Archive for May, 2011
Drinking Away Your Constitutional Problems
Santa Clara law professor Brad Joondeph, who runs the very helpful — as a primary document aggregator for all the Obamacare cases – ACA Litigation Blog, thinks he’s stumbled onto something :
So after reading my roughly 500th ACA-litigation-related brief, motion, or filing of some sort, I think I have gotten a little punchy. But it occurs to me that a a great new drinking game for those ACA litigation buffs who sit around on Friday nights drinking beers — a huge cohort, I am sure — would be to read aloud briefs filed by the challengers, and take turns drinking when the word “unprecedented” is used.
Indeed, the argument that there is no Supreme Court precedent sanctioning the assertion of power the government claims – that the individual mandate is, quite literally, unprecedented — goes back to the earliest articulated constitutional arguments against Obamacare, particularly by the “intellectual godfather” of the legal challenges. I can tell you that Cato’s latest Obamacare brief, which we’ll be filing in the Eleventh Circuit — the Florida-led 26-state case – next week, uses the word three times. (We also use “novel.”)
The drinking game that Joondeph proposes, however, is not, um, unprecedented. Josh Blackman has been talking about it incessantly at least since our time writing about the Privileges or Immunities Clause. He even blogged about it last August!
I would suggest that Brad and Josh play the “unprecedented” drinking game to settle the score once and for all, but alas Josh doesn’t drink. Maybe I should step in for him; if I can bet Yale law professor Akhil Amar $100 on the outcome of the litigation, I can certainly do this.
For other connections between booze and the Commerce Clause, see my recent post on the (unfortunately not unprecedented) Care Act.
Yes, Cut Medicaid – It Won’t Be as Painful as You Think
That’s the title of my latest Kaiser Health News column. An excerpt:
The budget blueprint passed last month by House Republicans… would encourage states to cut their Medicaid rolls. As it should: the evidence shows there are millions of people enrolling in Medicaid who don’t need taxpayer subsidies to obtain coverage, and experience shows that Medicaid cuts will not be as painful as you might think….
The president and the Republicans agree that balancing the federal budget is impossible without restraining Medicaid spending. That will be much easier, Mr. President, if we could stop pretending that every single Medicaid enrollee needs to be there.
Read the whole thing here.
Are Higher House Prices Better for the Real Estate Industry?
I’ve long suspected that the primary reason much of the residential real estate industry supports subsidies such as Fannie Mae or the mortgage interest deduction is in the belief that such subsidies increase house prices. And when your income is commission based, higher prices do indeed sound pretty good from the perspective of the industry. Of course, we also hear that the industry supports these subsidies because they want everyone to be a homeowner, wave the flag and have plenty of apple pie. Yes, those seemingly industry subsidies are really for all of us. Perhaps the best one I heard recently was that homeownership subsidies promoted self-reliance. Here I was thinking subsidies are the opposite of self-reliance. Silly me.
But if the price of a good increases, especially relative to income, it can increasingly become unaffordable, with the result that few sales take place. No sales, no commission income. I think even the industry folks would agree something like a $2 million median house price, given current incomes, would be bad for business. So what is the impact of high prices, relative to income, on market turnover?
The chart below the jump presents a scatter diagram of the ratio of median house price to median household income by annual home sales as a percent of the occupied housing stock by metro area. 490 U.S. cities represented from the 2005 American Community Survey, conducted by the Census Bureau.
What Not to Learn from bin Laden’s Killing
The tendency to treat Osama bin Laden’s killing as national holiday akin to V-E day is both understandable and unfortunate. Everyone with a sense of justice appreciates the death of mass murderers, particularly the terrorist sort. But celebrating as if we killed Hitler or won a war plays into al Qaeda’s self-serving myth. Paul Pillar put it well:
An unfortunate irony of the huge reaction to the killing of Bin Ladin is that it continues to give him in death what he worked so hard to achieve in life: the status of arch foe of the most powerful nation on earth. It is a status that conforms with Bin Ladin’s narrative of himself as the leader of the Muslim world, protecting that world against the predations of the Judeo-Christian West, the leader of which is the United States.
We should also avoid drawing sweeping conclusions about our counterterrorism policies from Osama bin Laden’s death. We typically overgeneralize about important events. After the September 11 attacks, for example, even defense analysts tended to interpret al Qaeda’s capability largely through the purview of that plot, rather than treating it as a particularly important data point in al Qaeda’s history. The myopic take made al Qaeda seem far more capable than it was. With that in mind, here are several things that bin Laden’s death either cannot tell us much about or will not tell us much about until more information surfaces.
1. The war in Afghanistan. There are many reasons we should draw down in Afghanistan, but the bin Laden raid offers little intellectual ammunition for either side of the war debate. The intelligence that led to Abbottabad came years ago, from prisoners outside Afghanistan and operations in Pakistan. The helicopters flew from a base in Afghanistan, but it didn’t take a decade of war and a massive ground force to get that. The fact that bin Laden was living in an area of Pakistan where the state was relatively strong does nothing to support the idea that we should fight wars trying to build authority in ungoverned regions lest terrorists gain haven there.
But the fact that Sunday’s events do not serve pro-war arguments does not show logically, the correctness of the anti-war position, which is mine. The pro-war argument, flawed as it is, depends on other claims (i.e. terrorists will gain haven in Afghanistan if we draw down) that bin Laden’s death does not affect. That something is not an orange does little to tell you whether it’s a pear. Hopefully, however, bin Laden’s death may make it easier, politically to get out of Afghanistan.
The President Has an Opportunity on Afghanistan. Will He Use It?
AP Photo/David Guttenfelder
There are not going to be many better opportunities to change course in Afghanistan than the one presented by the killing of Osama bin Laden in Abbottabad. It may be worth highlighting how ripe an opportunity this is:
- The politics on the Hill are changing. It probably comes as no surprise that Reps. Walter Jones (R-NC) and Jim McGovern (D-MA) would like to end the Afghanistan war, but their “Afghanistan Exit and Accountability Act” has brought on co-sponsors like Tea Party stalwarts Reps. Jason Chaffetz (R-UT) and Justin Amash (R-MI). This means that in the days and weeks to come, there will be Republicans on television and radio making the case for withdrawal. That could have a profound effect on where the debate goes from here. On the Senate side, establishment Republican graybeards like Richard Lugar (R-IN) seem to be indicating that their patience is wearing out.
- Wired-in reporters like Time‘s Joe Klein are saying that they believe dramatic drawdowns are coming. Here he goes so far as to suggest that the United States may draw down to roughly 20,000 troops before the end of next year.
- Gen. Petraeus is going to have a very full plate running the CIA, and will have his attention focused on running the sorts of operations like the one Sunday that got bin Laden. Moreover, his replacement, Gen. John Allen, is a Marine, which Tom Ricks suggests makes him “likely to be skeptical of Army support structure, and…likely [to] be comfortable with an austere infrastructure during the U.S. drawdown in Afghanistan.”
- Silly statements by political leaders could misinform the public in useful ways. It was absurd for Rudy Giuliani to say that getting bin Laden was “like taking out Hitler,” but if frames like World War II keep coming up, and if the war against al Qaeda is thought of in analogy with wars against powerful states, historically, once you get the head guy, the war’s over. Everyone knows that’s not the case with a maintenance problem like terrorism, but the public, like Giuliani, is probably casting about for some place where we can call this thing over and move on.
- The neoconservatives and liberal imperialists’ numbers have thinned and they have spread themselves too thinly. Between Iraq, Libya, and Afghanistan, the public seems to be tired of war. And my impressionistic sense is that the public increasingly has had it with the median writer at the New Republic or Weekly Standard.
- The giant debt. The fact is that cutting military spending can’t singlehandedly solve the long-term debt problem, but the zeitgeist of the day, austerity, has a way of clarifying minds about whether using their children’s credit card to pay $100-plus billion per year for a nation-building mission in Afghanistan is really worth the cost.
In short, the president has increasing political cover, a clear pivot point, a widely-appreciated need, public deference, and sound strategic logic for dramatically scaling back in Afghanistan. If he spends a nickel of every dollar of political capital he spent on Obamacare, he can do this. On the other hand, if he fails to seize the opportunity, he’ll have no one to blame but himself.
Indiana Voucher Law a Defeat for Educational Freedom
Indiana Gov. Mitch Daniels signed an expansive new voucher law today. It’s a disaster for educational freedom. Read the full explanation here.
The voucher program has been widely praised as a momentous victory for school choice and Gov. Mitch Daniels on the brink of his long-awaited presidential campaign announcement. In reality, the voucher program is a tactical victory for highly constrained choice won at the price of a broad strategic defeat for educational freedom. This program will greatly expand state regulation of and authority over participating private schools.
In our efforts to expand educational choice across the country, we can’t lose sight of what makes that choice valuable: educational freedom and the diversity of choices it allows to develop. School choice is meaningless if all the choices are the same.
Just a teaser . . . ever heard of Chief Seattle? Private schools in Indiana will know him well if they take a voucher.
Read the piece for these and other shocking details!
Thirty Years of Private Social Security in Chile
The big international story that broke on Sunday understandably was the death of Osama Bin Laden. But another big story was that May 1 also marked the thirtieth anniversary of the introduction of Chile’s successful private pension system. Implemented by José Piñera (now a Distinguished Senior Fellow at Cato) to replace unsustainable public pensions, private retirement accounts have averaged real annual rates of return of more than 9 percent, contributed to economic growth and the rise in savings, and helped turn working Chileans into capitalists. They’ve been a key to Chile’s economic progress and political maturity. The reform has been copied in part or in full by some 30 countries around the world. And contrary to what American critics on the left claimed at the time, private pensions weathered the global financial storm admirably. It’s only a matter of time before the United States and other rich nations begin addressing the crisis in public pensions in the same way. But the sooner the better. See this piece from Investor’s Business Daily on Chile’s system at 30.
Back-Door Tax Increases Are a Recipe for Bigger Government
Martin Feldstein’s on a roll, but not in a good way. Earlier this week in the Wall Street Journal, he advocated throwing in the towel on reforming Social Security into a system of personal retirement accounts. Today, in the New York Times, he endorses big tax increases.
Rather odd positions for someone who served as Chairman of President Reagan’s Council of Economic Advisers. The Gipper must be rolling in his grave.
To be fair, when compared to Obama’s tax-hike plan, Feldstein wants to raise taxes in ways that impose much less damage on the economy. Obama wants to raise tax rate on productive behavior, thus discouraging work, saving, investment, and entrepreneurship. Feldstein, by contrast, wants to cap various tax preferences.
Reducing the budget deficit and stopping the explosion of our national debt will require more tax revenue… But the need for more revenue needn’t mean higher tax rates. …tax revenues can be increased substantially by limiting the deductions, credits and exclusions that are essentially government spending by another name. …such tax expenditures create incentives for wasteful borrowing and spending; they have been factors in the mortgage crisis and the rising cost of health care. …here is a way to curb this loss of revenue without eliminating any individual deduction: limit the total tax saving for any individual to a maximum percentage of his total income. …What’s the result? Taxpayers with incomes of $25,000 to $50,000 would pay about $1,000 more in taxes; those with incomes of more than $500,000 might pay $40,000 more. The cap would affect more than 80 percent of taxpayers. Although they would continue to benefit from the mortgage deduction, the health insurance exclusion and other tax expenditures, their tax savings would not increase if they took out a larger mortgage or a more expensive insurance policy. … a 2 percent cap on tax expenditures in 2011 would raise tax revenue by $278 billion — nearly 30 percent of total projected income tax revenue for this year. The extra revenue would increase over time, reaching nearly half of the projected future fiscal deficits.
I’m not a fan of tax preferences. I agree with much of Professor Feldstein’s argument about the inefficiency and distortions that are created when government plays industrial policy with the tax code.
But there are good ways and bad ways of addressing the problem. If Professor Feldstein was proposing to cap or eliminate tax preferences as part of a plan that also lowered tax rates, that would be great news.
Unfortunately, Feldstein is proposing to cap tax preferences in order to funnel more money to Washington. But giving more tax revenue to politicians and bureaucrats, in the words of P.J. O’Rourke, would be like giving whiskey and car keys to teenage boys.
The big problem with Feldstein’s approach is that any source of additional revenue will ease up the pressure to restrain government spending. There are several budget plans, such as Congressman Ryan’s proposal and the House Study Committee plan, that would significantly improve America’s fiscal position by restraining the growth of federal spending. But these pro-growth initiatives will have zero chance of getting enacted if politicians think more revenue is forthcoming.
America’s fiscal problem is too much spending, not insufficient revenue.
Yes, the tax code is riddled with terrible provisions that are both corrupt and economically inefficient. But those provisions should be eliminated as part of tax reform – not as part of a plan to give politicians an excuse to prop up big government.
Want Medicare & Medicaid Reform? Stay On Message
This morning’s tempest-in-a-teapot concerns an internally inconsistent and now-corrected Washington Post story that claimed House Republicans had abandoned the badly needed Medicare reforms contained in the budget plan they passed the other week.
The original headline read: “Medicare dropped from GOP budget proposal,” even though the article clearly states, “[House Majority Leader Eric] Cantor [R-VA] said, he would press for all the provisions in the Ryan proposal, including changes to Medicare and Medicaid.” The Post has since changed the headline to: “Budget talks: Republicans offer to seek common ground with Democrats.”
The confusion appears to stem from comments such as these by Cantor and House Budget Committee Paul Ryan (R-WI):
The biggest mandatory programs — often called “entitlements” — are Medicare, Medicaid and Social Security. But Cantor said negotiators could avoid the “big three,” which Democrats have vowed to defend, by focusing on changes in other areas. “If we can come to some agreement [and] act to effect those savings now, this year, it will yield a lot of savings in subsequent years,” he said.
At a breakfast for reporters hosted by Bloomberg News, Ryan echoed that view, saying, “We’re not going to get a grand-slam agreement . . . because of just the political parameters” set by Obama. But Ryan said his budget offers a “menu of options . . . that I think we could get that are not necessarily the global agreement on, say, Medicare or Social Security.” That menu includes proposals from Obama’s budget request, such as ending grants for worsted-wool producers and requiring graduate students to pay interest on college loans while they are still in school.
Thus the problem appears to be that Republicans are rising to the media’s bait and trying to predict for reporters how the budget negotiations will play out in the end. Instead of staying on message — Making Medicare look more like Social Security is the only alternative to government rationing and higher taxes…Reform Medicaid the way Congress successfully reformed welfare in 1996…What’s your plan? — Republicans are negotiating with themselves, in public. So instead of getting a pro-reform message before the American people, we get news cycles that make reformers look weak by falsely reporting that Republicans have abandoned the field. This isn’t media bias: if Republicans care about entitlement reform, they need to be more disciplined.
Filed under: Cato Publications; General; Government and Politics; Health Care
Soros, Epstein, and Caldwell on Hayek
Last Thursday must have been Hayek Day. In the morning was the release of the rap video, “Fight of the Century: Keynes vs. Hayek Round Two.” And then in the afternoon a distinguished panel convened in the Cato Institute’s F. A. Hayek Auditorium to discuss Hayek’s great work The Constitution of Liberty, just released in a new definitive edition by the University of Chicago Press. The forum was moderated by Cato fellow in social thought Ronald Hamowy, who edited the new edition. Panelists were Hayek’s intellectual biographer and editor of The Collected Works of F. A. Hayek, Bruce Caldwell; the brilliant legal scholar Richard Epstein; and the hedge-fund billionaire and Open Society Foundations founder George Soros. (Find video and transcript here; easier-to-search video here.)
Let’s Not Go to the Video
Not that I think it will happen for the next several days, but it’s time for the chattering class to move past the White House’s decision not to release death photographs of Osama bin Laden.
The focus on this largely media-driven issue is an unnecessary distraction from what should be a broader discussion about the direction of U.S. counterterrorism efforts. Photographic evidence is not necessary to establish Osama bin Laden’s death. Al Qaeda has not disputed that its founder and leader is, in fact, dead. And photographic evidence has not stopped the conspiracy theorists from claiming that Americans never landed on the moon. If anything, AQ might wish for the photos to be released to keep the focus on them, and on bin Laden. Pakistan’s civilian and military leaders might prefer Americans to be talking about photos, and not the mounting evidence that Pakistan has been playing a double game.
But that is all speculation. The rest of the world seems to want to move beyond the actions of this mass murderer and his organization, and Americans should want that as well. We should revisit all of our policies pertaining to counterterrorism. We should review the policies and procedures that allowed U.S. personnel to deliver justice to bin Laden. We should examine the effect that similar policies have had on AQ, writ large, and inquire as to whether these should be continued or modified. And we should scrutinize the rationale for keeping 100,000 U.S. troops in Afghanistan. Bin Laden’s killing was not contingent upon the creation of a functioning state in Afghanistan, and effective counterterrorism going forward should not be made contingent on similar nation-building missions.
Nearly Half of Detroiters Illiterate. Cause Apparently a Mystery.
A study funded by 10 major foundations reported yesterday that 47 percent of Detroiters are functionally illiterate–unable to read a bus schedule, fill out a resume, or make sense of the directions on an aspirin bottle.
When I checked back in 2008, Detroit public schools were spending $13,000 / pupil, which was then above the national average.
The report notes that half of the illiterate population has either a high school diploma or a GED. That’s beside the point. Virtually the entire illiterate population has completed elementary school, the level at which reading is theoretically taught. That’s seven years of schooling (k-6), at a cost of roughly $100,000, for… nothing.
The study mainly calls for adult education services to remediate the problem after it has occurred. Perhaps when the city’s illiteracy rate reaches 100 percent the recommendations will suggest replacing the failed k-12 monopoly with something more effective. Of course, by then who’ll be able to read them?
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