September 16, 2014 3:31 PM
The U.S. Senate Committee on Commerce, Science, and Transportation has scheduled a markup for tomorrow afternoon of the Surface Transportation Board (STB) Reauthorization Act (S.2777). If enacted, the bill (specifically, Section 14) would threaten much needed investment in railroad infrastructure and reverse three decades of progress on railroad regulation.
Senate Commerce chair Sen. Jay Rockefeller (D-W.V.), irresponsibly joined by Sen. John Thune (R-S.D.), has for years sought to reverse the partial deregulation enacted by Congress over 30 years ago. Since 1980, when the Staggers Act was enacted, average real freight rates have fallen by nearly 50 percent, railroad employee productivity and safety have dramatically improved, and the industry is now healthy and reinvesting more than $20 billion of its own funds every year.
But hydrologic fracturing revolution has led crude oil shipments to skyrocket in recent years—since 2005, originated carloads of crude oil on major railroads have increased by more than 6,500%. With continued steady growth in intermodal movements, new capacity investments are needed to ensure America’s freight rail system remains the envy of the world. Unlike road and air carriers, the railroad industry owns and manages its own networks and uses its own funds for infrastructure investment.
While singling out the private railroad industry for its alleged sins, Sen. Rockefeller has often championed subsidies for other modes of transportation. West Virginia’s highway system has long been one of the most federally subsidized in the nation, and Sen. Rockefeller never misses an opportunity to protect wasteful taxpayer subsidies of government-owned Amtrak and the completely misnamed and unessential Essential Air Service.
September 16, 2014 12:21 PM
I was very sad to hear last week that Elizabeth Whelan, founder and president of the American Council on Science and Health, had passed away. Beth had a great scientific mind—always asking questions, and always seeking new knowledge—not just information, but understanding. And it was that innate desire to know, to better understand, and to share the truth that led her, in 1978, to found an organization dedicated to injecting solid scientific information into public debates and public policy on public health. Under Beth’s leadership, and with her aggressive, no nonsense activism, ACSH became a leading voice in science advocacy and “go to” source of information about a range of science and health issues.
I came to know Beth many years ago after becoming interested in food and drug safety issues. As a young policy wonk with no formal scientific training, I sought out as many respected scientific advisors as I could find to guide me. It wasn’t long before several of the scientists I consulted directed me to ACSH, and to Beth Whelan in particular. She was a nutritionist by training—having completed an Sc.D. at Harvard and a M.P.H. at Yale—and a greatly respected one at that. But I found her to be both incredibly knowledgeable about a broad range of science and public health issues and eager to teach a budding young scholar like myself.
September 15, 2014 11:34 AM
In the past, I’ve noted that carve-outs for ridesharing providers leaves more innovative and disruptive business models—particularly future automated services—illegal. While self-driving on-demand transportation services are still a ways off, California’s Public Utilities Commission last week sent letters to Uber, Lyft, and Sidecar warning them that operating commercial carpooling services they have proposed is illegal. (See the letter to Uber here.)
This is not surprising. The narrow carve-out secured by Uber et al. in California, the “Transportation Network Company,” basically only authorizes taxi-like services that utilize digital hail networks across a distributed ownership model. True commercial ridesharing where co-passengers face individualized fares has long been illegal across the country.
September 15, 2014 10:56 AM
That was the question at the center of a September 9 House Health, Employment, Labor, and Pensions Subcommittee hearing, which was held in response to the National Labor Relations Board’s (NLRB) July 29 decision declaring McDonald’s to be a “joint employer” with all of its local franchisees across the country.
Subcommittee Chairman Rep. Phil Roe (R-Md.) warned that the decision would diminish business opportunities for Americans by destroying the franchisee model that allows entrepreneurial people to use an established brand name to start a business instead of starting on their own from scratch.
The first witness, Catherine Monson, CEO of a franchise who has been in the business for 30 years, warned that the NLRB decision would impact many lines of business in addition to hotels and restaurants, including accounting and home improvement services. Monson said that, “I have seen franchising allow people to achieve the American dream of business ownership.” She expressed strong disagreement with the ruling, because franchisees pay their own taxes and hire, fire, manage, schedule, and train their own employees. The franchisor sets overarching standards to protect the brand name but has no input on franchisees’ labor relations.
But if franchisors were required to have direct input over labor relations, they would be liable for any charges of unfair labor practices. The potential for significant legal costs would force franchisors to enhance their oversight of the franchisee. Monson said this enhanced oversight would reduce franchisees’ autonomy, thus effectively ending the franchisee system. When asked about the costs to franchisees from this decision, Monson said there would have to be “cuts.”
Jagruti Panwala, a first generation immigrant from India and a franchisee, said that she would not have started her own business without the franchise system. Panwala said that franchising helped her business grow by attracting new customers and that, “Ultimately, franchising appealed to us because we still controlled our own business and simply paid fees for the use of a brand name.” Panwala, who employs roughly 200 people at a hotel, said that the impact of a decision forcing her franchisor to be involved in labor relations would hurt morale of her employees, some of whom have worked for her for over a decade. She described the potential restructuring of the franchise system as “devastating” to her business and said that it would make her an employee of the parent company instead of a business owner.
September 15, 2014 7:51 AM
The number of new regulations topped 2,500 on the year, while the Federal Register added 1,853 pages to end the week just shy of the 55,000 mark.
On to the data:
- Last week, 64 new final regulations were published in the Federal Register. There were 62 new final rules the previous week.
- That’s the equivalent of a new regulation every two hours and 38 minutes.
- So far in 2014, 2,521 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,561 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
- Last week, 1,853 new pages were added to the Federal Register.
- Currently at 54,872 pages, the 2014 Federal Register is on pace for 77,503 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
- Rules are called “economically significant” if they have costs of $100 million or more in a given year. Twenty-nine such rules have been published so far this year, none in the past week.
- The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
- 206 final rules meeting the broader definition of “significant” have been published so far this year.
- So far in 2014, 483 new rules affect small businesses; 70 of them are classified as significant.
Highlights from selected final rules published last week:
September 12, 2014 11:15 AM
Darrell West, a Vice President at the Brookings Institution, has a new book coming out next week on the political influence of the very wealthy, titled Billionaires: Reflections on the Upper Crust. West has come up with a savvy promotional idea by assembling a list of the top 20 billionaires (and billionaire couples) ranked by political influence. Bloomberg TV had him on yesterday to discuss the list and Philip Bump at The Washington Post wrote about it last week, taking issue with some of West’s choices.
September 12, 2014 8:33 AM
It’s not exactly a blood-pressure raising headline, which is probably why the new report from the Centers for Disease Control and Prevention is actually bears the alarming titled, High Sodium Intake in Children and Adolescents: Cause for Concern. The study will no doubt be hailed by public health advocates as proof that something must be done to bring America’s sodium intake in line with the recommendations of the CDC and other health originations. However, the report’s findings, when put into context of 50 years’ worth of research on global salt consumption aren’t alarming at all.
High sodium intake is associated with all sorts of nasty health problems—as the CDC was careful to note in the opening paragraph of its report. As NBC News put it:
Studies clearly show that eating a lot of salt can raise blood pressure — not in every single person, but in a significant percentage of the population. The latest survey of what kids eat shows that more than 90 percent of them are eating far too much salt...
September 11, 2014 12:21 PM
A vote on the Continuing Resolution, which includes the controversial Export-Import Bank reauthorization was originally scheduled for today, but has been pushed back to next week. So the combat continues over how long the Ex-Im reauthorization will last, and what other conditions might included as part of the deal. In today’s Washington Times, National Association of Manufacturers President Jay Timmons and I have dueling op-eds, with Timmons favoring reauthorizing Ex-Im, and me wanting to end it. The Wall Street Journal also weighed in with an editorial this morning, sharing my skepticism of Ex-Im.
Timmons makes three points in his piece that deserve a response. First, he argues that Ex-Im fills in gaps in private financing:
Ex-Im Bank provides financing that is critical to fill gaps when private-sector financing for small and large manufacturers is not available.
If Ex-Im makes a profit, as Timmons argues it does, then surely private banks would welcome an opportunity to make money for themselves by lending to more exporting businesses and their customers. If Ex-Im loses money, as the Congressional Budget Office convincingly argues, then there is no financing gap to be filled, and Ex-Im is financing too many insolvent projects.
Second, Timmons commits the “but other governments do it, too” fallacy:
September 10, 2014 2:17 PM
The Obama administration has claimed that despite recurring language in the Obamacare law limiting tax credits to people who buy insurance on an “exchange established by the state,” such taxpayer subsidies are also available to people who buy insurance on the federal exchange, Healthcare.gov. (The availability of tax credits triggers employer mandates and penalties in any state where the tax credits are available, and the tax credits contain work disincentives and marriage penalties, so the tax credits are not a free lunch.)
Architects of Obamacare like Jonathan Gruber have argued that it is “nutty” to argue that Congress intended to limit tax credits to state exchanges. But this supposedly “nutty” view was once the view of Gruber himself – and, apparently, the federal government itself. When the Department of Health & Human Services issued a contract to create a federal exchange in 2011, the contract assumed tax credits didn’t apply to the federal exchange. (The original contract did not include any functions to allow purchasers to calculate their tax credits, or factor in tax credits before displaying health-insurance prices, and the contract was not amended to apply tax credits to the federal exchange until much, much later.)
Back in 2012, Gruber had himself admitted tax credits were not available on the federal exchange, contradicting his later statements. A 2012 video caught “Obamacare architect Jonathan Gruber saying, ‘If you're a state and you don't set up an exchange, that means your citizens don't get their tax credits.’” In July 2013, that video was “nationally-publicized due to the efforts of CEI’s Ryan Radia,” who helped expose Gruber’s two-faced turnabout. (“The Wall Street Journal, Bloomberg, Forbes, New Republic, Slate and others carried stories” due to Radia, noted the Des Moines Register.)
Gruber claimed that what he earlier said on the video was just a slip-of-the-tongue—a “speak-o” equivalent to a typo—but it turned out that he publicly made the same exact admission on at least one other occasion in 2012, before that admission became politically inconvenient.
As Forbes Magazine noted, “the irony is that” by 2013, “Gruber was deriding as ‘nutty’ and ‘stupid’ the contention that the Affordable Care Act required subsidies to flow through state-based exchange,” the very contention he himself made back in 2012. “It’s a ‘screwy interpretation’ of Obamacare, alleged Gruber in an interview with Erika Eichelberger of Mother Jones . . . ‘It’s nutty. It’s stupid… it’s essentially unprecedented in our democracy.’” Less than a week before his video was unearthed, “Gruber was on MSNBC’s Hardball,” where he proclaimed the “criminality” of those who argue tax credits are limited state-based exchanges.
But as Scot Vorse discovered, the government itself once recognized that credits are limited to state-based exchanges. In light of that discovery, CEI has submitted two FOIA requests, one to HHS headquarters, and one to the Centers for Medicaid & Medicare Services, seeking additional information relevant to the government’s about-face.
September 9, 2014 3:14 PM
I've noted in the past the natural appeal passenger facility charges (PFCs) should have with fiscal conservatives. These are the user fees airports are allowed to charge passengers leaving their airports. Unlike federal Airport Improvement Program grants (funded via an array of taxes through the Airport and Airway Trust Fund) and local debt financing, PFCs offer a fair, transparent, and direct way for users to pay for the infrastructure investments from which they benefit. The monies collected by the airports are kept by the airports, who then use the funds to make Federal Aviation Administration-approved airport improvements. There are no Washington fiscal sleights of hand about which to worry and accountability remains a local matter.
Unfortunately, Congress has capped the maximum PFC at $4.50, an amount unchanged since 2000. Since then, inflation has eroded that buying power by nearly half. Major airports are lobbying Congress to raise that cap, something we at CEI believe is badly needed. Illustrating that this is beyond ideology, the White House has also endorsed raising the PFC cap.
Over at Human Events, CEI President Lawson Bader explains why those who attempt to conflate user fees with taxes (and raising the PFC cap with dreaded tax increases) are mistaken: