Archives: February, 2013

Ted Olson on John Roberts’ Saving Construction of ObamaCare

At a recent legal conference, former Solicitor General (and Cato Institute board member) Ted Olson offered this slightly nerdy take on Chief Justice John Roberts’ saving construction of ObamaCare’s individual mandate:

Roberts’ support for the individual mandate brings to mind the Higgs boson — it can’t be seen, it disappears upon occurrence, and it’s the God particle that controls everything in the universe.

Hat tip: Louise Bennetts.

Value of the Iranian Rial Hits an All Time Low

For months, I have kept careful tabs on the black-market exchange rate between the Iranian rial and the U.S. dollar. This is the metric I used to determine that Iran underwent a brief period of hyperinflation, in October 2012. And, using these data, I calculated that Iran ended 2012 with a year-end annual inflation rate of 110%.

Since the start of the new year (on the Gregorian calendar), the rial has displayed new-found weakness. Indeed, its value reached an all-time low of 38,450 rials to one dollar, on Saturday, February 2. As the accompanying chart shows, it is now trading at 38,250, moving the implied annual inflation rate to 121%, from its year-end value of 110%.

How can the IRR/USD rate be so volatile? After all, both the rial and the dollar represent nothing more than fiat currencies, without any defined value. At the end of the day, the value of a fiat currency is whatever value that fluctuations in the supply of and demand for cash balances accord to a scruffy piece of paper.

The markets for both the rial and dollar respond to conjectures about the ability of the respective governments to deliver on their stated “good” intentions. When it comes to Iran, these conjectures understandably generate sharp fluctuations in the value of the rial. Indeed, it is clear that Iranians do not trust their government to deliver economic stability. In consequence, the rial continues to tumble with increasing volatility, and inflationary pressures continue to mount.

WaPo: Let’s Have a National Identity System

There can be no denying the link between the E-Verify system prominent in discussions of immigration reform and the policy of having a national identification system. The Washington Post editorialized about it this past weekend, saying “a universal national identity card” must be part of “any sensible overhaul of the nation’s immigration system.”

I’ve written about it many times, as I certainly will in the future. Today, though, I’ll commend to you a well-written piece by David Bier on the Competitive Enterprise Institute’s “Open Market” blog. In “The New National Identification System Is Coming,” Bier writes:

“Maybe we should just brand all the babies.” With this joke, Ronald Reagan swatted down a national identification card — or an enhanced Social Security card — proposed by his attorney general in 1981. For more than three decades since, attempts to implement the proposal have all met with failure, but now national ID is back, and it’s worse than ever.

Read the whole thing.

The irony is that appropriate immigration reforms—those that align the law with our country’s need for immigrant workers—could dispense entirely with “internal enforcement,” national employment surveillance, and deputization of businesses as immigration agents.

Book Forum Thursday: Debating American Exceptionalisms with Richard Gamble

Thursday at 10 AM Cato hosts Richard Gamble to discuss his book: In Search of the City on a Hill: The Making and Unmaking of an American Myth. Historians Walter McDougall and Derek Leebaert will provide commentary. 

Gamble’s book traces the “city on a hill” metaphor as American self-description. We follow it from John Winthrop, who may have used the term, following the gospels, to remind the other Puritans onboard the Mayflower of their faith’s requirements, to modern conservatives like Sarah Palin, who use it in a story about the inherent virtue of the United States—the version of American exceptionalism that sees U.S. foreign policy as the engine of liberalism’s global progress. 

The forum should help us make sense of recent debates—or rhetorical posturing—about American exceptionalism. Its loudest advocates today claim that their opponents, starting with President Obama, deny that the country is exceptional. What they ignore, as Gamble shows, is that their exceptionalism reverses the old kind. What made the United States exceptional upon independence was its liberal government. Most early American leaders thought that form of government would suffer from participation in European power politics. They worried that entanglement in foreign troubles would produce domestic conditions corrosive to liberty— a large military establishment and consolidated executive power. So the liberalism that made the nation exceptional meant avoiding the crusading foreign policies that modern proponents of American exceptionalism say it requires. 

Here’s how Gamble put it in the American Conservative last September: 

The old exceptionalism was consistent with the ethos of American constitutional democracy; the new is not. The old was an expression of and a means to sustain the habits of a self-governing people; the new is an expression of and a means to sustain a nationalist and imperialist people. The old exceptionalism suited a limited foreign policy; the new suits a messianic adventurism out to remake the world. 

McDougall’s Promised Land, Crusader State: The American Encounter with the World since 1776 concerned this revolution of exceptionalism’s meaning, so his comments should be telling. Leebaert’s recent book, Magic and Mayhem: the Delusions of American Foreign Policy from Korea to Afghanistan, is also quite relevant. As moderator, I will push the speakers to answer two questions. First, aren’t we discussing competing ideas of American nationalism? Second, are the ideas we generally see as drivers of foreign policies really just their PR and power the cause of both? 

Register here or watch live online.

Cut Spending. Start Here.

If you want to cut federal spending, which has doubled under Presidents Bush and Obama, you need to eliminate some programs and agencies. At the Orange County Register – and thus on the World Wide Web – I offer some suggestions. Here are a few:

•Farm subsidies. The Department of Agriculture doles out $10 billion to $30 billion in cash subsidies to farmers and owners of farmland each year (depending on crop prices, disaster outlays and other factors). More than 90 percent of agriculture subsidies go to farmers of just five crops: wheat, corn, soybeans, rice and cotton. Most farms collect no subsidies. Farmers’ income has been booming lately, making this a particularly good time to end the subsidies.

•Head Start. Oh, no! Everyone loves Head Start. It helps poor kids. Who could be against that? But on the Friday before Christmas, the administration released a large-scale study of Head Start’s effectiveness. Its conclusion: “[B]y the end of third grade, there were very few impacts found … in any of the four domains of cognitive, social-emotional, health and parenting practices. The few impacts that were found did not show a clear pattern of favorable or unfavorable impacts for children.” Head Start costs $8 billion a year, and about $200 billion since its inception. Multiple official studies have shown its ineffectiveness.

•Afghanistan. Americans are tired of America’s longest war. It’s costing more than $100 billion a year. Instead of vague plans to reduce the number of troops next year or thereafter, let’s make the decision to end the war, bring the troops home, and save that money.

More on how to cut programs that are unconstitutional, obsolete, mismanaged, or otherwise dysfunctional at DownsizingGovernment.org.

ObamaCare’s Triple-Digit Premium Hikes Dramatize the Need for Repeal

In 2010, the Obama administration excoriated health insurance companies for “rate hikes as high as 39 percent.” HHS Secretary Kathleen Sebelius wrote:

This is unacceptable…

President Obama has offered a health insurance reform proposal to help working families and small business owners.  It will hold insurance companies accountable by laying out common-sense rules of the road to keep premiums down…

Reform will change the rules and help stop exorbitant increases.

And the President’s plan will help reduce costs…

According to the Chicago Sun-Times, that double-digit rate increase “helped dramatize the need for regulation.”

That episode came to mind this morning when I read about a survey of health insurers that shows ObamaCare will neither “keep premiums down” nor “stop exorbitant increases” nor “reduce costs”:

The survey, fielded by the conservative American Action Forum and made available to POLITICO, found that if the law’s insurance rules were in force, the premium for a relatively bare-bones policy for a 27-year-old male nonsmoker on the individual market would be nearly 190 percent higher…

Most other studies have tried to estimate average premium increases, which have ranged anywhere from negligible to 85 percent and higher. This survey looks at individual examples in specific markets to show the itemized impact of the major Obamacare reforms…

On average, premiums for individual policies for young and healthy people and small businesses that employ them would jump 169 percent, the survey found.

These findings are in line with projections by neutral observers and even ObamaCare supporters like MIT economist Jonathan Gruber that the law will increase premiums for some individuals and small businesses by more than 100 percent. 

If double-digit premium increases dramatized the need for regulation, do triple-digit increases dramatize the need for its repeal?

Politico offers a strange rationalization for these rate hikes:

The increase will most likely be substantial for “a slice of the younger population,” said Massachusetts Institute of Technology health economist Jon Gruber, a supporter of the health law who has studied its impact on premiums.

And those are the people who, before Obamacare, benefited from insurers’ ability to charge older, sicker people much higher rates — or deny them coverage altogether — practices that have kept premiums for the young low.

Set aside the fact that these rate hikes effectively tax young workers to subsidize older workers who generally have higher incomes. According to this theory – I can’t tell if it came from Gruber or Politico – those young workers are today unjustly enriched because they’re not being robbed.

The Hagel Hearings: Congressional Politics at Its Worst

The confirmation hearings on Chuck Hagel’s nomination to head the Pentagon are mercifully over. His wobbly performance earned derision among neoconservatives, but he responded as they intended to an interrogation that was all about politics, not policy. 

As I have noted before, Hagel is under fire because he disputed neoconservative nostrums to speak unpleasant truths to the Republican Party. He was an orthodox conservative, including on foreign policy. However, he was an Eisenhower, not a Dubya, Republican: Hagel criticized the debacle in Iraq, urged negotiation to forestall Iran from developing nuclear weapons, and backed reductions in today’s bloated military budget. General turned President Dwight Eisenhower could not have put it better. 

But this enraged a GOP that has turned perpetual war into its most important foreign policy plank. Hence the ludicrous attempt to paint him as an anti-Semite. Only slightly less dishonest was the performance of Hagel’s Republican interlocutors in the Senate, who asked the sort of questions which could not be honestly answered without wrecking the political façade behind which legislators on both sides of the aisle hide. His performance was disappointing, but far more striking is the fact that the uber-hawks who badgered him over every past statement exhibited little interest in exploring the most important challenges facing America. 

Consider the analysis of questions from Rosie Gray and Andrew Kaczynski at Buzzfeed.  They counted 166 questions about Israel—an important ally, but more important than every other ally combined? There were 144 questions about Iran. No one wants Tehran to build nukes, but U.S. intelligence does not believe Iran has an active weapons program and there is no evidence that the Iranian government cannot be deterred, as were Joseph Stalin and Mao Zedong. Surely there are options short of war. And is Iran that much more important than Afghanistan, where Americans continue to die, which rated only 20 questions? Sen. John McCain (R-AZ) fixated on Iraq, an invasion that should never have been launched, irrespective of the impact of the “surge.” And from which, if he hadn’t noticed, U.S. troops have been withdrawn. 

Nothing else received serious attention at the hearings. Not how to adjust America’s foreign policy to reflect inevitable Pentagon budget cuts, since Washington no longer can afford to police the globe. Not China, including the worrisome possibility of war between Japan and China over worthless islands in the Sea of Japan. Not North Korea and the enduring challenge of dealing with the world’s most malign actor.  

Not Europe, which continues to under-invest in the military while relying on America for its defense. Not Africa, where the U.S. is steadily being drawn into more conflicts. Not Russia, which, despite the difficult bilateral relationship, has been helpful in Afghanistan and Iran. Not Venezuela, where the possible death of Hugo Chavez could open up opportunities for reform and engagement with America.

And the neoconservatives claim to be serious about international issues and military capabilities. 

Chuck Hagel is eminently qualified to be Secretary of Defense. As my colleague Chris Preble has noted, Hagel’s thinking is mainstream and noncontroversial. Obviously, one can disagree with him on particular issues, such as the possibility of nuclear disarmament.  However, the president still will make the ultimate decisions. Hagel will bring a fresh perspective to administration discussions of foreign and military policy. That is reason enough to welcome him to the Pentagon.