Archives: July, 2012

McConnell Had It Right: Government Should Not Pursue Universal Coverage

I’m a bit late to this party, but Senate Minority Leader Mitch McConnell (R) was of course right to tell Fox News’ Chris Wallace last weekend that the federal government should not pursue universal coverage:

Wallace: In your replacement [for ObamaCare], how would you provide universal coverage?

McConnell: Well, first let me say the single best thing we can do for the American health care system is to get rid of ObamaCare…

Wallace: But if I may sir, you talk about “repeal and replace.” How would you provide universal coverage?

McConnell: …We need to go step by step to replace it with more modest reforms…that would deal with the principal issue, which is cost…

Wallace: …What specifically are you going to do to provide universal coverage to the 30 million people who are uninsured?

McConnell: That is not the issue. The question is, how can you go step by step to improve the American health care system…

Wallace: …If you repeal ObamaCare, how would you protect those people with pre-existing conditions?

McConnell: …That’s the kind of thing that ought to be dealt with at the state level…

Naturally, the Church of Universal Coverage caught the vapors. But Time’s Mark Halperin says McConnell’s stance, while embarrassing, is “not a politically dangerous place to be”:

McConnell would have seemed less evasive and could have stopped Wallace in his tracks had he said, “We will not pursue universal coverage because that causes more people–not fewer–to fall through the cracks in our health care sector.”

‘Health Law Critics Prepare to Battle Over Insurance Exchange Subsidies’

The New York Times:

WASHINGTON — Critics of the new health care law, having lost one battle in the Supreme Court, are mounting a challenge to President Obama’s interpretation of another important provision, under which the federal government will subsidize health insurance for millions of low- and middle-income people.

Starting in 2014, the law…offers subsidies to help people pay for insurance bought through markets known as insurance exchanges.

At issue is whether the subsidies will be available in exchanges set up and run by the federal government in states that fail or refuse to establish their own exchange…

“The language of the statute is explicit,” Mr. Blumstein said. “Subsidies accrue to people who obtain coverage through state-run exchanges. The I.R.S. tries to get around that by providing subsidies for all insurance exchanges. That interpretation will almost certainly be challenged by someone.”

The most likely challenger, Mr. Blumstein said, is an employer penalized because one or more of its employees receive subsidies through a federal exchange. Employers may be subject to financial penalties if they offer no coverage or inadequate coverage and at least one of their full-time employees receives subsidies.

Michael F. Cannon, director of health policy studies at the libertarian Cato Institute, said the link between subsidies and penalties was a crucial part of the law.

“Those tax credits trigger the penalties against employers,” Mr. Cannon said. If workers cannot receive subsidies in states with a federal exchange, their employers cannot be penalized, he said.

Tax credits are not subsidies, of course. But ObamaCare’s $800 billion of refundable premium-assistance tax credits and cost-sharing subsidies are three parts subsidy (i.e., government spending) and only one part tax reduction.

Blogging around the ‘Net

For those devoted Cato-at-Liberty fans who wouldn’t think of visiting any other blogs, here are links to a couple of things I’ve posted elsewhere this week.

In response to a New York Times op-ed deploring excessive freedom on the Fourth of July, I wrote this over at Libertarianism.org:

Where Andersen goes wrong, of course, is in deploring these outcroppings of freedom in American life. When people take seriously the promise of “life, liberty, and the pursuit of happiness,” he calls it “self-gratification” and “every man for himself.” He writes:

But what the left and right respectively love and hate are mostly flip sides of the same libertarian coin minted around 1967. Thanks to the ’60s, we are all shamelessly selfish….

Americans who actually appreciate the Declaration of Independence call it self-reliance, minding your own business, staying out of unnecessary wars, and raising everyone’s standard of living by pursuing your own profit. Andersen is sort of right: “For hippies and bohemians as for businesspeople and investors,” freedom is desired. And freedom works.

And at the HuffingtonPost, on the day that another dismal unemployment report came out, I wrote about some accomplishments the president could boast about in his reelection campaign:

Most deportations. Despite his endorsement of the DREAM Act, President Obama has deported more illegal immigrants than any president in history. He’s been deporting about 400,000 people a year, about double the number in the George W. Bush administration.

Most leaks prosecutions. The Obama administration has been criticized for leaking classified information in a series of campaigns to portray the president as a tough, engaged commander-in-chief. But meanwhile the administration information has used the 1917 Espionage Act to target suspected leakers in twice as many cases as all previous presidential administrations combined.

Most troops in Afghanistan. The United States had about 30,000 troops in Afghanistan during 2008, the last year of President Bush’s term. By the end of 2010, President Obama had increased that number to almost 100,000. It’s down to about 88,000 now, which still might surprise people who recall candidate Obama’s ringing antiwar speeches of 2008.

And more! Read ‘em all.

Why Romney’s Proposed Foreign-Policy Tour Is a Dumb Idea

Today, Politico reported that Mitt Romney is considering a globe-trotting foreign-policy tour. His foreign-policy advisers have been trashing him in the media for not focusing on their topic enough in the campaign, and the only explanation I can come up with is that he’s doing this to get them off his back. It’s still a dumb idea.

First, voters are overwhelmingly focused on the economy in this election, for understandable reasons. Second, even if he made voters care more about foreign policy, they like President Obama’s, by and large.

I break-down his proposed trip further over at Steve Walt’s blog on ForeignPolicy.com. Whoever suggested (unsuccessfully, apparently) that he stop off in Afghanistan was slapped down. In that case,

it seems the Romney people have realized that Bill Kristol’s suggestion, that he “go and look serious,” is absurd. Going there at all is a huge loser. It’s a zero-sum tradeoff between saying things the public will like and saying things Kristol and his foreign-policy team will like. The public loathes the war, but the Kristol and the Romney foreign-policy staffers like it a lot. So if he went and said anything the public wants to hear – like that he wants America to leave soon – he’d get trashed in the media by his foreign-policy team again. And if he gave a sop to his foreign-policy team, the public would worry he’s Bush redux. So they’re smart to stay away from Kabul.

Read the rest here.

TRUST Act Builds Wall Around Secure Communities

Yesterday, the California Senate passed the TRUST Act.  Known by some as the “anti-Arizona immigration law,” it would limit California law enforcement’s cooperation with the federal Secure Communities program.  The TRUST Act is positive news for California budgets, residents of the state, and police departments that practice community-policing strategies.

The TRUST Act is an improvement for three main reasons:

1.  The TRUST Act would limit immigration detainers to unauthorized immigrants convicted of a serious or violent felony.  This is essential to continuing California cities’  successful use of community policing strategies that rely on informant and witness cooperation with police, even if they are unauthorized immigrants.  If the possibility of deportation is increased with Secure Communities, fewer unauthorized immigrants and their legal families will go out on a limb to help police solve real crime.

2.  The TRUST Act would lower the cost for local governments who object to the high cost of detaining suspected unauthorized immigrants.  Food, guards, prisons, beds, and other amenities provided to suspected unauthorized immigrants are too expensive for many jurisdictions.

3.  The TRUST Act frees those who haven’t been convicted of violent or serious felonies and would prevent imprisonment of American citizens like James Makowski.

Beyond the TRUST Act, Secure Communities should be discontinued. Secure Communities is a federal immigration enforcement program that links fingerprint records with government immigration and criminal databases.  If ICE suspects an arrestee is an unauthorized immigrant, it issues a detainer to hold the arrestee so that ICE is notified when the arrestee is to be released, often delaying the arrestee’s release until ICE is ready—on merely a suspicion that the arrestee is an unauthorized immigrant.  ICE then detains the arrestee, verifies he is unauthorized (occasionally they deport American citizens by accident), and deports him.  Meanwhile, local police departments hold these suspected unauthorized immigrants past their release dates.

Secure Communities was started in March 2008 by the Bush administration and was piloted in 14 police jurisdictions in October of that year.  By now, Secure Communities is active in over 3,000 jurisdictions in the United States and will be nationwide shortly.  States and localities originally volunteered to cooperate with ICE in this program, but some states like New York and Illinois want to drop out.  The government’s response to their requests was to declare Secure Communities mandatory despite earlier agreements and statements to the contrary.

Makowski, who was naturalized at the age of 1 after his American parents adopted him from India, was held for two months in a maximum security prison in Pontiac, Ill., because his immigration files were not updated after he was naturalized.

“Everybody makes mistakes. I’ve made mine,” said Makowski. “But if the government can detain a U.S. citizen without justification, that’s pretty outrageous. There have to be safeguards in place.”

He is suing the Federal Bureau of Investigation and the Department of Homeland Security for his two-month detention.

ICE officials have previously stated in their Secure Communities agreement with California that the program would only target those “convicted of serious offenses.”  Recently obtained government documents show that Secure Communities issues detainers for people who are not suspected of any criminal conduct.  Some are detained by Secure Communities because they were unable to identify themselves satisfactorily at drivers’ license checkpoints or because they were arrested for identification purposes.  Merely being arrested for non-serious offenses should not subject an arrestee to Secure Communities.

Secure Committees has lost credibility with the public, imposes heavy incarceration costs on states, and the resources expended on it should be used to deport unauthorized immigrants who have been convicted of violent or serious felonies.  The TRUST Act would build a wall around the worst parts of Secure Communities in California and help restore confidence between police and immigrants.

Antitrust vs. Silicon Valley

As the American and European economies struggle, one of the few bright spots is the ongoing innovation and free-market expansion in technology industries. Thank goodness we have entrepreneurial companies such as Apple and Google generating economic growth and providing exciting opportunities for young people.

But that won’t last if governments have their way. The Washington Post today discusses government efforts to essentially turn the high-tech industry into another moribund regulated industry through antitrust rules:

European regulators last week imposed a $1.1 billion fine on a technology giant that “abused its dominant position.” The company was Microsoft, circa 1998. U.S. officials weren’t much faster. Last year, it officially closed its 14-year-old antitrust case against the software firm. As federal regulators launch fresh investigations into Silicon Valley, their history of drawn-out cases has companies on edge.

In taking on an industry that moves at lightening speed, federal officials risk actions that could appear to be too heavy-handed or embarrassingly outdated, some analysts and antitrust experts say. Indeed, in May, U.S. officials said they would step up their policing of Myspace’s privacy policies even though the company has long fallen out of fashion to behemoth Facebook.

In recent months, antitrust regulators around the world initiated cases involving Silicon Valley’s new guard — Google, Apple and Amazon.

Microsoft’s antitrust battle began in 1998, has stretched over three continents and cost the company more than $2 billion in fines.

These new efforts to impose antitrust rules on technology industries are idiotic. I say idiotic because there is a long history of government failure here. But that history doesn’t seem to make any impression on the proponents of aggressive antitrust action, who seem to be driven by legalistic ideologies, not by common sense economics or practical experience.

In Downsizing the Federal Government, I discussed some prior federal efforts to strangle technology firms with antitrust rules:

The American economy is so dynamic that government “solutions” are usually obsolete by the time they are imposed. Consider the antitrust case against Xerox Corporation in the 1970s. After inventing the photocopier in 1960, Xerox led the industry that it created. It still held a large market share in the early 1970s, which prompted the FTC to charge the company with monopoly. Xerox had a two-year struggle with the FTC that cost millions of dollars and ended in a settlement. As it turned out, government intervention was wholly unneeded as IBM, Eastman-Kodak, Canon, Minolta, and Ricoh surged into the market in the mid-1970s with copiers that were often superior to Xerox’s. Xerox’s market share eroded rapidly under the competition.

Government intervention was also a big waste of time and energy in the infamous IBM antitrust case that lasted from 1969 to 1982. IBM was charged with monopolizing the mainframe computer business. During the long legal battle, the industry evolved rapidly. By 1982, the government finally dropped its case and conceded that it was without merit. The case cost hundreds of millions of dollars in legal expenses, generated 66 million pages of evidence, and diverted IBM’s time and energy from more productive business endeavors.

Despite decades of such failed interventions, antitrust proponents still don’t seem to understand the dynamic nature of markets. A 2003 study by Brookings scholars Robert Crandall and Clifford Winston examined a century of antitrust policy. They found “little empirical evidence that past interventions have provided much direct benefit to consumers or significantly deterred anticompetitive behavior.” Indeed, the authors discuss numerous major cases where the government got it wrong and pursued actions that damaged the economy.

The Brookings analysis makes clear that after a century of trying, antitrust enforcers still have no clear idea when intervening in markets might be a good idea. So let’s stop bludgeoning some of the nation’s leading businesses with impractical rules based on flawed theories. If there ever was a group of One Percenters that we really don’t need, it’s high-paid antitrust lawyers.

‘Temporary’ Takings That Cause Permanent Damage Still Require Just Compensation

This blogpost was co-authored by Trevor Burrus.

The Arkansas Game and Fish Commission owns and operates 23,000 acres of land as a wildlife refuge and recreational preserve; the preserve’s trees are essential to its use for these purposes. Clearwater Dam, a federal flood control project, lies 115 miles upstream. Water is released from the dam in quantities governed by a pre-approved “management plan” that considers agricultural, recreational, and other effects downstream.

Between 1993 and 2000, the federal government released more water than authorized under the plan. AGFC repeatedly objected that these excess releases flooded the preserve during its growing season, which significantly damaged and eventually decimated tree populations. In 2001, the government acknowledged the havoc its flooding had wreaked on AGFC’s land and ceased plan deviations. By then, however, the preserve and its trees were severely damaged, so AGFC sued the government, claiming damages under the Fifth Amendment’s Takings Clause.

The district court awarded $5.8 million in lost timber and reforestation costs based on the substantiality of the government’s flooding and the foreseeability of the damage it caused. The U.S. Court of Appeals for the Federal Circuit reversed that decision, holding that flooding can never be a taking unless that flooding is permanent. It further held that, in determining whether the government’s flooding was permanent or temporary, courts must focus on the character of the policy behind the intrusion rather the effects of the intrusion itself. A taking cannot have occurred here because each deviation from the plan constituted a “temporary” policy, the court concluded, so AGFC had no constitutional remedy.

In December, Cato joined the Pacific Legal Foundation on an amicus brief urging the Supreme Court to take the case, which it did. Now Cato again joins the Pacific Legal Foundation, as well as the Atlantic Legal Foundation, on a new brief urging the Court to uphold the Fifth Amendment rights of property owners whose land is destroyed by the federal government.

We argue that the length of time of the government’s physical invasion of property should not be used to determine whether a taking occurred, but rather only for calculating how much damage the taking caused. We further argue that the Federal Circuit’s focus on the “intent” of the government action—whether the flooding resulted from a “permanent or temporary policy”—is likewise irrelevant to whether a taking occurred. Instead, the inquiry should be whether the government caused permanent damage and, if so, how much. The lower court erroneously created a rule—that so long as it might be “temporary,” no government flooding can be remedied under the Fifth Amendment—that runs afoul of a constitutional provision meant to compensate property owners for government intrusions on their land.

The Supreme Court will hear the case of Arkansas Game & Fish Commission v. United States in October or November.