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British Medical Association misleads on e-cigarettes

April 02, 2015, 8:50 AM

Dr. George Rae, chairman of British Medical Association Northeast, made reckless comments about e-cigarettes in a March 31 BBC radio interview, available here. I highlight Rae’s most egregious claims in the transcript provided by Clive Bates.

Interviewer: Give us the science bit: How dangerous could they be?

Rae: …You’ve got to realize that there are chemicals within e-cigarettes, particularly a group of chemicals called nitrosamines, and nitrosamines can cause cancer, and they [e-cigarettes] can be even more cancer-forming than what you’re getting within cigarettes themselves.

Obviously, as a doctor, that is causing me concern, because there is the perception by obviously many people that, ‘well, I’m not smoking cigarettes, which have got tar and have got nicotine, and therefore, that this is a safe substitute.’ Well what I think what has got to be coming across loud and clear, and I’ve been on the airwaves in the previous months and other doctors [are] saying ‘look hang on, this isn’t the case, there are chemicals within those e-cigarettes and these are serious chemicals’ and I’ve given you one example, the nitrosamines.

So there are lots and lots of concerns about e-cigarettes. I don’t think you’ll get many, if indeed any, doctors coming on the radio and saying ‘Look, it’s ok. They’re an acceptable substitute and let’s just go with it.’ I think nothing could be further from the truth.

Interviewer: We often hear about tar, you know in the advertisements from years ago, it’s all about the tar causing the problems. But with e-cigarettes, if there’s different types of chemicals, by the sounds of it, they can cause the same types of problems.

Rae: Absolutely! No, there’s absolutely no doubt about that at all. That is the whole point. They are being marketed as something which is safe and a safe substitute, and that’s not the reality. I don’t think there have been any clinical trials done on e-cigarettes. And anyway, doctors wouldn’t get involved in anything which wasn’t regulated. [BR note: The BMA spokesman ought to be aware of the growing body of scientific evidence here].

Interviewer: But surely it’s better than the alternative [smoking]?

Rae: No, it’s not better. Because what I’m actually trying to get across and I’ll say it again, there are potentially more cancer-forming chemicals within e-cigarettes than you’ve actually got in cigarettes, per se, themselves. Now nobody’s going to go on the air and say, you know, that is better for you – it’s not! It’s actually a bit of a time bomb that people are actually unaware of. I think you are not going to find the medical profession relenting on the message we are trying to get across on e-cigarettes.

The British Medical Association ought to assure that its spokespeople are properly educated and sticks to the facts on such an important public health matter.

What if Congress won’t do its job?

April 02, 2015, 8:41 AM

The U.S. Constitution is abundantly clear about which branch of the federal government creates our laws: “All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” But what the Constitution makes simple, Congress and the president have turned into a hot mess.

Lately, Congress has assailed the president for essentially writing law on his own. Congress is right. From immigration to environmental regulation and even health care, Barack Obama has used a combination of regulation and executive action to achieve his policy objectives. He even has gone so far as to take military action under the suspect legal authority of a congressional authorization of force from 2001.

Recent presidents have argued, however, that what appears to the public as unilaterally writing law is simply presidents’ using the fullest extent of their delegated power to respond to the issues of the day. And they’re right in a way, too. Over the course of several decades, Congress has shifted an immense amount of its constitutional law-writing authority to the president and federal agencies. The House and Senate seem perfectly content to complain about the president exceeding his constitutional authority while doing precious little to exercise their own.

The shift has been subtle but significant. Add one agency here. Delegate rulemaking authority there. Bring in some creative legal reasoning. Pretty soon, you have our current regulatory state, where bureaucrats use decades-old congressional authority to draft what amounts to new law.

Delegated congressional authority is substantively different than the executive branch’s responsibility to ensure that laws are faithfully executed. Purely administrative action is well within the president’s power. Developing new substantive provisions of law, crafting arbitrary exemptions to laws, and ignoring deadlines and details clearly laid out in properly enacted laws are not.

As my colleague Kevin R. Kosar writes in a new paper, the REINS Act, introduced in the current Congress by Rep. Todd Young, R-Ind., and Sen. Rand Paul, R-Ky., is just one way that Congress could take back its constitutional responsibility. The legislation would require Congress and the president to affirm major federal rules — those with an economic impact of $100 million or more — before such rules could be enforced. Congress would not be forced to write the rules itself; it would simply become accountable for the exercise of its authority.

Unfortunately, Congress is not clamoring to pass the REINS Act. At this point, Americans need to ask themselves — do senators and congressmen really have any interest in the arduous task of writing law, or would they rather talk about it? We hear so much about executive overreach, but what about legislative underreach? What if the biggest problem is not the president, but rather a complete unwillingness of Congress to develop or be accountable for positive ideas to address the challenges our nation faces?

The issue is not simply with Republicans. When Democrats most recently controlled Congress, they drafted the Affordable Care Act to look like a Mad Libs game, with the Health and Human Services secretary directed to fill in the blanks as she saw fit. Then-Speaker Nancy Pelosi’s preference — to pass the bill to find out what was in it — was a complete abdication of law-writing responsibility.

The REINS Act should have been one of the first bills the Republican Congress put on the president’s desk. The measure is not about attacking the president; it is about Congress being serious about its constitutional charge. Instead, we have watched Congress try to undo the president’s actions under authority Congress gave away long ago. Congress is not trying to take its authority back from the president. Instead, our senators and congressmen are saying: “We have no plans to use our authority, but we really do not want the president doing anything with it, either.”

The Constitution rejects a president that both writes the laws and executes them, but it also expects a Congress willing to do its job. Until Congress demonstrates a willingness, through legislation like the REINS Act, to be accountable for the laws that affect the American people, talk of separation of powers and overreach by the president is little more than empty political rhetoric.


Lehrer talks flood insurance on Morning Edition

April 02, 2015, 7:53 AM

R Street President Eli Lehrer joined reporter Charles Lane recently to discuss pending flood insurance rate increases on National Public Radio’s Morning Edition program. The full audio of the segment can be found here, while the transcript of his remarks are below.

LANE: Most homeowners, however, will see no rate increases and only a $250 annual surcharge. But for those who live in the most flood-prone areas, the idea is to align the cost of insurance with the actual flood risk. Eli Lehrer is a conservative policy analyst who helped Congress draft the rate increase.

ELI LEHRER: We encourage enormous numbers of people to live in areas where they really shouldn’t be living because we provide them with subsidized flood insurance.

LANE: After Superstorm Sandy, the flood program’s debt got so big that premiums barely covered the interest payments, so Congress raised rates. But Lehrer, who advocates for taking the government out of the insurance business, says it wasn’t enough.

LEHRER: The program still has enough built-in subsidies that it will be another decade at least before we can even have a hope of bringing all or almost all rates to actuarial soundness.

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

NSA was totally going to stop spying until Edward Snowden showed up

April 01, 2015, 4:04 PM

Edward Snowden doesn’t seem to be enjoying his Russian home – word has it that he’s looking to barter a plea deal with the United States in order to make a return – but in the wake of his massive intelligence leak that blew the lid off of the NSA’s data collection program, it was at least assumed that his actions were responsible for halting, or at least reeling in, the program itself.

Now, the NSA — which has been facing backlash over its program for more than a year, especially from privacy advocates that argue that even if the collection program stopped terrorism, that Americans should have been informed of the privacy they were giving up — says that it’s because of Edward Snowden that the program continued for so long. In fact, according to intelligence officials, the NSA was totally on the way to scrapping the program when Snowden leaked his information to journalists.

Because if there’s anything you can count on a government entity to do, it’s to discontinue an ineffective program. Or something.

The National Security Agency considered abandoning its secret program to collect and store American calling records in the months before leaker Edward Snowden revealed the practice, current and former intelligence officials say, because some officials believed the costs outweighed the meager counterterrorism benefits.

After the leak and the collective surprise around the world, NSA leaders strongly defended the phone records program to Congress and the public, but without disclosing the internal debate.

The proposal to kill the program was circulating among top managers but had not yet reached the desk of Gen. Keith Alexander, then the NSA director, according to current and former intelligence officials who would not be quoted because the details are sensitive. Two former senior NSA officials say they doubt Alexander would have approved it.

As the Huffington Post points out, noting that NSA higher-ups were uncomfortable with the project and its cost is nothing new. After news of the program leaked, NSA officials spoke to several news outlets about how they feared the public would have a problem with a program that captured all of their cellphone metadata with the blessing of their carrier services and stored it for future use.

The least this story does, though, is drive home that the NSA has some of the same concerns about the program that pro-privacy legislators and civil liberties activists do: that the massive scale of the program makes it unwieldy and that, despite assertions to the contrary, the program has not been an effective aid in combatting terrorism. But, of course, that doesn’t really mean anything in the context of government efficency. After all, Ronald Reagan put it best when he said that the nearest thing we will ever see to eternal life is a government program.

Testimony to the Delaware House Health and Human Development Committee

April 01, 2015, 2:00 PM

Rep. Michael A. Barbieri
House Health and Human Development Committee
Delaware House of Representatives

Re: H.B. 5 (Heffernan) Electronic Cigarettes

Chairman Barbieri:

My name is Edward Anselm and I serve as medical director for Health Republic Insurance of New Jersey (HRINJ). I hold the title of assistant professor of medicine at the Mount Sinai School of Medicine. I have a 30-year history of tobacco-control advocacy and running smoking cessation programs. I recently joined the R Street Institute as a senior fellow. I am here today to share my thoughts about H.B. 5, and hope you will consider some modification to the proposed language.

HRINJ is the first health plan to implement a tobacco harm-reduction program. We have complemented a comprehensive program of smoking cessation with a recognition that the majority of smokers are not ready to change. Even if not ready to quit entirely, most smokers are concerned about their health. We provide counseling services to members who want to reduce their smoking level. This can be supported by several means, including FDA-approved medications and electronic cigarettes. While the science supporting the role of electronic cigarettes is far from complete, we have sufficient evidence to support patients and doctors having a dialogue about harm reduction.

Harm reduction as a public health strategy is inherently controversial. It is rooted in the concept that some degree of self-destructive behavior is inevitable. For example, medicalization and decriminalization of marijuana represent a set of compromises about people’s behavior and the consequences of intervention. The net effect includes increased ease of access to marijuana by young people. In every harm reduction strategy, there is a trade-off.

I want to talk about nicotine. Lots of young people try smoking, but only a fraction adopt it as a regular habit. Those individuals gain some benefit. A focus on the additive nature of nicotine distorts our understanding of why people smoke. An important insight is gained from looking at the prevalence of smoking among people with mental illness, which is double that of the general population. Nicotine is an antidepressant, and when people stop smoking, they get depressed. People with schizophrenia and attention deficit disorder have better cognition on nicotine. My experience with smoking-cessation clinics shows that people quit smoking often, but relapse when overwhelmed by life stresses. People learn they can self-medicate with nicotine and they take the drug in order to avoid feeling bad. Here lies the harm-reduction opportunity: if people need nicotine, why do they have to smoke to obtain it?

Last year, we celebrated the 50th anniversary of the 1964 Surgeon General’s Report on Tobacco, and applauded the 50 percent reduction in the prevalence of smoking since its release. Notwithstanding this great progress, there are still more than 42 million smokers in the United States. Each year, we expect another 540,000 avoidable deaths attributed to smoking nationwide. The smoke of combusted cigarettes contains the well-recognized toxins that cause tobacco-related disease. Any reduction in the number of cigarettes smoked would translate into savings of life, health and health-care costs.

Electronic cigarettes represents an opportunity to provide nicotine to current smokers. There are now more than 600 brands of electronic cigarettes available in a market that remains largely unregulated. What these electronic nicotine delivery systems have in common is that they deliver nicotine to the lungs by heating liquid nicotine. By every comparison available, vapor produced by ENDS devices has far less harmful agents than cigarette smoke. No one is suggesting that electronic cigarettes are harmless, but it is not difficult to conclude that they are less harmful than cigarettes.

What about the harm to people who don’t smoke? The harm of cigarette smoke extends to household companions and co-workers who share the same environment. Legislation to protect individuals from other people’s smoking has been effective in transforming the culture of smoking and protecting many from exposure. If vapor is far less toxic than cigarette smoke, there may be settings in which electronic cigarettes could be considered to have minimal harm to others, such as the privacy of one’s home or in outdoor spaces.

In summary, I support the basic provisions of H.B. 5 with regard to restricting youth access to ENDS. I believe that appropriate distinctions need to be made between cigarette use and electronic cigarette use. An excessive restriction of electronic cigarette use by adults may limit their value in reducing harm from cigarette smoking.



Edward Anselm, MD
Senior Fellow, R Street Institute
Assistant Clinical Professor of Medicine, Icahn School of Medicine at Mount Sinai

PPA cautiously optimistic after RAWA hearing

April 01, 2015, 10:00 AM

From Cards Chat News:

That viewpoint was represented at the hearings by Andrew Moylan, executive director of the R Street Institute. Moylan provided a conservative voice on the panel that was against RAWA for reasons GOP members of the subcommittee might get behind.

“RAWA’s potential overreach in failing to exempt intrastate activity is unwise from the perspective of federalism, but it could also prove largely unnecessary,” Moylan said. “If a state wishes to prohibit gambling within its borders, it has sufficient power to do so.”

Five thoughts: RAWA hearing, Global Poker Masters, Urbanovich and more

April 01, 2015, 9:57 AM

From Poker News:

Parry Aftab, Executive Director of WiredSafety, and Andrew Moylan, Executive Director of the R Street Institute served as the voices of reason. Aftab actually acknowledged that there are three regulated states in America, and that their “fictitious borders” were actually working. Likewise, she informed the committee that each state’s regulatory body was effectively protecting underage citizens with the use of government-issued identification like social security…

…Moylan, while not necessarily pro-online gaming, is in favor of states’ rights. He testified that RAWA has no right to restrict these states’ rights to legalize and regulate, as long as they are doing so safely and effectively. Remember, this is a bit of a double-edged sword because the same 10th Amendment argument can and will be used against the federal legalization of online gaming.

While frustrating and a bit scary, the hearing gave me hope. Neither Aftab nor Moylan have a lot riding on the line with RAWA — they aren’t operators looking to prosper economically — yet they were the only two people called to the stand that offered relevant data. That makes me think there are more smart, thoughtful individuals out there that will see the merits of allowing states to regulate their own online gaming.

Net neutrality rules full of faults, R Street warns

April 01, 2015, 8:00 AM

WASHINGTON (April 1, 2015) – The R Street Institute expresses deep concern about this morning’s announcement by the Federal Communications Commission that it would expand its recently proposed net-neutrality rules to tennis, basketball and other sports-related broadcasts.

The proposed changes in net regulation from the FCC’s newly created Office of Mesh Guidelines (OMG) came as a surprise to many observers.

“This overreaching regulation will have profoundly negative effects on competition. The Davis Cup and Wimbledon will never be the same,” said R Street President Eli Lehrer, adding that the new rules likely would also undercut attendance at Washington Wizards games.

“Before the OMG stepped in with still more net-neutrality rules, no one even thought it possible for Wizards attendance to dip any lower,” Lehrer added.

Under the new rules, OMG regulators at tennis matches will regularly pull the nets lower to ensure balls reach the other side of the court. On basketball courts, the expanded rules will require lowering nets to five feet and expanding their diameter to five feet as well, to ensure that dominant players’ natural height or shooting ability doesn’t undermine the game’s fairness.

“This mandatory increase in bandwidth will do no harm to incumbent players, while lowering barriers to entry for new players,” an OMG spokesperson said. “Access to the courts long has been a cherished American tradition and we view it a basic human right.”

Other R Street scholars were similarly critical of the new rules.

“The commission thinks it has come up with a final solution, but in practice, it will trigger total war over the Internet. April 1, 2015 is a date that will live in online infamy,” said Mike Godwin, Director of the institute’s Center for the Study of National Socialism. “This kind of anticompetitive intervention is like something former Labor Secretary Robert Reich might have recommended in his book ‘Beyond Outrage,’ which is the third Reich book I’ve read.”

“These new rules will lead to massive regulatory confusion,” Godwin added. “The whole issue could have been avoided if OMG staff had been more thorough when they looked up the meaning of the word ‘server.'”


Single-device user Hillary Clinton actually used two devices at State

April 01, 2015, 7:00 AM

Remember when Hillary Clinton stood in front of a press gaggle at the United Nations and claimed that she used her personal email in order to simplify her communications routine, as her tiny little female brain was unable to account for two mobile devices at the same time, despite her quick adaptation to the iPad in addition to her phone? Sure, we all do. I missed lunch for it. The things I do for you people.

Well, it turns out that, once Clinton released her emails to the Associated Press, she was betrayed, somewhat ironically, by her real inability to use two devices. In at least one communication with her senior aide Huma Abedin, where Clinton mistakenly replied to a very important State Department email about drone debris in Pakistan, with a series of queries about benches and floral arrangements.

While limited, the emails offer one of the first looks into Clinton’s correspondence while secretary of state. The messages came from and were sent to her private email address, hosted on a server at her property in Chappaqua, New York, as opposed to a government-run email account.

They show that Clinton, on at least one occasion, accidentally mingled personal and work matters. In reply to a message sent in September 2011 by adviser Huma Abedin to Clinton’s personal email account, which contained an AP story about a drone strike in Pakistan, Clinton mistakenly replied with questions that appear to be about decorations.

“I like the idea of these,” she wrote to Abedin. “How high are they? What would the bench be made of? And I’d prefer two shelves or attractive boxes/baskets/ conmtainers (sic) on one. What do you think?”

Abedin replied, “Did u mean to send to me?” To which Clinton wrote, “No-sorry! Also, pls let me know if you got a reply from my ipad. I’m not sure replies go thru.”

The other emails between Clinton and her advisers provided by the State Department contained a summary of a 2011 meeting between Sen. John McCain, R-Ariz., and senior Egyptian officials in Cairo. It was uncensored and did not appear to contain sensitive information. That email was forwarded to Clinton’s private account from Abedin’s government email address.

The iPad was, of course, released more than a year after Clinton became Secretary of State, but the emails are from within a year of the iPad’s release, making Clinton something of an “early adopter” of the technology, which is very much at odds with the “technological ignoramus” card she played at the United Nations. Worse, the emails the AP obtained make it clear that Clinton did have a hard time separating personal email from work email, and now that all 30,000 emails on the server are gone, it’s hard to know whether some of the emails she marked as “personal” came from within conversations that were decidedly professional.

According to the AP, which asked her spokesperson for comment, Clinton’s aides now admit that then-Secretary Clinton did also use an iPad in addition to her Blackberry, but mostly to “read news clippings” and not primarily for email. Obviously because the latter was very difficult.

Recap of RAWA House subcommittee hearing and what it means for igaming

March 31, 2015, 4:26 PM

From JD Supra:

Some balance was introduced by Andrew Moylan, Executive Director of R Street, who strongly argued that RAWA would be dangerous precedent which substitutes the judgment of the federal government for that of the states. Setting aside the issue of internet gaming specifically, Mr. Moylan noted that it is problematic to say that anything that happens over the internet constitutes an interstate transaction which should be subject it to the federal government’s oversight as it would subject such a broad range of activity to the federal government’s jurisdiction. The final witness, Parry Aftab, executive director of Wired Safety, provided reasoned testimony that unregulated offshore gambling websites present a serious threat to citizens, whereas the regulated i-gaming industry has strong consumer protection measures built in.

Biased witnesses give testimony at RAWA hearing

March 31, 2015, 4:25 PM

From Online Casino Reports:

The other two witnesses were more subjective on the issue of RAWA. These were WiredSafety executive director Parry Aftab and R Street Institute executive director Andrew Moylan. Aftab said that the regulation of online gambling in the United States will better protect American citizens, and that there is certainly the technology to prevent minors from using the sites. Moylan argued that RAWA is very problematic for states’ rights.

Letter on Texas Alcoholic Beverage Code reform

March 31, 2015, 2:45 PM

The Honorable Kevin Eltife
Chairman, Texas Senate Business and Commerce Committee
Texas State Capitol
Austin, TX 78711

Dear Chairman Eltife:

My name is Josiah Neeley, and I am Texas director of the R Street Institute, a free-market think tank devoted to developing pragmatic solutions to public-policy challenges. I write today to urge you and other members of the Business and Commerce Committee to support S.B. 609.

It’s been more than 80 years since America ended its ill-fated experiment with Prohibition. Yet the Texas Alcoholic Beverage Code is littered with provisions that serve little purpose other than to constrain competition and favor entrenched interests. Current Texas law prohibits publicly traded corporations (other than hotels) from competing in the retail sale of alcoholic spirits, while allowing private corporations to do so. Texas is the only state in the nation to have such a restriction, which serves no purpose other than as an anti-competitive measure.

Similarly, provisions in current law limit the number of package store permits to sell alcoholic spirits that a given individual or entity may own. Yet loopholes in the law for family members and hotels allow certain types of businesses to hold many times the ostensible limit.

These provisions do not advance any state interest in health, safety or welfare. They serve only to limit competition, harming consumers. The provisions are inconsistent with the mission of the TABC, which includes as a goal to “ensure fair competition within the alcoholic beverage industry.” S.B. 609 takes the necessary step of modernizing Texas’ alcohol regulation by removing these anti-free market restrictions from the code.


Josiah Neeley
R Street Institute

NAIC rises above ‘No Action Is Contemplated’ on ride-sharing

March 31, 2015, 11:50 AM

Regular attendees of the National Association of Insurance Commissioners’ thrice-yearly meetings are known to joke that NAIC actually stands for “No Action Is Contemplated.”

At the group’s latest meeting in Phoenix, the Sharing Economy Working Group rendered the basis of that humor a little less true.

California Insurance Commissioner Dave Jones, chairman of the working group, oversaw the development, vetting and adoption of a white paper to assist both regulators and legislators as they approach insurance issues related to ride sharing. R Street was pleased to be an early participant in the white paper’s development and to contribute suggestions that were adopted into the paper.

The final and ultimately adopted draft of the white paper was presented to the working group with a supplemental handout that reflected a public policy compromise between insurers and transportation network companies. That compromise, publicly disclosed first by R Street, was presented to the working group by Jeff Sauls, vice president of state legislative affairs for Farmers Insurance and Gus Fuldner of Uber.

Together, they characterized the deal as a victory not only for the burgeoning new ride share industry, but also as a sensible balance of insurance standards.

They’re right. But what’s more, instead of crafting a deal designed to preclude certain market actors, the compromise is fundamentally accommodating to competition and further development of both the TNC industry and innovative new hybrid insurance products.

For his part, Commissioner Jones was vocal in his praise for the deal saying: “Congrats, this is a tremendously positive development.”

Now that a deal has been struck, it is necessary to effectuate it on a state-by-state basis. In some states, that might be easier said than done. Some states have short legislative sessions that are already coming to a close. Other states have already adopted their own TNC legislation and, given how acrimonious the early encounters between insurers and TNCs were, legislators in those states may be unexcited about revisiting the issue.

In the coming months, it will be crucial for TNCs and insurers to continue to work together to make sure their hard work translates into law.

Toward that end, the white paper can be of some assistance. In essence, it highlights the questions for which the compromise has the answers. When presented together, legislators and regulators will be able to see just how well-considered and carefully crafted the deal is. Both documents are borne of negotiation and concession.

It is worthwhile to note that the NAIC Sharing Economy Working Group process, while at times painful, played a crucial part in allowing insurers and TNCs to come together outside of the hitherto exclusively adversarial legislative context. Such a role is where the NAIC can really excel, particularly when it acts quickly to provide a forum and embraces and encourages involvement on as broad a scale as possible.

Commissioner Jones and his staff at the California Department of Insurance should also be lauded for their time and commitment to the issue, as should the staff at the NAIC. Together, their patience and dedication was responsible for the creation of a forum that should, itself, be considered as a model of openness and fairness.

Thus, while “No Action Is Contemplated” will continue to get chuckles, those close to the process know that, at least sometimes, the NAIC really can get stuff done.

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

How age, gender and marital status affect your car insurance

March 31, 2015, 11:34 AM

From the Huffington Post:

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

For example, a recent study by the Centers for Disease Control and Prevention (CDC) found that married men are more focused on taking care of their health than single men.

What’s more, Lehrer says married people are also a better business opportunity for an insurer, since they are more likely to own homes and “far, far, far more likely” to buy life insurance.

RAWA gets a hearing but supporters’ testimonies failed to impress committee members

March 30, 2015, 4:28 PM

From OnlineCasino.org:

Another testifier, Andrew Moylan, the Executive Director of R Street Institute, a free-market research, and consultancy firm, voiced his opinion that allowing the introduction of RAWA is tantamount to trampling on the rights of states to legislate laws that will legalize online gambling within their boundaries.

Moylan on the Heartland Daily Podcast

March 30, 2015, 11:21 AM

R Street Executive Director Andrew Moylan recently joined Jesse Hathaway, managing editor of the Heartland Institute’s Budget & Tax News, for a discussion of recently reintroduced proposals to grant states the authority to collect taxes on remote sales from businesses not located within their borders. You can hear full podcast here.


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

How Gov. Bentley stopped being a conservative on taxes

March 30, 2015, 10:47 AM

First came his signing of the Taxpayer Protection Pledge in 2010, which reads: “I, Robert Bentley, pledge to the taxpayers of the state of Alabama, that I will oppose and veto any and all efforts to increase taxes.”

That sounds pretty clear to most Alabama voters, and signing it made plenty of political sense for Bentley’s gubernatorial aspirations. The last time voters directly faced a sizable tax increase, one supported by the Business Council of Alabama and a powerful Alabama Education Association, 68 percent of them soundly defeated it.

Not surprisingly, as a popular governor highlighting his “right-sizing” of government and honoring his pledge not to raise taxes, Gov. Bentley cruised to re-election in 2014. Never did Gov. Bentley suggest during his re-election bid that he would push tax hikes if he found his streamlining efforts to be insufficient to keep state budgets in the black.

The governor did not find out about the General Fund budget issues after the 2014 election. He knew the budget challenges facing the state’s General Fund as early as 2011. In 2012, Alabama approved a constitutional amendment moving $437 million to the state’s General Fund from the Alabama Trust Fund over three years. If the General Fund was fine, why did it need the infusion of cash?

Then came the waffle.

Bentley explained his evolving stance by saying, “I did sign a no-tax pledge my first four years. I did not sign it the last four years.”

“What we did the first four years, we streamlined, we cut, we consolidated, we did everything that was necessary to make our state more efficient and we’ve done that,” he said. “Now, it’s halftime, little bit past halftime in fact, but we don’t have enough money to fund the general fund.”

Apparently nobody mentioned to Bentley that a conservative governor is not supposed to increase taxes after halftime.

The governor initially couched his tax plan as an ugly necessity but seemed resigned to letting the Legislature develop its own response. After all, he encountered so much resistance seeking Republican sponsors for his tax measures that Democrats introduced bills for him.

Alabama’s governor is no longer reluctantly resigned to simply proposing tax increase; he is leveraging state highway funds against legislators and touring the state to garner support for his tax hikes. He even has a tax-exempt organization promoting the tax increases on his behalf.

“Please give your legislators some cover,” he said to a meeting of the Birmingham Business Alliance. “It’s hard to vote for a tax, especially if you ran on a no-tax pledge.”

In fact, it is hard to be credible at all if you make a pledge to your constituents, earn their vote and then violate that critical promise. The Bentley many Alabamians voted for is a straight-shooting doctor who loves Alabama and told them he would not raise their taxes.

If that were not enough, one of the governor’s chief jobs is to convince businesses that Alabama is a better place to invest than neighboring states. While those states are exploring ideas like reducing their income tax or eliminating it entirely, Alabama’s governor is pounding pavement asking for a net tax increase. Which sounds like a better economic sales pitch to you?

Now things are just getting plain strange. Gov. Bentley is trying to persuade Alabamians that his tax increases are conservative. “There is nothing more conservative than paying your debts and getting your financial house in order,” he says.

Paying off debts and financial stewardship are conservative ideals, but a several hundred million dollar tax increase is not. Period.

Unfortunately for Gov. Bentley, most state legislators know that the political costs of reducing state government and eliminating services is far less than voting to increase taxes and grow government. If the people of Alabama want a tax increase, they will elect politicians to do just that.

They have not, and I am willing to bet that reality does not change the next time Alabama’s legislators are on the ballot and Gov. Bentley is not.

The U.S. Postal Service’s existential problem

March 30, 2015, 10:38 AM

The U.S. Postal Service has an existential problem. For five years, the agency has flirted with insolvency. It has $15 billion in debt, its statutory maximum. According to its most recent financial statement, the USPS:

[C]ontinues to suffer from a lack of liquidity. Cash balances remain insufficient to support an organization with approximately $73 billion in annual operating expenses. The Postal Service’s average daily cash and cash equivalents balances during the three months ended December 31, 2014 were $5.7 billion, which represents only 21 days of operating cash.

To conserve cash, the agency has put off many capital investments. The service’s 140,000-vehicle fleet is more than two decades old and needs to be replaced. The Postal Service has not made any payments into its Retiree Health Benefits Fund since 2008, meaning its $50 billion in unfunded health-care obligations are not getting any smaller. The agency has tried to shave overhead costs by not replacing hundreds of thousands of retiring employees, and closing post offices or reducing their operating hours. (Most post offices lose money.) The agency also plans to go forward with closing roughly 80 of its mail-sorting plants. If Congress allowed it, the Postal Service would end Saturday mail delivery (except for parcels).

How the agency will escape its debt and return to financial sustainability is anything but certain. The service’s existential crisis, however, goes far deeper than finances. Its very raison d’etre has disintegrated. The act that birthed the modern, reorganized USPS declares:

The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people.

That was drafted in 1970. Back then, long-distance telephone calls were fantastically expensive for most consumers, and facsimiles were few. Pop songs of the time, like Rod Stewarts’ 1972 hit, “You Wear It Well,” spoke of lovers writing precious letters to one another. When letter carriers went on strike in 1970, President Richard Nixon took to television to announce that he would contend with the threat. National Guardsmen were sent in to replace the wildcatters. Mail was king and the Postal Service could expect to reap profits as a monopolist.

Those days are long, long gone. As Elaine Kamarck previously pointed out on FixGov: “To understand this crisis of obsolescence, all you really need to do is ask yourself when was the last time you got an actual letter, addressed to you in the mail with a stamp on it. Even Christmas cards and wedding invitations are going electronic.” At most, 5 percent of all mail sent is personal correspondence. Magazines of all stripes (The Economist, the now sadly defunct Cat Fancy, etc.) are a mere 3.5 percent of what USPS delivers. More than half of all sent mail is advertising.

Mail is what the Postal Service does and it no longer “binds the nation…. through correspondence.” Mail today is not a communications medium; it is a broadcast medium for businesses.

Indeed, from a 21st century perspective, the USPS looks like a hopelessly retrograde enterprise. We cut down trees, mill them into paper, print words on the paper, then transport the paper all over America in pollution-belching trucks, and have people deliver them (often on foot) to 150 million addresses. Then people throw most of it away unopened. (That junk mail-thwarting companies like Catalog Choice exist testifies to the love lost for mail.)

Meanwhile, I can e-mail my sister in Ohio, text my nephew in New Jersey, Facebook message my friend in Russia and video chat with my mother for little to no cost, and without environmental damage. So why do we need a Postal Service?

To be clear, the Postal Service cannot be abolished; at least, not immediately. Many institutions’ operations remain tied to it. Local governments send jury summons, vehicle registration renewals and other important documents by mail. Voting by mail is widespread in the United States, and Colorado, Oregon and Washington hold all their elections by mail. Package delivery in America also is deeply dependent upon the Postal Service. FedEx and UPS have postal carriers deliver many small packages to sparsely populated rural areas. (It makes no financial sense for them to do it themselves, and USPS carriers are on the route anyway.) The Postal Service also is tasked by executive order to deliver medicines in the event of a terrorist biohazard attack.

Many of the legislative reforms proposed in recent years dodge the existential question, and instead take for granted that the government should lug paper mail all over America’s 3.8 million square miles. Finding any significant reform that suits the two biggest interest groups (USPS unions and high-volume mailers) is very difficult. Senators from low-population and far-flung states tend to be especially averse to reforms that reduce the massively subsidized service their constituents receive.

But eventually, a day of reckoning must come. A government operation that goes bankrupt is unlikely to be bailed out by a public who sees it as a pointless, environmentally harmful anachronism.

Rise in government insurance rates to mirror rising waters, flood debt

March 30, 2015, 10:22 AM

From the Washington Post:

“In general it’s a move in the right direction,” said Eli Lehrer, president the R Street Institute, a conservative Washington think tank, but doesn’t go nearly far enough to fix a program that’s broken.

Discounted insurance is “expensive for taxpayers and encourages people to live in harm’s way,” Lehrer said. “Stupid, rich people who want to should be allowed to build wherever they want to as long as taxpayers don’t have to bail them out.”