Archives: 02/2016

Former USTR Rob Portman Opposes TPP for the Worst Reasons

Yesterday, Senator Rob Portman (R-OH), a former U.S. Trade Representative during the George W. Bush administration, announced his opposition to the Trans-Pacific Partnership. 

According to Reuters:

Portman, from Ohio, said the Pacific trade deal fails to meet the needs of his state’s workers because it lacks an enforceable provision to fight currency manipulation and because of new, less-stringent country-of-origin rules for auto parts.

“I cannot support the TPP in its current form because it doesn’t provide that level playing field,” Portman said in a statement.

The announcement is significant because passage of the TPP will rely on broad Republican support and because Senator Portman’s credentials (as former USTR and member of the Senate Finance Committee who represents a traditionally trade-skeptic region of the country) have earned him a prominent voice on trade policy in Washington.

Police Misconduct — The Worst Case in January

Over at Cato’s Police Misconduct web site, we have identified the worst case for the month of January.  It was the case from Suffolk County, New York, involving now former police officer, Scott Greene.  He was convicted of repeated instances of theft.

According to the evidence introduced at the trial, Greene would target Hispanic drivers, pull them over, order them to surrender their wallets, or invent a reason to search their vehicles and then steal cash located inside.  By stealing from persons he thought were illegal immigrants, Greene thought his victims would not come forward to file any complaint.  And he would enrich himself by using his police powers.  Prosecutor Tom Spota called Greene a “thief with a badge” and says he will be seeking the maximum possible prison sentence–about four years.

Alas, there are problems in the Suffolk department even beyond Greene.  The recently departed chief, James Burke, has been indicted for abusing a suspect and then coercing his subordinate officers to cover up his crime.  Local community activists say the department is so corrupt that they want a federal takeover.  Stay tuned about that.

Using Congressional Budget Rules To (Not) Save Money

A new health club opened in my neighborhood recently and I told my wife I wanted to join it. She agreed, providing that I gave up something we were spending elsewhere to pay for the $1,200 annual membership.  I don’t want to give up anything fun so I decided to adopt the Congressional approach to budgeting to achieve such savings.  It turned out to be a snap.

The first thing I did was claim $150 in credit from a restaurant app I use called Open Table.  Each time I use the app to reserve a table it gives me the equivalent of $1 towards a future meal.  Since I got the app five years ago I’ve never gotten around to using these, but now seems a propitious time.

Next, I let our discount deals expire with the cable company and the newspaper. Each has a base price it offers subscribers, but if I call and threaten to stop my subscription they give me the discount for new subscribers. So I let each expire for a week and then called to get the new subscriber deal again. Together, that saved me $850.

Federal Workers Earning More Than $100,000

A new investigation by ABC7/WJLA reporter Chris Papst highlights data on the number of federal civilian workers earning more than $100,000 in annual wages. Using data from the Office of Personnel Management, Papst reports:

… last year the number of federal employees making more than $100,000 topped 500,000 for the first time. That’s 25 percent of the entire federal workforce of roughly 2.1 million. In the last 15 years, the number of federal workers making $100,000 increased from 66,116 to 509,025, a nearly 800 percent increase.

The chart below shows Papst’s data. The number of high-paid federal workers soared during the 2000s, but has grown more slowly in recent years. There is stark contrast between the George W. Bush years and the Barack Obama years. The number of federal workers earning more than $100,000 more than quadrupled under Bush (83,532 in 2001 to 389,828 in 2009), but has risen 31 percent since 2009 (to reach 509,025 by 2015).

What explains the spendthrift record of Bush and the more frugal record of Obama? Partly, Bush wanted large pay increases for the uniformed military, and to gain support he agreed to large increases for the civilian workforce. Partly, the new pay system in place for the Pentagon in the later Bush years inflated civilian Pentagon pay, as described by Dennis Cauchon. And partly, the Obama frugality was the result of a three-year partial pay freeze backed by the Republicans and approved by the president.

 

For more on federal pay, see DownsizingGovernment.org.

Data note: figure for 2002 in chart is estimated.

How Congress Should — and Shouldn’t — Bolster School Choice

This week, the House Committee on Education and the Workforce held a hearing on “Expanding Education Opportunity through School Choice.” As I’ve written before, there are lots of great reasons to support school choice policies, but Congress should not create a national voucher program:

It is very likely that a federal voucher program would lead to increased federal regulation of private schools over time. Once private schools become dependent on federal money, the vast majority is likely to accept the new regulations rather than forgo the funding.

When a state adopts regulations that undermine its school choice program, it’s lamentable but at least the ill effects are localized. Other states are free to chart a different course. However, if the federal government regulates a national school choice program, there is no escape. Moreover, state governments are more responsive to citizens than the distant federal bureaucracy. Citizens have a better shot at blocking or reversing harmful regulations at the state and local level rather than the federal level.

Time to Rein in Judicial Deference to Executive Agencies

Bryana Bible defaulted on her student loans. Upon her default, the guarantor of her loans, United Student Aid (USA) Funds, paid the default claim and took over the loan. Bible and USA Funds agreed to a $50-a-month repayment plan. Per the applicable Higher Education Act and Department of Education regulations, however, the agreement included a collection fee of 18.5% of the unpaid loan balance.

Bible balked at this fee and filed a class action against USA Funds, alleging that the company violated both the terms of the promissory note and the federal Racketeer Influenced Corrupt Organizations Act (!). The district court agreed with USA Funds because both the law and applicable regulations allowed for exactly that fee to be imposed. But when the case got to the appellate stage, it went off the rails.

The Seventh Circuit panel fractured, with one judge considering the regulatory text unambiguously permitting the fee, one judge considering the regulatory text unambiguously prohibiting the fee, and one just finding the regulations altogether ambiguous. The judges decided to resolve the case by deferring to the Department of Education’s opinion on the matter.

The Secretary of Education filed an amicus curiae brief, siding with Bible—which contradicted both the agency’s previous regulations and the statute’s express terms. Still, because the Secretary’s brief offered novel interpretative guidance, the court was forced to defer to the agency’s interpretation of its own guidance under a rule called Auer (or Seminole Rock)deference—a doctrine requiring courts to defer to agencies’ interpretation of their own guidance unless plainly erroneous or inconsistent with the regulation—instead of hazarding its own interpretation.

USA Funds has asked the Supreme Court to clean up this mess. Cato has joined the American Action Forum and Judicial Education Project on a brief urging the Court to take up the case and overrule both Auer v. Robbins (1997)and Bowles v. Seminole Rock & Sand Co. (1945).

Auer deference is simply outdated—and was superseded by statute from its inception. In 1946, one year after the Court decided Seminole Rock, Congress passed the Administrative Procedures Act (APA). The APA distinguished between legislative and interpretative rules. Legislative rules are subject to notice-and-comment practice but interpretative rules are not. Accordingly, judicial deference to a rule that results from an open notice-and-comment procedure may be justifiable, while deference to an interpretative rule—like the one at issue here—which is not subject to such a process, is inappropriate.

Upcoming Book Forum—Michael Doyle, “The Question of Intervention”

On February 18th at noon, Cato will be hosting a book forum with Columbia University professor Michael Doyle on his new book The Question of Intervention: John Stuart Mill and the Responsibility to Protect.  The forum will include a presentation of Doyle’s conception of the key standards that should guide decisions to intervene militarily abroad, followed by responses from two distinguished discussants—Anne-Marie Slaughter (President and CEO of New America, and former director of the State Department Policy Planning Staff), and Christopher Preble (Executive Vice President for Defense and Foreign Policy Studies, Cato Institute). 

In light of the persistent calls for the United States to intervene in trouble spots around the world, this event will provide an illuminating discussion of the circumstances in which moral and security considerations supersede the norm of state sovereignty and justify foreign intervention.  To register for the event, click here.