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OpenMarket: April 2013

  • Obama Budget: Bad News For Investors, Taxpayers, And Education Reform

    April 11, 2013 5:17 PM

    President Obama's budget was released yesterday, two months late. It's a record $3.78 trillion, and is full of wasteful spending, but at least it doesn't contain a trillion dollar deficit, like his prior budgets. (This time, the projected deficit is less than $800 billion. If adopted, Obama's budget "would increase spending by $154 billion.")


    It contains a cap on IRA's, which is a bad omen for savers. As Time magazine notes, it "proposes to cap tax-advantaged savings across all accounts at $3 million in order to raise $9 billion over 10 years," curbing


    the savings ability of self-employed professionals like doctors and lawyers. As these business owners reach the cap, and there’s nothing left in it for them, they might shut down or reduce plans that benefit their employees. The cap proposal is a clear play to unlock some of the $10 trillion sitting in IRA and 401(k) accounts, which have become the primary retirement savings vehicles in America. . . .What’s next? Taxing the growth in Roth IRAs?. . . It’s not clear how the IRA cap would be enforced. Would savings beyond $3 million be disallowed? Or taxed right away? If you already have more than $3 million in IRA and 401(k) accounts, might you be forced to take immediate taxable distributions? Would Roth IRAs and traditional pensions be included under the cap?


    The Obama budget contains big increases in spending on Early Head Start, even though neither Head Start nor Early Headstart works. America already spends more money on K-12 education than all countries except for a few extremely wealthy nations like Luxembourg and oil-rich Norway, and it spends a higher percentage of its GDP than the vast majority of countries. As the Cato Institute's Andrew Coulson notes, the Obama administration has ignored "the mounting evidence that the federal government’s own preschool programs, Head Start and Early Head Start, have essentially no lasting benefits. Though candidate Obama once said he would terminate ineffective programs, his latest budget retains them both, and actually grows Early Head Start. Additionally, the new budget would subsidize PreK programs like those in Oklahoma and Georgia that advocates have long touted as 'high quality.'" Never mind that "relative to the national average, Oklahoma has seen modest declines on the 4th grade NAEP tests."


  • Time To Rein In Unfunded Mandates

    April 11, 2013 12:45 PM

    In today's Investor's Business Daily, Wayne Crews and I point out that the higher deficits go, the more tempting it becomes for Congress to resort to unfunded mandates.


  • Who Profits From Alcohol Taxes?

    April 10, 2013 4:36 PM

    money in the handsWhile there appears to be no acceptable level of alcohol consumption to participants at the Alcohol Policy 16 Conference, which met last week in Arlington, Virginia, they certainly don’t mind profiting from people who do drink. During a discussion on alcohol tax policy, these "public health advocates" discussed ways to hike the rates as much as possible and earmark the funds to their own organizations.


    I thought we'd hear about research related to the impact of taxes on alcohol abuse. For example: Do higher taxes really reduce alcohol abuse or do they simply punish all alcohol consumers? The answer to that question appeared not to matter. The entire discussion revolved around how to lobby for taxes and profit in the process.


    Rebecca Ramirez of the Bloomberg School of Public Health at Johns Hopkins University presented her qualitative research on the framing of pro-tax messaging for use in lobbying campaigns. It included interviews with policy makers and activists involved in these campaigns. Ramirez's discussion eventually turned to earmarking, which is apparently the key reason many groups are involved. One disability advocacy group, she noted, told her flat out that they simply didn't care about the public health impacts of taxes. They were in the game solely to get some of the tax revenue earmarked to their organization.

  • Alcohol Regulation Roundup: April 10, 2013

    April 10, 2013 4:15 PM

    National: Constellation Brands revealed this Monday that a preliminary deal has been reached regarding the sale of Gupo Modelo -- the maker of Corona. The $20 billion deal was stalled when the DOJ filed a suit to stop the merger of Modelo and Anheuser-Busch (ABI), citing anti-trust concerns. In the revised deal, it seems that ABI would sell its 50 percent ownership of Crown Imports to Constellation Brands -- giving Constellation full control of Crown -- the importer of Corona in the U.S. That, along with the sale of the Modelo’s Piedras Negras brewery to Constellation, appears to be enough for the DOJ to allow the merger to go through.


    Alabama: The House of Representatives approved a bill earlier this month that would legalize home brewing in Alabama -- the last state that maintains a ban on the activity. Representatives voted 58-33 in favor of the bill that would allow those 21 and older to make up to 15 gallons of beer, wine, mead or cider every three months so long as they are not in a dry county or city. The measure now moves to the Senate for consideration.


    Arizona: Two sisters who wanted to open a combination vineyard and brewery were thwarted by an Arizona law that banned such combinations on the same property. However, the Governor signed legislation last week reversing the ban.


    Florida: Bills that would legalize the standard growler (64 ounces) in Florida are essentially dead after The Florida Beer Wholesalers Association, which opposed the bill, convinced Rep. Debbie Mayfield, R-Vero Beach, not to give it a hearing at the House Business and Professional Regulation Subcommittee she chairs. Currently, only 32 ounce containers or gallon-sized containers may be filled by breweries.


  • Obamacare Strangles Job Creation, Stifles Medical Innovation

    April 10, 2013 3:09 PM

    Earlier, I wrote about the dismal March jobs report and how high unemployment has been masked by rising numbers of discouraged workers and people going onto Social Security Disability. I also noted Obamacare has wiped out some jobs and prevented the creation of others.


    Economists including Mark Zandi and economics writers such as James Pethokoukis recently cited Obamacare as the likely culprit behind those lousy jobs numbers. Zandi cited the way it affected the labor market and which sectors were most sluggish in hiring. Ed Morrissey discussed some alternative theories for why hiring was weak, and why he wasn't buying them, here.

  • NOAA Proposes Tuna-Dolphin Regulations To Comply With WTO Ruling

    April 10, 2013 10:50 AM

    dolphin-safe-labelTo comply with a World Trade Organization ruling in a tuna-dolphin complaint brought by Mexico, the U.S. proposed new regulations that would tighten the requirements for allowing tuna to be labeled “dolphin safe.”


    The proposal was issued for comments by the National Oceanic and Atmospheric Administration on April 5. It would revise the Dolphin Protection Consumer Information Act (DPCIA) of 1990, which established a dolphin-safe labeling standard for certain tuna products.


    Under the original rule, a “dolphin-safe” label could be used only for tuna that was caught without using purse-seine, encircling methods.  But for tuna caught in the Eastern Tropical Pacific Region (ETPR), additional certification was required that “no dolphins were killed or seriously injured” while catching the tuna.


    In the U.S. regulations, NOAA also established a domestic tracking and verification program that provides for the tracking of tuna labeled dolphin-safe.


    In a case brought by Mexico in 2008, Mexico challenged in the WTO the U.S. dolphin-safe labeling system as violating provisions of the WTO's General Agreement on Tariffs and Trade 1994 and its Agreement on Technical Barriers to Trade (TBT Agreement).

  • Americans Reject Actual E-Verify System

    April 9, 2013 4:48 PM

    Imagine there was a free program that could guarantee for employers a legal workforce and eliminate illegal immigration. Would you favor such a system? Yes or no? This is essentially how all polls attempt to gauge the popularity of E-Verify, the electronic national identification system included in many immigration reform proposals. Then, the system’s proponents exclaim, “Americans demand E-Verify!”


    Last year, for example, when Rep. Lamar Smith proposed mandating E-Verify for all employers, the electronic national identification system used to catch unauthorized workers, he cited a Pulse Opinion Research poll that found that just 11 percent of Americans opposed a mandatory E-Verify system. Of course, most Americans do not know what E-Verify is, so how did this poll explain E-Verify?


    There is a federal program known as E-Verify which allows employers to electronically verify the Social Security numbers of the people they hire to ensure that they are eligible to work in the U.S. Do you strongly favor, somewhat favor, somewhat oppose or strongly oppose the use of an electronic system to verify that all workers hired in the United States are legally eligible to work here?


    This poll is similar to a poll finding support for the president’s stimulus packages that asked, “Do you strongly favor, somewhat favor, somewhat oppose or strongly oppose providing jobs for Americans during this time of economic uncertainty?” What person would oppose that? Similarly, how many Americans would oppose a system that quickly and inexpensively allows employers to “verify all workers hired in the United States are legally eligible to work here”? Not very many.


    Never mind that E-Verify does not actually do this, that it fails to catch unauthorized workers 54 percent of the time, that it would initially deem ineligible hundreds of thousands of authorized workers, and that it requires employers to hire, train, and pay unauthorized workers during appeals, but even if it did all those things with perfect accuracy, Americans would still oppose it if only they were aware of the costs.


  • Health "Advocates": Tax And Regulate Responsible Drinkers

    April 8, 2013 5:12 PM

    no_alcohol “Don’t just lean in, barge in,” said Rebecca Ramirez of Johns Hopkins University’s Bloomberg School of Public Health at the opening of the Alcohol Policy 16 conference in Arlington,Virginia (April 3-5, 2013). In one short sentence, Ramirez summed up the entire purpose of this 16th annual event: mobilize nanny-state activists to push taxes and regulations that limit access to alcohol, targeting those of us who just might take one too many sips of Merlot.


    A collaboration of numerous health-related groups, the theme of this partially taxpayer-funded event was “Building Blocks for Sound Alcohol Policy.” Surely, there is a role for public health advocacy when it comes to addressing issues related to serious alcohol abuse. But rather than focus on real problems, there was way too much focus on how to control the behavior of people like me.


    My crime stems from the fact that I like to share a bottle of wine with my husband at dinner. My consumption of 2.5 standard-drinks-a-day exceeds the two-drinks a day maximum for women -- placing me in the “excessive” drinker category.


    Mind you, a standard drink really isn’t that much alcohol, especially when consumed with food over many hours. According to the National Institute on Alcohol Abuse and Alcoholism, a standard drink is one that contains 14 grams of alcohol -- one small, 5-ounce glass of wine, a 12-ounce beer, or a 1.5 shot of spirits (40 percent alcohol). Many people can handle several of such drinks over a 24 hour period without getting “drunk” or abusing these products.


  • Protectionist Law Proposed In New York Would Hit Wine Consumers Hardest

    April 8, 2013 4:57 PM

    While most states are desperately trying to figure out ways to encourage business development and reduce the cost of consumer goods, New York is considering a proposal that would benefit one particular group of large businesses at the expense of smaller outfits and consumers. The reason, it appears, that lawmakers are considering the proposal is because those large in-state businesses set to benefit from the law changes donated very large sums of money to those very lawmakers.


    “At-rest” laws, which require alcohol being shipped from out-of-state spend 24 hours in a distributors warehouse in the state where it is to be sold (sometimes for up to three days) are an effect of the mandatory three-tier system that separates alcohol producer from retailers by forcing both to use a middle man. As I have stated in the past, wholesalers can provide and invaluable service for both retailers and alcohol producers, but by making their use mandatory it has given that middle tier an immense amount of control over the market and with it power and money. Over the decades, wholesalers have been able to buy or pressure their way to favorable laws. For example, 33 states have these “at-rest” laws which really serve no greater purpose than to act as a way to protect in-state wholesalers from out-of-state competition and raise costs (and thus the prices) of out-of-state alcohol. Now, New York is reportedly considering adding this provision to its alcohol control laws. Why? As others, like Walter Olson over at Cato have noted, the only explanation seems to be that large in-state wholesalers donated thousands of dollars to lawmakers in order to convince them to get on board — State Sen. Jeff Klein (D-Bronx), who is pushing the proposal, S3849, received no less than $33,000 from Empire Merchants, a distributor that already has warehouses in New York.


    Small and out-of-state wholesalers are up-in-arms about the proposal, claiming that the cost of buying or leasing warehousing space in New York could put them out of business which would reduce the choices for consumers in the New York market. Furthermore, for those that manage to survive the change, the increases in operating costs would necessitate an increase in the prices they charge to consumers. According to wine writer Jesse Nash, the new requirement could add $7 or $8 to bottles.


  • JOBS Act -- What's Been Implemented -- Is Working; Now Implement The Rest!

    April 8, 2013 11:30 AM

    CEI Research Associate Evan Woodham contributed to this post.


    Another round of disappointing jobs numbers released last Friday shows more than ever that massive spending "stimulus" isn't working in getting the U.S. economy going. We must, in the phrase coined by my Competitive Enterprise Institute colleague Iain Murray, "liberate to stimulate."


    But not only is the U.S. government piling on ever-more regulation on all sectors of the economy, it is stalling on implementing even modest bipartisan regulatory relief passed into law.


    On April 5 of last year, President Obama signed the Jumpstart Our Business Startups Act. Risking heat from allies, I praised the president for this action in conservative venues such as National Review, because I believe that good public policy actions should be praised no matter who the actor is.


    But on its first birthday, much of the JOBS Act might as well still be in the womb. That's because except for provisions that went into effect automatically -- and these are working well, as I will get to in a minute -- liberalized rules under the JOBS Act have been inexcusably delayed by the Securities and Exchange Commission (SEC).


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