Freedom Line Blog

We at CFIF have consistently highlighted the peril of federal, state and local government efforts targeting the short-term consumer lending sector.

Less than two years ago, we specifically sounded the alarm on a New Mexico law artificially restricting interest rates on short-term consumer loans.

Well, a new study entitled “A New Mexico Consumer Survey:  Understanding the Impact of the 2023 Rate Cap on Consumers” that surveyed actual borrowers confirms our earlier warnings:

Key findings include:

•Short-term,small-dollar loans help borrowers manage their financial situations, irrespective of the borrower’s income.

•The rate cap has failed to improve the financial wellbeing of New Mexicans, specifically those who had previously relied on short-term, small-dollar loans.

•Most former short-term, small-dollar loan users struggled with paying their bills since the rate cap took effect on January 1, 2023. At the same time, a majority of borrowers indicated they were unable to access credit at some point following the rate cap.

•When unable to obtain credit, consumers said they were left with poor alternatives, including late bill payments, skipping urgent appointments or vital expenses, or pawning valuables.

•The vast majority of borrowers want the option to return to their previous lender, demonstrating support for the loan options available before the rate cap.”

The lesson is once again obvious:  Although bureaucrats claim to help struggling consumers through such overregulatory efforts as capping repayment rates, the real-world impact only eliminates a source of reliable, legal short-term loans to navigate temporary emergencies.

To illustrate, a 2018 Federal Reserve System Board of Governors study on the economic wellbeing of U.S. households found that almost 40% of U.S. families don’t couldn’t cover even $400 in emergency expenses.  Outrageously, 51% of military service members live paycheck-to-paycheck.  Unfortunately, credit cards aren’t always a viable option, and traditional bank loans are unavailable due to the small amounts needed.  Although higher-income Americans with stronger credit histories can borrow from banks, use assets they possess as leverage or use their savings amounts, people with lower credit scores and little in savings cannot.  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.

Fortunately, short-term consumer finance loans can allow struggling Americans to access money needed to meet emergencies.

Under counterproductive laws like New Mexico’s, however, consumer finance lending becomes less available.  The unintended consequence of that is sadly foreseeable:  More people seek out illegal loansharks, suffer overdrafts, or simply fail to cover temporary costs.  As the World Bank found, such regulatory and legislative efforts as New Mexico’s 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.”

As expected, New Mexico’s H.B. 132 restrictions are already punishing the very people that it ostensibly claims to protect, making consumer finance lending more difficult, more expensive and less available.  It offers an ominous warning to other jurisdictions considering similar laws, and a quick lesson to New Mexico political leaders who can correct their mistake.

As pro-Israel marchers congregate in Washington, D.C., today and too much of the world swallows Hamas’s portrayal of itself as victim, an oldie but a goodie provides a helpful primer and corrective:

The Difference Between Israel and Hamas

Credit to Axios, whose image again prompts the question:  If the political left possesses the superior governance model, then why do people flee places where it is put into effect?  Just asking.

People Flee Blue States for Red

We continue to highlight the potentially disastrous consequences if the Biden Administration FCC revives the “Net Neutrality” zombie briefly imposed by the Obama Administration, which caused private broadband investment to decline for the first time in history outside of a recession.

When the FCC under Ajit Pai reversed the Obama FCC’s order in 2017, the usual litany of partisan leftists and latenight comedians predicted disaster.   Instead, as we’ve often noted, investment and internet speeds proceeded to increase.

Well, something else increased:  American consumers’ satisfaction with their internet service.  Something to keep in mind as the needless “Net Neutrality” debate returns:

Ending “Net Neutrality” Boosted U.S. Consumer Satisfaction

In our latest Liberty Update, we highlight how the Biden Administration is inexplicably resurrecting the zombie “Net Neutrality” that caused demonstrable harm to internet service during its mercifully brief lifetime at the end of the Obama Administration.  Once again, our friend economist Steve Moore illustrates one of the critical points in this debate well.  Namely, internet speeds shot back sharply upward after the Trump Administration FCC under Ajit Pai repealed the Obama FCC’s Title II-Net Neutrality order:

Repealing “Net Neutrality” Increased Speeds

A summer whose entertainment headlines were dominated by Taylor Swift and her blowout concert tour just came to an end.  Unsurprisingly, a significant number of those headlines centered upon the ongoing public policy debate over the consumer ticket purchase experience, along with varying and differing calls for reform.

Unfortunately, some of that discussion served to introduce terribly ill-advised proposals that would only make the industry and American consumers’ enjoyment of it far worse.

To be sure, the genesis of the problem underlying various reform proposals is the issue of predatory ticket resellers who engage in harmful practices that hurt fans as well as the artists themselves.  As just one illustration, resale ticket prices at StubHub alone have increased over 100% since as recently as 2019, even while the face value of the tickets being resold have increased only 10%.  No wonder consumers desire reform.

Currently, a complex patchwork of state laws govern the industry, which logically invites Congress to streamline consumer protections while still protecting artists’ underlying rights by prohibiting predatory resellers, ticket brokers and ticketing platforms from disregarding the negotiated contractual terms and conditions between artists and venues in which they perform.  Such federal-level reform should include limitations on price-gougers who seek to resell tickets above their face value.

Unfortunately, some Congressional proposals would make today’s problems infinitely worse.

As an especially egregious example, the “BOSS Act” would impose a Biden Administration-style, heavy-handed, big-government regime that would simply empower federal bureaucrats.  Americans struggling under deepening economic and governmental dysfunction due to Biden Administration policies hardly need instruction on how that’s an unsettling idea.

Specifically, the BOSS Act would empower the rogue Federal Trade Commission (FTC) under activist chair Lina Khan would be granted unprecedented authority to micromanage the ticketing market, set prices despite its lack of expertise or skin in the game, substitute its authority for the freely negotiated agreements for events between artists and other parties, impose ticket inventory rules, dictate timelines and inhibit artists’ ability to keep ticket prices affordable for their actual fans over wealthy corporate purchasers.  Meanwhile, the BOSS Act would do nothing to stop websites from duping fans into believing that they’re officially affiliated with the concert venue or sports teams, nor would it prevent shady sellers from offering tickets they don’t even possess yet.

If nothing else, the FTC’s recent record of successive and embarrassing courtroom defeats for its overreach and extra-legal activities should inform American how bad an idea it would be to suddenly give it free reign to govern the market.

What’s more, the free market has already been coming up with solutions to the longstanding concerns over the ticket purchase experience.  For instance, entertainment promotion and ticket company Live Nation in recent months unveiled an “all-in pricing” idea that took effect this month.  Under that voluntary reform, all-in pricing allows fans to see up-front the full price of tickets, including fees.  That matters, because knowing the total cost of tickets from the beginning makes purchase easier and more in line with other types of online shopping.

Congress, however, can still play a helpful role beyond those free market improvements.  Better enforcement of the Better Online Ticket Sales (BOTS) Act, for instance, would guarantee that real, actual fans, rather than “bots” used by predatory resellers, gain first opportunity to purchase tickets to performances.

What’s critical is that any Congressional reform must protect artists’ ability to choose how tickets to their own performances are sold, which in turn helps guarantee that their fans get to actually see their favorite artists perform.  The BOSS Act fails in that regard, whereas market forces and the BOTS Act offer improvement.

In our latest Liberty Update we highlight how replacing Joe Biden atop the Democrats’ 2024 ticket wouldn’t substantively change the left’s “Bidenomics” economic agenda that is the main voter concern driving his unpopularity.  In noting Biden’s strange and stubborn habit of whispering into the microphone that “It’s working” when promoting that failing agenda, we noted that poverty just surged at a record rate last year, according to the federal government itself.  From our friend Stephen Moore, here’s a helpful visual placing it in stark relief:

Bidenomics Is “Working?”

In recent days, we at CFIF have marked the ignominious one-year anniversary of the Biden Administration’s misnamed “Inflation Reduction Act” (IRA) by noting its particularly negative impact on pharmaceutical innovation and, in turn, the nation’s health and wellbeing.

As acknowledged by the United States Senate Committee on Homeland Security  as well as groups like the American Cancer Society, Americans are already confronting alarming and unprecedented drug shortages in the wake of the IRA.

To mark today’s date of September 13 – or 9/13 – it’s appropriate to note a different but significant 9-13:  That refers to the indefensible distinction that the IRA makes between what are known as “small-molecule” and “large-molecule” drugs.

Specifically, the IRA imposes destructive price controls on small-molecule drugs merely 9 years following Food and Drug Administration (FDA) approval, while waiting 13 years to impose those price controls on large-molecule drugs.  Although price controls of any duration and of any type only serve to create shortages and discourage innovation, that baseless disparity in the IRA needlessly discourages investment in small-molecule pharmaceuticals.

As cogently stated by leading scientific and medical expert Daniel Skovronsky in STATReports, it’s imperative that Congress correct that unjustifiable 9-13 distinction:

[T]o researchers like me, a provision in the recently enacted Inflation Reduction Act is puzzling.  For no clear reason, it draws a distinction between large and small molecule medicines.  As part of the IRA’s Medicare price control provisions, price negotiation for small molecule medicines is allowed nine years after Food and Drug Administration approval compared with 13 years for large molecule biologics.  There is no scientific reason for this distinction, and it will have a real and detrimental impact on drug discovery and patient care.  Nine years is not enough time to recoup the deep investments into small molecule R&D before government price controls take effect.  As a result, companies will deprioritize small molecule programs, lowering the potential to create drugs using these technologies.  Congress should correct this imbalance by allowing negotiation after a full 13 years for both small-molecule medicines and their large-molecule counterparts.”

There’s simply no sound basis for that 9-13 small-molecule/large-molecule differential, and on 9/13 we urge Congress to correct this error.

Joe Biden carelessly and repeatedly labels himself “the most pro-union president in history.”  Well, this snapshot of public opinion illustrates his tone-deafness on the issue, and might also offer insight for those who can’t fathom why he remains so wildly unpopular.  Namely, an overwhelming share of Americans consider unions a negative force in the private sector, not a positive one:

Americans Consider Unions a Negative Force

In an increasingly digital world marked by sharp partisan division, one thing that claims nearly universal agreement is the need to protect personal data against the threat of massive government overreach. 

To illustrate, an overwhelming majority of Americans (84%) said in a recent poll that they are at least somewhat concerned about the safety and privacy of the personal data that they provide on the internet. 

Contravening that near-universal public concern, the Miami-Dade Board of County Commissioners is inexplicably considering a dangerous new ordinance that would erode Miami consumers’ privacy rights by forcing popular third-party food delivery platforms like DoorDash or UberEats to share sensitive data about consumers to other parties. 

Supporters of the proposed ordinance attempt to rationalize it under the guise of supporting local restaurants, which might superficially appear to be a worthy goal.  The truth, however, is entirely different. 

Under the proposed ordinance, consumers would have their privacy routinely violated every time they order, with third-party food delivery platforms forced to disclose customers’ full names, contact information, and other identifying data to restaurants — putting customer data at significantly greater risk of being misused or hacked. 

Making matters worse, that regulatory overreach would also suppress any hope of recourse for consumers.  Even if they choose to delete their accounts from the third-party delivery platforms targeted by the proposed new ordinance, that personal information would remain vulnerable to being exposed or sold. 

Privacy concerns at the center of this proposed ordinance continue to mount as more Americans experience data breaches and discomfort over how their information is collected and used.  If passed, this ordinance would strike yet another blow against individuals’ privacy at a time when regulatory creep continues to infringe upon the rights of everyday consumers. 

For that reason, more sensible data privacy policies must prevail in Miami-Dade County, and we urge them to keep consumers in control of their personal information rather than opening the door to unprecedented and intrusive abuses of their privacy. 

CFIF recently marked the ignominious one-year anniversary of the Biden Administration’s misnamed “Inflation Reduction Act” (IRA), whose title even Biden himself admitted was mistaken.

We noted how, as a result of the IRA, drug shortages have already reached record highs, increasing by 30% between 2021 and 2022 alone, according to a report in March from the Senate Committee on Homeland Security and Governmental Affairs.  Another report from the American Cancer Society also sounded the alarm on emerging drug shortages, caused in part by drug price control policies.  Thus, just one year in, drug shortages have reached record levels under the looming threat of drug price controls, weaker intellectual property protections and regulatory browbeating.

This week, as reported by Politico, the same Biden Administration that called inflation “transitory” and insists in the face of public blowback that “Bidenomics” is somehow succeeding announced that it will soon release the first ten prescription drugs selected for its destructive price control scheme:

President Joe Biden has sought to sell health policies like the new Medicare negotiation program as part of a broader ‘Bidenomics’ agenda set to underpin his reelection campaign.  The drug pricing push, he has argued, will help counter inflation and boost the economy by slashing the amount Americans have to shell out each year for critical medicines, although prices negotiated on the first set of drugs won’t take effect until 2026.”

Given Biden’s shoddy record for accuracy and competence so far, Americans will be forgiven for their skepticism.  As we noted, the consequence of price controls will be shortages and less innovation, which we’re already witnessing.  Americans aren’t buying this “Bidenomics” pitch, and will pay a heavy price unless and until these dangerous drug price controls are reversed.

“The record of price controls goes as far back as human history.  They were imposed by the Pharaohs of ancient Egypt.  They were decreed by Hammurabi, king of Babylon, in the eighteenth century B.C.  They were tried in ancient Athens.” -Henry Hazlitt

Today marks the one-year anniversary of Joe Biden’s misnamed “Inflation Reduction Act” (IRA), which even he now admits shouldn’t have carried that title.

Beyond Biden’s own regrets, however, Americans deserve to understand its destructive impact on our healthcare system and world-leading pharmaceutical innovation sector.

Namely, our traditional market-based approach has resulted in an unrivaled legacy of pharmaceutical innovation and abundance relative to the rest of the industrialized world.

For example, the United States accounts for approximately two of every three new lifesaving drugs introduced worldwide, meaning that we alone create twice as many new drugs as the entire world combined.  As another illustration, American consumers enjoy a substantially higher availability of critical drugs compared to people in other advanced economies.  Of 270 new medicines introduced domestically since 2011, only 52% of them were available to our neighbors just across our northern border in Canada, 41% in Australia, 48 % in Japan, 53% in France, 64% in Britain and 67% in Germany.

Destructive drug price controls, however, maintained an illogical appeal for the Biden Administration and the political left.

They can’t say that they couldn’t have foreseen the downsides of the IRA.  Amid debate over broad drug price controls back in 2021, a University of Chicago study warned of their potential negative impact on future drug innovation and availability:

The United States has far fewer restrictions on price than other countries, but the Biden Administration has announced their goal to lower drug prices through greater price regulation. …  [N]ew drug approvals will fall by 32 to 65 approvals from 2021 to 2029 and 135 to 277 approvals from 2030 to 2039.  These significant drops in new drug approvals will lead to delays in needed drug therapies, resulting in worse health outcomes for patients.  

Several years earlier, even the United Nations World Health Organization (WHO) similarly warned about the consequences of government price controls and intellectual property violations:

[P]rice controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.  

Disregarding those warnings and textbook economic logic, the Biden Administration and Pelosi-Schumer Congress plowed ahead with the IRA, whose drug price control provisions President Biden bizarrely trumpets as a 2024 reelection theme.  From branded drugs to off-patent older generics, the Biden Administration accelerated government efforts to artificially target drug prices, oblivious to the foreseeable consequences.

We’re now suffering the consequences of that agenda.

Drug shortages have already reached record highs, increasing by 30% between 2021 and 2022 alone, according to a report earlier this summer from the Senate Committee on Homeland Security and Governmental Affairs:

Shortages of critical medications continue to rise – including drugs used in hospital emergency rooms and to treat cancer, prescription medications, and even common over-the-counter treatments like children’s cold and flu medicine.  The number of active drug shortages in the U.S. reached a peak of 295 at the end of 2022. …  Between 2021 and 2022, new drug shortages increased by nearly 30 percent.  At the end of 2022, drug shortages experienced a record five-year high of 295 active drug shortages.  

Separately, a new report from the American Cancer Society warns of emerging drug shortages, caused in part by drug pricing policies:

Chemotherapy drugs used to treat cancer are increasingly in short supply and have returned to the list of top-five drug classes affected by shortage.  Expanded demand, supply shortages, limited manufacturing capacity, and low profit margins for generic therapies are among the factors resulting in the current nationwide shortage.  …  A number of the drugs included in the shortage don’t have an effective alternative.  As first-time treatments for a number of cancers, including triple-negative breast cancer, ovarian cancer and leukemia often experienced by pediatric cancer patients, the shortage could lead to delays in treatment that could result in worse outcomes.  

Accordingly, drug shortages have reached record levels under the looming threat of drug price controls, weaker intellectual property protections and regulatory browbeating.

Instead of perpetuating the IRA’s spiral of price control insanity, elected leaders should return to the more market-oriented approach that brought unrivaled innovation before more Americans pay the needless cost.

Make of this what you will, as Joe Biden pitches “Bidenomics” in his reelection effort and maligns the alleged “trickle down” economic record of his predecessor:

Bidenomics

For years we’ve warned how drug price controls – as with price controls on any product or service – don’t reduce prices so much as they inevitably cause shortages and stifle innovation.

Europe and other advanced economies imposing socialized drug price controls suffer dramatic shortages compared to the traditionally more market-oriented United States, and now in the wake of the misnamed “Inflation Reduction Act” (IRA), the U.S. is already experiencing unprecedented drug shortages.

This is literally a matter of life and death.

A new analysis from Vital Transformation offers the latest detail on how the IRA’s drug price controls, and the proposed “Smart Prices Act” (SPA) seeking to expand them, will stifle innovation in the field of lifesaving pharmaceuticals:

Looking forward, we estimate that the expanded government price setting could result in roughly 230 fewer FDA approvals of new medicines over a ten-year period, once the impacts are fully reflected in the pipeline.  Impacts will be felt most heavily in many areas of unmet need, including rare disease, oncology, neurology, and infectious disease.”  (Emphasis added.)

Indeed, Vital Transformation’s study illustrates how many of the drugs currently targeted by the IRA’s price controls would’ve never come to market had the price controls existed at the time:

Had the drug pricing provisions of the SPA been in place prior to the development of today’s top-selling medicines, we estimate that 82 of the 121 therapies we identified as selected for price setting would likely have not been developed.”

In addition to price controls’ impact on lifesaving drug innovation, the new study also helpfully highlights the negative economic and job effects of these price controls on the U.S. economy and employment market:

We modeled the impacts on industry revenues and future R&D investments and estimated future lost innovation impacts including the impact on industry jobs.  We estimate a loss of between 146,000 – 230,000 direct biopharmaceutical industry jobs and a total of 730,000 – 1,100,000 U.S. jobs across the economy if the proposed IRA expansion were to be implemented.”

All of this, of course, simply confirms what analysts have known for decades.  A 2021 University of Chicago study warned in equally stark terms how drug price controls will dangerously reduce drug innovation and availability:

The United States has far fewer restrictions on price controls than other countries, but the Biden Administration has announced their goal to lower drug prices through greater price regulation.  …  [N]ew drug approvals will fall by 32 to 65 approvals from 2021 to 2029 and 135 to 277 approvals from 2030 to 2039.  These significant drops in new drug approvals will lead to delays in needed drug therapies, resulting in worse health outcomes for patients.”

Believe it or not, even the United Nations World Health Organization (WHO) issued the same warning of the deadly consequences of government price controls and weaker patent protections:

[P]rice controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.”

The evidence and real-world impacts are frankly beyond dispute.  Accordingly, it’s now up to reasonable members of the U.S. Senate and House of Representatives to oppose Joe Biden’s proposed 2024 budget and the SPA and avert the predictable deadly economically destructive consequences.

California Governor Gavin Newsom, who faced recall despite his state’s deep-blue status, continues his bizarre campaign to pick fights with Florida Governor Ron DeSantis, and can attempt to spin California’s disastrous social and economic decline any way he’d like.  The numbers, however, don’t lie.  Rhetoric is cheap, but people vote with their dollars and feet.  And in that measure, Newsom’s California suffers alongside his deep-blue brethren, as illustrated by our economist friend Steve Moore using official U.S. Census Bureau data:

DeSantis vs. Newsom in One Picture

The bipartisan Direct Capital Access (DCA) Act – recently introduced in both the United States House of Representatives and Senate – aims to reform antiquated legislation from 1966 artificially restricting nonstop flights into and out of Ronald Reagan Washington National Airport.

Since the DCA Act (H.R. 3185, S. 1933) was introduced in the House by Congressmen Burgess Owens (R – Utah) and Hank Johnson (D-Georgia) and in the Senate by Senators Cynthia Lummis (R – Wyoming) and Raphael Warnock (D-Georgia), opponents have lobbed false claims about its impact on regional airports.

Accordingly, it’s time to clear up any confusion and provide the corrective facts.

As background, the DCA Act would make travel to and from the Washington, D.C. region easier and more affordable for Americans by updating a decades-old “perimeter rule” federal regulation. That rule from 1966 limits direct flights to and from Reagan National Airport (DCA) to destinations within a 1,250 mile “perimeter.” The rule is a relic of a bygone era of air travel that only kneecaps modern travelers with fewer direct flight options and higher ticket prices.

As the DCA Act has gained support from lawmakers, several self-interested parties like the Metropolitan Washington Airports Authority (MWAA) recently partnered with United Airlines to stop efforts to increase access to the nation’s capital region because the current antiquated restrictions benefit them.

Let’s Set the Record Straight:

MYTH: Groups working with MWAA and United Airlines falsely claim that any changes to the 1966 perimeter rule would harm regional airports and their communities.

FACT: The DCA Act would only add more incoming and outgoing flights, not replace or eliminate any existing flights that currently service regional airports. There are only additional benefits here!

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MYTH: Those who oppose more airline competition and lower ticket prices for their own benefit falsely claim that Reagan National Airport currently operates at maximum capacity, and cannot handle increased traffic from additional flights.

FACT: A recent study released by Capital Access Alliance revealed that not only does Reagan National have the capacity to handle many more flights per day, but also that MWAA’s recent Project Journey $1 billion expansion provided passengers at DCA with more post-security space and a new 14-gate concourse. That created more than what is needed to accommodate higher passenger volumes and more direct flights to Reagan National.

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MYTH: Another false claim is that the DCA Act must be opposed in order to strengthen and protect regional airports across America.

FACT: Only a handful of members of the Coalition to Protect America’s Airports, the United Airlines/MWAA-supported group attempting to block the DCA Act, maintain direct flights from Reagan National. What they really advocate is keeping a nearly 60-year-old perimeter rule established by Congress to stifle competition and limit choices that Americans can make on air travel resulting in higher costs.

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The facts are clear. Those who oppose the DCA Act are endorsing protectionist policies that prevent Americans from enjoying more convenience and affordable choices. It’s time to modernize.

Tell Congress to act and support the DCA Act.