The abuse and overspending in government disability programs is so bad that even National Public Radio and 60 Minutes have taken notice. On the heels of this excellent NPR examination of the “disability industrial complex,” the venerable CBS news show last night profiled Senator Tom Coburn’s efforts to uncover fraud in the two big federal disability programs.
The combined spending on Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) has risen to a huge $200 billion a year, so kudos to the mainstream media for sounding the alarm on these programs. What we need now is for other fiscal conservatives on Capitol Hill to stand with Senator Coburn and demand reforms.
There appear to be millions of people on the disability programs whose ailments are not actually severe enough to warrant coverage or who are outright scamming the system. On 60 Minutes, Senator Coburn guessed that one-quarter or more of the people currently on the disability programs shouldn’t be. The following chart (sourced here) from Tad DeHaven supports Coburn’s assessment:
During the 1970s and 1980s, the ratio of people on SSDI to the U.S. workforce averaged 3.4 percent. That ratio has now more than doubled to 7.4 percent, even though the actual rate of disability among the working-age population is thought not to have increased in recent decades.
The following chart illustrates the problem from another angle. It uses data compiled by Jagadeesh Gokhale from the Current Population Survey on men aged 20 to 59 with a work-limiting health problem. Within this group, a falling share are working and a rising share are going on SSDI and not working.
As DeHaven explains in his recent reports on SSDI and SSI, the rapid growth in these programs is very troubling, and not just because of the rising taxpayer costs. The programs are apparently inducing many people who could be using their skills productively in the economy to instead drop out and go on the federal dole.
All government subsidy programs undermine individual responsibility and induce unproductive behaviors. This is true, for example, of the roughly $30 billion in annual federal subsidies for farm businesses. Each year federal disability programs pump out six times more benefits than farm subsidies, so it wouldn’t be surprising if the distortions and economic harm created is far larger.
Once again the media are full of talk about dysfunction and default, as the partial government shutdown threatens to linger until the federal government hits the limit of its borrowing capacity, possibly on Oct. 17. The parties in Congress are still far apart on passing a budget bill to keep the government running, and Republicans are also promising not to raise the debt ceiling without some spending reforms.
If in fact Congress doesn’t raise the ceiling by mid-October—or by November 1 or so, when the real crunch might come—then the federal government would be forbidden to borrow any more money beyond the legal limit of $16.699 trillion. But it would still have enough money to pay its creditors as bonds come due. The government will take in something like $225 billion in October, but it wants to spend about $108 billion more than that. You see the problem. If it can’t borrow that $108 billion—to cover its bills for one month—then it will have to delay some checks.
Now the U.S. Treasury isn’t full of stupid people. Back in 2011, when the debt ceiling of $14.3 trillion was about to be reached, the Washington Post reported:
The Treasury has already decided to save enough cash to cover $29 billion in interest to bondholders, a bill that comes due Aug. 15, according to people familiar with the matter.
You can bet they’re making similar plans today.
Back in that summer of discontent I talked to a journalist who was very concerned about the “dysfunction” in Washington. So am I. But I told her then what’s still true today: that the real problem is not the dysfunctional process that’s getting all the headlines, but the dysfunctional substance of governance. Congress and the president will work out the debt ceiling issue, if not by October 17 then a few days later. The real dysfunction is a federal budget that doubled in 10 years, unprecedented deficits as far as the eye can see, and a national debt bursting through its statutory limit of $16.699 trillion and heading toward 100 percent of GDP.
We’ve become so used to these unfathomable levels of deficits and debt—and to the once-rare concept of trillions of dollars—that we forget how new all this debt is. In 1981, after 190 years of federal spending, the national debt was “only” $1 trillion. Now, just 33 years later, it’s headed past $17 trillion. Traditionally, the national debt as a percentage of GDP rose during major wars and the Great Depression. But there’s been no major war or depression in the past 33 years; we’ve just run up $16 trillion more in spending than the country was willing to pay for. That’s why our debt as a percentage of GDP is now higher than at any point except World War II. Here’s a graphic representation of the real dysfunction in Washington:
Those are the kind of numbers that caused the Tea Party movement and the Republican victories of 2010. And many Tea Partiers continue to remind their representatives that they were sent to Washington to fix this problem. That’s why there’s a real argument over raising the debt ceiling. It’s going to get raised, but many of the younger Republicans are determined to set a new course for federal spending in the same bill that authorizes another yet more profligate borrowing.
And where did all this debt come from? As the Tea Partiers know, it came from the rapid increase in federal spending over the past decade:
Annual federal spending rose by a trillion dollars when Republicans controlled the government from 2001 to 2007. It rose another trillion during the Bush-Obama response to the financial crisis. So spending every year is now twice what it was when Bill Clinton left office a dozen years ago, and the national debt is almost three times as high.
Republicans and Democrats alike should be able to find wasteful, extravagant, and unnecessary programs to cut back or eliminate. And yet many voters, especially Tea Partiers, know that both parties have been responsible for the increased spending. Most Republicans, including today’s House leaders, voted for the No Child Left Behind Act, the Iraq war, the prescription drug entitlement, and the TARP bailout during the Bush years. That’s why fiscal conservatives have become very skeptical of bills that promise to cut spending some day—not this year, not next year, but swear to God some time in the next ten years. As the White Queen said to Alice, “Jam to-morrow and jam yesterday—but never jam to-day.” Cuts tomorrow and cuts in the out-years—but never cuts today.
If the “dysfunctional” fight that has sent the establishment into hysterics finally results in some constraint on out-of-control spending, then it will have been well worth all the hand-wringing headlines. The problem is not a temporary mess on Capitol Hill and not a mythical default, it’s spending, deficits, and debt.
Contempo Marin isn’t your stereotypical mobile-home park. The park sits two miles from San Francisco Bay and offers tenants a pool, spa, clubhouse, and lagoon. Because of the location and amenities, these mobile homes—some of which offer vaulted ceilings, gas fireplaces, walk-in closets, and jetted tubs—can sell for over $300,000. That’s what makes the rent- and vacancy-control ordinance imposed on the park by the City of San Rafael in the name of “affordable housing” so outrageous.
The ordinance caps the amount that MHC Financing, the owner of Contempo Marin, may charge its tenants—who own their mobile homes but rent the land underneath—and mandates that the land be rented at the same price to each homeowner. The result isn’t lower costs for incoming tenants, but a redistribution of the value from the below-market rent directly to the mobile-home owners, whose homes now sell at a premium of nearly $100,000 above their pre-existing value. Thus far, the ordinance has transferred more than $95 million from MHC to its tenants.
MHC challenged the ordinance in federal court as an unconstitutional taking. The district court ruled in MHC’s favor, finding that the alleged public purpose of the ordinance—“affordable housing”—was merely a pretext, such that the ordinance violated the Fifth Amendment’s mandate that property only be taken for a “public use.” As Justice Kennedy clarified in Kelo v. City of New London (2005), “transfers intended to confer benefits on particular, favored private entities and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause.”
The U.S. Court of Appeals for the Ninth Circuit, however, reversed the district court, holding that rent control generally, rather than the specific rent-control scheme at issue here, is “rationally related to a conceivable public purpose” and thus automatically meets the public-use requirement. MHC is now asking the Supreme Court to review that ruling and Cato has filed a supporting amicus brief, encouraging the Court to clarify the standard of review applied to pretextual takings claims and to confirm that the Takings Clause isn’t rendered inoperative when property is transferred.
The Ninth Circuit’s approach essentially bars future pretextual takings claims; any regulatory scheme viewed at its broadest theoretical level could have some “conceivable public purpose.” This evisceration of the Public Use Clause leaves the appropriate standard for determining if a government’s public-use justification is mere pretext in desperate need of Supreme Court clarification. The Ninth Circuit also undermined the Fifth Amendment by finding that no taking had even occurred because MHC had bought Contempo Marin after the rent- and vacancy-control provision had been enacted and therefore could have no investment-backed expectation as to the property value taken by the city. This decision directly conflicts with Palazzolo v. Rhode Island (2001), in which the Supreme Court held that buying property with knowledge of a regulation doesn’t preclude a takings challenge. The Ninth Circuit ignored the same precedent in Guggenheim v. City of Goleta in 2011—a case in which Cato also filed a brief supporting a petition for review—and the lower court’s continued misapplication of the law here reiterates the need for the Supreme Court to reaffirm that the Takings Clause has no “expiration date.”
The Court will decide whether to take the case of MHC Financing LP v. City of San Rafael later this fall.
This blogpost was co-authored by Cato legal associate Lauren Barlow.
Read some of the personal testimonials on HealthCare.gov’s Facebook page:
My families insurance rates went up to $1000 per month. Obamacare has forced us to become uninsured. Stop this law!!
I got notice that my blue cross was being canceled. The cheapest Obamacare replacement is $160 per month more and my total risk increases from $5000 to $12,500. The good news is that my menopausal wife and I now have maternity, pediatric dental and vision! Thanks a lot.
$12,000 to cover my family with a policy full of sky high deductibles? You call this affordable? I guess I’ll just have to be a criminal as there’s no way I can afford this mess.
This sucks – my premium will go from $230 to $528 with HIGHER deductibles and HIGHER copays. WTF is “affordable” about that?
My family premium of $789/mo for a healthy family of five just went up to $1700/mo, for a plan that we were completely happy with. What happened to “if you like your plan you can keep it”? What happened to the average middle class family saving $2500/year? My premium is now higher than my mortgage. Thanks for nothing.
So compare my old Plan: 100% coverage for $545 a month. To New Plan: 80% Coverage for $954 a month.
310% increase in premiums. My AFFORDABLE healthcare plan was taken from me by you. Now a third of my paycheck will go to Cigna. Exactly how the HELL IS THIS AFFORDABLE?
Fraud! Doubled our rate and increased our deductible by thousands. Vote accordingly in 2014!
Just found out my premiums will triple as compared to my perfectly adequate plan that was cancelled due to the law. Obama lied and my health insurance died.
My premium in California more than doubled for less coverage (now almost $1,000 / month). We now have predator gov’t, and the Gorgon Sebelius is now everyone’s master. Where do I go to vote Sebelius outta office? Oh.
Family of six, middle class income, $18,744 per month with a $8,000 deductible… No subsitiy. I will stick with my employer insurance which I’m sure will skyrocket. Barack must be sitting back laughing his butt off at us, his subjects being screwed
on the colorado exchange i was told that for my family of 5 making $40k a year that my preimum would be $625 a month, that is half my rent and twice my car payment, that is for the bronze plan plus a $12k deductable on top of that and becuase my employer offers health insurance, to the price of about $900 a month, i dont qualify for subsidies. so tell me again how is any of this affordable?
Affordable? How is this affordable???????? The rates are HUGE and the deductible is, too. HOW? HOW am I supposed to afford something like this?????? I barely put food on my table, and pay for my most basic expenses. HOW am I supposed to spend money on this THAT I DON’T HAVE????????
Um it doesn’t matter if you qualify for subsidies if you are still paying 40% of the bill and your deductible is 6000… Seriously how anyone views this as better or affordable is beyond me!!!!
Thanks you for raising my premium $420/months and my deductbile $10,000 a year. My only problem is where to get the additional $15,040 a year from? I’m not loving this. I want the old coverage I had when I used to work 40 hours a week instead of 29. This change isn’t working out so good
My already crappy PPO plan costs $198/month. Looking at the ACA plans, the cheapest PPO is $330/month!!!!!!!!!!!!!!!!!!! The cheapest HMO plan is $284! With TWICE the deductible. Someone please point me to the “Affordable” area.
Insanely expensive! $1207 a month for me and my healthy young family. I can’t afford a second mortgage just for a high deductible plan!
I can’t understand how they expect healthy people to sign up for this when it cost so much more than the penalty. I think only people who have health problems will sign up and from what I here that will raise the rates further.
Insurance rates through the roof!!! Unaffordable care act!!
For a family a 3 and only 1 income, my premium would be $5815, no subsidy and a $12,700 deductible. The premium alone is a 61% increase. So much for affordable.
I thought Obamacare was supposed to be FREE! I discovered that it will cost me MORE money than my current plan for LESS coverage! I’m disabled and my current plan costs $398 a month. It pays 100% after I pay $1500 a year out of pocket. Obamacare will cost me $759 and I STLIL have to pay 20% of all charges….and I have a lot of cherges. I CAN’T AFFORD the “Affordable” Care Act! This is a complete SCAM!
This sucks. Premiums like 70% HIGHER than just last year. Suck it Obama!
Their phone number says it all (800) F1UCK-YO. They think we’re suckers.
You guys are liars – this is nothing like you told people it was going to be. And now my friends are being dropped by their bosses and forced on this crap.
I looked at options on the KY Exchange (KYnect), using the highest deductible and highest co-pay the system would allow, and unfortunately, our premiums will increase by over $300 per month over what we pay now.
I am so disappointed. These prices are outrageous and there are huge deductibles. No one can afford this!
I have one question. What happens if I can’t afford the Affordable Health Care that you are cramming down my throat? I just ran your calculator, and if it is even close to accurate, I will have a choice…..I can pay my rent and buy groceries, or I can pay the health care premiums, move out into the streets and live under a bridge some where, and go hungry!
I am a single mother of two, in school and working full time, living 75% below the poverty level, and I DO NOT qualify for a healthcare subsidy. Are you F’ing kidding me???? Where the HELL am I supposed to get $3,000 more a year to pay for this “bronze” health insurance plan!?!??? And I DO NOT EVEN WANT INSURANCE to begin with!! This is frightening.
My co-worker was able to log on and she was checking for her son who makes $8000 a year. The lowest tier had monthly premiums of $215 ($2600 per year) with an annual deduction of $5000.00. How is that affordable?
$6k per person cap or $13k per family cap on top of premiums is more than most can afford these days. Its just not realistic.
I thought Obama said my rates would go down $2500 a year for my family. That’s odd. The policy he said I could keep doesn’t satisfy the non affordable care act and one that does that has similar coverage is $1000 more a month. Wow.
Patrick J. Michaels and Paul C. "Chip" Knappenberger
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.”
Most of the criticism was aimed at the IPCC’s defense of climate models—models that the latest observations of the earth’s climate evolution show to be inaccurate, or at least are strongly indicative that is the case.
There are two prominent and undeniable examples of the models’ insufficiencies: 1) climate models overwhelmingly expected much more warming to have taken place over the past several decades than actually occurred; and 2) the sensitivity of the earth’s average temperature to increases in atmospheric greenhouse gas concentrations (such as carbon dioxide) averages some 60 percent greater in the IPCC’s climate models than it does in reality (according to a large and growing collection of evidence published in the scientific literature).
Had the IPCC addressed these model shortcomings head on, the flavor of their entire report would have been different. Instead of including projections for extreme climate changes as a result of continued human emissions of greenhouse gases resulting from our production of energy, the high-end projections would have featured relatively modest changes and the low-end projections would have been completely unremarkable.
Since changes in the earth’s temperature scale approximately linearly with a property known as the earth’s equilibrium climate sensitivity (how much the earth’s average surface temperature rises as a result of a doubling of the atmosphere’s carbon dioxide concentration), it is pretty straightforward to adjust the IPCC’s projections of future temperature change to bring them closer to what the latest science says the climate sensitivity is. That science suggests the equilibrium climate sensitivity probably lies between 1.5°C and 2.5°C (with an average value of 2.0°C), while the climate models used by the IPCC have climate sensitivities which range from 2.1°C to 4.7°C with an average value of 3.2°C.
To make the IPCC projections of the evolution of the earth’s average temperature better reflect the latest scientific estimates of the climate sensitivity, it is necessary to adjust them downward by about 30% at the low end, about 50% at the high end, and about 40% in the middle.
The figure below the jump shows what happens when we apply such a correction (note: we maintain some internal weather noise). The top panel shows the projections as portrayed by the IPCC in their just-released Fifth Assessment Report, and the lower panel shows what they pretty much would have looked like had the climate models better reflected the latest science. In other words, the lower panel is what the IPCC temperature projections should have looked like.
Figure 1. (Top) Temperature evolution from 1950 to 2100 as portrayed by the IPCC in its Fifth Assessment Reportaccording to its worst case (red) and best case (blue) emissions scenarios (RCP8.5 and RC2.6, respectively). (Bottom) Temperature evolution from 1950 to 2100 from the same emission scenarios adjusted such that the equilibrium climate sensitivity values better matched the latest science.
The result of such adjustments is that the IPCC’s worst-case emissions scenario produces a global average temperature rise (from the 1986-2005 average) by the end of the century that has a centralized value of about 2.6°C, compared with a rise of 4.1°C given in the IPCC AR5. The more moderate emissions scenarios (the more likely course as the natural gas revolution will see lower carbon dioxide-emitting natural gas replace higher-emitting coal in energy production), once properly adjusted, produce a temperature rise by century’s end of only about 1.25°C (of which, about 0.15°C has already happened).
Since virtually all climate impacts are related to the change in the earth’s temperature, the smaller the future temperature increase, the smaller the resulting impacts. Another degree of so of temperature rise during the next 87 years is not going to lead to climate catastrophe.
Had the IPCC been more interested in reflecting the actual science rather than in preserving a quickly crumbling consensus (that human greenhouse gas emissions are leading to dangerous climate change that requires urgent action), its Fifth Assessment Report would have been a much kindler and gentler document—as it well should have been.
Michael F. Cannon
The Wall Street Journal’s James Taranto:
Meet Brendan Mahoney, the young man who is saving ObamaCare. He’s 30 years old, a third-year law student at the University of Connecticut. He’s actually been insured for the past three years–in 2011 and 2012 through a $2,400-a-year school-sponsored health plan, and this year through “a high-deductible, low-premium plan that cost about $39 a month through a UnitedHealthcare subsidiary.” But he wanted to see what ObamaCare had to offer.
He tried logging in to the exchange’s website at 8:45 a.m. yesterday…” He said the system could not verify his identity.” So he called the toll-free help line, whose operator also encountered computer trouble. “But then he logged on a second time, he said, and the system worked.”
“Once it got running, it was fast,” Mahoney tells the Courant. “It really made my day. It’s a lot like TurboTax.” He obtained insurance through ObamaCare. Now, he says, “if I get sick, I’ll definitely go to the doctor.” Even better, if he stays healthy, he won’t need to go to a doctor, and his premiums will support chronically ill policyholders on the wrong side of 40.
So, how much of a premium is strapping young Brendan Mahoney paying to help make ObamaCare work? Oops. The Courant reports that Mahoney “said that by filling out the application online, he discovered he was eligible for Medicaid. So, beginning next year, he won’t pay any premium at all.”
So the great success story of ObamaCare’s first day is the transformation of a future lawyer who was already paying for insurance into a welfare case.
Remember that the next time someone says that people on Medicaid have no other options. HT: Jack McHugh
Michael F. Cannon
Reason’s Peter Suderman:
Chad Henderson is the media’s poster boy for Obamacare. Reporters struggled this week to find individuals who said they had been able to enroll in one of the law’s 36 federally run health-insurance exchanges.
That changed yesterday, when they found Henderson, a 21-year-old student and part-time child-care worker who lives in Georgia and says that he successfully enrolled himself and his father Bill in insurance plans via the online exchange administered at healthcare.gov.
But in an exclusive phone interview this morning with Reason, Chad father’s Bill contradicted virtually every major detail of the story the media can’t get enough of. What’s more, some of the details that Chad has released are also at odds with published rate schedules and how Obamacare officials say the enrollment system works.
Steve H. Hanke
Syria: On September 27th, the United Nations Security Council unanimously adopted a resolution outlining the details of the turn over and dismantlement of Syria’s chemical weapons. Syria’s president, Bashar al-Assad, has stated that his government will abide by last week’s UN resolution calling for the country’s chemical weapons to be destroyed.
It appears that this news was well received by the people of Syria. The black-market exchange rate for the Syrian pound (SYP) has dropped from 206 per U.S. dollar on September 25th to 168 on September 30th. That’s a whopping 22.6% appreciation in the pound against the dollar. Currently, the implied annual inflation rate in Syria sits at 133 percent, down from a rate of 185 percent on September 25th.
Iran: Since President Rouhani took office, Iranian expectations about the nation’s economy have turned positive. Over the past month we have seen a significant decrease in the volatility of the Iranian rial on the black market. This trend of stability has continued into this week, as President Rouhani’s trip to the UN has raised hopes of constructive cooperation with the West. In consequence, the rial has remained virtually unchanged on the black market, moving from 30,500 per U.S. dollar on September 25th to 30,200 on September 30th. The implied inflation rate in Iran as of September 30th stands at 8%, down from 23% on September 25th.
Venezuela: While the crises in the Middle East are easing, the troubles in Venezuela are far from over. The black market exchange rate for the Venezuelan bolivar has fallen from 44.03 per U.S. dollar on September 24th to 40.92 on September 30th. This represents an appreciation of 7.6% over the last week. The implied annual inflation rate as of September 30th sits at 255%, down from a local high of 292% on September 17th. The ConocoPhillips dispute, a massive blackout, and worsening shortages caused by price controls have ravaged the Venezuelans’ confidence in the bolivar over the month of September.
Although the bolivar has rebounded modestly in recent weeks, this simply indicates that the economic outlook in Venezuela is only slightly less miserable than it was in mid-September. The economy is still on a slippery slope and economic expectations continue to be weighed down by the fragile political atmosphere, worsening shortages, and the ever-present specter of political violence. An inflation rate of 255% is nothing to celebrate.
Argentina: The black market exchange rate for the Argentine peso has held steady at around 9.5 per U.S. dollar since September 25th, with a 9.55 exchange rate on September 30th. That represents a 2.9% decrease in the value of the currency from the September 22nd rate of 9.27. The implied annual inflation rate as of September 30th sits at 54%, a decrease from the rate of 49% on September 22nd.
Egypt: The black market rate for the Egyptian pound has held steady at around 7.1 per U.S. dollar since September 25th, roughly the same level as the official exchange rate. This indicates that, for the time being, the military has brought some semblance of stability to the Egyptian economy. As of September 30th, the black market exchange rate was 7.12. The implied annual inflation rate as of September 30th sits at 19%.
For up-to-date information on these countries and their troubled currencies, see the Troubled Currencies Project.
I was critical earlier this year when lawmakers in my home state of Maryland enacted “Grace’s Law,” purporting to ban so-called cyberbullying — in this case, the use of hurtful online language as part of a course of conduct that inflicts serious emotional distress or harassment on a Maryland juvenile, apparently whether or not the speaker knows that the person distressed by the speech is a Maryland juvenile. I predicted that the law would run into trouble in the courts for infringing on much speech protected by the First Amendment.
On Tuesday, the new law took effect, and this morning Maryland attorney general Douglas Gansler unveiled a joint initiative with Facebook and the National Association of Attorneys General (NAAG) in which Facebook will create a new program for school officials, the Educator Escalation Channel — initially limited to use in the state of Maryland, presumably pending similar enactments elsewhere — allowing the officials to object to Facebook users’ content. Per local radio station WTOP, Maryland school officials will be offered the chance to flag “questionable or prohibited” language. That is to say, they will flag speech that isn’t prohibited by the new law but which they deem “questionable.”
The targets of the new program, according to Gansler as quoted by WTOP, include persons who are “not committing a crime… We’re not going to go after you, but we are going to take down the language off of Facebook, because there’s no redeeming societal value and it’s clearly hurting somebody.” That is to say, Gansler believes he has negotiated power for school officials to go after speech that is not unlawful even under the decidedly speech-unfriendly definitions of the new Maryland law, but which they consider hurtful and lacking in “redeeming societal value.”
Already, defenders of the new program are arguing that there’s no problem here, because Facebook as a private entity is free voluntarily to put whatever terms it wants to into its user agreement and enforce them however it likes. Of course, private companies deal voluntarily with a group of state enforcers like the NAAG only in the sense that you or I deal voluntarily with the Internal Revenue Service.
Can we now finally start taking the First Amendment implications of these laws seriously?
Michael F. Cannon
Obamacare’s health insurance Exchanges opened for business, in most states, sort of, on Tuesday. Millions of people have reportedly flooded the Exchanges’ web sites. But people have been having so much difficulty using the sites that reporters have had a hard time actually finding people who have successfully enrolled in an Obamacare health plan. The Washington Post’s Sarah Kliff writes:
Just moments after writing a blog post Thursday morning, about the lack of information on Obamacare enrollees, Enroll America reached out with contact information for Chad Henderson, a 21-year-old in Georgia who had successfully enrolled in coverage on the federal marketplace…
Chad is evidently a scarce commodity.
It was a little difficult to reach Henderson, mostly because so many other reporters wanted to talk to him. “I’m supposed to talk to the Chattanooga Times Free Press in a half hour,” Henderson said. “And The Wall Street Journal is supposed to call.”
Luckily, Henderson managed to squeeze me in for a few minutes.
Kliff reports that after a three-hour ordeal, Chad bought an Obamacare plan that cost him $175 per month – pretty steep, considering he makes less than $11,500 per year. His Obamacare premium comes to least 18 percent of his income. And no, Chad is not eligible for subsidies.
Compare that to what Chad could have paid if he bought one of the pre-ObamaCare plans still available on eHealthInsurance.com until December 31. The cheapest such plan for someone meeting Chad’s profile is just $44.72 – as little as five percent of his annual income, or about one-quarter of his Obamacare premium.
I can’t yet say whether Chad’s $175 premium is the lowest-cost plan available to him through the Obamacare Exchange. (I’m in the process of researching that, and it’ll probably take a few hours.) But it’s probably close.
The cheapest plan available to him through eHealthInsurance.com, after Obamacare’s community-rating price controls take effect market-wide in 2014 – and drive up premiums for young, healthy people like Chad – is $190.23, and that’s with the maximum cost-sharing allowed under Obamacare. So it appears that Obamacare quadrupled Chad’s premiums, and Enroll America thinks this is a success story.
To me, the most interesting part of this story is that Chad didn’t buy health insurance when it was available to him for just $45 per month, but then turned around and bought health insurance at an unsubsidized $175/month premium. Why?
He describes himself as a supporter of President Obama who has anxiously awaited Obamacare’s rollout…
Part of his decision was ideological: He wants the health-care law to succeed.
Okay, but why does he support the law and want it to succeed? If it’s because he likes the idea of young, healthy, low-income people like himself paying the medical bills for older, sicker, higher-income people, he didn’t have to wait for Obamacare to come along. Was he previously spending this money by writing checks to such people? If he’s doing it because he wants to serve his president, was he previously sending that money to the president’s campaigns and political organizations? Or the federal Treasury? Did he do it for the fame? Chad can spend his money however he wants, as far as I’m concerned. I’m just trying to understand.
From my op-ed in the Daily Caller today:
Alexander Hamilton won in the end. As Treasury Secretary in the 1790s he championed an array of “internal” taxes to supplement federal revenues from import tariffs. Thomas Jefferson despised Hamilton’s internal taxes as an assault on liberty, and when elected in 1800 he made sure that they were abolished.
The Jeffersonian view held sway for decades, but by the late 19th century the growth in government and concerns about high tariffs led to calls for new revenue sources. The first income tax was imposed to fund the Civil War and lasted until 1872. Another income tax was imposed in 1894, but it was struck down by the Supreme Court as unconstitutional.
At the turn of the 20th century, the rise of Progressivism and the Democratic opposition to high tariffs generated support for an income tax. President William Howard Taft proposed a Constitutional amendment for an income tax in 1909. It was passed by the House and Senate, and then ratified by the states in early 1913. Congress got to work on legislation, and the modern income tax was signed into law by President Woodrow Wilson exactly 100 years ago today, October 3, 1913.
Thomas Jefferson noted of internal taxes that they “covered our land with officers and opened our doors to their intrusions.” That’s certainly true of the income tax. Indeed, Jefferson would be horrified by the power of today’s IRS to break down our doors and seize our property, and he surely would have led a revolt on seeing the powers added to the IRS under Obamacare.
The Jeffersonian goal of abolishing internal taxes seems distant, but we can make the federal tax system much simpler, more efficient, and respectful of limited government. After a century, it’s time to scrap the income tax and replace it with a consumption-based flat tax.
School choice advocates have been winning in the halls of state legislatures and in the court of public opinion, so opponents have taken to the courts of law. Since the U.S. Supreme Court ruled in Zelman v. Simmons-Harris (2002) that school vouchers are consistent with the First Amendment’s Establishment Clause, opponents of choice have been scrambling to find novel reasons to challenge school choice programs. Here’s a brief summary of school choice lawsuits around the nation:
1) In Louisiana, the U.S. Department of Justice has sued to halt the state’s school voucher program, arguing that it hurts the desegregation effort. The DOJ’s already weak case was further undermined by a new study released today showing that school choice actually improves integration. Since 90 percent of the voucher recipients are black, the DOJ’s lawsuit would have the effect of keeping low-income blacks from attending the schools of their choice.
Earlier this year, Louisiana’s state supreme court ruled that the voucher program was unconstitutionally funded, but otherwise left the program intact. The governor and state legislators adjusted the funding mechanism in response.
2) Two days ago, a group of activists in Oklahoma sued the state over its special needs voucher program, arguing that it violates the state constitution’s ban on using public funds at religious schools. Last year, the state supreme court tossed out a challenge to the program by public school districts, ruling that they did not have standing since they are not taxpayers.
3) On the same day, the Arizona Court of Appeals ruled unanimously that the state’s education savings account program, the first in the nation, is constitutional. Anti-school choice activists had argued that it violates the state constitution’s ban on publicly funding religious schools. The court held that students are the primary beneficiaries and that any “aid to religious schools would be a result of the genuine and independent private choices of the parents.” The decision will likely be appealed to the state supreme court.
4) In Alabama, the Southern Poverty Law Center is challenging the state’s school choice tax credit program, absurdly arguing that if the program can’t help every child, it shouldn’t be allowed to help any child. The state supreme court recently dismissed a second lawsuit by the Alabama Education Association, though the teachers union has filed an additional suit on Blaine amendment grounds.
5) In New Hampshire, the ACLU and Americans United for Separation of Church and State are challenging the state’s scholarship tax credit program, arguing that it violates the state constitution’s ban on using public money at religious schools. Their case is weak because the U.S. Supreme Court ruled that tax credits are not “public money.” A citizen’s money only becomes the government’s once it has reached the tax collector’s hands. Nevertheless, in a flawed and unprecedented decision, the lower court ruled that the program could not include scholarships to students attending religious schools. The Institute for Justice, which is representing a scholarship organization and several scholarship recipients, has appealed the decision to the state supreme court.
6) The Colorado Court of Appeals ruled 2-1 that the Douglas County School District’s school voucher program is constitutional earlier this year. Opponents argued that it violated the state constitution’s prohibition against using public money at religious schools. The case is being appealed to the state supreme court.
In addition, the Indiana Supreme Court ruled that the state’s voucher program is constitutional earlier this year. For more information on some of the cases above, as well as numerous prior school choice lawsuits, see the Institute for Justice’s School Choice page.
Daniel J. Mitchell
There have been some unfortunate and dark days in American history, but what was the worst day?
Some obvious choices include December 7, when the Japanese bombed Pearl Harbor, and September 11, when the terrorists launched their despicable attack.
Another option (somewhat tongue in cheek) might be January 20 since Republican partisans would say that’s the day that both Jimmy Carter and Barack Obama became President while Democratic partisans would say that’s the day Ronald Reagan became President.
But allow me to suggest that today, October 3, should be a candidate for America’s worst day.
Why? Because on this day in 1913, one of America’s worst Presidents, Woodrow Wilson, signed into law the Revenue Act of 1913, which imposed the income tax.
The law signed that day by President Wilson, to be fair, wasn’t that awful. The top tax rate was only 7 percent, the tax form was only 2 pages, and the entire tax code was only 400 pages. And a big chunk of the revenue actually was used to lower the tax burden on international trade (the basic tariff rate dropped form 40 percent to 25 percent).
But just as tiny acorns become large oak trees, small taxes become big taxes and simple tax codes become complex monstrosities. And that’s exactly what happened in the United States.
We now have a top tax rate of 39.6 percent, and it’s actually much higher than that when you include the impact of other taxes, as well as the pervasive double taxation of saving and investment.
And the relatively simply tax law of 1913 has metastasized into 74,000 pages of Byzantine complexity.
Not to mention that the tax code has become one of the main sources of political corruption in Washington, impoverishing us while enriching the politicians, lobbyists, bureaucrats, and interest groups. Or the oppressive and dishonest IRS.
However, even though I take second place to nobody in my disdain for the income tax, the worst thing about that law is not the tax rates, the double taxation, or the complexity. The worst thing is that the income tax enabled the modern welfare state.
Before the income tax, politicians had no way to finance big government. Their only significant pre-1913 sources of revenue were tariffs and excise taxes, and they couldn’t raise those tax rates too high because of Laffer Curve effects (something that modern-day politicians sometimes still discover).
Once the income tax was adopted, though, it became a lot easier to finance subsidies, handouts, and redistribution. As you can see from the chart, the federal government used to be very small during peacetime.
But as the decades have passed, the Leviathan state in Washington has grown. And in the absence of genuine entitlement reform, it’s just a matter of time before the United States morphs into a bankrupt European-style welfare state.
And as government becomes bigger and bigger, diverting more and more resources from the productive sector of the economy, we can expect more stagnation and misery.
That’s why October 3 is an awful day in American history. All the bad results described above were made possible by the income tax.
P.P.S. If the income tax facilitated today’s bloated government, it should go without saying that giving politicians another big source of revenue would lead to an even bigger burden of government. That’s why the value-added tax is such an awful idea.
P.P.P.S. Government also used to be very small in Western Europe before the income tax. Indeed, it was during that period when European nations became rich.
P.P.P.P.S. One could also argue that February 3 is the worst day in history because that’s when Delaware ratified the 16th Amendment, thus making an income tax constitutional.
Rep. David Scott (D-Ga.) tells Republicans:
If you loved this country, you would not be closing it down.
Congressman Scott is confused. The federal government is not the country. The country is not shut down. Indeed, not only is the country going about its business, it’s barely noticing the government shutdown, which is barely even a government shutdown.
One might say, “If you loved this country, you would not be imposing further government control over health care, or busting the caps in a federal budget that doubled in a decade.” But those are topics for another day.
The murder rate in Mexico is a serious and troubling issue that I’m frequently asked about in relation to immigration. Although far lower than in other Central American countries, the Mexican murder rate is almost three times as high as it was in 2007 – and potentially much higher. But, do unauthorized Mexican immigrants come to the United States to avoid the violence in their home country?
I decided to plot the number of Mexican nationals apprehended by Customs and Border Protection (CBP) on the left axis, an admittedly imperfect measurement of the intensity of unauthorized immigration, and the murder rate in Mexico per 100,000 people on the right axis.
Sources: Sources: Customs and Border Protection U.S. Border Patrol Statistics and Trans-Border Institute.
The number of apprehensions between 2000 and 2007 halved while the murder rate fell from 10.7 to 8.1 per 100,000. Beginning in 2008, however, the murder rate in Mexico skyrocketed, reaching 23.7 murders per 100,000 in 2011. But during that time, border patrol apprehensions of Mexicans dropped from about 662,000 to 266,000.
If violence was driving emigration from Mexico, we’d probably be seeing more of it instead of less.
Some readers might be thinking that apprehensions on the border were down because the U.S. government is enforcing immigration laws less vigorously – a common but incorrect claim. From 2000 to 2012, appropriations for the Border Patrol increased from $1 billion annually to $3.5 billion, the number of border patrol agents on the Southwest border increased by almost 10,000, and marijuana seizures increased by almost 1,000,000 pounds annually. The concurrent decrease in immigrant apprehensions and increase in marijuana seizures indicates that the former are down for reasons other than a slacking border enforcement.
Sources: Customs and Border Protection U.S. Border Patrol Statistics and Center for International Policy.
Although some individuals have certainly been driven out of Mexico and into the United States because of violence south of the border, it does not appear to be a main driver of those movements.
A benefit of the government shutdown may be that it slows the stream of waste and bad behavior flowing from the federal bureaucracy. Catching up on my reading, I noticed these items in just the last few days of the Washington Post:
- The maximize their budgets over time, federal agencies drain their bank accounts on often wasteful items at the end of every fiscal year. The rule is “use it or lose it.”
- A high-level EPA official ripped-off taxpayers $900,000 over two decades, apparently duping administrators, supervisors, and auditors over many years.
- About $800,000 of federal unemployment insurance benefits were bilked by employed D.C. government workers.
- The availability of federal subsidies for dredging may induce Key West to destroy an area of unique coral and other sea life. Historically, the Army Corps of Engineers has been an environment-destruction machine, so residents should think twice before going that route.
- The Department of Commerce has kicked out the National Aquarium from its building after 80 years. There is no bad behavior here, just a sad story since the aquarium is an example of successful privatization. Federal funding was eliminated in 1982, and the aquarium was converted into a nonprofit corporation and supported by admission fees, donations, and volunteer efforts.
- The FHA is asking for a $1.7 billion taxpayer bailout.
- Environmentalists are concerned that grasslands and wetlands are being turned into farmland at a rapid pace across the northern prairies. This story mentions the effect of ethanol subsidies, but another cause of the change is the $30 billion of farm subsidies pumped out each year.
- The central figure in the IRS scandal, Lois Lerner, was finally pushed out. It is pretty obvious that a political and ideological agenda was at work in the targeting of conservative groups, but it has been very difficult to squeeze even an apology out of IRS officials and the Obama administration. Bart Simpson’s line “I didn’t do it” has long been the approach taken by government officials caught violating the public trust.
- A recent Washington Post article by Joe Davidson—the paper’s advocate for federal workers—was headlined “Shutdown Would Corrode Our View of Government.” I don’t think we need a shutdown for that.
Michael F. CannonMSNBC Forced To Abandon ObamaCare Exchange Demonstration After Glitches
CNN Tries & Fails To Use ObamaCare Exchange: This Isn’t Like The iPhone
If you’ve tried to reach a government site today, you may have noticed that the “shutdown” applies to the virtual homes and social media accounts of federal agencies no less than their brick-and-mortar offices… at least some them. It’s a bit hard to make sense of why some sites remain up (some with a “no new updates” banner) while others are redirected to a shutdown notice page—and in many cases it’s puzzling why a shutdown would be necessary at all. With the offices closed, you might not have personnel on hand to add new content or other updates, but is pulling the existing content down strictly necessary?
For agencies that directly run their own Web sites on in-house servers, shutting down might make sense if the agency’s “essential” and “inessential” systems are suitably segregated. Running the site in those cases eats up electricity and bandwidth that the agency is paying for, not to mention the IT and security personnel who need to monitor the site for attacks and other problems. Fair enough in those cases. But those functions are, at least in the private sector, often outsourced and paid for up front: if you’ve contracted with an outside firm to host your site, shutting it down for a few days or weeks may not save any money at all. And that might indeed explain why some goverment sites remain operational, even though they don’t exactly seem “essential,” while others have been pulled down.
That doesn’t seem to account for some of the weird patterns we see, however. The main page at NASA.gov redirects to a page saying the site is unavailable, but lots of subdomains that, however cool, seem “inessential” remain up and running: the “Solar System Exploration” page at solarsystem.nasa.gov; the Climate Kids website at climatekids.nasa.gov; and the large photo archive at images.jsc.nasa.gov, to name a few. There are any number of good reasons some of those subdomains might be hosted separately, and therefore unaffected by the shutdown—but it seems odd they can keep all of these running without additional expenditures, yet aren’t able to redirect to a co-located mirror of the landing page.
Still weirder is the status of the Federal Trade Commission’s site. Browse to any of their pages and you’ll see, for a split second, the full content of the page you want—only to be redirected to a shutdown notice page also hosted at FTC.gov. But that means… their servers are still up and running and actually serving all the same content. In fact they’re serving more content: first the real page, then the shutdown notice page. If you’re using Firefox or Chrome and don’t mind browsing in HTML-cluttered text, you can even use this link to navigate to the FTC site map and navigate from page to page in source-code view without triggering the redirect. Again, it’s entirely possible I’m missing something, but if the full site is actually still running, it’s hard to see how a redirect after the real page is served could be avoiding any expenditures.
One possible answer can be found in the policy governing shuttering of government Web sites—which, as blogger Jon Christian noted, stipulates that:
The determination of which services continue during an appropriations lapse is not affected by whether the costs of shutdown exceed the costs of maintaining services.
It’s easy to imagine how this might often be the case: if the “inessential” public-facing Web pages are hosted on the same systems you’ve got to keep up and running for other “essential” back-end purposes—meaning you don’t get to save the security or electricity overhead— then the cost of having IT go through and disable public access to the “inessential” sites could easily be higher than any marginal cost of actually serving the content. But the guidance here seems to require agencies to pull down “inessential” public-facing content even when this requires spending more money than leaving it up would. In the extreme case, you get the bizarre solution implemented on the FTC site: serve the content, then prevent the user from seeing it!
I don’t know enough about the rules of government shutdowns to say whether this strange result is a bit of Washington Monument Syndrome in action or a perverse but unavoidable consequence of the Antideficiency Act, but either way it seems like an awfully strange approach.
The Labor Management Relations Act (a.k.a. the Taft-Hartley Act) was passed in 1947 in order to curb the tide of unfair labor practices that had arisen since the National Labor Relations Act (NLRA) was passed in 1935. The NLRA established a legal regime that was friendly to unions and unfriendly to the rights of workers who dissented from attempts to unionize workplaces. Unions have many tools at their disposal to ease the path to unionization, but the government should not prefer the rights of those who wish to be unionized at the expense of those who do not.
One part of Taft-Hartley, Section 302, addresses the problem of corruption between unions and employers by prohibiting employers from giving “any money or thing of value” to a union seeking to represent its employees. Martin Mulhall is a 40-year employee for the Mardi Gras greyhound racetrack and casino in Hollywood, Florida, and he opposes the efforts of Local 355 to unionize Mardi Gras’s employees. Mr. Mulhall’s desire not to be unionized is no less valid or constitutionally protected than those who push for unionization, and thus he is a perfect example of an employee for whom the Taft-Hartley Act passed to protect.
Mr. Mulhall alleges that, in violation of Section 302, Local 355 and Mardi Gras exchanged “things of value” in order to smooth the path to unionization. In exchange for the union agreeing not to picket, boycott, or strike against Mardi Gras, as well as for financially supporting a ballot initiative that legalized slot machine gambling, Mardi Gras agreed to support Local 355’s efforts to organize its employees. Specifically, Mardi Gras gave the union access to employee records and to its facilities in order to engage in organizing efforts during non-working hours. Additionally, and most crucially, Mardi Gras agreed to waive its right to a secret-ballot election supervised by the National Labor Relations Board as well as its right to contest any unfair labor practices committed by the union during the process of organizing the workers.
The question before the Supreme Court is whether these are “things of value” exchanged in violation of Section 302. Cato, joined by the National Federation for Independent Business, has filed an amicus brief in support of Mr. Mulhall. We argue that, not only are Mardi Gras’s concessions clearly “things of value,” they are the types of exchanges that the Taft-Hartley Act was passed to prohibit. The union exchanged a promise of “peace” from strikes and boycotts for concessions from the casino that compromised Mr. Mulhall’s right to dissent from unionization. The “exchange” was little better than extortion. Allowing such transactions would enable unions to coerce business owners into waiving protected constitutional rights—including the First Amendment right to voice opposition to unionization efforts and the fundamental right to exclude the public from private property. Moreover, this is a particularly serious concern for small business owners because they are especially vulnerable to coercive union demands. Small businesses generally lack the resources to survive a targeted corporate campaign when a union threatens economic war.
Unions are free to try to organize employees, but they should not be allowed to override the rights of dissenters in the process.
Aaron Ross Powell
Need something to read during the shutdown? You’re in luck, because Students for Liberty and the Atlas Network have released a new book of original essays on the question, “Why Liberty?” It includes a piece on the humble case for liberty by yours truly, and is packed with great stuff. But you don’t have to take my word for it. Here’s the book’s editor, Cato senior fellow Tom G. Palmer:Why Liberty - feat. Tom Palmer