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Updated: 4 weeks 6 days ago

Three reasons proxy access proposals fail

May 13, 2016, 4:28 PM

From Agenda

“[This] shows that shareholders are starting to think a little clearer about proxy access even though there is still a lot more work to be done in informing shareholders about the pros and cons of proxy access,” says Bernard Sharfman, adjunct professor of business law at George Mason University School of Business, associate fellow at the R Street Institute and an outspoken critic of proxy access.

“It also shows that boards are starting to get on top of the issue,” says Sharfman.

“The preemptive implementation of proxy access may simply have been a necessary evil in order to keep other, more harmful corporate governance issues off the table,” Sharfman adds.

Flood cover bill makes progress in Congress

May 13, 2016, 4:26 PM

From Business Insurance

Ray Lehmann, senior fellow at free-market advocacy group R Street Institute in Washington, which is a member of SmarterSafer, called the bill a “step toward a private market.”

He noted that one potential source of opposition has not materialized.

“The lending community is where there would be objections, and the bankers and other groups have not raised any serious concerns,” Mr. Lehmann said. “It has support from the Realtors. Most of the organizations that are interested are either neutral or positive.”

Arizona flips the narrative, legalizes spacesharing statewide

May 13, 2016, 11:17 AM

Did you see the one in which the terrorist organization recruits a kid to destroy a government facility, killing millions of innocent bureaucrats in the process? What about the one with the lonely computer programmer who spends the majority of his life absorbed in a massively multiplayer online roleplaying game? Or the one in which the eccentric billionaire is fearful of an immigrant and willing to do anything to put an end to the situation?

As various online discussions have demonstrated, ranging from Twitter to reddit, a writer’s choice of phrasing can dramatically impact a reader’s impression of any given topic. For instance, the films Star Wars, The Matrix and Batman vs. Superman (I also would have accepted “the 2016 presidential election”), respectively, would have certainly enjoyed different receptions had the above descriptions been used to promote them, despite the fact that the summaries are technically accurate.

Used correctly, biased phrasing is a powerful tool. Consider Arizona’s recent move to intervene, with a bill signed yesterday by Gov. Doug Ducey, after numerous localities sought to prevent Arizonans from listing their properties on services like Airbnb. The measure, which takes effect Jan. 1, 2017, bars localities from banning spacesharing services, but allows them to set other regulatory guidelines and to collect taxes.

Now, if you’re a left-leaning blogger, you might choose to get a bit creative with your phrasing in how to characterize this legislation, such that private property owners regaining control over how to best use their property becomes:

Cities and counties are on the verge of losing their authority to keep property owners from renting out their homes for short-term and vacation rentals.

Reframed, it’s no longer about property owners regaining some small measure of freedom, but about victimized localities losing their all-important authority to tell those property owners what they can and can’t do.

This tactic seems to pop-up a fair amount where opponents of short-term rental services are concerned. It’s all about shifting the focus. So if you’re writing an op-ed in The New York Times about how Airbnb is “a problem for cities like New York and San Francisco,” you might write:

…when you have a limited supply of apartments, and unlimited demand for those apartments, turning some apartments into hotels makes the remaining ones even more expensive.

It’s subtle, but the argument hinges on two rather weighty words: “you have.” The “you” in this instance refers to the city itself, which is positioned as “having” all housing within its borders, and distributing it as the city sees fit. Again, the focus has shifted away from increased choice in the marketplace – away from property owners’ ability to use their property reasonably – and back to the city’s vital power to determine how a property owner chooses to rent out his or her property.

Within the same issue of the Times, the deputy director of New York’s Citizens Housing and Planning Council has a similar beef with property owners renting out their properties on a short-term basis:

The type of academic and government data that housing researchers typically rely on doesn’t exist for this issue… But we know that the rise of informal vacation rentals in high-demand cities has an impact on housing supply, even if we can’t quantify it perfectly yet.

While I appreciate the boldness of the argument – I have similarly long-maintained that I am a superhero, even if I can’t quantify it perfectly just yet – a less-biased phrasing might have rendered:

Though I have minimal data that supports my statement, it is nonetheless true, as determined by me, on the grounds that any other possibility would really ruin the premise of this op-ed.

A compelling point, to be sure, but not necessarily the ideal basis for prescriptive public policy. In this particular case, the author takes it upon herself to suggest that private property owners should be compelled to take on roommates, rather than renting out spare rooms.

Lackadaisical rhetorical strategies aside, the main problem with ominous claims about the looming Airbnb apocalypse is that they are what the less loquacious among us would call “entirely false.”

Consider a study of the San Francisco housing market commissioned by Airbnb. Even after factoring in a healthy dose of skepticism, given the report’s sponsor, the data surely trumps vague gut feelings based on a confessed absence of any supportive data whatsoever.

The report, released last year, found that “a housing unit would need to be rented more than 211 nights annually on a short-term basis in order to out-compete a long-term rental.” How many units meet that criteria in San Francisco, a city that is supposed to be among the hardest hit by short-term rentals? 0.09 percent, or less than one-tenth of 1 percent. Moreover, the report found that “from 2005 to 2013 the number of vacant units in San Francisco has remained essentially unchanged,” a trend that flies in the face of those who forewarn Airbnb-created housing scarcity.

To its great credit, these facts are not lost on Arizona. In part due to Gov. Ducey’s stated commitment to make the state a welcoming home to innovative, consumer-friendly services like Uber, Lyft, Airbnb and HomeAway, Arizona has been a great example for the rest of the country on issues related to “disruptive technologies.” The state’s three largest cities received some of the highest scores in the nation both on R Street’s annual Ridescore report and its Roomscore report – studies that look at the friendliness of regulatory frameworks governing for-hire transportation and short-term rentals, respectively.

With Ducey’s signing of SB 1350, Arizona deserves credit for shutting out the disingenuous cries of falling skies and sensibly demonstrating to the rest of the country that the relationship between state and local governments and cutting-edge startups does not have to be combative. Indeed, rare though it may be, it’s entirely possible to shut out the misinformation and put citizens first.

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36 groups to Energy and Commerce Committee: Hold hearing on the Renewable Fuel Standard

May 13, 2016, 8:47 AM

Dear Chairman Upton and Ranking Member Pallone:

The undersigned organizations encourage you, as soon as possible, to hold a Committee hearing on the Renewable Fuel Standard (RFS). We believe the RFS is in critical need of immediate attention, and your Committee, as the committee of jurisdiction, is the best venue in which to examine this flawed statute’s numerous failures and to consider legislative solutions.

Due to widespread public concerns with the serious unintended consequences of the RFS mandate, there is growing bipartisan interest among lawmakers in exploring how to fix this broken statute. Indeed, nearly 120 Members have cosponsored legislation in the House of Representatives to either repeal the RFS outright or to reform it significantly, and last year 189 Members sent a letter to EPA requesting a waiver from the statutory volumes.

The growing interest in the RFS is also evidenced by the fact that, between the House and Senate, there have been seven hearings on the law since 2014, six of which were held in committees which do not have jurisdiction over the RFS. These hearings have aired significant concerns with the RFS, from problems with the manner in which the statute has been administered, to the unintended consequences for food costs, conservation, greenhouse gas emissions, consumer engines, fuel costs and competitive markets. Moreover, the RFS’ costs are borne not only domestically, but also globally.

The Energy and Commerce Committee has already undertaken a substantive review of the program through its white papers and hearings in 2013. However, there have been significant events in the past three years, including EPA action to propose and withdraw rules in 2014, EPA’s decision last year to waive the RFS, and EPA’s indication that it plans to increase the volumes in the future. In addition, EPA activity on approving pathways, ongoing fraud in the Renewable Identification Number market, and issues related to post-2022 volumes deserve Congressional attention.

An Energy & Commerce Committee hearing on the RFS in the near future would be timely and welcomed by this broad group of stakeholders. We look forward to working with you on this matter in the coming weeks. Thank you for your consideration.


ActionAid USA

American Bakers Association

American Frozen Food Institute

American Highway Users Alliance

American Motorcyclist Association

American Sportfishing Association

Association of Kentucky Fried Chicken Franchisees


California Dairy Campaign

Clean Air Task Force

Council for Citizens Against Government Waste

Franchise Management Advisory Council

Georgia Poultry Federation

Idaho Dairymen’s Association

International Dairy Foods Association

Marine Retailers Association of the Americas

Milk Producers Council

National Association of Egg Farmers

National Chicken Council

National Council of Chain Restaurants

National Grocers Association

National Marine Manufacturers Association

National Restaurant Association

National Taxpayers Union

National Turkey Federation

North American Meat Institute

Oregon Dairy Farmers Association

Pennsylvania Food Merchants Association

R Street Institute

SNAC International

South East Dairy Farmers Association

Southeastern Meat Association

Southeast Milk, Inc.

Specialty Equipment Market Association

Taxpayers for Common Sense

Western United Dairymen

Iowa, Alabama pass ridesharing bills; could Pennsylvania be next?

May 13, 2016, 7:30 AM

It’s been a busy week and a half on the ridesharing front, as legislation setting out statewide rules for transportation network companies moved forward in Iowa and Alabama, while Pennsylvania’s version of legislation is now on the final leg of its trip through the Legislature.

Earlier this week, Iowa Gov. Terry Branstad signed H.F. 2414 into law (the measure goes into effect Jan. 1, 2017). The bill standardizes the definition of transportation network companies like Uber and Lyft and requires such firms to perform background checks on potential drivers. It also proscribes localities from imposing more restrictive terms on driver licensing.

The measure sets out minimum insurance requirements that include liability coverage of at least $1 million for the period from when a driver and potential passenger are matched until he or she is dropped off. During periods when a driver is logged in to the ridesharing app, but not matched with a rider, the law sets minimum coverage requirements of $50,000 per person and $100,000 per accident for death or bodily injury and $25,000 for physical damage. Coverage may be maintained either by the TNC, the driver or a combination thereof.

The final bill did not include a provision sought by lenders, and mulled in some earlier versions of the legislation, which would have required TNCs to ensure drivers with liens on their vehicles also maintain comprehensive and collision coverage.

Although not yet signed by Gov. Robert Bentley (who is perhaps facing bigger issues of his own these days), ridesharing legislation also cleared both chambers of the Alabama Legislature May 4. The bill, S.B. 262, focuses solely on insurance coverage matters. It doesn’t establish a statewide regulator, impose regulatory fees or include any language requiring background checks.

The bill does require TNCs or their drivers to maintain $1 million of liability coverage while engaged in a ride and, like the Iowa bill, requires that drivers must have coverage of $50,000 per-person, $100,000 per-accident and $25,000 for physical damage during any period when they are logged in to the ridesharing app, but not yet matched with a rider. The law will go into effect three months after Bentley signs it, presuming that he does.

Finally, there was a bit of movement in the long-stalled effort to pass statewide ridesharing legislation in Pennsylvania, a topic we’ve covered in this space before. The Commonwealth Senate passed a bill last November, but it has remained hung up in the House, largely over the question of whether and the extent to which state authorities will be permitted to pre-empt regulation by the Philadelphia Parking Authority, which has effectively banned ridesharing.

However, a compromise version of S.B. 984 passed the House Consumer Affairs Committee May 4 in a 23 to 2 vote. The final bill sets standards for ridesharing in most of the state under the regulatory authority of the Public Utility Commission, whose existing agreements with Uber and Lyft were validated late last month in a Commonwealth Court decision that struck down a legal challenge from taxi companies. The measure sets the usual background check and insurance requirements, as well as rules about the age of vehicles, a minimum age for drivers (21) and requirements to accommodate drivers with disabilities.

It also explicitly legalizes ridesharing in Philadelphia. However, the Parking Authority would retain its regulatory authority and the services would be banned from picking up and dropping off at locations with established cabstands, such as Philadelphia International Airport and 30th Street Station.

All in all, not an ideal piece of legislation, but still a major step forward for the City of Brotherly Love, which received the lowest overall score in R Street’s 2015 Ridescore report card.

Also, be sure to check out our map of state-by-state ridesharing legislation here.

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

Citizens’ anger is palpable, global, often misdirected

May 13, 2016, 7:00 AM

An awesome 6.7 percent of Iceland’s resident population took to the streets last month to demand the resignation of their prime minister. The rallying cause was his perceived duplicity regarding offshore investments in banking tax havens, as revealed by the “Panama Papers.”

More than a little bit of this anger is no doubt driven by the fact that perceived tax avoidance was discovered while the nation is still recovering from a serious fiscal and financial crisis that was tied to the global financial meltdown of 2008. The savings of 50,000 Icelanders disappeared and 25 percent of the nation’s homeowners fell into mortgage default.

Prime Minister Sigmundur Davíð Gunnlaugsson came to power on a wave of anti-bank sentiment and was widely credited for leading an unbelievable success story in Iceland. The country after letting its three big banks fail, imposing strict capital controls, sending bankers to jail and essentially concentrating its government on social programs. People no doubt felt betrayed when the media reported that Gunnlaugsson had hid millions while the country was collapsing. By introducing a 39 percent tax on creditors of the country’s failed banks and basically guaranteeing deposits of his Icelanders (but not the foreigners who invested in their risky offerings) he could have been a hero at least to his countrymen and women. Instead, he was forced to resign last month over his perceived undisclosed personal gain after he had led the fight for transparency.

Just to put this protest into perspective, if the same percentage of Americans had gone out to protest some malfeasance – or even just to celebrate the 4/20 “holiday” a couple of weeks ago, perhaps at the prospect of Canada legalizing recreational drugs – that would be 21 million people. That is roughly the entire combined population of Nevada, New Mexico, Nebraska, West Virginia, Idaho, Hawaii, Alaska, Maine, Vermont, Rhode Island, New Hampshire, Montana, Delaware, both of the Dakotas, Alaska and Wyoming.

We know other people are mad out there. Widespread public disaffection with those in charge has been pretty much a constant theme in American politics, especially in the presidential sweepstakes, but there also are signs of global discontent.

As I write this, Brazilian President Dilma Rousseff has been suspended from office, as the Brazilian Senate voted 55-22 to put her on trial for breaking budget laws and a corruption scandal. One byproduct of this mess is that Brazil has just sacked its sports minister, who was overseeing preparation for the 2016 Summer Olympics, along with every other minister except the central bank governor. The government will now be led by Vice President Michel Temer, who promises an austerity program, including reform of the unaffordable pension program.

But people don’t seem to be mad about costly pension systems, even though so many jurisdictions around the world that are in fiscal trouble can trace those difficulties to paying public employees greater benefits than the taxpayers themselves are earning. Citizens are clearly mad about “government spending,” according to the polls, but this is apparently spending only on other people they don’t care about.

Puerto Rico is the latest case for public mood regarding reform efforts to fix unsustainable fiscal conditions. As recently as 1998, former Gov. Pedro Rosselló, a dentist and University of Notre Dame graduate with a masters’ degree in public health, was president of the Council of State Governments and simultaneously chair of the Democratic Governors Association and Southern Governors Association. The much-admired governor had proposed an economic model which reduced working families’ income tax rates by 30 percent, while unemployment had been slashed to its lowest level in two decades. The explosive crime rate had been reduced as well. He was the last two-term governor of Puerto Rico.

Luis Fortuño, who came to politics during the Rosselló administration as executive director of the Puerto Rico Tourism Co., teamed up with Rosselló in 2004 to be elected Resident Commissioner and then ran against him in 2008 and was elected governor. A graduate of Georgetown University and the University of Virginia Law School, his background in government had been all about economic development.

As a candidate, Fortuño swore he would not lay off a single government employee, but once elected, he quickly noted that extraordinary measures to confront the $3.2 billion deficit might require the sacrifice of nearly 30,000 government workers. Since the government employs more than a quarter of the workforce, this was to be expected in any kind of fiscal reform. Two months after he was sworn in, Fortuño announced a fiscal and economic recovery plan that included reducing the government’s annual expenditures by more than $2 billion. Workers took to the streets, but Fortuño stuck to the plan.

The cost-containment and revenue-generation measures resulted in a $2 billion structural deficit the first year, which fell to $1 billion the next, $610 million in fiscal year 2011-12 and $332.7 million in 2012-13. Fortuño set out a goal of achieving a structurally balanced budget during the first year of the governor who succeeded him.

But the debt remains. In fact, more debt than any state except California and New York. Heroic attempts to manage the island’s public finances are generally still winning approval and honors from people who care about government, (Fortuño was also president of the Council of State Governments) but mostly opprobrium from the citizens. Current Gov. Alejandro Padilla Garcia, who came to office with a plan to cut another $1 billion of public spending, has a 12 percent popularity rating and announced six months ago that he is not running for re-election. The commonwealth is reportedly dead-ass broke, and can’t pay $2 billion in debt payments due next month.

Puerto Rico doubled its debt in 10 years by selling more than $126 billion in bonds, first to cover budget deficits and then to pay for operating expenses. A 2006 sales tax was enacted to stabilize the local economy because multigenerational “bootstraps” tax breaks had been phased out over a decade. Since that time, the Puerto Rican economy has shrunk every year but one, and the poverty rate is double the poorest U.S. state.

David Walker, the former U.S. comptroller-general, suggests we got to this crisis situation via “the politics of avoidance.” He was, of course, referring to the shopworn metaphor of “kicking the can down the road,” but public officials seem fixated on avoiding public wrath.

Last month, I had a chance to visit with the two top state legislative leaders – the Senate president and House speaker – in a state which had held its primary the weekend before. This was a caucus state, the form of primary that supposedly allows political parties the greatest control over the process. Both leaders were surprised by the result, and both said it’s hard to advise their members how to vote and how to run for election this year. These are both longtime lawmakers who meet with constituents every day to ascertain what mainstream citizens expect from government.

The constituents care about sustainability as practiced by Wal-Mart or ExxonMobil, but not necessarily as attempted by government. Unfortunately, their anger is not always directed at the breach of promises to fix the state, city, commonwealth or country so that it will last a while longer, but it surfaces regularly at any suggestion to curtail continued benefits.

Most people – with certain tea party members as exceptions – don’t seem to be mad at government in general, but furious at those who hold levers of power, particularly when they sense hypocrisy or not delivering on promises to make things better. Even if the objects of this disaffection have strong records of achievement in some areas, it’s all about figuring out what the constituents really care deeply about. Which, it should be noted, is not always well-managed government.

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

R Street encouraged by legal challenge to FDA deeming rules

May 12, 2016, 3:54 PM

WASHINGTON (May 12, 2016) – The R Street Institute is encouraged by news that Nicopure Labs LLC, a Tampa-based manufacturer of nicotine e-liquids and vaping devices, has filed federal suit challenging the Food and Drug Administration’s deeming rules for e-cigarettes.

The suit, filed in U.S. District Court for the District of Columbia, charges the FDA with violating the Administrative Procedure Act by promulgating rules in an arbitrary and capricious fashion and without a rational basis to protect public health; that the agency applied faulty benefit-cost analysis; and that the rules interpret the term “tobacco products” in ways that are plainly inconsistent with the Tobacco Control Act of 2009. The company also charges that the deeming rule violates its First Amendment rights.

The following statement can be attributed to Dr. Joel L. Nitzkin, R Street’s senior fellow in tobacco policy and former co-chair of the Tobacco Control Task Force of the American Association of Public Health Physicians:

As a physician who has dedicated his career to the protection of public health, I applaud Nicopure for challenging the recently announced deeming regulations for e-cigarettes and other tobacco-related products. As I see it, Nicopure is correct in each of their allegations.

Those within the public health community who have enthusiastically supported both the text of the FDA Tobacco Law and the deeming regulations – a group that includes leadership of the FDA and the Centers for Disease Control and Prevention; the Cancer, Heart and Lung Associations; Tobacco Free Kids; and so-called academic ‘experts’ – should take a close look at the allegations. The public health community must develop a set of amendments to the FDA Tobacco Law that bring both the law and regulations in line with policies that help, rather than damage, both the public health and the credibility of these major public health stakeholders.

A bitter fight and predictable loss in court could do considerable damage to our collective ability to provide health-related guidance to the public and to secure public participation in steps needed to protect us from Zika virus, contaminated water supplies and other public health emergencies.

Does America need more political dynamism?

May 12, 2016, 10:06 AM

We have all heard the railings of the presidential aspirants about the federal government: that it’s corrupt; that it’s rigged by the malevolent establishment against the common man; that the economy is faltering because elites and their cronies are hoarding the wealth.

To solve these problems, office-seekers peddle beguiling simplistic solutions like getting big money out of politics, evicting special interests from the temple and returning government to the people. Inspiring as these notions may be, Lee Drutman counsels that we should move beyond such “impractical utopianism” to solutions that accept the “fundamental realities of politics.”

Saying such a thing aloud make Drutman, a senior fellow at New America, a bit of a skunk at the liberal reform party. To be clear, Drutman is very concerned about the corruption of politics by money—he’s the author of a serious book on lobbying. But he wants solutions that embrace the messy realities of politics and governance:

Too often, reform visions treat politicians and organized groups (aka, ‘special interests’) as irredeemably venal and corrupt while simultaneously viewing governance as something perfectible and politics as something solvable — if only it could be taken away from the politicians and the special interests. The vision usually amounts to constraining political behavior through tight rules, or by circumventing politicians and organized groups entirely through some pure form of direct democracy and common sense wisdom.

In other words, it’s normal for people to be motivated by parochial and self-serving desires and reasonable people who share the same goal can disagree completely on how to achieve it.

So what’s the solution? More “political dynamism,” says Drutman in a white paper of that same name. Political dysfunction is driving public dissatisfaction. People are annoyed that government can’t get stuff done. Drutman proposes a slate of reforms that aim to make politics, and Congress in particular, more “fluid and competitive” and for a system that:

[L]everages diversity and creates opportunity for experimentation and change; [one that] expands the combinatorial possibilities of political innovation and deal-making…[and] helps citizens aggregate and realize their interests in the most efficacious ways, rather than simultaneously expecting them to super-engaged and expert while giving them few meaningful choices.

Toward these ends, Drutman advocates policies to:

  1. Diversify the pool of candidates for office by empowering smaller campaign donors and switching America to multimember districts;
  2. Strengthen public interest pressure on Congress by fostering general-interest lobbying groups;
  3. Make Congress less dependent on K Street by increasing the number of legislative branch staff; and
  4. Decentralize power in Congress by re-empowering committees as the source for new policy and reforms.

Much of Drutman’s white paper lays out the arguments for these various proposals. And I should add, he and I are collaborating on a project to strengthen the legislative branch. I will leave it to others to ponder Drutman’s various reforms, and instead will debate my friend on the nature of the problem. Does American national politics need more dynamism?

I’m not so sure. I have not seen evidence that the annual crop of candidates for public office are too few or too conventional in their ideas. But I might simply have missed some research on this topic that proves otherwise.

Part of political dynamism, I would posit, is governance dynamism. That means moving ideas to action, which means contending with problems and allocating government resources to productive ends. Governance dynamism can occur in either the executive branch or the legislative branch—or even elsewhere (see the Federal Reserve’s extraordinary actions in recent years).

So how do Americans feel about the efforts of the national legislature and the executive branch? Do they think it’s a dynamic force that gets things done and does so efficiently? No. The public’s approval rate for Congress and the bureaucracy are at historic lows. The public dislikes seeing so much partisanship and bickering while basic problems (the immigration system, the federal deficit, etc.) go unresolved. People want their government to get stuff done and what they see on the news and the Internet is, as Paul Ryan once put it, chaos. They believe government and politicians waste money sort of senseless, politically driven programs, as depicted in Jonathan Rauch’s classic and still germane “Demosclerosis.”

Presidents frequently take unilateral action. Sometimes their efforts, like President Barack Obama’s executive action on immigration, get tied up in court. But that is the exception to the rule. The president’s current ho-hum approval ratings are much higher than Congress’ and a bit higher than the executive branch bureaucracy’s, both suggesting the public desires action, not paralysis.

Which brings us to the matter of Congress. Public perceptions aside, is our legislature, in fact, a stolid governance body? Well, yes and no. In short, the House is very dynamic; the Senate…not so much.

The House of Representatives is a veritable cauldron of reform ideas, whether it is regulatory budgeting, budget process reform, reforming the federal civil service or abolishing Obamacare. Some of these bills are messaging bills that the House knows will never become law; others are Post Office naming bills and other feel-good non-policy. However, much lower chamber legislation is real policy designed to address real problems. Since January 2014, 5,100 House bills have been introduced (not counting postal-naming bills and resolutions). More than 400 of these bills have passed the House. Only 80 became law. Table 1 shows is that the Senate is the great choke-point for legislation. The Senate moved only one-fifth of the House bills it received.

Table 1: U.S. House bills, Jan. 1, 2014 to May 1, 2016

Introduced 5,123 Passed by House 431 Passed by Senate 88 Signed by president 80

Source: Congress.gov. Data exclude House resolutions and post office naming bills.

Senators, meanwhile have introduced 2,883 bills during the current Congress, about 56 percent of the House total. The chamber has passed 120 of these bills, or a little more than a quarter. While making laws is not a good metric of general congressional productivity, it is a solid measure of the legislature’s ability to make new policies and abolish old and failed ones.

That the Senate is a dilatory body is not news. Its short legislative schedule and hoary chamber rules make for plodding policymaking, and empower any senator to hinder action (e.g., wanton amending and holds). This modus operandi may be traditional, but in the 21st century, it is incongruous and self-defeating, as Christopher Demuth has explained. The Senate needs to think seriously about ways to improve its workings, both to appease a very dissatisfied government and to stop the executive branch from running circles around it.

Lee Drutman may be right—more political dynamism may be what we need. But unless it is accompanied by much more governance dynamism, particularly by the First Branch of government, our discontent won’t abate.

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

Uber approves first non-union drivers group in NY compromise

May 12, 2016, 9:59 AM

From Christian Science Monitor

“This is important not only for the gig economy, but because you might have a new kind of labor organization coming out of this,” Eli Lehrer, the president of libertarian think tank the R Street Institute, told The Washington Post.


Make Austin Uber-less!

May 12, 2016, 9:58 AM

From The Advice Goddess

As R Street Institute’s Josiah Neeley has explained, Austin doesn’t prohibit taxi driver applicants who have been convicted of “a criminal homicide offense; fraud or theft; unauthorized use of a motor vehicle; prostitution or promotion of prostitution; sexual assault; sexual abuse or indecency; state or federal law regulating firearms; violence to a person; use, sale or possession of drugs; or driving while intoxicated” to work as taxi drivers provided that they have “maintained a record of good conduct and steady employment since release.”

Uber and Lyft leave Austin over fingerprint requirement

May 12, 2016, 9:56 AM

From Cato

As R Street Institute’s Josiah Neeley has explained, Austin doesn’t prohibit taxi driver applicants who have been convicted of “a criminal homicide offense; fraud or theft; unauthorized use of a motor vehicle; prostitution or promotion of prostitution; sexual assault; sexual abuse or indecency; state or federal law regulating firearms; violence to a person; use, sale or possession of drugs; or driving while intoxicated” to work as taxi drivers provided that they have “maintained a record of good conduct and steady employment since release.”


Austin may move to deregulate taxis

May 12, 2016, 8:06 AM

It’s been a busy week for vehicles-for-hire in Austin. This past weekend, the city’s voters rejected a proposal that would’ve blocked new restrictions on ridesharing passed by the City Council late last year.

In response, the two main ridesharing companies (Uber and Lyft) announced they would no longer operate in the city. Multiple state legislators have also announced plans to pre-empt local regulation of the industry during the 2017 legislative session.

But even as Austin is ratcheting up regulation on ridesharing companies, it’s also looking at decreasing regulation on traditional taxis:

Austin’s taxi industry should be deregulated to level the playing field with ride-hailing firms like Uber and Lyft, the director of the Austin Transportation Department told City Council in a memo sent Wednesday…

Under the proposal outlined in the memo, the city would still oversee the industry and continue to require background checks and licensing for drivers, regardless of the type of service. But the city would end its cab franchise agreements have taxi companies obtain an “operating authority” from the city, just as ride-hailing companies do.

The changes would likely remove limits on the number of cabs that can operate in the city, which currently sits at just over 900, and on the number of cab operators.

While the timing of this proposal is a bit curious, Austin’s taxi market is in need of some good deregulation. Existing regulations not only limit the number of cabs in the city, but effectively limit the number of cab companies that can operate. A majority of taxi medallions are held by a single company.

Drivers also don’t fare well under this system. A 2010 report found the average Austin taxi driver made $200 a week before taxes, working 12 hours a day with no benefits or job security. And while the new regulations on ridesharing are deeply problematic, there’s no reason the city shouldn’t reduce regulation on taxis as well.

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Capping premium subsidies won’t kill crop insurance

May 12, 2016, 8:00 AM

The federal crop insurance program, administered by the U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA), serves as the largest single source of federal support for farms nationwide. Created during the Great Depression as a safety net to protect farmers from extreme loss due to market volatility and natural disasters, the program has been augmented several times via legislation, particularly the establishment of the RMA in the 1990s.

The program again expanded dramatically with passage of the Agriculture Act of 2014, as policymakers sought to replace the politically unpopular direct-payment system with what they anticipated would be a more market-friendly risk-management approach. In the past few decades, federally supported crop insurance has evolved into a massive, ever-expanding program that now covers about 130 crops and nearly 300 million acres of land. The USDA subsidizes an average of 62 percent of participating agricultural producers’ crop-insurance premiums, regardless of the size of their operations. With no reasonable controls on the program’s growth, farmers are encouraged to buy more insurance than they need, while taxpayers are forced to bear much of the risk. The majority of federal support flows to major agribusinesses, rather than small farms struggling to stay afloat.

In an attempt to rein in the ballooning federal program and eliminate its tendency toward cronyism, reformers in recent years have proposed enacting payment limits that would cap the amount any individual farmer could receive in annual premium subsidies. For example, a measure proposed by Reps. Ron Kind, D-Wis., and Tom Petri, R-Wis., during the last farm-bill negotiations would have capped payments at $50,000 and mandated means-testing for premium support, such that farms netting more than $250,000 could not receive any subsidies. This amendment failed by a narrow margin, but the reaction from the farm lobby and politicians with agricultural constituencies was typical. Any attempt to limit premium subsidies—no matter how modest—tends to be met with vigorous opposition from farm-subsidy supporters, who claim without evidence that such caps would devastate U.S. agricultural production.

To date, there has been little data-based evidence to quantify how many farms would be affected by premium-subsidy caps and how significantly their revenues would decline. R Street Institute Associate Fellow Vince Smith provided answers to these important questions in a recent policy study.2 Using a data-based simulation, Smith determined how various premium-cap proposals would affect farms across a dozen geographically diverse states and the extent to which affected farms would see a substantial reduction in their gross income from crop operations.

Fortunately for reform-minded congressmen, the answer is clear: a modest cap on crop-insurance-premium supports would not translate to devastating income loss for farms, nor would it destroy U.S. crop production. It would, however, place a meaningful check on the program’s growth, reduce taxpayer liabilities and ensure that federal funds aren’t used to boost the incomes of wealthy agribusinesses

Study shows people still love inappropriately referencing Nazis online

May 11, 2016, 1:41 PM

From NPR

Mike Godwin first noticed the phenomenon in the 1980s: People on a message forum called Usenet really, really liked referencing Hitler. In 1994, in an essay for Wiredmagazine, he coined Godwin’s Law: “As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one.”

A new study shows that the so-called law is, in fact, backed up by evidence. A data analyst who blogs under the name CuriousGnu has analyzed 4.6 million reddit comments to find that 78 percent of conversations that reach 1,000 or more comments mention Nazis or Hitler.

“I liked [CuriousGnu’s] statistical approach,” Godwin, director of innovation policy and general counsel for the R Street Institute, tells NPR. “I wish I’d thought of that.”


Uber recognizes first drivers association in New York City

May 11, 2016, 1:39 PM

From Washington Post

Eli Lehrer, president of the R Street Institute, a libertarian think tank based in Washington that is an enthusiastic supporter of the sharing economy, also welcomed the announcement.

“This is important not only for the gig economy, but because you might have a new kind of labor organization coming out of this,” Lehrer said. He said elements of the new drivers guild, such as offering drivers limited representation without compelling them to join the organization or pay dues, might become more widespread as more companies turn to contractors and ventures such as Uber expand their hold on the economy. “This to me is pretty exciting.”


Pennsylvania’s bad beer regulation system lives on

May 11, 2016, 11:35 AM

Eight years down the road, supermarket beer sales are changing the entire alcohol beverage sales category in Pennsylvania, and not for the better. Given our state’s comically byzantine alcohol laws, Pennsylvanians remain pathetically happy that some of us are now allowed to buy beer in supermarkets. If it seems remarkable that this has only happened some 70-odd years after Prohibition was repealed, a brief explanation of how beer is sold in Pennsylvania will only deepen your amazement. Here goes.

Since repeal, container beer sales have been allowed only at licensed beer stores and taverns. You may only purchase by the case or keg at the stores, and the cases must be as packed by the brewery; no mix-and-match allowed. You may only buy up to a 12-pack at taverns (bars, licensed delis and restaurants) and then, literally, if you step out the door and step back in, you may buy another. To add to the confusion, the Pennsylvania Liquor Control Board (PLCB) arbitrarily decided last year that a “case” is now defined as a 12-pack, despite clearly contrary language in the actual law.

There are further restrictions. The stores may only sell beer, soft drinks, a range of snacks limited by law, glassware, tobacco and lottery tickets. Taverns must also sell beer by the drink and food, and offer at least 30 seats for customers. There are even more details, like draft to-go sales; no licensees allowed to sell auto fuels; and the numerous other varieties of license, but we’ll put those aside.

About 10 years ago, some supermarkets realized that, if they bought a tavern license, they should be able to sell beer to-go. After the PLCB did some fiddling with the requirements – beer sales at separate registers in an area set off from the store, and a café with seating for 30 people (a court ruling later confirmed that the supermarkets must also sell beer by the glass if they sell it to go, a frankly amazing insistence given that taverns are not required to sell beer to go) – they said it was within the regulations. This was immediately challenged by the Malt Beverage Distributors Association, who rightly saw this as a threat to their hold on beer sales, but the Pennsylvania Supreme Court affirmed the ruling.

That sounds like progress – halting, twisted progress, but progress nonetheless. Except that such sales were already taking place in dozens of delicatessens; the rules pretty much excluded smaller grocery stores because of the café requirement; and the new cafés mostly sit as empty, wasted retail space. Not every supermarket has decided to make the substantial investment a license requires: sometimes as much as $200,000 just for the paper, plus whatever the café and separate register area cost in build-out and labor. Others have been stymied by local zoning or municipal board opposition. Eight years on, not one of the 10 grocery stores within 3 miles of my home offers beer; very few stores in the major population centers of Philadelphia or Pittsburgh sell beer, except on the suburban fringe.

What’s even worse is how this ruling affects general sales of alcohol in the state. Tavern licenses are limited by a population-based quota system; one license per 3,000 people in a county. The licenses are transferable within a county, for sale by the current owner at whatever the market will bear.

Therefore, every license bought by a supermarket makes licenses for actual taverns more scarce, and thus, more expensive. There are unintended consequences. Small corner bars, often family-owned, find the price irresistible and sell out. Chain restaurants tend to buy up the licenses, given their deeper pockets, leaving fewer opportunities for independent local businesses. Independent operators that do buy are often tempted to oversell and overserve, to create risky promotions and become public nuisances; or they head in the other direction and become more exclusive, high-end operations. The familiar American institution, the egalitarian watering hole where all are welcome, is disappearing in Pennsylvania.

Small grocery stores, or large ones that either can’t get or can’t afford a tavern license, are effectively shut out of the beer market, making them less attractive to shoppers looking for a one-stop experience. And of course, the traditional beer stores and taverns, many of which have made tremendous efforts to work within the system and build the fantastic craft beer scene Pennsylvania enjoys, are losing business rapidly from the increasingly intense competition from the supermarkets.

An equitable solution is needed, not more arbitrary tinkering by the PLCB, a three-person commission of political appointees who rarely, if ever, have any experience in beverage alcohol sales. The Pennsylvania Legislature has repeatedly declined to consider effective changes in state liquor law – ranging from a new supermarket license to a desperately needed modernization of the entire liquor code – most likely because of the strong political clout of the taverns and the beer industry, who are aided by partisans of the state-owned wine and spirits monopoly. All of these interest groups have an interest in keeping things static as much as possible.

The infuriating thing about all of this is that in no case, not one, has the PLCB, the courts or the Legislature considered the desires of citizens. What we want is simple: what the residents of other states can do – go to a store and come home with groceries, including whatever amount of beverage alcohol we want to purchase, from a bottle for that night’s dinner to a full carload for a family graduation party. No one in Harrisburg is offering any plan to achieve that. Instead, we get one convoluted compromise after another, and we continue to wait on the full fruits of Repeal, over 80 years later.

Guest blogger Lew Bryson is the author of “Tasting Whiskey,” published in 2014, and four books on the breweries of Pennsylvania, New York, Virginia, Maryland and Delaware. 

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

Free-market groups to Energy and Commerce Committee: Move quickly to pass HR 2058

May 11, 2016, 9:47 AM

Dear Chairman Upton, Ranking Member Pallone and Members of the Energy and Commerce Committee,

On behalf of the undersigned, we urge you to move quickly to pass legislation (H.R. 2058) that would move the “grandfather” date for Food and Drug Administration regulation of nicotine-delivery products from Feb. 15, 2007, to the date when the new rules take effect. If Congress fails to change the date, many products – including e-cigarettes and other vapor devices already being sold and used by consumers – will be required to pass a tremendously onerous and expensive authorization process in order to stay on the market. Now that the FDA has released its deeming regulations, which will be made final Aug. 8, 2016, time is of the essence to act to ensure that smokers can continue to have access to potentially lifesaving tobacco alternatives.

The FDA claims its regulations will reduce tobacco’s public-health burden by decreasing rates of tobacco-related deaths and illnesses. In fact, the opposite is true. Medical experts have estimated that e-cigarettes are at least 95 percent less harmful than traditional tobacco cigarettes. E-cigarettes and similar products are helping millions of smokers make the switch to products that, while not perfectly safe, present only a tiny fraction of the risk of death and disease posed by tobacco cigarettes. A report by the United Kingdom’s Royal College of Physicians concluded that encouraging smokers to switch to e-cigarettes would be likely to generate significant health gains and prevent almost all the societal harms from smoking. The FDA’s regulatory approach privileges the deadliest forms of tobacco and erects costly barriers that may wipe out consumer access to less harmful alternatives. Without the change, the FDA’s proposed rules won’t reduce smoking; they will increase it. We’ll also likely see a “vapor underground” for these products that will further deteriorate consumer safety.

To be clear, vapor products and e-cigarettes will be subject to the current regulations even if the deeming date is moved. The only change would be the approval process each product undergoes in order to stay on the regulated market. The FDA’s final rule contains measures aimed at restricting youth access and attempting to increase consumer safety, including age restrictions, photo-identification requirements, labeling mandates and ingredient disclosures. The FDA can still put these regulations into place without forcing e-cigarettes to comply with the arbitrary February 2007 deeming date.

Even though moving the date is not a long-term solution, it will preserve the current marketplace while the FDA develops a better regulatory scheme. The truth is that any cutoff date will favor existing product developers over future innovators.

There’s a better, more commonsense way to regulate emerging smoking cessation technologies rather than using the same onerous and outdated restrictions applied to much more dangerous traditional tobacco products. We make progress in America when innovators give consumers better choices; not when government takes those options away.


R Street Institute

Americans for Tax Reform

Campaign for Liberty

Competitive Enterprise Institute

Council for Citizens Against Government Waste


Heartland Institute

Jeffersonian Project

Less Government

Log Cabin Republicans

National Taxpayers Union

Taxpayers Protection Alliance

Puerto Rico: A big default—what next?

May 11, 2016, 8:53 AM

Rexford Tugwell, sometimes known as “Rex the Red” for his admiration of the 1930s Soviet Union and his fervent belief in central planning, was made governor of Puerto Rico by President Franklin Roosevelt in 1941. Among the results of his theories was the Government Development Bank of Puerto Rico, a bank designed as “an arm of the state,” which is a central element in the complicated inner workings of the Puerto Rican government’s massive insolvency.

The bank has just defaulted on $367 million of bonds – the first, but unless there is congressional action, not the last, massive default by the Puerto Rican government and its agencies on their debt. The Government Development Bank was judged insolvent in an examination last year, but the finding was kept secret. The governor of Puerto Rico has declared a “moratorium” on the bank’s debt, which means a default. A broke New York City in 1975 also defaulted and called it a “moratorium.”

Adding together the Puerto Rican government’s explicit debt of about $71 billion and its unfunded pension liabilities of about $44 billion amounts to $115 billion. This is six times the $18 billion in bonds and pension debt of the City of Detroit, which holds the high honor of being the largest municipal bankruptcy ever.

Puerto Rico’s government-centric political economy goes back to Rex the Red, but its budget problems are also long-standing. In this century, the government has run a deficit every year, borrowed to pay current expenses, and then borrowed more to service previous debt until the lenders belatedly ceased lending and the music stopped. Its debt and its real gross domestic product definitively parted company in 2001 and have grown continuously further apart, as shown Graph 1.

As its debt skyrocketed, the credit ratings of its bonds fell and then crashed.  See Graph 2.

Where do we go from here? Addressing the deep, complicated, and contentious problems requires three steps:

  1. The creation of an emergency financial control board to assume oversight and control of the financial operations of the government of Puerto Rico, which has displayed incompetence in fiscal management (or mismanagement), is a central aspect of the solution. This control board can be modeled on those successfully employed to address the insolvencies and financial mismanagement in the District of Columbia in the 1990s, in New York City in the 1970s and in numerous other places. More recently, the City of Detroit got an emergency manager along the same lines.

Such a board would be and must be quite powerful. The sine qua non for financial reform is to establish independent, credible authority over all books and records; to determine the true extent of the insolvency of the many indebted government entities—in particular to get on top of the real condition of the Government Development Bank; and to develop fiscal, accounting, control and structural reforms which will lead to future balanced budgets and control of the level of debt.

Needed reforms cited by Puerto Rican economist Sergio Marxuach in congressional testimony include:

[I]ncrease tax revenues by improving enforcement efforts, closing down ineffective tax loopholes, and modernizing its property tax system; crackdown on government corruption; significantly improve its Byzantine and unduly opaque financial reporting; reform an unnecessarily complicated permitting and licensing system that stifles innovation; … lower energy and other costs of doing business.

That’s a good list of projects.

Does all this take power and responsibility away from the Puerto Rican government?  Of course it does – it needs to and it can be done. Under the Constitution, Congress has complete jurisdiction over territories like Puerto Rico. Just as in Washington and New York City, when the problems are straightened out, financial management will revert to the normal local government.

  1. Pollock’s Law of Finance states that “Loans which cannot be repaid, will not be repaid.” Naturally, this law applies to the $115 billion owed by the Puerto Rican government, which is on its way to some form of restructuring and reorganization of debts. It seems clear that this should be done in a controlled, orderly and equitable process, which takes into account the various levels of seniority and standing among the many different classes of creditors.

The pending House bill puts the proposed oversight board in the middle of the analysis and negotiations of competing claims. If the reorganization cannot be voluntarily agreed upon, the process can move to the federal court, where the plan of reorganization would come from the oversight board.

Three objections have been made to this approach.  One that has been advertised heavily claims that it is a “bailout.” Since no taxpayer money is planned to go to creditors, this is simply wrong and ridiculous. Bondholders taking losses is the opposite of a bailout.

A second is that bondholders may be disadvantaged versus pension claims, and this may affect the whole municipal bond market. Indeed, in the Detroit bankruptcy, the general obligation bonds got 74 cents on the dollar, while the general city employee pensions got 82 cents— an important haircut, but a smaller one. The political force of pension claims in insolvencies is a credit fact that all investors must take into account. If the national municipal bond market internalizes and prices the risks of unfunded pensions, thereby bringing more discipline on the borrowers, that seems like progress to me.

A third objection is that the bill’s approach would set a precedent for financially struggling states like Illinois, which they might follow. In my judgment, there is zero probability that Illinois or any other state would volunteer to have a financial control board imposed on it. Even leaving aside the fact that Puerto Rico is not a state, this argument is vacuous.

  1.  Of fundamental importance is that in the medium term, Puerto Rico must develop a sustainable economy—that is, a market economy to replace its historically government-centric one. Various ideas have been proposed relevant to this essential goal, and much more work is required. This is the most challenging of all the elements of the problem. Steps 1 and 2 must be done first, but Step 3 must be achieved for ongoing success.

One thoughtful investor in municipal bonds, reflecting on Puerto Rico, Illinois and other troubled political entities, concluded, “We don’t trust governments.” That made me think of how there have been more than 180 defaults and restructurings of sovereign debt in the last 100 years and how, further back, a number of American states defaulted on their debts and even repudiated them. So I wrote him, “I think that’s wise.”

Nonetheless, the immediate requirement to deal with the Puerto Rican debt crisis is government action.

China’s self-driving future

May 10, 2016, 4:23 PM

In Beijing, a young car culture is going through teething pains. The pressure of urban density, in combination with growing demand for personal transportation in an ever-more-affluent city, has the capital of the People’s Republic aching for relief.

It’s thus no wonder that a generation of Chinese people see driving as a pain. Unlike car culture in the United States, which came of age during a romantic period of road trips, China’s car culture has come of age in a period of congestion.

China’s next great leap in transportation cannot come soon enough, not only as a matter of commuter convenience, but as a matter of necessity. Ring roads and surface streets flush with cars at all hours have become the bustling capital’s economic choke point. A 2014 study by Peking University estimated that congestion is costing Beijing alone roughly $11.3 billion per year. More importantly, the World Health Organization estimates that 200,000 people are killed in China in road accidents every year.

The Chinese government – specifically, the Ministry of Industry and Information Technology – is keenly aware of these issues. To its credit, it believes autonomous vehicles will be an essential part of the solution. The ministry has signaled that it intends to mandate a series of technical and development benchmarks that are to be reached by certain dates.

Li Keqiang, an automotive engineering professor at Tsinghua University who is affiliated with the ministry, has received wide coverage for his claim that a draft roadmap for the introduction of self-driving cars for highway use within three to five years, and autonomous urban use by 2025, is likely to be released later this year.

A series of international conferences have been held in China this year already to discuss the country’s approach to autonomous vehicles. In April, Beijing hosted a conference of industry CEOs, an international auto show and the Global Smart Car Summit at the Global Mobile Internet Conference. The stakeholders in attendance are keenly aware that while developments will be made in the private sector, China’s regulation of autonomous vehicles is a matter of central planning.

Unlike the United States, where authority over autonomous vehicle development and standards is split between the states and the federal government, China’s industry enjoys the benefits of broad-scale coordination. In the near term, this will likely mean that China will not suffer through the same regulatory frustration that will slow the rollout of similar technology here.

What’s more, China has pent-up demand for new vehicles and the ability and will to undertake large infrastructure projects. While U.S. regulators are pursing unrealistically onerous safety standards that could actually stunt widespread adopting of the technology, China is approaching safety as a relative matter. So long as an autonomous vehicle is safer than a traditionally directed vehicle, the Chinese government appears satisfied.

But in the long term, in the event that technical coordination becomes too granular, China could face a Minitel-like disaster of hitherto unknown proportions. The way that China can avoid such an outcome will be to embrace the raft of foreign firms with expertise in the field that are increasingly frustrated by the obstacles presented to them in the United States. Doing so will mean taking the hard step of moving away from mandated domestic communications monopolies (like Chinese firm BeiDou on satellite navigation), but the technical benefits of such a development likely would be tremendous.

To be clear, centrally planning regulatory liberalization is hardly ideal. But given the political realities that prevail in China, in the case of autonomous-vehicle development, it stands to bring a world of good to the Middle Kingdom.

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

Thoughtful, puritanical, or just plain “huh”? How the media reacted

May 10, 2016, 1:43 PM

From ECigIntelligence

And in the neoconservative magazine The Weekly Standard, Eli Lehrer – president of the R Street Institute think tank – seemed to see the whole issue as one more of Big Government than Big Tobacco. Lehrer opined that “members of Congress – even those who want an all out ban on e-cigarettes – should also oppose them in their current form because they’re such a blatant example of regulators asserting powers that ought to belong to Congress”.