Archives: 11/2009

The Week in Government Failure

This Cannot Last

This morning, Politico Arena asks:

Will the House pass healthcare this weekend — or not

My response:

In his post below, my colleague Michael Cannon links to his devastating analysis of the way House Democrats have buried the true cost of their healthcare scheme. This is legerdemain of the first order, but it is business as usual here in Washington. Here we have a Congress that cannot fix Medicare, which will go broke even before Social Security does, a Congress that still hasn’t met the October 1 budget deadline for the ninth year in a row, and it wants to fundamentally reorder healthcare in America with a scheme that no one understands and no one knows how to fund. Any private business that ran its affairs that way would long have been out of business.

Given this record of insanity, therefore, it is impossible to say whether the House this weekend will pass this 1,990-page monstrosity of a bill — whether enough sanity will come to enough members to kill the bill. One datum does loom large, however: Speaker Pelosi can afford to lose no more than 40 members of her caucus. Combine that, after Tuesday’s election results, with another datum — there are 49 House Democrats who sit in districts that John McCain carried — and one has to ask whether the insanity we see before us reaches to political suicide.

Yet whatever happens tomorrow, or in the Senate down the road, this cannot go on, simply because the money isn’t there to allow it to go on. On Tuesday at the polls and yesterday with the huge demonstration in front of the Capitol we are seeing what Charles Krauthammer this morning rightly calls the demolition of “the great realignment myth of 2008.” America is not a suicidal nation. The Founders and Framers gave us institutions that have endured for over two centuries and are the envy of the world. Whatever happens tomorrow, the seeds of sanity are in the American soil and soon will be springing forth.

As it Turns Out, There Are Limits on Congress’s Power

In 2006, Congress passed the Adam Walsh Child Protection and Safety Act. One provision of the law authorizes the federal government to civilly commit anyone in the custody of the Bureau of Prisons whom the attorney general certifies to be “sexually dangerous.” The effect of such an action is to continue the certified person’s confinement after the expiration of his prison term, without proof of a new criminal violation.

Six days before the scheduled release of Graydon Comstock — who had been sentenced to 37 months in jail for receiving child pornography — the attorney general certified Comstock as sexually dangerous. Three years later, Comstock thus remains confined in a medium security prison, as do more than 60 other similarly situated men in the Eastern District of North Carolina alone.

Comstock and several others challenged their confinements as going beyond Congress’s constitutional authority and won in both the district and appellate courts. The United States successfully petitioned the Supreme Court to review the case.

Cato, joined by Georgetown law professor (and Cato senior fellow) Randy Barnett, filed a brief opposing the government. We argue that the use of federal power here is unconstitutional because it is not tied to any of Congress’s limited and enumerated powers. The government’s reliance on the Necessary and Proper Clause of Article I, Section 8, is misplaced because that clause grants no independent power but merely “carries into execution” the powers enumerated elsewhere in that section. The commitment of prisoners after their terms simply is not one of the enumerated powers.

While the government justifies its actions by invoking its implied power “to establish a federal penal system” — itself a necessary and proper auxiliary to certain enumerated powers — civil commitment is unrelated to creating or maintaining a penal system (let alone any enumerated power). Nor can the law at issue fall under the Commerce Clause, because civil commitment involves non-economic intrastate activity.

As the Supreme Court recognized almost 150 years ago in Ex Parte Milligan, “[n]o graver question was ever considered by this court, nor one which more nearly concerns the rights of the whole,” than the government’s unconstitutional assertion of power against its own citizens. In this spirit, the Court should affirm the Fourth Circuit’s rejection of this blatant government overreach.

United States v. Comstock will be argued on January 12.  You can read Cato’s brief here.

Chamber of Commerce Endorses Carbon Tariffs?

Even though the climate change summit in Copenhagen next month is likely to yield very little, domestic shenanigans continue. The Senate Committee on Environment and Public Works passed a bill on Thursday amid controversy, and the farmers’ friends in the Senate (notably Sen. Debbie Stabenow, D. Mich) are looking to send goodies their way by filing an amendment that would pay farmers for not cutting down trees, not farming, and will likely see states such as — well, how about that! —  Michigan “cashing in” (see here).

Meanwhile, those concerned about the cost of climate change regulations may have lost an ally. Often, but not always, one can depend on the U.S. Chamber of Commerce to defend free enterprise, or at least free trade. On climate change, however, they are a little more ambiguous. If anything, they appear to be getting more sympathetic to climate change legislation. Nothing to do with membership defections, they assure us, just good business practice. Maybe it is. I’m not a member of the Chamber so their strategy is not really any of my business.

What concerns me is the apparent shift in their position toward so-called carbon tariffs (also called “border adjustment measures,” and often spoken of in terms of “international competitiveness,” “negotiating leverage” and other terms that should raise the alarm). My friend, and former Catoite, Scott Lincicome does an excellent job here of parsing through the Chamber’s recent public letter in support of  the Kerry-Graham “framework” (outlined in this New York Times op-ed) and their strange silence on the framework’s inclusion of the need for carbon tariffs, so I won’t repeat his analysis here. Suffice to say, their non-comment on the issue of carbon tariffs is worrying. As Scott points out, they appear to endorse the concept, if in a coded manner.

Back in June, the Chamber explicitly opposed Waxman-Markey, in part because “It would also impose carbon tariffs on goods imported into the U.S., a move that would almost certainly spur retaliation from global trading partners.” (See here.) I would feel a lot more comfortable if a similarly explicit statement had been repeated in their letter.

The House Health Care Bill — Transparent or Not?

The House health care bill is reportedly coming to the floor this weekend, and House Speaker Pelosi committed in September to a 72-hour delay between the time the bill is posted online and a final vote.

Is that 72-hour delay happening? Some say yes. Some say no.

On the “yes” side are some folks at the Sunlight Foundation. John Wonderlich wrote a post last Sunday called “72 Hours is Now.” He hailed the posting of the health care bill well in advance of a vote.

“Public outcry, partisan pressure, and rising expectations are forcing Congress’s hand,” he wrote, ”and it’s now (apparently) taken as a matter of course that this bill is online for a long weekend before its final consideration.”

Paul Blumenthal followed that up mid-week, sounding slightly more cautious notes but hailing the posting of the “final manager’s amendment.” His post restarted the 72-hour clock.

Which brings us to the folks who say no.

On the Weekly Standard blog, John McCormack says that Speaker Pelosi plans to violate the promise to post the health care bill online for 72 hours.

House members are still negotiating important issues in the bill — whether it will provide taxpayer-funding for abortions, for example. Pelosi is pushing for a Saturday House vote, and a number of big changes will be introduced, likely less than 24 hours before the vote takes place (if in fact it does).

Did Pelosi promise to post a bill? Yes — and she did, when it was pretty near final.

Meanwhile, though, the really tricky details — the stuff that matters to a lot of people — are still being hammered out. The spirit of the 72-hour pledge remains unfulfilled.

And this reveals a weakness in H. Res. 554, the preferred reform of the Sunlight-backed ”Read the Bill” effort. It would install a House rule giving bills 72 hours of online airing “before floor consideration.”

Floor consideration can and regularly does include the adoption of a “manager’s amendment” which can revamp a bill wholesale or add and subtract key details — things that matter.

H. Res. 554 has a loophole you can drive a truck through, and Speaker Pelosi is revving her engines.

This episode is a good, if regrettable, illustration that “self-reform” by a branch of government isn’t reliable. “Read the bill” is a good idea, but the genius of President Obama’s parallel “Sunlight Before Signing” pledge to hold bills coming out of Congress for five days before signing them is that it is based on interbranch rivalry. Especially, but not only, when there is partisan division between the president and Congress, competition among branches will promote the practice.

(More on “Read the Bill” and “Sunlight Before Signing” here.)

Getting Congress to hold up its own legislation for 72 hours, giving meaningful access to the public of every detail, is asking Congress to be altruistic. And Congress is anything but altruistic.

Cato Podcast Exposes Anti-Poor Bias of U.S. Tariffs

The dirty secret of the U.S. tariff code is that it is not only insanely complex but that it is biased against the poor. Our highest remaining trade barriers are imposed on goods that loom the largest in the budgets of poor and middle-income families — such as food, shoes, and clothing.

Politicians and interest groups that fight any reduction of U.S. tariffs are unwittingly picking the pockets of the poor every day. I discuss how President Obama supports this unfair status quo in a new Cato podcast, in an earlier newspaper column, and in Chapter 9 of Mad about Trade.

And you can bet your imported t-shirt that I will highlight this inconvenient truth during my presentation at today’s Cato book forum. You can watch it live online beginning at noon, eastern time. Commenting on Mad about Trade will be Steven Pearlstein, business columnist for the Washington Post.

Big Business Not Investing

In a recent post, I argued that while third-quarter GDP was positive, the underlying data revealed that U.S. private investment was still in the toilet. While government spending might be providing a short-term “sugar high” for the economy, U.S. business investment remains in recession. I speculated that Obama’s anti-business agenda is likely one cause of the problem.

For those observations, economist Brad DeLong called me an “utter fool.”

Let me draw your attention to an article in the Washington Post today entitled “Corporate giants sit on piles of cash.” Nucor Steel is sitting on piles of cash that it is unwilling to invest. Nucor’s chief executive Daniel Dimicco explains:

Everything is still on hold because we don’t have a lot of confidence that the right things are being done in Washington to reinvigorate the economy.

To story goes on:

Nucor isn’t alone. The balance sheets of large U.S. corporations are for the most part in good shape. Many big companies have piles of cash on hand and credit markets have thawed so that they can raise new funds… But most U.S. executives lack enough confidence in the economy to expand their businesses.

The article explains how big businesses are “jittery” for various reasons, such as memories of last year’s credit crunch. It doesn’t mention President Obama’s policies, but at this point in the economic cycle when world growth is returning, the lack of excitement by U.S. businesses regarding domestic investment is very curious.

Unfortunately, the Obama administration is giving them nothing to get excited about. The President is promising them higher health care costs, higher corporate taxes, more labor regulations, higher energy costs with cap-and-trade, and a lack of interest in further trade agreements.

The Post article says that some U.S. multinationals are using their hoards of cash to invest abroad, allowing them to avoid punitive treatment under the high-rate U.S. corporate income tax.

How do we get U.S. multinationals to start investing their “piles of cash” in the United States? Cut the U.S. corporate rate permanently to 15 percent, as I’ve described in Global Tax Revolution. With just about every other advanced economy having slashed their corporate rate in recent years, we are “utter fools” for not following suit, especially with the unemployment rate now topping 10 percent.