The Heritage Insider: Don't expect the Internet to evolve now, the FCC is lawless, the Left is getting ready to burn more heretics, and more

February 28, 2015

Latest Studies
45 new items, including a Yankee Institute report on how renewable mandates raise electricity prices, and a Buckeye Institute report on the pitfalls of Medicaid expansion for Ohio

Notes on the Week
Don’t expect the Internet to evolve now, the FCC is lawless, the Left is getting ready to burn more heretics, and more

To Do
Find out how the Supreme Court’s next decision will affect health care

Latest Studies

Budget & Taxation
• Medicaid Expansion Relies on Uncertain Funding – Buckeye Institute for Public Policy Solutions
• Comparing Government and Private Sector Compensation in Ontario – Fraser Institute
• Export-Import Bank Impervious to Reform – The Heritage Foundation
• State-Employee Health Benefits: Avoiding the ObamaCare “Cadillac Tax” – Illinois Policy Institute
• State-Employee Health Insurance: Opportunities for Reform – Illinois Policy Institute
• Incorrectly Defining Business Income: The Proposal to Eliminate the Deductibility of Foreign Reinsurance Premiums – Tax Foundation
• Options for Complying With the McCleary Decision Without Raising Taxes – Washington Policy Center

Crime, Justice & the Law
• Attorney-Client Privilege in the Compliance Context: Could Courts Trend Toward More Protection? – Washington Legal Foundation

Economic and Political Thought
• What Must We Think About When We Think About Politics? – Manhattan Institute

Economic Growth
• Who Is Working Less? – The Heritage Foundation
• Greece On The Brink – Hoover Institution
• Measuring Job-Finding Rates and Matching Efficiency with Heterogeneous Jobseekers – Hoover Institution

Education
• Personalizing Learning Through Education Savings Accounts – Independent Women’s Forum

Elections, Transparency, & Accountability
• Presidential Particularism: Distributing Funds Between Alternative Objectives and Strategies – Mercatus Center
• SB 5329 to Require that Public Employee Collective Bargaining Sessions Be Open Meetings – Washington Policy Center

Foreign Policy/International Affairs
• Six Issues the U.S. Should Not Concede to Cuba During Normalization Talks – The Heritage Foundation
• Moscow and Pyongyang: From Disdain to Partnership? – Hudson Institute
• Brexit: Directions for Britain Outside the EU – Institute of Economic Affairs

Health Care
• Eight Groups Harmed by the ACA’s Flawed Policies – The Heritage Foundation
• Impact of King v. Burwell: The ACA’s Key Design Flaws – The Heritage Foundation
• King v. Burwell: Assessing the Claimed Effects of a Decision for the Plaintiffs – The Heritage Foundation
• Improve Health Care for Medicaid Patients While Controlling Costs for Taxpayers – Illinois Policy Institute
• Certificate-Of-Need Laws: Implications for Virginia – Mercatus Center

Information Technology
• Regulating the Most Powerful Network Ever – Free State Foundation
• Regulation Won’t Preserve a Dynamic and “Open” Internet – Free State Foundation
• The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation – Mercatus Center

International Trade/Finance
• Time to Renew and Enhance the African Growth and Opportunity Act – The Heritage Foundation

Labor
• Has the Minimum Wage Kept Up With Inflation? – Washington Policy Center
• HB 1646 Equal Pay Act Would Promote Unfair Pay for Unequal Work – Washington Policy Center

Monetary Policy/Financial Regulation
• How Are Small Banks Faring under Dodd-Frank? – Cato Institute
• Can the Dodd-Frank Act Be Reformed To Strengthen the Financial System and the Overall Economy? We Think So – Federalist Society

National Security
• An American Strategy for Victory in the War Against Islamist Terror – American Enterprise Institute
• 2015 Index of U.S. Military Strength – The Heritage Foundation
• The U.S. Needs to Secure Maritime Ports by Securing Network Ports – The Heritage Foundation
• A Grand Strategy for Failed States – Hoover Institution

Natural Resources, Energy, Environment, & Science
• Fumbling the Alberta Advantage: How Alberta Squandered a Decade of High Energy Prices – Fraser Institute
• Restoring Power: How Lawmakers Can Lower Your Electric Bill – Yankee Institute for Public Policy

Philanthropy
• Philanthropy’s Dangerous Rival – Philanthropy Roundtable

Regulation & Deregulation
• Bootstraps Tangled in Red Tape – Goldwater Institute
• Bringing the Effects of Occupational Licensing into Focus: Optician Licensing in the United States – Mercatus Center
• Indiana Means Business! – Public Interest Institute
• Public Should Scrutinize Federal Dietary Guidelines’ Support for New Regulations – Washington Legal Foundation
• Revitalizing the Information Quality Act as a Procedural Cure for Unsound Regulatory Science: A Greenhouse Gas Rulemaking Case Study – Washington Legal Foundation

The Constitution/Civil Liberties
• Municipal Broadband Networks Present Serious First Amendment Problems – Free State Foundation

Transportation/Infrastructure
• What Congress and States Can Do to Reform Transportation Policy – The Heritage Foundation

Notes on the Week

The FCC’s net neutrality rules will shut down innovation on the Internet. By a 3-2 vote, the Federal Communications Commission approved “Net Neutrality” rules on Thursday. According to FCC chairman Tom Wheeler, the new rules “ban blocking, ban throttling, and ban paid-prioritization fast lanes” on the Internet. According to Brent Skorup, however, the rules will prevent ISPs from experimenting with different ways of managing traffic to improve the quality of their services:

Prioritization has been built into Internet protocols for years. MIT computer scientist and early Internet developer David Clark colorfully dismissed this first myth as “happy little bunny rabbit dreams,” and pointed out that “[t]he network is not neutral and never has been.” Experts such as tech entrepreneur and investor Mark Cuban and President Obama’s former chief technology officer Aneesh Chopra have observed that the need for prioritization of some traffic increases as Internet services grow more diverse. People speaking face-to-face online with doctors through new telemedicine video applications, for instance, should not be disrupted by once-a-day data backups. ISPs and tech companies should be free to experiment with new broadband services without time-consuming regulatory approval from the FCC. […]

Intelligent management of Internet traffic and prioritization provide useful services to consumers. Net neutrality proponents call zero-rating?—?which is when carriers allow Internet services that don’t subtract from a monthly data allotment?—?and similar practices “dangerous,” “malignant,” and rights violations. This hyperbole arises from dogma, not facts. The real-world use of prioritization and zero-rating is encouraging and pro-consumer. Studies show that zero-rated applications are used by millions of people around the globe, including in the United States, and they are popular. In one instance, poor South African high school students petitioned their carriers for free?—?zero-rated?—?Wikipedia access because accessing Wikipedia frequently for homework was expensive. Upon hearing the students’ plight, Wikipedia and South African carriers happily obliged. Net neutrality rules like Title II would prohibit popular services like zero-rating and intelligent network management that makes more services available. […]

[T]he FCC’s rules will make broadband more expensive, not cheaper. The rules regulate Internet companies much like telephone companies and therefore federal and state telephone fees will eventually apply to Internet bills. According to preliminary estimates, millions of Americans will drop or never subscribe to an Internet connection because of these price hikes. Second, the FCC’s rules will not make Netflix and webpages faster. The FCC rules do not require ISPs to increase the capacity or speed of customers’ connections. Capacity upgrades require competition and ISP investment, which may be harmed by the FCC’s onerous new rules. [Mercatus Center, February 23]

And Julian Sanchez explains how the rules foreclose the discovery of better business models:

[U]sers who want any of their traffic delivered at the highest speed will have to continue paying for all their traffic to be delivered at that speed, whether they need it or not. The extreme version of this is the controversy over “zero-rating“ in the developing world, where the Orthodox Neutralite position is that it’s better for those who can’t afford mobile Internet access to go without rather than let companies like Facebook and Wikipedia provide poor people with subsidized free access to their sites.

The deep irony here is that “permissionless innovation” has been one of the clarion calls of proponents of neutrality regulation. The idea is that companies at the “edge” of the network introducing new services should be able to launch them without having to negotiate with every ISP in order to get their traffic carried at an acceptable speed. Users like that principle too; it’s why services like CompuServe and AOL ultimately had to abandon a “walled garden” model that gave customers access only to a select set of curated services.

But there’s another kind of permissionless innovation that the FCC’s decision is designed to preclude: innovation in business models and routing policies. […] Are there different ways of routing traffic, or of dividing up the cost of moving packets from content providers, that might lower costs or improve quality of service? Again, I’m not certain—but I am certain we’re unlikely to find out if providers don’t get to run the experiment. It seems to me that the only reason not to want to find out is the fear that some consumers will like the results of at least some of these experiments, making it politically more difficult to entrench the sacred principle of neutrality in law. [Cato Institute, February 6]

Is the Federal Communications Commission lawless? With its vote on net neutrality, the agency is going to exercise a kind of power that the Constitution does not recognize, says Randolph May:

From all indications, the FCC contemplates that the new rules will be sufficiently burdensome and costly—and sufficiently ambiguous—that affected parties will be invited to seek exemptions from the new mandates through “waiver” requests or other administrative mechanisms.

But this likely flood of waiver requests should raise serious questions concerning the lawfulness of the agency’s mode of operating. As Philip Hamburger discusses in his book, Is Administrative Law Unlawful?, one of our Founders’ objectives was to control, if not eliminate, what in England was known as the “dispensing” power. Simply put, the dispensing power—which is much discussed in English constitutional history—was a form of exercise of royal prerogative under which the king could excuse himself or his favored subjects from complying with particular laws enacted by Parliament. As Hamburger explains, today’s administrative agencies, in essence, have resurrected the dispensing power by the way they so often use waivers to grant favored treatment.

Here is the way Hamburger puts it:

After administrators adopt a burdensome rule, they sometimes write letters to favored persons telling them that, notwithstanding the rule, they need not comply. In other words, the return of extralegal legislation has been accompanied by the return of the dispensing power, this time under the rubric of ‘waivers.’

And then he goes to the heart of the matter:

Like dispensations, waivers go far beyond the usual administrative usurpation of legislative or judicial power, for they do not involve lawmaking or adjudication, let alone executive force. On the contrary, they are a fourth power—one carefully not recognized by the Constitution. [The Hill, February 25]

Can the United States military fight two major regional conflicts at once? No, says The Heritage Foundation’s 2015 Index of U.S. Military Strength:

Overall, the current U.S. military force is adequate to meeting the demands of a single major regional conflict while attending to the various presence and engagement activities that keep it so busy, but it does not meet the standard of two MRC. This certainly does not come as a surprise, since this is what the military is doing now and has done for the past two decades, but the decline in funding and shrinking of the force are serious problems. Essential maintenance is being deferred; fewer units (mostly the Navy’s platforms and the Special Operations Forces community) are being cycled through operational deployments more often and for longer periods; and old equipment is being extended while programmed replacements are problematic. The cumulative effect of such factors has resulted in a U.S. military that is marginally able to meet the demands of defending America’s vital national interests.

This edition of the Index of U.S. Military Strength is the first in what will be an annual publication by The Heritage Foundation. The Index actually assesses three different things: the global operating environment, threats to vital U.S. interests, and U.S. military power.

Among the problems cited by the Index were readiness shortfalls in the Army and deferred maintenance that threatens the future capabilities of the Navy. The Index notes that only 12 of the Army’s brigade combat teams out of 38 were prepared for deployment at the end 2014. The Index also observes that only one-third of the Navy is fully mission-capable; historically the figure has been 50 percent. The Navy’s surge capacity (the ability to send non-deployed ships to a crisis region), meanwhile, is only one-third of its normal level. [“2015 Index of U.S. Military Power,” The Heritage Foundation, February 2015]

The Left is getting ready to burn more heretics. Last Saturday, the New York Times published an article claiming climatologist, and noted global warming skeptic, Wei-Hock (Willie) Soon “accepted more than $1.2 million in money from the fossil-fuel industry over the last decade while failing to disclose that conflict of interest in most of his scientific papers.” So there is now a debate going on over whether he should have disclosed more than he did. Much of the outrage on the Left, as John Hinderaker notes, is fed by a false assumption about conflicts of interest:

[T]he New York Times and other pro-government sources assume that government funding of research is lily-white, while corporate funding is inherently suspect. This is ridiculous. Put aside, for a moment, the fact that the American environmental movement is funded by Russia’s state-controlled oil company.

That isn’t the real scandal. The real scandal is that the overwhelming majority of money spent on climate research comes from governments. Governments, most notably ours, fund climate hysteria to the tune of billions of dollars per year. Why? Because the whole point of global warming alarmism is to persuade voters to cede more control over Western economies to government. (No one actually cares about CO2 emissions from India or China, which together vastly exceed ours.)

Governments fund climate research–but only climate research that feeds alarmism–because they are the main parties in interest in the climate debate. Governments stand to gain trillions of dollars in revenue and unprecedented power if voters in the U.S. and other Western countries can be stampeded into ceding more power to them, based on transparently bad science. [Powerline, February 24]

Now Rep. Raul Grijalva, ranking Democrat on the House Committee on Natural Resources, wants to investigate whether undisclosed financial relationships have influenced any testimony about global warming given to his committee on the issue. He has sent letters to seven universities making detailed requests about seven different climatologists. One of the academics being investigated is Roger Pielke, Jr., of the University of Colorado at Boulder. The investigation, writes Pielke on his blog, is nothing more than an attempt to intimidate scientists whose research doesn’t fully support a catastrophic view of the issue:

Adam Sarvana, communications director for Natural Resources Committee’s Democratic delegation, reinforced the politically-motivated nature of the investigation in an interview:

“The way we chose the list of recipients is who has published widely, who has testified in Congress before, who seems to have the most impact on policy in the scientific community”

Let’s see – widely published, engaged with Congress, policy impact – these are supposed to be virtues of the modern academic researcher, right? [The Climate Fix, February 25]

And Pielke isn’t even that much of a skeptic about global warming. He thinks it’s happening, that’s man’s activities are contributing to it, and that President Obama’s carbon regulations are a good idea. Pielke’s “sin” is that he doesn’t think the increasing costs of natural disasters can be attributed to global warming; his view isn’t catastrophic enough for Rep. Grijalva’s taste.

In a letter, the American Meteorological Society tells the congressman his actions are misguided:

Publicly singling out specific researchers based on perspectives they have expressed and implying a failure to appropriately disclose funding sources—and thereby questioning their scientific integrity—sends a chilling message to all academic researchers. Further, requesting copies of the researcher’s communications related to external funding opportunities or the preparation of testimony impinges on the free pursuit of ideas that is central to the concept of academic freedom.

The AMS maintains that peer-review is the appropriate mechanism to assess the validity and quality of scientific research, regardless of the funding sources supporting that research as long as those funding sources and any potential conflicts of interest are fully disclosed. The scientific process that includes testing and validation of concepts and ideas—discarding those that cannot successfully withstand such testing—is chronicled in the peer-reviewed scientific literature. [American Meteorological Society, February 27]

Corruption isn’t merely a byproduct of our politics; it’s hardwired into it. The reason public policy is so frequently bent to serve narrow interests, says Jay Cost, is that our system of checks and balances was designed for a government that was expected to do much less than it does today. That is the thesis of Cost’s new book: A Republic No More: Big Government and the Rise of American Political Corruption.

How not to beat the terrorists: Victor Davis Hanson:

Western diffidence and appeasement are interpreted as proof not just that the West is weak, but that its weakness arises from guilt and a tacit admission that Islamism is spot-on in its charges of Western culpability. Barack Obama reifies that message when he offers his confessional Al Arabiya interview, his platitudinous Cairo speech, his apology tour, and his euphemistic campaign to excise words such as “terrorism,” “Islamism,” and “radical Islam,” or when he admonishes Christians and Westerners generally about getting on their moral high horses despite having a cultural tradition of slavery, apartheid, inquisition, and crusading. If touchy and solicitous Western leaders are loath to challenge radical Islam’s charges against the West and instead seek any mechanism possible to avoid being offensive, such tentativeness must be proof of their guilt.

ISIS and its supporters, both radical Islamists and fence-sitting observers, also don’t see evidence of lasting Western military strength. The more the West blows stuff up with its complex technology, the more it loses. The Taliban, they feel, will return once the tired West pulls out of Afghanistan — just as, even when the West wins militarily in Iraq, it loses through abandoning garrisons that are felt to be too burdensome. Libya seemed a cowardly bomb-and-run quickie. Iran’s defiance of serial deadlines and Syria’s indifference to Obama’s red lines confirm that the West is sanctimonious and shrill but otherwise tentative. Radical Muslims look elsewhere around the world, from Putin’s aggression to China’s muscle flexing, and are convinced that America either cannot or will not act successfully, further proof that it confesses its own lethargy. […]

Every time [Obama] fails to note that Coptic Egyptians are beheaded precisely because they are Christians, or that Jews are killed by reason of being Jews, ISIS takes note. Each time he remonstrates with Christians for their moral high horses, or cites poverty as the root cause of “violent extremism,” or retreats into the distant past in desperate efforts to remind Westerners of their own comparable sins, ISIS takes note. Each time Obama hesitates, issues and then forgets about threats, or slashes defense, ISIS takes note. And if Obama continues, soon a 400-million-person Middle East will take note as well. Millions may not like ISIS, just as millions once were somewhat bothered by Hitler. They may prefer that its beheadings remain untelevised, or may frown on burning someone alive when the firing squad would do. But they most certainly will like the power, territory, and fear that ISIS commands — and the utter helplessness that follows in the once haughty West. [National Review, February 24]

To Do: Find Out How the Supreme Court’s Next Decision Will Affect Health Care

• Learn what’s at stake in King v. Burwell—the lawsuit that challenges the IRS’s authority to offer tax credits in non-exchange states. The Supreme Court will hear oral arguments on March 4. At noon on March 5, the Cato Institute will host a panel discussion on what a ruling either way will mean for patients and health policy.

• Examine what’s next for the Internet, now that the Federal Communications Commissions has classified it as a public utility. The American Enterprise Institute will host a discussion with Rep. Greg Walden, (R-Ore.), chairman of the House Subcommittee on Communications and Technology. The discussion will begin at 2 p.m. on March 2.

• Help the Pacific Research Institute celebrate the woman who turned Britain around. The 2015 Baroness Thatcher Dinner will feature Fox News’s Bret Baier and Rep. Dana Rohrabach (R-Calif.), who will be awarded the Baroness Thatcher Liberty Award. The event will begin at 6 p.m. on March 6 at the Island Hotel in Newport Beach.

• Learn what the failures of progressive policies teach us about progress. Harvey Mansfield will assess the futures of our two political parties in the light of current events. Mansfield’s talk will begin at noon on March 5 at The Heritage Foundation.

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