Supreme Court Takes on the Empire State’s Language Police

In Federalist 10, James Madison warned of “a number of citizens, whether amounting to a majority or minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens or to the permanent and aggregate interests of the community.” These groups—“factions” in Madison’s terms—come together to seek concentrated benefits from favorable legislation and regulation rather than competing in the marketplace, while spreading the costs throughout society.

While Madison conceded that such interests could not be stopped completely, he suggested that certain steps could be taken to mitigate the “effects” of these groups, and the damage that they can do to the public interest. The First Amendment is one such protection.

The New York legislature, however, ignored the First Amendment rights of both merchants and consumers when—at the behest of the credit-card lobby—it passed a law restricting how retailers can convey pricing schemes, as well as the public’s right to know about them. New York’s no-surcharge law—like those in 10 other states—insulate credit-card companies from consumer knowledge about who is actually causing the higher prices on goods when they use their credit card (“swipe fees”). The law does this not by restricting the merchants’ ability to charge different prices as between cash and credit payments—that’s legal everywhere—but by regulating the communications about the different prices.

To put it simply: the law allows merchants to offer “discounts” to cash-paying customers, but makes it a crime to impose economically equivalent “surcharges” on those who use plastic. By mandating how these merchants convey their pricing structure, New York is restricting speech on the basis of its content, which would seem to be an obvious First Amendment violation.

A federal district court agreed—as have two other federal courts, including the U.S. Court of Appeals for the Eleventh Circuit when it struck down a similar Florida law. The district court held that the law “plainly regulates speech”—not conduct—by drawing a line between prohibited “surcharges” and permissible “discounts” based solely on words and labels. The Second Circuit disagreed, however, holding that the law regulates “merely prices,” not speech. Cato filed an amicus brief urging the Supreme Court to take up this important case, and the Court has agreed to do so.

Along with the Pacific Legal Foundation, we have now filed another brief asking the Court to rule that collusion between business interests and state government can’t be used to circumvent constitutional rights. Indeed, the Framers sought to protect speech from the type of cronyism and rent-seeking the New York’s no-surcharge law manifests.

Amtrak’s World-Class Losses

Amtrak issued its F.Y. 2016 unaudited financial results last week with a glowing press release claiming a “new ridership record and lowest operating loss ever.” Noting that “ticket sales and other revenues” covered 94 percent of Amtrak’s operating costs, Amtrak media relations called this “a world-class performance for a passenger carrying railroad.” The reality is quite a bit more dismal.

Many new high-tech firms attract investors despite losing money, but a 45-year-old company operating an 80-year-old technology shouldn’t really brag about having its “lowest loss ever.” The “world-class performance” claim is based on the assumption that passenger trains all over the world lose money, which is far from true: most passenger trains in Britain and Japan make money, partly because they are at least semi-privatized.

Moreover, a close look at the unaudited report reveals that Amtrak left a lot of things out of its press release: passenger miles carried by Amtrak declined; ticket revenues declined; and the average length of trip taken by an Amtrak passenger declined. The main reasons for Amtrak’s positive results were an increase in state subsidies (which Amtrak counts as passenger revenue) and a decrease in fuel and other costs.

Ridership grew by 1.3 percent, but passenger miles fell because the average length of trips fell by 3.1 percent. One of the biggest drops in trip lengths was on the New York-Savannah Palmetto. Starting at the beginning of F.Y. 2016, Amtrak added stops at Metropark, New Brunswick, Princeton Junction, and Baltimore-Washington Airport, effectively turning the supposedly long-distance train into a Northeast Corridor train. In 2015, the train’s average trip length was 396 miles, but in 2016 that dropped to 257 miles.

A decline in passenger miles means more empty seats. In 2015, Amtrak filled 51.4 percent of its seat-miles; in 2016, this fell to 50.0 percent. In other words, the average Amtrak train is half full; when was the last time you were on a half-full airliner? The biggest declines were on the Washington-Richmond state-supported train, the Seattle-Los Angeles Coast Starlight, and the Auto Train.

Some trains did show an increase in passenger miles. One of the biggest increases was the Chicago-Indianapolis Hoosier State, which saw an 11 percent increase in passenger miles and a 16 percent increase in revenues. This train is supported by Indiana, which got fed up with Amtrak service and contracted it out to another operator, Iowa Pacific. Amtrak is a “partner” because it allows people to make reservations on the train from its web site. But the lesson may be that privatization (or semi-privatization) can result in bigger ridership gains than Amtrak.

Fixing the Federal Budget Process

On Friday, the Heritage Foundation held a conference entitled “Budget Process Reforms in the Next Congress.” Paul Winfree organized the event and provided opening remarks.

The federal budget process is a mess. Congress does not pass bills on time, and then jams huge omnibus measures through at the last minute. Spending exceeds revenues by $600 billion a year and rising. Congress does not scrutinize programs to see whether the benefits actually outweigh the costs. And most of the budget grows on auto-pilot, allowing politicians to pretend that they are not responsible for the government’s massive debt.

I was on the first panel, which looked at budgeting lessons from other countries. Barry Poulson and John Merrifield discussed Switzerland’s “debt brake” and proposed that the U.S. federal government adopt a similar budget cap. Dan Mitchell also likes the Swiss debt brake. In my remarks, I agreed that a cap was a good idea, but argued that a simpler restraint would be better, such as a 3 percent annual growth limit on total outlays.

What we really need is for Congress and incoming President Trump to focus on eliminating low-value programs. I provided evidence that politicians are capable of major spending cuts. In particular, Canada cut federal spending from 23 percent of GDP in the early 1990s to 14 percent by 2015. (Unfortunately, Canada has recently elected a government that seems to believe that deficit spending and debt helps the economy, despite the country’s own experience over two decades that shows the opposite).

On the second panel, former federal budget official Marcus Peacock described how federal agencies tend to maximize their costs, while private businesses focus on minimizing their costs and improving efficiencies. Fiscal restraint can lead to innovation, he argued.

On the third panel, Rick May and George Everly of the House and Senate Budget Committees, respectively, described Republican efforts to overhaul congressional budget procedures. Background materials on these efforts are here.

If you are interested in budget issues and enjoy free lunches, please attend our November 30 panel on Capitol Hill featuring Senator James Lankford. The senator will describe wasteful programs he found in the budget, and experts will discuss spending-cut opportunities during the Trump administration.

President-elect Trump

President-elect Donald Trump. That’s a phrase I never expected to see. Like most Washingtonians, journalists, and political observers around the country, I never took his candidacy seriously. And now here we are, in thoroughly uncharted waters. I don’t think we’ve ever had a president with less apparent knowledge of or interest in policy, which makes it difficult to assess the direction of policy over the next few years. The few issues that did seem to motivate Trump were strikingly unattractive from a libertarian perspective, notably his hostility to international trade and immigration.

Back in January I wrote this in a National Review symposium:

From a libertarian point of view—and I think serious conservatives and liberals would share this view—Trump’s greatest offenses against American tradition and our founding principles are his nativism and his promise of one-man rule.

Not since George Wallace has there been a presidential candidate who made racial and religious scapegoating so central to his campaign. Trump launched his campaign talking about Mexican rapists and has gone on to rant about mass deportation, bans on Muslim immigration, shutting down mosques, and building a wall around America. America is an exceptional nation in large part because we’ve aspired to rise above such prejudices and guarantee life, liberty, and the pursuit of happiness to everyone. Equally troubling is his idea of the presidency—his promise that he’s the guy, the man on a white horse, who can ride into Washington, fire the stupid people, hire the best people, and fix everything. He doesn’t talk about policy or working with Congress. He’s effectively vowing to be an American Mussolini, concentrating power in the Trump White House and governing by fiat. It’s a vision to make the last 16 years of executive abuse of power seem modest.

Nothing much changed over the ensuing 10 months. Except that Trump won the election. He is now president-elect, and scholars and activists on all sides are waiting to see what his actual policies will be. Some of my friends are excited about the prospects for tax cuts, deregulation, repeal of Obamacare, the appointment of conservative or classical liberal Supreme Court justices, and a change in our interventionist foreign policy. Others—and sometimes the same people—worry about threats to world trade and an open society, religious tests, and a president who seems vindictive, inclined to conflate his private business with public affairs, and predisposed toward an authoritarian mindset.

Donald Trump and the Future of U.S. Policy in Syria

Discussion of President-elect Trump’s approach toward Russia, and what that means for U.S. policy in the Syrian civil war, is heating up. Last week, Senator John McCain warned Trump that “the price of another ‘reset’ would be complicity in Putin and Assad’s butchery of the Syrian people.”

Donald Trump doesn’t necessarily see it that way. During the campaign, he tangled with his running-mate Mike Pence over Syria, and late last week Trump admitted that he “had an opposite view of many people regarding Syria,” and suggested that he would withdraw support for anti-Assad rebels, and focus on fighting ISIS.

Although he sometimes speaks derisively of regime-change wars and nation building, Donald Trump is hardly an anti-war dove and there are reasons to believe that his administration will be quite hawkish. At a minimum, he is likely to be receiving advice from many establishment voices who have been urging the U.S. government to play a much more active role in the Syrian civil war.

The president-elect should go out of his way to consider other perspectives. President Obama was caught between wanting to see Bashar al-Assad’s regime overthrown, but not wanting to see violent extremists take its place (for example, Jabhat Fatah al-Sham, formerly known as Jabhat al-Nusra). Unsurprisingly, the Obama administration’s efforts to arm the few factions that cleared the vetting process were an abject failure.

Despite the anxiety surrounding the election, and the expectations that Hillary Clinton would have substantially increased U.S. military intervention globally, the great irony is that Clinton’s foreign policy vis-à-vis Russia and Syria might not have been all that different from Trump’s. Clinton’s so-called smart power would have struggled to find the moderate elements capable of prevailing in the Syrian civil war, and would have struggled to keep them alive once found. She, too, might have dropped the demand that Assad and his followers evacuate the country, and tacitly worked with Russia to target the very worst extremists, including ISIS, a group that poses a threat not merely to Assad, but to many others around the world.

Clinton also would have confronted a skeptical Congress, reflecting the sentiments of a skeptical public. As I note over at The Skeptics, “Some in Congress have pushed back against the executive branch’s occasional zeal for intervention in Syria,” and that is likely to continue. Recall that:

In the late summer and fall of 2013, members of Congress were flooded with phone calls urging them to block U.S. military action there. Obama got the message too, and backed away from his ill-advised red line that would have entailed direct U.S. military action in the civil war.

But the Obama administration continued to funnel money to some anti-Assad rebels. Since then, a few in Congress have tried to cut off funds for the so-called “Syrian Train and Equip” program. An amendment to the Defense Appropriations Bill sponsored by Reps. Tulsi Gabbard (D-HI) and Austin Scott (R-GA) garnered 135 votes from both Republicans and Democrats, despite opposition from party leaders and the White House. It is reasonable to believe that a similar effort would fare even better in the post-election environment.

You can read the whole thing here.

You Ought to Have a Look: How to Start Afresh with Climate and Energy Policy

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.

 

Last week in this space, we highlighted a couple of areas where burdensome carbon dioxide policies exist that we hoped were not being overlooked by the Trump transition and planning teams in their push to reverse the more prominent Obama Administration actions like the Paris Climate Accord and the Clean Power Plan.

We want to draw a bit more attention to one of these—overturning federal regulations that were handed down on greenhouse gas regulations offered by the Department of Energy (DOE) and the EPA.

Wayne Crews, vice president for policy at the Competitive Enterprise Institute has a couple of great articles (see here and here) describing how this can be done through elements of the Congressional Review Act (CRA), which was passed in 1996. The beauty of using the CRA is that it only requires a simple majority vote (i.e., no worries of a filibuster) in Congress. To date, the CRA has been pretty ineffective at overturning “midnight rules” (in this case rules finalized since about mid-May) because the incoming president would veto them. But with Trump’s ascendency, this should not be the case. Crews has compiled, and is maintaining, a running list that is currently 140+ items strong (and growing) of “Significant Federal Rules Containing Potential Candidates for Trump Administration Congressional Review Act Resolutions of Disapproval.” There are many among them that either directly regulate greenhouse gas emissions or include (improperly in our estimate) the so-called “social cost of carbon” on the benefits side of the cost/benefit analyses that are used to support greenhouse gas reductions. These misguided and ill-informed should be prime targets for Congressional undoing.

We also want to highlight a couple of other pieces that get into the technical (or legal) details of how Trump may go about disassembling elements of Obama’s Climate Action Plan. These include analysis by:

Andrew Grossman: (Cato podcast) “Undoing Executive Action in a Trump Presidency

David Bookbinder and David Bailey: “Does Trump Spell Climate Doom?”

Greenwire’s Amanda Reilly: “Clean Power Plan: Rule’s demise looms, but how Trump will ax it remains unclear

Climatewire’s Jean Chemnick: “Paris Agreement: Here’s what could happen under Trump

And a good overview by Greenwire’s Robin Bravender: “Can Trump deliver and immense energy, climate promises?

It worth reading through these if you want to familiarize yourself with the myriad ways that the Trump Administration may clearing the climate policy slate.

And finally, the hard environmental left continues to fret about what is going to come to pass under the new Trump Administration. Much of the fretting is about whether or not Trump decides that “turnabout is fair play” when it comes to matters like research funding, research direction, respect of opposing views, personal attacks on scientists, etc. The new Administration’s approach, in fact, may offer refreshing new directions in both science and policy that were actively oppressed under the Obama Administration. A couple of commentaries over the past week cautiously embrace such possibilities. While we may not agree with everything that is being expressed in these articles, we highlight them because their authors were not afraid to offer at least a glimmer of (cautious) optimism for opportunity. They include essays by:

Dan Sarowitz: “Science and innovation policies for Donald Trump

Pat Michaels: “Trump Should Shine Spotlight on Shrouded Climate ‘Science’

And those ideas expressed by Judy Curry in this article “Climate scientists brace for funding battles under Trump

You ought to have a look!

The IRS Believes All Bitcoin Users are Tax Cheats

The Internal Revenue Service has filed a “John Doe” summons seeking to require U.S. Bitcoin exchange Coinbase to turn over records about every transaction of every user from 2013 to 2015. That demand is shocking in sweep, and it includes: “complete user profile, history of changes to user profile from account inception, complete user preferences, complete user security settings and history (including confirmed devices and account activity), complete user payment methods, and any other information related to the funding sources for the account/wallet/vault, regardless of date.” And every single transaction:

All records of account/wallet/vault activity including transaction logs or other records identifying the date, amount, and type of transaction (purchase/sale/exchange), the post transaction balance, the names or other identifiers of counterparties to the transaction; requests or instructions to send or receive bitcoin; and, where counterparties transact through their own Coinbase accounts/wallets/vaults, all available information identifying the users of such accounts and their contact information.

The demand is not limited to owners of large amounts of Bitcoin or to those who have transacted in large amounts. Everything about everyone.