Archive for the ‘Cato Publications’ Category
Why Wal-Mart Supports an Employer Mandate
A couple of years ago, I shared a cab to the airport with a Wal-Mart lobbyist, who told me that Wal-Mart supports an “employer mandate.” An employer mandate is a legal requirement that employers provide a government-defined package of health benefits to their workers. Only Hawaii and Massachusetts have enacted such a law.
I couldn’t believe what I was hearing. Wal-Mart is a capitalist success story. At the time of our conversation, this lobbyist was helping Wal-Mart fight off employer-mandate legislation in dozens of states. Those measures were specifically designed to hurt Wal-Mart, and were underwritten by the unions and union shops that were losing jobs and business to Wal-Mart.
But it all became clear when the lobbyist explained the reason for Wal-Mart’s position: “Target’s health-benefits costs are lower.”
I have no idea what Target’s or Wal-Mart’s health-benefits costs are. Let’s say that Target spends $5,000 per worker on health benefits and Wal-Mart spends $10,000. An employer mandate that requires both retail giants to spend $9,000 per worker would have no effect on Wal-Mart. But it would cripple one of Wal-Mart’s chief competitors.
So yesterday’s news that Wal-Mart is publicly endorsing a “sensible and equitable” employer mandate — i.e., a mandate that hurts Target but not Wal-Mart — didn’t come as a surprise to me. It merely confirmed what I learned in a cab on the way to the airport: Wal-Mart has gone native. That great symbol of the benefits of free-market competition now joins its erstwhile enemies among the legions of rent-seeking weasels who would rather run to government for protection than earn their keep by making people’s lives better.
In 2007, Wal-Mart officially joined the Church of Universal Coverage when it entered one of those countless strange-bedfellows coalitions with the Service Employees International Union. At the time, I criticized Wal-Mart for “self-congratulatory puffery” and “jump[ing] on the big-government bandwagon.” I also criticized then-CEO Lee Scott for spouting economic nonsense. (I later learned that Scott was not amused.)
This is so much worse than that.
Filed under: Cato Publications; Health, Welfare & Entitlements
The Roberts Revolution to Come
As I mentioned yesterday, the U.S. Supreme Court surprised many people by ordering a reargument in the case of Citizens United v. Federal Election Commission. Specifically, the Court called for the parties to the case to address the question of overruling Austin v. Michigan Chamber of Commerce.
The Court decided Austin v. Michigan Chamber of Commerce in 1989. The state of Michigan had prohibited corporations from spending money on electoral speech. In the case in question, the Chamber of Commerce wished to pay for an advertisement backing a candidate for the House of Representatives. The Chamber took this action on its own and not in tandem with the candidate or his party. Paying for the ad was a felony under Michigan law.
A majority of the Court in 1989 said the Michigan law did not violate the First Amendment. However, the majority had a problem. Previous cases permitted limits on funding electoral speech only in pursuit of a compelling state interest: the prevention of quid pro quo corruption or its appearance. The Court had also ruled that independent spending by groups could not corrupt candidates.
So the majority needed a novel rationale for approving Michigan’s suppression of speech. The majority concluded that speech funded by corporations would distort the democratic process and that the state could prohibits such outlays to prevent harms done by “immense wealth.” In other words, the Austin majority tried to redefine “corruption” as “inequality of influence.” That revision had its own set of problems. Buckely v. Valeo, the Ur-decision in campaign finance, had excluded equality as a compelling state interest justifying regulation of campaign finance.
It is easy to see why the Buckley Court had rejected equality of influence as a reason for restricting political speech. Imagine Congress could prohibit speech that had “too much influence.” But how could that be determined? A majority in Congress would be tempted to suppress speech that threatened the power of that majority. Paradoxically, the equality rationale would strengthen those who already held power while vitiating representative government. The First Amendment tries to prevent that outcome.
In last year’s decision in Davis v. FEC, the Court again rejected the equality rationale for campaign finance laws. More and more the Austin decision is looking like bad law.
Justices Kennedy and Scalia, both current members of the Court, wrote dissents in Austin. Justice Thomas has called for Austin to be overruled in other contexts. Neither Justices Roberts nor Alito is likely to vote to uphold Austin (or the relevant parts of McConnell v. FEC for that matter). But it would seem that either or both of them were unwilling to strike down a precedent without a formal hearing. That hearing will come on September 9 with a decision expected by Thanksgiving.
Almost six years after the Court utterly refused to defend free speech in McConnell v. FEC, the Roberts Court may be ready to vindicate the First Amendment against its accusers in Congress and elsewhere.
Filed under: Cato Publications; Government and Politics; Law and Civil Liberties
The Ultimate Question: Freedom or Power?
Here I was, sick with worry that the questions I hoped to pose to President Obama about his health reform plan would never be answered. Thank God, Matthew Holt stepped up to the plate. Or the wicket. Whatever.
What follows are some of my questions (addressed to the president) and Holt’s responses (in italics).
Mr. President, in your inaugural address and elsewhere, you said you are not interested in ideology, only what works. Economists Helen Levy of the University of Michigan and David Meltzer of the University of Chicago, where you used to teach, have researched what works. They conclude there is “no evidence” that universal health insurance coverage is the best way to improve public health. Before enacting universal coverage, shouldn’t you spend at least some of the $1 billion you dedicated to comparative-effectiveness research to determine whether universal coverage is comparatively effective? Absent such evidence, isn’t pursuing universal coverage by definition an ideological crusade?
Sadly Michael, universal coverage is not about improving public health. If you want to do that, go teach some kids age 1–5 and build some sewage systems. Universal care is about making sure that the costs of health care are fairly distributed. Under the systems you prefer and the one we now have they’re distributed from the poor and sick to the healthy and wealthy—many of whom we both know work in the health care system. But apparently there was NOT ONE MENTION of the uninsured or sick people bankrupted by the system in the whole hour.
Holt’s categorization of my preferred health care “system” and the un-mentioned uninsured aside, he makes my point for me: universal coverage is about ideology, not health. In fact, Holt demonstrates that the Church of Universal Coverage would be happy to have people die sooner if that would promote its ideo-religious goals. I really should send him a fruit basket.
A draft congressional report said that comparative-effectiveness research would “yield significant payoffs” because some treatments “will no longer be prescribed.” Who will decide which treatments will get the axe? Since government pays for half of all treatments, is it plausible to suggest that government will not insert itself into medical decisions? Or is it reasonable for patients to fear that government will deny them care?
Why should patients fear it? We know that less intensive care is better, and cheaper primary care is better than more extensive specialty care.
So the government will insert itself into medical decisions. Gotcha. Holt is really clearing a lot of things up.
To answer his question, though, the concern is that one size really doesn’t fit all, and that the government’s rules will, shall we say, break my eggs to make his universal-coverage omelette.
Filed under: Cato Publications; Health, Welfare & Entitlements
Three Worthwhile Health Care Videos
The first comes from the group Patients United Now. Keep this video in mind the next time you hear someone say that a new “public option” is not about a government takeover of the health care sector.
The next video comes from the Independence Institute in Colorado. It is a nice complement to my colleague Michael Tanner’s recent study, “Massachusetts Miracle or Massachusetts Miserable: What the Failure of the ‘Massachusetts Model’ Tells Us about Health Care Reform.”
Finally, a really disturbing video showing Christina Romer, chair of President Obama’s Council of Economic Advisors, refusing to admit to a congressman that the president’s reform plan would oust Americans from their current health plans.
It’s a shame what politics does to really smart people.
Filed under: Cato Publications; Health, Welfare & Entitlements
Cato Experts Live-Blog ABC News Health Care Special
Cato health care experts Michael D. Tanner and Michael F. Cannon provided live commentary Wednesday night for ABC’s “Prescription for America,” a special program from within the White House on Obama’s health care reform proposal.
You can watch the program, and follow along below.
For more, visit Healthcare.Cato.org.
Filed under: Cato Publications; Health, Welfare & Entitlements
Who’s Blogging about Cato
Here’s a round-up of bloggers who are writing about Cato commentary, research and analysis:
- Real Clear World blogger Greg Scoblete quotes Justin Logan on how pundits in Washington are handling the protests in Iran.
- Bloggers from The Orange County Register, My Ford Dreams, and The Truth about Cars posted the video of P.J. O’Rourke’s discussion at Cato on the future of the American car.
- In a round-up of commentary about Obama’s health care plan, Liberty Papers blogger Stephen Gordon quotes Michael Tanner’s analysis of Obama’s proposal.
- Colin Grabow writes about Brandon Arnold’s commentary on the effect of taxes on European sports.
- Pete Eyre of The Motorhome Diaries interviews David Boaz on the future of the freedom movement.
- At Liberty Maven, Mike Miller quotes Jim Harper about the movement toward a national ID card.
- Kiran Rao, who blogs about world politics from India, cites Doug Bandow’s commentary on the European Parliamentary elections.
Cato on Health Care Reform
We are now facing some of the most sweeping changes health care has seen in decades. Reform is needed, but increasing government control over one-sixth of the economy and over important personal and private decisions — as many of the proposals aim to do — would harm American taxpayers, health care providers, and patients.
This week, the Cato Institute launched Healthcare.Cato.org, which highlights Cato’s contributions to the health care debate. The resources provided on the site provide in-depth analyses of health care issues and reform initiatives, and underscore the ways in which free-market reforms, increased consumer choice, and energized competition — not more government control — improve the quality and cost-efficiency of health care.
Please check back regularly for updates and new resources!
Update: The Cato Institute Conference on Health Care Reform will be Webcast live from 9:00-5:00 PM Wednesday.
Featured speakers:
- Rep. Paul Ryan (R-WI)
- Rep. Michael C. Burgess, M.D. (R-TX)
- Rep. Jason Altmire (D-PA)
- Karen Davenport, Director of Health Policy, Center for American Progress
- Douglas Holtz-Eakin, Former Director, Congressional Budget Office, and Director of Domestic and Economic Policy for the McCain presidential campaign
- Tom G. Donlan, Barron’s
- Karen Tumulty, Time Magazine
- Susan Dentzer, Health Affairs
- John Reichard, Congressional Quarterly
Full schedule of events and Webcast, here.
Filed under: Cato Publications; Health, Welfare & Entitlements
Week in Review: Health Care Battles, Pay Caps and North Korean Prisoners
Will Obama Raise Middle-Class Taxes to Fund Health Care?
President Obama is promoting an expansion in federal health care spending, and Democratic leaders are scrambling to find ways to pay for it. The plan is expected to cost about $1.5 trillion over the next decade, but the administration has promised that health care legislation won’t add to already huge federal budget deficits. In a new paper, Cato scholars Michael D. Tanner and Chris Edwards argue that expanding government health care will likely involve huge tax increases on the middle class.
Tanner warns of “Obamacare” to come, saying that Obama’s new health care plan will give “government control over one-sixth of the U.S. economy, and over some of the most important, personal, and private decisions in Americans’ lives.” Don’t miss Tanner’s in-depth analysis of the new health care plan that is making its way through Congress, which “would dramatically transform the American health care system in a way that would harm taxpayers, health care providers, and — most importantly — the quality and range of care given to patients.”
A part of the plan would include “public option” (read: government-run) health care, which would allow the government to compete against private health care providers. Tanner says it would be the first step toward wiping out the private insurance market as we know it:
Regardless of how it is structured or administered, such a plan would have an inherent advantage in the marketplace because it would ultimately be subsidized by taxpayers. It could, for instance, keep its premiums artificially low or offer extra benefits, then turn to the U.S. Treasury to cover any shortfalls. Consumers would naturally be attracted to the lower-cost, higher-benefit government program.
…It is unlikely that any significant private insurance market could continue to exist under such circumstances. America would be firmly on the road to a single-payer health care system with all the dangers that presents. That would be a disaster for American taxpayers, physicians, and—most importantly—patients.
Treasury Seeks to Control Executive Pay Across the Private Sector
Fox Business reports, “The Treasury Department on Wednesday took new steps to rein in executive compensation, saying the Obama Administration would introduce legislation that could create stricter limits on pay; it also appointed an official to head up efforts on the issue.”
In a 2008 Policy Analysis Ira T. Kay and Steven Van Putten explain the misconceptions many people have about executive pay, and why the market is a better arbiter than any bureaucrat in Washington:
Such populist sentiments are often based on misunderstandings about the role of corporate executives in the economy and the vigorous competition that exists for these highly skilled leaders. In the past, federal regulatory efforts based on such misunderstandings have generated unintended consequences, which have damaged the economy and hurt the ability of the market for executives to self-regulate over time.
The labor market for executives and the associated pay levels are already subject to high levels of regulation. Indeed, U.S. corporations are subject to more stringent executive pay disclosure requirements than corporations anywhere else in the world. Before additional regulatory and legislative efforts are unleashed, policymakers should examine the rationale for current pay structures and the strong links between executive pay and corporate performance.
In a Washington Times op-ed, Alan Reynolds says efforts to cap executive pay are wholly misguided:
Congressional hearings to barbecue Wall Street executives are as fun as a circus, but with more clowns. Presidential politics is now taking such political distractions to a lower level.
…Most top executives who were actually in charge during the craze of overinvestment in mortgage-backed securities have been fired. Executives who are fired are not in a position to be “giving themselves” anything.
In reality, top executives are mainly paid by accumulating a big stockpile of company stock and stock options. Estimates of annual CEO pay that Congress and the press have been focusing on look as high as they do only because of the high value of restricted stock or stock options at the time.
Writing in 2007 (before the first round of major bailouts), Cato scholars Jerry Taylor and Jagadeesh Gokhale took it a step further: “Pay Bosses More!”:
Excessive executive compensation harms no one but perhaps the stockholders who put up with it. And stockholders put up with it because there’s good reason to believe that sizable CEO compensation packages help — not harm — corporate performance, which redounds to their benefit, and that of the firms’ workers.
Companies pay workers what they must to deliver their products and services to the market, and supply and demand establishes executive compensation packages the same way it establishes consumer prices. Any overcompensation comes out of the firm’s bottom line — at a loss to the shareholders, not the workers.
North Korea Sentences Two U.S. Journalists to 12 Years Hard Labor
Two American journalists were convicted of entering North Korea illegally while on assignment, and exhibiting “hostility toward the Korean people.” This week, a North Korean court sentenced them to 12 years in a labor prison.
Cato scholar Doug Bandow comments:
Washington should publicly downplay the controversy and present the issue to the Kim regime as a humanitarian matter. The Obama administration should indicate its willingness to open a broader dialogue with North Korea, but indicate that positive results will be possible only if Pyongyang responds with cooperation instead of confrontation. Releasing the two journalists obviously would provide evidence of the former.
Regrettably, Laura Ling and Euna Lee are political pawns. As such, Washington’s best strategy to achieve their release is to simultaneously reduce their perceived value to Pyongyang and ease tensions between the U.S. and North Korea. Patience may be the Obama administration’s highest virtue and Ling’s and Lee’s greatest hope.
In a Cato Daily Podcast, Bandow discusses what can be done for the American prisoners, and how the U.S. government should react.
Senate Hearings on Prison Reform
The Senate Judiciary Committee is holding hearings today on Sen. Jim Webb’s (D-VA) bill to create a National Criminal Justice Commission. Senator Webb is a long-time student of what has gone wrong with American criminal justice.
The bill provides for an 18-month review of the nation’s criminal justice system and recommendations for reform. I plan to attend, and the proceedings will be available on video here. Click here to read The Sentencing Project’s endorsement of the legislation.
My colleague Tim Lynch recently published a book on crime and punishment, In the Name of Justice. Notable authors such as Court of Appeals Judges Alex Kozinski and Richard Posner, Professor James Q. Wilson, and veteran defense attorney and law professor Harvey Silverglate weigh in on how the American criminal justice system has deviated from its moral foundations.
Ezra Klein: Socialized Medicine = Slavery
The Church of Universal Coverage really, really, really wants you to think that the Democratic health care reforms moving through Congress are not “socialized medicine.” Last year, I wrote a paper about why they’re wrong. On June 25, I’ll be debating the issue at a Cato policy forum with the Urban Institute’s Stan Dorn.
Today, The Washington Post’s Ezra Klein lends his voice to the chorus of socialized-medicine deniers. Klein doesn’t add much to the discussion, except for this: Klein (correctly) observes, “Socialized medicine is a system in which the government owns the means of providing medicine” (emphasis his). Single-payer systems, like the U.S. Medicare program or France’s health care system, are not socialized medicine because “the payer does not own the doctors.”
That’s right. Under socialized medicine, the government owns the doctors. When human beings can be owned, we call that slavery. Klein was probably just trying to do what other Church of Universal Coverage faithful have done over the past few years: narrow the definition of socialized medicine to the point where it has no meaning at all. (Duh, Canada doesn’t have socialized medicine — they don’t put Canadian doctors in chains, do they??)
Instead, Klein was inadvertently helpful because he clarified that the reforms he supports, and the reforms before Congress, would give the government ownership over the human capital of doctors and other clinicians. Whether we’re talking about wages, insurers’ assets, medical facilities, medical products, or even clinicians’ labor, ownership is a bundle of rights. If health care reform gives government the right to exclude people from using those resources in forbidden ways (e.g., retainer medicine, balance-billing, pure fee-for-service, whatever), then government gains control over a larger share of each bundle of ownership rights. That equals more state ownership — of financial, physical, and even human capital — which is the very yardstick Klein uses to define socialized medicine.
If only all the socialists could be so helpful.
Filed under: Cato Publications; Government and Politics; Health, Welfare & Entitlements
Robert Wright at Cato Unbound
This month’s Cato Unbound features Robert Wright, who offers us an excerpt from his new book, The Evolution of God. He looks at the possibility of religious tolerance from a game theoretic and evolutionary psychology perspective: Is there a fundamental “clash of civilizations” between Islam and the West? Or just a communication failure? Wright argues that we can work toward understanding by realizing the limits and biases of human moral reasoning:
You might not guess it to read the headlines, but by and large the relationship between “the West” and “the Muslim World” is non-zero-sum. To be sure, the relationship between some Muslims and the West is zero-sum. Terrorist leaders have aims that are at odds with the welfare of Westerners. The West’s goal is to hurt their cause, to deprive them of new recruits and of political support. But if we take a broader view—look not at terrorists and their supporters but at Muslims in general, look not at radical Islam but at Islam—the “Muslim world” and the “West” are playing a non-zero-sum game; their fortunes are positively correlated. And the reason is that what’s good for Muslims broadly is bad for radical Muslims. If Muslims get less happy with their place in the world, more resentful of their treatment by the West, support for radical Islam will grow, so things will get worse for the West. If, on the other hand, more and more Muslims feel respected by the West and feel they benefit from involvement with it, that will cut support for radical Islam, and Westerners will be more secure from terrorism.
This isn’t an especially arcane piece of logic. The basic idea is that terrorist leaders are the enemy and they thrive on the discontent of Muslims—and if what makes your enemy happy is the discontent of Muslims broadly, then you should favor their contentment. Obviously. Indeed this view has become conventional wisdom: if the West can win the “hearts and minds” of Muslims, it will have “drained the swamp” in which terrorists thrive. In that sense, there is widespread recognition in the West of the non-zero-sum dynamic.
But this recognition hasn’t always led to sympathetic overtures from Westerners toward Muslims. The influential evangelist Franklin Graham declared that Muslims don’t worship the same god as Christians and Jews and that Islam is a “very evil and wicked religion.” That’s no way to treat people you’re in a non-zero-sum relationship with! And Graham is not alone. Lots of evangelical Christians and other Westerners view Muslims with suspicion, and view relations between the West and the Muslim world as a “clash of civilizations.” And many Muslims view the West in similarly win-lose terms.
So what’s going on here? Where’s the part of human nature that was on display in ancient times—the part that senses whether you’re in the same boat as another group of people and, if you are, fosters sympathy for or at least tolerance of them?
It’s in there somewhere, but it’s misfiring. And one big reason is that our mental equipment for dealing with game-theoretical dynamics was designed for a hunter-gatherer environment, not for the modern world. That’s why dealing with current events wisely requires strenuous mental effort—effort that ultimately, as it happens, could bring moral progress.
Week in Review: A Speech in Cairo, an Anniversary in China and a U.S. Bankruptcy
Obama Speaks to the Muslim World
In Cairo on Thursday, President Obama asked for a “new beginning between the United States and Muslims around the world,” and spoke at some length on the Israeli-Palestinian conflict, Iran, Iraq, and Afghanistan. Cato scholar Christopher Preble comments, “At times, it sounded like a state of the union address, with a litany of promises intended to appeal to particular interest groups. …That said, I thought the president hit the essential points without overpromising.”
Preble goes on to say:
He did not ignore that which divides the United States from the world at large, and many Muslims in particular, nor was he afraid to address squarely the lies and distortions — including the implication that 9/11 never happened, or was not the product of al Qaeda — that have made the situation worse than it should be. He stressed the common interests that should draw people to support U.S. policies rather than oppose them: these include our opposition to the use of violence against innocents; our support for democracy and self-government; and our hostility toward racial, ethnic or religious intolerance. All good.
David Boaz contends that there are a number of other nations the president could have chosen to deliver his address:
Americans forget that the Muslim world and the Arab world are not synonymous. In fact, only 15 to 20 percent of Muslims live in Arab countries, barely more than the number in Indonesia alone and far fewer than the number in the Indian subcontinent. It seems to me that Obama would be better off delivering his message to the Muslim world somewhere closer to where most Muslims live. Perhaps even in his own childhood home of Indonesia.
Not only are there more Muslims in Asia than in the Middle East, the Muslim countries of south and southeast Asia have done a better job of integrating Islam and modern democratic capitalism…. Egypt is a fine place for a speech on the Arab-Israeli conflict. But in Indonesia, Malaysia, India, or Pakistan he could give a speech on America and the Muslim world surrounded by rival political leaders in a democratic country and by internationally recognized business leaders. It would be good for the president to draw attention to this more moderate version of Islam.
Tiananmen Square: 20 Years Later
It has been 20 years since the tragic deaths of pro-democracy protesters in Tiananmen Square in June 1989, and 30 years since Deng Xiaoping embarked on economic reform in China. Cato scholar James A. Dorn comments, “After 20 years China has made substantial economic progress, but the ghosts of Tiananmen are restless and will continue to be so until the Goddess of Liberty is restored.”
In Thursday’s Cato Daily Podcast, Dorn discusses the perception of human rights in China since the Tiananmen Square massacre, saying that many young people are beginning to accept the existence of human rights independent of the state.
A few days before the anniversary, social media Web sites like Twitter and YouTube were blocked in China. Cato scholar Jim Harper says that it’s going to take a lot more than tanks to shut down the message of freedom in today’s online world:
In 1989, when a nascent pro-democracy movement wanted to communicate its vitality and prepare to take on the state, meeting en masse was vital. But that made it fairly easy for the CCP to roll in and crush the dream of democracy.
Twenty years later, the Internet is the place where mass movements for liberty can take root. While the CCP is attempting to use the electronic equivalent of an armored division to prevent change, reform today is a question of when, not if. Shutting down open dialogue will only slow the democratic transition to freedom, which the Chinese government cannot ultimately prevent.
Taxpayers Acquire Failing Auto Company
After billions of dollars were spent over the course of two presidential administrations to keep General Motors afloat, the American car company filed for bankruptcy this week anyway.
Last year Cato trade expert Daniel J. Ikenson appeared on dozens of radio and television programs and wrote op-eds in newspapers and magazines explaining why automakers should file for bankruptcy—before spending billions in taxpayer dollars.
Which leaves Ikenson asking one very important question: “What was the point of that?”
In November, GM turned to the federal government for a bailout loan — the one final alternative to bankruptcy. After a lot of discussion and some rich debate, Congress voted against a bailout, seemingly foreclosing all options except bankruptcy. But before GM could avail itself of bankruptcy protection, President Bush took the fateful decision of circumventing Congress and diverting $15.4 billion from Troubled Asset Relief Program funds to GM (in the chummy spirit of avoiding tough news around the holidays).
That was the original sin. George W. Bush is very much complicit in the nationalization of GM and the cascade of similar interventions that may follow. Had Bush not funded GM in December (under questionable authority, no less), the company probably would have filed for bankruptcy on Jan. 1, at which point prospective buyers, both foreign and domestic, would have surfaced and made bids for spin-off assets or equity stakes in the “New GM,” just as is happening now.
Meanwhile, the government takeover of GM puts the fate of Ford Motors, a company that didn’t take any bailout money, into question:
Thus, what’s going to happen to Ford? With the public aware that the administration will go to bat for GM, who will want to own Ford stock? Who will lend Ford money (particularly in light of the way GM’s and Chrysler’s bondholders were treated). Who wants to compete against an entity backed by an unrestrained national treasury?
Ultimately, if I’m a member of Ford management or a large shareholder, I’m thinking that my biggest competitors, who’ve made terrible business decisions over the years, just got their debts erased and their downsides covered. Thus, even if my balance sheet is healthy enough to go it alone, why bother? And that calculation presents the specter of another taxpayer bailout to the tunes of tens of billions of dollars, and another government-run auto company.
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- James A. Dorn discusses “Socialism- U.S. Style” in the South China Morning Post.
- In The Washington Examiner, Gene Healy explains why voters are the true cause of America’s fiscal mess.
- In The American Spectator, Doug Bandow discusses why the outcome of India’s recent election is good news for religious minorities.
- On CNBC, Dan Mitchell discusses America’s debt problem, and how we can get out of it.
- In Wednesday’s Cato Daily Podcast, Daniel J. Ikenson asks, “What about Ford, Toyota, Honda, Nissan, BMW, Volkswagen and Kia?”
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- Marian Tupy examines the failure of government-to-government aid to Africa in The Financial Times.
- In The Wall Street Journal, John Hasnas asks whether “compassion and empathy” are really characteristics we want in a judge.
- In the South China Morning Post, Ted Galen Carpenter examines why North Korea ignores international calls for nuclear disarmament.
- Richard W. Rahn reports on the extreme changes about to occur in the British government in The Washington Times.
- In Monday’s Cato Daily Podcast, Mark Calabria weighs in on “shadow banking” and the effort to regulate it.
Week in Review: Sotomayor, North Korean Nukes and The Fairness Doctrine
Obama Picks Sotomayor for Supreme Court
President Obama chose federal Judge Sonia Sotomayor on Tuesday as his nominee for the U.S. Supreme Court, the first Hispanic Latina to serve on the bench.
On Cato’s blog, constitutional law scholar Roger Pilon wrote, “President Obama chose the most radical of all the frequently mentioned candidates before him.”
Cato Supreme Court Review editor and senior fellow Ilya Shapiro weighed in, saying, “In picking Sonia Sotomayor, President Obama has confirmed that identity politics matter to him more than merit. While Judge Sotomayor exemplifies the American Dream, she would not have even been on the short list if she were not Hispanic.”
Shapiro expands his claim that Sotomayor was not chosen based on merit at CNN.com:
In over 10 years on the Second Circuit, she has not issued any important decisions or made a name for herself as a legal scholar or particularly respected jurist. In picking a case to highlight during his introduction of the nominee, President Obama had to go back to her days as a trial judge and a technical ruling that ended the 1994-95 baseball strike.
Pilon led a live-chat on The Politico’s Web site, answering questions from readers about Sotomayor’s record and history.
And at The Wall Street Journal, Cato senior fellow John Hasnas asks whether “compassion and empathy” are really characteristics we want in a judge:
Paraphrasing Bastiat, if the difference between the bad judge and the good judge is that the bad judge focuses on the visible effects of his or her decisions while the good judge takes into account both the effects that can be seen and those that are unseen, then the compassionate, empathetic judge is very likely to be a bad judge. For this reason, let us hope that Judge Sotomayor proves to be a disappointment to her sponsor.
North Korea Tests Nukes
The Washington Post reports, “North Korea reportedly fired two more short-range missiles into waters off its east coast Tuesday, undeterred by the strong international condemnation that followed its detonation of a nuclear device and test-firing of three missiles a day earlier.”
Writing in the National Interest online, Cato scholar Doug Bandow discusses how the United States should react:
Washington has few options. The U.S. military could flatten every building in the Democratic People’s Republic of Korea (DPRK), but even a short war would be a humanitarian catastrophe and likely would wreck Seoul, South Korea’s industrial and political heart. America’s top objective should be to avoid, not trigger, a conflict. Today’s North Korean regime seems bound to disappear eventually. Better to wait it out, if possible.
On Cato’s blog, Bandow expands on his analysis on the best way to handle North Korea:
The U.S. should not reward “Dear Leader” Kim Jong-Il with a plethora of statements beseeching the regime to cooperate and threatening dire consequences for its bad behavior. Rather, the Obama administration should explain, perhaps through China, that the U.S. is interested in forging a more positive relationship with [the] North, but that no improvement will be possible so long as North Korea acts provocatively. Washington should encourage South Korea and Japan to take a similar stance.
Moreover, the U.S. should step back and suggest that China, Seoul, and Tokyo take the lead in dealing with Pyongyang. North Korea’s activities more threaten its neighbors than America. Even Beijing, the North’s long-time ally, long ago lost patience with Kim’s belligerent behavior and might be willing to support tougher sanctions.
Cato Media Quick Hits
Here are a few highlights of Cato media appearances now up on Cato’s YouTube channel:
- Ted Galen Carpenter discuss the North Korean missile tests on WOR radio.
- On Fox News, Chris Edwards disputes the idea of a federal sales tax.
- Gene Healy comments on the future of Guantanamo detainees on BBC.
- On CNBC, Dan Mitchell explains why California is like the “France of America.”
- In Friday’s Cato Daily Podcast, John Samples discusses how at least three presidents used the Fairness Doctrine to squelch dissenting speech.
Filed under: Cato Publications; Foreign Policy and National Security; Government and Politics; Law and Civil Liberties
California, Here We Come
Next week the Cato Institute will hold seminars in Los Angeles and Santa Barbara. The program is the same both places.
Leda Cosmides, one of the world’s leading evolutionary psychologists, will kick things off at 11 a.m. with a talk on our intuitive ideas about fairness and justice. Then Cato’s Michael Tanner will warn about the horrors of Obamacare and Dan Mitchell will tell us that it doesn’t matter because the country’s going to be bankrupt anyway. Former California congressman and Senate candidate, and potential governor, Tom Campbell will wrap things up after lunch with a discussion of the state’s fiscal predicament.
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Cohn vs. AFP
The New Republic’s Jonathan Cohn accuses Americans for Prosperity (AFP) of “lies” for running an ad that claims “Washington wants to bring Canadian-style healthcare to the U.S.”
AFP’s ad is more defensible than Cohn’s criticisms of it.
Cohn elides the question of whether Shana Holmes (the woman featured in the ad) was almost killed by Canada’s Medicare system. For a supporter of single-payer like Cohn, that is tantamount to admitting that, yeah, socialized medicine sometimes kills people.
Cohn argues that the ad is unfair because Canada has many advantages over the U.S. health care sector. That may be true, but the ad doesn’t appear to defend American health care. It merely says, “government should never come in between your family and your doctor” and “Don’t give up your rights.” That’s not pro-American health care or anti-reform. It’s just anti- the type of reform that Cohn wants. And it points to one area where our semi-socialized U.S. health care sector appears to be superior to Canada’s: quicker access to intensive treatments. Sometimes, that saves lives. In fact, AFP could go farther and say that the United States has another edge over Canada, in that we develop nearly all of the best new medical technologies. In fact, our medical technologies save Canadian lives, but Canada’s health care system (and its supporters) steal the credit.
Yet “the real lie,” Cohn claims, is that the ad suggests that “Washington” wants to impose a Canadian-style system on the United States. Cohn calls that claim “demonstrably false.” But consider:
- President Obama has said he would prefer single-payer and has hinted that he would like to make incremental changes in that direction.
- Many people who support a new public plan (e.g., Paul Krugman) do so because they believe it will lead to single-payer.
- Massachusetts, which has already implemented most of the reforms that Obama and congressional Democrats are considering, is now contemplating a large leap toward Canadian-style health care by imposing capitation on its entire health care sector.
- Government rationing becomes increasingly likely as government revenues fail to keep pace with the cost of government’s health care promises. (See again, Massachusetts.)
- The Left wants government to ration care. That’s the point of the comparative-effectiveness research funding. That draft House Appropriations Committee report committed a classic Washington gaffe when it said that certain treatments “would no longer be prescribed,” because it was admitting the truth.
Cohn is correct that no politician of influence is saying she wants to impose a Canadian-style system on the United States. But I prefer to pay attention to what they’re doing.
AFP: 1. Cohn: 0.
Filed under: Cato Publications; Health, Welfare & Entitlements
A Correction
In a previous post, I offered my impressions on the Coburn-Burr-Ryan-Nunes health care reform bill, based on my reading of the bill summary prepared by their staff. The very next day, I had a friendly discussion with those staffers about the legislation. (They were most gracious; many thanks to them.) It turns out some of the things I wrote were inaccurate. So I’d like to make the following corrections.
Based on my reading of the bill summary and my discussions with staff, my previous post ought to have read that the Coburn et al. bill would:
- Mandate that Offer federal subsidies to states that create a new regulatory bureaucracy called a “State Health Insurance Exchange,”
- Mandate Require that all plans offered through those exchanges meet federal regulatory standards,
- Mandate Require “guaranteed issue” in those exchanges,
- Mandate Create “uniform and reliable measures by which to report quality and price information,”
- Impose price controls on those plans by prohibiting risk-rating,
- Launch a government takeover of the “insurance” part of health insurance, by means of a “risk-adjustment” program intended to cope with the problems created by price controls, and Require that states creating an exchange also create some mechanism for providing coverage to people with high-cost illnesses, including but not limited to risk-adjustment, risk pools, or reinsurance, and
- Fall just short of an individual mandate by setting up (mandating?) Require that states creating an exchange take steps to facilitate enrollment, which may include automatic enrollment in exchange plans at “places of employment, emergency rooms, the DMV, etc.” — essentially, trying to achieve universal coverage by nagging Americans their residents to death.
My description of the legislation as a “Mandate-Price-Control Bill”? Not accurate. My claim that the bill involves tax increases? Based on my erroneous impression that the bill would impose price controls on insurance premiums. The bill may lead to some tax increases (it proposes new categories of federal spending after all), but for the moment I take staff at their word that on net the bill would not increase taxes or government spending.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
E-Verify: The Surveillance Solution
The federal government will keep data about every person submitted to the “E-Verify” background check system for 10 years.
At least that’s my read of the slightly unclear notice describing the “United States Citizenship Immigration Services 009 Compliance Tracking and Monitoring System” in today’s Federal Register. (A second notice exempts this data from many protections of the Privacy Act.)
To make sure that people aren’t abusing E-Verify, the United States Citizenship and Immigration Services Verification Division, Monitoring and Compliance Branch will watch how the system is used. It will look for misuse, such as when a single Social Security Number is submitted to the system many times, which suggests that it is being used fraudulently.
How do you look for this kind of misuse (and others, more clever)? You collect all the data that goes into the system and mine it for patterns consistent with misuse.
The notice purports to limit the range of people whose data will be held in the system, listing “Individuals who are the subject of E-Verify or SAVE verifications and whose employer is subject to compliance activities.” But if the Monitoring Compliance Branch is going to find what it’s looking for, it’s going to look at data about all individuals submitted to E-Verify. “Employer subject to compliance activities” is not a limitation because all employers will be subject to “compliance activities” simply for using the system.
In my paper on electronic employment eligibility verification systems like E-Verify, I wrote how such systems “would add to the data stores throughout the federal government that continually amass information about the lives, livelihoods, activities, and interests of everyone—especially law-abiding citizens.”
It’s in the DNA of E-Verify to facilitate surveillance of every American worker. Today’s Federal Register notice is confirmation of that.
Filed under: Cato Publications; Immigration and Labor Markets; Telecom, Internet & Information Policy
Obamacare to Come: Seven Bad Ideas for Health Care Reform
President Obama has made it clear that reforming the American health care system will be one of his top priorities, and congressional leaders have promised to introduce legislation by this summer.
In a new study, Cato scholar Michael D. Tanner breaks down the key components of any plan likely to emerge from Congress, and explains how those proposals would “dramatically transform the American health care system in a way that would harm taxpayers, health care providers, and — most importantly — the quality and range of care given to patients.”
At National Review online, Tanner explains the different aspects to Obama’s plan, all of which could be coming to a hospital near you. In today’s Cato Daily Podcast, he expands on his paper, describing what health care will look like in years to come.
Filed under: Cato Publications; Health, Welfare & Entitlements
The Coburn-Burr-Ryan-Nunes Mandate-Price-Control Bill
Today, Senators Tom Coburn (R-OK) and Richard Burr (R-NC), along with Reps. Paul Ryan (R-WI) and Devin Nunes (R-CA) announced that they will introduce a health care reform bill. If my reading of the bill summary is correct, their bill would:
- Mandate that states create a new regulatory bureaucracy called a “State Health Insurance Exchange,”
- Mandate that all plans offered through those exchanges meet federal regulatory standards,
- Mandate “guaranteed issue” in those exchanges,
- Mandate “uniform and reliable measures by which to report quality and price information,”
- Impose price controls on those plans by prohibiting risk-rating,
- Launch a government takeover of the “insurance” part of health insurance, by means of a “risk-adjustment” program intended to cope with the problems created by price controls, and
- Fall just short of an individual mandate by setting up (mandating?) automatic enrollment in exchange plans at “places of employment, emergency rooms, the DMV, etc.” — essentially, trying to achieve universal coverage by nagging Americans to death.
Needless to say, I am troubled.
The bill summary is self-contradictory. On the one hand, it lists “No Tax Increases” as a core concept. Do its authors not know that imposing price controls on health insurance premiums imposes a tax on healthier-than-average consumers? And where do they think the money for “risk-adjustment” payments will come from? Heaven?
The bill sponsors seem to want to cement in place the monopoly regulation that currently exists at the state level — when they’re not encouraging Congress to take over that function. Have they abandoned their colleague Rep. John Shadegg’s (R-AZ) proposal to allow for competitive regulation of health insurance?
And if Massachusetts created an “exchange” on its own, why do other states need federal legislation?
The bill includes some ideas for which I have more sympathy, like its tax-credit proposal and expanding health savings accounts.
But the above provisions would sow the seeds of a government takeover of health care — so much so that The Washington Post’s Ezra Klein is salivating:
The word of the day is “convergence.” That — and that alone — is the definitive message of the conservative health reform alternative developed by Sens. Tom Coburn (Okla.) and Richard Burr (N.C.), as well as Rep. Paul Ryan (Wisc.). For now, some of the key provisions are about as clear as mud. The plan’s changes to the tax code, in particular, are impossible to discern. So I’ll do another post when I can get some clarity on those issues. The politics, however, are perfectly straightforward.
A superficial read of the Patients’ Choice Act — which I’ve uploaded here — would make you think you’re digging into a liberal bill. A fair chunk of the rhetoric is lifted straight from Sen. Ted Kennedy’s office. “It is time to publicly admit that the health care system in America is broken,” begins the document. “Health care is not a commodity in the traditional sense,” it continues. “States should provide direct oversight of health insurers to make sure they are playing by fair rules,” it demands. The way we pay private insurers in Medicare “wastes taxpayer dollars and lines the pockets of insurance executives,” it says. Elsewhere, it praises solutions that have worked in several European countries.”
And though it’s still too early to say how the policy fits together, it’s clear that many traditionally Democratic concepts have been embraced. To put it simply, the plan wants to encourage a version of the Massachusetts reforms — which it calls a “well-known, bi-partisan achievement of universal health care” — in every state. There are some differences, of course. The plan doesn’t have an individual mandate. It doesn’t have an obvious tax on employers. But it strongly endorses State Health Insurance Exchanges. And that, for Republicans, is a radical change in policy.
This idea — present in every Democratic proposal but absent in Arizona Sen.John McCain’s plan — would empower states to create heavily regulated marketplaces of insurers. The plans offered would have to “meet the same statutory standard used for the health benefits given to Members of Congress.” Cherrypicking would be discouraged through risk adjustment, which the PCA calls “a model that works in several European countries.” The government would automatically enroll individuals in plans whenever they interacted with a government agency and states would be able to join into regional cooperatives to increase the size of their risk pool.
In essence, Coburn, Burr, and Ryan are abandoning the individual market entirely. Like Democrats, they’re arguing that individuals cannot successfully navigate the insurance market, and they need the protection of government regulation and the bargaining power that comes from a large risk pool. This is literally the opposite approach from McCain, who attempted to unwind the employer-based insurance and encourage families to purchase health coverage on the individual market. The core elements of this plan, in other words, make it the same type of plan Democrats are offering. A plan that enlarges consumer buying pools rather than shrinks them. It’s pretty much exactly what I’d expect a Blue Dog Democrat to propose. And it’s further evidence that the argument over health reform is narrowing, rather than widening. And it’s narrowing in a direction that favors the Democrats.
Filed under: Cato Publications; Health, Welfare & Entitlements
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- In USA Today, Jerry Taylor argues that Obama’s plan to require new vehicles sold in 2016 to get an average of 39 miles per gallon or better is likely to result in all cost no benefit.
- Will Wilkinson documents the rise of collectivist conservatives in the newest edition of The Week.
- In The American Spectator, Doug Bandow says that while it is important for the U.S. to encourage dialogue with Muslim nations, we must not shy away from serious discussions about religious persecution.
- Randal O’Toole argues in USA Today that Obama’s plan for high-speed rail will cost taxpayers billions of dollars and do little to reduce traffic congestion or improve the environment.
- In The Washington Examiner, Gene Healy discusses why President Obama’s approach to terrorism is virtually identical to Bush/Cheney’s.
- In today’s Cato Daily Podcast, James Bartholomew argues that the welfare state in Britain has resulted in a generation of badly educated citizens and has undermined its original intent.
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- At EducationNews.org Neal McCluskey explains how government aid is driving college costs through the roof.
- In The Washington Times, Doug Bandow discusses real ways to combat homelessness in the United States.
- Chris Edwards co-authors an article in The Washington Post arguing why we should look to Canada as an example of fiscal conservatism.
- In Monday’s Cato Daily Podcast, Mark Calabria weighs in on the aftermath of the financial crisis.
Week in Review: The War on Drugs, SCOTUS Prospects and Credit Card Regulation
White House Official Says Government Will Stop Using Term ‘War on Drugs’
The Wall Street Journal reports that White House Drug Czar Gil Kerlikowske is calling for a new strategy on federal drug policy and is putting a stop to the term “War on Drugs.”
The Obama administration’s new drug czar says he wants to banish the idea that the U.S. is fighting ‘a war on drugs,’ a move that would underscore a shift favoring treatment over incarceration in trying to reduce illicit drug use…. The Obama administration is likely to deal with drugs as a matter of public health rather than criminal justice alone, with treatment’s role growing relative to incarceration, Mr. Kerlikowske said.
Will Kerlikowske’s words actually translate to an actual shift in policy? Cato scholar Ted Galen Carpenter calls it a step in the right direction, but remains skeptical about a true change in direction. “A change in terminology won’t mean much if the authorities still routinely throw people in jail for violating drug laws,” he says.
Cato scholar Tim Lynch channels Nike and says when it comes to ending the drug war, “Let’s just do it.” In a Cato Daily Podcast, Lynch explained why the war on drugs should end:
Cato scholars have long argued that our current drug policies have failed, and that Congress should deal with drug prohibition the way it dealt with alcohol prohibition. With the door seemingly open for change, Cato research shows the best way to proceed.
In a recent Cato study, Glenn Greenwald examined Portugal’s successful implementation of a drug decriminalization program, in which drug users are offered treatment instead of jail time. Drug use has actually dropped since the program began in 2001.
In the 2009 Cato Handbook for Policymakers, David Boaz and Tim Lynch outline a clear plan for ending the drug war once and for all in the United States.
Help Wanted: Supreme Court Justice
Justice David Souter announced his retirement from the Supreme Court at the end of last month, sparking national speculation about his replacement.
Calling Souter’s retirement “the end of an error,” Cato senior fellow Ilya Shapiro makes some early predictions as to whom President Obama will choose to fill the seat in October. Naturally, there will be a pushback regardless of who he picks. Shapiro and Cato scholar Roger Pilon weigh in on how the opposition should react to his appointment.
Shapiro: “Instead of shrilly opposing whomever Obama nominates on partisan grounds, now is the time to show the American people the stark differences between the two parties on one of the few issues on which the stated Republican view continues to command strong and steady support nationwide. If the party is serious about constitutionalism and the rule of law, it should use this opportunity for education, not grandstanding.”
Obama Pushing for Credit Card Regulation
President Obama has called for tighter regulation of credit card companies, a move that “would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18,” according to CBSNews.com.
But Cato analyst Mark Calabria argues that this is no time to be reducing access to credit:
We are in the midst of a recession, which will not turn around until consumer spending turns around — so why reduce the availability of consumer credit now?
Congress should keep in mind that credit cards have been a significant source of consumer liquidity during this downturn. While few of us want to have to cover our basic living expenses on our credit card, that option is certainly better than going without those basic needs. The wide availability of credit cards has helped to significantly maintain some level of consumer purchasing, even while confidence and other indicators have nosedived.
In a Cato Daily Podcast, Calabria explains how credit card companies have been a major source of liquidity for a population that is strapped for cash to pay for everyday goods.
Filed under: Cato Publications; General; Law and Civil Liberties; Regulatory Studies
How Does It Feel to Be at the Table Now?
On Monday, the Obama administration held a well-publicized love-fest with lobbyists for the health care industry. It turns out that rather than a “game-changer,” the event was a fraud. And the industry got burned.
At the time, President Obama called it a “a watershed event in the long and elusive quest for health care reform“:
Over the next 10 years — from 2010 to 2019 — [these industry lobbyists] are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion.
By an amazing coincidence, $2 trillion is just enough to pay for Obama’s proposed government takeover of the health care sector.
Yet The New York Times reports that isn’t the magnitude of spending reductions the lobbyists thought they were supporting:
Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending… [C]onfusion swirled in Washington as the companies’ trade associations raced to tamp down angst among members around the country.
Health care leaders who attended the meeting…say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts…
My initial reaction to Monday’s fairly transparent media stunt was: “I smell a rat. Lobbyists never advocate less revenue for their members. Ever.” The lobbyists are proving me right, albeit slowly. (Take your time, guys. I don’t mind.)
Filed under: Cato Publications; Government and Politics; Health, Welfare & Entitlements
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- In The Washington Times, Richard Rahn explains how the current tax crackdown could deepen the country’s economic woes.
- In the Washington Examiner, Gene Healy discusses Wanda Sykes’ speech at the White House Correspondents’ Dinner and the lost pastime of making fun of the president.
- Nat Hentoff cries foul on the new “hate crimes” legislation that is currently advancing through Congress.
- On NPR.org, Michael Cannon explains why 2009 will not be a good year for health care reform.
- At National Review online, Jerry Taylor contends that Jack Kemp’s political career ultimately did the cause of limited government more harm than good.
- In Wednesday’s Cato Daily Podcast, Mark A. Calabria discusses the president’s plan for regulating credit card companies.
- Watch Chris Edwards on CNN discussing why the pay gap between government and private workers is rapidly growing wider.
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