To many Americans, the widespread deployment of 5G technology means faster download speeds on their mobile device.
While that is absolutely one of the real benefits of 5G technology, it is a great deal more than that. In fact, the U.S. maintaining its high tech advantage in the 5G arena has national security implications.It also has widespread economic importance. It is also critically important that 5G technology be American, and not Chinese technology — not for reasons of national pride, but because national security matters.
For this reason, we need U.S. policymakers to remove unnecessary impediments to American innovation and deployment in the 5G arena. The truth is that China is hoping that our regulatory regimes will slow and impede American innovation and the speed of implementation of this new technology so that we leave the window open for China to dominate the world in 5G technology.One of the current impediments to 5G progress is the Federal Aviation Administration (FAA), which despite having no actual evidence for vaguely stated concerns, nonetheless alleges that maybe 5G technology will interfere with altimeters in older helicopters and older small private planes. Without providing any specifics or data, the FAA is throwing up roadblocks.
I am confident that we all agree that if expanding 5G technology were going to mean planes falling out of the skies, we would all want to put the breaks on. But the FAA hasn’t provided any real transparency to its vague concerns or any significant specifics and there is zero evidence that 5G technology interferes with altimeters.But it’s not just that the FAA hasn’t provided any factual support. The truth is this issue has been heavily studied by the Federal Communications Commission (FCC) which regulates the usage of wireless spectrum to be sure it doesn’t create conflicts. Roughly 40 other countries have also studied this issue and they all agree that there is no harmful interference with 5G and altimeters.Why didn’t the FAA raise any concerns over American planes already flying to these countries?
On a practical level, around the globe there are a number of 5G cell towers. Some of them are near airfields and there has been no observed interference with altimeters.
The European Union Aviation Safety Agency has concluded: “[E]ven though 5G has already been deployed in several States around the world, we are not aware of any reported occurrence that relates to possible interference originating from 5G base stations.”While China may be able to give American consumers a better internet connection (as American technology would also clearly do), the communist country will not promote economic growth around the globe and certainly not in America. Moreover, because 5G technology will be more than just faster connection speeds, but will also be the “internet of things” and allow for our devices to communicate with each other (to the extent we authorize that), 5G technology will open up thousands of new businesses just as smartphones did.
The sharing economy — exemplified by Uber and Lyft and Airbnb — was made possible by smartphone technology.
In the same way, but probably multiplied by a factor of one thousand, 5G technology will become the foundation of thousands of amazing ideas that will make the lives of consumers more convenient. It will create millions of new jobs and greater opportunity for more and more people.
But if we hamstring our own industries and entrepreneurs, the totalitarian regime in China will gladly fill the void. And if China deploys 5G technology, privacy and security will take a huge hit.The Chinese regime has been gathering online data on Americans for decades. Dominating and defining the technology that will be built into your phone and later into household appliances will give the totalitarian regime unprecedented access to all of our private information — perhaps even how much milk we have in the refrigerator.
But the other problem would be a very serious national security issue. Can you imagine having 5G chips in military hardware that could give the totalitarian regime access to intelligence and even the ability to turn off the hardware?
Imagine our missile defense being turned off because we ceded 5G technology to China.
Experts and policymakers from all sides of the political spectrum agree that 5G technology does not pose risks to altimeters. So if the FAA has some secret information that it has yet to reveal, it should provide transparency and reveal precisely what its concerns are as well as the scientific and data basis for such concerns.
Otherwise, the FAA needs to work in good faith and allow America to continue to be the world’s high tech leader and innovator. Our national economic wellbeing and our national security hang in the balance.
It’s time to be honest. Despite all the scientific chatter, nobody yet has a handle on the COVID-19 crisis. No one can pinpoint for certain where or how it started. No one knows when it will end.
The possibility COVID may be with us for some time (despite predictions by Dr. Anthony Fauci and others that we can expect positive news sometime in 2023) is real. By then, if Fauci and others are right, we’ll have learned to live with it, managing the inevitable outbreaks similar to how we handle the flu. That, however, will require planning, making changes to the health care device and pharmaceutical approval process, and a reliance on technology.
Operation Warp Speed, the Trump Administration’s initiative to cut federal red tape and get the pharmaceutical industry to work finding a coronavirus vaccine, was a game-changer. It gave every American hope that a solution was on the horizon. The vaccines it produced have largely been effective, however, there’s still uncertainty about their efficacy long-term.
The current thinking is that at least one booster shot will be needed. The emergence of the Delta variant has been a setback, triggering calls for mandates including masks, vaccines and special travel passports. Uncertainty lingers, making it incumbent on leaders in the political, scientific, and media arenas to stay focused on innovative ways to address Americans’ concerns.
The Centers for Disease Control and the World Health Organization both say now that COVID is transmitted through tiny droplets and aerosols spread through indoor spaces. Fighting that means thinking differently. To accomplish this, we should rely on private industry initiatives to develop ways to eliminate airborne pathogens and limit the possibility of surface transmissions. When one comes along, we should talk about it and celebrate it because, like the vaccines produced through Operation Warp Speed, it provides hope as well as an added layer of protection.
One technology showing great promise is an air purification system known as ActivePure, originally developed by NASA. The technology seeks out pathogens through a process known as advanced photocatalysis, which sends out submicroscopic particles in real time to deactivate pathogens, including COVID-19 and other viruses.
ActivePure’s proactive air defense system is already being used in high-risk indoor environments including the Cleveland Clinic, The Texas State Capitol, and Philadelphia’s public schools. Additionally, groups like ThermoFisher Scientific are in the process of rolling out new aerosol sensor monitoring technology, potentially allowing hospitals, nursing homes, and schools to track for the presence of the virus, providing critical knowledge to inform mitigation strategies.
Innovators are hard at work creating solutions for retailers as well. Intel’s RealSense TCS is a touchless control software that converts kiosks into touchless interfaces without radically modifying the intuitive user experience. These changes are helping get brick and mortar establishments back in business safely.
No one can predict the future. America’s leadership in the health sciences is a vital part of the process of exploration that will produce novel approaches to block the spread of the pathogens leading to outbreaks of COVID-19 and other viruses.
The lockdowns throughout 2020 did not work as intended – and severely hurt a booming economy. A different strategy is required for the next outbreak. This will require the government to expedite the regulatory approval process in key areas, and partner with forward-thinking start-ups, while embracing new innovations to prepare for the next national health emergency.
The following is a letter that Frontiers of Freedom President, George Landrith, sent to members of the Senate Judiciary Committee on October 26, 2021, stating our opposition to the destruction of due process, the rule of law, and constitutional principles:
. . .
It is our understanding the Senate Judiciary Committee will hold a markup to discuss S. 2428, the “False Claims Amendments Act of 2021.” On behalf of the millions of members and supporters of Frontiers of Freedom, we ask that you oppose this counterproductive bill as it does great violence to the rule of law. This bill would actually weaken the False Claims Act (FCA) and it would undermine due process and foundational rule of law principles that have made our nation a shinning city on the hill. A vote in favor of this bill is a vote to send us into a lawless abyss where government power will be regularly abused by imposing criminal sanctions using ever lower standards of proof and eroding due process.
It is worth remembering that on June 16, 2016 the US Supreme Court unanmously held in Universal Health Services v. United States, ex rel. Escobar, that the materiality element is “demanding” and “rigorous” and the FCA “is not ‘an all-purpose antifraud statute’ or a vehicle for punishing garden-variety breaches of contract or regulatory violations.” S. 2428 would undermine several important elements of our nation’s long standing legal foundations by lowering the burden of proof for the government and the evidentiary standards for materiality to the point where a defendant could be considered guilty until proven innocent and where a defendant could be convicted of criminal voilations of the law based not on a beyond a reasonable doubt standard, but on a perpondernace of the evience standard. Additionally, this legislation would apply retroactively — violating yet another important constitutional standard.
We ask you to vigorouly oppose S. 2428, the False Claims Amendments Act of 2021, during committee consideration. Given the rather grotesque constitutional violations contained in this bill, it should die in committee. However, if the committee reports the bill to the full Senate, we also strongly urge you to continue to oppose this bill. We will be scoring any vote on bill, including procedural votes, because it is too important to ignore. Our millions of members and supporters all across the nation will want to know who voted to support the rule of law and who voted to turn the Constitution on its head.
It is also worth noting that we support Sen. Cotton’s proposed amendment to remove all language from S.2428 except the Sec. 6 portion that provides for a GAO study of the benefits and challenges of the FCA and the effectiveness of the FCA.
Frontiers of Freedom
Terry McCauliffe’s Horrible Vision for Virginia
Long format, story-telling TV SPOT IN DC-Northern Virginia market SAYS MCAULIFFE IS “CHOSEN CANDIDATE OF MEDIA AND TECH GIANTS” WHO ARE PROTECTING HIM. SO VIRGINIANS MUST QUESTION MCAULIFFE ABOUT:
“CORRUPT POLITICAL BARGAIN” WITH LEFT WING OF HIS PARTY TO DESTROY SINGLE FAMILY NEIGHBORHOODS
MCAULIFFE PLAN WOULD END SINGLE-FAMILY NEIGHBORHOODS AND CRAM HIGH DENSITY HOUSING INTO SUBURBS
Ties McAuliffe to liberal extremists and says he would also support:
• Critical Race theory teaching ugly Anti-American falsehoods to school children
• Defund the Police
• Continuing illegal immigration crisis ….influx of MS-13 gangs in Northern Virginia
• Persecution of Catholic religious orders
• ACLU anti-religious extremism and attacks on Church tax-deductions
CONSERVATIVE GROUP ASKS WHY MCAULIFFE WON’T DISAVOW HIS EXTREMIST ALLIES – THE RADICAL LIBERALS AND THEIR BIG BUSINESS ALLIES AND THE WALL ST. BARONS
“The people of Virginia won’t stand for it..”
Ask Terry McAuliffe and the liberal extremists and their billionaire allies why they don’t know …. THEY CAN’T HAVE AMERICA. THEY CAN’T HAVE VIRGINIA.”
**** *** ****
STATEMENT GEORGE LANDRITH, PRESIDENT, FRONTIERS OF FREEDOM FOUNDATION
For further information — George Landrith at 703-246-0110, ext. 1302
Washington D.C. — George Landrith, President of the Frontiers of Freedom Foundation, announced today his group is running long format, 120 second (2 minute) spots on TV news shows in the DC Northern Virginia media market to “make Terry McAuliffe come out from cover and face the crucial questions the media is protecting him from having him to answer.”
The tv spot was shown for the first time Sunday night on Fox affiliate WTTG’shighly-rated 10 pm news and will run through the week on that channel and other local DC-Northern Virginia channels.
DESTROYING THE SUBURBS — The spot’s major focus is on McAuliffe’s plan to destroy single family zoning by empowering the federal government to dictate local zoning decisions.
In showing pictures of Black and Hispanic families well as young people seeking a first home, the spot says such a plan would destroy the aspirations of many Americans who now have a chance to live in safe, family-friendly neighborhoods.
WALL ST. GREED — “We also highlight the fact that ‘the woke’ management of Wall St firms are buying suburban properties because they think they can make money eventually off this Washington land-grab.”
MCAULIFFE CORRUPT POLITICAL BARGAIN — “Terry McAuliffe got the Democratic nomination for governor by pushing aside promising young leadership in his own party and making a corrupt political bargain with the Left wing extremists to support their radical agenda.”
THE REST OF THE EXTREME LEFT AGENDA — “Terry McAuliffe needs to be asked if he will disavow the support of his other liberal allies who support a radical agenda.”
Our spot shows these issues and provides back up about them including Critical Race theory teaching ugly Anti-American falsehoods to school children, defund the police, continue the illegal immigration crisis and influx of MS-13 gangs in Northern Virginia, the persecution of Catholic religious orders, and ACLU anti-religious extremism and attacks on Church tax-deductions.
NOT ATTACK ADS — “These are not 30 second attack ads that try to manipulate people, but heavily informative narrative ads that tell the story of Terry McAuliffe’s extremist views and plans.” Landrith said.
Landrith notes his group’s TV spot asserts that McAuliffe is “the chosen candidate of the media and tech giants” and that Virginians must ask him the questions the liberal media will not.
BACKUP TO ALL ALLEGATIONS — The spots shows newspaper articles about the controversy and argues that McAuliffe’s plan is essential that of President Biden and features a large picture of former HUD Secretary Ben Carson who wrote a Wall St op-ed saying the Biden plan would destroy suburban neighborhoods.
“Virginians need to ask McAuliffe why he endorses the Biden-Schumer – Pelosi plan that has already been enacted in some places like California and Minnesota that would permit federal bureaucrats to dictate to local towns and cities and destroy the American dream of single-family neighborhoods.”
WHAT ASKING MCAULIFFE THE TOUGH QUESTIONS WILL DO — “By making McAuliffe answer these questions, Virginians will be sending a strong message. They will be telling the radical liberals and their big business allies, and the Wall St. barons that the people of Virginia won’t stand for it. And Terry McAuliffe and the liberal extremists and their billionaire allies will discover theycan’t have America. They can’t have Virginia.”
HERE IS THE SCRIPT OF THE TWO-MINUTE TV SPOT
Terry McAuliffe… chosen candidate of the media and tech giants…helping him hide from the people of Virginia
McAuliffe’s plan? override local zoning and force the construction of high-density, low income housing projects in residential neighborhoods.
Under the McAuliffe plan, federal bureaucrats would dictate to local towns and cities…cramming apartment complexes into single- family neighborhoods.
This plan is opposed by:
— The majority of Blacks and Hispanics — once shut out of single family neighborhoods – who now want the right to live in one.
— Young Americans who aspire to the American dream of a single-family home in a family-friendly neighborhood.
— People now fleeing the crime and disorder of Democrat run cities.
Terry McAuliffe’s threat to the suburbs is no exaggeration.
The Biden-Pelosi-Schumer-McAuliffe plan is already underway. Newsom in California recently moved to abolish zoning.
Former HUD Secretary Ben Carson warned against this ugly liberal power-grab.
A Clinton-era grifter…Wall St money mover… pushing aside young leadership in his own party to help extremist climate liberals who hate the suburbs
the McAuliffe plan helps Wall St barons gobble up suburban property and profit off of high-density housing
Terry McAuliffe made a corrupt political bargain with the extremist left wing of the Democratic Party giving him the party nomination
He has allied himself with those who support:
Destroying Virginia’s suburbs…
Critical Race theory – teaching ugly Anti-American falsehoods to school children
Defund the Police
Continuing the illegal immigration crisis and influx of MS-13 gangs in Northern Virginia
The persecution of Catholic religious orders
ACLU anti-religious extremism and attacks on Church tax-deductions
Terry McAuliffe will never face these questions from the media who favor him
So ask Terry McAuliffe why he wants to use Virginia to pay off his extremist allies… destroy suburban neighborhoods…and Destroy the American dream of a single family home.
Ask him about his ties to THE EXTREMIST LIBERALS, HIS BIG BUSINESS ALLIES AND WALL ST. BARONS
Ask Terry McAuliffe if he understands the people of Virginia won’t stand for it
That the extremists and their billionaire allies
… CAN’T HAVE AMERICA
THEY CAN’T HAVE VIRGINIA.
Possible changes to the U.S. Postal Service are gaining significant momentum as Congress continues its legislative deliberations this summer. The proposal vehicle in question, known as the Postal Service Reform Act (PSRA), received positive reviews in the House of Representatives, and a Senate version was also recently released.
Despite accumulating 63 pages of legislative text, the bill emphasizes fiscal sleight of hand to achieve short-term stabilization, while leaving a massive amount of the Postal Service’s future in doubt.
The hallmark of the package is a $46 billion bailout of healthcare benefit provisions. These unfunded liabilities have added up since the USPS began defaulting on payments for retiree benefits in 2012.
The depths of such blanket debt forgiveness should be enough to make fiscal conservatives cringe at the sight of more government intervention — especially when the federal government is more rightly looking to support key U.S. industries, small businesses and job creators who were badly affected over the past year due to no fault of their own.
Another cringe-worthy issue with the proposal is a bizarre element that would further reduce the Postal Service’s monitoring of its own costs and revenue inflows. As the agency’s multi-billion-dollar losses persist year after year, it hardly makes sense to dial back transparency and leave accounting managers off the hook.
The provision in question involves a statute that calls for the Postal Service to ”maintain an integrated network for the delivery of market-dominant and competitive products.” To be sure, it is sensible that the Postal Service carries both letter mail and packages together for the sake of delivery efficiency from one address to the next. In this sense the USPS already has an ”integrated network.” However, as a government-chartered operation, the Postal Service must be compelled to fully articulate the financial differences between its essential public service, and its products that are subject to the risks of the competitive market.
With this glaring understanding, lawmakers should be outraged by this ”integrated network” item that blurs the lines of the Postal Service’s finances. The chaotic nature of USPS fiscal management truly demands that we don’t throw away essential precautions. Instead, more analytical tools must be used to reinforce transparency about the separate impacts of every service — mail, packages and everything else.
With the PSRA, the Postal Service would benefit from major fiscal flexibilities, while it would also enjoy diminished responsibilities when it comes to delivery performance goals. This prospect of even more delayed mail delivery, coupled with all the irresponsibility of reform should be especially concerning to key Senate leaders.
Policymakers including Sen. James Lankford, R-Okla., Sen. Rand Paul, R-Ky., Sen. Rick Scott, R-Fla, Sen. Ron Johnson, R-Wis., Sen. Josh Hawley, R-Mo., and Sen. Mitt Romney R-Utah, must be especially concerned about the nature of deeply consequential bailouts and leaving millions of constituents who rely on the mail hanging out to dry.
Forcing American customers, especially those in harder to reach rural areas, to deal with more frequent mail slowdowns and higher stamps prices simply only adds insult to injury.
In parallel with the PSRA, Postmaster General Louis DeJoy has proposed a 10-year business plan for the Postal Service, which assumes that Congress will agree to the $46 billion liability bailout in order to kick-start systemic changes that would rebalance costs and revenues. However, these important plans may never see the light of day. Democrat leaders in Congress have spent January, March, and June organizing campaigns to ensure that Postmaster General DeJoy is soon fired from his role.
Senate leaders must be wise to see how the grand Postal Service bargain is destined to burst at the seams and there is simply no reason to swallow this bitter legislative pill. The political ramifications of Postal Service reform demands all-inclusive measures, and it is entirely clear that the Postal Service Reform Act is incomplete and would be detrimental for Americans.
In the years after World War II, the United States dominated the world economy–so much so that no other nation came close to the U.S. in its global influence and economic might.
But this dominance meant that the United States had no concerns about competing powers or threats to U.S. prosperity. Other countries did have to worry, so they constantly worked to make their tax and regulatory system more competitive. Over time, other countries surpassed the U.S. in various ways.
A Modern Tax Code
One of the most important ways that other countries surpassed the U.S. was in modernizing their tax codes. A modern tax system avoids double taxation of capital income and has the lowest possible corporate tax rate. A modern tax system also recognized the global economy. To be strong at home, and to serve foreign markets, companies usually need to produce and build factories in the markets they serve. This does not mean moving jobs overseas. It means keeping headquarters jobs in the home country. The headquarters jobs are associated with management and R&D. Headquarters jobs produce a disproportionate share of income and represent the highest salaries and benefits. The more operations overseas, the stronger the headquarters is at home. The point of having a global operation is to support the home base.
Therefore, beginning especially in the 1970s and 1980s, countries began to adopt tax systems that encouraged their home companies to go global and earn foreign profits that could make the home companies stronger, resulting in better jobs and more R&D in the home market. The new model of taxation was territorial. Home companies paid taxes at home, and they paid taxes on their foreign operations in foreign countries. There was no barrier to bringing profits home. Also, importantly, business decisions in one country had no bearing on business decisions in another country, at least for tax purposes. Under a territorial principle, every country was independent, and so there was no need to worry that tax policy in one country would interact with another. Also, a business decision in one country would have no adverse tax consequences in another. The territorial principle is all about simplicity on one level. But it is also about growing a global network that supports the home office.
The U.S. Lags Behind
Ironically, the United States was the victor in World War II, but it saw no reason to update its pre-World War II tax system. Before World War II, the model for international business was export trade. Companies made widgets in their home countries, and they exported them overseas. For a long time, the United States was the best place and most competitive place to make widgets, so the U.S. tax system relied on taxing overseas sales. The U.S. tax system worked on what is called a worldwide principle since U.S. companies paid taxes in the U.S. on their worldwide income. This made sense when international trade was mostly about trade involving exported goods, and the U.S. was far and away the best place for manufacturing, farming, mining, and many types of business. But over time, the nature of trade changed. Trade became more about intellectual property, and international investment, to build a global network production that supported the home base, or the headquarters operation, by sending profits home. But while most other countries in the OECD adopted the territorial principle, the U.S. stubbornly insisted that U.S. companies should be taxed worldwide. One result of this was that any business decision overseas had both foreign and U.S. tax consequences, which made business planning complicated.
Then another thing happened. It was President Ronald Reagan’s Tax Reform Act of 1986. Reagan cut the corporate tax rate from 50 percent to 35 percent. At the time, this was one of the lowest corporate tax rates in the world. Suddenly other countries began to cut their corporate tax rates too and kept cutting them, to be more attractive as company headquarters. By 2017, other countries had cut their tax rates so much that the United States had the highest corporate tax rate in the OECD—and the other countries, the United States applied its corporate tax rate of 35 percent on a worldwide basis. This meant that if U.S. companies made money overseas, they had to pay U.S. tax on any profits they brought home. Since the U.S. tax rate was higher than all foreign tax rates, and sometimes much higher, this meant that companies avoided bringing profits home for reinvestment in the U.S. Instead, they declared they declared their foreign profits to be permanently reinvested overseas as a way of avoiding U.S. tax on repatriated earnings. This defeated the purpose of a tax policy to support global trade. Instead of allowing money to flow home, U.S. tax policy pushed investment dollars overseas. The U.S. had adopted a “Do Not Invest in America” policy.
Headquarters Move Overseas
There was something even worse that happened. Headquarters offices with headquarters jobs started moving overseas. This is because foreign companies were able to buy U.S. companies on a scale that had never been possible before. Foreign companies could buy U.S. companies because they could afford to pay a higher price for U.S. companies than U.S. companies or investors could. Indeed, foreign companies could pay more than U.S. companies for acquisitions outside the United States as well.
The price one pays for a company is a multiple of the after-tax income it produces. If a company produces $1 million in earnings per year, and the valuation multiple for that industry is ten times, then a foreign investor that pays no foreign taxes on its U.S. income can buy the company in the U.S. for $10 million. This is called an inbound acquisition. However, if a U.S. company wanted to buy a foreign country overseas, in an outbound acquisition, it would have to account for the difference between foreign taxes and U.S. taxes. If the tax rate in the foreign country was 20 percent, about the OECD, average, then the U.S. company would have to account for a 15 percent difference between the foreign taxes and the U.S. taxes. The U.S. company buying a foreign company would effectively pay a 15 percent tax on its purchase, whereas the foreign company buying a U.S. company would pay no additional tax at home.
By the early 2000s, foreign companies were buying U.S. companies at an impressive rate. To some extent, this reflected the globalization of the economy and increased prosperity worldwide since World War II, which is a good thing. But because of the tax differential, the number of inbound acquisitions of foreign companies buying U.S. companies far exceeded the number of comparable outbound acquisitions in which U.S. companies bought foreign companies. This had two results. One was that iconic U.S. brand names and companies started moving overseas, and the corporate headquarters jobs that had been in the U.S. moved overseas as well. Famous American companies with foreign owners now include Chrysler (French), Budweiser (Belgian), Ben & Jerry’s (Dutch), Good Humor (Dutch), Burger King (Brazilian), and even Kraft Heinz (also Brazilian). But the real impact came in pharmaceuticals, where Europeans were not far behind the U.S. and competitive to begin with. The greatest U.S. pharma companies started moving steadily to Europe. The crown jewel of America’s industrial R&D, Bell Labs, similarly became a French company with its parent, Lucent Technologies, was acquired by Alcatel in 2007. As a result, at least in part, the U.S. has no manufacturer of 5G telecom equipment.
The other impact had to do with startup companies, which are often a source of innovation, growth, and intellectual property. When a U.S. company competed with a foreign company to buy a startup, the foreign company often won because it could pay a higher price. The U.S. company could not pay as much, because it had to factor the OECD’s highest corporate tax rate into what it could afford to pay.
More recently still, China has entered the scene. Chinese companies are subsidized at home, and they pay no Chinese taxes on their foreign earnings. Chinese companies have been aggressively buying startup and mature companies alike in the U.S. and Europe.
Where has this led us? Chinese companies are buying top startups and smaller firms with attractive technology portfolios. U.S. companies have been reliant on Chinese suppliers since the U.S. tax code makes it cheaper to buy from Chinese suppliers than to build factories and facilities in the U.S., or to produce in China from U.S.-owned facilities. In the time of the covid pandemic, the U.S. is dependent on China for most of its basic medical supplies. In a world where 5G will soon dominate the airwaves, and become the basis for the Internet of Things, the U.S. has no company that produces 5G telecom equipment. It’s a tax-induced disaster, made all the more dangerous by China’s aggressive intentions to dominate the world and impose its authoritarian style of government elsewhere.
Fixing the Problem
President Donald Trump recognized the problem. President Trump’s tax reform did two things right away. First, it lowed the corporate tax to 21 percent, which is about the middle of the pack in the OECD–not the highest, not the lowest, but close to the average and competitive. Then, it adopted the same territorial principle that nearly all of the major trading partners of the U.S. in the OECD use, so the United States was suddenly more competitive that way too. In a big change from its post-war arrogance, the U.S. studied the lessons of foreign countries. It may come to the surprise of many, but Trump’s all-American, America-first tax reform was designed to make the U.S. tax code look like the tax codes of the United Kingdom and the Netherlands, which long before the United States ever existed were already among the most successful trading nations of all time, and whose Anglo-Dutch model of shareholder capitalism was the foundation of the U.S. economy as well.
But to address three uniquely American problems, President Trump built three features into his tax system. One feature was designed to make sure that income earned in the United States was actually taxed in the United States, and not exported to lower-tax countries through leaks in the nominally worldwide but also obsolete and antiquated tax code of the U.S. This was called the Base Erosion and Anti-abuse Tax (BEAT). Another feature was designed to deal with the problem of U.S. industries that were based primarily on intellectual property, such as tech and pharma, earning profits overseas but never sending these profits back to the U.S. because of U.S. tax. This was a tax on a category of income called Global Intangible Low Taxed-Income (GILTI). For example, before BEAT, the world’s most valuable company, Apple, shifted many of its U.S. profits into low-tax Ireland. Also, before GILTI, Apple made profits worldwide and moved these profits to Ireland as well, never paying U.S. tax or moving the profits back to the U.S. GILTI respects the territorial principle, and it does not tax U.S. companies making normal profits in a foreign country. However, the tax applies a test for supernormal profits, and if a company is making more than a 10 percent return in any country, GILTI assumes that some of the unusually high profits in the foreign country result from shifting profits out of the United States, and therefore it applies a certain level of U.S. tax to them. Then there is the tax on Foreign Derived Intangible Income (FDII). This is a tax on income that results from unusually high profits on export sales of goods made in the U.S. FDII assumes that some of these supernormal profits result from headquarters activity, R&D, or patents and intellectual property held in the United States, so in this case, it applies a level of U.S. tax as well.
GILTI and FDII are designed to work in complement to one another. To discourage companies from moving their patent portfolios or research operations to foreign countries, GILTI and FDII have incentives and penalties to make sure that no country in the world offers better tax treatment of intellectual property for U.S. companies, but also that the U.S. tax treatment of U.S. intellectual property is the most favorable in the world. Together, GILTI and FDII mimic something called a “patent box,” which is used in the UK and European countries to ensure that intellectual property gets a preferential rate in those countries, as long as the R&D was performed there and the resulting patents are housed there as well.
Don’t Turn Back the Clock
For a long time, the United States pursued unilateral disarmament with regard to tax policy while other countries engaged in an arms race to make their tax systems more competitive. We see the result in the loss of U.S. headquarters companies from the U.S. and the dangerous ascendancy of China, which seeks to dominate and monopolize the technologies of the future while putting them at the service of its totalitarian system. President Trump put the U.S. back on the offensive and at the top of its game.
But President Joe Biden comes to office with a different set of values, in which government supposedly drives economic growth, and the government imposes high corporate taxes to support the welfare state, redistribute income, and reward its favored constitutions such as big labor. The major reason the United States took decades to overhaul its tax system while other countries made rapid progress is that labor unions fought to keep the U.S. on a worldwide tax basis. They argued the only possible reason for a U.S. company to locate overseas was to avoid U.S. labor costs, and for that matter, U.S. labor unions. But in fact, this is a view of global business that is decades behind the times. The primary model for global business today is not the export of commodities and manufactured from products from the U.S. That is important but is even more important for U.S. industries based on intellectual property to be able to operate anywhere, and for companies that serve foreign markets to support their U.S. headquarters by building factories and facilities around the world that still get their competitive edge from the U.S. knowledge economy. Big Labor wants to turn back the clock, and retreat to an outdated economic model, while China, with a more modern tax system, threatens both U.S. prosperity and national security, and even friendly trading partners have been acquiring many of our best and brightest companies and moving their headquarters overseas in a lopsided, one-way flow of mergers and acquisitions.
The Trump tax reform is a territorial system that makes the U.S. competitive with its top trading partners. The Trump tax reform incorporates GILTI, FDII, BEAT, to make sure that the U.S. benefits from U.S. intellectual property while also enjoying the financial benefits and good jobs that come to headquarters companies at the center of a global network. But Biden’s view is different. He wants to go back to a worldwide system, where U.S. companies have the highest tax rate in the OECD at home and must pay a global minimum on their overseas earrings as well. The problem is that China has no global minimum tax, and China is the biggest threat today.
J.P. Lucier is a tax policy analyst.
Is China weakening US intellectual property protection?
There is a global effort afoot to get the United States to suspend intellectual property rights (IP) for any and all COVID-19 medical innovations. Interestingly, China is a big backer of this global effort and has been using the World Trade Organization (WTO) to put pressure on the US. The Biden Administration fairly predictably is now backing the China backed pressure campaign. The communist Chinese state-controlled media has praised President Biden for giving into “global pressure.”
The US can certainly help the rest of the world deal with the COVID virus. Humanitarian efforts are about helping save lives, not giving the Chinese regime billions in intellectual property. The US now has a surplus of vaccines and we have the supply chain and the manufacturing set up to continue pumping out the vaccine for the rest of the world. If China and others wanted access to the vaccine as quickly as possible, that’s already available to them — all they need to do is ask.
But stealing the IP of those who invested billions in developing it won’t help the rest of the world because it would take them a year, or two, or more to set up the manufacturing process and organize the supply chains to replicate what the US is currently is able to do. If nations need help to deal with the virus, it isn’t in a year or two — it is now. So what the WTO and China are pushing for won’t help them solve any immediate problem or save lives. But it will help the communist Chinese regime access billions in research and development which they can use to undercut American jobs and innovation for decades to come.
So that’s how you know the global effort isn’t about helping vaccinate the world. It is about stealing the IP rights of American innovators. China has made a living stealing American IP and it has not only harmed us economically, but it has also endangered our national security. And one thing that the Chinese regime is very good at is using every tool at its disposal to weaken America and seek its own long-term advantage. If we don’t wake up to this, we will live to regret it.
If people are interested in helping those around the globe get vaccinated, let’s do that. But why is stealing IP part of that discussion? Especially, since it won’t provide any vaccinations for a year or more from now. But will be used by hostile regimes to undermine American innovation and American jobs.
The bottom line is that suspending intellectual property rights is bad policy. It does nothing to help those around the globe who need a vaccine right away. And it also undermines American medical innovation, and American jobs. Plus, under our Constitution, the government may not unilaterally take the property of its citizens without just compensation. The Constitution specially provides for the protection of intellectual property. And that is why America has been the world’s greatest engine of innovation. Let’s not kill the goose that lays golden eggs.
The very reason American pharmaceutical companies were able to provide vaccines so quickly to deal with the COVID-19 virus is because our system of intellectual property told them that investing billions of dollars in finding a cure was a good idea. If we remove that, future innovations and future discoveries will be far less likely. If we hope to continue to find new earth-breaking cures for cancer, Alzheimer’s, diabetes, etc, and new vaccines for the next horrible disease, we had better keep our intellectual property protections strong.
There is a why the United States leads the world in innovation — we’ve historically had the most robust intellectual property protections. As we’ve allowed those protections to slide, we’ve seen our innovation advantage start to slide as well. So rather than abrogating IP rights, we should be strengthening and reinvigorating them.
This global initiative to pressure the US into voluntarily destroying its system of intellectual property protections would be very costly — not only the US, but to the entire world because our innovation ultimately benefits the entire globe. Let’s hope Congress puts a stop to this foolishness. The Biden Administration has already caved in and signaled its willingness to compromise American law and American strength. Sure, America can, and should help the rest of the world. No one is suggesting that we hide the vaccine or prevent it from other nations or peoples. But using the pandemic as an excuse to kill off American IP protections and violate US law is akin to a beggar demanding access to your home equity loan when asking for help to buy dinner. You offer him a nice meal, and he says, “No, I want your home equity loan! Don’t you want to help a guy down on his luck?!” Beware, it’s a scam!
Education Department to propose Title IX rule amendments, undo Trump-era protections for victims and the accused
Initiating what could be a years-long project to undo Trump-era protections for college sexual assault victims and the accused, the Biden administration on Tuesday launched its audit of Education Department policies outlining how universities handle sexual misconduct investigations.
The Department of Education’s Office for Civil Rights announced it would begin a “comprehensive review” of Title IX rules that prescribe how university administrators deal with sexual misconduct cases. In a letter to students and educators, the office requested input on the department’s Title IX regulations—specifically, the August 2020 rule changes implemented under former education secretary Betsy DeVos.
Tuesday’s announcement follows President Joe Biden’s March 8 executive order on sex and gender discrimination, which asked the department to undertake a complete review of Title IX policies. The department’s letter marks the first step toward dismantling DeVos’s rules—a process that could take months or even years through the notice and comment rulemaking process, as outlined by federal policies.
“Today’s action is the first step in making sure that the Title IX regulations are effective and are fostering safe learning environments for our students while implementing fair processes,” Education Secretary Miguel Cardona said in a statement. “Sexual harassment and other forms of sex discrimination, including in extracurricular activities and other educational settings, threaten access to education for students of all ages.”
President Joe Biden pledged to bring a “quick end” to DeVos’s Title IX rules during his campaign and faced pressure from progressive legal organizations to do so. DeVos’s changes drew ire from feminist activists because they allowed students accused of sexual misconduct to cross-examine their accusers through a third-party representative. The August 2020 changes also delegated misconduct cases that occurred off-campus to local authorities.
In addition to due process protections, DeVos established the first federally mandated protections for sexual assault victims on college campuses. University administrators are required to provide victims with necessary support—for example, allowing the student to change his or her class schedule and providing the victim with a chaperone.
The Biden administration on Tuesday began what could be a lengthy procedure to unravel DeVos’s rules. The Trump-era guidance replaced the Obama administration’s “Dear Colleague” letters, which provided a framework for university administrators to handle sexual misconduct cases. Unlike the Obama administration’s directions, the DeVos rules were added to federal law through a rulemaking procedure called the Administrative Procedures Act—a process that took nearly two years.
Those regulations could take just as long to undo. The civil rights office must respond to each public comment, as they requested in their letter. Secretary DeVos’s civil rights office received more than 124,000 separate comments during their 2018 Title IX review, which took 18 months to resolve.
Candice Jackson, a counsel in DeVos’s Office for Civil Rights, insisted that universities must continue to address sexual misconduct as outlined by federal law while the department proceeds with their investigation.
“[The Office for Civil Rights] should be applauded for initiating a review process that centers around public input,” Jackson, one of the architects behind the 2020 Title IX changes, told the Washington Free Beacon. “In the meantime, the current 2020 regulations continue to provide schools with clear, legally binding obligations that take sexual harassment seriously, promote educational access, and respect the constitutional rights of all students and faculty.”
Progressive legal groups pressured the Biden administration to act on the DeVos Title IX rules. Public Justice and the National Center for Youth Law filed a lawsuit in California last month on behalf of the Berkeley High School Women’s Student Union. The plaintiffs claim the DeVos regulations made it more challenging for schools to investigate sexual misconduct cases and therefore caused an uptick in sexual assaults.
The suit asked for a preliminary injunction that, if granted, would have suspended the Education Department’s enforcement of DeVos’s Title IX rules.
The Office of Civil Rights will conduct a hearing in the coming weeks to give the public additional opportunities to comment, after which the department expects to release a proposed rulemaking notice.
The United States won the Cold War. The world was benefited by the fact that a pro-liberty, pro-human rights nation became the world’s sole superpower. Had that superpower been the former Soviet Union or current China, the world would be a much less free, happy and prosperous place.
Thanos, in the Marvel movies, was the ultimate supervillain. His goal was to kill half of all human life. Of course, Thanos is a make-believe villain. But there are real-life villains who have no problem brutally repressing and killing those they see as their subjects. When evil regimes have power, the people suffer — often horrifically. History proves that.
It is not inconsequential or coincidental that the U.S. also won the race to the moon. Being able to defend yourself from hostile powers has always been easier when you have the high ground and the superior technology. While no battles were fought on the surface of the moon, the technological advances that we obtained by making the trip helped our nation win the Cold War and benefited the entire free world.
This is one of the reasons that space exploration isn’t simply a fun hobby or a matter of national pride. Looking back at history, when Thomas Jefferson was president, it is clear that the Lewis and Clark exploration of America’s vast western frontier (1803-1806) was about a lot more than just mapping the frontier or learning about it. Part of the mission that Jefferson gave them was establishing our national presence in the west so that European powers didn’t claim it as their own and use it as a launch point to attack our young nation. Jefferson wasn’t imagining the risk. Only a few years later, the British did attack America — but not from the western frontier.
In today’s world, space exploration serves many vital national interests. China very much wants to overtake us in space exploration and its motives are not about advancing the cause of mankind. If you don’t believe me, ask one of the critics of China’s repressive and violent domination of Hong Kong.
The good news is that the United States is making important strides to reestablish its leadership role in space and space exploration. We just witnessed a very important test of NASA’s Space Launch System (SLS). It was a successful test and shows that America is once again Earth’s most capable nation in space exploration. We cannot afford to lose the momentum. We need for national leaders to fully support our efforts in space.
One thing that most Americans don’t understand is that as interesting as it has been to watch the development of SpaceX’s Vulcan Heavy and Falcon Heavy, they are limited in their capabilities. In fact, using lift capability as the measure, SpaceX’s options are less than 1/2 as capable as the current SLS and they will be only about 1/3 as capable as the next generation SLS. While it is true that SpaceX has lowered the cost of a generic space launch, the truth is that SLS can get us to the moon and Mars and beyond. Neither the Vulcan nor Falcon have the lift capability to do that.
Moreover, if we were to build the International Space Station (ISS) now, using SLS to send the parts and equipment into space, we could do it with only three launches. Even though each individual launch would be more expensive, SLS’s vastly superior lift capability would make the entire mission far, far less expensive. It took more than 30 launches to build the ISS with less capable space vehicles.
To state that differently, if you were moving across the country, a single trip in a small commuter car would be the cheapest option to make the 2,500 mile drive. But if you were hoping to move more than a few people, you’d quickly find that a larger, more capable vehicle would actually be cheaper to accomplish the mission of getting your belongings and furniture across the country. We all understand this point and would never seriously consider moving a house full of furniture and household belongings across the country in a Honda Civic.
The bottom line is that America needs SLS if we hope to maintain our advantage in space and continue to be the world’s high technology leader. The new Biden Administration and Congress must continue to support America’s leadership in space. It isn’t merely a matter of national pride or a geeky hobby. We, of course, learn so much in science, health, medicine,and technology when we explore. And history has proven over and over that we must always lead in technology and have the high ground if we hope to keep the world’s despots and totalitarians at bay.
The US should use performance-based contracting tied to reducing recidivism.
President Biden’s executive order calling for the eventual elimination of the use of private prisons by the federal Bureau of Prisons (BOP) serves as a hasty and misguided attempt to satisfy a political impulse without actually improving federal correctional services.
In fact, the new executive order could make conditions in prisons worse for inmates and staff. The Biden executive order repeats many of the same flawed arguments former President Barack Obama’s then-Assistant Attorney General Sally Yates made in an August 2016 memothat coincided with the release of an Office of the Inspector General (OIG) report. At that time Yates said:
“Private prisons … simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department‘s Office of the lnspector General, they do not maintain the same level of safety and security. The rehabilitative services that the Bureau provides, such as educational programs and job training, have proved difficult to replicate and outsource—and these services are essential to reducing recidivism and improving public safety.”
The biggest sticking point of the Yates memo was the allegation that private prisons in the Bureau of Prisons perform poorly when compared to their BOP-operated counterparts. This allegation does not have a basis in the OIG report itself, but it is nonetheless parroted by the new Biden administration’s EO, which says:
“(A)s the Department of Justice’s Office of Inspector General found in 2016, privately operated criminal detention facilities do not maintain the same levels of safety and security for people in the Federal criminal justice system or for correctional staff.”
As I noted in a report released in 2017, despite Yates’, and now Biden’s strong claims, there’s no evidence, that privately-run BOP prisons are less safe or provide inferior service compared to the BOP’s “in-house” prisons. In fact, the BOP warned against making such comparisons in a response to an earlier draft of the August 2016 OIG report:
“(W)e continue to caution against drawing comparisons of contract prisons to BOP operated facilities as the different nature of the inmate populations and programs offered in each facility limit such comparisons.”
Despite this clear warning from the BOP itself saying not to use the August 2016 OIG report to compare public and private prisons against each other due to the numerous factors that make such comparisons untenable, many continue to do so.
When sample groups share similar characteristics, comparisons tend to be more valid. But the Bureau of Prisons overwhelmingly puts foreign prisoners (mostly from Mexico and a few Central American countries) in privately-run BOP prisons, while the BOP-operated prisons are overwhelmingly filled with Americans. While the distinction may seem subtle, communicating with a mostly non-English speaking population presents additional costs and challenges for the operation of those prisons. Communication with a mostly Spanish-speaking population requires additional staff resources that add costs to operating the facilities. In addition to the communication barriers, there can be other problems related to the prisons having a lack of background information on the inmates themselves. Having a clearer criminal background of inmate populations helps corrections officers plan housing arrangements to minimize potential conflicts. When a prison knows of potential affiliations with hate groups, gang affiliations, and the like, it is available to better inform such decisions.
This segregated approach also can affect the safety of inmates and staff. The placement of inmates in cells is usually coordinated to avoid potential violent confrontations, so confining one large subset of inmates to one type of prison makes that sort of planning more difficult. The authors of the OIG report make those points pretty clearly:
“We acknowledge that inmates from different countries or who are incarcerated in various geographical regions may have different cultures, behaviors, and communication methods. The BOP stated that incidents in any prison are usually a result of a conflict of cultures, misinterpreting behaviors, or failing to communicate well. One difference within a prison housing a high percentage of non-U.S. citizens is the potential number of different languages and, within languages, different dialects. Without the BOP conducting an in-depth study into the influence of such demographic factors on prison incidents, it would not be possible to determine their impact.”
One way to better ensure safety, equality, and facilitate comparisons between the BOP’s public and private prisons would be to integrate the native Spanish-speaking population into all BOP facilities, so all BOP prisons would have a similar mix of native English and Spanish speakers. The added diversity would force BOP-run prisons to account for serving an entirely new set of inmates in terms of background, while the added ability to separate and strategically place inmates could help to minimize potentially violent incidents in all facilities. Providing services for inmates to a meaningful level of satisfaction is difficult for any prison operator, and it is made even more difficult when language barriers are introduced. Equalizing populations would also force the Bureau of Prisons to undertake those challenges itself, which it will eventually have to do anyway if private prisons are eliminated in the BOP.
Another problem that prevents valid comparisons between public and private prisons in the BOP is the lack of assurance that the two prison types have equal levels of security and monitoring procedures. While both public and private BOP prisons have dedicated resources to monitoring the operations and safety of their facilities, the Bureau of Prisons serving as both operator and monitor in its own facilities raises concerns about the comparability of the operational and monitoring regimes of public and private prisons in the BOP.
The August 2016 report does note that a greater number of security incidents per capita in privately-run BOP prisons, but in addition to communication barriers and other factors that make ensuring safety and security more difficult in contract prisons, there is reason to believe that publicly-run BOP prisons also have problems implementing staff policies and changes related to safety. Far from conclusive and limited to contraband interdiction, the BOP OIG’s own findings at least suggest a culture of distrust exists between staff and management in BOP-operated prisons, hindering opportunities to accurately assess and identify problems, much less improve and innovate practices and procedures in response to those problems.
Another OIG report produced in June 2016, which focused mostly on conducting staff contraband searches in BOP-operated prisons, noted that searching BOP staff at recommended levels has long been a struggle. The June 2016 report notes the BOP was asked to implement recommended staff search procedure changes in 2006, calling on all facilities to randomly search at least five percent of their staff on a monthly basis, only for the BOP prison guard union to stall and avoid implementation. After nearly a decade, it has implemented the policy inadequately and unevenly. The contraband interdiction report notes only one percent of employee shifts had received any pat-down searches between January and June of 2014, and the searches themselves did not follow established protocol for conducting proper searches (which should take two minutes per person, despite at least one search event lasting only a single minute).
While the BOP says that they were not finding contraband in the prisons they operate in-house, the OIG makes it clear that they doubt the validity of their self-reported claims:
“(I)n light of the BOP’s infrequent application of random pat search events and other related issues described in this report, the absence of contraband recoveries may not constitute an accurate performance measure.”
Since the contraband interdiction report’s time span coincides with the August 2016 report’s period of reporting incidents, the OIG seems to be saying that at least some of the contraband numbers reported from BOP-run prisons in their subsequent August report may be inaccurate. And the BOP’s in-house contraband interdiction efforts do not seem to be improving much. According to an OIG report from last year intended to map out the agency’s largest performance challenges, contraband is still a “pervasive problem” in BOP prisons. The report says that “5 of the 11 recommendations (from the 2016 contraband interdiction report) remain open, including those related to revising its contraband staff search policy and upgrading its security camera system.”
In contrast, the August 2016 OIG report’s authors do note that the relationship between BOP and private prison company staff (for the oversight and monitoring of contracts) is one that effectively works to improve conditions as problems are confronted:
“We determined that for each of the safety and security-related deficiencies that BOP onsite monitors identified during our study period, the contractor responded to the BOP and took corrective actions to ensure the prison was in compliance with policies and the contract.”
While one cannot conclude that guard searches are not an issue in privately-run BOP prisons, the OIG’s findings show that guard searches remain a big problem in the BOP’s publicly run prisons, despite over a decade of warnings and recommendations from the OIG to improve things. The August 2016 OIG report, in contrast, provides examples of how private BOP prisons changed procedures in immediate response to problems, including improving the interdiction of contraband as well as health care procedures, recordkeeping, and staffing procedures. None of these changes took contracted facilities a decade to implement fully.
The Biden executive order also creates problems on the training, educational and rehabilitation side of corrections. “We must ensure that our nation’s incarceration and correctional systems are prioritizing rehabilitation and redemption,” the order says.
The BOP itself is currently entered into over 150 contracts with private entities (businesses and nonprofits) for reentry services alone, with centers scattered all over the United States, mostly in or near medium-to-large cities (100,000+). Some of those firms are the same ones that operate reentry facilities, and a new anti-contracting would certainly undermine BOP’s goals on reentry.
Map of Reentry Centers Contracted By the Bureau of Prisons:
GEO and CoreCivic, two companies that manage federal prisons, alone combine for 17 contract facilities that accommodate around 13 percent of the BOP’s total capacity of roughly 9,800 inmates. The 2016 Yates memo chides private prison companies for preventing the reduction of inmate recidivism, even as the BOP continues to rely on these same companies for reentry services.
Prioritizing rehabilitation and redemption in the BOP would undoubtedly include finding the best reentry services and facilities for those transitioning back into society. Banning private prison companies from the equation only ensures that the BOP would be forced to eliminate some of the very arrangements it sees as providing the best answers to the difficult questions of preparing inmates for the final steps of returning to life as citizens.
Few question that prison systems in the United States need significant reforms and changes. Many are finally starting to come to the conclusion that the so-called tough-on-crime mentality has done more harm than good, including in terms of making conditions worse for inmates while in prison and subsequently after their release. Some of these failures have reached the point where federal consent decrees in multiple states have been filed in recent decades that cite prison conditions that violate our Constitution’s protections against cruel and unusual punishment.
But solutions to improving life inside and after prison have largely remained elusive to governments. Radical and innovative thinking will be needed to improve prison conditions to be more in line with best practices that have been demonstrated in Australia and New Zealandthrough effective use of performance-based contracting where private prison funding levels are tied to reducing recidivism.
A move toward a more rehabilitative and constructive incarceration experience requires policy changes that move away from the real driving factors of mass incarceration. After decades of courts, politicians, and prosecutors making incarceration harsher and lengthier, a growing consensus is moving toward a more rehabilitative approach that recognizes most inmates will eventually be released and reenter society.
New approaches focus on building inmates’ work and personal skills to help them avoid a return to prison. Innovative and competition-driven corrections services can help make that happen, and such a transformation requires departments of corrections that seek to find solutions wherever they emerge.
Getting prison operators and service providers the right incentives to work toward effective solutions should be the focus of the Bureau of Prisons and state departments of correction, regardless of whether the individuals’ responsible work for the government or private sector.
In the corrections space, reform should hinge on improving health and safety conditions as well as the availability of opportunities for inmates while in prison and after release. That is not what government-run prisons have delivered, and expecting that to change without competition from the private sector ignores how the present situation in corrections has played out for decades.
Given the BOP’s reliance on the private sector, a working relationship with private operators who provide effective rehabilitative and reentry services seems crucial. So let’s continue to develop ways to hold all prisons accountable to similar standards, no matter who runs them, and try to find what works best to ensure inmates and staff are kept in safe, secure environments that provide opportunities for those inmates to improve their lives behind bars and after their release. Looking to end private prisons in no way simplifies the difficult problems facing corrections, and the Biden administration’s proposed ban would, unfortunately, work to make solutions more elusive.
“The Right Minimum Wage: $0.00.” That was the title of a 1987 editorial in a major American newspaper. The editorial stated: “There’s a virtual consensus among economists that the minimum wage is an idea whose time has passed. Raising the minimum wage would price working poor people out of the job market.” You might expect the Wall Street Journal editors to write something like that. But the editorial wasn’t in the Wall Street Journal. It did appear, though, in a prominent New York newspaper. Which one? The New York Times.
In a 1970 economics textbook, a famous Nobel Prize–winning economist wrote of 1970’s minimum wage rate of $1.60, “What good does it do a black youth to know that an employer must pay him $1.60 per hour if the fact that he must be paid that amount is what keeps him from getting the job?” Who wrote that? It must have been free-marketer Milton Friedman, right? Wrong. The author of that statement was liberal economist Paul Samuelson.
Among non-economists and politicians, the minimum wage is one of the most misunderstood issues in economic policy. President Biden and almost all Democrats and some Republicans in the US Congress advocate increasing the federal minimum wage from its current level of $7.25 an hour to $15 an hour over four years. They argue that many of the workers earning between $7.25 and $15 will get a raise in hourly wage. That’s true. But what they don’t tell you, and what many of them probably don’t know, is that many workers in that wage range will suffer a huge drop in wages—from whatever they’re earning down to zero. Other low-wage workers will stay employed but will work fewer hours a week. Many low-wage workers will find that their non-wage benefits will fall and that employers will work them harder. Why all those effects? Because an increase in the minimum wage doesn’t magically make workers more productive. A minimum wage of $15 an hour will exceed the productivity of many low-wage workers.
The reason some workers earn low wages is not that employers are greedy exploiters. If exploitation were enough to explain low wages, then why would employers ever pay anyone over $7.25 an hour? Wages are what they are because they reflect two things: (1) workers’ productivity and (2) competition among employers.
Employers don’t hire workers as a favor. Instead, employers hire workers to make money. They hire people only if the wage and other components of compensation they pay are less than or equal to the value of the worker’s productivity. If an employer pays $10 an hour to someone whose productivity is $15 an hour, that situation won’t last long. A competing employer will offer, say $12 an hour to lure the worker away from his current job. And then another employer will compete by offering $13 an hour. Competition among employers, not government wage-setting, is what protects workers from exploitation.
We all understand that fact when we see discussions on ESPN about why one football player makes $20 million a year and another makes “only” $10 million a year. Everyone recognizes the twin facts of player productivity and competition among NFL teams. The same principles, but with much lower wages, apply to competition among employers for relatively low-skilled employees.
Open up almost any economics textbook that discusses the minimum wage and you’ll likely see a demand and supply graph showing that the minimum wage prices some low-wage workers out of the market. For textbooks published in the past twenty years, though, you might also find a statement that although some workers will lose their jobs, there’s controversy among economists about how many jobs will be lost. According to the textbook writers, some economists think the number will be large and others think it will be small or even imperceptible. You could easily conclude that there’s no longer a consensus among economists that an increase in the minimum wage would cause much job loss.
But that conclusion would be wrong. UC-Irvine economist David Neumark and Peter Shirley, an economist with the West Virginia Legislature’s Joint Committee on Government and Finance, showed that in a January 2021 study published by the National Bureau of Economic Research. Neumark is one of the leading scholars on the economic effects of minimum wages.
Neumark and Shirley chose a clever methodology. They read every published study of the effects of the minimum wage on employment in the United States that was done between 1992 and the present. They identified for each study the core estimates of the effect of minimum wages on employment. When that was difficult to do, they contacted the studies’ authors to ask them what they regarded as their bottom-line estimates. Sixty-six studies met their criteria and these criteria had nothing to do with the size or direction of the estimates.
Here’s what they found. The vast majority of studies, 79.3 percent, found that a higher minimum wage led to less employment. A majority of the studies, 55.4 percent, found that the negative effect of a higher minimum wage on employment was significant at the 10 percent level. Translation: for those studies, the probability that there was a negative effect on jobs was 90 percent. Almost half the studies, 47.9 percent, found a negative effect on jobs at the 5 percent confidence level. For those studies, in other words, the probability that there was a negative effect on jobs was 95 percent.
Moreover, found Neumark and Shirley, the evidence “of negative employment effects is stronger for teens and young adults, and more so for the less-educated.” They concluded that the commonly heard refrain that minimum wages don’t destroy jobs “requires discarding or ignoring most of the evidence.”
Moreover, virtually all the studies of the effects of minimum wages in the United States have considered increases in the minimum wage of between 10 and 20 percent. The US government has never raised the minimum wage by anything close to the 107 percent envisioned in the increase from $7.25 to $15.
Why does that matter? Because the higher is the increase as a percent of the existing minimum wage, the more certain we economists are that it will hurt job opportunities for unskilled workers. We are sure of that because of the law of demand, which says that for any good or service, the higher the price, the less is demanded. That applies whether we’re talking about iPhones, skateboards, or labor. So raise that price a lot, and the amount demanded falls more than it would fall if you raised it a little. And what employers don’t demand, willing workers can’t supply.
The effect of the $15 minimum wage would vary a lot from state to state. In New York in 2019, the median hourly wage was $22.44 and the average hourly wage was $30.76. So a $15 minimum would affect a fairly small percent of New York’s labor force. In Alabama, by contrast, the median hourly wage in 2019 was only $16.73 and the average was only $21.60. So the $15 minimum in Alabama could hurt a much greater percent of the labor force.
The University of Chicago’s Booth School has an Initiative on Global Markets (IGM) that occasionally surveys US economists on policy issues. Possibly because of the surveyors’ understanding that the $15 minimum wage would hurt some states more than others, the IGM recently made the following statement and asked forty-three economists to agree or disagree: “A federal minimum wage of $15 per hour would lower employment for low-wage workers in many states.” Unfortunately, the question did not specify what is meant by “many.” Is it ten, twenty, thirty? Some economists surveyed pointed out that ambiguity. That ambiguity could explain why a number of the economists answered that they were uncertain. But of those who agreed or disagreed, nineteen agreed that it would cause job loss in many states and only six disagreed.
One economist who disagreed, Richard Thaler of the University of Chicago, gave as his explanation this sentence: “The literature suggests minimal effects on employment.” No, it doesn’t. As noted earlier, the federal government has never tried to raise the minimum wage by such a large amount and so there is no scholarly literature on such an increase. Would Thaler say that if putting a cat in the oven at a temperature of 72.5 degrees Fahrenheit doesn’t hurt the cat, then putting a cat in the oven at 150 degrees wouldn’t hurt the cat either?
While few economists have actually estimated the effects of such a large increase in the minimum wage, the US Congressional Budget Office (CBO) presented its economists’ estimate earlier this month. According to the CBO, the increase would reduce US employment by 0.9 percent. That might not sound like much, but 0.9 percent translates into 1.4 million workers put out of work.
But wouldn’t the increase in the minimum wage also increase wages for a lot of workers who keep their jobs? Yes, it would, and the CBO estimates that although the workers who lose their jobs would lose income, their loss over the years from 2021 to 2031 would be “only” 34 percent of the gain to the workers who gained wages.
But the gain in wages is not an unalloyed benefit to those who gain. The reason is that, as noted above, an increase in wage rates doesn’t automatically make workers more productive. So employers, looking for ways to avoid paying more to workers than their productivity is worth, would search out other ways of compensating. They might cut non-wage benefits, work the employees harder, or reduce training, to name three. Interestingly, on its website in 2006, when Congress was considering an increase in the federal minimum wage, the Economic Policy Institute (EPI), an organization funded partly by labor unions, admitted the last two of these three. It stated, “employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.” How would an employer make his workers more productive and reduce absenteeism? Probably by working the employees harder and firing those who miss work. How would he reduce training costs? By providing less training. In an article in the winter 2021 issue of the Journal of Economic Perspectives, UC-San Diego economist Jeffrey Clemens noted a negative correlation between minimum wages and employer-provided health insurance. In the workplace as in the rest of the world, there’s no free lunch.
The late economist Walter Williams has written about how, as a teenager, he learned many skills on the job that made him more productive and ultimately higher paid. I wrote recently that he could get those early jobs because the minimum wage was so low. Low-paid jobs are often crucial for black youths and other youths who need to build their work skills and work histories. These skills might be as simple as learning to show up on time. In 1967, when I was sixteen, I worked in a kitchen at a summer resort in Minaki, Ontario. The minimum wage at the time was $1 an hour and I was paid, if I recall correctly, $1.25 an hour. For the first three days of the job, I showed up about twenty minutes late. On the third day, the chef told me that if I was late the fourth day, I shouldn’t bother showing up because I would be fired. I was never late again. I learned the “skill” of punctuality. We adults take such things for granted. Kids don’t. Raise the minimum wage enough and a whole lot of young people won’t learn the basics, or won’t learn them until later in life. That would be tragic.
How many Deaths is an elected official allowed before he/she is assigned an accurate but less than complimentary Nom De Plume which reflects his/her accomplishment ? If you are Ron DeSantis of Florida the number is probably zero. However, If you are Andrew Cuomo , the number is in the thousands.
The exact number may never be known since the quality of the recordkeeping and reporting is suspect – but published reports of the effect of the his now infamous March 25, 2021 order, put the number into the thousands. For those who don’t remember, Gov. Cuomo ordered Nursing homes to accept, without testing, medically stable patients without regard as to their COVID 19 status. Nursing homes were specifically prohibited from requiring testing of a hospitalized resident determined to be medically stable.
The stated reason for this policy was the urgent need for hospital beds, yet , the Javits Center opened with a 1,000 bed capacity two days after the order was issued. The USNS Comfort , with an additional 1,000 beds arrived March 30. It left New York waters on April 30 having cared for 282 patients, less than 30% of it’s capacity. Yet the order stayed on.
The Javits center closed on May 8, 2020. The order requiring Nursing Homes to take COVID 19 positive patients remained in place until May 27, 2020 after NY had registered one of if not the highest death rate in the Nation.
Now many are suggesting that Gov. Cuomo be investigated for attempting to cover-up his handling of the news concerning his lethal order.
The time is overdue for Mr. Cuomo to receive a Nom De Plum worthy of his actions. Henceforth he shall be known as The Butcher of Albany.
Serious consideration should be given to criminal prosecution for the untold number of persons who died because of his infamous order. Their cries for justice are deafening.
On February 8, 2021, the Financial Times published an op-ed authored by Eric Schmidt titled US’s Flawed Approach to 5G Threatens Its Digital Future. In it, Mr. Schmidt makes a series of claims, but his central theme is that the U.S. is not doing enough to promote our 5G infrastructure and, worse, forcing us to forfeit the U.S.’s dominant position in the race to 5G to China. He even goes as far as to suggest that the U.S. should throw the proverbial baby out with the bathwater by adopting a more nationalized approach to 5G vis-a-vis the Department of Defense (DoD) spectrum sharing plan. In this article, I address the most glaring of his assertions to put the 5G debate in the proper context.
Claim: “…China, is already far ahead [in 5G].”
Response: Mr. Schmidt’s article does not provide a metric when he says that China is “far ahead.” Based on the article, it appears that Mr. Schmidt might be comparing the two countries in the following ways: 1) internet speeds; and 2) national 5G coverage. In each case the United States is excelling. Although both countries have taken very different approaches to 5G, both countries’ 5G strategies involve blending their 4G/LTE networks with their nascent 5G networks. Hence, it is appropriate to compare the countries’ progress on those measures.
In terms of broadband speeds, China has an average internet speed of just 105.2 mbps where the United States has an average of 124.1 Mbps. In terms of broadband speed, we are far ahead of China. Moreover, a study conducted by Global Wireless Solutions released network performance testing from Super Bowl LV in Tampa and found that all three of the nation’s carriers averaged more than 1 gigabit per second on their respective 5G networks, which for the uninitiated means that we have past light speed and are now entering into ludicrous speed. Hence, we are certainly leading in this area.
In terms of 5G coverage, China appears to be deploying far more infrastructure than the U.S., but basing China’s success in 5G purely on the amount of infrastructure deployed may be misguided. The main issue China is having is making its 5G infrastructure compatible with its 4G/LTE networks. This issue is so prevalent that Huawei’s Ryan Ding described China’s 5G rollout as “fake, dumb, and poor,” because most of the applications China is calling 5G is really just disrupted 4G due to the frequent and sporadic handover between the two networks. This is distinct from the U.S.’s plan where it and its carriers have a slower deployment strategy to ensure that its 5G networks can efficiently interoperate with its 4G/LTE networks. However, China’s aggressive 5G policy should be taken seriously, but we should not assume that China is in fact “ahead” of anyone.
The one place where China may pose a competitive threat is in spectrum. This is because China can more easily clear incumbents from spectrum bands for 5G due to its heavier regulatory control when it comes to property rights. Also, China has much more local zoning control over deployment. It is similar to its government’s control on spectrum where it relies on heavy centralized state control allowing quicker infrastructure deployment without public input. If the U.S. wanted to emulate China’s approach, then Mr. Schmidt is essentially advocating that the U.S. allow the FCC to clear bands with disregard to the property rights of incumbents operating in those bands.
Claim: The FCC’s C-Band Auction is a “digital setback,” because the auction provided “no meaningful requirement to build necessary network infrastructure.”
Response: This criticism is simply untrue. As it relates to its C-Band Order, the FCC requires C-Band licensees to meet multiple performance metrics based off of the service or services the provider wishes to provide. For example, In paragraph 93 of the C-Band Order, the FCC requires licensees in the A, B, and C Blocks offering mobile or point-to-multipoint services must provide reliable signal coverage and offer service to at least 45% of the population in each of their license areas within eight years of the license issue date (i.e., first performance benchmark), and to at least 80% of the population in each of their license areas within 12 years from the license issue date (i.e., second performance benchmark). These population benchmarks are actually more aggressive than those for other flexible-use services under part 27 of the FCC’s rules.
There are even performance metrics for licensees providing IoT-type fixed and mobile services on paragraphs 97-99. The C-Band Order requires licensees providing Fixed Service in the A, B, and C Blocks band to demonstrate within eight years of the license issue date (first performance benchmark) that they have four links operating and providing service, either to customers or for internal use, if the population within the license area is equal to or less than 268,000. If the population within the license area is greater than 268,000, the FCC requires a licensee relying on point-to-point service to demonstrate it has at least one link in operation and providing service, either to customers or for internal use, per every 67,000 persons within a license area. The FCC requires licensees relying on point-to-point service to demonstrate within 12 years of the license issue date (final performance benchmark) that they have eight links operating and providing service, either to customers or for internal use, if the population within the license area is equal to or less than 268,000. If the population within the license area is greater than 268,000, the C-Band Order requires a licensee relying on point-to-point service to demonstrate it is providing service and has at least two links in operation per every 67,000 persons within a license area.
Claim: “Future auctions must set stringent build requirements, with penalties for underperformance.”
Response: In paragraphs 102-103 the C-Band Order goes into detail about the penalties for each licensee for not meeting the performance metric. For example, the C-Band Order outlines that, in the event a particular licensee fails to meet its performance benchmark, the licensee will have its license term substantially reduced and, when the shortened term is exhausted, the C-Band Order states that “licensee’s spectrum rights would become available for reassignment pursuant to the competitive bidding provisions of section 309(j) [of the Communications Act of 1934 that articulates restrictions on spectrum license applications] and any licensee who forfeits its license for failure to meet its performance requirements would be precluded from regaining the license.”
Claim: “Pursue alternatives to auctions.”
Response: Mr. Schmidt’s statement is myopic as auctions are only one way the U.S. has advanced 5G. His article failed to review or even mention the myriad of 5G policies in place now. In fact, the U.S. has taken an holistic approach to advance our 5G networks through: 1) a series of subsidy programs (e.g., Rural 5G Fund, RUS Fund, USF programs, etc.); 2) clearing spectrum and auctions (e.g., 24 GHz Auction, CBRS, Ligado Order, and, yes, the C-Band auction); 3) granting key mergers (e.g., T-Mobile-Sprint, AT&T-Time Warner, etc.); and 4) lowering regulatory burdens for wireless infrastructure (e.g., 5G Upgrade Order, 5G Small Cell Order, One Touch Make Ready Order, 6409 Order). Again, Mr. Schmidt fails to mention or even allude to these policies focused on infrastructure.
Claim: “The defense department has proposed sharing government-controlled spectrum with commercial providers if they build infrastructure quickly.”
Response: Mr. Schmidt’s endorsement of the DoD’s proposal is misguided.As I and others have argued before, the DoD’s blue-chip in 5G is that it sits on most of our Nation’s valuable mid-band spectrum, which is essential for 5G deployment. This is clearly evident from every other countries’ inclusion of these frequencies in their respective 5G plans. This is especially true in the case of China that is a leader in mid-band spectrum deployment for 5G. The DoD’s frequencies in its RFI (i.e., 3450-3550 MHz) are prime “beachfront” mid-band spectrum and are critical to open up for commercial use. This is because U.S. commercial 5G networks are severely lacking in mid-band spectrum; a fact of which the DoD is well aware. DoD’s offer to industry is, thus, enticing, but it comes at a hefty price: every carrier must go through the DoD to access this mid-band spectrum that they all will need to make their networks functional. This is a Hobson’s choice for carriers: either they want a functioning 5G network or not. Hence, they will be compelled to work with DoD if this proposal moves forward. This will most likely translate into the DoD being yet another bureaucratic barrier of entry for carriers looking to deploy 5G, which, in turn, slows down the deployment that Mr. Schmidt says the DoD’s plan will promote.
In his article, Mr. Schmidt makes assertions that are either exaggerated, myopic, or confused on the issues of 5G. We can both agree that China’s growth in the area is concerning. However, the arguments Mr. Schmidt presents regarding our auctioning process are not at all the issue and, ironically, is an example of the U.S.’s success in this technological race.
• • • • • • • • • •
Joel L. Thayer is an attorney with Phillips Lytle LLP and a member of the firm’s Telecommunications and Data Security & Privacy Practice Teams. Prior to joining Phillips Lytle, he served as Policy Counsel for ACT | The App Association, where he advised the Association and its members on legal and regulatory issues concerning spectrum, broadband deployment, data privacy, and antitrust matters. Prior to ACT, he also held positions on Capitol Hill, as well as at the FCC and FTC. The views expressed here are his own and do not reflect those of Phillips Lytle LLP, or the firm’s clients.
According to recent news reports, Senator Lisa Murkowski (R-AK) and Senator Joe Manchin (D-WV) are pushing for a far reaching energy bill that is shockingly similar to the New Green Deal to be shoe-horned into the “must-pass” government funding bill that is being negotiated during the remaining days of the lame duck legislative session.
Frontiers of Freedom President George Landrith said:
The Manchin-Murkowski energy bill is a horrible piece of energy legislation that would endanger America’s energy independence, increase costs to consumers, kill jobs, and is effectively the Green New Deal light. If the bill were a piece of stand alone legislation, it would be entirely worthy of outright defeat which is precisely why the Senators are trying to attach it to “must-pass government funding” legislation where there would be no real opportunity to review and debate the far reaching consequences of the bill.
This energy bill includes language lifted from the Green New Deal that would commit our nation to very costly and even highly impractical regulations that would restrict energy choices to either 100 percent renewable sources or zero emission sources. This 100% provision as a “Sense of Congress” is dangerous because it would give future Energy Department bureaucrats a blank check from Congress to impose virtually any energy regulations that suit their fancy. This is not government accountability — it is the precise opposite.
While innovation and the marketplace will continue to find cleaner and cleaner ways to provide consumers and our economy with needed energy, government regulations that attempt to force the issue will compel us into high cost solutions and do far more harm than good.
Even if one thinks that some of the ideas contained in this energy bill deserve consideration, this “slight of hand” procedural move should be universally opposed because it will rush us into radically different direction with virtually no debate or discussion. The economic costs and the job creation costs are obvious. But even national security and foreign policy could be impacted.
Making America less energy independent or forcing energy shortages on America does not make us more secure or help us keep aggressive adversaries like China or Russia at bay. To be blunt, China and Russia have to be cheering this effort. They would be its biggest beneficiary. It is the equivalent of the United States voluntarily shooting holes in our Olympic runners’ feet just before the start of their race.
Major shifts in important public policy that will have significant economic and even national security implications deserve full consideration and should not employ procedural chicanery to help them pass in the dark of night with no significant discussion, review or debate.
Senators Murkowski (R-AK) and Manchin (D-WV) both have a reputation for being moderate — politically speaking — but there is nothing moderate about their energy proposal. Its impact will harm America economically, reduce job growth at a time we desperately need more jobs, and increase consumer costs to Americans already struggling to make ends meet. On the international front, our adversaries in China and Russia and around the globe have to be cheering this effort.
The fact that the bill may contain some worthwhile reforms or provisions is largely irrelevant and cannot be a reason for supporting it. Let’s be honest, if you were offered a piece of cake that was made with only 5% poison, you would wisely decline and toss it in the trash. This bill is more than 5% poison and should be discarded with enthusiasm.
We urge Senators to opposed this move to radically change American energy policy in the dark of night and without serious debate and review. This is a bad energy bill. But the idea of passing it in a procedural move that hides it from the American public is truly sinister. Any Senator supporting this effort is unworthy of their office.
On November 13th, the U.S. Postal Service reported its Fiscal Year (FY) 2020 results. This revealed many insights about the agency with the largest takeaway being a disappointing $9.2 billion net loss. USPS, like so many other operations, has been adversely affected by the Covid-19 pandemic; mail volume, for example, declined 13.8 billion pieces. However, it is important to note that the USPS financial troubles far predate the coronavirus pandemic.
Frontiers of Freedom president George Landrith states, “The USPS has been consistently losing money year after year and has requested up to $75 billion in taxpayer money to remain solvent, but until thoughtful postal reform is completed, this money will merely kick the problem down the road.” He continues, “If we give USPS the money they are requesting, but allow the agency to continue with failed policies, we will inevitably have to bail them out again in the future.”
The agency states in the report that losses within the management’s control was $3.8 billion this year. This is a $334 million increase from the controllable loss in 2019. The agency is trending in the wrong direction and without postal reform it will only continue to decline.
In fact, although operating revenue has actually increased by nearly $2 billion due to a surge in e-commerce and greater package demand, the USPS’ out-of-date pricing system means the agency is unable to afford package costs or make a profit on these deliveries. Further, USPS calls shipping and packages its most “labor-intensive” effort, which is especially true during Covid-19, but how and to what extent that translates to its costs and full accounting picture continues to be unclear.
Landrith concludes, “In order to effectively manage and reduce the agency’s $160 billion debt, the USPS must update its policies and work with the incoming Biden administration to create thoughtful reform that will help preserve and ensure the success of our most important public institutions.”