Archives: 03/2014

The Wall Street Journal on Halbig v. Sebelius

Today, the U.S. Court of Appeals for the D.C. Circuit will hear oral arguments in Halbig v. Sebelius, one of four cases that Jonathan Adler and I helped spur with our 2013 Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.” Critics call Halbig the most significant existential threat to the Affordable Care Act.” In anticipation of the hearing, the Wall Street Journal wrote a lengthy editorial explaining the issues. Excerpts:

Halbig v. Sebelius involves no great questions of constitutional interpretation. The plaintiffs are merely asking the judges to tell the Administration to faithfully execute the plain language of the statute that Congress passed and President Obama signed.

The Affordable Care Act—at least the version that passed in 2010—instructed the states to establish insurance exchanges, and if they didn’t the Health and Human Services Department was authorized to build federal exchanges. The law says that subsidies will be available only to people who enroll “through an Exchange established by the State.” The question in Halbig is whether these taxpayer subsidies can be distributed through the federal exchanges, as the Administration insists…

In 2012, HHS and the Internal Revenue Service arrogated to themselves the power to rewrite the law and published a regulation simply decreeing that subsidies would be available through the federal exchanges too. The IRS devoted only a single paragraph to its deviation from the statute, even though the “established by a State” language appears nine times in the law’s text. The rule claims that an exchange established on behalf of a state is a “federally established state-established exchange,” as if HHS is the 51st state.

Careful spadework into ObamaCare’s legislative history by Case Western Reserve law professor Jonathan Adler and Michael Cannon of the Cato Institute has demonstrated that this jackalope rule-making was contrary to Congress’s intent…

Mr. Obama has conceded that “obviously we didn’t do a good enough job in terms of how we crafted the law.” The right and only lawful way to repair ObamaCare is through another act of Congress. In Halbig, the judiciary can remind the Obama Administration of this basic constitutional truth.

Jonathan Adler critiques the Halbig district court’s ruling in favor of the IRS here.

Find lots of commentary by me on the Halbig cases at DarwinsFool.com.

This reference guide contains all the information you could want about these cases – and more.

Privatizing the Royal Mail

Britain privatized its Royal Mail in 2013, proceeding with an initial public offering of shares that raised about $2.7 billion. The government pursued the reform because the company faced falling mail volume, and it needed to reduce costs and increase innovation. Similar issues face the U.S. Postal Service.

The Financial Times has named the reformer leading the privatized Royal Mail its “Person of the Year.” Below is an excerpt about Moya Greene from FT’s story. I have two questions: i) Why don’t we get reforms or reformers like this in Washington? ii) Why are American leaders so comparatively timid in embracing market-based reforms?

Ask anyone who knows Moya Greene, the Canadian chief executive who last year steered Royal Mail, the UK’s 500-year-old postal service, into the private sector, and the same phrases come up. “She’s relentless, a force of nature, a tough lady,” says one admirer.

It took a determined personality to get this behemoth, with £9bn of revenues and 150,000 staff, into a healthy enough state to be floated on the London Stock Exchange, where it went straight into the FTSE 100 index. The goal of privatising Royal Mail had defeated governments for 40 years.

Greene, 59, has been Royal Mail’s chief executive for almost four years, the first woman and first non-Briton to run it since Henry VIII established a “master of the posts” in 1512. Her previous role heading Canada’s postal service – and as a civil servant overseeing the privatisation of that country’s railway and deregulation of its airline and ports systems – gave her the necessary blend of industrial and political experience.

With this British privatization—and past ones—people have quibbled with some of the details. But, all in all, privatization in Britain has been hugely successful. Prime Minister Cameron should be applauded for having the guts to build on the privatization reform legacy of Thatcher, Major, and Blair.

Meanwhile on this side of the pond, Republican Darrell Issa is having trouble getting his own nominally conservative party to accept even small changes to the broken government postal system. Perhaps he could kick-start reforms by inviting Moya Greene to give testimony to his high-profile committee.

For more on postal privatization, see here.   

Beware of the Kremlin’s Propaganda

Since the beginning of the turmoil in Ukraine, some have attributed a large part of the blame for the crisis to the European Union and the United States, whose meddling allegedly brought down the President Viktor Yanukovych.

While, as a general rule, the foreign policy of the EU and the US deserve to be criticized on various grounds, it should not be forgotten that other actors are present on the world’s geopolitical scene as well – some of them quite malevolent. The idea that the eclectic, bottom-up movement that fueled the revolution in Kyiv was somehow orchestrated by the United States (and/or by the notoriously unimaginative bureaucrats in Brussels) is grotesque – as is the notion that Russia’s invasion of Crimea is a response to genuine secessionist desires of the citizens of South-Eastern Ukraine.

In short, one needs to be careful to avoid the trap of falling for the propaganda spread by Russia’s current regime, as Alexander McCobin and Eglė Markevičiūtė, both from Students for Liberty, argue here:

It’s much too simplistic to solely condemn the United States for any kind of geopolitical instability in the world. Non-interventionists who sympathize with Russia by condoning Crimea’s secession and blaming the West for the Ukrainian crisis fail to see the larger picture. Putin’s government is one of the least free in the world and is clearly the aggressor in Crimea, as it was even beforehand with its support of the Yanukovych regime that shot and tortured its own citizens on the streets of Kyiv.

[…]

Some libertarians’ Kremlin-style speculation about pro-western Maidan’s meddling in Crimea’s affairs is very similar to what Putin’s soft-power apparatus has been trying to sell in Eastern Europe and CIS countries for at least 15 years. Speaking of the Crimean secession being democratically legitimate is intellectually dishonest given that the referendum was essentially passed at gunpoint with no legitimate choice for the region to remain in Ukraine’s sovereign power.

Politico: Private Schooling a Threat to Science Education and Freedom of Conscience

In a lengthy piece released this morning, Politico asserts that publicly-funded private school choice programs are teaching creationism around the country and implies that public schools do not do likewise. It then quotes several sources as worrying about the impact that private school choice programs will have on science instruction, and as fretting that their money is being used to promote ideas they strongly disagree with. There are two serious problems with this story.

First, citing the work of activist Zach Kopplin, Politico states that “over three hundred” private schools participating in school choice programs are teaching creationism. Kopplin’s figures have been tabulated by the Friedman Foundation which reports that he identifies 305 creationist schools operating in 10 school choice programs. Those programs are served by a total of 3,084 private schools, so just under 10 percent appear to be creationist.

That may seem like a lot, particularly when you consider that, according to Politico, “Decades of litigation have established that public schools cannot teach creationism or intelligent design.” But that characterization is inaccurate. Public schools cannot constitutionally teach these things, but that doesn’t mean it never happens. In a nationwide poll of public school biology teachers, 21 percent “agree[d] with at least one statement concerning creationism or ID as a valid scientific approach.” What’s more, 14 percent of public school biology teachers both agreed with creationism and/or ID and actually taught about them in class. Though some of these teachers may stop short of endorsing these ideas to their students, it is naive to imagine that all are so self-disciplined.

Toyota Stumbles Into a Dark Legal Alley…

…and the U.S. Department of Justice emerges whistling with $1.2 billion. I explain how it happened in a Wall Street Journal opinion piece today (more: Overlawyered). Toyota’s cars are very safe indeed, and “sudden acceleration” was a concoction of media-fueled panic, as the government’s own safety engineers have confirmed. But now the company is being punished not just for alleged data-reporting and compliance infractions unlikely to have caused any genuine material risk to the public, but also for defending itself and its products at Congressional hearings and in the arena of public opinion. DoJ’s demagogic press release cites, among the instances of supposed fraud for which Toyota is now being punished by the gigantic forfeiture, such standard exercises in bland crisis communication as, “The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified.” 

A couple of other points I didn’t have room for in the WSJ piece: Toyota is settling the government’s trumped-up single charge of mail fraud by way of a so-called Deferred Prosecution Agreement, or DPA, and its terms really must be seen to be believed. “Toyota understands and agrees that the exercise of the Office’s discretion under this Agreement is unreviewable by any court,” appears on clause 14 on page 6, with “Office” referring to the office of the U.S. Attorney for the Southern District of New York, currently Preet Bharara. And if you are expecting even the tiniest squeak from anyone at Toyota in contradiction to the government line, even around the coffee machine at the local dealership, consider clause 13, which states: that Toyota “agrees that it shall not, through its attorneys, agents, or employees, make any statement, in litigation or otherwise, contradicting the Statement of Facts or its representations in this Agreement.” If DoJ catches wind of any such statement it can revoke the agreement not to prosecute, without of course having to give back the billion dollars. “The decision as to whether any such contradictory statement shall be imputed to Toyota for the purpose of determining whether Toyota has violated this agreement shall be within the sole discretion of the Office.” 

When people talk about federal prosecutors having become a law unto themselves, this is the sort of thing they mean.

Why Don’t Public Schools Give Parents What They Want?

The Washington Post reports today that it’s “harder to describe” the mission of one of the magnet schools in Arlington County, Virginia: Arlington Traditional School. Not that hard, if you just read the quotes from the principal and parents:

“Our emphasis is on basic education,” Principal Holly Hawthorne said….

“The word ‘traditional’ implies a cachet to us,” said Craig Montesano, a lobbyist for the shipping industry who visited Arlington Traditional with his wife. To him, the word conjures ancient Rome and Greece and the promise that his daughter will be “grounded in the learning that has come down through the ages in Western civilization.”

Some parents say the selective nature and more disciplined culture remind them of private school. 

And it seems to work:

The federal government has twice named Arlington Traditional a National Blue Ribbon School for its academic performance. And its students routinely outscore district averages on the Standards of Learning tests.

And parents like it:

Last spring, 298 families applied for 72 slots.

So why doesn’t the Arlington County School Board expand it, or build more such schools around the county to accommodate all the parents who want their children to get this exotic thing called “traditional” or “back to basics” education? Maybe they just didn’t realize until today – or last spring – how popular it is? Well, as it happens, I live in Arlington, and I recall that the Washington Post has been reporting on the popularity of Arlington Traditional School since the late 1970s. Parents used to camp out overnight to get their children into the school until they created a lottery system. Through the Nexis service, I found some of the stories I recalled. Most of these articles are not online. 

Here’s what the Post reported in September 1982 when the school, then called Page Traditional School, was three years old: 

For Arlington school board member Margaret A. Bocek and her husband, the first day of school this year began late Monday night when they and 40 other parents camped out on the lawn of the county’s Page Traditional School to ensure that their 3-year-old children could attend there on opening day, 1984…. 

In the last three years, such parent stakeouts have become commonplace at Page, a public alternative school that stresses a traditional format of self-contained classrooms, regular homework and strict standards for behavior and appearance. Page parents have been lobbying recently for expanding the program to the eighth grade and for expansion of the school’s program to other schools.

And here’s a report from September 1985:

This year, the line began to form at 10 a.m. on Labor Day, 23 hours before Page Traditional School in Arlington would begin accepting applications for the kindergarten class of 1987.

By the time Principal Frank Miller arrived at 9 a.m. the next day, about 80 parents were waiting on the lawn – more than triple the 25 slots that would be available in the school’s one kindergarten class.

Seven years after its much-heralded establishment as a back-to-basics, structured alternative to the open-classroom schools popular in the mid-1970s, Page is a cause of both enthusiasm and consternation in Arlington.

Each September, eager parents camp out on the lawn at 1501 N. Lincoln St. to put the names of their 3-year-olds on the kindergarten waiting list.

December 1991:

In an effort to stop overnight campouts by parents eager to register their children at Arlington’s three popular alternative schools, county school officials have proposed dropping the first-come, first-served admissions policy in favor of a random drawing.

An October 1999 headline:

School’s Excellence Is in Demand

Now you’ll notice that the 1991 story mentions three “popular alternative schools,” and indeed the other two, Drew Elementary and H-B Woodlawn Secondary, offer a very different alternative, a more informal, individualized style of education reflecting the “alternative” ideas of the 1960s and 1970s. The Post referred in 2004 to Woodlawn’s “quirky, counterculture ways.” In November 1991 the Post reported that “Last weekend, dozens of parents camped in front of H-B Woodlawn to register their children for the 70 sixth-grade slots.”

In 2012 the Arlington school board did vote to expand Arlington Traditional School by 12 classrooms. But why did it take so long? And why not open more “back to basics” schools, and also more “counterculture” schools, if that’s what parents want?

I wrote about that years ago in a book I edited, Liberating Schools: Education in the Inner City.   

In the marketplace, competition keeps businesses on their toes.  They get constant feedback from satisfied and dissatisfied customers. Firms that serve customers well prosper and expand. Firms that don’t respond to the message they get from customers go out of business. Like all government institutions, the public schools lack that feedback and those incentives.

No principal or teacher will get a raise for attracting more students to his or her school. A successful manager in a private business gets a raise, or gets hired away for a bigger salary. A successful entrepreneur expands his or her store or opens a branch. Can one imagine a public school choice system allowing a successful principal to open another school across town and run both of them? 

If Virginia were even a little bit tolerant of charter schools, or if Virginia allowed real private school choice, parent groups or entrepreneurs could organize to deliver the kinds of schools – from traditional to counterculture – that families want. But in a bureaucratic monopoly, the local paper can run thirty years of stories about parents desperate to get their children into particular types of schools, and the central planners can ignore them.