January 2012

Malcolm Wallop, Stand-Up Guy, R.I.P.

by Myron Ebell on September 16, 2011

in Features, Odds & Ends

Post image for Malcolm Wallop, Stand-Up Guy, R.I.P.

Former Senator Malcolm Wallop died on Wednesday, September 14, after a debilitating illness that had confined him to his home near Big Horn, Wyoming, for several years. He is survived by his wife, Isabel, and four children and their families.

Malcolm was a hero of mine long before I knew him, and so it was a great privilege to work for him after he retired from the Senate in 1995 and to become his friend. After I worked for Malcolm and got to know him, I admired him even more. I loved working for him, as I expect all of his Senate staffers did. He was unfailingly polite and considerate, intellectually engaging, and entirely positive. Malcolm had a healthy sense of his own worth, but entirely lacked the swollen head that afflicts many Senators.

When Malcolm defeated a Democratic incumbent in 1976 (not a good year for Republicans), he came to Washington as an uncompromising Cold Warrior, but as somewhat moderate on many domestic issues. While many conservatives tend to drift toward the center after a few years in Washington (which is variously described as growing in office or selling out), he was so appalled by how Washington works that he rapidly became a hardcore conservative across the board. He joined an extraordinary group of mostly Western conservatives in the Senate, a group which included Bill Armstrong, Steve Symms, Paul Laxalt, Phil Gramm, and Jesse Helms.

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Regulation Roundup

by Ryan Young on September 16, 2011

in Regulation

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Here’s a fresh batch of regulatory bloopers:

  • Flirting is illegal in Haddon, New Jersey. (see § 175-12)
  • It is illegal to play cards on the street in Madison, Iowa.
  • In Haverbill, Massachusetts, it is illegal for women to wrestle.
  • It is a felony for bears to wrestle in Alabama.
  • You may now sit outside year-round in Stratford, Connecticut, if you like.
  • Talk about attention to detail. Massachusetts state law requires gift certificates to be valid for at least 7 years.
  • In Florida, it is illegal to release 11 helium balloons per day. Ten is ok, though.
  • Adams County, Colorado, requires all male massage parlor workers to wear white shirts and white pants. Transparent clothing is expressly forbidden.

House Hearing on Effects of EU Privacy Directive

by Luke Pelican on September 16, 2011

in Personal Liberty, Privacy, Regulation, Tech & Telecom

Yesterday the House Subcommittee on Commerce, Manufacturing, and Trade held a hearing addressing the economic consequences of the European Union’s internet privacy regulations. The hearing is part of a comprehensive review of the online privacy aimed at encouraging discussion about how to best satisfy consumer privacy concerns while maintaining a robust and innovative digital ecosystem.

Among the issues raised was the concern that the US’s less restrictive framework for online privacy puts American companies at a disadvantage in the form of aggressive enforcement by EU member states. Also discussed was the question of whether there is a demonstrable harm to consumers from behavioral advertising, which utilizes browsing data to improve advertising efficiency for both businesses and customers.

Catherine Tucker presented results from a ten year study she conducted with Avi Goldfarb evaluating the effects of the EU Data Privacy Directive on advertising by European companies. Their study revealed that the directive “reduced advertising performance by 65%.” She cited an estimate based on the study indicating U.S. companies could suffer losses of $33 billion over five years if Congress chose to adopt opt-in online privacy measures similar to the EU directive. Tucker also observed that strict regulations in this area can incentivize companies to switch to more intrusive, less tailored advertising to maintain their current business models, or even switch to pay-wall type models.

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Obama’s “American Jobs Act” Is A Wasteful “Blue-State Bailout,” Researchers Say

by Hans Bader on September 15, 2011

in Bailout Watch, Economy, Stimulus to Nowhere

In the The Wall Street Journal, two researchers call Obama’s proposed “jobs” bill, the $450 billion “American Jobs Act,” a “blue-state bailout in disguise,” noting that his proposal would dump “$200 billion in taxpayer money” onto state government employees and projects, and would provide a “special benefit” to the most fiscally-irresponsible “states in the blue regions of the country where the president’s most fervent supporters reside.”

But it would harm most states over the long run by increasing their borrowing costs, driving up interest rates on bonds used to pay for useful transportation projects. As the researchers, Paul Peterson and Daniel Nadler, point out, “States will face even higher interest rates if the president’s proposed limit on the deductibility of state and municipal bond interest income (to help pay for the jobs plan) is enacted. If the interest is no longer deductible, investors will demand a higher rate of return for buying bonds, and state calls for more federal aid will intensify.”

Obama’s so-called “jobs” bill would fail to create private-sector jobs, and increase the size of the national debt, while wasting billions on failed federal “jobs” training programs that backfire by spreading bad work habits and welfare dependency. It would also introduce discriminatory provisions into the tax code, provide disincentives to work, subsidize pork and boondoggles, impractical green-jobs schemes, and educational bloat, and pay off special interests.  Obama’s proposals simply disregard experts’ suggestions about how to stimulate the economy, such as adopting common-sense regulatory reforms.

Obama and Sarbanes-Oxley Review — The One Sentence Worth 4,000 Words for Jobs

by John Berlau on September 15, 2011 · 2 comments

in Deregulate to Stimulate, Economy, Features

Post image for Obama and Sarbanes-Oxley Review — The One Sentence Worth 4,000 Words for Jobs

In President Obama’s 33-minute-long speech to Congress on job creation last week, one sentence was worth nearly all the rest of his 4,000 words.

In the middle of trotting out the tired old “solution” of stimulating by taxing, borrowing and even more spending, the president had one brief outline of a potential agenda item that was new and surprising. And if he indeed follows through with the initiative he hinted at, it will probably do more to boost job growth than the entire so-called American Jobs Act he dropped in Congress’ lap on Monday.

In the middle of the speech last Thursday, Obama said, “We’re also planning to cut away the red tape that prevents too many rapidly growing start-up companies from raising capital and going public.” The next day, Bloomberg reported that “the administration will work with the Securities and Exchange Commission to review rules, including those put in place by the Sarbanes-Oxley Act passed in 2002 to impose stricter accounting rules.”

It remains to be seen if the Obama will do any more than review Sarbanes-Oxley. But if he were looking for burdens to business growth and job creation, he certainly has the right target in his crosshairs.

Mostly through a vague mandate in the law’s Section 404 for documenting “internal controls,” Sarbox has made companies responsible for documenting the tiniest minutiae of little importance to shareholders. Referred to as the Accountants’ Full Employment Act, Sarbox has made the Big 4 accounting firms rich at the expense of growth in nearly every other industry.

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Infrastructure Si, Infrastructure Bank No

by Ivan Osorio on September 15, 2011

in Deregulate to Stimulate, Economy, Energy, Tech & Telecom

In his Forbes column, James Glassman provides a counterpoint to the Obama proposal to create a national infrastructure bank. Rather than direct funds through a new federal bureaucracy, he proposes, government should lift the barriers that are holding back private infrastructure investment.

[T]two of the largest prospective infrastructure investments in America are being blocked, or at least delayed, by government. One would result from the merger of AT&T and T-Mobile, which I discussed earlier on Forbes.com. The merger would accelerate deployment of a nationwide LTE 4G wireless network that would bring high-speed broadband to 97 percent of Americans.

The second investment involves energy. Wood Mackenzie, a consulting firm, recently released a report that showed that if the U.S. government allows further sensible energy development projects to go ahead, the results of building and benefiting from the new infrastructure would be over 1 million new jobs by 2018 and over $800 billion in extra government revenues by 2030.

Part of the problem is President Obama’s steadfast clinging to the notion of government spending as job creator. Obama unwittingly revealed the failure of that vision, as Glassman notes.

In his speech to a joint session of Congress, President Obama outlined a different set of taxpayer-funded infrastructure spending:

“The American Jobs Act will repair and modernize at least 35,000 schools.  It will put people to work right now fixing roofs and windows, installing science labs and high-speed Internet in classrooms all across this country.  It will rehabilitate homes and businesses in communities hit hardest by foreclosures.  It will jumpstart thousands of transportation projects all across the country.”

The problem is that, no matter how well-meaning such projects may be, spending on them will be determined by political considerations.

The politicized nature of an infrastructure bank is underscored by the fact that, as The Bond Buyer notes today, “The bank would be run by a chief executive officer and a seven-member board of directors, all of whom would be appointed by the president and confirmed by the Senate.”

Another problem is that, if Obama’s remarks are anything to go by, none of the projects he mentions (except for the passing mention of his bill’s intent to “rehabilitate homes and businesses”) has much wealth-creating potential. He seems more focused on handing out more government contracts than on giving businesses the freedom to grow — and hire.

Infrastructure always needs money, but the choice is not funding si o no, but over which is a better way to provide funding over the long term: increasing direct government spending — and  the cost of government on the private sector with it — or allowing businesses to flourish and therefore expand the tax base, by keeping taxes low and regulation light.

CEI Podcast for September 15, 2011: Solyndra

by Ryan Young on September 15, 2011

in Energy, Environment, Podcast

Post image for CEI Podcast for September 15, 2011: Solyndra

Have a listen here.

Myron Ebell, Director of CEI’s Center for Energy and Environment, takes a look at the brewing Solyndra scandal. Solyndra is a company that makes solar panels and recently declared bankruptcy. In 2009, the federal government gave Solyndra a $535 million loan even though its own analysts predicted the company would go bankrupt in 2011. The company’s cozy relationship with political figures, including a major political donor with an investment stake, make the loan — and its low interest rate — look rather suspicious.

WTO Issues Panel’s Findings on U.S.-Mexico Tuna-Dolphin Dispute

by Fran Smith on September 15, 2011 · 2 comments

in Environment, Features, International, Legal, Trade

Post image for WTO Issues Panel’s Findings on U.S.-Mexico Tuna-Dolphin Dispute

The World Trade Organization’s (WTO) dispute panel has found that the U.S. requirements for a “dolphin-safe” label on tuna products are more trade-restrictive than necessary to fulfill the U.S. objectives. The WTO published the dispute panel’s findings in a case brought by Mexico against the United States relating to the U.S. requirements for “dolphin-safe” labeling. Mexico had claimed that the U.S. measures were inconsistent with several articles of the WTO’s Technical Barriers to Trade Agreement (TBT) — that the U.S. measures were discriminatory and were more trade-restrictive than needed to fulfill U.S. objectives.

The dispute panel found that the labeling requirements did not discriminate against Mexican tuna products, which aren’t given less favorable treatment than tuna from the U.S. or other countries.

However, importantly, the dispute panel found for Mexico in its claim that the “dolphin-safe” labels went beyond what was necessary to achieve the U.S. objectives and thus were not consistent with Article 2.2 of the TBT Agreement, which requires that technical regulations “are not prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to trade.”

This particular dispute originated in October 2008 when Mexico asked for WTO consultations with the U.S. on these labeling requirements. However, the broader issue between the U.S. and Mexico of whether Mexico’s tuna fishing harms dolphins goes back 20 years. Since that time, tuna imports from Mexico have been limited since U.S. Commerce Department rules haven’t allowed the labeling of Mexican-caught tuna as dolphin-safe. Mexico, however, says that its tuna-fishing meets international standards of protecting dolphins.

This case is an important one as some countries use non-tariff barriers to protect their domestic industries or to advance environmental goals. (See a 1996 CEI article about the Basel Convention’s impact on international trade.)

Today’s Links: September 15, 2011

by Nicole Ciandella on September 15, 2011

in Odds & Ends

OPINION

Al Griffin: “COMMUNITY COMMENT: Blame Bush-Era Law for Decline of Postal Service”
“The Postal Service is in trouble because of a Bush-era law that requires the Postal Service to massively pre-fund the cost of retiree health benefits over the next 75 years in just 10 years’ time. This cost covers not only current employees, but employees who have yet to be hired — and is on top of the cost for health benefits for current retirees. No other company or agency in America is required to pre-fund future retiree health benefits. The Postal Service Retiree Health Benefit Fund already has more than $42 billion in it — more than enough to cover retiree health premiums for the next 20 years.”

Tim Carney: “GOP Field Takes Aim at Crony Capitalism—Finally”
“When Michele Bachmann attacked Rick Perry in this week’s debate for helping a politically connected drug company, and Newt Gingrich attacked GE and even oil companies for benefitting from targeted tax breaks, it stirred a bit of a reaction on the Left. ‘Wait, being a crony capitalist is a problem now?’ journalist Dave Roberts, a liberal environmentalist, asked rhetorically. It’s actually an important question.”

Ben Popper: “Venture Capitalists With Powerful Blogs May Run Afoul of the SEC”
“‘People think there is a distinction between how an major investor can talk about a public company versus a private company,’ Ralph Ferrara, former General Counsel for the SEC, told Betabeat. ‘But if you read the law carefully, you see that everything that you can do wrong when combining a public company with the media applies to investments in private companies as well.’”

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Congressional Vote to Halt NLRB Job-Killing Regulations

by Trey Kovacs on September 15, 2011

in Deregulate to Stimulate, Economy, Labor, Regulation

President Obama and the Senate Democrats’ agenda will be put to the test. GOP senators have called for the vote on the Protecting Jobs from Government Interference Act (H.R. 2587). The bill counters the job-killing regulations of the National Labor Relations Board. Most pointedly, the NLRB halting relocation of a Boeing plant from a forced-unionized to a right-to-work state.

Democrats on all levels have touted policies of job creation and supporting the working class. To date, the Obama administration scheme of government spending and succumbing to special interest favoritism has failed to produce economic growth.

In contrast, Sen. Rand Paul points out the Protecting Jobs from Government Interference Act will ease the present restrictions on growth. “I have got another message for the president. We have got a bill here that will help solidify a thousand jobs in South Carolina. Pass it now.”

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