The Heritage Insider: The Supreme Court rewrites ObamaCare in order to save it and redefines marriage for the whole country, there is still work to do to fix Kelo, and more

June 27, 2015

Latest Studies
32 new items, including a Mercatus Center report on government’s habit of impeding innovation in transportation, and an Independent Women’s Forum report on how government nutrition initiatives can harm health

Notes on the Week
The Supreme Court rewrites ObamaCare in order to save it and redefines marriage for the whole country, there is still work to do to fix Kelo, and more

To Do
Find out what’s next for self-government

Latest Studies

Budget & Taxation
• Are Income Taxes Destined to Rise? Fiscal Imbalance and Future Tax Policy in the United States – American Enterprise Institute
• Senate Defense Appropriations: The Battle over Budget Priorities Continues – The Heritage Foundation
• Best from Both Budgets – John Locke Foundation
• The Effect of Property Reassessments on Fiscal Transparency and Government Growth: Evidence from Virginia – Mercatus Center

Crime, Justice & the Law
• Arresting Your Property: How Civil Asset Forfeiture Turns Police Into Profiteers – The Heritage Foundation
• Liberalizing Marijuana Use and Improving Driving Safety: Two Contemporary Public Policies on a Collision Course – The Heritage Foundation
• Does Daimler v. Bauman Portend an End to Madison County’s Reign as a Top Magnet Jurisdiction? – Washington Legal Foundation

Economic Growth
• Street Homelessness: A Disappearing Act? – American Enterprise Institute
• Divergence: White Collar Jobs Up, Manufacturing Jobs Disappearing in Illinois – Illinois Policy Institute
• Scandinavian Unexceptionalism: Culture, Markets, and the Failure of Third-Way Socialism – Institute of Economic Affairs
• Failure to Thrive – Manhattan Institute
• Improving the Incentive to Innovate – Pacific Research Institute

Education
• An Education Agenda for 2016: Conservative Solutions for Expanding Opportunity – American Enterprise Institute
• Reauthorization of the Elementary and Secondary Education Act: No Place for Expanded Preschool and Childcare Subsidies – The Heritage Foundation
• Support & Defend: The K-12 Education of Military-Connected Children – Pioneer Institute for Public Policy Research

Foreign Policy/International Affairs
• America’s Strategy Against ISIS Must Focus on Assisting the Iraqi Security Forces and Government – American Enterprise Institute

Health Care
• ObamaCare Co-ops: Cause Celebre or Costly Conundrum? – Galen Institute

Labor
• Raising the Minimum Wage For Fast Food Workers – e21 – Economic Policies for the 21st Century

Monetary Policy/Financial Regulation
• The Supply of Transaction Assets, Nominal Income, and Monetary Policy Transmission – Cato Institute
• Some Historical Reflections on the Governance of the Federal Reserve – Hoover Institute
• After the Crisis: Revisiting the “Banks Are Special” and “Safety Net” Doctrines – Mercatus Center

National Security
• Islamist Terror Plot No. 70: Congress Needs to Take Terror Threat Much More Seriously – The Heritage Foundation
• Terrorist Plot No. 71: Rise in Terrorism Calls for Increased Vigilance – The Heritage Foundation

Natural Resources, Energy, Environment, & Science
• Lifting the Crude Oil Export Ban: How Increased US Exports will Hurt the Russian Market and Help at Home – American Action Forum
• The Economic Impact of the Clean Power Plan – The Heritage Foundation

Regulation & Deregulation
• Low-Hanging Fruit Guarded by Dragons: Reforming Regressive Regulation to Boost U.S. Economic Growth – Cato Institute
• The Unhealthy Consequences of Government Nutrition Initiatives – Independent Women’s Forum
• Public Pension Funds’ Shareholder-Proposal Activism – Manhattan Institute

The Constitution/Civil Liberties
• A Decade After Kelo: Time for Congress to Protect American Property Owners – The Heritage Foundation
• Revisiting Kelo – The Heritage Foundation

Transportation/Infrastructure
• Do Governments Impede Transportation Innovation? – Mercatus Center
• How Congress Can Fix the Highway Trust Fund – Reason Foundation

Notes on the Week

Justice Scalia: Court goes beyond the judicial power, changes ObamaCare in order to save it. On Thursday, the Supreme Court ruled that the Affordable Care Act provides tax credits in both federal- and state-established health insurance exchanges created under the law. It reached this conclusion in spite of language in the law specifying that such credits are available to individuals who purchase health insurance in an “Exchange established by the State.” The Court determined, however, that other language in the law indicated that Congress intended for federal exchanges to be regarded as equivalent to state exchanges. In particular, Chief Justice John Roberts, writing for the Court in the case King v. Burwell, pointed to the law’s command that the Secretary of Health and Human Services “establish and operate such Exchange within the State” whenever a state chose not to create its own exchange. According to Roberts, “by using the words ‘such Exchange,’ the Act indicates that State and Federal Exchanges should be the same.” He continued: “But State and Federal Exchanges would differ in a fundamental way if tax credits were available only on State Exchanges.” [King v. Burwell, June 25, 2015]

Justice Antonin Scalia, the dean of the textualists on the Court, called Roberts’s opinion a “jiggery-pokery” interpretation. Scalia’s colorful decision is worth reading in full, but here are some choice excerpts:

On whether there is ambiguity in the tax credit provision:

Statutory design and purpose matter only to the extent they help clarify an otherwise ambiguous provision. Could anyone maintain with a straight face that §36B is unclear? To mention just the highlights, the Court’s interpretation clashes with a statutory definition, renders words inoperative in at least seven separate provisions of the Act, overlooks the contrast between provisions that say “Exchange” and those that say “Exchange established by the State,” gives the same phrase one meaning for purposes of tax credits but an entirely different meaning for other purposes, and (let us not forget) contradicts the ordinary meaning of the words Congress used. On the other side of the ledger, the Court has come up with nothing more than a general provision that turns out to be controlled by a specific one, a handful of clauses that are consistent with either understanding of establishment by the State, and a resemblance between the tax-credit provision and the rest of the Tax Code. If that is all it takes to make something ambiguous, everything is ambiguous.

On Congress’s habit of creating schemes that don’t work:

The Court protests that without the tax credits, the number of people covered by the individual mandate shrinks, and without a broadly applicable individual mandate the guaranteed-issue and community-rating requirements “would destabilize the individual insurance market.” If true, these projections would show only that the statutory scheme contains a flaw; they would not show that the statute means the opposite of what it says. Moreover, it is a flaw that appeared as well in other parts of the Act. A different title established a long-term-care insurance program with guaranteed-issue and community-rating requirements, but without an individual mandate or subsidies. This program never came into effect “only because Congress, in response to actuarial analyses predicting that the [program] would be fiscally unsustainable, repealed the provision in 2013.” How could the Court say that Congress would never dream of combining guaranteed-issue and community-rating requirements with a narrow individual mandate, when it combined those requirements with no individual mandate in the context of long-term-care insurance?

On the law’s multiple purposes:

Compounding its errors, the Court forgets that it is no more appropriate to consider one of a statute’s purposes in isolation than it is to consider one of its words that way. No law pursues just one purpose at all costs, and no statutory scheme encompasses just one element. Most relevant here, the Affordable Care Act displays a congressional preference for state participation in the establishment of Exchanges: Each State gets the first opportunity to set up its Exchange; States that take up the opportunity receive federal funding for “activities … related to establishing” an Exchange; and the Secretary may establish an Exchange in a State only as a fallback. But setting up and running an Exchange involve significant burdens—meeting strict deadlines, implementing requirements related to the offering of insurance plans, setting up outreach programs, and ensuring that the Exchange is self-sustaining by 2015. A State would have much less reason to take on these burdens if its citizens could receive tax credits no matter who establishes its Exchange. (Now that the Internal Revenue Service has interpreted §36B to authorize tax credits everywhere, by the way, 34 States have failed to set up their own Exchanges.) So even if making credits available on all Exchanges advances the goal of improving healthcare markets, it frustrates the goal of encouraging state involvement in the implementation of the Act. This is what justifies going out of our way to read “established by the State” to mean “established by the State or not established by the State”?

Worst of all for the repute of today’s decision, the Court’s reasoning is largely self-defeating. The Court predicts that making tax credits unavailable in States that do not set up their own Exchanges would cause disastrous economic consequences there. If that is so, however, wouldn’t one expect States to react by setting up their own Exchanges? And wouldn’t that outcome satisfy two of the Act’s goals rather than just one: enabling the Act’s reforms to work and promoting state involvement in the Act’s implementation?

On mending laws v. interpreting law:

The Court’s decision reflects the philosophy that judges should endure whatever interpretive distortions it takes in order to correct a supposed flaw in the statutory machinery. That philosophy ignores the American people’s decision to give Congress “[a]ll legislative Powers” enumerated in the Constitution. They made Congress, not this Court, responsible for both making laws and mending them. This Court holds only the judicial power—the power to pronounce the law as Congress has enacted it. We lack the prerogative to repair laws that do not work out in practice, just as the people lack the ability to throw us out of office if they dislike the solutions we concoct. We must always remember, therefore, that “[o]ur task is to apply the text, not to improve upon it.”

Trying to make its judge-empowering approach seem respectful of congressional authority, the Court asserts that its decision merely ensures that the Affordable Care Act operates the way Congress “meant [it] to operate.” First of all, what makes the Court so sure that Congress “meant” tax credits to be available everywhere? Our only evidence of what Congress meant comes from the terms of the law, and those terms show beyond all question that tax credits are available only on state Exchanges. More importantly, the Court forgets that ours is a government of laws and not of men. That means we are governed by the terms of our laws, not by the unenacted will of our lawmakers. “If Congress enacted into law something different from what it intended, then it should amend the statute to conform to its intent.” In the meantime, this Court “has no roving license … to disregard clear language simply on the view that … Congress ‘must have intended’ something broader.” [Internal citations omitted.] [King v. Burwell, Dissenting Opinion of Justice Scalia, June 25, 2015]

A majority of nine has decided what marriage is. On Friday, the Supreme Court ruled that the Due Process Clause of the 14th Amendment to the U.S. Constitution requires states to recognize the marriages of same-sex couples as legal marriages. Justice Anthony Kennedy wrote the opinion of the court; the vote was five to four; four separate dissenting opinions were written. [Obergfell v. Hodges, June 26, 2015]

Here are two highlights from the dissents, the first from Justice Samuel Alito who points out that here again the Court is reading rights into the Constitution that are not really there:

The Constitution says nothing about a right to same-sex marriage, but the Court holds that the term “liberty” in the Due Process Clause of the Fourteenth Amendment encompasses this right. Our Nation was founded upon the principle that every person has the unalienable right to liberty, but liberty is a term of many meanings. For classical liberals, it may include economic rights now limited by government regulation. For social democrats, it may include the right to a variety of government benefits. For today’s majority, it has a distinctively postmodern meaning.

To prevent five unelected Justices from imposing their personal vision of liberty upon the American people, the Court has held that “liberty” under the Due Process Clause should be understood to protect only those rights that are “ ‘deeply rooted in this Nation’s history and tradition.’” And it is beyond dispute that the right to same-sex marriage is not among those rights. Indeed:

“In this country, no State permitted same-sex marriage until the Massachusetts Supreme Judicial Court held in 2003 that limiting marriage to opposite-sex couples violated the State Constitution. Nor is the right to same-sex marriage deeply rooted in the traditions of other nations. No country allowed same-sex couples to marry until the Netherlands did so in 2000.

“What [those arguing in favor of a constitutional right to same sex marriage] seek, therefore, is not the protection of a deeply rooted right but the recognition of a very new right, and they seek this innovation not from a legislative body elected by the people, but from unelected judges. Faced with such a request, judges have cause for both caution and humility.”

For today’s majority, it does not matter that the right to same-sex marriage lacks deep roots or even that it is contrary to long-established tradition. The Justices in the majority claim the authority to confer constitutional protection upon that right simply because they believe that it is fundamental. [Obergfell v. Hodges, dissenting opinion of Justice Samuel Alito, June 26, 2015]

And in his dissent, Justice Clarence Thomas points out that the rights being created are not really the sort of fundamental rights we normally associate with liberty:

Petitioners cannot claim, under the most plausible definition of “liberty,” that they have been imprisoned or physically restrained by the States for participating in same-sex relationships. To the contrary, they have been able to cohabitate and raise their children in peace. They have been able to hold civil marriage ceremonies in States that recognize same-sex marriages and private religious ceremonies in all States. They have been able to travel freely around the country, making their homes where they please. Far from being incarcerated or physically restrained, petitioners have been left alone to order their lives as they see fit.

Nor, under the broader definition, can they claim that the States have restricted their ability to go about their daily lives as they would be able to absent governmental restrictions. Petitioners do not ask this Court to order the States to stop restricting their ability to enter same-sex relationships, to engage in intimate behavior, to make vows to their partners in public ceremonies, to engage in religious wedding ceremonies, to hold themselves out as married, or to raise children. The States have imposed no such restrictions. Nor have the States prevented petitioners from approximating a number of incidents of marriage through private legal means, such as wills, trusts, and powers of attorney.

Instead, the States have refused to grant them governmental entitlements. Petitioners claim that as a matter of “liberty,” they are entitled to access privileges and benefits that exist solely because of the government. [Obergfell v. Hodges, dissenting opinion of Justice Clarence Thomas, June 26, 2015]

Toolkit: How to say thank you to donors: Is it ever OK to use email instead of direct mail to thank donors? What are the elements of a good thank you letter? What’s the right tone? These questions and more are answered in a new infographic on thank yous for nonprofits from ClassyBlog. [ClassyBlog, May 26]

Ten years after Kelo, eminent domain abuse is still a threat to property rights. Ten years ago this week, the Supreme Court ruled, in Kelo v. New London, that local governments could use eminent domain to take property from one private party and give it to another private party as part of an economic development plan. That use of the eminent domain power, the Court said, did not violate the Fifth Amendment’s prohibition against unreasonable seizures.

Following Kelo, many states enacted protections to prevent that kind of eminent domain abuse. However, as Daren Bakst writes, state level protections are not enough to really fix the problem:

Many of the reforms will likely be sufficient to address the unusual and rare situation, as in Kelo, where a city readily admits that it is seizing private property solely for economic development. However, most of these reforms are statutory, not constitutional, and therefore do not provide the level of protection that is warranted; a statute can generally be changed far more easily than a constitutional amendment. Further, the reforms do not properly address the way economic development takings usually happen, such as through overly broad blight laws. There are post-Kelo abuses that illustrate that eminent domain abuse is alive and well.

In New York, private property was seized for office space and apartment towers. In another New York project, property was seized for Columbia University, a private institution. A Glendale, Colorado, carpet store could soon be seized and ownership transferred to a developer for an entertainment district. These examples are all based on addressing so-called blight. New Jersey’s Casino Reinvestment Development Authority, unrelated to any claim of blight, is seeking to seize a home to redevelop the surrounding neighborhood, even though it has no clear plans for the property.

Blight Abuse. City officials do not usually admit that they are taking private property solely for economic development. They generally claim another reason to serve as a pretext for seizing property for economic development. Blight is one of the most frequent reasons.

On the surface, the idea that government would be seizing property to address blight may not sound particularly bad. However, there are two critical ways that many state blight laws allow government to abuse eminent domain power.

1. Blight definition: The word “blight” suggests property that is unfit to live in or is somehow unsafe. However, blight laws generally do not use such a definition. Instead, the definition is often extremely broad, covering properties that are in perfectly fine condition, allowing almost any property to fall under the definition. These broad and subjective definitions make it easier for cities to seize private property for economic development while pointing to “blight” as the justification. It also makes it easier to benefit private interests and exacerbate the cronyism problem.

2. Non-blighted properties in blighted areas: Even if a property is in pristine condition, the government might be able to seize it if it falls under a subjectively determined blighted area. Even if distinct boundaries could be established between a blighted area and a non-blighted area, this does not necessarily mean that a city could still not label all the properties as existing in one blighted area.

It is important to remember that courts generally do not scrutinize the actions and conclusions of the government when it comes to takings for blight. If a city claims that a property is blighted or in a blighted area, that usually suffices. [Internal citations omitted.] [The Heritage Foundation, June 22]

Bakst advises that eminent domain reforms should require local governments to prove that a taking is for a public purpose, and even better to “prove that it would have seized the property even if there was no economic development benefit”; should define the blight conditions that allow for a taking in terms of imminent risk to public health and safety; and should allow blight as a justification for a taking only for property that is itself blighted, not merely located in a blighted area.

There is indeed a tradeoff between redistribution and growth.

thf 2015-06-27 insider redistributionvgrowth.jpg

Kevin Hassett explains the chart above:

To measure how much a country redistributes, we looked at how much government policy changes that coefficient. The more taxes and transfers from the government reduce the coefficient, the more redistributive that government is.

The chart examines the recent experience of national economies in the wake of the financial crisis for the 47 countries for which there were sufficient Gini-coefficient data. The vertical axis plots how much redistribution there was in each country in 2008. The horizontal axis plots the rate of per capita national-income growth that each country averaged during the four years between 2008 and 2012. In some sense, then, the chart asks the question, “To what extent does variation in the size of the welfare state in 2008 explain variation in how economies recovered from the crisis between 2008 and 2012?”

As one can see in the chart, which contains the raw data and a highly statistically significant regression line through the data points, the data show a clear pattern: the heavy redistributors have done much worse. Indeed, the statistical relationship suggests that moving a nation’s redistributive apparatus from that of the typical country in the sample to that of the U.S. would have increased the expected growth rate of per capita national income over this period by a full percentage point. [American Enterprise Institute, June 18]

The welfare state didn’t improve Nordic health. The people of the Nordic countries may be healthier than most, but, relative to the rest of the world, they’re not as healthy as they were before their welfare states got big. The data for this graphic come from Nima Sanadaji’s new book: Scandinavian Unexceptionalism: Culture, Markets, and the Failure of Third-Way Socialism. (H/t: Tom Palmer.)

thf 2015-06-27 insider Nordicwelfare.jpg

Check your T-Shirts? If displays of the Confederate flag—even as historical representations in video games—are to be interpreted as showing sympathy with the Antebellum South’s system of slavery, then what should we make of those who wear T-Shirts showing America hater Che Guevara? As Brooke Winn points out, there are a number of reasons why Che is not the cool guy some people think he is, not least of which is that he murdered many thousands of people:

Forget due process. During the Cuban Revolution, Che condemned to death many who had never been properly charged or given a lawyer. The New York Times estimated that in the first two months of the Cuban Revolution, there were approximately 528 firing squad executions. The Black Book on Communism cites a total of 14,000 executions by the end of the 1960s. Che was quoted in 1962 by the editor of the RevolucÍon, Carlos Franqui, as saying “We executed many people by firing squad without knowing if they were fully guilty. At times, the Revolution cannot stop to conduct much investigation.”

Dissenters from the new regime, including unarmed civilians, were not tolerated. Che explained his approach to justice thus: “We don’t need proof to execute a man. We only need proof that it’s necessary to execute him.” He made no secret of his disdain for conventional legal standards, calling evidence and burden of proof “archaic bourgeois detail(s).”

In a speech before the United Nations in December of 1964, Che confirmed his government’s ruthless reputation, declaring, “Yes, we have executed, we are executing, and we will continue to execute.”

And the barbarity didn’t stop when the revolution was over either:

Like Stalin with his Soviet Gulag camps, Che set up political prisons where hard labor was enforced. These re-education camps were a way to punish accused counter-revolutionaries, dissenters, and political opponents. “We send to Guanahacabibes [i.e., Cuban labor camp] people who have committed crimes against revolutionary morals…it is hard labor…the working conditions are harsh…”

Che enacted a prison system much like the Soviet Gulag.

Included in this criminal system were ‘delinquents’ or those who were involved with drinking, disrespecting authority, and being lazy or playing loud music. Homosexuals were singled out for particularly brutal treatment. Also included in the definition of ‘delinquents’ were Catholic priests, Jehovah’s Witnesses, and other religious persons. In 1959, Fidel Castro appointed Che as the commandant of a fortress turned prison called La Cabaña in Havana. At one point, between 800 and 1,000 prisoners were housed in the facility when full capacity allowed for 300. [Internal citations omitted.] [Dissident, March 24]

Bank bailouts beget more bank bailouts. The reason banks take on more risk than they should is that they assume the government will always bail them out. As Nicole Gelinas explains, government always has, and unless that expectation is broken, financial crises will happen again:

To Do: Find Out What’s Next for Self-Government

• Examine the Supreme Court’s rulings in the marriage cases. Ryan Anderson and Roger Severino of the The Heritage Foundation will be joined by Carrie Severino of the Judicial Crisis Network, and Gene Schaer of the Law Offices of Gene Schaer to examine what the rulings mean for the future of marriage and of constitutional self-government. The discussion will begin at noon on June 30 at The Heritage Foundation. [The Heritage Foundation]

• Nominate an unsung hero. The State Policy Network is now accepting nominations for its Unsung Hero Award. The award honors policy entrepreneurs whose leadership has resulted in transformative pro-liberty public policy solutions. Nominations are due by July 24. The winner will be announced at the 2015 SPN Annual Meeting, which will be held September 29 – October 2 in Grand Rapids, Michigan. [State Policy Network]

• Find out if Puerto Rico is America’s Greece. A panel at the American Enterprise Institute will examine the deepening Puerto Rican debt crisis. The discussion will beging at 9 a.m. on June 30. [American Enterprise Institute]

• Learn about the conservative heroes who have shaped America. The John Locke Foundation will host Garland S. Tucker III, talking about his new book Conservative Heroes: Fourteen Leaders Who Shaped America, From Jefferson to Reagan. Tucker’s talk will begin at noon on June 29 at the John Locke Foundation in Raleigh, N.C. [John Locke Foundation]

• Hear the history of free market thinking on energy policy. Robert Bradley of the Institute for Energy Research and Patrick Michaels of the Cato Institute will tell the story of how free market ideas on energy have gained influence since the 1970s. The discussion will begin at noon on June 30. [Cato Institute]

Have a tip for InsiderOnline? Send us an e-mail at insider@heritage.org with "For Insider" in the subject line.

Follow us on Twitter: http://twitter.com/InsiderOnline.

Looking for an expert? Visit PolicyExperts.org.

The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400

You are subscribed to Heritage Foundation e-mails as johnmhames@comcast.net. If you want to change your e-mail preferences, please click here to update your subscription.

Search This Blog

Diogenes-Light