Street Institute, a free-market think-tank located in Washington, D.C., is seeking a law and technology wonk to serve as our Director of Innovation Policy. We’re looking for a super smart, super productive person who can write, research, educate, and learn about a wide variety of issues related to innovation, intellectual property, and the Internet, consistent with R Street’s brand of pragmatic libertarianism.

The job will, initially, focus on two major areas where we’re already working: intellectual property reform (particularly with regard to copyright and patent reform) and the sharing economy. While we’d ideally like someone with experience working in both of these areas, it’s particularly important that the person we hire be able to establish him or herself as a thought leader in the area of intellectual property reform. We don’t need candidates to agree with every word everyone at R Street has written. It’s important, however, that candidates familiarize themselves with the gist of R Street’s past work. Other interests in technology policy broadly will be considered a plus and anyone we hire will be able to spend some time working on technology-related projects and intellectual ventures of his or her choice. Candidates should be willing and able to learn about new areas quickly and keep apace with new developments in Congress, the courts, and the executive branch.

On a day-to-day basis, the person we hire will be expected to produce op-eds, magazine articles and white papers, participate in broad cross-ideological coalitions and engage in educational outreach to policymakers and potential allies. He or she will also be expected to help organize events and conferences.

While proven ability to do the job we’ve described is, of course, absolutely mandatory, we also put a great deal of emphasis on finding people who fit in with our institutional culture. We’re an office with no dress code, no set hours, little formal reporting, and very few meetings, but we take a very serious attitude towards our work. People who haven’t at least sometimes felt that they were more productive than the great majority of their colleagues probably won’t fit in.

Candidates should be able to demonstrate experience working on at least some of the issues we’re dealing with but we’re open to people with a range of different backgrounds. People with less than three years of experience in these fields probably won’t cut it. An advanced degree and record of published work are highly desirable. In general, we believe that highly qualified candidates will have some combination of experience with Capitol Hill, academia, or non-profits working on technology policy.

Salary will be commensurate with experience and we take pride in paying better and providing better benefits than most other think tanks in Washington, D.C. If you’re on the Hill or at another non-profit, it’s highly likely we can pay you more than you currently make.

Our benefits package includes health insurance fully paid for by the employer (including families), an employer-funded HRA to cover health insurance co-pays and deductibles, employer paid disability insurance, unlimited free snacks and drinks at the office, gym membership reimbursement, an automatic employer contribution to a 401(k) plan, bike sharing reimbursement, and an exceptionally generous vacation policy.

We don’t discriminate on the basis of sex, race, creed, color, national origin, sexual orientation, veteran status, gender identity, taste in music or anything else that’s illegal, immoral or stupid to use as a basis for hiring.

To apply, please send a resume, a cover letter, and a writing sample dealing with some aspect of intellectual property law or policy. A published writing sample is strongly preferred.

Here’s how the process will work going forward: We’ll look at all resumes we receive and reach out to candidates we want to interview remotely within a week of receiving their resumes. Candidates who believe they are highly qualified and don’t hear back within a week should drop us a line. Based on remote interviews, we’ll invite a few candidates to our offices for in-person interviews with our entire team.

We currently intended to accept applications until close of business on Monday January 12, 2015 and schedule in-person interviews during the week of January 19th, 2015, probably on January 20th, 2015. In-person interviews will take place in Washington, D.C. at our new office near Farragut square. We typically make hiring decisions within 24 hours of these in-person interviews. This timeline, however, may change.

Applications should be sent to employment@rstreet.org.


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Keeping the Texas budget lean

December 01, 2014, 1:56 PM
Mark Twain famously observed that the two things you don’t want to see being made are laws and sausages. But when it comes to the state budget, an occasional tour through the sausage factory is necessary.