Archives: 11/2012

What Filibuster ‘Reform’ Is Really About

As the current Congress wraps up, and in the after-glo of the election, Senate Majority Leader Harry Reid (D-NV) is proposing to limit the ability of senators to filibuster in the next Congress. Of course, we’ve heard the arguments about Republican “obstructionism” and not allowing measures to come to a vote. Having spent seven years as Senate staff, this is all spin. Reid’s attempt to ”reform” the filibuster is about one thing:  limiting the ability of Republicans of offer amendments that Reid doesn’t want Democrats to have to vote on.

First, let’s remember that the objective of every majority leader is to stay majority leader. To do so means members of his party must win re-election. One of the important ways a majority leader can facilitate such is to protect his members from tough votes. For instance, witness Reid’s current attempts to stop a vote on Rand Paul’s (R-KY) amendment to limit indefinite detention. You’d think that since many liberal voters and groups oppose indefinite detention, Reid would welcome such a vote. But such a vote would put Democrats and President Obama at odds. So Reid’s favored course of action is to avoid such a vote.

How does this relate to the filibuster? Well after cloture is invoked (see Senate Rule XXII), the only amendments that can be voted on are those that are both pending and germane. And an amendment only gets pending if there’s no objection. All Reid needs to do is oppose amendments for 30 hours, then the curtain comes down and he can force a vote, and this assumes he hasn’t already filled the amendment tree (I’ve witnessed such a process too many times to count). So when Majority Whip Dick Durbin (D-IL) claims, “[w]e’ve had over 300 filibusters in the last six years,” he fails to mention that few of these were actual filibusters. The vast majority were attempts by the Majority to limit amendments by pre-emptively filing cloture.

I’m an empirical person. So while I haven’t found a perfect way to measure this, a good proxy is the ratio of roll call votes to measures passed. After all, a voice vote isn’t much use in forcing uncomfortable votes. Since 1992, the annual average of roll call votes to measures passed is 67 percent. Under Reid its fallen to 60 percent. A good check on whether this a useful indicator is that in election years the measure has been 50 percent, but in non-election years 84 percent, which is what one would expect if a majority leader is trying to protect his members from tough votes.

So don’t be fooled. Reid’s efforts at filibuster reform is not to have more votes, but to have fewer, and to have those votes only on the things which Reid wants voted on. What the Senate really needs is more debate, deliberation, and recorded voting, not less.

Susan Rice and the Interventionist Caucus

The Associated Press is reporting that Susan Rice, “appears to have a clearer path to succeeding retiring Secretary of State Hilary Rodham Clinton” now that John McCain and Lindsey Graham have softened their opposition to her candidacy. “If she is nominated for the position,” the AP’s Steven Hurst predicted, ”it may signal greater U.S. willingness to intervene in world crises during Obama’s second term.”

Bill Kristol believes that it would, which is why he supports Rice over other qualified candidates, including especially John Kerry (D-MA). Asked on FoxNews Sunday why he prefers Rice over Kerry, Kristol said:

“Because I think Susan Rice has been a little more interventionist than John Kerry…. John Kerry has been against our intervening in every war that we intervened.”

That isn’t entirely true, of course. For example, Kristol noted that Kerry “was for [the second Iraq war] before he was against it.” But as Ben Friedman writes today at U.S. News and World Report, within the generally interventionist foreign-policy community, Susan Rice is more interventionist than most.

In that context, I understand why the Senate’s small (and shrinking) Interventionist Caucus prefers Susan Rice. I understand why Kristol and the neoconservatives do. But I don’t understand why other people support her so strongly. Although the political class favors costly crusades abroad, most everyone outside of that tiny circle believes in leading by example, and favors, in Obama’s words, more “nation building here at home.” In short, Americans generally favor global engagement, but they reject the neoconservative variety (.pdf).

The recent election was not a referendum on foreign policy. The issue barely registered. Although those who cared most about foreign policy favored Obama over Romney by a 56 to 33 margin, those voters represented just 5 percent of the electorate according to a Fox News exit poll. What’s more, Barack Obama and Mitt Romney agreed on most foreign-policy issues. Romney favored more belligerent rhetoric, and huge increases for the Pentagon’s budget, but his prescriptions for the future boiled down to: “What Obama did, just more of it.” More meddling in distant civil wars, more nation building, a heavy U.S. military footprint wherever possible, and more drone strikes with less oversight where ground troops can’t go.

That seems to neatly summarize Susan Rice’s views, also. If Barack Obama nominates Rice to be the next Secretary of State, he will effectively be saying that he doesn’t care what the public wants, and that Mitt Romney was right.

The IRS’s Illegal ObamaCare Taxes, Bagenstos Edition

As I posted a week ago today, Jonathan Adler and I have a paper titled, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.” Our central claims are:

  1. The Patient Protection and Affordable Care Act explicitly restricts its “premium-assistance tax credits” (and thus the “cost-sharing subsidies” and employer- and individual-mandate penalties those tax credits trigger) to health insurance “exchanges” established by states;
  2. The IRS has no authority to offer those entitlements or impose those taxes in states that opt not to create Exchanges; and
  3. The IRS’s ongoing attempt to impose those taxes and issue those entitlements through Exchanges established by the federal government is contrary to congressional intent and the clear language of the Act.

We hope to post an updated draft of our paper, with lots of new material, soon.

At the Disability Law blog and Balkinization, University of Michigan law professor Samuel Bagenstos writes that our claims are “deeply legally flawed.”

Like others before him, Bagenstos’s main argument in support of the IRS reduces to the absurd claim that the federal government can establish an Exchange that is established by a state. He also offers two new arguments. Each is a non sequitur, and like his main argument is contradicted by the express language of the statute.

As I have written before:

[T]he statute is crystal clear. It explicitly and laboriously restricts tax credits to those who buy health insurance in Exchanges “established by the State under section 1311.” There is no parallel language – none whatsoever – granting eligibility through Exchanges established by the federal government (section 1321).

(Bagenstos claims the statute’s tax-credit-eligibility provisions use the phrase “established by the State under section 1311” only twice. He neglects to mention: how the eligibility provisions refer to those limiting phrases an additional five times; that there is no language contradicting or creating any ambiguity about the limitation they create; and that the statute also restricts its “cost-sharing subsidies” to situations where “a credit is allowed” under those eligibility rules. At the risk of repeating myself, the eligibility rules for the credits and subsidies are so tightly worded, they seem designed to prevent precisely what the IRS is trying to do.)

Bagenstos correctly notes that Section 1321 directs the federal government to create Exchanges within states that fail to create their own. Like others before him, he takes that directive to mean that the phrase “established by the State under section 1311” in fact ”does not have the exclusionary meaning” you might think. The statute authorizes tax credits through federal Exchanges, he argues, because federal Exchanges are ”established by the State under section 1311.” The federal government, it turns out, can establish an Exchange that is established by a state.

Like others before him, Bagenstos finesses the absurdity of that claim by arguing that Section 1321 provides that a federal Exchange ”will stand in the shoes of a state-operated exchange.” So far as I can tell, the “stand in the shoes” trope was first advanced by Judy Solomon of the Center for Budget and Policy Priorities. It is based on a 180-degree misreading of Section 1321. If a state chooses not to dance, Section 1321 doesn’t instruct the federal government to step inside (read: commandeer) the state’s dancing shoes. It directs the federal government put on its own dancing shoes, and to follow all the dance steps listed in Title I. Since the language restricting tax credits to state-created Exchanges appears in—you guessed it—Title I, federal Exchanges are bound by that restriction.

Bagenstos’s second argument is that since it was not necessary for Congress to restrict tax credits to state-created Exchanges to overcome the “commandeering problem,” the statute does not do so. But that’s a non sequitur. Just because Congress didn’t have to do something doesn’t mean Congress didn’t do it. The express language of the statute says Congress did it.

Bagenstos’s third argument is that because the Senate Finance Committee didn’t have to restrict tax credits to state-created Exchanges in order to have jurisdiction to direct states to create them, the Committee-approved language—which is now law—must not do so. Again, that’s a non sequitur. And not only does the express language of the statute impose that restriction, but Senate Finance Committee chairman Max Baucus (D-MT) admitted that’s what he was doing.

Along the way, Bagenstos contradicts himself, Baucus, and Timothy Jost by categorically claiming, “Nor is there any reason to think that Congress would have intended to treat participants in state- and federally-operated exchanges differently,” while conceding the commandeering problem and the Finance Committee’s limited jurisdiction are two reasons why Congress might have intended to do so.

Bagenstos’s interpretation of the statute violates the “mere surplusage” canon of statutory interpretation. It violates the expressio unius est exclusio alterius canon of statutory interpretation. It violates common sense.

Like others before him, Bagenstos offers no rebuttal to Baucus’s admission that the  statute means exactly what it says, and nothing whatsoever from the legislative history that supports the IRS’s attempt to violate the express language of the statute by imposing taxes that Congress never authorized.

Voting in 2012, Libertarian and Otherwise

Somehow, election results continue to trickle in, and David Wasserman of the Cook Political Report continues to update his spreadsheet of the national popular vote. At this point, he shows President Obama reelected with 50.86 percent of the vote to Mitt Romney’s 47.43 percent. For whatever reason, the late-arriving results all seem to widen Obama’s lead.

The total vote appears to be down by almost 4 million votes from 2008, and Obama has received about 4.7 million fewer votes than he did in his first campaign. Romney received slightly more votes than John McCain did.

Libertarian Party nominee Gary Johnson received 1,265,000 votes, according to Wikipedia, whose mysterious editors show the votes for every candidate. That’s the most any Libertarian presidential candidate has ever received. It amounts to 0.99 percent, just shy of Ed Clark’s 1.06 percent in 1980. If Johnson had been on the ballot in Michigan and Oklahoma, he would surely have broken 1 percent, though he still probably wouldn’t have exceeded Clark’s percentage. (Michigan and Oklahoma haven’t been very good states for Libertarian candidates.) Johnson’s best states were New Mexico, where he served two terms as governor, followed by Montana and Alaska.

The Libertarian Party reports that seven Libertarian statewide candidates in Texas and Georgia received more than a million votes.

Don’t forget to read the new ebook The Libertarian Vote: Swing Voters, Tea Parties, and the Fiscally Conservative, Socially Liberal Center, which discusses how the millions of libertarian-leaning voters in America tend to vote. (It does not have 2012 results.)

Paul Krugman’s ‘Remarkable Success Story’ in Latin America

Remember back in May when Paul Krugman described Argentina’s economic model in the last decade as a “remarkable success story”?

Today La Nación of Buenos Aires reports [in Spanish] that Argentina will have the worst record in terms of inflation and growth in South America in 2012. The Argentine economy will barely grow 1% this year and inflation will be above 20%, while the rest of the region enjoys healthy growth and low inflation rates.

Argentina is indeed a remarkable story. But not necessarily a successful one as Krugman pointed out.

FYI Memo for Senator McConnell: Medicare Is Already Means-Tested

Speaking of the “fiscal cliff,” a November 11 Wall Street Journal interview of the Senate minority leader asked, “What kind of a deal would Mr. [Mitch] McConnell accept? The senator’s top priority is long-term entitlement reform. ‘Changing the eligibility for entitlements is the only thing that can possibly fix the country long term.’ He wants means-testing for programs like Medicare. ‘Warren Buffett’s always complaining about not paying enough in taxes,’ he says. ‘What really irritates me is I’m paying for his Medicare.’”

In reality, means-testing entitlements would be a nonsensical “top priority” in fiscal cliff negotiations because (1) the fiscal cliff is not about fixing long-term problems but about preventing rather than postponing an imminent $536 billion tax hike, and because (2) the U.S. already imposes means-testing for both Social Security and Medicare.

With Social Security, the ratio of benefits to “contributions” is lowest for those who paid the most payroll taxes for the most years and highest for those who paid the least.  Making matters much worse, up to 85 percent of benefits are now taxable for seniors who either saved for retirement or keep working, but tax-exempt for others.  That highly-progressive 1993 tax on benefits is another devious way of means-testing after-tax retirement benefits.

Thanks to new redistributionist rules from the Obama administration, monthly Medicare premiums now rise from $99.90 on single seniors with less than $85,000 in income to $229.70 (including drug coverage) at incomes from $107,000 to $160,000, and to $386.10 above $214,000.   Since President Clinton removed any ceiling on income subject to Medicare payroll tax, those who had relatively high salaries while working paid many thousands more in Medicare taxes than they can ever expect to receive in benefits – assuming they are foolish enough to sign up (as I did not) for benefits that also cost nearly four times as much as others pay.

The most money that Medicare might save by denying benefits to the “top 1 percent” would be roughly 1 percent.  That would leave 99 percent of Medicare spending untouched.  If high-income people were denied benefits, however, they would also be relieved of the steeply-progressive new Medicare premiums.  Medicare would then lose all that revenue they are now expecting to collect by charging much higher premiums at higher incomes.    The net effect of eliminating both benefits and premiums of high-income seniors offers no solution to the nation’s long-term fiscal problems.  It is certainly no solution to the very-near-term threat of a series of massive tax increases on January 1.

 

 

 

Solow’s Slippery Slope

Angus Burgin’s The Great Persuasion is a good book on how a handful of brave intellectuals “reinvented free markets” after the Great Depression. Readers of Cato@liberty may be familiar with this story. The founding of the Mont Pelerin Society, how Ludwig von Mises’s intellectual exile in the United States happened to breed a new generation of Austrian scholars, the establishment of the first free-market think-tanks (FEE by Leonard Read in the U.S., the IEA by Harris and Seldon in the UK) are part of the narrative of the revival of classical liberalism after a long period in which economics equated with Keynesianism. This story caught the eyes of outsiders to the libertarian movement too: the  books by Burgin and Masters of Universe , a far less intellectually polished work by Daniel Stedman Jones, are interesting, recent examples.

Burgin’s book was reviewed in The New Republic by heavyweight  Nobel Laureate Robert Solow. Solow’s review is interesting not so much because he affirms a point of view which is skeptical of the virtues of the free market - but because he does so in a rather peculiar way.

He does so by distinguishing between “a Good Hayek and a Bad Hayek”. The first was “a serious scholar who was particularly interested in the role of knowledge in the economy (and in the rest of society)”. The central insight of the Good Hayek made its way in the economic profession, according to Solow: “all economists know that a system of competitive markets is a remarkably efficient way to aggregate all that knowledge while preserving decentralization.”

But, Solow maintains, a “Bad Hayek emerged when he aimed to convert a wider public”. This “Bad Hayek” could be credited with the idea statism puts in place “a slippery slope,” so that state intervention almost inevitably calls for more state intervention, and thus the establishment of a national health service is nothing but the first step towards full fledged totalitarianism. “The Road to Serfdom was a popular success but was not a good book”, writes Solow, arguing that it set the apocalyptic tone which characterizes today those that he rather amusingly mocks as “Tea Party Hayekians.” The fact that “natural allies such as Knight and moderates such as Viner thought that he had overreached suggests that the Bad Hayek really was there in the text.”

If ever was a critic of determinism, that was Hayek. In The Road to Serfdom (as a quick reading of the introduction would suffice to establish) he did not maintain that interventionism inevitably and automatically lead to totalitarianism. By his own words, he was not “arguing that these developments are inevitable. If they were, there would be no point in writing this.” What Hayek wanted to explain was that “it would be a mistake to believe that the specific German rather than the socialist element produced totalitarianism. It was the prevalence of the socialist views and not Prussianism that Germany had in common with Italy and Russia”. A point that by now should be clear enough.

The founders of the Mont Pelerin Society, to quote Burgin, “perceived their roles as public intellectuals to be one of precipitating long term ideological change”. Being a public intellectual means to offer a narrative. Robert Solow may be right is in downplaying the influence of the Mont Pelerin Society, whose main function was in part “to maintain the morale of the free-market fellowship.” In years in which free-market leaning scholars were as rare as black swans, dispersed in a number of universities all over the world, and with no Facebook or Twitter to keep on a conversation at all time, that was in itself quite an achievement. (Tyler Cowen has sharply responded to Solow on the importance of  the Mont Pelerin Society.) But the central point of Solow’s critique is the insinuation that one cannot be a serious scholar and a libertarian at the same time.

Now, this argument leads indeed on a slippery slope. As Solow states, for a serious modern reader, the rhetoric is irrelevant or, worse, misleading, or, even worse, intentionally misleading. Everyone has known for a long time that a complicated industrial economy is either a market economy or a mess. The real issues are pragmatic.” The Milton Friedmans of this world find their place in the sun by manufacturing rhetorical devices that are then put at the disposal of political players - but this is more a demeaned political theater, than the glorious “war of ideas.”

Apparently, being a “serious modern reader,”  for Solow,  requires reducing all policy problems to “fine tuning”. A good social scientist should stick with that, without turning into his bad twin because of open advocacy of a serious and consistent set of ideas.

Maintaining that “ideas have consequences” does not explain everything - but it does explain something. The understanding of the basic institutions of the free society - or rather, the lack thereof - gets crystallized in fundamental prejudices shared by people. Public intellectuals are a strange kind of thermometer, that at the same time signals what are the prevalent views in society but also can preach and act to change the temperature.

After all, it was Robert Solow’s friend and fellow Nobel Laureate, Paul Samuelson, that famously said “I don’t care who writes a nation’s laws — or crafts its advanced treatises — if I can write its economics textbooks.” The debate on ideas enrich our societies - but it cannot take place, if one allows himself the luxury of considering others’ ideas as mere political stratagems, rather than complex world views worth examining. A slippery slope indeed.