Topic: Government and Politics

Pruitt v. Burwell: A Victory for the Rule of Law

From Darwin’s Fool:

The U.S. District Court for the Eastern District of Oklahoma handed the Obama administration another – and a much harsher — defeat in one of four lawsuits challenging the IRS’s attempt to implement ObamaCare’s major taxing and spending provisions where the law does not authorize them. The Patient Protection and Affordable Care Act provides that its subsidies for private health insurance, its employer mandate, and to a large extent its individual mandate only take effect within a state if the state establishes a health insurance “Exchange.” Two-thirds (36) of the states declined to establish Exchanges, which should have freed more than 50 million Americans from those taxes. Instead, the Obama administration decided to implement those taxes and expenditures in those 36 states anyway. Today’s ruling was in Pruitt v. Burwell, a case brought by Oklahoma attorney general Scott Pruitt.

These cases saw two appellate-court rulings on the same day, July 22. In Halbig v. Burwella three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ordered the administration to stop. (The full D.C. Circuit has agreed to review the case en banc on December 17, a move that automatically vacates the panel ruling.) In King v. Burwell, the Fourth Circuit implausibly gave the IRS the thumbs-up. (The plaintiffs have appealed that ruling to the Supreme Court.) A fourth case, Indiana v. IRS, brought by Indiana attorney general Greg Zoeller, goes to oral arguments in federal district court on October 9.

Today, federal judge Ronald A. White issued a ruling in Pruitt that sided with Halbig against King, and eviscerated the arguments made by the (more senior) judges who sided with the government in those cases…

Read the rest.

Government Crowding Out, USPS Style

This is a really bad policy idea: the U.S. Postal Service wants to get into the grocery delivery business. Economists will sometimes support government interventions in industries where there are serious market failures. But with grocery delivery, private businesses are already performing the service, and no market failure is evident.

The USPS grocery idea is a desperate attempt to save the agency’s hide, rather than to solve any problems in the marketplace. The Washington Post frames it correctly: “After nearly six years of multibillion-dollar losses, the U.S. Postal Service has developed a new plan to help turn its finances around: Daily grocery deliveries.”

The problem is that government expansion into an activity squeezes out private providers and deters entrepreneurs from getting in. As the government expands, the private sector shrinks. Such “crowding out” occurs in many areas. An op-ed in the Wall Street Journal [$] today on retirement savings in different countries notes, “OECD data show a strong negative relationship between the generosity of public pensions and the income that retirees collect from work and private saving.”

The decline in mail volumes is prompting the USPS to extend its tentacles. GovExec reports, “from banking to passport photos, nearly all postal reform stakeholders agree any legislation must unchain the Postal Service to leverage its unique, in-every-community network to create new sources of revenue.” By “stakeholders,” GovExec appears to mean groups—such as the labor unions—that benefit from the subsidized status quo.

The Wall Street Journal reports [$] that the grocery gambit “is the latest in a string of aggressive moves by the Postal Service to compete in the package-delivery market.” But why would we want the government “aggressively” undermining private businesses, especially in an industry like package delivery that is already efficient and competitive?

If the USPS expands into new areas such banking and groceries, we will end up with a mess of cross-subsidies between the agency’s different activities. Banks, for example, would complain that subsidized USPS banking was undercutting them, which would be inefficient and unfair. Such disputes would be chronic, and each dispute would descend into a battle over accounting between lobby groups in front of Congress.

For more efficiency and less lobbying, Congress should be encouraging the USPS to shrink, not expand. Does it make sense for a letter carrier to deliver groceries? The best way to find out is to privatize the letter carrier, repeal its legal monopoly, and then let it have a go. Postal privatization works. Britain, Germany, and the Netherlands have shown the way. 

Amtrak Shouldn’t Get to Write Its Own Ticket

Article One, Section One of the Constitution vests “all legislative powers” in Congress. The sovereign power to make laws comes from the people, so their representatives—Congress—should make those laws.

It sounds simple enough, but once the federal government started ballooning in size and regulating everything under the sun, that simple understanding had to go. There was too much governing for Congress to handle on its own, so the courts adjusted, allowing a proliferation of government agencies to exercise lawmaking power, within certain guidelines.&

We’ve now apparently gotten to the point, however, that there’s so much governing to do that it’s too much for the government to handle on its own. In a case now before the Supreme Court, Amtrak—the for-profit, quasi-public entity that the federal government has deemed private for these purposes—has been given a part to play in making laws to regulate its competitors in the rail transportation industry.

The Federal Government and American Indians

As research for this essay on the Bureau of Indian Affairs, I visited the Smithsonian National Museum of the American Indian (NMAI). I found virtually no information useful for my project.

I stopped by the museum information desk on the way out and said something to the effect, “There is very little here about the relationship between Indians and the federal government, yet that relationship is central to the story of American Indians over the last two centuries.” A few months ago, I emailed a similar complaint to the head of the NMAI, and he did kindly respond to me.

The museum has now taken a big step toward fixing the problem with its new exhibit about the history of treaties between tribes and the federal government. It’s a good exhibit, telling some of the stories about how the government deceived and cheated the Indians again and again, depriving them of their lands, resources, and freedom.

The general topic is interesting to me because it illustrates numerous libertarian themes, including the arrogance and dishonesty of federal officials, the eagerness of officials to substitute their own goals for individual freedom, government corruption, the failure of top-down planning from Washington, and the inability of hand-outs to create lasting prosperity.

As I discuss in my essay, there has been good news on Indian reservations in recent decades. But the federal government continues to fail in creating the legal structure needed so that people on reservations can prosper. One long-standing problem is the very poor functioning of law enforcement. In a story today about Indian tribes in North Dakota, the Washington Post says:

Investigating crime on Fort Berthold is more difficult than most places because the reservation sits in six different counties each with its own sheriff — some of whom do not have a good relationship with the tribe, according to tribal members. If the victim and suspect are both Native American, the tribal police or the FBI handles the arrest. But if the suspect is not Native American, in most cases the tribal police can detain the suspect but then have to call the sheriff in the county where the crime occurred. Sometimes they have to wait several hours before a deputy arrives to make the arrest. In a murder case, the state or the FBI might be involved, depending on the race of the victim and the suspect.

“There are volumes of treatises on Indian law that are written about this stuff,” Purdon said. “It’s very complicated. And we’re asking guys with guns and badges in uniforms at 3:30 in the morning with people yelling at each other to make these decisions — to understand the law and be able to apply it.”

I don’t know what the best solution to these particular problems is. I do know that the U.S. Constitution empowered the federal government to engage with the tribes, and that Congress should spend more time tackling such fundamental issues. Unfortunately, most members of Congress focus most of their efforts on hundreds of programs not authorized by the Constitution.

Anyway, kudos to the Washington Post for doing a series on justice issues in Native American communities. And kudos to the NMAI for informing the public about the government’s often appalling behavior over two centuries of dealing with the first Americans.

Democrats and Their Mansions, Again

Two articles in today’s Washington Post Real Estate section remind me of how off-target a Post political article was a couple of months ago. The House of the Week is Paul and Bunny Mellon’s Upperville, Va., estate, which features a 10,000-square-foot main house on 2,000 acres and is being offered for $70 million. The Mellons often entertained their friends John F. and Jacqueline Kennedy there. Bunny Mellon, the daughter of the man who cofounded the Warner-Lambert drug company, married the heir to the Mellon Bank fortune. Sadly, she made headlines late in her long life for her multi-million-dollar support of Sen. John Edwards’s presidential campaign, including money to cover up his extramarital affair.

Norton Manor

Meanwhile, the feature article in the Real Estate section looks at “an American palace,” a 40,000-square-foot house (and you thought the Mellons were extravagant at 10,000 square feet!) in Potomac, Md., built by a businessman who started a company with a federal grant, built it on government contracts, and then sold it for hundreds of millions of dollars. Frank Islam says that “‘to whom much is given, much is expected.’ It’s our responsibility to give back and share.” And share he does, with the kind of people who made all that government largesse possible:

Since moving into their 14-bedroom, 23-bathroom estate in 2013, the homeowners have regularly staged events for the Democratic Party. They held a June dinner attended by Vice President Biden and a fundraiser for Sen. Al Franken (D-Minn.) this month. 

Islam and Driesman have hosted nearly all the region’s Democrats, including Maryland Gov. Martin O’Malley and Lt. Gov. Anthony Brown; Sens. Timothy M. Kaine of Virginia and Benjamin L. Cardin of Maryland; and Montgomery County Executive Isiah Leggett.

All of which reminded me of another Post story by a longtime reporter back in May, which turns out to have been about the very same mansion:

The Potomac estate of IT entrepreneur and philanthropist Frank Islam seemed more fitting for a Republican soiree than a Democratic fundraiser, some of Maryland’s top elected officials said Wednesday….

“There are not too many people who own homes like this who are great Democrats,” Sen. Benjamin L. Cardin (D-Md.) told the audience of about 400.

As I said at the time, “Democrats don’t have much trouble finding billionaires and mansions for fundraising events. Reporters shouldn’t act like it’s an unusual event.”  

A month after that Sen. Harry Reid declared in one of his tirades about billionaires in politics that the Democratic party “doesn’t have many billionaires.” (Or maybe he said “any billionaires”; the audio is unclear.) Politifact found plenty of billionaire donors to both parties. Whatever you think of many politics, reporters should stop recycling Democratic spin that big money is found on one side of the aisle.

 

Land Use and Local Government: The Facts On the Ground Are Libertarian

Prof. Kenneth Stahl, who directs the Environmental Land Use and Real Estate Law Program at Chapman University School of Law, has a post at Concurring Opinions asking why libertarians aren’t more numerous among academic specialists in local government and land use law. Stahl describes his own views as siding with “leftists rather than libertarians,” that is to say, those who “have some confidence in the ability of government to solve social problems”: 

Nevertheless, were you to pick up a randomly selected piece of left-leaning land use or local government scholarship (including my own) you would likely witness a searing indictment of the way local governments operate. You would read that the land use decisionmaking process is usually a conflict between deep-pocketed developers who use campaign contributions to elect pro-growth politicians and affluent homeowners who use their ample resources to resist change that might negatively affect their property values. Land use “planning”—never a great success to begin with—has largely been displaced by the “fiscalization” of land use, in which land use decisions are based primarily on a proposed land use’s anticipated contribution to (or drain upon) a municipality’s revenues. Public schools in suburban areas have essentially been privatized due to exclusionary zoning practices, and thus placed off limits to the urban poor, whereas public schools in cities have been plundered by ravenous teachers’ unions.

… It hardly paints a pretty picture of local government. Yet, most leftists’ prescription is more government. 

To put it differently, libertarian analysis better explains what actually goes on in local government than does the standard progressive faith in the competence of government to correct supposed market failure. The post (read it in full!) goes on to discuss specifics such as annexation, incorporation, and economic stratification-by-jurisdiction; the relative success of lightly governed Houston in achieving low housing costs and attracting newcomers and economic growth; and the transference of progressives’ unmet hopes to regionalization, so memorably summed up by Jane Jacobs years ago: “A region is an area safely larger than the last one to whose problem we found no solution.”

Stahl: 

So why would left-leaning scholars, who have seen so clearly the failures of local government, place so much faith in a largely untested restructuring of governmental institutions, rather than looking to less government as the solution?

Great question.

Use Education to Transform China From Within

BEIJING—China’s university system is growing.  However, the People’s Republic of China still lags behind the U.S. and other Western nations.  Chinese students increasingly are heading to America for higher education. 

While recently playing tourist in Beijing I spoke to a number of young Chinese.  They were bright and inquisitive, ambitious and nationalistic.  They worried about finding good jobs and were irritated by government restrictions on their freedom. 

Beijing’s global influence depends upon domestic economic growth and political stability.  And that ultimately depends upon China’s young. 

The PRC’s university students today are most likely to become the country’s leaders tomorrow.  The number of college graduates has increased to seven million, a four-fold jump over the last decade. 

While the number of universities in China is growing, few have national, let alone international, reputations.  Undoubtedly that will change over time.  Today, however, competition for the few available spots at top schools is extraordinary. 

For instance, Peking and Tsinghua Universities are the only Chinese universities among the world’s top 100.  They have space only for 6000 new students a year. 

Obviously, far more Chinese students could succeed, indeed thrive, at fine universities.  So more than 400,000 young Chinese are heading abroad every year.