Archive for July, 2010
Obama Flip-Flops on the Individual Mandate (Again)
The individual mandate has been a tricky issue for Barack Obama, leading him to make some impressive self-reversals.
When campaigning against Hillary Clinton for the Democratic presidential nomination, Obama came out hard against an individual mandate to purchase health insurance, alleging that Clinton would garnish workers’ wages and that Massachusetts’ individual mandate has left many residents “worse off”:
He even dismissed an individual mandate by saying, “If a mandate was the solution, we could try that to solve homelessness by mandating everybody buy a house”:
Once president, of course, Obama endorsed and signed into law both an individual mandate and an employer mandate.
During the debate over ObamaCare, Obama likewise mocked George Stephanopoulos — no really, he mocked the poor guy– for suggesting the individual mandate is a tax. Obama didn’t mince words: “I absolutely reject that notion.” The relevant exchange begins three minutes into this video:
Now, the Obama administration says the individual mandate is a tax. According to The New York Times:
When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”…
Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations.
(My colleagues Randy Barnett and Ilya Shapiro explain how this flip-flop shows the constitutional challenges to ObamaCare aren’t quite as frivolous as supporters claim.)
The next time Obama is in the mood to reverse himself on the individual mandate, he might consider this statement from June 2009:
When you hear people saying, “socialized medicine,” understand that I do not know anybody in Washington who is proposing that–certainly not me.
When the government makes health insurance compulsory, that is socialized medicine. (Why else would ObamaCare win plaudits from Fidel Castro?) It would be nice to hear the president admit it.
Government Essentially Concedes Commerce Clause Challenge to Obamacare, Calls Individual Mandate a Tax
This Sunday’s New York Times had a fascinating story about how the defense of the individual mandate has shifted from the Commerce Clause — even though the law itself is replete with boilerplate about “economic activity” — to Congress’s taxing power. Here’s the first paragraph (h/t Jonathan Adler):
When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”
This is huge. After months of arguing that cases like Wickard v. Filburn (Congress can regulate the wheat farmers grow for personal consumption) and Gonzales v. Raich (Congress can regulate personal growth of state-allowed medicinal marijuana) justify the requirement that every man, woman, and child buy a health insurance policy, government lawyers (and spokesmen) now say the mandate is just a regulation accompanying a lawful tax (the penalty you pay for not buying insurance). After I spent most of April and May criss-crossing the country debating the constitutionality of Obamacare, it turns out that my opponents were barking up the wrong tree!
But don’t just take it from me. Here’s Georgetown law professor and Cato senior fellow Randy Barnett’s dissection of the Times story and its significance. An excerpt:
Now there are cases that say (1) when Congress does not invoke a specific power for a claim of power, the Supreme Court will look for a basis on which to sustain the measure; (2) when Congress does invoke its Tax power, such a claim is not defeated by showing the measure would be outside its commerce power if enacted as a regulation (though there are some older, never-reversed precedents pointing the other way), and (3) the Courts will not look behind a claim by Congress that a measure is a tax with a revenue raising purpose.
But I have so far seen no case that says (4) when a measure is expressly justified in the statute itself as a regulation of commerce (as the NYT accurately reports), the courts will look look behind that characterization during litigation to ask if it could have been justified as a tax, or (5) when Congress fails to include a penalty among all the “revenue producing” measures in a bill, the Court will nevertheless impute a revenue purpose to the measure.
Now, of course, the Supreme Court can always adopt these two additional doctrines. It could decide that any measure passed and justified expressly as a regulation of commerce is constitutional if it could have been enacted as a tax. But if it upholds this act, it would also have to say that Congress can assert any power it wills over individuals so long as it delegates enforcement of the penalty to the IRS. Put another way since every “fine” collects money, the Tax Power gives Congress unlimited power to fine any activity or, as here, inactivity it wishes! (Do you doubt this will be a major line of questioning in oral argument?)
Well, at least they’re not (yet) relying on Rep. John Conyers’s “Good and Welfare Clause.” (Conyers, remember, is a lawyer and chairman of the House Judiciary Committee).
For a concise legal argument against the use of the taxing power to justify the individual mandate, see Cato’s amicus brief supporting Virginia’s challenge to the health care reform. And for a great resource on all the state lawsuits against the new law, see this new blog/website run by Santa Clara law professor Brad Joondeph.
There’s Nothing Free about ObamaCare, Cont’d
Last week, I criticized major media outlets for reporting that ObamaCare‘s preventive-care mandate will provide “free” or “no cost” preventive care. A prominent reporter responded:
I can’t say I exactly agree with your critique. The fact is that there will be no direct cost to consumers who do not have to shell out for a co-pay for the selected services. And while the benefit will likely be offset in some way…that is true of almost everything. A tax cut, by your standards, should not really be called a cut!
A few points. First and most important, there is always a cost to consumers — even if there’s no co-pay. Second, as I blogged earlier, the fact that (some of) these articles eventually explained that consumers would pay in the form of higher premiums does not make the phrase “free preventive care” true. It merely explains that the phrase is untrue. Third, reporters should call a tax cut a tax cut just like they should call a subsidy a subsidy. But they should no more say that a subsidy results in “free preventive care” than they should say a tax cut results in “free money.”
Here’s a question for still-skeptical journalists. The federal government is currently sending $250 checks to seniors who enter Medicare’s “donut hole.” Same law. Two different subsidies. If it’s okay to use the phrase “free preventive care” when reporting on one, is it okay to use the phrase “free money” when reporting on the other?
ObamaCare Still Unpopular, Especially among Voters
As of mid-July, it appears the American public still opposes ObamaCare, with the opposition strongest among those most likely to vote.
Judging by the latest data at the poll-aggregating site Pollster.com, a solid plurality of adults continues to oppose ObamaCare (46.8 vs. 40.1 percent):
The trendlines don’t look so good for supporters of the law. (The public isn’t so hot about President Obama’s handling of health care, either.) Yet the above graph includes (polls that include) adults who are neither registered nor likely to vote.
If you want to know how public opinion about ObamaCare will influence the November elections, you’ll want to look at polls of likely voters. Those suggest a majority opposes the law (51.3 vs 42.9 percent):
Americans Voting with their Feet
The Financial Times reports that the number of Americans giving up their citizenship to protect their families from America’s onerous worldwide tax system has jumped rapidly. Even relatively high-tax nations such as the United Kingdom are attractive compared to the class-warfare system that President Obama is creating in the United States.
I run into people like this quite often as part of my travels. They are intensely patriotic to America as a nation, but they have lots of scorn for the federal government.
Statists are perfectly willing to forgive terrorists like William Ayres, but they heap scorn on these “Benedict Arnold” taxpayers. But the tax exiles get the last laugh since the bureaucrats and politicians now get zero percent of their foreign-source income. You would think that, sooner or later, the left would realize they can get more tax revenue with reasonable tax rates. But that assumes that collectivists are motivated by revenue maximization rather than spite and envy.
From the FT article:
The number of wealthy Americans living in the UK who are renouncing their US citizenship is rising rapidly as more expatriates seek to escape paying tax to the US on their worldwide income and gains and shed their “non-dom” status, accountants say. As many as 743 American expatriates made the irreversible decision to discard their passports last year, according to the US government – three times as many as in 2008. …There is a waiting list at the embassy in London for people looking to give up citizenship, with the earliest appointments in February, lawyers and accountants say. …“The big disadvantage with American citizens is they catch you on tax wherever you are in the world. If you are taxed only in the UK, you have the opportunity of keeping your money offshore tax free.”
It Depends on What the Meaning of “Tax” Is
The print edition of the Washington Post and the online Real Estate home page feature this headline:
Debunking rumors of a housing sales tax
The article begins:
Rumors are flying that the health-care legislation Congress passed this year will impose a sales tax on all real estate sales.
So I’m thinking, OK, more crazy Glenn Beck tea-party stories about mythical Obama tax hikes, and the Post is going to debunk them. Then I keep reading:
But the rumors are based only partly on fact. Although there is a new tax, it will not apply to everyone, and existing tax breaks for home sales will remain in place.
The Health Care and Education Reconciliation Act of 2010, which President Obama signed into law March 30, is comprehensive and complex. Section 1402, “Unearned Income Medicare Contribution,” imposes a 3.8 percent tax on profits from the sale of real estate — residential or investment.
But the levy is aimed at high-income taxpayers, leaving most people untouched. And it will not take effect until Jan. 1, 2013.
Let’s look at the facts of this new law.
First, it is not a sales tax, nor does it impose any transfer or recordation tax. It is called a Medicare tax because the money received will be allocated to the Medicare Trust Fund, which is part of the Social Security system.
Next, if your adjusted gross income is less than $200,000, you are home free….
How is the tax calculated? Through a complex formula that could be called “the accountants’ protection act.” As a taxpayer, you (or your financial adviser) must determine which is less: the gain you have made on the sale of your house, or the amount by which your income exceeds the appropriate threshold.
So let’s recap here. Post contributor Benny Kass promises to “debunk” the “rumors” that “the health-care legislation Congress passed this year will impose a sales tax on all real estate sales.” And he concludes, “In the meantime, don’t believe the rumors.” But in fact the health-care law did include a new tax on real estate profits. It’s not exactly a sales tax, and it won’t apply to most people. But the only real inaccuracy in the “rumors” that he said “are flying” was the word “all.” It’s only a 3.8 percent tax on some real estate sales, no doubt only a minority of sales, though perhaps affecting more readers of the Washington Post Real Estate section than people in less-affluent regions where housing prices didn’t soar and then remain high. Frankly, I’ve seen more effective debunkings.
This “rumored” real estate tax is also discussed on page 20 of Michael Tanner’s new study “Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law.” But if you’re really going to try to understand the new health-care legislation, you may want to clip the Kass article to keep with your copy of the Tanner paper, as no one study can guide you through every detail of a 2000-page law. Journalists and HR experts will be kept busy for years tracking down every sub-reference and interaction in the bill.
A Weekend’s Worth of Hayek Interviews
The estimable Francisco Marroquin University in Guatemala has just posted 15 hours of interviews with F. A. Hayek, conducted in 1978, four years after he won the Nobel Prize for Economics.
You know the interviewee is important when the interviewers include James M. Buchanan, Robert Bork, Armen Alchian, Axel Leijonhufvud, and Leo Rosten. Along with the streaming video, there’s a complete transcript posted. What an amazing resource! We are indebted to Armen Alchian, Bob Chitester, the Earhart Foundation, the Pacific Academy of Advanced Studies, and now Francisco Marroquin for making these interviews available.
A few years later Cato Policy Report published two exclusive interviews with Hayek, in print form. Find them here and here.
The Ecuadorian Government’s Campaign against the Free Press
The World Cup is over but not the Ecuadorian government’s propaganda campaign vilifying the free press.
For those Ecuadorians who don’t have Direct TV, but only have cable TV or the local network channels, the only place to have watched the much-awaited matches was on one of the state-owned TV stations and with constant state propaganda. (You can watch the videos depicting the private press as a snake or as shooting bullets coming out of the TV here, here, here and here.)
When I say constant, I might be understating the frequency: according to Infomedia — a media monitoring company— during the weekend of June 18-20 these ads were broadcasted 414 times for a total of 7,988 seconds or 133 minutes.
To make matters worse, the ads continue to be aired at the same time the not-so-independent National Assembly is debating a new communications law that would create a Communications Council — controlled by the executive branch — with the power to impose severe sanctions on radio and TV stations and newspapers.
For starters, the proposed law contains this contradictory statement in its preamble:
Every person . . . has the right to . . . search, receive, exchange and distribute information that is truthful, appropriate, contextualized, plural and without previous censorship. . .
Of course, it will be up to the council to decide what is truthful (and appropriate, contextualized and plural, whatever that means).
This Week in Government Failure
Over at Downsizing Government, we focused on the following issues this week:
- Thanks to the postal unions, the U.S. Postal Service’s utilization of part-time workers is below UPS, FedEx, and its international counterparts.
- Senate Republicans want agitated voters to view their support for a discretionary spending cap as evidence that the party is serious about out-of-control spending and deficits. But capping discretionary spending at the already exorbitant levels that Republicans helped reach isn’t exactly a big reform.
- Republicans and Democrats are both guilty of abusing the “emergency” designation to ram through more spending.
- HUD secretary Shaun Donovan calls public housing a “precious asset.” We’re not joking.
- Does anyone think the White House economic team was going to produce estimates that didn’t show substantial job creation resulting from the stimulus?
Cops and Cameras: The Future of Policing
The USA Today editorial board is criticizing the use of state wiretapping laws to prosecute citizens who tape on-duty police officers. I have written on this extensively: here, here, here and here. The editorial joins the Washington Examiner and Washington Post in this critique.
USA Today’s opposing view (presented by two AFL-CIO police union officials) provides this comment:
In today’s environment, police officers have to assume that every action they take is captured on tape, somewhere. They must be comfortable that everything they say or do in the course of their duties may be shown on the 5 o’clock news.
Our problem is not so much with the videotaping as it is with the inability of those with no understanding of police work to clearly and objectively interpret what they see. Videotapes frequently do not show what occurred before or after the camera was on, and the viewer has no idea what may have triggered the incident or what transpired afterwards.
This is often true. The recordings that prompt public outcry are sometimes “gotcha” moments where the camera only captures the use of force with no context.
Here is an example from Maryland that shows officers arresting a woman during the Preakness Stakes. At the end of the video, an officer says to the person recording the arrest: “Do me a favor and turn that off. It’s illegal to videotape anybody’s voice or anything else, against the law in the state of Maryland.”
As the USA Today editorial notes, this is a misreading of Maryland law that is kept alive by the prosecution of Anthony Graber and others who record the police. My commentary on the issue is here. As Carlos Miller points out, Maryland prosecutors come to different conclusions about the scope of the state’s wiretap law.
Stop ‘n’ Frisk Databases
Via Adam Serwer, New York governor David A. Paterson is expected to sign a bill today doing away with data collection on people the police stop and question, but who have done nothing wrong.
The Transportation Security Adminstration’s “SPOT” program—recently the subject of a scathing Government Accountability Office critique—does similar data collection about innocent people.
From late May 2004 through August 2008, “behavior detection officers” referred 152,000 travelers to secondary inspection at airports. Of those, TSA agents referred 14,000 people to law enforcement, which resulted in approximately 1,100 arrests. None had links to terrorism or any threat to aviation.
The data TSA collects “when observed behaviors exceed certain thresholds”—that is, when a traveler garners TSA suspicion—includes:
- first, middle, and last names
- aliases and nicknames
- home and business addresses and phone numbers
- employer information
- identification numbers such as Social Security Number, drivers license number or passport number
- date and place of birth
- languages spoken
- nationality
- age
- sex
- race
- height and weight
- eye color
- hair color, style and length
- facial hair, scars, tattoos and piercings, clothing (including colors and patterns) and eyewear
- purpose for travel and contact information
- photographs of any prohibited items, associated carry-on bags, and boarding documents
- identifying information for traveling companion.
Sunlight Before Signing . . . Clouded
I wrote the other day that it was poor implementation of President Obama’s Sunlight Before Signing promise to post bills for public review before Congress has sent them to the president. (The ideal time to start the Sunlight Before Signing five-day clock is “presentment,” the formal step when Congress sends a bill to the president.)
Today, three bills that have not been presented to the president are posted on Whitehouse.gov as if they are ready for him to sign. (One of them, S. 1508, has been cleared for the president, but not presented. The other two haven’t seen final votes in Congress.)
(Update: Later this morning, a fourth bill was added. H.R. 5502 has been passed by the House and Senate and cleared for the White House, but not presented, according to the Thomas legislative reporting system. It may be that the bill has been presented, but the fact is not yet reported on Thomas. Similarly, H.R. 4173 did have its final vote in Congress yesterday—it was my error to say otherwise—but its presentment is not indicated on Thomas. Based on that, I presume it has not been presented, but I cannot be sure. These facts—ahem—“cloud” this critique of Whitehouse.gov practice.)
They have the notation “In Progress” next to them rather than the date on which they were posted. What that means is lost on me, and I’m a lawyer with years of experience on Capitol Hill and more than a decade in public policy. Where does this leave Joe and Jane Six-Pack?
Transparency is about making public policy accessible to ordinary people so they can oversee their government. This doesn’t help.
Overall, the news remains good. The White House has created an institutional practice of posting bills online for five days before the president signs them, as he promised he would do. Perhaps it’s because we’re coming so close to full implementation of an important transparency promise that it’s disappointing to see this odd detour into posting bills that are not ready for the president’s signature.
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