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  • CPSC Proposal on Phthalates Likely to Do More Harm than Good

    March 13, 2015 8:58 AM

    On Monday, the Consumer Product Safety Commission will close the comment period for a proposed rule related to chemicals used to make soft and pliable plastics. While they claim to do this in the name of children’s health, it’s not clear that the rule will do more good than harm.

    The process and the “scientific” review that brings us to this proposed rule has been controversial, to say the least. I detail some of those issues in comments that I will submit on Monday and will post some of that here on Monday as well.

    Unfortunately, not enough attention has focused on the fact that the agency-commissioned study—referred to as the Chronic Hazard Advisory Panel (CHAP) report—failed to fully consider the potential implications of substitute products that will replace those they ban. 

    Before initiating a rulemaking that may remove chemical technologies from the marketplace that have been safely used for decades, CPSC should consider whether replacement products pose greater risks. The CHAP allegedly addresses replacement products by reviewing data on the potential environmental health effects of other chemical substitutes. But the CHAP did not address whether or not the substitutes that might actually win a place in the market would affect product performance in ways that help or harm public health and safety.  

    The rule should ensure net safety, considering all factors. It is incumbent that regulators don’t inadvertently increase risks with short-sighted decisions. Based on the CHAP, we lack reasonable assurance that regulatory action will increase net safety and, in fact, such actions might accidentally introduce new hazards and even greater public health and safety risks.

  • Civil Rights Commissioners Oppose Budget Increase for Education Department’s Office for Civil Rights

    March 12, 2015 2:36 PM

    On February 26, two members of the U.S. Commission on Civil Rights, Gail Heriot and Peter Kirsanow, wrote to the chairmen of the congressional appropriations committees, to warn “against” a “provision of the proposed Obama budget that would increase funding for the Department of Education’s Office for Civil Rights (‘OCR’) by 31%.”  

    As the Commissioners observed in their letter, there has been “a disturbing pattern of disregard for the rule of law at OCR. That office has all-too-often been willing to define perfectly legal conduct as unlawful. Though OCR may claim to be under-funded, its resources are stretched thin largely because it has so often chosen to address violations it has made up out of thin air. Increasing OCR’s budget would in effect reward the agency for frequently over-stepping the law. It also would provide OCR with additional resources to undertake more ill-considered initiatives for which it lacks authority. We strongly encourage Congress to take into account this troubling pattern of overreach in deciding whether to support the President’s proposed increases to OCR’s budget.”

    The Commissioners’ letter focuses on OCR’s attacks on free speech. For example, it discusses OCR’s 2013 attempt to redefine constitutionally protected speech about sexual issues in college classrooms as sexual harassment in a case involving the University of Montana, an act of overreaching criticized not just by free-speech groups like the Foundation for Individual Rights in Education, but also by law professors like Eugene Volokh and even by liberal commentators in the Washington Post and Chronicle of Higher Education, as well as by moderate Republican Senator John McCain. As the Washington Times and The College Fix note, it also criticized OCR’s 2011 attempt to federalize school bullying, and its related guidance redefining some speech protected by the First Amendment among K-12 students as illegal racial or sexual harassment. (See my discussion of that guidance here and here.)

  • Chaffetz Tells States and Lotteries: If You Don’t Want an Online Gambling Ban, Introduce Your Own

    March 11, 2015 4:04 PM

    According to a Gambling Compliance story (paywall) posted today, Rep. Jason Chaffetz (R-Utah) participated in a conference call last week with about 20 state and lottery officials to discuss his proposal to create a nationwide ban on Internet gambling. Chaffetz’s bill rewrites the 1961 Wire Act, which he claims was “reinterpreted” by Obama’s DOJ in 2011—which opened the door for states to legalize online gambling. When the participants voiced their concerns that Chaffetz’s bill would also criminalize lottery activities that were legal prior to 2011, Chaffetz responded by brazenly suggesting that when his bill passes, they can try to pass their own federal bill. “You can come back and re-start if you want,” Chaffetz concluded.

    The call was organized by the Commerce Committee of the National Governors Association (NGA), which has voiced opposition to Chaffetz’s bill in the past. But some on the call noted surprise at his aggressiveness. Mark Hichar, a gaming attorney on the call, found Chaffetz’s statement “surprisingly aggressive.”  According to Hichar, the bill would eliminate currently legal lottery offerings, such as online lotter ticket sales and subscriptions (currently available in 8 states), online real-time games like pull-tabs (legal in five states when Kentucky launches this year), and of course, online casino-style games legal in New Jersey, Nevada, and Delaware for almost two years now.  

  • Marketplace Fairness Act Is More about Tax Revenue and Rent-Seeking than Fairness

    March 11, 2015 12:10 PM

    Yesterday, Sens. Mike Enzi (R-Wy.), Dick Durbin (D-Ill.), Lamar Alexander (R-Tenn.), and Heidi Heitkamp (D-N.D.) reintroduced the speciously named Marketplace Fairness Act (MFA) in the 114th Congress. The legislation would authorize state tax collectors to reach across borders and tax out-of-state businesses, therein subjecting online retailers to taxation without representation.

    Certainly, there are inequities in the way remote sales are taxed, but the MFA’s approach is a cure worse than the disease. It would unfairly burden remote retailers by forcing them to calculate for approximately 10,000 distinct tax jurisdictions—each with their own rates, definitions and tax exemptions—while leaving brick and mortar shops to simply apply and remit tax based on the point of sale. Not much of a level playing field there.

    So if not “fairness,” as supporters of the bill claim, what is motivating pro-MFA sentiments?

    For the states and localities it’s purely a tax grab. Instead of trimming fat from their bloated budgets, governors and mayors are opting to spend time in D.C. schmoozing congress for the right to tax other state’s businesses. Why deal with disappointing or taxing your own constituents, to whom you are politically accountable, when you can spend the week office hopping on the Hill, collecting pins for your lapel, and topping it all off with an expensed dinner at Cap Grille? 

  • 6 Ridiculous Myths about Legal Internet Gambling Busted

    March 11, 2015 11:48 AM

    Should the United States government ban online poker? One billionaire casino owner thinks so. In the quest to convince Americans that they shouldn't be able to do what they want with their own money in their own homes, proponents of the ban have spent big bucks and spread big lies. Below are some of the biggest whoppers.

  • How Not to Fix, and Fix, Federal Surface Transportation Policy

    March 9, 2015 3:37 PM

    A lot of misinformation and scaremongering swells around transportation infrastructure policy in Washington. We are told our highway network is on the verge of collapse (false), that the federal role is the most critical component of government transportation infrastructure funding (false), and that things will only get worse unless we submit to massive federal gas tax increases (false). To be sure, there are many transportation projects that should be completed over the next two decades. But the “crisis” is politically manufactured. The infrastructure lobby does no one any favors by overstating the problem and supporting reckless and inefficient tax-and-spend policies.

    The “Crisis” in Context: Blame Mass Transit?

    Let’s start with the problem. As of January, the Congressional Budget Office (CBO) is projecting a 10-year $168 billion shortfall in the federal Highway Trust Fund (HTF). By 2025, CBO is projecting that the outlays from the HTF’s Highway Account will exceed revenues and interest by $16 billion (47 percent), with outlays from the HTF’s Mass Transit Account exceeding revenues and interest by $6 billion (150 percent). The HTF’s Mass Transit Account is in much worse shape over the long-run. It is also important to note that virtually every penny of the HTF’s Mass Transit Account is diverted revenue collected from drivers—2.86 cents of the 18.4-cents-per-gallon federal gasoline excise tax and 24.4-cent federal diesel excise tax is dedicated to the Mass Transit Account.

    Why is there a Mass Transit Account in the Highway Trust Fund? Because President Reagan made a foolish decision in 1982 to dedicate 1 cent of the federal fuel excise taxes to mass transit, as urban liberals would have otherwise refused his gas tax increase for Interstate projects on equity grounds (fuel taxes can be quite regressive). So, this misguided horse trade from The Gipper is why nearly 20 percent of all federal surface transportation funds are now directed to mass transit, a mode that accounts for less than 5 percent of commuting trips. But it gets worse. Less than 2 percent of total trips, both commuting and non-commuting, are completed by mass transit in the United States. When we consider expenditures from all levels of government—federal, state, and local—we observe that mass transit receives approximately 25 percent of the nearly $210 billion spent annually on surface transportation. That’s 25 percent of total funding for less than 2 percent of trips.

    In most places in the U.S., transit is a white elephant mode backed by powerful environmentalists, developers, and unions that does nothing to mitigate traffic congestion, which was its primary stated purpose in the 1970s when the federal government first began making large capital grants for local transit systems. More troubling, the U.S. Department of Transportation currently estimates that America’s mass transit systems have an $86 billion deferred maintenance backlog and that transit agencies need to increase annual system preservation spending from $10 billion to $18 billion just to tread water. No one knows where this additional money will come from, yet politicians continue pushing disastrous transit system expansion plans.

    If we were to redirect federal highway-user revenues that are currently automatically directed to mass transit from FY 2016-2025, CBO’s projected HTF revenue-outlay imbalance would be reduced from -$168 billion to -$77 billion over 10 years. Ending the major highway-dollar diversion to transit is unlikely to happen, but it is important to remember that political pandering to the transit lobby is responsible for more than half of CBO’s current projected HTF fiscal woes. But even without ending HTF diversions to mass transit, given the federal government’s small role relative to those of state and local governments, that projected $168 billon HTF shortfall would only account for about 8 percent of total surface transportation expenditures through FY 2025 assuming no increases in state and local spending. Some “crisis,” eh?

  • Remembering M. Stanton Evans

    March 9, 2015 12:00 PM

    What do best-selling author and New Yorker correspondent Malcolm Gladwell, ABC News Chief Foreign Correspondent Terry Moran, popular conservative journalist and author John Fund, and this writer have in common? We are all graduates of the National Journalism Center internship program, under the leadership of M. Stanton Evans.

    Stan, as he was called by friends (and whom I was privileged to call a friend after I graduated from the program), died last week at 80 of pancreatic cancer. He had no children, but left behind a legacy of students dispersed in prominent positions in media and public policy. All of us benefitted from the lessons he imparted on the importance of finding facts, regardless of opinion, on the subjects we were researching.

    “I tell my students even if you are an opinion journalist, your opinion should be based on facts,” Stan told New York Times reporter Adam Clymer in an interview that was quoted from in the paper’s obituary (which is a surprisingly good summation of Stan’s life and impact). This is a lesson I took with me from my NJC internship in the summer of 1993 to my reporting positions at Investor’s Business Daily and the Washington Times’ Insight magazine, and still adhere to in my current position as policy researcher and advocate at the Competitive Enterprise Institute.

    Stan had many accomplishments other than his leadership at NJC from its founding in 1977 until 2002. A founding member of Young Americans for Freedom in 1960, he authored its famous “Sharon Statement” outlining conservative and libertarian principles. Among other things, the statement affirms “that the market economy, allocating resources by the free play of supply and demand, is the single economic system compatible with the requirements of personal freedom and constitutional government, and that it is at the same time the most productive supplier of human needs.”

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

    March 9, 2015 7:36 AM

    The Supreme Court heard oral arguments on the King v. Burwell case last week. The decision, likely to appear in June, will determine in part whether regulatory agencies are allowed to rewrite legislation passed by Congress. Other than that, it was business as usual, with new regulations covering everything from 15 EPA rules to school lunches.

    On to the data:

    • Last week, 72 new final regulations were published in the Federal Register, after 65 new regulations the previous week.
    • That’s the equivalent of a new regulation every two hours and 20 minutes.
    • So far in 2015, 488 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,542 new regulations this year, which would be roughly 1,000 fewer rules than the usual total.
    • Last week, 1,242 new pages were added to the Federal Register, after 1,715 pages the previous week.
    • Currently at 12,310 pages, the 2015 Federal Register is on pace for 69,944 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Five 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 $647 million to $700 million for the current year.
    • Forty-eight final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 108 new rules affect small businesses; 17 of them are classified as significant. 
  • University of California Dean: Academic Freedom Makes Students "Feel Unsafe"

    March 6, 2015 12:39 PM

    Recently, the dean of the School of Social Welfare at the University of California at Berkeley condemned a professor’s constitutionally protected remarks, including but not limited to his mention of black-on-black crime at a Black Lives Matter event. A complaint has also apparently been filed against the professor with the Office for the Prevention of Harassment and Discrimination.  

    Rather than defending academic freedom, Dean Jeffrey Edelson said “we deeply regret the reported incident” involving Steven Segal, a tenured professor, who has taught at Berkeley for more than 40 years and is world-renowned for his research on mental illness. Worse, the dean said that his remarks “made the classroom environment feel unsafe” for the complaining students. The dean reportedly set up a “shadow class” for students offended by the professor’s remarks: “Students in Segal’s class were offered an alternate section” with “a different professor.” 

    The University’s overreaction to Professor Segal’s speech was so absurd that a former head of the Education Department’s Office for Civil Rights told me that what occurred at the University of California “could just as easily be a Saturday Night Live skit.” 

    But it also sets a very bad precedent for academic freedom. Why are taxpayers paying to subsidize a school of social work whose officials exhibit so little common sense—and so much disdain for constitutional free speech guarantees?

    The federal appeals court with jurisdiction over the University of California has made clear that speech like Professor Segal’s cannot be banned even by labeling it as a threat to people on campus or the classroom environment. In Bauer v. Sampson, it held that a college professor's caricatures of a college president and satirical yearning for his death were protected by the First Amendment, even though the college declared it a violation of its policy against “workplace violence.” Similarly, the Ninth Circuit held that the First Amendment protected a professor’s racially charged emails about immigration, which offended Hispanic faculty, in Rodriguez v. Maricopa Community College District (2010), holding that such speech was protected by the First Amendment against a racial harassment lawsuit, even if the complainants perceived it as discriminatory or creating a racially “hostile environment.” 

  • How Department of Labor's "Fiduciary" Rule Could Cripple IRA Choices

    March 3, 2015 12:38 PM

    Last week, President Obama called on the Department of Labor to “update the rules and requirements that retirement advisors put the best interests of their clients above their own financial interests.” At a speech at the American Association of Retired Persons, the president proclaimed, “You want to give financial advice, you’ve got to put your client’s interests first. “

    Yet, if the regulation the DOL is set to introduce at the president’s behest is anything like the “fiduciary” rule it proposed in 2010—and withdrew upon a groundswell of protest the next year—the government’s definition of “best interest” will likely not be in the best interest of individuals who wish to pursue alternative assets from gold to peer-to-peer loans to crowdfunding in their IRAs.

    The last time around, the DOL tried to reclassify a broad swath of financial professionals and business as “fiduciaries” even if they did not provide regular investment advice. Not only were broker-dealers covered, but so were directed custodians of IRAs, even self-directed IRAs in which investors don’t rely on any “fiduciary” advice. Once again, the freedom of self-directed IRA holders to invest in assets of their choosing, including crowdfunding ventures, may be at risk.

    Self-directed IRAs can invest in a wide range of assets. As worries about monetary policy have been on the rise, gold and silver have found popularity as IRA holdings. Real estate has long been a staple as well. The growth of peer-to-peer lending has stemmed in part from the ability to put the loans created by Prosper and Lending Club into IRAs.

    And as CrowdFund Beat and others have reported, self-directed IRAs serving accredited investors now have access to crowdfunded startups available through SEC Rule 506(c), which legalized general advertising of investment of non-public companies in 2013 pursuant to the Jumpstart Our Business Startups (JOBS) Act. When Title III of the JOBS Act or new congressional legislation legalizing equity crowdfunding for ordinary investors is finally implemented—and hopefully that will be soon—there should be no barriers to self-directed IRAs serving the masses providing access to these exciting new investments.

    Yet, much of this progress in lifting barriers to crowdfunding could be short-circuited if a broad, restrictive “fiduciary” rule comes to fruition. Last time, the proposal specifically included “appraisers” in its definition of fiduciaries, a category that included directed custodians of IRAs.

    Tom Anderson, board manager of Pensco Trust, a San Francisco-based IRA custodian that is now one of the leaders in offering crowdfunding options, wrote in comments to the DOL in 2011 that imposing a fiduciary standard “would result in higher costs and potentially fewer service providers to self-directed IRAs,” which “in turn, could result in fewer investment choices.” Anderson’s comments were written on behalf the Retirement Industry Trust Association, a trade group for custodians of self-directed IRAs, who helped successfully shelve the first DOL rule.

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