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Entrepreneurial & Regulatory Freedom

A California-style Brexit

Freelancers are rising up in opposition to the state’s new law regulating “gig workers.”

By Erica SandbergCity Journal

Are California Democrats—responsible for the state’s new anti-gig-worker law, AB5—so out of touch that they’re not aware of the growing anger of their constituents? It appears so.

Since AB5 took effect on January 1, hundreds of thousands of Californians are finding their businesses in tatters. Musicians can’t join bands for a one-night gig, chefs can’t join forces with caterers, nurses can’t work at various hospitals, and writers must cap their submissions per media outlet to 35 per year. Under the law, these freelancers can no longer conduct the same business-to-business transactions they have for years or even decades. Clients with whom they fostered valuable relationships are gone—as are their successful careers and incomes. An overwhelming majority of professionals in fields affected by AB5 identify as liberals and have generally voted along the blue line. Today, however, many are so disillusioned with their representatives that they’re changing political loyalties.

When Gloria Rivera, a San Diego-based, Peruvian-born translator and interpreter, achieved U.S. citizenship, the first thing she did was register as a Democrat. “Now I’m seeing a lot of people like me who are either going Independent or Republican,” she says, “myself included. The Democrats are not listening to us.”

Lorena Gonzalez, the San Diego assembly member who authored AB5, faces public condemnation wherever she goes. Online and in person, independent contractors are confronting Gonzalez and demanding a repeal of the law. Her condescending response: independent contractors need the protection of union-driven labor laws. In a damning KUSI news interview, Gonzalez denied that AB5 has resulted in widespread income loss. Her dismissive attitude has fueled outrage against Democrats. “Lorena Gonzalez is doing a great job turning everybody red,” says Rivera.

Gonzalez deserves much of the blame for the AB5 train wreck, but she had plenty of support from her party: nearly every assembly member who approved AB5 is a Democrat, including Governor Gavin Newsom. Those opposed: Republicans and Independents. Senator Patricia Bates, a Republican state senator representing parts of Orange and San Diego counties, has been hearing from constituents who had no idea that they were swept up in the AB5 net. “They’re asking, ‘Who did this to me?’” says Bates. “I don’t like to make it partisan, but I have to tell them the majority party that runs the show did it. There’s a new awareness about the anti-business environment and how it affects their right to work, to be free.”

Independent contractors are entering new territory. Suddenly, a more conservative approach seems more attractive. “My entire political mindset has changed drastically following the enactment of AB5,” says Cathy Hertz, a freelance copyeditor of STM (science-technology-medicine) books, from Loma Linda. Hertz campaigned for Barack Obama cross-country at her own expense in 2008; she campaigned for him locally, in Los Angeles, in 2012. “Now I feel that the rights of entrepreneurs are being stifled, trampled upon, violated,” she says. “Free enterprise is one of the main pillars of modern democracy.”

Apparently oblivious to the reaction in California, congressional Democrats have passed HR 2474, a national version of AB5, known as the “Protecting the Right to Organize” or “PRO Act.” The PRO Act, designed to boost union membership, will put 57 million independent contractors across the country out of work if it becomes law. These enterprising professionals will be forced into low-paying jobs—if they can find them—with none of the autonomy, flexibility, or opportunity that they currently enjoy. When the Trump administration denounced the bill, people who normally hiss at mention of the president’s name found themselves in a peculiar position: feeling grateful.

As for Gonzalez, she’s up for reelection this year and is aiming for secretary of state in 2022. Her campaigns will be tougher than she likely imagines. The movement against her is ramping up.

“I see a revolution on the horizon,” says David Mills, a musician from Lake Elsinore who created the Facebook group Freelancers against PRO Act. “This may be the final straw that breaks the camel’s back. But I think it’s leading to something good. The American people on all sides are waking up. We’ve gotten too caught up in partisan support. Now we’re paying attention. There is a huge uprising. People had to lose their jobs to find out what it was.”

Kevin Kiley, a Republican assembly member representing a large swath of Sacramento and a vocal ally of independent contractors, agrees. In January, he led a rally on the steps of the state capitol against AB5 and introduced a bill to repeal it. “We have a capital that’s controlled by special interests, and the public good isn’t even considered,” says Kiley. “That disconnect is stark. I’m more motivated to change this law than anything I’ve ever worked on because it has such a direct and negative impact on peoples’ lives. I believe very deeply in economic freedom, the right to pursue your calling. AB5 is a grave moral offense. So if there’s a silver lining to all this, it’s giving a diverse range of people a window into the dysfunctional nature of politics in Sacramento. For those who are disenchanted with the political majority, there is now an opportunity for alternatives.”

Such alternatives are popping up around the state. Evan Wecksell, a comedian and tutor by trade, is running for state senate as a write-in candidate for District 25, which encompasses parts of Los Angeles and San Bernardino county. He was registered as a Democrat until recently. Today, he’s a Libertarian.

“I definitely sense a change,” says Wecksell. “People who swore they would never vote for a Republican are doing it. We were not up to speed with knowing what was going on in Sacramento, but AB5 was a lesson and we’re learning from it. They’re taking away our natural human rights.”

Independent contractors are a unique bunch. Deeply committed to individual liberty, they’re becoming a unified group of fighters in California. They come from all walks of life and political persuasions, and if voting differently means that they can continue to run their businesses as they see fit, then so be it. Unless Democrats change course, the AB5 revolt may be the Brexit that the U.S. never saw coming. California certainly didn’t.


Bipartisan health care fix misses mark

By Peter RoffSanta Cruz Sentinel

America’s health care system is still a mess. The Affordable Care Act, Barack Obama’s signature legislative achievement, has sparked continued increases in premiums and deductibles while failing to bend the health care cost curve down as promised.

That’s just one of the assurances ACA supporters made about the new law it failed to keep. Obama was badly misinformed when he promised people could keep the coverage they had, if they liked it, once the ACA became law. Some suggest he knew at the time this was a lie, but he’s not saying, one way or another.

Yes, there are more people insured than ever before, but many of those people still can’t afford to use that insurance because the deductibles are so high. Plans in the individual markets are canceled from one year to the next, forcing people to re-enroll in something similar or find new insurance altogether.

That’s not the way it was supposed to be. Efforts at repeal collapsed thanks to the Senate Democrats’ procedural instance any plan to replace it be adopted with 60 votes or more. So much for what the people want.

The idea getting the most attention, the Medicare-for-All proposal first put forward by Vermont Sen. Bernie Sanders and embraced by other Democrats running for the party’s presidential nomination, is a non-starter. The non-partisan Committee for a Responsible Federal Budget estimates the Sanders’ plan “has a gross cost of $30.6 trillion and, incorporating offsets, would add $13.4 trillion to deficits over ten years under our central estimate.” The plans floated by former Vice President Joe Biden, Massachusetts Sen. Elizabeth Warren, former South Bend, Indiana Mayor Pete Buttigieg, and others also don’t come close to paying for themselves.

Obamacare was supposed to increase transparency for consumers, allowing them to make better decisions about the care they received and what it would cost. That hasn’t happened either, and though President Donald Trump is pushing for action from Congress to pass laws putting price tags on all kinds of care, nothing spectacular has happened in that area either – largely because the health insurance companies are still driving the train.

They helped write the ACA and are now employing armies of lobbyists to make sure they don’t go under because of it. They’re pursuing new laws and regulations to insulate them from their responsibilities to their customers, to protect them from liability, and to avoid paying for services using a variety of what can best be called coverage loopholes.

The biggest of these has come to be known as “surprise billing,” an issue the president has taken to heart. No one likes to get a bill they didn’t expect, especially when they thought they were covered for the expense. Yet let an in-network doctor perform a procedure at an in-network hospital using an out-of-network anesthesiologist and send tissue out for analysis to a pathology lab at a nearby, affiliated and out-of-network hospital, and that’s precisely what happens.

In that case, as I recently experienced for myself, the insurance suddenly doesn’t count because you went out-of-network. That you didn’t know it and that you asked ahead of time that everything to be done “in-network” doesn’t matter so you must pay for the out-of-network services performed. It doesn’t seem fair, but it’s legal.

Congress, led by Tennessee Republican Lamar Alexander, has crafted a bill to change that. The problem with the Alexander approach is that it relies on price controls. The track record of price controls creating adverse consequences is long and storied.

The bipartisan Alexander bill requires insurers to pay the surprise bills when they arise based on the average price for the services provided. This is called “benchmarking” and it’s a bad idea because it empowers the government to make further intrusions into the health care marketplace and gets the country all that much closer to a Medicare-for-All style system.
“Price controls” and “government rate-setting” are a large part of what helped wreck the U.S. health care system in the first place. Insurers need to own their responsibilities to their customers and level the playing field on their own.


Three issues the Dems own: Wealth Gap, Health Care, and Climate Change

There are free market solutions for these issues waiting for GOP support

By Dr. Larry Fedewadrlarryonline.com

On most of the issues highlighting the 2020 campaign, the Republicans have a great story, especially the economy, law enforcement, foreign policy (including trade), national security, energy, and job creation. The Democrats have concentrated on three critical issues, however, which are nearly ignored by most Republicans: the wealth gap, health care, and climate change

These issues are currently owned by the Democrat candidates; they have not even been addressed directly by the Republicans. This silence is a tragic mistake because current polls show that these three issues are of critical importance to significant numbers of the American electorate. If Republican candidates continue to ignore these two issues, they will suffer in the only polls that really count – the votes in November.

Today’s topic is the wealth gap, with discussions of health care and climate change to follow in succeeding columns. I use the term, “wealth gap” in preference to “wage gap” and “income inequality” because “wealth” includes assets which are relatively long range as opposed to “wages” or “income” which may fluctuate from time to time.

The Republican response to the wealth gap is the “trickle-down” economic theory: prosperity for the wealthy means incremental income to the entire workforce because the wealthy will of necessity invest in an expanding economy thus benefiting the workers who actually produce new goods and services by which the economy is actually expanded. This is the argument prominently featured by President Trump in his famous rallies.

And, measured by present and past metrics, it is true. A flourishing economy does indeed raise wages and job opportunities. When applied to a stagnant employment environment, the chief beneficiaries on a percentage basis are the lower wage workers – i.e. when a person goes from unemployed to employed, the percentage of improvement is 100%. This is, of course, a valuable trend.

The next step, however, poses an altogether different problem: in a tight labor market – which America is rapidly approaching – how does an employer retain an experienced worker? And an ancillary problem: how does the country avoid a steady inflation, as wages rise, and senior employees can seek and find ever higher wages?

There are free market solutions to both these questions. My answer may be considered by traditional economics a radical solution, namely profit-sharing. There are various ways to implement the concept of profit-sharing – e.g. stock grants or options, profit-based bonuses, or employee stock option plans (ESOP), among others.

The basic hedge against inflation is the fact that increases in income to the workers comes from profits rather than expenses, so prices do not have to increase. The operational result is that workers who have a stake in the performance of the company tend to work harder and more efficiently, and greater income leads to higher job satisfaction and loyalty.

There are other reasons to advocate profit-sharing, namely, redressing the imbalance in asset ownership in America, which currently shows that at least 80% of America’s wealth is controlled by 1% of the population. This is a frightening situation for a democracy which is founded on a prosperous middle class. Oligarchs are waiting to rule the nation (e.g. already three billionaires are running for president).

There is also a moral reason for profit-sharing which can be summarized as follows:

1) The increase in national wealth over the past 200 years is due primarily to increases in productivity, which in turn is due to new technologies.

2) The implementation of technological innovations involves a number of stakeholders – inventors, investors, managers, implementers and buyers.

3) The benefits of the new technologies are currently heavily weighted toward all the stakeholders expect the implementers – the workers who bring into actual being the ideas of the inventor – i.e. they design and build the machinery which produces the product, fabricate it, market and sell it, repair it and teach users. Without the implementors, there would be no technology – only ideas on paper.

4) All of the stakeholders should be rewarded when the product is sold; it is only fair, therefore, that each be rewarded in proportion to the value of their contribution to the success (or failure) of the product. This is called “profit-sharing”.

This idea is not as novel nor as radical as it may seem to traditionalists. In the first place, the entire history of free-market capitalism shows it ever evolving towards more and more recognition of the value of labor in the forward march of progress.

It is also true that the chief proponents of this march have historically been the organized labor movement – at least until the 1970’s. Since then American unions have shifted from ever advancing workers’ rights in the marketplace to attempting to achieve progress through government intervention, which has meant in practice an alliance with the Democrat Party and a slippery slope toward socialism.

The results have not been encouraging. We have seen the denuding of America’s manufacturing base, the disheartening imbalance of income between management and labor, and the gradual slipping of much of America’s middle class into poverty and desperation. The bureaucracy of American Labor has failed miserably in protecting and advancing the cause of America’s workers.

The most impressive advocacy for profit-sharing in today’s marketplace is called “Conscious Capitalism”. This is a rapidly growing group of companies who represent a new generation of free market businesses. It is both a movement and an organization.

As an organization, Conscious Capitalism, Inc. now numbers thousands of companies, millions of employees, with chapters in 41 countries, and a number of large firms including Federal Express, Southwest Airlines and Costco among others. (For more information, see www.ConsciousCapitalism.org). 

As a movement, it counts Amazon as one of its colleagues along with many other companies, both large and small. While this group is not particularly fond of organized labor, I believe there is a place for Labor in this movement, unions which work with and not against management and represent workers who are both employees and recipients of prorated profits from their work.

The time for advancing workers’ rights is now – in the 2020 election campaign. To win back the workers of America, the GOP must move “Onward and Upward!”


USPS Neglects Its Priorities and Starts Off 2020 with Another Massive Loss


Frontiers of Freedom expressed great alarm this week over the U.S. Postal Service’s (USPS) latest financial results which showed $748 million in losses during the first quarter of FY 2020. 

George Landrith, President of Frontiers of Freedom, said: 

“The U.S. Postal Service is hemorrhaging money!  In the first quarter of FY 2020, they have already reported $748 million in losses.  And it isn’t like 2019 was a good year.  Last year, they lost an unbelievable $8.8 billion in FY2019.  To put that into perspective, the Postal Service has posted 13 consecutive years with a net loss of a billion dollars or more, and its unfunded liabilities and debt now total more than $143 billion. It is extraordinarily difficult to lose that kind of money when you are operating a government-granted monopoly like the Postal Service has on First Class Mail.”

Frontiers of Freedom President George Landrith also called out the agency over its negligence and financials, stating: 

“It is readily apparent that the current USPS business model is failing.  It is up to Congress, the Postal Regulatory Commission, and the new heads of the USPS Board of Governors to address the ongoing challenges.  This includes ending nonsensical postal subsidies, trimming down the agency’s excessive costs, and complying with new laws impacting the USPS.”

Frontiers of Freedom previously hailed the work of Congress and President Trump to address some of USPS’ major systemic flaws with the enactment of the Synthetics Trafficking and Overdose Prevention (STOP) Act in 2018.  This bill was an essential step in requiring the Postal Service to meet industry standards in data collection and monitoring practices of packages that enter the U.S. from abroad.

Despite the required protocols to protect our communities from hazardous and criminal items, the Government Accountability Office reports that USPS continues to fall short on its requirements to provide Customs and Border Protection (CBP) with advanced electronic data (AED).

Failing to keep up with the directives of the STOP Act prompts further troublesome questions as the Department of Homeland Security embarks on robust initiatives to impede the flow of counterfeit and pirated goods. However, in assessing the Postal Service, DHS finds a “significant gap in the information CBP receives,” among numerous critiques and findings. Landrith remarked, “Ultimately, the work to intercept illicit drugs and contraband is an immense challenge, and there is simply no excuse for USPS to not do its part.”  

On the USPS’ array of responsibilities, Landrith concluded:

“Americans should be greatly concerned about the USPS procrastinating on its priorities. Looking ahead, it is crucial for the board to install a new Postmaster General with well-qualified business expertise. The demands of stakeholders, legislators and citizens continue to go unanswered. The path to reform will be wide-ranging, and USPS leaders and lawmakers will need to act with urgency.” 


Hollywood Fiction Isn’t a Good Basis for Legislation or Regulation

By George LandrithTownhall

Mark Ruffalo may be most famous for his fictional portrayal of Dr. Robert Bruce Banner and his alter ego “The Hulk” in Marvel’s Avengers series, but he has recently been grabbing headlines for other reasons. Last month, Ruffalo made the news by submitting testimony in Congress based on his recent role in a largely fictionalized movie — Dark Waters — that is being portrayed as a “true story.” 

While the media, Ruffalo, trial attorneys, and some politicians pretend that Dark Waters is a dramatization of a true story, its marketing materials merely claim it is “inspired by true events.” But it gets so many facts wrong, even that claim is hard to stand by. 

Whether the movie is entertaining is a matter of personal preference. But whether the movie is an accurate portrayal of fact is not a matter of opinion. A movie is either factual and accurate, or it is not. The Avengers‘ movies are in my estimation entertaining. But they are not factual and shouldn’t be the basis of congressional action. Neither do we need the Hulk testifying in Congress. Dark Waters is not nearly as entertaining as the Avengers movies, but it is about as factual, so we really don’t need Mark Ruffalo testifying either.  

The basic plot line of Dark Waters is that an evil, dark corporation knowingly and purposefully pollutes the water in a local community and an activist heroic trial attorney played by Ruffalo comes to the community’s rescue to force the evil corporation to take responsibility. The thrust of the movie is that corporate greed led to horrible excesses. Yet the movie itself appears to be an exercise in greed and excess. A network of well-financed trial attorneys, political activists and Hollywood nitwits have fabricated a story designed to support their political agenda, encourage ever more litigation, and make their greed appear altruistic and heroic. Trial lawyers and Hollywood shouldn’t be lecturing anyone about greed. 

The movie portrays the Ohio River communities in West Virginia and Ohio in ways that promote false “hillbilly” stereotypes of locals being simple-minded and uneducated with rotting teeth. The fact is that the region is a manufacturing powerhouse and has a diverse economy with hundreds of thousands of proud, healthy, hardworking people.  

Folks are not merely offended by the portrayals of locals as simpleton hillbillies with blackened and rotting teeth. Local legislators, people who would know the facts, have criticized the movie saying, “The film’s portrayal of Parkersburg does not reflect reality.” But it goes deeper than just that the film isn’t based in fact. Local legislators are concerned that Dark Waters will do “real damage to our economy and the hard-working people of the Mountain State.” 

The movie falsely suggests that PFAS chemicals lead to deteriorated oral health and cause cancer. PFAS chemicals are used in firefighting foam and consumer products like non-stick cookware and waterproof clothing. Science does not establish that this is a cancer-causing agent. Nor has it found that it harms teeth. But asserting these things as if they were established fact, does make the movie more dramatic — just like the Hulk’s fictionalized strength makes the Avengers movies better.

Ruffalo’s trial lawyer character claims that “DuPont is knowingly poisoning 70,000 local residents.” This hysterical claim may make for a dramatic scene in a movie, but local leaders doubt its veracity. But it is useful to tell such lies when you’re trying to promote a political agenda and you’re committed to grotesque oversimplification of complex matters in hopes of creating a fact-free political narrative. 

The movie is defended as an effort to educate and motivate Americans to take action and as a way to require accountability. But wouldn’t an accurate, fact-based portrayal be a better way to educate? How does one effectively educate with falsehoods?  

Ohio River basin locals have asked “that those who profit off of fear-mongering and stereo typing [i.e. Ruffalo and other Hollywood nitwits and trial lawyers] be held accountable.” But that isn’t the sort of accountability that Ruffalo or trial attorney’s support.  

No rational human being would suggest using the Avengers movies as the basis for congressional hearings. That’s why Tony Stark, Captain America, and Thor are not invited to testify. But sadly, ignorant Hollywood activists and trial attorneys — who see themselves as more intelligent and altruistic than other Americans — hope to use the mostly fictional Dark Waters movie to advance their fact-free political agenda, and shape and mold a more supportive public.

Hollywood is an entertainment industry. Ruffalo and other Hollywood activists seek to merge their political agendas with entertainment. The outcome is agenda motivated entertainment that creates distorted policy demands based in fantasy and an American public that is less informed and even misinformed because the agenda driven entertainment is such a distorted, largely fictionalized account. This is no way to make public policy.


The Trump Justice Department Probes Hollywood

By George LandrithRed State

Will the Trump administration ensure Hollywood remains driven by market principles?

Past harsh, critical comments from both President Trump and William Barr, his attorney general, demonstrate that the White House accepts the entertainment industry for what it is: a leftist, anti-capitalist blob that seeks not only to distort the culture war and remove Republicans from office, but also to rig the competitive market system to artificially increase its power and influence.

However, the question becomes how does the White House address its abuse in a free market way?

It’s a delicate balancing act, to be sure. While Hollywood often acts anti-competitively for personal gain – see: Steven Spielberg’s attempt to kill Netflix films’ ability to compete for Oscars – like every other industry, it also suffers from big-government edicts that unfairly harm their businesses. And, for all of the donating to Hillary Clinton they just made a few years ago, the movie and music industries have sounded alarm bells with the administration that the latter is a major concern to them.

Despite all the flack that the current White House gets for being rash and careless, the Trump administration is working tirelessly to ensure it treats its Hollywood detractors fairly and in line with the conservative principles it preaches.

Through a sweeping antitrust consent decree review, the Department of Justice is trying to successfully achieve this balance. Since April of last year, it has been examining the antitrust judgements that have been on DoJ’s books for generations. Its objective is to determine which are still needed to protect consumers against anti-competitive behavior, and which, at this point, act more as pointless red tape than anything else.

Seemingly as a result of multiple advocacy pushes, the clear focus of this effort quickly became those governing the entertainment industry. Namely, the Paramount consent decrees, which restrain the movie industry, and the ASCAP/BMI decrees, which created guidelines for the Big Music monopolies to follow.

On Nov. 18, the DoJ came to terms with its first major decision, announcing that it will ask the court to phase out the Paramount movie consent decrees. They prohibit the big five movie studios of the 1940s from harming small theaters by making exclusive deals with regional theaters (“circuit dealing”) and mandating that small theaters purchase their films in bundles (“block booking”).

DoJ made the right move. While at the time these decrees were necessary, modern-day innovation has made them obsolete and harmful to market competition.

Today, the Big Five studios from the 1940s are still far from angels, but there are plenty of new distributors that have taken their power away. Just look at Netflix, which plans to release over 50 films this year – more than Paramount, Disney, and Warner Bros. combined. Unlike in the 1940s, there are plenty of other studios with which theaters can do business should MGM, Warner Bros., RKO, Paramount, and 20th Century Fox – the five companies restrained by the decrees – provide terms to small theaters that are not agreeable. In fact, only two of those companies are still even in the Top 5 for market share.

If the DoJ let the decrees continue to restrict these studios while leaving their major competitors that have risen over the last 70 years unchecked, it would distort the marketplace by picking winners and losers. That would work to the detriment of, not the benefit to, consumer choice.

While the DOJ’s decision on Paramount was the right one for the free market, Barr’s department needs to be extra cautious on its next entertainment industry review – the ASCAP/BMI music consent decrees.

ASCAP and BMI – monopolies that control the rights to music licenses for public performance – are pushing for the DoJ to terminate or modify these antitrust guardrails. In an open letter to DOJ, they claimed that doing so would open the free market, which “would create a more productive, efficient and level playing field for everyone involved.” However, a dozen free market groups, including Frontiers of Freedom, have cautioned the DoJ that, contrary to what those monopolies are saying, doing so would run the free marketplace in the music industry to the ground.

The reason the ASCAP and BMI decrees went into place in the first place was to prevent ASCAP and BMI from enacting predatory pricing on small businesses. After all, the two monopolies’ very existence is emblematic of everything that Washington created antitrust law to prevent.

Both ASCAP and BMI are comprised of otherwise competing songwriters and publishers that banded together into these two groups to set prices for a joint product at a joint price. Both institutions were created with the explicit purpose of working together to increase prices. Put simply, there is nothing competitive or free market about them.

For the relaxation or removal of its decrees, ASCAP and BMI would have to prove that price-fixing is no longer a fundamental concern. As alluded to already, that is going to be hard to do when considering that the whole reason for their creation was to price-fix. It is going to be especially be hard to prove when considering how, unlike in the movie industry, their combined market share has barely moved at all since the 1940s – remaining at 90-percent of all performing rights. The fact that ASCAP had to settle a civil contempt charge with the DoJ for violating its decree just three years ago for nearly $2 million shouldn’t help its case either.

By giving everyone – including its political opponents, like the major entertainment industry conglomerates – the benefit of the doubt and the courtesy of a thorough review of present-day regulations, the Trump administration is yet again proving how serious it is about its deregulatory agenda. It is not governing on partisan or electoral grounds, but rather out of a desire to see fairness and accountability restored for everyone – even its enemies.

The White House is off to a good start, but for the sake of the free market and the consumers who depend on the fair playing field it creates, here’s hoping that it finishes strong.


Sanders vs. Warren

In the general election, Bernie would be more competitive

By LUKE THOMPSONNational Review

Former New York City mayor Michael Bloomberg and former Massachusetts governor Deval Patrick recently jumped into an already crowded race for the Democratic nomination. Politically, they hope to appeal to center-left voters rightly worried about Joe Biden’s flagging early-state poll numbers. Ideologically, they have cast their candidacies as efforts to save a fading breed of centrist Democrat. Neither Bloomberg nor Patrick is likely to win. Instead, for the first time in recent memory, two leftist candidates stand a good chance of seizing the party’s nomination: Senator Bernie Sanders of Vermont, and Senator Elizabeth Warren of Massachusetts. 

To many observers, Sanders and Warren closely resemble each other. They represent solidly blue New England states, advocate the nationalization of large parts of the economy, and believe that the ills afflicting society result from a political process hijacked by the wealthy few. Yet Sanders and Warren are hardly interchangeable. Despite shared policy goals, they differ in their coalitions, diagnoses of what ails America, theories of change, and, ultimately, prospects in the general election next November.

The Democratic primary electorate is sharply divided by race, age, and gender. The left wing of the party — younger, whiter, and more female — is overrepresented in the Iowa caucuses. Indeed, while national polling suggests that Sanders has a more racially diverse coalition, and that he does well among younger men, Warren is stronger among women of all ages and college-educated white liberals. 

Iowa is a do-or-die test for Warren and Sanders; should either win the Hawkeye State, he or she will be the odds-on favorite to win in New Hampshire, where both enjoy a home-field advantage as New England senators. Organizationally, the Iowa caucuses are a monster. Caucuses take place in the dead of Iowa’s notoriously severe winter and feature runoff voting at each of the state’s 1,681 precincts. A viable campaign needs representatives ready to speak at each caucus and trained to court supporters of candidates who fail to hit the 15 percent viability threshold in the first round. The state, and therefore the nomination, may hinge on whose caucus leaders are better trained. 

Warren has lately given Sanders a chance to highlight their ideological differences. On Medicare for All, Sanders has bluntly and repeatedly promised to raise taxes to pay for universal coverage. Taxes will go up, he contends, but costs will go down and Americans will no longer have to worry about losing coverage or wading through a morass of paperwork. Warren, by contrast, has promised to give free health care to every American without raising taxes on the middle class. 

Setting aside whether any Medicare for All plan is realistic, Warren’s no-tax promise suggests to many on the left that she lacks the resolve to force through a politically difficult reform and would cave to conventional wisdom. Indeed, leftists have reasons to doubt her commitment. She refuses the label “socialist,” was a Republican earlier in life, and has generally tacked closer to the Democratic mainstream than Sanders has. Some of her struggles with candor raise questions about her character. Warren has never satisfactorily accounted for her multi-decade deployment of imagined Native American heritage for personal and professional gain, for instance. Making an obviously false but politically expedient promise — free health care with no middle-class tax increases — reinforces the impression that Warren is not trustworthy. 

Warren’s no-tax plan also undermines her credibility with the press, which has heretofore dutifully relayed her self-presentation as a sophisticated thinker, policy wonk, and technocrat with a plethora of Ivy League–certified schemes. Many of her lower-profile plans will not hold up to scrutiny. If the press comes to see her as a phony, she might have to deal with a running series of bad stories about the unviability of her white papers. Sanders, whose messaging has always been high-level and simple (even simplistic), has not offered much in terms of specifics, but as a result he has a minimal paper trail to defend. 

Yet these differences go beyond taxes and messaging. They go to a fundamental tension on the American left. Warren comes from the progressive tradition of the Left, whereas Sanders is a legatee of its populist tendencies. Being a progressive first, Warren prefers the technocratic approach. For her, simmering left-wing populism can be used best to attack entrenched power, by electing a president who will fill the bureaucracy with like-minded experts and pass campaign-finance reform to limit corporate influence. In other words, personnel is policy.

Sanders believes that American government is fundamentally broken. In a divided constitutional system, elected officials and regulators alike will be corrupted by special interests and will default to the status quo unless compelled to act otherwise. Control of the bureaucracy is not enough. Rather, for his “political revolution” to succeed, Sanders needs a movement that will last beyond Election Day and exert political pressure on the elected officials and regulators. Absent a confluence of movement, party, and administration, special interests will prevent the passage of sweeping structural reforms. 

Put simply: Warren wants to regulate, Sanders wants to legislate.

Whether that distinction will matter electorally come November is unknowable today. However, we have some evidence on which to hazard a guess. First, the national demographic polls mentioned above, irrelevant in a staggered presidential-primary process, come to bear once the parties have picked their nominees. There are very few prospective Elizabeth Warren voters who did not pull the lever for Hillary Clinton in 2016. A replay of the last presidential election might be enough for Warren to win in 2020, especially given heightened Democratic turnout in elections since 2016. However, Democrats suffered from low minority and youth turnout in the Upper Midwest in 2016, and it cost them the presidency. 

Sanders does well with precisely the voters who stayed home when Hillary Clinton topped the Democratic ticket. Younger and more diverse voters were essential to his victory in the Michigan primary, for instance, and while primaries are not the same as general elections, they serve as decent indicators if Democrats need elevated turnout to win. Sanders would get more non-voters to the polls than Warren would, and there are few voters who would vote for Warren but not Sanders.

Sanders has overperformed the Democrats’ partisan vote-share in Vermont, whereas Warren has generally undershot other Democrats in Massachusetts in polling and at the ballot box. Admittedly, Warren represents a state many, many times the size of Vermont. Nonetheless, her underwhelming approval ratings at home suggest that she lacks crossover appeal to independent voters. This is especially true in western Massachusetts, which, like many parts of Vermont, resembles the rural and exurban parts of the Upper Midwest that turned out heavily for Trump and doomed Clinton’s candidacy. 

Neither Sanders nor Warren would enter a general election without baggage, and both would have to face a messaging onslaught from President Trump. Incumbent presidents tend to get reelected. Combine that with good economic performance, peace abroad, and wage growth, and Trump, despite his unpopularity, stands a good chance of winning a second term, provided there are no major changes in the next twelve months. However, 2016 was won on the narrowest of margins. When we look at only those states that were decisive, Sanders appears as a bigger threat to Trump than Warren does.


Extending, expanding or enlarging the electric vehicle tax credit is bad policy and robs the taxpayers

By George LandrithFrontiers of Freedom

Any extension, expansion or enlargement of the electric vehicle tax credit is a profoundly bad idea and essentially robs the taxpayers to pad the pockets of the wealthy who can afford the best lobbyists money can buy. 

When the original legislation giving tax credits and subsidies for electrical vehicles passed more than a decade ago, its sponsors promised that it would be temporary and were only designed to help new technologies gain a foothold in the marketplace.  Now more than a dozen years later, some irresponsible legislators are ready to move away from temporary, limited subsidies and are headed towards a permanent and almost unlimited subsidies. 

This is both bad policy, and dangerous. Government’s power to tax should not be used to transfer wealth to those who can afford the best lobbyists. Single parents working two jobs to make ends meet should not be forced to take an extra shift so that they can support this sort of wasteful spending.  If rich car purchasers want to buy new expensive electric sports cars, they should be free to do so. But the idea that they should be able to reach into the wallet of the single parent struggling to make ends meet is unconscionable! 

Virtually 80 cents of every dollar spent on subsidies went to households with more than $100,000 of income.  And, of course, all of the taxpayer provided cash benefits wealthy and profitable car companies — like Tesla and its billionaire founder Elon Musk. It is revealing that almost 1/2 of all the subsidies for electric vehicles go to just one state — California. 

This is a wealth transfer from the working poor and middle class to the wealthy.  And it is a wealth transfer from 49 states to 1 state.  Before anyone votes for these wealth transfers, they must provide an explanation. Why is this good for America? Why is this good for taxpayers? I know it is good for Mr. Musk and Tesla. But why is it good for that single parent who is working so hard to provide her children with a better life? 

There is no need to extend, expand or continue subsidies for electric vehicles.  Sales of electric cars have been on the increase for years. The original rationale was that the temporary aide would help them get established and build economies of scale that would drive prices down.  Twelve years is more than enough time. 

Some argue that the subsidies are justified because electric cars are “zero emission” vehicles. But that is a lie. Electric cars are plugged into the power grid to recharge and whatever emissions were created while generating the electricity needed to recharge the car are the car’s emissions.  Nationally, that won’t be anything close to zero. Moreover, recent studies indicate that full life-cycle emissions from electrical vehicles may exceed those from new internal combustion engines. So it is unlikely that electric vehicles provide the environmental benefits promised. 

Since there is no longer any plausible or rational reason for the subsidies, the real reason is laid bare — car companies want more taxpayer cash and they’ve lobbied Congress hard to get it. Mr. Musk and Tesla and others who receive the benefits of this taxpayer provided subsidy would love to extend and expand it. But that isn’t a good reason to give them more taxpayer cash or to reach into a single parent’s wallet so that some rich guy can get some help to buy that very cool electric car.  

Moreover, the public doesn’t support the idea of taxpayers helping people buy expensive and trendy electrical cars. By landslide proportions, 2 in 3 Americans oppose these subsidies, and with good reason. 

The truth is most people would love to receive a perpetual gift of cash. There’s an old saying, “A government that robs Peter to pay Paul can always count on the support of Paul.”  That’s what we have here.  Paul is in favor of Paul getting millions of dollars provided by Peter.  This is clearly just based on greed. 

Even more important, our constitutional system cannot devolve into a system in which one group gets to vote itself cash from another group.  But that’s what we have here.  Nothing more.  A vote to extend, expand, or enlarge this subsidy is a grotesque violation of the public trust.


FTC – Coalition Letter on Data Sharing Practices of Ring

Dear Chairman Simons, 

The Federal Trade Commission (“FTC” or “Commission”) should open an investigation into Ring—a subsidiary of Amazon—and its data-sharing practices with law enforcement officials. Ring’s conduct raises a number of concerns, including fears that (1) the emerging technology may result in discriminatory law enforcement activity, (2) sensitive consumer data may be jeopardized as a result of misuse by Amazon and (3) consumers may be subjected to heightened physical security risks. Given these concerns, which are outlined in greater detail below, and Amazon’s history of data mishandling, the FTC should more deeply examine the damaging effects of these practices. 

While innovative, Ring’s home security doorbell and its use of consumer data are cause for significant concern as this conduct has the potential to result in considerable consumer harm. So-called “smart home” technology, still very much in its infancy, and its misuse have the potential to cause lasting damage to consumers if the necessary precautions are not taken. 

Despite the potential benefits of “smart home” technology like the Ring “smart” doorbell, the data collected by Amazon opens consumers to exposure under the promise of additional security. As a result, not only is consumer data made more vulnerable, but their physical safety is put at unprecedented risk.  

 As the Commission is well aware, as more data is collected by Amazon, potential data breaches become more damaging. A data breach of consumers’ home security system by nefarious actors could have direct consequences on consumer physical safety. For example, should home security video footage fall into the wrong hands, consumers’ daily routines—including when they leave home and when they are alone and most vulnerable—would be easily discernible by criminals intending to cause harm. 

 According to reports, Ring has already misled consumers about its data handling practices. The Washington Post reports that Ring has partnered with over 400 police departments in the U.S., “granting them potential access to homeowners’ camera footage.”[1]  Amazon was able to secure hundreds of partnerships by capitalizing on artificially low prices funded through taxpayer resources.[2]  Making matters worse, Ring engages in these partnerships without first informing its users. This deceptive practice raises, at best, tremendous ethical concerns. 

Amazon’s record on data security is already cause for concern. Recently, two prominent senators have asked the Commission to investigate Amazon’s role in the Capital One data breach, which affected nearly 100 million customers.[3]  Given Amazon’s potential involvement in this historic breach and its reckless handling of consumer data captured through Ring, it would be unwise to allow this activity to continue without at least some examination from the Commission. 

In addition to the data security concerns, Ring’s video-sharing arrangement raises questions about the potential for profiling. In an open letter to lawmakers,[4] more than 30 civil rights action groups described the threat to civil liberties posed by Ring’s partnership with law enforcement. In the letter, the organizations explain the dangers of this arrangement:

“With no oversight and accountability, Amazon’s technology creates a seamless and easily automated experience for police to request and access footage without a warrant, and then store it indefinitely. In the absence of clear civil liberties and rights-protective policies to govern the technologies and the use of their data, once collected, stored footage can be used by law enforcement to conduct facial recognition searches, target protesters exercising their First Amendment rights, teenagers for minor drug possession, or shared with other agencies […].” 

These sentiments were echoed by another prominent senator in a letter to Amazon CEO Jeff Bezos.[5] In the letter, the lawmaker outlined the privacy and civil liberty concerns noted above. Amazon has not yet responded to this letter—a clear indication that, unless pressured by government officials, the company will only act in accordance with its own interests, rather than address the genuine threats expressed here. Because of this, it would be wise for the FTC to act before the situation spirals out of control. 

Inaction in light of these facts would subject consumers to risks that are all too dangerous. As the top “cop on the beat,” the FTC has a public responsibility to protect consumers from unfair and deceptive business practices. Given the data security and civil liberty concerns, it would be wise for the FTC to undertake a review of the partnership between Amazon and Ring and law enforcement authorities. 

This issue—that of data security and physical safety—is bipartisan in nature. In fact, it transcends politics entirely.

Thank you for your attention to this matter. 

Sincerely,

[1] Harwell, D. (2019, August 28). Doorbell-camera firm Ring has partnered with 400 police forces, extending surveillance concerns. Retrieved October 24, 2019, from https://www.washingtonpost.com/technology/2019/08/28/doorbell-camera-firm-ring-has-partnered-with-police-forces-extending-surveillance-reach/.

[2] Guariglia, M. (2019, August 30). Five Concerns about Amazon Ring’s Deals with Police. Retrieved October 24, 2019, from https://www.eff.org/deeplinks/2019/08/five-concerns-about-amazon-rings-deals-police.

[3] https://subscriber.politicopro.com/f/?id=0000016d-fde0-d909-abff-fde145f70001

[4] Fight for the Future (2019, October 7). Open letter calling on elected officials to stop Amazon’s doorbell surveillance partnerships with police. Retrieved October 24, 2019, from https://www.fightforthefuture.org/news/2019-10-07-open-letter-calling-on-elected-officials-to-stop/.

[5] https://www.markey.senate.gov/imo/media/doc/Ring%20Law%20Enforcement%202019.pdf 


Sunset The Sun Power Tax Credit Now

By Peter RoffTownhall Finance

The good times are back. The U.S. economy is performing at levels not seen in more than a decade, with unemployment at its lowest level in a lifetime.

Still, it wasn’t all that long ago when crude was selling for more than $100 a barrel and people were talking seriously about the problem of “peak oil.” The growing global demand for energy made from fossil fuels has U.S. policymakers pushing hard for subsidies intended to accelerate the development and commercialization of energy alternatives mace from agricultural products and coming from the wind and the sun.

The American faith in technology is almost never misplaced. The fracking revolution has turned the U.S. into a net energy exporter. The explosion in the use of natural gas and the development of microgrids powered by it in liquid form have made cheap power a reality once again, without the widespread adoption of renewables. Policymakers, though, have yet to come to grips with the reality and are, under pressure from special interests, trying to keep Bush/Obama-era energy policies in place that do more harm than good.

In 2005, the U.S. Congress adopted the Solar Investment Tax Credit with an eye to speeding the commercial adoption of energy from the sun as a way to heat and cool the nation’s homes and businesses. Whether it helped or not is debatable yet there are calls, even now, to ensure its renewal past its intended expiration at the end of the year.

The renewable lobby is politically powerful, especially given the nexus between those invested in and those who make generous contributions to elected officials. Remember Solyndra? And yet, despite its spectacular failure – which left taxpayers on the hook for who really knows how much – the ITC was already reauthorized in 2015 for solar PV, solar water heating, solar space heating and cooling, and solar process heat.

Right now, under current law, the industry is set to benefit from a 30 percent tax credit extended to consumers who purchase systems used in both residential and commercial properties that are under construction before 2020. Beginning in 2022 the credit decreases, dropping to 10 percent and useful only in commercial settings.

That’s what policymakers agreed to in 2015 to mollify the demands of the green groups who still believe, or at least claim they do, that the nation’s base power needs can be met by renewables without utilizing either nuclear or fossil fuels.

Science tells us that is a pipe dream and will remain one until the technology to store the energy generated by solar fields over the medium term (never mind the long) exists. Battery technology has not yet caught up to the increases the solar and wind energy industries have managed to achieve, meaning lots of generated power is left stranded and unused.

Nonetheless, the demand for another increase in the ITC as well as an expansion of what is covered is being pressed on legislators. The last extension was part of the deal that allowed for the U.S. to enter the crude export market which, while bad policy, makes it worth the price paid.

There are no such opportunities for a similar trade on the table now. The greens will never drop their opposition to energy exploration in the Arctic National Wildlife or the construction of new pipelines to move crude and natural gas produced by fracking to market. And since there’s no opportunity to trade for good policy, the ITC should be allowed to expire, especially since there’s plenty of evidence it’s no longer needed.

Solar, the web site GreenTechMedia reports, “will soon be able to out-compete gas-fired plants around the world on a levelized cost basis.” Large investments from foreign-based solar module manufacturing companies such as Hanwha Q Cells have led to the opening of manufacturing facilities in the United States. And solar energy experienced explosive growth between 2010 and 2016.

According to GTM Research, annual installations grew from just 849 MW in 2010, to more than 15,000 MW in 2016, a record-breaking year when the U.S. solar market nearly doubled its annual record for installations – while tax incentives are factored into the growth, efficiency and affordability have driven the adoption of the technology.

If the ITC worked as intended, as there’s evidence to suggest it did, it’s not needed anymore. And if it didn’t work as those who voted for and voted to extend it planned, it’s also not needed anymore. Either way, it’s time for it to be allowed to expire, if for no other reason than to show members of Congress they can allow special interest tax breaks to disappear and survive when they run for re-election.


Trump should scrap the flavored vaping ban

Hysteria over 'vaping-related lung illness' puts pressure on politicians, but vaping is safer than smoking

By Peter RoffThe Washington Times

ANALYSIS/OPINION:

There are those who say vaping is a public health menace, that it’s designed to appeal to young people as a gateway to tobacco with no redeeming social values whatsoever. Others who say it’s a public health miracle that’s made it possible for tens of thousands of people addicted to cigarettes to quit and live healthier lives.

It’s not clear who’s right but the evidence thus far hews toward the idea that vaping, from the standpoint of public health, is largely beneficial. There have been a few deaths among young people but, as we’re now finding out, those can be attributed to carelessness, black market formulas based in oil rather than water, and the effort to get a quick high by employing a THC-like additive. They did not result, as the proponents of regulation and abolition led us at first to believe, because all vaping technologies are medically and scientifically unsound.

Vaping is 95 percent safer than smoking, according to some estimates. Unlike inhaling cigarette smoke, vaping is not carcinogenetic and not, as some have claimed, a proven gateway to teen smoking. Yet it’s under attack as never before.

The hysteria over what’s been called “vaping-related lung illness” has generated enormous pressure on politicians from President Donald Trump on down to do something. That’s understandable but not necessarily right. The attack on the science showing that vaping generally leads to reductions in cigarette smoking and that favored vaping is very much a part of helping people quit is leading to a situation where even more people may die.

For more than a few years, the nascent vaping industry has tried to work with the government to set rules everyone can live with. They’re on board with an under-21 vaping ban, and the biggest player in the marketplace, Juul, has voluntarily agreed to withdraw its few flavored formulas from the U.S. market. No more mint, no more crème, no more cucumber, no more fruit and no more mango — even though studies have shown cigarette smokers find it easier to refrain from smoking if the vaping options available to them are flavored.


When agencies regulate in secret, none of us is safe

By JONATHAN WOODThe Hill

Imagine what it must feel like to have a government agent show up at your door, accuse you of violating some rule you’ve never heard of, and threaten you with massive fines and imprisonment if you don’t do what he says.

Wyoming’s Andy Johnson doesn’t have to imagine; he lived it. His alleged offense: he built a pond on his private property without begging D.C. bureaucrats’ permission first. Thankfully, two executive orders issued by President Trump last week aim to make this experience less common.

The focus of these executive orders is agency “guidance” — informal rules that regulate all of us without going through the normal rulemaking process. Before issuing a regulation, agencies are supposed to propose them publicly, explain their reasons, accept public comments and respond to those comments. Although no substitute for democratic accountability, this process at least ensures that Americans have an opportunity to learn about the rules being imposed on them and weigh in against the worst of them.

Unfortunately, agencies often circumvent this process, issuing rules through informal means such as internal memoranda or letters to selected constituents. This means that most of us cannot possibly know the rules that govern our lives, even though we face ruinous punishments should we unknowingly violate one of them.

As Andy Johnson’s experience shows, this results in unfair surprise. Johnson had no reason to expect that building a pond to provide water to his daughter’s horses would turn his life upside down. He got the required state permit and worked with state engineers to maximize the pond’s environmental benefits. The pond, which he built himself, achieved all of them: It restored wetlands in an area sorely lacking them, created habitat for fish and wildlife, and filtered the water that passed through it by allowing sediment and other pollutants to filter to the bottom.

As Johnson was wrapping up this work, the Environmental Protection Agency (EPA) showed up. It demanded Johnson rip out the pond or face $37,500 per day in fines. The potential fines would accrue at a rate of about $1 million per month, an incomprehensible sum for Johnson ­— and most Americans.  

He tried to reason with the agency, asking for some explanation of how he could be threatened in this way and what could be done. But the explanation would not be forthcoming. Nor would evidence that Johnson had done nothing wrong make a difference. An expert’s report documenting the pond’s numerous environmental benefits and exemptions from federal regulation fell on deaf ears.

Every month the agency dragged its feet, the fines grew. Two years later, when the potential fines reached $16 million, Pacific Legal Foundation filed a lawsuit on Johnson’s behalf. This forced the agency to finally put its cards on the table, revealing its evidence and explaining how that evidence showed a violation.

EPA asserted the small stream crossing Johnson’s property was a federal waterway, even though it was hundreds of miles from the nearest navigable river. The agency based this claim on a guidance document that purported to stretch the agency’s authority as far as it thought the Supreme Court might let it get away with.

The EPA also pointed to a guidance document to avoid the inconvenient fact that Congress had explicitly exempted the “construction and maintenance of farm or stock ponds” from federal regulation. This guidance interpreted that limit on the agency’s power as narrowly as possible. (If you haven’t noticed, there’s a theme here. Guidance almost always expands agency power and minimizes anything that might get in the agency’s way.)

EPA’s evidence fared even worse. Although it was supposed to show that Johnson’s pond significantly affects a downstream navigable water, the agency’s record showed that no one had ever checked where the water flowed. In fact, the water flows into an irrigation canal and never reaches any navigable water. If EPA had bothered to check, the whole ordeal could have been avoided.

Going forward, President Trump’s executive order will require agencies to review their guidance, revoke much of it, and publicize the rest so that Americans have a fair chance to know the rules that apply to them. The orders will also require agencies to give property owners an explanation of the agency’s allegations and an opportunity to contest them before threats can issue.

Although these orders are a welcome improvement, much work remains if we’re going to hold agencies truly accountable and restore power to the people we elect to wield it. Under our Constitution, only Congress can write laws, not unelected bureaucrats. It’s about time that we return to the Constitution’s design.


Frontiers of Freedom Joins Coalition of Free Market Organizations Opposing APEX Act’s Price-Setting Over Aluminum Reference Prices

By Frontiers of Freedom

WASHINGTON, D.C. –  Frontiers of Freedom recently joined 16 other free-market organizations to oppose The Aluminum Pricing Examination (APEX) Act.

The APEX Act would grant the U.S. Commodity Futures Trading Commission expansive authority over the setting of reference prices in the aluminum market, allowing political pressure potentially to distort the market by manipulating price signals.

As part of the effort a coalition letter was released urging Congress to reject the legislation that reads, in part:

By granting the government authority to arbitrarily alter market signals, supporters of the APEX Act—such as certain beer manufacturers with a history of working with politicians to distort the free market—are openly seeking to artificially deflate the price of aluminum. Such an outrageously crony abuse of government is unethical, and history shows that it will only worsen matters by further distorting the market and creating or exacerbating shortages. Domestic producers, faced with extensive government regulations and thinner profit margins, would find it increasingly difficult to survive and further erode domestic supply, a boon for foreign producers.
Republicans and Democrats alike have voiced concerns regarding America’s competitiveness within the aluminum industry. There is wide agreement that the market for American metals must remain a vibrant aspect of the U.S. economy. The APEX Act is dangerous piece of legislation, reflecting both a misunderstanding of industry pricing as well as a misapplication of government authority.
Representatives from the following 17 organizations joined the letter: American Consumer Institute, American Encore, Campaign for Liberty, Center for Freedom and Prosperity, Citizen Outreach, Competitive Enterprise Institute, Consumer Action for a Strong Economy, Frontiers of Freedom, Institute for Liberty, Institute for Policy Innovation, Less Government, Market Institute, National Black Chamber of Commerce, National Tax Limitation Committee, Taxpayers Protection Alliance, Tea Party Nation, and the 60 Plus Association.


Healthcare Reform Must Not Empower Big Government – It Must Harness the Innovation, Quality and Price Competition of the Marketplace

By George LandrithRedState

Before the passage of ObamaCare, we were told that it would solve all the problems with high costs and accessibility of healthcare. We were repeatedly told that Americans would save thousands of dollars every year. Of course, none of the promised benefits materialized. Now many of the same people who misled us about ObamaCare are now back trying to sell us on other “solutions.”

Speaker Nancy Pelosi — who laughably told us we had to pass ObamaCare to find out what’s in it — is now peddling a new drug plan claiming it will lower costs. However, Pelosi’s plan would supposedly lower costs by imposing up to a 95 percent excise tax on hundreds of prescription medicines. Imposing confiscatory taxes is no way to lower costs, or to encourage innovation. But it is a huge stride towards socialized healthcare which is her real goal. In the end, this plan leaves consumers and patients at the mercy of government bureaucrats. Imagine when you are sick having an experience like at the Department of Motor Vehicles – long lines, lots of waiting, and poor service. 

Pelosi’s plan isn’t even constitutional because it imposes a confiscatory retroactive tax on the total sales of a drug, not the profits, but the gross receipts. To escape this ruinous and confiscatory tax, Pelosi’s plan allows drug companies to agree to, and accept, government set prices. This is so abusive that it makes the mob’s protection money schemes look legitimate. 

The biggest losers of Pelosi’s plan will be the Americans who will suffer and die because the medicines that could have been developed to cure their condition will not exist or will not have been developed. So as Americans age and need cures for cancer, Alzheimer’s, diabetes, etc, those cures won’t exist and it will be Nancy Pelosi’s fault. These policies have long term consequences. If she were serious about improving things, she would unleash the power of the market and competition. Instead, she empowers government at the expense of Americans.

But there is no shortage of bad ideas on Capitol Hill, masquerading as solutions. For example, Senators Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) have proposed legislation that would change Medicare Part D prescription drug rebates to penalize drugs whose prices rise faster than the rate of inflation. It is strange that the Grassley/Wyden proposal targets Part D because it is one of the few government health care programs to successfully foster price-based productivity increases. 

In most parts of the economy, over time, prices go down and quality goes up, due to increases in productivity. The underlying mechanism driving this is competition. One sign of how successful Part D has been in wielding competition is that in its first decade of existence, it cost over 40% less than what the Congressional Budget Office estimated it would. This is an historical achievement.

At the very least, the Grassley/Wyden proposal will increase the cost of participating in the market, both in terms of compliance costs, and in the changed incentives and their inevitable unintended consequences. For example, a company that requires more revenue to economically survive might raise prices slightly on all its products, instead of steeply on just one. How this all plays out is impossible to predict. What can be said for certain is the market’s “logic” would now be less about providing the most value for customers at the lowest price, and now more about the political ramifications of pricing decisions.

The Grassley/Wyden proposal exemplifies the folly of centrally-designed price controls and thus, should be cast in the dustbin of bad socialist ideas. 

For example, Senator Bill Cassidy (R-La.) is a medical doctor and has been advocating for market-based approaches to healthcare reform. 

There are some good ideas out there. Senators Bill Cassidy (R-La), Steve Daines (R-Mont.), James Lankford (R-Okla.) and Ben Cardin (D-Md.) are sponsoring an amendment to the horribly misguided Grassley/Wyden bill. They suggest creating new tiers of drugs for generics and biosimilars, rather than lumping them in with brandname drugs. This is an idea that makes a lot of sense and it would benefit consumers. But it should be a stand alone bill. The Grassley/Wyden bill is bad enough that such amendments do not actually cure its horrible defects. But the underlying idea of this amendment, as stand alone legislation, would have a lot of merit.  The Administration has the authority to do this now under existing statutory authority — it should do so. 

The problem with healthcare and medical reforms in Washington is that there is too much blind faith in the ability of big-government to simply wave a wand and somehow magically lower prices. Rather than the promised benefits, what we actually receive are terribly high unintended consequences. We saw this with the ObamaCare fiasco.  Policy makers should place their confidence in the marketplace to incentivize innovation and high quality products at competitive prices. 


ATR Leads Coalition Opposed to Pelosi’s 95% Drug Tax

By Alex HendrieATR.org

ATR today released a coalition letter signed by 70 groups and activists in opposition to the Pelosi drug pricing proposal to create a 95 percent tax on pharmaceutical manufacturers.

As noted in the letter, this bill calls for a retroactive tax on sales that is imposed in addition to existing against income taxes:

Under Speaker Pelosi’s plan, pharmaceutical manufacturers would face a retroactive tax of up to 95 percent on the total sales of a drug (not net profits). This means that a manufacturer selling a medicine for $100 will owe $95 in tax for every product sold with no allowance for the costs incurred.

The tax is used to enforce price controls on medicines that will crush innovation and distort the existing supply chain as the signers note:

“The alternative to paying this tax is for the companies to submit to strict government price controls on the medicines they produce. While the Pelosi bill claims this is “negotiation,” the plan is more akin to theft.”

This proposal will create significant harm to American innovation to the detriment of jobs, wages, and patients, as the letter notes:

”[The Pelosi] proposal would crush the pharmaceutical industry, deter innovation, and dramatically reduce the ability of patients to access life-saving medicines.

The full letter is found here and is below:

Dear Members of Congress:

We write in opposition to the prescription drug pricing bill offered by House Speaker Nancy Pelosi that would impose an excise tax of up to a 95 percent on hundreds of prescription medicines. 

In addition to this new tax, the bill imposes new government price controls that would decimate innovation and distort supply, leading to the same lack of access to the newest and best drugs for patients in other countries that impose these price controls.

Under Speaker Pelosi’s plan, pharmaceutical manufacturers would face a retroactive tax of up to 95 percent on the total sales of a drug (not net profits). This means that a manufacturer selling a medicine for $100 will owe $95 in tax for every product sold with no allowance for the costs incurred. No deductions would be allowed, and it would be imposed on manufacturers in addition to federal and state income taxes they must pay.

The alternative to paying this tax is for the companies to submit to strict government price controls on the medicines they produce. While the Pelosi bill claims this is “negotiation,” the plan is more akin to theft.

If this tax hike plan were signed into law, it would cripple the ability of manufacturers to operate and develop new medicines.

It is clear that the Pelosi plan does not represent a good faith attempt to lower drug prices. Rather, it is a proposal that would crush the pharmaceutical industry, deter innovation, and dramatically reduce the ability of patients to access life-saving medicines.

We urge you to oppose the Pelosi plan that would impose price controls and a 95 percent medicine tax on the companies that develop and produce these medicines.

Sincerely, 

Grover Norquist
President, Americans For Tax Reform

James L. Martin
Founder/Chairman, 60 Plus Association

Saulius “Saul” Anuzis
President, 60 Plus Association            

Marty Connors
Chair, Alabama Center Right Coalition                       

Bob Carlstrom
President, AMAC Action 

Dick Patten
President, American Business Defense Council

Phil Kerpen
President, American Commitment 

Daniel Schneider
Executive Director, American Conservative Union

Steve Pociask
President/CEO, The American Consumer Institute Center for Citizen Research

Lisa B. Nelson
CEO, American Legislative Exchange Council 

Michael Bowman
Vice President of Policy, ALEC Action

Dee Stewart
President, Americans for a Balanced Budget

Tom Giovanetti​​​​​​​
President, Americans for a Strong Economy

Norm Singleton
President, Campaign for Liberty

Ryan Ellis
President, Center for a Free Economy

Andrew F. Quinlan​​​​​​​
President, Center for Freedom & Prosperity

Jeffrey Mazzella ​​​​​​​
President, Center for Individual Freedom

Ginevra Joyce-Myers
Executive Director, Center for Innovation and Free Enterprise

Peter J. Pitts
President, Center for Medicine in the Public Interest 

Olivia Grady
Senior Fellow, Center for Worker Freedom

Chuck Muth ​​​​​​​
President, Citizen Outreach

David McIntosh
President, Club for Growth

Curt Levey​​​​​​​
President, The Committee for Justice

Iain Murray
Vice President, Competitive Enterprise Institute

James Edwards
Executive Director, Conservatives for Property Rights

Matthew Kandrach​​​​​​​
President, Consumer Action for a Strong Economy

Fred Cyrus Roeder​​​​​​​
Managing Director, Consumer Choice Center

Tom Schatz ​​​​​​​
President, Council for Citizens Against Government Waste

Katie McAuliffe​​​​​​​
Executive Director, Digital Liberty

Richard Watson
Co-Chair, Florida Center Right Coalition

Adam Brandon
President, Freedomworks​​​​​​​

George Landrith ​​​​​​​
President, Frontiers of Freedom 

Grace-Marie Turner
President, Galen Institute

Naomi Lopez
Director of Healthcare Policy, Goldwater Institute

The Honorable Frank Lasee ​​​​​​​
President, The Heartland Institute

Jessica Anderson
Vice President, Heritage Action for America 

Rodolfo E. Milani ​​​​​​​
Trustee, Hispanic American Center for Economic Research
Founder, Miami Freedom Forum 

Mario H. Lopez
President, Hispanic Leadership Fund

Carrie Lukas
President, Independent Women’s Forum

Heather R. Higgins
CEO, Independent Women’s Voice

Merrill Matthews
Resident Scholar, Institute for Policy Innovation

Chris Ingstad​​​​​​​
President, Iowans for Tax Relief

Sal Nuzzo​​​​​​​
Vice President of Policy, The James Madison Institute

The Honorable Paul R LePage ​​​​​​​
Governor of Maine 2011-2019

Seton Motley
President, Less Government

Doug McCullough
Director, Lone Star Policy Institute

Mary Adams
Chair, Maine Center Right Coalition

Matthew Gagnon​​​​​​​
CEO, The Maine Heritage Policy Center

Victoria Bucklin ​​​​​​​
President, Maine State Chapter – Parents Involved in Education

Charles Sauer ​​​​​​​
President, Market Institute

Jameson Taylor, Ph.D.
Vice President for Policy, Mississippi Center for Public Policy

The Honorable Tim Jones
Leader, Missouri Center-Right Coalition 

Brent Mead
CEO, Montana Policy Institute

Pete Sepp ​​​​​​​
President, National Taxpayers Union

The Honorable Bill O’Brien
The Honorable Stephen Stepanek​​​​​​​
Co-chairs, New Hampshire Center Right Coalition

The Honorable Beth A. O’Connor
Maine House of Representatives

The Honorable Niraj J. Antani​​​​​​​
Ohio State Representative

Douglas Kellogg
Executive Director, Ohioans for Tax Reform

Honorable Jeff Kropf ​​​​​​​
Executive Director, Oregon Capitol Watch Foundation

Daniel Erspamer ​​​​​​​
CEO, Pelican Institute for Public Policy

Lorenzo Montanari​​​​​​​
Executive Director, Property Rights Alliance

Paul Gessing ​​​​​​​
President, Rio Grande Foundation

James L. Setterlund​​​​​​​
Executive Director, Shareholder Advocacy Forum

Karen Kerrigan
President and CEO, Small Business Entrepreneurship Council

David Miller & Brian Shrive
Chairs, Southwest Ohio Center-right Coalition

Tim Andrews
Executive Director, Taxpayers Protection Alliance

Judson Phillips
President, Tea Party Nation

David Balat ​​​​​​​
Director, Right on Healthcare – Texas Public Policy Foundation

Sara Croom ​​​​​​​
President, Trade Alliance to Promote Prosperity

Kevin Fuller
Executive Director, Wyoming Liberty Group


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