Celebrating the North Atlantic Treaty Organization as the cornerstone of U.S. foreign policy was an obligatory ritual for two generations of American statesmen. As the decades passed however, mention of it and of “our European allies” has come with decreasing conviction and increasing embarrassment. Few dispute that, today, the alliance’s formalities are a pretense likelier to get its members into trouble than to pull anyone out of it. Civilizational changes have emptied it of substance. Readjusting American strategy to take account of those changes makes far more sense than talking about “revitalizing” or “rebuilding” an alliance on bases that no longer exist.
Archives for November 2014
Last Friday I had the great pleasure of participating in a panel at the Federalist Society’s National Convention with Chris DeMuth of the Hudson Institute, David Weisbach of the University of Chicago Law School, and Judge Frank Easterbrook on intergenerational equity and old age entitlements, like social security. My talk had two parts. I first rejected a common claim about old age entitlements: that they transfer resources from a poor generation to a richer one, because young people today will be less well off than their elders. I, then, nevertheless showed that old age entitlements as presently structured raised substantial problems for the young and old. In this post I summarize the first part of the speech.
The history of economic growth in the United States suggests that, as they age, the young today will be much better off than the old are today. Since 1950 – less than a lifetime – real GDP per capita in the U.S. has tripled. And economic growth continues, even if the statistics suggest that it is slowing down. But this slowdown is to a substantial extent an illusion, because it fails to fully account for the two greatest ongoing revolutions of our time—the improvements in health care and the exponential increases in machine intelligence that are rapidly expanding throughout the economy.
First, take improvements in health care and longevity: they do not even show up in the GDP. And yet they are massive: as Larry Summers once remarked, it is not at all clear that one would choose to have the health care of 1950 and the income of today rather than the income of 1950 and the health care of today.
In my last post, I wrote about the consequences if Obamacare loses in the Supreme Court in King v. Burwell. My basic point is that a Supreme Court decision holding that federal exchanges cannot receive subsidies will create an enormous fight between President Obama and the Republican Congress. Bill Levin, who recently wrote a post on the cert grant at this site, now has a post at Powerline addressing the same issue. I strongly recommend his post.
Bill is more optimistic than I am about the effects of such a Supreme Court decision. One of his main arguments is that the public understands that the Democrats are responsible for Obamacare and that any problems it has will be seen as the fault of the Democrats. Perhaps, but this would have to be true even though the five Republican justices decide that the subsidies are illegal over the votes of the four Democratic justices.
Ultimately, the biggest advantage that the Democrats have is that the media is on their side. They will portray the dispute as having been caused by the five Republican justices and will argue that the Republicans can easily fix the problem by simply returning to the status quo. It may be that the Republicans can prevail, but they will have to do so over the heads of the media.
Let’s say that the Supreme Court holds, in the King v. Burwell case involving federal exchanges, that such exchanges are not legally permitted to receive subsidies. This holding would create an enormous problem for Obamacare, since individuals in a large number of states would not be receiving subsidies. Clearly, a legislative change would be required. What then?
It has generally been assumed that this legislative change would be beneficial to opponents of Obamacare, as compared to the current situation. Under the current situation, once Republicans control both houses in January, they can pass modifications of Obamacare, but it is assumed that Obama will simply veto them. The default situation—the regmine without a new law—is the continuation of Obamacare, which Obama likes. But if the Supreme Court holds the subsidies for federal exchanges illegal, the default situation changes: no subsidies for federal exchanges. And therefore one might argue that the Republicans are better off in this situation.
Perhaps. But things are more complicated. The default situation, if the Supreme Court holds the subsidies illegal, is similar to (although distinct from) the default under spending bills. If Obama vetoes a spending bill, the government often closes down. While one might believe that this would pressure him into approving Republican measures, it often doesn’t. The press—who often behave, as Glenn Reynolds puts it, as Democratic operatives with bylines—will usually report the shutdown in a biased way and the Republicans will be forced to compromise. If this happens with federal exchange subsidies—a likely possibility, even though Obama is losing support in the press—then the Republicans may be in a more difficult position than many people appear to assume.
Part of the issue turns on what will happen to people who lose the subsidies. If they lose their health insurance, then the Republicans are likely to be blamed by the press. If the Republican Congress does not give Obama what he wants, then states may choose to adopt exchanges in order not to lose the subsidies. One issue favoring the Republicans is that the employer mandate will not apply to states with federal exchanges. In addition, the people who lose the subsidies are likely not to be covered by the individual mandate.
Questioning the effectiveness of the Center for Disease Control and Prevention has become the national pastime ever since two nurses in Dallas became infected with Ebola after following CDC protocols. Yet, one overriding fact rarely sees the light of day: CDC does not deliver medical care, none at all, and rarely ever sees or touches it. It is a data collection and analysis agency that makes recommendations to those who actually live with and treat the diseases.
CDCs legitimacy comes from its claimed abstract scientific expertise. President Barack Obama defended CDCs recommendation against state quarantine efforts to control the disease by insisting “We don’t just react based on our fears. We react based on facts and judgment and making smart decisions.” We rely on the “best science.”
As one of its first acts, the Republican Congress should give President Obama fast-track authority for the Trans-Pacific Partnership, a proposed trade agreement between the United States and most important Asian nations with the exception of China. This free trade zone can help boost economic growth and help balance growing Chinese power in Asia. Negotiations have been ongoing for some time, but fast-track is needed to throw them into high gear.
Under fast-track authority, Congress suspends its rules and guarantees the President an up or down vote on a trade agreement that meets certain conditions. These provisions can help the agreement succeed by preventing interest groups from picking it apart. When the United States uses fast-track authority, other nations are more likely to summon the political will to make concessions in negotiations.
“Have you heard of the wonderful one-hoss shay, that was built in such a logical way, it ran a hundred years to the day?” If you haven’t, you’ve missed one of the most amusing poems of the nineteenth century, Oliver Wendell Holmes Sr.’s splendid satire of the American constitution. Shays or carriages break down, said Holmes, when one joint is stronger than the next. “There’s always somewhere a weakest spot, … and that’s the reason, beyond a doubt / A chaise breaks down but doesn’t wear out.” And so the Deacon built a carriage that wouldn’t break down because each part was a strong as the rest. On and on the carriage went, until 100 years from the day it was made it all turned into dust. “End of the wonderful one-hoss shay, logic is logic, that’s all I say.”
The poem was written three years before the outbreak of the Civil War, when the defects of a logical constitution seemed all too apparent to Holmes’ fellow Bostonians. Not that the Framers were logicians, of course. They were almost all practical politicians and simply strove to give us something better than what they had had.
My friend and former colleague from the Office of Legal Counsel, Bill Levin, has been following the Halbig case closely. Here are his thoughts on the Supreme Court’s cert grant. For his previous thoughts on the case, see here.
First, election night and now the highly significant decision by the Supreme Court to grant cert in the Obamacare tax subsidy case, King v. Burwell.
After such a week, it is justifiable to speculate as to why the court accepted King.
The initial item of interest is timing. The case was considered by the Court in normal course at its October 31 Conference, but relisted to November 7 when cert was granted. It is utterly plausible, though unprovable, to assume the Court did not want a high profile determination released just days before the mid-term elections.
The conventional wisdom was that the Court would deny cert since there is presently no split in the circuits, following the D.C. Circuit grant of en banc review vacating the Halbig decision. In days to come it will surely be repeated ad nauseam on the left that the Court is indulging in politics by taking King out of normal order.
Professor Rappaport on this site correctly bucked the conventional wisdom in predicting cert acceptance. His reasoning, that four of the five conservative justices would refuse to let stand the D.C. Circuit end run to vacate Halbig, is appealing from a visceral perspective. The D.C. Circuit vacated the decision in Halbig, but not the panel’s well-reasoned opinion. From every practical perspective, a fully litigated split in the circuit currently exists with respect to the correct statutory construction of the ACA.
Regardless, King independently justifies expedient resolution on standard grounds.
Yesterday, GMU Law School celebrated the 25th Anniversary of the fall of the Berlin Wall—quite possibly, the only law school to commemorate the joyous occasion. The event was sponsored by the GMU Law & Economics Center and the Federalist Society. I was asked to deliver a few personal remarks. They appear below.