Bridge Span 18-9: They Said It Best When They Said Nothing at All

For years, perhaps decades, or perhaps forever, Washington D.C. has been the butt of jokes with punchlines about how the political class talks and talks and talks while little gets solved. But sometimes Congress speaks by staying quiet. Sometimes doing nothing really is an actively made decision. Multiple U.S. Supreme Court justices seem to understand this even if pro-expansionist government advocates have repeatedly missed the point.

Several states, led by South Dakota, undertook a scheme to overturn current law, intentionally passing unconstitutional laws to bait the Supreme Court into acting. And it worked. In South Dakota v. Wayfair, heard by the Court last month, the Court was asked to determine whether in fact there are limits on state taxing authority or in other words, whether state authority to tax and enforce is as deep and broad as the internet. The real goal of South Dakota and others who support the state’s efforts is to remove any restraints on how far a state can reach into other states across the country to tax and regulate the other state’s citizens. To achieve their end they would have the Court create law where Congress has decided not to do so by overturning the current rules as governed by the earlier Supreme Court decision in Quill Corp. v. North Dakota. Those rules prevent states from collecting sales taxes on purchases made remotely, such as via internet, catalog unless the seller had a physical presence in the state.

During oral arguments the Court seemed skeptical. As Chief Justice Roberts pointed out, if Congress wanted to change the rules they had plenty of time and opportunity to do so. Congress could have already made a decision, the decision that the current standards for when a state can force the collection of tax and compliance with their rules have worked fine for the last twenty-six years and that the issue need not be revisited. Justice Breyer pointed out that in fact, at least several in Congress had spoken directly to the issue. He noted that three Senators and Congressman Goodlatte, chairman of the House Judiciary Committee, made clear that Congress was about to act but stopped when the Court moved to decide the Wayfair case. But the states did not want to compromise and it seems their own scheme is working against them.

Justice Kagan went even further in suggesting that Congress not acting may in fact be the action, “[U]sually, when somebody says something like that, that Congress has not addressed an issue for 25-plus years, you know, it — it gives us reason to pause, because Congress could have addressed the issue and Congress chose not to. This is a very prominent issue which Congress has been aware of for a very long time and has chosen not to do something about that. And that seems to make the — your bar higher to surmount, isn’t it?” Such questioning also implies that this is an area that should be left to Congress. Justice Kagan continued by pointing out that when the Court gets involved a binary option develops, Law or no law, whereas Congress has the capacity to craft a compromise that addresses the wide range of issues involved.

Justice Alito pulled on the same thread when he asked if the Court overruled Quill, ruling in support of South Dakota’s arguments, what incentives the states would have to continue to work for a congressional solution. Of course, there would be no incentive which is in large measure the strategy the states have pursued – to have their way without having to find solutions acceptable to all.

As Justice Breyer pointed out, if the fifty states were truly as united as suggested by South Dakota there is no more powerful group to move Congress. “And you are 50 states. If you do not have the power to get Congress to do something, I don’t know who would.”

In Justice Breyer’s point the truth is told – the states that support their pro higher tax, bigger government plan do not speak for the country. In fact, they speak for a small minority of the people. When constituents understand the legal scheme that has been underway the politicians tax agencies who crafted and pushed the cynical plan will have wished that they, like congress, had intentionally said nothing at all.

Bridge Span 18-8: Behold! The Free Market Works

Yesterday Comcast announced that it is in the market for buying most of the media assets of Twenty-First Century Fox for cash, preparing a bid to best Disney which already made an offer. The media will call this a “bidding war,” but the truth behind the hyperbole is that this is the free market operating as it should. The bidding highlights the robust competitive marketplace in online video.

This healthy level of competition can be seen across the technology and communications industries. Ironically Washington, D.C. seems to want to ignore such obvious evidence most recently with a Senate vote to reverse the FCC on its order to lift restrictions on the internet. That decision followed on the heels of what should have been widely understood as an embarrassing Senate hearing about Facebook. Nevertheless, despite the demonstrated ignorance the Senators involved in questioning during the hearing, the chamber has continued its sophistry asserting that competition is scarce.

But the desire of competitors to acquire Fox’s media assets should make plain at least this fact – that the technology and communications industries are highly competitive and filled with valuable assets, intellectual and otherwise. The daily fight is to bring the best to consumers to justify the value of those assets, or to add complimentary assets to drive even greater value to consumers. The value in this proposed deal is not just in the U.S. but around the world. Many of the assets up for sale are located globally.

That U.S. companies are growing internationally, either organically or through acquisition, typically indicates a strong industry and a strong U.S. economy. That is true in this case. Compare that to when international companies are buying up assets in the U.S., that is typically a signal that our economy is hurting and that the assets are a good buy…for someone else. Importantly, the international operations considered here would allow more effective competition in the robust global landscape by gaining some advantages of scale.

The owners, the shareholders, will have the final say in who can purchase the assets. They should act in their best interests as they are, in fact, the owners of the business, owners of the property that has been built and created in the private sector. The market is working. Sellers are wanting to sell, buyers are lining up with their best offers, the owners will make a decision in the best interest of the shareholders, and the U.S. economy will benefit with consumers winning, both here and around the world.

Bridge Span 18-7: A CRA and the Ghouls of the Senate

For two decades the internet hummed along, creating new opportunities for people, business, and ideas. For all that time, under both Democrat and Republican control, the FCC, following the clear lead of Congress as laid out in the 1996 Communications Act, pursued a light regulatory touch while staying out of the way of progress, innovation and invention. But, unfortunately in 2015, the FCC in the thrall of activists, abruptly changed course acted strictly along party lines and without citing any harm or unsolved challenges, placed the internet under heavy handed government control that went far beyond the principles of net neutrality and imposed the “Open Internet Order.”

This move “reclassified” broadband traffic as a Title II telecommunications service, meaning that broadband providers of all sorts would have to manage their systems, and be beholden, to government technology restrictions literally more than 70 years old. Those rules were created to regulate rotary dial telephones provided by a monopoly. Rarely has a better example of government hyper micro-management of an imagined potential future concern been conceived. Of course, the rules were never about solving a problem, fixing a broken process or protecting consumers. In fact, they placed consumers at risk as the new rules eliminated proven privacy protections for consumers. Instead the heavy-handed regulations were merely about placing one of the most innovative, vibrant sectors of the U.S. economy into the unrelenting grip of government control. Investment plummeted, consumers lost out on new innovations and privacy was placed at greater risk.

Thankfully, in 2017, the FCC moved to strike this approach, restoring the historical free and open internet. Restoring an internet to once again include a light regulatory touch while staying out of the way of progress, innovation and invention.

But now Senate Democrats want to return to those days of ill-conceived heavy-handed control and are willing to take advantage of the severely ill Senator McCain to get their way. Tomorrow, Senator Markey will begin the process of forcing a vote to overturn the light touch FCC rules using the Congressional Review Act. The Congressional Review Act empowers Congress to reverse a recently passed federal regulation and, if successful, the CRA vote blocks any future consideration of the rule so that agencies do not just pass the same rule again batting it back to Congress.

To pass, the CRA only requires 50 votes given Senator McCain’s absence, providing an advantage to those who merely want a political victory. The vote will largely be a piece of Congressional theatre, political kabuki in advance of elections, as the issue is highly unlikely to move forward in the House or receive a signature by the President. This fact makes the timing of the vote all the more unseemly, to exploit Mr. McCain’s medical absence.

Several political types, including some in the Senate, have done the right thing, such as Senator Graham, Joe Biden or Joe Lieberman who all have gone to visit with Mr. McCain as he recovers from recent hospitalization. Senator Chris Coons abstained from a confirmation vote for Mr. Pompeo out of respect to the absence and recovery of Senator McCain, allowing the nominee to move forward. Sadly, others scheme and ghoulishly leverage the brain cancer treatment, surgery and recovery, merely for political one-upmanship.

The end result of this game is only harm to consumers as their privacy protections are again ripped away, a massive decrease in investment and innovation, and one more severe blow to decency in the U.S. Senate. Any one Democrat, or more, could do the right thing. What is that?

There is no doubt that “net neutrality” is an issue that Congress must address. Congress is designed with the intent that it is the institution to project the will of the people. The FCC’s role has no such intent and the FCC no such design. We cannot afford to risk our future of health, communications, transportation, entertainment, work and education to those preferring social experiments above social success. But that said, the right format is a real debate on the subject, not a debate about an arcane procedure to reverse a reversal of a less than thoughtful administrative order.

Those who would show support to Mr. Markey should do so by doing all they can to force the Senate to consider net neutrality legislation during this session. At the same time they should leave the CRA opportunism behind.