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Mark A. Calabria

With the release of Peter Wallison’s new book, Hidden in Plain Sight, debates about the role of Fannie Mae and Freddie Mac in the financial crisis have heated up again. As I’ve written elsewhere, I believe there’s a lot more to the story than the GSEs’ housing goals. While there are a number of omissions in Peter’s otherwise fine book, I want to address a particular criticism of his work that strikes me as simply confused and mistaken.

I’ve often heard that Fannie and Freddie couldn’t have been a cause of the crisis because their loan loss rates (and totals) were far below those of banks. Robert VerBruggen recently repeats this in his review of Peter’s book. 

For this claim, Robert relies on loss estimates by David Min and Mark Zandi. The latter repeated this criticism at an AEI event for Peter’s book, and you can find Zandi’s estimates here (page 8, table 1). Zandi states that as a percent of debt, the GSEs witnessed a loss rate of 2.7 percent on their holdings of residential mortgages. Combined with the Federal Housing Administration’s losses, this comes to around $206 billion. In contrast, depositories (banks & thrifts) had a loss rate of 5.8 percent for a total of $217 billion—both the rate and total are obviously greater than that for the GSEs and FHA.  

So far, so good; I don’t disagree with any of the above. But Zandi’s estimates suffer from a massive omission: the other side of the balance sheet—equity. If you think losses are all that matter, consider that the dot.com bubble erased about $8 trillion in wealth, whereas losses on mortgages, according to Zandi, were just under $1 trillion. So if losses are the issue, why wasn’t the dot.com bubble so much worse than the subprime crisis? Because of leverage.

Yes, the GSEs’ losses on mortgages were less than that for depositories, but the differences in capital were far greater. The GSEs had far less shareholder money to fall back on if mortgages started to sour. Again bear in mind that total losses were similar between the GSEs and the depositories. In the 4th quarter of 2007, Fannie and Freddie held about $70 billion in shareholder equity, behind $1.7 trillion in assets and around $5 trillion in debt and guaranteed mortgage-backed securities. By contrast, depositories held $1.3 trillion in shareholder equity, or about 19 times the equity of the GSEs. Mortgage losses were not enough to sink the entire banking system, even if some banks did sink, whereas the GSEs were toast because of their low levels of capital. 

Why does that matter? Because it takes insolvencies to drive a financial crisis. The banking system, as a whole, was not driven to insolvency, but the GSEs where. Losses (and loss rates) only make sense relative to the capital ready to absorb those losses. And of course the failure of the GSEs was magnified through the system in a uniquely harmful manner. 

Did other banks hold Citibank equity?  Of course not, but they did hold GSE preferred shares. This all isn’t to say that the GSEs were the only cause of the crisis; they weren’t. It is to say that loss rates presented out of context are meaningless and could even be misleading.

Kat Murti

Over his 33 years at Cato and through his earlier activities in the libertarian policy sphere, Cato’s Executive Vice President David Boaz has played a key role in the development of both the Cato Institute and the libertarian movement at large; he even wrote the the Encyclopedia Britannica entry on libertarianism!

On Tuesday, in conjunction with the release of his new book, The Libertarian Mind: A Manifesto for Freedom (which, incidentally, sold out on Amazon within hours), Boaz took to Reddit’s iAMA forum to discuss libertarianism, his book, and the burgoening “libertarian moment,” inviting Redditors of all ilks to ask him anything

During the hour long Q&A session, Boaz tackled a wide-array of questions, weighing in on everything from the drug war and abortion to effective strategies for social change and the efficacy of libertarian governance.  Each one of his responses ignited impassioned debates amongst the forum’s diverse audience as commenters from all sides of the political spectrum hashed out the ideas of liberty. 

The resulting discussion is a fascinating one, very much worth your attention. Check out the Reddit discussion and Boaz’s book, and then continue the conversation on Twitter using #LibertarianMind.

Ted Galen Carpenter

In a joint press conference with German Chancellor Angela Merkel, President Obama stated that he was considering sending weapons to the government of Ukraine.  Noting that Russia had already annexed Crimea and was now backing separatist rebels in eastern Ukraine, the president warned that “the West cannot stand and simply allow the borders of Europe to be redrawn at the barrel of a gun.”

Such sentiments might have more credibility if the Western powers, including the United States, had not engaged in similar conduct.  But Washington and its NATO allies have indeed redrawn borders, including borders in Europe, through military force.  Two incidents are especially relevant.  Turkey, a leading member of NATO, invaded Cyprus in 1974 and amputated some 37 percent of that country’s territory.  Turkish forces ethnically cleansed the area of its Greek Cypriot inhabitants and, in the years that followed, desecrated a large number of Greek historical and religious sites.

Ankara subsequently established a client state, the Turkish Republic of Northern Cyprus in the occupied territories.  Turkey has steadfastly refused to atone for its illegal invasion and occupation, much less disgorge the land that it conquered.  Yet except for some token economic sanctions imposed shortly after the invasion, which were soon lifted, Washington has never even condemned the aggression that its NATO ally committed. 

One might assume that it would be awkward for U.S. leaders to excoriate Vladimir Putin’s regime for annexing Crimea or setting up puppet states in the occupied Georgian provinces of Abkhazia and South Ossetia (which Moscow did after a short, nasty war in 2008) when a NATO member is guilty of similar behavior.  But such flagrant inconsistency has apparently caused American officials little difficulty.

The other, even more blatant, case of redrawing European borders by force was the 1999 Kosovo war and its aftermath.  The United States and its NATO allies launched an air war against Serbia lasting 78 days to compel Belgrade to withdraw its security forces and relinquish control of the rebellious province.  A UN Security Council resolution ratifying that action still recognized Serbia’s sovereignty over Kosovo but mandated international control and governance of the territory for an indefinite period.  A NATO occupation force became the instrument of that control, despite Russia’s misgivings.

In early 2008, the Western powers encouraged and then formally recognized Kosovo’s unilateral declaration of independence from (a now democratic) Serbia.   Russia, China, and other countries strenuously objected to that decision, both because it bypassed the UN Security Council and set what they believed was a worrisome precedent in the international community. Indeed, nearly half of the member-states of the UN (including several members of the European Union) still refuse to recognize Kosovo’s independence. 

Given those precedents, it is astonishing for Obama or any other Western official to assert that redrawing European borders by force is unacceptable.  Russia’s actions in Crimea and eastern Ukraine deserve condemnation, but the West’s hypocrisy is nothing short of breathtaking.

 

Emma Ashford

After a grueling seventeen hours of negotiation, German, French, Ukrainian, and Russian leaders emerged with a compromise agreement aimed at ending the conflict in Eastern Ukraine. Although similar to last September’s failed Minsk accords, the new deal provides more details on timing and implementation, which may help a ceasefire to hold. After so many prior failures, strong skepticism is understandable. But if U.S. and European leaders actually commit to the specifics of the deal, it can provide Ukraine with much-needed time to rebuild, reform and address its dire economic problems.

The all-night negotiations between leaders in Belarus showed how far apart the parties were on a number of key issues, including whether the deal should rely on the boundaries laid out in the Minsk I ceasefire, or on the current situation in Eastern Ukraine. Since rebel forces have made substantial territorial gains since September, neither side is keen to concede on the issue. Other issues, including which side will control border crossings into Russia, and the withdrawal of foreign fighters and equipment, proved equally thorny.

Admittedly, the deal still leaves many issues unsettled. It calls for an immediate ceasefire, the withdrawal of heavy weapons and a demilitarized buffer zone in Eastern Ukraine.  It also mandates constitutional reform to allow the eastern regions increased autonomy, as well as amnesty for those involved in the fighting. But the issue of boundary lines is left effectively unsolved, requiring Kiev to adhere to the current front lines when withdrawing weaponry, and the rebels to adhere instead to the boundaries agreed upon in September. There is also no real mechanism to ensure compliance, although the situation will be monitored  by the OSCE.

Still, Minsk II provides more concrete details on each issue, which may help this deal to succeed. Timing is more clearly defined for the start of the ceasefire, the removal of troops and heavy weapons, the creation of the buffer zone, while all constitutional reforms and elections are scheduled to be completed by the end of 2015. The sequencing of events is also more clearly defined: the agreement calls for control of the border to be returned to Ukraine only after new elections in the region, which themselves must follow constitutional reform in Kiev. Since Minsk I’s failure can be attributed in part to disagreement between both sides over who would implement such steps first, this is a welcome change. The restoration of social transfers from Kiev to residents in rebel-controlled areas is also welcome, and may serve to reduce some of the misery in the region.

Although an imperfect deal, it is important that U.S. and European leaders support it. In the next few days, we can expect to see hostilities increase as both sides attempt to make last-minute gains before the ceasefire begins on February 15th. But thereafter, particularly during the first two week period, leaders must push strongly for both Kiev and Moscow to implement the deal. A substantive ceasefire will provide Kiev with breathing room, allowing them to begin the process of economic reform. Ukraine’s economy, never strong, has been a major casualty of the conflict, with the Hryvnia falling 65% in just the last year.  A newly-inked IMF deal will provide Ukraine with $17.5 billion in reform-oriented aid, allowing the government to begin the process of reducing government waste, rooting out corruption, and salvaging the badly damaged economy. It will also provide time to bolster the Ukrainian armed forces, which have performed poorly in the conflict due to rampant corruption and inefficiency. Such reforms would be extremely difficult in the absence of a ceasefire.

This week’s Minsk deal doesn’t necessarily offer a viable long-term solution to the crisis, as it fails to address several key issues. But if it can be made to produce a successful ceasefire, even in the short- or medium-term, it will provide Ukraine’s government with time to strengthen itself by addressing its numerous economic problems and widespread corruption. Such reform is far more valuable to Ukraine’s future prosperity than the current military campaign.  

Matthew Feeney

Advocates of increased transparency in law enforcement are understandably keen to see more police officers wearing body cameras. Not only is there some evidence that police officers wearing body cameras contributes to a decline in police “use-of-force” incidents, footage from police cameras has provided useful evidence to those investigating allegations of police misconduct. Yet despite the benefits of police body cameras there are serious privacy concerns that must be considered and addressed as they become more common.

Perhaps the most obvious privacy concerns are those of the civilians filmed by police officers. If footage from police body cameras is considered public record then hours of footage of innocent people’s interactions with police officers is potentially available. It is not hard to imagine a situation in which police officers wearing body cameras enter someone’s home and leave without making an arrest. Footage of that encounter could reveal embarrassing or private information about the homeowner.

In November of last year it was reported that Washington police departments were reviewing their policies related to dash cameras and body cameras in the wake of an increase in requests for footage from the public via public record requests. As the ACLU has pointed out, Washington is one of the states where body camera footage is considered “susceptible to public release upon request.”

At the end of last month, members of the North Dakota House overwhelmingly passed a bill that would exempt police body camera footage of the inside of a private place from a public record request. North Dakota House member Kim Koppelman, who introduced the bill, said that the legislation would protect civilians in situations similar to the one I outlined above. Koppelman reportedly introduced the bill “at the request of West Fargo Police Chief Michael Reitan.” Koppelman and Reitan may be primarily concerned with the privacy of civilians, but a civilian could have a genuine interest in seeing the footage gathered by police officers in her home, especially if she believes that officers damaged property or behaved poorly.

Writing in The Atlantic,Conor Friedersdorf suggested a policy framework for body cameras that included the following:

Members of the public who appear in body camera footage can request that it be sealed in certain cases—if they are a crime victim or witness, for example—but if no civilian in a video objects, then any member of the press or public can at least view it.

I would extend “certain cases” to include incidents involving police officers filming the interior of private property. Mother Jones’ Kevin Drum recommends that different police body camera policies be in place for footage captured inside private property and for footage captured in public. Whatever body camera policies police departments and lawmakers implement, they must be clear about when footage of the inside of private property will be available to the public. This is especially important because, as Friedersdorf highlights in his article, police departments are oftentimes unwilling to release their body camera footage disclosure policy (if they have one at all).

Jay Stanley at the ACLU has proposed a policy regarding when a police officer should turn on a body camera; such polices:

should require that a police officer activate his or her camera when responding to a call for service or at the initiation of any other law enforcement or investigative encounter between a police officer and a member of the public. That would include stops, frisks, searches, arrests, consensual interviews and searches, enforcement actions of all kinds, and any encounter that becomes in any way hostile.

This sounds like a good proposal, although it doesn’t address what ought to be done if such a policy is in place and an officer does not have his body camera on during an encounter. However, in October 2013 Stanley wrote that if a police department has a policy in place requiring that officers have body cameras on for all interactions with the public then failure to turn on body cameras should be dealt with in the following way:

And this requirement [to turn on body cameras during interactions with the public] must have some teeth associated with it — not only a risk of disciplinary action but also perhaps an exclusionary rule for any evidence obtained in an unrecorded encounter (for police who have been issued the cameras, unless there is an exigency to justify the failure to record). Another means of enforcement might be to stipulate that in any instance in which an officer wearing a camera is accused of misconduct, a failure to record that incident would create an evidentiary presumption against the officer.

These potential consequences may be enough to encourage officers to habitually turn on body cameras during encounters with the public, although it shouldn’t be surprising if there are genuine instances of police officers forgetting to turn body cameras on, particularly as they are introduced into departments. With something like Stanley’s exclusionary rule being strictly interpreted police officers will have to become used to regularly turning body cameras on in cases when doing so might be awkward or encumbering, such as during an unexpected on-foot pursuit of a suspect.

Some might argue that in order to get around the problem of officers not turning their body cameras on at appropriate times that cameras should be constantly on during an officer’s shift. This is technologically possible. During the first randomized control experiment on the effect of police body cameras, which took place in Rialto, California, cameras with a battery life of at least 12 hours were used, although officers taking part in the experiment were not required to have the cameras on at all times. 

While it is technically possible for officers with body cameras to have the devices on throughout a shift, there are serious problems with this requirement.

First, police officers deserve some privacy while on the job. The public should hold police officers to high standards and expect honesty and transparency from law enforcement officials, but it remains the case that police officers ought to be able to talk to each other in cruisers about department gossip and other topics without fear that members of the public may request footage of the conversation.

Second, police officers sometimes have to interact with informants and minors who are the victims of sexual assault. It would clearly not be appropriate for such interactions to be filmed by officers. Indeed, during the Rialto experiment officers were instructed not to have their body cameras on during such encounters.

Both of these issues raise concerns regarding a policy requiring that police officers have body cameras on at all times during their shifts. Any good police body camera policy cannot require that the cameras be on at all times.

It is my hope that an increasing number of police departments will issue body cameras to their officers. However, the issuing of these cameras must be accompanied by well-considered body camera policies that take into account the privacy concerns of civilians and police officers and the impact body cameras may have on law enforcement officials doing their jobs. Police body camera policies must also take into account local policing needs and should be crafted in this country’s labs of democracy.  

Patrick J. Michaels

The Obama Administration is sticking to its talking points claiming climate change affects us more than terrorism. It might be valuable to compare and contrast the real life affects Americans endure from both of these threats.

First, let’s take a look at climate change’s effects in the United States: Hurricane power, when measured by satellites, is near its lowest ever ebb. There’s no change in the frequency of severe tornados. The relationship between heavy snow and temperature is negative along the East Coast. Carbon dioxide and longer growing seasons are significantly increasing the world’s food supply, and there’s no relationship between global temperature and U.S. drought.

Compare this with the effects of terrorism: On September 11, 2011, terrorists took down the World Trade Center and nearly an entire side of the Pentagon, extinguishing 2,996 lives. As a result, every American’s privacy is assaulted by the government on a daily basis—and let’s not talk about what they’ve done to air travel, or worse, Iraq. We’ve managed to remain in a perpetual state of war, unleashing a wave of federal spending our great grandchildren will be repaying.

Perhaps next time President Obama skips the TSA lines to fly around the world on Air Force One (on the taxpayer dime, emitting the carbon of which he’s so scared) he should look down at Arlington National Cemetery at the tombstones left from the reaction to terrorism–it’s an excellent reminder of the real cost of government action.

(Read more about actual threat of terrorism in “Terrorizing Ourselves,” by Benjamin Friedman, Jim Harper and Christopher Prebel, and “Responsible Counterterrorism Policy,” by John Mueller and Mark Stewart.)

Patrick J. Michaels

NASA takes the (frozen) cake with this one.

It just released a report on global sea ice coverage that opens with the following sentence:

Sea ice increases in Antarctica do not make up for the accelerated Arctic sea ice loss of the last decades, a new NASA study finds.

NASA continued:

Furthermore, the global ice decrease has accelerated: in the first half of the record (1979-96), the sea ice loss was about 8,300 square miles (21,500 square kilometers) per year. This rate more than doubled for the second half of the period (1996 to 2013), when there was an average loss of 19,500 square miles (50,500 square kilometers) per year – an average yearly loss larger than the states of Vermont and New Hampshire combined.

Could have fooled us!

Figure 1 shows the sea ice coverage (anomalies) measured by satellite, as reported today by the University of Illinois at Urbana-Champaign’s website Cryosphere Today for the period since 1979 for the Arctic (left panel) and Antarctic (right panel). There has been an overall decline in Northern Hemisphere sea ice and a contemporaneous increase in Southern Hemisphere sea ice. It is also worth noting that the decline in Northern Hemisphere ice stopped about eight years ago, even as the within-year variability has gotten larger (perhaps because of thinning at the margins).

 

Figure 1. (left) Northern Hemisphere sea ice area anomalies (million square kilometers) from 1979 to present. (right) same for Southern (image source: Cryosphere Today).

Put them together and what do you get?  See Figure 2—the global sea ice history from 1979 through early 2015. The blow-up shows the last 10 years.

 

Figure 2. Global sea ice area anomalies (red line, million square kilometers) from 1979 to present. The insert shows the data since 2006 (image source: Cryosphere Today).

With the data available to us (and what NASA used, too), let’s check the veracity of NASA’s claims.

Is it true that increases around Antarctica don’t compensate for Arctic decreases? Nope.

The global ice anomaly (Figure 2) for the past two years has remained very close to the 30-yr (1979-2008) average.  This has happened because the increases around Antarctica have completely made up for the losses in the Arctic.

Is the loss of global sea-ice accelerating? Again, nope.

Look at the inset in Figure 2. It represents the second half of the period that NASA has offered to support its acceleration conclusion. Since 2006 (the past 9 years), global sea ice has increased.

How on earth can an extended period of increase be used as support for an accelerating decrease?!

Alex Nowrasteh

President Obama’s executive actions on immigration, known as the Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) and the Deferred Action for Childhood Arrivals (DACA), have allowed those beneficiaries to retroactively receive Earned Income Tax Credits (EITC) and Child Tax Credits (CTC).

The DACA and DAPA programs grant recipients temporary work permits during the period of their deferred action.  Under current legislation, CTC eligibility is determined through either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).  Since many unauthorized immigrants are already issued ITINs, eligibility for the CTC is not much affected by DACA and DAPA.

EITC eligibility status is another story altogether, as currently only those who file taxes with a valid SSN are eligible to receive the benefits.  DACA and DAPA will allow those recipients to apply for an SSN, thereby making them eligible for EITC benefits.  Another IRS rule allows those recipients to retroactively claim EITC benefits for previous years in which they were not in the country legally.  Under current law, taxes can be filed retroactively for up to three years by using the 1040X Amended Tax Return Form.  Because DACA and DAPA recipients are eligible for SSNs, they are able to file amended tax returns, making many eligible for EITC benefits in previous years.

The EITC is known as a refundable tax credit, meaning that low-income families can receive a tax “refund” that is larger than their original tax liability.  The program has become notorious for fraudulent and improper payments, yet the IRS has not enacted systematic reforms.  According to a report by the Treasury Inspector General, the IRS paid out $63 billion in EITC payments in 2013 alone – $15 billion of which were given to people ineligible to receive EITC benefits.  Of that $63 billion, only $8 billion were actual tax cuts and $55 billion were payments.

Non-citizens should be ineligible for means tested welfare benefits, the EITC, and CTC.  Walling off welfare benefits is the best option after scaling the benefits back or removing them for everybody.  Here is our previous work on how to build a wall around the welfare state.  Since I did not consider the EITC in my original Cato policy analysis on how to wall off welfare benefits to non-citizens, these are the specific laws that would need to be amended to correct this.

Reforming Section 32(c)(1)(E) of the Internal Revenue Code of 1986 delineates the eligibility for EITC benefits. The language in subsection (1) determines eligibility.  Changing the statute there could eliminate the ability for newly legalized immigrant workers to retroactively file for EITC benefits.  This section could also be amended to deny the EITC to non-citizens broadly, but that is more complex as SSNs are granted to some non-citizens.  A citizenship requirement for EITC would still decrease the outlays. 

CTC should also be denied to those had their deportations deferred. CTC eligibility requirements are included in Section 24 of the Internal Revenue Code of 1986.  Denying CTC benefits for previous years when the tax filer was ineligible for such benefits was actually proposed in Congress last year – here is the text of that bill.  If possible, CTC benefits should be reserved for citizens only (if we can’t get rid of them altogether).

Immigration is a huge economic net-positive for the United States and fiscally neutral in the long run.  Poor immigrants generally underuse means-tested welfare compared to poor Americans.  Immigrants broadly subsidize the entitlement programs.  Regardless, tax credits should not be retroactively available to immigrants who have had their deportations deferred nor should non-citizens have access at all.

Fiscal conservatives can use immigration as an argument in favor of restricting welfare and EITC benefits.  That would be a far more effective and conservative use of their time than using the welfare state as an argument against liberalized immigration.       

Gene Healy

Today, six months after President Obama unilaterally launched our latest war in Iraq, five months after he expanded the war to Syria, four months after his administration thought up a name for the war, and three months after he promised to go to Congress for authorization, the president sent congressional leaders a draft “Authorization for the Use of Military Force against the Islamic State of Iraq and the Levant”—along with a message insisting that “existing statutes provide me with the authority I need” to wage war anyway.

Better late than never? Maybe not: as I explain in my “Reclaiming the War Power” chapter in Cato’s new monograph “Policy Priorities for the 114th Congress,” retroactive authorization might be worth it as part of a package deal that sunsets the 2001 AUMF and imposes new barriers to “mission creep” in the war against ISIS. The Obama AUMF does neither.

As drafted, the president’s ISIS AUMF:

1. Does not impose geographic restrictions on the use of military forces (…thus a war that began with the placeholder Pentagon designation “Operations in Iraq and Syria” could easily expand beyond its current two-country theater);

2. Does not include firm limitations on ground combat operations (…unless you think barring “enduring offensive ground combat operations” is a workable and enduring limitation);

3. Does not preclude the war’s expansion to “associates of associates” of ISIS (… in fact, the Obama AUMF’s “associated forces” provision contains a broader delegation than did the 2001 AUMF, which doesn’t contain any such provision…);

4. Does not sunset the 2001 AUMF; and

5. Does not clarify application of the 2001 AUMF to the ISIS fight (…which risks leaving any limits it imposes susceptible to evasion by a president invoking the earlier resolution).

What little congressional debate we’ve seen so far on the president’s new war hardly smacks of “Profiles in Courage.” Still, the draft AUMF approved by the lame-duck Senate Foreign Relations Committee last December, flawed as it was, made for a far better starting point. It imposed a three-year sunset on the 2001 AUMF, applied new transparency requirements, and at least tried to provide limits on ground combat beyond a few flexible adjectives. If Congress is going to retroactively authorize the president’s latest war, they ought to reclaim some of the control they’ve ceded, not blithely delegate still more power. As I argue in greater detail here, “the 114th Congress should pick up where the SFRC left off, and impose additional limits on presidential authority.” Adopting the Obama AUMF as-is would amount to signing another blank check.

Julian Sanchez

A couple weeks ago, I had a brief tour of the Department of Homeland Security’s National Cybersecurity and Communications Integration Center, which probably isn’t quite as snazzy as U.S. Cyber Command’s Star Trek–inspired bridge, but looks more or less like the movies have programmed you to expect: A long wall filled with enormous screens displaying maps with each state’s self-assessed “cyber threat level”; the volume of traffic to various government networks, and even one for NCCIC’s Twitter feed. It’s not clear that this setup serves much functional purpose given that the analysts working there are already using three-monitor workstations, but let’s face it, taking tour groups reared on Hollywood’s version through a non-descript office would be a little anticlimactic.  Which is to say, while the folks there are clearly doing some useful work, there’s an element of theater involved.

So too, it seems to me, with our political approach to cybersecurity more generally. The Washington Post reported Tuesday that the Obama administration plans to create a new Cyber Threat Intelligence Integration Center (CTIIC) within the Office of the Director of National Intelligence, which will join NCCIC and USCYBERCOM, as well as an array of private ISACs (Information Sharing and Analysis Centers) and CERTs (Computer Emergency Response Teams) on the digital front lines.  If firewalls made of acronyms could keep malware out, we’d be in fantastic shape.

The immediate reaction from both policy and security experts could best be described as “puzzled.”  After all, for several years we’ve been told that the Department of Homeland Security plays the lead role in coordinating the government’s cybersecurity efforts, and isn’t information sharing and integration pretty much what the NCCIC is supposed to be doing? That’s what it says on the tin, at any rate.  What, exactly, is supposed to be the advantage of spinning up an entirely new agency from scratch to share that mission?  Why would you house it in ODNI if your primary goal is to coax more information out of a wary and skeptical private sector?  Is there even good evidence that inadequate information “integration” is significantly to blame for the poor state of American cybersecurity? Our intelligence agencies, to be sure, could be doing a better job of sharing threat information with the private sector—but their own notorious culture of secrecy seems to be the limiting factor there. Even the White House’s own former cybersecurity coordinator, Melissa Hathaway, told the Post that “creating more organizations and bureaucracy” was unlikely to do much good.

My slightly cynical suspicion: Cybersecurity is just fundamentally hard, and given that it depends on the complex practices of many thousands of private network owners, there’s just not a whole lot the government can do to drastically improve matters—beyond, of course, being more willing to share their own intel and hardening the government’s own networks, which they don’t seem to be terribly good at. But cybersecurity is a Serious Problem about which Something Must Be Done, and so like the drunk in the old joke—who lost his keys in the dark, but is searching for them under a streetlamp because the light’s better there—we make a great show of doing the things government is able to do. And since internal tweaks designed to make existing agencies do those things more effectively won’t make headlines, thereby assuring the public that someone is on top of the problem, we get another spoonful of alphabet soup and another Hollywood command center to do the same thing with even bigger and more impressive wall monitors.  But as Amie Stepanovich of Access aptly told The Hill: “You don’t necessarily get your house in order by building new houses.”

David Boaz

The Libertarian Mind may be out of stock at Amazon, but the Kindle is selling pretty well (numbers change constantly, of course):

It’s also available at other online retailers, brick-and-mortar stores (walk down the block, why don’tcha), and the Cato Institute. There are links to some of those outlets here.

Alan Reynolds

What “prompted many Greek manufacturers to relocate to neighboring Bulgaria” is not just less-capricious regulation, as The Wall Street Journal suggests, but also the much lower cost of government.

Bulgaria has a 10% flat tax on corporate and personal income and a 20% VAT. Greece has a 49% personal income tax, 26% corporate tax, 45% payroll tax and 23% VAT.  Unbearable tax rates drive a fourth of the Greek economy underground while businesses in the formal economy migrate or shut down.

What about government spending (which Keynesian economists call “fiscal stimulus”)?  Government spending in Bulgaria was 35.7% of GDP in 2012, according to Eurostat, compared with 53.7% in Greece.

If the word “austerity” is used to mean excessive frugality in governmen spending, as defined by Joe Stiglitz and Paul Krugman, then Greece is very far from austere.  A rising share of Greek government spending is now going to pay interest on accumulated debt, to be sure, but that is simply past profligacy coming home to roost.

On the other hand, if austerity is sensibly defined as punitive marginal tax rates on entrepreneurship, effort and investment, then Greece is indeed practicing suicidal austerity.

Alex Nowrasteh

One of the more interesting arguments in favor of further restricting lower-skilled immigration comes from the prolific pen of Reihan Salam.  His piece is worth reading in its entirety, especially his emphasis on the importance of the melting-pot metaphor, a far better approach to the ideal of assimilation than the salad bowl or other concepts.  Salam understates the amount of “togetherness” Americans feel and the degree to which immigrants and their descendants rapidly adopt American identity, as well as exaggerating the benefits of such togetherness.  But my disagreement lies elsewhere.

The big take away from Salam’s piece is that a constant flow of lower-skilled immigrants into the United States slows the economic and cultural assimilation of that immigrant group.  As a result, further restricting low-skilled immigration would aid in the assimilation of current immigrants who are settled here.  As he wrote, “the melting and fusing of different ethnic groups is essential to building a more cohesive and human society, and that slowing down immigration would help this process along.”

His conclusion rests on two points. 

The first is that new immigrants economically compete with immigrants who came before them and little with lower skilled natives.  That’s true (here is some work on that issue).  Salam’s concern is that additional lower skilled immigrants will lower the wages of already settled immigrants, preventing them from rising.  How would increasing the wages for lower skilled occupations incentivize those workers to climb the skills ladder after closing immigration?  No idea.

Salam’s second point is that turning off lower-skilled immigration will more quickly assimilate those immigrants of the same ethnic group who are already here.  Salam’s point here is less sound as it confuses stocks and flows.  Salam relies upon the 1920s immigration restrictions and the subsequent assimilation of those immigrant ethnic groups that followed.  He cites a quick comment by sociologist Mary C. Waters:

In the absence of appreciable numbers of new arrivals successive generations of acculturated Americans, not unassimilated greenhorns, became the majority among the new ethnics. Today most Italian Americans or Polish Americans are second, third, and fourth generation. They did not cease being Italian or Polish and become just plain ‘Americans.’ But their ethnicity became less intense and increasingly intermittent, voluntary, even recreational. If some still enjoyed ethnic holidays or special foods, their ethnicity rarely determined their occupation or residence. As more and more of the later generations of white ethnics intermarried, their ethnic identity became even more attenuated, and individuals felt increasingly free to choose whether to identify with their mother’s or father’s or grandmother’s or grandfather’s ethnic origins. As a result the vast majority of Italian Americans live in neighborhoods that are not predominantly Italian American. As fewer new immigrants from Italy arrived, the nation’s Little Italys gradually shrank and evolved into places visited by suburbanites in search of restaurants or other ethnic stores.

Waters’ quote is not about the pace of assimilation for the immigrants who were already here, merely how assimilated the stock of ethnics from those countries appeared to be after the flow was stopped.  That is a very different point from the one that Salam is trying to make.  Of course the stock of ethnics appeared to be more American when their flow was halted by immigration restrictions – stopping the flow will make the stock in the United States more American in their cultural affinities.  Assimilation will have appeared to improve if there is no more immigration because there are no new people to assimilate.  But that is very different from claiming that the cut off in immigration flows caused that assimilation to occur.  Cutting off immigration in the 1920s is not responsible for the rapid subsequent assimilation of those already settled immigrants and their descendants.

Some of Waters’ comments are similar to those made by Princeton sociologist Doug Massey.  In this paper, Massey wrote:

Moreover, because the social and economic forces that produce assimilation operate slowly, while those promoting immigration work quickly, the rate at which ethnic culture is augmented by new arrivals from abroad will tend to exceed the rate at which new ethnic culture is created through generational succession, social mobility, and intermarriage in the United States.  As a result, the character of ethnicity will be determined relatively more by immigrants and relatively less by later generations, shifting the balance of ethnic identity toward the language, culture, and ways of life of the sending society.

Massey’s argument is that the total stock of ethnics from a particular country will be less Americanized if there is continual immigration, which is undoubtedly true.  Massey’s argument is not that continual waves of immigration stunt the assimilation of the American-born second-generation from the same ethnic group.  Massey then goes on to argue that the post-war economic boom pushed up many second and third-generation Americans.  That economic boom did not result from immigration restrictions.

Fortunately, we have additional evidence on the pace of assimilation for the immigrant ethnic groups of the early 20th century.  If immigration restrictions boosted assimilation, we should see an increase in the success of the second-generation after those restrictions were put in place.  That did not occur.  Immigrants continued to assimilate after the immigration restrictions just as they had before.

How the assimilation of immigrants and their descendants progressed before and after the enactment of immigration restrictions is an empirical question.  Fortunately there is a lot of research on the topic. 

Joel Perlmann’s Italians Then, Mexicans Now measures the progress of Italian immigrants and their descendants by birth cohort.  He tracked the assimilation progress of American-born children of Italian immigrants by the period of years in which they were born.  Through that method, he could compare the progress of the second-generation born from 1891-1895 to the second-generation born from 1921-1925.  Tracking by generation and year of birth created a better comparison than lumping together all second-generation immigrants of various ages and decades of birth.  Perlmann found no increase in the rate of assimilation after Italian immigration was largely closed off in the mid-1920s – assimilation continued after immigration restrictions just as it had before because the addition of new immigrants did not slow down the process.  Perlmann found an almost identical pattern for the children of Mexican immigrant using his same methods – the only real lag being with income because the economy put a higher premium on education post-1965 than during the early 20th century.

One way to approach the question is to examine the pace of assimilation prior to the 1920s immigration restrictions and comparing that to the rate of assimilation after the laws were enacted.  Abramitzky, Boustan, Eriksson found rapid economic assimilation prior to the immigration restrictions of the 1920s.  They didn’t extend their analysis after that point, but we all know what happened.  On the civic and cultural front, Jacob Vigdor also found rapid assimilation both before and after the immigration restrictions of the 1920s.

Learning English, becoming accustomed to American norms and habits, and integrating is a long and sometimes arduous process.  However, immigrants and their descendants today are becoming American just as rapidly as those a century ago.  The difference is that we are in the middle of this wave of immigrant and assimilation, which makes it appear messy from our perspective, whereas we can look to the past and see a straight line of “Americanization.”  To many Americans from a century ago, assimilation was not occurring. 

The immigration restrictions of the 1920s and the assimilation subsidies of the American Movement do not appear to have impacted that assimilation trend.  There is little evidence to support the notion that closing off lower-skilled immigration today will boost the rate of assimilation, which is already high, going forward.  Those claiming that the immigration restrictions of the 1920s increased the rate of assimilation have all of their work ahead of them.  

David Boaz

Thanks to Nick Gillespie and Reason.tv for allowing me to talk at length in this interview about my path to libertarianism, self-evident truths, Ayn Rand, Rand Paul, and a lot of other topics related to The Libertarian Mind. About one hour:

Cato’s David Boaz Talks Politics, History, and His Path to Libertarianism

There’s a mostly accurate transcript here.

You can find the transcript of last night’s Reddit AMA here.

The Libertarian Mind is out of stock at Amazon! Of course, you can still get it on Kindle. Or you can buy it at many other fine bookstores, both storefront and online, some of which are linked here.

Paul C. "Chip" Knappenberger and Patrick J. Michaels

Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

As the snow keeps piling up in Boston, so does the climate change nonsense. Never letting a good weather story go to waste, our nation’s scribes are in high dudgeon that global warming is causing the serial burial of Boston.

We discussed the illogic (or at least the selective reasoning) behind the global-warming-made-this-snowstorm-worse excuses forwarded during the first big nor’easter to wallop the area (back on January 27th), and now, after the third big event (with likely more to come!) the din is deafening. Just today there are major stories in USA Today and the Washington Post strongly suggesting that global warming enhances snowfall in New England.

Perhaps we can test this hypothesis, glibly hiding as a fact.

Back in the late 1990s, we were involved in a research project investigating the relationship between winter temperature and winter snowfall across Canada. Our results were published in the peer-reviewed Journal Geophysical Research back in 1999.  We weren’t investigating the meteorology of any one specific storm, but rather the climatology (i.e., the general relationship) of temperature and snowfall, looking to see if there were really places that were “too cold to snow” and whether a warming climate might result in more snowfall, or precisely what is being presented as fact today.

Here is the context of our investigations:

If one accepts the projections of most climate models that future temperatures will increase in winter in the middle and high latitudes [Houghton et al., 1996], the higher temperatures could have two different impacts on the liquid water equivalent of snowfall: (1) Total snowfall could increase with increasing air temperature since the Clausius-Clapeyron relationship dictates that saturation vapor pressure increases exponentially as a function of temperature, thereby allowing for the possibility of a more moist atmosphere, or (2) total snowfall could decrease with increasing air temperature as warmer conditions would increase the amount of precipitation that falls as rain (or mixed precipitation) relative to snow.

Note that the global warming press as of late only focuses on possibility number 1. Except during winters when it doesn’t snow, when they shift their focus to number 2.

Figure 1 shows what we found after examining 50 years of data for locations all across Canada. 

Figure 1. Map of the January “zero contour” of the snowfall-temperature relationship (solid line) superimposed on the mean January temperature (°C) (dashed lines) (from Davis et al., 1999).

A little explanation is obviously in order. The solid black line labelled “0” is the line north of which higher temperatures result in more snow and south of which higher temperatures lead to less snow. The dashed lines are contours of the average January temperature (in °C). The circles represent the locations of data that went into our analysis.

Although U.S. stations weren’t part of our study, it is pretty clear via visual extrapolation what is most likely going on in the lower 48. Nowhere does the “0” line extend to the Atlantic coast. In fact, it barely extends into New England at all. In other words, the temperature/snowfall relationship along the entire Atlantic coast of the U.S. is negative—on average, the warmer it is, the less it snows.

In order to further those who are thriving in a fact-free environment, we present, in Figure 2, a scatterplot of winter snow versus winter temperature in Boston. What we surmised above is, in fact, the case.  Warm years tend to be low-snow years and vice-versa.

 

Figure 2. Total monthly snowfall versus average monthly temperature in Boston for all Januarys and Februarys since 1891 (data source: National Weather Service and National Climatic Data Center).

Unless human-caused global warming is going to lead to lower than normal winter temperatures in New England (hint: it isn’t), then less snow there is what is “consistent with” global warming.

While you could argue until your blue in the face as to whether or not the snow totals from a specific nor’easter storm event impacting the Northeastern U.S. were enhanced because of global warming, the big picture is much clearer—a warmer climate will lead to less snowfall there on average.

If/when such an impact actually becomes detectable, though, is still, well, up in the air.

Reference:

Davis, R.E., M.B. Lowit, P.C. Knappenberger, and D.R. Legates, 1999. A climatology of snowfall-temperature relationships in Canada. Journal of Geophysical Research, 104, 11985-11994.

Nicole Kaeding

ObamaCare gives states the option to expand Medicaid to cover all individuals below 138 percent of the federal poverty level, which is approximately $33,500 a year for a family of four. To encourage states to expand, the federal government agreed to fund 100 percent of expenditures for the newly-eligible participants until 2016, and then slowly decrease the match to 90 percent in 2020 and into the future.

Democratic and Republican governors alike are showing their penchant for “free” federal dollars by supporting expanded Medicaid roles in their state. Republicans governors—who often say they dislike Obamacare—are in many cases pushing their legislatures to expand Medicaid to take advantage of this windfall.

GOP Governor Bill Haslam in Tennessee announced that he would support Medicaid expansion. His administration promoted the plan by saying, “Insure Tennessee will leverage the enhanced federal funding which will pay for between 90 and 100 percent of the cost and in doing so will bring federal tax dollars Tennesseans are already paying back to the state.”

To help minimize the state’s contribution and maximize federal funding, Haslam decided to expand the state’s health provider tax. Under a provider tax, a state agrees to increase Medicaid reimbursements to the providers paying the tax, such as hospitals. The higher reimbursement level draws a higher federal contribution. So state politicians and hospitals win, but federal taxpayers lose.  

In this case, luckily, Tennessee’s legislature denied Haslam’s  expansion attempts.

Governor Mike Pence in Indiana is pushing for Medicaid expansion, dubbing the program “Healthy IN Plan 2.0.” Governor Pence received an “A” in our Fiscal Policy Report Card on America’s Governors last year for his tax-and-spending restraint. But his decision to expand Medicaid to include working-aged, able-bodied, childless adults sends a very different signal.

Governors Pence and Haslam aren’t the only two Republicans wanting to expand Medicaid. Wyoming Governor Matt Mead said that by rejecting Medicaid expansion the legislature is “rejecting $120 million dollars meant for Wyoming.” Governor Gary Herbert of Utah has said that Medicaid expansion allows “Utah [to bring] taxpayer dollars back to our state.” More than 10 Republican governors support Medicaid expansion, many using this same sort of rhetoric.

These governors justify their actions by claiming that it will return tax dollars to their states. But Medicaid spending is not a fixed pie. The more that each state expands its program, the more that the nation’s taxpayers will be hit.  Federal expenditures are funded based on the matching percentage. It’s not true to say that if Tennessee doesn’t expand, that the money goes to California. Instead, if Tennessee doesn’t expand, then the money isn’t spent and taxpayers keep more of their earnings.

As I’ve discussed before, expanding Medicaid is also a risky proposition for state budgets, which some Republican governors do not seem to understand. They boast their fiscal conservatism, but their recent actions on Medicaid expansion come at the expense of a larger burden on the nation’s taxpayers.

Michael F. Cannon

The plaintiffs in King v. Burwell claim the Patient Protection and Affordable Care Act only offers premium subsidies, as the statute says, “through an Exchange established by the State.” Members of Congress who voted for the PPACA – most recently Sen. Bob Casey (D-PA) and former Sen. Ben Nelson (D-NE) – now swear it was never their intent to condition Exchange subsidies on state cooperation.

Ironically, Casey’s and Nelson’s decision to wade into the King debate demonstrates why, when a statute is clear, courts traditionally assign no weight to what members of Congress claim they intended a law to say – especially if, as here, those claims come after a clear provision has proven problematic. While he claims he never intended to condition subsidies on states establishing Exchanges, Casey repeatedly voted to condition Exchange subsidies on state cooperation, has misrepresented what Congress intended the PPACA to do, and continues to misrepresent the PPACA on his Senate web site. Nelson’s claims about what Congress intended should likewise be taken with a grain of salt. In an unguarded moment in 2013, Nelson admitted that in 2009 he paid no attention to “details” such as whether the PPACA authorized subsidies in federal Exchanges.

All Sides Agree: Casey Supported Conditional Exchange Subsidies

Casey and Nelson exchanged correspondence exactly one day before amicus briefs supporting the government were due to be filed with the Supreme Court. Casey asked for Nelson’s recollection of whether, in 2009, Nelson or anyone else suggested the PPACA’s subsidies would only be available in states that established Exchanges. Perhaps more than anyone, Nelson was a pivotal figure in the debate over the PPACA. Not only did he insist on state-based Exchanges rather than a national Exchange run by the federal government, his was the deciding vote that enabled the bill to pass the Senate and become law – and he withheld his vote until his demands were met.

In his letter to Nelson, Casey discussed conditioning Exchange subsidies on state cooperation as if it were a foreign concept:

The plaintiffs in King argue that the law was intentionally designed to deny tax credits to people in states with federally facilitated exchanges in order to “induce” states into operating their own Exchanges…

[A]ccording to the King plaintiffs…residents of a state which did not operate its own Exchange would lose access to premium tax credits intended to ensure that those residents could afford health insurance.

I do not recall you – or any other member of the House or Senate – insisting upon such a structure. I would appreciate any clarification you can offer regarding your role in shaping this important law, as I believe it will be beneficial to the American public and the justices themselves.

Yet conditioning Exchange subsidies on state cooperation is hardly a foreign concept to Casey. In 2009, he supported and voted for another health care bill that even the Obama administration and congressional Democrats acknowledge conditioned Exchange subsidies on state cooperation. That bill was S. 1697, reported by the Senate’s Health, Education, Labor, and Pensions Committee:

As Jonathan Adler and I explained in a brief we filed before the district court in King, every Democrat on the Senate’s HELP Committee voted in favor of S. 1697, and therefore in favor of conditioning Exchange subsidies on state cooperation:

  1. Sen. Jeff Bingaman (D-NM)
  2. Sen. Sherrod Brown (D-OH)
  3. Sen. Bob Casey (D-PA)
  4. Sen. Chris Dodd (D-CT)
  5. Sen. Kay Hagan (D-NC)
  6. Sen. Tom Harkin (D-IA)
  7. Sen. Jeff Merkley (D-OR)
  8. Sen. Barbara Mikulski (D-MD)
  9. Sen. Patty Murray (D-WA)
  10. Sen. Jack Reed (D-RI)
  11. Sen. Bernie Sanders (I-VT)
  12. Sen. Sheldon Whitehouse (D-RI).

In Casey’s words, then, he himself voted for a bill that “included the threat” that residents of uncooperative states “would lose access to premium…credits intended to ensure that those residents could afford health insurance.”

If you were a judge, what would you consider a better indicator of what Casey actually intended: what he repeatedly voted to enact, or what now he says to influence the courts after the clear language he voted to enact has proved problematic?

Casey Continues To Claim “If You Like The Coverage You Have, You Can Keep It”

Before you answer, keep in mind that Casey, like dozens of other Democratic senators and representatives, claimed the PPACA lets everybody keep the health plans they had before the bill became law:

To this day, Casey still claims on his official Senate web site, “If you like the coverage you have, you can keep it; the government will not force you to change it.” This tells us either (A) Casey does not understand the legislation he voted to enact into law, or (B) he is willing to dissemble to advance his policy preferences. Personally, I think it’s (A).

Either way, if you were a judge, which would you think more accurately represents what Casey intended: what he repeatedly voted to enact, or what he now says to influence the courts after what he voted to enact has proved problematic?

Nelson’s Letter: The Irrelevant “Bombshell”

Nelson’s response to Casey received most of the attention, however. Here’s the key excerpt:

In either scenario—a state or federal exchange—our purpose was clear: to provide states the tools necessary to deliver affordable healthcare to their citizens, and clearly the subsidies are a critical component of that effort regardless of which exchange type a state chooses. I always believed that tax credits should be available in all 50 states regardless of who built the exchange. The final law also reflects that belief as well.

Doug Kendall, who filed the amicus brief with members of Congress who enacted the PPACA in which the Casey-Nelson letters first appeared, calls Nelson’s comments “a bit of a bombshell.” Not so much. Kendall and others don’t seem to understand, and therefore misrepresent, the plaintiffs’ argument about how Nelson fits into the story.

Kendall, the congressional amici, and the Huffington Post’s Jonathan Cohn accuse the petitioners of claiming that the language conditioning subsidies on state cooperation was inserted into the PPACA at Nelson’s request. That is simply not true. Neither the plaintiffs, nor Adler, nor I have ever claimed that Nelson even suggested, much less insisted, that the PPACA condition Exchange subsidies on state cooperation. (Nor did he need to: this feature appeared in the HELP bill, the Finance Committee’s bill, and the PPACA with or without his suggestion.)

What the plaintiffs, Adler, and I actually argue is that Nelson matters because, and only because, (1) he insisted on state-run Exchanges rather than a single, nationwide Exchange, and (2) his vote was crucial to get a bill through the Senate, and, since Congress cannot force states to implement federal programs, (3) the PPACA’s drafters therefore needed some way to states to establish Exchanges – a part of the Act that has turned out to be very costly, difficult, and fraught with political peril. So what the PPACA’s drafters do? They adopted a wacky, hair-brained, far-out idea that has been proposed only on numerous occasions by multiple Congresses as well as Presidents Johnson, Nixon, Clinton (more than twice), and Bush. They created an incentive for states to implement federal priorities by conditioning federal benefits on state cooperation.

Kendall, Cohn, and the congressional amici either (A) don’t understand the plaintiffs’ arguments, or (B) are deliberately misrepresenting them. Personally, I think it’s (A). Kendall writes, “The petitioners’ assertion that Sen. Nelson insisted on conditional tax subsidies is itself pure speculation without a shred of support in the record.” That assertion is moot, because Kendall’s straw man is pure invention, without a shred of support in the briefs.  

The real significance of Nelson’s response to Casey is not how much Nelson says, but how little. He says he wanted subsidies in both state-established and federally established Exchanges. Okay, that’s great. But it doesn’t tell us what Nelson intended, because it offers no insight into what he voted to enact into law. In his last sentence, opines that the PPACA reflects his preference for subsidies in federal Exchanges. But that’s the source of the dispute in King, and Nelson offers no evidence to help us resolve what the law says.

In 2013, Nelson Admitted He Didn’t Know What The Bill Said

Nor does Nelson deserve to be considered an authority on what the PPACA says about subsidies in federal Exchanges, because in 2013 he admitted he didn’t pay attention.

Thanks to a handful of intrepidresearchers and the North Dakota Department of Insurance, I happened to find audio of a press conference Nelson gave in January 2013, upon being appointed CEO of the insurance-regulators lobby in Washington, D.C.. As luck would have it, a reporter asked him about subsidies in federal Exchanges. Here’s part one of the press conference, but the relevant part is part two (at 8:20). When discussing negotiations over the crafting of the PPACA, Nelson described federal Exchanges as an afterthought, and admits he voted for the bill without paying any attention to whether the bill actually authorized subsidies in federal Exchanges:

NELSON (8:20): This is Ben Nelson again. I might add that I don’t know what everyone who voted for the health care act was thinking. But I can tell you that the discussions for having state-based Exchanges as an option for the states was to assure that the states would have that role. There was never really any intent for the federal government to assume any role, except by default or at the request of the states. So there was no way that the federal government was to have an initiative in this direction. It was more of a backup, fallback situation, should the states decide that they didn’t want, or a state decided it didn’t want for establish a state-based Exchange, but preferred to do it with a federal FFE, as it’s called, or join together on a multi-state basis for an Exchange. As many options as possible, but the goal was to be as far away from any kind of federal preemption as possible.

REPORTER (9:32): Was there, was the discussion along the lines of, we don’t want the subsidies to go through the federal Exchange? I’m sure you’re aware of that issue. Was that part of the thinking? And why did they go the way, they write the law the way [inaudible].

NELSON (9:43): I don’t think it ever got quite that specific, at least not during any time that I was involved in discussions. But when the discussion about an Exchange occurred, it was always, once [we] got over the hurdle of saying yes, states first, federal second, that it was clear that there was no real pre-emption, we didn’t get into, unfortunately, the details, because now they have to be fleshed out. So there are some levels of uncertainty.

I know of no evidence that calls into question Nelson’s claim that he always wanted subsidies in federal Exchanges. But these comments tell us (1) he never insisted on subsidies in federal Exchanges, (2) he never inquired about subsidies in federal Exchanges, (3) he never paid attention to whether the bill authorized subsidies in federal Exchanges, and (4) voted for the PPACA anyway. In an unguarded moment, Nelson admitted that whether the PPACA authorized subsidies in federal Exchanges just wasn’t that important to him. He admitted the issue now “ha[s] to be fleshed out” because there is “uncertainty” about whether he had indeed voted to authorize subsidies in federal Exchanges. In other words, if we want to know what Nelson actually intended to become law, asking Ben Nelson is not an option. Our only option is to read the bill.

Again, if you were a judge, which would you think more accurately captures Nelson’s intent: the clear language he voted to enact, or what now he says to influence the courts after the clear language he voted to enact – which he admitted was not a high priority for him – has proved problematic?

Conclusion

The King plaintiffs’ case does not depend on Casey or Nelson or any PPACA supporters consciously knowing that they were voting to condition Exchange subsidies on state cooperation. The fact that PPACA supporters voted to enact clear statutory language conditioning subsidies on states establishing Exchanges is enough. It means that statutory language is both the law and Congress’ intent – even if no members of Congress actually harbored such thoughts. The facts that some of them repeatedly voted to condition Exchange subsidies on state cooperation, and that others were indifferent, merely strengthens the plaintiffs’ case. 

Jason Bedrick

School choice is safe in the Granite State.

This morning, the New Hampshire Senate Education Committee voted 3-2 along party lines against SB 204, a bill to repeal New Hampshire’s trailblazing scholarship tax credit law, which was the first in the nation to include homeschoolers. The repeal bill is likely to be rejected in a vote of the entire state senate later this week. Thus far, no state has legislatively repealed a school choice law.

Last month, the Cato Institute released a short documentary on the fight for school choice in the “Live Free or Die” state, titled “Live Free and Learn: Scholarship Tax Credits in New Hampshire.” You can watch the film here:

Live Free and Learn: Scholarship Tax Credits in New Hampshire

David Boaz

In The Libertarian Mind, which is officially published today, I have a chapter titled “What Big Government Is All About” that aspires to be applied Public Choice analysis. Much of it relates to what I think Jonathan Rauch first called “the parasite economy,” the part of the economy that involves getting through government what you can’t get through voluntary market processes. Reason.com has just published an excerpt from that chapter, with a few recent examples added, such as these all-too-typical stories:

Lobbying never stops. One week in December, the Kaiser Health News reported that “growth opportunities from the federal government have increasingly come not from war but from healing.” That is, “business purchases by the Department of Health and Human Services have doubled to $21 billion annually in the past decade.” And who showed up to collect some of the largesse? Well, General Dynamics was having trouble making ends meet with defense contracting, so suddenly it managed to become the largest contractor to Medicare and Medicaid. “For traditional defense contractors,” wrote Kaiser Health, “health care isn’t the new oil. It’s the new F-35 fighter.”

Of course, the old F-35, despite a decade or more of running behind schedule and over budget, is still doing pretty well. That same week Congress passed the $1.1 trillion “Cromnibus” spending bill, including $479 million for four F-35 fighters from Lockheed that even the Pentagon didn’t want. The Wall Street Journal reported that the bill “sparked a lobbying frenzy from individual companies, industries and other special interests”—pretty much the same language you could have read in earlier stories about Porkulus and Obamacare. Every provision in the bill—from the $94 billion in Pentagon contracting to $120 million for the Chicago subway to an Obamacare exemption for Blue Cross and Blue Shield—has a lobbyist or several shepherding it through the secretive process.

And I also talked about the parasite economy on John Stossel’s television show last Friday night:

For more on the parasite economy, and everything else you wanted to know about libertarianism, read The Libertarian Mind.

Chris Edwards

Are federal government employees “public servants,” who faithfully execute the laws and aim at the broad public good? Do they match the Progressive-era ideal of neutral and selfless experts free of political bias?

Perhaps many federal workers do. But a story in GovExec suggests that other motivations are also in play:

Lawmakers from both parties addressing unionized federal employees at a conference Monday pledged more support and respect for the civil service, but the union itself promised to “whoop [the] ass” of Congress if it stood in the group’s way.

At its annual legislative gathering, the American Federation of Government Employees vowed to combat any congressional efforts to shrink the federal workforce, cut pay and benefits or weaken unions. While Congress has succeeded in slashing agency rolls and freezing pay, union leaders said, those actions have better positioned the union to prevent similar efforts in the future.

Every time the “fools” in Congress try to hurt the federal workforce, said AFGE National President J. David Cox in a passionate address to his members, “We get bigger. We get stronger and we fight harder.”

He added: “We are a force to be reckoned with and we are a force that will open up the biggest can of whoop ass on anyone” who votes against the union’s interests…

The union chief called on each of those [AFGE] members to help push its agenda. “I’m begging you,” he said, “I’m pleading with you: Get in the fight.”

Maybe it is no surprise that federal workers and their unions fight for themselves. But can we count on federal legislators to stand up for taxpayers and citizens and check union power? Maybe not:

Lawmakers who addressed the attendees emphasized they would not be alone in that struggle; the lawmakers promised to bring the message of the positive and essential work feds do back to their colleagues and into the public sphere.

Freshman Congressman Don Beyer, D-Va., promised to be a “champion” for federal employees, adding the “critical question” for the workforce is how to change the perception of civil servants. He pledged to mention the positive work feds do in every speech he gives, suggested creating public service announcements highlighting federal employees and even proposed someone write a movie in which an “anonymous civil servant” is the hero.

“We have a great, great story to tell,” Beyer said of the federal workforce. “We just have to find every possible way to tell it.”

Beyer and his fellow Virginian, Republican Rep. Rob Wittman, agreed one crucial step to demonstrating that support is to repeal the across-the-board budget cuts known as sequestration.

I think we can see who is the real boss in Washington today. Beyer and Wittman have figured it out, and they are standing firmly in line. AFGE chief, David Cox, barked the orders: “If I meet one more politician who tells me we need to tighten our belts, I’m going to take my belt off and I’m going to whoop his ass.”

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