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OpenMarket: December 2013

  • IRS Threatens to Curb Criticism of IRS and Bureaucratic Wrongdoing by 501(c)(3) and 501(c)(4) Groups

    December 17, 2013 12:35 PM

    The IRS recently proposed rules “limiting political speech" by nonprofit 501(c)(4) groups. In Orwellian fashion, the proposed rules seek to redefine non-partisan, non-election-related criticism of government abuses as "candidate-related political activity." As the Venable law firm notes, they label "a wide variety of activities as candidate-related and therefore not qualifying 501(c)(4) 'social welfare' activity." I discuss an example in the December 16 edition of The Wall Street Journal:

    Those rules restrict even truthful, nonpartisan criticism of IRS and bureaucratic wrongdoing by classifying it as "candidate-related political activity." For example, if an IRS official subjects citizens to incredibly burdensome demands for irrelevant information just to harass them for their political or religious beliefs, no 501(c)(4) group could later criticize that official's nomination to be IRS commissioner, without engaging in restricted activity. That's because the IRS's proposed regulation defines even unelected government officials, like agency heads and judges, as "candidates" if they have been nominated for a position requiring Senate confirmation. The IRS's proposed rules are an attack on the First Amendment that will make it easier for the government to get away with harassing political dissenters and whistleblowers in the future.

    Although these proposed rules in their initial form only apply to 501(c)(4) groups, and only limit the amount of such "political" activity those groups can engage in, rather than entirely banning it, the IRS says it may expand the limit to a total ban in the final version of its rule, and may eventually apply the ban to non-partisan 501(c)(3) groups, like think-tanks and other tax-exempt charities, in the future. Thus, think-tanks, which have have historically been allowed to criticize executive and judicial nominees for their misconduct or bad policies, could be banned from doing so, simply by the IRS radically redefining the candidate-related partisan political activity they are already forbidden to engage in (electioneering) to include non-partisan criticism that has nothing to do with election campaigns or electioneering (Think-tanks are currently forbidden to engage in any electioneering, but are perfectly free to criticize bureaucrats and judges, for the time being.).

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

    December 16, 2013 8:11 AM

    56 new regulations, from toddler beds to eagle permits.

  • BPA Junk Science Headaches

    December 13, 2013 8:44 AM

    IMG_3456Could your affection for bottled water be responsible for your bout with migraines? Apparently so, if you believe the latest headlines about the chemical bisphenol A (BPA). But its wise to be wary of such silly claims.

    First of all, it's wrong to suggest that single serving bottled water commonly contains BPA, because that's simply not true. BPA is not used for single-serving, flexible plastic water bottles, as pointed out on the International Bottled Water Association website. They note: "It [BPA] is not, however, used in any retail-sized PET bottled water containers." Nor is it used for most food storage containers like GladWare and other more flexible plastic food storage containers. So go ahead and put those containers in the microwave and leave your bottled water in the car and sun despite the claims that doing so will release BPA! They don't have any BPA to release. But even if they did, I wouldn't worry.

    BPA is used in the five-gallon water jugs designed for office water coolers, and other products made with hard, clear plastics, such as safety goggles. It was once used to make hard clear plastic reusable water bottles, but most of these are now made "BPA-free," thanks to all the misguided hype about BPA risks. And BPA is used in resins that line the interior of soda cans and steel cans for canned foods. These resins prevent the development of dangerous pathogens in our food, which is a good thing! The trace levels of of BPA that ends up in the food are so low that the risks are negligible and those benefits outweigh any risks, as numerous comprehensive scientific reviews around the world have concluded.

  • Minimum Wage Increases Harm the Young, Unskilled, and Less Educated

    December 12, 2013 4:58 PM

    Minimum wage increases eliminate some jobs. Real world examples abound. As a business owner explains:

    The minimum wage kills jobs. End of story. I am a perfect example. I run a very successful financial advisory practice, and I would gladly hire two or three teens to work for me personally. But I will not do it at the minimum wage. They simply don’t bring enough economic benefit to warrant me paying them that much. So, what’s the end result? Two or three teens go without a job and instead do nothing. No job. No experience. No learning. Nothing.

    I personally know at least a dozen seniors in high school and freshmen in college who would jump at the opportunity to work with me for nothing, let alone $3 per hour or $5 per hour. All of the ancillary skills and benefits would far outweigh any wage they may earn. Yet, the minimum wage laws prevent this from happening. And instead they are just unemployed – economic casualties.

    Warren Meyer of Recreation Resource Management, Inc., has also been prevented from hiring people because of the minimum age, as he chronicles at this link.

    Studies show minimum wages disproportionately increase unemployment among the youngest and least-educated and least-skilled workers. Increasing the minimum wage increases unemployment rates among young people and minorities, noted economics professor Walter Williams in his 1982 book, The State Against Blacks. The economist Thomas Sowell makes the same point in his recent two columns “Minimum Wage Madness” Parts I & II. A 2013 study released by George Mason University's Mercatus Center concluded that due to a relatively-modest “minimum wage increase," “the unemployment rate for young workers without high school educations" would “rise by almost two percentage points," compared to “almost one percentage point” among older workers. Sowell notes that a "survey of American economists found that 90 percent of them regarded minimum wage laws as increasing the rate of unemployment among low-skilled workers. Inexperience is often the problem. Only about two percent of Americans over the age of 24 earned the minimum wage." A 2012 study by Sabia, Burkhauser & Hansen reached similar conclusions.

  • CEI Podcast for December 12, 2013: The Affordable Care Act's Marriage Penalties

    December 12, 2013 2:49 PM

    The Affordable Care Act's subsides and tax credits are structured in such a way as to cause thousands of dollars worth of penalties for many married couples. CEI Senior Attorney Hans Bader proposes phasing them out as income rises to soften the blow.

  • The Volcker Winter Storm -- Bad Rule, Worse Implementation

    December 11, 2013 9:35 AM

    On a snowy day in Washington, several federal agencies packed some mean regulatory snowballs that will most likely overshoot their supposed destination of Wall Street and crash-land with a thud on the businesses and investors of Main Street. Rather than postpone the planned vote on Tuesday, when the federal government was officially closed, agencies sheltered themselves from public view and pushed through the rules.

    According to USA Today, "CFTC spokesman Steven Adamske said his agency will not hold a public meeting, but commissioners will approve the rules in writing." This lack of transparency on voting on the rule was symptomatic of a series of last-minute changes from the rule the agencies had initially proposed two years ago. The agencies never submitted these changes for public comment, and thus according to a Reuters analysis, may be vulnerable to lawsuits for violation of the Administrative Procedure Act.

    Beyond that, nothing good ever comes when the government utilizes an opaque process to force "transparency" on the private sector. For all the supposed "toughness" of the new rule, there is nothing specific that would prevent something like J.P. Morgan's much-despised "London whale" trade.

  • Volcker Rule Curbs Useful, Profitable Proprietary Trading, Not Risky Lending

    December 11, 2013 9:00 AM

    The government just approved a regulation called the Volcker Rule to curb proprietary trading by banks -- even though such trading did not cause the financial crisis, or lead to massive financial losses by banks and taxpayers the way other, much riskier practices by banks did (like risky mortgage loans, which the Obama administration has pressured banks to once again engage in, in the name of fair lending and affordable housing).

    The Wall Street Journal reports:

    All five regulatory agencies put to a vote and approved the Volcker rule on Tuesday, ushering in a new era of tough oversight that drills to the core of Wall Street's profitable markets and trading businesses.

    The rule will put in place new hurdles for banks that buy and sell securities on behalf of clients, known as market making . . . The Federal Reserve also approved an extension to give banks until July 2015 to comply with the rule.

    (The above report is from the Journal's liberal-leaning news staff, not its conservative editorial page, which has questioned the Volcker Rule.)

  • Driving the Market out of the Marketplace of Ideas

    December 10, 2013 5:27 PM

    Senator Elizabeth Warren’s recent letter to financial services companies demanding they disclose their contribution to public policy groups continues a troubling new development in the campaign against business participation in the public square. Along with Senator Dick Durbin’s letter this summer to more than 300 companies affiliated with the American Legislative Exchange Council (ALEC) demanding they explain their views on ALEC’s “Stand Your Ground” model legislation, anti-business groups increasingly seek to drive business out of the marketplace of ideas through shame and intimidation campaigns. Through legislation, public campaigns, and shareholder activism, groups hostile to business’s political activity now seek to isolate business and hinder its ability to defend itself against the regulatory state.

    Disclosure proponents bring an apparently powerful one-two punch in favor of disclosure. Groups like the Center for Political Accountability argue that secret political spending by corporations exposes investors to legal, political, and reputational risks, which justifies mandatory disclosure rules. And on the other side of the relationship, critics like Public Citizen and the Center for Media and Democracy argue that business funding of public policy groups constitutes a conflict of interest for them.

  • Busybodies in Congress Prepared to Re-Prohibit Voice Communications During Flight

    December 9, 2013 5:21 PM

    After two decades with a ban on the books, the Federal Communications Commission is set to consider allowing transmitting mobile devices on aircraft. On Thursday, the FCC will vote on whether or not it will begin allowing transmitting mobile devices in flight. The European Commission recently approved 3G and 4G transmissions aboard commercial flights with some limitations and leaving the decision to permit voice communications up to individual airlines. Recent research has found that there is little risk of aircraft instrument interference from passengers' portable electronic devices, which led the Federal Aviation Administration to recently end its prohibition on use of non-transmitting devices below 10,000 feet.

    Airlines can still decide individually if portable electronic devices are allowed during all flight phases, but most if not all will soon permit their customers to use their devices in airplane mode gate to gate. The airlines would have the same discretion to permit or prohibit transmitting mobile devices if the FCC decides to reform its current policy. Some airlines may wish to allow their customers to engage in voice communications during flight, others may not.

    But some in Congress wish to outlaw this choice. Bill Shuster, R-Pa., who chairs the House Transportation and Infrastructure Committee, is set to introduce a bill that would "prohibit an individual on an aircraft from engaging in voice communications using a mobile communications device during a flight of that aircraft in scheduled passenger interstate or intra-state air transportation."

    “For passengers, being able to use their phones and tablets to get online or send text messages is a useful in-flight option. But if passengers are going to be forced to listen to the gossip in the aisle seat, it’s going to make for a very long flight,” Shuster said in a statement. “For those few hours in the air with 150 other people, it’s just common sense that we all keep our personal lives to ourselves and stay off the phone.”

    Another Republican, Lamar Alexander, Tenn., is considering whether or not to introduce a similar bill in the Senate. "Stop and think about what we hear now in airport lobbies from those who wander around shouting personal details into a microphone: babbling about last night’s love life, bathroom plans, next week’s schedule, orders to an assistant, arguments with spouses," Alexander said in a November statement. "Imagine this noise while you travel, restrained by your seatbelt, unable to escape."

    According to the Red Team/Blue Team media narrative, the Republicans are supposedly skeptical of regulation while the Democrats enthusiastically embrace it. Yet here we have a proposed arbitrary political intervention coming from these supposed skeptics on Team Red -- who have charted out a more pro-regulatory course than European socialists.

  • Sugar -- Congress' Favorite Sweetener

    December 9, 2013 10:21 AM

    The sugar lobby’s sweet contributions and their day-in-day-out lobbying means broad bipartisan support for continuing the U.S. sugar program in the 2013 farm bill, as The Washington Post noted in a wide-ranging article December 7. Sugar policy, consisting of price supports, restraints on domestic supply, and import controls, benefits mainly a small number of rich sugar producers at the expense of consumers and taxpayers, according to the article.

    Historically, the program has resulted in domestic sugar prices substantially higher than the world price. Besides those sweet deals, the government also buys back sugar producers’ surplus so they don’t have to pay back federal loans. Then the U.S. Department of Agriculture sells that sugar to ethanol producers at a loss.

    Numerous attempts have been made to rein in this egregious program, but the sugar industry’s intense and consistent lobbying and the huge contributions they make on both sides of the aisle almost guarantee them the program’s continuation.

    The cost to consumers hits them in the pocketbook, as sugar is an ingredient in not just sweet treats, but in staples such as bread and processed food. The sugar program means about $3.5 billion in additional costs to consumers per year.


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