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OpenMarket: January 2013

  • CEI Podcast For January 31, 2013: The Recess Appointments That Weren't

    January 31, 2013 4:42 PM

    Federal judges recently struck down four recess appointments to the National Labor Relations Board, claiming the Senate was in pro forma session when President Obama made the appointments. Senior Fellow Matt Patterson talks about the case.

  • The Coming Regulatory Recession?

    January 31, 2013 12:40 PM

    Yesterday, the Bureau of Economic Analysis of the U.S. Department of Commerce reported the stunning news the U.S. economy actually contracted by 0.1 percent in the fourth quarter of 2012. The immediate response by many politicians and the establishment media was to blame spending cuts, or the threat of them, rather than even look at the dramatic increase in regulation over the last few years.

    The Washington Post sent a news bulletin shortly thereafter that blamed the problem on “cuts in government spending, fewer exports and sluggish growth in company stockpiles.” The "cuts in government spending" part is wrong on its face. According to the U.S. Treasury Department (and hat tip to John Nolte of, government expenditures actually increased by more than 10 percent from the previous quarter.

    The Associated Press story The Post linked to in the bulletin did not repeat the error and was technically accurate in noting reduced defense spending. But a more likely cause of the economy contracting was the very real threat -- and realization -- of the "regulatory cliff." If there's one thing worse than uncertainty, it is the certainty thousands of pages of new regulatory policies will go into effect. It’s far more likely the contraction was caused by entrepreneurs and investors seeing this future of shackling regulations and pulling back their investment in response.

    President Obama's reelection made it highly unlikely job creators would get any substantial relief from costly new provisions of the Affordable Care Act or the Dodd-Frank banking overhaul that hits many community banks and non-financial businesses. As Adam J. White noted recently in The Weekly Standard, "The Obama administration’s first three years of major rules, costing up to $26.7 billion, were five times more burdensome than the Bush administration’s first three years ($5.3 billion) and three and a half times more burdensome than the Clinton administration’s ($7.6 billion)." White adds that these "major rules" were only a fraction of the 3,500 total regulations Obama has issued so far, and the cost figures did not even included the opportunity costs for the economy in his blocking of the Keystone XL pipeline.

  • Cancer Risks Unlikely From Foam Cups

    January 31, 2013 10:47 AM

    Whatever happened to plastic foam coffee cups? Visit any to-go coffee shop and you will most likely only find paper cups that burn your hands and let your coffee go cold.

    Cups made with polystyrene foam are disappearing from the marketplace because a bevy of misinformation about their environmental effects, including claims styrene -- the chemical used to make them -- is a carcinogen.

    But a new study issued by the consulting group Gradient Corp. questions claims this chemical poses cancer risks. Specifically, it undermines the National Toxicology Program’s classification of styrene in 2011 as “reasonably anticipated to be a human carcinogen.” The Gradient researchers find:

    The epidemiology studies show no consistent increased incidence of, or mortality from, any type of cancer. In animal studies, increased incidence rates of mostly benign tumors have been observed only in certain strains of one species (mice) and at one tissue site (lung). The lack of concordance of tumor incidence and tumor type among animals (even within the same species) and humans indicates that there has been no particular cancer consistently observed among all available studies. The only plausible mechanism for styrene-induced carcinogenesis -- a non-genotoxic mode of action that is specific to the mouse lung -- is not relevant to humans. As a whole, the evidence does not support the characterization of styrene as “reasonably anticipated to be a human carcinogen,” and styrene should not be listed in the Report on Carcinogens.

  • Magician Economists Like Bernanke Can't Pull Prosperity Out Of A Hat

    January 30, 2013 4:25 PM

    Inflator-In-Chief Ben Bernanke defended today his third round of quantitative easing and additional $45 billion monthly purchases of U.S. Treasuries (totaling $85 billion per month in Fed balance sheet expansion) as efforts to combat “transitory factors” dragging down the economy. Yet there has been nothing “transitory” about the almost five-year recession lasting since 2008.

    As I explain in Forbes, Bernanke is no more than a magician attempting to paper over the real problems within the U.S. economy with the sleight of hand of the printing press. Ultimately, he and his central banker cohorts cannot defy a fundamental law of economics known as Say’s Law: People supply what they demand.

    By focusing solely on demand-boosting measures, inflationary economists do not address the root cause of the current malaise.

    Economists who advocate raining down dollar, euro, and yen bills from their high-flying helicopters say this needs to be done to gin up flagging demand, but this puts the cart before the horse. One cannot demand anything without first having something to supply. The crisis today is not that economies aren’t demanding enough value, but that they aren’t creating enough value.

    Printing money isn’t just ineffective. It’s redistributive and distortionary.

  • "Right-To-Work" Train Rolls On: Next Stop, Pennsylvania?

    January 30, 2013 2:50 PM

    The earthquake that was Michigan's right-to-work law has produced a number of interesting aftershocks, not least of which is the right-to-work rumbling in Pennsylvania where lawmakers (guided by Rep. Daryl Metcalf) have introduced legislation called "Pennsylvania Open Workforce Initiative," aimed at ending compulsory unionism.

    The initiative actually consists of a number of bills, including:

    • House Bill 50, The Freedom of Employment Act, under which "employment in Pennsylvania will no longer be conditional upon membership or non-union membership, nor upon payment or non-payment of money to a labor organization";
    • House Bill 51, which "would remove the language [of current law] that gives a public school entity the ability to collect compulsory union dues from non-members and return the Right to Work protections that were present in the original bargaining law of 1970";
    • House Bill 52, which would "amend the administrative code of 1929 to eliminate the authority for imposing the 'fair share fee' for commonwealth employees and relieve certain employee organizations of specific duties and obligations"; and
    • House Bill 53, which would "would return the individual freedom of choice to all local government employees to decide for themselves which private organizations they wish to support by removing the compulsory language and preventing the collection of compulsory union dues."

    Metcalfe, a long-time and passionate advocate of right-to-work, acknowledges the economic benefits of such legislation. But more than that, he sees the issue as one of basic freedom:

    The framers of our Constitution did not intend for our government to become an enforcer for unions. Working men and women should have the freedom to join a union if they choose and to leave that union when it is in their best interest to do so.

  • Germs In Reusable Grocery Bags Can Prove Deadly

    January 30, 2013 5:00 AM

    Cloth supermarket bags may be fashionable, but they can also prove deadly, according to a recent research paper published by the University of Pennsylvania Law School. The researchers point out that after the city of San Francisco banned plastic bags, the number of emergency room visits for bacterial related diseases increased significantly. A blog post explains the connection:

    Basically people were schlepping leaky packages of meat and other foods in their canvas bags, then wadding to the bags somewhere for awhile, leaving bacteria to grow until the next trip, when they tossed celery or other foods likely to be eaten raw in the same bags.

    It is in fact plausible that at least some portion of these illnesses did in fact result from reusable bags. Another study conducted by researchers at the University of Arizona and Loma Linda University in 2010 measured bacteria in a sample of reusable bags, finding many containing dangerous bacteria, such as coliform (found in half the bags) and E. coli (found in 12 percent of bags). They also noted that consumers reported that they rarely wash the bags in an attempt to control the development of such pathogens.

    That is why I am not so surprised to read this in the University of Pennsylvania report:

  • LaHood Out At DOT, But Is There Hope For A Qualified Transportation Secretary?

    January 29, 2013 6:21 PM

    After months of confusing double-talk on whether or not he would stay on in a second Obama term, Secretary of Transportation Ray LaHood announced he would be resigning once a successor is selected. I've expressed in the past my distaste for LaHood's management, noting that he lacked the qualifications one would like to see in a transportation secretary.

    Aping George W. Bush's selection of Democrat Norman Mineta, President Obama appointed Republican LaHood as transportation secretary. Unfortunately, unlike Mineta -- who had a fairly strong transportation policy background in Congress (where he chaired the House Transportation Committee and spearheaded the first post-Interstate highway bill) and the private sector -- LaHood's only transportation experience was a five-year term on the House Transportation Committee. Before leaving Congress, LaHood was best known as a major pork-barrel spender, which if anything made him even less qualified for the top DOT spot during the post-earmark Congress.

  • Unions Bad For Unions?

    January 29, 2013 4:29 PM

    Hard to believe, but even under the most union-friendly president since FDR, organized labor in America continues to shrink in numbers, popularity and influence.

    The latest numbers from the Bureau of Labor Statistics are enough to give any union leader a Trumka-sized case of heartburn. Last year, the number of union members plummeted by about 400,000 workers, leaving a mere 14.4 million union members in the American workforce. The percentage of workers who belong to a union dropped from 11.8 to 11.3 percent in 2012, the lowest level in nearly a century.

    (The loss hit unions representing workers in both the public and private sectors: the former declined from 37 to 35.9 percent; the latter from 6.9 to 6.6. percent.)

    All of this under the watch of Barack Obama, who has labored mightily to repay his money masters with sympathetic appointees to an already labor-friendly National Labor Relations Board (appointments that have now been found unconstitutional), as well government bailouts to unions under the guise of "stimulus."

    And yet, the great union contraction continues. Indeed, as the Manhattan Institute's Diana Furchtgott-Roth notes, unions have suffered as much erosion under four years of Obama as they did under eight years of George W. Bush.

  • The Anti-Democracy Index

    January 29, 2013 3:55 PM

    In compiling Ten Thousand Commandments over the years (alas, February 8 is going to mark 20 years of this project) it long ago became apparent that the unelected do the bulk of the lawmaking.

    That's why we see legislative proposals to cope with over-delegation of power, the latest being Rep. Todd Young's (R-Indiana) introduction of the REINS Act (with stands for Regulations from the Executive In Need of Scrutiny). REINS passed the House in the 112th Congress, but not the Senate. The 113 Congress will try again.

    The re-introduction of REINS inspired me to peruse past annual editions of the Ten Thousand Commandments report with my research assistant. We've extracted, since 2003, the number of rules finalized in the Federal Register, and compared it to the number of laws passed by both Houses of Congress and signed by the president. Here are the results:

    Year Bills Final Rules Multiple
    2003 198 4,148 21
    2004 299 4,101 14
    2005 161 3,943 24
    2006 321 3,718 12
    2007 188 3,595 19
    2008 285 3,830 13
    2009 125 3,503 28
    2010 217 3,573 16
    2011 81 3,807 47


    It's quite eye-opening: Regulators issue vastly more rules than those elected to make law. Calling it unaccountable rulemaking is an understatement; it's anti-democratic.

  • Thrifty People Punished Yet Again By Obama Administration

    January 29, 2013 1:24 PM

    When I bought my home, I chose a mortgage that was within my means. That meant buying a little two-bedroom house, and using much of my life savings for a 40-percent downpayment, so that my mortgage interest rate would be lower, and my monthly payment would be manageable even on my modest salary as a think-tank employee. It turns out that people who behaved like me -- saving up their money for a big downpayment and not buying more house than they could afford -- are suckers, since the Obama administration is using their tax money to bail out people who made smaller downpayments relative to their home value (and thus have larger mortgages that exceed the value of their home in the current depressed real estate market).

    The administration is busy writing down mortgage loans, but only for certain favored categories of people whose mortgages exceed the value of their homes. Even in depressed real estate markets, people who made downpayments as large as mine don't have mortgages that exceed the value of their homes. So effectively, the administration is rewarding certain lucky people who either (a) didn't save enough money to afford a large downpayment, or (b) bought more home than they could really afford, or (c) have lots of money, but chose not to use it for a large downpayment. The thriftiest people are generally being treated worse. This isn't as enraging as the Obama administration's past bailouts for real estate speculators and flippers, and deadbeats who had high-incomes and modest mortgage payments, but it is disturbing nonetheless.


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