Topic: General

We’ve Been over the Huge Price of “Free” College before

Hillary Clinton will be introducing a plan today that would enable students from families eventually making up to $125,000 not to have to pay tuition at in-state colleges or universities. This is a jump in college subsidization from her previously announced plan, which focused on debt-free tuition, and more in line with what Bernie Sanders has proposed. Presumably, it is going to be paid for by the federal government offering states more money for higher education in exchange for states saying they’ll increase their own spending, to a point of making tuition largely free.

We’ve been over how costly “free” college really is–massive overconsumption, credential inflation, big opportunity costs for taxpayers, etc.–which you can read about here and here. I won’t rehash it all now. But the political calculus hasn’t changed: People like getting things for free, especially when the ultimate costs are hidden. And the more people who think they’ll benefit–the estimate is 8 out of 10 for Ms. Clinton’s new proposal–the better.

Costs Skyrocket for Air and Space

Smithsonian leaders have revealed that renovating the Air and Space museum in Washington, D.C. will cost almost $1 billion. That’s the equivalent of an army of 10,000 workers earning $100,000 each for a year to fix it up. Geez, government projects are expensive!

My letter in the Washington Post today proposes that rather than hitting taxpayers, museum visitors should pay for the renovation:

Regarding the June 23 Style article “Estimate for Air and Space facelift closes in on $1 billion”:

About $250 million of the ballooning makeover costs for the National Air and Space Museum will come from private donations, leaving a $750 million bill for taxpayers.

But rather than burdening taxpayers, how about charging visitors? The Post noted that the museum gets 7 million visitors a year, so a modest $5 fee would raise $35 million a year and pay back the makeover costs over 21 years.

Aside from the greater fairness of charging users rather than taxpayers, fees would limit demand and thus improve the visitor experience at the overcrowded institution. User fees for Air and Space — and other Smithsonian museums — would also help level the playing field with private D.C. museums, such as the International Spy Museum.

There is one more advantage of user pays. The Post notes that the estimated cost of the renovation has already skyrocketed from earlier figures of $250 million and $600 million (a common pattern). If the museum were required to fully cover renovation costs through voluntary donations and user fees, Smithsonian executives would have a strong incentive to find design savings and control construction costs.  

House Republican Health Plan Might Provide Even Worse Coverage For The Sick Than ObamaCare

WASHINGTON, DC - JUNE 22: House Speaker Paul Ryan (R-WI) discusses the release of the House Republican plank on health care reform at The American Enterprise Institute for Public Policy Research on June 22, 2016 in Washington, DC. (Photo by Allison Shelley/Getty Images)

After six-plus years, congressional Republicans have finally offered an ObamaCare-replacement plan. They should have taken longer. Perhaps we should not be surprised that House Republican leaders* who have thrown their support behind a presidential candidate who praises single-payer and ObamaCare’s individual mandate would not even realize that the plan cobbled together is just ObamaCare-lite. Don’t get me wrong. The plan is not all bad. Where it matters most, however, House Republicans would repeal ObamaCare only to replace it with slightly modified versions of that law’s worst provisions.

Here are some of ObamaCare’s core private-health insurance provisions that the House Republicans’ plan would retain or mimic.

  1. ObamaCare offers refundable health-insurance tax credits to low- and middle-income taxpayers who don’t have access to qualified coverage from an employer, don’t qualify for Medicare or Medicaid, and who purchase health insurance through an Exchange. House Republicans would retain these tax credits. They would still only be available to people ineligible for qualified employer coverage, Medicare, or Medicaid. But Republicans would offer them to everyone, regardless of income or where they purchase coverage.
  2. These expanded tax credits would therefore preserve much of ObamaCare’s new spending. The refundable part of “refundable tax credits” means that if you’re eligible for a tax credit that exceeds your income-tax liability, the government cuts you a check. That’s spending, not tax reduction. ObamaCare’s so-called “tax credits” spend $4 for every $1 of tax cuts. House Republicans know they are creating (preserving?) entitlement spending because they say things like, “this new payment would not be allowed to pay for abortion coverage or services,” and “Robust verification methods would be put in place to protect taxpayer dollars and quickly resolve any inconsistencies that occur,” and that their subsidies don’t grow as rapidly as the Democrats’ subsidies do. Maybe not, but they do something that Democrats’ subsidies don’t: give a bipartisan imprimatur to ObamaCare’s redistribution of income.
  3. As I have tried to warn Republicans before, these and all health-insurance tax credits are indistinguishable from an individual mandate.  Under either a tax credit or a mandate, the government requires you to buy health insurance or to pay more money to the IRS. John Goodman, the dean of conservative health policy wonks, supports health-insurance tax credits and calls them “a financial mandate.” Supporters protest that a mandate is a tax increase while credits—or at least, the non-refundable portion—are a tax cut. But that’s illusory. True, the credit may reduce the recipient’s tax liability. But it does nothing to reduce the overall tax burden imposed by the federal government, which is determined by how much the government spends. And wouldn’t you know, the refundable portion of the credit increases the overall tax burden because it increases government spending, which Congress ultimately must finance with additional taxes. So refundable tax credits do increase taxes, just like a mandate.

Feds Love Higher Ed Scapegoats

For-profit colleges. Accreditors. Endowments. Loan servicers. Debit card companies. Federal policymakers have blamed just about everyone associated with higher education but themselves for the Ivory Tower’s myriad problems. The most recent target just happens to be one specific accreditor: the Accrediting Council for Independent Colleges and Schools (ACICS), which accredits lots of those icky proprietary schools.

Now, ACICS might be as bad as its detractors say. I don’t know because, frankly, I don’t have the time or resources to launch a full and fair investigation into the group. Of course, that is itself a huge problem: Unless you have umpteen free hours on your hands, it is very hard to know whether “bad actors” are really bad, their accusers are jumping to conclusions or are political opportunists, or some combination of those things.

Here is what I do know: Washington gives out big sums of money to people to pay for college without meaningfully determining whether those people are prepared for higher education. That fuels rampant price, credential, and luxury inflation, and seriously mutes incentives for students to think critically about their higher education choices. In other words, “caring and generous” federal policy – policy that lets politicians telegraph how “concerned” they are with education, the poor, and the middle class – is very much at the self-defeating root of all of higher ed’s biggest problems.

So go after ACICS, the openly for-profit schools they accredit, and anyone else you think looks bad (while ignoring crucial context needed to see reality). But don’t expect doing so to fix higher ed. Expect it to just lead to other hunts when these scapegoats are dispatched, and the Ivory Tower getting no better.

Twenty Years after Whren: A Crisis of Police Legitimacy

Today marks the 20th anniversary of the Supreme Court decision in Whren v. United States. The case clarified the constitutionality of the practice of “pretextual” traffic stops. The Court ruled that so long as an officer can articulate that a driver violated some traffic law, the officer may stop a motorist in order to investigate potential and wholly unrelated criminal activity. The case has effectively become a blueprint for police officers to racially profile drivers without repercussion.

Last fall, I gave a talk at Case Western Reserve Law School in a symposium dedicated to Whren and its legacy. The school’s law review recently published the article that came from that talk. Instead of putting forth an argument to overturn Whren, I argue that police departments ought to curtail or end the use of pretextual stops as a proactive policing measure. The Supreme Court’s ruling that the tactic is constitutional does not make it an ethical or wise tactic to employ.

Simply put, pretextual stops undermine police legitimacy by turning public servants into antagonistic interrogators. In practice, pretextual motor vehicle stops—much like the pedestrian Terry stops used in New York’s infamous Stop-and-Frisk program—ensnare far more innocent people than criminals. And most of the people who are stopped are black or Latino, further eroding police support in those communities. Police departments must establish their legitimacy—through trust and positive interactions—to improve their effectiveness and public safety. Overly aggressive and implicitly discriminatory policing practices undermine that legitimacy.

You can read the whole article here. The rest of this issue of the Case Western Reserve Law Review can be found here.

Update: I also wrote a shorter piece over at Rare describing what happens during a pretextual stop and why it’s so resented by the people who experience them. 

Is Defending Tax Competition Akin to “Trading with the Enemy”?

When I was younger, my left-wing friends said conservatives unfairly attacked them for being unpatriotic and anti-American simply because they disagreed on how to deal with the Soviet Union.

Now the shoe is on the other foot.

Last decade, a Treasury Department official accused me of being disloyal to America because I defended the fiscal sovereignty of low-tax jurisdictions.

And just today, in a story in the Washington Post about the Center for Freedom and Prosperity (I’m Chairman of the Center’s Board of Directors), former Senator Carl Levin has accused me and others of “trading with the enemy” because of our work to protect and promote tax competition.

Here’s the relevant passage.

Former senator Carl Levin (D-Mich.)…said in a recent interview that the center’s activities run counter to America’s values and undermine the nation’s ability to raise revenue. “It’s like trading with the enemy,” said Levin, whose staff on a powerful panel investigating tax havens regularly faced public challenges from the center. “I consider tax havens the enemy. They’re the enemy of American taxpayers and the things we try to do with our revenues — infrastructure, roads, bridges, education, defense. They help to starve us of resources that we need for all the things we do. And this center is out there helping them to accomplish that.”

Before even getting into the issue of tax competition and tax havens and whether it’s disloyal to want limits on the power of governments, I can’t resist addressing the “starve us of resources” comment by Levin.

Not a “Better Way” on Education

Yesterday, the House GOP released a report called A Better Way: Our Vision for a Confident America. Alas, at least in education, only if you think doing basically the same thing we’re doing right now is a “better way” could this report please you. And there is little to suggest what we’re doing now is working.

Start with pre-k education. While acknowledging the undeniable—“gold-standard” research commissioned by the feds themselves has shown federal Head Start has no discernable, lasting benefits—the report does not call for even decreasing Head Start spending, much less eliminating the program. No, it proclaims that early-childhood programs are very important and what Washington should do—again, with no talk about actually decreasing funding—is “streamline” duplicative programs and fund more research into “what works.” Because states, or local governments, or philanthropists, could never fund such research!

That’s not a better way. That is a way, maybe, to mute attacks that Republicans “don’t care” about little children or the poor. So maybe it’s a politically better way. But it isn’t a better way on policy.

At the elementary and secondary level, the report says nice things about choice, including the DC voucher program, which is all well and good. It also touts the Every Student Succeeds Act—the replacement for No Child Left Behind—before, frankly, we know what it is going to look like in practice. More and more, it seems the law may have given too much power to the U.S. Secretary of Education, which the report warns against in only the broadest terms.

A better way? We’ll see.

Perhaps the biggest disappointment is the report’s higher education discussion. Basically, the better way is—of course—to “streamline” stuff, including federal regulations, while failing to even mention the mountain of evidence that federal student aid—all $161 billion of it—fuels rampant price inflation and student debt; encourages massive noncompletion; finances credential inflation; and abets demand for on-campus water parks and other extreme amenities.

While we’re on the subject, the report falls all over itself to tout Pell Grants, but it would sure be refreshing if someone, in looking for a better way for everyone—taxpayers included—were to at least note how fundamentally unfair Pell Grants are. A huge benefit of completing college is to greatly increase one’s lifetime earnings—to use a term some people find distasteful, to profit—and what Pell says is you should be able to make that profit with other people’s money and no obligation to pay them back. How’s that fair?

There is one more omission from the report: any mention of the Constitution, and whether it gives the federal government authority to do any of these things. But if whether the programs work doesn’t matter, probably no one is going to care about a minor, abstract thing like the rule of law.

The “better way” on all these issues would be to be frank about the effects of federal policies, what the federal government is constitutionally permitted to do, and act accordingly. But that seems to be asking way too much.