Archives: June, 2012

One Cheer for Obama’s New Immigration Policy

The new legalization non-deportation policy President Obama announced on Friday, which I’ll call “Executive DREAM,” is really interesting.  A half-measure not worthy of unadorned praise or condemnation, Executive DREAM creates mixed feelings in those of us who want liberalized immigration laws – because immigrants are generally a good thing for a country – but want to see actual, you know, law-making get us there.  Not executive initiatives, not prosecutorial discretion, not administrative-agency diktats, but honest-to-goodness passed-by-Congress-and-signed-by-the-President laws.

I thus join my colleague Alex Nowrasteh in calling this a ”temporary, tepid” immigration fix.   Alex notes that Executive DREAM, if its operation turns out to be similar to the proposed DREAM Act, “will shrink the informal economy, increase economic efficiency, and remove the fear and uncertainty of deportation from potentially millions of otherwise law-abiding people.  It would be a good first step toward reforming immigration and a glimpse at what the Dream Act would do.”

Now, while the result of this little Executive DREAM is good, the manner in which it was promulgated ensures that it will be a short-lived stopgap that prevents real reform and undermines the rule of law.  There’s no reason not to normalize the status of those who would have been eligible for legalization under the DREAM Act, but doing it by executive discretion after Congress had rejected the equivalent legislation shows contempt for a co-equal branch of government.  That President Obama announced it in the midst of an election campaign, after not having spent any political capital on immigration during the first three-and-a-half years of his term, only adds to the corrosive cynicism surrounding the issue.

Our immigration system needs comprehensive reform that will only be achieved with buy-in from both parties.  Executive DREAM feels good and is the least we can do for over a million law-abiding, productive young people, but makes the long-term goal that much harder to achieve.  Indeed, Sen. Marco Rubio (R-FL) has already indicated that the president’s actions have essentially sucked the oxygen from his nascent attempts at reform.

Doug Mataconis has a similar take.  He concludes that “this action was made somewhat inevitable by Congress’s failure to act on immigration reform for at least the past six years. When there’s a power vacuum, someone will move in to occupy that space. Unfortunately, that’s what the President has done and, in the process, he’s done real damage to the Separation Of Powers.”

Claiming Defeat on the Brink of School Choice Victory in PA

The WSJ recently published an opinion piece passing judgment on a long and still-active battle over school choice in Pennsylvania.

Unfortunately, I think it misses the most important part of the ongoing saga; Pennsylvania is on the cusp of a massive school choice victory. A huge expansion of the education tax credit program looks feasible, and it would make the Keystone state the leader in school choice with $400 million helping over one hundred thousand poor kids get a good education.

But first, since this, sadly, seems necessary; I am not in fear of “the fury of teachers unions.” And I am not beholden to their special interests. Don’t take my word for it. Just look through what I’ve written, and then run it by a union flak for comment. Dollars to doughnuts the response is decidedly negative.

And yet, I, a fully credentialed non-teachers-union-hack, think the Pennsylvania voucher proposal is a very bad idea. Why?

First, Pennsylvania already has one of the largest, most successful education tax credit programs in the country. It serves more children than any other program, tapping more funds than all but one other program (in Florida, also a tax credit). A huge expansion of the program already passed the House with just 4 percent of legislators opposed.

Critics claim that the proposed credit expansion would help kids “far less than vouchers would.” The opposite is true. The Senate voucher plan is estimated to cost just short of $100 million in the fourth year (covering just kids in failing school districts) and it would expand the education tax credit program to $125 million (up from $75 million). The new House credit plan would add a new fund of $200 million for kids in failing schools and increase the existing credit fund to $200 million.

In other words, the voucher plan envisions $100 million for only low-income kids in failing schools. The new credit program doubles the funds for those same kids, and increases the existing credit program that serves all low-income kids, regardless of their school district, by an additional $75 million over the Senate voucher bill. Senate bill = $225 million for choice, House bill = $400 million for choice. And this would put Pennsylvania ahead of Florida’s $229 million program for next year.

Critics of credits claim that since the average scholarship is just $1,000 per child, it isn’t helping poor kids enough. But this misses entirely the fact that education tax credit funds are just part of the scholarships needy kids receive; schools backfill what’s needed with regular charitable donations. Scholarship organizations and schools are able to work together to ensure that every family gets just what they need to go to the school of their choice, but no more; they use the funds efficiently to help even more families. A voucher program, run by the government, cannot respond flexibly to the diverse needs of individual families, and will therefore waste funds and serve fewer children.

Furthermore, it is likely that this average scholarship size is artificially low, an artifact of a bug in the way education tax credits are currently processed. After two years of donating to the program, a taxpayer is thrown back into a first-come-first serve poll of applicants. Since there is a cap on the popular program, a good number of existing donors will be kicked out of the program each year when the cap is reached. And the schools they were donating to will have to make up a big hole in their budget.

In other words, donors, Scholarship Organizations and schools have no guarantee that a credit donation will come through and therefore face a lot of unnecessary uncertainty in budgeting. So they do the logical thing, which is to spread the money out over more students and rely on charitable funds as the stable base for the full scholarship. If the government processes some donors out, then they have less to try to scrape up per student and less per family to help make up spread over a larger number of families. The low scholarship amount is in part a response to the uncertainty caused by a bug in how the credit donations are process, a problem that can be easily fixed and should be fixed in any new legislation.

Critics also note that credits are subject to budget cuts, and indeed the program was caught in a frenzy to roll back tax benefits in Pennsylvania. But legislators quickly heard from the more than 200 Scholarship Organizations and the thousands of families, taxpayers, and schools who know the value of the program, and the funds were replaced and discussions about expansion resumed.

The fact is, any program can be cut or expanded; credits, vouchers or even, exceedingly rarely, government education. A program is protected to the extent that it has defenders. Because the credit program is entirely private and voluntary, it invests taxpayers and community organizations directly in the program and provides a structure of and motivation for support that voucher checks sent from the government simply cannot replicate.

And this is all before we even consider the fact that vouchers are likely unconstitutional under Pennsylvania’s state constitution, which contains one of the most explicit and restrictive clauses on state funds and religious education in the nation.

Finally, the article looks to Louisiana and Indiana as models for Pennsylvania, but those states would have done much better by modeling their choice efforts after Pennsylvania.

In Louisiana, the voucher program is under siege for a perceived lack of accountability and vetting of schools, and in Indiana, the program is capped at 15,000 students, or less than half of the number of kids currently served by Pennsylvania’s credit program. Both of these programs make nominally private schools “accountable” to the government that got us into our educational quagmire, whereas education tax credit programs keep schools independent while making them accountable directly to taxpayers and families.

The best thing Pennsylvania’s leaders can do is forget about an inferior and unattainable voucher program and make the state’s education tax credit the largest school choice program in the country.

Williams v. Illinois and the Supposed SCOTUS ‘Gender Gap’

Remember the supposed gender gap on the U.S. Supreme Court? When the Court’s three female justices sided with plaintiffs in the sex discrimination case of Wal-Mart v. Dukes, we heard quite a bit about how their dissent supposedly represented women’s point of view (albeit joined by male Stephen Breyer). Some of us objected that to the extent the three justices do tend to cohere as a bloc, it has less to do with their gender than with their general ideological stance: as the Court’s most reliably liberal members, Justices Ruth Ginsburg, Sonia Sotomayor, and Elena Kagan can be expected to be somewhat more sympathetic to plaintiffs in a discrimination case, whether that case hinges on sex or, say, national origin or disability. Yet in a column about a different case, Coleman v. Maryland Court of Appeals, Linda Greenhouse of the New York Times specifically rebukes those who imagine an outcome like this “simply maps onto the court’s ordinary ideological alignments.”

Today the court released its opinion in the Confrontation Clause case of Williams v. Illinois, raising the question of whether a criminal defendant has a Due Process right to cross-examine DNA technicians whose findings contributed to his conviction. In this case the three female justices were in dissent, joined by Justice Antonin Scalia (who not infrequently joins his liberal colleagues on matters relating to criminal due process). The other five justices voted to sustain the conviction, though Clarence Thomas adopted his own rationale in a concurrence.

As it happens, Williams was accused of rape, and the female justices (plus Scalia) were therefore the ones more concerned about the niceties of due process toward one in his position. If one adopted the ludicrous “which side are you on?” approach of so much pop commentary on the Court, one might find this a real puzzler: why would the Court’s men be more sensitive to the need to keep rapists behind bars?

That’s ridiculous, of course, but only a couple of notches more ridiculous than attributing the Wal-Mart result to the Justices’ genders. For the rest of us, it remains true that the best way to understand and predict jurists’ votes on tough cases is to consult their philosophy on legal questions, not which restroom they happen to use.

Another Cop Says It’s Time to Legalize Drugs

From the Los Angeles Times opinion page:

Stephen Downing speaks fondly of his 20 years with the Los Angeles Police Department, saying he misses the camaraderie and the integrity of the people he worked with in a career that took him from street cop to deputy chief. Along the way, as commander of the Bureau of Investigations, he oversaw the Administrative Narcotics Division.

And so when we had lunch at a sidewalk cafe in Long Beach the other day, it was more than a little strange to hear this life-long Republican insist that for the sake of cops, and in the interest of logic and public safety, the United States ought to legalize drugs….

The way he sees it, the war on drugs hasn’t reduced drug use and the violence that accompanies it; it’s made matters worse. Law enforcement and the drug lords have been in an arms race for more than 40 years, perpetuating their own existence in a never-ending escalation that has bloated prison budgets and robbed us of funding for education and basic human services. The killing fields hold the bodies of cops, dealers and innocent victims. And still, after incalculable costs in blood and money, neither the supply nor the demand has abated.

Read the whole thing.

On Transparent Data: Use It or Lose It, OMB

At a recent event on “lessons learned” from the Recovery Act, Earl Devaney, who served as chairman of the Recovery Accountability and Transparency Board, talked about the “crying need for data standardization in government.” (35:00) Good data wouldn’t only help expose waste, fraud, and abuse. It would help prevent waste, fraud, and abuse.

“There was so much sunlight on [Recovery Act] money,” he said, “that the bad guys just sort of said to themselves, ‘Well, we’ll just continue to steal Medicare money…’.” (38:25) That’s entertaining stuff.

But the really interesting comments came from Danny Werfel, controller of the Office of Management and Budget. He criticized the DATA Act, which would create an independent commission to standardize federal spending data. (40:30) “Slammed” it, according to Federal Computer Week.

The OMB has effective and transparent processes in place to create rules for agencies to follow in obligating and spending funds, Werfel said, and it has a history of working with agencies to do so. A new commission would add “a new layer of regulation.” Why would we not “leverage the existing instruments of government”?

Here’s why: The OMB still has not produced a machine-readable organization chart for the federal government. There is still no authoritative and reliable set of identifiers computers can use to identify even the top two layers of the federal bureaucracy: agencies and bureaus.

If the OMB can’t do this utterly basic stuff, if it can’t come up with standard identifiers for the programs underneath agencies and bureaus, and if it can’t create a uniform process for identifying and tracking awards and outlays of taxpayer dollars, there may not be as much there to “leverage” as we thought.

President Obama came into office promising great strides in transparency. By the end of his third year in office, he complied with his Sunlight Before Signing campaign promise just 52.4% of the time. President Obama’s Office of Management and Budget publishes the government’s top-level organization chart in a disorderly PDF document.

Why wouldn’t the public go looking for a replacement?

Some Readings on the Economics of the Euro

As my colleague Marian Tupy observes, yesterday’s Greek election solved little.  At best it buys Greece (and Europe) some additional time.  The last couple of years of European crisis have encouraged me to re-visit (or in some case, visit for the first time) some of the literature on the economic benefits and costs of the Euro.  What follows is list of readings that I’ve found useful for thinking about the Euro.  That doesn’t mean I agree with all (or even most) but only such writings have been helpful in understanding the issue.

Just as the crisis was full swing in 2010, the Journal of Economic Literature published a useful summary article “The Macroeconomic Costs and Benfits of the EMU and other Monetary Unions.”  As this paper notes, monetary union entails a country giving up one discretionary tool of macroeconomic management: monetary policy.  The value of a monetary union is to some extent depend upon how well a country managed its monetary authorities.  Its for this reason I suspect most Greeks don’t want to leave the Euro.

The Bank of Greece’s George Tavlas as also written a summary of the benefits of currency union, as applied to Africa.  The literature review is worth the read.

The Journal of Economic Perspective has also published a number of accessible and very good articles, most of which are free on-line.  I’d suggest starting with Phillip Lane’s “The Real Effects of European Monetary Union” which attempts to measure some of the trade benefits, among other things.  In the same issue is a good paper on the financial market impacts.  For a sense of the debate just before its introduction, see Martin Feldstein and Charles Wyplosz’s constrasting pieces in Fall 1997 issue.

Other worth-while reads are Chari and Kehoe’s “Time Inconsistency and Free-riding in a Monetary Union” which goes a long way to understanding the mess Europe is currently in.

Some opposition to the Euro is based upon the belief that flexible exchanges rates can be a “shock absorber” for macroeconomic distrubances (recall a currency union is bascially a set of fixed exchange rates).  There is some evidence to suggest that flexible exchange rates can be more sources of shocks than absorbers, questioning the value of say Greece returning to a floating regime.

If you are up for some book length treatments of the issue, the best place to start is with Benn Steil and Manuel Hinds’ Money, Markets & Sovereignty.  Barry Eichengreen’s Globalizing Capital is also a great treatment of the history, especially the arrangments that preceed the Euro.

Partially Reining in Administrative Agencies

Today, the Supreme Court decided Christopher v. SmithKline Beecham Corp. The case concerns whether the Department of Labor can change a 70-year old regulation essentially on a whim. Cato joined the Washington Legal Foundation in a brief that urged the Court to affirm the Ninth Circuit’s holding that administrative agencies are not allowed to enact massive regulatory changes without sufficient notice. Today, the Supreme Court did just that.

For over 70 years, the Department of Labor (DOL) has exempted “outside salesmen” from overtime-pay requirements. Such traveling salesmen typically do not punch a clock and often put in more than 40 hours per week. The pharmaceutical industry uses traveling pharmaceutical sales representatives (PSRs) to demonstrate to doctors the benefits of various prescription medications. While these PSRs do not make direct sales, the DOL has long regarded the PSRs as “outside salesmen” who do not qualify for overtime pay. In 2009, however, the DOL filed an amicus brief in a Second Circuit case announcing they had changed the classification—for the first time, PSRs would not be exempt from overtime-pay requirements. The move was unexpected, to say the least. There are currently approximately 90,000 PSRs in the country, and such a significant rule change threatened to alter the pharmaceutical industry’s entire way of doing business.

But the high costs are only a small part of the problem. In our brief, we argued that allowing administrative agencies to promulgate a major rule changes in amicus briefs as part of a litigation strategy would give them even more arbitrary power than they already have. Courts already give agencies so-called Auer deference in interpreting their own regulations, but this would be taking that deference too far. Justice Samuel A. Alito, writing for five justices (Scalia, Thomas, Kennedy, and Chief Justice Roberts),  agreed:

In this case, there are strong reasons for withholding the deference that Auer generally requires. Petitioners invoke the DOL’s interpretation of ambiguous regulations to impose potentially massive liability on respondent for conduct that occurred well before that interpretation was announced. To defer to the agency’s interpretation in this circumstance would seriously undermine the principle that agencies should provide regulated parties “fair warning of the conduct [a regulation] prohibits or requires.” …  Indeed, it would result in precisely the kind of “unfair surprise” against which our cases have long warned…Our practice of deferring to an agency’s interpretation of its own ambiguous regulations undoubtedly has important advantages, but this practice also creates a risk that agencies will promulgate vague and open-ended regulations that they can later interpret as they see fit, thereby “frustrat[ing] the notice and predictability purposes of rulemaking.” Talk America, Inc. v. Michigan Bell Telephone Co., 564U. S. ___, ___ (2011) (SCALIA, J., concurring)

The citation to Justice Scalia’s opinion in Talk America is interesting because in it Scalia expresses well-founded doubt that Auer should still be the law:

[W]hen an agency promulgates an imprecise rule, it leaves to itself the implementation of that rule, and thus the initial determination of the rule’s mean­ing. And though the adoption of a rule is an exercise of the executive rather than the legislative power, a properly adopted rule has fully the effect of law. It seems contrary to fundamental principles of separation of powers to per­mit the person who promulgates a law to interpret it as well. “When the legislative and executive powers are united in the same person, or in the same body of magis­trates, there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact ty­rannical laws, to execute them in a tyrannical manner.” Montesquieu, Spirit of the Laws bk. XI, ch. 6, pp. 151–152 (O. Piest ed., T. Nugent transl. 1949).

Deferring to an agency’s interpretation of a statute does not encourage Congress, out of a desire to expand its power, to enact vague statutes; the vagueness effectively cedes power to the executive. By contrast, deferring to an agency’s interpretation of its own rule encourages the agency to enact vague rules which give it the power, in future adjudications, to do what it pleases. This frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government.

Although SmithKline Beechum Corp. does not overturn Auer, it shows that Auer deference rests on a shaky footing with the current Court. Perhaps we’ll see an end to this unduly deferential standard in the near future.