Topic: Government and Politics

The D.C. Circuit Grants En Banc Review of Halbig

My reaction to the D.C. Circuit’s decision to grant en banc review of Halbig v. Burwell in a nutshell:

  1. It is unnecessary.
  2. It is unwise.
  3. It is unfortunate.
  4. It appears political, as would a decision to overrule Halbig.
  5. It will likely only delay Supreme Court review.
  6. En banc review does not necessarily mean the court will overturn Halbig, though it doesn’t look good.
  7. I predict that even if the court overturns Halbig, the Obama administration will lose ground.
  8. The D.C. Circuit will not have the last word.

If you want to go outside the nutshell, where I unpack all this with more words and facts and links, go here

The D.C. Circuit Vacates Its Panel’s Halbig Decision

A quick note on unfortunate happenings at the U.S. Court of Appeals for the D.C. Circuit this morning: The court vacated its excellent July 22 decision in Halbig v. Burwell, which had held that Obamacare’s plain language precluded the federal government from subsidizing the health insurance premiums of policies people obtain through exchanges established by the federal government. Just hours after that July 22 decision came down, the Fourth Circuit Court of Appeals ruled the other way on the question in King v. Burwell, setting up a circuit split and a reason for the Supreme Court to promptly decide the question, especially given the scope and magnitude of the issues at stake (36 states have declined to establish state exchanges, for which Obamacare does provided subsidies).

Thus, with the D.C. Circuit now having vacated its three-judge panel’s decision and having agreed to rehear the case en banc (by the entire court), there is no longer a circuit split and less urgency for the Supreme Court to take up the issue. Other cases challenging the federal subsidies are coming along, but for the moment, this is where things are. For more on these issues, see Ilya’s latest post and a WSJ op-ed by Adam White, both written before this morning’s decision. It’s rare for any circuit, but especially for the D.C. Circuit, to grant en banc rehearings. But then nothing has been normal about Obamacare, which is what you should expect when so politicized a program is thrust upon the nation.

FSOC’s Arbitrary, Ever-Changing Double Standard

In the Dodd-Frank Act, Congress, without irony, decided the best way to end “too big to fail” was to have a committee of regulators label certain companies “too big to fail.”  That committee, established under Title I of Dodd-Frank, is called the Financial Stability Oversight Council (FSOC) and is chaired by the Treasury Secretary. Like so much of Dodd-Frank, FSOC gets to write its own rules. Unfortunately FSOC won’t even write those rules, but instead it has decided that it knows systemic risk when it sees it. This has led to an ad hoc process that almost makes the bailouts of 2008 look systematic.

Compare the process for asset management firms and that for insurance companies. In late 2013, the Treasury released a report on the asset management industry. It was widely viewed as an attempt to make the case for labeling some asset management firms “systemic.”  The report was widely criticized. Such criticism did not stop FSOC from conducting a public conference on the asset management industry in May 2014.  Whether it was the public reaction to the conference or the paper, FSOC has largely abandoned labeling asset managers as “too big to fail.”  That was an appropriate outcome as firms in that industry are not systemic and shouldn’t be lead to expect a federal rescue.

Now don’t get me wrong: A shoddy report and a conference do not constitute a thorough process. As someone who has overseen a rulemaking process, I can say they do not even meet the basics of the Administrative Procedures Act. But just when that process seemed wholly inadequate, along comes the “process” for insurance companies.

Not unexpectedly, AIG went along without a peep. Given its role in the crisis that’s not a surprise. But there’s been no report or even a conference on whether insurance companies pose systemic risk. Completing either one would, of course, require FSOC to define systemic risk and to offer some minimal metrics. Instead, what we have is unelected bureaucrats simply making it up as they go along.

And here I was thinking Dodd-Frank was meant to end the haphazard behavior of regulators in 2008 and lead us towards a predictable rules-based approach to ending systemic risk!

Washington Should Stop Praising Military Tyranny in Egypt

CAIRO—Egypt’s capital is crowded, busy, confused, and messy.  Security isn’t obvious, until you get close to a sensitive site, such as the Interior Ministry. 

The military has taken firm control, elevating its leader, Abdel Fata al-Sisi, to the presidency.  The army permitted dictator Hosni al-Mubarak’s ouster by street protests in 2011 because he planned to turn military rule into a family dynasty.

If ousted president Mohamed al-Morsi and the Muslim Brotherhood been defeated in a future election, they would have been discredited peacefully.  However, the coup turned the movement’s members into angry victims.  In Cairo they took over Rab’a al-Adawiya and al-Nahda Squares, just as the anti-Mubarak and anti-Morsi crowds had done in Tahir Square. 

The military government responded with a campaign of premeditated murder.

In a new report Human Rights Watch detailed the junta’s crimes.  From the beginning the military used deadly force with no concern for casualties.  In fact, the army began using live ammunition against protestors just two days after the coup. 

The most horrific episode occurred when the regime deployed soldiers, APCs, bulldozers, police, and snipers to destroy a vast tent village in Rab’a Square.  Explained HRW:  “security forces used lethal force indiscriminately, with snipers and gunmen inside and alongside APCs firing their weaponry on large crowds of protestors.  Dozens of witnesses also said they saw snipers fire from helicopters over Rab’a Square.” 

In roughly 12 hours HRW figured that at least 817 and likely more than 1000 people were slaughtered.  Since then, said HRW:  “Security forces have continued to use excessive lethal force against demonstrators.” 

Moreover, the regime moved against liberals and other critics, including youthful leaders of the revolution against Mubarak.  Bahey al-Din Hassan, head of the Cairo Institute for Human Rights Studies, argued that military control “is more horrible than the old regime.” 

In fact, by its own count the government has arrested 22,000 people, many of whom have been tortured.  When meeting a visiting delegation organized by the International Coalition for Freedoms and Rights of which I was part, Ayaalaa Hosni, spokeswoman for a women’s anti-coup group, complained that you can’t demonstrate without a warrant but if you “go to ask for a warrant you get arrested.”

Outside assessments are uniformly negative.  David Kramer, president of the group Freedom House, declared in June:  “the human rights situation has worsened compared to what it was at any point under Hosni Mubarak.”   His organization reported that Egypt had gone from “Partly Free” to “Not Free” after the coup, with significant deterioration across the board. 

In a separate study Freedom House rated Egypt’s media “not free.”  An organizer for press freedom told our delegation that ten journalists had been killed.  Scores had been shot and injured, more than 100 had been assaulted, and scores more had been arrested.  Another reporter said simply:  “Journalism has become a crime.”

Yet repression is unlikely to deliver stability.  Terrorism may be seen by more than jihadists as the only way to challenge a regime which bars peaceful dissent.  Mubarak’s jails helped turn Brotherhood member Ayman al-Zawahiri into al-Qaeda’s leader. 

There isn’t much the U.S. can do to change Cairo.  But the Obama administration could stop intervening constantly and maladroitly.  In fact, Washington’s influence is extremely limited.

As I wrote in Forbes online:  “The U.S. should work with Cairo on issues of shared interest but otherwise maintain substantial distance.  In particular, the administration should stop using foreign aid to bribe Egypt’s generals.  They don’t have to be paid to keep the peace and shouldn’t be paid for anything else.”

Egypt appears likely to end up without liberty or stability.  Instead of pretending to be in control, Washington should step back from a crisis which it cannot resolve.

They’re Not Making Jeff Smiths Like They Used To

Movie poster

For generations of Americans, “Jefferson Smith” was the archetype of the honest, hard-working man of the people who gets into politics to serve the public interest and stands up to powerful interests. Mr. Smith Goes to Washington is the quintessential movie about a corrupt system that can be toppled by a single man of integrity. So maybe it’s no surprise that there seem to be a lot of Jeff Smiths getting into politics. What better name to inspire confidence?

Unfortunately, Sen. Jeff Smith of some unnamed Western state would be mighty embarrassed by some of the Jeff Smiths who have come along in his wake.

Today in Washington, D.C., former city council candidate Jeff Smith was sentenced to 60 days in jail for accepting illegal campaign funds and making false reports to the city’s campaign finance office. Like D.C. mayor Vincent Gray, Smith was essentially accused of benefiting from an illegal shadow campaign run by a major donor who makes his money from city contracts.

Today’s Jeff Smith story reminded me of one from a few years ago. As Jason Zengerle reported in the New Republic, Missouri state senator Jeff Smith “was the brightest young star in the Missouri Democratic Party. Thanks to an award-winning documentary about him, he was also a national political figure—a crusading reformer whose combination of charisma, idealism, and intelligence prompted comparisons to Howard Dean, Paul Wellstone, and even Barack Obama. Although he was only in his first term, no one (least of all of Smith himself) doubted he was destined for greatness.”

Jefferson Smith was the leader of the Boy Rangers. Jeff Smith of Missouri taught political science at Washington University and had equally devoted young supporters. Indeed, that Jeff Smith was so Capra-esque – at least to liberal eyes – that filmmaker Frank Popper made a film about him. Zengerle writes that the film, “Can Mr. Smith Get to Washington Anymore?, is a minor masterpiece of the political documentary genre. After its release in 2006, it broadcast nationally on PBS’s prestigious ‘Independent Lens’ series and earned Popper, a first-time feature director, numerous festival accolades.”

But then it all went wrong. Right from the beginning, actually. In his first campaign, afraid of losing, Smith turned to some sketchy operatives who put together – whattaya know? – an illegal shadow campaign to attack his opponent. Eventually the FEC came calling, and then the FBI. Things spiraled out of control. One of the operatives ratted him out. His campaign manager committed suicide. Smith was sentenced to a year in jail.

I remember hearing back in Kentucky about a woman who refused to vote for a friend for public office because “if a man’s not ruint when he gets in there, he’s ruint when he comes out. And there’s no sense in ruining a good time.” Frank Capra’s fictional Jeff Smith could resist the temptations of power, but it seems that a lot of regular folks named Jeff Smith – or anything else – can’t.

 

 

Religious Liberty in China: The Good, the Bad, and the Ugly

BEIJING—Today China’s big cities look much like urban areas anywhere in the world. There are lots of cars. What I didn’t expect was to see a Christian “fish” on an auto. 

Religion is “on the rise,” one U.S. diplomat told me.

It also is under attack by the Chinese government.  As I wrote in the American Spectator online:  “When it comes to religious liberty in the People’s Republic of China, there’s the (surprisingly frequent) good, (not so constant) bad, and (still too often) ugly.”

China turned hostile to Christianity after the 1949 revolution. The PRC has routinely been ranked among the worst religious persecutors. 

In its latest report on religious liberty, the State Department observed: “The government exercised state control over religion and restricted the activities and personal freedom of religious adherents when these were perceived, even potentially, to threaten state or Chinese Communist Party (CCP) interests, including social stability. The government harassed, assaulted, detained, arrested, or sentenced to prison a number of religious adherents.” 

Nevertheless, the experience varied geographically:  “In some parts of the country, however, local authorities tacitly approved of or did not interfere with the activities of unregistered groups.”

The group China Aid, headed by Bob Fu, a former house church pastor, compiled a list of incidents. The authorities in Zhejiang Province have been particularly repressive, destroying churches and crosses. 

Provincial officials pointed to the zoning laws to justify this and similar actions elsewhere, but Renee Zia, of Chinese Human Rights Defenders, argued that it was just “an excuse for the current wave of clamping down on Christian churches.” The government’s real concern is Christianity’s growth. Provincial party chief Xia Baolong reportedly complained that Christian symbols were too “conspicuous.”   

Still, the situation in the PRC is far better than it was even a decade or two ago. The majority of persecution cases, wrote blogger Renee Riley, involved Christians who “were either engaged in activity which the government perceived as a threat, or they ran afoul of the economic or political interests of corrupt local leaders.” Open Doors reported that the government has “chosen not to strictly control Christian activities in most regions in China,” and that the majority of churches “are not registered, but tolerated.” 

The number of Christians was estimated in 2011 by Pew Research at 67 million and likely is much higher today. There already may be more Christians than Chinese Communist Party members. Yang figured there could be 247 million Christians by 2030. 

The PRC hopes to constrain Christianity by forcing it into a “patriotic” channel. Nevertheless, the PRC may not find it easy to create a Sinicized Christianity. I attended the 800-member Beijing Chaoyang Church. There were 70 baptisms on the day I attended. The church is state-sanctioned, but the sermon seemed orthodox theologically (simultaneous translation was provided for foreigners).

My friend Phil Sheldon, who regularly attends the church with his Chinese wife, spoke positively of his experience. He earlier wrote: “I have seen and heard Christianity expressed in public. I have been in restaurants with Christian music playing.”  And then there’s that car sporting a “fish”!

Even some CCP members recognize the challenge.  Admitted Wang: “If we rush to try to push for results and want to immediately ‘liberate’ people from the influence of religion, then it will have the opposite effect.” 

In the PRC today, people are ever less willing to worship the false god of communism.

The Future of Dollarization in Ecuador

A new “monetary and finance” law that was approved by Ecuador’s National Assembly in July, is expected to be signed into law any day now. Many suspect that this marks the beginning of the end for dollarization in Ecuador, which began in January of 2000. But the underlying threat to dollarization is the incessant growth of public spending. Losing dollarization would be a sad development, considering it is what has protected Ecuadorians from one of the worst evils of populism: high inflation.

The remarkable contribution dollarization has made to the Ecuadorian economy is worth noting. A 2010 study published by Ecuador’s central bank (BCE) analyzed the first decade of the absence of independent monetary policy and found that average GDP growth increased from -6.3 percent during the 1990s to 4.4 percent during the 2000s; annual inflation decreased from a high of 90 percent in September of 2000 to single digits within a year, and has averaged 3 percent since 2004. Additionally, interest rates went down immediately, thereby reducing the cost of capital. According to the World Bank, the percentage of Ecuadorians living on less than $2 a day (PPP) decreased from 37.7 percent in 2000 to 10.6 percent in 2009.

Of course, there are many problems dollarization cannot solve and the positive outcomes above are not solely due to it. But it probably has been one of the main factors contributing to Ecuadorian growth prior to and during our current “revolutionary” government. In fact, Ecuador owes its superior economic performance today–compared the two most prominent populist nations in the region, Argentina and Venezuela–mostly to dollarization.