August 8th, 2014 at 11:00 am
Liberty Update
Posted by CFIF Staff Print

August 7th, 2014 at 6:18 pm
Would President Romney Be Allowed to Disregard the Law?
Posted by Ashton Ellis Print

Robert Delahunty, a former Department of Justice attorney, poses an interesting counterfactual to those defending President Barack Obama’s possible legalization of 5 million illegal immigrants.

“One has to wonder how those who consider such non-enforcement to be constitutional would react if a President Mitt Romney announced that his Internal Revenue Service would simply stop collecting capital gains tax on the rich, or that his Environmental Protection Agency would no longer seek to impose legal penalties on polluters,” writes Delahunty.

Delahunty’s thought experiment is worth elaborating. If it’s true that presidents can assume lawmaking powers when Congress refuses to implement his will – a point I’m only granting for the sake of argument; Articles I and II of the Constitution clearly foreclose this possibility – then it stands to reason that any Republican running for president in 2016 can simply campaign on a promise not to enforce any law he does not like. Why worry with winning control of Congress? All any political party needs to do is win one race – the presidency – and the entire executive branch can be put in the service of the party’s platform.

It’s an outcome so at odds with our constitutional system that in saner days it would have been ruled out as a serious option as soon as it was floated. But we are in transformative times. Future presidents and their would-be advisors are taking notes. If President Obama is allowed to get away with such a regime-shattering power grab – and unilaterally importing 5 million new citizens would be just that – then there is very little reason to justify limits on even bigger abuses hereafter.


August 7th, 2014 at 3:24 pm
The Coming ObamaCare Bailout
Posted by Ashton Ellis Print

Because of ObamaCare’s mismatched incentive structure, some savvy commentators are warning of an impending, multi-billion dollar bailout of the insurance companies selling health care policies under the law.

“Pre-ObamaCare,” writes Dan McLaughlin, “insurers had to price their policies mainly by reference to market forces (albeit in an already heavily-regulated market)… Guess wrong and you lost money. But under ObamaCare, consumers no longer have the choice whether or not to buy policies, and insurance companies no longer face any risk of losing money, because they’ve been promised a bailout. Money will still be lost, but it will be taxpayer money, and you never run out of that, do you?”

McLaughlin is talking about ObamaCare’s “3 R’s” – reinsurance, risk corridors and the risk adjustment program. I’ve written about this multi-year, $20 billion bailout before. In different ways, each is designed to subsidize insurers for lost revenue traceable to the health law’s dysfunctional mandates. The threefold scheme was buried in the legislation to buy the support of large insurance companies who would have refused to participate without it.

Now the bill is coming due.

Based on interviews and documents containing discussions between Obama administration officials and insurance industry executives, a House Government Oversight report reveals that insurers are expecting the following payments:

1)      $640 million from the Risk Corridor program for the 2014 plan year

2)      $346 million from the Risk Adjustment program

The reinsurance program redistributes money among private insurance companies, as determined by the federal government.

The numbers quoted above are two to three times higher than originally anticipated because of the high level of adverse selection – i.e. too many older and sicker enrollees, not enough younger and healthier ones. The latter group is avoiding enrollment, preferring to pay ObamaCare’s relatively low penalty. But even that is a mirage. Reports are surfacing that as many as 25 million uninsured Americans are getting ObamaCare penalty waivers for next year; further increasing the federal budget deficit.

Bailouts can be nice, if they apply to you. But as a governing strategy, they eventually bankrupt the entire system.


August 7th, 2014 at 9:42 am
The Fate of ObamaCare and the Courts
Posted by CFIF Staff Print

Timothy Lee, Senior Vice President of Legal and Public Affairs at CFIF, discusses the recent contradictory federal appeals court rulings on ObamaCare subsidies and what they mean for consumers and the ultimate fate of ObamaCare.

Listen to the interview here.


August 6th, 2014 at 1:36 pm
Vermont Latest to Fire ObamaCare Website Maker
Posted by Ashton Ellis Print

After nearly a year of failed attempts, Vermont is firing CGI Federal – the company that bungled both the federal healthcare.gov and Massachusetts’ online insurance exchange – as its web designer.

“With Vermont still lacking a fully functioning health website more than 10 months after its glitch-plagued debut last October, Vermont officials said late Monday that they were pulling the plug on CGI’s CGI Technologies and Solutions’ contract,” reports Newsweek.

The decision will cost CGI almost $20 million, but at least Vermont has agreed not to sue the company for damages.

Vermont’s announcement follows several other states that have abandoned their original – and very expensive – ObamaCare websites. Some, like Nevada, Hawaii, and Oregon, are planning to cut their losses and transition to the federal healthcare.gov website. Others, like Massachusetts, Maryland, and now Vermont, are switching to new contractors hoping to recoup at least some of their investments.

Of course, there are success stories. State exchanges in Kentucky and Connecticut are routinely cited as well-functioning websites – though even these have glitches. However, the prevalence of so many high-profile failures indicates that this massive experiment in public-private partnerships has resulted in a huge transfer of wealth with precious little to show for it.


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 4th, 2014 at 2:21 pm
Obama’s CIA Caught Spying on Congress
Posted by Ashton Ellis Print

Obama’s CIA Director was caught lying to Congress about spying on a Senate investigative committee, and so far it looks like his only punishment will be an apology tour.

In March, CIA Director John Brennan took issue with a line of questioning by U.S. Senator Dianne Feinstein (D-CA) alleging that the agency had hacked into a computer system used by Senate investigators. “Nothing could be further from the truth. I mean, we wouldn’t do that,” he said.

His cover blown, Brennan is facing bipartisan calls for his resignation. Despite his earlier claim, the embattled director is hoping his apology will quiet the critics and spare him the same fate as David Petraeus, his predecessor who was hounded from office by revelations of an extra-marital affair.

I’m no fan of firing people to make a point, but one does wonder what Congress could and should do now that the CIA – an executive branch agency – has been shown to be spying on a portion of the legislative branch.

Glenn Harlan Reynolds provides some answers.

“Congress can, of course, charge Brennan with contempt of Congress, or refer him for prosecution under the False Statements Act. But in both cases, the decision to prosecute would be made by Attorney General Eric Holder, who seems to see his role not as administering justice, but as running interference for the Obama administration and protecting its officials from consequences.”

Perhaps better, then, to make the agency as a whole feel the brunt of punishment for acting badly. “Probably the best that Congress can do is to punish the entire CIA by using its budgetary power to make employees’ lives worse: Cutting back on bonuses, raises, conferences, and other perks.”

None of these answers are completely satisfying. Punishing everyone for the misdeeds of a few can be precisely as unjust as the initial bad act. The truth is we want and need competent, honest public servants whose tenure in office won’t trigger massive expenditures of time and money cleaning up their messes. Until the man in the Oval Office sets a better example for following the rule of law, we’ll likely continue to see his subordinates faithlessly executing their duties.


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%.


August 1st, 2014 at 10:55 am
Video: Abused By The Government? It’s Your Patriotic Duty.
Posted by CFIF Staff Print

CFIF’s Renee Giachino discusses the senseless legislative and PR push by the Obama Administration and many Congressional Democrats against U.S. corporations legally working to reduce their tax burden.  Giachino explains that the most effective way forward is to reduce the U.S. corporate tax rate – currently the highest in the developed world – so American companies can better compete in the global economy.


August 1st, 2014 at 10:30 am
Liberty Update
Posted by CFIF Staff Print

August 1st, 2014 at 7:58 am
The Arab-Israeli Conflict: Is Peace Possible?
Posted by CFIF Staff Print

In an interview with CFIF, Bruce Herschensohn, Professor at Pepperdine University School of Public Policy, author and CFIF Board Member, discusses the war between Israel and Hamas, Secretary of State John Kerry’s bungled attempt to achieve a cease-fire and President Obama’s performance on foreign policy issues.

Listen to the interview here.


July 31st, 2014 at 2:46 pm
Federalism on the Firing Line
Posted by Ashton Ellis Print

With so much attention on the turf war between Congress and the President, it’s easy to overlook another, equally disturbing separation-of-powers crisis – the swift erosion of federalism.

Just as the U.S. Constitution assigns certain powers and duties to the three coequal branches of the federal government (legislative, executive, and judicial), so too does it differentiate lines of responsibility between the federal and state governments. This latter idea is known as federalism, and it’s in pretty bad shape according to a thought-provoking essay by Richard Epstein and Mario Loyola.

In particular, the practice of conditioning receipt of federal money on capitulation to federal regulations is turning states into mere enforcement officers.

“Federal officials exert enormous influence over state budgets and state regulators, often behind the scenes,” write Epstein and Loyola. “The new federalism replaces the ‘laboratories of democracy’ with heavy-handed, one-size-fits-all solutions. Uniformity wins but diversity loses, along with innovation, local choice, and the Constitution’s necessary limits on government power.”

Both parties are guilty, but the Obama administration has accelerated the trend. Poison pill programs like Common Core, ObamaCare’s Medicaid expansion, the federal highway system and the Clean Air Act all condition money for popular programs on local officials committing their states to dependency status.

“Federal ‘assistance’ to the states currently accounts for 30 percent of state budgets, on average,” according to the authors. “Since the early 1980s, the federal government has transferred about 15 percent of its budget to the states, which is almost as much as the federal deficit in an average year.”

Let that sink in for a moment. Annual federal transfer payments to the states roughly equal the yearly federal budget deficit.

Of course, eliminating the deficit isn’t as simple as zeroing out all federal-state spending relationships. Much of the logic of federal transfer payments hangs on the idea that poor states are funneled the resources they need to close the gap on some quality of life indicators with rich states. Until relatively poor states like North Dakota are allowed to fully exploit their natural economic advantages – such as being able to extract and export its huge oil reserve – ending redistribution without removing wealth-inhibiting regulations doesn’t make sense.

However, seeing the connection between the deficit and transfer payments to states does highlight the unsustainable nature of our current federalism-destroying arrangement. If we as Americans want to have more financial flexibility at the national level, we first need to remove the barriers to economic opportunity at the state and local level.


July 31st, 2014 at 1:59 pm
Wisconsin Supreme Court Vindicates Scott Walker’s Reforms
Posted by Ashton Ellis Print

Wisconsin Republican Governor Scott Walker’s campaign for reelection just got a whole lot easier.

Earlier today the state’s seven member Supreme Court ruled 5-2 that Act 10 – the controversial union-busting law championed by Walker and the GOP-led legislature – is constitutional, reports NPR.

In upholding the law’s curtailment of certain state employees’ collective bargaining rights – in particular teachers’ unions – the majority reasoned that, “No matter the limitations or ‘burdens’ a legislative enactment places on the collective bargaining process, collective bargaining remains a creation of legislative grace and not a constitutional obligation. The First Amendment [right of association] cannot be used as a vehicle to expand the parameters of a benefit that it does not itself protect.”

The decision vindicates Governor Walker’s goal to free Wisconsin taxpayers from being held hostage by public employee unions who demand ever increasing compensation, and threaten to strike if unsatisfied. Throughout the country, public employee unions have abused the privilege of collective bargaining to bring many states to the brink of insolvency. Armed with this decision, Walker can consolidate his policy victories and begin to tout Wisconsin as a model for other states to follow.


July 31st, 2014 at 1:10 pm
House Passes Bill to Sue Obama
Posted by Ashton Ellis Print

The House of Representatives made history today when it passed a bill allowing Congress to sue the President of the United States for failing to implement a federal law, reports the L.A. Times.

The legislation authorizes House Speaker John Boehner (R-OH) to file suit in federal court demanding that President Barack Obama enforce ObamaCare’s employer mandate, which requires companies with 50 or more full-time workers to purchase ObamaCare-compliant health insurance or pay a penalty.

House Republicans have been critical of President Obama’s unilateral delays in enforcing the mandate – now scheduled to go into effect in 2016 – because it spares Democrats and the Obama administration substantial political pain. If the law is so great, Republicans reason, then it should go into full effect.

As with other anti-ObamaCare measures to pass the House, this bill has virtually no chance of clearing the Senate where Democrats are in the majority. Still, it’s very presence helps Republicans draw a clearer contrast over where each party stands on the rule of law; in particular the president’s ability to pick-and-choose which parts of a statute he will – as he swore upon taking office – to faithfully execute.


July 31st, 2014 at 11:06 am
Ramirez Cartoon: The U.S. Border Floodgate
Posted by CFIF Staff Print

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.


July 30th, 2014 at 3:06 pm
Aetna CEO: ObamaCare “really not an affordable product”
Posted by Jeff Mazzella Print

In an interview on CNBC’s “Squawk Box” this morning, Mark Bertolini, the Chairman and CEO of Aetna, explained that ObamaCare is “really not an affordable product for a lot of people.” He goes on to say that we “have to have a more affordable system.”


July 28th, 2014 at 8:11 pm
A More ‘Proportional’ Response than Impeachment?
Posted by Ashton Ellis Print

Add First Lady Michelle Obama and various members of the Democratic Party to the chorus of politicos discussing the possibility of impeaching President Barack Obama.

The First Lady warned a group of donors that, “If we lose these midterm elections, it’s going to be a whole lot harder to finish what we started because we’ll just see more of the same out in Washington – more obstructions, more lawsuits, and talk about impeachment.”

A series of fundraising email blasts was then sent on behalf of the Democratic Congressional Campaign Committee begging immediate donations to thwart a Republican takeover of the U.S. Senate. “ALL GIFTS TODAY ARE TRIPLE-MATCHED!” blared the emails.

Despite all this, impeachment is still seen in most quarters as far-fetched. Simple math says the GOP needs at least 67 senators to ensure conviction (since the Constitution requires a 2/3 vote). For context, the GOP needs to pick up six seats just to get 51 members and control of the chamber.

Beyond counting noses, there’s a concern that impeaching the president at this stage would be disproportionate. Better, say thoughtful critics like Byron York, for Republicans to pass legislation that overturns the executive orders and policy directives they loathe – such as deferred action – and dare Democrats in Congress to vote to defend Obama.

Though York doesn’t think impeachment should be an option at all, his ‘proportionate’ thesis dovetails nicely with what Andrew McCarthy has written about in his book, Faithless Execution: Building the Political Case for Obama’s Impeachment. McCarthy says that although pursuing impeachment is justified, it won’t work unless the groundwork has been laid with the public to show conclusively that Obama can’t be trusted to follow the law. It’s hard to imagine a better way to make that case than with a string of presidential vetoes usurping Congress’ constitutional power to legislate.

Should that come to pass, perhaps the only proportionate action left to take would be impeachment.


July 28th, 2014 at 9:28 am
Big Labor’s Latest Targets: Women and Student Athletes
Posted by CFIF Staff Print

In an interview with CFIF, Aloysius Hogan, Senior Fellow at the Competitive Enterprise Institute, discusses the recent SCOTUS decision in Harris v. Quinn, labor unions’ targeting of women, and the latest on the proposed unionization of student athletes. 

Listen to the interview here.


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 25th, 2014 at 11:00 am
Liberty Update
Posted by CFIF Staff Print