The Heritage Insider: The Left told us to pay attention to veterans hospitals, IRS will write different rules against free speech next year, ObamaCare still has constitutional problems, and more

Updated daily, InsiderOnline (insideronline.org) is a compilation of publication abstracts, how-to essays, events, news, and analysis from around the conservative movement. The current edition of The INSIDER quarterly magazine is also on the site.

May 24, 2014

Latest Studies: 43 studies, including a Competitive Enterprise Institute report on why tilting the playing field for big firms doesn’t help the economy, and a Mercatus Center report on the economic costs of policies that target benefits for particular firms

Notes on the Week: The Left told us to pay attention to veterans hospitals, IRS will write different rules against free speech next year, ObamaCare still has constitutional problems, and more

To Do: Remember those who sacrificed

Latest Studies

Budget & Taxation
• Time to Privatize OPIC – The Heritage Foundation
• The Export-Import Bank’s Green Portfolio Benefits Familiar Firms – Mercatus Center
• How Much Do U.S. Multinational Corporations Pay in Foreign Income Taxes? – Tax Foundation

Crime, Justice & the Law
• The Asymmetric Enforcement of Federal Copyright Laws – Hudson Institute

Economic and Political Thought
• Do Chimps Have Human Rights? – Hoover Institution

Economic Growth
• House Prices and Land Prices under the Microscope: A Property-Level Analysis for the Washington, DC Area – American Enterprise Institute
• Why Family Businesses Matter – Competitive Enterprise Institute
• The Russian Economy Stares into the Abyss – The Heritage Foundation
• The Political Economy of State-Provided Targeted Benefits – Mercatus Center

Foreign Policy/International Affairs
• Realistic U.S.–German Cooperation over Russia – The Heritage Foundation
• The Pacific Alliance: A Latin American Role Model for the United States – The Heritage Foundation
• U.S. Should Condemn Spain and France’s Military Support to the Russian Federation – The Heritage Foundation
• Ukraine: Who Holds What Cards—and Why We Still Need to Play – Hudson Institute

Health Care
• Reform for a Healthy Future: Expanding Scope of Practice for Nurse Practitioners in Texas – Texas Public Policy Foundation

Immigration
• German Jewish Émigrés and U.S. Invention – Cato Institute

International Trade/Finance
• Congress Should Reject Proposed Food Aid Shipping Mandate – The Heritage Foundation

Labor
• Equal Pay for Equal Work: Examining the Gender Gap – The Heritage Foundation

National Security
• Measuring Military Capabilities: An Essential Tool for Rebuilding American Military Strength – The Heritage Foundation

Natural Resources, Energy, Environment, & Science
• California’s New Solar Plant: Burning Up Taxpayer Money, Land, and Wildlife – American Enterprise Institute
• Time to Lift the Ban on Crude Oil Exports – The Heritage Foundation

Regulation & Deregulation
• New FDA E-cigarette Regulations: Killing an Industry, Killing Smokers – American Enterprise Institute
• Challenging Government-Sponsored Private Regulation of Competitors – Reason Foundation

Welfare
• The Great Society at 50: The Triumph and the Tragedy – American Enterprise Institute
• Trends in Assistance and Dependency: Tracking Programs for New York City’s Poor, 1956–2014 – Manhattan Institute

Notes on the Week

Veterans hospitals show how successful government-run health care is, said liberals. Of course, that was before the Arizona Republic reported last month that at least 40 veterans had died while waiting for appointments at the Phoenix VA hospital and before CNN reported last month that the hospital’s managers had created a secret wait list and shredded documents in an attempt to hide the fact that 1,400 to 1,600 sick veterans were forced to wait months to see a primary care physician. [“Deaths at Phoenix VA Hospital May Be Tied to Delayed Care,” by Dennis Wagner, Arizona Republic, April 10; and “A fatal wait: Veterans languish and die on a VA hospital's secret list,” by Scott Bronstein and Drew Griffin, CNN, April 30]

Since then other problems have come to light at veterans hospitals around the country, including those in Fort Collins, Colo.; Austin and San Antonio; Cheyenne, Wyo.; Durham, N.C.; St. Louis; and Chicago. [See Avik Roy’s rundown of the problems in his article “No, the VA Isn’t a Preview of Obamacare—It’s Much Worse,” Forbes, May 23, 2014]

Back in 2011, Paul Krugman wanted us to think the Veterans Health Administration offered lessons for health care policy:

Multiple surveys have found the V.H.A. providing better care than most Americans receive, even as the agency has held cost increases well below those facing Medicare and private insurers. Furthermore, the V.H.A. has led the way in cost-saving innovation, especially the use of electronic medical records.

What’s behind this success? Crucially, the V.H.A. is an integrated system, which provides health care as well as paying for it. So it’s free from the perverse incentives created when doctors and hospitals profit from expensive tests and procedures, whether or not those procedures actually make medical sense. And because V.H.A. patients are in it for the long term, the agency has a stronger incentive to invest in prevention than private insurers, many of whose customers move on after a few years.

And yes, this is “socialized medicine”—although some private systems, like Kaiser Permanente, share many of the V.H.A.’s virtues. But it works—and suggests what it will take to solve the troubles of U.S. health care more broadly. [New York Times, November 13, 2011]

And in 2009 Ezra Klein wanted to let everyone go to Veterans Hospitals:

If you crudely ordered America’s different health-care systems from least government control to most, it would look something like this: individual insurance market, employer-based insurance market, Medicare, Veterans Health Administration (Medicare is single-payer, but VA is actually socialized medicine, where the government owns the hospitals and employs the doctors).

If you ordered America’s different health systems worst-functioning to best, it would look like this: individual insurance market, employer-based insurance market, Medicare, Veterans Health Administration.

That symmetry should get more attention in the health-care discussion than it does. [Washington Post, June 3, 2009]

Two-thirds of climate scientists are not part of the climate consensus. If you take the time to look into it and then read carefully, you’ll discover that the claim that 97 percent of climate scientists believe in climate change is “self-serving political tommyrot,” says Steve Hayward. Hayward observes that “[t]he most prominent form of [the claim] comes from Prof. John Cook of the University of Queensland in a paper published last year that purported to have reviewed over 11,000 climate science articles.” The key passage from Cook’s research:

We find that 66.4% of abstracts expressed no position on [Anthropogenic Global Warming], 32.6% endorsed AGW, 0.7% rejected AGW and 0.3% were uncertain about the cause of global warming. Among abstracts expressing a position on AGW, 97.1% endorsed the consensus position that humans are causing global warming.

In other words, says Hayward, “[m]any of these articles do not take a position on the magnitude of possible future warming, and fewer still embrace giving the car keys over to Al Gore.” And then:

The plot thickens. Prof. Cook refused to share his data with anyone. Shades of the East Anglia mob and their tree ring data. But also like the East Anglia mob, someone at the University of Queensland left the data in the ether of the internet, and blogger Brandon Shollenberger came across it and starting noting its weaknesses. Then the predictable thing happened: the University of Queensland claims that the data was hacked, and sent Shollenbeger a cease-and-desist letter. That just speaks lots of confidence and transparency, doesn’t it? [Powerline, May 18]

A free market hero: On Wednesday, the Cato Institute awarded Leszek Balcerowitz with its biennial Milton Friedman Prize for Advancing Liberty for his role in freeing the post-Communist Polish economy. Michael Tanner details the magnitude of Balcerowitz’s accomplishment:

When Balcerowicz became deputy prime minister and minister of finance in 1989, Poland’s economy, like those of most Eastern European countries, was a basket case. The country’s debt exceeded two-thirds of its GDP. Inflation ran as high as 250 percent per year. Both national income and productivity were declining, while basic consumer goods were often in short supply.

Balcerowicz rejected Keynesianism, choosing instead policies dubbed by both supporters and opponents as “shock therapy.” Prices were deregulated, and Balcerowicz balanced the budget by slashing government spending. State-owned enterprises (SOEs) were sold off: Almost 1,900 were directly privatized in the first half of the decade, and many more were liquidated or had to declare bankruptcy because they were inefficient and unable to compete in a market economy. The sales and closings removed these distortions from the economy.

Balcerowicz vigorously pursued a free-trade agenda, cutting tariffs and other import barriers. He was an early advocate of social-security privatization and helped set the stage for the introduction of privately invested personal accounts as part of Poland’s national pension system.

It was not a painless process, of course. Initially, unemployment spiked. Economic output continued to decline, driven in part by former state enterprises that failed to adapt to market competition. There were protests. Political opponents both inside and outside Poland attacked him. The EU and other institutions told him to alter his policies. His political popularity plummeted. Yet Balcerowicz refused to change course.

Within a few years, Poland was on the road to recovery. By 1992, just two years into the Balcerowicz plan, inflation had been largely tamed. Shortly thereafter, the economy began to grow again. Foreign investment has poured into the country, with some 6,000 foreign firms opening operations since 1990. In the years since Balcerowicz implemented his reforms, Poland’s real GDP has doubled, and today the average Polish income is roughly equivalent to that of Portugal. [National Review, May 21]

How to support marriage and freedom: Is it “game over” on marriage? No, says Ryan Anderson, who offers a detailed strategy for protecting and promoting marriage. Here are, paraphrased, the six elements of Anderson’s plan:

• Defend the right of the states to define marriage as a union of one man and one woman. After all, in striking down the Defense of Marriage Act, the Supreme Court said that the prerogative to define marriage belongs to the states.

• Advance the argument for the classically liberal form of limited government so as to protect the rights of individuals to follow their own conscience about marriage—including the right to not participate in same-sex weddings or recognize same-sex relationships as marriages.

• Continue to make the intellectual case for defining marriage as a union of one man and one woman. Anderson: “There is something perverse in conservatives thinking that ideas have consequences but that good ideas can’t persuade.”

• Emulate free market supporters success in building a movement. Winning on marriage will require a more diverse network of socially conservative think tanks, advocacy groups, media outlets, and university programs.

• And don’t forget the role of the church: “No matter what, the church will play a central role in shaping opinions on marriage. If it chooses to remain rather silent, it will shape opinion by default. On the other hand, it can rise to the occasion in developing a compelling response to the sexual revolution. And it possesses the only fully satisfying response.”

• Learn how to take the long view of the fight, as the pro-life movement has done in the battle for life.

Read the whole thing: “Six Things You Can Do to Support Marriage and Freedom,” by Ryan T. Anderson, May 23, The Foundry.

Image of the week: How maritime protectionism makes things more expensive. Here’s an image that shows the absurdity of the Jones Act, which requires “that any goods shipped by water between two points in the United States must be transported on a U.S.-built, U.S.-flagged, and at least 75 percent U.S.-crewed vessel.”

[“Sink the Jones Act: Restoring America’s Competitive Advantage in Maritime-Related Industries,” by Brian Slattery, Bryan Riley, and Nicolas Loris, The Heritage Foundation, May 22]

ObamaCare—now with less transparency: According to PoliticoPro, there will be no more monthly reports on ObamaCare enrollment. Even though the open enrollment period has ended, people can still drop out and re-enroll. Without regular enrollment reports, we can’t be sure an insurance death spiral isn’t happening, explains Michael Cannon:

I have written at some length about the huge incentives ObamaCare creates to drop one’s coverage and wait until sick to re-enroll, and how those incentives threaten the stability of the law’s health insurance Exchanges. Basically, if you drop your coverage, (1) avoiding the penalty is fairly straightforward, (2) you can get re-enroll the following January no matter how sick you get, and (3) in many cases, ObamaCare lets you enroll in coverage before January, again no matter how sick you get. If healthy enrollees become aware of and act on this perverse incentive, the Exchange pools will grow sicker, premiums will rise further, and the Exchanges could collapse.

[…] [I]f attrition overwhelms new enrollment, it could mean that consumers find Exchange plans too expensive relative to job-based coverage, or that the poor quality of Exchange coverage is causing people to flee, or that people are gaming the system in the above manner. You would think this is something worth monitoring. And it is. HHS just doesn’t want you monitoring it. [Forbes, May 22]

The IRS’s threat to free speech has been delayed. The Internal Revenue Service announced on Thursday that it would scrap its proposed rules that sought to limit political activity by tax exempt non-profits. The agency said it would rewrite them next year. The IRS had received an unprecedented number of comments about the rules—150,000—and many of those comments were negative. Both liberal and conservative nonprofits had criticized the proposed rules for proposing to define candidate-related political activity so broadly as to chill a significant amount of discourse about public policy issues. [Politico, May 22]

Attorney Cleta Mitchell, who has done more than just about anyone to educate the public about the threat posed to free speech rights by the IRS’s rules, told Newsmax that she expects the fight to resume next year:

“I wish they would have said that ‘if we do decide that we need regulations, we’re going to have hearings first and hear what people have to say, and we’re not going to continue this process in secret behind closed doors,’” she said. “So that’s the part that worries me, is what are they going to do next?”

“Every agency, every federal agency is supposed to publish online and you’re supposed to be able to look and see what regulations they’re working on,” she explained. “Except, they didn’t do that. They didn’t add this rule making to their plans until two days before they issued it.” The Washington attorney said that the reason the IRS must function in such secrecy is because “the things that they do and the things that they’re trying to do cannot withstand the scrutiny in the light of day.” [Newsmax, May 23]

Video of the week: We’re still counting the votes from 1964. George Will on the most consequential loser in American politics, Barry Goldwater:

Why does the Left want full employment for machines? Rising labor costs—whether caused by higher minimum wages or ObamaCare mandates—run the risk of inducing employers to cut jobs and use more machines instead. How easy is it for businesses to substitute capital for labor? When it comes to low-skill, manual labor in restaurants—the kind of work most likely to pay the minimum wage—employers are already moving ahead with automation. Just a few examples from a report by Ira Stoll:

McDonald’s announced this month that it will deploy computer kiosks at 7,000 restaurants in Europe, allowing customers to place their own orders and pay by swiping their own credit card.

Another restaurant chain, Panera, is deploying the computer kiosks for customers in the U.S., a development that Bloomberg News reported under the headline, “More Kiosks, Fewer Cashiers Coming Soon to Panera.”

The fast-food trade publication QSR reports that a McDonald’s in Laguna Niguel, Calif., is experimenting with iPads that let customers customize their hamburgers. A White Castle in Columbus, Ohio, has deployed computer kiosks that let customers place their own orders, unassisted by a paid human being.

“Both Chili’s and Applebee’s recently announced that they are adding tablets throughout their restaurants, allowing customers to order and pay at their tables,” the QSR story says.

Nextep Systems, a Troy, Michigan-based firm that specializes in touch-screen self-order systems, says its sales for 2013 were up 50 percent from the prior year. At some point, you won’t even need the kiosk—you’ll be able to order from an app on your smartphone, maybe even before you arrive at the restaurant. [Newsmax, May 19]

When machines can do work more efficiently than humans, then it makes sense for employers to use them. That’s just creative destruction: Innovations that economize on the need for labor make us all more productive—and wealthy. But when minimum wage laws and other regulations artificially raise the price of labor relative to capital, then low-skilled workers lose jobs that would have benefitted both them and their employers.

By the way, the CEO of Panera has stated publicly that he supports raising the minimum wage. But given his company’s plans to use more automated kiosks, why wouldn’t he? It’s a way of raising the costs of Panera’s competitors for whom automated kiosks don’t make economic sense.

Does your nonprofit need a social media policy? How do you create one? SparkFreedom had a webinar recently on what a social media policy is and why your non-profit might want to consider having one. Dave Buer of the Sutherland Institute and Sara Johnson of SparkFreedom discuss:

ObamaCare has a real constitutional problem. One of the bad arguments peddled in defense of ObamaCare these days has to do with the lawsuit claiming that the Senate violated the constitutional requirement for revenue raising bills to start out as House bills (the Origination Clause). For example, according to the editors of the New York Times in the paper’s May 18 edition, there’s no problem on that front because: (1) ObamaCare was not primarily a revenue-raising measure; and (2) even if it was, the bill that became ObamaCare satisfies the Origination Clause because it “started out as a House bill to modify tax credits for certain first-time home buyers and increase the estimated tax payments owed by corporations.”

Would you believe that the facts are exactly contrary to the New York Times on both points—i.e., ObamaCare was a revenue-raising measure but the House “shell bill” was not? Randy Barnett explains:

[T]he House bill raised no revenue at all. It increased tax credits (thereby lowering revenue) and changed the timing and amount of certain estimated tax payments and penalties for nonpayment, which the courts have ruled are not the same thing as the underlying taxes themselves. So like most everything else surrounding the adoption and implementation of the ACA, the Senate messed up and chose a non-revenue raising House bill to “amend” so as to comply with the Origination Clause. […]

The very fact that the Senate went to the trouble of “amending” this House bill shows that the Democrats in the Senate believed — correctly — that the ACA was indeed a revenue bill. Of course it was, as it contained 20 or so new taxes, on a variety of things and activities, the revenue from which goes into the treasury’s general coffers. […]

If a gigantic bill containing numerous taxes raising revenue to pay for other measures is not a “bill for raising revenue” because it also includes many other non revenue provisions, then the Origination Clause is a mere drafting rule, rather than a constitutional requirement that taxes be originated in the House of Representatives and not in the Senate. [Washington Post, May 19]

Among the taxes in ObamaCare as originally passed were surtaxes on investment income, a hike in the Medicare payroll tax, an excise tax on so-called “Cadillac” health insurance plans, and taxes on both medical device manufacturers and innovator drug companies. Those taxes, at least when passed, were expected to raise $500 billion over the first 10 years of the law. Now that the 10-year estimating window includes more years in which the tax provisions are actually in effect, the tax take is more like $1 trillion and rising. [See, for example, the Congressional Budget Office’s estimate for the 2013-2022 period. Also see: “Full List of Obamacare Tax Hikes: Listed by Size of Tax Hike,” Americans for Tax Reform, June 29, 2012.]

To Do: Remember Those Who Sacrificed

• Monday is Memorial Day, so take a moment to remember those men and women, soldiers and sailors and airmen, who sacrificed so that we could be free. [Photo at right from The Official Website of Arlington National Cemetery]

• Consider whether the Senate needs a little more gridlock. James Wallner will discuss his book The Death of Deliberation: Partisanship and Polarization in the United States Senate. Wallner’s talk will begin at noon on May 28 at The Heritage Foundation.

• Examine the state of religious liberty in the military. Rep. John Fleming (R - La.) will speak at the Family Research Council at noon on May 28.

• Hear the evidence that tax levels do indeed matter. The Heritage Foundation will host Arthur Laffer, Rex Sinquefield, and Stephen Moore discussing their book An Inquiry into the Nature and Causes of the Wealth of States: How Taxes, Energy, and Worker Freedom will Change the Balance of Power Among States. The discussion will begin at noon on May 29.

• Learn about the escalating costs and challenges of Medicaid under ObamaCare. The Cato Institute will host a discussion of what state policymakers can do to get Medicaid under control. The discussion will begin at noon on May 27.

• Get out your nice clothes and have a ball at the Annual America’s Future Foundation Gala. The fun will begin at 7 p.m. on May 28 at the Reagan Building in Washington, D.C.

• Examine the connection between economic liberty and human flourishing. The American Enterprise Institute will host a panel discussing the importance of economic liberty in the moral philosophies of the West’s great thinkers. The event will begin at 5:15 p.m. on May 27 at the American Enterprise Institute.

• Confab with your tax reform allies from 54 countries at the World Taxpayers Conference in Vancouver Canada. The conference will run from May 29 to May 31.

(Want more stuff to do? Check out InsiderOnline’s Conservative Calendar.)

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