Archives: 03/2012

ObamaCare in Four Words

Cato Senior Fellow Randy E. Barnett argued on behalf of Angel Raich at the Supreme Court in 2004. It was the last big case at the High Court dealing with broad federal assertions of power under the Commerce Clause. On Friday at the Cato Institute’s new F.A. Hayek Auditorium, Barnett laid out the four words that define ObamaCare’s individual mandate: unprecedented, uncabined, unnecessary, and unconstitutional.


Barnett and I chatted for a bit about whether Antonin Scalia is bound to uphold the Affordable Care Act (ObamaCare) based on his opinion in Raich.

You can watch the full event from Friday here.

ObamaCare Oral Arguments Day 1 - Giving the People What They Want: An Actual Decision

Nearly everyone who is commenting on the first round of oral arguments in the ObamaCare case seems to think it highly likely that the Supreme Court will decide the case on the merits—that is, they will decide if the individual mandate is constitutional rather than pushing the issue back for another day.

I agree. The arguments today looked at a law called the Anti-Injunction Act (AIA) and whether it precludes pre-enforcement challenges to the individual mandate. The AIA prevents plaintiffs from challenging a tax assessment until the tax has been collected. Only after collection can plaintiffs sue for a refund, plus interest. Since the individual mandate is enforced by a penalty that is collected by the IRS, there is a question as to whether the AIA applies.

Because both the government and the law’s challengers want the case to be heard on the merits rather than dismissed, the Court appointed an outside attorney to argue that the AIA totally bars ruling on the challenge to the individual mandate. That attorney, Robert Long, faced many difficult questions from the justices. At least five justices, and probably more, seemed to believe that the AIA should not apply for one reason or another. Some seemed to think that it doesn’t apply because the penalty for non-compliance with the mandate is not a “tax” to which the AIA applies (a position similar to the one argued in Cato’s brief). Some seemed to think that the AIA does not create an absolute jurisdictional bar but rather allows for equitable exceptions if the issue is too important not to be heard.

As Ilya Somin points out at the Volokh Conspiracy, some of these issues are intertwined with the merits of the individual mandate itself, specifically whether or not it is a tax. Like most judges who have heard the case, the justices seemed very skeptical of the argument that the penalty is a tax. Justice Stephen Breyer even pointed out what many have said, the law says “penalty,” not “tax.” While this doesn’t solve the issue, it seems odd given the fact that the federal government knows how to use the word “tax” when it wants to, as everyone is painfully aware.

Going into the big day tomorrow–the argument over the individual mandate–we can expect a lively bench and many challenging questions. From today’s arguments, however, I would not expect any justice to push the taxation theory too hard.

Is Washington Pressuring Central American Presidents to Boycott Debate on Drug Legalization?

A couple of weeks ago, I wrote about the U-turn performed by Mauricio Funes, president of El Salvador, who initially supported the proposal of Guatemala’s President Otto Pérez Molina to discuss drug legalization in Central America and then came out against it. I wondered if Funes’ change of mind had anything to do with pressure from Washington regarding the renewal of the Temporary Protected Status program (TPS) that grants migratory benefits to Salvadoran citizens in the United States. I also noticed that the TPS benefits nationals from Honduras and Nicaragua too.

This past weekend, president Pérez Molina hosted a Central American summit to discuss his proposal of drug legalization. Even though the presidents of all Central American countries had confirmed their attendance, three of them called off in the last moment. Want to guess which ones? Yes, the presidents of El Salvador, Honduras and Nicaragua.

Just a coincidence?

FTC Issues Groundhog Report on Privacy

The Federal Trade Commission issued a report today calling on companies “to adopt best privacy practices.” In related news, most people support airline safety… The report also “recommends that Congress consider enacting general privacy legislation, data security and breach notification legislation, and data broker legislation.”

This is regulatory cheerleading of the same kind our government’s all-purpose trade regulator put out a dozen years ago. In May of 2000, the FTC issued a report finding “that legislation is necessary to ensure further implementation of fair information practices online” and recommending a framework for such legislation. Congress did not act on that, and things are humming along today without top-down regulation of information practices on the Internet.

By “humming along,” I don’t mean that all privacy problems have been solved. (And they certainly wouldn’t have been solved if Congress had passed a law saying they should be.) “Humming along” means that ongoing push-and-pull among companies and consumers is defining the information practices that best serve consumers in all their needs, including privacy.

Congress won’t be enacting legislation this year, and there doesn’t seem to be any groundswell for new regulation in the next Congress, though President Obama’s reelection would leave him unencumbered by future elections and so inclined to indulge the pro-regulatory fantasies of his supporters.

The folks who want regulation of the Internet in the name of privacy should explain how they will do better than Congress did with credit reporting. In forty years of regulating credit bureaus, Congress has not come up with a system that satisfies consumer advocates’ demands. I detail that government failure in my recent Cato Policy Analysis, “Reputation under Regulation: The Fair Credit Reporting Act at 40 and Lessons for the Internet Privacy Debate.”

Red Team, Blue Team, and Gas Prices

The Washington Post puts public opinion on gas prices in stark red and blue:

Pretty clear Red Team/Blue Team answers. Republicans in 2006 accepted that there wasn’t much the president could do to reduce gas prices, but most of them think Obama could. Democrats show an even sharper shift; they overwhelmingly said that Bush could bring prices down, but few expect Obama to do so. I hope the fact that both Independents and Americans as a whole are 12-13 points less likely to think that presidents set gas prices is a sign of improvement in general economic understanding.

Back around 2003 or 2004 a colleague was escorted through the hallways of CNN by a junior staffer or intern, who asked him, “Do you think Bush is raising gas prices now so he can lower them before the election?” With perceptions like that among budding journalists, is there any hope for better public understanding of economics?

For examples of informed and nonpartisan analysis of gas prices, check out