January 2012

Breaking news: At a meeting of the Liberal Party’s Members of Parliament today, Malcolm Turnbull was turned out as Leader and replaced by Tony Abbott on a 42 to 41 vote.  Abbott then immediately called for a vote of his colleagues on the Labour Government’s cap-and-trade bill to ration energy and raise energy prices.  The vote was 54 to 29 against.

A number of Liberal Members have risked their careers to stop cap-and-trade, including Cory Bernardi and Nick Minchin as well as Tony Abbott.  They should all be honored for their courageous stand.

Toppling Turnbull was a necessary step, but it isn’t the end of the story.   It is likely that the Senate will now defeat the cap-and-trade bill for the second time.  However, a few disgruntled Turnbullite Liberal Senators could provide the votes needed to pass it.  If it is defeated, Prime Minister Kevin Rudd could then call a general election of both the House and Senate.  So the fight is still to be won or lost.

Tomorrow, December 1st marks the day when banks and other credit processing companies would have had to be in full compliance with Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).  The Act, which was sneaked into the unrelated and must-pass Port Safety Act, passed in the late night hours just before congressional recess, would cause a variety of problems for the credit processing companies and has been vehemently opposed for over three years by a multitude of banks, players’ organizations, and regulators. Luckily, the Treasury Department and the Federal Reserve Board on November 25th with little more than a week to spare decided to delay the implementation of the law for a period of six months.

According to the Treasury statement issued on November 25th, “While the final regulation affords regulated entities maximum flexibility in establishing and implementing policies and procedures that are reasonably designed to prevent or prohibit unlawful Internet gambling transactions restricted by the Act, the Agencies acknowledge some of the challenges regulated entities are experiencing with the Act’s definition of “unlawful Internet gambling.”

Apart from the fact that any attempt to ban gambling online is a serious infringement on individual rights, Treasury recognizes that UIGEA is vague, will do little to stop Internet gambling, and will be financially burdensome at a time when credit processing companies are teetering on the edge of bankruptcy. Not to mention the cost to the US government. By the Treasury department’s own estimate the cost of simply gathering and processing the information required by UIGEA to be somewhere around $20 million.

Proponents of the right to gamble online have six months to come to an agreement about the best way to permanently overturn UIGEA. Currently, the most promising route seems to be Barney Frank’s two bills related to Internet gambling. HR 2266 the Reasonable Prudence in Regulation Act would stall implementation of UIGEA until December 1st, 2010. HR 2267 Internet Gambling Regulation, Consumer Protection, and Enforcement Act also introduced by Barney Frank in May 2009, would create a regulatory regime, giving the Secretary of the Treasury the authority to license online gambling activities and “establish and enforce standards of integrity and fairness.”  Additionally, in June 2009 Rep. Jim McDermott (D-Wash.) introduced HR 2268, the Internet Gambling Regulation and Tax Enforcement Act, as a companion bill to Barney’s gambling regulatory regime, which would amend the US tax code, allowing the government to extract taxes from gambling related activities.

Barney Frank’s proposals have picked up a lot of steam, but it is unlikely, considering that congress has bigger financial fish to fry, that any major new regulatory regime will be decided upon in the next half year. Additionally, there are big potential problems with the proposed legislation that such a “rush to regulate,” might gloss over, potentially creating bigger problems than the past ambiguity of Internet gambling’s legal status that has been the long-running state of the US’s oversight on online wagering. Some of the potential problems with the Frank proposals include:  1. States will have the option to opt-out of regulatory regime for online gaming, 2. Sports gambling would continue to be illegal, 3. Taxation from federal, and state authorities could be disproportionately high, 4. The regulations are viewed by international operators and international trade authorities as protectionist, and 5. The proposed regime is likely to be inefficient and overly burdensome.

Overturn UIGEA Permanently

Internet gambling in the United States is going to continue, with or without a regime, and regardless of any attempt to ban the activity. While the best way to regulate Internet gaming, if it should be regulated at all, will continue to hotly debated by members of congress, the first step should be to recognize that UIGEA is a bad law and simply a strain on financial institutions and it should be overturned permanently.

If you put chlortetracycline powder in your farm animals’ drinking water to prevent disease, please be aware that a new federal rule now allows you to buy a generic version of the powder if you wish.

Actually, I probably shouldn’t be calling that rule a “rule.” As the new rule states:

This rule does not meet the definition of ‘‘rule’’ in 5 U.S.C. 804(3)(A) because it is a rule of ‘‘particular applicability.’’

Despite the rule being called a rule twice in one sentence, it really isn’t a rule. Probably best to let logicians sort that one out.

Your hosts Richard Morrison and Jeremy Lott welcome guests Gregory Conko and Garrett Peck to Episode 71 of the LibertyWeek podcast. We start with an update on the latest in the Climate-Gate scandal and the impact of nanny state policies in New York City, then move on to Monsanto’s antitrust worries and finish with an interview with Garrett Peck, the author of The Prohibition Hangover: Alcohol in America from Demon Rum to Cult Cabernet (buy your copy here).

“Would ObamaCare Kill Medical Innovation?”  That’s the question posed by health care expert Michael Cannon.  His answer is yes:  “President Obama’s health plan would likely reduce such innovation, to the detriment of the entire world.”

Other experts agree.  Harvard Medical School’s Dean said the health care bills backed by Obama would reduce “our capacity to innovate and develop new therapies” that save lives.

England’s government-run NHS health care system results in “10,000 unnecessary cancer deaths” every year.  “Hundreds of patients died needlessly at an NHS hospital due to appalling care.”

That is just the tip of the iceberg in what ObamaCare will cost our society.  It would also raise taxes, deficits, and medical costs.

As I noted earlier, the Senate recently voted 60-to-39, along party lines, to press towards passage of a massive health care bill, blocking a Republican filibuster.

Afterward, however, the bill drew criticism even from moderate Democrats who usually support the Obama administration, which backs the bill.  Veteran Washington Post editorialist David Broder called the bill a “budget buster in the making,” saying it will violate President Obama’s “pledge that health insurance reform will not add to our federal budget deficit over the next decade.”  He pleaded with the Obama administration and Congress not to “pass along unfunded programs to our children and grandchildren.”

In the Examiner, a Democrat who backed Obama in 2008 criticized the administration for backing a health care bill that violates Obama’s campaign promises by raising taxes on the middle class, citing the bill’s many tax increases, such as its tax on uninsured people and taxes on cosmetic surgery and other medical procedures.

Earlier, Tennessee Governor Phil Bredesen (D) criticized ObamaCare for driving up state spending and budget deficits, calling it “the mother of all unfunded mandates.”

Washington Post columnist Robert Samuelson today called ObamaCare a generational rip-off.  Earlier, he noted that the health care bill is “hypocritical” and “dishonest” and aggravates the worst features of the “status quo.”

In the Senate, all Democrats voted for the bill.  But many received payoffs for doing so.  And there really are no “moderate” Democrats left in the Senate: most of its so-called “moderate” Democrats are not moderate or conservative on anything except on a handful of social issues needed to survive in a “red state,” like gun control.  No Senate Democrat today deviates from the liberal party line as often as the moderate Democrats who once served in the Senate, like Senators Alan Dixon of Illinois and J. James Exon of Nebraska.

As I noted on Saturday, Senate Majority Leader Harry Reid (D-Nev.) lined up the 60 votes through payoffs to wavering Senators and powerful unions (some mismanaged unions will receive a taxpayer bailout of their health plans, to the tune of up to $10 billion).

The Dean of Harvard Medical School recently gave Obama’s health care plan a “failing grade,” saying it will harm America’s health and finances, and hamper medical innovations needed to save patients’ lives.  Dean Jeffrey S. Flier wrote in The Wall Street Journal that along “with dozens of health-care leaders and economists,” he had concluded that the bill “will markedly accelerate national health-care spending,” would harm care “by overregulating the health-care system in the service of special interests such as insurance companies,” and would reduce “our capacity to innovate and develop new therapies” that save lives.

Other experts agree.  The health care “reform” bill backed by President Obama “would reduce senior care,” increase “medical costs,”  and “could jeopardize access to care for millions,” report health care experts at the federal Centers for Medicare and Medicaid Services.  The House recently passed a similar bill by the razor-thin margin of 220 to 215.

The bill will raise taxes on the middle class.  It will increase taxes on individuals, employers, and hospitals, impose new taxes on medical devices and cosmetic surgery, and levy a 40% tax on health-care plans above $8,500.  It will increase the deficit, drive up state government spending, and cost taxpayers at least twice as much as predicted.  It is one of the most expensive bills of all time.

It contains special-interest pork, such as payoffs for trial lawyers, and racial preferences that drew criticism from the U.S. Commission on Civil Rights. The bill restricts national competition in health insurance, which is permitted in countries with cheaper health care.

ObamaCare spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

“ObamaCare is all about rationing,” and tax increases, says one of Obama’s own economic advisers, Martin Feldstein.

Fact-checkers say Obama is lying about health care. Obama often contradicts himself. In the very same speech, Obama claimed that Medicare is “unsustainable” and “running out of money,” then contradicted himself by claiming that “Medicare is a government program that works really well,” making it a model for national health care.

CNN noted that Obama’s plan would take away “5 freedoms,” contradicting Obama’s claim that the bill will leave you free to choose your doctor and keep your health care plan without government interference.

The bill does nothing to curb massive waste and fraud in existing government health care systems like Medicare and Medicaid, even though it proposes to make massive cuts in Medicare (cuts so painful that most of them will never happen: year after year, Congress waives “the annual cut in fees paid by Medicare to physicians” mandated by an earlier law.  The cuts were added to the bill only to reduce its apparent cost.  As economist and former Congressional Budget Office director Douglas Holtz-Eakin notes in The Wall Street Journal, the promised cuts to pay for ObamaCare will not happen: “Senate Democrats chose to ignore this reality and rely on the promise of a cut to make their bill add up. Taking note of this fact . . . destroys any pretense of budget balance.”)

Backers of ObamaCare have refused to cut medical costs through malpractice reform, with Senate Majority Leader Harry Reid saying that such reforms would save “only” $54 billion.  The Pacific Research Institute estimates that just one type of cost that could be reduced through malpractice-lawsuit reform — defensive medicine — costs around $200 billion annually (which is almost as much as France spends annually on health care for all of its citizens; like most countries, France has no punitive damages, and fewer lawsuits against doctors).

One reform opposed by the Democrats — setting up specialized health tribunals to hear malpractice cases — would be particularly helpful. Replacing uninformed juries with specialized health courts would provide more consistent rulings from case to case, eliminate meritless cases, reduce defensive medicine, and more speedily compensate injured people who truly are victimized by doctors’ carelessness. Such tribunals already exist in countries like “Sweden, Denmark, Finland, Iceland and New Zealand.”

Martin Feldstein, one of Obama’s own advisors, has 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 has relied on $2 trillion in imaginary savings to pay for healthcare “reform.”

Law professor llya Somin notes a “lesson of the original Thanksgiving: that the Pilgrims nearly starved to death because of collectivism and eventually saved themselves by adopting a system of private property.” He then highlights an article by economist Benjamin Powell:

Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.

In 1620 Plymouth Plantation was founded with a system of communal property rights. . .People received the same rations whether or not they contributed to producing the food, and residents were forbidden from producing their own food. . . Because of the poor incentives, little food was produced.

Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. . .

This change, [Governor William] Bradford wrote, had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been. Giving people economic incentives changed their behavior. Once the new system of property rights was in place, the women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability.

Once the Pilgrims in the Plymouth Plantation abandoned their communal economic system and adopted one with greater individual property rights, they never again faced the starvation and food shortages of the first three years. . . .

Professor Somin also links to this 1999 article by Tom Bethell, which provides a more detailed account of how property rights saved the Pilgrims.

This year’s Black Friday was much more peaceful than last year’s. No tramplings were reported. There was a fight at a Wal-Mart in the wee hours, unfortunately. The store was temporarily closed, which led to this lovely scene:

[P]eople began “yelling and screaming,” pounding on the glass doors and trying to sneak into the store through the lawn and garden section. Store managers had to be sent outside to try to calm the crowd, workers said.

Which brings us to Black Friday’s most important economics lesson: not all costs are measured in money. Yes, the discounts to be had can be great. But you pay a price for them. The price can be waiting outside in the cold. It could be the crowds, the parking, or the long checkout lines. In rare cases like today’s Wal-Mart near-riot, safety becomes an issue.

Here’s an example of what I mean. Suppose the people who camp out all night end up saving $40 on their purchases. If they spend eight hours suffering in the cold, that’s a savings of only $5 per hour. Less than minimum wage. Some people don’t place much value on their time, it seems.

Or, for some people, Black Friday’s pomp, circumstance, and sales are a cultural experience. They’re worth all the trouble. For other people, they’re not. Wherever you stand, non-price costs should be factored into your shopping habits. Otherwise you just might be getting ripped off.

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
November 27, 2009



>>Climate-Gate
Last week, CEI covered the release of e-mails which were leaked from the University of East Anglia’s Climatic Research Unit. These e-mails suggest scientists have been manipulating climate data for years.

CEI’s Chris Horner has led the way in taking legal action against NASA for its failure to provide information as it is expected to do under the freedom of information law. Chris Horner also appeared on Fox News to debate the need for an investigation on CRU.

Myron Ebell’s analysis of Climate-Gate has also been covered in the Wall Street Journal, the National Post and the Washington Post.


>>Shaping the Debate
Effort to Curb Financial Giants May Worry Markets Even More
John Berlau’s quote in the Investor’s Business Daily

DDT: The Silent Killer… Only When It Was Gone
John Berlau’s quote in theRealityCheck.org


>>Best of the Blogs
Real Climate Spin
by Marlo Lewis
Real Climate.Org is a chief defender of ”consensus” climatology on the Internet. One of its enduring missions has been to defend the dubious, indeed discredited “Hockey Stick” reconstruction of Northern hemisphere temperature history. The Hockey Stick was the basis for the IPCC’s claim in its 2001 report that the 1990s were the warmest decade and 1998 the warmest year of the past millennium. That Real Climate (RC) should feel special solicitude for the Hockey Stick is no accident, comrade. Two of the five principals at RC — Michael Mann and Raymond Bradley — were among the three researchers (Mann, Bradley, and Malcolm Hughes) who authored the Hockey Stick.

Moderates Criticize Health Care Bill As It Advances in Senate; Experts Gave Bill A “Failing Grade”
by Hans Bader
On Saturday, the Senate voted 60-to-39, along party lines, to press towards passage of a massive health care bill, by blocking a Republican filibuster.  Senators ignored the fact that the bill received a failing grade from health care experts like the Dean of Harvard Medical School, since it will raise taxes, deficits, and medical costs, while reducing lifesaving medical innovations. Afterward, however, the bill drew criticism even from moderate Democrats who usually support the Obama administration, which backs the bill.

The Partisan Deficit
by Ryan Young
When Republicans are in the White House, Paul Krugman thinks budget deficits are bad. When a Democrat is in the White House, deficits are no problem at all. Correctly noting in 2005 that the Bush deficits were “comparable to the worst we’ve ever seen in this country,” Krugman worried that investor confidence would wilt under the difficulty of paying back such massive obligations. Now that President Obama has tripled the Bush deficits, he has a column poo-pooing deficit worriers as “being terrorized by a phantom menace


>>LibertyWeek Podcast
Episode 70: Climate-Gate Bursts Forth
We start with the big Senate showdown on healthcare legislation and a shocking expose of climate science skullduggery. We then move on a double dose of Midwestern scandal and the curious cult-like organizing practices of major labor unions.


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It has become evident that the planet is running a “fever” and the prognosis is that it is apt to get much worse. “Warming of the climate system is unequivocal” and it is “very likely” due to human activities. This is the verdict of the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), known as AR4 . . . . Warming of the climate system is unequivocal as is now clear from an increasing body of evidence showing discernible physically consistent changes.

- Kevin Trenberth, head of the Climate Analysis Section at the Colorado-based National Center for Atmospheric Research and a lead author of the warmist bible, the 2007 Intergovernmental Panel on Climate Change (IPCC) report, congressional testimony of February 2007.

“We can’t account for the lack of warming at the moment and it is a travesty that we can’t,” and “any consideration of geoengineering [is] quite hopeless as we will never be able to tell if it is successful or not!”

- Kevin Trenberth, unintentionally released email to various recipients, October 14, 2009.

Following in an unpublished letter to the editor of the Washington Post.

“Panic is what we want,” declared Anne Applebaum of the swine flu in the Post Opinion pages in May. “Panic is good.” The next month John Barry told Opinion readers to expect “89,000 to 207,000” swine flu deaths. In August, Opinions ran Jorge R. Mancillas’ piece warning of “between 9 million and 10 million” swine flu deaths worldwide.

There have been no Opinions pieces critical of swine flu hype.

Now the CDC estimates that in five and a half months swine flu has killed 4,000 Americans, while plain old seasonal flu annually kills about 36,000 over a five-month season. Worldwide, as of November 13, the World Health Organization (WHO) says only that swine flu is known to have killed over 6,250 people in seven months, even while it estimates seasonal flu kills 4,800 to 9,600 every seven days.

Aha! But Posteconomics writer Alan Sipress warns Opinion readers that if the do-nothing avian flu (the WHO says it’s been infecting poultry and hence making bird-human contact since at least 1959) were to combine with the lazy swine flu, the outcome could be “savage,” a “real nightmare.” (“Playing Chicken with the Flu,” November 15). Yes, and if Godzilla could rise from the deep he could destroy Tokyo!

Enough already! The point is made. And it says nothing about the swine flu but everything about the Post Opinions page.

[Not incidentally, I know they don't run anti-panic op-eds because in addition to this letter I sent them two. One was specific to the Post, but the second one was not and later appeared in the much-larger circulation Los Angeles Times.