201301

January 31, 2013 4:26PM

“We’re Going to Have to Come Up with Something.”

And that something is a national ID.

The quote is Senator Chuck Schumer's (D-NY), speaking about immigration reform at Politico's Playbook Breakfast. The national ID gloss is mine, based on the immutable logic of "internal enforcement."

Senators Schumer and McCain (R-AZ) say that the "Gang of Eight" senators who are working up an immigration reform package are united on the idea of making it impossible for illegal immigrants to get work in the United States. The only way to do that is to put all working Americans---if you work, that means you---into a national ID system.

"People say, 'National ID card,'" Senator Schumer says. They do because that is what he's talking about.

Now, they haven't gotten all the way through the logic of their plans. Senator Schumer talks about a "non-forgeable [Social Security] card," but a Social Security card only proves that a certain name is linked to a certain number. If a system is going to prove that a given person is entitled to work in the United States, it must be an identity system. It must compare the identifiers of the person to the identifiers in the system, whether held on a card or in a database, so that it can assess their legal status, including natural-born citizenship.

This is why Senator Schumer also talks about biometrics. The system must biometrically identity everyone who works---you, me, and every working American you know. There is no way to do internal enforcement of immigration law without a biometric national identity system.

It looks as though E-Verify, an incipient national ID system, will be a part of most or all comprehensive immigration reform proposals. Ironically, immigration reform that aligns the law with our country's economic need for labor would obviate the need for E-Verify and a national ID. 

There are lots of ways to become familiar with the national ID issues that have yet to bubble up in this early stage of the immigration reform debate. My 2006 book, Identity Crisis, is a decent primer on identity and national ID generally. I examined the direct line between internal enforcement of immigration law and a national ID in my 2008 paper: "Electronic Employment Eligibility Verification: Franz Kafka’s Solution to Illegal Immigration." And my article in last year's special Cato Journal on immigration reform was called: "Internal Enforcement, E-Verify, and the Road to a National ID."

January 31, 2013 4:06PM

On ObamaCare’s Discriminatory Subsidies, Brewer Bows When Arizona Should Keep Slugging

Arizona Gov. Jan Brewer (R) recently set aside her vociferous opposition to ObamaCare's costly Medicaid expansion by announcing she will support implementing that expansion in Arizona. A significant factor in her reversal, she claimed, was that if Arizona did not expand its Medicaid program, then some legal immigrants would receive government subsidies while U.S. citizens would get nothing.

Brewer's analysis of this "immigration glitch," and her remedy for it, are faulty. Fortunately, she, Arizona's legislature, and its attorney general have better options for stopping it.

An odd and unforeseen result of the Supreme Court's decision upholding ObamaCare is that, in certain circumstances, the law will now subsidize legal immigrants but not citizens. What triggers this inequity is a state's decision to implement an Exchange -- not the decision to opt out of the Medicaid expansion. (Even if a state implements both provisions, legal immigrants would still receive more valuable subsidies than citizens.) The good news is that states can therefore prevent this inequity simply by not establishing an Exchange. If Brewer wants to avoid this "immigration glitch," there is no need to expand Medicaid. She already blocked it when she refused to establish an Exchange.

The bad news is that the Obama administration is trying to take away the power Congress granted states to block those discriminatory subsidies, and the punitive taxes that accompany them. Contrary to both the statute and congressional intent, the IRS has announced it will impose that witch's brew in all states, even in the 32 that have refused to establish an Exchange.

Oklahoma attorney general Scott Pruitt has filed suit to stop that stunning power grab. If Brewer is serious about stopping the "immigration glitch," the way to do it is by filing a lawsuit similar to Oklahoma's, while adding a complaint that the Obama administration's illegal subsidies also violate the Equal Protection clause.

How “the Immigration Glitch” Emerged

ObamaCare aims to offer some form of tax credit or subsidy to purchase health insurance to all citizens and legal immigrants below 400 percent of the federal poverty level (about $92,000 for a family of four). Generally, people below 138 percent of the poverty level would receive subsidies through their state's Medicaid program, while citizens and legal immigrants between 100-400 percent of poverty would receive tax credits and/or subsidies to purchase private health insurance through state-created health insurance “exchanges.”

In a slight departure from those general rules, Congress also made legal immigrants below 100 percent of poverty eligible for those Exchange subsidies. Why? ObamaCare originally would have required states to expand their Medicaid programs to all citizens up to 138 percent of poverty level. But since states have the option of excluding legal immigrants from their Medicaid programs, and could continue to do so under that expansion, Congress made legal immigrants below the poverty level eligible for Exchange subsidies if they live in one of those states. Since ObamaCare supporters expected all states to implement the Medicaid expansion, they reasonably believed all citizens and legal immigrants below 400 percent of poverty would receive some form of tax credit or subsidy.

Then along came Chief Justice of the United States John Roberts.

With six of his colleagues, Roberts voted to declare ObamaCare’s Medicaid mandate unconstitutional. Four of those justices then voted to strike down the entire law on the grounds that the Medicaid mandate was not severable from what remained. But rather than vote with them, Roberts voted with the other four justices—including two who held the Medicaid mandate to be constitutional—to preserve the law and simply make the Medicaid expansion optional for states.

Roberts claimed he was exercising judicial restraint. In reality, he put in place a new law that Congress never would have enacted. ObamaCare still makes the aforementioned legal immigrants eligible for Exchange subsidies, provided their state establishes an Exchange. But under the law as amended by John Roberts, if that state does not expand Medicaid, an inequity appears: some legal immigrants receive Exchange subsidies while otherwise identical citizens, if not already eligible for Medicaid, receive nothing. Given the sensitivity surrounding the law’s treatment of immigrants (remember “YOU LIE”?), there is zero chance such a bill could have passed Congress. So if you want to know whom to thank for this inequity, thank John Roberts. This inequity is one more reason Roberts' severability analysis was faulty, and the joint dissenters had it right: the Court should have struck down the entire law based on the unconstitutionality of the Medicaid mandate alone.

How States Should Respond

Be that as it may, state officials need to understand what causes the "immigration glitch," how they can avoid it, and that most of them already have.

  • What causes this glitch are the Exchange subsidies, not a state's failure to expand Medicaid. It is the Exchange subsidies that are available to (some) legal immigrants but not to otherwise-identical citizens. And since Exchange subsidies are available only through state-created Exchanges, it is a state’s decision to create an Exchange that creates this inequity.
  • If states want to prevent this inequity, they should do what 32 states have already done and refuse to establish an Exchange. If states don’t create Exchanges, there can be no Exchange subsidies, and thus no inequity. At this point, it appears there are only two states where this inequity might appear: Idaho and Mississippi. Those are the only states that might end up implementing an Exchange but not the Medicaid expansion. They and all other states can avoid this glitch simply by not establishing an Exchange.
  • Expanding Medicaid doesn’t really eliminate the inequity because citizens would still receive a less-valuable subsidy than legal immigrants. Legal immigrants would receive subsidies to purchase private insurance, while citizens would get Medicaid coverage, which is notorious for providing inferior access to care. This inequity was present in the original law, and will exist in the 16 or so states that are implementing both an Exchange and the Medicaid expansion.
  • This glitch is yet another reason why the Obama administration's attempt to dispense $500 billion in states that refuse to create Exchanges -- half a trillion dollars of subsidies that Congress never authorized -- is illegal and wrong. (ObamaCare supporters claim the IRS has the legal authority it needs. To which I say: if you're so sure, debate me.) Among other evils, the administration is reintroducing this discriminatory provision into the 32 states that have eliminated it. States, employers, and individual taxpayers therefore have one more complaint they can lodge against the administration's actions in federal court: the unauthorized subsidies the administration is trying to dispense also violate the Equal Protection clause. They are  available to legal immigrants but not to otherwise-identical U.S. citizens.

This latest glitch is one more reason why John Roberts' opinion was ill-considered, why Congress should repeal ObamaCare, and why, until Congress does, states should implement neither an Exchange nor the Medicaid expansion. When a massive new entitlement program unfairly favors one group over another, the proper response is not to enact a second massive new entitlement program. The proper response is to block the first one.

Brewer is correct that it would be unfair for Arizona residents to pay for ObamaCare's Medicaid expansion in other states, while receiving none of the benefit. (Actually, the inequity is even worse than that. ObamaCare's Medicaid expansion is entirely deficit-financed. So it is future generations, rather than current Arizona residents, who will pay for it.) The way to stop the "immigration glitch," and this much larger inequity, is by filing a companion suit to Oklahoma's. If Arizona expands Medicaid, it will blow a huge opportunity to stop all of ObamaCare's inequities once and for all.

January 31, 2013 2:40PM

Sheriffs Talk Tough on Second Amendment (Unnecessarily)

A number of sheriffs around the country (Oregon, Kentucky, Missouri, Wyoming, New Mexico, Utah) have said they will refuse to enforce federal restrictions on private gun ownership that they find to be in conflict with the Constitution.

It seems like a bold threat, but it really isn't. State and local law enforcement officials simply don't have to enforce federal laws that they don't want to enforce. That fact is not controversial. It is, however, a persistent issue in the federal versus state struggle over the marijuana legalization initiatives in Colorado and Washington. Those states have simply chosen to stop assisting the federal government. It may complicate the feds' ability to enforce those laws, but it's just not as confrontational an approach as media reports have suggested.

Robert Mikos discussed this in his new paper with respect to marijuana laws, but the principles related to how states and federal powers interact is one that holds significant implications for the right to keep arms and the President's health care law.

Mikos and I discussed the marijuana initiatives for a Cato Daily Podcast. You can also watch the forum.

Tim Lynch and I also discussed gun restrictions and federalism in a Cato E-Briefing last week.

January 31, 2013 1:18PM

Bill Gates and the Ancient Alexandrian Party Favor

Every year, Microsoft founder Bill Gates drafts a letter charting the course for the foundation he created with his wife, Melinda. This year, the focus is on the value of precise measurement in driving innovation and progress. His inspiration was the book The Most Powerful Idea in the World, “a brilliant chronicle by William Rosen of the many innovations it took to harness steam power.”

Certainly mensuration was important to the development of the steam engine, but there was a much more crucial ingredient, and unless we understand the role that it played, solutions to the world’s most pernicious problems will remain elusive. The key to grasping this missing ingredient is the aeolipile. As shown in the accompanying video, the aeolipile is a hollow metal reservoir with multiple radial “exhaust pipes,” all of whose spouts point off tangentially from the hub. To make it work, you simply suspend it, fill it with water, and light a candle under it. And… Voila! You’ve harnessed steam power to generate rotary motion.

This device is also known as Hero’s Engine, after Hero of Alexandria—who invented it over two thousand years ago…. Despite its seemingly obvious practical applications, Hero’s Engine was never more than a party favor. It had not the slightest impact on the course of human history. Why not?

The ultimate causes are contentious (Deirdre McCloskey will give you one answer), but the proximate one is obvious: the aeolipile was never commercialized. There wasn’t a sufficient network of entrepreneurs and investors toiling away in ancient Alexandria to relentlessly seek out, capitalize, and commercialize new technologies and innovations. The steam engine was refined and widely deployed during the Industrial Revolution only because such an entrepreneurial network had come into existence by the late 18th century, first in England and soon thereafter, elsewhere.

And that’s the real key to massively disseminating the benefits of innovation: enlisting the assistance of the free enterprise system. It is not a coincidence that the productivity of elementary and secondary education has collapsed while productivity in virtually every other field has steadily improved. Education has been largely excluded from the free enterprise system for the past 150 years.

So, while precise measurement certainly has its role to play, I hope someday to read an annual letter from Bill Gates that focuses on the need to harness all the freedoms and incentives of the marketplace for the betterment of education the world over.

January 31, 2013 12:37PM

Is Government a Threat to Our Freedom?

My book Libertarianism: A Primer, published in 1997, begins with this paragraph:

In 1995 Gallup pollsters found that 39 percent of Americans said that "the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens."  Pollsters couldn't believe it, so they tried again, taking out the word "immediate."  This time 52 percent of Americans agreed.

Well, the Pew Research Center has been polling on a similar question, and they've just found the highest number ever. They ask a slightly different question -- "Do you think the federal government threatens your own personal rights and freedoms, or not?" -- and of course pollsters' methods and samples may vary. Pew's numbers seem to have been somewhat lower than Gallup's over the past two decades. But today they report:

Pew Poll on Threat to Rights

As Barack Obama begins his second term in office, trust in the federal government remains mired near a historic low, while frustration with government remains high. And for the first time, a majority of the public says that the federal government threatens their personal rights and freedoms.

The latest national survey by the Pew Research Center for the People & the Press, conducted Jan. 9-13 among 1,502 adults, finds that 53% think that the federal government threatens their own personal rights and freedoms while 43% disagree.

Gallup's polling found that the level of fear had fallen dramatically in the early 2000s, as did Pew, but that by late 2011 it had risen back to 49 percent. Gallup also, alas, reports a partisan divide in answers to the question:

Americans' sense that the federal government poses an immediate threat to individuals' rights and freedoms is also at a new high, 49%, since Gallup began asking the question using this wording in 2003. This view is much more pronounced among Republicans (61%) and independents (57%) than among Democrats (28%), although when George W. Bush was president, Democrats and independents were more likely than Republicans to view government as a threat.

Dan Mitchell noted that divide back in 2010 and suggested that, with a Republican administration spending us into bankruptcy and a Democratic administration continuing the wars and the Patriot Act, partisans ought to start recognizing the threats from their own respective parties. Indeed.

The bottom line, though, is that when a government is viewed as a threat to "your own personal rights and freedoms" by a majority of its citizens, it should probably take a critical look at its policies.

January 31, 2013 11:11AM

Why GDP Data Shouldn’t Be Interpreted in Ways that Support Keynesian Spending

Fighting against statism in Washington is a lot like trying to swim upstream. It seems that everything (how to measure spending cuts, how to estimate tax revenue, etc) is rigged to make your job harder.

A timely example is the way the way government puts together data on economic output and the way the media reports these numbers.

Just yesterday, for instance, the government released preliminary numbers for 4th quarter gross domestic product (GDP). The numbers were rather dismal, but that's not the point.

I'm more concerned with the supposed reason why the numbers were bad. According to Politico, "the fall was largely due to a drop in government spending." Bloomberg specifically cited a "plunge in defense spending" and the Associated Press warned that "sharp government spending cuts" are the economy's biggest threat in 2013.

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To the uninitiated, I imagine that they read these articles and decide that Paul Krugman is right and that we should have more government spending to boost the economy.

But here's the problem. GDP numbers only measure how we spend or allocate our national income. It's a very convoluted way of measuring economic health. Sort of like assessing the status of your household finances by adding together how much you spend on everything from mortgage and groceries to your cable bill and your tab at the local pub.

Wouldn't it make much more sense to directly measure income? Isn't the amount of money going into our bank accounts the key variable?

The same principle is true - or should be true - for a country.

That's why the better variable is gross domestic income (GDI). It measures things such as employee compensation, corporate profits, and small business income.

These numbers are much better gauges of national prosperity, as explained in this Economics 101 video from the Center for Freedom and Prosperity.

The video is more than two years old and it focuses mostly on the misguided notion that consumer spending drives growth, but you'll see that the analysis also debunks the Keynesian notion that government spending boosts an economy (and if you want more information on Keynesianism, here's another video you may enjoy).

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The main thing to understand is that GDP numbers and the press coverage of that data is silly and misleading. We should be focusing on how to increase national income, not what share of it is being redistributed by politicians.

But that logical approach is not easy when the Congressional Budget Office also is fixated on the Keynesian approach.

Just another example of how the game in Washington is designed to rationalize and enable a bigger burden of government spending.

Addendum: I’m getting ripped by critics for implying that GDP is Keynesian. I think part of the problem is that I originally entitled this post “Making Sense of Keynesian-Laced GDP Reports.” Since GDP data is simply a measure of how national output is allocated, the numbers obviously aren’t “laced” one way of the other. So the new title isn’t as pithy, but it’s more accurate and I hope it will help focus attention on my real point about the importance of figuring out the policies that will lead to more output.

January 31, 2013 8:47AM

Arizona Moves to Limit Federal Spending

Earlier this month, I wrote about the Compact for America, an elegant mechanism for limiting out-of-control federal spending through a Balanced Budget Amendment to the Constitution that would be advanced via an interstate compact.

Well, already there's progress on that front.  This past Monday, the CFA passed the Arizona House Committee on Federalism and Fiscal Responsibility.  The full state house will now be taking up this important legislation.

I should note that the prime sponsor of the bill is former Cato intern who's now a state representative (and my friend), Adam Kwasman.  Glad to see that our internship program is paying dividends with the future leaders of constitutional liberty.

Let's hope the momentum continues and that the CFA gains traction in other states, putting on Congress to call a constitutional convention or pass its own Balanced Budget Amendment.