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Executives from energy drink companies take on Capitol Hill
Rising concern over the caffeine in energy drinks has been taken into account by not only the American Medical Assocation, who last month called for a ban on selling caffeine-laden drinks to children and teenagers, but the Senate as well.
On Wednesday, the giants of the energy drink industry took on Capitol Hill together in order to protest against claims that their products are dangerous to the health of young people. Red Bull, Rockstar, and Monster Beverage, all big names in the industry, argued that their products are not aimed at the younger generation.
The senior executives of the energy drink companies backed themselves up, citing several factors. Monster Beverage’s representative, Rodney Sacks, compared a 16-ounce can of Monster Energy to a similar-sized cup of Starbucks coffee, claiming the coffee had more caffeine than the energy drink. Sacks also specified that Monster’s main demographic is young, adult males, not children. On the other hand, Amy Taylor, the vice president of Red Bull North America, reiterated that while Red Bull is aimed at adults, the caffeine will now be limited to 80 milligrams per 8.4 ounces. As for Rockstar, the brand intends to remove any posts from social media sites that “encourage unhealthy consumption of energy drinks.”
Poison control centers have received thousands of calls this year alone relating to issues involving these caffeinated products, and numerous deaths over the years have been attributed to consumption of energy drinks. How will the tycoons of the energy drink business deal with the consequences if this continues to happen?
Economics Behaving Badly
IT seems that every week a new book or major newspaper article appears showing that irrational decision-making helped cause the housing bubble or the rise in health care costs.
Such insights draw on behavioral economics, an increasingly popular field that incorporates elements from psychology to explain why people make seemingly irrational decisions, at least according to traditional economic theory and its emphasis on rational choice. Behavioral economics helps to explain why, for example, people under-save for retirement, why they eat too much and exercise too little and why they buy energy-inefficient light bulbs and appliances. And, by understanding the causes of these problems, behavioral economics has spawned a number of creative interventions to deal with them.
But the field has its limits. As policymakers use it to devise programs, it’s becoming clear that behavioral economics is being asked to solve problems it wasn’t meant to address. Indeed, it seems in some cases that behavioral economics is being used as a political expedient, allowing policymakers to avoid painful but more effective solutions rooted in traditional economics.
Take, for example, our nation’s obesity epidemic. The fashionable response, based on the belief that better information can lead to better behavior, is to influence consumers through things like calorie labeling for instance, there’s a mandate in the health care reform act requiring restaurant chains to post the number of calories in their dishes.
Calorie labeling is a good thing dieters should know more about the foods they are eating. But studies of New York City’s attempt at calorie posting have found that it has had little impact on dieters’ choices.
Obesity isn’t a result of a lack of information instead, economists argue that rising levels of obesity can be traced to falling food prices, especially for unhealthy processed foods.
To combat the epidemic effectively, then, we need to change the relative price of healthful and unhealthful food for example, we need to stop subsidizing corn, thereby raising the price of high fructose corn syrup used in sodas, and we also need to consider taxes on unhealthful foods. But because we lack the political will to change the price of junk food, we focus on consumer behavior.
Or take conflicts of interest in medicine. Despite volumes of research showing that pharmaceutical industry gifts distort decisions by doctors, the medical establishment has not mustered the will to bar such thinly disguised bribes, and the health care reform act fails to outlaw them. Instead, much like food labeling, the act includes “sunshine” provisionsthat will simply make information about these gifts available to the public. We have shifted the burden from industry, which has the power to change the way it does business, to the relatively uninformed and powerless consumer.
The same pattern can be seen in health care reform itself. The act promises to achieve the admirable goal of insuring most Americans, yet it fails to address the more fundamental problem of health care costs. Instead of requiring individuals to pay out of pocket if they choose to receive expensive and unproven interventions, the act tries to lower costs by promoting incentive programs that reward healthy behaviors.
Prevention is certainly a worthy goal it is much better to prevent a case of lung cancer than to treat it. But efforts to improve public health, even if enhanced by insights from behavioral economics, are unlikely to have a major impact on health care costs. Studies show that preventive medicine, even when it works, rarely saves money.
Our over-reliance on behavioral economics is not limited to health care. A “gallons-per-mile” bill recently passed by the New York State Senate is intended to help drivers think more clearly about the fuel consumption of the vehicles they purchase research has shown that gallons-per-mile is a more effective means of getting drivers to appreciate the realities of fuel consumption than the traditional miles-per-gallon.
But more and better information fails to get at the core of the problem: people drive large, energy-inefficient cars because gas is still relatively cheap. An increase in the gas tax that made the price of gas reflect its true costs would be a far more effective though much more politically painful way to reduce fuel consumption.
Similarly, Prime Minister David Cameron of Britain recently promoted behavioral economics as a remedy for his country’s over-use of electricity, citing what he claimed were remarkable results from a study that reduced household electricity use by informing consumers of how their use compared to that of their neighbors.
Under closer scrutiny, however, tests of the program found that better information reduced energy use by a mere 1 percent to 2.5 percent modest relative to the hopes being pinned on it.
Compare that with the likely results of a solution rooted in traditional economics: a carbon tax would instantly bring the price of energy into line with its true cost and would unleash the creative power of the marketplace to generate cleaner energy sources.
Behavioral economics should complement, not substitute for, more substantive economic interventions. If traditional economics suggests that we should have a larger price difference between sugar-free and sugared drinks, behavioral economics could suggest whether consumers would respond better to a subsidy on unsweetened drinks or a tax on sugary drinks.
But that’s the most it can do. For all of its insights, behavioral economics alone is not a viable alternative to the kinds of far-reaching policies we need to tackle our nation’s challenges.
KPMG and Scott London: Long-Forgotten Devil's Deal Means Feds Are Unlikely to Bring Corporate Charges
KPMG LLP, one of the Big Four international accounting outfits, just got a bitter taste of what happens when a partner’s loyalty to the firm erodes. During a March 20 interview with the FBI, former Los Angeles-based partner Scott London admitted to passing confidential inside information about some of the firm’s audit clients to a friend, Bryan Shaw. Shaw reportedly admitted to trading on that information and making over a million dollars, a small portion of which he shared with London. The Wall Street Journal reported that KPMG Chairman and Chief Executive John Veihmeyer was “appalled” to learn of Mr. London’s “violations of trust.”
KPMG will likely be sued by its clients whose information Mr. London conveyed to Mr. Shaw. At the very least, KPMG is almost certainly going to have to return the audit fees, amounting to tens of millions of dollars, and the firm may be liable for other damages if the courts determine that the firm was in any way derelict in monitoring and supervising Mr. London, who was in charge of some 50 audit partners and 500 employees. But the feds are unlikely to make the firm’s plight much more difficult and uncomfortable than it already is, in part because of a little-known and long-forgotten deal between KPMG and the U.S. Department of Justice whereby the firm “cooperated” with the government and threw its employees and clients under the bus in order to avoid corporate prosecution, and likely ruin, growing out of an old tax shelter case.
The story begins around 1997, when KPMG started using particularly aggressive tax shelters for its clients, which produced some $124 million in fees for the firm by 2001. The US attorney in Manhattan opened a criminal investigation into these shelters, and, by February 2004, the feds told 32 past and present employees of KPMG they were the subject of a grand jury investigation. At first KPMG resisted, providing legal counsel for its employees and sending three of its partners to defend the shelters before a November 2003 US Senate hearing.
KPMG was right to defend itself: the line between legal “tax avoidance” and “tax evasion” is often unclear, and that was the case with these particular shelters. In key part, the indictment alleged that the defendants had criminally neglected to register the tax shelters with the IRS, yet hard evidence later revealed that there was considerable disagreement within the IRS itself as to whether these shelters had to be registered. As the Wall Street Journal wryly suggested at the time: “the finger-waggers in Congress might acknowledge their role in creating the 6,000-page, 2.8 million-word, tax code Frankenstein that facilitates the tax-avoidance industry.”
But the company’s courage would prove to be short-lived. As the DOJ increased the pressure to “cooperate” (one of the few ways for defendants to ameliorate their punishment), and after KMPG changed law firms, the company caved and began to negotiate a plea deal, a so-called “deferred prosecution agreement.” Based on the guidelines set out in Deputy Attorney General Larry D. Thompson’s January 2003 memorandum titled “Principles of Federal Prosecution of Business Organizations,” KPMG was expected to open its books and records, including those otherwise considered privileged, encourage employees to open up to the government, fire those who refused to do so, and refuse payment of employees’ legal fees even if a promise to pay those fees was part of an employment contract. (This latter provision turned out to be unlawful when the employees challenged it in court.)
In its settlement with the DOJ, KPMG further agreed that the firm would admit that the tax shelters were fraudulent. KPMG would “make available its recent and former partners and employees to provide information and/or testimony” at the government’s request. The firm waived all privileges, including the attorney-client privilege, and gave the government full access to its records and memos, even taking onto its staff a government-approved compliance monitor. The DOJ would have sole discretion as to whether KPMG was following the vague terms of the agreement and could reopen the prosecution at any time. And so the Sword of Damocles hung perilously over the firm as it became the DOJ’s partner in pursuing its erstwhile employees and others.
In a remarkable provision of its settlement, KPMG also agreed to the appalling condition that its employees and lawyers would not “make any statement, in litigation or otherwise, contradicting the Statement of Facts or its representations in this Agreement.” In other words, to the extent that KPMG witnesses agreed to sing, they were not to deviate from the government’s required oratorio.
Two months after KPMG signed the deferred prosecution agreement with the DOJ, prosecutors predictably issued a superseding indictment, adding ten additional defendants and 45 new counts, including charges of obstruction of justice and making false statements. Without the company’s protection and deep pockets for legal fees, the individual defendants tumbled like dominoes, pleading guilty and cooperating with the feds despite the government’s weak, legally controversial case as to the tax shelters.
So even though KPMG lived and prospered, protected by a devil’s deal, its employees were left to fend for themselves. Now that an employee has turned the tables and betrayed the firm, it is tempting to see some kind of morality play buried within. But morality has little to do with the relationships that the federal government builds with its cooperators. In the aftermath of the tax shelter imbroglio, after all, the Department of Justice agreed, as part of its settlement with the firm, that KPMG would continue in its role as auditor for the DOJ itself.
(KPMG’s dealings with the Department of Justice were originally detailed by Silverglate in his 2009 book Three Felonies A Day: How the Feds Target the Innocent. This piece was co-authored with Silverglate’s paralegals, Juliana DeVries and Zachary Bloom.)
Wall Street Rise Shows Corzine Was Iconoclast
When he surfaced 14 months ago as a contender for the United States Senate, Jon S. Corzine seemed to have come out of nowhere in a cloud of dust and dollar bills.
Mr. Corzine, 53, the former co-chairman of Goldman, Sachs & Company, is running solely on his record in business, but voters have been given little information about it. His opponent in the Democratic primary on June 6, former Gov. Jim Florio, asserts that Mr. Corzine left a trail of financial victims around the globe. Mr. Corzine defends himself but has revealed little else about his background. He says he remains bound by an ironclad confidentiality agreement, and has refused to release his tax returns.
But interviews with Mr. Corzine and his former colleagues suggest that in his quarter of a century at Goldman Sachs he was a bundle of contradictions: a trader with a conscience, a capitalist icon with a socialist streak as wide as Wall Street, the head of one of the financial industry's most secretive and profitable institutions who was so generous that, the story goes, if you so much as bumped into him in the hall he practically begged you to take a $5,000 donation to your favorite charity.
Mr. Corzine followed one of the most humiliating exits in the history of high finance -- in January 1999 he became only the second chief executive to be ousted in the firm's 130-year history -- with an audacious political conceit: despite giving hundreds of thousands of dollars to Democratic candidates over the years, he had never run for so much as the City Council in Summit, where he lives, and was unknown to all but a few New Jersey politicians.
But, like the steely bond trader he had been in the 1970's and 1980's, once he assessed the risks and decided on his course, he threw everything he had into his campaign, including a determination that borders on hardheadedness and a large part of his $400 million fortune.
This much is certain: Mr. Corzine had been laying the groundwork for a political career throughout his rise to power and ultimate downfall at Goldman Sachs.
A native of Illinois, Mr. Corzine went to Goldman in 1975 with a master's in business administration from the University of Chicago and a year's experience as a bond trader in Ohio. He joined Goldman's fixed-income department, a backwater that had never made any money, which he calls a lucky opportunity. ''I was there as a young, bright guy, and ended up making it successful,'' Mr. Corzine said, 'ɺnd much more important to the firm.''
Janet Tiebout Hanson, who joined the department in 1977, said Mr. Corzine inspired devotion among his troops by remaining calm during even the most disastrous market meltdowns.
''He was soft-spoken, but he wasn't wimpy,'' said Ms. Hanson, who spent 10 years working three desks away from Mr. Corzine. She now runs her own asset-management firm. ''I used to stand there and watch Jon do half-billion-dollar transactions in a single trade. This was how he, on a daily basis, earned the respect of traders. He didn't have to yell, scream or throw things, like some other people did.''
Mr. Corzine's unusual ''people skills'' may have had something to do with his ambitions beyond Wall Street. Robert E. Rubin, the former treasury secretary who was co-chairman of Goldman from 1990 until he joined the Clinton administration in 1993, remembers Mr. Corzine's confiding in him in the early 1980's that he wanted to run for Congress someday.
''I was surprised,'' Mr. Rubin said. ''Obviously, being a congressman is a very important thing, but it's a very different thing.''
As his department ballooned from 80 to nearly 2,000 people and provided more and more of the firm's profits, Mr. Corzine shot up through the ranks. He was made a partner in just five years and given a seat on the management committee in 1985.
His performance during a nearly catastrophic episode in 1986 made his reputation and ''singled me out as a likely future chairman,'' Mr. Corzine said. The crisis arose when Japanese holders of one issue of government securities failed to adhere to custom and exchange them for a newer issue, meaning that the price of the older securities did not fall, as it ordinarily would have. Goldman, like other Wall Street firms, had bet that the price would drop, and when it did not, the firm's paper losses quickly soared into the hundreds of millions of dollars.
''We were getting our tails kicked,'' Mr. Corzine said. ''So I came out of my office as a manager, rolled up my sleeves and went back to trading.''
Convinced that the situation would resolve itself in time, he persuaded Goldman's leaders to hold fast, even as he traded nearly round the clock to maintain the firm's ability to benefit from an eventual turnabout. After five months, he was proven right. 'ɺnd instead of losing hundreds of millions'' -- as other firms had -- ''we ended up making an equivalent amount,'' Mr. Corzine said.
Mr. Corzine's rise culminated in 1994, when he was named to succeed Stephen Friedman, the firm's senior partner, who resigned suddenly after enduring seven months of heavy losses in bond trading. ''Trading had become such a big part of the business that Goldman had to have someone who understood that business,'' said Lisa Endlich, a former vice president who wrote a best-selling history of the firm, ''Goldman Sachs: The Culture of Success.''
In 1994, she said in an interview, the losses of tens of millions of dollars caused by Goldman's traders had opened a deep rift between them and its risk-averse investment bankers. Mr. Corzine, she said, was a natural choice to put the pieces back together. 'ɺ more strident individual might not have been able to heal those wounds,'' she said.
By all accounts, Mr. Corzine was about as touchy-feely as they come on Wall Street. In a forest of pinstripes and power ties, he wore a beard and sweater vests. In a world where rank, wealth and ego are often interchangeable, he was as chummy and sincere with chauffeurs and waiters as he was with his peers. ''He's always somebody who would go out with his employees, sit and talk with them, or drop by for a drink,'' Ms. Endlich said.
He was also famously generous, writing checks to charities, no questions asked, and stepping in to help those in need. When he learned that a secretary who worked late every night was having trouble paying her mortgage, he took over the loan, then helped pay her son's college tuition.
He talked a Goldman messenger into going back to school and paid his tuition, too, asking only to see the man's report cards. His financial disclosure form as a Senate candidate lists two personal loans, which Mr. Corzine said he was forgiving. One, for more than $500,000, was to the widow of a good friend. Another, for more than $15,000, is to a schoolteacher who moonlighted as a chauffeur and drove Mr. Corzine home every night.
Mr. Corzine, who had made Ms. Hanson the firm's first female sales manager, showed his progressive bent as chairman by spurring Goldman to recruit and promote blacks and women. And he expanded a one-day-a-year volunteering program to the firm's offices worldwide.
But his signal achievement was prodding Goldman Sachs to go public. The move, for which Mr. Corzine campaigned relentlessly, eventually, at his insistence, enriched even secretaries and clerks, but ultimately cost him his job.
Repeated attempts to make a stock offering over the decades had failed. There was a generation gap, in that junior partners who had smaller stakes in the firm would receive far less than older partners. And many feared that the firm's insular, secretive culture would be lost. But Mr. Corzine believed that after the upheaval of 1994 the firm needed the stability and flexibility that public ownership would bring.
His colleagues say Mr. Corzine worked Goldman's headquarters like a political pro, cajoling and glad-handing for support. But his first attempt at a stock sale was a failure: in 1996, he brought the proposal to a partnership vote, but withdrew it at the last minute when he realized that he had little support. Some colleagues viewed this as a terrible blunder others say it was a master stroke, recalling that Mr. Corzine was given a standing ovation, and that he won changes in the firm's management structure that would help pave the way for an initial public offering.
Mr. Corzine made two more changes that proved costly. In 1998, another year of heavy trading losses, he relinquished sole control over Goldman Hank Paulson, the firm's vice chairman who had long resisted an I.P.O., was elevated to co-chairman and became a cautious supporter of a stock sale. Another change Mr. Corzine made, this time in the name of efficiency, was to pare down the executive committee to just six members, including himself.
But the shrunken committee led to his undoing: in January 1999, a few months after one of Mr. Corzine's two closest allies on the committee retired, Mr. Corzine was forced to step down as co-chief executive by Mr. Paulson and two of the other members. He kept the title of co-chairman until the public offering was completed in May 1999, when he resigned, taking with him 4.4 million shares of stock.
Mr. Corzine said there were three 'ɼonflict points'' between him and his opponents on the executive committee: the I.P.O. itself, the firm's philanthrophy, and its responsibilities to the financial system. He notes that while he sought to carve out $500 million from the stock sale to endow a charitable foundation, the amount was lowered to $200 million when the firm finally went public in 1999.
But former colleagues say Mr. Corzine erred by behaving like the head of a public company before Goldman had become one. At times, he could seem a loose cannon, failing to build consensus before pushing ahead. The last straw may have been his role in a $3.6 billion bailout of Long Term Capital Management, the hedge fund based in Greenwich, Conn.
In a few weeks beginning in August 1998, the fund lost billions. Mr. Corzine and the heads of other firms, as well as the president of the New York Federal Reserve Bank, feared that a fire sale of the fund's assets could take down several Wall Street houses as well. Taking the lead, Mr. Corzine committed $300 million of Goldman's money. He viewed this as the firm's duty to the financial industry. Others at Goldman, he said, ''wanted to walk away.''
Mr. Corzine's opponent in the Senate primary, Mr. Florio, has sought to lay at Mr. Corzine's feet every controversial deal Goldman was involved in during his years as a manager and chairman of the firm. And Mr. Florio has had plenty to choose from: Goldman paid $253 million in 1995 to settle a lawsuit charging that it conspired with Robert Maxwell, the British publishing magnate, to defraud pensioners, rather than risking a jury verdict in 1998, Goldman rushed into Russia to raise more than $1 billion for that country's nascent capitalists, pocketed huge fees, then stood by as bondholders were left with nearly worthless paper and it remains indirectly linked to two companies involved in a pipeline venture in Sudan, a deal that critics say is funneling money to a government at war with its own people.
Mr. Corzine defends himself in each case, saying that he was an early and outspoken advocate for the Maxwell settlement, and that the firm's more controversial overseas activities nonetheless had the blessing of the United States government.
But he has done little to make his business background clearer, resisting Mr. Florio's daily demands that he divulge his personal income tax returns. Some answers have seemed politically obtuse: he reacted to accusations about Goldman's connections to gun makers by defending the need for the police and the military for well-made weapons.
In Mr. Corzine's eyes and in the eyes of his former colleagues, his legacy has far more to do with his efforts to take Goldman public, which may provide lessons about the sort of politician he would become. As chairman he was an optimist, an idealist and an expansionist, so much so that he provided his detractors in the top ranks with ammunition to use against him. By the time they acted in January 1999, after a reprise of the trading losses of 1994, Mr. Corzine had exhausted whatever political capital he had with his fellow executive committee members.
''If I wanted to stand there and tear the firm apart, we could've had a plebiscite to decide my fate,'' Mr. Corzine said.
But he said he closed the books on his career at Goldman knowing he had accomplished his principal goal. And if he had used up all his influence in doing so, so what? ''Political capital, unused,'' he said, ''is irrelevant.
''It's to accomplish things. It's to get things done.''
Joe Biden’s Texas backers in Congress defend White House hopeful amid sexual assault allegation
10:04 AM on May 21, 2020 CDT
WASHINGTON — Former Vice President Joe Biden’s supporters in Texas’ congressional delegation are defending the Democratic presidential nominee over a sexual assault allegation recently made public by one of his former aides.
Biden has repeatedly and unequivocally denied that he assaulted Tara Reade when she worked in his Senate office in the early 1990s.
His endorsers in the Texas delegation are pointing to that response, along with several extensive media investigations into the allegation, to reiterate their strong support for the Democratic Party’s choice to take on President Donald Trump in the November election.
Many of those Texans are also citing their interaction with Biden over the years.
“I know Vice President Biden’s character personally — for 30 years as a senator and eight years as Barack Obama’s vice president,” said Rep. Eddie Bernice Johnson, a Dallas Democrat who is the dean of the Texas congressional delegation. “I appreciate how he has handled this.”
She continued: “He took the allegation seriously, respected Tara Reade’s right to speak out and then called for full transparency.”
The allegation has jolted the 2020 presidential race, particularly in the wake of the #MeToo movement that helped in recent years to bring many prominent men in politics, media and sports to account over their treatment of women.
Republicans have sought to highlight the claim, even as Trump once bragged about sexual assault — an episode he downplayed as “locker room talk” — and previously faced sexual misconduct allegations from multiple women. He denies the allegations.
Many in the GOP have zeroed in on potentially vulnerable Biden backers, such as freshmen Democratic lawmakers like Dallas Rep. Colin Allred and Houston Rep. Lizzie Fletcher.
The National Republican Congressional Committee, the House GOP’s campaign arm, recently accused the two Texans of having “stayed silent” about the Biden allegation and asked if their “previous support for victims [was] predicated on those victims not accusing Democrats.”
Allred, in response to questions The Dallas Morning News sent to every Biden endorser in the Texas delegation, offered the former vice president his “strong support.”
“Allegations like these always need to be taken seriously,” said Allred, who in 2018 unseated a longtime GOP lawmaker. “Vice President Biden has vehemently denied the claims and encouraged the media to look into them, and I agree with that call to action.”
Fletcher didn’t respond to a request for comment.
The former aide, who worked in Biden’s Senate office for less than a year, was among women who last year said Biden made them uncomfortable by touching their neck or shoulders. But at that time, she didn’t mention any alleged sexual assault.
Her account changed earlier this year, when she said that Biden had pinned her against a wall in a Senate hallway and reached up her skirt.
“I don’t really care if people believe it or not, I’ve had to live with it,” Reade said in a recent interview with Megyn Kelly. “And it’s just one of those things that’s impacted and shattered my life and changed everything about my life.”
Some of Reade’s family members and friends have publicly corroborated her account. Dozens of other Biden staffers — from Reade’s era and beyond — have disputed the allegation or said that they do not recall anything like that happening during their time working for Biden.
Biden addressed the allegation in early May, saying that “unequivocally it never, never happened.” He said on MSNBC in mid-May that he didn’t even remember Reade from her time on his staff and again reiterated that nothing like the alleged attack “ever happened.”
He also said that “women have a right to be heard, and the press should rigorously investigate claims they make.” But "ultimately the truth matters,” he said.
His backers in Texas’ congressional delegation echoed that sentiment.
“He made it clear that women should be able to come forward and be heard and not silenced but that all allegations should be subject to scrutiny — which is exactly what has happened in this case,” said Rep. Henry Cuellar, D-Laredo.
Rep. Sylvia Garcia, D-Houston, said Biden has “nothing to hide.”
“All women should be heard when they make an allegation of sexual misconduct and should be treated with dignity and respect,” said Garcia, who’s been floated as a potential running mate. “In this case, it is important that we look at all the facts.”
Rep. Veronica Escobar, D-El Paso, was direct.
"I believe Vice President Biden,” said Escobar, who’s also been mentioned as a potential veep.
Republicans have accused Democrats of hypocrisy in their treatment of Biden. They’ve sought to compare him to now-Supreme Court Justice Brett Kavanaugh, whose nomination faced fierce Democratic opposition after he was accused of sexual assault.
Texas Sen. John Cornyn, a Republican up for re-election, recently told Politico that “what is so appalling is the double standard.”
“I still remember where they thought due process was a joke and didn’t apply to Brett Kavanaugh,” he said. “Somehow, they think now due process should be applied to Joe Biden.”
The Texas Democrats queried by The News didn’t directly address that type of criticism. But many of them defended Biden by citing his policy track record and their personal relationships with him.
Rep. Filemon Vela, D-Brownsville, said he believed Biden’s “denial of the allegations because I know him and he is an honest person.” Rep. Vicente Gonzalez, D-McAllen, said Biden has “devoted much of his life’s work to ending violence against women.”
Rep. Marc Veasey, D-Fort Worth, said Biden’s “record speaks for itself.”
“The vice president is also one of the most honorable men that I know and I still fully stand behind him,” he said.
Denton fracking ban quickly draws two lawsuits after passing
A day after voters decided to make Denton the first city in Texas to ban hydraulic fracturing, the reaction by the energy industry and government was swift.
By 9:09 a.m. Wednesday, both the Texas Oil and Gas Association and the Texas General Land Office had filed lawsuits to prevent the city from enacting the ordinance in 30 days. And politicians in Austin are already drawing up legislation to make such bans illegal.
Denton has now joined the ranks of towns like Longmont, Colo., and Dryden, N.Y., which have fought to stop the decadelong U.S. shale drilling boom from entering their communities.
In just five years, U.S. oil production has increased 40 percent to 7.5 million barrels a day and created a huge economic boom across regions of Texas, North Dakota and Pennsylvania. But for residents living in and around the fields, it has also meant enduring heavy truck traffic and the steady hum of drilling rigs.
“Some sets of residents are going to prefer [fracking] doesn’t happen in their backyard. That’s not an uncommon perspective. But it is unusual it happened in Texas,” Aubrey McClendon, the former CEO of Chesapeake Energy who helped usher in the shale drilling boom, said in a speech Wednesday.
The question now is whether Texas, the unofficial home of the U.S. energy industry, will allow a town in one of its richest natural gas fields, the Barnett Shale, to buck the industry.
Both lawsuits filed Wednesday argued that the ban was illegal under Texas law, which gives authority to the state not only to regulate the oil and gas industry but also to ensure resources are fully exploited.
“No locality has the power to say this activity is not going to take place within our limits,” said Tom Phillips, an attorney representing the oil and gas association and a former chief justice of the Supreme Court of Texas.
Similar arguments have had mixed success in court in other states, attorneys say. New York’s highest court upheld municipalities’ ability to supercede state law and ban fracking. Colorado and West Virginia courts have ruled against such authority at the local level.
Texas towns have long regulated drilling to a certain degree. In Denton, for instance, there is a rule requiring new wells to be drilled at least 1,200 feet from homes the fracking of existing wells was found to be exempt.
“You’ve got a history in Texas of local regulation of oil and gas development,” said Kate Sinding, an attorney with the Natural Resources Defense Council. “There are 50 flavors where the courts are on this. The way this ends up getting resolved is a result of each state’s constitution and case law.”
On Wednesday, key lawmakers in Austin said they were considering drafting legislation to clarify in law that oil and gas regulation is in the hands of the Texas Railroad Commission.
But writing such legislation creates a conundrum for Republicans, who have traditionally championed local authority. Rep. Phil King, R-Weatherford, who sits on the House energy resources committee, said any legislation would be written in a “collaborative manner.”
“There is a role for cities, and I think we need legislation to clarify what that role is. But ultimately, the final arbiter of regulation for oil and gas has to be the Railroad Commission,” he said.
The Denton case is expected to end up before the state Supreme Court. And were that to happen, Texas being Texas, legal experts say, Denton faces an uphill climb.
“I have no way on knowing how the state Supreme Court would handle this. But generally speaking, they’re very deferential to mineral rights,” said Melinda Taylor, a professor at the University of Texas School of Law.
Many Texas landowners rely on oil and gas royalties for income. One of them is the state itself. The Land Office manages state oil and gas leases, which funneled $1.2 billion to public eduction in Texas this year.
For now, there’s still hope in some corners that a compromise can be reached. In the Texas Senate, Troy Fraser, a Republican from Horseshoe Bay and chairman of the natural resources committee, urged the industry and the Texas Municipal League to “find common ground, which can result in legislation that will protect all rights of property owners.”
But such a deal would have to rise above years of bad blood. Before the ban passed Tuesday, Denton and the natural gas industry went back and forth for years trying to find a balance on drilling rights.
“If they can soften this in some respect, it might get worked out. But given the public statements, it’s going to be pretty tough for [Denton] officials to change the ordinance at this point,” said John B. Strasburger, a commercial litigation attorney in Houston.
Is Big Soda winning the soft drink wars?
Without most of the nation noticing, the beverage industry has found a way to snuff out local sugar taxes—by squashing them at the state level.
When the mayor of Philadelphia unveiled his battle plan against sugary sodas, it looked like he was riding a national wave. The year was 2016, and one city after another was trying to fight obesity by nudging their citizens away from cheap, high-calorie drinks. In a speech to the City Council unveiling his first budget, Mayor Jim Kenney declared his plan to pay for a host of city initiatives with a new tax on every ounce of soda.
“This was a fight we thought was worth having,” said James Engler, Kenney’s chief of staff.
For a decade, concern had been rising in the public health world that soda’s superfluous calories were fueling an epidemic of obesity and diabetes, and supporters in Philadelphia and elsewhere embraced local taxes as a win-win—a way to encourage healthier choices while also generating some new money to help communities with high obesity rates. In California, Berkeley had passed a soda tax in 2014. Oakland, Boulder and Chicago would soon take up their own laws.
In Philadelphia, the soda industry poured more than $9 million into fighting the new tax, to no avail. The City Council passed the law in June 2016, and Philadelphia began collecting 1½ cents for every ounce of soda sold—boosting the price of a 12-ounce drink by 18 cents, and far more on big convenience-store cups. Soda companies, represented by the American Beverage Association, appealed the law, and the case went all the way to Pennsylvania Supreme Court—where the city won.
Opponents of Philadelphia’s proposed soda tax demonstrate outside City Hall in May 2016. The beverage industry has discovered that it’s far more expensive to fight soda taxes at the city level and has refocused its efforts to block soda taxes in state legislatures. | Matt Rourke/AP Photo
That might have seemed like the end. But it was only the start of a whole new fight. Starting in 2017, the beverage industry changed tactics and opened a new front at the state capital in Harrisburg, spending considerably less money—less than $2 million—on an influence campaign to get the state’s business community to put pressure on their legislators. The goal was no longer just to quash Philadelphia’s tax: It was to pass a new state law that would prohibit any city in Pennsylvania from passing a local soda tax.
And that fight is still very much alive. One version of the bill failed in 2017, and a similar measure is before legislators this year, with the lobbying effort led by a major grocery chain allied with beverage manufacturers who spearheaded the earlier version.
“They don’t want to just stop us from doing it now,” Engler said in an interview. “They want to make sure it wouldn’t happen anywhere else, either.”
Pennsylvania has found itself the latest battleground for a national strategy by soda producers aimed at stopping local taxes on their products—not by fighting the cities directly, but by pushing pliant state legislatures to ban any such tax increases statewide. Called “preemption” laws, they’re designed to limit cities from imposing taxes of their own. Legislatures in Arizona and Michigan have already passed state laws forbidding local soda taxes. In Washington state, the industry backed a voter initiative barring local soda taxes it passed in 2018.
Perhaps the industry’s most remarkable success has been California, a progressive state in which multiple cities passed their own soda taxes in the wake of Berkeley’s first-in-the-nation law and additional cities were ramping up campaigns. There, the industry used the statewide initiative system as leverage over lawmakers: It collected enough signatures to put a measure on the state ballot that would prevent any city or locality from imposing any tax on residents, no matter what the reason, unless approved directly by two-thirds of voters. The lobby then offered to withdraw the measure from the ballot if legislators simply passed a law stopping local governments from taxing soda. Faced with a potential new law that could have crippled budgets statewide, they complied. California’s preemption law went into effect in 2018—ensuring that, until 2030, the only cities in the state with extra beverage taxes are the handful, like Berkeley, that have already adopted them.
Signs in supermarkets in Seattle, top, and Philadelphia, bottom, inform consumers that city soda taxes have been applied to the sugary beverages on sale. | Lisa Baumann/AP Photo Matt Rourke/AP Photo
In its nationwide push against soda taxes, the beverage industry makes two main arguments: One, the health benefits of taxing soda are overstated and two, the taxes put an unfair burden on small businesses and shoppers. “We are definitely solidly behind preemption efforts because this is a very damaging tax to consumers, working families and small businesses,” ABA spokesman William Dermody said in an interview.
Beyond that, however, its campaign trades on a basic insight about modern American politics: Although the liberal leadership of American cities might be a hard nut for a pro-business lobby to crack, state legislators are often far more friendly to business, and they often have the power to overrule city laws. And it’s often much cheaper to lobby in capitals like Harrisburg, Sacramento and Springfield than to wage a fight in expensive cities.
A study published earlier this year found that at least 12 states have enacted preemption laws aimed at squashing local anti-obesity measures including soda taxes four states have specifically outlawed soda taxes and three other states have considered preemption laws in the past year.
“When you have a conservative state and a progressive city within that state, it becomes challenging,” said Pennsylvania Rep. Donna Bullock, a Democrat who supports Philadelphia’s tax, “because the conservative lawmakers use preemption to control progressive cities.”
THE SODA INDUSTRY'S preemption strategy largely has gone unnoticed on the national level, in part because state legislatures tend to draw less attention than policy fights in Washington and in big cities, and in part because beverage companies often obscure the real focus of the laws by framing them as opposition to “grocery” taxes. They also enlist grocers associations, local farm bureaus and retailers as allies to make it appear that the opposition is local, even though the campaigns draw significant funding from the national association.
Public health groups, which are often local, find themselves outgunned against an organized national strategy, and tend not to have the resources to play defense in multiple state capitals at the same time.
There are a few exceptions, including the American Heart Association, which has been actively pushing for soda taxes nationwide. But even with a national network of lobbyists, it has been outspent and outmaneuvered in state after state. “[H]aving to defend against preemption has become part of our strategy,” the AHA’s Jill Birnbaum told POLITICO. She said this approach is playing out in virtually every state where her organization is pursuing soda taxes.
Another national player is former New York Mayor Michael Bloomberg, the billionaire who became the face of anti-soda policy with a failed 2012 attempt to ban large sodas in New York. His organization now goes head-to-head with the beverage lobby in state and local campaigns, pouring more than $17 million into a trio of California ballot initiative campaigns, including the Oakland soda tax fight. He also put millions toward trying to defend a tax in Cook County, Illinois, that includes much of greater Chicago (unsuccessfully) and Philadelphia’s tax (successfully, so far). His money also helped beat back a preemption ballot initiative in Oregon. In Washington state, where the industry-backed preemption initiative prevailed, Bloomberg didn’t get involved.
Public health activists, top, hold signs in favor of San Francisco’s soda tax during a rally in 2014. Former New York Mayor Michael Bloomberg, bottom, has helped fund some campaigns for anti-obesity measures including soda taxes, but spending by him and other advocates has been dwarfed by lobbying by the beverage industry. | Justin Sullivan/Getty Images Eric Risberg, File/AP Photo
Dermody, the spokesman for the American Beverage Association, said in an interview that the preemption push has gained urgency in the past few years. He pointed to an ultimately unsuccessful 2017 Santa Fe soda tax proposal that drew the support of the city’s political establishment as “one of those turning points” in the larger debate.
“I think a lot of folks in other cities and towns started to pay attention to it,” Dermody said, because the New Mexico effort underscored the idea that “my gosh, this could happen anywhere.”
In its push against soda tax, the beverage industry is acting in concert with business owners and in some cases labor groups, like truck drivers, that worry about the impact if taxes start to cut down on soda sales. “We back all of these measures, but they’re backed by many other folks in the states at the same time,” Dermody said.
In Harrisburg, the preemption push has been driven by both the ABA and the Wakefern Food Corporation, which operates grocery stores in Pennsylvania. Anthony Campisi, who has lobbied on the chain’s behalf, said there’s a natural alignment of interests between the beverage manufacturers and the stores that sell their products carbonated beverages are an important source of revenue, particularly for convenience stores.
“What the beverage tax has done is essentially made it very hard for those stores, particularly in poor urban neighborhoods, to succeed,” Campisi said. “It really does it make it difficult to keep stores open in poor urban neighborhoods when there’s a massive tax on a core area of the business.”
While public health experts say the efficacy of soda taxes is well-established, the beverage industry points to contradictory evidence. Despite adopting a national soda tax in 2014, Mexico’s adult obesity rate rose from 2012 to 2016, Dermody noted, and research has shown that while consumption declines in areas with soda taxes, the reduction is at least partially offset by augmented sales in nearby jurisdictions. A recent editorial in the Journal of the American Medical Association said it is “still unclear if these taxes improve health outcomes,” given the multiple factors causing obesity.
Proponents of soda taxes point to studies showing they help reduce consumption of sugary drinks. Proponents of San Francisco’s soda tax emphasize the connection between sugary drinks and diabetes, top, and a display outside New York City Hall, bottom, illustrates how much sugar is in soft drinks of various sizes. | Jeff Chiu, File/AP Photo Richard Drew, File/AP Photo
“If you tax beverages at an extremely high rate, do sales go down? Yeah. We’ve seen that happen. Do they improve public health, and does overall consumption of sugar go down? No,” Dermody said.
Despite the murkiness, the industry is worried. Both Coke and Pepsi identified soda taxes as “risk factors” in recent reports to investors. Pepsi’s filing described a global phenomenon, encompassing not just Seattle but Saudi Arabia and France, in which soda taxes would reduce demand and amplify the public perception “that our products do not meet their health and wellness needs.”
THE LOBBY HAS reason to be concerned: Whether because of taxes or health concerns, sugary beverage consumption has begun declining in the United States. The American Medical Association endorsed soda taxes in 2017. This spring, the American Academy of Pediatrics also threw its weight behind taxing soda to bolster public health.
Given the challenges of campaigning in liberal cities, it may have been inevitable the beverage industry switched to statehouses. It is certainly more economical.
Campaign finance numbers from California neatly illustrate the calculus. The American Beverage Association spent more than $30 million combined on failed attempts to beat back local soda taxes in San Francisco, Oakland, Berkeley and Albany, California. It cost a fraction of that to qualify the statewide initiative it used as leverage to push Sacramento into a deal that ended local soda taxes for more than a decade. The ABA channeled $8.9 million to the committee managing the initiative.
“What they did in California last year,” said Harold Goldstein, executive director of Public Health Advocates, “was a sign to me that this is part of a much more intentional national strategy.”
The shift to state preemption has alarmed public health advocates and their political supporters, who had spent years mounting a city-by-city effort to build a track record—and momentum—for public health policies designed to slow the obesity rate.
“The mindset of prevention folks on sugary beverages was, ‘We’re not going to win at the state level until we win a constituency and get some momentum at the local level’,” said Victor Colman, director of the Childhood Obesity Prevention Coalition.
Industries hoping to avoid regulation often find it easier to fight a single battle in a state capital than a series of skirmishes in cities, said Jennifer Pomeranz, a public health professor at New York University who has researched preemption. Distance works to their advantage, she argued.
“Local legislators are pretty attuned to the needs of their community members, so the industry has a harder time,” Pomeranz said, “but once you’re at the state level, legislators are a little more disconnected.”
The Philadelphia experience figured into the calculus in Michigan, one of several states in which preemption efforts have themselves been preemptive strikes. Rather than wait for local soda tax proposals to bubble up, opponents moved to eliminate the option before anything could be proposed.
In 2017, before any jurisdiction had floated a soda tax in his state, Michigan state Sen. Peter MacGregor introduced a preemption bill, saying soda taxes were “creating controversy in other locations, Cook County (Chicago) and Philadelphia for example.”
Birnbaum of the American Heart Association also said there were exploratory soda tax efforts underway in Detroit when the Michigan Legislature passed its preemption bill and crushed the possibility. Senators representing Detroit were among the few legislators who voted no.
In Arizona, state Rep. T.J. Shope introduced a preemption bill that was signed into law in 2018. As in Michigan, no city in Arizona had yet proposed a sugary beverage tax. But a November 2017 poll found broad public support for a statewide soda tax, and he suspected some Arizona cities were inclined to consider them.
A third-generation grocer, Shope said he was approached about sponsoring the preemption bill by soda industry representatives who were keeping an eye on the national landscape.
“I think they were probably looking for a state to take a stand,” he said.
IN 2018, California became the soda industry’s Rubicon. Because the state is both the nation’s largest economy and its biggest consumer market, economic and regulatory decisions there can have an outsize impact—particularly given California’s function as a liberal bellwether in which ambitious progressive policies are tested and then exported to other states.
Moreover, California offered the beverage industry some tools of direct democracy not available in other states, specifically the state’s ballot measure system. For a few million dollars, a sum that amounts to a rounding error for major corporations, interest groups can place a measure on the state ballot and then offer to pull it if Sacramento authorizes an alternative deal. As a result, it’s not uncommon in California for groups to launch a ballot measure that’s unpalatable to lawmakers or to an ideological rival, then forge a legislative deal that averts a costly campaign.
California has become the soda industry’s Rubicon, with the tide swinging for and against soda taxes in a legislative battle that’s been waged for several years. Top, a California state assemblyman drinks a soda on the floor of the capital in Sacramento. Bottom left, a soft drink machine in the basement of the California state capital building and bottom right, a convenience store owner rings up a soft drink purchase in San Francisco. | Rich Pedroncelli/AP Photo Rich Pedroncelli/AP Photo Jeff Chiu/AP Photo
A committee launched by another business group but ultimately funded largely by soda giants got a measure on the ballot that would have set a two-thirds popular vote threshold for local governments to pass new taxes—a change that Democratic lawmakers and allies like organized labor warned would be ruinous for local finances. Though the group’s name didn’t exactly trumpet the soda industry’s involvement—“Californians for Accountability and Transparency in Government Spending, a Coalition of California Businesses, Taxpayer Groups, Business Property Owners, and Beverage Companies”—the effort was universally understood as a beverage industry power play after the ABA kicked in nearly $9 million.
With a deadline to remove measures from the ballot closing in, organized labor and business groups struck a deal to remove the vote threshold measure from the ballot. The new language barring soda taxes was swiftly inserted into a budget bill, which lawmakers passed after railing against what they called industry extortion. Nascent soda tax campaigns in cities including Stockton and Santa Cruz evaporated.
Optimistic health advocates had hoped that California would become a cautionary tale of industry overreach, in part because lawmakers resented having their hands forced. Instead, it appears that the pendulum is still swinging in favor of the beverage industry. This year, every one of a batch of bills intended to combat obesity has collapsed, from taxing soda to slapping health warnings on cans to limiting portion sizes.
The medical groups backing the bills say they aren’t defeated yet: They plan to put a statewide soda tax measure on the 2020 state ballot, which could give them leverage to negotiate a deal with the soda industry.
But the legislative wreckage attests to the beverage industry’s favorable odds when it’s focused on statehouses. “You kind of feel like if it could happen in California,” Birnbaum said, “it could happen anywhere.”
Democrat Raphael Warnock Mocks Christians in Support of Gun-Control
USA – -(AmmoLand.com)- Running against Georgia Republican Senator Kelly Loeffler, Democrat challenger Raphael Warnock chooses to insult his way to the Senate.
Georgia lawmakers enacted the Safe Carry Protection Act in 2014. Due to the number of attacks in Gun-Free Zones, the Safe Carry Protection Act was created to give people The ability to defend themselves and not become soft targets in such places as churches, school zones, and government buildings. The bill passed the Georgia General Assembly, passing the House of Representatives by a vote of 112-58 and the Senate by 37-18. In typical left-wing fashion, many anti-gun advocates quickly labeled the bill the “Guns Everywhere Bill,” in the hopes of discrediting it and creating a false visual narrative for the irrationally fearful and uninformed anti-gun crowd.
For decades gun owners have tried to help gun grabbing legislators and anti-gun politicians understand the importance of self-defense in public places. Even given countless studies and public events showing guns being used to save lives, Anti-Gunners continue to ignore the truth.
According to a study called Armed Resistance to Crime: The Prevalence and Nature of Self-Defense with a Gun by Florida Criminologist Gary Kleck, potential lives saved by armed law-abiding citizens, exceeds 2 1/2 million per year in America alone.
On November 5, 2017, Stephan Willeford used his AR 15 to stop a heinous attack on Churchgoers at the First Baptist Church in Sutherland Springs, Texas. The gun grabbers used the event to push a white supremacy narrative and continued irrational fear around semi-automatic rifles completely negating the fact that a good guy with a gun saved innocent lives that day.
Jack Wilson, another good guy with a gun, was able to stop an attacker at the West Freeway Church of Christ near Fort Worth, Texas in 2020. If it wasn’t for Mr. Wilson, many more would have likely been killed. The anti-gun crowd used this situation to push for more gun regulations, completely ignoring the fact that it was a good gun that stopped the bad guy.
Consistent with the left-wing anti-gun agenda, Democrat Senate candidate Reverend Raphael Warnock continues to feed the minds of the misinformed, fearful, anti-gun crowd. Ignoring the evidence of guns saving lives in churches, Warnock makes fun of those who believe in self-defense.
In a video Warnock said “somebody decided that they had a bright idea to pass a piece of legislation that will allow for guns and concealed weapons to be carried in churches.”
It actually was a bright idea but Warnock was being sarcastic. He continued to mock anyone who would carry a gun in church, saying churches are the last place firearms should be allowed.
We often wonder how the anti-gun left can look reality in the face and deny it in support of their political agenda. As the years go by, it becomes clear that politics on the left side of the political spectrum is at the top of the hierarchical list of values higher than religion and even life itself. The left-wing agenda has consumed many who proclaim religion to be their highest value including Reverand, Rapheal Warnock who happens to be running for the Senate on January 5th 2020. Mocking those who want to be able to protect themselves, their families and their fellow parishioners may win him points among his Democrat peers, but doesn’t sit well with folks who value life over politics.
About Dan Wos, Author – Good Gun Bad Guy
Dan Wos is a nationally recognized 2nd Amendment advocate and Author of the “GOOD GUN BAD GUY” series. He speaks at events, is a contributing writer for many publications and can be found on radio stations across the country. Dan has been a guest on the Sean Hannity Show, NRATV and several others. Speaking on behalf of gun-rights, Dan exposes the strategies of the anti-gun crowd and explains their mission to disarm law-abiding American gun-owners.
To Protect Its Empire, ESPN Stays on Offense
ESPN likes to call itself the Worldwide Leader in Sports, and by most every measure it is in a league of its own.
The network produced 35,000 hours of programming in 2012, including at least half of all live athletic events televised in the United States. It is a prodigious cash machine, regularly generating nearly half of the operating profit of Disney, its parent company. Wielding its wealth, it buys the rights to nearly all it desires: $15.2 billion for “Monday Night Football,” $5.6 billion for Major League Baseball and $7.3 billion for a 12-year deal to broadcast the new college football playoff system, to name just a few. From its sprawling 123-acre campus in Bristol, Conn., ESPN operates seven national channels, an industry-leading Web site, a magazine and international sites like ESPNcricinfo.com, for cricket fans.
So it may be hard to imagine that the sports media conglomerate has arrived at one of the most precarious moments in its nearly 34-year life.
The more than $6 billion in cable fees flowing annually to ESPN from almost 100 million homes is threatened as growing numbers of consumers cut ties with cable providers to avoid rising bills for pay TV, turning instead to video streaming services. In Washington, a renewed push to undo the bundling of channels into cable packages and allow viewers to simply pay for those they want has even drawn the support of Senator Richard Blumenthal, who represents ESPN’s home state.
ESPN’s viewership numbers plunged earlier this year, and that was before the debut this month of Fox Sports 1, a 24-hour network funded lavishly by Rupert Murdoch’s 21st Century Fox. Fox Sports 1 is likely to shape up as ESPN’s most formidable head-to-head rival.
All of this, particularly consumers’ move away from pay TV, is reverberating in Bristol. “This is the most complicated environment we’ve faced in a long time,” said John Skipper, the president of ESPN.
But ESPN has shown over the past decade that it will fight tenaciously and opportunistically to protect an empire it built by using the billions of dollars it collected from cable fees to gobble up the rights to more and more sports events.
In the mid-2000s, ESPN’s appetite for programming was so voracious that the Justice Department looked into complaints that the network was engaging in anticompetitive practices — an inquiry that ESPN executives first acknowledged in recent interviews. The complaint centered on ESPN’s practice of buying rights to more college games than it had the capacity to televise, leading to accusations that by “warehousing” games, it was depriving colleges of exposure and other networks of potentially valuable programming.
Although no action was taken against ESPN, it began to share programming with the competitor that brought the complaint, and it went on to create ESPNU, a channel dedicated to college sports.
During the same period, Washington was leveling one of its periodic attacks on what Mr. Skipper calls ESPN’s “beautiful business model” — the rising monthly fee that now stands at $5.54, according to the media research firm SNL Kagan, and is paid by homes with expanded basic cable packages, almost all of which include ESPN.
With cable packages known as bundles under repeated attack, ESPN and Disney have gone on the offensive, making it one of their priorities in Washington. Beyond lobbying and campaign donations, they have hosted lawmakers in Bristol and in Burbank, Calif. They brought their stars to Washington, where ESPN, the network that turned competition into 24-hour fare, has often found an eager audience among political players.
“I was proud to call on senators, congressmen, F.C.C. commissioners, staff and talk about ESPN,” said George Bodenheimer, ESPN’s president from 1998 to 2012. “And by the way, many, many of those folks enjoyed talking about ESPN.”
Given ESPN’s usual reception in Washington, it was perhaps surprising that Mr. Blumenthal decided last month to co-sponsor legislation with Senator John McCain aimed at undoing bundles — a signal that the cable pricing debate had returned.
“The bill certainly puts consumers first and definitely requires the industry to make a change,” Mr. Blumenthal, a Democrat, said. “But on the whole, ESPN should fare relatively well, because it has an extraordinarily loyal customer base.”
Bundles are clusters of channels that media companies like Disney sell to cable, satellite and telephone companies. Disney’s bundle features the stations owned by ABC, as well as the Disney Channel, Soapnet and the seven national ESPN channels. Companies with powerful bundles like Disney’s have the leverage to add channels and negotiate for higher monthly fees from providers, which are passed on to viewers.
So powerful is the ESPN-fueled bundle that one veteran cable operator described negotiations with Disney as “total surrender.”
As ESPN has added costly programming, it has consistently been able to raise its fees and has used that money to outspend its competitors and sustain a media empire unlike any other.
A former ESPN senior executive recalled a gathering of his colleagues where “everyone toasted to the concept of compounding”— that is, increases in subscriber fees that several years grew at a compounded annual rate of 20 percent. The current $5.54 average monthly price for ESPN is more than four times the fee for the next most expensive national network.
But the main issue for bundle opponents in Washington and among consumer advocates is that while an expanded basic package offers subscribers a smorgasbord of programming for a single fee, they are most likely paying for channels they never watch. ESPN is a prime example. Of the network’s nearly 100 million households, an average of just 1.36 million viewers watched in prime time during the second quarter of this year. Although marquee programming like “Monday Night Football” drew big numbers, the average number of viewers over a 24-hour period in the second quarter was 713,000.
“There is no regulation that says, ‘Wait a minute, is it mathematically positive, or reasonable, for 75 million who don’t want ESPN to pay for the 25 percent who do, at a false price?’ ” said Barry Diller, the media executive who is backing the technology of a company called Aereo that streams broadcast channels online and is viewed as a challenge to cable.
Bundling by media giants, Mr. Diller said, “is some game if you’ve got it: ‘Wow, what do I have to do to have this absolute pricing power in a totally closed system?’ ”
Mr. McCain, an Arizona Republican, declared at a 2004 hearing that cable executives gave consumers “all the choice of a Soviet election ballot.” Mr. McCain has been a persistent critic of bundles, and for about 10 years he has pushed for a so-called à la carte plan, which would allow viewers to get only the channels they want.
ESPN, with Disney at its side, has been among the chief defenders of bundles, calling them a great value for consumers given the diversity of the programming. Without revenue from bundles, Disney has argued, it would have to increase the monthly fee for viewers who want ESPN to about $15 a month.
ESPN has long been able to deploy an array of weapons on the field of politics.
In 1999, at a sports-infused reception hosted by ESPN at the Capitol, politicians were photographed posing as sports stars on a mock cover of ESPN the Magazine. They could also pose with actual athletic legends: Muhammad Ali, Johnny Unitas and Carl Lewis.
“Senators and congressmen lined up acting like schoolboys waiting to get their picture taken with these guys,” one former Disney lobbyist recalled.
As the cable debate heated up in the mid-2000s, ESPN and Disney representatives played the usual Washington game: testifying to Congress, lobbying on Capitol Hill, meeting with Federal Communications Commission officials and making campaign contributions.
But they also had moves all their own. When Michael Powell, the F.C.C. chairman at the time, needed a platform in the fall of 2004 to pitch to consumers his campaign to convert to digital television, he was welcomed to the halftime show of “Monday Night Football” on ABC, another Disney property.
According to interviews with Preston Padden, Disney’s chief lobbyist at the time, and Mr. Bodenheimer, Mr. Powell’s request for airtime was made to Mr. Padden and approved by Mr. Bodenheimer, who as ESPN’s president was also running ABC Sports. Mr. Bodenheimer relayed his decision to the ABC production truck in Baltimore.
Mr. Bodenheimer recently said he granted Mr. Powell’s request because digital TV was a “critically important subject for all television viewers.”
Critically important to ESPN was an F.C.C. study of cable economics that was under way. Mr. Powell, who declined to comment, supported bundled programming, and a month after his October appearance he released the study, which said an à la carte plan would most likely raise consumer costs by 14 percent to 30 percent and reduce the diversity of channels.
One focus of ESPN and Disney’s largess was Representative Joe Barton, a Texas Republican and the chairman of the House Energy and Commerce Committee, which had purview over television legislation.
In 2004, Mr. Barton had helped derail a legislative move aimed at breaking up bundles. On Super Bowl weekend in February 2005, with the cable controversy bubbling, Disney paid to bring Mr. Barton and his wife to Walt Disney World in Orlando, Fla., records show. ESPN did not carry the game, which was played in Jacksonville, Fla. But in Orlando, Disney was busy entertaining advertisers.
ESPN gathered some of its executives to talk to Mr. Barton about the absence of a college football playoff, an issue that the congressman would eventually explore in hearings.
“It was Preston Padden’s show and Joe Barton’s agenda,” one participant in the meeting said. Mr. Barton’s travel disclosure form for Feb. 5 to 7, 2005, shows that Disney spent $3,354 on the Bartons’ lodging, $1,616 for airfare and $1,200 for meals. He recorded the purpose of the trip as “Speak to executives and fact finding.”
A spokesman for Mr. Barton declined to comment beyond saying that the report “speaks for itself.”
Within a few weeks, Disney and ESPN employees made donations of $7,500 to Mr. Barton’s political action committee, according to an analysis of records from the Center for Responsive Politics. Disney’s corporate PAC contributed $5,000 more, adding to the $10,000 it had donated to Mr. Barton in 2004. Over the years, Disney and ESPN executives, and the Disney PAC, have donated $58,500 to Mr. Barton and his PAC.
Those contributions were a fraction of their donations. ESPN and Disney and their employees have donated more than $400,000, much of it since 2000, to representatives and senators who are key players on issues important to Disney, including cable.
The cable fee debate came to a head again in 2006. Mr. Powell’s replacement at the F.C.C., Kevin Martin, released a report that found an à la carte plan could actually reduce costs for 40 percent of households with cable. The industry blasted the report.
In June 2006, Mr. McCain formally proposed legislation that would effectively break up bundles. But it failed by a 20-to-2 vote in the Senate commerce committee.
Mr. McCain said of Disney’s lobbying effort, “They beat me like a drum.”
Mr. Padden played down both the threat and Disney’s role in defeating it. “À la carte is an easy sound bite, but it can’t withstand any level of scrutiny,” he said.
But Matthew Polka, the industry lobbyist for small cable operators, said, “On à la carte, there was no stronger opponent than Disney and ESPN.”
And ESPN has no more stubborn nemesis than Mr. McCain. This past spring, with cable rates and ESPN’s monthly fees continuing to rise, he revived an effort aimed at undoing bundles.
“Why do I pick on ESPN?” Mr. McCain said in an interview in May. “I’m not picking on them. But they are the most glaring example of what people are required to watch — I mean pay for — even if they never watch it.”
ESPN has used the billions of dollars in cable fees to build a moat of programming around its empire, which is likely to be tested in the coming challenge from Fox Sports 1, which made its debut on Aug. 17. ESPN’s business strategy has been to aggressively buy the rights to as much programming as possible for as long as it can to impede the growth of rivals, including Fox and sports channels owned by NBC and CBS.
With ESPN having locked up the rights to so many professional and college sports contracts beyond 2020, the bidding war between it and Fox Sports 1 over the few remaining prizes is expected to be fierce. One, the Big Ten Conference, has a 10-year, $1 billion deal with ESPN that expires in 2017, but Fox has already built influence through its 49 percent ownership of the Big Ten Network. The National Basketball Association, which Fox covets, has deals through 2016 with ESPN and TNT.
ESPN’s omnivorous strategy has given it such dominance that at one point in the mid-2000s, according to interviews and documents, Justice Department lawyers in Washington began questioning whether ESPN was engaging in anticompetitive behavior in handling college athletics.
No other network invested as much in college sports as ESPN or had the available time to carry more games. But by 2004, it owned the rights to far too many games to fit them on ESPN or ESPN2.
“We had an enormous amount of inventory that we weren’t using, and there was a fear that the conferences would accuse us of warehousing,” said Mark Shapiro, a former executive vice president of ESPN.
College conferences focused their frustrations on the exclusive contracts they signed with ESPN that prohibited them from taking games that ESPN held the rights to, but did not televise, and reselling them to other national networks.
“We felt that ESPN wanted our rights just to embargo them from other networks,” Wood Selig said, recalling part of his tenure as the athletic director at Western Kentucky from 1999 to 2010. “Like, ‘If we don’t show them, nobody else could.’ ”
Mr. Selig, now the athletic director at Old Dominion, added, “That was the sentiment on a lot of campuses.”
In 2004, College Sports Television complained to the Justice Department. As a fledgling network, CSTV did not have the money to buy the rights to major conferences, but it could afford the rights to midmajor and smaller conferences like the Western Athletic, the Atlantic 10 or the Mountain West. Yet no conference with an ESPN contract could, without ESPN's consent, make a deal with CSTV or any other national rival.
In meetings with Justice Department lawyers, CSTV laid out its case. It presented a report portraying ESPN as a monopolist that controlled the college sports market by using restrictive contracts, by refusing to sell unused games to competitors and by telling conferences they risked losing exposure on ESPN if they fled to CSTV.
In the 2003-4 season, the report noted, 163 Division I-A football games and 561 men’s basketball games were not televised nationally because ESPN refused to let conferences resell them.
“The most powerful exhibits we showed the Department of Justice laid out what the conferences were getting paid and how few of the games were actually aired, with the rest remaining in the warehouse,” said Chris Bevilacqua, a founder of CSTV. “Something was out of whack.”
The Justice Department began an inquiry in the spring of 2004. ESPN lawyers cautioned executives to take it seriously and save all relevant internal e-mails, two ESPN executives said. The lawyers also told officials not to use words like “dominate” and “markets” in public — to avoid raising the hackles of the government — and to play up the consumer benefits of the broad array of rights ESPN controlled.
The Justice Department spoke to conference commissioners, and one government lawyer, Lawrence Frankel, sought information about contracts from CSTV, according to e-mails and documents obtained in part through the Freedom of Information Act. The Justice Department declined to comment.
In a first public acknowledgment of the inquiry, Mr. Bodenheimer said in an interview, “It came and went quickly because there was nothing there.” He added: “It wasn’t an issue for us. We contracted for product and we aired as much of it as we could.”
Around the same time, though, warehousing became an issue in contract talks between ESPN and the Western Athletic Conference. Karl Benson, the WAC commissioner at the time, instead wanted to make a deal with CSTV that promised more money and more TV appearances than ESPN was offering. But the athletic directors at WAC universities wanted to stick with ESPN, which had far more subscribers and offered wider exposure.
According to a CSTV executive who talked to him shortly afterward, Mr. Benson said he asked John Wildhack, a longtime senior executive at ESPN, “How can you continue this exclusive practice in the face of this continuing D.O.J. investigation?” In the conversation, Mr. Benson described the ESPN executive’s response as “very dismissive.” Mr. Benson did not dispute this account.
Through a spokesman, Mr. Wildhack said he did not recall the incident but said, “Negotiations always cover the gamut of emotions.”
In the end, the government took no action against ESPN, but CSTV executives achieved their real goal: rattling the giant enough to change the way it did business with conferences. “If all they did was open an investigation, we won,” Mr. Bevilacqua said.
During the time the Justice Department was asking questions, CSTV signed an exclusive deal with the Mountain West Conference, which ESPN had previously carried. Soon after, CSTV made deals to carry Conference USA and Atlantic 10 games with ESPN, a rare moment when ESPN shared national cable rights with a rival. CSTV credits the government inquiry for ESPN’s change of heart.
But Mr. Bodenheimer said the Justice Department’s attention had no impact. “Look,” he said, “people — competitors — see the success of ESPN and say, ‘I want some of that I want that, too.’ ”
What ESPN wanted was to maintain its dominance in college sports — and all sports. Given its many conference contracts, starting a college network would be relatively easy. The new network, ESPNU, would reduce any warehousing and let Disney make more money when it was added to Disney’s bundle of channels.
“If we could have a network that would give us a new platform and build a new revenue stream, why not?” said Mr. Shapiro, the network’s former executive vice president.
One ESPN executive involved in the start-up said: “This was about warehousing. We needed the real estate.”
At CSTV’s offices at Chelsea Piers in Manhattan, there was no gloom that ESPN had targeted it for a direct hit. ESPNU was validation of CSTV’s focus on college sports.
“We had a party the day they announced ESPNU,” said Tim Pernetti, a former CSTV executive. “We were the new guy on the block, and this was all about good gamesmanship.”
Nearly a decade later, ESPNU is a prominent part of the Disney bundle, with more than 75 million subscribers paying an average of 20 cents a month, leading to $180 million in annual revenue.
CSTV, which was later sold to CBS and became CBS Sports Network, has nearly 50 million subscribers. Still, CBS lacks a vast array of conference rights or a strategy of spending the billions of dollars that ESPN does to get them.
Mr. Skipper, who became ESPN’s president early last year, said the story of ESPNU was not about the Justice Department or warehousing, but about a company that was relentlessly competitive.
“It was much more a response to CSTV and the fact that we wanted to establish a leading position,” he said. “They had first mover advantage, and once again we were able to do the right things and emerge as the leader in that space.”
Almost from its beginning, ESPN has controlled its destiny. One network wasn’t enough? It built several more. Altering the course of sports television wasn’t enough? It built Internet, international, mobile, radio, print and applications businesses that have perpetuated its dominance.
Central to that success has been a mastery of technology. ESPN runs two research laboratories that develop graphics, mine data, create equipment and package highlights and audio to feed the voracious appetite of fans who cannot get enough sports information from TV. Its ESPN3 online network is capable of showing an unlimited number of games — a godsend to some universities, including some that so crave national exposure that they are willing to pay the costs of production. It created one channel, the Longhorn Network, devoted to a single university, Texas, and is starting a second, the SEC Network, for the powerful Southeastern Conference, in 2014.
Now ESPN is working on an interactive screen project, code-named 2016, that would let viewers simultaneously watch multiple ESPN channels or videos, send social media messages, buy products, watch commercials and summon statistics at the touch of a button.
“ESPN has no reason to have any fear as long as it keeps innovating,” Mr. Shapiro said.
Yet ESPN does not appear to have a revolutionary advance that is capable of altering the industry the way the network did when it went on the air in September 1979.
Even as ESPN moves forward, the landscape it pioneered is rapidly changing. It recently announced cuts of up to 400 jobs, yet it will hire as needed, especially in growth areas. Although the revived à la carte legislation has an uphill battle to passage, it underscores a persistent concern with the rising costs of ESPN and other sports networks.
Beyond established cable rivals like NBCSN and CBS Sports Network, ESPN has a new and bold competitor in Fox Sports 1, which has a strong portfolio of rights. Mr. Skipper has made several early moves to strike back at Fox, hiring the political and sports statistician Nate Silver from The New York Times and bringing back Keith Olbermann to host a nightly show on ESPN2.
Meanwhile, companies like Google, Sony and Intel are planning virtual cable services that would be delivered on the Internet. They could lure consumers from traditional pay television as low-cost alternatives to traditional pay TV while also competing for major sports properties when ESPN’s contracts eventually expire. Mr. Skipper said he would make deals with these upstarts, but only on ESPN’s terms: they must take all of ESPN’s offerings, not just the ones they want.
With the rise of new competition come questions about the fate of existing customers.
Consumers are fleeing pay TV at a quickening pace: 898,000 in the past year, nearly twice the number in the previous year, the analyst Craig Moffett said. And in the past two years, ESPN has lost more than one million subscribers.
What’s more, ESPN ratings plunged 32 percent in the quarter that ended in June.
Mr. Skipper’s task — very different from that of predecessors who built ESPN into a powerhouse — is to negotiate a deeply uncertain future.
“It’s a high-class problem,” he said.
Brad Adgate, senior vice president for research at Horizon Media, said the triple play of decreased cable customers, fewer ESPN subscribers and lower ratings was a “worrisome trend,” but he suggested that ESPN was hurt in the last quarter by reduced interest in the N.B.A. playoffs. “This is not a perfect storm,” Mr. Adgate said. “A lot of big media companies are envious of the model Disney has. Every earnings report, ESPN is always there, a very solid part of their revenue.”
ESPN is relying on its built-in strengths: the dozens of sports and thousands of games on ESPN’s networks that are live and unavailable on other networks the loyalty of viewers who grew up on ESPN and can hum the “SportsCenter” theme the passion of fans who crowd every campus where “College GameDay” makes its Saturday morning stops and the WatchESPN app, which lets more than 20 million users watch all its networks’ live action on mobile devices accessible only with pay-TV subscriptions. An app like WatchESPN is designed not only to keep people connected to ESPN but also to reduce cord-cutting by cable subscribers.
Mr. Skipper described WatchESPN as “a significant measure to preserve the current system. And if you can’t preserve it, it’s our best opportunity to convert to something new.”
He added that while he could not imagine more than 10 percent of pay-TV subscribers cutting the cord, “big numbers don’t have to flee the system to have a profound effect on ESPN.”
His strategy is based on carrying live sports well into the next decade and beyond, thanks to Disney’s cash. Mr. Skipper has held onto the rights to the Rose, Orange and Sugar Bowls, then doubled down for the new college football playoff. He has retained control of “Monday Night Football” and Major League Baseball rights, extended SEC rights through 2034 and agreed to share Pacific-12 rights with Fox.
Rich Greenfield, a media analyst at BTIG Research, said ESPN should not be overly concerned because it is stocked with live sports in a video universe that considers it must-see content.
“The landscape has threats,” Mr. Greenfield said. But he added, “The value of sports is going dramatically, even exponentially, higher.” Even if the bundle breaks, he said, ESPN will be one of the very few companies “that will have established a relationship directly with consumers.”
Mr. Skipper, too, believes that ESPN has created a powerful defensive strategy out of live sports contracts that last a decade or two.
“We can’t stand by and say change is unlikely, but we’re taking the steps to preserve and adapt,” he said. “The ecosystem may change, but these unique events cannot be replicated anywhere else.”
It added: ‘As energy drink sales are rarely regulated by age and there is a proven negative effect of caffeine on children, there is the potential for a significant public health problem in future.’
Large amounts of caffeine can cause heart palpitations, fits and even death, as well as raising the risk of Type 2 diabetes.
Heavy consumption has also been linked to a greater risk of depression, addiction and alcohol dependency.
More than two thirds of 10 to 18-year-olds consume drinks like Red Bull and Monster, the study found
Energy drinks could be more likely to cause a caffeine overdose because they can be drunk quickly, unlike hot drinks like tea or coffee, the Energy Drink Consumption in Europe study said.
More than seven in 10 young people who drink energy drinks mix them with alcohol but this is particularly dangerous because the energising effect means drinkers are unaware of how drunk they are getting.
Studies have shown people who mix the drinks are more likely to drink-drive, fight and take sexual risks.
Several deaths worldwide have been linked to excessive consumption of energy drinks, although scientists say more research is needed to prove a link.
Gavin Partington, director general of the British Soft Drinks Association, said the study did not take ‘into account the conclusions of other scientific articles’.
He added: ‘Several of the policy recommendations it makes are already well established through the BSDA’s voluntary code and EU regulation.’
Recommended maximum caffeine intake is about 400mg per day – equivalent to around five cups of filter coffee.
A standard 250ml can of Red Bull contains 80mg of caffeine and 27.5g of sugar (nearly seven teaspoons), while a 500ml can of Monster contains 160mg of caffeine and 55g – or nearly 14 teaspoons - of sugar.
Some European countries like Denmark and Turkey have total bans on energy drinks, while others like Sweden have restrictions on sales to under-15s.
They are banned from many schools in Britain and some retailers have their own policies on sales to under-16s, but there is no law preventing their sale to children.
Last year, 19-year-old rugby player Joshua Merrick, from Manchester, who regularly drank a high-energy drink called Animal Rage before working out, was found dead.
A doctor who conducted tests on his body did not rule out the possibility they could have contributed to his death, but said the teenager also had an enlarged heart. His death was recorded as being from natural causes.