Reason Magazine - Contributors > Ed Carson

• Electrifying Possibilities
  

  Natural gas, long distance phone service, airline, trucking, and rail have more in common with each other than one might suspect. All five are network industries, "producing some kind of product that must move along some form of infrastructure," says Jerry Ellig, an economist with the Center for Market Processes. And all were deregulated in the late 1970s and 1980s, resulting in substantial price reductions.

  A new study by Ellig and Robert Crandall of the Brookings Institution estimates that opening up these sheltered industries to competition saves customers close to $60 billion annually. Airfares fell by nearly a third in real terms between 1977 and 1987. Rail rates fell by 44 percent in the 10 years after deregulation.

  And these price drops occurred without any reduction in the quality of service. Instead the authors found that the deregulated industries expanded consumer choices and encouraged innovation, such as the hub-and-spoke airline system.

  The success of these earlier deregulatory measures holds lessons for another network industry--the retail electricity market. "Policymakers concerned about consumers should open electric service to competition, deregulate rates, and promote consumer choice as quickly as possible," the authors conclude.

• A Pound of Flesh?
  

  Many Americans feel that paying taxes costs an arm and a leg. Now the federal government is asking for a little more-hearts, livers, and other assorted organs. The Internal Revenue Service is sending 70 million households organ donor cards along with their tax returns. The feds hope to increase the supply of donated organs, which falls well below the de- mand. (See "Hey Buddy, Can You Spare a Liver?," Citings, February.) Nearly 4,000 Americans died in 1996 while on a waiting list for a transplant. About 50,000 are on waiting lists. The federal government prohibits any compensation to organ donors.

• Deficit Deception
  

  It's an article of faith among Democrats that President Reagan was responsible for the doubling of the national debt during the 1980s. Not so, say Stephen Moore, director of fiscal policy studies at the Cato Institute, and investment analyst Michael A. Byrd in a new Institute for Policy Innovation report, "Whose Free Lunch?: The Truth About the 'Reagan Deficits.'" Like so many others before them, Moore and Byrd rebut claims that tax cuts drained the federal Treasury. They point out that tax revenues increased 24.1 percent between 1982 and 1989, virtually identical to the 24.4 percent rise from 1974 to 1981, and higher than the 19.3 percent growth projected for 1990-1997, after the Bush and Clinton tax hikes.

  But former Senate Majority Leader Robert C. Byrd maintains that if Congress had approved Reagan's appropriations requests, the deficit would have been even higher. True and false, say the report's authors. Reagan did request about $90 billion more for defense appropriations. But Byrd's claim leaves out entitlement programs, which make up over half the federal budget. If all of Reagan's requests had been approved, spending would have been $209 billion lower.

  And when Democrats controlled both houses in 1987-1988, congressional spending exceeded the president's requests by an average of $51 billion, far above the $20 billion average when Republicans controlled the Senate from 1981 to 1986.

  Moore and Byrd don't absolve Reagan for the deficits during the 1980s, noting that he exercised his veto power sparingly and never submitted a balanced budget. They simply state that Congress, particularly Democrat members, deserves more of the responsibility.

• First, Expose All the Lawyers
  

  The American Bar Association recently generated a lot of press when it declared its opposition to the death penalty. The media coverage suggested that this was an extraordinary decision for the nation's largest lawyers' organization to take. But as many critics point out-and the mainstream media did not-it is not unusual for the ABA to take decidedly left-of-center positions on controversial issues. They include:

  • Tort reform. The ABA opposes virtually all legal reform measures-loser pays, caps on product liability damages, eliminating joint-and-several liability.
  • Affirmative action. It endorses "legal remedies and voluntary actions that take into account...race, national origin, or gender."
  • Gun control. The ABA supported the "assault weapons" ban and generally endorses gun control measures.
  • Abortion. The group lobbied the last Congress in favor of continued federal funding of abortions.
  • Universal health care. It supports "universal coverage for all through a common public or public/private mechanism through which all contribute."

  The ABA also backs the Family and Medical Leave Act, funding the National Endowment for the Arts, and increasing spending on child care. The organization also advises the U.S. Senate in the judicial selection process. Critics charge that the ABA is strongly biased against conservative nominees, most famously when several members of the selection committee declared Judge Robert Bork "not qualified" for the Supreme Court, despite his standing as an eminent legal scholar.

  That special role may be coming to an end. Senate Judiciary Committee Chairman Orrin Hatch is a long-time ABA critic. Though he has taken no official position, a recent Judiciary Committee press release stated, "The ABA should henceforth play no official, quasi-constitutional role in the Senate's confirmation process."

• Stop the Madness
  

  In an effort to head off "cyber tax chaos," Rep. Christopher Cox (R-Calif.) and Sen. Ron Wyden (D-Ore.) are introducing a bill that would place a moratorium on new Internet taxes. The bill, which had not been finalized at press time, would prevent state or local governments from passing any new Internet taxes, including sales and telecommunications taxes. It would apply retroactively, probably to January 1, 1997.

  Sales on the Internet totaled $500 million in 1996, but could grow to tens of billions by 2000. States and local governments see the Internet as a potentially huge source of revenue. But there are a number of unresolved practical, legal, and constitutional issues (See Citings, January and March). The U.S. Constitution prohibits states and local governments from taxing interstate commerce, unless the company has a substantial physical presence within their jurisdiction. But due to the decentralized nature of the Internet, several states could claim a taxable nexus on any given electronic sale. Even if the nexus is clear, collecting taxes won't be easy.

  "Before these fundamental questions are answered," Cox says, "states and localities are rushing to tax the goose that lays golden eggs."

  To help answer these questions, the bill would require the Clinton administration to submit a comprehensive plan regarding electronic commerce taxes within two years. One solution that's been proposed is to create a national sales tax, but a recent Treasury Department white paper put the kibosh on that idea.

  Another provision in the bill prohibits the Federal Communications Commission from levying access charges -currently limited to telephone companies-on Internet service providers.

  Cox and Wyden, who teamed up two years ago to promote an ultimately unsuccessful anti- regulatory alternative to the Communications Decency Act, hope to move the legislation through Congress quickly, before the appropriations bills make their way to the floor.

• Road Hogs
  

  The House Committee on Transportation and Infrastructure recently expanded from 67 to 73 members, making it "the largest [congressional] committee in history,"according to its chairman, Rep. Bud Shuster (R-Pa.).

  What warrants placing one in six House members on a single committee? Except for a few intra-city projects, the Interstate highway system is finished. Transportation spending makes up no more than 2 percent of the $1.6 trillion federal budget. But that doesn't measure transportation's political importance. Entitlement programs eat up more and more of the budget, but they essentially run on autopilot. (They may be flying into a cliff, but it is on autopilot.) And representatives can't exactly promise to bring home more Medicare to their districts. Transportation is one of the last areas where individual congressmen can personally deliver federal dollars to constituents in a literally concrete way. Or as Rep. John Linder (R-Ga.) says, the Transportation Committee is the "last place for pork."

  It takes on added significance this year because the Intermodal Surface Transportation Efficiency Act of 1991 is up for reauthorization. ISTEA (pronounced "ice tea") provides the money--$155 billion between 1992 and 1997--to state and local governments for transportation projects, with the feds typically picking up 80 percent of project costs. ISTEA is funded by a 14-cents-per-gallon federal gas tax (an additional 4.3 cents goes to general revenues) and taxes on diesel fuel and truck tires.

  First, Congress takes care of its own. Right off the top come members' demonstration projects--"high-priority"projects, insists House Tra