Archives: 03/2010

Individual Mandate Is Constitutional - If You Rewrite the Constitution

House Judiciary Committee Chairman John Conyers (D-MI) was asked on Friday where in the Constitution Congress gets the power to force people to buy health insurance.  He said, “Under several clauses, the good and welfare clause and a couple others.”

As it happens, there is no “good and welfare clause” – which Conyers should know, as both judiciary chairman and a lawyer.  But even if you excuse his casual use of constitutional language, what he probably means – the General Welfare Clause of Article I, Section 8 – is not a better answer.  What that clause does is limit Congress’s use of the powers enumerated elsewhere in that section to legislation that promotes ”the general welfare.”  (So earmarks are arguably unconstitutional, though you can make a colorable argument that, when considering a pork bill as a whole, with all parts of the country getting something, that monstrosity is collectively in “the general welfare” – maybe.)  In any event, the General Welfare Clause doesn’t give Congress any additional powers – and I’d be curious to know what the other “several clauses” are.

Conyers  also noted that, “All the scholars, the constitutional scholars that I know … they all say that there’s nothing unconstitutional in this bill and if there were, I would have tried to correct it if I thought there were.”  Well, Mr. Conyers, to start let me introduce you to three constitutional scholars – not fringe right-wing kooks or anything like that, but respected people who publish widely – who think Obamacare is unconstitutional.  Now will you try to “correct” the bill?

Here’s video of Conyers’s full remarks on the subject (h/t Jon Blanks):

And for a survey of the various constitutional issues attending Obamacare, see Randy Barnett’s oped from Sunday’s Washington Post.

Health Care Is Cheap (Subsidies Are Not)

A column I wrote in 2002 seems more relevant than ever.  Some excerpts:

Health care is cheap: Eat less fat and more veggies, take a daily walk, quit smoking, and drink a little wine with some nuts. Fail to take care of yourself, and the long-term results can be costly – like the results of never changing the oil in your car and never replacing the tires. New diagnostic and surgical technologies involve expensive equipment and skills. Even so, insurance for gigantic medical expenses is also cheap. My policy pays nothing unless annual medical bills top $2,000. Most people call that “catastrophic” insurance. I call it real insurance.

Insurance for accidental damage to cars and homes is real insurance – something to protect against emergencies, not routine expenses. We do not expect an insurance company to pay for tires and gasoline, or to pay for home painting and termite inspections. When families make their own choices and pay for them, they choose insurance only for catastrophic expenses – the car becoming a total wreck, the house burnt to the ground or the breadwinner dropping dead. If we never collect a dime from such genuine insurance, we consider ourselves lucky.

With health insurance, by contrast, we all want somebody else to pay. Each of us expects to pay less for health insurance than the insurance companies pay to hospitals, doctors and pharmacies. Sadly, that does not add up.

More than a fourth of the U.S. population already has federally subsidized health care through Medicare, Medicaid and military health benefits. If that percentage ever reached 100 percent, as some politicians promise, we might finally begin to wonder how it is possible for everybody to subsidize everybody else.

If you subsidize something, people want more of it. That increase in demand translates into a market in which prices can more easily be raised.

Tuesday Links

  • Estimates of the health care overhaul’s real cost over 10 years run as high as $3.5 trillion, including $600 billion in new taxes from the start.
  • Will claims that the health care overhaul is unconstitutional get anywhere? Here is your guide to the possible legal challenges to the new law.

How Can We Be at Cyberwar if We Don’t Know What It Is?

Brilliant column from William Jackson on GCN.com debunking “cyberwar”:

“The United States is fighting a cyberwar today and we are losing it,” former National Security Agency chief and national intelligence director Mike McConnell wrote in a recent op-ed column in the Washington Post. “It’s that simple.”

It is neither simple nor true. Failure to distinguish between real acts of war and other malicious behavior not only increases the risks of war, but also distracts us from more immediate threats such as online crime.

The habit of threat inflation is harmful to the country. Jackson’s welcome take on “cyber” threats earns an accolade I rarely give out: Read the whole thing.

The Establishment Is Offended

Today Politico Arena asks:

Should Republican leaders be doing more to reign in the rhetoric?

My response:

One hesitates to weigh in on this mud-slinging for fear of getting muddy oneself.  But neither should commentary on Republican and tea-party reaction to Sunday’s House vote be left to the suddenly self-righteous Democratic left:  After all, it’s their appalling disregard for democratic principles and processes that gave rise to the weekend’s demonstrations and outbursts.  So a few points are in order, simply to put things in perspective.

First, let’s not leap to factual conclusions.  Last evening the Lehrer News Hour reported (along with Politico this morning) that Rep. Randy Neugebauer shouted “baby killer” as Rep. Bart Stupak was speaking Sunday night.  Yet NPR reported that Neugebauer actually shouted “It’s a baby killer” – referring to the bill, not to Stupak.  Neither version is acceptable, but there is a difference.  Likewise, claims about protesters’ taunts should be treated cautiously as well, especially since they’ve been denied, and as yet no footage has emerged to support them.  Yet we see here at the Arena this morning that Harvard’s Theda Skocpol is writing, without a shred of evidence, that ”Quite a few Republican public officials are even flirting with threats of violence against political figures they oppose.”  So let’s not pretend that the right has a corner on irresponsibility.

Second, even if the claims about protesters’ taunts prove to be true, how is that a warrant for condemning the entire tea-party movement, or the Republican party, as many on the left are doing?  No broad political movement can control its every “member.”  Yet we find people like House Majority Whip Jim Clyburn saying that GOP leaders “ought to be ashamed of themselves for bringing these people here to Washington.”  Perhaps Rep. Clyburn has forgotten that we still have the right to protest.  That’s what the first tea party was about.  And let’s remember that George Washington had to wade into the “mob” from time to time to keep order.

And that brings me to a final point.  The symbolism of the Democratic left’s hostility to the “tea baggers” should not go unnoticed.  The tea party movement’s roots are in the American Revolution.  These ordinary Americans are protesting the Washington ”Establishment” – which presently is the Democratic juggernaut – much as American Patriots were protesting the oppressive British Establishment that was “eating out their substance” with “a long train of abuses and usurpations.”  The Democratic left should think long and hard about those parallels.  The times they are a-changin’.

Postmaster Indicates Need for Privatization

A recent Senate Appropriations subcommittee hearing on the U.S. Postal Service’s dire financial prospects found little enthusiasm for the USPS’s idea to eliminate Saturday mail service. Financial Services subcommittee chairman Sen. Richard Durbin (D-IL) said “serious questions need to be asked and answered,” and ranking member Sen. Susan Collins (R-ME) expressed concern that it would send the USPS into “a death spiral.”

The USPS is already in a death spiral due to changes in technology, high labor costs, and costly congressional mandates that have left it facing a projected $238 billion in losses over the next ten years. The USPS says dropping Saturday service would save the USPS $3 billion a year. However, the Postal Regulatory Commission believes the savings would be significantly smaller. Regardless, if the USPS stops Saturday service then private firms should be allowed to provide Saturday mail service.

Better yet, the USPS monopoly should be completely repealed and private firms allowed to deliver mail every day of the week. Interestingly, Postmaster General John Potter’s testimony inadvertently makes a case for privatizing the USPS.

Potter notes that when private businesses are losing money, they sell off assets, close locations, and reduce employment. He cites Sears, L.L. Bean, and Starbucks as recent examples of companies making cost cutting moves in the face of declining revenues. The Government Accountability Office’s testimony noted that the USPS has more retail outlets (36,500) than McDonalds, Starbucks, and Walgreens combined. Yet, its post offices average 600 visits per week, which is only 10 percent of Walgreen’s average weekly traffic.

In his testimony, Potter states:

If the Postal Service were provided with the flexibilities used by businesses in the marketplace to streamline their operations and reduce costs, we would become a more efficient and effective organization. Such a change would also allow us to more quickly adapt to meet the evolving needs, demands, and activities of our customers, now and in the future.

This is precisely why the USPS needs to be privatized and subjected to the demands of the market and not the whims of Congress. Members of congress always raise a fuss when the USPS targets postal outlets for closure in their districts.

Potter wants Congress to suspend a requirement that the USPS pre-fund its retiree health benefits. He argues that the trust fund for these payments has a $35 billion balance, which he says is enough to pay the health premiums for its 500,000 retirees through their lifetimes.

The more fundamental problem is the existence of this generous benefit to begin with. Potter notes that private companies aren’t subject to a pre-funding mandate. But the vast majority of private companies don’t even offer retiree health benefits. The GAO also points out that the USPS retiree benefits are generous even by government standards:

USPS pays a higher percentage of employee health benefit premiums than other federal agencies (80 percent versus 72 percent, respectively). In addition, USPS pays 100 percent of employee life insurance premiums, while other federal agencies pay about 33 percent.

Potter naturally wants more flexibility in dealing with the USPS’s excessive labor costs. The average postal employee receives $83,000 a year in total compensation. Employee pay and benefits constitute 80 percent of the USPS’s cost structure, which despite increased automation has remained the same since the 1960s. But so long as the USPS remains a government enterprise, it’s hard to imagine Congress standing up to the postal unions and giving management the labor flexibility it desires.

Finally, Potter wants the USPS to have more freedom when it comes to pricing and getting into new lines of business:

We also need the ability to expand our products and services, and ensure prices for our Market-Dominant products are based on the demand and cost of each individual product.

“Market-Dominant” is an Orwellian way of saying “Government Granted Monopoly.” Again, if the Postmaster wants mail prices to have an economic rationale, then the USPS needs to be privatized so that the market can efficiently set prices. Further, the USPS has a poor track record when it comes to expanding into services not protected by its monopoly. Plus it would be competing against the private sector on advantageous terms due to its status as a government enterprise.

What Potter wants – and needs – is something that only the private sector can provide. If the Senate hearing is any indication, Congress has no present plans to relinquish its control over the dying government monopoly. Instead, the USPS will likely continue to bleed red until policymakers run out of band-aids and are finally confronted with the choice of either privatization or direct taxpayer funding.

Ireland Imposes Real Cuts on Bureaucrat Pay

Ireland may be in a recession (caused in large part by misguided housing subsidies), but there are two things worth admiring about the Emerald Isle’s public policy. Many wonks already know about the first policy, the 12.5 percent corporate tax rate that helped transform Ireland from the “sick man of Europe.” But it seems that Irish policymakers are reading Chris Edwards, because the second admirable policy is that lawmakers actually cut civil service compensation by 13.5 percent. And these are real cuts, not the type of phony gimmick you find in Washington, where something is called a “cut” simply because it didn’t increase as fast as previously planned.

A columnist writing in the UK-based Times wonders why Irish bureaucrats did not go nuts with public protests and speculates that maybe they actually understand that they have a sweetheart deal compared to their brethren in the productive sector of the economy:

Because of the budget deficit, shrinking economy and untenable level of national debt, all public service salaries will be cut by an average of 13.5 per cent, with immediate effect…and will apply to frontline public workers in health, education, transport and local services and also to MPs, Ministers of State and the Attorney-General. …Couldn’t happen, could it? Actually it has, and close to home. …public sector pay in the Republic has been cut. Not frozen, sharply cut. …although the payslips have been changed for many months now, the schools are open, the hospitals treat the sick, rubbish is collected and paper pushed around briskly enough in public organisations. Belts are tight all right and pips are squeaking; but the country whose public pay once led the EU league has not imploded into the chaos of suicidal strikes, unburied bodies, closed schools and garbage mountains, which the UK or France would expect as a matter of course if a government did any such thing. …Yet the pay cuts — I say again, 10 to 15 per cent cuts in pay, real and immediate holes in the family budget — have not caused the enraged citizenry to pull down the pillars of the temple around their own heads and everybody else’s. They just haven’t. Why? …unlike the self-righteous whiners who speak for British public service unions, middle-Ireland still knows that a secure and pensionable job is a privilege: that working in the public sector is not an altruistic gift to the nation, but a damn lucky break.

Since I have a multi-part series on “Bureaucrats vs. Taxpayers” at my International Liberty blog, I especially enjoyed this part of the column, which provides a real-world glimpse at the corrupting allure of cushy government employment:

I saw a spirited, self-mocking sketch performed by 12-year-olds in a village hall entertainment the other night about “Marty Matchmaker O’Donoghue, where every ould stocking will find an ould shoe”. The girl being advertised to the men is talked up by the matchmaker as having “a Government Job! A clerk at the council office — I tell ye, she’s a laying hen!” Friends confirm that it’s an old saying: “Marry a teacher or a nurse, you’ve got a laying hen.” It does not seem that way in boom times, but even in the UK it is becoming true.