ALJs and the Home Court Advantage

The SEC has come under fire lately for its use – some might say overuse – of internal administrative proceedings.  The SEC’s use of administrative proceedings and administrative law judges (ALJs) is by no means unique within the federal government.  Thirty-four agencies currently have ALJs.  Nor is the SEC the heaviest user of administrative proceedings or ALJs; the Social Security Administration has that distinction, with more than 1,300 ALJs according to the most recent data available.  The SEC, by comparison, has only five ALJ positions, two of which are recent additions. 

The SEC’s ALJs have been in the spotlight due to a provision in Dodd-Frank that expands their ability to impose fines.  In the past, the SEC could impose monetary sanctions only on individuals and entities registered with the Commission – typically brokers, investment advisors, and similar entities and their employees.  By registering with the SEC, it was reasoned, these individuals and organizations had submitted to the SEC’s jurisdiction.  Others could be brought before the SEC’s tribunals for violating federal securities laws, and the ALJs could make findings of fact (that is, decide which side’s version of the facts was correct) and issue cease and desist orders, but could not impose fines.  Instead, the SEC’s lawyers would have to bring a separate case in federal district court.  Under Dodd-Frank, registered and unregistered persons are treated the same.

Administrative proceedings have their advantages.  Like a federal judge, an ALJ can issue subpoenas, hold hearings, and decide cases.  Because an ALJ’s cases deal with a very narrow area of law – only that related directly to the ALJ’s agency – the ALJ’s knowledge of that area tends to be deeper than that of a federal judge who hears a broad range of civil and criminal cases.  The proceedings before ALJs tend to be somewhat truncated, with fewer procedural requirements than federal district court, allowing the case to be decided more quickly. 

Left and Right in China

There’s an ideological divide in China, and it’s basically statist vs. classical liberal, as Tyler Cowen puts it.

Based on 171,830 responses to an online survey, Jennifer Pan and Yiqing Xu “offer the first large scale empirical analysis of ideology in contemporary China.” They “identify one dominant ideological dimension in China.”

Individuals who are politically conservative, who emphasize the supremacy of the state and nationalism, are also likely to be economically conservative, supporting a return to socialism and state-control of the economy, and culturally conservative, supporting traditional, Confucian values. In contrast, political liberals, supportive of constitutional democracy and individual liberty, are also likely to be economic liberals who support market-oriented reform and social liberals who support modern science and values such as sexual freedom.

This is interesting in several ways. First, of course, it means that China is no longer ideologically monolithic, as it was at least officially in the days of Maoism. And a significant number of people seem to support what we would call classical liberal or libertarian values – “constitutional democracy and individual liberty, … market-oriented reform … modern science and values such as sexual freedom.” The online survey isn’t scientific or representative enough to estimate the prevalence of each ideology.

Second, it’s refreshing to see ideological views lined up in a coherent way. Libertarians usually find the standard American ideologies inconsistent. Today’s “liberals” (unlike classical liberals from Locke and Smith and Mill to Hayek) tend to support democracy and at least some forms of personal and civil liberties, but not free markets. Today’s conservatives support free markets but have tended to oppose civil rights, drug decriminalization, and sexual freedom. In China those who support “the supremacy of the state and nationalism” also, quite understandably, support state control of the economy and state support for traditional values. That’s a bad package, but at least it’s coherent. And so is the opposing liberal ideology.

Appealing President Obama’s Executive Action on Immigration

On November 20, 2014, President Obama unveiled DAPA, an executive policy that would defer the deportation of up to four millions illegal aliens and afford them work authorization. One week later, Texas, joined by 25 other states, filed a lawsuit against this unprecedented expansion of executive power.

Cato, joined by law professors Josh Blackman, Jeremy Rabkin, and Peter Margulies, filed an amicus brief supporting the challenge. While we broadly support comprehensive immigration reform, we argued that DAPA violated the president’s constitutional duty to take care that the laws were faithfully executed because this action went far beyond merely setting priorities on who will be pursued and deported given finite enforcement resources. It was highly unusual for Cato to file in a district court—amicus briefs of any kind are rare at this level—but this was a highly unusual situation.

On February 16, 2015, Judge Andrew Hanen blocked DAPA from going into effect, finding that the executive branch did not follow the proper administrative procedures—such as seeking comments from the public—before implementing what is effectively a substantive change in established immigration law.

Huckabee’s Support for Higher Taxes and More Spending

Former Arkansas Governor Mike Huckabee launched his presidential campaign last week. Huckabee highlighted his fiscal successes as governor during his announcement. He claims that he cut taxes 94 times while governor, and he promised to bring his tax-cutting experience to Washington, D.C. Huckabee’s statements do not tell the full story. While Huckabee cut some taxes, his time in office also included a rapid increase in Arkansas state spending and multiple tax hikes. 

Huckabee took office in July 1996 after Governor Jim Guy Tucker was convicted for his involvement in the Whitewater scandal. Shortly after taking office,  Huckabee signed a $70 million  package of income tax cuts. It eliminated the marriage penalty, increased the standard deduction, and indexed tax brackets to inflation. The broad-based tax cut was Arkansas’s first in 20 years.  Huckabee followed it with a large cut to the state’s capital gains tax. These tax cuts were popular, and they improved Arkansas’s economic climate.

Huckabee’s fiscal policies then changed direction. Huckabee used the state’s tobacco settlement money to expand Medicaid, and he supported a large bond initiative to increase spending for infrastructure. These and other spending policies came with a hefty price tag.

Opt Out Tests If Child’s a “Mere Creature of the State”

The Common Core War, over the last few months, has been fought on a largely new front: whether students can be forced to take state tests – in the vast majority of cases, Core-aligned tests – or whether parents and students can refuse. It is perhaps an even more fundamental question than whether the federal government may constitutionally coerce standardization and testing generally, and with Common Core, specific standards and tests. The testing battle is to a large extent about whether a child, in seeming opposition to the seminal Supreme Court ruling in Pierce v. Society of Sisters, is indeed a “mere creature of the State.”

The opt-out numbers are hard to pin down, though there is little question that some districts have seen very large percentages while others – probably the large majority nationwide – have seen few. It is also probably reasonable to conclude that the leader of the opt-out crusade has been New York State, where animosity toward the Core has been high since the state first rushed implementation and state officials, in an effort to calm things, actually inflamed them with a condescending approach to public engagement that launched weeks of recriminations. Last year the state saw an estimated 60,000 students opt out, which leapt to nearly 200,000 this year.

The root question, of course, is should students and parents be able to opt out without fear of punishment? And since punishment would be coming from a government institution – yes, that is what a public school is – that means without fear of punishment by the state. If children are, in part, creatures of the state – and Pierce did not say there is no legitimate state role in education – than punishment is legitimate. If, however, the public schools exist to serve fully free citizens, then punishment cannot be meted out for refusing the test; it is up to parents to freely decide whether or not their children are subjected to the tests.

Against Racial Preferences in Contracting

Since before the Declaration of Independence, equality under the law has long been a central feature of American identity—and was encapsulated in the Constitution. The Fourteenth Amendment expanded that constitutional precept to actions by states, not just the federal government.

For example, if a state government wants to use race as a factor in pursuing a certain policy, it must do so in the furtherance of a compelling reason—like preventing prison riots—and it must do so in as narrowly tailored a way as possible. This means, among other things, that race-neutral solutions must be considered and used as much as possible.

So if a state were to, say, set race-based quotas for its construction contracts and claim that no race-neutral alternatives will suffice—without showing why—that would fall far short of the high bar our laws set for race-conscious government action.

Yet that is precisely what Montana has done. Montana’s Disadvantaged Business Enterprise (“DBE”) program implements a federal program aimed at remedying past discrimination against minority and women contractors by granting competitive benefits to those groups. While there may be a valid government interest in remedying past discrimination, in its recent changes to the program, Montana blew through strict constitutional requirements and based its broad use of racial preferences on a single study that involved weak anecdotal evidence—a study that recommended more race-neutral alternatives, not fewer.

Climate Change Concerns Don’t Belong in Dietary Guidelines

On Friday, May 8, the public comment period closed for the new 2015 Dietary Guidelines issued by the U.S. Department of Agriculture (USDA) and the Department of Health and Human Services (HHS). In a nutshell, the new dietary guidelines are to eat a diet richer in plant-based foods and leaner in animal-based products. One of the considerations used by the USDA/HHA in their Scientific Report used to rationalize these new dietary guidelines was that such diets are

“associated with more favorable environmental outcomes (lower greenhouse gas emissions and more favorable land, water, and energy use) than are current U.S. dietary patterns.” [emphasis added]

Throughout the Scientific Report whenever greenhouse gases are mentioned, a negative connotation is attached and food choices are praised if they lead to reduced emissions.

This is misleading on two fronts. First, the dominant greenhouse gas emitted by human activities is carbon dioxide which is a plant fertilizer whose increasing atmospheric concentrations have led to more productive plants, increasing total crop yields by some 10-15 percent to date. The USDA/HHS is at odds with itself in casting a positive light on actions that are geared towards lessening a beneficial outcome for plants, while at the same time espousing a more plant-based diet.

And second, the impact that food choices have on greenhouse gas emissions is vanishingly small—especially when cast in terms of climate change. And yet it is in this context that the discussion of GHGs is included in the Scientific Report. The USDA/HHS elevates the import of GHG emissions as a consideration in dietary choice far and above the level of its actual impact.

In our Comment to the USDA/HHS, we attempted to set them straight on these issues.

Our full Comment is available here, but for those looking for a synopsis, here is the abstract:

There are really only two reasons to discuss greenhouse gas emissions (primarily carbon dioxide) in the context of dietary guidelines in the U.S., and yet the USDA and HHS did neither in their Scientific Report of the 2015 Dietary Guidelines Advisory Committee (DGAC).

The first reason would be to discuss how the rising atmospheric concentration of CO2—a result primarily of the burning of fossil fuels to produce energy—is a growing benefit to plant life. This is an appropriate discussion in a dietary context as atmospheric CO2 is a fertilizer that promotes healthier, more productive plants, including crops used directly as food for humans or indirectly as animal feed. It has been estimated that from the atmospheric CO2 enrichment to date, total crop production as increased by 10-15 percent. This is a positive and beneficial outcome and one that most certainly should be included in any discussion of the role of greenhouse gases emissions in diet and nutrition—but is inexplicably lacking from such discussion in the DGAC report.

The second reason to discuss greenhouse gas emissions in a diet and nutrition report would be to dispel the notion that through your choice of food you can “do something” about climate change.  In this context, it would be appropriate to provide a quantitative example of how the dietary changes recommended by the DGAC would potentially impact projections of the future course of the climate. Again, the DGAC failed to do this.  We help fill this oversight with straightforward calculation of averted global warming that assumes all Americans cut meat out of their diet and become vegetarians—an action that, according to the studies cited by the DGAC, would have the maximum possible impact on reducing greenhouse gas emissions and thus mitigating future climate change.  Even assuming such an unlikely occurrence, the amount of global warming that would be averted works out to 0.01°C (one hundredth of a degree) by the end of the 21st century.  Such an inconsequential outcome has no tangible implications.  This should be expressed by the DGAC and mention of making dietary changes in the name of climate change must be summarily deleted.

We recommend that if the DGAC insists on including a discussion of greenhouse gas emissions (and thus climate change) in it 2015 Dietary Guidelines, that the current discussion be supplemented, or preferably replaced, with a more accurate and applicable one—one that indicates that carbon dioxide has widespread and near-universal positive benefits on the supply of food we eat, and that attempting to limit future climate change through dietary choice is misguided and unproductive.  These changes must be made prior to the issuance of the final guidelines. 

We can only guess on what sort of impact our Comment will have, but we can at least say we tried.