August 5th, 2022 at 11:25 am
Image of the Day: As Senate Debates Latest Manchin-Schumer “Build Back Better” Iteration, Prescription Drug Prices Aren’t the Inflationary Problem
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As Senators Joe Manchin (D – West Virginia) and Kyrsten Sinema (D – Arizona) betray their “moderate” charade and join Senate Majority Leader Chuck Schumer’s (D – New York) latest tax-and-spend monstrosity, we’ve highlighted the preposterousness of the claim that imposing drug price controls will in any way address out-of-control inflation.  Price controls will kill innovation, but do nothing to reduce inflation, because prescription drug prices simply aren’t the problem.  Once again, economist Steve Moore offers a handy illustration of that truth:

Prescription Drug Costs Aren't the Problem

Prescription Drug Costs Aren’t the Problem


July 28th, 2022 at 10:33 pm
Image of the Day: Something Else Defying Inflation? Internet Service.
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We recently highlighted how prescription drug costs defy today’s otherwise out-of-control inflation, which makes it all the more odd that the Biden Administration and the Pelosi-Schumer Congress seek to impose drug price controls (which will suffocate future innovation, not relieve consumers).

Well, federal government statistics identify another critical consumer product that defies inflationary pressures, yet also remains the target of Biden Administration efforts to expand the federal regulatory state:  internet service.   Something of which legislators and regulators must remain mindful as yet another destructive “Net Neutrality” campaign looms.

Broadband Defies Inflationary Pressures

Broadband Defies Inflationary Pressures

 


July 18th, 2022 at 1:13 pm
Image of the Day: “Putin Price Hike?” No, a Biden Inflation Blowup
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While Joe Biden attempts to blame a shifting array of scapegoats for inflation, the simple numbers demonstrate the unmistakable truth.  Consumer prices began skyrocketing upon Biden’s inauguration in January 2021, and wage gains plummeted toward an immediate deficit relative to inflation.  During the Trump presidency, wages consistently exceeded inflation, only rarely even coming in even, let alone in negative territory.  Economist Stephen Moore illustrates the reality unambiguously:

 

 

 


July 5th, 2022 at 12:00 pm
Federal Regulators Again Target Short-Term Lending, Hurting Struggling Americans They Claim to Help
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We’ve often highlighted how federal and state regulators who target short-term lenders only end up hurting the struggling Americans they claim to be helping.

That dynamic is even more pronounced in times of increasing economic uncertainty like today.

According to a 2018 study from the federal government itself, nearly 40% of American families don’t possess sufficient savings to cover even a $400 emergency expense, including 51% of military service members living paycheck-to-paycheck.   For such people, credit cards aren’t always a viable option and traditional bank loans aren’t feasible because of the small amounts involved.

They can, however, access desperately-needed money for the short-term via consumer finance loans.   Unfortunately, the Biden Administration, the Pelosi-Schumer Congress, federal bureaucrats who think they know better and government officials at the state and local levels constantly pursue legislation and regulation to make consumer finance lending less available.  As a consequence, vulnerable Americans are forced to seek illegal loansharks, suffer overdrafts or simply fail to pay their pressing bills.

Our friends at National Taxpayers Union (NTU) commendably highlight the latest dangerous Biden Administration effort in a piece entitled “The Consumer Financial Protection Bureau Continues to Attack the Financial Industry”:

While taxpayers look for relief from out-of-control inflation, the Consumer Financial Protection Bureau (CFPB) continues to attack the financial industry, tipping our already unstable economy further over the edge…

As recently as April CFPB announced they would be invoking a long dormant authority to examine nonbank financial companies or ‘fintech’ companies.  CFPB inaccurately posits that these nonbank entities are harmful to consumers, however these companies often represent some of the only credit available to struggling Americans who have been continuously left behind by traditional institutions.  At a time when the economy is faltering and everyday Americans’ financial futures are so uncertain, the CFPB’s action seems misplaced.”

As NTU rightly concludes, “in many cases these institutions are doing the exact opposite of what CFPB claims, they are providing a lifeline to their users and breaking barriers to traditional institutions.” 

As our economy weakens due to the Biden Administration’s own counterproductive economic policies, the least it could do is avoid making matters even worse for struggling Americans increasingly desperate for a workable lifeline, non-traditional lenders.


June 17th, 2022 at 12:18 pm
Inexcusable and Dangerous: Biden Administration Surrenders U.S. Patent Rights to World Trade Organization (WTO)
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For a man who constantly claims to support “Buy American,” Joe Biden demonstrates an inexplicable and almost fetish-like tendency to undercut American industries.

Since day one, the Biden Administration has ceaselessly besieged a domestic energy sector that finally achieved U.S. energy independence after decades of effort.  And now, it is following through on its inexcusably foolish assault against the U.S. pharmaceutical sector.

Each year, American pharmaceutical innovators account for an astounding two-thirds of all new lifesaving drugs introduced worldwide.  That’s the direct result of our system of intellectual property (IP) protections, including patents, which consistently leads the world.

Instead of protecting that legacy of American Exceptionalism, however, the Biden Administration remains bizarrely determined to eviscerate it.  Today, the World Trade Organization (WTO) announced agreement to forcibly waive patent protections for Covid vaccines, a dangerous effort that the Biden Administration for some reason supports.

This is nothing short of a license to steal U.S. patents.

The WTO effort serves no valid purpose, because Covid treatments are already being provided to poor nations across the world and the underlying pharmaceutical patents it targets are already being licensed at reduced prices or even for free.  Moreover, the  nations that the WTO claims to help recognize that lack of immunizations stems not from vaccine shortages, but rather from local logistical distribution problems and vaccination hesitancy among unvaccinated people in those nations.  Indeed, biopharmaceutical manufacturers remain capable of producing 20 billion vaccine doses this calendar year, so the problem isn’t lack of vaccine availability.

Additionally, a  supermajority of American voters spanning the political spectrum oppose this forcible waiver of Covid vaccine patents, favoring instead the licensing of patents to boost the global supply of vaccines.  Specifically, over 70% of voters believe that waiving Covid vaccine IP could have significant negative implications on the safety and efficacy of supply.

American patent protections explain our unmatched record of innovation, and also why we produce the overwhelming share of new drugs worldwide.  As the pandemic demonstrated once again, that includes Covid vaccines.  The WTO proposal egregiously sacrifices U.S. property rights and undermines the rule of law, which in turn will mean fewer lifesaving vaccines and treatments in the future.  If the Biden Administration won’t correct course, Congress must intervene to do so.

 

 

 

 


June 6th, 2022 at 12:49 pm
Drug Costs Remain Far Below Inflation, but Beware Efforts to Impose Socialist “Price Controls”
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CFIF has continuously sounded the alarm on dangerous drug price control efforts, which will only do what artificial price controls always do – cause shortages of the very products they attempt to regulate.  The numbers speak for themselves.

Today, The Wall Street Journal editorial board cogently addresses the looming bankruptcy of Medicare and Social Security, and along the way nicely makes that point that we and others have been making, while also pointing out that drug prices have actually remained flat while prices for other products and services have skyrocketed:

Democrats blame Big Pharma for bankrupting Medicare, but annual Part D prescription drug costs have grown on average 1% over the last five years.  That’s far less than inflation, GDP and other Medicare spending. Even expensive drugs that grow spending in the short run can reduce long-term health spending.

Consider Hepatitis C treatments, which public-health scolds lambasted as too pricey when they launched nearly a decade ago.  Prices have since plummeted 75% from about $100,000 per course thanks to market competition.  A Department of Health and Human Services analysis estimates the treatments reduce patient health costs by about $16,000 annually and will save Medicaid $12 billion after this year.

Once the hospital trust fund runs dry, spending will have to be slashed by 10%.  The Democratic solution is to let Medicare “negotiate” drug prices — their euphemism for price controls.  But this will reduce the incentive to develop innovative treatments for hard-to-treat conditions like Alzheimer’s.  The result may be higher Medicare spending over the long term.

Artificial government efforts to impose price controls never work, whatever the product, whatever the time and whatever the flimsy rationalization.  America leads the world in producing lifesaving pharmaceuticals – 2/3 of all new drugs introduced worldwide, in fact – so we mustn’t tolerate Biden Administration or Congressional efforts to try this failed proposal yet again.  The stakes for us all are too high to re-learn that lesson the hard way.


May 31st, 2022 at 4:43 pm
Image of the Day: Advocates of Internet Regulation Falsely Claim Service Providers Forcing Consumers to “Pay More”
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Advocates of Obama-era internet service regulations that caused broadband investment to decline for the first time ever outside of an economic recession are at it again.  Even though U.S. internet service remarkably flourished amid the Covid pandemic while more heavily regulated Europe suffered, those who want to bring your internet under greater federal bureaucratic control are out with a preposterously defective poll suggesting that service providers are forcing consumers to “pay more” for inferior service.  Well, here’s a comparison of broadband price increases versus inflation among other critical consumer products since 2021, refusing that bizarre claim:

Broadband Prices Remain Moderated

Broadband Prices Versus Other Products

 

 


May 25th, 2022 at 7:32 pm
America Desperately Needs More Skilled STEM Workers, and We Should Steal Them from Russia
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We at CFIF have repeatedly highlighted America’s desperate need for more skilled science, technology, engineering and mathematics (STEM) workers.  In an increasingly information-based global economy, legal immigration by people with advanced degrees and valuable expertise to the United States must be encouraged, as even President Donald Trump advocated.

In that vein, we’ve also highlighted how desirable a destination the U.S. is to STEM talent, and how many openly seek to come to our shores, according to the Center for Strategic and International Studies (CSIS), which was named the top defense and national security think tank in the world.  “Only about 10 percent of international scientists and engineers seemed open to moving to China,” CSIS found, “compared to nearly 60 percent for the United States.”

American Enterprise Institute (AEI) scholars Brent Orrell and Alex Nowrasteh offer yet another excellent idea in a piece entitled “Skilled Workers Are Fleeing Russia.  Let’s Welcome Them”:

According to the Russian Association for Electronic Communications, between 50,000 and 70,000 information technology specialists have already left Russia since the war started.  An additional 100,000 are likely to depart before April 30.  This is not a new trend (since 2020, 20 percent of Belarusian IT workers — about 20,000 — have left the country for Poland), but Western sanctions on Russia and its allies are likely to accelerate the exodus of skilled laborers.

This outflow of highly skilled human capital is coming at a good time for the United States and its economy.  A recent report found that there were nearly 400,000 tech-related job openings in February 2022.  Meanwhile, data show that American universities annually graduate only about 89,000 computer science students — less than a quarter of total openings — leading to a chronic dearth of workers.”

And just like during the Cold War, welcoming more Russian STEM workers would also serve a strategic national security purpose as well, as the authors highlight in their conclusion:

We should welcome Russian skilled workers today as previous generations welcomed German and Soviet defectors during the 20th century with the effect of weakening our adversaries while strengthening the West.  They would fill valuable niches in the U.S. economy and drain geopolitical adversaries of vital skilled technicians while upholding the humanitarian values that we cherish.  In doing so, we can simultaneously do well for our economy while doing good for the world.”

Fortunately, provisions in legislation currently before Congress can help accomplish exactly that.

Despite some other provisions that should be removed during the House/Senate conference process, the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act of 2022 contains important provisions to welcome more highly skilled talent to America.  For example, the relevant provisions would eliminate obsolete green card limits for workers with advanced STEM degrees, create a new visa for entrepreneurs in start-up companies and facilitate the path to Legal Permanent Residence (LPR) status for STEM Ph.D. graduates seeking work in the U.S.

Unless we bring more skilled STEM talent to our shores, we’ll lose it to other countries like China, which in turn will be more able to undermine our global leadership position.  We can’t let that happen, and Congress can do something to help.

 


May 19th, 2022 at 12:51 pm
Image of the Day: More Economic Freedom = Higher Standard of Living
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In last week’s Liberty Update, we highlighted the Heritage Foundation’s 2022 Index of Economic Freedom, which shows that Joe Biden has dragged the U.S. down to 22nd, our lowest rank ever (we placed 4th in the first Index in 1995, and climbed back up from 18th to 12th under President Trump).  As we noted, among the Index’s invaluable metrics is how it demonstrates the objective correlation between more economic freedom and higher citizen standards of living, which this graphic illustrates:

 


May 13th, 2022 at 11:48 am
Quote of the Day: U.S. Leads the World in 5G Rollout, Thanks to Pro-Market Approach
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From economist Thomas Hazlett, in an insightful admonition against crony capitalist government intervention into the telecommunications market entitled “The U.S. May Repeat Mexico’s Wireless Spectrum Mistake” in today’s Wall Street Journal,  offers this little gem and tribute to the positive payoff of America’s comparatively pro-market deregulatory approach:

Meanwhile, 5G networks are spreading more rapidly in the U.S. than in any other nation, with 49% coverage in October 2021.  (China was at 20% that month.)  This rollout benefits from recent U.S. auctions for flexible-use spectrum rights, infusing networks with new capacity that lowers costs and spurs rivalry.  Further liberalization should continue.  Regulators haven’t been able to divert frequencies to selected business models to increase competition.  U.S. policy makers should avoid trying.”

 


May 10th, 2022 at 9:46 am
Image of the Day: Taxpayers Really Fuel EV Programs
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We recently sounded the alarm on how the Biden Administration, political left and crony capitalist big business interests are coalescing on an idea almost too bizarre to be real:  heaping new carbon taxes on traditional energy sources in order to “reduce energy costs.”  We subsequently illustrated one of the main reasons for that novel ploy:  so-called “green” energy sources are non-competitive without government intervention to artificially make more efficient fossil fuel sources more costly.  Courtesy of economist Stephen Moore, we have another biting illustration of that dynamic:

Taxpayers Power

Taxpayers Power “Green” EV Initiatives

 

There’s nothing wrong with electric vehicles, and in fact they offer a promising future technology.  But that should occur via market forces and consumer choice, not artificial government costs and subsidies paid by strapped taxpayers.


April 29th, 2022 at 9:30 am
Image of the Day: High Cost of “Green” Energy Explains Leftist Calls for Carbon Tax
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In our Liberty Update this week, CFIF highlights a bizarre new crony capitalist idea to introduce a carbon tax that some entrenched interests in Washington, D.C., have begun to advocate.  Even more bizarrely, they sell their proposal to begin taxing energy as a way to reduce energy costs.  You can’t make this up.

Courtesy of economist Stephen Moore, we have an illustration that helps explain their motivation.  Namely, “green” energy is far more expensive than more efficient fuel sources.  Accordingly, they need to tax those more efficient fuel sources in order to make their “green” energy boondoggles more acceptable by comparison:

Why Climate Activists Want a New Carbon Tax

Why Climate Extremists Want a New Carbon Tax


April 26th, 2022 at 1:28 pm
Happy World Intellectual Property (IP) Day — Celebrating the Fuel of U.S. and Worldwide Innovation
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Happy World Intellectual Property (IP) Day!

Among the many elements explaining American Exceptionalism in worldwide innovation, power and prosperity, nothing stands above our enduring legacy of protecting IP – patents, copyrights, trademarks and trade secrets.

Since America’s founding, we’ve protected IP like no other nation before or since.  Our Founding Fathers deliberately inserted text protecting IP rights into Article I of the Constitution, which reads, “Congress shall have the Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  And as James Madison explained in the Federalist Papers while advocating ratification of the Constitution, protecting IP respected the natural right of individuals to enjoy the fruits of their labors, while also serving the public good by encouraging innovation.

The assurance that one’s creations will enjoy legal protection in turn promotes creative activity, which is why Abraham Lincoln — himself a patent attorney — noted that America’s IP protections, “added the fuel of interest to the fire of genius in the discovery and production of new and useful things.”

Consequently, no nation spanning the entirety of human history even approaches America’s record of patented invention, from the telephone to the airplane, from lifesaving pharmaceuticals like the polio vaccine to the internet.   No society remotely rivals our copyrighted artistic influence, whether in the form of motion pictures, television programming or popular music.  No nation’s trademarks stand recognized in the way that the Coca-Cola or Apple logos are instantly identified across the world.  A direct relationship exists between our tradition of IP protection and our unrivaled success in innovation and prosperity.

That’s why we at CFIF are pleased to join over 100 other free-market, conservative and libertarian organizations here in the U.S. and across the globe in celebrating World IP Day, as highlighted by our collective open letter to World Intellectual Property Organization (WIPO) Director-General Daren Tang:

IP-intensive industries play a central role in job creation. In the United States, IP-intensive industries account for 44 percent of total employment, and jobs in these industries come with a 60 percent weekly wage premium over jobs in other industries… 

Intellectual property protections are also important for promoting economic growth.  The United States Patent and Trademark Office found that IP-intensive industries contribute $7.8 trillion USD to the U.S. economy, or nearly 41 percent of total U.S. DP.  The U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) further reported that these innovative industries account for over 40 percent of U.S. economic growth.  The role of robust IP protections is clearest when contrasting country scores and their World Bank income classification.  According to the 2021 International Property Rights Index, high-income countries’ scores were 33.5 percent stronger than the average score of upper-middle-income countries and 66.1 percent stronger than the average score of low-income countries.  This IP protection gap must be closed.”

Unfortunately, too many political leaders here in America and across the world fail to respect the role of IP in boosting innovation and wellbeing, and actively seek to undermine it.  We cannot let that occur, lest we all suffer.  As we conclude in our coalition letter, “On this World Intellectual Property Day, we urge WIPO, along with other international organizations, national governments, and policymakers around the world, to continue to promote policies which strengthen intellectual property protections and ensure that a healthy innovation environment can thrive for today’s youth and for generations to come.”

 

 


April 18th, 2022 at 9:54 am
Image of the Day: “Light Touch” Regulatory Policies Have Kept Broadband Prices Low
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As Americans express growing alarm over consumer price inflation that commenced in January 2021 under the Biden Administration and Pelosi/Schumer Congress (see here), it’s worth highlighting how critical broadband access on which our economy increasingly depends has diverged from that trend.  It’s also worth highlighting that stems from the fact that internet service has so far escaped Biden Administration regulatory attempts to reverse free-market progress achieved under former Federal Communications Commission (FCC) Chairman Ajit Pai:


April 12th, 2022 at 3:10 pm
CSIS Study Highlights Just How Badly STEM Talent Wants to Come to America
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In our latest Liberty Update column, CFIF highlights America’s desperate need for more high-skilled science, technology, engineering and mathematics (STEM) talent, and how the America COMPETES Act contains helpful provisions to meet that growing need.  We also highlight a study from the Center for Strategic and International Studies (CSIS), which was named the world’s top defense and national security think tank detailing that need.  A portion in the CSIS study worth highlighting on Page 7 further illustrates just how willing STEM talent is to come to America, versus our chief geostrategic rival China:

While China has successfully boosted its domestic STEM output, America remains a far more attractive destination for international STEM talent.  In this domain of talent competition, China – despite big ambitions and significant investments – has not yet made large-scale gains.

International scientists consistently rate the United States as much more appealing than China.  Figure 5 presents the results from two surveys that asked international scientists and engineers where they would consider moving in the near future.  Although the surveys were held years apart (2012 versus 2019) and involved different fields (STEM broadly versus AI specifically), the results are consistent:  only about 10 percent of international scientists and engineers seemed open to moving to China, compared to nearly 60 percent for the United States.”

Think about that.  Almost 60% of international STEM talent would love to come to America.  Accordingly, it’s now a matter of getting them here to contribute their talents to our economy and innovation.


April 4th, 2022 at 12:05 pm
Image of the Day: Biden’s Silly “Putin Price Hike” Excuse
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Apparently nothing is too preposterous for Joe Biden and his apologists.  They attempt to rationalize out-of-control inflation and wage erosion as a “Putin Price Hike,” but a simple chronology immediately refutes that (unless Vladimir Putin somehow took control of the U.S. economy in January 2021):

 

“Putin Price Hike?”


March 31st, 2022 at 12:49 pm
Congress Mustn’t Tolerate WTO and Biden Admin Proposal Targeting U.S. Pharmaceutical Patent Protections
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This week, the Biden Administration’s United States Trade Representative (USTR) Katherine Tai appeared before the Senate Finance Committee and House Ways and Means Committee, offering an important opportunity to rally opposition to the administration’s agreement with a misguided proposal in the World Trade Organization (WTO) to suspend patent protections for Covid vaccines, treatments and other therapies created by U.S. pharmaceutical innovators (through what’s known as the Agreement on Trade-Related Aspects of Intellectual Property, or “TRIPS”).

Don’t let the esoteric nature of the treaty fool you – this is an extremely dangerous proposal to attack U.S. patent rights.  As The Wall Street Journal observed, “this may be the single worst presidential economic decision” since the Nixon Administration.

That assessment is well-founded.  Strong patent protections provide the foundation for U.S. pharmaceutical innovation, and explain why the U.S. leads the world by accounting for an astounding two-thirds of all new drugs introduced worldwide.  The Covid vaccines and treatments at issue provide just the latest example.  Contravening that obvious causal relationship, however, some WTO members demand that the U.S. surrender those vital patent and other intellectual property (IP) protections for Covid vaccines, diagnostics and other treatments.  Worse, some misguided politicians here in America who should know better echo those potentially destructive demands.

That would tragically and needlessly undermine the very policies that prompted pharmaceutical innovators to devise and develop the vaccines already providing relief to the world, and leave us less capable of addressing current and future diseases and pandemics.  Ironically, President Biden himself has historically supported patent and other IP rights, including sponsorship of the 1980 Bayh-Dole Act that proved so invaluable in promoting innovation, and which The Economist magazine labeled “possibly the most inspired piece of legislation to be enacted in America over the past half-century.”

It’s also important to note that more rational actors like the European Union, United Kingdom, Canada, Switzerland and Japan oppose the proposed TRIPS patent suspension.   In contrast, WTO members India and South Africa, which back the effort targeting U.S. patent rights, have even joined international rogues China and Russia to create their own joint “vaccine center.”  That betrays the bad faith of their broader effort.

India and South Africa have joined with China and Russia (and Brazil) to establish a joint BRICS vaccine center.

The proposed TRIPS waiver targeting U.S. drug innovators and patent protections is also unnecessary, because treatments are already being provided to impoverished nations across the world, and patent rights are already being licensed at abnormally low prices or even free of charge.  To the extent that difficulties in immunizing impoverished populations remain, as emphasized by the Africa Centres for Disease Control, the problems center on local logistical distribution problems and vaccination hesitancy among the unvaccinated, not supply shortages.  Indeed, biopharmaceutical manufacturers already possess the ability to produce 20 billion vaccine doses in 2022.

More broadly, lawmakers and American consumers must consider the dangerous signal that suspending patent rights for pharmaceutical innovators would send, and the long-term disincentives that would follow if pharmaceutical patent rights were weakened rather than protected.  Pharmaceutical innovation demands billions of dollars in sunk costs of investment and testing, not to mention potential product liability lawsuits for any error.  To suddenly signal that those costs and risks won’t be sufficiently and fairly rewarded through ensuing patent protections would have catastrophic effects over both the short and long terms.  That will increasingly become the reality if we accept policies that deprive innovators and investors of the incentives to create drugs that save millions and even billions of lives.

American patent protections are the leading reason why we continue to produce the overwhelming share of new drugs worldwide, including the Covid vaccines themselves.  The WTO and Biden Administration must recognize and respect that reality, and Congress must act to stop this potentially catastrophic WTO proposal.


March 18th, 2022 at 4:30 pm
Congress Should Pass the American Music Fairness Act (H.R. 4130) to Bring Fairness to Performance Artists
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For years, we at CFIF have joined fellow conservative and libertarian organizations to spotlight the unfairness under federal law by which songwriters and others receive royalty payments when their songs are played on AM-FM terrestrial radio, but the performing artists themselves do not.

Exacerbating the illogic, performance artists do receive compensation when their songs play on digital broadcast platforms like the internet, satellite and over cable.  Yet terrestrial radio broadcasters remain exempt under existing law from having to pay that same compensation.

There’s no logical or legal justification for that paradox.  It amounts to crony capitalism in the form of a special government carve-out, and we’ve called for changes in federal law to finally correct it.

Fortunately, we can report good news in Congress on this unresolved issue.

New legislation before the House of Representatives entitled the American Music Fairness Act (H.R. 4130) would finally secure a performance right for artists whose recordings are played on terrestrial radio, with exceptions allowed for smaller mom-and-pop stations.

As we and fellow conservative and libertarian organizations wrote in our coalition letter to the House in 2021, that would protect artists’ natural intellectual property (IP) rights:

The Constitution protects intellectual property rights and specifically delegates to Congress authority to protect creative works.  Artists who produce music therefore have the right to protect their intellectual property, including both the writer and performer of a given recording.  When a given work is transmitted, common sense and basic fairness dictate that the medium of transmission should not affect the existence of these rights.  Yet, under the current regime, a performer does not hold effective or enforceable rights to his or her product when it is distributed through terrestrial radio.”

Opponents of the American Music Fairness Act might illogically allege that the proposal would introduce needless regulation of the market.  The truth, however, is that the market is already regulated in the discriminatory manner described above.  The proposed law would simply level the playing field and better respect the value of the artists’ works.

Opponents might also falsely attempt to portray H.R. 4130 as creating a “tax.”  As Grover Norquist of Americans for Tax Reform cogently answered, however, a tax is a compulsory payment to government while royalties at issue here are voluntary payments to broadcast others’ creations:

[W]hat is proposed is not, in fact, a tax but a royalty.  The definition of a tax is the transfer of wealth from a household or business to the government.  Taxes aren’t voluntary; paying a royalty is.  It is completely within the rights of broadcasters to decide not to pay for the use of a performer’s song by simply not using the song.  This may not be an ideal option, but these songs actually are the property of someone else…  Just as dishonest as calling a tax a fee or fine, so too is it wrong to apply the word ‘tax’ to a royalty payment.  Creating the negative perception that this legislation creates a new tax may be convenient in the short term and assist opponents in gaining political support;  in the long run it is incredibly unhelpful to those who work to reduce the burden of government in our everyday lives.”

Here’s the bottom line:  Performing artists have a natural right to enjoy the fruits of their labor and creativity, just like any of us do for our work.  Indeed, artists already receive payment from non-terrestrial radio stations, reflecting the value of the artists’ work.  Accordingly, the existing federal carve-out is unfair and illogical, and this bill simply corrects that imbalance.

It’s therefore time for Congress to pass the American Music Fairness Act (H.R. 4130) and achieve common-sense reform at last.

 


February 2nd, 2022 at 4:20 pm
Opposition to Biden FCC Nominee Gigi Sohn Reaches Critical Mass
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For months, CFIF has articulated why the U.S. Senate must reject the Biden Administration’s nomination of hyperpartisan Gigi Sohn to sit on the Federal Communications Commission (FCC), including our expression of support for Senator Roger Wicker’s (R – Mississippi) demand for rehearing based upon potential ethical concerns regarding Ms. Sohn after reviewing the substance of a $32 million litigation settlement between television broadcasters and the defunct Locast streaming service following her nomination.  Sohn sat on the board of Sports Fan Coalition, a nonprofit organization that operated Locast:

As Senator Wicker rightfully notes, the FCC oversees and regulates companies that were party to the $32 million settlement in question. Accordingly, the possibility of Ms. Sohn’s future financial liability to companies over which she would wield power if confirmed to the FCC merit immediate and full investigation. In addition, the timing of the settlement following her nomination by the Biden Administration offers additional reason for full public hearing to resolve any ethical questions.”

Now, The Wall Street Journal joins the accumulating chorus of opposition, bluntly asking, “Does an independent agency nominee who has deceived Senators about her business conflicts deserve to be confirmed?”

After the hearing Mississippi Sen. Roger Wicker followed up with a written question:  ‘Where did the money come from for the payment of the $32 million settlement in connection with the Locast case?’  If a company donated the funds, she might have to recuse herself from matters involving the donor.  She responded that the ‘settlement funds come from amounts collected to fund [Sports Fan Coalition NY] after SFCNY pays its vendors.’  SFCNY is the name of the nonprofit that operated Locast.  This was an odd answer because SFCNY’s IRS 990 form showed only $794,159 in assets and funds at the end of 2020.  Where did the other $31 million come from?

Ms. Sohn declined the Senate’s request for a copy of the settlement, and now we know why.  Bloomberg Law reported this week that the settlement was signed Oct. 27 — one day after President Biden nominated her.  Locast only agreed to pay $700,000.  We’ve independently reviewed a copy of the settlement, which has Ms. Sohn’s signature.  In other words, on the day after she was nominated to her powerful regulatory position, broadcasters agreed to a settlement that cut the liability of her nonprofit by 98%. Interesting timing.

Why didn’t Ms. Sohn correct Mr. Wicker about the ‘$32 million settlement’?  Even if there was nothing improper about the settlement agreement, her lack of candor is a problem.  The settlement also creates the appearance of a conflict given her pending power over broadcasters, which she must pledge to avoid in an FCC ethics agreement.”

Beyond her ethical failures as articulated by Senator Wicker and The Wall Street Journal, Ms. Sohn’s nomination gravely threatens America’s thriving internet sector.   Specifically, she seeks to more heavily regulate that sector in the image of European internet service, which performed poorly throughout the Covid pandemic compared to the United States.  Despite nationwide quarantines and surges in internet use, U.S. broadband speeds actually increased by 91% in 2020.  Europe, in contrast, suffered service bottlenecks and overload, prompting regulators to ask content providers to throttle back.  Ms. Sohn would undermine the private U.S. broadband sector and remake it in that demonstrably inferior European image.  She has signaled support for rate regulation of broadband and is a staunch advocate of government-owned broadband, which would undermine private investment and network expansion, as well as the jobs that investment and expansion create.

Sohn also favors radical reimposition of Title II so-called “Net Neutrality” regulations, which would regulate private internet service as a “public utility” under 1930s statutes aimed at copper-wire telephones.  After the Obama FCC first imposed those regulations in 2015, the negative effects were immediate:  For the very first time ever outside of an economic recession, private internet investment actually declined.  When the Trump Administration FCC under Chairman Ajit Pai subsequently reversed the Obama FCC’s Title II regulation, private investment rebounded and internet service speeds immediately increased.

Our internet service sector mustn’t be subjected to the sort of disruptive overregulation that Sohn would bring if confirmed to the FCC.  She’s also notoriously weak on U.S. intellectual property rights, and advocates imposition of consumer privacy laws in a crony capitalist manner.  She’s simply too radical to be confirmed to the FCC at a time when Americans rely more than ever on a thriving internet service sector, and Senator Wicker is to be applauded for his leadership on this issue.

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January 31st, 2022 at 5:17 pm
NM House Bill Targeting Consumer Lending Would Harm Vulnerable Consumers It Falsely Claims to Protect
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Whenever governments at any level artificially cap interest rates on consumer installment loans, they claim to be acting on behalf of vulnerable and lower-income Americans.

For straightforward reasons according to the laws of economics, however, such efforts only end up counterproductively harming the very people they allegedly help.

Sadly, we’re witnessing yet another effort tempting that destructive spiral in New Mexico, where the House of Representatives Consumer and Public Affairs Committee has approved by a narrow 3-2 margin H.B. 132, a proposal that would cap interest rates on consumer loans.

Making matters worse, the Committee even gutted funding for financial education in New Mexico, thereby evading reference to the House Appropriations Committee, in deceptive fashion to rush the bill through.

At a simplistic level, government laws regulating lending services and capping repayment rates may seem helpful to Americans struggling paycheck-to-paycheck.  But the real-world impact only eliminates a source of reliable, legal short-term loans to get them through temporary emergencies.

According to a 2018 Federal Reserve System Board of Governors study on the economic wellbeing of U.S. households, nearly 40% of American families don’t possess sufficient savings to cover even a $400 emergency expense.  Alarmingly, that same study noted that 51% of military service members live paycheck-to-paycheck.

Because of their credit profiles, credit cards aren’t always a viable option for such people, and traditional bank loans aren’t an option due to the small amounts at issue.  Whereas higher-income Americans with stronger credit history can borrow from banks, use assets they possess as leverage or access savings amounts, American consumers with lower credit scores and insufficient savings cannot.  In fact, according to the Fair Isaac Corporation, some 46% of consumers possess credit scores below 700, meaning that traditional bank loans aren’t possible for them.

That’s where consumer finance loans come in, providing a critical life preserver for lower-income Americans and New Mexicans.

In such circumstances, struggling Americans can access the money they need for short-term emergencies via consumer finance loans.  But under H.B. 132 as contemplated by the New Mexico House, consumer finance lending will only become economically unsustainable and therefore less available.

In turn, the unintended consequence will be more people seeking out illegal loansharks, suffering overdrafts, or simply being unable to cover their temporary costs.  As the World Bank aptly summarized, regulatory and legislative proposals like H.B. 132 lead to “increases in non-interest fees and commissions; reduced price transparency; lower number of institutions and reduced branch density; and adverse impacts on bank profitability, in addition to the lack of access for smaller and riskier borrowers.”

Obviously, that quickly ends up punishing the very people that legislation like H.B. 132 claims to protect.  It only threatens to make consumer finance lending more difficult, more expensive and less available.