Bipartisan Budget Buster

Congressional leaders and President Trump have agreed to another budget-busting spending deal. This one is a two-year plan that raises discretionary spending by $320 billion, but will ultimately cost $1.7 trillion over the next decade, notes the Committee for a Responsible Federal Budget. The deal will push up government debt and move us closer to a broad-based economic crisis, which international experience shows is often triggered by excessive borrowing.

Federal budgeting has descended from irresponsible to reckless. This year, the government will raise $3.5 trillion, borrow $1 trillion, and spend $4.5 trillion, which is like an individual earning $35,000, putting $10,000 on his credit card, and spending $45,000. It might work for a few years, but eventually the borrower hits a wall.  

As I discuss here, today’s budget situation is so worrying for two reasons. First, government debt is already the highest in our peacetime history and rising rapidly. Second, Congress has become completely dysfunctional at everything except passing large spending hikes. When the crisis comes, lawmakers will have no knowledge of ever proposing or making any cuts and won’t know what reforms to pursue. Paul Ryan’s proposed entitlement reforms are a distant memory to today’s lawmakers.

CRFB illustrates the $1.7 trillion cost of the budget deal in this chart:

Brian Riedl has an excellent summary of recent budget history here.

False Assumptions Behind the Current Drive to Regulate Social Media

In the early days of the Internet, citing concerns about pedophiles and hackers, parents would worry about their children’s engagement on unfamiliar platforms. Now, those same parents have Facebook accounts and get their news from Twitter. However, one look at a newspaper shows op-eds aplenty castigating the platforms that host an ever-growing share of our social lives. Even after more than a decade of social media use, prominent politicians and individuals who lack critical awareness of the realities and limitations of social media platforms choose to scapegoat platforms—rather than people—for a litany of social problems. Hate speech on Facebook? Well, it’s obviously Facebook’s fault. Fake news? Obviously created by Twitter.

But, what if these political concerns are misplaced? In a new Cato Policy Analysis, Georgia Tech’s Milton Mueller argues that that the moral panic attending social media is misplaced. Mueller contends that social media “makes human interactions hypertransparent,” rendering hitherto unseen social and commercial interactions visible and public. This newfound transparency “displace[s] the responsibility for societal acts from the perpetrators to the platform that makes them visible.” Individuals do wrong, platforms are condemned. This makes no political nor moral sense. Social media platforms are blamed for a diverse array of social ills, ranging from hate speech and addiction to mob violence and terrorism. In the wake of the 2016 U.S. presidential election, foreign electoral interference and the spread of misinformation were also laid at their feet. However, these woes are not new, and the form and tenor of concerns about social media misuse increasingly resembles a classic moral panic. Instead of appreciating that social media has revealed misconduct previously ignored, tolerated, or swept under the rug, social media is too often understood as the root cause of these perennial problems. 

People behaved immorally long before the advent of social media platforms and will continue to do so long after the current platforms are replaced by something else. Mueller argues that today’s misplaced moral panic is “based on a false premise and a false promise.” The false premise? Social media controls human behavior. The false promise? Imposing new rules on intermediaries will solve what are essentially human problems.

Mueller’s examination of Facebook’s role in hosting genocidal Burmese propaganda drives this point home. When Burmese authorities began using Facebook to encourage violence against the country’s Muslim Rohingya minority, Facebook was slow to act— it had few employees who could read Burmese, rendering the identification of offending messages difficult. However, Facebook has since been blamed for massacres of Rohingya carried out by Myanmar’s military and Buddhist extremists. While Facebook provided a forum for this propaganda, it cannot be seen as having caused violence that was prompted and supported by state authorities. We should be glad that Facebook could subsequently prevent the use of its platform by Myanmar’s generals, but we cannot expect Facebook to singlehandedly stop a sovereign state from pursuing a policy of mass murder. Myanmar’s government, not Facebook, is responsible for its messaging and the conduct of its armed forces.

Mueller shows that technologies enhancing transparency get blamed for the problems they reveal. The advent of the printing press, radio, television, and even inexpensive comic books were all followed by moral panics and calls for regulation. The ensuing regulation caused unforeseen harm. Mueller finds that “the federal takeover of the airwaves led to a systemic exclusion of diverse voices,” while recent German social media regulation “immediately resulted in suppression of various forms of politically controversial online speech.” Acting on the false premise that social media is responsible for grievances expressed through it, regulation intended to stamp out hate merely addresses its visible symptoms.

Contra these traditional, counterproductive responses, Mueller advocates greater personal responsibility; if we do not like what we see on social media we should remember that it is the speech of our fellow users, not that of the platforms themselves. He also urges resistance to government attempts to regulate social media, either by directly regulating speech, or by altering intermediary liability regimes to encourage more restrictive private governance. Proceeding from the false premise that a “broken” social media is responsible for the ills it reveals, regulation will simply suppress speech. Little will be gained, and much may be lost.

Is an End in Sight to the Longest Running World War?

The War on Drugs is not only fought on the home front. In fact, it is the longest running world war. While Portugal has decriminalized all drugs, Uruguay never criminalized personal drug use and possession, the Czech Republic has decriminalized possession of small amounts of illicit drugs, and Norway and Mexico contemplate decriminalizing all drugs, the world-wide war on drugs continues apace. And drug prohibition’s futility and destruction are on world-wide display.

I have written about the resurgence of methamphetamine use and methamphetamine related overdose deaths in the US, despite state and federal efforts to solve the “meth crisis” earlier in this century. Now comes a report from the United Nations Office on Drugs and Crime that Southeast Asian gangs are making $60billion (US) per year flooding Asia with methamphetamine, and laundering the money through Southeast Asian casinos. 

Most of the methamphetamine originates in the “Golden Triangle,” the region where the borders of Myanmar, Laos, and Thailand converge. The Northern Shan State in Myanmar is a hub of clandestine meth-making, but it is best known as a center of heroin production and distribution.

While heroin has been the export staple of the Golden Triangle, meth is reportedly the new “cash cow.” The largest market for the meth and heroin is China, but sophisticated distribution networks carry it throughout Asia, as far away Japan. And now motorcycle gangs in Australia and New Zealand have joined the distribution network.

As I have said repeatedly, fighting the war on drugs is like playing a game of whack-a-mole. Prohibition only serves to drive the drug trade and drug use underground, where it is more dangerous and deadly. As more countries around the globe are figuring this out, an end to the war becomes a more realistic possibility. But I fear that until the “big dog” in this war—the US—decides to call it quits, we can expect more death and destruction for quite some time.

Sanders Feels the Bern on Hourly Wage Demands

You really couldn’t script it.  

Faced with campaign staff complaining their hourly wages are too low, 2020 presidential candidate Senator Bernie Sanders (D-VT), he of “Fight for $15” federal minimum wage fame, is currently mitigating discontent by restricting the hours his staff can work rather than raising their pay.

Salaried Sanders field staff earning $36,000 have complained of working up 60 hours per week. Once one accounts for the number of weeks they work, they say this is equivalent to just $13 per hour.

Given Sanders describes $15 per hour as a living wage (something he wants to institute through federal legislation), the union representing his workers demands a rise in salary to $46,800 to fully compensate for their current activities. Instead, at least while discussions continue, Sanders will cap the hours the staff can work, such that their current salary equates to no less than a $15 minimum wage per hour.

This serves as a useful lesson in the trade-offs associated with pay hikes. In order to raise the hourly pay of his staff, Sanders is having to restrict the hours they work. Presuming they were at least doing something productive in the additional time they currently spend campaigning, this hour cap represents a fall in the overall “product” of the workers, and so, one imagines, will weaken the campaign.

The Sanders camp obviously thought other “channels of adjustment” to hourly wage rises were even more unpalatable. His campaign could have laid off field staffers, for example, cut back on other campaign expenses such as rallies or ads, or even sought to undertake one-off investments in campaign tools to “automate” workers by shifting to electronic electioneering. It turns out too that Sanders’ campaign doesn’t believe in fairy tales one hears about how higher wages will induce much more highly productive and loyal workers, making increased pay self-financing (in this case with a better campaign attracting more donations).

Perhaps next time Bernie Sanders advocates that all employers nationwide face an elevated minimum wage, his experience will make him realize the potential costs of cuts to jobs, hours, other worker perks, or the efficiency of the firms affected.

King v. Burwell Literally Overturned Part of the Affordable Care Act

I have a letter to the editor in today’s Washington Post

The July 8 front-page article “Court’s ruling on ACA could cost GOP” claimed that the Supreme Court upheld the Affordable Care Act “twice,” presumably referring to National Federation of Independent Business v. Sebelius in 2012 and King v. Burwell in 2015.

King v. Burwell did not uphold the ACA. On the contrary, King overturned part of the ACA.

The King plaintiffs challenged the Internal Revenue Service’s unexplained decision to spend funds that the ACA plainly does not authorize it to spend and to impose the ACA’s mandate penalty on millions of Americans whom the plain language of the statute exempts. Chief Justice John G. Roberts Jr. affirmed that “the most natural reading” of the operative statutory language favors the plaintiffs. In other words, the plaintiffs sued to uphold the ACA as written.

The court nevertheless upheld the Obama administration’s rewriting of the statute. In so doing, it overturned part of the ACA.

Note the present tense. The ACA still says the IRS doesn’t have that authority. 

No matter. The ACA is dead. Long live ObamaCare.

A Victory for Consumer Protections and Health Insurance Freedom

Last year, the Departments of Treasury, Labor, and Health and Human Services worked within federal law to expand consumer protections and restore Americans’ freedom to choose the health insurance that meets their needs. On Friday, a federal court rebuffed an effort to block those protections and force Americans into ObamaCare. First, a little background.

In 1996, Congress exempted “short-term limited duration insurance” from federal health insurance regulations. Congress never defined what “short-term” or “limited duration” meant. So in 1997, the Clinton administration gave meaning to those terms by decreeing that health insurance plans qualify for the exemption so long as they have a contract term, and a total duration, that last less than 12 months. The Bush administration finalized this definition in 2004. 

When Congress enacted the ironically named Affordable Care Act (ACA) in 2010, it tied that law’s copious regulation of the individual health insurance market to the same definition of health insurance Congress created in 1996. That means – you guessed it – “short-term, limited duration insurance” is also exempt from the ACA’s costly regulations.

When the ACA began to make the cost of health insurance soar in 2014, the Obama admininstration noticed that consumers were taking refuge in the short-term market, where premiums could be 50-70 percent lower than ACA premiums. So in 2016, the Obama administration arbitrarily shortened the maximum allowable contract term of such plans to 3 months.

When Addiction is Stigmatized and Criminalized We All Lose

In a recent Wall Street Journal column entitled Even Heroes Can Struggle With Addiction, Timothy McMahan King offers convincing evidence that the great British abolitionist and statesman, William Wilberforce, responsible for ending the slave trade within the British Empire in 1807, was an opium addict for much of his adult (and productive) life. Because of the stigma attached to addiction, most historians and biographers have hidden, ignored, or buried that fact.

Similarly, few of us who rely mainly on the history lessons we received in high school are aware of the regular and (by today’s standards) excessive use of alcohol, opium, and other drugs by our nation’s founders.

Even many in my profession do not know that the great William Halsted of Johns Hopkins University Medical School, considered the “father” of modern American surgery, and creator of hospital residency programs for medical school graduates, was addicted to cocaine and morphine for most of his professional life.

This weekend, in a letter to the editor of the Wall Street Journal entitled Should Drug Addicts Be Criminals as Well?,  I commended King for amplifying the fact that there are “functioning addicts” who, if they live in the right neighborhood, have the economic means, and the right connections, can keep their lifestyle private, avoiding not only the ostracism that comes with the stigma of addiction, but victimization by the criminal justice system as well. Many accounts of functioning addicts are provided by Jacob Sullum in his excellent 2003 book, Saying Yes: In Defense of Drug Use.

I also elaborated on King’s observations about the “consequences society has chosen to impose on people with addiction. You can be addicted without suffering them.” Indeed. And so many harmful consequences are a direct result of the dangerous black market prohibition inevitably creates.

In his article, King wrote, “The world would not have been a better place had Wilberforce languished in prison instead of fighting the slave trade.”  It is heartbreaking to reflect on the countless numbers of less fortunate people who languish in prison today instead of helping to make the world a better place.