Tag Archives: regulation

Maybe It’s Time

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Andrew Ackerman and Jeffrey Sparshott described in The Wall Street Journal last week the status of the government’s recovery of TARP funds doled out during the bailouts.

Two things struck me:

Treasury has turned a profit on the Capital Purchase Program, the main federal effort to help stabilize financial markets. It invested a little less than $205 billion in 707 banks, and as of mid-February had gotten about $211 billion back.

However,

More than three years after the launch of TARP, the federal government still owns stakes in about 350 banks.

They continued on that last:

While the biggest institutions have long since paid back their rescue funding, many smaller banks have been slow to shed government aid.

The divide in part reflects the difficulties faced by many Main Street banks, often saddled with poorly performing commercial real-estate loans and limited ability to raise new funds. Together with weak regional economies and a tough lending environment, the banks haven’t been able to exit TARP.

Maybe it’s time for the Feds to exit them from TARP.  Maybe it’s time to get government out of the way, let these banks fail, and let them recover and move on.

Information Privacy

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In a burst of good sense, the Federal Trade Commission is on the right track.  Earlier this week, it “issued a strong call for commercial-data collectors to adopt better privacy practices and called for Congress to pass comprehensive privacy legislation.”  While I have no great confidence in Congressional skill at protecting our privacy, this would be a better choice than leaving our information to the tender mercies of “commercial-data collectors.”  As FTC Chairman, Jon Leibowitz, notes,

Simply put, your computer is your property.  No one has the right to put anything on [your computer] that you don’t want[.]

The FTC’s initial solution, though, is at best naïve.  Putting a “Do Not Track” button into Web browsers is doomed to failure as Google’s decision to ignore even user-deliberate attempts to prevent their browsers from yielding up personal information demonstrates.  Such a button will not prevent the data collection; it can only rely on a “Pretty please, Mr Data taker, don’t take my data” plea.  Beyond that, the data collectors already are weasel-wording the meaning of “Do Not Track.”  The online-ad industry, for instance, has decided it means “Do Not Target,” and it will still collect your data for “market research,” “product development,” and the like.  Oh, and “trust us.”

The need for overt controls that actually block the collection rather than relying on begging and the good offices of the collectors is demonstrated by, even more than the equivocations, the rank cynicism of those collectors and their objections.  The Wall Street Journal article at the first link cites the Executive Vice President of the Direct Marketing Association, Linda Woolley—whose group represents many of those data hounds—as saying her Association opposes

giving consumers access to marketing information because it would be expensive, difficult to keep secure and the type of data used by marketers doesn’t harm consumers.

Sorry, Madam, your costs aren’t relevant to my privacy.  You don’t get to hide from me what you’re trying to take from me because that might hurt your pocketbook.  As to your plaint that such data would be “difficult to keep secure,” it’s not secure now.  You’re already taking it without our permission, and often without our knowledge, and as Google has demonstrated, and as Apple has demonstrated with its unauthorized tracking via our smart phones.  Worse, your view of “security” is markedly different from ours.  And on what basis should we believe your claim that the data you’re taking from us to be “used by marketers” doesn’t harm us when you’re at such pains to hide those data from us?

Woolley says,

We are very wary about taking the information out of the information economy[.]

Since it’s not your information in the first place, and we’re only looking to recover that which you’ve taken without authorization, no data are being taken “out of the information economy.”  Your argument could be used by the burglar, who having successfully stolen the jewelry from our house, also is “wary of taking…out of [his] economy.”

A Thought on Regulations

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The Heritage Foundation has an interesting article about the costs of President Obama’s regulations.  I want to talk briefly about one aspect of that article, and to disagree a bit with the Foundation.

One of the outcomes of the Obama explosion of regulations is a concomitant explosion in red tape, and the Foundation suggests a solution to this.  The article at the above link cites an article by  James Gattuso and Diane Katz as containing the proper response: additional congressional oversight, claiming that such a thing is necessary to protect us and our economy from overregulation.  Moreover, Congress should require congressional approval of “new major rules promulgated by agencies, establish a congressional office of regulatory analysis, and establish a sunset date for federal regulations in order to ensure that substantive review of existing regulations continually occurs.”

Gattuso and Katz have it partially right.  There is no need for additional bureaucracy, Congressional or otherwise, to “oversee” us or our government.  That’s how we got Obamacare and Dodd-Frank and how we got the EPA foisted onto us.  The oversight is our duty as citizens, and we’ve been derelict in carrying out that duty.  It’s on us finally to get off our duffs and do our job.

There’s also no need for a “congressional office of regulatory analysis.”  That’s just more red tape waiting to happen.  If we want to know what a proposed regulation might cost, we already have an Office of Management and Budget in the Executive branch and a Congressional Budget Office in the Legislative branch to give us (perhaps conflicting) estimates.  These estimates then can help inform Congressional debate—see below.

The other two ideas are quite sound.  Every new rule proposed should be subject—individually, not in groups—to Congressional debate and Congressional approval, or rejection.  Moreover, every rule approved should be sunsetted: it should automatically expire after five years (to minimize the impact of political cycles).  If renewal is desired, then see above for proposed rules.

Some will object that this will greatly slow down the pace of rule-making, or that it interferes with Executive branch powers.  As to the first, what’s the downside of that slower pace?  As to the second, there is no such Executive branch power.  Executive regulatory rule-making authority is nothing more than a Congressional delegation of a limited capacity to the Executive branch, and that delegation can be withdrawn quite easily.

Bookkeeping

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Related to the Health and Human Services mandate to provide—and so to buy—contraception and abortion health insurance coverage at no cost to the “purchaser” is another final rule from HHS that requires those plans that cover abortion to collect a separate fee of $1 or more directly from the policy customers, with the money collected being used for abortion coverage.  The administration’s claim is that doing it this way means that abortions are not subsidized with taxpayer subsidies.

However.

Congressman Chris Smith (R, NJ) correctly observes,

Requiring the segregation of funds into allocation accounts—a mere bookkeeping exercise, is a cheap political trick designed to circumvent longstanding prohibitions on taxpayer funding of abortion.

Moreover, as Smith also notes, the rule pushes insurance companies obscure information about the surcharge in their benefits materials, so that customers are not readily able to discriminate among policies that do and do not cover abortions.  We’re all still subsidizing abortions, which violates the consciences and religious teachings of many of us.

With regard to the government as middleman denial, we’re all taxpayers—at least those of us who work and so must buy these policies and this coverage under that other HHS rule.  The idea that the Federal government isn’t acting as middleman in the collection and transfer of the funds doesn’t alter at all the fact that it is us taxpayers’ money that’s being used to subsidize abortion coverage.  But the premise that government isn’t middleman in this set of transactions is itself fictitious: it’s government that’s mandating the funds transfer; it is the necessary middleman here.

Finally, the dishonesty of this bookkeeping separation of the money is easily illustrated with a thought experiment.  Imagine a woman who has, in her mind, three needs: pay the rent, buy food, and get an abortion.  Imagine further that each of these items costs $1 and that the woman has only $2 to her name.  Now imagine a government man approaches the woman and says to her, “Here’s $1.  The only string attached is that you may not use this dollar to get an abortion.”  With the $3 the woman now has, she goes out and gets all three: she pays the rent, buys food, and get the abortion.  Prove the taxpayers’ dollar, which the government man gave the woman, was not used to get the abortion, when without that third dollar, she could not get all three, and with it, she actually did get all three.  That third dollar made it possible.

Some Thoughts on Obamacare

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Since the Supreme Court is taking up the Patient Protection and Affordable Act this week, I thought I’d rumble on about it for a bit.  There’s a nearby post of my rumblings on one aspect of the Act, the HHS contraceptives and abortion mandate, nearby.

As Adam White, of The Weekly Standard, points out,

Ordinarily, judges decide cases by applying the text of laws and the precedents laid down in previous cases. But the Supreme Court is no ordinary court, and the cases that it chooses to decide are not ordinary ones. Cases in which the lower courts disagree; cases of utmost national importance; cases for which there is little precedent or the written law is ambiguous​—​this is the Supreme Court’s daily fare.

Indeed.  However, for the Supreme Court, the text of the law can flow only from these sources: the supreme Law of the Land—our Constitution—and the law, here PPACA, as Congress wrote it and the President signed it.  Moreover, the Supreme Court can use that lesser law in its rulings only after finding that law to be constitutional—proper and necessary (not to the law’s purpose, but to effectuate one or more of Art I, Section 8’s enumerated Congressional powers).  If the law is not both proper and necessary, then the Court cannot use it in its ruling but must strike it down instead—and that, generally, becomes the substance of the Court’s ruling.

This is the sum of the present case before the Court: is the Individual Mandate part of PPACA constitutional, and by extension can PPACA without the Individual Mandate survive: is the Individual Mandate both proper and necessary.  Also informing the Court’s ruling, though, are secondary precedents, prior rulings by the Court in similar controversies.  These rulings are secondary precedents because they can only (legitimately) come into play after due consideration of what the Constitution actually says on this matter and then only after due consideration of the law itself—PPACA.

The present case rests on whether the Commerce Clause allows Congress to regulate individual entry into transactions, or whether such decisions can only be made by the individuals involved and only in accordance with the individuals’ own imperatives.  Next, the PPACA as an implementation of that regulation must be both a proper means of implementation—i.e., in conformance with the Constitution—and necessary—i.e., the most efficient and least intrusive means of effecting that regulation.

White goes on make a case for PPACA’s impact on the very structure of our governmental system, and the erosion, if not elimination, of the federalism system we have now, should PPACA be upheld.  In my meager post, I want to stay with the narrower questions: PPACA’s relationship with the Commerce Clause, the Necessary and Proper Clause, and individual liberty.

Commerce Clause argument

The Commerce Clause was well understood to regulate commerce solely among the several States and to regulate only the commerce of a product in being, explicitly excluding the original production of that product, regardless of the purpose of producing it (e.g., for interstate trafficking).  Thomas Jefferson made this point in his February 1791 Opinion… letter to President George Washington concerning the constitutionality of a national bank:

For the power given to Congress by the Constitution does not extend to the internal regulation of the commerce of a State, (that is to say of the commerce between citizen and citizen,) which remain exclusively with its own legislature; but to its external commerce only, that is to say, its commerce with another State, or with foreign nations, or with the Indian tribes.

Plainly, the Commerce Clause was not intended to enable the Federal government to reach inside any State to regulate trafficking, either the State’s internal commerce, or any individual’s commerce, any more than could the government reach inside any of the other Sovereign entities of the clause.

Nor was the clause intended to empower the Federal government to control in any way that inter-State trafficking.  The Federal government was only to regularize, or make uniform, the methods by, and the framework within which, the States with their aggregated trade might engage in commerce with each other and with other Sovereign powers.  Moreover, the trade in question consists in the commercial interactions themselves; it does not include the behavior of engaging in those transactions.  What was regularized was the exchange, and regularization does not include dictating behavior to Sovereign entities, including (Sovereign) individual citizens.

Finally, health insurance, explicitly, is not interstate commerce: the 50 states all have their own mandated requirements concerning what coverages must be included in policies and what range of premiums can be charged for those policies.  And more to the point, those policies cannot be sold in across state boundaries.  PPACA plainly violates all of this, reaching as it does inside each state to require its citizens to obey a Federal mandate to engage in trade at all.  Thus, PPACA fails the Commerce Clause test and is unconstitutional.

Necessary and Proper Clause argument

The “necessary and proper” phrasing of this clause requires that laws, to be legitimate, must be required for the goal to be achieved; further, they cannot be just for any legislative or “worthwhile” desire.  Chief Justice William Howard Taft made this clear the “Child Labor Tax Case” [emphasis mine]:

It is the high duty and function of this court…to decline to recognize or enforce seeming laws of Congress, dealing with subjects not entrusted to Congress, but left or committed by the supreme law of the land to the control of the States.  We cannot avoid the duty even though it require us to refuse to give effect to legislation designed to promote the highest good.  The good sought in unconstitutional legislation is an insidious feature because it leads citizens and legislators of good purpose to promote it without thought of the serious breach it will make in the ark of our covenant or the harm which will come from breaking down recognized standards.

Under the limited government of our social compact, if there are two laws that can be considered, the less intrusive, the less restrictive, one must be the one chosen; the less extensive law meets the need and does not attempt to do more.  Further, to be a proper Law, even if it were the only means of achieving a Congressional goal—necessary—that Law must be strictly fit and suitable: it must satisfy one of the enumerated powers.

Again, PPACA fails.  It is not proper because it’s unconstitutional under the Commerce Clause.

Quite apart from that, though, it’s not necessary because there are a myriad of other, less intrusive, means of addressing the claimed problem of too high, and increasing, health care and health insurance costs.  One method, for instance, would be to regularize the commerce of health insurance across state lines, beginning with allowing that in the first place, thereby allowing competition in this trafficking to bring down costs.  Related to that step is the framework step of requiring policies of differing companies that cover similar conditions to describe those coverages in similar terms, thus to ease consumer understanding.  Related, also, would be the step of disallowing government price-fixing of insurance coverage, including allowing the insurance companies to charge risk-based premiums—which will increase coverage of, among other things, preexisting conditions thus allowing price competition to bring down prices.  And this is just a sample of alternative, less intrusive, less restrictive laws.

Individual liberty argument

The Individual Mandate, by itself, takes away our freedom of choice.  No longer can we choose, for instance, not to buy health insurance and roll the dice on our health—no matter how foolish some might think such a choice.  Instead, Government presumes to choose for us—for our own good: we must buy.  Supporters claim that, since we all will consume health services at some time in our lives, those of us who do so while uninsured are freeloading off those who are insured.  This, though, is a dishonest canard.  There are many cases—my own included—where uninsured consumers pay their own way, entirely, out of their own resources.  And in my case, it was not done out of an abundance of wealth: my family was a bit above the then Federal Poverty Guideline in current income when we paid cash, from our own carefully husbanded-against-the-eventuality resources, for my wife’s biopsy and her subsequent bilateral mastectomy.

The loss of freedom extends far beyond the mere loss of choice concerning health insurance.  If the Federal government can require, under the Commerce Clause or any other rationale, an individual to buy health insurance, then that government can require that same American to buy another product, also (a particular automobile, perhaps).  That government can require that American to not buy yet another product (a firearm, perhaps).  And more generally, that government can require that American to buy, or not buy, on the government’s schedule and at the government’s dictated price.  We will have lost all of our freedom, and all of our control over our own property with this single Act.

What is the limiting principle, the principle that keeps this law from being utterly boundless?  There is no such limit.

Finally, those who argue that Wickard, and the like, will require the Supreme Court to uphold the PPACA must also explain why Brown erroneously did not uphold Plessy, and they must justify an act of naked Federal coercion, at gunpoint, to reverse Dred Scott.

In a just world, the Individual Mandate can only be struck down as unconstitutional. And since the Government has made the Individual Mandate an integral part of PPACA, explicitly eschewing any severability, PPACA must be struck down in its entirety.