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In search of ‘Mr. Republican’

March 11, 2014, 10:39 AM

Who will be the next “Mr. Republican”? While the race for the 2016 Republican presidential nomination gets underway, there is another, more informal race going on as well. Since the Second World War, there have been a handful of elected Republicans who have distinguished themselves not by winning the White House, but rather by setting the party’s ideological direction.

The first Mr. Republican was Robert A. Taft, the Ohio senator who served as the most scathing conservative critic of FDR and the New Deal, and who later warned that America’s Cold War entanglements threatened freedom at home. His successor was Barry Goldwater, who called for rolling back the frontiers of the welfare state at home and communism abroad, and through his crushing defeat paved the way for the Great Society and a vast expansion of federal power. Goldwater inspired a generation of conservatives, including Ronald Reagan, who eventually overpowered the moderates and liberals who once played a central role in the party.

Jack Kemp crafted a less hard-edged and more optimistic “bleeding-heart conservatism,” which celebrated economic growth as a painless way to finance rising social expenditures. And Newt Gingrich, as architect of the first Republican House majority in a generation, offered a combustible mix of high-minded techno-utopianism and scorched-earth partisanship that transformed American politics.

Last week’s Conservative Political Action Conference saw a whole host of Republican standouts jockeying for position, including Kentucky Sen. Rand Paul, Texas Sen. Ted Cruz, Florida Sen. Marco Rubio and New Jersey Gov. Chris Christie. But with the exception of Rand Paul, these men aren’t offering distinctive new visions for the GOP.

To be the next Mr. Republican (or Ms. Republican, if the current bench included more women), you need to offer a full complement of policy positions and a theory of how they fit together. The closest we’ve come to a Mr. Republican in the post-Bush years might have been Jim DeMint, the former senator from South Carolina. DeMint’s embrace of the tea party insurgency played a key role in its early success, and in its early failures. But when DeMint left electoral politics behind to run the Heritage Foundation, his pronouncements lost the weight that comes from being accountable to voters. Tom Coburn, the senator from Oklahoma, has the intellect and the political shrewdness the role of Mr. Republican demands, but his decision to retire from office removes him from the picture.

Paul Ryan, the Wisconsin congressman and 2012 Republican vice presidential nominee, is a promising candidate for the role. Having spent part of his young adult years working for Kemp, Ryan has a deep understanding of the Republican coalition and what it takes to hold it together. His persuasive abilities were on full display in 2011 and 2012, when he united House Republicans around his controversial proposal to overhaul Medicare for future retirees. More recently, Ryan has been seeking out new ways to combat entrenched poverty. His ongoing efforts to identify market-oriented policy solutions are exactly what you’d want from a Mr. Republican. And though Ryan is still considered a potential presidential contender, he seems more interested in policy innovation and legislative coalition-building than in running another exhausting and dispiriting national campaign.

But Ryan isn’t the only candidate for Mr. Republican. In recent months, Mike Lee, the junior senator from Utah who defeated the veteran legislator Bob Bennett in a nomination fight that divided Republicans across the country, has emerged as something more than a tea party firebrand. Like Ted Cruz, Lee has not shied away from confrontations with party elders over tactics, like the fight to defund Obamacare.

Yet Lee has also emerged as the most vocal champion of a “conservative reform agenda,” focused not on the policy challenges that defined the Reagan era, but rather the thornier policy challenges facing the more diverse America of the 2010s, with its fragile families, bloated and unresponsive government and ongoing employment crisis.

In a largely unheralded speech at CPAC, Lee spoke of “America’s growing opportunity deficit”: of poor Americans trapped by dysfunctional welfare policies, cash-strapped middle-income families overwhelmed by the high cost of housing and a high-quality education and small businesses stymied by regulations that rig the playing field in favor of large incumbents.

Though Lee has only been in the Senate for a short period of time, he is building an ambitious policy portfolio that ranges from criminal justice reform to transportation to tax policy. He has also demonstrated a willingness to work with others. When the Tax Policy Center found that his first attempt at making the tax code friendlier for middle-income families with children would greatly increase the deficit, Lee formed a partnership with Marco Rubio to offer a new proposal that would tackle corporate taxes as well as individual taxes. One of the reasons Lee can form these partnerships is that he has no presidential ambitions, and as a Republican senator from conservative Utah, he recognizes that he can take risks other more vulnerable lawmakers can’t.

If the GOP grows strong in the post-Obama years, it won’t be because the party finds attractive presidential candidates in 2016 and beyond. Rather, it will be because of the intellectual groundwork that is being laid by party-builders like Ryan and Lee.

UCSF study falsely links e-cigarettes to smoking

March 11, 2014, 10:19 AM

Academics at the University of California San Francisco have used the 2011 and 2012 National Youth Tobacco Survey to fabricate a claim that “e-cigarettes are likely to be gateway devices for nicotine addiction among youth, opening up a whole new market for tobacco.”

Lead author Lauren Dutra provided that quote to the media in a UCSF press release touting the study.  Dr. Stanton Glantz was a co-author.  The study appears in the Journal of the American Medical Association Pediatrics.

The UCSF press release also contains a demonstrably false leading statement:

The study of nearly 40,000 youth around the country also found that e-cigarette use among middle- and high-school students doubled between 2011 and 2012, from 3.1 percent to 6.5 percent.

These percentages DO NOT refer to current e-cigarette use, but to ever using e-cigarettes, “even just one time.”  I have analyzed this data before (here and here).  E-cigarette use among middle- and high-school students did double between 2011 and 2012, from 1.0 to 2.0 percent.  The chart on the left provides a truthful picture of e-cigarette use.

The Dutra-Glantz study consisted of a dizzying array of statistical analyses that could not possibly support their claim that e-cigarettes are a gateway to cigarettes.  Unfortunately, the media is headlining this false claim around the globe.

The only positive note in this otherwise dark story is that, for the first time, Glantz’s fabrication was called out by the American Cancer Society and the American Legacy Foundation.  The ACS’s Dr. Thomas Glynn said in the New York Times that “the data in this study do not allow many of the broad conclusions that it draws.”

Dr. David Abrams of the American Legacy Foundation confirmed that the data do not support the authors’ conclusion.  “I am quite certain that a survey would find that people who have used nicotine gum are much more likely to be smokers and to have trouble quitting, but that does not mean that gum is a gateway to smoking or makes it harder to quit,”

There is more.  My chart shows that, although e-cigarette use increased, exclusive cigarette smoking plummeted, from 4 percent to 2.8 percent among middle-school students, and from 14.6 percent to 11.8 percent among high-school students.  This dramatic decline further undermines the Dutra-Glantz claims.

Anti-tobacco extremists have won this media skirmish against e-cigarettes, but at a price – their integrity.

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

R Street mocks Senate climate “talkathon” as hypocritical

March 10, 2014, 3:07 PM

WASHINGTON (Mar. 10, 2014) – The R Street Institute today mocked the Senate Democrat “talkathon” on climate change as a publicity stunt. Though R Street is unique on the right in acknowledging climate change and proposing conservative solutions to address it, the group derided the Democratic display as hypocritical given their vote just two weeks ago to gut reforms to the National Flood Insurance Program.

“Any rational response to climate change must start by ending taxpayer handouts for behavior that exacerbates its impact. Senate Democrats failed that test by voting almost unanimously for a bill gutting flood insurance reform,” said Andrew Moylan, senior fellow at R Street. Legislation passed by both the Senate and House of Representatives would delay or completely repeal several sections of the Biggert-Waters Flood Insurance Reform Act of 2012 directing FEMA to end subsidized rates for homes sold or mapped into flood zones.

“If senators are serious about addressing the negative impacts of climate change, they would not have voted to continue subsidies for those living in areas that would bear the brunt of rising sea levels,” Moylan continued. “They missed a rare opportunity to cast a vote that was pro-environment and pro-taxpayer and no gabfest on the Senate floor can change that.”

Moylan concluded by noting the peculiar sight of Democrats decrying inaction in a chamber they control. “Rather than pursue a thoughtful agenda, they chose instead to re-break the flood insurance program and mug for C-SPAN’s cameras mere weeks later.”

Congressional Data Coalition letter to House Appropriations Committee

March 10, 2014, 11:40 AM

Dear Chairman Cole, Ranking Member Wasserman Schultz, and members of the House Appropriations Legislative Branch Subcommittee:

We write on behalf of the  Congressional Data Coalition, a coalition formed in 2014 of citizens, public interest groups, trade associations, and businesses that champion greater governmental transparency through improved public access to and long-term preservation of congressional information.

The work of our coalition members reaches tens of millions of individuals and is relied on daily by members of Congress and their staff, legislative professionals, journalists, and citizens for timely, complete, and accurate information on the activity of Congress. For instance:

  • 250 members of Congress and more than 6,000 congressional staff use the mobile app “Capitol Bells” by Ted Henderson for vote alerts.
  • The mobile app “Congress” by the Sunlight Foundation, used to monitor congressional legislative activities, has been downloaded more than 500,000 times.
  • Data from GovTrack.us powers the district map widgets on more than 80 House member websites, DemCom (the House Democrats’ intranet), as well as Sen. Reid’s website’s vote tracker, and back-office dashboards in several Senate offices.

These products have been successful both in thanks to and in spite of the information made available by legislative branch offices and agencies. A 2012 report by the Cato Institute grading legislative branch data products identified successes, such as data on House floor debates and the Senate data on Senate membership, as well as failures, notably the status and text of amendments.

As you know, the House’s Legislative Branch Bulk Data Task Force submitted a report to the Committee on House Appropriations in December 2012 recommending “that it be a priority for Legislative Branch agencies to publish legislative information in XML and provide bulk access to that data.”

The task force’s recommendation reiterated a June 2012 statement by Speaker Boehner, Majority Leader Cantor, then-Chairman of the Subcommittee Crenshaw, and Oversight and Government Reform  Committee Chairman Issa which stated, “Our goal is to provide bulk access to legislative information to the American people without further delay…Bulk data is the next and a very important step.”

We commend the task force and the committee. Since the start of the 112th Congress, and especially since the start of the task force, we have seen significant improvements in congressional transparency, most notably with 1) the publication of floor and committee information on docs.house.gov, 2) the new Rules Committee website that makes it easy to see legislation under consideration for floor action, 3) House floor proceedings XML, 4) a series of conferences on congressional data and transparency, and 5) the new U.S. Code bulk XML data. These accomplishments addressed some of the concerns raised in the 2012 Cato report.

However, important information on bills has not yet been addressed. Our coalition members have used THOMAS.gov as their primary source of information for bill status for more than a decade. When THOMAS is retired at the end of 2014, products developed by our members and used by members of Congress, citizens, and others will stop working. Further, while we welcome the replacement of THOMAS by Congress.gov, neither THOMAS nor Congress.gov meets the House leadership’s pledge to make legislative data available. To illustrate the difference between a website and data, we note that no legislative branch office or agency makes available a spreadsheet that lists every bill introduced in the 113th Congress. As you may have experienced in your own lives, a spreadsheet is an important tool when working with large amounts of information. Bulk data is like that.

Some of our coalition members offered a path forward in a report submitted to the task force in August 2012, in which they recommended that legislative status information, which includes the status of bills, information on cosponsors, and so on be made available to the public in bulk, structured data formats such as XML Our members have requested this data regularly since 2007, but there is new urgency to our request as THOMAS is phased out this year. To provide an orderly transition from THOMAS to bulk and structured data a conversation must begin now.

Our request is relatively simple, inexpensive, and uncontroversial. Bulk, structured data is a cornerstone of many legislative information products such as House and Senate roll call votes and House and Senate bill text, which all use XML, as well as nearly all of the recent projects already completed by the task force. These methods also embody the “four key data practices that support government transparency” identified by a Cato Institute report.

Specifically, we ask the subcommittee to:

1) Direct the Library of Congress and the Government Printing Office to make timely bill status information available to the public in XML format. Such a requirement could take the form of:

 

As soon as practicable, and no later than 90 days after the enactment of this Act, the Librarian of Congress, in consultation with the Public Printer, the Clerk of the House of Representatives, and the Secretary of the Senate, shall make available to the public through the Internet and in a structured data format the legislative status data used by the Librarian to provide the information the Librarian posts on what is known today as the beta.congress.gov website.

 

2) Continue to support the work of the Legislative Branch Bulk Data Task Force. The House of Representatives has undertaken a historic effort to open Congress to the American people. More people are able to engage with Congress now than at any time in our nation’s history because of these digitization efforts. We welcome the opportunity to work with you to ensure Congress continues to provide crucial, timely legislative information to the public in formats that support analysis and reuse.

To discuss this further, please do not hesitate to contact us. More information on our coalition can be found at http://congressionaldata.org.

Yours,
Joshua Tauberer
President, Civic Impulse, LLC (GovTrack.us)
202-558-7227 / tauberer@govtrack.us

Daniel Schuman
Policy Director
Citizens for Responsibility and Ethics in Washington
Director, Congressional Data Coalition

on behalf of

The Congressional Data Coalition

Center for Responsive Politics
Citizens for Responsibility and Ethics in Washington
Civic Impulse, LLC (GovTrack.us)
Data Transparency Coalition
eCitizen.org / GovAlert.me
Ed Walters, CEO, Fastcase, Inc.
Free Government Information
Government Accountability Project
Gregory Slater
National Priorities Project
OpenTheGovernment.org
Project On Government Oversight (POGO)
Public Citizen
R Street Institute
Sunlight Foundation
TechFreedom
WashingtonWatch.com

A carbon tax to rule them all

March 10, 2014, 10:13 AM

From Triple Pundit

Finally, not many people would expect the Heartland Institute—long derided by climate advocates as the quintessential “climate denier”—to put its name anywhere near a carbon tax of any stripe. And it doesn’t. But Heartland’s former Center on Finance, Insurance and Real Estate, which spun-off in 2012 to form its own free-market group, does.

That group, the R Street Institute, has been shaking up the Washington, D.C. policy scene since it formed. R Street passionately believes in small government and the free market, and it went head-to-head with its progenitor on stage in a public debate over a carbon tax. At the end, in a room of 200 conservatives and libertarians, roughly 80 percent stood up to affirm that there is a strong conservative case for a revenue-neutral carbon tax.

Flood insurance a key issue in Louisiana Senate race

March 09, 2014, 10:40 AM

From The Advertiser:

“Amusingly to me, both Bill Cassidy in the House and Mary Landrieu in the Senate expressed annoyance when we pointed out the inconvenient truth that Louisiana Senate politics has been driving a great deal of this,’’ said Andrew Moylan, a senior fellow at the R Street Institute, a libertarian think tank.

 

Republicans dip toes in TV reg reform waters

March 06, 2014, 4:34 PM

Just when it seemed that Republicans might take the plunge in reforming outdated retransmission consent laws, it sounds like they found the water colder than expected and have settled on just a few tweaks around the edges in a bill reauthorizing STELA, the Satellite Television Extension and Localism Act. This all played out rather quickly and to the surprise of many, as House Communications and Technology Subcommittee Chairman Greg Walden , R-Ore., had previously signaled that he’d pursue a “clean” STELA reauthorization without changes to retrans.

You might remember some of my previous writing on an effort by Rep. Steve Scalise, R-La., to dismantle our archaic television regulatory structure piece by piece. His excellent Next Generation Television Marketplace Act would have repealed entirely retrans and related preferences while also eliminating compulsory licensing and ownership restrictions for broadcasters. This bill, in my view, takes the right approach of substantially reforming the ill-fitting rules that impact both sides of television negotiations: content and service provider. By getting rid of most of the relevant regulations that distort the market, the Scalise bill would have freed carriage negotiations of government meddling, thus turning them into truly private negotiations between private entities.

The most obvious vehicle to which such reform would be attached is STELA, the satellite TV law that’s coming up for reauthorization this year. And while full-scale retrans and licensing reform didn’t make it in, early reports did indicate that a few significant related changes would be made, most notable among them elimination of the rule forcing service providers to carry stations that elect retransmission consent on the so-called “basic tier” of programming that all subscribers must buy.

As recently as Monday, the word was that this provision was in the STELA draft, but what a difference a few days of concerted lobbying and expensive PR can make! Word today is that the basic tier provision is no longer in the draft after broadcasters cried foul. What is still in, however, as best we know is elimination of a regulation preventing service providers from blacking out signals during the “sweeps” period where ratings are measured. In addition, a provision of the draft will allow service providers to negotiate retransmission agreements jointly with certain stations.

These changes would be significant because the current regulations artificially reduce a service provider’s bargaining power. The retransmission consent regime ensures that Uncle Sam is a central player in these negotiations and the other rules that help govern the process essentially place government’s thumb on the scale between the two parties. The basic tier and “must carry” rules reduce their ability to choose which content to distribute, or not, and how that content is structured for customers.  The sweeps rule prevents them from dropping a signal for fully one-third of the year, while broadcasters are allowed to pull theirs whenever they choose (like, say, right before the World Series). “Network non-duplication” rules prevent them from cutting deals with broadcasters outside their local area.

The result of this meddling is likely making service more expensive and less efficient for consumers, as some negotiations lead to blackouts or exceptionally high retransmission fees. That’s why it’s encouraging to hear House leaders begin talking about reforms that would repeal outdated rules in service of getting us closer to the kind of free market negotiations that should reign in television service (and just about everywhere else). Though they’ve scaled back their ambitions somewhat, this is at least a worthwhile start to address a known issue on a relevant bill that’s moving through Congress this year. I would very much like to keep peeling the onion of misguided regulations to get to the center, but you’ve got to start somewhere and the crusty brown stuff on the outside seems as good a place as any.

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

R Street announces launch of Unfair By Design project

March 06, 2014, 1:08 PM

WASHINGTON (Mar. 6, 2014) – The R Street Institute today announced the launch of Unfair By Design, a project seeking to make the design patent system more transparent and less susceptible to frivolous lawsuits.

Recent legislation in Congress has focused on creating a more open and harmonized patent system, but these bills do little to address flaws in the design patents system, which has been growing rapidly in number of applications and grants. Under current infringement standards, if one design element is substantially similar to a patented competitor, one can be held liable for potentially hundreds of millions in damages, even if the element is something as simple as rounded edges on a smartphone.

“The application system for design patents has long been deeply flawed and opaque, a fact which has become more disconcerting in recent years as courts have significantly expanded the definition of what counts as infringement. Serious questions can be raised about whether design patents are needed at all, but at the very least, the process should be changes to ensure fewer frivolous and anticompetitive patents are granted,” said Zachary Graves, digital marketing director at R Street. “We’re excited about the formation of this project and hope to welcome new partners on board.”

Graves went on to describe how Congress could affect real change with to the patent system and named three principles for design patent reform: More transparency in the application and publication process, curbing abuse and “evergreening” of design patent applications and education about the design patents process for lawmakers.

“We are heartened that Congress and the Federal Trade Commission are addressing this important issue. These are steps in the right direction, but we must ensure that design patent reform is not overlooked,” Graves said.

For more information, please visit www.unfairbydesign.org

Design patents are a poor match for high fashion

March 05, 2014, 4:36 PM

As the lengthy Hollywood awards season has shown us, fashion – especially red carpet fashion – is rife with faux pas, but none so great as “stealing the look.” It is considered terrible form to shop for your own paparazzi-ready gown in the pages of In Style magazine’s party circuit coverage, and worse form to look better than the original wearer. It doesn’t stop most rising starlets — especially the ones interested in making a name for themselves in a “who wore it better?” piece — but it never quite improves anyone’s situation.

Fashion itself is no different. Designers strive to inject fantasy and innovation into their fall ready-to-wear and couture lines, featured weeks ago in New York, last week in London and this week in Paris. The major fashion houses set the stage for style in the seasons to come. And then, consumers interested in being wallet-friendly fashionistas have created an ever-expanding market of “knockoff” fashion, allowing them to duplicate runway looks for a fraction of the price, shopping in their local mall instead of on Fifth Avenue. In an economy as unpredictable as ours, the market for consumer-driven fashion from stores like Forever 21, Zara, H&M, TopShop and ASOS seems nowhere near fading. (Although Forever 21 has faced a bevy of lawsuits, accused of copying the work of Anna Sui, 3.1 Phillip Lim and others.)

So how do designers, who work all year long in their chosen artistic field, protect the designs they create and preserve their own luxury? At least one group of designers has suggested expanding the scope of design patents — those patens given out to protect a product’s new and novel utility — into the realm of fashion, with the intent to protect their spin on age-old products, ready-to-wear and accessories, as a tech company would a new cell phone design.

The idea is, at least on its face, complex. Fashion rarely makes a leap forward in technology. Although there are firms working to make clothes more responsive to the human body, and even working to provide a healing and developing aspect to what you wear, most designers are merely building off basic constructions available to them since humans began crafting the first rudimentary clothing from fig leaves and animal skins (of course, fashion designs with a novel utility would already be eligible for utility patents, rather than design patents).

While a few designers have managed to invent a new clothing option – Diane von Furstenberg’s wrap dress comes to mind, celebrating it’s 40th anniversary at this year’s fashion week – those designers have often seen their work copied not by discount fashion retailers but by other high-end designers. Just last week, Roberto Cavalli had a small meltdown over Michael Kors’s Fall 2014 collection, accusing the Project Runway mentor and his million-dollar commercial fashion operation of “stealing” the works of other brands, including Cavalli’s, Celine, Hermes, Louis Vuitton and Tory Burch.

And designers who would most need to protect their work — upcoming and independent labels whose clothes are knocked off most often by consumer-driven fashion entities — would hardly be able to afford the time and fortune that initial paperwork and follow-up litigation would cost; no designer can afford to wait months for a single design to pass through a government initiation process, when runway shows are a bi-annual staple.

There are, of course, already means at a designer’s disposal, namely copyright protections, that can afford some measure of control over who gets to sell a knockoff of your design. While design patents have been and would be notoriously difficult to prove, copyrights – which protects an artist’s control over their work in print – have been litigated successfully, including against discount fashion retailers. Forever 21, often the victor in suits leveled by top brands seeking to prevent the store from selling “designer inspired” garments (such a regular occurrence they’ve noted that it’s part of their business strategy and a budgeted expense), was easily on the losing end of a lawsuit involving a perfectly copied fabric pattern, swiped from indie fashion house Feral Childe.

Copyright also has more lenient boundaries than the existing patent structure. As the world of digital media expands, so has the world of copyright, as musicians, writers and photographers look to harness the power of its protection on the Internet. Visual works, like Feral Childe’s textile designs, logos like Louis Vuitton’s eponymous “LV” and Burberry’s iconic tartan have all earned copyright protection alongside their luxury status, a protection that has served to preserve their status as luxury brands. Considering fashion designs “visual works” for the purpose of copyright protection could do the same for up-and-coming labels looking to make a unique mark on the field, while also preserving fashion’s process of marketing and innovation, even to discount markets.

Slight changes, derivative products and unique takes inspired by iconic designs are still available to designers looking to build on fashion’s storied history. After all, the future of fashion would not look the same without modern touches to Givenchy’s little black dress, Dior’s cinched-waist feminine suit or Diane von Furstenberg’s wrap dress, even as those fashion houses look to the seasons ahead.

Some designers have, of course, headed off the trials of consumer-driven discount fashion by inking deals with large-scale retailers. Chanel’s Karl Lagerfeld, for example, has embarked on partnerships with discount fashion retailer H&M and retail powerhouse Macys. Missoni cemented a record-breaking partnership with Target with products that sold out across the globe, and ready-to-wear staples like Nanette Lepore and Vera Wang are now working with JCPenny and Kohl’s respectively. Market-friendly strategies that anticipate consumers’ needs and wants, while preserving the good name of the fashion house and building consumer demand for the same designers’ works at higher price points. By embracing the free market, some designers have bypassed the need for litigation altogether.

In short, the cumbersome, complicated and time-consuming nature of design patents makes them a poor match for the fashion industry. Between an existing litigation rubric that uses copyright law to preserve the most iconic aspects of fashion design and being as innovated in marketing as they are on the runway, designers can adapt to the future, meet consumer demand and build buzz for their brands without resorting to the very un-modern federal government.

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

Congress shouldn’t overlook design patents in its push for reform

March 05, 2014, 10:49 AM

With legislation passed in the House, the U.S. Senate is set to move forward on multiple bills to combat the costly problem of patent trolls. While current proposals address issues with transparency, patent quality and litigation procedure, they do little to address growing problems with “design patents.”

What most people imagine when they think of patents are “utility patents,” which offer protection for new technologies as a way to foster innovation. But intellectual property law also extends protection to the non-functional elements of a product’s design. This can include the shape of a camisole or generic-looking fuzzy slippers. In practice, an item’s shape and ornamentation often is patented to restrict competition, rather than to protect genuine innovation.

Moreover, these design patents have an application process that differs from utility patents in ways that are sometimes problematic. Where utility patent applications allow lots of time for public comment and input, design patent applications are not published before they are granted and have no mechanism for feedback about prior art.Where the terms of utility patents are dated to the day the application was filed, design patents are dated to the day they are issued. This quirk creates a loophole that allows a design patent applicant to enjoy perpetual protection by simply filing a series of “continuations” in conjunction with the patent application.Design patents once were considered fairly unimportant, but circumstances have changed. In addition to the Hague agreement that took effect last year, the 2008 decision in Egyptian Goddess vs. Swisa did a lot to strengthen design patents. That decision made design patent infringement much easier to prove by replacing the “point of novelty” test with a test that finds, if an ordinary observer would find the designs of two products to be substantially the same, then the patent is infringed. Design patents also are cheap, easy to procure and, unlike utility patents, require no maintenance fees, making them attractive to firms who wish to bolster their patent portfolios.

Under current infringement standards, if your fuzzy slippers, your camisole or – more crucially — the rounded edges on your smartphone are substantially similar to some patented competitor, you can be held liable for potentially hundreds of millions in damages. This is particularly problematic when there is no effective process to raise the objection that certain patented designs are not novel, and may have already existed for decades.

These differences also pose a problem for Congress as it drafts patent reform legislation. At The Faculty Lounge, professor Sarah Burstein highlights some unintended consequences of current patent reform proposals, which overlook how design patents work. The House’s patent bill, for instance, requires putative patent trolls to do things that either aren’t possible or don’t make sense in design patent cases.

Bringing design patent applications out into the open, like their utility patent cousins, would do a lot of good. It would bring down the number of lawsuits by exposing frivolous patent applications. In turn, this would enable more businesses to invest in jobs and development, rather than being forced to pay settlements for infringement.

Congress should look to address these problems as it moves forward with efforts to reform the patent system. To help organize these efforts, my colleagues at the R Street Institute have launched a new coalition called Unfair by Design. Check it out at unfairbydesign.com.

House passes flood insurance bill

March 05, 2014, 10:38 AM

From the Greenville News:

“Everybody we talked to, virtually without fail, recognize that these delay and repeal efforts are damaging and counterproductive,” said Andrew Moylan, a senior fellow at the R Street Institute. “Rushing a vote the way that they are is an indication that in their heart of hearts, they know it’s the wrong thing to do.”

The one budget proposal worth seizing

March 05, 2014, 10:34 AM

President Obama’s new budget for fiscal year 2015 is almost entirely free of surprises. The Obama administration supports a number of large tax increases, most but not all of which target high-income households, and so the budget assumes that revenues will grow faster than expenditures over the coming decades and that debt levels will decline. One key reason the White House is able to paint so rosy a picture is that its economic assumptions are different from those of the more buttoned-up Congressional Budget Office. Specifically, the Office of Management and Budget, which is responsible for crafting the president’s budget proposal, maintains that the U.S. economy will be 2 percentage points bigger in 2024 than it will be in the CBO’s projection.

This might not sound like a huge difference. But it matters more than you might think. The CBO has devoted considerable time and effort to understand why its 2010 prediction of a robust economic recovery failed to materialize, and it found that the post-crisis recovery really has been as dismal as it feels. Sluggish capital investment has contributed to sluggish productivity growth, and the labor market recovery hasn’t been strong enough to draw the long-term unemployed back into steady jobs.

With this sobering picture in mind, the CBO has lowered its estimate for America’s economic growth potential over the next decade to a mere 2.5 percent, far lower than the 3.3 percent that’s been the average growth rate for the U.S. economy since 1950. CBO projects that real GDP growth will actually fall to 2.2 percent in the second half of the next decade, which is to say they assume things will get worse rather than better. It turns out that even quite small changes, on the order of a 0.1 percentage point difference in the average annual growth rate, can have enormous fiscal consequences. So it’s very noteworthy that between 2010 and 2014, the CBO’s forecast for average real GDP growth over the next decade has gone from 3 percent to 2.5 percent.

How does the White House justify its more optimistic assessment? It seems that the Obama administration is counting on comprehensive immigration reform to deliver large economic benefits. The CBO has estimated that immigration reform could increase the size of the U.S. economy over the next decade by as much as 3 percentage points. It remains to be seen if the benefits of the immigration reform favored by the president will outweigh the benefits. I’m skeptical. It is easy to imagine that a more selective, skills-based immigration policy could be an enormous boon to the U.S. economy, as the economists Xavier Chojnicki, Frédéric Docquier and Lionel Ragot have suggested. Yet the president favors a substantial increase in less-skilled immigration that could prove quite expensive in an era of rapid technological change.

Regardless, there is no question that factoring in the potential benefits of immigration reform is a new development in presidential budgeting. It could speak to the fact that realistic estimates of America’s growth potential have fallen so much over the course of the Obama presidency that the president’s staffers felt an obligation to get creative.

There is, however, one very promising new initiative in the president’s budget proposal. He calls for a large expansion of the earned income tax credit (EITC), a program that greatly increases the incomes of poor households headed by a working adult. As it currently stands, the EITC is far more generous to parents than it is to childless workers. The unfortunate result is that the wages on offer to many childless adults, and in particular to childless men, are not high enough to draw them into entry-level jobs that can serve as a stepping stone toward economic independence. A number of activists, on the left and on the right, have suggested that an EITC that is more generous to childless workers might make work attractive to men with modest skills, and this might, in turn, make them better marriage partners and, eventually, better parents.

Unfortunately, the Obama administration has also vocally championed a substantial increase in the minimum wage that, unlike its proposed expansion of the EITC, is actually very poorly targeted. The CBO has found that while 19 percent of the income gains associated with increasing the federal minimum wage to $10.10 would go to households earning less than the poverty level, 29 percent would go to households earning more than three times the poverty level. The benefits of President Obama’s EITC expansion, in contrast, would flow almost entirely to the very poor, who need it most.

If anything, the president’s budget proposal is a reminder of the weakness of the U.S. economy. If America’s growth potential were even slightly higher — if it even came close to what the CBO assumed it would be at the start of the Obama years — it would be far easier to carry the growing burden of caring for older Americans and far easier to shrink our public debt.

House votes to curtail flood insurance rate hikes

March 05, 2014, 10:18 AM

From the Miami Herald:

Andrew Moylan, a senior fellow at the R Street Institute, a libertarian group, said his group’s goal was to move from a government-run flood insurance program to the private market. But until that happens, there should be a means test so that people who can’t afford the insurance get help and the wealthy pay their own way, he said.

R Street deeply disappointed by House flood insurance bill

March 04, 2014, 7:16 PM

WASHINGTON (Mar. 4, 2014) – The R Street Institute is deeply disappointed by today’s passage of HR 3370 in the House of Representatives. The bill represents a significant step backward from the much-heralded Biggert-Waters Flood Insurance Reform Act of 2012, which was meant to move the National Flood Insurance Program toward financial solvency.

HR 3370 undermines the current law’s goal of ending taxpayer subsidies for the roughly one-fifth of NFIP policyholders who receive them. It would extend into perpetuity subsidies for roughly 700,000 older primary homes, even if they are resold by the current owner. The measure also rolls back rate increases for properties that have been resold since the law was passed in mid-2012.

The bill as passed also repeals entirely the section of the flood insurance reform law that calls on FEMA to update its maps. For most NFIP policyholders, this bill, along with legislation already passed by the Senate, will result in higher rates than they would otherwise pay, as increases for remapped properties that were paying insufficient rates would be offset by reductions for other properties in the program.

Complying with these changes will keep FEMA from ever being able to charge actuarially sound rates for flood insurance, which in turn will keep the NFIP in significant debt to the taxpayers as more bailouts are needed to deal with destruction from major storms similar to Hurricane Katrina and Superstorm Sandy.

“This bill as passed does severe damage to the goal of making the NFIP financially solvent,” said R Street Senior Fellow R.J. Lehmann. “With the program in debt to the taxpayers to the tune of $25 billion, this bill makes clear that members are unwilling to stand behind the free-market principles and fiscal responsibility that the House leadership claims to embrace.”

Lehmann added that the outcry to undo Biggert-Waters has been driven by wildly inaccurate or exaggerated claims about the impact of rate increases. For instance, the phase-out of subsidies for older properties – which see premium increases of 25 percent a year until they reach risk-based rates – currently only affects second homes, business properties and about 9,000 properties that have been completely destroyed more than once. It does not affect primary homes unless the owner resells the property or allows his or her policy to lapse.

Moreover, according to FEMA data, as of July 31, 2013, 97.9 percent of the 5.6 million policies within the NFIP paid rates that were less than $5,000. Only seven properties in the entire United States had rates that were greater than $20,000.

“In this environment of budget cuts and growing deficits, the Biggert-Waters Act demonstrated a commitment to fiscal responsibility for a program that has been operating in debt since 2005. Gutting those reforms will taje us further into the debt that House members always claim to want to reduce.”

The bill now moves to conference with similar legislation passed by the Senate.

Letter to Washington Legislature on e-cigarettes

March 04, 2014, 5:07 PM

Dear Speaker Chopp,­­­

In the next few days, you and your colleagues will again consider measures that impose significant new taxes on e-cigarette products and will serve to make their use nearly as costly as those of cigarettes. I urge you to approach these proposals with extreme skepticism.

E-cigarettes are addictive and their use is certainly not good for one’s health. Measures to restrict their availability to children and place other limits on their sale are certainly justified.  But a huge increase in their taxes may well do more harm than good for public health.

As the attached paper by Dr. Joel Nitzkin demonstrates, they hold significant potential to improve public health if current smokers switch from tobacco cigarettes. As he writes in the included paper:

“A flood of new scientific papers relating to these products suggest the possibility that e-cigarettes may be the greatest advance in reducing tobacco-attributable illness and death in decades. Hugely higher taxes on e-cigarettes could, for all intents and purposes, urge people to continue using vastly more harmful tobacco cigarettes. “

Dr. Nitzkin, a long-time anti-tobacco crusader, is a senior fellow of the R Street Institute and a former public health commissioner of the State of Louisiana.  His opinions, and the findings in the scientific literature that he reviews, are certainly worth your attention.

The regulation and control of e-cigarettes is an important issue. I urge you to read the attached paper and reach your conclusion about e-cigarettes based on the best available evidence.

Yours sincerely,

Eli Lehrer

President

R Street Institute

R Street concerned about protectionist reinsurance tax

March 04, 2014, 2:16 PM

WASHINGTON (March 4, 2014) – The R Street Institute today expressed concern about a plank in the White House’s proposed 2015 budget that would impose protectionist taxes on legitimate reinsurance transactions made by affiliates of non-U.S. companies.

The proposal, which the White House estimates would raise $7.57 billion over the next decade, would disallow the deduction for certain reinsurance transactions between domestic insurers and reinsurers and affiliates that are based offshore.

“This proposal violates the fundamental principle that, in a free and open society, similar parties and similar transactions should be treated equitably, regardless of where a person is from or where a company is headquartered,” R Street Senior Fellow R.J. Lehmann said.

The proposal – and similar legislation from Sen. Bob Menendez, D-N.J. and Rep. Richard Neal, D-Mass. – would particularly impact states like Florida and California, which face significant natural disaster risks and depend on insurance and reinsurance capacity from firms headquartered outside of the United States. A report from the Cambridge, Mass.-based Brattle Group estimated taxing such transactions would cost consumers between $110 and $140 billion over the next decade.

Earlier this year, R Street joined with seven other taxpayer and free-market groups – including Americans for Tax Reform, National Taxpayers Union and Americans for Prosperity – to send a letter to the Senate Finance Committee opposing these sorts of protectionist tax proposals.

Sen. Mary Landrieu endorses House flood insurance bill after ‘affordability’ provisions added

March 04, 2014, 11:09 AM

From the Times-Picayune:

Landrieu lashed out at a statement last week by a leader of the conservative R Street Institute, that congressional leaders are moving away from the Biggert-Waters Act for political reasons, with Democrats wanting to help Landrieu’s re-election efforts and Republicans wanting to assist her main GOP challenger, Rep. Bill Cassidy, R-Baton Rouge. A lot of the credit, Landrieu said, goes to influential groups representing homeowners, real estate agents, homebuilders, banks and others who worked hard to convince lawmakers to take action. All acted to “represent their industries,” and interests — their goal wasn’t to try “to get me elected or Bill Cassidy elected,” Landrieu said.

The limits of consumer choice

March 03, 2014, 2:47 PM

Most conservatives, and even some liberals of the dwindling “New Democrat” variety, put near-religious faith in the maxim that greater consumer choice would improve nearly every heavily regulated service. They’re usually right. But examining a case where the benefits of consumer choice haven’t materialized as envisioned—in the consumer market for natural gas—may offer lessons to conservatives and liberals alike as they consider further reforms to the far more consequential health care market.

For many products and services, the benefits of choice are obvious. Within living memory, both landline telephone service and cable television were considered “natural monopolies” that couldn’t support more than one provider in any area. When technology and deregulation changed the equation, competing services proliferated and prices dropped steeply. Deregulation of trucking, freight railroads and air travel served to lower prices and increase competition a great deal, while generally squeezing profits for incumbent players.

In the market for home delivery of natural gas, 15 states (including 6 of the 10 largest) now allow consumers to choose their providers and shop for lower prices. But except in Ohio—where one major delivery utility has exited the gas-purchasing business altogether and another actively encourages its customers to buy from other suppliers—more than 85 percent of natural gas customers don’t bother to shop around. And when they do, the choices aren’t impressive. When I looked to switch my provider in Northern Virginia, several companies advertised as offering competitive service didn’t even answer my inquiries. Of those that did, the “best choice” offered me a savings that would amount to less than $5 per month.

This is a pity, because vigorous efforts to get more people to use gas at home would yield significant economic and environmental benefits. Gas heat usually costs less and is almost always more reliable than electric heat. It’s also cleaner by almost every measure than any other fossil fuel. But the percentage of houses in urban areas with natural gas service is actually lower than when it was used for lighting 100 years ago.

Given these facts, one would expect gas providers to be doing blanket advertising on television, sending out mailers and competing with each other to benefit consumers. But outside of the Northeast, the only region of the country where home heating oil is still common and the industry has for years been making a major “convert to gas” push, one doesn’t see this sort of marketing. No single reason can explain why. Indeed, gas industry trade associations I contacted were reluctant to give detailed explanations on the record. Four factors, however, stand out: lack of genuine choice, opaque pricing, generally high satisfaction with current service and the direction of capital investment.

The lack of genuine choice may be the most obvious barrier. Natural gas is a commodity, with prices largely determined in the global markets. Since the companies that sell gas in competition with existing utilities don’t provide duplicate distribution infrastructure, there are few if any “features” they could compete on. Since gas is all the same, they can’t even compete (the way some electric power marketers do in some states) on the environmental benefits of their service.

Pricing is also opaque. Like medical bills, but unlike bills for telephone and credit card services, natural gas bills are subject to few national standards. The electronic bill I get from Washington Gas simply contains an “amount due” with no explanation of how much I am paying for gas service. (I had to call for this information.) Natural gas “deregulation” has, like many other forms of deregulation, affected only part of the equation. While the price of natural gas itself floats up and down, the pipes that distribute the gas are so expensive to build that few property owners can actually choose which company provides them. The infrastructure demands create “natural monopolies.” As such, government bodies set regulations determining how much the companies who own them can charge to carry gas.

Consumer satisfaction with natural gas service is also very high. The system is so reliable that the Federal Energy Regulatory Commission, which monitors electric and gas grid reliability, doesn’t even keep statistics on gas outages. Most Americans probably can’t even name their local natural gas distribution company or they will name their electric utility (often a different entity) when asked.

The direction of capital investment may play another role. While the American Gas Association says its members spend $19 billion a year on infrastructure, the glamour and venture capital go toward efforts that unlock new deposits via hydraulic fracturing, as well as efforts to expand the use of natural gas to replace coal for generating electric power.

Since more and more gas is being used to generate power, the cost and environmental benefits of using gas and electricity are fast converging. For good reasons, much more technology, money, and brainpower go into better ways to get gas out of the earth and use it cleanly for electricity than into finding new ways to pump it into homes for heat and cooking.

A lot of these factors have analogues in the health care market. Just as gas companies generally don’t post their prices prominently, neither do doctors. For all of the political fighting that surrounds health insurance, likewise, most people are happy with what they have. According to a Gallup poll taken last year, among people earning over $75,000, a group that overwhelmingly uses private providers, 92 percent were satisfied with their own coverage. Overall satisfaction was a still quite respectable 69 percent.

Likewise, capital investment in medicine emphasizes advanced technology, research, and the discovery of “miracle pills”​—all ​areas in which the United States undoubtedly leads the world​—​rather than the low-margin, low-glamour business of improving day-to-day care. Although benefit packages once differed a great deal​—​from “mini-med” plans that provided little real coverage to so-called “Cadillac” plans that erased all bills​—​the strict benefit mandates under Obamacare have tended to make health insurance into much more of a commodity.

This offers lessons for both liberals and conservatives intent on health care reform. For all its abundant flaws, Obamacare does offer more choices to small businesses and sicker individuals, who now can buy their coverage through the exchanges and choose between plans (at least when the websites are up). Employees of small businesses, who previously were stuck with whatever plan their employer chose, now have a menu of options in many cases. This hasn’t produced much in the way of lower premiums, at least in part because the health market now looks a lot like the natural gas market.

But this also provides reason to think that conservative health reform plans that emphasize choice and consumer empowerment won’t produce vastly better results, either. The old system with fewer benefit mandates wasn’t a great deal better than the new system with more mandates. Likewise, unless pricing becomes more transparent, there’s little reason to think that simply offering consumers more choices—absent some way for them to parse the differences and weigh the costs—will make a big difference.

The natural gas market and the health care market, of course, aren’t mirror images. Gas is truly a commodity, while health care quality can differ a great deal between providers, insurers, and regions of the country. But choice alone is not a panacea.

‘Innocence of Muslims’ ruling raises host of questions

March 03, 2014, 1:16 PM

From Politix:

Remember the video that President Barack Obama cited as the reason behind the attacks in Benghazi? The 9th Circuit Court of Appeals has voted 2-1 to order the video be taken down from YouTube – though not for the reasons you may expect…

Republican congressman to oil and gas industry: ‘No more subsidies’

March 03, 2014, 1:03 PM

From Greentech Media:

Some recent history: in 2011, the environmental advocacy groups Friends of the Earth and Public Citizen partnered with climate deniers at the Heartland Institute (which received funding from the Koch Brothers) under the watchful eye of the Taxpayers for Common Sense to produce the non-partisan Green Scissors report. It outlined wasteful government subsidies totaling $380 billion over the next five years

In 2012, the free-market R Street Institute contributed to the Green Scissors report and identified wasteful and environmentally harmful programs that could cost taxpayers almost $700 billion over the next decade. This does not include Department of Defense expenditures that are for protecting global oil trades — something we don’t do for coal.