IPI PolicyBytes

TechBytes 7.10: Can Market-Friendly Ideas Address Gaps in Broadband Deployment?

Bartlett D. Cleland — Fri, 12 Mar 2010 10:51:07 -0500

By any objective measure, the rollout of broadband services to the country is going phenomenally well, and is largely being done with private capital and without involving taxpayer dollars. As you might expect, broadband providers have focused on areas where demand and market forces sufficiently incentivize private network companies. But there obviously remains the problem of areas where, for reasons of geography, population density, or other issues, making a business case for deploying broadband is a challenge.

The Federal Communications Commission (FCC) is about to reveal it’s recommendations to Congress regarding a National Broadband Plan. As part of the FCC’s efforts, they have solicited ideas from the public on what should be the elements of the plan.

We strongly suspect that the FCC is inclined to go in a direction that involves much more government spending, subsidy and regulation, and which undermines the existing investment and future role of private network providers. And, indeed most of the ideas submitted to the FCC’s website involve exactly such a Bigger Government direction.

We think this would be a mistake. So the Institute for Policy Innovation (IPI) has suggested a market-friendly idea for encouraging broadband buildout to unserved areas based on the success of enterprise zones over the past thirty years.

In areas designated as “Broadband Enterprise zones” (based on broadband mapping), broadband providers would receive federal tax credits which could be used to offset the company’s overall federal tax burden. And vouchers could be issued to homeowners to pay for installation and setup within the Enterprise Zone.

TaxBytes 7.09: On the House

Merrill Matthews Jr. — Tue, 9 Mar 2010 13:50:40 -0500

Members of Congress say they are concerned about the exploding budget deficit, though not so concerned, it seems, to stop all the spending that’s actually causing the deficit explosion—up to about 24.7 percent of gross domestic product (GDP).

President Obama’s solution has been to appoint, by executive order—because the Senate wouldn’t pass it—a bipartisan group to explore what the government can do to reign in the spending.

It’s like an alcoholic convening a meeting of other heavy drinkers to discuss how the alcoholic can cut back on his drinking—and having the meeting at a bar at happy hour.

Of course, everyone knows the committee will recommend some minor spending cuts and some major tax increases. The tax increases would pass and the spending cuts would be postponed until later—because spendaholics don’t really want to cut spending, they just want to say that they do.

Now Reps. Mike Pence (R-IN) and Jeb Hensarling (R-TX) have stepped up to the plate with a better way. Call it an intervention.

They propose a constitutional amendment to cap government spending at 20 percent of GDP, which has been the historical average since World War II. The cap could be ignored during war, and a two-thirds vote of Congress could override it.

Why they chose a constitutional amendment as opposed to legislation isn’t clear, but probably because it is more permanent. Democrats pushed pay-as-you-go (or paygo) legislation only a month ago, requiring Congress to find offsets to pay for any new spending measures. And then promptly ignored their new paygo rule by spending $10 billion three weeks later without a “pay for” to offset the cost.

So even though a constitutional amendment would be very hard to pass, maybe it’s the only way to get Congress to live by the rules it imposes on itself.

Pence-Hensarling is about controlling government spending. It’s simple and effective, which is why Congress and this administration will likely do whatever they can to dodge it.

As they order another round for everyone—on the House.

TechBytes 7.09: Free Radicals Attack Cells

Bartlett D. Cleland — Thu, 4 Mar 2010 13:49:16 -0500

Is there a more dynamic industry than wireless communications?

In a relatively short time a cell phone has become a necessity to virtually everyone, and one of the areas of most rapid technological innovation is in wireless handsets. Every few months one company or another introduces a new, feature-rich handset, which consumers eagerly gobble up.

At the same time, service providers compete fiercely for customers, continually upgrading their networks to provide better and faster service and even financing consumers’ purchase of sophisticated handsets.

This is at least one industry that has succeeded in creating high-paying jobs, pleasing consumers, delivering innovation, and funneling tax revenue to virtually every level of government. You’d think government would be pleased, but from San Francisco to Maine, and at many stops in between, mobile phones are under attack by radical opportunists.

This week it was Maine, apparently following the example of San Francisco, considering whether the state should impose regulations that would require health-related warning labels on mobile devices, despite the lack of evidence, and ignoring the fact that government restrictions are already in place. The American Cancer Society, World Health Organization, the Food and Drug Administration, the FCC, OSHA, EPA, and the International Commission on Non-Ionizing Radiation Protection all agree: A survey of the recent scientific literature shows there is no clear evidence of any link between mobile devices and health problems.

Across the country mobile devices are taxed at obscene levels--higher taxes than states place on pornography, alcohol or gambling winnings. But why? Are phones a special drain on the public infrastructure? No. The answer is easy: politicians and tax collectors can. As the government spending binge continues from the nation’s to state capitols, revenue is needed to feed the politician’s desires. Given the ubiquity of mobile phones they are easy targets.

The IRS is in the game of looting the mobile industry. Offended that employees might make a few personal calls on their company-provided mobile phones, the IRS wants to require that logs are kept of nonbusiness calls and levy taxes on those as a business benefit.

Isn’t it time to end these discriminatory, wrong-headed policies and free consumers from the opportunistic fear-mongering, costs and red tape?

TaxBytes 7.08: Believe What I Say, Not What I Do

Merrill Matthews Jr. — Tue, 2 Mar 2010 14:34:35 -0500

Senator Jim Bunning could probably use a hug.

The retiring Kentucky Republican has been trying to get Congress to live up to its fiscal promises. And for that good deed he’s getting pummeled by Democrats, barraged by reporters and largely ignored by Republicans.

This is not a good sign for all that promised future austerity by either party.

Congress passed a new version of “pay as you go,” or “paygo,” legislation in February when it increased the government’s borrowing limit to $1.9 trillion. The goal of paygo is to force the government to find ways to offset any new spending. Democrats included the provision to help deflect criticism for their explosion in deficit spending.

President Obama showered it with praise: "PAYGO would hold us to a simple but bedrock principle: Congress can only spend a dollar if it saves a dollar elsewhere. Mandatory spending increases and tax cuts must be paid for; they're not free, and borrowing to finance them is not a sustainable long-term policy."

But less than a month later, Congress completely ignored the rule it had just set, as it has done with paygo rules in the past, and passed a $10 billion extension for jobless benefits and other provisions — without paying for it.

Bunning thought all of this was hypocrisy —which it is — and objected to the legislation, which put it in limbo. He might have thought his Republican colleagues, who have been working to persuade the public they have regained their fiscal-responsibility bone fides, would have backed him. But they’ve been mostly silent as Democrats and the media have aggressively attacked him.

Now, IPI has never been a fan of paygo, because it is generally used to raise taxes, rather than to justify spending cuts.

But Bunning’s making an important point: Democrats claim their $1 trillion-plus health care bill is paid for with new taxes and spending cuts.

But if members of Congress refuse to take a stand on paygo less than a month after it’s passed and when we’re only talking $10 billion, is there any chance Congress would tow the fiscal responsibility line in the health care bill?

If you really want the answer, ask Jim Bunning. And while you’re there, give him a hug.

TechBytes 7.08: What’s In a Title?

Bartlett D. Cleland — Thu, 25 Feb 2010 14:03:23 -0500

One of the challenges of putting out nearly daily content is to find a title for all of the various pieces. Ideally titles should be clever and also provide the reader with some idea of what’s to come.

The Federal Communications Commission (FCC) seems to have a similar challenge—how to “Title” various things, which is why you should be concerned about the recent talk of moving Internet oversight from Title I to Title II.

One might be forgiven for thinking this is just inside-the-Beltway meddling and jamming the iPod earplugs back in. But in fact it is just that freedom to stream music, play a massive multiplayer game, watch video, send messages, and enjoy the future bounty of innovation that could very well be at stake. One could say that the “open Internet” as we know it is at risk.

Communications systems of various sorts get placed under either Title I or Title II of the Communications Act of 1934. This placement decision allows the FCC to handle different communications systems differently. Historically, the Internet, and broadband generally, is an “information service,” and has been placed under Title I, where government regulation is “light touch” and largely leaves decisions to consumers and service providers. These areas of communication have exploded, bringing investment, opportunity, innovation, better services and better products to consumers.

By contrast Title II, which rules the day with heavy government intervention and is typified by the regular old phone service that has been around for over a hundred years. This area of communications has lacked investment and innovation, and has had little to no service enhancement, much less product improvement. Consumers are stripped of the power to control their communications present and future.

And yet, some want the FCC to control the Internet by placing it under Title II, ending the open and free Internet by erecting government tariffs, rules, recordkeeping and reporting. These groups actually want government to seize control of the Internet because they believe that Washington, DC, can do a better job crafting an Internet experience than consumers.

So what’s in a Title? Your freedom.

TaxByte 7.07: Greece Job

Merrill Matthews Jr. — Tue, 23 Feb 2010 14:05:34 -0500

World markets have been worried about the financial disaster threatening Greece. And well they should.

The European Union member country recently revealed that it had been hiding its debt. Greece’s total debt is 113 percent of GDP for 2009, and expected to rise to 125 percent by 2010. E.U. rules require that total debt not be higher than 60 percent of GDP, according E.U. Business.

And so the markets stumbled for several days over the prospect of a Greek failure, until other E.U. countries hinted they might help out.

But looking at the mounting debt facing the U.S., we have to wonder if we’ll be the new Greece.

Veronique de Rugy of the Mercatus Center has just put together a chart highlighting our own challenges. It shows gross U.S. federal debt for 2010 at $11.9 trillion. That’s 94.3 percent of GDP. Not quite Greece yet, but heading that way quickly.

However, her graph shows a $4.3 trillion current debt in intragovernmental accounts. That’s the Medicare and Social Security money supposedly tucked away nice and safe for the future. But, as most people know, the government has actually borrowed that money. So it’s only there on paper. Add in the trillions of dollars in unfunded liabilities for those programs and, well, Greece isn’t looking so bad.

And that’s only federal obligations. The Pew Center on the States has raised the red flag on state finances. In a recent report, the Center estimates that at the end of 2008, states and participating localities had set aside $2.35 trillion to pay for retirees’ benefits. But the real obligation was around $3.35 trillion, leaving a $1 trillion gap.

And Pew argues that’s on the conservative side. Since the end of 2008, government portfolios took a beating. They may have revived some in recent months, but Pew expects not enough.

On the positive side, China, Japan and a few other countries have been willing to be our European Union, buying U.S. debt as fast as it needs it—at least for now.

If Washington and the states keep spending and borrowing, our benefactors may decide they have enough U.S. debt, and then what will we do? Who knows, maybe by then we’ll have to borrow from Greece.

TechBytes 7.07: Counting on Technology?

Bartlett D. Cleland — Thu, 18 Feb 2010 14:54:33 -0500

When will the Census Bureau enter the 21^st Century—or even the 20^th?

It’s time to take the constitutionally mandated census once again. But while the rest of the country gathers and processes information with the speed of light, the Census Bureau still operates at the speed of shoes, where few, if any, technological tools exist to streamline the process. And they seem uninterested in improving their processes.

This is a recurring theme in government: the misapplication of government interest in technology.

The Internal Revenue Service (IRS) pushed for years to create a means for taxpayers to file their taxes online, even though the private market had created Turbotax, a popular and successful tool for individuals to file their taxes. Government plowed ahead and created an ability to file, but only because of an agreement with Intuit. Reneging on the agreement might have run the company out of business.

Right now over at the Federal Communications Commission, despite a very successful private sector rollout of broadband across the country, bureaucrats are meddling in the marketplace at Congress’s demand, seemingly to try to transform it into some bureaucratic vision of a communications utopia that would not even be a marginal improvement over the status quo.

So who’s surprised that a recent Department of Commerce inspector general report explains that the Census Bureau is wasting money—with more waste on the way?

How is that money being spent? In part, to pay people to walk neighborhoods to “update government maps”—even while Google Maps seems pretty handy.

A great deal of money will be spent mailing pages and pages of census forms to citizens to be filled in with a number 2 pencil. If you can file your taxes with the IRS using electronic forms, couldn’t a similar interface be used for the census, greatly reducing the need for mailing forms?

Clearly past administrations failed to prepare adequately, so the Obama administration should be making plans now to transform the Census Bureau. Surely, 10 years from now, the Census Bureau will have thought of more innovative ways to spend their budget than on a commercial during Super Bowl LIV.

TaxBytes 7.05: Tax Cuts Are Better

Tom Giovanetti — Tue, 9 Feb 2010 14:25:53 -0500

Our thanks to FedEx Chairman Fred Smith for dredging up a 2001 IPI study and resurrecting its recommendations in a Wall Street Journal op/ed this past Saturday.

In his op-ed, Mr. Smith rightly touts accelerated depreciation as a powerful tool through which the federal government could stimulate real job creation in the private sector through tax policy.

He’s right—in 2001 IPI found that for every $1 in tax reductions through accelerated depreciation, the economy would reap $9 in increased GDP.

But depreciation fixes are not the only tax tools available to the feds to stimulate economic growth. In that same study, IPI found that capital gains tax cuts, repealing the Alternative Minimum Tax (AMT), an investment tax credit (ITC) and even a general corporate rate cut would all deliver “bang for the buck” in GDP growth.

The simple fact is that the most powerful economic recovery in recent memory was driven by tax cuts, but the current hoped-for recovery is being stillborn. It’s tax cuts, not massive spending programs, that really drive private sector investment and thus private sector recovery.

But WHY are tax cuts a better way to stimulate the economy than government spending?

Simply put, the private economy does a better, more efficient job of allocating resources than does the federal government. After all, what is the private economy but the collective wisdom of hundreds of millions of Americans making decisions every day in the marketplace? And what do you think is going to deliver better information: The decisions of hundreds of millions of Americans, or the decisions of a relative handful of appointed government bureaucrats or even worse, the politically manipulative decisions of politicians?

Cut their taxes, and American businesses will find the best, most efficient uses for the extra capital. But have the government spend tons of money, and waste, fraud and abuse is the name of the game. Does anyone doubt that there will be enough fraud and waste resulting from the $787 billion “stimulus” program to make the careers of scores of muckraking journalists?

Ask yourself this: Would the private economy invest $541,000 with a discredited global warming researcher in order to create 1.62 jobs? Almost certainly not. Yet that type of wasteful, inefficient so-called “stimulus” is the strategy thus far employed by the federal government.

Massive government spending accomplishes some measureable amount of economic stimulus. But a better, more cost-effective and ultimately more productive way to get the economy moving again is through specific tax cuts designed to encourage business investment and risk-taking.

Isn’t it about time to give tax cuts a try?

TechBytes 7.05: The Unaccountables

Bartlett Cleland — Thu, 4 Feb 2010 15:23:58 -0500

In the federal government, regulators are not directly accountable to the electorate. While an elected official must account at every election for their actions, typically regulators, such as FCC commissioners, are appointed by elected officials and hence do not answer directly to the people.

This simple fact may explain the FCC’s seeming determination to assert increased government control of the Internet, or at least the belief by pro-government control activists that the FCC deliver their agenda on a silver platter.

Years ago, the FCC determined broadband would be regulated as an “information service” rather than a “telecommunications service.” So, the FCC decided, and later the Supreme Court agreed, that broadband is not to be burdened with antiquated “common carrier” regulations, rules created in 1934 to impose heavy government control of the then monopoly telephone system. In fact, right now the federal courts are deciding whether the FCC has any authority over broadband at all.

So why would anyone, much less the FCC, want to impose stifling regulation on perhaps the only growing industry left in America?

To put government in control of data networks would be to put government in control of perhaps the most important part of the economy—communications. The attempt here is not to simply have government act as traffic cops for calls routed over systems in a monopoly environment—no, this move would allow government to know all we do and have the power to limit or stop it. This is a wholesale attempt to convince the FCC to backpedal on the progress of the last decade, to fly in the face of the Supreme Court and to take control of the Internet.

As has already been witnessed both nationally and in the states, with such control also comes a hesitancy to invest, and in this case particularly so because of the immediate legal confusion that will follow—an FCC reversal and the inevitable wait for Supreme Court review….again.

Given all of the negatives, the only explanation is an ideological rather than pragmatic agenda is being pursued at the FCC. It is the height of arrogance, sacrificing everything to achieve government control of broadband.

There is logical reason to go back to revisit old debates and reverse working policy structures. Technology is virtually synonymous with forward thinking, so let’s keep looking forward.

TaxBytes 7.04: The ’No’ Way

Merrill Matthews Jr. — Tue, 2 Feb 2010 13:37:27 -0500

President Obama introduced his budget this week amid lots of calls for Republicans to support the president’s laundry list of new and expanded spending programs, along with a minimal spending freeze and some tax cuts.

For example, Politico cites White House Communications Director Dan Pfeiffer saying that Republicans “have a responsibility now to partner with the President, to try to get things done for the American people.”

In short, Pfeiffer wants Republicans to quit being the party of “no.”

But bipartisanship is only good when the proposed legislation is good. And frankly, most of the president’s proposals have been stinkers.

Take the administration’s proposal to try accused 9/11 planner Khalid Sheikh Mohammed in downtown New York City. Republicans opposed the plan, as did most of the public. But the administration pushed ahead until New York City Mayor Michael Bloomberg suggested security to protect the city might cost $200 million a year.

Should Republicans, ala Pfeiffer, have “partnered” with the president and attorney general in this costly and foolish idea? Republicans said “no,” and now even the White House agrees.

Or take the House-passed “cap and tax” energy bill, which is supposed to help reduce greenhouse gases that are supposedly causing global warming. The vast majority of Republicans said no way. Then we learned that some “scientists” both in England and the U.S. weren’t just crunching the global temperature numbers, they’ve been fudging them instead.

Should Republicans have taken “responsibility” and backed the president’s energy tax that would have added a huge financial burden to every American family—especially if there’s reason to believe the global warming alarmism is bogus?

And now the president wants Republicans to “get things done” by backing his proposed spending freeze, affecting only 17 percent of the budget, and a new jobs bill that’s more handouts to governments, unions and “green jobs” (see the concern above)?

We’re all for bipartisanship—when there’s important and beneficial legislation. And when the president introduces such, we hope Republicans support it.

But until this administration demonstrates it understands economics, job growth and how to stimulate the economy, the real “responsibility” of all Americans is to take the “no” way.

TechBytes 7.04: Peachy Progress on Communications Reform

Tom Giovanetti — Thu, 28 Jan 2010 10:06:50 -0500

While in Washington ideologues argue over whether there is adequate competition in the communications industry and dream up fanciful schemes to redesign the communications industry and dangerous plans to regulate the Internet, the states are moving ahead with modernizing their communications regulations to reflect the competitive reality that we see around us every day.

This week the story is Georgia, where the legislature is beginning the process of eliminating hidden and distortive subsidies in the rates paid by Peach State consumers.

Wisely, Georgia is planning to "bring access charges to parity," which means to eliminate the subsidies buried in inter-carrier compensation, or fees paid between different carriers to carry local and long-distance traffic. The entire system is outdated and creates competitive distortions between companies.

Georgia is also attempting to make important changes to its Universal Access Fund, a state-based form of universal service subsidies. The problem here is that rural phone providers have become welfare dependents on the Fund, and consumers in urban areas end up paying higher fees to subsidize phone service to rural areas. Not only is this unfair to suburban consumers, but the rural providers have become content to sit back and collect subsidies instead of aggressively modernizing their networks to provide competitive services to their customers.

Ultimately, such funds balloon to enormous size and have inadequate oversight, which invites abuse and corruption. Georgia is wisely trying to eliminate the rural carriers' perpetual dependency on such subsidies and force them to invest and compete.

The details, of course, are subject to the political process. Subsidy mechanisms may be eliminated outright, or may be phased out over a period of years, depending on whatever political compromises are worked out among the legislators.

But the important thing is that Georgia is moving ahead with real, practical reform.

Other states, including Michigan, Wisconsin, Colorado, Kansas, Minnesota, Missouri, New Jersey, New York, North Carolina, Pennsylvania, Tennessee and Washington are all considering legislation during this state legislative session to fix their access charge regimes and to otherwise modernize their communications regulations. They're taking pragmatic action to protect their consumers and to make sure they provide an environment hospitable to competition, investment and economic dynamism.

The action, it seems, is in the states. For Washington DC, this could be--how should we say it?-- a "teachable moment."

TaxBytes 7.03: ‘Both-Ways’ Obama

Merrill Matthews Jr. — Tue, 26 Jan 2010 12:14:18 -0500

Would the REAL Obama agenda please stand up!

On Monday morning the White House released a plan for:

Doubling the Child and Dependant Care Tax Credit for families making under $85,000;

Limiting student federal loan payments;

Expanding tax credits to match retirement savings; and

Expanding assistance to families caring for elderly relatives.

All of which cost money.

But by Monday evening, the New York Times reported that President Obama wants to freeze spending on many domestic programs for three years, then tie future program growth to the inflation rate.

Talk about trying to have it both ways. So which is it?

Is the economy so bad that we need new or expanded spending programs? Or was last year’s spending spree so massive and irresponsible that we have to freeze the budget?

This is like going out for a double helping of chocolate fudge brownies with ice cream, to much fanfare, only to then head over to Weight Watchers, again with much fanfare?

And don’t forget that the president also wants another stimulus bill—to try and create jobs that the first $787 billion stimulus bill didn’t create.

President Obama has rapidly been losing the respect and support of the American people. Maybe it’s because he seems to want everything both ways.

He wants credit for openness and transparency, but supports back room, closed-door health care deals.

He wants to be the post-partisan president, but supports go-it-alone Democratic health care reform.

The list of this both-ways agenda is getting enormous—and very confusing.

It’s perfectly all right for the president to claim the government isn’t doing enough for working families—though I would disagree with that assessment—and propose new programs to solve the perceived shortfalls.

And it’s perfectly all right to say the government is spending too much and we need to freeze current spending levels—fine by me, though cutting would be better.

Obama just can’t do both. And if he keeps trying to get away with it, don’t be surprised if people start referring to him as “Both-Ways” Obama.

TechBytes 7.03: Can You Hear Me Now? Are You Even Listening?

Bartlett Cleland — Thu, 21 Jan 2010 14:02:46 -0500

With insurmountable majorities in both Houses of Congress, Congressional Democrats had the votes to jam through any piece of legislation they liked. They didn’t need the support of Republicans, and they acted as if they didn’t even need the popular support of the American people. They had the votes.

Or so they thought. Massachusetts’ new Senator-elect Scott Brown says the biggest driver behind his remarkable election was the people’s disgust with “the way things are being done.” Voters are unhappy with a ruling majority that seems intent to pass an agenda without regard to the will and concerns of the people.

It’s not too big a stretch to see a parallel situation at the Federal Communications Commission (FCC), where Democrat-appointed commissioners “have the votes” to jam through new federal regulatory control over the Internet through so-called “network neutrality” regulations.

Meanwhile, the groups most affected by the proposed FCC regulations, consumers and companies, are seemingly being ignored.

As has been reported by the Internet Freedom Coalition, more than 32,000 citizens filed comments opposing proposed network neutrality regulations. On the other hand, only 13,000 filed comments supporting giving FCC unprecedented regulatory control of the Internet. 71% to 29% on a very specific issue--if this were an election THAT would be a landslide.

In addition, by all reports, companies that previously have taken very different positions in this debate are finding ways to reach common ground. At IPI’s Communications Summit last November, Amazon.com’s vice president for global public policy was clear in his comments that he was concerned about arbitrary prioritization that harms other users’ online experience, but even so, he agreed that network operators should be able to manage their networks to provide the best product for all consumers and should be free to try new business models.

And more recently, Google and Verizon filed FCC comments seeking common ground, AT&T and Comcast have both made clear that they would like to address any real concerns even while preserving their ability to best serve their customers, and everyone is urging that the practical need for network operation and management trump ideological agendas.

And of course the best proof of all is the continuation of innovation in the communications marketplace driven by consumer demand and creative offerings, and not by government regulation or prescription.

The Chairman of the FCC has the votes to jam through anything he would like, just as the Senate did. But the commissioners should remember that, even in deep blue states the people do not like government overreach and hubris.

SoundBytes 224: What Will the President Say in His State of the Union?

Merrill Matthews Jr. — Wed, 20 Jan 2010 14:43:09 -0500

What Will the President Say in His State of the Union? The Institute for Policy Innovation’s Dr. Merrill Matthews says he has some explaining to do.

Washington is all atwitter over President Obama’s upcoming State of the Union address. And understandably so, because the president has some serious explaining to do, like:

How he plans to get control of the $1.4 trillion federal deficit, more than three times the deficit Obama was so critical of under George Bush.

And how he intends to pay for all the Democrats’ new federal spending. Yes, he could raise taxes, but he already has several new taxes in his health care bill.

And maybe the president can explain why his much-boasted stimulus bill has had little impact on creating new jobs.

In short, it’s time, Mr. President, for leadership and honest answers on the state of the union at a time when the public is increasingly worried about the fate of the union.

TaxBytes 7.02: The Game Is Changing

Merrill Matthews Jr. — Tue, 19 Jan 2010 14:44:44 -0500

Something remarkable is going on in America.

I can’t quite explain it; I’m not sure anyone can. But we can use Democratic Senator Ben Nelson of Nebraska to exemplify the change.

In order to “persuade”—some might say “payoff”—Nelson to vote for Senator Harry Reid’s health care reform bill, Reid agreed that the federal government would pay Nebraska’s portion of the increased Medicaid cost—forever.

Nelson can be forgiven for thinking his so-called “cornhusker kickback” would be hailed back home as a great achievement because, in the past, it would have been. Trying to maximize federal revenue is like a state hobby.

And Reid certainly thought Nebraska would approve. Why, he essentially called the other states a bunch of chumps for not getting their own kickback.

Nelson was so sure of himself that he dismissively told Nebraska’s governor, Republican Dave Heineman, who complained about the deal, that if the governor really didn’t want the money, Nelson would give it back.

Heineman called Nelson’s bluff and told him to do just that.

Well, that doesn’t happen much in American politics. Recall nearly a year ago when the federal government was trying to hand billions of dollars to the states and a handful of Republican governors pushed back, at least on some of the funds. They caught a lot of political flack for doing so.

But something even stranger happened this time. Rasmussen released a poll showing only 17 percent of Nebraskans supported the kickback; more than 80 percent opposed it. That is unheard of.

And recently, Politico reported that Nelson, who was a popular two-term governor, and his wife were in a pizza parlor when the other patrons started booing the couple. The situation got so bad they left.

Now Nelson’s asked that his Nebraska payoff be removed from the bill.

Politicians typically sleep easy at night secure in the knowledge that if someone is unhappy with them, they can use the public purse to buy them off—which is why Harry Reid must sleep like a baby.

But when the public stands up and refuses to be bought off, which is increasingly happening around the country, it’s clear the game is changing. And while no one quite understands the new rules, let’s be glad they’re here.

TexBytes 9.30: Sense and Census

Bill Murchison — Mon, 18 Jan 2010 12:50:57 -0500

Immigration—next to imitation—being the sincerest form of flattery, it’s no wonder new Census Bureau figures show Americans moving to Texas as fast as they can. They like what they see here.

The federal nose-counters say new Texans in 2008-09 numbered nearly half a million—18 percent of all the population growth in the country. Only Wyoming and Utah, with smaller populations, drew larger percentages of newcomers.

We’re not talking just about the foreign-born. Domestic migrants to Texas—from New York, California, wherever—outnumbered international border-crossers two to one.

How come? A good climate would be part of it, and we’re talking both weather and the business climate. Whereas the policies of many other states don’t exactly encourage hard work, savings and investment, Texas pours rewards on workers and entrepreneurs.

No state income tax—that’s at the top of the list. You get to keep more of what you earn around here and the state doesn’t stick its nose in what you make. And thanks to a commitment by state politicians to keep public spending low, there’s not the same need as elsewhere to tax producers. Regulation of business is also comparatively light.

Tort law reforms enacted several years ago mean the trial lawyers don’t rule the roost or the courthouse. Doctors accordingly like to move and practice medicine here. And corporations regard a Texas headquarters as pretty good business strategy.

Population growth isn’t all fun and games. It can strain public services, for one thing. It helps pay for them, too. Larger and larger numbers banking, buying, building—that’s how opportunities expand and new horizons open.

The opposite happens in states whose officials assume the public’s general willingness to pay high taxes and ask government permission to do things.

We see where that’s gotten California, New York, New Jersey and so on. They’re broke and looking for answers. Problem is that most of them are looking to Washington for a solution, when they should be looking to Texas.

TechBytes 7.02: Regulating Everything from Bits to Business Plans

Bartlett Cleland — Thu, 14 Jan 2010 16:01:57 -0500

[The following is an excerpt from IPI’s comments filed today with the Federal Communications Commission (FCC) in its Notice of Proposed Rulemaking to regulate the practices of Internet service providers (ISPs)]

The intent of Congress to increase competition and innovation in communications through the Telecom Act of 1996 is finally being realized. Congress intended to deregulate and thus invigorate the communications industry through competition and market forces—and it did just that.

The wisdom of this approach is obvious: The United States today has a vigorously competitive communications marketplace, and consumers have access to a tremendous array of products and services, and all of the research and rollout have been paid for through private risk capital at no cost to the taxpayers.

But the FCC didn’t initially see the wisdom of Congress’s intentions, and only after losing in federal court multiple times did the agency yield and properly implement the 1996 Telecom Act.

In particular, after the FCC decided to not regulate broadband networks, private investment in new broadband networks exploded, and today most U.S. households have access to high-speed broadband networks. The pace of that broadband rollout adds hundreds of thousands of homes and business to high-speed networks every year.

It is thus troubling and puzzling today to see the FCC backsliding and moving in the direction of reregulating the very same broadband networks that it freed from regulation only a short time ago.

There is no demonstrated reason for the FCC to begin applying new regulations to this vibrant and competitive broadband marketplace. There is no problem to solve, no consumer harm to address, and no market failure to correct.

Nevertheless, the FCC is considering regulating “everything from bits to business plans” in the broadband market. In our opinion, a return to such a flawed regulatory approach will almost certainly discourage investment and job creation, frustrate innovation and result in loss of consumer benefits.

Our conclusion is that the FCC is being urged to implement new regulations for ideological reasons alone. And we believe that regulations should only be implemented when there is clear evidence of consumer harm or market failure, not simply because newly empowered regulators have a different vision for what the communications marketplace should look like.

In a market economy, it is the participants in the market who determine what a particular market looks like and what results it delivers, not government regulators operating under the assumption of perfect knowledge.

The FCC should not implement new regulations on the broadband marketplace, but if it does, Congress and the courts should stop them.

SoundBytes 223: Can Congress Force You to Buy Health Insurance?

Merrill Matthews Jr. — Wed, 13 Jan 2010 13:34:19 -0500

Can Congress Force You to Buy Health Insurance? Dr. Merrill Matthews of the Institute for Policy Innovation says only by ignoring the Constitution.

The health care reform legislation in Congress requires every American to have health insurance or pay a significant fine. But where does the U.S. Constitution give Congress that power?

Cyber News Service posed the question, and Democrats seemed to fumble for an answer.

Senator Ben Nelson of Nebraska is quoted as saying, “probably the same place that states have the authority to require, mandate if you will, compulsory auto liability insurance.” Claire McCaskill and some other Democrats agree.

Of course, state constitutions are completely independent documents and have no bearing on powers granted by the U.S. Constitution.

That document sets strict limits on federal power. Those limits can be breached only when members of Congress don’t know their power is limited, or worse, don’t care.

TaxBytes 7.01: The Real Cost of a Presidential Election

Merrill Matthews Jr. — Tue, 12 Jan 2010 13:10:50 -0500

Presidential elections are expensive—something liberals never tire of reminding us every four years when they push for some way to nationalize the cost of presidential elections.

Except, of course, in 2008. Liberals were remarkably quiet when then-candidate Barack Obama spent money like there was no tomorrow—$741 million, more than the Bush and Kerry campaigns combined in 2004—a mindset the president seems to have carried over into the presidency.

But as expensive as presidential campaigns can be, that’s only a fraction of the true cost taxpayers must pay after the candidate is elected.

And we are only now beginning to discover just how much the election of Barack H. Obama will cost. For example:

There’s the president’s $3.5 trillion budget for 2010 that passed last April, by far the largest in history.
There’s the $1 trillion (for the first 10 years, but more like $2.5 trillion for the second 10) health care reform bill that is teetering on the brink of passage.
Then, of course, there’s the $787 billion stimulus bill that passed last February, and there will probably be a “son of stimulus” coming to Congress in the near future.

But let’s not forget the numerous new tax increases. Steve Moore of the Wall Street Journal says that “on Jan. 1 some 70 new taxes on the middle class and small businesses went into effect, thanks to Congress’s failure to prevent the expiration of popular and economically vital tax breaks on time.” According to Moore:

Without a fix the alternative minimum tax will cost an extra $63 billion this year.
Democrats are eager to reinstate the death tax, which drops to zero this year, but returns to its original pre-Bush-reform status next year.
The 50 percent write off for small business capital purchases is kaput.

In their defense, Democrats will need lots of new revenue to pay for their health care bill. Oh, wait, come to think of it there’s some 15 new taxes in the House bill to do that.

Yes, presidential elections come with a cost. And taxpayers will be paying for the 2008 election for generations to come.

TechBytes 7.01: TV Everywhere: Content or Discontent

Bartlett Cleland — Thu, 7 Jan 2010 13:01:09 -0500

When you watch a dog chasing its tail around and around in circles, the obvious question posed to the dog is “what are you going to do with it if you ever catch it?”

Well, politically liberal activist groups have been chasing their own tails for years, criticizing content and media companies for, well, just about everything they do, and of course all in the name of “protecting consumers.”

But in their latest attack, these activists have caught their own tails, and in the course of doing so have demonstrated that their real agenda is anything but innovation and consumer benefit.

The activists’ latest complaint is a new video service called TV Everywhere. TV Everywhere allows consumers to watch their pay TV—that is, content they have already paid for through their subscription to satellite, cable or the “telephone companies”—on Internet-connected devices, whether laptops, smart phones, PCs or other devices.

Sensing an opportunity to deliver more content to more places and provide consumers with more freedom, content companies negotiated with distributors to enable not just TV Everywhere but also the many announced and planned competitors to the concept. Simply put, TV Everywhere and similar concepts are products that allow the consumer to choose the venue and timing for enjoying content that they’ve already paid for.

What possible complaint could so-called consumer activists have with this clear benefit to consumers? That not everyone can get the content for which others have paid. That is, if you’ve paid for television programming then you can watch it anywhere, but those who didn’t pay for it cannot have it for free.

In other words, you buy a beer but everyone else in the bar should get one, too.

The other cartoonish complaint? That these new offerings might increase customer loyalty because the offerings are so desirable. Well, yeah. That’s what businesses try to do. That’s called pleasing your customers. That’s what markets are all about, and it’s why markets work, though it’s no surprise to us that left-wing activists don’t understand the most basic concepts of markets.

Funny. We thought the idea was that companies should be constantly innovating new ways to please their customers and to make content more easily and more widely available on a variety of devices and in a variety of formats.

We’ve gone well down the rabbit hole when supposedly pro-consumer technology groups reflexively criticize companies that are innovating precisely the new services that their customers say they want.

And remember, these are the very same activists demanding that government implement unnecessary and counterproductive “net neutrality” regulations to govern the Internet.

Public Knowledge, you’ve caught your own tail. Now what are you going to do with it?