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

    June 15, 2015 7:45 AM

    It was a prolific week for the Federal Register, with more than 1,700 pages covering everything from real estate appraisal to water banks.

    On to the data:

    • Last week, 64 new final regulations were published in the Federal Register, after 65 the previous week.
    • That’s the equivalent of a new regulation every two hours and 38 minutes.
    • So far in 2015, 1,365 final regulations have been published in the Federal Register. At that pace, there will be a total of exactly 3,020 new regulations this year, which would be several hundred fewer rules than the usual total of 3,500-plus.
    • Last week, 1,752 new pages were added to the Federal Register, after 1,344 pages the previous week.
    • Currently at 33,895 pages, the 2015 Federal Register is on pace for 74,989 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Eleven such rules have been published so far this year, two in the past week.
    • The total estimated compliance cost of 2015’s economically significant regulations ranges from $1.39 billion to $1.46 billion for the current year.
    • 114 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 235 new rules affect small businesses; 34 of them are classified as significant. 
  • Abolish Ex-Im Bank, Don't Reform It

    June 12, 2015 3:11 PM

    Over at the American Spectator, University of Chicago lecturer Frank Schell recently published a column arguing that the Export-Import Bank should be reformed, not abolished. Today, I have a piece disagreeing for two reasons:

    First, Congress has no appetite for substantive changes. Second, corruption and favoritism are inevitable consequences of Ex-Im’s very mission. As such, Congress should let the agency’s charter expire…

    America’s entrepreneurs are talented and resourceful enough to compete in global markets without having to spend time influence-peddling in Washington. They deserve the opportunity.

    Read the whole thing here.

  • How Many Significant Regulations Escape Congress' Notice?

    June 11, 2015 1:06 PM

    The Spring 2015 Unified Agenda of Federal Regulatory and Deregulatory Actions was released in late May, presenting recently completed actions and ongoing priorities of the federal bureaucracy. It covered 3,260 rules and regulations in the pipeline.

    Among these, there are 205 “economically significant” rules highlighted; this subset sports economic impacts of $100 million or more annually.

    Shortly after the Agenda appeared, the Environmental Protection Agency’s sweeping new Clean Water Rule on nationwide permitting on private property was released and got a lot of attention in the news. It’s known as the Waters of the United States rule, and promises huge burdens on landowners and farmers who have no “navigable waters” on their property. Congress is looking at ways to respond to one of the most notorious current regulations.

    Yet, when I glanced at the list of economically significant rules in the Unified Agenda, this heavyweight wasn’t listed among them.

    Incredibly, EPA lists the Clean Water Rule as merely “other significant” (a category defined in Executive Order 12866). The agency had received over a million comments on the rule that it apparently played a role itself in soliciting to reinforce this power grab.

  • Trade Promotion Authority: What it Is and What it Isn't

    June 11, 2015 1:00 PM

    The House of Representatives is poised to vote on Trade Promotion Authority (TPA), the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (H.R. 1314). Unfortunately, there has been some misinformed criticism, in Congress and elsewhere, of so-called “fast track” legislation. Under TPA, the President has the authority to negotiate trade agreements if certain criteria established by Congress are met. Then Congress reviews the agreement and the implementing legislation and has to vote on the bill with no amendments allowed.

    • TPA puts Congress in charge.

    TPA essentially is an accommodation between the Executive and the Legislative branches of government to assure trading partners that what they agreed upon during negotiations won’t be overturned in the voting process.

    Congress gives negotiating authority to the President for trade agreements only if certain congressionally determined criteria are met:

    • That very specific objectives outlined in TPA are accomplished in a trade agreement;
    • That Congress is consulted throughout the negotiating process; and
    • That timetables outlined in TPA for Congressional review of the text and the implementing legislation are followed.

    In return, Congress agrees to consider the legislation without amendments and have an up or down vote on it.

    • TPA is not a new concept.

    Congress has granted the President trade negotiating authority since the time of FDR. As the Cato Institute’s Scott Lincicome shows, every president since then—a total of 12 presidents—has been given such authority, with the Trade Act of 2002 being the last one of that long succession.

  • DOJ vs. Commenters: How the Deck Is Stacked Against Anonymous Political Speech

    June 9, 2015 8:42 PM

    Our friends over at the Reason Foundation, a venerable libertarian think tank and publisher of Reason magazine, recently received a grand jury subpoena from a federal prosecutor in New York, reports Ken White at Popehat. The subpoena demands that Reason disclose “all identifying information” it has regarding six pseudonymous users who posted comments about the death and afterlife of a federal judge on Reason’s Hit & Run blog.

    These comments came in response to a May 31 Reason post by Nick Gillespie about the trial and sentencing of Ross Ulbricht, who was convicted in February of running an Internet-based narcotics and money laundering platform known as Silk Road. In late May, Judge Katherine Forrest, who sits on the U.S. District Court for the Southern District of New York, sentenced Ulbricht to life in prison. This sentence was met with mixed reactions, with many commentators criticizing Judge Forrest for handing down what they perceived as an exceedingly harsh sentence.

    A few Reason users, some of whom may have followed Reason’s extensive coverage of the fascinating trial, apparently found Ulbricht’s sentence especially infuriating. One commenter argued that “judges like these … should be taken out back and shot.” Another user, purporting to correct the preceding comment, wrote that “[i]t’s judges like these that will be taken out back and shot.” A follow-up comment suggested the use of a “wood chipper[],” so as not to “waste ammunition.” And a user expressed hope that “there is a special place in hell reserved for that horrible woman.”

    Within hours, the office of Preet Bharara, the U.S. Attorney for the Southern District of New York, sent Reason a subpoena for the commenters’ identifying information “in connection with an official criminal investigation of a suspected felony being conducted by a federal grand jury.” This doesn’t mean a grand jury actually asked about the commenters; instead, in federal criminal investigations, it’s typically up to the U.S. Attorney to decide when to issue a subpoena “on behalf” of a grand jury. See, e.g., United States v. Kleen Laundry & Cleaners, Inc.381 F. Supp. 519, 521 (E.D.N.Y. 1974). The subpoena demands from Reason information about the six users, including their email and Internet Protocol (IP) addresses—which, if disclosed, could enable the government to uncover the true identities of the commenters, perhaps after another round of subpoenas are sent to the users’ respective Internet Service Providers.

    Popehat’s Ken White is quite troubled by the government’s decision to issue this subpoena. Ilya Somin, writing at The Volokh Conspiracy, also objects to the subpoena. So do the Cato Institute’s Tim Lynch and Techdirt’s Mike Masnick, among many others.

    I too find it quite concerning. Even if this subpoena is valid under current law—more on that angle in a bit—the government made a serious mistake in seeking to force Reason to hand over information that could uncover the six commenters’ identities. Unless the Department of Justice is investigating a credible threat to Judge Forrest with some plausible connection to the Reason comments at issue, this subpoena will serve only to chill hyperbolic—but nonetheless protected—political speech by anonymous Internet commenters. And if Reason decides to stand up for its users’ rights, the resulting court battle will amount to a waste of federal law enforcement resources that could instead help bring actual criminals to justice, as Tim Lynch reminds us.

    To be sure, I have no problem with the feds seeking to locate and prosecute people who actually threaten to commit murder—which, if transmitted in interstate commerce, is a federal crime under 18 U.S.C. § 875. Threatening to kill a federal judge is especially problematic; assassinations of federal judges do happen from time to time. As such, it’s only natural that law enforcement takes such threats seriously.

    Yet, while the comments identified in the subpoena are undeniably vile, they’re also protected by the First Amendment, and rightly so. Hyperbolic political statements have a long history in the United States; for instance, Ken Shultz notes that Martin Luther King, Jr., once said that “[t]he hottest place in Hell is reserved for those who remain neutral in times of great moral conflict.” Sound familiar?

  • DOJ vs. Commenters: When Everything Is Deemed a "Threat"

    June 9, 2015 3:20 PM

    The Supreme Court has said that true threats can be banned without violating the First Amendment, but that doesn’t mean that hyperbolic rants are unprotected just because they express a yearning for someone’s demise. That doesn’t make them a true threat. For example, the Supreme Court ruled on the issue in Watts v. United States (1969). Robert Watts, a young black man, stated during a protest in Washington, D.C.:

    I have already received my draft classification as 1-A and I have got to report for my physical this Monday morning. I am not going. If they ever make me carry a rifle the first man I want to get in my sights is L.B.J. They are not going to make me kill my black brothers.

    The Supreme Court reversed his conviction for making threats, ruling that Watts’ statement was political hyperbole rather than a true threat. “We agree with [Watts] that his only offense here was ‘a kind of very crude offensive method of stating a political opposition to the President.’”

    But prosecutors sometimes confuse hyperbolic dissent with true threats. School officials are even worse. They equate even mild academic references to violent protests in the distant past with unprotected threats.

    For example, Oakton Community College (OCC) concluded that a one-sentence “May Day” email referencing the Haymarket Riot sent by a faculty member to several colleagues constituted a “true threat” to the college president. On May 1, Chester Kulis sent an email to OCC colleagues that read, “Have a happy MAY DAY when workers across the world celebrate their struggle for union rights and remember the Haymarket riot in Chicago.” Lawyers for the Chicago-area college argue that the email, which commemorated the riot, thus threatened violence.

    Similarly, federal prosecutors in the Southern District of New York are using a subpoena to identify anonymous commenters on a Silk Road post at, notes First Amendment lawyer Ken White:

    The United States Department of Justice is using federal grand jury subpoenas to identify anonymous commenters engaged in typical internet bluster and hyperbole in connection with the Silk Road prosecution.  . . .Why is the government using its vast power to identify these obnoxious asshats, and not the other tens of thousands who plague the internet? Because these twerps mouthed off about a judge. . .. The subpoena commands Reason to provide the grand jury "any and all identifying information" Reason has about participants in what the subpoena calls a "chat."

    The "chat" in question is a comment thread on Nick Gillespie's May 31, 2015 article about Ross "Dread Pirate Roberts" Ulbricht's plea for leniency to the judge who would sentence him in the Silk Road prosecution. That plea, we know now, failed, as Ulbricht received a life sentence, with no possibility of parole.

    Several commenters on the post found the sentence unjust, and vented their feelings in a rough manner. The grand jury subpoena specifies their comments and demands that produce any identifying information on them.

  • Bad Tradeoff: Ex-Im vs. a Weak Dollar

    June 9, 2015 7:10 AM

    At this point, it looks like Congress will let the Export-Import Bank’s charter expire on June 30. This is not a big deal in grand scheme of things. Ex-Im would continue to service its existing loan guarantees and other financial products, and Ex-Im employees would also review applications for new loans and loan guarantees, though they would not be able to act on them. But suppose Ex-Im does have to shut down operations for good. What other options do export-oriented policymakers have?

    Tyler Cowen brings up one option: mess with the price system.

    Even a slight depreciation likely would offset the effects of Ex-Im expiration by more than a factor of one hundred, perhaps by more than a factor of one thousand.  Ex-Im is a relatively small program and it has nothing to do with more than 98 percent of American exports.  Many of its foreign beneficiaries, such as Pemex and Chinese state-owned enterprises, don’t need the subsidy to fund their imports.  Boeing is still reporting a robust demand for its planes.

    If the goal is to increase exports, a weak dollar is far more effective than any Ex-Im project could ever hope to be. As Cowen says, Ex-Im is involved with less than 2 percent of U.S. exports. Altering the price system itself would affect 100 percent of transactions, exports or not.

    Renewing Ex-Im’s charter is a bad idea. Weakening the dollar is a worse idea by at least a factor of 50, even ignoring imports and purely domestic transactions. Every export made cheaper equals an import made more expensive. Every business helped means another one hurt. There is no net benefit.

  • The Right to Choose Your Investment Partner

    June 8, 2015 2:49 PM

    The following is an abridged and revised version of my keynote address to the FinTech Global Expo at the San Diego Convention Center on May 29, 2015. I was introduced by conference organizer Andrea Downs, President and CEO of Coastal Shows.

    In startup investment, there have almost as many important developments in the past three years as there have been in the past 30. Let me take you on a very short trip on my time machine back to the days just before the passage of the Jumpstart Our Business Startups—or JOBS Act in 2012

    In those days—during the reign of the 80-year-old ban of general solicitation of private stock offerings that the JOBS Act repealed—it wasn’t even clear that you could have a conference, trade show, or expo like this one. That was a concern among angel investors I had spoken to interested in holding a trade show, but uncertain of the legality.

    Maybe we can remember the time in which if you were an entrepreneur and weren’t networked in, and you wanted to find an accredited investor, you had to whisper to someone on the street corner: “Hey, are you rich? Want to invest in my company?”

    And it’s amazing that since the JOBS Act—really since 2013, when the SEC implemented Title II and repealed the general solicitation ban—we’re seeing all these platforms like and the others being discussed. It’s amazing to see how much that has grown and is getting capital to entrepreneurs.

    We’ve come a long way, yet we have a long way to go. The SEC still hasn’t implemented Title III, so we still don’t have crowdfunded investment for ordinary investors. So ordinary folks can’t share in the dream quite yet.

    But we’re getting there. So much is happening in state legislatures. The Illinois House of Representatives and Senate just passed an equity crowdfunding bill for all in-state residents that’s awaiting the new governor’s signature. Michigan, Texas, Georgia and other states have already enacted similar statutes for their residents.

    One of the reasons I’m so optimistic is that I view the grassroots push to legalize crowdfunded investing for everyone as a freedom movement. Even though the JOBS Act, deregulation, and lifting financial red tape are often associated with Republicans and conservatives, I see this as a broad general freedom movement, similar to the movement for the right to smoke marijuana and to marry your partner of choice.

    My organization, the Competitive Enterprise Institute, looks at Dodd-Frank, Sarbanes-Oxley, and all regulations as a burden to personal rights. After all, what could be more personal than how you invest your money? If you can now choose who your domestic partner is, why in hell shouldn’t you be able to choose who your investment partner is?!

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

    June 8, 2015 2:44 PM

    New regulations last week covered everything from growing cherries to airport security fees to preventing collisions at sea.

    On to the data:

    • Last week, 65 new final regulations were published in the Federal Register, after 70 the previous week.
    • That’s the equivalent of a new regulation every two hours and 35 minutes.
    • So far in 2015, 1,301 final regulations have been published in the Federal Register. At that pace, there will be a total of exactly 3,012 new regulations this year, which would be several hundred fewer rules than the usual total of 3,500-plus.
    • Last week, 1,344 new pages were added to the Federal Register, after 980 pages the previous week.
    • Currently at 32,143 pages, the 2015 Federal Register is on pace for 74,406 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, none 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.
    • 109 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 220 new rules affect small businesses; 33 of them are classified as significant. 
  • Both Parties Should Oppose the Export-Import Bank

    June 5, 2015 3:30 PM

    Rep. Jeb Hensarling (R-Texas) chairs the House Financial Services Committee. The Export-Import Bank’s reauthorization falls under his jurisdiction, and he has been one of the bank’s most consistent critics. He also called for closing Ex-Im in a recent Wall Street Journal op-ed, making a number of well-reasoned arguments. But his closing clarion call is rather narrow for my taste:

    If Republicans can’t stand up to corporate interests in this skirmish, how will we ever stand up to the myriad special interests warring against adoption of a simplified, pro-growth tax code? How will we earn the moral authority to reform the social welfare state unless we first reform the corporate welfare state? Let the Democrats own corporate welfare by themselves.

    I prefer a more ecumenical approach. Opposing corporate welfare is something on which both parties should agree—and outside the Beltway, they often already do. People favoring a level economic playing field should put pressure on Republicans and Democrats alike to end their cronyist habits, not just the GOP. After all, Ex-Im’s traditional critics come from the left, not the right. The two sides’ role reversal is a recent, and puzzling phenomenon.

    Hensarling is doing some impressive yeoman’s work in getting his party on the right side of the Ex-Im issue, but that’s only half the battle—or slightly more than half, given the House’s current composition. Still, progressives are natural allies in the fight against Ex-Im, and for several decades they were the free market’s only allies in that battle. They should not be ignored.


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