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October 27th, 2014 at 2:48 pm
This Week’s “Your Turn” Radio Show Lineup
Posted by Timothy Lee Print

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn:  Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 CDT/5:00 pm EDT:  Phil Kerpen, President of American Commitment — Election 2014, why democrats will never fix ObamaCare and American Commitment’s big win in Moveon.org’s video contest;

4:30 CDT/5:30 pm EDT:  Steve Bucci, Director for Foreign and National Security Policy at The Heritage Foundation — “Lone Wolf” terrorist attacks;

4:15 CDT/5:15 pm EDT:  Mike Wendy, President of Media Freedom — Net Neutrality;

5:00 CST/6:00 pm EDT:  Jonathan Last, Senior Writer at the Weekly Standard — “The Seven Deadly Virtues: 18 Conservative Writers on Why the Virtuous Life is Funny as Hell”; and

5:30 CDT/6:30 pm EDT:  Sally Pipes, President and Taube Fellow in Health Care Studies at the Pacific Research Institute — ObamaScare and Ebola.

Listen live on the Internet here.   Call in to share your comments or ask questions of today’s guests at (850) 623-1330.


October 27th, 2014 at 10:22 am
Title II Reclassification: Not Just Unwise, But Also Illegal
Posted by Timothy Lee Print

Those of us who oppose the Obama Federal Communications Commission’s (FCC’s) effort to bridle the Internet  with so-called “net neutrality” regulation have explained at length why reclassifying the Internet as some sort of 1930s-style public utility under Title II is a dangerous idea.

Perhaps we we haven’t devoted appropriate time, however, to explaining why it’s almost certainly illegal.

As a broader policy matter, the vague and muddled calls from the extremist left to reclassify broadband typically don’t extend beyond an emotional demand for federal bureaucrats at the FCC to “do something.”  Or, as we often put it, they seek to impose a “fix” for an Internet that isn’t at all “broken.”  Accordingly, they go about offering substantive policy proposals as if lunching at a salad bar stocked with bad ingredients.  They pick and choose bad items, assembling what they consider a perfect combination.

But what they instead create is a Frankenstein-like monstrosity.

And in terms of legality more specifically, the FCC would be treading onto extremely unstable ground if it opts to follow the demands of far-left activists by rushing headlong into this dubious Title II reclassification proposal.  The fact of the matter is that the FCC has long contended that the Internet is a Title I service.  Therefore, in order to reclassify, the law requires it to meet a higher burden of proof as to why it got the initial classification wrong.  Hysterical activism from the far left that has tended to characterize this debate won’t suffice, whether as a matter of law or a matter of logic.  The FCC has already twice lost this legal battle in court (first in 2010, and again in 2014).  Rather than stubbornly tempt a third judicial rebuke of its effort to impose “net neutrality,” it would be better to learn its lesson as it proceeds with its rulemaking effort.

And that’s only with regard to traditional wired networks.  When it comes to wireless Internet (like the 4G/LTE smartphone technology), the law actually expressly prohibits the FCC from imposing Title II-type rules.  That clarity may not discourage the net-roots fringe from demanding reclassification, but it most certainly should stop the FCC from exceeding its legal mandate and once again blatantly flouting both the letter and spirit of applicable law.

Despite six years of effort to the contrary from the Obama Administration, we remain a nation of laws, not men.  That timeless principle does not yield to extremists’ pursuit of the “net neutrality” unicorn.

To date, and through previous administrations of both parties over the past two decades, the FCC has avoided attempting to classify Internet service under Title II for good reason:  it is bad policy and bad law.  Everyone except those clinging to an ideologically extreme position on the matter have recognized that reality.  We therefore cannot allow such Title II extremists to suddenly divert us from the “light touch” regulatory course that has made the Internet one of the most beneficial and revolutionary innovations in human history.  There’s too much to lose.

September 30th, 2014 at 4:17 pm
Global Warming… Back in 1821?
Posted by Timothy Lee Print

Like clockwork, climate alarmists attributed Hurricane Sandy in 2012 to anthropogenic (man-caused) global warming.  In one typically irrational commentary, Paul Barrett equated global warming to steroids in its effect on the storm.

With that hyperbole and hysteria in mind, a Discovery Channel item this week provided appropriate humor.  Entitled “Thought Sandy Was Bad?  Revisit This 1821 Hurricane,” its historical piece offers beneficial perspective:

Remember all the hype about Hurricane Sandy being a ’superstorm,’ a once-in-500-years convergence of meteorological nastiness?  According to a newly-published study by a Swiss insurance firm, Swiss Re, things could have been a lot worse.  Though the combination of factors that created Sandy was indeed unusual, Sandy wasn’t the most powerful storm that’s ever hit the U.S. East Coast.  That distinction probably belongs to the massive 1821 Norfolk and Long Island hurricane, which moved along the Mid-Atlantic before striking the New York/New Jersey coastline with wind speeds of 156 miles per hour.”

Too bad the alarmists weren’t around in 1821 to attribute causation to steam engine technology.  But perhaps contemporary alarmists can instruct us on how this only substantiates their ongoing charade.

September 26th, 2014 at 1:30 pm
In Property Rights Victory, Court Rules Digital Radio Must Compensate Artists for Playing Pre-1972 Songs
Posted by Timothy Lee Print

Last June, we highlighted important legislation proposed by Rep. George Holding (R – North Carolina) by asking a straightforward question: “Is it fair that digital radio broadcasters pay royalties for the privilege of playing songs recorded after the arbitrary date of February 15, 1972, but not for pre-1972 recordings?”

This week provided welcome news out of California, as a court correctly answered “no” to that question.

Here is the basic legal issue, as we wrote in June:

Recordings predating 1972 remain protected by a patchwork of state laws, whereas recordings after February 15 of that year going forward are covered under federal law.  That amounts to a historical idiosyncrasy, without any prevailing substantive logic.  But digital radio stations, some of which center entirely upon pre-1972 music, have capitalized on the legal aberration to simply stop paying for performance of the pre-1972 songs still covered by state laws…

Digital radio stations operate under privilege of federal license to broadcast, but take the position that they need not pay for pre-1972 songs that remain protected under state laws.  They profit from playing those songs, but refuse to pay accordingly.  Keep in mind that unlike contemporary performers, many of those older affected artists are no longer capable of touring, and sales of their records have diminished over the years, leaving royalties for performance of their songs as their only remaining means of continuing compensation.”

The proposed federal legislation to rectify that anomaly remains pending, but a court applying one among the patchwork of existing state laws referenced above ruled in accord with the bill’s goal.  In fact, the California court in question granted summary judgment, meaning that it didn’t consider the legal question worthy of going before a jury:

In the battle between today’s digital-music services and yesterday’s oldies artists, score one for the geezers.  The founders of the ’60s rock band the Turtles won a summary judgment on Monday against Sirius XM Radio Inc., in a lawsuit alleging that the satellite-radio company violated California copyright law by playing the band’s songs without permission.  The decision could entitle the band and other oldies acts to royalties from the satellite-radio broadcaster as well as from Internet radio companies like Pandora Media Inc.  Terrestrial radio broadcasters in the U.S. don’t pay royalties to performers of songs but the decision could affect their obligation to do so.”

This is a welcome and correct ruling, but the fact remains that artists shouldn’t have to sue across 50 various states, with inconsistent legal venues, to vindicate their property rights.  Digital radio is a fantastic technological advance, but that doesn’t justify exploitation of legal quirks to dodge compensation to artists who recorded songs prior to the arbitrary date of February 15, 1972.  Hopefully, federal lawmakers follow the court’s wisdom and streamline federal law to resolve this troublesome issue.

September 22nd, 2014 at 11:44 am
If Britain Were a U.S. State, It Would Be the Second-Poorest
Posted by Timothy Lee Print

An interesting new bit of original research by The Spectator’s Fraser Nelson entitled “Why Britain Is Poorer Than Any US State, Other Than Mississippi” helps reconfirm the concept of American Exceptionalism even amid the Obama Malaise. First, Mr. Nelson takes a welcome swipe against the all-too-common habit of American self-criticism:

No one beats up America better than Americans.  They openly debate their inequality, conduct rigorous studies about it, argue about economics versus culture as causes.  Their universities study it, with a calibre of analysis not found in Britain.  Americans get so angry about educational inequality that they make films like “Waiting for Superman.”  And the debate is so fierce that the rest of the world looks on, and joins in lamenting America’s problems.  A shame:  we’d do better to get a little angrier at our own.”

Nelson then gets to the heart of the matter:

If Britain were to somehow leave the EU and join the US, we’d be the 2nd-poorest state in the union.  Poorer than Missouri.  Poorer than much-maligned Kansas and Alabama.  Poorer than any state other than Mississippi, and if you take out the south east we’d be poorer than that, too.”

He also addresses the cliche of horrific American inequality along the way:

It’s not surprising that America’s best-paid 10 per cent are wealthier than our top 10 percent.  That fits our general idea of America:  a country where the richest do best while the poorest are left to hang.  The figures just don’t support this.  As the below chart shows, middle-earning Americans are better off than Brits.  Even lower-income Americans, those at the bottom 20 percent, are better-off than their British counterparts.  The only group actually worse-off are the bottom 5 per cent.”

Obama may not believe that American Exceptionalism is of any greater merit than British Exceptionalism, but the facts and some Britons contradict that notion.

September 19th, 2014 at 2:43 pm
New Study: Online “Cyberlockers” Facilitating Piracy
Posted by Timothy Lee Print

Happy “International Talk Like a Pirate Day,” which can make for a bit of harmless office fun on a Friday.

Unfortunately, real piracy of the online variety is no laughing matter.  It costs the American economy billions of dollars and tens of thousands of jobs each year, and even threatens life and health through such things as counterfeit drugs.

This week, a new report was released highlighting the role played by online “cyberlockers” in facilitating worldwide piracy.  Entitled “Behind the Cyberlocker Door:  A Report on How Shadowy Cyberlocker Businesses Use Credit Card Companies to Make Millions,” the report from Digital Citizens Alliance cogently introduces and explains the nature of this problem:

Rogue ‘cyberlocker’ operators peddling stolen content are making nearly $100 million in annual revenues by operating as hubs for the for-profit distribution of infringing digital copyrighted content.  That is the finding of our research looking at the profitability of the leading cyberlockers.  Unlike legitimate cloud storage services whose clients are people and businesses that need to store, access, and share data, the cyberlocker business model is based on attracting customers who desire anonymously to download and/or stream popular, copyright infringing files that others have posted.  The cyberlocker business model is designed around content theft.  In fact, cyberlockers generally pay or provide various incentives to those who distribute popular infringing content and discourage the use of their services for reliable data storage.  As this study shows, the overwhelming bulk of files distributed by cyberlockers infringe copyright.”

For those unfamiliar with the term “cyberlockers,” here is DCA’s definition:

Cyberlockers are online services that are intentionally architected to support the massive distribution of files among strangers on a worldwide and unrestricted scale, while carefully limiting their own knowledge of which files are being distributed.  The link to a user’s file stored on a cyberlocker can be posted to any location for any user to access:  cyberlockers generally place no limits on who can download or stream a file.”

DCA studied 30 sites, and those alone accounted for some $96.2 million in total annual revenue, or $3.2 million per site (one site alone accounting for $17.6 million).  While we must avoid interfering with meritorious technological innovation and the legitimate online marketplace, we must at the same time recognize this emerging problem and advocate corrective social policy to remedy existing piracy threats and deter their spread. Legitimate market participants must therefore determine proper recourse, and elected officials must also begin to consider reasonable avenues to help put a stop to this growing form of theft.

September 12th, 2014 at 10:18 am
David Horowitz: Stop Playing Nice Guy, Republicans
Posted by Timothy Lee Print

In our piece this week entitled Senate Democrats and Scorched-Earth Judicial Politics , we note the way in which Senate Democrats habitually play hardball, whereas Republicans tend to play Nerf.  Disturbingly, the Democrats’ methods paid off just days ago:

Just days ago, the D.C. Circuit Court of Appeals, which Reid and Obama had packed after ending the Senate filibuster, voted to rehear en banc the Halbig v. Burwell decision from earlier this year…  The full court’s unjustified decision to rehear the case en banc not only unnecessarily obstructs and delays Supreme Court resolution, it appears to be a transparently politicized decision to rescue ObamaCare.  On that note, Harry Reid openly congratulated himself when asked whether his Senate tactics underlie this turn of events by saying, ‘If you look at simple math, it sure does.’”

Famed conservative author David Horowitz agrees in an excellent Washington Times piece today entitled “Why Nice Guys Finish Last in Politics:  Politics is War, but Some GOPers Just Don’t Get It.” His observations are worth quoting at length:

Going into the 2016 election, you can count on Republicans to stay ‘positive,’ to emphasize policy, and above all, not to hit the Democrats where it hurts.  You can also count on Democrats to do just the opposite.  Because they always do…

Democrats have a massive punch in the mouth for Republicans, and it’s always the same punch.  Republicans are painted as racists, sexists, homophobes, anti-poor, selfish and uncaring.  Note that this is a moral indictment.  It defames the character of Republicans like the corporate predator and dog-abuser Mitt Romney.  The only answer to an attack like this is to attack Democrats with an equally potent indictment of their moral character…

How difficult is it to understand this:  If you are perceived by voters as racist or even just selfish and uncaring, they are not going to have the same interest in your policy advice, as Mitt Romney found out in 2012.  Here is what Republicans need to understand to win:  Politics is street war, and there are no referees to maintain the rules – and the ones that infrequently pop up (such as CNN’s Candy Crowley during one of the last presidential debates) are there to bury you.  Attack your opponents before they attack you.  Attack them with a moral indictment;  if well-executed, it will win the day.

And remember that even if you fail to do this to them, they will certainly do it to you.  You can count on that.”

Americans can determine for themselves whether Horowitz’s advice is wise.  But they must also acknowledge that Republican presidential campaigns in recent decades have been more notable for their moderation than their tenacity, whereas the opposite is true of Democratic campaigns.  And which party has won five of the past six popular presidential votes, after the landslide Reagan and Bush victories of the 1980s?

September 8th, 2014 at 2:42 pm
This Week’s “Your Turn” Lineup
Posted by Timothy Lee Print

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 CDT/5:00 pm EDT:  Ambassador Francis Rooney, former U.S. Ambassador to the Holy See and author of The Global Vatican — Persecution of Christians in the Middle East;

4:30 CDT/5:30 pm EDT:  Andrew Langer, President of the Institute for Liberty — Local Choice Broadcast Reform;

5:00 CST/6:00 pm EDT:  Nan Swift, Federal Affairs Manager for the National Taxpayers Union — “No-Brainer” Bills Congress Should Pass; and

5:30 CDT/6:30 pm EDT:  Marita Noon, Executive Director of Energy Makes America Great — What President Obama Hasn’t Done for American Energy Workers.

Listen live on the Internet here.   Call in to share your comments or ask questions of today’s guests at (850) 623-1330.

August 25th, 2014 at 3:57 pm
This Week’s “Your Turn” Radio Lineup
Posted by Timothy Lee Print

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 CDT/5:00 pm EDT:  Phil Kerpen, President of American Commitment — Halbig Decision as Major Legal Challenge to ObamaCare;

4:30 CDT/5:30 pm EDT:  Brad Smith, Chairman and Founder of Center for Competitive Politics — DISCLOSE Act of 2014;

4:45 CDT/5:45 pm EDT:  Robert Knight, Senior Fellow and Policy Expert at The American Civil Rights Union — Rock the Vote’s Liberal Designs;

5:00 CST/6:00 pm EDT:  Chris Griffin, Executive Director of the Foreign Policy Initiative — Iraq Crisis; and

5:30 CDT/6:30 pm EDT:  Bart Hinkle, Editor and Columnist with the Richmond Times-Dispatch — The Democratic Shift to the Left.

Listen live on the Internet here.   Call in to share your comments or ask questions of today’s guests at (850) 623-1330.

August 18th, 2014 at 9:46 am
Hillary Inevitable in 2016? These Numbers Say “Not So Fast”
Posted by Timothy Lee Print

Since World War II, only one president has been so successful, his party’s brand name so enhanced during his two presidential terms, that his party’s subsequent nominee won a third consecutive presidency for his party:  Ronald Reagan.

According to the old adage, although history doesn’t always repeat itself, it does tend to rhyme.  Accordingly, that speaks to the steep uphill battle that the Democratic Party faces in winning the 2016 presidential election.  On that note, this morning’s commentary from Bill Kristol highlights a numerical headwind facing Hillary Clinton, whom some consider “inevitable” in 2016 (just as she supposedly was in 2008):

Speaking of 2016, the NBC News/Wall Street Journal poll this summer had a couple of interesting findings on the question of who might be our next president.  The good news is that while 38 percent of respondents say they ‘probably’ or ‘almost certainly’ will vote for Hillary Clinton in 2016, 37 percent say they ‘definitely’ will not vote for her.  This means that Clinton, the candidate with by far the highest name recognition and the longest résumé, starts off at about 50-50.  And while her approval numbers remain decent, they’re falling:   Today, 44 percent view her positively against 37 percent negatively.   Those numbers were once 48 percent positive, and only 32 percent negative.

By contrast, in the sixth year of the Bush administration, John McCain, the frontrunner and eventual nominee of the party in power, had a favorable rating in the mid-50s and an unfavorable number in the mid-20s.  And of course he lost.”

Barack Obama is no Ronald Reagan by any meaningful measure, and there’s a reason that Hillary’s “inevitability” evaporated in 2008.  These numbers suggest that the “inevitability” narrative may prove just as ephemeral in 2016.

August 11th, 2014 at 2:11 pm
This Week’s “Your Turn” Radio Lineup
Posted by Timothy Lee Print

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 CDT/5:00 pm EDT:  Lori Lowenthal Marcus, co-founder of Z STREET — Politicization of the IRS and Z STREETS lawsuit against IRS for First Amendment violations;

4:30 CDT/5:30 pm EDT:  Mike Wendy, director of MediaFreedom — Net Neutrality;

5:00 CST/6:00 pm EDT:  Dr. Sunil Gupta, founder, chairman and chief medical officer of IRIS — Barriers to Medical Care and Access to Latest Technologies; and

5:30 CDT/6:30 pm EDT:  Quin Hillyer, political commentator and contributing editor for National Review Online — An Early Look at Elections 2014.

Listen live on the Internet here.   Call in to share your comments or ask questions of today’s guests at (850) 623-1330.

August 5th, 2014 at 7:43 pm
New Study: Pre-Release Movie Piracy Compounds Box Office Loss by 19%
Posted by Timothy Lee Print

Piracy of movies is wrong in and of itself, as it constitutes straightforward theft and deprives the creative community the right to the fruits of its labor and investment.  The sheer amount of money, time, creative energy and physical effort necessary to bring a film from concept to theaters is only possible where reliance upon return on investment exists.

For the viewing public, piracy also adds to the cost of a movie ticket.

That reality remains obvious, and the academic consensus confirms the high cost of piracy.  Of particular interest, however, is the specific issue of pre-release piracy of movies, as distinguished from post-release piracy.  In the case of post-release piracy, consumers obviously possess alternative legal avenues to see the film in question – one can view it in theaters, through legal streaming services, on DVD, etc.  Pre-release piracy, in contrast, occurs during a period in which legal options to view the film do not yet exist.  In recent weeks we witnessed an example, as the new film “The Expendables 3″ was leaked online and viewed 189,000 times in just 24 hours.

Pre-release piracy is thus a particularly pernicious form, but quantification of its damages remained relatively unexplored.

Now, however, Carnegie Mellon University professor Michael D. Smith and his colleagues have conducted a study on film piracy that occurs during that pre-release period:

Our study was accepted for publication last month in the peer-reviewed journal Information Systems Research, making it the first peer-reviewed journal article we are aware of to analyze the impact of pre-release movie piracy.  In our study we applied standard statistical models for predicting box office revenue, but added a variable for whether a movie leaked onto pirated networks prior to its release using data obtained from the site VCDQ.com.  Our analysis concluded that, on average, pre-release movie piracy results in a 19% reduction in box office revenue relative to what would have occurred if piracy were only available after the movie’s release.  As we discuss in the paper, this result is robust to a variety of different empirical approaches and sensitivity tests.”

That’s an immediate 19% loss to piracy, in addition to piracy that might occur post-release.  That’s something that no creator or investor should have to suffer, and it therefore remains imperative that we pursue existing and potential methods to combat such theft.  For the time being, however, we can thank Smith and his colleagues for helping put a number on the damage involved and illustrating the significance of the problem.

August 3rd, 2014 at 5:38 pm
FCC Should Focus on Releasing More Spectrum, Not Maligning Network Optimization Practices
Posted by Timothy Lee Print

Back in the days before nearly everyone possessed a cell phone, people who needed to place calls while away from home often used pay phones.  In many circumstances, it was considered common courtesy to make conversations as quick as possible, so that the next person in line could make their calls.  In crowded areas, however, some pay phones actually enforced time limits in a form of usage optimization.

Fast forward to today, with another form of optimization at issue.

In a recent letter to Verizon, Federal Communications Commission (FCC) Chairman Tom Wheeler proclaimed himself “deeply troubled” by Verizon’s announcement that it will extend its Network Optimization policy to 4G LTE devices.  “Network Optimization,” or “network management,” is not a new concept.  It enables wireless carriers to deliver the best possible service to the highest volume of customers, by optimizing the data speeds of the heaviest 5% of unlimited plan customers, but only when a specific cell site is significantly congested.  It serves as a necessary tool to ensure the best network experience for all customers, which should logically be the number one priority for wireless providers.

Under Verizon’s announced extension, customers affected will be those using a 3G or 4G LTE device on an unlimited data plan, who have fulfilled their minimum contract term, who are among the top 5% of data users and who are connected to a cell site experiencing high demand at that time.  In practice, that essentially means a person streaming a movie while playing a video game in the middle of Times Square for days on end – not the average consumer sending emails or scrolling through Facebook.

Chairman Wheeler’s letter, however, did not come as a surprise.  Unfortunately, it the type of action that we’ve witnessed all too often from President Obama’s other past FCC Chairmen.  To wit, they habitually flex their regulatory muscles and ostentatiously harass wireless providers in order to placate the 1% of digital elites, at the expense of everyday consumers.  The simple fact is that every national wireless carrier employs some similar type of network management practice, because it serves the best interest of consumers.  The US wireless market it is highly competitive, and carriers must strive to satisfy consumer demand or invite customer defection.

If Chairman Wheeler truly seeks to ensure that consumers receive the highest-quality wireless service, he would instead refocus the FCC’s best efforts toward releasing more spectrum, which constitutes a critical lifeline for the wireless industry, and which has the potential to resolve looming network congestion issues.  The FCC’s core mission is to manage spectrum – not to needlessly intervene in private market business decisions.

Accordingly, Chairman Wheeler should redirect his efforts away from government overreach designed to help the proverbial “1%” of digital elites, and more toward measures that actually matter to and benefit the 99%.

July 25th, 2014 at 12:02 pm
Solar Subsidies: Crony Capitalism Amounting to Class Warfare
Posted by Timothy Lee Print

Throughout solar technology’s checkered history, one thing has remained constant:  It’s not a cost-effective way to generate electricity.

Despite technological advance and even falling prices for solar panels, that unfortunate reality remains true.

For that reason, environmental activists and political liberals have succeeded in creating a complex array of local, state and federal subsidies to prop it up – funded by your hard-earned tax dollars.  Solar simply cannot compete as a power source without distorting the market through generous government subsidies.

To be clear, we at CFIF maintain no arbitrary animosity toward solar energy itself, or any form of energy for that matter.  We believe, however, that American consumers and taxpayers should remain aware that certain fashionable forms of energy  – conspicuously available to only some people – are subsidized in whole or in part by wasteful government spending.  By now we’re all well aware of the danger when government power is used to pick winners and losers in the market, but solar subsidies constitute a particularly bad example.  Artificial favoritism toward the solar sector has benefited rooftop solar users at the expense of taxpayers and consumers who don’t or can’t utilize solar.

Here’s how that distorted scheme works.

Favored homeowners exploit a generous 30% federal tax credit and other bureaucratic incentives to install rooftop solar systems.  Afterward, utility companies must then repurchase the excess power generated by the solar panels at full retail price under a policy known as “net metering.” That, in turn, allows rooftop solar users to enjoy the benefits of traditional electrical generation, and the grid that distributes electricity, without contributing to the broader costs associated with keeping the lights on, so to speak.  Meanwhile, consumers without solar remain on the hook for the maintenance of the electrical grid.

There’s an ugly irony that seems to have escaped most liberals who advocate that system of subsidies.  Namely, most consumers remain unable to exploit the system of handouts because they can’t afford solar in the first place.  Accordingly, liberals have created a government subsidy in which middle-income and lower-income consumers end up subsidizing wealthier homeowners.  How’s that for class warfare?

Just as unseemly, the solar industry and activist groups actually claim that solar subsidies promote “choice and competition.”  The reality is that the solar industry and its advocates simply seek favored economic status via crony capitalism.  Using bureaucracy to elevate the solar sector doesn’t promote choice or competition.  It’s simply government picking winners and losers – with everyday consumers paying the price.

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July 14th, 2014 at 2:53 pm
“Operation Choke Point” – Rogue Obama Administration Program Faces House Scrutiny This Week
Posted by Timothy Lee Print

Already mired in myriad scandals – the IRS, our southern border, Benghazi, etc. – one would presume the Obama Administration reluctant to run a legally and ethically dubious program named “Operation Choke Point.”  Yet that’s exactly what this tone-deaf administration has done.

Fortunately, the House of Representatives is paying close attention, and holding several important hearings on the matter this week.

For those still unfamiliar, Operation Choke Point is a program initiated by Eric Holder’s Department of Justice to interrupt – or “choke” – access to private financial resources by entirely legal industries such as firearms sales, ammunition sales, coin dealers and others.  If the administration can successfully pressure financial services like banks and third-party payment processors to refuse to do business with those industries, they obviously cannot survive for very long.  All the while, none of the targeted industries have even been shown to have violated any laws.  Accordingly, it’s a prototypical Obama Administration effort to demonize and target legal business that it happens to dislike.

This week, however, two House committees will bring cleansing public sunlight to this rogue operation.  On Tuesday at 10:00 a.m., the House Financial Services Oversight & Investigations Subcommittee will hold a hearing entitled “The Department of Justice’s ‘Operation Choke Point,’” and at 2:00 p.m. the House Financial Services Financial Institution and Consumer Credit Subcommittee will hole its hearing entitled, “Examining Regulatory Relief Proposals for Community Financial Institutions, Part II.”  Then, on Thursday at 9:30 a.m., the House Judiciary Regulatory Reform, Commercial and Antitrust Law Subcommittee will hold its hearing entitled “Guilty Until Proven Innocent?  A Study of the Proprietary & Legal Authority for the Justice Department’s Operation Choke Point.”

As with other Justice Department and IRS campaigns, Operation Choke Point is characterized by abuse of due process, secrecy and dishonesty.  Thankfully, this week’s battery of House hearings will provide some much-needed public scrutiny, and hopefully help end this rogue scheme.

July 14th, 2014 at 1:42 pm
This Week’s “Your Turn” Radio Show Lineup
Posted by Timothy Lee Print

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 CDT/5:00 pm EDT:  Aloysius Hogan, Senior Fellow at the Competitive Enterprise Institute – Harris v. Quinn and Unions Targeting Women;

4:30 CDT/5:30 pm EDT:   Evan Moore, Senior Policy Analyst at the Foreign Policy Initiative – Unrest in the Middle East;

5:00 CST/6:00 pm EDT:  Dakota Wood, Senior Research Fellow in Defense Programs at The Heritage Foundation – U.S. Inaction Creates Opportunities for our Enemies;

5:15 CST/6:15 pm EDT:  Ashton Ellis, CFIF Fellow and Adjunct Faculty at Pepperdine University School of Public Policy – To Impeach or Not?;  and

5:30 CDT/6:30 pm EDT:  Sally Pipes, President, CEO and Taube Fellow in Health Care Studies at the Pacific Research Institute – How ObamaCare Will Kill Job-Based Plans and Why Healthcare’s Problem is Not High Drug Prices.

Listen live on the Internet here.   Call in to share your comments or ask questions of today’s guests at (850) 623-1330.

July 8th, 2014 at 3:58 pm
What Economists Miss in the Patent Reform Debate
Posted by Timothy Lee Print

Following up on our patent reform post last week, today’s Wall Street Journal includes an interesting viewpoint via letters to the editor.  Specifically, Paul Adams of Albuquerque, New Mexico notes that while some economists short-sightedly applaud the way in which weakening patent protections and encouraging copying can lower costs in the near-term, they ignore the longer-term incentive to invest and invent that strong patent protections provide:

It may satisfy economists that allowing copying by large corporations will drive down prices for consumers since there is no other way to compete.  But that does enhance technology.  In fact, one benefit of the patent system is the pressure on competitors to invent a different and likely better solution, thereby advancing the technology.  I have on many occasions assisted competitors in ‘designing around’ a patent creating a new product or service.  There are few patents of such broad scope that there is not an alternative.”

Opponents of strong patent protections often fancy themselves clear-sighted, dispassionate, economics-based observers, but their positions are more accurately penny-wise but pound-foolish, as Mr. Adams correctly notes.

July 2nd, 2014 at 5:05 pm
The Mythical “Patent Troll?”
Posted by Timothy Lee Print

“Patent troll.”  The term has assumed prevalence amid discussion of broader patent law reform, which we at CFIF have supported in some incarnations.

The “patent troll” problem, however, is to a large degree a litigation problem more than a problem inherent in our patent system.  And in that vein, two prominent conservative/libertarian figures have penned a Wall Street Journal commentary entitled “The Myth of the Wicked Patent Troll.”  Author Stephen Haber is a senior fellow at the Hoover Institution’s Task Force on Intellectual Property, Innovation and Prosperity, while co-author Ross Levine is a business professor at the University of California, Berkeley and a senior fellow at the Milken Institute.  In other words, their intellectual and free-market credentials are well-established.

In their commentary, Mr. Haber and Mr. Levine substantively detail research showing that, “innovation rates have been strongest in exactly the industries that patent-reform advocates claim are suffering from ‘trolls’ and a broken patent system.”  They also correctly highlight the fact that, for whatever its flaws, our patent system is the world’s greatest:

Thanks in large part to the patent system we have, the current rate of invention in the U.S. might be the fastest in human history.  Where is the evidence that society would benefit from undertaking the risky process of reforming a patenting system that has been the envy of the world for more than two centuries?”

The real problem, they say, is large corporations seeking to leverage government power in pursuit of their own self-interest:

There is one basic reason behind the attacks on trolls:  Big Money.  Many patent-intensive products — the smartphone in your pocket, the laptop computer in your briefcase — are produced by big corporations that license many patents.  The iPhone is a classic example:  It contains thousands of patented components, but Apple does not own many of the key ones.  It must negotiate for the right to use them.  These corporations can make higher profits the less they pay to use patented technology they do not own, and higher profits still by paying nothing at all.  The battle over the ‘right price’ for patented technologies takes many forms, one of which is political.  Indeed, some corporations are looking to gain a competitive edge by changing the rules of the game.  The strategy is to pass patent-reform legislation that weakens the negotiating position of patent holders.  Corporations that pay large sums for patented technologies will point to lawsuits, trolls and anything else that will encourage lawmakers to pass such reforms.”

Agree or disagree, their piece brings an important and under-discussed perspective to the ongoing patent reform debate.

July 1st, 2014 at 2:51 pm
Hobby Lobby Hypocrisy? Not So Fast
Posted by Timothy Lee Print

Criticism of yesterday’s Supreme Court Hobby Lobby decision is already pioneering new realms of intellectual dishonesty and irrationality.  In one commentary that seems to be maintaining particular inertia on the Internet, Mother Jones labels the Hobby Lobby organization hypocritical because its retirement plan invests in contraceptive manufacturers.

Fortunately, Ryan Ellis of Americans for Tax Reform provides a welcome antibiotic.  Specifically, he rebuts the Mother Jones commentary, explaining in clear terms the nature of such retirement plans and the weakness of the Mother Jones assertion:

401(k) plans are directed and invested by employees, not by employers. It’s the Hobby Lobby employees that would be disenfranchised by the twisted logic employed by Redden and Ungar here.  They are the ones–not their bosses–who choose which mutual funds to invest in.  This is true both of the employee’s elective deferral and the employer’s match.  The menu of choices is primarily provided not by the Hobby Lobby employers, but by the 401(k) plan administrator, who helps select a wide menu of mutual fund (and, increasingly, exchange traded fund) choices so that the fiduciary obligations of the plan are met.”

It’s a brief, straightforward piece that is well worth taking a moment to read and share with others.

June 24th, 2014 at 3:52 pm
RESPECT Act: Rectifying a Legal Anomaly, Providing Equity for Digital Broadcast of Pre-1972 Recordings
Posted by Timothy Lee Print

Is it fair that digital radio broadcasters pay royalties for the privilege of playing songs recorded after the arbitrary date of February 15, 1972, but not for pre-1972 recordings?

By way of perspective, no fewer than 305 of Rolling Stone’s 500 “Greatest Songs of All Time” were recorded before 1972, including 9 of its top 10.  Additionally, 65 of its 100 greatest artists recorded songs prior to 1972, including all 10 of its top 10.  Further, the overwhelming majority of artists inducted into the Rock & Roll Hall of Fame also recorded before 1972, as were 83% of the recordings in the Grammy Hall of Fame.

Yet due to a legal quirk, digital broadcasters decided they would stop paying royalties for music recorded before 1972, believing that they’re entitled to play them for free.

Recordings predating 1972 remain protected by a patchwork of state laws, whereas recordings after February 15 of that year going forward are covered under federal law.  That amounts to a historical idiosyncrasy, without any prevailing substantive logic.  But digital radio stations, some of which center entirely upon pre-1972 music, have capitalized on the legal aberration to simply stop paying for performance of the pre-1972 songs still covered by state laws.  Estimates of royalties lost as a result reach $60 million per year.

As a result, the Righteous Brothers’ “You’ve Lost that Lovin’ Feelin’” receives no payment, but Hall & Oats’s remake does.  The Rolling Stones’ “(I Can’t Get No) Satisfaction” is not compensated, but Devo’s remake is.  The Beach Boys get paid for “Kokomo” but not “Good Vibrations.”  This situation has also led to numerous lawsuits spanning various states, adding further legal complexity and uncertainty for artists, consumers and digital broadcasters alike.

Digital radio stations operate under privilege of federal license to broadcast, but take the position that they need not pay for pre-1972 songs that remain protected under state laws.  They profit from playing those songs, but refuse to pay accordingly.  Keep in mind that unlike contemporary performers, many of those older affected artists are no longer capable of touring, and sales of their records have diminished over the years, leaving royalties for performance of their songs as their only remaining means of continuing compensation.

Now, however, some in Congress seek to rectify that unfairness.  Representative George Holding (R – North Carolina) has introduced the Respecting Senior Performers as Essential Cultural Treasures Act – the “RESPECT” Act.  Under that legislation, digital radio stations that enjoy federal broadcast privileges would finally be obligated to provide royalty payments for songs recorded before 1972, in the same way they already pay for songs recorded after 1972, as a condition for maintaining their licenses.  Importantly, the bill does not attempt to rework copyright laws or “federalize” pre-1972 recordings, which would introduce unnecessary legal complexity and confusion.  Rather, it explicitly maintains existing protection under state laws.  It simply conditions continued broadcasting privilege upon payment to artists for pre-1972 recordings.  A long list of musicians, spanning Martha Reeves to Brian Wilson to the Allman Brothers to Al Green have signed on in support of the bill.

Digital radio has provided an amazing innovation for which we can all be grateful.  Nevertheless, it’s simply unfair for them to attempt to exploit a legal quirk to avoid paying artists for songs recorded prior to the arbitrary date of February 15, 1972.  Congressman Holding is therefore to be applauded for his effort, and Americans should contact their Senators and Representatives to voice their support.