201611

November 14, 2016 10:06AM

Is For‐​Profit Higher Ed Horrible? Can We Talk, Please?

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Obviously, numerous Obama administration policies hang in the balance with the coming of a new president and Republican majorities in both houses of Congress. Among them is an administration campaign that has been waged against for-profit colleges, a sector of higher education seen by many as uniquely predatory and, it is probably fair to say, uniquely awful. But is the sector so horrible? And horrible or not, does the election mean a reprieve is coming?

To answer these questions—and in the interest of having a real exchange of views—this Wednesday Cato’s Center for Educational Freedom will be hosting a Q & A-intensive forum on for-profit colleges featuring several of the sector’s most prominent critics and defenders, including former Obama administration member Robert Shireman and Center for College Affordability and Productivity director Richard Vedder. We’ll also be fielding questions through Twitter using #CatoHigherEd.

One lesson from the just-completed election seems to be that different parts of America have been talking about and past each other, but rarely to each other. At least when it comes to for-profit higher ed, at least for one morning, we plan to do something different. Register today to join us in-person, or watch online—and join us via Twitter—at 10:00 am ET, on Wednesday, November 16.

Talk with you then!

November 14, 2016 9:43AM

Chris Christie Bets on Federalism

While he may be in the news for being on the outs from the Trump transition, as well as for legal troubles regarding Bridgegate, New Jersey Governor Chris Christie is also leading a challenge to federal law that could have a quite beneficial effect in rebalancing federal-state relations.

First, some background. Why do we even have states? While a fairly common question now in light of the federal Leviathan, it likely would have seemed quite foreign to the Constitution’s authors. The Framers saw federalism’s decentralization of government authority as a central bulwark of ordered liberty, preventing any one entity or bloc from gaining too much power over the nation while encouraging innovative competition among the several “laboratories of democracy.”

Unfortunately, federalism’s safeguards against centralized authority have slowly eroded, particularly since the New Deal Supreme Court’s expansive reinterpretation of the Commerce Clause paved the way for aggressive federal expansion under Presidents Roosevelt, Johnson, and beyond. One firewall that has survived, however, is the anti-commandeering doctrine: the idea that the federal government may not compel states or state officials to implement federal policies. In other words, states cannot be made into mere “puppets of a ventriloquist Congress.” Printz v. United States (1997).

It is this anti-commandeering doctrine that is under threat in Christie v. NCAA. The Professional and Amateur Sports Protection Act (PASPA) is a federal statute that does not allow states to “authorize” sports gambling “by law.” So when New Jersey wanted to repeal some of its old gambling laws, it was stopped from doing so by PASPA, prompting Gov. Christie to sue on the grounds that the law infringes on New Jersey’s sovereignty and further undermines the United States’ federalist structure.

The U.S. Court of Appeals for the Third Circuit interpreted this prohibition to bar states not just from affirmatively licensing sports gambling, but also from repealing or modifying preexisting state prohibitions. It held that PASPA did not violate the anti-commandeering doctrine because New Jersey wasn’t being compelled to pass new legislation, just forbidden from repealing existing laws. In doing so, it accepted an argument based almost entirely on semantics. Regardless of whether the federal government compels or forbids particular action, the result—a state’s being forced to regulate behavior that its duly elected representatives prefer to leave unregulated—is the same.

If allowed to stand, this absurd loophole may have wide-ranging implications across many policy areas and poses a serious threat to what remains of state sovereignty. Cato has joined the Pacific Legal Foundation and the Competitive Enterprise Institute on a brief supporting New Jersey’s petition for Supreme Court review.

We urge the court to take up the case so that it can clarify the proper scope of the anti-commandeering doctrine and ensure that the sovereignty of the individual states—so critical to the republic’s constitutional system of checks and balances—is not further eroded by an overreaching national government.

November 11, 2016 5:48PM

The Battle for the Court Takes Shape

As votes in a few places are still being counted, the battle to fill Justice Antonin Scalia’s empty seat on the Supreme Court is already taking shape. Speaking on MSNBC last night and again this afternoon on WBUR’s “Here & Now” (NPR), Oregon Senator Jeff Merkley, a member of the important Senate Democratic Caucus, set forth what is likely to be a main line of argument going forward for Senate Democrats.

In a nutshell, given the failure of Senate Republicans to hold hearings on President Obama’s nominee, Judge Merrick Garland, the seat “is being stolen,” rendering anyone that President Trump might put forward “illegitimate.” As Merkley put it last night:

The seat that’s sitting empty is being stolen. It’s being stolen from the Obama administration and from the construct of our Constitution, and it’s being delivered to an administration that has no right to fill it. And we have to understand that this is about the Koch Brothers cartel working with the Republican majority to say that they want to basically pack the Court. ... There’s no legitimacy to a Supreme Court justice in a seat that’s being stolen from one administration and handed to another. We need to do everything we possibly can to block it. ... This is a theft being delivered to the Koch Brothers, and the Koch Brothers are not interested in We the People. It’s turning the Constitution on its head. This is government by and for the most powerful. It locks in Citizens United, which is completely against the mother principle that Jefferson laid out for an equal voice for citizens, and this is going to corrupt our political system in a way never envisioned or intended by our Constitution for a generation to come.

Asked if he would keep that seat open for as long as Democrats could, even if it took the entire duration of a term and keep a 4-4 Court, Merkley answered that first he would “call upon the majority leader that Merrick Garland gets a legitimate shot at a vote here in the lame duck, and then the Trump administration, if they want to see partnership and cooperation, if he puts forward a nominee it should be Merrick Garland.”

Doubling down on those points on NPR this afternoon, Merkley charged that “for the first time in history the Republican leadership failed to fulfill their responsibilities” and this “delegitimizes any nominee that Trump might put forward”—adding that “there’s still time to salvage this,” but “we’re facing a real problem ... in terms of legitimacy of whoever Trump might put forward. So we really have a deep corruption that is occurring through this stolen Supreme Court seat.” He concluded that “absolutely,” he would filibuster a nominee, adding that “we changed the application of the rules back in 2013. We left in place the filibuster on the Supreme Court.”

The “we” Merkley references was not the Senate as a whole, of course, but Senate Democrats, led by Harry Reid, who exercised the so-called nuclear option in order to “pack” the appellate courts with Obama nominees unacceptable to the Senate Republican minority. Doubtless, Reid and company wanted to keep the filibuster in place for Supreme Court nominations just in case they lost the Senate, which happened only a year later. But in the process, they lost the principle, even as the appellate courts they filled were upholding Obama’s rule by executive diktat.

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November 11, 2016 5:36PM

Some Climate Realities for the Incoming Administration to Consider

While the twitterverse is chirping with concern over Donald Trump’s handling of the global warming science, we offer a few realities that should be key parts of any transitional team’s synthesis.

1. Carbon dioxide is a greenhouse gas that by itself will result in a slight warming of the lower atmosphere and surface temperatures, as well as a cooling of the stratosphere.

     a. All of these have been observed.

 2. Additional warming is provided by a complicated feedback with water vapor. If it were large and positive, so would be future warming.

     a. The observed warming is far below values consistent with a high temperature sensitivity. Therefore future warming will run considerably below any high-sensitivity estimate.

     b. The disparity between observed and forecast warming continues to grow.

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November 11, 2016 5:33PM

You Ought to Have a Look: Advice for Trump’s Transition Team

You Ought to Have a Look is a regular feature from the Center for the Study of Science.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

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In this You Ought to Have a Look, we hope that some of the “You” are members of, or influencers of, President-elect Trump’s transition teams.

With so much talk about the Trump’s plans on killing the Clean Power Plan, withdrawing from the Paris Climate Agreement, reversing the Keystone XL pipeline rejection, removing energy subsidies and reigning in the EPA (all good ideas in our opinion), we want to make sure the transition team doesn’t overlook other, invasive, burdensome, costly, and climatologically-meaningless regulations that were put in place in President Obama’s Climate Action Plan.

Here’s a rundown of some of the more significant of them.

Energy Efficiency Regulations from the Department of Energy. 

The DoE and put forth a seemingly endless string of regulations governing the energy efficiency of all manner of power-consuming appliances large and small, from industrial boilers and refrigeration systems, to microwave ovens, and ceiling fans (and most things in between). The reason?

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We have repeatedly submitted public comments as to why the climate change angle should be a non-starter (our latest in this long line is here). But besides that, the DoE standards result in appliances that work less well, cost more, and reduce consumer choice. Our big brother government thinks it’s doing us all a favor because we aren’t savvy enough to value long-term cost saving from energy consumption over other values. Not everyone agrees. Sofie Miller, senior policy analyst at the George Washington University Regulatory Studies Center, recently wrote:

This line of reasoning overlooks the possibility that consumers may have legitimate preferences for less-efficient appliances based on household characteristics or other observable product qualities (such as size, durability, reliability, or noise level). Also, the assumptions underpinning the DOE’s analyses may not be accurate; for instance, some consumers may have high discount rates, making future energy savings less important than immediate purchase savings. By regulating away the option for consumers to purchase less efficient appliances, the DOE claims to be improving consumers’ choice structure by removing choices. These rules aren’t technology-forcing, they’re consumer-forcing.

…the fact that consumers choose not to purchase efficient appliances indicates only that they do not value these attributes as much as the DOE does. As a result, these rules impose huge net costs on consumers, rather than benefits.

Yet the DoE has a lot more of these efficiency standard regulations in the offing (the public comment period is currently open for two more proposed regulations—governing walk-in refrigerators and residential furnaces).

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November 11, 2016 3:03PM

Trump Understands Housing

Trump won, and free market types have valid concerns about a Trump presidency. It certainly won’t be a conventionally free-market administration, and it won’t likely be an ideologically coherent one in the conventional Republican sense. However, one area that free-marketers can find some solace is development regulation. In fact, as a developer and businessman himself, there’s reason to think that Trump intuitively understands this policy area better than any other and self-interest makes him an ally.

All the way back in August, Trump spoke to the National Association of Homebuilders and decried the “horrible regulations” that are stacked against developers to the resounding cheers of the crowd. He described development regulations as increasing by almost thirty percent over the past five years, and complained about the “frivolous lawsuits” brought against homebuilders. Notably, he even framed the discussion in terms of low-cost housing, rather than housing affordability.

Decades of experience taught Trump that more regulation means higher cost housing. Taken together, Trump emphasized that development regulations increase the cost of housing by a whopping 25%. Although that figure may sound substantial, it may actually underestimate the impact of regulation on housing prices in some areas of the country. In Manhattan, for instance, it’s estimated that up to half of the price paid for housing is attributable to the hidden costs of restrictive zoning regulations alone.

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November 11, 2016 1:59PM

A Message for Trump: Basel IV Will Kill Dreams of an Infrastructure Boom

Ever since the Financial Crisis, regulators have tightened their grip on banking activities (read: beaten up on banks) without taking note of unintended consequences. Prominent amongst these misguided regulatory interventions have been the Bank for International Settlements (BIS) mandates, which are touted as promoting global financial safety and economic stability. John Dizard of the Financial Times has seen through the Basel Committee on Banking Supervision’s smoke and mirrors display and correctly concludes that the proposals provide background noise for the next crisis.

First, the new “Basel IV” reforms will dampen economic growth globally. The European Banking Federation claims that increased capital requirements will cause European Banks to raise an additional €850bn of capital. This will exacerbate the credit crunch because banks can increase capital-asset ratios by either shrinking assets or raising capital. In both scenarios, deposit liabilities are reduced and money is destroyed. Slower growth in the money supply, broadly measured, slows the expansion of nominal GDP. The implications are dire because Basel IV seeks specifically to increase capital requirements on project lending and banks account for 80 percent of lending to the real economy in Europe.

Second, Basel IV’s push to standardize risk weighted asset calculations will actually increase risky activities. Unbelievably, Dizard reports, “under the current version of the Basel ‘standardized approach’, unsecured lending to a non-public, below investment-grade corporate borrower requires the same bank capital commitment as project financing secured by assets, liens on equity and cash lockbox arrangements.” With all corporate risk considered the same, incentives will exist for bankers to lend for a risky, high-yield project instead of a safer, more productive one. The result will be a push away from revenue-producing infrastructure projects. 

The secretive Basel Committee on Banking Supervision continues to create systemic risks, which threaten to plunge the world into a slump. Thanks to the BIS mandates, we might experience the horrors of Quantitative Tightening (QT).