January 2012

Sugar Program Opponents Stake Out Their Position

by Fran Smith on September 30, 2010 · 3 comments

in Agriculture, Economy

Sugar producers got a sweet deal in the 2008 Farm Bill. Now, with the next bill scheduled for 2012, some opponents of the U.S. sugar program are already positioning themselves for another battle over one of the most egregious examples of central planning that raises prices for consumers and costs jobs.

On September 29, 2010, Rep. Joe Pitts (PA-16) introduced a bill — The Free Market Sugar Act — that takes direct aim at the sugar program administered by the U.S. Department of Agriculture.  Here’s Pitts’ statement:

The USDA sugar program is a needless waste of government money that is actually counterproductive to the goal of creating jobs in the U.S. Using taxpayer money to back loans to the sugar industry and buy sugar should not be a function of our federal government. Since the program actually raises the U.S. price for sugar, we see some food industry jobs shipped overseas.

Sugar producers are using the public backing to pocket healthy profits. The American people are fed up with bailouts, and my legislation would stop public money from propping up companies that should be providing for themselves.

Other policy makers were taking their own steps to focus attention on sugar and the next farm bill.  Congressmen Danny Davis (D-IL) and Mark Kirk (R-IL) sent a “Dear Colleague” letter to their fellow members of Congress asking them to sign on to a letter to the House Agriculture Committee leadership.  The letter points out some of the major problems with the program that need to be corrected in the 2012 farm bill:

The U.S. Department of Agriculture is keeping sugar prices at all-time highs by limiting the amount of sugar that can be grown in the United States and imported each year to meet domestic needs.  The sugar program is being run solely for the benefit of sugar growers and processors, with complete disregard for consumers and other sugar users.  The net result is that consumers are paying more for food products and workers are losing jobs at food processing and manufacturing plants.

It’s good that they’re starting early to position this issue, because they will be facing the sugar lobby, one of the strongest lobbies on the Hill — that day-in-an-day-out focuses on this one issue and spreads their largesse in a bipartisan manner.

See some of CEI’s earlier articles on the sugar program here and here.

CEI Podcast – September 30, 2010: William F. Buckley

by Ryan Young on September 30, 2010

in Culture, Odds & Ends, Personal Liberty, Zeitgeist

Jeremy Lott, a former Warren Brookes Fellow at CEI and an editor for RealClearPolitics, is the author of the new book, William F. Buckley. Jeremy talks about the book and the complicated, sometimes adversarial relationship between conservatism and libertarianism — a gap Buckley spent much of his life trying to bridge.

Wholesale Special Interest Manipulation

by Angela Logomasini on September 30, 2010

in Nanny State, Personal Liberty

Sometimes politicians say things so dumb that no one could have made them up. Utah Attorney General Mark Shurtleff told the Salt Lake City Tribune yesterday that the National Beer Wholesalers Association drafted testimony he offered before the House Judiciary Committee earlier in the day on H.R. 5034. H.R. 5034 is an alcohol regulatory bill pushed by wholesalers who want to advance anti-competitive state laws — laws that mandate all alcohol be sold through wholesalers rather than direct to retailers or consumers from wineries, breweries, or distilleries. Reported in the Tribute today, Shurtleff explained:

“He gave me some information,” Shurtleff said in a telephone interview as he was boarding a plane Wednesday evening. “I was communicating with him, and he drafted it for me because I was coming straight here [to Washington, D.C.]“

This is just more evidence of exactly what this debate is all about: It’s about wholesalers manipulating legislators to get special-interest legislation. Nothing more. And they are willing to use unsuspecting politicians — in this case a Mormon whose personal beliefs are anti-alcohol. But taking away consumer freedoms and undermining voluntary contracts to serve personal values isn’t an answer. And letting Washington lobbyists lead you into such folly is even worse.

When Utah Congressman Jason Chaffetz (R), a co-sponsor of H.R. 5034, heard about Shurtleff’s comments he responded by saying:  ”I feel like I have to share this with the ranking member and the chairman and I feel that I have to take some action.”

Well then, if that is the case, Chaffetz should also call an investigation into who is writing the bills he cosponsors. According to pretty much all news reports, it was the National Beer Wholesalers of America that drafted H.R. 5034, pressed for congressional hearings, and is spending millions (also with the Wine and Spirits Wholesalers of America) in PAC contributions to bill sponsors. And now we know that they are also writing testimony.

When the Tribune asked Chaffetz about the recent $10,000 campaign contribution that he received from the wholesalers for this election cycle, he said he didn’t even know about it. I’ll give him that. After all, there seems to be plenty things related to this bill that he — and other lawmakers — don’t know. But maybe he should at least know who he’s taking money from. After all, he seems to have moral problems with the industry wholesalers represent.

Chaffetz says that Utah needs this bill because advocates of a free-market “want to loosen liquor laws so they can sell Jack Daniels next to snow sleds at Costco.” Likewise, Shurtleff’s written testimony (which he did at least read himself!) notes: “The people of Salt Lake City feel differently about alcohol than the people in Detroit … That’s the beauty of the American system.”

Really? Taking away personal freedoms and undermining commerce between the states is “the beauty of the American system?” Is working for special interests part of that too?

I thought toleration, personal freedom, private property, and free trade were the values that make America great. Surely, there is someone in Utah that might enjoy a sip of vino sometimes or the convenience of picking up Jack Daniels at Costco. Why should their rights be less important?

Image credit: Jere Keys on Flickr.

Take a Look at U.S. Tariffs – They Raise Costs and Restrict Choice

by Fran Smith on September 29, 2010

in International, Trade

With so much focus on “unfair” trade vis-à-vis U.S. trade partners, especially China, it’s sometimes sobering to look at protectionist U.S. policies that restrict imported goods and services by slapping them with high tariffs.  The Business Insider provides a good start in its focus on 25 imported products that have the biggest U.S. tariffs. Take a look at the highlighted tariffs that range from 20 percent on some dairy products to 37.5 percent for leather shoes, then 163.8 percent on unshelled peanuts up to a whopping 350 percent for imported tobacco.

But what do these tariffs mean for consumers?  Obviously, they raise their costs.  Ed Gresser of the Progressive Policy Institute has written extensively on how U.S. tariffs are really regressive — they hurt the poor the most by increasing the costs of needed goods, such as shoes and clothes.  Here’s what Gresser says:

Though the tariff system is smaller than other taxes, it is far more regressive. This is because poor people spend a greater share of their income on clothes and shoes than do wealthy or middle-class people. The cheap and simple goods made in poor countries and bought by low-income Americans are subject to far higher tariffs than luxury goods. An acrylic sweater attracts a 32 percent tariff, while a cashmere sweater gets only 4 percent; a polyester bra is tagged with a 17 percent tariff, while one made of silk gets less than three percent; and a cheap stainless steel fork is hit with a 19 percent tariff, while a silver-plated spoon has none at all.

Since the Business Insider feature only looked at tariffs, it missed some of the most egregious protectionist programs in the U.S. — the U.S. sugar program that guarantees sugar producers a certain price by restricting domestic supply as well as sugar imports.  Or take the U.S. cotton program that subsidizes a small number of cotton producers at taxpayer expense and makes it uncompetitive for many poor countries to export their cotton to the U.S.  As with these and other protectionist policies, they generally help a small group of producers by restricting competition, but the costs are borne by consumers in terms of fewer choices and higher prices.

Science Credibility Flu Away – At Least in Europe

by Michael Fumento on September 29, 2010

in Health and Illness

Throughout the phony flu pandemic I warned that health officials would lose credibility because basically everything they were telling us was false and, unlike with some phony predictions which are safely years away, these quickly be shown false.

Turns out I was right — depending on what part of the world you live in.

A combined Scientific American/Nature magazine poll shows that of the 15 issues people were asked about, they trusted scientists the least regarding flu pandemics. Ah, but there’s a big asterisk. It was a poll of both Europeans and Americans. And only 29 percent of the Americans expressed serious distrust, compared to 69 percent of the Europeans.

Why the difference? The very media I was constantly criticizing. While a number of journalists and publications in Europe were critical of the WHO and their own governments, the American media acted as a mouthpiece for anybody — official or otherwise — willing to say something scary about swine flu.

More to the point, they’ve continued to do so. Nobody in this country has issued a mea culpa and nobody ever will, anymore than they did with heterosexual AIDS, SARS, avian flu and so many other hysterias they either perpetuated or outright fomented. Most recently it’s been Toyota. The motto of the American media, originally uttered in a John Wayne movie, is: “Never apologize. It’s a sign of weakness.”

Pack journalism is so pervasive in America we’ve practically got the equivalent of a state run media. And because of that, eventually it will be a state run media.

Ethanol: Following the E10 to E15 Debate

by Brian McGraw on September 29, 2010 · 1 comment

in Energy, Ethanol

The ethanol industry was patiently waiting for the EPA to approve an increase from 10 percent ethanol blends to 15 percent in gasoline. They are still waiting, but no longer patiently.

Numerous groups have voiced their opinion to keep the blend wall at 10 percent, or at least not to approve the increase until further testing is done. Despite the fact that the opposition comes from organizations such as the National Council of Chain Restaurants (this one is admittedly confusing), the Engine Manufacturers Association, and the Motorcycle Industry Association, the domestic ethanol industry is convinced this is an enormous big-oil conspiracy to keep the ethanol industry from succeeding. Did they just finish watching JFK?

From the reading I’ve done, it looks like 15 percent blends of ethanol aren’t going to have any negative effects on newer car engines — and EPA statements have hinted that the industry will get their 5 percent increase this year. But there is evidence that it can cause harm in non-automobile engines — like outboard engines used in boating, which explains why ESPN ran an article covering the issue.

Why is this confusing the ethanol industry? As the ESPN article says:

The lack of general public understanding of the differences between E10 and E15 increases the risk that boaters may misfuel their engines once E15 becomes readily available at gas stations.

The average citizen has no idea what E10 or E15 or E85 are. They might buy E15 rather than E10 and use it, potentially damaging very expensive equipment.

The underlying issue here is that the Renewable Fuel Standard is mandating huge blends of ethanol into our fuel supply, but the EPA isn’t permitting a high enough blend that will allow the mandate to be met. This highlights the absurdity of government energy policy. One government organization mandates a policy and another government organization sets policy making the original initiative impossible to obtain. This is one of the many reasons why consumers, not governments, should decide what they want going into their fuel.

And yes, the oil companies oppose the increase — as they should. They have absolutely nothing to gain from this, and will lose money as each gallon of gasoline sold now contains less refined oil and more ethanol. To some, it is downright shocking that a company would oppose policies that would have the direct effect of making their industry less profitable.

The Failed Stimulus Package Reveals What Economy Really Needs

by Ben Lieberman on September 29, 2010

in Economy, Energy, Regulation, Stimulus to Nowhere

A failure can make for a valuable learning experience, and the stimulus package is no exception. Clearly the stimulus has not worked, and from its inception many economists doubted the wisdom of the federal government trying to spend our way into prosperity. But putting aside questions about the merits of spending as means of sparking an economic recovery, it appears that the feds were not even able to dole out the money in a timely manner. The culprit — regulatory red tape.

Several studies conducted by the Department of Energy’s Office of the Inspector General (here , here , and here) have concluded that many of the stimulus-funded projects related to energy were very slow to get off the ground. For example, DOE’s investigation of one program dealing with block grants for energy conservation projects concluded that “as of August 2010, more than one year after the Recovery Act was passed, grant recipients had expended only about 8.4 percent of the $3.2 billion authorized for the Program.” Not exactly the “shovel ready” boost to the economy we were promised.

Regulatory delays were the reason. In its most recent report, DOE’s Inspector General concluded that “various regulatory requirements had slowed spending,” including “the Davis-Bacon Act, National Historic Preservation Act, Buy American provisions of the Recovery Act, and National Environmental Policy Act (NEPA).”

Granted, the programs funded by the stimulus are a big waste of taxpayer dollars, and it is a good thing that the feds can’t squander our money more quickly. But the point is that even the big government proponents of the stimulus package are finding out what it is like to get tripped up by — big government. Whilst hoisted on their own petard, one can hope that the legislators who supported the stimulus might figure this out.

Perhaps they will learn the critical lesson that can lead to real economic growth. Just as stimulus spending faces a regulatory gauntlet, so does private investment. Efforts by large and small businesses to expand — the real source of an economic recovery and job growth — are hampered by the regulatory state at least as much as are the government projects highlighted in the DOE reports. Streamlining or eliminating these regulatory hurdles would do far more to help the economy than all the stimulus spending in the world.

22,000 Lose Their Health Insurance Due to Obamacare

by Hans Bader on September 29, 2010

in Economy, Health and Illness, Healthcare, Insurance, Politics as Usual, Regulation, Zeitgeist

Approximately 22,000 senior citizens just lost their health plan with Harvard Pilgrim Health Care, which dropped its Medicare Advantage Program due to “cuts in Medicare” that “are being used to fund national health care reform.”  As the Washington Examiner notes, “President Obama’s most frequently repeated health care reform claim — ‘If you like your present health insurance, you can keep it’ — sounds about as credible these days as the finger-wagging Bill Clinton did when he said, ‘I did not have sexual relations with that woman.’”

While Obamacare cuts Medicare for the elderly, it does nothing to slow the growth of health-care spending, since it adds costly new Medicaid mandates for people on welfare, as former New York Lieutenant Governor Betsy McCaughey, a healthcare expert, notes in the New York Post.  She calls it “Obamacare’s redistribution of health.”  Obamacare will also cause Medicaid lawsuits to proliferate at taxpayer expense.

President Obama falsely claimed that the health care law would cut health care costs, but regulators in some states are now approving increases in premiums precisely because Obamacare increases costs.

As columnist David Freddoso notes, the Obama administration has been a windfall for wealthy trial lawyers.  As I noted in the Examiner‘s print edition, “Obamacare will also result in an explosion of lawsuits against employers’ health plans by stripping them of protection against unnecessary lawsuits based on paperwork technicalities, and by displacing settled exhaustion principles in employee benefits litigation.”

New EPA Rules Will Cost More than 800,000 Jobs

by Hans Bader on September 28, 2010 · 2 comments

in Deregulate to Stimulate, Economy, Employment, Energy, Environment, Global Warming, International, Politics as Usual, Regulation, Zeitgeist

New EPA rules will cost more than 800,000 jobs, probably far more, according to a newly released congressional report.  That includes the EPA’s first set of rules “for Greenhouse Gas Emissions,” and “new standards for commercial and industrial boilers.”  Indeed, the boiler rules alone could cost close to 800,000 jobs.

This shouldn’t be a surprise.  In 2008, President Obama admitted that under his greenhouse gas regulations, people’s utility bills would “skyrocket,” and coal-fired power plants would go “bankrupt.”  The EPA’s own internal documents show that the administration’s global warming regulations will result in a massive “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs.”

It’s not just the administration’s global warming regulations that will wipe out jobs. The stimulus package contained so-called “green jobs” funding, 79 percent of which went to foreign firms, replacing American jobs with foreign green jobs.  A recent biofuel program actually wiped out jobs rather than creating them as intended, while costing taxpayers a lot of money.

The administration’s energy policies presume that central planners know better than private citizens and companies about how to create jobs and allocate capital.  But government officials, unlike private companies, have little incentive to make economically wise decisions, since they don’t pay the cost of their own mistakes, but rather pass them on to taxpayers.  The Justice Department, for example, often ignores the misconduct and constitutional violations committed by its own employees, while the federal Energy Department is one of the biggest violators of America’s environmental laws.

Not Wright for Internet Gambling

by Michelle Minton on September 28, 2010 · 1 comment

in Legal, Nanny State, Personal Liberty

Some Net gamblers are lamenting the indictment of California State Senator Roderick Wright (D-Inglewood) who was indicted by a grand jury for alleged voter fraud. Wright is seen as a proponent of online gambling in California because of the bill he introduced earlier this year which would legalize online gambling in a limited form in California. If convicted of voter fraud, the chances of his bill passing are slim to none. Perhaps online gamblers in California shouldn’t be too upset.

As I wrote in June, Wright’s plans for bringing Internet gambling to California aren’t exactly ideal…to put it mildly. Actually, what I said was that Wright’s SB 1485, while apparently legalizing some online gambling, would actually have the effect of criminalizing all forms of Internet gambling except for the three state-authorized online casinos.

Sen. Rod Wright introduced SB 1485, a bill that supposedly legalizes Internet gambling for residents. What it would actually do is legalize gambling only at the three online platforms and criminalize Internet poker played anywhere else online. Currently, there are no federal laws that make online poker games a crime and the DOJ has never prosecuted individual players associated with the activity. California makes 11 names games illegal to play online, but poker is not one of them. Thus, in CA, poker is not consider an unlawful Internet gambling activity at the moment. But if a law is passed that sanctions only three online providers, chosen by the state, as SB 1485 does, then playing poker online anywhere else will be a crime. The state’s DOJ will be allowed to arrest any individual caught playing poker online at a non-sanctioned site.

Currently, California law makes 11 named games illegal to play online or any game where the operator takes a rake (a cut of the money won in each hand). Thus, online poker in the state is legal at the moment.

While some might argue that legalizing online gambling in this less than desirable form is still a step in the right direction, but is it? If Net gambling was banned throughout the United States, including California, then perhaps it would be a step forward. But as U.S. law and California law currently exist, Internet gambling is not illegal. There are currently 11 named games illegal online in California; poker is not one of those named games, thus it is technically legal in the state.

The supposed purpose of Wright’s bill is bring online gambling out of the black market, earn tax revenue for the state, and to protect consumers. While amendments will be considered, as it is now — restricted to the max — the bill won’t accomplish any of its goals.

1. It won’t add protections for consumers:

The text of the bill itself notes that millions of Californians gamble online for money. Criminalizing all but three sites will not stop players from visiting the platforms they know and like. Those online gamblers will have no protections because they will be breaking California law.

2. It pushes online gambling into the shadows:

As mentioned above, players will continue to frequent unsanctioned gambling sites, only they’ll now be criminals. If Senator Wright and any other politician talking about Internet gambling really wants to protect players, they should let all sites be legal — allowing players recourse if they’re ripped off. If, however, the state wishes to put its seal of approval on any of the platforms, that might make some new gamblers feel more comfortable about playing at those designated sites.

Whether Wright is found guilty or not, his proposal ought to be mucked.

Such limited legalization is an all around bad bet.

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