CFA News Update - December 9, 2013
Administration Releases Salmonella Action Plan
Addressing a pressing food safety issue, the Food Safety and Inspection Service (FSIS) in the U.S. Department of Agriculture released a Salmonella action plan last week designed to reduce the incidence of illness from Salmonella in meat and poultry products. In a press statement praising the action, Chris Waldrop, Director of CFA’s Food Policy Institute, urged FSIS to maintain a dedicated and sustained focus on reducing illnesses from Salmonella and to expand its Action Plan to undertake additional activities.
FSIS’ Salmonella Action Plan is a first step in a comprehensive approach to address Salmonella in meat and poultry products, Waldrop said. However a number of the items listed in the plan are future possibilities rather than concrete actions. For example, the agency says that it will explore developing a new sampling program or consider implementing new standards. “While CFA understands that several items listed in the plan may require multiple steps, it would be helpful to know that these are specific activities that the agency intends to undertake rather than potential steps that may occur sometime in the future,” Waldrop said.
Waldrop noted that FSIS continues to push its controversial poultry slaughter proposal. However, numerous groups and members of Congress have urged FSIS to withdraw the agency’s proposed rule on poultry slaughter until critical food safety and worker safety issues can be adequately addressed. Several other important approaches were missing from the Action Plan. The Plan does not address a consumer group petition urging the agency to declare antibiotic-resistant strains of Salmonella as adulterants. Antibiotic-resistant strains of Salmonella are a particular threat to human health because they are resistant to many of the drugs normally used to fight infection, which reduces the medical treatment options available. Further, FSIS does not include a request that Congress provide the agency with enforceable performance standards, which are essential for the agency to effectively enforce its standards for Salmonella and other pathogens.
“Reducing Salmonella illnesses will take a substantial investment of time, effort, and resources if we are to see real progress. CFA looks forward to working with the agency as it focuses its activities on Salmonella,” Waldrop said.
Study Supports Limits on ‘Baby Bell’ Spectrum Acquisition
Addressing one of the most pressing issues facing the Federal Communications Commission (FCC), CFA issued a study last month showing that unaffiliated wireless broadband service providers offer products that are much more innovative and consumer-friendly than those of the “Baby Bells” they compete against. That finding reinforces the argument for limiting the amount of spectrum AT&T and Verizon can purchase in the upcoming auction of low frequency spectrum, said CFA Research Director and report author Mark Cooper.
The report, Comparing Apples to Apples: How Competitive Provider Services Outpace the Baby Bell Duopoly utilized recently released data from the New America Foundation’s Open Technology Institute. The study rated the services on factors directly relevant to the consumer experience, including: monthly bill, cost per megabit, download speed, upload speed, presence of a data cap, and type of data cap.
Comparing the wireless services offered by the Baby Bells (AT&T and Verizon) to the other wireless service providers (Sprint and T-Mobile), the report found that both non-Baby Bell U.S. wireless broadband service providers and non-U.S. wireless broadband service providers offer much more attractive service than services offered by Baby Bell wireless broadband providers.
“These findings reinforce our earlier analysis that placing limits on the amount of spectrum AT&T and Verizon can acquire in the upcoming auction of low frequency spectrum would strengthen competition and promote the public interest,” Cooper stated in a press release. “The wireless broadband services offered by Sprint and T-Mobile match the ‘Baby Bells’ in their limited offerings, but their ‘unlimited’ services deliver lower cost and allow consumers to escape from the overage fees and contract locks that the Bells impose.
“The finding that the dominant incumbents charge more and deliver less attractive services reinforce our earlier conclusions that they are abusing their market power and magnify the importance of adopting rules for the upcoming auction of low frequency (TV) spectrum that prevent the dominant incumbent providers from using their ill-gotten gains to freeze out the competition,” he added. “Since the Baby Bells already control a disproportionate share of the low frequency spectrum, rules that ensure a better balance in those spectrum holdings will be to the benefit of the consumer and the economy by strengthening competition in the wireless sector.”
California’s Prop 103 Has Saved Consumers Billions on Auto Insurance
Over the past quarter century, auto insurance expenditures in America have increased by 43 percent on average, with the median state, Wisconsin, seeing a 56 percent increase, according to a CFA report released last month. Examining state auto insurance rate regulation in every state, CFA found that only in California, where a 1988 ballot initiative transformed oversight of the industry and curtailed some of its most anti-consumer practices, did insurance prices fall during the period.
Releasing the report on the 25th Anniversary of Proposition 103, CFA Director of Insurance J. Robert Hunter stated in a press release, “On this silver anniversary we can report that the Proposition delivered over $102 billion in savings for California’s motorists, an average annual savings of $345 per household, or $8,625 per family over the entire period. This was the result of strong regulatory oversight and a more competitive market fostered by the 1988 insurance reform measure.”
In addition to achieving the only price drop over the last 25 years, the report also found the following benefits from Proposition 103:
- Insurers operating in California returned over $1.43 billion in premiums refunds (“rollbacks”) to over seven million policyholders under Proposition 103’s mandate.
- Proposition 103’s provisions spurred full competition and penalized collusive behavior by insurers, through imposition of the state’s antitrust law.
- Proposition 103 built strong incentives for safety into the initiative. Drivers with clean records gain a 20 percent rate discount. They also receive the right to buy insurance from the company of their choice through Proposition 103’s “Good Driver Protections.”
“Consumers across the country would be better served with a more robust, prior-approval system of auto insurance regulation than the system currently in place in most states,” said CFA Director of Financial Services Tom Feltner. “When drivers, particularly low- and moderate-income drivers, are required to purchase auto insurance, states have a responsibility to address the high cost of coverage.”
Immediately following release of the study, the insurance industry issued, in rapid-response style, multiple critiques of the study. Last week, Hunter presented the report findings and rebutted the various industry claims during the National Association of Insurance Commissioners’ Auto Insurance (C/D) Study Group Conference Call.
“Rather than confront the facts, the insurance industry is throwing the kitchen sink at our report hoping to steer regulators, policymakers and the public away from the very compelling data that show how good regulation of insurance companies provides the best results for consumers by lowering rates and enhancing competition,” said Hunter. While the insurance industry has made very little effort to substantiate its critique of the CFA report, CFA has prepared a detailed refutation of the industry’s responses.
Consumers Likely to Increase Holiday Spending
More consumers plan to spend more than last year, and fewer consumers plan to spend less than last year, according to the 14th annual holiday spending survey released last month by CFA and the Credit Union National Association (CUNA). From 2012 to 2013, the percentage who said they would spend more than the previous year rose from 12 to 13, while the percentage who said they would spend less declined from 38 to 32. These changes continue the upward trend from 2011, when only 8 percent said they would spend more while 41 percent said they would spend less.
“The survey suggests that holiday spending will increase at least as fast as last year. It is also encouraging that fewer Americans see their economic status as worsening, despite on-going federal budget issues in Washington,” said CUNA Chief Economist Bill Hampel.
Despite the overall good news, about one-half of survey respondents (51 percent) said “recent controversies over federal government spending and borrowing” had affected their holiday spending plans, including 18 percent who said it had affected their holiday spending plans “very much.” Lower-income families were more likely to be affected by federal budget problems than high-income families. “Lower-income households are more dependent on federal jobs and expenditures than high-income households,” noted CFA Executive Director Stephen Brobeck.
Top Financial Regulators Address CFA Financial Services Conference
Attendees at CFA’s financial services conference last week heard keynote speeches from leading federal financial regulators, including Federal Deposit Insurance Corporation Chairman Martin Gruenberg, Consumer Financial Protection Bureau Director Richard Cordray, Comptroller of the Currency Thomas Curry, Federal Housing Commission Administrator Carol Galante, and Securities and Exchange Commission Commissioner Luis Aguilar, as well as well-known economist Mark Zandi.