Incredibly, the Federal Communications Commission (FCC) may be considering net neutrality rules. Now that Democrats have a 3-2 majority on the FCC with the confirmation of Anna Gomez, the commission has come under pressure from progressive activists to reimplement Title II, public utility-style regulations on internet providers. TPA urges the FCC to resist this pressure and look at the facts: these unnecessary regulations imposed on providers by the FCC between 2015 and 2017 hurt investment in broadband infrastructure. In the years since net neutrality regulations were removed, hyperbolic claims from progressive activists about the “death of the internet” were proven to be false. Reinstating Title II regulations would likely lead to diminished investment again. A March 2017 study by the Phoenix Center found that broadband infrastructure spending dropped by as much as $200 billion between 2011 and 2015 when the Obama administration pushed the FCC to adopt the new rules. Those regulations are just not needed. Despite concerns that the end of net neutrality would be the end of the free and open internet itself, nothing has changed between 2017 and 2023. Providers have no reason to block or throttle traffic and tick off their own customers. A previous investigation by TPA found very few instances of such actions in the year after Title II regulations were removed.

A Trick that Could Save $$$
 
While most lawmakers fiddle and flounder, a select few members of Congress are understandably eager to cut federal spending. The national debt is now more $33 trillion. Cutting administrative waste is a time-consuming and seldom-successful procedure, leading lawmakers to look for shortcuts. One tool that has gotten plenty of press lately is a 150-year-old legislative procedure called the “Holman Rule,” in which lawmakers can easily tuck cost-cutting provisions into appropriations bills. Federal workers’ salaries and dubious programs can be slashed practically overnight without the usual, required review process. While this rule can go a long way toward reducing spending waste, lawmakers must wield this powerful tool carefully to craft better budgets. With some simple “rules of the road” in place, the appropriations process can be a boon for taxpayers.
 
The Holman Rule isn’t exactly popular among highly compensated federal workers and unions. According to the National Federation of Federal Employees, the procedure is a “choice vehicle for ethically corrupt members of Congress who seek to purge the operational funding of agencies and programs that run counter to their outside political interests (such as law or regulatory enforcement agencies that keep industry captains and the most powerful people in check).” But, as FedSmith contributor Ralph Smith notes, the history of the Holman Rule doesn’t support this cynical interpretation. Throughout the 1930s, for instance, the rule was used to eliminate 37 Customs positions. Given that spending was perpetually on the upswing in the 1930s and tariff policies were exacerbating the Great Depression, this winnowing was warranted. The rule has also been wielded prudently to prevent agencies from filling vacancies until they get their budgets under control. A more valid concern is that slashing bureaucrats’ compensation may make it more difficult for agencies to hire competent personnel. And, when executive authority is entrusted to employees that are not up to the job, all sorts of problems can arise. That is why the Holman Rule works best when applied to agencies with consistently high pay compared to private sector counterparts. According to the 2022 Office of Personnel Management Federal Employee Viewpoint Survey, about 56 percent of federal employees are satisfied with their pay compared to about 27 percent who are dissatisfied (the rest being ambivalent).
 
These numbers mask considerable variation among agencies. For example, only about 21 percent of Department of Education employees are dissatisfied with their pay, while about 64 percent are satisfied. These numbers are bolstered by high average department salaries (more than $100,000 per year) compared to lackluster education salaries almost anywhere else. So, even if lawmakers used the Holman Rule to zero out programs and funding relating to lending irregularities, for example, it’s unlikely that the blow to morale would prompt an employee exodus. The same can likely be said for the Bureau of Alcohol, Tobacco, Firearms and Explosives, which registers consistently high job and pay satisfaction metrics. And, there’s plenty of funding to cut from that agency after decades of scandals such as Fast and Furious. The truth is that there’s a long list of government programs that should be on the chopping block, and the normal legislative process just isn’t fast enough to make much difference. Taxpayers need the Holman Rule now more than ever to keep the debt and deficit under control.
 
Credit Card Nonsense
 
In 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) in response to the 2007-2008 financial crisis, seeking to make the financial system safer for taxpayers and consumers. Included in Dodd-Frank was an amendment from Sen. Dick Durban (D-Ill.), which eliminated interchange, or “swipe-fees” on debt cards, which were previously paid to banks for the right to accept cards. However, in practice, removing those fees has significantly restricted credit unions and community banks from providing services to customers. Over the last two years, some members of Congress have pushed for a similar scheme for credit cards, through the introduction of S. 1838, the Credit Card Competition Act (CCCA), now being considered as Amendment #1161 to H.R. 4366, the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act.
 
The CCCA did not receive a committee vote in either the 117th or 118th Congress. Interchange is the small percentage of the cost of a purchase that the retailer’s bank pays to the cardholder’s bank or credit union. Revenue generated from interchange fees covers customer service, system operations and protection of private customer data from fraud. The National Federation of Independent Businesses (NFIB) conducts a survey of small businesses every four years, asking them to rank the issues they face. In 2016, small businesses ranked credit card processing fees as the 38th problem (out of 75). In 2020, credit card processing fees did not even make the list.]
 
Just as the Durbin Amendment did in 2010 to debit cards, loss of interchange revenue would eliminate credit card rewards programs for both individuals and businesses. Individuals would see airline miles, cashback programs, and fraud protections eliminated. Businesses would be unable to use rewards to cover significant expenses such as employee health insurance and inventory insurance. According to a 2021 study done by the International Center for Law & Economics, the Durbin Amendment cost large banks between $6.6 and $8 billion in lost revenue. Further, half of debit card issuers regulated by the Durbin Amendment interchange fee cap ended their rewards programs in 2011. The CCCA will, in practice, award the Federal Reserve complete control over American payment networks, reminiscent of the Ma Bell phone network monopoly or the Civil Aeronautics Board price fixing, severely limiting consumer choice on credit cards while simultaneously putting private user data at risk. The CCCA ignores quickly emerging cybersecurity threats to electronic payments – protection from which comes from credit card interchange fees. In 2022, more than 400 million individuals were affected by data breaches, due, in part, to retailer negligence. In the same year, $8.8 billion was lost to fraud, an increase of 30 percent over 2021. The average fraud payout per card in 2022 alone was $2,618. Congress should reject the Credit Card Competition Act. This harmful proposal will overhaul the existing payment processing system, severely limit consumer choice, place consumers at risk of fraud, and strip users of credit card rewards despite the legislation being based on false pretenses of anticompetitive practices within the payment industry.