Topic: General

Cato Weighs In With the Court – Cert.-Stage Amicus Edition

By
Roger Pilon

Adam Chandler, a Yale Law grad who recently completed a clerkship with Judge Patrick E. Higginbotham on the U.S. Court of Appeals for the Fifth Circuit, posted a SCOTUSblog piece this afternoon entitled “Cert.-stage amicus All-Stars: Where are they now?” Guess what? Cato’s number 4 on the list, right behind the U.S. Chamber of Commerce, the National Association of Criminal Defense Lawyers, and our friends out at the Pacific Legal Foundation – with a very respectable success rate of 22.2 percent.

Five years ago, when Chandler last did these rankings, Cato wasn’t even on the chart. That’s when Ilya Shapiro joined us. Say no more. But I will. He’s done a bang-up job with Cato’s amicus program.

The importance of filing Supreme Court briefs at the cert stage cannot be overstated. That’s the time when the Court makes its up-or-down decision about whether even to take a case, and hence the time at which arguments can be made about the importance of the issues at stake and the broader implications. We at the Center for Constitutional Studies have always taken the long view, grounded in the Constitution’s First Principles, especially as they underpin the limited constitutional government the Framers envisioned.

Commenting on the ideological aspects of these developments (where “conservative” and “libertarian” are largely interchangeable), Chandler writes:

Overall, the ideological cast of the new entrants is more conservative, anti-regulatory, and pro-business than that of those they replaced. To varying degrees, all seven of the new entrants have conservative profiles, whereas several of those left off the list this year, like the Society of Professional Journalists and the National League of Cities, have no obvious ideological bent. Five years ago, I wrote that “the list of top amici is dominated by pro-business and anti-regulatory groups—such groups hold over half the slots in the top sixteen.” Now they hold over three-quarters.

And he adds: “While the conservative groups have stepped up their game, the liberals are still nowhere to be found.” Part of the reason for this trend is of course the ideological cast of the Court itself. But that’s not the whole story – after all, it takes only four votes for certiorari to be granted, and for the most part there are four reliably liberal votes on the Court. Just as important is a change in the constitutional debate. And we’ve played our part in bringing that change about. In fact, in another month or so you’ll find a symposium in the Chapman Law Review on the origins and character of the modern libertarian legal movement. Stay tuned for more on that.

Topics: 
General, Law and Civil Liberties

Hogberg: How ObamaCare Is Disrupting the Coverage & Care of One D.C. Woman

By
Michael F. Cannon

David Hogberg reports on “Natalie,” a Washington, D.C., resident who may lose her current coverage when ObamaCare forces her into one of its health insurance “exchanges”:

Natalie increasingly thinks that she’ll have the surgery. However, she notes that if she could keep her insurance and her medical team indefinitely, she’d have the luxury of waiting a year or two to see if she could get the pain under control (or at least live with the pain she has) and avoid an operation. Now, she may have to decide on an operation within a few months so that her current physicians can treat her…

At times, Natalie feels her trust in progressive leadership was betrayed.

“I voted for Obama in 2008 because I couldn’t stand McCain,” she said.

During the debate over Obamacare, President Obama assured the American people, “No matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Natalie may lose both.

“I can’t say how disappointed I am because I believed him,” laments Natalie.

Topics: 
General, Government and Politics, Health Care

Was William Shakespeare the First Libertarian?

By
Daniel J. Mitchell

I’ve never been a big Shakespeare fan, but that may need to change. It seems the Bard of Avon may be the world’s first libertarian.

Some of you are probably shaking your heads and saying that this is wrong, that Thomas Jefferson or Adam Smith are more deserving of this honor.

Others would argue we should go back earlier in time and give that title to John Locke.

But based on some new research reported in Tax-news.com, we need to travel back to the days of Shakespeare:

Uncertainty over the likely future success of his plays led William Shakespeare to do “all he could to avoid taxes,” new research by scholars at Aberystwyth University has claimed. The collaborative paper: “Reading with the Grain: Sustainability and the Literary Imagination,”…alleges that, in his “other” life as a major landowner, Shakespeare avoided paying his taxes, illegally hoarded food and sidelined in money lending. …According to Dr Jayne Archer, lead author and a lecturer in Renaissance literature at Aberystwyth: “There was another side to Shakespeare besides the brilliant playwright - a ruthless businessman who did all he could to avoid taxes, maximize profits at others’ expense and exploit the vulnerable - while also writing plays.”

In that short excerpt, we find three strong indications of Shakespeare’s libertarianism.

  1. What does it mean that Shakespeare did everything he could to avoid taxes? His actions obviously would have upset the United Kingdom’s current political elite, which views tax maximization as a religious sacrament, but it shows that Shakespeare believed in the right of private property. Check one box for libertarianism.
  2. What does it mean that the Bard “illegally hoarded food”? Well, such a law probably existed because government was interfering with the free market with something like price controls. Or there was a misguided hostility by the government against “speculation,” similar to what you would find from the deadbeats in today’s Occupy movement. In either event, Shakespeare was standing up for the principle of freedom of contract. Check another box for libertarianism.
  3. Last but not least, what does it mean that Shakespeare “sidelined in money lending”? Nations used to have statist “usury laws” that interfered with the ability to charge interest when lending money. Shakespeare apparently didn’t think “usury” was a bad thing, so he was standing up for the liberty of consenting adults to engage in voluntary exchange. Check another box for libertarianism.

Read the rest of this post »

Topics: 
General, Political Philosophy

Question of the Week: What’s the Right Point on the Laffer Curve?

By
Daniel J. Mitchell

Back in 2010, I wrote a post entitled “What’s the Ideal Point on the Laffer Curve?”

Except I didn’t answer my own question. I simply pointed out that revenue maximization was not the ideal outcome.

I explained that policy makers instead should seek to maximize prosperity, and that this implied a much lower tax rate.

But what is that tax rate, several people have inquired?

The simple answer is that the tax rate should be set to finance the legitimate functions of government.

But that leads to an obvious follow-up question. What are those legitimate functions?

According to my anarcho-capitalist friends, there’s no need for any public sector. Even national defense and courts can be shifted to the private sector.

In that case, the “right” tax rate obviously is zero.

But what if you’re a squishy, middle-of-the-road moderate like me, and you’re willing to go along with the limited central government envisioned by America’s Founding Fathers?

That system operated very well for about 150 years and the federal government consumed, on average, only about 3 percent of economic output. And even if you include state and local governments, overall government spending was still less than 10 percent of GDP.

Moreover, for much of that time, America prospered with no income tax.

But this doesn’t mean there was no tax burden. There were federal excise taxes and import taxes, so if the horizontal axis of the Laffer Curve measured “Taxes as a Share of GDP,” then you would be above zero.

Or you could envision a world where those taxes were eliminated and replaced by a flat tax or national sales tax with a very low rate. Perhaps about 5 percent.

So I’m going to pick that number as my “ideal” tax rate, even though I know that 5 percent is just a rough guess.

For more information about the growth-maximizing size of government, watch this video on the Rahn Curve.

The Rahn Curve and the Growth-Maximizing Level of Government

There are two key things to understand about my discussion of the Rahn Curve.

First, I assume in the video that the private sector can’t provide core public goods, so the discussion beginning about 0:33 will irk the anarcho-capitalists. I realize I’m making a blunt assumption, but I try to keep my videos from getting too long and I didn’t want to distract people by getting into issues such as whether things like national defense can be privatized.

Second, you’ll notice around 3:20 of the video that I explain why I think the academic research overstates the growth-maximizing size of government. Practically speaking, this seems irrelevant since the burden of government spending in almost all nations is well above 20 percent-25 percent of GDP.

But I hold out hope that we’ll be able to reform entitlements and take other steps to reduce the size and scope of government. And if that means total government spending drops to 20 percent-25 percent of GDP, I don’t want that to be the stopping point.

At the very least, we should shrink the size of the state back to 10 percent of economic output.

And if we ever get that low, then we can have a fun discussion with the anarcho-capitalists on what else we can privatize.

P.S. If a nation obeys Mitchell’s Golden Rule for a long enough period of time, government spending as a share of GDP asymptotically will approach zero. So perhaps there comes a time where my rule can be relaxed and replaced with something akin to the Swiss debt brake, which allows for the possibility of government growing at the same rate as GDP.

Topics: 
General, Government and Politics, Political Philosophy, Tax and Budget Policy

Roy: “The Arkansas-Obamacare Medicaid Deal: Far Less Than It First Appeared”

By
Michael F. Cannon

At Forbes.com’s Apothecary blog, the Manhattan Institute’s Avik Roy is cool to the idea of states implementing ObamaCare’s Medicaid expansion by putting those new enrollees in ObamaCare’s health insurance “exchanges”: 

When Arkansas Gov. Mike Beebe (D.) first announced that he had reached a deal with the Obama administration to use the Affordable Care Act’s private insurance exchanges to expand coverage to poor Arkansans, it seemed like an important, and potentially transformative, development. The myriad ways in which the traditional Medicaid program harms the poor have been well-documented, and it looked like Beebe had come up with an attractive—albeit expensive—way to provide the poor with higher-quality private insurance. A Good Friday memo from the U.S. Department of Health and Human Services, however, splashes cold water on that aspiration. It’s now clear that the Beebe-HHS deal applies a kind of private-sector window dressing on the dysfunctional Medicaid program, and it’s not obvious that the Arkansas legislature should go along.

The first reason states should not pursue the Beebe plan is that, like a straight Medicaid expansion, it would inhibit the pursuit of low-cost health care for the poor. 

The second reason is that it would cost even more than putting those new enrollees in the traditional Medicaid program. Economist Jagadeesh Gokhale, who advises the Social Security program on how to make these sorts of projections, estimates a straight Medicaid expansion would cost Florida, Illinois, and Texas about $20 billion in the first 10 years. And that’s in the wildly unrealistic event that the feds honor their committment to cover 90 percent of the cost. President Obama has already proposed abandoning that committment. Congressional Budget Office projections suggest the “Beebe plan” would increase the cost of the expansion by 50 percent. That too should be enough reason to reject the Beebe plan. Neither the state nor the federal government have the money to expand Medicaid at all. Volunteering to make the expansion even more expensive is lunacy. 

The Beebe administration is trying to make its plan seem no more expensive than a straight Medicaid expansion. How? By simply assuming state officials would voluntarily make a straight Medicaid expansion so expensive that the Beebe plan wouldn’t cost a penny extra. The illogic goes like this. If Arkansas were to expand traditional Medicaid, the state would likely need to increase Medicaid payments to doctors and hospitals in order to secure adequate access to care for new enrollees. That would make a straight Medicaid expansion so expensive that the Beebe plan would be no more costly, and might even cost less. 

It’s true, states that implement ObamaCare’s Medicaid expansion would have to increase provider payments to give new eligibles decent access to care. The problem is that Medicaid never does that. Medicaid is notorious for paying providers so little that it access to care is lousy. Medicaid does so year after year, even if people sometimes die as a result. The Beebe administration simply assumed that state officials would magically change such behavior, increase Medicaid’s provider payments to the same levels private insurers pay, and thereby volunteer to make an already-expensive Medicaid expansion even more unaffordable. In that fantasy world, the Beebe plan would be no more expensive. As an indication of how implausible that assumption is, no one had been talking about combining a straight Medicaid expansion with higher provider payments until the Beebe administration needed to make the governor’s plan seem slightly less unaffordable. 

Roy has soured on Beebe-style plans since reading some of the terms and conditions the Obama administration issued on Friday. Yet he still imagines there might be free-market-friendly ways to implement a massive expansion of the entitlement state. Thus he counsels states only to expand Medicaid in exchange for real reforms. We’ve heard that song and dance before. Republicans said the State Children’s Health Insurance Program and Medicare Part D – two Republican initiatives – would lead to Medicaid and Medicare reform. Instead, government got bigger and reform went nowhere. Lucy is going to pull the football here, too. If it is Medicaid reform you seek, the only free-market Medicaid reforms are Medicaid cuts. Roy’s criticisms of the Beebe plan are welcome, though it’s odd to find him to the left of officials in the 15 or more states that are flatly rejecting the expansion.

Topics: 
General, Government and Politics, Health Care

Tiered Guest Workers – Preliminary Details & Observations

By
Alex Nowrasteh

Union and business negotiators have supposedly reached a deal on the major aspects of the guest worker visa program.  The details have not been released yet and the utility of such a proposal will rest there, but here are some brief observations on the broad strokes released:

  1. Tiered visa program.  The plan appears to create a tiered guest workers visa program based on the state of the economy.  Under the first tier, firms will be allowed to hire 20,000 visas in 2015 that would ratchet up to 75,000 in 2019.  The second tier could then kick in if the economy is growing quickly and unemployment is below a preset threshold, going up to an annual cap of 200,000 per year.  Under a third tier, employers sound like they would be able to hire a large number of guest workers if they are willing to “pay significantly higher wages.”  According to the Mexican Migration Monitor, almost 700,000 unauthorized immigrants entered in 2006, up from 500,000 in 2005.  If the regulations, fees, and wage controls for the third-tier are minimal, this tiered program could reduce unauthorized immigration significantly if the sectors of the economy that employ unauthorized immigrants can apply for them.
  2. Sector limitations.  The construction industry would be limited to no more than 15,000 visas annually.  As I wrote here, housing starts provided a huge incentive for unauthorized immigrants to enter to work in construction or other housing-related sectors of the economy.  Unauthorized immigration collapsed beginning in mid-2006 as housing starts declined precipitously, reducing demand for construction workers.  But with housing starts picking up, unauthorized immigration will increase again too.  15,000 total annual visas is not enough to siphon most unauthorized immigrants seeking construction employment into the legal market.  However, details in the tiered visa system could allow for some wiggle room there.       
  3. Wage controls.  It appears that guest worker wages will be determined from complex formula that considers actual wages paid by employer to similar U.S. workers, industry wage scales, and regional variations in compensation.  Current guest worker visas are similarly regulated with disastrous and expensive results that encourage illegal hiring.  Replacing all of these regulations with a fee is a much simpler, cheaper, and effective way of incentivizing employers to hire Americans first.  Stacking the regulatory deck too much in favor of hiring Americans, even in industries for which there are very few American workers, will just incentivize employers to look in the black market – defeating the purpose of immigration reform.  More enforcement (code for bureaucracy) will either fail to halt that behavior or halt it by destroying large sectors of the economy through regulatory micromanagement.   
  4. Worker mobility.  An unambiguously positive development is that guest workers would be allowed to switch jobs very easily.  Tying guest workers to employers was always a bad policy, one that could lead to employer abuse and justified numerous bureaucrats to intrusively inspect working conditions.  By allowing labor mobility, guest workers can look out for their own conditions and switch jobs when appropriate – obviating expensive bureaucratic oversight of employers and guest workers. 

These preliminary observations are based on broad policy outlines in numerous news stories rather than actual legislation.  I will update these observations as more details are released or the actual plan is published. 

Topics: 
General, Government and Politics, Trade and Immigration

Here’s Your Free Health Care. Would You Care to Vote?

By
Michael F. Cannon

The Washington Examiner’s Paul Bedard writes:

The 61-page online Obamacare draft application for health care includes asking if the applicant wants to register to vote, raising the specter that pro-Obama groups being tapped to help Americans sign up for the program will also steer them to register with the Democratic Party.

That may strike some as unseemly. After all, people go to jail for buying votes. But the real problem here is that ObamaCare is paying too much.

According to the Congressional Budget Office, the average subsidy ObamaCare offers for private health insurance will rise from $5,500 next year to more than $8,000 in 2023. But according to the Washington Post:

The price of one bona fide, registered American vote varies from place to place. But it is rarely more than a tank of gas.

Indeed, as a rising furor over voter fraud has prodded some states to mount extensive efforts against illegal voters, election-fraud cases more often involve citizens who sell their votes, usually remarkably cheaply. In West Virginia over the past decade, the cost was as low as $10. Last year in West Memphis, Ark., a statehouse candidate used $2 half-pints of vodka.

At the high end, corrupt candidates in Clay County, Ky., once paid $100. But that was probably too much: It attracted one woman who already had sold her vote. The man who bought it first was outraged, and he beat up the man who bought it second.

ObamaCare overpays for everything.

Topics: 
General, Government and Politics, Health Care

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