Topic: Regulatory Studies

Obama’s Executive Actions on Guns Better Than His Legislative Proposals

By
Ilya Shapiro

We’re all still digesting what it is the White House’s plan on gun policy is, but here’s my initial assessment, not having gone through what technical language is available.

President Obama’s 23 executive actions generally take positive steps towards stopping gun violence – such as improving the background check system and increasing enforcement of gun crime – though I have federalism or privacy concerns about a few of them.

His legislative proposals, however – banning “assault weapons” and restricting magazines to 10 rounds – are feel-good measures that fail to abide by the principle that should guide any lawmaking in this area: keeping guns out of the hands of those who would do ill while protecting law-abiding citizens’ constitutional rights to armed self-defense.  The guns that the Newtown shooter used, for example, complied with Connecticut’s extremely strict “assault weapon” ban and, in any event, the vast majority of murders are committed with handguns.

On both sets of actions, the devil will be in the details:  How will the relevant executive branch officials and agencies implement the new actions?  Will the proposed “assault weapon” restrictions ban ordinary rifles that simply come with a pistol grip or other cosmetic feature (like the New York law that Gov. Cuomo signed earlier in the week)?  And that’s before we even get to the feasibility of getting anything through Congress or whether the president is willing to negotiate to get at least some of what he wants.

Finally, this national action isn’t the end of the story: our constitutional structure leaves to states most of the power to regulate in this area.  On that score, and befitting a federal system meant to reflect different political preferences, states have been moving in different directions – from allowing concealed-carry to increasing tort liability to posting armed guards in schools.  So long as states and local authorities don’t violate individual Second Amendment rights, the federal government ought to encourage that kind of policy innovation.

See also Tim Lynch’s podcast on Obama’s gun control agenda.

Topics: 
Law and Civil Liberties, Regulatory Studies

REAL ID—A Quarter of a Billion Dollars Gone

By
Jim Harper

In an effort to show progress with implementation of our national ID law, the Department of Homeland Security issued a press release just ahead of Christmas reporting that thirteen states had “met the standards of the REAL ID Act of 2005.” Their compliance is not actually compliance, though. Read on…

Next Tuesday, another ‘deadline’ for REAL ID compliance arrives. Due to widespread public opposition, the majority of states and their people are not complying with the national ID mandate. Many states “have not provided sufficient information, at this time,” the DHS release says. I think that’s bureaucratese for: “They’re ignoring REAL ID.” But it doesn’t matter. The states ignoring REAL ID have been granted deferments. I’ve been looking for the Federal Register notice making this deadline extension official so I can put it next to the deadline extension from March 9, 2007, and the one from January 29, 2008, and the one from December 28, 2009, and the one from March 7, 2011.

The states that have tripped over themselves to follow this federal mandate should feel slightly burned. They’re no better off than the states that did nothing. And states need never comply.

We all know by know that the federal government will never use the lever that REAL ID gave them to “force” compliance on the states. The law says that the federal government can refuse IDs from states that aren’t in compliance. Basically, that means TSA would send most American travelers to secondary search. But that means that the federal government—not the states—would be blamed for travel nightmares (even worse than we already experience) all over the country. Deadline extension after deadline extension after deferment make clear that the federal government is not going to hold up air travelers because of REAL ID.

Now, the states that DHS says are complying aren’t really complying. You see, DHS long ago retreated from the requirements of REAL ID and established a set of “material compliance benchmarks.” These are 18 steps that bring one closer to REAL ID compliance, but they are not REAL ID compliance. And many of them are things that states were doing anyway. So, to the extent DHS is trumpeting progress, it’s a rooster taking credit for the sunrise.

Nonetheless, REAL ID ‘progress’ is the stitching together of a system to track and control us through our nationally uniform identity cards. It’s the system that will be used to control our access to work, to housing, to medical care and medicine, to guns, to credit and financial services, and much more. Big government, thy administrative tool is national ID.

The DHS release is a little more muted about the $263 million dollars it has spent or distributed on REAL ID so far—a quarter of a billion dollars toward a national ID system nobody wants. The continued spending is probably what keeps a small coterie of DMV bureaucrats and allied groups pushing for a national ID.

These national ID advocates will be well-represented at a Heritage Foundation event on REAL ID January 28th. Heritage is bringing in a Department of Motor Vehicle bureaucrat from Connecticut, a representative of a small national ID advocacy group, and the co-author of a recent Government Accountability Office update on REAL ID. I’ll hope to learn—as I’ve never been able to do before—how the national ID program would increase our security more than it would cost us in dollars and privacy—a quarter billion dollars, so far, and still counting.

Topics: 
Government and Politics, Law and Civil Liberties, Regulatory Studies, Telecom, Internet & Information Policy

Rum Subsidies Included in Fiscal Cliff Pork

By
K. William Watson

Among the various provisions in the recent fiscal cliff deal was a two-year extension of the rum cover-over program that sends federal revenue from rum excises to the governments of Puerto Rico and the U.S. Virgin Islands.  The program was originally designed to provide development aid to these U.S. territories, but in recent years it has become a tool of industrial policy and corporate welfare. 

I wrote about the program back in May last year: 

As it does with all distilled spirits, the federal government charges an excise tax of $13.50 per proof gallon of rum sold in the United States. This equates to roughly $2 per bottle. Under the cover-over program, almost all of that money is directly granted to the U.S. Virgin Islands and the Commonwealth of Puerto Rico using a complex formula so that each receives a share of the money based on how much rum it produces relative to the other. The tax is collected from sales of all rum imported to the mainland, even from other countries.

In 2009 the U.S. Virgin Islands figured out how to increase its haul under the program by luring Captain Morgan maker Diageo to relocate its production facility there from Puerto Rico with a promise to share the loot.  Diageo now has a 30 year deal to produce rum in the Virgin Islands backed by subsidies that cover almost the entire cost of production. 

The use of the funds this way and the program’s extension have two major consequences.

First, the ensuing rum war between U.S. Virgin Islands and Puerto Rico to secure a larger portion of the cover over funds has crippled the ability of producers in other Caribbean island nations to compete in the global rum market.  The potential for an embarrassing WTO challenge grows greater now that the program has been extended.

Second, Diageo now has a strong incentive to lobby Congress to keep the program in place.  As the invaluable Tim Carney reports today in the Washington Examiner, Diageo hired ex-senators Trent Lott and John Breaux to lobby their former colleagues on the issue.  The recent extension is merely a sign of more to come.

The program is worth about $450 million per year to the governments of these Caribbean territories.  Giving a slice of that to rum producers brings in the lobbying power to keep the program in place, even as it drastically distorts the rum market at the expense of everyone else.

Topics: 
Regulatory Studies, Tax and Budget Policy, Trade and Immigration

On Digital Privacy, Congress’ Offer Is This: Nothing

By
Julian Sanchez

It had the makings of a shockingly reasonable legislative bargain: Two outdated federal privacy statutes would be reformed together, removing some unnecessarily stringent restrictions on sharing video records while finally imposing a clear warrant requirement for government searches of e-mail and other private files stored in the “cloud.” Then Congress, perhaps in homage to Darth Vader, decided to alter the deal: A bill weakening the Video Privacy Protection Act of 1988 has been sent to the president for his signature, but without the corresponding badly-needed reforms to the Electronic Communications Privacy Act of 1986.

On the merits, the changes to the Video Privacy Protection Act actually make sense. Passed in the wake of Robert Bork’s unsuccessful Supreme Court confirmation hearings, during which a newspaper published a list of videos rented by the nominee, the VPPA barred any disclosure of video rental records without the explicit and specific consent of the customer on each and every occasion. That seemed reasonable enough at the time, but has proved an annoyance to video streaming services like Netflix and Hulu, which would like to make it easy for users to automatically post the movies and TV shows they’ve watched to social media services like Twitter or Facebook without having to click an extra “I consent” box every time—something that’s not required when users similarly share the music they’re listening to on services like Spotify or Pandora. So those companies wanted to let users give up-front, blanket consent for automatic sharing of videos.

Only the most hardcore privacy watchdogs had a serious substantive problem with such a change, but many nevertheless disliked the idea of diluting one of the stronger privacy statutes on the books when, in so many other areas, changing technologies had rendered existing privacy protections far too weak. Perhaps the most glaring example of this was the Electronic Communications Privacy Act, which established a confusing crazy-quilt of standards for government searches of remotely stored e-mail and other files, often allowing them to be obtained without a search warrant—standards that several appeals courts have already held to fall short of what the Fourth Amendment requires.

So Sen. Pat Leahy (D-VT) had proposed an eminently logical compromise: Bundle together updates to the two statutes, easing the excessively stringent privacy rules for video records while simultaneously requiring the government to obtain a probable cause search warrant in order to look through a person’s e-mail and cloud-stored files, just as they must when they search a personal computer or wiretap a phone conversation. The bundling ensured that privacy advocates—even the hardcore ones who disapproved of the change to the video privacy law—wouldn’t raise too much fuss about it. Few expected Leahy’s package, which had been approved by the Senate Judiciary Committee, to be acted on until the next session of Congress.

Then came the Vader move: The House of Representatives passed its own bill amending the VPPA, but without the provisions enhancing protections for e-mail, and that legislation was quickly approved by the House. Again, this is not a bad thing in itself. But it’s a disturbing sign that, as technology changes, Congress is willing to water down privacy protections that have been rendered unnecessary or overly restrictive, but not to strengthen them even when they’ve clearly fallen badly out of sync with the way Americans communicate in the 21st century.

Topics: 
Government and Politics, Law and Civil Liberties, Regulatory Studies, Telecom, Internet & Information Policy

Government Can’t Silence Speech Criticizing Its Actions, Even If That Speech Is ‘Commercial’

By
Ilya Shapiro and Sophie Cole

It is axiomatic that the freedom of speech is vitally important to our democratic society and that being able to criticize the government is at the core of this freedom. Yet government officials are constantly inventing new ways to limit such criticism, particularly with respect to regulatory and tax burdens.

Case in point: In April 2011, the Department of Transportation imposed several new pricing regulations on the airline industry, most burdensome of which is that airline advertisements must now “prominently” feature the “total price” of the advertised fare, inclusive of all taxes and fees. Any information highlighting the part of the price constituting the government’s cut “may not be presented in the same or larger size as the total price.” This font regulation (!) means that the tax-and-fees portion often can’t be displayed whatsoever or, at most, is relegated to a small and non-obvious size and placing.

Three low-cost carriers, Spirit, Allegiant, and Southwest, have challenged the regulations because they’re now largely unable to prominently identify, and thus criticize, the excessive and ever-growing portion of fares attributable to taxes, fees, and airport facility charges. The airlines contend that the regulations violate the First Amendment and also raise broader questions regarding the treatment of commercial speech.

Under current jurisprudence, courts afford “commercial” speech far less protection than other kinds—this despite the inherent difficulties in categorizing speech and that most commercial speech is intertwined with other forms of speech (political, artistic, etc.). No reasoning has ever been truly accepted for the distinction in protection. Indeed, truthful commercial speech can be just as important as fully “political” speech in drawing attention to the government’s missteps: The DOT regulation at issue in the lawsuit described here restricts speech that is both truthful and critical of the government.

And it’s no excuse to suggest that airlines can complain elsewhere because making the tax burden obvious to consumers at the exact moment they care most about the issue—when buying the affected airline tickets—is the most effective speech possible under the circumstances. Nevertheless, a divided U.S. Court of Appeals for the D.C. Circuit ruled against the airlines.

Cato, joined by the National Federation of Independent Business, has now filed an amicus brief urging the Supreme Court to hear this case, which is also important because it involves an executive agency’s effort to obscure the true extent of the government’s tax burden and to effectively re-regulate an industry that Congress deregulated decades ago.

In the 1941 case of Milk Wagon Drivers Union v. Meadowmoor Dairies, the Supreme Court said: “The First Amendment is often inconvenient. But that’s beside the point. Inconvenience doesn’t absolve the government of its obligation to tolerate speech.”

Spirit Airlines v. DOT presents the Court with an opportunity to clarify the law on commercial speech by ending the distinction between commercial and noncommercial speech and granting truthful commercial speech full First Amendment protection.

Topics: 
Law and Civil Liberties, Regulatory Studies

Free Trade in Health Insurance

By
Simon Lester

Yesterday, Alberto Mingardi said the following in a post on this blog: 

Holland has now a universal health care system financed through competing insurance companies.

This raises an issue I’ve been thinking about for a while now:  Why don’t we have free trade in health insurance?  We can buy cars that are made outside of the United States, and most people would agree that we are better off as a result.  So why not let Americans buy health insurance from foreign insurance companies?

In terms of the law and policy, I confess that I’m not completely sure how the system works, and why exactly people can’t use one of these Dutch health insurance companies, or companies of some other nationality.  But my impression is that, with a few exceptions, cross-border trade in health insurance does not happen here in America.  Before coming to Cato, I was in the individual health insurance market, and it was pretty clear that my health insurance options were limited to a few companies, and none of these companies were foreign. 

I have little doubt that we would be better off with free trade in health insurance, just like we are with (relatively) free trade in cars.  Trade would mean that the health insurance industry has more competition, and consumers would benefit as a result. 

There’s lots of talk about how to bring health care costs down.  Why not give free trade in health insurance a try?

Topics: 
Government and Politics, Health Care, Regulatory Studies

FTC Oversteps Its Bounds

By
Jim Harper

This week, the Federal Trade Commission awarded itself a holiday gift: more regulation of the Internet.

Under the Children’s Online Privacy Protection Act, a 1998 law designed to insulate children from marketing, It Takes a Village-style, the FTC found that it gets to regulate more intensively and confusingly.

The regulation is a mostly unremarkable expansion of authority. Like any political actor would do, the FTC followed the path of least resistance, avoiding raising the hackles of any major player in the marketplace. (Regulation tends to advance the way spilled paint spreads on cobblestone.) Of course, there are few major players in the marketplace because COPPA has increased the cost of serving entertaining and educational content to children since the Internet’s earliest days. The Association for Competitive Technology got it right in a release calling COPPA “improved for big companies, not for education startups.”

One interesting point about the new regulation is not political, though. It’s legal. The agency arguably overstepped the authority Congress gave it.

FTC Commissioner Maureen Ohlhausen explains:

The statute provides, “It is unlawful for an operator of a website or online service directed to children, or any operator that has actual knowledge that it is collecting personal information from a child, to collect personal information from a child in a manner that violates the regulations prescribed [by the FTC].” … [T]he amendments add a new proviso to the definition of operator in the COPPA Rule: “Personal information is collected or maintained on behalf of an operator when: (a) it is collected or maintained by an agent or service provider of the operator; or (b) the operator benefits by allowing another person to collect personal information directly from users of such website or online service.” The proposed amendments construe the term “on whose behalf such information is collected and maintained” to reach child-directed websites or services that merely derive from a third-party plug-in some kind of benefit, which may well be unrelated to the collection and use of children’s information (e.g., content, functionality, or advertising revenue).

In other words, if a Web site directed at children uses third-party plug-ins to enhance its functionality, analytical capability, and such, and if the plug-in collects information, then the Web site operator is responsible as if it were collecting the information. The result? Web sites aimed at children will avoid using third-party technology to enhance the experience of kids.

Commissioner Ohlhausen: “I find that this proviso—which would extend COPPA obligations to entities that do not collect personal information from children or have access to or control of such information collected by a third-party—does not comport with the plain meaning of the statutory definition of an operator in COPPA.”

Read the rest of this post »

Topics: 
Government and Politics, Law and Civil Liberties, Regulatory Studies, Telecom, Internet & Information Policy

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