The new deficit numbers came out this week and it’s not pretty.  The Congressional Budget Office (CBO) estimates that the federal government is expected to run a $1.9 trillion deficit.  This is 27 percent, or $400 billion larger than the CBO estimated in February.  One of the major drivers of this increase is student debt relief, a totally avoidable expense.  Deficit spending means the country has to borrow more and pay more in interest. Interest payments alone on the debt are projected to reach almost $900 billion in 2024. Incredibly, this eclipses what the government is projected to spend on defense. This CBO report confirms what the last few years of rampant inflation have already shown. Washington has a massive spending problem. It is everyday Americans who will pay the most severe price. If the Biden administration is serious about fulfilling its promise to reduce deficits, it must do so not through criminally mislabeled bills like the so-called “Inflation Reduction Act,” or through pursuing expensive student loan forgiveness even after being rebuffed by the Supreme Court.

CFPB Overreach Hurting, Not Helping Consumers

Those who have been keeping a watchful eye on all things consumer finance are aware of the recent news that has surfaced following the Supreme Court’s decision to classify the Consumer Financial Protection Bureau’s (CFPB) funding mechanism as constitutional. But, contrary to popular belief, this ruling only proves that Congress needs to put the reins on the CFPB and control its outrageous overreach that will harm consumers and small businesses. In fact, the agency is imposing regulations so burdensome that many small business lenders are left confused and unsure where to turn next.

The mandate of the CFPB is to formulate policies that safeguard consumers and provide clear guidance to consumer credit firms. However, the complexity and ambiguity of its recent policies pose a risk of limiting access to credit for millions of consumers, particularly at a time when the need for credit is crucial for many Americans. The CFPB’s regulatory brigade has created a climate of uncertainty within the consumer finance industry. A notable example is a rule finalized in March, which sets a cap of $8 on late fees for credit card companies. However, there appears to have been an oversight by the CFPB regarding the broader impact of this rule, particularly on small business lenders. These lenders have expressed legitimate worries about how this cap may affect the creditworthiness assessments of their future borrowers. Aside from the concerns raised by lenders, taxpayers should also rightfully be wary of the rule. The regulation practically encourages borrowers to pay their bills late and leaves the ones paying on time left to pick up the cost.
 

The consumer finance industry is in dire need of transparent and straightforward regulations because of the uncertainty that CFPB is injecting into the market. It’s essential that consumers have and maintain access to the credit they need to make ends meet – especially in this era of sky-high inflation. Yet the CFPB has been consistently blurring the lines of what is and isn’t allowed from small credit lenders, making its burdensome regulations nearly impossible to follow and wrapping consumer lending in unnecessary confusion and red tape. It is easy to recognize the severe burden of the CFPB’s regulatory overreach. This year alone, the CFPB has attempted to dip its toe into monitoring automotive loans and finances, video game marketplaces, and mortgage lenders. All of these came about with very little warning to relevant markets. More importantly, the CFPB has neither the scope nor the mandate to do so.
 

In addition to the scrutiny over its questionable and unique funding structure (which is solely under the purview of the Federal Reserve), the CFPB has been embroiled in an internal wage conflict since December. The agency failed to adequately adjust salaries for its employees. Instead, it opted to raise "pay bands," meaning the salary brackets for various levels of employment, which typically benefit upper-level management. This decision sparked discontent among CFPB staff members who did not experience a corresponding increase in their wages. While the intention behind the creation of the CFPB was to protect consumers, its current operations have strayed far from this goal due to overregulation and lack of accountability. The apparent absence of sufficient oversight has resulted in the establishment of a federal agency that lacks adequate safeguards for consumers. It’s time for lawmakers to recognize the pressing need to bring the CFPB back under the watchful eye of Congress.

Politicians Should Protect Patents

Bringing a medication to market isn’t cheap. The average medication takes about $2 billion worth of investment to bring to market. In exchange, pharmaceutical companies are given intellectual property (IP) rights to their products that allow them to recoup expenses over a reasonable time-period. A growing group of lawmakers want to replace this system with a free-for-all that would jeopardize innovation and cost lives. Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have urged government agencies to invalidate patents, allowing rivals to profit off drugs they did not create. And now, the Biden administration wants to (mis)use the Bayh-Dole Act to “march-in” and seize the IP of drug makers. Policymakers can protect patients by rejecting these anti-IP efforts and reaffirming patent rights.
 

Innovation suffers when these researchers are stripped of their patents and cannot continue to recoup their costs. According to a 2016 analysis in the American Economic Review, the weakening of IP protections for medications leads to lower availability and delayed launch times for new drugs. The authors examined data on the “launches of 642 new molecules in 76 countries during 1983-2002” and found that, all else equal, “longer and more extensive patent protection strongly accelerated diffusion [of new drugs], while price regulation delayed it.” This demonstrates the dangers of not just compulsory licensing, but also price-fixing proposals championed by the Biden administration and lawmakers. A more recent preliminary analysis by Princeton scholars confirms these findings. The issuing of an additional compulsory license “is associated with 5.10% decrease in innovation. Specifically, when the market share affected by compulsory licensing increases by 1%, patenting rates for the licensed disease decrease by 12.7% to 16.3%.” For all this havoc, compulsory licensing seldom leads to lower prices or greater availability. For example, the Brazilian authorities, “granted a CL [compulsory license] for [HIV drug] Efavirenz in 2007 and the local production of the drug started in 2009. Since then, the price of the local generic manufactured version has not changed while the lowest international price has reduced by 77%. If only imports had been considered, then [the Brazilian government] could have saved approximately 25% more.” Rather than trying to tamper with IP protections, the Brazilian government should have embraced free trade policies and let markets work their magic.
 

American policymakers could use this as a learning opportunity, but instead, they are choosing to emulate this policy fiasco. The Biden administration mistakenly thinks that it can use its own form of compulsory licensing to take away the IP rights of any drug that was developed using taxpayer dollars. The President and his allies plan on using the language of the otherwise-laudable Bayh-Dole Act to “march-in” and essentially turn brand-name drugs into generic medications. The “march-in” provisions of the Bayh-Dole Act were intended to be used sparingly and only in rare cases, such as when a private partner threatened to stonewall and subvert the drug development process. This improbable scenario has never come to fruition, and the government has never had to use this right. Reinterpreting the law to liberally exercise “march-in” authority, and effectively establish price controls on prescription drugs, threatens drug innovation to the detriment of millions of patients. The Biden administration’s guidance not only chills current development efforts, but also jeopardizes future private partnerships with universities. Companies will insist on universities contributing more taxpayer dollars as “insurance” against the risk of future patent takeovers, leading to higher tax bills and more red ink.

The Biden administration and lawmakers should steer clear of this path and commit to continued IP protections for America’s innovators. Instead of killing the goose that laid the golden egg, policymakers should strive to save patients’ lives.

BLOGS:

Monday: Minnesota City Should Reconsider Plans for Taxpayer-Funded Broadband Network

Tuesday: CFPB Overreach Hurting, Not Helping, Consumers

Thursday: GAO Duplication Report Highlights How to Save Taxpayers Money

Friday AM: Tobacco & Vaping 101: Canadian Provinces

Friday PM:  TPA Urges Pennsylvania Legislature to Reject Legislation Banning Interchange Fees

Media: 

June 12, 2024: Real Clear Markets ran TPA’s op-ed, “Lina Khan's 'Wins' Are Judicial Rebukes of Her Radical Theories.”

June 13, 2024: WBOB-AM (Jacksonville, Fla.) interviewed me for their story on the White House’s spin on inflation.

June 13, 2024: WBFF Fox45 (Baltimore, MD) interviewed me for their story on property taxes in Baltimore.

June 14, 2024: The Boston Herald (Everett, Mass.) ran TPA’s op-ed, “D.C. pols pick contractors over taxpayers.”

June 14, 2024: The Washington Examiner (Washington, DC) quoted Dan in their article, “IRS says free tax-filing pilot program Direct File to be made permanent.”

June 14, 2024: NewsMax ran TPA’s op-ed, “CFPB Overreach Hurting, Not Helping, Consumers.”

June 14, 2024: The Times Argus (Barre, Vermont) ran TPA’s op-ed, “F-35 disappointment.”

June 14, 2024: The Rutland Herald (Rutland, Vermont) ran TPA’s op-ed, “ F-35 disappointment.”

June 16, 2024: The American Spectator ran TPA’s op-ed, “The Supreme Court Defends Free Speech.”

June 17, 2024: The Jacksonville Journal-Courier (Jacksonville, IL) ran TPA’s op-ed, “F-35 continues to disappoint as politicians pick contractors over taxpayers.”

June 17, 2024: WBFF Fox45 (Baltimore, MD) interviewed me for their story on Baltimore County school overcrowding.

June 17, 2024: WECT NBC (Wilmington, NC) quoted me in their story about the NTSB.

June 17, 2024: ECig Click (United Kingdom) quoted TPA in their article, “GFN 2024 Round Up – Who Said What?!?!.”

June 18, 2024: The Bristol Press (Bristol, Conn.) ran TPA’s op-ed, “F-35 continues to disappoint as politicians pick contractors over taxpayers.”

June 18, 2024: The Herald (New Britain, Conn.) ran TPA’s op-ed, “F-35 continues to disappoint as politicians pick contractors over taxpayers.”

June 18, 2024: The Chronicle (Willimantic, Conn.) ran TPA’s op-ed, “F-35 continues to disappoint as politicians pick contractors over taxpayers.”

June 19, 2024: Real Clear Markets published TPA's op-ed "Politicians Can Aid Patients By Protecting Patents"

June 20, 2024: WBFF Fox45 (Baltimore, MD) interviewed me about Maryland Senate President Bill Ferguson’s new job with a renewable energy company. 

June 20, 2024: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the new deficit numbers.


Have a great weekend!