January 20, 2015 5:16 PM
Today, the Supreme Court lifted a cloud of uncertainty that had been hanging over consumers, community banks, and credit unions by refusing to take a case that threatened to make the stifling Dodd-Frank pseudo-financial reform legislation even more draconian than it already is.
The Court let stand a unanimous ruling from a three-judge D.C. Circuit Court of Appeals panel that overturned district Judge Richard Leon’s 2013 ruling that the Federal Reserve had not made the price controls stemming from Dodd-Frank’s Durbin Amendment were not stringent enough. Today’s decision, authored by Clinton-appointed Judge David Tatel, found that the Federal Reserve “reasonably construct[ed]” the law in considering costs in setting the price caps.
In the wake of cybersecurity attacks on credit and debit cards, this ruling may have come in the nick of time. In a show of incredible chutzpah, the trade associations for some of the nation’s largest retailers argued in federal court—even after the Target breach—that retailers should pay even less for fraud prevention and cleanup after fraud losses than they currently are under a federally imposed limit.
That would mean that innovation would continue to lag behind and even more of the costs of payment processing would be shifted to consumers—as they have since the passage of this amendment, which was inserted into the 2010 Dodd-Frank financial overhaul by Senate Majority Whip Dick Durbin (D-Ill.).
January 20, 2015 11:05 AM
Technology policy rarely earns more than a brief mention in the President’s annual State of the Union address to Congress. But tonight, when President Obama delivers his seventh address, he’ll lay out his plans for the Internet in greater detail than any President in recent memory. While the President’s tech agenda has its pros and cons, it generally envisions Washington doing more to oversee the Internet and technology markets. For the most part, this is the wrong prescription.
Obama is expected to focus on three tech policy issues: cybersecurity, broadband, and privacy. The President has delivered major speeches on each of these issues in recent days in locales ranging from the Federal Trade Commission down the street from the White House to Cedar Falls Utility in Iowa.
Cybersecurity is in the headlines in the wake of the cyberattack allegedly committed at the behest of the North Korean regime against Sony Pictures Entertainment. Unlike many roles the federal government now attempts to fill, protecting American companies from state-sponsored cyber terrorism is a legitimate governmental function. Therefore, to improve the state of cybersecurity, the President will call for greater coordination between the private sector and the government—including more information sharing about cyber threats between companies and federal agencies.
The approach Obama has outlined is no cybersecurity panacea, but it’s better than doing nothing, provided companies are held to enforceable promises made to their customers about how and when their information will be shared.
January 19, 2015 1:00 PM
It was another slow week with just 40 new final regulations and 37 proposed regulations, but new rules still cover everything from solid waste to washing machines.
On to the data:
- Last week, 40 new final regulations were published in the Federal Register.
- That’s the equivalent of a new regulation every four hours and 12 minutes.
- So far in 2015, 78 final regulations have been published in the Federal Register. At that pace, there will be a total of 1,773 new regulations this year, roughly half the usual total.
- Last week, 1,119 new pages were added to the Federal Register.
- Currently at 2,586 pages, the 2015 Federal Register is on pace for 58,773 pages, which would be the lowest page count since 1992.
- Rules are called “economically significant” if they have costs of $100 million or more in a given year. One such rule has been published so far this year, none in the past week.
- The total estimated compliance cost of 2015’s economically significant regulations is $477 million for the current year.
- 8 final rules meeting the broader definition of “significant” have been published so far this year.
- So far in 2015, 13 new rules affect small businesses; 4 of them are classified as significant.
Highlights from selected final rules published last week:
January 15, 2015 2:13 PM
With the Greek parliamentary elections being only two weeks away, it seems that the opposition leftist party SYRIZA is set for a victory on January 25. The most recent polls show that Alexis Tsipras’s party continues to hold the lead with 2 to 4 percent, even though the difference with the New Democracy is shrinking.
SYRIZA has already proposed a controversial economic program that it plans to implement once it comes to power. The program, which was first introduced by Mr. Tsipras in 2012, mainly focuses on negotiating a write-down of the Greek government debt, and reversing austerity imposed by Antonis Samaras’s government as part of the Greece’s bailout agreement. According to Costas Lapavitsas, a London-based Greek economist and SYRIZA’s economic advisor, in a revealing interview with the BBC, “both of these things are very sensible—basically mild Keynesianism.”
The self-described “anti-austerity” party claims that government debt, which accounts for more than 300 billion euros, is not sustainable, even though its service cost is going to be just 4 percent in 2015, which is much less than what other European countries are paying. Moreover, based on NYU Prof. Nicholas Economides’ calculations, the average interest rate on 250 billion euros debt to the EU Troika is only 1.82 percent with exemptions, such as no interest payments on 60 percent of the debt for 25 years and no interest payments on 20 percent of the debt for 13 years.
The leftist party also argues that austerity measures forced by the Greek creditors, mainly Germany, suppress economic growth and deteriorate debt sustainability. Mr. Tsipras, as a “mild Keynesian,” is certain that the crisis is caused by insufficient consumer demand, and therefore greater social spending together with private debt restructuring would allow Greece to attract private investment and encourage fast economic recovery. The party promises to restore public spending to pre-2012, and in some cases even pre-2009 levels. The 11.5 billion euros worth of social spending programs would increase pensions and minimum wages, cover food stamp and state housing programs, subsidized electricity, transportation, and healthcare.
Additionally SYRIZA plans to reverse Greece’s privatization program, reinstate some of the fired public sector workers and cancel the special heating gas tax. What is interesting is that SYRIZA promises that the program can be implemented without running a fiscal deficit, arguing that after the write-down Greece would not have to sustain such large budget surpluses.
The program was met with a lot of criticism, especially from the Finance Ministry, which concluded that it is based on a poor understanding of economics. The increase in public spending and wages would lead to large external deficits, higher labor and production costs, and a huge loss of competitiveness. Thus, instead of attracting private investment SYRIZA’s policy would result in capital outflow.
Another important concern is the program’s funding gaps. The Finance Ministry report states that SYRIZA’s economic program is more costly than the party claims, and it would actually increase the primary budget deficit to 9 percent compared to the current 1.5 percent surplus. With debt negotiations taking place between Greece and the Troika, SYRIZA would face some serious financing problems. The European partners would refuse to lend on favorable conditions, and the recent surge in bond spreads shows that it would be difficult to rely on the markets.
January 15, 2015 11:54 AM
In recent days, a growing number of congressional Republicans have signaled a willingness to increase the federal excise tax rates on gasoline and diesel. As I noted earlier, there is no fiscal conservative case for raising the federal gas tax. Thankfully, the editorial board of The Wall Street Journal this morning decided to inject a much needed dose of fiscal conservatism into the debate, calling for an abolition of federal highway taxes and spending programs:
Some highways do need repair and modernization, and the U.S. does need more roads to relieve congestion and encourage trade and economic activity. The real crisis isn’t the amount of money but how it is spent.
The 47,714 miles of the interstate highway network would likely be less complete absent federal support, but the system was officially finished in 1992. It is less rational for drivers nationwide to send so many dollars to Washington for Congress to apportion among winners and losers as they did under Eisenhower. Today, the costs of transportation can be reasonably borne by the people who enjoy the benefits, which will generate more accountability and fewer political boondoggles.
Almost three-quarters of highway spending is already supplied by state and local governments, and if the federal role is reduced, they can decide either to increase their own gas taxes; fund roads some other way, such as tolls or public-private partnerships; or use tax dollars for other priorities like schools. States can build cheaper in any case, since the Davis-Bacon prevailing wage rules and Buy America procurement provisions that accompany federal funding don’t apply.
Democrats always want to raise the gas tax. When prices are high, that’s the best time to encourage drivers to buy an electric car or take the bus. When prices are low, they can skim some of the proceeds for other spending. The mystery is why Republicans would go along.
I'm not sure about that last line about Democrats. While some Democrats, along with senior congressional Republicans, have called for increasing federal highway user taxes, this position puts them to the left of the Obama White House, which has stuck to its guns and continues to oppose raising the highly unpopular gas tax. Among some bad policy recommendations, the Obama administration has actually endorsed a very sensible, fiscally conservative proposal that would lift the current federal prohibition on states tolling their own Interstate Highway System segments. This is something we at CEI have advocated for years and have again included it in our forthcoming Agenda for Congress.
January 14, 2015 9:29 AM
With the start of the 114th Congress comes a fresh opportunity to address the challenges created by a broken government. To kick off this new congressional session, the Competitive Enterprise Institute (CEI) recommends numerous reform proposals to strengthen the U.S. economy, increase transparency, and foster fair and open competition instead of favoring special interests.
CEI’s top policy proposals center on substantive regulatory reforms needed to improve America’s economic health. In 2014 alone, 3,541 new regulations hit the books, and the burden is constantly growing. If federal regulations were a country, their cost would amount to the world’s 10th largest economy.
In addition to reining in burdensome regulations, CEI recommends that Congress continue to conduct fundamental oversight to protect Americans from executive overreach. Over the last six years, federal agencies have sought to usurp power from the legislative branch. Congress has a responsibility to demand honesty and accountability from our leaders and defend the rule of law.
January 13, 2015 6:39 AM
The trade association, WineAmerica, which represents 600 wineries in the U.S., seems to think so. The group has hired a lobbyists to push the FDA to allow them to provide a range of calories in each variety of wine rather than precise counts for each particular wine.
That would mean, for example, wineries could disclose that a 5-ounce glass of wine with 13 percent alcohol has between 130 and 140 calories, as opposed to testing to find the exact calorie count for every specific wine.
The new rule is part of the same section—4205—of the Affordable Care Act that mandates calorie labeling for restaurants with 20 or more locations. The provision has caused a lot of controversy for some smaller chain food outlets, such as grocery stores and pizza shops. According to the Food Marketing Institute, a trade group representing retail grocery chains, the menu-labeling regulation would cost that industry $1 billion in the first year of implementation.
WineAmerica estimates that it will cost about $500 per wine to conduct calorie testing. That might seem like small change, but for small wineries the cost and time it would take to test each wine just adds to the burden of getting their products to the market, according to trade group.
According to current regulations, which are implemented by the Alcohol and Tobacco Tax and Trade Bureau, listing calorie content on wine is voluntary. However, if the new ACA rule may mean that wines hoping to get onto the menu of chain restaurants or grocery stores will have to provide calorie content information.
January 12, 2015 7:27 AM
Happy New Year to all of our regulatory followers! Wayne Crews previously summed up 2014’s year-end statistics in this post. Among the highlights are 3,541 new regulations, which by my calculations is equivalent to a new regulation every two hours and 28 minutes. Last year’s 79,978 Federal Register page count is also good for fifth-largest all time, going back to 1936.
The 2015 Federal Register already has more than a full week of data, with new rules ranging from heated pools to flying musical instruments. Despite a total page count that passed 1,000 pages in just the fourth issue, the numbers of proposed and final rules are both off to modest starts. Many rules are timed to take effect every New Year’s Day, and this staggered timing leads to frequent early-January slowdowns, so look for this to change before too long.
On to the data:
- Last week, 29 new final regulations were published in the Federal Register, less than half the usual pace in recent years.
- That’s the equivalent of a new regulation every five hours and 48 minutes.
- So far in 2015, 38 final regulations have been published in the Federal Register. At that pace, there will be a total of 1,583 new regulations this year, less than half the usual total.
- Last week, 1,326 new pages were added to the Federal Register.
- Currently at 1,467 pages, the 2015 Federal Register is on pace for 61,125 pages, or nearly 19,000 pages less than last year. Look for this to change.
- Rules are called “economically significant” if they have costs of $100 million or more in a given year. One such rule has been published so far this year.
- The total estimated compliance cost of 2015’s economically significant regulations is $477 million for the current year.
- Three final rules meeting the broader definition of “significant” have been published so far this year.
- So far in 2015, seven new rules affect small businesses; one of them is classified as significant.
Automated Vehicles Update: Big Feature at CES, California Rules Delayed, Georgia Cautious on RegulationJanuary 9, 2015 12:16 PM
It’s been a few months since I last checked in on automated vehicles (AVs), commonly called driverless cars or autonomous vehicles. Below are some developments of note.
- California misses operations and licensing rule deadline. When the California legislature passed its AV bill in 2012, it ordered that the state Department of Motor Vehicles fully implement it by the end of 2014. While the final rules on testing came into effect in September 2014, the agency announced in late December it would not meet the January 1 deadline to implement its AV operations and licensing rules. AV policy observers have been watching the California rollout closely, given that California is the largest state and a first mover, which means other states are likely to follow its lead. Unfortunately, California’s AV statute is proving burdensome for robocar innovators. As written, it requires that a licensed driver be in the driver seat with the ability to retake manual control at any point following a transition period. Some developers are seeking full automation, where there is no ability for drivers to take manual control. To meet the new California testing regulations, Google was recently forced to add a steering wheel to its latest prototype.
- CES showcases vehicle automation. The annual Consumer Electronics Show just wrapped up in Las Vegas. Ford CEO Mark Fields delivered a keynote address discussing his company’s push toward vehicle automation, among other topics. Fields predicted the first generation of automated vehicles will be on the road within five years. My colleague Wayne Crews, who attended CES, worries that some of the AV policy discussions seem to be trending towards public utility–style common carrier regulation, under the unsupported assumption that AVs will be exclusively or even largely fleet vehicles, at least in the current way we tend to think about fleet vehicles. This would be a huge mistake. Brad Templeton, one of the most interesting thinkers on vehicle automation, also attended CES and offers his thoughts on the AVs showcased here, here, and here. Anyone interested in AVs should be sure to follow Brad’s blog for regular updates.
January 8, 2015 6:03 PM
My wife Sylvie, who grew up in France, is terribly shocked about yesterday’s terrorist attack on the French satirical weekly Charlie Hebdo, which murdered 12 people, including four prominent French cartoonists.
Its editor had been on an Al Qaeda hitlist, and this vicious attack was immediately cheered by supporters of the Islamic State and Al Qaeda. According to Vice News, “Minutes before the attack, the Charlie Hebdo account had tweeted out a cartoon mocking the Islamic State's leader, Abu Bakr al-Baghdadi.”
My wife calls the attack “France's 9/11,” and says Charlie Hebdo was a symbol of free speech for the French people, and much more culturally significant than publications like National Lampoon or The Onion is for Americans. French people across the political spectrum, from left-wing Trotskyites like my father-in-law, to conservative Gaullists, were appalled by the attack.
The slain cartoonist Cabu was not just a Charlie Hebdo cartoonist, but had also, years earlier, been perhaps the leading cartoonist of Sylvie's childhood. He drew cartoons for children, such as for “the children's TV programme, Récré A2,” making his murder as culturally significant for her as it would be if Charles Schultz, the creator of Peanuts and Charlie Brown, had been assassinated.
But most of the media are too cowardly to do so (which they should be doing, because doing otherwise rewards the terrorists who sought to eradicate such depictions). Instead, many are cropping historical photos, or blurring out images, to censor depictions of the prophet Mohammed found in newsworthy photos of Charlie Hebdo and its staff. Some are even effectively blaming Charlie Hebdo for the attack, like Tony Barber of the Financial Times referring to it as “being stupid” and aiming to “provoke Muslims.”
By contrast, Charlie Hebdo’s staff showed incredible courage over the years. As Matt Welch of Reason notes, it had the courage to not “just print original satirical cartoons taking the piss out of Islamic-terrorist sensibilities, but do so six days after [it was] firebombed . . .and do so in such a way that's genuinely funny (IMO) and even touching, with the message ‘Love is stronger than hate.’” And not “just print original cartoons of the Prophet Muhammad—a historical figure, lest we forget—but then defending and winning the right to do so after being charged with offensive speech.”