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It really is nearly impossible to fire a federal employee

May 15, 2015, 10:35 AM

Some credulous Beltway media sure took the bait last week. Consider:

“A lot of people still think it’s close to impossible to fire a federal employee, but that’s just one of the misperceptions the Merit Systems Protection Board is trying to debunk with its new report, ‘What is Due Process in Federal Civil Service Employment?’ ” (Federal News Radio, May 11).

“The agency that hears appeals from fired federal employees has listed common misconceptions about the firing of federal employees—with Number One being that it never happens” (Washington Post, May 11). 

The U.S. Merit Systems Protection Board (MSPB) has been around since 1979, when Congress spawned it from the Civil Service Commission. It is a quasi-judicial entity that, Government Executive magazine notes, “adjudicates appeals of ‘adverse personnel actions’ from federal employees who’ve been fired, suspended, furloughed, demoted or had their pay cut.” This makes it both expert about and invested in employee due process.

The agency’s new report has a helpfully descriptive title: “What is Due Process in Federal Civil Service Employment?” The board’s head, Susan Tsui Grundmann, told the media her agency spent a year working on it. Her executive summary states in placid governmentese:

In the Civil Service Reform Act of 1978 (CSRA), Congress sought to ensure that agencies could remove poor performers and employees who engage in misconduct, while protecting the civil service from the harmful effects of management acting for improper reasons such as discrimination or retaliation for whistleblowing. Recently, Congress has expressed an increased interest in amending the CSRA, including those provisions that apply to adverse actions. To assist Congress in these endeavors, this report explains the current civil serv­ice laws for adverse actions and the history behind their formation.

One need read just a few pages more to see this is a report with an agenda. Grundmann’s introduction makes this ringing declaration: “Due process is a constitutional requirement and a small price to pay to ensure the American people receive a merit based civil service rather than a corrupt spoils system.” This defense of the status quo is a blatantly political statement that denigrates the legitimate concerns of many members of Congress. The recent discussion on Capitol Hill has centered on how to amend the 1978 act to make its process more reasonable. No legislation would permit federal employees to be fired on a whim.

Grundmann’s pronouncement also is tendentious history. Congress destroyed the spoils system long ago, starting in the 19th century, by mandating that agencies use objective criteria for hiring. Being a good partisan was no longer enough; applicants had to take tests and demonstrate knowledge relevant to the work. This in no way describes what took place in 1978, when federal unions lobbied a Democratic Congress and President Jimmy Carter to erect a system that makes removing an employee all but impossible.

The 1978 statute and the myriad rules propagated there-after require a lousy employee first to be given notice of his shortcomings, allowed to pre-sent counter-evidence, then provided help and opportunities to improve. If the cock-ups continue, another meeting will be scheduled where the supervisor must marshal still more evidence. Should the boss dare to proceed with demotion or termination, the employee is entitled to be represented by an attorney.

Any adverse action against the employee can be appealed to the Equal Employment Opportunity Commission or the MSPB, which may overturn the decision for violating baroque legal standards. It is a grueling process, and very few supervisors can muster the time and energy to pursue it. Consider the case of S. P. O’Hara, who was caught viewing porn on his work computer in February 2012. It took a year and a half for the Department of Homeland Security to clear all the hoops required to fire him. He appealed to the MSPB, which did not decide his case until April 2015. (It supported his termination.)

Tucked in a cheekily titled appendix to the report (“Clearing up the confusion”) is the factoid that received so much buzz: “Perception: It is impossible to fire a Federal employee. Reality: From FY2000-2014, over 77,000 full-time, permanent, Federal employees were discharged as a result of performance and/or conduct issues.” That sounds like a big number that indicates the system is working. It is not.

 The 77,000 employees the MSPB says were fired over the past 15 years averages out to 5,133 employees annually, or just 0.26 percent of the 1,940,000 civil service workforce. But the percentage is even lower. MSPB told me that 41 percent of the fired employees were in their first-year, probationary period. These employees lack the extensive job protections of permanent federal employees. Adjusting to include only those employees past their probationary period, we arrive at a figure of just 0.15 percent of federal employees who are shown the door each year. Statistically, that is pretty close to “impossible.”

House committee bars publication of reports by Congressional Research Service

May 15, 2015, 9:08 AM

From AllGov:

“Even when we did find time and space to do serious research, lawmakers ignored our work or trashed us if our findings ran contrary to their beliefs,” former CRS analyst Kevin Kosar wrote earlier this year.

Will self-driving cars need hacker insurance?

May 15, 2015, 9:00 AM

From Hopes & Fears:

R.J. Lehmann, Policy Expert in Insurance, Co-Founder of R Street Institute

It’s obviously a very complicated issue. Before you even get to what do you do about insurance for hacking, it’s not at all clear what you do for insurance for self-driving cars. Auto insurance traditionally has covered drivers for their driving ability, with considerations for what it’s like where you live—are there a lot of accidents? Or, is there a lot of traffic, are there a lot of auto thefts?

If you have a fully autonomous car, that changes the equation entirely because we’re no longer looking at the driving record of the person, you’re looking at the vehicle itself alone. Traditionally, that would not be covered under an auto insurance policy, that would be covered under a product liability policy. The big difference there is you as a driver buy an auto insurance policy, but the company that produces the self-driving car would buy a product liability policy.

So how states are going to work in this area and consider these issues is totally unclear at this point. A few states have passed some preliminary laws that theoretically legalize fully-autonomous cars. For the most part they have kept their existing insurance systems in place, but that would be subject to court challenges, because, let’s say you’re driving a self-driving car, and the car causes an accident that you could not theoretically have avoided. Your auto insurer is not going to want to pay that claim because that’s not what they’re insuring. If they’re held responsible for it, they’ll want to sue the maker of your car and say that they are liable for it.

Moving this forward to self-driving cars and hacking, I think that would fall under some sort of product liability system where the manufacturers would be held at some part responsible for the security of their systems. If there were a way to find out who the source of the hacking was and if that person has any money, then the product liability system would look to recover something from them. But if it’s a state that does it—say North Korea does it—then there’s probably no chance that they’re going to get anything back.


‘Beach Plan’ insurance needs to do no further harm

May 15, 2015, 8:36 AM

When he was speaker of the North Carolina House of Representatives, now-U.S. Sen. Thom Tillis was fond of pointing to “the conservative revolution” that has taken hold in Raleigh over the past four years. But there remains one area where official state policy creates the opposite of a free market: insurance.

North Carolina was one of just two states to score an “F” (California was the other) in the annual report card we at the R Street Institute compile comparing how well states regulate their insurance markets. But a bill approved this past week by the state House of Representatives, and expected to be taken up soon by the Senate, could make matters even worse.

The measure, H. 182, would create a new state agency, the North Carolina Recovery Finance Authority, whose purpose would be to issue tax-exempt municipal revenue bonds on behalf of the North Carolina Insurance Underwriting Association. Better known as the “Beach Plan,” the association provides taxpayer-backed coverage to residents of 18 wind-and-hail zone districts along the coast.

The Beach Plan already has the power to borrow money after a major storm. Those funds paid off over time through “hurricane taxes” that are assessed on all policies, coastal and inland, for years to come. H. 182 would make it even easier for the plan to shirk its responsibility to ensure it has enough resources, through its own surplus and by transferring risk to the reinsurance and catastrophe bond markets, to make good on all of its obligations.

Proponents of the measure are clear about their goal, which is to lower costs for coastal real estate developers by shifting risk from the private reinsurance market to North Carolina taxpayers. Willo Kelly of the Outer Banks Homebuilders Association and Outer Banks Board of Realtors recently was quoted as touting that the bill would “eliminate or reduce the need for reinsurance.”

For its part, the Beach Plan leadership has responsibly insisted that it retain autonomy to make its own decisions regarding reinsurance and its overall financial health.  Among their concerns is that, unlike the plan’s own premiums and surplus, reinsurance can be structured to pay out for more than one storm in a season. Alas, given the motivations of the bill’s sponsors, such choices might indeed be subject to political pressure.

Another reason to be concerned is that North Carolina’s two state-run residual property insurance pools are once again growing rapidly. The FAIR Plan, which serves mostly lower-income residents, saw its market share more than double from 0.6 percent in 2011 to 1.4 percent in 2013. The Beach Plan spiked from 3.4 percent of the market in 2011 to 5.1 percent in 2013.

The proper response to these developments is to move to an open, competitive insurance market where rates truly reflect risk. This bill proposes the opposite, increasing the elected insurance commissioner’s to reject certain insurance catastrophe models.

The plan is modeled closely on what my state, Florida, did with creation of the Florida Hurricane Catastrophe Fund and Citizens Property Insurance Corp. This is decidedly not a good model to follow. Instead of spreading risk around the globe, which is the purpose of insurance, it concentrates it in one small area. My fellow Floridians just recently finally stopped paying the hurricane taxes imposed following storms that struck a decade ago.

Ironically, North Carolina is looking to copy the Florida model just as the Sunshine State has been looking to reverse its mistakes. With all the strides North Carolina has already made in areas conservatives take seriously, it’s time to apply that same approach to insurance, and most importantly, do no further harm.

Correction: An earlier version of this story stated that H. 182 expanded the insurance commissioner’s authority to order rate rollbacks. Although included in earlier versions of the legislation, that provision was not in the final version passed by the House.

Coalition letter supporting the PATENT Act

May 15, 2015, 8:32 AM

Dear Sens. Grassley and Leahy,

The undersigned organizations represent technology, small business, consumer and the public interests in the area of patent policy. We write to provide our views on the PATENT Act, S. 1137. We support this bill, as it will target the most problematic abuses in patent assertion, and we encourage members of the committee to oppose amendments that would substantially deflate the effectiveness of this bill in the areas of patent demand-letter reforms and post-grant AIA proceedings.

The patent system is intended to promote innovation, but far too often today we see abuses of the system that harm the small businesses, startups and creators who are the engine of American innovation. We applaud the sponsors of the PATENT Act for taking on this timely, urgent, important issue of patent reform.


The undersigned groups believe that the PATENT Act provides strong protections for consumers and small businesses from the worst abusive practices seen in the patent system today. The bill provides for basic fairness in patent litigation, provides procedural protections for consumers of off-the-shelf products and institutes penalties for the sending of misleading, deceptive or insufficiently informative patent demand letters. We support the bill and encourage members of the committee to support it as well.


We are particularly pleased to see the provisions of the PATENT Act that protect against improper patent demand letters. Such demand letters continue to be a serious problem for the smallest entities who lack the resources to defend themselves from such predatory activity.

This bill offers real, meaningful protections against abusive patent demand letters. It creates penalties and disincentives for failure to include relevant information, ensures the FTC has authority to deal with misleading and deceptive demand letters unhindered by excessive evidentiary requirements and permits the states to continue to develop new solutions to demand letters as new abuses arise. We would encourage the committee to pass these provisions without weakening them with unnecessary proposals that others may raise.


The America Invents Act introduced several new proceedings for challenging patents before the U.S. Patent and Trademark Office. These post-grant proceedings are critical for improving patent quality and ensuring that small businesses and individuals are able to challenge patents that interfere with the public’s ability to innovate.

At the hearing on the PATENT Act, several witnesses proposed changes to these post-grant proceedings that would raise their cost and make them less accessible to those third parties for whom the proceedings were designed. Several of us have criticized these proposals for being haphazardly developed and not targeted toward the perceived post-grant proceeding abuses. Accordingly, we concur with Sen. Schumer’s statement at the hearing that he would “not be able to support any deal on post-grant that does not preserve the viability of the process for these little startups.” We would oppose any amendments that would weaken these necessary procedures overall.

We thank you for your consideration of our views, and look forward to working with you to pass strong, meaningful patent reform legislation in the coming months.


Public Knowledge
R Street Institute
Engine Advocacy
Computer and Communications Industry Association
Electronic Frontier Foundation
Application Developers Alliance

Yes, the U.S. Congress has a role in foreign affairs

May 14, 2015, 10:13 AM

As the U.S. Congress this week continues to debate legislation to address President Barack Obama’s proposed nuclear deal with Iran, some critics howl that the bill would usurp presidential authority. They are very wrong.

The Iran Nuclear Review Agreement Act, or S.615, is modest. The measure, introduced by Sen. Bob Corker, R-Tenn., sets no negotiating terms, nor does it force the president to define the deal as a treaty subject to approval by two-thirds of the Senate. Instead, it asks the president to submit the proposed agreement and a report to Congress, and then to permit a vote. If the legislature approves the deal, it is done and Obama wins. If it disapproves, Obama can veto the resolution, and Congress likely does not have the votes to override that veto. Again, Obama wins. If Congress fails to vote within 60 days, the agreement, yet again, is approved. Once more, Obama wins.

So what is the big deal? Some observers have gotten it into their heads that the president should have an unfettered hand in foreign affairs.

Steve Coll of the New Yorker recently vented about a 1936 decision in which the Supreme Court endorsed the president’s prerogative to lead foreign policy. The court opined that the president alone “has the power to speak or listen as a representative of the nation.” According to Coll, the case, U.S. v. Curtiss-Wright Export Corp., “has influenced law and the conduct of foreign policy for almost eight decades,” and modern Republicans ignore this history. “They have meddled in unprecedented fashion to undermine President Obama’s nuclear diplomacy with Iran,” Coll writes.

In fact, the president never has been the sole organ of foreign policy. The U.S. Constitution assigns the president limited powers in foreign affairs. He may receive foreign nations’ ambassadors and ministers. He is commander in chief of the Armed Forces, but only when the military is called into service. He also may make treaties “by and with the advice and consent of the Senate.”

By contrast, Article I grants Congress the authority to raise and support armies, to provide and maintain a navy, and to declare war. Congress established the Department of State and the Department of War (now the Department of Defense) in 1789. Congress funds these foreign policy agencies, and per the Constitution it has the power to make rules for their operation. The Senate also must approve those the president selects to head these departments and to serve in top diplomatic positions.

The tradition of congressional involvement in foreign policy dates to the start of the republic. George Washington came to the Senate in August 1789. He wanted, as Charlene Bickford recounts in the latest Federal History journal, to discuss with the legislators how to proceed in his dealings with the Cherokees, Chickasaws, Choctaws and Creeks. Washington wanted money and specific instructions on the conditions for negotiating with the tribes. The Senate fell into debate, and the president left, as did Secretary of War Henry Knox. A couple of days later, Washington returned, and a mutually satisfactory arrangement was concluded.

This early instance of consultation in foreign affairs set the template for the future: Foreign affairs was to be a collaborative effort. Both chambers of Congress have foreign affairs committees, and the Senate’s dates back to 1816. Members of Congress have been involved in many foreign negotiations. President James Madison appointed congressmen to help negotiate the Treaty of Ghent in 1814. Congressmen participated in the 1945 gathering that produced the United Nations charter.

Presidents and Congress, unsurprisingly, often have found themselves at loggerheads over foreign affairs. In the latter half of the 19th century, the Senate rejected 10 treaties. Sen. Robert Byrd, , D-W.Va., went to Russia in 1979 while the SALT II negotiations were ongoing. Rep. David Bonior, D-Mich., traveled along with two other congressmen to Iraq in 2002 to denounce the Bush administration’s move to war. That is the nature of things in a system where separate branches share power.

The proposition that the president leads on foreign affairs, and that Congress should not meddle, has matters exactly backward. The Constitution gives all lawmaking authority to Congress and demands the president “take care the law be faithfully executed.” Treaties and other diplomatic agreements have the force of law, so Congress has every right to vote to approve their enactment. Let it be remembered, when President Franklin Roosevelt imposed an arms embargo in 1934 that the Curtiss-Wright Export Co. violated, he was drawing upon authority granted to him by an act of Congress.

Fixing the Texas tax-cut stand-off

May 14, 2015, 10:09 AM

As the Texas Legislature nears the end of its biennial session, the biggest issue on the table is how best to cut taxes.

The state House has proposed a $4.8 billion tax relief package, including a 25 percent reduction in the state’s margin tax and a reduction in the state sales tax from 6.25 to 5.95 percent. The state Senate proposal also cuts the margin tax, but pairs this with reductions in the property tax, for a total $4.6 billion in tax relief.

That Texas is debating which taxes to cut (rather than which taxes to raise) is a positive sign. The danger, however, is that if the different chambers can’t agree on a single approach, we may end up with no tax relief at all.

For this reason, some in both the House and the Senate have suggested that the chambers could focus on where they agree: cutting the margin tax.

Here at R Street, we’ve written extensively about the damaging effects of Texas’ margin tax. The poorly designed tax distorts the Texas economy, is a hidden tax on consumers and forces high compliance costs even on businesses that end up having no tax liability.

Eventual elimination of the margin tax is a stated goal of the leadership of both chambers, and a $4.5 billion reduction would allow either a 50 percent rate reduction as part of a phase out, or full repeal in the second year of the biennium. Either option would be an encouraging sign that Texas remains committed to maintaining its reputation as a business-friendly environment.

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

Odd couple asks EPA for carbon tax

May 14, 2015, 8:36 AM

From the Washington Examiner:

That’s what environmental group Friends of the Earth and the free-market R Street Institute advocated for in a Wednesday meeting with EPA officials.

Neither organization would confirm the other’s attendance to the Washington Examiner. Eli Lehrer, who heads R Street Institute, said his group was meeting with the EPA but said he couldn’t vouch for Friends of the Earth. Kate DeAngelis, climate and energy campaigner with Friends of the Earth, said she could not “confirm or deny” the meeting was taking place.

It’s a bit of a touchy subject for a conservative group to go to an EPA meeting with one of the more left-leaning environmental groups and, ostensibly, present a united front. R Street Institute, after all, is trying to court Republican lawmakers in hopes of backing a national carbon tax. It’s not lost on GOP lawmakers that groups like Friends of the Earth are hardly their friends.

Friends of the Earth is to the Left of inside-the-Beltway players such as the Natural Resources Defense Council. R Street Institute is more centrist than other conservative outfits. It was founded in a split with the Heartland Institute over the latter’s skepticism of human-caused climate change.

Both groups said a carbon tax was a better method for reducing greenhouse gas emissions, which most scientists blame for warming the planet, than the EPA’s proposal to limit emissions from power plants. Friends of the Earth is still a fan of the regulation, but says it’s too weak. R Street Institute hates the proposal, which calls for reducing electricity emissions 30 percent below 2005 levels by 2030…

…Friends of the Earth and R Street Institute are a bit of an odd couple, but the two have collaborated in the past. They, with watchdog group Taxpayers for Common Sense, have taken aim for several years at wasteful government spending and programs through their “Green Scissors” coalition…

…Lehrer said the more inclusive a carbon tax, the better. He said he’s glad the EPA proposal to cut power plant emissions allows for carbon tax plans. Still, he said a national carbon tax would be better than the Obama administration’s Clean Power Plan, as the emissions rules are called.

Lehrer’s stand on carbon taxes is certainly controversial…

…But where Lehrer agrees with congressional Republicans — and departs from Friends of the Earth — is that the EPA proposal has to go.

“Basically we are meeting with EPA [Wednesday] to tell them their plan sucks,” Lehrer said. “Our view is ‘nothing’ is better than this plan.”


House renews ban on CRS publication of its reports

May 13, 2015, 6:21 PM

From Federation of American Scientists:

Why is the US Postal Service “stockpiling ammunition”? That sort of question helped lead CRS analyst Kevin Kosar to leave his job, he explained in an article in the Washington Monthly earlier this year (“Why I Quit the Congressional Research Service,” Jan/Feb 2015).

What is most valuable, by contrast, is not necessarily of immediate use to individual Members and Committees. That is the kind of in-depth policy analysis that can only be helpful to those whose policy preferences are not predetermined by ideology or affiliation. CRS reports are now cited ever more frequently by reporters and others trying to come to grips with complicated policy issues that entail both costs and benefits.

This particular policy analysis function, however, may not be considered a “fundamental and optimal requirement” by every member of the House.

“Even when we did find time and space to do serious research, lawmakers ignored our work or trashed us if our findings ran contrary to their beliefs,” wrote former CRS analyst Kosar.

R Street praises House for passing USA FREEDOM Act

May 13, 2015, 4:48 PM

 WASHINGTON (May 13, 2015) – The R Street Institute praised today’s bipartisan vote by the U.S House to pass H.R. 2048, the USA FREEDOM Act.

The measure represents an important step toward curbing the National Security Agency’s bulk collection of communications records, with key provisions to end indiscriminate bulk surveillance. It also works toward more transparency and accountability for the FISA courts, the special branch of the court system that approves and monitors surveillance.

“We applaud the House for taking this important first step toward reining in the overreach of surveillance of American citizens,” said Mike Godwin, R Street’s director of innovation policy and general counsel. “The overwhelming bipartisan support in the House should send a clear message to the Senate that voters want Congress to pass strong reforms to America’s surveillance practices.”

Godwin also cautioned that while the legislation represents a good first step, more work will need to be done on the issue.

“More action is needed to compel our government to be more restrained and accountable in its surveillance activities,” Godwin said. “We will continue to argue for limited, effective, accountable government surveillance practices in upcoming debates over updating the Electronic Communications Privacy Act and reforming Section 702 of the PATRIOT Act,” he said.


R Street praises Texas Legislature for strengthening rights of property owners

May 13, 2015, 2:52 PM

AUSTIN, Tex. (May 13, 2015) – The R Street Institute praised the Texas Legislature for passing S.B, 1626, a bill to strengthen homeowners’ rights to choose how to power their homes.

The legislation eliminates the power of a developer of more than 51 units to prevent homeowners from installing solar panels while an area is still in a “development phase,” which can last many years.

“Homeownership comes with certain rights and developers shouldn’t be able to impose restrictions long after a property is sold,” R Street Texas Director Josiah Neeley said.

“They say your home is your castle. While you may not be able to surround it with a moat filled by laser-wielding sharks, being able to put solar panels on your roof is a good second best option,” he added.

Neeley warned that the fight for property holders’ rights is far from over.

“While this bill is a step in the right direction toward protecting property rights, we’d like to see the restriction lifted on developments of all sizes, not just large-scale developments,” he said.

Copyright, pharmaceutical enforcement shouldn’t be imposed on ICANN

May 13, 2015, 12:11 PM

Since 1998, U.S. policy has held that the Internet’s “IANA functions” — the technical functions collectively referred to as the Internet Assigned Numbers Authority, administered by ICANN.org — will ultimately belong to the world.

In this context, “the world” has been understood to mean not merely the world’s governments, but also other “stakeholders.” These may include national and international business entities, nongovernmental organizations, individual citizens, and everybody else who has a “stake” in the Internet’s successful operation.

But even as the process of moving these basic Internet functions to a global stakeholder model inches forward, other national governments eye the transition with suspicion, wondering how they can use (or delay) the process to advance their national interests. So it’s perhaps surprising that our own government, after more than 15 years of national policy designed to keep basic Internet functions outside the realm of politics, is now having second thoughts—largely due to political considerations.

Key among those political interests have been American copyright industries and pharmaceutical industries. They’re worried that if the distance between the U.S. government and the handling of IANA functions becomes too great, they’ll lose a key point of leverage to protect their own businesses.

At first glance, the copyright and drug-company anxieties may not seem to make sense. The IANA functions center on things like Internet-protocol addresses (“IP addresses”), domain names and technical protocols developed by the Internet Engineering Task Force (IETF). By contrast, trademark holders’ concerns are clearer; domain names easily can be used to dilute trademarks and confuse the marketplace.

But movie and music companies, like drug companies, long have seen the administration of these basic Internet functions—especially the administration of domain names—as a potentially powerful tool to deter or prevent copyright and patent infringement.

Such issues are central to today’s House Judiciary Committee hearing on the “.sucks” domain. It featured prepared testimony from copyright industry partisans—notably and most handwringingly, from the Coalition for Online Accountability, a trade association created to represent other copyright trade associations—who worry quite a lot about the loss of this potential tool.

Even if we assume the copyright and drug companies’ arguments are logical (we’re being generous here), there already are national and international enforcement frameworks that allow rights-holders to pursue infringers around the world, through the United Nations and through bilateral and multilateral treaties.  The final transition of the IANA functions to multi-stakeholder, nongovernmental, international governance does not itself pose any threat to these well-entrenched, well-funded, international enforcement mechanisms.

More importantly, if the Internet is to continue functioning as an international platform that connects the world, we all have to dodge the temptation to impose extraneous enforcement obligations on the Internet, whose fundamental design is grounded in connecting us, not disconnecting us.

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

Legal ridesharing comes to Portland…sort of

May 13, 2015, 8:30 AM

Uber is operating legally in Portland, for now. A pilot program adopted by the Portland City Council has given transportation network companies the green light to operate for four months, at which time the city council will need to revisit the issue. When it does, it may be confronted with a difficult decision: whether or not to roll back the liberalization of transportation-for-hire services. Doing so would be a mistake.

The furor over the emergence of Uber in Portland has overshadowed the comparative weakness of the city’s transportation-for-hire situation overall. In a study conducted by the R Street Institute, which examined the regulatory environment for taxis, limos and transportation network companies in 50 cities across the nation, Portland ranked among the worst.

The new pilot program, which not only legalizes TNCs but also improves the state of the city’s taxi market, could improve Portland’s rank dramatically, provided that the reforms are made permanent.

Regulations that have, to date, artificially suppressed both fares and the numbers of for-hire vehicles that can operate in the city have been suspended. Those changes, in consort with one another, will allow consumer demand, and not industry protectionism, to dictate the future of the transportation market.

What’s more, in a freer market, as consumers come to understand the distinct benefits of each mode of for-hire-transportation, they will be able to tailor their behavior to the situations best fit for each model. For instance, in situations in which an immediate hail is required, a taxi will continue to make the most sense. Whereas, when a ride is needed in an area not otherwise frequented by transportation-for-hire, connecting with a TNC will be an attractive option. The resulting efficiencies will save consumers money.

While the pilot program is victory for Portland’s transportation-for-hire consumers, the significance of the development should not overshadow the state’s need for comprehensive TNC legislation. Legislators in Salem are currently considering bills that would establish statewide insurance standards for TNCs.

Two of those bills are problematic. In fact, they are so onerous that, if passed, Uber might be forced to leave the state. Fortunately, an alternative exists. Insurers and TNCs agreed upon a national model that balances consumer protection with market flexibility earlier this year. Since then, 16 states have seen fit to adopt it.

If adopted in Oregon, that standard would enhance safety by eliminating consumer confusion about the type and amount of insurance in effect during a TNC ride, which has been a hitherto persistent barrier to the wholesale acceptance of TNCs.

Policymakers at the state and municipal level should continue to remove obstacles that hinder for-hire transportation services, in whatever form they take. Affordable on-demand personal mobility is a necessary condition of economic growth and shared prosperity. The more transportation options available to consumers in Portland, and in Oregon as a whole, the better.

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

Hollywood celebrities aren’t abiding California drought rules

May 13, 2015, 8:00 AM

The California drought, that exceptional byproduct of an exciting, unnatural approach to preserving the lives of millions of tiny, endangered fish for no discernable purpose except to prevent their own extinction, has taken its toll on the “little people” of California. Forced to give up all consumption of water, to the point where it has been routinely suggested that they refrain from regular bathing, California citizenry are suffering through one of their worst water restrictions in history.

Well, some California citizenry are suffering through one of their worst water restrictions in history.

As these aerial photos from The Post prove, Hollywood celebrities like Kim Kardashian, Barbra Streisand and Jennifer Lopez continue to suck up water to keep their gardens fresh and lawns green, while Southern California withers from a devastating drought.

Experts predict California reservoirs have less than a year’s worth of drinking water left. An emergency law passed last week forces local cities to conserve water immediately. The Las Virgenes Municipal Water District, which supplies many of these elite enclaves north of Los Angeles, will have four weeks starting next month to cut water use by a staggering 36 percent. But the mandate is toothless, with the maximum fine a paltry $100.

Barbra Streisand, of course, besides being a regular performer who makes millions, operates the Streisand Foundation, which gives a great deal of money to Climate Reality, among other environmental causes. Climate Reality, which is charged with educating the population about climate change, has followed the California drought closely, and stresses that individual action is key to environmental leadership, even counting “smart actions” and “global actions” that, in aggregate, they claim, make an environmental impact.

Today, after being shamed over wasting precious California water for her lush lawn and extensive swimming pool, Streisand committed to preserving water and curbing her consumption (though, I’m sure, the carbon footprint of her massive mansion is still several thousand times what yours or mine is). There’s still no commitment from others, including Cher, who is, according to her occasional outbursts on social media, also an outspoken environmental activist. Kim Kardashian, whose home with Kanye West is on the list (though reports differ as to whether they actually live in the Hidden Hills mansion), once claimed to only wash her hair every five days to preserve water, but still also made the list and has not addressed her problem.

Well, one of her problems. The rest are probably impossible to address.

Uber, but for GOP hypocrisy

May 12, 2015, 3:18 PM

From the Daily Beast:

Andrew Moylan, the executive director of the R Street Institute—a conservative think tank that works extensively on issues involving transportation network companies like Uber and Lyft—said that since the RNC rolled out its pro-Uber rallying cry, there’s been no discernible change in how the party’s legislators have handled policymaking on their issues.

“There hasn’t been any consistent ideological trend that we’ve been able to identify just yet,” he said.

He added that there’s a broad national policy trend of tightening rideshare regulations for customer safety purposes—for instance, mandating driver background checks and barring these companies from hiring sex offenders…

…One bill would have made Uber drivers get the same licenses as limousine drivers, a standard Moylan described as “problematic.” Republican state Sen. Rick Jones expressed concern about surge pricing; Michigan Daily reported that the state’s taxicab drivers think it’s unfair that Uber can charge extra when demand is high, but they can’t.

…R Street has a scorecard that rates cities on their transportation policies (www.ridescore.org), and Moylan pointed out that the comparative blueness or redness of a city doesn’t say much about its rideshare-friendliness.

Washington D.C. and Minneapolis, bastions of liberal policymaking, both get A’s.

But even-more liberal Portland, Ore., gets an F.

Indianapolis, a comparatively red city, gets good marks, while oil-rich San Antonio gets a sad D-.

There’s one dot of light for the RNC and rideshare advocates: Gov. Scott Walker in Wisconsin signed legislation this month implementing statewide regulations that Uber and co. don’t seem to hate.

Moylan noted that Walker is following a few other governors in passing statewide regulations that preempt city and municipal rules.

…Uber advocates aren’t complaining about the RNC trying to reach kids by talking up transportation policy. But Moylan added that their stance hasn’t had discernible policy results.

“As an effort, I think it was largely an email list building exercise,” he said.

Nevada Senate gives green light to ridesharing

May 12, 2015, 12:50 PM

With just three weeks to go in Nevada’s legislative calendar, a bill that will give the green light to hitherto illegal ridesharing activity has cleared an important hurdle in the state capitol.

Assembly Bill 175 passed the Senate on an 18-1 vote and now moves back to the Assembly, where the bill’s amendments will require another floor vote for approval before the bill can be sent to Gov. Brian Sandoval. The large bipartisan majority that supported A.B. 175 in the Senate bodes well for the bill as it moves back to the Assembly, because it requires a two-thirds vote, not a bare majority, to pass.

The specifics of A.B. 175 are imperfect, particularly the imposition of a 3 percent tax on rides and a nebulous background check provision. But the overriding concern for legislators, and those in favor of market competition, is that transportation network companies begin to operate legally within the state.

Anybody who has ever stood in a seemingly endless queue for overpriced two-mile taxis rides to the Strip from McCarran Airport is just a little closer to avoiding that nightmare in the future.

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

If payday loans are horrible, what about federal student loans?

May 12, 2015, 10:22 AM

When I was researching payday loans, I came across an interesting statistic: Within three years of entering into repayment, 13.7 percent of federal student loans wind up in default.

So it made me wonder. What is the difference between payday loans and federal student loans?

The default rate for payday loans is considerably higher, but the economic stakes are vastly greater, in terms of dollars, for student loans.

A quick look at current direct federal loans in repayment shows an average balance of more than $26,000.

Even assuming that the average payday loan amount is $500, a high assumption, a single federal student loan borrower carries more than 52 times the burden of a payday borrower.

Look at the difference in marketing as well. Most Americans realize payday loans are a raw deal and a poor financial decision; that’s why they have become a favorite political target. In stark contrast, student loans are accompanied with a narrative that you either take on a massive debt or your future will forever be compromised.

You don’t have to like payday loans to see the similarities. Payday loans offer relatively small amounts of money in anticipation of a payday in the near future. Federal student loans permit students to take on massive amounts of debt in spite of the fact that many, if not most, are not working and have no immediate job prospects. In many instances they have a co-signer, like parents, on the hook as well.

If that weren’t enough, student loan debt is generally not discharged in bankruptcy unless repayment would create an “undue hardship” for the student borrower or his or her dependents.

It doesn’t sound right, does it? If there is outrage over payday loans keeping lower-income Americans on the debt cycle, why is nobody questioning federal student loans?


A politician simply pointing out the math and potential hazards of student loans will be branded as denying access to education. Period. And that’s not a political winner.

Federal student loans also create other types of problems. They drive up the costs of higher education.

There are exactly two ways to control the costs of higher education for students: government fiat or market forces. State-run higher education – we’re talking “free” education in places like Germany – is fully funded by taxpayers at no cost to students. Most gainfully employed graduates will eventually feel the cost in the form of significantly higher taxes when they enter the workforce. Since we generally don’t want the government to run even more of our lives in America, we don’t do that.

The other option is letting markets operate freely. When enough people cannot afford the prices of higher education to keep those institutions operating, educators are motivated to offer similar education options at lower prices. But many Americans dislike the idea that ability to pay determines higher-education options. So we don’t do that either.

Instead, we have created the worst of both worlds: An essentially private system of education fueled by taxpayer support and government-issued loans, knowingly provided to many students who will struggle for decades to pay them off.

For some students, the skills learned from an undergraduate or graduate program may indeed be worth the significant debt they take on. Repayment may happen relatively quickly. Many others will literally fight student loan debt for a significant portion of their adult lives.

At the end of the day, the difference between payday loans and student loans may simply be that students have a better chance of a positive economic future in exchange for taking on radically higher economic stakes.

Audio from SxSW ‘Your Laws, Your Data’ panel

May 12, 2015, 10:00 AM

In the two decades that it has been managed by the Library of Congress, THOMAS — the online record of Congress’ activities, named for Thomas Jefferson — has revolutionized access to public information. It has served as a centralized hub for bills and resolutions, the Congressional Record, committee reports and other essential records.

However, the technology powering THOMAS — which now is in the process of transition to a new site, Congress.org — has not kept pace. Open data advocates believe a more open and comprehensive system of public data, covering the entire federal government, not only is possible, but holds the potential to power a host of new applications.

At a March 13 panel at the SxSW conference in Austin, Texas, R Street Associate Fellow Molly Schwartz joined several fellow members of the Congressional Data Coalition (CDC Co-Chair Daniel Schuman, Molly Bohmer of the Cato Institute and Rebecca Williams of data.gov) to discuss how better data can empower citizen activists and public interest groups to make government more accountable, and more responsive. Audio of that panel discussion is available below.


(h/t Daniel Schuman at the Congressional Data Coalition)

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

California: dry, earthquake zone, fire hazard

May 11, 2015, 9:04 AM

From the Washington Examiner:

Ian Adams for the R Street Institute: California is a land of calamity. The ground shakes, it runs dry and, with underappreciated frequency, it catches fire…

Should Alabama have a flat tax?

May 11, 2015, 8:43 AM

They’ll probably label it a tax hike. That’s what always happens anytime anyone attempts to reform Alabama’s mangled tax code.

Alabamians hate tax increases. Just ask Gov. Robert Bentley.

If you want to keep your special-interest tax deduction, credit or incentive, a flat income tax is a threat. After all, it is designed to simplify taxes. That’s the tradeoff. Removing specific deductions and carve-outs are the price you pay for lower rates and simplicity.

That’s how you attack a flat tax. Fuel outrage over a few people losing their special treatment and get the average taxpayer worked up enough to overlook the fact that their tax bill might actually be lower.

State Sen. Bill Hightower, R-Mobile, knows he’s taking a risk. Even though his effort won’t be a net tax increase for the state, some businesses and individuals in Alabama will pay higher taxes.

Hightower is one of them. He’s run the figures on his own individual income taxes and expects to pay a little more.

He simply sees the benefit to Alabama as greater than the increase in his personal taxes. “It will be simpler for everyone and the majority of Alabamians will experience a tax reduction,” he says. “Any increase, for most people, will be offset by the savings from not having to pay an accountant to file.”

“The people opposed to a flat tax are those who are only looking to see whether their individual tax bill increases or decreases,” says Hightower.

He’s urging Alabamians to consider the bigger picture, and he cites North Carolina as an example. North Carolina routinely engaged in a “government goodies” battle with South Carolina for attracting new business and routinely lost.

That’s how Alabama operates now. We cut generous deals to businesses trying to lure them to the state. You’ve seen it time and again. We can call it whatever makes politicians more comfortable, but we’re basically using tax dollars and specific tax breaks to pay a business to come to the state. Almost all other states do it, so the justification for the practice is that we’ll be left out if we don’t play the game.

North Carolina modified that game by lowering tax rates and simplifying their tax code. Hightower notes, “Most jobs are created by existing businesses, not new ones coming to the state. We need to make a good business environment for anyone to operate.”

Hightower has a point.

Ask existing businesses in Alabama how they feel about the state’s economic development strategy. State economic developers chase flashy names with generous offers and relatively little economic accountability on the back end. If you’re already here, you either have the political clout to get in on the action or you’re left out altogether.

Hightower sees a flat tax as a way to encourage economic growth while reducing the use of “government goodies” to attract business.

Before conservatives get their hackles up, the tax hawks at Americans for Tax Reform are backing Hightower’s idea.

In fact, a flat tax is the kind of conservative idea that Alabama needs: Take out the special treatment and lower taxes for everyone. The change wouldn’t hurt Alabama’s revenues, and it would help a lot of average individuals and businesses with their taxes.

The folks who won’t like a flat tax are the ones fine with the status quo. If a change threatens what they have, they’d rather keep the rest of Alabama footing the bill. Sen. Hightower is willing to take the political risk; the average taxpayer would be wise to take him up on his offer.