COMPETITIVE ENTERPRISE INSTITUTE VOL. 28, NO.

1 | SPRING 2015

FEATURED ARTICLES

The IRS, Obamacare, and the

English Language
4
MARC SCRIBNER
Dont Outlaw
Vapes on a Plane

11
JESSICA MELUGIN
A New Idea for
Tax Fairness Online

12
IAIN MURRAY
the rule will frustrate Congresss alleged
Greece Jumps from BY SAM KAZMAN purpose of making health care available to
Scylla to Charybdis everyone.
This is where the disaster stories come

ALSO IN THIS ISSUE

Why the FCCs Vote to Regulate the Internet
Is a Mistake,
by Ryan Radia . . . . . . . . . . . . . . . . . . . . . . . 5
In Memoriam: Robert Weekley . . . . . . . . . 6
The Clean Power Plans Dirty Secret,
by William Yeatman . . . . . . . . . . . . . . . . .10
The Good, the Bad, and the Ugly . . . . . . 14
Media Mentions . . . . . . . . . . . . . . . . . . . . 15
End Notes . . . . . . . . . . . . . . . . . . . . . . . . .16
F or weeks, weve been hearing claims
about the disasters that will result if the
Supreme Court upholds the challenge to
Obamacare it heard on March 4. At issue
in the case, King v. Burwell, is an IRS rule
that gives health insurance subsidies to
every state. The question for the Court is
whether that rule is legal, since the under-
lying statute authorizes subsidies only in
those states that have set up their own
Obamacare exchanges. Only about 14
states have done so. The challengers argue
that the IRS rule is contrary to the clear lan-
guage of the law that Congress enacted.
The government argues that invalidating
inabout how, without nationwide
subsidies, millions of people will be left
uninsured. But the Obamacare insurance
subsidies arent some long-established x-
ture of medical care; they only took effect
in 2014. And for several years before then
Obamacare was delayed by purely politi-
cal decisions made by the White House.
Where were the cries of disaster back then?
There werent any, in large part because
we had a sizable array of medical entitle-
ments aimed at preventing such disasters.
We still have them. To the extent that state
(continued on page 3)
 A New Year for CEI and Economic Liberty
by Lawson Bader
C EI works in the shadows. That does not mean we
work out of the public spotlight. Rather, we focus
FROM THE PRESIDENT
on that dark, dry, but challenging place where gov-
ernment policy and private markets clash: the regula-
tory state. CEI is unique in that we not only analyze
the impact of economic regulation on our economy,
we directly challenge government overreach into this
system of capitalism that has made America the most
prosperous nation on Earth. Weve been doing it for
over 30 years, quietly bearing fruitand sometimes
not so quietly, as our Supreme Court challenge to
Obamacare shows.
Weve been in the news a lot during the past month.
On March 4, the Supreme Court heard oral argu-
ments in King v. Burwell, our legal challenge to an IRS
regulation imposed under Obamacare. The regulation
illegally provides subsidies on both state and federally
established health insurance exchangescontrary to
the Obamacare statutes plain languageafter 36
states chose to opt out of the program. We are hopeful
a majority of Justices will correctly interpret the law and
agree with our challenge.
We have other cases in the worksfrom ling a
signicant constitutional challenge to the Dodd-Frank
nancial services law to holding the White House
Ofce of Science and Technology Policy account-
able for promoting questionable claims about the
Polar Vortex weather phenomenon that chilled
much of the eastern U.S. last year. We recently sued
the Environmental Protection Agency for its failure
to honor Freedom of Information Act requests. And
believe me, therell be more legal action to come.
Thats because we see our legal work as part of
our integrated strategy toward public policy. CEI
seeks to remove government-created barriers to eco-
nomic liberty, entrepreneurship, and innovation. We
Publisher
Lawson Bader
Editor
Marc Scribner
Editorial Director
Ph (202) 331-1010
Ivan G. Osorio
Fax (202) 331-0640
info@cei.org Contributing Editor
Keara Vickers
ISSN#: 1086-3036
2 CEI.ORG
do this with a combination of analysis and action. We
formulate and articulate the intellectual case for free
enterprise and capitalism. But our work doesnt end
there. We also engage these ideas directly through
proactive advocacy and communications. Its this
combination that makes us unique.
We produce studies that ll the intellectual gaps in
debates over economic regulation. For example, we
recently published a paper examining the deleterious
effect of Securities and Exchange Commission rules
on crowdfundingan important and growing venue
for expanding opportunities for investors and promot-
ing new business growth. Its innovative, but hardly
a new concept. Its how Henry Ford rst generated
funding for mass producing automobiles.
We do not operate in a vacuum. We also need
to work with others, including those with whom we
might not always agree in some areas, to successfully
advance policy change. We lead coalitions with both
old allies and strange bedfellowsfrom center-right
coalitions focused on environment and energy issues
to center-left ones focused on privacy, chemical
policy, or cybersecurity.
We also take our message directly to lawmak-
ers, the media, and the public. From radio and TV
appearances to animated videos about the spontane-
ous order of the marketplace. In short, we eagerly
take our message wherever it may be heard.
And when persuasion, thoughtful analysis, or
political alliances arent enough, we challenge
government policy directly in court. Our Obamacare
challenge in King v. Burwell is but the latest, most
visible example. This lawsuit and CEIs other work
on exposing the regulatory statefrom hard-hitting
analysis to strategic litigationcould not happen
without your continued support.
The CEI Planet is produced by the Competitive Enterprise
Institute, a pro-market public interest group dedicated to
free enterprise and limited government.
CEI is a non-partisan, non-prot organization incorporated in the
District of Columbia and is classied by the IRS as a 501 (c)(3)
charity. CEI relies upon contributions from foundations, corporations
and individuals for its support. Articles may be reprinted provided
they are attributed to CEI.
COMPETIVE ENTERPRISE INSTITUTE
 Obamacare, continued
or federal xes are necessary to ease transition problems that
might be caused by a court ruling, nothing would stand in their
way. States that chose not to set up exchanges could change
their mind, for example.
One thing the disaster stories leave out is the fact that for mil-
lions of Americans Obamacare itself has been a disaster. These
victims of Obamacareyes, victimsinclude people who can
no longer buy low-priced catastrophic insurance, or who nd
the cost of their current policies have skyrocketed, or they cant
keep their doctors. They include people pushed into part-time
status by companies trying to avoid Obamacares dictates, and
companies that shelve their expansion plans due to its regulatory
burdens. They include the taxpayers who foot the bill.
And theres one last victim herethe rule of law. Under the
R.M.
Constitutions separation of powers, Congress enacts laws and
the Executive Branch implements them. But what the IRS has
FREEDMAN
done in creating its subsidy rule isnt implementation; its rewrit-
ing the law, plain and simple.
SOCI ET Y
To defend that rewriting, the government has resorted to a
set of arguments that twist the plain language of the Obamacare
statute into what the governments lawyers claim is a term of Help the Competitive
arta phrase whose meaning is known only by some inner
circle of experts. For example, consider the phrase exchange
Enterprise Institute
established by the state. Those are the words Congress used carry on its work for
to designate the insurance exchanges that qualify for subsi- generations by joining the
diesthose set up by the states. It clearly excludes the federal
exchangesthose the U.S. Department of Health and Human
R.M. Freedman society.
Services is directed to set up in states that dont create their own
exchanges. In 2013, CEI established the R.M. Freedman
According to the governments counsel, this phrase has noth- Society in honor of Robert M. Freedman,
ing to do with specifying a type of exchange. Rather, to quote a business owner from West Bloomeld,
directly from the governments brief to the Court, the phrase Michigan, who placed CEI in his estate
is just a matter of style and grammar. Under the administra- and, in 2009, sadly passed on and gave
tions approach, the word establish is no longer a verb; its an CEI its rst legacy gift. We named the
ornament. society in appreciation of his generosity.
Perhaps you think thats an insignicant technicality. But con- Many of CEIs extended family choose to
sider the opening phrase of the Constitution: We the People of include CEI in their estate plans through:
the United States, in Order to form a more perfect Union, estab-
lish Justice Try applying the governments semantic approach Bequests,
to that sentence, and what do you get? Gibberish. Charitable Remainder Trusts,
If defending the IRS takes us down the path toward consti- Charitable Lead Trusts, or as a
tutional gibberish, thats a pretty good hint that its rule should
never have seen the light of day in the rst place. Life insurance beneciary.

If you make the decision to include CEI in

Sam Kazman (sam.kazman@cei.org) is General Counsel at CEI.
CEI is funding and coordinating the King v. Burwell challenge
before the Supreme Court.
your estate plans, please reach out and let
us know.
While these sorts of decisions should be
undertaken with the help of an estate
planner, Lauren Avey and Al Canata of
CEI can be a resource to you. You can
reach them anytime at 202-331-1010.

COMPETIVE ENTERPRISE INSTITUTE CEI.ORG 3

 Dont Outlaw Vapes on a Plane
BY MARC SCRIBNER
T hese are good times for anti-smok-
ing campaigners. But you wouldnt
know it from listening to their rhetoric.
At the urging of anti-tobacco activists,
the U.S. Department of Transportation
(DOT) is proposing to ban electronic
cigarette use aboard aircraft. This
impending regulation not only dees
medical evidence but makes a mock-
ery of the law in the process.
The use of e-cigarettes among
adults in the U.S. more than doubled
between 2010 and 2013, according
to the Centers for Disease Control and
Prevention. The tobacco industry pre-
dicts e-cigarette sales will surpass sales
of traditional cigarettes in the coming
decades. This signals great progress
from a harm-reduction standpoint,
since the best available scientic evi-
dence suggests that while e-cigarettes
may bring health risks, they are far
smaller than those associated with
tobacco smoking.
Yet, anti-tobacco campaigners are
increasingly agitating for strict rules
against e-cigarette use, perversely
threatening advances in public health.
The risks associated with e-cig-
arettes are borne exclusively by the
users, not the people around them.
Unlike tobacco cigarettes, vaporizers
do not produce harmful sidestream
emissionsthe smoke released directly
into the air from the end of lit ciga-
rettes, which produces 85 percent of
secondhand smoke and virtually all of
its associated risks.
As for the mainstream smoke
inhaled by smokers, many of its harm-
ful compounds are partially retained
within the smokers body, which acts
as a lter before it is exhaled into the
surrounding air.
There is simply no evidence that
secondhand aerosols exhaled by
e-cigarette users endanger non-users.
4 CEI.ORG
As Dr. Joel Nitzkin, a former co-chair of
the Tobacco Control Task Force of the
American Association of Public Health
Physicians, recently said, [T]here is no
public health justication for banning
e-cigarette use in no-smoking areas.
Anti-tobacco activists who disin-
genuously equate vapor and tobacco
smoke may perversely convince
smokers to reject far safer e-cigarette
alternatives. Consumers should not be
misled to believe e-cigarettes, which
do not produce tobacco smoke and
its many concentrated toxins, pose the
same risks as smoked tobacco.
To be sure, airlines should be free to
ban e-cigarettes aboard their aircraft
if they so choose. But just like the use
of cell phones on planes (or a pas-
sengers odoriferous perfume, for that
matter), the risks posed by e-cigarettes
do not justify federal regulation.
In 2011, the Department of
Transportation initiated a regulatory
proceeding to reinterpret smoke and
smoking in order to extend the exist-
ing federal ban on in-ight smoking
to e-cigarettes. Now years delayed,
the department quietly indicated last
January that it plans to issue a rule by
the end of April to prohibit e-cigarette
use aboard aircraft. Such an action
runs counter to congressional intent
and constitutes an illegal expansion of
regulatory power.
The DOT states that Congress intent
in prohibiting smoking in the skies was
to improve air quality within the air-
craft, reduce the risk of adverse health
effects on passengers and crewmem-
bers, and enhance aviation safety
and passenger comfort. The law
was intended to address secondhand
smoke, and the department concedes
a vapor, rather than smoke, is pro-
duced. So how does the Department
of Transportation justify its proposal?
By noting, that e-cigarettes require
an inhalation and exhalation similar to
smoking cigarettes.
Anti-tobacco activists
who disingenuously
equate vapor and
tobacco smoke may
perversely convince
smokers to reject
far safer e-cigarette
alternatives.
So, by DOTs logic, when Congress
referred to smoke and smoking,
it meant anything that might vaguely
resemble smoke and smoking, rather
than smoke itself and its resulting
harmseven though Congress enacted
a clear law in which the terms smoke
and smoking are not ambiguous.
The Department of Transportation
has no authority to regulate vaping.
It may claim that it is simply interpret-
ing smoking to cover the use of
e-cigarettes, but as the Supreme Court
has made clear, an agency may not
bootstrap itself into an area in which
it has no jurisdiction by stretching the
language of a statute.
Regardless of ones views on
whether airlines should permit e-cig-
arette use on their ights or not, the
Department of Transportations attempt
to rewrite a law passed by Congress is
an unlawful abuse of power. The loom-
ing in-ight e-cigarette ban has far
more to do with pushing a nanny-state
agenda than promoting illusory public
health benets.
Marc Scribner (marc.scribner@cei.org)
is a Fellow at CEI. A version of this article
originally appeared on CNN.com.
COMPETIVE ENTERPRISE INSTITUTE
 Why the FCCs Vote to Regulate the
Internet Is a Mistake
BY RYAN RADIA
O n February 26, the Federal
Communications Commission
(FCC) voted to regulate Internet pro-
viders as public utilities under a 1934
law. President Obama celebrated this
ruling, which the FCC based on his
plan to enforce net neutralitythe idea
that Internet providers shouldnt be
allowed to prioritize, throttle, degrade,
or block lawful content. But the FCCs
sweeping rules will have unintended
consequences for the Internets future,
potentially hurting the very users net
neutrality is supposed to protect.
Consider other markets where
bureaucrats have the nal say over
prices and services. Taxicabs, for
instance, are strictly governed by local
boards or commissions that dictate
rates and policies. In theory, these
rules are supposed to guarantee good
service and affordable prices. In real-
ity, riders routinely endure cabs that
are expensive, unreliable, or both.
Recently, some entrepreneurs have
upended this status quo through ride-
sharing services like Uber and Lyft that
most consumers nd vastly superior to
taxis.
Ridesharing faces far fewer rules
than taxis, even in states with laws spe-
cically addressing Uber and similar
services. And thats as it should be.
Competition works best for consum-
ers when rival rms can experiment
with business models without worrying
about what prices and levels of service
government regulators will deem just
and reasonable. Yet that uncertainty
is precisely what the FCCs decision
will impose on Internet providers going
forward. That will breed complacency
and make providers think twice before
COMPETIVE ENTERPRISE INSTITUTE
rocking the boat with something new
and disruptive.
To be sure, weve all had a bad
experienceor severalwith the cable
or phone company, along with air-
lines, insurance companies, and banks.
But compare your Internet bill from 10
years ago to this months. Odds are
your connection speeds have grown
signicantly, even as your bill has
probably changed little in real dollars
(excluding television, which is driven
by content costs). If broadband were
a monopoly, or even a cozy duopoly,
big providers wouldnt invest billions
annually to one-up each other. Yet this
is precisely what theyre doing.
All sides agree that broadband
competition can only benet consum-
ers. But how can government best
foster entry into the Internet market?
Reducing burdens on Internet provid-
ers is the better approach. Making it
cheaper and easier for companies to
wire neighborhoods with ber-optic
linesor build new wireless towers
should be a no-brainer for Congress
and the FCC. Conversely, more regula-
tion means more barriers to entry, as
evinced by Googles decision not to
offer voice to Google Fiber subscribers
because of special rules that would
apply to the service.
What about fears of providers
blocking or throttling lawful trafc?
Again, FCC intervention is unneces-
sarythis time thanks to another
federal agency, the Federal Trade
Commission (FTC). Tasked with pursu-
ing companies that employ unfair
or deceptive business practices, the
FTC has gone after Internet provid-
ers before. Unlike the FCCbest
known for censoring the airwaves
and safeguarding the Ma Bell tele-
phone monopolythe FTC special-
izes in policing competitive markets,
CEI.ORG
like broadband. If a provider touts its
service as access to the full Internet but
then blocks access to legal sites, its
arguably in violation of federal law.
Net neutrality supporters tout it as
a solution to the alleged problem of
paid prioritizationan Internet pro-
vider giving preferential treatment to
certain trafc in exchange for money.
But paid prioritization is a feature, not
a bug. What exactly is the problem
with an online gaming or telemedicine
service that wants to pay Comcast for
faster access to its subscribers?
Not every startup will have an
equal chance to make these deals,
according to critics of so-called fast
lanes, but since when do we ban
something because only some com-
panies can afford it? If rms believe
they can offer better service through
paid prioritization, users shouldnt be
denied this potential benet. Besides,
Silicon Valley giants have come
and gone even though theyve long
enjoyed better equipment and more
engineers than their smaller rivals.
Regulating Internet providers as
utilities might stop a few instances
of genuinely harmful conduct, but
public outcry over such practices will
likely also curb abuses. Regulation,
however, will deter providers from
devising better ways to serve consum-
ers through trial and errora process
epitomized by Ubers ongoing efforts
to perfect its surge pricing model. If
courts uphold the FCCs decision,
Congress should step in and reverse it.
Consumers will be better off if they do.
Ryan Radia (ryan.radia@cei.org) is
Associate Director of Technology Studies
at CEI. A version of this article originally
appeared on MSNBC.com.
5
 In Memoriam: Robert Weekley
Lawson Bader
I was in Los Angeles recently, and
happened to drive by a certain coffee
shop near Santa Monica. It marked our
meeting for many of my visits with Bob
Weekley. I hadnt planned on driving by.
It just happened. But I managed to pull
over and give Bob a nod of thanks. Im
glad I did.
I knew Bob before I came to
CEI. He was quick to champion my
arrival and equally quick to challenge
me to push CEI and build on what
Fred had started.His often low-key
demeanor belied a erce commitment
to classical liberal ideas. He was never
afraid to ask pointed questions and
always eager to listen and learn. This
liberty movement of ours is replete with
Fred Smith
Bob Weekley was enthusiastic
about economic liberty and curious
about why so few others seemed to
be.I met with him several times when
visiting California. Our meetings were
often punctuated by some interesting
cuisine and some even more interest-
ing conversation.He knew CEIs goals,
but consistently pressed me on how
we hoped to advance liberty.On one
occasion, he said he found my direct
remarks were evocative and convincing.
So why wasnt I doing more to commu-
nicate them more widely?Good point,
I responded, and experimented with a
few short videos.He liked them, and sent
a contribution enabling us to do more,
leading to a Fred Weekly series.

W e are saddened to note the

passing of Robert Weekley, a
longtime supporter of CEI, who was
passionately committed to advancing
economic liberty on every front. In rec-
ognition of his substantial contribution to
the free market movement, CEI President
Lawson Bader and Founder Fred Smith
offer the following thoughts.
intellectual champions. Bob was that
and morea practical defender of the
businessman as hero and an equally
erce defender of the businessman as
communicator. Messengers matter. We
have lost a good one.
Bob represented the type of busi-
nessman we need more of if capitalism
is to survive. Bob cared about economic
liberalization and understood the chal-
lenges we face in making it a reality.
Importantly, he brought his insights as a
businessman to that struggle. We need
more engaged activist business support-
ers. Bob will be missed.

Coming soon to Indiegogo

I, Whiskey: The Spirit of the Market reveals how every product
and service we enjoy is made possible by the free market and
human ingenuity. Its the story of entrepreneurs, scientists, and
bootleggers and the whiskey they producea spirit renowned for
its individual expression and rich history.
When people share a glass of whiskey they are playing a part in
this ever-evolving narrative.
CEI is dedicated not only to protecting the human spirit but also
celebrating it.

6 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE

 SAVE THE DATE
JUNE 11, 2015
CEIs Bourbon and BBQ Bash:
Liberty served smooth and smokin
JW Marriott Washington
1331 Pennsylvania Avenue, NW
Washington, DC 20004

COMPETIVE ENTERPRISE INSTITUTE CEI.ORG 7


CEI Fellow in Transportation Studies Marc Scribner explains the history
of anti-consumer transportation service regulations. Photo courtesy of
Brendan OHara.
CEI Joins Ridesharing
Regulation Debate
On February 10, CEI Fellow Marc Scribner
appeared on the Cato Institute panel, How
Should Ridesharing Be Regulated? Scribner
was joined by Catos Matthew Feeney and
Dean Baker of the left-leaning Center for
Economic and Policy Research. Scribner
discussed the origin of taxi regulations, which
began not with early taxis but with streetcars
in the years before World War I. He strongly
criticized government attempts to apply
anti-competitive taxi regulations to Uber
and other ridesharing companies, argu-
ing that the current rules limiting entry and
imposing minimum fare requirements serve
no legitimate public purpose and should be
repealed.

CEI Hosts
Reception for
Staffers on
Capitol Hill
To highlight the publication of the latest
edition of CEIs most recent Agenda
for Congress, CEI held a reception for
congressional staffers in the Rayburn
House Ofce Building on February
12. CEI Executive Director Gregory
Conko delivered remarks on the King
v. Burwell case against Obamacares
illegal IRS rule, which CEI is funding
and coordinating. Dozens of Hill staff-
ers attended to enjoy light refreshments
and mingle with CEI policy scholars.

(Top) CEI Executive Director Gregory

Conko welcomes congressional staff
and provides an update on King v.
Burwell.
(Bottom) Congressional staffers social-
ize with CEI analysts.

8 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE


CEI President Lawson Bader addresses
the CPAC audience.
RealClear Radio
Hour Now Live in
San Francisco
On February 11, CEI hosted a launch
party to celebrate RealClear Radio
Hours debut on Bloomberg Radio
San Francisco. Host Bill Frezza and
CEI President Lawson Bader were
delighted with the turnout and the
enthusiasm of local friends and media
at Donato Enoteca in Redwood
City. A special project of CEI,
RealClear Radio Hour airs Saturdays
at 10 am and 4 pm PT on San
Franciscos KNEW 960AM and KOSF
103.7FM-HD2.
COMPETIVE ENTERPRISE INSTITUTE
Myron Ebell, director of CEIs Center
for Energy and Environment, debunks
left-wing myths on climate change risks
before a CPAC audience.
CEI Fellow and RealClear Radio Hour Host Bill Frezza (right) with CEI President
Lawson Bader at Donata Ecoteca in Redwood City, California.
CEI.ORG
CEI at CPAC
In late February, the American
Conservative Union hosted its
annual Conservative Political Action
Conference (CPAC) in National
Harbor, Maryland. CEI President
Lawson Bader moderated a panel on
crony capitalism featuring Rep. Jeb
Hensarling (R-Texas), chairman of the
House Financial Services Committee;
Washington Examiner columnist Tim
Carney; and others. Myron Ebell,
director of CEIs Center for Energy and
Environment, appeared on the panel,
Setting the Record Straight on Climate
Change, along with Rep. Bill Flores
(R-Texas) and others. In addition, CEI
held its own panel and reception at
CPAC on the King v. Burwell case.
The panel discussion was led by CEI
General Counsel Sam Kazman and
featured several health care policy
analysts.
(Top) Panelists at CEIs event on the King
v. Burwell challenge to Obamacare.
Left to right: CEI General Counsel Sam
Kazman, American Enterprise Institute
Resident Fellow Thomas P. Miller, Galen
Institute President Grace-Marie Turner,
and American Commitment President
Phil Kerpen.
9
 The Clean Power Plans Dirty Secret
BY WILLIAM YEATMAN
T he U.S. Environmental Protection
Agency (EPA) recently announced it
would nalize three major rules regulating
carbon emissions this summer, as a part of
the Obama administrations plan to imple-
ment an ideological, environmentalist
agenda. One rule in particular, the Clean
Power Plan, would have a devastating
effect on Americas electricity industry and
economy.
The generation and retail provision of
electricity has been regulated by the states
since the passage of the 1935 Federal
Power Act. The law was premised on the
notion that an electric utility is a local
institution and should be locally con-
trolled, as articulated by former U.S. Sen.
Burton Wheeler of Montana, one of the
statutes sponsors. It established a bright
line between state and federal jurisdiction,
whereby Washington regulates interstate
wholesale power sales and the states
oversee retail electricity markets within
their borders.
While not perfect, that longstanding
model has served the nation pretty well.
So it came as a surprise last summer when
the Obama administration proposed the
Clean Power Plan, an unprecedented
power grab that would usurp oversight of
the electric industry from the 50 states and
hand it over to the EPA.
Historically, states have overseen their
electricity industry to incentivize afford-
ability, reliability, and use of local fuel
sources. The Clean Power Plan would
jettison these sensible state-determined
goals and instead impose a federally
determined goal for resource planning:
carbon reduction. The result will be more
expensive and less reliable power for
American industry and consumers.
Then there is the issue of the agency
itself. Considering recent events at the
EPA, it is deeply worrying for it to be
entrusted with such a major responsibility.
Over the past year, the EPA has
been rocked by embarrassing scandals,
10
including revelations that a high-ranking
agency ofcial had defrauded the
agency of more than a million dollars
over a decade by impersonating a CIA
agent, that an employee was caught
watching porn for six hours a day on the
taxpayer dime (and received a perfor-
mance bonus!), and widespread reports
that employees at the EPAs Denver
ofce had repeatedly used a hallway as
a bathroom.
Plainly, this agency can barely
manage itself, yet the Obama adminis-
tration would like to hand the EPA power
over the entire electricity industry, the
backbone of the U.S. economy.
Consumers stand to lose the
most. According to a study by NERA
Economic Consulting, the Clean Power
Plan would be the most expensive regula-
tion ever imposed on the power sector,
costing between $41 billion and $73
billion per year.
It will hit Americans gas bills, too. An
analysis by Energy Ventures Analysis esti-
mates that the EPAs suite of energy regula-
tions, including the Clean Power Plan,
cumulatively would increase the cost of
electricity and natural gas by nearly $300
billion in 2020 compared with 2012.
The rule also poses a threat to electric
reliability. By the EPAs own estimates, it
would shutter 68,000 megawatts of fossil
fuel electric generating capacity.
Federal, regional, and state experts
have warned that the Clean Power Plan
threatens to turn out the lights in much of
the country. Federal Energy Regulatory
Commission member Philip Moeller
warned that the Clean Power Plan could
lead to widespread rotating blackouts in
parts of the country.
Southern Company CEO Thomas
Fanning, whose company serves several
Southeastern states, told Bloomberg in
November, I dont think we have the
ability to maintain a reliable system
and comply with the new EPA rule. And
a reliability analysis performed by the
independent operator that maintains
Texass grid warned the rule could result
CEI.ORG COMPETIVE ENTERPRISE INSTITUTE
Federal Energy
Regulatory Commission
member Philip Moeller
warned that the Clean
Power Plan could lead
to widespread rotating
blackouts in parts of
the country.
in transmission reliability issues due to
the loss of generation resources in and
around major urban centers.
And for what? The EPAs climate rule
would fail to impact the climate in any
meaningful fashion, since the vast major-
ity of global emissions originate outside
the United States. According to the Cato
Institutes Patrick Michaels and Chip
Knappenberger, who modeled the climate
impact of the rule, the Clean Power Plan
would only reduce temperatures by 0.018
degrees Celsius by 2100.
In sum, the EPAs Clean Power Plan
is a costly regulation that serves no valid
environmental or public health purpose.
Yet, that is to be expected when such a
bungling agency is put in charge of the
nations vital electricity industry.
Utilities need to plan years in advance.
That means they have to reckon with EPAs
Clean Power Plan now, even though
the rule isnt set to be nalized until this
summer. The upshot is that the regulation
is already causing economic distortions.
Congress should rein in the agencys
attempt to overlord the provision of elec-
tricity, before the costs begin to mount.
William Yeatman (william.yeatman@cei.org)
is a Senior Fellow at CEI. A version of this
article originally appeared in U.S. News &
World Report.
A New Idea for Tax Fairness Online
BY JESSICA MELUGIN
The misleadingly named Marketplace
Fairness Act (MFA) died a quiet death
during the House of Representatives
lame-duck session, but is it really the
end? What does the new year and
the new Congress have in store for the
Internet sales tax debate? If recent expe-
rience is any guide, MFA supporters will
be back to try again.
Many MFA supporters correctly
point out that the current system creates
inequities in the way brick-and-mortar
and remote sellers are treated. But their
proposed cure would be worse than the
disease. To understand why, lets con-
sider what the nation just avoided.
The MFA passed the Senate with the
support of lobbyists for big-box retail-
ers and revenue-hungry states. It would
have empowered states to reach across
geographic boundaries and collect sales
taxes from businesses outside their bor-
dersmeaning that Virginia companies
would have become subject to New York
state taxes and audits, for example.
This would have weakened healthy
tax competition among states and led to
higher taxes. It also would have proved
burdensome to implement, as it would
have required single-location Internet
sellers (think Etsy and eBay) to calculate
sales tax in accordance with almost
10,000 jurisdictions across the nation,
each with its own rates, taxing catego-
ries, exemptions, and tax holidays. The
compliance costs would have proved
lethal for many small Internet sellers.
Cooler heads prevailed in the House,
where the bill stalled in committee.
Judiciary Committee Chairman Bob
Goodlatte (R-Va.) expressed concern
about the MFAs approach to address
the inequities in how sales are taxed both
online and at brick-and-mortar retailers.
Currently, a tax is only applied to
online purchases when the seller has a
physical presence like a store, ware-
house, or ofce in the buyers state. For
COMPETIVE ENTERPRISE INSTITUTE
example, if an online
bookseller in Virginia sells
to a customer in Texas,
sales tax is only applied
to the transaction if the
seller has some physical
presence in the Lone Star
State. Far from a tax loop-
hole, this is the principle
of no taxation without
representation in prac-
tice, because it is the seller
who remits and is subject
to compliance audits. In
effect, the business is the
taxpayer.
This system connes
states taxing power to
lower tax-rate jurisdictions when shop-
their borders, preserving tax competition
ping online or by mail.
among the states, which puts downward
The accounting burden would be
pressure on taxes. It keeps taxing authori-
minimal. Retailers would only have to
ties politically accountable to those they
calculate and remit taxes applicable to
tax and limits the jurisdictions for which
their primary place of business. Their rate
businesses must calculate and remit sales
would stay constant whether they sell
taxes to the states where they choose to
an item in the store or mail it across the
locate.
country. This efciency would benet the
But what about the different treatment
larger economy (with the possible excep-
of online and brick-and-mortar retailers?
tion of sales tax software makers).
Instead of empowering states to tax
An origin-based regime preserves
outside their borders, Congress should
consumer privacy. The tax calculations
consider some solutions proposed by
are based on the sellers location only, so
Rep. Goodlatte in his 2013 report, Basic
there is no need to collect, store, or share
Principles on Remote Sales, which he
the buyers location. An origin-based
is likely to reintroduce. One such idea is
approach requires no databases to main-
an origin-based system, under which the
tain, no third parties to calculate rates,
tax is assessed at the point of sale, not
and no audits to verify accuracy.
the destination of the good, as under the
Perhaps most important, an origin-
MFA. This would address the fairness
based sales tax keeps political authorities
issue by treating all retailers the same.
accountable to those they tax. This is an
For walk-in stores, sales tax is
especially important consideration for the
calculated at the point of sale, not by
maintenance of democratic governance;
the residency of the customerwho
its simply too easy to tax those who lack
may be crossing state lines or city limits.
a political voice.
Expanding this origin-based principle
So in the New Year and the new
to all retailers will ensure that online,
Congress, heres to new ideas for
catalog, phone, and yet-to-be-invented
e-fairness online.
sales platforms will be treated the same
as purchases on Main Street.
An origin-based system puts down-
Jessica Melugin is an Adjunct Analyst at
ward pressure on taxes. It allows custom-
CEI. A version of this article originally ap-
ers to vote with their wallets by choosing
peared in The Roanoke Times.
CEI.ORG 11
 Greece Jumps from Scylla to Charybdis
BY IAIN MURRAY
E very Greek child reads Homer
in school. So Greek children are
familiar with the legend of Scylla and
Charybdis, from Homers Odyssey. The
sailor Odysseus, returning home after the
Trojan War, is faced with a desperate
choice in the straits separating Italy and
Sicily. To one side is the monster Scylla,
who will tear his ship and eat his crew.
On the other is the whirlpool Charybdis,
which will suck his entire ship down to the
depths. He chooses to sail past Scylla,
and loses a few of his crew, but the rest
and the ship make it through. Greece, in
its recent parliamentary election, faced
a similar choice. But unlike Odysseus,
Greek voters chose Charybdis.
The whirlpool was represented by
Syriza, a radical leftist party that sprang
out of nowhere to ll the void created
by the collapse of the long-established
12
Panhellenic Socialist Movement,
better known by its Greek acro-
nym, PASOK. It was the last PASOK
government, headed by George
Papandreou (from a family that pro-
duced three Socialist prime ministers),
that steered Greece into these straits
in the rst place.
Papandreou was presented with
the boon of cheap money following
Greeces entry into the euro zone
in January of 2001. At the time,
the European Central Bank (ECB)
pursued policies aimed at shoring up
Germanys then-agging economy
by borrowing heavily to nance public
spending. The result was the debt crisis
that began in 2010.
Greek voters came to regard
PASOK as the party of nepotism and
corruption, and shifted their support to
the Coalition of the Radical Left, known
as Syriza for its Greek acronym. Syriza
positioned itself as anti-corruption,
CEI.ORG
Greek voters came to
regard PASOK as the
party of nepotism and
corruption, and shifted
their support to the
Coalition of the Radical
Left, known as Syriza.
anti-bank, and (at least implicitly) anti-
euro, and for increased levels of public
spending and welfare.
Syriza narrowly lost to the center-
right New Democracy party in the 2012
election, but was able to capitalize on
increasing public discontent with that
partys policies afterward. A majority
of Greeks perceived New Democracy
COMPETIVE ENTERPRISE INSTITUTE

As long as Greece
remains beset by a
bureaucracy that
promotes corruption as
the best way around
it, its economy will
remain in the doldrums,
regardless of how
austere or proigate any
one government may be.
to be governing at the behest of the
troikathe European Commission,
the ECB, and the International
Monetary Fundthat set conditions for
the Greek bailout.
The troikas conditions were charac-
terized as an austerity program intended
to lower the countrys debt burden. It
consisted of a combination of increased
taxes and lower public spending by
means of privatization, staff layoffs,
and welfare cuts. But it did not include
major structural reforms, so the Greek
economy has yet to recover, with unem-
ployment at 25 percent overall and 60
percent among young people.
Syrizas platform rejected austerity.
Instead, it offered a return to prosperity
by lowering taxes on the working class
Learn more at RealClearRadio.org.
COMPETIVE ENTERPRISE INSTITUTE
and increasing spending
to stimulate demand, while
providing free electricity.
How would it pay for this?
By more heavily taxing the
richof course!and by
diverting money from bond
repayments to public spend-
ing following a negotiated
debt restructuring. It also
expects the ECB to steer its
new quantitative easing pro-
gram toward buying Greek
debt.
This set of policies
spending nanced by the
rest of Europeis precisely
what got Greece into
trouble under PASOK. But
this time the rest of Europe is
unlikely to stand for paying
Greeces bills. German nance minister
Wolfgang Schaeuble has already
signaled that he expects Greeces new
government to abide by its interna-
tional agreements.
All this sets Greece on a straight
course for another whirlpool: default
and a possible Grexit from the euro.
The new prime minister, Alexis Tsipras,
has said he wants to avoid both even-
tualities, but it is hard to see how he can
achieve this without forcing the troika
and Germany into a humiliating U-turn.
There is a strong argument that
Grexit would actually be good for
Greece, which probably should never
have entered the euro zone in the rst
place. But the Greek people remain
CEI.ORG
strongly in favor of the European
project. They would likely blame Grexit
on Germany, leading to even greater
political tensions. The fact that Syrizas
coalition partner, the right-wing
populist Independent Greek party, is
militantly pro-Russian would exacer-
bate this further.
Not all the blame for this terrible
situation should fall on Greek voters.
While the austerity program of New
Democracy and the troika looks
impressively Thatcherite at rst sight, it
includes very high taxes and misses out
on one vital element: institutional and
regulatory reform. New Democracys
attempts at reform were half-hearted at
best. Greeces nancial and labor mar-
kets are still hopelessly bureaucratic.
As long as Greece remains beset
by a bureaucracy that promotes cor-
ruption as the best way around it, its
economy will remain in the doldrums,
regardless of how austere or proigate
any one government may be.
Greece does not have to choose
between Scylla and Charybdis. It is
possible to steer between the rocks
of anti-establishment populism (in
Greeces case, Syriza) and the whirl-
pool of an arbitrary executive (the
troika). It can do so if its sets a straight
course for the safe harbor of liberty.
Iain Murray (iain.murray@cei.org) is Vice
President for Strategy at CEI. A version
of this article originally appeared in The
Freeman.
Realclear Radio offers listeners a
fresh perspective on political and
social issues of the day through
informative interviews and dis-
cussions. Brought to you by the
Competitive Enterprise Institute
and RealClearPolitics, and hosted
by CEI Fellow Bill Frezza.
13
 THE
GOOD
CEI Releases Agenda
for Congress
In late January, CEI released Free to
Prosper: A Pro-Growth Agenda for the
114th Congress, which identies eight
economic areas in dire need of free
market reforms. CEIs agenda recom-
mends policy ideas that would release
innovators, entrepreneurs, and other
hardworking Americans from bureau-
crats regulatory squeeze, and advance
health, safety, efciency, and long-term
economic growth. CEI has more than
30 years of institutional knowledge
about the effects of well-intentioned but
poorly planned economic regulations,
said CEI President Lawson Bader. The
hidden and growing regulatory state
deserves more attention and CEIs
Agenda puts Congress back in the
drivers seat to create real regulatory
reform, stemming the executive branchs
ever-increasing overreach.
14
THE
BAD
Adelson Continues
Push for Internet
Gambling Ban
A handful of GOP lawmakers have
revived an effort to effectively ban
internet gambling, reintroducing the
so-called Restoration of Americas
Wire Act. The bill, written by a lob-
byist for casino mogul and GOP
mega-donor Sheldon Adelson and
introduced by Rep. Jason Chaffetz
(R-Utah), would amend a 1961 law
by expanding a ban on interstate
sports betting to a de facto ban on
all online gambling transactions.
This attack on consumer freedom is
not about protecting consumers or
restoring any law, said CEI Fellow
Michelle Minton. It is about doing
the bidding of a powerful donor and
imposing top-down federal control
over state choice. Anyone who cares
about consumer choice and abuse
of power by the federal government
should oppose this bill.
CEI.ORG
THE
UGLY
Court Rules NSA
Spying Not Broad
Enough for FOIA
The United States District Court
for the District of Columbia ruled
in January that based on national
security concerns, the National
Security Agency (NSA) does not
have to disclose even the existence of
documents related to the phone calls,
emails, and text messages of certain
Environmental Protection Agency
ofcials, in response to a Freedom of
Information Act (FOIA) lawsuit from
CEI. Judge James E. Boasberg stated
in his ruling that the government
had not ofcially acknowledged its
collection of such materials. At rst
glance, theres a silver lining in this
decisionnamely, it suggests that the
NSA isnt spying on all of us, said
CEI General Counsel Sam Kazman.
This is because Judge Boasberg
found no public acknowledgement
by the NSA that its monitoring is that
broad. On the other hand, the ruling
leaves open the possibility that the
NSA simply hasnt admitted that its
snooping on everyone.
COMPETIVE ENTERPRISE INSTITUTE
MediaMENTIONS
The Washington Examiner asks CEI
Fellow Michelle Minton to discuss
the potential changes in tax policy
facing big and small brewers:
Michelle Minton, consumer poli-
cies study fellow at the free-market
Competitive Enterprise Institute, says the
main beneciaries would be medium-
sized brewers. The BREW Act would
increase the number of barrels a brewer
could produce and still qualify for the
reduced excise tax rate. That will pull
in some of the larger craft brewers
like Boston Beer Company and Sierra
Nevada, she said. ...
Minton says either the BEER Act or
the BREW Act would be an improvement
over current policy. The major brewers
approach would be the better one, she
said, since it would be broader and
more comprehensive.
A much better approach would be
to scrap the excise tax entirely, Minton
said. Excise taxes should not be used
to penalize companies just because
they are large. They should be reduced
across the board or just scrapped.
JANUARY 11,
The Washington Examiner
George Will cites CEI Vice
President for Policy Wayne Crews
regulatory calculations in his
column:
The lingering economic anemia is
astonishing, given plummeting energy
prices. To a considerable extent, the
anemia is an iatrogenic social ailment,
induced by government behavior. The
business burdens and uncertainties
created by the Affordable Care Act are
just part of the Obama administrations
regulatory mania (3,659 new regu-
lations nalized in 2013 and 2,594
others proposed, according to Wayne
Crews of the Competitive Enterprise
Institute).
FEBRUARY 4,
The Washington Post
COMPETIVE ENTERPRISE INSTITUTE
Vox.com cites CEI Associate
Director of Technology Studies
Ryan Radia on the net neutrality
debate:
Ryan Radia, a telecom policy expert
at the libertarian Competitive Enterprise
Institute, expects the Republican-
controlled Congress to become more
hostile toward the FCC as the result of
Wheelers latest move.
If Tom Wheeler wanted to anger
Congressional Republicans, hes done it,
Radia says. For the rest of this congress,
Republicans will do what they can to
make things unpleasant for the FCC.
Radia notes that Thune recently
proposed requiring Congress to regularly
reauthorize the FCC, effectively putting
the independent agency on a shorter
leash. As Congress works to overhaul
telecommunications law in the coming
years, Republicans will be more leery of
giving the FCC broad authority, he says.
And Radia predicts that if a
Republican captures the White House in
2016, he will appoint someone who will
go to work reversing Wheelers network
neutrality rules.
FEBRUARY 5,
Vox.com
The New York Times prole of
CEI features Senior Fellow William
Yeatman:
The Competitive Enterprise Institute
sees itself not as a think tank, but as a
do tank, committed to changing fed-
eral policies rather than just analyzing
them, said William Yeatman, a senior
fellow at the group.
MARCH 4,
The New York Times
CEI.ORG
The Financial
Times quotes
CEI General
Counsel Sam
Kazman on the
King v. Burwell
Obamacare
challenge:
If the states
didnt set up the exchanges, they would
not get the subsidies, says Sam Kazman
of the Competitive Enterprise Institute, a
free-market group that has spearheaded
the challenge. But then the IRS comes
along and basically says subsidies for
everyone.
Should the premium subsidies be
struck down, the average out-of-pocket
expense for consumers would more than
triple from $105 to $374 per month,
according to Department of Health and
Human Services data.
If people do lose badly needed
health insurance, it really is the IRS that is
the culprit here, said Mr. Kazman.
MARCH 4,
Financial Times
USA Today cites CEIs Sam Kazman
on the impact of the Affordable
Care Act:
Sam Kazman, general counsel of the
Competitive Enterprise Institute, which
coordinated the Obamacare challenge,
spoke after the oral arguments on behalf
of the millions of people hurt by the
health law. Theyve lost their health plans,
their doctors or jobs, and thanks to the
Internal Revenue Service, have to pay
higher insurance premiums and taxes, he
said.
MARCH 4,
USA Today
15

...END NOTES
Litigiousness Destroys Childhood Winter Fun
America is a very litigious nation. And Americans often
go to absurd lengths to avoid being sued. Now several
cities, fearing lawsuits, are outlawing sledding in their public
parks, ruining a favorite winter pastime for children through-
out Americas colder climates. In Dubuque, Iowa, the city
council voted to ban sledding in all but two public parks
because the city, they said, cant manage the risk at all of
those places. To justify their decision, Dubuque ofcials
cited a case of an adult Iowa man who successfully sued for
$2.75 million after he injured his spine running into a sign on
a sled. Hope may not be lost. In the nations capital, a group
calling itself Sled Free or Die took to the slopes of Capitol
Hill in early March to defy the prohibition there. No arrests
were made.
Garbage Man Gets Jail Time for Working Too Early
Sandy Springs, Georgia, a wealthy suburb of Atlanta
famous for outsourcing most of its municipal functions to
private sector contractors, may be a great place to raise a
family. But it may be the worst place to pick up the trash. In
March, a judge sentenced Kevin McGill to 30 days in jail
for emptying garbage cans too early. Some residents have
complained that early morning pickups disturb their sleep.
McGill had only been driving his route since the beginning
of 2015 and was apparently unaware of the ongoing spat
between his company and the city. McGill, an employee of
Waste Management, Inc., received jail time after prosecu-
tors claimed previous efforts to ne Waste Management into
ending early morning pickup failed. So, they argued that
jailing Waste Management employees was their only avail-
able solution.
16
Nonprot Org.
U.S. Postage
PAID
Permit 425
Southern MD
Court Dismisses Mans Claim of Fajita Burns
Suffered During Prayer
In March 2010, a New Jersey man ordered fajitas at
an Applebees. According to the Associated Press, the man
claimed he bowed his head in prayer and then heard a
loud sizzle followed by a grease pop. He then felt a burning
sensation in his left eye and on his face. The man said he
panicked and knocked the food on his lap, causing more
burns. In his lawsuit, Hiram Jimenez claimed that his injuries
were solely due to Applebees negligence when he came
in contact with a dangerous and hazardous condition.
Afrming a lower court decision dismissing the case, a New
Jersey appeals court held that the self-evident risks of the
hot fajita skillet did not require the restaurant to warn Jimenez
against a danger that is open and obvious.
Mayor Called Jerk for Expecting Spanish
Inquisition
As any forum moderator can tell you, audience members
frequently waste question and answer times to make long-
winded comments, much to everyones annoyance. To tackle
this problem, one mayor in a Philadelphia suburb is proudly
eschewing question marks for his Q&A sessions. During a
tense Evesham, New Jersey, township council meeting in
December 2014, Mayor Randy Brown spoke over a question
on a tax abatement from a member of the public. That ques-
tioner, 81-year-old Kenneth Mills, told Mayor Brown, Youre
acting like a jerk. In response, the council has only accepted
public comments, not questions, at meetings. Brown, who is
considering a run for governor in 2017, told The Philadelphia
Inquirer that most residents ask him questions outside of public
meetings. Those who ask questions in public, Brown said, try
to turn it into the Spanish Inquisition.
CEI.ORG COMPETIVE ENTERPRISE INSTITUTE