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Updated: 3 weeks 6 days ago

A TWIA by any other name

April 16, 2015, 11:15 AM

As I’ve written ppreviously, Texas’ market for coastal windstorm insurance is in dire need of reform. Insurance rates for the Texas Windstorm Insurance Association, a state-run agency that provides wind coverage in certain Texas counties near the Gulf Coast, are currently 22 percent below what would be considered “actuarially sound.” While TWIA has managed to improve its financial position substantially in the last few years, a single major storm could take the agency back to square one.

But there are good ways to reform TWIA and there are bad ways. Currently, the Legislature is considering proposals that would restructure TWIA, changing the composition of the agency’s board and even changing the organization’s name. Unfortunately, as currently written, this legislation — which cleared the Senate Business and Commerce Committee April 14 and could be up for a vote by the full Senate as early as next week — would not deal with the basic problems of TWIA, and could undermine even the progress that’s recently been made.

For example, TWIA has closed the gap needed to achieve actuarially sound rates via a series of narrowly approved rate increases. It’s not clear that such increases would be able to pass with a restructured board. The larger the gap, the bigger the amount for which Texas taxpayers may ultimately be on the hook should TWIA be unable to meet its financial obligations.

Instead of making it harder for TWIA to reach financial stability, reform legislation ought to build on the progress TWIA has already made. Right now, for example, TWIA is restricted from charging different rates within its territory based on geography. Simply allowing this tool would go along way toward achieving actuarial soundness. TWIA has also launched a “depopulation portal,” a special website that makes it easier for private insurers to take current TWIA policies on a voluntary basis. One company has already announced its intention to make offers on almost 60,000 policies via the portal. Other states such as Florida and Louisiana have had a lot of success in using depopulation portals to get people back into the private insurance market, and Texas should look at strengthening the current portal along similar lines.

Most importantly, though, Texas should follow the medical maxim: first, do no harm. Any legislation that impedes TWIA’s progress will ultimately leave all Texans more exposed to risk.

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

Testimony to Minnesota House Committee on Taxes

April 16, 2015, 10:15 AM

My name is Alan Smith and I serve as senior fellow and Midwest director for the R Street Institute. R Street is a nonprofit 501(c)3 institution devoted to finding pragmatic, free-market solutions to public policy challenges. Since opening our doors in 2012, we have had an active public health project devoted primarily to exploring “harm reduction” approaches to tobacco-control policy. My testimony was prepared in consultation with our senior fellow, Dr. Edward Anselm, who also is medical director for Health Republic Insurance of New Jersey and an assistant professor of medicine at the Mount Sinai School of Medicine

I am here today to share our thoughts about HF 2182, which would change the formulary for taxing “vaping” fluids used in electronic cigarettes.

The proper absolute levels of taxation on tobacco and e-cigarettes are rightly a topic of much debate and discussion. On tobacco, a reasonable tax is certainly justified. Likewise, e-liquid certainly should be taxed in some fashion. As you proceed with evaluating this topic, I hope the committee will take a balanced approach to taxing tobacco products that takes into account the needs of Minnesotans. Many of our residents have made repeated efforts to quit smoking, but find that they still need nicotine in order to function. If it is possible for products to provide these smokers with the nicotine they crave while presenting only a small fraction of the health risks of cigarettes, why penalize these groups’ opportunity to live a healthier life with high excise taxes intended as a public policy tool to encourage better behavior?

Electronic cigarettes are a relatively new set of devices that produce a vapor containing nicotine and a small number of other compounds. The number of toxic compounds is substantially less and the concentrations of these compounds is lower than that of cigarettes. No one has stated that these devices are safe, but they are far less-harmful than combusted cigarettes. The harmful effects of combusted smoke are well-documented. The early literature on the effects of passively inhaled vapor does not suggest anything like the same levels of harm, but it remains an active and ongoing research area.

A recent article in the prestigious journal Science summarized the contentious internal debate within the tobacco-control community regarding the role electronic cigarettes might play in harm reduction for current smokers. Scientists and public health officers are divided regarding the potential benefits to smokers and the potential harms to adolescents. Some argue that no level of nicotine from any source is acceptably safe, while others contend that, since some set of people are likely to use nicotine, encouraging less harm is better than great harm.

Although the evidence is not perfect, there are several studies that show electronic nicotine-delivery systems can help people quit smoking. These are detailed in a recent Cochrane review, the international compendium of randomized clinical trials. There are thousands of anecdotes from individuals who have ceased smoking and replaced it with vaping.

Taxes are a potent motivator for tobacco use. States with higher taxes on tobacco have a lower prevalence of tobacco-related disease. Given the potential benefit to smokers and the lower level of harm associated with vapor, is it not reasonable to tax electronic cigarettes at a lower rate? This is the position of the American Society for Clinical Oncology and the American Association for Cancer Research, which recently published a strong position paper on electronic cigarettes.

In summary, vapor is not combusted smoke. Given the reduced level of harm, and the potential to benefit current smokers, it should be taxed at a lower rate than regular cigarettes. We offer these thoughts for informational purposes, and neither support nor oppose this specific bill in its particulars.

Pennsylvania’s energy economy is a model for the rest of the country

April 16, 2015, 9:00 AM

President Barack Obama has been aggressively promoting the advantages of fast-track authority for his Trans-Pacific Partnership free-trade agreement by pushing a message of job creation, economic growth and American competitiveness.

“As we speak, China is trying to write the rules for trade in the 21st century,” Obama said earlier this year. “We can’t let that happen. We should write those rules.”

Yet, as the White House stumps for free trade, it drags its feet on liberating our own U.S. energy industry from archaic export barriers that were put in place decades ago.

Pennsylvania for years has served as a model of how experiencing and embracing its own energy renaissance has led to an increase in jobs and a boost in its economy.

Now nationally, other parts of the country are experiencing a similar shale oil and natural gas revolution, which has led to a rewriting of the rules that even the most respected experts thought were inviolable: diminishing resources, more geopolitical risk and ever-higher prices.

In a March 30 report, the U.S. Energy Information Administration announced that crude oil production in 2014 showed the largest volume increase since record-keeping began in 1900.

On a percentage basis, last year’s output increased by 16.2 percent, the highest growth rate since 1940. Most of the increase occurred in North Dakota, Texas and New Mexico, where hydraulic fracturing and horizontal drilling were used to produce oil from shale formations, the EIA said.

As a result, crude-oil inventories are now at their highest level (relative to demand from refiners) since the mid-1980s, and storage depots have been filling up everywhere. Estimates of recoverable oil and natural gas reveal vastly more potential.

The most recent supply projections for liquefied natural gas (LNG) show that domestic producers using today’s technology have the potential to develop more than 750 trillion cubic feet of recoverable shale gas.

In Pennsylvania, the energy “stimulus” to the economy has been remarkable. Marcellus Shale-related industries support about 243,000 jobs in the commonwealth and have contributed more than $34 billion to its economy.

Energy production in Pennsylvania, according to industry sources, saved the state and local governments $19 billion and the public schools $45.5 billion in 2012 and 2013.

Pursuing free trade in energy would produce even greater benefits.  According to a study by energy research group IHS, lifting the crude export ban would add between $86 billion to $170 billion in additional annual economic output for the United States. That translates into a range of 394,000 to 859,000 new jobs every year nationwide (total energy industry employment already approaches 10 million).

In Pennsylvania, the study estimates the total crude-oil-export employment contribution could average between 11,126- 29,276 jobs between 2016 and 2030.

In fact, as The Economist reported recently, there is so much domestic crude oil being produced that American oil sells for about $10 a barrel less than it does in the rest of the world.

Normally, this would be a welcome notion; however, everyday Americans don’t even experience the savings from this artificial discount, as the price of gasoline we buy is set in the international market. Essentially, this is a ban that benefits some American oil refiners, who then ship the gasoline out of the country.

There is additional policy support for easing the current regulatory hurdles for LNG exports.

In its latest report, the White House Council of Economic Advisers put it succinctly: “Expanded natural-gas exports would generate more jobs, incentivize increased domestic production, strengthen U.S. geopolitical security, promote a cleaner environment at home and abroad and help American manufacturers maintain a healthy competitive cost advantage in natural gas.”

It’s important to remember that this is not all about the big energy companies. Spurring free trade in energy will benefit the thousands of smaller independent producers responsible for 95 percent of U.S. oil and natural gas wells (or 67 percent of domestic production).

A recent study by the Small Business and Entrepreneurship Council found that more than 90 percent of these businesses had fewer than 500 employees.

In Pennsylvania alone, establishments supporting oil and gas operations with less than 20 workers grew by 173.3 percent, and those with less than 500 workers grew by 236.4 percent from 2005 to 2012.

Accelerating crude oil and LNG exports will allow U.S. energy industry to increase its investments across the country, drive more of the innovations that have made the United States a global energy leader and expand the energy jobs market.

Furthermore, opening the export gates for outflows of American oil and gas to a growing global market will enhance U.S. influence in an increasingly dangerous world.

It’s time to free domestic energy from the bans and bottlenecks that limit our nation’s ability to trade with the world.

President Obama should be promoting not only expanded trade with Asian partners, but exports of LNG and crude oil to secure a lead on our global competitors.

More on hidden formaldehyde in e-cigarette aerosols

April 16, 2015, 8:00 AM

This letter was co-authored by Dr. Michael Siegel of the Boston University School of Public Health and Dr. Konstantinos Farsalinos of the Onassis Cardiac Surgery Center in Athens, Greece.

The data presented by Jensen et al. (Jan. 22 issue) in their recent letter to the editor do not support their conclusion that e-cigarette use presents a likely risk of excessive exposure to formaldehyde. The 5-V puff topography used by Jensen et al. appears to have overheated the coil, resulting in excessive breakdown of propylene glycol to formaldehyde. This phenomenon is readily detected by the consumer by virtue of an exceedingly unpleasant burning taste, commonly referred to as a “dry puff.” It has been described in detail in the literature. The consumer can address this issue by discontinuing use of the unit or reducing puff duration while increasing the interval between puffs. Thus, taste prevents e-cigarette users from exposing themselves to excessive formaldehyde from overheating of the coil.

The IRS spent lots of cash on office furniture and toys

April 15, 2015, 1:30 PM

According to a press release from Sen. Orrin Hatch’s office, the IRS has spent a boatload of taxpayer money on lots of things it really doesn’t need.

Now, normally, accusing a government agency of making terrible financial decisions is all in a day’s work for Congress, the Inspector General and political writers — since Hillary Clinton has halted her ridiculous van tour of Iowa to beg for money from Des Moines donors —  but today, being Tax Day, is special. After all, what could possibly make this day better than to see not only what the government is wasting your hard-earned money on, but what the agency charged from extracting it from the very marrow of your bones has been buying with their share.

Turns out, the list begins with an overpriced stair climber (for use in a building with stairs), and ends with Thomas the Tank Engine.

The Internal Revenue Service spent millions of dollars on public opinion polling, office furniture and other items last year, including an $8,000 stair climber, and Thomas the Tank Engine wristbands…The spending borders on the ridiculous — including plush animals, toy footballs, kazoos, bathtub toy boats, and Thomas the Tank Engine rubber wristbands for managers’ meetings.

It also includes very costly expenditures, including $4.3 million on market research and public opinion polling and $4 million on office furniture, in addition to the stair climber.

It is, of course, not unusual for a government agency to spend like a drunken sailor on leave right before the close of the fiscal year (though, as the joke goes, drunken sailors usually just spend their own money). If agencies do not consume their full budget for the fiscal year, they may not qualify to receive the same amount or more the following year. So, the IRS, like many agencies, goes on a year-end spending spree, purchasing all new office furniture and office supplies, and free IRS trinkets that are supposed to cheer you up while you get audited.

The problem here is, the IRS has recently complained that they are short funds. Last year, they took a $350 million pay cut, landing their budget at a meager $10.9 billion. In response, the agency maintains that it’s been forced to tighten its belt beyond reason, and has been eliminating non-essential personnel and cutting into its customer-service operation, causing IRS “customers” to experience delays in receiving refund checks and long waits on the IRS helpline (if, that is, they don’t experience one of the IRS’s recent inventions, the “courtesy disconnect”). The IRS is so woefully underfunded that they simply cannot afford to attend to the dramatic increase in need that Americans experience when forced into a yearly tangle with the tax code.

And yet, they’re shelling out $4 million for desk chairs. Maybe next year, they should consider using that surplus budget to get a few temporary workers to fill them.

Is it time to rethink the congressional budget resolution?

April 15, 2015, 12:04 PM

April 15 has arrived and Congress once again has not adopted a budget resolution. It was not for lack of trying. The Senate voted for S.Con.Res.11 on March 27 and the House approved H.Con.Res.27 on April 13. However, the two resolutions have differences, and the work of reconciling them is ongoing.

Failing to pass a budget resolution is not unusual. In fact, missing the deadline is the norm. Congress has not met the deadline since 2003. In the 40 years since the enactment of the Congressional Budget and Impoundment Control Act, Congress has adopted a resolution on time only six times, according to the Congressional Research Service. Congress blows the deadline by an average of nearly 40 days.

It is easy, and all too common, for observers to trash Congress for being derelict in its duties. But when a statutory target is missed 85 percent of the time over four decades, it is reasonable to ask: is the deadline actually feasible? Should it be changed?

Consider that April 15 is 104 calendar days into the year, 26 of which are weekends. The remaining 78 days include three federal holidays (New Year’s Day, Martin Luther King’s birthday, and George Washington’s birthday). Easter and Passover also draw senators and representatives back to their homes. The State of the Union consumes another workday.

Then, of course, there are all of Congress’ other responsibilities, like considering and voting on bills, holding hearings and meeting with constituents and interest groups to hear their concerns. The task is made trickier still every other year, as a new Congress begins, meaning new members, new committee assignments, new staff and plenty of operational confusion. The current Congress arrived in January with a few hot potatoes, including legislation to fund the Department of Homeland Security.

The budget resolution itself is also no simple document. S.Con.Res.11, for example, is more than 220 pages long. It requires a ton of work to put together. As CRS explains, committees of jurisdiction must first provide their respective spending and revenue estimates to the two budget committees, who then must compile a voluminous mass of data pulled from government reports, hearings, economic projections, budget projections and program information from sources as disparate as the CBO, the OMB, the Federal Reserve, executive branch agencies and, finally, their own congressional leadership.

The point of this herculean task is to craft an overall fiscal year budget, along with budgets for the committees. Given the record of failure, pushing back the deadline to, say, May 1 or May 15 might be more reasonable. Proposals to insert some sort of trigger that would impose pain for failure to adopt a resolution also could hold promise.

But it’s also reasonable to question whether the congressional budget resolution process is worth the time and effort. Perhaps it should be dispensed with altogether.

The budget resolution itself is not a law. The president does not sign it. The resolution is a plan for appropriators, who subsequently do the grueling work of cobbling together appropriations acts. According to the CBA, Congress is not supposed to vote on appropriations until after May 15. In recent years, Congress also has had a difficult time passing appropriations bills by the end of the fiscal year (Sept. 30). Government shutdowns, threatened or real, are becoming a regular feature of governance. This is not good, not least because budgetary uncertainty creates operational havoc for agencies.

The 1974 CBA tried to create a rational process to assure Congress had effective control over the budget and determined appropriate levels of federal taxing and spending. If Congress would just adopt the resolution and appropriate within those limitations voila, we would see real congressional control over our nation’s pocketbook.

In practice, it hasn’t quite worked out that way. There have been eight fiscal years, including last year, in which Congress did not agree to a budget resolution at all. Money was appropriated anyway. Chicanery in crafting the resolution is commonplace, enabling legislators to evade limits and dodge hard choices. More generally, our nation’s finances are a mess. We are pushing up against the $17 trillion debt cap, not counting the $40 trillion in unfunded Medicare obligations. To call what we are doing “budgeting” defines the term to near meaninglessness.

A few years back, Alice Rivlin told Congress it should blow up the entire the congressional budget process. She was on to something.

For much of the 20th century, Congress did without a budget resolution. The budget process was led by the executive branch. The president and his agency heads went hat in hand to Capitol Hill, and whatever was appropriated was what they got. If Congress wanted to authorize and appropriate spending for some new initiative, it did so. In retrospect, that process looks less problematic than the one that replaced it.

Coalition urges reform to milk-pricing rules

April 15, 2015, 11:42 AM

Dear Secretary Vilsack:

As consumer and taxpayer organizations that represent millions of Americans, we are pleased to offer these comments in response to the Agricultural Marketing Service (AMS) Notice to review the Federal Milk Marketing Orders (FMMOs) under Section 610 of the Regulatory Flexibility Act (RFA).

The FMMOs are the federal government’s milk-pricing regulations, which date back to the Great Depression. They are one of the last remaining areas of direct government market intervention in food prices. As such, FMMOs have a substantial impact on hundreds of millions of U.S. consumers and taxpayers.

The FMMOs initially provided an important service to the American public. Specifically, they were adopted to ensure an adequate supply of beverage milk, particularly in rapidly growing cities of the early 20th century. Today, that mission has been fulfilled, and the continued existence of FMMO milk-pricing regulations is no longer in the best interests of consumers and taxpayers.

FMMOs raise the cost of federal nutrition programs

Food is a fundamental component and cost of many U.S. social welfare programs.   The FMMOs are designed to raise or alter milk prices, and they predate the emergence of modern social welfare programs. Through such initiatives as the Supplemental Nutrition Assistance Program (SNAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the National School Lunch and School Breakfast Programs, the Special Milk Program, the Child and Adult Care Food Program and others, the federal government is the largest purchaser of beverage milk. Quite predictably, higher prices for milk result in higher costs for some feeding programs and fewer people served in others. Higher-than-market milk prices also run counter to the underlying goal of providing disposable income or direct benefits, such as dairy foods, to qualified program participants. By raising the price of milk, the FMMOs erode the very income and food benefits given to recipients, and raise the taxpayer costs of government feeding programs that include milk.

FMMOs raise the cost of milk and effectively amount to a regressive tax on low-income families

Effectively, the FMMO system artificially raises beverage milk prices. Published studies of the impacts of government milk price regulations on consumers found that, while all consumers benefit when the milk-pricing system is eliminated, households with lower income levels benefit the most because they spend a larger percentage of their income on food than do other consumers. Higher beverage milk prices brought about by government pricing effectively function like a regressive tax imposed on consumers, disproportionately affecting fixed and lower-income households, which spend a higher share of their income on food in general and on milk in particular.

FMMOs are inconsistent with nutrition guidelines

USDA’s milk-pricing regulations conflict with federal nutrition policy. The 2010 Dietary Guidelines for Americans (DGA) recommend three servings a day of low-fat or fat-free milk or dairy products. The government sets the price for beverage milk (Class I) at a rate above cheese (Class III) or butter (Class IV) prices. The mandatory price premium for beverage milk is required regardless of whether the milk is sold as low fat or fat free. Considering also that the vast majority of milk fats are not sold in the Class I beverage milk category, the current pricing system requires beverage milk to subsidize the price of milk fat in other dairy products.

Retrospective review and prospective action

The original purpose of the FMMOs (i.e., to benefit producers and consumers by establishing and maintaining orderly marketing conditions of milk) is no longer a valid justification for the continuation of this government program. Rather than additional retrospective analysis, we propose that USDA prospectively consider how existing FMMOs affect the department’s policy goals and statutory responsibilities in all of its mission areas, including, but not limited to, the cost to federal nutrition programs and the impact on consumers. Going forward, USDA should require that the FMMO system consider important consumer nutrition and health objectives with respect to the cost and consumption of beverage milk. When the FMMO rules enhance one USDA objective but detract from others, there should be a clear analysis of the trade-offs, particularly in light of the fact that dairy producers now have access to taxpayer-funded financial support programs administered by USDA’s Farm Service Agency and Risk Management Agency.

Finally, AMS could increase public participation in its FMMO rulemaking through use of “plain English” to explain how the current rules operate. FMMO rules are particularly complex and difficult to understand. Accordingly, it is nearly impossible for consumers to participate in any public dialogue on this subject. Simplification of this discussion would lead to more consumer and taxpayer participation in future policy debates and could generate potentially innovative ideas on how federal dairy programs could best serve the public interest.

Thank you for your consideration of our views on this important matter.



Citizens Against Government Waste
Consumer Action
Consumer Federation of America
National Consumers League
National Taxpayers Union
Taxpayers for Common Sense
Taxpayers Protection Alliance
The R Street Institute

The Kafkaesque horror Of Tax Day

April 15, 2015, 8:33 AM

Congratulations! You get to pay taxes to the federal government. The upside is that you earned money. The downside is that you just realized how much of it the federal government took.

That realization snuck up on you. Like slowly boiling a frog, the federal government requires that most of your tax liability be paid before it is actually due on tax day. Because of withholding requirements, most Americans never feel the economic loss of taxes because they never see the money. You earned it, but the government took it before you could spend it.

If you were forced to write a check for ten, fifteen or twenty percent of your paycheck, you’d probably freak out. More than likely, you probably would not have set aside enough to pay Uncle Sam. Financial planning, even for a year, is not exactly an American hallmark.

But now you see it.  You see the line at the bottom. At least you think that’s the number. You’ve added almost an entire alphabet of schedules with A, B, C, D, E, H and SE. On top of that, you have forms on items from employing individuals living on Indian reservations to a litany of energy efficiency credits.

Then comes the sinking feeling that you missed something. You probably did. But don’t worry; the federal government appreciates your donation.

That can’t be right though? After all, you’re educated. You understand math and you even get most of that questions right on Jeopardy. The problem is that nowhere in any math class did you have a 16-step word problem within a 40-step word problem that could potentially result in an IRS audit.

As a result, you err on the side of over-withholding and overpayment. First, you give the federal government an interest-free loan, and then you let them keep money that you’re legally entitled to get back. The problem is that you are not sure. You think you’ve filled everything out right, but you don’t want to receive an audit letter. So you play it safe and the Treasury keeps the money you rightfully earned.

Benjamin Franklin famously stated, “In this world, nothing can be said to be certain, except death and taxes.” If Franklin had to fill out a federal tax return today, he probably would have left off the last part about the certainty of taxes.

Our federal tax code is ridiculous and an economic drag on American families and businesses…unless you are in a family of accountants working at accounting firms. In fact, that is the point. You should not need an advanced degree or accounting background to have confidence that you are paying the government what you owe.

Testimony on Oregon carbon-pricing proposals

April 14, 2015, 5:00 PM

My name is Ian Adams and I am the Western region director of the R Street Institute. R Street is a non-profit, free-market think tank, headquartered in Washington, D.C. I am based in California and am a graduate of the University of Oregon School of Law. Our mission is to engage in policy research and outreach to promote free markets and limited, effective government. Thus, it is fair to say that we are members of the political right.

Before you today are three pieces of legislation designed specifically to reduce Oregon’s use of carbon-based fuels: HB 3250; HB 3252; and, HB 3470. While we support none of these proposals outright, only HB 3250 (cap-and-dividend program) offers a revenue-neutral option that would return funds to Oregonians and thereby create fewer impediments to economic activity. Of the three, it is the best, by far.

The most challenging aspect of addressing climate change at the state level is the reality that solutions that restrict carbon emissions have immediate impacts on energy costs, while their long-term impact on the negative consequences of climate change are, at best, uncertain. Indeed, it is not seriously contended that state-level action in Oregon to reduce carbon emissions will meaningfully impact the level of global carbon output.

For this reason, we at R Street favor strategies that embrace revenue-neutral mechanisms that seek to correct negative economic externalities. Such strategies, known as Pigovian taxes, are preferable to command-and-control regulatory frameworks, like those offered in HB 3252 (revenue-positive carbon tax) and HB 3470 (cap-and-trade), for three reasons:

First, the results of their use are likely to be the same in qualitative terms to command-and-control mechanisms, since meaningful emission reductions would be achieved.

Second, Pigovian mechanisms would achieve carbon reductions in a more cost-effective manner, since they also promote innovation and allow for greater flexibility of implementation and compliance. As a result, though energy costs will increase, a revenue-neutral approach leaves the economy better situated to cope with higher prices.

Third, and most importantly, revenue-neutral Pigovian mechanisms are desirable independent of the fact that state-level action will not meaningfully reduce global carbon emissions. Taxing an activity with a negative social impact, and returning that money to Oregonians, reduces the tax burden of the state outright.

While the best option of the three before you today, we have concerns about the political and practical realities of administrating a cap and dividend structure as embodied by HB 3250. The costs of administering a universal dividend program could eat up a fair part of the revenue it might generate. Additionally, there are political concerns too about the distribution of dividends. Still, there is time yet for those concerns to be addressed as this bill moves through the legislative process.

Attaching a revenue-neutral price signal to greenhouse gas emissions has environmental and free-market benefits, both objectively and relative to other policy prescriptions. Unfortunately, because of the politicization of carbon pricing, this policy has not, to date, resonated with those on the political right. Should it pursue a revenue-neutral policy, Oregon is well-situated to create an example that conservatives could follow nationally. Given the current composition of the federal government, is ultimately the most important outcome that this an Oregon-specific effort could achieve.

Thank you for your consideration.

Gwyneth Paltrow takes SNAP challenge, fails miserably

April 14, 2015, 1:28 PM

Years ago, in need of some unintentional hilarity in my life, I signed up for Gwyneth Paltrow’s “lifestyle email newsletter” called, somewhat unappetizingly, “GOOP.” Since then, on a weekly basis — I think, it goes to my spam folder and has for a while now — I get a delivery of incredibly pretentious life advice that no one with a household income south of $10 million per year could ever follow. I mean, I like nice things. But I like nice things I can use. And that other people know are nice things. But I’m not going to spend $900 on a blanket; I’d just as soon let my cats shed on actual cash.

But years of public humilitation (her life is totally like being in a war!) and “homemade” kale rolls (fast! and easy! if you have an in-house chef!) have yet to make any dent in Gwyneth Paltrow’s massive, unchecked ego. Unfortunately, she’s now moved back to our fair shores from her former home in England, from whence she used to pontificate on America’s substandard lifestyle, and is now happily pretending to be a real person, involving herself in solving the American peoples’ many problems: paying too little for leather footwear, failing to understand the composition of their wholeness and the terrible standard of living encouraged by food stamp programs.

For seven days, Gwyneth Paltrow will live on the $29-per-week budget of families who rely on the Supplemental Nutritional Assistance Program (SNAP).

Paltrow has accepted the #FoodBankNYCChallenge from celebrity chef NYC Food Bank board member Mario Batali, who also challenged Sting and Debbie Harry, Us Weekly noted. The challenge limits people to $1.38 per meal for a week.

The only media outlet that took this seriously is, apparently, the Huffington Post, and for good reason. As most people quickly realized, $29 per week is an arbitrary amount selected by the organization hosting the challenge. Last year, when Cory Booker did the challenge, he was given $35 for a week. Some commentators estimate the number is actually closer to $125 per week for a family of four, and if you crunch the numbers based on the U.S. Department of Agriculture’s own chart, you get around $100 per week.

Of course, feeding a family of four on $100 per week is tough, but SNAP isn’t meant to cover your whole grocery bill. It’s a supplemental program, and many families who are on food stamps also receive other forms of assistance. There are also different programs within the “food stamp” rubric that help out by providing essentials, like milk.

But we’re not here to discuss the particulars of the food stamp program. Given just $29, Gwyneth Paltrow bought this:

This is what $29 gets you at the grocery store—what families on SNAP (i.e. food stamps) have to live on for a week. pic.twitter.com/OZMPA3nxij

— Gwyneth Paltrow (@GwynethPaltrow) April 9, 2015

As we used to say on the old NakedDC blog when confronted with an error of this magnitude: Bitch, please.

Let’s review her purchases and rate them for viability, shall we? Eggs, good. Brown rice, good. Beans and peas? Great. All of these can make for healthy meals by themselves or in combination with other forms of protein. I can even almost understand the kale because, regardless of its nutritional value (or, for that matter, whether it tastes any better than just eating newspaper), Gwyneth Paltrow cannot live without kale. It is her sustaining force.

But this is where reason ends. That is a random collection of individual vegetables, as though she just considered, briefly, as an alien, what humans without sushi instructors would keep in a charming vintage fridge in an ad for baking soda (oh! a corn!). And I like cilantro as much as the next person for whom a gastric bacteria does not make it taste like soap, but I highly doubt anyone struggling to put food on the table is concerned with whether that food gets an appropriate garnish. And what, pray tell, is anyone going to do with seven limes? If you consider that limes are, say, 2 for $1, as they are at my local Wal-Mart, that’s $3 spent just on limes. As they seem hard to justify nutritionally, I’m lead to believe that Paltrow is just using this as an excuse to go on a juice cleanse and “refresh her spirit” with the gratitude that our impoverished millions will no doubt heap on her consciously uncoupled head for her generosity in allowing them to see the spiritual value in their unending quest to satisfy their own hunger — their colons are as clean as a whistle! They’ll also lose a spectacular amount of weight, since almost nothing in this picture can provide you with the calories you need to do any real work. You can expect Gwyneth to publish a pretty solid SNAP diet plan on her GOOP site sometime soon: “What I Learned Eating With the Poors, And Why You Should Starve Yourself to Death to Live Forever.”

(Note: This was written under the assumption — perhaps mistaken, because she is the author of several cookbooks — that Gwyneth Paltrow can cook. Thanks to an alert reader, we can deduce from the collection of random vegetables that Gwyneth may only be able to make two actual dishes, scrambled eggs and guacamole, explaining why when faced with a challenge where she had to “cook at home,” she bought ingredients for exactly those two things, and possibly huevos rancheros.)

So, having actually been poor (though I’ve never taken food stamps), I can tell you, Gwyneth, that your choices are unconventional. When feeding yourself on a budget, the point is to make the entire budget work for you, not cut off the cashier at Whole Foods when you hit $30. It’s no sacrifice to leave the imported olive oil and handmade Greek yogurt in the bin by the register. Most people with small budgets select food based on whether it will fill them up, picking things like large bags of frozen chicken breasts, macaroni and cheese, hot dogs, ground beef, bananas, cereal, canned soup and sandwich bread. I bought bags of baby carrots and tubs of hummus. I shopped at Wal-Mart.

And that’s exactly the trouble with having celebrities take the “SNAP challenge”: Gwyneth would hardly feature a spaghetti-and-hot dogs meal on GOOP.com, unless the spaghetti was artisanal, hand-made only by women over the age of 70, in an Italian town that doesn’t have the Internet yet and relies on goats to deliver important messages to the next village, wrapped lovingly in antique parchment and flown in on a private jet, while packed in ice hammered out of the Alps and carefully reformed into crystal clear “ice globes,” served only with hot dogs fashioned from macrobiotic tofu, made of hand-selected soybeans in rural Japan, aged to perfection in the bosom of a 16th century samurai warrior’s armor and then hand-cut with a 24-karat gold wire. The very thought of setting foot in a discount grocery store where she has to pack her own generic, store-brand dried fruit and expired milk in a cardboard box after counting out her pennies probably breaks her out in such nasty hives, she has to have an allergy-banishing skin cream custom-mixed for her in Paris by trained monkeys in bellhop uniforms.

Gwyenth would probably be the kind of person who nudges their cart up to yours in the grocery checkout line and asks you whether you intend to feed your children that Hamburger Helper, or whether this is some sort of ironic joke, and you’re going to repurpose the “enchilada powder” into an ingredient for a comically complex craft cocktail. Or threatens to call the government on you if you both buy a bag of chocolate chip cookies and pay for your wares with an EBT card. Her entire purpose in life, through her lifestyle website, is to shame the less fortunate into spending money to live like a celebrity. I doubt she’ll draw the line at judging the contents of your shopping cart. After all, how will your starving children ever survive in this harsh world without their kelp?

R Street congratulates Florida Cabinet for approving transfer of Cat Fund risk

April 14, 2015, 1:06 PM

TALLAHASSEE (April 14, 2015) – The R Street Institute praised today’s Florida Cabinet decision to allow the Florida Hurricane Catastrophe Fund to purchase $1 billion of retrocessional coverage.
The decision follows from the cabinet’s previous approval for the Cat Fund to pursue up to $2.2 billion of protection. The remaining $1.2 billion will be secured through pre-event bonds.

“The Cat Fund poses huge liabilities on Florida’s taxpayers due to the hurricane exposure it is legally required to cover,” said Christian Camara, R Street’s Florida state director. “Today’s responsible action by Gov. Rick Scott, Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater will shield Floridians from potentially billions of dollars in debt and post-hurricane taxes, should a long-overdue hurricane strike the state this year.”

Securing the total $2.2 billion of additional protection will enable the Cat Fund to reach its $17 billion statutory maximum obligation to reimburse participating property insurers.

Camara praised state and Cat Fund officials for securing the funding in the private market through no extra cost to existing policyholders

“The fact that the Cat Fund is able to secure the extra protection without increasing insurance rates on consumers is another sign that hurricane risk management in the state is headed in the right direction,” he said.



R Street, ATR urge Gov. Brownback to veto anti-competitive ridesharing legislation

April 14, 2015, 11:04 AM

Dear Gov. Brownback,

On behalf of Americans for Tax Reform and the R Street Institute, we urge you to veto S.B. 117, which would burden ridesharing services with hostile and unnecessary regulation.

Innovative businesses like Uber and Lyft can provide reliable, low-cost transportation options for thousands of residents in the state of Kansas. In addition, these services spur new economic activity and help create jobs that didn’t previously exist.

While we applaud the Kansas Legislature’s initiative to advance full legalization of transportation network companies (TNCs) operating within the state, this effort must be undertaken in a manner that promotes competition and innovation, rather than impedes it.

Providing a comprehensive regulatory framework for TNCs is essential to answer important liability and insurance questions. However, these regulation must be not be overly burdensome or force these innovative businesses to leave, as Uber has threatened to do if this legislation is signed into law.

As you are no doubt aware, many of the nation’s leading insurance trade associations, along with transportation network companies, have reached an accord about what exactly constitutes a comprehensive, yet flexible insurance framework.

While much of the content of S.B. 117 provides for a sound insurance framework for ridesharing, it deviates meaningfully from the national compromise in several important ways. For instance, S.B. 117 requires drivers to provide to lienholders proof of comprehensive and collision insurance coverage during Periods 2 and 3 of the transaction. In Kansas, both comprehensive and collision coverage are optional coverages that drivers elect to purchase. Whatever their facial appeal, the national compromise chose to forgo placing these onerous coverage requirements on drivers. Instead, it calls for horizontal uniformity and predictability in coverage between the various for-hire transportation services by recommending that coverage match the state’s current requirement on limousine services. Comprehensive and collision coverages are not required of limo drivers in Kansas.

In addition, this legislation would impose overly broad restrictions on the use of commercial data from TNCs in the name of protecting consumer privacy. While well-intentioned, this provision would limit innovations that could help significantly reduce costs.

Therefore, we ask you to veto this legislation, and urge the Kansas Legislature not to advance proposals that unnecessarily hinder competition or innovation.


Eli Lehrer
President, R Street Institute

Grover Norquist
President, Americans for Tax Reform


Groups push to end NSA spying before June

April 14, 2015, 8:04 AM

From Watchdog Wire:

The coalition includes a range of organizations including the Electronic Frontier Foundation, the American Civil Liberties Union, Free Press Action Fund, DownsizeDC, TechFreedom, Fight for the Future, R Street Institute, and Human Rights Watch and the Sunlight Foundation…

…More recently, during Congress’ two-week Easter recess, members of Fight215.org petitioned staffers during a Capitol Hill panel organized by the R Street Institute to convince their bosses to end the program.

Congress should vote to override Obama’s latest veto

April 13, 2015, 2:30 PM

Congress returns from its two-week break on Monday. If it has any respect for itself, it will promptly schedule a vote on President Obama’s most recent veto.

The nixed bill was a resolution to strike down new regulations issued by the National Labor Relations Board in mid-December. These new rules, which run 180 pages, would have the effect of making it easier to unionize certain workplaces. Sen. Lamar Alexander, R-Tenn., who introduced S.J. Res. 6, said the new regulations allow “a union to force an election” to decide whether to unionize “before an employee has a chance to figure out what is going on.” To the concern of some in Congress, the rules would also force employers to provide union advocates with employees’ email addresses and phone numbers.

This was the first time Congress had fully utilized the Congressional Review Act since 2001. Thanks to fast-track rules for such resolutions, both chambers passed the legislation in less than a month.

Congress likely does not have the votes needed to override the veto. The legislation passed along party lines, with 53 ayes in the Senate and 232 yeas in the House. Leadership in both chambers should nonetheless schedule an override vote.

For one, voting to override the veto will signal to the White House that Congress is serious about having a role in regulatory policy. For too long, Congress has treated regulation as an afterthought, or worse, an issue to ignore and then demagogue. Sens. Roy Blunt, Angus King, Mark Kirk and others have introduced promising bills to curb the explosion in regulation. Congress passes perhaps 50 significant laws per year. The executive branch issues 80 to 100 major rules per year, to the tune of $100 million or more each in economic impact.

For another, Obama’s veto was issued in an insulting and unconstitutional manner. The president claimed he was issuing a pocket veto. Yet he also returned the legislation to the Senate, where it originated.

Article I, Section 7 of the U.S. Constitution sets the legislative process: When the president issues a veto, he must return it to the chamber from whence it originated. If, however, “Congress by their adjournment prevent its return,” then the president may veto it once and for all with the stroke of his pen. “It shall not be a law.” It is an either/or choice; either one vetoes or one pocket vetoes. That a Senate designee received Obama’s veto makes his assertion of a pocket veto “gibberish,” as one constitutional scholar put it.

Obama, as has been reported, is not the first president to issue both types of vetoes at once. This dubious practice goes back to the Ford Administration, at least. The “protective return veto,” as it is termed, aims to allow the president to kill legislation while denying Congress the right to override it.

When Obama pulled this same maneuver in 2010, then-House Speaker Nancy Pelosi, to her great credit, scheduled a vote. Congress did not override the veto, but it did send the message that the legislative branch was not going to tolerate such shenanigans. Senate Majority Leader Mitch McConnell has condemned the president’s veto. Hopefully, he sees fit to protect Congress’ constitutional prerogatives and schedule an override vote pronto.

R Street alarmed by FDA panel ruling on tobacco

April 13, 2015, 1:05 PM

WASHINGTON (April 13, 2015) – The R Street Institute expressed disappointment and alarm at the decision by a key Food and Drug Administration advisory panel to bar Swedish Match of North America from eliminating misleading warnings on its snus products.

Currently mandated snus warnings allege risk of mouth cancer, tooth and gum disease and health risks similar to that of cigarettes. The company requested that these warnings be replaced with a warning that, while not totally safe, these snus products present far less health risk than cigarettes.

“The denial of Swedish Match’s application represents a victory for Big Tobacco and Big Pharma, but a major loss for public health,” said Dr. Joel Nitzkin, R Street senior fellow and former co-chair of the Tobacco Control Task Force of the American Association of Public Health Physicians. “If allowed to stand, this action will reaffirm cigarettes as the primary means of nicotine delivery in the United States, and will protect cigarettes from competition from less-addictive and far less-hazardous nicotine-delivery products, which could substantially reduce future rates of tobacco-related addiction, illness and death.”

Nitzkin said the ruling also would protect Big Pharma and prevent competition from these relatively low-risk products, which could prove to be more effective for smoking cessation and more attractive to smokers than the current pharmaceutical options.

“A major flaw in the panel’s approach was to disregard the potential public health benefits of the action requested,” said Nitzkin. “Cigarettes are the most hazardous and most addictive of nicotine-delivery products. Consumers deserve to be told that alternative products, such as snus, present far less health risk.”

Nitzkin stated that reversing this decision could pave the way for a tobacco harm-reduction initiative that would secure personal and public health benefits in excess of those achievable with current tobacco-control programming.



R Street congratulates Gov. Herbert on signing insurance modernization bill  

April 13, 2015, 1:03 PM

SALT LAKE CITY (April 13, 2015) – The R Street Institute congratulated Utah Gov. Gary Herbert for today’s signing of H.B. 141, which will modernize arcane insurance terms and definitions.

Specifically, the law updates the state’s anti-rebating statute to clarify that a product offered free of charge to customers and non-customers alike cannot be considered an inducement. This clarification brings Utah’s law into conformity with the bulk of interpretive judgment concerning the widely adopted model promulgated by the National Association of Insurance Commissioners.

“We applaud Gov. Herbert for recognizing that innovation brings new conditions which could not have been predicted when laws were enacted,” said Ian Adams, R Street’s western region director. “As would be expected, the Internet and e-commerce have enhanced the quality of products and services offered to consumers and updating the Utah statue will allow all customers to harness the power of the Internet to work for them.”

By taking a permissive approach, the law will allow insurance brokers to offer online benefits portals, which are increasingly inseparable from insurance products themselves, without worrying about running afoul of the state’s anti-rebating statute.

“Enactment of this law represents a step in the right direction by narrowing the scope of largely outdated state anti-rebating insurance statutes,” said Adams.


PTO smacks down podcasting patent troll

April 13, 2015, 11:45 AM

Notorious patent troll Personal Audio LLC did not invent adding episodic content to a webpage, the U.S. Patent and Trademark Office ruled in an April 10 decision that’s expected to put a serious crimp in Personal Audio’s plans to extract licensing fees from podcasters and television networks.

The decision from a panel of three administrative patent judges comes in an inter partes review filed by the Electronic Frontier Foundation, which raised more than $75,000 in a crowdfunding challenge to support the effort.

An earlier campaign had raised more than $500,000 to fend off a suit Personal Audio brought against podcaster Adam Carolla, although Carolla ultimately settled with the company. In a separate infringement suit against CBS Corp., a federal jury in Texas awarded Personal Audio $1.3 million.

The background is this: In 1996, Personal Audio applied to patent a personal audio device, an application that was amended 13 years later – long after the explosion of the podcast industry – to include the concept of regularly updating a website with new audio and video episodes. The business was founded as a mail-order service in which subscribers would regularly receive cassettes with newspaper and magazine articles read and recorded aloud. That service, Personal Audio would later claim, constituted the “invention” of podcasting.

But EFF was able to demonstrate in its filing that, by 1996, there were already many examples of webpages regularly updated with episodic content, including those of CNN, the Canadian Broadcasting Corp. and Carl Malmud’s “Geek of the Week” Internet radio show. The PTO judges agreed that there was sufficient prior art that the patent ought never have been granted, ordering the claims for episodic content “unpatentable.”

A copy of the full decision is embedded below.


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

Key FDA panel votes down warning label change for snus

April 13, 2015, 10:45 AM

Swedish Match should not be allowed to alter the warning labels on its U.S. snus products to reflect evidence they are safer than cigarettes. That was the determination of the Food Drug Administration’s Tobacco Products Scientific Advisory Committee at Friday’s conclusion of two days of testimony on the matter.

The eight-member panel voted unanimously that there was insufficient evidence to demonstrate that use of snus – a smokeless-tobacco product contained in packets placed under the lip – didn’t increase the risk of tooth loss and gum disease. The New York Times reports members were split on other questions related to the relative risk of oral cancer:

Perhaps the most direct question, whether the research showed that health risks from Snus were “substantially lower” than those from cigarettes, divided the panel in half, with four members voting yes and four no.

“I voted no because I have a problem with the word ‘substantially’ lower as it relates to all health risks,” said Pebbles Fagan, an associate professor at the University of Hawaii Cancer Center. “There’s no evidence that pregnancy outcomes related to snus would be any different than with any other tobacco product.”

But other panel members were persuaded.

“You can still care about a wide array of health effects and still endorse the idea that there’s a substantial reduction in risk,” said Kurt M. Ribisl, a professor of health behavior at the University of North Carolina Gillings School of Global Public Health. “Cancer and heart disease are top killers of women in this country, and the risk for those are substantially lower in these products.”

The hearings followed up a 130,000-page application Swedish Match submitted last June, which included the results of dozens of studies – including two double-blind, randomized trials comparing snus to placebo for those trying to quit smoking – that the company said demonstrate that snus use is at least 90 percent safer than smoking cigarettes.

Much of the evidence is drawn from 50 years of data from snus users in Sweden, which has one of the highest rates of tobacco use in Europe, but one of the lowest-rates of smoking-related deaths. The reason, says Swedish Match, is that Swedes prefer snus to cigarettes, with roughly one-in-five Swedish men reporting they are regular snus users.

Indeed, snus accounts for roughly half of Swedish Match’s $15 billion in annual sales. But in the United States– where there are still 40 million regular smokers – its General Swedish brand has only about 4 percent of the smokeless tobacco market. Swedish Match also makes cigars and the chewing tobacco brand Redman.

The company sought clearance to replace on its U.S. snus packages such standard warnings as “This product can cause mouth cancer” and “This product is not a safe alternative to cigarettes” with one that reads: “No tobacco product is safe, but this product presents substantially lower risks to health than cigarettes.”

R Street Associate Fellow Brad Rodu, who wrote about the hearings last week, told Reuters:

“The committee appears to have set an absolute standard of safety that ignores decades of evidence showing that snus is vastly safer than cigarettes,” said Dr. Brad Rodu, a professor of medicine at the University of Louisville.

Or, as another expert quoted by the Washington Post put it:

“Can you make the claim that a product is safer when it’s not perfectly safe? Yes, I think you can,” said Lynn Kozlowski, a University of Buffalo professor who studies tobacco use policy. “But there are some who think their job is satisfied only when they say nothing is safe.”

These were the first hearings conducted under provisions of the 2009 Tobacco Control Act, which granted the FDA authority to regulate tobacco, but permits companies to petition for the right to demonstrate one tobacco product is safer than another. The panel’s recommendations are considered advisory, though they likely will have significant weight with the FDA, which is expected to render a final decision this summer.

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

The ‘green’ tea party fights for a more environmentally friendly GOP

April 11, 2015, 9:26 AM

From Public Radio International:

Summit panelists (from left): Former Texas Republican Senator and head of the Texas Clean Energy Coalition Kip Averitt, former South Carolina Congressman Bob Inglis, Eli Lehrer of conservative think tank R Street Institute, founder of the Green Tea Coalition and national coordinator for the Tea Party Patriots Debbie Dooley and Republican strategist Tucker Eskew. 

This costs less for married couples than it does for single people

April 10, 2015, 9:24 AM

From Deseret News:

“Marriage really does make people more careful and responsible it isn’t at all surprising that this translates into better driving behavior,” Eli Lehrer, president of nonprofit research group The R Street Institute, told InsuranceQuotes.