On December 25, 2019 the Wall Street Journal had an editorial that discussed the involvement of bootleg THC vaping cartridges in the recent outbreak of vaping-related lung illnesses. For an editorial board that is usually very sophisticated in understanding and applying economics, I was very disappointed to witness how biases against the recreational use of marijuana and other currently illicit drugs can cloud the usually clear reasoning of the editors. Not only did the editorial cherry-pick facts to perpetuate unproven or long-discredited dogmas about the harmful effects of marijuana—a drug not nearly as dangerous as alcohol—but it also seemed to ignore the harmful unintended consequences that result from prohibition, which has a lot to do with the “Vaping-Marijuana Nexus.” This should never escape the attention of editorialists who are knowledgeable in economics. I was particularly disappointed in light of the editorial board’s history of opposing punitive taxes on tobacco and other politically incorrect but legal products, recognizing that such “sin taxes” only fuel an often-dangerous black market. My disappointment and frustration moved me to write this letter to the editor, which the Journal was gracious enough to publish today.

Most days, the Wall Street Journal OpEd page runs multiple unsigned editorials next to the letters and across from the opinion columns. Last Friday, however, the Editorial Board gave its entire platform to a single composition, titled “Elizabeth Warren Has a Plan, Oh My.”

The editorial’s thesis is to “show where the American left wants to go” by presenting Senator Elizabeth Warren’s (D‑Mass.) campaign platform for president, which “exceeds what the socialist dreamers of a century ago imagined.”

The guts of the editorial are 26 bullet points each describing Warren’s policy initiatives, including “Wealth tax,” “Medicare for all,” and “Free college.” After listing Sen. Warren’s various “plans for that,” the WSJ Board concludes:

All this adds up to such an expansion of government that the temptation is to dismiss it as fanciful. But Ms. Warren is a shrewd and disciplined politician who isn’t supporting these ideas on an ideological whim … The question for Democrats: Is this the agenda they want to put forward in 2020?”

For my part, I’d add that Republicans are little better than Democrats on this score, at least in practice (if not in campaign rhetoric). Last month, for example, large bipartisan majorities in Congress passed a $1.43 trillion spending bill—up $50 billion over the previous year—that also raises the legal vaping age to 21. Our Republican president quickly signed the package. The upshot is that both parties collaborated on a spending bill defined by principles of Big Government and the Nanny State.

Setting aside the limited scope of the Editorial Board’s case, I have a bone to pick with one of their policy arguments against Sen. Warren.

Specifically, the editorial’s last bullet point, titled “Miscellaneous,” includes Warren’s pitch to “give congressional staff ‘competitive salaries.’” If the WSJWSJ‘s‘s institutional voice is to be believed, then lawmaker spending on congressional staff reflects the “expansion of government” and even “socialism.”

I share the Board’s concern regarding overweening government, but I think the editorial misses the mark on Congress’s support personnel. Though perhaps counter-intuitive, investment in congressional staff is an essential complement to the WSJ’s avowed goal—that is, checking the “expansion of government.”

Of course, Big Government today is largely coterminous with the administrative state. From 1995 to 2017, the executive branch issued over 92,000 rules, compared to 4,400 laws enacted by Congress. The regulatory agencies behind all this lawmaking didn’t materialize from thin air; rather, they were created by legislation, and Congress paired these “delegations” with an oversight framework.

Passed during the administrative state’s adolescence, the 1946 Legislative Reorganization Act established Congress’s strategy for supervising the regulators. The Act tasked issue-specific committees with a duty to conduct “continuous watchfulness” over administrative policymaking. To execute this mandate, the Act provided committees with professional staffs.

By design, therefore, committee staffers are crucial cogs in Congress’s oversight machinery, and this understanding served as conventional wisdom among lawmakers through much of the last century. Yet this prevailing sense abated during the 1980s and, ultimately, disappeared by the mid-1990s.

What happened? A shifting power landscape on Capitol Hill led to the decline of staff, both in status and number.

After World War Two, committees were the most consequential institutions in Congress; now, parties fill that role. Part of the reason for this change is demographic: The parties became more homogenous with the demise of southern Democrats and northeastern Republicans. At the same time that party rank-and-file were taking on hive-minds, opportunistic party leaders gamed the House and Senate rules to centralize power in their hands.

For ascendant party leadership in Congress, strong committees were a roadblock to the consolidation of authority. To weaken committees, party leaders sought to weaken committee staff.

Matters came to a head in 1995 on the first day of the 104th Congress, when Speaker Newt Gingrich and Republican leadership slashed committee staff by one-third, and the Senate soon followed suit. Because it was in the interest of both parties’ leaders to subdue committees, staffing never recovered

For example, there were 2,115 professional personnel in House and Senate standing committees in 2015, or less than two-thirds the total in 1991 (3,528). To be fair, party leaders invested in some parts of Congress–themselves. From 1995 to 2011, House and Senate leadership staff increased 35 percent and 38 percent (respectively).

Simply put, Congress doesn’t have the tools to oversee the administrative state it created. The WSJ grows a false narrative when its Editorial Board opines that Warren’s plan for congressional staff reflects an “expansion of government.” In a less sincere tone—his real purpose was power—Rep. Gingrich advanced the same arguments when he dropped the ax on committee staff in 1995. Though untrue and often disingenuous, it makes for a great talking point to claim that Congress should lead by example by starving itself in the name of fiscal prudence. Anyone who claims otherwise is branded as a spendthrift. That’s why staffing levels have never recovered.

In conclusion, I’ll turn to R St. Institute’s Casey Burgat, who’s been sounding this alarm for a while. He warns:

As the size and complexity of the federal government has continued to grow, Congress has deprioritized spending within the offices most responsible for legislating and conducting Executive Branch oversight.

A just-published National Bureau of Economic Research working paper provides empiric evidence that the new “war on vaping” runs at cross-purposes with public health efforts aimed at getting tobacco smokers to quit.

Nicotine e‑cigarettes are twice as effective as nicotine patches, gum, or other nicotine replacements in achieving smoking cessation according to a 2019 study published in the New England Journal of Medicine.

In the NBER working paper the researchers studied the impact of the 95 percent tax on the wholesale price of e‑cigarettes that was enacted in Minnesota, the first of the states to tax e‑cigarettes. (There is no federal tax on e‑cigarettes.) They used the National Cancer Institute Tobacco Use Supplement to the Current Population Survey from 1992–2015 in conjunction with a synthetic control difference-in-differences approach and concluded:

Our results suggest that in the sample period about 32,400 additional adult smokers would have quit smoking in Minnesota in the absence of the tax. If this tax were imposed on a national level about 1.8 million smokers would be deterred from quitting in a ten year period. The taxation of e‑cigarettes at the same rate as cigarettes could deter more than 2.75 million smokers nationally from quitting in the same period.

On New Year’s Eve the Washington Post reported the Trump administration plans to announce a ban on flavored vaping pods while sparing refillable open-tank systems commonly sold in vaping shops. Menthol and tobacco flavored vaping pods will still be permitted. This is seen as a compromise between a complete ban on flavored vaping and the status quo. President Trump was concerned that a complete ban will irreparably harm vaping retailers.

While this proposal is not as damaging as a complete ban, it still stands to interfere with efforts by adults to quit smoking. Multiple surveys show they prefer the flavored variety to quit tobacco and the flavored pod ban makes that more inconvenient. And if the goal is to reduce teen vaping (which has increased as teen tobacco smoking has plunged), it is unclear if the ban of all flavored pods except menthol and tobacco will have much impact, given survey reports that menthol is one of the most popular flavors among teens.

This proposal will likely cause many teen and adult vapers to shift to the menthol flavor, but it may also cause some to look to the black market for flavored pods, with all of the health risks that entails. It also risks disrupting the continued decline in adult tobacco smoking. 

Mrs. Soon Pak manages Dami Hospitality, LLC, a company that runs hotels and motels in Colorado. Pak is a Korean immigrant with minimal proficiency in English. She relies on third-party professionals to assist her in maintaining compliance with the myriad regulations that even native English speakers struggle to understand. Between 2006 and 2014, Dami’s insurance agent failed to renew the company’s worker’s compensation insurance, despite assuring Pak that Dami maintained full coverage.


In 2014, the state division of workers’ compensation gave notice that Dami’s policy had lapsed, and Pak immediately secured coverage without any employee suffering any harm. A few weeks later, the division imposed a fine of $841,200, calculated at a $25–500 daily rate that the division had allowed to accumulate for eight years before finally giving notice to the company. Put simply, the state assessed nearly a million-dollar fine against a small corporation—which grosses less than a quarter of the total fine—for a violation that was solved immediately after notice was received, with no actual harm done to anyone.

However one defines “excessive,” this fine is excessive compared to Dami’s violation. To frame it in the worker’s comp context, if an employee is killed on a job, his dependent receives $250,000. That means the Colorado Labor Department considers the results of Dami’s lazy insurance agent to be worse than three workplace fatalities.

Dami sought relief in the Colorado courts, arguing that the fine violated the Excessive Fines Clause of the Eighth Amendment (which the U.S. Supreme Court held just this part term applies to the states). Cato filed an amicus brief supporting Dami before the Colorado Supreme Court, arguing that the excessive fines clause applies to corporations (which the state had been denying). The Colorado Supreme Court ruled that the Excessive Fines Clause does indeed apply to corporations and that a fine that is financially ruinous may be deemed unconstitutionally excessive, but that the total fine in this case cannot be considered in the aggregate. The question, the court said, is limited to evaluating whether each individual daily fine is financially ruinous. While the decision was favorable to Dami and Mrs. Pak in part, as one justice wrote in dissent, confining the excessiveness inquiry to the daily fine ($250-$500) misses the point of the constitutional exercise.

Both Colorado and Dami were unsatisfied with the ruling and have asked the U.S. Supreme Court to step in. The state has asked the Court to review (1) whether the Excessive Fines Clause applies to corporations at all, and (2) even if it does, whether the financial ruin the fine may cause is relevant to determining its excessiveness. Dami has filed a cross-petition, asking the Court to take up both of those issues—to finally resolve all the issues in this expensive and time-consuming enforcement action—and also to look at whether the fine must be considered in the aggregate.

The Supreme Court will review at its conference next week (January 10) whether to take up this case—which it should.

After bailing out two of the “Big 3” Detroit automakers, President Obama called in his markers during the summer of 2011. That’s when his administration announced an agreement with major car manufacturers to increase federal fuel economy standards to 54.5 miles per gallon (MPG) by 2025.

At the time, fleet averages (including cars and light-duty trucks) were about 27 MPG; doubling that figure in 14 years was a tall order requiring technological breakthroughs that might or might not happen.

Accordingly, the 2011 agreement included an escape hatch. The plan stipulated for a “mid-term review” process, by which regulatory agencies could revisit their fuel efficiency targets and change course if necessary.

Under the agreement’s terms, the mid-term review was due by April of 2018. All the parties to the original accord understood that the mid-term review would entail a process that unfolded up to the 2018 deadline in order to best inform the final decision with the latest data.

If Hillary Clinton had won in 2016, the process would have occurred as initially expected. But then Trump won, and the Obama administration scrambled to finish a mid-term review during the outgoing president’s lame-duck session.

After a six-week rulemaking conducted with breakneck speed, Obama’s agencies completed their mid-term review with only eight days to spare before Trump occupied the White House. To no one’s surprise, the Obama administration affirmed its original 54.5 MPG (by 2025) target.

About a month after President Trump took office, his administration announced it would reconsider Obama’s lame-duck determination. Ultimately, the Trump administration proposed to freeze the fuel efficiency standards at their 2021 targets through 2025. That proposal, however, has yet to be finalized. When it is made final, it will be challenged in court by progressive state attorneys general and environmental groups.

With this context in mind, let’s turn to Europe, which has more stringent fuel efficiency standards than we do. To be precise, the European Union regulates tailpipe emissions of greenhouse gases, the control of which is effectively coterminous with the regulation of fuel efficiency.

Current regulations for the EU translate to fuel efficiency standards that are roughly commensurate with what the Obama-era standards would have required by 2023, based on my eyeball approximation of this New York Times chart comparing the two regimes.

So, how’s that working out for Europeans?

Not well, according to last Thursday’s fascinating Big Read in the Financial Times by Peter Campbell. The sub-headline says it all: “rather than embrace the new technology, consumers seem more interested in larger, petrol-fueled cars.”

The article starts with a charming story about how the European Union’s regulatory framework affected a recent automobile purchase in Spain:

When Blas Arambilet tried to buy an electric car in April, something strange happened.

Months after ordering a white Kia e‑Niro from his local Barcelona showroom, he received a call from the dealership. Kia could not deliver the car this year, a salesman explained, because it needed to book the sale in 2020 in order to help meet tough new targets for [fuel economy].

In sum, car companies are delaying delivery of their least polluting cars, and their purpose is to game compliance with the European Union’s fuel economy regulations. Perversely, emissions-conscious consumers—the very buyers whom the EU’s fuel efficiency rules are supposed to favor—are the first to feel the unintended consequences.

But it’s not just environmental-minded buyers who stand to lose out. According to the Financial Times, sports car enthusiasts might be denied their need for speed:

[Daimler] is expected by many dealers to cut production of its most polluting models. In its crosshairs is the Mercedes AMG range, its highest specification models that have supercar acceleration and the body of a family saloon. A reduction of 75 percent in the availability of some [of these] models … is expected by several retail executives … 

More broadly, the general car-buying public is in for a bumpy ride. Per the FT:

“There is going to be an imbalance between what consumers want and what manufacturers want to sell them,” say Robert Forrester, chief executive of the dealership group Vertu … [V]anishingly few buyers are turning to electric cars … [they’re instead] switching to heavier sports utility vehicles.

For their part, carmakers are playing a dangerous game of chicken with regulators. The FT reports that manufacturers would be on the hook for $27 billion in fines were they to sell the same mix in 2021 as they did last year.

In an understatement, one anonymous industry insider told the newspaper that “the regulation is not aligned with what is happening in the market.”

Inconvenient delivery dates for super fuel-efficient cars are merely the first mile of a long and uncomfortable road trip, but what’s the destination? A dramatic and government-imposed scarcity of what the Financial Times calls “American-style SUVs”—that is, the cars that buyers want—seems likely unless either consumer preferences or EU regulators pull a u‑turn. 

Because these “American-style SUVs” engender higher profit margins, they are essential to many automakers’ bottom lines. To the extent manufacturers are not permitted to sell these “gas guzzlers,” there will be pileups in the sector, in the short term at the very least, as the industry is compelled to change lanes to a new business model.

The upshot is that consumers and automakers will be left in the dust if EU regulators keep their pedal to the metal with fuel efficiency requirements that remain grossly out of “alignment” with what buyers want. Could it happen here? 

One of the Constitution’s chief protections for liberty is the separation of powers. The legislative power is granted to Congress, the judicial power to the courts, and the executive power to the president. This division cannot be altered by anything short of a constitutional amendment. Still, since the beginning of the 20th century, Congress has enjoyed considerable success in limiting the president’s executive power through the creation of what are known as “independent agencies.”

One of the main differences between independent agencies and traditional executive departments is that while officers of the latter serve at the pleasure of the president, the heads of independent agencies are insulated from presidential removal except “for cause.” This structure denies the president the ability to exert control over independent agencies, even though they exercise significant executive power by enforcing laws and pursuing investigations.

In 2010, Congress added another independent agency to the ever-expanding administrative state: the Consumer Financial Protection Bureau. The CFPB is even less accountable to the democratically elected branches because, unlike every independent agency created in the 20th century, all of which are headed by multi-member commissions, the CFPB is headed by a single director, removable only for cause. The CFPB director has near-unilateral authority to enforce 19 federal laws, without answering to anyone. This is a problem.

Supporters of the CFPB’s constitutionality—a group that doesn’t now include the CFPB itself, as the Trump administration has changed sides—seek refuge in a 1935 Supreme Court case called Humphrey’s Executor. In that case, the Court, flying in the face of history and precedent, declared that limitations on the president’s ability to remove the heads of independent agencies were constitutional.

Since 1935, the rationale for that decision has become increasingly muddled with subsequent inconsistent cases. The Court has recently shown a willingness to return to enforcing the Constitution’s separation of powers principles but has lacked an opportunity to address Humphrey’s Executor directly.

Thankfully, the Court now has a case where it can do just that, in a case brought by a law firm that assists in resolving personal-debt issues. The Supreme Court agreed to hear the case of Seila Law v. CFPB, with oral argument scheduled for March 3. Cato has now filed an amicus brief urging the Supreme Court to clarify the constitutional test for removal limitations and find the CFPB unconstitutionally structured. (Cato also filed a brief supporting Seila Law in its request for the Court to hear this case, and has filed twice in the lower courts arguing that the CFPB is unconstitutional.) In our brief, we argue that the best path forward for the Court is to narrow Humphrey’s Executor—or just craft a new “Seila Law” test—so as to allow removal limitations only if the officer in question doesn’t exercise any executive power.

The Supreme Court has an obligation to defend our separation of powers. If the Court allows the CFPB to continue as currently constituted, it will allow major violations of constitutionally protected liberty by a powerful and unaccountable federal agency. If the Court allows removal doctrine to remain muddled and incoherent, it will only lead to more confusion and inconsistency in the lower courts and in Congress. The Court should thus pull the plug on Humphrey’s Executor’s—salvaging its useful parts into a new, more coherent removal doctrine—in the context of finding the CFPB unconstitutional.

As of December 2019, eight states have acted to ban the sale of flavored e‑cigarettes. Other states are contemplating bans in 2020.

I have pointed out here and here why banning flavored vaping products will deny adult tobacco smokers a proven means of quitting harmful tobacco smoking.

In fact, nicotine e‑cigarettes—of which more than 90 percent of adult tobacco quitters prefer the flavored kind—are twice as effective as nicotine gum or patches in helping smokers stop. We recently learned from the Centers for Disease Control and Prevention that virtually every case of EVALI (e‑cigarette or vaping product-use associated lung injury) is due to bootleg THC vaping cartridges containing vitamin E acetate.

The states of Washington and Colorado, where recreational cannabis is legal, banned the use of vitamin E acetate in the manufacture of any THC vaping cartridges by state-based companies in reaction to the CDC report.

It has been illegal to sell e‑cigarettes to persons under age 18 since 2016. The reason lawmakers are targeting flavored vaping products is because underage e‑cigarette users prefer the flavored variety. But, as mentioned above, so do adults trying to quit tobacco.

Now comes a new study published in the December issue of the peer-reviewed journal Addictive Behaviors Reports that found 80 percent of adolescents aged 13–17 who were able to obtain JUUL brand e‑cigarettes got them from “at least one social source (e.g. ‘someone bought for me, someone offered me’) in the past 30 days.” The rest were able to buy them, usually at convenience stores or gas stations.

Keep in mind, JUUL brand e‑cigarettes, the most popular brand on the market, are legally produced and do not contain vitamin E or THC (which is federally prohibited).

The many arguments against a panic-driven ban on flavored e‑cigarettes resonated with US Senator Ron Johnson (R‑Wisconsin), who sent a letter, co-signed by several other senators, urging President Trump against going through with his plans to implement a federal ban on flavored vaping products. The letter appeared to help. The President backed off from his plan in late November.

In announcing the change, President Trump said, “If you don’t give it [flavored vaping cartridges] to them, it’s going to come here illegally.” He’s correct.

There is already evidence that the Mexican drug cartels are getting into the vaping cartridge business. Now with this new evidence of the ease with which teens are able get safer and legally produced e‑cigarettes through “social sources,” it is easy to see how dangerous, tainted, products smuggled along the cartel routes will quickly fill the void created by a flavored vaping ban.

State lawmakers should restrain the impulse to “do something” in reaction to a largely media-driven panic that ignores the abundant evidence.