September 8, 2011 2:40PM

Senator Reid Comes Clean

After much back‐​and‐​forth on sequencing and strategy [subscription required], and many fine words from both sides about how the long‐​pending trade agreements with Panama, Colombia and South Korea are a bipartisan priority (President Obama’s failure to send the agreements for a vote notwithstanding), Senate Majority Leader Harry Reid (D‑Nev.) finally laid all his cards cleanly on the table yesterday.

A deal reached in August seemed to imply that the House would merely have to put Trade Adjustment Assistance to a vote before passage of the trade agreements, but yesterday Senator Reid said that the Senate would not vote on the trade agreements unless and until the House PASSES (not merely “considers”, as the Republican House leadership was always careful to specify) an extenstion of Trade Adjustment Assistance. (By the way, just to clarify, the stimulus‐​enhanced version of TAA is the main issue here. The basic TAA program has been running without authorization since the start of the year, when OMB ruled that it could continue unauthorized, so long as it was funded. So while the entire program “needs” reauthorization, the 2009 version is the most urgent priority for TAA advocates and their political supporters.)

So there you have it, folks, with all the niceties stripped away: If TAA doesn’t pass, then Harry Reid will ensure the trade agreements won’t even see the Senate floor. Pay the bribe, or pay the price.

September 8, 2011 1:09PM

Job Creation, Obama‐​style

I guess the Labor Department didn’t get the memo on trying to create jobs, rather than destroy them. As reported by the Wall Street Journal, the Labor Department is investigating several home builders for treating their contractors as…contractors. Anyone with the slightest understanding of the construction industry knows that much of the relationships are between contractors and subcontractors, rather than employees and employer, largely because the projects regularly change.

But from Obama’s perspective, and that of his union allies, such treatment makes unionizing construction workers all that much harder. Without such unionization, construction wages might fall. Obviously that’s the last thing anyone would want when you have about 2 million unemployed construction workers. If wages fell, a few more of them might actually get hired. Someone in this Administration really needs to learn how the basics of supply and demand work, in the labor market and elsewhere.

My favorite part of the story is the union representative complaining about home builders trying to lower costs. She states that home builders need to stop pressuring subcontractors to “go cheaper” on costs: “It’s pretty clear that there’s an enormous pressure to rush to the bottom in terms of keeping costs down.” Maybe if houses were even cheaper, then not eveyone would have had to get such a large mortgage to buy a house and we could have avoided the financial crisis altogether. But then when it comes between choosing to make one of life’s basic necessities — shelter — cheaper or helping to line the pockets of special interests, this Administration sadly continues to prefer the later.

September 8, 2011 1:06PM

Fourth Circuit Dismisses Virginia’s Obamacare Suit; Time for Supreme Court to Act

The Fourth Circuit’s rulings today in no way affect any other case and should only speed up the Supreme Court’s ultimate consideration of the issues raised in all these challenges. 

The dismissal of Virginia’s lawsuit on standing grounds merely removes one particular plaintiff from consideration, even as 26 states and numerous non‐​state plaintiffs remain in separate suits. Similarly, the dismissal of Liberty University’s lawsuit, while interesting in that it marks the first‐​ever finding that the individual mandate is a tax (not for constitutional purposes, but statutorily in a way that cannot be challenged before it’s enforced), doesn’t change the jurisprudential calculus because there was already a split between the Sixth and Eleventh Circuits on the mandate’s constitutionality. 

All of the constitutional issues attending the individual mandate have now been exhaustively ruled upon by three federal appellate courts in four separate cases. While the D.C. Circuit will hear argument in yet another suit later this month, there’s no reason for the Supreme Court to delay its review. 

As President Obama unveils yet another plan to stimulate job creation, it’s time to finally end the uncertainty over the fate of his most economically damaging piece of legislation.

September 8, 2011 11:20AM

Progressivism on the Ropes

George Will strikes at the heart of modern liberalism this morning with his discussion of David Bernstein’s new book, Rehabilitating Lochner: Defending Individual Rights against Progressive Reform, co‐​published by Cato and the University of Chicago Press. As Will concludes:

Long execrated by most law professors, Lochner is the liberals’ least favorite decision because its premises pose a threat to their aspiration, which is to provide an emancipation proclamation for regulatory government. The rehabilitation of Lochner is another step in the disarmament of such thinking.

That gets it exactly right. In fact, this new book by Bernstein, a Cato adjunct scholar, is the fourth in a series of books Cato has lately published, all of which are aimed at disarming those who’ve given us the modern redistributive and regulatory state.

Start with Richard Epstein’s How Progressives Rewrote the Constitution and you’ll see the roots of modern “constitutional law” – not to be confused with the Constitution itself – in the thinking of the Progressives, 30 and more years before the New Deal Court instituted that “law.” As Epstein writes: the Progressives “were determined that their vision of the managed economy should take precedence in all areas of life. Although they purported to have great sophistication on economic and social matters, their understanding was primitive. The Progressives and their modern defenders have to live with the stark truth that the noblest innovations of the Progressive Era were its greatest failures.”

Then go to Tim Sandefur’s The Right to Earn a Living: Economic Freedom and the Law and you’ll see what Progressivism has wrought in the way of impediments to economic freedom. Sandefur traces the natural and common law origins of the fundamental right to earn a living and shows, through modern cases, some of which he himself has litigated, how this right has been thoroughly compromised by the Progressive thinking George Will excoriates this morning.

Finally, to sink your teeth into a detailed history and analysis of the right to freedom of contract, you can do no better than to read David Mayer’s new book Liberty of Contract: Rediscovering a Lost Constitutional Right. The book shatters myths that scholars have created about the Progressive Era, including the notion that the Court was reading a “laissez‐​faire” ideology into the Constitution – as Justice Oliver Wendell Holmes asserted in his Lochner dissent.

And before I forget it, you’ll find these themes throughout the new Cato Supreme Court Review, due out next Thursday. Read all of this and you’ll be well armed to disarm the Progressive thinking that today is increasingly on the ropes, and rightly so.

September 8, 2011 10:42AM

Latest ObamaCare Glitch Enables States to Block New Entitlement Spending

Investors Business Daily reports on the latest glitch found in ObamaCare’s 2,000-plus pages:

Because of a quirk in ObamaCare, people who buy health insurance through a federally run exchange may not be eligible for premium subsidies.

Government‐​created exchanges are places for individuals to shop and purchase health insurance. ObamaCare will require individuals and families to buy insurance, starting in 2014.

Those with incomes at 100% to 400% of the federal poverty level will be eligible for taxpayer funded subsidies — a tax credit to help pay for the premium.

It turns out that the legislation isn’t so clear, the latest example of what analysts predicted would be a stream of surprises from the mammoth health law.

Section 1311 of ObamaCare instructs state governments to set up an exchange. If a state refuses, Section 1321 lets the federal government establish an exchange in the state.

Yet ObamaCare states that the tax credit is available to people who are enrolled in an “an exchange established by the state under (Section) 1311.” It makes no mention of people enrolled in federal exchanges being eligible for the tax credit.

“There is this technical problem in the law,” said James Blumstein, a professor at Vanderbilt Law School. “I don’t see how you get around that.”

I guess the folks who chanted, “Read the bill!” seem a little less crazy now.

Regrettably, the IRS has tried to “get around” the clear meaning of the law. In a proposed rule, the IRS writes that taxpayers will be eligible for ObamaCare’s “tax credits” — which are more government spending than — if they are enrolled in a health plan “established under section 1311 or 1321″ [emphasis added]. But that’s not what the law says. As I told IBD:

“Congress did not delegate this discretion to the IRS,” Cannon said. “Congress created a tax credit for A, and the IRS is saying it applies to A and B. If the IRS offers this tax credit to federally run exchanges, the IRS will be assuming powers the Constitution vests only in Congress to alter the tax code and spend money.”

Citizens have until October 31 to share with the IRS their thoughts about the agency’s overly broad interpretation of its powers (see here).

More broadly, this bug feature means that states can block ObamaCare’s new entitlement spending, and possibly the entire law, just by refusing to create an Exchange:

“The whole structure of the law collapses without a state‐​run exchange,” said Michael Cannon, director of health policy studies at the libertarian Cato Institute. “That forces Congress to either repeal ObamaCare or significantly alter it.”

Yesterday, Rep. Michael Burgess (R‑Texas) helpfully suggested that the so‐​called “Super Committee” should meet its target of $1.5 trillion in spending reductions by cutting ObamaCare’s new entitlement spending:

The Select Committee is getting to work, and I encourage both parties, all 12 members, to put the Affordable Care Act on the table, alongside other entitlements in need of reform…The easiest money to save is money you haven’t yet spent…This new select committee could easily achieve almost their entire target of reducing the nation’s deficit, and…almost every dollar would come from benefits that do not yet exist.

The wonderful thing about this newly discovered feature of ObamaCare is that states don’t have to wait for Congress to act. They can reduce federal spending simply by not creating a health insurance Exchange.

September 8, 2011 10:06AM

‘Biggest Crackdown Ever’ Shows Medicare’s Anti‐​Fraud Efforts Are a Fraud

The Obama administration somehow continues to garner positive coverage for arresting (alleged) Medicare fraudsters who bilk the program for, say $295 million. See this CBS News report:

Combating fraud is a good thing, but $295 million is chicken feed compared to the $100 billion or so that Medicare and Medicaid lose to fraudulent and other improper payments each year.

Instead of merely parroting the government’s press releases on its anti‐​fraud efforts, it would be nice to see some media outlet examine why Medicare and Medicaid fraud is so prevalent, so persistent, and why politicians have no incentive to do anything serious to combat it. They could start with this article and this video:

September 8, 2011 8:50AM

Rick Perry’s Moment

Last night POLITICO Arena asked:

Who won the Reagan debate?

My response:

Give Rick Perry credit: he had the courage to call Social Security a Ponzi scheme, which it is. As with all such schemes, early entrants got something for nothing (or very little). Late entrants will get nothing for something. Social Security started with 16 contributors for every recipient. It’s now down to fewer that 3, and headed for 2. It’s unsustainable, as Perry said. A private company that ran such a scheme would be prosecuted in less than a New York minute. We should be grateful that a major candidate has finally spoken truth to fiction.