Win for School Choice in Georgia

Lost in all the commotion over the U.S. Supreme Court’s several decisions today is another important decision with ramifications for school choice. The Georgia Supreme Court unanimously ruled in Gaddy v. Georgia Department of Revenue that plaintiffs had no standing to challenge the state’s tax-credit scholarship program because the scholarship funds are private funds, not a government expenditure:

We also reject the assertion that plaintiffs have standing because these tax credits actually amount to unconstitutional expenditures of tax revenues or public funds. The statutes that govern the Program demonstrate that only private funds, and not public revenue, are used.

The program allows donors to receive tax credits in return for contributions to qualified nonprofit scholarship organizations that help families send their children to the schools of their choice. Plaintiffs asserted that the program violated Georgia’s Blaine Amendment, which prohibits the state from giving public funds to religious schools. However, as we explained in our amicus brief, no public funds are involved. “Taxpayers choose to donate voluntarily using their own private funds and receive a tax credit for the amount of the donation; no money ever enters or leaves the treasury.” Neither does the state direct where the funds are used. “The state exercises no control over which scholarship organizations donors choose to support, which students receive scholarships, or at which schools parents choose to use the scholarships.” The Georgia Supreme Court agreed:

Individuals and corporations chose the [scholarship organizations] to which they wish to direct contributions; these private [scholarship organizations] select the student recipients of the scholarships they award; and the students and their parents decide whether to use their scholarships at religious or other private schools. The State controls none of these decisions. Nor does it control the contributed funds or the educational entities that ultimately receive the funds.

“Today’s victory has secured Georgia parents’ right to continue choosing the best education for their children,” stated Erica Smith, an attorney for the Institute for Justice, which represented scholarship parents in the Gaddy case. “This Court correctly recognized that government should promote educational opportunity and choice, not limit it as the plaintiffs proposed.” 

Even in a “Slow” Year, Cato Continues Its Winning Ways at the Supreme Court

If the death of Justice Antonin Scalia overshadowed the 2015-16 Supreme Court term, the extended absence of his successor and the subsequent battle (including eliminating the judicial filibuster) over the appointment of Neil Gorsuch dominated Court news for 2016. Indeed, Scalia’s absence was felt more in the the lower quality and quantity of cases that the Court took up: The justices ended up deciding 62 cases after argumentthe fewest evernone of which would’ve made it into the “greatest hits” in recent years given the six or seven consecutive “terms of the century.” And recall that the Trump Department of Education withdrew a 2015 guidance letter construing Title IX to require schools to treat transgender students consistent with their expressed gender identity, removing the most politically charged case from the Court’s already muted docket. 

In any event, Justice Gorsuch took his seat on the bench in April, and his initial opinions showcase his promised readable style and principled textualist approach to statutory interpretation. With Justice Anthony Kennedy refraining from announcing his rumored retirementthough we could get a telegram from Salzburg this summerCourt-watchers will likely have to wait another year for the first nomination in a “post-nuclear” world.

Cato still filed in 13 merits cases on important issues ranging from separation of powers, free speech (both commercial and disparaging), and property rights. Improving on a 4-4 performance in an unusual term last yearwhere we still beat the government handilyCato achieved a strong 9-4 showing, besting the combined Obama-Trump effort of 8-12. Cato also effectively drew votes from across the judicial spectrum, winning 10 votes from both Chief Justice John Roberts and Justice Elena Kagan, 9 votes from Justice Stephen Breyer, and 8 votes each from Justices Kennedy, Samuel Alito, and Ruth Bader Ginsburg.

Here’s the breakdown, in the order the opinions arrived:

Winning side (9)NLRB v. SW General, IncExpressions Hair Design v. Schneiderman; Nelson v. Colorado; Bank of America Corp. v. Miami; Kokesh v. SEC; Packingham v. North Carolina; Matal v. Tam; Lee v. Unites States; Trinity Lutheran Church v. Comer.

Losing side (4): Bravo-Fernandez v. United StatesSalman v. United States; Turner v. United States; Murr v. Wisconsin.

Donald Trump’s inauguration also marked the official end of the Obama era at the Supreme Court. A pair of unanimous losses brought the administration’s total to 48, more than a quarter of all cases argued by his administration and approximately 50% higher than both the Bush and Clinton teams. His total winning percentage of under 47% was also significantly lower than both of his predecessors, who finished at 60% and 63% respectively. Of course, the Trump administration is off to an even less auspicious start, with a 1-9 record and 5 unanimous losses in just half a term. (The apportionment of cases on either side of the inauguration may be somewhat artificial, given that most or all of these relatively low-profile Supreme Court arguments were handled by career lawyers, not political appointees, and the government’s position didn’t change with the change of administration.)

This fall promises another blockbuster term, with the travel ban, Fourth Amendment protection of cellphone location data, same-sex wedding vendors, and likely the fate of mandatory union dues headlining the docket.

I’m sure I’ll have more to say on this in future commentary, but if you’d like to learn more about all these cases/trends and the views of Cato-friendly scholars and lawyers, register for our 16th Annual Constitution Day Symposium, which will be held September 18. That’s also when we’ll be releasing the latest volume of the Cato Supreme Court Review, the editing of which will consume much of my summer.

Seattle Exhibiting Costs Of Minimum Wage Hikes

Last week, Thomas Firey blogged here on how proponents of higher minimum wages tend to be selective when reviewing the academic literature. In particular, they mischaracterize it as implying that papers tend to show minimum wage hikes do not affect employment.

Right on cue, an important new NBER paper from academics at the University of Washington examining Seattle’s two minimum wage hikes since 2014 suggests significant job and hour losses as the pay floor rose.

Seattle raised its minimum wage from $9.47 to $11 per hour in 2015 and then again to $13 per hour in 2016. The report concludes:

Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase.

The paper seems significant both as a result in its own right and in addressing why sometimes results can be so different depending on methodology.

It suggests that the disemployment effects caused by reductions in demand for low-wage labor rise disproportionately as the wage floor increases. This is logical, but often needs to be articulated given many appeals to the effects of past increases in wage floors as evidence for new much higher minimum wages (see the “Fight for 15,” for example).

Perhaps more importantly, whereas much of the previous literature examines low-wage industries (usually restaurants or retail) or teenagers as proxies for those impacted by minimum wage changes, this paper uses a comprehensive data set allowing assessment on employment for all categories of low-wage employees across industries and demographics. This suggests that previous research examining the impact on individual industries such as restaurants may have significantly underestimated the negative effects on hours worked for low-wage employees.

Of course, as with all studies, there will be disputes about methodology. The paper itself notes that it does not include companies with multiple locations, such as fast food chains, which theory suggests could bias the results in either direction. They also acknowledge that some of the “jobs lost” may have been replaced by jobs in the broader area, making their results an overestimate. Overall though, this is further evidence, adding to an already large literature, suggesting raising the minimum wage to high levels has a very high cost indeed and that the competitive model of the labor market holds.

Trinity Lutheran Ruling Only Gets Us Closer to Equality in Education

Today’s Trinity Lutheran ruling strikes a blow against patently unequal treatment of religious Americans under state laws, an inequality felt no more acutely than in education. But it does not yet get us to where we need to be.

The huge impact of today’s ruling is that it says religious institutions cannot be barred from participating in government programs simply because they are religious. The Trinity Lutheran Church could not be ruled ineligible to participate in a grant program to improve playgrounds simply because it is a religious entity. This should have been a simple decision: It is clearly unequal treatment of religious Americans under the law to say “the reason you are ineligible for this benefit for which anyone else is eligible is that you are religious.”

This is crucial, but it is not sufficient to throw open the doors to full freedom and equality in education.

First, as Justices Thomas and Gorsuch note in their concurring opinions, the Trinity decision keeps in place the ruling in Locke v. Davey (2004) that a state could deny a student a scholarship otherwise available to him because he planned to study to become a minister. Trinity supports the rationale of denying funding for someone to learn to propagate religion. But why should someone be barred from accessing otherwise generally available funding only because the profession he wished to follow was religious? From a school choice perspective, if a goal of sending your child to a religious school with a voucher is that he or she will learn to evangelize, precedent still stands in your way.

Second, Trinity says that religious institutions cannot be excluded from funding otherwise available to other groups. It does not state that it is unconstitutional to require people to fund a single government institution—in education, de facto atheist or agnostic public schooling systems—then pay a second time for institutions that are consistent with their beliefs and values. That would be crucial to truly treat religious people equally, and to totally clear the path for school vouchers. (Tax credits, as we see again in Georgia today, are a different, more liberated story!)

Today’s ruling is a welcome move in a decidedly right direction, but it is not sufficient to achieve full equality in education.

Another Bleak Day for Property Owners

Property owners have long suffered under the Supreme Court’s erratic rulings. It got worse today. In Murr v. Wisconsin, the Court ruled against the owners, 5-3, with Justice Kennedy writing for the majority, Chief Justice Roberts writing a dissent, joined by Justices Thomas and Alito, Thomas writing a separate dissent, and Justice Gorsuch taking no part. The problem isn’t simply with the majority’s holding and opinion, it’s with the dissent as well. Only Thomas points in the right direction.

This was a regulatory takings case arising under the Fifth Amendment’s Takings Clause, which prohibits government from taking private property for public use without just compensation. In separate conveyances in 1994 and 1995, the Murrs, four siblings, inherited two contiguous lots on the St. Croix River that their parents had purchased in 1960 and 1963. The parents had built an ancestral home on the first lot. They bought the second for investment purposes.

The trouble began in 2004 when the Murrs sought to sell the second lot, valued at $410,000, and use the proceeds to upgrade the ancestral home. But they were blocked by a 1975 local zoning ordinance that treated the two lots as one, even though they had long been deeded and taxed separately. Under the ordinance they had to sell the lots together or not at all. Out $410,000, the Murrs sued, claiming that the ordinance had deprived them of their right to sell their property.

Big Goings-On at Supreme Court as We Race to the End of Term

The Supreme Court today came down with opinions in two cases in which Cato filed a brief. First, in Murr v. Wisconsin, it unfortunately ruled against property owners in an important regulatory-takings case. Then, in Lee v. United States, it correctly found that a criminal defendant who had virtually no chance to win at trial—absent jury nullifcation, which was our focus—was still prejudiced by (and entitled to a new trial due to) his counsel’s wrong advice that he wouldn’t be deported if he pled guilty.

Murr: Whenever you see a court invoke a “multifactor balancing test,” you know it’s just making stuff up. Alas that’s what happened in Murr v. Wisconsin, where a family was deprived of significant use of its property—not to mention economic benefits—because of an unfortunate operation of local law. The Supreme Court compounded that harm by essentially deferring to state determinations of property owners’ rights, and did so by applying that “multifactor” standard that allows it to reach whatever result it wants. This ruling shows that in the grander scheme, as Justice Thomas noted in his dissent, the Supreme Court needs to reevaluate its regulatory-takings jurisprudence altogether. (For more, see Cato’s amicus brief.)

Lee: The Court was correct to give even seemingly hopeless criminal defendants the right to adequate legal repreentation. Jae Lee only took a plea deal because his lawyer repeatedly assured him that he wouldn’t face deportation. The fact that going to trial, where he had no legal leg to stand on, would’ve almost certainly resulted in a longer prison sentence is immaterial. It’s clear that for Lee, who was brought to the United States from South Korea as a child, the risk of being forced to leave the only country he knows was much more important than a longer prison sentence. Lurking under this case was the controversial doctrine-that-must-not-be-named of jury nullification, which was essentially Lee’s only chance for acquittal. (For more, see Cato’s amicus brief.)

Stay tuned Monday for the Supreme Court’s final opinions of the term (especially Trinity Lutheran), as well as decisions on whether to take up the travel-ban case, Masterpiece Bakery (vendors for same-sex weddings), and Peruta (Second Amendment right to carry). And maybe, just maybe, Justice Anthony Kennedy will announce his retirement—though if I had to bet, I’d say he sticks around another year.

Senate Republicans Offer a Bill to Preserve & Expand ObamaCare

Yesterday, I posted “Five Questions I Will Use to Evaluate the Phantom Senate Health Care Bill.” The phantom bill took corporeal form today when Senate Republicans released the text of the “Better Care Reconciliation Act.”

So how does the Senate bill fare with regard to my five questions?

1. Would it repeal the parts of ObamaCare—specifically, community rating—that preclude secure access to health care by causing coverage to become worse for the sick and the Exchanges to collapse?

No. The Senate bill would preserve ObamaCare’s community-rating price controls. To be fair, it would modify them. ObamaCare forbids premiums for 64-year-olds to be more than three times premiums for 18-year-olds. The Senate bill would allow premiums for the older cohort to be up to five times those for the younger cohort. But these “age rating” restrictions are the least binding part of ObamaCare’s community-rating price controls. Those price controls would therefore continue to wreak havoc in the individual market. The Senate bill would also preserve nearly all of ObamaCare’s other insurance regulations. 

2. Would it make health care more affordable, or just throw subsidies at unaffordable care?

The Senate bill, like ObamaCare, would simply throw taxpayer dollars at unaffordable care, rather than make health care more affordable.

Making health care more affordable means driving down health care prices. Recent experiments have shown that cost-conscious consumers do indeed push providers to cut prices. (See below graph. Source.)  

How Cost-Conscious Consumers Drive Down Health Care Prices