3 Jul 2009
National Organic Program:
Is it 'going to seed'?
by Richard Belzer
in Regulatory Policy
Washington Post staff writers Kimberly Kindy and Lyndsey Layton say the US Department of Agriculture's National Organics Program is falling short, allowing synthetic ingredients or to be used in making organic foods.
In their long Page One story, Kindy and Layton never reveal crucial facts about the National Organic Program: it's a marketing program, not a food safety program.
More...29 Jun 2009
The AIG Bonuses, Part 11:
The Administration's program to clean up 'toxic assets' has failed
by Richard Belzer
in Regulatory Economics
We've blogged ten times about the "AIG bonus problem" and its sequelae, most specifically about the adverse effects that arise when the government signals its intentions not to honor contracts. Examples of these government signals include HR 1586, which the House of Representatives passed to confiscate legally awarded bonuses via the tax code and even punish those who returned them; HR 1664, which the House subsequently passed to force TARP recipients to break these contracts; and statements by the Administration indicating that it will decide after the fact whether investors made "too much" money.
It was in this setting tha the Administration announced a new Public-Private Investment Program (PPIP), the stated purpose of which was to provide a facility for banks to sell so-called 'toxic assets" and for investors to buy them at fire sale prices. An obvious deterrent to buyer participatin is the Treasury Department's decision to impose on buyers TARP-like restrictions on employee compensation.
Both banks (sellers) and investors (buyers) have declined to participate. As we predicted, buyers are deterred in large part by political risk: they do not trust the government as a business partner.
More...28 Jun 2009
Cap and Trade, Part 2:
Waxman-Markey passes the House
by Richard Belzer
in Legislation, Regulatory Policy
HR 2454 (Waxman-Markey) passed the House Friday night 219-212. The mostly party-line vote has interesting details.
More...27 Jun 2009
Cap and Trade, Part 1:
Compensating tariffs or trade war?
by Richard Belzer
in Legislation, Regulatory Economics
The House leadership plans to amend Waxman-Markey to impose trade sanctions on countries that do not reduce greenhouse gas emissions. International adherence to effective restrictions is essential for the bill to have any effect on global emissions. However, trade sanctions would have the effect of significantly reducing international trade and protect energy-sensitive US industries and their workers from foreign competition. This amendment would compel other nations (chiefly China) to adhere to US emission standards if they want to continue exporting to the US. These nations likely would interpret such demands as trade restrictions impermissible under existing WTO agreements.
More...26 Jun 2009
Remedies for the Housing Market:
A foreclosure problem or an unemployment problem?
by Richard Belzer
in Regulatory Economics
The Obama Administration's program to prevent foreclosures is encountering hurdles. There is new empirical evidence that it is based on an erroneous diagnosis of the problem.
More...25 Jun 2009
Health Care Reform:
Lessons from Japan
by Richard Belzer
in Legislation, Regulatory Economics, Regulatory Policy
Debates about universal health care inevitably lead to comparisons, such as with Canada and the United Kingdom in large part because there are no language barriers making the experiences of other nations hard to gather and analyze. Typical observations from these systems include the various non-price means by which health care is rationed. For example, care can be rationed by forcing patients to wait. Some will decide that waiting is too burdensome and choose not to seek care. Some will seek health care outside of the system; Canadians can obtain care in the United States rather than wait, as long as they are willing and able to pay for it. Inevitably, some patients will die before they can receive care, and these patients will tend to be poorer than average.
The UK also rations care by authorizing a government agency (the National Institute for Health and Clinical Excellence, or NICE) to make eligibility decisions -- that is, they will decide by rule, formula, or other criteria who is eligible to receive expensive services and who will not. For example, on June 24, 2009, NICE published guidance concerning percutaneous endoscopic laser cervical discectomy, a less invasive technique for remedying certain spinal problems. The NICE guidance generally restricts access, which is available in the United States as an outpatient procedure and for which there are published peer reviewed reports of success.
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24 Jun 2009
The Car Market:
Where is it still strong?
by Richard Belzer
in Regulatory Economics
The news has been full of evidence that automobile sales are way down. For some vehicles, demand appear to be undiminished by the financial crisis and recession. What do these vehicles have in common?
More...7 Jun 2009
Greenhouse Gas Endangerment Finding, Part 4:
Scientific causation
by Richard Belzer
in Regulatory Science
A careful look at parts of EPA's proposed endangerment finding show the causal chain that the Agency believes is scientifically sufficient. This causal chain has interesting implications for air pollution policy more generally.
More...5 May 2009
Greenhouse Gas Endangerment Finding, Part 3:
Distinguishing between 'public health' and 'welfare' effects
by Richard Belzer
in Regulatory Science
EPA's proposed endangerment finding asserts that greenhouse gas emissions from US mobile sources cause or contribute to public health harm. However, the Clean Air Act distinguishes between "public health" and "welfare." EPA proposes to count some welfare-related effects as public health effects.
More...1 May 2009
Greenhouse Gas Endangerment Finding, Part 2:
The mysterious disappearance of last year's advance notice of proposed rulemaking
by Richard Belzer
in Regulatory Policy
In July 2008, the Environmental Protection Agency published an advance notice of proposed rulemaking that raised numerous issues concerning the regulation of greenhouse gas emissions through the Clean Air Act. Regulations.gov reports over 17,000 entries labeled as public comments.
In the April 2009 proposed endangerment finding, this ANPRM makes only a cameo appearance.
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28 Apr 2009
Greenhouse Gas Endangerment Finding, Part 1:
EPA's technical support document
by Richard Belzer
in Regulatory Science
EPA's proposed endangerment finding for greenhouse gas emissions from motor vehicles relies on a small number of references, primarily this technical support document (TSD).
More...24 Apr 2009
Greenhouse Gases:
EPA proposes to regulate under the Clean Air Act
by Richard Belzer
in Regulatory Policy
Today, the Environmental Protection Agency proposed to use authority in Section 202(a) of the Clean Air Act to regulate US emissions of six greenhouse gases.
More...21 Apr 2009
The AIG Bonuses, Part 10:
Compensation limits may apply to PPIP investors
by Richard Belzer
in Regulatory Economics, Regulatory Policy
In the seventh in our series of posts on the AIG bonuses and the incentive effects of efforts by the Obama Administration and Congress to forcibly recover them, we predicted that investors in the Treasury Department's "Legacy Loans Program" would be regulated by the same constraints on employee compensation and, ultimately, profits. We said that H.R. 1586, the House-passed bill to impose confiscatory taxes on bonus recipients, would have unintended consequences on the Treasury Department's Public-Private Investment Program (PPIP):
In short, the House's action, which President Obama did not contemporaneously discourage, creates the precedent that the government may choose not to honor the legal commitments it makes to investors who participate in the Treasury Department's new program. If investors earn "too much" in profit -- a term that would be defined subjectively after the fact -- they may be prevented from realizing these earnings. It is reasonable for prudent investors to discount the government's credibility.
The Obama Administration could have included strong language promising to protect these property rights in [the Treasury Department's Public-Private Investment Program], but it did not do so. Such a promise might prove to be unenforceable in fact, but the absence of a promise means there is nothing yet for investors to rely upon. This uncertainty may (or may not) be resolved when the Treasury Department issues implementing regulations. For now, the cleanup of underwater financial assets has entered a zone in which political risk -- uncertainty about the government's reliability -- may be as great or greater than financial risk.
A story in today's Washington Post says that this has come to pass.
More...The Tradeoff Between Mass and Fuel Economy:
It cannot be wished away
by Richard Belzer
in Regulatory Science
It is a fact of physics that vehicles with greater mass do better in collisions. Wall Street Journal automotive columnist Joseph B. White explores this trade-off from an odd perspective -- one in which he seems to wish that it it weren't so.
More...20 Apr 2009
Getting Out from Under the TARP:
Is this possible?
by Richard Belzer
in Regulatory Economics, Regulatory Policy
Several recent news stories have covered the efforts of some large financial institutions to repay the funds they received from the federal government under the Troubled Assets Relief Program. Executives of these firms are chafing under the costs resulting from acceptance of these funds, which in some cases they did not accept voluntarily.
The federal government is imposing conditions on repayment that mean recipients cannot get out from under the TARP without the federal government's permission. What lessons can be learned from this experience?
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