Tag: State of the Union

#CatoSOTU: A Libertarian Take on the State of the Union Address

On Tuesday night, President Obama delivered his sixth annual State of the Union address. Cato scholars took to Twitter to live-tweet not only the President’s address, but also the Republican and Tea Party responses—delivered by Sen. Joni Ernst and Rep. Curt Clawson respectively—focusing, as always, on what the policies being discussed would mean for the future of liberty. 

Many on Twitter joined the discussion, which was billed as a chance to ask experts what to expect from the policy world in 2015; the hashtag #CatoSOTU has been used over 4,400 times since Tuesday, a number which will likely continue to grow as Cato scholars and members of the public continue the online conversation.

Over the years, the State of the Union has become an annual spectacle much larger than the founding fathers would ever have expected, and Cato scholars were quick to put it in context:

The State of the Union: Please, Just Do No Harm

At the National Interest, I critique the president’s State of the Union speech:

Instead, we got a sweeping vision of a federal government that takes care of us from childhood to retirement, a verbal counterpart to the Obama campaign’s internet ad about “Julia,” the cartoon character who has no family, friends, church or community and depends on government help throughout her life. The president chronicled a government that provides us with student loans, healthcare, oil and the Internet.

The spirit of American independence, of free people pursuing their dreams in a free economy, was entirely absent. Indeed, the word “freedom” appeared only once in the speech.

I wasn’t so impressed with the “middle-class economics” he laid out:

The president wants more and better jobs. And yet he wants to raise taxes on the savings and investment that produce economic growth and better jobs. And he proposes a higher minimum wage, which would cost some low-skilled workers their jobs. Those proposals are not well thought out….

The president spoke a lot about the future. He mentioned Social Security, Medicare and Medicaid. And he twice boasted of shrinking deficits. But he never addressed the elephant in the room: The deficit is about to head back up, reaching $1 trillion in a few years. The national debt is $18 trillion and still growing. Worse, those entitlements programs have an unfunded liability of around $90 trillion. What’s his plan to avert an unprecedented financial crisis a few years after he leaves office? He didn’t say, because he has no plan.

Things got a little better when he turned to foreign policy:

When he turned from economics, the president offered a bit more to libertarian-minded voters. He said that we don’t want to be “dragged into costly conflicts that strain our military and set back our standing” or “dragged into another ground war in the Middle East.” He said that “when the first response to a challenge is to send in our military, then we risk getting drawn into unnecessary conflicts, and neglect the broader strategy we need for a safer, more prosperous world.” Music to noninterventionist and realist ears.

But the reality is somewhat different. He has officially ended the wars in Afghanistan and Iraq, but American troops remain in both countries, which are hardly experiencing postwar tranquility. He has bombed seven countries, three more than President Bush. We are getting more deeply entangled in a new war in Iraq and Syria, without congressional authorization. Obama asked Congress to “pass a resolution to authorize the use of force against ISIL. We need that authority.” Really? He hasn’t shown any need for it these past six months. Nor did he ask for authorization to wage war in Libya. The senator who said in his 2008 campaign, “The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation,” has become a president who acts as if he does.

I also found an opportunity to praise his promises on Cuba, criminal justice reform, and the dignity of every citizen. But I concluded:

Early in the speech the president said, “We need to set our sights higher than just making sure government doesn’t screw things up, the government doesn’t halt the progress we’re making. We need to do more than just do no harm.” Please, just do no harm. Americans will make plenty of progress if government doesn’t interfere. 

Mr. President, Tell HealthCare.gov Enrollees about King v. Burwell and the Risks to Their Coverage

Tonight, President Obama will deliver his annual State of the Union address to Congress. He will no doubt boast that his administration has enrolled 6.8 million individuals in ObamaCare plans in the 37 states with federal Exchanges – i.e., through HealthCare.gov – and a couple million more in the few states that established their own Exchanges. The State of the Union would also be a good time for the president to be honest with those HealthCare.gov enrollees, especially the roughly 6 million of them who are purchasing coverage with the help of federal subsidies, about the risks to which he has exposed them.

The Patient Protection and Affordable Care Act, which the president himself signed, expressly provides that those subsidies are authorized only “through an Exchange established by the State.” Since majority of American people have never supported ObamaCare, about three quarters of the states now have refused or otherwise failed to establish Exchanges.

If the president were following the law, he would not be issuing subsidies to any HealthCare.gov enrollees. Indeed, if the president had followed the law – if he had all along admitted he has no authority to subsidize HealthCare.gov enrollees – then enough of the country would have seen the full cost of ObamaCare coverage that Congress would have reopened and likely repealed the statute by now. It would have happened even before anyone lost their coverage in the “if you like your health plan you can keep it” debacle of late 2013.

Instead, President Obama insisted on violating the express language of his own health care law. The result is that he put millions of Americans in jeopardy of losing their health insurance – again.

On March 4, the Supreme Court will hear a case called King v. Burwell, one of four challenges to those illegal subsidies, and the illegal taxes that those subsidies trigger. The Court will likely issue a ruling by June. The fact that the Supreme Court agreed to consider King at all means that at least four justices believe the Fourth Circuit’s ruling for the government in King merits review.

If the justices agree with two other lowercourts, they will hold that the president is breaking the law and will put an immediate end to those illegal subsidies. Such a ruling would free the plaintiffs and more than 57 million individuals and employers from being illegally subjected to the aforementioned taxes – ObamaCare’s individual and employer mandates.

The people with whom the president most needs to be honest are the millions of Americans who enrolled in HealthCare.gov. If the Court finds those subsidies are illegal, then enrollees receiving subsidies would see their health insurance bills quadruple (on average). They would be hit with a new tax bill of up to $5,000. Their plans could disappear, and they may not be able to find a replacement. An estimated one million of these folks left jobs with secure coverage because the president promised them secure, affordable coverage through HealthCare.gov. Only he never had that power, and by pretending he did, Obama has now made coverage less secure for millions.

Instead of warning Americans of these risks of HealthCare.gov coverage, the president and his administration have been lying to HealthCare.gov enrollees. As they lost before lower courts and even as the Supreme Court agreed to hear King just days before open enrollment in HealthCare.gov began, the White House and administration officials have repeated the mantra that “nothing has changed.” Watch HHS Secretary Sylvia Burwell say “nothing has changed” four times in 90 seconds (go to 3:40).

It is not true that nothing has changed, and the administration knows it isn’t true. The administration knows the risks inherent in HealthCare.gov coverage have increased, because the administration changed the agreements between HealthCare.gov and participating insurers to insert a clause allowing insurers to back out if the subsidies disappear:

CMS acknowledges that QHPI has developed its products for the FFE based on the assumption that APTCs and CSRs will be available to qualifying Enrollees. In the event that this assumption ceases to be valid during the term of this Agreement, CMS acknowledges that Issuer could have cause to terminate this Agreement subject to applicable state and federal law.

The administration made the change, reports Inside Health Policy, because insurers demanded it and because administration officials themselves “believe the clause is critical.” 

What does this mean? It means the president knows that millions of HealthCare.gov enrollees are facing serious financial risks, or worse. Yet his administration is actively concealing those risks from enrollees by telling enrollees “nothing has changed.” At the same time the president is protecting insurers from the risks they face by participating in HealthCare.gov, he is not even informing consumers about the risks HealthCare.gov coverage poses for them.

The president needs to put an end to the deception, tonight. He needs to warn HealthCare.gov enrollees about the risks inherent in their coverage, so they have time to prepare. If he tells them tonight, some of those who need insurance the most might be able to find jobs with secure coverage (or other access to coverage) by the time the Court rules. He needs to tell HealthCare.gov enrollees what his contingency plans are if the Supreme Court rules that he was breaking the law and playing games with their coverage.

He can blame it all on his political opponents. He can claim to be the only honest man in Washington, for all I care. But he needs to level with HealthCare.gov enrollees tonight about the risks they are facing. To keep pretending “nothing has changed” would be a reckless lie.

TONIGHT: Cato Scholars Live-Tweet the State of the Union

#CatoSOTU

Tonight at 9 p.m. EST, President Obama will lay out his plans for the upcoming year in his sixth annual State of the Union (SOTU) address. What will the President’s words mean for liberty? 

Find out tonight: Cato scholars will be live-tweeting their reactions to what the president says—and what he leaves out. Following the President’s address, stay tuned for commentary on the Republican and Tea Party responses. Featured scholars will include everyone from David Boaz to Mark Calabria, Walter Olson to Alex Nowrasteh….and many, many more.

This is your chance to ask the experts what to expect from the policy world in 2015—and to add your two cents to the discussion. Follow @CatoInstitute on Twitter and join the conversation using #CatoSOTU

Minimum Wage Laws Kill Jobs

President Obama set the chattering classes abuzz after his unilateral announcement to raise the minimum wage for newly hired Federal contract workers. During his State of the Union address, he sang the praises for his action, saying that “It’s good for the economy; it’s good for America.[1] Yet this conclusion doesn’t pass the economic smell test; just look at the data from Europe.

There are seven European Union (EU) countries with no minimum wage (Austria, Cyprus, Denmark, Finland, Germany, Italy, and Sweden). If we compare the levels of unemployment in these countries with EU countries that impose a minimum wage, the results are clear – a minimum wage leads to higher levels of unemployment. In the 21 countries with a minimum wage, the average country has an unemployment rate of 11.8%; whereas, the average unemployment rate in the seven nations without a minimum wage is about one third lower – at 7.9%.

Nobelist Milton Friedman said it best when he concluded that “The real tragedy of minimum wage laws is that they are supported by well-meaning groups who want to reduce poverty. But the people who are hurt most by high minimums are the most poverty stricken.”[2]


[1] Barack Obama, State of the Union Address, New York Times, January 28, 2014.

[2] Milton Friedman, The Minimum Wage Rate, Who Really Pays? An Interview With Milton Friedman and Yale Brozen, 26-27 (Free Society Association ed. 1966), quoted in Keith B. Leffler, “Minimum Wages, Welfare, and Wealth Transfers to the Poor,”Journal of Law and Economics 21, no. 2 (October 1978): 345–58.

The State of the Union Is…Irrelevant

Kevin Williamson has your red-meat, small-r republican rant on the State of the Union over at NR. He’s right that the once-modest Annual Message has become as bloated and ridiculous as the presidency itself.   

Like Williamson, I used to fume and fume about our latter-day Speech from the Throne, but lately I’m no longer sure it’s worth the bother. For the speech to be worth getting worked up about, somebody would have to be listening. But as I point out in the Washington Examiner today, the polling and poli sci evidence suggest that POTUS is basically howling into the void: 

“There is overwhelming evidence that presidents, even ‘great communicators,’ rarely move the public in their direction,” writes George C. Edwards III, a presidential scholar at Texas A&M University. “Going public does not work.” In a 2013 analysis of SOTU polling, Gallup found that “most presidents have shown an average decrease in approval of one or more points between the last poll conducted before the State of the Union and the first one conducted afterward.”

(For more on that point, see Table 2.2 from Edwards’s book On Deaf Ears: The Limits of the Bully Pulpit or this review of the evidence by Ezra Klein) 

Nor does the president usually fare any better trying to use the SOTU to bend Congress to his will. As this Associated Press analysis puts it, the speech is “high volume, low yield” in terms of generating legislative action.  Contra TR, the bully pulpit isn’t so “bully.” 

None of that is to deny that the modern president has powers vastly greater than he was ever intended to have—or than one man should ever have. The danger isn’t his “power to persuade”: it’s what he can get away with under the “living Constitution” version of Article II: waging war worldwide, reshaping the law through “royal dispensations,”  taking care that his secret laws are faithfully executed. What he does matters; what he says in this stage-managed spectacle is the least of our worries. 

Many of us at Cato will watch and read the speech tonight because it’s sort of our job. If the spirit moves you, follow along on Twitter, hashtag #CatoSOTU. Otherwise, it seems to me that the late Justice Rehnquist had the right attitude

When asked why [he planned to skip the SOTU], he explained that it conflicted with a watercolor class at the YMCA. An incredulous law clerk said, “You can’t miss the State of Union Address for a watercolor class.” Rehnquist responded that he had spent $25 to enroll in the class, and he was going to get every benefit out of it.

 

Who Cares If Pre-K Would Work?

The following is cross-posted from the National Journal’s Education Experts blog:

This week’s introduction says that, when it comes to President Obama’s preschool proposal, “the only problem, as always, is that these investments cost money.” These proposals certainly would cost money – dollars Washington doesn’t have – but even discussing cost is seriously jumping the gun. The fact is that right now, regardless of cost, there is almost no meaningful evidence to support massive expansion of federal pre-school efforts. Indeed, the evidence calls much more loudly for the opposite.

Start with the biggest federal pre-K initiative, Head Start. It costs about $8 billion per year, and what are its lasting effects? According to the latest random-assignment, federal assessments, there essentially aren’t any. The program has demonstrated no meaningful, lasting benefits, and is therefore a failure.

How about Early Head Start, which involves children ages 0 to 3? It is a much newer program than its big brother, but it, too, provides no evidence of overall, lasting benefits. As a 2010 random-assignment, federal study concludes:

The impact analyses show that for the overall sample, the positive effects of Early Head Start for children and parents did not continue when children were in fifth grade…. It appears that the modest impacts across multiple domains that were observed in earlier waves of follow-up did not persist by the time children were in fifth grade.

There were, to be fair, some lasting positive effects found for some subgroups, but there were also negative effects. And for the “highest-risk” children – the ones the program is most supposed to help – the outcomes were awful:

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