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Out of Control Policy Blog Archives: 4.21.13–4.27.13

A Step Toward More Rational Sentencing Policy

On Wednesday, Representatives Bobby Scott (D-VA) and Thomas Massie (R-KY) introduced a bipartisan bill titled the Justice Safety Valve Act of 2013. Identical to the legislation introduced last month by Senators Rand Paul (R-KY) and Patrick Leahy (D-VT), this bill would authorize federal judges to pass sentences below federal mandatory minimums in cases where assigning the mandatory sentence would be excessive, and where a shorter sentence would not endanger public safety.

A press release on Rep. Massie’s website reports:

The Justice Safety Valve Act of 2013 would expand the current “safety valve” provision to include all federal crimes, allowing federal judges to tailor sentences on a case-by-case basis. This would also reduce the bloated federal prison population.

Essentially then, this bill would return some discretion to federal judges by no longer requiring them to sentence first-time and/or low-level nonviolent offenders to prison terms intended for high-level drug kingpins and major criminals. The fact is that existing federal mandatory minimum sentences result in many low-level nonviolent drug offenders receiving lengthy prison terms that do not fit their crimes.

The introduction of this legislation comes at a time when the federal prison population is nearly nine times larger than it was in 1980, facilities are increasingly overcrowded (39% over the rated capacity in 2011), and the system has becoming more expensive to maintain. Mandatory minimum sentences for nonviolent drug offenses are largely to blame for this, with inmates convicted for these type of offenses making up nearly half (47.3 percent) of all federal prisoners as well as the largest portion of newly admitted federal inmates.

The Justice Safety Valve Act of 2013 would help ensure that these types of offenders are not sent to prison for longer than is necessary to keep society safe, therefore saving prison space and resources for those who pose a larger threat to society, such as violent criminals.

While the Justice Safety Valve Act of 2013 neither repeals federal mandatory minimum sentences nor requires judges to ignore them if it would be appropriate to do so—both of which would be good policies—it nevertheless represents a welcome step toward reducing the size of the federal prison population, as well as the costs that come with maintaining it, all without compromising on public safety.

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FedEx Founder Makes the Case for Air Traffic and Highway Improvements

FedEx Founder Fred Smith, a former Reason trustee, testified before the U.S. House Committee on Transportation and Infrastructure on Wednesday. He advocated, among other things, three improvements that Reason has studied and called for at length: the NextGen air traffic control system, improved aviation infrastructure and extending the national standard for twin trailers from 28 feet to 33 feet.

BizJournals reports:

The founder, president, chairman and CEO of Memphis-based FedEx Corp. (NYSE: FDX) focused mainly on runway and road infrastructure, but also talked about the importance of more sustainable energy sources.

Smith said FedEx Express is excited about the possibilities of the Federal Aviation Administration’s NextGen air traffic control system which is being developed. The GPS-based system could enhance safety, reduce delays and save fuel. For FedEx, it could save money by shaving minutes off flight times and reducing fuel costs.

Smith also singled out aviation infrastructure as key, saying it takes an average of 20 years to build a runway from planning to completion.

“However, within 10 years, the top 20 airports in the U.S. will become overly congested,” he said. “While control of traffic in the air will help, new runways and facilities will still be needed and existing ones will need maintenance.”

Reason’s recent study on air traffic control consolidation flagged the FAA’s ongoing modernization struggles:

Without consolidating airspace and ATC facilities, NextGen is at risk of becoming merely a very costly upgrade of hardware and software, without the large productivity gains that should constitute a major portion of the business case for this transition. And without a timely commitment to large-scale facility consolidation, the Air Traffic Organization will be forced to spend billions in coming decades refurbishing and rehabilitating aging and unneeded facilities. Consequently, the time for action on these issues is now.

And in a recent edition of his Air Traffic Control Newsletter, Reason’s Robert Poole added:

This succession of ever-lower annual forecasts of aviation growth makes it ever-harder to justify spending $20 billion or so on NextGen based on the argument from capacity. On an aggregate basis, that case is simply not there, due to significantly reduced growth expected in all but the airline category. To be sure, there are still major problems with capacity in large metro areas served by major hub airports (sites of FAA's Metroplex efforts). But it seems to me the primary case for NextGen now rests on efficiency and productivity gains attainable by replacing the old paradigm of detailed control of every aspect of a flight with the new paradigm of air traffic management of aircraft trajectories. New tools and procedures will make it possible for far more direct routes, optimal altitudes most of the time, and time-based flow management. All of this will reduce fuel consumption and reduce delays, especially for airlines and business jets. That is definitely worth doing.

For ground shipping, Smith wants the national standard for twin trailers extended:

On the road side, FedEx supports increasing the national standard for twin trailers from 28 feet to 33 feet as a way of increasing shipping volumes in a less expensive way than widening or building roads.

“Longer trailers will mean fewer truck trips to move the same volume,” he said. “This can result in a reduction in congestion. At a time when adding more lanes may be problematic given budget cuts, this is a way to help alleviate an acute problem without spending more federal dollars.”

The move could also save fuel and reduce emissions. In the less-than-truckload industry, 1.1 million to 3.2 million pounds of carbon could be saved and 102 million to 305 million gallons on concomitant fuel could be saved.

In their trucks-only toll lanes paper, Robert Poole, Peter Samuel and José Holguin-Veras wrote about the use of Longer-Combination Vehicles (LCVs):

This study suggests that, rather than rebuilding all lanes, federal and state governments should authorize only specialized truck lanes which would be designed for exclusive use by large trucks. This approach would significantly reduce the amount of money it would take to improve the nation’s highways in order to accommodate greater use of LCVs. Moreover, if large trucks were separated from automobiles and smaller vehicles as this study.

Poole and Samuel identified the most promising urban Interstate corridors for truck-only toll lanes here.

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The Real Causes of Rising Healthcare Costs

According to the Los Angeles Times:

U.S. healthcare spending grew 3.9% a year in 2009-2011, according to government data, the lowest growth rate since the government began tracking it in 1960, and down significantly from annual growth averaging 8.8% in 2001-2003.

That sounds like good news. But the article also cites research from the Kaiser Family Foundation that finds “economic factors related to the recession accounted for 77% of the reduced growth in national health care spending”. As a consequence, we should expect “more rapid growth as the economy strengthens”. Given that health care spending already stood at an estimated $2.8 trillion in 2012—nearly 18 percent of GDP—this is cause for concern.

Many health reform advocates believe the main driver of spiraling health costs is the absence of universal coverage, which results in uninsured patients “free riding” via costly emergency room visits, leaving the insured to foot the bill in form of higher premiums. And it’s true that this and other forms of legally mandated cross-subsidization (like Medicaid, Medicare, and community rating) make healthcare more costly than it would otherwise be for many Americans. But it certainly isn’t the main factor.

The real issue is that policymakers—despite their good intentions—have managed to design a health care market in which the supply of services is both unnecessarily constrained and inefficiently organized, while also doing their best to eliminate any effective checks on demand. Put those two things together and rising costs are an inevitable outcome.

Let’s start with the supply side. As John H. Cochrane points out in this excellent paper, there are plenty of examples in the corporate world of better products being provided more cheaply than they were ten or twenty years ago—think Southwest Airlines, Amazon, Toyota, or Wal-Mart:

These revolutions are not just about technology. In most of these cases, we see process innovation, reorganizing activities to deliver complex services at lower cost and with better and more uniform quality. This process efficiency is most glaringly absent in healthcare.

But why is health care provision still so fragmented, so lacking in consumer focus, and so far behind in computerization? Cochrane cites a lack of intense competition: “certificate of need” requirements severely restrict market entry in 36 states, and occupational licensing rules artificially constrain the supply of doctors while preventing nurses from offering competing, lower-cost treatment. Then there are rules that hold back the “corporatization of overall health service provision”, promote inefficient non-profit institutions that have little incentive to innovate, and block mergers and consolidations that could deliver greater economies of scale.

Cochrane’s solution is a commendable one: “Look for every limit on supply of health services, especially entry by new companies, and get rid of it.”

On the demand side, the problem is straightforward enough. The dominance of third-party payment and the prevalence of employer-provided health insurance—both of which are supported by regulation and the tax code—mean that patients and providers almost always have an incentive to maximize care, irrespective of cost. Patients do this because their up-front premium has already been paid and they want to extract as much value from it as possible. Providers do it because they want to earn as much fee-for-service income as they can. In the long run, this is not a sustainable model.

Ultimately then, the prospect of more rapidly rising health care spending serves as a timely reminder that US healthcare really does need a comprehensive overhaul. It’s just too bad that the reforms currently under way do so little to move things in a positive direction, and will likely make things worse, rather than better.

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CISPA Circumvents Fourth Amendment, Allows Warrantless Online Surveillance

The Cyber Intelligence Sharing and Protection Act, or CISPA, recently passed through the House of Representatives and is on its way to the Senate. The bill is supposed to help companies and government work together to help fight cyber attacks. However, it poses some real threats to Americans’ Fourth Amendment privacy protections. As Steven Titch recently wrote in the Federal Government section of Reason’s Annual Privatization Report 2013:

While most analysts agree that the U.S. needs to do more to defend its assets from potential cyberattack, policymakers are divided over how best to do this.

The main arguments against the bill are that CISPA makes it much easier for government agencies to put politically disfavored people in prison, government’s shoddy secret keeping may mean CISPA actually makes data less secure and that data suggests that U.S. businesses would rather see the private sector develop cybersecurity solutions.

While the bill has many similarities to last year’s widely reviled SOPA, CISPA enjoys far more corporate support, which has led to a much more muted response online. Anonymous called for an Internet blackout but giants like AT&T, Comcast, Verizon and tech policy group TechNet, whose members include Facebook and Google, all support CISPA. You can see a full list of CISPA supporters here.

One major reason companies support CISPA is that it actually protects them from being sued if or when they break their Terms of Service in order to give government agencies like the National Security Administration their users’ private data, as long as the government claims it’s for cyber security. Even with this handout to tech companies, over 300 websites participated in a blackout Monday. the largest of which was Reddit.

A big problem many people have with CISPA is that it, as Mediaite put it, “effectively creates a ‘cybersecurity’ loophole in all existing privacy laws.” This is done mainly in two ways. First, it expands allowable warrantless government surveillance. Under CISPA, government agencies can collect information on users of sites like Facebook and Twitter, even when that information is supposed to be private under existing Terms of Service. All this can be done without warrants and without warning. Second, and as previously mentioned, it immunizes those companies against lawsuits for violating their Terms of Service.

How much data would CISPA give the government has access to without a warrant?

TechCrunch is reporting that Facebook has plans to build a billion-dollar data center that will cover “1.4 million square feet and serve as what the company says will be ‘the most advanced data center in the world.’” Combine the fact that the average American commits three felonies a day due to vague and broad regulations with the once-unimaginable amounts of data law enforcement can now troll through and CISPA makes it extremely easy for law enforcement to find reasons to imprison unfavored but harmless citizens. Simply put, CISPA makes it much easier for government officials to find reasons to put people it doesn’t like in prison.

Not only does CISPA threaten citizens’ safety from unreasonable searches and seizures, but it may not even keep citizens’ data safe from attackers. As Reason’s Titch wrote:

In August 2012, the U.S. Government Accountability Office (GAO) reported that federal data breaches involving unauthorized disclosures of personally identifiable information increased by 19 percent, or about 13,000 to 15,500, from 2010 to 2011. As if to punctuate the GAO findings, that same month, the Environmental Protection Agency separately disclosed that a security breach exposed social security numbers, banking information and home addresses of some 8,000 people.

Whether due to concerns about effectiveness or privacy, research data suggests that U.S. businesses would rather see the private sector develop cybersecurity protocols and policies for the government, rather than the other way around. Titch again:

Information security professionals say private sector security protocols, honed bottom-up through multi-lateral, multi-stakeholder processes, are far better at securing data than over-reliance on technology and government-driven directives.

Bit9, a security market research firm, released its 2012 Cyber Security Survey of 1,861 IT professionals (1,533 in the U.S.) across a wide range of industries, including government, which found 58 percent of respondents said implementing best practices and better security policies would have the biggest impact on improving the state of cybersecurity. By contrast, only 7 percent said government regulation and law enforcement and 15 percent said better technology.

The Electronic Frontier Foundation has been a vocal critic of CISPA. On warrantless wiretapping, they wrote:

Early in his first presidential campaign, then-Senator Obama was a leading critic of giving telecom companies like AT&T immunity for breaking the law to assist in the government in warrantless wiretapping.

President Obama promised to veto CISPA. This is a move to be applauded as CISPA circumvents Fourth Amendment privacy protections, won’t even guarantee citizens’ data will be kept safe from attackers and is unnecessary as private companies are already hard at work and working together to develop way to keep their valuable data secure.

He's reading your Facebook messages

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Air Traffic Control: How to Save Money Without Compromising Services

USA Today reports that air travelers have begun to experience delays resulting from air traffic controller furloughs, which took effect on Sunday in response to automatic federal budget cuts contained in the sequester. According to a statement from Alaska Airlines, the Federal Aviation Administration (FAA) expects “extensive ground delays ranging from 50 minutes to two hours and a reduction in flight arrivals of 30 to 40 percent at certain airports.”

Of course, there have been plenty of dire predictions about the effects of sequestration, and most have failed to come to pass. Perhaps that’s not surprising – after all, domestic discretionary spending is only falling back to inflation-adjusted 2009 levels, which isn’t exactly the end of the world. Yet air traffic controller furloughs look set to prove an exception to this general trend.

The problem is that the FAA has to cut 10% from its April – September payroll, and is doing this by requiring employees to take unpaid 8-hour furloughs out of every 80-hour pay period. The upshot is 10% staff shortages in all air traffic control facilities, including the busiest ones. Fewer air traffic controllers means that fewer takeoffs and landings can be handled safely, and that equals delays. As a spokesman for the Air Traffic Controllers union put it, “If you have 10 tollbooths and you only open eight of them, traffic is going to back up.”

None of this is to deny the need for real federal spending cuts. Whatever the president says, the United States really does have a spending problem, and a big one at that. But if the goal is to reduce spending on air traffic control, Reason’s policy experts have proposed a much better way.

Air Traffic Control from Anywhere to Anywhere
, which was released earlier this month, suggests combining the NextGen upgrade of air traffic control technology – which will mean air traffic controllers no longer need to be directly below the airspace they are managing – with the consolidation of air traffic control centers and Terminal Radar Approach Control (TRACON) facilities. By closing more than 100 existing air traffic control facilities, Reason’s plan would generate approximately $1.7bn in one-time savings, and save another $1bn a year going forward by increasing productivity and reducing maintenance and facility costs.
  
Better still, the study proposes shifting the cost of air traffic control away from taxpayers altogether by making the Air Traffic Organization (ATO) an independent entity, regulated at arms-length by the FAA, and allowing it to charge aircraft operators for its services (just like airports and other utilities) and issue bonds backed by this revenue stream. This model has been successfully used overseas for many years, in countries like the Australia, Canada, Germany, and the U.K. 

The crucial point here is that it is possible to significantly reduce spending without compromising services, provided you’re smart about it, and take a structural, reformist approach instead of imposing arbitrary, across-the-board cuts. This lesson extends far beyond air traffic control: indeed, sustainably balancing America’s books in the long run is going to require just such an effort, and on a much larger scale. For now though, air traffic control seems as good a place as any to make a start.

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New at Reason: Looking Back at the Last Year in State Government Privatization

The rollout of Reason Foundation's Annual Privatization Report 2013 continues today with the release of the State Government Privatization section—authored by Reason's Leonard Gilroy and Lisa Snell—which offers an overview of the latest on privatization and public-private partnerships in state government. Topics include:

  • State Budget Update
  • Privatization of State Lottery Management
  • The Emergence of Social Impact Bonds: Paying for Success in Social Service Innovation
  • California Pioneers Public-Private Partnerships for Private Operation of State Parks
  • Higher Education Public-Private Partnerships Update
  • State Liquor Privatization Update
  • Social Infrastructure Public-Private Partnerships Update
  • Child Welfare Privatization Update
  • State Privatization News and Notes

» Annual Privatization Report 2013: State Government Privatization
» Complete Annual Privatization Report 2013

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