January 14, 2020 12:26PM

Elizabeth Warren: Taxpayer‐​Funded Student Debt Jubilee, Meet Pen and Phone

We already know that Elizabeth Warren’s massive student loan forgiveness proposal is atrocious policy that would saddle taxpayers with at least $640 billion in debt that millions of students freely accepted to greatly increase their lifetime earnings. That’s private profit, socialized cost. Now Warren is declaring that she’ll combine bad policy with even more dangerous government, promising to start forgiving student debt “on day one” of her presidency, as she declares in the tweet below. She offers a justification we’ve seen before: Congress isn’t moving fast enough. She does not, however, cite where the Constitution says Congress shall have the power to make law, unless the president decides it is taking too long.

To be fair, Warren says that there is authority in law for massive loan forgiveness, and it is true that Congress has too often given away its power. But that there is legal authority for what Warren suggests she’ll do defies the obvious reading of applicable law, which not only contains no “cancel it all” provisions, but has many targeted forgiveness and cancellation programs, including for debt held by teachers and people in “public service.” If the president is legally allowed to cancel student loans in basically any way he or she sees fit, why bother with targeted programs with specific rules?

Blanket student loan forgiveness that will fall on the backs of taxpayers is terrible education policy that should scare us a lot. Such policy coupled with presidential usurpation of power is awful, unconstitutional governance that should scare us much, much more.

January 14, 2020 11:28AM

Trump Clearly Doesn’t Care to Get His Facts Straight. Neither Do His Critics.

The public debate over how to protect patients with expensive medical conditions is so muddled and uninformed that sometimes President Trump’s critics end up matching his ignorance and muddle‐​headedness.

The most recent controversy concerns (what else?) a pair of missives by the Tweeter‐​in‐​Chief.

It is hard to argue Trump’s words comport to reality. He seems to be taking credit for ObamaCare’s (purported) ban on insurers discriminating against enrollees with preexisting conditions. While he has seemed to suggest in the past that he likes those parts of the Affordable Care Act, his supporters have spun his remarks by saying, no, Trump wants to take care of people with preexisting conditions in a different way. Fine.

The only credible claim Trump could make in this area, however, is that the changes his administration made to short‐​term, limited duration plans have improved access to care. But while such renewable term health insurance can make coverage more secure for those who develop expensive conditions in the future – and can therefore make the problem of preexisting conditions smaller – they can’t really help people who already have preexisting conditions, for the same reason fire insurance can’t really help someone whose house has already burned down. The phrase preexisting conditions rather unhelpfully clouds this fact that some medical conditions are simply not insurable. People who actually want to get sick people the health care they need should drop the phrase from their vocabulary and speak only of insurable versus uninsurable medical conditions.

Trump’s critics are little better. A smattering:

Trump clearly does not care to get his facts straight. But neither do his critics. They ignore the critical distinction between insurable and uninsurable medical conditions. They ignore that markets have done a better job of preventing preexisting conditions than the government on which they pin their hopes for the sick. They ignore that the ACA’s (purported) protections for people with preexisting conditions literally ration care to the sick outside the law’s “open enrollment” period. They ignore that those same “protections” are forcing ACA plans into a race to the bottom on coverage for multiple sclerosis and other illnesses. Finally, they ignore that Democrats are literally trying to throw people with preexisting conditions out of their health plans and leave them with no coverage for up to 12 months, while Republicans have prevented Democrats from throwing people with preexisting conditions out of their health plans. I wrote about those efforts in the Wall Street Journal in 2018. The New York Times reports on those efforts here.

Like I said, it’s a muddle. Trump makes so many errors because he just assumes he’s right. Trump’s critics make so many critical errors because that’s how orthodoxy works. So long as everyone you like agrees, you don’t have to think too much. Which is really not all that different from Trump’s approach.

January 13, 2020 2:38PM

It’s the Knick of Time for States to Revisit Overbearing Land Use Regulations

It’s January, so most state legislatures are kicking off their sessions. Across state capitols, one issue to monitor is the fallout from the Supreme Court’s 2019 landmark decision in Knick v. Township of Scott, a holding which may compel many local governments to rethink how they regulate private property.

Professor Ilya Somin coauthored an amicus brief to the Knick Court on behalf of the Cato Institute and other organizations, and he summarized the controversy as follows:

The main point at issue in Knick is whether the Court should overrule or limit Williamson County Regional Planning Commission v. Hamilton Bank, a 1985 decision that makes it virtually impossible to bring many types of takings cases in federal court. Under Williamson County, a property owner who contends that the government has taken his property and therefore owes “just compensation” under the Fifth Amendment, cannot file a case in federal court until he or she has first secured a “final decision” from the relevant state regulatory agency and has “exhausted” all possible remedies in state court. At that point, it is still often impossible to bring a federal claim, because various procedural rules preclude federal courts from reviewing state court decisions in cases where the case was initially brought in state court.

Property owners prevailed last Summer, as explained by my colleague Ilya Shapiro:

[Today] the Supreme Court in Knick v. Township of Scott ruled 5 – 4 that a government violates the Fifth Amendment’s Takings Clause when it takes property without compensation, and a property owner may bring a claim to that effect in federal court at any time … Knick represents the culmination of many years of challenges to Williamson County, and years of effort to put property rights (and takings claims specifically) on the same procedural footing as other rights enumerated in the Bill of Rights.

No longer will courts relegate the Takings Clause to “second‐​class status” among our rights. Of course, the Knick holding is only the start. Now, states must deal with the constitutional consequences.

As Justice Elena Kagan noted in her dissenting opinion, “There are a nearly infinite variety of ways for regulations to affect property interests.” One such “way” — increasingly popular of late — involves local laws that obstruct mineral extraction on private property. Obviously, these measures would result in property owners losing some or all of the value of their subsurface mineral rights.

After Knick, affected property owners are much more likely to get their day in federal court to seek just compensation from the government. This access to courts, in turn, changes the dynamic between local governments and regulated entities. Most localities have insufficient resources to either litigate these challenges or provide just compensation (if they lost in court). The upshot is that Knick gives local governments a strong incentive to revisit recently passed roadblocks to oil and gas production.

Which brings us to Colorado, among the biggest beneficiaries of the recent revolution in American oil and gas production ushered in by technological breakthroughs in directional drilling and hydraulic fracturing. At present, the industry annually creates more than $30 billion in wealth for the state.

A mere months before the Supreme Court’s decision in Knick, Colorado Governor Jared Polis signed SB19-181, a massive overhaul to the state’s oil and gas regulatory regime. Among other measures, the law provides local governments with increased authority to limit subsurface property rights.

In Knick’s wake, some Colorado officials are asking hard questions about SB19-181. One of them is Sen. Kevin Lundberg. Almost a decade ago, I worked with Sen. Lundberg on the state’s implementation of the Clean Air Act, and I know he’s a serious lawmaker.

Last month, Lundberg led the Republican Study Committee of Colorado in a series of hearings on how SB19-181 will function in a post‐Knick world. His findings are sobering: Potentially, “thousands of Colorado citizens who are mineral interest owners can have their day in Federal court” and seek “literally trillions of dollars.”

In his writeup of the hearings, Sen. Lundberg correctly observed that “Something has to give … If [state] policy makers are smart, they will unwind SB19-181 before it becomes a crisis for the entire state.”

During the new legislative session, Sen. Lundberg promised more hearings on the matter. Coloradans should hope his colleagues give this matter the attention it deserves. Even if the state lawmakers don’t act, I suspect that municipal and county governments in Colorado will think twice before they exercise their SB19-181 authority to constrain property rights.

January 13, 2020 12:15PM

Neil Peart: An Appreciation

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Neil Peart, drummer for Canadian rock band Rush, passed away last week after a three‐​year battle with brain cancer. Peart was 67. He was regarded as one of the best rock drummers of all time, and Rush carved out a unique place in music overlapping heavy metal and progressive rock.

Aside from his virtuoso drumming skills, Peart gained fame for the brainy lyrics he wrote for Rush’s remarkable string of 19 studio albums. Libertarians may be aware that Rush credited ideas on its 1976 album 2112 to the “genius of Ayn Rand.” Peart was not a full‐​fledged libertarian, but many of his songs were influenced by Rand’s individualism. The epic title track on 2112 describes a dystopian world where an all‐​powerful government crushes creativity.

Peart was a voracious reader and his songs reflected a wide range of influences. He explored freewill, heroes, mob rule, scheming and hypocritical leaders, forced equality of outcomes, the soul‐​killing conformity of suburbs, survival in a prison camp, the drama of a rocket liftoff, the joy of music, the beauty of sunlight, and the illicit thrill of revving up a sports car in a future car‐​free despotism. Peart’s lyrics were always thoughtful and honest. While other rock bands sang about romance, sex, and left‐​wing politics, Rush offered something different.

In interviews, Peart and his bandmates Alex Lifeson and Geddy Lee always came across as the nicest guys. No trashed hotel rooms, drug overdoses, or ugly band infighting with these guys. They were focused, humble, and dedicated professionals. Even after reaching the peak of his profession, Peart continued taking drum lessons to see what else he might learn. Peart’s passion for his art is clear in this interview.

In the photo above from Drummer, Peart’s drum kit sports Rush’s starman emblem. The naked man representing creativity and free thought stands before the star of the dictatorship — the Solar Federation from 2112—which controls every facet of life and enforces equality. Here is a graphic version of the story.

If you are not a Rush fan, you might start by listening to Moving Pictures and A Farewell to Kings.

When I first moved to D.C. I lived at 2112 37th Street, which was the perfect address for a Canadian‐​born classic rock fan.

Neil Peart will be greatly missed.

January 13, 2020 11:42AM

Labor Law: Feds Call Off Their War on Franchising and Subcontracting

The U.S. Department of Labor has announced a final rule (press release, fact sheet, FAQ) backing off one of the Obama administration’s most damaging initiatives, its attempt to redefine a wide range of franchise, subcontract, and supplier business models as “joint employment.” The effect of that move would have been to make many companies liable for breaches of labor and employment law committed by their franchisees or contractors. The final rule is set to take effect on March 16, 2020.

This is an important win for economic freedom, as well as for the legal reality that a supply or contractual relationship between two firms is by no means the same thing as a merger between them.

It is also a victory for regulatory modesty. The Obama rules had pushed hard at (and arguably overstepped) the bounds of the New Deal‐​era Fair Labor Standards Act so as to rope in as employment many relationships that Congress had never chosen to include as such. The push had been a multi‐​agency affair, extending to ostensibly independent federal bodies such as the National Labor Relations Board (NLRB) and others; and the retreat is likewise multi‐​agency, as can be seen in an NLRB case last month in which the board confirmed that McDonald’s does not, in fact, employ the employees of McDonald’s franchisees.

The new four‐​part balancing test announced by the Trump labor department assesses, to quote directly, whether the potential joint employer:

* hires or fires the employee;
* supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
* determines the employee’s rate and method of payment; and
* maintains the employee’s employment records.

Whatever else can be said about this framework, it at least seems likely to return the scope of the rules to the same general neighborhood they occupied for decades up to 2015.

Most of all, to quote our 2015 description, the new rule beats a retreat from the past administration’s aim “to force much more of the economy into the mold of large‐​payroll, unionized employers, a system for which the 1950s are often (wrongly) idealized.” That very same goal is at the root of California’s unfolding debacle with AB5, a law that tries to force many lines of freelancing into a direct‐​employment model and is already harming large numbers of workers it had purported to help.

If some progressives at the federal level continue to pursue this paradoxically backward‐​looking agenda, they will need to do so through the front door, by working in Congress to enact different standards into law.

January 13, 2020 11:39AM

New York’s Government Is Twice the Size of Florida’s

New Census data show that Americans are continuing to move from high‐​tax to low‐​tax states. One of the largest migration flows is from New York to Florida, as discussed in this Cato study.

The exodus from New York is sad, but the blame falls on the politicians who impose high‐​cost government on the state. New York’s high taxes are a side effect of excessive state and local spending.

The excess is clear when comparing New York to Florida.

The table below shows Census data for state and local spending in 2017. New York and Florida have similar populations of 20 million and 21 million, respectively. But governments in New York spent twice as much as governments in Florida, $348 billion compared to $177 billion.

On some activities, spending in the two states is broadly similar, such as on transportation, police, fire, parks, sewers, and solid waste. But in other budget areas, New York’s excess spending is striking.

New York spent $69 billion on K‑12 schools in 2017 compared to Florida’s $28 billion. Yet the states have about the same number of kids enrolled — 2.7 million in New York and 2.8 million in Florida.

New York spent $71 billion on public welfare compared to Florida’s $28 billion. Liberals say that governments provide needed resources to people truly in need. Conservatives say that generous handouts induce high demand whether people need it or not. Given that New York’s welfare costs are 2.5 times higher than Florida’s, the latter effect probably dominates.

New York spends vastly more on transit than Florida. Transit system revenues in New York are $6.8 billion per the Census, but that appears to leave about $14 billion a year in taxpayer costs. Because of its size and density, New York City does need an extensive transit system. But that does not mean that taxpayers should bear such high costs. Hong Kong is a huge and dense city with an extensive subway system that is run privately without taxpayer subsidies.

New York spends vastly more on employee retirement than Florida. Retirement systems are mainly funded by contributions and investment earnings, although most systems are underfunded. New York has a larger and more unionized public workforce than Florida. New York governments employed 1,196,632 workers in 2017 compared to Florida’s 889,950 (measured in FTEs). New York’s public workforce is 67 percent unionized compared to Florida’s at 27 percent.

New York spends $10 billion more a year on interest costs than Florida. That is a clear example of how profligacy imposes an unnecessary burden on New York taxpayers.

If New York wants to stem its chronic loss of residents, it needs to slash spending on welfare, transit, and worker payroll and benefits. It should privatize transit systems, pursue school choice, and repeal collective bargaining for government workers. It should fund services from current revenues, not borrowing.

Most New York residents do not benefit from bloat in government payrolls, inefficient transit, excessive welfare, and deficit spending. To them, the high taxes are disproportionate to the government services received. That is why they are moving to better‐​managed states with lower taxes.

spending

January 13, 2020 9:53AM

Stop Treating Adopted Kids Differently Based on Race

The Indian Child Welfare Act strips basic constitutional rights from any child who is racially classified as “Indian.” ICWA was initially created to prevent seizure of Native American children from their intact families by state actors. Modern‐​day applications, however, hurt the administrative process of foster families’ adoption proceedings. Even in cases where the Native American parent(s), relatives, or affiliated tribe have no issue with the adoption, the process is still delayed by arbitrary administrative rules. In some cases, the child is even removed from stable adoptive parents to be placed in a neglectful, abusive situation. The U.S. Court of Appeals for the Fifth Circuit reversed a district court’s decision to deem ICWA as applied to adoption unconstitutional under principles of equal protection, the Tenth Amendment, the nondelegation doctrine, and the Administrative Procedure Act.

This Fifth Circuit ruling creates a dangerous new precedent that eliminates the distinction between racial and political classifications, upholding ICWA’s definition of a child’s political classification based solely on her race (as determined by a minute blood quantum). This logic ignores the cultural and political identification of the child while bolstering the use of race in government decision making. At the very least, biological eligibility for tribal membership is a form of national‐​origin classification, which is subject to the same strict scrutiny that applies to racial classifications in other contexts.

The court asserted that because many racially Indian children do not fall under ICWA’s definition of “Indian child,” this term is not a racial classification — which is incorrect, in that legal precedent dictates that a state classification does not become race‐​neutral simply because it is over or underinclusive. Another ICWA provision requires children to be placed with “Indian” adults, regardless of tribal affiliation. In other words, a Sioux child must be placed with Seminole parents instead of a potentially better situation with black, white, Asian, or Hispanic parents. This “generic Indian” concept is a blatantly arbitrary racial identification.

Finally, the Fifth Circuit’s ruling will, in fact, further harm the most at‐​risk minorities. Native American children are at greater risk of abuse, neglect, molestation, alcoholism, drug abuse, and suicide than any other demographic in the nation. Instead of providing these children with more legal protection, ICWA creates heavier evidentiary burdens, thus forcing children to remain in abusive homes longer.

Fortunately, the full Fifth Circuit decided to hear the case en banc. Together with the Goldwater Institute and Texas Public Policy Foundation, Cato has filed an amicus brief on behalf of parent plaintiffs frustrated in a wish to adopt children of Native descent. (We likewise did so before the Fifth Circuit panel and on the plaintiffs’ motion to rehear the case en banc.) We argue that under ICWA, “Indian child” is a genetics‐​based racial category and that ICWA does not constitutionally promote tribal sovereignty. The government may not treat American citizens differently, as it does here, based on whether their genetic ancestry would qualify them for tribal membership. For Congress to impose a racialized and non‐​neutral regime on parents and children is not only unwise and unfair, but unconstitutional.