Center for Technology and Innovation | Competitive Enterprise Institute

Comcast's Puny Data Cap Increase

Ryan Radia — Fri, 18 May 2012 19:50:17 +0000

From Timothy B. Lee's op-ed on Forbes:

Ryan Radia wants to know what I think of Comcast’s announcement that it’s raising its data cap from 250 GB to 300 GB and making various other changes to its usage-based pricing scheme.

Ryan Radia

Fri, 2012-05-18

Citation Source:

Forbes

http://www.forbes.com/sites/timothylee/2012/05/18/comcasts-puny-data-cap-increase/

Horses In the Dining Room?

Nicole Ciandella — Fri, 18 May 2012 20:21:59 +0000

From Rep. Jason Chaffetz' op-ed in The Daily Herald:

Some 1.65 million lawsuits are filed each year over enforcement of federal regulations according to Berkeley law professor Sean Farhang, author of The Litigation State. Estimates by the Competitive Enterprise Institute suggest that regulation cost the economy $1.75 trillion in 2008. That's Trillion with a T. If you were to spend $1 million a day every day, it would take you nearly 3,000 years just to get to $1 trillion.

CEI Staff

Thu, 2012-05-17

Citation Source:

The Daily Herald

http://www.heraldextra.com/news/opinion/horses-in-the-dining-room/article_f7ec243e-845d-5e7c-b9f6-5735ca9bd9dd.html

Light Bulb Battle Pits Tea Party Against Manufacturers

Myron Ebell — Wed, 16 May 2012 16:48:49 +0000

From Ari Natter's article in Bloomberg:

“I think that many people feel it is a personal intrusion into their lives by government,” said Myron Ebell, director of Freedom Action. His grass-roots political group supports the tea party goals of smaller government and less regulation and is associated with the Competitive Enterprise Institute free-market think tank.

Myron Ebell

Wed, 2012-05-16

Citation Source:

Bloomberg

http://www.bloomberg.com/news/2012-05-16/light-bulb-battle-pits-tea-party-against-manufacturers.html

Ten Thousand Commandments 2012

Clyde Wayne Crews — Mon, 14 May 2012 20:31:10 +0000

Full Document Available in PDF

The scope of federal government spending and deficits is sobering. Yet the government’s reach extends well beyond the taxes Washington collects and its deficit spending and borrowing. Federal environmental, safety and health, and economic regulations cost hundreds of billions—perhaps trillions—of dollars every year over and above the costs of the official federal outlays that dominate the policy debate.

Economics 101 on tax incidence explains how and why firms generally pass along to consumers the costs of some taxes. Likewise, some regulatory compliance costs that businesses face will find their way into the prices consumers pay and into wages earned. Precise regulatory costs can never be fully known because, unlike taxes, they are unbudgeted and often indirect—even unmeasurable as such. But scattered government and private data exist on scores of regulations and on the agencies that issue them, as well as estimates of regulatory costs and benefits. Compiling some of that information can make the regulatory state somewhat more comprehensible. That is one purpose of the annual Ten Thousand Commandments report.

Highlights of the Report:

• Estimated regulatory costs, while "off budget," are equivalent to over 48% the level of federal spending itself.

• The 2011 Federal Register finished at 81,247 pages, just shy of 2010’s all-time record-high 81,405 pages.

• Regulatory compliance costs dwarf corporate income taxes of $198 billion, and exceed individual income taxes and even pre-tax corporate profits.

• Agencies issued 3,807 final rules in 2011, a 6.5 percent increase over 3,573 in 2010.

• Of the 4,128 regulations in the works at year-end 2011, 212 were “economically significant,” meaning they generally wield at least $100 million in economic impact.

• 822 of those 4,128 regulations in the works would affect small businesses.

• The total number of economically significant rules finalized in 2011 was 79, down slightly from 2010 but up 92.7 percent over five years, and 108 percent over 10 years.

• Recent costly federal agency initiatives include the Environmental Protection Agency’s Mercury and Air Toxics Standards Rule and the Department of Transportation’s Fuel Economy Standards.

Clyde Wayne Crews

Tue, 2012-05-15

Sub Title:

An Annual Snapshot of the Federal Regulatory State

Expanded 2012 Edition of Ten Thousand Commandments Now Available

Nicole Ciandella — Tue, 15 May 2012 12:19:05 +0000

Washington, D.C., May 15, 2012 – Today, the Competitive Enterprise Institute (CEI) released the expanded 2012 edition of Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State. CEI Vice President for Policy Wayne Crews authors the report every year to draw attention to the “hidden tax” of regulations---a cost often imposed not by legislators, but by unelected federal bureaucrats.

When lawmakers and government officials spend public funds on new initiatives, they properly expose themselves to taxpayers’ approval or criticism. But, Crews explains, when federal agencies advance government goals by regulating the private sector, the costs of their activity are hidden from public view. Crews writes, “Rather than pay directly and book expenses for new initiatives, the federal government can require the private sector, as well as state and local governments, to pay for federal initiatives through compliance costs.”

While the exact cost of federal regulations can never be known, the Small Business Administration has estimated annual complaince costs of well over $1 trillion since the mid-2000s. The most recent evaluation, a controversial one based on data and information available in 2008, was $1.7 trillion.

Meanwhile, numbers of rules, pages in the Federal Register, and economically significant rules are rising under President Obama.

Below are highlights from the 2012 edition of Ten Thousand Commandments:

• Estimated regulatory costs, while "off budget," are equivalent to over 48% the level of federal spending itself.

• The 2011 Federal Register finished at 81,247 pages, just shy of 2010’s all-time record-high 81,405 pages.

• Regulatory compliance costs dwarf corporate income taxes of $198 billion, and exceed individual income taxes and even pre-tax corporate profits.

• Agencies issued 3,807 final rules in 2011, a 6.5 percent increase over 3,573 in 2010.

• Of the 4,128 regulations in the works at year-end 2011, 212 were “economically significant,” meaning they generally wield at least $100 million in economic impact.

• 822 of those 4,128 regulations in the works would affect small businesses.

• The total number of economically significant rules finalized in 2011 was 79, down slightly from 2010 but up 92.7 percent over five years, and 108 percent over 10 years.

• Recent costly federal agency initiatives include the Environmental Protection Agency’s Mercury and Air Toxics Standards Rule and the Department of Transportation’s Fuel Economy Standards.

The report includes a spotlight feature on the Federal Communications Commission, further analysis of trends in the numbers of regulations, and an appendix of historical tables. Crews also proposes reforms that would improve regulatory transparency and restore accountability to Congress, who, Crews argues, should bear “direct responsibility for every dollar of new regulatory costs.”

>> Read the full 2012 report: Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State.

>> Browse archives of past reports.

>> Visit http://www.tenthousandcommandments.com for regular updates and data.

Nicole Ciandella

Tue, 2012-05-15

Sub Title:

Annual Report on Regulatory Costs Seeks to Hold Congress Accountable; Shows Federal Register Pages and "Economically Significant" Rules on the Rise

ObamaCare's Killer Device Tax

Nicole Ciandella — Mon, 14 May 2012 15:30:03 +0000

Much of the political conversation in Washington these days concerns innovation, job creation and competitiveness. But talk is cheap, and elected officials must enact policies that enhance economic activity and job creation. The medical device industry is an example of Washington doing exactly the opposite.

Medical device manufacturing is one of the nation's most dynamic and vibrant industries. The United States is the global leader in medical technology innovation, and it is one of the few major industries with a net trade surplus. This industry is responsible for more than 400,000 American jobs—and is indirectly responsible for almost two million more that supply and support this highly skilled workforce. Most important, its products are essential elements of modern medical care. They include everything from CT scanners and pacemakers to blood pressure cuffs and robots used by surgeons.

Yet instead of protecting this paragon of American ingenuity and innovation, the Obama administration and Congress have viewed the industry as a cash cow from which they could milk profits to help pay for the president's health law. So they added to the Affordable Care Act a 2.3% excise tax on medical devices that will take effect at the beginning of 2013.

This tax is especially pernicious because it is assessed on sales, not profits. To put this in perspective, imagine that you've manufactured medical devices and had sales of $1 million, after all your costs and expenses—everything from materials and labor to research and development—your profit was $100,000. The excise tax would be $23,000, wiping out almost 25% of your profits.

Many medical device companies have to ramp up sales before they become profitable. Due to the long, draconian and sometimes unpredictable regulatory process that must be negotiated before a product can be sold, it can take from $70 million to $100 million in total sales before these businesses make their first cent of profits. Nevertheless, they would have to pay the excise tax on their revenue.

The nation's medical device industry is vulnerable. It is not comprised of behemoths: 80% of its companies have 50 or fewer employees, the very businesses we are relying on to turn the U.S. economy around. The new excise tax comes when regulatory delays and uncertainty are increasing, and as many device firms are shutting down or moving abroad to take advantage of the more favorable tax and regulatory climate in Europe. The tax will force companies to lay off employees, cut back on research and development, or diminish capital investment.

The governors of five prominent states—Tom Corbett of Pennsylvania, Mitch Daniels of Indiana, Nikki Haley of South Carolina, Robert McDonnell of Virginia and Scott Walker of Wisconsin—agree. "As governors of states with a significant concentration of medical technology manufacturers, we believe that this tax could harm U.S. global competitiveness, stunt medical innovation and result in the loss of tens of thousands of good-paying jobs," they wrote in an April 30 letter to congressional leaders.

Anticipating the excise tax, several companies already have announced layoffs or withheld investments. Recent surveys show that medical technology executives are examining a host of other undesirable options, including passing along the added costs through price increases. Even if the market would tolerate that—which is surely questionable given the current pressure to drive down costs—it would, ironically, raise the costs of medical care. That was not supposed to be an outcome of ObamaCare.

The U.S. remains the global leader in medical device development and manufacturing, although reports from PricewaterhouseCoopers and others show that its lead is tenuous, in part due to regulatory uncertainties and dysfunction that thwart innovation. If we allow foreign competition to seize the lead, it will be difficult to regain.

We need to create a more nurturing entrepreneurial climate, one in which ingenuity and innovation are rewarded, not penalized. Legislation has been introduced in both the House and Senate to repeal the medical device excise tax. That would be a good start.

Henry I. Miller

Fri, 2012-05-11

Citation Source:

The Wall Street Journal

http://online.wsj.com/article/SB10001424052702304451104577387870788041912.html?mod=WSJ_Opinion_LEFTTopOpinion

Coalition Letter on Cyber Security Act of 2012

Ryan Radia — Thu, 10 May 2012 18:22:01 +0000

Full Document Available in PDF

We, the undersigned organizations, write to express our deep concerns with S. 2105, the Cyber Security Act of 2012. In particular, we are concerned that the information-sharing provisions in Title VII allow companies, “notwithstanding any law,” to share sensitive Internet and other information with the government without sufficient privacy safeguards, oversight or accountability.

Ryan Radia

Thu, 2012-05-10

The Off-Label Drug War of Words

William Frezza — Mon, 07 May 2012 19:43:32 +0000

If knowledge is power and ignorance is bliss, what is power used to prevent knowledge from eliminating ignorance?

I don't know; ask the FDA (U.S. Food and Drug Administration).

The practice of prescribing a drug "off label" to treat an illness other than that for which it was originally intended predates not only the FDA, but Western Civilization itself. The trial and error process by which medicine has advanced-and continues to advance-has certainly been made more scientific by the clinical trial processes required before the FDA approves a drug for a new use. Thankfully for the cause of progress, this is not the only place where trial and error occurs.

Once a new drug has been deemed safe by regulators and is released to the market, it is still lawful for scientists and physicians to use their judgment and experience, as well as that of their peers, to advance the clinical frontier. Nowhere is this more important than in treating deadly diseases like cancer, where the stakes of waiting for new drug approvals are extremely high, and so-called orphan diseases, where the financial motivation to develop new treatments is low.

Many of these off-label uses have proven so successful that they have gone on to become "standard of care" treatments. Other off-label uses, particularly for treating allergies or psychiatric ailments, are widespread despite the fact that 75 percent of off-label treatment lacks scientific evidence demonstrating improved efficacy compared to a placebo. A few off-label uses, like the notorious Fen-Phen combination once prescribed for weight loss, proved to have disastrous side effects. Yet such risk of error is inherent to the trial-and-error process.

The most commonly quoted estimate is that 21% of all prescriptions are written for off-label use. This generates valuable clinical experience and knowledge that is formally disseminated through peer-reviewed journal articles, medical conferences, and manufacturer sponsored educational outreach programs. It is also informally disseminated through doctor-to-doctor, doctor-to-patient, patient-to-patient, and patient-to-doctor conversations, increasingly mediated by online social networks.

Some of this dissemination-even if it is proven to be 100% truthful, such as distribution of a peer reviewed paper-can land you to jail. Even more strangely, one person can be sent to jail, or a corporation fined millions of dollars, for disseminating the same information which it would be perfectly legal for another person or corporation to distribute. The fact that the information is both truthful and beneficial to doctor and patient is no defense.

How is this possible in the USA?

I don't know; ask the FDA.

Despite acknowledging the importance and even necessity of off-label prescribing, the FDA has been waging war on it for years. The regulatory logic behind the agency's position is that no one would submit to the enormous expense of additional clinical trials of already approved drugs for new uses if those new uses enjoyed a level playing field in the marketplace despite lack of FDA approval. The FDA cannot directly control the actual practice of medicine (at least not yet), and the First Amendment unambiguously protects free speech if it is truthful and non-commercial. So the only club the agency has left in an effort to encumber the off-label market is to go after commercial speech, which enjoys a lower level of constitutional protection.

The FDA has waged much of this war through enforcement activities, including the use of undercover agents posing as doctors. This has led to multi-million dollar settlements, jail terms, and in at least once case the suicide of a doctor after his life was ruined. Most of those caught in the FDA's snare were never accused of disseminating untruthful information. Rather, they were accused of having a financial interest in the dissemination of truthful information in contravention to FDA regulations. This rendered their activities commercial speech, whose First Amendment protection-attenuated as it already is-has been under assault for over a century.

The FDA has gotten away with this despite the fact that its regulations are muddled and subject to capricious enforcement. In response, manufacturers have been begging both the FDA and the courts to make the rules clear and unambiguous, in order to create a bright red line between permitted and banned activities. Patient groups also have petitioned the FDA to get its act together. Lawsuits abound. A comprehensive review of the courtroom battles trying to clear up this mess can be found in an August 2011 article in Health Matrix: The Journal of Law & Medicine, titled, "Hidden Truth: The Perils and Protection of Off-Label Drug and Medical Device Promotion."

But don't hold your breath. Capriciousness, unpredictability, obfuscation, and delay are central to the FDA's regulatory campaign to sabotage off-label prescribing. Meanwhile, offering inducements, such as patent extensions or tax advantages, to convince manufacturers to submit approved drugs to additional clinical trials for new uses seem not to have occurred to the FDA.

The chilling effect of this regulatory overreach on innovation is devastating. But innovation isn't the only victim. The damage to the rule of law is profound as well.

William Frezza

Wed, 2012-05-02

Citation Source:

Bio IT World

http://www.bio-itworld.com/2012/05/02/the-off-label-drug-war-of-words.html

How a Cybersecuity Protection Bill Might Differ From CISPA

Clyde Wayne Crews — Fri, 27 Apr 2012 17:52:08 +0000

The House of Representatives is expected to vote on “CISPA,” the Cyber Intelligence Sharing and Protection Act this week. Whatever advocates’ frustrations, it’s not clear what government’s capabilities really are with respect to private critical infrastructure security and cybersecurity, regardless of resources.

Given that, ensuring that nothing blocks markets from reacting as fluidly as possible, rather than federally over-steering cybersecurity, should be the guiding principle. There’s a chance to adopt that stance next, because the Senate won’t likely pass CISPA and a White House veto is promised anyhow; but it would require a somewhat different mindset.

Those who feel we must legislate cybersecurity remain far apart. But it’s not really surprising; agreement even on fundamentals with respect to where to allocate cybersecurity resources and know-how doesn’t exist. Nor are we sure of the relative likelihood of physical vs. cyber-attacks, for example; or of cyber-terror or cybercrime aimed at the power grid, food processing facilities, chemical plants, banks or other institutions.

Or why are we handwringing over CISPA instead of, say, worrying about an electromagnetic pulse.

So it’s complicated. On the one hand the bill, aimed at threat information sharing between government and the private sector, is more limited than several recent proposals; there’s no “kill switch” for the Net; there’s no standards-setting; no major security requirements imposed on business.

But the outcry over the bill’s potential privacy-invading features has now reached anti-SOPA/PIPA proportions; those were the intellectual property bills that flamed out early this year and late last. Civil liberties advocates holler: Online freedom mattered greatly there, and privacy matters here.

CISPA barks up the wrong tree in a sense, capable of cementing in existing frailties such that regulation will surely persist in future years even when it shouldn’t.

An actual cyberspace protection plan, in my view, is different; it would embark upon the liberalization of heavily regulated critical infrastructure assets like telecommunications and electricity and water that are artificially siloed and managed as 20th century utilities. We need to open up unprecedented investment and foster new wealth creation in them. In similar vein, a cybersecurity plan would forbid compulsory “net neutrality” in the telecommunications industry that, to me, threatens sound network evolution and armor-plating. The relationship between cybersecurity and variously regulated critical infrastructure needs intense exploration, but I don’t really see it on the radar.

Policymakers more attuned to cybersecurity might also ponder relaxation of antitrust. One of the more non-controversial cybersecurity tasks often ascribed to government and prominent in CISPA is that of coordinating (certain) information sharing. But there may be impediments to voluntary information sharing that, if relaxed, lessen the pressure for having Washington run the show. It might be that we should examine how antitrust laws may inhibit coordination among firms. Relaxing antitrust constraints so firms can enhance reliability and security not just by sharing information but though “partial mergers” of the kind that would make today’s antitrust enforcers squirm may be what we need.

Overly aggressive interpretations of the Freedom of Information Act also may inhibit certain private information sharing.

Washington does have a substantial cybersecurity role that entails protecting government’s own insecure networks and setting reasonable internal security standards. It involves arresting computer criminals, not cyber-regulating. It means making sure government doesn’t increase its own culpability in cybersecurity risk by instigating unwise information sharing. It’s too easy to undermine individual privacy in this age of proposed national ID cards, biometrics, RFID, and evolving cloud-computing and mobile-device information standards. People need to be able to say no to the wrong kind of government information collection.

Private sector experimentation in cybersecurity is messy but important. It’s needed to appreciate what counts as appropriate and inappropriate information sharing and strategies. Companies are automating and outsourcing security; biometrics are restricting access to critical facilities.

And fragile, frontier institutions of insurance and liability are emergent, and should not be improperly interrupted by CISPA’s immunity provisions.

Moreover, lessons learned from today’s parallel online privacy and digital piracy conflicts will inform cybersecurity more generally.

We do need to better distinguish between commercial and political anonymity. The tug of war between anonymity vs. authentication matters. Outlawing online anonymity was never an answer for cybersecurity and is a non-starter; but private sector “regulation” of anonymity via developing authentication technologies far more capable than those of today can be critical in commercial settings and aid cybersecurity. If we were building the Net from the ground up knowing what we know today, perhaps we might embed authentication at the core in a way absent today. Experimentation in that vein might do more good than the sharing approach of CISPA.

Whether a law is passed or not, few stand in any position to make security guarantees on an Internet with a built-in, open and trusting architecture.

So cybersecurity legislation mustn’t undermine the evolution needed to make such guarantees real. Information sharing as in CISPA can help a lot but isn’t the sole answer, and compulsion should be avoided; And neither immunity nor the also-proposed opposite approach of imposed liability are appropriate reactions. Yet both have been put into legislative language.

In critical infrastructure security and cybersecurity, we’ll always need the private sector’s door locks, barbed wire and guards more than we need the feds (apart from criminal prosecutions). The cybersecurity bill to affirm that principle has yet to appear.

Clyde Wayne Crews

Thu, 2012-04-26

Citation Source:

Forbes

http://www.forbes.com/sites/waynecrews/2012/04/26/how-a-cybersecurity-protection-bill-might-differ-from-cispa/

Internet Bill Could Allow DHS to Spy on Congress, Supreme Court

Ryan Radia — Thu, 26 Apr 2012 19:11:22 +0000

From Josh Peterson's article on The Daily Caller:

“Ryan Radia, associate director of technology studies at the Competitive Enterprise Institute, a libertarian-leaning think tank that has criticized CISPA, suggested that it could also allow DHS to monitor the communications of the federal courts and Congress, and intercept tax returns sent to the IRS,” CNET reported on Tuesday evening.

Ryan Radia

Thu, 2012-04-26

Citation Source:

The Daily Caller

http://dailycaller.com/2012/04/26/internet-bill-could-allow-dhs-to-spy-on-congress-supreme-court/