Archives: April, 2013

‘Why Indiana Shouldn’t Fall for Obamacare’s Medicaid Expansion’

My latest oped, in the Indy Star:

Meanwhile, many [Medicaid] enrollees can’t even find a doctor. One-third of primary care physicians won’t take new Medicaid patients. Only 20 percent of dentists accept Medicaid. In 2007, 12-year-old Deamonte Driver died — yes, died — because his mother couldn’t find one of those dentists.

For more on why states should reject ObamaCare’s Medicaid expansion, read my latest Cato white paper, “50 Vetoes: How States Can Stop the Obama Health Law.”

The Constitution Protects Even Old-Timey Property Rights

In the 19th Century, when railroads were being built across the West, the federal government granted significant land and benefits to the railroad companies. The Great Railroad Right-of-Way Act of 1875 allowed the government to give railroad companies easements to build tracks — that is, a right to use sections of another’s property without legally owning it. The Brandt family eventually acquired land in Wyoming that came with pre-existing railroad easements.

In 2001, the owner of the easement formally abandoned all claims to it, presumably returning the property to the Brandts. But the government wanted that land. In 2006, it sued for title to the former easement land on the theory that the government retained a residual claim to it after the railroad abandoned it. The Brandts argue that the government has no such right and that taking their land requires just compensation under the Fifth Amendment’s Takings Clause.

Although this may seem like a small, unique problem, the scope of the Old West’s railway system was huge and those old easements criss-cross the land of thousands of property owners. In 1983, Congress amended the National Trails System Act to allow the government to take abandoned railroad easements and turn them into land for public recreation and “railroad banking.” Landowners have been fighting the taking of their property under the Trails Act ever since, claiming, as here, that the government’s original grant to the railroads contained no residual right of possession for the government.

Indeed, two federal courts of appeals, the Seventh and Federal Circuits, have held that the government didn’t retain any residuary rights. In the Brandts’ case, however, the Tenth Circuit held otherwise. This circuit split is untenable. Over 5,000 miles of abandoned track has been taken by the government since the Trails Act, and about 10,000 property owners are currently fighting in federal courts to hold onto their property.

Of course, given the possible benefits of not having to pay compensation to landowners, the government has responded to these claims by being aggressively litigious, reaching into its endless war-chest of taxpayer-provided resources to challenge the landowners on every tiny point. As the Federal Circuit said, the government’s behavior is “puzzling” in that it is “foregoing the opportunity to minimize the waste both of its own and plaintiffs’ litigation resources, not to mention that of scarce judicial resources,” but also by advancing arguments “so thin as to border on the frivolous.”

Still Another Low Climate Sensitivity Estimate

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

As promised, we report here on yet another published estimate of the earth’s equilibrium climate sensitivity that is towards the low end of the United Nations’ Intergovernmental Panel on Climate Change (IPCC) range of possibilities.

Recall that the equilibrium climate sensitivity is the amount that the earth’s surface temperature will rise from a doubling of the pre-industrial atmospheric concentration of carbon dioxide. As such, it is probably the most important factor in determining whether or not we need to “do something” to mitigate future climate change. Lower sensitivity means low urgency, and, if low enough, carbon dioxide emissions confer a net benefit.

And despite common claims that the “science is settled” when it comes to global warming, we are still learning more and more about the earth complex climate system—and the more we learn, the less responsive it seems that the earth’s average temperature is to human carbon dioxide emissions.

The latest study to document a low climate sensitivity is authored by independent scientist Nic Lewis and is scheduled for publication in the Journal of Climate. Lewis’ study is a rather mathematically complicated reanalysis of another earlier mathematically complicated analysis that matches the observed global temperature change to the temperature change produced from a simple climate model with a configurable set of parameters whose actual values are largely unknown but can be assigned in the model simulations. By varying the values of these parameters in the models and seeing how well the resulting temperature output matches the observations, you can get some idea as to what the real-world value of these parameters are. And the main parameter of interest is the equilibrium climate sensitivity. Lewis’ study also includes additional model years and additional years of observations, including several years from the current global warming “hiatus” (i.e., the lack of a statistically significant rise in global temperature that extends for about 16 years, starting in early 1997).

We actually did something along a similar vein—in English—and published it back in 2002. We found the same thing that Lewis did: substantially reduced warming. We were handsomely rewarded for our efforts by the climategate mafia, who tried to get 1) the paper withdrawn, 2) the editor fired—not just from the journal, but from Auckland University, and 3) my (Michaels) 1979 PhD “reopened” by University of Wisconsin.

Rand Paul’s “Teachable Moment”

On the U.S. government’s targeted killing and drone-bombing program, in the past I have harped on the fact that despite the discrete and immediate effects of disrupting terrorist activity, no expert can conclusively answer whether such tactics materially reduce the threat of terrorism. But don’t just take my word for it:

  • General James E. Cartwright, the retired, former vice chairman of the Joint Chiefs of Staff, has said about drones undermining America’s long-term battle against extremism, “We’re seeing that blowback…If you’re trying to kill your way to a solution, no matter how precise you are, you’re going to upset people even if they’re not targeted.”
  • General Stanley McChrystal, the retired, former commander in Afghanistan, has said about drones and anti-American sentiment, “The resentment created by American use of unmanned strikes … is much greater than the average American appreciates. They are hated on a visceral level…”
  • And John Bellinger, a former State Department legal adviser in the George W. Bush administration, has said that one day, drone strikes might “become as internationally maligned as Guantanamo.” 

Today, in a piece for U.S. News and World Report, I write about yet another relevant factor in the drone debate beyond the scope of the aforementioned issues: the Congressional prerogative to limit executive war powers. It explains why Senator Rand Paul (R-KY) should keep fighting the good fight for more transparency over the program:

Today, our commander in chief, through a secretive decision-making process based on classified evidence, has declared the right to use lethal force against anybody, anytime, anywhere on earth. Although Paul’s effort to shine a harsh light on targeted killings has thus far been commendable, he has squandered many opportunities to explain how we get back to the constitution-based system he champions. In this respect, the liberty movement has been right to hold his feet to the fire. Thus, here comes the “teachable moment.”

Check it out

Hollywood, Destroyer of Nations?

In an attempt to continue an existing scheme of protectionist quotas for theaters and television stations, European filmmakers have admitted that no one likes their movies.  Right now, European countries like France require that a certain portion of movies shown to the public be of domestic or European origin.  The possibility that a U.S.-EU trade agreement could end these quotas has prompted some European filmmakers to start an online petition acclaiming the virtues of cultural diversity.

The best part of the petition is the filmmakers’ claim that European civilization will fail without them:

The liberalisation of the audiovisual and film sector will lead to the destruction of all of what until now protected, promoted and helped develop European cultures… .

Those who, in the name of Europe, will have accepted this resignation will be forever guilty in the eyes of history. Cultural diversity must not be just another bargaining tool. It must remain an ambition, a legitimate demand, and a commitment.

It is not too late!

Let me paraphrase: If Europeans are allowed to consume our competitor’s product, Europe will cease to exist.  I’m sure other domestic industries wish they could get away with claiming to be the guardian of national identity, though I’d be impressed if they could make it with a straight face.  Maybe the U.S. automobile industry should give it a try.

The Path to National Identification

In my 2008 paper, “Electronic Employment Eligibility Verification: Franz Kafka’s Solution to Illegal Immigration,” I wrote about where “internal enforcement” of immigration law leads: “to a national, cradle-to-grave, biometric tracking system.” More recently, I wrote “Internal Enforcement, E-Verify, and the Road to a National ID” in the Cato Journal. The “Gang of Eight” immigration proposal includes a large step on that path to national identification.

National ID provisions in the 2007 immigration bill were arguably its downfall. Scrapping the national ID provisions in the current bill would improve it, allowing our country to adopt more sensible immigration policies without suffering a costly attack on American citizens’ liberties.

Title III of the “Gang of Eight” bill is entitled “Interior Enforcement.” It begins by reiterating the current prohibition on hiring unauthorized aliens. (What seems to many a natural duty of employers was an invention that dates back only as far as 1986, when Congress passed the Immigration Reform and Control Act. Prior to that time, employers were free to hire workers based on the skills and willingness they presented, and not their documents. But since that time, Congress has treated the nation’s employers as deputy immigration agents.)

The bill details the circumstances under which employers may be both civilly and criminally liable under the law and provides for a “good faith defense” and “good faith compliance” that employers may hope to use as shelter. The bill restates (with modifications) the existing requirements for checking workers’ papers, saying that employers must “attest, under penalty of perjury” that they have “verified the identity and employment authorization status” of the people they employ, using prescribed documents or combination of documents. Cards that meet the requirements of the REAL ID Act are specifically cited as proof of identity and authorization to work.

In addition, the bill would create a new “identity authentication mechanism,” requiring employers to use that as well. It would take one of two forms. One is a “photo tool” that enables employers to match photos on covered identity documents to photos “maintained by a U.S. Citizenship and Immigration Services database.” If the photo tool is not available, employers must use a system the bill would instruct the Department of Homeland Security develop. The system would “provide a means of identity authentication in a manner that provides a high level of certainty as to the identity of such individual, using immigration and identifying information that may include review of identity documents or background screening verification techniques using publicly available information.”

The bill next turns to expanding the E-Verify system, requiring its use by various employers on various schedules. The federal government and federal contractors would have to use E-Verify as required already or within 90 days. A year after the DHS publishes implementing regulations, the Secretary of Homeland Security could require anyone touching “critical infrastructure” (defined here) to use E-Verify. She could require immigration law violators to use E-Verify anytime she likes.

Brown-Vitter: More Hot Air

Today’s New York Times article by Senators Brown and Vitter (the preview of their much-touted “bank break-up” bill) starts with a very encouraging line: “governments shouldn’t pick economic winners and losers.”

Senator Brown, in particular, seems to have learned this important lesson fairly recently (auto bailout, anyone?). But putting this aside (and also ignoring the ongoing debate about the purported subsidy to large banking organizations, which should be eliminated, if it indeed exists), Senators Brown and Vitter display some disturbing, though not uncommon, misconceptions about U.S. and global banking. And, as is always the case, poorly understood and inaccurate facts create bad policy suggestions.

The first problem is the implicit assumption that large size and diversity of operations are negative traits. In fact, diversity is the key to managing risk in banking. Part of the reason why US banking has had such a checkered history relative to many other countries is because of its historical lack of geographical and product diversity – a result of the long-standing prohibitions on inter-state banking and branch banking and limitations on combining investment and commercial banking activities. One of the single biggest causes of the banking crisis in the late 1920s was a lack of geographical diversity (and, as congressional records show, States that prohibited branch banking fared the worst). Similarly, one of the primary causes of the 2008 financial crisis was a lack of asset diversity - too many banks holding too many securitized sub-prime mortgages.

Second, is the implicit assumption that investment banking and underwriting activity are inherently more risky than loan activities. Certainly, imprudent investment banking can be disastrous. So can making risky loans. And the 2008 crisis was, at its core, a loan origination problem (a fact largely ignored by Congress because of the uncomfortable questions it raises about the two GSE’s - Fannie and Freddie).

Third, is the belief that the 2008 bank bailouts were somehow linked to the FDIC deposit insurance scheme and that if we ‘narrow’ the safety net, all future bailouts will be avoided. I am no fan of federal deposit insurance, but the bailouts were unrelated to it. TARP was a Treasury creation, passed by Members of Congress under extraordinary circumstances. The only way to ensure it doesn’t happen in future is to rein in Congress and limit their ability to (in the words of Brown and Vitter) “pick economic winners and losers”.

As it turns out, the Brown-Vitter Bill is less about bank ‘break-up’ and more a U.S. variant of the FSB’s G-SIFI surcharge – which raises the question why it is necessary at all, except to put the U.S.’s global banks at a disadvantage, even though they are already disproportionately affected by the surcharge. Brown and Vitter’s calls for higher capital requirements are not objectionable per se, but as the ongoing problems with the Basel Accord shows, the devil is always in the details. And if you get it wrong, you risk creating exactly the systemic problems – such as an excessive reliance on sovereign bonds or mortgage-backed securities – that you were trying to avoid.

Essentially, the only way to end the perception of a government backstop is to put in place a credible system to allow large firms to fail if they make poor decisions. To this end, the Brown-Vitter Bill doesn’t add anything except more confusion.