Topic: Regulatory Studies

What DC Schools Can Teach Us about Obamacare

Thanks to today’s Supreme Court ruling, the federal government has gained broad new powers to control the nation’s health care system. This, we are told by the President and his fellow travelers, will save money, expand access, and improve quality. One way to gauge the chances of that is to see what benefits federal oversight has brought to education in the one district in the nation over which Congress has ultimate authority: the District of Columbia public schools.

As I wrote earlier this week, the Census Bureau has now confirmed my finding that DC public schools spend about $30,000 / pupil annually. That is more than double the national average of public schools. Access to schooling may be universal in the District, but access to a quality education is not. As Economist Mark Perry writes, despite its stratospheric spending, DC’s graduation rate of 58.6% is far lower than the national average of 75.5%. The academic performance of its students is also significantly below the national average, and also below the average for other big city districts–in both reading and mathematics. Its achievement gaps by race and socio-economic status are also larger than in other public school districts.

That is how the only public school district in the nation under the control of Congress performs. Nor have nationwide federal education programs shown promise, as the chart below illustrates.

If our experience with education is any guide, a bigger federal role in health care does not bode well.

Supreme Court Unlawfully Rewrites Obamacare to Save It; Four Votes (Led by Kennedy) to Strike It

Today’s baby-splitting decision rewrites the Affordable Care Act in order to save it. It’s certainly gratifying that a majority rejected the government’s dangerous assertion of power to require people to engage in economic activity in order to then regulate that activity. That vindicates everything that we who have been leading the constitutional challenge have been saying: The government cannot regulate inactivity.  It cannot, as Chief Justice Roberts put it, regulate mere existence. 

Justifying the individual mandate under the taxing power, however, in no way rehabilitates the government’s constitutional excesses.  As Justice Kennedy said in summarizing his four-justice dissent from the bench, “Structure means liberty.” If Congress can slip the Constitution’s structural limits simply by “taxing” anything it doesn’t like, its power is no more limited than would it be had it done so under the Commerce Clause.  While imposing new taxes may be politically unpopular and therefore harder to do than creating new regulations, that political check does not obviate constitutional ones—and in any event, Congress avoided even that political gauntlet here by explicitly structuring the individual mandate as a commercial regulation.

Nor does the Court vindicate its constitutional sleight-of-hand by rewriting the Medicaid expansion to tie only new federal funding to an acceptance of burdensome and fundamentally transformative regulations.  While correct on its face—and a good exposition of the spending power and what strings the federal government can attach to its funds—that analysis is relevant to a hypothetical statute, not the one that Congress actually passed.  Moreover, allowing states to opt out of the new Medicaid regime while leaving the rest of Obamacare in place throws the insurance market into disarray, increases costs to individuals, and gives states a different Hobson’s choice—different but no less tragic than the one it previously faced. As Justice Kennedy wrote in dissent, while purporting to apply judicial modesty or restraint, the Court’s rewriting of the law is anything but restrained or modest.

In short, we have reaped the fruits of two poisonous trees of constitutional jurisprudence:  On the one (liberal activist) hand, there are no judicially administrable limits on federal power.  On the other (conservative pacifist) one, we must defer to Congress and presume (or construe) its legislation to be constitutional.  It is that tired old debate that produces the Frankenstein’s monster of today’s ruling.  What judges should be doing instead is applying the Constitution, no matter whether that leads to upholding or striking down legislation.  And a correct application of the Constitution inevitably rests on the Madisonian principles of ordered liberty and limited government that the document embodies.

In any event, the ball now returns to the people, who opposed Obamacare all along, and whence all legitimate power originates.  It is ultimately they who must decide—or not—to rein in the out-of-control government whose unconstitutional actions have taken us to the brink of economic disaster.

What’s Next After the Obamacare Ruling?

With the Supreme Court ruling on President Obama’s health care law, everyone is wondering what’s next for big government. Here are some ideas for federal policymakers to consider:

Federal Broccoli Act of 2013: Eat your broccoli, else pay the IRS $1,000.

Federal Recycling Act of 2014: Fill your blue box and put on the curb, else pay the IRS $2,000.

Federal Green Car Act of 2015: Make your next car battery powered, else pay the IRS $3,000.

Federal Domestic Jobs Act of 2016: Don’t exceed 25 percent foreign content on family consumer purchases, else pay the IRS $4,000.

Federal Obesity Act of 2017: Achieve listed BMI on your mandated annual physical, else pay the IRS $5,000.

Federal National Service Act of 2018: Serve two years in the military or the local soup kitchen, else pay the IRS $6,000.

Federal Housing Efficiency Act of 2019: Don’t exceed 1,000 square feet of living space per person in your household, else pay the IRS $7,000.

Federal Population Growth Act of 2020: Don’t exceed two children per couple, else pay the IRS $8,000.

Stopping the EPA: the Long Game

Yesterday’s DC Court of Appeals ruling throwing out an omnibus petition against EPA’s first tranche of carbon dioxide restrictions rested largely on the Court’s decision that EPA’s “Endangerment Finding” from related global warming stands as is. In particular, it noted that the petitioners’ argument that “uncertainty” about climate change was not sufficient grounds to void the Finding.

Indeed, “uncertainty” is thin ice if EPA is in the business of saving us from almost-certain doom. A better argument would have been a direct assault on the Finding’s science, or rather, selective science.

But this is beyond the capabilities of most litigators, who simply aren’t trained to wade through the enormous technical literature on global warming and its effects. That’s about to change.

The next battle with EPA is likely to come over their proposed regulation that would essentially outlaw coal-fired electrical generation. Here at Cato, we are preparing the definitive answer to its Endangerment Finding.

With regard to climate change impacts in the U.S., the Finding relies primarily on one document, Global Climate Change Impacts in the United States. It was produced by the U.S. Global Change Research Program (USGCRP), a mélange of agencies all dependent upon climate change dollars. This document is about as inclusive as one would expect it to be—i.e. it avoids a massive amount of inconvenient science. You can find it here.

Since April, 2011, along with several colleagues around the country, I have been working on the scientific counter to the USGCRP document. It looks like it, section by section. It flows exactly like it. It has more references and notes—almost twice as many—as the USGCRP document. As in the adage, “you can take it to court.”

While it’s not yet in final copy, the latest draft is sufficient to give you the idea: this is the document to take down the Endangerment Finding. You can download it here.

We expect this document is going to figure heavily in the next round in the fight to prevent EPA from imposing scientifically senseless but economically disastrous restrictions on energy use.

Judge Green-Lights ADA Captioning Suit against Netflix

A federal judge has declined to dismiss a lawsuit against Netflix arguing that its Watch Instantly streaming viewing service violates the rights of deaf persons under the Americans with Disabilities Act because many of the movies it offers lack closed captioning. In the Boston Globe, Hiawatha Bray quotes me on the case:

…the high cost of adding accessibility features to all online entertainment services could pose an undue burden on Internet companies and lead to reduced choices for consumers, said Walter Olson, senior fellow at the Cato Institute, a libertarian think tank in Washington.

“This forces Netflix to serve markets that it currently doesn’t find profitable to serve,” said Olson, and could prompt online video companies to refrain from stocking obscure and unusual films, to avoid the expense of adding subtitles to movies that few customers will want to see.

The Caption Center at Boston public television station WGBH has subtitled thousands of films and TV shows, according to Larry Goldberg, WGBH’s director of media access. Goldberg said it costs $400 to $800 to add captions to a movie from scratch.

And captioning for the deaf is just the start if the law’s goal is to be what one advocate quoted in the Globe piece calls “100% equality.” Some in the blind community believe all films should be accompanied by “descriptive video” supplemental soundtracks that describe action on screen (“Jenny walks over to the desk and takes a revolver out of the drawer. She points it silently at the intruder.”) That could add substantial additional cost to the distribution of, say, small-circulation independent documentaries, vintage public-domain features and other low-revenue fare. While the current suit is against Netflix, the precedents it sets would also apply to much smaller providers of online streaming. Much more on the push for “web accessibility,” and its implications for almost everyone who communicates over the Web, here.

William H. Peterson, RIP

We’re saddened to note that William H. Peterson, a longtime friend of the Cato Institute, died this week at 91.

Bill was a student of Ludwig von Mises at New York University, where he received his Ph.D. in economics in 1952. He was later professor of economics in the Graduate School of Business Administration at NYU;  Scott L. Probasco. Jr. Professor of Free Enterprise and director of the Center for Economic Education at the University of Tennessee at Chattanooga; and Lundy Professor of Business Philosophy at Campbell University in North Carolina. He also worked in business, consulted with governments around the world, and wrote a book review column for the Wall Street Journal. In 1982, he lectured on free-market economics in Romania, East Germany, Ireland, and Canada. He wrote an essay on Mises that appeared in the 1971 book Toward Liberty: Essays in Honor of Ludwig von Mises, edited by F. A. Hayek.

In recent years he reviewed books, including many Cato Institute books, for the Washington Times. I’m pleased to have published his article “Is Business ‘Administration’?” in Cato Policy Report in 1983, in which he made the case that business is “dynamic, competitive, synergistic, literally wealth-creating”—entrepreneurial, not merely administrative—and therefore the coveted MBA degree is misnamed and perhaps wrongly taught.

Bill’s wife of 62 years, Mary Bennett Peterson, died last year. She also studied with Mises at NYU. She worked as a stockbroker, a foundation officer, and a lobbyist for General Motors. She also wrote a book, The Regulated Consumer, that was ubiquitous among libertarians and conservatives in the 1970s. She criticized such agencies as the Interstate Commerce Commission and the Civil Aeronautics Board for harming consumers, helping to set in motion a policy agenda that resulted in deregulation of both airlines and trucking.