Archives: 05/2012

My Second Year Battling Obamacare: Hitting the Century Mark

A year ago, I published a law review article detailing “my first year battling Obamacare.”  That essay wove the main legal arguments and judicial opinions to that point—the last one being the Sixth Circuit’s ruling for the government, a footnote about which I managed to insert in final editing—into a narrative about my and Cato’s involvement in the litigation.

The colorful highlights of that narrative undoubtedly came from the many debates, panels, and other public events I participated in, a tour triggered at least in part by my “Obamacare debate challenge.”  Cato senior fellow Randy Barnett has also graciously passed on to me various speaking invitations he’s declined; I’ll take being the back-up/junior varsity to the “intellectual godfather” of the Obamacare cases any day!  (Randy and I, who are the only people other than two or three government lawyers to have attended every single Obamacare appellate argument, joked that that we were going to make t-shirts called “Obamacare Appeals Tour 2011: Traveling in Interstate Commerce.”)

All that good fun has continued through the present, of course, and while nobody’s yet asked me to do a follow-up article about my second year—I may write one anyway this summer once the decision hoopla dies down—I can report that next Wednesday I’ll be marking my 100th Obamacare public event.  Fittingly, it’ll be held at the National Constitution Center in Philadelphia.  It’s an interesting format too, with Randy and Yale law professor Jack Balkin (whom I’ve debated) as the main discussants and a small panel of “experts” acting as interlocutors.  The event, which starts at 6:30 p.m., is open to the public but has a modest ($7-$10) admission fee.

And of course, we shall soon see the ultimate result of all this investment of time and energy.  The Supreme Court will almost certainly release its ruling at the end of June, with the most likely days being June 27 (my birthday, as it happens), June 25, June 21, and June 29—in that order.

‘Ron Paul’s Revolution’ Will Be Televised

Two weeks ago Brian Doherty discussed his new book, Ron Paul’s Revolution: The Man and the Movement He Inspired, at a Cato Book Forum, which you can watch online.

This weekend BookTV on C-SPAN2 will broadcast the event twice:

  • Saturday, June 2, at 8:30 p.m. ET
  • Sunday, June 3, at 3:30 p.m. ET

Also on BookTV this weekend: a rebroadcast of Brian Lamb’s 1999 interview with Virginia Postrel on The Future and Its Enemies, and an interview with Elizabeth Price Foley on The Tea Party: Three Principles.

Forfeiture On the Farm: The Feds’ ‘Structuring’ Crackdown

If you’re a small merchant and you do a lot of cash business, please read on very carefully:

A federal law called the Bank Secrecy Act requires that banks report to the feds their customers’ transactions of over $10,000 in currency. More menacingly, the BSA makes it a federal crime for customers to try to dodge this paperwork burden (or just hedge their privacy) by making repeated smaller deposits or withdrawals that, totaled up, would meet the $10,000 threshold. When the Supreme Court ruled in 1994 that defendants could not be convicted of this “structuring” offense unless they knew the practice was illegal, Congress promptly changed the law to delete the willfulness requirement.

Until recent years, the structuring provision tended to go unenforced unless federal prosecutors were interested in some bigger illegality that the transactions helped to advance, whether it be international terrorism or just tax-dodging. Now that’s changed. As I explain in an op-ed today in the Baltimore Sun, the feds nowadays keep descending on small businesses and seizing their bank accounts on structuring charges, with no effort to allege other illegality. In the best-known instance of structuring in recent years, Eliot Spitzer knowingly manipulated transactions so as to hide his illegal nightlife habits; after Spitzer deployed a team of fancy lawyers, he got the Justice Department to drop the charges. But Main Street businesses, as I explain in the Sun, have not been so lucky:

Last month, the feds swooped down on a successful Maryland dairy business, South Mountain Creamery, seizing $70,000 in its bank accounts and formally charging its owners, Randy and Karen Sowers, with the offense of bank “structuring.”

…In Maryland, which has become the busiest federal prosecutorial district for structuring charges—coincidentally or not, the assistant U.S. attorney is the author of a book on forfeiture law—the feds last year seized $90,000 from the bank accounts of a farm stand on the Eastern Shore, and gave back only about half of it after filing no criminal charges.

Besides direct-to-consumer farmers, targets of federal action have included motels, restaurants, taxi companies, and car dealerships. You can read earlier work on the evils of forfeiture law here and more comprehensively here; more on structuring at here and here.

Jonah Goldberg’s Good Advice for the GOP: Confess Your Spending Sins and Repent

In a post last week, I explained that Obama has been a big spender, but noted his profligacy is disguised because TARP outlays caused a spike in spending during Bush’s last fiscal year (FY2009, which began October 1, 2008). Meanwhile, repayments from banks in subsequent years count as “negative spending,” further hiding the underlying trend in outlays.

When you strip away those one-time factors, it turns out that Obama has allowed domestic spending to increase at the fastest rate since Richard Nixon.

I then did another post yesterday in which I looked at total spending (other than interest payments and bailout costs) and showed that Obama has presided over the biggest spending increases since Lyndon Johnson.

Looking at the charts, it’s rather obvious that party labels don’t mean much. Bill Clinton presided during a period of spending restraint, while every Republican other than Reagan has a dismal track record.

President George W. Bush, for instance, scores below both Clinton and Jimmy Carter, regardless of whether defense outlays are included in the calculations. That’s not a fiscally conservative record, even if you’re grading on a generous curve.

This leads Jonah Goldberg to offer some sage advice to the GOP:

Here’s a simple suggestion for Mitt Romney: Admit that the Democrats have a point. Right before the Memorial Day weekend, Washington was consumed by a debate over how much Barack Obama has spent as president, and it looks like it’s picking up again.

…[A]ll of these numbers are a sideshow: Republicans in Washington helped create the problem, and Romney should concede the point. Focused on fighting a war, Bush—never a tightwad to begin with—handed the keys to the Treasury to Tom DeLay and Denny Hastert, and they spent enough money to burn a wet mule. On Bush’s watch, education spending more than doubled, the government enacted the biggest expansion in entitlements since the Great Society (Medicare Part D), and we created a vast new government agency (the Department of Homeland Security).

…Nearly every problem with spending and debt associated with the Bush years was made far worse under Obama. The man campaigned as an outsider who was going to change course before we went over a fiscal cliff. Instead, when he got behind the wheel, as it were, he hit the gas instead of the brakes—and yet has the temerity to claim that all of the forward momentum is Bush’s fault.

…Romney is under no obligation to defend the Republican performance during the Bush years. Indeed, if he’s serious about fixing what’s wrong with Washington, he has an obligation not to defend it. This is an argument that the Tea Party—which famously dealt Obama’s party a shellacking in 2010—and independents alike are entirely open to. Voters don’t want a president to rein in runaway Democratic spending; they want one to rein in runaway Washington spending.

Jonah’s point about “fixing what’s wrong with Washington” is not a throwaway line. Romney has pledged to voters that he won’t raise taxes. He also has promised to bring the burden of federal spending down to 20 percent of GDP by the end of a first term.

But even those modest commitments will be difficult to achieve if he isn’t willing to gain credibility with the American people by admitting that Republicans helped create the fiscal mess in Washington. Especially since today’s GOP leaders in the House and Senate were all in office last decade and voted for Bush’s wasteful spending.

It doesn’t take much to move fiscal policy in the right direction. All that’s required is to restrain spending so that it grows more slowly than the private sector. (With the kind of humility you only find in Washington, I call this “Mitchell’s Golden Rule.”) The entitlement reforms in the Ryan budget would be a good start, along with some much-needed pruning of discretionary spending.

And if you address the underlying problem by limiting spending growth to about 2 percent annually, you can balance the budget in about 10 years. No need for higher taxes, notwithstanding the rhetoric of the fiscal frauds in Washington who salivate at the thought of another failed 1990s-style tax hike deal.

Blocking Obamacare Exchanges Is Only Risky for Obamacare Profiteers

USA Today reports that groups like the American Legislative Exchange Council and the Cato Institute have had much success in discouraging states from creating Obamacare’s health insurance “exchanges.” Even the Heritage Foundation, which once counseled states to establish “defensive” Obamacare exchanges, now counsels states to refuse to create them and to send all exchange-related grants back to Washington.

In response, Obamacare contractor and self-described conservative Republican Cheryl Smith sniffs:

When you work at a think-tank, it’s really easy to come up with these really high-risk plans.

Except, there is no risk to states. The only risks to this strategy are that health insurance companies won’t get half a trillion dollars in taxpayer subsidies, and that certain Obamacare contractors won’t get any more of those lucrative exchange contracts.

A Win in Texas for Drug Policy Reform

Beto O’Rourke, who is well known for questioning the policy of drug prohibition, defeated eight-term congressman Silvestre Reyes, former chairman of the House Intelligence Committee, in a Texas congressional primary yesterday. In the heavily Democratic, 78 percent Hispanic El Paso district, O’Rourke is almost certain to win in November.

President Obama endorsed Reyes, and former president Bill Clinton campaigned for him. The Washington Post notes:

Reyes made an issue out of O’Rourke’s support for marijuana legalization, which the congressman opposes. In one Reyes ad, a group of children say “no” to drugs while “Beto O’Rourke wants to legalize drugs” flashed across the screen.

O’Rourke campaigned as a “true Democrat” on economic issues. But in addition to his criticisms of the drug war, he endorsed term limits and criticized Reyes for supporting the Patriot Act.

Last November, O’Rourke spoke at Cato’s conference “Ending the Global War on Drugs,” along with the former president of Brazil, the former foreign minister of Mexico, and other world leaders. Watch the video:

O’Rourke was also interviewed for a Cato podcast. Back in 2009, Cato’s Juan Carlos Hidalgo participated with O’Rourke in a conference on the drug war in El Paso.

Reyes is the sixth congressional incumbent defeated in a 2012 primary, which doesn’t sound like a lot. But the Campaign for Primary Accountability, which supported O’Rourke, notes that the average number of incumbents defeated in any primary season is three.

Blame It On the Constitution

The New York Times treats us today to an op-ed by Prof. Sanford Levinson entitled “Our Imbecilic Constitution,” with the remedy recommended for such imbecility taking us well beyond reforming the document’s amendment provisions. The problem, you see, is that our government has become “dysfunctional” owing to “gridlock.” Like all good Progressives, Levinson is a government man: he sees problems for which no less than the federal government is the ready solution, but that’s unlikely under the strictures our “imbecilic” Constitution imposes on it.

Not surprisingly, therefore, he starts with a complaint about federalism: in the Senate, small states have power equal to that of large ones, which in turn implicates the Electoral College. The remedy for the problems Levinson believes can be traced to those checks on power is to unleash popular will through a more direct democracy. Thus he lauds Theodore Roosevelt and Woodrow Wilson, Progressives who “seriously questioned the adequacy of the Constitution.”

Theodore Roosevelt would have allowed Congress to override Supreme Court decisions invalidating federal laws, while Woodrow Wilson basically supported a parliamentary system and, as president, tried to act more as a prime minister than as an agent of Congress. The next few years saw the enactment of amendments establishing the legitimacy of the federal income tax, direct election of senators, Prohibition and women’s right to vote.

Never mind the merits of those accomplishments, Levinson next offers various state constitutions as models for what might be, starting with New York’s, its fifth such document. One hopes the Knickbockers get it right before too many more years pass, because if dysfunction be the touchstone of failure, the Empire State has come close to it.

Then again, Levinson offers this idea for fixing congressional gridlock:

We could permit each newly elected president to appoint 50 members of the House and 10 members of the Senate, all to serve four-year terms until the next presidential election. Presidents would be judged on actual programs, instead of hollow rhetoric.

“Programs:” We need to get things done. Isn’t that what government is for?

To be sure, there are problems today that cry out for solutions, yet most are not inherent in the human condition but rather are the result of government “programs.” After all, it’s entitlements, individual and corporate, that have given us our massive deficits and debt, to take only the largest and most conspicuous examples. That is the one thing that Levinson does not seem to appreciate.

As compared to the rest of the world, our Constitution has stood the test of time fairly well. The problems we now have did not arise from abiding by its limitations but just the opposite. The Progressives ignored those limits. It’s that behavior, on which the New Deal and the Great Society doubled down, that has brought us to this impasse, with the country immersed today in the politics of a zero-sum game. We don’t need a new Constitution. We need to return to the one we have.