Today Cato filed its second Supreme Court amicus brief in the Obamacare litigation, on the issue of whether the health care law’s Medicaid expansion is a proper exercise of the Constitution’s Spending Clause.

That is, states must now accept a comprehensive reorganization of Medicaid or forfeit all federal Medicaid funding—even though the spending power is circumscribed to preserve a distinction between what is local and what is national. If Congress is allowed to attach conditions to spending that the states cannot refuse in order to achieve an objective it could not outright mandate, the local/national distinction that is so central to federalism will be erased.

Joining the Center for Constitutional Jurisprudence, Pacific Legal Foundation, Rep. Denny Rehberg (chairman of the House Appropriations Subcommittee on Labor, Health & Human Services, Education, and Related Agencies), and Kansas Lt. Gov. Jeffrey Colyer (also a practicing physician) we argue that, in requiring states to accept onerous conditions on federal funds that it could not impose directly, the government has exceeded its enumerated powers and violated basic principles of federalism.

California is at risk of losing $25.6 billion in annual federal funding, for example, and together the states stand to lose more than a quarter trillion dollars annually. On average, states would have to increase their general revenue budgets by almost 40% in order to maintain their current level of Medicaid funding.

The 1987 case of South Dakota v. Dole, however, prohibits such a coercive use of the spending power and recognizes that “in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which ‘pressure turns into compulsion.’” Indeed, the states’ obligations, should they “choose” to accept federal funding and thus commit themselves to doing the government’s bidding, are far more substantial than those the Supreme Court invalidated in New York v. United States and Printz v. United States (which prohibit federal “commandeering” of state officials).

Moreover, the Congress that enacted the original Social Security Act, to which Medicare and Medicaid were added in the 1960s, recognized that social safety has always been the prerogative of the states and should continue to be done under state discretion. Medicaid itself was narrowly tailored to serve particularly needy groups.

In short, if Obamacare does not cross the line from valid “inducement” to unconstitutional “coercion,” nothing ever will. Just as the Commerce Clause is not an open-ended grant of power, the Spending Clause too has limits that must be enforced.

Obamacare’s Medicaid Expansion Violates Federalism is a post from Cato @ Liberty - Cato Institute Blog

Coercive redistribution and diversity in the interests of its constituent groups are essential features of the modern welfare state.  Disagreement over perceived consequences of social policy creates the demand for publicly justified “objective” evaluations. If there were no coercion, redistribution and intervention would be voluntary activities and there would be no need for public justification for voluntary trades.

−James J. Heckman (winner of the 2000 Nobel Prize in Economics), “Accounting for Heterogeneity, Diversity and General Equilibrium in Evaluating Social Programs,” National Bureau of Economic Research Working Paper No. 7230, July 1999.

Why Congressional Budget Office Estimates and Policy Options Are Taken Much Too Seriously is a post from Cato @ Liberty - Cato Institute Blog

Stephen Metcalf’s prolix takedown of Robert Nozick demands response, not because Metcalf has advanced a novel and Rawls-esque so-interesting-and-powerful-it-must-be-addressed argument, but because he precisely has not. Nozick is, justifiably, a hero of libertarianism (and liberty), and his terrific book, Anarchy, State, and Utopia, as well as libertarianism in general, deserve better than Metcalf’s excoriation.

My colleague Jason Kuznicki started things off admirably. At the risk of beating what ought to be a dead horse, I’d like to add a word or two of my own. I’ll avoid what Jason’s already covered.

Let’s start with Metcalf’s very odd characterization of Nozick’s view of liberty as the primary value. He writes, “Nozick is arguing that liberty is the sole value, and to put forward any other value is to submit individuals to coercion.” Metcalf adds that, according to Nozick and modern libertarians, “Every other value, meanwhile, represents someone else’s deranged will-to-power.”

This claim evinces a common confusion about libertarianism, one that continues throughout the remainder of Metcalf’s article: libertarians don’t believe that liberty is the primary value, we believe that liberty is the primary political value. Like so many critics of libertarianism, Metcalf does not understand the scope of the libertarian argument.

I value liberty, yes, but I also value my health, my daughter’s happiness, and films staring William Powell and Myrna Loy. In fact, libertarians, progressives, and even Robert Nozick value quite a lot of things. The libertarian argument is simply that a state that attempts to directly maximize any value besides liberty—by, say, coercively taxing in order to pay for more Thin Man films—violates individual rights. What’s more, if the state does remain limited to protecting only liberty, we’ll get more health, happiness, and great movies.

According to Nozick and most other libertarians, it is for the protection of liberty that we organize a state—and a state that violates its citizens’ liberty (beyond, arguably, certain “night watchman” duties) commits a moral wrong. Metcalf gets that much right. But this is not because liberty is the only value. Rather, it is because liberty is the only value the state should concern itself with. All the other values—of which there are a great many, not all shared equally by all individuals—are the exclusive concern of civil society.

Nozick argues that it’s wrong for all of us to look in moral horror at Wilt Chamberlain’s earnings, band together into a government, and send in armed tax collectors because we think Wilt’s money could be more valuably used somewhere other than Wilt’s pockets. Nozick’s parable is about the morality of politics while saying nothing about what Wilt ought to voluntarily do with his money. He might choose to spend it all on caviar and rare basketball cards, in which case the rest of us might even be justified in looking down our noses at such “wasteful” behavior. But Wilt might also give a portion of his money to fund homeless shelters, free medical clinics, and scholarships for poor children (as many people in his position in fact do). Or he might use it to launch a new business, employing many of his fellow citizens at decent wages to teach his basketball skills to willing consumers.

Liberty is not the only value. It is the only value within the scope of politics. Liberty is also the value that allows all the other actually-held values to flourish.

Which brings me to this odd bit of Metcalf’s reasoning: “Even in 1975,” he writes, “it took a pretty narrow view of history to think all capital is human capital, and that philosophy professors, even the especially bright ones, would thrive in the free market.” Doesn’t Nozick recognize, he asks, that the very university system he took advantage of to pay his bills while writing his defense of free markets was made possible only by massive government transfer payments? Without a hugely interventionist state, Nozick wouldn’t even be able to pay his rent with his philosophy knowledge, let alone revitalize an intellectual movement.

In effect, Metcalf is saying that Nozick is dumb to support markets because markets wouldn’t support Nozick. If liberty is the only value (of the state), then the talent of philosophy wouldn’t be sufficiently valued (by the market) to allow a fellow like Robert Nozick to do philosophy.

And Metcalf may be right. But if he is, it’s unclear why we shouldn’t also extend his argument to all other talents. A great many mystery novelists, for instance, would love to have academic appointments while they pen new adventures for their detectives. But instead they have to compete in the free market, hoping an audience will value their work enough to pay for it. Last I checked, even in this unforgiving environment, there are a great many mystery novels on shelves.

The fact of the matter is that not all talents are valued, which is why Nozick chose a basketball player to build his case around instead of, say, a teenager who can name every Pokémon from memory. If we are going to create a world in which everything valuable (to Metcalf) is given financial support, we need to organize it such that people are not free to choose their own values. The beauty of the free market is not that it specifically supports basketball playing or philosophy writing, but that it rewards those who have talents that are actually and voluntarily valued by the rest of us. Arriving at an array of values this way seems a good deal better than the alternative, at least. For if we aren’t to leave “value” to the market, we have to leave it to someone. Which means substituting that person’s (or committee’s) particular, uniform conception of value for the variegated bramble that is a free society.

The beauty of liberty is that it allows each of us to pursue our own ends and strive for whatever we value. The curse of liberty is that our striving takes place among a great many fellow strivers, many of who are headed in directions we find elitist or prole, dangerous or dull, distasteful or uninspired. The difference between Nozick’s vision and Metcalf’s is that Nozick embraces that wonderful chaos, provided it happens within a framework of respected rights. Metcalf would strike down choice and replace it with state-endorsed value. He would force all of us or none of us to watch Wilt play, placing the decision to be a spectator or an abstainer not with free individuals but with Stephen Metcalf.

Robert Nozick and the Value of Liberty is a post from Cato @ Liberty - Cato Institute Blog

President Obama has been saying that if the United States government can find and eliminate Osama bin Laden after ten years of searching, it can do anything:

Already, in several appearances since the raid, Obama has described it as a reminder that “as a nation there is nothing that we can’t do,” as he put it during an unrelated White House ceremony Monday. On Sunday night, during his first comments about the operation, he linked it to American values, saying the country is “once again reminded that America can do whatever we set our mind to.”

This is, of course, nonsense. Finding bin Laden, difficult as it proved to be, was an incomparably simple task compared to using coercion and central planning to bring about desired results in defiance of economic reality. You can’t deliver better health care to more people for less money by reducing the role of incentives and markets, even if you set your mind to it. As Russell Roberts said about a similar concept, “If we can put a man on the moon, then…”:

Putting a man on the moon is an engineering problem. It yields to a sufficient application of reason and resources. Eliminating poverty is an economic problem (and by the word “economic” I do not mean financial or related to money), a challenge that involves emergent results. In such a setting, money alone—in the amounts that a non-economic approach might suggest, one that ignores the impact of incentives and markets—is unlikely to be successful.

Obama should listen to Bill Clinton, who last fall seemed to be channeling Hayek:

Friedrich Hayek, The Fatal Conceit: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Bill Clinton, 9/21: “Do you know how many political and economic decisions are made in this world by people who don’t know what in the living daylights they are talking about?”

Clinton, Obama, and Hayek is a post from Cato @ Liberty - Cato Institute Blog

The recent focus in Washington on mortgage modifications once again illustrates one of the most fundamental flaws in current political debate:  the notion of using government to threaten or force the “voluntary” transfer of wealth from one group of citizens to another.

Just this week Rep. Barney Frank warned the banking industry if they don’t “voluntarily” do more to reduce foreclosures, Congress will step in and make them do so, by allowing bankruptcy judges to re-write mortgage contracts.  This proposal is really nothing more an ex poste transfer of wealth from investors in mortgage backed assets to borrowers.

Of course, Rep. Frank and others respond that they are only trying to “bring lenders to the table” in order to keep negotiations going.  In the words of many “consumer” advocates, this is just a “stick” to the motivate the lenders.  I could think of few things more offensive to a free society.  In a government truly constituted on the notion of the common good or general welfare, it would be no more appropriate to use the stick of the state on lenders than it would be on borrowers.  Government quite simply should not take sides in purely private disputes. 

One would think that if anyone could understand the principle that government should not interfere in the private, voluntarily entered relationships of consenting adults, it should be Mr. Frank.

Mortgage Mods: Congressman Prefers Coercion over Cooperation is a post from Cato @ Liberty - Cato Institute Blog

George Will recently accused Obama’s token Republican, Transportation Secretary Ray LaHood, of being the “Secretary for Behavior Modification” because of his support for programs designed to coerce people into driving less. Speaking before the National Press Club on May 21, LaHood pleaded guilty as charged.

In the video of LaHood’s presentation, he was asked if the administration’s “livability initiative” is really “an effort to make driving more tortuous and to coerce people out of their cars.” His answer: “It is a way to coerce people out of their cars, yeah.”

The next question was, “Some conservative groups are wary of the livable communities program, saying it’s an example of government intrusion into people’s lives. How do you respond?” His complete answer: “About everything we do around here is government intrusion in people’s lives.”

While these are certainly quotable, defenders of “livability” (code for “transportation by any mode but automobile”) would be quick to point out that all of LaHood’s examples are aimed at giving people choices other than driving: walkways, bike paths, streetcars, light rail. LaHood never mentions any actual techniques aimed at coercing people out of their cars.

Yet those coercive techniques are a major part of the livability campaign, as shown by Portland, Oregon, which LaHood touted as “the example” of a livability program. The most important of these techniques is to divert highway user fees to expensive forms of transportation that receive little use. Portland is deliberately allowing congestion to grow while it spends money collected from highway users on streetcars and light rail.

Not that Portland’s program is very successful. Despite spending more than $2 billion on rail transit since 1980, transit’s share of Portland-area commuting declined from 9.8 percent in 1980 to 6.9 percent in 2007. (The table says 6.5 percent but that includes the people who worked at home.)

Much of the money that Portland does spend on roads goes into “traffic calming,” a euphemism for “congestion building.” This consists of putting barriers in roads, speed humps, narrowing streets, and turning auto lanes into exclusive bike lanes. Portland’s official objective (see table 1.2) is to allow rush-hour traffic to grow to near-gridlock levels (“level of service F”) on most major freeways and arterials.

“People don’t like spending an hour and a half getting to work,” said LaHood. But if more congestion is a key part of “livability,” then a lot more people are going to be doing that under the administration’s plans.

Beyond not seeing anything wrong with government coercion, LaHood can’t see the difference between transportation systems that pay for themselves (such as the interstate highways) and transportation systems that require huge subsidies (such as streetcars and light rail). “If somebody wants to ride streetcars or light rail to work,” says LaHood, then it is up to the government to provide it for them.

What if someone wants to take a helicopter to work? Or a dirigible or rocketship or a personal limousine? Does LaHood really believe that, just because someone wants something, all other taxpayers should fund it?

When in Congress, LaHood was known as a “moderate Republican.” I guess that is a euphemism for “central planner in waiting.”

Secretary of Behavior Modification is a post from Cato @ Liberty - Cato Institute Blog

I have to confess I don’t understand why Roger Pilon and Ilya Shapiro are criticizing our colleagues Ben Friedman and Peter Van Doren below.  At the risk of being cast as yet another cog in the insidious piratofascist fifth column, I’d like to defend Ben and Peter.

Roger and Ilya reproach Ben and Peter for likening pirates to “pseudo-governments” and mount an impassioned defense of the nation-state as deserving a place in a different category from pirates.

On the distinction between the two, they write: “A tax, at least in principle, and most often in practice, is a charge for a service rendered –- not necessarily a wanted or an evenly distributed service, to be sure…”  To be sure, indeed!  There’s a term for charging people for an unevenly distributed and unwanted service.  It’s called racketeering.  Their description of taxation could apply quite well to a mafia.

Roger and Ilya would prefer to keep pirates and governments in two discrete categories but provide little reason why other than the above.  But if they dislike the analogy, their problem is not with Ben or Peter or Noam Chomsky or St. Augustine, but rather with a body of well-developed academic literature.  In particular, one of the preeminent scholars of the formation of national states, the late Charles Tilly, wrote a famous book titled Coercion, Capital, and European States that would help color in the gaps for them.  The short version is that European elites came to form national states as a means for protecting their fiefdoms from other proto-states, which frequently had predatory aims, and that this process sometimes had the incidental effect of protecting the populaces that lived under state jurisdiction and could be used as means for making war against the neighbors.

Tilly also wrote a well-known essay titled “War Making and State Making As Organized Crime” that makes the following claim: “Banditry, piracy, gangland rivalry, policing, and war making all belong on the same continuum.” Tilly went on:

In retrospect, the pacification, cooptation, or elimination of fractious rivals to the sovereign seems an awesome, noble, prescient enterprise, destined to bring peace to a people; yet it followed almost ineluctably from the logic of expanding power. If a power holder was to gain from the provision of protection, his competitors had to yield. As economic historian Frederic Lane put it twenty-five years ago, governments are in the business of selling protection … whether people want it or not.

Governments and pirates both “put the victim to a choice between two of his entitlements — his freedom and his property.”  In the literature on state formation, this isn’t a controversial point.  I’m really surprised to see that it is for two libertarians.

Pirates as Proto-Governments? You Bet! is a post from Cato @ Liberty - Cato Institute Blog