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Phil Kerpen on June 13, 2018 | Protect the Free-Market Internet

By Phil Kerpen

The 2015 Obama FCC order reducing the Internet to a regulated public utility under Title II of the 1934 Communications Act was marketed as protecting net neutrality – even though the DC Circuit Court of Appeals expressly held that any ISP that blocked or filtered web traffic would be completely exempt from the rules.  The apocalyptic claims from the left that the repeal of Title II – which took effect on June 11 – would herald the end of net neutrality and the destruction of the Internet are therefore obviously absurd hyperbole.  Especially considering that we have simply returned to the same regulatory framework that applied while the Internet grew and thrived for decades until 2015.

So what are the real stakes as Congress considers a partisan Democratic effort to re-impose the Obama public utility order?   Taxes and fees.  A lot of them.  Internet services are protected by federal law from state, local, and federal taxes, but the Title II order reclassified broadband Internet as a phone service which enjoys no such protection.  And there is overwhelming evidence that Democrats were waiting until Hillary Clinton won the election (oops) to spring the Title II tax trap.

Now-FCC Chairman Ajit Pai explained it in testimony to the Senate back in 2016, when he was a dissenting member of a Democrat-controlled FCC.

"The FCC has already decided to boost E-Rate spending by $1.5 billion per year (conveniently, right after the November 2014 elections)," Pai said.  "And it will soon dramatically expand the Lifeline program to subsidize broadband."

"The money to fund this spending spree will come from a broadband tax.  The only question is when," he continued. "One might reasonably suspect that this decision is conveniently being put off until after the November elections.  After all, making people pay more to access the Internet isn’t going to be popular."

How much would Democratic broadband taxes cost if Title II were restored and a future Democratic FCC moved forward with this plan?

The current universal service fund assessment – which only applies to phone bills – sits at 18.4 percent.  It would start as somewhat less than that if the assessment were spread over broadband bills, but over time it would creep up as demands for spending increased – perhaps sharply as public utility regulation would depress private investment, increasing pressure for taxpayer dollars to pick up the slack.

And that's just the federal component.  As a legal matter, the Title II reclassification could also trigger major increases in taxes and fees for cash hungry state and local governments too.  The center-left think tank Progressive Policy Institute estimated that reimposing the Obama order would hit wired Internet users with an average annual state and local charge of $67 and wireless users with $72 – and of course most people have both home and wireless Internet, so they would pay both.

Republicans, led by South Dakota Senator John Thune and Oregon Congressman Greg Walden, have offered Democrats what...

Phil Kerpen on May 14, 2018 | Promote Economic Growth, Restore Fiscal Sanity

By Phil Kerpen

Republicans are set to move landmark welfare reform in this year's farm bill, which includes language requiring able-bodied adults to work or participate in a job training program to be eligible for food stamps.  Democrats in Congress, however, have decided to litmus test opposition to work requirements and have therefore walked away en masse from supporting the usually bipartisan farm bill.  That gives conservatives leverage to push for free-market reforms to the other 20 percent of the bill – and they should.

The food stamp program accounts for about 80 percent of the cost of the farm bill, and work requirements are overwhelmingly popular with the public. They enjoy a robust 82 percent approval among all voters and are supported by even 71 percent of Democrats according to a recent poll commissioned by the Foundation for Government Accountability.

If the farm bill accomplished nothing else, it would be worth supporting for this popular, critical reform that would incentivize Americans to reenter the workforce and get back on the ladder of economic opportunity – while helping grow an economy that is being held back by chronic shortages of workers in many industries.

But a farm bill that reforms the food stamp program while reauthorizing farm welfare programs without reforms – and in some cases even with expansions – is an unnecessary political gift to Democrats, who can spin their opposition to sensible work requirements by accusing Republicans of hypocrisy.

The bill loosens the loophole that allows non-farmers to collect agricultural subsidies of up to $125,000 per year.  Current law allows immediate family members of farmers to collect even if they don't live on the farm – the proposed farm bill expands the definition to include urban-dwelling cousins, nieces, and nephews.  And they aren't required to work to collect the money.  And commodity support programs are available for couples making up to $1.8 million per year – hardly the needy – rather than following the much more sensible proposal in President Trump's budget to cap eligibility at $500,000.

The bill also reauthorizes the Soviet-style sugar program, which the great anti-cronyism writer Tim Carney has accurately identified as a test of whether Republicans "understand the distinction between pro-business and pro-market."  The sugar program is a hidden tax of $2.4 to $4 billion per year according to an analysis by the American Enterprise Institute – and it pushes candy companies to move to Mexico so they can buy sugar at the much lower world price.  Census Bureau estimates show the sugar program has destroyed about 123,000 American jobs.  But it continues because the sugar industry is politically powerful, especially in the key state of Florida.  There might be enough votes in the House to reform the sugar program, but we won't find out unless leadership allows a vote.

Ultimately, conservatives may find it impossible to resist voting for a bill with a key policy reform (work requirements) applied to the single program (food stamps) that accounts for 80...

Jonathan Decker on May 11, 2018 | Protect Property Rights

By Holly Sadler

Several weeks ago, we highlighted the unanimous passage of the Music Modernization Act through the House Judiciary Committee. This was a huge step in finally revamping an out-of-date, inadequate system of copyright and intellectual property protection for the music industry.

Since then, the bill has been passed unanimously in the House and introduced in the Senate, with a key Senate Judiciary Committee hearing scheduled for Tuesday.

To recap, this bill brings together the vast majority of industry stakeholders (who rarely agree on copyright issues) and forms a consensus on how to address some of the most problematic and antiquated areas of copyright law negatively impacting the industry today.

If passed, the Music Modernization Act will:

  • Correct a loophole in the 1976 Copyright Act, which resulted in works created prior to 1972 being exempted from proper compensation under copyright law;
  • Create a songwriter database so songwriters can be fairly compensated for their work and those who play the music can easily identify who to compensate;
  • Realign the rate standard used to determine compensation for artists, incorporating a more market-based approach and including standards for digital music providers like Spotify, Pandora, SiriusXM, and others; and
  • Allow artists to voluntarily designate a portion of their royalties to producers, mixers, and sound engineers, creating a mechanism to do this easily.

These are all huge wins for intellectual property and copyright protections, as well as the free market. And they are a long time coming.

Throughout this process, it has been encouraging to see Members of Congress reject the small, but vocal, factions of opposition and efforts to undermine the purity of these reforms. These voices represent a viewpoint that private property does not exist and any effort to strengthen property rights must be fought. It is our hope that senators will follow the lead of their colleagues in the House, recognize intellectual property is a private property right protected by the Constitution, continue to reject efforts to undermine the reforms, and pass the Music Modernization Act in its current form.

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