Regulation

Congress should reserve the right to protect our wireless future

by Guest Author on January 24, 2012

From Erik Telford
Wireless technology is great. Only a few years ago, most Kansans were using their phones to call, and perhaps even text, now mobile devices are essentially small computers in the palms of our hands — capable of almost anything.

According to Nielsen research, about 44 percent of U.S. mobile subscribers now own smartphones.[i] In Kansas, there are more than 2.4 million wireless subscribers[ii] and nearly 450,000 of those subscribers have data plans with full Internet access for more than 1 million high-speed mobile devices as of December 2009.[iii]

With mobile devices capable of almost anything, Kansans are finding more ways to use them — from uploading pictures during a concert at the Sprint Center to updating their Facebook status about K-State’s football team to checking into their favorite Wichita restaurant on Foursquare.

However, in what is becoming an all too familiar occurrence, some of these efforts are unsuccessful because we just can’t seem to connect online in a stadium or arena full of people. This is just one localized example of how the looming spectrum crisis could become a widespread reality — crippling innovation and investment in one of our country’s most vibrant sectors.

Thankfully, Congress is currently considering legislation that would help avoid the looming crisis by freeing up more spectrum through an auction process. Spectrum auctions are widely supported by both Republicans and Democrats; however, as with most things — the devil is in the details.

As the agency in charge of spectrum auctions, the FCC is pressuring Congress to give the FCC complete control over the auction design process. While the FCC’s request seems somewhat innocuous, if allowed, it could have dangerous consequences.

Recent actions by the FCC suggest it would use its power to limit which companies will get to participate in the auction, effectively determining the winners and losers.

Some members of Congress, support the FCC’s request and argue that proposals that would restrict the FCC from imposing eligibility conditions on auction participants “could have a deterring effect on fostering competition and maximizing auction proceeds to pay for a public safety network and deficit reduction.”[iv] The argument that fewer auction participants would result in more competition and more revenue, however, just doesn’t make sense.

The FCC’s desire to impose conditions to increase competition and encourage innovation is not only counterintuitive; it is unnecessary. As the FCC’s own data demonstrates, the wireless market is already fiercely competitive. Nearly 90 percent of Americans have a choice of five or more wireless providers.[v]

In, Kansas, consumers in communities both large and small have a number of options for wireless services. Consumers in Salina and in Wichita can choose from six or more wireless providers.[vi] In Garden City, subscribers can choose from seven or more wireless companies.[vii]

Furthermore, eligibility restrictions could prevent companies like Sprint, Verizon and AT&T from acquiring more spectrum, which could prevent them from deploying 4G service to other communities outside the Kansas City market due to spectrum constraints.

As the expert agency, the FCC is right to ask for some flexibility with the auction design process. Congress, however, should reserve its right to protect our wireless future by preventing FCC overreach and ensure that all companies can participate in the auction process. It’s only the fair choice to make.

Notes:
[i] Nielsen Wire, “Android and iPhones Dominating App Downloads in the U.S.” November 29, 2011
[ii] Federal Communications Commission, 15th Annual Mobile Wireless Competition Report, Table C-2: FCC’s Semi-Annual Local Telephone Competition Data Collection: Mobile Telephone Subscribership, in Thousands,” p. 248, June 27, 2011
[iii] Federal Communications Commission, 15th Annual Mobile Wireless Competition Report, Table C-5: Mobile Wireless Devices Capable of Sending or Receiving Data at Speeds Above 200 kbps and Subscribers with Data Plans for Full Internet Access as of December 31, 2009, in Thousands,” p. 260, June 27, 2011
[iv] Sen. John Kerry, Press Release, “Democratic and Republican Senators Urge Smart, Inclusive Spectrum Reform,” January 9, 2012
[v] Federal Communications Commission, 15th Annual Mobile Wireless Competition Report, “Estimated Mobile Wireless Voice Coverage by Census Block, 2010,” p. 6, June 27, 2011
[vi] Cell phone provider coverage as found by zip code on http://www.wirelessadvisor.com/
[vii] Cell phone provider coverage as found by zip code on http://www.wirelessadvisor.com/

Tagged as: Computing, Regulation, United States Congress

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Sustainable planning: The agenda and details

by Bob Weeks on December 16, 2011

Sedgwick County Commissioner Richard Ranzau has produced a document that explains the dangers contained with the “sustainable development” movement that is spreading across the country. Recently both the City of Wichita and Sedgwick County voted to participate in a planning grant devoted to starting the implementation of this ideology that government can plan better than markets can.

In the document Ranzau writes: “Proponents of these grants often speak in general terms that make it difficult to disagree. But as they say, the devil is in the details. It is very important for you to know what they are not telling you. We all need to look beyond the fancy talk and find out what the agenda is really about. … The intent of this paper is to share information and insight about ‘sustainable development’ so that citizens and elected officials can have a more complete understanding of what the planning grants will entail and what possible consequences our communities may face if these policies are implemented.”

One of the concerns Ranzau identifies is the attack on the automobile-based suburban lifestyle that many in Wichita and the surrounding area prefer, based on their revealed choices: “One of the most important reasons to be concerned about the agenda behind these grants is the effect it could have on housing costs and property rights. Smart Growth supporters decry suburban development (single family home with a yard) as unsustainable and work to push people into high density housing (and government transportation).”

This attitude is creeping into Wichita. At a January 2010 presentation by Goody Clancy, the planning firm that developed the plan for downtown Wichita, I reported on the attitudes expressed by planners and how they believe they know what people should want, if only the people were as smart as the planners:

At a presentation in January, some speakers from Goody Clancy revealed condescending attitudes towards those who hold values different from this group of planners. One presenter said “Outside of Manhattan and Chicago, the traditional family household generally looks for a single family detached house with yard, where they think their kids might play, and they never do.”

David Dixon, who leads Goody Clancy’s Planning and Urban Design division and was the principal for this project, revealed his elitist world view when he told how that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is only found at the core.

The document holds many links to valuable resources, a timeline of sustainable planning activities, and contact information for local officials.

Sustainable Planning Grants and UN Agenda 21

Tagged as: Environment, Free markets, Liberty, Property rights, Regulation, Richard Ranzau, Sedgwick county government, Wichita city government

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Pompeo: Obama, EPA not to be trusted on regulation

by Guest Author on December 8, 2011

U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, wrote this op-ed to warn us of the many ways in which President Barack Obama seeks to implement his radical agenda through regulation, this time through the Environmental Protection Agency (EPA). The remedy in this case is in the form of legislation, H.R. 1633, the Farm Dust Regulation Prevention Act. The bill was voted on today in the House of Representatives and passed 268 to 150.

While Pompeo focuses primarily on the direct impact of this regulation on farmers and ranchers, anything that makes these activities more difficult and expensive will drive up food costs for everyone, and many complain that these costs have been rising rapidly. Part of that rise, we might note, is due to regulations that require the use of ethanol in fuel, which diverts corn production away from food.

A version of this appeared in the Washington Examiner.

EPA must stop playing in the dust

By U.S. Representative Mike Pompeo

The Environmental Protection Agency (EPA) would like to regulate farm dust all across the nation. I know it sounds ridiculous, but given the Obama Administration’s demonstrated hostility toward rural America, it should not come as a huge surprise. Although EPA has verbally reversed course in recent weeks and said it has “no intention” of regulating farm dust, my 11 months in Washington have taught me quickly that we must pay attention to what politicians do and not what they say. EPA’s actions continue to show that radical environmentalists desire to regulate dust. To stop the EPA in its tracks, I have worked to advance H.R. 1633, the Farm Dust Regulation Prevention Act, through the House Committee on Energy and Commerce. I look forward to final passage on the House Floor later this week.

In Kansas and across the country, businesses are struggling to stay afloat. At best, EPA is oblivious to this fact. At worst, it deliberately presses forward in spite of the damaging consequences of new regulations. Rather than helping farmers, ranchers, business owners and other entrepreneurs, EPA continually bombards these job creators with undue and costly new regulations. The agriculture sector is now holding its collective breath as EPA considers new air quality standards, which it revises every five years. Under the Clean Air Act, the Agency asserts the authority to regulate farm dust as “coarse particulate matter.” This dust is known very well to rural Kansans. It is merely the dust created from driving down unpaved roads, moving livestock, and working the fields.

As it is, the current standard already imposes costs and restrictions on farmers, ranchers, agribusiness entities, and small businesses, particularly in arid parts of the West where dust is easily kicked up. Earlier this year, EPA staff suggested tightening standards to levels that would push most of the West — including Kansas — out of compliance.

In a recent House Committee on Energy and Commerce hearing, we heard from individuals who live in these areas, including Arizona farmer Kevin Rogers, who is already threatened by strict dust regulations. Because parts of Arizona already struggle to meet the current dust standards, he and other farmers may be required to halt tillage, drive at a snail’s pace on unpaved roads, stop work entirely on windy days, or take other expensive measures to reduce dust. If the dust standards are actually tightened to the levels suggested by EPA staff, other parts of the country would have to implement similar policies that will destroy the efficiency and productivity our farmers and ranchers are known for.

Opponents of our efforts call the desire to regulate farm dust a ‘myth’ and liken these concerns to worrying about regulation of fairy dust. While these theatrics garnered some snickers, I was not amused — and neither were the 500 plus Kansas Farm Bureau members I met with just before Thanksgiving who agree that this is a real problem. We need the bipartisan Farm Dust Regulation Prevention Act. The American Farm Bureau Federation, National Cattlemen’s Beef Association, and over 180 other organizations also agree that this valid concern with what EPA might do is more than fairy dust, and they know that this bill is vitally important to the survival of their industry.

EPA Administrator Lisa Jackson has announced that the agency has “no intention” of further regulating dust. But that announcement sounds more like political rhetoric designed to appease opponents as the 2012 election cycle nears, rather than a genuine promise rural Americans can count on. Given what I know, I would be letting farmers and ranchers down if I simply trusted the Obama Administration on their stated farm dust intentions. Besides, there is also a threat that an environmental group could sue and persuade a pliant EPA to regulate farm dust as a settlement condition. We need smart and clear laws set by Congress — not unelected bureaucrats. The Farm Dust Regulation Prevention Act is one. We must ensure that the federal government creates a positive atmosphere for businesses to prosper — including farming and livestock operations. It’s time to forget about regulating farm dust and give rural America some breathing room from the crushing regulations of which this Administration is so fond.

Tagged as: Barack Obama, Environment, Kansas fourth district, Mike Pompeo, Regulation

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Regulatory Accountability Act of 2011

by Bob Weeks on December 7, 2011

Last week the U.S. House of Representatives passed H.R. 3010: Regulatory Accountability Act of 2011. This law would, if passed by the Senate and signed by the president, would require regulatory agencies to “base all preliminary and final determinations on evidence,” among other reforms. It might surprise citizens to realize that regulations may be made for other reasons.

The act would also requires agencies to address “specific nature and significance of the problem,” the “significance of the problem the agency may address with a rule,” and also to recognize “the legal authority under which the rule may be proposed.”

In commentary on this legislation, James L. Gattuso of the Heritage Foundation wrote: “On the whole, the Regulatory Accountability Act represents a positive step toward regulatory reform, imposing clear obligations on agencies with review by the courts. It should, however, be considered by Congress as a supplement — not an alternative — to other needed reforms.”

All Kansas representatives voted for the bill, which passed 253 to 167. Votes were split primarily along party lines, although 19 Democrats voted in favor. Two Kansas members provided comments on the bill, and shared Gattuso’s opinion that this bill is just the start of controlling harmful and unneeded regulation.

Representative Tim Huelskamp of the Kansas first district commented on the bill and the potential of it passing the Senate: “HR 3010 — like several other bills that would require economic impact to be taken into account when regulation is being written — has the potential to control the costs of federal regulations. But, it’s just potential. I am about as optimistic as the Senate taking up this bill as I am about the Senate taking up any one of the nearly two dozen other ‘jobs’ bills or passing a budget. Majority Leader Reid is doing America a great disservice by allowing these jobs bills to go untouched in the Senate; the American people don’t send their Senators to Washington to loiter for six years.”

Representative Mike Pompeo of the Kansas fourth district was also cautious about relying on this bill to provide needed regulatory reform: “The Regulatory Accountability Act of 2011 (HR 3010) is a great piece of legislation, but it is not the silver bullet for reining in the Obama Administration’s rampant regulatory overreach, which is severely hindering job creation across the country and here in Wichita. While the Administration is ‘strongly opposed’ to the bill, they have not issued a veto threat, yet. Even still, I doubt this bill will pass the Senate. Tomorrow the House will consider a stronger piece of legislation — The REINS Act (HR 10), of which I am a co-sponsor. HR 10 would require Congressional approval of every major new regulation proposed by this Administration. Ultimately, if passed into law, it will radically slow the expansion of government which is something that I have been working to do in every way since I got here in January.”

The House is expected to vote on the REINS Act today.

Tagged as: Kansas first district, Kansas fourth district, Mike Pompeo, Regulation, Tim Huelskamp

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Kansas gas storage regulation might not improve safety

by Bob Weeks on December 2, 2011

Due to a jurisdictional issue, underground natural gas storage facilities in Kansas have not been inspected for 19 months — at least not inspected by government regulators. Senators Pat Roberts and Jerry Moran have introduced legislation that would allow Kansas to resume inspections.

The safety of underground natural gas storage is important, especially in Kansas, where in 2001 gas leaked under Hutchinson and caused fires and explosions that killed two people and caused much property damage. So should Kansans be relieved that government regulation and inspection may be resumed soon?

Reading news stories from after the January 2001 Hutchinson disaster should teach us to be wary of relying on government regulation and inspection for ensuring safety. For example, a February 2001 in the Wichita Eagle contained this: “State officials in Kansas knew that the 20-year-old regulations governing underground gas storage were inadequate, years before a gas leak in Hutchinson claimed two lives. Officials with the Kansas Department of Health and Environment met with industry representatives in 1996 and told them new regulations were needed to ensure safe operation of 630 gas storage wells in the state. The new regulations were never written. The update was delayed because the KDHE was short staffed, said Don Carlson, chief of the industrial programs section. The department has two people assigned to permit, inspect, oversee and write regulations for the 6,000 underground injection wells in Kansas that are used to store natural gas and propane, dispose of hazardous waste or mine salt, he said.” (emphasis added)

So for 20 years Kansas operated with inadequate regulations. Was this know by the general public? It doesn’t appear that it was. Instead, people assumed that government was watching out for their safety.

The Hutchinson News concluded in 2004: “True, some of the company’s reports misled the regulator. But the state official also did little, if anything, to check the company’s information or to inspect the site. A local diner serving two dozen cheeseburgers a day received more attention than an underground facility storing billions of cubic feet of natural gas and other volatile hydrocarbons.”

So how well were Kansans served by its regulators? Not well at all, we must conclude.

Eventually the operators of the gas storage facility were held accountable for their errors. But it wasn’t direct government action that did that, although the operators were fined $180,000. But government operates courts where the victims received compensation for their losses — if it is possible to compensate for loss of life with mere money.

What about the other party to this disaster — the State of Kansas: Was it held accountable? Not at all. Examples of regulatory failure rarely result in punishment of government or those who work for it.

A recent example is the Washington Post story Eight SEC employees disciplined over failures in Madoff fraud case; none are fired. Bernie Madoff stole tens of billions from clients over a long period of time in a highly-regulated industry. The Securities and Exchange Commission chief was advised to fire one person, but declined to do even that. Instead, eight employees received punishments such as “suspensions, pay cuts and demotions.”

Not only did the state not perform adequate inspections, and not only did the SEC fail to detect Madoff’s ongoing theft, the presence of government regulation makes people think things are safe.

Sadly, it is only after disasters like Hutchinson or sensational cases like Madoff’s that we become aware of the weak protections that government regulation provides.

Tagged as: Jerry Moran, Kansas state government, Pat Roberts, Regulation

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The use of regulation by business, contrary to markets

by Bob Weeks on November 2, 2011

There are many examples of how the conventional wisdom regarding regulation is wrong: Republicans and conservatives are in bed with government, seeking to unshackle business from the burden of government regulation. Democrats and liberals, on the other hand, are busy crafting regulations to protect the common man from the evils of big business. As it turns out, both Democrats and Republicans love creating regulations, and big business loves these regulations.

For example, in 2005 Walmart came out in favor of raising the national minimum wage. The company’s CEO said that he was concerned for the plight of working families, and that he thought the minimum wage level of $5.15 per hour was too low. If Walmart — a company the political left loves to hate as much as any other — can be in favor of increased regulation of the workplace, can regulation be a good thing? Had Walmart discovered the joys of big government?

The answer is yes. Walmart discovered a way of using government regulation as a competitive weapon. This is often the motivation for business support of regulation. In the case of Walmart, it was already paying its employees well over the current minimum wage. At the time, some sources thought that the minimum wage could be raised as much as 50 percent and not cause Walmart any additional cost — its employees already made that much.

But its competitors didn’t pay wages that high. If the minimum wage rose very much, these competitors to Walmart would be forced to increase their wages. Their costs would rise. Their ability to compete with Walmart would be harmed.

In short, Walmart supported government regulation as a way to impose higher costs on its competitors. It found a way to compete outside the marketplace. It abandoned principles of free markets and capitalism, and provided a lesson as to the difference between capitalism and business. Many, particularly liberals, make no distinction between business and capitalism. But we need to learn to recognize the difference if we are to have a thriving economy based on free-wheeling, competitive markets that foster innovation, or continue our decline into unproductive crony capitalism.

In the following excerpt from his book The Big Ripoff: How Big Business and Big Government Steal Your Money, author Timothy P. Carney explains that big business is able to use regulation as a blunt and powerful tool against competitors, and also as a way to improve its image.

How does regulation help big business?

Excerpt from The Big Ripoff: How Big Business and Big Government Steal Your Money, by Timothy P. Carney

If regulation is costly, why would big business favor it? Precisely because it is costly.

Regulation adds to the basic cost of doing business, thus heightening barriers to entry and reducing the number of competitors. Thinning out the competition allows surviving firms to charge higher prices to customers and demand lower prices from suppliers. Overall regulation adds to overhead and is a net boon to those who can afford it — big business.

Put another way, regulation can stultify the market. If you’re already at the top, stultification is better than the robust dynamism of the free market. And according to Nobel Laureate economist Milton Friedman:

The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.

There is an additional systemic reason why regulation will help big business. Congress passes the laws that order new regulations, and executive branch agencies actually construct the regulations. The politicians and government lawyers who write these rules rarely do so without input. Often the rule makers ask for advice and information from labor unions, consumer groups, environmental groups, and industry itself. Among industry the stakeholders (beltway parlance to describe affected parties) who have the most input are those who can hire the most effective and most connective lobbyists. You can guess this isn’t Mom and Pop.

As a result, the details of the regulation are often carefully crafted to benefit, or at least not hurt, big business. If something does not hurt you, or hurts you a little while seriously hindering your competition, it is a boon, on balance.

Another reason big business often cries “regulate me!” is the goodwill factor. If a politician or bureaucrat wants to play a role in some industry, and some executive says, “get lost,” he runs the risk of offending this powerful person. That’s bad diplomacy. Bureaucrats, by their nature, do not like to be told to mind their own business. Supporting the idea of regulation but lobbying for particular details is usually better politics.

Tagged as: Capitalism, Free markets, Minimum wage, Regulation

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‘Sustainable planning’ not so sustainable

by Guest Author on October 31, 2011

By Randal O’Toole, Senior Fellow at the Cato Institute. A version of this appeared in the Wichita Eagle.

The vast majority of Americans, surveys say, aspire to live in a single-family home with a yard. The vast majority of American travel — around 85 percent — is by automobile. Yet the Obama administration thinks more Americans should live in apartments and travel on foot, bicycle, or mass transit.

To promote this idea, the administration wants to give the south central Regional Economic Area Partnership (REAP) the opportunity to apply for a $1.5 million grant to participate in “sustainable communities.” Also sometimes called “smart growth,” the ideas promoted by these programs are anything but sustainable or smart. (As members of REAP, the governing bodies for both Wichita and Sedgwick County endorsed this grant.)

The urban plans that come out of these kinds of programs typically call for:

Redesigning streets to increase traffic congestion in order to discourage people from driving;
Increasing subsidies to transit, bike paths, and other “alternative” forms of travel even though these alternatives are used by few people;
Denying owners of land on the urban fringes the right to develop their property in order to make single-family housing more expensive;
Subsidizing high-density, developments that combine housing with retail shops in the hope that people will walk to shopping rather than drive;
Rezoning neighborhoods of single-family homes for apartments with zoning so strict that, if someone’s house burns down, they will have to replace it with an apartment.

My former hometown of Portland, Oregon has followed these policies for two decades, and the results have been a disaster. In their zeal to subsidize transit and high-density developments, the region’s officials have taken money from schools, libraries, fire, and police, leaving those programs starved and in disarray.

Since 1980, Portland has spent more than $3 billion building light-rail lines. Far from improving transit, the share of commuters taking transit to work has fallen from 9.8 percent in 1980 to 7.5 percent today, mainly because the region cut bus service to pay for the trains. Traffic congestion quadrupled between 1984 and 2004, which planners say was necessary to get people to ride transit.

The region’s housing policies made single-family homes so expensive that most families with children moved to distant suburbs where they can afford a house with a yard. Residents of subsidized high-density housing projects drive just about as much as anyone else in the Portland area, and developers have learned to their sorrow that if they follow planners’ guidelines in providing less parking for these projects, they will end up with high vacancy rates.

Despite these problems, Portland has received lots of positive publicity. The reason for this is simple: by forcing out families with children, inner Portland is left mainly with young singles and childless couples who eat out a lot, making Portland a Mecca for tourists who like exciting new restaurants. This makes Portland a great place to visit, but you wouldn’t want to live there unless you like noisy, congested streets.

The idea of “sustainable communities” is that planners can socially engineer people into changing their travel behavior by redesigning cities to favor pedestrians and transit over automobiles. Beyond the fact that this is an outrageous intrusion of government into people’s lives, it simply doesn’t work. Such experts as University of California economist David Brownstone and University of Southern California planning professor Genevieve Giuliano have shown that the link between urban design and driving is too weak to make a difference.

To protect livability and avoid unsustainable subsidies to transit and high-density development, Wichita, Sedgwick County, and other REAP members of south central Kansas should reject the $1.5 million grant offered by the federal government.

Randal O’Toole (rot@cato.org) is a senior fellow with the Cato Institute and author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future.

For more about the local grant, see Sedgwick County considers a planning grant.

Tagged as: Economic development, Economics, Environment, Free markets, Regulation, Sedgwick county government, Wichita city council, Wichita city government

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Kerpen on Obama’s regulatory extremism

by Bob Weeks on October 20, 2011

In the introduction to his book Democracy Denied, Phil Kerpen gives us a history lesson on a topic that doesn’t receive much discussion in public: the grab for executive power by presidents through the use of “signing statements.”

Elizabeth Drew made the case against Bush’s abuse of executive power in a lengthy New York Review of Books piece called “Power Grab.” She specifically highlighted Bush’s use of signing statements (a technique to object to elements of a law while signing it, and refusing to enforce those elements), the detention of foreign combatants at Guantanamo, and warrantless wiretaps. She concluded that Bush was a tyrant.

Kerpen explains how the view from the oval office can make one forget campaign promises:

Even the Bush practice that raised the most ire — the use of signing statements — was embraced by Obama just weeks after he took office, when he said: “it is a legitimate constitutional function, and one that promotes the value of transparency, to indicate when a bill that is presented for presidential signature includes provisions that are subject to well-founded constitutional objections.” Contrast that with what Obama had said about signing statements on the campaign trail: “This is part of the whole theory of George Bush that he can make laws as he is going along. I disagree with that. I taught the Constitution for 10 years. I believe in the Constitution and I will obey the Constitution of the United States. We are not going to use signing statements as a way of doing an end run around Congress.”

Not that Obama alone takes criticism for exercising presidential power contrary to the actions of Congress, as he describes the auto industry bailout in the last days of the presidency of George W. Bush. A bill didn’t make it through Congress, but Bush “repurposed” TARP funds — intended for banks — and used them for an auto bailout in the amount of $17.4 billion.

It is this use of executive power and agencies to bypass the will of people — as expressed through Congress — that is detailed in a book authored by Phil Kerpen and published this week: Democracy Denied: How Obama is Ignoring You and Bypassing Congress to Radically Transform America — and How to Stop Him.

Kerpen is Vice President for Policy at Americans for Prosperity, a national group that advocates for free markets and limited government at all levels. His website is philkerpen.com, and it features excerpts from the book along with a theatrical trailer.

Kerpen explains the problem by describing a solution: The Regulations from the Executive in Need of Scrutiny Act, or REINS Act. This proposed law would require any major regulatory action to be approved by Congress and receive the president’s signature. Kerpen writes: “We have regulators who are effectively writing and executing their own laws. The major policy decisions that affect every aspect of our economic lives are moving forward without consent of the people’s legitimately elected legislative branch.”

The problem is that often Congress passes generic laws and leaves it to regulatory agencies to write the rules that implement the law. By requiring Congressional and Presidential approval of major regulations, agencies will be accountable to the current Congress, and lawmakers will have a chance to ensure that actual regulations are consistent with the intent of enabling legislation.

Cap-and-trade energy legislation provides an example of Kerpen’s thesis, which is “how the Obama administration was disregarding Congress and the American people to accomplish its objectives through regulatory backdoors.” The legislation passed the House, but couldn’t pass the Senate. So what happened next? Kerpen explains Obama’s detour around Congress:

Just to show you how unfazed the Obama administration was by the political defeat of cap-and-trade, consider what’s on page 146 of Obama’s 2012 budget: “The administration continues to support greenhouse gas emissions reductions in the United States in the range of 17 percent below 2005 levels by 2020 and 83% percent by 2050.” Those just happen to be the same levels required by the failed Waxman-Markey cap-and-trade bill. Obama is telling the EPA to just pretend that the bill passed and regulate away.

In fact Obama’s EPA was already moving full steam ahead to implement a global warming regulatory scheme that could even be more costly than cap and trade — without the approval of the American people and without so much as a vote in Congress.

The remainder of the chapter details some of the ways EPA is accomplishing this backdoor regulation.

The Patient Protection and Affordable Care Act, otherwise known as ObamaCare, is another topic Kerpen covers where regulation is replacing lawmaking by Congress:

Nancy Pelosi was right in more ways then she realized when she infamously said “We have to pass the bill so that you can find out what is in it, away from the fog of the controversy.” Not only was the more than 2,000-page bill negotiated in secret and so densely complex that few humans could understand it, it also deferred most of the really difficult and important decisions to the regulators, including dozens of brand-new boards, committees, councils, and working groups. So even after ObamaCare had been passed there was no way to know what was really in it until the bureaucracy was assembled and began issuing regulations.

Kerpen describes the bill that passed as not “finished legislation,” and is now being interpreted by bureaucrats, the most powerful being HHS Secretary Kathleen Sebelius. Her office is now, according to Kerpen, “issuing a whole string of official guidelines and regulations that attempt to ‘correct’ the draft law, often by asserting things that the law doesn’t actually say.”

Other chapters describe regulation of the internet (net neutrality), card check, the Dodd-Frank financial regulations, and energy regulation. All of these represent the Obama administration either ignoring Congress or creating vast new powers for itself. The chart Kerpen created shows the plays being made.

Kerpen’s chart of Obama regulatory extremism. Click for larger version.

What about regulatory reform? Obama’s doing that. In January he wrote in the Wall Street Journal: “We’re looking at the system as a whole to make sure we avoid excessive, inconsistent and redundant regulation. And finally, today I am directing federal agencies to do more to account for — and reduce — the burdens regulations may place on small businesses.”

In a chapter titled “The Back Door to the Back Door: Phony Regulation Reform” Kerpen explains that this promise or regulatory reform by the president is a sham. Kerpen describes the executive order that implements regulatory review this way: “The new executive order is the regulatory parallel to the Obama administration’s strategy on federal spending, which is to spend at astonishing, record rates and rack up trillions of dollars in deficits while paying lip service to fiscal responsibility by establishing a fiscal commission.”

And in a gesture of true public service, Kerpen introduces us to Cass Sunstein, the man who is heading the Office of Information and Regulatory Affairs (OIRA), the agency that will be conducting the purported review of regulations. A quote from Sunstein: “In what sense is the money in our pockets and bank accounts fully ‘ours’? Did we earn it by our own autonomous efforts? Could we have inherited it without the assistance of probate courts? Do we save it without the support of bank regulators? Could we spend it if there were no public officials to coordinate the efforts and pool the resources of the community in which we live?”

Kerpen sums up Sunstein’s political philosophy of central planning:

The idea of Sunstein’s “nudge” philosophy is that the fatal conceit of central economic planning can somehow succeed if it is subtly hidden from view. Sunstein thinks that if he imposes regulations that steer our choices instead of outright forcing them, he can achieve desirable social objectives. … Given Suinstein’s views and the central role he will have in reshaping federal regulation to be “more effective,” we need to be deeply concerned that any changes that come out of the process may make regulation less apparent, but no less costly — and more effective at crushing genuine individual choice and responsibility and substituting the judgment (even if by a nudge instead of a shove) of a central planner.

The challenge, Kerpen writes in his conclusion to the book, “is to change the political calculus to elevate regulatory fights to the appropriate level in the public consciousness. We must make sure the American people understand that a disastrously bad idea becomes even worse when it’s implemented by backdoor, unaccountable, illegitimate means.”

Kerpen recommends passage of the REINS Act as a way to restore accountability over regulatory agencies to Congress. The two messages Congress needs, he writes, are: “You can delegate authority, but you can never delegate responsibility,” and “If you fail to stop out-of-control regulators, voters will hold you accountable.”

Tagged as: Americans For Prosperity, Regulation, United States Congress, United States government

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Kansas automobile dealers benefit from protectionist law

by Bob Weeks on October 20, 2011

This week the Kansas Register contains two items titled “Notice of Intent to Establish a New Motor Vehicle Dealer License.” People in Kansas want to open new automobile dealerships. But if a privileged class of people are able to persuade the Kansas director of vehicles, these actions won’t be allowed.

In Kansas, like many states, existing new car dealers are able to weigh in as to whether competition will be allowed into their market areas. In Kansas, the statue is 8-2430, captioned “Establishment of additional or relocation of existing new vehicle dealer; procedure; relevant market area.”

Examination of this statute lets us learn of its anti-competitive nature. A person proposing a new dealership must state in writing why the new dealership should be allowed to be formed. The law requires that the applicant provide “a short and plain statement of the evidence the licensee, or proposed licensee, intends to rely upon in meeting the burden of proof for establishing good cause for an additional new vehicle dealer.”

If the director of vehicles holds a hearing and finds that “good cause has not been established,” the director shall deny the application, according to the statute. The burden of proof is on the applicant for the new license, and must be proved “by a preponderance of the evidence presented.”

The statute says that in determining whether there is good cause for a new dealer, the director of vehicles shall consider:

“permanency of the investment of both the existing and proposed new vehicle dealers”
growth in population
“effect on the consuming public in the relevant market area”
“whether it is injurious or beneficial to the public welfare for an additional new vehicle dealer to be established”
whether dealers of the same make of cars are “providing adequate competition and convenient customer care”
whether the proposed new dealer would increase competition and if that increased competition would be “in the public interest”
the effect of a new dealer on existing dealer(s)

The decision of the director is not limited to these considerations, says the statute. Some of these factors are so vague and open-ended that they give the director reason to deny a new license virtually at his discretion. Will a new dealer have an effect on an existing dealer? Sure. Licensed denied.

These laws that restrain trade and competition are harmful to the consumer. In his recfent book The Right to Earn a Living: Economic Freedom and the Law, author Timothy Sandefur discusses the Illinois Motor Vehicle Franchise Act, which has language similar to the Kansas law. He writes:

Although cloaked in the language of public benefit, such laws are really private-interest legislation designed to allow the government to choose each company’s “fair share” of the trade. But the only way of determining what share of the trade is “fair” for any business is its success with consumers who are free to choose. If bureaucrats, rather than consumers, decide what amount of economic success is “fair,” businesses will devote their time not to providing quality products at affordable prices but to wooing government officials to give them special favors. … Consumers, again, are victims of anti-competitive laws of which most of them are not even aware.

Sandefur cites studies that show that states with laws like Kansas’ have fewer new-car dealerships, and higher prices for new cars. “This price difference means that consumers are forced to pay more for cars without getting any increased value; the extra money is merely transferred into the pockets of politically influential car dealers.”

This law is bad for all Kansans except those who own automobile dealerships. It ought to be repealed. There’s a mechanism in place. Kansas Governor Brownback’s Executive Order 11-01, creates the “Office of the Repealer.” In its preamble, the order recognizes the administration’s priority to promote “growth of liberty and economic opportunities for the citizens of Kansas and for Kansas businesses” and our state’s “mutual interest in a system of government, laws, regulations, and other governing instruments that are reasonable, comprehensible, consistent, predictable, and minimally burdensome.”

I suggest to the repealer — Dennis Taylor is his name — that we’ve found the law that should be first to go by the wayside.

Tagged as: Economic freedom, Kansas state government, Regulation

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Greenpeace and allies again attack Koch Industries

August 29, 2011

Last week saw the release of two reports criticizing Koch Industries for its opposition to heavy-handed regulation of the chemical industry.

Tagged as: Capitalism, Chemical facility anti-terrorism standards, Environment, Koch Industries, Politics, Regulation

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