Archives: 10/2013

Close Washington to Dismantle the Welfare-Warfare State

The GOP is attempting to defund ObamaCare by holding the federal government hostage.  Congressional Republicans say:  Cut the spending or Uncle Sam will have to stay home. 

Unfortunately, while the public doesn’t favor President Obama’s plan to nationalize American health care, people seem even less enthused about Republican tactics.  Better would be a threat to close down the government because the government should be shuttered.  The GOP should seek to eliminate entire programs and agencies. 

Federal control of health care is a good place to start.  The U.S. medical system is a mess, but the government should not decide who gets how much health insurance in what form through whom. 

Moreover, as I wrote in Forbes online:

Corporate welfare should be another target.  Republicans rightly worry about perverse incentives created by welfare for the poor since federal programs have wrecked families and communities while discouraging education and work.  However, even less justified are a variety of payments to dependent businesses.  Export subsidies, research grants, farm subsidies, housing aid, regulatory preferences, and more.

There’s no better reason to underwrite smaller enterprises, through the Small Business Administration.  Is there really a critical scarcity of liquor stores requiring taxpayers to pay for additional ones? 

Some tasks, such as the Department of Housing and Urban Development, just aren’t Washington’s job.  Worrying about the construction of apartments and homes should be left to localities and states. 

Another unnecessary bureaucracy is the Department of Education.  The national government shouldn’t be trying to run local schools.  And why should lower-income taxpayers subsidize middle-class kids who want to become lawyers?

Grant the federal government authority to create parks involving uniquely scenic or otherwise special lands.  There’s still no reason for the Interior Department to own and manage hundreds of millions of acres of forest and range land. 

The Department of Defense possesses—at the sufferance of foreign governments—hundreds of properties abroad.  While maintaining cooperative relationships with foreign militaries as well as access to some of their bases is useful, the U.S. has no need for innumerable facilities and garrisons around the globe.  The U.S. should act as a back-up against the rare hegemonic threat that friendly states could not handle rather than the guardian against every mundane controversy and conflict that arises elsewhere.

Foreign facilities often are justified as logistical way stations for intervening in the Middle East or Central Asia.  However, Europe should provide the troops as well as the bases to deal with such hot spots as Egypt and Syria.  It would not be isolationism for America to more humbly and prudently engage the world.

Foreign aid should go the way of military intervention.  Even humanitarian assistance can have counterproductive impacts, while economic assistance has been a grand failure, doing more to subsidize debilitating collectivism than promote economic reform. 

There’s much at the Justice Department that should be eliminated.  Federal criminal law has exploded.  In some cases Congress makes crimes out of actions that should be left to civil punishment—environmental disputes, for instance.  Federal lawyers also have become the vanguard of political correctness, enforcing a racial spoils system under the guise of promoting affirmative action.

Other federal sacred cows also deserve challenge.  The Drug Enforcement Agency arrests people because they prefer to get intoxicated with drugs rather than alcohol.  There are scores of welfare and job training programs of dubious effectiveness.  If Washington moved from the income to a consumption tax, the IRS would be smaller and much less intrusive. 

While many people are criticizing Republicans for threatening to close the government over ObamaCare, there actually is good reason to go to the brink on shrinking the American Leviathan.  Washington meddles in Americans’ lives far more than the Founders ever imagined—and circumstances ever justified.  It’s time to reverse the process and really shut down government.

60 Minutes Disability Investigation

The abuse and overspending in government disability programs is so bad that even National Public Radio and 60 Minutes have taken notice. On the heels of this excellent NPR examination of the “disability industrial complex,” the venerable CBS news show last night profiled Senator Tom Coburn’s efforts to uncover fraud in the two big federal disability programs.

The combined spending on Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) has risen to a huge $200 billion a year, so kudos to the mainstream media for sounding the alarm on these programs. What we need now is for other fiscal conservatives on Capitol Hill to stand with Senator Coburn and demand reforms.

There appear to be millions of people on the disability programs whose ailments are not actually severe enough to warrant coverage or who are outright scamming the system.  On 60 Minutes, Senator Coburn guessed that one-quarter or more of the people currently on the disability programs shouldn’t be. The following chart (sourced here) from Tad DeHaven supports Coburn’s assessment:

During the 1970s and 1980s, the ratio of people on SSDI to the U.S. workforce averaged 3.4 percent. That ratio has now more than doubled to 7.4 percent, even though the actual rate of disability among the working-age population is thought not to have increased in recent decades.

The following chart illustrates the problem from another angle. It uses data compiled by Jagadeesh Gokhale from the Current Population Survey on men aged 20 to 59 with a work-limiting health problem. Within this group, a falling share are working and a rising share are going on SSDI and not working.

As DeHaven explains in his recent reports on SSDI and SSI, the rapid growth in these programs is very troubling, and not just because of the rising taxpayer costs. The programs are apparently inducing many people who could be using their skills productively in the economy to instead drop out and go on the federal dole.

All government subsidy programs undermine individual responsibility and induce unproductive behaviors. This is true, for example, of the roughly $30 billion in annual federal subsidies for farm businesses. Each year federal disability programs pump out six times more benefits than farm subsidies, so it wouldn’t be surprising if the distortions and economic harm created is far larger.

The Real Dysfunction: A $17 Trillion National Debt

Gentlemen may cry default, default, but there will be no default. (With apologies to Patrick Henry.)

Once again the media are full of talk about dysfunction and default, as the partial government shutdown threatens to linger until the federal government hits the limit of its borrowing capacity, possibly on Oct. 17. The parties in Congress are still far apart on passing a budget bill to keep the government running, and Republicans are also promising not to raise the debt ceiling without some spending reforms.

If in fact Congress doesn’t raise the ceiling by mid-October—or by November 1 or so, when the real crunch might come—then the federal government would be forbidden to borrow any more money beyond the legal limit of $16.699 trillion. But it would still have enough money to pay its creditors as bonds come due. The government will take in something like $225 billion in October, but it wants to spend about $108 billion more than that. You see the problem. If it can’t borrow that $108 billion—to cover its bills for one month—then it will have to delay some checks. 

Now the U.S. Treasury isn’t full of stupid people. Back in 2011, when the debt ceiling of $14.3 trillion was about to be reached, the Washington Post reported:

The Treasury has already decided to save enough cash to cover $29 billion in interest to bondholders, a bill that comes due Aug. 15, according to people familiar with the matter.

You can bet they’re making similar plans today.

Back in that summer of discontent I talked to a journalist who was very concerned about the “dysfunction” in Washington. So am I. But I told her then what’s still true today: that the real problem is not the dysfunctional process that’s getting all the headlines, but the dysfunctional substance of governance. Congress and the president will work out the debt ceiling issue, if not by October 17 then a few days later. The real dysfunction is a federal budget that doubled in 10 years, unprecedented deficits as far as the eye can see, and a national debt bursting through its statutory limit of $16.699 trillion and heading toward 100 percent of GDP.

Luxury Mobile-Home Parks Don’t Need Rent Control

Contempo Marin isn’t your stereotypical mobile-home park. The park sits two miles from San Francisco Bay and offers tenants a pool, spa, clubhouse, and lagoon. Because of the location and amenities, these mobile homes—some of which offer vaulted ceilings, gas fireplaces, walk-in closets, and jetted tubs—can sell for over $300,000. That’s what makes the rent- and vacancy-control ordinance imposed on the park by the City of San Rafael in the name of “affordable housing” so outrageous.

The ordinance caps the amount that MHC Financing, the owner of Contempo Marin, may charge its tenants—who own their mobile homes but rent the land underneath—and mandates that the land be rented at the same price to each homeowner. The result isn’t lower costs for incoming tenants, but a redistribution of the value from the below-market rent directly to the mobile-home owners, whose homes now sell at a premium of nearly $100,000 above their pre-existing value. Thus far, the ordinance has transferred more than $95 million from MHC to its tenants.

MHC challenged the ordinance in federal court as an unconstitutional taking. The district court ruled in MHC’s favor, finding that the alleged public purpose of the ordinance—“affordable housing”—was merely a pretext, such that the ordinance violated the Fifth Amendment’s mandate that property only be taken for a “public use.” As Justice Kennedy clarified in Kelo v. City of New London (2005), “transfers intended to confer benefits on particular, favored private entities and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause.”

The U.S. Court of Appeals for the Ninth Circuit, however, reversed the district court, holding that rent control generally, rather than the specific rent-control scheme at issue here, is “rationally related to a conceivable public purpose” and thus automatically meets the public-use requirement. MHC is now asking the Supreme Court to review that ruling and Cato has filed a supporting amicus brief, encouraging the Court to clarify the standard of review applied to pretextual takings claims and to confirm that the Takings Clause isn’t rendered inoperative when property is transferred.

The Ninth Circuit’s approach essentially bars future pretextual takings claims; any regulatory scheme viewed at its broadest theoretical level could have some “conceivable public purpose.” This evisceration of the Public Use Clause leaves the appropriate standard for determining if a government’s public-use justification is mere pretext in desperate need of Supreme Court clarification. The Ninth Circuit also undermined the Fifth Amendment by finding that no taking had even occurred because MHC had bought Contempo Marin after the rent- and vacancy-control provision had been enacted and therefore could have no investment-backed expectation as to the property value taken by the city. This decision directly conflicts with Palazzolo v. Rhode Island (2001), in which the Supreme Court held that buying property with knowledge of a regulation doesn’t preclude a takings challenge. The Ninth Circuit ignored the same precedent in Guggenheim v. City of Goleta in 2011—a case in which Cato also filed a brief supporting a petition for review—and the lower court’s continued misapplication of the law here reiterates the need for the Supreme Court to reaffirm that the Takings Clause has no “expiration date.” 

The Court will decide whether to take the case of MHC Financing LP v. City of San Rafael later this fall.

This blogpost was co-authored by Cato legal associate Lauren Barlow.

What the New IPCC Global Warming Projections Should Have Looked Like

Global Science Report is a 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.”

The United Nations’ Intergovernmental Panel on Climate Change (IPCC) released its Fifth Assessment Report (AR5) last week to fanfare and stinging criticism.

Most of the criticism was aimed at the IPCC’s defense of climate models—models that the latest observations of the earth’s climate evolution show to be inaccurate, or at least are strongly indicative that is the case.

There are two prominent and undeniable examples of the models’ insufficiencies: 1) climate models overwhelmingly expected much more warming to have taken place over the past several decades than actually occurred; and 2) the sensitivity of the earth’s average temperature to increases in atmospheric greenhouse gas concentrations (such as carbon dioxide) averages some 60 percent greater in the IPCC’s climate models than it does in reality (according to a large and growing collection of evidence published in the scientific literature).

Had the IPCC addressed these model shortcomings head on, the flavor of their entire report would have been different. Instead of including projections for extreme climate changes as a result of continued human emissions of greenhouse gases resulting from our production of energy, the high-end projections would have featured relatively modest changes and the low-end projections would have been completely unremarkable.

Since changes in the earth’s temperature scale approximately linearly with a property known as the earth’s equilibrium climate sensitivity (how much the earth’s average surface temperature rises as a result of a doubling of the atmosphere’s carbon dioxide concentration), it is pretty straightforward to adjust the IPCC’s projections of future temperature change to bring them closer to what the latest science says the climate sensitivity is. That science suggests the equilibrium climate sensitivity probably lies between 1.5°C and 2.5°C (with an average value of 2.0°C), while the climate models used by the IPCC have climate sensitivities which range from 2.1°C to 4.7°C with an average value of 3.2°C.

To make the IPCC projections of the evolution of the earth’s average temperature better reflect the latest scientific estimates of the climate sensitivity, it is necessary to adjust them downward by about 30% at the low end, about 50% at the high end, and about 40% in the middle.

The figure below the jump shows what happens when we apply such a correction (note: we maintain some internal weather noise). The top panel shows the projections as portrayed by the IPCC in their just-released Fifth Assessment Report, and the lower panel shows what they pretty much would have looked like had the climate models better reflected the latest science. In other words, the lower panel is what the IPCC temperature projections should have looked like.

 

Another Obamacare Success Story: Turning a Future Lawyer into a Welfare Recipient

The Wall Street Journal’s James Taranto:

Brendan Mahoney, 3L, Medicaid recipient (LinkedIn.com)Meet Brendan Mahoney, the young man who is saving ObamaCare. He’s 30 years old, a third-year law student at the University of Connecticut. He’s actually been insured for the past three years–in 2011 and 2012 through a $2,400-a-year school-sponsored health plan, and this year through “a high-deductible, low-premium plan that cost about $39 a month through a UnitedHealthcare subsidiary.” But he wanted to see what ObamaCare had to offer.

He tried logging in to the exchange’s website at 8:45 a.m. yesterday…” He said the system could not verify his identity.” So he called the toll-free help line, whose operator also encountered computer trouble. “But then he logged on a second time, he said, and the system worked.”

“Once it got running, it was fast,” Mahoney tells the Courant. “It really made my day. It’s a lot like TurboTax.” He obtained insurance through ObamaCare. Now, he says, “if I get sick, I’ll definitely go to the doctor.” Even better, if he stays healthy, he won’t need to go to a doctor, and his premiums will support chronically ill policyholders on the wrong side of 40.

So, how much of a premium is strapping young Brendan Mahoney paying to help make ObamaCare work? Oops. The Courant reports that Mahoney “said that by filling out the application online, he discovered he was eligible for Medicaid. So, beginning next year, he won’t pay any premium at all.”

So the great success story of ObamaCare’s first day is the transformation of a future lawyer who was already paying for insurance into a welfare case.

Remember that the next time someone says that people on Medicaid have no other options. HT: Jack McHugh

Did Obamacare ‘Poster Boy’ Really Get Exchange Coverage?

Reason’s Peter Suderman: 

Chad Henderson is the media’s poster boy for Obamacare. Reporters struggled this week to find individuals who said they had been able to enroll in one of the law’s 36 federally run health-insurance exchanges.

That changed yesterday, when they found Henderson, a 21-year-old student and part-time child-care worker who lives in Georgia and says that he successfully enrolled himself and his father Bill in insurance plans via the online exchange administered at healthcare.gov.

But in an exclusive phone interview this morning with Reason, Chad father’s Bill contradicted virtually every major detail of the story the media can’t get enough of. What’s more, some of the details that Chad has released are also at odds with published rate schedules and how Obamacare officials say the enrollment system works.

Read the whole thing.