Latest Cato Research on Regulatory Studies https://www.cato.org/ en Scholarship Tax Credits in Pennsylvania https://www.cato.org/multimedia/cato-daily-podcast/scholarship-tax-credits-pennsylvania Wed, 22 Jan 2020 17:07:14 -0500 Marc LeBlond, Caleb O. Brown https://www.cato.org/multimedia/cato-daily-podcast/scholarship-tax-credits-pennsylvania More Evidence That “Ban the Box” Laws Don’t Work https://www.cato.org/blog/more-evidence-ban-box-laws-dont-work Walter Olson <p>President Trump recently <a href="https://www.esrcheck.com/wordpress/2019/12/23/fair-chance-act-will-ban-the-box-in-u-s-government/">signed</a> a&nbsp;bill including a&nbsp;measure called the Fair Chance Act, which will restrict federal contractors from asking applicants about criminal records until after a&nbsp;conditional job offer is made. In a&nbsp;<a href="https://www.cato.org/blog/ban-box-statistical-discrimination">summary of the research</a> in this space last year, Peter Van Doren observed that <a href="https://www.overlawyered.com/?s=%22ban+the+box%22">“ban the box” laws</a> of this sort do not appear to work as intended. Now there is new evidence that they either fail of effect or harm the intended beneficiaries.</p> <p>A series of economic studies up to now <a href="https://twitter.com/jenniferdoleac/status/983036787898675200?lang=en">has found</a> not only a&nbsp;lack of statistical evidence for a&nbsp;positive effect from these laws, but even signs of a&nbsp;negative effect on the employment of young black men with no criminal records (because some employers will assume the worst if not allowed to ask; more from economist Jennifer Doleac of Texas A&amp;M <a href="http://jenniferdoleac.com/wp-content/uploads/2019/03/Doleac_testimony_BTB_2019.pdf">here</a> and <a href="http://jenniferdoleac.com/wp-content/uploads/2018/08/Doleac_Hansen_JOLE_preprint.pdf">here</a>). Despite this track record the laws have remained popular across the ideological spectrum, including some persons of generally free‐​market inclination. The unpromising outcomes have not deterred Congress from passing bills like the one enacted last fall, or city and state governments from extending such laws to private employers, often in <a href="https://www.overlawyered.com/2014/08/nyc-ban-box-bill-worries-businesses/">onerous ways</a>.</p> <p>Now Ryan Sherrard of the University of California, Santa Barbara economics department illuminates another part of the picture, recidivism, in a&nbsp;<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3515048">new paper</a>. Advocates <a href="https://www.naacp.org/campaigns/ban-the-box/">routinely</a> <a href="https://www.congress.gov/116/meeting/house/109189/documents/HMKP-116-GO00-20190326-SD013.pdf">predict</a>, and cite as a&nbsp;major expected benefit, that ban the box laws will reduce re‐​offense rates. But Sherrard found no such effect. Relevant portion of abstract:</p> <blockquote><p>Using administrative prison data, this paper examines the direct effect of BTB policies on rates of criminal recidivism. I&nbsp;find that while BTB policies don’t appear to reduce criminal recidivism overall, these policies may be exacerbating racial disparities. In particular, I&nbsp;show that being released into a&nbsp;labor market with a&nbsp;BTB policy is associated with higher rates of recidivism for black ex‐​offenders, with little to no effect for white ex‐​offenders.</p> </blockquote> <p>It might sometimes make sense for government to tilt its own hiring policies toward the creation of opportunities for ex‐​offenders, even when that means shouldering extra costs or inconvenience, given that incarceration and its after‐​effects are themselves the consequences of government action. But why keep passing laws that backfire even when judged against that goal? And how much less justification is there for using them to constrain the freedom of private employers that have never incarcerated anyone, whether they be government contractors or just plain old businesses?</p> <p>Ban the box laws, above all those that restrict the liberty of private employers, are a&nbsp;triumph of feel‐​good sentiment over economic rationality, practicality, and in the end the interests of the intended beneficiaries.</p> Wed, 22 Jan 2020 14:01:08 -0500 Walter Olson https://www.cato.org/blog/more-evidence-ban-box-laws-dont-work A Plan to Give CFPB’s New Task Force Some Teeth https://www.cato.org/publications/commentary/plan-give-cfpbs-new-task-force-some-teeth Diego Zuluaga <div class="lead text-default"> <p>The Consumer Financial Protection Bureau recently <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-announces-membership-taskforce-federal-consumer-financial-law/?utm_campaign=Newsletter%20-%20CMFA%3A%20Big%20Change&amp;utm_source=hs_email&amp;utm_medium=email&amp;utm_content=81758635&amp;_hsenc=p2ANqtz-_4SoJ-4ylYhppvRzurWkKja5vopVTCs9uglpMPsHuPBEE7s3FCnwiK3gkDU_iLU43LFKcTzOGY1TPVq8BJDtJR-g8e6Q&amp;_hsmi=81759487" target="_blank">announced</a> the composition of its new task force, aimed at improving and strengthening federal consumer financial laws and regulations.</p> </div> , <div class="text-default"> <p>The task force’s five members are all eminently qualified, with more than 150&nbsp;years of academic, government and private‐​sector experience in consumer financial law and policy between them. But experience and professional distinction is no guarantee of productivity.</p> <p>To be successful, the task force will have to make judicious use of the limited time (around a&nbsp;year) and staff at its disposal. With 15 enumerated consumer laws and important parts of other financial laws within the CFPB’s remit, it will face multiple competing demands on its attention.</p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Policymakers can create an environment in which lenders innovate and compete vigorously, broadening the range of products to which even risky borrowers have access, at prices that most of them can afford.</p> </div> </div> </aside> , <div class="text-default"> <p>The agency should prioritize those long‐​term issues and procedural questions that it is less likely to consider in its day‐​to‐​day supervisory, rulemaking and enforcement activity.</p> <p>Some of these issues — the uses and protection of consumer data, the role of cost‐​benefit analysis in CFPB rulemaking and the ranks of nonprime financial consumers — are especially urgent and pervasive.</p> <p>Consumer data is transforming financial services by making it easier to qualify for credit, manage one’s personal finances, compare options and switch providers. But the emerging ecosystem of data sharing, third‐​party authorization, and data processing is already&nbsp;<a href="https://www.americanbanker.com/news/is-a-new-data-war-about-to-erupt" target="_blank">challenging</a>&nbsp;the existing rules for consumer disclosure, provider liability and fair‐​lending evaluations.</p> <p>It will fall to the CFPB, as the federal consumer financial regulator, to promote adaptation to the new market environment. The European response, known as open banking, is well‐​intentioned but fundamentally top‐​down and bureaucratic.</p> <p>Financial institutions in Europe have been&nbsp;<a href="https://www.fintechfutures.com/2019/05/open-banking-why-the-revolution-is-behind-schedule/" target="_blank">slow</a>&nbsp;to comply, and the system’s resilience to data breaches is as yet untested.</p> <p>The CFPB has an opportunity to instead foster a&nbsp;bottom‐​up approach, characterized by cooperation between banks, payment providers and data aggregators. Unlike government officials, these market participants have the data and economic incentive to better serve consumers within the parameters of the law.</p> <p>Cost‐​benefit analysis is an essential component of rational policymaking. Because this is a&nbsp;world of imperfect human beings and limited resources, regulators must make informed estimates of whether a&nbsp;proposed regulation will have a&nbsp;net positive or negative effect.</p> <p>The CFPB took an important first step when it&nbsp;<a href="https://morningconsult.com/2018/05/10/cfpbs-cost-benefit-analysis-office-to-be-modeled-after-ftcs-bureau-of-economics/" target="_blank">announced</a>&nbsp;the creation of an office of cost‐​benefit analysis 18 months ago. The task force should advise it on how to improve its methods for evaluating the costs and benefits of existing and proposed rules.</p> <p>It is widely recognized, for example, that even desirable consumer credit regulation can make credit more expensive by increasing providers’ compliance costs and litigation risk. This impact of regulation is often not evenly distributed among borrowers.</p> <p>Rather, lower‐​income and higher‐​risk consumers bear the brunt because serving them is usually costlier. In the face of new regulatory burdens, lenders withdraw credit from these borrowers first.</p> <p>The task force should explore how the CFPB can better assess the distribution of costs and benefits among consumers. It might place a&nbsp;premium on policy changes that make the most vulnerable better off, while axing regulations that might especially hurt access by those consumers.</p> <p>The task force must also get a&nbsp;grip on America’s persistent financial inclusion problem. Much evidence shows that many consumers have, at best, limited access to financial services: more than eight million households&nbsp;<a href="https://www.fdic.gov/householdsurvey/" target="_blank">lack</a>&nbsp;a&nbsp;bank account, according to the Federal Deposit Insurance Corporation.</p> <p>Further, a&nbsp;CFPB study found 45 million Americans have&nbsp;<a href="https://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf" target="_blank">no or insufficient</a>&nbsp;credit histories. And among those who do have credit scores, FICO found 28.2% are&nbsp;<a href="https://www.fico.com/blogs/average-u-s-fico-score-ticks-706" target="_blank">subprime</a>, meaning they face fewer and costlier credit options than other borrowers.</p> <p>Most people do not believe that the government should subsidize credit. Nor can public policy do much to change the ways of those who borrow irresponsibly.</p> <p>But policymakers can create an environment in which lenders innovate and compete vigorously, broadening the range of products to which even risky borrowers have access, at prices that most of them can afford. The task force should offer a&nbsp;blueprint for how to craft such choice‐​maximizing consumer‐​credit policy.</p> <p>When the National Commission on Consumer Finance&nbsp;<a href="https://archive.org/details/ReportConsumerCreditInTheUS/page/n13" target="_blank">issued its report</a>&nbsp;in 1973 (which inspired the CFPB’s new task force), it anticipated many of the structural changes that have since transformed U.S. financial markets: the rise of credit cards, the opening up of bank charters, the growth of nonbank lenders and the decline of interest‐​rate controls.</p> <p>The Commission’s report may have ruffled some feathers, but it proved prescient in its analysis and many of its key recommendations. The new CFPB task force should approach its mission in a&nbsp;similarly truth‐​seeking and</p> </div> Wed, 22 Jan 2020 10:02:56 -0500 Diego Zuluaga https://www.cato.org/publications/commentary/plan-give-cfpbs-new-task-force-some-teeth Burning Waters to Crystal Springs? U.S. Water Pollution Regulation over the Last Half Century https://www.cato.org/publications/research-briefs-economic-policy/burning-waters-crystal-springs-us-water-pollution David A. Keiser, Joseph S. Shapiro <div class="lead text-default"> <p>In 1969, the Cuyahoga River in Cleveland, Ohio, ignited. Historically, this fire was unremarkable — rivers elsewhere in the United States had caught fire throughout the 19th and early 20th centuries, and the Cuyahoga had blazed at least 13 times since 1868. But the 1969 event attracted enormous attention and outrage, and the fire is often listed as one reason behind the passage of U.S. environmental laws in the early 1970s.</p> </div> , <div class="text-default"> <p>The Cuyahoga has not burned since 1969 and is now home to 40 species of fish. But water pollution issues are not just a&nbsp;part of history. Today, more than half of U.S. rivers and lakes violate environmental standards, and 4 – 28 percent of Americans in a&nbsp;typical year receive drinking water from systems that violate health‐​based standards. Flint, Michigan, recently exposed 100,000 residents to dangerous levels of lead in drinking water. Contaminated drinking water leads an estimated 16 million Americans to suffer from gastrointestinal illnesses annually.</p> <p>Polls also suggest that water pollution has been Americans’ top environmental concern for at least 30&nbsp;years. Sixty percent of Americans today list drinking‐​water pollution and also river and lake pollution as great concerns. In every survey since 1989, the share concerned about these issues has substantially exceeded the share expressing concern about air pollution, climate change, or other environmental problems.</p> <p>The federal government sought to address these concerns by creating the Environmental Protection Agency (EPA) in 1970, the Clean Water Act in 1972, and the Safe Drinking Water Act in 1974. The Clean Water Act regulates “surface waters” — rivers, lakes, and some ocean areas. Whether the Clean Water Act regulates groundwater, which includes subsurface aquifers, is legally disputed. The Safe Drinking Water Act regulates drinking water, which includes groundwater or surface water that is purified by a&nbsp;drinking‐​water treatment plant and then transported by pipe to households and businesses.</p> <p>A half century later, these laws still manage U.S. surface and drinking water. Since 1970, the United States has spent approximately $4.8 trillion (in 2017 dollars) to clean up surface‐​water pollution and provide clean drinking water, or more than $400 annually for every American. In the average year, this accounts for 0.8 percent of the gross domestic product, making clean water arguably the most expensive environmental investment in U.S. history. By comparison, the average American spends $60 annually on bottled water.</p> <p>We ask four main questions: What forces led to these laws? How do they regulate pollution? How effective and efficient have they been? Why has recent economic research focused relatively little on water pollution, and what can remedy this lack of research? We illustrate that water pollution provides an excellent setting to learn about externalities, cost‐​benefit analysis, local public goods, fiscal federalism, regulatory design, nonmarket valuation, and other classic economic issues. Indeed, water pollution is a&nbsp;textbook example of an externality — introductory texts have long used the example of a&nbsp;plant dumping waste into a&nbsp;river and causing people downstream to suffer to illustrate the concept of externalities.</p> <p>We emphasize several main conclusions. Many measures of drinking‐ and surface‐​water pollution have fallen since the EPA’s founding, due at least in part to the Clean Water Act and Safe Drinking Water Act. The progress, however, is incomplete. William Ruckelshaus, first head of the EPA, noted, “Even if all of our waters are not swimmable or fishable, at least they are not flammable.”</p> <p>But while these large investments in drinking water do appear to create substantial health benefits, existing evidence suggests that estimated costs of most investments in cleaning up rivers, lakes, and oceans exceed their measured benefits. A&nbsp;summary of cost‐​benefit analyses of 240 regulations implemented by the federal government between 1992 and 2017 finds that out of five categories of regulations (surface water, drinking water, air pollution, greenhouse gases, and all other regulations, including nonenvironmental ones), surface‐​water regulations are the only category where total estimated costs exceed total estimated benefits. Estimated total benefits are only 80 percent of estimated total costs, and the mean regulation has benefits that are only 57 percent of its costs. Sixty‐​seven percent of surface‐​water regulations fail a&nbsp;cost‐​benefit test, compared to 20 percent of drinking‐​water regulations and 8&nbsp;percent of air pollution regulations.</p> <p>It is noted that many of these estimates have difficulty quantifying several important channels of benefits and may be understating true benefits. But even if costs are underestimated, there are several reasons regulation of surface‐​water quality could produce smaller net benefits than other types of environmental investments. For example, surface‐​water policy does not typically use market‐​based instruments, such as cap‐​and‐​trade markets or pollution taxes, which are generally cost effective. Beyond specific policy choices, surface waters may be more substitutable than other environmental goods — changing the river where a&nbsp;person goes fishing or boating may be less costly than changing the air a&nbsp;person breathes or the water a&nbsp;person drinks.</p> <p>Unfortunately, economic research on water pollution and its regulation has been limited. An important task for research is to assess which investments in surface‐​water pollution create net benefits and ways to make these investments more effective.</p> <p><strong>NOTE:</strong><br>This research brief is based on David A. Keiser and Joseph S. Shapiro, “U.S. Water Pollution Regulation over the Last Half Century: Burning Waters to Crystal Springs?,” <em>Journal of Economic Perspectives</em> 33, no. 4 (2019): 51 – 75, <a href="https://www.aeaweb.org/articles?id=10.1257/jep.33.4.51" target="_blank">https://​www​.aeaweb​.org/​a​r​t​i​c​l​e​s​?​i​d​=​1​0​.​1​2​5​7​/​j​e​p​.​3​3​.4.51</a>.</p> </div> Wed, 22 Jan 2020 03:00:00 -0500 David A. Keiser, Joseph S. Shapiro https://www.cato.org/publications/research-briefs-economic-policy/burning-waters-crystal-springs-us-water-pollution Randal O’Toole’s article, “Amtrak’s Big Lie,” is cited on WISN’s The Morning Briefing https://www.cato.org/multimedia/media-highlights-radio/randal-otooles-article-amtraks-big-lie-cited-wisns-morning Mon, 20 Jan 2020 12:05:26 -0500 Randal O'Toole https://www.cato.org/multimedia/media-highlights-radio/randal-otooles-article-amtraks-big-lie-cited-wisns-morning Jeffrey A. Singer discusses making prescriptions more available on ThinkTech Hawaii’s Hawaii Together https://www.cato.org/multimedia/media-highlights-tv/jeffrey-singer-discusses-making-prescriptions-more-available Mon, 20 Jan 2020 11:58:45 -0500 Jeffrey A. Singer https://www.cato.org/multimedia/media-highlights-tv/jeffrey-singer-discusses-making-prescriptions-more-available Ninth Circuit “Reluctantly” Dismisses Kids Climate Case https://www.cato.org/blog/ninth-circuit-reluctantly-dismisses-kids-climate-case William Yeatman <p>Today, a&nbsp;split panel on the U.S. Court of Appeals for the Ninth Circuit “reluctantly” dismissed <em><a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2020/01/17/18-36082.pdf">Juliana v. United States</a></em>, known colloquially as the “kids’ climate case.”</p> <p>We should all be thankful for the court’s avowed restraint — for&nbsp;much of this&nbsp;controversy, judges in the circuit seemingly champed&nbsp;at the bit to take on central planning of the American economy. A&nbsp;big assist is due the Supreme Court, which bench‐​slapped some sense into the Ninth Circuit.</p> <p>Here’s the backstory. In 2015, a&nbsp;group of children filed suit in a&nbsp;federal district court in Oregon, alleging that the federal government infringed on on their putative constitutional right to a&nbsp;climate unaffected by anthropogenic global warming.</p> <p>On its face, the kids’ case is silly. For starters, it’s not terribly plausible to claim there’s an unenumerated constitutional right to a&nbsp;specific atmospheric concentration of greenhouse gases. But let’s assume there is, for the sake of argument. What could a&nbsp;court do about it?</p> <p>As a&nbsp;remedy, the <em>Juliana </em>plaintiffs&nbsp;sought for the court to order&nbsp;the government to draw up a&nbsp;comprehensive climate plan – one that is subject to judicial approval and ongoing oversight.</p> <p>The requested relief, therefore, is a&nbsp;court‐​ordered scheme to regulate the American economy. If the plaintiffs had their druthers, a&nbsp;single federal district court judge would become, after the president, the most powerful official in the country. Obviously, that’s a&nbsp;big practical&nbsp;problem with the plaintiff’s argument.</p> <p>From a&nbsp;legal perspective, the Constitution vests Article III judges with the “Judicial power.” National regulatory plans, by contrast,&nbsp;emanate from the “legislative” or “executive” powers that are the province of the political branches of government. Simply put, judges have no constitutional authority to initiate and oversee major climate policy.&nbsp;</p> <p>For these reasons, judges in other circuits have been quick to nix similar challenges. Last February, for example, U.S. Eastern District of Pennsylvania Judge Paul Diamond <a href="https://www.reuters.com/article/us-usa-climatechange-lawsuit/u-s-judge-dismisses-boys-lawsuit-against-trump-climate-rollbacks-idUSKCN1Q92SA">dismissed</a> a&nbsp;near‐​identical suit. According to Judge Diamond, the Constitution does not guarantee children a&nbsp;right to a “life‐​sustaining climate system.” After disavowing both “the authority [and] the inclination to assume control of the Executive Branch,” he concluded that climate change regulation “is a&nbsp;policy debate best left to the political process.”</p> <p>Yet, in <em>Juliana</em>, U.S. Oregon District Judge Ann Aiken entertained no such reservations. Not only did she deny two of the federal government’s procedural motions to stop&nbsp;the case, but she initially refused to certify her orders for interlocutory appeal — that is, she refused to allow the government to appeal&nbsp;her procedural orders&nbsp;before the case went to trial. It seemed as if she wanted to try <em>Juliana</em>.</p> <p>The Ninth Circuit, too, seemed eager for the case to proceed. Twice, the court denied government petitions to end&nbsp;the case.</p> <p>If all these judges in the Ninth Circuit were so eager to take the case, then how did <em>Juliana</em>&nbsp;get dismissed today?</p> <p>The answer involves unmistakable signals sent from the Supreme Court. At various points during the litigation, the federal government asked the&nbsp;Court to pause the case. In denying these motions as untimely, the Court included language that unequivocally imparted its concern regarding the constitutional viability of the claims at issue in <em>Juliana</em>.</p> <p>For example, in July of 2018, the Court <a href="https://www.supremecourt.gov/docket/docketfiles/html/public/18a65.html">observed</a> that “The breadth of respondents’ claims is striking,” and further directed District Court Judge Aiken to “take [justiciability] concerns into account.” A&nbsp;few months later, the Supreme Court <a href="https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/18a410.html">basically ordered</a> the Ninth Circuit to hear the federal government’s appeal (on justiciability grounds).</p> <p>After the Supreme Court’s second order, the Ninth Circuit leaned on Judge Aiken to certify her procedural orders and thereby permit the government’s appeal. Last June, the Ninth Circuit <a href="https://www.cato.org/v">held oral arguments</a>. Today, it “reluctantly” dismissed the case, holding:</p> <blockquote><p>We reluctantly conclude … that the plaintiffs’ case must be made to the political branches or to the electorate at large, the latter of which can change the composition of the political branches through the ballot box. That the other branches may have abdicated their responsibility to remediate the problem does not confer on Article III courts, no matter how well‐​intentioned, the ability to step into their shoes.</p> </blockquote> <p>It bears noting that a&nbsp;majority on the three‐​judge panel dismissed <em>Juliana</em> over the impassioned (though wrong) dissent of Judge Josephine L. Staton. So a&nbsp;third of the panel would have allowed the case to proceed, while the rest ended <em>Juliana</em> only with “reluctance.” It may not be&nbsp;pretty, but I&nbsp;welcome the outcome nevertheless.</p> Fri, 17 Jan 2020 16:07:23 -0500 William Yeatman https://www.cato.org/blog/ninth-circuit-reluctantly-dismisses-kids-climate-case Chelsea Follett discusses GMOs on WPRO’s The Matt Allen Show https://www.cato.org/multimedia/media-highlights-radio/chelsea-follett-discusses-gmos-wpros-matt-allen-show Fri, 17 Jan 2020 12:41:03 -0500 Chelsea Follett https://www.cato.org/multimedia/media-highlights-radio/chelsea-follett-discusses-gmos-wpros-matt-allen-show Zoning, Discrimination, and State Constitutions https://www.cato.org/multimedia/cato-daily-podcast/zoning-discrimination-state-constitutions Maurice A. Thompson, Caleb O. Brown <p>Zoning has long been used for less than public spirited purposes. Constitutional litigator Maurice Thompson of the 1851 Center details a&nbsp;useful case of pointless local zoning in Ohio.</p> Wed, 15 Jan 2020 15:42:39 -0500 Maurice A. Thompson, Caleb O. Brown https://www.cato.org/multimedia/cato-daily-podcast/zoning-discrimination-state-constitutions Kerry McDonald discusses parental rights in a Freedom Hub Working Group Webinar https://www.cato.org/multimedia/media-highlights-tv/kerry-mcdonald-discusses-parental-rights-freedom-hub-working-group Wed, 15 Jan 2020 12:57:02 -0500 Kerry McDonald https://www.cato.org/multimedia/media-highlights-tv/kerry-mcdonald-discusses-parental-rights-freedom-hub-working-group Mortality and Socioeconomic Consequences of Prescription Opioids: Evidence from State Policies https://www.cato.org/publications/research-briefs-economic-policy/mortality-socioeconomic-consequences-prescription Robert Kaestner <div class="lead text-default"> <p>The opioid “epidemic” is one of the most pressing public health issues for local, state, and federal policymakers and its consequences have been widely documented. The so‐​called epidemic is often characterized by the rise of prescription opioid use. Between 1992 and 2011, the number of opioid prescriptions in the United States increased nearly threefold from approximately 75 million annually to 220 million annually. At its peak in 2010 – 2012, the opioid prescription rate was 80 per 100 people in the United States, although only about 20 percent of the population had one or more prescriptions. Since 2010, the opioid prescription rate had declined to 59 per 100 people in 2017.</p> </div> , <div class="text-default"> <p>The second prominent fact used to characterize the opioid epidemic is the rise in prescription opioid‐​related mortality. Between 1999 and 2010, the rate of prescription opioid‐​overdose deaths increased from just over 1&nbsp;death per 100,000 population to just over 5&nbsp;per 100,000 and remained at around 5&nbsp;per 100,000 through 2016. Finally, the rise in nonprescription opioid (e.g., heroin and fentanyl) deaths is also often included to document the epidemic. The rate of nonprescription opioid (heroin and fentanyl combined) deaths increased from approximately 1&nbsp;per 100,000&nbsp;in 1999 to 2&nbsp;per 100,000&nbsp;in 2010. After this date, nonprescription opioid deaths began to increase markedly, rising to more than 10 per 100,000 by 2016.</p> <p>While the sheer magnitude of opioid prescriptions and the mortality consequences of the opioid epidemic have garnered most of the research and public policy attention, the rise in prescription opioid use may have had other consequences. For example, outcomes that may be plausibly affected by opioid use (both medical and nonmedical) include marriage, earnings, and health. There have been no studies of the effect of prescription opioid use on these outcomes. There have been a&nbsp;few studies of the effect of opioid use on employment, although evidence from these few studies remains mixed.</p> <p>To add to this limited literature, I&nbsp;exploit variation in prescription opioid use caused by two state policies. First, prescription drug monitoring programs (PDMPs) are statewide databases that collect data on opioids dispensed in the state. “Modern” PDMPs are fully electronic, are more accessible to physicians, pharmacists, and other pertinent parties, and often include requirements for mandatory use. Second, “pill mill” statutes target prescribers who account for a&nbsp;disproportionate share of opioid prescribing (pain management clinics) and include provisions establishing state inspection authority or specific training requirements. These laws are associated with a&nbsp;decrease in the number of pain management clinics.</p> <p>The adoption of PDMPs, particularly modern PDMPs, and the adoption of pill‐​mill legislation reduced prescription opioid sales by 5 – 20 percent. This evidence is consistent with several prior studies. The variation in prescription opioid sales, and presumably opioid use, caused by the state policies provides variation in prescription opioid use that we use to assess the effects of prescription opioid use on socioeconomic outcomes. We also estimate the effect of state policies on mortality.</p> <p>An important contribution of my analysis is the stratification of the sample by age and gender. This stratification is motivated by evidence suggesting that most prescription opioid use is medical and that rates of nonmedical use and the ratio of nonmedical‐​to‐​medical use of prescription opioids differ significantly by age, gender, and to a&nbsp;lesser extent, education. For example, approximately 16 percent of females aged 50 – 64 had a&nbsp;prescription opioid in 2002 – 2006, but only 2&nbsp;percent reported nonmedical use, and about 1&nbsp;percent reported heroin use in the past year. These figures suggest that this group of females has a&nbsp;relatively high rate of prescription opioid use that is almost all medically prescribed. There is little purposeful misuse of prescription opioids, or use of illegal opioids, among this demographic group. In contrast, among men aged 26 – 34, only 9&nbsp;percent had a&nbsp;medical prescription for opioids in 2002 – 2006, but 9&nbsp;percent also reported nonmedical use, and 3&nbsp;percent reported past‐​year heroin use. For this group, much of prescription opioid use is misuse, and this group has a&nbsp;relatively high rate of illegal drug use. Given these differences in opioid use, it is likely that changes in prescription opioid use due to state policies had different effects on the mortality and socioeconomic outcomes of these demographic groups.</p> <p>Results of my analysis indicate that state implementation of a&nbsp;modern PDMP is associated with modest decreases in opioid sales of between 5&nbsp;and 10 percent, although estimates are not always statistically significant. Pill‐​mill laws are more strongly associated with decreased opioid sales; adoption of such statutes is associated with a&nbsp;decrease in opioid sales of between 10 and 20 percent, and estimates are highly significant. I&nbsp;also show that the effects of these two state policies are larger in urban areas.</p> <p>The reductions in prescription opioid sales associated with adoption of a&nbsp;modern PDMP and a&nbsp;pill‐​mill law were not associated with moderate or large effects on mortality or socioeconomic outcomes. There was limited evidence that pill‐​mill laws reduced drug‐​related mortality among young males, which is consistent with this group having the highest rates of prescription opioid misuse. However, though large (25 percent), these estimates were not statistically significant. I&nbsp;also found that adoption of a&nbsp;modern PDMP decreased earnings (2 – 5 percent) and that the adoption of a&nbsp;pill‐​mill law increased earnings (2 – 6 percent) among young people aged 18 – 34, but the statistical significance of these estimates was marginal. Overall, while state policies have had a&nbsp;significant effect on prescription opioid sales, the impact of this decline on opioid prescriptions and the impact of these policies on mortality and socioeconomic outcomes have been insignificant.</p> <p><strong>NOTE:</strong><br> This research brief is based on Robert Kaestner and Engy Ziedan, “Mortality and Socioeconomic Consequences of Prescription Opioids: Evidence from State Policies,” NBER Working Paper no. 26135, August 2019, <a href="https://www.nber.org/papers/w26135" target="_blank">https://​www​.nber​.org/​p​a​p​e​r​s​/​w​26135</a>.</p> </div> Wed, 15 Jan 2020 08:49:26 -0500 Robert Kaestner https://www.cato.org/publications/research-briefs-economic-policy/mortality-socioeconomic-consequences-prescription Amtrak’s Big Lie https://www.cato.org/publications/commentary/amtraks-big-lie Randal O&#039;Toole <div class="lead text-default"> <p>Recent&nbsp;<a href="https://www.foxbusiness.com/money/amtrak-break-even-profitability" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.foxbusiness.com/money/amtrak-break-even-profitability&amp;source=gmail&amp;ust=1579099600109000&amp;usg=AFQjCNEMVO1Ysu8WpFD0KXZpQMTFY4Z_4g">articles</a>&nbsp;in respected&nbsp;<a href="https://www.wsj.com/articles/surging-amtrak-seeks-green-light-from-congress-11577889706" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.wsj.com/articles/surging-amtrak-seeks-green-light-from-congress-11577889706&amp;source=gmail&amp;ust=1579099600109000&amp;usg=AFQjCNGGmb-U7dpQw4_nbqf4_t4E-2L2LA">business journals</a>&nbsp;report that Amtrak lost only $29.8 million in 2019 (out of $3.3 billion in total revenues) and that it expects to make a&nbsp;profit in 2020. This is a&nbsp;remarkable turnaround for a&nbsp;company that cost taxpayers more than $100 billion in its first 49&nbsp;years of existence. Amtrak accomplished this using a&nbsp;simple yet apparently effective technique: It’s called lying.</p> </div> , <div class="text-default"> <p>Amtrak’s accounting system is so full of lies that even the pro‐​passenger train&nbsp;<a href="https://www.railpassengers.org/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.railpassengers.org/&amp;source=gmail&amp;ust=1579099600109000&amp;usg=AFQjCNFO9qrvxyNJuF2Ko61qUQoNd5GiBw">Rail Passengers Association</a>&nbsp;calls it “<a href="https://www.railpassengers.org/site/assets/files/5819/amtraks_route_accounting_-_fatally_flawed.pdf" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.railpassengers.org/site/assets/files/5819/amtraks_route_accounting_-_fatally_flawed.pdf&amp;source=gmail&amp;ust=1579099600109000&amp;usg=AFQjCNFM7xO72-osQBzR4F33aywptcyvPA">fatally flawed, misleading, and wrong</a>.”</p> <p>The first lie is that Amtrak counts taxpayer subsidies from the states as “passenger revenues.” According to Amtrak’s&nbsp;<a href="https://www.amtrak.com/content/dam/projects/dotcom/english/public/documents/corporate/monthlyperformancereports/2019/Amtrak-Monthly-Performance-Report-September-2019.pdf" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.amtrak.com/content/dam/projects/dotcom/english/public/documents/corporate/monthlyperformancereports/2019/Amtrak-Monthly-Performance-Report-September-2019.pdf&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNFxrngnaizXRECz7JhlUMj9pSMhQg">unaudited report</a>, 17 state legislatures gave Amtrak a&nbsp;total of $234 million in 2019. The taxpayers in those states were never allowed to vote on these subsidies, and the vast majority don’t ride Amtrak. These subsidies are no more “passenger revenues” than the subsidies given to Amtrak by Congress. Deducting these subsidies from revenues immediately increases Amtrak’s 2019 losses to $264 million.</p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Amtrak’s accounting system is so full of lies that even the pro‐​passenger train Rail Passengers Association calls it ‘fatally flawed, misleading, and wrong.’</p> </div> </div> </aside> , <div class="text-default"> <p>An even bigger lie is Amtrak’s failure to report depreciation in its operating costs. Ignoring depreciation is an old railroad accounting trick aimed at misleading investors by boosting apparent profits.</p> <p>A classic example was the&nbsp;<a href="https://media.amtrak.com/2019/11/improved-safety-and-customer-experience-drive-record-amtrak-ridership/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://media.amtrak.com/2019/11/improved-safety-and-customer-experience-drive-record-amtrak-ridership/&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNGTirNGyo20homKYzKBx7ND-5GE_A">Rock Island Railroad</a>, which ran many fast passenger trains throughout the Midwest in the 1950s. Then Rock Island proposed to merge with another railroad, and to improve the merger terms it began deferring maintenance. By the time the federal government approved the merger, Rock Island’s tracks were so decrepit that its passenger trains ran as slow as 10&nbsp;miles per hour. The other railroad backed out, and Rock Island shocked the nation by going out of business.</p> <p>The Interstate Commerce Commission responded by requiring railroads to include depreciation among their operating costs. This represents the amount of money railroads have to spend or save to keep their infrastructure and equipment in good shape, ensuring that investors would never again be misled by deferred maintenance.</p> <p>Amtrak dutifully includes depreciation in its&nbsp;<a href="https://www.amtrak.com/content/dam/projects/dotcom/english/public/documents/corporate/financial/Amtrak-Audited-Consolidated-Financial-Statements-FY2018.pdf" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.amtrak.com/content/dam/projects/dotcom/english/public/documents/corporate/financial/Amtrak-Audited-Consolidated-Financial-Statements-FY2018.pdf&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNHk90B2L1clbr8Xn6wLazETcrNN5A">audited financial statements</a>, but it never mentions it in its&nbsp;<a href="https://media.amtrak.com/2019/11/improved-safety-and-customer-experience-drive-record-amtrak-ridership/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://media.amtrak.com/2019/11/improved-safety-and-customer-experience-drive-record-amtrak-ridership/&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNGTirNGyo20homKYzKBx7ND-5GE_A">press releases</a>&nbsp;about its finances. In 2019, depreciation amounted to $868 million, increasing total losses to $1.13 billion — 38 times as much as claimed.</p> <p>Even with federal capital subsidies, Amtrak is deferring maintenance like crazy. Amtrak passenger cars have expected lifespans of 25&nbsp;years, yet the average car in its fleet is&nbsp;<a href="https://www.bts.gov/content/age-and-availability-amtrak-locomotive-and-car-fleets" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.bts.gov/content/age-and-availability-amtrak-locomotive-and-car-fleets&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNG4GDs3v9OSICFk4Xq8CJNYv0GmRQ">well over 30&nbsp;years old</a>. The Boston‐​to‐​Washington corridor, which Amtrak has often claimed to be profitable, has a&nbsp;<a href="https://nec.amtrak.com/readytobuild/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://nec.amtrak.com/readytobuild/&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNHbmgPeaB36TIyd1IOe0FzS0fmcCA">$38 billion maintenance backlog</a>.</p> <p>Fixing just these two line items in Amtrak’s accounting shows that Amtrak did not come close to earning a&nbsp;profit in 2019, it won’t earn a&nbsp;profit in 2020, and it never will earn a&nbsp;profit. This is because, after counting all subsidies, Amtrak spends four times as much to move a&nbsp;passenger one mile as the airlines. The difference between Amtrak and intercity buses is even greater, which means Amtrak can’t compete in any market without heavy subsidies.</p> <p>Of course, airlines and highways are also subsidized, and we should end those subsidies as well. But federal, state, and local subsidies to air and highway travel average around a&nbsp;penny per passenger mile, whereas Amtrak subsidies were 34 cents per passenger mile in 2019.</p> <p>Amtrak’s biggest lie is that passenger trains are somehow vital to the nation’s economy. Last year, Americans traveled an average of 15,000&nbsp;miles by automobile, 2,100&nbsp;miles by plane, and 1,100&nbsp;miles by bus. Amtrak’s contribution was less than&nbsp;<a href="https://www.bts.dot.gov/content/us-passenger-miles" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.bts.dot.gov/content/us-passenger-miles&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNGeokqbTa3N9wNwPt1aVBNEEvxyaA">20&nbsp;miles per person</a>. Even in the Northeast Corridor, Amtrak reluctantly admits that it carries&nbsp;<a href="http://www.amtrak.com/ccurl/214/393/A-Vision-for-High-Speed-Rail-in-the-Northeast-Corridor.pdf" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://www.amtrak.com/ccurl/214/393/A-Vision-for-High-Speed-Rail-in-the-Northeast-Corridor.pdf&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNH-yzwB13To91SIcWDSEiTIAh56Qw">only 6%</a>&nbsp;of intercity travelers.</p> <p>According to the best available estimates, Americans bicycle&nbsp;<a href="https://bikeleague.org/benchmarking-report" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://bikeleague.org/benchmarking-report&amp;source=gmail&amp;ust=1579099600110000&amp;usg=AFQjCNEUbTYKXdyDh4xwQlbwUb_YZNg0wQ">8.5 billion passenger miles</a>&nbsp;a&nbsp;year compared with 6.5 billion passenger miles on Amtrak. Being less important than bicycles, Amtrak certainly doesn’t deserve the $2 billion in annual subsidies that it requires to run a&nbsp;supposedly almost‐​profitable operation.</p> <p>Rather than give Amtrak billions of dollars to restore or build infrastructure that it can’t afford to maintain, Congress should simply agree to pay Amtrak a&nbsp;given amount for every passenger mile it carries. This will give Amtrak an incentive to focus on passengers, not politics.</p> <p>Over time, Congress should reduce that amount until Amtrak receives no more per passenger mile than airlines or highways. Any trains that can truly be profitable will survive, but if they do, it will be because Amtrak has found ways to efficiently transport people, not because of lies in its accounting system.</p> </div> Tue, 14 Jan 2020 15:20:55 -0500 Randal O'Toole https://www.cato.org/publications/commentary/amtraks-big-lie Neil Peart: An Appreciation https://www.cato.org/blog/neil-peart-appreciation Chris Edwards <div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="ebb3e766-63d4-43c3-ad10-ed6b45f11592" data-langcode="en" class="embedded-entity"> <p><img srcset="/sites/cato.org/files/styles/pubs/public/2020-01/peart%205.png?itok=ZBbfkzV4 1x, /sites/cato.org/files/styles/pubs_2x/public/2020-01/peart%205.png?itok=zFpToNdo 1.5x" width="700" height="612" src="https://www.cato.org/sites/cato.org/files/styles/pubs/public/2020-01/peart%205.png?itok=ZBbfkzV4" alt="n" typeof="Image" class="component-image" /></p></div> <p>Neil Peart, drummer for Canadian rock band Rush, passed away last week after a three‐​year battle with brain cancer. Peart was 67. He was <a href="https://www.moderndrummer.com/2020/01/rush-drummer-neil-peart-passes/">regarded</a> as one of the best rock drummers of all time, and Rush carved out a unique place in music overlapping heavy metal and progressive rock.</p> <p>Aside from his virtuoso drumming skills, Peart gained fame for the brainy lyrics he wrote for Rush’s remarkable string of 19 studio albums. Libertarians may be aware that Rush credited ideas on its 1976 album <em>2112</em> to the “genius of Ayn Rand.” Peart was not a full‐​fledged libertarian, but many of his songs were influenced by Rand’s individualism. The epic title track on <em>2112</em> describes a dystopian world where an all‐​powerful government crushes creativity.</p> <p>Peart was a voracious reader and his songs reflected a wide range of influences. He explored freewill, heroes, mob rule, scheming and hypocritical leaders, forced equality of outcomes, the soul‐​killing conformity of suburbs, survival in a prison camp, the drama of a rocket liftoff, the joy of music, the beauty of sunlight, and the illicit thrill of revving up a sports car in a future car‐​free despotism. Peart’s lyrics were always thoughtful and honest. While other rock bands sang about romance, sex, and left‐​wing politics, Rush offered something different.</p> <p>In interviews, Peart and his bandmates Alex Lifeson and Geddy Lee always came across as the nicest guys. No trashed hotel rooms, drug overdoses, or ugly band infighting with these guys. They were focused, humble, and dedicated professionals. Even after reaching the peak of his profession, Peart continued taking drum lessons to see what else he might learn. Peart’s passion for his art is clear in <a href="https://www.cygnus-x1.net/links/rush/drummer-11.2004.php">this</a> interview.</p> <p>In the photo above from <em><a href="https://www.cygnus-x1.net/links/rush/images/books/drummer-11.2004/drummer-11.2004-cover.jpg">Drummer</a></em>, Peart’s drum kit sports Rush’s starman emblem. The naked man representing creativity and free thought stands before the star of the dictatorship — the Solar Federation from <em>2112</em>—which controls every facet of life and enforces equality. Here is a <a href="https://www.cygnus-x1.net/links/rush/comicbook-2112-5.1.php">graphic version</a> of the story.</p> <p>If you are not a Rush fan, you might start by listening to <em>Moving Pictures</em> and <em>A Farewell to Kings</em>.</p> <p>When I first moved to D.C. I lived at 2112 37th Street, which was the perfect address for a Canadian‐​born classic rock fan.</p> <p>Neil Peart will be greatly missed.</p> Mon, 13 Jan 2020 12:15:46 -0500 Chris Edwards https://www.cato.org/blog/neil-peart-appreciation Labor Law: Feds Call Off Their War on Franchising and Subcontracting https://www.cato.org/blog/us-department-labor-calls-its-war-franchising-subcontracting Walter Olson <p>The U.S. Department of Labor has announced a&nbsp;<a href="https://s3.amazonaws.com/public-inspection.federalregister.gov/2019-28343.pdf">final rule</a> (<a href="https://www.dol.gov/newsroom/releases/whd/whd20200112">press release</a>, <a href="https://www.dol.gov/agencies/whd/flsa/2020-joint-employment/fact-sheet">fact sheet</a>, <a href="https://www.dol.gov/agencies/whd/flsa/2020-joint-employment/faq">FAQ</a>) backing off one of the Obama administration’s most <a href="https://www.overlawyered.com/?s=%22joint+employer%22">damaging</a> initiatives, its attempt to redefine a&nbsp;wide range of franchise, subcontract, and supplier business models as “joint employment.” The effect of that move would have been to make many companies liable for breaches of labor and employment law committed by their franchisees or contractors. The final rule is set to take effect on March 16, 2020.</p> <p>This is an important win for economic freedom, as well as for the legal reality that a&nbsp;supply or contractual relationship between two firms is by no means the same thing as a&nbsp;merger between them.</p> <p>It is also a&nbsp;victory for regulatory modesty. The Obama rules had <a href="https://www.seyfarth.com/news-insights/dol-announces-rule-clarifying-joint-employment-under-flsa.html">pushed hard at</a> (and arguably overstepped) the bounds of the New Deal‐​era Fair Labor Standards Act so as to rope in as employment&nbsp;many relationships that Congress had never chosen to include as such. The push had been a&nbsp;multi‐​agency affair, extending to ostensibly independent federal bodies such as the National Labor Relations Board (NLRB) and others; and the retreat is likewise multi‐​agency, as can be seen in an NLRB case last month in which the <a href="https://www.nytimes.com/2019/12/12/business/economy/mcdonalds-labor-board-settlement.html">board confirmed that McDonald’s</a> does not, in fact, employ the employees of McDonald’s franchisees.</p> <p>The new four‐​part balancing test announced by the Trump labor department assesses, to <a href="https://www.dol.gov/agencies/whd/flsa/2020-joint-employment/fact-sheet">quote directly</a>, whether the potential joint employer:</p> <p>* hires or fires the employee;<br> * supervises and controls the employee’s work schedule or conditions of employment to a&nbsp;substantial degree;<br> * determines the employee’s rate and method of payment; and<br> * maintains the employee’s employment records.</p> <p>Whatever else can be said about this framework, it at least seems likely to return the scope of the rules to the same general neighborhood they occupied for decades up to 2015.</p> <p>Most of all, to quote <a href="https://www.cato.org/blog/obama-administration-declares-war-franchisors-subcontractors-staffing-firms">our 2015 description</a>, the new rule beats a&nbsp;retreat from the past administration’s aim “to force much more of the economy into the mold of large‐​payroll, unionized employers, a&nbsp;system for which the 1950s are often (wrongly) idealized.” That very same goal is at the root of California’s unfolding debacle with AB5, a&nbsp;law that tries to force many lines of freelancing into a&nbsp;direct‐​employment model and <a href="https://www.overlawyered.com/2019/12/ab5-californias-much-predicted-freelancer-disaster/">is already harming</a> large numbers of workers it had purported to help.</p> <p>If some progressives at the federal level continue to pursue this paradoxically backward‐​looking agenda, they will need to do so through the front door, by working in Congress to enact different standards into law.</p> Mon, 13 Jan 2020 11:42:19 -0500 Walter Olson https://www.cato.org/blog/us-department-labor-calls-its-war-franchising-subcontracting What Unions Won’t Let Employers Say https://www.cato.org/multimedia/cato-daily-podcast/what-unions-wont-let-employers-say Ken Girardin, Caleb O. Brown <p>How does labor law restrict communications between workers and employers? Ken Girardin of the Empire Center in New York discusses some of the “Dos and Don’ts” in public sector labor law.</p> Sun, 12 Jan 2020 00:00:00 -0500 Ken Girardin, Caleb O. Brown https://www.cato.org/multimedia/cato-daily-podcast/what-unions-wont-let-employers-say Gains From Deregulation Undone by Tariffs https://www.cato.org/blog/gains-deregulation-undone-tariffs Jeffrey Miron, Erin Partin <p>Optimism among U.S. manufacturers was near an all‐​time high in early 2017. Just eleven days into his presidency Trump signed <a href="https://www.cato.org/blank">an executive order</a> specifically targeting overregulation. According to <a href="https://www.cato.org/blank">a survey</a> by the National Association of Manufacturers, an advocacy group representing 14,000 U.S. companies, 93.3 percent of respondents felt optimistic about their company’s outlook. This optimism was driven by an expectation that the new administration would focus on deregulation, which would benefit the domestic manufacturing industry. The administration’s commitment to deregulation <a href="https://www.cato.org/blank">kept industry confidence high</a> through much of 2017 and 2018 as <a href="https://www.cato.org/blank">regulations</a> <a href="https://www.cato.org/blank">continued to be repealed</a>.</p> <div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="c5a478b6-9e83-4cb4-820d-6ddbce586eda" data-langcode="en" class="embedded-entity"> <p><img srcset="/sites/cato.org/files/styles/pubs/public/2020-01/NAM.png?itok=jZaWKS0q 1x, /sites/cato.org/files/styles/pubs_2x/public/2020-01/NAM.png?itok=HTzjo3sF 1.5x" width="700" height="406" src="https://www.cato.org/sites/cato.org/files/styles/pubs/public/2020-01/NAM.png?itok=jZaWKS0q" alt="This figure shows the results of a NAM survey with the percent of respondents expressing a positive outlook each quarter from 2016-2019" typeof="Image" class="component-image" /></p></div> <p>However, the escalating trade war with China is erasing many of the gains from deregulation. Small and medium sized firms are being <a href="https://www.cato.org/blank">hit hard</a> by high tariffs on steel and other imported components. The only hope for many companies is to apply for <a href="https://www.cato.org/blank">tariff exemptions</a>, but the process is often opaque, arbitrary, and tilted heavily in favor of larger firms with strong lobbying power.</p> <p><a href="https://www.cato.org/blank">Pro Publica reports</a>:</p> <blockquote><p>“Companies with enough resources and savvy can not only push their own cases, they can work to undermine those of competitors.”</p> <p>“With new tariffs being announced and lifted on a few days’ notice and trade agreements constantly being renegotiated, companies have scrambled to protect themselves. Tariff exclusions are highly sought after because they offer a huge competitive advantage — especially if a rival still has to pay. The review of exclusions is happening on a compressed time schedule, with little warning before tariffs and a complex set of rules that few people understand go into effect. And there are no second chances.”</p> <p>“The Commerce Department at first had projected that it would see only about 4,500 applications — a threshold that was passed almost instantly. According to a regulatory filing, USTR estimated that each exclusion request would take applicants two hours to prepare, at a cost of $200 each, and two and a half hours for USTR to process. For the China tariffs, adjudicating cases is expected to take 175,000 staff hours over the course of a year, at a cost of $9.7 million.”</p> </blockquote> <p>Trump’s trade war is harming U.S. manufacturers, their employees, and their customers. While it may be too soon to determine the damage to the economy, the thirty percent drop in manufacturer confidence over the past year does not bode well.</p> Thu, 09 Jan 2020 15:29:11 -0500 Jeffrey Miron, Erin Partin https://www.cato.org/blog/gains-deregulation-undone-tariffs How to Make Congress Great Again https://www.cato.org/blog/how-make-congress-great-again William Yeatman <p><a href="https://www.cato.org/blog/wall-street-journal-editorial-board-misses-mark-congressional-staffing">As</a> <a href="https://www.cato.org/blog/vox-misses-mark-institutional-primacy-contemporary-federal-policymaking">I’ve</a> <a href="https://www.cato.org/publications/commentary/isnt-founding-fathers-impeachment">argued</a> <a href="https://www.cato.org/blog/trump-isnt-only-constitutional-crisis-afflicting-congressional-oversight">repeatedly</a>, Congress is a&nbsp;shell of its former self.</p> <p>In last Sunday’s <em>Washington Post</em>, Paul Kane <a href="https://www.washingtonpost.com/powerpost/least-deliberative-senate-faces-weighty-task-of-holding-trumps-impeachment-trial/2020/01/04/ba120cf4-2ea9-11ea-bcd4-24597950008f_story.html">made the same point</a> specifically with respect to&nbsp;Congress’s&nbsp;upper chamber. He wrote:</p> <blockquote><p>The Senate tasked with holding President Trump’s impeachment trial would be unrecognizable to most of its predecessors … By almost every measure, today’s Senate is the least deliberative in the modern era of a&nbsp;chamber that bills itself as the world’s greatest deliberative body.</p> </blockquote> <p>Congress’s weakness threatens liberty because it reflects a&nbsp;breakdown of the Constitution’s structural check on overbearing government. In modern America, policy flows from regulatory agencies known in the aggregate as the “administrative state.” From 1995 to 2017, the executive branch issued over 92,000 rules, compared to 4,400 laws enacted by Congress.</p> <p>Over the last forty years, alas, Congress&nbsp;abandoned oversight of the agencies it had legislated into existence. Meanwhile, the president’s grip over administrative policymaking tightened with each successive administration.</p> <p>With Congress M.I.A., the president has become the policymaker‐​in‐​chief at the head of the administrative state. Indeed, the presidency has become so powerful that one of the two parties in Congress — roughly half the legislature — loses interest in executive overreach whenever “their guy” occupies the White House.</p> <p>Our constitutional system of separate and competing powers — a bulwark for liberty — is dangerously out of whack. Which raises a&nbsp;crucial question: What do we do about it?</p> <p><a href="https://www.jewishpolicycenter.org/2020/01/06/its-time-to-make-congress-great-again/">In the latest issue of <em>InFOCUS</em>&nbsp;quarterly</a>, I&nbsp;offer a&nbsp;menu of options&nbsp;to “Make Congress Great Again”:</p> <blockquote><p>So, how do we make Congress great again?</p> <p>Congress might be compelled to get its act together, even if it doesn’t want to.</p> <p>For almost 80&nbsp;years, the Supreme Court has refused to police how much power Congress transfers to the executive branch … [Yet] [f]or the first time since the New Deal‐​era, a&nbsp;majority on the Supreme Court has expressed a&nbsp;willingness to revisit the nondelegation doctrine. Were the Court to add teeth to its “intelligible principle” test, then Congress would be forced to curtail the breadth of its delegations to the executive branch.</p> <p>Turning from the Supreme Court to Congress, there are many institutional reforms that the legislature could take to empower itself <em>vis‐​a‐​vis</em> the presidency.</p> <p>Starting with the easiest measures, Congress could remedy its anemic staffing. In fact, the current level of committee staffing is commensurate with levels from the early 1970s, even though government has grown much larger and more complex in the five decades since.</p> <p>…</p> <p>Congress also could create new institutions to better compete. In the early 1980s, the president unilaterally established the Office of Information and Regulatory Affairs (within the Office of Management and Budget) to manage regulations out of the White House. Yet Congress has no commensurate capacity. There is an obvious need for Congress to create its own comparable mechanism to oversee agency rules.</p> <p>Congress could adopt simple legislative fixes. For example, lawmakers used to regularly limit the clock on their delegations, such that an agency’s regulatory authority expired after a&nbsp;given time. These “sunset” provisions force Congress to periodically review the programs it creates, before these regimes are re‐​authorized.</p> <p>Or lawmakers could make greater use of “resolutions of disapproval,” which allow them to veto individual regulations …&nbsp;</p> <p>If it wanted to get bold, Congress could pass more comprehensive reform. The Regulatory Accountability Act, for example, would require agencies to better justify rules that cost more than $100 million.</p> <p>And if Congress wanted to regain the upper hand in one fell swoop, the House and Senate would get behind the REINS Act, which would require both chambers of Congress to approve all major regulations before they took effect.</p> <p>These reforms are fantastic ideas, to be sure, but they’re all nonstarters for as long as love of party trumps institutional pride in Congress. You can lead a&nbsp;horse to water, but you can’t make it drink. Even were Congress to pass REINS, no doubt the House and Senate could find a&nbsp;way to avoid accountability.</p> <p>Most likely, we need a&nbsp;new type of lawmaker, one who is cut from old cloth …</p> </blockquote> <p>Read the whole thing <a href="https://www.jewishpolicycenter.org/2020/01/06/its-time-to-make-congress-great-again/">here</a>.</p> Thu, 09 Jan 2020 10:04:11 -0500 William Yeatman https://www.cato.org/blog/how-make-congress-great-again Cato Institute’s Freedom in the 50 States is cited on KHVH’s Rick Hamada & Scotty B https://www.cato.org/multimedia/media-highlights-radio/cato-institutes-freedom-50-states-cited-khvhs-rick-hamada-scotty Wed, 08 Jan 2020 11:54:24 -0500 Cato Institute https://www.cato.org/multimedia/media-highlights-radio/cato-institutes-freedom-50-states-cited-khvhs-rick-hamada-scotty Progressive Governments’ Economic War on the NRA Fails in Court https://www.cato.org/publications/commentary/progressive-governments-economic-war-nra-fails-court Walter Olson <div class="lead text-default"> <p>Some politicos just can’t stop grandstanding, even if it means their court case goes down in flames. Consider what just happened in a&nbsp;federal court in Los Angeles.</p> </div> , <div class="text-default"> <p>Not long ago, progressive state and local officials nationwide were vowing to take down the hated National Rifle Association by targeting its pocketbook. When city authorities in Los Angeles and San Francisco gave that idea a&nbsp;try, they were following the lead of Governor Andrew Cuomo, who had unleashed New York financial regulators to go after the gun‐​rights organization’s access to insurance and banking services.</p> <p>Now all three are facing a&nbsp;reckoning in court, based not on the Second Amendment but on the First. Without needing to even consider the issue of gun rights, federal courts are recognizing that boycotts enforced by government power can menace free speech and free association.</p> <p>The amusing part is that the public officials themselves are helping to provide the basis for these rulings by tweeting and speechifying about how much damage they intend to do the NRA.</p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>In California and New York, efforts to target the gun‐​rights group’s business relationships are failing on First Amendment grounds.</p> </div> </div> </aside> , <div class="text-default"> <p>In December, a&nbsp;federal court in California granted a&nbsp;preliminary injunction against a&nbsp;Los Angeles ordinance requiring city contractors to disclose any business links to, or memberships in, the gun group. It found the evidence “overwhelming” that the city’s intent in passing the law was “to suppress the message of the NRA.”</p> <p>Public officials have been on notice about this sort of thing for at least two decades, since the 1996 Supreme Court case&nbsp;<a href="https://scholar.google.com/scholar_case?case=1420742315640734083" target="_blank"><em>Board of County Commissioners v. Umbehr</em></a>. In that case, the Court held that a&nbsp;county’s having terminated a&nbsp;government contract in retaliation for the contractor’s persistent and annoying political speech could violate the First Amendment. Controversial and unpopular speech is protected speech; officials cannot yank a&nbsp;contract from some business, or threaten to, just because it has donated to, or partnered in some venture with, the Sierra Club, the NAACP, or the NRA.</p> <p>Lawyers for Los Angeles tried to defend their ordinance by saying all it did was require disclosures from contractors, which wouldn’t necessarily amount to punishing or chilling speech. But this sort of First Amendment claim comes down to a&nbsp;question of intent. And&nbsp;<a href="https://michellawyers.com/wp-content/uploads/2019/12/2019-12-16-Corrected-Minute-Order.pdf" target="_blank">the court found</a>&nbsp;that the city’s lawmakers had made their intent to suppress speech and association utterly clear. They had done so in the text of&nbsp;<a href="https://bca.lacity.org/Uploads/sdo/NRA%20Ordinance%20FINAL%202019.pdf" target="_blank">the ordinance itself</a>, in its legislative history, and in the statements made at the time by its chief sponsor, Councilmember Mitch O’Farrell (Hollywood‐​Silver Lake).</p> <p>The ordinance starts off with a&nbsp;long preamble that, amid much demagogy, cites the NRA’s $163 million (2015) in membership dues and asserts that those dues go toward foiling beneficent legislative ends. That helped establish nicely that part of the bill’s aim was “to cut off revenue to the NRA because of its pro‐​firearm advocacy,” as the court put it.</p> <p>Then there were O’Farrell’s various pronouncements. Earlier in the year, he had motioned the city to “rid itself of its relationships with any organization that supports the NRA” and further moved that the city’s chief legislative analyst “report back with options for the City to immediately boycott those businesses and organizations” that do business with the NRA “until their formal relationship with the NRA ceases to exist.”</p> <p>Were doubt left about his intentions, O’Farrell’s Twitter outbursts through 2018 told of his efforts to jawbone businesses such as FedEx and Amazon into cutting off business relations with the NRA, often tagging friendly accounts such as @everytown, @momsdemand, @shannonrwatts, and @bradybuzz. It was unnecessary to show that the city had actually cut off any businesses, or that any such businesses had cut ties with the NRA for fear of city displeasure. So long as the ordinance was intended to chill speech and association, as it was, it would fall.</p> <p>San Francisco’s similar ordinance, although also the subject of a&nbsp;brief challenge in court, collapsed as a&nbsp;practical matter even more quickly. The measure’s&nbsp;<a href="https://www.wsj.com/articles/liberal-city-tags-speech-as-terrorism-11567969503" target="_blank">tantrum‐​like preamble</a>&nbsp;branded the NRA a&nbsp;domestic terrorist group, in a&nbsp;move calculated to draw wide national attention. The text of the ordinance proclaimed that the city should “take every reasonable step to limit those entities who do business with the City and County of San Francisco from doing business with” the gun‐​rights organization. Commentators promptly pointed out that any such step would fail in court as unconstitutional.</p> <p>Soon thereafter, San Francisco mayor London Breed issued a&nbsp;memo clarifying that “the City’s contracting processes and policies have not changed and will not change as a&nbsp;result of the Resolution” because only an actual ordinance can enact changes to city law. The NRA is suing anyway, but by the city’s own account the measure at this point does nothing except beam out vain hostility.</p> <p>Governor Cuomo was shrewder. He avoided the blatant statements of intent that tripped up his California counterparts. But did he retain enough deniability to survive a&nbsp;court challenge? In April 2018, he issued a&nbsp;statement saying he was directing “the Department of Financial Services to urge insurance companies, New York State‐​chartered banks, and other financial services companies licensed in New York to review any relationships they may have with the National Rifle Association and other similar organizations.” Review such relationships for what, exactly? Well, “the companies are encouraged to consider whether such ties harm their corporate reputations and jeopardize public safety.” In a&nbsp;press release, he made things a&nbsp;tad more explicit, saying that he was directing his financial regulators “to urge insurers and bankers statewide to determine whether any relationship they may have with the NRA or similar organizations&nbsp;<em>sends the wrong message</em>” (emphasis added).</p> <p>Those regulators, of course, have the discretion to make life very unpleasant for insurers and banks dense enough not to take the hint. Sure enough, the NRA in short order was cut off by some long‐​term business partners, notable among them one major insurer and one major insurance broker. The state declared that it had found regulatory infractions in NRA‐​branded insurance‐​affinity offerings, and in the ensuing settlements with the insurer and the broker it got them to promise never to do business with the NRA again, in New York or anywhere else. Yet at the same time, the NRA says, the state took no action against similarly marketed affinity products sold by others. Cuomo’s financial regulator made things a&nbsp;little more explicit still: “DFS urges all insurance companies and banks doing business in New York to join the companies that have already discontinued their arrangements with the NRA.”</p> <p>In November 2018, a&nbsp;federal court in New York&nbsp;<a href="https://casetext.com/case/natl-rifle-assn-of-am-v-cuomo" target="_blank">found that</a>&nbsp;all in all, there was enough plausible evidence of “direct and implied threats to insurers and financial institutions because of these entities’ links with the NRA” to allow the group to proceed with a&nbsp;First Amendment suit. While Cuomo was of course free to express his own views, the Constitution would have something to say about it if he or his appointees had made veiled threats against banks and insurers to encourage them to disassociate from the NRA. The court also asked for more evidence documenting a&nbsp;selective‐​enforcement claim, and this summer, against stiff legal resistance from the state, the NRA succeeded in getting discovery of some state files. In a&nbsp;<a href="https://www.courtlistener.com/docket/6631763/national-rifle-association-of-america-v-cuomo/#entry-154" target="_blank">filing on December 20</a>, the NRA said it had found new documentation of both the pressure and the selective enforcement.</p> <p>One reason the California disputes went so well for the NRA is that the officials just couldn’t help grandstanding at every turn in search of followers’ applause. That’s how O’Farrell, in Los Angeles, helped tweet his side of the case right out of court. But Cuomo, while he’s been more circumspect, has not covered himself as thoroughly as he might have. “If I&nbsp;could have put the NRA out of business, I&nbsp;would have done it 20&nbsp;years ago,” he declared in response to one legal development.</p> <p>Tell us more, Governor.</p> </div> Wed, 08 Jan 2020 10:12:01 -0500 Walter Olson https://www.cato.org/publications/commentary/progressive-governments-economic-war-nra-fails-court The Wrong Kicks on Route 36 https://www.cato.org/publications/commentary/wrong-kicks-route-36 Tom Miller Jr., Todd Zywicki <div class="lead text-default"> <p>Members of Congress in the&nbsp;<a href="https://chuygarcia.house.gov/media/press-releases/reps-garc-grothman-introduce-bipartisan-veterans-and-consumers-fair-credit-act" target="_blank">House</a>&nbsp;and&nbsp;<a href="https://www.merkley.senate.gov/imo/media/doc/19.11.12%20Veterans%20and%20Consumer%20Fair%20Credit%20Act.pdf" target="_blank">Senate</a>&nbsp;recently introduced versions of the “Veterans and Consumers Fair Credit Act,” designed to extend to all consumers the interest rate caps currently in place for active‐​duty service members and dependents. This proposed legislation is modeled after the 2015 update to the 2007 Military Lending Act (MLA), and mandates a&nbsp;nationwide 36 percent interest rate cap on consumer credit.</p> </div> , <div class="text-default"> <p>Supporters of a&nbsp;36 percent interest rate cap compare it to a “<a href="https://www.npr.org/2019/11/07/776769597/a-ban-on-high-cost-loans-may-be-coming" target="_blank">speed limit on small‐​dollar loans</a>.” Not so. It is an abrupt “pavement ends” sign for millions of Americans. As with all price controls, interest rate caps have predictable outcomes. Interest rate caps create shortages and make credit less available for millions of families.</p> <p>Small‐​dollar credit products serve millions of people. According to the FDIC, nearly 33 million families have no or only&nbsp;<a href="https://www.fdic.gov/householdsurvey/2017/2017execsumm.pdf" target="_blank">limited access</a>&nbsp;to bank credit. A&nbsp;recent&nbsp;<a href="https://www.newyorkfed.org/medialibrary/media/outreach-and-education/community-development/constraints-on-access-to-credit.pdf" target="_blank">study</a>&nbsp;by the Federal Reserve Bank of New York suggests millions more may be “credit insecure.” That is, they tend to max out their credit limit, have a&nbsp;low credit score, and have a&nbsp;history of late payments. Also, 45 million primarily young, low‐​income, and minority Americans have&nbsp;<a href="https://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf" target="_blank">poor or thin credit histories</a>.&nbsp;They are ineligible for prime credit cards and bank loans.</p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>If the MLA has not helped service members, why extend it? The MLA is a&nbsp;cautionary tale — not a&nbsp;model — for consumer credit regulation. It seems ripe for repeal, not ready to extend to all consumers.</p> </div> </div> </aside> , <div class="text-default"> <p>A primary function of credit is to smooth consumption.&nbsp;<a href="https://www.usfinancialdiaries.org/book" target="_blank">More than a&nbsp;third</a>&nbsp;of households making under $50,000 experience month‐​to‐​month spikes and dips in their income. Small‐​dollar credit products help them deal with unforeseen expenses. The choice for these consumers is between using small‐​dollar credit products and simply going without.</p> <p>In theory, how would a&nbsp;36 percent interest rate cap eliminate consumer choices? It costs money to produce small‐​dollar loans. Reducing revenue too much makes loans unprofitable, and lenders will obviously not supply unprofitable loans. This includes installment loans, payday loans, and even pawn shops. Borrowers’ option to use small‐​dollar credit products is not outlawed, but there is no supply for payday and pawn loans, and no amounts available lower than $4,000 for traditional installment loans at those rates.</p> <p>A 36 percent cap on payday loans for active military, their spouses, and dependents has been in place since the MLA passed in 2007. Its proponents&nbsp;<a href="https://archive.defense.gov/pubs/pdfs/Report_to_Congress_final.pdf" target="_blank">argued</a>&nbsp;at the time that payday lenders near military bases were taking advantage of inexperienced borrowers in uniform, causing them financial distress which compromised their performance. The MLA banned payday loans for military members on those grounds. In 2015, the MLA cap was extended to all forms of credit, including pawn loans — which had been exempt in the 2007 Act.</p> <p>More than ten years later, though, evidence has accumulated that the MLA has had no benefit and might even hurt those it was intended to help. For example, in 2017,&nbsp;<a href="https://pdfs.semanticscholar.org/6601/2bae87cfed61966e938d54b9f4daaf479271.pdf?_ga=2.189541931.1083233226.1550242757-1598403270.1550075182" target="_blank">researchers</a>&nbsp;found that access to payday loans did not increase bad outcomes, such as involuntary separations and the denial of security clearances as a&nbsp;result of financial distress. Their analysis “suggests no significant benefits to servicemembers from the MLA.” A&nbsp;2016&nbsp;<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741001" target="_blank">study</a>&nbsp;showed access to payday loans made it easier for military personnel to buy food and other goods before their biweekly paycheck.</p> <p>If the MLA has not helped service members, why extend it? The MLA is a&nbsp;cautionary tale — not a&nbsp;model — for consumer credit regulation. It seems ripe for repeal, not ready to extend to all consumers.</p> </div> Wed, 08 Jan 2020 07:57:14 -0500 Tom Miller Jr., Todd Zywicki https://www.cato.org/publications/commentary/wrong-kicks-route-36 Are Tech Companies Too Big? https://www.cato.org/blog/are-tech-companies-too-big Chris Edwards <p>P<span>oliticians and pundits are claiming that technology companies such as Amazon, Google, and Microsoft are damaging monopolies. Some politicians, such as <a href="https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c">Elizabeth Warren</a>, want to actively break up big tech firms. Ryan Bourne explains the folly of these sentiments <a href="https://www.cato.org/publications/policy-analysis/time-different-schumpeter-tech-giants-monopoly-fatalism">in a recent study</a>. A decent understanding of the dynamism in U.S. economic history reveals why aggressive antitrust policy makes no sense.</span></p> <p><span>When a big tech company is earning high profits, it attracts competitors like sharks smelling blood in the water, which is a good thing. Meanwhile, what do tech firms earning high profits use them for? To push innovation forward by funding huge amounts of research. </span></p> <p><span>The <a href="https://www.wsj.com/articles/quantum-computing-remains-a-challenge-for-tech-firms-11578345473"><em>Wall Street Journal</em></a> outlines current efforts to fund quantum computing. That technology would be a revolutionary leap, but it is a tough nut to crack. We need a bunch of tech companies with deep pockets pursuing a diversity of approaches to make the needed breakthroughs. And that is what we are seeing with Amazon, Google, Microsoft, IBM, Intel, and others in a vigorous competitive race. </span></p> <p><span>At the same time, the <em>Journal</em> reports that venture capitalists are placing bets on quantum computing startups. So the big firms are feeling the competitive heat from each other while they all risk being undercut from below. Microsoft spent two years building a quantum computer that ended up falling short, and now it has restructured its project. Unlike governments, businesses pull the plug on things that are not working and try again.</span></p> <p><span>The <em>Journal</em> says, “</span>The field attracted a total of at least $450 million in private investments in 2017 and 2018,” which is impressive given that skeptics say that profit‐​seeking companies don’t do basic long‐​term research. Microsoft has been funding quantum computing research for many years, which a stream of solid profits has made possible. Some of the firms the <em>Journal</em> profiles are focused on making short‐​term breakthroughs, but other firms see quantum computing as a longer‐​term goal.</p> <p>Profits, competition, diversity of strategies, big companies and startups, uncertainty, and experimentation. That is what markets are all about. Politicians, pundits, and antitrust lawyers claim to know the proper size of companies, how large profits ought to be, and how industries should be structured. They don’t. We need markets to figure it all out.</p> <div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="fa11a093-370b-4531-999e-d1293035f376" data-langcode="en" class="embedded-entity"> <p><img srcset="/sites/cato.org/files/styles/pubs/public/2020-01/quantum.png?itok=lKRxj6FH 1x, /sites/cato.org/files/styles/pubs_2x/public/2020-01/quantum.png?itok=8sOzsu8k 1.5x" width="700" height="521" src="https://www.cato.org/sites/cato.org/files/styles/pubs/public/2020-01/quantum.png?itok=lKRxj6FH" alt="q" typeof="Image" class="component-image" /></p></div> Tue, 07 Jan 2020 12:35:10 -0500 Chris Edwards https://www.cato.org/blog/are-tech-companies-too-big Cato Institute study, “The Community Reinvestment Act: Looking for Discrimination That Isn’t There,” is cited on WMBC’s The Larry Elder Show https://www.cato.org/multimedia/media-highlights-tv/cato-institute-study-community-reinvestment-act-looking Fri, 03 Jan 2020 09:52:22 -0500 Cato Institute https://www.cato.org/multimedia/media-highlights-tv/cato-institute-study-community-reinvestment-act-looking The Wall Street Journal Gets It Wrong On Marijuana Prohibition https://www.cato.org/blog/wall-street-journal-gets-it-wrong-marijuana-prohibition Jeffrey A. Singer <p><span><span><span><span><span><span><span><span><span><span><span>On December 25, 2019 the <em>Wall Street Journal</em> had an <a href="https://www.wsj.com/articles/the-vaping-marijuana-nexus-11577299411">editorial</a> that discussed the involvement of bootleg THC vaping cartridges in the recent outbreak of vaping‐​related lung illnesses. For an editorial board that is usually very sophisticated in&nbsp;understanding and applying economics, I&nbsp;was very disappointed to witness how biases against the recreational use of marijuana and other currently illicit drugs can cloud the usually clear reasoning of the editors. Not only did the editorial cherry‐​pick facts&nbsp;to perpetuate unproven or long‐​discredited dogmas about the harmful effects of marijuana — a drug not nearly as dangerous as alcohol — but it also seemed to ignore the harmful unintended consequences that result from prohibition, which has a&nbsp;lot to do with the “Vaping‐​Marijuana Nexus.” This&nbsp;should never escape the attention of editorialists who are&nbsp;knowledgeable&nbsp;in economics. I&nbsp;was particularly disappointed&nbsp;in light of the editorial board’s history of opposing punitive taxes on tobacco and other politically incorrect but legal products, recognizing that such “sin taxes” only fuel an often‐​dangerous black market. My disappointment and frustration moved me to write this <a href="https://www.wsj.com/articles/the-america-that-legal-marijuana-has-wrought-11577984718">letter to the editor</a>, which the <em>Journal</em> was gracious enough to publish today. </span></span></span></span></span></span></span></span></span></span></span></p> Thu, 02 Jan 2020 13:57:29 -0500 Jeffrey A. Singer https://www.cato.org/blog/wall-street-journal-gets-it-wrong-marijuana-prohibition Wall Street Journal Editorial Board Misses the Mark on Congressional Staffing https://www.cato.org/blog/wall-street-journal-editorial-board-misses-mark-congressional-staffing William Yeatman <p>Most days, the <em>Wall Street Journal</em> OpEd page runs multiple unsigned editorials next to the letters and across from the opinion columns. Last Friday, however, the Editorial Board gave its entire platform to a&nbsp;single composition, titled “<a href="https://www.wsj.com/articles/elizabeth-warren-has-a-plan-oh-my-11577404548">Elizabeth Warren Has a&nbsp;Plan, Oh My</a>.”</p> <p>The editorial’s thesis is to “show where the American left wants to go” by presenting Senator Elizabeth Warren’s (D‑Mass.) campaign platform for president, which “exceeds what the socialist dreamers of a&nbsp;century ago imagined.”</p> <p>The guts of the editorial are 26 bullet points each describing Warren’s policy initiatives, including “Wealth tax,” “Medicare for all,” and “Free college.” After listing Sen. Warren’s various “plans for that,” the <em>WSJ</em> Board concludes:</p> <blockquote><p>All this adds up to such an expansion of government that the temptation is to dismiss it as fanciful. But Ms. Warren is a&nbsp;shrewd and disciplined politician who isn’t supporting these ideas on an ideological whim … The question for Democrats: Is this the agenda they want to put forward in 2020?”</p> </blockquote> <p>For my part, I’d add that Republicans are little better than Democrats on this score, at least in practice (if not in campaign rhetoric). Last month, for example, large bipartisan majorities in Congress <a href="https://www.nationalreview.com/news/senate-sends-2020-budget-to-president-trump/">passed</a> a $1.43 trillion spending bill — up $50 billion over the previous year — that also raises the legal vaping age to 21. Our Republican president quickly signed the package. The upshot is that both parties collaborated on a&nbsp;spending bill defined by principles of Big Government and the Nanny State.</p> <p>Setting aside the limited scope of the Editorial Board’s case, I&nbsp;have a&nbsp;bone to pick with one of their policy arguments against Sen. Warren.</p> <p>Specifically, the editorial’s last bullet point, titled “Miscellaneous,” includes Warren’s pitch to “give congressional staff ‘competitive salaries.’” If the <em>WSJWSJ‘s</em>‘s institutional voice is to be believed, then lawmaker spending on congressional staff reflects the “expansion of government” and even “socialism.”</p> <p>I share the Board’s concern regarding overweening government, but I&nbsp;think the editorial misses the mark on Congress’s support personnel. Though perhaps counter‐​intuitive, investment in congressional staff is an essential complement to the <em>WSJ</em>’s avowed goal — that is, checking the “expansion of government.”</p> <p>Of course, Big Government today is largely coterminous with the administrative state. From 1995 to 2017, the executive branch issued over 92,000 rules, compared to 4,400 laws enacted by Congress. The regulatory agencies behind all this lawmaking didn’t materialize from thin air; rather, they were created by legislation, and Congress paired these “delegations” with an oversight framework.</p> <p>Passed during the administrative state’s adolescence, the 1946 Legislative Reorganization Act established Congress’s strategy for supervising the regulators. The Act tasked issue‐​specific committees with a&nbsp;duty to conduct “continuous watchfulness” over administrative policymaking. To execute this mandate, the Act provided committees with professional staffs.</p> <p>By design, therefore, committee staffers are crucial cogs in Congress’s oversight machinery, and this understanding served as conventional wisdom among lawmakers through much of the last century. Yet this prevailing sense abated during the 1980s and, ultimately, disappeared by the mid‐​1990s.</p> <p>What happened? A&nbsp;shifting power landscape on Capitol Hill led to the decline of staff, both in status and number.</p> <p>After&nbsp;World War Two, committees were the most consequential institutions in Congress; now, parties fill that role. Part of the reason for this change is demographic: The parties became more homogenous with the demise of southern Democrats and northeastern Republicans. At the same time that party rank‐​and‐​file were taking on hive‐​minds, opportunistic party leaders gamed the House and Senate rules to centralize power in their hands.</p> <p>For ascendant party leadership in Congress, strong committees were a&nbsp;roadblock to the consolidation of authority. To weaken committees, party leaders sought to weaken committee staff.</p> <p>Matters came to a&nbsp;head in 1995 on the first day of the 104th Congress, when Speaker Newt Gingrich and Republican leadership slashed committee staff by one‐​third, and the Senate soon followed suit. Because it was in the interest of both parties’ leaders to subdue committees, staffing never recovered</p> <p>For example, there were 2,115 professional personnel in House and Senate standing committees in 2015, or less than two‐​thirds the total in 1991 (3,528). To be fair, party leaders invested in some parts of Congress – themselves. From 1995 to 2011, House and Senate leadership staff increased 35 percent and 38 percent (respectively).</p> <p>Simply put, Congress doesn’t have the tools to oversee the administrative state it created. The <em>WSJ</em> grows a&nbsp;false narrative when its Editorial Board opines that Warren’s plan for congressional staff reflects an “expansion of government.” In a&nbsp;less sincere tone — his real purpose was power — Rep. Gingrich advanced the same arguments when he dropped the ax on committee staff in 1995. Though untrue and often disingenuous, it makes for a&nbsp;great talking point to claim that Congress should lead by example by starving itself in the name of fiscal prudence. Anyone who claims otherwise is branded as a&nbsp;spendthrift. That’s why staffing levels have never recovered.</p> <p>In conclusion, I’ll turn to R&nbsp;St. Institute’s Casey Burgat, who’s been sounding this alarm for a&nbsp;while. He <a href="https://www.rstreet.org/2019/03/14/whos-on-the-hill-staffing-and-human-capital-in-congresss-legislative-committees/">warns</a>:</p> <blockquote><p>As the size and complexity of the federal government has continued to grow, Congress has deprioritized spending within the offices most responsible for legislating and conducting Executive Branch oversight.</p> </blockquote> Thu, 02 Jan 2020 10:42:54 -0500 William Yeatman https://www.cato.org/blog/wall-street-journal-editorial-board-misses-mark-congressional-staffing With Mounting Evidence That E‑cigs Help Smokers Quit, The Trump Administration is Poised to Make Quitting More Difficult https://www.cato.org/blog/mounting-evidence-e-cigs-help-smokers-quit-trump-administration-poised-make-quitting-more Jeffrey A. Singer <p><span><span><span><span><span><span><span><span><span><span><span>A just‐​published National Bureau of Economic Research <a href="https://www.nber.org/papers/w26589.pdf">working paper</a> provides empiric evidence that the new “war on vaping” runs at cross‐​purposes with public health efforts aimed at getting tobacco smokers to quit.</span></span></span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span><span><span><span><span><span>Nicotine e‑cigarettes are twice as effective as nicotine patches, gum, or other nicotine replacements in achieving smoking cessation according to a&nbsp;2019 study published in the <em><a href="https://www.nejm.org/doi/full/10.1056/NEJMoa1808779">New England Journal of Medicine.</a></em></span></span></span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span><span><span><span><span><span>In the NBER working paper the researchers studied the impact of the 95 percent tax on the wholesale price of e‑cigarettes that was enacted in Minnesota, the first of the states to tax e‑cigarettes. (There is no federal tax on e‑cigarettes.) They used the National Cancer Institute <a href="https://cancercontrol.cancer.gov/brp/tcrb/tus-cps/">Tobacco Use Supplement to the&nbsp;Current Population Survey</a> from 1992 – 2015&nbsp;in conjunction with a&nbsp;synthetic control <a href="https://www.mailman.columbia.edu/research/population-health-methods/difference-difference-estimation">difference‐​in‐​differences</a>&nbsp;approach and concluded:</span></span></span></span></span></span></span></span></span></span></span></p> <blockquote><p><span><span><span><span><span><span><span><span><span><span><span>Our results suggest that in the sample period about 32,400 additional adult smokers would have quit smoking in Minnesota in the absence of the tax. If this tax were imposed on a&nbsp;national level about 1.8 million smokers would be deterred from quitting in a&nbsp;ten year period. The taxation of e‑cigarettes at the same rate as cigarettes could deter more than 2.75 million smokers nationally from quitting in the same period. </span></span></span></span></span></span></span></span></span></span></span></p> </blockquote> <p><span><span><span><span><span><span><span><span><span><span><span>On New Year’s Eve the <em>Washington Post</em> <a href="https://www.washingtonpost.com/health/2019/12/31/trump-administration-ban-most-flavored-e-cigarette-pods/">reported</a> the Trump administration plans to announce a&nbsp;ban on flavored vaping pods while sparing refillable open‐​tank systems commonly sold in vaping shops. Menthol and tobacco flavored vaping pods will still be permitted. This is seen as a&nbsp;compromise between a&nbsp;complete ban on flavored vaping and the status quo. President Trump was concerned that a&nbsp;complete ban will irreparably harm vaping retailers.</span></span></span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span><span><span><span><span><span>While this proposal is not as damaging as a&nbsp;complete ban, it still stands to interfere with efforts by adults to quit smoking. Multiple surveys show they <a href="https://www.cato.org/publications/commentary/vaping-panic-out-hand">prefer</a> the flavored variety to quit tobacco and the flavored pod ban makes that more inconvenient. And if the goal is to reduce teen vaping (<a href="https://reason.com/2019/08/21/vaping-may-be-driving-down-smoking-says-federal-survey-report/">which has increased as teen tobacco smoking has plunged</a>), it is unclear if the ban of all flavored pods except menthol and tobacco will have much impact, given survey <a href="https://www.nbcnews.com/health/vaping/teens-who-vape-prefer-minty-flavors-n1076556">reports</a> that menthol is one of the most popular flavors among teens.</span></span></span></span></span></span></span></span></span></span></span></p> <p><span><span><span><span><span><span><span><span><span><span><span>This proposal will likely cause many teen and adult vapers to shift to the menthol flavor, but it may also cause some to look to the <a href="https://www.wsj.com/articles/vapings-black-market-complicates-efforts-to-combat-crises-11570354204">black market</a> for flavored pods, with all of the health risks that entails. It also risks disrupting the continued <a href="https://www.cdc.gov/media/releases/2019/p1114-smoking-low.html">decline</a> in adult tobacco smoking.&nbsp;</span></span></span></span></span></span></span></span></span></span></span></p> Thu, 02 Jan 2020 09:29:39 -0500 Jeffrey A. Singer https://www.cato.org/blog/mounting-evidence-e-cigs-help-smokers-quit-trump-administration-poised-make-quitting-more