Archives: 12/2011

Obama’s Top 10 Constitutional Violations

That’s the topic of my latest op-ed, in the Daily Caller.  Here’s the list:

  1. The individual mandate
  2. Medicaid coercion
  3. The Independent Payment Advisory Board
  4. The Chrysler bailout
  5. Dodd-Frank
  6. The deep-water drilling ban
  7. Political-speech disclosure for federal contractors
  8. Taxing political contributions
  9. Graphic tobacco warnings
  10. Health care waivers

For descriptions of what makes these things so constitutionally bad, read the whole thing.

This Week in Government Failure

Over at Downsizing the Federal Government, we focused on the following issues this past week:

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Ninth Circuit Gets It Right, Deregulates the Bone Marrow Market

This blogpost was coauthored by Cato legal associate Chaim Gordon.

Thanks to the Institute for Justice, those suffering from leukemia and various other ailments that require them to wait for a bone marrow match to miraculously appear have new hope. Yesterday’s unanimous opinion by the Ninth Circuit in Flynn v. Holder effectively deregulates the bone-marrow market—and may even encourage lawmakers to rethink the disastrous federal prohibition on compensating organ donors.  (I previously wrote about the case here and here, and you can watch Cato’s forum on it here.)

At issue here is the National Organ Transplant Act, which prohibits patients from compensating would-be donors of life sustaining organs. The Ninth Circuit ruled that NOTA does not apply to blood (or blood subparts), and so it is entirely legal to sell bone marrow stem cells if those cells are extracted from the blood—as they are in 70% of donations—instead of from the bone marrow itself.

Unfortunately, the Ninth Circuit rejected IJ’s argument that Congress has no legitimate authority to interfere with the right to participate in safe, accepted, lifesaving, and otherwise legal medical treatment. In rejecting this argument, the court effectively held that NOTA’s ban on the sale of actual bone marrow was constitutional because an unregulated market posed certain dangers (especially of the exploitation of desperate patients).

It is highly unlikely that such exploitation could occur under current market conditions, however, because donors and patients have no way of contacting each other without the National Registry system that matches them. And, of course, the choice is not between a prohibition on compensation and complete non-regulation; some regulation may be appropriate, whether by legislation or simple action of the common law akin to how it operates to prevent extortion in other contexts.

The good news is that, with the bone marrow market effectively deregulated, Congress may now be motivated to reexamine its misguided ban on compensating organ donors. One of the greatest obstacles to reforming the prohibition on organ sales is the fortunate fact that relatively few Americans require organ transplants in any given election cycle. According to government statistics, 112,546 Americans are currently on some kind of organ transplant waiting list. That means only around 1 in 3,000 Americans (and their families and friends) would be seriously motivated to demand organ transplant reform from Congress. Congress will now be forced to grapple with its policies regarding bone marrow transplants, which may be an opportune time for advocates to push for wider organ transplant reform.

The Ninth Circuit’s opinion also clears the way for Supreme Court review of NOTA. If this case reaches the high court, IJ can press its constitutional arguments more forcefully. And even if the Supreme Court merely affirms the Ninth Circuit’s opinion on statutory grounds, we will inevitably learn much about the justices’ views on the constitutionality of NOTA more broadly.

For the moment, Flynn v. Holder means that, for the first time in over 25 years, a spotlight has been shined on NOTA and its disastrous effects on Americans’ medical liberty. And that is why the Ninth Circuit’s narrow bone marrow opinion may actually be a significant step toward the rational regulation of organ markets.

For more of Cato’s work in this area, see, for example, this paper and this op-ed.

Revisiting the ‘Christmas Tree Tax’

Three weeks ago, a national commotion erupted when the Drudge Report headlined a story from the Heritage Foundation on the Obama administration’s implementation of a new tax on Christmas trees. I noted here that the 1996 legislation enabling the U.S. Department of Agriculture to implement the tax received most of its support from Republicans, including co-sponsor John Boehner.

The National Taxpayers Union gives a tidy explanation of how the law almost led to the “Christmas Tree Tax”:

The Federal Agriculture Improvement and Reform Act of 1996 permitted producers of agricultural commodities such as beef, pork, or popcorn to create what are known as research and promotion programs, or “checkoffs.” These are analogous to unions: producers pay “dues” to the checkoff which works to fund research and advertising efforts on behalf of the industry represented. Board members are appointed by the Secretary of Agriculture who also has authority to enforce dues-payment. Because the dues are government-coerced, they are essentially taxes passed on to consumers.

There are currently 18 checkoff programs. And while the Obama administration quickly stopped the Christmas tree tax checkoff program from going into effect, there are still other agricultural commodity groups, such as the hardwood lumber industry, pushing for their own checkoff. There are also efforts to allow the creation of non-agricultural commodity checkoffs.

NTU notes that now another Republican wants to create a similar scheme at the Department of Commerce:

Congressman John Shimkus (R-IL) introduced H.R. 3395 to create the Concrete Masonry Products Board to promote and market concrete products. The Board would be made up of representatives of the concrete industry appointed by the Secretary of Commerce. Producers and importers of concrete masonry would initially be assessed $0.01 per concrete masonry unit sold in the United States. The Board will have authority to change the assessment rate, but it can be no higher than $0.05 per unit. The Secretary of Commerce would have authority to levy late-payment and interest charges on those producers who fail to remit an assessment.

That would be the same John Shimkus who received a “Taxpayer Hero” award from the Council for Citizens Against Government Waste in October. Carrying water for a special interest at the expense of consumers is not what I would consider to be an act of heroism. Worse, granting this authority to the Department of Commerce would add another layer of cement to the foundation (pun intended) of a bureaucracy that one former Commerce secretary derided as “nothing more than a hall closet where you throw in everything that you don’t know what to do with.” Fortunately, the bill only has two co-sponsors (Republican Rep. Richard Hanna of New York is one of them), so it’s probably not going anywhere.

Republicans who say they want smaller government should walk the talk by introducing legislation that would eliminate agencies and programs. For example, Rep. Mike Pompeo (R-KS) has introduced legislation to abolish Commerce’s Economic Development Administration. Otherwise, they’re just part of the problem, or—in the case of Shimkus and Hanna—they make matters worse.

See here for more on downsizing the Department of Commerce.

Housing Will Be the Last to Recover

The New York Times’ Floyd Norris repeats the same old tired argument that if only we could get the housing market going, everything would be swell. Maybe that works if somehow you believe our objective is to get back to 2005.

Don’t get me wrong; 2005 felt great in terms of the economy. But it was a BUBBLE, driven by false and misplaced beliefs about housing prices (not to mention lots of easy credit). The result? We built more housing than we now need or want. Norris never gets around to explaining how exactly building more housing would solve our current problem of oversupply.

Norris’ solution? Yes, the same tired, old proposal of writing down mortgage debt. Again, nowhere does he explain how forgiving mortgage debt helps to clear the oversupply of housing—because it doesn’t. As I argued before, the notion that forced mortgage write-downs creates wealth, and hence increases spending, is false. But why let facts get in the way of a blind devotion to theft as a manner of creating wealth?

The solution is not to hope our housing market turns around (if you actually want to, try these). Counter to Norris’ bias against markets, letting prices fall and the market clear is the most workable path to fixing the housing market. The real solution to getting our economy moving is helping to transition resources out of housing and into other sectors of the economy, where they can be used to create real wealth and not simply to bid up house prices. I cannot envision a situation where we put more than half of the 2 million unemployed constructions workers back to work in residential construction any time soon. Ain’t going to happen.

I particularly find these positions most puzzling when they come from the Left. We’ve had a decade of stagnant wages. Why? Because we invested in running up asset (house) prices, rather than investing in capital (plant and equipment), which would have increased labor productivity and ultimately wages. Running up house prices does not increase wages or benefit the working class. It’s just a horrible form of regressive theft that benefits those with assets (houses) at the expense of those without.

This Week at

The day after Thanksgiving didn’t see one of these updates, so we’ve got two weeks of new content at to cover.

George H. Smith continued his Excursions series with the first two parts in an extended look at the Declaration of Independence. In part 1, Smith discussed the intellectual history behind the document’s famous reference to “unalienable” rights. In part 2, he turned to two instances of curious wording: the use of “self-evident” and the lack of “property” in Jefferson’s list of inalienable rights.

We had a few new videos, too. In an addition to our “Libertarian View” series, Penn Jillette—magician and H. L. Menken research fellow at the Cato Institute—talks about what he sees as the important distinction between trying to convince someone that what you believe is true and just stating sincerely what you believe.

On November 29, we posted our first talk from Thomas Szasz. Speaking in 1994, the famous psychiatry skeptic addressed the problem of socialism in health care—an issue very much with us today.

And just today, we added a talk by Roger Garrison on monetary policy and central banking.

Finally, we had an extended—and ongoingdebate in the Free Thoughts blog between Julian Sanchez and Miles Pope on conceptions of morality in Jan Narveson’s The Libertarian Idea.

As always, there’s much more at Keep up to date with everything new on the site by following us on Twitter, Facebook, and Google+.

Digging Our Grave in Af-Pak

Last week’s killing of two dozen Pakistani soldiers by a NATO airstrike shows why the war in Afghanistan will continue to weaken, not stabilize, neighboring Pakistan, contrary to what U.S. officials and analysts claim. Perhaps the gravest outcome from this latest “tragic, unintended incident” will be the widening gulf between Pakistan’s senior military leadership and its junior officer corps, a chasm that opened under President-General Pervez Musharraf (1999-2008) and threatens to open far wider.

Pakistan’s alliance with the United States has always been a liability. After 9/11, Musharraf forced the reassignment or resignation of officers regarded as pro-Taliban or Islamist, because his decision to support U.S. counterterrorism efforts undermined his support among key military officials. In 2003, he narrowly escaped two attempts on his life—within 11 days of each other—that involved the collaboration of junior officers. The attacks came two months after al Qaeda’s second-in-command, Ayman al-Zawahiri, released an audiotape urging Pakistanis to overthrow the military general.

B. Raman, the former head of the counterterrorism division for India’s external intelligence agency, Research and Analysis Wing (RAW), writes that while many in India might rejoice at this intra-military split and the further deterioration of U.S.-Pakistan relations, “This need not necessarily be a beneficial development for India. It is in our interest that the US retains the ability to influence the behaviour of the Pakistani military leadership.”

That is exactly what Washington risks losing the longer it prosecutes this ill-conceived quagmire in Afghanistan. “Imagine how we would feel if it had been 24 American soldiers killed by Pakistani forces at this moment,” said Sen. Dick Durbin (D-IL) on Fox News Sunday. Fanning public anger in Pakistan is Jamaatud Dawa, Hizb ut-Tehrir, and other organizations that stand to gain whenever anti-U.S. anger spikes. But is it any wonder why Pakistani streets and newspaper editorials were brimming with anti-American sentiment? Such escalating pressures against General Ashfaq Pervez Kayani, the chief of the army staff, come just after Pakistan’s security establishment was publicly humiliated for either being complicit or incompetent in America’s Osama bin Laden raid, and was accused of attempting to stage a coup in the recentmemogatescandal.

Compounding the partnership’s endless string of controversies are recurring incidents along the Af-Pak border. These incidents hurt the honor of Pakistan’s military, decrease the country’s resolve to cooperate with America, and highlight a glaringly obvious problem with America’s current strategy. U.S. officials claim the coalition cannot fight its way to victory in Afghanistan. But by continuing to attack indigenous insurgents before withdrawing or engaging in negotiations, the coalition is undermining the potential for a diplomatic solution. Look no further than Pakistan’s refusal to attend this week’s Bonn summit. As Pakistan’s foreign minister, Hina Rabbani Khar, told Dawn News television this week, “It is definitely not Pakistan’s intention to work against the rest of the world. But the rest of the world also has to understand that if they have pushed Pakistan into this corner, violated red lines, then they have denied the basis of partnership.”

An iteration of this discrepancy comes from Pakistani columnist Ejaz Haider, who wrote last year:

Behind all the nice talk about setting the world right through a Lockean cooperative framework lurks Mr. Hobbes… Mr. Obama… (de-hyphenated) Pakistan and India by not including Pakistan on this visit even as Pakistan is supposed to be a vital strategic partner and a state that is, presumably, going to determine, by his own admission, not only the future of this region but of the entire world. This would be amusing if it did not indicate a deep policy flaw.

Only America’s hubris can explain why officials continue to believe that they can win a war in which the neighboring state—with legitimate security interests—actively assists elements of the insurgency, denies transit routes for delivery of war supplies, and uses its leverage to increase the costs of America’s military presence. The 10-year war’s latest casualty is the ongoing effort to bring insurgent networks into a broader power-sharing arrangement in Kabul. U.S. militarism has deprived diplomatic efforts of a key regional player. Absent the cooperation of Pakistan, the United States continues to dig its own grave.

Cross-posted from “The Skeptics” at the National Interest.