January 2012

Waxman Joins Markey Again to Sponsor a Terrible Bill

by Elizabeth Jacobson on September 17, 2009

in Tech & Telecom

You know them from the cap-and-trade climate bill that failed to generate funding for Obama’s proposed health reforms.  Now, they’re joining forces again. Rep. Henry Waxman (D.-CA) announced Thursday that he will co-sponsor a net-neutrality bill introduced by Rep. Ed Markey (D.-MA).  Misleadingly named the Internet Freedom Preservation Act, Waxman-Markey v 2.0 would hold Internet Service Providers legally responsible for ensuring that every user has access to whatever they want, whenever they want, regardless of the actual resources available.

While Internet firms have in recent years embraced a pricing scheme that renders users unaware of the marginal cost of their surfing habits, the unfortunate fact is that bandwidth isn’t free. Somebody has to pay for it. U.S. consumers seem hesitant to embrace a metered pricing system, which could theoretically be the most efficient and “fair” way to bill users (though it seems doubtful that many people would stream video online if they faced an astronomical monthly broadband bill). Somewhere in between those two extremes lies a pricing/usage model that the ISPs are trying to find.  They ought to have the ability to experiment to find out what works. And net neutrality advocates should remember that Comcast, the last company that tried implementing an unpopular network management scheme, was scolded by the FCC. As the CNET article above notes, after a public backlash, Comcast quietly stopped the practice. Preventing network administrators from managing traffic on their own networks will lead to either congestion and poor service or prohibitively expensive prices. Under a rule that prohibits innovation in network management schemes, congestion can only be fixed by increasing overall bandwidth, which ultimately leads to higher prices for all consumers.

WaPo on CEI’s FOIA release – biasing by innuendo

by Fran Smith on September 17, 2009

in Environment, Global Warming, Politics as Usual, Sanctimony

Today the Washington Post carried a follow-up article on CEI’s release of Treasury’s estimates — through a FOIA request –  on the cost of cap-and-trade legislation.  The article by Steven Mufson was quick to find and quote those who said CEI’s interpretation of those costs – an extra $1,761 each year for each American household – were built on false assumptions.  What was more interesting about the article, however, is the subtle slant the reporter gave in his depiction of both CEI and Declan McCullagh, who broke the story.

First, in its only description of CEI, the article states:  “. . . Competitive Enterprise Institute, which questions whether human and industrial activity is linked to global warming. . . .”  That certainly doesn’t describe CEI and the many issues it works on nor its approach to global warming.  Why didn’t the reporter depict it as “a free market policy group” and then go on to describe its global warming position accurately?

Second, the article disparagingly referred to Declan McCullagh as “A CBS News blogger named Declan McCullagh.”  Now, McCullagh is a respected and accomplished journalist, and he is listed on the article referenced by WaPo as “a correspondent for CBSNews.com.” Here’s what his bio says:

Declan McCullagh is a senior correspondent for CBS News’ Web site. He became the chief political correspondent for CNET News in 2002, where he remains a frequent contributor, and lives in the San Francisco area after spending over a decade in Washington, DC.

An award-winning journalist, McCullagh writes and speaks frequently about technology, law, and politics. From 1998 to 2002, he was Wired’s Washington bureau chief. Previously he was a reporter for Time Magazine, Time Digital Daily, and The Netly News, as well as a correspondent for HotWired. At CBS, McCullagh writes for the Taking Liberties section, the successor to a weekly column he started in October 2008 titled Other People’s Money.

Guess straight-forward descriptions didn’t fit what Mufson and the Post wanted to get across.

Public Option Is Not The Worst Aspect Of ObamaCare

by Greg Conko on September 17, 2009 · 1 comment

in Culture, Healthcare, Nanny State, Personal Liberty, Regulation, Zeitgeist

Much of the hullabaloo over President Obama’s health care speech to Congress last week focused on his endorsement of a “public option” — that is, a government-run, not merely government regulated health insurance plan for the non-elderly middle class.  Throughout the August congressional recess, it appeared as though the White House was ready to abandon the public option, since that was a major source of contention among congressional Republicans, Blue Dog Democrats, and a sizeable portion of the American public.  In his speech, Obama paradoxically came out firmly in support of a public option, while acknowledging that his support was not so firm that he wouldn’t be willing to bargain the public option away.

Still, the public option is not the worst aspect of the various Democratic health reform proposals, the mandatory purchase requirement is.  Under each of the three bills moving through Congress, every person living in the United States would be required by law to have insurance.  And, if your employer doesn’t provide you with it, you’ve got to buy it yourself or pay a fairly stiff monetary penalty.  What’s more, each of the proposals would eliminate some of the options that are available now — particularly the low-cost insurance plans that cover only catastrophic health events and have substantial cost-sharing features.  And, depending on which bill would eventually be enacted into law, Congress, state insurance commissioners, and/or a federal Health Choices Commissioner would be empowered to determine whether any given plan even “qualifies” as health insurance.  The end result will be higher, not lower costs, for almost every person living in the country.

President Obama knows this, of course.  During the presidential campaign, he roundly criticized Hillary Clinton for proposing essentially the same thing.  As today’s Wall Street Journal points out:

“The political irony here is rich. If liberal health-care reform is going to make people better off, why does it require “a very harsh, stiff penalty” to make everyone buy it? That’s what Senator Obama called it in his Presidential campaign when he opposed the individual mandate supported by Hillary Clinton. He correctly argued then that many people were uninsured not because they didn’t want coverage but because it was too expensive. The nearby mailer to Ohio primary voters gives the flavor of Mr. Obama’s attacks.

And the Baucus-Obama plan will only make insurance even more expensive. Employers will be required to offer “qualified coverage” to their workers (or pay another “free rider” penalty) and workers will be required to accept it, paying for it in lower wages. The vast majority of households already confront the same tradeoff today, except Congress will now declare that there’s only one right answer.”

Firing Blanks on FOIA Part II

by Iain Murray on September 17, 2009

in Economy, Energy, Environment, Global Warming, International, Regulation

In his update to his post, Declan McCullagh notes an objection by the Center for American Progress:

The fourth objection is the most compelling. The Center for American Progress writes: “The potential benefits of clean energy legislation far outweigh the modest costs.” That’s a reasonable cost vs. benefit calculation, and it includes the claim that even with the extra taxes, cap and trade is so vital to America, it’s still worth it.

That’s the right approach to take: it would be a very good thing if all federal regulation were subject to a cost vs. benefit analysis. For example, if rising temperatures are significantly harming the planet, and cap and trade would reduce greenhouse gases enough to slow the rise, that would be a real benefit. But the Center for American Progress never actually makes that argument, and as CEI senior fellow Christopher Horner says: “Nobody has ever said this will change the temperature. It won’t.”

Well, we’ve already covered that one.  Even taking the most favorable analysis to WaxKey, the costs to Americans massively outweigh the benefits to them.  Here’s my post from a week ago:

There’s a new cost:benefit study from New York University Law School’s Institute for Public Integrity that, its authors claim, shows that, “From almost any perspective and under almost any assumption, H.R. 2454 [Waxman-Markey] is a good investment for the United States to make in our own economic future and in the future of the planet.”  A good investment for the US? Really?

The authors recognize that the benefits they find are global, while the costs are located in the US.  So let’s see what benefits accrue to US citizens and at what cost. (I am working with the authors’ figures here, which derive from the EPA, and are significantly different from the figures provided by such groups as the Heritage Foundation or the American Council for Capital Formation, which find much, much higher costs.)

Highest possible benefit = $5.2 trillion / 6 billion people = benefits of $866 per person

Cost to US citizen = $660 billion / 300 million people = cost of $2200 per citizen

That means a best possible benefit to cost ratio for a US citizen of 0.4:1.

The report talks about thinking of the Waxman-Markey costs as a “highly effective, highly leveraged form of foreign aid.”  One has to doubt that, given that the benefits that accrue to the developing world do so mostly in the far future, while the developing world is in desperate need of greater wealth – and better access to energy – today.  Even if it were true, however, one wonders whether the American public will accept a de facto tax increase of around $1300 per person, or $400 billion total, to pay for such climate aid.

Yet that’s assuming that the “high end” benefits scenario is what occurs.  The global low end benefits are actually far outweighed by the American costs, leading to a benefit:cost ratio to America of something in the order of 0.05:1 (or a cost:benefit ratio of 20:1).

And, of course, there’s no guarantee that a reduction in American emissions will amount to a reduction in global emissions.  We have seen the response to European cap-and-trade schemes being the relocation of facilities to other jurisdictions.  If so, the effective foreign aid program of Waxman-Markey might actually be a loss of American jobs to be replaced by developing world jobs, with no emissions reduction at all.  That would be very generous of us, but not quite what the authors of this study have in mind.

To summarize, the authors of the study have conclusively demonstrated that the Waxman-Markey bill is actually a very bad deal for the United States, and their attempts to claim otherwise are just spin.

Firing Blanks in Response to FOIA

by Iain Murray on September 17, 2009

in Economy, Energy, Environment, Features, Global Warming, Regulation, Zeitgeist

As I’m sure you’ve heard by now, CEI has used the Freedom of Information Act to find out what the administration thought its proposal to introduce cap-and-trade would cost the economy. CBSNews’s Declan McCullagh can fill you in on the details:

A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration’s estimate, the cost per American household would be an extra $1,761 a year.

A second memorandum, which was prepared for Obama’s transition team after the November election, says this about climate change policies: “Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation.”

Politico‘s Ben Smith posted a story on this, to be greeted by an angry harrumph from the League of Conservation Voters:

Specifically, the original White House plan had 100% of emissions permits being distributed by auction; the plan that passed has just 15%.  “Can you say ‘irrelevant analysis’? It would be like pricing the health care bills currently in front of Congress based on a single-payer system,” he writes.

Well, CEI never said that the documents refer to the cost of cap and trade as it passed the House (for the record, the 15% is a bait-and-switch payoff to industry, with the percentage moving to 100% over a number of years), but the figure accurately reflects the likely cost of the president’s proposal, which is, amazingly enough, also the actual position of none other than the League of Conservation Voters:

By embracing a mandatory cap-and-trade program, the Obama energy plan would provide incentives to cut production of carbon dioxide and other pollutants that cause global warming.  In addition, because this program is a 100% auction, this system will generate significant revenues for reinvestment in job-creating, clean energy industries.

So what’s going on here? Is the LCV now fully behind the 15% plan? Or is it annoyed that it has been established that its favored 100% plan is actually just as expensive as everyone now realizes it is?

Oh, and the LCV spokesman added the “postage stamp” canard (the idea that the cost of cap and trade will be less than a postage stamp a day). That only works if you deposit your postage stamp cost in a guaranteed interest account today and withdraw it when the bill comes due in 2020, and even then it will only pay for the real cost, not the nominal cost (see here for a full analysis of the postage stamp claim). One thing even the current bill will not cost is just “a postage stamp a day per household . . . in 2020.”

But the real problem with the postage stamp claim is that even that figure is more than people are willing to pay. Polls show that only 10% are willing to pay more than $100 a year for cap and trade. That’s considerably less than a postage stamp a day.

Even the LCV’s Doublethink won’t get it past that one.

Of course, even the basic premise of the “irrelevance” argument can’t stand when the Administration is still projecting massive revenues (p33) as a result of cap-and-trade.

Meanwhile, how does the Huffington Post repsond?  EXXXXXOOOOOONNNNNN!!!!

Intel Appeals Record-Breaking EU Fine

by Elizabeth Jacobson on September 16, 2009 · 3 comments

in Features, Tech & Telecom, Zeitgeist

Intel is in the news again, this time for fighting the European Commission’s record-shattering $1.4 billion fine against the company. In its appeal, Intel accuses the Commission of having failed to prove that Intel’s allegedly anticompetitive tactics actually harmed consumers in any way.

Recall that it wasn’t a consumer group that brought this case against Intel. Rather, this case was pushed by its rivals. In fact, both Intel and its closest competitor, AMD, have spent hundreds of thousands of dollars on lobbying in the second quarter of 2009 alone, of which much was devoted to antitrust-related issues. As more antitrust allegations mount against Intel, rest assured that these amounts will increase considerably. Instead of investing in things that will actually provide more value to consumers, like price cuts or research and development, chipmakers will have to divert that money towards playing the Washington game.

Climate policies endanger U.S. national security

by Marlo Lewis on September 16, 2009

in Global Warming, Sanctimony

The global warming scare campaign goes through phases. Warmists are collectivists, and they buzz like a hive. The overall narrative of doom does not change, but every couple of months or so the hive settles on a different scare to buzz about most loudly.

That’s the best way to get media and public attention, after all. Single out one alleged global warming terror, publicize the heck out of it until ”everybody knows” the “crisis” is “even worse than scientists previously believed,” and then move on to the next scare-of-the-month. The intended effect, as H.L. Mencken put it, “is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”

Previously featured scares include killer heat waves, malaria epidemics, more powerful hurricanes, catastrophic sea-level rise, ocean acidification, and, my personal favorite, a shutdown of the Gulf Stream leading to a new ice age. Some of these have been scares-of-the-month more than once — a form of recycling, if you will. 

You might think that after so many years of hearing about so many ways global warming is going to wreck the planet, the American people would be “clamorous to be led to safety” and demand cap-and-trade as the salvific path to a “clean energy future.”

But no, the American people aren’t buying it — at least not enough to overcome their repugnance to a massive new energy tax, which, many now understand, is what cap-and-trade boils down to.  

So proponents of the Waxman-Markey bill need a new scare du jour, and this month it’s “climate change threatens U.S. national security.” Instead of warning, implausibly, that we’re going to fry, drown, blow away, or freeze, the new sales pitch is more sophisticated. 

Here’s what they say. Climate change is a “threat multiplier.” It aggravates several problems – poverty, drought, famine, coastal flooding – that already foster instability and conflict. A warming world will be plagued by more frequent and more intense conflicts among and within nations.

A coalition of eco-warriers and defense hawks has formed to push the message. What each side gets out of this strange-bedfellow coalition is obvious. The defense professionals get mission creep — an expansive rationale to justify new DOD and intelligency agency programs, capabilities, and activities, all funded by the taxpayer, from now until 2100 and beyond, regardless of the actual geopolitical and military threats facing the country. Greenies, for their part, gain allies respected by conservatives, who up to now have opposed Kyoto-style “global governance” and greater political meddling in energy markets.

On the free-market energy blog, MasterResources.Org, I have written a two-part essay titled, ”Even the Generals Are Worried! Mission Creep, Climate Change and National Security.” Part 1 shows that the “threat multiplier” argument is hype. Part 2 shows that climate change policy poses greater risks to national security than does climate change itself.

Big Health and Energy Tax Increases for the Middle Class from Obama and Liberal Congressmen

by Hans Bader on September 16, 2009

in Employment, Energy, Environment, Global Warming, Healthcare, Insurance, Natural Resources

The middle class is facing big tax increases thanks to Obama and liberal congressional leaders.

Even the trimmed-down version of Obama’s health-care plan recently announced by a ranking Senator contains lots of tax increases for the middle class (see below).

And the costly cap-and-trade energy legislation passed by the House and supported by Obama would lead to big tax increases in the name of fighting global warming, Administration officials privately have conceded, even though they publicly claim otherwise.  “Officials at the Treasury Department think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents circulated within the agency and provided to The Washington Times” by CEI.  It would also result in “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs,” as jobs migrate overseas to countries which have fewer environmental protections than the U.S. does.

Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s excise tax increases were in 1932, aggravating the Great Depression. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air, as well as harming forests and water supplies.

Americans for Tax Reform summarizes the tax increases in the trimmed-down version of ObamaCare revealed by its principal drafter, Senator Max Baucus (D-Montana).  Here is a partial list:

· Individual Mandate Tax.  If you don’t sign up for health insurance, you will have to pay a tax in the following range:

Single

Family

100-300% FPL

$750

$1500

300+% FPL

$900

$3800

· Employer Mandate Tax. $400 per employee if health coverage is not offered.  Note: this is a huge incentive to drop coverage, as $400 is much less than the average plan cost of $11,000 for families or $5000 for singles (Source: AHIP)

· Excise Tax on High-Cost Health Plans.  New 35% excise tax on health insurance plans to the extent they exceed $21000 in cost ($8000 single)

· Medicine Cabinet Tax.  Americans would no longer be able to purchase over-the-counter medicines with their FSA, HSA, or HRA

· Eliminate tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D

· Report Employer Health Spending on W-2. This is clearly a setup for the easy individual taxation of employer-provided health insurance down the road.

· Cap Flex-Spending Account (FSA) Contributions at $2000. Currently unlimited.

· Backdoor Death of HSAs. By requiring that all plans (besides the few that are grandfathered) provided first-dollar coverage for most services, there would be no HSA-qualifying plans available from the Massachusetts-like exchanges

NYT Love Letter to FDA

by Greg Conko on September 16, 2009

in Culture, Healthcare, Nanny State, Personal Liberty, Precaution & Risk, Regulation, Zeitgeist

New York Times reporter Gardiner Harris has a front page article in today’s paper on the head of the Food and Drug Administration’s Office of Oncology Drug Products, Richard Pazdur.  As the article notes, Pazdur has come under severe criticism in recent years for obstructing the approval of numerous innovative cancer drugs.  Some of this criticism is unfair, and Harris is clearly attempting to defend Pazdur and the FDA, while proving the critics wrong. After all, Pazdur has implemented reforms that permit the FDA to occasionally consider New Drug Applications for cancer drugs that are supported by fewer clinical trials, with fewer patients in those trials, and that measure progress toward a “surrogate end-point” such as tumor suppression instead of increased length of patient survival.

But that’s not the whole story.  Steven Walker, a co-founder of the patient advocacy group Abigail Alliance, is rightly quoted saying “Patients are right to be angry and frustrated with Richard Pazdur. … He is a dinosaur.”

Indeed, in his zeal to defend Pazdur, Harris gets a few important facts wrong.  For example, he writes that “Federal law requires that the agency demand two ‘well controlled’ trials before approving a drug; in cancer, the Food and Drug Administration is often satisfied with just one.”  Wow, you might think, this Pazdur guy must really be special if he’s willing to disregard federal law in order to speed new drugs to market.  Except that federal law hasn’t required two Phase III trials in all cases since passage of the FDA Modernization Act (FDAMA) in 1997, which specifically permits FDA to approve a drug on the basis of a single Phase III trial if the Secretary of HHS (of which FDA is a part) determines the information sufficient to prove the drug is effective.  Similarly, FDAMA specifically grants FDA permission to “fast track” the approval of important new drugs by considering surrogate end-points rather than increased length of survival.  Pazdur’s contribution was not to come up with these great ideas, but merely to implement them at the request of Congress and President Clinton.

Pazdur looks even less good when you consider some of the products he’s accused of derailing, such as the prostate cancer drug Provenge, which I wrote about two years ago. Provenge works like a vaccine to help a patient’s immune system fight off prostate cancer, a disease with few other available treatments.  The independent panel of scientific experts that advises the agency on new oncology drug approvals unanimously agreed that Provenge was safe, and voted 13 to 4 that it was effective enough for approval, but the agency demanded additional testing before it would approve the drug.  In one trial, 34 percent of patients receiving the drug were alive three years after treatment, compared to just 11 percent of patients receiving the placebo. But the median survival time for those taking Provenge was just 4½ months longer than for the placebo group. Still, Taxotere, the only currently approved alternative for advanced prostate cancer, extends survival for just half that time, while killing some 300 patients outright every year.  FDA’s main contention was that the clinical trial showing these benefits in Provenge was actually designed to find a different end-point.  So, under Pazdur’s leadership, the FDA oncology drugs unit refused to approve Provenge despite pretty reliable evidence of its safety and efficacy.  That story doesn’t make it into Gardiner Harris’s article, however, since it might weaken his case for Pazdur’s sainthood.

Harris does, however, trot out a patient advocate and an industry analyst to make the case that, even safe drugs with uncertain benefits shouldn’t be approved.  “We want drugs that prolong survival, not drugs that just improve a test result,” said Frances Visco of the National Breast Cancer Coalition.  Naturally, we don’t want snake-oil salesmen touting non-existent benefits of sham treatments.  But, why can’t we require full disclosure of the ambiguity, and let patients and their doctors choose?  In far too many cases, waiting for absolute proof of some huge benefit serves only to keep promising new drugs off the market.  It also means that dying patients are refused the only option that might prevent or delay their death.

Harris notes, as a humanizing aside, that Pazdur doesn’t eat meat “because he believes a vegetarian diet will help protect him from cancer, although the supporting evidence is as thin as vegetable broth.”  That’s wonderful; a balanced vegetarian diet certainly can’t hurt, and there is some evidence suggesting that it may well help improve Pazdur’s health.  But, if this dietary choice were subject to the same evidentiary standards that Pazdur places on new drugs, he wouldn’t have that choice.  What seems not to have occurred to Pazdur, Harris, and Pazdur’s other supporters is that, if a drug with uncertain effectiveness is approved, those who “want drugs that prolong survival, not drugs that just improve a test result,” don’t have to use it.  They can hold out for a product with more certain benefits.  But, when a drug with uncertain benefits is not approved, it means that everyone is denied the choice.

Regulation of the Day 52: Bar Food

by Ryan Young on September 16, 2009

in Culture, Deregulate to Stimulate, Economy, Nanny State, Personal Liberty, Regulation, Regulation of the Day

This one comes courtesy of Jacob Grier, blogger extraordinaire and former colleague.

In Arlington County, Virginia, there exist twelve restaurants that are required to sell $350 of food per gallon of liquor sold.

Isn’t that weird?

Stranger still, this gang of twelve voluntarily opted in to that bizarre requirement. They think it works better than what all other Arlington restaurateurs have to deal with – sales must be no less than 45% food, and no more than 55% liquor.

Again, what a strange regulation.

The reason for the switch from a dollar to a volume ratio is that Arlingtonians are developing a taste for more sophisticated – and more expensive – cocktails. Restaurants are finding themselves pushing up against that 55% barrier even without serving more drinks.

Jacob, who has thought about opening his own establishment, adds:

“this kind of regulation is one reason among many that I can’t imagine ever opening a bar in Virginia. It would be much smarter to eliminate ratios entirely and simply require that food is available to patrons who want it.”

Way to encourage entrepreneurship, Virginia.

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