The Heritage Insider: Religious liberty loses in Indiana, the Budget Control Act is working, U.S. social spending is second-highest in the world, and more

April 4, 2015

Latest Studies
55 new items, including a Tax Foundation report on the burden of capital gains taxes, and a Manhattan Institute report on growth of the shadow regulatory state

Notes on the Week
Religious liberty loses in Indiana, the Budget Control Act is working, U.S. social spending is second-highest in the world, and more

To Do
Learn more about the Constitution

Latest Studies

Budget & Taxation
• Alabama’s Public Pensions: Building a Stable Financial Foundation for the Years Ahead – Alabama Policy Institute
• Transition Costs and Public Employee Pension Reform – American Enterprise Institute
• Gov. Wolf’s Proposed Property Tax Shift – Commonwealth Foundation for Public Policy Alternatives
• A Remedy for Taxpayer Giveaway to Unions: Time to Enforce Missouri Constitution’s Bar on Gifts to Private Parties – Competitive Enterprise Institute
• Preempting Discriminatory State or Local Taxes: Does Congress Have a Role? – Federalist Society
• How Compensation Spending Consumes Provincial Government Resources in Ontario – Fraser Institute
• Keep the Spending Caps – Heritage Foundation
• Proposal 1 of 2015: An Analysis – Mackinac Center for Public Policy
• Cracking the Code: Analysis of the Governor’s Proposed 2016-2017 Biennial Budget – Maine Heritage Policy Center
• The Budget Act at Forty: Time for Budget Process Reform – Mercatus Center
• The State of Pension Funds in Pennsylvania – Mercatus Center
• What Is in the Lee-Rubio Tax Plan? – National Center for Policy Analysis
• The 13 Million Percent Tax: Nevada Considers Complex, Arbitrary BLF Proposal – Tax Foundation
• The High Burden of State and Federal Capital Gains Tax Rates in the United States – Tax Foundation

Crime, Justice & the Law
• Without Law or Limits: The Continued Growth of the Shadow Regulatory State – Manhattan Institute

Economic and Political Thought
• Fatal Shore or Land of Opportunity? – Centre for Independent Studies
• Behavioral Public Choice: The Behavioral Paradox of Government Policy – Mercatus Center

Economic Growth
• How Fast Are Semiconductor Prices Falling? – American Enterprise Institute
• Crony Capitalists – Capital Research Center
• Achievable Economic Policy Reforms for Congress – Heritage Foundation
• Vis Medicatrix Naturae – Pacific Research Institute
• Breaking Apart the Perfect Litigation Storm: House Bill 3646 and Senate Bill 1628 – Texas Public Policy Foundation

Education
• Civic Education Professional Development: The Lay of the Land – American Enterprise Institute
• Trendsetting Charter Schools: Raising the Bar for Civic Education – American Enterprise Institute
• Expanding METCO and Closing Achievement Gaps – Pioneer Institute for Public Policy Research
• Washington State Public Schools and the Common Core – Washington Policy Center

Elections, Transparency, & Accountability
• Wanted: A Color-Blind Voting Rights Law – Hoover Institution
• Slicing Up the Public Sector: A Radical Proposal for Devolution – Institute of Economic Affairs

Family, Culture & Community
• The Moynihan Report 50 Years Later: Why Marriage More Than Ever Promotes Opportunity for All – Heritage Foundation
• Prison-to-Work: The Benefits of Intensive Job-Search Assistance for Former Inmates – Manhattan Institute

Foreign Policy/International Affairs
• Iran’s Noncompliance with Its International Atomic Energy Agency Obligations – American Enterprise Institute
• Friends Like These: Why Petrostates Make Bad Allies – Cato Institute
• True North: Economic Freedom and Sovereignty Must Be at the Heart of the U.S. Chairmanship of the Arctic Council – Heritage Foundation
• The Tipping Point In The Middle East – Hoover Institution
• A Reform Agenda For Egypt – Hudson Institute
• Prophecy & the Jihad in the Indian Subcontinent – Hudson Institute

Health Care
• Expanding Trade in Medical Care Through Telemedicine – Cato Institute
• Four Problems with Physician-Assisted Suicide – Heritage Foundation
• King v. Burwell: A Loss of Subsidy Does Not Mean a Loss of Coverage – Heritage Foundation
• Certificate-of-Need Laws: Implications for Georgia – Mercatus Center
• Certificate-of-Need Laws: Implications for Tennessee – Mercatus Center
• Does Connecticut Have Enough Healthcare? – Yankee Institute for Public Policy

Immigration
• Securing the Border: Understanding and Addressing the Root Causes of Central American Migration to the United States – American Enterprise Institute
• The Nature and Impact of Illegal Immigration on Security in Texas – Texas Public Policy Foundation

Information Technology
• Regulating Net Neutrality: Who Will the FCC Really “Protect”? – Free State Foundation

National Security
• 64th Islamist Terrorist Plot Since 9/11 Shows the U.S. Must Combat Radical Islamist Threat – Heritage Foundation
• Breeding Ground For Terrorism – Hoover Institution

Natural Resources, Energy, Environment, & Science
• The Strategic Consequences of Increased U.S. Energy Production – Hoover Institution
• EPA Overreach Will Shrink Florida’s Economy – James Madison Institute
• Subsidies Are the Problem, Not the Solution, for Innovation in Energy – Mercatus Center
• Baby Got Brack: Desalinating Brackish Groundwater in Texas – Texas Public Policy Foundation

Regulation & Deregulation
• North Carolina Dental Board and the Reform of State-Sponsored Protectionism – Heritage Foundation
• State “Competitor Veto” Laws and the Right to Earn a Living: Some Paths to Federal Reform – Mercatus Center

Retirement/Social Security
• Why Americans Don’t Face a Retirement Crisis – American Enterprise Institute

Transportation/Infrastructure
• Overview of Spokane’s Electric Trolley Proposal – Washington Policy Center

Indiana’s Religious Freedom Restoration Act did not need to be fixed. The political Left went apoplectic this week when the Indiana legislature dared to put into place protections for the practice of religious faith that mirror those found in the federal Religious Freedom Restoration Act. Some twenty or so other states have similar laws on the books, and they all create a balancing test for courts to adjudicate conflicts between generally applicable laws and the practice of religious faith. Basically, those laws require the government to show that it is acting in furtherance of a compelling government interest whenever it substantially burdens a person’s practice of religion and that it is using the least restrictive means of furthering that interest.

After Indiana joined the ranks of states with a Religious Freedom Restoration Act, commentators and activists on the Left charged that homosexuals could now be denied any kind of service at the mere whim of a proprietor. Gov. Mike Pence (R) called for changes to the law and the Indiana legislature obliged. As Ryan Anderson explains, however, the law didn’t need to be fixed:

[T]he proposed “fix” amounts to nothing less than a wholesale repeal of the Indiana Religious Freedom Restoration Act with respect to those who need religious liberty protections the most.

The “fix” is bad public policy that explicitly exempts sexual orientation and gender identity laws from the Religious Freedom Restoration Act except with respect to a narrow class of nonprofit religious organizations and their agents. The “fix” specifically targets the millions of other religious Americans who wish to live their lives in accordance with their faith values, free from government coercion. […]

[T]his fix does not create new sexual orientation and gender identity privileges in Indiana; it says that the Religious Freedom Restoration Act cannot protect citizens from existing (municipal) Indiana sexual orientation and gender identity laws and ensuing coercion from government.

In other words, it eliminates any balancing test for sexual liberty and religious liberty. It says sexual orientation should trump religious liberty. That’s bad policy.

Sexual orientation and gender identity laws do not protect equality before the law. Instead, they create special privileges that are enforceable against private actors.

All citizens should oppose unjust discrimination, but sexual orientation and gender identity laws are not the way to achieve that goal. Sexual orientation and gender identity laws threaten fundamental First Amendment rights. These laws create new, subjective protected classes that will expose employers to unimaginable liability, and would increase government interference in labor markets in ways that could harm the economy.

Yet sexual orientation and gender identity laws’ damage is not only economic. It would also threaten the freedom of citizens and their associations to affirm their religious or moral convictions, such as that marriage is the union of one man and one woman and that maleness and femaleness are not arbitrary constructs but objective ways of being human. Sexual orientation and gender identity laws would treat expressing these beliefs in a commercial context as actionable discrimination. [Daily Signal, April 2]

The short version: Before the “fix,” if you were a baker who didn’t want to bake a wedding cake because you sincerely believed it constituted participation in something that was contrary to your faith, then you had a chance—but not a guarantee—of prevailing in court if you got sued. Now, you will definitely lose.

Religious liberty is for everyone. The Cato Institute’s Ilya Shapiro, who supports gay marriage, has no problem with Indiana’s Religious Freedom Restoration Act (as originally written), and says progressives shouldn’t either:

We’re all born free and equal under the law. That means that we may associate with anyone who wishes to associate with us, and also to decline to associate. While governments must treat everyone equally, individuals should be able to make their own decisions on whom to do business with and how — on religious grounds or otherwise. Those who disagree with those choices can take their custom elsewhere and encourage others to do the same.

The prototypical scenario that the Indiana law is meant to prevent is the case of that New Mexico wedding photographer who was fined for declining to work a same-sex commitment ceremony. Note however that she lost despite New Mexico’s RFRA, and her stronger argument was based on her First Amendment freedom of expression (which the Supreme Court alas refused to hear).

For that matter, gay photographers shouldn’t be forced to work fundamentalist celebrations, blacks shouldn’t be forced to work KKK rallies, and environmentalists shouldn’t be forced to work job fairs in logging communities. This isn’t the Jim Crow South; there are plenty of wedding vendors who would be willing to do business regardless of sexual orientation, and no state is enforcing segregation laws.

Moreover, I don’t know why you’d want to have someone who can’t in good faith (literally) support your wedding work it. It must be the desire to narrow the rules of the game such that private institutions are allowed to continue operating only as long as they follow a prescribed list of mores.

Doesn’t that strike you as reactionary and illiberal? If progressives support tolerance and respect for diversity, they should support Indiana’s law. [Time, April 2]

Religious liberty is what allows a pluralistic society to live in peace. A statement on the current controversy over Indiana’s Religious Freedom Restoration Act:

For many religious believers, Passover and the Easter season are cornerstones of the year. Thus our hearts have been especially troubled in recent days by the acrimony and lies surrounding legal efforts, in Indiana and elsewhere, at ensuring religious liberty for people of all faiths.

As Americans commemorate their respective holy days, we urge all our fellow citizens to remember the moral roots of their constitutional system, and to engage in a sensible national conversation about religious liberty. Even those who are not religious have a stake in seeing that our “first freedom”—religious freedom; freedom of conscience—is protected in law.

In recent days we have heard claims that a belief central to Judaism, Christianity, and Islam—that we are created male and female, and that marriage unites these two basic expressions of humanity in a unique covenant—amounts to a form of bigotry. Such arguments only increase public confusion on a vitally important issue. When basic moral convictions and historic religious wisdom rooted in experience are deemed “discrimination,” our ability to achieve civic harmony, or even to reason clearly, is impossible.

America was founded on the idea that religious liberty matters because religious belief matters in a uniquely life-giving and powerful way. We need to take that birthright seriously, or we become a people alien to our own founding principles. Religious liberty is precisely what allows a pluralistic society to live together in peace.

Charles J. Chaput, O.F.M. Cap
Roman Catholic Archbishop of Philadelphia

Robert P. George
McCormick Professor of Jurisprudence
Princeton University

William E. Lori
Roman Catholic Archbishop of Baltimore

Albert Mohler, Jr., President
The Southern Baptist Theological Seminary

Russell Moore, President
Ethics and Religious Liberty Commission
Southern Baptist Convention [Public Discourse, April 3]

Religious freedom restoration acts are not at all like Jim Crow laws. There’s a big difference between the discrimination that critics fear could be allowed by Religious Freedom Restoration Acts such as that in Indiana and the racial discrimination that happened in the old South. Businesses that today decline service to homosexuals pay a price in the form of lost business. In the Jim Crow South, such discrimination was backed up by the force of law, as Jonah Goldberg explains in a short history lesson at National Review. He concludes:

While Jim Crow laws obviously went beyond economics, they were in their origin and greatest effect about economics. Racist Southern Democrats understood that nothing threatens discrimination more than economic liberty. Restore to blacks their God-given right to control and sell the fruits of their own labor, and the market will make enforced bigotry expensive. Without Jim Crow, bigoted businesses would suffer in the marketplace. As [Thomas] Sowell said, “Prejudice is free but discrimination has costs.”

Comparing RFRA laws to Jim Crow laws turns all of this on its head. Jim Crow laws forced tolerant businesses to be intolerant of blacks. No one, anywhere, is suggesting that people who want to do business with same-sex couples should be barred from doing so. The argument is whether the government should force a few ardent Christians (or Jews or Muslims) to participate in a ceremony that violates their faith.

In Indiana, the most vocal and arguably the most powerful voices against even the perception of anti-gay discrimination have come from the business community. And, one suspects, there are plenty of people in the wedding-planning industry eager for such business. [National Review, April 2]

Does political speech become less protected when it becomes more effective? That outcome would seem to fly in the face of the First Amendment, but it is the result—so far—of a case that was provoked by an eminent domain action in Norfolk, Virginia. In 2010, the city attempted to obtain the property of Central Radio Company, which responded by hanging a 375-square-foot banner on the very property the government was attempting to obtain. The banner read: “50 years on this street/78 years in Norfolk/100 workers/Threatened by eminent domain!”

The company’s property rights were eventually vindicated at court, but not before the city ordered the company to take down the sign. The company sued, but courts have so far rejected its free speech claims, siding with the city’s claim that it has a compelling interest in preventing drivers from being distracted by large signs. The Institute for Justice is now asking the Supreme Court to take the case, arguing that the city’s sign code runs afoul of the First Amendment:

According to the 4th Circuit majority opinion, it was irrelevant that the sign code drew distinctions between different types of banners based on their content so long as those distinctions were what the court deemed “reasonable.” Moreover, restricting Central Radio’s banner was warranted, according to the majority, because some passersby had “reacted emphatically” to the sign by waving, honking and shouting in support when they saw it. The majority claimed that these expressions of support were evidence that “motorists [we]re distracted by [the] sign while driving.”

“Unfortunately, the 4th Circuit allowed Norfolk to play favorites with the First Amendment by arbitrarily deciding who gets to speak and what they get to say,” explained [IJ Attorney Michael] Bindas. “Worse, it held that Norfolk was justified in restricting Central Radio’s banner precisely because it was effective. The honking, waving and shouting of passing motorists were expressions of support for Central Radio—not evidence of distraction. Government cannot regulate speech based on the supportive reactions of those who see or hear it.” [Institute for Justice, April 1]

And Radley Balko underlines the problem here:

In order to rule on the free speech claim, the courts have to assume that the city is arguing in good faith. There’s no reason the rest of us should. We’re free to consider the possibility that city officials are merely upset that they lost the eminent domain case, and so they’re now pettily preventing the property owner from celebrating his victory over them. I’d say that’s not only possible, it’s likely. Imagine if another building a few miles down the road put up a banner celebrating the city’s wise and prudent development policies. Does anyone honestly think the owner of that property would need to go to court in order to keep his banner? [Washington Post, April 1]

Tool kit: Does your headline writing need work? From Nate Birt, some ideas on writing headlines that will win you readers on mobile:

Go to any bookstore and you’ll find your eyes drawn to some titles more than others. Why? The best covers have something others don’t: winning titles and striking art.

You can capture the same emotional response using mobile headlines for your digital content. Corey Eridon over at Hubspot suggests incorporating strong words or alliteration to stand out from the crowd. Additionally, you can earn yourself credibility points by simple honesty about what a post or piece of content actually includes, Eridon notes. Bracketed phrases that convey the type of content at play, such as eBooks or videos, help audiences make informed choices.

Content should also foster a sense of fun in your mobile audience. Some might frown upon the listicle, says Erik Dekers at Convince and Convert, but the fact is many of us read them and love them.

Finally, recognize that mobile delivery opens a door to mood subcultures. In a recent post for Inc., author Minda Zetlin recaps a study revealing the tone of posts on social media varies by platform. Popular posts on LinkedIn and Pinterest tend to be more upbeat than those on Twitter and Facebook, for example. As a result, you might repackage the same piece of content under multiple headlines to see which generates the most traction.

For more, see Birt’s article “Five Tips for Headline Writing in the Mobile Age.” [Visual.ly, March 31]

Self-driving cars, the singularity, and why you should be short on New York: Peter Thiel shares his thoughts on these topics and more with Tyler Cowen:

The Budget Control Act is actually controlling the budget—so far.

Stephen Moore writes:

Spending cuts have been positive for the economy. Total government spending as a percentage of GDP has plummeted from 24.4 percent in 2009 to 20.3 percent in 2014. From 2011 to 2014 alone, discretionary spending dropped by 2 percentage points of GDP. The economic growth rate, although still far too low, has crept upward as government spending has fallen. No evidence indicates that spending cuts have restrained growth, despite the predictions of many economists. The 4.1 percentage point reduction in federal spending is the equivalent of $714 billion (based on the GDP in 2014) in resources remaining in the private sector each year rather than being squandered by the federal government. This constitutes one of the largest fiscal retrenchments in modern times. […]

The BCA is far from ideal, but it has produced beneficial results for the U.S. economy and the federal fiscal situation. Under the Budget Control Act, total federal outlays have fallen from $3.603 trillion in 2011 to $3.506 trillion through FY 2014. This is the first three-year stretch of declining federal outlays since Dwight Eisenhower’s first term in office. The BCA slammed the brakes on the reckless government activism of 2008, 2009, and 2010. [Internal citations omitted.] [The Heritage Foundation, April 1]

A conversation with Vicente Fox: The former President of Mexico shares his views on Western hemisphere issues, including the importance of trade, the prospects for turning back Bolivarianism, and how to deal with the drug trafficking crisis:

U.S. social spending is second highest in the world, but not well targeted. That surprising finding comes from Jacob Kirkegaard of the Peterson Institute. Kirkegaard counted up not just government transfers, but also social spending hidden in the tax code—for example the Earned Income Tax Credit and the tax exclusion for employer provided health insurance—and also private spending on social purposes. He also adjusted the figures to account for the extent to which governments claw back benefits by taxing them. He found: “Taking the full effects of tax systems and social spending from both private and public sources into account, the United States is seen to be devoting more resources toward social purposes than is generally acknowledged. In fact, only the French spend more than Americans, while the alleged welfare-addicted Scandinavians and Europeans spend less on average.” [“The True Levels of Government and Social Expenditures in Advanced Economies,” Jacob Funk Kirkegaard. Peterson Institute for International Economics, March 2015]

Commenting on Kirkegaard’s paper, Eduardo Porter writes:

Such spending through the tax code not only offered the false promise of smaller government. Its most insidious effect was to hide what the government does and, notably, to shield from political debate which people it benefits most. That is clearly not those of middle and low income, who don’t earn enough to qualify for many tax deductions and often don’t even claim them. Built in the shadows, protected from democratic accountability, the government developed into a Rube Goldberg contraption that has only a weak claim to a defensible social purpose. It might not be the smallest government in the advanced world, but it can lay claim to being among the least efficient and the most unfair. [New York Times, March 31/ h/t James Pethokoukis, AEIdeas, April 1]

Losing a subsidy is not the same as losing coverage. Will turmoil reign in health insurance markets if the Supreme Court disallows tax credits on the federal exchanges? The plaintiffs in King v. Burwell claim that ObamaCare creates a tax credit subsidy program only for health insurance purchased through a state exchange, not the exchanges set-up by the federal government in the states that declined to create their own. Some worry that a Court decision agreeing that the Internal Revenue Service improperly extended the credits to federal exchanges would create too much disruption for those covered on the exchanges. As Ed Haislmaier explains, however, a loss of subsidy is not the same as a loss of coverage:

The ACA instructed the Secretary of Health and Human Services (HHS) not only to establish “annual open enrollment periods” during which eligible individuals may purchase subsidized coverage through an exchange, but to also provide for enrollment outside of open season under certain circumstances. Such so called special enrollment periods are triggered when an individual experiences a qualifying event specified in regulation such as gaining or becoming a dependent due to marriage, birth, or adoption or moving to another state. An individual also can qualify if he or she is “determined newly eligible or newly ineligible for advance payments of the premium tax credit or has a change in eligibility for cost-sharing reductions.” Thus, anyone losing subsidies as a result of the Court’s ruling would qualify for a special enrollment period. […]

The regulations further specify that in such circumstances, the individual must be allowed to “enroll in or change from one Q[ualified] H[ealth] P[lan] to another.” That means the individual must be given the choice of any other plan—at any coverage level and from any insurer—that is offered in his state through the exchange. Thus, individuals could stay with their current plans or could switch to less expensive plans.

Data released by HHS on the 2015 exchange open enrollment period show that many subsidized exchange enrollees did not select one of the less expensive plan options available to them. Specifically, HHS reported that among subsidy-eligible enrollees, 77 percent could have picked a plan with a monthly after-subsidy cost of $50 or less but that only 38 percent of them actually did so. This indicates not only that the availability of subsidies encouraged enrollees to “buy-up” to more expensive coverage, but also that should the Court rule that those subsidies can no longer be paid, they could respond by “trading down” to less expensive coverage. [Internal citations omitted.] [The Heritage Foundation, March 30]

To Do: Learn More About the Constitution

• Hear the little known stories behind six of the Constitution’s most indispensable provisions. Sen. Mike Lee (R-Utah) will speak about his new book Our Lost Constitution at The Heritage Foundation at noon on April 9.

• Examine the role of federal mandates in fueling the subprime boom and bust. The Cato Institute will host Peter Wallison of the American Enterprise Institute, talking about his new book, Hidden in Plain Sight: What Really Caused the World’s Worst Financial Crisis and Why It Could Happen Again. Wallison’s talk will begin at noon on April 7 at the Cato Institute.

• Explore state and local solutions to poverty and family fragmentation. The Georgia Opportunity Center will host a conversation with Jennifer Marshall of The Heritage Foundation. The conversation will be held at the Buckhead Club in Atlanta, and will begin at noon on April 8.

• Assess the future of liberty and democracy in Hong Kong. The Hudson Institute will host a conversation with David Feith, a Hong Kong-based editorial writer for The Wall Street Journal, and Libby Liu, president of Radio Free Asia. The talk will begin at noon on April 10.

• Find out how New Mexico’s renewable energy standards are affecting electricity prices in the state. The Rio Grande Foundation will host a talk by James Taylor of the Heartland Institute. Taylor will speak at 6 p.m. on April 8 at the University of New Mexico Law School (room 2401) in Albuquerque.

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