Archive for February, 2011
SAT/ACT Factoid Debunked
There’s been a factoid making the rounds during the Wisconsin union standoff that you may have seen. I’m not sure what the ultimate source of the factoid is, but here’s the meat of it as reiterated by a blogger for The Economist:
Only 5 states do not have collective bargaining for educators and have deemed it illegal. Those states and their ranking on ACT/SAT scores are as follows:
South Carolina – 50th
North Carolina – 49th
Georgia – 48th
Texas – 47th
Virginia – 44thIf you are wondering, Wisconsin, with its collective bargaining for teachers, is ranked 2nd in the country.
Now, aside from the factoid, if true, providing no real insight into whether collective bargaining is good or bad for education — there are myriad variables at work other than collective bargaining, none of which does this control for — but the factoid itself is highly dubious. Again, it is hard to find the original source for this, but I looked up 2009 ACT and SAT state rankings, and at the very least it seems highly unlikely that Virginia ranks 44th out of all states. According to the ACT ranking, for instance, Virginia places 22nd, and on the SAT (assuming the linked to list is accurate — I’m doing this fast), it ranked 33rd. It’s hard to see how those would be combined for a 44th place overall finish.
How about the Wisconsin second place-finish? Well, that is accurate for the SAT, but notably only 5 percent of Wisconsin students took the SAT – a negligible rate. On the ACT, which is the main test taken in the Badger State, Wisconsin finished 13th — not bad, but hardly great.
So what does this tell you? Not that collective bargaining is educationally good or bad – like I said, you just can’t get there from here — but that you have to be very careful about your sources of information. Unfortunately, that seems especially true when you’re dealing with education.
Privacy? Nuthin’. Respect My Authoritah!
A fascinating enforcement action under the Health Insurance Portability and Accountability Act (HIPAA) shows what really matters in the world of privacy regulation.
The U.S. Department of Health and Human Services has imposed a $4.3 million civil penalty against Maryland-based Cignet Health for violations of its regulations. HHS’s Office for Civil Rights (OCR) found that Cignet violated 41 patients’ HIPAA rights by denying them access to their medical records, which they requested between September 2008 and October 2009. The penalty for these violations is $1.3 million.
But Cigna’s real crime was willful disobedience of the government. Who knows why, but according to the government:
During the investigations, Cignet refused to respond to OCR’s demands to produce the records. Additionally, Cignet failed to cooperate with OCR’s investigations of the complaints and produce the records in response to OCR’s subpoena. OCR filed a petition to enforce its subpoena in United States District Court and obtained a default judgment against Cignet on March 30, 2010. On April 7, 2010, Cignet produced the medical records to OCR, but otherwise made no efforts to resolve the complaints through informal means.
OCR also found that Cignet failed to cooperate with OCR’s investigations on a continuing daily basis from March 17, 2009, to April 7, 2010, and that the failure to cooperate was due to Cignet’s willful neglect to comply with the Privacy Rule. Covered entities are required under law to cooperate with the Department’s investigations.
The penalty for that was $3 million.
Notably, the HHS release says nothing about the condition of the aggrieved parties. How are they doing with their $31,000 a piece? Does it fully compensate for their inability to access medical records during the relevant period?
Just kidding! Nobody really cares.
This enforcement action has nothing to do with remedying a genuine breach of privacy—an annoyance and genuine paperwork problem, yes—and everything to do with sending a message: You will respect my authoritah!
Despite Huawei’s Experience, America Is Open to Chinese Investment
After several days of defiance, Chinese telecom equipment manufacturer Huawei announced Monday that it would abide a recommendation from the Committee on Foreign Investment in the United States (CFIUS) that it divest of U.S. technology company 3-Leaf. CFIUS is an inter-agency group charged with reviewing the national security implications of proposed foreign investments in U.S. companies and assets and advising the president about whether or not he should block those transactions on security grounds. CFIUS is composed of representatives from 16 different U.S. government departments and agencies and is chaired by the Secretary of the Treasury.
Last week, CFIUS issued a recommendation that the president block Huawei’s $2 million purchase of assets—including certain patents—from 3-Leaf on the grounds that the transaction presented a risk to national security. (Technically, the recommendation was for the president to compel Huawei to divest of 3-Leaf, since the transaction was consummated in May 2010, before CFIUS was made aware of the deal). Apparently, CFIUS was concerned about Huawei’s ties to the Chinese government—specifically the Chinese military.
Despite assurances from Huawei’s vice president of government affairs, William Plummer, that the company “is 100 percent employee-owned and has no ties with any government, nor with the PLA,” Huawei’s ownership structure is opaque. A letter submitted to administration officials from U.S. Senators Jim Webb (D-VA) and Jon Kyl (R-AZ) alleged that Huawei has a “history of illegal behavior and ties with the People’s Liberation Army, Taliban and Iranian Revolutionary Guard.” The letter also accused Huawei of various patent and trademark infringements and suggested that the small scale of Huawei’s acquisition ($2 million) was designed to enable the transaction to avoid scrutiny—a theory that is lent credibility by Huawei’s decision not to inform CFIUS of its intention to purchase 3-Leaf.
Huawei’s decision this week to abandon the deal spares the president from issuing a formal opinion on the matter, and in all likelihood spares Huawei the added humiliation of a formal rejection from the U.S. president. Meanwhile, Huawei and officials of the Chinese Ministry of Commerce are lambasting the CFIUS decision as further evidence that the United States is closed to Chinese direct investment, and implying that U.S. investors might expect similarly shoddy treatment in China. What to make of all of this?
Is Buying a House with Cash Bad?
The Washington Post reported today that the increase in January home sales was driven mainly by an increase in all-cash sales. Whereas I would have thought increasing sales, especially driven by cash buyers, was a sign of market strength; the Post and the National Association of Realtors portrayed this as a bad thing. NAR chief economist Lawrence Yun went so far as to call this portion of the market “unhealthy.”
Of course, what NAR and the rest of the real estate lobby were complaining about was that home sales and prices were not being driven by easy credit. For the housing industry, it would seem that the “correct” house price is the price that is propped up by loose credit.
Yun goes on to say that ”investors are taking the advantage of conditions to purchase undervalued homes.” I used to work with Yun, he’s a smart guy, but I don’t think anyone is smart enough to say that the homes being sold are ”undervalued.” Consider that most non-industry forecasters are projecting further price declines.
More cash sales actually means less future foreclosures, because the cash buyers start out with 100% equity from day one. They are very unlikely to walk away, regardless of the future path of prices. Cash buyers also pay prices that are closer to reflecting the fundamentals of supply and demand, which are ultimately driven by income and demographics.
What the high percentage of cash borrowers, at 37 percent, says to me, is that there is a significant demand for housing that isn’t dependent upon massive taxpayer subsidies to the mortgage industry.
Logan vs. Kagan on Military Spending
In January, Robert Kagan of the Brookings Institution wrote an epic-length cover story for the Weekly Standard urging that not only should military spending not be cut, but that it should be increased.
I disagreed, and responded with an article in the April 2011 issue of the American Conservative that is now available online. Here’s the basic gist:
[Kagan's] argument centers on three claims. First, [he] alleges that America faces a dire threat environment in which a more restrained strategy would only amplify the dangers. Second, he argues that cutting military spending can’t solve our fiscal dilemma. And finally, he asserts that America simply cannot change its grand strategy, for we have always been interventionists.
Each claim is wrong: America could make substantial changes to its grand strategy that would save hundreds of billions of dollars per year without endangering our national security.
Read for yourself and see if you think I moved the ball forward at all. We debate, you decide.
P.S.: I have a polemical side, but the “Beltway brigadier” trope in the subhead was not mine — in case anyone at the, uhh, “National Institute for Civil Discourse” is concerned.
The Necessary & Proper Clause Isn’t a Blank Check
Cato legal associate Trevor Burrus and I have an article about to be published in the Syracuse Law Review that grapples with United States v. Comstock, last term’s big Necessary and Proper Clause case that could have big ramifications on the Obamacare litigation (but probably not, we argue).
Here’s the abstract:
In United States v. Comstock, the Supreme Court upheld § 4248 of the Adam Walsh Act, which allows for the civil commitment of federal prisoners deemed “sexually dangerous” for an indefinite period after they’ve completed their sentences. The case dealt with that most basic of constitutional questions: Where does Congress find its authority to enact a particular law?
Justice Breyer, writing for the majority, found warrant for § 4248 in Congress’s power “to make all Laws which shall be necessary and proper for carrying into Execution” its other powers. But which of Congress’s enumerated powers does § 4248 execute? And is § 4248 necessary and proper for executing that power? Unfortunately, the Court focused mainly on the second question, arguing that Congress has “broad authority” to enact laws to further its enumerated powers. Moreover, the five-factor “test” Breyer offered asked not whether § 4248 was necessary and proper for executing an enumerated power, but for “a jumble of unenumerated ‘authorities,’” as Justice Thomas put it in a searching dissent joined by Justice Scalia.
Fortunately, Justice Breyer’s opinion was joined in full by only four other justices — with Justices Kennedy and Alito writing separately to emphasize the strict requirements that federal laws invoking the Necessary and Proper Clause must meet (even if those requirements were satisfied here). These concurrences, along with an impracticable majority opinion and a logically powerful dissent, suggest that Comstock may have limited application beyond the four corners of civil commitment law. Most prominently, Comstock seems to have little effect on the ongoing Obamacare litigation.
Read the whole thing. Also read Ilya Somin’s article on Comstock in last year’s Cato Supreme Court Review.
$61 Billion in Cuts in Perspective
Talk of a government shutdown is heating up. The current continuing resolution funding the government is set to expire on March 4th. Last week, House Republicans passed a bill that would fund the remainder of fiscal 2011 at $61 billion below fiscal 2010 levels. Senate Democrats are balking at the $61 billion in cuts and the president has issued a veto threat.
The following chart measures $61 billion in cuts against the president’s fiscal 2011 estimates for total federal spending, the deficit, and interest on the debt:
As the chart shows, the proposed cuts amount to less than a third of what taxpayers will pay in interest on the debt alone this year.
The $61 billion in cuts, which are woefully insufficient, would come from a relatively small category of government spending (non-defense, discretionary spending). However, that merely indicates the need to tackle defense spending and budget-busting “mandatory” programs. Unfortunately, the president’s latest budget proposal punted on these critical areas, and the Republicans have yet to put forth a plan let alone a coherent message.
My Favorite Constitutional Right
Both the Washington Post and NPR refer to the Tenth Amendment as a “tea party favorite.” I would have thought that tea partiers — and most of the rest of us — liked all 10 of the Bill of Rights, and indeed the rest of the Constitution as well. Now, sure, I guess if the ACLU could publish (in the 1970s or 1980s) the poster below, an “illustrated guide to the Bill of Rights” featuring only the First, Fourth, Fifth, Sixth, Eighth amendments (and only parts of those), along with the Fourteenth, Fifteenth, and Nineteenth amendments, which are not part of the Bill of Rights — well, then, I guess the Tea Party is entitled to have its own favorite parts of the Bill of Rights. But then, it was NPR and the Washington Post, not tea partiers, who suggested that the Tenth Amendment was perhaps uniquely a “tea party favorite.” I would urge the ACLU, the Tea Party, and all other Americans who care about freedom to consider the entire Constitution a “favorite.” Of course, the Tenth Amendment is pretty crucial, reminding policymakers that the federal government does not have any powers not delegated to it in the Constitution.
Two Reasons Governors Should Stop Implementing ObamaCare
The Washington Post reports:
Practically every week, a Republican governor or lawmaker announces a new effort to kill the health-care law or undercut its implementation.
Unfortunately, many of those same governors are still implementing the law when they should be outright refusing to do so.
In my Kaiser Health News column today, I offer two reasons why (at least) Republican governors should stop implementing ObamaCare:
Swearing an oath to support the Constitution also obligates governors to use lawful means to prevent its unlawful abuse. Governors who believe ObamaCare to be unconstitutional are as duty-bound to stop implementing the law as they are to challenge it in court…
It is the height of fiscal irresponsibility to be making new spending commitments (1) when the federal deficit is $1.5 trillion and state budget deficits are a cumulative $175 billion, (2) when those new commitments create a framework for a massive new entitlement program, and (3) when that new spending comes under the auspices of a law that has been invalidated by one federal court and may be invalidated by the nation’s highest court.
So far, the only governors I’ve seen take a firm stand against implementing the law are Rick Scott (R-FL) and Sean Parnell (R-AK), who respectively govern the fourth-largest and the fourth-smallest states. (Disclosure: I served on Rick Scott’s transition team.)
Spending Restraint Works: Examples from Around the World
America faces a fiscal crisis. The burden of federal spending has doubled during the Bush-Obama years, a $2 trillion increase in just 10 years. But that’s just the tip of the proverbial iceberg. Because of demographic changes and poorly designed entitlement programs, the federal budget is going to consume larger and larger shares of America’s economic output in coming decades.
For all intents and purposes, the United States appears doomed to become a bankrupt welfare state like Greece.
But we can save ourselves. A previous video showed how both Ronald Reagan and Bill Clinton achieved positive fiscal changes by limiting the growth of federal spending, with particular emphasis on reductions in the burden of domestic spending. This new video from the Center for Freedom and Prosperity provides examples from other nations to show that good fiscal policy is possible if politicians simply limit the growth of government.
Honoring Our Greatest President
A new Gallup Poll shows that Americans are most likely to say that Ronald Reagan was our greatest president. Reagan had many good qualities, but this is not plausible. Following Reagan in the poll was Lincoln, who despite a devastating war and a vast expansion of government, did end slavery and preserve the union. Then come Clinton and Kennedy, about whom one can only bemoan the historical illiteracy of the voters. They were actually the top two picks among Democrats, followed by Obama.
Only in fifth place do we find George Washington, the man who led the revolution that created the United States and then ensured that it became an enduring republic. Washington’s accomplishments are the subject of my weekly column at the Britannica blog:
Had he been a Caesar, a Cromwell, a Napoleon, we know what he would have done. A French officer who wrote a book about the new country of America told us what he in fact did: “This is the seventh year that he has commanded the army and that he has obeyed the Congress; more need not be said.” But one more thing was said: The Commander in Chief traveled to Annapolis, where the Continental Congress was meeting, returned his commission, and said, “Having now finished the work assigned me, I retire from the great theatre of Action; and bidding an Affectionate farewell to this August body under whose orders I have so long acted, I here offer my Commission, and take my leave of all the employments of public life.” And he created a new order for the ages.
It is appropriate that we still celebrate the birth of George Washington — and in fact the actual federal holiday on the third Monday in February is Washington’s Birthday.
Wisconsin, Virginia and Public-Sector Unions
The struggle over collective bargaining and government worker benefits continues in Wisconsin. Residents of the Badger State may be interested in comparing their government’s fiscal and union policies with policies in the Old Dominion.
Wisconsin
- Collective bargaining (monopoly unionism) in place for government workers, with about 52 percent of state/local workers in unions (Source: Table 1 here)
- State debt as a share of income: 4.6% (Source: Moody’s)
- State unfunded pension obligations as a share of GDP: 32% (Source: Andrew Biggs)
- Score on quality of state government management: B- (Source: Pew Center)
- Score on Pew’s subcategory for “people” management: B-
Virginia
- Collective bargaining in state and local government banned by a 1993 statute signed into law by Democratic Governor Douglas Wilder
- State debt as a share of income: 2.1%
- State unfunded pension obligations as a share of GDP: 17%
- Score on quality of state government management: A-
- Score on Pew’s subcategory for “people” management: A
Public sector unionism is, of course, just one factor affecting a state’s fiscal and management results. But there is a statistical correlation across the 50 states on unionism and some public policy outcomes (see here and here).
Ending monopoly unionism in state government would not be the apocalyptic event that some Wisconsin protesters seem to think. Indeed, collective bargaining is not a “right” of government workers, but a special privilege that stands in the way of modern and flexible policy management. Hopefully, public sector unions will eventually go the way of private sector unions and the dinosaurs.
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