First, Happy Fiscal New Year!! One of the bigger projects that TPA has been working on this year is opposing the nomination of David Weil to run the Wage and Hour Division at the Department of Labor. David Weil would effectively end the practice of independent contracting, destroying a needed source of income and flexibility for thousands of employees across the country. He would also force workers to dedicate their money and personal information for the benefit of labor bosses. We ran full-page ads in The Dominion Post and The Charleston Gazette-Mail this past weekend to educate West Virginians and so that West Virginia Senators Joe Manchin (D) and Shelley Moore Capito (R) would oppose his nomination when it comes to the floor of the Senate. A few days after the ads ran, The Dominion Post ran a follow-up story about the ads. I was thrilled that TPA was able to educate West Virginia residents about the problems with this nomination. TPA’s stated mission is very clear. We are a non-profit, non-partisan organization dedicated to educating the public on the government’s effects on the economy. As the story acknowledges, many of its readers do not know who David Weil is. Yet, his proposals on independent contracting would do irreparable harm to the West Virginia economy. Be sure to visit www.rejectweil.com for more information about David Weil.
Profile in Courage: Rep. Scott Peters (D-Calif.)
Plenty of lawmakers come to Washington, D.C. with unusual resume lines and bizarre career trajectories. But, Rep. Scott Peters (D-Calif.) may have the most interesting background of them all. The lawmaker went from cleaning pigeon cages to analyzing complex economic issues at the Environmental Protection Agency (EPA) to serving his constituents on Capitol Hill. And, once in Congress, Rep. Peters has continued to deny convention by taking a series of admirable stands for taxpayers and consumers on a range of pressing public policy issues. It’s not easy to do battle against the fashionable big government populism of the day, but the California Democrat is ready to roll up his sleeves and do what’s right.
It’s easy to assume that most public officials in Washington, D.C. are born with silver spoons and are far removed from the concerns of ordinary Americans. Rep. Peters took little for granted growing up and worked his way through college even when the jobs were far from cushy. A write-up from his alma mater Duke University recounts, “While at Duke he studied economics and political science. To help earn money, he cleaned the Psychology Department’s pigeon cages for $2.55 an hour. Perhaps that’s one way to prepare for a congressional career.” From early on, the future lawmaker was guided by a strong motivation to do what’s right and bring people together to solve problems that were holding the country back. The preacher’s son would strive to improve people’s lives, but by focusing first and foremost on environmental issues. Peters became an economist at the EPA during the Carter administration, which would turn out to be a momentous time for the regulatory agency. In the preceding years, rulemaking agencies such as the EPA focused little on cost-benefit analysis and instead enacted sweeping regulations with little regard to expense or unintended consequence. President Carter pushed agencies to analyze their assumptions while making rules, including disclosing a, “description of the problem, an identification of alternative ways of achieving the policy goal, and an analysis of the potential economic impact of the regulation. A rudimentary cost-effectiveness test was also required to enforce the requirement that "the least burdensome of acceptable alternatives has been chosen." The lawmaker was one of few California Democrats to speak out against the Green New Deal, pointing out the lack of actionable legislation and the strange focus on guaranteed federal jobs and taxpayer subsidies for college (yes, college subsidies are part of the Green New Deal). To be clear, Rep. Peters has plenty of his own proposals on climate change (e.g., requiring more zero-emissions vehicles) that would impose large costs on taxpayers and consumers. But Rep. Peters is at least willing to take a stand against the costliest proposals championed by members of his own party.
The lawmaker has also taken a commendable stand against price controls on lifesaving medications. Democratic leadership has been loudly pushing for a plan that would embolden Medicare to “negotiate” prices for a wide range of medications, despite unintended consequences such as inevitable drug shortages and lower levels of future research. Rep. Peters rightly points out that, “If you institute it, you won’t have cures because you’ll dry up all the private investment that does that research. ... It’s a false promise of generating revenue because that industry is going to implode — it’s going to go someplace else. Just as when Europe started regulating, over-regulating the industry, they moved here.” The lawmaker knows full well that taking a stand against drug price-fixing is not politically advantageous and will make it more difficult to curry favor with fellow Democrats in the future. But he also knows how important it is to stand up for what is right and speak out against proposals that would jeopardize healthcare access. And for risking it all to make America a better place, Rep. Peters is absolutely a Profile in Courage.
Poor Tobacco Taxes
Congressional Democrats have proposed doubling the federal cigarette tax to pay for the $3.5 trillion reconciliation package. Not only is the proposal contrary to President Biden’s promise to not increase taxes on persons earning $400,000 or less, but it could prove hazardous to state budgets because an increase in a federal excise tax could spur smokers to quit – or switch to less harmful tobacco alternatives. Many states rely on both cigarette taxes and annual tobacco settlement payments to finance state funds and existing loans. If a large number of smokers switch and/or quit, these expected revenues will quickly evaporate. To understand how states got into the business of securing money from smokers, one must revisit the past. In the mid-1990s, amid growing controversy regarding the tobacco manufacturers, many states began suing tobacco companies for costs associated with smoking-related health issues. As many smokers are low-income persons, these health issues were largely subsidized by taxpayers via public health insurance programs, including Medicaid. In 1994, Mississippi became the first state to sue tobacco companies. By 1998, 40 other states had also sued. In 1997, Mississippi would be the first to settle, while three other states (Florida, Texas, and Minnesota) would also settle with their own lawsuits. On November 23, 1998, the 46 remaining states, five U.S. territories and Washington D.C. entered the landmark Master Settlement Agreement (MSA). Under the MSA, and similar to previous state settlements, tobacco manufacturers agreed to several sets of provisions including prohibition of youth-oriented marketing, restrictions on the promotion and sale of tobacco products and bans on certain tobacco advertisements including “billboards, product placement in media, branded merchandize, free product samples, and most sponsorships.” Further, and perhaps the most significant provision of the settlement agreements, tobacco companies would pay the states billions of dollars annually, in perpetuity, with payments based on tobacco sales in the respective states. To date, the MSA is the “largest civil litigation in U.S. history,” and dwarfs the recently settled opioid lawsuits.
While states sued the tobacco companies to make up for the costs of treating smoking-related health problems, the states continue to fail to allocate such monies to health care programs, or tobacco control programs to help smokers quit and/or prevent smoking uptake. In 2021, the states are estimated to receive $26.9 billion attributed to tobacco settlement payments and taxes. Yet, in the same year, states will only spend $656 million (2.4 percent) on tobacco control programs. Even more problematic, many states have sold off future tobacco settlement payments in the form of tobacco bonds for one-time, upfront lump sums, beginning as early as 2000. This is just a measly two years after settling with tobacco companies. Many of these states are still on the hook for future MSA payments, even as states receive fewer MSA payments as smoking rates continue to decline. In California, due to several localities suing tobacco companies separately, cities including Los Angeles and San Francisco get their own portion of MSA funds. Since 2001, localities have issued tobacco securitization bonds, selling off future MSA payments for bonds that were used to “finance capital improvements and health care projects.” In 2003, the state created the Golden State Tobacco Securitization Corporation (GSTSC) and issued $5.6 billion in tobacco bond sales “to help balance the state’s budget.”
Not only is it disturbing that lawmakers continue to rely on the lungs of smokers to finance programs other than health care and/or tobacco control, but the sources of revenue for both tobacco bonds and taxes are unstable as smoking rates continue to decline. In 1998, the same year as the MSA, approximately 22.9 percent of American adults were smokers. In 2020, this had dropped by more than 32.3 percent to 15.5 percent of adults. Congressional policymakers should be wary. While a tobacco tax might feel like an easy fix to fund the latest spending plan, it could have dire consequences to lawmakers’ very own states who rely on smokers to finance their own projects.
BLOGS:
MEDIA:
September 24, 2021: I appeared on KWTO 93.3 FM (Springfield Mo.) to talk about the $3.5 trillion budget bill.
September 24, 2021: The Center Square ran TPA’s op-ed, “Government snooping undermines case for postal banking.”
September 27, 2021: I appeared on Rush to Reason on KLZ 560AM (Denver, Col.) to talk about H.R. 1 and taxpayer-funded campaigns.
September 27, 2021: WBFF Fox45 (Baltimore, Md.) interviewed me about the debt ceiling.
September 27, 2021: Townhall.com ran TPA’s op-ed, “Federal Tobacco Tax Could Prove Hazardous to State Budgets.”
September 27, 2021: Inside Sources ran TPA’s op-ed, “Proposed Federal Standards Could Have Farms and Consumers Feeling the Heat.”
September 27, 2021: The American Conservative ran TPA’s op-ed, “The Consultancy Scam: How taxpayer-funded private reports encourage boondoggles and fuel government waste.”
September 27, 2021: The Times and Democrat (Orangeburg, S.C.) ran TPA’s op-ed, “Expensive smoke and mirrors.”
September 28, 2021: The Jacksonville Journal Courier (Jacksonville, Ill.) ran TPA’s op-ed, “Congressional tax proposal is expensive smoke and mirrors.”
September 29, 2021: Texasnewstoday.com quoted TPA in their story, “Cynthia Lummis wept at Biden’s proposal to report all transactions over $ 600 to the IRS.”
September 30, 2021: WBFF Fox45 (Baltimore, Md.) interviewed me about Postal Service issues.
September 30, 2021: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the infrastructure bill.
September 30, 2021: National Review ran TPA’s op-ed, “The USPS Should Deliver Mail, Not Health-Care Services.”
September 30, 2021: The Dominion Post (Morgantown, W.V.) mentioned TPA in their article, “Readers ask about Sunday full-page ad opposing Biden nominee — paper finds answers.”
Have a great weekend!
