January 2012

Secy. Chu crosses the line; he should resign

by Marlo Lewis on October 9, 2009

in Global Warming, Sanctimony

Yesterday, energy secretary Steven Chu told reporters at a solar energy conference in Washington, D.C.  “it’s wonderful“ that Apple Inc., Exelon, Nike, PG&E, and PNM Resources have quit the U.S. Chamber of Commerce or its board. He also encouraged other companies to leave, according to Reuters.

This crosses the line. The Secretary of Energy is not supposed to use the authority of his taxpayer-funded office to advocate the breakup of the Chamber of Commerce, or of any lawful private association, for that matter.

Chu is of course free to criticize the Chamber’s positions on climate policy. Even then, however, such criticism should be generic, focused on the positions, not on the organization, lest it have a chilling effect.

But when Chu praises companies for leaving the Chamber, he is not only injecting himself into a quarrel that is none of his business; he is taking hostile action against the organization.

Imagine the outcry from congressional Democrats, the liberal media, and the environmental community if Bush energy secretary Samuel Bodman had urged companies to quit U.S. CAP, or if Bush EPA Administrator Steven Johnson told Sierra Club members to cancel their memberships.

Chu has been in office too long to still think of himself as an academic free to spout off on any topic he likes. He is a cabinet secretary, and unless we’re now living in a banana republic, cabinet heads are not authorized to threaten people over policy differences.

Threaten how? DOE does business with Chamber members. DOE therefore has the power to affect the bottom lines of Chamber companies.

Let’s also not put blinders on here. Environmental lobbying groups are waging a campaign of intimidation against the Chamber because it refuses to put the short-term special interest of energy-rationing profiteers ahead of the long-term general interest of business in limited government, economic growth, and affordable energy. Chu’s remarks make him a de-facto partner in this intimidation campaign.

Most importantly, when Chu speaks, he speaks for the Obama administration, which wields vast regulatory and prosecutorial powers over the business community. It is precisely because the executive branch is inherently coercive that we expect cabinet secretaries to avoid even the appearance of trying to suppress political dissent.

Chu should apologize to the Chamber and then do the decent thing: resign.

DOJ Investigates IBM’s Mainframe Business

by Elizabeth Jacobson on October 9, 2009

in Tech & Telecom

The lawyers at the US Department of Justice must be getting bored around the office. This week, antitrust regulators launched an investigation of IBM‘s business practices. The probe was launched after the Computer and Communications Industry Association (which represents several of IBM’s competitors) filed a complaint against IBM, claiming that it has abused its dominance in the computer mainframe market.

This marks the third time in the last sixty years that IBM has had the antitrust dogs on its trail. In 1956 the government forced the company to begin selling (rather than leasing) its tabulating machines, as well as separate its data processing services into a subsidiary company. Then, in the late 1960s, the company was investigated again for allegedly attempting to monopolize the market for business computing, a charge that was dropped in 1983. Today, IBM is accused of anticompetitive business practices within the mainframe market. T3, a rival company that until recently resold used mainframe computers, filed a civil suit against IBM for refusing to license its newest version of its software to customers using competitors’ hardware.

The problem with government antitrust action in the tech industry is that it’s difficult to forecast the future of computing in the next ten or twenty years. The DOJ’s prior efforts against IBM couldn’t foresee that by the 1990s, IBM would become a company struggling to stay afloat. When computing shifted to a more distributed client/server model, demand for desktop computers took off while demand for mainframes shriveled, and IBM suffered unprecedented financial losses. After some restructuring, the company moved in a new direction in the last decade, focusing on software and business IT consulting. Currently, mainframe computers and service still accounts for about a quarter of their revenue.

Today, parallel processing systems are being adopted by more businesses for their computing needs. While server farms aren’t yet a perfect substitute for the large reliable mainframe computers, they are increasingly becoming a popular alternative. Software designed to emulate mainframe functionality is another option that’s gaining support in the marketplace. Meanwhile, IBM has been the leader in innovation for mainframe technology, having invested a lot of its resources into next-generation chips and software. It seems that the DOJ is less interested in IBM’s competitive practices, and more interested in its market share.

President Obama Wins Nobel Peace Prize

by Ryan Young on October 9, 2009

in Economy, Personal Liberty, Trade

It is ironic that the winner of the Nobel Peace Prize wants to send more troops to Afghanistan. Even so, President Obama is in a prime position to work wonders for the cause of peace. He can institute free trade in America.

Trade is the ultimate act of peace. If someone has something you covet, you are faced with a choice. You could take it from him by force. Or you could trade for it. The first option is the root of all war. The second is the root of all peace.

Trading with people instead of stealing from them is a sign of respect. It says you honor their rights as an individual. It says you reject the use of force.

If he wants to earn the prize he has been given, President Obama should scrap those tire tariffs against China. Publicly retract his blustery campaign statements about renegotiating NAFTA. Repeal every tariff, every antidumping duty, and every last restraint on trade in the books.

Nothing promotes peace and civility more than commerce. After all, killing the customer is very bad for business.

CEI Weekly: EPA Should Reopen Proceedings After Data Deletion Story

by Charles Huang on October 9, 2009

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

CEI Weekly is a compilation of articles and blog posts from CEI’s fellows and associates sent out via e-mail every Friday. Also included in the Weekly newsletter is a brief description of CEI’s weekly podcast and a feature on a major CEI breakthrough made during the week. To sign up for CEI Weekly, go to http://cei.org/newsletters.


CEI Weekly
October 9, 2009


>>CEI Petitions EPA to Reopen Proceeding After Discovery of Data Deletion
In mid-August the University of East Anglia’s Climate Research Unit (CRU) disclosed that it had destroyed the raw data for its global surface temperature data set because of an alleged lack of storage space. CEI’s petition, filed late Monday with EPA, argues that CRU’s disclosure casts a new cloud of doubt on the science behind EPA’s proposal to regulate carbon dioxide.  EPA stopped accepting public comments in late June.  As CEI’s petition argues, court rulings make it clear that agencies must consider new facts when those facts change the underlying issues. Read more here at CEI, including the petition put out by CEI.


>>Greg Conko Writes on the FDA’s Consideration of Regulating Internet Drug Promotion
A new report released by the Competitive Enterprise Institute challenges the Food and Drug Administration to bring its “1960s approach” to prescription drug advertising into the 21st Century by acknowledging that the Internet and other new media let ads present complete risk and benefit information in unique ways.  The agency will hold a public hearing next month to consider developing its first ever policy on Internet drug promotion, which the study authors say is long overdue. Quotes by Greg Conko and the report are available at CEI.


>>Shaping the Debate
Price Fixing
Wayne Crews and Ryan Young’s Op-ed in the American Spectator

Cool Cash to be Made on Warming Mania
Christopher C. Horner’s Quote in the Orange County Register

Curbs on Bonuses Would Simply be an Overreaction
Alex Nowrasteh’s Letter to the Editor in the Financial Times


>>Best of the Blogs
Obamacare’s Provisions Have Already Been Tried, and Failed, at the State Level
by Hans Bader
When the Senate Finance Committee votes on President Obama’s health care plan, it won’t even have the text of the bill in existence. It will just be voting on a summary of what the bill will supposedly contain. . . The desire of Obamacare’s supporters to avoid any scrutiny or review of their bill is understandable, because its provisions have already been tried, and failed, at the state level.

Regulation of the Day 56: Kahlua in Ohio
by Ryan Young
Kahlua contains 20% alcohol in 49 states. But in Ohio, it is 21.5%. Weird, huh? Turns out regulations are the reason. My friend Jacob Grier pointed me to an article showing that Ohio groups alcoholic beverages into two categories: wine/beer and spirits. Any beverage below 20% alcohol is in the wine/beer category and can be sold in grocery stores. Anything above 20% is classed as a spirit and can only be sold in state-run liquor stores.

Eminent Domain Abuse in New York (Upstate Edition)
by Marc Scribner
Yesterday, U.S. District Court Judge Frederick Scullin dismissed the majority of a lawsuit filed by J.C. Penney against the owner of the mall where it leases retail space. In its complaint, J.C. Penney alleged that the mall owner violated the terms of its lease agreement, including provisions that required the retailer’s consent before any significant alteration to the mall was allowed to take place.  The court found that the mall was not liable because the Syracuse Industrial Development Agency had condemned the property through eminent domain, which stripped all rights J.C. Penney had to its retail space per the original lease agreement.


>>Liberty Week Podcast
Episode 63: Suing the Government Into Honesty
We start with CEI’s FOIA fight with the U.S. Treasury, 7-Eleven’s attempt to give consumers a big gulp of government and the solution to a jobless recovery. We then move on to union pension politics, Ireland’s regrettable embrace of EU hegemony and some scantily-clad Olympic News.


>>Support CEI
Like what you read?
The Competitive Enterprise Institute’s 25-year record of success is made possible by our over 3,000 supporters. Make sure to stop by www.cei.org/support and make a donation to continue your support or become a supporter. Curious about all the possible ways to donate to CEI? Contact Al Canata at acanata@cei.org or 202-331-2280 to find out more.

Charles Huang

Web and Media Associate

Competitive Enterprise Institute

chuang@cei.org

http://www.cei.org

http://www.openmarket.org

202-331-1010

Regulation of the Day 58: Banning Children from Playgrounds

by Ryan Young on October 8, 2009 · 1 comment

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

A new regulation in Kensington, Maryland bans children over five years old from using a local playground between 9:00 am and 4:00 pm.

Officials are upset that children from a nearby private school were using the public playground during recess.

(Hat tip: Drudge)

New ObamaCare Version Claims Not to Increase Federal Deficit, But It Explodes State Deficits, and Relies on Mythical Savings and Unlikely Medicare Cuts

by Hans Bader on October 8, 2009 · 1 comment

in Healthcare, Nanny State, Personal Liberty, Politics as Usual

Democrats are cheering a Congressional Budget Office decision to “score” the Senate Finance Committee’s version of ObamaCare as not increasing the federal budget deficit. But it pays for some of ObamaCare’s massive cost by expanding state Medicaid programs, shifting its cost to the states. That will radically increase state budget deficits. Moreover, this version of ObamaCare, while cheaper than the four other versions, still relies on mythical cost savings and massive cuts to Medicare that are likely to be canceled after ObamaCare is enacted, to avoid enraging seniors and doctors. Rather than keeping costs down, ObamaCare outsources them to state governments and people with insurance.

This version of ObamaCare “proposes to spend more than $800 billion in the midst of an explosion of federal spending and debt to create a new entitlement program, the cost of which CBO says will grow at more than 8 percent a year (faster than health care costs grow now), and to raise taxes by almost $200 billion in the midst of a recession. It then proposes to make up the difference by massive cuts in Medicare which, as CBO notes, are unlikely to actually materialize.”

The Congressional Budget Office “scored” the bill as not increasing the deficit, but in doing so, it admitted that the bill does not even exist except as a concept, and that its details have yet to be fleshed out. Senate leaders intend to have the Finance Committee vote on the bill before its text is even available, and to have the Senate vote on the bill with virtually no advance notice, after major changes are made to the broad outline of the bill approved by the Committee (to add a potentially-costly “public option”).

ObamaCare would pay to cover some currently uninsured people by expanding state Medicaid programs.  Tennessee Governor Phil Bredesen (D) is criticizing Obama’s health-care plan as “the mother of all unfunded mandates,” saying it will force states to spend so much that they will have to either massively raise taxes, or run large budget deficits that violate state constitutions.

Some people who currently have employer-provided insurance or individual insurance policies will lose that insurance under ObamaCare.  In states that adopted major provisions of ObamaCare, the number of privately-insured people fell, as the cost of their insurance skyrocketed.   “The Congressional Budget Office analyzed” ObamaCare “and said that by 2016 some 3 million people who now have employer-based care would lose it because their employers would decide to stop offering it.”  Some of these people will wind up on Medicaid, which ObamaCare will expand to cover some people who are not poor enough to be covered now.

While the CBO has scored this version of ObamaCare as not increasing the federal budget deficit (unlike the 4 other versions of ObamaCare pending in Congress, which the CBO admits would explode the deficit), some of Obama’s own advisers are more skeptical.  Earlier, adviser Martin Feldstein said that Obama’s health-care plan would explode the federal budget deficit and lead to “crippling deficits,” as well as “higher taxes, debt payments, and interest rates” that would cut America’s standard of living.  Feldstein also noted that Obama’s health-care plan would harm people with insurance, and predicted that it would lead to massive tax increases.  Other analysts have predicted that it will drive up medical costs and inflation.

Obama is relying on $2 trillion in imaginary savings to pay for his health care plan.   He is also relying on tax increases, which breaks Obama’s campaign promise not to raise taxes on the middle class.

Fact-checkers say Obama is lying about health-care. CNN Money says ObamaCare would take away 5 freedoms.

CBO report: new taxes will balance Baucus health care bill

by Fran Smith on October 8, 2009 · 1 comment

in Economy, Health and Illness, Healthcare, Politics as Usual

Those pushing the Senate health care bill were ecstatic when the Congressional Budget Office reported that the bill “would result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period.” But it’s more budgetary legerdemain, as Cato’s Michael Tanner pointed out today.  Tanner notes that new health care taxes are the revenue-raising tools:

The bill imposes a 40 percent excise tax on health-insurance plans that offer benefits in excess of $8,000 for an individual plan and $21,000 for a family plan. Insurers would almost certainly pass this tax on to consumers via higher premiums. As inflation pushes insurance premiums higher in coming years, more and more middle-class families would find themselves caught up in the tax.

In fact, overall, the tax increases in the bill are more than double the amount of deficit reduction. This isn’t a health care efficiency bill or a cost containment bill. It is a tax and spend bill, pure and simple.

The CBO report clearly states that the “savings” come from new taxes:

. . . net revenues from the excise tax on high premium insurance plans, totaling $201 billion; penalty payments by uninsured individuals, which would amount to $4 billion; penalty payments by employers whose workers received subsidies via the exchanges, which would total $23 billion; and other budgetary effects, mostly on tax revenues, associated with the expansion of federally subsidized insurance, which would reduce deficits by $83 billion.

It’s not surprising that policymakers and pundits ignored that statement. After all, everyone knows that spending more billions will save billions.

Precisely Backwards

by Ryan Young on October 8, 2009

in Deregulate to Stimulate, Economy, International

People buy less of something when it becomes more expensive. That’s what economists call the law of demand. It is one of the key drivers of every facet of human behavior. And it’s a simple concept. Easy to understand. Easy to apply.

Or maybe it only seems that way. 366 members of Congress just voted to attract tourists to the U.S. by taxing them $10 when they enter the country. Seriously.

The noise you hear may well be Adam Smith rolling over in his grave.

Few things are more taxing than our elected officials’ economic illiteracy. How sad that visiting a wonderful country like America may soon be one of them.

Obamacare’s Provisions Have Already Been Tried, and Failed, at the State Level

by Hans Bader on October 7, 2009 · 1 comment

in Features, Healthcare, Legal, Personal Liberty, Politics as Usual, Zeitgeist

When the Senate Finance Committee votes on President Obama’s health care plan, it won’t even have the text of the bill in existence.  It will just be voting on a summary of what the bill will supposedly contain. Senate Democrats voted down Republican proposals that the bill’s text be made available to Senators and the public 72 hours before the vote.

And the bill itself is likely to be changed by Senate leaders at the last minute, right before the Senate as a whole votes on it, “to add the public option provision they have long favored,” but removed from the Committee version of the bill to appease moderates.

The desire of Obamacare’s supporters to avoid any scrutiny or review of their bill is understandable, because its provisions have already been tried, and failed, at the state level.  As Peter Suderman of Reason (and formerly of CEI) notes in today’s Wall Street Journal, “The major provisions of ObamaCare already have been tried.  They’ve led to increased costs and reduced access to care” for people who once had private insurance.  The states that adopted these “reforms” have the most expensive and unaffordable health insurance.

Despite these state-level failures, President Barack Obama and congressional Democrats are pushing forward a slate of similar reforms. Unlike most high-school science fair participants, they seem unaware that the point of doing experiments is to identify what actually works. Instead, they’ve identified what doesn’t—and decided to do it again.

Obama is relying on $2 trillion in imaginary savings to pay for his health care plan.  Even Democratic governors have criticized its huge cost, much of which would be passed on to state taxpayers through higher state-government Medicaid costs. One of Obama’s economic advisers said his health-care plan would lead to “crippling deficits” and “higher taxes.”

It also breaks Obama’s campaign promise not to raise taxes on the middle class.  Americans for Tax Reform summarizes the tax increases in the trimmed-down version of Obamacare revealed by its principal drafter, Senator Max Baucus (D-Mont.). Here are just a few of those tax increases: an individual mandate tax of $900 per individual or $3800 per family (if you don’t have health insurance); an employer mandate tax of $400 per employee if health coverage is not offered; an “excise tax on high-cost health plans”; a “medicine cabinet tax”; capping flexible-spending accounts (FSA’s); abolishing most health savings accounts; and increasing tax penalties for HSAs.

This is part of a long line of broken promises, such as Obama’s pledge to enact a “net spending cut,” which he broke with huge budgets that will explode the national debt through $9.3 trillion in massively increased deficit spending.

Fact-checkers, including the Associated Press and Washington Post, say Obama has made many false claims about his health-care plan. For example, Obama claims that nothing in his health-care “plan will require you or your employer to change the coverage or the doctor you have.” But that’s not true of the House and Senate versions the plan. AP noted that, “the Congressional Budget Office analyzed the health care bill written by House Democrats and said that by 2016 some 3 million people who now have employer-based care would lose it because their employers would decide to stop offering it.”

ObamaCare has other dubious provisions, like its racial preferences, which drew criticism from the U.S. Commission on Civil Rights.

Eminent Domain Abuse in New York (Upstate Edition)

by Marc Scribner on October 7, 2009 · 1 comment

in Economy, Features, Legal, Politics as Usual, Zeitgeist

Yesterday, U.S. District Court Judge Frederick Scullin dismissed the majority of a lawsuit filed by J.C. Penney against the owner of the mall where it leases retail space.  The Carousel Center, located in Syracuse, New York, is currently undergoing a [doomed] expansion project–the largest commercial development to break ground in Syracuse in 20 years. The project is in part bolstered by public support in the form of generous tax breaks and ridiculous green giveaways (the planned hotel will be “powered by rainwater, solar,” and construction vehicles by biofuel), which has become a contentious issue in local Syracuse politics. But the development is also supported by questionable eminent domain condemnations.

In its complaint, J.C. Penney alleged that the mall owner violated the terms of its lease agreement, including provisions that required the retailer’s consent before any significant alteration to the mall was allowed to take place.  The court found that the mall was not liable because–at the insistence of the mall’s owners–the Syracuse Industrial Development Agency had condemned the property through eminent domain, which stripped all rights J.C. Penney had to its retail space per the original lease agreement. However, there appears to be some evidence that the takings were pretextual and that the developer violated the terms of the lease prior to the condemnation. This means it is possible that J.C. Penney will get some relief, despite New York’s notoriously biased and antiquated eminent domain statute. (And where exactly is the blight in this case justifying the takings? It seems difficult to apply the over-broad definition that came out of Berman v. Parker, as the condemnee is not a lone department store surrounded by “slums [and] blighted areas that tend to produce slums” in an economically-depressed inner city neighborhood, but an anchor store in a large, secure, modern shopping center.)

Unfortunately, the same cannot be said for Syracuse taxpayers, as the expansion project has also run into serious financial problems and completion of the expansion is now in jeopardy. In June, Citigroup, the primary construction lender, halted funding for the expansion project after it came to light that no tenants have agreed to lease the new space and that massive cost overruns now require drastic changes to the financing plan (specifically, Citi now wants the developer to contribute more cash). The case is currently tied up in appeals court, and the construction jobs and other benefits touted by cheerleading politicians have yet to materialize.

← Previous Entries

Next Entries →