Archive for April, 2011
Obama and Military Tribunals
Yesterday, Obama’s attorney general, Eric Holder, held a press conference and announced that Khalid Shaik Mohammed (KSM) would be prosecuted for war crimes before a military tribunal. It’s probably fair to say, as some newspapers have noted, that the idea of bringing KSM to New York City to be tried in civilian court for the 9/11 atrocity was Holder’s “signature” decision since becoming attorney general–and that that idea is now dead. However, Obama and Holder conceded a place for tribunals more than a year ago and they could never really offer a good explanation as to why some persons would go to civilian court and why others would go before tribunals. Like Bush, Cheney, and Rumsfeld, Obama and his people would just sorta decide case-by-case.
Conservatives are chortling over Obama’s apparent embrace of Bush policies, such as keeping Guantanamo open and reviving trials before tribunals. Like the escalation of the war in Afghanistan, however, Obama has not stumbled on to the correct path. He has instead shown exceptionally poor judgment yet again. Two questions are now looming on the horizon. First, prosecutors are anxious to have a lengthy 9/11 trial, but what if KSM calls the tribunal a farce and decides to skip the trial, plead guilty, and then demands to be executed so he can become a martyr? The tribunal might grant the wish, but the legitimacy of the military system may be called into question again–especially in the Muslim world. Second, the Pentagon has made it pretty clear that anyone acquitted by a tribunal will remain a prisoner at Guantanamo (pdf). There may be a legal rationale for that, but, again, how is that going to be perceived by the world? As a start, one might consider how we would react if an American were acquitted by a court abroad, but was nonetheless returned to his prison cell to be detained indefinitely.
There is no need to go there. Obama should close Gitmo and transfer the prisoners to Bagram and hold them there, but with full transparency. The Bush policies of secret prisons, secret interrogation methods, and secret trials before special military courts were wrongheaded and remain so.
For additional background, go here.
Federal Spending: Ryan vs. Obama
House Budget Committee Chairman, Paul Ryan, introduced his budget resolution for fiscal 2012 and beyond today entitled “The Path to Prosperity.” The plan would cut some spending programs, reduce top income tax rates, and reform Medicare and Medicaid. The following two charts compare spending levels under Chairman Ryan’s plan and President Obama’s recent budget (as scored by the Congressional Budget Office).
Figure 1 shows that spending rises more slowly over the next decade under Ryan’s plan than Obama’s plan. But spending rises substantially under both plans—between 2012 and 2021, spending rises 34 percent under Ryan and 55 percent under Obama.
Figure 2 compares Ryan’s and Obama’s proposed spending levels at the end of the 10-year budget window in 2021. The figure indicates where Ryan finds his budget savings. Going from the largest spending category to the smallest:
- Ryan doesn’t provide specific Social Security cuts, instead proposing a budget mechanism to force Congress to take action on the program. It is disappointing that his plan doesn’t include common sense reforms such raising the retirement age.
- Ryan finds modest Medicare savings in the short term, but the big savings occur beyond 10 years when his “premium support” reform is fully implemented. I would rather see Ryan’s Medicare reforms kick in sooner, which after all are designed to improve quality and efficiency in the health care system.
- Ryan adopts Obama’s proposed defense (security) savings, but larger cuts are called for. After all, defense spending has doubled over the last decade, even excluding the costs of wars in Iraq and Afghanistan.
- Ryan includes modest cuts to nonsecurity discretionary spending. Larger cuts are needed, including termination of entire agencies. See DownsizingGovernment.org.
- Ryan makes substantial cuts to other entitlements, such as farm subsidies. Bravo!
- Ryan would turn Medicaid and food stamps into block grants. That is an excellent direction for reform, and it would allow Congress to steadily reduce spending and ultimately devolve these programs to the states.
- Ryan would repeal the costly 2010 health care law. Bravo!
To summarize, Ryan’s budget plan would make crucial reforms to federal health care programs, and it would limit the size of the federal government over the long term. However, his plan would be improved by adopting more cuts and eliminations of agencies in short term, such as those proposed by Senator Rand Paul.
Tuesday Links
- Republicans have a big opportunity to undo Obamacare and reform Medicaid and Medicare all at once.
- It’s a good thing, too, because we’re facing a big debt crisis and if we don’t change course, federal spending will crest 42% of GDP by 2050.
- There’s also a big elephant in the room in an excessively complicated tax code.
- One has to wonder if the Republicans intend to put the big sacred cow of defense spending on the table.
- Unrelated to the budget, education choice proponents scored a big victory in the U.S. Supreme Court yesterday in ACSTO v. Winn, a decision that upheld education tax credits:
Paul Ryan and Political Discipline
Today POLITICO Arena asks:
Paul Ryan’s budget — hard-headed fiscal sanity or inhumane?
My response:
Either we discipline ourselves, painfully, or soon enough the Chinese and other lenders will do it for us, more painfully still, by refusing to loan to us any longer at currently low interest rates. And in that event, the debt service will be all consuming. Neither individuals nor nations can go down the road we’re on without paying the price.
Margaret Thatcher put it plainly: “The trouble with socialism” — let’s be honest, we’re socializing the costs of our appetites by imposing them on our children and grandchildren – ”is that eventually you run out of other people’s money.”
Inhumane? The inhumanity is among those demagogues who put us on this path, promising something for nothing year in and year out. Paul Ryan deserves our gratitude for biting the bullet at last. The ball is now in the court of the demagogues.
Does Virginia Even Have Standing to Challenge Obamacare?
As I described yesterday in the context of Cato’s latest brief, Virginia’s challenge to the constitutionality of the individual mandate is now on appeal before the Fourth Circuit (the federal appellate court that covers Maryland, Virgnia, and the Carolinas). Before the court even considers the constitutional merits, however, it must confirm that the state has standing to bring the lawsuit in the first place.
Indeed, two amicus briefs filed by some law professors argue that the state does not have the legal power to challenge the constitutionality of Obamacare. But Pacific Legal Foundation attorney and Cato adjunct scholar Timothy Sandefur filed a brief responding to those briefs and arguing that Virginia does have standing to bring the case.
Medicare and Medicaid Reform
House Budget Committee chairman Paul Ryan (R-WI) is proposing reforms to Medicare and Medicaid as part of his budget proposal for fiscal 2012. Readers who are interested in getting a better understanding of these pillars of the federal welfare state should check out two Cato essays on our Downsizing Government website.
An essay on Medicare explains the program’s numerous shortcomings and an essay on Medicaid examines that program’s flaws. Suggested reforms in the essays are similar to reforms in Rep. Ryan’s proposal, including converting Medicaid to a block-grant program.
It’s All In How You Define ‘Community’
Every week, the National Journal’s Education Expert blog tackles a different issue, and from hereon out I’ll be weighing in on many of them, crossposting at Cato@Liberty. I sent in my first entry today, which appears as a “guest response” while they set me up to appear as a regular. It’s on my favorite topic — education and social cohesion — so hopefully I’ve started with a bang.
Enjoy, and thanks to the National Journal for bringing a libertarian perspective on board:
Looking at the evidence suggests that school choice is the best educational system to build strong communities. A lot, though, depends on how you define “community.”
Diane Ravitch essentially defines a community as a “neighborhood,” and certainly neighborhoods can be a form of community. But neighborhoods are hardly close to the only type of community, and to the extent that neighborhoods – or, given education reality these days, school districts, states, and the federal government – often include people with very diverse backgrounds, desires, and norms, public schools can be very destructive to social cohesion.
Start with simple logic: If diverse people are required to support a single system of schools, is it more likely to result in unity or conflict? The answer, of course, is conflict. If people cannot agree on what math curriculum to use, they have to fight it out politically. If they cannot agree on whether or not there should be school uniforms, they have to fight that out. Indeed, any disagreement has to be resolved in a political arena, and the term “arena” certainly does not connote cohesion.
We see this forced conflict manifested constantly in education. States and communities are regularly inflamed over the teaching of human origins, whether we’re talking Scopes Monkey or Intelligent Design. We have disputes of which religious groups will get their holidays off from school. And then there’s the ever contentious teaching of U.S. history.
And conflict is only one manifestation of the division caused by trying to bring diverse people under a single government umbrella. Renowned social capital theorist Robert Putnam has found that where there is significant diversity there is also major atomization – people “pull in like a turtle” – quite possibly because they have few recognized, shared norms to hold onto. So not only don’t you have cohesive – but separated – groups, you have seriously compromised intra-group cohesion as well. Communities of all types are weak.
How do you overcome these very real problems through the education system? Let people choose schools – especially private schools – with the money that currently all goes to public schools. Then, not only can you phase out the inherently adversarial system that is public schooling, you can empower people to choose schools based on their shared norms and values.
But won’t this “balkanize” Americans? Maybe, in that many people will choose to attend schools with people like themselves. That, though, is certainly preferable to forcing us at each others’ throats. Moreover, there is evidence that allowing people to choose schools helps to meaningfully overcome serious divisions. Research by Jay Greene and Nicole Mellow, for instance, found that lunch tables – where students sit by true, voluntary choice – at private schools were better integrated by race than those at public institutions. Why? There could be many explanations, but a very reasonable one is that the ties that bind kids at private schools – common religious values, perhaps shared interest in a particular curriculum – help to overcome divisions such as race.
Does more work need to be done to prove that choice is crucial to building communities? Absolutely. Unfortunately, for the most part we haven’t even considered that government schooling might be more divisive than unifying, despite the very real – and painful – evidence that that could indeed be the case. Well, we need to seriously consider the possibility that choice is better mortar for building communities than government schooling because, respect for “neighborhood schools” notwithstanding, the evidence in favor of choice – and against government schooling – is both real and mounting.
Homeownership and Mortgage Debt
One of the rationales commonly given for massively subsidizing our mortgage market is that without such homeownership would be out of reach for many households. Such a rationale implies that more debt should be associated with more homeownership. (Let’s set aside the obvious, how are you actually an owner without any equity?)
But is that the case. The chart below compares the homeownership rate with the average debt-to-value ratio of U.S. households. (Data on debt-to-value is from the Fed’s Flow of Funds and homeownership is from the Census Bureau).
By 1960, the homeownership rate was already over 60%, yet debt-to-value was less than 30%, half of the current value. Even in 1990, when homeownership reached over 64%, debt-to-value was still under 40%. From 1990 until today, the percentage of mortgage debt to value increased by over 50%, all to gain a 2 percentage point increase in homeownership. So it seems the story of the last 20 years has been a massive increase in home debt with very little increase in actual homeownership rates. The converse should also hold: reducing homeowner leverage should have little, if any, impact on homeownership rates.
Cato’s Latest Obamacare Brief: Congress Cannot ‘Commandeer the People’
A recent poll showed that 22% of Americans believe Obamacare has been repealed and 26% aren’t sure. Yet here at Cato, we’re all too aware that the massive, unconstitutional, and fundamentally unworkable overhaul of our health care system still looms on the horizon.
While two lower courts have struck down Obamacare in whole or in part, three others have ruled it constitutional, including a D.C. District Court opinion that claimed for the federal government the right to regulate the “mental activity” of decision-making. As litigation progresses to the appellate level, this latter decision has proven to be more a hindrance to Obamacare’s supporters than a help, its Orwellian pronouncement being hard to ignore while the government downplays the significance of the power Congress is asserting. Nevertheless, Obamacare’s constitutionality—with a focus on the individual health insurance mandate—remains an open question until ruled upon by the Supreme Court.
Cato’s latest amicus brief is in the Fourth Circuit, in the case brought by Virginia Attorney General Ken Cuccinelli. In this case, unlike in the Sixth Circuit (in which we also filed a brief), it is the federal government that appealed an adverse district court decision that struck down the individual mandate. In our brief, joined by the Competitive Enterprise Institute and Prof. Randy Barnett (the intellectual godfather of the Obamacare legal challenges, and also a Cato senior fellow), we argue that the outermost bounds of existing Commerce Clause jurisprudence prevent Congress from reaching intrastate non-economic activity regardless of whether it substantially affects interstate commerce. Nor under existing law can Congress reach inactivity even if it purports to act pursuant to a broader regulatory scheme.
Allowing Congress to conscript citizens into economic transactions is not only contrary to existing Commerce and Necessary and Proper Clause doctrine—as broad as that doctrine is—but it would fundamentally alter the relationship between the sovereign people and their supposed “public servants.” The individual mandate “commandeers the people” into Congress’s brave new health care world. If Obamacare is allowed to stand, the only limit on federal power will be Congress’s own discretion.
The case will be argued before the Fourth Circuit in Richmond on May 10. Read more from Prof. Barnett on Obamacare here and check out the half-day event we recently held on the legal and economic problems with the law. Finally, though his name isn’t on our brief because he hasn’t yet become a member of the bar, many thanks to legal associate Trevor Burrus for his work on it.
Government Can Tax Your Income, But It Doesn’t Own It in the First Place
As Andrew and Adam have already explained, today’s decision in ACSTO v. Winn, though grounded in the technical legal doctrine of “standing,” is a big win for school choice and state flexibility in education reform. Even more importantly, it makes clear that there is a difference between tax credits and government spending; to find that tax money was used for unconstitutional ends here would have assumed that all income is government property until the state allows taxpayers to keep a portion of it. That is not, to put it mildly, how we think of private property.
Of course, even had the Court found that Arizona’s scholarship scheme involved the use of state funds, the program would have been insulated from Establishment Clause challenge because it offered the “genuine and independent choice” that the Court has long required in such cases (most notably the 2002 school voucher case of Zelman v. Simmons-Harris). Many layers of private, individual decisionmaking separate the alleged entanglement of taxpayer funds with religious activities: the choice to set up a scholarship tuition organization (STO), the choice by an STO to provide scholarships for use at religious schools, the choice to donate to such an STO, the choice to apply for a scholarship, and the choice to award a scholarship to a particular student.
Far from being an impediment to parental control over their children’s education or an endorsement of religious schooling, the autonomy Arizona grants taxpayers and STOs ultimately expands freedom for all concerned. For more on that, see Cato’s amicus brief.
Also interesting about the case is that it offers us Justice Elena Kagan’s first significant opinion, for the dissenting four justices. While not surprising that she would be in dissent here, in a “conventional” 5-4 split — although the “conservatives” adopted the position advocated by the Obama administration – there do appear to be some eyebrow-raising turns of phrase. I won’t comment until I finish reading the opinion, but Ed Whelan offers an initial reaction at NRO’s Bench Memos blog.
SCOTUS Issues a Super-Zelman Decision on Education Tax Credits
Today, the Supreme Court of the United States issued the Zelman decision for education tax credits. More than that, it’s Super-Zelman.
The findings in Zelman apply just as well to education tax credit programs, but only credit programs allow taxpayers to spend their own money on education.
As Andrew Coulson explained in detail earlier, the Court ruled that education tax credits are not government funds, and the plaintiffs therefore have no standing to bring suit in the first place. They were not harmed because none of their money was collected and then disburse by the state.
Children are rightly our primary concern, but taxpayers deserve more consideration than they often get in debates over education reform.
Education tax credit programs can expand educational choice and freedom while respecting the preferences and values of the individual taxpayers who earned that money in the first place.
Voucher programs simply cannot provide this kind of accountability to both parents and taxpayers.
Congressman Ryan’s Budget Is a Big Step in the Right Direction
The chairman of the House Budget Committee, Rep. Paul Ryan of Wisconsin, will unveil his FY2012 budget tomorrow. Not all the details are public yet, but what we do know is very encouraging.
Ryan’s plan is a broad reform package, including limits on so-called discretionary spending, limits on excessive pay for federal bureaucrats, and steep reductions in corporate welfare.
But the two most exciting parts are entitlement reform and tax reform. Ryan’s proposals would simultaneously address the long-run threat of bloated government and put in place tax policies that will boost growth and improve competitiveness.
- The long-run fiscal threat to America is entitlement spending. Ryan’s plan will address this crisis by block-granting Medicaid to the states (repeating the success of the welfare reform legislation of the 1990s) and transforming Medicare for future retirees into a “premium-support” plan (similar to what was proposed as part of the bipartisan Domenici-Rivlin Debt Reduction Task Force).
- America’s tax system is a complicated disgrace that manages to both undermine growth and promote corruption. The answer is a simple and fair flat tax, and Ryan’s plan will take an important step in that direction with lower tax rates, less double taxation of saving and investment, and fewer distorting loopholes.
One potential criticism is that the plan reportedly will not balance the budget within 10 years, at least based on the antiquated and inaccurate scoring systems used by the Congressional Budget Office and Joint Committee on Taxation. While I would prefer more spending reductions, I’m not overly fixated on getting to balance with 10 years.
What matters most is “bending the cost curve” of government. Obama’s budget leaves government on auto-pilot and leaves America on a path to becoming a decrepit European-style welfare state. Ryan’s budget, by contrast, would shrink the burden of federal spending relative to the productive sector of the economy.
Along with other Cato colleagues, I’ll have more analysis of the plan when it is officially released.
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