Let the Courts Decide

by Dave Schuler on July 23, 2014

The DC Circuit and the 4th Circuit have arrived at directly contradictory rulings on the question of whether people who reside in states that did not set up their own exchanges under the PPACA are eligible for the subsidies specified by the law. The DC Circuit has said “no”; the 4th “yes”. Unless the DC Circuit reverses itself in an en banc decision this sets the stage for the matter being brought before the Supreme Court.

The editors of the Washington Post side with the 4th Circuit:

Given the contradictions, the administration’s interpretation deserves deference. That is particularly true because the administration’s reading accords with the law’s obvious intent: to offer affordable health-care coverage to a large number of Americans.

while the editors of the Wall Street Journal agree with the panel of the DC Circuit:

In Halbig v. Burwell, the D.C. Circuit Court of Appeals held that the Administration violated the Affordable Care Act by expanding subsidies to the 36 insurance exchanges run by the federal government. The plain statutory language of ObamaCare repeatedly stipulates that these credits shall flow only through “an Exchange established by the State.” The 2-1 panel majority thus did not “strike down” part of ObamaCare, as liberals and the media claim. Using straightforward textual construction, the court upheld the law the President signed but it vacated the illegitimate federal-exchange subsidies he tried to sneak in via regulation.

The point being ignored by the Post’s editors is brought forward by the editors of the WSJ:

Distinguishing between state and federal exchanges was no glitch or drafting error. In 2010 Democrats assumed that the unpopularity of ObamaCare would melt away and all states would run their own exchanges. Conditioning the subsidies was meant to pressure Governors to participate. To evade this language, the Internal Revenue Service simply pumped out a rule in 2012 dispensing the subsidies to all. The taxmen did not elaborate on niceties such as legal justification.

We know that the distinction wasn’t a “glitch or drafting error” because the issue was stated in the terms described by the WSJ by Sen. Max Baucus, the principle sponsor of the Senate bill that would become the PPACA, among others, contemporaneously with the passage of the law. By the way, you might be interested in this handy guide to the “Halbig” cases.

While much of the commentary is arguing the policy, the real question should be one of the law. Will we have a law that is circumscribed by the letter of the law and the expressed intentions of its authors or will we have a law that is determined by the unstated intentions and hopes of its supporters?

As Wittgenstein explained many years ago, it is impossible to make a perfectly unambiguous statement using natural language. Consequently, ambiguities in law are inevitable in every law and the longer and more intricate the law, the more ambiguities there will be. That means that if ambiguity in the law allows any possible interpretation, there is no law as we’ve known it. As I’ve written elsewhere, legislate in haste, repent at leisure.

Now let the courts decide.

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Cheap Talk

by Dave Schuler on July 22, 2014

There’s an article at Fiscal Times that gets dangerously close to the truth about the supposed lack of skilled workers:

“The story that there is a structural mismatch between the needs of expanding employers and the skills of the people waiting on the sideline…is based mainly on anecdotal evidence from individual companies,” he said.

When business owners complain about having difficulty filling jobs, Burtless said, “What’s always surprised me is the business journalists who decline to ask the obvious follow-on question: Have you tried offering them more money? Better benefits?”

“It’s cheap to say there is a mismatch in skills. It’s a little more expensive to pay workers more,” he said.

I think we have yet to come to terms with the implications of the prevalence of two career families. That brings up an interesting subject. What policies are the best during periods of great social change? What if we enter a period in which society is always in a state of upheaval?

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Why Is the Present Corporate Tax Rate Good?

by Dave Schuler on July 22, 2014

Edward Kleinbard urges us to adopt policies that end the practice of “inversion”, corporations changing countries for tax purposes:

Yet inversions are symptomatic of a corporate tax system that is highly distortionary, unstable and riddled with loopholes. The headline rate of 35% is well above world averages, effective rates imposed on investments vary wildly, and the international rules in particular are an incoherent mess. Inverting firms try to justify corporate self-help as the right response, but inversions both gut the domestic tax base and allow key players (those with international operations) to excuse themselves from the debate, while domestic firms are left holding the bag.

Thus fundamental corporate tax reform is urgently needed, but the path forward has two prongs. First, Congress should enact a temporary law to preserve the status quo, and thereby the corporate tax base, by treating inversions according to their economic substance, and by foreclosing the “hopscotch” strategies described above. Without this, there will be no corporate tax base left to reform.

Then both parties need to get serious about substantive reform, lowering the rate to say, 25%, and imposing a stable international regime that works well with territorial systems in other countries. The work Congress’s tax-writing committees did last year shows that reform is possible. Now congressional leadership needs to make it a priority.

What does present law achieve? That’s not a rhetorical question but a practical one. The only thing I can see that it positively does is help politicians by scoring brownie points with constituents eager to punish corporations and get them to pay “their fair share”, neither of which it accomplishes. That and providing a lever for securing donations from companies and their lobbyists eager to get a tax break.

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Wanna Buy a Laser?

by Dave Schuler on July 22, 2014

There’s an interesting post at RealClearScience on the sad story of the world’s highest energy laser:

So you spent 17 years and $5 billion to build a fusion experiment. You built a facility wider than the length of three football fields. You built a 400-foot-long laser with more than 33,000 optical parts; it is currently the highest energy laser in the world. You’ve been through more budget overruns and management problems than you’d care to admit.

Now, you finally turn the thing on at full power and carry out your experiment. And it fails monumentally. Now what?

I would have thought they would have had a backlog. Apparently not.

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The National Pastime

by Dave Schuler on July 21, 2014

Today seems to be “National Pick on Dodd-Frank Day”. Perhaps it should be added to the list of federal holidays. The editors of Bloomberg get the ball rolling with the complaint that Dodd-Frank isn’t doing anything:

Four years after President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law, polling suggests that most Americans think it hasn’t done enough to protect them from a repeat of the 2008 financial crisis, a disaster from which the global economy has yet to fully recover.

Unfortunately, they’re right.

while Peter Wallison whinges that it’s doing far too much:

When the Dodd-Frank Wall Street Reform and Consumer Protection Act took effect on July 21, 2010, it immediately caused a sharp partisan division. This staggeringly large legislation—2,300 pages—passed the House without a single Republican vote and received only three GOP votes in the Senate. Republicans saw the bill as ObamaCare for the financial system, a vast and unnecessary expansion of the regulatory state.

Four years later, Dodd-Frank’s pernicious effects have shown that the law’s critics were, if anything, too kind. Dodd-Frank has already overwhelmed the regulatory system, stifled the financial industry and impaired economic growth.

According to the law firm Davis, Polk & Wardell’s progress report, Dodd-Frank is severely taxing the regulatory agencies that are supposed to implement it. As of July 18, only 208 of the 398 regulations required by the act have been finalized, and more than 45% of congressional deadlines have been missed.

The effect on the economy has been worse. A 2013 Federal Reserve Bank of Dallas study showed that the GDP recovery from the recession that ended in 2009 has been the slowest on record, 11% below the average for recoveries since 1960.”

I don’t think that either opinion piece sees the big picture here. Dodd-Frank is clearly a jobs program. Full employment for federal bureaucrats. It’s an overwhelming success. Heckuva job.

That under Dodd-Frank we’ve seen a constant progression towards increasing centralization of the banking industry into the hands of an ever-shrinking few “too big to fail” banks does not seem to concern anyone. You can’t make an omelet without breaking eggs, can you?

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The Buck Stops Where?

by Dave Schuler on July 21, 2014

At Fiscal Times David Patrick calls for letting Europe “do the heavy political lift” on dealing with Russia on the Ukraine:

“Days after the plane went down,” Liow said over the weekend, “the remains of 298 people lie uncovered. Citizens of 11 nations, none of whom are involved in the conflict in eastern Ukraine, cannot be laid to rest.”

These conditions at the crash site say it all now. The MH-17 tragedy transforms the Ukraine crisis into one that must be taken, decisively and immediately, out of the hands of its two belligerents, the Kiev government and the rebels who oppose them. This means international engagement of a seriousness not yet achieved.

Mr. Patrick does a pretty fair job of explaining some of the interests that various European countries have in pacifying the situation in the Ukraine. He doesn’t do nearly as good a job of explaining why they wouldn’t want to delegate that job to us. Or why we should be interested in doing the heavy lifting for them.

Let me summarize. We have no direct national interests in Ukraine. Russia does. We have an interest in not increasing tensions with Russia. We don’t do nearly as much trade with Russia as Europe does. Every move by us I have seen anyone propose would produce an escalation in the conflict rather than reducing tensions.

This entire crisis is a near-perfect example of the sort of thing where we should be able to depend on Germany, France, Italy, the Netherlands, etc. to take the lead because of their direct interests but can’t.

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Searching for an Answer

by Dave Schuler on July 20, 2014

There’s an interesting article at Fiscal Times on the alternatives for punitive measures against Russia. Here are David Francis’s proposals:

  • Arm the Ukrainian military.
  • Strangle the Russian economy.
  • Extend NATO membership to Ukraine.

I think that each of those proposals is problematic in its own way and all fail by the standards I suggested yesterday. Is the present Ukrainian government really one we want to ally ourselves with? Germany in particular has shown few signs of any appetite for further economic sanctions against Russia. As I said yesterday, it’s not a crisis until Europe decides it’s a crisis.

Finally, the Ukraine is not a vital interest for us but it is a vital interest for Russia not only because of its substantial Russian population and historic ties but for its strategic importance. Do we really want to commit to defend the country? Does anybody believe that we would?

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James Garner, 1928-2014

by Dave Schuler on July 20, 2014

Many years ago when television and I were much younger and television was testing its legs to see what genres were best-suited to the still-new medium, the Warner Brothers studio had a sort of repertory of westerns that played on ABC. Each was headed by a tall, good-looking, second- or third-tier contract player. Of these westerns the star of the most popular was a tall, impossibly handsome, easy-going Oklahoman. Now James Garner has died at the age of 86:

James Garner, a master of light comedy who shot to fame in the 1950s as the charming and dry-witted gambler on the hit TV western “Maverick” and later won an Emmy Award as the unconventional L.A. private eye on “The Rockford Files,” has died. He was 86.

Garner was found dead Saturday at his home in Brentwood, Los Angeles police officer Alonzo Iniquez told the Associated Press. Garner underwent quintuple bypass heart surgery in 1988 and suffered a stroke in 2008, but the cause of death was not immediately known.

Once described by Washington Post TV critic Tom Shales as having “embodied the crusty, sardonic and self-effacing strain of American masculinity” in his iconic roles as Maverick and Rockford, the Oklahoma-born Garner amassed more than 80 movie and TV-movie credits during his more than 50-year career.

After his stint on television’s Maverick, Garner went on to become a major motion picture star, appearing in a string of hit movies in the 1960s including The Children’s Hour, Boys’ Night Out, The Great Escape, and The Americanization of Emily. Many of the obituaries point to his talent for light comedy but it was as a dramatic actor that Garner had cut his teeth on stage and he excelled at it.

His motion picture career peaked with a pair of western spoofs, Support Your Local Sheriff and Support Your Local Gunfighter.

He returned to television to star in a modern day remake of Maverick, The Rockford Files.

His last role as a romantic lead was in 1985′s Murphy’s Romance. In it he played an elderly pharmacist courting Sally Fields’s spunky 40 year old ingenue. He received an Academy Award nomination for his performance in it. Murphy’s Romance remains one of my favorite pictures, one of the handful I could watch over and over again.

Garner never fit comfortably into the studio system. His relationships with the studios for which he worked were fractious. His parting with Warner Brothers was bitter; he sued Universal twice.

I think that the secret of James Garner’s success on both the big and small screens was that he always played himself and James Garner was always interesting and charming enough for us to want to watch.

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Spent Force

July 19, 2014

Gunmen of the “Islamic State” née ISIS (or ISIL) have defeated the Iraqi military and its Shi’ite militia allies at Tikrit: RBIL, Iraq — Islamic State gunmen overran a former U.S. military base early Friday and killed or captured hundreds of Iraqi government troops who’d been trying to retake Saddam Hussein’s hometown of Tikrit, the […]

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Buying New Cookware

July 19, 2014

We finally broke down and bought new cookware. When my wife and I were married, I had a set of Le Creuset enamel-coated cast iron cookware which I loved. My wife pronounced it too heavy to use (something she only does rarely anyway) and, shortly after we married, we purchased a set of Calphalon anodized […]

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