Archive for February, 2010
Utah Legislators Call for Fiscal Federalism
Tea partiers take note: at the forefront of any effort to reduce the size of the federal government should be the devolvement of federal programs to the states. Achieving this may seem like mission impossible given the states’ addiction to federal money. However, there are signs that the idea of returning the relationship between the federal government and the states to that which the Founders prescribed is starting to gain some currency.
On Friday, the president of the Utah Senate and the speaker of the Utah House of Representatives penned an op-ed in the Washington Post calling for the federal government to begin the devolution process. The authors want the states to have the right to opt out of federal programs and allow the states to keep the taxes their residents send to Washington to fund them. The states would then be free to fund and manage the programs as they see fit.
The authors call their idea a “modest experiment,” and indeed, it is hardly radical. The 10th amendment to the Constitution is clear:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
From the op-ed:
Let’s select a few programs — say, education, transportation and Medicaid — that are managed mostly by Utah’s government, but with significant federal dollars and a plethora of onerous federal interventions and regulations.
Let Utah take over these programs entirely. But let us keep in our state the portion of federal taxes Utah residents pay for these programs. The amount would not be difficult to determine. Rather than send this money through the federal bureaucracy, we would retain it and would take full responsibility for education, transportation and Medicaid — minus all federal oversight and regulation.
Such a notion terrifies proponents of big government because state budgets are generally constrained by balanced budget requirements, debt inhibitions, and the inability to print money. States are also more limited in how much they can abuse taxpayers for the simple reason that citizens can move to a friendlier environment. Indeed, one of the beautiful aspects of returning to fiscal federalism is that it would strengthen this competition that $600+ billion in annual federal subsidies has somewhat neutered.
See this essay for more on fiscal federalism and this Cato Policy Analysis on the problems with federal subsidies to state and local governments.
Update: A C@L reader pointed me to this resolution introduced by Michigan state representative Paul Opsommer, which calls on the federal government to allow the states to opt out of federal highway programs funded by the federal gas tax. The states would be free to fund their own roads with their own gas tax revenues instead of sending money to Washington where its then redistributed back to the states according to Congress’s politicized wishes. As the resolution notes, the federal government uses the leverage it has over transportation spending to force the states to enact policies that they don’t want.
ObamaCare 3.0: Higher Implicit Taxes, Quicker Death Spiral
In a recent paper, I showed that the health care legislation passed by the House and Senate would impose punitive implicit tax rates on low- and middle-income workers. Those bills would also result in higher health insurance premiums over time because they would create large financial incentives for healthy people to drop coverage and only purchase it when they become sick.
The health care proposal that President Obama released yesterday essentially splits the difference on most areas of disagreement between the two bills. But a preliminary analysis shows that ObamaCare 3.0 would make these perverse incentives even worse. Families of four earning $22,000 under the Senate bill (100 percent of the federal poverty level) or $30,000 under the House bill or the Obama plan (133 percent FPL) would face the following effective marginal tax rates as they climb the economic ladder:
- Senate bill – Average: 62 percent. High: 73 percent.
- House bill - Average: 74 percent. High: 82 percent.
- Obama plan – Average: 72 percent. High: 90 percent.
In other words, over broad ranges of income, families of four would see their take-home pay rise by an average of 28 cents of each additional dollar earned. In some cases, it would rise as little as 10 cents for each additional dollar earned. Using smaller changes in income reveals the Obama plan would create EMTRs as large as 200 percent or higher. That is, earning more money would leave many families worse off financially.
In addition, by requiring insurers to cover all applicants without regard to illness, each of these health plans would remove any penalty on waiting until you are sick to purchase coverage. Therefore — even after accounting for all relevant taxes, subsidies, and penalties — these plans would create large financial incentives for healthy people to drop out of the market, which would cause premiums to rise for those who remain. That would in turn encourage more healthy people to drop out, which would cause premiums to rise further, and so on. Those perverse incentives are much worse under the Obama plan than under the House or Senate bills. Here are the maximum financial incentives to drop coverage that each plan would create for families of four:
- Senate bill: $8,000
- House bill: $7,800
- Obama plan: $9,900
By increasing the financial incentives to drop coverage, the Obama plan would cause private insurance markets to unravel even faster than the House and Senate bills would.
School Webcams and Strange Gaps in Surveillance Law
Last week, I noted the strange story of a lawsuit filed by parents who allege that their son was spied on by school officials who used security software capable of remotely activating the webcams in laptops distributed to students. A bit more information on that case has since come out. The school district has issued a statement which doesn’t get into the details of the case, but avers that the remote camera capability has only ever been used in an effort to locate laptops believed to have been lost or stolen. (That apparently includes a temporary “loaner computer that, against regulations, might be taken off campus.”) They do, however, acknowledge that they erred in failing to notify parents about this capability. The lawyer for the student plaintiff is now telling reporters that school officials called his client in to the vice principal’s office when they mistook his Mike and Ike candies for illegal drugs.
Perhaps most intriguingly, a security blogger has done some probing into the technical capabilities of the surveillance software used by the school district. The blogger also rounds up comments from self-identified students of the high school, many of whom claim that they noticed the webcam light on their school-issued laptops flickering on and off—behavior they were told was a “glitch”—which may provide some reason to question the school’s assertion that this capability was only activated in a handful of cases to locate lost laptops. The FBI, meanwhile, has reportedly opened an investigation to see whether any federal wiretap laws may have been violated.
It’s this last item I want to call attention to. The complaint against the school district states a number of causes of action. The most obvious one—which sounds to me like a slam dunk—is a Fourth Amendment claim. But there are also a handful of claims under federal wiretapping statutes, specifically the Electronic Communications Privacy Act and the Stored Communications Act. These are more dubious, and rest on the premise that the webcam image was an “electronic communication” that school officials “intercepted” (as those terms are used in the statute), or alternatively that the activation of the security software involved “unauthorized” access by the school to its own laptop. The trouble is that courts considering similar claims in the past have held that federal electronic surveillance law does not cover silent video surveillance—or rather, the criminal wiretap statutes don’t.
That leads to a strange asymmetry in a couple of different ways. First, intelligence surveillance covered by the Foreign Intelligence Surveillance Act does include silent video monitoring. Second, it seems to provide less protection for a type of monitoring that is arguably still more intrusive. If officials had turned on the laptop’s microphone, that would fall under ECPA’s prohibition on intercepts of “oral communications.” And if the student had been engaged in a video chat using software like Skype, that would clearly constitute an “electronic communication,” even if the audio were not intercepted. But at least in the cases I’m familiar with, the courts have declined to apply that label to surreptitiously recorded silent video—which one might think would be the most invasive of all, given that the target is completely unaware of being observed by anybody.
One final note: The coverage I’m seeing is talking about this as though it involves one school doing something highly unusual. It’s not remotely clear to me that this is the case. We know that at least one other school district employs similar monitoring software, and a growing number of districts are experimenting with issuing laptops to students. I’d like to see reporters start calling around and find out just how many schools are supplying kids with potential telescreens.
PS: I Also Want to Take over Education
Andrew already blogged about it a bit, but overshadowed by the release of President Obama’s price-controlling health-insurance proposal was his speech to the National Governors Association promoting the federal takeover of elementary and secondary school curricula. True, the White House would only require states to adopt some sort of “common” — not national and certainly not federal – standards to get federal funds, but don’t accept the semantic dodge: If the feds are paying, the standards will not only be national, but federal.
Implicit in the President’s proposal, as well as the rhetoric of many national-standards supporters, is that national standards will necessarily be high standards that push improved academic achievement. Unfortunately, these people have chosen to ignore actual tests of that proposition.
They can no longer: My latest Policy Analysis — Behind the Curtain: Assessing the Case for National Curriculum Standards – reviews the theoretical and empirical literature and shows that there is simply no convincing evidence that national standards drive higher academic achievement. Couple that with federal meddling in education being clearly unconstitutional, and the next critical battle in the war against Leviathan seems to be shaping up. And this time, we could very well be fighting for our children’s minds.
The Small Matter of Abortion
Newsweek‘s Sarah Kliff nicely summarizes why abortion could be THE issue that stops ObamaCare. I’ve made a similar argument in a paper on ObamaCare’s individual and employer mandates.
Two factors seem most salient:
- One side must lose. ObamaCare would so infuse federal money into private insurance markets that either (A) taxpayers will be forced to pay for elective abortions, which would be unacceptable to pro-life Democrats, or (B) the restrictions necessary to prevent taxpayer funding would curtail access to private abortion coverage — even for women who don’t receive federal subsidies — which would be unacceptable to pro-choice Democrats. Abortion is not one of those issues where opposing sides can meet in the middle. There’s no way to, ahem, split the baby.
- Abortion may be the one issue that Democrats care about more than health care. Democrats may therefore prefer to let ObamaCare die than violate their principles on abortion. One can imagine pro-life Democrats saying, Health reform, yes — but not at the expense of the unborn, just as one can imagine pro-choice Democrats saying, Health reform yes — but not at the expense of a woman’s right to choose.
No matter which way ObamaCare comes down on abortion, the legislation could lose enough House Democrats to fall short of the 218 votes needed to win.
Was it Terrorism?
A man with a gripe against the system crashed a plane into an IRS office. The first thing people ask is whether this was a crime or domestic terrorism as if the two categories are mutually exclusive.
The official definition is “the unlawful use of force and violence against persons or property to intimidate or coerce a government, the civilian population, or any segment thereof, in furtherance of political or social objectives” (28 C.F.R. Section 0.85).
Unlawful use of force and violence? Check.
Requisite grievance? Check. And how. If this manifesto is genuine, the man responsible had an axe to grind with the IRS, politicians, GM executives, drug and insurance companies, the Catholic Church, tax-exempt religious organizations generally, corrupt unions, Arthur Andersen executives, former Senator Patrick Moynihan, wealthy loan companies, his accountant, George W. Bush, communists, and capitalists.
That hasn’t stopped people from trying to lay this man at the feet of political opponents.
This guy’s political affiliation was “crazy.” Everyone should move on and not try to score political points with this incident.
Whether or not he meets the definition, it’s better to deny this man and those like him any credibility with the word “terrorist.” As my colleague Jim Harper said (twice) about the man who shot Dr. George Tiller, this is an unproductive debate that fulfills their desire to be something more than a pathetic murderer.
Cato Institute Endorses Socialized Medicine
That’s about as believable a headline as the one on President Obama’s health reform site.
In Praise of Libertarian Fickleness
A few follow-ups on the post by David Boaz, below.
Libertarians are basically a sect of conservatives, say John Zogby & Zeljka Buturovic in the National Review Online. That’s because libertarians care more about economics than about foreign policy, cultural, or other issues:
Let us for a moment [assume] that a person’s ideology is solely determined by his policy views. And let us also assume that social and economic liberties can largely be disentangled and that libertarians are as close to liberals on social issues as they are to conservatives on economic ones — a view implicit in the argument for liberaltarianism. Still, our data show that different aspects of ideology are not equally important for a person’s ideological identity, and, somewhat ironically, that this is especially true of libertarians. For all their insistence that liberty has multiple facets, libertarians appear to cherish one of them much more than others.
Supporting data shows that 60% of self-described libertarians find “economics” more important than the “social/cultural,” “foreign policy,” “energy/environment” or “other/not sure” issue areas.
I’m not convinced. A common libertarian approach to any issue is to begin with the economics of that issue. Certainly it’s true of energy and the environment. It’s also very likely true of foreign policy, because wars aren’t cheap, and it’s at least plausibly true of social and cultural issues. Libertarians see economics everywhere, not just in “economic” policies. It’s a common belief in our tribe that we are among the very few to grasp sound economic principles at all.
We can (and should) debate whether this is true, of course, but such is libertarian belief. And when conservatives abandon what we see as sound economics — as with the George W. Bush administration — well, we start looking for the exits.
Lately, though, it’s been easy for libertarians to return to conservatism. To no one’s great surprise, the Obama administration has continued the profligate spending. We may have hoped that the new administration would compensate in other areas, but this just hasn’t happened. The Guantanamo Bay detention camp should have been closed by now. On military tribunals, search and seizure issues, indefinite detention, and our expensive, never-ending foreign wars, there’s little difference between this administration and the last.
I don’t want to say that liberaltarianism is dead. But is it endangered? Sure. It deserves to be.
If libertarians seem more conservative lately, it’s not only that we’ve been pushed away by the left. Attendees at this year’s CPAC ranked “reducing size of federal government” and “reducing government spending” as by far their highest policy priorities. They also chose Ron Paul as their preferred presidential candidate. Those same attendees even booed speaker Ryan Sorba for condemning gay Republicans:
(Though many seem to share it, I wouldn’t personally trust Sorba’s understanding of Aquinas.)
Today’s young conservatives appear embarrassed by the culture wars, which must seem to them like a relic from someone else’s past. Many young conservatives have known a literal state of war for their entire adult lives. They may not even remember the last balanced federal budget. And they know that putting a Democrat in the White House hasn’t helped. Personally, I’m no conservative. But there is strength in fickleness, and if conservatives can do better, then good for them.
Net Neutrality Regulation: A Solution in Search of a Problem
This Reason.tv video illustrates the weak case for network neutrality regulation of Internet service providers.
In the AT&T case, which the video touches on, an AT&T web site blocked some (barely) controversial statements by Eddie Vedder—the Pearl Jam lead singer who stopped mattering a really long time ago. This was an error, and it was contrary to AT&T policy, according to this August 2007 story. Yet the example is one of a few used to argue for net neutrality regulations.
Do we really want the government treading any of this ground?
Most people would probably agree that web site operators should be free to publish or not publish whatever they want. Regulations barring web sites from editing out controversial political statements, or requiring them to broadcast them, would be facially unconstitutional. Strangely, proponents of net neutrality regulation tout this kind of regulation as a virtue at the Internet’s transport layer.
The Red Team’s Spin on The Christmas Bomber
In recent weeks, conservatives have worked themselves into a self-righteous lather over how the Obama administration handled the would-be Christmas bomber. It’s a complaint you could hear again and again at last weekend’s Conservative Political Action Conference: Mirandizing the 23-year-old Nigerian Muslim was a big mistake, the story goes, because it denied us valuable intelligence, and it’s just so typical of Barack Obama’s callow, weak, law-enforcement-oriented approach to the terrorist threat.
As a constitutional matter, I’ve never been entirely comfortable with the Miranda decision, which smacks of judicial lawmaking, and I don’t think liberty stands or falls on whether one failed terrorist got read his rights. In fact, I think Mirandizing Abdulmutallab was a pretty silly thing to do. The administration could and should have continued to question him and gather intelligence (and it’s not as if you’d need his statements to convict when there were scads of witnesses aboard the plane).
Nonetheless, I still find it hard to see all the hubbub as much more than manufactured partisan outrage.
After all, Richard Reid, the failed shoebomber of December 2001, was Mirandized repeatedly by George W. Bush’s FBI, who, rather than questioning him for 50 minutes, read Reid his rights as soon as the Massachusetts staties handed him over. That was barely two months after the largest terror attack in American history, at a time when we had good reason to fear that the terrorist threat was far greater than it now appears to be. Somehow, though, I don’t recall hearing quite as much wailing and gnashing of teeth from the Right back then. Moreover, outside of the special pleading of former Bush officials, there’s little evidence that Bush would have handled the situation much differently even if it happened much later in his tenure as president.
We’re told that the Christmas Bomber’s treatment reveals Obama’s pusillanimous new paradigm for the War on Terror. But virtually anyone who’s taken a serious look at Obama’s terrorism policies has concluded they differ from Bush’s mainly in terms of rhetoric, not substance. You can love the Bush approach or hate it, but if you’re drawing a sharp distinction between his policies and Obama’s, you’re misinformed at best.
Are Libertarians a Political Force?
Some lively debate this week on our papers on the libertarian vote and on the broader questions of how many libertarians there are, whether they’re a voting bloc, and whether they might be targets for both parties. Ed Kilgore, managing editor of The Democratic Strategist, wrote in the New Republic that any possible alliance between liberals and libertarians is shown to have gone by the wayside in Cato’s new paper, “The Libertarian Vote in the Age of Obama,” even though, he says, “ modern liberals and libertarians share common ideological roots in eighteenth and nineteenth century Anglo-American liberalism, … these groups have a sociocultural affinity,” and “New Democrats” are more sympathetic to libertarian arguments on technological progress and free trade. But they just can’t work together in the age of Obama.
In National Review John Zogby and Zeljka Buturovic present some interesting data and conclude, “For the most part, libertarians are a fraction within the conservative coalition — not a stand-alone movement.” They find that only 2 percent of poll respondents claim the label “libertarian,” and those people rate themselves firmly to the center-right on a 9-point scale. At the Corner I respond:
“Libertarian” is an unfamiliar word to most people, even people who actually hold broadly libertarian views. Rasmussen found that 4 percent identified themselves that way, and a Center for American Progress poll found 6 percent — but 13 percent of young people.
But there are other ways to measure libertarian sentiment….we found that 14 percent gave libertarian answers to all three questions. Gallup asks two questions — one on the size of government, one on “promoting traditional values” — every year and finds about 20 percent of respondents give libertarian answers to both questions (23 percent in 2009)….
On the second point, yes, we’ve found that the 14-15 percent of libertarian voters we identify usually vote about 70 percent Republican. But not always. … In 2004 George W. Bush got only 59 percent of the libertarian vote, and in 2006 libertarians gave only about 54 percent of their votes to Republican congressional candidates. …
From the perspective of politicians and their advisers, I think it’s fair to say that these libertarians are a not-entirely-reliable part of the broad Republican constituency. After the 2006 election … the underreported story was a 24-point swing of libertarians away from Republican congressional candidates between 2002 and 2006. That’s a point Republican strategists — and Democrats — ought to ponder.
And there’s a footnote that might become main text in the next few years: In 2008, even as libertarians generally returned to the 70 percent Republican fold, young libertarians (18 to 29) gave a majority of their votes to Obama. Maybe these younger voters will come to their senses. Or maybe the Republican brand just isn’t very appealing to young voters (who are, for instance, strongly supportive of gay marriage and overwhelmingly supportive of gays in the military).
Find more data on the libertarian vote in the paper David Kirby and I did in 2006, “The Libertarian Vote,” or in our just-published paper, “The Libertarian Vote in the Age of Obama,” or in this possibly corroborating data from the Tarrance Group, which found that 23 percent of respondents described themselves as fiscally conservative but liberal or moderate on social issues.
The President’s Unhealthy Proposal
The President’s health care reform proposal is introduced by five bullet points, all of which are misleading at best.
The bullet points supposedly show that the proposal “puts American families and small business owners in control of their own health care.”
In reality, the proposal would put the federal government in control of health insurance (which is not at all the same as health care). It would make it a federal crime for people to not buy insurance, or for insurers to offer plans that did not meet expensive federal mandates (such as insuring “children” up to the age of 26). The only families who would remain in control are those exempted from compulsory insurance because they can’t afford it (which was supposedly the reason why people are not insured today). And the only small businesses that would remain in control are those who take care to not hire more than 50 people (one of many unexpected consequences).
Here are the five White House selling points, followed by my doubts:
- “It makes insurance more affordable by providing the largest middle class tax cut for health care in history, reducing premium costs for tens of millions of families and small business owners who are priced out of coverage today. This helps over 31 million Americans afford health care who do not get it today – and makes coverage more affordable for many more.”
Not true. It would make insurance more affordable for those who receive subsidies and more expensive for taxpayers who finance those subsidies. It would make insurance more affordable for those who wait until they have preexisting conditions to buy a “Cadillac plan,” and more expensive for those who have been paying for a high-quality plan for years. It would make insurance more affordable for those with adult children living at home, and more expensive for singles and childless couples. If would make insurance more affordable for obese alcoholic smokers and more expensive for people with a healthy diet and exercise. It is all about redistributing health.
The estimate that those lured into subsidized plans and Medicaid would otherwise be uninsured is largely false, as is the related illusion that the number of uninsured would drop by 31 million. Economists know from past expansions of taxpayer-financed benefits that such giveaways mainly substitute for or “crowd out” benefits otherwise purchased by employers or individuals.
- “It sets up a new competitive health insurance market giving tens of millions of Americans the exact same insurance choices that members of Congress will have.”
Not true. Very few of the insurance companies who choose to participate in the large group plan for federal employees (75% financed by taxpayers) would also offer individual policies for relatively few people on the proposed exchanges. If the federal government made good on the President’s recent threats to slap price controls on premiums, no sensible insurers would participate. If the federal government attempted to impose Medicare-like reimbursement rates on doctors and hospitals, only second-rate doctors and hospitals would accept the insurance. Even the Mayo Clinic in Phoenix recently stopped accepting Medicare because Medicare payments (which “reform” would cut even more) don’t come close to covering expenses.
- “It brings greater accountability to health care by laying out commonsense rules of the road to keep premiums down and prevent insurance industry abuses and denial of care.”
Not true. The thinly-veiled threat of Nixonian price controls on health insurers would drive capital out of the industry, and likely end in “cost-plus” regulations that are simply encourage higher costs. The next point deals with some of those “commonsense rules.”
- “It will end discrimination against Americans with pre-existing conditions.”
Not true. Basing premiums on known health risks is not discrimination but sound actuarial practice. Compelling insurers to charge similar rates to healthy and sick applicants makes no more sense than compelling them to charge the same rates to smokers and non-smokers. Compelling insurers to keep people on the plan even if they lie about their health or lifestyle must result in higher premiums for honest and/or healthy people.
- “It puts our budget and economy on a more stable path by reducing the deficit by $100 billion over the next ten years – and about $1 trillion over the second decade – by cutting government overspending and reining in waste, fraud and abuse.”
Not true. The costly new subsidies and extra Medicaid spending could reduce future deficits only if taxes were increased even more than spending. By that logic, the President could propose $99 trillion of new spending and $100 trillion of new taxes and claim the result would put the government’s budget (as opposed to taxpayers’ budget) “on a more stable plan.”
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