Oh, the Hyperbole!

I’m generally a fan of the efforts by WikiLeaks to publish secret government documents.  There may be times where particular documents are too sensitive to put out there, but for the most part I think the government is being unnecessarily secretive.

However, in terms of commentary on the documents it publishes, WikiLeaks doesn’t always know what it is talking about.  Here is what it said recently about a draft text of an international negotation on freeing up trade in services (the Trade in Services Agreement, or TiSA):

Today, 1500 CEST Wednesday, 1 July 2015, WikiLeaks releases a modern journalistic holy grail: the secret Core Text for the largest ‘trade deal’ in history, the TiSA (Trade In Services Agreement), whose 52 nations together comprise two-thirds of global GDP. The negotiating parties are the United States, the 28 members of the European Union and 23 other countries, including Turkey, Mexico, Canada, Australia, Pakistan, Taiwan and Israel.

While the proposed Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Pact (TTIP) have become well known in recent months, the TiSA is the largest component of the United States’ strategic neoliberal ‘trade’ treaty triumvirate. Together, the three treaties form not only a new legal order shaped for transnational corporations, but a new economic “grand enclosure”, which excludes China and all other BRICS countries.

Wow, “a new legal order shaped for transnational corporations”! That sounds scary! We better avoid that!

It also sounds like a massive exaggeration of what’s in the legal text. WikiLeaks seems to be taking the view of one trade critic as fact. There are certainly arguments that, in their efforts to promote free international trade in services, the governments working on this treaty haven’t gotten the balance between economic efficiency and national autonomy exactly right. But I think the right approach for WikiLeaks, instead of assuming a massive corporate conspiracy, is to publish the documents it finds and then offer to host a discussion among various experts about what the text actually says and what its impact will be.

Police Misconduct — The Worst Case in June

Over at Cato’s Police Misconduct web site, we have identified the worst case for June.  It goes to the police department in Carrollton, Kentucky.

Adam Horine was a homeless person who was arrested for some petty offense. Horine then appeared before Judge Elizabeth Chandler to determine whether he wanted to go to trial, or plead guilty to the charges. Horine said he wanted to represent himself in the case and he gave the judge some rambling answers to her questions. Horine indicated that he had problems and did not seem angry when the judge ordered that he be sent to a hospital for a mental health evaluation.

This is when things took a bizzare turn. Instead of following the judge’s order, the local police chief, Michael Willhoite, had one of his deputies put Horine, against his wishes, on a 28 hour bus ride to Florida. No one accompanied Horine on the bus and no one was expected to meet him when the bus trip ended in Florida. The idea seemed to be to push their problem prisoner on someone else. (One wonders whether that was the first time that this “police technique” was used.)

Adding insult to injury, the police would later charge Horine with a new crime, “escape from custody” – even though the police themselves purchased the bus ticket and placed the mentally distressed Horine on the bus.

The Obamacare Giveaway, Wisconsin Edition: Earn $62k and Get Free Insurance

The King v. Burwell decision last month highlighted the role of the premium tax credit (i.e. “subsidies”) in Obamacare. I have examined the structure of the subsidies quite carefully, and was shocked by their size. I’ll try to educate you about this, state-by-state. Today, I’m starting with Wisconsin, which has some of the largest giveaways on the federal exchange.

Among all individuals aged 55 to 64 in Wisconsin, approximately 70% – or 522,000 people – rely on employer coverage, where the odds are high that they’re paying something out of their own pocket for monthly premiums.

Consider either a single person earning $41,000, or a married couple earning $62,500. Each is 64-years-old, a non-smoker, and lives in Florence, Wisconsin (ZIP code 54121).  The structure of Obamacare subsidies means that many individuals who are not poor can find health plans with such large subsidies that they pay absolutely nothing for premiums out of their own pocket. In this case, the married couple or single person would qualify for the Molina Marketplace Bronze Plan with zero monthly premium.

See the graphic below for a married couple:

Married Couple, Earn $62,500, Florence, WI
Pay $0 per year for premiums

Although plenty of other plans exist – with higher premiums but less cost sharing– this plan is essentially a giveaway for those who didn’t want to purchase coverage, but were mandated to do so by the government. And if a near-elderly person (in the age range of 55 to 64) happens to get sick, they could always move into a plan with generous cost sharing provisions in future years, a problem that economist Martin Feldstein calls Obamacare’s fatal flaw.

What Greek “Austerity”?

It’s hard to find anything written or spoken about Greece that doesn’t contain a great deal of hand wringing about the alleged austerity – brutal fiscal austerity – that the Greek government has been forced to endure at the hands of the so-called troika. This is Alice in Wonderland economics. It supports my 95% rule: 95% of what you read about economics and finance is either wrong or irrelevant.

The following chart contains the facts courtesy of Eurostat. Social security spending as a percentage of GDP in Greece is clearly bloated relative to the average European Union country—even more so if you only consider the 16 countries that joined the EU after the Maastricht Treaty was signed in 1992. To bring the government in Athens into line with Europe, a serious diet would be necessary – much more serious than anything prescribed by the troika.

Social Security Fund

Washington Helped Create Puerto Rican Crisis

On Monday, I highlighted the fiscal crisis in Puerto Rico. The island’s governor announced that it cannot fully pay back its $70 billion in outstanding debt. Much of the attention this week has focused on how Puerto Rico has mismanaged its finances. San Juan has delayed necessary reforms. But missing in most news articles is the role that Washington, D.C. has played in creating the mess.

Over at Fox News, I have a new piece describing how the federal government has contributed to the island’s problems.

For instance, the federal minimum wage contributes to Puerto Rico’s challenges:

The federal minimum wage of $7.25 an hour applies on the island. The minimum wage’s effects are well-known, but it has disproportionate influence in Puerto Rico. The island’s median income is only 40 percent of the mainland. Twenty-eight percent of Puerto Rico residents earn $8.50 an hour or less, compared to 3 percent on the mainland. So the minimum wage has greater impact in Puerto Rico. It would be like if the mainland had a $19 an hour minimum wage. The high minimum wage raises the cost of employment and prices many employers out of the market, causing unemployment to rise and thus tax revenue to dry up.  The minimum wage is a partly why the island’s unemployment rate is almost three times that of the mainland.

Similarly, the 1920 Jones Act limits Puerto Rico’s ability to import and export goods efficiently:

You Ought to Have a Look: Supreme Court, Business-as-Usual, Poison Ivy and Shark Attacks

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

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This week, as our title suggests, we have a somewhat eclectic mix of articles worthy of your attention (and some that are not). Let’s get started.

In handing down its decision on Monday in Michigan v. EPA, the Supreme Court ruled that the U.S. Environmental Protection Agency (EPA) was remiss for not considering costs when deciding to (expensively) regulate mercury emissions from coal-fired power plants. This ruling was urged in Cato’s amicus brief, and hailed as a victory for “liberty and sound science.”

But the direct impact on the ruling as it pertains to mercury emissions is likely to be slight as most coal-fired power plants have already been modified (or shut down) in an effort to reduce mercury emissions under the EPA’s 2012 regulation. Rather, what is being debated in the ruling’s aftermath is what the implication may be on future EPA actions.

Some have argued the ruling in Michigan v. EPA was “pointless,” while other have argued that it “may be the beginning of the end of the Obama Administration’s climate agenda.” Perhaps the biggest thing that could result would be for the Supreme Court to re-evaluate its decision in the Chevron v. Natural Resources Defense Council case.  This possibility was raised by Clarence Thomas in his concurring opinion on the case.  The Wall Street Journal editors picked up on this in their review of the Michigan v. EPA decision and highlight its importance:

Which is why Justice Clarence Thomas’s concurring opinion deserves a larger audience. He makes a provocative case that the Court’s 1984 decision in Chevron v. Natural Resources Defense Council is unconstitutional. Under what has become known as “Chevron deference,” the Court defers to executive interpretations when laws are ambiguous. Justice Thomas writes that this has become a license for the executive to usurp legislative powers that are supposed to be vested in Congress.

“Perhaps there is some unique historical justification for deferring to federal agencies, but these cases reveal how paltry an effort we have made to understand it or to confine ourselves to its boundaries,” Justice Thomas writes. “Although we hold today that EPA exceeded even the extremely permissive limits on agency power set by our precedents, we should be alarmed that it felt sufficiently emboldened by those precedents to make the bid for deference that it did here.”

That’s an especially apt point coming in a year when the Supreme Court seemed to abdicate much of its obligation to police the Constitution’s separation between the executive and legislative power. A future Court ought to revisit Chevron deference in what has become an era of presidential law-making.

Here’s hoping!

And here’s how it can happen. At Cato, your obedient servants have, through the years, purposefully compiled a massive record of public comments on global warming regulation that we have filed as official responses to requests for them in the Federal Register. These include our Addendum to the Government’s second “National Assessment” of climate change. It was designed to have a look similar to the federal document, with the cover the exact same material paragraph-by-paragraph, if possible, to make comparison as simple as possible. 

Happy Second of July

Americans are preparing for the Fourth of July holiday. I hope we take a few minutes during the long weekend to remember what the Fourth of July is: America’s Independence Day, celebrating our Declaration of Independence, in which we declared ourselves, in Lincoln’s words, “a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.”

The holiday weekend would start today if John Adams had his way. It was on July 2, 1776, that the Continental Congress voted to declare independence from Great Britain. On July 4 Congress approved the final text of the Declaration. As Adams predicted in a letter to his wife Abigail:

The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more.

The Declaration of Independence, written by Thomas Jefferson, is the most eloquent libertarian essay in history, especially its philosophical core:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Jefferson moved smoothly from our natural rights to the right of revolution: