For the 17th time since 1976, the federal government has shut down over a partisan fiscal squabble. Vice President for Strategy Iain Murray gives his thoughts on how it happened, what the consequences will be, and what is at stake.
On Sunday, House Minority Leader Nancy Pelosi opposed the notion of federal spending cuts, saying that “The cupboard is bare” and “There’s no more cuts to make.” This not actually being the case, Senior Communications Director Brian McNicoll lists off a series of programs and departments that should be removed from the very full federal cupboard.
Ron Binz is President Obama’s choice to head FERC, the Federal Energy Regulatory Commission. William Yeatman, in a new report, shows why Binz’s disregard for reliable, low-priced electricity, along with several ethical and ideological red flags, make him less than an ideal nominee.
H.R. 3102, the “Nutrition Reform and Work Opportunity Act of 2013’’ will be considered on the House floor later today. The 109-page bill, which would take steps to reform the $80 billion per year food stamp and nutrition programs, is being considered on its own, separate from agricultural titles.
Recent background for this story is necessary. Food stamp programs have traditionally been included in farm bills – those omnibus bills that every five years hand out the largess that every farm product receives from taxpayers’ funds. This year’s farm bill was no different. Both the Senate and the House voted on farm bills that included both elements. The Senate passed its legislation on June 10, 2013. But the outcome in the House was a lot different: On June 20, 2013, the $940 billion farm bill was killed on a 195-234 vote, mainly because Democrats were opposed to an included amendment that would have given states the option of running pilot programs for instituting work requirements for food stamp recipients.
Some principled Republicans also voted against the bloated bill because few agricultural reforms were included and few amendments were allowed to be considered. CEI and other free-market groups called for the bills to be split in two, so that the agriculture programs would be considered separately from the nutrition and food stamp program and could be considered on their own merits. A split would also drive a wedge into the unholy alliance and deal-making between rural farmers and urban food stamp proponents.
Bloomberg on September 9 published an in-depth article on the high costs of federal crop insurance – likely to be increased even more if the House version of a proposed farm bill gets passed. The article noted that last year the U.S. Department of Agriculture spent $14 billion insuring farmers against losses due to crop failure or income. Proposed House legislation would up that to cover so-called “shallow losses” – that would guarantee up to 90 percent of a farmer’s income.
It’s estimated that U.S. taxpayers fund about 60 percent of the premiums farmers pay. And there are no caps on those crop insurance subsidies, which encourages farmers to plant on unproductive land, take higher risks, and claim losses. The names of the crop insurance recipients are also not public.
As the Bloomberg article noted:
In 2011, the latest year for which data is available, 26 farmers each got annual subsidies of more than $1 million; more than 10,000 received $100,000 or more. One grower of tomatoes and peppers in Florida enjoyed a subsidy of $1.9 million, according to the Environmental Working Group. Congress has barred the USDA from revealing the identities of payout recipients.
Farmers are not the only ones getting subsidized by the crop insurance program. The federal government also pays the administrative costs of the 18 approved insurance companies that write the policies. Last year those administrative costs amounted to $1.4 billion paid out by the government.
The House and the Senate farms bills are expected to be reconciled by September 30. While a host of lawmakers are calling for cuts in the crop insurance program, agricultural and insurance interests are lobbying hard to continue and even expand the program. Here’s what the Bloomberg article noted:
Yet the president and the Republicans’ chief budget expert are no match for the farm and insurance lobbies, which spent at least $52 million influencing lawmakers in the 2012 election cycle. Rather than thin the most expensive strand in the nation’s farm safety net, Congress is poised to funnel billions of dollars more to individuals who already are more prosperous than the typical American.
“We have been subsidizing some of the farmers who least need it in a way that is really costing taxpayers a lot of money,” said Senator Jeanne Shaheen, a Democrat of New Hampshire. “We’re never going to solve our budget challenges if that’s what we’re doing.”
Ronald Coase, an extremely influential economist and winner of the 1991 economics Nobel, has passed away at the age of 102. CEI Founder and Chairman Fred Smith discusses Coase’s major works, the animating themes that unite them, and the fact that Coase was always a man of great personal and intellectual humility — a trait that escapes many of his peers. In 2004, Smith sat down with Coase for an extended interview, which you can watch here.
(Note: On September 9, the U.S. Court of Appeals for the D.C. Circuit will hear oral arguments in Verizon’s challenge of the Federal Communications Commission’s December 2010 Order on “Preserving the Free and Open Internet.” This series explores fundamental issues at stake.)
Forced “openness” on the assets in existence now will undermine growth of infrastructure wealth and property tomorrow, and downgrade expansion of physical and wireless access to content.
However the U.S. Court of Appeals for the D.C. Circuit ends up ruling, it is absolutely clear that the impulse for genuine liberalization must come from outside the FCC; the regulatory approach to infrastructure creation and access to content will fail, but FCC has no other mission, tool or inclination.
Policy emphasis belongs on fostering the emergence of competitive institutions that replace uninspired and damaging bureaucratic oversight of “long and thin” property.
A handful of things Congress might contribute to such future reforms include:
- Legislatively affirm that the agency is not authorized by Congress to regulate the Net; Remove FCC’s power and advance “Communications Without Commissions.”
- Ban the extension of neutrality mandates (or so-called “openness” rules) to wireless and future technologies.
- Short of a radical liberalization, legislatively affirm exemption from regulation of future construction and competitive options, to all that which does not yet exist. Guarantee that compulsory neutrality shall not apply to future network extensions or those that are not part of the “public” Internet, and those that seek to break away.
- Discourage the use of antitrust against large scale content and infrastructure ventures.
- Have FCC present a report to Congress, not critiquing “discrimination” and other alleged “market failures,” but articulating the pro-market role of pricing and network management freedom, and clarifying the agency’s understanding of the primacy of private enterprise in creating and managing networks.
- Hold detailed hearings not on private business practices, but on FCC practices and political failure: its scope of authority and whether it’s growing or declining, its interventionism, its expansion in staff and budget, its reason-for-being in modern times compared to that invoked at its origin. Such concerns were covered in “Before Net Neutrality Eats the World (Part 5): The Fallacies Motivating Net Neutrality.”
- Explore the state of infrastructure regulation across all sectors, not solely communications, and create inter-agency plans for liberalization and the potential for future cross-industry consortia.
In 2010, the FCC issued regulations to implement net neutrality. The resulting legal challenge is about to hit the D.C. Circuit Court. Vice President for Policy Wayne Crews explains why net neutrality policies would hamper innovation and reduce competition in high-tech infrastructure.