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OpenMarket: January 2014

  • Long-Suspected TSA Abuse and Incompetence Confirmed by Former TSA Employee

    January 31, 2014 3:44 PM

    tsa-nun-screeningPolitico Magazine has a disturbing article by former transportation security officer Jason Edward Harrington. At least it would be disturbing if it wasn't largely just a confirmation of what many of us had long suspected. (Titled "Dear America, I Saw You Naked: And yes, we were laughing. Confessions of an ex-TSA agent.") Harrington details the dim view the Transportation Security Administration holds of traveling public, in addition to their willful use of ineffective screening techniques and technologies, which may or may not be deployed by spiteful TSOs to humiliate or delay a passenger who rubs them the wrong way. A taste:

    We knew the full-body scanners didn’t work before they were even installed. Not long after the Underwear Bomber incident, all TSA officers at O’Hare were informed that training for the Rapiscan Systems full-body scanners would soon begin. The machines cost about $150,000 a pop.

    Our instructor was a balding middle-aged man who shrugged his shoulders after everything he said, as though in apology. At the conclusion of our crash course, one of the officers in our class asked him to tell us, off the record, what he really thought about the machines.

    “They’re shit,” he said, shrugging. He said we wouldn’t be able to distinguish plastic explosives from body fat and that guns were practically invisible if they were turned sideways in a pocket.

  • EPA, Freedom of Information, and Good Faith

    January 31, 2014 2:58 PM

    Yes, the recent ruling in Competitive Enterprise Institute v. Environmental Protection Agency (D.D.C. No. 12-1617) is good news for the EPA, but the lawsuit still produced some pretty valuable results for both CEI and the public at large.

    This case involved then-Administrator Lisa Jackson’s use of her "Richard Windsor” email alias. As the court noted, the fact that administrator Jackson and other EPA officials used alternative email addresses “raised questions about the agency's compliance with federal record-keeping laws as well as the completeness of its responses to certain FOIA requests.” In the court’s words, this was a matter of “appropriate… concern,” and not just for us.

    The court ruling has some entertaining references to CEI’s so-called “conspiracy theory.” We didn’t use that phrase in our pleadings, but we did argue that EPA’s filings and declarations shouldn’t get the usually automatic presumption of good faith. After all, as recently as last August, another court found the agency had handled a Landmark Legal Foundation FOIA request in “bad faith,” and six months before that, EPA’s Region 8 Administrator resigned after having apparently misrepresented his use of a private email account for official business. In short, we believe the court erred in how it applied the good faith presumption, because we weren’t exactly suing Snow White here.

  • CEI Podcast for January 30, 2014: State of the Union

    January 30, 2014 4:36 PM

    Vice President for Strategy Iain Murray analyzes the President's 2014 State of the Union speech.

  • Schism among Democrats On "Fast Track" to Trade

    January 30, 2014 1:11 PM

    The trade debate is heating up in the wake of President Obama’s nod to trade in his State of the Union address, the introduction this month of a Trade Promotion Authority (TPA) bill, and the on-going negotiation on two major trade deals.

    A major schism among Democrats on trade broke out January 29, when Senate Majority Leader Harry Reid, D-Nev., said in an interview that he was against TPA, commonly known as “fast-track” legislation, which gives the president authority to negotiate trade agreements that are then voted on by Congress without amendments. Without fast-track, it’s difficult to negotiate final trade deals with other countries when they know Congress can change the terms. Reid was quoted as saying: “Everyone would be well-advised just to not push this right now.”

    Reid’s opposition is in contrast to President Obama’s endorsement of fast-track authority in his State of the Union address earlier this week when he said:

    We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped “Made in the USA.” China and Europe aren’t standing on the sidelines. Neither should we.

    Reid’s stance is at odds too with some leading Democrats, such as Senate Finance Committee Chairman Max Baucus, D-Mont., who joined with Ranking Member Orrin Hatch, R-Utah, and House Ways and Means Committee Chairman Dave Camp, R-Mich., to introduce a TPA bill on January 9. However, Baucus’ active leadership on TPA may be in question, since he was nominated to be Ambassador to China.

  • Reining in the Executive Branch Bureaucracy, Part 5: Categorize Regulations by Impact

    January 30, 2014 1:00 PM

    Since the Federalist Papers, America has debated “Energy in the Executive.” But President Obama’s 2014 agenda framed by his State of the Union address heralds a class warfare agenda, one fusing an “income inequality” theme with federal industrial policy.

    When I can act on my own without Congress, I’m going to do so,” Obama promises. This spend-and-transfer fixation makes Americans poorer and dependent except for the lucky few running things.

    Others have argued for federal budget rationality as essential to any anti-poverty agenda. This series proposes a greater prosperity enhancing opportunity, streamlining the nearly $2 trillion regulatory state and ending the uncertainty, wealth destruction and job loss it creates.

    Every year, the Office of Management and Budget's (OMB) releases its annual Report to Congress on the Benefits and Costs of Federal Regulations.

    Well, almost every year; in 2013, OMB issued only the Draft version and we still await the final.

    The report leaves out a lot of the regulation that goes on, moreover OMB's ability to address economic regulation as opposed to health, safety and environmental rules is undermined by its lack of a mandate to review independent agency rules such as those of the Federal Communications Commission, the Securities and Exchange Commission or the Consumer Financial Protection Bureau. OMB just reviews (some) executive agency rules.

    Nonetheless, OMB’s prior willingness to entertain the notion by researchers such as Robert Hahn of the American Enterprise Institute that some economic regulation “produces negligible benefits” was a dramatic official development of the latter 20th Century.

  • State of the Union: More on the President's Debunked Wage Gap Claim

    January 29, 2014 2:14 PM

    Aloysius Hogan has already debunked the president's wage gap claim in his State of the Union Address in an earlier post, noting that labor economist Diana Furchtgott-Roth found that "men and women make about the same" per hour in each "individual" occupation after taking into account factors like “job responsibility" and "experience."

    What's noteworthy is that even fact-checkers for some liberal newspapers such as The Washington Post are finally taking issue with the president's claims in this area. In his State of the Union address, President Obama said,

    Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it’s an embarrassment.

    But as the fact-checker for The Washington Post (which hasn't endorsed a Republican for President since 1952) noted yesterday, this figure is quite misleading, since it involves comparing apples to oranges: Women on average do not work the same number of hours men do per year, nor do female workers have the same individual or occupational characteristics as male workers:

    Obama is using a figure (annual wages, from the Census Bureau) that makes the disparity appear the greatest. The Bureau of Labor Statistics, for instance, shows that the gap is 19 cents when looking at weekly wages. The gap is even smaller when you look at hourly wages — it is 14 cents — but then not every wage earner is paid on an hourly basis, so that statistic excludes salaried workers.

    In other words, since women in general work fewer hours than men in a year, the statistics used by the White House may be less reliable for examining the key focus of legislation pending in Congress — wage discrimination. The weekly wage is more of an apples-to-apples comparison, but it does not include as many income categories.

    Economists at the Federal Reserve Bank of St. Louis surveyed economic literature and concluded that “research suggests that the actual gender wage gap (when female workers are compared with male workers who have similar characteristics) is much lower than the raw wage gap.” They cited one survey, prepared for the Labor Department, which concluded that when such differences are accounted for, much of the hourly wage gap dwindled, to about 5 cents on the dollar.

  • State of the Union: President Gets Minimum Wage and Gender Pay Gap Wrong

    January 29, 2014 9:53 AM

    President Obama surprised few in his State of the Union address, which was dominated by egalitarian and populist themes. The president is entitled to his ideology, but not to his own facts. On both the minimum wage and gender pay gap, the president's position runs counter to the economic reality.

    President Obama voiced strong support for legislation sponsored by Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., to raise the federal minimum wage from $7.25 to $10.10 per hour. He also encouraged cities and states to raise their minimum wages, citing the five states to have done so in the past year, while calling on businesses themselves to increase employee pay. Every employee would certainly like to be paid more. Unfortunately, increasing the minimum wage will decidedly not promote economic growth nor help our present employment woes.

    Writing in the The Wall Street Journal nearly two decades ago, Nobel laureate economist James Buchanan called out such populist rhetoric as economically baseless: “[N]o self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores.”

    Nonetheless, President Obama proclaimed, “In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally funded employees a fair wage of at least $10.10 an hour -- because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.”

    What the president fails to note is that his proposed minimum wage of $10.10 per hour would still leave a full-time breadwinner’s family below the poverty line.

  • State of the Union: Economic Band-Aids for Poverty and Unemployment

    January 28, 2014 10:46 PM

    One of progressivism’s most admirable traits is its concern for the little guy. But many progressive policies for alleviating poverty, unemployment, and other social problems don’t work as advertised. This is because those policies often focus only on the desired outcome, and ignore the deeper processes that ultimately generate those outcomes. This misplaced focus was on full display in President Obama’s State of the Union speech.

    This is a subtle point that would benefit from an analogy. Suppose, while slicing vegetables, that you accidentally cut your finger. The sensible thing to do is put on a band-aid. But in the long run, you are far better off knowing and practicing proper knife safety. The band-aid eases the immediate problem. But if you focus on the long-term process of safety, you are far less likely to get hurt in the first place.

    Now apply this thinking to the President’s call for passing the $10.10 federal minimum wage bill currently winding its way through Congress. A lot of people aren’t making very much money. The obvious thing to do is legislate a raise for them. Pass it! Some people will clearly benefit; no doubt many of them will appear at press conferences if the increase is enacted. But there is a tradeoff. Those raises are offset by reduced hours and even firings for other people.

    There is also an unseen cost to the minimum wage: workers who are never hired in the first place. These minimum wage casualties cannot be trotted out in front of cameras because we don’t know who they are. But we do know that they exist. They are mostly young, and they are disproportionately minorities. These workers lack experience and skills because they haven’t lived long enough to gain them yet. It may not be worth it to pay an employee at that skill and experience level $10.10 per hour.

    Pricing people out of employment prevents them from getting the experience they need to get higher-paying jobs later in life. It makes the old paradox even more painful: without experience, you can’t get the job, but without the job, you can’t get experience.

  • New Farm Bill Will Deliver the Pork to Farmers

    January 28, 2014 5:31 PM

    Last night House and Senate conferees agreed on a nearly $1 trillion farm bill that would eliminate long-standing direct payments to farmers but beef up the heavily subsidized crop insurance program. Farmers are pretty happy about that because federal crop insurance covers farmers’ crop losses or revenue losses, while the government pays a high percentage of the premiums’ costs and underwrites most of the insurance companies’ administrative costs.

    The five-year farm bill replaces the 2008 farm bill, which had expired and was extended because Congress could not reach agreement on components of a new bill.

    The command-and-control sugar program remains in place, with its combination of controls on domestic supply, price supports, and restrictions on sugar imports. It has been estimated that the sugar program costs consumers up to $4 billion a year in increased costs, while driving many confectionery companies out of business or out of the country.

    The bill would also continue U.S. country of origin labeling requirements for meat – COOL – even though the protectionist program is being challenged by Canada and Mexico as being discriminatory under World Trade Organization rules. COOL requires labeling that indicates where the animal was born and raised, where it was slaughtered and processed.

    The conference agreement would include modest cuts to the food stamp program – about a one percent cut over 10 years or about $9 billion. Originally the House had pushed for more extensive cuts, but the Senate balked at those.

  • Reining in the Executive Branch Bureaucracy, Part 4: Put a Spotlight on Economically Significant Rules

    January 28, 2014 12:54 PM

    Since the Federalist Papers, America has debated “Energy in the Executive.” But President Obama’s 2014 agenda framed by his State of the Union address heralds a class warfare agenda, one fusing an “income inequality” theme with federal industrial policy.

    When I can act on my own without Congress, I’m going to do so,” Obama promises. This spend-and-transfer fixation makes Americans poorer and dependent except for the lucky few running things.

    Others have argued for federal budget rationality as essential to any anti-poverty agenda. This series proposes a greater prosperity enhancing opportunity, streamlining the nearly $2 trillion regulatory state and ending the uncertainty, wealth destruction and job loss it creates.

    Federal regulations are loosely broken into those that are “economically significant” (over $100 million in annual impacts), and those that are not. But that threshold only tells us the minimum level of costs.

    For example, given the definition of what an economically significant rule is, we can infer only that the 224 rules so classified in the 2012 federal Unified Agenda, when fully implemented someday, will, loosely speaking, have economic impacts of some $22.4 billion annually (100 million times 224 rules).

    We can’t glean any more than that without exploring Regulatory Impact Analyses of specific rules, or figuring out which ones have some clarifying narrative in the annual Report to Congress on the Costs and Benefits of Federal Regulations.

    But the latter is unreliable, since for 2013, only the Draft report is available even at this late date (complain to @OMBPress).

    Any "Regulatory Report Card" (see Part 3) should naturally include the number of economically significant (or “major”) rules, but this designation would be more informative if expanded to reveal more than the minimum level of costs.

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