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  • December 2014
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Put a Fork In It: Why Taxpayers are Fed Up with Pork-Barrel Spending

For 16 years, Louisiana Sen. Mary Landrieu fed her constituents powerful promises of pork – pork barrel spending that is. Fortunately for taxpayers, the results of the December 6, 2014 Senate run-off race stifled any of Landrieu’s future attempts at bringing home the bacon, and eliminated the dangerous implications that Landrieu’s fiscal negligence could have further imposed.

In a December 8, 2014 article featured on The Washington Post’s Wonkblog, Max Ehrenfreund implied that this strategy, known as earmarking, the redirecting of funds to pet projects in order fulfill personal political interests, possibly prevented Landrieu from reclaiming her throne as voters may have soured on the practice of pork barrel spending – and rightfully so.

From fiscal year’s (FY) 2008 to 2010, the only years in which members of Congress were required to list the earmarks that they requested, an assessment completed by Citizens Against Government Waste (CAGW) determined that Sen. Landrieu was responsible for 436 earmarks costing $794.5 million.

Since the enactment of the earmark moratorium of 2010, the practice of deal-making and back-door vote trading between members has drastically decreased from $16.5 billion in FY 2010 to $2.7 billion in FY 2014, though pork barrel spending is not entirely a thing of the past.

Extensive research revealed that 109 earmarks totaling $2.7 billion still managed to weasel their way into the twelve FY 2014 appropriations bills.  An initial CAGW evaluation of the 2015 “CRomnibus” appropriations bill, a combination of a continuing resolution (CR) and omnibus appropriations, produced similar findings: earmarks are still very much alive.  Unfortunately, only a few individual members can be directly linked to most funding requests, as the vast majority of the earmarked funds include fewer details than those prior to the moratorium.

Both government accountability and transparency have taken a punch to the gut, raising disturbing questions for the future, particularly since representatives and senators from both sides of the aisle continue to clamor for earmark revival by sullying the political process.

During a November 14, 2014 closed-door caucus meeting, Rep. Mike Rogers (R-Ala.) proposed re-instituting earmarks for “state, locality, or a public utility or other public entity,” claiming the moratorium transfers too much power over spending decisions to the executive branch. While the proposal was ultimately dismissed, it surprisingly enjoyed considerable support from Republican lawmakers. In the past year, Sens. Harry Reid (D-Nev.) and Richard Durbin (D-Ill.) along with Rep. Jim Moran (D-Va.) have also argued for a return to an earmarking system, albeit unsuccessfully.

Prior to the moratorium, earmarking led to corruption, including the incarceration of members and staff – mostly Republican – and led to an inequitable distribution of projects. Taxpayers seem to have the negative implications of pork barrel spending figured out, while earmark advocates have all but forgotten the days when Congress used earmarks to promote overblown spending and sell out the American people in order to remain in power, or maybe they haven’t.
Earmarks do not lead to reduced or controlled spending as earmark enthusiast Rep. Rogers has claimed; they simply act as a “gateway drug” for big spending, allowing pork-addicted members of Congress to grease the skids for even bigger, more wasteful legislative vehicles.

Instead of trying to reinstate earmarks, members of Congress should devote their time and energy to restoring regular order to the budget process in order to cut the bloat that continues to plague government spending and prevent authentic compromise.

As voters decisively awarded control of the Senate to the Republicans, while also electing the largest majority of taxpayer advocates in the House since the 1928 elections, Ehrenfreund’s assertion may be correct: Taxpayers are fed up with money mongers who continue to fan the embers of profligate spending in Washington.

A return to the bad old days of earmarking, regardless of political party affiliation, would be a repudiation of the message that voters sent to Capitol Hill as a result of the mid-term elections: move America forward by practicing individual responsibility, not aberrant behavior, to establish a permanent culture of fiscal restraint and trust in Washington.

Jonathan Gruber Goes to Washington

Most of you know about Jonathan Gruber. He is the Massachusetts Institute of Technology (MIT) economics professor that was hired as a consultant by the Obama administration to provide guidance on designing ObamaCare. He has often been called the “architect” of ObamaCare. What was his consulting fee just from the Department of Health and Human Services? A mere $400,000. I wrote in an earlier blog that he had been called to testify before the House Oversight and Government Reform Committee on December 9, 2014. That hearing occurred today.

Yesterday, I was listening to WMAL, a local radio station. The hosts asked their usual Monday guest Joseph diGenova, former United States Attorney, District of Columbia, what questions congressional Republicans should ask professor Jonathan Gruber in the hearing. What did diGenova say? He said they should ask about and get his billing invoices, not only for the federal government but also from the states that hired Gruber. According to diGenova, the records are vague and with little transparency on what Gruber did for the millions of dollars he received.

For example, Vermont government officials hired Gruber to help them design their single-payer plan. State Auditor, Doug Hoffer, wants all of Gruber’s billing records and payments. The blog Vermontdigger has been following the Gruber billing issue and has reported there is a lack of information on the invoices.

I watched most of the hearing. Sure enough, Gruber’s billing records were a topic of much heated discussion. The Hill reports, “In a House Oversight hearing to examine the ‘transparency failures of ObamaCare,’ the embattled healthcare adviser who called voters stupid repeatedly refused to say how much money he received from the government.” He also said he would not provide the documents and data related to his consulting work and told the committee several times to work with his attorney to get that information.

Rep. Jason Chaffetz (R-Utah) asked Gruber “What are you hiding? Why won’t you give those to us? According to The Hill:

Chaffetz then ordered Gruber to submit the information within 30 days, with nearly a half-dozen others joining in.

Gruber, who largely kept a calm voice and demeanor during the grueling hourlong hearing, mocked Chaffetz’s request for documents.

‘Do I have documents?’ Gruber asked. ‘I have all sorts of documents. I ” have a piece of paper in front of me.’

The Republicans have threatened to serve a subpoena for his billing records and to bring him back before the committee.

Republicans were not the only ones that were angry. Ranking Member Elijah Cummings (D-Md.) said Mr. Gruber’s remarks about American voters were “stupid,” “irresponsible”, and “incredibly disrespectful.” He expressed frustration over Gruber’s remarks concerning the way the law was written, such as how “a lack of transparency is a huge political advantage” and the “stupidity of the American people” was useful in getting the bill passed.

It is clear that the Oversight and Government Reform Committee is not through with Mr. Gruber. He probably should have been more cooperative about providing his billing records and with his demeanor to Rep. Chaffetz. After all, Chaffetz is the incoming chairman of the committee.

Newt’s Very Bad Idea

Former House Speaker Newt Gingrich often comes up with ideas to change how the government works.  One of his most recent suggestions has made a lot of people who care about property rights scratch their head.

At a December 2, 2014 meeting of Academy of Managed Care Pharmacy executives, Speaker Gingrich was asked about the high costs of certain biopharmaceutical drugs, such as Gilead Science’s hepatitis drugs Sovaldi and Harvoni.  According to the December 4, 2014 edition of Inside Health Policy, he said, “I think there are some drugs where it may either lead the government to buy the patent rights to figure out some way to make it a public commodity, because it is so expensive if it stays at a monopoly level.”  He went on to say that the policy should apply only to drugs that are “very life-changing.”

Alarmingly, this concept aligns him with Public Citizen, a left-of-center group that has long called for single-payer or government-run healthcare.  According to Inside Health Policy, the group’s president, Robert Weissman, advocated for a similar solution with respect to pharmaceuticals before a December 4, 2014 Senate Veterans Affairs Committee.

If the U.S. government wanted to forcibly purchase a patented drug, it would be equivalent to the taking of personal property by eminent domain.  If the company refused to turn over the patent for the offered price, the government would simply confiscate it.  This is no better than countries like China, India, or Russia, which steal intellectual property on a routine basis.  Such policies should never be deployed in the U.S.

Furthermore, getting the government involved in “purchasing” certain drug patents would kill innovation in the U.S. pharmaceutical industry.   Why would companies and investors want to risk developing a life-saving drug only to have it confiscated?  No longer would the U.S. produce approximately 52 percent of the world’s biotechnology and pharmaceutical patents.  Perhaps the U.S. would precipitously drop to the patent production level of other countries that utilize pharmaceutical price controls, such as Japan, which produces about 10 percent; or the entire European Union, which provides around 20 percent of the world’s biotech and pharmaceutical patents.

The way to drive down the cost of drugs simply should be encouraging competition.  For example, Citizens Against Government Waste (CAGW) has urged the Food and Drug Administration to finalize its work on designing the shortened regulatory pathway to bring biosimilars, the “generic” version of biologic drugs, to the marketplace.

Removing barriers within pharmacy networks is another way to cut costs.  Drug benefit plans constantly seek ways to lower the price of pharmaceuticals, such as creating preferred pharmacy networks, increasing efficiency by utilizing mail-order pharmacies, and developing formularies.  But groups such as community pharmacists lobby Congress, state legislatures, and government bureaucracies to write laws and regulations to force the drug benefit plans to accept “any willing pharmacy” to participate in their network, or bar plans from offering lower prices for drugs via mail order.  Such policies reduce a plan’s bargaining power and drive up costs for patients.

Perhaps Speaker Gingrich should stop promoting the potential theft of IP and read CAGW’s new book “Intellectual Property: Making it Personal.”  The last paragraph in the book says it best:

Everyone benefits from IP.  If the Founding Fathers had not recognized its importance, the light bulb, the telephone, the cell phone, and the microchip might never have been invented.  Strong IP protection is fundamental to keeping the engine of ingenuity on track for generations to come.

USPS In-APPtitude on Display

Sometimes, when it comes to grAPPling with the overarching, mind-numbing problem of trillions in government waste across all federal agencies, it’s the little vignettes that really illustrate and crystallize the larger story.

And so it goes with the newest mis-hAPP unveiled by the United States Postal Service and reviewed by a reporter for Popular Mechanics:

It’s a simple demonstration of augmented reality’s potential: layering digital information over real-world objects in ways that add context or provide richer experiences. But to keep itself relevant in the digital age, the USPS needed to go further than this first attempt, which is little more than a greeting card.

The idea of turning stationary physical infrastructure from the analog era into a useful source of updated digital information certainly has appeal. New York City is about to take a similar tack with its 8,400 pay phones, planning to replace them with 10,000 new Wi-Fi hotspots. For the USPS in particular, the challenges of adapting to the digital era have been difficult: insurmountable pension costs and declining paper mail business have put the USPS’s finances in deep trouble. The agency reported a $2 billion dollar quarterly net loss in August, far more than the $740 million it reported in the same period last year. And that was despite revenue increases from price hikes on package deliveries.

So far, though, this app hasn’t proven to be the solution for giving today’s generation of smartphone-addicted, constantly texting adults a new reason to visit their local collection boxes. I tested the iPhone app on several blue collection boxes in my neighborhood in Brooklyn and none of them worked. As it turns out, the app needs to capture the USPS Eagle logo in your smartphone’s camera view in order to function properly, and that logo was completely faded on all my local collection boxes.

Not a new phenomenon, CAGW has exposed and highlighted the feds’ mismanagement and miscues related to mobile apps for years.  Just a reminder that the mis-APProporation of taxpayer money continues APP-ace.

APP-alling.

Who’s the Obstructionist?

While I tend to write mostly about healthcare issues, a November 27 article from Investor’s Business Daily, entitled “Obama Taking Hard Line, Blows Up Bipartisan Tax Deal,” provides a brief look into what the next two years will be like.  Says Investor’s: The White House move this week to torpedo a deal between House Republicans and Senate Democrats to extend dozens of expiring tax breaks suggests that the executive action legalizing 5 million unauthorized immigrants may have been no fluke: Compromise appears to be near the bottom of President Obama’s agenda for his last two years in office.”

Keep in mind it was soon-to-be-former Majority Leader Harry Reid (D-Nev.) that was shepherding this bill through the Senate but with the veto threat, there are not enough votes (two-thirds from the House and the Senate) to override a presidential veto.  The tax extenders package is as good as dead for 2014.

I am not arguing whether all or parts of the tax extenders legislative package are valid, but if Obama can’t even work with a Democratically-controlled Senate and pass a bi-partisan bill, what will he do when the GOP takes over the Senate in January? This doesn’t bode well for other issues that Americans want, such as repealing and replacing ObamaCare, immigration reform, and so forth.

Investor’s hypothesizes that because of the Republican wave, Obama is moving further to the left (if that is even possible) and make it harder for the GOP to get anything done.  This is completely the opposite of President Bill Clinton who worked with a Republican congress – albeit with many acrimonious and partisan fights – and had successes such welfare reform and balanced the budget.

While Obama is following the Elizabeth “Hiawatha” Warren’s battle cry that the tax breaks are nothing more than “a massive handout to big corporations” leaving it to “working families to pick up the tab,” there are popular  provisions in it that also affect families such as making permanent an expanded deduction for users of mass transit and tax-free charitable contributions from tax-protected retirement accounts.  Investor’s writes, “While the bulk of the value of the tax breaks do go directly to corporations, helping out working families only indirectly, it’s unfair to charge that ‘there’s nothing in the deal for the little guy,’ said Keefe Bruyette & Woods policy analyst Brian Gardner.”

Investor’s writes that corporate tax breaks include a “$160 billion provision to make permanent and expand a research and experimentation tax credit, an idea that the administration has supported” and two provisions worth “about $73 billion over 10 years [that] would make permanent the American Opportunity tuition tax credit and an allowance for small businesses to write off capital investments permanently.”

The United States has the highest corporate tax burden in the industrialized world, approximately 35 percent.  Certainly overall tax reform is needed that will lower the corporate rate and flatten it, getting rid of many special interest tax breaks, including some that are in the tax extenders’ package. It likely means, as long as Obama is president, we will not see tax reform for American citizens and businesses. But for now businesses, who thought a tax extenders bill was on its way to passage, are facing tax increases that will not be good for the economy and job creation.

Only if enough Democrats revolt and override vetoes by the president, will anything be accomplished.

MR. GRUBER – COME ON DOWN!

On November 20, 2014, Chairman Darrel Issa of the House Oversight and Government Reform Committee sent letters to Center for Medicare and Medicaid Services (CMS) Director Marilyn Tavenner and Massachusetts Institute for Technology (MIT) professor Jonathan Gruber asking them to testify before his committee on December 9 at 9:30 AM.  The topic: to examine the transparency failures related to the implementation of the Affordable Care Act (ACA), better known as ObamaCare.  So mark your calendars now for a lively hearing.

Director Tavenner has already testified before the committee on the numerous ObamaCare’s problems.  No doubt a main focus of this hearing will be how her agency inflated ObamaCare’s September enrollment numbers by including dental policies.   The actual enrollment numbers were not 7.3 million as announced, but closer to 6.7 million.

But it is Professor Gruber’s maiden appearance that will attract all the attention.  Most of you are probably are familiar with Mr. Gruber by now but for those of you who are not, he is often referred to as one of the major architects of ObamaCare.  He was paid $400,000 in consulting fees by the White House to help design the healthcare reform law and millions of dollars in additional consulting fees from federal and state agencies.

The reason he has been asked to appear before the committee is because many of his video-taped speeches in which he discusses his role in designing ObamaCare have finally come to light.  His words are not flattering to the writers of the law, nor the law itself, because he unwittingly tells the truth.

As you watch many of the videos, there is a sense of elitist smugness as the professor discusses his role being part of ObamaCare’s “inner circle.”  He provides an insight into the behind-the-scenes thought process in its design.  Many of his speeches, particularly those before fellow economists, are eye-opening as his audience laughs about many policy decisions, such as the deception around the creation of the “Cadillac tax,” selling it to the public as a tax on insurance companies, while hiding the fact the tax really falls on individuals.  And, it’s almost amusing to watch him talk, gushing like a school-girl with a crush, about being in the same room, breathing the same air, as President Obama.

The video, which really kick-started the “Gruber Film Fest,” is from the October 2013 Annual Health Economics Conference held at the University of Pennsylvania.  Gruber discusses the political advantage of having a lack of transparency with many aspects of ObamaCare, such as how the bill was cleverly written so the Congressional Budget Office did not score the mandate as a tax, hiding the fact that healthy people would pay more so sick people would get money to purchase insurance, and essentially relying on the “stupidity of the American voter” to make sure the legislation got passed.

In another video [begin at 31:23], Gruber discusses the taxpayer-funded subsidies for health insurance at a forum held January 18, 201 at the Noblis Innovation and Collaboration Center.  He clearly states that the subsidies for health insurance can only be issued to people who purchase ObamaCare in the state-run exchanges, not the federal exchange.  Gruber says the reason the law was written this way was to encourage the states to play nice and develop an exchange.  But, thirty-six states had a little “revolution” and have either failed or refused to establish an exchange.  The Gruber quote is particularly valuable because the policy is the basis of four lawsuits against the federal government.  The IRS has interpreted the law to say subsidies can be given in the federal exchange while the plaintiffs argue the law only allows subsidies in the state-run exchanges.  The Supreme Court has granted certiorari in one of the lawsuits: King v Burwell.  If the Court should agree with the plaintiffs, then taxpayer-funded subsidies will become non-existent in the federally-run exchange and ObamaCare will certainly collapse.

Who can the public thank for finding many of these videos?  Rich Weinstein, an investment advisor who lost his health insurance because of ObamaCare.  He has spent hours surfing the internet looking for and listening to lengthy, mind-numbing lectures and shares what he finds with conservative policy wonks who have long known ObamaCare was not going to be the panacea that was promised.

Not too long ago, ACA supporters such as House Minority Leader Nancy Pelosi (D-Calif.) and the President spoke highly of Professor Gruber; now they are running away from him.  Nancy Pelosi says she doesn’t know who he is and the President belittles his participation in the creation of the healthcare law.

One thing Mr. Gruber has certainly learned is Harry Truman’s old adage, “If you want a friend in Washington, get a dog.”

_______

 

Here are some Gruber videos for your viewing pleasure.  HT to Phil Kerpen of AmericanCommitment and Norm Singleton at Campaign for Liberty

 

Gov. Mitt Romney praises Gruber

https://www.youtube.com/watch?v=tcBjRfZO7QE

Tax is really on the people…not the insurance companies

https://www.youtube.com/watch?v=m54CqiMGe-k&feature=youtu.be

University of Penn lecture, voters are stupid

https://www.youtube.com/watch?v=iHihDa_VPWw

The states get the subsidies, not the federal exchange

https://www.youtube.com/watch?v=LbMmWhfZyEI&feature=youtu.be

Budget Impact of Healthcare Reform

http://pioneerinstitute.org/hewitt-lecture/2011-hewitt-health-care-lecture/

 

Ding, Ding, Ding – Arlington, Virginia Hops Off the Trolley

Good for Arlington, Virginia for pulling the plug on its wasteful trolley project.

May the action of a few sages in Arlington become a beacon of light to other municipalities, which may be experiencing the intense pressure of the “smart growth,” mass transit zealots, but really don’t want to bleed scarce tax dollars on projects that never move masses of people anywhere.

That northern Virginia trolley/streetcar project was slated to cost $550 million all in, but these novelty projects are no different from any other transportation project in that they rarely come in on budget or on schedule.

One of the nails in the Arlington project coffin might have been the ill-conceived, ridiculous “super stop” that was unveiled in Arlington March, 2014…a bus and trolley stop that cost $1 million.

Residents of the relatively wealthy DC suburb were appropriately outraged and may have started to do the math on the costs associated with 24 more such stops, plus the streetcar/trolley itself.   City officials all over the nation are dealing with similar cost-benefit considerations and are being lured/hounded/worked over by (depending upon your point of view) an alliance of green urban planners, big developers, affordable housing advocates, etc. to spend billions of dollars on them.

Interestingly, in left-leaning Arlington, the recent election to the Arlington County Board of Republican-running-as-an-Independent John Vihstadt by a wide-margin was the death knell for the streetcar.  Vihstadt ran on an explicitly anti-trolley/streetcar platform and won by a wide margin.  According to The Washington Post:

“Residents of the affluent suburb seem increasingly fed up with spending on what some call “vanity projects” and the perception that voters have little influence over them. And public officials are taking notice.”

In the Washington D.C. area, there are other transit projects like this going on, including the $2.45 billion, 16-mile light rail Purple Line in Montgomery County, Maryland and the H Street Trolley in northeast DC, which was recently named the “worst transit project in America” by Matthew Yglesias at Vox, a liberal news and opinion blog (Yglesias doesn’t seem to have a problem with other light rail projects, just streetcars, which don’t have dedicated lanes and tend to increase congestion, and siphon money from other more worthy mass transit projects, something along those fixed lines).

So many of the light rail and streetcar/trolley projects are poorly thought out, controversial, their raisons d’etre are often based upon questionable ridership stats and tortured estimates of future economic benefits (usually provided by the proponents and often difficult to verify).  The pols who have the authority to green light the projects are often captive of special interests and perhaps captivated by the potential for ribbon-cutting ceremonies and the inevitable naming of buildings, etc.  But, at least in Arlington, voters finally grew weary of the disconnect and rebuked their imperious elected officials.  And there’s also this:

“Financing for the streetcar project remains uncertain. County officials were turned down for some federal funding last year because U.S. transportation officials said the project probably would cost $60 million to $150 million more than the $250 million the county was estimating at the time.”

In a great post on The Federalist, reporter Georgi Boorman highlights the fact that even that green Mecca, Seattle, Washington, is having second thoughts on the wisdom of streetcars and trolleys:

Some locals know that Central Link, Seattle’s first light rail line, was North America’s most expensive light rail at over $100,000 per yard when it opened in 2009. It serves less than 3 percent of total commuters, as only 3 to 4 percent of Seattle commuters get to work through mass transit. Apparently flush with cash in 2014, the City of Seattle will now shell out $10 million to study new streetcar lines. Yes, to study them. Mike Lindbolm of the Seattle Times writes, “At least four routes would be examined…all once served by streetcar tracks before the citywide system was abandoned in 1941.” Yes, abandoned. Did we ever stop to think that perhaps there was a reason for that? Like, say, the much niftier invention of trolley buses,  since as it turns out the invention of the wheel was all it’s cracked up to be?

“Nevertheless, almost a decade after the initial plan to build the South Lake Union Streetcar (also called the SLU Trolley and affectionately titled S.L.U.T. by critics), it accounts for just 1 percent of the region’s passenger boardings and is heavily dependent on its sugar daddy, the City of Seattle.  In 2005 at the time the project was announced, opposing Councilman Steinbrueck, referencing the necessary accompaniment of new sidewalks, re-paved streets, and streetlights, called the S.L.U.T. a “luxury.”  John Fox of the Seattle Displacement Coalition offered the most telling critique: “[It’s] not that there shouldn’t be a streetcar, but that it’s more of a real-estate toy that shouldn’t be propped up by more vital services around the city.”

Cities might be waking to the inherent dumbness of spending tens of millions of dollars (whether it’s local, state, or federal money) on these streetcar and trolley projects.  So, unlike trolleys and streetcars, public opinion on the wisdom of funding these projects might finally be…turning.



DOE Doublespeak: The “Profit” in Solar Energy Loan Programs?

George Orwell would feel vindicated. As he wrote in his blistering essay, “Politics and the English Language” (1946), “…[the English language] becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts… In our time, political speech and writing are largely the defense of the indefensible.”

More recently, a federal government loan program, whose proponents acknowledge may actually lose money, is ballyhooed by the media to be turning a profit.

From the November 13, 2014 edition of The Washington Post, Max Ehrenfreund (writing for WaPo’s “Wonkblog”) observes, under the headline, “Remember Solyndra? Those loans are making money”: “…the Department of Energy’s loan program is expected to make money for taxpayers.” And this from the lefty apologist Paul Krugman (The New York Times, November 16, 2014): “…the program that included Solyndra is, in fact, on track to return profits of $5 billion or more.”

“Unfortunately, that’s not true,” wrote Donald Marron in Forbes. “Taxpayers are losing money on DOE lending. Less than originally expected, and less than you would expect given media coverage of Solyndra, Fisker, and a few other failed loans. But smaller losses are still losses, not profits.”

Essentially, the case that proponents make is this, as described in Forbes (November 17, 2014). Loans and loan guarantees issued ($30.29 billion), plus conditional commitments ($3.96 billion), amount about $34.25 billion in guarantees for which taxpayers could be on the hook. But so far, only $21.71 billion has been disbursed, with $3.49 billion (roughly, a respectable one-sixth) in principal already repaid. The proponents further argue that Interest Earned* amounts to $810 million, while loan losses are less, at (only?) $780 million, apparently yielding a $30 million profit.

Of course, few, if any, have highlighted the fact that this purported “profit” amounts to a negligible one-sixth of one percent of the outstanding principal. It sounds a lot more like a rounding error.

And footnotes, like facts, are stubborn things. That little asterisk (*) after the heading “Interest Earned” alludes to the following footnote from the Department of Energy’s report: “Calculated without respect to Treasury’s borrowing cost.” Given that this cost is borne by taxpayers, it is entirely conceivable that even this minuscule “profit” is erased.

To his credit, Ehrenfreund quickly tried to redeem himself a few days later in his November 18, 2014 “Wonkblog” post, under the heading, “Why the government’s claim that the Solyndra program is earning interest may be misleading.” While his earlier thesis (“Those loans are making money”) may have been grammatically accurate – the loans were actually earning interest, therefore “making money” – there is little evidence that the program will turn a profit over its 22-year repayment term. Marron writes, “It’s technically true, but tells you nothing about profits.” So, some of the “misleading” was perpetrated by Ehrenfreund’s own pen. He comes clean in the end: “Relative to the massive scale of the loans, the program is close to breaking even either way, but there’s still a difference between profit and loss.”

While the Wonkblogger was not alone in distorting the truth, he acted responsibly by correcting the record rather quickly. But whither the rest?

Sloppy reporting? Well, George Orwell might use the term “slovenly.”

Family Feud

On October 22, 2014, Senator Tom Coburn, M.D. (R-Okla.) released his annual “Wastebook 2014: What Washington Doesn’t Want You To Read.”  The report listed 100 wasteful spending programs that cost taxpayers $25 billion annually.  The Wastebook always brings chuckles and disbelief that the government could dish out so much money so foolishly.  On the other hand, it is not a joke that so much taxpayer money is wastefully spent year after year.

The Wastebook always includes a plethora of grants that have been dispensed for frivolous projects, such as a $371,026 grant from the National Institutes of Health (NIH) to do the first comparison study of MRI-related brain activation patterns in women as they viewed images of their dogs and kids to see if they loved them equally or not.  The total amount of NIH grants in the Wastebook was $904,402, but as is the case with every other agency included in the publication, there is always more waste to be exposed.

And while it is bad enough when an agency spends taxpayer money foolishly, it is even worse when those expenditures end up undermining the findings of another agency.

For example, between 2000 and 2014, NIH sent $172.7 million in grant money to scientists to study the chemical bisphenol-A (BPA) and its effect on humans, particularly as an endocrine disruptor, which is a chemical that interferes with hormonal activity.  Some of these taxpayer-funded research studies have in turn been used to by non-governmental organizations (NGOs) to attack a sister agency of NIH within the Department of Health and Human Services:  the Food and Drug Administration (FDA), which has regulatory oversight for BPA.

According to the FDA, “BPA is an industrial chemical used to make polycarbonate, a hard, clear plastic, which is used in many consumer products.  BPA is also found in epoxy resins, which act as a protective lining on the inside of some metal-based food and beverage cans.  Uses of all substances that migrate from packaging into food, including BPA, are subject to premarket approval by FDA as indirect food additives or food contact substances.  FDA can make regulatory changes based on new safety or usage information.  The original approvals for BPA were issued under FDA’s food additive regulations and date from the 1960s.”

The FDA has found that BPA “is safe at the current levels occurring in foods.  Based on FDA’s ongoing safety review of scientific evidence, the available information continues to support the safety of BPA for the currently approved uses in food containers and packaging.”  Considering the FDA is better known for being overly cautious in its scientific and regulatory decisions, especially when it comes to approving life-saving drugs and medical devices, their conclusion that BPA is safe as it is currently used is significant.

Even though the FDA has statutory authority to regulate BPA and has concluded that the science proves it is safe, NIH continues to dish out grant money in an effort to provide a contrary result.  Even worse, the basis for these studies may not be academic; they may be political.

Of the NIH grants that CAGW reviewed, 70 percent were provided between 2010 and 2014.  This time period also coincides with the tenure of NIH National Institute of Environmental Health Sciences (NIEHS) and the National Toxicology Program Director Linda Birnbaum, Ph.D, a 35-year federal scientist, who was appointed to the position on January 18, 2009.  She has been called out by members of both the House and Senate for her participation in biased activities when, as a federal official at a science-based agency, she should be focused instead on providing impartial research.

Jon Entine, a journalist and researcher who focuses on science and public policy and has written with skepticism about the relationship of public policy, the media, and NGOs, believes Birnbaum is an unabashed anti-BPA activist and a “high-profile supporter” of “academic scientists who look for endocrine effects regardless of whether those effects can cause harm.”

In an October 31, 2012 Forbes online article, Entine discussed the continued attacks on BPA.  He wrote, “one of the most disturbing trends in science reporting” is “the increasing tendency of reporters and [NGOs] to trumpet research that supports a pre-determined perspective, no matter how tenuous – or dubious – a study might be.”  According to Entine, this trend has been coined “single-study syndrome” by New York Times columnist Andrew Revkin.

Sure enough, following the single-study syndrome methodology, the Natural Resources Defense Council and the Environmental Working Group, along with Mother Jones, among others, have used the expected predisposed NIH-funded research to attack the FDA’s work on BPA, tying up the agency’s resources.

There are many occasions when the bureaucratic left hand often doesn’t know what the right hand is doing, usually as a result of a lack of transparency and communication.  But, when one federal agency is handing out millions of tax dollars to outside influences knowing that the findings will be used for the purpose of attacking, undermining, and reversing the taxpayer-funded work of another agency, that idiom is elevated to a whole new and absurd level.

The taxpayer-funded family feud between the NIH and the FDA should be stopped.

 

To read more about it, see CAGW’s November’s WasteWatcher Dueling Agencies

Innovation = Jobs

Innovation creates jobs.

That is the central premise of Jay Walker’s keynote address, “Making Innovation Work for America and Americans,” at the first meeting of the IP Dealmakers Forum on November 6, 2014. The forum linked investors together with intellectual property (IP) information and opportunities.

Walker’s speech is particularly timely given the release on November 17, 2014, of a new book from Citizens Against Government Waste (CAGW), “Intellectual Property: Making it Personal;” the November 18, 2014 Global IP Summit hosted by the U.S. Chamber of Commerce’s Global Intellectual Property Center; and the November 12, 2014 report by Economists Incorporated, “Unlocking Patents: Costs of Failure, Benefits of Success.”

As the holder of more than 700 issued and pending U.S. and international patents and ranking as the world’s 11th most patented inventor, Walker has almost unparalleled credibility on the subject of intellectual property (IP). On top of his impressive array of patents, he is the Executive Chairman of Patent Properties, chairman and curator of TEDMED, and the founder of three companies that each serve more than 50 million customers, including Priceline.

Walker began his speech by asking how a job is created in the U.S. or any other country. After discussing and rebuffing the idea that companies or (especially) governments create jobs, Walker said that jobs are created when customers purchase a service or product. In order to get more customers, it is essential to have inventors, who “improve products and services in a way that has market value.” As Walker said, “you create customers by delivering something that a customer wants more than the money they have.”

Walker noted that America’s “competitive advantage is primarily our ability to innovate,” and that most other countries do not reward success. Nonetheless, the use of IP, particularly patents, could be an even larger part of economic growth if unlicensed patents were made more widely available.

As CAGW noted in its report and Walker stated in his remarks, there are several companies that have created a voluntary and affordable process that would provide greater access to unlicensed patents by bundling them together and selling them at a reasonable price. This system would both provide income to the patent holders that they would not otherwise receive and help patent users solve problems, create improved products, increase sales, and open up new markets.

The Economists Incorporated report estimated that intellectual capital derived from patents and other IP constitutes approximately 55 percent of GDP. Increasing the number of licensed patents by 20 to 40 percent could add as much as $200 billion annually in new growth to the U.S. economy as well as help improve the global economy.

Since the first three patents were approved in 1790, more than 5.1 million patents have been approved by the U.S. government, including a record 302,948 patents in 2013. About 2.3 million patents are “active,” but 95 percent of those patents do not provide any licensing revenue.

It is obvious that very few patents have the same value as the telegraph, phonograph, light bulb, television, transistor, cellphone, and microprocessor. However, with the potential to add $200 billion annually to the U.S. economy, every effort should be made to unlock the value of every patent.