October 9, 2014 5:18 PM
The number of studies that have appeared in the news during recent years on the chemical bisphenol A (BPA) is staggering. Few substances undergo such scrutiny. So why BPA? Mattie Duppler of American’s for Tax Reform’s Cost of Government project answers that question in an article for The Hill’s Congress Blog: Congress has poured millions of dollars ($170 million since 2000) into BPA research for what amounts to little more than a witch hunt.
Follow the money and you may find a strong statistical association between government funding and the increased number of research studies that link BPA to various health ailments.
Money goes out to researchers motivated to produce studies that report positive associations that easily get published and that gain more funding. And the more money politicians spend for research studies, the more likely some portion of studies will come up with positive associations between BPA and various health aliments, which is likely to happen by mere accident. In addition, many positive findings appear to be attributable to activist agendas among some researchers who make creative interpretations of largely meaningless data. And the studies that come up negative usually don’t get published or end up in the news either because negative findings as simply not interesting.
Thus far, the allegedly most damning studies on BPA are extremely weak. Most don’t really find what the researchers claim they do, and they are often poorly designed. Consider the latest BPA study in the news. Published in the Journal of the American Medical Association Pediatrics (JAMA Pediatrics), it claims that BPA is associated with wheezing and reduced lung function in children.
October 9, 2014 12:36 PM
President Obama is right that Congress doesn’t do much. That’s not necessarily a bad thing, of course. But the pen and phone strategy Obama proposed can be used for a lot of things. The president seems inclined to use it mostly to expand government. But the pen and phone can also shrink government and make it more accountable, as Wayne Crews and I explain over at RealClearMarkets:
Congress passed 72 laws in 2013, while agencies issued 3,659 rules and regulations—a 51 to one ratio. This disparity suggests two areas where a pen-and-phone strategy might do some good. First, increased government transparency about the nature of all these rules. Second, establishing something akin to a federal "Department of No" to reduce the bureaucracy's output relative to Congress.
In short, we propose the Executive require already-required transparency documents such as the Unified Agenda to at least come out on time. And we propose at least an informal check on agency rulemaking that asks agencies to look before they leap. Read the whole thing here.
October 9, 2014 11:52 AM
Surprise! Price controls lead to unintended consequences—including transfers of wealth to parties who lobbied for those controls.
That’s the actual – and unsurprising – result of the an amendment to the 2010 Dodd-Frank financial reform bill, sponsored by Sen. Richard Durbin (D-Ill.) that caps fees charged by banks for payment cards, mainly debit and credit cards. As The Economist reports:
[T]he limits on “interchange fees”, as the financial jargon has it, have not worked out as planned. They have resulted, by one calculation, in the transfer of between $1 billion and $3 billion annually from poor households to big retailers and their shareholders. These were not the beneficiaries Mr Durbin had in mind when the amendment came into effect three years ago this week.
Or are they? This result is exactly what I said would happen. And as I noted at the time, Sen. Durbin was quite open about whose interests he had in mind.
The 2014 Federal Paperwork and Red Tape Roundup, Part 2: Billions of Dollars and 13,000 Lifetimes AnnuallyOctober 9, 2014 9:38 AM
Whoever makes two ears of corn, or two blades of grass to grow where only one grew before, deserves better of mankind, and does more essential service to his country than the whole race of politicians put together. —Jonathan Swift
The Office of Management and Budget, in its 2014 Information Collection Budget of the U.S. Government (encompassing fiscal year 2013 data), estimates that it takes citizens 9.453 billion hours to complete the paperwork requirements from 22 executive departments and six independent agencies subject to the survey.
Tax compliance (Treasury Department) represents the bulk, some 75 percent at 7 billion hours.
Note that many compliance hours attributable to the Dodd-Frank law and its agency spawn are not included in the official tally here, but are rather exiled to an appendix on the last page of the Information Collection Budget. We’re early in the life-cycle of that red tape machine, but at least hours are disclosed. Expect growth in these categories and their playing a greater role in future editions.
How does one visualize 9.5 billion hours? I don’t know, but an 80-year human lifespan is 29,200 days. In hours, that’s 700,800 hours.
That means 2013’s 9.5 billion hours of paperwork took up the equivalent of 13,488 full human lifetimes. I’m being generous in saying everyone lives 80 years. And this is paperwork only, not other compliance costs, tasks, duties, restrictions, directives and mandates. Is red tape a time waster? You can decide, you don’t want to hear it from me about how you spend your finite 700,000 hours.
October 9, 2014 8:18 AM
The Obamacare insurance exchange rule is being challenged in four cases, and each one of them has been active over the last two weeks. The IRS rule puts the Obamacare insurance subsidies, and their attendant penalties, into effect nationwide. CEI is involved in two of these cases: King v. Burwell, which we lost in the Fourth Circuit, and Halbig v. Burwell, which we won in a 2-1 D.C. Circuit panel ruling. We argue that this is contrary to the underlying statute, which provides for such subsidies only in states that have chosen to set up their own exchanges—a choice that 34 states have declined.
The King plaintiffs have petitioned the Supreme Court to review the Fourth Circuit’s ruling, which upheld the IRS rule. Last Friday the federal government filed its opposition to that request. Its arguments were relatively predictable, with one exception that we’ll get to later.
In the D.C. Circuit, Halbig is now on en banc review, with argument before the full 13-judge court scheduled for December 17. Our opening en banc brief, together with six supporting amici, was also filed last Friday.
Last Tuesday, September 30, there was a third court ruling—Oklahoma won its own challenge to the IRS rule in the Eastern District of Oklahoma. That court did an excellent critique of the dissent in Halbig, and it was also noteworthy for issuing the first “post-Gruber” ruling—that is, the first court decision to consider the recently-unearthed 2012 video that showed MIT Professor Jonathan Gruber, one of Obamacare’s chief architects, directly contradicting his current attack on our position. The video shows him flatly stating that nonparticipating states would not receive subsidies, in stunning contrast to the more recent claims, by Gruber and others, that our legal position is “crazy.” (CEI, by the way, is proud to have helped launch that video into Internet stardom just two days after the Halbig and King decisions.)
October 8, 2014 3:34 PM
Last week, Alternet posted yet another bogus smear on the libertarian billionaires Charles and David Koch. It has since been reposted by Salon.com. The article summarizes the “findings” of a report titled, “The Koch Brothers’ Record on Civil Rights and Race,” which was produced by an outfit called “The Bridge Project.” This front group is really an arm of a super PAC called American Bridge 21st Century, which was founded by Democratic party activist David Brock and in 2012 was described as “the hub of the left” by Roll Call.
October 8, 2014 2:05 PM
My colleague Wayne Crews’ Forbes column Monday explained “How Entrepreneurs Can Speak Out About the Cost of Regulation,” but noted sadly that “businesses that never form in the first place because of regulation never get a chance to talk.”
But there may be at least one exception. Next week in San Francisco, a conference will bring together entrepreneurs and investors to discuss, in part, businesses that can’t form because of the thicket of red tape.
Coastal Shows, producer of the annual Crowdfund Global Expo (CFGE), will host the CFGE Crowdfund Banking and Lending Summit at San Francisco’s Grand Hyatt on October 16 and 17. A bevy of prominent speakers, including yours truly, will talk about crowdfunding as a new frontier that could open up opportunities in investing and lending, if only some of the antiquated securities regulations could be trimmed.
When most folks hear the word “crowdfunding,” they think of sites like Kickstarter and IndieGogo in which fans can fund a new project and get souvenirs such as T-shirts. These innovations should be applauded, but they only scratch the surface of what crowdfunding could do. Viewed broadly, crowdfunding could bring together investor and entrepreneurs, allowing them to bypass “middle men” such as Wall Street banks.
But as I wrote recently in Forbes, if one of these crowdfunding projects currently were to offer funders a piece of the potential profits—instead of T-Shirts and other trinkets—it would run “into a brick wall from 1930s-era Securities and Exchange Commission (SEC) rules that treat a promise of a share of a business’s earnings a ‘securities offering.’”
As I explained, “this would subject entrepreneurs making a simple pitch for funding movies or music to the panoply of federal securities laws—including the behemoth Sarbanes-Oxley and Dodd-Frank laws—that publicly traded corporations must contend with every day at a cost of millions of dollars per year.”
October 8, 2014 2:01 PM
The more restrictions and prohibitions are in the Empire, the poorer grow the people. —Lao-Tzu
When it comes to red tape and federal paperwork, the costs of tax compliance for individuals and businesses are said to account for most of the federal paperwork burden.
And according to federal data, the Treasury Department does indeed account for the bulk of federal paperwork. But increasingly, paperwork-heavy compliance in other areas like health (Obamacare), finance (Dodd-Frank), and labor asserts itself.
In any event, paperwork costs associated with non-Treasury federal executive branch regulation are presumably accounted for in the Regulatory Impact Analyses for executive agency rules.
Thus such paperwork should already be reflected in the annual Office of Management and Budget Report to Congress on the Benefits and Costs of Federal Regulations. Whether in actual fact paperwork is adequately accounted for there is another matter.
Unfortunately, these OMB reports only address a handful of major or economically significant executive branch rules, and those having a notable impact on small business. These reports ignore independent agencies like those administering Dodd-Frank altogether, even though that’s where fertile paperwork burdens multiply. The Information Collection Budget, another OMB document, is where one must look for partial answers on these. Regrettably even the paperwork we do know about is duplicative to the tune of tens of billions of dollars annually.
A managerial accounting journal referenced the complex issues involved in simply determining, as an accounting matter, how to even allocate the many varieties of costs in areas like environmental compliance:
As companies feel pressure from consumers and competitors to lower cost while maintaining profits they have found a greater need to accurately allocate environmental cost. There also has been a growing need to trace compliance cost that governmental regulations have caused. These costs, including such items as permit fees, compliance and filing cost, training of personal, and others has been so large in recent years that they can make up a significant cost in some industries. As these environmental and compliance cost rise comparative to other cost, accurate assignment of them will become even more important.
It is doubtful that such costs get accurately reflected in agency Regulatory Impact Analyses, which are prepared worlds away from those actually grappling with the real world effects of regulation and day-to-day business.
October 7, 2014 9:41 AM
“Heads I win; tails you lose.” That essentially sums up the relationship the California Public Employee Retirement System (CalPERS) has long enjoyed vis-à-vis the Golden State’s elected officials. Now it is finally facing a serious challenge.
Last week, a federal bankruptcy judge ruled that cities must treat bondholders and pensions in like fashion. Judge Christopher Klein of the Eastern District of California said he would decide by the end of October how to apply the ruling to the bankruptcy of the City of Stockton, but it seems unlikely that pensions will escape cuts altogether, while bondholders are forced to take haircuts.
As The New York Times reported on the case:
Calpers is a powerful arm of the state, with statutory powers that include liens allowing it to foreclose on the assets of a city that fails to pay its pension bills.
Calpers had argued that if Stockton stopped making payments and dropped out of the state pension system, the lien would let it claim $1.6 billion of its assets. But Judge Klein said those statutory powers were suspended once a California city received federal bankruptcy protection.
“Why should I take that lien seriously?” he asked a lawyer for Calpers, Michael Gearin. “I may avoid it as a black-letter matter of bankruptcy law,” he said, referring to well-established legal principles.
He did not dispute that Stockton would be billed $1.6 billion to leave Calpers and said such a termination fee “can be seen as a golden handcuff.” But in bankruptcy, he said, Stockton could legally refuse to pay the bill because it arose from the city’s contract with Calpers, and contracts are broken routinely in bankruptcy.
“The bankruptcy code provides that the lien can be avoided and be treated as an unsecured claim,” Judge Klein said.
Judge Klein also said that Stockton had many options other than Calpers for retirement benefits: a private provider, like an insurance company; a multiemployer pension plan affiliated with a union; one of California’s county-run pension plans; or it could even offer no pensions at all.
October 7, 2014 9:40 AM
While vacationing in Germany recently, I noted many beautiful and now largely untenanted churches. Elegant, majestic against the sky, they are potent symbols of a religious system no longer observed by many. They are maintained now largely as historic and cultural artifacts. I also noted, framed against the German landscape, the “temples” of today’s eco-theocrats—gigantic engineering marvels dominating almost all ridge lines, the modern version of the technologies of the 15th Century—windmills. As a technocrat, I did appreciate their aesthetic nature and can only marvel at the deep beliefs that have encouraged the German government to spend hundreds of billions on their construction and on the electrical interconnections necessary to get that power to market.
As a result, energy costs have gone up dramatically, threatening the competitiveness of German industry (particularly the chemical and manufacturing sectors), encouraging firms to expand in nations with more affordable energy and raising consumer energy bills. Understandably, political opposition has mounted to Chancellor Angela Merkel’s grand “Energiewende” plan for moving Germany to greater dependence on wind and solar power. The current system is non-sustainable.