Kevin Drum - June 2012

Dish Network Annoys John Dingell, Prepares to Pay the Price

| Thu Jun. 28, 2012 2:09 PM EDT

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.

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More Bickering on the Agenda Today in Brussels

| Thu Jun. 28, 2012 12:19 PM EDT

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?

| Thu Jun. 28, 2012 11:17 AM EDT

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

| Thu Jun. 28, 2012 10:12 AM EDT

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

| Thu Jun. 28, 2012 9:58 AM EDT

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

| Thu Jun. 28, 2012 9:46 AM EDT

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.

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Individual Mandate Upheld Under Taxing Power

| Thu Jun. 28, 2012 9:09 AM EDT

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!

| Thu Jun. 28, 2012 9:03 AM EDT

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

| Thu Jun. 28, 2012 12:11 AM EDT

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.

How Wall Street Shakes Down Every City in America

| Wed Jun. 27, 2012 4:45 PM EDT

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.