Archives: 02/2010

Yeeow? Ayipioeeay?

And when we say
Yeeow! Ayipioeeay!
We’re only sayin’
You’re doin’ fine, Oklahoma!
Oklahoma O.K.                                  – Oscar Hammerstein, Oklahoma

And when you’re not doing fine?

I was asked recently by Brandon Dutcher of the Oklahoma Council of Public Affairs to investigate the relationship between spending and student achievement in his state, and to chart the results as I’ve done for U.S. school spending and student achievement. Here it is:

For reasons I’ve never understood, the NAEP test results for students at the end of high-school have never been broken down by state–they’re only reported nationwide–so for the achievement measure I used the ACT. Oklahoma’s participation rate in the ACT is high (between the mid 60s and low 70s), hasn’t fluctuated wildly over time, and is not significantly correlated with its actual scores (I ran a regression to find out), so it’s a reasonable measure. I’ve only carried it back to 1990 because the ACT was redesigned in that year, making the scores discontinuous.

When they see the chart, maybe Oklahoma taxpayers can say:  “Owwww! AiYaiYai!”

Utah Legislators Call for Fiscal Federalism

Tea partiers take note: at the forefront of any effort to reduce the size of the federal government should be the devolvement of federal programs to the states. Achieving this may seem like mission impossible given the states’ addiction to federal money. However, there are signs that the idea of returning the relationship between the federal government and the states to that which the Founders prescribed is starting to gain some currency.

On Friday, the president of the Utah Senate and the speaker of the Utah House of Representatives penned an op-ed in the Washington Post calling for the federal government to begin the devolution process. The authors want the states to have the right to opt out of federal programs and allow the states to keep the taxes their residents send to Washington to fund them. The states would then be free to fund and manage the programs as they see fit.

The authors call their idea a “modest experiment,” and indeed, it is hardly radical. The 10th amendment to the Constitution is clear:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

From the op-ed:

Let’s select a few programs – say, education, transportation and Medicaid – that are managed mostly by Utah’s government, but with significant federal dollars and a plethora of onerous federal interventions and regulations.

Let Utah take over these programs entirely. But let us keep in our state the portion of federal taxes Utah residents pay for these programs. The amount would not be difficult to determine. Rather than send this money through the federal bureaucracy, we would retain it and would take full responsibility for education, transportation and Medicaid – minus all federal oversight and regulation.

Such a notion terrifies proponents of big government because state budgets are generally constrained by balanced budget requirements, debt inhibitions, and the inability to print money. States are also more limited in how much they can abuse taxpayers for the simple reason that citizens can move to a friendlier environment. Indeed, one of the beautiful aspects of returning to fiscal federalism is that it would strengthen this competition that $600+ billion in annual federal subsidies has somewhat neutered.

See this essay for more on fiscal federalism and this Cato Policy Analysis on the problems with federal subsidies to state and local governments.

Update: A C@L reader pointed me to this resolution introduced by Michigan state representative Paul Opsommer, which calls on the federal government to allow the states to opt out of federal highway programs funded by the federal gas tax. The states would be free to fund their own roads with their own gas tax revenues instead of sending money to Washington where its then redistributed back to the states according to Congress’s politicized wishes. As the resolution notes, the federal government uses the leverage it has over transportation spending to force the states to enact policies that they don’t want.

ObamaCare 3.0: Higher Implicit Taxes, Quicker Death Spiral

In a recent paper, I showed that the health care legislation passed by the House and Senate would impose punitive implicit tax rates on low- and middle-income workers.  Those bills would also result in higher health insurance premiums over time because they would create large financial incentives for healthy people to drop coverage and only purchase it when they become sick.

The health care proposal that President Obama released yesterday essentially splits the difference on most areas of disagreement between the two bills.  But a preliminary analysis shows that ObamaCare 3.0 would make these perverse incentives even worse.  Families of four earning $22,000 under the Senate bill (100 percent of the federal poverty level) or $30,000 under the House bill or the Obama plan (133 percent FPL) would face the following effective marginal tax rates as they climb the economic ladder:

  • Senate bill - Average: 62 percent.  High: 73 percent.
  • House bill -  Average: 74 percent. High: 82 percent.
  • Obama plan - Average: 72 percent. High: 90 percent.

In other words, over broad ranges of income, families of four would see their take-home pay rise by an average of 28 cents of each additional dollar earned.  In some cases, it would rise as little as 10 cents for each additional dollar earned.  Using smaller changes in income reveals the Obama plan would create EMTRs as large as 200 percent or higher.  That is, earning more money would leave many families worse off financially.

In addition, by requiring insurers to cover all applicants without regard to illness, each of these health plans would remove any penalty on waiting until you are sick to purchase coverage.  Therefore – even after accounting for all relevant taxes, subsidies, and penalties – these plans would create large financial incentives for healthy people to drop out of the market, which would cause premiums to rise for those who remain.  That would in turn encourage more healthy people to drop out, which would cause premiums to rise further, and so on.  Those perverse incentives are much worse under the Obama plan than under the House or Senate bills.  Here are the maximum financial incentives to drop coverage that each plan would create for families of four:

  • Senate bill: $8,000
  • House bill: $7,800
  • Obama plan: $9,900

By increasing the financial incentives to drop coverage, the Obama plan would cause private insurance markets to unravel even faster than the House and Senate bills would.

School Webcams and Strange Gaps in Surveillance Law

Last week, I noted the strange story of a lawsuit filed by parents who allege that their son was spied on by school officials who used security software capable of remotely activating the webcams in laptops distributed to students. A bit more information on that case has since come out. The school district has issued a statement which doesn’t get into the details of the case, but avers that the remote camera capability has only ever been used in an effort to locate laptops believed to have been lost or stolen. (That apparently includes a temporary “loaner computer that, against regulations, might be taken off campus.”)  They do, however, acknowledge that they erred in failing to notify parents about this capability.  The lawyer for the student plaintiff is now telling reporters that school officials called his client in to the vice principal’s office when they mistook his Mike and Ike candies for illegal drugs.

Perhaps most intriguingly, a security blogger has done some probing into the technical capabilities of the surveillance software used by the school district. The blogger also rounds up comments from self-identified students of the high school, many of whom claim that they noticed the webcam light on their school-issued laptops flickering on and off—behavior they were told was a “glitch”—which may provide some reason to question the school’s assertion that this capability was only activated in a handful of cases to locate lost laptops. The FBI, meanwhile, has reportedly opened an investigation to see whether any federal wiretap laws may have been violated.

It’s this last item I want to call attention to. The complaint against the school district states a number of causes of action.  The most obvious one—which sounds to me like a slam dunk—is a Fourth Amendment claim. But there are also a handful of claims under federal wiretapping statutes, specifically the Electronic Communications Privacy Act and the Stored Communications Act. These are more dubious, and rest on the premise that the webcam image was an “electronic communication” that school officials “intercepted” (as those terms are used in the statute), or alternatively that  the activation of the security software involved “unauthorized” access by the school to its own laptop. The trouble is that courts considering similar claims in the past have held that federal electronic surveillance law does not cover silent video surveillance—or rather, the criminal wiretap statutes don’t.

That leads to a strange asymmetry in a couple of different ways. First, intelligence surveillance covered by the Foreign Intelligence Surveillance Act does include silent video monitoring. Second, it seems to provide less protection for a type of monitoring that is arguably still more intrusive. If officials had turned on the laptop’s microphone, that would fall under ECPA’s prohibition on intercepts of “oral communications.” And if the student had been engaged in a video chat using software like Skype, that would clearly constitute an “electronic communication,” even if the audio were not intercepted. But at least in the cases I’m familiar with, the courts have declined to apply that label to surreptitiously recorded silent video—which one might think would be the most invasive of all, given that the target is completely unaware of being observed by anybody.

One final note: The coverage I’m seeing is talking about this as though it involves one school doing something highly unusual. It’s not remotely clear to me that this is the case. We know that at least one other school district employs similar monitoring software, and a growing number of districts are experimenting with issuing laptops to students. I’d like to see reporters start calling around and find out just how many schools are supplying kids with potential telescreens.

PS: I Also Want to Take over Education

Andrew already blogged about it a bit, but overshadowed by the release of President Obama’s price-controlling health-insurance proposal was his speech to the National Governors Association promoting the federal takeover of elementary and secondary school curricula. True, the White House would only require states to adopt some sort of “common” – not national and certainly not federal – standards to get federal funds, but don’t accept the semantic dodge: If the feds are paying, the standards will not only be national, but federal.

Implicit in the President’s proposal, as well as the rhetoric of many national-standards supporters, is that national standards will necessarily be high standards that push improved academic achievement. Unfortunately, these people have chosen to ignore actual tests of that proposition.

They can no longer: My latest Policy Analysis – Behind the Curtain: Assessing the Case for National Curriculum Standards – reviews the theoretical and empirical literature and shows that there is simply no convincing evidence that national standards drive higher academic achievement. Couple that with federal meddling in education being clearly unconstitutional, and the next critical battle in the war against Leviathan seems to be shaping up. And this time, we could very well be fighting for our children’s minds.

The Small Matter of Abortion

Newsweek’s Sarah Kliff nicely summarizes why abortion could be THE issue that stops ObamaCare.  I’ve made a similar argument in a paper on ObamaCare’s individual and employer mandates.

Two factors seem most salient:

  1. One side must lose. ObamaCare would so infuse federal money into private insurance markets that either (A) taxpayers will be forced to pay for elective abortions, which would be unacceptable to pro-life Democrats, or (B) the restrictions necessary to prevent taxpayer funding would curtail access to private abortion coverage – even for women who don’t receive federal subsidies – which would be unacceptable to pro-choice Democrats.  Abortion is not one of those issues where opposing sides can meet in the middle.  There’s no way to, ahem, split the baby.
  2. Abortion may be the one issue that Democrats care about more than health care. Democrats may therefore prefer to let ObamaCare die than violate their principles on abortion.  One can imagine pro-life Democrats saying, Health reform, yes – but not at the expense of the unborn, just as one can imagine pro-choice Democrats saying, Health reform yes – but not at the expense of a woman’s right to choose.

No matter which way ObamaCare comes down on abortion, the legislation could lose enough House Democrats to fall short of the 218 votes needed to win.

Was it Terrorism?

A man with a gripe against the system crashed a plane into an IRS office. The first thing people ask is whether this was  a crime or domestic terrorism as if the two categories are mutually exclusive.

The official definition is “the unlawful use of force and violence against persons or property to intimidate or coerce a government, the civilian population, or any segment thereof, in furtherance of political or social objectives” (28 C.F.R. Section 0.85).

Unlawful use of force and violence? Check.

Requisite grievance? Check. And how. If this manifesto is genuine, the man responsible had an axe to grind with the IRS, politicians, GM executives, drug and insurance companies, the Catholic Church, tax-exempt religious organizations generally, corrupt unions, Arthur Andersen executives, former Senator Patrick Moynihan, wealthy loan companies, his accountant, George W. Bush, communists, and capitalists.

That hasn’t stopped people from trying to lay this man at the feet of political opponents.

This guy’s political affiliation was “crazy.”  Everyone should move on and not try to score political points with this incident.

Whether or not he meets the definition, it’s better to deny this man and those like him any credibility with the word “terrorist.” As my colleague Jim Harper said (twice) about the man who shot Dr. George Tiller, this is an unproductive debate that fulfills their desire to be something more than a pathetic murderer.