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Charles Hughes

Broken promises and lowered expectations littered the first year of the Affordable Care Act. When the law was being debated, Obama promised the law would cut health care premiums for a typical family by $2,500. Instead, premiums everywhere continued to rise, in some places they skyrocketed. Supporters claimed the law would reduce the deficit, citing a score from the Congressional Budget Office. More recent calculations with a full ten years of implementation show that it will increase budget deficits. The now infamous “if you like your health care plan, you can keep it” pledge, which Politifact dubbed its “lie of the year” turned out to be a fabrication as millions of people received cancellation notices. The administration has tried to shift focus from past promises on cost containment and premium savings to the expansion of insurance coverage. Even in this area, the Affordable Care Act looks like it will fail to meet its goals, and the administration is already scrambling to try to temper expectations.

At an event at the Center for American Progress earlier this week, Health and Human Services Secretary Sylvia Burwell revealed that the administration had drastically lowered their exchange enrollment target. She divulged “[t]he number we’re going to aim for this year is 9.1 million.” This is a far cry from the Congressional Budget Office’s April projection of 13 million. The new goal for next year  is only 70 percent of the initial projection, which showed exchange enrollment jumping 7 million in 2015. The new target only anticipates a net increase of 2 million, a drastic reduction.       

In a related brief, HHS cited a slower than expected shift from employer-sponsored insurance and off-exchange enrollment as the reason for the lower projection. The brief suggests that it will take five years instead of three to ramp up to the eventual enrollment level of 25 million. This could mean that exchange enrollment could not reach its peak until 2019 and will likely fall short of initial expectations for years to come.

Secretary Burwell also sought to tamp down expectations for the website, saying that it “will have things that won’t go right. We will have outages, we will have downtime.” While the website will probably function better than last time, the second round of open enrollment faces many serious obstacles.

Most of the people most interested in signing up already did last year. Convincing those still uninsured to sign up could be more of a challenge. The first enrollment period had more outreach and coverage, whereas the Obamacare story potential enrollees are most likely to see now is news that the Supreme Court agreed to hear a case that could invalidate the majority of federal subsidies. Automatic renewal for people already enrolled poses another problem. If they do nothing, many people could keep the same plan but have to pay much more due to the way the law calculates subsidies. On top of that, the second open enrollment is only half as long as the first, so people have less time to visit the website and enroll through the exchange.

The first real indicator for how the second round is going will be how the renewal period goes for people who signed up last year. Last year there was a surge in enrollment at the end of the enrollment period. If people run into problems with automatic renewal or have difficulty using the website that could deter new potential enrollees.

The law’s past failures have led to broken promises and missed goals in areas like cost savings, premium reduction and improving the quality of care people receive. One of the only metrics the administration could point to in the past was that exchange enrollment in the first year actually met stated goals despite the website’s terrible launch. Now it seems that the law will fall short in enrollment too.

Open enrollment begins next week, and the recent efforts by the administration to lower expectations so close to the start date do not inspire much confidence.

Chris Edwards

In an article about federal highway legislation yesterday, the Washington Post illustrated the art of advocacy journalism cloaked as news reporting. The article explored different options for raising federal taxes $100 billion to fund state highways. It quotes three transportation lobbyists and included scare lines about the supposed consequences of not raising taxes (“… hundreds of thousands of construction jobs put at risk…”).

The article does not mention that spending cuts are an option for the upcoming highway bill. Everyone agrees that there is a large gap in the Highway Trust Fund (HTF), but gaps can be closed either by tax hikes or spending cuts. Yet the “transportation advocates” the Post talked to agreed, “until there is consensus on finding more money, transportation may be doomed to limp along in perpetual crisis.”

Nonsense. As I testified here, federal spending cuts would balance the HTF and solve the crisis, while spurring greater efficiency and innovation in U.S. transportation as the states played a larger role. The Post did not bother to explore that option, despite support from conservatives in Congress, prominent think tanks, and independent transportation experts.

In the election, Congress swung decidedly in a small-government direction, but the Post’s reporting did not reflect that reality, and instead presented only the lobbyist point of view. The Post’s silence on the spending-cut option is all the more striking because the newspaper admits that it would be very difficult to raise transportation taxes due to political and public opposition.

It will be interesting to see how Congress closes the HTF gap before the May expiration of the current highway bill. I hope that we have a robust debate on all the options and that the Washington Post changes course and presents its readers with a more balanced perspective.

Doug Bandow

Power is like quicksilver.  It often slips through the fingers of those attempting to grasp it.  Who is in power in North Korea?  Maybe 31-year-old Kim Jong-un.  Maybe not.

The Democratic People’s Republic of Korea’s Kim disappeared from public view for 40 days.  On his return Pyongyang only released undated still photos.

There’ve been no untoward troop movements or party conclaves in the North, though some other signs seemed conflicting.  Whoever reigns, there is little reason to hope for nuclear disarmament. 

To the contrary, the North appears to be increasing production of fissile material, moving ahead on ICBM development, and upgrading rocket launch facilities.  Even a seemingly secure Kim, the “Great Successor” whose father concocted the North’s “military first” policy, would hesitate challenging the armed services by trading away its most important weapon. 

Yet there are signs of change elsewhere.  The economy appears to be growing, with more consumer goods evident, especially in Pyongyang. 

Moreover, Pyongyang appears to be adjusting diplomatic strategies yet again.  The North released the three Americans it held, apparently without receiving anything in return. 

North Korea’s UN ambassador, So Se-pyong, indicated that the North was ready to return to the six-Party nuclear talks.  In early October Pyongyang sent a high-ranking delegation to Seoul for the Asian Games, which proposed further talks, though the latter later foundered. 

Nothing suggests that the regime is close to collapse. 

In this situation there is little to recommend the administration’s continuing policy of isolating the North.  In August North Korea’s deputy UN representative, Ri Tong-il, complained that “No country in the world has been living like the DPRK under serious threats to its existence, sovereignty, survival.” 

Of course, the North’s leaders are practiced cynics and their claims cannot be taken at face value.  But even paranoids have enemies, it is said, and North Korea is surrounded by wealthier and more powerful adversaries. 

A more pacific U.S. approach might not change the Kim regime’s calculus.  However, it’s hard to imagine a less threatening DPRK without changing America’s approach.

And that could come in part from diplomatic dialogue.  Washington should offer to establish low-key diplomatic relations, perhaps a consulate. 

Such a shift would be even more effective if coupled with policy changes that would be in America’s interest in any case.  Sanctions haven’t changed the DPRK and should be loosened.

Moreover, Washington should bring home its troops.  The U.S. conventional presence is long outmoded:  the South has around 40 times the GDP and twice the population of the DPRK.

Washington then could invite the North’s authorities to reciprocate.  If Pyongyang failed to act, which would surprise no one, Washington would be no worse off. 

It also would be more difficult for Beijing to excuse North Korean misbehavior.  Moreover, a troop withdrawal would eliminate the prospect that Korea unification would result in U.S. troops on China’s border, a Chinese nightmare which discourages Beijing from cooperating with Washington.

Even a more responsive North Korea is unlikely to be a particularly friendly actor.  Nevertheless, there is more hope for internal improvements in human rights and external talks over the issue if the international environment is less threatening for Pyongyang.  America’s earlier refusal to talk to the PRC gained nothing, while the famed Nixon opening helped create an atmosphere more conducive to post-Mao reforms.

Someday North Korea will pass away.  As I wrote in National Interest online:  “Until then the country is likely to remain a mysterious challenge, unsettling an entire region.  Washington’s best approach would be to extricate itself from confrontation and pursue dialogue, while leaving South Korea and Japan free to develop their separate policies.” 

Every strategy toward the DPRK so far seems to have failed.  Anything adopted is likely to be only a second best.  However, today even second best would be a major step forward.  It’s time for Washington to try something different.

Patrick J. Michaels

Okay, here’s how much of what calls itself science works today:

1) Find a change in something

2) Say it could be caused by global warming

3) Get more funding

4) Let people ask critical questions

5) Get tenure to protect you from that criticism

Today’s textbook example comes from the Washington Post, in an article, “Large ‘dead zones’, oxygen depeleted water, likely because of climate change”.

This is bad. According to The Post, the authors of newly minted article in Global Change Biology, say,

As global temperatures warm, they will create conditions such as rain [!], wind and sea-level rise that will cause dead zones throughout the world to intensify and grow…

Dead zones are (sometimes) large regions of hypoxic seawater that appear every summer. Because of their seasonality, obviously global warming is making them worse, right? (see 2) above) Or is it due to the fact that, on the average, humans are flushing more agricultural nitrates into the ocean as we produce ever more food? So the nitrates fertilize the ocean, algae bloom and die, bacteria decompose them and in the process, water becomes hypoxic, and fish die.

The authors, Andrew Altieri and Keryn Gedan, both with Smithsonian Institution affiliations, state there’s been quite the change in the number of dead zones (see 1) above). There’s a whole lot of stinking water, as according to Fears, they show that “Dead zone events have doubled each decade since the 1950s”.

But, according to Gedan, “we just don’t know how much of this doubling is due to climate change or nutrient runoff”. According to her, we need more studies and “more sophisticated modelling” (see 3) above).

Math time. That means they doubled from the 50s to the 60s, increased fourfold in the 70s, etc…to the first decade of the 21st century in which they have purportedly gone up from 16-fold in the 1990s to 32-fold over the 1950s.

Speaking of decadal scales, according to Cato’s Ross McKitrick, the “pause” in warming is now 19 years in length. So how do you get a doubling in the dead zones (and a 32-fold increase over the 1950s) without warming? Perhaps there’s not much of an effect from warming, and a much bigger one from nutrient runoff.

Evidence? The doubling of dead zones in the absence of warming not unique. From the 1960s to the 1970s, global surface temperature actually declined.

Gedan is certainly correct that you really would need “more sophisticated modelling” to pin the huge increase on the tiny amount of warming since 1950, and a doubling per decade even when two decades don’t warm. And wouldn’t the three millennia after the end of the ice age, when it was warmer (at least in our hemisphere) have been a very stinky time?

Given that dead zones maximize during the summer’s hottest temperatures, there is surely some component from warming. But the more obvious answer is that the massive flushing of nitrates into the world’s nearshore regions is changing a minor (and possibly undetectable) amplification into a stinking roar.

Or, given the fact that the earth has been warmer than it is today for about 95% of the last 100 million years, is it possible that the world’s biota really don’t care?

If the dead zone increase is real and caused by human activity, then there actually is some hope. There’s a real ecological problem here—the massive dumping of nitrates into our onshore ecosystems—that can actually be significantly reduced with relatively simple measures. On the other hand, there is simply no way that any conceivable climate policy will have a meaningful effect on global surface temperature.

Ted Galen Carpenter

Two countries that have the capacity to cause serious headaches for the United States are Russia and China.  Yet Washington is committing a cardinal sin in foreign policy: getting on bad terms simultaneously with those two major powers.  As I discuss in a recent article at China-U.S. Focus, that approach is especially unfortunate because Beijing has boundary disputes and an array of historical grievances against Russia.  In addition, China is now uneasy about the precedents being set by the Kremlin’s support of secessionists in Crimea and eastern Ukraine.  Those concerns and would normally cause Chinese officials to be wary about close cooperation with Russia.  But because Washington’s own relations with China have become frosty, the Obama administration may be forfeiting an opportunity to keep Moscow and Beijing from developing a common policy directed against the United States.

Two high-priority Chinese foreign policy objectives are now in conflict.  Beijing does not want to encourage the increasing popularity of secession in the international system.  The breakup of the Soviet Union, the violent fragmentation of Yugoslavia, the emergence of South Sudan, and the increasing likelihood of an independent Kurdistan arising from the wreckage of Iraq and Syria, all confirm a powerful trend.  Russia’s actions in Georgia in 2008 (supporting the breakaway regions of Abkhazia and South Ossetia) and now in Ukraine have given that trend a major boost, much to Beijing’s dismay.  Chinese leaders fret about separatist sentiments in Tibet and Xinjiang, as well as Taiwan’s continuing de facto independence.  From Beijing’s perspective, Moscow’s embrace of secessionist movements in neighboring states is most unhelpfu

However, the Chinese government is reluctant to join the West’s campaign of coercion against Moscow.  Not only is Russia an important partner of China’s in the Shanghai Cooperation Organization, the two countries have significant mutual economic and security interests throughout Central Asia and the Middle East.  The multi-billion dollar energy deal that the two governments recently signed underscores yet another aspect of the growing bilateral ties.

China also is receptive to a cooperative relationship with Russia because of pressing security concerns in East Asia.  The upgraded military alliance between the United States and Japan alarms Beijing, as does Washington’s vocal support for Vietnam, the Philippines, and other Chinese rivals regarding territorial claims in the South China Sea.  The last thing Chinese leaders want to do is help the West weaken Russia at a time when Beijing may need Russian support (or at least benevolent neutrality) as the United States and a growing roster of U.S. security partners tighten an implicit containment policy against China.

Ideally, the Obama administration should follow Thomas Jefferson’s advice to seek “peace, commerce, and honest friendship with all nations.”  Washington would be wise to reconsider some of its actions and move to repair relations with both Russia and China.  If U.S. leaders cannot bring themselves to do that, they should at least avoid antagonizing China at a time when tensions with Moscow are reaching alarming levels.

Nicole Kaeding

Ivanpah in California is the world’s largest solar project. The project is owned by Google and NRG Energy, and is heavily subsidized by taxpayers. Ivanpah originally received a $1.6 billion loan from the Department of Energy (DOE) in 2011. Now the company is asking for another government subsidy to pay off its original loan.

Ivanpah’s loan guarantee came from the Section 1705 program created by the 2009 stimulus law. Section 1705 provided up to $18 billion in loan guarantees to “certain renewable energy systems, electric power transmission systems and leading-edge biofuels.” The program was temporary, with loans available until the end of fiscal year 2011. Unlike previous energy loan guarantee programs, Congress even provided subsidies to borrowers to pay the fees on loans.. As a consequence, firms were able to get a federal loan guarantee without any direct expenditure, providing a large incentive for firms to take advantage. By the end of the Section 1705 program in September 2011, DOE approved 27 projects totaling $14.5 billion.

Business failures among these loan recipients were common, the most famous being Solyndra. Solyndra, a solar-panel manufacturer, received a $535 million loan guarantee before filing bankruptcy. An analysis by the Reason Foundation found that 10 of the 27 recipients under Section 1705 experienced some sort of financial trouble.

The survival of Ivanpah is still up in the air. The project came online in December 2013. From January to August 2014, the project generated just one quarter of its predicted amount of electricity.

In February, the company asked DOE for permission to delay payments on its loan. According to the Wall Street Journal, DOE gave Ivanpah a one-year extension on the $132 million first payment. A second subcomponent—the loan is divided among three subcomponents—delayed a June payment of $159 million to December.

Now, Ivanpah is asking for $539 million in cash from the federal government. This time, Ivanpah is targeting a Department of Treasury tax credit program that reimburses renewable energy projects for up to 30 percent of project costs.

 

Ivanpah would use the proceeds to pay off a large portion of its $1.6 billion loan. The company is asking the federal government to provide it with an enormous amount of cash to be used to payoff its debt to taxpayers. DOE actually requires Ivanpah to apply for a tax credit to aid loan repayment.

The process is absurd. First, the government uses tax dollars to provide a loan guarantee to a risky firm. Then, it functionally forgives a large share of the outstanding balance after providing a large tax credit. This is an unjustified giveaway to investors in Ivanpah and a horrible deal for taxpayers.

Energy subsidies have a long history of waste and mismanagement, but Congress ignores the record and keeps the money flowing. If approved, the Ivanpah tax credit would be another $539 million flushed down the drain.

Neal McCluskey

This morning NPR published an interview with Sen. Lamar Alexander (R-TN), the presumptive next chair of the Senate Health, Education, Labor and Pensions Committee. Unfortunately, if you were hoping the new GOP Senate would move decisively in the right direction on education, you may be disappointed. While the interview suggests we could see a moderate move in the right direction at the k-12 level, there is little reason for hope in higher or early childhood education.

For elementary and secondary education Alexander certainly says the right thing – the states should be in charge – and it is better that federal funds be block granted with few rules attached than delivered via numerous, micromanaged streams. So he is moving in the right direction when he says under a Republican plan, “Tennessee, Texas or New York would decide what the academic standards would be, what the curriculum would be, what to do about failing schools and how to evaluate teachers.” His general inclination is also right when he says he wants to “give states the option — not mandate — to take federal dollars and let those dollars follow children to the schools they attend.” Empowering parents beats simply feeding government monopoly schools.

Unfortunately, moving somewhat in the right direction isn’t the same as doing the clearly right thing. The Constitution does not allow federal funding of education (outside of D.C. and federal installations), nor does the record indicate that federal funding is educationally effective. The feds should therefore get out of education, including abandoning plans to provide private school choice, which if voucherized would eventually deliver stultifying federal rules and regulations to private schools nationwide.

Alas, things only go downhill in the interview after tackling k-12.

On higher education, as I feared, Alexander gives no indication he will do what must be done to address colossal waste and crippling price inflation: significantly reduce student aid. Indeed, what he seems most intent on doing is simplifying the Federal Application for Federal Student Aid, which makes sense from a paperwork-reduction standpoint but might actually lead to more aid flowing from Washington as more people complete aid applications. At least, though, Alexander recognizes the danger of the federal government trying to rate all of the nation’s postsecondary institutions, ranging from “Nashville Auto-Diesel College…[to] Harvard.”

And then there is pre-kindergarten. Again, Alexander rightly warns about federal micromanagement, but he seems to fully accept that Washington should be spending tens-of-billions of dollars on pre-k. Indeed, he states that, “The question is not whether early childhood education is a good idea. It’s how best to encourage it.” But the question absolutely is – or at least should be – whether early childhood education is a good idea. As the Cato Policy Analysis published last month by George Mason University professor David J. Armor made abundantly clear, the pre-k research simply does not support the conclusion that early childhood programs work, and talking like it is a settled issue does not make it so.

Based on this one interview, the good news is that Senate Republicans might try to make horrible federal education policy a little bit better. The bad news is that something made a little less horrible is still awfully bad.

Doug Bandow

It’s easy to be pessimistic about the future of liberty.  Yet sometimes freedom advances with extraordinary speed.  Like 25 years ago in Europe.

As 1989 dawned communism had ruled what was the Russian Empire reborn for seven decades.  The system failed to fulfill its promise of human liberation, but survived with the backing of secret police, gulags, and the Red Army.

Then in an instant it all was swept away.  On November 9, 1989, the Berlin Wall was open.  One of the most dramatic symbols of human tyranny was gone. 

Tens of thousands of East Germans were imprisoned for “Republikflucht,” or attempting to flee the East German paradise.  Some 1000 people died trying to escape East Germany, about 200 from Berlin.

As 1989 dawned there was obvious unrest in what Ronald Reagan had called the Evil Empire.  Hope was rising, but no one could forget that previous popular demands for freedom always had been crushed by Soviet tanks. 

In 1989 Hungary led the way.  Plans were made for multiparty elections.  The Communist Party dissolved.  When the new leadership tore down Hungary’s wall with the West the Iron Curtain had a huge hole.

Poland’s communist regime made a deal with a revived Solidarity Union and held free elections.  The liberal tide rose in Czechoslovakia, sweeping away the hardline leadership installed to squelch the Prague Spring of 1968.

The East German regime remained tough.  Frustrated East Germans began escaping through Hungary, with its open border. 

Protests spread, causing the communist leadership to temporize.  On November 4 a million people gathered in East Berlin. 

On November 9 visibly struggling Politburo member Guenter Schabowski declared that East Germans would be free to travel to the West “immediately.”  Border guards desperately sought guidance as tens of thousands of people gathered demanding to be let through. Just before midnight the security forces stood aside. 

The rest of the European communist dictatorships soon fell.  These revolutions were mostly peaceful.  But Romania capped the year with the Christmas Eve execution of Nicolae and Elena Ceausescu, the most odious members of Communism’s ruling menagerie. 

The transition from totalitarian communism to democratic capitalism turned out to be far more difficult than most anyone expected.  But it is important not to forget how awful communism truly is.  The Black Book of Communism figured the overall death toll to be more than 100 million.  In Death By Government the late R.J. Rummel estimated the butcher’s bill to be nearly 160 million. 

As I point out in the Freeman, “we should celebrate a quarter century after the collapse of communism.  The events of 1989 represent a massive increase in liberty, a fantastic triumph of the human spirit.  With so little bloodshed everyday people ousted a gaggle of tyrannies.  They have given hope for future generations, and themselves, that freedom can emerge against seemingly impossible odds.”

There were many heroes in the battle for liberty.  Particularly important were Mikhail Gorbachev and Ronald Reagan.  The former ended the Soviet police state and kept the Red Army in its barracks as the Soviet satellites fell out of orbit. 

Ronald Reagan understood that communism was morally evil.  On June 12, 1987 he stood in front of the Brandenburg Gate and said:  “General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization:  Come here to this gate!  Mr. Gorbachev, open this gate!  Mr. Gorbachev, tear down this wall!”  But Reagan did something else equally important:  he recognized that Gorbachev was different than previous Soviet leaders and would be willing to accept the opening of the Berlin Wall.

There is much today to frustrate those who believe in liberty.  Yet we must not give up hope.  May the spirit of liberty from 1989 remain strong among us.

 

Paul C. "Chip" Knappenberger

The front page of yesterday’s New York Times included the beginning of a long article about geoengineering—in this case, as it applies to purposeful activities aimed at changing the earth’s climate at a large scale. Why on earth would anyone even think of doing something like that? Why to avoid catastrophic global warming, of course!

Thankfully, most signs point to only a modest global temperature increase resulting from our fossil fuel usage—a rise that will be readily adapted to and which actually may work out to be more beneficial than detrimental. Thankfully, we say, because geoengineering schemes seem like really bad ideas full of nasty consequences (unintentional and otherwise) and we are glad that no one is seriously entertaining them.

Most folks who spend much time critically thinking about geoengineering the climate arrive at the same conclusion.

Here are a couple of reasons why:

● Who would be in charge of the global thermostat?

● What temperature would it be set to?

●  Who gets to decide?

● What if a country doesn’t like the decision?

● Does the thermostat control rotate between counties every so often?

● If you don’t like the weather can you lobby someone to change it?

● If you don’t like the weather can you sue the entity responsible?

● The unintended consequences are mind-boggling!

● How do you know it is effective (climate models can’t accurately foresee annual to decadal variability)?

● Schemes to remove CO2 from the air are detrimental to agriculture.

These are just tastes of the problem, it shouldn’t be hard to come up with more on your own. If you need some help, the always insightful Roger Pielke Jr. has a series of articles on his blog over the years dedicated to this highly controversial topic (see here for starters).

So next time you hear someone offer up geoengineering as a way to “offset” anthropogenic climate change, just say “No, thank you, I’d much rather take my chances with the climate that comes than risk the alternative.”

Jim Harper

The benefits of transparency are hard to explain. Bit by bit, we’re improving public oversight of government, I’ve been heard to say, implying more libertarian-friendly outcomes—never quite sure that I’m getting my message through.

Now comes a comment on transparency that articulates its importance better than I ever could. It’s Obamacare architect Jonathan Gruber describing how lacking transparency allowed the president’s signature health care regulation to pass.

A gaffe in Washington is when somebody tells the truth. Thanks to this one, more people may understand how non-transparent government undercuts their freedoms. Insisting on government transparency can protect them.

Christopher A. Preble

The Congressional Budget Office estimates that the costs of the Pentagon’s current plans will total nearly $3.8 trillion over the next seven years, $308 billion more than is permitted by the 2011 Budget Control Act (BCA).

That $3.8 trillion represents the Pentagon’s base budget, not the entirety of federal spending on national security. It does not include, for example, nuclear weapons spending in the Department of Energy; nor the Departments of Homeland Security and Veterans Affairs; nor overseas operations in Afghanistan, and the campaign against ISIS in Iraq and Syria. But I digress.

If spending exceeds the BCA caps, CBO observes, the Pentagon will be forced to “make sharp additional cuts to the size of its forces, curtail the development and purchase of weapons, reduce the extent of its operations and training, or implement some combination of those three actions.”

A more likely scenario, however, is that the new Republican-controlled Congress will adjust or eliminate the BCA spending caps. According to The Daily Beast, Sen. John McCain’s “first order of business as chairman of the Senate Armed Services Committee will be to end the budget rule known as sequestration, which requires the U.S. military to cut its budget across the board.”

If McCain succeeds, military spending advocates can be expected to push through dramatic increases in the Pentagon’s budget. Indeed, if House Budget Committee Chairman Rep. Paul Ryan’s FY15 budget is any indication, the Pentagon would receive over the next seven years nearly $100 billion more than it has requested.

How would Republicans pay for such increases? Many would prefer to find the money by cutting non-defense discretionary spending, or by reforming entitlement programs. But it’s difficult to envision Democrats agreeing to such proposals, especially if the Pentagon is the primary beneficiary. Others, including Sen. Lindsey Graham, are open to the idea of raising tax revenue by closing loopholes and eliminating deductions. But most Republicans remain allergic to tax increases, and they are likely to confront a bipartisan coalition of outside groups that has adamantly opposed past efforts to circumvent the BCA in order to fund higher Pentagon budgets. The easiest path is, as usual, debt. Thus, expect another Ryan-Murray style “cave-in” that puts additional Pentagon spending on the country’s credit card.

Despite all that talk during the mid-term election campaigns of President Obama’s reckless deficits, Washington’s willingness to spend the people’s money – including money the people don’t yet have – is a bipartisan affliction.

The only hope, it seems, is to stick to the current spending caps, imperfect though they may be. The BCA caps are not the wisest way to curb military spending, but they are all we have.  

Alan Reynolds

Wall Street Journal columnist E.S. Browning presents a graph titled “Wages Still Soft …  hourly wage gains have been sluggish.”   It shows the percentage change in average hourly earnings from a year earlier.  That rate of change slowed from about 3.5 percent in early 2009 to 1.5 percent in late 2012 before rising to 2.2-2.4 percent in recent months.   The upside, in Browning’s view, is that “wage gains still aren’t big enough to push inflation higher.”  In reality, wage gains never push inflation higher, but inflation can certainly push real wages lower.

The trouble with Browning’s graph is that it shows only changes in nominal earnings – unadjusted for the huge drop in inflation after July 2008 when the year-to-year increase in consumer prices reached 5.5 percent in July 2008 (up from 1.9 percent in August of 2007).  Nominal wage gains miss the real story.

In the graph shown below, I adjust the same hourly earnings figures for inflation by using the PCE deflator.  Note that real earnings rose rapidly when inflation dropped to zero or less in 2009 – when Browning’s chart begins.  But employers could not afford to pay rising wages when their prices were falling, so employment collapsed.

Measured in 2009 dollars, real average hourly earnings for production and nonsupervisory workers have been rising slowly but surely for two years – from $18.55 in October 2012 to $18.95 in October 2014, or 1.1 percent a year.  That’s not so terrible considering the slow pace of growth of GDP and productivity.

Despite hazardous chatter from the likes of Paul Krugman and Larry Summers about U.S. inflation being too low, the truth is that low inflation has been raising U.S. real wages even as confused politicians and journalists erroneously bemoan slow growth in nominal wages.

Simon Lester

To follow-up on my colleague Walter Olson’s earlier post on the Paul Krugman piece on King v. Burwell, what struck me was Krugman’s flexible approach to statutory interpretation.

Here he is in today’s piece:

Last week the court shocked many observers by saying that it was willing to hear a case claiming that the wording of one clause in the Affordable Care Act sets drastic limits on subsidies to Americans who buy health insurance. It’s a ridiculous claim; not only is it clear from everything else in the act that there was no intention to set such limits, you can ask the people who drafted the law what they intended, and it wasn’t what the plaintiffs claim. …

 if you look at the specific language authorizing those subsidies, it could be taken — by an incredibly hostile reader — to say that they’re available only to Americans using state-run exchanges, not to those using the federal exchanges.

As I said, everything else in the act makes it clear that this was not the drafters’ intention, and in any case you can ask them directly, and they’ll tell you that this was nothing but sloppy language. …

So, don’t worry so much about the specific language; instead, look at the drafters’ intent and the surrounding context. Got it.

On the other hand, here’s Krugman from January of 2013, writing about the idea of a platinum coin:

Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.

So in this situation, you should stick to the “letter of the law,” and not worry so much about the drafters’ intent.

Hmm, how to reconcile those two Krugman assertions about the proper approach to statutory interpretation?  That’s a tough one.  Wait, I got it!  We’ll call this the Krugman canon of construction: “Interpret statutes in whatever way makes them consistent with your policy preferences.”

Doug Bandow

President Barack Obama finally is obeying the law. He wants Congress to authorize military action against the Islamic State. 

Congress should respond as it was prepared to do when the president requested permission last year to bomb Syria: Capitol Hill should say no.

Candidate Barack Obama stated: “The president does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.”  But three years ago, President Obama took America into war against Libya.  Three months ago, he initiated hostilities in Iraq against the Islamic State. Both without a congressional vote.

Most recently, administration officials claimed authority under the Authorization for Use of Military Force against al-Qaeda adopted in the aftermath of September 11.  But the Islamic State is not al-Qaeda and ISIL’s leaders did not help organize the attacks on the twin towers and the Pentagon. 

The president obviously changed his mind after his party was defeated in the off-year elections.  At least he now is following the Constitution. 

The Founders gave most military powers to Congress: raising and funding the military, writing the rules of war, issuing letters of marquee, and ratifying treaties. Moreover, Article I, Section 8 (11) states: “Congress shall have the power … to declare war.” 

The early Americans feared a president and war like today.  The Founders particularly opposed a system which subjected the nation’s peace to the whims of one man, accountable to no one.

For instance, at the Constitutional Convention George Mason advocated “clogging rather than facilitating war” because he didn’t believe the president to be “safely to be entrusted with” the authority to commence military action.  James Wilson applauded the convention’s language,  “It will not be in the power of a single man, or a single body of men, to involve us in such distress; for the important power of declaring war is in the legislature at large.” 

Today’s “president-as-king” club contends that “declare” simply meant to take note of the fact that the chief executive had dragged America into war.  But the convention delegates complained about the monarch taking them into unnecessary wars. 

John Jay argued that kings relied on dubious motives and engaged “in wars not sanctified by justice or the voice and interests of his people.”  Pierce Butler spoke against placing in the president’s “hands the influence of a monarch, having an opportunity of involving his country in a war whenever he wished to promote her destruction.” 

Over the centuries several of America’s most respected presidents affirmed the original constitutional understanding.  George Washington observed:  “no offensive expedition of importance can be undertaken until after [Congress] shall have deliberated upon the subject, and authorized such a measure.” 

Abraham Lincoln opined that the Framers recognized war “to be the most oppressive of all Kingly oppressions; and they resolved to so frame the Constitution that no one man should hold the power of bringing this oppression upon us.”  Dwight Eisenhower promised that he would not “order any troops into anything that can be interpreted as war, until Congress directs it.” 

Supreme Court Justice Antonin Scalia, a conservative icon, more recently wrote: “Except for the actual command of military forces, all authorization for their maintenance and all explicit authorization for their use is placed in the control of Congress under Article I, rather than the president under Article II.”

Now that President Obama finally has requested congressional authorization, legislators should vote no.

As I observed on Forbes online:  “Congress has no obligation to support a bad presidential request.  The Islamic State is evil, but that hardly makes it unique.  American foreign policy should focus on protecting Americans, and not undertaking a Quixotic crusade around the globe.” 

President Obama did the right thing by belatedly asking Congress for authority to go to war.  Congress also should do the right thing—by saying no.

Daniel J. Mitchell

I’ve argued that we’ll get better government if we make it smaller.

And Mark Steyn humorously observed, “our government is more expensive than any government in history – and we have nothing to show for it.”

But can these assertions be quantified?

I had an email exchange last week with a gentleman from Texas who wanted to know if I had any research on the efficiency of government. He specifically wanted to know the “ratio of federal tax dollars collected to the actual delivery of the service.”

That was a challenge. If he simply wanted examples of government waste, I could have overloaded his inbox.

But he wanted an efficiency measure, which requires apples-to-apples comparisons to see which jurisdictions are delivering the most output (government services) compared to input (how much is spent on those services).

My one example was in the field of education, where I was ashamed to report that the United States spends more per student than any other nation, yet we get depressingly mediocre results (though that shouldn’t be a surprise for anyone who has looked at this jaw-dropping chart comparing spending and educational performance).

But his query motivated me to do some research and I found an excellent 2003 study from the European Central Bank. Authored by Antonio Afonso, Ludger Schuknecht, and Vito Tanzi, the study specifically examines the degree to which governments are providing value, and at what cost.

The objective of this paper is to provide a proxy for measuring public sector performance and efficiency. To do this we will put together a number of performance indicators in the government’s core functions. …We will set these indicators in relation to the costs of achieving them. We will, hence, derive simple performance and efficiency indicators for 1990 and 2000 for the public sectors of 23 industrialised OECD countries. …As a first step, we define 7 sub-indicators of public performance. The first four look at administrative, education, health, and public infrastructure outcomes. …The three other sub-indicators reflect the “Musgravian” tasks for government. These try to measure the outcomes of the interaction with and reactions to the market process by government. Income distribution is measured by the first of these indicators. An economic stability indicator illustrates the achievement of the stabilisation objective. The third indicator tries to assess allocative efficiency by economic performance.

Here’s a flowchart showing how they measured public sector performance.

I should explain, at this point, that I’m not a total fan of the PSP measure. Most of the indicators are fine, but some rub me the wrong way.

I think an even distribution of income is a nice theoretical concept, for instance, but I don’t think it can be mandated by government (unless the goal is to make everybody poor). Economic stability also isn’t necessarily a proper goal. I’d much rather live in a society that oscillates between 7 percent growth and -2 percent growth if the only other alternative was a society that had very stable 1 percent growth.

But enough nit-picking on my part. What did the study find when looking at public sector performance?

Indicators suggest notable but not extremely large differences in public sector performance across countries… Looking at country groups, small governments (industrialised countries with public spending below 40 percent of GDP in 2000) on balance report better economic performance than big governments (public spending above 50 percent of GDP) or medium sized governments (spending between 40 and 50 percent of GDP).

These are remarkable findings. Nations with small governments achieve better outcomes. And that’s including some indicators that I don’t even think are properly defined!

But what’s most amazing is that the above findings are simply based on an examination of outputs.

So what happens if we also look at inputs to gauge the degree to which governments are delivering a lot of bang for the buck?

Public expenditure, expressed as a share of GDP, can be assumed to reflect the opportunity costs of achieving the public sector performance estimated in the previous section. …Public expenditures differ considerably across countries. Average total spending in the 1990s ranged from around 35 percent of GDP in the US to 64 percent of GDP in Sweden. The difference is mainly due to more or less extensive welfare programs. …we now compute indicators of Public Sector Efficiency (PSE). We weigh performance (as measured by the PSP indicators) by the amount of relevant public expenditure, PEX, that is used to achieve a given performance level.

And what did the experts discover? Just below is a chart showing the results. There’s a lot of data, particularly if you’re looking at individual countries. To see the bottom-line results, look at the numbers circled in red.

As you can see, countries with small governments are far more productive and efficient.

We find significant differences in public sector efficiency across countries. Japan, Switzerland, Australia, the United States and Luxembourg show the best values for overall efficiency. Looking at country groups, “small” governments post the highest efficiency amongst industrialised countries. Differences are considerable as “small” governments on average post a 40 percent higher scores than “big” governments. …This illustrates that the size of government may be too large in many industrialised countries, with declining marginal products being rather prevalent.

The conclusion of the study makes some very important observations.

Unsurprisingly, countries with small public sectors report the “best” economic performance… Countries with small public sectors report significantly higher PSE indicators than countries with medium-sized or big public sectors. All these findings suggest diminishing marginal products of higher public spending. …Spending in big governments could be, on average, about 35 per cent lower to attain the same public sector performance.

Though I can’t help but wonder what the results would have been if Hong Kong and Singapore also were added to the mix.

After all, I don’t consider the United States to have a “small” government. Same for Japan, Switzerland, and Australia. Those are simply nations where government isn’t as big and bloated as it is in France, Italy, Sweden, and Greece.

Imagine the results if you could measure public sector performance and public sector efficiency for the United States and other developed nations in the pre-World War I era, back when the burden of government spending averaged less than 10 percent of economic output.

I strongly suspect we got far more “bang for the buck” when government was genuinely small.

But I don’t want to make the perfect the enemy of the good, so let’s focus on the results of the study. The clear message is that big governments spend a lot more and deliver considerably less.

And that’s a very worrisome message since the burden of government is projected to increase substantially in the United States thanks to demographic changes and poorly designed entitlement programs.

So at the very least, we should do everything possible to reform those programs to keep America from becoming Greece.

And once we achieve that goal, then we can try to reduce the size and scope of government so we’re more like Hong Kong and Singapore, with only about 20 percent of GDP diverted to government.

Then, in my libertarian fantasy world, we can cut, prune, privatize, and eliminate until government once again only consumes about 10 percent of economic output.

Walter Olson

Even by his standards, Paul Krugman uses remarkably ugly and truculent language in challenging the good faith of those who take a view opposed to his on the case of King v. Burwell, just granted certiorari by the Supreme Court following a split among lower courts. Krugman claims that federal judges who rule against his own position on the case are “corrupt, willing to pervert the law to serve political masters.” Yes, that’s really what he writes – you can read it here.

A round of commentary on legal blogs this morning sheds light on whether Krugman knows what he’s talking about. 

“Once upon a time,” Krugman claims, “this lawsuit would have been literally laughed out of court.” [Citation needed, as one commenter put it] The closest Krugman comes to acknowledging that a plain-language reading of the statute runs against him is in the following:

But if you look at the specific language authorizing those subsidies, it could be taken — by an incredibly hostile reader — to say that they’re available only to Americans using state-run exchanges, not to those using the federal exchanges.

New York City lawyer and legal blogger Scott Greenfield responds

If by “incredibly hostile reader,” Krugman means someone with a basic familiarity with the English language, then he’s right.  That’s what the law says. … There is such a thing as a “scrivener’s error,” that the guy who wrote it down made a mistake, left out a word or put in the wrong punctuation, and that the error was not substantive even though it has a disproportionate impact on meaning.  A typo is such an error.  I know typos. This was not a typo. This was not a word misspelled because the scribe erred.  This was a structural error in the law enacted. Should it be corrected? Of course, but that’s a matter for Congress.

While some ObamaCare proponents may now portray the provision as a mere slip in need of correction, as I noted at Overlawyered in July, “ObamaCare architect Jonathan Gruber had delivered remarks on multiple 2012 occasions suggesting that the lack of subsidies for federally sponsored exchanges served the function (as critics had contended it did) of politically punishing states that refuse to set up exchanges.”

Josh Blackman, meanwhile, points out something incidental yet revealing about Krugman’s column: its homespun introductory anecdote about how his parents discovered that they had been stuck with a mistaken deed to their property, fixed (“of course”) by the town clerk presumably with a few pen strokes and a smile, couldn’t possibly have happened the way Krugman said it did. Property law, much more so than statutory construction, is super-strict about these matters.

If your deed is incorrect, you cannot simply get the “town clerk” to “fix the language”. … Mistakes are enforced by courts. That’s why [everyone] should purchase title insurance. … 

So this is the exact opposite example of what Krugman would want to use to illustrate why King is “frivolous.” If courts applied property doctrine to the construction of statutes, this case would be over in 5 seconds. The government loses. 

To be sure, there may be better arguments with which to defend the Obama administration’s side of the King case. But do not look for them in Paul Krugman’s commentary, which instead seems almost designed to serve the function of pre-gaming a possible defeat in King by casting the federal judiciary itself as “corrupt” and illegitimate.  

 

 

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

You Ought to Have a Look is a feature from the Center for the Study of Science, posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger. 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.

Leaving the election results aside (noting that they were bad for the Obama administration’s ill-founded and executive-ordered climate policies), we highlight a couple (among the many) interesting climate change–related tidbits scattered among the intertubes.

The first is an analysis of what was left out of the latest (final?) report from the United Nations’ Intergovernmental Panel on Climate Change (IPCC), conducted by Marcel Crok, a Dutch journalist who covers climate change with a somewhat skeptical eye.

Crok recently partnered up with climate researcher Nic Lewis to produce a major analysis of climate sensitivity—one of the key parameters in helping to understand how much influence human activities will have on the future climate—for the United Kingdom’s Global Warming Policy Foundation  (another site that you’ll surely be hearing from in these pages from time to time). Lewis and Crok found that the IPCC greatly overestimated the climate sensitivity based on a critical review of the extant scientific literature on the topic.

In a post this week on his blog (which is sometimes written in Dutch), Crok compares how the IPCC treatment of climate sensitivity changed from being-front-and-center in its 2007 Fourth Assessment Report to being nearly buried in its 2014 Fifth Assessment Report.  

Why the change? Because the more people look at climate sensitivity, the less it looks like the IPCC produced a very good “assessment” of it. Virtually the entirety of their reports are premised on a climate sensitivity of around 3.5°C. A much more realistic value is around  2.0°C—a difference so large as to consign most of the IPCC reports to the dustbin of climate history.

In his article “IPCC Bias In Action,” Crok writes:

The IPCC was saddled with a dilemma. A lot of conclusions in the report are based on the output of models and admitting that the models’ climate sensitivity is about 40% too high was apparently too … inconvenient. So IPCC decided not to mention climate sensitivity anymore in the SPM of the Synthesis Report. It decided to give the world a prognosis which it knows is overly pessimistic. One may wonder why. Did it want to hide the good news?

We could hardly have said it better ourselves!

Another site worth clicking on from time to time is a blog called The Blackboard, run by Lucia Liljegren, and independent climate researcher and all-around busybody. Previously, we have teamed up with Lucia to examine how the observed evolution of the global average temperature compares with expectations of the behavior as produced by climate models. Our results indicated that climate models were not faring too well. While everyone knows this now, 4–5 years ago this was cutting edge, and the establishment wanted nothing to do with it.  Thus, our paper was never published (rejected by several journals). Nevertheless, it was a scientifically robust work that was a harbinger of things to come. It  is available here.

Lucia continues to keep a tab on climate model performance. Recently, she updated her analysis to check to see if reports of the death of the global warming “hiatus” were accurate. Like Mark Twain before her, she found them to be greatly exaggerated. Lucia reports:

Anyway: I’m rather unconvinced ‘the hiatus’ is over. That said: it’s a bit difficult to say for sure because the definition of ‘hiatus’ is rather vague. It does seem to me we are going to need to see quite a bit of warming to overcome the doubts of those who think models are not well suited to predicting warming over periods as long as 20 or 30 years.

The reason for this is simple. It will take several years of warming to establish a significant trend since 1997. For example, if warming began in 2014, at the same rate that was established between the late 1970s and the late 1990s, the “hiatus” would extend to 24 years (using annual data) before the post-1997 trend became significant.

And finally, we’d be remiss if we didn’t point out that level-headed science/science policy researcher Roger Pielke Jr. of the University of Colorado has a new book out that should be of interest to anyone who seeks the truth behind the (lack of) identifiable linkages between extreme weather and human greenhouse gas emissions. His book is called The Rightful Place of Science: Disasters and Climate Change, and it is available from Amazon at the insanely cheap price of only $5. For more info and to see what folks have to say about it, you ought to have a look here.

Ilya Shapiro

While the Supreme Court’s decision last month not to take up the same-sex marriage cases that had accumulate over the summer surprised some (but not all), that “decision not to decide” was easily explained by the absence of a conflict in the lower courts. All of the federal courts of appeal to have ruled had held traditional state definitions of marriage to be unconstitutional. As of this past Thursday, however, that’s no longer the case.

In case you’ve been overly focused on the last few days’ other big legal news, the Cincinnati-based U.S. Court of Appeals for the Sixth Circuit ruled 2-1 in favor of the state marriage laws of Michigan, Ohio, Kentucky, and Tennessee (cases in which Cato filed several briefs). Judge Jeffrey Sutton – whose previous turn in the national spotlight came when he voted to uphold Obamacare’ individual mandate before the Supreme Court got that case – wrote a magisterial opinion rejecting the challengers arguments regarding the Fourteenth Amendment. While I disagree with it for reasons spelled out in Cato’s various briefs, it’s seriously the best possible legal articulation of why states should remain free to restrict marriage licenses to opposite-sex couples. Sutton’s elegant and well-crafted opinion, though ultimately wrong, puts to shame many of the opinions that nevertheless correctly struck down state marriage laws – most notably Seventh Circuit Judge Richard Posner’s, which reads like a stream-of-consciousness college-sophomore sociology paper.

And this development wasn’t surprising. The conventional wisdom was that Sutton would be the swing vote on the panel and that he would invoke Baker v Nelson – the Supreme Court’s 1972 dismissal of a gay-marriage lawsuit “for want of a substantial federal question” – as binding lower courts’ hands notwithstanding Windsor v. United States and other legal developments. Ilya Somin makes an astute observation comparing Sutton’s approach to what he did in the Obamacare case:

Some of the flaws in Sutton’s analysis in the same-sex marriage case bear a surprising resemblance to those of his most famous previous opinion: his concurrence upholding the Obamacare individual health insurance mandate. In that case, he relied on an idiosyncratic interpretation of the distinction between facial and as-applied challenges that went against Supreme Court precedent, and was not adopted by any of the other judges who considered the issue on either the Supreme Court or the lower courts (including the many who voted to uphold the mandate on other grounds). Both opinions combine strong rhetorical statements about the humility required of lower court judges – especially when it comes to deferring to the Supreme Court – with neglect or significant misunderstanding of relevant Supreme Court precedent.

The practical question now is whether the cert-petition process will be completed quickly enough for the Court to consider these cases this term or whether it’s pushed to next fall (meaning a ruling as late as June 2016). Dale Carpenter and Josh Blackman sketch out the twists and turns we can expect, ultimately concluding that it’ll be very close, given that generally only cases the Court takes by early January make it onto the argument calendar for the same term. The challengers will be filing their cert petition(s) this very week, which makes an argument in late April still theoretically possible. 

My bet is that Chief Justice Roberts maneuvers behind the scenes in such a way that argument won’t be until next term begins in October but the ruling will come by Christmas 2015. Of course, if Justice Ginsburg retires or is otherwise unable to perform her duties at any point in this process, the case/ruling will be held up, thus setting up a presidential election in which same-sex marriage figures much more prominently than any we’ve had.

Ilya Shapiro

President Obama has finally managed to strike the proper political tone on something. His nomination of federal prosecutor Loretta Lynch is unlikely to ruffle the feathers of the lame duck Congress and should let the Justice Department operate with less political opposition. Like George W. Bush’s appointment of Michael Mukasey to replace the embattled Alberto Gonzalez, Lynch is likely to be a low-profile steady hand to replace the radioactive Eric Holder.

At the same time, picking the first black woman AG allows the president to further his diversity agenda without spending tremendous political capital (which he doesn’t now have) – in a way that wouldn’t have been possible with Tom Perez, the controversial labor secretary who was also thought to be a contender for the job. All in all, while I’m sure I’ll disagree with some of Lynch’s enforcement decisions, this nomination means that legal analysts’ focus will largely remain on those policy issues rather than the controversial personalities and politics behind them.

Michael F. Cannon

I applaud the Supreme Court’s decision to grant certiorari in King v. Burwell.

Since January, the Obama administration has been spending billions of unauthorized federal dollars, and subjecting nearly 60 million Americans to unauthorized taxes, all to hide the full cost of the Patient Protection and Affordable Care Act, or ObamaCare. The administration’s actions have not only violated the law and caused massive economic disruption, they have also subverted the democratic process. The plaintiffs in Pruitt v. BurwellHalbig v. Burwell, King v. Burwell, and Indiana v. IRS seek to put an end to those unlawful taxes and spending.

The Supreme Court’s decision is a rebuke to the Obama administration and its defenders, who dismissed as frivolous the plaintiffs’ efforts to defend their right not to be taxed without congressional authorization.

It is essential that these cases receive expedited resolution, if only to eliminate the uncertainty currently facing states, employers, insurers, and taxpayers.

Most important, these cases deserve expedited consideration because only they can bring an end to the greatest domestic-policy scandal of this administration.

Click here for reference materials on these cases, including all court filings and judicial opinions. Click here for news and opinion coverage of these cases.

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