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By Phil Kerpen
Transportation Secretary Elaine Chao did the right thing when she put the brakes on the Obama administration's regulatory mandate that would have forced an expensive technology called dedicated short-range communication (DSRC) in all new cars and trucks sold in America. The Obama rule would have imposed total costs of $108 billion and raised the price of every new car about $300 – for a technology that is already obsolete.
Now comes the related policy question of what to do with the big chunk of prime spectrum that would have been used for the Obama plan – will it be opened up for unlicensed use, enabling gigabit WiFi to make the Internet work better on all of our devices? Or will it continue to sit fallow on the prospects of potential future automotive use?
The Department of Transportation (DOT) has zealously guarded the 5.9GHz band since it was set aside by the Federal Communications Commission (FCC) in 1999. Twenty years later, DOT's longtime preferred DSRC technology remains nearly undeployed – the technology is in just 18,000 of the 270 million some passenger vehicles in the country. And the Obama DOT's own testing found that "every DSRC device deployed had to be recalled at least once... to identify and correct issues" and "there were more false alerts generated by the systems than anticipated."
Meanwhile, radar, lidar, camera-based, and cellular 4G technologies have been developed and enable a wide-array of driver-assist features. As 5G is deployed it will bring even greater capabilities.
Yet DOT and automakers insist on a slow, three-phase series of tests to see whether WiFi can share spectrum with DSRC before making any changes.
The first phase was completed successfully in October, but as FCC Commissioner Michael O'Rielly observed: "The reality is that the entire debate has gravitated away from the type of sharing regime envisioned in the testing. Instead, the Commission should move past this and initiate a rulemaking to reallocate at least 45 megahertz of the band, which is completely unused today for automobile safety."
He's right, and it's an issue with bipartisan agreement at the FCC.
Democratic Commissioner Jessica Rosenworcel joined O'Rielly in a 2016 joint statement, saying: "We believe this slice of spectrum provides the best near-term opportunity for promoting innovation and expanding current offerings, such as Wi-Fi. That’s because combining the airwaves in this band with those already available for unlicensed use nearby could mean increased capacity, reduced congestion, and higher speeds."
The Trump DOT has stopped the Obama DSRC mandate but so far held on to the spectrum. They have also, however, signaled a welcome shift to a technology-neutral approach, and are presently taking public comments on where vehicle communications technology is going.
Given the rapid development of mobile technology and the even greater capabilities coming with 5G – as well as sensor-based technologies being rapidly developed for driver-assist features and autonomous vehicles– it is possible...
By Phil Kerpen
Americans are justifiably angry that we pay the highest prescription drugs prices in the world – anger President Trump tapped into on the campaign trail. The disparity exists because other rich countries use price control schemes, forcing American consumers to provide the returns on capital that justify the enormous research and development costs associated with bringing new cures to market; the rest of the world free-rides on our innovation.
The good news is that the Trump administration has been aggressive on the trade front in efforts to break foreign price control regimes; the bad news is that the Trump administration is also proposing to actually import foreign price control regimes into the Medicare program by adopting a payment formula that is pegged to foreign prices.
In its recent report "The Opportunity Costs of Socialism," the White House Council of Economic Advisers (CEA) looked at "the impact on medical innovation of the U.S. adopting European-style price controls" and found: "If M4A would entail the same experience with below-market prices as other countries with socialized medicine, it would reduce the world market size and thereby medical innovation, and ultimately mean that future patients would forgo the health gains that would have come from these forgone innovations."
It is remarkable that, just days later, Health and Human Services Secretary Alex Azar proposed setting prices for drugs in the Medicare Part B program, which are doctor-administered drugs, with a formula based on foreign price controls.
That would directly undercut the efforts of the U.S. Trade Representative to combat foreign price controls. A recent study by the Committee to Unleash Prosperity found that eliminating price controls in OECD countries would result in eight to 13 more drugs coming to market every year by 2030 and raise life expectancy in the United States by 1.1 to 1.6 years.
The U.S. Commerce Department has found that easing foreign price control regimes could, by increasing research and development of new drugs, result in more competition and lower prices in the domestic U.S. market.
Doing the opposite – imposing foreign price controls to the domestic market – would have disastrous consequences.
"Economists and policymakers have long recognized that research and development activity suffers from a severe free-rider problem," Kevin Hassett, now president Trump's top economist, wrote in 2004. "In the past, the U.S. market has been large enough relative to the rest of the world that it has been able to support research despite these intrusions. The evidence reviewed here suggests that there could be devastating effects should our policy environment change."
Importing foreign price controls in the United States would short circuit diplomatic efforts to break foreign price controls, both because they would lack credibility and because the politics would flip, as higher prices abroad would now translate directly into higher prices at home through the price index.
Far from solving the free-rider problem, U.S. adoption of foreign price controls would undermine the incentive to invest in research and development; there...
By Phil Kerpen
President Trump recently tweeted that he wanted to end subsidies for General Motors "including for electric cars." In this case the president's personal pique aligns with an opportunity to advance good public policy. One of most significant subsidies from which GM benefits – the $7500 tax credit for electric car buyers – is already scheduled to phase out as GM passes the 200,000 vehicle cap on the full credit, entering a one-year phase-out before the subsidy ends completely. It's a rare circumstance in which a government program could actually end just by Congress doing what it specializes in – doing nothing.
Unfortunately, while the House version of tax extenders leaves the cap in place, the Senate has been discussing lifting the cap and allowing subsidies to keep flowing to GM and Tesla, which has already reached the phase out. The president should make clear he would veto any legislation to lift the cap.
Democrats should support letting the credit phase out because it is a tax break for the rich. The Pacific Research Institute looked at the most recent IRS data and found that more than half of the electric car buyers claiming the credit make more than $200,000 per year and nearly 80 percent make more than $100,000. Just 1 percent make $50,000 or less.
They conclude: "the subsidization of EVs has some reverse Robin Hood impacts where tax dollars are taken from all households (including lower-income households) and given to wealthier households."
There is also a geographic dimension to the wealth redistribution. The most recent industry data shows that half of all electric vehicles sold in the United States were sold in California, which has its own lavish subsidies at the state level. In August, the most recent month with data available, 53 percent of electric vehicle sales were in California.
A September 2018 NERA Economic Consulting study looked at the economic impact of eliminating the cap, as some in the Senate have proposed and for which Tesla and General Motors have been heavily lobbying.
They found that the costs of lifting the cap outweigh the benefits, because lower gasoline costs are more than offset by the direct and indirect costs of subsidized EV infrastructure. The study finds total household income falling as a consequence of lifting the cap by $7 billion in 2020 and $12 billion in 2035, which is about $50 to $70 per household in lost income every year.
That's a cost of over $50 every year to middle-income middle-Americans to pay for subsidies for rich people in California.
As Tom Pyle recently explained in The Hill, the subsidy for electric vehicles was always meant to be temporary.
Orrin Hatch, the original sponsor of the bill, explained the logic behind the cap in 2007:
"I want to emphasize that like the tax credits available under current law for hybrid electric vehicles, the tax incentives in the FREEDOM Act are temporary. They are needed in order to help...
By Jon Decker
One of the great underreported stories of the midterm election was the decisive defeat handed to liberal activists wishing to enact grocery taxes in Washington State.
Voters in Washington – where statewide elections are typically dominated by Seattle-area liberals – approved a ballot measure that would ban local municipalities from enacting taxes on processed foods and beverages in a near-landslide 56 percent to 44 percent decision.
To make things more interesting, rather than accept the fact that Washington residents rejected the regressive nanny-state tax hike, liberals are in denial.
They are bizarrely claiming this amounted to a "deceptive ballot initiative" that was "fundamentally misleading" and "reminiscent of the tobacco industry’s playbook".
Here is the actual text of the ballot initiative that liberals are calling "deceptive":
"This measure would prohibit new or increased local taxes, fees, or assessments on raw or processed foods or beverages (with exceptions), or ingredients thereof, unless effective by January 15, 2018, or generally applicable.
Should this measure be enacted into law?"
As the text makes blindingly obvious, a "yes" vote banned local grocery taxes.
The sanctimonious outrage displayed by leftwing activists is both comical and revealing. Surely voters were too dumb to understand what this actually meant! It certainly couldn't mean that Washington residents just didn't want to pay more for the food or beverages they enjoy, or experience the sort of sticker shock that has taken place in Seattle.
The left seems to be having a hard time accepting their recent defeats, statewide in Washington or in Santa Fe, New Mexico – another location not generally known as a bastion of free market thought.
For members of the food police grocery taxes are necessary because people aren't smart enough to choose what groceries they buy, as Mike Bloomberg himself has helpfully explained.
And when voters decide at the ballot box to ban such taxes, it must be because those voters are not smart enough to read.
Regardless of how the Michael Bloombergs of the world attempt to spin this embarrassing ballot defeat, Washington and Sante Fe's ballot initiatives make clear that not everyone buys into liberals' self-righteous attitude towards the American consumer.
Sorry tax hikers.
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