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  • Raise a Glass to Lower Taxes

    May 26, 2015 4:23 PM

    You might not know it, but about half the cost of your preferred alcoholic beverage is made up of taxes and fees. One man in Congress, Rep. Todd Young (R-Ind.) wants to change that. Today he introduced a bill that would introduced a bill that would cut the current federal excise tax rate on whiskey, rum, vodka, and gin. For the first 100,000 gallons, the bill would reduce the tax from from $13.50 per proof gallon to $2.70 per proof gallon, and for subsequent gallons the tax would be $9 per proof gallon.

    H.R. 2520 has support from both the American Craft Spirits Association (ACSA) and the Distilled Spirits Council of the U.S. (DISCUS), which said in their press release that “[d]istilled spirits products are one of the most highly taxed consumer products in the United States.” According to ACSA President Tom Mooney, the bill “will help create jobs across America for the rapidly growing distilling industry. It will translate into real economic benefits and jobs for hundreds of small distillers and their surrounding communities.”

  • Politics vs. Principle: Export-Import Bank Edition

    May 26, 2015 10:14 AM

    On the merits, the case for closing the Export-Import Bank is a slam-dunk. This has made life difficult for the bank’s supporters, especially since the bank will permanently close on June 30 unless Congress reauthorizes its charter. So they are switching to politics.

    One of the top items on Congress’ agenda is Trade Promotion Authority (TPA), which despite some drawbacks, would make international trade a little freer than it is now. Seeing a point of entry, Ex-Im supporters tried to tie Ex-Im reauthorization into the TPA bill. This way, a Senator who opposes Ex-Im might have to hold his nose and vote for it anyway, since it would be part of the larger TPA bill he supports.

    This attempt was rebuffed, and a clean TPA bill is poised to pass the Senate. But Sens. Maria Cantwell (D-Wash.) and Patty Murray (D-Wash.), both coincidentally from major Ex-Im beneficiary Boeing’s home state, did exact a promise from Senate leadership: the Senate will soon hold a separate vote on Ex-Im reauthorization. This is important, since Ex-Im will close if Congress does nothing.

    Since Ex-Im reauthorization is likely to pass the Senate, the political focus moves to the House. Sen. Cantwell tried to get Speaker Boehner to promise to hold a House Ex-Im vote, but he refused. But nor will he get in the way of a vote if members of his own chamber decide to bring one up.

    At least 90 House members oppose Ex-Im reauthorization, according to Heritage Action. The Republican Study Committee (RSC) announced its opposition to Ex-Im reauthorization, though not all RSC members share that stance, most notably Rep. Stephen Fincher (R-Tenn.), who is sponsoring an Ex-Im reauthorization bill. Despite this substantial groundswell, a House majority is 218 members, and it remains to be seen if enough other members will stand firm in opposing the bank.

    So that’s where the issue stands right now. The merits of Ex-Im were decided long ago—despite affecting less than 2 percent of U.S. exports, the agency has still managed to divert billions of dollars of capital away from deserving businesses, subsidize U.S. firms’ foreign competitors, and cause dozens of corruption cases. Now the question becomes whether politics are stronger than principle. Either way, Congress’ pending answer will be revealing.

  • Fourth Circuit Flouts Appellate, Evidence, and Class-Action Rules in Brown v. Nucor Corp.

    May 26, 2015 8:56 AM

    In the past, businesses have been happy to put new factories in states like South Carolina and Virginia, due to their right-to-work laws and relatively reasonable employment laws. But they should think twice about doing so in the future, thanks to some recent, very unreasonable court rulings against employers in those states by the U.S. Fourth Circuit Court of Appeals. Those decisions illustrate a contempt for binding Supreme Court precedent, and basic rules of logic, evidence, civil procedure, and appellate procedure

    A classic example is the Fourth Circuit’s 2-to-1 decision on May 11 in Brown v. Nucor Corp., which violated fundamental rules of appellate review and class-action procedure. Essentially, the court allowed a class action lawsuit alleging racial discrimination in promotions to be brought based on statistics that other courts (like the Eighth Circuit) have correctly rejected as unreliable junk science, in rejecting class actions lawsuits against the very same company. Compare Bennett v. Nucor Corp., 656 F.3d 802 (8th Cir. 2011).

    It also permitted the plaintiff to make internally contradictory arguments to get that junk science into evidence, improperly put the burden of proof on defendant to disprove the admissibility of evidence, and allowed the plaintiff to make arguments it had waived by not including them in its opening brief, but rather putting them into its reply, where the company never even had a chance to rebut them.

    The decision also flouted the Supreme Court’s 2011 decision in Wal-Mart v. Dukes. That Supreme Court decision overturned a finding of “commonality” among Wal-Mart’s female employees in a class action lawsuit alleging discriminatory promotions, saying they didn’t have enough in common to sue together in a class action. That principle applies to the lawsuit against Nucor with added force, since it was brought under Rule 23(b)(3), the rule under which class actions for damages are brought. This rule requires not just commonality but also an additional, heightened showing of predominance of such common issues: “a Rule 23(b)(3) certification . . requires proof that common issues not only exist but also predominate over individual issues and that class treatment is superior to handling the absent class members’ claims individually.”

    But the Fourth Circuit effectively held that rather than following the Supreme Court’s decision in Wal-Mart, the trial court should have followed an earlier prior Fourth Circuit decision involving Nucor that was abrogated by the Supreme Court’s Wal-Mart decision, Brown v. Nucor Corp., 576 F.3d 149 (4th Cir.2009) (“ Brown I ”). Or rather, it held that the trial court should have certified a class action based on invisible ink in that decision, namely a non-existent finding in it that common issues predominated over individual issues. Even if it had made such a finding, it would be abrogated by Wal-Mart, since if commonality is absent, predominance will even more clearly be absent in almost all cases. (As the Fourth Circuit observed, the Wal-Mart decision “provided a sufficiently significant change in the governing legal standard to permit a limited reexamination of whether the class satisfied the commonality requirement of Rule 23(a)(2)”).

  • CEI's Battered Business Bureau: The Week in Regulation

    May 26, 2015 6:40 AM

    The big regulatory news from last week was the publication of the semiannual Unified Agenda, which lists most upcoming regulations from rulemaking agencies at various stages of the regulatory process. It is one of the most important transparency tools we have for keeping an eye on new regulations, which may explain why it was published just as people are getting ready for the long Memorial Day weekend, and why the user interface is surprisingly difficult to use for such a simple document. Take a look at the Unified Agenda here, and you’ll see what I mean.

    On to the data:

    • Last week, 49 new final regulations were published in the Federal Register, after 46 the previous week.
    • That’s the equivalent of a new regulation every three hours and 26 minutes.
    • So far in 2015, 1,166 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,944 new regulations this year, which would be several hundred fewer rules than the usual total of 3,500-plus.
    • Last week, 1,780 new pages were added to the Federal Register, after 1,333 pages the previous week.
    • Currently at 29,819 pages, the 2015 Federal Register is on pace for 75,301 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Nine such rules have been published so far this year, one in the past week.
    • The total estimated compliance cost of 2015’s economically significant regulations ranges from $1.36 billion to $1.44 billion for the current year.
    • Ninety-eight final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 203 new rules affect small businesses; 31 of them are classified as significant. 

    Highlights from selected final rules published last week:

  • Trade Promotion Authority in the Senate: Do-It-Yourself Economics

    May 21, 2015 10:27 AM

    The U.S. Senate yesterday continued discussion on Trade Promotion Authority (TPA), also called the “fast-track” trade authority, which would give the President power to negotiate trade deals based around certain principles and then present any deal to Congress for a vote with no amendments. The bill failed to progress in the Senate last week by 52-45, with only one Democratic senator – Sen. Thomas Carper (Del.) – voting “yes” on the legislation.

    The Senate is currently working on possible amendments to this bill, with most of the negotiations taking place behind the scenes. Senate majority leader Mitch McConnell filed a cloture motion to stop debate and limit amendments, which will be voted on today.

    In his remarks Sen. McConnell (R-KY) once again emphasized the benefits of trade to entrepreneurs that were described at a recent press conference (hosted with Sen. Warner (D-VA) and Sen. Ernst (R-IA)) with small business owners. These American entrepreneurs highlighted opportunities that knocking down trade barriers overseas could bring to their businesses. While the U.S. does not have many trade barriers, the same cannot be said about the foreign trade partners. Passing TPA is a way to address the situation that damages American exports and workers within those industries. Senator McConnell said:

    “So I’m going to keep working to get votes on amendments, both Republican and Democrat amendments. There have been objections from the other side of the aisle, and I would remind our colleagues that even with my strong support, the Senate can’t have a robust amendment process if every single amendment offered by Democrats or Republicans is objected to by our friends on the other side… The Senate can’t vote on amendments that are being prevented.”

  • Sen. Warren Gets Hit on Trade Issues

    May 20, 2015 5:20 PM

    Washington Post columnist Ruth Marcus (May 20, 2015) took on Sen. Elizabeth Warren’s (D-Mass.) contention that trade agreements are being negotiated in secret, with multinational corporations calling the shots. Warren, the populist flavor of the month, has been leading a campaign against trade deals and against Trade Promotion Authority, all in the name of confronting greedy multinational corporations and helping U.S. workers. 

    In her column titled “A bogus argument against the trade deal,” Marcus skewers Warren’s argument by pointing out that releasing negotiating documents before they are agreed upon undermines the U.S.’s bargaining positions; that lawmakers and their staffs have access to the documents in a secure context; that the negotiating text will be made public 60 days before signing; and that the trade advisory working groups who review the documents were established by Congress.

    Marcus could have gone even further in putting to rest Warren’s charge that trade agreements are being negotiated in secret. Currently, the U.S. Trade Representative is required to consult with Congress during negotiations, and the TPA legislation would significantly broaden those consultations and create Congressional advisory committees on negotiations. Also, Marcus could have noted that currently about 700 private citizens representing not only industrial and agricultural sectors and small business, but labor and environmental groups. In fact the influential Labor Advisory Group includes a broad representation of major labor unions in the country.

  • Pollinator "Strategy": Pork Barrel, Handouts, and Counterproductive Pesticide Policy

    May 20, 2015 5:18 PM

    The Obama administration has finally released its National Strategy to Promote the Health of Honey Bees and other Pollinators. It’s the federal government’s answer to all the hype found in the news related to the health on the nation’s honeybee hives. While it’s not clear what it will achieve for the bees, we can be sure it comes with lots of pork-barrel spending, government handouts, and shortsighted pesticide polices that undermine food production.

    I have documented why much of the hype on this issue is misinformed and why solutions will only come from private collaboration between various parties—primarily beekeepers and farmers. The federal government is the last entity that will be able to “save” the honeybee.

    Nonetheless, the report outlines several goals for its program, some of which border on the ridiculous. For example one key goal is: “Reduce honey bee colony losses during winter (overwintering mortality) to no more than 15% within 10 years.” 

    Seriously? Federal officials are going to determine how many beehives should survive each year and what survival rate is sufficient? This is dumb and only sets the stage for news hype every year losses exceed this government set arbitrary number. In fact, many surveys of beekeepers have indicated that a much higher rate is acceptable, closer to 20 percent a year. Moreover, survival rates will ebb and flow based on myriad factors to which government, and even beekeepers, have no control, such as weather and emergence of new and old diseases.

    The federal government has also decided how many butterflies we should have. Among its goal is to increase the Monarch butterfly population to 225 million butterflies that live on 15 acres in Mexico over the winter, and they will achieve that through “international collaboration.” In addition, the feds also promise to improve 7 million acres of land to make it more pollinator friendly.

    The report lists out a host of action items to achieve these goals that include spending more than $80 million on education and habitat development for pollinators. Education will mean, more government posters and Smithsonian programs, all paid with your tax dollars. Some of it may contain good information, and some probably will amount to no more than anti-pesticide propaganda, and much of it may include just the right amount of alarmism to ensure bigger and bigger allocations of your tax dollars to address this “crisis.”  

  • Long Mass Transit Commutes Are Horrible for Your Health

    May 20, 2015 5:12 PM

    Joseph Stromberg at has an article up arguing that “commuting alone by car” is “associated with obesity, high blood pressure, sleeplessness, and general unhappiness” relative to other transportation modes. His solution to unhealthy lengthy commutes is to increase carpooling.

    Back in 2012, I argued against another now-Voxxer, Matthew Yglesias, on the supposed health harms of auto commuting. The problem, as Census data make clear, is that other than those who walk to work, people commuting by driving alone generally have the shortest commutes. Those using public transit take on average twice as long to make their commuting journeys as those who drive by themselves.

  • Johnson-Crapo's Reemergence Ruins Reg Relief Bill

    May 18, 2015 5:05 PM

    Last year, an overhaul of Fannie Mae and Freddie Mac called Johnson-Crapo—named after then Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho)—went down in flames after observers found that the bill was not reform, but a massive expansion of the government’s role in housing.

    One of the most vocal opponents of Johnson-Crapo was Sen. Richard Shelby (R-Ala.), who voted against the bill in the Senate Banking Committee and blasted it in his statement in committee and it media interviews. “Shelby Opposes Massive New Regulator and Taxpayer Exposure in Housing Regulation Bill,” exclaims the headline of a press release from Shelby’s office on the date of the Senate Committee vote on May 15, 2014.

    Though the bill narrowly passed the committee, support for the bill died on the vine and it was never even brought to the Senate floor for a vote. The bill was torpedoed after vocal opposition from Shelby as well as that from 26 leaders of conservative and free-market groups who signed a letter blasting Johnson-Crapo that was coordinated by the Competitive Enterprise Institute. In addition to CEI, signatories included the Club for Growth, Americans for Tax Reform, Freedom Works, and the American Family Association.

  • Welfare Recipients Relabeled As "Workers" Despite Doing Little or No Work

    May 18, 2015 4:21 PM

    Welfare is often unpopular with voters, who fund it with their taxes. So California politicians and academics who support it are now redefining welfare recipients as “workers” even if they do almost no work, and as members of “working families” if they live in the same household as someone who does a tiny bit of work. By doing this, they hope to brand critics of welfare as “anti-worker.”

    Fifty-six percent of welfare recipients are in “working families,” according to a misleading recent report by the University of California at Berkeley’s Center for Labor Research and Education. But the report reached that erroneous conclusion by defining even very lazy people as “workers”: “We define working families as those that have at least one family member who works 27 or more weeks per year and 10 or more hours per week.” But working just ten hours a week for only about half the weeks in the year doesn’t make you a typical worker, or show industriousness. As Breitbart notes, “if someone is only working ten hours a week, there is probably time to find a second job, rather than rely on government assistance.” The Center that put out this ridiculous “study” is funded not just by taxpayers, but also by government employee unions like AFSCME whose members are hired to administer such welfare programs.

    This slanted “study” coincides with a recent push by California’s governor to expand welfare for so-called “workers” who actually do very little work. The Associated Press reported that Gov. Jerry Brown is

    proposing a $380 million earned income tax credit” for “as many as 825,000 families and up to 2 million Californians. "It's just a straight deliverance of funding to people who are working very hard and are earning very little money, so in that sense I think it does a lot of good things," Brown said of the tax credit. The average tax credit would be $460 a year with a maximum credit of $2,653 for families with three or more children, to complement the federal tax credit program. It would be available to individuals with incomes of less than $6,580, or up to $13,870 for families with three or more dependents.

    For an individual to have an income of less than $6,580 at the California minimum wage of $9 per hour, they would have to work no more than 731 hours per year, or 14 hours per week. That’s not “working very hard,” Governor Brown. The Associated Press story, which reads like a press release for Governor Brown’s proposed budget, never even questions his strange claim about this being hard work. The Associated Press wrongly labeled the record-setting budget “a cautious approach to spending” even though it does nothing about California’s massive unfunded pension problems, even as it relies on tax increases were supposedly temporary but will likely become permanent, such as those in Proposition 30.


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