Professor Gyourko’s five myths:

1.  Housing is a great long-term investment.

2.  The homebuyer tax credit makes buying a house more affordable.

3.  Homeowners are better citizens.

4.  It’s safe to buy a house with a very low downpayment.

5.  Owning is always cheaper than renting.

You’ll have to read the op-ed to see his explanations.  An important qualification on his analysis is that in many cases what can be good for the buyer, such as putting no money down, may not be good for the economy if it results in additional foreclosures.

• The federal government is assuming a larger share of the Medicaid bill.
• General Electric might eventually need to be renamed Government Electric.
• The government’s mail monopoly lost $3.8 billion last fiscal year and could lose more this year.
• The $98 billion in improper payments made by the federal government last year undermines the case for expanding its role in subsidizing health care.
• Cost overruns in the British government mirror problems in the U.S. government.

The results of a new survey suggest that one-fifth of UK-based entrepreneurs earning more than GBP150,000 are planning to flee Britain in search of countries with more favorable tax rates. The poll of more than 300 entrepreneurs by business advisors Tenon also found that many more may follow in an attempt to escape the 50% rate of income tax, due to be introduced from next April on annual incomes above GBP150,000, with nearly half of the respondents (48%) still deciding what action to take. …Tenon points out that in the last month, high profile names such as the actor Sir Michael Caine and the artist Tracey Emin have threatened to change their tax residency to countries with more favorable tax rates. Popular locations for redomiciling include Monte Carlo, Guernsey, Liechtenstein, and the Cayman Islands. Andy Raynor, Chief Executive of Tenon Group, noted that entrepreneurs are showing their disapproval of the tax measures by “letting their feet do the talking.”

The Mayor of London, meanwhile, is much less restrained regarding the foolishness of Gordon Brown’s class-warfare policy. Here’s what he has to say in the Daily Telegraph:

Not everyone can be relied upon to mourn the departure of Tracey Emin and her duvet. …Some readers may feel that the country can rub along without her. …And then there may be people who don’t give a monkey’s that Michael Caine is thinking of vamoosing, or that we are about to lose Eddie Jordan, the former Formula One chief, or the milk tycoon Lord Haskins. Some of you may not care a tinker’s cuss if the former bookshop king Tim Waterstone deserts these shores, and as for the impending absence of Hugh Osmond, an entrepreneur who has had a role in everything from pizza to insurance, you may feel that we just have to dry our eyes and get a grip on our feelings. …the 50p tax rate that is beginning to drive these people away is a disaster for this country, and it is a double disaster that no one seems willing to talk about it. When Margaret Thatcher’s government cut the top rate of tax to 40 per cent in 1988, she was completing a series of reforms – beginning with the removal of exchange controls and followed by the Big Bang – that helped to establish London as the greatest financial centre on earth. Britain had been transformed from a sclerotic militant-ridden basket-case to a dynamic enterprise economy, and the capital became a global talent magnet. …So it is utterly tragic, at the end of the first decade of this century, that we are back in the hands of a government whose mindset seems frozen in the wastes of the 1970s. If Gordon Brown remains in power – and perhaps even if he does not – Britain’s top rate of tax will soar far above that of our most important global competitors. …even on the Government’s figures it is only due to raise £2.5 billion of the £700 billion required – and those estimates may be wildly optimistic. This tax is predicted to drive away at least 25,000 people; it may simply encourage more avoidance; it may actually cost money, not bring it in. After all, when Mrs Thatcher cut the top rate in 1988, the Treasury saw yields go up. People stopped avoiding taxation; people thought it worth their while to get up at 5am and work that extra bit harder – and the share paid by higher-rate taxpayers actually increased as a result of the tax cut. What Gordon Brown wants to do is therefore economically illiterate.

By the way, I’m not picking on England. America is soon going to be making the same self-destructive mistake. Here’s my video on the broader subject of class-warfare tax policy.

You probably have heard about the University of California Regents voting yesterday for a 32-percent tuition hike over the next two years. Not surprisingly, many students are angry, some enough that they were arrested protesting outside the Regents’ meeting.

Now, a 32 percent hike over two years isn’t small. But here’s the thing: California has typically charged students very little relative to both state taxpayer funding and national averages. As you can see in the chart below, which uses data from the State Higher Education Executive Officers, net per-pupil tuition revenue (meaning revenue from tuition minus any state financial aid) in California has hovered around $1,200 over the last 25 years, and has only gone up about $18 per year. Meanwhile, state taxpayers have been shelling out around $7,300 per pupil per year, with about a $3 annual increase. So state taxpayers have been furnishing the vast majority of funding for California college students, and students have done very little to make up the vast gulf between what they pay and what taxpayers shell out.

How does California compare to the rest of the nation? On average for all states, net per-pupil revenue from students has risen from just about $2,000 to $4,000, putting the ever-growing average around $3,000, or close to three times what Golden State students have been furnishing. Funding from state and local taxpayers, meanwhile, has been just slightly lower nationally than in California.

So California students have been getting a heck of a deal, which is no doubt one among many reasons the state is on fiscal life support. Sooner or later bills come due, and that has left the state little choice but to make students pay more for the education of which they are by far the biggest beneficiaries.

Naturally – but still shamelessly – students are acting like victims now that the decrepit gravy train is slowing down a bit.  Unfortunately, the adults in charge of California colleges are also naturally — but perhaps even more shamelessly – stoking student anger so that they don’t have to do things that make their jobs less pleasant.

Despite the utterly unsustainable taxpayer funding for higher education that California has doled out for decades, for instance, UC president Mark Yudof had no qualms about declaring that:

We’re being forced to impose a user tax on our students and their families. This is a tax necessary because our political leaders have failed to adequately fund public higher education.

Last I checked, what a customer pays for a service is called a “price” not a “tax.” A tax is what has been used to make taxpayers bear by far the biggest part of California’s higher education burden while students have furnished but a token amount. And please don’t give us the “failed to adequately fund” line. UC Berkeley Chancellor Robert Birgeneau has been happily trotting out that disproven dreck in a grab for federal taxpayer dollars at the same time it has been discovered that he’s been pushing millions of dollars intended for academic and other purposes to Berkeley athletics.

It’s hard enough to accept the underfunding bit when the data clearly show it not to be the case. It’s even harder when college leaders push their precious dollars to water polo and golf.

It’s time in California for the adults to stop acting like kids, and for the kids to start paying their share. But don’t get your hopes up, at least in higher education. It seems that no one there is without a shameless sense of entitlement.

The Department of Homeland Security has started a program called the “I E-Verify” campaign for businesses that use the federal background check system on its employees. If you see businesses with “I E-Verify” decorations or insignia, they at least indirectly support a national ID system in the United States. This can help you decide whether or not you want to spend your dollars with them.

According to Reuters, OMB Director Peter Orszag told reporters that the embarrassing figures from Medicare and Medicaid demonstrate the need for health care reform. I would concur if “reform” meant reducing the government’s role in health care. However, he means the opposite, which raises the question of how giving more money to an already waste-prone and bureaucratic federal health system can possibly make sense for the economy.

The administration has promised to cut down on improper payments with the aid of a new executive order. According to the Associated Press:

Under the executive order, every federal agency would have to maintain a Web site that tracks improper payments, error rates and outstanding payments. If an agency doesn’t meet targets for reducing error rates for two years in a row, the agency director and responsible official will have to directly report to OMB to explain the delinquency and new actions they will take.

Somehow I doubt this will amount to much of a deterrent. The AP also said the administration plans to impose penalties on government contractors who receive improper payments. But last month it was reported that “the Department of Defense awarded nearly $30 million in stimulus contracts to six companies while they were under federal criminal investigation on suspicion of defrauding the government.”

Democrat Tom Carper, chairman of the Senate subcommittee on federal financial management, seemed to partly understand the broader meaning of the improper payment estimates:

It goes without saying that these results would be completely unacceptable in the private sector, as they should be in government, especially at a time of record deficits…Unfortunately, these numbers may still be just the tip of the iceberg since they don’t even include estimates for several major programs, including the Medicare prescription drug plan.

Yes, Senator, which is precisely why bigger government – be it stimulus, bail outs, or health care reform – is an inferior option to letting the marketplace provide for our wants and needs.

Carper is also right about the $98 billion figure being the “tip of the iceberg.” As has been noted here before:

The Government Accountability Office estimates that the two major government health programs are currently losing a combined $50 billion annually to such payments. But that estimate probably low-balls the actual losses. Harvard’s Malcolm Sparrow, a top specialist in health care fraud, estimates that 20 percent of federal health program budgets are consumed by improper payments, which would be a staggering $150 billion a year for Medicare and Medicaid.

See this essay for more on fraud and abuse in government programs.

According to the Chamber of Commerce polls, strong majorities in every state they polled believe the health care bills will increase the deficit. In this case the public’s cynical instincts are almost certain to be more accurate than the computer models of the CBO. As David Dickson of the Washington Times reviewed yesterday, government health care programs have a history of cost overruns.

And not small overruns, like overdrawing your checking account — massive, order-of-magnitude cost overruns. Is that because politicians intentionally overstate the benefits and underestimate the costs of their proposals? Or just that computer models aren’t very good at predicting how entitlements programs change behavior? Either way, just look at the record: In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion. In 1987, Congress projected that Medicaid would make special relief payments to hospitals of less than $1 billion in 1992. The actual cost, just five years after the projection, was $17 billion. Similarly, Medicare’s home care benefit was projected in 1988 to cost $4 billion in 1993, but the actual cost — again, just five years after the projection — was $10 billion.

The government is running a trillion-dollar annual deficit already, and Congress and the president propose to create a new program that promises to cover millions more people with health insurance, drag currently insured people onto government programs, and save billions of dollars in the process. No wonder levels of trust in government are at record lows.

In addition to being theoretically misguided, critics sometimes blame Obama for things that are not his fault. Listening to a talk radio program yesterday, the host asserted that Obama tripled the budget deficit in his first year. This assertion is understandable, since the deficit jumped from about $450 billion in 2008 to $1.4 trillion in 2009. As this chart illustrates, with the Bush years in green, it appears as if Obama’s policies have led to an explosion of debt.

But there is one rather important detail that makes a big difference. The chart is based on the assumption that the current administration should be blamed for the 2009 fiscal year. While this makes sense to a casual observer, it is largely untrue. The 2009  fiscal year began October 1, 2008, nearly four months before Obama took office. The budget for the entire fiscal year was largely set in place while Bush was in the White House. So is we update the chart to show the Bush fiscal years in green, we can see that Obama is partly right in claiming that he inherited a mess (though Obama actually deserves a small share of the blame for Bush’s last deficit since earlier this year he pushed through both an “omnibus” spending bill and the so-called stimulus bill that increased FY2009 spending).

It should go without saying that this post is not an argument for Obama’s fiscal policy. The current President promised change, but he is continuing the wasteful and profligate policies of his big-spending predecessor. That is where critics should be focusing their attention.

When Cato author Radley Balko was preparing his report on violent, no-knock, drug raids, he discovered the case of Cory Maye, who was then on death row for murdering a police officer.  On closer inspection, Radley thought the shooting looked like self-defense, not murder.  At Maye’s initial trial, he had lousy legal representation.  Thanks to Radley’s writings about the case, Maye secured top notch lawyers for his appeal.  With a new trial, Maye now stands a very good chance of getting out of prison altogether.  Congratulations to Radley Balko!

Previous coverage here.

no trial can provide closure for the traumas of that day. But a judgment in New York, where the greatest suffering was inflicted, will remind us both of the narrow viciousness of the terrorists’ cause and of the enduring strength of our own values.

I say again, this is not an easy case to make, and not just because of the emotions involved. Most people have already made up their mind that 1) KSM is undeserving of such treatment (the same could be said of most mass murderers); 2) that the risks posed to national security by a public trial (including the possibility of an acquittal and the potential disclosure of sensitive information) are not outweighed by the benefits; and 3) that AG Eric Holder made this decision in a haphazard manner, and for all the wrong reasons.

But I think that Simon renders a great service in making Holder’s argument, and, indeed, in making it better than the AG did.

My objectivity can be called into question: Steven has spoken at Cato a few times, and he was and is a participant in our ambitious counterterrorism project. I have enormous respect for his expertise on such matters.  

But I submit that anyone who reads Simon’s op-ed with an open mind must concede at least some of his points, and therefore further conclude that some of the criticisms of the decision are unfair. That does not mean that Simon will ultimately change a lot of minds. One might still conclude that, on balance, the DoJ’s decision was unwise, and that KSM should have been tried by a military tribunal, or merely detained forever. In truth, I was leaning in that direction before I read the piece.

But, on reflection, my confidence in our system of government and in the rule of law leads me to believe that Simon has it right. To the extent that KSM is given a forum for propagandizing on behalf of al Qaeda, the net effect of his rantings will be to remind the entire world that AQ is nothing more than a bunch of self-important, murderous SOBs who kill innocent people.

Nothing more, nothing less.

Late last night, Orin Kerr at the Volokh Conspiracy sketched out his predictions of whether the individual justices would go for Gura’s main argument: that the indefensible Slaughter-House Cases should be overturned and thus that the Court should “incorporate” the rights at issue via the Privileges or Immunities Clause.  (Cato supports this argument, as we’ll show in the brief we’ll be filing next week.) He concludes that Justice Thomas is the only vote available for this claim. According to Orin, the Chief Justice and Justices Scalia and Alito are too enamored with stare decisis to overturn an 1873 precedent, Justice Kennedy isn’t an originalist and likes substantive due process too much, and the other four are too afraid of Lochner and Institute for Justice-style economic liberty arguments to go there.

As George Will would say: Well. Orin could turn out to be right, but I think his analysis is too simplistic. I was just about to write my response when I saw that Josh Blackman, with whom I have a law review article forthcoming on these issues, already said it best in the comments to Orin’s post:

First, I think you present a binary choice; incorporate through Due Process OR incorporate through privileges or immunities. The question presented asked about both routes of incorporation. Neither path is by necessity mutually exclusive. As Gura’s brief makes clear, the Court could incorporate through the Due Process Clause, and alternatively recognize that the right to keep and bear arms is also among the Privileges or Immunities of Citizenship. The Court need not displace 100 years of substantive due process jurisprudence with this single case. And from a practical perspective, basically the entire Bill of Rights has been incorporated. So, unless some people start clamoring about states quartering troops in theirs homes, this would be a one time deal. Such a holding would do little to upset the apple cart, or as we put it, open Pandora’s Box.

Second, I think you may over-simplify Scalia’s views on originalism and stare decisis. Our article shows that Scalia, while on the Supreme Court, has never voted in favor of a substantive due process incorporation. The last such case was in 1982. Can Scalia really cite the doctrine that he excoriated in Lawrence, Casey, and elsewhere based solely on reliance interests? It is no secret Scalia likes guns, and he wants to incorporate the 2nd Amendment. But he does not want to enlarge substantive due process. Is he stuck between a rock and a substantively hard place? The Privileges or Immunities Clause provides an alternative method for Scalia. He could write a classic originalist opinion tracing the right to bear arms during Reconstruction, and find that it applies to the State.

Finally, fellow Volokh conspirator Randy Barnett (and Cato senior fellow) also disagrees with Orin, offering this perspective:

When choosing between the two pending cases in the Seventh Circuit, why would four Justices grant cert on the McDonald case in which the challenge was focused on the Privileges or Immunities Clause and deny cert on NRA case, which confined its argument to the Due Process Clause? Why would they have rejected the City of Chicago’s proposal which limited the question presented to Due Process?

Faced with this background and the actual question presented, I wonder how would Orin have briefed the case. Would he have offered any of the analysis in his post? Would he have told the Court just to ignore the Privileges or Immunities Clause? Or might he not have assumed as an experienced litigator that the Justices could write a Due Process Clause “incorporation” opinion in their sleep–heck, their clerks could write that opinion in their sleep–and then devoted the bulk of his brief to describing the meaning of the Privileges or Immunities Clause in context?

Ultimately, Orin’s analysis is based in what he thinks will be the Justices’ dislike for the interpretation of the Privileges or Immunities Clause described in the brief. The conservatives will hate the references to “natural rights” while the liberals will hate the references to “property.” Fair enough. But notice that the brief does not offer Alan Gura’s theory of the Privileges or Immunities Clause. All the phrases to which Orin objects are taken from quotes from the historical sources. Was Gura supposed to conceal these sources from the Court or faithfully report them? Orin may think this case is a hoot, but for the parties and the Court it is serious business.

In short, Orin’s legal realism/conventional wisdom may turn out prescient — and all the rest of us are engaged in a quixotic originalist/libertarian crusade – but I’ll put my money elsewhere.

From the Associated Press:

The post office has been struggling to cope with a decline in mail volume caused by the shift to the Internet as well as the recession that resulted in a drop in advertising and other mail. Total mail volume was 177.1 billion pieces, compared to 202.7 billion pieces in 2008, a decline of almost 13 percent. For the fiscal year that ended Sept. 30 the agency had income of $68.1 billion, $6.8 billion less than in 2008. Expenditures were down $5.9 billion to $71.8 billion.

The recession and the rise in electronic communications are generating huge financial problems for the lumbering government monopoly. Despite its efforts to reduce headcount, the USPS remains overburdened by a costly and heavily unionized workforce. As I noted previously:

The average USPS worker earns $83,000 per year in compensation, which is considerably more than the average U.S. worker. And the Government Accountability Office recently noted that ‘compensation and benefits constitute close to 80 percent of USPS’s costs — a percentage that has remained similar over the years despite major advances in technology and the automation of postal operations.’

Radical reform is needed, but I suspect that Congress will just paper over the problems for now and also continue allowing the agency to defer funding its retirement obligations:

The post office is required to make an annual contribution of about $5 billion to pay in advance for medical benefits for future retirees. Congress reduced that by $4 billion for 2009, but that change was for one year only. The agency’s independent auditor, Ernst & Young, questioned whether the post office would have enough money to make the next payment on Sept. 30, 2010, when $5.5 billion will be due.

This will just kick the can down the road. It shows that even when Congress gets something right — as it did with making the USPS pre-fund its retiree health benefits — it lacks the will to see it through when the going gets tough. Meanwhile, the Europeans continue to make progress toward deregulating their national postal services and allowing for competition. Unfortunately, it seems that Congress only looks to Europe for guidance on expanding the welfare state.

A former soldier who handed a discarded shotgun in to police faces at least five years imprisonment for “doing his duty”. Paul Clarke, 27, was found guilty of possessing a firearm at Guildford Crown Court on Tuesday – after finding the gun and handing it personally to police officers on March 20 this year. The jury took 20 minutes to make its conviction, and Mr Clarke now faces a minimum of five year’s imprisonment for handing in the weapon. In a statement read out in court, Mr Clarke said: “I didn’t think for one moment I would be arrested.”

… The court heard how Mr Clarke was on the balcony of his home in Nailsworth Crescent, Merstham, when he spotted a black bin liner at the bottom of his garden. In his statement, he said: “I took it indoors and inside found a shorn-off shotgun and two cartridges. “I didn’t know what to do, so the next morning I rang the Chief Superintendent, Adrian Harper, and asked if I could pop in and see him. “At the police station, I took the gun out of the bag and placed it on the table so it was pointing towards the wall.” Mr Clarke was then arrested immediately for possession of a firearm at Reigate police station, and taken to the cells.

… Prosecuting, Brian Stalk, explained to the jury that possession of a firearm was a “strict liability” charge – therefore Mr Clarke’s allegedly honest intent was irrelevant. Just by having the gun in his possession he was guilty of the charge, and has no defence in law against it, he added.

… Judge Christopher Critchlow said: “This is an unusual case, but in law there is no dispute that Mr Clarke has no defence to this charge. “The intention of anybody possessing a firearm is irrelevant.”

According to Yoo, “The treatment of the 9/11 attacks as a criminal matter rather than an act of war will cripple American efforts to fight terrorism.  It is in effect a declaration that this nation is no longer at war.”  That is an odd thing to say for several reasons.  First, it is all over the news: We are still very much at war.  Second, even if Obama pulled U.S. troops out of Afghanistan and Iraq, would the United States really be “crippled” in the fight against bin Laden?  ”Crippled”  suggests the U.S. is on the verge of joining Costa Rica or Belize in terms of our military strength.  Farfetched.  Third, the Bush administration also treated the 9/11 attacks as a criminal matter when it indicted and prosecuted Zacarias Moussaoui in civilian court.  Yoo seems to think that that call was mistaken, but did it ”cripple” the U.S.?  Did the Bush administration, in effect, declare that the U.S. was “no longer at war”?  Of course not.  So why does Yoo make that claim now?  Odd.

Next, Yoo complains that by bringing KSM to New York for a civilian trial, the prisoner will get to “enjoy the benefits and rights that the Constitution accords to citizens and resident aliens.”  This is another odd statement because the benefits of a civilian trial (public trial, jury trial, calling witnesses, confronting adverse witnesses, etc) are not limited to citizens and resident aliens.  After all, Asian tourists and illegal immigrants from Mexico, to take two examples, are not “citizens” or “resident aliens.”  If a federal prosecutor were to accuse them of a crime, they would get a trial in civilian court.  A claim that the government could deny, say, a nonresident alien from China a civilian trial would be totally at odds with American constitutional law.  Yoo may disagree with that law, but if he does, he should have made that clear because he left a misleading impression.

Third, Yoo calls the Moussaoui trial a “circus” because it provided Moussaoui with a “platform to air his anti-American tirades.”  Well, to start, just because Yoo calls a trial a “circus” does not make it so.  The federal judge in the Moussaoui case did what we would expect a good American judge to do–that is, give the person who is accused of the crime a fair opportunity to speak and to offer a defense.   At the same time, the  judge must maintain order in the courtroom and anyone who becomes disruptive (including the accused) can be removed.  The potential problem of  a “tirade” is nothing new and is not, of course, limited to persons who share bin Laden’s twisted worldview.  Some recent examples include the Unabomber and the shooter at the Holocaust museum.  In short, it is a weak argument to critique our system of civilian trials because the defendant may want to insist on saying something that is unpopular, unpleasant, or incoherent.  And, at the time of sentencing, a trial judge can respond, as Judge William Young did when he sentenced Richard Reid to life behind bars.

For more on the subject of military commissions, go here and here.  For more on John Yoo, go here and here.

The one ray of hope I can offer is that the shooting itself makes such things more foreseeable, putting the military community and investigators on notice prospectively that this kind of thing can happen. No formal policy change can do more than the Fort Hood shooting itself to ferret out inchoate incidents like it in the future. Belief that the Fort Hood shooting was easily preventable, though, is 20/20 hindsight.

I first read How We Know What Just Isn’t So: The Fallibility of Human Reason in Everyday Life to get a handle on how it became so plausible after the September 11, 2001 attacks that terrorists might next use chemical, biological, and nuclear weapons. Recall that their weapons of choice for the World Trade Center and Pentagon attacks were box cutters. How did we proceed to the assumption that nuclear terrorism was next?

One explanation is the “representativeness heuristic,” a mental shortcut people use to organize the world around them. “According to this overarching belief, effects should resemble their causes, instances should resemble the categories of which they are members, and, more generally, like belongs with like.” (page 133)

Big causes have big effects, so big effects come from big causes. … Right?

The 9/11 terrorists knocked down the World Trade Center and killed 3,000 people. Driven to match the huge effects of the those attacks to a sufficient cause, our common sense imported skills, knowledge, weapons, and organizational capability that terrorists do not in fact have. (Ongoing pressure worldwide will ensure that remains true.)

As to the 9/11 attacks, the representativeness heuristic lead us astray. I believe a similar mental error is at play in many people’s interpretation of the Fort Hood incident.

Though it’s not true, many maternity room nurses believe that more babies are born during a full moon than at other times. This is because of confirmation bias: They notice babies born during full moons and accumulate proof of the full-moon theory—but they fail to notice babies born at other times.

How We Know What Just Isn’t So has a chapter called “Too Much from Too Little: The Misrepresentation of Incomplete and Unrepresentative Data” that discusses not only the excessive impact of confirmatory information, but also the problem of hidden or absent data. We make many judgments in life without considering all the relevant data.

An extreme instance of this is Fort Hood, about which political leaders and millions of Americans are taking a few data points—one or two things occurring—and concluding from them that all instances of these things result in a shooting or other violence like we saw at Fort Hood. But, as I said with regard to Nidal Hasan’s contacts with a jihadi in Yemen, the relevant data includes thousands of times when such things happen. Because they were offshore communications with a jihadi, investigators appropriately examined the messages and found them lacking signs of intended violence.

The other major indictment is that Hasan’s Islamist rantings should have been a dead giveaway of violence to come. Political correctness drove colleagues to turn a blind eye to Hasan, ”permitting” the Fort Hood shooting to happen, this argument maintains.

There probably was some “political correctness” involved. I can think of no community more likely to withhold judgment of others than psychologists and psychiatrists, who are privy to the strange and dangerous thoughts of their patients day after day after day.

Note again the full range of relevant evidence, though: Thousands of times daily across the country, mental health professionals and social workers hear people’s violent thoughts—not just political rantings—which only rarely materialize into violence. In the military, it’s harder to guess at a number, but certainly thousands of times per year, service members discuss violence against other service members and political opinions that are odd or controversial, including Islamist political views. Very rarely—tragically when it does—this results in actual harm to men and women in uniform.

Nidal Hasan may have been fit for expulsion from the military. He may have been kept in by some form of political correctness or opportunistic bureaucratic burden-shifting once it was clear he was leaving Walter Reed for Fort Hood.

But only operation of the post hoc ergo propter hoc fallacy allows the conclusion that his expulsion from the military would have averted the tragedy. Because it followed in time, the shooting appears to be a result of his continued military service or his looming deployment to Afghanistan. But it is not so obvious that his discharge from the service would have caused him to go limp, take a job at a convenience store, and live a happy life.

Had he been pushed out of the military, it’s quite plausible that his resentments would have grown, his contacts with jihadis would have increased, his planning would have been more strategic, and so on. It is simple assumption that expelling Hasan from the military would have averted so many deaths and collective national pain, just like it is simple assumption that it wouldn’t have.

As I discussed in a recent podcast, information always points to what happened next when you look at it after the fact. Data does not point so clearly to any conclusion when you observe it in real time along with all the other then-relevant data.

The Fort Hood shooting was a tragic and regrettable incident, but correctable security failure is not easily shown. The idea that the shooting was predictable is fueled by a small array of common perception problems and errors in logic. These errors have now inspired a hearing in the Senate Homeland Security and Governmental Affairs Committee later this week. The committee will try to find security lapses and seek after conditions in which ”no such attack ever occurs again.”

Politicians can promise the public that every tragedy can be averted, but soldiers know better than most that tragedy and loss do happen. At the memorial service for the Fort Hood victims, Lt. General Cone captured that reality, and the spirit in which we must accept it, saying to victim’s families, ”The Fort Hood community shares your sorrow as we move forward together in a spirit of resiliency.”

There are, to be sure, ways some of these errors could have been avoided. As David Freddoso points out, it would have been trivial to design the backend to only permit legitimate congressional districts to be entered.  But again, getting the site up quickly means they can count on critics to point out those sorts of possibilities for improvement. That said, Freddoso surely has a point when he argues that there’s no sane reason this kludgy beast of a site should have cost $18 million. Far better would have been to take the open-source logic to its conclusion and simply dump the raw data on a server in XML format, then let outside groups—maybe the Sunlight Foundation or Americans for Tax reform or just some clever lone hacker—figure out how best to mash it up and present it.

Being a smart, informed, and aggressive consumer is each person’s responsibility if a free market is to operate well. The alternative is a negative feedback loop in which government authorities protect us, we rely on that protection and stop policing retailers. Thereby we abandon the field of consumer protection to government authorities, who—try as they might—can never do as good a job for us as we can for ourselves.

The Senate Commerce Committee is having a hearing today on “Aggressive Sales Tactics on the Internet and Their Impact on American Consumers.”

In an essay for Cato Unbound on the issue of corporations and markets, libertarian theorist Roderick Long states: “Corporate power depends crucially on government intervention in the marketplace.” This dependency is on full display in an insightful Wall Street Journal story on General Electric’s overt efforts to hitch its future to billions of stimulus dollars.

The article is worth reading from start to finish, but here are some snippets:

The government has taken on a giant role in the U.S. economy over the past year, penetrating further into the private sector than anytime since the 1930s. Some companies are treating the government’s growing reach — and ample purse — as a giant opportunity, and are tailoring their strategies accordingly. For GE, once a symbol of boom-time capitalism, the changed landscape has left it trawling for government dollars on four continents.

‘The government has moved in next door, and it ain’t leaving,’ Mr. [GE CEO Jeffrey] Immelt said at the International Economic Forum of the Americas in Montreal in June. “You could fight it if you want, but society wants change. And government is not going away.’

A close look at GE’s campaign to harvest stimulus money shows Mr. Immelt to be its driving force… Inside GE, he pushed his managers hard to devise plans for capturing government money.

By January, Mr. Immelt had become a leading corporate voice in favor of the $787 billion stimulus bill, supporting it in op-ed pieces and speeches. Reporters who called the Obama administration for information on renewable-energy provisions in the legislation were directed to GE.

When the stimulus package was rolled out, Mr. Immelt instructed executives leading the company’s major business units “to put together swat teams to get stimulus money, and [identify] who to fire if they don’t get the money,” says a person who heard him issue the instructions.

In February, a few days after President Obama signed the stimulus plan, GE lawyers, lobbyists and executives crowded into a conference room at GE’s Washington office to figure out how to parlay billions of dollars in spending provisions into GE contracts. Staffers from coal, renewable-energy, health-care and other business units broke into small groups to figure out “how to help companies” — its customers, in particular — “get those funds,” according to one person who attended.

It speaks poorly for American capitalism when one of the nation’s biggest economic engines is assembling “swat teams” to go after taxpayer money. Instead of corporate America trying to figure out what products and services to bring to the marketplace, big business is taking its cue from politicians and bureaucrats in Washington. This isn’t socialism; it’s state corporatism and it bodes ill for long-term economic growth.

See this essay for more on the problems with special-interest spending. Also see this essay on why the excuses for government interventions in energy markets fall short.

But here’s a delight I ran across this morning: the Los Angeles Times arguing against techno-panic despite the use of Web sites to research and case potential burglary victims (by the “bling ring,” soon to be the subject of a major motion picture).

The Times editorializes:

[T]hieves [did not] have to wait for the invention of Google maps to reconnoiter neighborhoods in search of easily accessible homes. That’s worth remembering if, as we fear, some legislator decides that a law should be passed to prevent Internet surfers from looking at houses they easily could scope out from the sidewalk. . . . . A law against photographing a home or what occurs outside it in plain sight — or disseminating the images to others — would be overreaching, not to mention unconstitutional.

What a delight—a major newspaper arguing to keep a hot issue in perspective and citing the constitution as a limit on government power! Thank you, L.A. Times.

The question presented in this case is: Whether the Second Amendment right to keep and bear arms is incorporated as against the States by the Fourteenth Amendment’s Privileges or Immunities or Due Process Clauses.  Remarkably, only 7 of the brief’s 73 pages are devoted to the Due Process Clause, which is the constitutional provision by which almost all the the Bill of Rights has been “incorporated” against the states.  Indeed, the brief argues that the Due Process Clause “has incorporated virtually all other enumerated rights” and so there is no reason to make the Second Amendment an exception.

The rest of the brief is far more interesting, arguing for overturning the ill-fated Slaughter-House Cases, which eviscerated the Priviliges or Immunities Clause in 1873.  Slaughter-House forced the Court to start protecting natural rights and fundamental liberties under the oddly named “substantive due process” doctrine — and it remains a bugaboo for legal scholars of all ideological stripes.  Overturning it would potentially open the door to challenges against legislation that violates a host of unenumerated rights, such as the right to enter into contract or to earn an honest living. 

Understandably, libertarians are excited at the prospect of Privileges or Immunities’ revival.  But so too are liberals, at the thought of potentially filling an empty constitutional vessel with positive rights (to health care, education, pensions, etc.).  I believe this to be an overstated threat from the perspective of constitutional interpretation — as opposed to legislation – and have an article coming out with Josh Blackman in the Georgetown Journal of Law and Public Policy in January making this point.  (The article, titled “Opening Pandora’s Box? Privileges or Immunities, The Constitution in 2020, and Properly Incorporating the Second Amendment,” will shortly be up on SSRN, but for now you can read the abstract/introduction here.)

In any event, P or I (as it’s known) is a vastly superior way of giving people in the states the right to keep and bear arms for self-defense. But it’s ambitious to argue this way rather than settle for the traditional jurisprudence.  As Orin Kerr says at the Volokh Conspiracy, “It’s certainly an attention-getting way to brief the case. It’s not just arguing for a win: It’s arguing for a revolution.”

For further discussion of Alan’s McDonald brief — which Cato will be supporting with an amicus brief next week – see Lyle Deniston’s write-up at SCOTUSblog.

The summary is that you can look at the individual mandate as a tax, which is constitutional, or as a regulation forcing private actors to engage in a certain transaction, much like the minimum wage, which is also constitutional. I’ve also heard scholars mention auto insurance, which is an obvious analogue, and the Americans With Disabilities Act, which proved that the government can order businesses to install ramps, despite the fact that the constitution doesn’t explicitly give the federal government jurisdiction over entryways.

This doesn’t seem like the right level of analysis. Some taxes and regulations are within the ambit of federal powers; that doesn’t mean anything capable of being so described is. Some things not explicitly and specifically mentioned in Article I are nevertheless necessarily implicit in the enumerated powers; that doesn’t mean anything is. Auto insurance seems like a poor analogue because it’s a condition of access to government-maintained roadways. Ezra also mentions Massachusetts’ individual mandate, which seems rather beside the point in a discussion of the scope of Congress’ Article I powers. But bracket that. Even if you think the federal commerce power legitimately extends to legislation like the ADA, there’s intuitively a world of difference between saying that a commercial enterprise providing services to the public must provide them in such-and-such a fashion and insisting that private persons have to engage in a specified type of transaction just by dint of being alive. I don’t think the best reading of the Commerce Clause encompasses either, but it’s not that hard to conceive a reading that extends to the former but not the latter. I stress this just because I don’t think you have to be a libertarian or have a very restrictive view of the legitimate scope of federal power to believe there’s a genuine question here. The real form of the argument here looks an awful lot like: “Look, we’ve stretched commerce…between the several states so absurdly already, why are we even pretending it might be found to exclude anything?”

The Obama administration, alas, has decided to back the Senate’s bill, though the Justice Department also expressed “concerns” about the handful of actually-substantive checks on government spying power, and made clear that it intends to continue “working with the Committee” to gut those before the bill reaches the floor. For those with a taste for the gory details, Wired points to CDT’s handy dandy cheat sheet comparing the main provisions of the two bills.

The result is not more happiness, but a race to the bottom, in which aggrieved groups compete endlessly with one another for a slice of government power. Philosopher Robert Nozick once observed that utilitarianism is hard-pressed to banish what he termed utility monsters—that is, individuals who take inordinate satisfaction from acts that displease others. Arguing about who hurt whose feelings worse, and about who needs more soothing than whom, seems designed to discover—or create—utility monsters. We must not allow this to happen.

Instead, liberal governments have traditionally relied on a particular bargain, in which freedom of expression is maintained for all, and in which emotional satisfaction is a private pursuit, not a public guarantee. This bargain can extend equally to all people, and it forms the basis for an enduring and diverse society, one in which differences may be aired without fear of reprisal. Although world cultures increasingly mix with one another, and although our powers of expression are greater than ever before, these are not sound reasons to abandon the liberal bargain. Restrictions on free expression do not make societies happier or more tolerant, but instead make them more fractious and censorious.

Read the whole thing.

The ordinary American, if not the political class, recognizes that neither the Fed’s monetary actions nor the trillions in spending have helped them. Unemployment is in double digits. Former senior Bush economic adviser Larry Lindsey is reported to have estimated that Americans’ net worth has dropped $13 trillion since the beginning of the recession in December 2007. Americans suffer while speculators profit.

We are on the cusp of a dollar crisis.  President Jimmy Carter faced a similar crisis in his presidency. Carter ousted his own choice for Chairman of the Fed and appointed Paul Volcker to that position. Volcker recognized that the dollar crisis needed to be ended and instituted painful but necessary sound money policies.  President Reagan re-appointed Volcker and together they restored American prosperity. Volcker advises President Obama and can explain to the president why he must act now.

It turns out that, unlike her next most junior colleague, Justice Alito — who hung back early in his tenure while learning the rhythms of the Court – Justice Sotomayor has not been a shrinking violet in her questioning of advocates. Indeed, according to a National Law Journal tally, during the 13 November arguments that just concluded, she asked 146 questions (or 11.2 per case), which is even ahead of where Chief Justice Roberts was at this point in his career.  And, because Sotomayor speaks more often than her more reserved predecessor, Justice Souter, she has made a “hot” bench even hotter.

By another indicator, however, Sotomayor ranks at the bottom of the Supreme Court table: Apparently her questioning has not yet generated a single laugh (as measured by such indications in the argument transcript).  Not surprisingly, Justice Scalia leads in that department — as he long has, both in absolute and per-question terms – with the Chief being the only other justice in double figures.  Joining Sotomayor with a goose-egg so far this year are Justices Ginsburg and Thomas (who hasn’t asked a question since 2006).  If you’re curious about last year’s final standings, see here.

For what it’s worth, all this accords with the sense I’ve gotten from the handful of times I’ve been to the Court for oral argument so far this term. To my mind, Sotomayor is still acting as a Court of Appeals judge — or maybe even a district judge – asking simpler questions about the factual record or procedural history rather than the broader issues the Court tends to grapple with.  And therefore I’ll go out on a counterintuitive limb here to predict that, as Sotomayor settles into her new role, her questioning will become less frequent but more substantive.

One result of the federal government paying for half or more is that it encourages the states to expand enrollment and benefits. It also makes it politically difficult to cut state Medicaid spending because of the accompanying loss of federal dollars.

A 2007 analysis on the exorbitant future costs of Medicaid by Jagadeesh Gokhale illustrates how the program’s price tag has skyrocketed since its creation in 1965 (see chart here). Over the decades, the states expanded their programs whenever the economy was growing and the tax revenues were flowing. When the economy went into recession and the revenue dried up, the states generally didn’t scale-back benefits and sometimes they asked for bailouts from the federal government. The 2009 stimulus package provided an estimated $87 billion in federal Medicaid money for the states.

If the economy remains stagnant over the next few years and state tax revenues fail to rebound, further pressure will mount on the federal government to continue bailing out state Medicaid programs. The nightmare scenario would be for the federal government to assume the full costs of Medicaid under state pressure.

California Gov. Arnold Schwarzenegger’s budget director, Michael Genest, recently raised the idea:

Genest, who is retiring at the end of the year, warned that California’s budget problems will persist even after the state works its way through this recession. He singled out Medi-Cal, the state’s Medicaid health-care program for the poor, as unaffordable for the state. If the program’s costs continue to climb 8 percent a year, the state will have little money left for anything other than schools and debt service by 2040, he said.

The health-care reform proposals now before Congress could further strain state budgets because they would expand Medicaid, Genest said.

Genest said Congress should overhaul Medicaid, now funded jointly by state and federal governments but run by the states. The federal government should cover more of the costs, give states more flexibility or even make a drastic switch and let federal officials take over Medicaid completely, he said.

“If you want to imagine a crisis, as a thought experiment, imagine all 50 states writing a letter to the federal government saying, ‘We’re no longer providing Medicaid.’ That would get Congress’ attention. And that’s about the only real leverage we have,” Genest said.

Current health care legislation in Congress threatens to increase state Medicaid spending. In the House passed bill, the federal government would pick up 100 percent of Medicaid’s expansion until 2015 when it would drop to 91 percent. However, the future is unpredictable and it’s not hard to imagine a future Congress keeping it at 100 percent federal funding.

According to the Congressional Research Service, the House bill also contains a provision that could be intended to create a justification for greater federal assumption of state Medicaid spending:

H.R. 3962 would require GAO to study federal matching payments made to state Medicaid programs to make recommendations on the FMAP formula to Congress. By February 15, 2011, GAO would be required to submit a report based on this study assessing the effect on the federal government, states, providers, and beneficiaries of making the following changes to the FMAP formula: (1) removing the 50% floor or 83% ceiling, or both and (2) revising the current FMAP formula to better reflect state fiscal capacity, state efforts to finance health and long-term care services, and to better adjust for national or regional economic downturns.

See this essay on the need for a return to fiscal federalism.

Update: The Washington Post reports this morning that the House health care reform bill contains an additional $23.5 billion Medicaid bailout for the states. The provision would extend by an additional six months (through 2011) the stimulus legislation’s “temporary” increase in the federal government’s share of total Medicaid spending.

Giuliani argued, for example, that criminal defendants aren’t tried “at the scene of the crime.” Criminal defendants are almost always tried in the jurisdictions where their crimes took place (not at the actual crime scene, of course). Giuliani’s insistence on misstating basic criminal procedure showed that he was twisting to score points against the administration. This is inappropriate political use of terrorism issues.

But Chris Wallace roasted Giuliani—with quotes from Rudy Giuliani. Of prosecuting the 1993 World Trade Center bombers, Giuliani said: “[Y]ou put terrorism on one side, you put our legal system on the other, and our legal system comes out ahead.” Giuliani said that the trial of Zacharias Moussaoui shows “that we can give people a fair trial, that we are exactly what we say we are. We are a nation of law.”

As he did during his failed presidential campaign, Giuliani appears caught in a terror-warrior time warp. He criticized the Obama administration for eschewing the regrettable phrase “war on terror,” and he betrayed no awareness of what has dawned since 9/11 on the rest of the country: Terrorism seeks overreaction on the part of victim states. Cool, phlegmatic prosecution of terrorists deprives them of rhetorical victories that empower them by drawing others to their side.

“I doubt the most notorious terrorists of our time — the Sept. 11 hijackers, Timothy McVeigh — would have been stopped by these new DMV requirements,” Dvorak writes. ”All these laws have done is make us more harried, more paranoid and more red-faced than ever.”

As Wired has already reported, one e-mail shows Bush officials feared that if the attorney general was given too much discretion over retroactive immunity for telecoms that aided in warrantless wiretapping, the next administration might refuse to provide it.

A couple other things stuck out for me. First, while it’s possible they’ve been released before and simply not crossed my desk, there are a series of position papers — so rife with  underlining that they look like some breathless magazine subscription pitch — circulated to Congress explaining the Bush administration’s opposition to various proposed amendments to the FAA. Among these was a proposal by Sen. Russ Feingold (D-WI) that would have barred “bulk collection” of international traffic and required that the broad new intelligence authorizations specify (though not necessarily by name) individual targets. The idea here was that if there were particular suspected terrorists (for instance) being monitored overseas, it would be fine to keep monitoring their communications if they began talking with Americans without pausing to get a full-blown warrant — but you didn’t want to give NSA carte blanche to just indiscriminately sweep in traffic between the U.S. and anyone abroad. The position paper included in these documents is more explicit than the others that I’ve seen about the motive for objecting to the bulk collection amendment. Which was, predictably, that they wanted to do bulk collection:

• It also would prevent the intelligence community from conducting the types of intelligence collection necessary to track terrorits and develop new targets.
• For example, this amendment could prevent the intelligence community from targeting a particular group of buildings or a geographic area abroad to collect foreign intelligence prior to operations by our armed forces.

So to be clear: Contra the rhetoric we heard at the time, the concern was not simply that NSA would be able to keep monitoring a suspected terrorist when he began calling up Americans. It was to permit the “targeting” of entire regions, scooping all communications between the United States and the chosen area.

One other exchange at least raises an eyebrow.  If you were following the battle in Congress at the time, you may recall that there was a period when the stopgap Protect America Act had expired — though surveillance authorized pursuant to the law could continue for many months — and before Congress approved the FAA. A week into that period, on February 22, 2008, the attorney general and director of national intelligence sent a letter warning Congress that they were now losing intelligence because providers were refusing to comply with new requests under existing PAA authorizations. A day later, they had to roll that back, and some of the correspondence from the EFF FOIA record makes clear that there was an issue with a single recalcitrant provider who decided to go along shortly after the letter was sent.

But there’s another wrinkle. A week prior to this, just before the PAA was set to expire, Jeremy Bash, the chief counsel for the House Permanent Select Committee on Intelligence, sent an email to “Ken and Ben,” about a recent press conference call. It’s clear from context that he’s writing to Assistant Attorney General Kenneth Wainstein and General Counsel for the Director of National Intelligence Ben Powell about this press call, where both men fairly clearly suggest that telecoms are balking for fear that they’ll no longer be immune from liability for participation in PAA surveillance after the statute lapses. Bash wants to confirm whether they really said that “private sector entities have refused to comply with PAA certifications because they were concerned that the law was temporary.” In particular, he wants to know whether this is actually true, because “the briefs I read provided a very different rationale.”  In other words, Bash — who we know was cleared for the most sensitive information about NSA surveillance — was aware of some service providers being reluctant to comply with “new taskings” under the law, but not because of the looming expiration of the statute. One of his correspondents — whether Wainstein or Powell is unclear — shoots back denying having said any such thing (read the transcript yourself) and concluding with a terse:

Not addressing what is in fact the situation on both those issues (compliance and threat to halt) on this email.

In other words, the actual compliance issues they were encountering would have to be discussed over a more secure channel. If the issue wasn’t the expiration, though, what would the issue have been? The obvious alternative possibility is that NSA (or another agency) was attempting to get them to carry out surveillance that they thought might fall outside the scope of either the PAA or a particular authorization. Given how sweeping these were, that should certainly give us pause. It should also raise some questions as to whether, even before that one holdout fell into compliance, the warning letter from the AG and the DNI was misleading. Was there really ever a “gap” resulting from the statute’s sunset, or was it a matter of telecoms balking at an attempt by the intelligence community to stretch the bounds of their legal authority? The latter would certainly fit a pattern we saw again and again under the Bush administration: break the law, inducing a legal crisis, then threaten bloody mayhem if the unlawful program is forced to abruptly halt — at which point a nervous Congress grants its blessing.

• Export-Import Bank: Call it the “Boeing Bank”
• HUD: Federal Housing Administration woes continue and housing subsidies for the dead
• Transportation: High-speed rail lobbyists squabble over taxpayer loot

Also, in addition to losing more money, Fannie Mae and Freddie Mac lose their inspector general.

[W]hen some people in Washington hear that nation-building in Afghanistan is not a precondition to making America safer, or that prolonging our presence undermines America’s security, the argument for remaining then shifts to preserving the security and human rights of the people of Afghanistan.

For example, Sen. Barbara Mikulski, (D-MD), a member of the Appropriations Subcommittee on Foreign Aid and Dean of the Senate Women, said last April, “The United States should do everything it can to encourage Afghanistan to respect the basic rights and welfare of women and children.”

But Malalai Joya, an Afghan woman elected to her country’s Parliament, says in yesterday’s Mercury News (via GG):

As an Afghan woman who was elected to Parliament, I am in the United States to ask President Barack Obama to immediately end the occupation of my country.

Eight years ago, women’s rights were used as one of the excuses to start this war. But today, Afghanistan is still facing a women’s rights catastrophe. Life for most Afghan women resembles a type of hell that is never reflected in the Western mainstream media.

In 2001, the U.S. helped return to power the worst misogynist criminals, such as the Northern Alliance warlords and druglords. These men ought to be considered a photocopy of the Taliban. The only difference is that the Northern Alliance warlords wear suits and ties and cover their faces with the mask of democracy while they occupy government positions. But they are responsible for much of the disaster today in Afghanistan, thanks to the U.S. support they enjoy.

Some journalists and commentators are calling this move a wholesale repudiation of the Bush policy.  Actually, no.  Holder also announced that five other Gitmo prisoners will soon be put on trial before a military commission.  Thus, the Bush framework essentially remains in place.  The Executive will decide on a case-by-case basis who will be held prisoner (overseas, Gitmo, here in the USA), and who will be tried in civilian court, and who will be tried before a military commission.

By way of background, these prisoner controversies (habeas corpus, waterboarding, trial by commissions) fall into three basic categories: (1) detention/imprisonment; (2) treatment (including interrogation practices); and (3) trial issues.  Today’s announcement concerns trials. 

If there is to be a trial for persons accused of terrorism, it ought to be in civilian court.  Courts martial are for persons actually in the U.S. military (the Fort Hood shooter).  Military “commissions” are a hybrid that is nowhere mentioned in the Constitution.  It is mistake for Obama to retain the commission system because it is (a) dubious to begin with, and (b) can be whimsical with respect to the people that end up there.  Even the former Gitmo prosecutor has voiced his objections to the system!

Bin Laden and his cohorts murdered some 3,000 people on 9/11.  It is lamentable that they did not all go down fighting at Tora Bora.  But we do have to have  policies in place for captures.  Boiled down, the U.S. should follow the Geneva Convention for prisoners and, for trials, the procedures set out in the Constitution.

For additional Cato work on this subject, go here and here.

The extremely competitive ten-week program comes with a $7,000 stipend, and is a chance to do serious policy work on issues like privacy and surveillance, telecommunications regulation, and other things you read about on Slashdot.   Applications are due December 28, so get cracking!

From the Journal:

Fannie Mae has about $109.5 billion of mortgage-insurance coverage in force, which represents 4 percent of all single-family home loans it owns or guarantees. Freddie Mac had $63.4 billion in mortgage insurance and $12.2 billion in bond insurance. Private mortgage insurance is required for any home loan with less than a 20 percent down payment, and the policies typically cover 12 percent to 35 percent of losses in the event of a default, according to HSH Associates, a financial publisher. Mortgage insurers have been forced to pay up as loan defaults escalate.

Escalating loan defaults are also likely to bite taxpayers through the Federal Housing Administration, which covers 100 percent of losses. The FHA is in deep trouble:

The reduction in private insurance coverage has contributed to the rise in the volume of loans backed by the Federal Housing Administration, a government mortgage insurer that backs loans with as little as 3.5 percent down payments. It could be required to ask for a federal subsidy for the first time in its 75-year history if the housing market deteriorates further.

Who is looking out for taxpayers here?

Ryan Grim at Huffington Post reports that the Federal Housing Finance Agency, which is in charge of Fannie and Freddie, has used a legal technicality to rid itself of its inspector general:

There is no independent auditor overseeing the federal agency responsible for some $6 trillion in home mortgages, because the Department of Justice’s Office of Legal Counsel ruled that the agency’s inspector general didn’t have authority to operate, according to internal memos obtained by the Huffington Post. The ruling came in response to a request from the Federal Housing Finance Agency itself — which means that a federal agency essentially succeeded in getting rid of its own inspector general.

The timing is curious:

Fannie and Freddie are burning through cash at a staggering rate. Fannie reported a loss of $18.9 billion in the third quarter of 2009, four billion more than it lost in the second quarter. FHFA requested $15 billion from Treasury to plug the hole. What’s it spending money on? “The company continued to concentrate on preventing foreclosures and providing liquidity to the mortgage market during the third quarter of 2009, with much of our effort focused on the Making Home Affordable Program,” boasts the press release accompanying the announcement of the massive loss. “As of September 30, 2009, approximately 189,000 Fannie Mae loans were in a trial period or a completed modification under the Home Affordable Modification Program.” Those are the precise programs that Kelley was looking into when his own agency shut him down.

See here for essays on the problems associated with the federal government’s housing market interventions. Also check out Johan Norberg’s book, Financial Fiasco: How America’s Infatuation with Homeownership and Easy Money Created the Economic Crisis.

The audit found the following “significant weaknesses:”

• HUD and local agencies did not have effective policies related to deceased tenants.
• Local agencies did not provide accurate and reliable information to HUD.
• HUD and local agencies did not safeguard assets to ensure correct assistance payments.

This report is a small illustration of the fundamental problems with the federal government subsidizing local governments. The local public housing agencies are supposed to be monitoring how money is spent and reporting to HUD. HUD is supposed to be monitoring the local public housing agencies. But no one does a very good monitoring job, despite the piles of regulations and paperwork that every level of government has to deal with for such subsidies. The muddled web of responsibilities also makes it easy for fraud artists to take advantage.

Last week, HUD’s IG reported that the department is sending $220 million in stimulus funds to local agencies already known to misspend taxpayer dollars.

From USA Today:

The government is sending millions of dollars in stimulus aid to communities and housing agencies that federal watchdogs have concluded are unable to spend it appropriately, increasing the risk that the money will be wasted.

Since July, auditors working for the Department of Housing and Urban Development’s inspector general have scrutinized at least 22 cities, counties and housing authorities in 15 states and Puerto Rico to measure whether they can handle stimulus funds effectively. Only six, they found, could do so.

The rest — in line to receive more than $220 million in stimulus aid — had shortcomings ranging from poor management to inadequate staffing that threatened their ability to spend the money quickly and appropriately, a series of audit reports show.

According to a HUD spokesperson, the department is “spending millions of dollars to help local officials spend stimulus money effectively.” Maybe that’s true, but all monitoring help is a pure loss to taxpayers and the private sector economy.

Even when the federal oversight does find problems, the money often keeps flowing anyway. As the article notes:

USA TODAY reported in April that HUD planned to send $300 million in stimulus money to public housing authorities that had been repeatedly faulted by outside auditors for mishandling other forms of federal aid. Congress gave the Obama administration permission to withhold stimulus money from some of those agencies, but HUD opted earlier this year not to do so.

For more on fraud and abuse in federal programs, including housing subsidies, see this essay.

It turns out that Justice Anthony M. Kennedy, widely regarded as one of the court’s most vigilant defenders of First Amendment values, had provided the newspaper, The Daltonian, with a lesson about journalistic independence. Justice Kennedy’s office had insisted on approving any article about a talk he gave to an assembly of Dalton high school students on Oct. 28.

Kathleen Arberg, the court’s public information officer, said Justice Kennedy’s office had made the request to make sure the quotations attributed to him were accurate.

The justice’s office received a draft of the proposed article on Monday and returned it to the newspaper the same day with “a couple of minor tweaks,” Ms. Arberg said. Quotations were “tidied up” to better reflect the meaning the justice had intended to convey, she said.

I’m all for being tidy — and, for all his faults, Kennedy has indeed been friendly to the First Amendment (if not to student speech rights in the “Bong Hits for Jesus” case, Morse v. Frederick) – but public figures don’t usually get to change a story to “better reflect” the intent of their words.

…Frank D. LoMonte, the executive director of the Student Press Law Center, questioned the school’s approach. “Obviously, in the professional world, it would be a nonstarter if a source demanded prior approval of coverage of a speech,” he said. Even at a high school publication, Mr. LoMonte said, the request for prepublication review sent the wrong message and failed to appreciate the sophistication of high school seniors.

While this is hardly a major scandal — and it’s not unusual for justices to exclude the press entirely from public appearances — Kennedy’s use of a judicial editor’s pen does support the general feeling that students don’t always get a fair shake when it comes to their constitutional rights. As I said about an unrelated case in which Cato filed a brief last week (quoting the landmark Tinker case), students shouldn’t have to “shed their constitutional rights to freedom of speech… at the schoolhouse gate” — especially when a man charged with protecting those rights comes to talk to them about the importance of law and liberty.

H/T: Jonathan Blanks

Reactions generally consist of pundits pouring their preconceptions over what is known of the facts. These are the least worthy of our time, and rejoinders like this one from Stephen M. Walt of Harvard University in the Fort Hood section of The Politico’s Arena blog dispense with them well:

Of course [Fort Hood] is being politicized; there is no issue that is immune to exploitation by politicians and media commentators. The problem is that there are an infinite number of “lessons” one can draw from a tragic event like this — the strain on our troops from a foolish war, the impact of hateful ideas from the fringe of a great religion (and most religions have them), the individual demons that drove one individual to a violent and senseless act, etc., — and so no limits to the ways it can be used by irresponsible politicians (is that redundant?) and pundits.

My favorite response—by “response,” I mean careful, productive analysis—was written last year as a general admonition about events like this (which at least has terrorist connotations):

Above all else is the imperative to think beyond the passions of those who are hurt, frightened or angry. Policymakers who become caught up in the short-term goals and spectacle of terrorist attacks relinquish the broader historical perspective and phlegmatic approach that is crucial to the reassertion of state power. Their goal must be to think strategically and avoid falling into the trap of reacting narrowly and directly to the violent initiatives taken by these groups.

That’s Audrey Kurth Cronin, Professor of Strategy at the U.S. National War College in her monograph, Ending Terrorism: Lessons for Defeating al-Qaeda.

But I want to turn to a critique leveled against my recent post, ”The Search for Answers in Fort Hood,” which discussed how little Fort Hood positions us to prevent similar incidents in the future. (I hope it was response and not reaction, but readers can judge for themselves.)

A thoughtful Cato colleague emailed me suggesting that there may have been enough indication in Nidal Hasan’s behavior—in particular, correspondence with Anwar al-Awlaki—to stop him before his shooting spree.

There may have been. Current reporting has it that his communications with al-Awlaki were picked up and examined, but because they were about a research paper that he was in fact writing, he was deemed not to merit any further investigation.

This can only be called error with the benefit of hindsight. And it tells us nothing about what might prevent a future attack, which was my subject.

If humans were inert objects, investigators could simply tweak the filter that caused this false negative to occur. They could not only investigate the people who contact known terrorists as they did Nidal Hassan, they could know to disregard claimed academic interests. Poof! The next Nidal Hassan would be thwarted at a small cost to actual researchers.

But future attacks are not like past attacks. Tweaking the filter to eliminate this source of false negatives would simply increase false positives without homing in on the next attacker. Terrorists and terrorist wannabes will change their behavior based on known and imagined measures to thwart them. Nobody’s going to be emailing this al-Awlaki guy for a while.

In “Effective Counterterrorism and the Limited Role of Predictive Data Mining,” IBM distinguished engineer Jeff Jonas and I used examples from medicine to illustrate the problem of false positives when searching for terrorism in large data sets, concluding:

The question is not simply one of medical ethics or Fourth Amendment law but one of resources. The expenditure of resources needed to investigate 3,000,000, 15,000,000, or 30,000,000 fellow citizens is not practical from a budgetary point of view, to say nothing of the risk that millions of innocent people would likely be under the microscope of progressively more invasive surveillance as they were added to suspect lists by successive data-mining operations.

The same problems exist here, where tens of thousands of leads may present themselves to investigators each year. They must balance the likelihood of harm coming to U.S. interests against the rights of U.S. citizens and the costs of investigating all these potential suspects.

Armchair terror warriors may criticize these conclusions a variety of ways, believing that post hoc outrage or limitless grants of money and power to government can produce investigative perfection. (n.b. Getting victim states to dissipate their own money and power is how terrorism does its work.) But none can accurately say based on currently available facts that anyone made an error. Much less can anyone say that we know any better how to prevent essentially random violent incidents like this in the future.

If there’s one thing we think we can count on, it’s that a frantic call to 911 will bring a swift and effective response.  Government’s first priority, after all, is protecting its citizens.  But a spate of recent cases reveal shocking flaws in our national emergency response system–at a cost measured in lives.

One of those cases involved a young college student at the University of Wisconsin.  She dialed 911 and then hung up without saying anything.  Before the line was disconnected, however, there were screams and sounds of a struggle caught on tape.  The operator claims she could hear no noise–so she did not dispatch the police or try to call back.  Later that day, the college student, Brittany Zimmerman, was found beaten to death in her apartment.  An audio recording of some of the 911 nightmares can be found here.

Michael Crowley stresses the need for better trained operators and perhaps penalties for the people who tie up the lines with frivolous calls.  That’s all well and good, but more importantly, we must all acknowledge the limits of the 911 system and take responsibility for our own safety.  As the libertarian sheriff, Bill Masters, points out “If you rely on the government for protection, you are going to be at least disappointed and at worst injured or killed.”

For related Cato work, go here.

Update: New Jersey State Police are reviewing how a recent 911 call was handled. A Catholic priest called 911 as he came under criminal attack in his church.

This issue includes Greek economists Michael Mitsopoulos and Theodore Pelagidis on “Vikings in Greece: Kleptocratic Interest Groups in a Closed, Rent-Seeking Economy” as well as Peter Leeson, author of The Invisible Hook: The Hidden Economics of Pirates, writing (with David Skarbek) on the effects of foreign aid. As for taxes, well, editor Jim Dorn has assembled a number of useful papers:

• Andrew T. Young on taxing, spending, and “fiscal illusion”
• Michael J. New on the “starve the beast” hypothesis
• Alan Reynolds on Paul Krugman’s misunderstanding of the monetary and fiscal lessons of the Great Depression and Japan’s lost decade

And on the general rapaciousness of the state, don’t miss Jason Kuznicki’s careful review of government racial discrimination from the end of Reconstruction until the civil rights movement.

Subpoenas like, for instance, the one issued last year seeking the complete traffic logs of the left-wing site Indymedia for a particular day. According to tech journo Declan McCullah:

It instructed [System administrator Kristina] Clair to “include IP addresses, times, and any other identifying information,” including e-mail addresses, physical addresses, registered accounts, and Indymedia readers’ Social Security Numbers, bank account numbers, credit card numbers, and so on.

The sweeping request came with a gag order prohibiting Clair from talking about it. (As a constitutional matter, courts have found that recipients of such orders must at least be allowed to discuss them with attorneys in order to seek advise about their legality, but the subpoena contained no notice of that fact.) Justice Department officials tell McCullagh that the request was never reviewed directly by the Attorney General, as is normally required when information is sought from a press organization. Clair did tell attorneys at the Electronic Frontier Foundation, and  when they wrote to U.S. Attorney Timothy Morrison questioning the propriety of the request, it was promptly withdrawn. EFF’s Kevin Bankston explains the legal problems with the subpoena at length.

Perhaps ironically, the targeting of Indymedia, which is about as far left as news sites get, may finally hep the populist right to the perils of the burgeoning surveillance state. It seems to have piqued Glenn Beck’s interest, and McCullagh went on Lou Dobbs’ show to talk about the story. Thus far, the approved conservative position appears to have been that Barack Obama is some kind of ruthless Stalinist with a secret plan to turn the United States into a massive gulag—but under no circumstances should there be any additional checks on his administration’s domestic spying powers.  This always struck me as both incoherent and a tragic waste of paranoia. Now that we’ve had a rather public reminder that such powers can be used to compile databases of people with politically unorthodox browsing habits, perhaps Beck—who seems to be something of an amateur historian—will take some time to delve into the story of COINTELPRO and other related projects our intelligence community busied itself with before we established an architecture of surveillance oversight in the late ’70s.

You know, the one we’ve spent the past eight years dismantling.

Cato filed an amicus brief in the case.  A ruling is expected by the Supreme Court by June.

When faced with any risk, including rampaging gunmen, there are four options:

• Prevention—the alteration of the target or its circumstances to diminish the risk of the bad thing happening.
• Interdiction—any confrontation with, or influence exerted on, an attacker to eliminate or limit its movement toward causing harm.
• Mitigation—preparation so that, in the event of the bad thing happening, its consequences are reduced.
• Acceptance—a rational alternative often chosen when the threat has low probability, low consequence, or both.

(There is much more to risk management, of course. This handy simplification is taken from the DHS Privacy Committee’s “framework” document.)

Taking the facts as they appear now, what lessons can we take from Fort Hood that will help protect military forces and facilities, and the country in general? Let’s go through some of them option-by-option:

Prevention: What circumstances at Fort Hood and elsewhere could be altered to prevent this ever happening again? An obvious one is gun control—if there were no guns, there could be no shooting. But this prescription is complicated by the intrusions on individual rights required to implement it. Depriving citizens of arms directly violates the Second Amendment, and effectively enforcing a gun control regime would almost certainly violate the Fourth.

Removing guns from specific locations might be more palatable and achievable, but gun rampages do not restrict themselves to restricted areas, and widespread possession of guns by law-abiding citizens is an important form of interdiction. Indeed, appropriate gun violence was the interdiction that ultimately stopped further bloodshed.

Interdiction: What steps can be taken against attackers to limit their progress toward causing harm? This is a confounding option because learning what this attack looked like as an embryo won’t tell us what the next one will look like.

Thousands of people are like Nidal Hasan in one respect or another, but they will never commit any attack. There are thousands of people with turmoil or mental illness similar to his, for example. There are thousands of military servicemembers with doubts about U.S. policies. There are thousands of Muslims in the military (whose contributions are highly valuable). There are thousands of people who have investigated or sought contact with Al Qaeda.

If the conclusion from Fort Hood were that all people who share certain traits should be investigated/interdicted, this would violate fundamental rights and values while it wasted investigators’ time: Who is troubled enough in their minds, doubtful enough of U.S. foreign policy, etc. Whose contacts with Al Qaeda or jihadi Web sites indicate a desire to perpetrate bad acts and not curiosity or enmity?

Sending investigators into this quagmire would only work as a salve until some future rampage arose from another unique set of circumstances. We would be no safer for having investigated all who were “like” Nidal Hasan in the ways we decide are material.

Mitigation: I have seen no indication that the facilities and staff of Fort Hood were ill-equipped to deal with the results of this violence. There may be marginal ways they could improve—there always are—but medical services can’t be available everywhere always. There is little prescription for change here.

Acceptance: With the confounding difficulty of prevention and interdiction before us, this option rises a little bit in currency. Television news and commentary may make it feel differently to many people, but there is a very low probability of shootings like this happening. The costs of preventing and interdicting such violence is very high. This is a candidate for “acceptance.”

Acceptance is the least “acceptable” option, of course. Nobody thinks it is ‘ok’ for this kind of thing to happen. But like so many tragedies—indeed, part and parcel of tragedy—it is the loss of innocent life for no good reason.

Fort Hood presents the country with a choice: Invest extraordinary efforts in measures that cost a great deal, that invade prized rights, and that don’t work? Or show our sorrow to the families and community of Fort Hood and make peace with the grief and tragedy of this incident.

To use a technical phrase, this is hogwash. This new 6-1/2 minute video, narrated by yours truly, gives 12 reasons why Obamacare will lead to higher deficits – including real-world evidence showing how Medicare and Medicaid are much more costly than originally projected.

By the way, this video doesn’t even touch on the mandate issue, which Michael Cannon explains is not being counted in order to make the cost of government-run healthcare less shocking.

The economic crisis of 2008-9 will no doubt spawn dozens of books. Here are two good early ones….

Norberg, a knowledgeable Swede, provides a much more detailed account of the broader events of 2007-9, from the useful perspective of a non-American. He finds plenty of blame with all the major players in the U.S. financial system: politicians, who thoughtlessly pushed homeownership on thousands who could not afford it; mortgage loan originators, who relaxed credit standards; securitizers, who packaged poor-quality mortgage loans as though these were conventional loans; the Securities and Exchange Commission, which endowed the leading rating agencies with oligopoly powers; the rating agencies, which knowingly overrated securitized mortgages and their derivatives; and investors, who let the ratings substitute for due diligence. Senior management in large parts of the financial community lacked an attribute essential to any well-functioning financial market: integrity. But solutions, Norberg warns, do not lie in greater regulation or public ownership. Politicians and bureaucrats are not immune from the “short-termism” that plagues private firms.

The other book he praises, by the way, is Paul Krugman’s The Return of Depression Economics. And oddly, his list of Norberg’s villains doesn’t include one implied in the title: the Federal Reserve Bank, which issued the “easy money” that allowed the boom to happen. Purchase Financial Fiasco here or on Kindle.