Archives: 05/2011

Drinking Away Your Constitutional Problems

Santa Clara law professor Brad Joondeph, who runs the very helpful – as a primary document aggregator for all the Obamacare cases –  ACA Litigation Blog, thinks he’s stumbled onto something :

So after reading my roughly 500th ACA-litigation-related brief, motion, or filing of some sort, I think I have gotten a little punchy. But it occurs to me that a a great new drinking game for those ACA litigation buffs who sit around on Friday nights drinking beers – a huge cohort, I am sure – would be to read aloud briefs filed by the challengers, and take turns drinking when the word “unprecedented” is used.

Indeed, the argument that there is no Supreme Court precedent sanctioning the assertion of power the government claims  – that the individual mandate is, quite literally, unprecedented – goes back to the earliest articulated constitutional arguments against Obamacare, particularly by the “intellectual godfather” of the legal challenges.  I can tell you that Cato’s latest Obamacare brief, which we’ll be filing in the Eleventh Circuit – the Florida-led 26-state case – next week, uses the word three times.  (We also use “novel.”)

The drinking game that Joondeph proposes, however, is not, um, unprecedented.  Josh Blackman has been talking about it incessantly at least since our time writing about the Privileges or Immunities Clause.  He even blogged about it last August! 

I would suggest that Brad and Josh play the “unprecedented” drinking game to settle the score once and for all, but alas Josh doesn’t drink.  Maybe I should step in for him; if I can bet Yale law professor Akhil Amar $100 on the outcome of the litigation, I can certainly do this.

For other connections between booze and the Commerce Clause, see my recent post on the (unfortunately not unprecedented) Care Act.

Yes, Cut Medicaid – It Won’t Be as Painful as You Think

That’s the title of my latest Kaiser Health News column.  An excerpt:

The budget blueprint passed last month by House Republicans… would encourage states to cut their Medicaid rolls. As it should: the evidence shows there are millions of people enrolling in Medicaid who don’t need taxpayer subsidies to obtain coverage, and experience shows that Medicaid cuts will not be as painful as you might think….

The president and the Republicans agree that balancing the federal budget is impossible without restraining Medicaid spending. That will be much easier, Mr. President, if we could stop pretending that every single Medicaid enrollee needs to be there.

Read the whole thing here.

Are Higher House Prices Better for the Real Estate Industry?

I’ve long suspected that the primary reason much of the residential real estate industry supports subsidies such as Fannie Mae or the mortgage interest deduction is in the belief that such subsidies increase house prices.  And when your income is commission based, higher prices do indeed sound pretty good from the perspective of the industry.  Of course, we also hear that the industry supports these subsidies because they want everyone to be a homeowner, wave the flag and have plenty of apple pie.  Yes, those seemingly industry subsidies are really for all of us.  Perhaps the best one  I heard recently was that homeownership subsidies promoted self-reliance.  Here I was thinking subsidies are the opposite of self-reliance.  Silly me.

But if the price of a good increases, especially relative to income, it can increasingly become unaffordable, with the result that few sales take place.  No sales, no commission income.  I think even the industry folks would agree something like a $2 million median house price, given current incomes, would be bad for business.  So what is the impact of high prices, relative to income, on market turnover?

The chart below the jump presents a scatter diagram of the ratio of median house price to median household income by annual home sales as a percent of the occupied housing stock by metro area. 490 U.S. cities represented from the 2005 American Community Survey, conducted by the Census Bureau.

It is generally considered that a house price to income ratio between 3 and 4 is a balanced, healthy market.  Some of this is driven by consumer preferences; part by mortgage underwriting standards.  Fortunately, even in the bubble year of 2005, about 360 of the 490 cities examined had price to income ratios below 4.    But this sample does include small cities like Enterprise, Alabama.  Within these balanced cities the relationship between affordability (price/income) to turnover is slightly positive, almost zero, implying that relatively small price increase in affordable housing markets do not have detrimental impacts on sales activity.

When we look at markets with price to income ratios above 4, the highest being Key West, FL, where median home prices were 14 times median household income, we see this relationship become much stronger and negative (-.31).    Unsurprisingly when housing markets become increasingly unaffordable, sales volumes fall.  These markets are also likely to be supply-constrained, so that subsidies that are demand based, like those that are mortgage based, will largely push up prices. 

The point here is to be careful what you ask for.  When subsidies end up pushing prices above the price to income ratio of 4, sales turnover tends to fall.  So what extra one makes on price, you might more than lose on volume.

What Not to Learn from bin Laden’s Killing

The tendency to treat Osama bin Laden’s killing as national holiday akin to V-E day is both understandable and unfortunate. Everyone with a sense of justice appreciates the death of mass murderers, particularly the terrorist sort. But celebrating as if we killed Hitler or won a war plays into al Qaeda’s self-serving myth. Paul Pillar put it well:

An unfortunate irony of the huge reaction to the killing of Bin Ladin is that it continues to give him in death what he worked so hard to achieve in life: the status of arch foe of the most powerful nation on earth. It is a status that conforms with Bin Ladin’s narrative of himself as the leader of the Muslim world, protecting that world against the predations of the Judeo-Christian West, the leader of which is the United States.

We should also avoid drawing sweeping conclusions about our counterterrorism policies from Osama bin Laden’s death. We typically overgeneralize about important events. After the September 11 attacks, for example, even defense analysts tended to interpret al Qaeda’s capability largely through the purview of that plot, rather than treating it as a particularly important data point in al Qaeda’s history. The myopic take made al Qaeda seem far more capable than it was. With that in mind, here are several things that bin Laden’s death either cannot tell us much about or will not tell us much about until more information surfaces.

1. The war in Afghanistan. There are many reasons we should draw down in Afghanistan, but the bin Laden raid offers little intellectual ammunition for either side of the war debate. The intelligence that led to Abbottabad came years ago, from prisoners outside Afghanistan and operations in Pakistan. The helicopters flew from a base in Afghanistan, but it didn’t take a decade of war and a massive ground force to get that. The fact that bin Laden was living in an area of Pakistan where the state was relatively strong does nothing to support the idea that we should fight wars trying to build authority in ungoverned regions lest terrorists gain haven there.

But the fact that Sunday’s events do not serve pro-war arguments does not show logically, the correctness of the anti-war position, which is mine. The pro-war argument, flawed as it is, depends on other claims (i.e. terrorists will gain haven in Afghanistan if we draw down) that bin Laden’s death does not affect. That something is not an orange does little to tell you whether it’s a pear. Hopefully, however, bin Laden’s death may make it easier, politically to get out of Afghanistan.

2. Torture. Some intelligence used to find bin Laden came from prisoners, including Khalid Sheikh Mohammed, that were subject to coercive interrogation methods like waterboarding, but it remains unclear whether any of that useful intelligence came via waterboarding. Either way, we can learn little about the efficacy of that and other coercive interrogation methods from this experience. Only the most hackish arguments against torture pretend that it never produces useful intelligence. The real argument against torture’s efficacy is that non-coercive techniques work as well or better. Because you do not know what these guys would have said under standard interrogation—in scientific terms, you have no control—it is hard to draw valid inferences about how well coercion worked.

3. Defense spending. Hawks are already arguing that this raid would not have succeeded given a smaller defense budget.  That is silly, obviously. The capability needed to conduct this raid would be intact after the deep defense cuts I favor, let alone the slowdown in defense spending growth that the president is pushing. The budgets of our intelligence agencies and special operations command together account for roughly fifteen percent of U.S. defense spending. Only a portion of that fraction concerns counterterrorism.

4. Bin Laden’s leadership of al Qaeda. The Washington Times insists that finding communication equipment among bin Laden’s effects shows that he was actually running not only al Qaeda central but also its affiliates. They offer little evidence for that conclusion. The fact that bin Laden communicated does not mean that he commanded. There is little reason to suppose that he could control the far flung and disparate entities that use the name al Qaeda, whatever his intent. The National Journal, meanwhile, makes similar assumptions about bin Laden’s operational control in reporting that American authorities expect “a treasure trove of intelligence” to come from bin Laden’s hideout, in the form of thumb drives, hard drives and papers. Even if bin Laden was still capable of providing substantial intelligence on his associates, it is unlikely that he left it sitting around to be gathered. A guy that survived for over a decade while being hunted by various enemies probably knows enough to regularly destroy documents and files. Maybe he got sloppy, but certainly we should not expect to quickly roll up much of the remaining al Qaeda central leadership based on this event.

5. Pakistan’s relationship with al Qaeda. Prior to bin Laden’s death we knew that Pakistan was not as dedicated to hunting al Qaeda as it could have been. It was reasonable to guess that elements of its security and intelligence apparatus either tolerated (if only by looking the other way) or actively supported al Qaeda members. Today the same is true. That bin Laden was living under the nose of the Pakistani military does not show that he was its official guest. And if bin Laden had the help of some Pakistani intelligence or military personnel, it does not follow that many higher-ups were complicit. Pakistan is a factionalized society with weak civilian control of security agencies. It is hard to know who knows what about what or where lies the line between active complicity and unwillingness to look for things one is not eager to find. To be clear, I am not arguing that no Pakistani official is guilty of harboring bin Laden. The point is rather than no new degree of guilt has become obvious since Sunday. Like number four, this issue should be become clearer as more information comes to light.

Cross-posted from The National Interest.

The President Has an Opportunity on Afghanistan. Will He Use It?

AP Photo/David Guttenfelder

There are not going to be many better opportunities to change course in Afghanistan than the one presented by the killing of Osama bin Laden in Abbottabad. It may be worth highlighting how ripe an opportunity this is:

  1. The politics on the Hill are changing. It probably comes as no surprise that Reps. Walter Jones (R-NC) and Jim McGovern (D-MA) would like to end the Afghanistan war, but their “Afghanistan Exit and Accountability Act” has brought on co-sponsors like Tea Party stalwarts Reps. Jason Chaffetz (R-UT) and Justin Amash (R-MI). This means that in the days and weeks to come, there will be Republicans on television and radio making the case for withdrawal. That could have a profound effect on where the debate goes from here. On the Senate side, establishment Republican graybeards like Richard Lugar (R-IN) seem to be indicating that their patience is wearing out.
  2. Wired-in reporters like Time’s Joe Klein are saying that they believe dramatic drawdowns are coming. Here he goes so far as to suggest that the United States may draw down to roughly 20,000 troops before the end of next year.
  3. Gen. Petraeus is going to have a very full plate running the CIA, and will have his attention focused on running the sorts of operations like the one Sunday that got bin Laden. Moreover, his replacement, Gen. John Allen, is a Marine, which Tom Ricks suggests makes him “likely to be skeptical of Army support structure, and…likely [to] be comfortable with an austere infrastructure during the U.S. drawdown in Afghanistan.”
  4. Silly statements by political leaders could misinform the public in useful ways. It was absurd for Rudy Giuliani to say that getting bin Laden was “like taking out Hitler,” but if frames like World War II keep coming up, and if the war against al Qaeda is thought of in analogy with wars against powerful states, historically, once you get the head guy, the war’s over. Everyone knows that’s not the case with a maintenance problem like terrorism, but the public, like Giuliani, is probably casting about for some place where we can call this thing over and move on.
  5. The neoconservatives and liberal imperialists’ numbers have thinned and they have spread themselves too thinly. Between Iraq, Libya, and Afghanistan, the public seems to be tired of war. And my impressionistic sense is that the public increasingly has had it with the median writer at the New Republic or Weekly Standard.
  6. The giant debt. The fact is that cutting military spending can’t singlehandedly solve the long-term debt problem, but the zeitgeist of the day, austerity, has a way of clarifying minds about whether using their children’s credit card to pay $100-plus billion per year for a nation-building mission in Afghanistan is really worth the cost.

In short, the president has increasing political cover, a clear pivot point, a widely-appreciated need, public deference, and sound strategic logic for dramatically scaling back in Afghanistan. If he spends a nickel of every dollar of political capital he spent on Obamacare, he can do this. On the other hand, if he fails to seize the opportunity, he’ll have no one to blame but himself.

If he needs some ideas, he could start here or here.

Indiana Voucher Law a Defeat for Educational Freedom

Indiana Gov. Mitch Daniels signed an expansive new voucher law today. It’s a disaster for educational freedom. Read the full explanation here.

The voucher program has been widely praised as a momentous victory for school choice and Gov. Mitch Daniels on the brink of his long-awaited presidential campaign announcement. In reality, the voucher program is a tactical victory for highly constrained choice won at the price of a broad strategic defeat for educational freedom. This program will greatly expand state regulation of and authority over participating private schools.

In our efforts to expand educational choice across the country, we can’t lose sight of what makes that choice valuable: educational freedom and the diversity of choices it allows to develop. School choice is meaningless if all the choices are the same.

Just a teaser … ever heard of Chief Seattle? Private schools in Indiana will know him well if they take a voucher.

Read the piece for these and other shocking details!

Thirty Years of Private Social Security in Chile

The big international story that broke on Sunday understandably was the death of Osama Bin Laden. But another big story was that May 1 also marked the thirtieth anniversary of the introduction of Chile’s successful private pension system. Implemented by José Piñera (now a Distinguished Senior Fellow at Cato) to replace unsustainable public pensions, private retirement accounts have averaged real annual rates of return of more than 9 percent, contributed to economic growth and the rise in savings, and helped turn working Chileans into capitalists. They’ve been a key to Chile’s economic progress and political maturity. The reform has been copied in part or in full by some 30 countries around the world. And contrary to what American critics on the left claimed at the time, private pensions weathered the global financial storm admirably. It’s only a matter of time before the United States and other rich nations begin addressing the crisis in public pensions in the same way. But the sooner the better. See this piece from Investor’s Business Daily on Chile’s system at 30.