Category Archives: Government

Last Week In Regulation

According to the Competitive Enterprise Institute,  83 new regulations were added to the Federal Register last week, which places the current tally at 2,322 regulations on 50,432 pages. So far this year, 440 new rules will affect small businesses.

“The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.”

The Revolving Door Keeps Swinging

Tim Carney of the Washington Examiner wrote recently about the revolving door at the Consumer Financial Protection Bureau and noted how multiple employees of the bureau have left it for private-sector jobs in industries regulated by the bureau. Carney writes, “Peter Carroll helped shape the mortgage regulations at the Consumer Financial Protection Bureau until this spring. Now, Carroll is senior vice president of capital markets at Wells Fargo Home Mortgages, the largest private mortgage lender in the country.”

The revolving door refers to the movement of people from positions in government where they make rules to positions in the private-sector, which is impacted by those rules. An individual may go back and forth between a regulatory agency and impacted industries multiple times in his or her career. The revolving door between government agencies and the private sector is ripe for cronyism as personal relationships can impact policy decisions. It is easy to imagine how favoritism can occur when a regulator’s friends and former colleagues work for the companies that he or she is regulating. The revolving door is related to another aspect of cronyism: regulatory capture. Here, an agency’s regulations benefit favored companies at the expense of their competitors or consumers.

To learn more about the terms “revolving door” and “regulatory capture” check out these resources:

The Center for Responsive Politics on the Revolving Door

Susan Dudley on Regulatory Capture

 

FAA Ruling Bans Planesharing

Ridesharing services like Uber and Lyft have already brought technology to those needing a ride across town, but what about those who want a ride to the next town over? Imagine being able to use an app on your smartphone to book a seat on a private airplane. Planesharing apps like AirPooler and Flytenow allowed pilots of small, non-commercial aircraft to post when and where they were flying. Passengers could then purchase seats on those flights. It was a good way to connect passengers wishing to make short trips with pilots looking to cover part of their expense in operating the aircraft. While these services would have lowered passengers’ costs and pilots’ expenses, they will be grounded due to a Federal Aviation Administration (FAA) ruling.

Under FAA regulations, pilots who want to carry passengers must acquire an air carrier license, something many pilots can neither qualify for nor afford. The claim is that this licensing protects passengers by preventing them from flying with rookie pilots. However, these are precisely the same claims made by the taxi industry against ridesharing services Uber and Lyft—claims that have been largely unfounded. Planesharing pilots were already going to be flying, and the addition of passengers changes very little. Even accepting the FAA’s protection argument, many would-be passengers will be pushed back onto the roads to engage in a statistically more dangerous form of travel: driving.

Like most forms of occupational licensing, this ruling does not truly protect passengers. But it does benefit the established commercial airline industry. By preemptively stopping these services, those with commercial carrier licenses can avoid competition and continue operating without disruption. Ultimately, it is the consumer who suffers.

“While the FAA’s decision is confusing, it’s also stalling the opportunity for private enterprise and government to work together to foster innovation in the sharing economy. It’s a big disappointment for hundreds of thousands of pilots and for everyday travelers. Pilots, who have always loved to ride-share but found it difficult to arrange, were looking forward to taking advantage of modern sharing technology to offer seats as a way of defraying costs.”

Last Week In Regulation

According to the Competitive Enterprise Institute,  75 new regulations were added to the Federal Register last week, which places the current tally at 2,239 regulations on 48,550 pages. So far this year, 417 new rules will affect small businesses.

“The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.”

Cash For Clunkers Cost Taxpayers $3 Billion

According to a study from Texas A&M University, the Car Allowance Rebate System Act cost taxpayers $3 billion. The program, otherwise known as ‘Cash for Clunkers,’ gave individuals who traded in older cars $4,500 in cash towards a more fuel-efficient model. Over 700,000 vehicles were traded in during the program but while it was intended to boost auto sales the researchers found that it actually negatively impacted the auto industry.

“Texas A&M researchers found that Cash for Clunkers strikingly reduced overall spending on new vehicles as consumers tended to purchase less expensive and smaller vehicles… On average, buyers spent an average of $4,600 less on a new vehicle than they otherwise would have.”

Onerous Food Boat Regulations In Maine

For most businesses, being featured in a newspaper article is a great opportunity to bring in new customers. However, one entrepreneur in Maine found out that publicity also gets you noticed by the government. Reilly Harvey outfitted her small boat with a propane stove, a pot full of lobsters, and some homemade pies. She then began selling the delicious food to other boaters during Maine’s busy season. Just as food trucks have met resistance from local governments around the country, Harvey’s food boat ran into trouble. Harvey was told by health inspectors that she needed to meet health standards for mobile vendors. She would have to outfit her old ship with hot and cold running water in order to continue serving food. Although public outcry did manage to allow Harvey a temporary reprieve (she is allowed to operate with a wash basin, five gallons of water and a food thermometer in the interim) she will likely face off against regulators again before next season.

“The state requires her to add to her little boat a three-bay sink and a separate hand sink, and must have hot and cold running water and follow the same rules as food trucks. They also complained about her being barefoot in the boat. They’ve offered to ‘expedite’ her application as soon as she gets one in, though it’s unclear in the story how her small boat could meet these requirements.”

Last Week in Regulation

According to the Competitive Enterprise Institute, last week 80 new regulations were added to the Federal Register which places the current tally at 2,164 regulations on 46,563 pages. So far this year, 401 new rules will affect small businesses.

“The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.34 billion to $10.57 billion. They also affect several billion dollars of government spending.”

$2 Million in Cotton Subsidies Improperly Spent

An audit by the U.S. Department of Agriculture’s Office of Inspector General found that over $2 million in cotton subsidies were spent improperly. According to the report, the subsidies were given through the Economic Adjustment Assistance to Users of Upland Cotton Program (EAAP) which was intended to assist the U.S. textile industry. Instead, 75 expenditures made with the subsidies were spent on a new car, lawnmowers, a sound system, and artwork. Surely all of these purchases were vital to keep the U.S cotton industry running, even the elephant lamp purchased by one CEO for their office.

“’OIG concluded that these types of expenditures, which were allowed by FSA, represent waste and abuse of EAAP funds, as they do not have direct applicability to the manufacturing of upland cotton into eligible cotton products by the user that made them,’ the audit said.”

Last Week In Regulation

According to the Competitive Enterprise Institute, last week 98 new regulations were added to the Federal Register which places the current tally at 2,104 regulations on 44,987 pages. So far this year, 388 new rules will affect small businesses.

“The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.34 billion to $10.57 billion. They also affect several billion dollars of government spending.”

Government Transparency Website is Transparently Broken

USASpending.gov, a government transparency website designed to report government spending to the public, is so woefully prone to error that as much as 98 percent of its records are inaccurate, according to a Government Accountability Office (GAO) audit. The GAO found instances where agencies literally had no idea where their money went or the spending they did report was often wrong. From USA Today:

“Among the data missing from the 6-year-old federal website: The Department of Health and Human Services failed to report nearly $544 billion, mostly in direct assistance programs like Medicare. The department admitted that it should have reported aggregate numbers of spending on those programs.”

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