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June 29, 2012
Notes on the Week: The constitutional ground shifts, Obama just raised your taxes, fight for religious freedom goes on, fracking fights global warming, inequality debunked, and more
To Do: Get your ObamaCare game on
Latest Studies: 47 new items, including a Georgia Public Policy Foundation/Competitive Enterprise Institute report on Dodd-Frank’s threat to prosperity, and a report from the Show-Me Institute finding Missouri’s enterprise zones haven’t worked
We Still Have a Government Enumerated Powers, Maybe: Even though the Supreme Court upheld ObamaCare and its individual mandate on Thursday, it did so on much narrower grounds than liberals would have liked. The Court held that the mandate was valid as a tax, but only four of the Justices were willing to say the Commerce Clause gives Congress the power to force people to buy health insurance. George Will [Washington Post, June 28] celebrates the refusal of the other five justices to read enumerated powers out of the Constitution as a significant consolation prize for conservatives:
By persuading the court to reject a Commerce Clause rationale for a president’s signature act, the conservative legal insurgency against Obamacare has won a huge victory for the long haul. This victory will help revive a venerable tradition of America’s political culture, that of viewing congressional actions with a skeptical constitutional squint, searching for congruence with the Constitution’s architecture of enumerated powers. By rejecting the Commerce Clause rationale, Thursday’s decision reaffirmed the Constitution’s foundational premise: Enumerated powers are necessarily limited because, as Chief Justice John Marshall said, “the enumeration presupposes something not enumerated.”
When Rep. Nancy Pelosi (D-Calif.), asked where the Constitution authorized the mandate, exclaimed, “Are you serious? Are you serious?,” she was utterly ingenuous. People steeped in Congress’s culture of unbridled power find it incomprehensible that the Framers fashioned the Constitution as a bridle. Now, Thursday’s episode in the continuing debate about the mandate will reverberate to conservatism’s advantage.
[Related: Todd Gaziano, The Foundry, June 28; James Taranto, Wall Street Journal, June 28.]
The Big Picture, from Randy Barnett [SCOTUS Blog, June 28]:
In the 1930s & 40s, when Congress was asserting new powers to address the grave distress caused by the Great Depression, the Court relented and allowed it to reach wholly intrastate activity that, in the aggregate had a substantial effect on interstate commerce. This was interpreted by academics to mean that Congress now had a plenary power over anything that affected the national economy, which means any activity at all. The Court would always defer to Congress’s assertion of its Commerce Clause powers.
The New Federalism was attacked precisely because it offered a different vision of the so-called “New Deal Settlement”: although the Court acquiesced to the constitutionality of New Deal-style regulations, when Congress goes beyond this already expansive reading of its powers, the Court will meet any further expansion with skepticism. It will continue to insist on some judicially enforceable limit on federal power. Congress cannot be the sole judge of the scope of its own powers. Today a majority of the Roberts Court reaffirmed this vision.
Academics are sure to react to today’s decision by declaring the New Federalism dead, but they would be wrong to do so. The Founders’ scheme of limited and enumerated powers has survived to fight another day.
Another Tax Increase: Did you hear? President Obama raised your taxes on Thursday. He didn’t announce it, though. Chief Justice John Roberts did from the Supreme Court. From his opinion in NFIB v. Sebelius: “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”
In 2016, the tax is projected to be between $720 and $2400 per year. That tax will hit 3 million middle-income taxpayers, according to an estimate by James Sherk, Ashley Shelton, and Stephanie Jaczkowski [The Foundry, June 29]. You might not have to pay the tax, however, if you have health insurance that meets certain standards. Check with the Department of Health and Human Services on that.
The Legal Fight Against ObamaCare’s Depredations Now Focuses on the First Amendment: The individual mandate and the rest of ObamaCare survived in the Supreme Court on Thursday, but the law faces another set of constitutional challenges. Specifically 23 lawsuits from 56 different plaintiffs claim that the Department of Health and Human Services overstepped its constitutional authority when it required all employers, with only very few exceptions, to cover contraception, sterilization, and abortion-inducing drugs in their employee health plans.
Under ObamaCare, HHS must decide what health insurance plans must cover in order to qualify as meeting the law’s individual mandate. Today’s Supreme Court decision addressed the question of whether the individual mandate is a valid exercise of Congress’s power to regulate interstate commerce or (the government’s fallback position) its power to lay taxes. The Court ultimately accepted the tax argument. Yet to be heard in court, however, is the 23 lawsuits arguing that forcing employers to cover reproductive health services violates the freedom of conscience that is supposed to be guaranteed to all Americans by the First Amendment.
The Becket Fund is one of the leading advocates in the courts for religious freedom, and it is representing four plaintiffs in these cases. Among the groups representing other plaintiffs in these cases are the Alliance Defense Fund, the American Center for Law and Justice, and the Thomas More Law Center. The Becket Fund has put together an HHS Mandate Information Central page that will track these cases. The page includes an FAQ, a map showing where the plaintiffs are, and listing of each lawsuit with pertinent information and links to key documents.
ObamaCare Will Make Income Inequality Worse: Rising health care expenditures may explain a large part of the appearance of rising income inequality. Health care isn’t free, even when you get it from your employer. It’s part of your compensation. The more health care costs grow, the slower your wages will rise. As Merrill Matthews [Forbes, June 22] explains, that phenomenon is especially a problem for low-income workers:
[Mark J.] Warshawsky, looking at compensation growth between 1999 and 2007, concludes that while income may have become more unequal, total “compensation growth, at around 35 percent, was essentially evenly distributed across all earnings levels.”
Since health insurance costs are relatively the same for every worker at the same company, they would comprise a larger share of a middle-income worker’s total compensation than a higher-income worker’s, even if both were to receive the same percentage increases over time. The net result would be the appearance of a greater income disparity, even though total compensation remained the same.
ObamaCare won’t help:
Because ObamaCare forces people to get comprehensive, and therefore expensive, health coverage, it actually makes the income inequality problem worse. Lower- and middle-income workers will see a much larger percentage of their income—which includes the employer’s contribution since that is part of total compensation—going to health insurance than higher-income workers.
Fracking Fights Global Warming: Steve Hargreaves [CNN Money, June 22]:
Despite there being no real effort by Congress to address global warming and America’s longstanding reputation as an energy hog, U.S. carbon dioxide emissions are falling.
The lackluster economy has something to do with it. But it doesn’t fully explain what’s happening. Consider that even factoring in a stronger economy, forecasters see greenhouse gas emissions continuing to fall.
It’s possible the country may meet its pledge to reduce emissions 17% by 2020. […]
“The primary reason by far is low natural gas prices,” said Robert Stavins, director of the environmental economics program at Harvard.
Natural gas prices are so low largely thanks to hydraulic fracturing.
Meanwhile, reports Christopher Helman [Forbes, June 22], a new study from researchers at Yale calculates that the benefits from shale gas are about $100 billion per year, against environmental costs of about $250 million—a 400-1 benefit-to-cost ratio.
An Uninspiring Recovery: This recovery has less hiring than the recession, notes John Lott [New York Post, June 28]:
In the year and half before the recession, new hires averaged 5.25 million per month. During the recession (December 2007 to June 2009), they fell dramatically to 4.39 million, hitting 4.2 million per month in December 2008, right before Obama became president.
Yet, instead of rising as they normally would in a recovery, new hires now average just 4.08 million per month. The latest data, released on Wednesday for May, show just 4.18 million — a number still well below the average during the recession.
Yet the economy is still gaining jobs, primarily because fewer people are quitting the jobs they already have, explains Lott: “More than 1 million fewer Americans a month are quitting their jobs than before the recession.” This datum indicates a lack of confidence in the recovery. In a robust recovery, as Lott notes, quits typically rise as people decide the time is right to pursue new opportunities.
Pitting Women Against Men: Title IX of the Education Amendments of 1972—whose passage 40 years ago this month has been much celebrated—was intended to open doors for women in collegiate athletics, but there’s another side to the story. As Carrie Lukas [U.S. News & World Report, June 22] explains, the law has been turned into a gender quota system that takes opportunities away from men:
[I]n 2007, the College Sports Council (now the American Sports Council) conducted a comprehensive analysis of NCAA data over 25 years (1981-2005), which revealed that, after controlling for the growth in the number of NCAA schools, the number of female athletes per school increased by 34 percent and the number of women’s teams also increased by 34 percent. During the same time period, male athletes per school fell by 6 percent and men’s teams by 17 percent. […]
Making the numbers add up has become a real challenge since women increasingly outnumber men on campus, earning an estimated 57 percent of bachelor’s degrees. Colleges pursuing “proportionality” can try to increase the number of female athletes so that women account for 57 percent of athletes, or—the more surefire and less costly path—eliminate male athletes from the roster. […]
[C]urrent enforcement policies are increasingly outdated and even anti male. How else can one explain why Title IX’s enforcement remains focused solely on athletics, the one extracurricular activity in which men’s participation outpaces women, instead of the many other activities—from theater to student newspapers to academic clubs—that women dominate? How else can one justify that discussions about expanding Title IX into academic disciplines exclusively target the fields of science, technology, engineering, and mathematics—again, those few disciplines in which men’s enrollment exceeds women’s?
Inequality Debunked: The “rising inequality” narrative largely falls apart when you look at consumption instead of income:
The chart above is from Kevin Hassett and Aparna Mathur’s “A New Measure of Consumption Inequality,” published this week by the American Enterprise Institute. It shows that the share of consumption spending has been relatively constant for both the top and bottom income groups since the 1960s.
Aside from being a more direct way of measuring well being, looking at consumption fixes the problems with using income tax returns to measure inequality. That’s the Thomas Piketty/Emmanuel Saez method, much cited by Left commentators who almost always fail to point out that the method excludes government transfers from income calculations.
Looking at ownership of durable consumer goods like televisions and washing machines also debunks the notion that inequality has risen. Like Robert Rector and Rachel Sheffield did last year [“Air Conditioning, Cable TV, and an Xbox: What Is Poverty in the United States Today?” The Heritage Foundation, July 18, 2011] Hassett and Mathur use data from the Department of Energy’s Residential Energy Consumption Survey to compare different income groups on ownership of durable goods.
For many items, Hassett/Mathur find that the gap in ownership between low-income and high-income groups has either narrowed or remained constant since the 1980s. For example, in 1987 low-income households were 13.6 percentage points less likely than middle- and high-income households to own a color television. By 2009, that gap had narrowed to 1.2 percentage points. For some items that were not in widespread use in the 1980s, like computers, Hassett/Mathur find that the gap initially widened, but has been narrowing in the past decade. The authors conclude: “[O]n average, there is a trend toward narrowing the consumption gap between low income and other households.”
More Choice: Seventeen hundred kids in Washington, D.C. will have education options they weren’t expecting next year. The Obama administration finally did the right thing by agreeing to preserve funding for the D.C. Opportunity Scholarship Program, explains Michael Q. McShane [The Hill, June 25]:
According to a government-sponsored study, led by Dr. Patrick Wolf at the University of Arkansas, the program increased the graduation rate of students offered vouchers by 12 percentage points (from a rate of 70% to a rate of 82%) and the graduation rate of students that actually used vouchers by 21% (from 70% to a whopping 91%). […]
The cost of the vouchers and administration of the program came to $14 million per year, or $70 million over the five years in which the program was evaluated. By simply multiplying the increased rate of graduation by the 3,512 students who were offered vouchers in the study, we can conclude that there are roughly 421 more students walking the streets of DC with high school diplomas than there would have been absent the program. Multiplying that number by the value of a high school diploma yields a benefit of over $180 million, a return of a over $2.50 for every dollar spent.
Sometimes I think it’s a sin
When I feel like I’m winnin’ when I’m losin’ again.
—Gordon Lightfoot, Sundown, 1974
It is not our job to protect the people from the consequences of their political choices.
—Chief Justice John G. Roberts, NFIB v. Sebelius, 2012
Also on the blog this week: Dodd-Frank v. the economy • grand plans v. human nature • unions v. union members • expensive green jobs • green crony capitalism • change the spending rules • better admirals needed
• First, take in the post-mortem on the ObamaCare cases. A panel at The Heritage Foundation on Friday provided the plaintiffs’ perspective on the ruling. Featured speakers included Greg Abbott, Texas Attorney General, and Karen Harned, Executive Director of the National Federation of Independent Business. On Monday you can take in another panel on the decision at the Cato Institute. That panel includes Randy Barnett and David Rivkin, two of the key intellectual architects of the challenge to the government’s Commerce Clause theory of the case.
• Then get inspired for the fight ahead. The Becket Fund, the Alliance Defense Fund, the American Center for Law and Justice, and others have taken up the next legal battle: defending freedom of conscience against ObamaCare mandates. Listen to Becket Fund founder Kevin “Seamus” Hasson’s talk last month at the Canterbury Medal Dinner. Speaking about the fight for religious liberty, Hasson declared: “What a great cause to give my life to!” Of course, the best way to protect liberty now will be to repeal ObamaCare entirely. Listen to Heritage Foundation President Ed Feulner’s call to arms. And if that doesn’t fire you up, listen to John Adams’s pep talk to his constituents, circa 1774.
Budget & Taxation
• 2012 Tennessee Pork Report: Smashing Wasteful Government Spending – Beacon Center of Tennessee
• Tax Talk/ Tax Action #2 – Grassroot Institute of Hawaii
• Federal Budget: Congress Should Uphold House Appropriations Spending Limits – The Heritage Foundation
• The President’s 2013 Budget: More Troubling Tax Increases in the Fine Print – The Heritage Foundation
• Should We Hire Even More Teachers, Cops, and Firemen? – Reason Foundation
• Measurements of Enterprise Zones: Comparative Economic Growth in Missouri Counties – Show-Me Institute
Economic and Political Thought
• The New Leviathan: The State Versus the Individual in the 21st Century – Encounter Books
• Defending the Free Market – Regnery Publishing
Economic Growth
• The U.S. Housing Market: Metrics of Recovery & Links to Economic Growth – American Action Forum
• A New Measure of Consumption Inequality – American Enterprise Institute
• The Negative Effects of Minimum Wage Laws – Cato Institute
• The Disappearing Gender Wage Gap – National Center for Policy Analysis
Education
• The Successful Failure of ED in ’08 – American Enterprise Institute
• Opportunity Scholarships for Pennsylvania – Commonwealth Foundation for Public Policy Alternatives
• Michigan’s Chartering Strategy – Education Next
• KPI Update: New Information on the Reduction of Kansas’ Math and Reading Standards – Kansas Policy Institute
Foreign Policy/International Affairs
• Challenging America: How Russia, China, and Other Countries Use Public Diplomacy to Compete with the U.S. – The Heritage Foundation
Government Reform
• Checks, Balances, and Audits – American Enterprise Institute
• Who's Counting? How Vote Fraudsters and Bureaucrats Put Your Vote at Risk – Encounter Books
• The Challenges of Producing Economic Data for the 21st Century – Mercatus Center
Health Care
• An Assisted Living Option for Alabama Medicaid Beneficiaries – Alabama Policy Institute
• Saving the American Dream: The U.S. Needs Commonsense Health Insurance Reforms – The Heritage Foundation
Immigration
• Arizona v. United States: What the States Can Do to Enforce Immigration Laws – The Heritage Foundation
• Childish Reaction to Supreme Court Immigration Ruling: Obama Administration Ends a Key Joint Program with Arizona – The Heritage Foundation
Information Technology
• Questioning the Premises of DOJ’s Usage-Based Pricing Investigation – Free State Foundation
• Internet Security without Law: How Service Providers Create Order – Mercatus Center
• Video Marketplace Deregulation: The Battle Over Spectrum Policy and Retransmission Consent Reform – Mercatus Center
Labor
• RAISE Act Lifts Pay Cap on Millions of American Workers – The Heritage Foundation
Monetary Policy/Financial Regulation
• Dodd-Frank: The Economic Case for Repeal – American Enterprise Institute
• Government Barriers to Georgia’s Growth: How Dodd-Frank Price Controls Poach the Peach State’s Prosperity – Georgia Public Policy Foundation
• Corporate Political Spending: Why the New Critics Are Wrong – Manhattan Institute
• Europe Still Doesn’t Get It – Manhattan Institute
National Security
• Getting Cyber Serious: Mastering the Challenges of Federal Cloud Computing – The Heritage Foundation
Natural Resources, Energy, Environment, & Science
• Balancing Fiscal, Energy, and Environmental Concerns: Policy Options for California’s Energy and Economic Future – American Enterprise Institute
• The Federal Green Jobs Agenda – American Enterprise Institute
• The Great Global Warming Blunder – Encounter Books
• Global Warming Nuisance Suits Given a Cool Reception in Court – Federalist Society
• Energy-Related Tax Preferences and Job Creation: Which Industries Provide the Best Value for Taxpayers? – Manhattan Institute
• Pipelines Are Safest for Transportation of Oil and Gas – Manhattan Institute
Regulation & Deregulation
• The Shortage of Generic Sterile Injectable Drugs: Diagnosis and Solutions – Mackinac Center for Public Policy
• Baselines: A Fundamental Element of Regulatory Impact Analysis – Mercatus Center
• Beware the Surge: “Midnight Regulations” – Mercatus Center
Retirement/Social Security
• The Pension Benefit Guaranty Corporation: Who Will Guarantee This Guarantor? – American Enterprise Institute
• MPSERS and MSERS: Three Pension Policy Briefs – Mackinac Center for Public Policy
• Disability versus Work – National Center for Policy Analysis
The Constitution/Civil Liberties
• The New Textualists’ Finest Hour? – American Enterprise Institute
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