• The Strategic Value of Being a Punching Bag

    Over at the Washington Monthly, Ryan Cooper is annoyed at the tendency of moderate drug policy reformers to spend time attacking hardcore reformers to their left who want to see full legalization of illicit drugs. In particular, he singles out some of the academics who blog at Reality Based Community:

    These guys have done a lot of great work….But they have a rather foolish tendency to attack the “legalizer” community, efforts which are not only misguided, but self-defeating….The “legalizers,” which are few and powerless, aren’t just a pointless waste of ink and oxygen, they’re actually helping the RBC case by making them seem like the sensible moderates. Kleiman and company should welcome these folks as holding down the flank of the debate, and focus their attacks on Joe Arpiao and the DEA.

    This is a common argument from folks on the extreme left:1 without them, they argue, centrists wouldn’t look like centrists. It’s only the existence of a loud, firebrand flank that makes moderate lefties seem sensible and attractive to the vast mass of non-radical voters. Purely as a strategic necessity, then, moderates should welcome their comrades on the left.

    I don’t really know if this holds water or not. But suppose it does. Doesn’t it imply that centrists have to attack the far lefties? If this is all a bit of play acting, with the far lefties playing the role of scary revolutionary, part of that role is to be attacked. That’s what gives centrists their centrist cred.

    And yet, whenever this happens, the left flank yells about it. There’s nothing wrong with that on its own, but you can’t do it if you’re also making a strategic argument about your value to the center. That is, you can’t (a) claim that you play a strategic role as a punching bag and (b) complain when you get punched. They go together, don’t they?

    1I assume the same thing happens on the right. I’m using the left as an example here because I’m more familiar with it.

  • Friday Cat Blogging – 29 June 2012

    My sister called last night to chatter about the Obamacare decision and to demand extra super good catblogging today. The problem is that this is catblogging we’re talking about, and sometimes the cats cooperate and sometimes they don’t.

    For better or worse, though, this week we have action shots. On the left, Domino is looking rather alarmed, and the reason is that she had just crashed her way through the flowers behind her. When I snapped the shutter she was still shaking the cobwebs out of her face. On the right, Inkblot is taking a sunset hunting stroll through our neighbor’s yard. In a second or two he’ll realize that the brown object he’s staring at isn’t a mouse, it’s a leaf. But life is full of disappointments like that. Both of them are still wondering if the Supreme Court upheld Obamacare’s Freedom From Vet Visits clause yesterday, and I don’t have the heart to tell them that it never made it through the conference report in the first place. They’ll find out soon enough.

  • The Good, the Bad, and the Ugly of our Shiny New Highway Bill

    Brad Plumer runs down the new highway bill for us today, providing both the good news and the bad. The good news is, basically, that we even have a highway bill. The bad news is that the bill’s funding is dumb and mass transit got screwed. Plus this:

    5) Two obscure — but important! — reforms got left out of the final bill. The original Senate transportation bill did two things that may seem minor but were actually quite significant, says Joshua Schank of the Eno Center for Transportation. For one, the bill shifted more money to fixing existing roads rather than building new ones. (Analysts have long argued that it’s more cost-effective to repair the roads we already have, but state and local politicians prefer new projects that come with shiny ribbon-cuttings.) That earlier version also would’ve established a new coordinated policy that linked up freight and ports. But these provisions have been cut from the final bill.

    Hooray for Washington! Lots of money for stuff we don’t really need, not so much for stuff we do. But at least it’s bipartisan. That’s what matters, right?

  • Yes, if Republicans Win in November, Obamacare is Toast

    If Republicans win in November, can they repeal Obamacare? In theory, this is a fairly technical discussion. Republicans can repeal all the parts of the law that are budget related using reconciliation, a procedure that requires only 50 votes in the Senate. But the non-budget parts, like the rule that insurance companies have to cover people with pre-existing conditions, can only be repealed via regular order, which Democrats can filibuster. That takes 60 votes to overcome, and Republicans won’t have 60 votes.

    But this whole conversation has always struck me as faintly ridiculous. First, if you repeal all the budget-related aspects of Obamacare, you’ve essentially gutted the law. Who cares if it takes a few more years to do the mopping up via amendments to must-pass bills? Second, I’m not sure 60 votes is actually out of reach for the regulatory parts of the law anyway. If the law is already in tatters because the funding is gone, there might very well be a dozen Democrats willing to join Republicans in getting rid of the rest of it and starting over.

    And third — well, look. Can we stop pretending to be children here? As Matt Yglesias points out, the last time Republicans had a problem with reconciliation, they just fired the Senate parliamentarian and hired a new one willing to make the rulings they needed. They can do the same thing this time, or they can skip the drama and just ask Vice President Rubio to overrule the parliamentarian. All they need is a determination that the entire law is so tightly intertwined that, taken as a whole, it’s a budgetary matter. Will they do that? Of course they will:

    That is how you get things done in Washington when you want to get things done. And my view is that Republicans, at this point, really do want to repeal the Affordable Care Act. They don’t like that it raises taxes, they don’t like that it spends money on the poor, they don’t like that it rolls back Medicare privatization, and they don’t like that it pushes health insurance companies in the direction of becoming regulated utilities. If they genuinely lack the votes for repeal they won’t repeal it, but they’re not going to let interpretive disputes over what is and isn’t a budgetary measure hold them up.

    One way or another, if Romney wins and Republicans gain control of the Senate, Obamacare is toast. Anyone who thinks otherwise just hasn’t been paying attention to politics for the past couple of decades. Can we please stop acting like earnest ninnies about this stuff?

  • In the 21st Century, We Will All Be Fired on Twitter

    Yesterday, while the rest of us were busy obsessing over the Supreme Court, the board of LA’s Museum of Contemporary Art fired chief curator Paul Schimmel. Lots of people were upset about this, but I wasn’t one of them since I’m not an art guy and I don’t know anything about Schimmel. Still, I was sort of interested in this little nugget from the LA Times writeup:

    There also was dismay at the way the museum handled the high-level termination. It was first reported on a New York gallery blog, then picked up and disseminated widely on Twitter. Hours later, MOCA issued a terse announcement: “Paul Schimmel is stepping down as MOCA’s chief curator. It’s amicable and there will be a release tomorrow.”

    Question: is it even possible to fire a public figure any longer without having it first leaked on blogs and Twitter? It barely seems like it. I have a feeling that if you fire someone these days, you should be prepared to announce it pretty much instantly. If you don’t, it will inevitably end up on the internet somewhere and you’ll get dinged for “handling it badly.” Might as well just announce it on your own Twitter feed instead.

  • Germany Caves In (A Little Bit)

    It looks like Germany has blinked. Or, more accurately, the leaders of Italy and Spain shoved hot bamboo spikes under Angela Merkel’s eyelids until she cried Onkel!

    Amid bad-tempered talks that continued through the night, Italy and Spain stunned the Germans by blocking progress on an overall deal at a two-day EU summit in Brussels until they obtained guarantees that the eurozone would act to cut the soaring costs of their borrowing.

    The tough negotiations were deadlocked for hours, prompting the departure from the summit after midnight of the 10 non-euro countries, including Britain, leaving the eurozone leaders to fight it out. After 14 hours of wrangling, they emerged with a three-point statement rewriting the rules for the eurozone’s new bailout regime in a way likely to soften the draconian terms that have accompanied the rescue programmes for Greece, Portugal, and Ireland over the past two years.

    This isn’t quite the same thing as support for eurobonds, which would allow countries to fund their deficits with bonds backed by the entire eurozone (i.e., Germany) but it’s a step in that direction. In the deal announced a couple of weeks ago, money was loaned to Spain, which it used to bail out its banks. But Spain was still on the hook for the money. Now money will be going straight to Spanish (and Italian, Irish, Greek. and Portuguese) banks, with the loans coming from the entire eurozone. The Irish are elated:

    Eamon Gilmore, Ireland’s deputy prime minister, said the deal reached in the early hours at the EU summit represented “a major change” in European policy and was a course of action Dublin had been advocating for a long time. “This is a massive breakthrough for Ireland and it changes the game in terms of our bank debt,” he told Irish radio. “This deal will allow the country to recover much faster,” he said.

    Enda Kenny, Ireland’s prime minister, hailed the move as a seismic shift in EU policy. “What was deemed to be unachievable has now become a reality and that principle has been established and decided and agreed upon by the council, by the heads of government,” Mr Kenny told reporters in Brussels.

    Merkel, of course, still has domestic politics to worry about, so she put a brave face on things: “The details about liability” — i.e., who’s really responsible for these loans if they go bad — “still have to be negotiated individually,” she said, “and I can predict now that they will be quite difficult negotiations because we are in a new area, and for that reason it won’t just take only 10 days.” No doubt. But for now, the PIIGS have won a victory.

  • What the Obamacare Decision Means for the Future

    I’ve been pondering the future impact of yesterday’s Obamacare ruling, and I continue to think that the Commerce Clause ruling probably isn’t a big deal. After all, the activity/inactivity distinction, which John Roberts bought into, hasn’t come up in the past 200 years and probably won’t come up in the next 200 either. And if it does, Congress now has due warning that it needs to use language that doesn’t directly compel anyone to engage in commercial activity. As long as the court doesn’t extend the ruling to apply to measures that indirectly compel commercial activity, there’s just not much impact here.

    (In fact, it could even be a win for liberals. Mandatory Social Security private accounts, for example, are almost certainly now unconstitutional, which just makes it easier for liberals to explain why we can’t have them. More generally, this ruling means that Congress is now on much safer ground when it simply raises taxes to fund programs directly run by the government, rather than outsourcing them to the private market. That’s friendlier to liberal ideology than to conservative ideology.)

    The Medicaid ruling is a different story. That one is a little trickier. The court ruled that it’s acceptable for Congress to create a new program and then tell states that they won’t receive funding for the program unless they agree to all its rules. In a case like that, states have a genuine choice. However, it’s not acceptable to create a new program and then tell states they’ll lose existing funding unless they also accept the new program along with all its rules. That’s too coercive. In practice, no state could ever refuse.

    So what does this mean? The basic idea is that states need to have a genuine say in whether they want to participate in federal programs. Congress can nudge them to participate, but they can’t create conditions so onerous that, in practice, states have no alternative but to go along. But how far does this reach? Can Congress create new rules for existing programs and impose them on the states after the states have accepted funding for a program? Or is this now unacceptable because, in practice, states can’t pull out of programs that are up and running and therefore have no leverage to refuse the new rules? Would this apply to any new rule? Or only to rules that are especially onerous?

    That’s unclear. But at the least, the court has, for the first time, defined a genuine outer boundary for federal coerciveness. As it stands, this outer boundary probably doesn’t act as a very big restraint on congressional power. However, the court didn’t define an inner boundary, and future rulings could easily move the bar so that it applies very generally to new congressional rulemaking of all kinds.

    Brad DeLong suggests that there’s a way around this:

    At a formal level, this notion that the federal government cannot alter the terms of The Deal — that it must make a new deal, with consideration, offer, and acceptance — is hard to understand. The federal government could certainly repeal Medicaid entirely. It certainly could start up a new program equal to Medicaid + ACA Expansions and offer states that deal. It sounds as though if the ACA had been structured in this way:

    • Title 15: Title XIX of the Social Security Act, as amended, is repealed.
    • Title 16: New Medicaid = ACA Expansions + the old Title XIX of the SSA are hereby enacted

    that that would, formally, pass Roberts’s scrutiny.

    I guess I find this unlikely. The sophistry is too obvious. At this point the Medicaid ruling is just a tiny acorn, barely worth worrying about. But given the proper care and treatment by a conservative court, it could grow into a mighty oak. This is very definitely something to watch out for.

  • We Could Stop Importing Oil From the Middle East Today if We Wanted To

    Earlier this week the Wall Street Journal passed along some good news: Within a few years, America will be able to substantially reduce its dependence on Middle East oil.

    The shift, a result of technological advances that are unlocking new sources of oil in shale-rock formations, oil sands and deep beneath the ocean floor, carries profound consequences for the U.S. economy and energy security. A good portion of this surprising bounty comes from the widespread use of hydraulic fracturing, or fracking, a technique perfected during the last decade in U.S. fields previously deemed not worth tampering with.

    By 2020, nearly half of the crude oil America consumes will be produced at home, while 82% will come from this side of the Atlantic, according to the U.S. Energy Information Administration. The change achieves a long-sought goal of U.S. policy-making: to draw more oil from nearby, stable sources and less from a volatile region half a world away.

    The article mainly emphasizes the benefits of new shale oil fields that have been opened up by hydraulic fracturing. But I think this is a misreading. Fracking is important, but it’s not really the key to America’s petroleum future. Here are three things you should know from the recent release of the EIA’s Annual Energy Outlook 2012.

    #1: We could stop importing oil from the Middle East today if we wanted to.

    The chart on the right shows U.S oil consumption. Take a look at the past few years: oil consumption has dropped nearly 2 million barrels per day since 2007. Over the same period, U.S. imports of oil have dropped 2.1 million barrels per day.

    So how much oil do we import from the Persian Gulf? Answer: in 2007 we imported 2.1 million barrels per day, about 10% of our total consumption. The fact is that we’ve never heavily relied on Persian Gulf oil, and if we had chosen to, we could have cut Middle East imports to zero based solely on our drop in consumption over the past few years. Far from trying to wean ourselves off Middle East oil, we’ve made a conscious decision to keep buying it.

    #2: EIA only projects a small amount of new production from shale oil.

    The Journal suggests that “tight oil” produced from shale deposits is a key reason that the US will be able to reduce oil imports in the future. But although shale oil is important, the fact is that EIA projects only a modest amount of new production from shale fields.

    The chart on the right shows various projections. In the best case, shale oil could amount to nearly 3 million barrels per day, but that’s unlikely. EIA’s “reference case” — i.e., their best estimate — is that shale fields will peak at 1.3 million barrels per day and then start to decline. That’s not nothing, but it’s only about 7 percent of our total consumption.

    #3: The main source of lower oil imports comes from better fuel economy and other efficiency measures, not from fracking.

    There are two charts below. Take a look at the one on the left. In the 25 years between 1980 and 2005, U.S. oil consumption increased by more than 5 million barrels per day. Now take a look at the projection for the 25 years from 2010 to 2035. EIA forecasts an increase of only about 1 million barrels per day.

    That’s a difference of more than 4 million barrels per day — and it’s by far the biggest contributor to our projected reduction in imports. The chart on the right shows the real explanation for declining imports: It’s because we’re using energy a lot more efficiently, and per capita energy use is therefore forecast to be on a steady downslope. Fracking may be sexy these days, but as always, it’s drab old energy efficiency that has the biggest potential to lead the way toward energy independence. It may be boring, but if we paid even more attention to it, it would reduce energy imports far more than fracking ever will.

  • Anthony Kennedy’s Swing Vote Days Are Long Gone

    One of the supposed surprises of today’s Obamacare ruling is that Anthony Kennedy, the traditional swing vote on the court, joined the fire-breathing conservatives in their bid to wipe out ACA completely. Meanwhile, reliable conservative John Roberts shied away from the precipice and wrote a modest, Kennedy-esque opinion that split the baby but ended up mostly leaving ACA intact.

    I’m not sure why Roberts chose to do that, but Kennedy’s vote was less of a surprise: some time ago, for reasons that remain mysterious, Kennedy seemed to finally tire of being the court’s perennial squish. Who knows why? Maybe he just got tired of being called a squish. In any case, over the past five years he’s steadily become a much more reliable conservative vote, something the chart below, which we ran a couple of days ago, confirms. As you can see, several of the justices have moved rightward over the past few years, but Kennedy is the only one who’s moved from the center to a firmly conservative position, and he shows no signs of stopping. Whatever the reason for this, it’s really not correct to think of Kennedy as a centrist anymore. He’s now a pretty firm conservative vote, and Citizens United and the Obamacare decision have been his coming out party. The days of Lawrence and Kelo are long gone.

  • Liberals Won the Obamacare Battle, But May Have Lost the War

    Having already written half a dozen posts about the Supreme Court’s decision in the Obamacare case, over lunch I decided to dive into the dissent, authored by Antonin Scalia. It’s fairly remarkable.

    First off, Scalia invalidates the individual mandate completely. The Commerce Clause doesn’t justify it because Congress can’t compel people to participate in commerce, and Congress’s taxing power doesn’t justify it either because it’s a penalty, not a tax. This isn’t unexpected, though it’s a little surprising that Scalia barely even bothers to address the argument that, by its nature, everyone already participates in the healthcare market, so the individual mandate isn’t truly compelling anything in the first place. Young people, Scalia says, “are quite simply not participants in that market,” and can’t be made so by arguing that they’ll participate later in life. But that’s never been the whole argument. The argument is that healthy young people already participate in the market today because taxpayers end up paying for their care if they have an unexpected illness and end up in the emergency room. You might or might not buy that argument, but Scalia just blithely ignores it.

    But if striking down the mandate wasn’t too unexpected, the Medicaid dissent is more surprising. In the majority opinion, seven justices agreed that Congress had overreached when it threatened states with the loss of all Medicaid funding if they didn’t sign up for ACA’s new Medicaid expansion. This, they said, was too coercive. It’s OK to make new funding contingent on acceptance of new rules, but you can’t make existing funding contingent on new rules.

    Scalia agrees, but says the court can’t simply strike down this penalty. Instead, it has to invalidate the entire Medicaid expansion:

    The reality that States were given no real choice but to expand Medicaid was not an accident. Congress assumed States would have no choice, and the ACA depends on States’ having no choice, because its Mandate requires low-income individuals to obtain insurance many of them can afford only through the Medicaid Expansion. Furthermore, a State’s withdrawal might subject everyone in the State to much higher insurance premiums.

    ….Worse, the Government’s proposed remedy introduces a new dynamic: States must choose between expanding Medicaid or paying huge tax sums to the federal fisc for the sole benefit of expanding Medicaid in other States. If this divisive dynamic between and among States can be introduced at all, it should be by conscious congressional choice, not by Court-invented interpretation.

    This is fairly breathtaking. Congress routinely makes federal funding of new programs dependent on acceptance of federal regulations. The majority ruled that this long-accepted practice was as far as Congress could go and therefore rolled back the more stringent penalty. But Scalia argues that the court can’t do that. The court can’t simply roll back Congress’s overreach, it has to wipe out the program completely. Why? Because (a) a reduced incentive to accept the Medicaid expansion might have knock-on effects, and (b) states that don’t accept the Medicaid expansion would be faced with the prospect of paying tax dollars for the sole benefit of other states. Scalia is unfazed by the fact that the first reason is wildly speculative and the second has been true of every federal program in history that disburses money to states. The fact is that withholding new money has always been sufficient in the past to get essentially unanimous buy-in from the states, and Scalia doesn’t really have much basis for thinking that it wouldn’t do so this time too.

    The rest of the opinion follows fairly mechanically. Without the mandate and the Medicaid expansion, the exchanges don’t work. Without the exchanges, the employer incentives don’t work. Without those four things, the tax increases don’t make sense. At this point you’ve gutted the all the major provisions of the act, and without them there’s no way Congress would have passed any of the rest of it. This is Scalia’s “Christmas tree” doctrine: “When we are confronted with such a so-called “Christmas tree,” a law to which many nongermane ornaments have been attached, we think the proper rule must be that when the tree no longer exists the ornaments are superfluous.” Basically, Scalia says, the whole act was a gigantic orgy of horsetrading, and when you invalidate some pieces of the act, you have to assume that Congress wouldn’t have passed any of the other pieces either.

    This is a very far-reaching dissent, and goes to show just how far four members of the court are willing to go. They didn’t choose the most restrained option, overruling only what they absolutely had to. They gleefully took a meat axe to everything, concluding that the only possible resolution was to completely invalidate the major provisions of the law, and then to invalidate the entire law. And although they may not have enunciated a new limiting principle on the Commerce Clause (aside from deciding that Congress can’t compel activity), they made it crystal clear that they’re eager to rein in Congress in the future.

    What’s more, unlike Chief Justice John Roberts, they showed no inclination to allow Congress to use its taxing power instead to achieve ends denied them under the Commerce Clause. This goes even beyond the 1930s court, which struck down several New Deal laws but made it clear that they’d uphold similar laws in the future if only Congress would justify them via its taxing power.

    There are now four votes on the court to radically restrict the power of Congress to enact social legislation. For some reason, Roberts chose not to be a fifth vote this time, but no one knows quite why he did that. Possibly he was put off by the prospect of overturning an entire piece of landmark legislation, on a 5-4 party-line vote, based on a new and untested doctrine that had never seen the light of day prior to 24 months ago. In fact, it’s possible that Roberts was initially willing to join the four conservatives, but then flipped sides when they implacably insisted on gutting the entire measure. If that’s the case — and there’s some evidence that it is — liberals were saved not by the force of their arguments, but purely by the intransigence of the court’s conservatives.

    Needless to say, we can’t count on that saving us in the future. We may have won the battle today, but it doesn’t seem likely that we’ve won the war.

    UPDATE: Adam Serwer has a different take here: “The Medicaid ruling is a concern. But the good news for liberals in the Affordable Care Act ruling is concrete and easy to see. The dangers are, for now, entirely hypothetical.”

    I agree, and obviously this is all pretty speculative. I’m just afraid that the dangers might not stay hypothetical forever.

  • Dish Network Annoys John Dingell, Prepares to Pay the Price

    The Dish Network, in its continuing effort to attract new viewers, introduced a new DVR called the Hopper earlier this year. The Hopper’s main appeal is that it allows you to skip past commercials entirely, and unsurprisingly, TV networks aren’t very happy about this. But guess who else is unhappy?

    At a Wednesday hearing on video distribution held by the Communications and Technology Subcommittee of the Energy and Commerce Committee, [Rep. John Dingell, D–Clueless] complained that the service will allow potential voters to skip past important commercial messages.

    “I’ve got an election coming up, like all my colleagues,” Dingell said, during his questioning of Dish Network Chairman Charlie Ergen. “We all put political ads on the local stations to reach our constituents. The Hopper potentially limits the ability of every member of this subcommittee to reach constituents to help them make up their minds on Election Day.

    “Do you understand and appreciate the concerns that the politicians up here on the dais and other politicians everywhere will feel about that, yes or no?” Dingell asked.

    Clearly, the Dish Network has gone too far. Skipping past Axe body spray ads is one thing, but skipping past John Dingell’s reelection ads? That can’t be tolerated.

    This is a surprising lapse. The Dish folks should have known that they were violating one of the fundamental rules of American business: you can annoy consumers all you want, but never, never, never annoy congressmen. That’s the royal road to ruin.

  • More Bickering on the Agenda Today in Brussels

    You may be surprised to learn that the rest of the world still exists today, but it does! In particular, EU leaders are meeting today to decide if they plan on doing anything to prevent the eurozone from melting down, or if they’re just going to twiddle their thumbs a bit longer. Unfortunately, reading the tea leaves is even harder than usual right now. For example, here is German Finance Minister Wolfgang Schäuble on the possibility of pooling European debt in order to shore up Spain and Italy:

    Berlin Blinks on Shared Debt

    Germany may be willing to move sooner than expected to accept shared liability of euro-zone debt and would support short-term measures to deal with the acute financing problems facing some of the region’s governments….Mr. Schäuble said Germany could agree to some form of debt mutualization as soon as Berlin is convinced that the path toward establishing centralized European controls over national fiscal policy is irreversible. That could happen before full implementation of treaty changes.

    That sounds promising. But here’s his boss, chancellor Angela Merkel:

    Germany rules out pooling of eurozone debt

    Germany has flatly ruled out any pooling of eurozone debt in response to the single currency crisis, seeming to set the scene for clashes at an EU summit that looks unlikely to take any big decisions to quickly stabilise the euro…..[Merkel] made it clear she would not yield to pressure to move towards the common issuance of eurozone debt in the form of eurobonds, to lower the cost of borrowing for vulnerable countries such as Spain and Italy.

    Merkel’s tough stance appeared to open up the prospects of a clash with Mario Monti, the Italian prime minister, who is trying to restructure Italy’s creaking economy but is impotent in the face of the financial markets raising the price he pays to borrow. Italy was forced to offer a yield of 2.96% to sell six-month bills, up from 2.1% a month ago. Its benchmark 10-year yield was up slightly at 6.22% and faces an important test with an auction of €5.5bn (£4.4bn) of five and 10-year bonds.

    Not so promising! Overall, I’d say the tea leaves are bending toward more thumb twiddling, but I suspect that this depends a lot more on outside events than on negotiations behind closed doors in Brussels. Germany is going to hold out as long as it can, and that means holding out until catastrophe is truly looming and either Spain or Italy is about to collapse. That could happen tomorrow or it could happen six months from now. So stay tuned.

  • How Big a Deal Is the Court’s Medicaid Decision?

    Although the Supreme Court upheld the constitutionality of the individual mandate, it partially struck down the expansion of Medicaid under Obamacare. Here is John Roberts’ explanation:

    Our cases have recognized limits on Congress’s power under the Spending Clause to secure state compliance with federal objectives. “We have repeatedly characterized…Spending Clause legislation as ‘much in the nature of a contract.'” The legitimacy of Congress’s exercise of the spending power “thus rests on whether the State voluntarily and knowingly accepts the terms of the ‘contract.'”

    ….Permitting the Federal Government to force the States to implement a federal program would threaten the political accountability key to our federal system….Spending Clause programs do not pose this danger when a State has a legitimate choice whether to accept the federal conditions in exchange for federal funds. In such a situation, state officials can fairly be held politically accountable for choosing to accept or refuse the federal offer. But when the State has no choice, the Federal Government can achieve its objectives without accountability.

    ….The States […] object that Congress has “crossed the line distinguishing encouragement from coercion,” in the way it has structured the [Medicaid] funding: Instead of simply refusing to grant the new funds to States that will not accept the new conditions, Congress has also threatened to withhold those States’ existing Medicaid funds. The States claim that this threat serves no purpose other than to force unwilling States to sign up for the dramatic expansion in health care coverage effected by the Act.

    Given the nature of the threat and the programs at issue here, we must agree…In this case, the financial “inducement” Congress has chosen is much more than “relatively mild encouragement”—it is a gun to the head…A State that opts out of the Affordable Care Act’s expansion in health care coverage thus stands to lose not merely “a relatively small percentage” of its existing Medicaid funding, but all of it.

    I actually find this partially compelling. Threatening to withhold all Medicaid funding if a state doesn’t participate in the new program is, as Roberts says, pretty close to being “a gun to the head.” But if you look at the actual funding levels enacted in the law, it’s more of a popgun than an AK-47. The feds will finance 100 percent of the Medicaid expansion through 2016, 93 to 95 percent through 2020, and 90 percent beyond 2020. So yes, the level of coercion is high, but the level of funding demanded of the states is very low. There’s both a carrot and a stick here.

    Still, the court has ruled, and that’s that. Congress can set conditions for federal funding, but those conditions can’t include the loss of existing funds if a state chooses not to participate in a new program. It’s not immediately clear how big an impact this will have going forward, since Congress still has some big sticks to persuade states to participate in federal programs, but it definitely blunts Congress’s power at least a little bit.

    In practice, what’s likely to happen here is pretty sad: Southern states, the very ones whose residents would gain the most from the new Medicaid provisions, are the most likely to opt out. The question is, how long will this last? Here, I’ll go out on a limb and suggest that they won’t hold out very long. There are a few reasons for this:

    • Federal funding is 100 percent for the first three years. That’s going to be hard to resist.
    • That 100 percent funding runs through 2016. Right now emotions are running high, but if Obama is reelected and it becomes obvious that Obamacare is here to stay, things will probably cool down. By 2014 or 2015, as the specter of jackbooted federal tyranny recedes, wiser heads may prevail.
    • There’s going to be a lot of pressure from various interest groups to accept the funding. That includes pressure from within government agencies as well as from outside groups. After all, state and local governments are already on the hook for indigent healthcare, and that includes caring for those who fall in between the current Medicaid cutoff and ACA’s new one (roughly speaking, those who are between 50% and 133% of the poverty line). Even the stingy states may discover that they’re already spending enough money on that group that they’d be better off simply enrolling them all in Medicaid and paying their small share of the new benefits instead.

    So we’ll see what happens. For now, I wouldn’t pay too much attention to whatever crowd-pleasing bluster we start hearing from (primarily) Southern governors. It’s election season, after all. Instead, wait until next year. If Romney wins, it’s probably moot. If Obama wins, expect opposition to the new rules to cool down over time. By the time Obamacare kicks in in 2014, the blusterers may be having second thoughts.

  • Obamacare Ruling Doesn’t Limit Congress Much

    Since the Supreme Court did rule that the Commerce Clause isn’t sufficient to justify the individual mandate, it’s reasonable to wonder just how big a restriction that places on Congress. This is a tentative judgment, but I agree with Tom at SCOTUSblog:

    Here is the money quote on the fifth vote to hold that the mandate is not justified under the Commerce Clause (recognizing that doesn’t matter because there were five votes under the Tax Power): “The power to regulate commerce presupposes the existence of commercial activity to be regulated.” That will not affect a lot of statutes going forward.

    The ruling didn’t set out any kind of concrete limiting principle, as I was hoping. It simply explained the activity/inactivity distinction. So to the extent that this sets any precedent, it’s only that Congress can’t force people to engage in commerce. That’s not something Congress has done before or is likely to need to do in the future. The taxing power is sufficient for most purposes, and existing precedent on the Commerce Clause, which allows Congress nearly unlimited power to regulate existing commerce, is sufficient for the rest. So I doubt this decision will have much real effect on future lawmaking. It will be pretty easy to write nearly any kind of legislation to stay inside the court’s new rules.

  • John Roberts Says: If it Walks Like a Tax and Quacks Like a Tax, It’s a Tax

    Here is the relevant section of Chief Justice John Roberts’ majority decision upholding the individual mandate as a tax:

    It is well established that if a statute has two possible meanings, one of which violates the Constitution, courts should adopt the meaning that does not do so…..If the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.

    The question is not whether that is the most natural interpretation of the mandate, but only whether it is a “fairly possible” one. As we have explained, “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.”

    ….It is of course true that the Act describes the payment as a “penalty,” not a “tax.”….That choice does not, however, control whether an exaction is within Congress’s constitutional power to tax. [A bit of analysis follows about past precedent that controls whether something is really a tax or not.]

    ….The same analysis here suggests that the shared responsibility payment may for constitutional purposes be considered a tax, not a penalty: First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more….None of this is to say that the payment is not intended to affect individual conduct. Although the payment will raise considerable revenue, it is plainly designed to expand health insurance coverage. But taxes that seek to influence conduct are nothing new.

    Yes indeed. Taxes are designed to influence conduct all the time. That’s nothing new.

  • Roberts Bought the Commerce Clause Kool-Aid

    This is from the syllabus of the Obamacare decision:

    Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority. Congress already possesses expansive power to regulate what people do. Upholding the Affordable Care Act under the Commerce Clause would give Congress the same license to regulate what people do not do. The Framers knew the difference between doing something and doing nothing.

    That’s Chief Justice John Roberts. He bought the activity/inactivity Kool-Aid completely. What’s ironic, of course, is that whatever else you think of the law, the framers of the Constitution very decidedly didn’t know the difference between doing something and doing nothing. At least, they didn’t mention anything about this in the actual Constitution they wrote. That’s a distinction invented in the 21st century, not the 18th.

  • Individual Mandate Upheld Under Taxing Power

    10:08: The individual mandate has been struck down but survives as a tax. Say what? More in a moment.

    10:10: Wait a second. SCOTUSblog says the mandate is constitutional, with Chief Justice Roberts joining the court’s commies. The Medicaid provision is “limited but not invalidated.”

    10:13: From SCOTUSblog: “The bottom line: the entire ACA is upheld, with the exception that the federal government’s power to terminate states’ Medicaid funds is narrowly read.”

    10:15: CNN reads a piece from the decision, written by Roberts. Says the mandate is upheld under Congress’s taxing power.

    10:16: CNN now agrees that the entire law has been upheld.

    So I wonder what the decision says about Congress’s Commerce Clause power? Did they define some kind of limiting principle? Or just punt? More in a moment.

    10:19: So apparently this is a 5-4 decision, with Roberts voting to uphold Obamacare and Kennedy voting to overturn. Who would have predicted that?

    10:22: SCOTUSblog excerpts this from the section of the decision on Medicaid expansion: “Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”

    10:24: Sure enough, CNN confirms that it’s Roberts and the liberals voting to uphold, with Kennedy and the conservatives voting to overturn. Everyone figured that Roberts might jump to the liberal side if Kennedy also did so, in order to make it a 6-3 decision and give himself the job of writing the decision. But no. This should be good for about a million words of Kremlinology.

    10:28: Time’s Michael Crowley tweets: “Friend who worked in House D leadership chuckles at memory of how hard Dems strained to ensure mandate was not seen as a tax.”

    10:30: Wow. Apparently the minority believes the entire act is unconstitutional, lock, stock and barrel. Maybe that’s why Roberts defected. He might have been up for overturning the mandate, but not the entire law.

    10:33: Amy Howe of SCOTUSblog summarizes the ruling: “The Affordable Care Act, including its individual mandate that virtually all Americans buy health insurance, is constitutional. There were not five votes to uphold it on the ground that Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. However, five Justices agreed that the penalty that someone must pay if he refuses to buy insurance is a kind of tax that Congress can impose using its taxing power. That is all that matters. Because the mandate survives, the Court did not need to decide what other parts of the statute were constitutional, except for a provision that required states to comply with new eligibility requirements for Medicaid or risk losing their funding. On that question, the Court held that the provision is constitutional as long as states would only lose new funds if they didn’t comply with the new requirements, rather than all of their funding.”

    10:34: Needless to say, this ensures that Obamacare will be a gigantic political football during campaign season. That will definitely electrify the tea party base, which I guess is good for Romney. Not sure yet what the other political implications are.

    10:38: From a friend: “Man, the right is going to turn on Roberts now. He’s going to be the new Souter.” No kidding. Roberts is about to become Public Enemy #1 on Fox News.

  • Supreme Court Hands Down Decision!

    The Supreme Court has overturned the Stolen Valor Act by a vote of 6-3. So we can all go home now, right?

  • The Obamacare Ruling I’d Like to See

    I have no idea how the Supreme Court will rule on Thursday in the Obamacare case. So instead I’ll tell you how I’d rule.

    You probably figure that’s easy: I’d vote to uphold the law. And you’re right. I would. But I’d go a step beyond that, because I think the justices really do owe it to Congress and the rest of us to articulate a limiting principle that defines the scope and reach of the Commerce Clause.

    To explain this, let’s back up a bit. As most everyone knows who’s been following this case, the Obama administration contends that the Commerce Clause gives Congress the authority to implement an individual mandate that requires everyone in the country to buy health insurance if they don’t already have it. In a nutshell, the argument is this: (a) the healthcare market is clearly interstate commerce, (b) Congress has the power to regulate interstate commerce, therefore (c) Congress has the right to regulate the healthcare market, and (d) the mandate is part of a reasonable legislative scheme for regulating healthcare.

    Critics, however, argue that forcing people to purchase a commercial product goes beyond Congress’s power. The problem is this: there’s simply nothing in the text of the Constitution, or in prior precedent, that makes this distinction. The Constitution says Congress has the power to regulate commerce “among the several States.” It doesn’t say Congress has the power to regulate commerce “among the several States as long as nobody is ever required to buy something.” Suddenly plucking this distinction out of thin air without a shred of prior warning, just in time to overturn a major piece of legislation that conservatives happen to dislike, would be outrageously partisan.

    But what should be the limit on Congress’s commerce power? In Wickard vs. Filburn, which has controlled Commerce Clause jurisprudence since 1942, the court was asked to decide whether Congress could bar a farmer from growing wheat for his own use. The Roosevelt administration argued that even though this was obviously activity within a single state, it affected the amount of wheat the farmer bought on the national market — a market that Congress had the right to regulate. So unlike the Obamacare case, where there’s really no conflict with the text of the Constitution to begin with, Wickard clearly required a court ruling. The black letter text of the Constitution gives Congress the power to regulate only interstate commerce, and the question at hand was precisely whether Wickard’s private wheat crop did, in fact, constitute a meaningful impingement on interstate commerce. The court had to address this question, and it ruled that Wickard’s private activity did indeed affect interstate commerce and that therefore Congress had the authority to regulate it.

    My view is that the individual mandate is way inside the boundaries set by Wickard. Not only did Wickard present a legitimate question suggested by the actual wording of the Constitution, but the court ruled that virtually anything that affects interstate commerce, even in a small way, can be regulated by Congress. In the Obamacare case, there’s nothing in the text of the Constitution that demands a ruling, and in any case the mandate affects interstate commerce far, far more than Wickard’s wheat growing ever did.

    So the mandate falls well within the authority of Congress. Still, it would be nice to know just how far that authority extends. The Supreme Court traditionally tries to tailor its decisions narrowly, but in this case it really ought to go further. It’s obvious that several of the justices think there ought to be some limit a little more stringent than Wickard, and if that’s what they think they shouldn’t keep Congress guessing about it. The legislature has a reasonable right to know what rules they have to work under.

    Ideally, then, that’s what I’d like to see the court do on Thursday: uphold Obamacare, but at the same time enunciate some reasonably concrete limiting principle to Congress’s Commerce Clause power. We shouldn’t have to keep playing guessing games about this.

  • How Wall Street Shakes Down Every City in America

    As long as I’m recommending long form magazine pieces, here’s another one: Matt Taibbi’s latest in Rolling Stone, “The Scam Wall Street Learned From the Mafia.” I have a mixed view of Taibbi: some of his pieces are great, others are overwrought and depend more on his trademark expletives than on really getting the goods. This one is the former. On one level, it’s a granular look at a single Wall Street corruption trial that accomplished little except putting a few small-time operators behind bars; at another level, it demonstrates that the corruption on trial pervaded Wall Street’s entire business model for a decade, with no one in the executive suites ever paying a price for it. Worth a read.